Commons Sitting of 4 November 1974

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]

MEMBERS SWORN
The following Members took and subscribed the Oath or made and subscribed the Affirmation required by law:
Ronald Henry Atkins, esquire, Preston North.
Right honourable Peter John Mitchell Thomas, QC, Barnet, Hendon South.
respecting application of Standing Order No. 30 (Closure of Debate) during Session 1974 (1) in the House and in Committee of the whole House, under the following heads:—

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Date when Closure claimed, and by whom

Question before House or Committee when claimed

Whether in House or Committee

Whether assent given to Motion or withheld by the Chair

Assent withheld because, in the opinion of the Chair, a decision would shortly be arrived at without that Motion

Result of Motion and, if a Division, Numbers for and against.

and (2) in standing Committees under the following heads:—

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Date when Closure claimed, and by whom

Question before Committee when claimed

Whether assent given to Motion or withheld by the Chair

Assent withheld because, in the opinion of the Chair, a decision would shortly be arrived at without that Motion

Result of Motion and, if a Division, Numbers for and against.

—[The First Deputy Chairman of Ways and Means.]

PRIVATE BILLS AND PRIVATE BUSINESS
Return ordered,
of the number of Private Bills, Hybrid Bills and Bills for confirming Provisional Orders introduced into this House and brought from the House of Lords, and of Acts passed in Session 1974:
Of all Private Bills, Hybrid Bills, and Bills for confirming Provisional Orders which in Session 1974 were reported on by Committees on Opposed Bills or by Committees nominated partly by the House and partly by the Com-
Mr. Speaker: With the agreement of the House, and in accordance with recent practice, I propose to call the First Deputy Chairman of Ways and Means to move all eight of his motions for unopposed returns together.

ADJOURNMENT MOTIONS UNDER STANDING ORDER NO. 9:
Return ordered,
of Motions for Adjournment under Standing Order No. 9, showing the date of such Motion, the name of the Member proposing the specific and important matter and the result of any Division taken thereon, during Session 1974.—[The First Deputy Chairman of Ways and Means.]

CLOSURE OF DEBATE (STANDING ORDER NO. 30):
Return ordered,
mittee of Selection, together with the names of the selected Members who served on each Committee; the first and also the last day of the Sitting of each Committee; the number of days on which each Committee sat; the number of days on which each selected Member served; the number of days occupied by each Bill in Committee; the Bills of which the Preambles were reported to have been proved; the Bills of which the Preambles were reported to have been not proved; and, in the case of Bills for confirming Provisional Orders, whether the Provisional Orders ought or ought not to be confirmed:
Of all Private Bills and Bills for confirming Provisional Orders which, in Session 1974 were

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referred by the Committee of Selection to the Committee on Unopposed Bills, together with the names of the Members who served on the Committee; the number of days on which the Committee sat; and the number of days on which each Member attended:
And, of the number of Private Bills, Hybrid Bills, and Bills for confirming Provisional Orders withdrawn or not proceeded with by the parties, those Bills being specified which were referred to Committees and dropped during the sittings of the Committee.—[The First Deputy Chairman of Ways and Means.]

PUBLIC BILLS
Return ordered,
of the number of Public Bills, distinguishing Government from other Bills, introduced into this House, or brought from the House of Lords, during Session 1974, showing:

(1) the number which received the Royal Assent;

(2) the number which did not receive the Royal Assent, indicating those which were introduced into but not passed by this House, those passed by this House but not by the House of Lords, those passed by the House of Lords but not by this House, those passed by both Houses but Amendments not agreed to; and distinguishing the stages at which such Bills were dropped, postponed or rejected in either House of Parliament, or the stages which such Bills had reached by the time of the Prorogation or Dissolution.—[The First Deputy Chairman of Ways and Means.]

SELECT COMMITTEES
Return ordered,
of the Select Committees appointed in Session 1974 with the Sub-Committees appointed by them; the names of the Members appointed to serve on each, and of the Chairman of each; the number of days each met, and the number of days each Member attended; the number of meetings held by each Select Committee and Sub-Committee, and the number of meetings each Member attended; the total expenses of the attendances of witnesses at each Select Committee and Sub-Committee; and the total number of Members who served on Select Committees; together with so much of the same information as is relevant to the Chairmen's Panel and the Court of Referees. —[The First Deputy Chairman of Ways and Means.]

SITTINGS OF THE HOUSE AND BUSINESS OF SUPPLY
Return ordered,
of (1) the days on which the House sat in Session 1974, stating for each day the day of the month and day of the week, the hour
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of the meeting, and the hour of the adjournment; and the total number of hours occupied in the Sittings of the House, and the average time; and showing the number of hours on which the House sat each day, and the number of hours after the time appointed for the interruption of business; and (2) the days on which Business of Supply was considered.—[The First Deputy Chairman of Ways and Means.]

STANDING COMMITTEES
Return ordered,
for Session 1974, of (1) the total number and the names of all Members (including and distinguishing Chairmen) who have been appointed to serve on one or more of the Standing Committees showing, with regard to each of such Members, the number of sittings to which he was summoned and at which he was present; (2) the number of Bills, Estimates, Matters and Statutory Instruments, considered by all and by each of the Standing Committees, the number of sittings of each Committee and the titles of all Bills, Estimates, Matters and Statutory Instruments considered by a Committee distinguishing where a Bill was a Government Bill or was brought from the House of Lords, and showing in the case of each Bill, Estimate, Matter and Statutory Instrument, the particular Committee by whom it was considered, the number of sittings at which it was considered and the number of Members present at each of those sittings. —[The First Deputy Chairman of Ways and Means.]

SPECIAL PROCEDURE ORDERS
Return ordered,
of the number of Special Procedure Orders presented in Session 1974; the number withdrawn; the number against which Petitions or copies of Petitions were deposited; the number of Petitions of General Objection and for Amendment respectively considered by the Chairmen; the number of such Petitions certified by the Chairmen as proper to be received, and the number certified by them as being petitions of General Objection and for Amendment respectively; the number referred to a Joint Committee of both Houses; the number reported with Amendments by a Joint Committee, and the number in relation to which a Joint Committee reported that the Order be not approved; and the number of Bills introduced for the confirmation of Special Procedure Orders;
Of Special Procedure Orders which, in Session 1974, were referred to a Joint Committee, together with the names of the Commons Members who served on each Committee; the number of days on which each Committee sat; and the number of days on which each such Member attended.—[The First Deputy Chairman of Ways and Means.]

ORAL ANSWERS TO QUESTIONS
  INDUSTRY

    HS146 Aircraft
    Wallasked the Secretary of State for Industry if he will make a statement on the future of the HS146.
    Adleyasked the Secretary of State for Industry if he will make a statement on his discussions with Hawker Siddeley on the future of the HS146.
    Mr. Dalyellasked the Secretary of State for Industry if he will make a statement on his discussions with Hawker Siddeley concerning the HS146.
    Sir D. Walker-Smithasked the Secretary of State for Industry what representations he has received from Hawker Siddeley Aviation Limited regarding the development contract for HS146 and the company's decision to suspend work on the development of this aircraft; what replies he has made; and whether he will make a statement on the position in the context of employment and prospects in the civil aviation industry.
    The Secretary of State for Industry (Mr. Anthony Wedgwood Benn): The Government are still considering the future of this project but the House will be kept informed.
    Mr. Wall: Does the right hon. Gentleman agree with the firm that this project is no longer financially viable? If not, will he give further Government guarantees, or invest further Government money, to save the project? Will there be a tripartite study on viability in the very near future?
    Mr. Benn: I shall try to deal with those three points. The Government are not satisfied that the arguments put before them by the firm are valid. That is why we are still engaged in a review. I should very much like to have organised a tripartite discussion but that was not acceptable to the firm. The question of Government funding does not arise since funding has not been requested by the
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    firm and the Government's review is not complete.
    Mr. Dalyell: What representations have been received from British Airways, in the event of not going ahead with the HS146, about replacements for existing aircraft?
    Mr. Benn: I cannot answer in detail for British Airways, as my hon. Friend knows, but clearly the market at home for this aircraft, or the extent to which it would be necessary to purchase aircraft abroad to meet a demand for such an aircraft were it not available, is one of the reasons why we are going into the matter in greater detail.
    Mr. Adley: After the right hon. Gentleman's deplorable mismanagement of the Court Line affair, is it likely that Hawker Siddeley Aviation will look to him as a perfect partner for future investment projects? Is it not justified in fishing to prevent his "doing a Beagle" with its jobs, its workpeople and its investors?
    Mr. Benn: The hon. Gentleman should know that I am advised that the company is in breach of its contract.
    Mr. James Johnson: Is my right hon. friend aware that, whatever may have been said to him by management, thousands if not tens of thousands of workers, whether in the design office or on the shop floor, believe that in this aircraft they have a winner? They believe that there are markets for it overseas. Therefore, they ask the Minister to stand firm in this matter. May I ask, however, whether it is a fact that Sir Arnold Hall has not yet seen the Minister? May I ask my right hon. Friend if and when he will see him in this matter and do something definite about it?
    Mr. Benn: I am hoping to see Sir Arnold Hall, though not in the tripartite context that I have been continually pressing upon him. It is not only the workers in the industry and the managers who had confidence; right up until the beginning of July I had every reason to believe that the company itself shared that feeling. One of the reasons why I have not felt able to agree to what the company says is that the arguments presented to me by the firm are not self-evidently accurate. Therefore, we are

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    anxious to look at the matter together with those concerned.
    Sir D. Walker-Smith: Is not the basic problem here that, owing to the inflationary situation, the rise in the price of oil and the diminution of demand, the company cannot quote the fixed forward prices that customers demand? What efforts are the Government making to assist with practical solutions to that problem? Will the right hon. Gentleman put a specific agenda and specific proposals for tripartite talks before the company and the unions?
    Mr. Benn: On the latter point, I have sought very hard to get tripartite talks going, without success. Everybody recognises that inflation creates serious problems for the aircraft industry. On the other hand, those problems are not confined to the British aircraft industry and they are not confined to this country. It would be very dangerous indeed for anyone in this country to assume that the present level of world inflation makes it necessary for us automatically to destroy projects upon which the long-term health of British industry depends. These are the reasons why we want to go into the matter in greater detail.
    Mrs. Hayman: In view of the fact that while the Government review is going on redundancies are taking place at Hatfield and other factories and the design team on the HS146 is in danger of splitting up, at his meeting with Sir Arnold Hall will my right hon. Friend make as much attempt as is possible to ensure that the project is continued and funded in the interim while the review which is to take a final decision takes place?
    Mr. Benn: I am well aware of what my hon. Friend says. Indeed she and others have made the point very strongly, and so have the trade unions concerned. I should be deceiving the House and the workers, however, if I gave them the impression that it was within my power at this moment to safeguard jobs in a company that has taken action that, I am advised, is in breach of contract.
    Mr. Heseltine: The Secretary of State for Industry tells us that he first heard about the problem at the beginning of July. It is now the beginning of Novem-
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    ber. How many meetings has he held with the company, and on what dates?
    Mr. Benn: To give an accurate answer I should need to respond to a Written Question with all the details set out clearly. But the hon. Gentleman misheard me. I said that at the beginning of July there was no evidence of any problem whatever as far as this aircraft was concerned, and that the matter had been brought to my attention. I was in fact in receipt of a letter 48 hours before I was told that the board intended to terminate this contract, and I do not believe that with an aircraft that has such a long-term prospect it is sensible to seek to operate on that basis. Since then I have tried without success to bring about tripartite talks. I shall now have to proceed by a series of bilateral talks.

    Public Ownership
    Churchillasked the Secretary of State for Industry what plans the Government have for taking into public ownership industries or firms other than those listed in the Gracious Speech.
    Mr. Benn: The Government's proposals for the extension of public ownership were set out in the White Paper on The Regeneration of British Industry.
    Mr. Churchill: Can the Secretary of State say what estimates the Government have made of the cost of the proposals for public ownership announced by the Government?
    Mr. Benn: As the hon. Gentleman knows very well, there are two answers to his question. One is that it depends upon the pace at which public ownership proceeds. Secondly, it depends on the basis of compensation in the industries that are specifically to be acquired. He will also know, because it is well established, that the cost of acquiring an asset is not set against current taxation.
    Mr. Kilroy-Silk: Would my right hon. Friend also make an estimate of the cost of low investment, low productivity and low wages to the workers in the industries concerned? Would he also make an estimate of the cost to the country as a whole of the inefficiency of British industry?
    Mr. Benn: We are debating this matter all day today and I think that my hon. Friend is right in saying that the progressive relative industrial decline of this country as a manufacturing nation over the past 25 years has involved an appalling waste of resources and has led to much of the unemployment with which we have had to deal. One has to set all these costs one against another.

    Steel (Scotland)
    Mr. William Hamiltonasked the Secretary of State for Industry if he will make a statement on the future of the steel industry in Scotland.
    The Under-Secretary of State for Industry (Mr. Michael Meacher): The British Steel Corporation's development strategy provides for the investment of some £400 million in Scotland in the period to 1980. By the early 1980s the corporation expects public sector steelmaking capacity in Scotland to have risen by almost 30 per cent. from current levels.
    In Scotland as elsewhere the corporation's plans envisage the closure of its older and less economic plant. This aspect of its development strategy is being reviewed by my right hon. and noble Friend the Minister of State. Lord Beswick, who will be visiting Scotland next week to see the workers and consult those who would be affected. He will subsequently hold a tripartie discussion in London on the proposed Scottish closures with the corporation and the TUC Steel Committee, including representatives of the works affected.
    Mr. Hamilton: Is my hon. Friend aware that that will be received with some confidence in Scotland, but can he assure the House that, if there is a diminution in employment in the steel industry, compensating employment will be provided in other fields? Will he scotch, once and for all, the nonsense that was produced at the last election by certain opponents of the Government that after the election the Scottish steel industry would be finished?
    Mr. Meacher: On the second point, it is certainly untrue that the steel industry will be finished in Scotland as the result of this review, but rather the reverse. A very large amount of expenditure is being put into Scotland. I have already indi-
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    cated that it will be £400 million. A significant proportion of this, under the BSC's development strategy, has already been approved by the board and these investments are now under way, including a modern steel plant at Ravenscraig which, together with other plants that are planned, will push up steel capacity in Scotland from 3½ millions tons to 4½ million tons.
    With regard to employment, of course the point about the kind of review that we are undertaking is precisely to ensure that employment is safeguarded. This was not the case under the joint steering group conclusion. The whole point of this review is to ensure that employment is fully safeguarded in an improved and stronger steel industry or in viable alternatives.
    Mr. Teddy Taylor: Does the Minister agree that it would greatly assist the future of Scottish steel if the Government would adopt a system of uniform prices for coking coal throughout the United Kingdom? Does he further agree that it would be accepted as proof of the corporation's interest in regional development if it would consider following the practice of Government Departments and transferring its grotesque, large and growing headquarters from the centre of London?
    Mr. Meacher: I will certainly convey the hon. Gentleman's views on the second point to the British Steel Corporation, with which such a decision would lie, but the question of the price of coke and coal is a matter for my right hon. Friend the Secretary of State for Energy, and I will see that the hon. Gentleman's remarks are conveyed to him.
    Dr. Bray: Is my hon. Friend aware that the present market position is very buoyant as the result of North Sea developments and also as the result of the favourable prices in the British steel export market? Therefore, there is no need in the short term to talk of closures or redundancies in the Scottish steel industry. Will he ensure that there is no such talk next week?
    Mr. Meacher: The point of the steel review is to ensure that the steel industry in the long term is on a viable basis, and this requires some transmission from the open-hearth process to the basic

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    oxygen process. I agree that this should not, and will not, mean significant and substantial redundancies—far from it. This is a matter which is now being reviewed, not only because of the advantages to which my hon. Friend refers but because of a significant developments that are being brought into operation at Hunterston—for example, the direct reduction plant, the first in Great Britain—which should make a very considerable difference.
    Mr. Gordon Wilson: Will the hon. Gentleman give an undertaking that there will be no closure of the open-hearth furnaces at the Lanarkshire steelworks and, therefore, no redundancies until such time as the future investment takes place, so as to avoid loss of employment in the Scottish steel industry?
    Mr. Meacher: The whole point of the steel review is precisely to examine in the case of each site the way in which it is possible to provide for continued employment, whether in the steel industry or as the result of alternative investment. This is precisely the reason why my right hon. and noble Friend the Minister of State is visiting Scotland next week and will be holding tripartite discussions, not only with the TUC Steel Committee and the corporation but also with Members of Parliament. and he will be able to make representations himself, if he so wishes, or meet local representative groups.

    Regional Development
    Mr. Gwilym Robertsasked the Sectary of State for Industry what study he has made of the effectiveness of regional development policies; and what additional steps he plans to take to attract industry to areas like the Cannock Chase which have a high level of unemployment but lie outside development and intermediate areas.
    The Under-Secretary of State for Industry (Mr. Gregor Mackenzie): The effectiveness of regional policies is the subject of continuing study by my Department. It is the Government's policy to aim for a high level of activity and employment throughout the country.
    Mr. Roberts: Does my hon. Friend agree that, although the environmental advantages of having blanket-type regional policies are obvious, it is doubt-
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    ful whether the industrial advantages are as great? Does he not accept that they provide special problems for areas such as Cannock Chase, which, although they lie in the West Midlands, have more of the industrial characteristics of Durham or South Wales and which are treated in a Cinderella fashion? Will my hon. Friend look at this carefully to see whether additional help can be provided for such areas?
    Mr. Mackenzie: I do not feel that I can accept all that my hon. Friend says, no matter how sincerely he puts it, and I assure him that the concern expressed recently about the economic situation in the West Midlands has been noted. The Government will keep a close watch on the position, but there is no justification for a change in our regional policies at present.
    Mrs. Kellett-Bowman: Will the hon. Gentleman accept that the more he increases incentives in development and special development areas, the more difficult it becomes for intermediate and other areas closely adjoining those areas? Will he consider making the boundaries of such areas much more flexible than they are at present?
    Mr. Mackenzie: The boundaries are flexible. Only a few weeks ago we enlarged some of the boundaries, but should there be any difficulty in any area it will be noted by the Department and appropriate changes will be made.

    National Enterprise Board
    Mr. Loan Evansasked the Secretary of State for Industry when he will introduce legislation to establish a National Enterprise Board; and if he will make a statement.
    The Minister of State, Department of Industry (Mr. Eric S. Heffer): Provisions for the establishment of the National Enterprise Board will be included in the Industry Bill, which will be brought before Parliament as soon as possible in the current Session.
    Mr. Evans: My hon. Friend will realise that there will be general satisfaction in the Labour movement that this promise is to be fulfilled at an early date. In the extension of public ownership, will he ensure that it will not be confined to loss-making industries, such

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    as Rolls-Royce, as it has been in the past? Will he realise also that there is a feeling in the country that it would be far better for some of these industries to come under British control than be owned by foreign capital?
    Mr. Heffer: I am well aware of the general satisfaction in the Labour movement throughout the country. I have met with some of that satisfaction in my own area. With regard to my hon. Friend's second point, the White Paper clearly lays down that we shall be concerned not only with rescuing cases in bad financial difficulty but will enter the competitive profitable sphere.
    Mr. Tim Rentonasked the Secretary of State for Industry when he proposes to announce the composition of the board of the National Enterprise Board and its capital.
    Mr. Heffer: The financing of the National Enterprise Board will be dealt with in the Industry Bill which will be introduced as soon as possible in the current Session. An announcement about the composition of the board will be made at the appropriate time.
    Mr. Renton: Cannot the Minister and his colleagues see that the total vagueness of their proposals about the National Enterprise Board lies like a dark threat over private enterprise just at a time when its confidence needs to be restored? Will he assure us that men will be appointed to the board who are not amateurs in business and who have experience in running successful private companies, and that they will be given a free hand in maintaining both the profitability and the independence of the companies in which the NEB buys stakes?
    Mr. Heffer: Before hon. Members get too enthusiastic about the term "amateurs", may I say that there might be some argument as to exactly who is an amateur and who is a professional. But I inform hon. Gentlemen that the Government will appoint people best qualified by skill and experience to carry out the board's responsibilities.
    Mr. Newens: Will my hon. Friend bear in mind that in past nationalisation measures all too little consideration was given to giving adequate representation to the workers employed in industry?
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    Will he ensure in future measures that the employees have a much better crack of the whip?
    Mr. Heffer: I assure my hon. Friend that it is our intention to have trade unionists on the NEB. Provisions relating to the appointment of board members will be included in the Bill, but I must ask the House to await its introduction.
    Mr. Heseltine: Why is the Minister so coy on all the money questions? He tells the House that he has a figure in mind. Would it not be a great step towards the open government about which we have heard so much if he told us the figure?
    Mr. Heffer: The hon. Gentleman knows as well as I do why it is not possible at this juncture to indicate precisely what figure the Government have in mind.

    Hawker Siddeley
    Mr. Raphael Tuckasked the Secretary of State for Industry if he will seek to initiate legislation to take Hawker Siddeley into publish ownership as a matter of urgency.
    Mr. Michael McNair-Wilsonasked the Secretary of State for Industry if it is his intention to seek to nationalise Hawker Siddeley.
    Mr. Benn: Legislation to bring the aircraft industry into public ownership will be introduced as soon as is practicable.
    Mr. Tuck: Does my right hon. Friend realise that the HS146 is the only civil aircraft we have to offer in the 1980s and that if Sir Arnold Hall is allowed to wreck it, which he is now petulantly and spitefully trying to do, the long-term result will be a loss of 20,000 jobs, the finest jet design team in the country and perhaps hundreds of millions of pounds worth of exports of civil aircraft in the 1980s, while Britain will be forced to purchase civil aircraft from abroad? The British civil aerospace industry will therefore be dead, and when the Government take over the aircraft industry there will be nothing left to take over. Will my hon. Friend press again for urgent tripartite talks so that a national disaster of that sort does not arise?
    Mr. Benn: My hon. Friend, along with other hon. Members, has been making these points to me, as have the trade unions and representatives of the management side involved in the project. I have already answered questions on the HS146, but I admit that, if ever there was an example of the need for public ownership, it is clearly in the funding of long-term projects, as we were able to do, for example, with the RB211–524, only because Rolls-Royce had been brought into public ownership by the Conservative Government.
    Mr. McNair-Wilson: Is the Secretary of State aware that his answer could imply that he intends to nationalise Hawker Siddeley as such? I suspect that he intends to nationalise Hawker Siddeley Aviation. If so, will he say how he intends to buy the assets of the company? Will he do so with a cash offer, and who will value those assets?
    Mr. Benn: I understand the hon. Gentleman's question, but I must ask him to await the full statement that I shall make upon this matter, as I did with the shipbuilding industry in the summer.

    Shotton Steelworks
    Mr. Peter Morrisonasked the Secretary of State for Industry when he intends to make an announcement about the steel-making process at the Shotton Steelworks.
    Mr. Meacher: My right hon. and noble Friend the Minister of State has undertaken extensive consultations with the BSC, the TUC Steel Committee, the workers involved and other local interests about the future of iron- and steel-making and hot-rolling at Shotton. He is now carefully considering the many representations which have been made to him. I am well aware of the need to resolve the present uncertainty and an announcement will be made as soon as possible.
    Mr. Morrison: Is the hon. Gentleman aware that any further delay in the announcement on the future of the steelmaking process at Shotton is bound to have the effect of completely undermining the morale of those who work in that section of the steelworks? Is he also aware that certain supporters of the
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    Labour Party campaigned during the last General Election on the basis that a vote for Labour was a vote for the continuation of the steel-making process?
    Mr. Meacher: I agree that a decision needs to be made as early as possible, but the hon. Gentleman will agree that there are interconnections within the BSC strategy, and until the review is complete in that section which affects Shotton it would be premature to make a decision. I am sure that a decision will be made before long.
    I should remind the hon. Gentleman that, were it not for the fact that the Labour Government are carrying out this review, there would be a loss of 6,000 jobs in 1978–79 as a result of the closure of iron-and steel-making at Shotton. Even if there is some delay, the review will be in the long-term interests of Shotton.
    Mr. Skinner: Will my hon. Friend take a tip from me? Will he reflect upon the possibility that the steel industry, like the coal industry, nationalised as it is, could to some degree suffer the same fate as the coal industry if he pays too much attention to those well-paid economists who give him information on matters such as these? Will he bear in mind most of all that perhaps it would be as well to look at the lessons derived from the coal industry and save jobs in the steel industry rather than have to clamour for steel in two or three years' time?
    Mr. Meacher: I am always very happy to take tips, particularly successful ones, from my hon. Friend; he has been right on many occasions. I am sure he would agree that, whilst job preservation is a central priority of the Government, nevertheless we must have a steel industry which in the long term is viable. This does not mean making closures quickly and abruptly simply because market interests suggest that that would be the most profitable conclusion in the short term. We have to take account of the longer-term view and the need to compete successfully and viably, as we believe we can, with Continental, American and Japanese steel-making firms.
    Sir A. Meyer: Will the hon. Gentleman bear in mind and impress upon the British Steel Corporation that a decision on the future of steel-making at Shotton,

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    which may be marginal to the calculations of the British steel industry, is none the less absolutely essential and crucial to the whole economic future of North-East Wales?
    Mr. Meacher: We certainly do not take the view that a decision about Shotton is marginal to the British steel-making strategy, but I am rather surprised that the hon. Gentleman should raise that point since I believe he voted in favour of the previous Government's decisions to close Shotton. However, I can assure him that we shall be taking full account of the importance of Shotton, because there are a large number of jobs there and we are extremely conscious of that fact.
    Mr. Roy Hughes: May I remind the hon. Member for Flint, West (Sir A. Meyer) that it was the previous Government who accepted the proposals of the BSC to close large sections of the steel industry in Wales, including East Moors at Cardiff, and also to end steel-making at both Ebbw Vale and Shotton? Should we not expect a much better deal from this Labour Government and an early announcement?
    Mr. Meacher: My hon. Friend is entirely right that he should expect a better deal, and I can assure him that when the time comes he can confidently have that expectation. Certainly it was the previous Government who were going to do away with a large number of jobs, many—in fact, the great majority—of them concentrated in the development areas. We are determined that within the constraints of a viable industry we shall preserve and indeed, in many places, as I have indicated, expand the number of jobs.

    Nationalisation
    Mr. Teddy Taylorasked the Secretary of State for Industry what estimate he has made of the cost of the nationalisation measures outlined in the Gracious Speech.
    Mr. Heffer: The cost will depend on the basis of compensation. Estimates will of course be given when a Bill is brought before the House.
    Mr. Taylor: Is it not the height of irresponsibility for the Government to go ahead with major nationalisation measures without, apparently, having an approximate idea of what the whole package will cost? Does the Minister accept that, in difficult financial times, this is utter irresponsibility, and will he explain to my constituents how on earth it will help production or employment in Scotland to nationalise firms such as Scott Lithgow and Yarrow, which are profitable and efficient and have good labour relations?
    Mr. Heffer: I refute the charge that the Government are being irresponsible in putting forward their views. These views have been put forward at elections, and by a majority the electorate have accepted the views of the Labour Government.
    We have an assumption of the estimates, and these will be put before this House at the appropriate moment.
    Several Hon. Members rose—
    Mr. Speaker: Order. We are to debate this matter later today, and we must get on with Questions.

    Profitability
    Mr. Rostasked the Secretary of State for Industry when he expects to bring, forward proposals to protect the profitability of industry.
    Mr. Meacher: The Gracious Speech made clear the Government's wish to encourage vigorous and profitable private and public sectors of industry.
    Mr. Rost: Yes, but those are empty words. When will the Minister understand that, if he does not do something quickly to undo some of the damage that he and his Ministers have done to the profitability, employment and investment prospects of British industry, there will not be any British industry left to employ anybody or to make any profit? Or is the Minister deliberately stalling in the hope that he can turn every factory into a loss-making Communist co-operative?
    Mr. Meacher: The general question of financing industry's liquidity and the serious problem of profitability in industry are matters to which my right hon. Friend

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    the Chancellor of the Exchequer will address himself when he presents his Budget proposals. I cannot be expected to forecast what he will say, but one must take account of the real factors that have affected the financing of industry. These are a boom in the United States, Europe and Japan, world high interest rates and, above all, the problem for which Conservative Members were responsible when they were the Government, namely the excessive stimulation of the money supply and the inflationary problems that that has produced. Those are the basic problems that underlie the problems of profitability in industry.
    Mr. Ioan Evans: Does my hon. Friend realise that the profitability of British industry has been seriously affected by the three-day working week that was introduced by the Conservative Government? Will he do his utmost to help industry out of the difficulties that are still being experienced as a result of that situation?
    Mr. Meacher: It is true that after the Conservative Government had stimulated the money supply in order to float off an investment boom they then, with criminal irresponsibility, banged it on the head by imposing a three-day working week. The effects of that are still being registered and are still a main problem of industry's profitability.
    Mr. Heseltine: Will the Minister understand that the length of his answers in no way disguises the paucity of their content? The reality of the situation is that in their first Budget the Government which the hon. Gentleman represents took£1,400 million away from industry.
    Mr. Meacher: I have never thought that the poverty of the hon. Gentleman's questions was any reflection on his intellect. As to the changes that were made by my right hon. Friend the Chancellor in his first Budget, there were very good reasons why they were made at that time. The social contract had certain essential requirements, and at that time it was an opinion that was widely held. The changes made by the Chancellor were concerned largely with tightening the Price Code, the last quarterly report on which makes it clear that those changes have not been a main factor in reducing industry's profitability.

    Publicly Quoted Companies (Share Valuation)
    Mr. Stanleyasked the Secretary of State for Industry what will be the basis of valuation of shares in publicly quoted companies acquired by the National Enterprise Board and in companies made subject to nationalisation legislation.
    Mr. Heffer: I must ask the hon. Member to await the proposals that will be put before the House in due course.
    Mr. Stanley: Will the Minister at least give a minimum assurance that the valuation of the companies to be nationalised will not be lower than their market valuation on the date on which the nationalisation legislation is published?
    Mr. Heffer: I cannot add to what I have said. The proposals will be put before the House in due course.
    Mr. Molloy: However, there may rightly be discussions about compensation that might be paid to industries that are taken into public ownership. What is causing more concern among the British public is the vast sums of money being paid to industries which are about to become bankrupt, in order to save them, or which, when they have become bankrupt, come with their begging bowls to the Treasury to be bailed out. That aspect of the question needs emphasising, because it must be part and parcel of public ownership schemes that where public money is used there is a public return.
    Mr. Heffer: It has long been the Labour Party's view that when public money is given, in one form or another, there must be public accountability. I assure my hon. Friend that all the points he has made will be taken into consideration in discussions on this matter.
    Mr. Hordern: Is it not clear that the capital market is in no state to bear the amount of resources that will be required for the proposals for nationalisation? Is the Minister aware that the Government themselves cannot borrow on any long-term basis at less than 16 per cent.? How do the Government propose to finance the deficit that is bound to occur between the dividend received from the nationalised industries and the interest that will have to be paid on the money borrowed

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    to carry out the nationalisation proposals? How much will that deficit be, and how does the Minister propose that it will be funded?
    Mr. Heffer: The hon. Gentleman must await the proposals. I cannot go beyond that at this stage, but I shall make one comment on the hon. Gentleman's statement. From what he said, it would appear that the Opposition have never understood how the publicly-owned industries have been funded in the past. It has been done before, and it will be done again very much on the same lines.

    Industrial Development Certificates
    Mr. Hal Millerasked the Secretary of State for Industry whether he will raise the limit for industrial development certificates in the West Midlands.
    Mr. Heffer: No, Sir. The Government have strengthened the IDC control in order to ensure that the needs of the assisted areas receive first priority. Nevertheless, each application for an IDC is considered on its merits.
    Mr. Miller: Is the Minister aware that there is no prospect of assisting the regions if the industrial heart of the West Midlands is allowed to decline? I hope that I may draw the hon. Gentleman's attention to the report of the West Midlands County Council entitled "Time for Action".
    Mr. Heffer: I have seen that report. It is being studied by officials in my Department and we shall give a reasoned reply to it at the earliest possible moment. We in the Department understand very well that there are problems also within areas that are not part of the region, and we are considering the position.
    Mr. Golding: Is my hon. Friend aware that many Members on this side of the House are concerned about the change in IDC policy? Is he also aware that concern is expressed in the West Midlands that unemployment is rising? We fear that we shall face great problems if these matters are not dealt with shortly.
    Mr. Heffer: The Government have brought back the IDC levels to what they were between 1970 and 1972. We have not gone as far back as the position that existed prior to that date. We have
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    kept a moderate position between both levels, but we stress that our greatest concern about regional policy is to get various industries into the regions. On the other hand, we recognise that there are growing problems in areas like that of my hon. Friend, and we are taking them into consideration.
    Mr. Anthony Grant: If, as the Minister says, the object of the exercise is to encourage firms which have IDCs refused to go to the assisted areas, is he aware that all the evidence shows that the small firms do not move at all? Therefore, the purposes is defeated. Will the hon. Gentleman have a complete review made of this situation, not only in the West Midlands, but throughout the country?
    Mr. Heffer: I do not think that the hon. Gentleman is correct in saying that there is no evidence that firms which do not get IDCs do not go into the regions. If the hon. Gentleman knows of a particular case where there has been refusal of an IDC and therefore there has not been any development, will he raise the matter with me?

    Ship Repairing (Southampton)
    Mr. R. C. Mitchellasked the Secretary of State for Industry what consultations he has had with management and trade unions regarding the future development of the ship repair industry in Southampton.
    Mr. Meacher: None, Sir. My Department is arranging to hold discussions about the recent consultants' report on the industry with the major national bodies concerned with the ship repair industry, including employers and unions, and I would hope that local representatives would in the meantime await the outcome of these discussions.
    Mr. Mitchell: Will the Minister do his best to ensure that that both before and after nationalisation efficient shipyards in non-development areas are not penalised in favour of shipyards in development areas?
    Mr. Meacher: We shall certainly agree to that proposal. I am well aware that the PA Consultants' report did not take full account of the advantages of Southampton as one of the fastest growing

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    port areas where ship repairing can be expected to flourish. Unfortunately the figures taken were for 1972, when the passenger line trade had been declining and there had not yet been a recovery of the container trade.

    Telecommunications
    Mr. Goldingasked the Secretary of State for Industry what steps have been taken towards the formulation of a national telecommunications policy.
    Mr. Gregor Mackenzie: The provision of telecommunications services is primarily a matter for the Post Office. I have asked for its views on some major issues.
    Mr. Golding: While I welcome that answer and am glad that progress is being made, may I stress that telecommunications is wider than some aspects of the Post Office and that it is important to have a national telecommunications policy which embraces all departmental responsibility?
    Mr. Mackenzie: I think my hon. Friend knows of the concern I have had about this for a very long time. The Post Office has, as my hon. Friend knows, long-term plans which envisage a national integrated system, and the aim is to provide all the services according to demand.
    Mr. Lane: Will the Minister keep in mind that one of the most successful and enterprising makers of telecommunications equipment is in my constituency and is a subsidiary of a multinational company? Will the Labour Party cease its vendetta against multinational companies, which is bound in the long run—and perhaps also in the short run—to discourage further investment in this country?
    Mr. Mackenzie: I am sorry, but I do not know the company to which the hon. Gentleman alludes. If he cares to tell me which it is, I shall certainly give consideration to his point of view.

    Shipbuilding
    Mr. Beithasked the Secretary of State for Industry whether his proposals for the nationalisation of the shipbuilding industry extend to small shipyards
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    such as the Berwick-upon-Tweed shipyard.
    Mr. Meacher: The proposals, which were outlined in the discussion paper referred to in my right hon. Friend's statement on 31st July, do not extend to small shipyards such as that at Berwick-upon-Tweed.
    Mr. Beith: That clarification is welcome, but does not the Minister agree that the ending of uncertainty in large as well as small shipyards would be expedited if he clarified the rest of his intentions by publishing a list of the shipbuilding firms which he intends to nationalise?
    Mr. Meacher: My right hon. Friend has already published in the consultative document a list of 13 companies which are shipbuilders, ship repairers and manufacturers of slow-speed diesel engines. The reason why the decision is not yet definite is that we are having consultations with the SRNA on the employers' side and the CSEU on the union side, and until those consultations are completed we do not wish to be absolutely watertight about the list; but it may be assumed that that is approximately correct.

    Yorkshire
    Mr. Duffyasked the Secretary of State for Industry how many new industrial projects were started in south Yorkshire and west Yorkshire, respectively, during the last two years; and whether he will make a statement on the future of Yorkshire industry.
    Mr. Gregor Mackenzie: I am sorry that the information which my hon. Friend requests on this is not available.
    Mr. Duffy: Will the Minister take it that the information which he says is not available has been published, and is he aware that my purpose in raising the Question is to ask whether he can explain the disturbing discrepancy in the figures that have been published? They show a much greater number of starts on industrial projects in west Yorkshire than in south Yorkshire. In view of the considerable spread of private industry in south as well as west Yorkshire, can the Minister offer an explanation?
    Mr. Mackenzie: The only answer to my hon. Friend is that someone will

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    answer some of my questions when I get back to the office.

    North-East
    Mr. Blenkinsopasked the Secretary of State for Industry how many applications for industrial development in the North-East have been approved during the quarter ended 30th September as compared with the previous quarters of this year; and if he will make a statement on the prospects for industrial development in the North-East.
    Mr. Gregor Mackenzie: Industrial development certificates have not been required in northern England since July 1972 when development and special development areas were excluded from the operation of the IDC control. Offers of selective financial assistance under the Industry Act 1972 in the first three quarters of 1974 in chronological order were 35, 32 and 28 and were expected to provide 3,018, 2,070 and 2,633 jobs respectively.
    The measures announced in the Gracious Speech for the regeneration of British industry will improve the prospects of industrial development in the North-East.
    Mr. Blenkinsop: Is my hon. Friend aware of the anxiety in the North-East about the way in which the numbers of inquiries about industrial developments have been running down, particularly in the past few months? Will he note particularly that there have been heavy redundancies in the South Tyneside area, and will he help in getting ahead with the reclamation of a big industrial site on Tyneside?
    Mr. Mackenzie: We have always been very concerned about industry in the North-East. I think my hon. Friend knows that my first visit was to the North-East, and he can be assured that anything that the Department can do to help will certainly be done.

    Steel Industry (Review)
    Mr. Michael Marshallasked the Secretary of State for Industry when he expects to make an announcement of his policy regarding the British Steel Corporation's closure review; and if he will make a statement.
    Mr. Lambieasked the Secretary of State for Industry when he will complete his review of the British Steel Corporation's 10 years' strategic plan; and if he will make a statement.
    Mr. Benn: My right hon. and noble Friend the Minister of State is now carefully considering the many representations he has received in the course of his consultations on the proposed closures at Ebbw Vale, East Moors, Hartlepools steel-making, Shelton and Shotton arising out of the BSC's development plans. He will be visiting Scotland next week to see nine plants likely to be affected there and to hold similar discussions. I am well aware of the need to resolve the present uncertainty and an announcement will be made as soon as possible.
    Mr. Marshall: Is the right hon. Gentleman aware that the Chairman of the British Steel Corporation recently estimated that for each month of the delay in finalising the closure review the increase in the cost investment programme went up by 1½ per cent. to 2 per cent.? Is he further aware that in the case of Port Talbot, assuming a capital investment of about £500 million, this means that we are now seeing about £90 million added to that bill since February? Finally, will the right hon. Gentleman understand that this kind of delay and situation bodes ill for the future of the shipbuilding and aircraft industries?
    Mr. Benn: I appreciate what the hon. Gentleman has said. There are, in fact, no major investment proposals now before us. But I would put this to him for his consideration. If there had been proper consultation and disclosure at the time the BSC development plans were first produced, all these reviews, taking account of the social, community and human as well as technical factors, would have been taken into account without its being necessary for us to undertake the reviews at this stage. I make no apology whatever for looking very carefully, after full consultation, into the closures that are implicit in the original BSC plans.
    Mr. Lambie: I thank my right hon. Friend for his reply. However, I am more concerned with the future plans of the British Steel Corporation. Would my right hon. Friend state that the Government accept former Labour Party policy

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    in that we should be considering a United Kingdom annual production steel target of about 44 million tons and not the 33 million tons announced by the corporation? Is not this the time for the Government to be considering breaking up the corporation, giving Dr. Finniston the kick and setting up a Scottish steel corporation in its place?
    Mr. Benn: I confess to my hon. Friend that I am not persuaded of his latter point, but I made clear on my first meeting with Dr. Finniston after the election that, as far as the Government were concerned, there was no upper limit on his steel targeting if he thought it right to bring forward alternative proposals. Therefore, on the first part of my hon. Friend's question, the matter was dealt with by me some months ago.

