Commons Sitting of 7 August 1975

Preamble
The House met at Eleven o'clock
PRAYERS
[Mr. Speaker in the Chair]

ROYAL ASSENT
Mr. Speaker: I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Acts:

1. Lotteries Act 1975

2. Criminal Jurisdiction Act 1975

3. Social Security Pensions Act 1975

4. Child Benefit Act 1975

5. Northern Ireland (Emergency Provisions) (Amendment) Act 1975

6. McDermott Scotland Order Confirmation Act 1975

7. Lerwick Harbour (Miscellaneous Provisions) Order Confirmation Act 1975.

8. Greater Glasgow Passenger Transport Order Confirmation Act 1975.

9. Greater London Council (Money) Act 1975

10. Milford Haven Conservancy Act 1975.

11. British Railways (No. 2) Act 1975.

12. Greater London Council (General Powers) Act 1975

13. London Transport Act 1975

ORAL ANSWERS TO QUESTIONS
  NATIONAL FINANCE

    Value Added Tax
    Mr. Townsendasked the Chancellor of the Exchequer what representations he has received about the operation of VAT so far as small traders are concerned; and if he will make a statement.
    The Minister of State, Treasury (Mr. Denzil Davies): We have had a number of representations about various aspects of the operation of the tax.
    Mr. Townsend: Bearing in mind that VAT has been in force in this country for several years, and taking account of the rates of inflation in recent years, is it not high time that the commencement rate for VAT was drastically raised? Would not this bring real benefit to a large number of small traders in my constituency and elsewhere?
    Mr. Davies: This point was raised by the National Federation for Self-Employed when it met the Financial Secretary a few days ago. There are problems about raising the threshold from £5,000. Such action would mean that many traders who were not registered would not get credit for the input tax. We shall consider this matter, as we shall consider other representations made to us by the federation.
    Mr. David Mitchell: Will the hon. Gentleman consider allowing small traders to make estimated quarterly returns and then a final return when their auditors have been in at the year end which would adjust any errors made in the estimated returns?
    Mr. Davies: That was one of the matters put to us. It was suggested that there should be just annual returns. Another variation is the proposal mentioned by the hon. Gentleman—an estimate every three months and a reckoning at the end of the year. These matters are being carefully considered, and I cannot say more at this stage.
    Mr. Grimond: I am grateful for what the hon. Gentleman has said about examining the threshold and relieving small

    701
    traders of some of the VAT load. Has any estimate been made of the cost in money and resources falling upon small traders, because many of them have complained to me that they are finding it difficult to get people to deal with the problems of VAT and they are thinking of going out of business partly because of it?
    Mr. Davies: I cannot give an estimate of the cost, but most Community countries have a much lower threshold than our £5,000. The burden on people in those countries is probably even greater than it is on people in this country. We accept that there is a burden with VAT. We are considering the matter very carefully.
    Mr. Michael Marshallasked the Chancellor of the Exchequer, how many representations he has now received objecting to the imposition of 25 per cent. VAT on sales by the boating industry.
    Mr. Denzil Davies: About 350.
    Mr. Marshall: Is the hon. Gentleman aware that among those representations are many of the views put to me by boat-builders in Littlehampton who are clearly facing the direct impact of lost business because of the imposition of the higher rate of VAT? The introduction of a multi-rate VAT brings us back to the worst absurdities of purchase tax. Will the hon. Gentleman admit that the Government are wrong and tell us when the matter will be put right?
    Mr. Davies: I do not accept those remarks about multi-rate VAT. We accept that the introduction of the 25 per cent. rate has had a marginal effect on employment in boat building, but it should be remembered that the major drop in orders occurred in the first three months of this year. There was a 40 per cent. drop. This is now agreed with the Ship and Boatbuilding National Federation. It had nothing to do with VAT. It was caused by the world recession. We are keeping the situation under review. We are having discussions with the federation and will keep the matter under close scrutiny in the next few months.
    Mr. Fairgrieve: When will the Chancellor of the Exchequer consider putting the VAT rate back to 10 per cent., so
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    that he can both raise more money and get rid of the 25 per cent. rate?
    Mr. Davies: This matter was discussed fully on the Floor of the House and in Committee during the passage of the Finance Bill, and we have nothing further to say.
    Sir G. Howe: Does not the fact that orders in the boat building industry were falling by 40 per cent. even before the introduction of the higher rate of VAT underline the folly of singling out that industry as one of those to be subjected to the higher rate? Does the whole history not underline the double folly of making selective impositions of a tax which was originally intended to be across the board?
    Mr. Davies: It is not correct to say that the industry was singled out. What is more, most other countries of the European Community have more rates of VAT than we do. The fact that we have introduced a 25 per cent. rate on less essential items is part of the strategy to raise more revenue and to try to deal with inflation.

    Money Supply
    Mr. Ridleyasked the Chancellor of the Exchequer what rate of growth of the money supply would be consistent with a rate of annual inflation of 10 per cent.
    The Paymaster-General (Mr. Emund Dell): No clear relationship has been established to link a particular rate of growth of the money supply with a particular rate of inflation, but in broad terms, there is little risk of monetary factors stimulating inflation if the growth of the money supply, M3, is kept well within the rate of growth of money GDP.
    Mr. Ridley: Is the right hon. Gentleman aware that the indications are that the money supply is now well above the level which will be necessary to achieve the aim of the Chancellor of the Exchequer, of a 10 per cent. rate of inflation at the end of next year? Therefore, will he look carefully into what is to happen after the present recession is past? The indications are that we may be having Latin American rates of inflation unless he keeps a severe eye on this matter.
    Mr. Dell: I do not accept what the hon. Gentleman says. My right hon. Friend has succeeded in getting down the rate of growth of M3 compared with what

    703
    it was under the previous Government. M3 is the relevant indicator here. The hon. Gentleman can be sure that we shall continue to regard it as important to keep the money supply under control.
    Mr. Alexander Fletcher: As a contribution to reducing expenditure, what would be the saving in public expenditure if the Government abandoned their proposal to purchase 51 per cent. of North Sea oil?
    Mr. Dell: I do not think that that arises out of this Question. The hon. Gentleman has asked that question on many occasions. All that I can tell him is that the figures offered by the Opposition are, fortunately, a gross exaggeration.
    Mr. Alexander Fletcher: On the Government's figures.

    Value Added Tax
    Mr. Brothertonasked the Chancellor of the Exchequer what is the rate of VAT on garden furniture.
    Mr. Denzil Davies: Eight per cent.
    Mr. Brotherton: Will the Minister confirm that the rate of VAT on garden tools, such as spades, forks and rakes, is 25 per cent.? Is it not monstrous that the Chancellor of the Exchequer, in one of his many residences, can take his ease in an 8 per cent. VAT-rated deckchair, whereas those of us who have gardens or allotments and are growing vegetables to help both ourselves and the country have to pay a 25 per cent. rate of VAT on the tools that we use?
    Mr. Davies: With respect, the analogy which the hon. Gentleman has drawn is not correct. The correct analogy is between garden furniture and furniture in general. That is why garden and household furniture are rated at 8 per cent. Tools are in a separate category. Power garden tools are charged at 25 per cent. because they are large, reasonably easily identified items, and the burden on the retailer caused by a higher rate of VAT on those items is not considerable.
    Mr. Adley: Is it not also inequitable that the Prime Minister can enjoy his round of golf with his golf clubs taxed at 8 per cent. VAT—[Interruption.] It is no good hon. Gentlemen moaning. Many of my constituents' jobs are in jeopardy because they work in companies which
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    build boats and produce ancillary equipment. There is no point in the Government's pretending that they do not know or care that the jobs of people in many parts of the South Coast region, Scotland and other boat building areas are in jeopardy. Moreover, exports are being lost as a result of the Government's deliberate acts of policy.
    Mr. Davies: If the hon. Gentleman had taken the trouble to attend the debates on the Finance Bill he would have heard that various small items of leisure occupations, such as golf balls, are not charged at 25 per cent. VAT, because such a provision would substantially increase the burden on retailers. We deliberately chose the larger items to reduce the burden on retailers as far as possible. If the hon. Gentleman wants the rate increased to 25 per cent on smaller items, we shall of course consider it. However, I do not believe that the retailers in his constituency will like it.
    Mr. David Howell: I assure my hon. Friend that had he attended the Finance Bill Committee discussions he would have discovered no reason at all why boats should be picked out for the higher rate of VAT. He would have discovered chat the Government regard non-essential things as subjects for higher-rated VAT, and they include not only canoes, but electric kettles and electric irons. The Government consider that all those items are non-essential.

    International Monetary Fund
    Mr. Adleyasked the Chancellor of the Exchequer when he last met the IMF Committee; what transpired; and when he next intends to meet it.
    The Chancellor of the Exchequer (Mr. Denis Healey): I attended the IMF Interim Committee meeting in Paris in June. On what transpired, I refer the hon. Member to my answer to the hon. Member for Cornwall, North (Mr. Pardoe) on 13th June. I propose to attend the IMF Annual Meeting in Washington at the beginning of September.
    Mr. Adley: Is it the right hon. Gentleman's intention to show the IMF the reserve powers Bill, if he has not already done so?
    Mr. Healey: No, Sir.
    Mr. Lane: Before the September meeting, will the right hon. Gentleman put more emphasis on the positive side of the Government's anti-inflation policy—that is, higher productivity and harder work? Will he say a little more about the new industrial strategy which has been mentioned in Press reports in the last day or two?
    Mr. Healey: I am glad that the hon. Gentleman has referred to the NEDC meeting which took place yesterday. My right hon. Friend the Secretary of State for Industry and I discussed with the other members of the NEDC the way in which Government policy is developing in this area, and we shall continue the discussion in the autumn. I agree strongly with the hon. Gentleman that it is important to improve the industrial performance and economic performance of this country. This requires macro-economic measures, to which the instruments in the Industry Bill will make a major contribution.

    Borrowing Requirements (Public Sector)
    Mr. Hurdasked the Chancellor of the Exchequer what will be the estimated effect on the public borrowing requirement in the current year and next year of the imposition of cash limits in the public sector as proposed in Command Paper No. 6151 "The Attack on Inflation".
    Mr. Dell: The measures proposed in Cmnd. 6151 are unlikely to have a significant net effect on the public sector borrowing requirement in the current year. As regards next year, the application of cash limits should help to reduce some of the uncertainty in forecasting the borrowing requirement.
    Mr. Hurd: That is very disappointing. Is the right hon. Gentleman not supposed to be in control of this operation? Before he started all this talk about cash limits, he must have had some idea of what he meant their effect to be, next year, on the borrowing requirement. Has there not been a degree of backsliding since the brave days when he said that he would need convincing that a particular case did not require the imposition of cash limits?
    Mr. Dell: The hon. Gentleman should observe the difference between the level of public expenditure, about which my right hon. Friend the Chancellor of the Exchequer has made a number of statements, and cash limits, which are a system for the better control of public expenditure. Once we have determined the appropriate level, cash limits will help to control and to ensure that we achieve that level.
    Mr. David Howell: The Prime Minister spoke on Tuesday about "a new lot" of public expenditure cuts. Will the right hon. Gentleman say when this new lot is likely to come along? Will it be in October, in September, or this month? On the issue of public expenditure cuts, does the right hon. Gentleman agree that there is, to quote Sir Monty Finniston in another context, no possibility of running away indefinitely from this issue?
    Mr. Dell: The hon. Gentleman knows that it is customary to publish a public expenditure White Paper later in the year. At the moment, the Government are going through the normal processes of considering the level of public expenditure. The Chancellor of the Exchequer has made a number of statements in the House about what he expects to achieve in respect of the level of public expenditure. I cannot add to them at the moment.
    Mr. Frank Allaun: Is my right hon. Friend aware that the cuts in public expenditure clamoured for by the Opposition will be resisted by many Government supporters? Will not the so-called cure of cutting back production and consumption only worsen the disease of unemployment?
    Mr. Dell: My right hon. Friend has made it clear that he wishes these cuts in the increase in public expenditure to coincide with the upturn in world trade, so that there can be a movement of people into export-oriented industries to improve the balance of the British economy. We understand the anxieties about public expenditure. But my hon. Friend, in turn, must understand the great increase in the proportion of British resources devoted to public expenditure in the past two years.
    Mr. MacGregor: Will the right hon. Gentleman confirm that it is the intention

    707
    of the Chancellor of the Exchequer to publish the initial cash limit figures and the eventual outturn related directly to those initial figures, so that Parliament can monitor the way in which the policy is operating?
    Mr. Dell: We are considering publication. I cannot give any assurance about it at the moment. The matter will be considered in due course.
    Mr. Horam: In respect of the public sector generally, does my right hon. Friend agree that it is most important that the programmes are as cost effective as possible, and are seen to be? Will he consider the proposals of the Expenditure Committee to publish as much as possible of the detailed programmes, so that they may be analysed not only by Parliament but by other interested bodies?
    Mr. Dell: We always consider seriously the proposals of the Expenditure Committee, especially on public expenditure.
    Mr. Ridley: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of those replies, I beg to give notice that I shall seek leave to raise the matter on the Adjournment at the earliest possible opportunity.
    Mr. Gowasked the Chancellor of the Exchequer if he will now make it his practice to give estimates of the public sector borrowing requirements, other than at Budget time.
    Mr. Dell: No, Sir.
    Mr. Gow: Will the Paymaster-General reconsider that answer? Does he recall that in November of last year the Chancellor gave a figure of £6,300 million as his estimate of the public sector borrowing requirement, but that five months later the requirement proved to be £7,600 million? Does he expect that the Chancellor's forecast for the current year will be more accurate than the appalling estimate he made as recently as November 1974?
    Mr. Dell: No, I do not think it is right at present to reconsider this answer. A satisfactory revision of the estimate of the public sector borrowing requirement can be made and its implications fully understood only in the context of a
    708
    revised forecast for the economy as a whole.
    Mr. Heffer: When my right hon. Friends are considering this question, and when we get the series of cuts which are likely to take place in public expenditure, will my right hon. Friend give us an assurance that if any local authorities in assisted areas wish to bring in schemes to help the unemployed in those areas, this will not be counted against them and, in fact, the schemes will be exempted precisely because of the very high level of unemployment in areas such as the West of Scotland, Merseyside, and South Wales?
    Mr. Dell: I cannot give my hon. Friend that assurance. As he knows, this Government have devoted considerable attention to assisting development areas, but the expenditure situation in respect of local authorities is serious. My right hon. Friend the Secretary of State for the Environment made a statement about it recently. I cannot add to that.
    Mr. Norman Lamont: Is the Paymaster-General aware that in the United States, for example, the authorities publish forecasts not just for the borrowing requirement but for the growth of the money supply, which the Treasury refuses to do here? Is he further aware that in the United States and Japan the Budget judgment is discussed openly by the Government for many months, whereas here it is delivered by the Chancellor like a white rabbit conjured out of a hat on Budget day? Why cannot the Treasury be a little less secretive?
    Mr. Dell: The hon. Gentleman will also realise that a number of these forecasts, even in the very different economic situation of the United States, are very inaccurate. Forecasts which we might make—for example, in respect of the money supply—would be subject to many influences, including external influences, which we cannot control. It could be self-defeating. It could be a destabilising factor. Therefore, at this point we have come to the conclusion that the balance of advantage is against publication.
    Mr. Dykes: Does not the Paymaster-General think that it was a little foolish—indeed, somewhat amazing—that several weeks ago when the Chancellor

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    was under pressure yet again he castigated the Opposition for being too obsessed with the size of the borrowing requirement and its relationship to the prevailing rate of inflation, and said proudly: "After all, look at Germany. It has the same size borrowing requirement as ours, at £9 billion."
    Is that not amazing, bearing in mind that the German economy is twice the size of ours, that Germany's rate of inflation is considerably lower than ours, and that Germany has a different standard of financial structure?
    Mr. Dell: That question might lead the hon. Gentleman to think a little more deeply about the relationship of the public sector borrowing requirement to the rate of inflation.
    Mr. David Howell: The Chancellor said that forecasts are very inaccurate in the United States, but the Government's own forecasts have not been too hot, either. Is he not damaging his own case by being such a blushing bride on the question of the public sector borrowing requirement? Is it not the position that if the £6 limit is to work effectively in the public sector and in local authorities as from 1st August, this will greatly reduce the total outturn of pay increases in the public sector, and this, presumably, should change some of the arithmetic for the public sector borrowing requirement? Would it not help the Government at least to reduce the present appalling lack of confidence if they were more forthcoming on the lines that my hon. Friend the Member for Kingston upon Thames (Mr. Lamont) suggested?
    Mr. Dell: I do not think that it would help in the respect that the hon. Gentleman has suggested. The reason for not publishing certain forecasts is not that they are inaccurate. We all know that all forecasts are likely to be inaccurate. It has been judged by successive Governments that these forecasts are likely to have a certain value. The point is that they are not merely inaccurate but in certain circumstances could have a destabilising effect and could give rise to certain expectations about Government policy. It is obviously a balance of considerations. All that I am saying is that in present circumstances we are of the view that these should not be published.

    Corporation Tax (Redundancy Payments)
    Mr. David Mitchellasked the Chancellor of the Exchequer whether he will consider allowing companies to include as a liability their contingent liability for redundancy payments when arriving at the profit for which they are assessed for corporation tax.
    Mr. Denzil Davies: No. It would not be right to allow companies to establish tax-free reserves to meet unquantifiable liabilities which may not arise.
    Mr. Mitchell: Is the hon. Gentleman aware that the contingent liability here is greater than the assets of many companies and that, as unemployment mounts further and further, we shall see a very serious situation developing in many cases?
    Mr. Davies: I do not see how the hon. Gentleman can equate the contingent liability with assets. The liability is contingent and, because of that, it cannot be quantified, because no company will know the pattern of redundancy. That is why the hon. Gentleman's suggestion is impractical. I might also point out that companies obtain relief for payments made into the redundancy fund against their corporation tax and for the net cost of paying out, from their own resources, redundancy payments to their employees who are made redundant. We consider that they are adequately compensated in that way.

    Double Taxation Relief (Brazil)
    Mr. Dalyellasked the Chancellor of the Exchequer when he hopes to introduce a double taxation relief agreement with Brazil.
    Mr. Denzil Davies: As soon as current negotiations with Brazil have been brought to a satisfactory conclusion.
    Mr. Dalyell: Byzantine though the complexities are, is it understood that other countries seem to have overcome the difficulties, especially the Germans and the Japanese, and that we are at something of a disadvantage in this important market? Is there any chance of settling this question before the Brazilian Foreign Minister arrives on 21st October?
    Mr. Davies: I cannot comment on the last part of my hon. Friend's question. The other countries which have reached agreements have a system of double taxation which is different from ours. We give credit against credit. They tend to exempt foreign income completely. The basis of our system has been that we give maximum credit. If we accept the Brazilian proposals—and we are still considering them very seriously—they will have implications for double taxation treaties that we have with other countries.
    Mr. David Howell: Is the Brazilian rate of inflation higher or lower than ours?
    Mr. Davies: I have no idea.

    Credit Cards
    Mr. Huntasked the Chancellor of the Exchequer what estimate he has made of the amount of money annually injected into the economy by the credit card system.
    Mr. Dell: Separate figures for the amount of bank lending to persons through credit card accounts are not published, on grounds of commercial confidence. However, the latest figures available for total bank advances to persons outstanding, which include amounts outstanding on bank credit card accounts, show little change over the past year.
    Mr. Hunt: I am a user of one of these cards. Does the right hon. Gentleman agree that they represent a permanent temptation to overspend? Therefore, is there not a case for a suspension of these credit facilities, at least until we have brought inflation successfully under control?
    Mr. Dell: There has been no increase, or at least little change, over the past year in total bank advances to persons with outstanding accounts. Therefore, it does not appear that these cards are having the effect that the hon. Gentleman fears. He knows that in December 1973 the minimum payment was increased. Therefore, I do not see any reason for action on this matter at present.
    Mr. Lee: Is not the position similar to that of advertising? It may be a marginal factor. Is it not absurd that, on the one hand, the Government rightly want to curb expenditure on personal
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    consumption, and yet, on the other, they allow or connive at the existence of things which tempt people to spend to an unnecessary degree?
    Mr. Dell: I should point out to the House that, like the hon. Member for Ravensbourne (Mr. Hunt), I use these cards myself. I do not believe that my hon. Friend the Member for Birmingham, Handsworth (Mr. Lee) would want the convenience that they represent to be removed, unless there were serious reasons for doing so.
    Mr. Edward Lyons: What view does my right hon. Friend take of the ability to use credit cards abroad to buy goods above the £300 spending limit?
    Mr. Dell: This follows from the freedom of trade in which this country engages. It is possible to import goods from abroad, by various means of payment, above the £300 limit which is imposed in respect of foreign travel.

    Tax Allowances
    Mr. Mike Thomasasked the Chancellor of the Exchequer whether he will now take steps to increase the personal tax allowances and introduce a reduced rate first band of tax to ameliorate the marginal tax rate of low earners.
    Mr. Hooleyasked the Chancellor of the Exchequer if he will now introduce a reduced rate of income tax for the first band of taxable earnings.
    Mr. Denzil Davies: I share my hon. Friends' concern about the burdens on those who are just within the tax-paying field, but I do not think that the introduction of reduced rates of income tax will provide an effective solution. In his last Budget my right hon. Friend put up the allowances for both single and married people and single parents, and these increases will have helped to ease matters for many among the least well-off taxpayers.
    Mr. Thomas: Is my hon. Friend aware that although the £6 limit has been advocated as of help to the low paid, in many cases the low paid will lose almost all the £6 through loss of means-tested benefits, so they may suffer a net loss in income? Does my hon. Friend agree that the Treasury must take steps to

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    ameliorate the situation? Otherwise, we shall face serious consequences this autumn.
    Mr. Davies: I share my hon. Friend's concern. The difficulty is that at the end of the day any substantial improvement will have to be financed. To be realistic, the only true way of financing a substantial improvement would be by either reducing the rate of personal allowances or increasing the basic rate of income tax. If we reduced personal allowances, more people would be brought into the poverty trap. If we increased the basic rate, many people who now pay tax and also receive rent and rate rebates would move into a higher marginal withdrawal rate, which at present is about 60 per cent. At the end of the day any relief must be financed.
    Sir A. Meyer: Is it not a fact that, by dispensing with the reduced rate for the lower bands of income the Treasury has deprived itself of a most useful way of avoiding the problem of the poverty trap? Should this not be looked at again?
    Mr. Davies: No, Sir. I do not agree. At the end of the day there are many ways in which we can assist, but we must still find substantial sums of money, whether by a reduced rate, by personal allowances, or in any other way.
    Mr. Pardoe: Will the hon. Gentleman consider again the reduced rate band? Why are the Government not prepared to introduce a new reduced rate? Will he indicate whether 35 per cent. is the highest low rate in Europe? Does he recognise the substantial disincentive, even to people on comparatively low earnings, caused by the considerable impact of taxation coming in at the lowest rate, including national insurance contributions?
    Mr. Davies: I agree with the latter part of the hon. Gentleman's statement, but if we had a reduced rate of 25 per cent. on, for instance, the first £300 of taxable income, the cost would be £1,000 million. I am not saying that we should not spend that money, but that £1,000 million will have to come from the main bands of income tax in one way or another. Whether we have a reduced rate or any other system, at the end of the day we must find the money.
    Mrs. Bain: Does the Minister agree that his replies so far are very disappointing for those who are concerned about the poorer sections of the community? Does he further agree that the only way for people to escape from the poverty trap is to have indexed-linked personal tax allowances, together with social security benefits, and a qualifying level for those benefits? Has the Minister considered the positive alternative, put forward by the Scottish National Party in the recent debate, of indexation as an alternative to the £6 flat-rate increase referred to by the Chancellor?
    Mr. Davies: We have debated indexation in the House on a number of occasions since the beginning of the year. Indexation involves many large questions which go outside the income tax area. We are constantly considering the matter and are aware of the problems of the lower income earners.
    Mr. Dalyell: Will the Treasury lose no opportunity to point out how costly various schemes for separate direct and indirect taxation in Scotland and England would be?
    Sir G. Howe: Does not the volume of questions from both sides of the House drawing attention to the burden of direct taxation on low income earners, as well as on every other class in the community, demonstrate that we have now reached the limit of the taxable capacity of our people? Does it not underline the strong case for concentrating on reducing public expenditure in the light of the burdens about which complaints have been made in this series of questions?

    Public Expenditure
    Mr. William Hamiltonasked the Chancellor of the Exchequer whether he now intends to produce a new White Paper on public expenditure over the years 1975–76 to 1980–81.
    Mr. Dell: The next White Paper on public expenditure, covering the years to 1979–80, will be published when the Government have completed the 1975 public expenditure review.
    Mr. Hamilton: Will my right hon. Friend give an assurance that when it is published it will take into account the comments and recommendations of the Expenditure Committee, whose report was

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    referred to in an earlier supplementary question? Will he also give an undertaking that if there are to be substantial cuts in public expenditure some of us who were previously opposed to the view of my hon. Friend the Member for Salford, East (Mr. Allaun) will incline to the view that those cuts should be in the defence sector rather than in the social service sector?
    Mr. Dell: We shall of course consider the report of the Expenditure Committee. As I said earlier, we always consider the reports of that Committee. I note what my hon. Friend said about the forms of cuts in public expenditure of which he would most approve.
    Mr. Lee: Defence expenditure is not the only obvious candidate for cuts in Government expenditure. Does not my right hon. Friend agree that the over-ambitious road programme is one such candidate? Will he bear in mind that if there is any attempt to reduce local authority housing expenditure there will be the devil of a row?
    Mr. Dell: All those points will be borne in mind.
    Mr. Mike Thomas: Does my right hon. Friend agree that one factor affecting public expenditure that he could examine in the interim is the rapid rate at which he and his right hon. Friends are proposing to phase out nationalised industry subsidies? Is he aware that ordinary people will be facing the doubling of their electricity bills this winter? Can some reasonable process be gone through by which the phasing out is slowed down and the situation thereby ameliorated?
    Mr. Dell: My right hon. Friend the Chancellor of the Exchequer has made the position quite clear, and I have nothing to add to what he said.
    Sir G. Howe: Will the Paymaster-General make it absolutely clear that if inflation is to be successfully defeated, the task must be undertaken by means of a policy sustained over some years, and that an inescapable part of that policy must be continued reductions in public expenditure? Will he give us an assurance that the Government will give, as quickly as possible, plain indications of what is intended, and that there will be no danger of these restraints being
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    escaped by local authorities seeking to spend more by heaping larger burdens upon the ratepayers?
    Mr. Dell: It is certainly true that dealing with inflation in this country will require concentrated Government activity over a period of years. It is equally true that public expenditure's share of United Kingdom resources has greatly increased over recent years, and that this has become an excessive burden on those resources. This is a matter which the Government are currently considering. The results of those considerations will be published in the ordinary way in the White Paper.
    My right hon. Friend the Secretary of State for the Environment has made a number of statements on the situation of local authorities.

