FIRST DAY

HC Deb 19 November 1975 vol 901 cc10-154

2.46 p.m.

Mr. Caerwyn E. Roderick (Brecon and Radnor)

I beg to move.

That an humble Address be presented to Her Majesty, as follows: Most Gracious Sovereign, We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament. In being called to propose this vote of thanks, Mr. Speaker, I am most conscious of my good fortune in catching your eye. I hope that my good luck remains with me throughout this Session.

It makes me feel very humble to see so many hon. Members gathered here to listen to my few remarks—but they may have come to hear someone else. I guess that my constituents will be very proud that I, as their representative, have been invited to perform this task today. Of course, it is not their unanimous wish that I should be standing in this place. Even so, despite my inadequacies, I wish to express my gratitude on behalf of the people of Brecon and Radnor that we have been so honoured.

The old counties of Brecon and Radnor form the major portion of the new county of Powys. It is becoming an increasingly important Mecca politically. My right hon. Friend the Prime Minister has visited it on several occasions. We had the pleasure of his company in the Elan Valley some time ago. In July we had his company at Brecon, where he was warmly welcomed by many of his supporters throughout Wales.

The right hon. Member for Sidcup (Mr. Heath) felt it necessary to visit Brecon and Radnor. I advise the right hon. Lady the Member for Finchley (Mrs. Thatcher) that she ought to visit us at some time rather than pass through to other venues, because that would lead to her greater maturity as Leader of the Opposition.

I am told on good authority that that well-known impressionist the right hon. Member for Devon, North (Mr. Thorpe) paid us a visit recently. He gave a remarkable impression of the Leader of the Liberal Party. Other politicians, too numerous to mention, feel it important to pay visits. One was the Leader of Plaid Cymru, the hon. Member for Carmarthen (Mr. Evans). In 1970, at an open-air meeting. I had the pleasure of having him as a member of the audience—quite unbeknown to me at the time, but it was reported to me afterwards.

Brecon and Radnor contains some of the most beautiful countryside in the United Kingdom. We had a recommendation from no less a person than Cliff Michelmore. In announcing the results of the 1970 General Election, he suggested that people should visit the area. It contains almost the whole of the Brecon Beacons National Park. We almost had the Cambrian National Park, but that project did not go ahead. In its 60-mile length there are such things as the caves of Dan-yr-Ogof, in the Upper Swansea Valley, and the caves of Ystradfellte. These are becoming increasingly important tourist attractions and are important for serious cavers. The Brecon Beacons and Llangorse Lake are towards the middle of the constituency, and the reservoirs which supply Cardiff, Newport, Swansea and Birmingham are located within these boundaries.

We look forward to an agreement soon being reached with our English friends so that the proposals to build in the constituency one of the biggest reservoirs in Europe can go ahead. This reservoir will be 11 miles long and 32 miles around. Unfortunately, due to the upheaval of water charges, we have not yet reached agreement.

The 1,200 square miles of this constituency consist mainly of agricultural holdings, and along the southern border—that is, the Heads of the Valleys—is the beginning of industrial South Wales. The mix is perhaps best illustrated in my family, my father having started life in a small wool factory and my mother having been brought up in a miner's home in the upper reaches of the Swansea Valley.

The farms are mainly hill farms, producing beef and lamb. It was no surprise to some of us that two of our young men recently broke the world record for sheep shearing. They were two friends, one beating the record of the other within a fort- night during the course of the summer. Our farmers had a difficult time last year when prices for their products were at rock bottom while their costs were higher than ever before. Matters have improved somewhat this year, but our farmers are still working on very tight margins. Fodder is a serious problem in the area, being scarce and costly. I believe that it is vital to keep these farms as viable units, if only because they are the backbone of the community in these rural areas and they make it a live area instead of a desert, as it might become in other circumstances.

I note that the Queen's Speech states: "My Government will play their full part in the development and improvement of the common agricultural policy". I am reminded of the American senator who, when asked at a public meeting what he thought of a particular policy, said "Some of my friends agree with the policy; other friends are opposed to the policy. I agree with my friends." I do not particularly want to improve and develop the CAP as it is basically so wrong in concept. I want to abolish it, but I have it on good advice that I am not allowed to amend the Gracious Speech.

In common with other rural areas, we have over the years experienced difficulties in communications of all kinds and in job opportunities—that is, a lack of variety in opportunities for jobs—leading to a loss of our young people who leave to live in other parts. Services such as education and health are difficult, and they suffer. I therefore particularly welcome the proposal to set up a Development Board for Rural Wales. I have pestered my right hon. and learned Friend the Secretary of State for Wales—nay. I have nagged him—on this question. I take this opportunity to apologise to him for being such a nuisance and at the same time to express my gratitude to him and to my right hon. Friend the Prime Minister for including that measure. If recent indications are any guide, it should command support from all quarters of the House.

I have a special interest in education, particularly education of the handicapped and the 1further education of handicapped people, whether physically or mentally handicapped. It was, therefore, with much pleasure that I noted that provision is to be made for those with special needs in education and that priority will be accorded to 16 to 19-year-olds.

I have no intention of enumerating the various parts of the Gracious Speech. Suffice it to say that many of us have the same objectives, although we differ in our means of achieving those objectives. In foreign affairs we seek stability and peace throughout the world, and we seek to foster and assist weaker areas so that they can enjoy such conditions and a more dignified life. I was privileged during the past Session to visit Tanzania with a Commonwealth Parliamentary Association delegation. What I saw during that visit reinforced my belief that we must give maximum support to developing countries.

Turning to less controversial matters, I applaud the Government on their intention to introduce legislation to set up Assemblies in Wales and Scotland as promised in the last two election manifestos. I have heard it asked "Why should not the English regions enjoy such privileges?" and I agree. Why should they not enjoy those privileges? If that is their desire, they should press for them. [An HON. MEMBER: "We will."] Critics have said that we are setting up another bureaucratic structure. We already have such a structure in Wales, and it is in the interests of democracy that I support these proposals so that control over the numerous bodies in Wales, which seem to dominate our lives, should rest with the elected representatives of the people.

I trust that the present dissatisfaction felt about the new local government structure will not be allowed to obscure the need for democratic control at this level. I believe that, once these proposals are implemented, local government will have to be looked at again and that the two tiers will have to be merged into one.

I hope also that people, be they Members of Parliament, councillors or members of appointed bodies, who oppose these measures will not be motivated by the fear of loss of power for themselves. I believe that we should be seeking the best structure of government and not protecting vested interests.

The Queen's Speech refers to proposals for a major review of the practice and procedure of Parliament. Apart from any consideration of what will happen to the other place, may I put in a plea on behalf of provincial Members and Members who have families. Few Members from the provinces stay for Friday business, apart from exceptional occasions. If I stay, for instance, I am ruled out of any constituency activity on Friday, both by day and in the evening. Many constituency events take place on a Friday, and I should like to attend mine. I ask that business at present conducted on a Friday be conducted on two mornings during the week so that we may all play a fuller part in those proceedings.

In the short time I have been a Member of this House it has seemed that we reach a crisis every summer, and we are never sure when the business of the House will be finished. It is high time that we had a definite timetable so that we knew when the programme would finish in July. This House is not the leisurely place it was many years ago, and those who have children see little enough of them during their term time. We should have an absolute deadline in July and, if necessary, return for a couple of weeks in September, before the party conferences start, to clear up the business.

I said that I should mention only a few points in the Gracious Speech, but it would be unforgivable if I were to sit down without mentioning unemployment. The matters I have touched on so far are totally insignificant compared with the intolerable level of unemployment. We have differences of opinion on how to solve this problem. Many Government supporters believe that public sector intervention can play a most significant rôle, and selective import controls are now being discussed more freely.

In my constituency I have witnessed the loss of jobs in shoe manufacturing and in textiles, and I feel strongly that some short-term measures on imports are needed. Whatever our views on the present strategy for dealing with this situation, I hope, for the sake of those at present unemployed and those over whom a cloud hangs, that it will bring the required result.

The programme for this Session promises to keep us as busy as the last Session did. I trust that by next autumn we shall feel that it has been worth while and that the results will justify our actions.

2.58 p.m.

Mrs. Ann Taylor (Bolton, West)

I beg to second the motion, so ably and wittily moved by my hon. Friend the Member for Brecon and Radnor (Mr. Roderick). Although our constituencies, one in rural Wales and one in industrial Lancashire, are very different, I am sure that our constituents are concerned about similar problems and that they would all agree that our priority at present is the fight against unemployment and inflation.

I have been a Member of the House for only a short time—just over a year, in fact—but I have known my constituency in Bolton for much longer, having lived in Bolton for most of my life and having been educated at schools in my constituency. It is perhaps on this account that the reference to education in the Queen's Speech is one of the announcements that I welcome most.

We are still a long way from real equality of opportunity in education, and we shall make progress only by compensating for disadvantage and by keeping educational doors open.

One phrase that I particularly welcome in the Gracious Speech today is that which says: A Bill will be introduced to require local education authorities in England and Wales who have not already done so to make plans for the abolition of selection in secondary education,…". I well remember the General Election of October 1964. At the time, I was a sixth-former and stood in the mock election at my grammar school in Bolton. One of the main points in my manifesto then was the urgent need for the abolition of selection in secondary education Throughout the rest of that decade, I waited for the then Labour Government to take action to deal with those local authorities, such as Bolton, that refused to introduce comprehensive education. Today, we have had an assurance that the present Labour Government will do just that. I cannot say "Thank you for waiting 10 years until I got here", but I am pleased to see this pledge in the Gracious Speech, because I am convinced that it will be of benefit to future generations of children in Bolton and elsewhere.

I am sure that when hon. Members think of Bolton they think of industrial Lancashire and, perhaps, of Bolton Wanderers, the team which is doing well at present. [Interruption] It will be promoted this season. I assure my right hon. and hon. Friends that Bolton Wanderers is doing well, unlike the textile industry, which is also associated with Bolton.

Bolton is a town which grew up with cotton. Its inhabitants, like Samuel Crompton, were responsible for some of the most important inventions of the Industrial Revolution and for much of the early industrial strength of the country. From the start, however, Bolton was wise, and began to diversify, first to making textile machinery and later to general engineering. Therefore, today we have a healthy range of industries, including work carried out for the North Sea oil industry. But although we have many sources of employment, the textile industry is still significant, and in Bolton we want to keep it that way.

Many jobs in textiles have been lost in recent years, but we now have a modern and efficient industry. I am sure that many of my hon. Friends will agree that help should be given to what is essentially a viable industry, and I hope that the other measures mentioned in the Gracious Speech will include the early introduction of selective import controls to help textiles and other industries in a similar position before it is too late.

One of the single most important problems facing many of my constituents as individuals is that of housing. Therefore, I welcome the statement that the Government will take energetic action to encourage the provision of more houses in both public and private sectors because we are short of houses in Bolton.

We have another housing problem. Bolton has a tradition of owner-occupation of smaller, older houses—what we in the North call terrace housing, but what in London would be called, deceptively, "spacious town houses". Whatever they are called, the fact remains that building societies do not like them. They do not want to lend on them, although many young couples would like to be able to buy them. Consequently, local authority mortgages are extremely important, and I hope that measures to improve our housing situation will include a new initiative to ensure that loans and mortgages are available for this type of property, because without it there will be no real improvement in the housing situation in Bolton and the Northwest.

I welcome the proposals for a major review of the practice and procedure of Parliament. In the last year, as I walked through the Lobby at 2 o'clock or 4 o'clock in the morning, I frequently thought that there must be a better way of organising our business. However, my main concern is not the hours of parliamentary sittings but the more important problem of the balance of power between Front and Back Benches. I am sure that a shift towards the Back Benches would be in the interests of our constituents and in the interests of open government, and I hope that it will be seriously considered and achieved.

I hope that I am right in assuming that a review of the procedure and practice of Parliament will involve both Houses. I hope, too, that we shall soon consider the whole question of the rôles and powers of the Second Chamber. In the past my constituents have shown their opinions about what should be done to a Lord who goes against the wishes of the people.

During the Civil War, Bolton had a reputation as one of the strongholds of support for Parliament, and Boltonians suffered for their beliefs—the town being the scene of one of the bloodiest massacres of that war. My constituents later expressed, rather forcibly, their views about this to the Earl of Derby, who was thought to be responsible for the massacre, by removing his head. That might seem a little drastic today, and I am sure that my constituents will settle for the alternative of reform of the other House.

My constituents like to be able to elect their political leaders rather than be dictated to, and they have never been slow to exercise their democratic right to elect or, I am afraid, to remove their Members of Parliament, although I must admit that their propensity to change them with frequency is one of the traditions that I should like to change.

There are many other things upon which I should have liked time to comment today. I refer to the proposals for phasing out private practice from the National Health Service; for the abolition of tied cottages in agriculture; for the nationalisation of the aircraft and shipbuilding industries, which will affect my constituents; and, finally, for accelerating the programme of price display and unit pricing.

Bolton has a reputation as one of the thriftiest towns in the country and Boltonians do shop wisely, but even they cannot compare a price of 12p for 8 oz with 14p for 250 grammes—at least, not without a moment's thought. Acceleration of the programme for price display and unit pricing will be especially helpful in view of the plans for metrication—a move which is welcomed with about as much enthusiasm as was decimalisation. But at least this time round we shall have unit pricing to help.

It is just 65 years to the day since suffragettes stormed Westminster to demand votes for women. I cannot say that women would have stormed Westminster if unit pricing had not been promised, but I feel that the Government's move will be welcomed as being of practical help to all shoppers. Certainly there might have been storms if the Government had not introduced price controls and food subsidies, both of which will, I hope, stay for some time. I am pleased that the Government are to introduce a programme of price stabilisation for essential goods.

Our basic consideration should be whether these measures will help us achieve a fairer, more just society. I believe that they will, and, while there is a long way to go before we achieve the kind of society which we want as an ideal, I hope that hon. Members will accept these measures as steps in the right direction, and, as such, will give them their support

Mr. Speaker

I think it is the custom for an announcement to be made, early in the debate, about the topics to be dealt with each day. I understand that we are to have one day less this time, but I am not sure about it yet. I believe that I am authorised to say that today's debate is a general one and that tomorrow there will be a debate on industry. I shall make a further statement tomorrow, after consultation about the topics to be discussed in the following days of this debate.

3.10 p.m.

Mrs. Margaret Thatcher (Finchley)

I rise, in accordance with the pleasant customs and traditions of this House, to congratulate most warmly the hon. Members for Brecon and Radnor (Mr. Roderick) and Bolton, West (Mrs. Taylor) on the able and witty way in which they moved and seconded the motion.

I must confess that until the hon. Member for Brecon and Radnor said that the Prime Minister had visited his constituency twice I had not realised what a marginal seat he represented. Perhaps it was therefore wise that the hon. Member was chosen to discharge this distinguished and honourable task.

