Commons Sitting of 21 July 1975

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

RT. HON. MEMBER FOR WALSALL, NORTH
Mr. Speaker: I have to inform the House that I have received a letter dated 21st July 1975 from the Chief Clerk, Bow Street Magistrates' Court, in the following terms:
" Dear Sir,
Re: John Thomson STONEHOUSE, M.P.
The above named defendant appeared at this Court on Saturday, the 19th July, 1975, and stands remanded in custody until Monday. the 28th July, 1975."
An enclosure to the letter goes on to set out the alleged offences in detail. I shall cause the whole text of the letter and enclosure to be printed in the Official Report.
I should also tell the House that I have received a letter from the right hon. Member for Walsall, North (Mr. Stonehouse), saying:
" 9 July 1975
Dear Mr. Speaker, As you know I have been unable to attend the House firstly for
2
medical reasons and since 21 March under restraint. However I am hoping next week to be able to arrive in London and as soon as I have recovered from the journey I wish to make a personal statement in the House. At the appropriate time I would ask you to consider a request for such a statement.
Yours sincerely,
JOHN STONEHOUSE."
Following is the information:

CHARGE(S)

  STONEHOUSE ONLY
  On a warrant granted by Frank MILTON, Kt.. a Metropolitan Stipendiary Magistrate, sitting at Bow Street Magistrates Court on 29th April, 1975:-
  1. That you on 15th day of July, 1974, at the General Register Office, St. Catherines House, Kingsway, London, W.C.2, in the said District uttered a forged application for a certified copy of a birth certificate for Donald C. Mildoon knowing it to be forged and with intent to defraud.
  Contrary to Section 6(1)(2) of the Forgery Act, 1913.
  2. That you on the 17th day of July, 1974, at the General Register Office, St. Catherines House. Kingsway, London, W.C.2, uttered a forged application for a certified copy of a birth certificate for Joseph Arthur Markham knowing it to be forged and with intent to defraud.
  Contrary to Section 6(1)(2) of the Forgery Act, 1913.
  3. That you on the 1st day of August, 1974, at the Passport Office, London, uttered a forged United Kingdom Passport Application in the name of Joseph Arthur Markham, knowing it to be forged and with intent to defraud.
  Contrary to Section 6(1)(2) of the Forgery Act, 1913.
  4. That you on or about the 9th day of September, 1974, at 22, Victoria Street, London, S.W.1, dishonestly obtained for Export Promotion and Consultancy Services Limited a pecuniary advantage namely the enlargement of overdraft facilities from £10,000 to £17,500 for that company from Midland Bank Limited by deception namely by falsely pretending that your personal guarantee was a guarantee of value and that the increased facilities were required for the purposes and benefit of the company.
  Contrary to Section 16(1) Theft Act, 1968.
  5. That you on or about the 18th day of September, 1974, at 26, Dover Street, London, W.1, together with Sheila Elizabeth Buckley stole the proceeds of a cheque for £7,500 drawn on the account of Export Promotion and Consultancy Services Limited at the London Capital Securities Limited Bank.
  Contrary to Section 1 of the Theft Act, 1968.
  6. That you on or about the 23rd day of September, 1974 at 26, Dover Street, London, W.1, together with Sheila Elizabeth Buckley stole the proceeds of a cheque for £6,981·25p drawn on the account of Export Promotion and Consultancy Services Limited at the Midland Bank Ltd., 22, Victoria Street, London Branch.
  Contrary to Section 1 of the Theft Act, 1968.
  7. That you on or about the 3rd day of October, 1974, at 16, St. James's Street, London, S.W.1, dishonestly obtained for Export Promotion and Consultancy Services Limited a pecuniary advantage namely an overdraft facility up to £10,000 by deception namely by falsely pretending that your personal guarantee was a guarantee of value and that the facilities were required for the purposes and benefit of the company.
  Contrary to Section 16(1) of the Theft Act, 1968.
  8. That you on or about 14th day of October, 1974, at 26, Dover Street, London, W.1, together with Sheila Elizabeth Buckley stole the proceeds of a cheque for £2,112·10p drawn on the account of Export Promotion and Consultancy Services Limited at Lloyds Bank, St. James's Street Branch, London, S.W.1.
  Contrary to Section 1 of the Theft Act, 1968.
  9. That you on or about the 14th day of October, 1974, at 26, Dover Street, London, W.1, together with Sheila Elizabeth Buckley stole the proceeds of a cheque for £3,029·87p drawn on the account of Export Promotion and Consultancy Services Limited at Lloyds Bank Limited, St. James's Street Branch, London, S.W.1.
  Contrary w Section 1 of the Theft Act, 1968.
  10. That you on or about the 31st October, 1974, at 26, Dover Street, London, W.1, stole the proceeds of a cheque for £3,188 drawn on the account of Export Promotion and Consultancy Services Limited at Lloyds Bank Limited, St. James's Street Branch, London, 'S.W.1.
  Contrary to Section 1 of the Theft Act, 1968.
  11. That you on or about the 3rd day of September, 1974, at 16, St. James's Street, London, S.W.I, together with Sheila Elizabeth Buckley stole the proceeds of a Banker's Draft for the sum of $12,500 drawn by the Bank of America and made payable to Export Promotion and Consultancy Services Limited.
  Contrary to Section 1 of the Theft Act, 1968.
  12. That you on the 23rd day of September, 1974 at the Martletts, Civic Way, Burgess Hill. Sussex, with intent to defraud, caused to be delivered to yourself from the American Express Company an American Express Credit Card in the name of Joseph Arthur Markham by virtue of a forged application and a forged letter of reference signed S. P. Alexander knowing the same to be forged.
  Contrary to Section 7 of the Forgery Act, 1913
  13. That you on the 28th day of October, 1974, at 160, Piccadilly, London, W.1, dishonestly obtained from Barclays Bank Limited, Travellers cheques to the value of $870 by deception namely by falsely pretending that you held a Barclay-card in good faith and intended to pay for the goods and services which you obtained by use of it.
  Contrary to Section 15(1) of the Theft Act, 1968.
  14. That you on the 29th day of October, 1974, at 181, Piccadilly, London, W.1, dishonestly obtained from National Airlines Incorporated, Airline tickets to the value of £355·95p by deception namely by falsely pretending that you held a Diners Club card in good faith and intended to pay for the goods and services which you obtained by use of it.
  Contrary to Section 15(1) of the Theft Act, 1968.
  15. That you on the 18th day of November, 1974, at 75–81, Regent Street, London, W.1, dishonestly obtained from British Airways, two Airline Tickets, to the value of £422·65p by deception namely by falsely pretending that you held an American Express Credit Card in good faith and intended to pay for the goods and services which you obtained by use of it.
  Contrary to Section 15(1) of the Theft Act, 1968.
  16. That you between the 1st day of May, 1974 and the 25th day of December, 1974, at 26, Dover Street, London, W.1, and elsewhere together with Sheila Elizabeth Buckley conspired to defraud the creditors of Export Promotion and Consultancy Services Limited.
  Against the Peace.
  17. That you on the 20th day of November. 1974, dishonestly attempted to obtain from the Canada Life Assurance Company in the United Kingdom the sum of £25,000 by deception, namely by fabricating evidence from which your death would be presumed and by falsely pretending that the death benefit on a life assurance policy which commenced on the 10th day of July, 1974, was payable by the said insurers.
  Against the Peace.
  18. That you on the 20th day of November, 1974, dishonestly attempted to obtain from the Norwich Union Life Insurance Society in the United Kingdom the sum of £25,000 by deception, namely by fabricating evidence from which your death would be presumed and by falsely pretending that the death benefit on a life assurance policy which commenced on the 27th day of July, 1974, was payable by the said insurers.
  Against the Peace.
  19. That you on the 20th day of November, 1974, dishonestly attempted to obtain from the Phoenix Assurance Company Limited in the United Kingdom the sum of £25,000 by deception, namely by fabricating evidence from which your death would be presumed and by falsely pretending that the death benefit on a life assurance policy which commenced on the 28th day of July, 1974, was payable by the said insurers.
  Against the Peace.
  20. That you on the 20th day of November, 1974, dishonestly attempted to obtain from the Yorkshire General Life Assurance Company Limited in the United Kingdom the sum of £20,000 by deception, namely by fabricating evidence from which your death would be presumed and by falsely pretending that the death benefit on a life assurance policy which commenced on the 6th day of August, 1974, was payable by the said insurers.
  Against the Peace.
  21. That you on the 20th day of November, 1974, dishonestly attempted to obtain from the Royal Insurance Company Limited in the United Kingdom the sum of £30,000 by deception, namely by fabricating evidence from which your death would be presumed and by falsely pretending that the death benefit on a policy which commenced on the 18th day of September, 1974, was payable by the said insurers.
  Against the Peace.

ORAL ANSWERS TO QUESTIONS
  PRICES AND CONSUMER PROTECTION

    Retail Prices
    Mr. Tebbitasked the Secretary of State for Prices and Consumer Protection if she will estimate the extent to which retail prices may be expected to rise in the winter as a result of increased costs already incurred in manufacture and supply.
    Mr. Laneasked the Secretary of State for Prices and Consumer Protection
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    what estimate she has made of the increase in the retail price index during the 12 months beginning in July 1975, compared with the previous 12 months.
    The Secretary of State for Prices and Consumer Protection (Mrs. Shirley Williams): The Government are determined to bring the rate of inflation down to 10 per cent. by the third quarter of 1976. It is not possible to forecast precisely the behaviour of the retail price index within that period but while the annual rate of inflation is likely to remain high for the rest of this year, the monthly rate this winter should not be much above 1 per cent., reflecting lower pay and commodity prices.
    Mr. Tebbit: Why is the right hon. Lady so much less forthcoming and so much less optimistic than she was at that happy Press conference on 7th October last year—the 8·4 per cent. Press Conference—when she said that she saw no evidence at all that there were any price rises in the pipeline for the following winter? What has changed in the past eight months?
    Mrs. Shirley Williams: The hon. Gentleman's memory is somewhat selective. I said nothing as incautious as he suggests. One of the points made quite clear by my right hon. Friend the Chancellor of the Exchequer in his remarks on the Budget earlier this year was that all our predictions would depend on the rate of wage and salary settlements. In addition, the hon. Gentleman might care to remember that there was an increase in oil prices last winter, a factor that we have had to take into account.
    Mr. George Rodgers: Does my right hon. Friend agree that there have recently been announcements by several major food manufacturers of substantially increased profits? Can these manufacturers be directed to hold down prices in the food sector?
    Mrs. Shirley Williams: My hon. Friend may not be aware that the Price Commission's report, to be published later this week, will indicate that the profits of food manufacturing companies have been halved in the past year. I think that the companies my hon. Friend quotes must be those which largely export rather than sell in the home market.
    Mr. Lane: Does the right hon. Lady agree that even if the rate of inflation is brought down to 10 per cent. by this time next year it is still likely to be well above the rate of our main industrial competitors? Therefore, will the Government make it clear that if Britain's position is to be properly restored national restraint and the acceptance of lower living standards will be necessary not just for one year but for the next two or three years?
    Mrs. Shirley Williams: I know that the hon. Gentleman would not like to mis record what I said. I referred to the third quarter of 1976, rather than this time next year. As we are being held very closely to our remarks, I hope that the hon. Gentleman will accept that correction. My right hon. Friend the Chancellor and I have made it clear that the 10 per cent. is an immediate target, and that we must proceed to the point where inflation ceases to be of any significance in our economy.
    Mr. Peter Morrisonasked the Secretary of State for Prices and Consumer Protection by what percentage the retail price index has risen as compared with a year ago.
    Mr. Rostasked the Secretary of State for Prices and Consumer Protection what is the current annual rate of inflation based upon the rise in the retail price index over the past three months.
    Mr. Jim Lesterasked the Secretary of State for Prices and Consumer Protection what has been the increase in the retail price index over the past 12 months.
    Mr. Neuhertasked the Secretary of State for Prices and Consumer Protection what is the current rate of inflation based on the last three months of the retail price index expressed at an annual rate.
    Mr. MacGregorasked the Secretary of State for Prices and Consumer Protection what is the latest percentage increase in the retail price index on a yearly basis.
    Mrs. Shirley Williams: The retail price index for June was 261 per cent. higher than a year earlier. The change over the three months to June, expressed at an annual rate, was 48 per cent. But this includes the exceptional increase in May, which was substantially due to Budget changes in indirect taxation, and the
    8
    annual rate based on the June increase alone is 21.9 per cent.
    Mr. Morrison: Does the right hon. Lady accept that a rise of 26.3 per cent. in the retail price index is a pretty poor reflection on the Government's attempts to control inflation, and that the only way to stop the rot is for the Government to cease spending so much money?
    Mrs. Shirley Williams: The hon. Gentleman must have tabled his Question and formulated his supplementary question before the Government's announcements in the White Paper " The Attack on Inflation ". It would be helpful to the Government if, in the attack on inflation, we had for once the support of the Opposition.
    Mr. Rost: If the Government are really interested in attacking inflation, why do not they accept that indiscriminate, blanket food subsidies will only add to inflation? When will the right hon. Lady abandon the deception that she can hold down retail prices by spending public money in this way?
    Mrs. Shirley Williams: It is not a deception. In a period when sacrifices have to be made, those least well off should be protected. That is why the Government are continuing food subsidies. That is why the Government believe that they are adopting the right policy.
    Mr. Neubert: As inflation. on a three-months' basis, was 25.6 per cent. at the end of March, and as it is now, on the same basis, running at an annual rate of 48 per cent., does the right hon. Lady at least agree that the rate of inflation has nearly doubled in the past three months, and has gone up nearly six times since the Chancellor's pre-election statement of 8.4 per cent. last September? To whom does the right hon. Lady ascribe responsibility for this rapid acceleration?
    Mrs. Shirley Williams: I shall give the hon. Gentleman the benefit of the doubt in trusting that he did not hear my final sentence, in which I pointed out that the annual rate of inflation, on a monthly basis, is now 21.9 per cent. For the hon. Gentleman to pretend that such things as increases in indirect taxes on hard drink and tobacco are in some curious way an essential part of what has happened to inflation will not do.
    Mr. Ioan Evans: Does my right hon. Friend agree that if Opposition Members are expressing concern about the retail price index and calling for the removal of food subsidies, they must accept that if food subsidies are removed there will be an increase in the retail price index?
    Mrs. Shirley William: Of course, my hon. Friend is right. He will appreciate that the TUC and the trade unions have come a long way in supporting a flat-rate limit on their increases. It would be impossible for them to do so unless the Government also demonstrated concern for the situation of the least well-paid and the least well-off.
    Mr. MacGregor: Is the right hon. Lady aware that there is strong feeling among moderate and responsible people that it is wrong to increase food subsidies any further at present? Quite apart from the need to cut public expenditure, does the right hon. Lady agree that food subsidies are a bad way of helping those who are at the lower end of the income scale? Will she confirm that the Press reports from Brussels this morning that the Government are contemplating a further increase in food subsidies to compensate for the effect on the retail price index of a revaluation of the green pound are incorrect?
    Mrs. Shirley Williams: The hon. Gentleman will find that there are other Questions on the Order Paper on this point, but on the general question of subsidies I must go back to the past. I would not wish to do so but I think that it is necessary on this occasion. The hon. Gentleman's administration permitted large subsidies to be made available to nationalised industry prices—subsidies very much less progressive than the subsidies on food that this Government have introduced.
    Mr. Raphael Tuck: Will my right hon. Friend explain to the Opposition that as producers are also consumers, wage demands are bound to be influenced by the level of prices, and that to keep subsidies on is the only way of combating inflation?
    Mrs. Shirley Williams: I accept what my hon. Friend said. In a situation where unquestionably those with average or
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    higher than average standards of living will have to be asked to make sacrifices, it seems to the Government only reasonable that those who are considerably below the average standard of living should be helped in one way or another.
    Sir John Hall: Does the right hon. Lady agree that, despite the measures proposed in the White Paper that we shall be debating this afternoon, unless the Government are prepared to add further to the £70 million additional food subsidies, as proposed in the White Paper, the cost of living at the end of this year is likely to be over 30 per cent. higher?
    Mrs. Shirley Williams: I hope that the hon. Gentleman will be proved wrong. The best estimates that I can make suggest that he will be proved wrong. I have to repeat that there have been rumours and discussion about the possibility of a further oil price increase, to take one example. None of us can predict exactly what may happen to commodity prices. Present trends show commodity prices continuing to fall.
    Mrs. Sally Oppenheim: As the annual rate of increase in the retail price index is now more or less double the rate that the right hon. Lady inherited from the previous Conservative Government, will she acknowledge that the present rate signals the total failure of her Government's policies, and will inevitably lead not to a three-day working week but to a nil-day working week for more than I million people this winter?
    Mrs. Shirley Williams: No, the hon. Lady is not right. I have the year-on-year percentage changes in the RPI—20·1 per cent. and 26·1 per cent.—in front of me, and it is untrue to suggest that the rate at present is double the rate that applied when the hon. Lady's administration left office. I would say, in addition, that we would welcome the support of the hon. Lady for the policies that we propose to take to offset inflation.
    Later—
    Mrs. Shirley Williams: On a point of order, Mr. Speaker. I wish to make an apology. I misheard a remark which the hon. Member for Gloucester (Mrs. Oppenheim) threw at me across the Table in what was, I think she will agree, a

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    somewhat rowdy moment. I thought that she was speaking about food prices in the figures she mentioned. I am told that she was referring to the all-items index, and I apologise. This matter can be raised in the forthcoming debate.
    Mr. H. Boardmanasked the Secretary of State for Prices and Consumer Protection what was the percentage increase in the index of retail prices in the period March 1974 to May 1975; and what were the increases for the same period for food, electricity, gas, coal, postal charges, telephone charges, and public transport.
    Mrs. Shirley Williams: I shall arrange for the figures to be circulated in the Official Report.
    Mr. Boardman: Is it not obvious that some of the greatest inflationary pressures have come from the town halls and the State industries? Does my right hon. Friend agree that unless the Department can effectively control these elements there is little or no hope of success in other departments?
    Mrs. Shirley Williams: My hon. Friend will know that the price increases in certain nationalised industries have, above all, reflected the massive increase in firsthand fuel prices, particularly in that of oil. Therefore, there have recently been attempts to prefer the small consumer in terms of tariff changes. We on this side very much welcome that.
    Mr. Mike Thomas: But is it not a fact that the changes in electricity and gas tariffs have been modest in the extreme and that the breadth of the increases in those and other charges, particularly in the nationalised industries, are about to submerge the consumer completely, and that the White Paper offers no precise way of ameliorating the problem for them?
    Mrs. Shirley Williams: I assure my hon. Friend that on the best forecast we have the indications are that nationalised industries' prices are not likely to increase in the coming year at anything like the rate of the present year, which was largely due to the massive increase in first-hand fuel prices.
    The information is as follows:
    The percentage increases for the retail price index and selected items over the period March 1974 to May 1975 were:

    All items

    …

    …

    31·1

    Food

    …

    …

    30·1

    Electricity

    …

    …

    60·5

    Gas

    …

    …

    13·9

    Coal

    …

    …

    40·8

    Postal charges

    …

    …

    79·2

    Telephone charges

    …

    …

    38?9

    Rail fares

    …

    …

    29·9

    Bus etc. fares

    …

    …

    36·5

    Food Subsidies
    Mr. Gowasked the Secretary of State for Prices and Consumer Protection what is her latest estimate of the cost of food subsidies during the current financial year; and whether she will make a statement of Government policy in regard to food subsidies, following the statement of Mr. Chancellor of the Exchequer on 1st July.
    Mr. Tim Rentonasked the Secretary of State for Prices and Consumer Protection what are her latest proposals for the planned reduction in food subsidies.
    The Under-Secretary of State for Prices and Consumer Protection (Mr. Robert Maclennan): The estimated cost of food subsidies during the current financial year is about £550 million. As stated in the White Paper "The Attack on Inflation", the planned run-down in the programme next year will be moderated.
    Mr. Gow: Does the Minister think that the best way to help the elderly and those on low incomes is to increase food subsidies? How does he reconcile the statement of the Chancellor of the Exchequer of 15th April—when his right hon. Friend said that it was the Government's policy to contain and reduce food subsidies—with the statement that his right hon. Friend made earlier today?
    Mr. Maclennan: An analysis of the income expenditure of two-person households shows that the benefit of food subsidies is proportionately nearly four times greater for those with incomes below £20 a week than for those with incomes over £80 a week. Therefore, the answer is in the affirmative. On the second part of the hon. Gentleman's

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    question, the policy set out in the White Paper will affect pay more quickly than prices. We felt it essential to take steps to safeguard the position of poorer families. That is why the cut in the subsidy programme next year is to be smaller than that envisaged at the time of the April Budget.
    Mr. Bates: Why does my hon. Friend believe that we should subsidise butter but not margarine? As we import large quantities of butter but hardly any margarine, is not this almost a direct subsidy on imports?
    Mr. Maclennan: I have had discussions with the margarine industry about the effect on it of the butter subsidy. The industry recognised that the prospects are brighter than they were—[Interruption.] Conservative Members who find this such a risible situation should appreciate that the effect of competition on the margarine industry is not unimportant. They may then look at this matter from a new point of view.
    Mr. Renton: Is not the real danger that on food subsidies the Government will fall into the same trap as that into which they have fallen over post office charges and gas prices? Is it not clear that the longer we continue to subsidise the harder it is to return to economic and commercial levels? Would it not be far better to scrap food subsidies now and, instead, to concentrate the help that is available on those who cannot afford to buy food?
    Mr. Maclennan: It is not good enough for the Opposition to make this sort of criticism when they supported a policy not only of heavily subsidising the more regressive nationalised industries but a policy of food subsidies. It was the previous Conservative administration who introduced the butter subsidy that the Opposition are now apparently criticising.
    Mr. Mike Thomas: Does my hon. Friend accept that there are many hon. Members on both sides of the House who, over the years, have made a case for negative income tax? As food subsidies and subsidies on other essential items are financed by a clawback through income tax, does my hon. Friend agree that we have here a form of negative income tax? Does my hon. Friend accept that many of my hon. Friends would like
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    to see the Government's programme extended to other essentials and not limited to food?
    Mr. Maclennan: I am aware of my hon. Friend's views on this matter. I believe that he is right in stressing the redistributive benefits of the food subsidy programme. I regret that that appreciation is not shared by Conservative Members.
    Mr. Maxwell-Hyslop: Is the Secretary of State aware that the Government's policy of not covering producer costs has already predictably resulted in a chronic shortage of milk for manufacture? Is she aware that last Friday all of the employees in a milk processing factory in my constituency were told that they were losing their jobs because there was no milk for manufacture? Is she not concentrating so much on subsidies that the commodities simply will not be there, with the result that people will not benefit from subsidies on commodities which they cannot buy because they are not being produced?
    Mr. Maclennan: There is a later Question tabled on this subject.

    Packaging
    Mr. Gwilym Robertsasked the Secretary of State for Prices and Consumer Protection what study she has made of the packaging of goods; if she will lay down regulations on the needs and limitations of packaging; and if she will make a statement.
    Mr. Maclennan: I wrote to consumer organisations in March about over-packaging and I have asked the Waste Management Advisory Council to consider its views. The council, set up by the Government, is examining all aspects of packaging and is giving priority to an examination of any extravagant use of materials in retail packaging.
    Mr. Roberts: Does my hon. Friend accept that it is not only a question of over-packaging—although we do have an absurd situation when, sometimes, the package is worth five times the commodity—but that there are also occasions when packaging which is vitally important is missing? Does he further accept that guidance from his Department on this subject would be welcomed not only by

    15
    the general public but by the industry, in terms of its research and development programme?
    Mr. Maclennan: My hon. Friend is right to draw attention to the need for packaging as well as to the possibility of saving on wasteful packaging. It is to review all of these considerations that the Government have set up the Waste Management Advisory Council, whose packaging group is considering the points he has made.
    Mr. Lane: What are the Government doing to encourage a greater re-use of containers?
    Mr. Maclennan: That is one of the matters being considered by the group.
    Mr. Greville Janner: Is the group also considering the problem of misleading packaging, in particular—
    Mr. Cormack: Manifestos.
    Mr. Janner:—those vast packs containing minute articles, for example, little bottles of scent hidden in huge boxes, or cartons of dairy products with false bottoms, which appear to contain at least twice as much as is the case?
    Mr. Maclennan: We are looking at the possibility of extending the use of standardised containers. The point which my hon. and learned Friend has made about bottles is before the group. I have received representations on this from a number of consumer organisations.

    Green Pound
    Mr. Biffenasked the Secretary of State for Prices and Consumer Protection what has been the beneficial impact of the green pound calculation of the Common Agricultural Policy for farm prices upon the Retail Price Index; whether she intends to seek to maintain this consumer advantage; and if she will make a statement.
    Mrs. Shirley Williams: The green pound system reduces the price in the United Kingdom of most important food- stuffs, including cereals, beef, dairy products, bacon and other pigmeat products. It reduces farmers' incomes correspondingly, and adjustments to the rate have to balance the interests of producer and consumer.
    16
    The present gap between the green pound and the market rate for sterling is about 19 per cent., though the figure fluctuates according to the value of the pound. There can be no precise estimate of the effect on retail prices, because many other factors are involved. If the gap were completely closed and the United Kingdom guaranteed price for milk were adjusted correspondingly, the eventual effect on the retail food index might be in the order of 4 per cent to 5 per cent., and on the retail price index about 1 per cent. to 1¼ per cent.
    Mr. Biffen: I am sure that that answer has a false bottom, in the sense that the right hon. Lady did not seek to reply to the part of my Question which asked her whether she sought to maintain this consumer advantage. In view of the widespread and authoritative Press comment that there is likely to be a 5 per cent. devaluation in the green pound concluded at this week's meeting of the Council of Agriculture Ministers, will she confirm that this will, as a consequence, produce an impact of between £40 million and £50 million upon the retail price index? Will she further confirm that that will substantially obliterate the increase in food subsidies announced by the Chancellor? Will she tell the House how she views this likely development?
    Mrs. Shirley Williams: The hon. Member represents a constituency with considerable agricultural interests—
    Mr. Biffen: And consumer interests.
    Mrs. Shirley Williams:—and he will therefore know that the job of any Government is to strike a balance between consumer and producer interests. He will also know that my right hon. Friend the Minister of Agriculture is presently engaged in a meeting of the Council of Agriculture Ministers which does not complete its deliberations until tomorrow. My right hon. Friend will be answering questions when he makes his statement to the House about the outcome of those discussions. Not only would it be improper for me to attempt to predict results at this stage; it would also be quite inaccurate.
    Mr. Dalyell: In the meantime, what can we usefully say to our NFU branches as to the time scale during which the gaps can be closed?
    Mrs. Shirley Williams: My hon. Friend will be aware that no statement on that can be made until tomorrow, when my right hon. Friend makes his statement. The NFU, too, will recognise that there is a balance to be struck between consumer and agricultural interests.
    Mr. Powell: Will the right hon. Lady explain what is the beneficial impact of the difference between the sterling green pound and the Irish green pound, and what is the justification for maintaining it?
    Mrs. Shirley Williams: There is a difference, as the right hon. Gentleman knows. He will be aware that the Republic of Ireland has pressed for there to be an adjustment of the rate all the way up to the market rate. This does not have the full support of Her Majesty's Government.

    Price Code
    Mr. Norman Lamontasked the Secretary of State for Prices and Consumer Protection if she can yet state what action she intends to take on the expiry of the Price Code in March 1976.
    Mrs. Shirley Williams: The Remuneration, Charges and Grants Bill provides for the Price Code to be extended beyond March 1976. This does not exclude the possibility of taking further new powers beyond those being included in the present Bill, or of amending the present Price Code.
    Mr. Lamont: Will the right hon. Lady undertake to keep the House fully informed about the discussions she has with the CBI, since it is unsatisfactory that, often, we do not know what has been proposed to the CBI? Secondly, will she tell us when we shall have the consultative document on the Price Code and when it will be enacted? Will she also tell us whether she has indicated in any of her discussions with outside bodies that she is considering amending the present code and continuing it next year, or whether she is considering having another code?
    Mrs. Shirley Williams: I can assure the hon. Gentleman that we shall explain as fully as we can all our discussions with the CBI during today's debate and in the debates over the next couple of
    18
    days. There will be in the Vote Office, I hope at 3.30 p.m., copies of the consultative document, which will have been available to Members at the earliest possible date, since the document has only just been finalised for presentation and publication. There will be an opportunity to debate amendments to the Price Code, which will have to be made by affirmative order of the House, following the passage, we trust, of the Remuneration, Charges and Grants Bill. There will, therefore, be more than one opportunity for the House to discuss in detail the proposed changes to the Price Code. There is a further Question dealing with a new price code and I shall deal with that point when we reach that Question.
    Mr. Raphael Tuck: Has my right hon. Friend read the proposal by the National Consumer Council for a freeze on prices and essentials? If so, may I have her comments upon it?
    Mrs. Shirley Williams: Not only have I read the report, I have also met members of the council in the past week to discuss the matter. I pointed out to it that while a price freeze was not possible at this time because of high rising costs still coming through the pipeline—some of them associated with rates and import prices as well as increases in incomes—it was the Government's intention, as soon as costs began to ease, to make sure that that was reflected in prices—certainly in the prices of the more essential goods.
    Mr. Dodsworthasked the Secretary of State for Prices and Consumer Protection what discussions she has had with the CBI on amendments to the Price Code.
    Mrs. Shirley Williams: I met the CBI on several occasions during the discussions leading up to the White Paper " The Attack on Inflation ". These discussions covered the question of amending the Price Code to prevent excessive pay settlements being reflected in higher prices. With other interested parties, the CBI have now been invited to comment on the details of the code amendments.
    Mr. Dodsworth: Is the right hon. Lady aware that the key to any anti-inflation policy must be increased productivity, and that the key to increased productivity must be increased investment? Will she

    19
    undertake that there will be a continuous review of the investment relief available under the Price Code, comparable with the one we have for taxation purposes, to ensure that investment is fostered in every possible way?
    Mrs. Shirley Williams: The hon. Gentleman will know that this Government introduced investment relief into the Price Code. We have already reviewed it once and we shall certainly continue to keep it under review, because it is very much our intention that we should take action to improve investment in both the public and private sectors for the sake of this country's future growth.
    Mr. Mike Thomas: Is my right hon. Friend satisfied that the Price Code gives her sufficient power to control both the overall nature and the details of nationalised industries' prices?
    Mrs. Shirley Williams: Although the Price Code bites on nationalised industries' prices it is not the most direct control over them. The most direct control over the nationalised industries' prices, following the White Paper, "The Attack on Inflation", arises from the ability of Ministers to decide whether any given price increase shall be given.
    Mr. Norman Lamont: Will the Secretary of State give some details of the basic items on which voluntary price restraint is to be called for? Will she confirm that this is not to be confined to food? Will she therefore give some examples of what, in addition to food, it may be applied to?
    Mrs. Shirley Williams: The hon. Gentleman will know that our discussions with the CBI and the Retail Consortium have, at present, just begun. It would be wrong for me to try to predict the outcome. I confirm that it is not the Government's wish that this should be concentrated wholly on food, which is the area where margins, at present, are the most narrow, but it should be an across-the-board system of price stabilisation, based upon essential goods, including consumer durables.
    Mr. Arthur Lewis: At the end of my right hon. Friend's original reply she made reference to the CBI and other interested parties. In future, when she and the Government generally go to the
    20
    lengths that they do to discuss these matters with the CBI, the TUC, other parties and Uncle Tom Cobley and all, will she occasionally consider discussing them with Members of Parliament? Members of Parliament would love to be able to discuss with the Government such things as their counter-inflation policy, wage freezes, and all the rest, before they come to these decisions. They would like to discuss these matters with the Government at the same time as they are discussed with other interested parties.
    Mrs. Shirley Williams: My hon. Friend has got it wrong. We are laying before the House today a consultative document. No final decisions have been made upon it. It will be available to Members of Parliament as early as it is available to anybody else today. The discussions over the next four days will cover that document. I shall listen closely to the debate before we finalise the document. I assure the House that it is being fully consulted at the earliest possible stage in this matter and that no final decisions have yet been taken.

    Goods and Services (Nationalised Industries)
    Mr. Wakehamasked the Secretary of State for Prices and Consumer Protection what steps are taken under her responsibility to protect the consumer in relation to services and products provided by the nationalised industries.
    The Minister of State, Department of Prices and Consumer Protection (Mr. Alan Williams): We keep in close touch with the Departments responsible for the nationalised industries on all matters affecting consumers. Members of the nationalised industry consumer councils are now appointed by my Department. We have asked the National Consumer Council to review the present arrangements for consumer representation in the nationalised industries and will consider any recommendations which the council may make for strengthening the protection of the consumer.
    Mr. Wakeham: May I draw the Minister's attention to Section 79 of the Fair Trading Act 1973 and ask whether his right hon. Friend has referred any of the labour practices in the nationalised industries to the Monopolies Commission

    21
    and, perhaps more important, in view of the vast increases in nationalised industry prices that are in the pipeline, whether she has any plans to refer them to the Monopolies Commission in future?
    Mr. Alan Williams: No, Sir.
    Mr. Cryer: Does my hon. Friend agree that one way of bolstering up the consumer councils is to examine the possibility of holding direct elections to the boards? Does he also agree that recently the consumer councils have given valuable critical advice about the proposed gas and electricity increases, which they oppose? Will my hon. Friend tell the House what he proposes to do about these attitudes?
    Mr. Alan Williams: I look forward to receiving the formal reports which are due from the Post Office and the gas industry consultative councils. We shall discuss those reports with the relevant Departments.
    On direct elections, it is an interesting prospect, but I am not sure that the public want more elected bodies. There is a danger of a proliferation of elections if we are not careful, but certainly it is a possibility worth considering. I shall urge my hon. Friend to draw this to the attention of Michael Young, in the National Consumer Council, so that it can be taken into account when its report is prepared.
    Mr. Giles Shaw: Does the Minister agree that there is little evidence that the existence of these councils hitherto has actually achieved reductions in costs to the consumer? In view of the proposals for massive increases in postal charges, what terms of reference does the Minister expect the Post Office Users National Council to have in order to try, at long last, to achieve some reduction on behalf of the consumer?
    Mr. Alan Williams: As the hon. Gentleman is so disillusioned about the effectiveness of these councils, no doubt he will give wholehearted support to our decision to refer them for consideration. On the Post Office, as I indicated to my hon. Friend the Member for Keighley (Mr. Cryer), we are waiting for the report so that we can have discussions with the relevant Department.
    Mr. George Cunningham: Does the Minister realise that on the gas consultative councils, at regional level, there are
    22
    too many local authority representatives, and that these days they are far too busy on local authority matters to be able to give enough time and energy to the task of looking after the gas boards?
    Mr. Alan Williams: I do not dissent from my hon. Friend's point of view. However, he must bear in mind that we are somewhat inhibited about the ratios of local authority representatives by the requirements of the statutes, which in some cases specify the ratio of councillors who have to be put on to the committees. This is one of the matters that we hope will be looked at by the consultative councils, with a positive result for the consumer.
    Mrs. Sally Oppenheim: Is the Minister aware that the consumers of nationalised industries' goods and services are among the most dissatisfied consumers in the country? Is he also aware that we do not want subsidies increased, but that we want him to investigate those instances of extravagance, inefficiency, overmanning and overpayment in the nationalised industries, which are contributory factors?
    Mr. Alan Williams: The hon. Lady has said that she does not want subsidies and that the consumers are dissatisfied. I do not dissent from that point of view. However, I ask her to bear in mind that one of the reasons is that the nationalised industries have had to face an abnormal rate of increase to get rid of subsidies that her Government imposed.

    Consumer Products (Safety)
    Mr. Crouchasked the Secretary of State for Prices and Consumer Protection whether she will make a statement on her proposals for improving the safety of consumer products.
    Mr. Alan Williams: I am currently reviewing our powers in this area and propose to issue a consultative document as a result. Meanwhile my Department is preparing further regulations under the Consumer Protection Act 1961.
    Mr. Crouch: I thank the Minister for that reply. Is he aware that many hon. Members regard as most important the area of his Department concerned with the safety of products. Will he say whether the consultative document will be in the nature of a Green Paper, which will

    23
    cover, in particular, such items as electrical appliances and children's toys?
    Mr. Alan Williams: Electrical appliances will be the subject of a regulation which we hope to lay before the House before the recess. We trust that that will have already been achieved before the consultative document comes forward. This will the first time that there has been a public discussion about the safety responsibilities of the Department. We want to raise issues on the question whether there should be a cease-and-desist power with the Minister or Director General, and whether there should be a improvement of the pilot scheme which we have for obtaining information about product-caused accidents from accident units of hospitals.
    Mr. Greville Janner: I thank the Minister for the steps that are now being taken in connection with the safety of consumer products, but is he also proposing to take steps to deal with the safety of consumer services in which area consumers are totally unprotected at present, largely because they are not protected against the effects of totally misleading and disgraceful exclusion clauses?
    Mr. Alan Williams: My hon. and learned Friend will be aware that the exclusion clauses are the subject of consideration by the Law Commissions, over whom Parliament has given my Department no control whatsoever. [Interruption.] My hon. and learned Friend may chunter away as much as he wishes. He is free to bring forward a Private Member's motion to give my Department power, but I cannot act outside the powers which the House of Commons has given to the Department. On services, we shall, of course, be including the whole range of safety factors covered by the Department in the consultative document.

    Package Holiday Surcharges.
    Mr. McCrindleasked the Secretary of State for Prices and Consumer Protection how many representations she has received in 1975 on package holiday surcharges.
    Mr. Alan Williams: Ten, Sir.
    Mr. McCrindle: The Office of Fair Trading having deplored the imposition of the surcharges either at the airport or,
    24
    more particularly, at the resort, will the Minister try to persuade those tour operators who have been guilty to desist? Will he tell us why some operators have felt it necessary to impose this sort of surcharge although others taking holiday makers to the same resort and the same hotel have not?
    Mr. Alan Williams: It is often a matter of the conditions of contract. It is understandable that where the value of sterling has fallen and imposed extra costs on operators, they sometimes incur legitimate extra costs, which should be recouped. As the hon. Gentleman will be aware, the Civil Aviation Authority is looking at the matter, and we are waiting for its report. The hon. Gentleman will be further aware that responsibility for the industry is vested in the Department of Trade and not in my Department.
    Mr. MacFarquhar: Does my hon. Friend accept that many holiday makers find it incomprehensible that they should pay many months in advance, at a certain sterling rate, for their holidays and yet, when they take their holidays in the summer, they find they are liable for a surcharge? Will he undertake to ensure that these surcharges are not due to the inefficiency of tour operators who do not buy transportation or residential accommodation far enough in advance?
    Mr. Alan Williams: I cannot give that assurance, because responsibility rests with the Department of Trade. However, I shall draw the attention of my right hon. Friend the Secretary of State for Trade to the points made by my hon. Friend.

    Food Prices
    Mr. Canavanasked the Secretary of State for Prices and Consumer Protection whether she will now take further measures to control the price of food.
    Mr. Thorneasked the Secretary of State for Prices and Consumer Protection whether she will now introduce proposals to freeze all prices of food and other essentials.
    Mrs. Shirley Williams: The White Paper " The Attack on Inflation " made it clear that the present price control already ensures that a lower rate of increase in pay is reflected in a lower

    25
    rate of price increase, and that the Government do not intend to push price control to the point where it would endanger employment and investment. Further action will be taken as soon as it is clear that the new pay limit is being effectively observed.
    Mr. Canavan: Will my right hon. Friend ensure that traders do not take advantage of temporary abnormal shortages of certain foods by imposing permanent price increases on the consumer? In particular, will she ensure that potato merchants and chip shops, for example, lower their prices now that the temporary shortage of potatoes has been alleviated? In some areas of Scotland people are still having to pay up to 15p for a pound of potatoes, up to 35p for a fish supper and, possibly worst of all for a Scotsman, up to 25p for a haggis supper?
    Mrs. Shirley Williams: I should not like to prevent my hon. Friend's constituents enjoying one of their favourite suppers. I assure him that I have already asked the Prime Commission to look closely at any fall in raw material prices, which would include fresh foods like potatoes, and to make sure that the benefit goes through to the consumer.
    Mr. Ridley: The right hon. Lady said that she did not want to push price control to the point where it would endanger inflation and investment. Has she not already passed that point? Will she describe at what level of return on capital she thinks that point is reached?
    Mrs. Shirley Williams: There has been a decline in profits in home markets amounting to nearly half the figure which was ruling at the time of the introduction of the Price Code, and that has meant a very sharp decline in margins. I believe that the hon. Gentleman gave himself away when he said that I did not want to push price control to the point where it endangered inflation. It is my intention to press it to the point where it endangers inflation, without pressing it to the point where it endangers employment.
    Mr. Adleyasked the Secretary of State for Prices and Consumer Protection if she will publish in the Official Report, from international sources available to her, a list of those Western countries
    26
    which have a higher rate of increase of food prices than that presently pertaining in the United Kingdom.
    Mr. Alan Williams: Yes, Sir.
    Mr. Adley: Is the hon. Gentleman aware that that is the sort of unhelpful answer which we might have expected? Could it have anything to do with the fact that the figures will presumably show that this country has a much higher rate of increase in food prices than have its industrial competitors? Will the hon. Gentleman confirm that that is so? If it is, does he agree that now that the Government have shown the first glimmer of sanity in recognising that we have a problem called inflation, they would help to control it and bring down the rate of increase in food prices if they scrapped a whole range of their other policies which are doing much damage to the economy?
    Mr. Alan Williams: It was a good reply. It answered precisely the point about which the hon. Gentleman chose to ask. I apologise; I did not realise that the hon. Gentleman wanted equivocation. The hon. Gentleman suggested that there is a glimmer of the Government's recognising certain measures that the hon. Gentleman finds appropriate. Therefore, I trust that he will reflect that glimmer by marching into the Division Lobbies in support of it, unlike his other fence-sitting colleagues, when the House is asked to vote on the Government's measures.
    Mr. Arthur Lewis: Whatever may or may not be the cause of higher food prices, is my hon. Friend aware that today the agricultural workers will get an increase in their wages but that they will still be receiving less, in real terms, than they did 10 years ago? Therefore, it can hardly be suggested that the increase in the cost of food is the fault of the agricultural workers, can it?
    Mr. Alan Williams: I do not recollect that I accused the agricultural workers of any responsibility in this respect. However, my right hon. Friend the Secretary of State for Employment, who is avidly listening to what is being said, will no doubt bear in mind my hon. Friend's point.
    The information is as follows:

    PERCENTAGE CHANGES IN FOOD PRICES IN THE TWELVE MONTHS TO:

    November 1974

    February 1975

    May 1975

    Iceland*

    + 51·2

    + 56·9

    + 39·2

    Ireland*

    + 20·2

    + 22'7

    + 28·0

    Portugal

    + 37·0

    + 28·8

    Not available

    * Quarterly indices.

    Gas and Electricity Supplies (Consumer Councils)
    Mr. Hooleyasked the Secretary of State for Prices and Consumer Protection by what date her Department will assume responsibility for the consumer councils of the gas and electricity supply industries.
    Mr. Alan Williams: The Department assumed responsibility for the appointment of the members of the nationalised industry consumer councils, other than the Scottish Electricity Consultative Councils, on 1st February 1975. When the Statutory Corporations (Financial Provisions) Bill receives the Royal Assent, the financing of these councils will also pass from the industries to the Government.
    Mr. Hooley: That is very welcome news. Will my hon. Friend confirm that these consumer councils will have adequate staff and, if possible, independent inspectors to check on some of the less desirable practices of the British Gas Council and on the rising and disquieting number of complaints against that body?
    Mr. Alan Williams: I have already indicated in answer to an earlier Question that we are reviewing the whole structure of these councils and their membership. I shall bear in mind the points made by my hon. Friend. However, I draw to his attention the fact that, for example, the Post Office Users National Council has been told that if it wishes to commission a consultant to give it back-up research facilities it is free to do so.
    Mr. Crouch: Will the hon. Gentleman tell us whether he is of the opinion that these councils should be associated in any way with the nationalised industries on which they comment, or should be completely separate? He will be aware that the Select Committee on Nationalised Industries examined these councils some years ago and found, to its dismay,
    28
    that their association was not always in the consumers' interest.
    Mr. Alan Williams: The hon. Gentleman has made a valid point. I think that to some extent we anticipated that point by pressing for the transfer of the responsibility for these councils away from the sponsoring Departments to my Department, and assuming the financial responsibility which had previously rested with the nationalised industries. Therefore, we have moved considerably towards the greater independence of these councils. If there are any other aspects worrying hon. Members which they believe in any way limit the independence of these councils, we shall be willing to look at them.

    Trades Union Council (Talks)
    Mr. Townsendasked the Secretary of State for Prices and Consumer Protection what aspects of prices and consumer affairs have featured in her recent discussions with the TUC.
    Mrs. Shirley Williams: I have discussed with the TUC those aspects covered in its statement "The Development of the Social Contract", which was adopted by the TUC General Council on 9th July.
    Mr. Townsend: Did the Secretary of State make it clear to the TUC that it would be highly dangerous to increase Government expenditure at this time? Did she also point out that to do so would work against the TUC's approach to the problem of controlling excessive wage demands?
    Mrs. Shirley Williams: The hon. Gentleman will recognise, if he has read the TUC document, that it concerns itself largely with pay and prices questions and does not touch on what has always been regarded as a major Government concern, namely, public expenditure—which is not normally widely discussed with other bodies.

    Price Commission
    Mr. Giles Shawasked the Secretary of State for Prices and Consumer Protection when the next report of the Price Commission will be published; and whether she will make a statement.
    Mr. Maclennan: The Price Commission's Ninth Report should be published on 24th July and will be laid before the House.
    Mr. Shaw: Does the hon. Gentleman agree that it would be of great benefit to the House to have the Price Commission's report available at this time, when we are to discuss this important measure? Does he further agree that the Price Commission's report has been available to his Department for some time? Why should it be released so much later than the consultative document to which the Secretary of State referred this afternoon?
    Mr. Maclennan: I am in a fair measure of agreement with the hon. Gentleman. We have been discussing with the Price Commission the possibility of its providing its quarterly reports more quickly, to take account of the considerations put forward by the hon. Gentleman.

    National Consumer Council
    Mr. Mike Thomasasked the Secretary of State for Prices and Consumer Protection whether she will make a statement on the progress to date of the National Consumer Council.
    Mr. Alan Williams: The National Consumer Council announced its initial list of priorities on 14th July. My right hon. Friend the Secretary of State and I saw representatives of the council last week to discuss the Government's policy on inflation. Its chairman is now a member of NEDC.
    Mr. Thomas: As the National Consumer Council is by Government policy to be accorded the same status in the Government's consultation process as the CBI and the TUC, may I ask whether the NCC was present and what part it played in the discussions about the present package with the TUC and the CBI? Secondly, although the Prime Minister is prepared to tell us all about his meetings with the CBI and the TUC, may I ask why he transfers to the Secretary of State for Prices and Consumer Protection Questions about his meetings with the National Consumer Council?
    Mr. Alan Williams: I reassure my hon. Friend that to the best of my knowledge we have received no com-
    30
    plaints from the NCC about the way in which the consultations have taken place. Indeed, we had full and constructive discussions with the NCC last week. I know that my hon. Friend will accept that the whole basis of consultation will evolve gradually as the NCC develops its own methods of work. During the discussions last week we dealt with ways of expanding consultation.
    Mr. Dykes: In the Government's proposed discussions with the Retail Consortium on the 10 per cent. price limits and limits on essential goods and services. would it not be a good idea to give the NCC equal status with the consortium?
    Mr. Alan Williams: As I have already indicated, our aim is to allow the NCC to develop its own capacities naturally. It has been in existence for only two months. We had constructive and helpful discussions with the NCC last week. We hope to expand the basis of consultation. As my lion. Friend the Under-Secretary of State said, the House still has to debate the points which the Government have put forward in the consultative document. The House will also be able to consider the points put forward in the NCC's Press statement.

    Estate Agents
    Mr. Ioan Evansasked the Secretary of State for Prices and Consumer Protection what plans she has for the regulation of the services of estate agents in the interest of the consumer.
    Mr. Alan Williams: I am preparing a consultative document which will invite public comments on proposals designed to give further protection to consumers in this area.
    Mr. Evans: I thank my hon. Friend for his reply. Did he notice that the question of lost deposits was recently raised by the Master of the Rolls in a court case? Will he bear in mind that estate agents are involved in buying and selling property?
    Mr. Alan Williams: I am fully aware of the unsatisfactory nature of the current controls concerning estate agents. That is why I wish to bring the matter to public notice and seek a positive move ahead in protecting consumers. We are

    31
    considering the requirement for compulsory bonding and the possibility of establishing a licensing system.
    Mr. George Rodgers: Does my hon. Friend agree that a useful service for consumers could be provided by the solicitors and surveyors in town halls?
    Mr. Alan Williams: Yes, but that goes slightly beyond the scope of this Question, and raises the matter of the monopoly in conveyancing, which is vested in solicitors. I assure the House that that is also a matter on which I hope to make an early announcement of the Government's intentions.

    Bread
    Mr. Ridleyasked the Secretary of State for Prices and Consumer Protection if she will now phase out the bread subsidy and establish a real price for bread.
    Mr. Maclennan: Bread is a basic foodstuff of particular importance to poorer families, and I have no intention of phasing out the subsidy in the immediate future.
    Mr. Ridley: Is the hon. Gentleman aware that the words of this Question have been taken exactly from the annual conference resolution of the Bakers' Union? This is what it wanted. Why do the Government always do everything that they are told to do by the unions except on the rare occasion when it happens to be right?
    Mr. Maclennan: I think that the hon. Gentleman is under a misapprehension. The subsidy has not affected the profits of the baking companies since it was designed to give the same return as the price increases which they would have implemented. We believe that the subsidy may have positively helped the industry since we have observed a small increase in the consumption of bread, which is against the established trend.
    Mr. Mike Thomas: Will my hon. Friend say whether the real value of the bread subsidy, including its share of the £70 million referred to in the White Paper, will be greater in the next 12 months or less than it was last year?
    Mr. Maclennan: I should expect it to be much the same.

    Milk Subsidy
    Mr. William Hamiltonasked the Secretary of State for Prices and Consumer Protection what is the present subsidy on the price of liquid milk; and whether she intends to maintain price control on this commodity.
    Mr. Maclennan: The subsidy on liquid milk is estimated to amount to £270 million in the current financial year, which is equivalent to about 2p per pint. The price of milk has been controlled since 1940 and we have no intention of changing the position.
    Mr. Hamilton: That reply is very satisfactory. We hope that whatever happens to other food subsidies this one will be maintained, if not increased. Does my hon. Friend agree that milk is the most nutritious food for the most helpless sections of the community, namely, children and old people, and that the longer he maintains it, the more the new Government policies against inflation will be accepted?
    Mr. Maclennan: I am grateful to my hon. Friend, and I agree with him whole heartedly.
    Miss Fookes: Will the hon. Gentleman urgently consult the Minister of Agriculture, because if the price is held down at the present level there will be a shortage of liquid milk, as farmers will not produce it?
    Mr. Maclennan: The hon. Lady is unreasonably pessimistic about the liquid milk situation.
    Mr. Raphael Tuck: Is my hon. Friend aware that on 26th June the Finance Minister for the Republic of Ireland, Mr. Ryan, announced that he was applying a subsidy to milk to reduce the price by 2p a pint? Does my hon. Friend think that he might follow that example.
    Mr. Maclennan: Perhaps my hon. Friend will await the statement of my right hon. Friend the Minister of Agriculture when he returns from his current talks. I think that it will deal with my hon. Friend's point.
    Mr. Biffen: What would be the impact on the subsidy bill if the green pound were devalued by 5 per cent. but the

    33
    retail price of milk was maintained at its present level?
    Mr. Maclennan: My right hon. Friend has already answered that question—
    Mr. Biffen: No.
    Mr. Maclennan:—and has pointed to the statement that my right hon. Friend the Minister of Agriculture will be making. Talk about the possible extent of the devaluation of the green pound is pure speculation.