    Wages and Salaries
    Mr. Edwin Wainwrightasked the Chancellor of the Exchequer if he will publish in the Official Report the percentages of wages and salaries as part of the national income for the years 1940, 1950, 1960, 1970, 1971, 1972, 1973 and 1974, respectively.
    Mr. Dell: Yes, Sir.
    Mr. Wainwright: Will my right hon. Friend say whether those figures will show that the ratio of wages and salaries to the gross national product varies very little over the years in question? Will he give consideration to the question of bringing together more than ever the directors of companies and the trade unions to ensure not only that we shall have greater investment in industry so that we shall have greater production, but that there will be a greater understanding between employees and employers, to ensure greater harmony in industry throughout the country?
    Mr. Dell: When he studies these figures my hon. Friend will see that there has been some variation of wages and salaries, excluding Armed Forces' pay, as a percentage of national income. For example, in 1950 it was 64·1 per cent. and in 1974 it was 70·7 per cent., so there are variations. I entirely agree with my hon. Friend that better understanding within industry would contribute to greater investment.
    Mr. Heffer: Does my right hon. Friend agree that although there have been variations the figures show that they have not been as great as has been suggested? Therefore, it is not true to say, as is being said the whole time by all types of economists, by the Government Front Bench, by the Opposition Front Bench, and by Uncle Tom Cobbleigh and all, that inflation is due to the rapid increase in wages. Is it not clear that those figures prove the very opposite?
    Mr. Dell: No, I do not think that is clear. My right hon. Friends have not said that wages are the sole cause of inflation. They have from time to time indicated a number of causes of inflation. What has been said is that recently wages have been the prime cause of inflation in this country. Nothing in these figures disproves that assertion.
    Following are the figures:

    WAGES AND SALARIES AS A PERCENTAGE OF NATIONAL INCOME

    1950

    64·1

    1960

    65·6

    1970

    68·3

    1971

    68·1

    1972

    67·6

    1973

    67·0

    1974

    70·7

    *Excluding Forces' pay

    Figures for the later years are consistent with those published in the July 1975 issue of Economic Trends. Figures for 1940 are not available.

  HOME DEPARTMENT

    Taxis and Hire Cars (Legislation)
    Mr. Matesasked the Secretary of State for the Home Department what representations he has received from interested bodies on the need for early legislation for the regulation of taxis and private hire cars; whether he is satisfied that these vehicles should be regulated under an Act 130 years old; and what plans he has to introduce legislation.
    The Under-Secretary of State for the Home Department (Dr. Shirley Summerskill): Representations have been received from a number of MPs, local authority associations, individual local authorities and trade associations. My right hon. Friend recognises the need for amending legislation on this subject, and draft proposals are being prepared which he
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    hopes will be circulated in the autumn to the interested bodies.
    Mr. Mates: Is the hon. Lady aware that that answer is very welcome indeed? Will she take note of the peculiar anomalies in the operation of taxis and private hire cars in rural areas which have urban communities amongst them? It is there that the confusion of the out-dated law is the greatest. To sort this out would be of great help.
    Dr. Summerskill: It is because there are these anomalies and because considerable complications have been introduced by local government reorganisation that we are introducing amending legislation.
    Mr. Horam: Will my hon. Friend confirm that the trade unions will receive copies of the proposed legislation which she is considering? Will these proposals also cover the question of advertising by unlicensed private hire cars? Does my hon. Friend agree that it is time we had a proper economic study of the whole question throughout the entire country in order to put the whole matter on a viable and sensible basis instead of the restricted coverage that we now have?
    Dr. Summerskill: I shall see that the trade unions are sent the proposals. I am sure that they will include suggestions about advertising. As to the economic point, I shall refer that to my right hon. Friend the Chancellor of the Exchequer.

    Prisoners (Control Unit)
    Mr. Dykesasked the Secretary of State for the Home Department what plans he has to monitor and require the use of prisoner control units in Her Majesty's prisons; and if he will make a further statement on control units.
    Dr. Summerskill: We have nothing to add to the reply my right hon. Friend gave to the Question from my hon. Friend the Member for Derby, North (Mr. Whitehead) on 17th July.—[Vol. 895, c. 574.]
    Mr. Dykes: May I point out that as originally printed the Question contains a mistake and that the word "require" should be "restrain"? May I suggest that the answer is not satisfactory, in that there are considerable misgivings about the use of these units? The brainwashing and psychological control

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    implications of them are wholly alien to this country's traditions in the prison service, and it is up to the Government to stop them now.
    Dr. Summerskill: There is one other error in the Question, in that it is not right to refer to "control units". There is only one unit in operation, and that is at Wakefield. I can assure the hon. Gentleman that an active review is now taking place of the whole matter of the control unit. It has not been operating for many months. I myself have visited it. I assure the hon. Gentleman that every aspect will be considered—not only the question of control, and who is in charge of individual prisoners; we are also assessing the prisoners during their stay at the control unit and when they have left it.
    Mr. Kilroy-Silk: Will the Under-Secretary of State say what improvements there have been, if any, in the discipline and good order of those prisons from which the disruptive prisoners have been taken? Will she also say what has been the psychological effect on prisoners who have been put into the control unit?
    Dr. Summerskill: This is one of the matters which are being examined. The psychology department at Wakefield is collecting information with a view to assessing the behaviour and response of the very few prisoners involved.

    MARITIME RESOURCES
    Ql. Mr. Townsendasked the Prime Minister if he will review the arrangements for ministerial co-ordination in relation to North Sea and other maritime resources.
    The Prime Minister (Mr. Harold Wilson): The present arrangements are kept under regular review.
    Mr. Townsend: Is the right hon. Gentleman aware that there is an urgent need to co-ordinate British maritime policy, instead of having the present patchwork? Is he further aware that the vital protection of our North Sea oil and gas resources cries out for better coordination of the Armed Forces, the four separate police authorities, and the commercial operators, as well as Government Departments?
    The Prime Minister: I am not sure what the hon. Member meant in the first part of his question, about having a co-ordinated maritime policy in place of what he calls the present patchwork. Perhaps he will pursue that point with the relevant Ministries. Alternatively, I shall be glad to hear from him in greater detail on what he has in mind.
    With regard to protection of North Sea oil operations, I have answered a number of Questions in the House and I shall be glad to draw the hon. Gentleman's attention to what is being done in this matter. It is not in any sense as he rather pessimistically expressed it.
    Mr. Dalyell: May I give an example of excellent co-operation between the Ministry of Defence and the Department of the Environment in making Port Edgar, in West Lothian, into a national offshore engineering laboratory? This is in a constituency which is next to the North Sea. I assure my right hon. Friend that co-ordination is far more satisfactory than it used to be.
    The Prime Minister: I am very grateful to my hon. Friend both for his remarks in the latter part of his supplementary question, about which great concern has been expressed in the House, and for drawing attention to the case which he has warmly welcomed.
    Mr. Grimond: Will the Prime Minister re-examine certain aspects of co-ordination? Is he aware that there was a serious diving accident in my constituency, about which I put down a Question and wrote a letter to the Department of Trade? Is he aware that the letter was referred to the Department of Energy and the Question was referred to the Department of Employment?
    Is the right hon. Gentleman further aware that if there is a serious accident involving widespread pollution, it will require immediate remedial action? Many Ministers are involved. Who will take immediate command?
    The Prime Minister: I am aware of this case. There have, indeed, been a number of tragic cases, as the right hon. Gentleman knows. He knows also that the safety of divers operating at offshore installations is now covered by the Offshore Installations (Diving Operations) Regulations 1974, which came into force

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    at the beginning of this year. He will also be aware of the comprehensive code of regulations introduced by my right hon. Friend the Secretary of State for Energy under the Mineral Workings (Offshore Installations) Act 1971. There has now been a comprehensive attempt to coordinate activities in order to develop safety and to minimise tragedies of the kind referred to by the right hon. Gentleman.
    Mr. William Hamilton: With regard to fuel resources in the North Sea, will my right hon. Friend now give an assurance that when the White Paper on devolution is published there will be a categorical assurance that there will remain a United Kingdom Department of Energy?
    The Prime Minister: Yes, Sir. The United Kingdom Department of Energy will be responsible for these matters.
    Mr. Alexander Fletcher: Is the right hon. Gentleman satisfied with ministerial control over North Sea oil? Does he agree that a separately instituted conservation authority would be a much better public safeguard in this respect?
    The Prime Minister: That proposal was put forward by the Conservative Party at the time of the General Election in 1974, or perhaps a little while before that. I am satisfied that the control of depletion and conservation will be adequate under the legislation at present before Parliament and under the powers of the Secretary of State for Energy.
    Mr. Henderson: Is the right hon. Gentleman aware that the reply he has given to the hon. Member for Fife, Central (Mr. Hamilton) that Scottish oil is to remain under the control of this House is worth several hundred votes to the Scottish National Party at the next election?
    The Prime Minister: The hon. Gentleman found that his persuasiveness in the recent referendum fell far short of the hopes he held and the claims he puts forward from time to time. When we have discussed these matters in debate in the House and at Question Time there has never been a satisfactory answer to the possible desire of certain parts of Scotland not to regard even the kind of Scottish dream which the hon. Gentleman puts forward as appropriate for those areas.

    INDUSTRIAL POLICIES (MINISTER'S SPEECH)
    Mr. Hurdasked the Prime Minister whether the public speech by the Secretary of State for Energy to the Institute for Workers' Control in Sheffield on 20th July about the Government's domestic policies represented Government policy.
    Mr. Tim Rentonasked the Prime Minister whether the Secretary of State for Energy's speech at the Institute for Workers' Control in Sheffield about industrial policies represents Government policy.
    Mr. Pattieasked the Prime Minister whether the Secretary of State for Energy's public speech at the Institute for Workers' Control in Sheffield on 20th July about industrial policies represents Government policy.
    Mr. Blakerasked the Prime Minster if the public speech by the Secretary of State for Energy to the Institute for Workers' Control at Sheffield on Sunday 20th July about industrial policies represents Government policy.
    Mr. Adleyasked the Prime Minister if the public speech by the Secretary of State for Energy to the Institute for Workers' Control, in Sheffield on 20th July about industrial policy represents the policy of Her Majesty's Government.
    Mr. Stanleyasked the Prime Minister whether the Secretary of State for Energy's speech at the Institute for Workers' Control in Sheffield on 20th July about industrial policies represents Government policy.
    The Prime Minister: Yes, Sir.
    Mr. Hurd: Did the Prime Minister see Press reports to the effect that in his speech the Secretary of State talked about the independent rôle which Cabinet Ministers would need to play in working out Labour Party policy? Can he confirm reports that under the Secretary of State's chairmanship the Labour Party is preparing yet another programme for control of British industry and financial institutions? Will he please call it off before confidence is entirely destroyed?
    The Prime Minister: The only published quotations from the speech which I have seen in the national and local Press referred to the need to sustain and maintain the Labour Government—unexceptionable, and in the highest national interest—and to the need to develop party policy in parallel with the programme of the Government. This was done by the Conservative Party. During its period of office, in drawing up its policies it was naturally looking forward to what it hoped would be a continuing period in office. As for the question of the participation of Ministers in the National Executive or its committees, the situation has been made very clear by me. I welcome the fact that Ministers, constituency parties and others play their full part. I try to do so myself, but this does not and cannot mean—all Ministers are aware of this—that any Minister can dissociate himself from the policies and actions of the Government of which he is a member. Nor can any Minister appear to or purport to commit the Government in advance of their deliberations and decisions announced in this House.
    Mr. Noble: Does my right hon. Friend not agree that the greatest danger to the Government's anti-inflation policy will arise from the disillusionment of workers because of increasing unemployment? If so, will he read carefully the report of last night's debate, in which there was virtual unanimity on the Government side of the House in the desire for import controls on textiles, footwear and clothing? Will he note that this unanimity is shared by the trade union representatives in those industries who came to the House on Tuesday?
    The Prime Minister: I look forward to reading the report of that debate in full when it is available. My hon. Friend should be careful to distinguish between a general policy of import control, which would have very bad effects on this country as a big trading nation, and the cases urged again yesterday in the debate and at Question Time, in respect of unfair competition and dumping. We are considering a number of these cases and are seeking proof. We shall not hesitate to act. We have already acted in a number of cases, either within existing powers or by informal arrangements with the Governments
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    of the countries behaving in that way.
    Mr. Tim Renton: With unemployment now rising at a tragic rate, might not work forces be tempted more and more, often by outside influences, to conduct illegal sit-ins or take control of their factories? What plans has the Prime Minister to deal with this? Will he assure us that all members of the Cabinet have a collective responsibility to see that these plans are fulfilled?
    The Prime Minister: The answer to the latter part of the question is "Yes". The hon. Gentleman will be aware of the deep anxiety felt in factories that are facing closure as a result of what we all agree is the worst world-wide depression since the 1930s, and about which leaders of all parties warned in a number of speeches during the previous two elections and at times between and since. This point does not arise out of the speech referred to in the Question, as far as I am aware of the contents of the speech. On the wider aspect of the need to give more confidence, particularly to people who are anxious, the hon. Gentleman will have noticed the statement by my right hon. Friend the Secretary of State for Trade on industrial participation, which seemed to receive a warm welcome from both sides of the House and the Press.
    Mr. Heffer: Returning to the question of collective ministerial responsibility, is it not clear that at times the Labour Party conference and the NEC may take up one position while the Government take another? Does my right hon. Friend agree that this puts Ministers on the NEC, or in their position as ordinary party members trying to carry out conference policy, in an extremely difficult and embarrassing position? Apart from the fact that the Government should not move away from conference policy and manifesto commitments, is it not clear that it is a pretence to the whole world—and has been for a long time—that all Ministers accept definite policies of the Government? Is it not time we had another look at the whole question of collective responsibility, to try to bring the matter up to date?
    The Prime Minister: I do not agree with my hon. Friend's statement at all.

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    He must be willing to draw a distinction between manifesto commitments and conference decisions from year to year, many of which are totally opposed to the manifesto commitments. It has often been the case—this happened in the 1960s, as my hon. Friend remembers—that there has been a sharp divergence between conference decisions and the policy of the Government. This is always unhappy. We try to take full account of the conference decisions, but they are not binding on an elected Government. As my hon. Friend will be aware, it may not always be the case that a decision of the conference necessarily represents a view of all Labour Party members and voters. I attended a conference at Islington earlier this year, and the clear decision of that conference was not shared by Labour voters when they had the chance to vote in a ballot.
    Mr. Pattie: Will the Prime Minister explain the difference between workers' control and industrial democracy?
    The Prime Minister: All these phrases have many definitions. The Institute of Workers' Control has one set of proposals and there have been some very forward-looking proposals from the TUC and CBI. In many of these matters, this country, under successive Governments, has lagged behind some of the best practices on the Continent. My right hon. Friend the Secretary of State for Trade set up the inquiry in order that the House can legislate in the Session after next.
    Mr. Blaker: One of the difficulties here is that I understand from the Library that no text of the speech made by the Secretary of State for Energy is available, but is the Prime Minister aware that it was reported in the Press, including The Times, a copy of which I have in my hand, that the Secretary of State put forward the view that because of the economic crisis Cabinet Ministers who are members of the NEC should be free to express an independent view? In view of that, does the Prime Minister stick to his original answer to these Questions?
    The Prime Minister: I stick to my original answer. I have seen The Times report. If I am correct, it was reported second-hand, and the newspaper did not actually report the speech. It added up
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    a number of views of its own on the basis of what it assumed might have been said. There is nothing in that speech, as publicly reported or intimated to me by my right hon. Friend, which justifies the criticisms of the hon. Member for Blackpool, South (Mr. Blaker). My right hon. Friend was reported as saying that there must be the fullest possible support for the Government and their decisions. I hope the hon. Gentleman will see the wisdom of that advice.
    Mr. Whitehead: In view of the fact that we should perhaps attribute 11 Questions on this speech to the unoriginality of the Opposition, is it not a fact that the enormous attention they are paying to the Institute of Workers' Control could be rewarded if they were to go along to the institute, enrol there and listen to the views of genuine working people?
    The Prime Minister: I think my hon. Friend is absolutely right. We would like to see some members of the Opposition show a greater appreciation of the decision taken by the TUC for the first time last year. Throughout its history, when the Conservative Party is bereft of policies, it always goes in for bogyman hunts. There were the cases of Lloyd George and Aneurin Bevan, but the Conservatives reserved their supreme malice for Winston Churchill when he was not sitting on their Front Bench. This Benn-hunting is a pathetic example of their inability to think of anything constructive to say.
    Mr. Adley: Is the Prime Minister aware that it is frightening, to say the least, that he accepts as Government policy the contents of a speech which he now admits he has not seen or read in full? Does he not accept that those parts of the speech that we have seen, and the remarks by the hon. Member for Liverpool, Walton (Mr. Heffer), are a continuing reminder to this country that the nation is dependent upon a Government who are seriously split on almost every major issue? Will the Prime Minister now shake off the habits of a lifetime and disown the Marxists and Trotskyists in his party?
    The Prime Minister: On the hon. Member's first appearance on the Opposition benches in March 1974 he appeared

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    dressed as a comedian, and he has lived up to that rôle ever since. Nothing more justifies my view on that score than his obsession with this matter. The Press was present at this meeting, and I have studied the local Press. I have given a full account to the House of my interpretation of what is in the Press, and I am sure that if my right hon. Friend had said anything which would have provided pabulum to the Benn-hunters opposite, the Press would have reported it. It did not.
    Mr. Stanley: Does the Prime Minister agree that there was an extremely important development in industrial policy last night, when an amendment was passed to the Industry Bill in another place, providing for the disclosure of information to all employees, not just to representatives of the trade unions? Does the Prime Minister agree that since this amendment has been supported by all five parties on the Opposition side of the House this would be the right moment for the Government to drop their wholly undemocratic approach to the question of disclosure, which makes those who are not members of trade unions second-class citizens in law?
    The Prime Minister: It would be wrong and improper for me to comment on amendments which have been passed in another place but which have not been reported back to this House. When they are reported back, as with other amendments that this House receives from time to time, the Government will study them sympathetically. If we think they are of value, we shall recommend my right hon. and hon. Friends to join with others who may feel similarly moved to support them. We shall judge these and other amendments on their merits or demerits.
    Mr. Blaker: In view of the unsatisfactory nature of the reply, I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest possible opportunity.

POST OFFICE (TARIFF INCREASES)
Mr. Tom King(by Private Notice) asked the Secretary of State for Industry if he will make a statement of the Government's policy following the rejection
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of the Post Office's proposed tariff increases by the Post Office Users' National Council.
The Minister of State, Department of Industry (Mr. Gregor Mackenzie): I am grateful to the Post Office Users' National Council for the thoroughness of its report, and the speed with which it has produced it. My right hon. Friend is considering the report. The tariff proposals of the Post Office were of course also referred by the corporation to the Price Commission, and my right hon. Friend will wish to have the commission's findings before reaching a view. I would, however, remind the hon. Member that it is Government policy to phase out subsidies to nationalised industries as quickly as possible; and that, as my right hon. Friend the Chief Secretary to the Treasury said in the debate on the Statutory Corporations (Financial Provisions) Bill, the Government's intention is that the Post Office's deficit for 1975–76 should be contained at £70 million.
Mr. King: We are grateful to the Minister of State for making the statement. We are aware that he has only just received the report, but does he appreciate that the urgency of the question is that the increases are otherwise due to come into effect on 29th September, before the House reassembles? Will he confirm that the rejection of the Post Office price increases by POUNC, which represents consumers, is quite unprecedented? Will he give an undertaking that this matter will be seriously reconsidered and that the views of this statutory body, which was set up under the Act to represent the interests of all consumers, will be given serious consideration by the Government and not brushed aside as one or two other independent reports have been? Does he accept that the POUNC has the same concern as all parties in the House in aiming to eliminate the deficit, but that just increasing prices with the risk of further rapid increases and of rapidly falling traffic may not achieve that objective? Will he give an undertaking that an independent inquiry into the whole operation of the Post Office—something we called for in the debate and which the council has also called for—will be set up with due dispatch by the Government?
Mr. Mackenzie: We have had a critical report from the POUNC before, as the hon. Member will recall. I can assure him that my right hon. Friend the Secretary of State, will give this matter most serious consideration. We have never brushed aside any recommendations which have been made by Lord Peddie and his colleagues on the council. We shall give their views the most serious consideration. We discussed the whole question of an inquiry not many days ago here in the House. Of course, my right hon. Friend will consider this recommendation, as he will consider all the other recommendations made by the council. The hon. Member will have noted what Lord Peddie said in his report that the one thing he does not want in the Post Office at this time is a witch-hunt, and that is the one thing we are determined not to have.
Mr. Mike Thomas: Does my right hon. Friend accept that this is another indication that the rapid phasing out of nationalised industry subsidies will affect the poorest most severely? A lot of old people will have great difficulty finding the money to heat their homes this winter, but now they will also be unable to afford to write letters and they certainly will not be able to afford a telephone. Will my right hon. Friend see whether there might be the possibility of not insisting on the level of private pension fund contributions and the other factors which make up the need for this £300 million? Can he not take some dramatic action, if only because the increased charges will affect most severely the poorest and those least able to pay?
Mr. Mackenzie: I cannot accept that the recommendations affect the poorest in the community. On telephones, the Post Office has deliberately contained the increase to the call rate and has not extended it to rentals or installation charges. There are possibilities for local authorities and others to make contributions to the poorer-off sections of the community. The Post Office has the obligation to break even. There are other organisations to take care of the poorer sections of the community.
Mr. Kenneth Lewis: The public are quite convinced that the Post Office needs to become more efficient and to save
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money through efficiency. Will the Minister give an assurance that there will be no announcement of these increases until the House reassembles so that we can at least debate the action which has been taken by the Post Office to secure this efficiency in order to achieve at least reasonable prices?
Mr. Mackenzie: We debated this topic not many days ago, and if my memory serves me right, the hon. Member was not present. The Post Office's financial difficulties are with us now and they have to be settled now. I am sure that the Opposition would not want us to put off increases for any length of time, because they appreciate that if we did so those difficulties would become even greater than they are already.
Mr. Pardoe: I accept the need to phase out the Post Office subsidy at the earliest opportunity, but is the Minister of State aware that this cannot be done simply by raising charges in order to meet the costs of the present standards of service and the present style of management, much of which are more appropriate to the nineteenth century than to the twentieth? Before this House will accept the need for these new charges, there will have to be a radical reappraisal of the standards of the service and of the whole question of the management of the Post Office. Will the hon. Gentleman say something about the chairmanship of the Post Office? Is he aware that the chairman, Sir William Ryland, is a reluctant chairman? What steps are the Government taking to find a replacement?
Mr. Mackenzie: As this Private Notice Question relates to the Post Office Users' National Council, it is worth pointing out to the hon. Gentleman that the council pays the greatest tribute to the chairman and members of the Post Office Board for the work that they are doing and for the loyalty and service of the staff of the Post Office.
Mr. Gwilym Roberts: Will my hon. Friend pay particular attention to what my hon. Friend the Member for Newcastle-upon-Tyne, East (Mr. Thomas) said earlier? There are real dangers in cutting out these subsidies in terms of unemployment and inflation. Will he not accept that many of the public sector industries, for example,

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energy, transport and even the Post Office, operate in a social context and that as a party our first and main priority should be to maintain those social services?
Mr. Mackenzie: Together with the Post Office, we recognise that under the Act we have pledged to support our social obligations. The Post Office takes those obligations seriously. During the last debate on the Post Office we discussed whether we should ask the general run of taxpayers, many of whom are often poor people, whether they want to subsidise the users of the service. In the main, the users of the service are those in the business world and not the poorer people, about whom my hon. Friends are genuinely concerned.
Mr. Dudley Smith: Is the hon. Gentleman aware that apart from the fact that these proposed increases are quite unacceptable to members of the public, they will have a devastating effect on industry and commerce, which he has just mentioned, at a time when they need all the help and support they can get?
Mr. Mackenzie: My right hon. Friend the Secretary of State for Industry and I appreciate that. We shall be considering all of these recommendations. The Post Office is conscious of the need for efficiency. It is constantly looking at means of reducing its costs and the services that it provides. As the hon. Member for Bridgwater (Mr. King) well knows, these discussions have been taking place and the Post Office has tried very hard to provide a good service at low costs. We have to bear in mind that the high labour-intensive nature of the Post Office means that there is no way of reducing costs in relation to the employment of postmen.