I note that the hon. Gentleman has been a mathematics teacher. Someone in my office kindly did the statistical research which it was thought might be appropriate to the wishes of the hon. Gentleman. I understand that his constituency covers 1,200 square miles and has 53,000 electors—an average of 44 electors per square mile. I understand also that it contains one-third of the sheep population of Wales, which totals about 6 million. I am sure that that has nothing to do with the hon. Gentleman's majority.

I understand that the hon. Gentleman could have made his speech in Welsh. I for one am very glad he did not. The hon. Gentleman has shown a certain Welsh independence in not always agreeing with his Government's policy. Indeed, he has sometimes recorded his disagreement in the Lobby. Perhaps it was this independence of mind that appealed to the right hon. Member for Ebbw Vale (Mr. Foot) in selecting the hon. Gentleman as his PPS. I hope that they will not lead each other astray.

I also congratulate most warmly the hon. Lady the Member for Bolton, West on the way in which she seconded the motion. She showed the true spirit of citizenship of the United Kingdom. Having been born in Scotland, and having had a Lancastrian upbringing, it was appropriate that she should have been chosen to take part in the debate on the Address. The hon. Lady is a very good advertisement for direct grant schools, and I am sorry that she denies to others the opportunity to derive such a benefit.

I understand that the hon. Lady believes there should be more power given to back-bench Members. The customary way to extend more power to backbenchers is to put them on the Front Bench. Perhaps the hon. Lady, too, will eventually take this course, and I wish her well.

Mr. Russell Kerr (Feltham and Heston)

Now start being sincere.

Mrs. Thatcher

I am very sincere. I am sorry it is not reciprocated.

I wish to base my remarks on the Gracious Speech on three broad themes. They seem to fall quite naturally into three main groups. First, this year we shall consider the question of constitutional change more closely and more deeply than for many decades.

Secondly, we are to consider, as we do in any Gracious Speech, economic problems. They are always with us, and changes in constitutional structure will not solve them. A very difficult year economically is ahead, in some respects even more difficult than the one we have just experienced.

My third theme is the effect of the Gracious Speech on the balance of power between the Government and the citizen.

Although I propose to deal with these matters under three separate headings, in some respects the themes overlap, which I hope will become obvious as I develop my remarks.

First, I should like to deal with the constitutional issues foreshadowed in the Gracious Speech. I take them in the order in which the issues occur and deal, first, with the difficult and prolonged question of Northern Ireland. It is a distinct and important issue with which we shall have to deal in the new Session.

I have visited the Province recently and am grateful to the Secretary of State for Northern Ireland for the arrangements he made. I received an extremely warm welcome, but I saw for myself the strain and tension caused by years of terrorism—terrorism which has gone on for as long as the last world war. I believe that confidence needs to be restored to the minds of all our fellow citizens in Northern Ireland, Protestant and Catholic alike. I hope that the Government will regard the protection of citizens as the first priority.

I am also concerned to see that it has been reported that the Secretary of State for Northern Ireland said that he did not intend to give the Government's decision on the Convention Report until early in the new year. If that is correct, I view that decision with some dismay. Some indication is necessary well before then. Could not the Government tell the House which parts of the Report they regard as acceptable and which parts as unacceptable? Can they not decide whether there are any sections which further discussions in the Convention could clarify and then conclude whether they intend to reconvene the Convention? It was impressed upon me very strongly that the worst thing that can be done in these circumstances is to leave a political vacuum in Northern Ireland. I pass that on to the Secretary of State.

The main part of the Gracious Speech concerned with constitutional matters is, of course, that part which refers to devolution to Scottish and Welsh Assemblies. It is interesting to note the way in which this phrase is couched. It is not My Government will bring forward legislation but My Government will bring forward legislative proposals. This probably demonstrates that the Government understand that time is needed to debate these proposals thoroughly, not only in this House but in the country as a whole—and not just in Scotland and Wales. We who represent English constituencies are also citizens of the United Kingdom, concerned with the constitution of the United Kingdom, and likewise accountable to our own constituents. These things will ultimately work only if we appreciate the full consequences of the action before we take it and see that any arrangements we make are effective.

I therefore welcome the fact that the Government appear to give recognition to this need for very thorough and prolonged debate.

Mrs. Winifred Ewing (Moray and Nairn)

Shame.

Mrs. Thatcher

The constitutional changes we make will last for far longer than some of the economic problems we have. I am very disappointed indeed that some of our Scottish Members do not think that thorough debate is necessary.

Mr. Gordon Wilson (Dundee, East)

Would the right hon. Lady not accept that the subject of devolution in Scotland has been thoroughly debated in Scotland and that it formed part of the manifestos of all the political parties represented? Would she not agree that it is high time that the Conservatives came off the fence and said that they want devolution immediately?

Mrs. Thatcher

The general question has been debated. The details have never been fully and properly worked out. Now that we come to consider it in detail we realise just how much there is to work out. I am sorry that those who come from Scotland do not fully realise that. [Interruption] I am sorry also that they do not appear to believe in debate in a democratically-elected assembly. Certainly other Scottish Members, apart from those in the Scottish National Party, realise the fundamental nature of the constitutional changes we are about to embark upon and are aware that they must be well and thoroughly made because they will last for a long time indeed. I am glad also that the Gracious Speech deploys the case for the integrity of the United Kingdom and specifies: within the framework of the United Kingdom ". The time when we are discussing the interdependence of nations and the need to be part of larger groupings is not a time to start breaking up the United Kingdom.

In my party we treat the question of the Scottish and Welsh Assemblies differently. Scotland has had its own legal system and separate legislation for some years, whereas Wales has had no separate legal system. Also, there is much more demand for such an Assembly in Scotland than there is in Wales. Therefore, although we are pledged to a Scottish Assembly, we have made no similar pledge about a Welsh Assembly.

Mr. Gwynfor Evans (Carmarthen)

Will the right hon. Lady explain the relevance of a different legal system in Scotland from that in Wales? In a country such as Switzerland, for instance, which has 25 cantonal governments, each with far more powers than are proposed for our Assemblies in Scotland and Wales, there is a common legal system.

Mrs. Thatcher

I was expressing an undisputed fact. It should be undisputed.

Consequent upon local government re-organisation, most people are wary of too much structural upheaval and of the potential cost of another layer of government. Devolution of power is a popular cry, but more bureacracy and more tax to pay for it is not. We must make abundantly clear that devolution must come to mean not more government and more powers to Governments but a dispersal of some powers to areas less remote from those whose needs they serve.

However, I believe that devolution presents both an opportunity and a danger. The Government and the House have a prime responsibility to see that the issue becomes one of opportunity. The opportunity lies in the chance to re-examine the rôle and extent of government. It is no accident that discontent with our form of government has increased with the extension of government itself. Devolution should march hand in hand with a conscious and deliberate attempt to scale down the size of government. The object is not more government of the people but more decisions by the people over their own lives. That is the opportunity.

The danger, of course, is that devolution could facilitate the break-up of the United Kingdom. There is, however, one major background factor that casts the most oppressive shadow of all; that is the state of the United Kingdom's economy. The prospect of maintaining the Union is related to the success of the Chancellor of the Exchequer. Economic failure would deliver a succession of hammer blows upon our political structure and the sense of failure would feed the forces of separatism. It is important to consider the future of the economy at the same time as the future of devolution, and the Chancellor perhaps as much as the Lord President presides over the destiny of the political and constitutional stucture of the United Kingdom.

In this context, we come to my second theme. We are compelled to examine the strategy of the Government's economic policy and to judge whether measures and events are fulfilling that strategy, whether their actions follow their words or whether they are saying one thing but doing another.

It is important to consider the future of the economy at the same time as no one disputes the Chancellor's aim, as expressed in the Gracious Speech, to reduce inflation and return to more stable money with the minimum possible social and economic dislocation. I think that a similar aim has been expressed in almost every Gracious Speech—certainly during the whole of my time in the House. Indeed, most of the dangers and fears about both inflation and unemployment are set out in the 1944 White Paper on Employment Policy. We know the causes and we know the effects, but so far none of us has yet been able to solve these problems simultaneously.

However, I do not believe that it makes the Chancellor's task any easier to suppose that he can obtain his central objective of reducing inflation without a period of painful adjustment. The Government have been less than candid on the painful period that must accompany the abatement of inflation. They have not been candid with the public or with the House about the necessity to curb the growth in public spending. They have not been candid, I believe, about the likely trends in unemployment. They have not been candid about the limited scope that exists for import controls.

The hon. Lady the Member for Bolton, West mentioned the problem of import controls, and I shall consider those three matters quickly in reverse order. Most of us agree that this nation must rely for its prosperity on an expansion in world trade. Therefore, there can be no question of general import controls. Equally, we accept that internationally the system is geared to fair and free competition between nations, and the question is, when does the competition become unfair, and cheaper goods become dumped goods?

The Prime Minister has no difficulty in visiting Communist countries and in boasting, when he comes back, about his capacity to give those countries credits and rates of interest which are not available to our own people for the export of such goods as textile machinery. But so far the right hon. Gentleman has not been able to discover criteria which would enable us to decide whether consumer goods produced by Communist and other countries are being dumped in the United Kingdom.

That question must be solved, and the Government must deal with requests for anti-dumping orders more quickly than they are being dealt with now. At Ram-bouillet, the Prime Minister made a reference to import controls. Perhaps he will give us his views more precisely today. He referred to selective controls but did not list the industries.

On the question of unemployment, we have been led to believe that 1.2 million persons would be the likely peak of unemployment, after which the figure would level off and then reduce. The Secretary of State for Employment has been specific on this point. I wonder, however, whether it is advisable to raise people's hopes falsely, or risk raising hopes falsely, by saying that that figure might be the peak, at a time when we are experiencing our present levels of inflation and our present difficulty in borrowing enough to finance our public spending. I hope that the Secretary of State is right, but I fear that next year will be worse than this, and that the level may go up to a higher figure than that quoted.

I take the view, which I know is debatable, that it is far better to fix modest targets and achieve them than to fix over-ambitious targets and fail to achieve them. This is what I believe both the Secretary of State for Employment and the Chancellor of the Exchequer tend to do.

In the event, we are always brought back to the dangers of the Chancellor's current spending and borrowing policy. The current levels of public spending have raced so far ahead of last year's that we can only conclude that the problem is now out of control. There will come a time when the borrowing has to stop. It cannot be maintained at home because, once there is a modest revival in the economy, there will be renewed private demand for investment. It should not be maintained, because our record borrowing is now bequeathing to immediate posterity an interest payment level that will bedevil our national finances and an enormous burden of debt repayment that it will put on future generations.

The past 18 months have been sadly misspent by the Chancellor. A nation in debt has no self-respect and precious little influence. I believe the Prime Minister discovered this at Rambouillet when he found that other nations will not bail us out by pursuing policies that would lead them to the same levels of inflation as those we are experiencing under this Government.

The Prime Minister (Mr. Harold Wilson)

The right hon. Lady referred to Rambouillet. Would she give the public sector borrowing requirement of Germany and the other countries represented at Rambouillet?

Mrs. Thatcher

My hon. Friend the Member for Horsham and Crawley (Mr. Hordern) has some extremely interesting figures, and, if he catches your eye, Mr. Speaker, doubtless he will produce them.

The important issue is not the public sector borrowing requirement but its relation to the productivity of the country. The percentages given by the Chancellor in the House the other day did not wholly add up. There was a certain difference when they were related to national productivity.

Mr. Robin Corbett (Hemel Hempstead)

What is the answer?

Mrs. Thatcher

The answer is that Germany is doing four times better in dealing with inflation than we are and therefore can speak with more authority. The Prime Minister has to rely on Germany and America to reflate because he has lost control of the economy here. He has to go to other private enterprise economies to try to get the Socialist-run economy of this country out of its financial mess.

The third obvious theme in the Gracious Speech is that it extends more power to the Government and less to the citizen. This, of course, is typical of Socialism. In addition there are the usual extra measures of nationalisation or public ownership as it is now called. It has always seemed that the word "public" was a misnomer for that operation. The irony is that the moment things are taken into public ownership is the moment when the public ceases to have control, consideration or choice. It used to be argued that nationalisation was a means to greater efficiency, but that argument was demolished pretty efficiently by the Economic Editor of The Times on 6th November. Further nationalisation puts more power into the hands of the Government and gives less economic freedom to citizens—more monopoly, no choice.

An example of less choice for the citizen and more power to the Government is the Government's policy on education. I hesitate to remind the Government of this, but the last time they tried to bring forward this Bill a General Election followed very quickly. I seem to recall that the Minister's PPS was absent for a crucial vote and the Opposition, with whom I was then concerned on education, rapidly took advantage so that the Bill never became law. That was only six years after the Prime Minister had said that grammar schools would be abolished over his dead body.

This proposed Bill will be a measure to ensure further reduction of choice. It will be a Bill to ensure that parents who want to send children to a school whose intake is based on ability will not be able to do so. We say, allow these parents to do so, and leave the schools in existence. Let the parents be heard as well as be seen. It should be noted that this attack is on statutory schools. The limitation of choice to nil is for those who have to rely on the State system. There is not even a policy of "take it or leave it" because one cannot leave it. It is, "Take what the Government decide you should have—take it and lump it."

The children who will suffer most—and the Government know this—are those who live in deprived areas and have to go to a neighbourhood school. Most of the teachers in those areas know this. That is why I got such support from the Joint Four for the policy I was pursuing, and why, in an opinion survey during the last General Election, the majority of teachers came out in favour of the grammar schools—something which the Government conveniently forget.

Whatever the Government are planning to do to Parliament through a major review of the practice and procedure of Parliament it is encouraging to note that it is "the practice and procedure" and not the powers or composition of Parliament. The proposer and seconder of the Gracious Speech suggested that we might have morning sittings. Last time we had morning sittings I recall that it took longer to do the same amount of work. It did not, for instance, reduce the necessity to sit on Friday.

Even if there is little hope for the future from the Gracious Speech, great hope came yesterday and today from at least one union. The moderates of the AUEW were prepared to stand up and be counted. When the people exercise their democratic choice extremism is snuffed out and common sense prevails. Perhaps this will give encouragement to the moderates in the Government to follow the lead of these people. Will they not stand up and be counted, too, and ensure that their majority prevails?

If, within that phrase in the Gracious Speech, Other measures will be laid before you. the Government could consider heralding the AUEW success by bringing forward a Bill introducing postal balloting they will have our maximum support and cooperation. After all, Winston Churchill was right—we may not be able to trust Governments but we can trust the people.

3.35 p.m.

The Prime Minister (Mr. Harold Wilson)

I join the Leader of the Opposition in paying tribute to my hon. Friends who moved and seconded the Address.