    Northern Region
    Mr. Radiceasked the Secretary of State for Industry what steps he is taking to bring down the unemployment figures in the Northern Region.
    Mr. Gregor Mackenzie: The doubling of the regional employment premium, announced in the Chancellor's statement on 22nd July, was intended to help areas such as the Northern Region with unacceptably high rates of unemployment. We shall be keeping a careful watch on the situation.
    Mr. Radice: Does my hon. Friend realise that the increased unemployment level in the Northern Region is the highest in the United Kingdom outside Northern Ireland? Is he also aware that hon. Members representing constituencies in the Northern Region, many of whom were returned with very large Labour majorities, were not elected to preside over high and rapidly rising unemployment? What do the Government intend to do?
    Mr. Mackenzie: Let me first congratulate my hon. Friend and others from the area on their return to this House. The "Regeneration of British Industry" White Paper was published by the Government before the election. Many of its provisions exercised our minds during the election campaign and will be the means by which we tackle the problem.
    Mr. Marten: Does the hon. Gentleman remember 1971 and 1972, when we
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    were told that as a result of going into the Common Market these matters would be very different? What has happened to the Common Market regional development policies? Have they got lost?
    Mr. Mackenzie: The traditional reply is to tell an hon. Member that he must ask the Foreign Secretary. In this case the hon. Member for Banbury (Mr. Marten) must ask his right hon. Friend the Leader of the Opposition.

  CONTEMPT OF COURT
  Mr. Cryerasked the Attorney-General if he will introduce legislation defining the position of the Press with regard to contempt of court.
  The Attorney-General (Mr. S. C. Silkin): Legislation in this field is a matter for my noble Friend. He will wish to hear the views of the Press and the public on the Phillimore Report on Contempt of Court before deciding what, if any, changes should be made in the law. Publication of the report has been seriously delayed by printing difficulties, but it is hoped to publish it before the House rises for Christmas.
  Mr. Cryer: Will my right hon. and learned Friend accept that, irrespective of the Phillimore Report, legislation is urgently required to define the position of the Press, because the recent decision has curbed the right of free expression in the Press, which is very important? Does he not accept that where the courts are asked to make decisions this tends to work in favour of those with money because of the expense of going to the courts? Does he not accept that the recent appalling judicial decision in the case of Eric Tomlinson and Des Warren indicates that the courts are not the best place to go to when decisions affecting our basic freedoms are concerned?
  The Attorney-General: It is much better that the general question of contempt of court should be dealt with as a whole after publication of the report, and after the Press, the public and the House have had the opportunity of examining the report and, possibly, of debating it.
  As regards the question of means, subject to legal aid it is a truism that those who have greater means are more easily able to afford court proceedings. The

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  whole purpose of legal aid is to try to equalise the burden. With regard to the third point which my hon. Friend made, I will certainly look at the case which he mentioned.
  Mr. Buck: Can the right hon. and learned Gentleman say why the Phillimore Report has not been published when so many reports of far lesser importance were published immediately before the election?
  The Attorney-General: As I explained in my original answer, publication of the report has been seriously delayed by printing difficulties. I certainly hope that it will be published before Christmas and that the House will have an opportunity to debate it.
  Mr. Christopher Price: Is my right hon. and learned Friend aware that the case involving Paul Foot has caused many journalists serious concern since somebody can be sentenced by the court for no known statutory offence? When will he bring forward legislation to clear up this whole area and define in black and white what journalists are and are not allowed to report?
  The Attorney-General: The fact is that, until Mr. Foot issued his challenge to the existing practice, journalists had always taken and supported the view that the names of alleged victims of blackmail ought not to be disclosed, for obvious reasons. I can assure my hon. Friend that all the factors in this not easy matter, including the boundaries within which names should be disclosed in court—because there are other possible cases where it may be an advantage that they should not be disclosed—will be under discussion in the light of the Phillimore Report.
  Sir D. Walker-Smith: Can the right hon. and learned Gentleman say at what date the Phillimore Report was received for the purpose of printing?
  The Attorney-General: I can say that I received it somewhere about the month of August. I cannot say when it was received by my noble Friend.

  RHODESIA
  Mr. Tom Kingasked the Attorney-General how many prosecutions have
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  been brought against British citizens in respect of articles they have written about Rhodesia on the grounds that they are encouraging emigration to that country.
  The Attorney-General: None.
  Mr. King: Does not the right hon. and learned Gentleman agree that, in protecting the freedom of the Press, it is vital to ensure that this rather obscure Article 14 of the Southern Rhodesia (United Nations) No. 2 Order is not proceeded with in any petty instance but only in serious occurrences?
  The right hon. and learned Gentleman will no doubt be aware of the situation of my constituent who—together with the editor of the Western Daily Press and the vicar of North Petherton, in my constituency—in his capacity as the editor of the parish magazine, now finds himself under this obscure provision liable to prosecution for what in no reasonable circumstances could be considered a serious offence.
  The Attorney-General: I certainly take the view that the infringement of the sanctions order is at least as important a matter as any other infringement of an order. The seriousness with which I treat this matter is shown by the fact that, as I told the hon. Gentleman in my reply to his letter, I have sought counsel's opinion about the article.

SOUTH AFRICA (DEFENCE ARRANGEMENTS)
Mr. Peter Walker (by Private Notice)asked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement upon any changes he is contemplating in our defence arrangements with South Africa.
The Secretary of State for Foreign and Commonwealth Affairs (Mr. James Callaghan): I informed the House last Wednesday that the Government were reviewing the naval arrangements arising from the Simonstown Agreement, taking into account both its military value and also wider British interests throughout Africa. The House will be informed when the review is completed.
Mr. Walker: Does the right hon. Gentleman agree that the recent joint

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naval exercises were beneficial both to the Royal Navy and to general defence arrangements in the South Atlantic? Can he confirm that, since the 1964–70 Labour Government reviewed the Simonstown Agreement, the activities of the Soviet navy have increased substantially in the South Atlantic and the Indian Ocean? Will the Foreign Secretary assure the House that the three Ministers who were rebuked by the Prime Minister last week will not be having their own way next week?
Mr. Callaghan: There is no doubt that the situation has changed drastically since 1955. There were then only five independent countries in Africa. Those apart, the ports of the whole continent were controlled by Western Powers. Now there are some 42 independent countries in Africa.
As for activities in the Indian Ocean, there has been an expansion by the Soviet, French and American navies. All these factors must be taken into account.
Mr. Kinnock: Will my right hon. Friend take note of the fact that the last major act of piracy on the high seas was committed by the United States of America against Cuba at the beginning of the 1960s, that in the estimates of most experts the likelihood of Russian interference with our trade routes is marginal, and that a large number of people of liberal opinion throughout the country and the rest of the world take heart from the assurance given by my right hon. Friend in Cardiff a week last Friday that if our relationships through Simonstown were only a matter of marginal military importance, the likelihood is that the agreement would wither on the vine?
Mr. Callaghan: I am grateful to my hon. Friend for studying my speeches with such care. This is not a case for simplistic solutions, to use a phrase of the right hon. Member for Worcester (Mr. Peter Walker) yesterday. There is a balance of interests and concern—interests to this country and concern to other countries—and, of course, in our attitude to South Africa in these matters. Co-operation with that country would be much easier if her domestic policies were different.
Mr. David Steel: Will the right hon. Gentleman confirm that there are matters wider than simply British interests at
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stake? However, if we are to confine the discussion to that aspect, will the right hon. Gentleman confirm also that the balance of British interests is now substantial in Zambia, Nigeria and other countries?
Mr. Callaghan: There are much wider interests at stake here, and our interests have changed since the 1955 agreement was entered into. That is the case for the review.
Mr. Alan Lee Williams: Is my right hon. Friend aware that a number of us are deeply disturbed by the increased presence of the Russian fleet in warm waters but nevertheless do not altogether accept the strategic arguments for Simonstown? Will my right hon. Friend agree to look at this matter more in the context of some of our NATO partners and not necessarily in the context of Britain alone?
Mr. Callaghan: NATO has reached no conclusions about this. Its area of activities does not extend in this direction. This is a matter that we shall discuss with the South African Government, because in our view there are many aspects that need changing, and also with our other allies, to see what the final answer should be. But I do not intend to announce any conclusion until one is reached.
Sir F. Bennett: Can the right hon. Gentleman indicate whether in his opinion and that of his colleagues the task of maintaining the Beira blockade would be made easier or more difficult, cheaper or more expensive, by the removal of the Simonstown facilities?
Mr. Callaghan: Probably it would be marginally more expensive. At the moment we use facilities in Simonstown to refuel ships. If the agreement is brought to an end, there is no reason, subject to the agreement of the South African Government, why a British ship should not call in at Simonstown in the future as it has in the past and as HMS "Llandaff" will during the next two or three weeks. That is different from having a defence agreement with South Africa on this issue. But in the end we shall have to weigh the marginal increase in cost against the very changed circumstances from the time that the Simonstown Agreement was concluded. In my

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view, the balance of advantage has changed substantially.
Mr. Hooley: Is my right hon. Friend aware that for about six months we have been receiving the same argument in relation to defence, Namibia and other South African matters—to the effect that the matter is under review? Although my right hon. Friend's Department has been heavily engaged in the past six months in matters concerning Cyprus and the Common Market, our interests and those of others in Southern Africa are as vital and urgent there as elsewhere. Cannot we have some movement on this issue?
Mr. Callaghan: There is considerable movement on this issue. The question of arms to South Africa has been settled. As for the general question of the defence review, at Question Time last Thursday my right hon. Friend the Leader of the House said that he hoped that a statement would be made in the third week of November.
Mr. Wood: Whatever the events and pressures that have led to the present situation, does the right hon. Gentleman realise that abrogation would cause a very serious vacuum in the South Indian Ocean and that a number of nations are only too ready to fill it?
Mr. Callaghan: I am not aware of either. I have read reports in the newspapers—but I do not always believe everything that I see in the newspapers—about nations rushing to fill the vacuum. As regards the first part of the right hon. Gentleman's question, I do not necessarily accept that, either.

EUROPEAN ECONOMIC COMMUNITY (BUSINESS)
The Minister of State for Foreign and Commonwealth Affairs (Mr. Roy Hattersley): With your permission, Mr. Speaker, I will make a statement about business to he taken in the Council of Ministers of the European Community during November.
Written forecasts for September and October were deposited at the beginning of each month in the normal way. The monthly written forecast for November was deposited on 1st November. At
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present seven meetings of the Council of Ministers are proposed for November. Environment Ministers will meet on the 7th; Foreign Ministers on the 12th and the 13th; Finance Ministers on the 18th; Agriculture Ministers on the 18th and the 19th; Justice Ministers on the 26th; Budget Ministers on the 28th; and Development Ministers on a date yet to be set.
The Foreign Ministers' Council will discuss the report which they asked the Commission to make in response to the Foreign Secretary's statement of 4th June about the impact of the Community Budget on the United Kingdom. They will also consider the Community's generalised scheme of preferences for 1975, the régime governing commercial relations with State-trading countries in 1975 and relations with Canada. The Council will also examine progress in the negotiations for a convention of association under Protocol 22 of the Treaty of Accession, including the arrangements for imports of sugar from certain developing, mainly Commonwealth, countries.
The Finance Ministers, in addition to their usual monthly discussions of the economic situation in the Community, are expected to give further consideration to the proposed joint Community borrowing scheme and possible financial assistance to Italy. The Budget Council will consider the European Assembly's observations on the Community's draft budget for 1975.
The agenda for the Agriculture Ministers' meeting is still to be prepared, but the Council is likely to continue consideration of the future Community sugar beet régime and arrangements for sugar imports under Protocol 22; and to discuss proposals to increase import prices of New Zealand butter and cheese under provisions of Protocol 18 of the Treaty of Accession.
Development Ministers will discuss future commission proposals for the overall framework of future Community development policy. The Environment Ministers will discuss proposals to implement part of the environment action programme.
The Council and Conference of EEC Ministers of Justice will take stock of the work on company law, the mutual recognition and enforcement of judgments, the recognition of the status of companies and

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other legal persons, the assimilation of private international law rules, the strengthening of co-operation in taking legal action following infringement of Community economic law and the liability of EEC officials in respect of criminal law.
Mr. Rippon: I thank the hon. Gentleman for his helpful business statement. It seems to cover almost everything except the future of the regional fund. Can he say when that is likely to be discussed again? Will he recall that the Foreign Secretary said last Wednesday that the aim was to bring the so-called renegotiations to an end by the spring? Has any timetable been agreed with our partners in the Community? The Foreign Secretary also said that the White Paper on progress would shortly be avalaible. Can the hon. Gentleman say whether this will be before Christmas? One appreciates that the Government have made no decision of any kind in the matter, but would they consider issuing at the same time as the White Paper a Green Paper setting out the place of the referendum in the British constitution?
Mr. Hattersley: Certainly a White Paper will be available before Christmas. I cannot give the right hon. and learned Gentleman the exact date, he will understand, but it will be available in the very near future. As for discussions on regional policy and the regional fund, no Council of Ministers expects to discuss it at that level during the next month, but work is going on at official level, which I can assure the right hon. and learned Gentleman is intended to secure our renegotiation aims of enabling the British Government to apply those regional policies that they think best for Great Britain. As for the renegotiation timetable, it is impossible to give a date within the year. The Labour Party manifesto and my right hon. Friend confirmed that the policy of the Government was to take a decision within a year. The important date is October 1975, when the British people will decide how they see the future of this country.
Mr. Thorpe: Is the Minister aware that we are delighted to see all this good, splendid European Community work going on and that we wish the Ministers well? Is he further aware that some of my colleagues who visited Brussels recently were disturbed to hear from
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M. Lardinois that no application had been made by the Government for a temporary guaranteed price for beef pending the renegotiation of the CAP? Since the agricultural agenda is still being negotiated, would it not be a good thing to put that on the agenda for 18th or 19th November?
Mr. Hattersley: My right hon. Friend the Minister of Agriculture made it clear in the House on Wednesday what our policy was towards the new beef régime and our intentions for getting new arrangements. I have no doubt that he will continue to pursue that at the Council of Ministers next month.
Mr. Buchan: Would my hon. Friend confirm that the decision made about sugar has still to be confirmed by the meeting of Foreign Ministers? Would he also assure us that, before representatives from this country go to that meeting, they will listen to those of us who believe that we understand the deal rather better than may have appeared in recent weeks, because some of us believe that it is a thoroughly bad deal and not in the interests of this country?
Mr. Hattersley: The Minister of Agriculture told the House last week that he regarded it as a good deal, and that is the deal that he accepted on behalf of the Government through the Council of Agriculture Ministers. There are still some details to be confirmed and some details to be prepared and agreed. My right hon. Friend will pursue these during the rest of the month, but he made the Government's case absolutely clear last week and I have nothing to add to what he then said.
Mr. John Davies: Unless I mistook him, the Minister made no reference to further discussions this month on energy, or to those concerned with the meeting between the Community and the Arab States. Can he say when they are likely to come forward again, particularly in view of the extreme urgency of the energy matters?
Mr. Hattersley: It is unlikely that energy matters will be discussed in great detail at the Foreign Ministers' meeting or meetings over the three days of this month. As for future plans, it is impossible to anticipate what will be discussed

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in December, after a number of important initiatives in Europe have been mounted.
Mr. English: Does the Minister recollect that, in the last Parliament, in answer to a question from me, he said that the Government would answer the Council of Ministers' questionnaire on political union? Will he tell us which system of direct election we favoured in the answer to that questionnaire?
Mr. Hattersley: As I recall it, I told my hon. Friend that we would eventually answer that questionnaire but I could advise him of neither the date on which the answer would be given nor, when it was given, when it would be published. The situation has not changed since I answered the last question.
Mr. Powell: Can the Minister state, or if it is inconvenient to do so verbally would he put a statement in the Library showing, which, if any, of the items on the agenda are matters which have been put forward by the Scrutiny Committee for discussion and decision in this House? Will he in any case renew the undertaking that Her Majesty's Ministers will not commit themselves on any such matter prior to such decision?
Mr. Hattersley: The undertaking which was given during the right hon. Gentleman's absence about the Government's attitude to the Scrutiny Committee of course holds good. That is that the Scrutiny Committee exists to fill the vacuum which might exist in this House about Community legislation and to ensure that the rights of this House are preserved so far as Community legislation and related matters are concerned. The assurances given by the Foreign Secretary and by the Leader of the House of course continue from one Parliament to the next. As for which of the matters I have announced today are decided by the Scrutiny Committee as appropriate for debate, that might be a long list. Either I or the Chairman of the Scrutiny Committee, when the Committee is formed and the chairman appointed, will, I am sure, be prepared to get in touch with the right hon. Gentleman.
But I assure the right hon. Gentleman —I think that the Chairman of the "old" Scrutiny Committee, if I may so describe it, will confirm my judgment—that the Government are anxious to ensure that,
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wherever possible—that is, virtually on every occasion—the Government will wait to take decisions in the Community until the Scrutiny Committee has examined the proposal and the House has had the opportunity to debate it. That is not always the case; sometimes, for instance with agriculture, there is fast-moving business in which the interests of this country require a quick decision. But the Government are determined that the Scrutiny Committee, and through it this House, should have their proper rights over Community legislation.
Mr. John Mendelson: With reference to the House having an opportunity to debate these matters, and referring back to the contribution of my hon. Friend the Member for Renfrewshire, West (Mr. Buchan), who had considerable inside experience of these matters in the immediate past, would the Minister agree that the sugar agreement proposed is of such long-term and far-reaching proportions that, if the Australian offer is not further discussed and if the House never has an opportunity to weigh the two proposed agreements in the balance, it will be impossible for five years to return to the Australian proposals? Is it not therefore essential, if he wants the House to debate these matters before final judgments are made, that the Government should come to this House and allow a debate on the proposed sugar agreement before the Minister of Agriculture commits this country for five years?
Mr. Hattersley: My hon. Friend must not tempt me to argue the merits of the Community proposals in a business statement, which simply describes what the Councils of Ministers will be discussing in the forthcoming month, nor must he tempt me to re-examine and redefine the terms of the Scrutiny Committee, which is not—if I may use a contentious adjective —a monitoring committee to examine the Government's attitude towards the Community as a whole. It is a Committee which examines the legislative proposals that come from Brussels and Luxembourg on legislative matters. If my hon. Friend simply wants a debate on the sugar arrangement proposed by my right hon. Friend, he should propose that to my right hon. Friend the Leader of the House, not through me during discussion of a business statement on EEC matters.
Mr. Prior: With reference to the Minister's previous answer about fast-moving business in agriculture needing quick decisions, can he now ensure that the Minister of Agriculture has placed on the agenda the need for the immediate introduction of either a guarantee for beef or, failing that, putting intervention into the market straight away, as farmers and housewives in Britain cannot wait until March for this to happen?
Mr. Hattersley: As I said earlier, and as my right hon. Friend said last week, I have no doubt that the sort of policy which my right hon. Friend believes is necessary to improve the beef régime within the Community will be discussed at the Council of Ministers' meeting.
Mr. Frank Allaun: Did not the Minister say that the date on which the British people will decide will be October 1975? Is not that rather different from saying, as has been said up to now, that we would decide within 12 months? Is he aware that many of us on the Government side of the House see no reason to wait yet another 12 months before a decision is taken, particularly as negotiations started after the General Election of February of this year?
Mr. Hattersley: If it were different from what has been said up to now, it certainly was not intended to be, but in case my hon. Friend still has doubts let me assure him that all of us believe that there is every case for concluding these renegotiations as speedily as possible. My hon. Friend and I want it; I believe the Labour Party wants it; it is in the interests of Great Britain; and I am sure that the EEC wants it. My right hon. Friend's policy is to conclude the ministerial stage of the renegotiations as quickly as possible, and then for the matter to be put to the British people at the first opportunity.
Mr. Tugendhat: Does not the Minister agree that he has skated rather quickly over the business of Community countries borrowing money from Arab States? Does he agree that this matter is more important than the sugar agreement, both in terms of binding this country into the Community and in terms of foreign policy in our dealings with the Arab countries? When does he expect that the House will have an opportunity to discuss the matter? Can he say what
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the attitude of the Chancellor of the Exchequer will be during the discussions with the Community?
Mr. Hattersley: If I may paraphrase an answer that is given mostly on Thursday afternoons, that is not a subject which is to be discussed next month.
Mr. Spearing: Will my hon. Friend confirm that it would be possible for the Foreign Secretary to raise the question of the 1·4 million tons of cane suger and that the standing orders of the Council of Foreign Ministers do not prevent that? Is he aware that the bankable assurances that we were given by the right hon. and learned Member for Hexham (Mr. Rippon) have consistently bounced and that unless they are cashed soon future supplies for the housewife, production from the Third World and the interests of the sugar refining population will be put at risk?
Mr. Hattersley: It is certainly possible for the Foreign Secretary to raise the matter of the 1·4 million tons guarantee at the Ministers' meeting, and I assure my hon. Friend that he will do so. I shall not be tempted into discussing the merits of the matter as that is not my rôle this afternoon.
Mr. Hurd: Can the Minister assure us that the Government are pressing hard for the provision of a Community regional fund? Some of us are a little surprised about the lassitude of his right hon. Friend on this subject since February. Is not that particularly surprising now, when the prospect in our regions is of rising unemployment?
Mr. Hattersley: I fear that the hon. Gentleman must be getting reports from Brussels which are, shall I say, coloured in one way or another. My right hon. Friend and the entire Government are determined that there shall be a regional policy in the Community if we remain within it—[HON. MEMBERS: "Oh."]—which meets the needs of British industry and the British people. My right hon. Friend and the entire Government are pressing towards that end. That is our duty and obligation.
Mr. Jay: May we have a much fuller statement than we have yet had by the Government to the House of the terms of the sugar agreement, including the details of the offer made by Australia?
Mr. Hattersley: The Leader of the House, who is at present on the Front Bench, has, I am sure, noted that request and will pass it to my right hon. Friend the Minister of Agriculture. This is essentially not a matter for me but for my right hon. Friend.
Mr. Marten: Before 18th November will the Minister tell his right hon. Friend the Minister of Agriculture of the deep concern of all parts of the House at the shocking delay in coming to an agreement about sugar from the developing countries? There is great anxiety here and in the developing countries that the Common Market must get on with this matter.
Mr. Hattersley: I am sure that we are as aware as is the hon. Gentleman of the need for confirming the 1·4 million tons arrangement and undertaking. The last thing that I want to do on these occasions is to make political points, but I hope that the hon. Gentleman will understand that in the earlier discussions on this matter we discovered that the "bankable assurances" for 1·4 million tons were neither as bankable nor as firm as we had been led to believe. We are beginning from a first-base position on the matter. We shall continue to press it and to insist that the 1·4 million tons is part of Community policy.
Mr. Skinner: Will my hon. Friend answer the question why it is necessary to send another batch of legislation affecting the Common Market upstairs, rather than have it debated in the Chamber? When he also says, almost in the same breath, that a decision will be made by the British people very shortly, and especially as the House is generally noted for taking a "wait-and-see" policy before it takes rash decisions, why has the House taken a rash decision to shove all this legislation upstairs in this instance?
Mr. Hattersley: I understand that no firm decision has yet been made on the point that my hon. Friend raises. The questions raised about the procedures of the House are essentially not for me but for my right hon. Friend the Leader of the House. I hope that my hon. Friend will forgive me for saying so, but he, like me, rejoiced at the size and scope of the Queen's Speech and at the legislative timetable that we face over the next 12 months, and, therefore, we must face some of the penalties involved.
Mr. Crouch: The Minister has told us of an immense amount of business activity emanating from Brussels at the Council of Ministers. Does he not feel that he is less than adequately served by his party, which has refused to support him and the Government by sending a delegation to the European Parliament?
Mr. Hattersley: I have made my position on this matter very clear on previous occasions, and I am happy to repeat it. In previous years I have voted in private meetings for participation by the Labour Party in that assembly, but now I believe that were we to take part in that assembly it would make our renegotiations, which are serious and firm, a good deal less than that. I am sure that we are right to maintain our position until we have determined whether we should or should not remain in the Community.
May I also take this opportunity of correcting an error I made in reply to an earlier question. I told the hon. Member for City of London and Westminster, South (Mr. Tugendhat) that the Finance Ministers would not discuss the Arab loan. I think that the hon. Gentleman regretted that that did not show appropriate urgency. I hope that he will forgive my error in saying that they would not discuss it when in fact they will, and will congratulate them on showing urgency, which I did not represent.
Mr. Molloy: Notwithstanding my hon. Friend's ingenuity, the original statement that he had to make this afternoon was frightening in so far as it was almost indicative of a bureaucratic nightmare. If what he has had to do today is a sample of the sort of thing that we shall have if we are silly enough to stay in the Common Market, does not that lead him to the view that the sooner we get out the better? Will my hon. Friend convey to my right hon. Friend the Minister of Agriculture the grave feeling in the House about the current situation and the fact that it may get worse unless we are provided with an opportunity to debate what he apparently concluded in Brussels without the permission of the House of Commons?
Mr. Hattersley: I think that the feelings of the House about the sugar deal

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are well documented, and I am sure that my right hon. Friend the Minister of Agriculture will take note of them. My hon. Friend the Member for Ealing, North (Mr. Molloy) referred to what I described in my statement as a "bureaucratic nightmare". In a peculiar way, what I described is a democratic nightmare, in that elected representatives, members of Governments of the Community—will go through, in great detail, decisions which, frankly, the Government and, perhaps, the Parliament of this country would not feel were right for consideration by elected representatives. In fact, the process I have covered today is essentially democratic.

SIMONSTOWN AGREEMENT
Mr. Ian Lloyd: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration; namely,
"the reported abrogation of the Simonstown Agreement."
Anyone seeking leave to move the Adjournment of the House under Standing Order No. 9 must be acutely aware that the procedural needle through which the subject must pass has, quite rightly, a narrow eye and that some very large camels have attempted to pass through it. They usually fail because one of the three dimensions fails to fit Standing Order No. 9. I submit, however, Mr. Speaker, that all three criteria are fully satisfied by the case I wish to put to you.
First, the matter must be specific, and this one is specific, in my view. The Government's decision, although no firm statement has been made, was widely reported on television and in the Press during the weekend. If the news has come from a leak—and there is no official statement—then, like any significant radioactive leak, it has set all the geiger counters clicking from one end of NATO to the other.
There are three reasons for the importance of the matter. First, such a decision, whatever view one may take of its merits—and I take none—would affect the strategic disposition of Her Majesty's
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Forces in peace or war and the repercussions would be far-reaching.
Secondly, the decision would affect the whole balance of our economic interests in Africa, whatever view one takes of the relationship between our interests in Southern Africa and those in other parts of Africa, euphemistically described as "emancipated States". Thirdly, there is overwhelming evidence of a dramatic and continuing change in the dispositions of NATO and Soviet bloc naval forces in the Indian Ocean, and any British decision which affects that balance must be, as the Foreign Secretary himself admitted today, of the utmost importance.
I base my case for urgency on two arguments. The first is the widespread evidence that a vital decision either has been taken—and the right hon. Gentleman did not dispute this—or is about to be taken by Her Majesty's Government without Parliament having had any significant opportunity to consider its merits. If the decision has been taken, it is a national scandal, and the Government should be called to account immediately. If it is about to be taken, Parliament should be consulted at once and the Government should publish their criteria and evidence and he prepared to defend their judgment in the House. This is too important a matter to be swept under any procedural carpet or left to the tender mercies of 14 Questions on the Order Paper next Wednesday.
Secondly, the matter is urgent because the House was entitled to assume that no major policy decision would be taken ahead of the defence review. If that is not so, the House is entitled to assume or to conclude that other faits accomplish of even greater significance are about to be perpetrated, and the Government should be prepared to say at once exactly what they are.
Mr. Speaker: The hon. Member for Havant and Waterloo (Mr. Lloyd) was kind enough to give me notice of his intention. He wishes to seek an emergency debate on the reported cancellation of the Simonstown Agreement. I have listened to him carefully and had regard to the exchanges which took place earlier in the House. My decision in no way reflects upon the importance of this matter. I simply have to decide whether I should

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allow a debate either today or tomorrow on the matter under Standing Order No. 9. I am afraid that my answer must be "No". Other means must be found of discussing the matter.

ORDERS OF THE DAY

  DEBATE ON THE ADDRESS
  [FIFTH DAY]
  Order read for resuming adjourned debate on Question [29th October]:
  That an humble Address be presented to Her Majesty, as follows—
  Most Gracious Sovereign,
  We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.—[Mr. Weitzman.]
  Question again proposed.

  INDUSTRY
  Mr. Speaker: I have selected the amendment standing in the name of the right hon. Gentleman the Leader of the Opposition and the names of his right hon. and hon. Friends.
  4.5 p.m.
  Mr. Michael Heseltine: I beg to move, at the end of the Question, to add:
  But humbly regret the disastrous proposals for the nationalisation of the aircraft, shipbuilding and off shore oil industries, the establishment of a National Enterprise Board and the imposition of planning agreements, which will lead to bureaucratic interference, further loss of confidence, damage to investment and rising unemployment.
  The House will agree that it has now become a statement of the obvious to refer to the crisis of liquidity and profitability facing British companies, and any last lingering doubts must have been dispelled by the Survey of Business Opinion in the Financial Times today. But perhaps only this Government could so firmly come to the House committed in the Gracious Speech to an expansion of
  "…pvigorous and profitable public and private sectors of industry"
  believing that this could be achieved by further nationalisation and State control.
  The crisis in part is of world proportions but the factors that, in countries broadly similar to ours, have led to anxieties deeper than anything we have seen since the end of the Second World War have been deepened in this country

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  by the squeeze of the last Budget and the intensification of price control which followed. The CBI, the TUC and the Bank of England only reinforce the Government's own statistics demonstrating beyond question that the shortage of cash is now imperilling investment and employment.
  If we can agree that the patient is ill—and everyone does—we cannot, however, agree on the diagnosis or, indeed, on which doctor to send for. I suspect that many hon. Members opposite have a political vested interest in ensuring that the patient does not recover. Even the magnitude of the current crisis must not obscure the underlying debilitation that years of inadequate investment in this country have produced. We have consistently spent more and invested less than the equivalent economies of Europe. The latest forecasts indicate that even in the current situation facing us all, the growth rates will be higher in Germany, France and elsewhere in Europe than here. As the real wages in Europe outstrip our own, as the evident capital investment by other European countries manifests itself, and as the gap between the standards of living here and on the Continent widens, so we are faced not only with the need to restore industry's ability to invest but, equally important, to restore the will of industry to invest.
  We are faced with the unpalatable duty to tell our people that, if we are to have a hope of keeping our place as a significant European Power, we have to forgo many of the things we want today in order to provide for ourselves a sense of purpose tomorrow. It is always easier for politicians in a democratic society to provide bread and jam today, but we shall not be forgiven if we preside in this House over a society that, year after year, has consumed and now borrowed its way to poverty.
  The outdated factories, the slums, the hospital queues, the bitterness of the regions, are the prices that our people pay because, year after year, we have chosen to spend and not save some 5 per cent. more than our neighbours. The overwhelming criticism of the Gracious Speech is that it could have been delivered by any other Labour Government at any time in a good year or bad, in crisis or out of crisis. It sees and sets no challenge, offers no leadership and
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  provides no hope. Nowhere in it are the real problems of industry even hinted at.
  Yet the bad industrial relations, low productivity, restrictive practices, the need for a different quality of dialogue between board room and shop floor, and the harsh, unavoidable impact of competitive economics are the issues we should be discussing here. All we are offered is the delusion that more absolute State ownership can protect us and keep us immune from a world in which we have no choice but to compete. After 30 years of experimentation with State ownership, the aggregate of public endeavour is measured by capital losses of over £5,000 million and revenue losses in excess of £2,000 million.
  Nationalisation has a record of Government interference for the short-term purpose of achieving political aims. Let us listen to the words of Richard Marsh, speaking in May of this year, when he said:
  "None of the five-year investment plans we have produced has remained intact for more than six months because of the inability and unwillingness of Government to settle investment plans for more than an inadequate period ahead.…The cost to the taxpayer of the present short-term nature of the Government's method of allocating investment to the nationalised industries is frightening."
  That is the record of reality to which this Government now intend to commit yet further large sectors of British industry.
  It is the Secretary of State for Industry who has pointed out that Whitehall lacks entrepreneurial flair—and no man in this House has greater cause to know that! The first priority today is to restore industrial confidence. No matter how careful the figuring or how sophisticated the calculations, there is a critical moment in any investment decision when the cold, arid facts give way to human judgment. That judgment depends upon confidence. That confidence in industry today has gone. Even if next week tax cuts restore the liquidity of companies and industries, they will not restore industry's confidence.
  For that to happen there must also be restored the expectancy of profit. No one underestimates the difficulties of bringing this about when world conditions are so uncertain. But world conditions are no longer responsible for the danger that

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  Britain is now moving into its worst-ever period of home-bred inflation which the Government seek to justify as part of a contract recognisable only in the eyes of its architect.
  There are four reasons why profitability must be restored to industry. First, without it industry is unable to raise the cash for further investment and there is no way to restore the ability to invest in profitable undertakings without at the same time restoring the working of the capital markets. Secondly, no system of centralised bureacracy can prove so responsive or sensitive to the genuine requirements of industry and consumers. Thirdly, in practice we in Britain know that the machinery of government has proved incapable of exercising effective control of the public sector either for the public at large or even for Members of this House.
  The final and most important reason of all is that the strength of the private corporate sector is the only guarantee we have of the widespread distribution of power throughout the community. It is the tragedy of this country that we are the only advanced economy where the sterile arguments for more State ownership are paraded so regularly before us. The most prosperous country in Europe, Sweden, after 42 years of Socialist Government, has achieved its prosperity because it left 95 per cent. of its industry in private hands.
  Mr. John Tomlinson: Would the hon. Gentleman agree that when he talks about 95 per cent. of the Swedish economy being in private hands he has totally ignored the 30 per cent. of the Swedish economy in co-operative ownership?
  Mr. Heseltine: I will come to the question of co-operation. It is an important point. [Interruption.] Very well, let me deal with it now. I see no fundamental objection to the concept of co-operation but my concern—[Interruption.] I am not denying the figures. My concern is that the experimentation with co-operation in this country is being built upon fragile and genuinely uneconomic projects which the Secretary of State picks up from the debris of companies in collapse.
  There are five areas referred to in the Gracious Speech which have a major im-
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  pact on industry. They concern the small businessman, the aircraft and ship manufacturing industries, listed for direct nationalisation, the establishment of a National Enterprise Board and the imposition of planning agreements.
  The small businesses already employ 6 million people and account for 20 per cent. of our gross national product. Already rising bankruptcy rates reflect the pressures loading upon this sector. The Gracious Speech heralds the arrival of the wealth tax, which makes numbers of people wonder "Was it really worth the effort after all?" The insurance increases which are threatened in other legislation add to the burden of the self-employed as further Government imposts are put upon them.
  There are two industries listed for nationalisation. Perhaps it will be appropriate to deal with the details of those proposals when the Bills are published. Suffice it to say that the presumption upon which these proposals are based must be that the real problems of those industries can be better solved when there is greater Government influence and control. If we look at the second argument —I do not believe there is evidence anywhere in the way we run our public sector that Government ownership or control has led to dramatically effective results. The Government argue that the shipbuilding industry has received £156 million in grants and, therefore, ought to be brought into public ownership.
  There is no greater distortion of this argument than the "realities" which the Secretary of State has sought to build into it. Of the £156 million, £109 million has gone to those three shipbuilding companies that are either totally or largely owned by the Government. This leaves £47 million which has gone to the rest. Of that, £12 million has gone in loans at arm's length at market terms of interest and £25 million went on grants to protect our industry against subsidised competition from overseas. At the end of the day we are left with only £9 million to £10 million which has gone to the private sector.
  That is the total financial case for bringing 13 companies into public ownership. It totally ignores the fact that virtually no help has been given to the ship repair or marine repairing industries

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  which are also listed for public ownership.
  In aerospace the record of Government intervention has been no more successful. Let us be clear that there is without doubt a need for a close relationship between the Government and that industry. It happens wherever the industry exists throughout the world. There is not a shred of evidence that public ownership will add one real dimension to the problems confronting the aerospace industry.
  If we look at the areas where the partnership between Government and industry has been closest, in Concorde and the RB211, the reality is that Government and industry have been equally wrong in the forecasts they have made about the costs likely to emerge. The record of British European Airways over the Trident or BOAC over the VC10 destroys the myth of the real benefits that can come from taking companies over and trying to impose State-oriented plans upon the industries.
  The damage to the mutual trust between Government and industry—and that trust has been gravely worsened by the threat of nationalisation—cannot be divorced from the difficulties facing Hawker Siddeley in its relationship with the Government. I listened to the Secretary of State for Industry this afternoon saying that he wanted written notice to answer a question about how many meetings he had had on this urgent matter. I was not surprised he sought to avoid answering the question. I should have thought that the right hon. Gentleman would have had a pretty good idea of how urgently he had dealt with the news which had reached him early in July that the Hawker Siddeley project was in real danger.
  I should have thought that the right hon. Gentleman would have wanted to tell the House that it was weeks before he even held a meeting with the company and that nearly four months later he has stood back, aloof, more concerned to try to make a point which might have a certain relevance—I do not dispute it —in terms of relationships with the trade unions but which has no relationship to the urgency with which the Secretary of State should have dealt with the prob-
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  lems facing the HS146 once they were drawn to his attention.
  I suppose that it is arguable at least that a certain circumspection has come to the Secretary for Industry in the way in which he handles industrial affairs. Gone is the old panache with which he rushed in, without time to consult the industrial advisers provided under the Industry Act, to rescue, we were told, the holidaymakers booked through Court Line. Gone is the old spirit with which the Secretary for Industry regarded his enthusiastic partnership with Rolls-Royce. We have the Secretary for Industry's own words to describe the speed with which he was able to act in relation to Rolls-Royce and its negotiations with the Americans. The House may remember the words. This is the way in which he told it:
  "At 5.30 on Wednesday 27th March, Rolls-Royce came to me and said that Lockheed had decided to go ahead with only two airline orders, and it required another £20 million, which it must have five hours later if it was not to withdraw altogether from the race…I have heard it said many times—…and seen it on television in 'The Power Game' and 'The Plane Makers '—that Governments are very slow when it comes to major industrial decisons, that only businessmen can take big risks at critical moments. Because my memoirs are not appearing in the Sunday Times, perhaps I can he allowed to give them to the House. In fact, five-and-a-half hours later—I noted the time in my diary—at four minutes past 11 that night I rang Rolls-Royce and authorised a guarantee not for £20 million but for £9 million to carry it over that four-week period.…That is the reality of Government-industry relations."—[OFFICIAL REPORT, 23rd November 1970; Vol. 807, c. 39]
  What a pity the Hawker Siddeley board was not treated with the same dispatch when it appealed for help. The reality has always been the same. The closer the relationship the larger the loss, and corporate wisdom has hardly been enhanced when it has been added to collective wisdom.
  Anyone who really wants to understand the fundamental difference between private enterprise and what the Government describe as" vigorous and profitable public sector activity" should have come with me to the last day of the Farnborough Air Show this autumn. I do not need to remind the House of the major international significance of Farnborough to British aerospace. Every chalet was thronged with visitors from all over the world except for one chalet which

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  dominated the show, perched high in the most conspicuous position. That chalet, and it was the chalet of the Secretary for Industry, had closed down—bolted and barred—a defiant tribute to the difference between private enterprise and public apathy.
  The argument about public ownership has followed the course that could long have been expected of it. It is no longer enough to conduct frontal assaults on chosen industries. Now the State has to be armed with the ability to pick off individual companies for the National Enterprise Board. There is no more effective way to prepare the ground for this than to suggest that the whole of private enterprise is being subsidised by the taxpayer.
  A figure of £2 million a day is produced as the psychological background against which to justify the latest addition to the weaponry of Socialism. Forget for one moment that industry contributes £8 million a day in taxes to the central Exchequer. Forget that private enterprise is a major contributor whilst the nationalised industries are a major liability. It is the underlying fallacy that I resent. For what is this £2 million a day? It is investment grants, which have now been abolished, it is Concorde and the RB211, which are special cases. Other than that it is largely development grants, Local Employment Acts, regional employment premium for industry and help to the regions. In other words, it is the social and political expenditure of Governments to subsidise our regions, to balance the economic compulsion of the South-East, to counteract the decline of traditional industrial patterns and to spread employment more evenly throughout Britain.
  No one questions those objectives, but if anyone should be called to account for that expenditure it is we in this House as politicians. Indeed, it is worth while to reflect just how ineffective the House is in monitoring the money which is spent by Governments on our behalf in this way.
  It is necessary for the image of industry to be redrawn to pave the way for the new approach which the Government seek to introduce. The rewriting of the language is an important aspect of
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  the attempt to persuade a reluctant public to stomach the Socialist dogma so few people want. A new vocabulary is the familiar tool of propagandists the world over. The term "nationalisation" is unpopular, so let it be renamed "public ownership". The ragbag of earlier State excursions into British companies is glamourised under the heading "National Enterprise Board". Grants to the regions become "subsidies to private enterprise", and a bureaucratic system of planning agreements becomes "the regeneration of British industry". Perhaps most incredibly of all, the Secretary for Industry on television last week told the public that even if his planning agreement covered the top 100 companies, only 1½ per cent. by number of British companies would be affected. That is to equate ICI with the local window cleaner, or Unilever with the family business in which the Secretary of State for Industry learnt the first tricks of salesmanship.
  Mr. Neil Kinnock: As an active servant of capitalism, does not the hon. Gentleman share the views of Government supporters that it is a bad thing that the 100 companies of which he speaks, although they represent only 1½ per cent. of the total number of companies in the country, control just over 50 per cent. of all the manufacturing facilities and wealth?
  Mr. Heseltine: I believe that the British public are much more interested in the jobs they create, the exports they earn and the general sense of affluence they produce.
  The Prime Minister's view is that the National Enterprise Board is to be set up to draw a clear divide between the public sector and the private sector, to bring a new commercial skill to Whitehall and to deploy a cool financial judgment to the investment of the taxpayers' money. That may well be the writing on the tablets of stone but they have sunk without trace on their journey to Victoria Street.
  Within the past few months we have seen example after example of how that cool financial judgment has worked out in practice. We have seen the use of the Industry Act, when we were told that there was not time to consult the industrial advisers. We were told that in the case of Harland and Wolff there was no