PALACE OF WESTMINSTER (SECURITY)
Mr. Speaker: I should like to make a statement.
On 25th July 1974 the Leader of the House informed the House that at the request of the Government, and with the agreement of the Lord Chancellor and myself, the Commissioner for Police for the Metropolis had arranged for a security review of the Palace of Westminster to be
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carried out by the Deputy Commissioner of the Metropolitan Police, now Sir James Starritt. The report is now in my hands, and the House will wish me to express its gratitude to Sir James Starritt for his thorough and comprehensive examination.
When announcing the setting up of the review, the Leader of the House said that he thought that some of the recommendations would need to come before the House for a decision, while others—perhaps on more confidential matters—might be decided administratively. I have been considering, in consultation with the Leader of the House and with the authorities of the House of Lords, how in these circumstances the Report might best be considered.
Those whom I have consulted are in general agreement that the most effective way would be to set up a small Committee, consisting of four members of each House, those from this House being amongst the members of the Select Committee on House of Commons Services. The Committee would be an informal one, as was the Committee under the right hon. Gentleman the Member for Middlesbrough (Mr. Bottomley) to study the Compton Report, and not a Joint Select Committee set up by Resolution of both Houses. It will report jointly to myself and, I understand, to the Lord Chairman of Committees in the House of Lords: so far as this House is concerned it will then be for me, in consultation with the Leader of the House, to consider what further action should be taken; in particular whether all or part of the Report, which is at present graded Secret, should be laid on the Table of the House.

STATUTORY INSTRUMENTS
Ordered,
That the Customs Duties and Drawbacks (Revenue Duties) (The Overseas Countries and Territories) Order 1975 (S.I., 1975, No. 1267) be referred to a Standing Committee on Statutory Instruments.—[Mr. Walter Harrison.]

STATUTORY INSTRUMENTS
Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments),
REPRESENTATION OF THE PEOPLE
That the Elections (Welsh Forms) Regulations 1975, dated 11th July 1975, a copy of which was laid before this House on 22nd July, be approved.—[Mr. Walter Harrison.]

VALUE ADDED TAX
That the Value Added Tax (Betting, Gaming and Lotteries) Order 1975 (S.I., 1975, No. 1185), a copy of which was laid before this House on 21st July, be approved.—[Mr. Walter Harrison.]
Question agreed to.

CYPRUS (SELECT COMMITTEE)
The Parliamentary Secretary to the Privy Council Office (Mr. William Price): I beg to move,
That Mr. Arthur Bottomley, Mr. Bryant Godman Irvine, Mrs. Lena Jeger, Mr. Christopher Price, Mr. William Rees-Davies and Mr. Hugh Rossi be members of the Select Committee on Cyprus.
This is in a slightly different form from the words on the Order Paper.
Mr. Speaker: With the leave of the House I shall put the motion in that form.
Question put and agreed to.

ADJOURNMENT
Motion made, and Question proposed, That this House do now adjourn.—[Miss Betty Boothroyd.]

MOTOR CYCLE INDUSTRY
12.17 p.m.
Mr. Reginald Eyre: The present situation in the British motorcycle industry with regard to unemployment is worrying for many hon. Members, particularly so for those who have constituency interests in the West Midlands. Therefore we are appreciative, Mr. Speaker, of the time you have allotted to this debate.
Whatever may be said in the course of the debate, it has to be acknowledged that the former Conservative Minister of State, Mr. Christopher Chataway, within the restraints then applying, was seeking a genuine viable solution when he called in the Norton Villiers management to apply itself to the task of making a commercial success of the newly-formed NVT.
The most important requirement today, after so much unhappy history—from which we all have to learn—is the vital need for moderation from all the parties involved in the present difficulties. We should concentrate our efforts on finding a sensible and realistic approach because the position is now so much worse for everyone concerned than it was in 1973. However, I emphasise that there is no need for the defeatist stance that appears to have been adopted by the Government.
Government Ministers must keep firmly in mind their true liability, the Government having been so heavily involved and the former Secretary of State for Industry having given such strong assurances to the men at Small Heath. He said:
"The Government is fully committed to securing the future of the motor cycle industry in this country and of course this involves the success of NTV no less than the co-operative."
These words were contained in a carefully-worded letter dated 6th November 1974 addressed to Mr. Checkley, convener of the shop stewards at the Small Heath works. The letter was written in response to anxieties which had been expressed by Mr. Checkley on behalf of the men. Those words were intended to have a profound effect upon the men, and they did.

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The statement of the present Secretary of State for Industry on 31st July was a total repudiation of that commitment, and the men feel that they have been misled and badly let down by the Government.
In the Court Line debate yesterday, the Secretary of State for Energy said that that affair fell short of expressions of unqualified confidence.
The words I have quoted do not have that qualification. The question is, did the former Secretary of State for Industry exceed his authority? He said yesterday that he accepted full personal responsibility for all decisions that the Government took last year. However, it seems obvious to those concerned that the Cabinet has reviewed the commitment which the former Secretary of State for Industry entered into and has now decided that he acted unwisely. By its action the Cabinet has said "This is another of his mistakes", and it has shrugged its shoulders and turned away from the industry. It is no wonder that the men are saying that they feel betrayed.
The Secretary of State for Energy also asked yesterday, "How far is too far?" The men are about to lose their jobs, but the Minister still sails on in his job.
I turn to the developing situation of the sit-in. My goodness, how we in this House should feel for those men in Wolverhampton. When talking to their senior representatives one becomes conscious of the fact that they believe in their motor cycle industry. They were a successful profit-making part of it in Norton Villiers and had no reason to doubt that their future was secure under the arrangements made by the former Secretary of State for Industry. All those men are now openly critical of politicians.
In these circumstances, it is the duty of a Minister to tell the truth about the whole situation and to give a positive and realistic lead, not simply to imply that we cannot find a new track when we certainly can. We realise very disturbingly the deterioration in the situation since 1973—the raging rate of inflation which has developed, the high and increasing unemployment in the West Midlands, the huge size of the budgetary deficit, the problems of the balance of payments and the strength of sterling, and the fact that
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the Government are under enormous pressure to limit their swollen expenditure.
I shall say what I think should be done for the motor cycle industry, but I am not formulating unrealistic demands for the Government to pour huge funds into the industry. I am very conscious that the former Secretary of State has committed the Government to the investment of colossal sums in the motor car industry, and I am conscious of the fears of that industry that a similar reappraisal of the Government's position might take place.
I accept that in these anxious times our only way to salvation as a country is to produce goods or services efficiently enough to attract customers at home and abroad. With this principle in mind, I tell the present Secretary of State for Industry, who has inherited some terrifying problems, that the reasonable and attainable demand now is for a plan for viability for a modified motor cycle industry. I appeal to him to talk to the unions concerned and the NVT management without delay. I know he will also bear in mind that many firms and jobs are involved in the supply of electrical equipment and components to the motor cycle industry. Those firms will want to help in finding a viable solution.
Mr. Maurice Edelman: The hon. Gentleman used the phrase "modified motor cycle industry". Will he define exactly what he means by "modified"? Does he mean cutting down the existing numbers of men? That will not do anything to solve the unemployment problem. Does he advocate cutting down the volume of production, which would ultimately raise unit costs?
Mr. Eyre: I cannot say precisely what would be the form of a viable industry. I accept that it would be difficult to maintain the employment of the present number of men employed. But I think it is reasonable and sensible to try to save as high a proportion of the jobs as possible in these difficult circumstances.
Let the Secretary of State consult all the people involved with the greatest possible speed. The sit-in at Wolverhampton makes ominous news. A considerable act of leadership by the Minister is required to get men out of what

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could become entrenched positions from which they can only inflict further defeats upon themselves and their own interests. It would help if it were said frankly that both Governments have made mistakes. Pitched mock battles about ideology, "phoney" class warfare or bigoted attempts to pin total blame on managements or work forces will do no good to anyone involved or to the economy on which we all depend.
What is needed, following the transfer of the former Secretary of State, is for everyone to co-operate in taking a new look at the situation. The aim must be to find the most sensible way of cutting back and finding a realistic basis for the survival of an effective industry, and thus of limiting the hardship involved.
On those terms, I firmly believe that there is a future for a competitive British motor cycle industry. The industry now holds its own in about 50 per cent. of the home market for heavy motor cycles. That in itself is an important contribution to import-saving, and it could be improved upon. The very thought of having no British manufacturer of motor cycles, and of having to import police and Service motor cycles, is most disturbing.
The Boston Report indicated an expected growth of big bike sales next year of 7 per cent. in the United States, 10 per cent. in Canada and 17 per cent. in Europe. We are successful exporters, and can continue to be so and to take our share of those markets. It should be noted, to support that view, that in the United States last year Norton registered the highest percentage increase in sales over the previous year of any motor cycle importer. The American market is particularly difficult at present. It is well known that demand for heavy bikes, which are at the top end of the market, is cyclical there in economic terms as well as terms descriptive of the product. But there are signs that the market is recovering from temporary recession. We have many good friends among the dealers there, who should not be exposed to further uncertainties.
We are building up exports elsewhere in the world. For example, an order was recently received for 300 machines for Government service use in Nigeria, and similar orders have come from public authorities in the oil States. The European
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market is slow but, as forecast, it is improving—noticeably in Spain, for example. Therefore, if the industry is sensible it can make a useful contribution to our overseas earnings.
Here I wish to make a brief reference to the statement of the Secretary of State for Industry on 31st July, when he said:
"nearly £24 million of public money has been spent or committed to the motor cycle industry in the past two years."—[Official Report, 31st July 1975; Vol. 896, c. 2060.]
It should be noted that £14 million of that total was made up of export credit guarantees—£6 million to the Meriden Co-operative, and £8 million went to NVT. I stress that those sums were in the form of guarantees rather than the provision of cash. I know that the Minister would want to be fair in his presentation of the facts.
Critics of management should take into account that Norton Villiers was formed in 1966 to salvage the business of the old Norton. In the six years to 1972 it had rebuilt the business to a viable and successful level, manufacturing in Wolverhampton and exporting 90 per cent. of its production—and all without any Government assistance. For that reason, Norton Villiers was given the wider responsibility of putting right the failed BSA business in March 1973, but since then there have been almost constant distractions about which we have all heard so much. Norton Villiers has hardly had a fair chance to make a success of what is probably the last opportunity for a British motor cycle industry.
I believe that, to help in the process of survival, compensation is due to NVT for ministerial involvement in time-wasting doctrinal issues over the past two years. The delays incurred, and the production and sales lost in that period, to say nothing of management effort diverted, have cost the company dear. It is entitled to proper recompense.
Every hon. Member will feel sympathy for those who are displaced from jobs at this difficult and worsening time. In addition to redundancy pay they are entitled to every consideration for retraining, because it is essential for our future that we have confidence in our initiative to find ways to make new products with new methods. It is becoming clearer every day that this country needs to set new standards in research, investment,

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industrial relations, management, sales and service, or we shall never maintain our standard of living.
If the realistic basis that I have described, upon which I hope the Minister will operate, could be established quickly, we should at least save a significantly large number of jobs in the West Midlands and enable the industry to make a substantial contribution to the economy.
12.30 p.m.
Mr. Robert Edwards: We are grateful to the hon. Member for Birmingham, Small Heath (Mr. Eyre) for taking the initiative to enable us to have a short debate on this important issue. I congratulate him on his moderate and constructive contribution. It will enable us to follow his example and not to try to assess the blame for this critical situation.
The Wolverhampton establishment is in my constituency. I must declare two interests. Until January last, I was the National Chemical Officer of the Transport and General Workers' Union. Many of the workers, clerical staff and technicians involved in all three factories are members of that union. In an honorary capacity, I am President of the Industrial Common Ownership Movement, which has 16 establishments organised on the principle of co-operation, so I am greatly interested in the success of the Meriden co-operative. These are two interests but they are not vested interests.
I hope that the Minister will take into consideration the real social problems that will arise in the West Midlands if the motor-cycle industry is allowed to disappear as if it had never existed. That is the serious danger. It is not a question of reducing the industry but of saving it from complete collapse.
In Wolverhampton, I have never known in 20 years' membership of this House quite such indignation and disillusionment in all sections of the community as that which exists today. The chamber of commerce, the whole trade union movement, the trades council and the local authority are all unanimous. Even the Conservative councillors are supporting an appeal to the Government. There is also the sit-in of workers.
Many of these workers have never worked in any other factory. Many of
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them came out of the Army to the Wolverhampton Villiers factory. Some have worked there for 38 years. Many of them are highly skilled. This establishment has never had an industrial dispute. That is how good and balanced and harmonious has been the relationship between the unions and the management. Yet this establishment, with the best record of production per worker in the motor cycle industry, is in danger of complete collapse and closure.
The Wolverhampton factory was producing 18 motor cycles per worker a year as against 10 at Small Heath—I am not trying to put one section against another—and 14 at Meriden before it was a co-operative. There is a very small firm producing only five motor cycles a week at a cost of £1,200 each. But every one is sold as it goes out of the factory. I therefore refuse to accept the view suggested by the Department that there is no future for this industry.
When are we to call a halt to the wiping out of industry after industry in our country? Seven hundred workers in the Pilkington glassworks at St. Helens lost their jobs because the Japanese can produce television tubes at lower than the production costs in this country. St. Helens is a high unemployment area. Is its story to be repeated in the motor cycle industry and later in the motor car industry?
As an internationalist, I have never subscribed to interfering with free trade across the frontiers of the world. But there are times in our history when we have to take action to protect the employment of our people, and it is now an urgent necessity for the motor cycle industry.
No risk capital is coming into the industry from private enterprise. I hope that the hon. Member for Small Heath will forgive me if I say that the only justification for private enterprise is that it supplies risk capital. If it cannot find that risk capital, it is no longer functioning. That is why the State from time to time has to move in and supply money to maintain British industry. That is why the motor cycle industry if it is to be saved must be brought under some form of social ownership.
We have had the report of the experts. We have never had time in the House

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to debate it. We could rip that report apart chapter by chapter if we had time, but our time is very limited. But I challenge from my own experience the so-called facts which they give about Japanese production, wages and social conditions.
As chairman of Trade Union International with half a million Japanese workers affiliated to it, I know what they tell me at international meetings about the absence of social wages in Japan. It is time we had a thorough analysis of Japanese working conditions and of how they are able to produce goods at prices lower than the production costs in this country and in Europe. Unless something is done to put a limited restriction on the import of Japanese motor cycles, we cannot save our own industry. This is an urgent job that has to be done, and I believe that it can be done within the principles of GATT in order to save our own industry.
In Wolverhampton we have 5,500 unemployed, which is getting towards 7 per cent. That is higher than the national average. It has never happened before in half a century. We have 1,800 school leavers without any likelihood of work.
The Norton Villiers factory in Wolverhampton is also a very important training centre for the engineering industry. In a small but important scheme, it trains engineering apprentices for 16 different firms. In the West Midlands, firms take in one another's washing as it were. Again, not merely one factory is involved in this crisis. Altogether another 65 are involved in producing spare parts for Wolverhampton, Small Heath and Meriden. We are talking about 12,000 workers, technicians and clerical staff who will lose their jobs.
My right hon. Friend the Secretary of State has a communication from the Wolverhampton and Bilston Trades Council. In it there is a close analysis of the cost if this establishment closes down—for example, redundancy pay running to between £8 million and £10 million, unemployment benefit running into millions more, and the loss on insurance stamps, running into hundreds of thousands of pounds. There would be a loss by way of rent rebates for the local council running into thousands of pounds. If we add up those costs, we can understand
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the amount of cash required to keep this industry going. That is sensible.
I hope that we shall take another look at this problem of the motor cycle industry. I hope that there will be a holding arrangement and close discussion with the trade unions and management concerned, who have constructive ideas, which I do not have enough time to elaborate in this short debate.
12.41 p.m.
Mr. Nick Budgen: I agree with the hon. Member for Wolverhampton, South-East (Mr. Edwards) in his expressions of sympathy towards our constituents, who feel the deepest sense of unease and anxiety at what is happening in their industry.
In a period of deepening recession and rising unemployment, everyone is anxious to hold on to his job. It is difficult to persuade anyone that there is no future in subsidised employment. It is difficult to explain that it is only by the security of profit from private industry that people can hope to have long-term jobs. Few of us in any walk of life, whether trade unionists or industrialists, can be totally consistent when we find that our jobs are under attack. I regret that many people who feel themselves under attack believe that Government support—which is the polite, modern way of talking about nationalisation—is an answer to their problems.
The anxieties and resentment of many of our constituents arise as a result of the feeling that they have been conned by successive Governments. So often have they been told that interference by politicians and support by the taxpayers' money will be the answer to their problems that they now believe it. Now, the rug has been whipped from under their feet by the Government who they believed were least capable of doing that.
However, there is great hope for these people. They are men of great intelligence, high skills, ingenuity and determination. They love their jobs and have a capacity for this highly detailed and skilled work.
As long as Britain has any wealth or standing in the industrial world there will be people who want to employ such men. However, no one should tell them that they can expect the same jobs in the same

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places, doing the same type of work, for the remainder of their lives. In the highly uncertain situation in which this country finds itself, we can only extend from this House our deepest sympathy to them in their moment of great anxiety.
I disagree with the argument that there is no risk capital available. In recent weeks we have seen risk capital going into gilts in a large way and the gambling industry. Risk capital is available, but it is placed to earn the best profit. As long as profit remains a dirty word in this country risk capital will not be attracted into the engineering industry in the West Midlands, which we hope will thrive in the future. The Government must understand that profit decides where risk capital will go. I do not refer to gross profit. Net profit after tax decides where investment will go. When the Government recognise that fact they will be doing more to help British industry than giving short-term aid to our many ailing industries.
Many hon. Members will agree with me in regreting that the hon. Member for Wolverhampton, North-East (Mrs. Short) is not with us this afternoon. She has been extremely active in attacking her own Government for their failure to nationalise this industry. On 5th August she was reported in the Financial Times as saying that she would support a sit-in at NVT's Wolverhampton factory as long as the workers did nothing against the law.
We do not need to be lawyers to understand that a sit-in is unlawful. It is inconsistent to pretend that a sit-in can be anything other than putting a pistol at the Government's head by unlawful methods. It is regrettable that the hon. Lady is not here this afternoon. This is the place where she could argue her case.
Mr. Robert Edwards: I am sure the hon. Gentleman realises that the management encouraged this sit-in and is, therefore, violating the law.
Mr. Budgen: The management made some equivocal comments on the sit-in. I greatly regret that. It must be said firmly that the plant and premises do not belong to the management. They belong to the shareholders. As long as we want shareholders to risk their capital, at the least they must be satisfied that the
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management is carryling out its proper duties under the Companies Act in safeguarding the legal rights of shareholders in the plant and premises.
Mr. Julius Silverman: The management is prepared to tolerate, if not to encourage, the sit-in. There can be nothing illegal about that
Mr. Budgen: I hoped that I had made the point clear. The management do not own the assets. The shareholders own the assets. The management has no right to tolerate or encourage a sit-in.
I attempted to discuss the way in which the hon. Member for Wolverhampton. North-East had attempted to encourage the sit-in. I regret the hon. Lady's action. She has a legitimate rôle to play in the House of Commons in trying to persuade the Government to nationalise this industry.
However, I make it clear that I do not agree with nationalisation. I do not agree with it in Wolverhampton any more than in Timbuctoo. But the hon. Lady has a constitutional right to argue her case in this Chamber. It is regrettable that she has encouraged this sit-in, which is not far off mob rule, rather than argue her case in a legal and constitutional manner. I hope that those who may have been encouraged in this sit-in, either by the management or by the hon. Lady, will think again, as I believe that many of them are supporters of the Government. I want this Government to be defeated as quickly as possible in a legal and constitutional manner. I do not wish to see them defeated as a result of their having given in to a sit-in, which I regard as totally unlawful.
As the two previous administrations were partly defeated as a result of attacks by the trade union movement upon them, if the Government were to give in to a sit-in at Wolverhampton the country as a whole would be tottering nearer to being ungovernable. Such a defeat of the Labour Government by unlawful action would diminish not only the Labour Government but all Governments.
A successful sit-in could not be to the advantage of the men concerned. I assume that above all else the men are anxious that the plant should remain a viable organisation producing motor cycles for the NVT organisation or for

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some other organisation which may buy the shares, plant and premises. I hope that that will happen, but let there be no doubt that if there is a prolonged sit-in at these premises it will produce a great deal of delay and the result will be that many organisations which might be interested in the plant will be put off.
It will also mean that Wolverhampton may do to Small Heath what Meriden has done to Wolverhampton. There can be no doubt that had there been no sit-in at Meriden, the Meriden plant and premises would have been sold. Indeed, it can be seen from page 16 of Mr. Poore's Blue Book that at the time the Meriden site was first offered there were 32 inquiries for it. Had there been no sit-in, that site could have been sold at a time of high industrial activity and the money could have been used to create a viable motor cycle industry in Birmingham and Wolverhampton.
I understand the deep anxiety of the people of Wolverhampton, but do they want to do to Birmingham what Meriden did to them, since it was unlawful action at Meriden which created the present tragic situation in the motor cycle industry?
Mr. Les Huckfield: As one of the negotiators on behalf of the Meriden Co-operative, may I ask the hon. Gentleman, as Triumph has already sold Meriden to the Co-operative, how he can still think that the sit-in at Meriden has some effect on what NVT is doing? Meriden is no longer part of NVT.
Mr. Budgen: The sit-in at Meriden delayed the sale for 18 months. It tied up plant and equipment which could have been sold. It lost throughout, it lost an enormous amount of money in bank charges and, above all, it missed the market. The plant and the premises could have been sold at a time when shares were high, when the value of the industrial plant and premises was high and and the money could have been reinvested. Everyone now believes that had that money been invested in the Wolverhampton and Birmingham factories, the Wolverhampton and Birmingham factories might now be viable. I do not say that they would be viable, because I speak here as a politician and do not pretend to make a commercial
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judgment, but I do say that had there been no sit-in at Meriden that cash would have been available for investment in the two remaining factories. That is the moral argument.
There is also a legal argument concerned with the behaviour of components suppliers throughout the whole of industry. There are about 60 firms which are suppliers of components and which are owed about £2 million by the Wolverhampton factory. Why do they allow a factory which they know to be in difficulty to create a debt of £2 million? Those components suppliers allow such a debt to arise because they know that under the law of bankruptcy, if the worst comes to the worst, the company to which they have supplied those components can be made bankrupt, and the plant and premises can be sold and the proceeds of the sale will in part go to those who have supplied components.
If a sit-in at Wolverhampton succeeds, those component suppliers throughout Wolverhampton and the West Midlands will have to go without their £2 million. Therefore, there will be a further and totally unjust exaggeration of the unemployment which is about to occur at Wolverhampton. It will also mean that in future when any supplier of components to any individual factory which is believed to be in financial trouble asks himself whether he should continue to supply that factory and run the risk of having to take this chance under the bankruptcy law, he will refuse to do so, because if the company went into liquidation he could be sure that there would be a sit-in encouraged by a Labour Member of Parliament who could not bother to come to the House of Commons to argue his or her case in a constitutional manner. If that sort of mob rule is allowed to spread throughout the country, there will be total dislocation of all commercial contracts.
I hope that the message that goes out from this Chamber this afternoon will be one of deep sympathy and of clear understanding of the anxieties which are being felt in Wolverhampton and Small Heath. I hope also that when there has been a proper period for consideration everyone in Wolverhampton and Small Heath will show that they depend for their very being upon the independence and the integrity which is part of the West

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Midlands philosophy of life. Let them remember their distrust of the South-East. Let them remember their sturdy independence, their belief that Birmingham and the West Midlands are best, and let them forget the transitory phase in which they have come to trust politicians. It is not possible to trust politicians of any hue. Their only trust should be in profit, the profit which comes from properly run private business.
Several Hon. Members rose—
Mr. Deputy Speaker (Sir Myer Galpern): Order. I did not expect to have to make an appeal from the Chair for brevity in speeches, but it looks as though I shall have to do so now. If all hon. Members who wish to take part in the debate are to have a chance to speak we shall have to have 10-minute speeches, because this debate must be finished at 2.30 p.m.
12.58 p.m.
Mr. Les Huckfield: The House can see that the hon. Member for Wolverhampton, South-West (Mr. Budgen) has learned at the feet of his right hon. predecessor. I only hope that the Wolverhampton Express and Star reports faithfully and accurately every word he says.
I have two interests to declare. I am a member of the Transport and General Workers' Union and I was one of the original co-architects of the scheme to set up the Meriden co-operative. I was directly involved in the initial negotiations with Mr. Poore.
It would be ill-fitting for me to use my position of privilege in the House to make personal attacks on people outside the House. It would, however, be fitting for me to give the House some of the facts of those early negotiations which have not often been given either to the House or to the outside world.
In doing so I wish to stress to my right hon. Friend the Secretary of State for Industry the need in the immediate future for the establishment of a holding position for this industry. That is what we in the Midlands want. We do not want the redundancies to go ahead. We want the immediate establishment of a holding position, and I wish to suggest later one or two ways in which that might
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be done. I hope that my right hon. Friend will re-examine the ways in which, apart from liquidation, apart from receivership and even perhaps apart from the immediate future regarding nationalisation, we can establish some sort of holding operation so that Mr. Poore and the Norton Villiers Triumph management is not enabled to push through its plans for redundancies.
The hon. Member for Wolverhampton, South-West is right when he says that the key factor in this situation is the loss of the American market. I am glad that the hon. Gentleman referred to that, and I am glad that I managed to prod him into saying so. I shall attempt to explain why the American market was lost in the 1974 and 1975 peak seasons. I do not blame my right hon. Friend for losing the American market. He has been put in a very difficult position. I sympathise with him for the extremely difficult and precarious balance of forces over which he has had to adjudicate and on the difficult decision that he has had to take.
I do not blame the setting up of the Meriden Co-operative for what has now come to pass. All I can say to the hon. Member for Wolverhampton, South-West is that as one who was involved in the negotiations, and as one who had to negotiate with Mr. Poore, I believe that I am a tiny bit more qualified than many to pronounce on some of the initial factors in the negotiations and on some of the events which may have come to pass.
Mr. Poore and the Norton Villiers Triumph management were hailed by the quality Press and the media as the people to save the motor cycle industry. I well remember the plaudits and all the applause in the Financial Times, The Times and all the other so-called establishment newspapers. They said that Mr. Poore was the man to do the job. The first thing the NVT management did was to turn its back on the detailed Cooper Brothers study, which recommended that production at Small Heath should cease forthwith and that production should be concentrated forthwith at Meriden. Lord Shawcross, when Chairman of BSA temporarily, had even gone to the extent of sacking 3,000 workers at Small Heath to set the transfer to Meriden in progress. Mr. Poore and the NVT management