Like many hon. Members, I have many times visited the beautiful constituency of my hon. Friend the Member for Brecon and Radnor (Mr. Roderick) both in his time as a Member and in the years when it was held by my noble Friend Lord Tudor-Watkins, my most recent visit being last July. It is a constituency which breathes both the turbulence of the Industrial Revolution and the peace of East and South Wales, as old as history itself. Many of us have seen what my hon. Friend referred to as the reservoirs of the Elan Valley supplying a number of cities with their water, and I also saw some of those 2 million Tory sheep to which he referred.

My hon. Friend demonstrated his wide knowledge, gained over many years, and his concern for improving education for handicapped children. He will know of the initiative which my right hon. Friend the Secretary of State for Education and Science is taking to promote, through a series of regional and local conferences, thorough discussion by all concerned in this most important area of education.

Equally, the House was attracted by the speech of my hon. Friend the Member for Bolton, West (Mrs. Taylor)—a speech as charming as the constituency which she represents. Those who know Bolton know that its people possess great and determined character. My hon. Friend was right to refer in the way she did to the employment challenge and to the situation in the textile industry. Bolton also possesses the character of rather frequent changes in political representation, but clearly, with two of my hon. Friends now representing it, such changes are now a thing of the past.

My hon. Friend the Member for Bolton, West portrays in herself the triumph of one of the greatest social experiments introduced in this country. Speculative, much criticised and even scorned when it was inaugurated, it is now a proven success. Before coming to the House she was a local tutor for the Open University—operating on the other side of the Pennines—now the biggest university in Britain. It is among the top mail order businesses in the world. [Laughter.] It is not a laughing matter for those who have benefited from it. When this idea was put forward, the Tories opposed it. We carried it through. Now they are prepared to say how successful it has been, not only with its material in this country but all over the world, especially in the developing countries.

I will not go into what my hon. Friend said about Bolton Wanderers, who were always my team's bogy team in those days.

In the arrangements for our affairs in this new Session, my right hon. Friend the Leader of the House will shortly be bringing forward proposals for Private Members' time similar to those in recent Sessions, on the basis of rather more time for Bills than for motions, together with the usual four additional half-days for motions. The Government will propose the usual allocation of Supply Days.

In the light of the experiment during the summer, the Government will give the House an opportunity as soon as possible to decide for itself whether we should now go forward to a system of permanent sound broadcasting of our proceedings. It is for the House itself to decide on a free vote.

Many hon. Members of all parties have asked whether, by agreed improvements, we cannot run our affairs in Parliament better and enable Parliament to fulfil all its historic and essential functions with increased efficiency but with less strain and effort on hon. Members. My right hon. Friend the Leader of the House will before long be putting forward proposals for a thoroughgoing review of our practice and procedures.

The Gracious Speech makes clear the Government's intention to bring forward our legislative proposals for devolution for Scotland and Wales. The White Paper setting out the Government's detailed proposals will be laid before the House on 27th November, and my right hon. Friend the Leader of the House would hope to provide an early occasion for an extended debate on the Government's proposals. As the House knows, we are already working on the legislation, which we shall introduce as early as possible this Session taking account of reactions to the White Paper, the views of this House and the results of consultations with interested bodies.

In the timing of legislation and its passage through Parliament, there will be no avoidable delay. However, this is a major measure, as both supporters and opponents of devolution all agree. Even after the great national debate on the White Paper following its publication next week, the Bill itself will have to be studied, not only by the House but by people outside. For these reasons the Government are not insisting, even if it were possible and proper to insist, that the House should complete the whole legislative process in this present Session. Whatever view any hon. Member takes, I think he will agree, whether he supports the principles of the White Paper or bitterly opposes them, that we must ensure that the final form of the legislation is responsive to the national debate and to the parliamentary debate, not only on the White Paper but on the text of the Bill.

On the assumption, therefore, that the Bill is to be introduced at the earliest possible time this Session and cannot conclude its passage in this present Session, it will be the Government's intention to present the Bill, with whatever amendments are thought right following the national debate, at the very beginning of the next parliamentary Session, so that it can proceed towards Royal Assent with all reasonable speed, having regard to the magnitude and constitutional importance of its provisions.

Mr. George Reid (Clackmannan and East Stirlingshire)

Does not the right hon. Gentleman consider that he has a clear electoral commitment to the people of Scotland on this issue? May I remind him of two of the carefully orchestrated interviews given by devolution Ministers over the past year? On 30th April the Lord President said that the Bill, meaning the Assembly Bill, would be the major Bill of the next Session. On 30th January the Under-Secretary of State for Scotland said that there was no reason why the Bill should not be introduced at the beginning of November. Against that background, does not the right hon. Gentleman consider that the people of Scotland will think that their patience has been cynically abused?

The Prime Minister

The hon. Gentleman has got this wrong. I should have thought he would be the first to say that there must be adequate discussion and debate on the White Paper. The hon. Member should refer to what my right hon. Friend the Lord President said. During the last election, when I was in Edinburgh, I was asked about what he had said about a three- or four-year timetable and I said that I hoped it would be quicker. It is our intention that it should be quicker, and we have entirely kept faith with everyone who accepted the White Paper which we published before the last General Election. We shall keep faith with those who will be considering the White Paper to be published next week.

Mr. Emlyn Hooson (Montgomery)

The right hon. Gentleman referred to "the Bill". Does he envisage one Bill to cover both Scotland and Wales, or has he an open mind on this and will there be two Bills, one dealing with Scotland and one with Wales?

The Prime Minister

I ask the hon. and learned Gentleman to wait for the White Paper. We envisage one Bill for Scotland and Wales, but, of course, the parliamentary handling will inevitably be different as between the two. It does not have to be and will not, of course, be homogeneous in its provisions for Scotland and Wales, for reasons which have already been advanced this afternoon.

Mr. Donald Anderson (Swansea, East) rose—

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

Mr. Speaker

Order. It is not quite clear to whom the Prime Minister has given way.

Mr. Anderson

If there is one lesson from recent opinion polls, it is that, whatever enthusiasm there is for devolution in Scotland, there is little, if any, in Wales. Will my right hon. Friend ensure that his proposals take this on board?

The Prime Minister

Yes. I am not sure that I wanted to give way on that point. It is a point which can be made when my hon. Friend has had time to study the White Paper. He may like it very much. But we cannot debate the White Paper on the basis of interruptions to the speech that I am trying to make until my hon. Friend and the whole House have seen the White Paper.

Mr. Heffer

I apologise to my right hon. Friend. There seems to be a misunderstanding with Mr. Speaker on this question. My right hon. Friend must be aware, as we all are, that the manifesto of October 1974 not only stated that there should be Welsh and Scottish Assemblies but went on to say that there would be a consideration for regional devolution in England. Does not my right hon. Friend agree that, before we have a Bill, there must be the fullest discussion and debate amongst English Members in relation to regional devolution problems and answers for England, as we are all concerned about devolution and not merely Scotland and Wales?

The Prime Minister

My hon. Friend is absolutely right about this. We have said that we shall probably publish a separate paper about the English aspect, and we expect that it will be published some time before the House decides the ultimate form of the legislation. My hon. Friend knows that at Newcastle some years ago I made some proposals with regard to this matter. Tomorrow I shall speak on this subject to the local authority associations.

Following the statement of my right hon. Friend the Secretary of State for Employment, the Trade Union and Labour Relations (Amendment) Bill will be speedily reintroduced so that all the necessary steps can be taken, under established constitutional procedures, to ensure that the wishes of the elected House on this matter are not frustrated.

The Leader of the Opposition began her speech by referring to Northern Ireland. I was not sure of the implications of one passage. I hope she will agree that we have done better on this question over the past years, particularly when the right hon. Member for Penrith and The Border (Mr. Whitelaw), the Deputy Leader of the Opposition, was Secretary of State, when we sought to maximise and not to minimise bipartisanship. There are plenty of people of the wrong kind ready to exploit any breaches on this problem. I am sure that the right hon. Lady will have this in mind, and I hope that there will be no danger of any misintepretation of some of the things she said.

The House will have noted with horror the passing last week of a new and grim milestone in the history of Northern Ireland when the thousandth civilian death since the present troubles began was recorded. However—here I know that I speak for both sides of the House—despite the men of violence we are determined to work for a constitutional solution.

As my right hon. Friend the Secretary of State for Northern Ireland told the House on 10th November, we have now received the report of the Constitutional Convention, which will be published tomorrow and laid before Parliament. I must tell the right hon. Lady that we do not feel it right to make any substantive comment on the Report at this stage. Parliament should take time to consider the Convention's Report so that when, at an appropriate moment, we come to debate these matters, we shall do so on the basis of considered views. However, I must repeat that the solution to the problems of Northern Ireland must be found in Northern Ireland. That is what we said after the troubles last year. Every cowardly murder, every brutal maiming and every insane bomb outrage creates new bitterness and hatred and delays still more the peace that one day must come.

The main theme of the Gracious Speech is economic priorities. The House will no doubt have an opportunity on Thursday of this week and next week of debating the economic situation. In a very real sense, however, a large part of the debate from now until next Tuesday—even the debates on social affairs—will be about the world economic situation and the problems before us in Britain. The right hon. Lady was absolutely justified in devoting a considerable part of her speech to these matters and in giving her opinions on them.

What we face in Britain today—we share this in greater or smaller degrees with almost every advanced country and many other countries—is the interlocked problem, which at one time we would have thought of as a paradox, if not an impossibility, of inflation and depression. In human terms this means unemployment. Our anxieties, not only our fears but the figures themselves and the reality on a world scale and on a national scale, are greater than any in recent memory. Unemployment in this country was up 90 per cent. by July of this year over the fourth quarter of 1973. Unemployment in Japan was up 56 per cent. over the same period, and in the United States it was up by 84 per cent. In France it was up by 113 per cent. and in West Germany by 265 per cent. It is a common problem to all the advanced countries. [Interruption.] It does make a little difference to those who, for political reasons, try to suggest that all the problems are in Britain. It is common to all those countries, whatever form of government they have.

Similarly, while the United Kingdom's industrial production in the second quarter of this year was 9 per cent. down on the mid-1973 peak, industrial production in Germany was down by 10¾ per cent., in France it was down by 12 per cent., in the United States by 13 per cent., in Italy by 14¾ per cent. and in Japan by 16¾ per cent. from the peak in 1973. It is right to say that we have talked about inflation. Conservative Members are always saying that there is more unemployment in this country than in other countries and that production has not fallen as much elsewhere. It is a common problem, but they never mention this in their speeches because they want to say that it is all due to a Labour Government. These figures, therefore, utterly confute the whole theme of their political attack.

I come to the public sector borrowing requirement. The scale of deficit in relation to the size of the economy—the very point that the right hon. Lady mentioned in answer to me—has risen in many countries. Allowing for structural differences, it seems reasonably clear that our deficit now is much the same—as a proportion of national income—as that of other major industrial countries such as the United States, West Germany and Italy. That utterly destroys the main theme of the right hon. Lady's political attack.

Mrs. Thatcher

In that case, can the Prime Minister tell us the level of public sector borrowing requirement he is using to make that comparison?

The Prime Minister

Yes, I am using the figures published for last year in my right hon. Friend's Budget Statement in April. [Interruption.] No Chancellor has ever given a figure for this halfway through the year. We have heard from our opposite numbers in those other countries that they also have to face the problems of forecasting. On that basis their deficit is as high as ours. The right hon. Lady might get a new speech writer.

Sir Geoffrey Howe (Surrey, East)

Is the Prime Minister aware that in answer to questions last week the Chief Secretary, in endeavouring to give the basis of the Chancellor's repeated claim about comparable borrowing requirements, made it clear that it was impossible to produce relevant comparisons, and also made it clear that the Chancellor was not prepared to give any figure beyond that given in his Budget Statement in April, which we all know by now to be wholly unrealistic? Will the Prime Minister acknowledge that the real test and criticism is the extent to which the rate of inflation in this country has gone roaring ahead of that in other countries?

The Prime Minister

That is an interesting point. The Opposition have been on about the public sector borrowing requirement for two months. Now that they find they are beaten on that, they go back to inflation. [HON. MEMBERS: "Answer".] I was coming to this later but I will answer it now, if hon. Gentlemen will listen. The rate of inflation in this country was higher when we took office. It rose considerably thereafter. The main item was thresholds. It has risen higher. It is now falling as a result of the Government's policy. During the debate in the summer the Opposition could not vote for or against our proposals. They sat on their hands and by so doing they utterly relinquished any right to talk about inflation in this House. But I know how they love to switch from the balance of payments to PSBR, to unemployment, to production—whichever suits them at the moment.

The first thing that must be realised is that Britain's economic strength in an increasingly interdependent world is dominated more than at any time in our lifetime by international developments. The effect of oil prices on all of us, the effect of violent fluctuations in commodity prices and repeated shortages of essential materials have emphasised this fact in a sense of which we have no previous experience.

The summit conference at Rambouillet last weekend consisted of the Heads of Government of six leading industrial countries accounting between them for over half the world's trade and a current total of 12½ million unemployed. Its work was directed to dealing specifically with world problems while at the same time examining what, by co-ordination in advance of our national programmes, we could do individually and all of us together to get the world economy moving.

The fact that that meeting took place was itself important. Still more important was the fact that every participant felt that it had achieved far more than he could have hoped two weeks ago. In the words of the declaration, unanimously approved, we held a searching and productive exchange of views on the world economic situation. But above all our central theme was unemployment, with the related problem of inflation.

We did not seek to take decisions and impose them on the rest of the world trading community. Everything we said will be pursued through national institutions of our own and the relevant established international organisations.

The three countries whose production and trade have the biggest determining effect on the volume of world trade as a whole—and therefore on each one of us—gave chapter and verse on their confidence about their own recovery now and in the immediate future. My right hon. Friends and I stressed the importance of speedy action should that recovery, which has begun, lag or slow down in those countries, or should increased production fail to produce a rapid reduction in unemployment.

In the declaration, which will be laid before the House as a White Paper, we said—all of us: We are confident that our present policies are compatible and complementary and that recovery is under way. Nevertheless, we recognise the need for vigilance and adaptability in our policies. We will not allow the recovery to falter. We will not accept another outburst of inflation. We expressed our determination to secure speedy international action on multilateral trade negotiations, an orderly and fruitful increase in East-West trade, and increased and secure supplies of energy from all sources.

Paragraph 11 of the declaration, dealing with the decisions we took about monetary problems, has been widely welcomed throughout the world and the seal was set upon those decisions by the success of the United States and France, at Rambouillet, in reaching a wide measure of accord on fundamental questions relating to parities and the reform of the international monetary system. But we each of us committed ourselves to watch the situation closely and to take action, through existing institutions, if a further fillip to trading and employment is needed.