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  need to consult the industrial advisers. In short succession proposals for Meriden motor cycles, Scottish newspapers and Liverpool heating systems were put to the industrial advisers, whose advice was rejected, and the proposals were pressed on with as rapidly as possible. For in reality the Secretary of Industry is more concerned with the public political impact of his policies than with the health of British industry. To force British industry closer to his personal theories he is prepared to scatter taxpayers' money like confetti.
  The present wage explosion which, predictably, we have been told the social contract is now not expected to contain, is one of the greatest weapons in the hands of people who wish to see British industry brought to the doorstep of the State. Without doubt, what is needed is a comprehensive review of the pricing policy, without which we shall find industry unable to stand on its own feet and unable to carry on with the job of investing and developing as it should be doing.
  As the Secretary of State for Industry so clearly stated in this week's Labour Weekly, the rôle of public ownership is central to Labour's investment drive. It is not only because the unnecessary acquisition of profitable companies is a prime objective of the National Enterprise Board that we reject it. Even more important, we see it as an instrument for the more pervasive use of State power.
  It is unrealistic for the Prime Minister to talk of a clear divide between the public and private sectors. The reality of the purpose of the National Enterprise Board is to be found on page 14 of the Labour Party's paper on the National Enterprise Board, the report of a study group published in 1973:
  "The direct contribution of the NEB companies would also be matched by a 'pull' effect on private companies of a kind which previous planning and financial handouts did not promote—both because many private companies would be compelled to follow the NEB companies' lead, or lose market share and profit…".
  Mr. Guy Barnett: Hear, hear. Good competition.
  Mr. Heseltine: Competition with the use of taxpayers' money, which is not good competition at all.
  The reality was clearly indicated by the right hon. Member for Birkenhead (Mr.
  710
  Dell), the Paymaster-General, who, on reading the National Enterprise Board proposals, gave his authoritative judgment:
  "The management problems of this conglomerate can perhaps be imagined…one thing it would not be is an instrument of Ministers in solving Britain's regional and export problems…it is a bad idea. It derives from, a vision of monopolistic society, ruled by technocrats."
  That is the view of a member of the Labour Government who saw clearly the way in which that proposal is likely to work out.
  The House will be as aware as I am that the National Enterprise Board is not without parentage. The experiment has been tried before, conspicuously in Italy, where, in the 1930s, IRI was set up. I do not believe that anyone would argue that history has shown that the Italians' regional problems, employment problems and industrial relations problems have emerged as a pattern of encouragement to the rest of Europe. But a fact that has remained lost in the obscurity of history is that the economic adviser to Mussolini at the time IRI was created was no less a personage than Signor Benni.
  But the second negation of the Prime Minister's principle of the clear divide is the concept of the planning agreement.
  Mr. John Stonehouse: Is it not of more significance that Tory Members of Parliament prefer to buy motor cars produced by the Italian NEB to choosing private enterprise cars made here in Britain? Is not that the fact of the matter, which proves that actions are louder than words?
  Mr. Heseltine: I am sure that that is a message that the right hon. Member would like to give to people responsible for disrupting the flow of motor cars out of Britain's factories so that customers cannot get them.
  I was saying that the second negation of the Prime Minister's principle of the clear divide is the concept of the planning agreement. We are told that such agreements are to be voluntary. Then why is an Act of Parliament necessary to set them up? When Chris Chataway was Minister for Industrial Development he held continuing discussions with our leading companies about their future plans and the impact of those plans on the regions, on investment and on

  711
  employment. But the great difference was that those discussions took place in an atmosphere of trust. It is that atmosphere of trust which has been destroyed by the present Government.
  The only other conclusion is that there are to be inducements or subsidies to companies to accept planning agreements in order to qualify for the grants or subsidies available to their competitors. It would be the proverbial case of an offer that nobody could afford to refuse.
  The planning agreements are, of course, the handmaiden of the National Enterprise Board. Any company expected to reveal its detailed future expectation to the Government will be the totally exposed prey of the board. If the planning agreement projects decline, the company will not be able to counter a bid from the NEB. If the company projects succeed, then the NEB will know long before anyone else. The State will become the most sophisticated insider dealer or them all. It only requires the asset stripper to be rechristened the asset reclaimer for the process to have run full course.
  The most likely consequence of the creation of a formal agreement is to create an illusion of control in Whitehall that will be completely overwhelmed by the reality. No one can predict the future with the accuracy that a formal agreement implies. But the nature of the Civil Service is to expect a degree of precision which industrialists know to be unattainable. Forward planning is a tentative exercise, but the information will be solemnised by the machine and will assume the rigidity of holy writ by the trade unions. The promises of the planning agreements could all too easily become running sores of misunderstanding and contention in the negotiations between industrial manager and employee.
  Where are we to get the staff to monitor these plans? A new breed of technocrats cannot be created by Act of Parliament. Nobody who has the experience of administering the nationalised industries in government has the slightest doubt that there simply is not the apparatus to partner private sector industry in the administration of a concept as sophisticated and as bureaucratic as that of the planning procedures.
  Nationalisation, the National Enterprise Board, and planning agreements, are
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  only a part of the weaponry of those who have now forced them into the Labour Party programme. The purpose is not just to experiment with three or four more methods of Socialist control. The real purpose is to bring about a fundamental switch of power from private citizens and individual companies to the State—the irreversible shift of Socialism.
  No clearer example of this can be found than in the controversy raging over the proposals for an investment bank. First, by taxing and squeezing industry, the Government destroy the prospect of profit. British investors refuse to invest and the capital markets are destroyed. A detached observer might feel that the urgent requirement was to restore to industry its ability to earn profits and thus to attract investment through a revived capital market. But Socialists want investment and not profit. They want the State and not the market to allocate the resources. Consequently, the Left of the Labour party stands firm in its determination that the capital markets must not be restored, thus, as they hope, forcing industry into the hands of the National Enterprise Board. The rest of the Government try to find a compromise by offering long-term lending without strings so that industry will have the opportunity to by-pass the National Enterprise Board.
  In reality, neither proposal will secure the investment so badly needed. For what company will go either to the National Enterprise Board or to the proposed investment bank unless it sees a prospect of profit? The prospects are not there. Therefore, the answer is clear. In the main, only those companies seeking, not funds for investment but funds for survival, will appear at the door of the Government. The weakest will come running in a race to keep ahead of the bank manager, because, faced with a choice between the receiver and the Secretary of State for Industry, the latter will seem the softer touch.
  But it is the British people who will pay, not only with the progressive elimination of freedom in society that these policies imply, but with their savings and with their jobs. The Prime Minister may have nothing to say about the Stock Exchange in the Gracious Speech except irrelevant references to attempts to corner national resources by

  713
  financial manœuvres. But it is because nearly every family in the land have a direct stake in the Stock Exchange through their pensions, their life policies and other savings, which are secured on the value of British industry, that the collapse of the capital market represents a personal tragedy for so many.
  But the most far-reaching tragedy which the Government's fiscal and industrial policies have done so much to aggravate is the present menacing level of unemployment. For those of us who sat through the last period of Labour Government from 1964 to 1970 the most bizarre memories were those of Ministers justifying each new level of rising unemployment with the rationale of the technocrat. The "temporary adjustments" became "shake-outs in industry" which, in turn, gave way to the " new opportunities for purposive redeployment". For the ordinary man and woman in British industry it was unemployment by any other name.
  The process is beginning again. Falling confidence has always been the first of the storm cones, and confidence is now at the lowest recorded level. Investment cuts follow. The cut-backs are announced daily. No matter what steps the Government now take, the harm already done cannot be undone quickly enough to prevent unemployment from rising to levels not seen in Britain by my generation.
  If there were an area of priority which I should have thought the Government would find attractive it is the need for a penetrating and comprehensive reappraisal of our attitudes towards unemployment. More than anything else it is the fear that the job will go that engenders distrust and fosters suspicion on the shop floor. The older the person, the more bleak the prospect. But the Queen's Speech is silent on a new urgency for retraining, on new schemes to encourage mobility, of any word about improving the quality of dialogue in industry.
  The briefest survey of this nation's industrial problems leaves the clearest lesson that we in Britain do not have a surfeit of time. Elections and pre-election periods are not the easiest for politicians to make the call on people that the true nature of our crisis demands. Whichever party had been elected would
  714
  have been expected to make such a call. The Government's response in no way measures the challenge to which the nation yearns to respond.
  The Government's proposals are at best imbued with the sense of relevancy with which the sailors varnished the deck-chairs on the state decks of the "Titanic" [Laughter.] The people on the "Titanic" laughed just as hon. Members opposite laugh. They did not appreciate the disaster that was coming. At worst the Government's proposals in the Queen's Speech will divide where they should unite, destroy where they should create and wound where they should heal.
  4.43 p.m.
  The Secretary of State for Industry(Mr. Anthony Wedgwood Benn): This is the first major debate on industrial policy held in this Parliament. When the legislation comes forward, there will be opportunities to examine the proposals that the Government intend to lay before the House. Those proposals include, as was clear from the Gracious Speech, legislation on North Sea oil which was forecast in the White Paper, and my right hon. Friend the Secretary of State for Energy, who will be winding up for the Government, will say more about that.
  There will also be laid before Parliament a new Industry Bill to establish the National Enterprise Board, and there will be provision in it for the disclosure necessary to make planning agreements possible. This has all been set out in the White Paper published on 15th August which the House has not had the opportunity of debating until today. There will also be legislation to bring shipbuilding and the aircraft industry into public ownership. In that connection, it is clearly in the national interest, and in the interests of the workers and management in the aircraft and shipbuilding industries and of their customers, that in the period until vesting day the day-to-day operations of these two industries should continue smoothly.
  I wish, therefore, to give an assurance that in the period up to vesting day no company or person will be penalised as a result of reasonable action taken in the normal course of business and in good faith. However, it is necessary to protect the new undertakings from dissipation of

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  the assets to be nationalised or other transactions which would have the effect of frustrating the objectives of nationalisation. The legislation will, therefore, contain provision enabling any transactions entered into up to vesting day to be reversed if they are considered to be disadvantageous to the new undertakings, unless the Secretary of State has consented to them.
  It has already been announced that these provisions will apply from 31st July 1974 for the shipbuilding, ship repairing and marine engineering industries, and they will apply as from today to the aircraft industry. The Government are ready at any time to discuss any problems which may arise in connection with these provisions with the companies concerned or with the representative organisations of the industry. We shall be prepared to augment these provisions in whatever way we consider necessary to safeguard the assets to be nationalised against dissipation.
  The new undertaking will take over the companies to be nationalised as going concerns. Their commercial contracts will remain binding. Shareholders and long-term debenture holders will be compensated. Customers, collaborative partners, suppliers and other commercial creditors can be assured that obligations will be fully honoured under the new arrangements. There will be no lack of continuity in this respect.
  Mr. Cranley Onslow: I am grateful to the right hon. Gentleman for giving way. He has evidently finished dealing with that point, but can he tell us what arrangements the House of Commons is to have to monitor all this while it goes on?
  Mr. Benn: I think that if the hon. Gentleman will allow me to complete my speech he will see not only that there will be legislation on all these matters but that the provisions of the legislation, as has been made clear in the White Paper, will provide for a high degree of parliamentary accountability. I shall be very surprised indeed if the hon. Gentleman—or the House—found it difficult to contribute continually to the debates on these matters, because it is my hope that that will happen.
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  The hon. Member for Henley (Mr. Heseltine), who opened for the Opposition today, was critical of our proposals. I must do the hon. Gentleman the honour of recognising that he has consistently been critical of these proposals—and I make no complaint about that—but the House will recognise that the Government have consistently advocated these policies. There has been no attempt on my part or on the part of my right hon. and hon. Friends to conceal our policies in any way from the electorate, and, therefore, nobody should be surprised that they are being brought before Parliament with a view to implementing them in full.
  Unless every debate—as I feared would be the case when I heard the hon. Gentleman—is to be a perpetual re-run of the election campaign, we should use this debate to establish early what are the real arguments about our proposals—what are they really about, what are we not arguing about and on what should the House expect to find agreement?
  Let me begin with this aspect: on what issues should the House expect, in the course of these debates over the forthcoming Session, to find itself in agreement? One must, surely, be the depth and extent of the industrial problem that confronts the United Kingdom. There is no question but that our industrial problems lie at the heart of many of the problems which we now describe as part of the gravest economic crisis since the war. In many cases industrial problems lie at the heart of the problems of inflation, of exports and of productivity. It has to be seen against a long-term, relative industrial decline which has gone on under Governments of all parties, including that of the Tory Party, when they had full opportunity to develop their policies with a working majority. There is another aspect: this country's industrial future needs and prospects.
  Figures quoted by the right hon. and learned Gentleman the Secretary of State for Consumer Affairs before the February election forecast for Britain a standard of living that would be below that of Italy and just above that of the Republic of Ireland by the early 1980s. There has been a steady industrial decline for 25 years, and poor investment in private manufacturing industry has played a large part in that decline.

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  The wider problems of industrial relations have also been touched upon; not only wages negotiations but the whole question of relations within industry is clearly connected with this central industrial problem. If we add to that the intensification of those long-term problems by the oil crisis and the effect of the rise in oil prices last year, the confrontation associated with earlier legislation, and the three-day working week, we get some measure of the magnitude of the task that confronts us as we debate our industrial problems.
  We may differ on the remedy but on the magnitude of the problems that face us the House should find some measure of agreement.
  Mr. Tom King: Does not the right hon. Gentleman realise that all hon. Members accept what he said but that the words he has just uttered increase the magnitude of the problem to British industry? The longer the politicians continue to say how disastrous the state of British industry is—those words are read widely abroad—the harder is the problem. Would it not be fair of the right hon. Gentleman to recognise that this country faces problems—as do all other industrial countries in the world at present—and draw some comfort from the fact that this country exports a larger proportion of its gross national product than any of its major industrial competitors?
  Mr. Benn: I appreciate what the hon. Gentleman says, but a Minister presenting an argument to the House involving substantial changes in industrial policy must be allowed, in presenting them, to do so against a background of real problems that go back a generation. I shall not make a point about whether the crisis was concealed from the public. My view is that we should all speak candidly to each other, without hyperbole. I have said what I genuinely believe, and I have, in doing so, indicated not any pessimism but the magnitude of the task that confronts us.
  There is no disagreement between the two sides of the House on the principle of Government intervention in industry. Let us be absolutely clear on that point. No Government in peace time or in war time have ever intervened so directly and so intimately in the workings of private
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  manufacturing industry as the Conservative Party when it was in power. It intervened directly through the Industrial Relations Act right into the workshop. It intervened through the Counter-Inflation Act right into every pay settlement. I think that it would be sensible, as we approach these debates over the next 12 months, if we could get clear from the beginning that it is not a matter of argument between us as to whether Government should involve themselves in industry.
  The Labour Government have begun their period of office by reducing the intervention in the two key areas to which I refer; namely, by the repeal of the disastrous Industrial Relations Act and by the abolition of the Pay Board. I know many managers in industry who found that the Pay Board interfered more directly with their rôle as managers than any other single act of intervention.
  Mr. Nicholas Ridley: What about the Price Commission? Is that not the body which has done more damage to British industry than the Pay Board? When are we going to shop that down the river, too?
  Mr. Benn: I was not claiming that the Labour Government had withdrawn all intervention. I said that in two key areas—[Interruption.] The hon. Gentleman has honourably Benn engaged in an argument with his own colleagues about this matter and now carries the argument to us. But it is no part of my argument that that withdrawal of intervention would be in the public interest.
  What, then, is the argument about? This is what we need to have clear before we begin this session of debates. This argument is about four issues: first, in whose interests should one intervene; second, with what objectives; third, by what methods; and, fourth, with what reasonable expectation of success?
  Mr. Eldon Griffiths rose—
  Mr. Benn: Allow me to finish this point. Our industrial policy constitutes a wide-ranging and, in our judgment, long overdue programme of industrial reform, and it is to the issues that divide us that I should now like to turn.
  Mr. Eldon Griffiths: I am obliged to the right hon. Gentleman for giving way. To the four questions which he has posed would he add two more and be sure to give the House an answer this afternoon; namely, fifthly, what will it cost, and sixthly, who will pay?
  Mr. Benn: The hon. Gentleman will have been in the House at Question Time today, when this question was put, and I think I must be allowed to develop my own argument in my own way. It is open to the hon. Gentleman to intervene as he has done in this debate publicly and in Parliament.
  To come to the first question—in whose interests should intervention and industrial policy be pursued?—I am very surprised when I hear hon. Gentlemen opposite speak of industry as if the only spokesmen for it were the directors of major industrial companies. Clearly, British industry is the British people at work, and it is certainly with that in mind that we begin our approach to industrial confidence. We are arguing—it is a very big change and there is a wide difference between us on it—that those who invest their skills, energy and their lives, including managers, in British industry are entitled to at least as great a say in its control as those who invest their money in it. That is the first point we put before the House. The skills are not fully used—
  Mr. Onslow: Mines?
  Mr. Benn: If the hon. Gentleman wants to intervene he will have an opportunity to do so, but continual heckling does not contribute usefully to our debate. If he wants to speak perhaps he will rise to his feet and intervene.
  What we are saying is that our industrial policy must be based upon the recognition of that fact of collective effort and joint decision, and that is the industrial component of the social contract.
  Mr. Peter Rost: The right hon. Gentleman has referred to the social contract. Would he not agree that the millions of people who contribute their savings to industry to which he has referred, also have the right to be consulted under the social contract? What has the social contract done for those millions of people who
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  have had their savings wiped out by inflation and the collapse of the capital market?
  Mr. Benn: All I can say to the hon. Gentleman is that the first product of the social contract was the pension increase, which the trade union movement put at the head of its campaign, and anyone who observed the issues raised by the Labour movement and the Labour Party in the period of opposition will recognise that all the policies advocated were in the interest of the comunity as a whole. I shall return to that question again.
  I come now to the question of the objectives which should now be adopted by us. The four traditional macroeconomic objectives of the balance of payments, full employment, stable prices and economic growth have been debated many times in the past. The Opposition's view has generally been that these problems were soluble by stimulating and guiding the market mechanism to make it work more perfectly. In practice, however, when in government, when they have come to seek to apply the principles —even those described today—they have abandoned their philisophy and adopted one of direct and. I might add, usually—as last time—unsuccessful intervention in order to resolve these problems.
  The reason why we reject this approach is that it has not dealt with the growing problem of monopoly to which reference has been made—the 100 companies producing 50 per cent. of our output. It has not resolved the problem of regional unemployment. In the case of the last Conservative Government it has not brought investment up even to levels as high as when we left office in 1970, and it ended with a breakdown of consent. It is this failure that gives us the starting point for the presentation of our new policy.
  We must explore new objectives, and I want to take up what has been said by the hon. Member for Henley in opening the debate. There must be a much greater emphasis upon jobs in our industrial policy. It is more than full-employment as a macro-economic goal that we must adopt. It is the recognition that it is through work that a man expresses his skill, acquires his self-respect and status, and gains his security. Therefore, it must be a key factor in any

  721
  industrial policy to sustain jobs, create jobs, make jobs more secure and, furthermore, to see jobs not just as one of the balancing factors in a complicated national equation but as the heart and core of the needs of people and thus of our industrial policy.
  I emphasise this with the threat of a recession ahead where we shall have to accept that, rightly, the British people will not again go through the experiences of the pre-war years. The arguments about the monetary solution, which are discussed within the academic circles of the Conservative Party and in their weekend speeches, which would involve deliberately creating unemployment in order to tackle the problems of inflation, are wholly and absolutely unacceptable. I am putting a point of view to the House. Whatever interest there may be in these debates about monetary solutions, they are absolutely alien to the policy which we are putting forward, and the British people will not accept them.
  Mr. John Peyton: The right hon. Gentleman is using brave words, but I wonder whether he would explain to the House how these disasters are going to be staved off?
  Mr. Benn: My speech is an opening up, for the benefit of the House, of the arguments that we are having between us. If the right hon. Gentleman will listen he will find they are not about intervention. As I have said, they are about these other matters.
  I want to offer the House my analysis. This is the beginning of a long series of debates. It is not the end of the matter. We shall be pursuing it further. Charles Wilson said "What is good for General Motors is good for the United States", and what we say is "What is good for working people and their families is good for Britain." There is a substantial difference between those approaches. For all of us, jobs come first.
  That is not a theoretical matter. It is a practical matter that presents itself to Ministers on a day-to-day basis.
  Mrs. Elaine Kellett-Bowman rose—
  Mr. Benn: I have given way several times. I must be allowed to continue. Has the hon. Lady a question?
  Mrs. Kellett-Bowman: Is the Minister aware that the measures in the Chancellor's Budget for squeezing cash liquidity are causing severe de-stocking throughout the land? That is adversely affecting many firms in my constituency, and many are on a three-day working week and many are declaring large-scale redundancies. Would he please ask his right hon. Friend to do something about that most urgently in his November Budget? We shall otherwise be facing far worse unemployment in Lancaster than we have had since the 'twenties.
  Mr. Benn: As unemployment rose to more than I million in 1972, in addition to the three-day working week in January, which led to enormous lay-offs, the hon. Lady will recognise that the industrial problems facing Britain go back some time. I made that point earlier.
  I want to come to the practical effects of what I have said. As in the case of Court Shipbuilders, for example, where 9,000 jobs were set at risk by financial speculation in the company, it is absolutely right for the Government to intervene to safeguard jobs.
  According to Press reports, two brothers own 56 per cent. of the shares of Ferranti. Suddenly, that great enterprise, with some 14,000 jobs in development areas, is in difficulty, and it is absolutely right for the Government to go in and ensure that the necessary operation is carried through.
  In the instance of Alfred Herbert, 6,500 jobs are at stake in a company whose problems are very deep-seated and go back to before the February election. The imminent problems of that company were the first to be put on my desk in February. It is right for the Government to go in to safeguard employment.
  Other examples are the firm of George Kent, the motorcycle workers at Meriden, and the people at IPD. IPD has had six or seven different owners over the past 12 years. The men have been thrown on to the mercies of the receiver on two or three occasions. The male unemployment rate in Merseyside; is 9·5 per cent. I make no apology to the House for approaching the responsibility that I have in this field by seeing that jobs are sustained, created and strengthened in practical terms, and that is what I intend to do.
  Mr. William Molloy: Would the Minister be good enough to add to his list the firm of Rockware in my constituency? It was driven out—I know it is funny to Conservative Members when 1,000 men lose their jobs—and the glass container industry savagely damaged because of the predatory activities of people like Slater Walker, who drove Rockware to the point of having to sell its factory to keep another two, while the products that were made at Greenford are now being made in Western Germany.
  Mr. Benn: I, like my hon. Friend, regard it as totally unacceptable that workers should be regarded as pawns in a game, the principal objective of which is simply to make money in some other way. It is absolutely wrong, in my judgment, that workers who have devoted their lives to an industry should come—as often happens, and is happening all the time—to their place of work and find a notice announcing a redundancy as a result of a decision that, in many cases, has been taken months earlier and has been taken for reasons that have no bearing whatsoever on whether these people could earn their living by the exercise of their skill.
  Mr. Greville Janner rose—
  Mr. Benn: I must not detain the House too long. I know that there are many hon. Members, of different parties, who at one time or another will be coming quite properly to the Department of Industry with examples of this kind themselves, and they will be correctly speaking on behalf of those whom they represent in Parliament.
  I know the argument that if one is too concerned with saving jobs there will be some ossification of the industrial pattern. I have heard the argument put very strongly. Against that, I ask the House to consider that if it is generally thought —particularly at a time when world unemployment levels may be rising—that the Government are not concerned with jobs, ossification may be avoided but at the same time the arthritis of restrictive practices throughout industry will be reinforced, and they derive most of their strength from the fear, which unfortunately is correct, that unless people defend themselves in some way they will have no chance of retaining their jobs.
  724
  In every case, in so far as it is open to me to do so, I shall seek time to examine the real nature of the problem, which is not at all revealed by what may be the short-term market situation, and see whether it is possible to find an answer to these problems.
  The Tory Party totally misunderstands the mood of salaried management if it does not realise that salaried management is as keen that this should be done as are organised workers in industry, because salaried managers who do not own the businesses in which they work have far further to fall if they become the victims of closures or redundancy. They do not find in the hon. Gentleman's rhetoric the comfort that they find in believing that we shall look at the firms in which they work with a view to giving them a long-term future through higher investment and higher productivity; and if public money goes in on that basis, frankly there should be full accountability for it.
  Mr. David Crouch rose—
  Mr. Benn: The hon. Gentleman must excuse me. I have a little more to say, and I do not want to prevent other hon. Members from speaking.
  The third difference between the two sides of the House is difference of method. I said in March when I spoke on the Queen's Speech, and I say it again, that, as a Minister responsible for this policy, I reject absolutely the way of confrontation which characterised the previous Conservative Government in their industrial relations legislation. It was a disaster to try to impose upon industry a legal framework, with the lawyers coming in and enforcement by law in an area which requires a measure of consent.
  I intend, and I believe, that our planning agreements and the National Enterprise Board in their actual operation will win wide consent in British industry. Our interest is not, and never has been to have civil servants running British industry. The hon. Gentleman should read what is said more carefully. If there were 20,000 civil servants with Ph.Ds. in business studies at the disposal of the Department of Industry, it would not raise British production by 0·0001 per cent. That is not

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  what it is about. That is never what it has been about.
  What we are determined to ensure is that those who have devoted their lives to industry shall not be excluded, because they are not shareholders in the firms in which they work, from exercising the right to shape and plan the work they do, and the re-equipment of the firms in which they work, and to secure for themselves, their children and the communities in which they live greater security than they can achieve under the unacceptable face of capitalism, of which we have seen so many examples.
  At the heart of our proposals lies not the vast apparatus of bureaucracy but the simple measure of disclosure, because if there were comprehensive disclosure to workers in industry the information available to them would be the basis on which they could make their influence felt and at the same time contribute constructively to the development of the firms in which the work. It is the extension of the industrial franchise that really lies behind our concept of this shift of power, not the transfer of power from management to Ministers but the sharing of power by those who work in industry—at least a sharing—with those who own.
  In this first general debate I would say to the House that, for my own part, it is not the mechanics that are important but the objective. It is not the details of the legislation that should excite us at this moment, but the fact that we are seeking to set a new course upon which we recommend the nation to proceed.
  I turn now to individual cases. The hon. Gentleman spoke earlier of planning agreements. I told the CBI and the Association of British Chambers of Commerce last week that 90 per cent. of the value of planning agreements will come from what is contributed by workers in the firms concerned, and 10 per cent. will come from the Government. What is that 10 per cent.? It is the simple requirement that any Government of any party would wish to inject into industrial decision-making— investment, exports, location. It will not be an attempt to manage firms in which planning agreements will operate.
  As to the National Enterprise Board, I must say to hon. Members of all parties who represent areas of high unemployment that there is no chance whatsoever
  726
  of dealing with the deep-seated problem of unemployment—in Merseyside, the North-West, in Scotland or Wales—if we rely solely upon the market system, even if it is amplified and assisted by general regional aid.
  Mr. D. E. Thomas: Can the right hon. Gentleman give us an indication whether the powers of the NEB in Wales will work through the proposed Welsh Development Agency?
  Mr. Benn: Yes. That is clear from my White Paper and the reference in the Gracious Speech to the fact that we do not even intend the NEB to be centralised in its operations. I assume from the hon. Gentleman's question that he, too, wishes to see the direct generation of employment in areas of high unemployment by public enterprise, which will itself be fully decentralised to meet need.
  When, as it will, this message finally gets through the great cloud of distortion that has surrounded our policy on areas of high unemployment—and no one has done more than the hon. Gentleman to obscure what this is about—those areas will see the National Enterprise Board and the planning agreements as a means of bringing jobs to them and of sustaining and creating jobs. With all his market mechanism, the hon. Gentleman could not possibly hope to achieve that, however much he intervened.
  Mr. Heseltine: I wonder whether the Secretary of State will understand that, no matter how comprehensive the machinery he sets up, no matters how good the intentions and how general the verbiage, he will do nothing to help the regions if he does not allow a thriving, profitable industrial base to be recreated in the private sector.
  Mr. Benn: All I can say is that if I had the hon. Gentleman's past, I would share his pessimism. But I do not feel that such pessimism is justified; I do not share it. The hon. Gentleman tried his methods. There were two periods of policy—the Selsdon and the intervening periods—and neither succeeded in dealing with these underlying problems.
  Finally, I put to the House as carefully as I can an assessment of the prospects of success for this policy. We are confronted by a very difficult situation. There is certainly no easy or quick way to

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  reverse a 25-year decline. I believe that a five-year industrial recovery programme, starting now, has some reasonable prospect of success. We would not advocate it unless we believed that. There is certainly no Act of Parliament, not even a new Industry Act or an NEB, that provides a short cut forward, but we offer this programme to the House, and through the House to the country, as being relevant and in the national interest. We believe that there is much support for it now and that the support will grow. I commend it to the House.
  5.21 p.m.
  Mr. Nicholas Fairbairn: There falls to me the rare honour of paying a universally heartfelt and greatly deserved tribute to a former Prime Minister and a most distinguished and successful Foreign Secretary, Sir Alec Douglas-Home, one of the greatest statesmen and conciliators of this century, a most respected Member of this House, and a beloved representative of my constituents in Kinross and West Perthshire. Sir Alec's counsels will be greatly missed in the public life of Great Britain, and his inspiration places upon me the special duty of making such contribution to the deliberations of the House and the life of this country as my meagre abilities may provide.
  The life work of Sir Alec Douglas-Home illustrates how much greater is the contribution that Scotsmen can make to world affairs through the indissoluble partnership of the United Kingdom than they could make in isolation, and the great benefit to the reputation of Scotland which our right to representation in the Parliament of Great Britain obtains for us.
  There is in this great, powerful and inventive nation a crisis, but I believe that it is a crisis not so much of economics as of confidence and morale. I see in prospect in the last quarter of this century a great period for our country in the service of civilisation, if we will but be true to our principles and traditions. The briefest glance at the recent voting figures discloses that the people overwhelmingly voted for a Parliament of statesmanship and not for a Parliament of politics, and there lies, I humbly believe, on each one of us, but especially upon the Scots, who
  728
  look forward with bright hope to the future, the duty of inspiring the national renaissance.
  I believe that the people of this country now realise that the division is not between right and left, or worker and management, or class and class, but between the tolerant and the intolerant, the self-disciplined and the indisciplined, the self-restrained and the self-seeking. I greatly regret that the inescapable conclusion which the Gracious Speech forces upon me is that it is the intolerant, the indisciplined and the selfish who have, for the moment, won the day.
  The tenor of the threatened legislation seems to move our way of life from a free country where what is not generally condemned is freely permitted to a State where what is not compulsory is forbidden. The announcement by the Secretary of State for Social Services that private beds are to be forbidden is a foreboding omen of the slide to a dirigiste society whose main fetter is nationalisation, a process which removes power and ownership, not from some hands into all hands, but from any hands into the amorphous clutches of bureaucracy and the State, and thus restricts the liberties and choice of us all.
  I suppose that the oldest State industry is the Forces of the Realm. The Gracious Speech proclaims the Government's intention of ensuring
  "the maintenance of a modern and effective defence system while reducing its cost as a proportion of our national resources."
  That would be a commendable achievement at any time, an impossible one at a time of rampant rising costs. Either we are to have the same for less or we are to have less for the same. If, as I fear, it means the latter, none will be more pleased than those to the east of us who are continually intent on the weakening and destruction of this country as a power and democracy.
  But if it means that we are to get the same for less, can we hope for a similar miracle in the other nationalised industries? Can we hope that the coal, electricity and transport industries will give us more for less, or will the taxpayer receive inferior services for an ever-increasing proportion of his income and of our resources?

  729
  The first result of nationalisation is centralisation of decision, usually in London. I am dismayed that the localisation of governmental decision should be proposed in the same breath as the centralisation of industrial decision, with the inevitable destruction of such Scottish firms as have, to their credit, resisted the seductive advances of the sirens of English and foreign companies.
  The second result of nationalisation is that the State, or, as the public see it, the Government, becomes the employer. As employers, Governments have neither the heart to be fair when the employee has a tradition of discipline and service —as nurses, police and now teachers in Scotland will confirm—nor the guts to be strong when the employee is powerful and Left Wing, such as the militants in the NUM who are demonstrating for the second time in a year—what the Prime Minister calls the "big battalion philosophy". With or without the productivity deal, it looks like being a cold, expensive and bitter winter.
  There are at work in the country forces of revolution and disintegration, ruthlessly determined to secure their interests and the interests of their dominies. Against these forces the Government have raised and wave, with perhaps genuine but, nevertheless, naive feebleness, the already shredden banner of appeasement and surrender—a social contract.
  For all its much vaunted magical powers, this now tattered remnant of hopeful haberdashery did not deflect or diminish by even a penny the suicidal settlement of the lorry drivers' disputed claim in Scotland, now spilling into England, for an increase of 40 per cent. to 50 per cent. on basic rates—suicidal not just for employers and the community but, much more tragically, for the families of the impendent beneficiaries.
  It is almost as if we wanted to pull down the pillars of the temple and revel in the rubble of our national collapse. The first victims, if not the intended first victims, will be those who show discipline and self-restraint, are self-employed or self-sufficient, who set high standards for themselves and higher horizons for their children, in the forefront of whom is the farmer.
  I note that
  730
  "Further measures for the protection of consumers will be brought forward."
  But what of the producer? The best protection of the consumer at this time is the salvation of the producer. We are promised continued discussion with the farming industry. Banks do not lend on security of continuing discussions. In my constituency for an increasing number of farmers even help now may be help too late, and the continuing discussions will be but a requiem on their bankruptcy.
  The Government are forcing the farmer this autumn to kill the cow that lays the golden calf, and while initially they will reap only the bitter anguish of the farmer, in two years their prize will be the wrath of the consumer whom they have attempted to seduce at the producers' expense. The greatest act of statesmanship that any Government can undertake at this time is to set in motion plans to ensure that we are self-sufficient in food by the end of the century, by which time, with the doubling of world population, those nations which are not will not eat.
  I desperately request the Minister to forbid the import from Ireland of live cattle of unknown origins and increasing number, and to permit the export of live British cattle to Europe, from which so many of the so-called Irish cattle come; and I desperately urge him to come to the rescue of the most restrained, dedicated and essential industry in our land.
  I note also at this time of necessary national thrift that
  "Legislation will be introduced to provide additional protection for people booking overseas holidays and travel who suffer loss as a result of the failure of travel organisers."
  Why should such people, who could for a trivial sum insure their holidays, obtain protection at the expense of those who pay tax on the meagre income from their savings, of their already taxed life-time incomes, who have never had the means to enjoy, or who, on account of their thrift on behalf of their families, have forgone such luxuries and taken their holidays—if any—in our own country? In my constituency, which is as beautiful a part of God's earth as may be found, there are many men and many women who after a lifetime of service have suffered great loss in the value of their savings, their

  731
  businesses or their shops, particulary since February, many who invested in the nation in the time of peril by buying War Loan, many who bought an annuity, or saved for a modest pension, many who invested in beef production, who have suffered great loss. Are they, in reward for their diligent lives, to be protected, or is protection only to be for the foreign holidays of the industrial worker who expects the community to provide for his retirement and whose unresisted demands enable him to book a holiday abroad?
  The Prime Minister, in his ministerial broadcast, promised a partnership between the Government and the whole of our national family. Are those who have done their best for their families and been the most diligent, enterprising and self-sacrificing to be omitted, or are they to be included only for the plunder of what they have saved? Let us be clear that the promise in the Gracious Speech about the redistribution of wealth is a promise for the reduction, or the destruction of capital saved and invested. Upon confiscation, the accumulated savings of the nation will be spent by the Government on nationalisation, if nothing else, and no other person in the community, however humble, will be its new recipient.
  While on the subject of capital, may I observe that in his eloquent maiden speech, the hon. Member for Perth and East Perthshire (Mr. Crawford) advised the House that an independent State of Scotland would have one of the lowest interest rates in the the Western world. With a rate of 15 per cent. or more in the neighbouring kingdom of England, that should effectively ensure the flight of all risk capital from the little tartan, oil-fired, Ruritanian tax haven that is to come and make Scotland a land of disillusion, deprivation and despair, but with this distinction—there will be no British Government to blame for it.
  I repeat that there are forces of anarchy and disintegration at work in our country. I observe with relief that Her Majesty's Ministers will continue to act decisively against terrorism and lawlessness. I trust, therefore, that the Home Secretary will be able to assure the House that yesterday's speculative reports that he is considering parole for the so-called "flying
  732
  pickets" who were convicted of lawlessness backed by terror are without foundation, for the people of this country will not stand for that. Last week saw three examples of the cowardice and horror of terrorism—one in England aimed at a Minister of the Crown. One in Northern Ireland aimed at the forces of the Crown. And one across the Channel in Scheveningen. The characteristic of the perpetrators of these outrages is that they are cowards. There are no applicants for martyrdom amongst their seedy and fanatical ranks. They are as jealously concerned for the salvation of their own lives as they are contemptuous of the lives of their random victims. The one decisive step which the Government can take is to treat all acts of terrorism as acts of treason or acts of war, for which the appropriate penalty is death, and to enter into international agreement that all such acts will be treated accordingly, for who can deny that the events in Scheveningen could not have occurred if the malefactors had been executed in the first place?
  I hope that I have said nothing in the course of these remarks which offends the traditional generous indulgence and indulgent generosity of this House. What I have said I have said from my heart, and what I have said, I trust, reflects the beat of the heart of the people of our country.
  5.35 p.m.
  Mr. R. E. Benn: I am sure that the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn) will not expect me to comment on his remarks, since I rise to make my first speech in this House.
  I begin by paying tribute to the former Member for Rochester and Chatham, Mrs. Peggy Fenner, who represented the constituency for four years and in that time served with distinction, rising to junior ministerial rank, which is no mean achievement in this Chamber.
  As most hon. Members will be aware, the principal employer in my constituency is Chatham Dockyard, or, to give its modern title, the Navy base. During the recent election campaign, there was a great deal of talk about the delay of the Government in publishing their defence review. There was irresponsible speculation, nationally and locally, about the possibility of one or more of the dockyards being closed. I am glad to say that