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totally turned their backs on that recommendation and on everything that had been set in train.
One of the preconditions upon which Mr. Poore accepted the chairmanship of NVT, with the Conservative Government's backing, was that Meriden had to close. When the man who is supposed to be the saviour of the British motor cycle industry turns his back on a very detailed consultants' study and recommendation, I believe that some searching questions should be asked. At the time of closure Meriden had more than 1,500 orders for Bonneville and Meriden motor cycles from all parts of the world, excluding America. When I returned from the United States after completing my market research on behalf of the co-operative I brought back orders for a further 5,000 Meriden-produced motor cycles, yet Mr. Poore was still determined to close down the factory. He was determined to go ahead on that course with an order book containing orders from all round the world.
It is worth stressing to the House what Mr. Poore used to say to us in the early days of negotiations. He used to point out that it was vital to get the American market supplied, and particularly for the spring 1974 peak buying season. In this House I negotiated with Mr. Poore, on behalf of the co-operative, an agreement which would have enabled Meriden to keep going, which would have reduced labour loading and waiting time-rates and which would have given Mr. Poore a great deal of flexibility. Indeed, the agreement included the conditions which he had put forward and which a mass meeting at Meriden had agreed.
The agreement was made in the interests of keeping the Meriden factory going to supply the spring 1974 peak buying season in the United States. Mr. Poore wanted to keep the American market supplied, but when I had been to the United States and I telephoned back I found that Mr. Poore had gone back on the agreement in that he refused to sign it.
What I found in the United States was interesting. It became clear that Mr. Poore and Norton Villiers Triumph International had totally put in jeopardy the United States distributors' network. Not only was it proposed to shift the headquarters of the network from the East
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Coast to the West Coast, despite the fact that the majority of Triumph dealers were on the East Coast, but Mr. Poore was at that time talking about Small Heath supplying approximately 120,000 Tridents. At least, that was the kind of production which was supposed to emanate from Small Heath. It was intended that Small Heath should produce 120,000 3-cylinder motor cycles per year. The only trouble was that I did not find one dealer in the United States, even at that time, who wanted many Trident motor cycles.
I have the order sheets which I brought back from the dealers in the United States. In the autumn of 1973 all those dealers told me that they did not want most of the motor cycles which Mr. Poore proposed to make. It is no wonder that bikes are stockpiled in the United States and that Mr. Poore cannot sell the product from Small Heath and Wolverhampton. The United States dealers told me that they wanted Bonneville twin-cylinder machines and Tigers—namely, Meriden-produced bikes. Indeed, they were prepared to back the co-operative with their own money to ensure that they received supplies of the twin-cylinder machines that Meriden was supposed to make.
When I returned from the United States I told Mr. Christopher Chataway, the Minister then responsible, everything that I had been told. Dealers had flown in from all parts of the United States to talk to me, including dealers from the North-West, Washington State, California, Florida and Boston. I talked to representative dealers along both coastlines. It was clear that they were not really interested in Mr. Poore's 3-cylinder motor bikes. They wanted the famous "Meriden Twin". To say that Mr. Christopher Chataway was unmoved by all this is to pay him a compliment. The fact is that he did not want to know. I told him what I had found, and to reinforce what I said one of the dealers, Mr. Bob Myers, came over to see Mr. Chataway, only to find that he would not even see him. It was all I could do to force upon Mr. Chataway a 10-minute interview with Mr. Myers. During that interview Mr. Myers pointed out that the bikes that Mr. Poore had in mind would not sell in the United States. To reinforce the point, there was a flood

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of cables from United States dealers to the effect that they did not agree with Mr. Poore's plans because they could not sell 3-cylinder bikes.
If the House or my right hon. Friend has any kind of doubt about what I am saying, let me point out that all the orders, all the cables and the notes of the meetings are still in the files. Of course, I appreciate that my right hon. Friend cannot study the papers of a previous administration. As I say, Mr. Christopher Chataway was totally unmoved.
It is also interesting to note that it was Mr. Chataway who presided at the meeting of 11th November 1973 and who was responsible for the original draft of the setting up of the Meriden co-operative. In other words, it was under Mr. Chataway's own auspices that the blessing was given for the setting up of the co-operative. A Tory administration accepted in principle the need for a three-factory motor cycle industry. The only trouble was that although the agreement had been initially drawn up on 11th November, it was not until the eve of the February election of 1974 that Mr. Poore told us that it would not proceed. As a result of his refusal to sign the early agreement and the agreement of 11th November, the 1974 peak selling season in the United States was totally lost.
I could go on at length, but I wish to give other speakers a chance to have their say. I could certainly go on to elaborate how the procrastination of Mr. Poore and the NVT management were also responsible for the loss of the 1975 market. Why was it that in principle, in the middle of 1974, we had an agreement to sell the Meriden co-operative but it was not signed until the beginning of this year? All through last year, however, Mr. Poore said that we had to keep the 1975 American market. If Mr. Poore was so keen on keeping the market in the United States, why did he delay signing an agreement from the middle of July 1974 until the beginning of this year? If we want to examine the reason why NVT lost the 1974 and 1975 American markets, we need to look no further than the present management of NVT.
Mr. Eyre: Was it not a fact that the co-operative was not in a position to produce
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the money in completing the transaction of purchasing the property? Was not that the cause of the delay?
Mr. Huckfield: Again I am at some advantage because I was involved in the negotiations. The co-operative had money from various sources from the beginning of 1974. Therefore, the money at that time was not the principal issue in the negotiations.
The Boston Report records what I regard as a total condemnation of management in British industry and of the investment strategy of NVT. It is a question not only of craftsmanship and pride at Meriden but also of the situation at Small Heath and at Wolverhampton. It is not an industry that produces 60 cars an hour but it is an industry in which men and boys—indeed, fathers and sons—have worked in the same factory ever since they left school. That is the situation in Wolverhampton and Meriden and that is where the craftsmanship and pride resides.
I know from my contacts with the trade union movement that the men are willing to co-operate to see what can be done to save this industry. Shortly we shall see London Metropolitan Police and Army dispatch riders on Yamaha and Honda machines. The prospect sticks in my throat, and I am sure it will stick in the throats of workers throughout the country.
We have still a chance to save this concern, but as a precondition of so doing I urge the Government to evacuate the present management as quickly as possible, having done that, why not put the matter in the hands of Lord Ryder, the Government's industrial adviser? Let him get together with the unions to see what can be done. We need not talk about sums of £50 million or of mass injection of capital immediately, but let us examine the industry to see what we can save, otherwise it will involve not only the West Midlands or the people in the factories but the whole country, since we shall lose yet another industry to the Japanese.
1.16 p.m.
Mr. Hal Miller: I should like to pay tribute to the right hon. Gentleman the Secretary of State for Industry for being with us this afternoon and for the courage and generosity with which he handled his difficult

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statement last week and indeed for the manner in which he defended his right hon. Friend.
We are confronting a difficult situation and I should like to pay tribute to the hon. Gentleman the Member for Wolverhampton, South-East (Mr. Edwards) and my hon. Friend the Member for Birmingham, Hall Green (Mr. Eyre) whose approach was forward-looking and helpful. Therefore, it was regrettable that that trend was reversed in more recent contributions.
The situation is that the Conservative Government recognised that something needed to be done about the motor-cycle industry and took steps to give it aid and to assist in its reconstruction. I do not wish to weary the House with past history or with quotations from Hansard. It was made plain at that time to the Government that there could be a two-factory system at a cost of so much and a three-factory system for so much more. That was quite clearly put in the report at the time.
The position that we now face is a three-factory industry.
Mr. Les Huckfield: No.
Mr. Miller: It is no good the hon. Gentleman saying that we have not a three-factory system. The hon. Gentleman in his speech cited Meriden, Wolverhampton and Small Heath. They exist, although they may not be in the same ownership. However, I was not dealing with that point. I was suggesting that there are three existing factories and that there is not enough money to make the thing work.
Mr. Les Huckfield: I know that the hon. Gentleman has not been in the House for very long and therefore may I try to put him right on the present situation. Norton Villiers Triumph has sold the Meriden plant to the co-operative and the co-operative is no longer part of NVT, except for marketing purposes.
Mr. Miller: I have never attempted to discuss the position of the co-operative. I merely stated that there are three factories. I was not dealing with who owned them. I accept that the co-operative with the aid of public funds has paid the NVT for the Meriden factory. Since the hon. Gentleman has pressed me on this matter,
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I should like to know why it was, if as the hon. Gentleman suggested there was money available to the co-operative, that the public was asked to provide money last summer.
We have three factories at present with inadequate finance and there is an inadequate volume of sales and inadequate export credit cover. I hope that the Secretary of State for Industry in his reply will explain how, at this critical juncture, his right hon. Friend the Secretary of State for Trade allowed £4 million of export credit guarantee cover to be withdrawn as recently as last month, which seriously prejudiced the amount of working capital available to NVT.
We have before us the Boston Report. There are not many hon. Members who can absorb such a report in a week and base a convincing judgment on it. This is one of the difficulties which hon. Members face in seeking to deal with reports on industrial problems. This was also the case over the Ryder Report on British Leyland. We are presented with those reports without adequate opportunity for a critical examination. Although there is a need for speed, there is also a need for some procedure to assess such reports before we debate them. This case provides a microcosm of a great number of industrial problems which now confront the nation. There are certainly lessons to be learned here for the British Leyland situation, which is still by no means clear.
I do not think that the people who have been making inquiries in the industry, and particularly Members representing constituencies in the area, accept all the findings of the Boston Report or the basis of its comparisons. It is not satisfactorily established that we are comparing apples with apples. The report refers to the levels of production and productivity in Japan. But the Japanese are making a different machine; they have a different set-up. Several hon. Members have spoken as if we are presiding over the death throes of the motor cycle industry in this country. I do not accept that the industry is finished. This industry has 50 per cent. of the home market for the super bikes and we have a basis on which we can build.
However, we need a clear statement from the Government, not only on their policy regarding finance, but about where

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they propose to take us from here. The Minister has said that £24 million or £25 million of public money has been made available to the industry by way of credit guarantee as well as grant. Is the right hon. Gentleman implying that he is prepared to let all this go? His answer yesterday to the Written Question which I tabled to him was far from clear. He simply referred to the Boston Report and his statement. But people want to know, and they have a right to know, what is to happen to the public money which has been put in the industry. Is no attempt to be made to safeguard it, quite apart from the question of the loss of the jobs and skills to which the hon. Member for Wolverhampton, South-East (Mr. Edwards) paid glowing tribute?
We should not jump to rapid conclusions as we have been in the habit of doing on the basis of reports such as the Boston Report and Ryder Report. Let us have from the Government a statement of the philosophy which they are trying to develop for the future industrial strategy of this country. Statements in support of the Industry Bill such as those made by the hon. Member for Walton (Mr. Heffer) are not sufficient foundation on which to build that strategy, nor has it been satisfactorily explained to the public or to the work force.
I turn to the question of the workers, particularly those at the Small Heath plant. The hon. Member for Nuneaton said that under the previous BSA management a consultants' report suggested that Small Heath should be closed and that about 3,000 sackings were made at Small Heath. The hon. Gentleman will be aware of the extreme bitterness at Small Heath about the total lack of co-operation or response at that time from Meriden. He will also be aware that correspondence appeared in The Times recently on the subject of the consultants' report and the recommendation by a previous director which was answered by the present management.
However, the Government—and I am not indulging in a personal witch-hunt—decided, largely for political reasons, to support the Meriden co-operative against the majority advice of the advisory board. It is no good the hon. Member for Nuneaton denying that, as he attempted
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to do on a television programme with me the other day. The Secretary of State for Trade made it plain in the Department's Press notice for 29th July 1974 that that step was taken. It was a political decision of the sort which we discussed yesterday in connection with Court Line.
It may be thought that there is not room for maladministration in such a decision, but having established the cooperative with public money, insufficient finance was made available to support the other two factories. The only conclusion that one can draw from that is that either private risk capital would have to be made available, which the hon. Member for Wolverhampton, South-East has made plain could not be made available, or there would have to be a reduced level of activity at the other two factories unless additional support was forthcoming.
It is easy to castigate management. It is just as easy for me to draw attention to the behaviour of the work force at Meriden prior to the sit-in. Mr. Johnson admitted that the record of industrial disputes at Meriden had been very damaging and the workers had not understood the consequences and damage which they would cause.
Mr. Les Huckfield: I am sorry to keep intervening, but the hon. Gentleman will appreciate that I have spent about two years dealing with this subject. Mr. Poore was originally given almost £5 million by the then Minister, Mr. Christopher Chataway, for the so-called restructuring of the motor cycle industry. He received a further almost £5 million from the sale of the Meriden plant to the co-operative. Therefore, in all, Mr. Poore has received almost £10 million. What has he done with it?
Mr. Miller: It was made plain originally that the three-factory solution—I said this in the House and it was not contradicted by the hon. Member for Nuneaton or by the hon. Member for Walton, who had the courtesy to reply to the debate—required a public investment of £30 million to £40 million.
Having set up the third factory, and having failed to provide adequate finance for a three-factory solution, the then Secretary of State and the Government—

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I do not say that it was a personal decision; it was a Government decision and was debated in the House on that basis—could not get the workers, particularly at Small Heath, to sign the agreements with the Meriden co-operative because they were concerned about their future and jobs. Pressures were brought to bear on the company and on the work force to sign the agreements. The research development grant was specifically and admittedly withheld for that purpose.
My constituents were not satisfied and were given assurances in writing and orally, notably by the Confederation of Shipbuilding and Engineering Unions, to which my hon. Friend the Member for Birmingham, Hall Green (Mr. Eyre) has referred. There is a clear possibility of people sustaining injustice as a result of maladministration by a Government Department, and, therefore, at the request of my constituents, I have referred the matter to the Ombudsman for a determination.
Apart from the future of the country's industrial policy, to which I hope the right hon. Gentleman will be responding, we have here also to decide what is to be done about the present situation and those who have suffered loss in it. Therefore, I hope that the Secretary of State will be able to shed some light on this aspect, which concerns solely the motor cycle situation. But, apart from the broader questions of industrial policy, this unhappy situation in the motor cycle industry has a great deal to offer us by way of example when we consider the motor car industry and other industries as a whole.
1.30 p.m.
Mr, John Lee: I am grateful for the opportunity to take part in this debate. Small Heath is, in constituency terms, on my doorstep, I am chairman of the West Midlands group of Labour Members, several of whom are intimately concerned with this matter, and like my hon. Friend the Member for Nuneaton (Mr. Huckfield) I am a member of the Transport and General Workers' Union—indeed, a sponsored Member—so I have a threefold involvement in this matter.
By way of an opening remark, I wish to refer to the hon. Member for Birmingham, Hall Green (Mr. Eyre). In this
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House, we tend to be either elaborately polite or excessively rude to one another. Therefore, when I say that I want to express my warm appreciation of the fact that he raised this matter and of the manner in which he raised it, I mean that with utter sincerity. We have had debates on industrial matters in the past few weeks which have been noticeable for their vituperation. The hon. Gentleman's speech was notable for its moderation, good humour and positive approach. All of us, whatever our divisions politically, are extremely grateful to him for his approach to this matter.
We are also grateful to the hon. Gentleman for his brevity. If I seem to be sounding off a little, it is because I was one of the victims during the debate on the Consolidated Fund Bill recently when Scottish Members suffered from verbal diarrhoea for six hours. I hasten to add that I do not make that charge against all Scottish Members on the Opposition benches. Indeed, one of my hon. Friends was a chief offender.
We face a very sombre situation. Whatever the Minister does, he is bound to be judged wrong. If he proceeds with this policy, the axe falls on the jobs of quite a large number of people, not only those obviously and immediately affected in Wolverhampton, but, because of the intimate interrelation of component manufacturers and their employees, upon others as well. It will have even wider repercussions because of the general vulnerability of the West Midlands to unemployment.
If my right hon. Friend tries to reverse this decision, I suppose that he will be attacked by the Poujadist element in this House for throwing more Government money on to the amounts already supplied for a variety of ventures.
As for the unemployment situation in the West Midlands, perhaps I might remind the House of its vulnerability. I have the relevant figures for March. Undoubtedly they are out of date to a considerable extent. But at any rate in March of this year in the West Midlands metropolitan county there was a total of male unemployment of 53,000. In the processing, making, repairing and related metal trades, there were 7,700 unemployed as against 2,000 odd vacancies. Against the total of 53, 000 men registered as being unemployed, there

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were unfilled vacancies of just over 6,000. That puts into perspective the acute situation facing us.
The West Midlands is vulnerable in another way. My right hon. Friend knows that I am not castigating him, because we discussed the matter only the other day. But the West Midlands is peculiarly vulnerable because we are dependent on a very few large firms such as Leyland, Alfred Herbert and so forth, and on large numbers of very small firms and, paradoxically, at the moment they both suffer from acute liquidity problems.
The bigger firms are extremely vulnerable to the vagaries of foreign markets and to the intrusion of imports. The small companies, for a variety of reasons, about some of which there is a great deal of controversy between the two sides of the House, suffer from acute liquidity problems. Exactly how it comes about matters not, but there is great danger.
The hon. Member for Wolverhampton, South-West (Mr. Budgen) made a good Poujadist speech. However, it is all very well relying upon market forces, but what happens in the case of small productive firms, as I have seen in my constituency in relation to other matters, is that they fold up, and if they are replaced at all, it is often by non-productive enterprises which are not oriented to exports. If the Government apply the principle of commercial viability, at any rate in a short and medium-term context, at the end of the day the grim logic is that there will be very little British industry left.
One Government after another have recognised this. Whatever the monetarists and financial purists on the Opposition benches may say, there were massive infusions of money into the aircraft industry throughout the 1950s. At the behest of Lord Duncan-Sandys, whom no one will accuse of being a Trotskyist, we had the Concorde saga, which was much more disputable in terms of merit and which is still open-ended. That has absorbed funds on a far larger scale than anything that could possibly be in contemplation in the case of the motor cycle industry.
But the significant matter is the counter-argument that is advanced. How do we know that we can ever make a
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commercially viable industry? We do not know. The Minister does not know and will not know for a long time whether at the end of the day, the enormous sums of money spent on the Concorde will prove to have been a commercially justifiable endeavour. I have the gravest doubts about it.
During one of our debates on Leyland, my hon. Friend the Member for Nuneaton said that the infusion of the very large sum involved—although compared to the Concorde it was modest—had been made on the basis of commercial judgments and of suppositions which to say the least were questionable. Certainly they are totally improvable, and they are not likely to be proved one way or the other for a number of years to come.
If we pursue the logic of saying that if we cannot see a segment of British industry being viable within a comparatively short time we shall withdraw financial assistance from it and face the logic of its collapse, which is almost certain to happen, one British industry after another will be a casualty, and we shall end up as a sort of ruralised peripheral fringe territory of the Common Market.
I shall not tempt myself to say anything about that. When I consider Members of the Scottish National Party, however much I may disagree with their arguments, I sympathise with the exasperation of the electors who have sent them here. We could find ourselves politically in a similar position if that situation were allowed to prevail.
My right hon. Friend knows perfectly well that, compared with the sums of money that the Government have been prepared to provide for other industries on the basis of commercial judgments which are far from being proved or provable, the sum necessary in this case would be mere peanuts. To add £50 million to the £24 million already spent is nothing compared with what has been committed to Leyland.
Hon. Members who have greater knowledge than I about this matter, such as the hon. Member for Bromsgrove and Redditch (Mr. Miller), who took a reasonable line, although I disagree with some of the points he made, and my hon. Friend the Member for Nuneaton, were referring, in the context of the Boston

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Report, to our own domestic market or the North American market.
However, we must look further ahead to the pent up demand for exports generally which must arise in the underdeveloped world starting with the oil enriched Third World nations, but remembering that there will be others to follow. The under-developed countries will not remain under-developed for ever. Many parts of the under-developed world are already breaking through from a position of being hapless and poverty stricken recipients of open-ended economic aid which seems to have no impact. If we look further ahead than the writers of the Boston Report, who have been myopic in their approach, surely there must be a demand for motor cycles, and, indeed, for many goods in time to come.
At a time when oil prices will increase—there is no doubt that the OPEC countries will be forcing them up still further—one knock-on effect will be that people who have large cars will be obliged to have smaller cars, and many of the people who would normally have smaller cars will be induced, because of comparatively low petrol consumption, to move to motor cycles. That might give a further boost to the market.
My principal quarrel with my right hon. Friend and the Cabinet arises from the fact that theirs is a short-term approach to the situation. In the light of the willingness and boldness of my right hon. Friend's predecessor and the Cabinet—a boldness which I am prepared to justify—to provide large sums of money to all areas of the country to sustain and modernise British industry, it is wholly inconsistent to cavil at the expenditure of what I believe, in the context of the sums of money with which modern economies are concerned, is a modest sum. I beg my right hon. Friend to reconsider the situation.
1.43 p.m.
Mr. Nicholas Ridley: I should like to refer to the remarks made by the hon. Member for Birmingham, Handsworth (Mr. Lee) and, indeed, to much that has been said in this valuable debate. However, I should like first to make what I believe is a procedural point but which is of wider application to all situations of industrial distress and failure and typically to the
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motor cycle industry. I believe that Mr. Christopher Chataway was wrong to put money into this industry in the way he did. The present Government were also wrong to follow that money with more money in the fashion they did. These remarks have nothing to do with the merits or otherwise of Government money but are concerned with the way that it should be provided.
In every situation where there has been a Government rescue by simply giving money to an existing company, there have been appalling problems for all concerned. The hon. Member for Nuneaton (Mr. Huckfield) said that nothing in this method causes the managers to be brought to book or provides the opportunity for bad managers to be removed. In my humble opinion, the management of the motor cycle industry has been shown to be wildly defective and should have been changed a long time ago. However, that cannot be done simply by providing money to an existing company.
The second point concerns the creditors. In every instance in history—Rolls-Royce, Beagle, UCS and NVT—there has been a serious problem for those who have extended credit for supplying the industry or firm concerned. We have almost reached the stage where we can coin the word "Bennkruptcy" to deal with the situation which was implicit in yesterday's debate on Court Line. If the Government seek to put money into a company and have to state an opinion about their future liability, that opinion will either lead or mislead would-be suppliers of extended credit. On every occasion on which it has been done the Minister has had to answer an awkward, uneasy and vituperative situation just as we saw yesterday. Of course, the Government are in no position to take the responsibility off the directors' shoulders and say whether in their opinion viability is achieved or not. Governments cannot take over that responsibility simply by putting money in. Therefore, the answer is that they should not have done it that way.
The disillusionment, distress and hardship that have been caused to all workers in the motor cycle industry as a result of what has been done has been a common theme in all speeches in the debate. I add my own sympathy to what has already

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been expressed. This has happened because the industry has been misled in the same way as the creditors have been misled by the Government seeking to assume the responsibility of directors under the Companies Act for saying what the future will be. The Government cannot know and in no sense have the legal responsibility for an industry in the private sector.
I should like to refer to shareholders. If there is any section of people who should lose all in industrial failure, it is the shareholders. By putting money into industry in the way we have done in this case, it is often the shareholder who is partially bailed out. This, of course, is quite wrong. The answer is that we should always use the Official Receiver, because he is in a position to guard against all these problems. Official receivership is designed to provide a period of time to see what the assets are worth, what the future of each is and whether the people will take them on, to give the creditors such of their due as is available and to take away all the value of the shares unless there is some residual value after the creditors have been paid out.
We have become so frightened of the words "Official Receiver" that we are failing to use this very sensible procedure. The hon. Member for Nuneaton dismissed this proposition out of hand as if it were some awful thing that caused everybody employed to be immediately put on the streets. That is not official receivership. That is compulsory liquidation, which is not what I am advocating. It is now firmly in the minds of most people that the sensible mechanism of using the Official Receiver simply means putting everybody out of a job immediately. In fact, it means the reverse.
I go further and make a constructive suggestion. This position will arise again with other companies. Let the Government study the whole matter of official receivership and see whether there are any defects in it. I think that there might be defects even in keeping an Official Receiver going with public money to give more time to allow thought to take place about the future of an industry. Hon. Members may be able to suggest other defects. It may be necessary slightly to adapt procedure to provide the vehicle
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necessary to deal with such situations, albeit with the injection of public money if that were thought right. Even then, if we are going back to using the concept of the Official Receiver, as suitably modified, it is essential that steps be taken to secure the accusations of bad faith and so on which have been hurled across the Floor of the House will no longer have cause to arise.
My second point relates to the motor cycle industry. Grave damage has been done to it by the amateur way in which, first, Christopher Chataway and, secondly, the present Secretary of State for Energy put money into the industry without bothering to discover what the future viability of the industry was.
I have read the Boston Report with the greatest of interest. I wonder whether every hon. Member who has spoken in this debate has read the report. It contains one of the clearest, most explicit and most damning condemnations of British industry, albeit a small sector of it, that can be read. The hon. Member for Wolverhampton, South-East (Mr. Edwards) dismissed it too cavalierly and in a way which was irresponsible, because sooner or later we shall have to read the Boston Reports that come out and we shall have to learn the lessons from them.
The Boston Report says that the investment decisions have been totally wrong, that market research has been fatally absent, that design has been deficient, that productivity is lousy and that the proper use of machinery and other modern industrial techniques is absent.
All that is borne out by hon. Members who talk about craftsmanship in motor cycles. However, we do not want craftsmanship. We want modern, automated, efficient industry. The motor industry has become a craft. However, productivity in Japan is four or five times greater than it is here. This is the reason for the failure.
Mr. Budgen: I wonder whether on consideration my hon. Friend wants to make remarks such as "We do not want craftsmanship". It would seem that by making such remarks he is making an industrial judgment and a commercial judgment, whereas I should have thought that his philosophy was that we in the House should not be making such judgments