    Asbestos (Do-It-Yourself Products)
    Mrs. Joyce Butlerasked the Secretary of State for Prices and Consumer Protection if she will introduce regulations making the labelling of do-it-yourself products containing asbestos mandatory, so that the asbestos content is clearly indicated, and a warning of the danger of dust inhalation given.
    Mr. Maclennan: I shall certainly consider doing so if the consultations my Department is currently holding with the Asbestosis Research Council do not lead to the introduction of a satisfactory voluntary labelling scheme.
    Mrs. Butler: As most "do-it-yourselfers " are not aware that materials such as that used for masonry plugs contain asbestos and that asbestos itself can be a serious cancer hazard, will my hon. Friend say why it has taken four years since the Standing Medical Advisory Committee reported to the Department of Health and Social Security for us to reach the present stage? Will he consider this matter urgently, with a view to getting some regulations on the statute book?
    Mr. Maclennan: My Department has not been in existence for four years, but we have been in touch with the manufacturers of the criticised screw-fixing compounds and have secured their agreement on the labelling of the plugs with appropriate safety advice.
    Mr. Cryer: Is my hon. Friend aware that the Asbestosis Research Council has distributed throughout industry hundreds of thousands of leaflets about asbestos, and that mandatory regulations have been ignored, with the consequence that a number of people in, for example, the Hebden Bridge area, represented by my hon. Friend the Member for Sowerby (Mr.
    34
    Madden), have suffered from asbestosis There have also been cases in London. What is needed is legislation containing penalties for breaches.
    Mr. Maclennan: I am aware of some of the general facts mentioned by my hon. Friend, and I am in discussion with the Asbestosis Research Council on the possibility of introducing a voluntary scheme. If the scheme does not prove satisfactory, I shall consider my hon. Friend's points sympathetically.

COWM RESERVOIR (POLLUTION)
Mr. Cyril Smith(by Private Notice) asked the Secretary of State for the Environment if he will make a statement concerning the pollution of the Cowm Reservoir.
The Minister of State, Department of the Environment (Mr. Denis Howell): Water supplies in the Rochdale area became contaminated on Friday as a result of the pollution of the Cowm Reservoir by phenol. This substance was conveyed into the reservoir by springs which feed into it. It appears that the source of the pollution, although not yet pinpointed, is likely to be an industrial waste tip in the area. I am informed that phenol has a very unpleasant taste but is not toxic.
The contamination was first detected by the North-West Water Authority on Friday, and it immediately carried out a preliminary analysis, the results of which became known on Saturday afternoon, when the first public complaints were also received by the police, who took action to warn householders. Emergency supplies were laid on Sunday afternoon.
The suspected spring water is now being diverted away from the reservoir and the water authority is cleansing the mains and will continue to supply tanker drinking water until the mains are clear.
The water authority, the Lancashire County Council—the waste disposal authority—and the Rossendale District Council are investigating the cause of the pollution. The services of my Department and of the Government Chemist have been placed at the authorities' disposal.
I am concerned about this incident and the delay in warning the public and I

35
have called for a full report from all the authorities involved. I am grateful to the hon. Member for Rochdale (Mr. Smith) for raising this matter and to my right hon. Friend the Member for Heywood and Royton (Mr. Barnett) who has also been in constant touch with me. I shall, of course, keep them fully informed as to the results of my inquiries.
Mr. Smith: I am grateful to the Minister for his comments and for saying that the right hon. Member for Heywood and Royton (Mr. Barnett) has also been deeply concerned about this matter. I should have done so myself had not the Minister mentioned it.
The Minister said that he will have prepared a full report. May I take it that the substance of the report which is to be presented to him will be made public, so that we may know the real cause of the problems suffered by thousands of people in this area over the weekend?
Will the Minister take immediate steps to ensure that, should a similar incident occur in any reservoir in this country, emergency procedure is laid down which will secure the immediate notification of suspicion to the medical officer of health in the area and the protection of the consumer as the first priority? Is the Minister aware that 36 hours elapsed between suspicion of pollution and the public's receiving any notification of the suspicion and that the notification when it came was via the media at the request of the local police rather than at the request of the water authority?
Does the Minister realise that lives might have been lost or at stake if the pollution of the reservoir concerned had been by a chemical which had more serious results? Does the Minister not agree that the total disregard of the North-West Water Authority for its consumers was absolutely scandalous, and what does he propose to do about it?
Is the Minister further aware that water wagons were first delivered to the area on Sunday? Will he advise the water authority that the truth is called for rather than a tissue of lies to cover up the totally inefficient way in which the North-West Water Authority dealt with the matter?
Mr. Howell: I certainly agree that when there is public concern over the pollution of water supplies the fullest possible disclosure is called for. That is what I intended when I said that I would see that the hon. Gentleman and my right hon. Friend get the report when I have it. There will be no cover up by the Government. I must say, on behalf of the North-West Water Authority, that, however strongly we may feel about the administration—I share the hon. Gentleman's concern about the delay between the first suspicion and notification to the public, which is one of the matters that needs to be looked into—the authority has been completely open and has not attempted to hide any of the unfortunate facts, including the delay.
On the question of emergency procedures, based on the findings of the inquiry into this incident I intend to have the emergency procedures thoroughly examined in the light of experience to see whether we need to make any changes.
Mr. Raison: Is the Minister aware that the Opposition share the concern that has been expressed about this incident and about the apparently feeble response of the water authority? Is the Minister quite sure that there is no danger to health, and will he tell us how his plans are advancing for bringing in Part II of the Control of Pollution Act 1974, which deals with water pollution?
Mr. Howell: We are actively consulting local authorities on the latter point. If they agree to our implementing that part of the Control of Pollution Act, we shall do so but, as the hon. Gentleman knows, the local authorities are at present resisting further legislation being imposed upon them which would cause any increase in public expenditure. We therefore thought it right to consult them before bringing that part of the Act formally into operation. If the local authorities agree, it will be brought into operation immediately.
I understand that, fortunately, no danger to health is involved. The dumping of toxic wastes is already controlled by previous legislation, not by the Control of Pollution Act.
Mr. George Rodgers: Are there other sites or dumps in the vicinity of reservoirs where industrial waste may be tipped, and have any steps been taken to avoid incidents of this sort in future?
Mr. Howell: When we came into office we found that our predecessors had identified about 50 tips which were potentially dangerous. We have continued with the action they properly took, which was to have every one of the 50 tips thoroughly investigated by competent scientists. I announced in an answer a few weeks ago the detailed result on each one of those tips. No tips in the country, so far as we know, are liable to cause danger to health, but this sort of incident means that one can never be complacent about public health.
Mr. English: Is my hon. Friend aware that when I served with the hon. Member for Rochdale (Mr. Smith) on the local authority which controls this reservoir, one elected authority controlled all the three functions that today are controlled by three authorities, some of them unelected? Is that not another illustration of the way in which local government was better administered under the old system than under this so-called reform?
Mr. Howell: I advised my hon. Friends when in Opposition that this diversification of responsibility was a reason to vote against local government and water authority reorganisation. I therefore have some sympathy with my hon. Friend's comment.

NORTHERN IRELAND
The Secretary of State for Northern Ireland (Mr. Merlyn Rees): I will, with permission, Mr. Speaker, make a statement.
On Thursday 10th July, in South Armagh near the border village of Forkhill, the security forces saw what appeared to be a suspect device possibly containing explosives. This was kept under observation until Thursday 17th July, when an Army patrol went to deal with it. As it approached, an explosive was detonated from a distance. Four soldiers were killed and one was seriously wounded. A man has been arrested and has appeared in court charged with murder. The House will join with me
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in expressing sympathy for the relatives of the dead and injured.
The Crossmaglen PIRA claimed responsibility. It has used the excuse that it was avenging the death in Bessbrook on 4th June of one of its members and the death of a man in Belfast on 13th July. These are specious justifications. In the Bessbrook incident a man was shot by the security forces whilst trying to throw a bomb into a crowded bar. The Crossmaglen Provisionals had set up their ambush at least three days before the Belfast incident.
Overall there has been a substantial reduction in the violence attributable to the Provisional IRA. It has never ceased completely, and particularly in the South Armagh area shootings and booby traps have continued, although less frequently and less successfully. The Government are very conscious of the desire—indeed the longing—of the people of Northern Ireland from all parts of the community for peace and a return to normality. The Government have, therefore, responded sincerely to the reduction in activity by the PIRA by a very substantial lowering of activity by the Army, but without lowering its guard. In normal circumstances violence should be dealt with by the police, and by bringing criminals before the courts and not by detention. So far in 1975, the police have charged 640 persons with security type offences including 66 with murder and 59 with attempted murder. Also, as I have said, a man has been charged with the murder of one of the soldiers killed last Thursday.
Accusations have been made of so-called Army harassment. I pay tribute to the good will and restraint shown by the security forces in carrying out our policy of maintaining a level of security force activity related to the level of violence. They have done neither more nor less than this. They have my full support.
As I have said before, I want an end to detention. But this will depend on the progress towards the cessation of violence and on the continued success of the police in bringing criminals before the courts. It will, however, clearly be necessary to retain for some time to come the power to detain people, and I shall not hesitate to use this power if I am satisfied that it is needed.

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In the light of all these factors, I must under the law exercise my own judgment on releases. I have to make the judgment on each individual case, balancing the right of the community to be protected against the right of the individual to his freedom. Decisions are difficult, but I will not shirk them. I do not know whether the Provisionals from Crossmaglen want to see detainees released, but I shall not be deflected from what I think is right.
The big questions I have to ask myself are: whether the leaders of the Provisional IRA are able to control their followers, for example, in South Armagh; whether such actions do not make the ceasefire meaningless; and whether they will not provoke reactions in retaliation against innocent Catholics.
With every incident and each new Provisional statement such as the one it made today, there is speculation about the end of the cease-fire or changes in Government policy. The Government's policy is clear and has been explained fully in this House. It is that we are looking for a lasting and permanent peace and for a genuine and sustained cessation of violence which will create a new situation and make further progress possible on the basis of the statements I have made. The Provisional's political aims as restated today are well known. Provisional Sinn Fein is free to pursue them by peaceful and legitimate means. I must make it clear that the Government have not entered into any agreement.
I have already informed the House of the changing nature of violence in Northern Ireland in recent months. All those who engage in violence in Northern Ireland should be considering their position. The British Government want peace in Northern Ireland as do most of the people there. What is needed is a positive and continuing response from the PIRA and from other groups involved.
Mr. Neave: The Opposition wish to express their deep sympathy with the families of those who died in defence of the people of Northern Ireland as a result of this contemptible ambush and at a time of the alleged IRA cease-fire. The Secretary of State said that the political aims of the Provisionals were
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well known. Is it not obvious that the Provisional IRA has not given up its political objective of removing British sovereignty from Northern Ireland, in defiance of Her Majesty's Government's resolve and the wishes of the people of Northern Ireland? Is it not a fact that the known terrorist leaders are still at large as a result of the Government's policy, and will they now be arrested?
Mr. Rees: Over 650 people have been arrested. I can arrest only those who have broken the law. If the hon. Gentleman knows of any people who have broken the law, and where they are, we shall arrest them. The law must be carried out.
If the Provisional Sinn Fein want political aims with which the Government disagree, I have no complaints. The only complaint concerns political aims for which men kill. The more those political aims are discussed, the better it is for Northern Ireland. What matters in Northern Ireland is that the people of Northern Ireland should explain whether they agree or disagree with those aims. The hon. Gentleman will find that whether he or I disagree with them does not matter much in Northern Ireland.
Mr. McNamara: Is my right hon. Friend aware that people will generally welcome his statement not to be deflected from the policy which he has pursued up to now with such marked success both for the people in Northern Ireland and to the contentment of this nation? Is he aware that the people in this country support him in all his actions in bringing before the courts those people who are responsible for terrorist outrages and breaking the peace, from whatever side of the community in Northern Ireland they come?
Mr. Rees: Over 600 people were brought before the courts this year. They break about 50 per cent. either way, from either community. The security forces act against those who break the law, from whatever part of the community they come. The best way to act is through the courts. Both communities in Northern Ireland support action through the courts. If we have to resume detention—which may well be for other reasons—we divide the communities. The Government want to act through the courts.
Mr. McCusker: Does the Secretary of State accept that there is not much point in his acting sincerely towards a phoney cease-fire which is controlled by people who are patently insincere? Will he concede that this brutal and disgusting murder scatters the last vestige of this so-called cease-fire? He must be conscious that there are people in Northern Ireland, and I am sure throughout the United Kingdom, who find it extremely hard to understand that this Government can continue to talk with people who are accomplices, in fact, of these murderers.
Mr. Rees: I could not with my hand on my heart say that I do not speak with many people in Northern Ireland who are accomplices of a lot of funny people in Northern Ireland. I do not say that of the hon. Gentleman, whom I respect. I should not want anyone to think that I am referring to him, as I respect him and the stand which he takes against violence in Northern Ireland. He knows Crossmaglen. The problem of Crossmaglen has not existed only since 1969. I can speak only for our side of the border, but it is an area which has been curious in this respect for very many years. The cease-fire is not phoney. In fact there has been a great fall in the level of violence since the turn of the year. The cease-fire is not complete. But every day that goes by in which fewer and fewer people are killed, I am sure, is to the advantage of the long-term future of Northern Ireland.
Mr. Dalyell: Is the Secretary of State aware that even in the aftermath of such a lamentable incident, there are many of us who support him on the question of detention without trial? But could he say what evidence there is that those who have been released have subsequently indulged in criminal activities?
Mr. Rees: I am grateful for my hon. Friend's support. I am sure that it is right to proceed through the courts. I am sure that it is right to proceed in Northern Ireland as we would in the rest of the United Kingdom. There may be times when this is not possible, but there has been a great break through in this respect in the past six months. I have no evidence, from the nature of the violence, and nor have the security forces of a return to violence by those who have been released.
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We have to take into account what happens in certain circumstances to those who have been released, not only from detention but from prison. In certain circumstances in both parts of the community—whether or not people have been in gaol and have been properly sentenced—there is every chance of a return to violence. I am informed, however, that the families of a number of those detained are getting them to leave the country. Wives, mothers and fathers are having an effect. Good is coming out of this. That is not to say that at the fringes there may not be people who may return to violence in the longer run, although I have no evidence of this as yet.
Mr. Beith: Will the right hon. Gentleman accept that we share his abhorrence of these foul murders at Forkhill and the sympathy expressed for the relatives of those involved? Has he noted the speculation that this was some kind of curtain raiser for a new campaign of violence that will extend into England and Scotland? Does he not agree that it would be right to assume that such a campaign would profit those involved not at all, that this House is not prepared to be deflected and will listen only to those who want to talk and not to those who throw bombs?
Mr. Rees: I agree that this House would want to listen to those who want to talk. I have no evidence in the way the hon. Gentleman has mentioned. Over the centuries in Ireland people have been bred on both sides of the community who will kill first and talk after. It would be wrong not to speculate at least about what might happen in the longer run. The hon. Gentleman is absolutely right that those who believe, in the face of many years of history, that we can be bombed and killed into changing our minds ought firmly to be told that they are wrong.
Mr. Burden: Does not the right hon. Gentleman consider that the most disquieting feature of the incident in which four soldiers were killed is the fact that three or four days passed during which this device was observed in apparently open country? It has come to light since that it was detonated from some considerable distance. What examination of the area around was carried out in order to find the control post and the mechanism that detonated the bomb?
Mr. Rees: The security forces and the GOC in charge of them are fully aware of what happens in cases such as this. The trip wires and long-distance wires are carefully hidden. However, this is the hazard that men who deal with this sort of thing have to face. It would be wrong at this stage to believe that there was an error. The situation needs to be investigated. I am afraid—as I know from talking to the men—that this is a hazard of life that the men undertake when doing this sort of work. I am sure that the security forces knew what they were doing and they were right to leave the bomb to give it a chance to blow up of its own accord.

MOTIONS (OBJECTION TAKEN)
Mr. Speaker: The House will remember that at the beginning of the proceedings last Friday, the Solicitor-General presented a petition on behalf of the Attorney-General, and that after the petition had been read the Solicitor-General moved a motion for leave for reference to be made in court to certain Reports of Debates.
It is in accordance with precedents—"Erskine May", page 797—for such a motion to be made without notice. However, it is also in accordance with precedents—"Erskine May", page 360—that if objection is then taken, notice must be given of the motion so that it may be debated on a future day.
Discussion of a motion, of course, does not necessarily imply objection to it, and it is sometimes not entirely clear at what point objection emerges. Last Friday I allowed the debate to continue for some time until it was absolutely clear that objection was taken. Had an hon. Member at once shouted "Object", that would have stopped the debate.
As, perhaps, I did not state this clearly enough at the time, I thought it right to restate the proper procedure to the House for the avoidance of doubt in the future.
Mr. Maxwell-Hyslop: On a point of order, Mr. Speaker. As reported in col. 1935 of Friday's Hansard, speaking to his motion for a petition, the Solicitor-General said:
"I should also make it clear that there is no question today, not only of debating the merits of the matter, as you have ruled, Mr.
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Speaker, but of taking any steps on behalf of the Government. This is not the Government's motion."
As reported three lines later, the right hon. Gentleman said:
"and it is in no sense a motion by the Government."—[Official Report, 18th July 1975; Vol. 895, c. 1935.]
However, the Order Paper today at page 10494, Item No. 5 states:
"PETITION OF THE RIGHT HONOURABLE SAMUEL CHARLES SILKIN, Q.C., HER MAJESTY'S ATTORNEY GENERAL: Adjourned debate on Question [18th July]."
This item has an asterisk. On page 10492 of the Order Paper it says:
"Those marked thus * are Government Orders of the Day".
I seek your guidance, Mr. Speaker, on how it is that on today's Order Paper a motion appears as a Government Order of the Day whereas three times on Friday the Solicitor-General denied that is was Government business.
Mr. Speaker: I understand that this is in accordance with the rules and precedents of the House. It is being taken in Government time and, therefore, it now earns the asterisk.
Mr. Hugh Fraser: I thank you, Mr. Speaker, for the guidance we are all seeking. As this is Government business, would it not be more appropriate if it were made the immediate business rather than the last business of the day? After all, great principles are involved. The Secretary of State for Employment is being arraigned by the Attorney-General. Even if this were not Government business, it would be of enormous interest to the House and an important constitutional point. Surely it should not be discussed in the depth of night but as soon as possible'? Cannot the Government change their business around so that it is the first order after the main debate?
Mr. Speaker: Fortunately, that is not a matter for me.
Mr. English: Further to that point of order, Mr. Speaker. Subsequent to the short debate we had on Friday, by about 3.30 p.m that day the High Courts of Justice had discovered that the documents they were requesting were not in existence. They were in existence—
Mr. Speaker: Order. I must try to save the time of the House. This will be

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a germane point for the hon. Member to make at the appropriate time, which will be when the motion on the petition is considered. It is not a point of order for me now.
Mr. English: As the motion that we are discussing relates to an incorrect petition, presumably at some stage a correct one will be laid? Will that have to be the subject of notice as well?
Mr. Speaker: The hon. Member must wait and see.

ATTACK ON INFLATION
3.57 p.m.
The Chancellor of the Exchequer (Mr. Denis Healey): I beg to move,
That this House approves the White Paper on The Attack on Inflation (Command Paper No. 6151).
Mr. Speaker: We turn to the business on the Order Paper which comes first—in spite of the point raised by the right hon. Member for Stafford and Stone (Mr. Fraser)—that is, the Prime Minister's motion.
I have selected the amendment in the name of the right hon. Lady the Leader of the Opposition, leave out from 'House' to end and add
'supports Her Majesty's Government's belated commitment to reduce the disastrous rate of inflation and their acceptance of the need both for strict cash limits throughout the public sector and for a substantial reduction in the level of pay settlements; regrets, however, Her Majesty's Government's prolonged failure to reduce public spending and to promote the prosperity of the private sector; and deplores their decision to increase indiscriminate subsidies and to proceed with further measures of nationalisation, which are damaging in themselves and inconsistent with the conquest of inflation'.
I have not selected the amendment to the amendment in the name of the hon. Member for Nottingham, West (Mr. English).
It may be appropriate to discuss, with the amendment in the name of the right hon. Lady the Leader of the Opposition, the amendment in the name of the hon. Gentleman the Leader of the Liberal Party, after 'House', insert:
'welcomes Her Majesty's Government's inevitable conversion to a statutory incomes policy as one essential means of controlling modern inflation; rejects indiscriminate cuts in public expenditure which would disrupt essential services and accelerate the rise in inflationary unemployment; and, while regretting that Her Majesty's Government's proposals are only short term and deploring the lack of adequate enforcement and monitoring powers, nevertheless, at this time of national crisis'.
It may also be appropriate to discuss the amendment in the name of the hon. Member for Liverpool, Walton (Mr. Heifer), leave out from 'House' to end and add
'declines to give support to the White Paper "The Attack on Inflation" because it constitutes a fundamental shift in the economic strategy of the Government in response to pressures from the enemies of the British Labour Movement, will reduce the living

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standards of working people and cause mass unemployment, and is a reversal of commitments given by Government Ministers during the February and October general elections; believes that the wage control proposals outlined in the White Paper are based on the false premise that wage increases are the sole reason for inflation and cannot solve the immediate or long-term economic crisis facing Great Britain; rejects the view of the Conservative Opposition that further cuts in public expenditure and the social wage are required which, like the cash limits proposals in the White Paper, will inevitably lead to higher unemployment and a further adverse effect on capital investment decisions: considers that other measures are necessary to deal with the crisis, namely, a price freeze on basic commodities which particularly affect working people, pensioners and others on low incomes and a more effective control over other price increases, the use of selective import controls, the marshalling of Great Britain's overseas assets to defend the pound, the use of depreciation guarantees to overseas holders of sterling, stringent control over the outflow of capital, the control of banks and insurance companies and the directing of their funds into productive capital investment via the NEB, real cuts in arms spending, and the extension of public ownership and public accountability as a necessary step towards a planned economy; urges the Government to introduce a wealth tax and to use other fiscal measures to create a more egalitarian society and asserts that such policies are essential to the implementation of the commitment in Labour's election manifesto to bring about a fundamental and irreversible shift of wealth and power in favour of working people and their families; and calls upon the Government to enter into urgent discussions with the TUC in order to reach a genuine voluntary agreement on all aspects of income and wealth which, coupled with the radical measures proposed above, is essential if Great Britain is to have a planned economy so its it can deal on a longer-term basis with its economic problems'.
It will be in order to discuss those amendments with the first amendment, after it has been moved, and while that is being discussed.
I wish to make one further point, namely, that 75 right hon. and hon. Members have indicated that they wish to speak in this debate. The House will, therefore, realise the burden placed upon the Chair. The only palliative is brevity.
Mr. Eric S. Heffer(Liverpool, Walon): On a point of order, Mr. Speaker. Could you clarify the position? You say that it is appropriate to discuss the amendment in my name and that of my hon. Friends together with the amendment in the name of the Leader of the Opposition. Does that mean that there can be a
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separate vote on that amendment, because this is important from our point of view?
Mr. Speaker: In accordance with the rules of order, as they now stand, I expect that the debate on the first amendment will continue until 10 p.m. tomorrow and after that, I assume, there will be a Division. Therefore, it will not be within the rules of order after that for the amendment of the hon. Member for Walton to be moved, even formally. This is a matter we have discussed in this House before. It is a matter that has been before the Select Committee on Procedure. As the situation is at present, I am bound by the rules as they are. Unless the debate on the first amendment finishes in time—and the Division on it—the hon. Member will not be able to move his amendment, even formally, and there cannot be a Division on it. The same applies to the amendment in the name of the right hon. Gentleman the Leader of the Liberal Party and his hon. Friends.
Mr. Norman Atkinson: further to that point of order, Mr. Speaker. Are we to assume that your ruling just now means that within the rules of the House it is permissible for you to select only one amendment? Is that the interpretation that we should make of your ruling?
Mr. Speaker: I am afraid that that is the position for a vote in these circumstances.
Mr. Peter Walker: On a point of order, Mr. Speaker. Last Thursday, further to the representations of the Leader of the Opposition and the Leader of the Liberal Party, the Leader of the House undertook to me that he would contact the Prime Minister to see about the publication of the draft legislation which is such a vital part of this White Paper. I have just been to the Vote Office, and the document is still not available. Could not the Government make it clear that it will be available very quickly in order that we may discuss it along with the business today?
Mr. Speaker: That, again, is not a matter for me.
Mr. Nigel Lawson (Blaby): Further to that point of order, Mr. Speaker. Are you aware, Mr. Speaker, that at the Press conference which the Prime Minister gave on

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11th July, he categorically stated that this legislation would be published? What is more, at the same Press conference, a transcript of which I have in my hand, the Chancellor of the Exchequer said something very important about this legislation. He said:
"The legislation we have drafted contains provision for it to take effect from the moment the Bill is announced. We do not have to wait until the Bill is through the legislative process."
Mr. Speaker: Order. This is irregular. I cannot allow it to continue. It is not a matter for the Chair. It is a matter for argument and debate. I have no power to direct the Prime Minister to do anything in this regard.
Mr. John Peyton: Further to that point of order, Mr. Speaker. I do not wish to trespass on your patience, but the House is in real difficulty here. The right hon. Gentleman the Patronage Secretary, on Friday last, said:
"I have no doubt that by Monday morning, when the matter starts on its way in the House of Commons, many of these points will he cleared up."—[Official Report, 18th July 1975: Vol. 895, c. 1940.]
Simply nothing has been done—except a holding reply addressed to my right hon. Friend the Leader of the Opposition. But the whole House is in real difficulty in that it still does not know the measure of the Government's intentions. One can only believe that this silence on their part is more conditioned by their own interest than by any concern for the country.
Mr. Speaker: Order. These are all arguments and matters which can be put to the Chancellor of the Exchequer.
Mr. Jeremy Thorpe: On a point of order, Mr. Speaker. With great respect, we are being asked to debate a White Paper in paragraph 26 of which substantial reference is made to legislation, legislation which has already "been prepared" and which the Government in certain circumstances would wish the House to pass forthwith. Therefore, this is very germane to the debate on the White Paper—
Mr. Speaker: Order. I am afraid that I must interrupt even the right hon. Gentleman. These are matters for argument and for criticism of the Government. They are not matters for the Chair. There is nothing under the Standing
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Orders of the House which would enable me to take any action on this at all.
Mr. Thorpe: May I, through the Chair, ask whether the Leader of the House could make a statement today, before the debate, as to how the House will be got out of this very difficult situation?
Mr. Speaker: I cannot order the Leader of the House to make a statement. It is up to him. If the Chancellor of the Exchequer were allowed to begin the debate, he might be able to deal with these points.
Mr. Kenneth Lewis: Further to that point of order, Mr. Speaker. As these matters concern the Prime Minister, and as the Prime Minister is sitting on the Government Front Bench, in order to help you, Mr. Speaker, and the House, could not the Prime Minister himself say what he proposes to do?
Mr. Speaker: Not everything affecting the Prime Minister raises a point of order.
Mr. Robin Maxwell-Hyslop: On a point of order, Mr. Speaker. This point is from a different angle, Mr. Speaker. As you have a responsibility for the operation of the Vote Office and it is sometimes the case that documents are sent by the Government printer to the Vote Office but the Government instruct that they shall not be released until a certain time, can you tell us, Mr. Speaker, whether the Bill has been delivered to the Vote Office, for which you are responsible, with instructions not to release it until a certain time, or whether no such Bill has arrived at the Vote Office?
Mr. Speaker: Ingenious—but not very effective. I have no such knowledge.
Mr. Healey: When I made my statement to the House on 1st July I made it clear that the Government were determined to get inflation down to 10 per cent. by the end of the next pay round and into single figures by the end of next year, and that this would require the increase in wages and salaries over the next 12 months to be limited to 10 per cent. I said I would discuss the problem with both sides of industry in the following week in the hope that they would agree with the Government on a voluntary policy which would satisfy this target, leaving it open whether the 10 per cent. limit should be achieved

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through the establishment of a percentage limit in individual settlements, a limit fixed in cash terms, or some mix between the two. I also insisted that there should be convincing arrangements to ensure compliance with the policy agreed.
Ten days later, after the most intensive and continuous discussions, the Government were able to announce that agreement had been reached with the General Council of the Trades Union Congress on new guidance to negotiators which was consistent with the anti-inflation target I had set. I cannot recall any previous occasion in industrial history when the trade union movement has voluntarily agreed, not just in general terms but in the most precise detail, to set a limit to wage increases over a whole year which is based on a target for a substantial reduction in the rate of inflation. This unique achievement was by no means due solely to the pressures imposed by the time limit I was obliged to set on 1st July because well before that date trade union leaders had been proposing that wage settlements next year should be based on what was necessary to achieve a lower rate of inflation rather than on the actual rate of inflation over the previous 12 months.
As the House knows, the Government agree with the TUC that the limit should be expressed in terms of £6 a week to full-time adult workers up to a cut-off point with a lower pro-rata limit for part-time workers and juveniles. This figure is consistent with the Government's 10 per cent. target since it is associated with the most stringent limitations. The cash amount will be applied as a straightforward supplement to earnings; it will not be carried through to overtime or shift premiums. There will be no special cases. The only exceptions adding to the pay bill are the increase necessary to enable women to obtain equal pay by the end of 1975 and prior commitments to staged increases which exceed £6 a week. Moreover, with the agreement of the TUC General Council the Government are asking Parliament, in the Remuneration, Charges and Grants Bill, to relieve employers of contractual obligations which would compel them to increase pay above these limits.
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The Government have been able to welcome all the TUC's proposals in this field with the one exception of the cutoff, which the Government believe should be set at incomes of £8,500 a year rather than £7,000. A lower limit would be too disruptive of existing pay scales among supervisory and technical staff. The £8,500 cut-off includes all emoluments which are reckonable for tax purposes. I believe it is right that the higher paid should make some additional sacrifice; they will benefit like everyone else from the reduction in the rate of inflation. The House should note the most important statement by the TUC General Council that the TUC will oppose any settlement in excess of the £6 limit.
I ought to make clear to the House the extent to which the CBI was able to go along with us on these matters. The CBI agreed with us on the objectives of the policy and on the need for a limit equivalent to 10 per cent. on pay. The CBI told us, however, that it preferred a percentage pay limit to a flat rate, and that if it was to be a flat rate, it ought to be £5 rather than £6. It also thought that the cut-off point should have been higher than £8,500. It dislikes our decision to allow incremental increases provided they do not add more than £6 a head to the pay bill for the group concerned. The CBI also favoured compulsory monitoring of settlements. I shall refer again to the CBI's views on monitoring in a moment. Despite these disagreements, it has undertaken to give the strongest support to the Government's efforts to control inflation.
I appreciate the reasons which led the CBI and many hon. Members to feel that it would have been preferable to set the limit for individual settlements in percentage terms. But this would have had a perverse effect on the distribution of post-tax increases between rich and poor. It would have benefited most those earning between £4,000 and £6,000 a year—well above average earnings—and would have given steadily smaller benefits to rich and poor alike as earnings moved in either direction away from this central band. In theory, some of these disadvantages could have been reduced by a mixture of percentage and cash limits as,

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for example, in the previous Government's incomes policy, but the Government agree with the TUC that to achieve so rapid and drastic a reduction in the rate of inflation as we propose in a single year it is essential to use a formula which is dramatic and easily monitored and brings home the reality of our national problem to every man and woman in the country.
The flat £6 limit will be progressive right throughout the income scale. I do not deny that the resulting compression of differentials will make it more difficult to pass to more flexible and sophisticated guidelines after the current wage round. It will complicate the re-entry problem next year. The TUC is as aware as anyone else of this, and I hope discussions will begin in good time about the handling of wage negotiations once the next round is complete. As I made clear the other day, the problem of inflation will not be solved when we are down to 10 per cent. We must continue with our efforts at least until our prices are rising no faster than those of our competitors. We must be certain that once we have achieved the necessary level we are no longer vulnerable to the same domestic pressures for inflation that have produced the problems with which we are wrestling today.
I must make clear, too, that the figure of £6 is an upper limit for wage increases. It is not an automatic entitlement. Of course, trade unions have the right to press for settlements up to this limit, and I have no doubt they will use this right. But the capacity of an employer to pay will be a factor in determining the agreement finally reached at the negotiating table, just as much under this new policy as under any other. There are bound to be some employers who simply cannot pay the full £6 without making substantial reductions in their labour force, going bankrupt or raising prices to unacceptable levels.
Questions have been raised—and no doubt will be raised in this debate—on various points of interpretation of the pay guidelines in the White Paper. The guidelines are basically simple, but it is natural that people should seek assurance on particular points, and, in order to assist with such questions, the Department of Employment set up a special inquiry unit immediately the White Paper was
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published. This unit gives advice on the application of the pay guidelines and has already dealt with hundreds of requests for advice from employers, unions and workpeople up and down the country. The nature of these inquiries has shown the extent to which people want to work this new voluntary initiative and are anxious to see it succeed.
My right hon. Friend the Secretary of State for Employment will deal with the questions of interpretation which have arisen most frequently and with any others which may arise in the course of this debate when he winds up tomorrow.
Mr. Tom King: The right hon. Gentleman says how good this unit is at answering inquiries, but I have evidence today of an employer who sought clarification on incremental problems and was told by a senior official of the Department that he did not know the answer and suggested that the employer would do better to ask the TUC.
Mr. Healey: I was not aware of that fact. No doubt if the hon. Gentleman gives the details to my right hon. Friend, he will take up the matter and comment in the House tomorrow.
As I told the House on 1st July, the Government propose to employ a battery of weapons to ensure that the limit is observed in the public and the private sector.
Mr. Hugh Fraser: Roll them out.
Mr. Healey: I am just about to roll them out. Perhaps afterwards we can roll out the right hon. Member.
In the public sector, we recognise that, wherever we have direct responsibility as employers, the Government's major duty is to ensure that no settlement is made above the limit. We must resist pressures, of whatever nature, to break the rules. Sanctions after the event against those who are responsible for breaching the limits are very much a second best, but the knowledge that sanctions exist and will, if necessary, be applied is bound to act as a deterrent. For settlements affecting the 2 million people directly employed by the Government, including those in the National Health Service, the Government themselves will ensure compliance. This will require the suspension

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of the operation of pay research in the Civil Service for the period of the policy. The Government will also ask the relevant review bodies to comply with the pay limit.
In the nationalised industries, which employ another 2 million people, the Government's power is rather less absolute. The chairmen of the nationalised industries have already undertaken to observe the limits, and my right hon. Friend the Secretary of State for Industry has pointed out that the Government possess a very significant sanction as far as they are concerned. We have also made it clear that the Government 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 to the public through increased prices or charges.
Mr. Norman Tebbit: Can the right hon. Gentleman deal with the problem of pension funds, particularly those in nationalised industries where there is a statutory obligation to increase pensions by the amount of increase in the cost of living? In many cases, this would exceed £6 a week.
Mr. Healey: The Government propose that existing pension obligations should be met by public and private enterprises, even where they exceed the £6 limit. This is a different matter from increases in wages.
A further 3 million people are employed by the local authorities and public transport authorities. Apart from teachers and the police, the Government are not directly involved in pay settlements in this sector, but we finance by rate support grant a high proportion of local authorities' current expenditure. This year the proportion is two-thirds in England and Wales and three-quarters in Scotland.
If there should be any national pay settlement for local authorities' employees which exceeds the pay limit, the Government will pay no grant towards financing the excess. If any individual local authority should make an agreement to pay more than the limit, it will stand to forfeit grant on the whole of its settlement under new legislation which the Government will introduce.
Mr. Hugh Fraser: When?
Mr. Healey: Next week. If the right hon. Gentleman had taken the trouble to read the Bill which is available in the Vote Office he would see that provision for this is included in the measure we are to discuss on Wednesday.
If, in spite of these sanctions, the local authority exceeds the pay limit, the Government can, and will if necessary, offset the excess by using its powers of control on the borrowing of individual local authorities to reduce their capital expenditure.
We shall be discussing the application of the limit by local authorities and the operation of these arrangements, as well as the restriction of manpower which is the other element in the local authorities' pay bill, with their representatives through the new consultative machinery which I announced in the Budget Statement.
In the private sector, the Government's sanctions are more limited. A firm's record of observance of the pay limit will be taken into account in our general purchasing policy, in the awarding of contracts and in assistance to industry under the Industry Act. Our main weapon, however, depends on amending the Price Code, so that where an employer breaks the limit, the whole pay increase will be disallowed for price increases.
The Department of Employment will certify to the Price Commission whether any of the settlements notified to the commission in applications for a price increase exceed the limit. My right hon. Friend the Secretary of State for Prices and Consumer Protection will deal in more detail with these provisions later in the debate.
Mr. Lawson: Will the Chancellor explain how he squares paragraph 21 of the White Paper with paragraph 23? He has referred to them both. Under the Price Code provisions companies which pay over the limit will not be able to increase their prices, and that will mean that they will sell their goods more cheaply. However, in their public purchasing policy the Government will be telling people not to buy from these cheap suppliers but to buy from those selling goods more expensively. At the same time he says he is concerned to curb public expenditure.
Mr. Healey: Sometimes the hon. Member talks the most awful rubbish. If he had any familiarity with the thousands of applications which go to the Price Commission every month he would know that no business in this country is prepared to pay very large pay increases without some chance of recovering the cost through increased prices. This, therefore, is likely to be a very effective sanction.
The information about pay settlements underlying price increase applications will be one element in the flow of information to the Government on the observance of the policy and of the pay limits. The CBI has explained to me its views on the need for compulsory notification of pay increases. I understand those views and can assure the House that the Government have considered the problem very carefully. We believe that compulsory notification is not necessary either for the monitoring of the policy and of economic developments generally or for seeing whether the pay limit is being endangered so as to necessitate consideration of the use of the reserve powers.
The Department of Employment will have full information about settlements, made and intended, in the public sector. Under informal arrangements it will have information about most of the more important private sector settlements. Taken together, its information will cover nearly 60 per cent. of the employed population. In paragraph 28 of the White Paper we express the hope that further monitoring arrangements might be agreed between the TUC and the CBI. But, whether or not this proves possible, the Government are satisfied that they will have sufficient information to monitor the policy without compulsory notification through the information flowing to the Department of Employment directly, and through the price control. If the pay limit were endangered and use of the reserve powers became necessary, they would, of course, be supported by powers to require compulsory notification. Meanwhile, the Government intend, as paragraph 28 of the White Paper says, to monitor economic developments, including the trend of pay settlements, jointly with the TUC and with the CBI, if they agree to help us.
This is a voluntary policy with powerful sanctions in the public and private
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sectors and support from legislation in the three fields to which I have referred —relief from contractual commitments, selective reductions in rate support grant for offending local authorities, and disallowance of excess settlements under the Price Code. It is clear that the great majority of the British people on both sides of industry are determined to make it work. But the Government have prepared legislation which, if applied in particular cases, would make it illegal for the employer to exceed the pay limit. If the pay limit is in danger and the great majority of our people who wish to observe it risk finding their readiness to make sacrifices for their country made nonsense of because a selfish minority chooses to breach the policy, the Government will ask Parliament to approve this legislation forthwith.
Several hon. Members rose—
Mr. Healey: I know, and if I did not the exchanges at the beginning of the debate would have told me, that there is great interest in the nature of the powers which the Government would seek in this contingency. These powers would have four main features. First, the legislation would give the Government legal powers enforceable against individual employers who exceed the pay limit.
This brings me to the second point. All recent history from Churchill at Betteshanger to the Tipstaff at Pentonville Gaol has shown that an attempt to apply criminal sanctions against trade unionists on such issues can result only in discrediting the law. So, unlike earlier legislation, the powers held in reserve would not provide for criminal sanctions on work people in order to enforce the pay limit. But, like earlier legislation in this field, there would be provision to prevent the prosecution of work people for criminal conspiracy.
The Bill would, thirdly, provide for compulsory notification of all wage settlements and, fourthly, once passed, it would enable the Government to reduce to the White Paper level any settlements made after 1st August 1975.
Mr. Patrick Cormack: How?
Mr. Healey: Like the whole of the Government, I hope that it will never be necessary to ask the House to approve

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this legislation. I have no doubt that the House would approve it, and that the country would applaud it, if the need were ever demonstrated.
Several Hon. Members rose—
Mr. Healey: I give way to the Leader of the Liberal Party.
Mr. Thorpe: Will the right hon. Gentleman go into a little more detail? He said that he would take legal powers against employers. What legislation does he have in mind? This could mean anything from deportation to putting them on probation. On the fourth point—namely, that he will reduce arbitrarily wages which exceed the limit—will this be by Order in Council, by an inflation tax or by some other means?
Mr. Healey: An Order in Council would be required to activate the Act against individual employers, or to require them to "roll back" pay increases. On the first question as to the sort of penalty, this is one of the matters to which I am coming.
Several Hon. Members rose—
Mr. Healey: I cannot give way. The House must let me continue. [Interruption.] Very well, I give way to my hon. Friend.
Mr. Heffer: In the event of the Bill becoming law, what would happen if an employer took out an injunction against a group of workers who decided to strike in order to secure a settlement in excess of the limit? Surely the employer would be taking out an injunction in order not to break the law. The situation could surely arise in which the workers would go to prison.
Mr. Healey: I have made it clear, and I repeat what I said a moment ago. Like earlier legislation in this area—and this was a feature of both the previous statutory incomes policies—there would be provision to prevent the prosecution of work people for criminal conspiracy.
Several Hon. Members rose—
Mr. Healey: I will not give way again. Hon. Members opposite have asked me to give some account of the proposals, and I hope that they will have the patience to listen to my account.
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Legislation to give effect to these powers has already been prepared, but since there are some technical details which may require some revisions of the drafting, the Government cannot publish it in draft at this stage. What is important to the House for present purposes is to know the main elements of the Bill and the character of the powers that would be sought. These I have described. The details of drafting are not central at this stage, and might anyway have to be changed somewhat to meet the circumstances at the time of introduction—and we all hope that the Bill will never have to be introduced.
Several Hon. Members rose—
Mr. Healey: I will not give way, Mr. Speaker, until I have finished answering the questions put to me by hon. and right hon. Members opposite. I hope that the House will do me the courtesy of listening to what I have to say before interrupting me again. There is no point in debating the drafting now and, therefore, no advantage in publishing a detailed draft, particularly as such a draft could not be the final one.
I give way now to the right hon. and learned Gentleman.
Sir Derek Walker-Smith: I wish to put a question to clarify the question raised by the hon. Member for Liverpool. Walton (Mr. Heller). The hon. Gentleman was, I think, concerned not with criminal conspiracy in the illustration which he gave but with what would be the effect if an injunction were taken out in those circumstances and the employees, the workers, then became liable to committal for contempt of court. I see that the hon. Gentleman nods assent, so I take it that that was the point which he had in mind, but it is a point to which the Chancellor of the Exchequer has not yet addressed himself.
Mr. Healey: It is precisely one of the drafting points still under consideration. [HON. MEMBERS: "Oh."]
Mr. John Biffen rose—
Mr. Healey: I think that anyone who is aware of the catastrophic history of the attempts to apply legal sanctions to workers under the previous administration will know that these matters require

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—and they will certainly have from this Government—the most careful consideration.
Mr. Cormack: On a point of order, Mr. Speaker. The Chancellor has just said that this is a drafting point, which implies that the Bill has not been prepared, yet the White Paper states categorically that it has.
Mr. Speaker: Order. I have already said that that is not a point of order for the Chair.
Mr. Healey: I gave a full account of that when the hon. Gentleman was yelling at me, but he was more concerned to hear the sound of his own voice than to listen to mine.
I turn now to the essential buttress for any policy for incomes, the Government's policy for prices. The present price controls already ensure that the reduction in wage costs produced by the new pay guidelines will be passed on to the consumer in lower prices. I recognise that the best possible send-off for the new policy would have been a total freeze on prices for a period of months. But an immediate price freeze after nearly three years of stringent price control would have depressed investment still further, forced many companies into bankruptcy, and thrown many thousands more people out of work. Indeed, mistaken rumours of an intended price freeze at one stage appeared to jeopardise the support of a major union for the new policy.
In recent months there have been many big increases in pay and other costs. Until these cost increases are out of the pipeline, we shall not see the benefit in prices of the lower rate of settlements.
Since, as hon. Members opposite never cease to remind me, the rate of price increase was particularly low in the third quarter of last year, partly as a result of the July measures, the year-on-year increases in the retail price index which will be announced up to October are still likely to be high. But, as I said in my Budget speech, the month-on-month increases are likely to be very much lower for the rest of this year than they have been up to now, since the effect of tax increases imposed by the Budget is now almost complete and the bulk of the increase in nationalised industry prices has already taken effect.
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The latest figures for wholesale and retail prices are encouraging in this respect. On the other hand, the recent depreciation in the parity of sterling, which was caused by our domestic inflation, will be reflected in an increase in the retail price index of about 1 per cent. over the next six months. The full effect of the new pay guidelines will be felt only from the beginning of next year, when I expect to see a dramatic fall in the rate of inflation. Only a major increase in the cost of imported raw materials or a breakdown in the new policy for incomes could prevent our achieving the targets we have set ourselves in the second half of the year.
Meanwhile, the Government will do whatever they can without damaging the economy to reinforce the strict price controls already operating. We shall finance through a special Exchequer grant of up to £2 million the establishment of more consumer advice centres in local authority areas and accelerate the programme of price display and unit pricing.
We are discussing with the CBI and the Retail Consortium a programme for stabilising prices of selected goods which are specially important in family expenditure. I am adding £70 million to food subsidies for next year, restoring part of the cut-back announced in the last Budget, and local authority rent increases will be limited to the rise in the cost of living, so that average rent increases next spring should be about 60p per week rather than £1 a week or more. This will cost the Government £80 million.
On the other hand, we propose to continue our programme for phasing out price subsidies in the nationalised industries. The lower rate of wage costs envisaged under the new policy should ensure that the rate of price increase in the nationalised industries as a whole should be a good deal lower next year.
I have made clear on many occasions to the House that in my view inflation does not have one single cause or one single cure. In the last 12 months excess wage settlements have been the biggest single factor in making our inflation rate so much higher than that of our competitors. But wages have not been the only factor. Without going so far as many right hon. and hon. Members opposite who make it the sole cause, I have little

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doubt that the unprecedented increase in the money supply under the last Government in 1973 has made a significant contribution to the rate of inflation this year.
The Government are determined to ensure that in the period ahead excessive expansion of bank credit does not endanger the achievement of our planned reduction in inflation. We have substantially reduced the growth of money supply in the last year and a half, and we shall use the full range of instruments available to us to keep the growth of money supply under firm control, while seeing that priority in lending is given to the essential sectors of the economy.
The effective control of public spending is another element in our attack on inflation, although in my view it has a greater relevance to other aspects of our economic performance. There are two separate problems here, and I shall spend a little time on each of them.
First, successive Governments have announced plans for public spending in the year ahead and beyond, but the actual level of spending has been higher. This has partly been by choice, where new policies have been introduced, but it has happened also because action has not been taken to keep expenditure in line with estimates. This has particularly been the case in the large and important field of local authority current expenditure. In each of the four years up to 1974–75—the last financial year—the total of this expenditure has been considerably higher than the amount provided for in the previous year's White Paper. In 1973–74 the growth of local authority expenditure was nearly 30 per cent. higher than planned, but in both 1972–73 and 1974–75—one year under each administration—it was over 50 per cent. higher.
We are now improving our arrangements for the monitoring and control of this expenditure through discussions in the new Consultative Council. I believe that the new guidelines for wage negotiations which I have described, together with the associated sanctions and a careful control of manpower. should do a great deal to help in establishing firmer discipline here, particularly since the wage bill forms so large a part of local authorities' spending.
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Similarly, in the nationalised industries we are strengthening the existing arrangements for financial information and control so that the Government are kept more closely in touch with the industries' revenues and expenditure, including, of course, wages and salaries.
It would not be generally practicable, however, to set rigid and predetermined limits on the total finance to be raised by the nationalised industries in any given period. They are very large trading organisations whose revenues and expenditures depend on trading conditions. There are also bound to be considerable fluctuations in stocks and working capital which cannot be precisely forecast. None the less, like any private firm, the nationalised industries must have regard to the call that the business makes on their cash requirements, and it is our intention to strengthen the arrangements for scrutinising substantial changes in these requirements. Although allowance has to be made for special factors, I see no reason why cash control should not play a key rôle in the nationalised industries, as it already does in private companies of comparable size and complexity.
Mr. Nicholas Fairbairn: I have listened with care to the Chancellor's battery of weapons, particularly with regard to the nationalised industries. May I have an answer to this very simple question? Labour in the nationalised industries has a very powerful weapon, and that is the strike. What is the Government's answer to a strike in the nationalised industries?
Mr. Healey: The hon. and learned Member shows a degree of wisdom and insight that is not universal on his own side of the House. He has pointed to the central fact that no incomes policy can work without the support of the majority of working people in the industries concerned. I hope that he will agree with me that the support already given to the new pay policy by critically important and powerful unions, particularly in the nationalised industries, such as the Executive Committee of the National Union of Mineworkers, shows that the present Government have an advantage in putting forward their incomes policy that no previous Government ever had.
Mr. Hugh Dykes rose—
Mr. Healey: Even at the risk of speaking longer than I intended, I propose to give way at fairly regular intervals to hon. Members on, I hope, both sides of the House, but I do not think that it would be fair if I were to bob up and down in a sort of Greek stichomythia throughout my speech. If I did, I doubt whether any of the 75 other Members who have indicated a desire to speak would have a chance.
If for any reason excessive pay were to be conceded, the industry—we are talking about the nationalised industries —would have to make offsetting cash reductions in its employment bill or in the other costs of the services that it provided. The specific measures to be taken would have to be clearly identified and agreed by the Government. This is one example of the way in which the Government plan to get a firmer control over the amount of cash which they spend themselves or provide to other bodies.
As the White Paper makes clear,
"The present system of planning and control of public expenditure puts the main emphasis on the volume of resources used rather than the cash cost and has substantial advantages, especially for control in the medium term. However, at a time of rapid inflation and with important changes in relative prices, this system needs reinforcing in appropriate programmes by placing a limit on the amount of money which the Government are prepared to pay in the year ahead towards the purchase of the planned volume of resources."
Cash limits of this nature already apply to a number of services financed by the Government and they were recently extended to several construction programmes, both Government and local authority. They are not a suitable method for controlling services such as social security benefits where expenditure must inevitably depend on the statutory rate of benefit and on the number of claimants. We are, however, working on the introduction of an extensive system of cash limits in 1976–77 in those areas where this technique would help to reinforce the existing system of control in constant prices.
Wherever these limits apply, Departments will have to live within the cash limits allocated to them, and additional allocations will be considered only in quite exceptional cases. The general aim
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will be that, apart from unsuitable programmes, such as social security benefits, cash limits will be applied to all Government expenditure, capital as well as current, unless a case is made out for its exclusion. The general presumption will be that the expenditure of Government money, whether directly or in the form of grant, will be within the scope of cash limits rather than the other way round, and I shall need a lot of convincing if it is argued that cash limits should not apply in a particular case.
Mr. Peter Walker: As the Secretary of State for Industry has made it clear that the chairman of a nationalised industry who used investment funds to meet additional wages would be sacked, why does not the cash limit apply to wages rather than to the whole of a nationalised industry?
Mr. Healey: Because there are many other elements than wages in the expenditure of a nationalised industry requiring control in cash terms. I agree that in the nationalised industries, and even more in local government, wage costs form a very large element, and it should be possible to set severe limits to the total wage bill in the coming year under the new pay policy.
Sir Geoffrey Howe: My question arises directly from the point that the Chancellor has just made. In his statement to the House on 1st July, the Chancellor said:
"The Government … propose to fix cash limits for wage bills in the public sector …"—[Official Report, 1st July 1975; Vol. 894, c. 1189.]
He has not now repeated that statement. It is not contained in the White Paper, nor was it contained in the Prime Minister's statement of 11th July. What is the Government's policy: as the right hon. Gentleman first stated it, or as subsequently stated?
Mr. Healey: What I have said—and I hope that I have made this clear to the House—is that the public sector will be expected not to make wage settlements in excess of the limit set in the White Paper. There will be restrictions on the amount of manpower that local authorities will be able to employ. In some of the nationalised industries there will be restrictions in terms of total manpower.