  733
  the electors of Rochester and Chatham accepted the assurances of the Under-Secretary of State for Defence for the Royal Navy and of the Prime Minister that the future of Chatham Dockyard was safe. But defence rôles and demands are changing. The modern warship is much smaller than its counterpart of 20 years ago. It is composed far more of electronics and computer equipment. So the traditional skills of the shipwright, the boilermaker and other trades are no longer in such demand. The Government are aware of this and have taken steps to ensure that outside contracting work comes into the dockyards. At Chatham the first contract is due later this month.
  There is another change on the industrial scene in my constituency—that of North Sea oil. Hon. Members may be surprised to see that this comes so far south. A company has been established on the banks of the Medway to construct a jack-up rig. Other companies have expressed an interest in moving into the Medway area, undoubtedly attracted by the skill and talent in Chatham Dockyard. I hope that the Government are aware of this, because there is the danger that highly skilled men will be attracted away from the dockyard, thus upsetting its stability.
  I think that we have an opportunity in the Medway of realising the full potential of the dockyard, but it needs investment and management expertise. I am sure that we can carry out some of the necessary North Sea construction work in Rochester and Chatham. I read reports about the future expansion of the North Sea oil industry and that it is threatened by the shortage of skilled labour. Again, Chatham Dockyard can make a contribution here. For many generations now it has provided skills and training unequalled anywhere in the country. These skills are needed even more today. In my view, the Government should consider expanding this side of the dockyard's activities.
  My main interest, however, is in the building industry. I was interested to read a speech made outside this House by the Secretary of State for the Environment in which he spoke of introducing means to speed up the housebuilding programme. There can be no doubt that we need to speed it up. The latest statistic
  734
  prove that it now takes a quarter of the time longer to build the average local authority house than it did just four years ago.
  The present housing and construction statistics contain another interesting fact. It is that no fewer than 81 different types of industrialised or rationalised systems are in use at present. That is far too many. If we followed continental practice, we could cut the number down to fewer than 10, and I suggest that that should be one of our first priorities. A body set up with Government help in 1963 called the National Building Agency was founded for this very purpose. Unfortunately, after doing a great deal of work in the 1960s and early 1970s, its sphere of influence was changed in 1972 to concentrate on the rehabilitation of housing. In my view, the time has come to review this policy, and perhaps the agency should be given back its old rôle of examining new construction methods as well as the problem of rehabilitation.
  I speak as one who is familiar with the building industry, and I appreciate the pledge in the Gracious Speech to look at "the lump" and to introduce new legislation. But that is just the tip of an iceberg. The safety record of the building industry is scandalous. The Chief Inspector of Factories in his report published last week quoted the staggering increase in the number of accidents in the industry. In fact, 40 per cent. of deaths from industrial causes are in the building industry. I hope that the Chief Inspector will take a much stronger and more stringent attitude.
  The training and apprenticeship position in the industry is also scandalous. We are failing the nation. But, most of all, we must examine the industry's capabilities. A report earlier this year in the Financial Times showed that from 1970 to 1973 demand on the building industry increased by 33 per cent., yet its capacity increased by barely 10 per cent. If we in this House expect to overcome our housing problem and achieve new roads and hospitals, we must look at the industry's capabilities. As at present composed, it will fail us. I hope that the Government will conduct a short-term and a long-term survey and make radical changes so that we can tackle the problem.
  5.41 p.m.
  Mr. J. Grimond: It is my happy duty to congratulate on behalf of the whole House two maiden speakers—the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn) and the hon. Member for Rochester and Chatham (Mr. Bean). I greatly welcome their excellent contributions.
  The great naval dockyards have always had a special place in Britain's affections and those of this House. We cannot but regret the disappearance of Peggy Fenner, but she clearly has a worthy successor, one well able to stand up for those great naval traditions which Sir Winston Churchill once summed up in a moment of irritation as being composed of " rum, sodomy and the lash". There are, we believe, other goings-on in the Navy, and with modern devices no doubt some of these activities have become out of date. I was particularly glad to hear what the right hon. Member for Rochester and Chatham said about the building industry, and I hope that we shall hear more from him on that important subject.
  I also welcome the speech of the hon. and learned Member for Kinross and West Perthshire. He achieved a narrow squeak at the election, no doubt due to adequate hot tea at the count. He gave us an excellent, vigorous and, I think he hoped, impartial or non-controversial speech. Next time, he should address his attention to his own party; that is the way to get out of any difficulty about being too controversial.
  May I add a word to the hon. and learned Member's happy tribute to his predecessor? I do not think that we need tonight give any funeral oration on Sir Alec Douglas-Home. He is pretty indestructible. I have known him for a long time. He had a serious illness, from which he recovered, and I expect that he will turn up in another place as the fifteenth, sixteenth or seventeenth Earl of Home. He was a great friend of many hon. Members. He had a long and distinguished career in the public service. He was unfairly viewed as a man of great charm and experience but lacking in shrewdness. He was, in fact, a very shrewd man indeed.
  Looking around my colleagues in this place, I sometimes think "Here they are in charge of the nation, but which of them
  736
  would you actually consult upon any matter of important private business?" There are some, not necessarily those in the highest offices of State. Alec is a person to whom one would have gone both for his undoubted unselfishness and for his shrewdness on many practical matters.
  To take up again the general theme of the debate, I would say that to listen to the opening speech from the Opposition one would not have thought that it is only nine months since the Conservatives were in power. We heard a vigorous attack based on the total loss of confidence in the country. That loss of confidence began at least in 1973. Many of our troubles today are due to Mr. Barber—a very nice man, a very capable fiscal Chancellor, but in economics the most irresponsible Chancellor of the Exchequer that we have ever had. They are due, too, to the rapid turn-around by the Conservative Party from total laissez-faire in 1970 to, I suppose, the strictest dirigisme from which this country has ever suffered.
  I thought, listening to the hon. Member for Henley (Mr. Heseltine), that he might have been imbued with a little of the modesty of his leader, who has now publicly admitted that, if he had been re-elected Prime Minister, he would not have had the slightest idea what to do but would have consulted a few worthy people around the country. The moral of this is that this is not a situation—the Secretary of State was quite entitled to point this out—which has sprung suddenly on the country since last April, and it is not one to which any Government or any party have provided an absolutely convincing answer, at least over the last 10 or 15 years.
  The right hon. Gentleman in turn, I thought, was too sanguine about the process of further State intervention. He started by putting his finger on the need for greatly increased investment in private industry. We should also bear in mind that one of the difficulties that we have faced is the immense appetite for investment in the nationalised industries, which has earned no real return.
  To many people in this country the difficulty has been not only that each Government attempt to undo some of the remedial measures of their predecessors, but that, going through all this

  737
  at the same time, there has been an unwelcome similarity about the repetition of certain faults throughout the economy. The Secretary of State mentioned Alfred Herbert, which is a very good example of the days when bigger was always thought to be better and when a company gave up expertise that it possessed in its own field to branch out into all sorts of different fields in which it could not compete.
  These troubles, I believe, are fundamentally political or moral or a question of value judgments, and are not simply economic.
  The Minister of State, Department of Industry (Mr. Eric Heffer): Just as a matter of fact—there is no other point in my rising—the Secretary of State mentioned that company. He made a point of that.
  Mr. Grimond: Right. As I was saying, I do not think that our troubles are primarily economic. One thing which has been very much lacking in the public debate is any general aim put before the nation and any great political skill in trying to achieve it. If the social contract —a phrase which, I hate reminding hon. Members, was originally used by my hon. Friend the Member for Roxburgh, Selkirk and Peebles (Mr. Steel)—is to put before the nation, and the whole nation, an aim in the achievement of which it can unite, it will indeed perform a useful purpose. But if it is just a contract between the Government and the trade unions, that is something quite different.
  As to political skills, it is surely the first duty of any Government to reconcile the competing interests in the community. Historicaly, this has been the main basis of politics; it is no new situation, but of course it is made much worse by the lack of any overall aim. This encourages various interest groups to claim as much as they can. I would recommend the Government to look at the way in which this has been handled before —in the days of the feudal barons and the days of the great tycoons. It was done then by a mixture of political skills in pursuit of some aim to which most, if not all, of the people could give consent.
  I do not believe that further nationalisation will contribute to this aim. It will be very expensive. I missed the answer
  738
  to a question which was asked on this matter today, but I am told that it will cost about £7,900 million to put the Government's proposals into operation. It still dates from the time when "bigger" meant "better". I do not think that in practice nationalisation has directed resources to the best advantage.
  The main argument for nationalisation used to be that it would inject into industry a new motive, something which would, to some extent, take the place of the profit motive, the motive of service and the motive of working in the public interest. I found it a pity, incidentally, that we removed the Post Office out of the control of the Crown and Parliament. The Post Office had a great tradition of service. We tried to turn it into another commercial corporation. However that may be, I do not think that this hope has been realised in general. My one fundamental criticism of the nationalised industries is that they seem to suffer from the same effects and to be moved by the same objectives as big private firms. I do not believe that people at large feel that there is any great difference between ICI and the large nationalised industries.
  Furthermore, the nationalised industries have not directed our resources into what I should have thought are the type of production which may not be highly paid but is highly necessary. I should have hoped that they would, for instance, have directed resources into intermediate technology for the use of under-developed areas and the poorer people of this country, rather than into Concorde, which will never be of any use to anyone except the extremely rich or expense-account traveller. Furthermore, the nationalised industries have been given an impossible task by being far too big, and it has been difficult, if not impossible, to find people capable of running them.
  Therefore, I want to take up the Secretary of State's offer that we shall be entitled to examine new means of dealing with the problem, which I freely acknowledge—the failure of this country to make the most of its resources in the last 20 to 25 years.
  What is the rôle of the State? To me, it is much more that it should create conditions rather than that it should take an active part in running industry. It should create conditions in which industry can be well run and it should undertake

  739
  certain types of operation which are not attempted by the private sector. Furthermore, it is the State's duty to try to mobilise the national will to a greater extent than has been done at present. The Liberal Party has always praised the advantages of partnership between all those who work in industry. We do so still. We should like to see the law amended to make public companies take on their boards directors from their work people. We should like to see partnership tried in these new experiments of nationalisation.
  Earlier in the debate the co-operatives were mentioned. They have been much neglected in this country. In house building and repairing, and so on, there is a great area in which local co-operatives have a great part to play. Again, we have neglected civic enterprises for a very long time. All of these methods will enable us to break down the monolithic size of some of the nationalised industries without departing from public control. I beg the Government to look at them.
  There was an interesting experiment in shipbuilding at Fairfields. It was the Secretary of State who produced revised proposals for the Upper Clyde. I view with the utmost dismay the idea that a firm such as Scott Lithgow at Yarrow is now to be put into some big nationalised shipbuilding corporation. Scott Lithgow is training an immense number of apprentices on the Clyde, many of whom are being taken into far less prosperous enterprises which are Government supported. I grant to the Secretary of State the fact that one of the great difficulties in the industry has been the position of Harland and Wolff, which has had to be kept going for social reasons, has had enormous quantities of public money and has, therefore, been able to take on jobs which otherwise would have gone to other yards. The main difficulty, certainly of Scott Lithgow and Hall-Russell, is a lack of labour. The best thing that the Government could do would be to increase training facilities. Both Scott Lithgow and Hall-Russell have turned away orders simply because of a lack of labour.
  The Secretary of State also mentioned unemployment. He is right to emphasise that no one dreams of returning to the
  740
  situation of the 1930s, but he did not put the alternatives quite properly. If we continue pouring out money into firm after firm that is in difficulties, it will feed inflation. Inflation does not necessarily harm the rich classes. It harms all those who are unable to protect themselves against it. I do not think that we can expect that people have a right to continue in the same job. We have the duty to try to the best of our ability to make jobs available, and to provide retraining, housing and other necessities for those who have to move. We also have a very strong duty, as the Secretary of State said, to see that people are not pushed about for purely financial reasons. To maintain full employment is one thing; to keep people in the same job is quite another.
  That brings me to the National Enterprise Board. Here again, the Secretary of State said that it would be broken down into smaller units. I hope that we shall hear more about that. I do not believe that in this country we have the geniuses who can do in this corporation all that is necessary for all firms in the country. I hope that we shall hear more about how it will be broken down and how local people will be associated with it. One of the reasons for the comparative failure of our regional policy has been the failure to associate local people in the regions with that policy, and to make them feel that it is not simply something handed down from London but is a natural growth in their own area.
  On the subject of oil, I hope that the Government will say exactly why the British National Oil Corporation is necessary. I am open-minded about it. Having lived in Shetland, however, I think that the House should be aware that North Sea oil will be very much more expensive to get than has been thought by some. It will not be the easy bonanza that was talked about a year ago. Many firms engaged in the business are already feeling the effects. As a taxpayer I am not so sure that I should welcome too much public money being put into this risky venture.
  I may be wrong, but I think that the Government still have a vacancy on the board of BP and that that vacancy has existed for a year.
  Mr. Kinnock: You cannot have it, Jo.
  Mr. Grimond: I might put in for it. The Labour Party tell us that it is essential for the Government to have their hand on these great public enterprises. The Government have the right to appoint two directors, yet one vacancy is always used as a nice old pasture for a retired diplomat and the other is left empty. What will happen to Orkney and Shetland legislation under these proposals? Will they be affected?
  I should like to mention the Scottish National Party which is now the second party, in numbers of votes, in Scotland. What the SNP says must be taken seriously. It says that Orkney and Shetland should have Faroese status. That is its official policy. Faroe is virtually an independent attachment to Denmark. It has its own Parliament and controls its own resources. It gets a lot of money from Denmark, which has a high commissioner. But it is independent. That is the status suggested for Orkney and Shetland. That is perfectly reasonable. Orkney and Shetland are as big as Faroe and have resources that are also as big. If Scotland is prepared to pay the subsidy, similar to that which is received by Faroe, we should be likely to accept that position. This is a serious proposition of the SNP.
  We should then, however, control the oil—let there be no doubt about that. If oil is found 100 miles off Faroe, it is the Faroese and not the Danes who will have it. So when the SNP speaks of Scottish oil, it means about one-third of Scottish oil. The rest is for Orkney and Shetland. I shall not need a seat on the board of BP; I will have my own oil company.
  Mr. Gordon Wilson: I am glad that the right hon. Gentleman has a seat on which to rest at present. Is he aware of the terms of the legislation under the Geneva Convention and of the arrangements which could be made with Orkney and Shetland if they wished Faroese status? Is he further aware that it is part of the Scottish National Party's policy that the people of Orkney and Shetland should be asked their wishes?
  Mr. Grimond: That is what I was saying. We will accept such status.
  742
  I am as strong a Scottish Home Ruler as anyone else, and another very important matter to me is devolution. We have been promised devolution by Her Majesty's Government. How is it going to fit in with their new proposals for nationalisation of oil, and so on? The Conservative Government made the great error of changing Scottish local government before devolution. Is such an error to be repeated by the Labour Government?
  It is no good giving us devolution if all our main industries are to be run from London. One of the main arguments for devolution of governmental power is that there should also be devolution of industry—that the Scottish people should control their own nationalised industries. What, therefore, is the Government timetable? The introduction of devolution after nationalisation would be an appalling mess, to say the least, and totally unacceptable to the people of Scotland.
  As I have said, the fundamental point of the Gracious Speech is whether the social contract is simply a compromise between the Government and the unions, or whether it is to put new aims before the people at large. During the General Election, I noticed with some regret that there seems to be a certain polarisation. The Labour Party has, on the whole, a stranglehold in its traditional areas, the Conservative Party is strong in the South-East of England, and in Scotland the Scottish National Party is a rising force. There is a certain danger of some centrifugal tendencies throughout Britain. Although I am a dedicated Home Ruler, I take the view that we should all much regret it were our politics to become divided in that sort of way at this moment. I believe that objectives should be put before the people of England, Scotland, Wales and Northern Ireland which will infuse new life not only into the economy but also—most important of all—into the politics of the United Kingdom.
  6.3 p.m.
  Mr. John Stonehouse: The right hon. Member for Orkney and Shetland (Mr. Grimond) has considerably improved the standard of the debate, which had become extremely depressing during the opening speeches. We had in the speech of the hon. Member for

  743
  Henley (Mr. Heseltine) a rehash of political ideas from the Conservative Party—ideas which have completely failed in the past. I regret to say that for the Government we had a failure by my right hon. Friend the Secretary of State for Industry to analyse and explain some of the ideas which he has been ventilating in the past months. It is not sufficient on this important occasion to repeat in the House things we have heard many times before. We need detailed explanations from the Government as to how these great and imaginative ideas of social engineering are to be put into effect. I regret that we have not had them so far today.
  I particularly applaud the remarks of the right hon. Member for Orkney and Shetland about the development of cooperative enterprise. I have been associated with the co-operative movement for many years. I believe that, as a nation, we should give encouragement to co-operative enterprise, and I hope that the Co-operative Development Authority will have top priority in the Government's programme, because it is a great method of spreading participation and the rewards of business enterprise.
  However, I must strike a note of caution, because in the co-operative movement we have had for many years an experiment in democracy that my right hon. Friend the Secretary of State for Industry would now like to spread throughout industry generally. I would be the last one to claim that co-operative democracy has been an unqualified success in Britain. In fact, for many years it has failed. We have to find out why it has failed. Why, for example, is it that in some of the big co-operative societies only 1 per cent. of the shareholders vote? Why is the maximum number who vote, even in the smallest societies, only about 7 or 8 per cent.? We have had the mechanism for participation for 100 years but it does not work.
  The thinkers in the Labour Party who have now embraced the idea of participatory democracy must start to analyse the reason why it does not work in the Socialist area where it has already been available. We are in the throes of getting new systems of participation which may completely fail, because in 10 or 15 years' time we may discover that the workers
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  we are pushing into this participation in democracy do not want to participate. We have to apply ourselves to motivation as well as to creating new constitutions.
  The period of this Parliament will be crucial to the future of the country. This is the time when the kidding has to stop. For too long we have fooled ourselves and have tried to fool others that Britain would somehow muddle through. For too long Britain has allowed itself indulgences which a successful and expanding country would hesitate to allow itself. Our problem is deep-seated, and can be best summed-up as "the end of Empire syndrome". It is a failure to adjust to our new situation in the world, which does not owe us a living and is making it extremely difficult for us to earn one.
  Our decline first set in during those first 13 wasted Conservative years which have been followed by 10 years of almost constant electioneering, with the wasteful posturing and manipulating that go with it.
  Now, however, we have a Government of Ministers with experience—experience of failures as well as of successes—who have the chance to snap the country away from this debilitating past and begin to pull Britain round. It is not only a question of policies. In the midst of shortages, we have a plethora of policies. It is will and strength of administration that we require.
  First, the country demands honesty. It is not true that most other countries are more or less in the same state as we are and that we are all suffering from a worldwide disease. The truth about the state of our society is that in 1973 and 1974 political violence in this country has been worse than in any other country in Europe—including Greece and Portugal, which have both gone through some terribly traumatic changes in these years.
  Our economic performance in the last 10 years has been the second worst in Europe. A comparison with West Germany, a country of the same sort of population and resources as ourselves, shows the contrast. The West Germans have no balance of payments problem, even with the high oil prices. Their industry has high investment and there is a growth of productivity per man, year by year. Indeed, their productivity per man is, overall, twice and sometimes three times what we achieve.

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  Factories in my constituency are still using machinery reparated from Germany at the end of the last war, but German factories today have the most modern machinery.
  According to some figures that I obtained from the Library, during the last 10 years sterling has devalued against the German mark by 45 per cent. The pound has not lost value simply because of the effect of worldwide inflation; it has almost halved in value against the German mark today in real terms.
  The pound would buy 11 deutschemarks in 1964. Today it will buy only six. The decline goes on. The drop in the value of the pound against the mark during the past month alone has been 2½ per cent. The implications of this trend are truly frightening. We emerged from the last war with our economy intact. Germany was devastated but it has won the peace which we are losing. It is argued that our economic problems will be solved by North Sea oil. I agree with what the right hon. Member for Orkney and Shetland had to say about this. The price of oil could drop dramatically in the next 10 years. The cost of extracting a barrel of oil from the North Sea is the highest in the world. North Sea oil does not provide jobs for 10 million people.
  Mr. Tim Renton (Mid-Sussex): I am interested to hear the right hon. Gentleman quoting figures about the West German economy. Doubtless he will know that the real success of the German economy stemmed from the moment that Chancellor Erhardt took the decision to decentralise, to minimise the amount of State intervention in the German economy. As all German business men know, and as the German Government knows, the real wirtschaftwunder of the German economy stems from that point. Will the right hon. Gentleman be urging his Front Bench colleagues to minimise State intervention in this country and follow the German model?
  Mr. Stonehouse: The hon. Gentleman will know that the period of greatest advance in Western Germany has been under Socialist Chancellors. In West Germany there is a degree of worker participation in the management of industry which might be an example we should
  746
  follow. Another significant point is the fact that the trade union movement in Germany participates constructively in industry. I would like to see that being done here, where trade unions tend to be more disruptive than constructive.
  Against this depressing factual background the Government have to act decisively. They face a weak and divided Opposition, so they can afford to cut out the electioneering. There should be two broad guidelines for the Government's action. First, they must avoid the error of pursuing excellence and thus losing the good. In other words, they must temper their idealism with the practical realities of 1974–75; secondly they must stop pandering to the demands of vociferous minorities who want to hold the community to ransom and, instead, start acting in the interests of the silent and abused majority.
  I turn to the problem of Northern Ireland because our handling of it over the past five years has been symptomatic of our lack of resolve in other areas of our responsibility. The Gracious Speech does not show that Ministers have learned the lessons of weakness in Northern Ireland. I ought to declare a personal interest, as my car was blown up by the IRA and completely destroyed. I could have been sitting in it at the time.
  The people who perpetrate these crimes and commit mass murder in the interests of their warped political objectives are dangerous criminals, and I think they are insane. I am glad to see that the Minister of State, Northern Ireland Office is present to hear what I have to say, because it will be his responsibility and that of the Secretary of State, for whom I have a great regard, to grasp the problem of Northern Ireland. They cannot deal with the people there as though they could be considered rational. Many of them are not. They are irrational, and some of them are insane. They have to be dealt with as such. Trying to win their cooperation is futile.
  The Government should now declare that the time for patience has run out. If within one month the murder and violence has not stopped, and if the communities are not genuinely working together, the Government should bring proposals before Parliament which should reflect the interests not just of the Province—we should not just be consulting

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  it about what it wants—but of the United Kingdom as a whole.
  My preference would be for a repartitioning of Northern Ireland, with a subsidised, voluntary transfer of population. Let those who choose Eire make their bed and sleep in it and those who choose to stay on this side of the border be welcome to remain in the United Kingdom, with appropriate representation in this House. Let us have no more nonsense about devolution, which has clearly been divisive. If we stay within the wider EEC, as I hope we will, the problem of the two Irelands will resolve itself in 10, 15 or 20 years' time.
  Mr. Phillip Whitehead: Is my right hon. Friend aware that a transfer of population on that scale has probably taken place only once in Europe in the past 50 years, with the expulsion of the Sudeten Germans after the Second World War? It needs a crisis of that kind. Is my right hon. Friend really contemplating that in Ireland?
  Mr. Stonehouse: I think we have to contemplate an extreme remedy to this ongoing problem, to which we can see no solution. The Conservative Government tried and failed. We have been trying and we are failing. I honestly do not think there is any hope of reaching a clear agreement. If it can be proved that the two sides can work together and reach agreement I would go along with that, but I do not think we can be convinced that such an agreement will be reached in the short term. In any case, this business of where people live and how they participate will be solved in the wider EEC if we stay in it. It will be academic on which side of the border a person lives.
  I am sure that hundreds, if not thousands, of families in the Falls Road and elsewhere in Belfast are sick to death of the constant shootings and the danger they face when they go out on the streets by day or by night. They would welcome the opportunity to move to a place where they could live in peace, and where their children would not be shot down if they happened to appear to be holding a toy gun in their hands.
  I do not think that we on this side of the Irish Sea really understand how serious the position is in Belfast. It is
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  depressing in the extreme, and it is time that opinion on this side of the Irish Sea stood up and said what it feels should be done about the problems of Ulster, because it is clear that the communities there have not been able to grasp the problem and find a solution.
  I am glad to note that devolution for Scotland and Wales is not included in the Gracious Speech. It is a foolish policy if carried to extremes, and could be as devastating in its effects in those countries as it has been in Ulster. I hope that the Secretary of State for Scotland will win his battle to keep the decentralisation programme to the minimum. There is no guarantee that sectarian violence in Scotland would be confined to the football grounds if devolution occurred there.
  During the election I strongly supported the concept of the social contract. I shared the platform with the Secretary of State for Employment on the day that the TUC came to its decision. We were all delighted by that decision because, as I said at the time, it gave hope for a new era of industrial relations. There was the idea of participation by the trade unions in a constructive rather than a destructive direction. The alternatives to the social contract are not palatable.
  I am bound to say, however, that the signs which we have had from the TUC today are that it is unlikely that the official trade union movement can deliver its side of the bargain. The courageous speech made by Jack Jones in Glasgow had absolutely no effect on the actions of the unofficial strikers, who have now won an award of 40 per cent. By no stretch of the imagination can that be construed as being within the social contract, which lays it down that wage increases will take account only of price increases. Any increase over and above that percentage will come out of someone else's wage packet.
  The increases demanded by large sections of the population today cannot be afforded, and the Government must tell them so in forthright terms. A good text to follow would be the excellent speech made towards the end of October by Mr. Arthur Sugden, the Chief Executive of the Co-operative Wholesale Society, who said:
  "The great tragedy is we do not seem to learn from past mistakes. Official statistics

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  just published show that in the second quarter of 1974 we were no better off than we were in the final quarter of 1972 when the wage freeze was on. Since then personal incomes have risen by no less than £3,200 million, but inflation has taken back £2,000 million and the tax man got all the rest. These are the economics of the madhouse… Whatever the expectations of people, and irrespective of promises made, consumption will have to be reduced…
  I am sure nobody would deny that the real battle is against inflation or that the most essential ingredient of any Government strategy to resolve it will be public support for whatever proposals are put forward. Inflation is, in fact, the challenge of our times, and it is not just a matter of monetary policy, important though that is but rather that our economy is fuelled by a growing expectation by the community of bigger and better things in a demand economy where today's satisfied demand is merely the starting point for tomorrow's negotiations, but without any means of reconciling the various claims with the nation's ability to meet them."
  The nub of the problem is that the Government have failed to show how we should evaluate the various claims made on our economy. If the various sections of the community who are represented by trade unions do not behave in a responsible fashion the Government will have to step in. If the TUC and the trade union movement generally cannot keep their side of the bargain of the social contract, we shall undoubtedly have to have a wages freeze in 1975. I hope that we can break away from the depressing cycle of stoppages and strikes which handicap industry and sap the country's morale. I regard a strike as the last refuge of a bankrupt negotiator facing an inept employer, both operating within a flimsy structure which provides no real rules of conduct. The TUC and the Secretary of State for Employment must aim for the abolition of all strikes, unofficial and official. We should apply a little civilisation to this area of our affairs and stop inflicting terrible wounds on ourselves to prove our manliness.
  I am surprised that there is no reference in the Queen's Speech to an investment bank. I presume, therefore, that the Chancellor of the Exchequer intends to refer to it in his Budget Statement next week. There is an urgent need for such an institution, because the joint stock banks are now incapable, on their reserve position, of converting available short-term funds to long-term investment. They could not take the risk. The oil
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  producers have failed, as yet, to invest any significant part of their huge funds in long-term facilities.
  Only a State investment bank would have the backing to guarantee conversion of the thousands of millions of pounds required from seven-day money to seven-year investment money. Only the State can take a view about long-term interest rates for these massive amounts of money. A State investment bank should not detract from the National Enterprise Board, which is also required. The two are complementary, the former providing long-term loans on national terms and the latter taking out equity shares in industry.
  I welcome the Government's intention to set up quickly the National Enterprise Board and also to take the aircraft industry under State control. It is essential that we should have a strong and viable aircraft industry and that the period of uncertainty about the industry should be brought to an end. However, it is not only the form of ownership but the management which is so vital to its success.
  The Post Office Corporation has been referred to. That has not been an unqualified success, not because the structure is wrong but because there are weaknesses at the top and in the management of the corporation. It is not easy to find chairmen for large-scale public corporations. The man I put forward for the Post Office Corporation is now the successful chairman of a large industrial group, but he was turned down by the Prime Minister for reasons which I did not understand at the time and do not understand today.
  I hope that we shall be able to persuade qualified men, irrespective of their political loyalties, to be chairmen of the aircraft industry corporation and the National Enterprise Board. There are too few qualified men around who are able to do these jobs. It is all very well to assume that people can be plucked from the shop floor, from an accountant's office, or out of the Army to do these jobs, but it is not as easy as that. They are difficult jobs, and I hope that the Government will apply themselves not only to creating the right structure but to finding the men capable of running the industries successfully.
  For the aircraft industry, I hope that a way will be found to persuade Sir

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  Arnold Hall to serve. He has one of the most able business brains in Britain. He is not a speculator or a capitalist of the sort whom my hon. Friends below the Gangway would attack; he is a wage slave, like all of us. He has been a distinguished civil servant and the head of Farnborough, where he did noble work. He is now doing a marvellous job in industry. Many trade unionist jobs in Hawker Siddeley are there because he and his colleagues are running Hawker Siddeley as a successful enterprise. We cannot afford to lose men of that ability and calibre. Sir Arnold is dedicated to the aircraft industry, and it would be a tragedy if he were lost to it.
  There are many misconceptions about democracy. I believe that a democratic decision is valid for the community as a whole and is binding on the community as a whole, but that does not mean that democratic decisions taken by minority groups are thereby sanctified. Many minority groups make decisions to act against the community and representatives of those groups appear on television and say that it was a democratic decision, on the assumption that it will thereby be sanctified and everyone will accept it. I have never heard anything so ridiculous as the suggestion that if a group of people make a decision in their own selfish interests which will hold the rest of the community to ransom it will be accepted because it is a decision democratically arrived at.
  The decision taken by the men of Clydeside to pour hundreds of millions of gallons of sewage into the Clyde and pollute the river beyond recovery for two years I do not regard as a moral decision, although it was a democratic one. I think that the decision was wrong, and should be condemned. I hope that the Government, with four or five years in power, will be able to find an answer to the problem of creating a mechanism to prevent damaging strikes of that character, which destroy the environment and sap the country's morale.
  We have an exciting period in front of us. The Government are certainly better than the administration we had until February of this year. The Government must recognise, having had many years' experience, that the country expects them to stop making excuses and to produce
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  results. I wish the Government well over the next four or five years, and I believe that, on the whole, the Queen's Speech is a very good start.
  Several Hon. Members rose—
  Mr. Speaker: Order. It is clear that I shall not be able to call everyone who wants to speak, but I promise to carry forward until tomorrow the names of those who cannot get in today.
  6.30 p.m.
  Mr. John Davies(Knutsford): First, I should like to join the right hon. Member for Orkney and Shetland (Mr. Grimond) in what he said about the maiden speakers today. I particularly want to follow what he said about my hon. and learned Friend the member for Kinross and West Perthshire (Mr. Fair-bairn) in commending his predecessor to us. Sir Alec Douglas-Home was a very respected figure in this House. I had the benefit and privilege of serving with him for a considerable time in the previous Government, and certainly no finer colleague could have existed in or outside Parliament.
  During the course of this debate I should like to touch upon the subjects of capital resources to industry on the one hand, and, briefly, the oil industry on the other. I feel it right to declare an interest in that I am a director of a merchant bank and have for many years been a director of a major oil company.
  Over my life in industry I have noted that the deterrents to investment generally consist of a deficiency of margins, or a deficiency of markets, or a deficiency of labour, or a deficiency of resources or more generally, a blend of them all. In the course of the past few months I have found that the extent of deterrent which is effected by a deficiency of resources greatly exceeds all other causes. The number of investment projects in industry—I speak of areas wider than this country, but particularly in this country —that are now being foreclosed and abandoned on the score of simple lack of money to undertake them is, indeed, frightening.
  It is not confined to smaller companies. Many large companies that, I am sure, perhaps for generations previously had never contemplated failing to go ahead with major viable investments on the

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  score of the inability to find the resources necessary to achieve them, are now so faced, and are deferring or abandoning such projects.
  Undoubtedly, too, the problems that arise are involved with the major problems of liquidity, to which so much reference has been made. Clearly, the fact that there has been so much reference tends to restrain one from going into the whole argument about why that should be, but I wonder whether the full measure of that liquidity deficiency is realised even now in the country at large.
  Professor Harold Rose commented on this the other day. It was reported that
  "He feared that industry's requirements for stock finance, fixed investment and trade credit were likely to exceed resources generated in the current financial year by roughly £5,000 million, double the excess of £2,500 million for 1973."
  We are dealing with illiquidity of quite unparalleled severity.
  It is necessary to point out that British industry traditionally finds about three-quarters of its total investment programmes from its own internal generations of funds, and looks to the market to meet the other 25 per cent. Today, that 75 per cent. is far from being met. Therefore, for a long time to come, industry generally is bound to look more to the market than it has done hitherto.
  Of course, all the explanations of this phenomenon have been put to us. We know all about the nutcrackers of prices and costs; we know about the excessively damaging effect of the March Budget on industrial liquidity; we know about the extraordinary problem caused by inflation acting on stock appreciation and thereby causing high tax liabilities that derive from so-called profits having nothing whatever to do with real profits.
  It is difficult to conduct this debate—particularly this part of it, in relation to the capital resources of industry—with the Budget only a week ahead. Clearly, the Budget plays a fantastically important part in the solution of these problems. At this stage we can only contemplate what may be the outcome of the Chancellor's reflections.
  However, it is wise and perhaps right to say that it would surprise us all if those reflections gave rise to a relief of this intense liquidity problem for industry
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  at the price of an excessive printing of new money without backing. I think that none of us—even those who feel most acutely about the need to support industry at this stage—would feel at all happy if that support were to be generated by the printing press, with all the damage that that could contain for us.
  Equally, we have some concern on the subject of the investment bank—the brainchild of the right hon. Member for Manchester, Central (Mr. Lever). It is an interesting concept, but as yet it is too little outlined, and too little defined —particularly about where the access to those resources would be found—to make it a proposition that we can contemplate with anything like equanimity. But we expect to hear more about this subject during the course of next week's Budget Statement and debate.
  In today's conditions—certainly in circumstances in which industry is caught with this wholly inadequate fund of resources to sustain its capital programmes and with an incapacity to generate the resources necessary even for the future to meet what it considers quite seriously to be profitable and viable investment—industry is forced to look outside itself, to the market, for funds, and it has been doing so. What has it found in the way of a market outside? In terms of the domestic market, it has found an equity market that is in so serious a condition that it may be absolutely excluded as a resource to be regarded as available to industry for the maintenance of its investment.
  When we talk in perhaps a somewhat sneering tone about the Stock Exchange and all that it entails, let us not forget that the Stock Exchange is the measure of the capacity of industry to appeal to the country for risk capital. If, through that mechanism, industry cannot look to the country for risk capital, then indeed, particularly in the parlous conditions in which it now finds itself, it is faced with gruesome prospects.
  It goes beyond that. The truth is that in terms of anything like long-term borrowing in our domestic markets, certainly on fixed interest rates, there is virtually a total absence of available funds. Therefore, the normal industrial enterprise, faced with the problems of investment ahead, short of generated resources of its

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  own, unable to appeal to the equity market, can equally not appeal to the debenture or fixed-interest bond market either—it does not exist. So it finds itself led towards the market of the overdraft, or the market of the variable interest rate, all of which are generated more and more, these days, on the basis of short-term deposits with the banks.
  Those are circumstances that hon. Members on both sides of the House must recognise as a sure signal of damage to our economy. An excessive use of short-term investment funds for long-term investment is in itself, I think, one of the high roads to liquidation and bankruptcy.
  We therefore find ourselves with industry in this difficult situation, looking for more than the usual complement to the market to help it along with its problems and finding a completely flat or absent market to face it. What does it do? It does as British industry has done for many years and I am sure will continue to do; it turns to foreign markets for finance. It looks there for what it can find.
  Today the foreign markets for finance are themselves exceedingly affected by the whole shift in resources occasioned by the change in the oil pricing system and the mammoth movement of funds to new owners, who are perhaps putting back the money to a certain degree but putting it back on conditions that only with great difficulty allow anything like long-term investment. They allow short-term investment. One can put out money at short term, but one cannot put it out on anything that commands a long-term requirement on the lender.
  One finds certain markets, such as the United States market, better placed than all of the European markets in this respect, but even so it is affected by this shortage in the availability of funds for long-term investment. They are terribly short throughout the world.
  Unfortunately, where there is shortage the confidence of the borrower becomes a critical factor in the availability of those funds. In seeking to find funds in the course of the past months for absolutely blue chip industrial companies in this country, I am met consistently with the fact that the United Kingdom is at the
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  bottom, or near the bottom, of the list of confidence for the availability of overseas finance. It is a mortifying experience for a person such as myself, having been in industry for years, to find myself relegated to the bottom of the list and have that regarded as a factor of no confidence.
  The reason for the absence of confidence often does not derive from the company itself. The company may be a fine one, with a good record, with excellent management and with a known record of technical achievement and commercial efficiency, but one is faced with the conclusion that the funds are not available because what is in doubt is not the company but the country.
  This adds still further to the anxieties and concern for our future. That people will not lend to XYZ company, not because they do not think that it is a fine concern but because they do not know that the country in which that company exists is responsible in the longer term, is a new experience for me.
  It is a new experience which derives from the fact that there is this real fear that the tendencies in this country at the moment are not to allow these good managements and efficient concerns to operate on their own and in their own judgment, but, on the contrary, consistently to be the subject of more and more critical intervention of a damaging and troublesome kind.
  This is the cause, to a large degree, of the lack of confidence that one finds. I regret to say it, but it is true, that the right hon. Member for Bristol, South-East (Mr. Benn) is the greatest credit risk for British industry that I know. It is a matter that is bound to cause acute concern to those whose task it is to try to ensure that British industry receives the resources that it needs.
  Mr. Robert Kilroy-Silk: Is the right hon. Gentleman aware that investment in British manufacturing industry dropped catastrophically during the years of the Conservative administration? Is he not aware, also, that productivity per man dropped during the same period and that this had nothing to do with the Labour Party's proposals for nationalisation? The proposals were not

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  even in the manifesto at that time. Investment in British manufacturing industry, which was at its height in 1970, dropped in 1971, dropped further still in 1972, and went down again in 1973—long before there was any prospect of a Labour Government.
  Mr. Davies: I do not think that the hon. Gentleman's statistics are quite right. In 1973, investment was certainly moving forward fairly rapidly in the early part of the year, and it would have moved forward much more rapidly. The point I am complaining about is that even where there is potential for investment there is at the present moment an absence of resource. The absence of resource derives from a lack of confidence, and I am afraid that that lack of confidence is attributable to the causes to which I referred and to no other.
  I cannot accept that there is an alibi. There is no alibi. There is a real reason why international resources are not available to this country to the extent to which they are needed.
  This provokes a real and particular problem in the oil industry. The truth is that anyone who knows the oil industry at all knows that discovery is one thing —it is expensive, difficult and it was at the limits of technology in the North Sea —but it is only one step forward, and there are many steps to take after it. The development operation for bringing oil to these shores in the 1980s in quantities that will allow us to correct what is bound to be a savage imbalance during the intervening period will be immensely costly.
  During a period when, in order to meet our problems, we shall still be big importers of oil for the whole of the rest of this decade and, by the very nature of international markets, we shall have a difficult international market in which to live and gain our living anyway, we shall add to that the tremendous weight of finding externally a vast investment for our own requirements of North Sea oil.
  We are talking of many thousands of millions of pounds of foreign money which we need to borrow. If there is an absence of confidence of the kind of which I have had so dismal an experience in recent months those funds will not be forthcoming in which case what we are all elying on to save us from the situation
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  in which we now find ourselves, and from the terribly precarious life which we shall face over the next few years. will itself not be forthcoming.
  I looked through the Queen's Speech for a realisation of the extent of this problem, some kind of understanding that we were not, at this moment in time, just dealing with seeing through a manifesto conceived, perhaps, in different times for different purposes. I looked for a recognition that we were facing what may prove to be the most awkward, worrying years that we have ever had in the life of our industrial activity—not just since the war —and I found little of it.
  Of course the Queen's Speech is a series of generalities. But the Secretary of State for Industry has promised us a series of debates. I sincerely hope that that series of debates will produce something which shows a deeper understanding of the problems with which we are faced and something which has its heart in the need to regenerate industry, but to regenerate it in the only way that is practicable—by relying on the qualities and the ability of those at every level in British industry including those at management level.
  6.46 p.m.
  Miss Margaret Jackson: I have the good fortune to represent a constituency of some distinction, perhaps occasionally even of some political notoriety, the city of Lincoln.
  Lincoln is a beautiful cathedral city with a glorious past dating back to Roman times Its previous Member was Mr. Dick Taverne, but, as I am sure he in his time has made this House aware. Lincoln is not just an historic city with a glorious past. It is an industrial city, a city which is rightly proud of its fame and its skill in engineering, a city which is part of the wealth-creating industry of this country, a manufacturing industry.
  This part of the debate on the Gracious Speech is about cities like Lincoln—with their past glories in historical pageant and technological achievement—but with great concern for their future. The proposals for industry contained in the Gracious Speech are directed towards their problems, the problems that beset industry not only in my own constituency but throughout the country.