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but should leave it to the operation of the market.
Mr. Ridley: I shall come to that. I agree in part with what my hon. Friend says. This is where I come to what the hon. Member for Handsworth said. We have to do a motor cycle industry rescue which will in the end be viable if we are to do it at all. There may be room for hand-made, tailor-built cycles in the world market. I do not know enough about it. I do not know what the market is. The hon. Member for Nuneaton knows a great deal about it. He talked with apparent great knowledge of what the potential for motor cycles has been and is. I would never dream of assuming that I knew what was right and what was wrong for this industry.
The essential element for success is that a team of people come together who say "We will set up the designs, the market research, the productivity and the use of machines through the trade unions co-operating. We will set up a show which will beat the Japanese at their own game and sell profitably, cheaper than them." Without that, there is no future for the motor cycle industry.
To test whether that exists, it is necessary to go to a merchant bank or to a stockbroker who will issue equity or rights to raise the capital. It is this test of the use of capital which determines whether private money is available. It has been said in this debate that risk capital was not forthcoming. Of course it was not, because it was a bad risk. It has been proved to be the worst risk that one could have taken. Anyone who put his money in would have lost it. That is why risk capital was not forthcoming.
However, risk capital can be forthcoming if the project which is put up is sound. The danger is that every time the Government, whether they be Tory or Labour, prove to be a soft touch, they provide a way round the essential discipline as to whether risk capital should properly be employed and whether the management and the workers in the concern can be trusted to use it properly.
Mr. Lee: We all agree with what the hon. Member is saying about the need for modernisation, modern investment and proper organisation. What I do not understand
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—I should be grateful if he would explain this—is why he is so confident that a collection of bankers or stockbrokers are capable of making the technical judgments that are necessary to be followed by putting their money where their mouths are whereas, according to the hon. Gentleman, it seems that the Government, with all the resources for monitoring at their disposal, were not capable of doing so.
Mr. Ridley: I cite in return the example of the motor cycle industry. The private sector did not think that it was viable. The civil servants thought that it was viable. Who was right? The private sector was right. The bankers, using their own money, have to adopt a great deal of scepticism and care. They often say "No". What the Labour Party so often fails to understand is that when the bankers say "No" they do so for good reasons. Too often the Labour Party seeks to say that it is the fault of the bankers that money has not been advanced, whereas in reality it is the fault of the risk which has been brought before the bankers.
Mr. Silverman: Is the hon. Gentleman saying that private risk capital will be forthcoming only when there is no risk?
Mr. Ridley: That is not what I said. Those who are expected to incur the risk must be allowed to determine whether they think that it is reasonable.
I believe that there is much to be said for the co-operative at Meriden. My criterion of a group of people who come together to do what is necessary to make a viable motor cycle industry is demonstrated possibly by the workers at Meriden and those helping them. If they can produce plans which convince the bankers that another £40 million should go in, that would be one of the best things that ever happened, but it would be no good their convincing the Government, because the Government would be taken for a ride for political reasons, whatever happened. The people concerned must convince someone who is professional at lending risk capital.
If the same thing happens at Wolverhampton or Small Heath I do not mind. I do not mind whether the initiative comes from the workers, from another

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group or from another company, or from people who, as with Aston Martin, think that they would like to have a go. It does not matter where it comes from. The more we can encourage this to happen, the more likely we are to get an industry which will be viable in future.
In the end it comes down to people. If the people of this country want another industrial revolution, they have got to come forward and justify the investment of risk capital in what they are going to do. That is the lesson for the motor cycle industry.
2.1 p.m.
Mr. Tom King: This debate follows the grave statement made by the Secretary of State last week. I know that the whole House is grateful to my hon. Friend the Member for Birmingham, Hall Green (Mr. Eyre) for giving us this early opportunity, through the kind offices of Mr. Speaker, to debate a very serious and urgent matter before the House rises.
I think all hon. Members recognise that the debate has been marked, with one or two small exceptions, by very serious responsible and moderate speeches on an acutely worrying situation. I thought that my hon. Friend the Member for Hall Green introduced the debate in a most responsible way. If I may say so, I think that my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) made a very brave speech. It is very easy in this House, as a simple elected Member of Parliament, to adjust one's views to every passing situation in one's own constituency and trim to every wind.
We know my hon. Friend's views. I hope that every word of his remarks will be printed and not taken out of context. His speech was utterly coherent, genuine, and sincere on a problem which greatly concerns the overwhelming majority of his constituents. It was a brave speech to make in an appallingly difficult situation.
The hon. Member for Nuneaton (Mr. Huckfield), who has now returned to the Chamber, made something of an apology for Meriden. If I may say so, I think he has something to apologise for. He speaks as a great authority on this subject. One knows a little of the work in which he has been involved. I know that the current situation is an acute embarrassment
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to the people of Meriden. One has heard of how Mr. Myers is going to solve the sales problems of Meriden. But my information is that Mr. Myers' total orders for motor cycles has been three since the hon. Member's intervention, which does not look as if he is going to solve the British motor cycle industry's problems single-handed.
This debate marks the end of an instalment of a long saga of Government involvement. The problem did not start with the arrival of the new Government. This point has already been made. We recognise that there was already a problem. But the hon. Gentleman must accept that the Government, since they took over, have done absolutely nothing to resolve the problem and, indeed, have made the situation very much worse. They took over a complicated situation but we now see that it has been allowed to deteriorate. We have seen all these different incidents which have been marked by muddle all the way down the line. We have watched, month after month, a motion, permanently positioned on the Order Paper, dealing with NVT.
The Government must make up their minds. We have had the problem of trying to resolve the situation at Small Heath. There was the letter to which reference has been made and the assurances given by the Secretary of State for Energy in his previous capacity. I do not know whether that is now clarified by what the Secretary of State last night called a colloquial guarantee. It is quite clear from the speech of the hon. Lady the Member for Wolverhampton, North-East (Mrs. Short) that that was taken as an undertaking from the Government and it was accepted as such.
Mr. Poore, the Chairman of Norton Villiers Triumph, said:
"In the face of these arguments, the Small Health unions were left with virtually no alternative and agreed with some reluctance to lift their veto against the co-op in the belief that by so doing they were putting their future in the hands of the Government and were not cutting their own throats as would otherwise be the case."
Their throats have now been cut. The speech by the hon. Lady contradicted what the hon. Member for Nuneaton said. There is no doubt about the feelings of the people of Wolverhampton, and that they put their trust in the Government on

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the assurance given by the right hon. Gentleman's predecessor, but they have been let down.
Mr. Budgen: My hon. Friend keeps referring to these remarks as having been made in a speech. In fact they were made in a Question. The opportunity to make a speech would have been today.
Mr. King: I accept that. I am not privy to the hon. Lady's reason for not being here today. This whole atmosphere of muddle that has marked the Government's handling of the case in these last two months reached an ultimate farce when the Minister in another place made his statement. When the statement was made, part of the Minister's copy was missing; the last two pages had to be supplied by the Opposition, and they were read in the wrong order, which marked a high spot of farcical inefficiency.
Even then, when the Government have muddled around, when they have left the industry in a situation in which it has got to fight back by itself, whether it be a co-operative, whether it be Small Heath or Wolverhampton, it seems outrageous that Lord Shepherd can say in another place:
"It is indeed regrettable that as a consequence of this decision Britain…will not have an industry."—[Official Report, House of Lords, 31st July 1975; Vol. 363, c. 1200.]—
writing it off like that as though it was already an established fact, so that the news would go out from Parliament that there would not be an industry at all. What authority did he have for making that statement?
I am sorry that the Secretary of State did not help the situation when, in a supplementary answer, he said that the problem was that NVT had 13,000 motor cycles in stock in various countries with no sales prospects. I understand that that statement is quite incorrect. There have been temporary problems. There has been a temporary overstocking. The American market has not collapsed. My hon. Friend the Member for Hall Green said that there was a temporary overstocking situation, but the predictions for this year and next year are of an increased market. Yet the Secretary of State and Lord Shepherd are both seen to be going out of their way further to damage the
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industry in which enough damage has been done by the Government already.
I have already said that the whole background is very unhappy. I have admitted that the situation did not start with the present Government. Their predecessors created the original situation. I also accept that in the final situation there was clearly no alternative for the Secretary of State or the Cabinet if it was put forward as "£50 million or no" or "£30 million or no", and that it was not a practical proposition to say that the money would be put forward, certainly against the extremely gloomy forecasts of the Boston Report. The payback situation envisaged in the Boston Report, with no payback before the year 2000, was most unattractive.
We are pleased that the Secretary of State consulted the Industrial Development Advisory Board. It was a pity that the board's advice was not taken originally. Had the advice been taken, this situation might not have arisen. The statement says that the creation of the co-operative in no way affected the situation. But this cannot be true. I understand the concern of the members of the co-operative. The fact is—my hon. Friend the Member for Wolverhampton, Southwest made this point—that this concerns not only the ownership of the factory. There is an industry. There are a number of brands of motorcycle. A number of overheads are involved, which have to be taken into account with the costs of the product and the sales value of the motor cycles.
What has been understood all the way down the line is that this was a situation in which two factories could have been viable. This was said by Mr. Poore and accepted by the previous Secretary of State for Industry when he gave the go-ahead to put Government money into the co-operative. The tragedy of the present situation is that if the facts had been recognised in 1973 or even 1974, the people now being affected would already be in other jobs. August 1975 is about the worst possible time to try to tackle this situation.
When Mr. Christopher Chataway made his statement, there was talk of a shortage of skilled labour in the Birmingham area. Hon. Members said that these workers were needed in many other profitable

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industries. The strategy followed by Mr. Chataway was right. I say that not simply because I was involved and working as his PPS at the time. It could have worked, but it was severely frustrated by the sit-in and never had a chance to get going and to take advantage of the market on favourable terms.
Mr. Les Huckfield: The hon. Member says that the Poore and NVT strategy would have worked. He knows, because he attended some of the meetings that I attended, that this strategy was to manufacture 120,000 bikes a year at Small Heath, particularly in the 3-cylinder range which cannot, apparently, now be sold in the United States. Does he still think that that original strategy would have worked?
Mr. King: The first concept of the strategy was to concentrate on the one management with a proven track record. It had taken over a part of the business which had previously gone into liquidation and re-created a viable British motor cycle industry. If it had been allowed to develop that strategy without frustrations and delays and had been able to get access to funds which could have been invested, it could have been made to work. The hon. Gentleman's memory is very faulty. I cannot remember attending a single meeting with him. Maybe that casts some doubt on his other memories as well.
This House and the Government are in a very difficult moral situation in relation to Manganese Bronze and NVT. They were invited to take over BSA, which was in a serious financial situation and in danger of closing down. The Boston Group report shows a loss of £5·7 million. Part of this will be taken by other shareholders and part will stand against Manganese Bronze. When Mr. Chataway made the original statement, my hon. Friend the Member for Oswestry (Mr. Biffen) said he was against the taxpayer becoming a pillion passenger for Mr. Poore. That pillion passenger got on the NVT motor bike, took it miles out of its way and used all its petrol. It has now jumped off the bike and is not prepared to do anything to get it on its way again. The case for compensation for Manganese Bronze and NVT must be taken very seriously. There are also serious lessons to be learnt about
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the dangers of Government intervention. I am not in favour of non-intervention in all cases, but this is a classic example of where dangers can arise.
The Secretary of State for Energy talked last night about the worries of companies in relation to statements made by Ministers, but he should realise that they are far more worried in situations like this. Companies that are asked by the Secretary of State to co-operate in particular circumstances in future will be very concerned. We cannot put in £50 million or one of the lower figures at this time, but I understand that there has been no attempt to have a constructive dialogue about alternative methods of tackling the problem. There has been considerable delay and the company has been pushed to the brink. There have not even been discussions on what would be a second-best possibility of an orderly run-down in the business. I understand from the company that this is the situation and it is most unfortunate. The Cabinet is faced with putting in either the money or the receiver.
We should understand that a receiver and a liquidator are not the same person. They provide very different functions. Some form of interim arrangement might be the best way of tackling this matter. Something must be done, and there is no question of putting in the substantial sums of money suggested by the Boston Report. Every speech in this debate has recognised the serious problem faced by the people of Wolverhampton. It is particularly poignant that they were the people in the profitable part of the business and they now find themselves about to lose their jobs.
With their background of involvement in the company, the Government have an obligation to see whether a way can be found, short of putting in these unrealistic substantial sums, to help these people in the very difficult situation they face.
Mr. Deputy Speaker (Mr. George Thomas): Before I call the Secretary of State for Industry, I should remind him that, in order to be fair to others, this debate must finish at 2.30 p.m.
2.18 p.m.
The Secretary of State for Industry (Mr. Eric Varley): I shall keep to your instructions about the ending of the debate, Mr. Deputy Speaker. I thought

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it right that as many hon. Members as possible should speak, because this is a matter of great concern. I welcome the debate as an opportunity to expand on the statement I made last Thursday. I fully understand the concern expressed by all hon. Members. They are reflecting the anxieties of their constituents. I had the opportunity to meet some of my parliamentary colleagues a day or two ago and I know how they feel.
The hon. Member for Bridgwater (Mr. King) has suggested that we have been dragging our feet in reaching a decision, and that there has been procrastination and delay. This is not the case. In the seven weeks and two days since I was appointed Secretary of State for Industry I have had four meetings with the men and their representatives, and three with NVT management, on a tripartite basis or separately. We have taken into account all their views in coming to a decision pretty quickly. Not a day has gone by without papers relating to the motor cycle industry coming across my desk. Of course the Government were anxious not to give up, without a fight, an industry which, as my hon. Friends have said, demonstrates British skills and has earned valuable exports. We took all these factors into account when reaching our decision.
The consultants' report shows how costly and risky it would be to attempt to support the industry at its present size. Some hon. Members will have had the chance to study it completely and will have had time to reflect how difficult this decision was for the Government. It is necessary to remind the House of the origin of the consultants' report. It was commissioned by my predecessor, paid for out of Government funds, and undertaken with the full knowledge of both management and workers in the industry.
At the very heart of this problem is the question of the way in which the Government are to develop an industrial strategy with limited resources and how we use those limited resources to best advantage. I shall probably have something to say about the figure of £50 million that has been referred to. We are not faced here with a problem for the West Midlands alone. This morning I have been dealing with problems affecting
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Hull, where there is a male unemployment rate of between 8 per cent. and 9 per cent., Merseyside, which has a comparable rate, and West-Central Scotland where it is very high, too. It all boils down to the criteria that we use in supporting British industry at this difficult time.
This industry has received considerable support over the past two years. To hear some people one would almost think that the Government had received an application for assistance and had done nothing about it. Over the last two years successive Governments have committed nearly £24 million to the industry, either in the form of finance or guarantees, and almost £18 million of that has been spent. There is no question of withdrawing support, as some newspapers have suggested; it is a matter of trying to examine the risks and prospects for the industry in the future.
There are market problems, too. The consultants' report highlights the way in which the British industry has been driven out of the market, or, at least, how its dominance has been taken over by the Japanese. I am not here to praise the Japanese industry. It is a matter of great concern to me that this should have happened. In 1968 the United Kingdom had about 70 per cent. of the United States market and the Japanese had virtually nil. In 1974 the Japanese had about 70 per cent. and our share was down to 10 per cent. to 12 per cent. cent.
My hon. Friend the Member for Wolverhampton, South-East (Mr. Edwards) has far greater experience than I of international trade union relations, but I must ask him to accept that there is no evidence of a direct subsidy by the Japanese Government to their industry. If there were, we should take a different view of the matter.
Then there is the question of the super-bikes. The British industry has had to retreat continually into the super-bike range, and we now find that there is nowhere else for it to go. The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) and my hon. Friend the Member for Nuneaton (Mr. Huckfield) had very strong words to say about the failure of management in the British motor cycle industry. I think that their

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criticism is fair. The blame lies with successive managements, going back 10 or 15 years, for their concern for short-term profitability, which culminated in the present problems. The consultants' report shows that investment in the industry has been about £1,500 per man, while in Japan over a comparable period it has been about £5,000 per man, and productivity bears no comparison.
Of course, it was not only the consultants' report that brought the Government to the conclusion that we had to take the decision we did; we had, too, the advice of the Industrial Development Advisory Board. Both the board and the Government examined all the alternative strategies, but found that none was likely to be viable. The IDAB actually asked the consultants to have another look at the industry to see whether there were other prospects for it, on the basis of direct employment for 3,000 to 3,500 people. None of the strategies appeared viable. I must explain here that the IDAB is the enlarged board. In the past there have been criticisms that the board was set up by the previous Conservative administration, and perhaps that was the reason its advice was not followed in all previous cases. Now, however, the board has been enlarged—some people might say reconstituted—and it has serious trade union leaders as members. No one would describe them as Right-wing lackeys of British capitalism.
Mr. Tom King: On the point about strategy, did the Secretary of State ask the board to study the apparent contradiction in the Boston Group report, which referred to up-market, low-volume production of only 16,000 when the group admits that BMW, which is marketing exactly that product, is expected shortly to move up to 45,000?
Mr. Varley: All I can say is that the IDAB has considered all the alternatives.
There is one other important matter, concerning the so-called "Checkley" letter written by the Secretary of State for Energy when he held my job. It was quoted at great length by the hon. Member for Birmingham, Hall Green (Mr. Eyre). I have talked to my right hon. Friend about that letter and I have checked the records of the time. I do not want to say too much about this, because
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the hon. Member for Bromsgrove (Mr. Miller) has told us that he is referring the whole question to the Ombudsman. I do not know whether this question will fall within his jurisdiction, but access to departmental papers will be provided. My right hon. Friend wrote the letter on 6th November 1974. The Small Heath workers actually rejected it when he went to visit them. I can send the hon. Member Press reports of what my right hon. Friend said at that time. On 9th November 1974 he was reported in the Birmingham Post as saying:
"I have not got the power to guarantee anyone a job."
In the Daily Telegraph of the same date my right hon. Friend was reported as saying that he would be
"deceiving Small Heath workers if he gave the guarantee they sought, five years free of redundancy. With world business in its current state that was impossible, he said."
I hope, therefore, that hon. Members will not rely too much on that aspect of the matter. The commitment to the industry, referred to by my right hon. Friend, relates to the ongoing commitment by the previous administration, the commitment to the £8 million under the Industry Act for NVT and the commitment to the Meriden co-operative.
The other matter referred to by the hon. Member for Hall Green and by the hon. Member for Bridgwater concerned the position of NVT, and the question whether, if there was liability, there should be compensation. I reject that entirely. NVT entered into commitments on its own commercial judgment. There is no question of the Government having to compensate NVT for its involvement. I have given the most careful scrutiny to all these matters. I have again considered them with my colleagues. Whilst we fully appreciate the deep anxiety of those in the industry, we see no possibility of establishing it on anything approaching a competitive basis, and accordingly must reaffirm that there are no grounds for making further Industry Act assistance available to NVT. We say that after our deep examination of the very difficult problems that face the industry, and in the light of the consultants' report and the advice we have received from IDAB.
Our decision, of course, was taken with bitter regret. We are sickened by it. We

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are worried stiff for the workers in the industry, and we know how concerned they are. We have to stand by the decision that I announced to the House last week, although we take no pleasure from it.

NATIONALISED INDUSTRIES (PRICES)
2.30 p.m.
Mr. J. M. Craigen: In the middle of the present heat wave I confess that the problem facing all of us is one of over-heating. However, unless heed is taken of certain aspects of the recent report of the Price Commission in the right quarters, many households in this country will be plunged into a domestic ice-box by Christmas, because with higher heating and lighting charges many families will have to cut down on their consumption of gas and electricity.
The report of the Price Commission for the period 1st March to 31st May 1975 was produced prior to the publication of the White Paper on inflation. It is interesting to note that in the "Highlights of the Report" it says:
"Everything now depends upon the rate of pay settlements. If these are kept within reasonable bounds, the rate of inflation will fall and go on falling."
The report strikes an optimistic note that
"The tide can be turned."
On page 6 of its report the commission singles out the nationalised industries for special attention. It points out that they are
"responsible for bigger price increases than any other sector in the last six months"
that is, up to 31st May. In fact 32p in every £1 of increased prices was due to the nationalised industries. It is interesting that in the report it emerges that this could not be entirely attributed to the substantial increases that have taken place as a result of increased oil prices.
One of the fears of many hon. Members about reports that are published by various Government Departments is that a civil servant in one Government office writes reports about his next-door neighbours, those reports are filed away and nothing is ever done about the conclusions reached. The Price Commission report reaches a conclusion which has serious
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implications for the future of the nationalised industries and for social trends in our present inflationary situation, which must be mastered.
This morning we heard about the prospect of higher postal charges. I greatly fear that in the coming months the only items that may appear behind the door will be more and more bills, which will land with a heavy thud. We know that the cost of public transport, both buses and trains, is increasing with the result that people will be making fewer journeys. We know that television costs have increased. It is interesting that just the other day we heard from the manufacturers that more black and white than colour television sets are being sold. Unless we watch the underlying trends in the nationalised sector, we shall find that more and more people will be isolated and cut off because the main means of communication into the home will be via radio and television and there will be less social mobility.
Apart from that there are serious implications not only for the family budget, but for society as a whole. This morning it was made clear that we do not want to see a witch-hunt of the nationalised industries. There is, however, now a need for a root and branch investigation of our various public corporations.
My hon. Friend the Member for Newcastle-upon-Tyne, East (Mr. Thomas) may get an opportunity of making a few remarks on the pricing policies of some of the nationalised industries. It is said that technology is the art of getting the maximum from the minimum of resource. The opportunity should arise for us to look at our public corporations and ensure that both their financial and manpower resources are being deployed as effectively as possible.
One of the problems in this Chamber is the difficulty of individual hon. Members being able to call our great public corporations to account. We have to go through Ministers for many of these matters. I hope that the Minister, whose task is to oversee the work of the Price Commission, will tell us what follow-up there will be to the Commission's recent report. I am under no illusions about the difficulties facing nationalised industries because, clearly, at present they are uncertain about their exact rôle. There

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are pressures for them to be economically viable and, on the other hand, to provide social services. It may be that the whole accounting procedure of our nationalised industries will have to be re-examined in order that we can separate the one from the other and draw clearer distinctions where one service is being supported because it is felt that it is socially necessary although it might well not be financially viable.
The report was somewhat cryptic in its comments about why the increased prices in the nationalised sector had occurred. However, it was ominous in making the point that all the evidence is that the deficit in the nationalised industries is greater today, despite the recent price increases, than it was in April 1973. I should like the Minister to spell out in more detail why the present situation has arisen and what he hopes the consumer watchdog will be able to do, how it will get the bit between its teeth and tackle the nationalised industries over the present problem. Unless we put our house in order I greatly fear that every family budget will be in total disorder within the foreseeable future.
2.38 p.m.
Mr. Mike Thomas: I am grateful to my hon. Friend the Member for Glasgow, Mary-hill (Mr. Craigen) for allowing me a brief intervention in this debate and to the Minister for agreeing to it.
I want to make two main points. The first is that the present level of increase in nationalised industry prices, which is so well documented in the Price Commission Report, will have two important effects on the Government's present strategy. The first, which I have mentioned before in this House, is that it will have a profoundly damaging effect on the Government's anti-inflation strategy. It is a fact that when my constituents pay their electricity bills this coming winter they will be paying twice as much for their electricity as they were the same time last year. If we ask ordinary people to bear increases of as much as 100 per cent. in the prices of basic commodities we shall profoundly damage the Government's anti-inflation strategy.
My second point is simply that the other effect of increases of this magnitude
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will be further to erode the standard of living of the poorest in our community, who are already weakened and ravaged by the inflation that has occurred over the past two or three years. This level of increases is not only damaging but cannot be borne by pensioners or by the low paid in my constituency. They will find that they cannot pay higher bills because they will not have the money to do so, and the only course open to them will be simply not to switch on the fire, the cooker or whatever appliance it may be.
I am concerned about the Price Commission Report because, implicitly, it goes a long way towards removing the three main planks in the Government's justification for the increase in the nationalised industries' prices over the past six months.
The Government have been using three arguments—first, that there has been a massive increase in oil prices; secondly, that the industries had suffered from restraint and were catching up; and, thirdly, that the industries were making losses which must be recouped. The Price Commission report goes a long way towards removing those three arguments from the Government's ammunition. Paragraph 2.8 says that oil prices are clearly not as important as the Government and others have made them out to be. Paragraph 2.11 shows that it is not true that the policy of restraint in the past is the principal reason for the increases.
The report tabulates some figures which, far from showing that the nationalised industries have exercised restraint in the recent past, clearly shows that they have virtually increased their prices in line with the private sector. The crucial statistics are found in paragraph 2. 11, which says that between April and November 1973 private sector prices increased by 6·5 per cent. and nationalised industry prices increased by 6 per cent. There is not much sign of restraint there. Between December 1973 and May 1974 private sector prices increased by 10·8 per cent. and nationalised industry prices by 12·1 per cent. Between June and November 1974 private sector prices went up by 8·4 per cent. and nationalised industry prices by 7·9 per cent., only just behind the private sector. In the most recent period, from December 1974 to May 1975, private sector prices rose by