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In other cases—for example, where investment plans are under way—there may have to be some latitude for increases in manpower in one field or reductions in another.
Sir G. Howe: Will the Government, or will the Government not,
"fix cash limits for wage bills in the public sector."?
Yes or no?
Mr. Healey: Yes, Sir, but I hope that I have made it clear to the House that in this as in other fields that I have mentioned cash limits might be required to be adjusted in the course of a year to take account of, for example, unforeseen changes in investment programmes, or otherwise. However, subject to the limitations that will apply throughout the whole field of cash limits, cash limits will be applied to public sector wage bills.
I believe that the changes envisaged in the relations between the Government and the local authorities, together with the more general use of cash limits, will introduce greater financial discipline and precision into the short-term control of public expenditure. But cash limits, as I have just been saying, are not a panacea. They can support, but are not a substitute for, a policy designed to keep pay settlements to acceptable levels. Public expenditure is relevant to the problems of inflation also through the level of demand which it makes on resources and on public finance. This must be determined in the light of a realistic assessment of our economic prospects for the rest of this decade.
In my Budget Statement of 15th April I explained why it had become essential for us to reduce the public expenditure programmes in 1976–77 by about £900 million at 1974 survey prices, equivalent to more than £1,200 million at 1976–77 prices, and I explained how these reductions would be made both in Government and in local authority programmes. These cuts mean that the planned level of public expenditure as a whole for 1976–77 is now actually 1 per cent. lower than that for the present year. I also warned in my Budget Statement that, looking beyond 1976–77, there would at best be only very restricted room for overall growth in public expenditure.
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This is inevitable after a period of years in which successive Governments have made exceptionally large increases in public expenditure. In 1973–74, its last year of office, the previous administration increased total public expenditure by about 6 per cent. in volume terms. I hope that the right hon. Lady the Member for Finchley (Mrs. Thatcher) heard that figure. I do not think that she did, and so I repeat it. In 1973–74, its last year of office, the previous administration increased total public expenditure by about 6 per cent. in volume terms. It did not raise tax rates to help to finance that additional expenditure. Instead, there was a very sharp increase in the money supply, which has contributed to the current level of inflation. Indeed, some hon. Members opposite think that it is solely responsible for the current level of inflation.
In 1974–75, the first year of the present administration, public expenditure was increased by nearly 8 per cent. in volume terms. But we raised tax rates, and we have kept the money supply under strict control. In the current year the planned rate of growth of public expenditure has been cut back to about 1½ per cent.—a very marked reduction in the rate of growth compared with the previous two years.
I have been urged to cut back the rate of growth still further in the current year by making immediate cuts in expenditure already under way. I do not think that there would be any justification for this at a time when our economy is working well below capacity and unemployment is rising. In these circumstances there would be little chance of absorbing into other employment the manpower and resources released by such cuts.
Moreover, as the Expenditure Committee pointed out in its Ninth Report last year, there are strong arguments against using public expenditure as a tool of demand management in the short term. The Opposition appear to envisage, among other cuts, substantial immediate reductions in expenditure on food and housing subsidies. But immediate cuts in public expenditure of this kind would add further to unemployment and could only push prices up further at a time when we all agree that it is vital to get the support of the British people for pay restraint.

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The right hon. Lady has chosen to cloak her inability to take a decision on the policy which the Government are putting forward in the White Paper by tabling an amendment in which she commits herself to large cuts in public expenditure. I hope that she will tell us honestly in this debate—she has not told us so far—what increase in prices and what increase in unemployment she is prepared to accept in consequence of the immediate cuts in public expenditure that she demands.
Mr. Hal Miller: Will the Chancellor kindly confirm that the reduction in public expenditure that he has announced for this year takes into account—in other words, is inclusive of—the sum set aside for, say, British Leyland under the Ryder Report and the money to be spent on the nationalisation of the shipbuilding and aircraft industries, to quote just a few examples? Will he confirm that all these additional expenditures are still included in the cut that he has announced?
Mr. Healey: I have already answered that question, but I can tell the House that the public accounts do not take account of the extra £50 million—£60 million that the Opposition added to the public sector borrowing requirement by their vote last Thursday. The House and the country will note their total hypocrisy in lecturing us on the public sector borrowing requirement when in every vote they seek to add to it.
Mr. George Rodgers: If the effects of the measures were such that there was a substantial increase in unemployment in the short term, would my right hon. Friend be prepared to relax the cash flow to local authorities to stimulate employment in that area?
Mr. Healey: I see no reason to believe that the measures that I have announced will lead to any increase in unemployment. [Interruption.] Absolutely not. But I can tell my hon. Friend that if I saw any reason to believe that they were doing so I would seek to take countervailing action, though I cannot guarantee that it would be in the particular area of local authority expenditure to which he referred.
I was talking about the arguments against any immediate panic cuts in the current year's public expenditure. We shall all be listening eagerly to the right
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hon. Lady to note her reply to the questions I have just put about the increases in unemployment and prices that she is prepared to accept as a result of the cuts in public expenditure that she is urging on the House.
The situation should be very different after next year—that is, from 1977 onwards—when world recovery should be well established and the British economy should be returning towards full capacity working. For this reason, as I indicated in my Budget speech, in the course of the current normal annual review of all expenditure programmes over the next five years the Government will be seeking further substantial economies in these programmes, particularly in 1977–78 and 1978–79. If we adhere to the plans in Cmnd. 5879, public expenditure in 1977–78 would then be about £1¼ billion higher, at 1974 survey prices, than the reduced level now planned for 1976–77. This would be quite unrealistic.
The prospects for the growth of total resources in the economy must remain uncertain until we have brought our immediate and pressing problems under firm control and established a sound and lasting competitive position. We must ensure that in these critical years, when keeping inflation under control will still be a high priority, we make sufficient resources available for exports and investment without denying the British people the prospect of some rise in their own real earnings. It is to an expansion in exports and investment that we must look for the extra demand needed to bring unemployment down, and this requires a continuing shift in the current balance of resources within the economy.
We shall also require a major shift in the financial balance of the economy. At present we are able to finance our expenditure with a high public sector borrowing requirement without losing control of the money supply, but this is partly due to the low level of demand for bank credit from the private sector. Hon. Members will be aware that as industry recovers and the balance of payments improves it will be very difficult to hold the growth of money supply unless we reduce the borrowing requirement to more reasonable levels. If this is not to involve exceptionally severe increases in taxation, public expenditure must be contained.

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Thus the needs of the resource balance and of the financial balance in the economy point in the same direction. Public expenditure must be firmly contained for several years to come. The outcome of the current review, which is bound to require a new look at priorities for public spending, will be announced when it is completed later this year. But it is clear that, in carrying the reassessment of spending programmes forward beyond 1976–77, there will at best be very little room for overall growth beyond the reduced level for that year. As I have already said, that year's planned total of public expenditure implies an absolute reduction in the real level of public spending compared with the present year.
What the country will be able to afford in years after 1976–77 depends on many factors, only some of which are under our own control and only some of which we can now clearly foresee. It would, therefore, be imprudent to get committed to plans for public expenditure which in the event we lacked the resources to carry through. It is damaging in the extreme to proper planning of our vital public programmes if programmes have to be cut back without notice because events have not gone as expected. If we are to avoid this by being realistic in our planning, we must recognise that our minimum public expenditure plans must be based on a cautious assessment of our prospects so that there is a good chance of carrying them out even if economic progress is less than we hoped. Conversely, we must have ready properly prepared plans for feeding in the most desirable projects to take advantage of the situation if growth is faster than expected. This is the only way of ensuring that the resources required by public programmes neither pre-empt the resources we need for exports and investment nor involve intolerably large increases in taxation on incomes or consumption.
Mr. Michael English: My right hon. Friend spoke of "intolerably large increases in taxation" but, whilst I accept all that he said about the borrowing requirement and public expenditure control, I would point out that one can attack the borrowing requirement through taxation as well. My
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right hon. Friend will be aware that the latest international figures show that in the EEC only Ireland and Italy are taxed less than we are, although the basis of taxation is different.
Mr. Healey: I must put this seriously to my hon. Friend and to all who think like him. The current marginal rate of income tax is one of the highest in Europe. If we were to meet the full cost of current public expenditure programmes —in other words, if we did not reduce them—that could require a marginal rate of State take-away from increases in earnings of 50p in the pound. I do not believe that that would be acceptable to the masses of the British people, nor do I believe that it would be compatible with any attempt to achieve the voluntary restraint in wages that is required. If, on the other hand, we sought to produce such taxation through indirect means—namely, by taxing consumers—that would have an even more direct effect on pressure for increased wages. I think that my hon. Friend must accept that these are severe restraints which would be imposed by political realities on any Chancellor in my position.
Several Hon. Members rose—
Mr. Healey: With respect, I have given way at least 20 times and I have spent at least 20 minutes answering interventions and listening to interventions. I must now finish my speech.
The proper planning and control of our public expenditure programmes will keep down the size of the public sector deficit and so make it easier for Government financial needs to be met without an excessive increase in the money supply. This is an important contribution to the control of price inflation. But it is not a policy for reducing overall demand for goods and services. So far from producing any increase in unemployment, it is part of the attack on price-inflationary forces which is essential if we are to have any hopes of maintaining a high and stable level of employment, as are the policies I have described for pay and prices.
The whole of the Government's policy is designed to create the conditions for the most rapid possible return to full employment. Last year I was able to take action in July and November to

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counteract the effects of the international depression, whose depth and duration we in Britain foresaw perhaps more clearly than some of our friends abroad. The excessive rate of inflation which followed breaches in the 1974 guidelines prevented me from taking further action of this nature this year. But, as the rate of inflation comes down, and world recovery gets under way, we can look forward to an upturn in our own economy. But I must repeat what I said in my Budget speech. The countries with comparatively strong balance of payments positions must lead the way to world recovery for the benefit not only of them-selves but of the international economy as a whole. If such countries do not pursue suitable reflationary policies, this will damage the flow of world trade just as directly as if they introduced physical controls on imports, and I shall then have to consider other measures for maintaining employment in Britain.
In any case, as the rate of inflation falls the prospects for employment are likely to improve along with the competitiveness of our exports and the readiness of business to invest. The CBI has already committed itself to this effect. In its statement on 11 th July it stated:
"The CBI on behalf of member firms wishes to make it clear that insofar as the Government's counter-inflation proposals alleviate the cash position of companies, the major part of such help will necessarily be devoted to investment, either in plant or machinery, or in the working capital needed to maintain the business. Apart from helping to preserve jobs and increase output this will ensure that British industry is better placed to take advantage of the expected upturn in world trade."
Meanwhile, the Government recognise the need for action to mitigate the effect of the unemployment already generated by past inflation. I announced a range of measures in April for increasing opportunities for training and retraining, for helping people to move to new jobs and for strengthening the employment services. Powers to enable us to introduce the temporary employment subsidy are now part of the Employment Protection Bill, which I hope will be law by the end of the month, and we shall bring it in as soon as possible. We are now planning further measures to increase training opportunities for young people and are consulting the TUC and CBI about special measures to encourage the employment of young people in industry.
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These measures, however, though they will reduce the impact of current unemployment levels, are no substitute for getting the general level of unemployment down. That is why it is so essential that this new attack on inflation should succeed. Then, and only then, will the Government be able to use all the weapons at their disposal for the attack on unemployment.
The White Paper which we are asking the House to approve outlines the Government's strategy for the attack on inflation, by far the most urgent and important task facing the nation at the present time. Inflation is a canker which eats away the security of every family in Britain. Inflation at the rate to which it has risen in recent months threatens not only the health of our economy but the very survival of our society. Unless we can cut the present rate of inflation as dramatically as the Government propose, the consequences will be catastrophic for jobs, for investment, for public expenditure and for living standards. If we succeed in the task we have set ourselves, we shall at last have laid a firm foundation for the action so desperately needed to improve our industrial performance, and this, the regeneration of British industry, is the underlying challenge facing our generation.
In the 30 years since the end of the Second World War wages in Britain have not risen faster on the average than in the countries which compete with us. But productivity has risen far more slowly. This is the problem which lies at the root of all our economic troubles—even at the root of our present inflation. But the improvements in productivity we seek cannot be achieved overnight, and cannot be achieved at all with inflation at its present level.
This is the central fact the House must face. There is no way of bringing down the rate of inflation as fast as we must bring it down except by acting directly on the level of wage settlements. The alternative policies put forward by fringes on the Left and Right of British politics—and I fear that on the Right it is far more than a fringe—whatever their merits might be in the longer-term, cannot possibly produce their effect in time.
I do not pretend that the policy embodied in the White Paper will not impose

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sacrifices on the British people as a whole. But I do claim that those sacrifices will be distributed fairly, so that the broadest backs carry the biggest burden. I do not claim that the new policy will not produce anomalies—
Mr. John Davies: The Chancellor has made the point that he does not wish to load unfair hardships on people. He will be aware of the wide-spread anxiety amongst over 10 million occupational pensioners about the effect of his wage policy on pensions. Before the right hon. Gentleman finishes his speech, will he not give an assurance on that subject?
Mr. Healey: The right hon. Gentleman should be aware that I have already answered a question on that matter. I made it clear that the payments would go ahead. I think that everyone heard me say that except the right hon. Gentleman.
I do not claim that the new policy will not produce anomalies and distortions. Any incomes policy is certain to do so. But I do believe that this policy has a better chance of success than any incomes policy since the voluntary policy introduced by Stafford Cripps just after the war—because, like that policy it has overwhelming support from the British people, and from the trade union movement it has not only support but deep and detailed understanding too. No trade unionist wants to be paid in confetti, to quote the words of Lawrence Daly's powerful speech to the Durham miners' gala on Saturday. The groundswell of support among the British people for this policy is now approaching the dimensions of a tidal wave. Sometimes the British people are wiser than those who claim to represent them in this House.
I hope that on this occasion the support of the British people will be reflected in equally firm support from both sides of the House. This is not a time to allow considerations of party management to dictate a carefully calculated neutrality. History will not forget or forgive those who stand on the sidelines at this time seeking to cloak their abdication of responsibility with quibbles on procedure. The battle against inflation is now under way. I ask all hon. Members to join it.
5.11 p.m.
Mrs. Margaret Thatcher: I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
"supports Her Majesty's Government's belated commitment to reduce the disastrous rate of inflation and their acceptance of the need both for strict cash limits throughout the public sector and for a substantial reduction in the level of pay settlements; regrets, however, Her Majesty's Government's proloneed failure to reduce public spending and to promote the prosperity of the private sector; and deplores their decision to increase indiscriminate subsidies and to proceed with further measures of nationalisation, which are damaging in them-selves and inconsistent with the conquest of inflation".
I have listened carefully to what the Chancellor has said. It is a great pity that he was not saying it 15 or 16 months ago. There was not a shred of evidence throughout his speech to suggest that he realised that he had been in charge of the economy of Britain and that it was he and his policies that had brought us to this pass and to this White Paper. The policies we are debating today reject and falsify the whole basis upon which the Labour Party fought two General Elections.
Let me repeat what the Chancellor said during those two elections. On 23rd September 1974 he said:
"Inflation…is currently running at 8·4 per cent."
The same day he said:
"We have in fact succeeded in doing very well on our own this year—I have cut the inflation rate I inherited by half."
Later he said:
"If the social contract is maintained we can get inflation down close to 10 per cent. by the end of next year"—
that is this year—
"and into single figures the year after."
Another member of the right hon. Gentleman's Government, the Secretary of State for Employment, said:
"I trust that we shall never see a statutory system of wages restraint in this country again. I am bitterly opposed to the idea that you can settle wages by some high and mighty authority from London, be it Downing Street, the Pay Board or anything else."
The Chancellor said at the close of his speech today that history will not forget. History will not forget the attitude of the Labour Party during those two General Elections.

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I find it difficult to adjudge whether this is a voluntary or a statutory policy. It seems to have all the structure of a statutory policy but to have certain of the supports removed at the last instance. It is interesting to note that had the Chancellor taken some action a great deal earlier we might never have had the level of inflation we now have, the level of public expenditure we now have or the level of unemployment which we shall face this winter.
Inflation is now over 26 per cent. at an annual rate, while the three-month rate, or the "Healey half-truth", is running at 48 per cent. Until now the Chancellor was noisily denying the need for any action. Now he is noisily asserting the need for action on his own policies. It is interesting to observe that the previous starting point for counter-inflation policies was when the level of inflation was far lower than it is now. In 1961 action was taken because it was thought that the level of 3·2 per cent. annual inflation was too high. In 1968 the figure was 5·3 per cent., and in November 1972 we took action when the figure stood at 7·6 per cent. Now we have got the rate up to 26 per cent. before taking action.
It will be easy to say in some respects that we have been here before, because this is the sixth post-war pay policy starting with that of Sir Stafford Cripps. But we have no previous experience of rates of inflation as high as this, let alone getting them down by 15 per cent. in one year. The true rate of inflation is a lot higher than 26 per cent. since that is the retail price index rate. But this rate has been reached at a time when we have had price control operating for three years, when food and housing subsidies have been increased and when the latter actually doubled in two years. Of course, such subsidies have not solved the housing problem. This rate of inflation has also been reached at a time when profit margins have been squeezed to a dangerously low level.
The real rate of inflation is very much higher than 26 per cent. The public might not be bearing the cost in prices but it is bearing the cost in another way. It comes either in taxes or in borrowing, which itself can increase the inflation and start the pound sliding, which again puts up prices.
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The Chancellor inevitably goes towards the relationship between inflation and unemployment. I think that often deliberately he has confused people on this issue. Economists and politicians may vary in their views about the causes of inflation but most now agree that the more we delay before dealing with it the greater unemployment will ultimately be. The Chancellor has delayed. He has constantly pursued a short-term policy which is against the long-term interests of our people and of jobs in industry. We should have had a much lower level of unemployment than we shall now experience this winter if the right hon. Gentleman had not done so. In spite of all the noises the right hon. Gentleman is making, and one would imagine that he is not responsible for the unemployment figures, there is nothing he can do now to prevent those figures from rising substantially this winter—rising to far more, I fear, than the 1 million level which he prophesied. I understand that he is going around talking in much larger terms now.
The yearly rate of inflation will probably go up further before moderating next year. Nevertheless, there is a purpose in an incomes policy in this inflation-unemployment relationship. The first purpose is to reduce the level of unemployment from what it would otherwise have been. If the money supply is held tight and some take more of it, there is obviously less for the rest. They would fall into unemployment but for the existence of an incomes policy.
The second purpose of such a policy is to reduce people's expectations of future pay increases and thereby, hopefully, to have some effect on the rate of inflation. We would endorse both of those objectives. But an incomes policy is only a part of the fight against inflation. The Chancellor knows this. It is highly unlikely that most of us have lived through six incomes policies, several trade cycles and rising inflation without having learned some general economic lessons about the other steps which have to be taken simultaneously.
The one lesson that seems to be most important and which is most commonly agreed is that all economic policies must be operated in the same direction simultaneously—money supply, public expenditure, fiscal policy and incomes policy—so that they reinforce one another in

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effect. I do not believe that it is sufficient to rest on one or even two factors alone. That is what the Chancellor is in danger of doing and is, therefore, in danger of having only half a package on inflation.
With that in mind we might go a little more closely into our examination of the White Paper and see how it deals with these several factors. I listened carefully to what the Chancellor said, but, in spite of the fact that he said a lot, he did not give us very much information. It was clear that every time he was cross-examined he had no idea about how these things would operate in detail. That is always the difficulty with incomes policies. Everyone agrees with them in general but they so often disagree with them in particular because they do not agree about what is fair. It is difficult to get the detail operating fairly. The metahod chosen by the right hon. Gentleman in this White Paper seems to make it specially difficult.
From the record both voluntary and statutory incomes policies appear to have had only temporary success. They have gone through an initial stage for a period of nine to 12 months, particularly if there has been a freeze, and they have seemed to work dramatically. They have then entered a second, much more detailed, phase in which they have been seen to be deficient and to lead to many rigidities in both the labour market and the prices area. They have been seen to create anomalies and differentials. They have then entered the third phase, after they have broken down, in which all the benefits of wage reductions, as far as inflation is concerned, seem to have been cancelled out and there is a tremendous catching-up period.
Therefore, it is now particularly important to go into a policy in such a way that avoids these problems when we come out. However, that is not what the Government have done. The £6 limit will play havoc with differentials both within groups and between groups.
There is also considerable conflict within the White Paper itself, let alone in the interpretation of the £6 limit. Paragraph 6 says, and the Chancellor repeated today:
"The £6 is however a maximum within which negotiations will take place; some employers may not be able to pay it."
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However, the White Paper refers us to the TUC document which is annexed and which, presumably, becomes, for the first time, an official document. In paragraph 1 it says:
"The General Council therefore conclude that there should be a universal application of the figure of £6 per week."
That is very different from what the Chancellor said. Does the TUC understand that everyone gets £6 a week automatically, because that is what it says:
"a universal application of the figure of £6 per week"?
Many people will expect that to mean exactly what it says, and they will demand £6 when otherwise they would not have done so. If that figure is demanded and paid in the textile and food industries, it will put up prices by far more than 10 per cent., because I gather that it is equal to approximately a 23 per cent. wage increase in those industries. It is not a question of what the Chancellor says but of the expectations that arise in people's minds about what this means.
What will the Government do in the public sector—in the Civil Service? Will they pay £6 to everyone? Will there be universal application of a £6 increase or will it be negotiated? From what the Chancellor has said, it appears that the £6 limit is not the upper limit in some public sector occupations because he spoke of excessive wage settlements. We cannot have excessive wage settlements if £6 is the upper limit. He speaks of an excessive wage settlement and then knocking it off current expenditure. Therefore, £6 is not, in fact, the upper limit.
It seems that there will be a considerable mess about increments. I am not surprised that the inquirer was directed to the TUC, because the only place, as far as I can see, where increments are mentioned in the White Paper is in the TUC document, and then it is in very difficult terms. It appears that some will get £6 plus increments, some will get £6 and no increments, and some will get £6 and part increments. It will depend on the age structure of those in a particular group. For example, with teachers, those who leave will be paid at the top of the incremental scale, but those who come in will be at the bottom. If, ignoring the £6 a week, the rest of the wage bill, with all the increments, is no bigger this year

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than last year they will get the increment. If not, they will not. That will cause enormous difficulties because it is not only in the public sector that there are increments. After the last incomes policy round I said that if increments were to be exempted and I were a trade union leader I would start negotiating increments now. That is what a lot of them have done.
I gather that there are now 2 million people in the private sector who also have increments. However, if those people stand one beside the other, and one receives £6 and no increments and another £6 plus increments, they will not consider it fair.
There will be a great difficulty because of the way in which the Chancellor has gone into the policy and the level of inflation. The people who received a full 30 per cent. in July will be much better off than the people who receive only 10 per cent, in August, who will practically never catch up if the policy continues for more than a year, again with people working one beside another.
I come to the question of monitoring, enforcement and reserve powers. I begin to wonder what the Reserve Powers Bill does contain if the elected representatives of the people cannot see it when discussing this matter. Is the reason that it is too tough, or is it that it is not tough enough? We do not know the nature of the offence. We do not know the nature of the punishment. It is like saying to a person "You shall not know what the punishment is until you have committed the offence, and you shall not know precisely what the offence is until you have committed it." It is absolutely absurd. In my view it is a complete contempt of and an insult to Parliament.
The reality is that the Government do not know what they will do about these powers. Paragraph 26 of the White Paper states:
"Legislation has therefore been prepared".
They have drafted it and it is probably printed. However, the Prime Minister in his reply to me—I am most grateful to him for letting me have it before the debate started—said:
"We shall continue to work on the details of that contingency legislation in parallel with the work which still is to be done on the
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details of the voluntary policy announced in the White Paper".
Therefore, the reality is that the Government do not know what they will do. They may be changing their mind, but I must say that throughout the whole of the White Paper it seems as though there is still a great deal of detail to be worked out. The Chancellor of the Exchequer did not seem clear about a great deal of it either.
Mr. Atkinson: The right hon. Lady seems to be telling the House ways in which success can be achieved by backing every horse in the race. Will she now tell us, having left the whole question of the £6, whether or not it should be higher or lower? Does she agree with the CBI and its advocacy of £5? She has pointed out quite rightly all the anomalies that are likely to arise, but does she want to avoid these anomalies and apply more rigorously all the power of the law whether it be against employers or workers? Is she complaining that there are no effective methods contained in the Bill? Does she agree with statutory policy? We should like to know.
Mrs. Thatcher: The Government got us into this economic mess and they must get us out.
Mr. NevilEe Sandelson: Where do you stand?
Mrs. Thatcher: If the hon. Gentleman had heard what I have said many times, he would know full well that I infinitely prefer a voluntary policy to a statutory policy. That remains my own position. We would never have got to 25 per cent. inflation. We reached it because of the Government's attitude through two General Elections. They said that it was 8.4 per cent.—the "Healey half truth". [Interruption.] It is a pity that I am not at the Government Dispatch Box instead of this one.
Last week I and a number of hon. Members asked the Prime Minister what protection an employer who was driven out of business because he upheld the Government's policy would have. His reply was:
"we would not hesitate to introduce the statutory powers".—[Official Report, 15th July 1975; Vol. 895, c. 1263.]
Those statutory powers, from what the Chancellor of the Exchequer said, will

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contain no protection whatsoever for the law-abiding citizen. Therefore, the Prime Minister's reply was thoroughly misleading. We understand that there is to be no protection for the responsible employer who, in carrying out the Government's policy, loses his business.
On the incomes side of the Government's policy, it seems that they have gone into it in such a way that it is bound to create problems—inflationary problems—at the end of the year. They have learned nothing from the past. It does not look like being for "one year for Britain". It looks as if this policy will go on for several years with increasing detail, rigidity, control and increasingly catastrophic consequences at the end of it.
The Chancellor of the Exchequer asked me about public expenditure borrowing requirements and fiscal policy. I always find his arguments on this matter somewhat intellecutally ambidextrous. They were again today. In his estimation, it is always necessary to cut public expenditure. But it is always necessary tomorrow, never today. Why he can do tomorrow what he cannot do today is a mystery.
The Chancellor referred to the amount that we were borrowing when we were in Government. The Prime Minister made great fun of it during the February General Election campaign. He said:
"This Government has minted and printed in three years more money than all the Governments of this country… Record borrowing. In last year's budget Mr. Barber announced that he would have to borrow £4,400 million."
That is comparatively modest compared with present levels.
"This was eight times the total borrowing by his predecessors to pay for the Napoleonic Wars, the Crimean War and the Boer War. For good measure you can include the War of Spanish Succession, the War of Austrian Succession, the Seven Years War".
To meet this Government's borrowing requirement of £9,000 million, history has run out of enough wars. It sits ill in the mouth of the Chancellor of the Exchequer to castigate us for a much smaller borrowing requirement on an economy which was growing than he has had on an economy which is absolutely stagnant. The Chancellor knows that we
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do not need to borrow as much if we do not spend as much, because we can cover a smaller amount of spending by taxation and get nearer to balancing the budget.
Let us look at the record mentioned by the Chancellor. In 1974–75 total public expenditure rose by 30 per cent., which was nearly half as fast again as the gross domestic product at current prices. This disproportionate increase in public spending was a sharp departure from recent trends, because—this is what the right hon. Gentleman failed to mention—between 1969–70 and 1973–74 public spending and domestic output had risen broadly in line. Public spending went up, but so did domestic output. The right hon. Gentleman has put up public expenditure substantially while output has remained virtually the same. His great increase—in 1974–75 it amounted to about 54½ per cent. of gross national product—was financed partly by greater borrowing and partly by greater taxation. So much for the facts.
Interpreting those facts, we find that there has been an enormous drain of funds and resources from people and companies into the Government sector. There has been a fantastic drain out of the private productive sector into the Government sector. That drain has occurred in both taxation and borrowing.
Although the Chancellor of the Exchequer is fond of saying that he will make the rich howl with anguish by increased taxation, it is not the rich who have howled with anguish but those on average wages who have constantly had to bear the increased level of taxes. They now equate them not in gross terms but in terms of net take-home pay. It is interesting to observe that a £6-a-week increase will be £3·57 net of standard tax with the increased national insurance contributions. People are now saying that they do not regard a social wage as a substitute for the wages in their pockets. They are not prepared to have taxation going up and up. If it does go up, they will try to recoup it in increased wages. They will not have their net take-home pay go down.
Not only has money gone from the private into the public sector through taxation, but money which companies have as they go into the beginning of

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a recession, instead of being put into investment and re-stocking, is now being put into gilt-edged stock. The reason is clear. At present price levels, they cannot get a decent return on investment. Until profitability is restored, companies will not be putting more money into investment.
Mr. Frank Hooley: The right hon. Lady seems to have overlooked the fact that when there was profiability in the years 1971, 1972 and 1973 investment in manufacturing industry went down and the Conservative Government did nothing about it.
Mrs. Thatcher: But 1973 was a particularly good year for investment. It was increasing. Next year will be a very bad year for investment.
The hon. Gentleman knows that there are two problems. The first is that the profitability of industry has gradually been reduced over a number of years. Secondly, it is not always possible to get back the investment on new technological undertakings because of over-manning. This is one problem which we have to a greater extent than on the Continent. We put in new machinery, but often we still have the same numbers of people as on the old machinery.
Unless the Government are prepared to reduce public expenditure there will be no room whatsoever for manufacturing industry to take advantage of the improvement in trade which will come within a year. All the money is going into Government spending at the moment. As soon as industry wants to take advantage of rising trade, it will withdraw its money, it will restock, and it will need still more for working capital, leaving a gap in Government financing. The Chancellor knows very well that the danger is that in about a year, unless he has made full reductions in public expenditure, he will have to finance it by printing. That is why it is vital to make cuts in public expenditure now.
The White Paper makes two points about public expenditure. First, it increases food subsidies by £70 million and rent subsidies by £80 million. Those two increases, not reductions, are in areas where we were hoping to get rid of some of the distortions in the market. I am always puzzled why the Chancellor of
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the Exchequer thinks it right to get rid of distortions in nationalised industry prices by putting them up at a time when he is increasing distortions in rents in the housing market. Unless we get some sense into housing finance, we shall never have people properly housed. The more we put on these subsidies, the more difficult it will be.
The Chancellor of the Exchequer did not say how this subsidy would be dealt with in rate support grant settlements. I am not sure whether the £80 million covers in full the costs which local authorities will have to meet. However, there is no mechanism under rate support grant settlements for distributing the £80 million according to the cost to each local authority. Therefore, there will be times when that extra rent forgone will have to be borne by the ratepayer.
Having listened to what the Chancellor said on cash limits in the public sector, I cannot escape the conclusion that the Government have not gone into this matter very far and do not know how it will work. They have already been working in some areas—for instance, in the University Grants Committee—for some time, and I fail to see some of the alleged difficulties. I only hope that the cash limits in local government will apply to the total of local authority expenditure and not only to rate support grant totals, because people must have some protection from considerable rate increases at a time when their incomes will be curtailed substantially.
On the public expenditure side, if expensive schemes like the Land Community Bill—which will cost between £360 million and £400 million per annum and involve the recruitment of 14,000 extra officials—and petroleum nationalisation go through, it will hardly seem that the Government are serious about reducing public expenditure in the short, medium or long term.
But the sector on which we rely for exports and most of our jobs is the free enterprise sector, and that is the one which has received such cursory treatment from the Government.
Mr. Healey: Will the right hon. Lady answer the question which all of us on this side of the House want answered: how big an increase in the RPI, and how large an addition to unemployment,

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would she tolerate as the inevitable consequence of the further public expenditure cuts which she wants to be made this year?
Mrs. Thatcher: The right hon. Gentleman does not seem to understand that the increase in the RPI has occurred under his stewardship—the biggest increase involving the biggest guilt in history. The increase in unemployment has occurred under his stewardship. He was using the same arguments a year ago as an excuse for not taking action. Had he taken action, we should not have a 25 per cent. inflation rate nor over 1 million people unemployed. It is his fault; he is the guilty man.
Mr. F. A. Burden: Is my right hon. Friend aware that on 26th July last year the Chancellor of the Exchequer stated that the measures he had taken the previous day would reduce unemployment by between 10,000 and 20,000 this year and increase employment by between 100,000 and 150,000?
Mrs. Thatcher: It would be best if we believed precious little of what the Chancellor of the Exchequer said at any time.
Mr. Healey: Answer our question.
Mrs. Thatcher: I live for the day when the Chancellor of the Exchequer will be answerable for his economic sins in both inflation and unemployment.
Mr. Healey: The right hon. Lady must be aware that she has dodged the central question. No one in the country will give the slightest regard to the frivolous humbug to which she is treating us unless she answers our simple question.
Mrs. Thatcher: No one in the country will give any attention to what the right hon. Gentleman says after his forecast of an 8·4 per cent. inflation rate. We now have a 48 per cent. inflation calculated on the Healey three-monthly rate. If we look—[Interruption.]—
Mr. Robert Adley rose—
Mr. Deputy Speaker (Mr. George Thomas): Order. The right hon. Lady is entitled to be heard. I realise that we are accustomed to interruptions, but there is a difference between reasonable inter-
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ruptions and sustained interruptions which prevent speaking.
Mrs. Thatcher: What bothers me is that I do not believe that what the Chancellor of the Exchequer has said will have much success in tackling inflation. His arguments are the same as those he used a year ago. Other nations were taking action simultaneously at that time in four fields. That is what the Chancellor of the Exchequer is not doing, and it is one reason why the Government's policy is only half a package. The key elements in the strategy of other nations were: first, wage restraint, which the Chancellor is proposing now; secondly, prices in general were not controlled, which greatly helped to preserve profitability; thirdly, public spending programmes were cut back. In the major OECD countries there has been no real increase since 1973. Some increases are being planned now but in the context of a healthy reflation from a much lower inflation base. Fourthly, monetary policy was tight. In Germany, the inflation rate is down to between 6 and 7 per cent.
Mr. John Cronin: Is it not the case that the Cabinet of the Government of the right hon. Member for Sidcup (Mr. Heath) in which the right hon. Lady served agreed in 1973 to a 24 per cent. increase in money supply, which was a record in peace time, and that that excess money supply was used not for productive investment but for property speculation and other undesirable financial objectives?
Mrs. Thatcher: As far as I can make out, under the present Government the money supply has increased by about 20 per cent. in the last two months. [Interruption.] Obviously the Government are switching from one indicator to another. M3 is not a proper indicator at present. It is much easier to control the money supply in a period of depression than it is in a period of boom—and we are going into a quite severe depression.
Mr. Thorpe: As the right hon. Lady said that, in her view, this was only half a package which she did not think would succeed, are we to take it that the Opposition will be voting for or against, or abstaining?
Mrs. Thatcher: I hope that I have said enough about the weaknesses of the

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incomes policy, about which the House is riot allowed to know, for the right hon. Gentleman to realise that we shall realise that we shall reserve judgment on the package. We shall ask the country in a year or two what it thinks of it when the country knows how it works in detail, which is a great deal more than the Chancellor of the Exchequer knows at present.
The recipes used by other countries have included all four of the methods to which I have referred. As a result, their economies are in a reasonably healthy condition and are ready to take advantage of the upturn in world trade which will come soon. We agree with the Chancellor's immediate objective—the rapid reduction of inflation—but insofar as we have been able to examine his methods we have reason to doubt whether in the longer term they will do the job, and we fear a reflation on top of an inflation which has not been properly quelled.
The Chancellor's longer-term strategy remains clear. It is progressively to increase the area of Government control over industry through more nationalisation and by buying up shares in profitable companies. It is to get more Government control over the pay packet and savings through the typical Socialist method of increasing taxation on both. This is not the way to create wealth or to further the prosperity and well-being of Britain.
The pronouncements of the Chancellor of the Exchequer during election periods and since—I quoted some of them at the beginning of my speech—show that he has never yet found the truth for the hour. Unlike a previous politician, he was prepared during the election campaigns to sell the truth for the hour. Now he has found a half truth well after the hour has struck. Against that record the responsibility for the level of prices is his. This policy is not a wholehearted attack on inflation. When it is, we shall support it.
5.50 p.m.
Mr. Jeremy Thorpe: The right hon. Lady the Leader of the Opposition has at least told us what she will do from her reserved position, which is to abstain.
At the outset I should like to say what my hon. and right hon. Friends will do. They will not be in a reserved position. Despite the reservations which we have,
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on the charitable basis of judging the policy as a first instalment of further powers which the Government will be compelled to ask for in the autumn, and which they have been very coy about showing us—about as coy as the right hon. Lady has been in declaring her intentions—my colleagues and I believe that the White Paper must be given the chance to succeed and that the measures should be supported by any responsible Opposition in the national interest.
This is not a time to imperil the policy or increase its chances of failure by voting against it or, for those who cannot make up their mind, abstaining. Therefore, we shall vote for the White Paper, but, as we say in our amendment, we believe that stronger powers may be required. We certainly do not believe in indiscriminate cuts in public expenditure which we believe—as I think the Chancellor of the Exchequer agrees—will lead to increased unemployment.
Although in our view the White Paper does not go far enough, it represents a fundamental change in the thinking of Her Majesty's Government and the TUC. Any doubts on that score may be resolved by looking at the Tribune Group amendment, which suggests that it is a full-scale attack upon the Ark of the Covenant. I think the Tribune Group would agree that it certainly represents a full-scale change in the Government's thinking. The Government recognise that not only have the social contract and the guidelines been inadequate but that they must accept a greater share of responsibility for the level of prices and also for the level of wages.
The Government already have statutory powers in regard to prices because they have not repealed Sections 5 and 6 of Part II of the Counter-Inflation Act 1973. Now we are told that there are powers in reserve which could be of a a statutory nature with regard to incomes. We already have statutory powers in regard to incomes if the Bill which is before the House is carried this week. For example, there will be power to withhold rate support grant from local authorities which are in breach. There will be power to refuse to buy from employers who are in breach. To be told that there is a vague illegality which an employer might commit at a later stage yet to be resolved shows extraordinary haste in the

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preparation of the case. I suspect that the view that is taken is that the Bill will not see the light of day until after the TUC conference and after the Labour Party conference.
Despite the events of the last 18 months, considerable credit is due to Len Murray, Jack Jones and the Chancellor of the Exchequer, backed by David Basnett, Tom Jackson, Frank Chapple and others who have come to this decision, but there is not much credit due to anyone else, certainly not to the Government, who have waited for a 26 per cent. rate of inflation, the prospect of 1 million unemployed, a fall in the value of the pound of 40 per cent. since 1967 and wage awards running at well over 30 per cent. before acting.
There is little to admire in the history of prices and incomes under successive Governments. In 1966 the present Prime Minister told the electorate that he would never introduce statutory controls. In 1968 the Parliamentary Labour Party was told that he could not govern without them and he introduced compulsory measures. The Conservative Party in opposition opposed every order and every attempt to give effect to that statutory policy. We voted for it.
In 1970 the Conservative Party manifesto said:
"Labour's compulsory wage control was a failure, and we will not repeat it".
At that time I believe that the right hon. Member for Sidcup (Mr. Heath) and the right hon. Lady were in total agreement. After saying in 1970 that the Conservatives would never introduce compulsory wage control, in 1972 the right hon. Member for Sidcup, who was then Prime Minister, said that the Government had no alternative but to bring in statutory measures.
As the rôles were reversed, the Labour Party in opposition bitterly and stoutly resisted the introduction of statutory controls at every stage. Both Labour manifestos in 1974 declared that Labour would not in any circumstances introduce a statutory prices and incomes policy. In the first of the two Tory manifestos a statutory policy was vital, and in the second in October the Conservatives said that they might introduce a statutory policy. So now the Labour Government
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are introducing it and the Conservative Opposition will abstain. We do not know whether the Opposition are abstaining from voting for a statutory prices incomes policy so that they are consistent with their views of 1972 to 1974, abstaining from voting against it so as to be consistent with their views of 1966 to 1970 and 1970 to 1972, or merely abstaining for the sake of abstaining.
Mr. Nicholas Ridley: Is the right hon. Gentleman aware that the two periods in recent history when the rate of inflation has moderated a little—not gone down but gone up less fast—were in 1971 and 1975, which are the only two periods in the last 10 years when there has been no statutory control on prices and incomes? Does it not therefore seem to the right hon. Gentleman perhaps better not to have a statutory policy?
Mr. Thorpe: The hon. Gentleman seems to think that 1975 is a halcyon year. It is a record year—
Mr. Ridley: Moderate.
Mr. Thorpe: Surely 26 per cent. is a rather high rate of inflation. It may come down by about 1 per cent., and if that gives the hon. Gentleman any joy and hope in heaven he is welcome to it. The hon. Gentleman's other example was 1971. I refer him to his former leader who thought that the rate of inflation at the end of 1971 had become so acute that he had to introduce his statutory prices and incomes policy in 1972—but I do not want to widen the splits in the Tory Party. Perhaps it is wisest for the Conservatives to abstain on this issue, otherwise hon. Members may be going in different directions.
We have the extraordinary situation that the Government have totally changed. They have come round to the well-known views of the Secretary of State for Employment, who is always known as being very firm in these matters and who is giving support to the package, with an Opposition which, in the words of The Times, have decided on the great national issue of how to tackle inflation to be the party of "decisive indecision", militantly united in abstention.
Therefore, it comes as no surprise that this measure has been introduced.

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May I modestly remind the House that at the time of the last election I said that within six to nine months, whichever Chancellor was returned, a form of statutory prices and incomes policy would be introduced? I similarly predict that by Christmas the Government will be coming back for tougher measures and saying "It has not gone as we would have liked and we therefore want a second instalment".
Mr. David Made!: The right hon. Gentleman is giving us an interesting lesson in history and consistency. When matters were getting difficult for the Conservative Government in 1973, does the right hon. Gentleman recall his hon. Friend the Member for Cornwall, North (Mr. Pardoe) saying in November 1973 that the miners should easily be able to find their way through the multitudinous holes in stage 3? Does he recall saying in January 1974 that stage 3 was not worth dying for? May we have an assurance that the Liberal Party will be consistent in this, as manifestly it was not in November 1973 and January 1974?
Mr. Thorpe: That greatly assists my case. My hon. Friends and I voted against phase 3 as we thought that the threshold arrangements were wildly inflationary. In retrospect I think that that fact is now accepted by everybody. I said in the House that we did not believe that phase 3 was worth dying for.
There was proper machinery for settling the miners' dispute in the relativities board, which could easily have been retained, without the threshold arrangement of phase 3, to which we were opposed.
I suggested to the then Prime Minister on two occasions that he should refer the miners' dispute to the relativities board. He refused. He eventually did so only at 6 o'clock following the 12 noon announcement that there would be a General Election, since no further options were open to him. I spent that morning with the National Union of Mineworkers. I am convinced that there could have been an honourable settlement within the framework of the relativities board. We are now back in the old milieu of one Government introducing a statutory policy while the other side merely abstains with harsh words.
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Having seen a genuine degree of consent and agreement between the Government, the TUC and the CBI, can we in the national interest and the interests of the economy take this a stage further? I believe that we can. Can we learn from the lessons of countries such as Germany, Sweden, the Benelux States and France, which have had greater success than the United Kingdom in tackling inflation? Unless there is a radical change in the way in which we control our economy —I do not believe that we shall achieve that radical change without agreement—we shall face a difficult situation in August next year when the problems of differentials and other difficulties flow from this policy.
We must have regard to three matters. We have suffered since the war from chronic underinvestment as a result of causes which are generally accepted. We have a problem of overmanning compared with our European partners. There is a problem of productivity per man. The trade union movement fears the growing rate of unemployment. As a result, we have often pursued job security policies which have led to serious overmanning in large sections of our industry. That is one of the root causes of inflation.
The electorate were shocked to read in the Ryder Report on British Leyland that over many years that firm had been overmanned by 25 per cent. That applied to 40,000 out of 150,000 workers. I estimate that that must have added about £80 million a year to the overheads of British Leyland. If that wasted manpower could have been diverted to designing and producing the capital re-equipment which British Leyland so desperately needed but for which it did not have the necessary finance, the situation and story would have been different today. The same is true of steel, printing and many other industries.
The effect of overmanning on the cost of production has led us into a mentality where many people almost welcome the decline in the foreign exchange value of the pound, as they believe that this will allow us to be more competitive in selling our goods. Every time the value of the pound falls, the advantage is short-lived and buys less and less time, and wages rapidly catch up. The increased cost of imports resulting from the 40 per cent. depreciation in the value of the pound

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since 1967 has probably been £4,000 million. That is a direct additional cost on the price at which we export our goods.
Since world trade has increased by about 300 per cent. since the war, why is it that our competitors have done so much better? First there is the problem of overmanning. Next there is the level of investment and re-equipment. If we compare other industrialised countries, both on the basis of volume and per capita, we have probably underinvested by comparison with our competitors, to the tune of £20,000 million over the past decade. That fact must be recognised. But if we are to achieve the consent and agreement which we need there must be greater worker participation in industrial policy formulation. We need much closer worker participation in capital growth and investment decisions. Now is the moment for the Government to start working on policies to achieve those objectives.
For the past 25 years the main supervisory boards of the German steel and coal industry comprised 11 people, five representing the shareholders, five representing the employees and a neutral chairman. Many of the decisions on issues such as investment and overmanning are taken with the agreement of the representatives of both sides of industry working together. They are now thinking of having parity on boards of concerns employing over 2,000 people. That is the way in which the Germans are moving. Likewise, in Sweden 20 per cent. of the profits are free of tax if they are set aside in the State bank and are spent—after obtaining the agreement of the supervisory board representing employers and employees, if there is an approved scheme—either on improving the working environment or providing improved benefits such as works canteens or on protective measures for dealing with pollution either in the factory or the environment. Many of our competitors have followed that pattern. I do not believe that that will solve the problems overnight. But if there are problems of overmanning and of friction between management and labour, that is one way in which we can bring about a far greater understanding of what people should
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regard as being to their mutual advantage.
The feeling at present is that investment can come from profits or from the State, usually at the last moment to bail out a firm. A firm can always obtain money from the State if it is going bust. However, a nationalised industry wanting to expand finds that it is almost impossible to obtain funds, as I know from a nationalised industry in my constituency.
It is not realised that the imposition of more tax does not diffuse or spread wealth. Instead the wealth is concentrated in the hands of the Government. That is what has happened. It is a justified criticism for a wage-earner to say "A wage restriction for me is total. A dividend limitation for the shareholder is deferred". I can see that. Therefore, I should like the Government to work out a national investment plan for the whole of British industry which would be slightly different from the National Enterprise Board, although both could work together, and which would include wage and salary earners.
The gross national product of the United Kingdom is about £80.000 million, of which £60,000 million is accounted for by incomes from employment, leaving aside the self-employed. That figure represents a 50 per cent. increase over three years. If we compare gross profits before tax, or gross profits net of stock appreciation, with the annual bill for wages and salaries, the 1973 wage bill and the global overheads that firms had to meet were seven times the gross trading profits. This year they will be nearer 11 times the gross trading profit. Therefore, in dealing with the matter as a ratio there will be less profit. There will be insufficient profit with which to provide all the investment required.
Just as the Government talk in the White Paper about a cash wage and just as they have often talked about a social wage, I should like them to move towards accepting an investment wage. This is not an airy-fairy idea. At the moment there are some 14½ million employees in Germany who are benefiting from capital accumulation schemes as a result of some 850 union-negotiated agreements. If the Government say to people "We are sorry, but there will have to be a cash limit on the actual wage that you can

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negotiate and obtain", I believe that there is a lot to be said for supplementing it at a later stage—I should like this to be worked out as soon as possible—with an investment wage.
If employers were to credit to each employee of the order of 2½ per cent. of wages free of tax to a British national investment trust, with employers putting in 2½ per cent. themselves, something of the order of £3,000 million would be accumulated a year or, at the end of 10 years £30,000 million. This scheme could work closely with the National Enterprise Board and it would be not only a form of saving but a new form of capital for investment in industry.
Obviously one asks the question "Could it be cashed?" My view is that it would be reasonable to suggest that it could not be cashed, at any rate for the first five years, but afterwards it could be. Tax would then have to be paid on it, but if it were not cashed until the date of retirement it should be tax free
The Germans have shown that this is one way in which people can take a genuine interest in the whole of industry, both the State sector and the private sector. However, this scheme does not hold the same dangers that would apply if one were to put all one's money in one firm—as happened in the case of Rolls-Royce—where if the firm goes bust the workers lose their money.
Mr. Hooley: How does the right hon. Gentleman deal with the situation of the 7 million employees in health, education, the Civil Service and other Departments who cannot possibly participate in this scheme but who will not sit back and watch advantages accruing to the manufacturing sections of employment in which they cannot take their fair share?
Mr. Thorpe: Germany has schemes for civil servants. The nationalised industries credit to their workers a particular percentage which the workers match. This can be translated into loan stock if the particular nationalised industry wants to attract investment from the unit trust involved. It has to be a viable proposition before the unit trust backs it. However, it is possible to include all those persons. I agree with the hon. Gentleman that otherwise it would gravely weaken the case.
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It has been said that it is extraordinary that we do not know what the Government's reserve powers are. I hope that the Government will reconsider this matter. To talk about vague legal powers is an unsatisfactory way of proceeding when we are being asked to look at the package as a whole. The first question I ask the Government is, how did they come upon the figure of £6? Does £6 reflect to them 10 per cent.? If they fail to reduce inflation to 10 per cent. and they get it down, say, to only 12 per cent. or 15 per cent., is that 15 per cent. to be translated into a higher cash term next year?
Having discussed this particular problem with Len Murray in public, the Government may regard the £6 as the maximum, but I can assure them that there are many members of the trade union movement who regard it as the norm and there may well be a difference of interpretation here.
Secondly, what monitoring have the Government in mind? They have said that they do not want compulsory monitoring except in their reserve, unseen and hidden Bill. I got the impression from Len Murray that the trade unions were anxious to see monitoring working effectively and efficiently. As paragraph 28 of the White Paper refers to monitoring, I hope that we shall be told something more about it. Surely it cannot be based on the normal accounting practices, which are based on an annual budget. I should have thought that that would be too late in the day.
Paragraph 9 states that the Government are opposed to criminal sanctions on workpeople, with which I agree. Are they also opposed to criminal sanctions on employers, or are employers regarded as a rather different category? This is a simple point and I hope that the Secretary of State for Employment can deal with it.
What is the time scale? When will the Government start discussing the problems of differentials? I disagree with the right hon. Lady. I do not mind making changes in differentials because I believe that this can do more than anything to help the low paid in this country. This is long overdue, but I recognise that the problems of differentials will be one of the effects. But is it fair to cut back on

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local authorities' and nationalised industries' expenditure when measures such as the Community Land Bill will increase not only their work but their costs? I am well aware that those measures will not have immediate effects, but psychologically it is not a good way to persuade local authorities to cut down on their obligations.
Mr. Atkinson: Does the right hon. Gentleman relate what he is saying about differentials to what I take to be the policy of the Liberal Party, namely, the introduction of a permanent incomes policy, not something of a temporary character? How does he view his differential? Does he not say that in terms of recognizable differentials lie, as a Member of Parliament, has a differential far too great in the present circumstances and that this should be reduced? If so, by how much should it be reduced?
Mr. Thorpe: The hon. Gentleman has asked me two questions. We believe that there should be a permanent prices and incomes policy for this country until such time as we get plant bargaining and we get away from the present totally archaic monopoly bargaining situation that we have. That is why I believe we should have a statutory prices and incomes policy for the foreseeable future. I do not say that we should have one for ever. Certainly it would not he right to consider giving up such a policy until such time as we had brought our rate of inflation down to that of our competitors. We would then he able to know whether we could live without it.
With regard to the point about hon. Members' salaries, I must not trespass on the debate we shall have tomorrow night. Suffice it to say that even Lord Boyle thought that the figure of £8,500 was the correct one to restore differentials. I believe that the Government were right to think that the differential should not be restored. Indeed, I am not certain whether they have the right figure. I would prefer it to be £6 per week over three and a half years. The Government would then have a stronger case to put forward.
I hope that the Chancellor, when he referred to local authorities, meant that there would be a total freeze on the payroll of such authorities. This is one of
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the great industries in this country which employs more people and, collectively, produces very few additional services. This year, on the Chancellor's own figures, the bill for local and national government officers has increased by £3,000 million over last year's figure. This is one of the biggest growth industries we have. If the hon. Member for Liverpool, Walton (Mr. Heller) is wondering whether I am referring amongst others to the local authority in my constituency, I am. My local authority has been increased, but the same work is done by more people at higher cost. This is the same in every constituency in this country, if only Members had the courage to say so, but they do not.
The Government have started very modestly. I believe that they have at last realised that the social contract applied to everyone except the next breach—and then there was a good reason why it was an exception. They have realised that there has to be some control. They will have to have statutory back-up powers; they will probably have to use them. I hope that they will listen to those who are prepared to support the White Paper, who will give it a chance and who do not sit in sullen abstention unable to make up their minds whether they are for or against it.
I do not believe that the White Paper has enough teeth, but it should be given a chance. Any Government who can get on top of inflation will be able to claim that they have maintained, improved and enhanced the living standards of the people of Britain and removed the sceptre of unemployment. If they do that, they will be the first Government to have done so since the war.
6.19 p.m.
Mr. Eric S. Heller: This afternoon my right hon. Friend the Chancellor of the Exchequer clarified at least one point about the Government's policy. That is that we now apparently have a voluntary policy with powerful sanctions. In other words, we have a form of statutory incomes policy. When I heard my right hon. Friend the Prime Minister speak recently. I was not sure whether we had a voluntary voluntary policy, a voluntary compulsory policy or a compulsory compulsory policy. But at least we now have the position clarified. We now have a statutory incomes policy.