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  Successive Governments have highlighted our industrial problems—under-investment, ill-directed planning and regional unemployment. All in turn have had earnest discussions with industry and have sought fresh incentive to tempt industry to invest and to expand in the regions and elsewhere, and successive Governments of every political persuasion have failed. It is true that there have been some small successes—one or two factories, a few hundred jobs—but nothing ever on the massive scale of reinvestment and redeployment that we need. Indeed, there are those among hon. Members opposite who, when they were in Government, were heard berating industry for its failure to respond to all the pressure, persuasion and pleas that that Government directed to them.
  I believe that these policies have failed under successive Governments because they were founded on the same basis of misconception, namely, that industry would invest not only in depressed regions but anywhere, because it was in the national economic interest for it to do so. Successive Governments have set the targets for growth, talked of increasing and decreasing confidence, and made changes in investment incentive on that mistaken assumption.
  I call it a mistaken assumption because it seems to me that it is, under our present system, not the job of those who run British industry to put the national interest first. Perhaps it should be, but it is not, and they do not, especially if it means risking a fall in profitability, even in the short term, and a bad result for their shareholders. It is their job to manage their businesses efficiently and to make as much reasonable profit for their shareholders as they can. That is their prime aim. When Governments exhort or persuade them to invest or expand, they do so if it is in their interests as companies, if it fulfils their prime aim, but not otherwise.
  This is not a theory of mine or of my party. Indeed, a Select Committee of this House that had studied these problems published a report last year and found that the companies concerned had accepted and made use of Government incentives, when they had already decided to move into the regions to expand and to invest, because these plans were
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  acceptable in their own interests. In other words, Government incentives had had little or no effect.
  The cumulative effect of this failure in the process of persuasion is the failure of our regional policies. We lose, therefore, as a country the opportunities that we should take. We invest too late. We expand too little both for the general welfare of the economy and for the rational fulfilment of Government economic targets.
  Our second basic mistake has lain in an outdated view of the ways in which companies decide whether to invest or to expand, and the factors that influence them—outdated because it fails to take into account the changes that have taken place in British industry, as elsewhere in the world, over the last 20 years.
  I refer principally to the degree of concentration of ownership and interest. I do not propose to discuss on this occasion whether this concentration is beneficial, but its existence is a fact. Where years ago a sector of industry might contain as many as 20 or 30 companies, each competing for the market, today it contains about four or five. Where the market is divided among so little free competition, to base our industrial and regional policies on the assumption that free competition operates among these industrial giants is nonsensical. They base their actions on the need to hold their share of the market.
  This frequently means that little or nothing is done that is out of line. If one raises his prices, they all do. If one advances plans for new investment in new plant, they all do; if one decides on a moderate degree of job expansion, they all do; because they are watching not only the world and the domestic economic climate but one another, making a kind of collective judgment about the prospects for their trade. Government wishes and judgment about investment and expansion take a secondary rôle to these other considerations.
  The proposals in the Gracious Speech are designed to come to grips with these realities. They have been much criticised, and the grounds on which they have been criticised are extremely interesting. There are those who have based their criticisms on an understanding of the proposals, fearing that they will not work. I must

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  add, however, that in most cases, even where there has been criticism on these grounds, there has been no rejection of the idea that the experiment should continue Most of the criticism, however, does not come on the grounds of what these proposals are meant to do or how they are meant to work—not even on the grounds that they involve taxpayers money. Taxpayers' money is quite acceptable so long as it is handed out without return in terms of influence or direction. They are criticised on the grounds that they are said to be dogmatic.
  I have never understood the philosophical assumption that private ownership is intrinsically better than public ownership. No one can suggest that it is more fair. It tends to be defended on the grounds of efficiency—grounds that are subject to considerable question and considerable operation of selective judgment. The automatic assumption that there is something wrong about public involvement in industry, even without considering whether it can be made more flexible or used in different ways, has never been philosophically justified. It is my hope that we shall hear it so in this debate. I believe that it cannot be philosophically justified. It is an instinctive reaction, a gut reaction, a dogmatic reaction, on the part of our opponents.
  Our proposals are based on the use of public ownership and of more informed public planning to solve the real industrial problems that this country faces. We hope, through planning agreements, to ensure that the Government are better informed about industry's plan and do not make wild assumptions about investment and jobs on which they base the wrong policy. We hope, too, to make industry aware through these agreements of the Government's needs and problems, and perhaps to make industry take them more into account at the planning stage. There is nothing dangerous or frightening about that; it is common sense.
  Through the National Enterprise Board we hope in time to be able to harness the changing patterns of industrial interaction that I have described, to ensure that if the most influential nine or 10 companies in a sector are watching and following one another, at least one of them is concerned with the interests of Government planning, of economic planning, our interests. As companies are run
  762
  in the interests of their shareholders, it seems only reasonable that the way to achieve this is through Government shareholding.
  This policy, and that of planning agreements, is pursued in many other countries in the European Economic Community as well as other countries outside it; a Community whose policies and success have been extolled to us in the past by other hon. Members. Only in this country are the proposals for industry seen as elements of dangerous revolutionary tendencies, and then, I fear, only by those who are as ignorant of the real proposals in the Gracious Speech as they are of what is done elsewhere.
  These policies are, nevertheless, an experiment here, although in some ways an extension of what has gone before, but I believe them to be a necessary experiment, a brave experiment. Certainly they form the only rational proposals before us. The industrial policy of Opposition Members appears to rely on the maxim of Bo-Peep:
  "Leave them alone, and they'll come home, And bring their tails behind them."
  Our industrial future is of great concern to all of us, but especially to a constituency such as mine which is totally dependent for its survival on our industrial success and our industrial strength. For these reasons I hope that these proposals in the Gracious Speech are given a fair hearing and a fair trial.
  6.58 p.m.
  Mr. Cranley Onslow: In the 10 years and some few days during which I have been fortunate enough to be a Member, I have never have the chance to speak immediately after a maiden speaker. I thank you, Mr. Speaker, for giving me the opportunity to do so after one who is so articulate, so self-possessed and, if I may make a chauvinistic comment, so easy on the eye. I am sure that the House will look forward to hearing from the hon. Member for Lincoln (Miss Jackson) in future. If I may chide her without malice, may I say that the House might make cognisance of the fact that her predecessor for 12 years was, whatever faults he may have had, a man to be envied for having the courage of his convictions? I should not have liked that to go unsaid.

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  It may be that in some of the hon. Lady's comments she has laid up a fruitful area of disagreement between the two sides of the House when next she seeks to catch your eye, Mr. Speaker, because I was interested to detect no reference in what she said to our rôle as customers and consumers. But, never mind, that is all for the future and we look forward to it. I heartily congratulate the hon. Lady on the immense self-possession with whch she addressed the House—far greater than most of us mere males could muster.
  Turning to the matter of this debate, there was one omission on the part of the Secretary of State to which I should like to draw attention. Although at one moment he appeared to be about to mention Court Line, he never did so. An occasion when we are discussing the Government's industrial policy, would seem to me to be a good opportunity to have said a bit more about what is going on in this particularly controversial area. I do not suppose that I am alone in wanting to hear from the Secretary of State some amplification of his promise that the holiday makers who were booked with Court Line last summer should have some reasonable security, and how he wishes now to react to a statement which looks as if it has an element of the careless about it.
  I do not think the Secretary of State ought to be surprised at the bitterness with which a large number of people up and down the country view those remarks and that promise of his. A great many people were frustrated, lost their holidays, and considered themselves swindled on the basis of something that was said from the Dispatch Box by one of the principal members of the last Government and of the present Government.
  I am not surprised that my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) has had a great deal of correspondence on the subject, following his announcement that he had been invited by one of his constituents to take the matter up with the Parliamentary Commissioner for Administration. As this is a House of Commons matter as much as a matter for the Parliamentary Commissioner for Administration, may I still ask —and perhaps the hon. Gentlemen on the Front Bench will stop gossiping and take
  764
  note for a moment—the Minister for an answer to these questions?
  What is happening in the case of Court Line? Who will pay the money which has been lost by the individuals concerned? Why is it that we have not yet had from the Secretary of State some statement explaining the way in which he has pledged the public credit and let the public in for considerable expenditure in a manner which, I dare say, in former times might have been considered to touch upon the fitness of the Minister concerned to continue to hold public office?
  I make no bones about the fact that my memory of the performance of the Secretary of State is a long one. It goes back over the affair of the Beagle Aircraft Company. During the debate on 10th March 1970, when we were considering a mere matter of £7,500,000 of public money which had gone down the drain, the Secretary of State said:
  "I cannot pretend that I examine personally all the matters in which public money is involved."—[OFFICIAL REPORT, 10th March 1970; Vol. 797, c. 1141.]
  When we look at the affairs of Rolls-Royce, I do not suppose that the House needs to be reminded that there was another example of how the light-hearted approach of the Secretary of State to matters of public accountability has so often landed the taxpayers with an extremely heavy bill. [An HON. MEMBER: "Frivolous."] One of my hon. Friends says "Frivolous." I find it difficult to quarrel with that description, again remembering a debate in which I was involved when the Secretary of State chided the Government of the day at great length for not having come wholly clean about the financial arrangements involved in the Concorde project; only to reveal, in the course of his own speech, that he himself had come to some agreement three years previously which he had not thought necessary to disclose to the House at that time and which, had it been known, would have enabled the House to alter the terms of the project.
  When I asked the Secretary of State earlier this afternoon how, in the new arrangements with which we are concerned—relating to the extensions of nationalisation upon which he has embarked—the House of Commons would be accountable for the expenditure of public money involved, I was told that

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  there would be a reference to that later in his speech. The only reference which I was able to detect later in his speech as even remotely touching upon this subject was when he said that there would be complete disclosure to the workers.
  I hope that when right hon. and hon. Gentlemen on the Government benches approach this matter they will realise that the money which they are speculating is not their own; it is raised from the taxpayers of this country upon conditions which are well established by precedent, and if they are not prepared to account to the taxpayers for it they put themselves in considerable political and personal peril.
  The amendment to the Gracious Speech is tabled in the names of a number of my right hon. Friends and refers to the proposals before the House as being disastrous. I do not think there is an element in them which is more disastrous than the Government's evident readiness to bypass Parliament—to cut the House out of the decision-making process by any and every means in their power.
  It may be that the previous Conservative Government opened the way to some of this. In retrospect, I think that criticism on those grounds has in it an element of validity. The Secretary of State, after doling out large sums of money to the workers' co-operative at Triumph, after propping up International Property Development, after bailing out Alfred Herbert, and being in the expectation of passing legislation which will enable him to take the British Aircraft Corporation, Hawker Siddeley and the shipbuilding industry into public ownership, still speaks of a high degree of accountability being made available through the parliamentary process. I think he should have devoted a line or two in his script to telling us how that might be done.
  If we leave aside the irrelevance of these propositions; if we leave aside the damage which the Secretary of State and all his works do to confidence in British industry at home and abroad, it is still right that we should ask: how are the people to control what is done in their name? How is Parliament to exercise some check over the power which is exercised by the Secretary of State and by Government?
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  That brings me to my second and more general point. The Select Committee on Nationalised Industries is a busted flush; there is no use pretending otherwise. It is a committee whose reports are seldom read. It is a committee which is virtually unstaffed. It is a committee which exercises virtually no power, and yet vast sections of British industry come within its orbit. Enormous sums of public money are raised and spent by the nationalised industries. We rely upon that Select Committee to invigilate on our behalf, but that Committee is a busted flush.
  As a matter of high priority, if the Government care about these matters, which I doubt—I put it to my right hon. and hon. Friends on the Opposition Front Bench, in default of any evidence of Government care on the subject—we must do something to jack up the Select Committee on Nationalised Industries to raise it to a level at least as high as the Public Accounts Committee. It must become a committee which can strike terror into the minds of some of the mandarins of the nationalised industries and into the minds of the Ministers and the civil servants who are theoretically controlling these mandarins. This must happen within the next 12 months.
  This afternoon we have been confronted with a Minister who evidently believes that mines exist to provide employment for miners, and who believes that there is no difference between people who work for an employer who can go broke and people who work for an employer who cannot go broke. He is a Minister, in short, who is totally out of tune with his responsibilities and with reality.
  Given that this is so, the House must adjust to the need to control a nationalising Government. That is even more important than the question asked by the right hon. Member for Walsall, North (Mr. Stonehouse), namely): where are the men to come from, who are to flesh up these new nationalised industries?
  If the House has to adjust, industry must adjust as well. The Queen's Speech uses platitudinous and comforting words about the flourishing private sector. It is worth reflecting that it also contains proposals which would reduce the insurance companies to a level of performance set by the least efficient and least reliable

  767
  among them, and everywhere in the Government's programme there is the same levelling down of enterprise, efficiency and profit-making as we see, as private individuals, in all our spheres of activity. Business is in the front line. It cannot and must not trust the motives of the present Government. It must look to the House and to the Opposition to monitor and to check the actions of the Government.
  I suppose it would be unjust to say that the Government are wholly made up of members of the "National Union of Grave Robbers", but there is a large number of members of the "National Union of Grave Robbers" in the Government. Given that that is so, industry must fight for its life. I hope that all those who sit on the Opposition Bench in this Parliament will pledge themselves to keep industry alive, up to and including a willingness to volunteer to be present at any interview that may take place between the representatives of any branch of industry and the Secretary of State and his minions.
  7.11 p.m.
  Mr. Neil Kinnock: There are at least two bits of common ground that I have with the hon. Member for Woking (Mr. Onslow), and it is unusual since he tends to occupy that part of his party's philosophical ground which is the most distant from that of my party I tend to occupy. Certainly, in his compliments to my new hon. Friend the Member for Lincoln (Miss Jackson), I fully endorse everything he says.
  In addition, to some extent I agree with the hon. Gentleman's comments about the performance, functions, support, staffing and efficiency of the Select Committee on Nationalised Industries. I do not think that it is busted flush—perhaps I should be better able to comment if I knew what a busted flush is—but I gained the impression that he did not think it an efficacious body in fulfilling the parliamentary function of scrutiny, and I agree with him there, in spite of the fact that I am a member of it. I hope that my continued participation will strengthen it. I am sorry that he cannot join me in this participation.
  Before the hon. Member got on to the question of the Select Committee, he disclosed in one comment a great deal of
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  what hon. Members in all parties on the Opposition benches, and, indeed, some people outside this House, feel about the difference between that which is privately owned and used to manufacture and service and that which is publicly owned and employed in manufacture and service.
  The hon. Gentleman spoke about the taxpayers' liability and the responsibility that Members of Parliament and Ministers have to taxpayers, while five minutes previously he had been talking about the need for us to be responsive to the needs of customers. Constantly, throughout my political life, and no more frequently than during the recent election campaign, I have encountered people who insisted on asserting that the publicly-owned industries were an incubus, that taxpayers would have to foot the bill, that people were fed up with making up the deficits that the nationalised industries allegedly incurred repeatedly. They could see nothing wrong with private enterprise doing exactly the same—to create additional surpluses and profits to meet the investment obligations and so on, and to create dividends, but doing it not through the financing of taxation which is moderately progressive but simply doing it in the most regressive fashion by pushing up prices in order to collect the necessary additional cash.
  The sooner the Opposition acknowledge that public enterprise in this country, as everywhere else, has the choice of meeting its need for revenue either by collecting from the Exchequer or by putting up its prices, and the sooner they face the political choice and the political task, unenviable as it may be, and face it honestly, the sooner will they make a great contribution to political and public education about the needs of public industry and of private industry.
  I say categorically that I much prefer, for reasons of economic justice, for consistency in economic planning and for many other reasons, a system that would fulfil the demands that we are about to make as never before on industrial production in this country and ensure that any deficits that arise from underpricing in order to meet domestic demand can be made up out of taxpayers' money, which is fairly and progressively collected, rather than be spread as a burden indiscriminately across the board, with all the effects that that has on distribution

  769
  of wealth, power and consumer ability in this country. That is probably the essential difference between the two sides of the House on the central question of who shall own and, therefore, by the same token, who shall control our country.
  The point was reached a great time ago, in the view of many who share my Socialist political philosophy, that capitalism had a foreseeable end. In recent years we have seen that capitalism has failed to meet any of the demands that a civilised society imposes upon industry, whatever its ownership, in recognising the need for full employment, for goods and services at a price that the country can afford, and for financial and international security. British capitalism has signally failed to show the enterprise about which it boasts so frequently and so loudly, and it has failed to fulfil the tasks that it set itself to make this nation prosperous. Therefore, the time has come, in the view of an increasing number of our fellow citizens and a large proportion of the British Labour movement, for the private enterprise system to give way to one that is to a far greater extent in public hands.
  I would rather put the emphasis, in the word "nationlisation" on the first part of the word, as the Americans do, because what we seek to do is to take those resources and wealth that are the nation's original product and the result of the effort of the people of the nation and put them under the control and ownership of, and make them accountable to, the people of the nation.
  There are those in our party who, at least occasionally, employ the Marxist analysis of what is happening in our society. It would be wrong to call us Marxist. That gives the impression of our having a kind of religious conviction about the words of a man, and I do not think that anyone should have that about any man. Occasionally, the phrase "Marxist" is used as a form of mild slander against us, and apparently it is used to frighten children in prep schools.
  However, Marx did give us one phrase that should enable even the Opposition to get a closer understanding of what the Labour Party and many people associated with it are now seeing as necessary for this country, and a justification of the move towards increasing public owner-
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  ship and control of our industries and services. Marx said):
  "Capital is merely expended labour. We consider that the original source of all wealth is labour by hand and by brain by human beings."
  If that is the case, as I believe it is, then we deserve the full product. The workers by hand and brain, their dependants, their fathers, mothers and children, deserve the full benefit, the full product of the wealth that they create. That is taking a basic, philosophic view of the situation, but, stripped of all the sophistication and the managerial phrases that we employ in order to try to explain ideas, it is essentially the logic behind our ideas.
  The simple assertion, therefore, is that we have tried the private enterprise system for a long time. It does not meet the needs of a modern civilisation which expects to be fully employed, which wants to overcome inflation, and which expects to attain at least a reasonable balance of payments with the rest of the world. Therefore, that system must be moved aside, and it is best replaced by a Socialist system, because that is how we translate the efforts of the common ordinary working people, by hand and by brain, in our economy, back into wealth for the use, disposal and benefit of those people.
  Our proposals were slandered throughout the election campaign. Indeed, they have been slandered this afternoon. I should like to think that it is an unconscious slander by some of the Members of the Opposition, but it probably arises from a deliberate attempt to carry on scarifying people and drawing red herrings across the public debate about ownership and control.
  The allegations which the Opposition have made about our proposals for nationalisation do not enjoy the support which they did even five or six years ago among the people generally. We have been told that nationalisation, in the words of the amendment, will cause just about everything short of the return of the Black Death. What we find, on the contrary, in those sectors of our economy that have been nationalised is a total contradiction of all the disaster that is foretold for us.
  We are told repeatedly that the nationalised industrial sector is a perpetually loss-making sector. I am glad

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  to be able to tell the House that it does not have to rely on my belief in public ownership to counteract that view. The evidence is to be found in no less a place than the latest annual edition of The Times 1000 1974–1975 which says:
  "Any idea that Britain's nationalised industries cannot make profits is exploded. Nationalised industries do make profits, or surpluses as they prefer to call them, on a straight trading basis and, according to the latest figures available, at the time of going to press, only three private companies, British Petroleum, Shell and ICI make more profit than the Electricity Council and its Boards last year. Similarly, the British Gas Corporation would have had a place in the top ten profit makers."
  I take no particular credit for that, and I derive no particular enjoyment from it. I should prefer those profits to be delivered to the economy in the form of cheaper goods, services and manufacture. If Opposition Members wish to employ the criterion that profit is the justification for status in our society and economy and to use that to defend their economic philosophy they have only to look down the list published by The Times 1000 1974–1975 to see that, with the exception of the National Coal Board, every nationalised industry in this country made a profit in the last year, the smallest of which, I think I am right in saying, on looking quickly down the list, was that made by the National Bus Company—£4·8 million.
  Sir Stephen McAdden: If someone has a monopoly and can charge what prices he likes, he must be up the pole if he cannot make a profit.
  Mr. Kinnock: I hope the hon. Gentleman will freely admit at all forthcoming hustings and in all his speeches in the House that it is a general characteristic of nationalised industries to make a profit, whether they have a monopoly or not.
  The second thing I sincerely hope the hon. Gentleman will acknowledge is that the feature that is most important in our nationalised industries is not the fact that they are monopolies. If it is, and he wishes to oppose monopolies, it is a pity that he did not do it when he had the chance when his Government were in power during 17 of the years since 1951, because there was no significant de-nationalisation in the whole of that period, and nobody seriously proposed any.
  An Hon. Member: And none today.
  Mr. Kinnock: Indeed, none today, as my hon. Friend says.
  In spite of this implied criticism of a State monopoly there has been no tendency to de-monopolise any of the public industries and services throughout that whole period.
  Sir Stephen McAdden: The hon. Gentleman has not answered my question.
  Mr. Kinnock: I am sorry. I should love to continue a dialogue with the hon. Gentleman, but I am sure that there will be plenty of future opportunities to do so.
  The important thing in this debate is not the existence of monopoly or the characteristic of ownership, but the purposes for which monopoly and ownership are used and how accountable ownership is. It is obvious that the nature and character of ownership tends to mould the uses to which ownership is put. That is the difference between the industries which I have listed here, which are publicly-owned industries, and the industries listed in The Times 1000 1974–1975, which are privately owned and which, as one of my hon. Friends said earlier, exist and, indeed, operate for entirely different reasons.
  Another slander which is generally cast upon the nationalised sector of our society is the suggestion that public enterprise is, by definition, over-centralised, inefficient, unconscious of public needs and unable to meet public demands. This general belief owes more to the continual propagandising of those who have a vested interest in promoting the image of private enterprise than to any realities of life, as is instanced by my postbag and, no doubt, the postbags of other hon. Members.
  During my time as a Member of Parliament I have had hundreds of letters complaining that there are people who cannot get a telephone installed and operating within six months in their homes. The number of complaints on this score has totalled hundreds and is probably edging towards 1,000 by now. Most people attribute this deficiency in the telephone service to the fact that it is a nationalised service.
  Strangely enough, during those four years I have not had one complaint from a constituent who has been unable to

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  get a new car to the specification given to his supplier—such as a certain colour and so on—in under six months. It is strange that the inability to get a telephone at the drop of a hat, no matter how remote the house, how new the estate, how difficult the circumstances, or how over-subscribed the exchange, is generally taken to be a comment on nationalisation, a final judgment on the inability of public enterprise to meet the public need. Yet if someone gets a new motor car in less than six months, that is an abiding tribute to the efficiency of private enterprise.
  As my hon. Friend the Member for Lincoln said, this is because our whole belief due to the way in which we are brought up in the Western world, is that private enterprise is essentially virtuous, implicitly and intrinsically so, and that public enterprise is essentially an incubus, if not—as I think some hon. Members imagine it to be—an evil.
  In an assessment of our present needs and of our industrial future let us do away with the exchange of dogmas. I refer again to my hon. Friend the Member for Lincoln, who made a very perspicacious speech, and who said that we should do away with the exchange of dogmas. I do not see anything wrong with the affection for doctrines; there is nothing wrong with being doctrinaire. People who criticise politicians for being doctrinaire are proposing the idea that it is virtuous not to have any beliefs, any doctrines or any philosophy. I do not accept that idea.
  If, however, we are to accept doctrines and propose them as a serious means of combating the difficulties that face our country we shall have to do better than sloganising about the virtues of one kind of industry or another, and judge them on their proven record. On that record I would be proud and more than prepared to stand alongside the publicly-owned industries in our country.
  My final point is more for the digestion of my right hon. Friend than for anybody else. My criticism of the Gracious Speech is that we tend not to go far enough or fiercely enough in certain industries and interests in the area of public enterprise. Planning agreements and national enterprise boards are laudable, necessary and acceptable if we are to co-ordinate, to
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  obtain accountability and to secure the development of our industrial structure, but I do not think that we can secure the development that we want at the pace that we want and as quickly as we want by relying on a voluntary system. As other hon. Members have said, the private enterprise sector is singularly unresponsive to voluntarism even though it preaches it for other parts of the economy.
  On the subject of North Sea oil and gas, my right hon. Friend will be familiar with my views. However, he ought to give attention to the essential dishonesty of the stance which the Scottish National Party and, to a lesser extent, the Welsh nationalists have taken in this Parliament. In its proposed amendment to the Gracious Speech, the Scottish National Party speaks of the
  "inalienable rights of the Scottish people to ownership of Scotland's offshore oil and natural gas and to control of the rates of extraction and manner of development."
  I believe that we should control the rate of extraction and the manner of development. I also believe that the people of Britain as a whole should have the fullest possible benefit of this wonderful treasure off our shores.
  However, in my studies of what the Scottish National Party and Plaid Cymru have said about the use of these natural resources, I have never been conscious of their advocating public ownership of them. Instead, they are prepared to surrender the control of these facilities to the barons of the international oil companies. They will turn their countries of Wales and Scotland into modern banana republics dependent on the whims of the great multi-nationals. If they do not assist us in securing the prerequisite of a consistent, publicly accountable and wealth-giving offshore oil and gas industry, that will be the result. It must be publicly owned. The only area of disagreement that I have with the Government is that the demand at this stage falls 49 per cent. short of what I should like in terms of public ownership.
  We have from one side the populist view as expressed by the nationalists and from the other side the dogmatic laissez-faire philosophy from business interests which have had the penny and the bun of recent years in getting immense State aid without any concurrent State

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  accountability. The people are misled if they think that a State Britain would not be a Great Britain. Very large numbers of taxpayers are sick and tired of the insecurity which is part of the current system. They are sick and tired of paying out hand over fist to industries which do not respond in job or accountability terms for the money given to them. They are sick and tired of the continual slanders of the industries in which they work. They want the nationalised industries socialised and made more progressive. They want them to advance into wider areas of our economy. They know that at the end of the day the system which has failed will not bring us to a new prosperity. A new system must be tried, and they rely on this Government to do it.
  Several Hon. Members rose—
  Mr. Deputy Speaker (Mr. Oscar Murton): Order. Before calling another hon. Member I remind the House that there are a considerable number of right hon. and hon. Members who still wish to contribute to the debate and that there is not very much time left for them to speak. Brevity in speeches will be very helpful.
  7.35 p.m.
  Sir John Eden: Having listened to the hon. Member for Bedwellty (Mr. Kinnock), I regret very much to tell him that it is not quite as simple as he pretends. Unfortunately, life is a little more complicated than he realises.
  I owe it to right hon. and hon. Members to make it known that, as a director of and shareholder in a number of companies, I have an interest in the profitability of British industry.
  I felt a great deal of sympathy and understanding for that part of the speech of the Secretary of State in which he spoke about unemployment. But I think that he was misguided, as are so many of his right hon. and hon. Friends, in believing that the matters proposed and the attitudes adopted by this Government will do anything but damage to the objectives which they themselves have declared. Unless we can maintain a profitable industrial base, the prospect for secure employment is bleak.
  I regret that we are having, yet again, to debate nationalisation. The only reason
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  why we are having to do so is the proposals of this Government. The economic case for further nationalisation, centralisation and intervention has not been made out; nor has it even been attempted. The disruption of the aircraft industry, with its exceptional and outstanding performance, cannot be justified under any pretext.
  The example of existing nationalised industries gives little encouragement to the belief that a company's total immersion in the State system will of itself enhance performance, improve efficiency and raise standards of service to the public. On the contrary, it makes the attainment of these objectives more difficult, more complex, more drawn out and much more costly.
  Having had, throughout the lifetime of the last Conservative administration, something to do with practising intervention, I know how damagingly distracting for management it can be. Yet, as a Minister with responsibility for nationalised industry, I found that it was not possible to step aside from the many problems—political as well as economic—posed by these great concentrations of power in the public sector. Perhaps the most difficult of all was how to deal with prices and with pricing levels in the public sector.
  The nationalised industries, being in the main monopolies in their own spheres of activity, have a marked influence on the domestic economy. By holding down the prices for their products or services, demand is stimulated, capital hunger is increased and management disciplines are weakened. That is bad for the industry concerned and bad for the country's economy. But the creation of these public sector monoliths makes more difficult the natural interplay of market forces to which any self-respecting management must remain sensitive, and seems almost inexorably to embroil Government—Ministers and civil servants—in directing the decisions of management.
  Although during our time in Government much thought was given to possible ways out of the dilemma, we failed to reach any conclusion. It would have been more fruitful could we today have been concentrating on the steps needed to deal with this problem. Instead, we now have to contend with the Government's proposals, which will make it much worse.

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  Undoubtedly there are weaknesses in British industry. But further nationalisation and the proliferation of interventionist agencies, even if we can find the right people to man them, which is very difficult, will contribute nothing to their correction. The overriding need today is for the re-creation of a climate of business confidence, and, although the onus for achieving that rests primarily with the Chancellor of the Exchequer in his Budget next week, all Ministers who are engaged in any way in manipulating the economy share in the responsibility.
  If the Government are genuine in their commitment to vigorous and profitable public and private sectors, immediate action is imperative. They must act to ease company liquidity, to discount the effects of inflation on the valuation of stocks and inventory, to make it possible for managers, who are the decision-takers in industry, to foresee an adequate profit on capital to be invested, to cease treating the private investor as some kind of parasite and—here I agree very much with the right hon. Member for Walsall, North (Mr. Stonehouse)—to encourage a more constructive attitude on the part of unions and employees, especially towards schemes for improving productivity, whether of capital or of labour. To a short list of that kind, one must also add—forlorn hope though it may be—that the Government should forgo the worse excesses of their forays into further nationalisation and public ownership.
  There are many influences which affect managements in the decisions which have to be taken about marketing, investment and the development programmes of their companies. There are already risks and difficulties enough. To push ahead with arrangements for the formal and extensive involvement of Government Departments in business affairs will make the whole exercise much more burdensome and unsure. Detailed planning by the Government will almost guarantee that the wrong goods are produced at the wrong prices for the wrong markets. One might be able to coerce domestic demand to accept such products, but we have to sell abroad, where the writ of Government does not run.
  The purpose of this Government's industrial policies is, of course, more political than economic. Their oft-stated
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  objective is the redistribution of wealth and fundamental changes in the structure of society, and their industrial policies are avowedly means to those ends. But that will bring no benefit to anyone if the creation of new wealth is discouraged.
  The weakness of the Government's case is to be seen throughout British industry today, where steel and coal productivity have fallen, industrial activity has slowed, industrial disputes have grown and inflation is rampant. What, then do they propose to redistribute, and to whose advantage do they think it will be? The true aim of this Government is to centralise economic power in the hands of those who already hold political power. If there be any in the House who are disposed to cheer at that, they should realise that at the end of that path lies also the end of liberty itself.
  7.43 p.m.
  Mr. Mike Noble: The constituency that I now have the honour to represent is tucked away in the foothills of the Pennines and is part of the economy of North-East Lancashire. Like the rest of that area, it is still very much based on traditional industries, particularly footwear and textiles. My predecessor, Mr. Bray, worked hard for his constituency but was unable to diversify the industrial base, and the loss of insured population continued.
  I make no apology for concentrating on the footwear aspect of my constituency. Nationally, footwear employs 85,000 people, and about 50,000 more in ancillary jobs, and the turnover is £350 million per annum. It compares with many of the more spectacular industries. In Rossendale, two towns particularly depend on the industry. In Rawtenstall 24 per cent. of the insured population work in the industry, while in Bacup the figure is 30 per cent. It is not unreasonable to say that virtually half the economy of my constituency rests upon the industry.
  I was, therefore, particularly interested in that part of the Gracious Speech which said that the fulfilment of the social contract was seen as a means of maintaining employment, particularly in the older industrial areas. About 35 per cent. of employees in the industry in Rossendale are working short time. It is significant

  779
  that next week the industry will be celebrating—if that is the right word in present circumstances—its centenary.
  The industry faces two kinds of problem. There is a long-term problem relating to its structure, which was based on small family firms. Although one employer has extended and rationalised across the industry, there is still far too great a concentration of employment in small family firms. The attitudes of the industry in the past could have been described as conservative—I hasten to add, with a small "c"—but the climate of opinion is changing. Representatives of both the manufacturers and the unions have recently suggested to me that there was a need for at least a little Neddy. I would suggest going further and extending the operations of the National Enterprise Board, which the Secretary of State described today as "the only way", to this industry. But even if we go only as far as a little Neddy there are certain problems.
  The little Neddy would have to be all-embracing. I am assured by many friends in the industry that, whereas on the manufacturing side they would wish to reach agreement with the Government, any arrangement, to be effective, would need to include distribution and retailing, and there could be problems there. What they were most emphatic about was that with the increasing competition from overseas the industry's only way forward is a collective solution.
  These are long-term proposals, but there are severe short-term problems as well, arising from international trade. Again with interest, I see from the Gracious Speech that the Government
  "will promote international efforts to establish a more liberal pattern of trade."
  That is a praiseworthy aim which we should all seek, but the trade we wish to liberalise must be fair, unlike that which is threatening the jobs of so many of my constituents.
  I have already talked to various members of the Government about the import situation, and I know that representations have been made to them from other quarters. From the Comecon countries of Eastern Europe alone—Poland, Romania and Czechoslovakia—in the full year of
  780
  1973 we imported 5·36 million pairs of shoes. Between January and July of this year 5·42 million were imported. So the figure for those seven months exceeded the whole of the previous year. The prices of these imports led one strongly to suspect dumping.
  There is an immediate need for import restriction. The Conservative Government of 1970–74 reached a voluntary agreement, particularly with Poland, which is now being breached. If voluntary agreement cannot be operated, we must urgently seek to impose anti-dumping legislation.
  As if the import position were not enough, the industry is now threatened by restrictions on exports. Only on 18th October the Australian Government imposed a quota system on footwear, aimed mainly at cheap imports from Hong Kong and Taiwan but also affecting Britain, and particularly companies in my constituency. According to the Lancashire Footwear Manufacturers' Association, its immediate effect will be to prevent the export to Australia of £250,000 worth of footwear.
  The initial request that I would urge the House to accept is very modest—that those companies which have already entered into contracts or have shipped goods or hold irrevocable letters of credit in exporting to Australia should be allowed to complete their contracts in accordance with the terms and conditions agreed between the parties, and that goods on the high seas or currently being manufactured in Rossendale should not be prevented from being exported. But it is a matter of urgency that the Government must pursue these negotiations now. In Rossendale we cannot afford the kind of hardship which is being created.
  Earlier this afternoon, at Question Time, my hon. Friend the Under-Secretary of State for Industry, the Member for Oldham, West (Mr. Meacher), said that the work of his Department was job preservation. If that is so, in the long term we must restructure industry, but in the short term it is absolutely essential that we are protected from unfair trade through imports and that the export situation, particularly with regard to Australia, is cleared up.
  Immediately before the February General Election the Granada Television

  781
  company held a series of programmes in my constituency called "Crisis 74". Those programmes dealt specifically with the crisis caused by the energy problems and the problems of the three-day working week. I hope that there will be no recurrence, with a "Crisis 75" held in Rossendale to deal with a three-day working week which might be continuing then.
  7.52 p.m.
  Mr. Gordon Wilson: It is almost presumptuous of me to speak immediately after a maiden speaker, having been a Member of the House for only seven months, but I should like to take the opportunity, from my innocence in these matters, of congratulating the hon. Member for Rossendale (Mr. Noble) on a notable and thoughtful speech. The constituency of Rossendale will be thankful that it has a representative who will be outspoken on its behalf in dealing with the problems of the footwear industry. I hope that the House will hear more frequently from the hon. Gentleman on other matters as well as on industry.
  In Scotland, which is principally my interest, the General Election made it clear that we are interested in self-government, and with autonomy in relation to economic management. If the Government assume that legislative devolution will necessarily satisfy the aims and aspirations of the Scottish people, they are making a mistake. There are claims coming from members of the Labour Party—as well as, I would hope, from Conservative Members from Scotland, if any such care to turn up this evening in the Chamber—that trade and industry could be among those functions which should be delegated to the Scottish Assembly. But I want to make it perfectly clear to the Government that it is essential that centralisation of jobs and opportunity and of economic initiative should cease to be vested in London, and that centralisation has, in a sense, probably marred the concept of nationalisation.
  While in a self-governing Scotland all nationalised industries would remain in public control, undoubtedly we should try to improve the methods of management so that these industries become more efficient and responsive to the general consuming public. All Members of Parliament must be aware of complaints about
  782
  the nationalised industries and their failure to carry out services, and some-times there is exasperation about the difficulty of getting through to the bureaucracy behind the nationalised industries that there is need for immediate action—although there is often equal irritation about the failure of some multinational companies to perform their obligations to service domestic equipment.
  If the Government are really interested in devolution and a Scottish assembly, they must ensure that there is maximum power over industrial development. It is no use calling, on the one hand, for a Scottish assembly but, on the other hand, promoting legislation which would strip Scottish control from the shipbuilding industry, oil and natural gas. In anything that the present Government approach, they must remember that, in addition to the mandate which they secured at the General Election, they should pay attention to the competing pressures in Scotland from public opinion on the need for control within Scotland over the economy.
  It has been suggested that some of the Government's proposals are intended to prevent unemployment from growing. But anyone who looks at the record of the nationalised industries in Scotland will be aware that they are not a buttress against unemployment. Some information has been supplied to me by the Department of Trade or by the Department of Industry—I cannot remember which; perhaps the Department of Trade and Industry would cover it. That information shows that from June 1955 to June 1973 covering the gas industry, railways, coal mining and electricity—and, in the case of iron and steel, June 1967, which was the date of nationalisation—the performance was rather discouraging.
  For instance, out of the 18 years in the table given to me, there was in the gas industry over 15 of those years a loss of employment. Again, with the railways there was a loss of employment over 16 years. In coal mining there was a loss for 14 years. In electricity there was a much better performance and I am glad to say that out of the whole period there were 11 years during which there was growth in employment. In steel, in a shorter period of six years, there were only two periods when the situation gave rise to an increase in employment.

  783
  Looking at the nationalised industries in Scotland, it is perfectly clear that for the regeneration of industry in Scotland there will be a requirement to have a Scottish industrial and economic policy. It is no use continuing with the old practice of the last 20 years of "stop and go", when these factors were applied against industrial and economic expansion in Scotland.
  I should like to refer the Secretary of State to the report of the Scottish Council's Development and Industry Research Group, published earlier this year, which advocates a case for economic and industrial autonomy. The group was outlining this case within the concept of the United Kingdom, but I rather doubt in some instances the practicality of that without the self-government which the Scottish National Party wishes to achieve.
  It is very important, therefore, that we deal with this question in this Parliament to ensure that there is the initiative located in Scotland, perhaps to take different economic decisions in the course of Budgets or in some other way to change the trends within Scottish industry. In some ways the question of centralisation has been positively harmful to Scotland, as seen through the nationalised industries. But it should also be borne in mind that centralisation can occur in other ways, too. One can also get developments of industrial monopolies, and restrictions on trade in the private section. But certainly within the nationalised industries, perhaps because of the tendencies towards bureaucracy which one gets in administrative units, the situation has been worse.
  The Scottish steel industry, which before nationalisation was fairly nicely balanced and had a wide range of markets, after nationalisation, because of this trend towards centralisation, was reorganised on a basis of different divisions, which had the effect of stripping away a lot of the decision-making powers within Scotland. Although a general steels division was set up in Scotland by the British Steel Corporation, with what one might term a nominal control, almost immediately 100 sales jobs were sent to London. Successively after that, the advanced planning group, which was responsible for the planning of Ravens-Craig strip steel mill—the brains of the
  784
  Scottish steel industry—was dismantled and the experts were dispersed. Now we are threatened with the possibility of another 7,500 jobs being lost to the steel industry in Scotland.
  The statement made in response to Questions today about the lack of guarantee being given about the retention of two of the open hearth furnaces at the Lanarkshire works faced with closure must fill many steel workers with dread, although the works was running at a profit in June. One of the saddest things has been the narrowing of the products range within the Scottish steel industry, from 17 to five. The sections of the products retained are unfortunately in the less profitable range, so that the opportunities for future development have been limited.
  Hunterston should have been one of the great opportunities of Scotland, even within the British let alone the Scottish, context. The British Steel Corporation's way of proceeding with the sterilisation of land to the prevention of expansion must be very harmful and is expressive of what I have been saying.
  Again, in energy supply we come to the British Gas Corporation. Far be it from me to advance the cause of the former Scottish Gas Board—a body with which I had many strenuous arguments in connection with my own domestic supplies—but the British Gas Corporation, which took the place of the Scottish Gas Board, has, in the recent development of the Frigg field, been pursuing an extraordinary, if not anti-Scottish, line. I have here a report from gas engineers in Scotland pointing out that contracts for the pipeline were valued at about £800 million. Yet Scottish responsibility for that development has—according to the engineers—been reduced to minimal proportions, very largely related to the use of the legal department and wayleave personnel, as London did not have Scottish lawyers. A request has been made to headquarters for a share of the Scottish work since Scottish gas engineers believe they have the ability and skills to carry these contracts forward. They have advanced a detailed case to me about it. It seems they are not to be entrusted with the major and important job of bringing Scotland's offshore gas on flow.