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7·4 per cent., while nationalised industry prices increased by 15·6 per cent., rather more than twice as much. Those figures show that restraint has certainly not been one of the characteristics of the nationalised industries' price pattern.
The Government's third argument has been that the nationalised industries have made loses and that steps must be taken to recoup them. But in paragraph 2.12 the Price Commission repudiates that argument. It says that the current increases fall short of the increases in costs over the period to which they apply, and do nothing to recoup the losses.
What concerns me is that if those are not the reasons—and the Price Commission seems to show clearly that the arguments are at best fairly fragile—the real reason why nationalised industry prices have gone up so dramatically faster than private sector prices must be an unprecedented and unjustified escalation of costs in those industries. If that is so, who will tell the nationalised industries as my right hon. Friend the Secretary of State for the Environment has told the local authorities, "The party is over. We cannot in this House be prepared for ever to increase your prices just because you need the increases to meet your increased costs. What are you doing to minimise those costs? What steps are being taken to operate more efficiently?"?
I have raised a number of issues. I have been somewhat confined in the past by the Government's arguments about oil, restraint and losses. Now we have a report from the creature of the Department of Prices and Consumer Protection, the Price Commission, the Government's own mechanism for monitoring price increases, which undermines those arguments. That places the problem fairly and squarely in the Government's lap.
There is an argument in the report for the closest examination of the cost structures of the nationalised industries and the basis on which the Government are agreeing their costs. The report also supports an argument on a policy matter for which the Government are wholly responsible. It is that in the present circumstances they should stop the crazy programme of phasing out nationalised industry subsidies so rapidly. They should try to spread it more evenly, so that our inflation policies may work, and, most of all, so that the poorest in our
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community will be able to buy their heat, post their letters, and travel on public transport without risking putting themselves in penury by doing so.
2.45 p.m.
The Under-Secretary of State for Prices and Consumer Protection (Mr. Robert Maclennan): I thank my hon. Friend the Member for Glasgow, Mary-hill (Mr. Craigen) for initiating this debate and drawing attention to the sombre comments of the Price Commission on nationalised industries in its latest report. I also thank my hon. Friend the Member for Newcastle-upon-Tyne, East (Mr. Thomas) for his contribution to the debate.
The report is important and merits careful consideration. In paragraph 2.11, the Price Commission states that
"in the first year of control, nationalised industry prices were lagging a little behind private sector prices. But in the second year, this shortfall was more than made up. Taking the two-year period of control as a whole, nationalised industry prices have increased significantly more than private sector prices".
In paragraph 2.13 the Price Commission makes the more general point that
"the fact that nationalised industry prices have gone up faster than private sector prices is a reflection of the fact that nationalised industry costs have gone up faster than private sector costs".
That underlines the point made by my hon. Friend the Member for Newcastle-upon-Tyne, East.
It would not be fruitful to engage in a statistical dispute on the significance or otherwise of the Price Commission's findings. The commission has undoubtedly referred to a relatively limited period—April 1973 to May 1975—during which we faced an unprecedented explosion in commodity and energy costs as well was the aftermath of statutory wage controls, and during which price controls were operating. Examination of the figures from March 1969 to May 1975 shows a more balanced picture.
As a follow-up to the report, I shall be asking my Department to examine the movement of nationalised industry costs compared with private sector costs to see whether there is a divergence.
Mr. Mike Thomas: Is there not the further factor that the report specifically says that certain dramatic price increases

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such as electricity prices, have been excluded from the commission's consideration, so that there are arguments the other way too?
Mr. Maclennan: That is a point to be considered.
No one disputes the vital importance of the nationalised industries to our economy as suppliers of vital products and services and as major investors. They also have a vital rôle to play in our battle against inflation, and it is on that area that I want to concentrate in the short time at my disposal.
On the pay front, we all know the vital importance of achieving consent from the unions and employees in the nationalised industries. In 1972 and 1974 the lack of consent led to pay in the nationalised industries outstripping the limits necessary to contain inflation. We have set a premium on winning the agreement of the unions to the new policy to bring down inflation. There is little doubt that if we are to succeed as a nation in achieving our inflation target for next year, it will be largely because negotiators in the nationalised industries have implemented the terms of the national agreement on pay and prices, set out in the White Paper "The Attack on Inflation".
As a Government we are bound by the national agreement. We have made clear that the pay policy should be strictly applied by the nationalised industries and that we will not foot the bill for excessive settlements in the nationalised industries through subsidies, by permitting extra borrowing or by allowing excess costs to be loaded on the public through increased prices or charges. In this respect the Government are determined to protect the public both as taxpayers and as consumers, from the effects of excessive settlements.
The chairmen of the nationalised industries have agreed to operate strictly within the limits laid down by the guidelines, and I do not expect any question of sacking or other sanctions to arise. It may be asked why at this time, when inflation is at an unprecedented level, the Government should permit the nationalised industries to put up their prices by such an enormous amount.
784
I know that the answer is not easy to accept but I hope that at least it is easy to understand. The nationalised industries have tended to run up deficits due to a variety of reasons in recent times, due to severe price restraint as much as to anything else. In some cases, such as British Rail, part of the deficit is attributable to keeping services running for social reasons. In the energy sector prices have been held back, again for social reasons. The worst recession for 40 years has been hitting steel industries all over the world. These deficits have to be financed and paid for, and this invariably and inevitably means an extra burden on the taxpayer.
Mr. Norman Lamont: A few moments ago the hon. Gentleman said that it was not the Secretary of State's policy to allow nationalised industries to increase their borrowing powers. There have recently been Press reports that the amount of money provided for under the Statutory Corporations Act has already been used up and that further legislation will be necessary to allow the nationalised industries to borrow more money.
Mr. Maclennan: I think that the hon. Gentleman misheard me. I said that we would not permit the financing of pay increases which were out of line with the agreed pay limits by borrowing for that purpose. It was about excessive wage settlements that I was speaking specifically.
To hold prices down below costs for an excessive length of time has the same damaging effect on nationalised industries as it does in the private sector and creates a misallocation of resources. In the energy sector in particular, it would make no sense to subsidise excess demand at a time of rising energy prices.
In formulating our prices policy for nationalised industries, therefore, we have had to try to balance the interests of the individual as taxpayer against the interests of the individual as consumer, and that is not an easy balance to maintain. The nationalised industries have been fully involved in the policy to control inflation and in the development of that policy. They have been subject to Price Code control since early 1973 and were involved in the freeze and voluntary agreement prior to that time.

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Indeed, at one time the policy was much more severe on the nationalised industries, with the consequence that many of them were forced into substantial deficit which had to be met by Government subsidy. This in itself had to be raised from taxation or by borrowing, and so contributed to the growing level of public sector borrowing requirement. As a consequence, the Government decided last year that nationalised industries must be allowed to raise their prices to the point where they eliminated their deficits, and this must be done as quickly as possible—that is, in the financial year 1976–77. This was the objective that my right hon. Friend the Chancellor of the Exchequer set and reaffirmed in his Budget speeches of last November and April.
I have been asked what examination will be taking place following the report. Among measures which have already started is the inquiry by the NEDO to make a study of the rôle of nationalised industries in the economy and the way they are to be controlled in the future. After that study has been completed, which is likely to be early next year, a White Paper will be published by the Government embodying the NEDO's report and dealing in particular with the relationship between the Government and the nationalised industries.
My hon. Friend the Member for Newcastle-upon-Tyne, East asked about the restructuring of nationalised industry prices. He has made this point before and I am well aware of it. The Government are keenly aware that nationalised industry prices are a key element in the household budget and that they are of special significance to low-paid and pensioner households. My hon. Friend is right to draw attention to these facts.
For less-well-off people, there are discretionary powers to give additional help where there is need for more than the normal expenditure on heating on the ground of poor health or bad accommodation, including help with central heating costs. Extra heating additions consist of varying standard amounts depending on the degree of poor health. These standard additions are not fixed maxima and may be increased where there are exceptional circumstances.
We decided that even though social security benefits were increased by record
786
amounts in July 1974 and are to be increased again in April and November 1975, it was desirable to shield this category of people from the worst effects of nationalised industry price increases. We therefore asked the gas and electricity industries to tilt their tariff increases on 1st January and 1st April this year so as to bear less heavily on the consumer using a small amount of energy. This they have agreed to do. Moreover, the Gas Corporation has reflected this approach in its rates proportionately.
The National Consumer Council is starting an inquiry into whether the present policy of the nationalised energy industries needs revising in the interests of the poorer consumers. This is a long-term study, but the preliminary results will be announced at the September Consumer Conference, particularly on the subject of tariff policy affecting poorer consumers.
At a time when these deficits are being phased out, and because pressures on the industries are particularly intense, the protection of the consumer is an exceedingly difficult but important task. In the five months since my right hon. Friend took over responsibility for the nationalised industry consumer councils, we in the Department have been striving, and still are, to develop a close relationship with all the nationalised industry consumer committees.
We hope to enhance the impact which the expression of consumer opinion can make upon the efficiency of nationalised industries. For example, we are making use of the procedure of specially referring to these councils matters which we think of importance and worthy of investigation. One such subject is the reference we have made to them of the possibility of merging gas and electricity showrooms.
The principal means by which we hope to develop our aim is, first, by giving the views of the councils a direct voice where necessary within the Government so as to ensure that the interests of the consumers are given due weight in the formulation of policy; secondly, through the appointment of members who will secure effective representation of all types of consumers, not only the big commercial and industrial consumers but the

787
millions of individual domestic users, and above all the old and disabled, who are especially dependent upon gas and electricity; and thirdly, through the provision of adequate staff and finance to enable the councils to carry out their functions.
My right hon. Friend has already made a reference to the National Consumer Council asking it to review the present arrangements for consumer representation in the nationalised industries and to report its findings by March next year. In the light of its advice, my right hon. Friend will consider what further action the Government might take to strengthen the machinery for representing effectively the needs of the consumer to the industries and, where appropriate, to the Government themselves.
I turn finally to perhaps the most worrying element in the Price Commission's report, namely, the contention that nationalised industry costs have gone up faster than private industry costs. It is not easy to disentangle cost structures and compare them, but the contention reflects a commonly-held opinion that the nationalised industries suffer from their monopoly status and from their avoidance of market disciplines, and are thereby inefficient and wasteful of resources.
I do not think that that charge is wholly true or wholly justified. There are many facts that show the nationalised industries in a better light than some parts of the private sector. For example, capital—fixed assets excluding dwellings—per person is £16,500 in the nationalised industries compared with a £5,000 average for the economy as a whole. We can hold those arguments on another occasion.
My hon. Friend the Member for Newcastle-upon-Tyne, East spoke about the vicious regressive effect of inflation. My Department has great sympathy with much of his approach to the essentials. We have tried to shape our prices policy to fill in the gaps where social security benefits do not apply. We have initiated a thorough-going review of the nationalised industries to see what can be done to minimise the impact of unavoidably steep nationalised industry price increases now coming through on the smaller user, who tends to be the poorer consumer. We look forward to the constructive recommendations
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which may emerge from Sub-committee B of the Select Committee on Nationalised Industries.
Meanwhile we have sought to hold down standing charges as far as possible and to tilt the tariff increases in favour of the smaller users. There is a strict limit on how far we can go towards achieving the ideal in this area. There are many practical difficulties. Some poor consumers are large users, and it may be unreasonable to expect one section of the poor to cost subsidise another. There are the critical limitations imposed by the extent of the public sector borrowing requirement and the burden of taxation, to which I have referred. It costs about £600 million to reduce the retail price index by 1 per cent. whereas the cost of improving the living standards of social security beneficiaries by 1 per cent. is rather less than £80 million.
We must move with care if we are to help the needy in the most cost effective way we can. We have moved in the way which I have mentioned over the past year to meet the objectives which hon. Members hold dear. We are determined to move further in the same direction over the next year within the price limitation programme announced in the White Paper.

HOUSING (IMPROVEMENT SCHEMES)
3.2 p.m.
Mr. Michael Mates: I am grateful for the opportunity of raising an urgent problem which has arisen in my constituency. I thank the Minister for coming here to answer—fully and frankly, I hope—my questions.
The matter which I seek to raise is not a party political issue. I do not seek to make party points. I am well aware that the problem of finance available to local government is far wider, and does not apply only to the case which I seek to outline.
I hope that the House will allow me to confine my remarks to the situation which has arisen in my constituency.
I am well aware of the severe restraints under which the Minister's Department is operating at the moment, but I have come to tell the House about good management

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and bad management and the events of the past months concerning the improvement plans for council accommodation in my constituency. This, I believe, is a case of bad management, as I shall hope to explain during the next few minutes. I naturally hope that the Minister will agree with my assessment of the situation and be able at least to give me the encouragement that he will look at the matter again and reconsider his Department's decision.
As a result of the Secretary of State's recent decision we now have in my constituency a quite ludicrous problem. It would not be fruitful to go back into the history of the causes of the neglect of the council accommodation in Alton—suffice it to say that there were many factors, not least the way in which the reorganisation of local government affected this area. Nevertheless, since its inauguration just over a year ago the East Hampshire District Council has set about its tasks with enthusiasm, imagination and sound common sense. I should like to pay tribute to both the officers and members of the district council for the way they have set about their task. As early as 18th April last year—just over two weeks after it came into being—it decided that as a matter of priority it must pay attention to the appalling condition of some of the council houses in Alton. This is the largest part of the problem, although there are some houses in Liss and Bramshott, as well, which were in much the same state.
These houses, built in the early 1930s, have deteriorated over the years until they are now thoroughly unsatisfactory and in some cases dangerous. They have unplastered walls, ungalvanised metal windows, which are generally so distorted as to be now incurring considerable maintenance costs, lath and plaster ceilings which are generally seriously deteriorated and electric wiring which may in some cases be dangerous. The only method of heating is a cast-iron back boiler type of grate, the parts for which are no longer available for routine maintenance. In general, the conditions under which council tenants are living are thoroughly inferior and unsatisfactory.
The housing committee decided, in accordance with the Department of the Environment Circular No. 50 of 1972, to embark upon a modernisation scheme for
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a total of 122 houses. In July 1974 loan consent was granted for the purchase of 12 mobile homes at a cost of £60,000 to provide temporary accommodation for council tenants while renovation took place according to a planned programme.
In August, the Department accepted a tender for improvements to a show house in order to mount a public relations exercise amongst the community to involve them as affected families, and to convince them how worth while the scheme was. In September, the work on the show house was started, and it was completed in December 1974. It was furnished by a local firm. Meanwhile, work commenced on the mobile homes site. This site was made available, temporary planning permission was given for the erection of the mobile homes, and the work went on through the spring and summer, finally being completed a week or two ago. A public meeting was called to discuss the modernisation programme with the tenants. Press statements were issued announcing the improvement programme. In February 1975 tenders were sent out for the modernisation of 47 houses, which was the first part of the plan.
I should emphasise that the programme had already been cut by half by a responsible decision of the council as a result of local authorities having been asked to retrench. Prior to this it was planning for a modernisation programme of more than double this number.
The district council then received a letter from the Department of the Environment dated 28th February limiting the expenditure between 1st April this year and 31st March next year to the sum of £114,000. Added to this, the council is compelled to charge the whole of the cost of the erection of the mobile homes against this year's allocation, although the mobile homes will be in use for several years while the programme continues. This decision means that, instead of the planned improvement to 47 houses—which figure was already cut by half—there is now only the finance available to improve 10. Not only this; there is a requirement for only three of the 12 mobile homes, and, furthermore, there is no use to which the rest can be put. They cannot be let to reduce the grave housing shortage in Alton, for several reasons. There are clearly problems because the homes, having been

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set up as temporary accommodation, are fully furnished. If they are let to tenants from the waiting list the tenants will have security of tenure and there will be problems about their own furniture.
Finally, the site of the mobile homes carries only a temporary planning permission, since the sole object was to use them for a short time to facilitate improvements in the area.
We now have a situation in which £60,000 has been spent, the programme associated with this expenditure has been decimated, and the council is saddled with a white elephant and some angry tenants. To add to an already utterly ludicrous state of affairs, while the council is prevented from modernising its own accommodation, under other regulations it is free to spend sums greatly in excess of the amount we are talking about to buy old properties, obtain mortgages and improve them, which is a far more expensive way of improving accommodation for council tenants than the one which the council has proposed. It must be more economical to prolong the life of properties which are falling into disrepair than to build anew. For example, for the cost overall of this modernisation scheme this year only 10 or 11 new houses could be built, whereas some 23 could be modernised for the same sum. On top of this with the modernisation programme, additional accommodation would be provided, because in several cases the larger houses could be converted into two flats and thus relieve the pressure on the housing list.
Many of those on the Alton waiting list are young families, or older families whose children have grown up and gone. Such applicants would find the accommodation which can be provided by converting a large council house into two flats perfectly satisfactory.
I now put some specific questions to the Minister. What justification can he give for arbitrarily cutting an allocation of funds, which will cause wasteful expenditure, inability to use resources already made available, and reaction from the general public that local government affairs are being badly mismanaged? What other councils have been left high and dry with accommodation available and ready, the whole public relations
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exercise carried out, and plans and tenders ready to start on such a scheme? Why must the Council bear all of the initial costs for a five-year programme in the first year's allocation of funds?
This means, with the whole of the £60,000 having to be set off against this year's grant, that only 10 houses can be improved, whereas if it could be spread over a longer period—which is perfectly logical, because the mobile homes will be earning their keep for three or four years—this would alleviate the situation somewhat. If the Minister could consider spreading the £60,000 over five years it would mean an increase, this year, of £48,000 in money available for improvement, which would allow the figure of 10 to rise to 20. Does the Minister not feel that this would be a fair way of spreading what has been an initially large capital cost over the five years that these mobile homes will be used for temporary accommodation?
Last, but not least, the members and officers of the East Hampshire District Council were angered and dismayed at the high-handed way in which their request for an interview with the Minister was refused. Subject to what the Minister may be able to say now which may give us some reassurance, I trust that when I ask to bring a deputation to him—as I shall—it will not be as arrogantly refused as it was in the letter from his Department to the council's chief executive on 3rd July in which it was said that Ministers were too busy to see chief officers of local authorities with their Member of Parliament.
The members and officers of the district council feel that they have been given a raw deal by the Government. I feel that what I have told the House today shows a careless disregard for the proper management of public funds, in that the cuts proposed waste money already spent and will inevitably mean higher estimates in spending when eventually these improvements can be carried out. I hope that in his reply the Minister can give me and my constituents some comfort.
3.12 p.m.
The Under-Secretary of State for the Environment (Mr. Ernest Armstrong): I am grateful to the hon. Member for Petersfield (Mr. Mates) who has raised

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a subject that is of importance to his constituency and of general interest throughout the country. I shall read carefully what he said and take up the strong allegations he made. I am anxious to retain good relationships with local authorities because they and the Government are in partnership in dealing with this serious social problem. The hon. Gentleman raised a subject which is of great concern to many constituencies and local authority districts throughout the country.
It is important to consider the question of council house improvements in its full context. I shall come to the particular circumstances the hon. Gentleman has raised and I hope that I shall be able to give him some reassurance this afternoon. We can, however, have further discussions together if the hon. Gentleman thinks that that is necessary.
I hope that the hon. Gentleman will forgive me if I begin by explaining the policy background to the new control system of capital allocations introduced as from 1st April this year. I shall then go on to deal, as best I can, with some of the specific problems he has raised.
It is always a source of some consternation to me to discover how apparently misleading is the information available to Government Departments on matters over which they are supposed to exercise some influence or control. Certainly many of the difficulties that have arisen over the operation of Section 105 of the Housing Act 1974 during this initial year of the new system—and I do not minimise them—result from the hazards of assessing and fully understanding the nature of the problems associated with the physical state of council-owned dwellings.
Our starting point was the 1971 National House Condition Survey of of England and Wales which indicated that at that time there were under a million dwellings in council ownership which lacked at least one standard amenity. It was also estimated that there were about 100,000 council dwellings—probably largely included among the half million already mentioned—which needed at least £500 worth of repairs. These figures were broadly confirmed by the 1971 Census which indicated that there were 383,000 households in public-sector dwellings in England and Wales—that is, housed by local authorities or the
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new towns—which lacked the exclusive use of at least one basic amenity.
From 1971 to 1974 inclusive, improvements to no fewer than 360,000 council dwellings were approved by my Department and the Welsh Office. One would have thought that this amount of activity—which was, incidentally, an all-time record—would have produced a very significant drop in the number of council houses needing attention.
However, when the Department examined the results of its questionnaire issued in January of this year to all local authorities in England, we were very surprised to discover that there are apparently about 445,000 council-owned dwellings which are still without standard amenities. This clearly indicates either that the local authority returns are not to be relied upon or that the improvements that have been undertaken since 1971 have not benefited the most needy council tenants.
The latter assumption seems to me to be the more likely, and, indeed, a good indication of the way in which priorities have been allowed to become a little distorted can be seen from the fact that of the 155,000 dwellings on which the authorities wanted to start improvement work this year, only 75,000 were without standard amenities.
These findings, among others that I shall touch upon in a moment, bear out the need for the more positive form of control over this programme that we introduced under Section 105 of the Housing Act 1974.
Let me emphasise that the Government did not lightly take the decision to introduce this provision. For many years local authorities have been free to determine for themselves how much to spend each year on house improvement, and in an ideal world this is obviously right. But the Government believe—a belief borne out by the figures I have just quoted—that over the past few years too large a proportion of the resources available for the improvement of the nation's older housing has been devoted to purpose-built, inter-war, council estates, many of which were already in a relatively satisfactory condition, certainly when compared with the bulk of the substandard houses remaining in the hands of private landlords. Perhaps I should

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remind the House that it is in the declining privately-rented sector that we find 60 per cent. of all our remaining statutory slums and 40 per cent. of all dwellings without standard amenities.
We, therefore, deliberately decided to adopt measures to control local authority improvement expenditure—measures which first appeared in the previous administration's Housing and Planning Bill and which are now to be found in Section 105.
The hon. Member will know that the bids for capital approvals received by the Department in January of this year totalled about £572 million, which greatly exceeded the amount of public expenditure available. I might point out that this sum not only covered the expenditure already contractually committed on improvement schemes—about £200 million worth of work—but also envisaged a substantial spend on new schemes of improvement to no fewer than 155,000 council dwellings. As this compares with a level of approvals running at below half that figure during 1974, the Government might be forgiven for believing that the bid for new projects was somewhat inflated. Indeed, new approvals for the first three months of this year—that is, before the Section 105 control was introduced—amounted to under 10,000 dwellings, equivalent to an annual rate of one-third of that envisaged in the local authorities' bids.
However, the available funds were allocated by the Department in February in accordance with the priorities enunciated by my hon. Friend, the Minister for Housing and Construction in reply to a Question on 23rd May from my hon. Friend the Member for Mitcham and Morden (Mr. Douglas-Mann)—that is, apart from existing commitments, to the improvement of sub-standard dwellings acquired from private owners; to work needed to bring empty dwellings back into use; and to the initial provision of standard amenities in purpose-built stock.
Of the £211 million—at 1974 survey prices—that we originally allocated throughout England, East Hampshire District Council received £114,000. This covered all that authority's committed
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expenditure, leaving £66,000 available for new work.
In the light of representations that were subsequently made by local authorities throughout the country, the Government recognised that the original allocations had presented many authorities with very real difficulties, not least because of the scale of their existing commitments in this the first year of the new arrangements. Consequently, the Government made a further £44 million available, bringing the total allocated to English authorities to around £255 million, an amount not far short of the record levels of spending on this programme achieved last year.
Details of how this additional tranche of Section 105 approvals have been allocated have today been set out in the Official Report, in response to a Question tabled earlier this week by the hon. Member for Petersfield. I am afraid, however, that it was not possible at the time for any of this additional money to be allocated to East Hampshire.
I know that this was a matter of considerable disappointment to the hon. Gentleman, but the hard facts of the matter are that despite the additional funds that have been found—at no small cost to those people who are now finding it more difficult to obtain mortgages as a result of the switch that we had to make from local authority lending—the sums available remain limited and cannot cover the cost of all the desirable work that local authorities rightly wish to undertake. I accept, moreover, that much of the work that East Hampshire District Council is keen to put in hand falls within the priority categories for this year that I enunciated earlier, but the available resources will not permit all such work to be carried out immediately. Some will inevitably have to be deferred.
The hon. Gentleman has described in particular the circumstances of the 47 houses at Alton which the council wants to retain in this year's modernisation programme. He will doubtless have a detailed knowledge of the present state of these dwellings. For my part, I have had a report on their condition. I know how strong the case is for carrying out improvements as quickly as resources permit.
But despite their conditions—attributable perhaps to the former authority's

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philosophy, which I trust has now been abandoned, of doing nothing to modernise housing for semi-rural tenants—we simply did not have sufficient capital resources at our disposal to meet this and many other equally deserving cases before us when we were deciding how to distribute the extra £44 million.
However, I am pleased to say that a very recent development enables me to alleviate the hon. Gentleman's concern. Another local authority in the region has just advised the Department that, for a variety of unforeseen circumstances, it will not be able to spend all the money that it has been allocated. This means that a small sum is now available for redistribution elsewhere, and I am able to advise the hon. Gentleman that we shall be getting in touch with East Hampshire District Council to tell it that it is now authorised to begin work as soon as it is able on the 47 dwellings concerned.
I am also aware of the seven empty houses which will be difficult to let in their present state. This is another example of the price that the new council is having to pay for the lack of action on the part of its predecessor authority in tackling council dwellings built so long ago. But the council already has an allocation of some £66,000 for new work, and I believe that it is planning to use this money to ensure that its empty houses are brought up to a decent standard and quickly let to those in need of rented accommodation in the area.
Similarly I regret that it has not yet been possible for the council to make use of the 12 mobile homes that have been purchased to enable tenants to be decanted from dwellings undergoing comprehensive renovation. I must point out to the hon. Gentleman that the authority does not have to charge the cost of mobile homes against its Section 105 allocation. The Department has not at any time led the authority to believe that it does have to do so. I am sure that in the happy circumstances which I have just outlined the £75,000 which the council has spent on these temporary homes will not prove abortive.
I am grateful to the hon. Gentleman for raising this matter. I hope that the district council will be able to overcome its remaining problems. Certainly we
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shall give it every consideration when we make the allocation for 1976–77.
3.25 p.m.
Mr. Hugh Rosed: As there are a few moments left before the time allocated for the debate expires, I shall make one or two comments upon the present situation. First, I am grateful to my hon. Friend the Member for Peters-field (Mr. Mates) for raising this matter. He has raised it in the context of a constituency problem but has indicated that certain national problems must be faced. The Minister has made reference to those problems.
Given the present crisis, I understand the need for local authorities to restrict public expenditure. Clearly there is a need for priorities even in the most important matter of housing. It is regrettable that economies have to be sought. However, I wonder whether the priorities that are being sought are the right ones.
According to the information at my disposal, by the end of 1973 approvals for improvement grants were running at the rate of 453,000 per annum. In other words, 453,000 sub-standard homes were being brought up to modern conditions to provide decent houses for people in which to live. That was an allocation of public resources when existing sound houses were in being and when the minimum of expenditure was required to provide homes, in contra-distinction to a situation in which many more millions of pounds would have been required to build new homes in place of those already existing. Of the 453,000 homes that I have mentioned, some 188,000 were in public ownership. Improvement grants were directed to local authority housing. I understand that 179,000 approvals were attributed to housing associations, Owner-occupied houses and private landlord housing.
How has the situation deteriorated since the end of 1973? From the latest figures available, it appears that in the first two quarters of this year only 37,500 local authority improvement grants have been approved as against 188,000 in 1973. In the private sector only 50,000 have been approved. The Minister has told the House that there has been a redeployment of resources away from council housing improvements towards the more serious situation that exists in the private

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sector, but the approvals in that sector for the first two quarters of this year are only 50,000 as against three times that figure in 1973. It is clear from the figures that resources are not being deployed towards improvement grants. I think the truth of the matter must be that the resources are being deployed by the Government in pursuance of certain doctrinaire policies.
Mr. Armstrong: Oh!
Mr. Rossi: Yes. The money is being spent in municipalisation. That is a euphemism for the nationalisation of properties. The money is being used in rent subsidies for tenants who perhaps do not need as much help as tenants in the private sector.
Can the Minister give us up-to-date estimates of the spending on rent subsidies? Secondly, will he give us current estimates for renovation or improvement grants? Thirdly, will he give us the estimates of spending on municipalisation? Fourthly, will he give us the figures for new council house spending? If we are given those figures we shall be able to assess whether the Government have their priorities right.
I shall welcome having those figures, but we believe that it makes far more sense to bring up to a decent standard our existing stock of housing so that it does not become obsolescent. We believe that it is better to do that than to transfer houses from private ownership to public ownership at vast public expense without creating one new home for anyone. That is where we believe that priorities have gone wrong. I hope that the hon. Gentleman will be able to supply the figures for which I have asked.
Mr. Armstrong: I take exception to the hon. Member for Hornsey (Mr. Rossi) coming into the Chamber and asking detailed questions, thereby muscling in on an hon. Member's constituency concern. The hon. Gentleman knows that this is a matter of priorities. I have outlined the Government's policy. To make the assertion—it is an assertion that the hon. Member continually makes—that housing matters are all concerned with party politics indicates that he is not addressing himself to the serious social problems that we must consider when discussing housing.