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The position was further clarified by my right lion. Friend the Secretary of State for Prices and Consumer Protection in a radio broadcast a week ago last Sunday, when she was discussing the position and clearly pointing out that the sanctions were very powerful indeed and that the Government wanted to use them to the full. In other words, if a local authority decides to go beyond the £6, action can be taken in relation to the rate support grant and so on. If the nationalised industries go beyond the £6, action can be taken on subsidies and finance for them.
There is no question about it. Whatever my hon. Friends try to say, this is a statutory incomes policy. It is no good denying it. I say in particular to my right hon. Friend the Secretary of State for Employment, who is a great personal friend and has been for many years, that there is no question about it that this is a statutory incomes policy, backed in a way by sanctions, without its actually being in a Bill. The first part of the two Bills comes up for discussion on Wednesday, when we shall be discussing certain powers in a Bill which may be actually brought before the House.
I want to remind my right hon. Friends of what we said in the last two election campaigns. I shall not quote the manifestos. I have no doubt that they have been well studied in the last week or so, certainly by the Opposition, as we studied their manifestos and speeches when they also did their U-turn when they were last in Government. I can remember making speeches from the Opposition side of the House reminding the then Prime Minister of the speeches he has made and the various statements in the Conservative manifesto. However, I want to recall what we said in our manifesto.
We said that we had already taken four lines of action to deal with inflation. We then said that we intended to take four further lines of action to deal with inflation. We did not say that one of those four lines of action would be the introduction of a wages control policy. That was not among the actions we were to take. In fact, in the section dealing with the social contract we made it absolutely clear that we had no intention of reintroducing the type of legislation we had got rid of which had existed under the previous Tory Government.
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I say to my hon. Friends that we knew that there was a crisis. When the leader of the previous Conservative Government said in the election campaign that we had misled the people about the seriousness of the crisis, we made it absolutely clear, as did certainly my right hon. Friend the Prime Minister, on television and elsewhere, that this was not true. We boasted about that. We said that we knew there was a crisis, the most serious crisis we had faced since the days of mass unemployment in 1931. That is clearly on record. It is in our manifesto. It is worth while quoting the manifesto on that point, because it says:
"Britain faces its most dangerous crisis since the war. The Labour Party makes no attempt to disguise this. On the contrary, at the time of the February election, we took the British people into our confidence and shared the realities of our daunting problems."
Therefore, we know that there was a most serious crisis.
We put forward our policies in relation to dealing with inflation and our economic problems. We said nothing about a policy of wage control because we did not believe that wage control was necessary to deal with that crisis. On the contrary, we argued the opposite. I can remember making a speech about this. The right hon. Member for Devon, North (Mr. Thorpe) talked about bringing in a wages control policy. I said that this was absolutely absurd. In our manifesto we are clearly against such a policy. Either my right hon. and hon. Friends are, as I said in the House the other day, economic illiterates and do not know the position or they have misled themselves in particular.
This is a very serious matter from the point of view of the Labour Party. I am not one of those who believe that we should ever say one thing to the electorate and do something else when we are elected as a Government. It is that sort of thing that leads to cynicism and ultimately to the undermining of our parliamentary democratic system.
Of course we must tackle inflation. No one denies that. We made that clear in our manifesto. There was a whole section on the question of inflation, and we said that it had to be tackled. There were sonic of us in the Government who clearly stated months ago that drastic action had got to be taken. Because of

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the international crisis in the capitalist system with our own crisis grafted on to it, we recognised that we had to take drastic action to deal with the crisis or otherwise Britain would move steadily into a deteriorating position. We argued the sort of lines that ought to be adopted. Our policies were not accepted, as we all know. Some people even then believed that the real answer was wage control, on the ground that they have always believed that our inflation is wage-led.
That is not a view that I accept. Wages are only a marginal part of our inflationary crisis. I am not denying that they have some effect—it would be ridiculous to deny that in respect of certain industries and certain groups of workers—but not as a general principle. In 1953 the wage percentage of the gross national product was 38·1. Taking wages and salaries together, it was 57·4 per cent. These figures are taken from National Income and Expenditure Blue Books. In 1973 the wage percentage had fallen to 32·6 per cent., and coupled with that the percentage of salaries and wages together had risen to 59·6 per cent., just 2 per cent. higher than it was in 1953.
Therefore, the idea that wages and salaries have been moving miles ahead is absolutely unfounded. Salaries and wages taken together have remained a relatively stable proportion of the GNP, but taken alone wages have gone down.
Mr. Thorpe: These figures cannot be allowed to pass. The Central Statistical Office has shown that the gross national product in 1975 is likely to be £80,000 million and all income from employment is likely to be £60,000 million. Income is three-quarters of GNP, compared with two-thirds in 1973.
Mr. Heffer: I would like to draw the right hon. Gentleman's attention to the information I was quoting. He cannot get away from the fact that it is based on the most impeccable information one can get. I do not know where he gets his information.
Mr. Thorpe: From the Press Information Office of the Central Statistical Office. The information is put out by the Government.
Mr. Hafer: My information is also put out by the Government. The only deduc-
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tion I can make from that is that we should never take any notice of figures.
Mr. Peter Hordern: Perhaps I can assist the hon. Gentleman. I had an answer from the Chancellor of the Exchequer a week ago which said that the proportion of wages and salaries to GNP in 1965 was 67·5 per cent. and in 1973 was 68 per cent.
Mr. Heller: I did not quote any figures for 1975 because I do not have them. If the hon. Gentleman has extra figures, I shall be happy to receive them.
I still insist that in percentage terms working people's wages have not leapt ahead of the general increase in wealth in this country. Of course wealth has gone ahead, but the wage percentage has not. Any one who suggests that the whole of our inflationary crisis has arisen because of wages is not taking into consideration all the other important factors the existence of which was admitted by the Chancellor of the Exchequer today.
Let us take a look at some of the other factors. The devaluation caused by the floating of the pound since 1971 has reached about 30 per cent. and has caused a massive increase in import prices. Rising unemployment has led to increasing unit costs and, again, to increased prices. The Common Market agricultural policy has led to a dramatic increase in prices, and the high interest rates which are charged in order to attract foreign cash have also resulted in price increases. There are many other factors, one of the most important of which is the pricing and profits policy of multinational companies.
The old laissez-faire policies are largely gone. Under the old capitalist system, based on the workings of the market, there would be increases or downturns in prices according to whether there was a period of boom or slump. However, since the multinational companies came on the scene we do not get downturns in prices even when there is a slump. This is because of their pricing policies on an international scale. This is a new factor in capitalism.
Mr. Lawson: I am most grateful to the hon. Member for giving way. If it is the multinational companies and their pricing policies that are responsible for inflation, why is our inflation two or

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three times as high as that in other countries where these companies operate with the same policies?
Mr. Heffer: I should not have given way. I said that this was an additional factor in relation to rising prices. I did not say that inflation was entirely due to multinational companies. I gave their policies as just one example of many that could be cited. Inflation is not purely or primarily wage-led. There are many other factors which need to be dealt with in a comprehensive policy.
Prices can be held down in our system for only a short period. Such action leads to a lack of profits and investment, but the lesson I draw from that is not the same as the lesson drawn by hon. Members opposite. I draw the lesson that we need to extend and expand controls over the economy as a whole. We need greater investment. We have suffered from a lack of investment in this country. An hon. Member referred earlier to overmanning. This is partly caused because of the fear of unemployment but also because there have not been the required new technological advances and machinery, and this is because of lack of investment. I worked in industry and I know the basic reasons for what is called overmanning.
We need investment yet we have allowed capital to flow out this country on a massive scale. It has doubled in the last 10 years. We have overseas assets which could be organised and used on behalf of this nation in the same way as they were used during the Second World War. These are radical measures, but we need to go further. We need to control the banks, insurance companies and finance houses. [HON. MEMBERS: "Like Russia."] It is not a question of Russia. It is a question of dealing with our people's problems to make certain that we do not have the mass unemployment that we are likely to get unless we have this sort of radical policy.
We have tried six wage control policies, and each time they get worse. Each one is a failure because at the end of the period the cork comes out of the bottle and there is a greater rush for wages than we had previously. All that we do is to make people increasingly wage conscious when we adopt these policies.
Several hon. Members rose—
Mr. Heffer: I am not giving way. I shall be speaking for only a limited period. I give way generously in this House, perhaps too generously. I am a democrat and I believe that people should have the right to ask questions.
I must say to my right hon. Friends on the Front Bench that if we persist in this policy, even with the support of the General Council of the TUC, we are adopting a policy with no real future. As it progresses, discontent among the working people at the absence of any real control of prices will grow, and the Labour movement will bear the full weight of that discontent. The Conservatives will be sitting waiting for the next General Election in order once again to move in and pick up where they left off.
I must warn the Government that this is a most dangerous path for them to tread. My right hon. Friend the Secretary of State for Employment has said so many times about incomes policy. I merely repeat the argument that he put forward in the past. Len Murray suggested that all that the Left had to offer was instant Socialism, but he is wrong. We do not offer instant Socialism, but we know that in order to deal with the basic underlying crisis, which is part of the capital crisis, we must have Socialist measures.
Socialism is not something for the distant future. It is not something one dreams about for 100 years. Socialist measures are required now in order to deal with our serious problems. We have been along this road before and I urge my right hon. Friends not to cause us to tread it again. Let us back away now. There is still time. We need an alternative economic strategy. My hon. Friends both on the Right and the Left of the party have said that we are putting forward a policy which in the long term has great merit, but they ask what we have to offer as an immediate policy to deal with the crisis.
Mr. Leslie Huckfield: Hear, hear.
Mr. Heffer: The policy being put forward by the Government will not deal immediately with inflation. We shall not be able to work a miracle on this problem. The Government will not be able to clutch out of the air a policy which automatically

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solves all our problems. Only on a longterm basis and moving stage by stage will we deal with those problems.
Mr. Huckfield rose—
Mr. Heffer: I shall not give way. The collective measures that we have put forward in our amendment are designed positively to deal with the crisis, and they are just as immediate as and far more important than the policies put forward by the Government.
Mr. Huckfield: Tell us what they are.
Mr. Heffer: If hon. Members will read the amendment, they will see. We are not opposed to getting a genuine voluntary agreement with the TUC. In fact, it was not a genuine voluntary agreement.
Mr. Roy Hughes: It was blackmail.
Mr. Heffer: It could hardly be a genuine voluntary agreement, in spite of what my right hon. Friend the Chancellor said on television, and it is no good his telling me that he was at the meeting and I was not. That makes no difference. I know people who were there. I can discuss the matter with General Council members as well as anyone else. The position is quite clear. The General Council was informed that if it did not go along with some such policy—probably put forward with the best of intentions by Mr. Jack Jones—a Bill would be brought in immediately on the basis of the type of legislation introduced in the past.
A Bill will be introduced anyway. We are involved now only with the first step. Stage by stage we shall move into a wage control situation. The Conservatives might like that but I do not. I do not like the corporate State mentality which hon. Members, particularly in the Liberal ranks, have developed even in the argument today, in which the TUC, the Government and the CBI work out a policy in which Parliament and the people have no say.
I want to get back to the genuine voluntary agreement. Only by the adoption of a voluntary agreement coupled with the measures we have put forward can we deal with the crisis.
Mr. Huckfield rose—
Mr. Heffer: I shall not give way. My hon. Friend has explained his views to me elsewhere.
Mr. Huckfield rose—
Mr. Heffer: I shall not give way.
Hon. Members: Give way.
Mr. Huckfield: I am grateful to my hon. Friend for giving way. May I reassure him that I support him still in his immediate and long-term aims for the British economy?
Mr. Roy Hughes: You could have fooled us.
Mr. Huckfield: How does my hon. Friend propose to surmount the present problem of keeping money in this country when there is a 30 per cent. rate of inflation? Or does he think that a sterling crisis is something like an optional extra?
Mr. Heffer: My hon. Friend knows that whenever there is a Labour Government there are withdrawals of capital from this country.
Mr. Ian Gow: Is the hon. Gentleman surprised?
Mr. Heffer: Of course I am not surprised. It is nothing new. It happens to every Labour Government. The Prime Minister's great tome—perhaps I should have pronounced that "tomb"—says at one point that this is to be expected, but when it happens we do not have any measures to deal with it. Take the latest crisis over the so-called withdrawal of Arab money. It may be a figment of someone's imagination because no one seems to know anything definite about it. I understand that one of the arguments used in the Cabinet in support of the policy was that if action was not taken the Arabs would withdraw their money and the pound would collapse. All sorts of ingenious arguments may be used to get a policy through, and that might have been one of them. Withdrawals are always bound to happen, especially since sterling is the world's second reserve currency. We obviously have to take serious measures to deal with it. That is why my hon. Friends and I have put down the amendment. We believe that we need an alternative economic strategy which is as positive and important as anything we have heard from the Government.
6.50 p.m.
Mr. Peter Bottomley: I am sorry that I cannot say I have come here having defeated someone who put forward at the Woolwich, West by-election a policy such as we see in the third amendment on the Order Paper today, However, I prefer to leave most of the comments of the hon. Member for Liverpool, Walton (Mr. Heffer) for others to answer, because I wish to start on a note of agreement among everyone.
I wish to say to the Prime Minister, in whose private office my predecessor worked, to Bill Hamling's close friends, to his family and to all hon. Members on both sides of the House, as well as to all those on both sides of the political fence in West Woolwich, that I regard it as a great privilege to follow in this place someone who was so well loved and respected both in the House and in the country.
I hope that in my first speech I shall not have to compete with someone who 10½years ago was interrupted a dozen times—or by a dozen people in the same interruption—having brought it upon himself, perhaps, by referring to you, Mr. Speaker, in a previous capacity. However, having won a record election, and having voted twice for the Government on my first day here—I suppose that I must regard that as a mark of distinction, if not of incompetence—and having discovered myself in the same Lobby with the hon. Member for Bolsover (Mr. Skinner) on my second day, I cannot imagine that anything that will happen in the remainder of this Parliament will greatly surprise me.
I represent a very sensible place, sensible not only because the electorate elected me but sensible also because they had Bill Hamling as their Member before me. It is an area where people take their political duties seriously. They have a high turn-out at local government elections. They are generally well served by their council, of either political complexion. Incidentally, I think that it is likely to change again fairly soon.
Woolwich, West is an area where most people are desperately concerned, as they showed by their behaviour last month, about the future of our country. They are worried about their children's education. They are concerned about our Armed Services, because it is a place where the
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military and the Military Academy hold a high place in their hearts and in their employment. I believe that most of my constituents are concerned also that the lesson of the referendum and the lesson of their by-election are taken more to heart beyond the confines of Westminster than has been the case so far.
On another occasion I hope to be able to raise such matters as the question of the Rochester Way and the future of Colfe's Grammar School, but today I shall direct myself to the White Paper "The Attack on Inflation". The White Paper modestly does not acknowledge the influence of the Government party during 3½ years in opposition and 17 months in Government. Neither does it acknowledge that it was the Labour Party which pulled the trigger of inflation several times over and the trigger of unemployment. One cannot entirely blame the Government for that, since it was the Liberal voters who gave them the gun when they could not make a firm choice between our two major political parties in February last year.
Over the past five years—I am broadening the time span deliberately—we have seen a redistribution of incomes and of spending, partly from those who save to put something by for their old age to those who spend as they go, and I cannot believe that anyone would regard that as desirable. We have seen a redistribution of income and spending from individuals to local authorities and to the central Government. This has reached a point now when, deliberately or otherwise, families are discouraged, or in some cases virtually forbidden, from spending the marginal increase in pounds in their pocket on things which matter most to them.
In housing, for example, we see that people cannot make the small jump from £5 a week on rent to £7 in order to get a better home for themselves, and certainly not to £17 or £25 for a private mortgage. In education, people cannot move from paying a small cost—or nothing, because it comes through local authority expenditure—to £15 a week for a private school. Moreover, we see that our direct grant schools are likely soon to suffer even more. Anyone who is really interested in the use of resources and who believes in Samuel Brittan's theories of participation without politics

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ought to realise that, instead of getting rid of our direct grant secondary schools, we should be working towards direct grant primary schools, upon which most people's initial concern for their children's education centres and which set the foundations of all education. Much the same applies also to medicine.
Over the past five years—this topic was not mentioned by the hon. Member for Walton, and neither was it touched on by the Chancellor of the Exchequer—there has been a redistribution of income from families with children to households with all income earners, whether just one adult or three or four. I have not been able to gather information from the Central Statistical Office, and neither do I have such information as the hon. Gentleman had in terms of the proportion of gross national product going to people earning wages and salaries, but, according to my coarse arithmetic, £2,500 million a year has been redistributed away from people with children and has been given to people at work without family responsibilities.
It is difficult to be precise about these figures because the Government do not have them, so one is working to some extent in the dark, and I acknowledge the help of the valuable work done by my hon. Friend the Member for Kensington (Sir B. Rhys Williams), who managed to get some figures out of the Secretary of State for Prices and Consumer Protection.
Paragraphs 33 and 34 of the White Paper talk of family budgets and food subsidies, but they do nothing to acknowledge that transfer of £2,500 million. There are hon. Members on the Government side who share my concern for people with children, but we have not yet heard that concern expressed in the debate, partly because the debate so far has been taken up by hon. Members like me who are almost strangers here themselves or by those who put down amendments which ignore the influence of five years' inflation on families with children.
The £6 flat-limit increase will again redistribute more resources away from families with children. It was said during my election campaign that I was in favour of motherhood and against inflation. Indeed I am. I am concerned also about industrial relations and conditions at work.
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But it must be emphasised that half our population—14 million children and 13·5 million parents—are, apparently, totally ignored by the House most of the time, and I think it suitable, therefore, to concentrate most of my speech on them.
The Government cannot find time for a proper debate on the Finer proposals for one-parent families, whose circumstances are even worse than those of two-parent families, which are bad enough. They cannot find time for a proper debate, and they also tell us that they cannot find the money to implement more of the Finer proposals. Yet the White Paper implies that the public sector will find £1,500 million for up to £6 increases for 5 million people, and the way they seem to be approaching the matter is that that £1,500 million will be balanced by £4,500 million in the private sector, making £6,000 million in all—over £.100 for every man, woman and child in the country. This will inevitably have its repercussions in terms of unemployment and price increases. Yet the Government tell us that we cannot instead have that £100 a year for an interim family allowance for the first child. Would it not be better to introduce a £2 a week interim allowance and hold back on adults, in view of the way in which our society has been treating families and children over the past five years?
I wish to put to the authors of the White Paper a few short questions, and I am willing to wait until tomorrow evening for the answers. During their discussions with the TUC—apparently the principal body to be consulted—how far did the Government consider representations about the position of the family? Under this Government, there has been a massive transfer of resources from children to adults—or, as it was well put a week or so ago in the debate on the Child Benefit Bill, from the butcher to the betting shop, vividly illustrating that if it is not in the mother's purse one cannot be sure where the money is spent. Again, according to my coarse arithmetic we have a Government prepared to allow this same redistribution to continue under their White Paper proposals.
These are important issues, especially when we have a Government who apparently cannot contemplate even a six-month limited pay freeze for people at

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work but who are prepared to announce a 24-month pay freeze for mothers at home. During the Report stage of the Child Benefit Bill we were told that it was impossible to do anything more for familly allowances, or to bring family allowances and child tax allowances together before April 1977, and we could not be sure that it would happen even then. Certainly we were not told whether the total benefit would be higher or would be the same as the existing value of benefits.
Thus, 7 million mothers are told that there is no more for them for 24 months —I am referring here to the period April 1975 to April 1977—yet in the first three months of this period there has been a 10 per cent. price increase. They are 10 per cent. worse off already.
The monthly price increases have dropped from 4 per cent. to 2 per cent. and we are told that they are to come down to 1 per cent., but even supposing that over the next 21 months they rise by only 1 per cent. a month, and adding on the 10 per cent. by which these people are already worse off, the result is that they are 31 per cent. worse off. But this is the only pay freeze, the only total income restraint that the Government are willing to put forward—a 30 per cent. reduction for those who have children. This is a 30 per cent. reduction while we wait for the child tax credit scheme or the child endowment scheme, apparently delayed by high alumina cement in Newcastle.
If the House of Commons allows the Government to get away with this, we shall not be doing our job, not always the job of governing but of controlling the Government—although it is a great pleasure to be sent here to arrange the income tax of other people. If the Government care about families, they ought not to listen only to the political voice of organised labour, which is considered by many not to be the voice of the people, but rather the result of an inexpert ventriloquist manipulating ever more reluctant dummies. I speak as a dummy myself who, as a member of a trade union, has not attended any debate in four years, although I go to my branch meetings regularly, where the subject has been the social contract or the referendum. Yet we are all aware that the view of the people is supposed to come, accord-
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ing to Labour Members, from the leaders of the trade union movement. That view is also held by many commentators in the newspapers too.
I have two leading trade union leaders living in Eltham, which shows what a good area I represent. Whenever a trade union leader says that he will not allow a drop in his members' living standards —and we know that our living standards have to come down—if attention is paid to him it must mean that others must suffer an even greater drop, and they include workers without a job—and there are more and more of those—and pensioners who do not have a union, and the 14 million children who have no votes in parliamentary elections or in electing delegates to the TUC.
To change the subject slightly, I should like to refer to the £6 limit. I want to know whether the Government have considered not just having a £6 overall limit for 12 months but whether they are willing to consider paying some attention to what has happened to any particular group of workers over the past 17 months. It seems particularly relevant to what people get over the next 12 months to know whether they have had 30 per cent. or 10 per cent. over the last 17 months.
I want to put forward one or two simple suggestions to accompany the White Paper. If the Government are in touch with the economic facts of life and if they wish to undo the damage that has been done by politicians through the ages, I hope that their publicity machine—and that includes Ministers as well as the people they hire to put advertisements and editorials in the newspapers—will start talking openly about the unemployment and inflationary implications of their present proposals and the unemployment and inflationary consequences of their previous proposals. We could then see what has been the effect of the last 17 months and judge what will be the effect of the next 12 months, or the effect of the four years before the Government came in if hon. Members want to take a longer period.
I hope that both in office and in Opposition right hon. Gentlemen on the Government side will explain the economic facts of life to their most Marxist and flat-earth supporters. By this I mean that if the terms of trade move against

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us or if the price of oil moves against us, no amount of price increases or pay increases will compensate for our becoming worse off. The present round of inflation was set off by external price increases. If as politicians we face the economic facts of life, we shall avoid trying to pour water uphill when we are in Opposition and accepting that it will dribble down our necks when we are in Government, and we shall find that we have a more sophisticated electorate who will take politicians more seriously.
It is important that we all accept that unions have a proper job to do in representing people at work, not in providing management and not in providing politicians. If that happened, we should have to have another set of unions, one to represent people at work and another lot to provide politicians to represent the people in the House of Commons. When my constituents want to put forward their political views and ideas, they do so through me and I do not see why two of them should be privileged in being represented also through the TUC, or why the unions should be able to influence the Government when they move away from dealing with the terms and conditions of employment into subjects such as the level of defence spending and other issues about which my constituents in Eltham feel very strongly.
It is even more important for Government supporters and certainly for members of the Government themselves to repeat the frequently forgotten first law of economics—that whether one is dealing in fantasies or goods and services, one cannot consume or benefit by anything until it has been produced. In the last year we have been paying ourselves increases 20 times greater than the increase in production, and that makes one wonder whether universal education for two generations has had the desired effect on this country, certainly on this country's politicians.
I should like to touch on three subjects to which I hope to be able to return but which are now relevant to the White Paper. The first is that we must look more and more at the value we are getting for our resources. A small example is that of education in primary schools. All primary schools in London have the same staff-pupil ratio and the same resources,
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but in some schools the standards are so good that if a child's name is not put down at the age of three he will not be able to get a place, while at other schools a child can simply walk in at the age of five. In education debates hon. Members do not talk about the education system becoming more responsive to the expressed wishes of parents, and they do not ask why some teachers manage to get better results with limited resources. When there are cash limits, we need to look at the value obtained as well as at the level of money allocated.
The second topic is housing. When local authorities are restricted in the amount they can lend on mortgage or to the improving of homes, is it not perfectly obvious to everyone that this is a chance to provide massive opportunities for the sale of council homes so that people can, if they wish, pay out of their own pockets and thereby leave more money in the local authority's pocket or the Government's pocket, so that they may buy their own home and not find when they retire, as they do under the present system, that they are condemned to pay the same rent in retirement as when they were in work, although left with only 20 per cent. or 40 per cent. of their working income, which means that they probably have to live on supplementary benefit? This seems a good opportunity both to combat inflation and to make people better off.
Thirdly, the Government should make a gesture by declaring a 5 per cent. cutback in the amount of office space used by the Government, 5 per cent. a year for the next five years. This would completely change the investment outlook of those who look after investment funds and insurance funds. The consequential adjustment of investment decisions combined with a belated recognition of the value of profits would lead to more investment in manufacturing industry, which is what this country needs.
Last of all I come to a problem which faces the politically uncommitted—I have met many of them over the last months —which is shared by many Christians, people who want to take a responsible interest in politics and who feel that they cannot opt out of an imperfect system, but who find it impossible to identify wholly with one set of political prejudices, beliefs or principles. We can all unite in the belief that we have to defend

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community life from the totalitarian view, which provides repression for every expression of the human spirit. Fascism was defeated in part because of a debate held 35 years ago. Marxism has equal dangers—Eastern Europe is a bleak proof of that. Out of power it attempts every ruse and every act of social violence to poison the unity and freedom of our community life.
I have found in a previous debate some comfort during this battle against inflation and those who directly or indirectly support it. It comes from reading the words of a previous Labour leader. Instead of quoting, I shall merely refer to them. Hon. Members will find the reference in column 1094 of Hansard for 7th May 1940.
7.10 p.m.
Mr. Douglas Jay: In welcoming the hon. Member for Woolwich, West (Mr. Bottomley) to this debate, I should like to echo what he said about the respect and affection felt for his predecessor both in the House and in Woolwich. I am happy to follow the hon. Gentleman, because we have met on many occasions, but also because I was born in his constituency, and because on the whole I preferred his speech to that of the leader of his party.
I thought that the Leader of the Opposition made a most extraordinary speech. She did not tell us whether she or her party were in favour of an incomes policy. She did not tell us whether they were in favour of a statutory incomes policy. She could not tell us what forms of public expenditure they would reduce. All that she said was that they reserved judgment on the whole issue before the House—and she took a very long time to say it.
My only quarrel with the Government is that I believe that they should have acted earlier. My hope is that they are now preparing a more long-term incomes and prices policy to apply intelligently when this short-term emergency is over. I am bound to give general support to the Government, having said in the debate on the Budget on 21st April:
"the Government must act quickly. We must have this summer a new social contract and a revised incomes policy … a White Paper should be issued by the Government, and approved by Parliament setting out the Government's incomes policy in clear and
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unambiguous terms."—[Official Report, 21st April 1975; Vol. 890, c. 1033–1034.]
Therefore I say "At any rate, better late than never."
Basically, it seems to me, our present discontents spring from the fact that almost everybody in this country is trying to increase his real income when it is impossible for the real income of the country as a whole to rise. The amendments would be improved if they took more account of the hard economic facts underlying all these arguments, which I summarise as follows.
As the supply of goods and services available to us now, and for some time ahead, cannot be increased, a rise in money rates of pay combined with a rise in the money supply is bound to push prices up further. A rise in money rates of pay without a rise in the money supply can only increase unemployment. Therefore, it is only by restraining both the rise in money incomes and the money supply that there can be any hope of full employment with reasonably stable prices.
In short, there are three possible roads open to us. The first is to let pay rates and the money supply rise without restraint, and then prices will certainly go on rising at 20 per cent., 30 per cent. or 40 per cent. a year. The second is to let pay rates go on rising, with no incomes policy, and stop the increase in the money supply, and then we could well have a million or more unemployed for three or four years. The third is to control both the money supply and pay rates by some reasonable policy.
The controversy between those who say "Control the money supply" and others who say "Control incomes" is absurd and artificial. We must do both if we are to have any hope of success. Back in the 1940s and 1950s I think that it was possible to hope that pay rates and price rises could be restrained without any specific incomes policy, and for some years after the war they were. It is no longer sensible or realistic to think that. There are some things that one has to learn from experience rather than from theory [An HON. MEMBER: "Permanent control?"] Long-term. If we talk about permanency, this is beyond my powers of foresight, but for the foreseeable future I would accept such control.

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To those who say that free collective bargaining is a sacred principle, and that everything must give way to it, I reply that it is a means and not an end. It was made for man, and not the other way round. If we have to choose, as I believe we must, between free collective bargaining and full employment, I certainly choose full employment.
To those who say, as I think my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) did today, that any statutory control is a breach of the Government's election manifesto and the social contract, my reply is that the social contract was, after all, a contract. In my view the Government wholeheartedly carried out their side of the contract, but not all the other parties did so, and one cannot break one side of a contract and demand that the other party be held rigidly to it.
To the doctrinaire monetarists—if there are any left in the House, and I think that I see one—I say that to clamp down on the money supply and refuse to control pay rates would probably in the end check the rise in prices, but my estimate is that in Britain in the 1970s it would mean many years of high unemployment, low or nil growth and very low investment. What a price that would be to pay for the sake of a doctrinaire objection to any sort of incomes policy! Even Professor Laidler, a less doctrinaire monetarist, said in his recent pamphlet, published with Professor Friedman, "Unemployment Versus Inflation", that, rather than face unemployment of over 1 million for five years or more, he would
"reconcile himself to living with high inflation rates."
I would also say to the monetarists, and the right hon. Lady, that I certainly want to see a cut in the borrowing requirement. But let us not assume, without looking at the figures, that the public sector debt or the Budget was the main instrument for the wild Barber inflation of 1972–73. I do not believe that it was. The figures in "Financial Statistics" show that total bank deposits rose from about £38,000 million in 1971 to the incredible figure of £76,000 million in early 1974. But the rise in the corresponding bank assets consisted hardly at all of public sector debt, but mainly of an equally extravagant rise in bank ad
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vances, from £30,000 million to £69,000 million in March 1974. Much of that rise in advances was to overseas residents, but the rest was mainly to companies and to private borrowers, including over £2,000 million to property companies.
Therefore, the statistical evidence is that the credit inflation of 1972–73, from which we are still suffering as always happens, came mainly not from the Budget but from the misguided competition and credit control policy of 1971, which removed restraint, the indiscriminate tax relief for overdraft interest, and—monetarists please note—the compulsion on employers to borrow in order to finance higher pay rates. It is arguable that it was the higher pay rates that led to the credit inflation, rather than vice versa.
In spite of that, I should like to see some economies in public expenditure. One programme simply crying out to be cut is major new road construction. Evidence of extravagance in motorway building reaches us from all directions. My hon. Friend the Member for Meriden (Mr. Tomlinson) gave some examples from his area in the Budget debate. At the very least, many such schemes are of very low priority.
The latest figures of Government expenditure that we have, in the Public Expenditure Blue Book, show for 1975–76 the huge sum of £597 million for new road construction and improvement—that is, local and major roads—in addition to £335 million on maintenance. The Government should reduce the enormous figure of new road construction by at any rate postponing schemes that have not yet started. It is intolerable that when housing is being cut we should continue with extravagant road building. However, we all know that economies of that kind would not make an enormous difference to the total situation even if they were made.
The crux of the Government's policy will be the long-term income strategy which they propose should succeed the present 12-month freeze. I agree with Professor Galbraith's excellent letter to The Times last week. We must now design a policy to last not for 12 months but for the foreseeable future. Otherwise the dam will simply burst again next year.
The Government's long-term policy will, I hope, be backed by reasonable

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monetary restraint. There must be a realisation that a total freeze cannot last more than nine or 12 months. In a mixed or free economy the system cannot work unless pay relativities constantly change, and change largely for economic reasons as well as for reasons of equity. I believe that it was the fatal mistake of the right hon. Member for Sidcup (Mr. Heath) not to understand that if there is a desperate shortage of fuel, then miners' pay must rise relative to other pay rates in the economy.
If we are to allow relativities to change over a period without being enmeshed in the upward spiral, once again we must re-establish some sort of national tribunal or pay board which can consider the whole structure of incomes and give final awards when all else fails. There is no other practical way of succeeding in the long term.
The present medley of separate tribunals for nearly every separate vested interest is a recipe for continuous pay inflation. Last week's rather absurd antics over MPs' pay were only one inevitable consequence of the present regime under which we are living. I do not believe that it is an issue of principle whether a national tribunal is backed by statutory powers. My objection to such powers is not a moral one but one that is based on the experience that usually they do not work. If some reserve powers will work, let us try them. If they do not work, let us do the best we humanly can with the moral authority of an independent and impartial authority. One of the great mistakes of recent Governments was the abolition of the Pay Board which we had in 1971, which was gaining authority and respect. Most of the board's decisions were being accepted.
I am happy to agree with my hon. Friend the Member for Walton that the Government could make this package much more acceptable if they were to sweep away the present high import taxes on essential foodstuffs. It is absurd to select, as I gather will be the case, a number of essential foods and try to keep prices down by subsidising them, and at the same time impose higher and higher import taxes. At least we must have an assurance that the Govern-
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ment will not raise import taxes any further.
If Ministers will hold down food prices in that way—and it is in our power to remove such taxes—and if they will prepare thoroughly in advance the sort of incomes policy that I have been suggesting, I believe that our problems will be perfectly manageable and that we should not be too gloomy. Indeed, there are quite a few encouraging signs now, given the falling world prices of many materials. But do not let us delay any longer effective action to deal with what is the really long-term problem.
7.24 p.m.
Mr. Julian Amery: I join the right hon. Member for Battersea, North (Mr. Jay) in offering my congratulations to my hon. Friend the Member for Woolwich, West (Mr. Bottomley) upon his maiden speech. There is nothing like fighting an election campaign in a marginal seat to bring one in touch with public opinion. It was refreshing to have a contribution from someone whose views have not yet been distorted by the rather hot-house atmosphere in which we tend to live in the Palace of Westminster.
The right hon. Member for Battersea, North struck a note of consensus. I do not agree with all that he said but I liked his general approach. His formidable intellect was arrayed against most of us in the referendum battle but I should like to think that in this campaign it will be on the side of the angels.
Yesterday, at the commemoration ceremony for the Tolpuddle martyrs, the Chancellor of the Exchequer explained the cost of inflation in these words:
"For the past 18 months we have been living above what we have been earning."
I think that the right hon. Gentleman put the matter very simply and very truly. What he said applies to the industrial wage we have been paying ourselves and to the social wage—the social services.
Of course, inflation itself is only a symptom of a deeper disease. There is something rather absurd about the fact that we should not be able to earn an equivalent wage or equivalent social services to the Germans we defeated or to the French and others whom we liberated. There is no inherent reason for our not

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being able to do so. The explanation is simple enough—namely, that our levels of taxation and our restrictive practices, such as overmanning and demarcation disputes, have had such an impact on enterprise and investment over the past 10 or 15 years that we have fallen seriously behind our European neighbours.
The problem underlying the inflation which we face today is, in my judgment, essentially political rather than economic. Unlike the countries that we defeated or liberated, we were never obliged to adapt our economic or political structures to meet the changes that have taken place during the Second World War and since to our social structure. For that we are all of us to blame—employers, trade unions, Government and Parliament. Our company law remains archaic.
We have still given no proper recognition to either management or unions. As the right hon. Member for Devon, North (Mr. Thorpe), the Leader of the Liberal Party, pointed out, they are still regarded as commodities to be hired in the market. We have done nothing like what the Germans have done to give them the status which corresponds to the power which they hold. The trade unions have acquired enormous power but have neither sought nor been given the responsibilities that should go with power. Mr. John Lyons, in an article in the magazine of the Electrical Power Engineers Association, wrote:
"We are living in the 1970s, not the 1930s, and the attitudes and slogans which were absolutely right in dealing with the problems of the 1930s are no guide for action today."
There is a certain irony in listening to a speech such as the one we heard from the hon. Member for Liverpool, Walton (Mr. Heffer). In one breath he said that what we need today is a far more controlled and planned economy, but in another breath we heard him defending free collective bargaining with all the ardour of Cobden and Bright defending laissez faire.
It should also be clear by now that Governments of both parties have been very slow to institutionalise consultation between themselves, industry and the unions. We have lagged far behind Europe in this.
Our inertia here has been the opportunity of the militants and extremists, and
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behind them the Communist Party. They have seized the opportunity and they have set the pace in pressing for higher wages and higher social services and even in seeking to influence the conduct of foreign and defence policies. They have done so partly by direct industrial action and partly through the influence which they have acquired by assiduous attendance at every level in the Labour Party, as we see in Newham today. They have done so through the money that they provide and through the energy they show. This is not a new problem. Successive Governments have made attempts to overcome it.
The Labour Party tried to overcome the problem in the days of "In Place of Strife". I shall always regret that we on the Conservative side opposed the effort made in "In Place of Strife" to deal with much the same issue which is confronting us again today, though the problem facing us then was a much easier one to solve. My right hon. Friend the Member for Sidcup (Mr. Heath) also tried to solve it, and for 18 months with considerable success. Whether he could have carried his solution through if he had had the support of the Labour Party is a question which hon. Members can think over for themselves.
The Labour Party tried to return to a purely voluntary policy through the social contract. I doubt whether it will be possible in our new society to have a purely voluntary policy. But in a climate of recession it was only natural that militant union leaders should say "Rather than see our standard of living go down we will grab all that we can, even if it is at the expense of others, even if it disrupts our mixed economy and our pluralist social democracy." Some of them indeed make no secret of the fact that they would have welcomed the disruption of the mixed economy and the pluralist democracy. The result of their efforts has been an inflation rate of 26 per cent.
This rate of inflation would have gone on but for the fact that our foreign creditors, the holders of sterling abroad, lost confidence and there was a run on the pound. The Government and trade union leaders had to face up to the fact that unless they did something quickly to restrain inflation they would have to go to the International Monetary Fund and be restrained by an outside authority. There was no alternative. I believe that

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the hon. Member for Nuneaton (Mr. Huckfield) in an article he wrote in one of the Sunday newspapers yesterday was abundantly right when he said that, despite his sympathies with the long-term policies put forward by his hon. Friend the Member for Walton, none of those policies would deal with the immediate crisis now facing us. The truth is, and it had to be faced and was faced, that, to use the elegant phrase of the Secretary of State for the Environment, "the party is over".
What we are debating today is how to restrain inflation. There will be differences of emphasis in all parts of the House about how that should be done. But this we can say at the outset. No policy has any chance of winning unless Government and Parliament can find the way by persuasion, or, if necessary, by law which is enforced to restrain the militants.
This is not a new phenomenon. We have been through it in our history on many occasions—with the Barons, the mediæval Church, the "King's friends", the land-owning oligarchy, the industrialists of the Victorian era, the plutocrats in the Edwardian era. We have managed, certainly since the Civil War, to solve such problems without violence, and I believe that we can do it again. The White Paper is a declaration of intent, and as such I welcome it wholeheartedly. If observed it must help in the short term to bring down the rate of inflation.
I agree with my hon. Friends who tend to take the monetarist view that to put a ceiling on wages, particularly a flat-rate ceiling, will build up distortions. But what we need at the moment is a short-term remedy, and in the short term what is proposed must help. But the question in all our minds is: Is it for real? The Government's record in this matter is not encouraging. They have appeased the militants, acquiescing in excessive wage claims and themselves spending far more money than we could afford on social services and public expenditure generally.
There are still no back-up powers. The Chancellor was pretty vague about what they will be, if they are ever produced. He was vague about the reductions in public expenditure. There was not a word from him about the postponement —I do not ask for more from the Labour Party—of nationalisation proposals which
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are not only divisive but must be inflationary. This White Paper is born of compromise out of necessity. We all know—it is an open secret—that the Treasury proposals were different. They have been substantially watered down, no doubt through the influence of the Secretary of State for Employment.
I do not underrate the importance of maintaining the unity of the Labour movement in this crisis because what the Government are trying to do, and what the House hopes they will succeed in doing, is to persuade the rank and file of the trade union movement to follow moderate rather than militant counsel. But the cost of a policy of political convenience can be very high. As my right hon. Friend the Leader of the Opposition pointed out, when the European countries were faced with the inflationary crisis last year they adopted conventional deflationary measures at some cost in terms of unemployment. They have now got on top of their inflation and are in a position to begin reflating. Last year our Government went on reflating for reasons of purely political opportunism—to win the October General Election.
The Government's present proposals will mean—they have not been precise about them—more unemployment than we would have had if they had cut back public expenditure last year. Inflation has been the curse of the 1970s just as unemployment was the curse of the 1930s. But it is a worse curse because it brings with it unemployment. The great question is: is the White Paper enough to prevent even worse unemployment than would follow from slightly more severe measures? It is not for me to judge. I do not think that in the House we can be sure which way the situation will develop over the months ahead.
The market will judge. The holders of sterling will decide whether to keep their money here or to take it away and precipitate a fresh crisis. If we have done too little too late we shall have to turn to more and deeper surgery. Ultimately we shall inflict a worse injury upon the country than was ever necessary. Let none of us underestimate how serious the situation is. Our economy is literally on a knife edge. The last bulletin of the Bank of England showed that our foreign liabilities stand at £7·4 billion while our external assets are only £4·2 billion. This

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would mean a declaration of bankruptcy for any company. And a large part of those external assets are held by private individuals and could not easily be mobilised—as hon. Members in the Tribune Group should realise.
Against this background foreign holders must look with great concern at our borrowing requirement and ask themselves how will the Government finance it. Can they get more loans from abroad? I do not think so, certainly not from private sources. Can they sell gilts to the public here? Yes, up to a point, but nothing like enough to cover this enormous borrowing requirement which is already in excess of £9 billion. Foreign holders of sterling must think of themselves that there will be an enormous temptation on the Government to turn to the printing press.
This question mark is so obvious to any foreign banker that the Government must recognise that they can only restore confidence by tabling at an early opportunity the back-up powers with which they mean to enforce their new incomes proposal. They must give precise details of how public expenditure will be cut and must make an announcement that nationalisation plans are to be postponed, not because we Conservatives ask for that, but because they are inherently inflationary.
The Prime Minister is said to be a good judge of public opinion. He has certainly shown great political flair in winning elections, earning him as I think he sometimes remarks, a lease of office comparable only to that held by Mr. Gladstone. I do not know what his opinion is, but I believe that the time is now ripe, the tide is flowing the right way, for him to face the issues squarely. But the weather can change. As the days shorten and we head towards the turn of the year, unemployment will rise to a 1½ million or more, and it may not be so easy to get a consensus of the Labour Party, the Labour movement, or indeed, of the country as a whole.
Now is the time to face the issue not only squarely but nationally. Now is the best chance to unite the nation at home and restore confidence abroad. If the Government let the opportunity slip and over-insure in order to obtain party
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unity, they may pay—indeed we may all pay—a very high price.
None of us on either side can claim to emerge with very great credit from the way we have sought to tackle the basic illness of the British economy over the past decade or more. I regret that the Conservatives opposed the Labour Party over "In Place of Strife." I regret the way that the Labour Party opposed us in the run up to the 1974 election and the way in which they acquiesced in excessive wage claims and have encouraged since then excessive Government expenditure.
I cannot speak for the Conservative Party as a whole, but I believe that if the Government mean business there will be very little inclination on the Conservative side to make political capital out of measures which the Government take, even if they are measures taken to remedy their own mistakes.
But we are entitled to ask for the postponement of what are divisive and, into the bargain, purely inflationary measures. We are all in this together. We shall need the co-operation not only of the trade unions but of the other and larger sections of the country. When we pull through I look forward to heated debate about how best we can establish industrial democracy in this country and how best we can restructure our economy and, indeed, our institutions. But first we have to deal with the immediate danger.
The White Paper is full of good intentions. Some of the speeches made by Ministers throughout the country show a welcome change. But we have not yet got a firm programme and there is no clear decision to act. It is only action that will restore unity at home and confidence abroad.
7.43 p.m.
Mr. Ray Carter: I was elected in 1970 and, therefore, I come to the debate with a certain degree of humility. However, if there are hon. Members present who were also present in 1962, I imagine that they come to the debate with even more humility. I have been here approximately five years, but it appears to me that we are going round a track the sides of which have a certain degree of familiarity about them. There are some people who could

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claim over that period of 14 or 15 years some degree of consistency. However, in a matter as complex as this and in a society as complex as ours, consistency of the kind that some people have displayed over that period is not necessarily a virtue.
It is true that during that period, when confronted with certain problems, most Governments have come to the same conclusions. There is, however, a unique distinction to be drawn between the conclusions of this Government in 1975 and the conclusions of other Governments over the past 15 years or so, and that is that on this occasion, however vague the debate may have been when it started, and however vague the White Paper might appear to be to some people, compulsion does not lie at the heart of it.
I am trying to be as fair and as impartial as possible but consent for the first time is the basis of a policy to deal with inflation, prices and wages. We should ask ourselves why. The quite simple reason is that at long last—and it is rather sad that we have had to wait until now before we realised it—the problems that we face are not simply economic. They are desperately political as well. During the past two months or so an increasing section of the trade union movement has realised that.
We cannot, as last year, have two General Elections about one central matter—namely, how to deal with inflation—and exercise two major options in the kind of democracy we live in and then, having exercised them, refuse to search for an answer to the problem. Jack Jones, who happens to be the leader of my own trade union, in my view was foremost in realising that. That is why he, with other members of the trade union movement, sought to find at long last a basis of consent for tackling the desperate problems that we face. In conjunction with industry and other sections, they arrived at an agreement with the Government which forms the basis of our debate.
Therefore, this is a unique occasion and we are taking a historic step. Although we are currently only flirting with our problems, perhaps we can go on from this faltering first step towards achieving consent between the trade union movement, industry and the Gov-
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ernment to find ways in which, in co-operation with one another, we can deal with these massive problems.
I think I carry most Labour Members and probably many Opposition Members, too, when I say that we have to go much further than the mere question of prices and incomes. On the basis of consent we must start to grapple with the desperate and underlying problems of the British economy. We must involve the trade union movement, the CBI and other sectional interests in the whole question of investment policy. That door has been closed to the trade union movement for too long. It has a vital part to play in the way we, as a community, apportion our national priorities.
The trade union movement should also be involved in social priorities. If we ask the trade union movement to be responsible in the area of incomes, equally we must offer it a share in the way we, as a community, govern ourselves and tackle the task of dividing the national cake. It should have something to say about the whole question of manpower planning. We should not in an abstract way either here or in Government decide from year to year—almost month to month in recent years—precisely what the level of unemployment or employment should be or where manpower should be shifted from or to.
We must involve the trade union movement. It has a constructive part to play, and I am sure it is prepared to play that part. Equally, it can play a useful part in the area of pricing policies. For too long the Government or industry have decided almost in a vacuum precisely what the pricing policies should be in either the nationalised industries or the private sector.
We have, at long last, realised—certainly a large section of the trade union movement realises—that consent is the only way we can get ourselves out of the desperate problems we are in. Either we must consent to planning or, by default, we must consent to unemployment. In a sense the middle way is the only way. There is no other way apart from consent, with the Government and the community working together to solve the problems that we face.
Our problems are almost unique in the Western industrial world. We are the

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oldest industrial society with an accumulation of problems which are not to be found anywhere else in the Western world. It is no use comparing us with Germany, France or Japan. They are entirely new industrial democracies. Our industrial democracy is almost 200 years old with a massive accumulation of industrial and urban problems. Our problem, therefore, is not just inflation. It is how we set about the task of transforming an aged, ailing industrial society and how we find a massive injection of investment to revitalise our industrial sector so that it can start producing the goods without which we cannot pay our way in the world.
But there is cause for hope. It is not entirely a lost cause. With the prospect of North Sea oil and the new sense of hope that the agreement between the trade union movement and the Government has given us, I believe that we can look forward in the not too distant future to a better and brighter basis upon which to tackle our problems.
A secure energy base will transform our industrial sector and balance of payments situation, leaving the pound for once in a strong position, so that we can get to grips in a sense of community with the problems facing us.
I think that in what is almost a crisis situation—
Mrs. Sally Oppenheim: It is a crisis situation.
Mr. Carter: Yes, it is a crisis situation, but it is not entirely a crisis situation, because we are debating measures and steps which can solve the problems currently confronting us.
With the willingness of the trade union movement, the employers, the CBI and the Government to sit down together and begin discussion around which, on the basis of consent, we can get cooperation, I believe that this Government, like no Government before them, have it within their grasp to solve our problems. It seems to me that to mark time for just two or three years, in the secure and certain knowledge that there is a brighter future, would not be to give an awful lot away. I believe that there is hope in the situation and that people outside are waiting and hoping for the
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Government to give the lead that is desperately needed.
7.53 p.m.
Mr. Douglas Crawford: As a veteran of nine months, I should like to add my congratulations to the hon. Member for Woolwich, West (Mr. Bottomley) on his excellent speech. I lived in Woolwich for one and a half years. Perhaps it was that that turned me into a Scottish National. The hon. Member for Woolwich, West may have been forgiven if he thought that he was listening to a Budget speech—it is the third Budget speech of the year—had it not been for the noisy behaviour of hon. Members over which neither the Chancellor nor the Leader of the Opposition could at times make themselves heard.
There has been much talk during the debate of this "nation". The Chancellor of the Exchequer referred to our national problem. The hon. Member for Birmingham, Northfield (Mr. Carter) referred to this nation and country. What nation?
My hon. Friend the Member for Caernarvon (Mr. Wigley) in his maiden speech in this Parliament reminded the House that there was more than one nation in the British Isles. He said that the United Kingdom was a State and that there was more than one nation in it. Even Shakespeare could not find a proper answer to the rhetorical question he put into Llewellyn's mouth in Henry V when he asked: "What is my nation?"
I know what my nation is, I know how it is suffering, and I know its potential. My nation is Scotland, and it is from that standpoint that I speak.
Scotland and England have together faced many crises in the past. Scotland and England have fought against dictatorship and totalitarianism in the past. I was too young, but many members of my party have fought for King and Queen and country in the past.
Nobody doubts that the United Kingdom now faces a major crisis. But it is not the same kind of crisis as arose in 1939, 1914, or earlier. We are not fighting a dictator or totalitarianism This is a peace-time crisis.
The Scottish National Party parts company with the three other parties in this House when it comes to the suggestion that it is a matter of there being only

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one solution for the whole of the United Kingdom. It is not necessarily right to say that there is a blanket solution for the United Kingdom. Some parts of the United Kingdom have contributed to the crisis more than others. Mr. Micawber said,
"Annual income £20, annual expenditure £19 19s. 6d., result happiness. Annual income £20, annual expenditure £20 Os. 6d., result misery."
I suggest that in certain parts of the United Kingdom expenditure has been £20 Os. 6d., whereas in others, including Scotland, it has been £19 19s. 6d. We do not want any more misery.
Hon. Members on both sides of the House have said that the economy has been mismanaged. I suggest that it has been mismanaged from London. Both previous Tory and Labour Governments are to blame.
Mr. Dykes: None the less, does the hon. Gentleman agree that, despite his analysis, before North Sea oil began to come on the horizon there was ample evidence that Scotland had a physical trading deficit with England and perhaps the rest of the United Kingdom and that, therefore, Scotland's standard of living has been higher than if it had been a separate entity?
Mr. Crawford: I do not think that there is any actual evidence that we had either a balance of payments deficit or a surplus with the United Kingdom. I concede that the oil find proves our economic case beyond a shadow of doubt.
At the beginning of the century Scotland was economically better off than England. Indeed, it was better off than the United Kingdom as a whole. Between 1914 and the mid-1960s we were having trouble. Therefore, why did not the rest of the United Kingdom say "Go away and run your economy by yourselves"?
Hon. Members on both sides of the House have said that other countries in Europe have solved their inflationary problems more quickly than Britain. The right hon. Member for Brighton, Pavilion (Mr. Amery) said that the Labour Government were slow to act. The Conservative Government were also slow to act to solve the problem of the increase in oil prices in 1973.
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I put it to the House that solutions cannot be found in textbooks on classical economics. We need a new departure from political and economic thinking in this country. Perhaps the Scottish National Party can be a catalyst to England's as well as to Scotland's benefit. Political and economic centralisation is at the heart of the problem. Centralisation is bad for the regions of England as well as for Scotland. Decentralisation, political and economic, will be genuinely good for the regions of England as it will be for Scotland and Wales.
I want to be practical from the Scottish point of view and make one or two points which show that the difference between the Scottish and English economies is great.
First, it is said that for every 1 per cent. fall in the value of the pound, £36 million is added to the United Kingdom's food bill. But that does not apply to Scotland, because Scotland has a small surplus in food production. Indeed, Scotland, is a small net exporter of food. In 1973 we produced £33 million worth of food, which made us virtually self-sufficient, whereas the United Kingdom imported £1,000 million worth of food. I believe that the United Kingdom imports almost half her food requirements.
Secondly, Scotland's per capita income is lower than in England. The Prime Minister, in reply to my hon. Friend the Member for Galloway (Mr. Thompson) last week, referred to wage rates and said that the differences between Scotland and England were almost closed. The point concerns not wage rates but family income. If we take the Government's family income and expenditure survey for 1974, we see that per capita income in the South-East of England was £18·94 per week whereas in Scotland the figure was £14·28. The difference is quite substantial. Unemployment in Scotland is 4·7 per cent. compared with just over 3 per cent. in the United Kingdom. In England it is just over 3 per cent. and in the South-East it is 2·2 per cent. There are great differences between the Scottish and English economies. In Austria the figure is 2·2 per cent., in Norway 1 per cent. and in Sweden 1·5 per cent. Those are the types of economy which we in Scotland and the SNP are trying to emulate.