One further point came up on which the House will want me to comment and to which the right hon. Lady referred. On the action to deal with abnormal and damaging imports where they threaten even the existence of sectors of industry in this country suffering now from imports but viable and competitive in recovery conditions, I told my colleagues at Rambouillet exactly what I said in the House on 4th November, and what I said was fully understood at Rambouillet.

But no action taken on an international scale absolves us from the necessity of taking every possible action to strengthen Britain in the face of the world and national problems. It is our own duty to our own people and it is equally our duty to our trading partners.

Here I stress the fundamental importance of the attack on inflation approved by this House—by some of us, anyway——with overwhelming majorities in the summer. Right hon. and hon. Members opposite know that this policy, which they failed to endorse in the House carries the overwhelming endorsement of the British people, as shown by the miners' ballot, by the TUC and by the overwhelming support of people in the country. [Interruption.] If the hon. Gentleman thinks that the people of the country do not support the policy, perhaps he will get up and say so.

Mr. Victor Goodhew (St. Albans)

The right hon. Gentleman does not speak from a very strong position. Is he not aware that most of the policies included in this Queen's Speech are opposed by a majority of the electors? That being so, why does he not give them a chance to vote on it?

The Prime Minister

I did, in October last year, actually, and we saw the result. But the hon. Gentleman denies my claim that the majority of the people support our anti-inflation policy, on which the House legislated. The hon. Gentleman and the right hon. Lady—the lot of them—sat there in a humiliating posture voting neither for nor against.

Sir G. Howe

Will not the Prime Minister acknowledge the immense contrast between the position adopted by the Labour Party, which challenged and sought to overthrow every attempt of the last Government to implement policies against inflation, and the position now explicitly adopted by the Conservative Party, which is making it very plain that we shall not do anything to try to overthrow the policy and that we wish the Government well in their attempts to tackle the problem?

The Prime Minister

The right hon. and learned Gentleman should not underrate the ability of the right hon. Lady to speak for herself. He is a little too protective and defensive. I was challenging the Opposition on their failure to vote for or against the legislation this year. The answer to the right hon. and learned Gentleman, who was the biggest confrontationist in the last Government, the author of the Industrial Relations Act, is that we had the right to the support of the Opposition because our policy was agreed with industry, whereas the Conservative Government's policy was confrontation. When the Conservatives were challenging us for not announcing a policy and saying that we must lay down the law—though they did not say what law we should lay down—we were working night and day to get a consensus, and that is what we succeeded in doing.

My right hon. Friend the Secretary of State for Employment has reported to the House on the extent to which pay settlements, covering a wide range of different types of workers in the public and private sectors, have been concluded within the limit set. More than 2 million workers are now covered by major settlements within the limits approved by Parliament—all of them within the policy—and nine wages councils covering 600,000 workers have agreed proposals for increases in statutory minimum rates in line with the policy.

With the inevitably harsh winter months ahead, when prices will inevitably continue to run ahead until lower costs work through—and this must be said, as it has been—the need for all of us, Government, Parliament and people, to maintain our determination and resolve remains total and must not be abrogated, however strong the circumstances in any particular case or negotiation.

The House knows this. Pay settlements have to be held at a time when prices are still rising—due to previous commodity prices working through, due to previous pay settlements working through, and due again to the need to bring public industry prices and charges into relation with costs. Now, of course, political capital is being made out of the Government's decision on publicly-owned industry pricing. Yet this was also the Conservative Government's policy—they announced it on 17th December 1973 as a firm and irrevocable decision. By 4th March 1974, when they lost office, they had not done it. They had got their figures wrong about what it would cost. They were £ 900 million out in a matter of less than three months. They talked about this policy. We are carrying it through, and they are raking over the political pickings.

The House knows, for the reasons I have given, that the nation must expect to face a period in which there is an absolute temporary reduction in living standards measured by the relationship between earnings and prices.

The House and, I believe, the country understand the paramount need to make these policies effective in human terms—in family terms, in terms of prices in the shops, in terms of the household budget. But, secondly, success in the anti-inflation policy is a necessary precondition of bringing down the present unacceptable level of unemployment and of moving speedily towards full employment. We have, meanwhile, acted to alleviate, with the support of the House, the immediate threat of increased unemployment, especially for young school leavers.

We have done so not by general reflation measures, which are expensive, slow-acting and might operate contrary to the policies that the House has approved. Less than £100 million of expenditure by the methods used by my right hon. Friend has the same effect in creating jobs or saving jobs as a classical Keynesian reflation of £1,000 million, and it takes effect in a quarter of the time. [Interruption.] The House may want to debate this and pursue it further—I mean those hon. Members who understand it and who were listening when I said it. It is a serious point. In a sense, the point is a new discovery of the past few months and I hope that the House will take it seriously when we debate the economy. Too often we are told that the choice is between full-scale Keynesian reflation by taxes or expenditure and by other means. I hope that the House will take seriously what my right hon. Friend has been saying on this matter.

Third, it is essential that we ensure that, when world recovery begins, the export-led boom—which on the basis of our recent export achievement, when for the first time for many years we have increased our share of world trade, we are entitled to expect—is not frustrated within a short period by constraints caused by a fresh round of inflation or constraints of capacity or inadequate investment, above all in manufacturing.

The problems we face are partly caused by world factors—for example, the problem of inflation—but also by our own failure over a quarter of a century under successive Governments to increase the amount of industrial investment, to improve its quality and no less its deployment where most needed, and again by our failure over the years to secure a return on that investment in terms of productivity in any way comparable with that achieved by our leading competitors. I do not think any of us can deny that these are the problems that have faced all of us.

That was the challenge before NEDC at its meeting a fort-night ago. The objective accepted by all of us at Chequers—Government, unions and management—was to reverse the post-war economic decline by a breakthrough to a high-output, high-earnings economy, based as it must be on full employment. This was agreed on the basis of a common approach, flexible in its response to the changing needs of industry, and both unions and management, together with the Government, will now get down to identifying the areas of improvement, the action to be taken at national level through NEDC, at the level of particular industries, through the little "Neddies" and, no less important—perhaps most important—at company and plant level.

By these means we all seek industrial regeneration—there is no political difference here—a process founded on an agreed common approach and now backed by the powerful new machinery of planning agreements, the National Enteprise Board and the Development Agencies in Scotland and Wales. The Order enacting the Industry Act 1975 and formally constituting the National Enterprise Board was signed yesterday and will take effect tomorrow.

I want to deal with what the right hon. Lady said earlier and has said so often in public and in the House now. I do not complain about the right hon. Lady concentrating her speech on the problems of inflation, unemployment and public expenditure. I just question her and her Government's credentials on these subjects. [Interruption] I mean "her Government". She has not yet totally dissociated herself from the Government of whom she was a member, so I call them "her Government".

An unprecedented increase in inflation existed and was out of control before February 1974. Indeed, in the debate about whether the right hon. Member for Sidcup (Mr. Heath) should have an election, leading Tory newspapers were demanding a quick election on the ground that inflation was out of control and that prices would rise by 20 per cent. that year. That was already happening.

As the die was cast on inflation, it was cast equally in relation to unemployment. The state of the economy in March 1974 was incapable of meeting the challenge of the world oil price and the world depression without heavy unemployment.

Sir G. Howe

Why did not the right hon. Gentleman say so?

The Prime Minister

We said so in the General Election. The balance of payments is, for any Government, a constraint on our ability to expand. This is something that is not often realised by some hon. Members opposite, but it is by most right hon. Members.

Under the previous Government the balance of payments deficit on visible trade was £2,300 million in 1973 for the whole year—that figure will not be denied—when the effect of oil had barely been felt in that year. In the fourth quarter of 1973 alone—again with the oil effect only marginally hitting us—their deficit was running at an annual rate of £4,000 million, before oil had really hit us. It is no good denying it. In less than two years we have not only wiped out the whole of that deficit on our non-oil trade but we have—

Mr. John Hannam (Exeter)

Who are "we"?

An Hon. Member

Private enterprise.

The Prime Minister

Hon. Members opposite would give the credit to private enterprise, but all the time they say that the Government cannot enable private enterprise to function. In exports it is doing much better than it did under the Tory Government. I do not object, but we have not only wiped out the whole of the non-oil trade deficit; we have also covered one-third of that part of the deficit resulting from the increase in oil prices. Some time it would be nice if the right hon. and learned Gentleman would pay tribute for what has been done under this Government, instead of nattering on as he always does.

Last month's figures, excluding oil, were the best figures for any month, apart from the figures distorted by the London docks dispute earlier this year, since July 1972. Without the increase in oil prices since 1973, there would today be a surplus on current account of £1,000 million. We are used to having to do this every time the Labour Party takes office. I wish that the right hon. and learned Member for Surrey, East (Sir G. Howe) would cheer up and look a little happier about it.

As with prices, as with the balance of payments, so with unemployment. Industrial production stagnated from the spring of 1973 and began seriously to decline before the end of the year when the Conservative Party—all of them—had full responsibility for these matters.

In 1973 alone, when money was being printed on an unprecedented scale, M3 grew by a phenomenal 27 per cent. In 1973, far from money going into industrial investment, it went into every wrong purpose the Government could devise. Compared with 1970, bank advances to productive industry fell, as a proportion of all loans, from 37 per cent. to 27 per cent.—over the Opposition's period of office—and loans to the manufacturing sector fell from 28 per cent. to 20 per cent. By February 1974, under the right hon. and learned Member for Surrey, East, who is looking at a brief that has just been passed to him—

Mrs. Thatcher

I am sorry, but the Prime Minister left himself open to an interruption. I was just looking up some Government figures. Trade and Industry for 7th November 1975 shows at page 371 that the level of production in this country is below what it was in 1970. It is not below 1970 in any other European country except Luxembourg. Our performance in production is worse under this Government than under any comparable Government in Europe.

The Prime Minister

I have already dealt with that matter. I said that production began to fall under the right hon. Lady's Government before oil hit us. Oil hit us after that. We were the worst poised for dealing with the oil situation precisely because of neglect. The right hon. Lady's brief did not, I think, enable her to counter what I just said, namely, that by February 1974, under her Government's free-for-all, the banks were investing almost as heavily in financial companies as in the whole of manufacturing industry, and bank advances to property companies had increased six-fold since 1970.

Mr. Dennis Skinner (Bolsover) rose—

The Prime Minister

No, I have given way seven times already. I apologise, but I want to get to the end of my speech, as, I am sure, right hon. Members opposite wish me to do. Of course, what happened in 1973 was not their fault. It was all the work of the "demon Barber". They are all monetarists now—some of them. That is why what was missing in all the right hon. Lady's speeches, including her speech today, was not only any policy for dealing with the balance of payments, not only any policy for dealing with inflation—she does not have one—not only any policy for dealing with unemployment, but any ability whatever to see the three together—balance of payments, inflation and unemployment.

In the interesting series of articles in the Sunday Times it was conceded that successive Ministers of both parties, including the Shadow Foreign Secretary, had achieved success in one or two of these three areas, but the authors concluded: What was unique about Mr. Heath's 1970–74 administration was that failure was total. World prices are often blamed for this but…it was the weakness of domestic policy that was fundamentally to blame"— on all three.

Now from the right hon. Lady who leads the Conservatives we have no more than the repetition of their demand for swingeing cuts in public expenditure, and a total absence of any proposals from her of the precise programmes that her party would cut. Some of its programmes, of course, created the additional expenditure of 1974 and 1975. The country is bearing a heavy burden for some of those policies in terms of public expenditure. In fact, the Conservative Party has been demanding individual increases while calling for massive unspecified cuts in the total, and at the same time, while talking about the public sector borrowing requirement, it is calling for reduced taxation and increased expenditure and is then complaining about the public sector borrowing requirement.

Let us take defence. The Conservatives voted in December last year, and again in May, against our reductions in defence expenditure. They opposed cuts of £300 million in defence spending this year and £380 million for next year, committing themselves by their votes and speeches not to a reduction but to an increase in public expenditure. Let us put that to one side of the tally—because when we cut expenditure we must, apparently, meet that as well. They opposed our decision to stop the Maplin project, which would have meant an expenditure of £650 million between now and 1980. Their Front Bench—however it was composed at that time—voted against our decision not to proceed with the Channel Tunnel in the foreseeable future.

On the Social Security Benefits Bill, the Conservatives voted for, and carried the House in favour of, relaxing the earnings rule at a cost of £60 million this year and a further £325 million spread over the next two years. They still presumably support their tax credit scheme, biased as it was in favour of the wealthy and costing, on their own original estimates, £1,300 million to operate—£3,000 million at today's prices. They are the people who, on specifics, press for more expenditure and, on the total, say we must cut it.

On taxation, the Opposition have the same irresponsible attitude. Their vote on VAT on rented television sets will cost the Exchequer and the PSBR an estimated £250 million spread over the next four or five years. If all their proposed amendments to the 1975 Finance Bills had been carried, they would have cost an additional £600 million a year. Even in areas where the Conservatives failed to act, and we have acted, they have called for more, and not less, expenditure.

The Opposition ought to work out specific proposals. They should give not just a figure by which they want total expenditure to fall, but that figure plus all the additional expenditure to which they are now committed.

Of course we have made specific increases in public expenditure on the basis of our policy. One cannot talk expenditure without talking policy. That is where the Conservatives are so wide of the mark. They should remember the words of Disraeli—"Expenditure depends on policies".

We have increased expenditure based on policy. It was our policy to increase pensions to £10 for a single pensioner and £16 for a married couple—an increase of nearly one-third in money terms—at a cost of £1,000 million. The Opposition did not oppose it. [Interruption.] Did they oppose it? Are they now of the opinion that we should not have done it? If not, they should not complain about that increase in expenditure.

We provided last year an extra £700 million—a 25 per cent. increase—to get public sector housing moving again, because in the Conservatives' last year in office the public sector starts were 32 per cent. below 1969–70 and completions were 40 per cent. down—the lowest figures since the war that was the Conservative Party's record. Were we wrong to provide another £700 million to get the public sector housing programme moving again? If the Conservatives thought we were wrong, they did not say so at the time. If they now believe we were right, they have no right to say that these are the figures that must be cut.

For the National Health Service—on which we recently had a debate and there is to be another on Friday—we provided an additional £1,000 million last year compared with the previous year, raising expenditure for the National Health Service from 4.9 per cent. to 5.4 per cent. of gross national product. Did the Opposition oppose that at the time? They did not. In fact, they are pressing all the time for more to be spent on the National Health Service. Therefore, all the time that the Conservatives want total expenditure cut they are pressing for more expenditure.