  785
  In relation to the proposed British National Oil Corporation, I am sympathetic in the broad and philosophical sense to what the Government are trying to do, because they have taken over the policy of the Scottish National Party and of Norway in seeking State participation in the industry. But the Government are making the major error of calling it the "British National Oil Corporation", which clearly indicates that the profits and benefits of the development of North Sea oil will be divided on a British level, making the share for Scotland very slim. One must congratulate the Government on their honesty in doing it, but some of the leaflets issued by the Labour Party in Scotland during the election campaign seemed to suggest that the Scottish people would get advantage out of these proposals.
  I hope that the House will have an opportunity to discuss the new energy-sharing agreement in detail, because in some ways, with the majority powers built in, it seems to have a much more restrictive effect on sovereignty than is perhaps the case with the EEC.
  Comment has been made about sites for production platforms and the dangers of having too many of them in Scotland. I refer the Government to an article in today's Glasgow Herald and advise them to tread fairly carefully in that respect.
  I hope that there will be a reorganisation of the nationalised industries in Scotland on a Scottish rather than a British basis and that the responsibility for the nationalised industries in Scotland will go to the Scottish assembly. I hope, in relation to shipbuilding, that the Government, whatever detailed proposals they eventually produce, will endeavour to retain local managements wherever possible rather than submerge them in bureaucratic corporations. Representing a constituency with a small shipyard, I would have fears for its future if its product range were lost sight of in a larger organisation.
  The idea of a Scottish development agency meets with the approval of all political parties in Scotland, but a lot will depend on the size of the amounts of oil money which will go to it. Unfortunately, the Government will not commit the revenues from Scotland's oil resources directly to the- agency, but mask them under the guise of the Treasury in the
  786
  hope that the Chancellor of the Exchequer may be generous and oversway the opinions of the barons of his Department.
  When the Government approach the regeneration of industry they should not dismiss Scotland purely in terms of two paragraphs in a White Paper but should consider the positive rôle that Government funds can have in the creation of new jobs in Scotland as well as in the safeguarding of jobs which may be placed in temporary jeopardy.
  Finally, I come to a matter which will largely determine how my hon. Friends and I vote tonight. In the White Paper,
  "Democracy and Devolution Proposals for Scotland and Wales",
  there is the heading "Trade, Industry and Employment". The paragraph says:
  "There is still a great deal of doubt about whether and if so how far executive powers in these fields could be devolved to Scottish and Welsh assemblies without prejudice to the essential economic unity of the United Kingdom. There is a strong desire for more decision making in Scotland and Wales, but this would not necessarily require the creation of an elected assembly."
  I serve notice that if the Government do not brush up and strengthen the proposals in their White Paper they will quickly lose whatever remaining support of the Scottish people they may presently have.
  8.8 p.m.
  Mr. Philip Whitehead: It would be inappropriate for me, as a mere English Member, to follow the hon. Member for Dundee, East (Mr. Wilson) too closely in his remarks, but I regret the chauvinism of part of what he suggested. I have never thought, as an English Member, that it was any part of my outlook to advocate that the expenditure of the national product of England, if it could be differentiated, should be spent only for the benefit of the people of England. We have to see this debate in the context of the United Kingdom, and I think that perhaps in time the hon. Gentleman will realise that the autonomy he advocates cannot be operated in the case of Scotland by autorchy but that Scotland is and must be a part of the United Kingdom.
  I want to devote my remarks to the main subject of the debate, the question of public ownership, particularly in the

  787
  context of the aviation and aerospace industry. I was saddened by some of the remarks of the hon. Member for Henley (Mr. Heseltine). After many of the pronouncements during the General Election, one had expected that we might today have a coherent critique at least of the proposals in the Gracious Speech with regard to public ownership. Instead, we got from the hon. Gentleman an array of remarks which culminated in an attempt to equate the principle of full employment with the health of the Stock Exchange. To those of us who remember that the Financial Times share index record was broken in the very week that unemployment passed the million mark, that is an absurd assertion by the hon. Gentleman.
  I want to talk about the proposal in the Gracious Speech for the public ownership of the aerospace industry and to say how much I welcome it, representing a constituency which has within it a significant element of aerospace in the shape of the already publicly-owned Rolls-Royce company. I found the recent attack on our proposals by the Society of British Aerospace Companies almost incomprehensible and showing some signs of incipient hysteria—an attempt, if I recollect correctly, to claim all the benefits of innovation and export potential for private enterprise without a mention of the enormous amount of public money which has been put into this industry over the years, partly on a contractual basis, because the Government have been one of the main purchasers of the aircraft concerned, and partly in floating loans and general backing finance for the industry over many years.
  There was not a mention of the fact that, relatively speaking, over recent years the British aerospace industry has declined if we compare it with the French industry. I find it incomprehensible that those in the Tory Party who take this view can always ignore facts of this kind, as though the only success story in France was Marcel Dassault and as though the large segment of the French aerospace industry which has been in public ownership for many years was not in itself a success story.
  I hope we shall take the view today that as we are to put into this vital industry essentially more and more
  788
  public money it should be followed by public accountability. In my view there is no other way to do this other than by public ownership. That can take many forms. I propose to argue tonight that the wholly-owned public company on the lines of what we already have in the aero-engine business may well be the solution.
  Mr. Geoffrey Pattie: Does the hon. Gentleman not agree that the aerospace industry as at present constituted has earned this country £3,400 billion over the past 11 years?
  Mr. Whitehead: I agree with that. I think it will earn a great deal more in the future. In the high risk business we are now in with aerospace work it is essential that public investment should be safeguarded and that there should be public accountability. I recognise the hon. Member's constituency interest in this and I know some of the concerns nearest to his heart. I think he would agree that much of the public money which has gone into the aerospace industry over the past decade has not been fruitfully used but has been wasted. In this House we have never had proper accountability until long after the event.
  It is no good some Select Committee deliberating upon these things years after the money has been spent. We need to know what is happening and to have accountability at the time of the expenditure, when the risks have been taken. Of course there will be risks, and I hope that there will be profits accruing from them. But this should be within the context of public ownership.
  I give two small examples from the publicly-owned Rolls-Royce company, which is my particular concern, as an illustration of this point. The company is engaged upon a wide range of production and innovation. It is engaged not merely in the massive project which led to the financial crisis of 1970–71, but in a whole range of collaborative ventures often overlooked when we consider the rôle of this public company within the general aerospace picture.
  I take just one small example which is relevant by way of comparison with other matters which have been raised by some of my right hon. and hon. Friends recently, namely the small, short-haul airliner being built in collaboration with

  789
  the Dutch company, Fokker. In view of the fears that have been expressed in the House over the future of the Hawker Siddeley 146, it is worth recollecting that the number of British components in the Fokker aircraft is almost as considerable as those which would have been in the proposed HS146, although I hope that the 146 will still be built.
  It is worth considering that we have here a public company putting about 41 per cent. of its expenditure into this aircraft, the F28, while the privately-owned company, from which we have heard a great deal through the pronouncements of Sir Arnold Hall during the election, has now withdrawn from its commitment. It had a great deal of public assistance in the early stages of its commitment to build the HS146.
  There should be a publicly-owned company for the aerospace industry. It should be based upon BAC and should certainly include all of the aerospace parts of Hawker Siddeley. Sir Arnold Hall would probably not quarrel too much with the contention that during the period of his control over Hawker Siddeley it has diversified pretty successfully out of aerospace. It has not actually been expanding its aerospace interests. It has been moving into other things. It is part of that removal from the, to my mind, vital aerospace side of our exporting industries which is in part at the back of all that has happened with the HS146.
  I believe that the wholly owned public company such as Rolls-Royce is now an answer in the context of public ownership. In the remarkably lucid maiden speech by my hon. Friend the Member for Lincoln (Miss Jackson) we heard the contention that the publicly-owned company, unlike the privately-owned company, does not have the need at every turn to placate its shareholders, to consider the short-term profits over the long-term investment. When the hon. Member for Henley began prating from the Opposition Front Bench about a failure to invest one would have thought that that failure had begun on 1st March this year.
  That failure is deep-seated and profound It is the major malaise of the whole of private industry in the country. That is nowhere more true than in aerospace. In Rolls-Royce we have a com-
  790
  pany which is now deriving its investment from the left and right pockets of the taxpayer. The major investment programme which is now being undertaken by it, the RB211 engine in its stretched form, the-524, is partly funded by the profits of Rolls-Royce, which are based upon the taxpayers' investment, since it was the taxpayers' money which floated Rolls-Royce 1971. It was also floated, in equal ratio, by direct Government grant, by Government loan, to get this project moving.
  Much to my regret just before the election, and not entirely coincidentally, the Financial Times ran a major story to the effect that the Labour Government were withdrawing from their commitment to the pre-production financing of the-524 engine. My right hon. Friend the Secretary of State for Industry was put under considerable pressure then. It is fair to say that the Boeing Company, reading this article, and believing it—and I have reason to think that a major part of the story was perhaps leaked from within the aerospace industry—had to ask the Government whether the project was going ahead and receiving the backing of the British Government. The fact is that it was. It is perhaps a sign of the times that the Government funding of the-524 engine depended upon a firm order from Saudi Arabia, Saudia Airways. The minute we received that firm order, the Government contribution by way of the launching loan was paid over. My constituents and I welcome that, as do all the people who came to talk to the Secretary of State. They know that that is happening within the context of a responsible public industry.
  When Opposition Members say, "What about all these profits, and what about the collapse of this great industry if it were taken into public ownership?"—I say that at the cutting edge of innovation, export and risk-taking is a publicly-owned industry which is doing precisely that.
  I make a special plea to my right hon. Friend the Secretary of State for Industry. I believe that a large part of the future of the British aerospace industry lies in the development of the whole family of engines built upon the RB211. We have seen an extension of this in the -524 which has been developed with 48,000 lb thrust for Lockheed and will be developed up to 50,000 lb thrust for Boeing and

  791
  Lockheed if that development is approachable. I have every reason to believe that it will be. It will be the work horse of the world's airlines in the 1980s and 1990s. My right hon. Friend should vary the conditions which have been placed by the British Government upon additional funding for the collaborative project with Boeing, because the fitting of that engine to the Boeing 747 aircraft would give the engine a much wider range and a much greater acceptability to the world's airlines than is possible if it is included only in the Lockheed TriStar, successful though that has been.
  I know my right hon. Friend's enthusiasm for the RB211 project and I know that he has been with it and supported it from the start. As the Boeing Company already has a conditional order from British Airways for a certain number of 747 aircraft, we should be able to say to the Boeing Company, as we said to Lockheed, that one order is enough.
  As I understand the financing of the project, about £80 million is required for this development, about £55 million of which will be required for Lockheed in any event and a further £10 million to get the engine up to the 50,000 lb thrust that Lockheed as well as Boeing requires. We are, therefore, talking of less than one-third of the total amount which will be specifically earmarked for the funding of a conversion for the Boeing 747. As the Government will be putting up half that money directly through the taxpayer and from the Chancellor of the Exchequer I believe that it will be money well spent.
  If there is to be a future for this great enterprise not merely in the next decade but for the rest of the century it has to be achieved within the context of responsible public ownership. During the election I was constantly seeing large Renault motor cars driving people to the polls in the Conservative interest which had plastered all over the back window "No to Nationalisation". There is a similar ambivalence about the Conservative Party's attitude not only in this debate but also towards Rolls-Royce which the Conservative Government had perforce to nationalise in 1971. I believe that the industry can go forward into an immensely profitable area of exports and into a sustained field of further innovation, as a publicly-owned enterprise which will belie
  792
  as the years go on all the absurd, cheap sneers about public ownership which we have heard in this debate.
  8.22 p.m.
  Mr. Churchill: It is a pleasure to speak after the hon. Member for Derby, North (Mr. Whitehead) who has referred so eloquently to his constituency interests in Rolls-Royce. The hopes he has expresed for the future development of the RB211 engine will be echoed by many of my hon. Friends. It is a great project, and it is right that we should be pushing back the frontiers of high technology. If we once opt out of that business we can no longer expect to have a high and increasing living standard for our people.
  The hon. Member for Derby, North will not expect me to take up his remarks in favour of nationalisation generally, although he made a more eloquent case for it than did his right hon. Friend the Secretary of State. The hon. Gentleman mentioned ambivalence—it was he who re-recruited me into the Conservative Party when we were at Oxford a few years back.
  During the election campaign and in opening the debate on the Address the Prime Minister said that the economic crisis that Britain faces is the gravest since the war. I think that few of us in the House would dispute that. We have a crisis of inflation. Rip-roaring wage inflation has taken over from oil and commodity price inflation as the principal cause of high prices to the consumer. We are faced with a crisis of industrial confidence, brought about in the first place by the declaration of war by the Secretary of State for Industry and the Labour Government on that sector of British industry which accounts for three out of every four jobs and 95 per cent. of Britain's exports.
  Is it any wonder that more and more firms are facing bankruptcy, and that unemployment is growing? In the summer the figure rose by more than 10,000 a month in the North-West region alone. We face a crisis of agricultural confidence, with tens of thousands of animals which should not be coming on the market for one year, or even two years, going for slaughter.
  We also have a crisis of growing foreign debt. We are financing, by short-term borrowing, principally of Arab

  793
  money, a living standard which we are not earning in the market places of the world. That is hot money which can be withdrawn at 24 hours' notice. We are rapidly getting into a situation in which a single telephone call from the Finance Minister of any one of four Middle Eastern States could cause the collapse of the British banking system overnight. This is a situation which I hope that the Government will seek to get away from at the earliest moment.
  The Government, in the Gracious Speech, have laid before Parliament those measures which they believe should have legislative priority in this Session. In the debate last week the Prime Minister said:
  "This week we shall be debating the economic crisis and the Government's measures for fighting it"— [OFFICIAL REPORT, 29th October, 1974; Vol. 880, c. 74.]
  What measures? We have been given no measures by the Prime Minister or by his Ministers for fighting inflation. The only recipe they have is to cling to the social contract.
  Where is the social contract? It is not in the Library of the House of Commons. I went to check there three months ago; I went to check there again today. Even though the Prime Minister said last week that it had been published, it has not been published by the Government. The Government have not given their version of it. It is no wonder that people on the shop floor of industry and those who have to negotiate on behalf of industry have no idea where they stand.
  Where is the social contract today in Scotland? There is paralysis over large sectors of Scottish industry. Where is it so far as it concerns the commuters who are seeking to get home tonight on Southern Region and up in Liverpool, and who face a total stoppage of all rail services?
  I welcome the appeal by the right hon. Member for Walsall, North (Mr. Stone-house) to those people who take that action to think of the interests of the community as a whole. Is it impossible to think of the damage being done to the Clyde by the millions of gallons of sewage being poured into it? Is it impossible for these people to think in terms of the gross inconvenience being caused to hundreds of thousands of commuters seeking to get back home after a hard day at work?
  794
  Where is the social contract? Twenty-seven out of 39 settlements in the last three months have broken what is understood to be one of the clauses of the contract, namely, that there should not be a second increase in the space of less than a year. Yet the Government take no action.
  I freely acknowledge that the Prime Minister did say that Britain faces the gravest economic crisis since 1931. But the fact is that no one believes him, and one wonders whether, at any rate during the election campaign, anyone was intended to believe him, for at the same time, the Prime Minister and his Ministers made clear that the situation was not so grave as to require any formal restraint of excessive wage demands, and emphatically ruled out any resort to the most potent economic weapon in the armoury of any Government—namely, the wage freeze, which has been used by Governments of all colours in recent years.
  It is this sort of double dealing to the electorate of this country that has provoked, and is provoking today, the wage explosion and the industrial unrest which is doing so much damage to our economic situation. The fact is that the Government have no policy for dealing with inflation. The Prime Minister says that Governments should keep their promises. I certainly agree with that. But the corollary is that when Governments make promises they should do so with some belief that they can honour them. One must wonder how many hundreds of thousands of working people in this country will be thrown in the coming months on to the slag heap of unemployment in the name of the promises which have been given to effect no restraint over excessive wage demands. Mr. Jack Jones was right to say—and the Prime Minister in his earlier incarnation before the 1970 election said as much himself—that we cannot have runaway wage inflation and expect to have a high level of employment.
  What is to be found in the Gracious Speech to stimulate industrial confidence? The answer is, "Not a single thing." Indeed, the reverse is the case. The war on industry is to continue. We are to see the nationalisation of aerospace, shipbuilding, building land and other sectors, including North Sea oil. The hon. Member for Bedwellty (Mr. Kinnock) said that

  795
  the private enterprise system had failed the British people. I put one question to the hon. Gentleman and to the Government as a whole. How is it that the people of this tiny island with few natural resources—at least until recently when North Sea oil was discovered, and even that has not come on stream yet—apart from our own wits, have been able to have and command a living standard approximately three times as high as that of the people of the great Socialist Republic of the Soviet Union, a continent twice the size of the United States and with natural resources approximately twice those of the United States? Why is it that the Russian people, who live under a system of Socialism, State bureaucracy and centralised control, have a living standard which is one-third of that of the ordinary British people?
  Mr. Kinnock: I regret having to intervene again, but the hon. Gentleman has invited me to do so. The crassness of the Soviet system is not mine to excuse, nor does it appear as a model in the Labour Party manifesto. The fact remains that, while we need not follow the example set by the Soviet Union, what we are seeking to do in this country is to avoid the mistakes of the private enterprise system and give a higher standard of living to our people. Any hypothetical or allegorical statements about the Soviet Union are totally irrelevent to this debate.
  Mr. Deputy Speaker (Sir Myer Galpern): I think it would be appropriate for me at this stage to indicate to right hon. and hon. Members that the principal speeches will begin at 9 o'clock. There is still a long list of back benchers who are anxious to speak and I appeal to Members, as my immediate predecessor in the Chair did about an hour ago, for brevity to enable others to take part in the debate.
  Mr. Churchill: I accept what the hon. Gentleman says, that he wishes to have no part of what happens in the Soviet Union in terms of economic and industrial control. Nevertheless, one must recognise that what Government Members are seeking to do is to concentrate economic and industrial power in this land in the hands of the politicians. This is something with which I and my hon. Friends cannot go along. In short, in the eight months in which the present
  796
  Government have been in office we have seen a growing crisis. Indeed, the Government have in no small measure contributed to the growth of that crisis, and yet they have taken no decisive action to deal with the critical economic problems that face us; nor, indeed, have they indicated that they have any proposals to put before Parliament.
  The Prime Minister, in his television broadcast speech following the election, took up the Leader of the Opposition's theme on national unity. Some may have thought that this heralded a new start, but the rhetoric was far removed from the reality. The Government are making it clear in the Gracious Speech that they are pressing ahead with the divisive policies for which they have no mandate whatever from the people. The Government are pressing ahead with nationalisation. Yet neither in the election campaign nor today when the Secretary of State for Industry was answering questions from the Dispatch Box—if it can be called answering questions—have they once told the House or the electorate what is the cost of the nationalisation proposals. The least that they can do for the people is to tell them where the money is to come from and how much is to be extorted from them in the coming months and years to pay for the insane measure of State ownership that is going to be forced on wide sectors of British industry.
  The Government also are intent on pressing ahead with their defence cuts, at a time when British defence capability has never been weaker in this century—and that goes back to the pre-war period —at a time when the Soviet Union is producing 5,000 tanks a year—five times as many as the United States—and the equivalent in two months of the total 900 that the British Army can deploy. Yet there are two references in the Gracious Speech to détente. What détente? What justification is there for the Government's cutting the defence capabilities of this country still further?
  With regard to hospitals, the right hon. Lady the Secretary of State for Social Services is carrying on where what Mr. Bernard Levin felicitously called "the lady with the saw-toothed bed-pan" left off—chivvying private patients and consultants in what seems a determined effort to make the National Health Service into a third-class service.

  797
  With regard to industry, the divisive and unfair policies of a wages free-for-all are wreaking their damage. Why do not the Secretary of State for Industry and the Secretary of State for Employment go down to the pithead and explain the productivity deal to the miners? They can see the moderates being pushed aside. The Secretary of State for Employment is perhaps too busy rehashing the law on picketing, which will enhance the powers of the industrial wreckers at the expense of ordinary trade unionists and employees who seek to attend their places of work. It will certainly curtail the freedom of the individual.
  The right hon. Member for Bristol, South-East (Mr. Benn) is too busy building new empires and creating new State monopolies which will in their turn, no doubt, provide new vehicles of power for militants in the trade union movement to paralyse new sectors of British industry and hold the country to ransom again. He would do better to get those industries which are already nationalised running smoothly.
  Why do the Government stand aside while a small wholly unrepresentative Fascist minority on the executive of the National Union of Mineworkers seek to gain control of that union, wishing to have another confrontation with the Government, this time a Labour Government—
  Mr. Bob Cryer: Go to the pithead.
  Mr. Churchill: The hon. Gentleman says, "Go to the pithead". It is a pity that some Ministers are not going to the pithead at the moment and explaining the productivity deal.
  Could it be that some of these same Fascist forces—and I use the word advisedly, because they are anti-democratic, totalitarian and extreme socialist, all of which are the hallmarks of Fascism —have their reflection within the ranks, sad to say, of the Labour Party?
  It is time that the British electorate realised the stark reality, that sovereign power has been leaving this Parliament—which for many centuries has been the guardian of the liberties of the British people—and, following the humiliating surrender in 1969 of the present Prime Minister over pay and prices, over "In
  798
  Place of Strife" and the defeat of the Conservative Government by the miners in February this year, we have seen power passing from this Chamber to forces and bodies which have no democratic control whatever.
  One must wonder whether it would be a more appropriate suggestion that the National Executive of the Labour Party should be televised rather than this Chamber. There, it seems, is where power has been going to, even though this body is elected by the Labour Party conference where 80 per cent. of the votes are wielded by the block vote of the trade union movement. Nobody is less representative of the aspirations of the ordinary Labour voter, let alone the ordinary voter in this country.
  The Government's proposal that we should go ahead on the basis of nationalisation and more State control is enormously divisive and, unless the Prime Minister and his colleagues make it clear that they are prepared to exercise decisive leadership in the coming months, decisions will be increasingly taken, not here in Parliament, but in the Labour Party's National Executive. Already a decision apparently has been taken about tearing up the Simonstown Agreement. It has not been taken on the Floor of the House; it has not even been taken by the Cabinet. It has been taken by the National Executive. The Cabinet endorsed the sending of the fleet recently to Simonstown. Unless the Government are prepared to show some leadership, the democratic liberties of the people of this country will be at risk.
  The reality is that Britain today is being governed by a minority which commands less than 40 per cent. of the vote. It is not only a minority but a minority within a minority, and this is what, above all, is unacceptable to the British people.
  The Prime Minister must recognise that the British people will not tolerate being led towards a Socialist dictatorship by a minority clique in his Government. He has the choice of going down in the history books as one of the greatest peacetime Prime Ministers who saved parliamentary democracy from its gravest internal threat, or as the weakest Prime Minister since, and including, Lord North, and the man who became the Quisling

  799
  who sold out the liberties of the British people to a small, power-seeking Fascist clique.
  8.45 p.m.
  Mr. Brian Sedgemore: It is always a pleasure to follow the hon. Member for Stretford (Mr. Churchill) in debate. This Chamber is steeped in serious history and his boyish approach soon makes one forget that.
  In the debate today there seems to be universal acceptance from the Government side that the language of Socialism is the politics of investment. Paragraph 3 of the White Paper "The Regeneration of British Industry" states:
  "In 1971, investment for each worker in British manufacturing industry was less than half that in France, Japan or the United States, and well below that in Germany or Italy. In spite of the measures to encourage investment taken since then, it has still lagged behind; indeed, it was significantly less in 1972 and in 1973 than it was in 1970."
  Behind those two sentences lies the failure of private enterprise over the past two and a half decades: the failure of British management to invest and the failure of the financial institutions to provide the working and investment capital that industry so desperately needs.
  Year after year, the CBI shuts its eyes to reality. Every year, whatever the economic situation and however disastrous the performance of its members, it submits to the Chancellor of the Exchequer a gramophone record called its Budget representations. Every year that document calls for help for company liquidity, cuts in company taxation, handouts to industry and cuts in public expenditure.
  The year 1970 was no exception. In that year, its prayers were answered with the return of a Conservative Government, and in four years the open-ended money supply eased the liquidity problem, company taxation was cut, the better off had £2,000 million slashed off their taxes, public expenditure was regularly mauled, handouts to private industry totalled £3,000 million, several millions a day, and, unbelievably, the nationalised industries were made to subsidise private industry by £1 million to £2 million a day through low public sector pricing.
  800
  By every tenet of classical economic theory we should have been witnessing the greatest investment boom that this country has ever known. Indeed, the then Secretary of State for Trade and Industry told us that that was precisely what was happening. The then Prime Minister believed him and spoke of the problems of success. Whatever happened to the truth in those years? To some people, one could spray the truth on their eyeballs and they would not see it.
  Investment in manufacturing industry in 1972 was 15 per cent. less than it was in 1970. In 1973 it was 10 per cent. less than it was in 1970. In 1973 Britain was spending only 3·5 per cent. of its gross domestic product on investment in manufacturing industry, or 16 per cent. less than in 1970. By every international comparison the performance of British management was wretched. The investment ratio in Britain in 1972 was 3·4 per cent. In Sweden it was 4 per cent. In Japan it was 6·8 per cent.
  In 1970 British management invested a miserable £251 per employee in manufacturing, whereas the corresponding figures of our chief competitors were: Italy, £330; Germany, £392; Japan, £512; France, £623, and the United States of America, £697.
  We are, therefore, entitled to ask where the plentiful supply of money went in those years. Direct investment by British firms overseas trebled. Thousands of millions of pounds found their way into secondary banks and out of secondary banks. Millions of pounds found their way into property companies. Millions ended up in swamp-infested tax-free tropical islands.
  It would be unfair to place all the blame on British management. The financial institutions and the City illiterates, as the right hon. Member for Down, South (Mr. Powell) so endearingly calls them, played their bit, too, From 1971 to 1973 bank advances doubled, but while advances to property empires soared by 320 per cent. and advances to other financial institutions rose by 225 per cent. advances to British industry went up by a mere 75 per cent.
  Yet the performance of the banks was positively heroic compared with the sloth of the Stock Exchange. In 1969 the Stock Exchange provided but one-tenth of the

  801
  capital used by all industrial and commercial firms. By 1973 that figure had fallen to one-hundredth. It is unbelievable, but in 1973 the Stock Exchange provided 1·1 per cent. of the total capital used by all the industrial and commercial firms in this country. People in my constituency have been going to the citizens advice bureau and asking what in the name of God and mammon those parasites on the Stock Exchange do to earn their money.
  Yet, with all that evidence before it, the CBI comes back this year with its old plaintive cry: improve company liquidity by removing price control—which would certainly lead to a rise in prices of more than the 1¾ per cent. claimed by the CBI —and cut company taxation, this time specifically cut corporation tax from 52 per cent. to 35 per cent. It asks for £2,400 million this year and £3,500 million next year. The truth is that that would lead to practically no increase in investment in this country, and would preempt each and every social advance that the Chancellor of the Exchequer has in mind, including the proposed increase in family allowances. If that is not enough, this morning it went to the Chancellor and asked him to slash his already modest proposals for a gifts tax. I believe that the social contract will not stand the strains of these selfish demands. The public, no less than the trade unions, will be up in arms.
  However, this time there is one difference: the CBI has started to employ arguments of doom, saying that the whole of British industry is now operating at a loss. As I understand it, accountancy may be an art, and Professor Sykes and Mr. Merrett may be excellent artists, but that is damned ridiculous. A piece of serious research by Mervyn King in the Financial Times recently showed that 1973 was a good year for profits compared with 1972, which was in itself an annus mirabilis. He showed that in 1973 even if we deducted stock appreciation, depreciation and tax, profits for that year were 14·5 per cent. higher than in 1972.
  For a correct analysis of the state of British industry at present we should read two letters in The Times of 18th and 24th October, signed by seven MPs. Those letters have the support of the bulk of the trade union movement, the majority of
  802
  Members on this side of the House, and the bulk of the Labour movement. They are now part of the social contract and part of the Socialist contract.
  If I were to summarise briefly the true position of British industry at present, it would be thus: granted that certain small and medium-sized firms have cash flow problems in industry, it is these and not the largest firms—that is, the 200 in category 1 of the Tories' Counter-Inflation Act—which have cash flow problems. A relaxation of those problems for the 200 firms would threaten the social contract and presage industrial confrontation. Economists of the Left and Right —and on the Right I could cite Vernon of Harvard or Penrose of London—all seem to agree that the big firms can declare what profits they want to by altering their transfer prices, and they can fix their prices at levels which just enable the small firms to survive. If we are to help the medium-sized firms, perhaps we could do it on a regional basis, with new access for local authorities, regional economic planning councils and workers in the firms concerned; and with public and workers' shareholdings where substantial sums of money are involved.
  However, the critical and crucial need for this country is to bring those 200 large firms into the planning procedures which the Government have in mind, and to enable the National Enterprise Board to buy into the profitable sectors of each part of industry. We must bring our industrial democracy into line with our political democracy. We must give the National Enterprise Board teeth if it is not to become a lame duck, and we must allow it to buy shares compulsorily.
  I would not rule out fiscal measures as a means of encouraging investment. I am talking about such measures as a differential payroll tax for those firms which are not subject to planning agreements or to purchases by the National Enterprise Board, but I would rule out the investment bank of the Chancellor of the Duchy of Lancaster—the bastard son of the Industrial Relations Court, spawned in error, conceived in the dark, and now, hopefully, aborted.
  Finally, I would remind the House that the next crucial advance for our movement—the battle for the next Session of Parliament—must be the future

  803
  of the financial institutions in this country. They must be made publicly accountable and relevant. Good Europeans in this House—and they are spread all over the opposite side of the Chamber —know that it was 29 years ago that the banks of France were nationalised. I can think of no measure that would be economically more relevant and politically more popular than the public ownership of the banks and insurance companies in this country. A sum of £60,000 million is too much money to be handled badly.
  I sincerely hope that the Chancellor of the Exchequer and the Secretary of State for Industry will give the lead. If they can persuade the country that there really is an irreversible shift of wealth and power afoot, that industrial democracy really is on the march, and that in a property-owning democracy it is vital that industry and finance be publicly owned, I believe that there is genuine hope for this country.
  8.56 p.m.
  Mr. Geoffrey Pattie: I hope that the hon. Member for Luton, West (Mr. Sedgemore), who has just spoken so ably and breathtakingly, will not mind if I do not take up his remarks in the few minutes that I have before nine o'clock, although I was intrigued by the imagery which he conjured up of a lame duck without teeth.
  I want to confine my few remarks to the subject of the proposed nationalisation of the aerospace industry. I am glad that the hon. Member for Derby. North (Mr. Whitehead) has taken part in this debate. Between us, we have at least ensured that this proposal has not gone without comment.
  I believe that the onus must be on the Government to submit a convincing case for nationalising the aerospace industry. There has been precious little sign of such a case so far. The onus is not on the aerospace industry to say why it should not be nationalised, or to ask its many friends to support it.
  Despite the many uncertainties created by successive Governments and the difficulties for the aerospace industry caused by rising cost of fuel and the impecunious nature of airlines throughout the world,
  804
  the British aeropsace industry bids fair this year to achieve exports of £600 million. This represents over £2 million in foreign exchange earned for every working day by 200,000 skilled men and women, who are about 1 per cent. of the total work force. There is also the huge technological spin-off that has been achieved. All in all, this is a first-class achievement by this industry.
  As I said in my intervention during the speech of the hon. Member for Derby, North, in the past 11 years this industry has earned £3,410 million abroad. Yet, in the document the Labour Party and the TUC have produced, "The Nationalisation of the Aircraft Industry", we read only such snippets as:
  "BAC have received more than £200 million in the last ten years and Rolls-Royce more than £300 million."
  It then says:
  "The major firms have been the beneficiaries."
  The inference is that these major firms have taken this money and decamped with it, whereas, in fact, it has been used to create the £3,410 million earned abroad. Therefore, the whole industry has been the beneficiary of this investment in those two companies. The whole industry includes not only the two I have just mentioned but also the 300 avionics companies which are involved in this industry. The whole country has benefited from the achievement of earning this amount of foreign exchange.
  We all know the arguments. Hon. Members opposite say, "Think of all the money we have put into aerospace, into research and development, and of all the money we have spent to buy the aircraft from these companies." We know that in military terms all the ordering has to come from the Government. The purchasing power is the Government's. We all know that there is no possibility of any sizeable civil aviation project, literally and metophorically, getting off the ground without Government money behind it. All new projects need Government funds. But it is a complete non sequitur to suggest that therefore we need to take over these companies.
  In the course of his interesting and amusing speech the hon. Member for Bedwellty (Mr. Kinnock) spoke of a Mr. Marx. Let me refer to another Mr.

  805
  Marks. I have in mind the Mr. Marks who went into business with a man named Spencer. They formed a firm which has been extremely successful. It is a model of profitability, service and high standards. Marks and Spencer is supplied by many small companies. To such a company, a contract with Marks and Spencer can represent 75 or even 80 per cent. of its work load. Marks and Spencer takes a very close interest in the welfare of those small companies, even down to the way staff are trained and deployed, their holiday arrangements and so on. But it does not seek to take the next step, which is to own those companies.
  The British aerospace industry faces two problems. They are simply that the cost of projects is going up and up at a time when the capability of airlines throughout the world to buy these projects is diminishing. No one in the debate so far has suggested how nationalising any company in the aerospace industry will tackle either of these two problems. Therefore, I suggest that any proposals for the nationalisation of aerospace are totally irrelevant to the real problems facing that industry.
  9.2 p.m.
  Mr. Patrick Jenkin: In what has been a good debate today we have heard a number of excellent maiden speeches, and it is my privilege to congratulate those who made them. My hon. and learned Friend the Member for Kinross and West Perthshire (Mr. Fairbairn) paid what I thought was an extremely graceful tribute to his very distinguished predecessor which this House much appreciated. His was a wide-ranging speech. Whether it was controversial, I do not know. If my hon. and learned Friend thought that it was not, I look forward to hearing a controversial speech from him on some future occasion. Then we heard from the hon. Member for Rochester and Chatham (Mr. Bean), the hon. Member for Lincoln (Miss Jackson) and the hon. Member for Rossendale (Mr. Noble). All spoke with a knowledge and understanding of the industrial problems of their constituencies, and I know that this House looks forward to hearing them again.
  The Secretary of State for Industry does not appear to be with us. [HON. MEMBERS: "Where is he?"]. He opened
  806
  the debate, and I wish to make one or two comments about what he said. I have no doubt that someone will tell him what I am about to say. His speech was chiefly remarkable not for what he said but for what he did not say. He was attacked from his own benches by the right hon. Member for Walsall, North (Mr. Stonehouse) in what I thought was a very robust speech. He attacked the Secretary of State for his failure to analyse and explain his ideas, and he demanded a detailed explanation of what he described as this "exercise in social engineering". He did not get it from the Secretary of State.
  The Secretary of State was asked by my hon. Friend the Member for Henley (Mr. Heseltine) where he intended to recruit all the experts required to man the National Enterprise Board. There was no answer. The right hon. Gentleman was asked by my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) what the plans would cost. There was no answer. He was asked who would pay the cost. There was no answer. He was asked by my hon. Friend the Member for Derbyshire, South-East (Mr. Rost) what effect the plans would have on savers and investors. There was no answer. He was asked by my right hon. Friend the Member for Yeovil (Mr. Peyton) how the Government proposed to avoid the evil of rising unemployment which is now threatening us. No answer.
  On all the real issues which arise in this debate, the Secretary of State displayed, somewhat uncharacteristically, great similarity to a Trappist monk. But what emerged was a frightening fixation on the preservation of existing jobs at all costs, come what may. This showed a total disregard for the need for some flexibility in industry if we are to make progress. If the right hon. Gentleman's recipe had been in operation 100 years ago, much of British industry would still be struggling along making hansom cabs, crinolines and cast-iron kitchen ranges. Some may prefer hansom cabs and crinolines, but I do not think that that was the message that the right hon. Gentleman wished to convey.
  Mr. E. Fernyhough: British industry would still have had child labour, too, 100 years ago.
  Mr. Jenkin: Fortunately, it was a Conservative politician who did away with that.
  This will be the first occasion since the announcement of the Government's plans for offshore oil that we have been able to debate that matter. We were promised a debate before the Summer Recess, but it never materialised. I therefore propose to devote most of my speech to that part of our amendment. But I wish to make it absolutely clear that our vote tonight will be on our amendment as a whole. We are utterly opposed to the increasing concentration of power in the hands of the State—and that is what it will be, for all the brave talk about participation. We are opposed to the spreading tentacles of bureaucratic State control and interference. They will divide the nation, undermine confidence, damage investment and put jobs at risk. That is why we are voting tonight.
  But before I deal with the specific problem of offshore oil I should like to say a word about recent events in an industry which was nationalised nearly 30 years ago—the coal industry.
  Last Wednesday the executive of the National Union of Mineworkers finally decided to recommend rejection of the National Coal Board's proposal for a realistic productivity scheme. Of course this will be voted on by the miners, it still may be accepted, but it is already more than possible that that union is once again on a collision course with the Government.
  This productivity scheme is no peripheral matter. The Secretary of State for Energy will know that he pinned his faith on higher productivity in his somewhat emotional foreword to the interim report. It is picked up in the final report published today. He said last June:
  "All of us want a thriving coal industry offering proper rewards to those who work in it, and this is now a perfectly realisable prospect. But, for mineworkers as for the nation as a whole, real rewards can advance to the extent that they reflect higher efficiency and higher output per man."
  That is absolutely right. Therefore, the threat that it may not happen is very serious.
  This threat comes at a desperately dangerous moment for this country. Coal stocks, distributed and undistributed, stand—I have the figure for 19th Octo-
  808
  ber—at 21½ million tons, compared with over 35 million tons at the same time in 1973. Coal output since April is 5 millin tons down on the same period in 1973 and there is clearly no hope at all of reaching the 120 million-ton target. The Central Electricity Generating Board now has to burn, and import, more oil, at grave cost to our balance of payments, because of the shortage of coal.
  That is not all. What if the union rejects the productivity scheme? We have been told—a jubilant Arthur Scargill has already warned us—that it will be a claim not just for £30 a week more but for £42·50—the £30 plus the £12·50 that they might have got on the productivity scheme. Note his words:
  "That is going to be the price of peace in the pits."
  To show what a reasonable chap he is, he added
  "We do not want a confrontation."
  What have the moderates got to say about that? Mr. Gormley has no doubt about where the blame lies. He at least recognises a Communist conspiracy when he sees one. Mr. Len Clark, of the Nottingham miners, summed it up in a nutshell, and his words bear repetition:
  "I do not hesitate to say that the Communists' aim is to bring down the Establishment and seize control."
  I could not have put it more succinctly.
  When my right hon. Friend was Prime Minister, however, he was told—the unions were saying as much—that he was hell-bent on confrontation with the unions. When he warned that the Communists were using industrial power to bring down not just the previous Conservative Government but any democratically elected Government, he was scoffed at by the wiseacres on the opposite benches, with shouts of "Reds under the bed".
  Will the Secretary of State for Energy now tell the House what he proposes to do? Does he stand by his election boast, made 10 days before the election, of
  "The days of confrontation with the miners are over"?
  Will he confess to the House that Communist influence in unions can lead to a confrontation which is of no seeking by the Government? Will he spell out to the House the consequences of the failure of the coal industry to reach its targets?

  809
  Of one thing I am certain—that the Secretary of State's time in the next few weeks would be far better spent in campaigning for sanity in the coalfields than it will be in nationalising the oil industry.
  I now turn to the oil industry. I start with a proposition which few will dispute. Amid all the perils that face our economy, Britain's offshore oil stands as a lifeline of quite crucial importance. Rising world oil prices mean that we are currently running an oil deficit of between £3 billion and £3½ billion a year. There have been various estimates of how this will build up over the next few years. Our own calculations, based on reasonable assumptions, suggest that by 1980 the total indebtedness on oil account could reach £15 billion.
  Of course, this is part of the world monetary crisis, and no country can expect to solve that alone. But surely, at the very least, it should be the central aim of any British Government, first, to seek to reduce this country's consumption of oil and, secondly, to do everything in their power to speed up progress to the day when we can achieve self-sufficiency in oil.
  This is not the occasion, perhaps, on which to castigate the Secretary of State for his manifest lack of energy in the field of conservation. It has taken him eight months just to appoint a committee. Almost every other nation has already embarked on a major energy conservation programme, but the Secretary of State has done virtually nothing. He merely claims to have cleared the ground for the committee's deliberations. How much better if he had spent some time in the last few months in seeking to conserve oil rather than in trying to nationalise it!
  My main attack is on the other count. Nationalisation, or even the partial nationalisation outlined in the Government's White Paper, is bound to delay the achievement of self-sufficiency, at massive cost to the nation. It is bound to make the Chancellor's task in financing our vast debts even more difficult than it is already. To that I would add another charge, made by the right hon. Member for Orkney and Shetland (Mr. Grimond). He said that nationalisation was utterly pointless and unnecessary. I shall demonstrate that. I want to make sure that
  810
  when the Secretary of State for Energy replies to the debate he answers the specific question which I will put to him and does not evade it in a sort of flummery of guff which we have had from him on previous occasions in seeking to justify his policies. The specific attack that I level at the Government is against their unnecessary and foolish decision to nationalise a 51 per cent. share in commercial oilfields.
  I am not objecting to the principle that offshore oil profits should be fairly and effectively taxed, nor am I objecting to the Government taking the necessary powers to regulate offshore activities and, in particular, powers to regulate the rate of depletion. While we shall want to study the details of the Government's proposals on taxation and regulation, we on the Opposition side of the House have made it abundantly clear—we did so long before last February's General Election—that we recognised and accepted the need both for tax changes and for stronger controls. But it is nationalisation which is unnecessary, and it is nationalisation that we attack, because it is totally irrelevant to both those objectives.
  Let us take first the question of a proper share of the revenues for the Exchequer. The Government are well able to devise and enforce, and no doubt will do so, a tax régime which will secure for the Exchequer an appropriate share of the oil revenues and leave a fair share to the operating companies as a return on their investment. The licences which have been issued have always reserved the Government's right to levy taxation and, if necessary, to change the tax system. The companies are expecting a tax régime, and this is perfectly appropriate. But even this Government cannot take the same pound twice. If the Chancellor takes the money in the form of dividends, he cannot take it again as tax. That at least must be obvious.
  In either case—dividend or tax—the key question is what rate of return the operators should expect on the capital they have invested. It is clear that there is no need for the taxpayer to invest huge sums to secure a financial return which the Government are perfectly well able to get by taxation. This is to confuse sovereignty with ownership. The Government are a sovereign power and have a sovereign right to tax. They do

  811
  not need to own a company in order to tax it.
  I have seen only one even barely plausible reason why nationalisation is necessary in support of the power of taxation. It was given by the Minister of State, Department of Energy, Lord Balogh, in an article in the September issue of The Banker which was a riposte to an article by my hon. Friend the Member for Guildford (Mr. Howell). Lord Balogh said:
  "… participation … automatically provides a check on the investment outlays and production costs of the oil companies."
  He went on to argue that these precautions were necessary to prevent avoidance of tax. I have to point out that even while he was writing his article his own Department was destroying his argument.
  I have here a copy of a letter, dated 3rd September, which has been sent to all the offshore companies by the head of the petroleum products division of the Department of Energy. Its purpose, quite properly, was to consult the industry on the various new powers which the Government propose to take over the licensees. It attached a list of the powers. I am concerned at the moment with the one contained in paragraph 10, headed "Provision of Information ". This said:
  "The Secretary of State would have power to require a licensee to give him any information … This power would cover financial as well as technical or geological information …".
  I see that the Secretary of State for Industry has returned. No doubt he has been engaged in important matters of State and his hon. Friends will tell him what I have said about his speech.
  The letter went on:
  "It would also give the Secretary of State a reserve power to appoint an auditor or assessor to inspect a licensee's books and records where necessary."
  That is quite right. I doubt whether we shall dispute that. But where does that leave Lord Balogh's argument about the need for participation to see that the books are not fiddled'? At least we must congratulate Lord Balogh on his imagination, because not even the Secretary of State for Industry in his wilder moments of fantasy has suggested that in order to put an auditor into a company one has first to nationalise it. So there is
  812
  no need to nationalise in order to raise revenue. Taxation is the satisfactory and appropriate weapon.
  Then there is the question of control over operations. It is clear that these powers must stem from legislation. They will not stem from ownership. It is clear not only from the Department's letter but from what the Prime Minister told us about the Bills we can expect this Session. We argued during the General Election that these powers require a separate impartial regulatory body. We shall be interested to see whether the Government contemplate such a body. There are ample precedents in Canada, the United States and elsewhere. The key power is the power to control the rate of depletion of the resources—that we must have. This is an intensely complex technical process and not one to be carried out by Government-appointed directors or by Government shareholders. Ownership or participation is totally irrelevant to the exercise of these powers.
  Here again there is only one argument which it has always seemed might carry some weight and would justify a form of participation—that relating to control, also referred to by Lord Balogh. It is that participation, entitling the Government to direct ownership of the oil, will give better control in times of emergency. But that argument is no longer available to the Government because only last week the Secretary of State announced in a Written Answer that the United Kingdom is to join the agreement for an international programme. He said:
  "The immediate practical part of the agreement is the oil-sharing scheme. This"—
  subject to majority voting—
  "will be activated when supplies of oil to any participating country or to all the participating countries are reduced by a given proportion."—[OFFICIAL REPORT, 30th October 1974; Vol. 880, c. 4.]
  I might say that there is some indignation and surprise, not confined to this side of the House, about the fact that the Government should have assented to this far-reaching agreement even before the House has had a chance to read it, let alone debate it. It is a massive agreement, over 100 pages long, and there is at the moment only one copy in the Library, which no Member is allowed to remove. I have here a copy which the Secretary of State has kindly sent me.