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Fourthly, we have a higher rate of exports than England. The Scottish Council Research Institute stated in a recent survey:
"Exports have risen steadily maintaining Scotland's relatively large share of United Kingdom exports. Further, the increase in Scottish exports has been greater than for the United Kingdom as a whole … comparatively the increase in the value of Scotland's manufactured exports has been greater than that for the United Kingdom as a whole."
Taking 1965 as the base year and an index of 100 in 1973 the figure for the United Kingdom as a whole was 254 while in Scotland it was 261.
Thus, on many accounts the Scottish economy is different from that of England. We accept that an incomes policy is an important economic ingredient for any country, and there should be a Scottish incomes policy, not a London-based one.
The extent of poverty and deprivation in Scotland is such that it is unthinkable that there should be deliberate reductions in Scotland's living standards. We have 115 of the 121 worst areas of deprivation in the United Kingdom. If the people of Scotland are required to make sacrifices, it should entail no more than a deferral of long overdue increased living standards. The Argyll oilfield is on stream, and it will be worth £80 million to the Scottish economy. We therefore believe that paragraph 3 in the White Paper is unacceptable. It reads:
'The problem is not just one for the next year: the Government intend to maintain policies which, over a number of years, will control domestic inflation …".
We are not prepared to tolerate for long the measures outlined by the Chancellor of the Exchequer today, especially when our oil is flowing. The impact of our oil should add 4 per cent. to Scotland's real wealth this year and 12, 13 or 14 per cent. next year. Yet, with this wealth, we are told that we cannot have the schools, houses, hospitals, roads, industrial investment and jobs that we need. If we were to tell that to the Scottish people, they would not be very happy about it.
We suggest two practical points as possible solutions of the problem of inflation in Scotland—and perhaps England could learn from them. First, we agree with the Leader of the Liberal Party,
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the right hon. Member for Devon, North (Mr. Thorpe), that there should be a Swedish-type meeting between the Scottish Council of the CBI and the Scottish TUC annually where the basic facts about the Scottish economy would be agreed and targets for salaries and wage increases in the various industries would be agreed, taking into account the Scottish economy's growth potential—and it is a huge growth potential. The right hon. Member for Battersea, North (Mr. Jay) was, I think, groping for this point in a United Kingdom context.
Mr. Tam Dalyell: Does not that assume a perfect accord between Mick McGahey and some of the Scottish industrialists?
Mr. Crawford: It implies a near-perfect accord between the General Council of the Scottish TUC—I do not believe that McGahey is a member of it—and the Scottish Council of the CBI, which is a sensible body of people.
In the first year the objective would be within the United Kingdom to maintain Scottish living standards when London is deliberately seeking to depress them. Later it would be to distribute the benefits of Scotland's growing wealth to all the people of Scotland in a real increase in living standards. I accept that we need a strong currency to do this, and this will come only from self-government, but come it shall.
We also suggest a Scottish cost of living index regularly adjusted, perhaps every six months. This indexation would apply not only to wage agreements—which is inflationary—but to personal allowances against tax. As a major incentive to wage and salary earners to participate in national agreements, we should like to see tax indebtedness relatively lessened when increases were given, and the backlog of tax allowances which indexation would have provided over the past 13 months would be translated into increases in personal tax allowances via the PAYE coding so that wage increases would not necessarily result in too much going to the tax man. There would, therefore, be less inflationary pressure and less demand for increased wages.
I realise that indexation is difficult in United Kingdom terms because it acts

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as a barrier to the reduction of living standards which England requires. In Scotland it would operate against a background of sustained expansion, backed eventally by a strong Scottish currency.
Mr. Dalyell: Let us suppose that we took for ourselves all the advantages to which the hon. Gentleman has referred. What does he think the reaction of England would be. Would there be any co-operation? Is this the price that we must pay? What about my hon. Friends from the North-East or from the Midlands? Would they co-operate? Do not be silly.
Mr. Crawford: A self-governing Scotland would have a great interest in maintaining a prosperous England, and perhaps there would have to be some recycling of the oil revenues from England to Scotland so that Scotland could buy back that part of Scottish industry which England owned.
Mr. Mike Thomas (Newcastle-upon-Tyne, East): I hope that there would be at least as great an interest as England has had, particularly in areas like my constituency, in supporting a poor Scotland over decades.
Mr. Crawford: Scotland has not always been that poor. I sympathise with the hon. Gentleman.
We have a constructive alternative. The Government have been perfectly fair, although they have not been wholly fair because they have not shown us the Bill. The Conservatives do not have a policy. The Leader of the Opposition said "The Government have got us into the mess and they should get us out of it." That is not helpful to Conservative voters. There is a need to realise that the blunt weapon proposed by the Government—or, as in the case of the Chancellor of the Exchequer, the battery of weapons—cannot be applied indiscriminately throughout all the countries of the United Kingdom, and certainly not in Scotland. No Scottish Government, with all Scotland's potential, would dream of doing this. Although the people of Scotland are prepared to play their part, as soon as they see their standard of living going down and the natural resources flowing from Scotland, greater impetus will be given to the movement for self-government.
8.8 p.m.
Mrs. Judith Hart: It was attractive to hear the hon. Member for Perth and East Perthshire (Mr. Crawford) spreading out the array of the economic policies of the Scottish National Party, which seemed to be suspended in uneasy space between Adam Smith and, I suppose, Keynes. The hon. Gentleman will forgive me if I do not take my time in examining the policies which he has presented. In the present situation of inflation, it is not possible to separate Scotland's problems from those of the rest of Britain.
First, I set out the parameters of my remarks. I agree with all those hon. Members who have emphasised the severe and critical nature of our economic problems. I agree that we have a serious rate of inflation. I agree that a sharp problem is presented by our borrowing requirements. And, although it has been comparatively little mentioned in the debate, I am sure no one would disagree that we have a serious underlying, continuing balance of payments problem. The latest figures may be better, but they reflect a situation in which we have fewer imports because of the depression already hitting the economy. We would all agree that the underlying balance of payments problem is one of the major factors in the nation's overall economic problems.
I wish to direct attention to the lack of wisdom in selecting one element, namely wage inflation, out of the complex of factors which compose our economic difficulties and directing all economic attention and the policies of the Government to it. It would be absurd to deny that it is one element, but it is only one.
Over the past four or five months, as the index of retail prices has climbed steadily, the attention of the media and the Government has been directed sharply towards certain wage settlements. Increasingly the Government and the media, helped along by the City, the CBI and the Conservative Party, have concentrated attention on wages as being the major factor and, in the last couple of weeks, the only factor in inflation about which steps were to be taken. This insidious process has taken us along with it to the point of denying the House its normal critical attitudes.

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We are therefore presented with an analysis in the White Paper and reserve powers in a Bill about which we are not permitted to know, and that analysis is so incomplete as to lead us into critical dangers.
The British situation is a comparative one. Our problems are greater than those of our industrial competitors, and that is why we have this emergency. In considering the factors that have led to the British situation, we are entitled to point to the fact that in the past two years or so there has been a combination of circumstances unique to us which has not been experienced by any of our industrial competitors. Had we said that loud and clear to the people who deposited their sterling with us, we might have lost a little less confidence in ourselves.
We have shared with other countries the rise in oil and commodity prices and the trend towards world depression in the past few years. The factors we have not shared with other countries and which are ours alone are these. Over the four years leading up to 1974 we had an acute balance of payments deficit. I do not seek to make party points. Just as the Conservatives can say that the Government should have acted differently, so we can argue that the Conservative Government should have acted differently between 1970 and 1974. During that time there developed serious under-investment in manufacturing industry. That is another key factor.
One element of stimulus to price inflation was caused by our entry into the EEC—the element that VAT contributed, in addition to the increase in food prices, which will continue with 2 per cent. this year and 2 per cent. next year. Those were an added stimulus to the inflationary process in terms of price inflation, as France and Italy found a decade earlier when the EEC was formed. The problems arose in part from EEC policies and in part from uncertainties whether we should stay in or come out, and that no doubt was one factor which affected underinvestment. Those are two factors which our competitors were not experiencing.
There is also the interaction of one factor on another. We experienced a rate of effective devaluation as we moved away from the old-fashioned sterling
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crisis we used to have to a floating pound. That rate of effective devaluation was greater than that of any of our competitors. Indeed, one or two of our major competitors have revalued. That also is a factor which is special to us.
Then there is the further factor mentioned by my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) which should not be under-emphasised. We have experienced at an accelerated rate in the last 10 years or so a concentration of the ownership of British industry into a smaller number of giant firms, most of them with multinational connections. The more our big firms have developed multinational relationships, the more resistant have they become to orthodox methods of Treasury management, because their price determination has not been influenced by the normal factors that in classical Keynesian and post-Keynesian economics are held to influence price determination. They are factors which are concerned with situations beyond Britain.
In all those circumstances which I have outlined which are unique to us, the Government have picked out one element. They have said "Wage inflation; this is where we bring our battery of weapons to bear ". Indeed the Government seem to have taken upon themselves a sense of guilt that they need not have done. So we have this unwise decision, unwise to the extent of identifying one element only, by bringing to bear conventional capitalist wisdom and admitting the complete victory of the wage inflation theorists. Until two or three years ago there was a battle raging, but the wage inflation people have clearly won.
Within the next few months what we are doing now in this place will begin to affect ordinary people. One wonders why we should not have considered steps similar to those taken in France, which imposed a price freeze on certain essential goods, or in Ireland, with a similar rate of inflation to ours, where public sector prices have been reduced and there is a different approach to the problem.
I want to look at the effects of what we are doing. First, if the analysis is not right and the remedy is therefore incomplete, we shall not resolve the problem. In failing to resolve the problem we shall risk the creation of serious tensions and conflicts within our society and we shall, I fear, produce a

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quasi co-operation or coalition between the major parties in confrontation with the working people. That I fear deeply because it could be a threat to our party-based democratic system.
I turn to the effect on living standards. Here again, the Government analysis is neither complete nor frank. There are certain questions that we are entitled to ask and to have answers to, not necessarily this evening. We are told by the Treasury that its estimate of the effect of the wage restraint of £6 a week is that it is likely to result in a fall of between 1 per cent. and 2½ per cent. in our living standards. But that is the effect only of the relationship between the £6 per week increase, for those who receive it—not everyone will necessarily receive it—and what it is predicted will happen to prices. Does this include the price increases which will come in the public sector? Will it include the rent increases which are still to come, in spite of the subsidy which will slightly minimise them? What level of continuing price increases is assumed?
The Chancellor apparently assumes that prices will begin to fall as we move into next year. When, and by how much? No one can claim that the effect of the £6 a week limitation will be between a 1 per cent. and 2½ per cent. fall in real standards of living unless we clearly set our figures straight as to the assumption about continuing price increases. I know that wholesale prices in the pipeline are said to be diminishing, but there are a great many of them and they are diminishing from a high level of 25 per cent. or 26 per cent. We are entitled to know about the calculations.
A further element has not so far been mentioned. When workers and their wives judge the effect of these policies on them, they will not be interested in the minutiae of the White Paper. They will be concerned about what is happening to their gross or real earnings, their real disposable income. To arrive at that real disposable income, however, we must take account of the tax proposals in the Budget, the increases in the public sector prices and the increases in the prices of imported goods.
We must also take account of gross earnings and how many hours are worked in industry. At this time unemployment is rising steeply. It is predicted that it will touch 1½ million or even 2 million.
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Are we asked to believe that in those circumstances there will not be a tremendous increase in short-time working and a great deal less overtime, which will reduce the net disposable income of workers who are earning less in gross terms and a good deal less in net terms? That is what will matter to the worker on the shop floor. He will be concerned if he loses his Sunday working or other overtime. For he will not merely lose a given number of hours of work. He will lose a disproportionate amount of his income since a high proportion of it is earned on overtime working. We cannot reconcile 1½ million unemployed with a high level of overtime working and the continuance of a high level of gross earnings. That must be taken into account.
The Government have not given us in the White Paper, or in anything else they have said so far, accurate statements of the figures on which they base their predictions to justify their claims. The so-called voluntary agreement, with its element of statutory powers to come, is reached on the basis of a false diagnosis and an unclear understanding of the facts. The next few months will show that those of us who believe that the policy is wrong —as it is based on a wrong analysis—are right. That will give me no pleasure, as it will mean that we are setting a course of confrontation between the Government and the working people, the people who elected the Labour Government.
We must reconsider the answers. The amendment proposed by many of my hon. Friends includes an alternative strategy to do something effective about prices and to take other steps to control imports. Import controls attract highly respectable support. This is not a Left-wing fantasy. Half the economists in the country support selective import controls. Why do the Government reject them out of hand, with the Chancellor producing a fairy-tale story about shirts in Marks and Spencer? Let us properly examine this proposal. Let us see whether selective import controls can make a substantial contribution to our problem. Let us see whether we can mobilise many of the assets of our overseas firms, against which we can borrow. Let us examine the alternative proposals put forward in the amendment.
On that basis it may be possible to reach a genuine voluntary agreement with

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the trade unions, a genuine voluntary incomes policy based on true facts and true predictions, not misleading anyone. That is the way forward. The policy proposed is so far from that course that I shall be unable to support the Government.
Mr. Deputy Speaker (Sir Myer Galpern): Despite the fact that the debate continues tomorrow, there are so many hon. Members who are anxious to take part that I feel I must make an appeal for brevity. If we could have speeches of 10 minutes' duration, we could accommodate 16 hon. Members before the winding-up speeches tonight. That would make the occupant of the Chair and the 16 hon. Members involved very happy.
8.27 p.m.
Sir John Hall: After that appeal I shall try to confine my speech to the 10 minutes which you requested, Mr. Deputy Speaker.
The House will have listened to the speech of the right hon. Member for Lanark (Mrs. Hart) with some interest. I agree with her that the development of wage demand is not the only contribution to inflation. I doubt whether any member of the Opposition would say that that was the only cause of inflation. It is one of the causes. At present it is probably the main cause.
The right hon. Lady mentioned other contributory causes of inflation, which I accept. However, she mentioned one which I found difficult to accept. The same point was raised by the hon. Member for Liverpool, Walton (Mr. Heffer). I refer to the operation of the multinational companies. I find it difficult to believe that multinational companies could have a more adverse effect on this country than on the other countries in which they operate. Although it is true that multinational companies tend to absorb companies and businesses within one country, other companies and businesses spring up contantly. There are a considerable number of independent companies outside the ranks of multinational companies.
I have, as is generally known, spoken against the use of voluntary or statutory controls consistently over the years that I have been a Member of Parliament—ever since the whole concept of statutory
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or voluntary controls on prices and incomes was first mooted. I have not changed my attitude about that one iota. Indeed, nothing I have seen over the years in the way these systems of control operate leads me to believe I was wrong in my original attitude to them.
I have my reasons for this view which are well enough known for me not to bore the House by repeating them. However, basically, I believe that controls of this kind, whether they are called voluntary or compulsory, have only a temporary effect. They distort the economy, and the process of re-entry—to use the current jargon—tends to give an even savage twist to the inflationary spiral. These are the basic reasons why I have always been against controls.
The hon. Member for Walton could not quite make up his mind whether we were having a voluntary compulsory policy or a compulsory voluntary policy. I would describe it as a compulsory voluntary policy of the kind to which we are accustomed in the Army. This runs throughout the whole of the White Paper. The difference is that previously when the Conservatives were in Government and I expressed my disagreement with policies of this kind, I then had the support of right hon. and hon. Members in opposition. Unfortunately, I now find that the support which I had hoped and looked for from at least the majority of Labour Members is denied me. The Prime Minister and the Chancellor of the Exchequer, if I can mix my metaphors, have shot my fox and I no longer have the support to which I used to look forward from Labour Members when I expressed my opposition to the kind of policies we are now discussing.
It would be quite easy to have a lot of fun at the change of policy, to talk about U-turns and to quote from past speeches. Last Thursday the Leader of the House said that, of course, the social contract was not dead and that this measure was an expansion of it, which restored my faith in the whole belief of the survival of life after death. One could adapt Humpty Dumpty's famous remark about the use of words. I do not propose to do so because the situation with which we are faced, both in this House and in the country, is too

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serious for party games. We tend to fall into that trap far too easily.
I am sure that we are all grateful that the Government have now realised the dangers of galloping inflation and have had the courage to take action—even if it is action with which I do not entirely agree—in the face of the opposition they knew it would attract from Labour Members and from many of the trade unions which they have had great difficulty in persuading.
From what has been said in the debate, all informed opinion is conscious of the evil effects of inflation. I should like to quote a part of what I believe to be the best analysis of the evil of inflation that has been written recently. It is from an article, which will be familiar to most hon. Members, written by Paul Johnson in the New Statesman on 16th May this year. This underlines and supports the argument I shall make about an alternative method of dealing with this problem. Mr. Johnson said:
"wage inflation is the very worst kind of rat-race. It sets group against group and makes self-interest the guiding principle of life. It makes money seem the only social nexus, and the sole criterion of well-being. It forces on us all the aggressive posture of comparative envy. It turns money and its ever-changing value into the chief preoccupation not just of the miser and banker but of every human being, the dominant topic of conversation, the source of all anecdote, the ever-present, ever-nagging worry behind every plan and move. It makes the young predatory, the middle-aged apprehensive, the old fearful. It penalises not just the poor, the old, the sick and the weak, but the decent, the diffident, the unselfish, the reasonable, the temperate, the fair-minded, the loyal and the generous. And, by contrast, it allows the social Mood to be set by the rapacious, the unscrupulous, the antisocial and the bully. Hyper-inflation forces us to accept a world of blind materialism where ideals cannot be realised, where force, power and selfishness are the only dynamics, and where charity is dead."
That strikes me as an extremely good analysis of inflation and of the kind of hyper-inflation into which we are moving. Therefore, it lends greater emphasis—if emphasis is needed—to the importance of the measures we are now considering, and it is our responsibility to decide whether or not they are the right ones.
The present proposals aim at reducing the rate of inflation to single figures by the last quarter of 1976. Today at Question Time I asked the Secretary of State for Prices and Consumer Protection
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whether she did not agree that the cost of living would probably have increased by 30 per cent. by the end of the year. Therefore, the task facing the Government to reduce the rate of inflation to single figures by the last quarter of 1976 is formidable indeed. If we are to do it, we shall need far more drastic measures than have been put before us so far. Not only does it require the reduction of Government expenditure of the kind that has already been forecast by the Chancellor of the Exchequer but it requires a far more drastic reduction—a reduction that should be carried out with the greatest speed, with all the effect that will have of creating unemployment and the almost irresistible pressures it will bring to bear on the Government to reverse their policies. It is true that the imposition of cash limits, as proposed, will help to produce the needed reduction in Government expenditure. But I suggest that the Government could easily abandon some of their doctrinaire policies at great economic benefit to the country and with a considerable saving.
I wonder, however, whether the Government will have the courage to maintain this policy next year. Several hon. Members have mentioned during the debate the figure of 1½ million unemployed—some have said by the end of this year. I would suggest that this will arise certainly by the spring of next year. The Chancellor's view of the possible development of unemployment is even more pessimistic than that. But I should be prepared to make a bet—I do not bet very often—that we shall have at least 1½ million unemployed unless the Government produce measures and policies which they have not so far announced.
In those circumstances and without the improvement in world trade which the Chancellor is banking on for next spring, which I do not think we shall see happening until well on into 1976 and possibly not until the beginning of the following year, will the Government really have the courage to cut Government expenditure in the way they say they will, faced by an ever-increasing demand from hon. Members on both sides of the House to do something to deal with mounting unemployment, especially when it has been the policy of both major parties since the war to try to avoid unemployment at all costs? That policy has led

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us sometimes into some very convoluted actions indeed.
What do we do against that background when we realise, too, that we shall face a borrowing requirement not of £9 billion, which we were told about in April in the Budget speech, but a figure, I would hazard a guess, approaching much nearer to £12 billion than £9 billion? What do we do against that background and the background of the Supplementary Estimates which are about to be put before the House, which involve nearly £2,000 million, only a few months after we had the normal Estimates for the current year?—[AN HON. MEMBER: "What would you do?"]. I shall come on to the question of what to do. I am just considering what parts of my speech to skip in order to comply with the request of Mr. Deputy Speaker. However, I am coming to the part that really matters—that is, my particular solution to this problem.
First, I believe that we have all been in error in the past in regarding economic problems as something that could be treated in isolation from the rest of the social system, as something which we could regard as separate problems and to which we could apply certain well-known and well-tried techniques, which would operate on the economic situation without having any effect upon or being affected by the rest of the social system. That is a grave error. This world-wide phenomenon of inflation from which we have been suffering springs as much from rapid changes in social attitudes as it does from any movements in economic affairs. We have to pay a great deal of attention to this matter if we are to find any long-term solution to the problem of inflation with which we are now bedevilled.
I should have liked to develop some of the social activities to which we should pay attention, but in view of the time I shall skip that subject. Perhaps I may mention that in another debate if I have the privilege of catching the eye of Mr. Deputy Speaker.
If this is a long-term problem—which inflation is—it will be with us for a long time yet. I believe that the present programme is very unlikely to solve the problem. However, if we are to have something which will at least hold the
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situation until we can find the real longterm solution for which we are searching, I would suggest one thing which we can do. Perhaps this is the one moment at which I could have the attention of the Secretary of State for Employment and the Chief Secretary to the Treasury, who I am sure would be most interested to hear this.
One thing that we shall have to do in the short term is to introduce indexation. I can see the Chief Secretary rolling his eyes in despair, because this subject has been introduced on many occasions during the long watches of the night when we were debating the Finance Bill in Committee, and the right hon. Gentleman has heard a great deal about it. To be successful, indexation must be applied right across the board. If nothing else, it ensures that the sacrifices which are almost bound to follow inflation are evenly spread. We would not find that powerful, well-organised groups were able to opt out while the great majority, who are not organised in that way, had to suffer more and more from the evils of inflation. Indexation is not a cure for inflation, but it does facilitate its control. It prevents inflation causing major distortion. It cannot prevent the destruction of past savings, but it can protect future savings.
The Government have shown themselves conscious of this fact by introducing two index-linked bonds recently. Indexation takes the fear out of inflation and makes extortionate wage demands unnecessary. It preserves the real value of incomes and makes the sort of controls we are discussing tonight unnecessary. Of course, it has to be accompanied by more orthodox action to support it in order to control the underlying causes of inflation. We would still require the operation of strict monetary control in one form or another, and attention would have to be given to controlling Government expenditure as well.
Indexation was introduced in Brazil. a country which suffered acutely from inflation. Perhaps its experiences are not so different from our own. In the post-war years, inflation in Brazil was running at 11 per cent., and it moved up to 17 per cent, between 1958 and 1968 and on to 30 per cent. between 1969 and 1972. By 1962 it had reached 80 per cent., and in 1963 and 1964 it reached nearly 140 per

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cent. Once it broke the barrier of 30 per cent., it moved extraordinarily rapidly. When they introduced indexation in Brazil, it reduced inflation to between 20 per cent, and 25 per cent. in 1967–69 and to between 15 per cent, and 20 per cent, in 1972–73. Inflation increased again in 1974 because of oil prices, but it is coming under control again now.
Brazil's rate of growth over the five years to 1964 averaged 10 per cent. per annum, and has been rising since then. It has maintained growth at a fairly high rate while drastically reducing the rate of inflation.
Perhaps Brazil's circumstances are not similar to our own. There is rather more support behind the Brazilian Government than is available to our Government, and they had a good deal of military backing. However, the fact that the policies when imposed, were successful at least demonstrates that there is some underlying merit in them. We are now faced with a White Paper and proposals the intention of which, whatever is said by the Government Front Bench, is compulsory in nature. There will be back-up legislation designed to make the policy compulsory. If there is a real challenge from a trade union which refuses to do as the Government ask, the Government will find themselves facing the downfall of their policies.
I have had my 10 minutes and a lot of other hon. Members want to speak. I have had to cut a lot out of my speech to make room for them. [Laughter.] It is good that on an occasion like this when we face a very serious problem we can at least find time to laugh. I only hope that when the laughter has died down and we have had time to think about the solution hon. Members might come to the conclusion that there is something to be said for a policy that at least ensures that burdens we are called upon to bear are fairly shared and evenly spread over everybody. What I advocate is a policy which would not encourage the continuation of inflation. It would provide a breathing space in which we could find long-term solutions. These will be found not by concentrating only on economic problems but by looking also at many other aspects of our social and political life.
Mr. Deputy Speaker: Order. The hon. Member said that he had had his 10 minutes. He must have misread the clock. He has actually had almost 20 minutes.
8.46 p.m.
Mr. Mike Thomas (Newcastle-upon-Tyne, East): The hon. Member for Wycombe (Sir J. Hall) reminds me of the Duke of Wellington, who wrote home after his first Cabinet meeting telling his wife that the meeting had gone well, that he had presented all his proposals to the Cabinet and that the thing which had surprised him was that the Cabinet seemed to want to discuss them. The hon. Member clearly would not have his policies to control inflation discussed by anyone. He would have them enforced by the Army or whatever other body it was which enforced them in the countries to which he referred. I hope that we have moved a little way since the Duke of Wellington. The hon. Member would not have great success in discussions with the TUC or the CBI on that basis.
I wish to pay tribute to the Government for playing a substantial part in helping to bring about the remarkable change of atmosphere both in the House and in the country in the last two months. Within the constraints imposed upon the Chancellor, I believe that the package before us has considerable merits. My right hon. Friend the Member for Lanark (Mrs. Hart) must accept that in the short run, given the constraints on the Chancellor, wages are the only major cost item that are amenable to change. We may not like that and we may wish for structural change in the economy, but in the short run wages are important and we cannot escape from that fact.
I share some of the desire expressed by my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) for comprehensive control of the economy, but I will not accept that comprehensive control does not include control and management of the wages structure. It is disingenuous to suggest that every other aspect of our life except wages should be controlled, and it is even more disingenuous to suggest that until everything else is controlled we should make no attempt to control wages.
I do not wish to concentrate on these issues, however. The atmosphere which

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we have now managed to create, an atmosphere which may enable this package to work, will be very easily dissipated. For the people and the trade union movement the proof of the pudding will be in the eating, and the pudding in this instance is the question of prices. I regard with some concern the Chancellor's target on the price front. He tells us that he wants to get prices down to a 10 per cent. rate of increase in 12 months' time and to single figures by the end of 1976. I applaud that objective. We all want it to be achieved, but we have to be realistic too.
We have only to look at the White Paper to see that even the Government have their doubts on that score. In paragraph 29 they talk about the increases that are in the pipeline. Later they talk about oil price rises, and the possibility of these cannot be ruled out in the next six months. In paragraph 37 the Government give themselves a let-out on import costs—the cost of imported raw materials.
The Government talk about the problem of the pay increases of the past 12 months working their way through into prices in the next 12 months, and in paragraph 31 they talk of the problem of creating profits and the money for further investment.
By any realistic process of addition, if we put all those factors together, quite apart from any unforeseen factors which may arise, we shall be lucky if we bring inflation down to the 15 per cent. to 18 per cent. level within 12 months, even if the £6 limit is rigorously adhered to.
I take no joy in that whatever, but we must have regard to the effect that there will be on the atmosphere, on the trade union movement and on ordinary working people if in 12 months, after they have played their part in restraint, they look at the pudding again and see that price increases are still going on at rates which may well be double those that the Government have promised.
If that moment comes, far from our being able to say that we kept our side of the contract but they did not keep theirs, there will be a legitimate argument that the Government did not keep their side of the contract, and what that bodes for stage 2 and the atmosphere 12 months
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hence must be a matter of serious concern to us all.
I turn now to some of the price proposals in the White Paper, partly because of the general importance of this aspect of the matter for the success of the Government's overall policy and also because of the importance of prices to the poor. Inflation has a vicious regressive effect on the poorest in our community. The poor spend a larger proportion of their income on essentials such as food, fuel, clothing and housing. None of us on this side will forget how damaging it was to have it alleged in 1970 that the poor had got poorer under a Labour Government. Whether it was true or not may be a matter for statistical argument, but I fear that the White Paper proposals on the prices side may make us vulnerable again to that charge, and I beg my right hon. and hon. Friends on the Front Bench to look seriously at that problem.
In paragraph 33 of the White Paper, under the heading "Family budgets", we are told that, once pay limits are being effectively observed, the Government will take steps to hold the prices of essentials —we are not told what essentials—
"to about 10 per cent."
We are told that the CBI and the Retail Consortium will discuss this, and we know that there is to be a consultative document. I presume that this is to be some sort of extension of the voluntary agreement on essentials which the Government have had in the past with the retail sector. But the only sanction mentioned in that part of the White Paper is the extension of the three months' interval between price increases.
In paragraph 34 we are told that food subsidies will be increased by £70 million, but it is still the Government's intention to phase them out. We are not even told that their real value will be maintained by the £70 million additional payment.
On rents, we are told that the Government will take steps to keep rent increases in line with the cost of living, but we are told nothing about rates and nothing about mortgages.
With regard to nationalised industry prices, the best that we can be promised in paragraph 36 is that there may be good prospects for a lower rate of increase—and that after we have had a

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year by the end of which electricity prices, for example, may well have risen by as much as 100 per cent.
Altogether, the prices proposals are the weakest aspect of the Government's policy package. Overall, I wonder whether they are enough to make the £6 limit stick. In particular I wonder whether what is proposed will be effective in protecting from inflation those 15 million people in Britain who are on or near the breadline. I wonder whether even what is proposed will be capable of enforcement by the Government.
I believe that what is necessary is the assurance to everyone in the community that the cost of the essentials of life—food, fuel, clothing and housing—will not rise more than their incomes. There is a need for a Government-subsidised "Essentials Budget" deliberately controlling the prices of essential goods. I am wholly in favour of the Government phasing out indiscriminate subsidies. The official Opposition's reference in their amendment to indiscriminate subsidies is laughable in view of the way in which they indiscriminately subsidised the nationalised industries, with no attempt to see that the subsidies reached those in need, so that in fact they went largely to the better off. They are in no position to criticise the Government for their subsidies policy.
What I want—and in effect this is a sort of negative income tax, which I understand at least some Opposition Members favour—are carefully directed subsidies financed from direct taxation, in effect a negative income tax in kind. They would have the benefit of being universal. There would be no take-up problems.
A great advantage of the Government's food subsidy programme is precisely what the Opposition are continually complaining about—the fact that everyone receives it. I see no argument against everyone in the community receiving the essentials of life at reasonable prices, the richer having that benefit clawed back from them, as we do with family allowances, through the income tax system.
I regard that as practicable and socially just. It is the equivalent of a negative income tax in kind. Some of the practical proposals that would run from such an approach are just an extension of what the Government are already doing—main-
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tenance and extension of the food subsidy programme at at least 1974 levels in real terms, rigorous enforcement of regulated prices for other essentials in the family budget—for example, children's clothing and shoes—at retail as well as wholesale and manufacturing levels, with particular attention to the availability and pricing of small quantities of goods.
I would go for a two-tier pricing structure for electricity and gas with a quota of low-priced, or in some cases free, units followed by higher-priced run-on units with an end to standing charges, and that to be financed by direct subsidy to the industry concerned through direct taxation. I would directly subsidise domestic coal prices and continue to subsidise council and private rents. In addition, I would try to help those who wish to own their own homes by additional subsidy to small mortgages—say, those less than £7,500—and perhaps increasing the tax burden on those with larger mortgages.
I think that in her heart of hearts the Secretary of State for Prices and Consumer Protection accepts the bones of that programme, and we can see that in some ways it is applied in the White Paper package. I have grave doubts about my right hon. Friend the Chancellor of the Exchequer, whose statements in the past have not always been helpful on this front.
The National Consumer Council, which the Government have established to speak independently for the consumer, takes up two of my major points. In its statement at the end of last week it advocated a key essentials Budget for the products of special importance in family expenditure and it asked for control of those prices and for cross-subsidisation from other products. The council has been making the case that I have made for help to small and poor consumers of the products of the nationalised industries.
The most important fact is that, without this sort of approach, not only will the poor suffer in the next 12 months from the effects of our ravaging inflation but the seeds may be sown of the ultimate failure of the Government's policy. All that is needed to make the policy succeed on the prices side is to extend some of the thoughts that are half articulated, half

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put into the White Paper, and turn them into a comprehensive programme to protect the poor.
I urge my right hon. Friends to reconsider whether it is possible to protect the poor by an essentials Budget directly financed from the income tax system, and whether they cannot join me in seeing this as a way to help make all the other desirable aspects of the Government's policy stick over the next 12 months.
9.1 p.m.
Mr. David Price: I agree with the hon. Member for Newcastle-upon-Tyne, East (Mr. Thomas) that on almost any time scale the withdrawal symptoms from a 26 per cent. a year inflation are bound to be painful, and on the Government's time scale of one year—I think that this was the hon. Gentleman's point—if they are to be successful, the symptoms will be positively agonising. I do not believe that Ministers have brought that sufficiently to the attention of the House. I do not have time to develop that matter, but the point will be obvious. We are dealing with the inflationary equivalent of withdrawal from heroin and not merely from pot.
Exactly a year ago plus one day, on 22nd July, the Chancellor of the Exchequer offered us an economic package, not a Budget, but a special package such as we have had in the White Paper. He said:
"The first and main objective of the proposals I shall now describe is to attack inflation at its source."—[Official Report, 22nd July 1974; Vol. 877, c. 1048.]
Inflation then was running at 16 per cent. a year, and it is now running at 26 per cent. For both those figures I take the Index of Retail Prices as being the most acceptable of the many measures of inflation.
Without sounding too impertinent, may I ask the Treasury Bench what went wrong? Did Ministers not attack inflation at its source? Presumably they did not. Why not? The Chancellor presented his measures then as if they were going to attack inflation at its source.
I look to the White Paper to see whether it assists me in finding the answer to the problem. It tells us that, unlike 1972–73, great increases in the cost of
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imported food and raw materials were not to blame, nor, as in 1973–74, were large increases in oil prices. Then I ask myself "What was to blame?". As far as I can detect from listening to debate here, from the White Paper, the statement of the Prime Minister, his Press conference, and the Chancellor's statement, the Government have given us no reason why, to coin a phrase, they were blown off course. Before we vote tomorrow evening we are entitled to know why the Government think their previous measures did not succeed, and why, incidentally, they think that their new package will succeed where the previous one did not.
The Government always tell us that they are a Government of planners. Even in my most partisan and hostile moments I would not accuse them of positively planning a 26 per cent. inflation. They may be a bad Government, but they are certainly not a mad Government. I have an instinct that under the present Prime Minister's leadership they may, like the Bourbons, have learnt nothing and forgotten nothing. To old-stagers like me, the Prime Minister's speeches have a familiar, almost nostalgic, ring from the past. I have the sort of feeling that, rather like Archie Rice, the entertainer, we are going round the same old bumpy course again. We have seen this show come round before.
Mr, Atkinson: Like the Archers.
Mr. Price: The hon. Member for Tottenham (Mr. Atkinson) will probably recall with me the joint statement of intent between the Government, the TUC and the CBI in December 1964. Did not the Prime Minister describe the joint statement as a great landmark? What happened to that?
Going through the sequence of events, we had the White Paper of 1965 with the 3½ per cent. norm. What happened to the norm? Then we went on to the early warning systems. What happened to them? We had a General Election in early 1966, when the Prime Minister said:
"I do not think you can ever legislate for wage increases … Once you have a law prescribing wages I think you are on a very slippery slope."
Four months later we had the historic document dealing with prices and

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incomes. We had a standstill, a total freeze.
I shall not embarrass the Government Front Bench by recalling all these matters in detail. I merely remind the House that eventually, in 1969, the Prime Minister abandoned all these controls. If the Sun newspaper is correct, the right hon. Gentleman told a meeting of some of his back benchers:
"the crucial issue is not the incomes policy, but the General Election."
As we know, the Prime Minister did not win that election. However, he may have been right when he said that the crucial issue was not an incomes policy.
I suggest to the House that before we go round the same old bumpy course again with the Prime Minister we should ask ourselves how far incomes policies have worked in the past. If they have not worked in the past, by what alchemy of habit and time should they be expected to work in the present situation? There are now many empirical studies available about the determination of the rates of change of wages and prices for the past 20–50 years. Amongst them there is much evidence to suggest that we in Britain, or those in any other democratic country, have not seen a prices and incomes policy that has had a lasting effect on the rate of inflation of retail prices.
This is not a matter of personal opinion. I believe that there is a great deal of evidence to prove what I am saying. I suggest that the evidence supports the view expressed by Professor Michael Parkin in the current number of the Lloyds Bank Review, when he writes that
"variations in the rate of both wage and price inflation are determined mainly by variations in the state of excess demand in the previous year and variations in the expectations of future inflation."
Professor Parkin went on to claim that the available evidence is
"consistent with the view that inflation is a monetary phenomenon associated with the elimination of excess demands initiated by excessive monetary expansion. It is not consistent with the wage-push view."
As one who is personally agnostic on matters of economic theory, I find that the evidence points more and more towards the monetary demand-pull theory and away from the wage-push view. To say the least, it is imprudent for the Gov-
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ernment to ignore the evidence. Alternatively, I ask the Government, before the debate is over, to indicate what evidence they have to support the alternative theory. Certainly they have not yet deployed it before the House.
What makes the Prime Minister think that he can succeed where he has failed before, and where, to be fair, his successor has failed—namely, my right hon. Friend the Member for Sidcup (Mr. Heath)? I would add my personal view that the evidence points against the statutory prices and incomes policy being the determinant.
I have no doubt that the Government cannot escape their responsibility for the movement of public sector incomes, simply because they are the employer in the public sector. Therefore, their responsibility there is not as the manager of the total economy but as employer qua employer. The Prime Minister may deny that the Government's new incomes policy is an imposed policy. He may say that it is all a matter of consensus. But we have not yet seen the reserve powers. It has become clearer in the exchanges that have taken place that the new incomes policy is as voluntary as a voluntary contribution to the Mafia in the city of Palermo.
If the House thinks that that is a slightly harsh judgment, might I draw its attention to the exchange that took place on Friday 11th July at the Prime Minister's Press conference? I would add that the Press conference was a great deal more revealing for what was said by the Prime Minister and the Chancellor than the exchanges which took place an hour earlier across the Floor of the House. I will quote one exchange from that conference:
"Q. Does the Prime Minister define this as a voluntary or a statutory policy, because I am not at all clear?
The Prime Minister: It is a question of terminology. I am more concerned with policy than trying to find a name for it … So it starts as a voluntary policy, it has that statutory backing, but we have made clear that we shall use all the powers at present in the hands of Government together with others that we propose to take … to make it work."
Before we go around the old course again let us have some evidence from the Government or from the Leader of the Liberal Party that prices and incomes policies have had a lasting and determining effect on the rate of inflation. There

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is much that I would like to say, but, taking your advice, Mr. Deputy Speaker, to be as brief as possible, this is my main contribution.
I observe in conclusion that I can think of only one possible reason why the House should support this White Paper, and I can put that reason briefly in a line from Hilaire Belloc:
"always keep a-hold of Nurse for
Fear of finding something worse."
Reading the amendment tabled by members of the Tribune Group, I suggest to my right hon. and hon. Friends that there might be something worse than this White Paper. That is the only reason I can think of for approving it.
For me it is not a sufficient reason. The best I can do, in this time of national crisis of which we have heard, to meet the Government half way is to do what anyone does with a rather doubtful product—take it on approval. The only way I know of indicating in this House that I will take the Government's package without paying for it at the moment —"on appro"—is to abstain.
9.13 p.m.
Mr. Eric Moonman: It is right that the hon. Member for Shipley (Mr. Fox), who is currently sitting on the Opposition Front Bench, should convey to the leader of his party that the reason why she got such a roasting this afternoon was that many of us who have reservations about this package nevertheless feel that it is an attempt to try to deal with something that is affecting not only the economy but the whole basis of production in the country. It is wrong for someone who leads a party not to be able to offer an alternative or to say "Yes" or "No".
Many of us feel that while it is right that some of our colleagues should have serious reservations about the package —my hon. Friend the Member for Liverpool, Walton (Mr. Helfer) has expressed his concern—it is odd that the official Opposition should take the view that abstention is the one decision they are able to reach. That cannot possibly be a right decision except on rare occasions. On crucial issues abstention surely reveals weakness of mind or character, or both.
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Perhaps the Opposition are not inclined to commit themselves, because the operative phrase presented by the right hon. Lady was that "We shall judge the issue as it comes". The White Paper is available. A fair amount of debate has taken place. There have been a number of weekend speeches. The hon. Member for Eastleigh (Mr. Price) has referred to the rocky road. In my view, with a reasonable amount of insight, the Opposition should now be in a position to tell us what they want to do.
The Opposition have been told. In a very forceful Leader in The Times last Friday it was pointed out, quite apart from the economic need, that
"A great political advantage is being thrown away. The Conservatives are not giving their full backing to the incomes policy. They thereby deprive themselves of the claim to be the party that puts the campaign against inflation first. They deprive themselves of the right to argue that the Wilson policy of 1975 has shown how necessary the Heath policy was which Mr. Wilson attacked in 1974. They deprive themselves of the argument that they are the more consistent of the two parties ".
I do not think that any further reference is required. But I am sure that any Opposition Member who speaks on the basis of that background must need some clear understanding of exactly where the Conservative Party is going.
Let us deal with the point raised by the hon. Member for Eastleigh. He took us down the very rocky road of the voluntary attempts that have been made since 1964. I do not think that there is anything terribly embarrassing or indeed particularly wrong about a Government recognising the social milieu and the difficulties of trying to make decisions on a voluntary basis. The whole point of the measures that have been attempted since 1964 is consensus.
When efforts have been made to go into the arena, as the Conservative Party did, to introduce a measure of censure and sanctions, there has been a quick response from the working class. The hon. Member for Eastleigh makes a great mistake in knocking the very difficult attempts by the Government since 1964 to try to get a voluntary policy. It will never be easy to attempt to deal with a difficult measure, but on every occasion the attempt has been worth while. That is why I welcome the Government's anti-inflation White Paper.

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The Government's priorities are right. It is important that the level of expenditure in essential areas of social need is maintained. I am staggered that some of my colleagues, while making serious criticism of the anti-inflation measures, appear to have overlooked this point. The preservation of the welfare safety net for the poor, the sick and the deprived is a first priority for any Labour Government, and never more so than in times of economic crisis.
The continuation and strengthening of subsidies as well as no attempt to make a major cut-back in public expenditure indicates that this Labour Government are particularly concerned to look after the vulnerable groups of society. Surely the mixture is near enough right. Its strength can certainly be seen in the public sector, which in recent times has been at the heart of the inflation problem.
In my view the strategy is promising. The idea of cash limits on nationalised industries and the whole of public service pay puts a heavy responsibility on Ministers. That is exactly where the responsibility should be. It should have been there a long time ago. It also shows that perhaps for the first time this responsibility is a shared responsibility with the Treasury. Some of us have never accepted the extraordinary role which the Treasury has fulfilled in the past in acting as a watchdog. We have seen it act when it comes to co-ordination, but it has gone much further in the past 10 years or so.
Instead, each spending Minister will be responsible for his own budget plan. Instead of a breach by a particular group of occupational workers within an industry, the responsibility will be that of the Minister. Therefore, the Secretary of State for the Environment will be held responsible for local authority breaches.
No incomes policy, be it voluntary or statutory, is an end in itself. It can do no more than gain us a breathing space during which some fundamental issues can be resolved. One of these is the nature and role of a future incomes policy. As a party of planning we cannot plot investment, employment levels and economic growth and leave incomes totally out of account. If we do, we shall upset the whole picture.
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I am not suggesting that we should have a Government who meddle in collective bargaining. I am looking for something more sophisticated in the sense of trying to establish guidelines for the relationship between upper and lower incomes, the rôle of differentials and the analysis of jobs in different industries. There is a Royal Commission currently dealing with the distribution of incomes. I hope that its report will be forthcoming fairly soon.
I have three worries about the White Paper, and they can be expressed simply. The first is that the Government's package is not without weaknesses. In particular. it is not clear how the level of settlements in the private sector can be monitored. The onus placed on the Price Commission to monitor wage settlements as part of its criteria for allowing price increases will put it under great strain. I cannot accept that it is not possible to have notification of all wage or salary increases. Surely it is not beyond the wit or ability of the Government to show that they are taking the whole psychology as well as the economic circumstances of the policy seriously.
One important matter regarding the psychology of the mixture is that the Government should consider making notification of all wage or salary increases compulsory. That cannot be left out. As has been pointed out, we will probably have about 60 per cent. of all wage and salary increases monitored because of the way in which we shall be getting the larger companies and the public sector to help. That is not enough. It is alarming that we should be satisfied with 60 per cent. when there can be serious omissions and abuses in the other 40 per cent. In no other situation—certainly not in industry—would we be able to go to a management or board and say "We are going to get 60 per cent, of the information on which to make a judgment." It is outrageously wrong. I ask Ministers to look at that point again.
My second worry is on the role of management. The Government have put the onus for carrying out their incomes strategy on management, whether in private industry, the public sector or local government. That is not a bad thing. Most managers, in much the same way as

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Ministers have responsibility, will welcome that. But such sanctions as there are in the initial voluntary stage, as well as in the statutory back-up, will penalise management weakness through price control, withdrawal of rate support grant and subsidies. The CBI has indicated that this is a major cause for complaint. I should have thought that it would be a cause for celebration, because it passes back to management the responsibility for relations with the work force. In looking at the strategies and the micro aspects, one is inclined to get them out of proportion. Most managers, in recognising their responsibilities and meeting certain objectives, find this a handicap, but the existence of the upper limit for pay settlements will give them a breathing space. That is an opportunity to plan for the future.
An incomes policy, especially when combined, as this one is, with a freeze on dividends, would help to put at management's disposal a larger share of company income than it would otherwise have done. The Government should ask, what will happen to that money? Its proper use is investment for the future prosperity of this country. I hope that the Government will bear that in mind in their use of the Industry Act.
My third concern is the complete omission so far from the Government's statement of any reference to productivity. Lack of mobility and antiquated equipment are the major causes of our weak industrial position. Some consideration should be given, if not within the next two days, at least when we come to look at later stages of the proposal, to a sophisticated productivity unit. We should accept that there is a need for national retraining schemes. Reference was made to this point earlier but it was not spelt out. I should like to see greater interest by the consumer. Some of us have argued that the consumer is not to be thought of as a label and should be considered not only from time to time, but at most critical points in wage negotiations and so on. An independent body would take account of the consumer interest.
In a succession of economic crises since the war, we have tried traditional economists' solutions and they have not worked.
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That does not justify what the hon. Member for Eastleigh said about the problems of a voluntary policy. It is far more important that we try to make the voluntary policy succeed than to attempt something more serious in the nature of a statutory policy, recognising that it could disturb the balance of industrial relations. In short, we have a less orthodox approach which has caused some confusion in the mind of my hon. Friend the Member for Walton, who uses such terminology as a statutory-statutory policy. I am not sure what that means as opposed to a statutory-voluntary policy.
Some of us are not equipped to understand what the Government are trying to do. It is up to the Government to make clear how the policy will work in practice. We should give the policy our backing. It is understandable that we on this side of the House have reservations. What cannot be tolerated is the way the Opposition have behaved today. If they continue in this way, they will make no contribution to solving the national crisis. They will have no credibility in asking people to believe that they understand the crisis. Although they may feel that because they are no longer in power they do not have to take any responsibility, it is possible that people will remember this and will act accordingly in future.
9.27 p.m.
Mr. Russell Fairgrieve: I cannot commence my brief remarks without referring to the speech of the hon Member for Perth and East Perthshire (Mr. Crawford). It is not good enough for him and other members of the Scottish National Party to produce selective statistics, saying that unemployment and wages in Scotland are X and in England are Y without mentioning that in parts of Scotland wages are higher than they are in parts of England and that unemployment is lower in parts of Scotland than it is in parts of England. The attitude of the SNP is completely selfish. We have had an integrated economy for a century. Is it suggested that, because of the temporary benefit of the discovery of oil, we should disintegrate and then when the oil has been extracted by the much-maligned multinational firms we should reintegrate?

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The Scottish National Party argues that the oil is Scotland's oil. As long as this is a united kingdom, it will be a United Kingdom asset. The argument is dangerous because the logic is that the next cry will be that it is Shetland's oil. That island is making good agreements with the oil companies, and I should hate to encourage it to do a UDI.
Mr, Hamish Watt: On the criterion which the hon. Gentleman is using, does he agree that in the past Scotland should have had exactly the same rates of unemployment as England?
Mr. Fairgrieve: You, Mr. Speaker, and your Deputy have asked hon. Members to be brief. Most hon Members have complied and there have been virtually no interventions. The hon. Member has rarely been present during the debate. Therefore, I shall not waste time by answering stupid and half-baked questions.
I give a welcome to the White Paper, with the proviso that it is too late and too little. We have had 18 wasted months, with two bought elections, while wages have been allowed to let rip with settlements of around 30 per cent. Hon. Members have criticised the Opposition for tabling a reasoned amendment and intending to abstain on the main Question. But we shall support the Government although they did not support us, not necessarily by voting in the House but by our actions in the country and by not encouraging people to make vast wage settlements. We shall abstain and yet support the Government's honest intention to bring down inflation because of where the White Paper stops short.
The main reason why we object to what is proposed is the Government's failure to do anything about costly nationalisation projects. Such projects were supported, if at all, by only 30 per cent. of the electorate. I doubt whether half the Labour Party is in support of nationalisation. Yet we have the Land Community Bill—that is, the nationalisation of land—the Employment Protection Bill, which includes a good bit of employer bashing, the Petroleum and Submarine Pipe-lines Bill, which sets up the useless and irrelevant British National Oil Corporation, and the Industry Bill, another form of nationalisation, with its Scottish and Welsh Development Agencies to buy into
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prosperous and efficient firms and make them unprosperous and inefficient.
The Chancellor told us that Britain could get out of its problems by an increase in productivity. The Bill which I did not mention—the one dealing with British Leyland—provides for the pouring out of £1 million a day into the company over the next eight years, but has any guarantee been given about productivity or overmanning? None whatsoever. It is a virtual encouragement to this inefficient state of affairs.
We object to the fact that there is to be no cut now in national or local government expenditure. We also object to the increase of £150 million in subsidies. We all know that if subsidies were removed taxes could be brought down by similar amounts and people would realise more accurately what things cost.
It is ridiculous, unfair and arbitrary to increase VAT to 25 per cent. on certain items, when it is well known that if the 10 per cent. rate overall were reimposed instead of the 8 per cent. rate the Chancellor would get more revenue than from the combined 8 and 25 per cent. rates.
Those are the sound reasons why we have put forward a responsible amendment to the motion and, while abstaining on the main issue, we shall support the Government in genuine attempts to bring down inflation, although the Labour Party did not support us.
9.31 p.m.
Mr. Norman Atkinson: I have just heard a stage whisper "Good God, is he winding up for the Government?". The hon. Member must have looked at the clock and not read the Order Paper. I reassure the House that I am rising to speak to the amendment—
Mr. Speaker: I hope that the lion. Gentleman's speech will not be as lengthy as a winding-up speech.
Mr. Atkinson: I want to deal with some of the comments that have already been made about monetary policy and the Labour Party. Before doing so I wish to comment briefly on the wage aspects and to relate them to the amendment in the names of myself and my hon. Friends.