On help for disablement, we are committed to an increased expenditure of £500 million. Again, the Opposition did not oppose this. On the radio I heard the right hon. and learned Member for Surrey, East, then the social services spokesman, welcoming our proposals. Other Front Bench spokesmen for the Opposition have pressed for more, not less, expenditure. They have called for enlarged programmes on social security, fire precautions, health, the urban programme, schools and the social services, including care of the lonely and the elderly. I have had a return taken of the sum totals of all the demands in the last month of right hon. and hon. Gentlemen opposite in two areas only—health and education—and they add up to increased expenditure of £60 million.

The House knows that a significant part of the increase in public expenditure over the past two or three years has been in local government. Comparing 1974–75 with 1973–74, the increase in local authority expenditure is about 25 per cent. of the total increase in public expenditure which the Conservatives attack and criticise. Many local authority programmes were increased by right hon. Members opposite and we did not, in many cases, complain. Some have been increased by us and others reined back.

My one criticism—and not of the party opposite in what I am about to say—is that in recent years in particular there has been in some areas of local government a big increase in the ratio between chiefs and Indians—or, perhaps better, between teeth and tail—between those engaged in administration and those at the sharp end providing help for those in need, and so on. This ratio, the administrative overload, in the words of a famous Resolution of this House of 1780, has increased, is increasing, and ought to be diminished. But the biggest single factor in this wide area of our national life, extending from local government to water supplies and the Health Service—I say this to anyone who talks about the increase in public expenditure—is in the drastically misconceived policies which led to the re-organisation carried through in local government—duplication, double banking, a vastly increased bureaucracy, super-chiefs taken on to supervise existing chiefs, and divided responsibility. Let those whose single prescription for handling our nation's problems lie in vague proscription of public expenditure examine their own record, their own responsibility, their own conscience—on water, on the Health Service and on local government.

I know that right hon. Members opposite have called for immediate cuts in housing subsidies and in food subsidies. We know that that is their policy, and I do not deny that this is a partial response from them to our challenge—"What would you cut?".

Mr. Skinner

Not all of them.

The Prime Minister

Not all of them, no. I suppose that the kindest comment would be to say that a party which abstained on the great inflation debates, on the White Paper and on the Remuneration, Charges and Grants Bill this year could hardly be capable of understanding the effects of such a policy on the retail price index at this time, and therefore the strains which this would put on pay settlements, and on the programme which the nation has accepted. That apart, they have nothing to say on what should be cut except vague promises to cut taxation, which would vastly increase the PSBR that we keep hearing about from them.

Ever hopeful, I studied the reports of the Tory Party Conference in the hope of finding some useful policy proposals. Indeed, we have been told for months that that was where the policy was to be unveiled. I found only one relevant commitment. In the words of the hon. Member who is, I think, currently their spokesman on the environment—they have had three since 1974, so he may have been changed—the hon. Member for Aylesbury (Mr. Raison)—is he still the spokesman—?

Mrs. Thatcherindicated assent.

The Prime Minister

I thank the right hon. Lady. I did not know whether it was the hon. Gentleman, and I wanted to be sure that she did. We have had three since 1974. [An HON. MEMBER: "Cheap."] Yes, but the hon. Member was not cheap. He is most expensive, and I shall tell the House why.

The hon. Member for Aylesbury announced that the Conservative Party was committed to drastic reform in local government finance and specifically an end to the present system of domestic rates". That was the promise—an end to domestic rating. He went on to say that as a responsible party it had to await the outcome of Layfield before announcing its final views on what should replace tie present system. Perhaps, as a responsible party, it should not have committed itself to abolition until it had seen Layfield.

The Conservative Party's 1971 inquiry into local rates came up with nothing. I know that it is difficult for that party. The right hon. Lady gave a pledge to abolish domestic rates during the October election campaign—one of her two totally irresponsible pledges—which would have added prodigiously to Government expenditure, the PSBR and everything else. Where would the Opposition find the £1,500 million to meet this renewed pledge on rates? Would they get it from industry or from the small shopkeeper, whom they are sponsoring all the time? And where would they get the hundreds of millions to meet their mortgages pledge? Local government expenditure has to be paid for. The Conservatives have vastly increased it with local government re-organisation. It has to be paid for. If it does not come out of rates, something else has to be put in their place, and that is what they have not told us about. That explains why they are making so many pledges about cutting taxation and so few to cut expenditure.

The right hon. Lady referred again today to expenditure. It is perfectly fair that she should do so from her point of view, and it is relevant to the challenges that I have put to her this afternoon, to which we hope to have a reply some time. When challenged on expenditure, she has on a number of occasions talked about the public ownership of aircraft and shipbuilding—referred to in the Gracious Speech—and expenditure in industry generally, including the NEB and the North Sea.

It is fair to say that, while the Opposition's remarks on those subjects are relevant in the PSBR context, they are not relevant, or are only remotely relevant, to the question of the call on resources. Indeed, on shipbuilding and aircraft, which the House will no doubt be debating very soon, the maintenance of these industries in the private sector does not seem to have been a marked success in safeguarding public expenditure. The expenditure has gone to them anyway, and both have been huge recipients under successive Governments.

On general industrial expenditure, under Sections 7 and 8 of the Conservative Industry Act 1972—for which we are very grateful to them—it is possible to question particular expenditure in any particular case. It is possible, though in my view wrong, to query the decision of the previous Government when they took into public ownership the Rolls-Royce gas turbine business and got the full and wholehearted support of the Opposition. We have not heard whether the present generation of Tory Front Benchers have yet dissociated themselves from that action. Many of their speeches suggest that perhaps they would now like to do so, but one would hope that they would feel that their Government were right on that occasion.

On the NEB, of course, we went through the frenzied argument we had from them over the IRC, when the whole Tory Party rose in rage against the IRC proposals nine years ago. We all know that the biggest mistake they made then, in an ideological convulsion, was to scrap the IRC. Having done that, they then tried to re-establish it as a private agency. Industry, which nine years ago was critical of the IRC Bill, gave it full support when it became law, as a step—in our view, not a big enough step—to industrial regeneration.

The NEB has an important IRC role. But it also has the role not only of stepping into re-organisation of management when industries or sectors of industry essential to the nation need help to carry on but of ensuring that, when State help is given, not only must re-organisation and restructuring follow if this is needed but that the public who have put up the money should have a corresponding share in the control and the ultimate profits. It has an important role, too, in promoting, on an entirely voluntary basis—which has been much welcomed in industry—joint projects with enterprising companies, especially small and medium-size firms, which have the management and the product but lack resources for the expansion they seek.

I turn next to the policy of the right hon. Lady and her right hon. Friends on the rich resources in the North Sea. While out of the country, the Leader of the Opposition was playing to the Texas oil gallery, and must have been very popular.

Mrs, Thatcher

How?

The Prime Minister

By saying that they would repeal the North Sea legislation which has just gone through the House. But the Opposition know that by 1980 we expect to be producing as much oil as we shall be consuming in that year. By 1980 we shall be producing 90 per cent. of all the oil produced in the area of the European Community, and 45 per cent. of the Community's total indigenous energy—oil, gas, coal and nuclear power. They know that our potential North Sea reserves have been valued at £200,000 million, at least 50 per cent. greater, on a comparable basis of assessment, than the reserves so far discovered round the coastline of the United States, including that of Alaska.

Against the background of these figures it is ideology—no more, no less—that leads right hon. Members opposite to seek to deny to the British people their rightful share in the earnings from the North Sea—and later the Western Approaches—for which provision has now been made in a measure which became law a week ago.

The House faces a challenging Session, certainly, and the nation faces a challenging and difficult winter. Our debates, not only this week but throughout the months ahead, will be dominated by formidable economic realities. We shall all put forward—with sincerity, I am certain—our different interpretations of the realities and of what should be done about them. I believe that the nation—which in the previous Session gave the Government its backing in their policies to master the problems—will continue to look to this House to sustain the Government in their endeavours.

4.30 p.m.

Mr. David Knox (Leek)

I start by referring to the outstanding speech by my right hon. Friend the Leader of the Opposition. Not only was it a hard-hitting speech; it was commendably brief, for a member of the Front Bench. My right hon. Friend's brevity added to her speech rather than detracted from it. I hope that her excellent example will be followed by hon. Members on both Front Benches during the forthcoming Session.

Alas, the Prime Minister did not follow my right hon. Friend's example this afternoon. I understand that he was ill yesterday. In a spirit of charity, I should like to say that we are pleased to see him back today, obviously much better, and his usual boring self—as his back benchers' total lack of enthusiasm for most of his speech showed.

I suppose that it is a moot point whether this year's Gracious Speech contains more measures that will do more damage than did the Gracious Speech last year. I shall not attempt to reach a judgment on this sorry—indeed, terrifying—state of affairs. Suffice it to say that many of the proposed Government measures for the forthcoming Session seem to have no relevance to the desperate needs of our current situation and will serve only to aggravate an already desperately serious position.

I cannot see what contribution the nationalisation of the aircraft and shipbuilding industries—to take but two examples—can be expected to make to the strengthening of the British economy. Indeed, if past experience of similar measures is anything to go by, these measures will do positive harm. Therefore, I cannot welcome much that is in the Gracious Speech, and I am afraid that I look forward with apprehension and considerable foreboding to the coming Session and—even more important—to the consequences of the legislation that it will enact.

However important the Government's legislative programme is in most years—particularly the coming year—the management of the economy is the Government's most important task. In the coming Session, as in the last Session, the problem of inflation will be the dominant problem facing them. Until inflation is brought under control, there is little hope of anything else going well in this country.

It is obvious that the present deflationary policies will be continued until inflation is controlled. It is obvious that unemployment will rise to 1½ millions, perhaps much higher. It is obvious that living standards will fall, especially when price increases already in the pipeline—the Prime Minister referred to this this afternoon—exceed the value of the £6 pay rise permitted under the Government's incomes policy.

While some deflation, some unemployment, and a marginal reduction in living standards were the inevitable consequences of the escalation in oil prices, in my judgment the severity of the present situation—and this will apply also to the future situation—is due in no small measure to the Government's abandonment of the Conservative Government's incomes policy last year. That abandonment led to an escalation of wage and salary settlements on a terrifying scale, and the self-infliction of appalling economic consequences in addition to what was, admittedly, a difficult imported situation.

In July the Government eventually saw sense and introduced their incomes policy, but the consequences of the 16 wasted months between March 1974 and July this year will be with us for a long time. Inflation has already been much higher than was necessary. Unemployment is already much higher than was necessary, and it will be much higher before we are done.

The point I wish to highlight today, however, is that the under-utilisation of capital equipment is already higher than was necessary, and it will be higher still before we are done. What is particularly alarming about this are the consequences for investment. It is universally agreed that one of the most worrying features of the British economy in recent years has been our failure to invest at a high enough rate. Of course, it is easy to blame industrialists for not investing, as Jack Jones did at the weekend. It is easy to blame trade unionists who, it is claimed, will not work new and better machines.

If we really want to know why investment has been so low in Britain, however, we should perhaps ask ourselves why people invest in the first place. It is simple. It is because they believe that new investment will enable them to produce what they cannot produce now, and sell it at a profit, or to produce what they can produce now, but more efficiently, and sell it for a greater profit. There is no justification for investment on any other grounds.

Unfortunately, the management of the British economy since the end of the war is one long story of stop-go economic policies. Each cycle starts with a couple of good years. Capital capacity becomes fully utilised. Often, on the basis of Government promises of a continuity of growth, industrialists invest, only to find that the Government have brought the expansion of the economy shuddering to a halt. As a result, the new investment can be only partially used, or may not be used at all. However, the interest charges on the money borrowed to pay for the new investment continue. The firms concerned are worse off than if they had not invested. Profits decrease, and some firms may even suffer losses. That is their reward for their efforts to invest.

Meanwhile, when the stop came about, the company which did not invest had no extra interest charges to pay. If there was a severe drop in demand, some of its employees were laid off. Its fixed costs were so low that it continued to make a profit. In due course, the Government having expanded the economy again, the firm that invested finds its capital capacity brought into use once again. When the pressures of full capital utilisation begin to appear, however, the firm is more wary of undertaking further expensive investment. Even if it does decide to invest, when the next stop comes there will be a repetition of what has happened before. Sooner or later—it is not surprising that this should be the case—the firm decides that investment is not worth while.

The point I am making is that stop-go economic policies have penalised the firms which invested and rewarded those that did not invest, thereby penalising virtue and rewarding a lack of imagination and a reactionary attitude to new methods and ideas. Unfortunately, that situation is truer in the present recession than it has been at any time since the war, with massive under-utilisation of capital equipment. Millions of pounds worth of plant is standing idle, and even more plant is operating well below capacity, not because it should not have been introduced in the first place but because of a deficiency in demand, as a result of Government policy.

It is all very well for the Prime Minister to call for investment—I agree that we need investment—but it is preposterous to think that we shall get that investment in the foreseeable future when so much of our existing capacity is underutilised. Indeed, we shall not get the investment we need until certain conditions are fulfilled. First, existing capital capacity must be fully utilised or nearing full utilisation. Secondly, we must have a return to full employment. People will invest in plant only if there is no labour available to produce goods by other means. Thirdly, the Government must convince industry beyond the slightest doubt that once the economy begins to expand the brakes will not be slammed on yet again. We must give industry a guarantee that there will be continued expansion, because only in such circumstances will there be the necessary confidence for investment to take place at a growing rate in the way that we want.

Such a policy as I am advocating is not possible, of course, until inflation is brought under control. But when one considers the damage that is being done to business confidence and, so, to investment, by the present policies, and when one considers the consequent long-term damage being done to the British economy, the urgency of curing inflation becomes even more obvious. This parliamentary Session will be judged largely on the Government's performance in the battle against inflation. The sooner that battle is won and we can get on the road to expansion again, and get the sort of investment that we need, the better it will be for Britain and for our competitive position in the world.

It is clear from the Gracious Speech that there is already a heavy legislative programme ahead of us, so perhaps it is churlish of me to complain about certain omissions. However, of late, there has been talk in the Press about the setting up of a Speaker's Conference on electoral reform. I hope that this will happen. Nevertheless, I remind the House that there was a Speaker's Conference in the 1970–74 Parliament. Unfortunately, the advent of the February election last year prevented it from completing its work, but it made important recommendations on the registration of members of the Armed Forces and their wives, on multiple registration, on the minimum age for election, and a number of other items.

A recommendation on increasing permitted expenditure in elections was rushed through in time for the February election, but the other recommendations of that Speaker's Conference have still not been effected. I regret that the Gracious Speech contains no reference to the implementation of those recommendations, and I ask the Leader of the House, who was himself a distinguished member of that Speaker's Conference, to consider implementing them in the forthcoming Session.

In particular, perhaps I may repeat the plea that I made in the debate on the Gracious Speech on 30th October 1973, namely, that the proposal to reduce from 21 to 18 the age at which people may stand for election to this House should be implemented.