  813
  This agreement contains substantial supra-national powers, and it is already apparent that other prospective Western oil producers are having grave reservations about whether they should join. Neither Canada nor Norway is a signatory. The Secretary of State is treating the House with contempt on this issue. It may be a good agreement. I do not know. I shall want to study it. We must have an early opportunity to debate it.
  But in the context of tonight's debate it must be clear that the argument by Ministers that nationalisation is needed to control oil in an emergency is wholly invalidated. The implementation of sharing may need legislation but not nationalisation. Both the United States and Germany, which intend to be signatories to the agreement, have felt no need to nationalise their oil-producing companies. Here again, nationalisation is wholly irrelevant to control.
  The specific question to which we must have an answer tonight from the Secretary of State is: what is the extra advantage—the incremental benefit—which will flow to this country as a result of obtaining 51 per cent. nationalisation? What benefit is it that cannot be obtained by appropriate tax machinery and appropriate regulatory legislation? The House is entitled to a clear and specific reply. We have never had it. We have not had it from the Secretary of State or the Prime Minister, and it is time that we had the answer. The right hon. Member for Orkney and Shetland asked the simple question: why is it necessary?
  If the benefits are vague and insubstantial, the cost is appalling. There is first the cost of buying a 51 per cent. stake. In July we made a rough calculation that it would be perhaps £2 billion.
  It is now apparent that that was far too low—for two reasons. First, the costs of offshore operations are rising dramatically. In June 1972 BP estimated that the cost of developing the Forties field was £360 million. Its latest estimate is £630 million. Shell estimated last yew that the cost of a concrete gravity platform installed in 1977 would be about £55 million. Today that same structure installed in the same spot will cost £100 million. I could quote example after example. The 51 per cent. share will
  814
  cost the Exchequer vastly more than the £2 billion which I estimated. It may cost three times as much as that, and this will be Exchequer money paid out for absolutely no purpose at all. Let no Labour Member delude himself that these are merely paper transactions. A vast quantity of money will be spent on hardware, on investment, and will be in the public expenditure accounts competing with all the other demands on the Chancellor of the Exchequer in the same way for example as investment in the steel and the coal industries.
  Mr. Arthur Lewis: Who bought a 51 per cent. share in BP?
  Mr. Jenkin: The cost of buying half of BP was £2 million, not £6 billion.
  Then there is the cost of delay. Every day's delay in bringing the oil ashore costs this country on its balance of payments £10 million. Quite modest delays could run us into £3,000 million or £4,000 million extra on the balance of payments. It is inconceivable that this vast State investment, far bigger than anything attempted before, will not lead to massive delays.
  The British National Oil Company does not exist. It will need hundreds of oil technicians and engineers, and the best estimate is that it will take five years to build up the teams. In the meantime, how can the companies plan? What assumptions should they make about the kind of reimbursement they will get? What consents will they need to invest? How is the Department of Energy or the Treasury to monitor the expenditure? What will the Comptroller and Auditor General require for the control of the expenditure of these vast sums of money? What is the cost to the Exchequer of financing the compensation? On the precedents, this will presumably be by a further issue of Government paper. What will be the effect of that upon the management of the Government's debt? What will be the effect on the management of the gilt-edged market? How will the Government be able to finance the already massive borrowing requirement if at the same time they are issuing billions of pounds worth of new debt on to the market? Nothing whatever has been said by any Minister to suggest that this problem has ever been thought

  815
  about, let alone solved, before the policy was embarked upon.
  Then there is the intangible cost, the damage to the United Kingdom's reputation as a country which welcomes investment from overseas. It is significant that the Secretary of State for Energy had to resort to distorting what was said to him by a prominent American oil man during what was intended to be a private conversation. The Scotsman reported the Secretary of State at one of the Labour Party conferences during the election as saying:
  "that the world's largest oil company, Exxon, would readily accept the Government's plans for majority State participation in North Sea oil if Labour were returned with a majority after the election."
  Exxon had to issue a denial. Mr. Jamieson, the chairman in New York, said:
  "I have had discussions with Mr. Varley, but apparently there has been a misunderstanding between us. In these discussions I indicated that Exxon would not favour direct State participation in North Sea oil."
  I hope that the Secretary of State apologised to Mr. Jamieson for thus disgracefully misrepresenting him.
  The Minister is fond of citing the Norwegian example. Norway is utterly different. The Norwegians are trying to slow down development in their sector in which precisely four rigs are operating. In the United Kingdom sector there are 28 rigs. But even Norway never sought to alter retrospectively participation in existing concessions, and that is what is causing concern. I can find only one international precedent for a country which has altered an existing participation arrangement before production has started, and that was Ecuador, in February 1972, after the Government had been overthrown in a revolutionary coup by a military dictatorship. Is that the standard by which the Government want to be judged?
  In the amendment we condemn the Government's nationalisation proposals as disastrous. It is depressing that when Socialist Parties in virtually every other country in the free world have long since recognised that nationalisation is irrelevant to the solution of today's problems, here in Britain the same dreary old Socialist dogma goes plod, plod, plodding
  816
  along. Like the Bourbons, the Labour Party has learned nothing and forgotten nothing. It has dressed up the same tired old doctrinaire discredited ideas in the trendy modern gear so beloved of the Secretary of State for Industry. But, to misquote Gertrude Stein, nationalisation is nationalisation is nationalisation. Because we are against it, we propose to divide the House tonight.
  9.30 p.m.
  The Secretary of State for Energy (Mr. Eric Varley): I am pleased to be able to begin by congratulating hon. Members who have made maiden speeches. I did not have the opportunity and the good fortune to hear all of them, but I have been told of the high quality of those I missed as well as those I heard.
  The House certainly appreciated the tribute paid by the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn) to his predecessor, Sir Alec Douglas-Home. Sir Alec was widely respected in the House and was a unique individual figure. His successor has already marked himself out as equally individual in his dress as well as his views. I was rather amused a moment or two ago when the hon. and learned Gentleman suggested that all the trendy dressers were on the Government side of the House.
  My hon. Friend the Member for Rochester and Chatham (Mr. Bean) demonstrated his intimate knowledge of the building industry, and I know that we shall all benefit from that knowledge. My hon. Friend the Member for Lincoln (Miss Jackson), as might have been expected from her expertise, made an extremely good and well-argued case for public enterprise. Many of us know her well from the hard work she did for the Labour Party at Transport House. We are delighted to welcome her to the House.
  My hon. Friend the Member for Rossendale (Mr. Noble) made a powerful speech and showed that he will fight vigorously for his constituency and the constituency interests about which he is so concerned.
  Let me say something straight away about the international energy programme. No discourtesy was intended on my part. I wanted to get the matter before the House as quickly as possible, but it proved

  817
  difficult last week. I thought it best to arrange for the House to be informed in the way that it was informed. I think it is a very good agreement. I am not responsible for arranging debates in the House, but I should be pleased if it were debated. As the right hon. Gentleman knows, it came out of the Energy Coordinating Group. I know that his party, in Government, and the right hon. Gentleman the Leader of the Opposition were very keen on the work of the Energy Co-ordinating Group. If it is decided that a debate is needed, I hope that it can be arranged.
  I am certainly glad that the Opposition have at last stopped running away from a debate on the Government's plans for public participation in North Sea oil. How well we remember the stern clarion call of the Leader of the Opposition on 11th July, the day on which I made my statement about offshore oil and gas policy, when the right hon. Gentleman said:
  "Will the Leader of the House note that this is such an important matter that we shall probably want to debate it before the House rises?" —[OFFICIAL REPRT, 11th July 1974; Vol. 876, c. 1550–1.]
  The House sat for another three weeks. During that period the Opposition used up two of their Supply Days—
  Mr. Patrick Jenkin: I want to explain the position. The Leader of the House as the right hon. Gentleman well knows, had in the Business Statement preceding the right hon. Gentleman's statement already promised a debate on this question in Government time.
  Mr. Varley: I am coming to that. At no time did the Opposition take any further action to debate Labour's oil policy. If the right hon. Gentleman would just hold his fire a moment, I will tell him the other part of the saga. They were even offered a Friday debate by my right hon. Friend the Chief Whip. When he made it plain that we could have the debate on a motion that required a Three-line Whip, the Opposition ran away again. They could have had a debate, had they so wished. Now, four months and one General Election later, they have plucked up courage to insert three words in a 46-words amendment which give us our chance to debate North Sea oil. I am afraid they have made a very grave mis-
  818
  take. In fact, the right hon. Gentleman spent a good deal of his time debating the coal industry. I should be happy to debate the coal industry at any time, but even in this amendment there is no mention of the coal industry.
  The Opposition have really made a mistake in wanting to debate this. Since I made the statement on the Government's offshore policy on 11th July, we have had a bizarre misrepresentation of the Government's policy. But the right hon. Member for Wanstead and Woodford (Mr. Jenkin) has also, ironically enough, described what his party would do and how the Tories would frighten off North Sea oil operators. Nothing could be more damaging to confidence, to investment and to employment than the sterile bureaucratic interference which would have been the sole outcome of the right hon. Gentleman's scheme.
  The Tory Party was determined to ensure the worst of all worlds under its policy. Under its policy there is no stake for the British people in the oil wealth, no effective control by the British Government over depletion rates, no right for a British national oil corporation to engage in exploration, exploitation, marketing and refining—just a eunuch body, again described by the right hon. Gentleman tonight, called the United Kingdom Conservation Authority, with no clear powers to take action to protect the interests of the British people, but with the ability to meddle and interfere to no constructive purpose with the oil licensees and in a way which would have totally stultified their activities.
  I should like the right hon. Gentleman to listen to what I have to say. I have in my hand what purports to be the Conservative policy on offshore oil. For greater accuracy, I have obtained a copy. An article written by the right hon. Gentleman in Petroleum Review says:
  "we would therefore propose to give the United Kingdom Oil Conservation Authority the power to control the timing of investment by oil companies in production facilities. It would work something like this. A company declares a field to be commercial. The United Kingdom Oil Conservation Authority call the company in for discussions and sees how the projected production from the field fits in with the overall target levels of production laid down by the Government."
  What does the Opposition amendment say? It accuses the Government of

  819
  "bureaucratic interference". But it goes even better than that. The right hon. Gentleman says in the article:
  "If the production is needed as soon as possible to reach the target figure, then the company can be given the go-ahead. If, however, the given level of production is likely to be achieved from facilities already on stream or approved, then the United Kingdom Oil Conservation Authority would ask the company to postpone its major investment for a year or two perhaps even longer …".
  Is that bureaucratic interference?
  The right hon. Gentleman goes on to say that this would be irksome to the oil companies. You bet your life it would be irksome!
  Mr. Patrick Jenkin: I ask the right hon. Gentleman to answer this question. Given that there must be control over the rate of depletion, and given therefore that there must be controls of this nature, would he ask the oil companies which they would prefer—our solution or his?
  Mr. Varley: That is the easiest question I have been asked for a long time. Of course, the oil companies would like that, because it does not offer one scintilla of a depletion control.
  Mr. Patrick Jenkin: Then why was the right hon. Gentleman saying that my solution would frighten them off with bureaucracy?
  Mr. Varley: As a result of some of this, the oil companies would much prefer that policy to our policy.
  The right hon. Gentleman has derided the Government's intention to provide suitable staff for the British national oil corporation. He says that such people are not available. Yet he insists that his oil conservation authority would employ highly qualified expert assessors. He would recruit highly qualified oil experts to do no job at all while, according to him, these men would not be available to do a real job for a real authority with real powers. No wonder the Tory Party's oil policy was rejected by the people of England, Scotland and Wales, each and all of whom returned more Labour Members committed to our oil policy than Tory Members impaled on the fantasies of the right hon. Gentleman. No wonder that in Scotland the Tory Party received a rebuff of historic dimensions and it is now reduced in that country to a rump.
  820
  I can well understand the Tories' defeatism. After all, they have plenty to be defeatist about. But what I cannot understand is their lack of confidence in their own country. They call their manifesto "Putting Britain First", but by their attitude to the oil industry it puts Britain nowhere.
  Here are some countries which have participation in their own oil industries: Saudi Arabia 60 per cent.; Kuwait 60 per cent.; Qatar 60 per cent; Iraq 71 per cent.; Nigeria 55 per cent.; Denmark and Greenland 50 per cent. In their attitude to oil, the Tories are implicitly saying, Do not class Britain with such countries as Nigeria or Greenland". That is what they are saying.
  Mr. Patrick Jenkin rose—
  Mr. Varley:I cannot understand the inferiority of the Tory Party. It is perfectly all right for the tiniest oil sheikhdom to have participation in its oil industry, but when it comes to a British Tory Government the Tories say, "No, we cannot have it."
  The Labour Government intend to put Britain first, and we shall give the British people a stake in their own oil industry. We shall find the money required to fund State participation.
  The Opposition benches are scarcely lacking in hon. Members who were something in the City. There are on those benches experts in identifying the face of capitalism whether acceptable or unacceptable. They preach the merits of investment for private gain, or even selfish gain, yet they fail to discern the merits of investment for public gain.
  It is an undeniable fact that participation is as good an investment for the Government as an investment in the North Sea is for the oil companies. The cost of the initial investment will be considerable, but the rate of return will be very good indeed. [Interruption.] No investment could be better than the development in a natural resource which already belongs to the nation, for which demand is guaranteed. I only wish the investors in Court Line had had such a secure and guaranteed return on their money. Had that been the case, the House would have been spared the squalid and cynical antics last summer

  821
  of the hon. Members for Henley (Mr. Heseltine) and for Bury St. Edmunds (Mr. Griffiths).
  Mr. Heseltine: The right hon. Member will understand that the antics of Court Line and North Sea oil will be paid for in the end by the taxpayer.
  Mr. Varley: I have referred to the unacceptable face or acceptable face of capitalism. The hon. Gentleman's antics last summer were the unacceptable and unsuccessful face of political opportunism.
  North Sea oil is a good investment for the British people. These are the immediate prospects. In my report to Parliament I said that proven reserves of oil in the 10 fields then declared commercial amounted to 895 million tons, with a further 165 million tons of probable reserves making a total of 1,060 million tons from those fields. Since May two more fields, Heather and Claymore, have been declared commercial and these, together with the results of further appraisals on the other 10 fields, now bring the total of proved and probable reserves from commercial fields to around 1,160 million tons. The value of this quantity of oil at today's prices is immense. One thousand million tons of oil is worth around £40,000 million. That is the oil we know about.
  In addition, other promising possibilities have come into view such as the probable extension into United Kingdom waters of the large Statfjord find off Norway. Other finds such as British Petroleum's Andrew field announced recently need more appraisal before an estimate of their potential can be made. A great deal more exploration will take place and huge quantities of oil will be discovered.
  A few weeks ago the Bank of Scotland estimated—and it is consistent with the estimates of total possible reserves in my report to Parliament—that the value of all the oil in the North Sea could exceed £100,000 million.
  Day after day my officials bring to me news of foreign organisations and foreign Governments which wish to get some small share of Britain's oil. The Leader of the Opposition knows this, because he had discussions with Mr. Tanaka, the Japanese Prime Minister, and he will confirm that day after day there are approaches to the British Government
  822
  about getting some small stake. If by some curious misfortune the right hon. Gentleman had stumbled into the office I hold, he would apparently have looked extremely benevolently and encouragingly upon such approaches, and the only approach that he would have coldly discouraged would have been the approach from the representatives of the British people. That is the motto when it comes to oil: "Put Britain at the back of the queue."
  Mr. Edward Heath: The Secretary of State has emphasised the importance of this matter to the British people. I think, therefore, that he ought to deal seriously with it. The proposal that the Japanese Prime Minister put to me when I was Prime Minister was that the Japanese were prepared to put investment into North Sea oil and into the development areas of Scotland in order to provide jobs for Scotland on the basis that the oil would come to this country and be of benefit to this country and we for our part would help the Japanese with the development of oil nearer to their own country. That bears absolutely no resemblance to what the Secretary of State is describing at the moment.
  I have put this question to the Secretary of State and he has failed to answer it. He wishes to put money into oil already completely under our control. Would he now kindly tell the House where the money is to come from? Is it to come from the taxpayer, in which case will he tell us so? Is it to be borrowed by the Government, in which case they will pay interest on it, high interest rates at that? If that is the case, why is it necessary to pay interest on this money instead of taking the complete amount in taxation from the oil companies for the benefit of the taxpayer?
  Mr. Varley: I am very pleased that the right hon. Gentleman has confirmed that approaches by foreign countries were made to his Government, and were perhaps being encouraged by his Government. Does he not realise that that is a contradiction of the Conservative Party's case? The right hon. Gentleman and his party are saying that perhaps it is all right to encourage foreign companies and foreign countries, but the British Government themselves cannot get involved in this project. We shall have a chance to

  823
  debate this issue on another occasion—[Interruption.] No, I cannot give way now. I have done so already on many occasions.
  What I cannot understand is this. After 30 years of expanding public enterprise in this country, I am astonished that the Tory Party is so narrow and so hidebound that it refuses to recognise Britain's publicly-owned industries. I thought that the right hon. Gentleman and hon. Members opposite were interested in knowing about public enterprise. [HON. MEMBERS: "Answer."] I should like to—[HON.MEMBERS: "Answer."]
  Mr. Speaker: Order. Hon. Members must not go on shouting "Answer". We have had a fairly orderly debate. There have been good speeches from both sides of the House. I hope that we can finish the debate in an orderly manner.
  Mr. Varley: I thought that in this debate the Opposition wanted to know the Government's case for public ownership. I want to give the House some facts about successes of public ownership. I cannot understand why hon. Gentlemen opposite will not listen. [Interruption.] I am very sorry that right hon. Gentlemen opposite have decided to shout me down so that I cannot give the facts about public enterprise. Do the Opposition want to hear about public enterprise? [Interruption.] The right hon. Gentleman is the Leader of the Opposition for only a short time. There are other Leaders of the Opposition, I think.
  We are told that the Tory Party is engaged in an agonizing reappraisal of its attitudes and forces. Let hon. Gentlement opposite at least pluck up enough courage to acknowledge the debt that ought to be paid to those who are engaged in publicly-owned industries. When the asset strippers, the speculators and the whizz kids contribute one fraction of what the miners, the steel men and the nuclear technologists do, the Tory Party will deserve a hearing for the tired chidings which they utter from time to time.
  Regarding North Sea oil, only majority public participation will attract to public enterprise the skilled oil technologists that Britain must train and keep. Other oil-producing countries have learned to their cost the dangers of allowing the
  824
  exploitation of their indigenous oil resources to be wholly in the hands of foreign experts. We should learn from their mistakes and experiences, and not wilfully disregard them. But at the same time, we shall continue to welcome all those in the oil industry who contribute their experience and skills to this great enterprise. Only majority participation can ensure for the British people a realistic revenue from these indigenous resources.
  The House will be pleased to know that within a matter of weeks, and certainly in the New Year, we shall have the opportunity of studying the text of the petroleum Bill, the preparation of which is now approaching its final stages. This Bill will set up the British national oil corporation with the powers outlined in the White Paper.
  Meanwhile, my right hon. Friend the Chancellor of the Duchy of Lancaster, the Paymaster-General and my noble Friend, the Minister of State, will be embarking on negotiations to obtain public participation in existing licences. I know that the Opposition at least will take some pleasure when they observe my right hon. Friend the Chancellor of the Duchy of Lancaster deploying his brilliant and greatly appreciated talents in extending the boundaries of the public sector.
  This afternoon my right hon. Friend the Secretary of State for Industry advanced a compelling case for taking the aircraft, shipbuilding and ship repair industries into public ownership. Most of the firms operating in these industries, whose survival is essential to the economic and industrial future of the country, have received substantial amounts of taxpayers' money over the years. They asked for that money and they were glad to get it. Yet in the meretricious words of this bogus amendment the Opposition have the nerve to claim that State intervention is damaging.
  On Friday, when the workers of Hawker Siddeley lobbied hon. Members, they were not fearful of public intervention jeopardising their jobs. They were asking for public intervention to save their jobs.
  Far from these measures being damaging, as the Opposition so unconvincingly claim, all of them are absolutely essential.

  825
  But public enterprise is not simply a matter of rescuing private industry that has fallen on difficult days, or is badly managed, or cannot make money, or cannot ensure employment for its work force. Public enterprise is not simply the week's good cause. Public enterprise must also ensure that the State is institutionally equipped to make the decisions that matter for the British economy, rather than leave it to random forces to make them. It is absolutely essential that we reject the doctrine that what is good for Slater Walker is good for the country.
  It does not matter to us whether the decisions about the future of the Tory Party are made in Milk Street rather than in the House. We are not prepared to allow the decisions about the jobs of
  British workers to be made in Milk Street rather than in the House.
  I cannot understand why the right hon. Member for Penrith and The Border (Mr. Whitelaw) is shouting. Is he trying to frighten somebody? The amendment that we shall vote against tonight has shown the total irrelevance of the Tories. They drift unrealistically out of the mainstream of British political life. They are now a fringe party, which is why we shall reject the amendment in the Lobby tonight.
  Question put, That the amendment be made:—
  The House divided: Ayes 296, Noes 310.

  Division No. 1.]

  AYES

  [10.0 p.m.

  Adley, Robert

  Crowder, F. P.

  Harvie Anderson, Rt Hn Miss

  Aitken, J. W. P.

  Davies, Rt Hon J. (Knutsford)

  Hastings, Stephen

  Alison, Michael

  Dean, Paul (N Somerset)

  Havers, Sir Michael

  Amery, Rt Hn Julian

  Dodsworth, G. H.

  Hawkins, Paul

  Arnold, Tom

  Douglas-Hamilton, Lord James

  Hayhoe, Barney

  Atkins, Rt Hn H. (Spelthorne)

  Drayson, Burnaby

  Heath, Rt Hon Edward

  Awdry, Daniel

  du Cann, Rt Hon Edward

  Henderson, Douglas

  Bain, Mrs Margaret

  Dunlop, J.

  Heseltine, Michael

  Baker, Kenneth

  Durant, Tony

  Hicks, Robert

  Banks, R. G.

  Dykes, Hugh

  Higgins, Terence L.

  Beith, A. J.

  Eden, Rt Hon Sir John

  Holland, Philip

  Bell, Ronald

  Edwards, Nicholas (Pembroke)

  Hooson, Emlyn

  Bennett, Sir Frederic (Torbay)

  Elliott, Sir William

  Hordern, Peter

  Bennett, Dr Reginald (Fareham)

  Emery, Peter

  Howe, Rt Hon Sir Geoffrey

  Benyon, W. R.

  Eyre, Reginald

  Howell, David (Guildford)

  Berry, Hon. Anthony

  Fairbairn, Nicholas

  Howell, Ralph (North Norfolk)

  Biffen, John

  Fairgrieve, Russell

  Howells, Geraint (Cardigan)

  Biggs-Davison, John

  Farr, John

  Hunt, John

  Blaker, Peter

  Fell, Anthony

  Hurd, D.

  Body, Richard

  Finsberg, Geoffrey

  Hutchison, Michael Clark

  Boscawen, Hon Robert

  Fisher, Sir Nigel

  Irvine, Bryant Godman (Rye)

  Bowden, Andrew (Brighton)

  Fletcher, Alex (Edinburgh N)

  Irving, Charles (Cheltenham)

  Boyson, Dr Rhodes (Brent)

  Fletcher-Cooke, Charles

  James, David

  Bradford, Rev Robert

  Fookes, Miss Janet

  Jenkin, Rt Hon Patrick (Redbr)

  Braine, Sir Bernard

  Fowler, Norman (Sutton C)

  Jessel, Toby

  Brittan, L.

  Fox, Marcus

  Johnson Smith, G. (E Grinstead)

  Brocklebank-Fowler, C.

  Fraser, Rt Hon H. (Stafford & St)

  Jones, Arthur (Daventry)

  Brotherton, Michael

  Freud, Clement

  Jopling, Michael

  Brown, Sir Edward (Bath)

  Fry, Peter

  Joseph, Rt Hon Sir Keith

  Bryan, Sir Paul

  Galbraith, Hon T. G. D.

  Kaberry, Sir Donald

  Buchanan-Smith, Alick

  Gardiner, George (Reigate)

  Kellett Bowman, Mrs. Elaine

  Buck, Antony

  Gardner, Edward (S Fylde)

  Kershaw, Anthony

  Budgen, N. W.

  Gilmour, Rt Hon Ian (Chesham)

  Kilfedder, James

  Bulmer, J. E.

  Gilmour, Sir John (East Fife)

  Kimball, Marcus

  Burden, F. A.

  Glyn, Dr Alan

  King, Evelyn (South Dorset)

  Carlisle, Mark

  Goodhart, Philip

  King, Tom (Bridgwater)

  Carr, Rt Hon Robert

  Goodhew, Victor

  Kirk, Peter

  Carson, John

  Goodlad, A.

  Kitson, Sir Timothy

  Chalker, Mrs Lynda

  Gorst, John

  Knight, Mrs Jill

  Churchill, W. S.

  Gow, I. (Eastbourne)

  Knox, David

  Clark, Alan (Plymouth S)

  Gower, Sir Raymond (Barry)

  Lamont, Norman

  Clark, William (Croydon S)

  Grant, Anthony (Harrow C.)

  Lane, David

  Clarke, Kenneth (Rushcliffe)

  Gray, Hamish

  Langford-Holt, Sir John

  Clegg, Walter

  Grieve, Percy

  Latham, Michael (Melton)

  Cockcroft, J. H.

  Griffiths, Eldon

  Lawrence, I.

  Cooke, Robert, (Bristol W.)

  Grimond, Rt Hon J.

  Lawson, Nigel

  Cope, J. A.

  Grist, Ian

  Le Marchant, Spencer

  Cordle, John

  Grylls, Michael

  Lester, Jim (Beeston)

  Cormack, Patrick

  Hall, Sir John

  Lewis, Kenneth (Rutland)

  Corrie, John

  Hall-Davis, A. G. F.

  Lloyd, Ian (Havant)

  Costain, A. P.

  Hamilton, Michael (Salisbury)

  Loveridge, John

  Craig, Rt Hon W. (Belfast)

  Hampson, Dr. Keith

  Luce, Richard

  Crawford. Douglas

  Hannam, John

  McAdden, Sir Stephen

  Crouch, David

  Harrison, Sir Harwood (Eye)

  MacCormick, Iain

  McCrindle Robert

  Percival, Ian

  Stainton Keith

  McCusker, Harold

  Peyton, Rt Hon John

  Stanbrook, Ivor

  Macfarlane, Neil

  Pink, R. Bonner

  Stanley, John

  MacGregor, John

  Powell, Rt Hon J. Enoch

  Steel, David (Roxburgh)

  Macmillan, Rt Hn M (Farnham)

  Price, David (Eastleigh)

  Steen, Anthony (Liverpool)

  McNair-Wilson, M (Newbury)

  Prior, Rt Hon James

  Stewart, Donald (Western Isles)

  McNair-Wilson P (New Forest)

  Pym, Rt Hon Francis

  Stewart, Ian (Hitchin)

  Madel David

  Raison, Timothy

  Stokes, John

  Marshall, Michael (Arundel)

  Rathbone, T

  Tapsell, Peter

  Marten, Neil

  Rawlinson, Rt Hon Sir Peter

  Taylor, R. (Croydon N.W.)

  Mates, Michael

  Rees-Davies, W. R.

  Taylor, Teddy (Glasgow, C)

  Mather Caro

  Reid, George

  Tebbit, Norman

  Maude, Angus

  Renton, Rt Hn Sir D (Hunts)

  Temple-Morris, P.

  Mawby, Ray

  Renton, Tim (Mid-Sussex)

  Thatcher, Rt Hon M.

  Mayhew, Patrick

  Rhys Williams, Sir Brandon

  Thomas, Rt Hon P. (Barnet)

  Meyer, Sir Anthony

  Ridley, Hon Nicholas

  Thompson, G.

  Miller, Hal (Bromsgrove)

  Ridsdale, Julian

  Thorpe, Rt Hon Jeremy (Devon)

  Mills, Peter

  Rifkind, Malcolm

  Townsend, Cyril D.

  Miscampbell, Norman

  Rippon, Rt Hon Geoffrey

  Trotter, Neville

  Mitchell, David (Basingstoke)

  Roberts, Michael (Cardiff NW)

  Tugendhat, Christopher

  Moate, Roger

  Roberts, Wyn (Conway)

  van Straubenzee, W R

  Molyneaux James

  Rodgers, Sir John (Sevenoaks)

  Vaughan, Dr Gerard

  Montgomery, Fergus

  Ross, Stephen (Isle of Wight)

  Viggers, P. J.

  Moore, John (Croydon C.)

  Ross, William (Londonderry)

  Wainwright, R. (Colne Valley)

  More, Jasper (Ludlow)

  Rossi Hugh (Hornsey)

  Wakeham, John

  Morgan, Geraint

  Rost, Peter (S.E. Derbyshire)

  Walder David (Clitheroe)

  Morgan-Giles, Rear-Admiral

  Royle, Sir Anthony

  Walker Rt Hon P. (Worcester)

  Morris, Michael (Northants)

  Sainsbury, Tim

  Walker-Smith, Rt Hon Sir Derek

  Morrison, Charles (Devizes)

  St. John-Stevas, Norman

  Wall, Patrick

  Morrison, Peter (Chester)

  Scott, Nicholas

  Walters, Dennis

  Mudd, David

  Scott-Hopkins, James

  Warren, Kenneth

  Neave, Airev

  Shaw, Giles (Pudsey)

  Watt, Hamish

  Nelson, Anthony

  Shelton, William (Lambeth, St)

  Weatherill, Bernard

  Neubert, M.

  Shepherd, Colin

  Wells, John

  Newton A

  Shersby, Michael

  Welsh, Andrew

  Normanton Tom

  Silvester, F.

  Whitelaw, Rt Hon William

  Nott, John

  Sims, Roger

  Wiggin, Jerry (Weston-s-Mare)

  Onslow, Cranley

  Sinclair, Sir George

  Wilson, Gordon (Dundee E)

  Oppenheim, Mrs Saliy

  Skeet, T. H. H.

  Winterton, Nicholas

  Osborn, John

  Smith, Cyril (Rochdale)

  Wood, Rt Hon Richard

  Page, Rt Hon R. Graham (Crosby)

  Smith, Dudley (Warwick)

  Young, Sir George (Ealing)

  Page, John (Harrow West)

  Speed, Keith

  Younger, Hon George

  Pardoe, John

  Spence, John

  Parkinson, Cecil

  Spicer, James (W Dorset)

  TELLERS FOR THE AYES

  Pattie, Geoffrey

  Spicer, Michael (S Worcester)

  Mr. Adam Butler and Mr. John Stradling Thomas.

  Penhaligon, David

  Sproat, Iain

  NOES

  Abse, Leo

  Canavan, Dennis

  Dempsey, James

  Allaun, Frank

  Cant, R. B.

  Doig, Peter

  Anderson, Donald

  Carmichael, Neil

  Dormand, Jack

  Archer, Peter

  Carter, Ray

  Douglas-Mann, Bruce

  Armstrong, Ernest

  Carter-Jones, Lewis

  Duffy, A. E. P.

  Ashley, Jack

  Cartwright, John

  Dunn, James A.

  Ashton, Joe

  Castle, Rt Hon Barbara

  Dunnett, Jack

  Atkinson, Norman

  Clemitson, I. M.

  Dunwoody, Mrs G. P.

  Bagier, Gordon A. T.

  Cocks, Michael (Bristol S)

  Eadie, Alex

  Barnett, Guy (Greenwich)

  Cohen, Stanley

  Edelman, Maurice

  Barnett, Joel (Heywood)

  Coleman, Donald

  Edge, Geoff

  Bates, Alf

  Colquhoun, Mrs Maureen

  Edwards, Robert (Wolv SE)

  Bean, R. E.

  Concannon, J. D.

  Ellis, John (Brigg & Scun.)

  Benn, Rt Hn Anthony Wedgwood

  Conlan, Bernard

  Ellis, Tom (Wrexham)

  Bennett, A. (Stockport North)

  Cook, Robin F. (Edin. C.)

  English, Michael

  Bidwell, Sydney

  Corbett, Robin

  Evans, Fred (Caerphilly)

  Bishop, Edward

  Cox, Thomas (Wands Toot)

  Evans, loan L. (Aberdare)

  Blenkinsop, Arthur

  Craigen, J. M. (Glasgow. M)

  Evans, John (Newton)

  Boardman, H.

  Crawshaw, Richard

  Ewing, Harry (Stirling)

  Booth, Albert

  Cronin, John

  Faulds, Andrew

  Boothroyd, Miss Betty

  Crosland, Rt Hon Anthony

  Fernyhough, Rt Hon E.

  Bottomley, Rt Hon Arthur

  Cryer, G. R.

  Fitch, Alan (Wigan)

  Boyden, James (Bish Auck)

  Cunningham, G. (Islington S)

  Fitt, Gerard (Belfast)

  Bradley, Tom

  Cunningham, Dr J. (Whiteh)

  Flannery, Martin

  Bray, Dr Jeremy

  Dalyell, Tam

  Fletcher, Raymond (Ilkeston)

  Broughton, Sir Alfred

  Davidson, Arthur

  Fletcher, Ted (Darlington)

  Brown, Hugh D. (Glasgow, Pr)

  Davies, Bryan (Enfield N)

  Foot, Rt Hon Michael

  Brown, Robert C. (Newcastle)

  Davies, Denzil (Llanelli)

  Ford, Ben T.

  Brown, Ronald (Hackney S)

  Davies, Ifor (Gower)

  Forrester, John

  Buchan, Norman

  Davis, S. Clinton (Hackney C)

  Fowler, Gerald (The Wrekin)

  Buchanan, Richard

  Deakins, Eric

  Fraser, John (Lambeth N)

  Butler, Mrs Joyce (Haringey)

  Dean, Joseph (Leeds West)

  Freeson, Reginald

  Callaghan, Rt Hon J. (Cardiff S)

  de Freitas, Rt Hon Sir Geoffrey

  Garrett, John (Norwich S)

  Callaghan, Jim (Middleton & P)

  Delargy, Hugh

  Garrett, W. (Wellsend)

  Campbell, Ian

  Dell, Rt Hon Edmund

  George, Bruce

  828

  829

  Gilbert, Dr John

  McGuire, Michael (Ince)

  Selby, Harry

  Ginsburg, David

  Mackenzie, Gregor

  Shaw, Arnold (Redbridge, Ilf)

  Golding, John

  Maclennan, Robert

  Sheldon, R. (Ashton-u-Lyne)

  Gould, Bryan

  McMillan, Tom (Glasgow C.)

  Shore, Rt Hon Peter

  Gourlay, Harry

  McNamara, Kevin

  Short, Rt Hon E. (Newcastle C)

  Graham, Ted

  Madden, Max

  Short, Mrs R. (Wolv NE)

  Grant, George (Morpeth)

  Magee, Bryan

  Silkin, Rt Hn S. C. (Southwk)

  Grant, John (Islington C.)

  Mahon, Simon

  Silkin, Rt Hn John (Lewish)

  Grocott, Bruce

  Mallalieu, J. P. W.

  Sillars, James

  Hamilton, James (Bothwell)

  Marks, Ken

  Silverman, Julius

  Hamilton, W. W. (Central Fife)

  Marquand, David

  Skinner, Dennis

  Hamling, William

  Marshall, Dr Edmund (Goole)

  Small, William

  Hardy, Peter

  Marshall, Jim (Leicester, S)

  Smith, John (N Lanarkshire)

  Harrison, Walter (Wakefield)

  Mason, Rt Hon Roy

  Snape, Peter

  Hart, Rt Hon Judith

  Maynard, Miss Joan

  Spearing, Nigel

  Hattersley, Roy

  Meacher, Michael

  Spriggs, Leslie

  Hatton, Frank

  Mellish, Rt Hon Robert

  Stallard, A. W.

  Hayman, Mrs Helena

  Mendelson, John

  Stewart, Rt Hn M. (H'smith F)

  Healey, Rt Hon Denis

  Mikardo, Ian

  Stoddart, David

  Heffer, Eric S.

  Millan, Bruce

  Stonehouse, Rt Hn John

  Hooley, Frank

  Miller, Dr M. (E. Kilbride)

  Stott, Roger

  Horam, John

  Miller, Mrs Millie (Redbridge)

  Strang, Gavin

  Howell, Denis (B'ham Sm H)

  Mitchell, R. C. (Soton, Itchen)

  Strauss, Rt Hon G. R.

  Huckfield, Leslie

  Molloy, William

  Summerskill, Hon Dr Shirley

  Hughes, Rt Hon C. (Anglesey)

  Moonman, Eric

  Swain, Thomas

  Hughes, Mark (Durham)

  Morris, Alfred (Wythenshawe)

  Taylor, Mrs Ann (Bolton W)

  Hughes, Robert (Aberdeen N)

  Morris, Charles R. (Openshaw)

  Thomas, Jeffrey (Abertillery)

  Hughes, Roy (Newport)

  Morris, Rt Hon J. (Aberavon)

  Thomas, Michael (Newcastle)

  Hunter, Adam

  Moyle, Roland

  Thomas, Ron (Bristol NW)

  Irvine, Rt. Hon Sir A. (L'pool)

  Mulley, Rt Hon Frederick

  Thorne, S. G. (Preston)

  Irving, Rt Hon S. (Dartford)

  Murray, Ronald King

  Tierney, Sydney

  Jackson, Colin (Brighouse)

  Newens, S.

  Tinn, James

  Jackson, Miss Margaret (Lincoln)

  Noble, Mike

  Tomlinson, J.

  Janner, Greville

  Oakes, Gordon

  Tomney, Frank

  Jay, Rt Hon Douglas

  Ogden, Eric

  Torney, Tom

  Jeger, Mrs Lena

  O'Halloran, Michael

  Tuck, Raphael

  Jenkins, Hugh (Wandsworth)

  O'Malley, Brian

  Urwin, T. W.

  Jenkins, Rt Hon Roy (B'ham St)

  Orbach, Maurice

  Varley, Rt Hon Eric G.

  John, Brynmor

  Orme, Rt Hn Stanley

  Wainwright, Edwin (Dearne V)

  Johnson, James (Kingston W)

  Ovenden, J,

  Walden, Brian (B'ham, L'dyw'd)

  Johnson, W. H. (Derby S)

  Owen, Dr David

  Walker, Harold (Doncaster)

  Jones, Barry (East Flint)

  Padley, Walter

  Walker, Terry (Kingswood)

  Jones, Dan (Burnley)

  Palmer, Arthur

  Ward, Michael

  Jones, T. Alec (Rhondda, W.)

  Park, G.

  Watkins, David

  Judd, Frank

  Parker, John

  Watkinson, John

  Kaufman, Gerald

  Parry, Robert

  Weetch, Ken

  Kelley, Richard

  Pavitt, Laurie

  Weitzman, David

  Kerr, Russell

  Perry, Ernest

  Wellbeloved, James

  Kilroy-Silk, Robert

  Phipps, Dr C.

  White, Frank (Bury)

  Kinnock, Neil

  Prentice, Rt Hon Reg

  White, James (Glasgow P)

  Lambie, David

  Prescott, John

  Whitehead, Phillip

  Lamborn, Harry

  Price, C. (Lewisham W.)