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On the subject of a planned economy and free wages, several speakers have suggested that Socialism extends to a compulsory wage policy. Others have suggested a voluntary wage policy as part of the concept of a planned economy. They have it the wrong way round. Socialists over the ages have agreed that in a planned economy a wage policy would be an integral part of the planning concept. But we are a long way from that.
Other speakers have suggested that there should be some form of wage control but free prices. That is totally illogical unless those who now argue for wage control also argue for permanent price control—but I suspect that the opposite is the case. I take that to be the idea advanced by the Liberal Party and some hon. Members who say that there should be total planning. In other words, the argument is for free price fixing within a free market economy and within that system some wage con. trol, although wages are merely an integral part of the price structure leading to the price of the product. Many people argue that wages should be controlled but that the prices of the products should be open to a free market. I find that illogical.
Reference has been made to the deflationary effects of the wages policy, which is based on the £6 per week flat-rate increase. In opening, the Chancellor said that that was a maximum. However, some employers may go out of business if they concede increases of £6 per week to each of their employees. Some may compromise at £4 or £4·50. British industry must be in a precarious state if the difference between bankruptcy and solvency is between £1 and £1·50 per week per worker, and if those are the narrow margins which apply in industry—[Hon. Members: "They are."] If the Opposition seriously advance that argument, the basis of our economy is more precarious than I had imagined.
I now turn to the basis of our opposition to the flat-rate increase of £6 a week. We can calculate how much it is necessary to pay in total wages to equate the projected rise in the price index. If we compare that with the increase in wages resulting from the £6 a week flat-rate increase, the difference must
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be more than 7 per cent. in terms of living standards. The difference between the total wages bill proposed by the Government, against that which is required to maintain living standards and to keep pace with the rise in price index, is a 7 per cent. drop in living standards on aggregate for all wage earners. We do not believe that that should be tolerated. It is not necessary to take that amount out of the economy to achieve a mythical result. It could have a tremendous effect by adding to the numbers which we know are likely to become unemployed in the next 18 months or two years. That is a further reason why we should resist the Government's proposal to deflate wages and to cut living standards by this enormous amount. That alone is a good reason for opposing this policy.
Most hon. Members recognise that there is a fine balance between maintaining living standards and triggering price inflation. My view is shared by most Government supporters. I have always believed that trade unions are sufficiently sophisticated to understand their responsibilities as wage bargainers. Indeed some time ago they set out on their adventure with the social contract recognising only too well their responsibilities as wage bargainers. They understood the fine balance between attempting to win for their members the maintenance of living standards whilst they did not want to contribute to price inflation in the way in which some of our labour-intensive industries have suffered over the past 12 months. There is nothing wrong with the understanding of the trade unionists. Indeed, if other policies had been pursued by the Government, the social contract, as originally conceived, would have been successful and would have prevented much of the inflation which has occurred in the past few months. No matter how we view in retrospect the events and the relationships to which I have referred, we are forced to that conclusion.
We have always advanced the case that it is possible responsibly to negotiate wages against fixed price ceilings. However, if our purpose as Socialists and as a Labour Government is to intervene in the price mechanism and to reject the idea that the free market economy can allocate resources according to the priorities set

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out in our manifesto—if we reject the system as incapable of doing that—it involves us in intervening in the price mechanism. By that means, trade unionists must freely bargain their wage agreements against the ceilings which are socially agreed. The concept which the TUC accepted at the time was that we can have free wage bargaining within a system that has agreed upon price ceilings.
At that time we accepted that that was the way in which to bring about a redistribution of wealth through the wage system. All these things were transitionary but could be contributory factors in leading up to the kind of transitionary society or economy that we have always envisaged. Therefore, we have come to certain conclusions about the policy.
The reason why we have rejected these ideas is that we believe that the fundamental changes we have set out, plus the fact that if there was—as some Conservative Members suggest—indexation of wages and some way of having close harmony price rises and negotiated wages, of necessity that would mean a deceleration in price rises, although in accordance with the targets set by the Chancellor. None of the hon. Members who have put their names to the amendment in the name of my hon. Friend the Member for Liverpool, Walton (Mr. Helfer) disagrees with that conclusion or the targets laid down by the Chancellor. Indeed, we have argued for the deceleration of price rises.
We have spent 18 months attempting to convince people that there is a way of doing this which is consistent with the ideas set out in our manifesto. There is a means of getting exactly the price deceleration about which the Chancellor spoke. Therefore, there is unanimity among hon. Members, the Chancellor and the Government in that we totally agree that we must now decelerate prices from the existing 26 per cent. rate of inflation down to 8 per cent. at the end of 1976. which is approximately 1 per cent. per month over an 18-month period. That is the target which we all agree, and, whatever happens, that must be achieved at the end of the day.
Mr. Hoo!ey: Will my hon. Friend explain how he sets a price ceiling on the price of oil or world prices of food or raw materials?
Mr. Atkinson: It is not possible to do that within this country. However, it is possible to set a price ceiling on products that our labour will produce with the aid of oil, recognising that we have to accept the situation if we cannot control the price of one factor within the total price. That, with all the other considerations,must be taken into account in setting the maximum price ceiling. It puts a greater strain on trade unionists who bargain for wages when there are external factors—for example, inflation among commodity prices. That makes the responsibility that much greater.
I conclude on the basic argument about the question of the monetary policy of the Labour Party and the problems we suffer. I know that my hon. Friend the Member for Berwick and East Lothian (Mr. Mackintosh) wishes to speak on this matter, so I shall be brief. It is germane to the debate and important to the Labour Party to understand our difficulty. As a party we must recognise that we are elected on a programme of high social expenditure. In setting out the programme on which we were elected, we are trying to achieve a rapid shift from capital intensity in manufacturing industry to a labour-intensive service industry. Our aim is for that shift to take place in the economy in order to minimise the labour content in manufacturing industry by rapid investment, with all that goes with modernising industry —making it competitive in the world market—but at the same time finding a way of shifting our human resources into all the social services, improving health, housing and education, and making our society that much better. That is the purpose of our being here. We can get general agreement on that.
However, because this is a shift from capital intensity into labour-intensive social industry or social service—because that is the movement—it does some things in the absence of regulators or controls in a free market economy. For the Labour Party to have to pursue a policy of that kind in the absence of these other regulators means of necessity that that in itself is inflationary. No one would disagree on the pure monetarist argument that in a free market economy without any other controls or interventionist strategies pursued by a Government—in the absence of all that

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—of necessity a Labour Government cannot make the books add up.
It is arithmetically not possible in this situation unless we go to phenomenally high rates of taxation, which are in themselves a disincentive to building the kind of society that we want. We cannot raise income in this way so that arithmetically it can balance the books with the kind of social expenditure to which we are committed. Therefore, of necessity there must be printing of money with a Labour Government. Of necessity that must happen.
However, there is a case to be argued, and I ask hon. Members seriously to consider the implications of what we are trying to do. Two things that we have always argued are that in pursuing a policy of that sort a Socialist Government, in trying to reach out towards a planned economy, must intervene in the price mechanism and must introduce import controls to prevent the conversion of that additional currency into higher domestic prices—because that is what happens. Therefore, we say that the inadequacy of the present economy is such that the Labour Party, in pursuing the policies now before us, must do the other things which are spelt out in the amendment on the Order Paper in order that we can successfully transform society in this way.
That is the essence of our economic argument: not to be afraid about having a Budget deficit, or afraid of the monetarist arguments saying that we are overspending or over-reaching within the economy, but to introduce the restructuring of society that we think necessary in order that we can safely carry out those policies and at the same time protect the living standards of the people whom we represent.
I know that in the few minutes of the debate that have been allocated to me it is important to try to set out the fact that we recognise the difficulties in the journey that the Labour Party has to face. We recognise all the problems and all the criticisms that the monetarists may have. But statutory wage control is not the answer. That is the reason why we have tried to say that there is a need to do certain things, a need to restructure the economy in accordance with our ideas and our purpose. That is what we have
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tried to do. We have tried to set out in the amendment the way in which we think it should be done and how speedily we can do it.
Where the Government are weakest is in the fact that they are presenting an "and/or" situation. Speaking at Tolpuddle, the Chancellor suggested that there would be 3 million workers unemployed if inflation continued as it is now. No one has ever nosed seriously an alternative of that sort. That is not the choice before the country. What we are saying is that it is possible to decelerate prices in the way stated by the Chancellor but also at the same time to do something about rising unemployment. It is possible to bring about full employment in this country while simultaneously decelerating price inflation within the target figure set by the Chancellor of the Exchequer. The Government fail to look at the whole business of rising unemployment and there is a basic weakness in the argument submitted to the House by the Chancellor of the Exchequer.
Mr. Bruce Douglas-Mann:: Is my hon. Friend really saying that the only way to defend full employment and decelerate inflation is by the method he has suggested? Does he reject increases in taxation to meet the expenditure we all regard as necessary? Does he think his solution is the only one? If he does, he will not carry a great deal of credibility.
Mr. Atkinson: I am not saying that. An hon. Friend beside me says "That is another half-hour". It will not be another half-hour because I intend to conclude on this point. I take less time than those hon. Members who sit here making pretty rude remarks. I have spoken only once in this House this year and that was on 25th February. I was reminded by Mr. Speaker how many times I had spoken. I do not think there is any need for rude comments.
I was saying that we had not reached the level beyond which we could not go with tax increases. There are margins left and tax might go 2 per cent., 3 per cent. or 4 per cent. higher before we reach the point of disincentive. However, there is a point of disincentive, and if we go beyond it, we need a totally different method of collection in order to transfer that revenue to pay for something else in

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the sort of social programme envisaged by the Labour Party. We must also take into account the size of the current public and private borrowing requirement.
If we are going to re-tool British industry, we cannot do it at the pace required and improve health, education and the other social services within a budget for which people will voluntarily contribute and still have the incentive to do all that is necessary in society. We cannot go up and up with taxation.
We should not be too worried about not making the books balance because we have some arithmetic problems here. We must have intervention in the price system. and we need to do something about import controls.
The whole of our case is that this policy, whether it is voluntary or statutory, will have a tremendous effect on the economy and on deflating wages. Our policies should be designed to do what is well within the capability of the Government if they want to pursue the policies they once advocated. They would take on price deceleration at the same time as tackling this massive difficulty of rising unemployment.
9.55 p.m.
Mr. John Wakeham: I do not feel competent to follow the hon. Member for Tottenham (Mr. Atkinson) in the points he made at the end of his speech, and, therefore, I shall restrict my remarks briefly to the White Paper. There must be very few people who will not give a warm welcome to the fact that the Government are taking some action to deal with inflation. My constituents are bewildered why action has not been taken before. Provided it was fair, an incomes policy, whether statutory or voluntary, would be generally acceptable to a very large number of my constituents.
I wish to declare an interest as an employer and a chairman of a company. As my right hon. Friend the Leader of the Opposition said, such people run the risk of being punished for a crime which has not yet been invented and of paying a penalty which has not yet been determined. I shall certainly wish to see the Bill very quickly—we are not quite sure whether it is in draft—if this policy is to be put into effect. This policy is so akin
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to a statutory policy that for all practical purposes that is just what it is.
I have no objection in principle to a statutory policy. At the last General Election my party said that in the last resort it might be necessary to invoke the law to fight inflation. However, we have always maintained that an incomes policy alone will not solve our problems. It must be part of an overall package of measures designed to reduce inflation, and that means policies which will have the effect of reducing everyone's standard of living in the foreseeable future. If the right measures had been adopted at the right time, a statutory incomes policy might not now be necessary.
If the White Paper proposals are to have any chance of success, the other measures referred to in it will have to be brought forward and further measures will have to be added. The only thing which can be said for an incomes policy is that it can buy a little time. There is no real evidence that an incomes policy can have a marked effect upon the rate of inflation except over a very short period. There is considerable evidence—some of it was referred to by my hon. Friend the Member for Eastleigh (Mr. Price)—that the cause of inflation is the expansion of the money supply. If the Government can get that under control, they can solve the problem.
But that is far more difficult and, certainly in the short run, far more unpleasant. It involves cuts in Government spending. It probably entails increases in taxation. It probably means abolition of the Price Code, and it should certainly mean the abandonment by the Government of further measures of nationalisation.
It being Ten o'clock the debate stood adjourned.

BUSINESS OF THE HOUSE
Odered,
That the Motion relating to The Attack on Inflation may be proceeded with at this day's sitting, though opposed, until midnight; and that any Motion relating to a Petition of the Right Honourable Samuel Charles Silkin, Q.C., Her Majesty's Attorney General, may be proceeded with at this day's sitting, though opposed, until any hour.—[Mr. John Ellis.]

ATTACK ON INFLATION
Question again proposed, That the amendment be made.
Mr. Wakeham: It will mean an increase of unemployment in the short term, but there will be an increase anyway, and if we do not grasp the nettle now the longer-term effects for unemployment will be substantially worse than they will be if we tackle our problems correctly now.
In paragraph 26 of the White Paper we are told that the back-up legislation
"would make it illegal for the employer to exceed the pay limit."
I believe that many people would consider it grossly unfair if all the sanctions to secure compliance with the policy were put upon the employer when in many cases it might be a powerful trade union or powerful group of workers pressing a small or medium-size employer to exceed the limit.
I should like to see any legislation which may be introduced not apply sanctions only to the employer but make it illegal for him to employ someone outside the laid-down limits, so that both employer and employee shared in the responsibility and suffered if there were any attempt to break the law.
I therefore give a qualified welcome to the White Paper as part of an attempt to tackle the problem. I am, however, extremely critical of the delay in bringing it forward and of the failure to make a concerted attack on the issues confronting us, and for this reason I shall not vote for the White Paper but shall support the amendment moved by my right hon. Friend the Member for Finchley (Mrs. Thatcher).
10.2 p.m.
Mr. John P. Mackintosh: This debate has revealed a curious situation in that the Government's policy has split the Opposition and split the Left wing of the Labour Party. This is, I suppose, one of the tactical achievements of the Government in the present situation, and I shall begin by agreeing with one or two of the comments made by my hon. Friends below the Gangway.
I thought it fair of my hon. Friend the Member for Liverpool, Walton (Mr.
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Helfer) to point out the extent of the U-turn which the Government have made in adopting this policy. The Government were elected twice in 1974 on the general argument that it was not necessary for a Government to impose limits on wage bargaining and that it was possible to combine a totally free hand for the unions, through the social contract, with the Government's policies.
That has been one of the traditional approaches of the Labour Party, for since its inception the Labour Party has been a combination of certain producer pressure groups out for their own members—trade unions out for the welfare of their members—with an idealistic approach, an egalitarian policy aimed at social justice for all groups. It was assumed that these two elements could be combined although they were very different in ideology and motivation. It was assumed that they could be combined because for a long time people's wages were so low that pressure for higher wages and pressure for the interests of trade union members could be said to be steps towards social justice.
However, the development of our country has now gone so far that that is no longer true, and we have had staring us in the face during the past year a situation in which the social contract, which was an attempt to keep the two sides together, allowed certain groups to secure wage increases above the guidelines, above the voluntary self-imposed guidelines such as they were, and this has widened the gap between those who got the 30 per cent. and 40 per cent. settlements and those who had the low-grade settlements, with the result that an inegalitarian pressure has come into our society.
This inegalitarianism can be seen in constituencies such as mine, where there are deep divisions between those who have been getting £50 and £60 a week and those who are still struggling with less than £30 a week but whose electricity bills, transport costs and charges of all kinds have been rising because of the wage increases being paid to people in the more powerful unions. This is a direct example. A great problem for poor people is the quarterly electricity bill, and the reason is the wages for those producing the coal for the electricity. [HON. MEMBERS: "No, the Common Market."]

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The basic reason is the 30 per cent. increase and it has a direct origin in certain wage increases. This is a transfer of income from those least able to pay to those able to get these large increases.
Therefore, there has been a direct conflict between greater egalitarianism and social justice and certain powerful groups demanding and getting increases. This conflict could not have been concealed any longer, and I am glad that it has been brought to a head by the external factor of the sterling crisis forcing it through. It has forced us to look at wage settlements not only as a matter of price inflation but as a matter of equity and social justice in our community, and at how the whole situation has its impact on so many institutions in our society.
I am surprised if anyone on either side of the House seriously imagines that we could have gone on for another year with 30, 35, or even 40 per cent. settlements in certain sections of the community without destroying fundamental parts of our society and the sense of fairness and social justice. Small organisations dependent on subscriptions have been collapsing, and the damage that has been done to big organisations, to the Post Office and the railways by the degree of price inflation that we have had will probably not be remedied for many years.
Mr. George Rodgers: Would not my hon. Friend accept that the figures demonstrate that the greater increases contained within the general pattern of wage increases have been devoted to the low-wage earners—I have in mind the nurses and various other claimants—and that the tendency is for the larger increases to go to the lower paid?
Mr. Mackintosh: No, the figures that I have seen demonstrate exactly the contrary, that the greater increases have gone to the most powerful groups and that the gap between the lower paid and the higher paid has considerably widened.
I refer my hon. Friend to the record of the Labour Government of 1964–70. One of the major reasons why I supported them was their drive for egalitarianism. My hon. Friend Will find that the beginning of the widening of the gap between sectors in the community dates from 1968-69, when wage inflation began to creep ahead. Wage inflation and inflation generally are a greater destroyer of social
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justice and egalitarianism in our society than any other cause. Lenin said "If you want to destroy a country, if you want to destroy a society, debauch its currency." This we have seen with every group grabbing for itself and social justice and principle going by the board.
That demonstrates the need not only to halt the collapse of foreign confidence in sterling, but to tackle inflation for internal social reasons, which are as powerful, if not more so. In the policy announced by the Government we have split parts of both parties, but in the debate so far we have not had an adequate presentation of any alternative policy. I have waited for the monetarists on the Opposition side to produce their policies. If they do so during the course of the debate, I should like them to follow those policies through and explain precisely the steps by which their policy would produce the desired result of getting rid of inflation.
There are two possible methods. One is by cutting demand. It is the impure monetarists who say that if demand is cut, particularly if there are heavy cuts in public expenditure, unemployment will be increased to a level where wage settlements cannot go any higher. I should like this spelt out. I should like that level of unemployment described, because it would be less socially acceptable in this country than the policy being put forward now by the Treasury Bench. There is overwhelming public support for a wages policy—[HON. MEMBERS: "No."]—for an incomes policy—I am happy to follow hon. Members in that. There is great support for an incomes policy. There is 70 per cent. support behind us in the public polls. I do not believe that this country could take the levels of unemployment necessary to make the monetarist policy of a demand type work, bearing in mind the level and size of the public sector in our economy.
There is a second level of monetarist argument, the pure monetarist argument, which is simply that if no more money is made available demand will fall—that if wages rise, prices will rise, demand for the product will fall, people will become unemployed, and the net result will be no different. But that means fantastic distortions in the economy. In certain sectors, particularly the public sector, there is not that discipline. No one can

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say today that if railway wages are increased and then fares rise, there will be a corresponding drop in employment or in the use of the railways. There is a monopoly element there which cannot be avoided. Therefore, the increase is passed on to those who have to use the railways, as it is passed on by the Post Office to people who have to send their letters.
Those are the consequences of the monetarist approach. [Interruption.] I shall be happy to deal with interventions, if hon. Members care to make them from a standing position.
Mr. Hooley: Does not my hon. Friend realise that there is a powerful alternative to the railways—namely, road transport?
Mr. Mackintosh: Yes, indeed, but not a total alternative. Many people cannot avoid using rail transport. It is desirable and understandable that the railways should be used, but I am afraid of their being priced out of the market. I am pointing out that the effect of that type of monetarist policy is a distortion between the public and the private sector.
A second effect is the pricing out of the international market of this country's exports. When people tell me that that does not matter because, with a floating exchange rate, the pound floats down, so that it does not matter if the prices of British goods rise, my answer is that a trading nation cannot have its currency sinking indefinitely. It can float for minor and possibly large-ish adjustments, but if it floats down week after week and month after month the result is a collapse of confidence, apart from the inflationary effects on import prices.
If any Conservative Members are making the monetarist case, we are entitled to ask them to spell out the consequences in terms of unemployment, or the reduction of demand spread between the private and the public sector, and to explain the precise implications of how their policy would work. If they look those implications in the face, they will see that the policy is more socially divisive, socially unjust and damaging than the incomes policy presented by the present Government.
Mr. Alan Clark: How could we possibly wish to cause
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unemployment? Hon. Members laugh, but they know very well that all of us meet our constituents at weekends. We all have personal knowledge of the extremes of human misery and deprivation experienced by constituents who lose their jobs. How can the hon. Gentleman accuse us of wishing to cause unemployment? Even considering the matter at its very lowest, in terms of personal advantage, how would we wish to cause our constituents to lose their jobs?
Mr. Mackintosh: I am sorry that I gave way to allow the hon. Gentleman to make such a piffling point. No one imagines that those concerned wish to cause anything. The point is that they must accept the consequences of their policies, and, if they disagree with Government policy, choose what to do to bring down the rate of inflation. If they decide to cut demand, that will cause unemployment. No one says that they wish it, but that is the consequence of pursuing that type of monetarist policy. I am asking hon. Members to face the consequences of their action. If they wish the policy, they wish the consequences. That intervention added nothing to the dialogue.
The only alternative policy that has been advanced is that in the lengthy amendment tabled by my hon. Friends below the Gangway, which contains two substantive points. The suggestion of import controls is interesting, and it has support. The main problem is that import controls add to inflation.
The second suggestion they put forward is what has been described as instant Socialism—namely, the immediate takeover of the major financial centres, the take-over of a large block of the private sector and the imposition of a directly-controlled economy over a large area. I know that some of my hon. Friends have entertained this policy and advocated it over the years, but to bring in such a policy now would be the total destruction of what remains of confidence abroad in this country's ability to operate.
I do not care to use that argument in the short run. If a policy is desirable in the long term we should aim at it despite the short-term consequences. However, I dislike the policy that is put forward by some of my hon. Friends, because I want a mixed economy with the freedom and the choice that go with it. If

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we have a total publicly-owned economy the consequence would be statutory control of wages throughout the economy. Any strike or any argument would be a conflict with the State and would upset the entire planning system. The essence of free bargaining as we have known it depends upon a mixed economy and the degree of freedom which it gives to our workers as well as to managers.
I suggest that we are in some muddle about the policy that has been put before us because it is in itself a little obscure. Precisely what is meant by "consent", for instance? It seems that "consent" is no longer the idea of the trade unions running the policy themselves, as with the social contract, but involves the Government imposing a limit. It is desirable that such consent was obtained. It shows a great deal of responsibility on the part of the TUC majority who voted for it. That is a help in beginning a statutory policy, or compulsory policy, as I would prefer to call it. It must help to begin with the acceptance of the working people. The fight against inflation is more important than the free-for-all struggle we have seen in recent weeks and months.
The second point to make about language is the question of the word "statutory". I think that my hon. Friend the Member for Walton had a good point when he said that if an employer, on whom the onus will be laid, is challenged by his workers and he takes out an injunction against them he may well transfer the legal liability from himself to the workers concerned. That is true, and it is semantic nonsense to get tied up in a discussion as to whether or not the policy is statutory.
In practice, we have a compulsory policy. If the policy fails, the Government's will and their capacity to control events will have collapsed. The Government have set their hand to this task, and what matters now is their degree of determination and capacity to carry it through.
I echo the worry of my hon. Friend the Member for Basildon (Mr. Moonman) when he said that there is no one to monitor the policy. When a Government are totally committed to carrying through a policy and have decided to do their own monitoring, I am worried that there
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may be a temptation in difficult cases to let the monitoring slip. Notification of all wage or income increases should be compulsory. The whole question of monitoring should be dealt with in that way. We may well be told that a certain agreement had not broken the policy because there is an undermanning agreement or other conditions and qualifications. There is a danger that in that way the policy will be eroded step by step. I hope that the Government will set themselves against anything of that kind.
We shall be faced with the question of how to get out of the policy at the end of the year. We are constantly told about the problems of re-entry. I was delighted to see that the Government have accepted the idea of a permanent incomes policy. I hope that when we come towards the end of the year the Government will decide to leave the question of differentials, which I think is the key issue, to bargaining between the sectors, and that the Government will content themselves with setting an overall limit on the extra amount of money available in the community for wage increases.
The essential step is to deal with all major wage settlements in one period of the year. That should apply particularly when the £6 limit comes off next summer We want all major wage agreements for the coming year to be fixed in the month or two before the limit comes off. If that is done the Government will be able to judge the total impact of the full set of agreements on the economy. It will become clearer that what one sector of income earner—and I am grateful to my hon. Friend the Member for Newham, North-West (Mr. Lewis) for this point—receives another loses in this situation. We would like to get this situation through so that the question of fairness comes out and the differentials are left to open bargaining. The total impact on the economy is something of which the Government must take care.
At last the Government have grasped the nettle of wages policy. There is now light at the end of the tunnel. It will be two or three very difficult years that lie ahead of us. We must back this policy and see that it succeeds, because upon it rests the democratic capacity of this House and this Government to order the economy and our affairs.
10.22 p.m.
Mr. Michael Spicer: I listened intently to the fluent speech of the hon. Member for Berwick and East Lothian (Mr. Mackintosh). My major point of disagreement with him concerns his contention that we can have an effective incomes policy in the absence of a proper demand management policy. He made an unfair response to my hon. Friend the Member for Plymouth, Sutton (Mr. Clark) because clearly if this policy before us tonight is effective the primary reason for that will have been the fact that it has been introduced in a period of major demand recession. It is humbug to pretend otherwise.
There cannot be an effective incomes policy for instance in a period of major reflation. My own view is that the measures outlined in the White Paper can be welcomed only in the sense that one might agree that a patient suffering from cancer should have a temporary dose of morphine. Short-term prices and wages policies have precisely the effects—and the contra-effects— and the limitations of an anaesthetic. They give short-term relief but as with anaesthetics to the metabolism they can do positive harm if they give the illusion of a cure when the reality is that the disease is becoming progressively worse.
There is no doubt that the underlying movement of the British economy is one of rapid deterioration. I must declare an interest in an economic consultancy company in this context. By themselves the measures we are debating offer no hope of long-term salvation. It is true that they might prevent the immediate collapse of our currency and may even contribute something towards the reduction in inflation, perhaps by the end of next year to a figure of between 13 per cent. and 15 per cent. By themselves they do nothing to reverse the trends or the characteristics which currently bedevil the British economy.
These trends are well known and I will not recount them now. It is a fact that over the past 15 years this country has deteriorated. From being one of the wealthiest countries in the Western world per capita it is now one of the poorest. Perhaps the most disturbing feature of the current economic situation is the fact that the oscillations in our trade
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cycles, as measured, for instance, by the unemployment rates or inflation, are becoming progressively more extreme.
There is now a real danger that our economy will become completely unstable. Even if these measures are successful) in reducing inflation to 13 per cent., which even a few months ago would have been considered completely intolerable, we have to consider what will be going on next year in the world economy. Clearly the world economy will be reflating dramatically so that by the end of next year when, with a bit of luck, our rate of inflation will be somewhere around 13 per cent. to 14 per cent., it must be seen in the context of a superimposition of substantial world price increases.
Therefore, we must consider the problem of the British economy in the context of inflation as an insuperable problem at least for the foreseeable future. If we do what has to be done we must first accept once and for all that there are no panaceas. For instance, it is argued, quite rightly, that one of the major failures of the United Kingdom is in its productivity per head—that we produce per man in this country barely half what other countries are producing. This has been referred to on several occasions in the debate.
One rather bland but correct answer is that we should invest more. However, when we look at the figures about precisely what is required in terms of investment to raise our level of investment, for instance, per gross national product, to the levels of those of our partners, the nature of the task becomes formidable.
At present we are investing about 20 per cent. of our gross national product. If this was to be raised, say, over a period of five years to the levels that our trading partners invest per GNP, we would have to change 20 per cent. over five years into 35 per cent. This would mean a deteriorating level of real disposable income of about 2½ per cent. per year which would have its own effect upon the rate of investment. Therefore, I suggest that there are no simple panaceas even when we examine the question of investment.
Those of us who are directly involved in the political processes have done our

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country a great disservice in pretending that there are any short cuts to salvation. We have taken an age to get into this mess. It will take an age to get out of it. I completely agree with the remarks made by the hon. Member for Liverpool, Walton (Mr. Heffer). The only question now must be whether we can set our sights sufficiently far ahead and develop determination to think deeply about the matter. The one factor which may give some edge to our determination and willpower must be that we simply cannot continue on the course we are on at present.
There are only two clear options before us. The first was outlined by the hon. Member for Liverpool, Walton. It is clearly the Socialist alternative outlined broadly in the amendment in the name of of the hon. Member for Walton and his hon. Friends. My only comment is that it must surely imply total control of the economy. There is quite a bit of dichotomy on the Labour benches between those who seem somehow to accept total control and those who accept total control of everything except wages and labour. The very first aspect of the economy which would have to be controlled in a totally Socialist economy would be the movement of labour. There is only one country which has, with a limited amount of success, developed a totally Socialist economy and that is East Germany. This has been achieved at the price of complete loss of personal freedom.
If we are to continue to preserve our liberties and at the same time to regenerate the economy, there has to be a complete change of rhetoric and philosophy by which our actions are guided. We must begin by changing the emphasis from an obsession with the spending and the distribution of wealth to a new consideration about how it is to be created.
I believe that at a personal level we must somehow detach status from the process of consuming and transfer it to those who have the capacity to work and take the risk. There will have to be a new sense of values by which the adventurous and hard working will be the first claimants upon rewards. There will have to be an acknowledgement that the rewarding of success will generate the wherewithal to compensate the un-
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successful. There must be no apology for policies introduced within the framework of these principles.
The trend by which trading profits over past years, for example, have fallen from 11·5 per cent. to 4 per cent. as a percentage of costs must be reversed. Marginal rates of taxation which, as the Chancellor of the Exchequer mentioned in his speech, are now amongst the highest in the western world, contrary to the general opinion of hon. Gentleman opposite, must be reduced.
Public spending, as has been said many times in this debate and elsewhere, must be brought down or reversed from the trend which, over the past 15 years, has increased it from 35 per cent. to 50 per cent. of the GDP.
Savings must be not only indexed, but rewarded, as was conventional and traditional.
Above all, there must be a search for a new sense of confidence on both sides of industry. The whole implication is that the problems with which we are faced—I believe that inflation is merely a symptom, an outcome, of our present economic problems—have now gone well beyond the reaches of economists and theoreticians. They belong absolutely and properly to the kind of debate that we have had tonight.
The real argument lies between the kind of points put by the hon Members for Walton and Tottenham and the broad objectives and reversal in current mythology and ideology which I have been trying to suggest. That is the real argument and this is where it should take place.
The kind of recipe which has been put forward by, for example, the hon Member for Berwick and East Lothian—a kind of half-baked moderate Socialism—is the single definite recipe for disaster. We cannot have half-baked Socialist measures, which happen to include high rates of profit tax and regressive nationalisation of British industry, as a backdrop to a policy of trying to manage a mixed economy, as the moderates within the Labour Party would have us do.
I believe that we must have either total Socialism—that is one way out of our problem, but it is not one that I should support for the reasons that I have given

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—or a mixed economy run within the rules of the game.
10.33 p.m.
Mr. Raphael Tuck: I am bewildered—I often am in this House—at what I might call the polarisation between hon. Members. On the one hand, there are those who take the view that we must have an incomes policy, either statutory or voluntary, because we must control wages. Wages, they say, are the great evil. On the other hand, there are those who say that we must let wages go sky high, but control prices and invest.
I have always been against a statutory incomes policy. However, it seems that the Government have no alternative if the voluntary policy will not work. But why use only one blade of the scissors? Why not have both blades working at the same time? I submit that we cannot use one without the other.
Mr. Fisher, of the National Union of Public Employees, recently said that a Price Commission without teeth is a disgrace. Mr. Bowman, of the National Union of Railwaymen, said that we could not expect the unions to follow or to tie in with the Government's lead unless we maintained control of prices. He said that there would be no support from the unions unless prices were regulated and held down. I think that he is right. If we want the unions to support us we must hold prices down.
There is, however, no mention in the White Paper of a freeze on the prices of essentials. At Question Time today I referred to the proposals of the National Consumer Council for a price freeze on essentials. It is a great disappointment that little has been done or is to be done to reduce prices during the autumn and winter. I pointed out this afternoon that producers are also consumers and, therefore, their wage demands are bound to be influenced by the level of prices. But the level of prices will not come down unless advance action is taken on prices. Unless such actions begin now, the Government's policy will be undermined from the beginning.
The Government hope, that, if there is a pay limit, price increases for essentials will be held down by retailers. What a pious hope. It is doomed to disappoint-
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ment. Why not step in with subsidies to hold down prices. [HON. MEMBERS: "Oh."] I hear grunts of disapproval from hon. Members on both sides, but surely that would ensure that price rises were cut to 10 per cent. until wages and other costs and then prices came down to the target level. Then, and only then, should additional subsidies be withdrawn.
It is very disappointing also to read what the White Paper says about the nationalised industries. Massive increases are proposed in postal, telephone and gas charges, but instead of introducing subsidies, the Government are phasing them out. How can the Government expect workers to make sacrifices if they see prices constantly rising? I warn the Government that if there are massive increases in postal, telephone and gas charges, they will be followed by a spate of wage demands from the workers—and who will blame them if they see prices going up and up?
I refer my right hon. Friend the Secretary of State for Prices and Consumer Protection to what the Irish Republic has done. On 26th June, Mr. Ryan, the Minister for Finance, announced in the Dail cheaper food, fuel and public transport. The Irish Times reported:
"The Government has decided to apply subsidies as soon as possible to CIE, reducing fares by an average of 25 per cent."
we are increasing them—
"and to bread (5½p a loaf), flour (4½p a kilo), butter (10p a lb.), milk (2p a pint) and town gas (12½ per cent.). Value Added Tax will be removed from electricity, all fuels except road fuels, and clothes, clothing materials and footwear … Subsidies will be made effective 'as soon'"—
as possible—
"and the net effect of these measures … would be to reduce the Consumer Price Index …"—
Mr. Crawford: Does not the hon. Gentleman realise that the Republic of Ireland Government are trying to break free of the United Kingdom pound, and that is why they are taking these measures?
Mr. Tuck: The motive does not concern me. I am concerned with what is being done, and its effect.
The report continues:
"The Minister announced an increase of £27 million in public capital expenditure—on housing, telephones, industry and agriculture …".

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The Minister needs to recoup himself. How will he do it? In fact,
"he announced a 10 per cent. surcharge this year on all income tax paid at rates of 35 per cent. in the £ or over."
Is that not common sense? Mr. Ryan justified the imposition of the income tax surcharge by saying that collective and individual actions to cope with our economic problems could not be painless and maintaining:
"It is only equitable that the relatively better-off should be called upon to make some temporary financial sacrifice."
Mr. Mike Thomas: Will my hon. Friend note that the Irish Government are producing an "essentials" budget financed from direct taxation, which is a totally Socialist approach to the problem? The Irish Government are also providing that certain categories of consumers—particularly pensioners—shall be entitled to certain commodities free—notably they will receive a free allowance of electricity.
Mr. Tuck: I am grateful for that intervention. I, too, am a Socialist. Right or wrong, I firmly believe in Socialism. I ask my right hon. Friends seriously to consider what I have said and to use what I have termed the other blade of the scissors. If they do not, then, despite all the incomes policies in the world—voluntary or statutory—they will be doomed to disaster.
10.41 p.m.
Mr. Nick Budgen: It is hardly surprising that much of our discussion has been upon the relative merits of wage control, the statutory control of wages and the whole panoply of price and wage control. My right hon. Friend the Member for Finchley (Mrs. Thatcher) spoke of the practical advantages of wage control. She said, rightly, that in certain circumstances statutory or voluntary control of wages might reduce the level of unemployment. She spoke also of the psychological effect that a period of wage freeze or control might have upon inflationary expectations. I thank her also for what she did not say. She did not pretend that wage control had any effect in curbing inflation.
The practical disadvantages of any form of wage control are equally obvious. Such a policy may easily be put forward
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by any Government as an alternative to necessary measures. Indeed, it is plain from the present package that the Government envisage some form of wage control as an alternative to cutting Government expenditure. Secondly, it is plain that forms of wage control have been tried so often since the war that instead of becoming a psychological depressant upon wage claims they have, if anything, become an irritant, and when wage controls are finally taken off the pressure upon wages is even greater than it was before the controls were imposed.
Unlike my hon. Friend the Member for Eastleigh (Mr. Price) I am not a pragmatist in my attitude towards wage or price control. I am fundamentally opposed to it for deep philosophical reasons. There is no better way of dividing the nation and creating deep resentment between all classes of our people than for Government after Government to blame one section or another for the creation of inflation. It is no more just for the Government to blame the workers for inflation than it was for the last Government to blame property speculators for the last period of inflation—or indeed to blame the anchovies as they took a different course in the waters around South America. There is no policy better designed to set class against class. It is only when the Government admit that they, and they alone, create inflation, that we shall have set the condition precedent once again to becoming a united nation.
I am also philosophically opposed to any form of wage and price control, as any freeze stultifies the market in labour. It prevents the man who has labour to sell from moving from a loss-making firm to a profit-making firm.
In the long term any formula of wage or price control is arbitrary and unjust. If the present proposal is that we should have a long-standing control of both wages and prices—which, from some of the remarks which the Chancellor of the Exchequer has made over the past fortnight, we may predict—it will create great anomalies. Some people will be caught. Some will escape through the net.
Mr. Arthur Lewis indicated assent.
Mr. Budgen: As a member of the self-employed I have always been amongst those who have escaped through the net. I do not blame the self-employed for that. They are an example of a class that is frequently hated during a period of statutory wage controls.
Mr. Arthur Lewis: The overwhelming majority of Members of Parliament who support this wage freeze are lawyers. During all these periods they fix their own fees. I read recently in the newspaper that Sir Comyns Carr, Q.C., will fix the refresher fee at hundreds of pounds.
Mr. Budgen: The hon. Gentleman illustrates very clearly the resentment which one class in society feels towards another. Frequent periods of wage restraint have taught him to look at other people's incomes. He does not accept the oddities and anomalies of life and say to himself "That is the market economy working in all its strange ways." No. He says "There is a class which earns more than I. Let us stop them. Let us see whether we can find some way of creating an even better and fairer form of wage control."
Indeed the unhappy scene of last Wednesday illustrated perhaps best of all that each class of society, each profession, tends at the beginning of a period of wage control to be in favour of the control of other people's wages. I am opposed to that. I believe that the right to bargain for the best wages is the single most important freedom possessed by many of our fellow citizens. Those people perhaps are buying cars on hire purchase. Perhaps they do not have an assured position in society. But their position in the family and in society rests most of all upon the size of their wage packet. If they cannot bargain for the best wage packet going, we have infringed the single most important human liberty they possess. A long-standing infringement of that right is unlikely to be supported by the mass of the people for very long.
But do not these proposals also lead to a constitutional danger which is even more important? They lead to the corporate State and to a deal between the TUC and the CBI. I make no attack upon the TUC. At best it represents 10 million people. Some of us might argue that it does not represent that
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number. It represents the 1 million people who vote in that way.
I do not wish to attack the CBI, although it is difficult to know who that body represents. However, it certainly does not represent the 14 million children to whom my hon. Friend the Member for Woolwich, West (Mr. Bottomley) referred in his most moving maiden speech, the 13½ million mothers of whom he also spoke, or the 7 million pensioners. However, we in this House for all our numerous defects, represent all those constituent parts of the nation, and if we surrender our right to control inflation to other bodies, whether they be the TUC or the CBI, we shall be denying our basic duty to the nation.
Therefore I believe that there are profound philosophical and practical arguments against any form of statutory or voluntary interference in the level of wages. Of course, it is true that the alternative of accepting the monetarist argument for controlling the supply of money and of cutting back Government expenditure is a painful course—a course which needs courage and consistency in advocating. However, I believe it to be the only alternative which is consistent with a free society. It is, therefore, for those fundamental reasons that I can give the White Paper only a tepid welcome.
However, there are reasons for arguing that the White Paper is not wholly bad. At least the Government have recognised in the first paragraph of the White Paper that their overriding obligation must be to reduce the rate of inflation. They have recognised the importance of cash limits in cutting Government expenditure and of keeping a tight control over bad credit.
For those three reasons one cannot say that the White Paper is wholly bad. That, perhaps, provides a respectable reason for abstaining on the main Question.
10.53 p.m.
Mrs. Renée Short: Although very little time remains for me to put the points that I was hoping to put, first, may I agree with my right hon. and hon. Friends who have put forward the thesis that the system under which we live has failed, that capitalism is not delivering the goods, that the crises which are occurring at increasingly frequent intervals, are creating fantastic difficulties for everyone and that

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we are now facing what may well be our last opportunity to resolve the problem.
Is the White Paper likely to find the solution? I support the flat-rate proposals because they are fair to all wage and salary earners. However, many of the other weapons available have not been used and should have been used. In my view the White Paper will fail simply because it does not use those weapons.
There is no argument that British industry is now spiralling downwards and that means that unemployment is rising. Important areas such as the West Midlands—in which the constituency of the hon. Member for Wolverhampton, South-West (Mr. Budgen) and my constituency are located—where there is a vast concentration of engineering skills and talent, are now suffering a catastrophic level of unemployment with an enormous number of short-time workings imminent and a contraction of job opportunities and apprenticeships for young people. We face the prospect of thousands of young school leavers with no opportunity of employment. They are the next generation of the engineering skills that the nation needs if it is to survive.
Investment is not forthcoming from private sources and therefore, this lack must be filled by the State. We have the National Enterprise Board and the planning agreements which, we hope, will provide a dramatic increase in the capital needed. However, that is a fairly long-term view and until that can materialise urgent action is needed to salvage the best of the firms—firms that are in danger—and to bring new opportunities to men and women. Women have a very important part to play in our economy if only we would allow them to do so. No one has said a word about women during the course of this debate.
In my constituency, urgent and immediate is the problem of what is to be done to take into public ownership Britain's remaining motor-cycle industry—Norton Villiers Triumph. If we let this go to the wall we shall leave the world motor-cycle market to the Japanese, Italians and Germans. A commitment was made by the previous Secretary of State for Industry. I have in my hand a copy of the letter in which it was made. That commitment must be
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honoured, because the livelihood and happiness of about 20,000 families in Wolverhampton and other parts of the West Midlands depend on these jobs. Their enthusiasm for their project is enormous. They are determined to fight for it. The Government cannot let them down. If they do, they will not be forgotten, and it will not be forgotten. If the Government let NVT down, unemployment in the West Midlands will rise to 5 per cent. or more.
These are acute problems. Those of us who have been Members of the House since 1964, as I have, will know that we have been through all this before. We have had Ministers beating their breasts and saying, "Never again shall we endeavour to introduce a statutory incomes policy or anything of that kind. We shall not again try to put the main burden of resolving our economic problems on the shoulders of workers. We shall not blame wages any more for our inflationary situation."
The Opposition can offer us only cuts in public expenditure. That is the recipe they followed previously—when Mr. Barber was Chancellor of the Exchequer—with disastrous results, to the spending Ministries, particularly social services, and local authorities. The White Paper offers no alternative to putting the main burden on wage and salary earners.
As our industries are contracting our balance of trade worsens because more and more manufactured goods and industrial products are imported. That is the position we are seeing now. Between 1970 and 1974 the volume of manufactured goods imported rose by 67 per cent.—nearly twice as much as our exports of manufactured goods, which rose by only 35 per cent. This surely is the road to ruin.
The Government cannot sit back and allow this to continue. We cannot allow our motor-cycle and car industry, our shoe and textile industry and our industrial machinery industry to collapse while allowing unlimited imports of all these goods to come pouring in. I do not know what the House may think about it, but the West Mercia Police has recently given us a marvellous example. They have decided not to buy British cars but to import 18 BMWs at £5,000 each. Why on earth do they have to do this? Why is it permitted?

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We are also importing enormous amounts of food from all over the world. We import half the food we use. We could produce a good deal more. It has been estimated that about £700 million could be saved on imports of food if only we would allow our farmers and agricultural workers to produce what we need.
What is urgently needed now is control on the goods I have mentioned so that we can produce these goods. As long as we import so much manufactured goods and other goods our own industries will contract and job opportunities will disappear. We also need to cut down immediately on all imported luxury foods. It is not necessary to bring large quantities of out-of-season foods from all over the world simply to titillate the palates of those in a position to pay high prices for them.
If we were to do these things urgently—only the few that I have time to mention—we could instil some sense of urgency into the problem. We could make people understand that the position is serious.
We could make clear that we are not expecting working people to make their contribution to solving our inflationary situation by having their wage and salary increases held back in the face of rising inflation, but that other proposals will be coming forward to increase job opportunities and reduce the disastrously high level of imports. We could then make a small contribution to the immediate problem of closing the gap between imports and exports.
11.1 p.m.
Mrs. Sally Oppenheim: My first two tasks are extremely pleasant. I am sure the House will welcome the news that my hon. Friend for Wycombe (Sir John Hall), who collapsed earlier in the day, is recovering in hospital and is expected to be discharged tomorrow morning.
Secondly, I would like to congratulate my hon. Friend for Woolwich, West (Mr. Bottomley) on his excellent maiden speech. He spoke with a great deal of compassion from a background of expertise on a subject he obviously understood. One of the most charming aspects of a charming and interesting speech was his justified and understandable paternal
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pride in his new constituency and constituents. I am sure the whole House will look forward to his contributions in future debates.
There have been two notable features about this debate. First, there has been the thread running through almost every speech that over 10 days after the Chancellor's statement and more than a week after publication of the White Paper, Members were still unable to tell whether we were discussing a statutory, voluntary, compulsory-statutory or compulsory-voluntary pay policy.
Secondly, almost every hon. Member on this side of the House and a number opposite expressed relief that at last the Government are facing up to the implications of the disastrous inflationary crisis to which they have brought us.
But the White Paper which is entitled "The Attack on Inflation" could have been more appropriately entitled "The Day the Chickens Came Home to Roost", because, if it represents anything, it represents an admission by the Government of the complete failure of their policies and their disastrous Social Contract.
The White Paper could only have been debated against the background of the current economic situation and in the light of the record, and it is not surprising that a number of hon. Members have spoken of the disastrous chain of events leading to this country after 16 months of Labour Government having practically the worst rate of inflation in the world.
Whereas the Government have shown some belated recognition of the seriousness of the crisis, they have shown no recognition of their own culpability. They have shown a massive misjudgment which their credulous belief in the social contract constituted, the irresponsibility of a Government who, in opposition, gave not only tacit support, but actual encouragement, to inflationary wage claims at a time when we were trying to control inflation—a lack of responsibility incidentally that led as much as anything else to the three-day week and, perhaps more than anything, to the collapse of their own social contract.
They can hardly blame the trade unions for being surprised at the re-allocation of priorities away from political expediency towards the conquest of inflation when

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the Labour Party came to power. My hon. Friends were right to point out in this debate the deception of that "blue skies round the corner" election campaign which cruelly misled people and reinforced expectations still further. We are also, above all, right to point to the neglect of the Government in sitting back for the 13 months during which they were content to watch prices rise at a record rate, month by month, more concerned with making excuses for the social contract than getting to grips with inflation. This was followed by three months of inert acceptance of the fact that all was not well with the social contract, a period of insane euphoria which led to the 11th hour panic, the appearance of the Chancellor in the House a couple of weeks ago to make a statement with all the forethought of Ethelred the Unready, and of the White Paper itself.
And so to this dismal catalogue of culpability we add the profligate levels of expenditure with which my right hon. Friend the Leader of the Opposition and practically all of my hon. Friends have dealt this afternoon. It is the sum total of the Government's culpability which has brought them to the House today, White Paper in hand, the victims of their own misjudgment, irresponsibility, deception, neglect and extravagance. If they were the only victims it would not be so bad, but they have made the country and the people victims, too, as so many hon. Members have said, including my hon. Friend the Member for Woolwich, West.
Far from creating the compassionate society to which they so often give lip service, they have created a society in which, over the last 16 months, advantage has been concentrated not where the need was greatest but where the greed was greatest. A society in which people are going to have to pay a grim price for a long time to come for the spoils that only a few have enjoyed, a society in which mounting unemployment and seething inflation are eroding living standards daily and causing hardship and fear among millions of people.
That is the record of the Government and that is the background to the White Paper, which contains no expression of regret from the Government for their avoidable failures. The package itself, which is ill-prepared, which is largely in-
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adequate and in some ways unfair, carries the depressing implication that the Government intend to meet the very serious dangers that we face with half measures and compromise, and without the other essential measures which are necessary to conquer inflation and bring their own spending under control.
The Government have launched their lifeboat without any oars with no auxiliary engine and one, moreover, which could prove to be as leaky as a sieve. In spite of the Government's assertion that the Price Code solution will work there appear to be a number of loop-hopes, which no doubt the Secretary of State for Prices and Consumer Protection will deal with.
Quite apart from the loopholes about which the CBI has expressed concern—the question of incremental payments and the worries about the TUC appendix to the White Paper, referring to special cases—there are a number of major credibility gaps which must be filled before the Government can carry conviction. Not least of these is the publication of the statutory back-up Bill which, by the time it is published, will probably become the statutory back-down Bill. In view of the Government's remarkable attitude today it is not surprising that no one can be sure that they will produce it, if necessary, in time.
We heard from the Chancellor today that it will be introduced only if pay limits are endangered, but who is to decide if and when that happens? Will it be the Government who have sat back for 16 months and allowed breach after breach of the social contract? How many breaches of their new pay limits will the Government condone? How much more fatal delay will there be before they acknowledge or admit that statutory backup powers may be necessary. Or are they prepared to sit back and wait for our creditors to impose far more unpalatable measures on the country?
I wonder whether the right hon. Lady can tell us—this may be an important loophole in the proposed amendments to the Price Code—whether she proposes to take powers through the Price Code to limit export prices. We are not advocating this, but—[Interruption.] I am just exposing one of the possible loopholes. I am trying to help the Chancellor

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by pointing out loopholes which he may wish to close.
If there are no limits on export prices, what is to stop a company with a big export trade giving an excessive wage increase and financing it through higher export prices? That may or may not in itself be harmful, but what would be harmful would be the precedent created by the payment of such a claim and the leapfrogging effect it would have.
Then there is the question of industries which do not produce a standard product and which have contractual agreements, such as the construction industry, which are subject not to price control but to profit control. Will they be exempt? Will they be able to meet any sort of excessive pay claims? Having had only a cursory look at the consultative document at this stage, I am not sure whether this is dealt with in paragraph 11 of that document. Perhaps the right hon. Lady will tell us.
As for the nationalised industries, how tough will the Government be? Already we have seen evidence of double-talk in the White Paper and double-talk in the Chamber today, and it is the nationalised industries which are driving consumers to distraction. In paragraph 10 of the White Paper we see the ambiguous phrase:
"The Government will ensure strict observance throughout the public sector".
Precisely how will they ensure strict observance? Will they outlaw strikes? They have not said so. Apparently, there will be volatile pay limits in nationalised industry. The Chancellor admitted that the powers were less than absolute there.
In paragraph 19 of the White Paper, we see the phrase "excessive pay settlements". Does the reference to "excessive" pay claims in the nationalised industries mean anything whatsoever in excess of £6 or not? If it does not mean that—and it is ambiguous—the House and the country are entitled to know.
So long as these questions remain unanswered, as well as the other important questions raised by my hon. Friends and hon. Members opposite during the debate, the Government will not carry conviction in the House, in the country or in the world outside that they really mean business, that they fully recognise that there is no time left for trial and error or for retreat, and that playing with words is no substitute for effective action.
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I have been interested to hear hon. Members on the Government side talk about the monetarists in the Conservative Party as though this were some new and strange disease. They might look for a moment at the monetarists—the not very successful monetarists—in their own party. I remind them of what the right hon. Lady herself said in the Standing Committee on the Prices Bill in 1974:
"There are broadly two means of fighting inflation. One is a general attack on the whole level of inflation, upon the general pressures of inflation and on the retail price index. One may do that by sensible economic management and by reducing the borrowing requirement. The present Government"—
she said, in response to my hon. Friend the Member for Oswestry (Mr. Biffen)—
"are going nearer the hon. Member for Oswestry than his own party did in this respect."—[Official Report, Standing Committee D, 14th May 1974; c. 208.]
That was in May 1974. Since then, of course, the public sector borrowing requirement, as one of my hon. Friends said, has risen to nearer £11,000 million.
I was interested also in the remarks of the hon. Member on the Government side who made an impassioned plea about monetary policy and in favour of income restraint—
Mr. Arthur LewisWages restraint.
Mrs. Oppenheim: —or wages restraint. If the monetarists are so frightening, how is it that almost every head of a family and every housewife in the country is a monetarist? They do not spend a great deal more than they have or more than they can borrow, and, unlike the Chancellor, they do not have a little printing press up their sleeve if things go wrong. They have to manage to balance their budgets.
I was admiring the hon. Member for Liverpool, Walton (Mr. Heffer), because to have been a member of the Parliamentary Labour Party as long as he has and to be able to avoid cynicism is quite an achievement. Still to be able to express surprise that something in his party's manifesto was not being carried out was a most engagingly naive quality. Does he not know, has he not learned yet, that for his right hon. Friend the Prime Minister there are no yesterdays and no tomorrows; only the political expendiencies of today? I am afraid that he will have to learn it the hard way.