There are three main reasons why this should be done. First, it is a logical consequence of reducing the voting age to 18. That, after all, was done several years and three General Elections ago. Secondly, I get the impression from my contacts with young people that they feel that it should be possible for them to stand for election at the same age as they may vote. I do not think that many of them necessarily want to stand for election, but I think that quite a number feel that the prohibition to some extent alienates them from our democratic system. As many of them are among the more articulate of our younger people, I think that this is a strong argument for lowering the age to 18. Thirdly, if people were allowed to stand for election at a lower age it might lead to a lowering of the average age in this House.

Whatever we may think, this House is essentially a middle-aged and old men's assembly. I hesitate to say that it is a middle-aged and old women's assembly, because, of course, all ladies are young. If we were to reduce a little the age at which people may first stand for election to this House, I do not think that the place would immediately be flooded with 18-year-olds and 19-year-olds, but I think that people would tend to stand for Parliament for the first time at an earlier age, usually for seats that they would be unlikely to win, and that this, in turn, would lead to people actually being elected at a slightly younger age than they are now.

I hope, therefore, that the Leader of the House, who, I appreciate, may have other preoccupations in the forthcoming Session, will give some consideration to this matter, with which he was concerned at an earlier time.

4.44 p.m.

Mr. Donald Stewart (Western Isles)

It is apparent to my hon. Friends and myself that the volume of legislation mentioned in the Gracious Speech will leave very little time for discussion of devolution for Scotland and Wales, which my colleagues and I regard, or had looked to, as the main legislation in the coming Session of Parliament. I shall return to the question of devolution later in my speech.

The Prime Minister referred to unemployment. This has now become serious in Scotland. Apparently the Government are under the impression that if they state that figures in certain continental countries are worse, it should satisfy the unemployed in Scotland.

The Prime Minister said recently that we are in for a very hard time but that a year or so after that all will be lovely in the garden again. Down the years, from 1964 to 1970, the Prime Minister is on record as promising "jam tomorrow" on numerous occasions. He used to say that the economy was on the turn, and, some months later, that employment had taken an upsurge and that everything was fair sailing, and so on. We were told that if the balance of payments was made right all our problems would be solved. The Government got the balance of payments right, but nobody noticed the slightest difference, and it will be the same at the end of the present crisis.

The Gracious Speech contains a reference to the fishing industry. It says that the Government "will actively protect" its interests. It is rather late in the day for us to believe that they will actually carry out that promise. Inshore fishing is in a serious condition, and unless something is done in the immediate future, not even at some time later in the Session, there may not be a fishing industry when the Government finally get round to doing something to protect its interests. They will be able to come in only on the last rites.

One thing that they could do, shortly, would be to extend the limit to 200 miles. We have heard that the Government are chary of taking unilateral action. That was the excuse when the limit of 12 miles was proposed. They kept saying "We must not take unilaterial action." At the end of the day the United Kingdom was about the last country round the North Sea to give its own fishermen the benefit of a 12-mile limit. For the first time for many years, only four inshore fishing boats are being built in Scotland. Some shipyards which have had full order books for many years are now without orders.

In passing, one of the things that the Government could do for the inshore fisheries would be to increase the protection service. There are now only six vessels available in Scotland. At the end of the war we had nine in that service.

It is regrettable that nothing has so far been done to change the Common Market fisheries policy. We regard it as detrimental to Scottish fishing, and, indeed, to English fishing interests. We cannot understand the reluctance of the Government to take action, because this is one area, at least, in which the countries that originally formed the Six had nothing of their own to put into the pool. The British Government negotiators had a good case for getting them to change the policy. It seems, however, that it is to be left until 1982. Meanwhile, foreign vessels will fish around our coasts.

The Prime Minister and the right hon. Lady the Leader of the Opposition referred to offshore oil. The right hon. Lady talked about the economic plight of the United Kingdom. We submit that it is the economic plight of England, because Scotland is a wealthy country with oil Only two years ago we were being denounced for putting a figure of £800 million on the oil. It was said to be a gross SNP exaggeration. The Prime Minister mislaid £1,000 million during his speech in Aberdeen the other day. Despite his fast footwork, he did not notice it, nor did anyone else, until it was too late.

One of the Ministers at the Department of Energy has said that the income from oil may be insubstantial. If he is right, it is a very poor future that the Government are looking forward to, because they are rapidly pawning it, trying to see some hope in the economic future of this country.

I want briefly to welcome the promise that legislation will be brought in on crofting and the reform of the liquor laws in Scotland.

I turn to the question of devolution. An early comment in the Gracious Speech states that Her Majesty will be going to the United States to celebrate the two-hundredth anniversary of American independence. I am sure that all our good wishes go with Her Majesty and the Duke of Edinburgh on that trip. The United States is to celebrate 200 years of independence, but here the British Government are taking the same attitude as George III to the fact that Scotland and Wales may win their independence. Will the Government not learn anything along the line? Does history not show them how they should move on these questions? Apparently not. They are going to make the same mistakes.

Conservative and Labour Government's have gone on record, at various times, stating that country A will never have its independence, country B can never hope to run its own affairs, and so on. In fact, a guarantee for a person to be the president in a newly independent country would be that he had been imprisoned by a British Government only a year before. That would seem to be the best guarantee for becoming president of a newly liberated country. The Gracious Speech contains a reference to "legislative proposals" for devolution. It took 102 years of effort in this Chamber to stop little boys from having to clean chimneys. If an issue such as that took a century, it is apparent that the Government and, indeed, the Opposition intend to drag this matter out as long as possible.

Mr. Kenneth Lewis (Rutland and Stamford)

Does not the hon. Gentleman realise that the Prime Minister has today ensured support for himself and his colleagues for the next two years, so that the Labour Government may stay in office? The Prime Minister has pushed forward devolution for two Sessions to make sure that the hon. Gentleman and his Friends vote for him to keep him in office. Will the hon. Gentleman promise me that he will take his courage in his hands and join the Conservative Opposition in the Lobby on a vote of censure against the Government?

Mr. Stewart

I have enough to do dealing with my own Whip without being whipped by a Conservative Member. I assure the hon. Member that my colleagues and I do not vote on that basis. We in the Scottish National Party vote according to what we think the Scottish situation requires. We have never regarded ourselves as called upon to sustain a Labour or a Conservative Government, or to knock it out, and that is the basis on which we shall proceed in the future.

There are clear electoral commitments to devolution for Scotland and Wales, not only by the Government but by the Conservative and Liberal Parties. I want to quote the words of one of the devolution Ministers—the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing)—who, in an interview for the Glasgow Herald, said, on 30th January: We are bang on target, and if anything we are ahead of schedule. I see nothing to suggest that we will not publish the devolution Bill by the beginning of November. On 30th April the Lord President of the Council was quoted by the Scotsman as saying: The Bill, we very much hope, will be produced at the end of this vear and the Assembly set up as quickly as possible after that. It will be the major Bill of the next Session of Parliament. It does not even figure in the Gracious Speech as a Bill.

In a statement to a delegation of Scottish Labour leaders on 21st July, the Lord President said again that a White Paper on devolution would be published in October. The date is a month out already. Another statement said that the Bill would be out by the end of the year. That commitment has gone by the board. Again, it was said that legislation should be through by the 1975–76 Session, and so on.

I warn the Government that this is a cynical betrayal of their election promise. It is one that will be noted by the Scottish people. It is no good talking about political conventions in Scotland and Wales; the time for that has long passed. We have debated the subject for many a long day, and it has not been followed here. After all, we are always being told that Scotland is part of the United Kingdom. If the Government did not know or care what was happening in Scotland, whose fault is that? The debate has been going on long enough.

On the question of a referendum, my party has asked every Prime Minister from the time of Sir Winston Churchill to let us have a plebiscite on home rule for Scotland. The answer was identical on every occasion—"We do not do things like that in this country. Get your support through the ballot box and you will achieve your aims". We accepted that, and that is what we shall stand by.

Mr. Dennis Canavan (West Stirlingshire)

Is the hon. Gentleman saying that the Scottish National Party is unequivocally, and without reservation, absolutely opposed to a referendum—that is, a referendum not on devolution but on separatism versus devolution?

Mr. Stewart

That is a matter for the future. It is the hon. Gentleman's party that, in its manifesto, is committed to a devolution Bill. To give him credit, the hon. Gentleman keeps the Government in order on the question of the manifesto. Let him see that he keeps them in order on the question of a referendum, as well.

Mr. John Prescott (Kingston upon Hull, East) rose—

Mr. Stewart

I am sorry, I shall not give way. I have given way previously.

Since its inception the Labour Party, or Socialism, at any rate, has had self-determination for small nations as a major item of its platform. That has apparently gone by the board. Now the Government intend, with the assistance of the Conservative Party, to drag it out as long as possible. It will not do. The Government will be educated by the electorate in Scotland.

4.56 p.m.

Mr. Roy Hughes (Newport)

I have no cause to follow the hon. Gentleman to the fair land of Scotland, nor do I intend to deal with the Government's devolution proposals for Scotland and Wales. I feel, nevertheless, that the Gracious Speech contains a number of imaginative proposals. I particularly welcome the proposal to ensure comprehensive employment safeguards for dockworkers. Over the years, dockers have been a much-maligned section of the community. They will now get a better deal.

With the development of container trade, there has been a tendency to evade the dock labour scheme. The use of small wharves is undermining our established ports, which has led to many disputes in this important industry. Now, presumably, there is to be a new definition of "dock worker" and "dock work", which will, of course, involve the extension of the dock labour scheme to ports and wharves to which it did not apply before the proposed legislation.

I criticise the omission from the Gracious Speech of a proposal to take our ports into public ownership. I believe that the delay in port re-organisation and integration, and the establishment of a national port authority, are contrary to the national interest. I appreciate that the Government cannot achieve all their programme at once. Now we know that we shall not have our ports nationalised until 1977, at the earliest.

In 1970 I was a member of the Standing Committee which considered the Ports Bill. We spent 94 hours—we were kept up all night on a number of occasions by the then Opposition—discussing the Bill, at the end of which time our efforts came to nothing. I certainly hope that we shall not see history repeating itself.

There is one industry that is not directly mentioned in the Gracious Speech but about which I am particularly concerned—the steel industry. It is vital to the British economy and it is the largest employer of labour in Wales. What is more, it is publicly owned and is accountable to Parliament. A report published a few days ago indicated that the British Steel Corporation had lost no less than £125 million in the first six months of this financial year—that is, up to 4th October. The reasons for this lie in the fact that the plants of the Corporation are not working to full capacity and the fact that there is a recession in world trade generally.

Presumably the work people and their representatives are now to be told that drastic measures are necessary to deal with this situation. This could well mean redundancies, short-time working, and the closure of plants being expedited. The farcial side to this whole situation, however, is that steel imports are flooding into the country at present. On Monday 3rd November the Under-Secretary of State for Trade replied to a Question about imports of steel from Germany in recent years. According to his answer, in 1970, 103,000 tonnes were imported; by 1973 that figure had risen to 564,000 tonnes; and in 1974 the figure had doubled again, to 1,018,000 tonnes. When I read those figures my natural reaction was to express concern for workers in the industry and their jobs, certainly, and to call for the imposition of controls to prevent these great quantities of steel coming into our country.

In looking at the reasons given for these imports, one finds that at one time we were given the excuse that they were due to the three-day working week, back in the early days of 1974. There was the further excuse that certain vital equipment for North Sea installations had to be imported. We then had a startling revelation in The Times on Tuesday, when Peter Hill, the industrial correspondent, pointed out, in the Business Section, that With thousands of its workers on short time, the financially distressed British Steel Corporation is to import huge quantities of steel from its European competitors to fulfil major home market contracts. The purchases are believed to involve about 100,000 tonnes with an estimated value of £13 million. Those are really startling figures. The article went on to say, The foreign purchasing scheme by the BSC is geared particularly to meeting the requirements of the motor industry, and reflects the corporation's anxiety not to let down its home market customers, as it did last year. That is another remarkable revelation. My final quotation from this article is that The corporation could claim that the need to resort to foreign suppliers is partly the result of industrial disputes and technical difficulties at key plants. As I have said, it is truly a remarkable proposition for the British Steel Corporation to be importing no less than £13 million worth of steel at present. Here we have a public corporation, working to 65 per cent. of its capacity, the chairman calling for plant closures, and, at the same time, redundancies and short-time working throughout the industry. Yet we are importing these vast quantities of steel. It is farce in the extreme.

In May of this year the Corporation produced a news sheet for all of its employees, telling them of all the benefits that would accrue to them as a result of Britain's being in the Common Market. I quote an article from The Times of today, which gives the figures for imports and exports in the last year or two. Imports of steel into Britain from overseas, including EEC member states, rose 24 per cent. last year, while exports fell by some 20 per cent. That was David Cross, reporting from Brussels. He went on to say, In 1973, Britain exported 2.3 million tons and imported 1.7 million tons of steel products but in 1974 exports fell to 1.8 million tons and imports rose to 2.2 million tons. By contrast, steel exports from the six founder members of the Community to countries outside the EEC rose by more than 30 per cent. during 1974, while imports fell by 34 per cent. Those figures reveal clearly that whoever is benefiting from the Common Market and our membership of it, it is certainly not the British steelworker.

I appreciate the difficult situation of industrial disputes in the steel industry. There have undoubtedly been many of them. Likewise, there have been certain technical difficulties. But surely this is a reflection, to some extent at least, on the people who have been running this industry for the past seven or eight years. They are highly paid, and they should carry the can. The doctrine of executive responsibility was clearly and concisely laid down, many years ago, by the late President Truman, when he said "The buck stops here". That is the principle that should be adopted by the executive of the BSC, instead of their hiding behind the skirts of their employees and the trade unions in the steel industry. President Truman said something else, many years ago, namely, that "Those who cannot stand the heat should get out of the kitchen". That also applies to the BSC. If the people who are running it are failing in this lamentable way, they should get out and make way for people who can run it efficiently.

The industrial situation in the steel industry is pinpointed by the situation in Newport, at the Llanwern works. That is a modern plant and a large employer of labour, but its industrial relations are chaotic. However, Newport is a town that has been well established for three quarters of a century in the steel industry. It has enjoyed impeccable industrial relations over the years. I do not say this in a derogatory sense, but there has never been any Communist influence in Newport, or at the Llanwern works—so we can dispose of the theory of "Reds under the bed". The people of Llanwern are suffering from a lack of security, because they have no faith or confidence in the people making the decisions at their works or in the industry generally.