LOCAL GOVERNMENT (LONDON)
3.30 p.m.
Mr. William Molloy: I wish to draw attention to the problems of local government in London. In instancing the manifold problems that face the Greater London Council, I wish also to emphasise the equally disturbing difficulties of 32 London boroughs in general and the London borough of Ealing in particular.
It is clear that in many respects the problems in London are far greater than those in any other part of the country. Between one-fifth and one-sixth of the people in the country reside in Greater London, and Greater London comprises 32 towns of average size. We can therefore begin to understand the difficulties that can face local government in London, whether in the GLC or in the London borough areas.
There is one thing that unites the two major parties in the London area, namely, the danger that some tragedy will befall the capital city and the Greater London conurbation. It is equally fair to say that the concern and anguish affecting all local government politicians in London is shared by all those who serve in the two great parties in this House.
Arthur Mee, in his book "London—the Eternal City" wrote:
"London will not be destroyed—it is the London of ages past, the London of ages to come."
Many politicians in all parts of the political spectrum began their political apprenticeship in the Greater London area. I have served for a decade and a half on the council of a famous London metropolitan borough, namely, the Fulham authority, and for a period of almost 11 years I have been privileged to be a Member of Parliament representing an equally famous London borough—Ealing. Those of us who have served that kind of apprenticeship know what we are talking about when we debate these matters.
The problems that face Greater London, in terms both of the GLC and of the London boroughs, are very great and, regrettably, are becoming greater. The sheer scale of London's problems, which are so daunting, can be illustrated by

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examining one instant statistic. A total of 60 per cent. of the homeless people of England and Wales are to be found in London. People regard London's 610 square miles as one prosperous whole, but we know that in East London and in other parts of the area there are areas of severe industrial decline equalling anything to be found in development areas. In the last 12 years in manufacturing industry alone London has lost 500,000 jobs. But a mere 25 per cent. of those jobs have been of benefit to the regions. The remaining 75 per cent. have been lost either due to factory closures or because of substantial cut-backs in staffing by London firms.
The situation amounts to an incredible phenomenon for many parts of London. I wish to refer particularly to the situation in the London borough of Ealing. I have made a number of appeals to Ministers in both Labour and Conservative Governments to take action, but with little success. I hope that they will not be so myopic that they will merely wait for disaster to arise before they decide to act. They must not wait until the bomb explodes, probably blowing them to bits, before they decide to do something.
In the northern part of the London borough of Ealing, famous and well-known industries have closed in the past 10 years, and thousands of skilled craftsmen have lost their jobs. Warehouses have mushroomed on virgin land on which new industry could have been built in properly zoned areas. Local planning authorities seem to have almost an obsession about ensuring that if a great industry is lost and thousands of men are put out of work compensation should be made by building warehouses, employing perhaps half a dozen drivers and a few hundred clerks.
That practice has been increasing not only in Ealing but in other parts of London, and London will pay the penalty in vears to come. There is a great danger of the Greenford area in the London borough of Ealing becoming a depository for depositories. I appeal to GLC planners and the Department of the Environment to get together to stop this ugly, wasteful and disturbing cancer of the spread of warehouses.
In the past 12 years London's population has decreased by 900,000, but that
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bold figure disguises the fact that a very high proportion of that emigration has been made up of skilled industrial workers. We in London have been watching the steady and relentless creation of a capital city of social and economic extremes. A few years ago the Government's Family Expenditure Survey showed that between 1971 and 1973 real incomes of the poorest 25 per cent. of households in Britain increased by 10·1 per cent., yet in London the real incomes of the poorest 25 per cent. of the population decreased by 10·5 per cent.
Unless something is done soon about London's industrial decline, it may become irreversible except at great cost, which even the national Treasury will not be able to afford. If London's industrial economy declines, so does London. No city whose population ranks it as the seventeenth largest member of the United Nations can support itself on the productivity of Civil Service departments and stockbrokers alone. I ask my hon. Friend the Under-Secretary of State to consider that somewhat awesome statement.
London's unique problems are highlighted by the public transport difficulties, which the GLC has had to tackle. The transport services, although complex and extensive, are insufficient to meet the travelling needs of Londoners. As well as necessary improvements and extensions to the transport network, they face the problem of providing a viable transport service in dockland, which is of importance to the viability of Greater London.
The cost to London of its transport system is very high in per capita terms because, of necessity, the network is of a highly complex nature. The Government's intention to scale down revenue subsidies to public transport will mean that the burden on London of running its transport services will be disproportionately high. Any national formula must of necessity have adjustable elements. We are approaching the time, in London, when all daylight hours are crush hours. This is a sad reflection on our capital city. An efficient and reliable public transport system will produce immediate gains and reduce tension for millions of Londoners.
I now deal briefly with what is perhaps the sorest problem of all for everyone

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concerned with London government—the maldistribution of the rate support grant.
What are London's resources to deal with these immense problems? Between 1965 and 1972, whereas rateable values in England and Wales rose by 23 per cent., in London they rose by only 9 per cent. During the same period, in 14 out of London's 32 boroughs, commercial and industrial rateable values remained static or fell.
But perhaps the single most damaging burden which London bears is the refusal of successive Governments to treat London the same as everywhere else in the distribution of the rate support grant. Men and women who are concerned with the government of London—Conservative, Labour and possibly a few others—are united in their bitterness about this issue. London is deliberately excluded from the needs element formula which determines the rate support grant because, in the words of the Government's own working group, its inclusion would have resulted
"…in a massive increase in London's share of the needs element total."
That exclusion is costing London £250 million in the current financial year. In any language, that is unjust and extremely dangerous.
London is confronted with the dilemma of being a capital city with enormous social problems. It is denied a sizeable proportion of the resources that it deserves if it is to deal with them. I hope that there will be an early examination of this problem and that the Government will see to it that an element of fair play is applied to Greater London in the same proportion as it is applied to the remainder of the country. If it is not, I believe that there will be a remarkable alliance between all London Members of Parliament to force the Government, if necessary—as far as we can, constitutionally—to ensure that Greater London is given a measure of fair play.
I turn briefly to another matter, which is the awful housing problem that we have in Greater London. In our capital city, there are no fewer than 200,000 families who are practically homeless. At the same time, there are large elements of property which are empty. In the language of ordinary people, it is a downright
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disgrace. If that kind of language does not suit senior civil servants, they will have to get out their ordinary dictionaries. It is a disgrace that Great Britain's capital city should have thousands of homeless people when there are thousands of good houses lying empty in which they could be living.
Are a Labour Government to say in 1975 that there is no room at the inn? They must make that room available quickly, because London's councillors despair of this very serious situation.
Parliament passes legislation all too easily. Then it passes the buck of responsibility on to local authorities. The problems of education are enormous. I have seen councillors in Ealing battling to modernise the education system in the borough. They have done a magnificent job. The fact that they have attempted sometimes to do something brings them into bad repute with the very people they are trying to help. They need much more Government help. Homelessness is a primary scandal, as are transport and unemployment. Together, they are reducing the quality of life of the ordinary Londoner. What is more important is that unless we find the answers there is a grave danger that the future of local government in London will be severely challenged
Will my right hon. Friend agree to meet Sir Reginald Goodwin, the leader of the Greater London Council and some of his leading chairmen? Will he also meet the leader of the opposition on the Greater London Council and some of the leading shadow chairmen? Will he also meet Sir Lou Sherman, Chairman of the London Boroughs Association, and some of his colleagues? These people, with practical experience, are eminently qualified to discuss with my right hon. and hon. Friends the problems and possible remedial measures needed to save London. I do not want to be fobbed off with the statement that a contining conference is in progress. My only comment on that proposition is that it is a dead loss. Let us make a fresh start with a brand new conference to which I believe the people whom I have mentioned, from both sides of the political fence, should be invited.
At GLC and local government level we are facing a battle. The Battle of London is on. All the

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London boroughs and the GLC are operating in the shadow of a disaster. They have the guts and determination to meet the challenge. The Government must exhibit the same courage and join forces to ensure the future of London and Londoners. The dignity of our capital city must not in any way be damaged We must restore to it the glory to which it is entitled.
3.47 p.m.
Mr. Geoffrey Finsberg: The House is grateful to the hon. Member for Ealing, North (Mr. Molloy) for initiating this brief debate. I only wish that the calibre of local government councillors coming forward for election were as high as his. I fear that on both sides the calibre of person who is coming forward for election as a councillor is not as good as we have had in the past.
I agree that all Governments in the past have put a burden on local government without spelling out how the costs are to be borne in both money and manpower terms. From a recent speech by the Secretary of State it appears that the Government have accepted that it is wrong for the House to put fresh burdens on local government without first willing it the means.
I shall make two brief comments. The hon. Gentleman was right to expose the failure of the Government to recognise the appalling maldistribution of London's rate support grant. I certainly support him in his demand, not request, that this be altered in time for the fixing of London's rates next year. In the same way as hon. Members on both sides joined forces against the former Secretary of State for Industry over the granting of industrial development certificates, and beat him, the present Secretary of State may encounter the same sort of unholy alliance if he is unable to move the mandarins of Marsham Street into realising that London suffers appallingly from the rate support grant.
The hon. Gentleman mentioned the loss of jobs in London. There has always been bipartisan pressure on the Government to try to keep jobs in London and to bring in fresh jobs wherever possible. The development of dockland should contribute to that objective.
The hon. Gentleman also referred to the scale of London's problems. I believe
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that the time may now be ripe, after a decade in which the new structure has been in operation, for a review of the distribution of functions between the GLC and the London boroughs. The time may well be overdue. I hope that the Minister will take that point on board.
3.49 p.m.
The Under-Secretary of State for the Environment (Mr. Ernest Armstrong): My hon. Friend the Member for Ealing, North (Mr. Molloy) and the hon. Member for Hampstead (Mr. Finsberg) have reminded us of London's unique position. It is one of the world's greatest cities. It is a great attraction to people from all over the world. As a member representing a constituency as far from London as it can be in England, I am very well aware of the great problems that London has but also of its great attractions.
I have lived all my life in my constituency. During the whole of my life my friends and other folk there have found it necessary to come to London to find employment here. Today the situation is different, largely because of industrial decline, the policy of dispersal, and the very severe problems of homelessness.
London's transport problem is severe. At present relatives from the United States are staying with me. They are never tired of telling people here about London's wonderful public transport system. I therefore think that all our complaints are relative. I understand something of the problem. In my stay at the Department of Education and Science I made it my business to meet many London local authorities and I told people throughout the country of the special problems arising in this great city.
To day I shall spend my time dealing with what I sense to be the sorest of the points which my hon. Friend raised. I have heard my hon. Friend speak many times on this subject, both inside and outside the Chamber of the House of Commons. The major point is what he calls the maldistribution of the rate support grant. We are in constant touch with the Greater London Council. On that matter my hon. Friend made some remarks. I assure him that if there were any easy, so to speak overnight, solutions to these problems we should have come into contact with them long ago. There are no such solutions.

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I am Chairman of the London Housing Action Group which meets frequently. That position has made me aware of the overall problem. I shall take on board all that has been said this afternoon and read the report of this debate carefully. I shall then talk to my hon. Friend about the need for further meetings—and, indeed, about the need for a new initiative, as he termed it—when we have had time carefully to study what he said.
I come to what my hon. Friend described as the maldistribution of the rate support grant. I wish to put the matter in its correct perspective. The distribution of the rate support grant has three main purposes—to compensate for variations between local authorities in their spending needs; to supplement the rateable base of those authorities with inadequate resources; and to meet the cost to the authority of giving rate relief to householders. It is the first two of these that chiefly concern us today.
The assessment of needs and resources is of course a highly controversial as well as a highly technical matter.
I know of no authority that does not think, and indeed argue vigorously with the Department, that its problems are unique and deserve special recognition by the Department. The issues are discussed at length each year by my Department and a group of local authority treasurers representing the local authority associations and, subsequently, at Minister-Member level. The results of these consultations are embodied in the Rate Support Grant Order on which we have a debate—often a very lively one—in December each year. Throughout our discussions and consultations, both sides bear very much in mind the large number of representations which are received from individual local authorities, directly and through right hon. and hon. Members. London Members are particularly active here.
Those representations come from densely-populated urban areas and thinly-populated rural areas. They come from areas of expansion and from areas of decline. Authorities with low rateable resources complain that we do not supplement
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their resources enough. Authorities rich in rateable value point out that, if their rate poundages are relatively low, the rate bills their householders pay are none the less very high.
Authorities which come into none of these categories tell us that too much of the grant total is being paid to the special cases. Nor are we allowed to forget the particular needs of authorities in the North, the South, the East, the West, the Midlands, Wales and London. Each of these authorities can produce at least half-a-dozen excellent reasons why they should be given a larger slice of the cake. I have heard of many special cases since I moved to the Department of the Environment. Indeed, there are special cases. This is the terrible problem that we face. We do our very best to investigate the technical merits of these claims and counter-claims and to produce a balanced distribution at the end of the day.
Mr. Molloy: I appreciate what my hon. Friend is saying. What these other authorities are asking for is a larger slice of the cake to add to the larger slice that they already get in comparison with London.
Mr. Armstrong: I ask my hon. Friend to be patient.
We are conscious that no nationally-applied formula can reflect more than very imperfectly the huge variations in the circumstances of individual local authorities.
Of all the issues which we have to face in this process, none is more difficult than the treatment of London and of individual authorities within London. London as a whole is exceptional both in the scale of its spending needs and in the size of the resources it has to meet its needs. It goes without saying that the cost of local services is very high in London. So are the demands and the needs for those services, whether in education, housing or the social services. But London is so different in every way from the rest of the country that it is enormously difficult to assess how much greater are the spending needs per head of their population for the London authorities than for authorities outside London.

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Suppose, however, that we have successfully arrived at a measure of London's extra needs. It may seem axiomatic that the needs element of rate support grant should be distributed in such a way as to meet London's extra needs in full. But that would be to ignore the fact that London as a whole possesses a rateable wealth which, in relation to its population, is vastly greater than that of authorities outside.
The resources element of rate support grant is used to supplement the resources of the poor-to-medium-rich authorities, but, even allowing for this fact, London is left with a huge advantage. If nothing were done to counteract this advantage, Londoners would be paying far smaller amounts in the pound in rates while receiving a standard of services fully comparable with, and, some would say, significantly higher than, the standard prevailing in the rest of England and Wales. I appreciate that because the level of valuation is high in London, total rate bills tend to be very high there. That, too, we have to take into account.
For this reason, we thought it only right and proper to give London a share of the needs element this year which, while going much of the way towards compensating London for its extra needs, goes somewhat less than the whole way. Each London borough receives an 8 per cent. supplement to its needs element. If no adjustment had been required to take account of London's high resources, that 8 per cent. would have been a significantly higher figure. We recognise, of course, that London is dissatisfied with this outcome, and we shall be reviewing the position for 1976–77, bearing in mind what has been said in this debate today.
So much for the position of London as a whole. As if the difficulties of deciding on a fair share of the grant for London were not enough, we also have to take account of the very large variations in rateable resources which exist from borough to borough. To some extent, the benefit of the massive concentration of rateable value in the central boroughs is made available to London as a whole. The GLC levies a single precept over the whole of London. This draws in huge sums from the City of London, and relatively modest ones from boroughs such as Ealing. In other
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words, the cost of some of the services enjoyed by the commuting householder in Ealing is already subsidised by the rates his employer is paying in Westminster.
None the less, there remain large inequalities in the tax-raising capacity of the individual boroughs. That is why, ever since the London government reorganisation, there has been a London Rate Equalisation Scheme. The form of the scheme has varied from year to year, but the principle has always been that the rich boroughs—rich that is, in rateable value—make contributions to the poorer boroughs. In 1975‖76, under a scheme devised by the London Boroughs Association, the Inner London boroughs are each contributing the product of a 2·5p rate to a pool, which is then distributed among the outer boroughs according to how far their rateable value per head falls short of the London average.
Mr. Deputy Speaker (Mr. George Thomas): May I remind the hon. Gentleman that he has started to take time from the next debate.
Mr. Armstrong: I am aware of that, Mr. Deputy Speaker. I beg the indulgence of the House for a couple of minutes.
Mr. Deputy Speaker: Not a couple of minutes: one minute.
Mr. Armstrong: We are awaiting the report of the official working group that has been studying grant distribution for 1976–77.
I repeat that I will read very carefully what has been said in the debate. In the longer term, the committee of inquiry into local government finance is reviewing the whole future of local taxation and grants. Its recommendations will have an important bearing on the place of London in any future grant arrangements.

CYPRUS
4.1 p.m.
Mr. Cyril D. Townsend: I wish to draw the attention of the House to the tragic situation in Cyprus. As one of the three guarantor Powers, Britain is pledged to support the independence of Cyprus. I do not underestimate the problems posed for our Government by the Cyprus crisis and the agony of the

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Cypriot people. I hope I do not overestimate our diplomatic and economic strength, but over the past year we have failed in our special moral commitment and left undone certain things that might have been done.
I respected the Foreign Secretary's initial enthusiasm to deal with this threat to international peace and security, but I am not alone in thinking that much of that enthusiasm has been allowed to slip away with the sands of time. This is a part of the world in which Britain could and should take an initiative independently of the United States. I appreciate the desire to keep in step with United States foreign policy, though with the present constitutional deadlock in Washington it is not always easy to discover what is the Americans' policy. Britain has ties with Cyprus going back into the last century. One hon. Member is a former deputy-governor of Cyprus. Cyprus is a member of the Commonwealth and of the Council of Europe.
Our greater ties are matched by greater obligations. On no account can we merely accept the situation as a fait accompli on a far-away island. The British people must raise their sights from their largely self-inflicted economic problems and see what is going on in a Commonwealth country in a crucial area of the world.
The decision of the United Nations is being treated with contempt, and great damage is being done to the UN's authority and effectiveness. The UN resolution No. 3212 was supported by 117 nations, including Greece, Turkey and Cyprus. None voted against and none abstained. Yet it has still not been implemented. The lack of action could create a vacuum which might be filled by the Soviet Union. The Communist Party in Cyprus has capitalised on the anti-imperialist and anti-NATO feeling that is rampant on the island. There has also been pressure put on Archbishop Makarios by arms sent from Russia. We do not know whether he has succumbed.
This is not the time to go over the events which led to the invasion of Northern Cyprus by Turkish armed forces. Over the years, the Turks have exercised patience and restraint in the face of provocation. The Greek colonels apparently wanted to reactivate the
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EOKA struggle for Enosis. The arrival of the murderer, Nicos Sampson, as President of Cyprus was clearly an outrage, but we must face the reality that the Turks, with only 18 per cent. of the population, hold 40 per cent. of the island by force of arms. This 40 per cent. happens to contain much of the agricultural and industrial capacity of Cyprus. This is the first and most obvious of all the many barriers on the way to a free and independent Cyprus. So long as the so-called Attila line runs like a Berlin wall from Lefka in the east to the empty city of Famagusta in the west, Britain can be said to be failing in its duties as a guarantor Power.
I have been given reliable reports that the Turkish authorities have been settling simple Turkish farming families from Anatolia in Cyprus. It does not take much imagination to realise that such a move of population is fraught with dangers for the future. I much appreciate that the Minister of State has come to the House on the last day of the long, hot summer term to reply to this short debate. I hope that he will pick up this point. I hope he will tell us that the Government have been making strong diplomatic protests to the Turkish Government about it.
I can think of two gestures that Turkey could make which would produce a favourable impression in Cyprus. The Turks could and should withdraw immediately from the Greek part of Famagusta. Here is a European city which originally had a population of about 42,000 and which is now empty, with stray animals roaming the streets and doors flapping on their hinges. Of course it would have only a minor military significance, but it would allow tens of thousands of Greek Cypriots to return home. The Turks could scale down their occupying forces, at present about 40,000 strong, representing one person out of four in the north of Cyprus.
There is a danger that the current negotiations will be seen to have taken place against a background of duress. Understandably the Government have been reluctant to offend Turkey lest it withdraws from NATO, but Turkey will remain a NATO ally only as long as it believes that it is in its own interest to do so. One has only to consider the geographical situation of Turkey and to remember some of the remarks that have been made

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about Soviet and Warsaw Pact forces by hon. Members recently to realise that Turkey is likely to wish to remain in NATO in the foreseeable future. Who knows what will happen after that?
Surely the way to obtain vital stability in the Eastern Mediterranean is first to achieve an independent, sovereign Cyprus with both communities participating in a strong, central administration with adequate provision for communal and local autonomy. There is a danger that Cyprus could become a second Palestine. As in the Middle East, violence is being bred with the degradation and squalor of the refugee camps, where, amid the heat and the flies, 200,000 Greek Cypriots remain, uprooted from their lands and strangers in their own homes. That figure includes 50,000 children. It is an extraordinarily high proportion of the total population of Cyprus, which is about 633,000. The number of refugees is rising.
Reports that it has been agreed in Vienna that 9,000 of the approximately 11,000 Turkish Cypriots in the south are being allowed to move north, whereas 800 Greeks expelled from the north in late June and July of this year are being permitted to return to their homes, mean that action on behalf of the 200,000 Greek Cypriots in the south has become imperative. Here is a priority rôle for the United Nations as the refugees face, with mounting anger and despair, a second winter under canvas.
I wish to comment briefly on the woes of the British subjects whose property has been occupied either by Turkish soldiers or by Turkish Cypriots. There have been reports of a great deal of looting and general damage to personal possessions. I understand that no compensation for homeless British residents has yet been agreed or formally offered by the Turkish Government. I shall be listening intently to what the Minister says about this.
I have been told that on occasions the Turks discriminate against British passport holders on the ground that they have Greek-originated names. Have any such reports been received by the Foreign Office? No doubt when the idea of a Select Committee was first put forward the gentlemen of the Foreign Office gave it a frosty reception, and all credit is due to the Government for going ahead and
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setting up a Select Committee. The Committee is fielding a high-calibre team.
The Government will know that citrus fruits and potatoes have been exported by the Turkish-occupying forces from Famagusta to Britain. Much of this produce must have come from Greek-owned but now Turkish-occupied farms. I am told that all produce landed in the United Kingdom must be accompanied by the appropriate official documents. In the case of potatoes, they include plant health certificates. The issuing authority for such documents in Cyprus is the Government of Cyprus. They have issued no such documents since July 1974. It is alleged that our Government have allowed produce into the United Kingdom which has not been covered by the necessary documents. One result of this is that the Government have contravened international plant health regulations.
It would be appreciated if the right hon. Gentleman could arrange for me to receive a letter on this specific point. I raised the matter in a Parliamentary Question on Monday of last week and received what I thought was an unsatisfactory answer, which incidentally conflicted with a previous statement in another place a month ago.
Mr. Marcus Lipton: I believe that the entry of future fruit and vegetable imports is now the subject of High Court proceedings in which a judgment is being sought.
Mr. Townsend: The hon. Gentleman is quite right. It behoves the British Government to treat exports from north Cyprus with far greater caution than they appear to have done so far.
All of us have put our faith in the present communal talks. They might lead to success—God willing, they will. We all appreciate that this debate takes place at a critical time in those talks. Should they wind down, there would be a real danger that once again Greek Cypriot guerrillas will stalk the pine forests and orange groves of Cyprus and that the Turks will not be slow to retaliate with restriction and repression. Beyond the shores of Cyprus, two former NATO allies might reach for each other's throats. If the Clerides-Denktash talks should fail before the end of the Summer Recess, at all costs the Government must generate future discussions.