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The right hon. Lady the Member for Lanark (Mrs. Hart) gave a rather depressing impression that once her mind was closed, there was absolutely no way of opening it.
The hon. Member for Walton spoke quite rightly of the fact that not everybody's pay was concerned in the inflation that we have in this country. That is absolutely true and the cause of a great deal of the resentment. We all have in our constituencies working people and people at work who have not received these enormous pay increases. The hon. Member was right too, to say that it is not always pay that is to blame, but it is largely to blame for this particular cycle of inflation that we have today.
Although it would be very foolish to pretend that it is always to blame, the hon. Member did not take account of the fact that the last Price Commission report made it clear that pay was the major factor in inflation at present. What was really frightening was the speech of the hon. Member for Tottenham (Mr. Atkinson). Has he only just woken up to the fact that there are no soft options left, that there is no easy way out and no way now to protect living standards over next year and probably for longer than that? If he still thinks that there is an easy way, the implications of what he said are even more frightening.
I turn now to the part of the White Paper, paragraphs 29 to 34, to which I assume the right hon. Lady will want to address a number of her remarks. It is entitled, somewhat ironically in the circumstances "Prices and consumer protection", ironically because the professions of concern about prices and consumer protection in paragraph 29 coming as they do from the Government and the TUC who have stood by and let consumers be exploited by the big batallions as never before over the past 16 months, sound rather hollow, because not only have they exploited consumers, but in doing so they have ensured that the resources that would otherwise have been available from the Government, from business and industry for further consumer protection measures are simply not there. If paragraph 29 is notable for its irony, it is also notable for the blinding originality of the elementary way in which
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it expresses what I should have thought would have been a self-evident truth about the relationship between pay and prices, which in my innocence I should have thought would have been made abundantly clear when the social contract was first negotiated.
If paragraph 30 is striking in its originality, paragraphs 33 and 34 are striking too for the way in which they illustrate that the Government have not only run out of time, but room to manoeuvre as far as prices are concerned, and, far from the rosy commitments that they have given in two election campaigns, they have no more scope left for any further action on prices or for any further freeze. This is of course the beginning of the end of what is to happen in terms of prices over the next six months at least. It has happened because of the extent to which profits have been eroded over the past year by wage costs, which has meant that some industries, especially the food industry, are in serious trouble. At Question Time today the right hon. Lady confirmed that the Price Commission report will show that profits have been halved—such profits as were left—over the past year and that most of the retail trade is finding profit margins below reference levels. Therefore, clearly, they cannot be pushed any further.
One of the manifestations of the great disadvantages to consumers of this situation is that there is already a noticeable reduction of choice, because manufacturers and retailers have been squeezed by the stringent application of the Price Code, and by inflation they are forced to reduce their stocks, forced to reduce and limit the number and variety of goods that they manufacture and offer for sale. If it continues, some of those goods will not be manufactured at all, leaving the way wide open for the importation of those goods at higher prices.
The Government will have to face the reality that, just as you cannot make people work for less money than they think they are worth, so you cannot make manufacturers or retailers produce and sell goods at little or no profit. If this is taken to its logical conclusion, it will be consumers who lose out every time.
Given that the Government are left with no scope for further price freezes or stringent controls, prices will continue to rise quite sharply in the short term, as Labour Members have indicated, as the

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White Paper accepts, and as the right hon. Lady has acknowledged, but they will also continue to rise in the medium term, because of the pressure of wage settlements still working their way through, and the higher price that must be paid for the goods we buy abroad with our devalued pound. At the very best, if the Government's policies are 100 per cent. successful, the very least that will have happened is that the Government will have inflicted nearly two years of the most damaging and disastrous inflation that we have ever had.
If paragraphs 30 and 31 demonstrate how little action the Government can take about prices, the paragraph on the shopping basket, paragraph 33, and the paragraph on food subsidies, paragraph 34, demonstrate the insignificance and the cosmetic nature of what they do propose, we have all the old familiar ingredients of the window dresser's art, Shirley's shopping basket and food subsidies. They have been taken down off the shelf, dusted over and put back in the window. But in this case the old price does not pertain. Not surprisingly, that perennial constituent of any social contract, food subsidies, rears its head again.
Mr. Heffer: Would the hon. Lady care to explain, in the last seven minutes of her speech, what the Opposition's alternative is? We on our side of the House, in the Tribune Group, have put forward an alternative policy. People either agree with it or disagree, but at least they know where we stand. I am fascinated to hear the hon. Lady's arguments, but I should like to know where the Opposition stand. Will she explain what their policies are, and what they believe?
Mrs. Oppenheim: I am sorry that the hon. Gentleman has forced me to notice that I have only seven minutes left. I do not want to deprive his right hon. Friend of her time. I suggest that the hon. Gentleman does me the courtesy which I did to him, which is to read our amendment. I have read his, and if he reads ours he will see precisely what we mean.
The only relevant fact about food subsidies, about which a number of hon. Members have spoken, and which is the occasion of massive Government expen-
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diture, causing some of the inflation about which we are talking, is that although they may be saving the average family about 75p a week, and a larger, poorer family something more, that larger, poorer family is probably having to spend more than £10 a week more to live than it did last year, as a result of inflation, partly generated by expenditure on food subsidies.
As for the proposal not to reduce the amounts spent on food subsidies in 1976–77 by £70 million, as far as one can calculate—and this must be variable, because there are many unknown factors—this will be worth about 2½p per person per week. Not only can it be claimed that it is not very significant, but it is no more than a socially inconsequential but expensive hiccup in the phasing out of food subsidies, to which the Government are already committed.
In paragraph 33 we have that old inflation-beater, Shirley's shopping-basket. I am not sure whether the right hon. Lady has noticed, but she has a big hole in her basket. With the same money which would have filled her basket when the scheme was first introduced last year, given the items that she specified, she can now fill it only a little more than two-thirds full. I hope that her new basket will be a good deal more robust than the old one.
Even if the right hon. Lady had not had a hole ripped in her basket by inflation, we could never have told exactly how effective it was going to be. Much depended on cross-subsidisation, which meant that the prices of some things went up and the prices of other things went down. There could not be any monitoring because of the amount of promotional activity taking place at the time that the scheme commenced. The one thing we knew about the scheme was that it applied to only one brand and only one size of the items specified. Therefore, not unnaturally, those items for which there was the least demand were the items selected for promotional offers. I hope that the right hon. Lady will tell the House whether her new shopping-basket will be based on a similar scheme.
The right hon. Lady will appreciate too that the scope for concentrating on food items is extremely limited. Will she tell the House in what way she is to extend her basket and whether the rumour

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we have heard is correct that she will include in it such family necessities as cinema tickets, beer and other items which may not be considered by many hon. Members to be items which are of fundamental importance to families.
I know that time is limited, but I ask the right hon. Lady what will happen to her shopping basket if the £6 limit becomes not a maximum but a norm in the distributive industries, and if more than 23 per cent.—and most of it can be passed on in prices—is passed on on the very items in her basket on which she hopes money will be saved?
On paragraph 32 I offer a very small welcome for the slight increase, for what it is worth, in consumer advice centres. I hope that the Government realise that some of the most successful centres are operating on far lower budgets than they otherwise accepted as the norm.
I do not propose to speak at length on the Price Code amendments because my colleagues and I have not had much time to consider them. The amendments were published only just before the debate began. However, there are two matters that I must reiterate clearly, because this is a fundamental part of the Government's policy for overcoming inflation. First, I reiterate that it is unfair to place the entire onus on employers, whatever the consequences and in so doing to imply that even the most militant union is above reproach. This is a policy emphasis which no doubt owes something to the Prime Minister's voracious appetite for scapegoats. Now to the Gnomes of Zurich and the wet ducks of the cocktail party circuit we have the rogue employer pressing for excessive pay increases on unwilling workers.
Mr. Mike Thomas: What would the hon. Lady do?
Mrs. Oppenheim: I am coming to an important point. The House will understand that I have only two minutes left as I started after 11 o'clock. I turn to a point to which I hope the right hon. Lady and the hon. Member for Walton will listen. The Government have carefully not made it clear that very high unemployment is the inevitable consequence of non-compliance with the Price Code sanctions. If an employer is to be faced with not being able to pass on a
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price increase and with going bankrupt, apparently he is to be allowed to do so. If he is to be bankrupted by a long, crippling strike, he is to be allowed to go bankrupt. Alternatively, if he absorbs the price increase and has to lay off a large part of his work force, he is to be allowed to do so. I must ask the right hon. Lady to tell the House whether it is the Government's intention, and indeed central to their policy, to allow the bankruptcy and unemployment that would arise from non-compliance and from the sanctions which are imposed under the Price Code and, if this is so, whether the whole policy can only succeed if there is acceptance by those with big bargaining power that this is the case. Will the right hon. Lady make it clear to the House whether the Government are prepared to stand by this policy whatever the consequences, in which case the country may just as well know that the Government's main sanction against breaches of the pay limit is high unemployment? Or is it, alternatively, that the Government intend to let the small companies go to the wall and take a Government stake in the bigger companies?
Finally I sound a note of caution to the Prime Minister—
Mr. Mike Thomas: Tell us what you would do.
Mrs. Oppenheim: The hon. Gentleman is depriving his right hon. Friend of the chance to answer some important questions. I am about to tell the hon. Gentleman what we would do if he will listen. So far, since this Government came into power, consumers have felt let down as never before. If people are to make sacrifices the least that they can expect is a resolute Government. If people are to face a difficult time and a great deal of hardship they are entitled to feel, and will need to be persuaded, that the Prime Minister will pursue a much broader concept of consent than he has pursued so far. The consent he has pursued and won is from a narrow sectional interest—the leaders of the TUC who represent less than half of the people at work. This is important but the right hon. Gentleman will also have to obtain the consent of the vast majority of people in the country who are reasonable and moderate who may or may not belong to a trade union, who may be

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employer, employee or neither. Above all, he must get the consent of those who have suffered most from the inflation.
We have highlighted what we believe to be the shortcomings in the Government's policy, as we are entitled to do, as we have a responsibility to do, and as our amendment signifies. However, we join with the country in hoping that the Government's policy will succeed, because the national interest is our interest. [Interruption.] Unlike the Leader of the Liberal Party we reserve the right, if there is compromise or retreat, to expose it, attack it and press for the policy which we believe is necessary. If we could have a really determined Government, prepared to go the whole way to defeat inflation, they would have our support and the support of the country. If the Government want to show their own good faith they could do so by accepting our amendment.
11.33 p.m.
The Secretary of State for Prices and Consumer Protection (Mrs. Shirley Williams): I begin by echoing the sentiments of the hon. Member for Gloucester-(Mrs. Oppenheim) and saying that we on the Labour benches are delighted to hear that the hon. Member for Wycombe (Sir John Hall) is not seriously ill and is recovering. We should like to send him our best wishes for a rapid return to this House. Second, I join in the congratulations to the hon. Member for Woolwich, West (Mr. Bottomley) who made his maiden speech in the debate. He follows a Member of Parliament with a great tradition, for whom many of us had much affection. We hope that he will live up to that tradition. We shall look forward to hearing him again.
The hon. Member for Gloucester nagged at us eloquently, but in the course of her nagging at us eloquently she presented not a single constructive idea, suggestion or plan. All she could do was to recommend to us the Opposition's amendment, which I have read carefully. Apart from saying that it agrees with some of the things the Government say, it goes on to say that it wants to cut public expenditure in unspecified ways by unspecified amounts on unspecified sectors of the economy.
That is not a policy. It is not even an excuse for a policy. It is an attempt to
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avoid stating any policy at all in case someone blames the Opposition for taking a stand. It will not do. The House must recognise, and I believe that many hon. Members in all sections do recognise that faced as we are by a remarkable public response to the attempt to deal with inflation—all right we can all make criticisms about the timing and so forth—it will not do for us to respond by nothing better than the most petty points which can be chucked across the Chamber on an individual footing.
I turn to some of the contributions made to this debate which pointed to how deep are some of the problems we have to face in our society. They are problems of the past year, two years or even five years. They are problems endemic in what has happened in our society over the past 50 years.
Hon. Gentlemen on both sides, including my right hon. Friends the Members for Battersea, North (Mr. Jay) and for Lanark (Mrs. Hart), have pointed to some of the underlying weaknesses with which we must deal—the weaknesses of inadequate investment, the weaknesses of concentration of industrial power and the weaknesses of inadequate attention to productivity. Here I very much accept what my hon. Friend the Member for Basildon (Mr. Moonman) said. What we need to do now as a country, however, is to deal with the immediate threat of inflation and then, side by side with that, to get to grips with these underlying structural problems that have bedevilled our economy for many decades past.
The Government are attempting to do that. It may be that hon. Members, in all parts of the House, do not agree with the way they are trying to do it, but through the reconstruction of industry, through macro economic measures, through planning agreements and in many other ways the Government are attempting to tackle precisely those underlying weaknesses.
It will not do simply to pretend that the country's economic problems existed and started in February 1974, because that is nonsense and we all know it. It is also nonsense for people to pretend that we live in a market economy. We do not. We live in an economy which, whether we like it or not, is constrained by powerful institutions on both sides

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of industry and in society itself. Surely the challenge to us is to find out how one runs such an economy.
We want neither the pure capitalism of Marshall or of his predecessors, Adam Smith and others, nor, for that matter, the purist Socialism which one sees in some parts of Eastern Europe, but something which is neither of those things, something new and evolving, unusual and strange, something to which we have to find new answers.
When my hon. Friend the Member for Birmingham, Northfield (Mr. Carter) said, quite rightly, that we face not only problems of economics but also, in the most profound sense, problems of politics, what he was saying, and what the House is surely capable of responding to, is that we have to find a new politics to go with these new economics and that those new policies can be based in the most profound sense only on consent.
Mr. Adley: May I—[Interruption.] It might surprise Labour Members that some of us are trying to listen with some sympathy and understanding to what the right hon. Lady is saying. Many of the points she has just made are valid. Does she not accept, therefore, that if we are to get away from the old-fashioned political thoughts that she is condemning, and if we are perhaps to try occasionally to support each other across the Floor of the House, it would be a great deal more helpful if that aim is to be achieved if her party would make its modest sacrifice in getting rid of some of the worst doctrinal excrescences of her right hon. Friends' proposals, such as the nationalisation of the aircraft industry? Will she at least accept—
Mr. Deputy Speaker (Sir Myer Galpern): Order. I hope that interventions will not be endless. Mr. Adley.
Mr. Adley: Will the right hon. Lady at least accept that some of us put some store on the Government making sacrifices as well?
Mrs. Williams: Had the hon. Gentleman waited a bit, he would have seen that I am attempting to say some things about what we can agree upon, and one of the things upon which I think we can agree tonight—at least I hope so—
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is the possibility of facing the battle of inflation on a quite extraordinary degree of consent.
One of the things about which I felt rather sad in listening to the debate was how few people seemed to realise what a long way we have come in carrying both sides of industry with us in the acceptance of a new policy, a policy which is in many ways essentially voluntarist, in trying to deal with the inflation which is today perhaps the most immediate short-term evil that we have to cope with. There has not previously been presented to the House a policy which is as open and which has been as widely discussed as this one, both within the House and outside, and one which has carried this degree of consent with it.
Opposition Members criticise the Government for basing the sanctions in the private sector on the employers—[An HON. MEMBER: "Not all of them."]—not all of them, but they do not seem to realise that the CBI itself accepted that sanctions in the private sector must be based on employers and accepted the concept of a Price Code sanction to do this. They do not seem to recognise what a long way it has been for the Trades Union Congress to come to accept the concept of a single flat-rate limit on increases regardless of collective bargaining strength. I suggest to hon. Members opposite, including the right hon. Lady the Leader of the Opposition, that the great merit of the flat-rate approach is that it is simple, that it can be easily understood, and that it has about it—[An HON. MEMBER: "Unfairness."]—not unfairness, but all the characteristics of fairness at a time of sacrifice when no one group can expect to use its strength to maintain its relativities against everybody else. It has the great merit that, at a time of difficulty, everyone is entitled to the same, but no more than the same, and that the strongest and richest must make the major sacrifices.
Mr. Crawford: The right hon. Lady said that the richest and strongest must make the greatest sacrifice. Therefore, should not the South-East of England make a greater sacrifice than Scotland, Wales and the regions of England?
Mrs. Williams: I think that the hon. Gentleman will recognise that, if his assumption is correct—I am not sure that

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it is correct as it once was—that people in Scotland are paid very much less than people in the South-East of England, a flat-rate increase will benefit the Scots far more than people in the South-East. That is the simple arithmetic of this policy. I can only say that £6 on £24 is a 25 per cent. increase whereas £6 on £60 is a 10 per cent. increase. I learned that in the first form of my secondary school. I am surprised that others did not.
I turn now to some of the objections raised by some of my hon. Friends. They object to the White Paper on the ground that it is based upon the false premise that wage increases are the sole reason for inflation. I do not read that in the White Paper and I do not believe it to be true. It is idle to pretend that increases in incomes have not been an important factor, and in the last few months probably the most important factor, in inflation. I want to set out the record not only for them, but for the hon. Member for Gloucester and other Members who shared in the Conservative administration. The causes and sources of inflation are far more complicated than were suggested in the hon. Lady's speech.
Since the summer of 1972 inflation in this country has been accelerating without a halt. It accelerated, admittedly, from quite a low level broadly comparable with that of our industrial competitors. The main engine of inflation in those early months—those who were Ministers in the last administration cannot deny this—was the massive explosion in commodity and oil prices. The index of basic materials and fuel purchased by manufacturing industry in 1972 and the largest part of 1973 soared by about 80 per cent. at any annual rate of 69 per cent.
That jump in commodity and oil prices reflected a redistribution of resources and incomes in the world, not just in this country, between primary producers and industrial countries like our own which indeed required of industrial countries a certain sacrifice in standards of living to make room for it. Whether we like it or not, that was one of the basic engines of inflation. It is no use pretending that it was not there. It was, and we have to live with the consequences of it.
What then happened, as hon. Members opposite may be fair enough to recognise
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was that they took a substantial gamble on what they expected to be a fall in commodity prices coming at the end of 1973. Looking at some of the speeches made in that period, one notices the extent to which they expected, admittedly on the basis of a number of economic forecasts, commodity prices not to continue to go up after the end of that year. That was when they introduced the thresholds, because the thresholds made sense only in a situation in which they were likely not to be triggered and in which they were likely to give a guarantee to employees that their standard of living would be protected. But the gamble was wrong. The thresholds were triggered no fewer than 11 times and consequently the RPI was set 5 per cent. higher than it would have been had there been no thresholds.
Either the Conservative Government were wildly irresponsible in introducing thresholds or they made, as any of us can, a wrong estimate of the future. But it does not do to pretend that thresholds made no contribution to what later happened to the RPI, because they made a substantial contribution, and they meant that the social contract based as it was on the RPI, started at a higher level than it would have done had there been no thresholds.
Mr. James Prior: I have been following the right hon. Lady's argument very closely and I agree with much of it. Perhaps it is a pity that her party did not recognise it in 1972–73. Is she saying that had we not introduced the threshold payments so that people were not safeguarded against rises in the cost of living because of the increases in commodity prices wage increases would not have been so great? If so, there is no proof of it.
Mrs. Williams: Yes, I am saying that. The threshold policy made sense only if the underlying forces behind inflation were likely to weaken. In fact, in that period, the underlying forces, which I accept were commodity movements, strengthened and did not weaken, which made a considerable nonsense of the threshold policy.
Mr. Heffer: I am absolutely amazed by my right hon. Friend's argument. She is saying that when the cost of living increased, as it did, there should not have

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been an increase in workers' wages to meet the increase. Is she arguing as a Labour Minister that workers' wages should not keep up with the rise in the cost of living?
Mrs. Williams: If there has been a sudden savage increase in commodity prices, room must be found to meet it, because one cannot pretend that it does not exist. If my hon. Friend wants me to argue, as I gladly will, that any attempt to make room for it must be made on the basis of protecting the less well off people, I will go all the way with him. But one cannot pretend that an increase in oil prices can be overridden by an increase in incomes which is more than equal to it.
I wish to say a few words about the position that this created for companies. My hon. Friends who have been urging me to introduce a price freeze must recognise what the consequences of the increase in costs, however created, had on the situation of firms. The position of firms has changed rapidly over the past 10 years, and this is a fact which we must take into account in setting our policies. I take that long period to show the way in which things have changed. Gross trading profits net of stock appreciation are half the level of what they were in 1964 as a percentage of total domestic income net of stock appreciation. The fall in the rate of return on capital has been to a quarter of what it was 10 years ago. The effect of the Price Code—and I ask the hon. Member for Gloucester to bear in mind who the authors of the Price Code were—has been to reduce the proportion of reference levels of firms to just over 50 per cent. of what it was at the time that the levels were established. In the case of distributors—the retail trade—the fall has been from 83 per cent. in the first quarter of 1974 to 57 per cent. now. Unquestionably, I believe that to have been right because profits had to make a substantial contribution to the battle against inflation. But it will not do now for people to argue that the Price Code has not operated and should now be operated, because it has operated fairly stringently in the past year. I urge my hon. Friends to consider that profits now are running at about half what they were running at just over a year ago. The consequences of a price freeze would be redundancies, bankruptcies for a number
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of firms and the disappearance of a substantial number of lines of produce from the shops.
There is another factor which I urge hon. Members who care about low wages to consider carefully. One of the effects of the £6 limit is intended to be redistributive. It is meant to help those with low wages as distinct from those with high incomes and high wages. It is a sad truth that some of the lowest-paid industries are those connected with essential consumer goods. The £6 limit for male workers in food manufacturing is not 10 per cent. but 11 per cent., and for female workers 20 per cent. In the clothing industry it is 17 per cent. and in distribution it is 16 per cent. We are not talking about sectors in which the £6 limit is a mere bagatelle but sectors in which it would be perhaps the most substantial increase the workers in those industries had ever enjoyed. To declare a price freeze on essential goods would be to deny to some of the lowest-paid people in the country any possibility of getting even part of the £6 limit let alone the whole amount.
The Government have to make a difficult judgment between these pressures and circumstances. There are encouraging signs that the policy is widely accepted. Perhaps the people are wiser than their own Parliament. There is from them more support, more strongly urged, for this policy than one would believe from listening to debates in the House. If the policy does work—and I hope that it will without the need to introduce any further statutory elements—unquestionably it will take between five and six months for the major relief on costs to find its way through into retail prices. At that point, without disruptive effects upon employment, and without disruptive effects in terms of bankruptcies among companies, we want to introduce our price stabilisation programme.
The hon. Member for Gloucester called it "Shirley's shopping basket". I do not care what it is named but I do care that there should be some response in prices to the restraint we are asking for incomes, and that it should come through at the earliest practicable moment. I wish, with my hon. Friend the Member for Watford (Mr. Tuck), that the earliest

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practicable moment could be tomorrow but it cannot be without the consequences which I have described. I assure him that as soon as we can operate—once the pipeline of costs is beginning to ease—we shall do so. We shall do so not on just what the House has come to call essentials but on the whole range of household goods we all need. That means ovens, consumer durables and all the other items that households need to buy. We sometimes seem to think that only food and clothes are essentials of daily life, but we are wrong in that. The wider the area covered the more effective can be our restraint policies.
I want to say a word or two about the ray of light that may help us on our way. In the last month there has been a marked slowing up in the input prices of the goods we have to buy—less than 1 per cent. for the input prices of food manufacturers and industry. Even the rate of increase in the output index for wholesale goods is beginning to fall quite dramatically. I shall not promise the House that these falls of commodity prices will offset the other cost increases. But I believe at long last that we have the chance to grasp this opportunity and to turn it into an effective fight against inflation.
I wish that I had time to spell out in more detail the Government's intention in respect of the Price Code. Suffice it to say—I underline this—that it is the Government's intention to operate this with private sector employers and with the nationalised industries. We shall not permit any increase above the norm to be reflected in price increases. That means
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any part of any settlement above the norm, and not the element above the norm.
The Leader of the Opposition taxed the Government with their inability or unwillingness to face up to inflation. Perhaps I can make one modest plea. I recall that eight months ago the Government first put forward in the consultative document of last November the suggestion of a price code reflection of settlements above the norm. It was rejected at that time by the Opposition and the CBI. Here we are again. Perhaps it would have been better if we had acted earlier. But we attempted to do so and we did not win the consent that we needed to go ahead with it. We shall do it now effectively in the private sector. I assure the hon. Member for Gloucester that this will apply to any attempt to increase contract prices to reflect settlements above the norm.
The House has seen a considerabl response to the counter-inflation policy from a number of trade unions, the CBI, employers and, I suspect, a wide section of the public. I hope that this time we shall respond to that desire to deal with the most serious short-term problem facing us, and indeed to construct a longer-term policy which will match up to the needs of our society and our economy. But I would urge on the House not to miss this great opportunity to seize the moment, to live up to it and to respond at the level at which people are already responding.
Debate adjourned.—[Mr. David Stoddart.]
Debate to be resumed tomorrow.

ORDERS OF THE DAY

  REMUNERATION, CHARGES AND GRANTS BILL
  Order for Second Reading read.
  Bill to be read a Second time tomorrow,

CHURCH COMMISSIONERS (MISCELLANEOUS PROVISIONS) MEASURE
11.59 p.m.
Mr. Terry Walker: I beg to move,
That the Church Commissioners (Miscellaneous Provisions) Measure, passed by the General Synod of the Church of England, be presented to Her Majesty for Her Royal Assent in the form in which the said Measure was laid before Parliament.
Mr. Enoch Powell: Object.
Mr. Deputy Speaker (Mr. George Thomas): I understand that this is exempted business and is permitted.
Mr. Terry Walker: This measure was generally approved by the Synod of the Church of England in July 1974, considered for revision in November of that year and finally approved in February 1975 by an overwhelming majority. At no stage in the General Synod was there a division.
The measure deals with two distinct matters. Clause 1 replaces Section 3 of the Ecclesiastical Commissioners (Powers) Measure 1936, under which the Commissioners were empowered to augment the income of the bishopric of Sodor and Man up to a ceiling of £3,000 per annum. This figure is now generally accepted to be too low. The clause enables the Commissioners to pay out of their general fund such annual sums as they think expedient to augment his stipend and as a contribution to the expenses of office in this far-flung diocese.
Clause 2 relates to the pensions of the First and Third Church Estates Commissioners and their widows. This provision is understood to be most expedient because at present this is left at the discretion of the Commissioners. The pension is paid on a discretionary basis to the First and Third Estates Commis-
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sioners providing that they have served for 10 years.
The present amount of the pension is up to two-thirds of the salary if they have performed 10 to 15 years service or, if they have, retired by reason of disability, after not less than five years' service. If they have less than five years' service they are allowed at least a pension of one-third of the salary. This measure will bring the Estates Commissioners into line with good pensions practice.
The First and Third Estates Commissioners are usually people who have been appointed after they have served in high office elsewhere, yet they bear great responsibility. It is only proper that they should receive reasonable remuneration and that provision should be made. It is, therefore, desirable that this measure should be brought before the House tonight. It has been before the Ecclesiastical Committee and has been found most expedient.
Question put and agreed to.
Resolved,
That the Church Commissioners (Miscellaneous Provisions) Measure, passed by the General Synod of the Church of England, be presented to Her Majesty for Her Royal Assent in the form in which the said Measure was laid before Parliament.

ECCLESIASTICAL OFFICES (AGE LIMIT) MEASURE
12.1 a.m.
Mr. Terry Walker: I beg to move:
That the Ecclesiastical Offices (Age Limit) Measure, passed by the General Synod of the Church of England, be presented to Her Majesty for Her Royal Assent in the form in which the said Measure was laid before Parliament.
I wish to raise three matters about this measure. First, clergymen of the Church of England are entitled to then national insurance and Church pensions at the age of 65. Most of them, according to statistics, retire by the time they are 67 years and at present fewer than 300 of the bishops and clergy holding freehold offices are over 65 years of age. None of them—and I emphasise this—will be affected by the present measure which does not affect sitting tenants in any way.

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Secondly, the measure relates to freehold offices only. It proposes that a bishop must give up his bishopric or a clergyman must give us his freehold office, if he has one, at the age of 70. However, there is nothing to prevent him going on after the age of 70 in a post which is not freehold, that is to say, he can be an assistant bishop, a priest in charge of a parish, or he can be an assistant curate. However, the measure will prevent the situation which can arise now in which a man, continues as a rector or a vicar until he is past it and, under the present situation, nothing can be done about it.
Thirdly, the Church has taken great care—and it has been discussed—before presenting this measure to make sure that there is adequate provision for housing the retired clergy. I emphasise that many clergy are still able to obtain houses or bungalows for their retirement out of their own resources. But in addition to this, there is a mortgage scheme, on very favourable terms, and the Church of England Pensions Board has houses available for renting.
The overall result is that in one way or another clergy are able to obtain accommodation when they retire. If this measure is enacted, there will be no problem of clergy being turned out of their accommodation with nowhere to go. This measure was discussed by the Ecclesiastical Committee, which found it to be expedient.
Dr. Alan Glyn: I should like some information. One of the reasons behind this measure, as the hon. Gentleman said, is that so many clergy do not want to retire, simply because they have not the means to do so. Bearing in mind the very long periods on low stipends, one can appreciate that they have been unable to save enough money. The hon. Gentleman said that provisions were being made for mortgages, and so on. Obviously the matter of mortgages will not apply to the elderly. Can the hon. Gentleman give the House an undertaking that anyone who is affected as a result of this measure will be rehoused by the Commissioners?
Mr. Walker: This matter has been thoroughly dealt with by the General
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Synod. Funds have been made available in this respect. We shall try to make sure that favourable terms are offered to those who wish to buy something of their own. We have also made funds available to the Church of England Pensions Board. The board's chairman said at the Synod that he was quite satisfied with what was being done. I am sure that everything that can be done will be done to make sure that this is all right. We have given a pledge on this matter, and so far it has met with satisfaction.
Dr. Glyn: I am grateful to the hon. Gentleman.
Question put and agreed to.
Resolved,
That the Ecclesiastical Offices (Age Limit) Measure, passed by the General Synod of the Church of England, be presented to Her Majesty for Her Royal Assent in the form in which the said Measure was laid before Parliament.

HIGH COURT ATTENDANCES (OFFICERS OF THE HOUSE)
Order read for resuming adjourned debate on Question [18 th July]:
That leave be given for reference to be made to the said Reports of Debates and for the Editor of the Official Report or other proper Officer to attend the trials of the said actions and to produce the said Reports.—[The Solicitor General.]
Question again proposed.
Mr. Deputy Speaker (Mr. George Thomas): Mr. Speaker has not selected the two amendments in the name of the hon. Member for Nottingham, West (Mr. English), but he has selected a manuscript amendment to be moved by the Parliamentary Secretary to the Law Officers' Department. Copies of the manuscript amendment are available.
Mr. Michael English: On a point of order, Mr. Deputy Speaker. In view of Mr. Speaker's statement this afternoon, in which he pointed out the apparent discrepancy, at first reading, between the two passage in Erskine May, and as on Friday at 11 a.m. we were following that which said that the petition could be placed without notice, and as most of the speeches were therefore disorderly as they should have stopped as soon as the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) made objection to it, will you rule, Mr. Deputy

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Speaker, that in this debate anyone who spoke on Friday morning may speak again, for the simple reason that he should not have been speaking then?
Mr. Deputy Speaker: I am sorry, but I have to rule in the opposite sense. Those who have spoken in this debate may speak again only with the leave of the House, and if any hon. Member shouts "Object", they cannot speak again.
Mr. Arthur Lewis: Further to that point of order, Mr. Deputy Speaker. Regarding the remarks you have just made, Mr. Deputy Speaker, may I say, with great respect, that this motion was slipped in at the last moment on Friday? Due to the vigilance of hon. Members, on both sides of the House, I am pleased to say that eventually it was put down very late at night—or very early this morning. That was done with knowledge—one might say "malice aforethought"—on the part of the Government or of the sponsors of the motion. But now you, Mr. Deputy Speaker, tell us—rightly; I do not object because Mr. Speaker has decided not to call my hon. Friend's amendments—that one of the Ministers has put down an amendment, but none of us has seen it. The original reason for this motion being postponed was that we were not given notice of it. Now we are told there is a manuscript amendment and, although I could probably go out now and get a copy the Government knew on Friday that this was going to come up today and they should have given us proper notice of the amendment.
Mr. Deputy Speaker: The hon. Member knows it is not open to him to question Mr. Speaker's choice of amendments. I can only inform the House of Mr. Speaker's selections.
Mr. Arthur Lewis: Further to that point of order. I am not criticising the selection, but it was agreed on Friday that we should not proceed because we had not been given enough notice. Now there is an amendment which none of us have seen, and I am objecting to the Government doing this.
Mr. Deputy Speaker: I understand the hon. Gentleman's objection, but it is not a point of order. It is an objection to the
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Government's way of dealing with its business.
Mr. Nicholas Ridley: On a point of order. I listened with great interest to Mr. Speaker's ruling after Question Time today and I understood him to say that if hon. Members had said "Object" on Friday, the debate would have been abandoned and there would have been no further application by the Solicitor-General for his motion. Would it be in order for me to say "Object" now. I cannot see how it would be any different to me saying "Object" on Friday morning.
Mr. Deputy Speaker: I can explain to the hon. Gentleman. The debate has begun and the time for shouting "Object" has passed.
Mr. Ridley: Object.
Mr. Deputy Speaker: I am sorry, the hon. Gentleman has left it too late to shout "Object". We are continuing a debate which began on Friday morning last.
Mr. Ridley: On a point of order. If this is a new debate, can I say "Object" as I could have done on Friday morning?
Mr. Deputy Speaker: I am sorry to interrupt the hon. Member. I have already ruled that this is not a new debate. It is the same debate. It was adjourned and those who participated in the debate on Friday—I believe the hon. Gentleman was one—are unable to participate tonight.
Mr. Bob Cryer: On a point of order. If the manuscript amendment was not accepted by the House, would the proposal be valid and would the point of my hon. Friend for Nottingham, West (Mr. English) about the inaccuracy of the original petition prevail? Will the House be given the opportunity of a separate vote on the manuscript amendment?
Mr. Deputy Speaker: It is not for me to say whether the motion would be valid. It is for me to put the Question, and Mr. Speaker has selected the manuscript amendment.
Mr. Robin Maxwell-Hyslop: On a point of order. As I understand the situation, no hon. Member can speak twice in the debate if another hon. Member shouts "Object". As I was unaware

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that this motion was to come up on Friday morning, I was not present to hear the arguments of my hon. Friends. If objection is taken on extremely thin grounds, this debate might go on until 6 a.m. or 7 a.m.
Mr. Deputy Speaker: I have no control over the length of the debate. Perhaps the hon. Gentleman was not here when I explained that hon. Members can only speak a second time with the leave of the House. My responsibility is merely to see that the rules of the House are observed.
Mr. Norman Lamont (Kingston-upon-Thames): Further to that point of order, Mr. Deputy Speaker. Presumably your ruling applies equally to the Solicitor-General, and he, too, can speak a second time only if we give him leave.
Mr. Deputy Speaker: This is a case where all men are equal, but some are more equal than others. By the rules of the House the Solicitor-General has the right to speak again.
Mr. Ridley: Further to the point of order. As the Solicitor-General has already spoken twice—he spoke in introducing the motion on Friday and he spoke again at about 11.45 a.m. the same day—is it acceptable, even for those more equal than others, for someone to speak on three occasions without the leave of the House?
The Solicitor-General (Mr. Peter Archer): Further to that point of order, Mr. Deputy Speaker. May I explain the position as I see it? My desire tonight is to be as helpful to the House as possible. I am actually on my feet now since I was on my feet when the debate was adjourned on Friday.
Mr. Deputy Speaker: I find it difficult to deal with two points of order at once. The Solicitor-General is entitled, as the one who moved the motion originally, in a resumed debate, according to "Erskine May" to speak again.
Mr. J. Grimond: On a point of order. With reference to the Solicitor-General's last remark, surely he moved the adjournment of the debate, and the motion was accepted. That motion surely has been dealt with.
Mr. Deputy Speaker: The issue is quite clear. My ruling is supported by "Erskine May". The Solicitor-General is entitled to address the House again.
Mr. Maxwell-Hyslop: Further to that point of order, Mr. Deputy Speaker. If the Solicitor-General was speaking as a member of the Government on a Government motion he would be entitled to speak twice. However, he went out of his way on Friday to explain to the House that he was not speaking as a Minister on a Government motion. In that case he does not meet the condition of a Government Minister speaking to a Government motion, as set out in "Erskine May".
Mr. Deputy Speaker: I can help the hon. Gentleman and the House if I read what "Erskine May" says.
"On resuming an adjourned debate, the Member who moved its adjournment is, by courtesy, entitled to speak first on the resumption of the debate".
Mr. Maxwell-Hyslop: Further to that point of order, Mr. Deputy Speaker. That situation applies where he had not already spoken once before.
Mr. Deputy Speaker: Order. No, the hon. Gentleman is not correct on that. "Erskine May" is quite clear and I must now ask the House, whether there are differing views on the proposal or not, to allow the Solicitor General to address the House.
Mr. Maxwell-Hyslop: On another point of order, Mr. Deputy Speaker. Just so that we do not waste our time, I believe that through an unhappy accident the Solicitor-General has drafted his amendment defectively. Is it meant to read so that the amendment comes after "Mrs Anne Patricia Crossman" or is it meant to follow
"any record of such discussions and".
It is not clear which is line 4.
Mr. Deputy Speaker: Order. If the hon. Member is patient the Solicitor-General will explain that matter. It is not my responsibility to do so.
The Solicitor-General: Mr. Deputy Speaker, they say that all things come to those who wait. In order to assist the House and before attempting to explain my motion, may I say that the manuscript amendment which in due course my

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hon. Friend will seek to move, is necessary simply because in consequence of the vigilance of my hon. Friend the Member for Nottingham, West (Mr. English) certain defects in the copying have been pointed out. In those circumstances it would be wrong of me to invite the House to pass the motion without the amendment. My right hon. and learned Friend the Attorney-General will not obtain a benefit as a result of the amendment, but, in a sense, is making a concession. It would be wrong to move the motion without the amendment.
This is a debate from which I have learned a great deal—
Mr. English: On a point of order, Mr. Deputy Speaker. I am not sure what is happening. Is the Solicitor-General moving his amendment?
The Solicitor-General: If I may, I shall come to the amendment in a few moments. I am not moving it. May I now begin where I originally intended to begin? This is a debate from which I have learned a great deal and on which I have reflected a great deal—and to judge from some of the conversations I have had with hon. and right hon. Members on both sides, I am not wholly alone in that.
To the apology which I tendered to the House on Friday, I wish now to tender a further apology to Mr. Speaker, because when I rose on Friday I was not myself aware that he had not been informed that the petition was to be presented, and I understand today that that was the position.
When I rose to speak, I did not appreciate that the whole matter had been shrouded in such mystery. It was certainly no part of my intention to slip something through the House, and, as I ventured to say on Friday, that allegation has not often been made against me.
The situation arose because those who were preparing the case which is to be heard by the court decided in the course of their preparation that the court would be assisted if certain reports of proceedings in the House were before it. Such preparation, as hon. Members know, is an ongoing process. That decision was taken at a fairly late stage in their preparation, and it led to a somewhat hurried sequence of events, culminating in
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the presentation of the petition on Friday.
The matter arises in this way. My right hon. and learned Friend the Attorney-General is engaged in certain actions in the High Court which are described in the petition and which are known to hon. Members. In this debate, as I understand it, it would not be open to me to discuss the merits of those actions, and in any event it would be wrong if I were to express views on matters which are to be considered by the court.
Mr. Maxwell-Hyslop: Why is not the Attorney-General presenting the matter to us?
The Solicitor-General: I shall answer the hon. Gentleman's question at once. The reason my right hon, and learned Friend is not presenting the petition is that the practice, I understand, is that one does not present one's own petition.
It was thought that it would be helpful to the court in considering the reasons for what has come to be known as the 30-years' rule if there were before the court records of what had been said in the House on the doctrine of collective responsibility. For that purpose, leave of the House is required. It is required because it has long been a privilege of this House that what takes place here is not to be called in question elsewhere. That was reaffirmed in Article 9 of the Bill of Rights, which declares that
"freedom of speech and debate or proceedings in Parliament ought not to be impeached or questioned in any court or place outside Parliament".
In 1818 the House resolved that no Clerk or Officer of the House should attend court for the purpose of producing records of proceedings of the House without the leave of the House. It is for that purpose that my right hon. and learned Friend seeks to petition the House.
The motion which I moved on Friday, that leave be given, may be moved without notice. It is normally moved, I understand, without notice, and I was merely endeavouring to follow the practice in what I did.
In fact, the contents of the petition were read in the House on Friday, and they were subsequently described by one of

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my hon. Friends as gobbledegook. He almost implied that lawyers liked using gobbledegook.
Mr. English: For a fee.
The Solicitor-General: Personally, I am not receiving a fee.
It would be arrogant of me to speak for lawyers in general, but let me say that this lawyer does not enjoy gobbledegook. I much prefer to be able to explain things if I can in plain English. That is what I would have done on Friday, but, not having had the opportunity of looking at the precedents, I had understood that it would be contrary to precedent and practice for me to offer an explanation. I believe that in fact there are some precedents for petitions of this kind being presented when a brief explanation has been given, but it was for that reason and that reason alone that I did not venture an explanation originally on Friday.
May I try to explain one other matter which was raised today as a point of order? This debate arises this evening as Government business. As I explained on Friday, it is not a Government motion. The petition of my right hon. and learned Friend arises in his capacity as guardian of the public interest. But it was important if tonight's debate was to be relevant to the proceedings in court that it should be debated this evening, and if that were to happen the motion would have to be adopted by the Government. As I understand it, in that kind of situation the Government from time to time adopt a Private Member's motion.
Mr. Tam Dalyell: It may be within my hon. and learned Friend's recollection that last Monday I asked the Attorney-General about the distinction between his rôle as guardian of the public interest and his rôle as Attorney-General. Could it be explained at some time of convenience to the Solicitor-General what is the financing of a case conducted by the Attorney-General in his rôle as guardian of the public interest?
The Solicitor-General: I will endeavour to give my hon. Friend a complete answer to that question later in the proceedings. This sort of situation is the same as that with actions by the Treasury Solicitor or by other public officers who have a
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non-political or quasi-judicial function. The fact that they are financed by public funds does not mean that my right hon. and learned Friend is acting in his rôle as a Minister of the Government.
The Government take the view that the House would clearly not wish to impede the courts or the administration of justice, and they would risk being impeded if this motion were not ultimately passed by the House, or if it were not to be debated tonight. It is in that sense and that sense only that the motion comes before the House as Government business.
Mr. Cryer: If the petition is not passed, in the pursuit of his public office will the Attorney-General have to withdraw the case completely in his attempt to suppress the Crossman Dairies, or will the case go ahead but impeded?
The Solicitor-General: The action would not be withdrawn. The court would have to arrive at a decision without the assistance of the pronouncements in the House. I should like to add a further word on that matter later.
I certainly do not wish to detain the House and I have no doubt that other hon. Members wish to speak, but I should like to add two further comments. My hon. Friend the Member for Nottingham, West (Mr. English) was kind enough to point out to me before I had an opportunity to check it that there were two clerical errors in the references in the petition. They arise from copying errors and all I say about them is that they did not occur in the Law Officers' Department.
It would be wrong for me to invite the House to give leave with reference to a petition when a citation was not in accordance with the description, and so for that purpose I would seek to move an amendment, if that were permissible, to delete these two false references. That would mean that the court would be deprived of those references, but that is the inevitable consequence.
As it would be contrary to practice for me to move an amendment to my own motion, I have asked by hon. Friend the Member for Accrington (Mr. Davidson) to do so formally in the course of the evening. I have endeavoured to ensure that hon. Members I knew wished to take

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part had a copy of the manuscript amendment, but I have not been able to ensure that every hon. Member interested in the debate had a copy.
Mr. English: It would assist the House if the amendments were moved at an early stage. I say that because, I regret to say, I have found a defect in them.
The Solicitor-General: The House is always indebted to my hon. Friend for his vigilance, but certainly if it will be of any assistance I shall ask my hon. Friend the Parliamentary Secretary to move the amendment formally at an early stage. Copies of the amendment are now available in the Vote Office.
I understand that one other party to the action has already included in an affidavit an extract from a record of this House. That affidavit has been served on my right hon. and learned Friend. As I understand it, that party did not seek the leave of the House. I take no point on that as a matter of privilege, and I do not invite the House to take a point on it. I would not seek to penalise or pressurise that party. I mention it only because it would produce a curious imbalance if a reference included by another party without seeking the leave of the House were before the court, whereas a reference which my right hon. Friend and learned Friends seeks to include, having sought leave, was denied to the court, because the House denied leave.
Mr. English: Surely the High Court will take notice of all parts of the law, including the law of privilege of this House, and will therefore not admit the evidence?
The Solicitor-General: I should be wrong to venture an opinion as to how the court might deal with any particular situation. If that were to happen there would be one further reference which would be denied to the court. Further than that, I would be wrong to comment. Then the imbalance would be eliminated, but it would be eliminated by denying to the court access to all the references. [Interruption.] This would be on the assumption which I was originally propounding, that the House refused leave to my right hon. and learned Friend.
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This House has traditionally been anxious to assist the courts in their function of administering justice. It would be impeding the court in its attempts to arrive at a conclusion on the matters before it if it were denied access to the records of what has been said in this House.
Mr. John Peyton: As I understand it, Hansard may be freely quoted almost everywhere except in the courts. On this occasion somebody is trying to suppress and limit the publication of information. Could the hon. and learned Gentleman make quite clear to the House whether it is the Attorney-General who is seeking to suppress information, or the defendants to the action?
The Solicitor-General: I am most grateful to the right hon. Gentleman for that intervention. I have tried to keep this contribution to the debate uncontroversial. My right hon. and learned Friend is trying to make the maximum information available for the purpose of what the court will have to decide. Anyone seeking to deny that information to the court would be seeking to inhibit access to information.
Mr. Peyton: That is not quite the question. What I was asking was whether it was the Attorney-General who was seeking by his action now to make available to the public the maximum of information, or the other parties to the action.
The Solicitor-General: I am reluctant to become involved in a discussion on the merits of the action, for reasons which the right hon. Gentleman will appreciate, but what my right hon. and learned Friend is seeking to do is to give effect to the existing rule. Whether that rule is desirable, whether it might be amended on another occasion, is a matter which is neither before the court in these proceedings nor before the House in tonight's debate. My right hon. and learned Friend is seeking to enforce the rule as he finds it. In those circumstances—
Mr. Cryer: Would the effect of producing this information assist the Attorney-General in seeking to obtain an injunction to prevent the publication of the Crossman Diaries?
The Solicitor-General: I am rather surprised by the levity with which some of my hon. Friends seem to regard the question of my hon. Friend the Member for Keighley (Mr. Cryer). I thought that it was a sensible question. I think that I can only answer my hon. Friend by saying that those who are preparing the case believed that the information would assist the court in arriving at a proper conclusion. They have nothing personally to gain or lose. Their function is to assist the court in arriving at a proper conclusion. If the court decides that my right hon. and learned Friend's action does not lie, so be it. All that my right hon. and learned Friend is seeking to do is to give the court an opportunity of pronouncing upon it. It may be that when the court considers some of the extracts it will take the view that they provide a reason for refusing his application, I do not know. I honestly believe that those who advised that the debates should be placed before the court were sincerely trying to give as balanced a picture as they could to the court. I cannot give a better answer than that.
As I think I have said three times already, I hope that the House will pass the motion. At some subsequent stage, and if it is the wish of the House, I might have the opportunity to reply to any further questions that are raised.
Mr. Deputy Speaker (Mr. George Thomas): Before I call anyone else to speak, it might help the House if I remind it of Mr. Speaker's rulings on Friday, which I repeat for greater accuracy. Mr. Speaker ruled:
"The matter is purely evidential. I would not be prepared to allow discussion of the merits of the case in which it is proposed that Officers of the House should be given leave to give evidence."
In column 1926 Mr. Speaker ruled:
"Today's motion relates purely to the question of whether certain Officers of the House should be given leave to give evidence."—[Official Report, 18th July 1975; Vol. 895, c. 1923–6.]
12.37 a.m.
Mr. J. Grimond: To the layman the position appears to be clear. Indeed, it is set out in the Order Paper. The petitioner is the Attorney-General and his petition is for an injunction to prevent certain information being published. If nothing
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else, that seems fairly clear. This may be put in a vulgarised version as assisting the court.
As I have had the honour to be mentioned, I feel that I must draw the attention of the House to the fact that I appear to have an interest.
Mr. Nicholas Winterton: Not financial.
Mr. Grimond: I shall not go into what that interest is supposed to be as various maters are sub judice, but I am afraid it is not financial. I shall not pursue my interest at this moment because if I did so I should get into trouble with Mr. Deputy Speaker and probably with the court.
This seems to be a curious procedure. Whatever the reason may be, this is now a Government motion. One of the defendants is a member of the Government. The Secretary of State for Employment, the right hon. Member for Ebbw Vale (Mr. Foot), has been put in some embarrassing situations lately. He appears to be on the side of censorship of the Press and he is engaged in defending a Bill which might well lead to some form of statutory incomes policy. I suppose he passes off these matters on the basis that Church of England parades are entirely voluntary because everyone is an automatic member of the church. However, the right hon. Gentleman is in various difficulties—he is the great upholder of free speech—by the Government now being a party in the Attorney-General's petition.
I suppose that there are precedents in which one member of the Government has moved a petition of this nature to produce evidence against another member of the Government. No doubt the Solicitor-General can point to that. On the face of it it seems a strange situation. It is no good saying that this is purely a private affair. We know that the Attorney-General is not a politician. We know that he has been dragged into politics against his will. Nevertheless there is a curious aura about him. He sits on the Government Front Bench. He is usually a member of the governing party, although I dare say that there have been exceptions. He occasionally makes political speeches. In this case he is acting in his official capacity and he is acting in an action against another

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member of the Government. We would like some explanation about that.
The Solicitor-General said that the House was jealous of the possibility of its reports being "called in question." I should like to know what exactly will happen. Are we merely giving authority to the Officers of the House to appear in court to say that these are true copies of Hansard? Incidentally, it is as well that the Solicitor-General is not being called because he would not be able to produce true copies of Hansard. We let that pass. Are the Officers being called as witnesses are occasionally called to swear to the nature of the document they are producing or are they being called for other purposes? Is the document simply to be used as a record of the proceedings of this House?
If so, what is called in question? Is there to be argument in court about what the House meant when certain speeches were made? I have read my own. It seems to be an admirable speech—clear as daylight as always, but possibly open to misinterpretation by ill-disposd people. What will go on in court? What are we guarding against? We are giving authority either for the production of Hansard and a guarantee that it is Hansard or else we are going much further and I do not think we have been told what more we are authorising.
What more may happen? I noted in particular the phrase about the House of Commons being very jealous in case its proceedings are called in question. Who is to call them in question? What is the danger of having them called in question and is that what we are guarding against in having to pass this motion before anyone in court can read Hansard?
12.47 a.m.
Mr. Arthur Palmer Mr. Arthur Palmer (Bristol, North-East) rose—
Mr. Deputy Speaker (Mr. George Thomas): The hon. Member will need the leave of the House.
Mr. Palmer: I am much obliged, Mr. Deputy Speaker. I was about to seek leave because I made a few remarks on this matter on Friday. By leave of the House. My difficulty remains the same as it was on Friday. The Solicitor-General said that it was the duty of the House of Commons—a natural obligation
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—to assist the courts in arriving at justice. That was the word he used. As we understand it, and we cannot refer to the matter in great detail, the proceedings in question have very little to do with justice, or even an abstract search for truth. They are an attempt on the part of the Attorney-General to suppress certain—
Mr. Deputy Speaker: Order. May I ask the House to help me in this matter. I cannot go away from Mr. Speaker's ruling on Friday—which was clear—that he would not allow discussion of the merits of the case in which it is proposed that Officers of the House should be given leave to give evidence. The only question before us is whether evidence should be given.
Mr. English: On a point of order, Mr. Deputy Speaker. It would considerably shorten the debate if the Parliamentary Secretary's amendment could be moved at an early stage, when I would be willing to explain why I think that it might shorten the debate.
Mr. Deputy Speaker: The hon. Gentleman made that point of order in the middle of another hon. Member's speech.
Mr. Maxwell-Hyslop: Further to that point of order, Mr. Deputy Speaker. Mr. Speaker ruled that the merits of the case could not be discussed but I do not believe that he ruled that the merits of the decision to bring the case could not be discussed.
Mr. Deputy Speaker: The hon. Gentleman is very ingenious, but I must tell him that the "merits of the case" are enough for me. I understand what is meant by that and I shall try to keep the House to it. The only reason why the amendment has not been called is that once it is proposed it limits the debate.
Mr. Palmer: I was doing my best not to discuss the merits of the case, Mr. Deputy Speaker. I was merely referring to something which was referred to earlier: that it is rumoured that an attempt is being made to suppress certain information contained in certain diaries. That is common knowledge. Unless we refer to that occasionally, I do not see that we can talk about the thing at all.
My point, however, is this, and my hon. Friend the Member for Nottingham, West

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(Mr. English) referred to it. On Friday I put this question to the Solicitor-General:
"My hon. and learned Friend says that it is necessary for him to come to the House in order to get leave of the House for its Officers to be released. If leave of the House is asked for, presumably it can be refused. What would be the result if we were to refuse leave?"
My hon. and learned Friend replied:
"If leave were refused, the court would have to decide the particular issues before it without the advantage of having these documents."—[Official Report, 18th July 1975; Vol. 895, c. 1936.]
It does not seem to me, therefore, as if the court would be handicapped a great deal.
Since some of us hold the view—I suppose that I can say this without discussing the merits of the case, Mr. Deputy Speaker—that these proceedings are somewhat dubious in themselves, why, therefore, should we have to give leave to one of our Officers to go to the court to assist in these proceedings, of which many of us do not approve, when my hon. and learned Friend has already told the House that it would not make very much difference anyhow? I would therefore like my hon. and learned Friend to explain himself a little further. He seems to think that it is a great obligation on the part of the House to assist the court, and yet at the end of it he says that it would not make a great deal of difference.
I put that point to my hon. and learned Friend. I think he will have to give the House a much better explanation than he has done so far. He may well wish, of course, at the end of the day that he had not brought this motion before the House at all.
12.48 a.m.
Mr. Jonathan Aitken: I seek to oppose the motion, because I believe that there are several fundamental defects in the Attorney-General's petition and also in the Solicitor-General's motion relevant to the petition.
The first defect lies in the Law Officers' basic reason for needing these documents and excerpts from Hansard. The Solicitor-General said on Friday:
"all that is being asked is that the courts…should have the advantage of having before them certain documents without which they would be inhibited in arriving at a conclusion".—[Official Report, 18th July 1975; Vol. 895, c. 1936.]
If that is the justification, I believe that it might well be based upon an error.
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I realise that the Solicitor-General may have been too busy reading certain diaries himself lately, but if he looks at Halsbury's "Laws and Statutes of England", volume 36 of the third edition, at page 410, he will find a section, No. (5), headed
"Matters which are not legitimate aids to construction".
Paragraph 622 goes on to say:
"Even when words in a statute are so ambiguous that they may be construed in more than one sense, regard may not be had to the bill by which it was introduced…or to what has been said in Parliament".
At an earlier page of Halsbury, page 392, there is a paragraph headed
"Speculation as to Parliament's intention not permissible"
and the same thing is more or less said again.
The Solicitor-General: I hesitate to interrupt, but the hon. Gentleman will appreciate that what is before the court is not the construction of a statute.
Hon. Members: Ah.
Mr. Aitken: I am grateful to the hon. and learned Gentleman for tripping over that banana skin which I was trailing before him. He has now admitted that the whole case for suppressing the diaries is not based on a statute. That is an extremely interesting and rather damaging admission.
The Solicitor-General: The rules which the hon. Gentleman has quoted from Halsbury relate to the suggestion that the court might be invited, in the construction of the wording of a statute, to look into Hansard to see what was said in the debates on that statute when it was a Bill. That is not happening in this case.
Mr. Aitken: The motion does not say that. It simply states:
"That leave be given for reference to be made to the said Reports of Debates and for the Editor of the Official Report or other proper Officer to attend the trials of the said actions and to produce the said Reports."
It does not say what they are being produced for. I do not know how many the hon. and learned Gentleman may have up his sleeve. Some may relate to statutes or precedents.
To give a more recent example, which seems to indicate a case of double standards, hon. Members may recall that the most recent case fought in the courts over

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the issue of open government was one in which the editor of the Sunday Telegraph and myself were among the defendants. In that case there were two and a half days of legal submissions. During that time counsel for the defence tried to show that the Crown's whole interpretation of the law on open government was wrong and attempted to quote from Hansard to show that it was wrong. My recollection is that during those legal submissions counsel for the then Attorney-General agreed that such quotes from Hansard were not permissible, precisely on the grounds quoted from Halsbury, and the learned judge agreed.
In other words, it seems to me that in the one previous recent major case on open government counsel for the Law Officers claimed that quotations from Hansard could not be used in court. Now, in the coming case on open government, they are proposing the opposite. I find that somewhat inconsistent and suggest that it could be a case of double standards. Perhaps the Solicitor-General will be able to reassure me on that matter when he winds up.
Turning to the extracts from Hansard which the Attorney-General wishes to quote in court—the Solicitor-General says "in order to be fair"—I think they are highly selective and, in some cases, rather defective.
I suggest that they are defective because some, we were told, indicate that the 30-year rule is a good thing. Yet many of the quotations come long before the 30-year rule was dreamed of or conceived.
I said that they are selective. A great deal has been said in Parliament at various times which suggests that the Attorney-General's present thesis is wrong and undermines the argument which I believe is about to be presented in court.
There are some startling omissions. There is the startling omission of any quotations concerning the controversy which surrounded the publication in 1923 of Mr. Winston Churchill's, as he then was, book "The World Crisis", which breached the then rules of Cabinet secrecy. Questions were asked in Parliament and the Prime Minister, Bonar Law, rejected all requests for the kind of action that the Attorney-General is now contemplating.
If we probe behind some of the statements which have been made about
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Cabinet collective responsibility and secrecy, we find some great oddities.
In 1916 Asquith made a ringing affirmation of the importance of Cabinet secrecy. Yet, a few years later, it was discovered that he had been writing daily notes to his mistress, Venetia Stanley, describing exactly what was happening in the Cabinet. Therefore, these quotations, however fine they may sound when read in court, may have a subsequent episode which completely destroys them.
Mr. English: The hon. Gentleman will realise that this rule stems in part from the existence of the Bill of Rights which applies to both Houses. I think that the late Lord Beaverbrook's memoirs were an even more remarkable breach of Cabinet secrecy.
Mr. Aitken: I think that with almost whatever figure in contemporary or past history to whom one looks, one finds that the rule has been more honoured in the breach than in the observance of it. I think that it is a very shaky rule over which to start fighting.
The reason I object to the selectivity of the quotations is that the Editor of Hansard, who is to be asked to appear before the court, is a respected and independent figure. He is not the Government's or the Attorney-General's poodle to be bossed around and told to affirm in court the validity of one set of selected quotations. That is wrong.
Lastly. I am still puzzled about the extraordinary contradiction which emerged during Question Time last Monday. The Attorney-General was answering questions from his hon. Friends about his writ-issuing activities and he took the unusual step of referring them to The Guardian for an accurate statement of his views.
Those who followed that advice found that The Guardian said that the Attorney-General had given evidence to the Radcliffe Committee, saying that the rules relating to the publication of Cabinet Ministers' memoirs should be relaxed and liberalised. He was pressed about the matter at Question Time and asked whether there was a contradiction between the hawk-ish line which he was taking in his present activities and the dove-ish line that he was apparently sounding out to the Radcliffe Committee.