The recent blastfurnacemen's dispute at Llanwern is now the subject of an independent inquiry and I do not wish to prejudice that, but it was rather ironic that on the morning the inquiry opened, eight men doing a similar job at Scunthorpe were killed at work. That illustrates the hazardous nature of this work. Mr. Hector Smith, the leader of the blastfurnacemen's union, lived close to the Llanwern works for many years and knows it well. His heart and soul are in the steel industry. Politically, he is what hon. Members opposite would call a moderate. No one would more like to see the Llanwern works operating to its full potential. I find it difficult to understand why the BSC cannot work amicably and arrive at a just settlement with a man like this.

I am sad at having to criticise a publicly-owned industry in this way. We know about the unsavoury aspects of capitalism—they have been revealed very clearly in the Lonrho, Ferranti, and Slater Walker affairs—but we have a right to expect better from our publicly-owned industries. I have always been a fervent advocate of public ownership. On this matter, I am at one with the people on the left of my party, particularly in the Tribune group, but the British Steel Corporation is doing immense harm to the whole principle of public ownership and to the image of the Labour Party.

The Chairman of the Corporation, Sir Monty Finniston, has certain qualities. I understand that he is a gifted technocrat, but he seems to me to be a bull who carries his own china shop around with him. It is obvious that he should now go. He should resign without further delay. New men are needed at the top in this vital industry, and more worker involvement in management is necessary. There may also be a need for structural changes, and certainly the choice of management personnel is of primary concern.

5.13 p.m.

Mrs. Jill Knight (Birmingham, Edgbaston)

It is extremely unusual for there not to be a single Minister on the Government Front Bench to listen to points raised by hon. Members on both sides. I object to the fact that there is no one to carry back our comments to the Government.

There are many points on which I would like to speak, but I am conscious of the fact that you are anxious to allow as many hon. Members as possible to speak, Mr. Deputy Speaker, so I shall content myself with referring to one particular point. The Gracious Speech says that: social security benefits will be increased to protect the living standards of the most vulnerable members of the community. My question to the Government is "Social security benefits for whom?" It is becoming clear that there is a substantial abuse of social security benefits, but there is not one word in the Gracious Speech about any intention of the Government to deal with this important problem. If hon. Members opposite would stop murmering and start listening, they might even learn something.

Mr. Canavan rose—

Mrs. Knight

The hon. Member is very fond of interrupting. Let him listen for a moment. There was a report, last week, of a family in Skelmersdale where the father had come over from the South of Ireland and was now drawing £67.25 a week in social security benefits. That is an enormous amount of money. According to newspaper reports, the man has not done a stroke of work since he arrived in this country five years ago. He has certainly never contributed in any way towards the money he is now drawing. The Government should understand that that situation is deeply offensive to a large majority of our people.

Mr. John Ovenden (Gravesend)

The hon. Lady is taking great delight in telling us how much money this man receives. Perhaps she would also tell us how large his family is. Does she agree that the benefits this man receives are based on scale rates depending on the size of the family? Is she suggesting that large families should be penalised by not receiving the same scale rates as other families?

Mrs. Knight

The hon. Member's intervention shows how unwise one is to give way. One gives way out of the goodness of one's heart and then gets useless comments like that. The hon. Member will get the answers to his questions if he will wait and let me elaborate the point I was making. He will learn that it is never wise to intervene too soon in an hon. Member's speech, because the hon. Member is usually intending to cover the points raised in the interruption, anyway.

This case and others like it strike a deep chord of offence in the ordinary British citizen. This man has 11 children, and no means of supporting them except the British taxpayer. It is entirely wrong that he should be allowed here without any means of support for this very large family. Not only has he managed to father 11 children; he has done so while, apparently, suffering gravely from arthritis. I am sorry about his arthritis but apparently the only time he visits a doctor is to get a medical certificate, every month. This raises, again, the question of the ease with which these certificates are obtained. Some time ago I asked the Government to look into the whole question of medical certificates. Some doctors seem quite incapable of refusing certificates in cases of this kind, when they would be far wiser not to grant them.

This man is reported to be looking forward to the £6 a week rise that the Government will graciously give him shortly. He says that life will become even better. At £73-plus a week from the British taxpayer, life should be a lot better. This is not an isolated case. I have well over 100 letters dealing with aspects of social security abuse. A correspondent from Sheffield writes: I am only a fitter with the British Steel Corporation, but I can tell you that 95 per cent. of shopfloor workers are fed up hearing of these cases. More and more people are saying: 'Why should I care? Why should I work regular?'. That is exactly the point. Why should he or anyone else work regularly when by not working he can draw such enormous sums. The next letter says: My husband and I are both registered handicapped and I cannot work because of back trouble and blackouts. My husband had a coronary and has had to give up a well-paid job. He is only able to do so much work for which he is paid £24. We get a small rate rebate but now another £20 has been put on the rates. We are not getting enough to eat and yet that man has all that. If it were not for relations we could not manage. My final letter comes from an elderly single lady who asks: How do these people who have never worked and will not work get this amount of money? I am one of the elderly citizens, being in my 82nd year. I worked until I was 65 in order to get the extra pittance. I had to continue working until I was 70 years old in order to live, and being single I had to pay full tax on my pension, increased rent and so on. I am not asking for extra money as, having been brought up to be thrifty, I can manage—just. How are the elderly supposed to pay for electric heat? We have just been asked not to turn it off, yet I cannot pay the bill. Like many others I get less than £20 a week income including supplementary. It cannot be right that the people who are in need cannot get benefits while the man to whom I have referred, who has never contributed to the Exchequer of this country, can draw such a huge sum.

One of my constituents is a gentleman from India, who came over with his family and by the aid of a grant secured a teacher's degree as an art master. He wrote to me saying that he was very anxious to start work. He told me that the pay for his grade would be £45 a week. Unfortunately, there is no job for him. The British taxpayer has paid for a three-year course for this man. He has no money and he is on unemployment pay, drawing over £60 a week. He tells me he is very anxious to work and would happily work for £45 a week if he could be found a job.

We are going raving mad. Surely it is time that the Government recognised the need for an inquiry or investigaton into these matters. People have written to me with hundreds of examples of social security abuse. I am told from East Anglia of one, in particular. Not so long ago there were many American Service men in East Anglia, and many of them married English girls. I am told that those girls come back to see their parents, but that their husbands know better than to give them money for the holiday. Instead, as soon as they land in Britain they can draw social security benefits, and many of them do so.

I am told of many other instances, and many are reported in the newspapers. The Keane family, in Skelmersdale, is by no means an isolated case. No one should be allowed to enter Britain without meeting certain conditions in respect of his ability to support himself. I made inquiries of other countries about the rules they apply to people wishing to visit them. In West Germany it is quite impossible to enter and claim benefits in the way that I have been describing. There is a residential qualification of six months for claiming benefits. People are not allowed in unless they can support themselves and they must take any job which is offered to them. If they do not work they cannot draw unemployment pay. In France it is similarly impossible to draw social security benefits as a newcomer. In no other country is it possible to draw the enormous benefits which Britain pays.

I rang the American Embassy—[Interruption.]—to inquire about the rules governing the entry of visitors to the United States. [Interruption.] When I outlined the case at Skelmersdale the person to whom I was speaking—[Interruption.]

Mr. Deputy Speaker (Mr. George Thomas)

Order. Hon. Members must not continually interrupt from a sedentary position. It is discourteous to the House.

Mrs. Knight

The person to whom I was making my inquiry asked me whether I was right about the Skelmersdale case. He said that it sounded very odd to him. I should think it would. It sounds very odd to many British people, as well. To get into America a person must have a labour certificate from a prospective employer to prove that he has a job to go to there. A relative already living in the United States can sponsor a visitor, but that migrant must have at least $10,000 to invest—not to live on but to invest. Persons without that sort of money are not allowed in. It is impossible to enter the United States as a destitute person.

Visitors to Australia must have a trade before they are allowed in, and it must be a trade which is needed in that country. Such a person is required to have a reasonable amount of money with which to keep himself, and if he has 11 children he will need a very large amount indeed.

In 1967, Canada operated a non-discriminatory entry policy. A person could enter if he had a skill in the sort of job he was seeking, or if he was sponsored by Canadian relatives. He could enter also if he had a close relative—it is called a first degree relative—already there. I am told that inflation has changed the situation in Canada. To get in now, one must have an offer of employment in a job which no one else locally can fill. One must be of good health and good character, and able to prove it. One must have enough money to establish oneself, and for someone with 11 children that would be a considerable sum. There is, I am told, a table specifying how much a person should possess. Canadians say that they must be sure that a visitor will not deteriorate to a social security case.

The Bahamas, Bermuda, Mexico, Sri Lanka, the Middle East and many parts of the Far East all have sensible rules to cover this situation. Why does Britain not follow their wise lead? Let us curb the abuses, so that the money can go to the people who really need it—the sort of people who have written letters to me. Unless we make a determined effort to curb these abuses we shall not have enough to meet their requirements. We might well have been a flourishing country today if only we had adopted a more sensible policy in this respect, and had not followed one involving the donation of huge sums to people who have never paid a penny into the Exchequer.

5.28 p.m.

Mr. Gwynfor Evans (Carmarthen)

Not unnaturally, I looked to the Gracious Speech this time for evidence of the Government's determination to implement, this Session, their manifesto commitment to establish elected Assemblies in Scotland and Wales. Throughout last Session they protested that they were quite resolved to keep to their time-table, and Ministers have angrily repudiated any suggestions that there might be delay. Some of us, however, suspected that when the crunch came they would find reasons for deferring the establishment of these Assemblies. So it has been. Today, the Prime Minister made a categorical statement that no Bill would be introduced in this Session. Apparently, more time is needed. It seems that the Government have not done their homework.

This matter has been discussed for so long that it is astonishing that more time is needed for yet further discussion. It has been discussed in Wales for the last two or three generations. In 1895 the Liberal Prime Minister of the day, Lord Rosebery, came to Cardiff and declared himself in favour of a Parliament for Wales. Within three months of that declaration this House declared itself, in principle, in favour of a Parliament for Wales. That was 80 years ago. Seventy years ago, Keir Hardie and the Independent Labour Party were enthusiastically in favour of a Parliament for Wales, and 40 to 50 years ago the modern Labour Party was also in favour. Its favour did not lack enthusiasm. Indeed, its most distinguished Secretary, Arthur Henderson, said that if Wales had her own Parliament, she could be a Utopia among the nations. That was a statement not by a Welsh nationalist but by the Secretary of the Labour Party.

Ten years ago the Labour Party once again, after an interim period, came out in favour of an elected council or assembly for Wales, although it had not thought the matter through. Seven years ago, the Leader of the Opposition of the day, the right hon. Member for Sidcup (Mr. Heath), declared himself—I suppose on behalf of the Conservative Party—in favour of Assemblies in Scotland and Wales. I have heard it said that if the Conservative Party had been returned to power in 1974 it would have established at least a nominated Assembly for Wales, which could have become an elected assembly.

Although we have had all these years of discussion, there are still some who say that we need still more time to discuss the matter, and that it is being rather rushed. Most conservatives, of both parties, are in that category. They oppose giving the Welsh people any power over their own affairs, but not for Welsh reasons. Their reasons are, apparently, British reasons. They seem to fear the loss of power to London. They approved the transfer of power from London to Brussels bureaucrats without much trouble, but transferring power to the Welsh people is another matter for them. That is, perhaps, because they fear the end of London's power to exploit Welsh human and natural resources in the way in which those resources have been exploited during recent generations.

Their fear is for what they would call the British nation. It needs to be emphasised that Britain is not a nation. This afternoon we heard the Prime Minister speaking of the nation. Britain is not a nation; it is a State. A nation is a community of people which is the fruit of historic growth. England is a nation. Scotland and Wales are nations. But a State is the political order which serves the nation. It has a place subordinate to the national community. That is the place of the British State. It should be serving Wales, but we have never had a State to serve us in Wales.

When Wales and Scotland achieve their full national status—and that day is coming—it will be the end of the British State. Where will the alleged British nation be then? It has not existed. It is a figment of the imagination. Britain is a huge unitary, highly centralised State. The status of Wales inside that organisation is that of an internal colony—an apt phrase, which is now having wide currency—exploited by the State and on the periphery of the State.

There is a stark contrast between the economic and cultural situation in Wales and that in countries in the north of Europe which have enjoyed freedom during recent generations. Wales is far richer in natural resources than are the Scandinavian countries—or she was, until Norway found oil in the seas. Wales is also no poorer in human talent. Yet if we compare the recent economic history of Norway with that of Wales we find a tremendous difference. The standard of living in Norway, which achieved self-government only in 1905, is considerably higher than that of England. Her gross national product, compared on a per capita basis, is much higher than that of England. Although Norway has only 4 million people and is a difficult country to govern, the strength of her Government is greater than the strength of the Government in London, in terms of dealing with great powers such as the international oil companies. The way in which Norway has dealt with the oil companies has been far more effective and civilised than the way in which Governments here have dealt with them. Many of us in Wales think that we could have enjoyed standards comparable with those of Norway if we had had Norway's freedom of action.

Finland is in a similar position. She did not achieve freedom until 1918, yet standards of living there are now much higher than in England. If Finland had remained incorporated in another State, as we in Wales have been, I dare say that her standards would be as low as ours in Wales, or even lower.

Denmark's is an extraordinary story. There was a war between Denmark and Prussia in 1864, when Denmark lost the richest two-fifths of her country, Schleswig-Holstein became part of Germany, and still is part. Denmark was left with the poor rump, without natural resources.

We can imagine what the situation would be today if the whole of Denmark had been incorporated in Germany after that war. There would be in Denmark a nationalist party calling for self-government. Wise people would say "How ridiculous! These Danish nationalists think that they can run their country, which is so poor and so obviously dependent on Germany. Is it not from Germany that the Danes get their whole industrial development and the wherewithal to maintain all the unemployed? How could Denmark possibly afford to be self-governing?" Yet Denmark has not only been self-governing; she has enjoyed far higher standards of living than we have in Wales, and she has suffered nothing like the social ills from which we have suffered.

I know that you do not agree, Mr. Deputy Speaker, but I think that if we had had our own Parliament in the past two generations the story in Wales would have been very different. It would have been a much happier story, and we should have avoided at least the worst of all the unemployment, migration and depopulation that we have seen in such quantity.

You will remember, Mr. Deputy Speaker, because you are from the valleys, the drain from the valleys and the whole of Wales between the two wars, when we lost 500,000 of our people. Was that good government? The problem has continued, and we are still being drained of our people. We are still suffering from higher unemployment than in England, despite all the loss of population by migration and depopulation.

The havoc is even greater on the cultural side. Our language, which is the vehicle of our fine civilisation, is fighting for its life. We cannot even have a television channel to serve our people in their own language. If we had had our own Parliament these things would not be problems for us. We cannot do anything about them as matters stand, any more than we can do anything about housing, where the situation is wretched; about leaseholds; about securing any material return for the sale of the rich natural resource of water; about civil aviation, including the prob- lem at Rhoose, the Cardiff airport; or even about having a development plan for Wales and implementing it.