  Whitlock, William

  Lamond, James

  Price, William (Rugby)

  Willey, Rt Hon Frederick

  Latham, Arthur (Paddington)

  Radice, Giles

  Williams, Alan (Swansea)

  Leadbitter, Ted

  Rees, Rt Hon Merlyn (Leeds S)

  Williams, A. L. (Havering)

  Lee, John

  Richardson, Miss Jo

  Williams, Rt Hn Mrs S. (Hertford)

  Lestor, Miss J. (Eton & Slough)

  Roberts, Albert (Normanton)

  Williams, W. T. (Warrington)

  Lever, Rt Hn Harold

  Roberts, Gwilym (Cannock)

  Wilson, Alexander (Hamilton)

  Lewis, Arthur (Newham N.)

  Robertson, John (Paisley)

  Wilson, Rt Hon H. (Huyton)

  Lewis, Ron (Carlisle)

  Roderick, Caerwyn

  Wilson, William (Coventry SE)

  Lipton, Marcus

  Rodgers, George (Chorley)

  Wise, Mrs. Audrey

  Litterick, Tom

  Rodgers, William (Teesside)

  Woodall, A.

  Lomas, Kenneth

  Rooker, J. W.

  Woof, Robert

  Luard, Evan

  Roper, John

  Wrigglesworth, Ian

  Lyon, Alexander (York)

  Rose, Paul B.

  Young, David (Bolton E)

  Lyons, Edward (Bradford W.)

  Ross, Rt Hon W. (Kilm'nock)

  Mabon, Dr J. Dickson

  Rowlands, Ted

  TELLERS FOR THE NOES:

  McCartney, Hugh

  Ryman, John

  Mr. Joseph Harper and Mr. Tom Pendry.

  McElhone, Frank

  Sandelson, Neville

  MacFarquhar, R.

  Sedgemore, B.

  Question accordingly negatived.
  Main Question again proposed.
  It being after Ten o'clock, the debate stood adjourned.
  Debate to be resumed tomorrow.

  LOCAL LOANS
  10.15 p.m.
  The Minister of State, Treasury (Mr. Robert Sheldon): I beg to move,
  That the Local Loans (Increase of Limit) (No. 2) Order 1974, a draft of which was laid before this House on 23rd October, be approved.
  This order increases by £1,000 million —[Interruption.]—the amount available to the Public Works Loan Board—[Interruption.]—for lending—
  Mr. Speaker: Order. Will those hon. Members who wish to withdraw from the Chamber do so and not stand talking by the Bar?
  Mr. Sheldon: The order increases by £1,000 million the amount available to the Public Works Loan Board for lending to local authorities and other eligible authorities. The amount was originally fixed at £1,000 million in the Finance Act 1972, which also gave the Treasury power to increase the amount by £1,000 million at a time on three further occasions. The power is exercised by order, subject to affirmative resolution of the House of Commons.
  This is the third such order. The first order was made in July 1973 and increased the a mount available to £2,000 million. The second order was made in May 1974 and further increased the amount available to £3,000 million. This order, the last under the Finance Act 1972, increases the amount to £4,000 million. We shall be taking an early opportunity to provide the Public Works Loan Commissioners with further powers to lend.
  As of today, the commissioners had about £100 million available for meeting the new applications, and at the present rate of lending this would probably run out within the next fortnight. It is not possible to forecast with precision the timing of local authority borrowing from the commissioners, and in the last few months they have been taking up their entitlement more quickly than had been expected. The House is, therefore, asked to approve this order so that the flow of essential capital funds during the current period may be maintained.
  The order does not in itself sanction any increase in local authorities' capital
  832
  spending. The local authorities are currently entitled to borrow from the commissioners 30 per cent. of their net capital requirements—40 per cent. if they are in the less prosperous regions—plus a further element to assist them with the refinancing of existing debt as it matures. The purpose of the order is simply to ensure that the commissioners have available the funds necessary to meet these obligations.
  I am sure the House will want to join me in once again expressing our thanks to the commissioners for the services which they have continued to render with such skill and on an entirely voluntary basis.
  10.20 p.m.
  Mr. David Howell: May I begin by congratulating—this is the first opportunity I have had—the Minister of State upon his translation from the Civil Service Department to the Treasury. He can now rejoin what some of us remember as the well-known firm, in opposition, of economic advisers—"Messrs. Heywood and Royton and Ashton-under-Lyne." I hope that they will soon have the opportunity to renew their excellent partnership in Opposition.
  My first reaction when notice of this order appeared, and I suspect it was the reaction of many of my hon. Friends, was "What? Already? Is it so soon that we need a further tranche of £1,000 million on top of the £1,000 million extra loan capacity which was approved in May? "That was the occasion when the last order was made. The one before that was when my right hon. and hon. Friends were in Government, in July 1973.
  The hope in July 1973, when the first order was made, was that it would last for about eight months. Ten months passed until 23rd May 1974. The hope in May, I think the Chief Secretary to the Treasury told us this, was that it would last until the end of the year. Here we are, not yet six months from the last order. This time the £1,000 million has been gobbled up in five and a half months. I shall have a word to say on the speed with which this is apparently to be swallowed up by ever-rising capital demands from local government.

  833
  The debate raises fundamental questions about local government expenditure. The House will have an opportunity fairly shortly to debate in full the question of rates on the Second Reading of the General Rate Bill. It is worth noting that when this extra £1,000 milion is spent, then, assuming quite moderate rates of interest of say 10 per cent. or 12 per cent. per annum—and I should like to know what the rates of interest will be—we are nodding through a potential further £120 million a year in interest which someone will have to pay.
  We know that, as 40 per cent. of local authority expenditure comes from the ratepayers, 40 per cent. of that £120 million will be placed on the already hard-pressed ratepayers. That is an appalling burden. The House would be less concerned if it felt that there was any attempt beyond pious hopes to get a firmer check on local government spending. We do not see that. We hear the Secretary of State for the Environment talk about "utter realism". That is to be his slogan in the review of local government finance.
  When we look at the Government's approach to public spending—and we had a marvellous example earlier today when the Secretary of State for Energy was hardly able to tell us where the thousands of millions of pounds will come from which he will need to borrow to finance his North Sea oil plans—we can see that what we have is not utter realism but utter unrealism in the Government's attitude towards public spending. Already rate demand increases of 25 per cent. to 50 per cent. are being predicted and two boroughs have predicted a 100 per cent. increase for the coming year. This creates a grave background against which we must look at this order. In addition to its implications for local government expenditure and the way in which it points to increasingly uncontrolled, although I hope not uncontrollable, local government expenditure, there are implications for overall financial policy. The Public Works Loan Board loans add to the Government deficit, which is already rising at a precipitate rate. It is far in excess of what was predicted for the year as a whole, and we want to hear more about that.
  834
  I should like to know one or two details from the Minister of State. By my calculations, the net figure for loans from the Government was £1,020 million, of which the Public Works Loan Board loans amounted to £978 million. For the first quarter of 1974 the figure was £297 million. May we have more up-to-date figures? Is the figure for the second quarter running on that trend and what is the prediction of the net figure for the whole year?
  What proportion is the figure of Public Works Loan Board loans to local authorities of the total loans from the Government? Will the Minister say a word about other sources as well as the Public Works Loan Board. Is the share from the Public Works Loan Board rising or falling? What are the prevailing interest rates for a 10-year or 25-year term loan? Are they falling? The prediction we heard in our last debate on this subject was that they would be falling. It is hard to come by information about that.
  I know that it is not strictly within the terms of the Public Works Loan Board, but how much is being borrowed by local authorities in foreign currencies? That has important implications for our overall monetary policy. I hope to have an answer to those questions.
  I know that my hon. Friends are also anxious to comment on the colossal facility which we are renewing so soon after the last colossal facility. The main question is: what is being done to check local government expenditure? What is being done to alter the climate in which ceaseless commitments build up and to check the impossible rate burdens that are accumulating? "Impossible" is the only adjective that can be used. On the evidence during the election campaign the answer is "Nothing". The Secretary of State for the Environment, in a speech he made in July, said in rather benign terms that there should be a levelling off in the growth of local authority expenditure. He added that he was a passionate believer in a high rate of public expenditure, which rather undermines the whole point of his observations. The answer is that the qualifications betray the heart of the Government's policy, and the small print about levelling off betrays financial intentions behind which there is little serious purpose.

  835
  There is no evidence that there is to be a serious check on local government spending, whether capital or current. This time it has been five-and-a-half months, the time before it was eight months and next time I fear that within four months the Government will be back again, perhaps under new powers, and the next time within two months. That seems to be the geometric progression. The time will come when the House will no longer stand for what is in effect a bland and lackadaisical surrender to one inflationary force after another, and that time may well be soon.
  10.29 p.m.
  Mr. Bryan Magee: Unlike the hon. Member for Guildford (Mr. Howell), I welcome the order. I share his concern about the strain on rates, but I draw different conclusions from those of the hon. Gentleman. I wholeheartedly agree that the order raises fundamental questions of local government finance, and I wish now to draw attention to one such fundamental question.
  We are facing a situation in which nothing less is required of the central Government than a financial rescue operation for local government. Local authorities face a crisis of unprecedented magnitude from which only a massive increase in assistance from the central Government can rescue them. For this there is one reason above all others.
  As people's incomes rise, so they pay more income tax. This means that in a period of unprecedented rises in prices and incomes, like the one we are in at the moment, the central Government's income automatically to some extent keeps pace. But local government is in an altogether different situation. Local government income is based on rates, which can only be altered by political decisions from one year to another. One might say, therefore, that, whereas the central Government's income is to some extent buoyant with inflation, local government income is not. As a result, the rate of inflation that is on us at the moment hits local government in a peculiarly ferocious way that is not suffered by the central Government.
  The prospect is now so alarming that it is difficult to talk about it in measured
  836
  language. Local authorities face not just the same price increases as are faced by everybody else—an increase for next year which my own borough of Waltham Forest estimates for itself at £1,300,000—but they will also have to face threshold payments of £1½ million, and that figure is certainly an underestimate. On top of that there will be an increase of £2¼ million due to national awards. In the case of Waltham Forest there will be yet another increase due to the rise in London weighting—for next year this is estimated at £1,300,000. And on top of all this there is the rise in interest rates. The total of these increased costs is bound to be of the order of £7 million for next year.
  Most of these increases are in the form of increased wages and salaries, and the Government will take an enormous slice of that in the form of income tax. It is therefore right, as well as necessary, that the central Government should help local authorities to pay them. That is the central point I wish to make in tonight's debate.
  There will be demands from the Conservative benches—they were clearly to be heard implied in the speech of the hon. Member for Guildford (Mr. Howell)—that the crisis should be met by cuts in expenditure. That can only mean cuts in capital expenditure and in services. That was what the Conservatives did when they came to power in local government in 1968–71. But we must not accept that as a way out of the crisis in local government finance. We must never forget that it is local government which sustains the basic fabric of civilised life for our people. It maintains the houses and their sewerage systems, the roads and their lighting and paving, the schools and so on. It would be wrong if in our present condition of financial stringency we were to allow our standards in those matters to come under attack. There are huge areas in our national economy which should be squeezed before those standards are touched. We look to a Labour Government to get their priorities right in this respect almost before any other. But that will require a degree of additional financial assistance to local authorities that goes far beyond anything this Labour Government have so far indicated as their future intentions.
  10.34 p.m.
  Mr. Graham Page: I join the hon. Member for Leyton (Mr. Magee) in saying that a rescue operation is needed for local government on the question of rates—and a quick rescue operation, too.
  I commend to the Government the speech which I made in the House only last week—a speech which I made at seven o'clock in the evening and which was never reported in the Press, so nobody read it. I advocated a year's moratorium on household rates, that there should be no rates collected from householders next year and no increase in industrial and commercial rates for that one year, and that the money should be found by sixpence on the income tax for that year. I am convinced that by the end of that year the Layfield Committee will have reported that we should abolish rates and have a local income tax.
  However, that may be a little out of order in this debate, because we are debating the Local Loans Order. As my hon. Friend the Member for Guildford (Mr. Howell) said, it was only on 23rd May last that the House was asked to approve a similar order making available for local authorities a loan from the Public Works Loan Commissioners of £1,000 million out of the National Loans Fund. It seems, therefore, that every six months local authorities borrow £1,000 million from the fund. That means a borrowing rate of £2,000 million a year, which is just about double the figure for 1973. My hon. Friend mentioned that for 1973 the borrowings of local authorities from the Government were £1,020 million, so we are now running at double that rate. Why is it double for 1974? No explanation was given to the House by the Minister.
  Local authorities are entitled to borrow 30 per cent. of their capital needs—it is 40 per cent. for some local authorities —from the National Loans Fund. One looks at the £1,020 million which local authorities borrowed in 1973 and the £2,000 million which they will borrow this year to see what relation they have to the total borrowings. I have only the 1973 figure, which was £2,369 million net borrowing from all sources. If the borrowings from the National Loans Fund double in 1974, one must assume that the total borrowings will increase proportionately.
  838
  What the order is recognising, therefore, is that the total net borrowings of local authorities for this year will be £4,750 million—nearly £5,000 in round figures. Let us consider that against the total loan debt of local authorities. At the end of March 1973, the total loan debt was £20,604 million, and it will be up to £25,000 million by the end of this year. In short, local authorities are increasing their loan debt by about one-quarter a year; £5,000 million this year will bring it up to £25,000 million outstanding.
  What is that costing the ratepayer? One is here speaking of tremendous figures which are difficult to comprehend. I suppose one could take an average rate of interest of 10 per cent. on that £25,000 million and say that local authorities have to find £2,500 million a year to pay the interest on the money borrowed by them. By the rate support grant the taxpayer finds 60 per cent. of that, but the local authorities, the ratepayers, have to to find the remaining 40 per cent. of that £2,500 million, which is £1,000 million a year. That is not far short of what the local authorities collect in rates from the householders. It may be ironical to tell the householder-ratepayers that all they are doing by paying their rates is paying interest on the money borrowed by their local authorities.
  What a simple solution one could have found for all the difficulties over rates if the Government had included in the order a provision for a moratorium on all interest payments, and a moratorium, therefore, on household rates, because they just about balance out. Perhaps that is too much to expect, however, because the Government would be taking on the payment of interest on borrowings other than from the National Loans Fund. But the Government could have written off all interest on National Loans Fund loans to local authorities. The financial statistic volume for September 1974 shows that the interest paid to the National Loans Fund by local authorities for 1973 alone was £441 million. The ratepayer finds 40 per cent. of that, which is £176 million. If the hard-pressed ratepayer were let off that, it would be a nice little windfall for him.
  At least the Government might have included in the order freedom of interest on the £1,000 million now sought to be

  839
  authorised by the draft order. That would have shown that they were conscious of the burden being imposed on ratepayers for next year. I see from the volume of statistics that the average rate of interest is now about 14 or 15 per cent., depending on the length of term of the borrowing. Let us assume that the rate of interest is 15 per cent. and, therefore, that there is £150 million to be paid on the £1,000 million to be authorised by this draft order. Forty per cent. of that is £60 million to be found by the ratepayers.
  It would be a nice little windfall if the Government had the courage to say "We realise the burden falling on the ratepayer next year. This is something that we can do to help." Here was an opportunity for the Government to show that they were conscious of the burden on the ratepayers, and I am sorry that they have not seized it. They could have done even more by abolishing the rates and replacing them with a local income tax, but at least it would have shown that they have some appreciation of the burden falling on ratepayers.
  Mr. John Lee: Are we to understand that the right hon. Member wants to insulate local authorities from market rates of interest? This is a novel suggestion. Certainly it will not please the monetarists amongst his right hon. and hon. Friends.
  Mr. Page: Not at all. I am suggesting an emergency measure this year to find a way of assisting local authorities with their rate burden this coming year without taking away from them their powers and discretions. If we talk about relieving them of the expense of, say, education, the fire service, the police and so on, there is the suspicion that in doing that we are taking away their powers. By the means I suggest, we would be taking away no discretion and no power. It is a nice little subsidy for local government which I wish the Government had taken the opportunity of giving.
  10.43 p.m.
  Mr. Eric Ogden: I wish to make two comments and to ask two questions. My first comment concerns the proposal of the right hon. Member for Crosby (Mr. Page)
  840
  about a moratorium on the rates for this year. What the right hon. Gentleman said seemed to contradict his hon. Friend the Member for Guildford (Mr. Howell). A moratorium of that kind would be a way of giving money to people, directly or indirectly, whereas the hon. Member for Guildford was criticising the Government for making too much money available.
  A moratorium for ratepayers is an attractive idea, but why only ratepayers? Why not have a moratorium on mortgage payments and other payments? Certainly that was not the proposal advanced by the right hon. Member for Crosby last year when he was Minister with responsibility for local government.
  Then I wish to comment on the strange phrase used three times by the hon. Member for Guildford. He said that the House was "nodding through" £1,000 million tonight. There are at least 50 Government supporters present in the Chamber. The hon. Member for Guildford has been able to muster a dozen, including two Liberal Members. It does not seem to me that the sum in question is being "nodded through" and taken for granted. The hon. Member might correct that; the House was taking an interest.
  It is time that someone said a word for the rating system, which is under attack. It has faults, which must be improved, but it is still the best value for money in local government or any other services. We should not dismiss it entirely.
  How long does my hon. Friend estimate that this further sum is likely to last? It is dangerous to give estimates in these times, but he should be prepared to give a rough one if that is the best he can do.
  10.46 p.m.
  Mr. Tim Renton (Mid-Sussex): I very much support what has been said about the crisis facing local government. My constituency was fortunate—although none of my constituents thought of themselves as such—in that our rate increases this year were only about 30 per cent. But now there are rumours of much higher increases next year. This is leading to a profound sense of disquiet throughout the country. We have all seen the proliferation of ratepayers' action groups, some of which incite people, certainly against the wishes of

  841
  those of us here, not to pay their rates. To quell this, it is essential that the Secretary of State for the Environment should announce quickly what instructions he will give local authorities about their level of expenditure for next year and what rate support grant he will give.
  I agree that the most alarming thing about the order is its size and the accelerating rate at which requests for further money for local authorities come before us. There are two specific questions I should like to ask the Treasury. First, I understand from the newspapers that the National Water Council may be the first organisation to draw, to the extent of one-third, upon the $1,200 million credit arranged by the Government with the Government of Iran. Is it not strange that non-elected bodies which are now performing the functions previously performed by the elected authorities should have access to foreign currency borrowings raised by the Government under their name when similar borrowings under Government guarantee are not available to the local authorities? To help the local authorities in the face of the present interest rates, will the Government consider extending the Government guarantee to foreign currency borrowings by local authorities? After all, why should water and sewerage have priority over hospitals and schools?
  Secondly, although the interest rate on yearling bonds for local authorities has fallen substantially in recent months, the long-term interest rates charged by the Public Works Loan Board now stand at record levels. Its rate on the non-quota loans for more than 25 years went up on 19th October from 15½ per cent. to 16 per cent. Presumably this reflects the fall in the gilt-edged market and it is the Government's intention to keep the rates charged by the board on really long-term loans comparable to the rates of interest prevailing on the gilt-edged market.
  If that is so, we look at what has happened to the gilt-edged market in the last few weeks thanks to the tremendous increase in the Government deficit and we see that the outlook for local authorities is bleak indeed. If the Government announce new financing requirements every week and these are reflected in the gilt-edged market and yields on that mar-
  842
  ket increase, this will mean higher interest rates being paid by local authorities to the Public Works Loan Board. I fear that the rates will reach astronomical proportions.
  In view of the weakness in the gilt-edged market at present, will the Government consider pegging the interest rate to be charged by the Public Works Loan Board to local authorities so that in these unusual times, with the Government planning to spend thousands of millions of pounds in participation in industry, including offshore oil development, at least the local authorities should to some extent be insulated from the folly of the Government's actions?
  10.51 p.m.
  Mr. R. B. Cant: I am sorry to disappoint the Deputy Chief Whip, but having just been presented with a gold badge for 21 years' service in local government I feel justified in making a very brief contribution to the debate, although I am conscious of the fact that most of the points I want to make have been made already.
  Taking up the point made by the hon. Member for Mid-Sussex (Mr. Renton), I think that the whole area of local government borrowing is a bit of a shambles. We were thrown out into the cold as local authorities by the Opposition when they were the Government in 1956, at which point we could borrow almost entirely from the Government. Since then we have had a proliferation of types of borrowing which I do not fully understand but to which I think that the Minister should pay attention, particularly as virtually the same pieces of paper nowadays attract such different amounts of interest. A yearling bond now stands at 12·7 per cent. A 365-day mortgage bond for a splendid place like Rotherham will attract 14 per cent. There is much to be said for the remarks of the former treasurer of Manchester that at any rate short-term borrowing should be rationalised.
  Equally, we are entering a rather bizarre period in which for long-term rates of interest the yield gap is growing substantially, so that anybody with the money and the courage can invest in long-term gilt-edged securities and get about 17–18 per cent. I share the forebodings of those who feel that if the Public Works

  843
  Loan Board rates of interest are too intimately linked with the long-term rates in the market, heaven help local government.
  The whole area of borrowing for local government needs very substantial review. I should like the Government to make some of the gestures mentioned by the right hon. Member for Crosby (Mr. Page), who is very learned in these matters but whose generous impulses seem to escape him when he is up in a Committee room in charge of a Bill, although he did not do so badly with land compensation.
  To take up the point mentioned by the hon. Member for Guildford (Mr. Howell), the other aspect of this is the question of the relation between the undoubtedly large increase in local government borrowing and the money supply. To some extent this might be overcome by a technical point. Again, I take up a point made by the hon. Member for Mid-Sussex. If one borrows in Euro currency markets, the effect of this on money supply is not the same as a direct budgetary deficit. In this particular context of local authority borrowing I hope that we can persuade the Government not to treat local authorities as the Cinderella.
  Why should superior status over and above local government be given to nationalised industries and the new wretched water authorities? I know that occasionally the Greater London Council has crept into the Euro currency markets. But why cannot this gate be opened more freely to small local authorities, such as that which I represent—Stoke-on-Trent? That is something to which the Government should give serious consideration.
  Being something of a monetarist, to the disgust of some of my hon. Friends, I entirely agree that we must watch money supply very carefully indeed. But when the Chancellor begins to put on the screws he should to a very large extent exempt local government. That is not a bit of special pleading because I have got my gold medal. It is simply because I think that the things that local government does are so intimately concerned with the welfare of people that to a very large extent they should be exempt from many of the cuts.
  844
  And not only that. I am talking about capital and not revenue expenditure, although this delightful "capital from revenue" capital expenditure has always interested me in local government. So much of what the local authorities do by way of capital expenditure has a very low import content. I hope that my right hon. Friend the Secretary of State for Education and Science will say that Stoke-on-Trent can have a generous allocation of the moneys which have been made available for schools. If we build houses, schools or a prestige office block, or if we build—as we intend, despite the ratepayers' association—a new museum, the import content of this type of construction activity is very low. It is much lower than with many other types of more sophisticated expenditure which is indulged in by other sectors of the economy.
  The other aspect of this matter is quite simply that it is terribly important from the point of view of local employment. At present the construction industry—house building and general construction —is going through a desperate period. It is up to local authorities to take their courage in their hands and carry out some of the projects which they have said in the past they intend to carry out. It is up to the Government also to give them the financial support that is necessary.
  Certainly it may be that the overall Budget deficit will have to be reduced. I believe that the money supply, even adjusted for inflation, must be prevented from increasing unduly. But in the process I hope that local government, which makes a much bigger contribution to human welfare than even perhaps this august place, will not be sacrificed.
  11.0 p.m.
  Mr. Stephen Ross: I feel desperately sorry for councillors, particularly those elected to our new local authorities and who came into office last April. They are facing frustrating demands without any financial ability to carry them out.
  I know that this order is necessary, particularly as I understand that there is now to be no advance on the rate support grant given to local authorities in the next financial year. Originally I understood that they were likely to get

  845
  some advance payment in September or October, but I now gather, in answer to a Question, that this will not now happen. Therefore, this money must be made available by some other means.
  I feel that hon. Members who criticise local government should put themselves in the position of the councillors who comprise these new authorities. The authorities in some cases, including mine in particular, which were set up by the last administration were misdirected. They are facing enormous problems. They have to make cuts, and they do not know in which direction to make those cuts. They receive complaints with every step they take. I ask the Government to give some guidance to local authorities and to give them some hope. The new councillors took office with ideals, and now they are frustrated and are wondering whether they are doing a worthwhile job.
  I am certain that if demands are made for ratepayers to pay substantially higher rates we shall have a revolution of a size that we have not witnessed before. The Government have got to do some rapid thinking on this subject. The country will not take 50 per cent. rate rises. I go along with the right hon. Member for Crosby (Mr. Page) in much of what he said. I understood that over a five-year period his party intended to abolish domestic rating, and in view of the extreme situation, the Government should be thinking on those lines.
  11.2 p.m.
  Mr. Sheldon: I should like first to thank the hon. Member for Guildford (Mr. Howell) for his kind words about me. I should also like to point out that he and I have trodden that unusual path from the Civil Service Department to the Treasury, although in my case for a rather longer period.
  The hon. Member was quite right to say that it was announced in May that the further £1,000 million would last only until the end of the year. I suppose that November can be regarded as something near the end of the year. At any rate, the precise timing of these loans and their nature is up to the local authorities, and I think I ought to say that at the beginning of my remarks in reply.
  When we consider the £23,000 million which is the latest estimate that I have
  846
  of the total loan debt of local authorities, and when one considers that within that total there is a considerable amount of maturing debt, it is evident that refinancing is something for which this money has to be used.
  The hon. Member for Guildford asked about the total sums of money available. The following are the figures which I have for the Public Works Loan Board gross lending: for the quarter to March 1974, £440 million; for the next quarter to June 1974, £285 million; for the quarter to September 1974, £418 million. I think those figures help to put the matter into perspective.
  In reply to the question put by the hon. Member for Guildford, there are no other loans of any consequence from the Government to local authorities beyond those from the Public Works Loan Board.
  The hon. Gentleman and others asked about interest rates. Indeed, the right hon. Member for Crosby (Mr. Page) referred to the subject in some detail. This is a fairly complex area because, as the right hon. Gentleman is aware, there is a large number of interest rates. They range from 11⅝ up to 16⅝ per cent. depending on terms and whether they are in or out of quota. The figure that might be of most interest to right hon. and hon. Members who are interested is that the rate on a 10-year annuity loan is currently 12¼ per cent.
  I was also asked about foreign borrowing. The local authorities have borrowed about $1,250 million in foreign currency since the introduction of the exchange cover scheme in March 1973.
  The hon. Member for Guildford and others suggested that the check on local government spending was not as rigorous as it might be, but that question does not have much to do with the order. The control of local government spending is decided in conjunction with the Chancellor of the Exchequer, and the capital expenditure is a separate agreement made between the Chancellor and the local authorities. The quota they get for the finance they are seeking from the Public Works Loan Board is 30 per cent. in the case of most local authorities and 40 per cent. for those with certain problems in the regions. What we are debating tonight is really largely the technical matter of financing those loans which are the subject of separate agreement and on

  847
  which discussion can be pursued on other occasions in the House.
  Mr. Graham Page: We are in some difficulty. We seldom get the advantage of having a debate on the amount allowed for local authorities to borrow. This has been our only opportunity to tackle it.
  Mr. Sheldon: I know the right hon. Gentleman's great expertise in this subject and I recognise his dilemma, but I suggest that rates and the problem of rates are likely to come before the House on a number of occasions and I shall be surprised if there is no opportunity of debate.
  What is important in relation to foreign currency loans is that there is an orderly market. These arrangements are made under a process whereby only one borrower negotiates at a time, with the result that borrowers are not bidding up against each other for the foreign currency. This process is restricted to the large local authorities, those with relevant loan debts equal to or in excess of £400 million.
  In reply to the hon. Member for Mid-Sussex (Mr. Renton) I would point out that it has always been understood that local authorities have the right to obtain rates of interest under the National Loans Act sufficient to cover the cost to the Treasury of borrowing similar sums for similar periods. The Public Works Loan Board's rates of interest reflect this.
  What we have dealt with is obviously an essential measure but I do not think that it has the wide implications that a number of hon. Gentlemen have sought to give it. I look forward to further debates that might be initiated dealing with the points raised.
  Question put and agreed to.
  Resolved,
  That the Local Loans (Increase of Limit) (No. 2) Order 1974, a draft of which was laid before this House on 23rd October, be approved.

  STATUTORY INSTRUMENTS
  Ordered,
  That the Lords Message of 30th October, relating to a Joint Committee of both Houses to scrutinise delegated legislation, be now considered.—[Mr. Walter Harrison.]
  Lords Message considered accordingly.
  Resolved,
  That this House doth concur with the Lords in the said resolution.—[Mr. Walter Harrison.]
  Message to the Lords to acquaint them therewith.

  ADJOURNMENT
  Motion made, and Question proposed, That this House do now adojurn.—[Mr. John Ellis.]

  BREAST CANCER SCREENING
  11.11 p.m.
  Mrs. Joyce Butler: It is difficult to speak in measured, scientific terms about cancer of the breast, which is still the biggest single killer of women and about which many women are deeply worried for most of their adult lives. Many worry because relatives and friends have died from breast cancer or because there is a history of cancer in the family. Others worry because the breasts are a sensitive area of the body, subject to various changes and discomforts which they cannot interpret.
  In the past most of the women kept their worries to themselves, often with tragic results. Many women do so still. With the progress of health education and more stress on preventive medicine, I feel there has been an important breakthrough in the battle against cancer, which is that more and more women are facing the possibility of cancer and seeking medical advice. Bringing cancer out into the open has been half the battle in seeking its cure. In this connection we must all be very much in the debt of Mrs. Betty Ford and Mrs. Rockefeller for the selfless and courageous acceptance of publicity during their private agony, which has encouraged women everywhere to face their own fears.
  This is why I have chosen this subject for debate. As the founder of what is now the Women's National Cancer Control Campaign I have seen some of the letters which have been coming into the campaign recently. These letters included a particularly poignant one from a father concerned about the prevention of cancer in his 18-year-old daughter, whose mother died from breast cancer soon after her daughter was born.

  849
  It is a fact that women have been going in increasing numbers to clinics and to their general practitioners seeking to secure cancer screening in recent weeks. Many have been bitterly disapponted because, while the success of the campaign for screening for cervical cancer has produced 573 cytology clinics in England, I understand that only about 66 counties and boroughs arrange for breast examination. This is despite the fact that cancer of the breast is four times as common as cervical cancer.
  Even more disquieting is the evidence accumulating from personal reports that many general practitioners are somewhat off-putting, to put it mildly, when asked by women about possible breast cancer symptoms. Since it is necessary for a general practitioner to refer a woman to an early diagnostic clinic, this is a serious weakness in any early detection service.
  While much that needs to be done in this area is expensive, one simple improvement which could be made in the service, which would cost very little, would be for the Department of Health and Social Security immediately to ensure that a circular is sent to all general practitioners alerting them to the urgency of early detection of breast cancer. Most important, it would set out for them the diagnostic facilities in their areas. Many doctors seem unaware of the facilities which are available within their areas.
  It has been estimated that we need about 30 of the early diagnostic clinics throughout the country. That compares with the half-dozen or so that we actually have. The additional clinics are necessary because of the vital importance of making early diagnosis available to women in the high risk groups, whether or not they have symptoms. I refer here to women preferably over 45 but certainly over 50 and to women with a family background of breast cancer.
  I appreciate that there is hesitation about trying to establish comprehensive screening services for breast cancer because of doubt about the viability of such mass breast screening. However, I have found the unanimous view among everyone working in this subject that every possible facility should be made available to the high risk groups and that
  850
  this is the most intelligent use which could be made of the resources available.
  Since I feel so strongly about this matter, I wonder whether my hon. Friend the Minister will consider whether the time has come to launch a campaign urging every woman on reaching the age of 50 to have a clinical examination for cancer of the breast as a matter of course. We may have no idea of the numbers involved, because as far as I know no study of the subject has been made. Inevitably some women would not take advantage of the scheme. The numbers might not be very large, and if that were so the cost would not be prohibitive.
  It is worth remembering that in the United States 52,000 women die every year from breast cancer. That is the number of lives that were lost in the Vietnam war, yet the toll from breast cancer is at that level every year. Since the proportion of deaths in Britain is the same as in the United States, surely we have a special duty to do something more effective.
  I understand that in Britain 11,186 women died from breast cancer in 1971. In 1972 the figure had increased by about 100, and the indications are that in 1973 it will show a further increase of 100 or so.
  The situation, therefore, is not improving. I understand, too, that clinics like the Royal Marsden Clinic will soon no longer be able to take in women in the high risk groups who do not have actual symptoms. I hope that my hon. Friend will therefore have something helpful to say about ironing out the deficiencies in the provision for these high risk groups and meeting the increased demand.
  I hope that my hon. Friend will feel able to use this opportunity to make a statement about the whole problem of breast cancer screening and say what is being done and what more can be done. I assure him that those who are concerned for themselves and their families are anxious to have the fullest possible information.
  Will he say something about the progress of his special research projects in that respect? Will he also indicate what he feels about the value of thermo-mammography since, as I understand it, the BUPA medical centre has found that

  851
  90 per cent. of the cancers that is discovers have earlier shown up as abnormalities on the thermo-mammography test? Is there any hope that such agreement will be more readily available in National Health Service clinics?
  Since there is a great demand for leaflets and booklets on self-examination issued by the Women's National Cancer Control Campaign and by BUPA, has my hon. Friend anything to say about the value of self-examination and is there any possibility that his own Department might issue leaflets or help in the financing of the issue of such leaflets by other bodies?
  I ask my hon. Friend to give breast cancer a new priority, by more public information—because everyone, I believe, would welcome the knowledge that the Department of Health itself was taking as much interest in the problem as do all the people working in this field—by giving more information to general practitioners so that they can be more cooperative, by providing more early diagnostic clinics with more effective equipment and by mounting a special campaign directed to the high risk groups.
  I believe that I am speaking for all the women in this country when I ask my hon. Friend to consider these points very seriously, because we need a breakthrough in the early detection of breast cancer as a means towards its prevention, and I believe that the time for that is now.
  11.22 p.m.
  The Minister of State, Department of Health and Social Security (Dr. David Owen): I am sure that the country generally will be grateful to my hon. Friend the Member for Wood Green (Mrs. Butler) for raising this subject. She is the founder of the Women's National Cancer Control Campaign and has taken a great deal of interest in the subject for many years.
  First, let me give the bare statistics. Deaths from breast cancer in 1971 were 11,182; in 1972, 11,149; and in 1973, 11,428. Breast cancer is the cause of 4 per cent. of all female deaths and 20 per cent. of all female cancer deaths. To compare that with other important causes of female deaths in percentage terms, coronary disease accounts for about 22 per cent., strokes 17 per cent. and respir-
  852
  atory diseases 13 per cent. Thus, breast cancer is a major cause of death, and also, of course, a much greater cause of morbidity.
  In 1972 in England and Wales there were 31,300 hospital admissions for breast cancer, and 1,400 hospital beds were occupied at any one time by women with breast cancer. New cases represent an incidence of 0·7 per 1,000 females per year, and the mortality rate has risen by 8 per cent. since 1968.
  Those statistics are difficult to interpret, and I caution against interpreting swings from one year to another, but there is no doubt that we are dealing here with a considerable problem and it is right that we should be discussing the possibilities of preventive medicine.
  For many years I have taken an interest in trying to give greater priority, greater publicity and greater attention to preventive medicine, and I hope that in the New Year the Government will be able to produce a document for the House covering a lot of aspects of preventive health, probably for discussion in the first instance but to bring together all the available evidence.
  It is important to point out that clinical examination of women for breast cancer is widely available, and any woman who has the slightest suspicion of symptoms should consult her doctor without delay. Additionally, in recent years a considerable amount of research has been undertaken in the use of several diagnostic techniques, including X-ray mammography, using both conventional film and xerography, thermography, ultrosonography, cytology and various biochemical and immunological tests. This work is still continuing. I must tell my hon. Friend that it is not yet possible to reach final conclusions on the benefits and the drawbacks of each of these methods, but I assure her that we are pushing ahead.
  In past discussions there has been a tendency to concentrate on the possible development of a screening service based on the use of diagnostic equipment rather than clinical examination. Although we are not in a position to know which method is the most effective, we consider the development of such diagnostic techniques important. There are a number of problems that need to be resolved before the desirability of implementing the screening service can be determined. The

  853
  techniques under investigation are known to have appreciable false positive and false negative result rates, these being particularly high for thermography, and even combinations of these tests are not free from error. This might well mean that unnecessary anxiety might be caused to many women, some of whom would have to submit to what might turn out to be unnecessary biopsy procedures. On the other hand, others might be told that they were free from cancer when in fact they were not, and that might result in their delaying a consultation with a doctor when they developed symptoms.
  Repeated X-ray mammography results in a significant dose of radiation to the breast. The practical importance of this has yet to be determined accurately, but there is at least a theoretical possibility that more cancers might be induced by regular mammography than would be detected by it. This goes to the point that my hon. Friend has raised. She asked whether we could concentrate on the high risk ages, and she mentioned the age of 50. This is a factor that needs to be considered carefully. Mammography undoubtedly has a place in diagnosing symptomatic breast lesions. If it were used for this purpose, only a small number of women would be exposed on a small number of occasions and the radiation risks would be less than those from other radiological procedures in everyday use. This kind of diagnosis to deal with such suspicions would certainly be helpful, but there are many resource problems that have to be carefully considered.
  As my hon. Friend knows, a joint working group was set up in 1971 comprising experts from the hospitals, the medical schools, the universities and the research institutes as well as officials of the Health Departments to study all these problems. Working groups have considered a number of projects financed by the Health Departments and these projects are now in progress using different methods and approaches to screening in order to provide the answers that we need. These working parties are in fact producing reports and I would hope that by the end of this year, or perhaps early next year, we shall be able to consider the advice of the Medical Research Council, and then we can consider what, if anything, we should do.
  854
  As my hon. Friend has asked for them, I give some details of some of the projects. At Ealing there have been 1,074 attendances at the clinic up to July 1974 representing 800 women. At Manchester there is another research project. There is a research project planned for Edinburgh, although there have been some delays with building plans. However, construction work there is expected to commence soon and completion is foreseen for the spring of 1975. In Bath there is a project that will be carrying out clinical examinations and mammography using a mobile screening unit, and there is a survey in South London financed by the Imperial Cancer Research Fund. Here, too, there have been some difficulties about finding a site for the clinic which have not yet been totally resolved. However, the working party will, I hope, be producing a report, the proposals will come to us and we shall then have to decide. For instance, one of the papers which the working party has studied has been on the cost-effectiveness of mass screening. This is expensive.
  I know that my hon. Friend is aware of the trials that have been done in New York. The Health Insurance Plan of New York study has shown a statistically significant reduction of about one-third in the mortality of the screened group, though this was confined to those aged 50 to 59 years. This study has been in progress for about seven years and since its inception there have been 70 deaths from breast cancer in the study group compared with 108 in the control group. We can gain some knowledge from experience in New York, but we hope that the trials we are currently mounting will give us a great deal more of the information we need.
  Cost-effectiveness is an important question in considering priorities: where does one put one's money? I believe that the approach adopted by the Department under successive Governments is right. This is an area where we are bound to be guided by the professional advice that is available to us. The House has a right to demand, in the interests of the health of the nation generally and of women in particular, that the working party has not been set up merely in the hope that the problem will go away. I assure my hon. Friend that that is not so. I have seen the papers which have

  855
  been presented to the working party. I have also seen the active interest its members have taken in stimulating specific research projects. All this has been with the objective of providing us with the answer to the question "Is it a cost-effective solution?"—and perhaps also the answer to the question "Is it the right use of resources at this time that in an attempt to cure, eradicate or reduce cancer we should put money into screening?" I do not think the case is yet proved, and it is not fair to make a judgment until we have the conclusions.
  I hope that either at the end of this year or early next year we shall be in a position to make an informed judgment. The options open to us would be to put more resources into more research projects, to try a screening programme in certain areas or to concentrate on an age group, which was one of the suggestions made by my hon. Friend.
  My hon. Friend made a further useful suggestions about putting out a circular with the aim of making general practitioners more aware of the facilities which already exist and the techniques which are available. I shall give serious consideration to that suggestion. My initial reaction is that, since I shall fairly soon be in possession of expert advice from the working party, it would be premature to take such action, but that it would be appropriate to do this when the
  856
  working party's conclusions have reached us. I shall give serious thought to producing a circular to all doctors on this subject when we are in a position to give more definite advice some time next year.
  With those comments, I hope my hon. Friend will feel that something is being done about this matter. I welcome pressure on us, though I do not think we need it. I am determined to give the highest priority to preventive health —a higher priority than perhaps has been given to it for a number of years.
  Breast cancer is an area in which, if we are able to discover adequate diagnostic techniques and apply them successfully, we might well be able to pick up early cancer and then, by treatment, eradicate it. Early diagnosis is therefore of crucial importance. I hope that we shall be able to take some steps towards that end in the fairly near future. At present, however, diagnostic techniques are expensive, and if we embarked on a project on a major scale it would involve a fairly substantial investment without any certainty that the benefits would repay the outlay. But I promise to keep my hon. Friend informed and let her know the results of our conclusions when we have the findings from the working party.
  Question put and agreed to.
  Adjourned accordingly at twenty-six minutes to Twelve o'clock.