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He replied that his job was to uphold the law and that his personal independent views about what the law should be did not matter.
Here we come to the question of the law on which this argument is based. Where is the justification for suppressing Press, newspaper or book information? Is it based on statute or on judicial precedent? I believe that it is based on the Attorney-General's discretion. As the New Law Journal said in an editorial article not long ago, the law is as long as the Attorney-General's foot. If the Attorney-General believes that the law should be relaxed, his duty is to exercise his discretion and relax the rules. It is not to apply rules which are in need of relaxation.
The law is a muddle of confusing conventions, disputed ethics, muddled precedents and gentlemanly club rules which have been broken many times by many people. The whole thing is a mess, and Parliament must clean it up. We cannot abdicate our responsibility to the judiciary, still less can we abdicate it to a politically-motivated Attorney-General.
I oppose this motion because it is one more step in a Government conspiracy to suppress the politically embarrassing Crossman Diaries. The truth may hurt the Government, but it is the duty of the House to bring home to the Government that suppressing the truth about history hurts much more.
12.58 a.m.
Mr. Bob Cryer: I am astonished that members of the Government committed to a radical approach to society should present a petition which is designed to uphold a tradition which is no part of the Labour movement and which will result in a very narrow interpretation of material which it is proposed to publish.
The Labour Party manifesto said:
"It is part of the very purpose of the Labour Party's existence to protect and extend the processes of democracy at all levels. It was a Labour Government which introduced the law which allows a citizen to sue government itself: established the Parliamentary Commissioner; and legislated against racial discrimination and to enforce equal pay. Now we want to give a much bigger say to citizens in all their various capacities…".
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The Solicitor-General will no doubt argue that he wants the court to be able to make a better informed decision by providing it with information dating back to 1806, but the House knows full well that the reason and motivation for the provision of the information is to restrict publication of some diaries which we are not permitted to comment on. Therefore, this information is in the background of the petition.
Surely it is accepted by the House that if this information impeded the Attorney-General in his aim he would hardly be seeking permission from the House to place the information before the courts. One assumes that it will support the Attorney-General's somewhat eccentric whim in seeking to suppress this set of diaries.
We have some excellent principles which were enshrined many hundreds of years ago—for example, the Bill of Rights has been mentioned. At the same time, we on this side of the House as a radical party should examine traditional principles to see whether they serve the interests of the people whom we represent. We should be wholly opposed to upholding traditions of closed information and producing quotations back to 1806 in support of those traditions. Of course, we must support principles that are of universal and time-enduring validity, but we should not support a tradition that inhibits the expression of ideas and opinion.
Therefore, I express surprise that the Solicitor-General has come to the House, on the basis of tradition and past precedent, seeking to support the application for an injunction by the Attorney-General. I suggest that we should express our opinion by rejecting the request. The Officers of the House have plenty of work to do without supporting activities of this sort.
The Solicitor-General: If one of the other parties to the action were to come to the House seeking leave to adduce evidence it thought might assist its case, would my hon. Friend be in favour of granting leave for that?
Mr. Cryer: I would have to consider it on its merits and I should have to know the motivation of the person coming before the House. We have a good idea

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of the motivation of the Attorney-General in this instance. I am in a difficulty because I cannot go too far into that motivation. Seeking information is a very good purpose, but the reason for the use of the information is what the House questions.
1.3 a.m.
Mr. Robin Maxwell-Hyslop: The Solicitor-General invited us to believe that his motivation was a desire to assist the court. Were that truly so, he would not have limited his petition to those quotations which the Attorney-General wanted to make. If he had wanted to assist the court he would have drawn the petition in such a way that the defendants also could have asked the Officers of the House to give evidence which the defendants wanted to put before the court. He has not done so. Far from wanting to assist the court, he has wanted to limit the court to looking at those bits of parliamentary lore that will assist the repressive case of his right hon. and learned Friend and to deny to the defendants the same privilege.
The case is listed for 22nd July 1975, which does not give much opportunity to the other side to ask questions of Officers of the House. If we pass the motion, I understand that the Officers of the House will not be permitted to give views on anything other than the specific items which appear on the list in the Attorney-General's petition. This is an ex parte application, not an application to assist the court.
I find the Attorney-General's position an unpleasantly ambivalent one. We have been told that there is a star against item 5 on the Order Paper. There has to be to get it on tonight. But there is no star against items 3 and 4. Although the Solicitor-General was at such pains to tell the House this was not Government business, items marked with a star are Government Orders of the Day. Was the Attorney-General's action discussed in the Cabinet, or are we invited to believe that the Attorney-General closeted himself with himself and took this decision in a state of complete moral virginity? Clearly, he does not seem to have discussed this with the Secretary of State for Employment.
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Will the Solicitor-General say for what the petitioner is praying? What does the word "etc." conceal? The fact that it has been done before is no good reason for us doing so tonight. I am sure that the Solicitor-General knows the full details of the position which he is putting before the House.
The Solicitor-General: The word "etc." is not part of the prayer or the petition. It is part of the conclusion. It is the standard form.
Mr. Maxwell-Hyslop: The word "etc." is a shortened form of what?
The Solicitor-General: My recollection from the days when I read legal history is that it means that the petitioner would pray for the soul of the Lord Chancellor.
Mr. Maxwell-Hyslop: I am sure that the Lord Chancellor would be most gratified if this were spelt out in full rather than concealed. This has added a piquant sauce to this debate.
Mr. English: For as long as the House of Commons has existed it has been taken to refer to the soul of Mr. Speaker.
Mr. Maxwell-Hyslop: I trust that you, Mr. Deputy Speaker, are included in that benediction.
We are still in a state of grace. We are also perilously near 22nd July, when the case will be heard. [Hon. Members: "It is today."] Will the case be heard today? Has it been postponed? Is there no opportunity now for any of the defendants, including the Secretary of State for Employment, to petition the House? Does the Solicitor-General believe that this one-sided presentation will be conducive to the administration of justice?
The Solicitor-General: The hon. Gentleman may not have been listening when I said earlier that one party quoted from the debates in the House without first seeking leave.
Mr. Maxwell-Hyslop: That is not my point.
Does the Solicitor-General think it fair to seek a leave restricted only to his right hon. and learned Friend's one-sided application without extending that leave to the cases which the defendants want

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to quote? Does he think that he is asking the House to act in a way which is conducive to the administration of justice?
The Solicitor-General: I want to give the hon. Gentleman an opportunity of explaining what he means. I am not sure in what form a petition could have been presented so as to include reports which some other party might want to quote but which it has not expressed a desire to quote. The other parties are, of course, advised by highly-skilled counsel, and if they had thought that some other report had been relevant, they would have taken the appropriate steps.
Mr. Maxwell-Hyslop: The Solicitor-General has already referred to one quotation from the other party without leave of the House. That is an example of one which he has declared from his own knowledge could have been included in the petition so that it was covered. Why did he not include it in the petition? He has already told the House that it has been mentioned. Why did he not include it, so that the Officer could be asked about that too, if he was aware of it, as he has told us he was?
Mr. English: As I understand the situation—having just looked it up in the relevant books in the Library—the court will take notice of any part of the law, including the law and practice of this House. If, therefore, Treasury counsel should get up later today and object to the debates referred to in the affidavit mentioned by the Solicitor-General, the court will be bound to say that those cannot be admitted in evidence because they have not been the subject of a petition and leave of this House.
Mr. Maxwell-Hyslop: In that case, would not the Solicitor-General like to move yet another manuscript amendment? I am addressing through you, Mr. Deputy Speaker, the Solicitor-General. This is a serious point. Would he not wish, even at this late hour, to offer the Chair another manuscript amendment so that the case cited in the affidavit can receive the same treatment from the court as the cases which the Attorney-General wishes to cite?
Mr. English: And from us.
Mr. Maxwell-Hyslop: Indeed. It is not too late if it is true that the Solicitor-
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General wishes to assist the court—if that is not just a phrase he uses without meaning what he says. We can test the sincerity of the Solicitor-General by this means: let him offer a manuscript amendment to bring within the scope of the motion, which the House may or may not pass tonight, at least an equality of opportunity for the declared pleadings of the defendants, even if there are procedural reasons—and I do not think there are any—why he should not widen it so that they can quote any proceedings of this House without specifying them.
As I understand it, the only reason for specifying them is to ensure that the Officers of the House cannot consume the time of the court by looking through the actual document and checking that it is authentic. In other words, they are specified to enable the Officers of the House to do their homework beforehand, arrive with an authenticated copy in their hands and assert to the court on oath that it is what it appears to be. Leave could be given in more general terms without specifying it.
The Solicitor-General: If it will assist, I should be happy to take that course. Perhaps the House will permit me to check that that is permissible, and I speak subject to your ruling, Mr. Deputy Speaker. It may assist the hon. Gentleman if I point out that I have just been told that the passage which occurs in the affidavit is listed in the Attorney-General's petition.
Mr. Maxwell-Hyslop: Good. Let us also extend it by a manuscript amendment so that if the defendant wants to cite any other passages, he is at liberty to do so. If we are to lift the privilege of this House so that justice can be done, let us do the job thoroughly and not in a restricted sense. If that were done it would remove my principal objection to this motion.
1.15 a.m.
Mr. Arthur Lewis: I have never heard so much confusion being compounded every time the Minister rises to speak. I say that with great respect to him. We all love him and his Parliamentary Secretary. There is nothing personal in this matter. However, is it not strange how this great legal luminary and this great legal Department—God knows how much it

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costs the Exchequer and ratepayers and taxpayers—do not seem to know from one minute to the next what is happening? There was the kerfuffle and mix-up on Friday. It was then said that this matter was nothing to do with the Government. Then we were told that we must have it tied in with the Government to have the motion debated today.
Mr. Cryer: On a free vote.
Mr. Lewis: Yes—no Whips and a free vote on this.
Now we are told that we are doing this to help the courts. I agree with the hon. Member for Tiverton (Mr. Maxwell-Hyslop). If we are to have manuscript amendments, I should like to see an amendment which said "That this House agrees to allow the court and those who are not attending the court at any time"—I am not speaking of any particular case as that would be out of order—"to call anyone they care to call and to have any information they want and that any defendant or the Attorney-General may call for any Officer of the House or any information."
As I see it, it is a question of picking and choosing. I am wondering where we are getting to. I read in a newspaper this morning that some QCs attending some case—I must not mention the case—in the courts, which may come up at some time, are being paid thousands of pounds, and hundreds of pounds per day in refreshers. That is on the day after we have been talking about income restraints, and the £6 maximum. A fighter who has always been in favour of income restraint and who was a great Liberal candidate at the General Election, Mr. Comyns-Carr, QC, is to be paid hundreds of pounds a day in refreshers, plus the thousands of pounds for the briefs. In addition, if a case comes forward we are asked to let our under-paid, over-worked and hard-pressed Clerks go and spend time at a court.
I do not think that we should allow this sort of thing. I do not know whether such a case is coming up. I do not know why there has not been a court case about the memoirs of the former Prime Minister, Mr. Macmillan or, to be fair, the former Prime Minister,
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Lord Avon. Even better still, what about the present Prime Minister? I believe that they have all written autobiographies and may possibly have breached this rule. I should like to know why some action has not been taken—perhaps it is to be taken; I may be jumping the gun—about other matters. Perhaps the Attorney-General will come forward with another petition. He may be taking action against Lord Avon, Mr. Harold Macmillan, Lord Marples or my right hon. Friend the Secretary of State for Social Services.
I could go on from now until next week, naming a number of right hon. and hon. Members who have signed contracts to write autobiographies. Some have declared that they have already written them. They may be disclosing secrets which should not be divulged. We do not even have to go that far. What is to stop the Attorney-General coming forward tomorrow with another motion saying that as this debate is relevant he wants to have another resolution so that this debate could be made available to a court.
Mr. Nicholas Ridley: There is a problem. This debate will not be published in Hansard until Wednesday because it is now after 10 p.m. It will not be available in any proceedings before court later this afternoon.
Mr. Lewis: I am very much obliged. The hon. Member always helps me. We do not need Hansard. We could call the Clerks to give their views and information. The motion before the House asks for the Clerks to give views and information.
I am a little upset. I have been in this House for 30 years. Why am I not being called? I would give my views. I have nothing against the Clerks, who are very straight, honourable, able and capable gentlemen and I would not doubt their word. But there are some hon. Members who have been here for 30 years and perhaps some of us should be called. I think my hon. Friend the Member for Keighley (Mr. Cryer) would be willing to be called in respect of this debate.
Where will all this end? Why are we doing this in one particular case, which I will not mention as it might make you

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cross, Mr. Deputy Speaker, and I do not like cross men in this House. I must not mention particular cases and I will not do so.
I have a high regard for the former Prime Minister, Mr. Macmillan, and I would hate to think I had been party to his being taken to court because he had published articles in respect of which a petition might be brought forward and our Clerks might be directed to go against Mr. Macmillan. I have no objection to what Mr. Macmillan and Lord Avon wrote.
If any hon. or right hon. Member wants to divulge what happens in Cabinet, I do not mind; the more that is divulged, the better. We have all proclaimed at election time that we are in favour of open government, and our own manifesto included a commitment to open government. So let us have open government. There is nothing to hide, is there? It would be very good.
An old friend of mine—we used to sit in the same classroom—is now in another place. He is a straight, honest, able and capable man. I refer to Lord George-Brown, who has claimed in public that certain things he has said are 100 per cent. the Gospel truth. I believe him. But other people who are also 100 per cent. honest, straightforward and decent say the reverse. I do not know who is right.
I would like to see everything published, or, and I am being serious, we should introduce a rule to prevent Ministers publishing their memoirs in the first five years out of office. They would then cease to get the big money they receive now.
Mr. Deputy Speaker: Order. I got carried away because I was so interested in what the hon. Member was saying. I should have pulled him up earlier. The question is whether representatives of the House shall give evidence in court.
Mr. Lewis: I agree, Mr. Deputy Speaker, and I was trying to explain that if we introduced a rule that Ministers could not write their memoirs for a certain period, we would not have to argue about this petition tonight. The memoirs would be stale news, our Clerks would not be needed to give evidence,
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and the Ministers would not be able to get the high fees they get at present. That would help our anti-inflation programme. We could stop Ministers from getting hundreds of thousands of pounds in that way.
I do not think that we should waste the time of the House with this petition. Let the courts deal with the matter in whatever way they think fit, or let us have open government and permit the courts to have any information they may call for. Let this House give the courts the right to demand whatever papers or documents they might wish.
Mr. Tam Dalyell: Whatever else this unmentionable book contains, will my hon. Friend accept my assurance that a lot of it is not stale news in the present context?
Mr. Lewis: Yes, but if we made it a rule that no Minister should write a book of what happened until five years after leaving office a lot of these problems would not occur.
1.20 a.m.
Mr. Nicholas Ridley: I agree very much with the hon. Member for Newham, North-West (Mr. Lewis). It seemed to me that there might be something for saying that no Cabinet Minister should write his description of Cabinet events less than 30 years after those events had taken place.
I should like now to turn to this list of Hansard references. Having read all the debates I was annoyed to find that two of the references were not relevant. I read the whole of Hansard for 1886 and 1946 and could find no reference which could conceivably have applied to this case. I might have spent a happier weekend if the Solicitor-General had left the incorrect ones out of my homework.
There is some interesting reading in the debate of 1806 from Charles James Fox. It reads:
"But. to return to Lord Mansfield; it really surprised me to hear it remarked upon, as a new and surprising article of intelligence, that that noble Lord was so many years in the Cabinet, and that some gentlemen heard it this night for the first time. What, that Lord Mansfield could have been so many years in the Cabinet with such different administrations, with Lord Chatham, the Duke of Newcastle, and Mr. Grenville, and all the time have kept snug in the corner and be unknown".

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I was wondering how that was relevant to this particular trial, and I supposed that the éminence grise comes in here in the form of the right hon. Member for Ebbw Vale (Mr. Foot). They are trying to pretend that he has never been in the Cabinet and that no one has heard that he is a Cabinet Minister. This must be the basis of the prosecution in the forthcoming action. We want to know the real reason for quoting Charles James Fox. I do not see how the Editor of Hansard, with all the respect that hon. Members hold for him, can possibly know whether Charles James Fox actually said that or not.
It is a long time since Charles James Fox is alleged to have made these remarks, and it is asking a great deal of the Editor of Hansard to appear in court later this afternoon and say that this was what Charles James Fox said in 1806. He has no means of determining such a fact any more than you, Mr. Deputy Speaker, or I, or, for that matter, the court. That leads me to the conclusion not only that this quotation is of dubious relevance, whatever the Attorney-General may wish to make of it in court, but also that it is, as the hon. Member for Islington, South and Finsbury (Mr. Cunningham) said on Friday, a little silly. Anybody can read Hansard. One can buy it and, presumably, make a film of it. We quote it freely in this House. Yet it cannot be adduced as evidence in court, and Officers of Hansard have to be troubled to go to court and produce it.
Surely, the truth of the matter is that we should not insist upon this curious procedure any more. By a sidewind, it has been of enormous benefit to the House since it has enabled it to express its deep disquiet about the selective use of the injunction weapon against some Cabinet Ministers, unhappily deceased, who have seen fit to reveal what they thought of Cabinet proceedings, but not against others. This is really why the debate has arisen, because hon. Members have deep misgivings about the propriety of the present course of action.
Having said that, however, I feel that we cannot trust to luck to that extent in the future. If any future Government were to make such an asinine decision as the present Government have done in relation to this injunction, it would be asking to much of good fortune to
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believe that we should be able to catch it up in debate simply by the chance of whether the prosecution wanted to quote Hansard in court.
I suggest that the House would be wise to consider whether it is imposing an unnecessary duty on the Editor of Hansard, and whether we should be quite so jealous of the record of proceedings up to 170 years ago and what hon. Members were recorded as having said. Ought we not to adopt new procedures and drop this whole thing?
1.31 a.m.
Mr. John Peyton: If I may have the leave of the House to speak, I cannot help feeling that my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) put his finger on the nub of the matter, especially in his closing remarks. I wonder whether the time has come when the House should be a little less jealous of its precious possession, the rights to Hansard, rights which are freely enjoyed by the whole world except by our own courts of justice. It seems a rather odd situation.
I felt that the Solicitor-General was enormously helped—oddly enough—by his hon. Friend the Member for Keighley (Mr. Cryer), who quite unnecessarily dragged in all that mumbo-jumbo about a radical approach, and even produced from under the carpet that hoary old creature, the Labour Party manifesto. At that point, I confess, any sympathy which I had—and I had a good deal at one time—for the case against the Government pretty well evaporated.
Then we had the hon. Member for Newham, North-West (Mr. Lewis), who spoke with his accustomed eloquence of his love for his hon. and learned Friend the Solicitor-General. I am bound to say that he did not give too much proof of it tonight, but the hon. Gentlemen is known for his restraint in these matters, and perhaps it is just as well. The hon. Gentleman wondered where we were getting to, and I think that he took the whole House with him in that, because I, too, began to wonder about our destination.
The hon. Gentleman went on to permit himself one or two liberal remarks, and suggested—horror of horrors—that he might be jumping the gun. I do not think that any of us felt that he was

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going about his business too quickly. However, when the hon. Gentleman then perpetrated the most horrid pun I have ever heard, talking about cross men, he put himself quite beyond the pale for the evening, and exhausted all that enormous tolerance which he has earned over years of affection in the House of Commons. I hope that he never permits himself to commit such sins again. Nevertheless, I am sure that the glowing testimonies which the hon. Gentleman paid to Lord Avon and Mr. Harold Macmillan will bring blushes to their cheeks and make them warm with gratitude towards him.
The Solicitor-General graciously repeated the apologies which he offered the House the other day. This place has an almost insatiable appetite for apologies. I am sure that the House will be glad to accept what the hon. and learned Gentleman said. We also accept that it was none of his fault. He is here shouldering the blame for other people who failed to think at all. I am sure that on this occasion he at least can leave the House conscious of the fact that his own reputation is wholly unsullied. Indeed, he has done the honourable thing in shouldering the blame for others higher up the ladder.
The hon. and learned Gentleman made one or two remarks that should be mentioned very briefly. He said that the practice was that one did not present one's own petition. That should not go unchallenged. Normally petitions in this place are presented on behalf of those who are not Members and, therefore, have no opportunity to present their own petitions. The idea that Ministers, who are in a position to present their own petitions, should be excused from doing so has very little foundation. I hope that the hon. and learned Gentleman will warn his right hon. and learned Friend that in future he must come and do his own work here.
The hon. Member told us that "this lawyer"—meaning himself—did not enjoy gobbledegook. In that case his will be a very worthy presence in the present administration. We wish him all good fortune in infusing a measure of good language and general literary hygiene throughout an administration which is given to even nastier language than is usual for an administration.
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My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) rightly questioned whether this was a Government motion, with an asterisk against it on the Order Paper and so on. This should be understood for the future: one cannot eat one's cake and have it, and motions must be Government motions or not.
The right hon. Member for Orkney and Shetland (Mr. Grimond) earned the gratitude of the whole House for reminding us, as if we did not already know, that the Attorney-General was not a politician. We have always held the right hon. Gentleman very close to our hearts, but this evening for that piece of news we are deeply indebted to him.
My hon. Friend the Member for Thanet, East (Mr. Aitken), in attacking the Government, went very near to giving a characteristic reason for conceding the case, which is the only issue, as being why we deny to the courts what is freely available to everyone else. The Solicitor-General was right to assume that the House would not wish to impede the courts. That must be right. At the same time, we should not wish to see the courts either unduly bored or unduly deprived.
I look at the schedule of delights to be extended to them for their enjoyment—Fox, Gladstone, Baldwin and Baldwin again, Morrison, Attlee and the right hon. Member for Orkney and Shetland. How can we possibly deny the courts those sources and Crossman as well? I do not see what the courts have done to have the last three entries inflicted upon them, those coming from the present Prime Minister.
The Government brought this entirely upon themselves. This is one of those parliamentary occasions that occur from time to time and that in the past would always have been a source of cries for the attendance of such odd animals as the Lord Advocate and the Solicitor-General for Scotland, strange people who have no possible interest in the proceedings. But tonight I have spared you these, Mr. Deputy Speaker.
I believe that on the whole my hon. Friends would be right to allow the courts the very great privilege of having the limited access to our records which is now proposed. I am awfully sorry that the Solicitor-General had to carry the burden of other people's incompetence and thoughtlessness.
1.40 a.m.
Dr. Jeremy Bray: My hon. and learned Friend the Solicitor-General mentioned another affidavit referring to proceedings in this House. Would he care to say from whom that affidavit came?
The Solicitor-General: It was served on my right hon. and learned Friend by those acting for Times Newspapers Ltd.
Dr. Bray: I am not quite clear whether that gives the information that I was after. I was asked by the defendants to swear an affidavit, and in it I made a passing reference to certain proceedings of this House. Those proceedings are not listed in the petition.
As I understand it, Mr. Deputy Speaker, you cannot accept a manuscript amendment, and if we wish to move one we must get Mr. Speaker out of bed, something which he may or may not be keen to have happen. So wide-ranging is the evidence which has been submitted to the courts in this case that it would be a restrictive list to confine the references to those mentioned.
Mr. Deputy Speaker: It may help hon. Members if I tell the House that Mr. Speaker's consideration has been given to a manuscript amendment.
Mr. Maxwell-Hyslop: On a point of order, Mr. Deputy Speaker. Is it not a fact that whoever is the occupant of the Chair is at liberty under the rules of the House to accept an amendment, just as he is at liberty to call whomever he wishes in a debate?
Mr. Deputy Speaker: I understand that this is the one area where we are restricted, and that the selection of a manuscript amendment is tied to Mr. Speaker. However, that need no hold up the House any longer.
Dr. Bray: That being so, perhaps my hon. and learned Friend could help us. If there are proceedings of the House which have been referred to in affidavits, and which will appear in court in this case, is the threat that my hon. and learned Friend mentioned in his speech, that this will rule the evidence out of court, to be enforced, so that the affidavits will not be admitted as evidence in the case?
Mr. Deputy Speaker: Before calling the Solicitor-General to move the manuscript amendment which Mr. Speaker has accepted, I want to call one other hon. Member who has been trying to catch my eye.
Dr. Bray: I gave way to my hon. and learned Friend the Solicitor-General, Mr. Deputy Speaker, to see whether he wished to reply to my points.
The Solicitor-General: I am grateful to my hon. Friend for giving me the opportunity to say that I should be prepared to move the manuscript amendment which would be in the sense indicated by the hon. Member for Tiverton (Mr. Maxwell-Hyslop). What course the court would take in admitting any specific reference is a matter that I must not attempt to pre-empt. It is entirely a matter for the court, but, as I now understand it, the House would be giving leave for any appropriate debate to be produced.
1.45 a.m.
Mr. Tam Dalyell: So much wrath and scorn seems to have been directed towards my right hon. and learned Friend the Attorney-General in the past hour and a half that I think it would be appropriate for me to say, as the late Dick Crossman's PPS, that this is a many-sided matter in the same way as Dick Crossman was the many-sided and complex man.
Some hard things have been said about the Attorney-General which are less than fair. However, I suspect that Dick Crossman's shadow might be laughing at the various parliamentary misfortunes that have overtaken him and the Solicitor-General in the past three days. It is exactly the type of thing that happened to Dick Crossman when he was Lord President of the Council.
I understand that the Attorney-General, as guardian of the public good, has taken certain initiatives. Of course, a great deal of money is involved in these matters. It is relevant to ask on whose authority a Minister has embarked upon such a massive expenditure of public funds. This matter could continue for day after day.

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We have already seen some lawyers rubbing their hands and saying that this is a fascinating constitutional case. That may be, but I for one would think it wrong if, for instance, Mr. Crossman's widow were to have to bear much of the expense. If she does not and the defendants do not, who will bear the cost? There is a real issue as to what extent the Treasury and the State should bear the costs, however fascinating the case may be. I should like some explanation on that matter.
Mr. Deputy Speaker: Before the Solicitor-General replies, I must tell the House that the question of why the case is being held is not one for discussion tonight.
Mr. Dalyell: Mr. Deputy Speaker, I purposely did not ask why the case was being hold, nor did I stray into the pros and cons of the case. The question I asked was directly concerned with the provision of finance. That is a slightly different question.
1.47 a.m.
The Solicitor-General: This has been a lively debate and for many of us a memorable occasion. I make no complaint at this late hour about the nature of some parts of the debate. Without an element of levity our discussions would be burdensome indeed. I must take comfort from the love of my hon. Friend the Member for Newham, North-West (Mr. Lewis).
But this is a serious matter and it is a matter which might become a serious precedent. I am grateful for the remarks of the right hon. Member for Yeovil (Mr. Peyton). I can assure the House that the reason for my right hon. and learned Friend the Attorney-General not presenting the petition was not because he wished to take refuge in any procedural niceties. He would have been delighted to argue this matter himself. In a different situation I, too, would be happy to argue some of the issues which have been raised tonight. More than once I have been tempted to embark on a debate on the merits of the action or on political theory. Some day I shall take the opportunity of doing so, I promise myself that. However, it would be wrong to do so tonight and I shall not permit myself that luxury. It happens to be the case that the proper
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course of action is for me to confine myself to the specific questions which have been raised.
The right hon. Member for Orkney and Shetland (Mr. Grimond) asked what it was precisely that the House was being asked to authorise. The answer is set out in my right hon. and learned Friend's petition. The House is being asked that it will be
"graciously pleased to give leave to the proper Officers of the House to attend the trials of the said actions and to produce the said Reports, and formally to prove the same accordingly to their competence."
It is as limited as that.
The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) said that it is a little odd that the proper Officers of the House should be able to prove what was said by Mr. Fox in this House some 200 years ago. I accept that. It is a rule of evidence that a document can be produced to the court if it is produced from the proper custody, if there is no better evidence. The reason is as technical as that. Certainly it might be said that at this stage it is odd that the leave of the House is required for that to be done when it can be seen in every history book, textbook and magazine in the kingdom.
My hon. Friend the Member for Bristol, North-East (Mr. Palmer) suggested that I said on Friday that even if leave were given it would not make much difference. I did not follow that part of his argument because if I said that on Friday it was not intentional. Two consequences would follow if leave were not given tonight. One would be that the court would not have the advantage of these reports, and if it is hoped that the court will arrive at a proper and just conclusion that would be a serious matter. The second consequence is that there would be a precedent for this House having refused its assistance to the courts. I would hope that the House would feel that that is an undesirable precedent.
The hon. Member for Thanet, East (Mr. Aitken) asked whether these reports would be admissible because they may or may not be relevant. All I can say is that it would be wrong for me to try to suggest what conclusions the court might arrive at. It is for the court. If the court decided that, even though the House had given leave, these reports

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were not properly admissible or not relevant the court would act accordingly.
Mr. Peter Bottomley: Can the hon. and learned Member tell us whether he will be able to help us in coming to a conclusion by quoting one or two extracts from the diaries so that we can make a decision?
The Solicitor-General: The answer to that is "No."
The other question raised by the hon. Member for Thanet, East was what was the legal basis for this action. It would be wrong if I attempted now to embark on the kind of legal argument which the court will be called upon to consider. Broadly, there is a distinction between the 30-year-rule, which we all know exists—whether or not it should—and the law. It may or may not be the case that in due course it will transpire that the law enforces the 30-year-rule.
Mr. Aitken: What law?
The Solicitor-General: That is precisely the question on which I cannot be drawn. The hon. Gentleman must appreciate that. That there is a 30-year-rule we all accept. Whether there is a legal remedy to anyone for breach of that rule is the matter which the court will be called upon to decide. Clearly I must not embark upon an attempt to argue that question now.
My hon. Friend the Member for Keighley (Mr. Cryer) said that he assumed that what was now being required would assist my right hon. and learned Friend's case. I thought that I had attempted to answer that earlier. If any other party believes that any other debate will now be of assistance to the court, if the House accepts the amendment I am about to move it will be open to any other party to produce it.
Mr. Arthur Lewis: May I ask a question arising from the intervention of the hon. Member for Thanet, East (Mr. Aitken)? While I do not ask the Solicitor-General to argue whether there is a law, may I ask him to give us a reference so that we may look it up? I would like to know whether my hon. and learned Friend can give us this information. Surely the Solicitor-General can tell us that there is a law which we can
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look up. The hon. Member for Thanet, East and I could sit down together and check it for ourselves.
The Solicitor-General: I do not wish to be unhelpful but if I were to embark upon that it would lead the debate into such questions as whether my source was the appropriate one or whether some alternative source was better. The only advice I can offer to my hon. Friend is that if he looks in The Times Law Reports, possibly the day after tomorrow, he might find something that is of assistance.
My hon. Friend the Member for West Lothian (Mr. Dalyell) raised the question of the finance connected with this action. Whether this is a desirable action is a question on which I clearly cannot embark. But that it is financed out of the appropriate Vote is not surprising. Many prosecutions in this country are financed out of a Government Vote. They are not in any sense political prosecutions. They are not propounded by a Government Minister and they are not embarked upon for political reasons. That situation, therefore, is not unusual.
I do not think I have left any questions unanswered. What I think remains for me to do is to attempt to give effect to the right hon. Gentleman's suggestion, which I rather felt met with the wishes of the House. I think that the proper course is for me to say what amendments I had in mind and then, since it is my own motion, to invite my hon. Friend the Parliamentary Secretary to the Law Officers' Department formally to move them.
I must confess that my mind has been on things other than the draftsmanship of the amendments during the last few minutes. I hope, therefore, that the House will forgive me as I read out what has been drafted: in line 1, after "given", insert
"to all parties to the said actions";
and in line 2, leave out "the said" and insert "any". I think I am right in saying that that will give effect to what is desired. My intention throughout has been to invite the House to assist the court in the duty which has been imposed upon it.
Mr. Maxwell-Hyslop: May I raise a point for the removal of doubt? The

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word "said" appears more than once. The hon. and learned Gentleman means the final "said".
The Solicitor-General: The hon. Gentleman is right. I am grateful. The word "said" is in line 2, but I think the hon. Gentleman is right that the word "said" also occurs in line 3. I think the answer to that would be that it would follow from the reference in line 2. I do not think there is a problem there.
Amendment proposed: In line 1, after "given", insert
"to all parties to the said actions".—[Mr. Davidson.]
Mr. English: I am grateful to the Solicitor-General because, although it was not apparent on the written copy on Friday when we discovered some of the errors, it is now clear on the printed document that there are four, not two, errors. The right hon. Member for Yeovil (Mr. Peyton) might like to know that had they been taken out, he would have lost two out of the three references to "Prime Minister", which he advocated earlier. The more important point is that I hope that in future when we have petitions of this type they will be drafted in such a way, by whoever drafts them—I understand that it is not my hon. and learned Friend or his office—

Division No. 290.]

AYES

[2.0 a.m.

Archer, Peter

Dalyell, Tam

Peyton, Rt Hon John

Armstrong, Ernest

Davidson, Arthur

Rooker, J. W.

Atkins, Rt Hon H. (Spelthorne)

Ellis, John (Brigg & Scun)

Stradling Thomas, J.

Benyon, W.

English, Michael

Weatherill, Bernard

Bray, Dr Jeremy

Grimond, Rt Hon J.

Woodall, Alec

Cocks, Michael (Bristol S)

Harper, Joseph

Cohen, Stanley

Harrison, Walter (Wakefield)

TELLERS FOR THE AYES

Coleman, Donald

Lewis, Arthur (Newham N)

Mr. David Stoddart and

Cox, Thomas (Tooting)

Maxwell-Hyslop, Robin

Mr. James A. Dunn-

Cryer, Bob

Penhaligon, David

NOES

Cohen, Stanley

Coleman, Donald

Ellis, John (Brigg & Scun)

TELLERS FOR THE NOES:

Mr. Jonathan Aitken and

Mr. Norman Lamont.

Mr. Deputy Speaker: As it appears that 40 Members are not present, the Question is not decided and the business stands over until the next sitting.
that we do not waste this much time trying to put them right.
Amendment agreed to.
Amendment made: In line 2, leave out "the said" and insert "any".—[Mr. Davidson.]
Mr. English: On a point of order, Mr. Deputy Speaker. You did not say whether Mr. Speaker had selected the manuscript amendment of which I had given him notice before he left the Chair and went to bed.
Mr. Deputy Speaker: The hon. Gentleman could not have heard me. I began the debate by saying that Mr. Speaker had not selected the two amendments standing in the hon. Gentleman's name.
Mr. English: I am talking about the third amendment. You mentioned the two amendments on the Order Paper. I am talking about the manuscript amendment.
Mr. Deputy Speaker: I saw the hon. Gentleman's manuscript amendment as well. Mr. Speaker did not select it. I am sorry if I did not indicate that decision to him.
Main Question, as amended, put:—
The House divided: Ayes 25, Noes 3.

HIGH COURT ATTENDANCES (OFFICERS OF THE HOUSE)
  ADJOURNMENT
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Walter Harrison.]

CONISTON ROAD ESTATE, BROMLEY
2.13 a.m.
Mr. John Hunt: After the procedural fun and games in which we have been engaged, it is with much pleasure that I turn to a matter of vital interest and importance not only to many of my constituents but also to many ratepayers in the neighbouring London borough of Lewisham. I refer to the acquisition by Lewisham Council of a newly built estate of 28 houses in Coniston Road in my constituency and the Government's subsidy approval for this deal.
The history of this affair began for me early in November of last year when I first heard of Lewisham's intentions. I wrote at once to the Minister for Housing and Construction urging that the necessary loan and subsidy consents should be withheld in view of the financial restrictions being imposed upon local authorities at that time which since then have been intensified still further. In his reply to me dated 5th December 1974 the then Under-Secretary of State said that local authorities had been told that they could acquire new dwellings from developers provided that they were available in the right place to meet urgent housing needs and were of an appropriate standard and price. The letter concluded:
"I cannot say whether approval for subsidy purposes will be given to the scheme you mention in the absence of any application or detailed information from Lewisham. It depends on whether they are of the right standard and represent good value for money."
I shall return to those two important criteria.
In the meantime the three Bromley councillors representing the Martins Hill and Town ward, in which these properties are situated, presented a petition through me to the Minister signed by 124 residents living in the Oaklands Road and Spencer Road areas of Bromley adjoining the properties being acquired by Lewisham. The petition referred to the excessive price of acquisition, then rumoured to be £500,000, and also to the fact that the development was originally planned for the private sector and, as it put it, had been "architectured" to conform to local environmental conditions.
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This is not an aspect of the matter which I have raised in my own representations. I have concentrated solely on the public expenditure implications.
There is understandable apprehension in Bromley about the intentions of Lewisham council with regard to the tenancies of these 28 properties. They were built as three-bedroomed houses but I understand that Lewisham council has since converted a study into a fourth bedroom in each house, and this makes them substantially larger than the average council property. I therefore warn Lewisham Council and the Minister that any attempt to use this accommodation as a means of exporting Lewisham's problem families into Bromley will be bitterly resented and strongly resisted.
Returning to this saga, I report that, having continued to press the Department of the Environment on the mater, I was finally told in a Written Answer on 7th May this year that approval for the first purchase of the properties for subsidy purposes was given on 24th April. Subsequently, on 21st May, I asked for full details of the subsidy arrangements, including the capital cost of the acquisitions, and was referred by the Minister to Lewisham Council. I therefore wrote at once to the Town Clerk of Lewisham, who informed me in a letter dated 4th June that it was the council's policy to treat as confidential financial information relating to individual purchases of property. This was said to be partly because vendors might not wish the prices to be made public and partly because disclosure might compromise future council negotiations for similar property. This remarkable coyness on the part of Lewisham Council showed scant concern for the interests either of its ratepayers or of the taxpayers, from whom money was being taken and used for these highly expensive acquisitions, aided and abetted by the Department of the Environment.
The Town Clerk's letter to me went on:
"I have informed Councillor Pepper, Chairman of the Housing Committee, of your request and he has asked if you would let him know your purpose in seeking this information. He would, of course, have no objection to it being supplied to you on the basis that you would maintain its confidentiality."
To that I replied as follows:
"I was rather surprised to learn that you did not feel able to supply the information

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which I requested, particularly in view of the fact that the impression which I gained from the ministerial reply was that the details I required would be forthcoming from your Council.
In response to Councillor Pepper's enquiry, the purpose of my seeking this information is to expose the inconsistency of a Government which preaches economy in public expenditure while sanctioning a deal of this kind. I am, frankly, not interested in receiving the information on a confidential basis, and I hope that the matter can be reconsidered.
If you still feel unable to supply the details I have requested, I shall have to go back to the Minister again. In the meantime, in view of the widespread interest in Bromley in this purchase by your Authority, I am releasing to the press a statement regarding our correspondence."
That seemed to do the trick, and I am happy to say that it produced a reply by return of post telling me that the matter had been reconsidered and that the information would now be supplied.
When it came the information was to the effect that the total cost of acquisition of the 28 houses was estimated at £576,720. I have been informed by Councillor Eames, who is leader of the opposition on Lewisham Council, that, in addition to this, the rate fund subsidy to the scheme borne by Lewisham's hard-pressed and long-suffering ratepayers works out at £10 per week per house while the Exchequer subsidy works out at £20 per week per house. Perhaps the Minister in reply would be good enough to confirm whether those figures are correct.
I also understand that Lewisham Council has assessed the reasonable rents of these properties at between £10·55 and £ 10·85 per week, excluding rates. These figures illustrated the degree of financial madness involved in municipalisation schemes of this kind, for the estimate of £576,720 for 28 houses works out at more than £20,000 apiece.
Bearing in mind that such expenditure does not add a single extra unit of housing accommodation to the total stock in Greater London, how can this acquisition possibly be justified, and how can it possibly meet the Government's criteria, laid down in a letter to me, of "good value for money"? I regard it as an outrageous waste of public funds. One is bound to ask what is the point of the Secretary of State telling local councils that the party is over when in the very next breath he sanctions a spending spree
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of this kind by Lewisham Council within my constituency.
There has been an interesting postcript to the affair in the form of Circular No. 64/75 issued to local authorities by the Department of the Environment on 9th June. This circular sets out significant changes in the permitted categories for municipalisation. I should be grateful if the Minister would confirm tonight that the Coniston Road deal would not now qualify under the terms of the latest circular. If that is so, I hope that we can equally have a firm assurance from the Minister tonight that Lewisham Council will never again be allowed to infiltrate into my borough in this way acquiring properties which were designed for the private market and for which there was no lack of private purchasers. If that assurance is forthcoming, as I hope it will be, all my efforts in this affair will not have been in vain and my constituents, as well as Lewisham ratepayers, will be greatly relieved and reassured.
2.24 a.m.
The Under-Secretary of State for the Environment (Mr. Ernest Armstrong): I must say to the hon. Member for Ravensbourne (Mr. Hunt) that I find it difficult to understand why so much heat has been generated by what in its context is, in fact, an unexceptional transaction.
The Coniston Road Estate, which lies just within Bromley's border with Lewisham, consists of 28 6-person town houses. The total price paid was £551,241, of which £175,000 represented the cost of the land.
The hon. Gentleman seems to be upset about three things, with which I shall deal. The first is that Lewisham Council has purchased an estate within Bromley for letting to council tenants, the second is that the cost is too high, and the third is that this kind of property is unsuitable for people who have to look to a local authority to provide a roof over their heads. I should like to deal with these points in that order, but before doing so I think that an explanation of the background to the transaction would be helpful.
In April last year the Department issued a circular, No. 70/74, entitled "Local Authority Housing Programmes". This circular recommended ways to secure an immediate increase in council

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housing programmes which had suffered a serious decline over recent years. It was admitted that some of the methods suggested would necessarily take time. But one way in which an immediate increase could be achieved was through the acquisition of new houses from developers. It was known that, because of the then current mortgage famine, developers were having difficulty in selling their houses. As a result, a substantial number of dwellings were standing empty at a time when, particularly in places such as London, homelessness was on the increase and waiting lists were rapidly rising. It was, therefore, only common sense to bring together purchasers badly in need of a commodity—housing is still the greatest social problem this nation faces—and those with that commodity who were only too anxious to sell.
The only snags were that many privately built houses are not up to Parker Morris standards on which approval of council built housing for subsidy purposes normally depends, and that dwellings which had been designed to attract buyers might be outside the price range of ordinary council housing. It was also important to ensure that only dwellings in places where there was real need would be bought.
Accordingly,—the hon. Gentleman will be aware of this—Parker Morris conditions were temporarily waived in the circular, provided the schemes complied with the standards of the National House Building Council. It was made clear that the dwellings should be available in the right places to meet urgent—and I mean urgent—housing needs. Prices had to be those recommended by the district valuer, and the dwellings had to be of an appropriate standard. It was specifically stated that dwellings in the upper price bracket should not be acquired.
The circular also pointed out that purchase of developers' schemes was only an emergency measure. That, in part, is an answer to the particular question the hon. Gentleman raised—although I shall read very carefully what he had to say and write to him if any further explanation is necessary.
Although the latest circular on the subject, No. 24/75, mentions the possibility of purchasing dwellings already under construction by private developers
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in areas where there is a local shortage of building land, the acquisition of completed schemes by local authorities does not now have the urgency that it had when this transaction took place.
I turn now to the question whether a council should build or acquire property in the area of another authority. Under the Housing Act 1957, the Act which lays down the general powers and duties of local authorities for the provision of housing accommodation to meet local needs, the area in which a local authority could acquire land—which includes dwellings—is not limited. The only exceptions originally were the London metropolitan borough councils, which could acquire land outside their area only with the agreement of the then Minister of Housing and Local Government. The London Government Act 1963 changed this to the extent that a London borough council is prohibited from exercising its powers without ministerial consent outside the Greater London area.
I think that the House will agree that in cases where a local authority has certain rights it would be wrong to prevent it from exercising them by administrative action without very good grounds indeed. Accordingly, it is not the practice of the Department to withhold approval of a scheme merely because it is outside the area of the London borough which is building or acquiring it. However, in my opinion—and I am sure that most boroughs generally agree with this—poaching in another's area should not be encouraged because of the bad feelings it arouses and because prices can be forced up. Accordingly, the Department normally asks any London borough proposing to buy land or a developer's scheme outside its own area whether the local council is also interested in acquiring it. If the answer is "Yes", the borough is usually told that priority must be given to the local council.
In the case of the Coniston Road scheme the Department was assured that Bromley was not interested in purchasing the estate and that the GLC, to which it had also been offered, had withdrawn from the field.
Mr. Hunt: The reason Bromley was not interested in purchasing was that the council was more aware of the needs of

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the ratepayers of the area and was not prepared to squander money on this scale.
Mr. Armstrong: That does not contradict what I have said. There is a balance between families and public expenditure, and this is something we could argue about for some time.
It is of great concern to the Government that the cost of providing houses, in both the public and the private sectors, has become so high. Indeed, steps have already been taken to bring about economies without cutting down the supply of new housing. However, the kind of measures which have been recommended cannot be effected overnight and are certainly impracticable where the dwellings have already been erected.
What the Department had to decide in its survey of Coniston Road, after receiving a certificate from the district valuer that the cost was not in excess of the current market value, was whether the dwellings compared roughly with equivalent council dwellings in standards and costs and that the cost of the land was not too high. In the first exercise it constructed a yardstick for a local authority scheme of this kind, including appropriate allowances, and found that the building costs compared favourably with those prevailing at the time for council dwellings of this size in London, taking into account slightly different standards. The land costs were considered high for an outer London borough but not unduly so, and it would have been unreasonable to refuse approval to the scheme on this ground. I therefore conclude that the hon. Member's criticism on grounds of cost is completely unjustified.
I referred just now to different standards. The dwellings do not quite come up to Parker Morris standards since the total floor area is slightly deficient, and, as they were designed for the private market, they contain such higher standards as neo-Georgian details to elevations and a few frills like a bay window, a window seat and an artificial vent to some of the bathrooms. These extras are not subsidised.
To suggest that these dwellings are unsuitable for council tenants is, of course, nonsense. The design and quality of council housing stand up very well with
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those built for sale. If the hon. Gentleman does not believe me, I invite him to look at the award winning schemes, details of which are published by the Department. He may also like to know that town houses in a more modern idiom are not an uncommon feature in council schemes these days.
I understand that there is concern in some quarters that these houses, because of their size, will be occupied by problem families. The hon. Gentleman referred to the fears of his constituents. It is not for me to interfere in the way Lewisham manages its properties. Parliament has laid the duty for this on the shoulders of local authorities. But the Chairman of Lewisham's Housing Committee has been reported as saying that the borough tries to match families with the properties they go into for the purpose of avoiding problems. There is, of course, some element of risk in having too many families in one scheme. But good behaviour is not a quality confined only to small families or, indeed, to one class of society.
As I said at the beginning of my remarks I cannot understand the fuss made about the carrying through of this project. Here on one side we had a builder with empty dwellings on his hands through no fault of his own. He was willing to sell them at a reasonable price. He had no expectation of assistance from Bromley. On the other hand there was Lewisham just a stone's throw away from the scheme, a borough with all the usual problems of inner London boroughs—very little land for new building, a long waiting list of people in desperate need of homes and growing homelessness—and only too anxious to lay its hands on empty properties. If Lewisham had not been permitted to buy these houses, what would have happened? The dwellings themselves, or at least some of them, might have been left empty and the builder might have had to hold stock at a time when many builders were running into liquidity probelms.
Therefore, having listened carefully to the matter, I am satisfied that I have no reason for criticising Lewisham for taking the action that it did in this case.
Question put and agreed to.
Adjourned accordingly at twenty-five minutes to Three o'clock am.