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My conviction is that the European Community has a great rôle to play in the Eastern Mediterranean. I look forward to hearing the views of the right hon. Gentleman. His pro-European background and current responsibilities should allow him to take a major part in such an initiative. In addition, as a permanent member of the Security Council we may have to appeal to that council once again to give a lead to the international community.
I offer four further simple guidelines. There will need to be a revised constitution, worked out by the two communities this time. Obviously Greek and Turkish troops must be withdrawn. The United Nations peace-keeping force should be strengthened in size and given wider responsibilities to cover the protection of both communities and to guard the integrity of the island. All refugees must be returned to their homes.
I remind the House that the Commonwealth Heads of State in Jamaica issued an official communique in which they
"expressed their solidarity with the Government of the Republic of Cyprus and their determination to help in the achievement of a political settlement based on the independence, sovereignty, territorial integrity and non-alignment of the Republic of Cyprus."
They agreed to establish a committee consisting of representatives of the Governments of Australia, Britain, Guyana, India, Kenya, Malta, Nigeria and Zambia to meet the Commonwealth Secretary-General. I hope that the right hon. Gentleman will be able to bring us up to date on the work of the special Commonwealth Committee.
I am not pro-Greek Cypriot. I am not pro-Turkish Cypriot. I am a pro-Cypriot. I do not doubt that a long and tortuous road lies ahead. I do not doubt that missed opportunities could condemn an island's generation to bitterness and bloodshed. But neither do I doubt that a magnanimous and lasting settlement between these two proud and ancient communities could lead to a fertile plateau of peace and prosperity.
4.15 p.m.
Mr. Marcus Lipton: I was in Cyprus three weeks ago—
Mr. Deputy Speaker (Mr. George Thomas): Order. Has the hon. Gentleman reached agreement with the Minister and with the hon. Member for Bexley-heath (Mr. Townsend) to intervene in the debate? Mr. Speaker has ruled that the only hon. Members who can participate are those who have reached such agreement.
The Minister of State for Foreign and Commonwealth Affairs (Mr. Roy Hattersley): I am prepared to give agreement now, if that helps my hon. Friend.
Mr. Lipton: Having been in Cyprus three weeks ago, I wish to make the observation that it is a disaster area. Thousands of people are living in deplorable conditions. What will happen to them with the advent of winter I do not know.
The part of Cyprus occupied by the Turks is a desert. The tourist trade has disappeared, and the agricultural resources in that part of Cyprus are bound to be adversely affected. We must take immediate steps to remedy the tragic situation, in respect of which we have special responsibilities.
4.17 p.m.
The Minister of State for Foreign and Commonwealth Affairs (Mr. Roy Hattersley): I understand very well the anxiety expressed in the House over many months, and expressed again by the hon. Member for Bexleyheath (Mr. Townsend) today. I also understand the near despair felt in Cyprus that over a year after the invasion of that island a settlement which would bring peace, stability, territorial integrity and lasting independence is still a very distant prospect. I understand the feelings of frustration. I understand, as do the Government as a whole, the need to make progress where progress can be made.
I do not want the House to think for a moment that during this difficult and in many ways desperate year the Government have been idle, indolent or passive. Throughout the year the United Kingdom has constantly sought a negotiated solution and has constantly played a part in that search which seemed to us appropriate and likely to lead to practical results. We not so much attended as initiated the two Geneva conferences of last summer, the first of which was

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successful in stopping the fighting and the second of which did not end in success but which on our part at least was a genuine attempt to find an immediate solution to the Cyprus tragedy which would have lasting effect. We have played our part on many occasions.
We have played our part within the EEC and the Commonwealth and we have constantly initiated bilateral discussions which have led to advice and suggestions and sometimes to pressure—bilateral initiatives of the sort the hon. Gentleman suggested. He implied that we had not made them, or at least that we had not made them sufficiently strongly.
The hon. Gentleman told the House that the Government should be speaking to the Government of Turkey about excessive troop levels in the north of the island and the need to show a more compassionate and understanding attitude towards the Greek Cypriot refugees. These things have been done, and it has been announced to the House that they have been done. I remember very well, when we agreed that Turkish Cypriot refugees should leave the Western sovereign bases, making the point as forcefully as I could to the Government of Turkey that that required from them reciprocal gestures, not as a balance or bargaining condition but simply out of human understanding and compassion. We announced to the House that we had sought such gestures in strong terms.
My right hon. Friend the Foreign and Commonwealth Secretary has told the House his views on the involvement of Turkish forces in their present numbers, and the disadvantage not only for the people and the island of Cyprus but the problems that would be caused for the people of Turkey themselves. All these things have been said and done.
I should not like it to go on record unchallenged that the Government have been dilatory or lacking in understanding and interest in all these matters. This is not the occasion for controversy, but I hope that the hon. Gentleman will forgive me if I say that his speech was rather long on description and short on prescription. I say that not as a point of criticism but as a pointer to the dilemma that we all face in dealing with Cyprus.
We all know how extensive the tragedy is and the results of the suffering which
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has been faced so bravely by the people of Cyprus. The difficulty that we face is knowing exactly what are the best steps to bring the suffering and the crisis to an end. The Government strongly take the view that we ought not to confuse apparent activity with genuine achievement. There may be times when new initiatives and effort on our part are appropriate. There have been times when we have been urged to do something without that something being very precisely specified, and when it has been our view that doing something might not play a part in bringing about a settlement but might push it into an even more remote time.
That attitude remains our policy. Of course we are ready to do anything, on our own or with our partners, playing a major rôle or a minor rôle, contributing to any initiative or mounting an initiative, which seems likely to have a constructive outcome. But we have equally been cautious about unwise initiatives or precipitate proposals which might give the appearance of great activity on our part and make it easier for us to answer Adjournment debates, but which would not result in the kind of practical progress which all of us regard as an essential part of our policy towards Cyprus.
We have placed very much hope for progress towards peace and stability and territorial integrity on inter-communal talks held in Cyprus and, more recently, in Vienna, between Mr. Denktash and Mr. Clerides. We have placed our faith in them for two reasons. The first is our fundamental judgment that the final decision about Cyprus, although it will have to be endorsed by the Governments in Athens and Ankara, must come about as a demonstration of the wishes and the will of the Cyprus people themselves. Secondly, we do not believe that until the people of Cyprus themselves, as represented by the leaders of their communities, are able to give a clear indication of the sort of solution they would accept, there will be much progress of a kind which would enable the Governments in Ankara and Athens to endorse the decisions taken and thereby endorse a permanent and lasting solution.
The Clerides-Denktash talks have had what I must describe as success and failure and a mixed history. But their prospects of success took a substantial turn

819
for the better when, through the involvement of the Secretary-General of the United Nations, they moved into their second phase, and increased dramatically as a result of the third phase of the talks, held in Vienna a week ago.
The prospects of success increased dramatically, for two reasons. First, for really the first time Mr. Clerides and Mr. Denktash were prepared to talk about the most difficult and intractable issues—for example about territory, at least about the shape of a constitution. The fact that these items remained on the agenda and were discussed is a sign of hope. Secondly, Mr. Clerides and Mr. Denktash were prepared to take some decisions, on humanitarian grounds, about alleviating the plight of refugees in enclave areas—desperately needed in terms of the humanitarian requirements of individuals, and important not only for that reason but because it was an important demonstration that they were prepared to grasp some of the most prickly nettles and to discuss and decide some of the most difficult issues.
As my right hon. Friend told the House yesterday, where previously our hopes of the Clerides-Denktash talks have been based on a mixture of hope and judgment that they were the best way to proceed, the element of hope has not deteriorated and the element of judgment has increased. The prospects of these talks making some progress in cutting through the undergrowth before the Turkish and the Greek Governments give eventual approval to some scheme have appreciably increased as a result of the discussions in Vienna between 31st July and 2nd August.
The hope that those discussions will continue to be fruitful and point the way forward does not lead me to believe that the other major initiative to which the hon. Gentleman referred—for some kind of participation in discussions by the EEC, corporately and collectively—should be abandoned.
The EEC discussions were never thought of as an alternative to the Denk-tash-Clerides talks. They were never thought of as measures to be employed if the Denktash-Clerides talks ended in failure. They were thought of as the EEC making itself available to use its good offices in whatever way seemed
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appropriate, to bring pressure where pressure was needed, to urge on the parties where that seemed necessary, to offer advice and assistance, to contribute the collective wisdom of the nine Governments, the nine Heads of Government and Foreign Ministers, as to how progress could be made.
The EEC corporately through its president, the Prime Minister of Italy, and through Mr. Rumor, his Foreign Secretary, remained available to give what advice and assistance it could. It is now contemplating how the influence of the EEC can best be used. Although I regard that as a possibly crucial element in bringing about a solution, we must continue to hope that the Denktash-Clerides talks continue, when they are resumed, as successfully as last week and that they make it possible for us to see our way towards a situation in which the Governments of Greece and Turkey and Cyprus can come to a conclusion based on the wishes, the will and the judgment of the Cyprus people. That is essential for a variety of reasons, essential predominantly and overwhelmingly in my view because of the plight of the refugees in Cyprus.
Perhaps it would be unwise for me to give a table of importance of the reasons why we need to solve the Cyprus crisis at the first opportunity. However, I act with that unwisdom and say that for me at least the most important reason is the plight of those people and our obligation to bring relief to them. They are innocent of any guilt in the events which preceded the invasion, a plight which was described graphically and movingly by the hon. Gentleman. The need for that relief will grow increasingly necessary as the economic situation of Cyprus deteriorates, as it must. That is the first reason. The second is the necessity to avoid instability in the Eastern Mediterranean, to which the hon. Gentleman referred, and the necessity for two ex-NATO partners to work again in peace and harmony.
We understand those matters well. We understand the crucially important point about finding a solution to end the suffer-ang and the difficulty which has been experienced by many British residents in Cyprus, especially in North Cyprus.
I must make two points about the British residents. First, we note with

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pleasure and relief that the harassment seems to have come to an end. When I saw the Foreign Minister of Turkey in Ankara eight weeks ago, he expressed his strong determination that that should be the case. As a result of his actions and words, harassment in its worst forms no longer takes place.
There is still the problem of compensation. I fear that I cannot promise that those problems will be remedied swiftly and that compensation will be paid soon. International compensation is a protracted business. However, there are signs of hope. At that meeting the Turkish Foreign Minister told me that the Government of Turkey accepted some responsibility for paying the bills. Mr. Denktash made a broadcast on the BBC accepting a measure of responsibility. We have been following up that broadcast with him today. The signs are that progress will soon be made. It will be a long and protracted business, as will, I fear, be the solution to the Cyprus situation, which is necessary before the problems of the refugees, the economy and the British residents or of NATO can be solved.
The Government are certain of two points. If we are to make progress, we must do so without constantly gearing our discussions and our plans to recriminations and analyses of past faults and past shortcomings.
Secondly, we believe that that must be done in a way which demonstrates that the will of the Cypriot people will be properly observed and enshrined in the new constitution. That is why we place much of our faith in the Cleride-Denktash talks. But those talks must be backed up by a variety of international initiatives. We are at the disposal of the United Nations Secretary-General to play our part.
We shall play our part as best we can through the United Nations, the Commonwealth and the EEC, and our hope and determination to bring this crisis to an end is no less than that of the hon. Gentleman, as I am sure he understands. It is incumbent upon all those who have the same feelings as the hon. Gentleman constantly to bring this matter to our attention and it is incumbent upon the British Government to keep pressing as hard as we can to bring the crisis to a speedy conclusion.

HOUSE OF COMMONS (BROADCASTING)
4.30 p.m.
Mr. William Hamilton: When the House decided a short time ago on an experimental month of radio broadcasting many hon. Members feared it as an unwarranted instrusion into our private affairs. They regarded radio broadcasting—and still do—as the foot in the door. They had convinced themselves that the media were our enemies and that they would seek to sensationalise or trivialise the proceedings of the House of Commons rather than to educate the electorate on what their Parliament is all about.
I doubt whether the experiment told anyone much that they did not know already, certainly in the technical sense. I doubt whether it converted any hon. Member from the views that he previously held. I am told that only 24 hon. Members bothered to go to the Committee Room to listen to the playback of the tapes, altough I am not sure what significance one can attach to that. I gather that there was a little turbulence when the subject was down for debate.
The BBC did not know what information to give me or my hon. Friend the Parliamentary Secretary because the information on the experiment is to be the property of the Committee of the House which is to go into the matter. I think that that is proper and I have no constitutional complaint about it.
I was given some information by the BBC for which I am grateful. I was told that the audience of the radio programme "Yesterday in Parliament", which in any case is small, increased by roughly 30 per cent. in the course of the experiment. I do not know how much of that increase was due to the novelty of the experiment, and I do not think that anyone else has any means of knowing whether novelty was the attraction.
The BBC gave me some information which I hope that it will not be improper for me to divulge and to comment upon. The programmes were evidently popular with all the 21 local radio stations, and I understand that 150 Members of Parliament were heard live on their local radio programmes—notably in the big cities.

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Again, we cannot tell whether that experience was more chastening for the Members of Parliament or for the electorate who sent them here, but at any rate they both know now what they got and they both deserve what they got.
In the regions, I am told that Scotland had 30 programmes with four hours of live broadcasting of the debate on the Scottish Development Agency. A recording was made of the housing debate of the Scottish Grand Committee. The schools and the Open University expressed great interest in the broadcasts, although it was too late for them to be included in the curricula. I have no doubt that if the radio broadcasting of our proceedings becomes permanent a place in the curricula will be found for it.
The BBC Overseas Service used the recordings substantially, especially in its morning news programmes. There were nine requests from foreign broadcasting companies to broadcast their own material, from countries as diverse as Holland, Hungary, Japan and Eire.
The reaction of our people was mixed. I think that was the experience of most Members of Parliament. I do not think that they were exactly singing in the streets about the prospects of getting Parliament permanently on the radio, but on the whole I gather that the proportion that expressed favourable views on the experiment was roughly three to one.
The proceedings of this place were never meant to be entertaining in the Palladium sense, although they often ascend or descend to that plane according to one's point of view. We can never hope to achieve peak rating figures.
It is my view that we have in front of us an exciting and educative challenge that must be met, and particularly at a time when our democratic institutions are under fierce challenge and critical scrutiny. It is vitally important that we do not excommunicate ourselves from the people who sent us here in the first place. They have a right to hear what we say and how we say it.
The broadcasting of our proceedings can never be a live continuous show. I could not think of anything more excruciatingly boring or incomprehensive.
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However, until that becomes a possibility there is the vexed problem of editing. It seems that it is not as insuperable as some people at one time thought. From time to time charges of bias will be made, although I gather that there were singularly few such charges during the month of the experimentation. If there were to be blatant abuse in that respect, the House would still retain the right to put a boot to the BBC's backside. In that context it is very important that the Government should keep their hands off in the matter of costs and, therefore, of control. I understand that the BBC wants to finance its own coverage of the proceedings here apart from the costs that will be covered in any event. I have in mind such matters as power, heating and accommodation.
I put on record one or two personal reactions before posing some questions to my hon. Friend. At the outset I think that the House was acutely aware that it was on the air. Perhaps there was no one more aware of that than Mr. Speaker himself. In parenthesis, I hope that the BBC will rid itself of that dreary, tired "Order, order" at the beginning of the proceedings. It sounded rather like a country vicar presiding over granny's grave in some outlandish cemetery.
I believe that Mr. Speaker's rôle becomes even more important given the broadcasting of our proceedings. I have in mind his choice of speakers at Question Time in establishing a balance of view as between parties and within parties. That is always a difficult balance for Mr. Speaker to strike, but it becomes much harder and much more important if our proceedings are broadcast.
I sensed that there were changes at Question Time. There were certain Members who seemed to attract a greater amount of publicity than was merited by their contributions or their status in their parties. There were even some who made mischievous or bogus points of order, or long interventions in other Members' speeches. I could name names but I do not propose to do so.
Perhaps one example is the point of order raised by my hon. Friend the Member for Warley, East (Mr. Faulds) on 12th June at column 669 concerning the personal statement made by my right hon. Friend the Member for Lanark (Mrs.

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Hart) immediately after her dismissal by the Prime Minister. The point of order was raised and Mr. Speaker expressed his opinion that the controversial character of my right hon. Friend's statement, had nothing to do with the fact that it would be broadcast to millions. I am not so sure whether that opinion was right. I am inclined to disagree with that view. The temptation to make such statements with full media coverage must be very great once we get on the air on a permanent basis.
A little later the Speaker said:
"I still think that the rule is right that in all circumstances the permission of the Chair should be sought, as it was in this case, and also that in other cases, not resignation cases, not only the permission of the Chair should be sought but the terms of the statement should be approved by the Chair."—[Official Report, 12th June 1975; Vol. 893, c. 670.]
That statement is topical in current circumstances. I presume it means that if a statement is to be made by the right hon. Member for Walsall, North (Mr. Stonehouse) when the House resumes it must be approved by the Speaker. I hope that the Minister will consider that matter and give the House his views.
Last but not least, I wish to draw attention to one or two problems that worry me very much. The first relates to privilege. In this House we can say what we like without danger of libel actions or anything else, but I merely pose the question: what will happen if those words go out on the radio into the homes of millions of our citizens?
The second point relates to broadcasting coverage of House Committees. Obviously the system must be made more comprehensive than it was during the experiment. I gather that coverage would involve considerable improvement in the acoustics of Committee Rooms. I hope that the Minister will say whether the Government are considering that matter.
I turn to the vexed question of copyright. What arrangements are contemplated or have been made between the Government and the BBC to prevent abuse of the tapes by selection and cutting? I can imagine "Monty Python's Flying Circus" taking advantage of selective cutting of tapes and matching, say, the words of my hon. Friend the Member for Bolsover (Mr. Skinner) with the voice
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of the right hon. Lady the Leader of the Opposition, or vice versa The mind boggles at what could be done. For example, the words of the Prime Minister could be delivered in the shrill shriek of the voice of the hon. Lady the Member for Lancaster (Mr. Kellett-Bowman). This is a problem on which I hope the Minister will comment.
Another question that worries me a great deal is the gulf that is growing between the executive and the ordinary viewer. Any move to worsen the situation must be viewed with considerable suspicion. Broadcasting of our proceedings gives an enormous additional advantage to the executive because it has the last word on everything. I say that even though the Labour Government look likely to enjoy office for a very long time to come. I dislike that trend, even though it may be of advantage to a Labour Government.
I was delighted that the voice and accent of the right hon. Lady the Leader of the Opposition went out loud and clear in broadcasts to ordinary working folk in London, Wales, Merseyside, Durham and Scotland. They would never have believed it had they not heard it. There is a perceptive piece in tonight's Evening Standard that says that the right hon. Lady speaks as though she is constantly opening village fetes. That just about sums it up. However, I hope that my last comment will not dampen the enthusiasm of Tory Members who want to see broadcasting of our proceedings put on a permanent basis.
I hope that the Minister will give some idea of the Government's thinking about a timetable within which to achieve the aim which the vast majority of Members now wish to see—namely that broadcasting will be put quickly on a permanent basis.
4.44 p.m.
The Parliamentary Secretary to the Privy Council Office (Mr. William Price): I am grateful to my hon. Friend the Member for Fife, Central (Mr. Hamilton) for raising this matter. It is one of considerable importance to the House and it is right that it should be discussed. If I have any regret at all, it is that it comes rather late in our proceedings. I take the view that both my hon. Friend and myself are certainly worth a bigger audience than the one we have today.

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In case I am prevented from doing so later, Mr. Deputy Speaker, may I take this opportunity of wishing you a peaceful and restful recess and of saying that, much as we all love you, we hope that no circumstances will arise in which it is necessary for us to see you before 13th October.
Mr. Deputy Speaker (Mr. George Thomas): I reciprocate those sentiments exactly.
Mr. Price: If we meet, Mr. Deputy Speaker, I hope that it will be in a Welsh Methodist chapel rather than in this Chamber.
We have had our experiment, and it is my experience, having talked to many Members, that the general feeling is that it has been a success. Like my hon. Friend the Member for Fife, Central, I believe that it fully justified the vote of nearly two to one last February.
Both the BBC and independent radio authorities are well satisfied with the experiment and they hope that sound broadcasting will be resumed at the earliest opportunity. That, too, is the view of my right hon. Friend the Leader of the House. He has made no secret of his commitment to permanent broadcasting and it is certainly his wish that we can make the necessary arrangements as quickly as possible.
But this is a matter for the House. It is being considered by a sub-committee of the Services Committee which has been given responsibility for evaluating the experiment, and its findings and recommendations will be reported to the House by the main Services Committee. No doubt the broadcasting authorities will themselves be asked for their views on the way the experiment worked and what lessons can be learned from it. When the House has had an opportunity to consider this report it will be necessary to provide the right framework for a decision on a permanent system.
I now wish to deal with the three points which my hon. Friend the Member for Fife, Central wished particularly to be answered. On the question of editing, I hope that I am right in thinking that few hon. Members would wish to exercise any editorial control over what went out from this Chamber. If that were not so, we
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should be on extremely dangerous ground. As a former newspaperman, I certainly would not welcome it. This matter is best left to impartial judges, and we, by the nature of our involvement, could hardly be regarded as impartial.
The questions of copyright and privilege are difficult. They are being considered by Ministers and officials and we hope in due course to make the position as we see it as clear as possible.
On the question of cutting and editing for entertainment purposes, we have an agreement with the BBC that what goes out of this Chamber will not be used for such purposes. There is no possibility of Monty Python getting his hands on our proceedings. That is a clear understanding with the BBC. However, I cannot give my hon. Friends an assurance about what the Monty Pythons overseas will do, because I understand that once broadcasts go out from the BBC they become common material for use by anybody. It would be misleading to suggest that we could control what was put out in, say, North America. I have heard some of the broadcasts which have gone out, and they were not at all helpful.
Difficulty arises with programmes such as the Jimmy Young programme. I understand that 8 million people listen to Jimmy Young's programme in the mornings. He attempts to deal with matters in a serious way, but I understand that it would be necessary for Jimmy Young to seek approval at a very high level in the BBC before using material even in the serious part of his programme. The authority is being as helpful as it possibly can in circumstances which are not always easy.
The Government's view is that the House should have an early opportunity of finally resolving the matter, but before that final decision can be taken, not on an experimental basis but on a permanent basis, the House must have a clear idea what the permanent arrangements would be.
It seems particularly essential that there should be a clear understanding about the way in which a permanent system would be financed and what it would actually cost. I share the fears of my hon. Friend that if we provided the money it might be thought that we would want editorial control, or some other form of control

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to go with it. I should be extremely unhappy if I thought that that was likely to happen. The way that this is to be financed is a matter for discussion between the broadcasting authorities and ourselves.
There are other important matters, such as the legal ownership of the copyright of the sound record, privilege—which has been raised already—and accommodation. All need to be resolved, and they are being considered as a matter of urgency. These issues will need to be determined as quickly as possible and as thoroughly as possible. Since the House of Lords is likely to be involved in any permanent system, it might be appropriate for this issue to be considered by a Joint Committee, but I think that the first step is to see what the Broadcasting Sub-Committee has to say in its report.
Like my hon. Friend, I have been talking to the BBC, and it has produced some interesting statistics for me, not least the fact that 350 Members were heard in broadcasts. My hon. Friend and I will agree about one matter—that the less that the Front Benches monopolise broadcasts, the better. There is no doubt that there has been a wide selection of speakers.
During the experimental period, 450 news and current affairs reports were transmitted, amounting to about 1,000 separate recorded extracts. The audience for "Yesterday In Parliament" increased during the period by about 300,000, to about 1·5 million, and the live broadcast on the first day attracted four times the normal audience. Of course, the extracts were used in programmes with mass audiences—the BBC main news bulletins, ITN bulletins and others. In the case of the BBC alone, there were 56 extracts on television.
Particularly encouraging has been the response from local radio stations—both BBC and IRN. The BBC used material on all its stations and the national regional stations devoted considerable time to our proceedings.
Perhaps I may mention Scotland. We had four hours of broadcasting on the Scottish Development Agency alone, and there will be much to come, I suspect, on devolution, if the House gives approval for permanent broadcasting.
There was also the broadcasting of Committees, although in some Committee
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Rooms there is a problem with acoustics. Expert advice from the BBC and IRN suggests that the acoustics in this House are better than had been expected, but that in some of the Committee Rooms it was far less acceptable than had been hoped. Clearly that is a matter which will have to be looked at.
There has been considerable success with external broadcasting, by both the BBC and the COI There has been considerable demand from around the world for recordings of our proceedings.
I have quoted these figures because I believe that there is considerable interest in our affairs. There is no doubt that the broadcasting authorities share that view. That is why they are anxious to come back on a permanent basis and why I for one would welcome them.
I believe, as I have always done, that the more that people know about us and our affairs, the less suspicion and distrust there is likely to be. This is not a perfect institution. Sometimes we do not behave as we should. But I know that it is a great deal better than many of my constituents believe, and I want them to know what goes on here. If that involves their seeing a few warts, that is a price worth paying.
That is why in due course my right hon. Friend the Lord President hopes to bring forward proposals for permanent broadcasting. It will take a little time. There are problems. But we shall deal with the matter as one of urgency. Much will depend on the speed with which the Sub-Committee produces its report, and that has nothing to do with the Lord President or me. I hope that it will be as soon as possible.
We shall learn as we go along.
Mr. Paul Hawkins: I apologise for intervening in the middle of the debate, but, being a member of the Sub-Committee, I should like to add that it is to meet during the recess.
Mr. Price: I am grateful for that intervention.
This matter is not quite as easy as some of our colleagues imagine. There are difficulties and problems. Many people believe that it is possible to put a commentator in the box, bring in a cable, and start it all off again. I do not believe that

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the House would want that. We need to get this matter right, and it will take a little more time than some of us would wish. I should dearly like to think that it would be possible to begin broadcasting proceedings again on 13th October, but that is just not on. It will take a little while before we can make the necessary arrangements, reach agreement with all parties, arrange the financing, and so on. Therefore, I ask hon. Members to bear with us if this matter is rather longer delayed than many of us would wish.
If the House takes the decision which I expect it to take. I believe that it will
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be a major step forward in involving people in the process of government. We want more, not less, interest in the working of this institution. That is why I shall join my hon. Friend in trying to persuade colleagues on both sides of the House that we should open our doors to all who want to listen to us, and one day, hopefully, see us as well.
Question put and agreed to.
Adjourned accordingly at four minutes to Five o'clock till Monday 13th October, pursuant to the Resolution of the House of 31st July.