Mr. Peter Morrison (City of Chester)

Exactly who will pay for everything the hon. Gentleman wants if he gets his Parliament?

Mr. Gwynfor Evans

The Welsh people will pay. They are paying now. They are paying through the nose, in taxes. Wales is self-supporting in all the things the Government do for Wales. If the huge burden of armaments were removed, or even if only part of that burden were removed, we should be in credit.

Mrs. Winifred Ewing

Hon. Members should do their homework.

Mr. Evans

Our problems are chronic. The United Kingdom faces a desperately serious economic situation. Wales has faced that sort of situation for generations, and it is high time that we had power to do something about it.

Some people say that we cannot have an Assembly now because of the United Kingdom's economic difficulties. It is precisely because of Britain's present economic difficulties, and their consequences in a helpless peripheral region like ours, that we so urgently need an Assembly with real powers to tackle our problems.

The gravest problems of Wales have their roots not in the economic poverty of our country, or anything like that, but in the political order. They exist in such magnitude because Wales is an internal colony and because the people of Wales have no power at all over their national environment.

It is for these reasons that we see the growth of the national movement. It is growing strongly, and it is important that the House and the Government should realise what is happening in local elections in Wales. In the last seven months there have been 11 county and district elections. Plaid Cymru has won six of them. It has had 37 per cent. of the vote. The Labour Party has won one of them, and it has had 32 per cent. of the vote. The independents, ratepayers, and so on, have had 31 per cent. of the vote.

People are beginning to feel—and to feel very strongly—the need for a measure. at any rate, of democratic control. It could not be more urgent. They need this control in order to defend their interests and to develop the civilisation of one of the world's oldest nations.

Attempts are made to frighten us by the cost of devolution. Our calculations show that, if properly organised, it would even lessen the expense. But even if it did cost what some seem to think it might, would it be more than the cost of, say, three of the 385 MRCAs which Britain is now ordering? Would it be more than, or as much as, the £15.2 million a year spent now on the upkeep of British military bands?

The Conservative Party in Wales seems to have as its dominating passion a determination at almost all costs to prevent Wales living her own life as a nation. What the Conservative Party in Wales wants to see is an increase in bureaucratic control. It wants to increase the powers of the Welsh Office. It does not want to see more democratic control over the nominated bodies in Wales, which spend so much public money. It does not want to have these bodies accountable to the Welsh people.

The Conservative of greatest stature, the right hon. Member for Sidcup, seems to take a different view from that of the Conservative Party in Wales. He realises the evil of the great growth of bureaucracy, as he told us on television the night before last, and the need, therefore, for devolving more power to the people. He used that phrase himself. The Government take this attitude, too. That is why they are intending—though further in the future than we had hoped—to establish a nationally elected Assembly in Wales.

It should be noted that the most active, and very often the most intelligent, supporters of the Government in Wales are very keen on devolution. They are to be found in the TUC in Wales and active in the Labour Party in Wales. I am sure that it will be a great disappointment to many Labour supporters in Wales that the Government are now deferring action for another year.

5.44 p.m.

Mr. John Parker (Dagenham)

There can be few more English names than Parker. I am told that it is the sixty-seventh commonest name in England. But I should point out that my mother is Welsh, and I am the fifth owner of a family Bible that originally belonged to a John Morgan who was born in Ebbw Vale in 1787. My father's mother was Scottish.

I am one of the figments of the imagination, the British, to whom the hon. Member for Carmarthen (Mr. Evans) referred. I am British and proud of it. Many of us in this country are mixed in our origin and none the worse for it. My wife, I might add, happens to be partly of French origin.

Very few of us are 100 per cent. Welsh, English or Scottish. There is a British nationality. We can also, quite rightly, be sympathetic to the cultural feelings of Wales or of Scotland and to the particular traditions of different parts of the country. The two should not be in contradiction.

It should be remembered that Socialists have always disliked narrow nationalist ideas. I remind the hon. Member for Carmarthen that Keir Hardie was a Scottish miner. He sat in this House as a Member for East London and then for a Welsh constituency. That kind of thing should continue to be possible in future. We do not want the United Kingdom to be broken up in such a way that this cannot happen in future. We should all be able to make our contributions to this island.

I support what the Prime Minister said about a cautious approach towards devolution. There must be devolution of various institutions to different parts of the island, and particularly to Scotland and Wales, but there are other aspects of administration on which we must keep the island united.

The tendency throughout the world in any federation is towards greater power to the centre. This has happened in Canada, Australia, the United States of America, Germany and the Soviet Union. That is the general tendency. The United Kingdom, a small island, must be regarded economically as one unit. Whatever is done in relation to devolution, I maintain that nothing should be done to break up the economic unity of this island.

The Mint would not have been moved to Wales if there had not been a Government in Westminster. The Welsh could not have brought the Mint for the whole of Britain into Wales. There would have been no development at Dounreay in Scotland without the decision of the Government in Westminster. The island must remain united so that we can have proper planning and proper organisation of the economy.

What has happened in other countries where there has been devolution? Let us consider Yugoslavia, with its six republics. Three of the republics each created factories to build transistor radios large enough to supply the whole of the union. Steps had to be taken to prevent that sort of thing happening in the future. The decision as to what economic development should take place in future in any particular part was given not to the central Government but to the central bank.

We do not want to have a situation of that sort in Britain. We want to keep economic control in this Parliament, here in Westminster. Whatever powers are released as a result of devolution, the final control over the economy must remain in Westminster, with the British Parliament. That is very important, and we must see that we do not take any steps that break up the unity of the island or take away from people the possibility of moving to and fro in the island.

None of my friends from the Scottish National Party are here, but I must say that from some of their pronouncements they seem to be far more reactionary than the Tories in Scotland. One hon. Member has spoken of differentials in the social services within the British Isles. That would be chaotic. It would mean that a person moving from Edinburgh to Durham would not get the same social services as he had in Edinburgh. One cannot have differentials in the social services within the British Isles.

Northern Ireland has been outside the United Kingdom in many ways during the whole period of 50 years since it has been a separate country, but the Government there, despite that fact that frequently they have not liked the Government in Westminster, have tended always to bring their social services into line with those in the rest of the United Kingdom. There is a very strong case against having differentials in the social services.

On some matters there ought to be more centralisation than we have now. It is ridiculous that the law of divorce and marriage should be different in different parts of the island. Australia has had to bring in a common marriage and divorce law throughout the different States. There are different divorce and marriage laws in Scotland from those in England and Wales. This is a great disadvantage. They ought to be the same.

In these discussions on devolution we must decide the sort of fields in which we think it should apply and in what fields we ought to have a common policy for the whole of the United Kingdom. We must not, in doing so, forget that many of us are British and not narrowly nationalist—English, Scottish or Welsh. Even if we are British, we can still be proud of the traditions and developments in different parts of the United Kingdom.

I therefore welcome what my right hon. Friend the Prime Minister said about a cautious approach to devolution. We must all make our contribution to working out what sort of powers should go to the different Assemblies, if we are to have them, in Scotland and Wales, and what powers should remain with the central Government.

5.50 p.m.

Mr. Emlyn Hooson (Montgomery)

I wish to devote most of my remarks to the issue of devolution. Like the hon. Member for Dagenham (Mr. Parker), I feel both intensely British and intensely Welsh, and there is nothing incompatible in that. I therefore disagree—as I have done all my life—with the hon. Member for Carmarthen (Mr. Evans), who, although he supports devolution, as I do, does so on an entirely different basis. He supports devolution as a step along the way to breaking up the unity of Britain. I regard devolution as a means of strengthening and adding to the unity of the United Kingdom. I have always believed that, and I have always been anti-nationalist in its extreme sense.

Nationalism has more to answer for than has any other creed in modern times for many of the world's troubles. Yet national identity and national pride exist. National pride affects the feelings of each one of us in different ways. One of the great problems of the modern world is in reconciling the need for an overall loyalty, an overall umbrella to protect us against economic bad weather and an overall defence umbrella with pride in national identity and local roots.

On St. David's Day in 1967 I introduced a Bill to give Wales a domestic Parliament. I have always supported the moves made by various right hon. and hon. Members to introduce measures of devolution for various parts of the United Kingdom—including my right hon. Friends the Members for Orkney and Shetland (Mr. Grimond) and Devon, North (Mr. Thorpe), my hon. Friend the Member for Inverness (Mr. Johnston) and one or two Labour Members—but it is important to get devolution right. For the first time in modern history we are engaged not in taking power away from the provinces but in giving power back to them. We must take the people of Wales, Scotland and England with us in that process. Unless people are convinced that devolution will lead to better and more acceptable government, a very difficult situation could be created.

What is the reason for the present movement towards devolution? The wheel of history has gone full circle. From the time the Welsh dynasty of Tudors took over the running of the country following the Battle of Bosworth, there has been a steady process of centralisation. Many of our bright people from Scotland, Wales and England went abroad to seek their fortunes and to find expression in the colonies and dominions, and they ran many of those countries.

We must recognise the psychological factor that for the first time in centuries this country is driven back on to its own resources. Able people who perhaps two or three generations ago would have gone abroad are left in Wales, Scotland and the regions of England, and they want more control over their own affairs. They are exasperated with the whole bureaucratic process, and that is a great factor behind the move for devolution.

Another factor is intense national pride and the need for a national identity which is manifesting itself in Scotland and Wales. In addition, unexpectedly the movement towards European untiy has given a fillip to the movement for devolution. If Western civilisation is to hold and to survive, we shall have to move to even greater European unity. A few years ago a possible alternative course was open to us, but it is no longer available. A compensatory factor for a more unified Europe would be greater devolution within a European context.

In giving examples of sovereign independent States the hon. Member for Carmarthen was extremely selective. He did not tell us that the unemployment problem in Southern Ireland is much greater than it is in Wales, although Southern Ireland has had its own Government for 50 years. That shows that many problems are not related to government but depend on economic circumstances. Although I am a convinced federalist, unlike some of my right hon. and hon. Friends I do not think that federalism makes a great deal of sense in a purely British context. There has been a tendency to create synthetically an English regional feeling to try to rationalise the case for devolution in Wales and Scotland. It is possible that within the next century or so there will be a federated European State. A Welsh unit, a Scottish unit and an English unit within a federal European system make a great deal of sense.

Will devolution result in better and more acceptable government? I believe that it will, but this has to be established by the Government in various ways. One problem which the Government must examine is local government. This House has made a mess of local government. The previous Tory Government would not listen to reason. When they came into office they found on the desk a Bill prepared by the Labour Party. The Conservatives pushed it through despite all the pressures against it. Even the Labour Party by then had had second thoughts about it, but the Tory Party would not listen. Although the Kilbrandon Commission was expected to report, the Conservative Government pushed on with the so-called local government reform and made a mess of it.

If we are to have successful devolution, one tier of local government must be phased out. My personal view is that in most places the county tier should be phased out, although in certain areas—perhaps in your own area, Mr. Deputy Speaker—it might be better to keep the present county tier. In my area it might be better to keep the district tier. This problem must be examined carefully and should be part of a package deal on devolution.

We must not push through devolution like a steamroller, as the Tory Government pushed through local government reform. Despite our commitment to devolution, we must get it right. The so-called local government reform opened the floodgates to inflation. The Tory Government were taken for a ride on manning by the local government unions, and this has caused enormous problems. We must not fall for that one again when we have devolution.

We must ensure that there is a limit to the cost of devolution. The Government must look for ways of saving money. If they create a new tier, they must economise on existing tiers. They could save by the abolition of all nominated bodies. The staff for the devolved Assemblies, by agreement with the respective unions, should be obtained from existing local government and Civil Service staffs. There is therefore no need for devolution to cost a great deal. It is important that the Government should not be taken for a ride on staffing matters by NALGO and the Civil Service and other unions, as happened to the previous Government under local government and National Health Service reform.

The Welsh and Scottish Assemblies must be capable of attracting able people. The Welsh Assembly must therefore be endowed with adequate powers. Those powers must be derived from London and not from local government. There must be devolution, not centralisation of local government.

We must face reality. Many people do not support devolution, on the ground that local government has a bad reputation in some parts of the country, including parts of Wales. Some authorities have been run by caucuses which have paid little heed to the spirit of democracy. Everything has been decided beforehand. It is important that a Welsh Assembly should not be tainted with that brush.

Mr. Cledwyn Hughes (Anglesey)

The hon. and learned Gentleman pursues a reasonable point when he argues for the creation of an effective single tier of local government in Wales. However, on many previous occasions he said that the county councils should be abolished and that a new authority should be created. In pursuance of that argument, is he saying that all the powers of the existing county councils should be devolved to the district councils? Does he not foresee the possibility that some of the major powers might go to a Welsh Assembly?

Mr. Hooson

My predisposition is to devolve most of the powers of the existing county councils to the district councils. In some areas, for example Glamorgan, the county council might provide the right tier. I am not sure. I might give a few of the powers of the county councils to the Assembly, but the Assembly generally should draw its powers from Westminster.

Mr. Cledwyn Hughes

It is possible that some major Powers may go upwards.

Mr. Hooson

That is a matter for discussion. I am never dogmatic. Some powers might best be exercised on a regional basis. The argument against the county councils is that they are too remote to be good local government units and are too small to be good regional units.

The elections to the Assembly must be based on proportional representation. In a recent article, Sir John Foster said that this country had the most primitive electoral system in Europe and that it was significant that we had the most dismal economic record in Europe, and that those two facts were not unconnected. Those facts are not unconnected because we have the most inconsistent government in Europe. The pendulum swings too violently from side to side. The public and private sectors of industry are adversely affected by frequent changes in economic policy. For example, take the difference between industrial investment grants and industrial investment allowances. We know of the arguments which were produced in the House year by year on their respective merits and how greatly upset our industry was by changes from one system to the other. West Germany has had more consistent government—whether dominated by the Christian Democrats or Social Democrats—because the system prevents the pendulum swinging too far either way and ensures fair representation.

It is important that the minority groups in a Welsh Assembly should feel that they are properly represented. There is a major case in favour of proportional representation A constitutional doctrine was put forward by the Prime Minister to the effect that with 38 per cent. of the votes the Government could do as they pleased if they obtained a majority of the seats. That is a mandate. I was brought up in constitutional law. I do not think that that constitutional doctrine has ever been seriously challenged in this country. If a Government gain a majority of seats, they can push through what legislation they please. If the Scottish National Party wins 38 per cent. of the votes and gains a majority of the seats in the Assembly, it can, according to this constitutional doctrine—its policy is the separation of Scotland from the United Kingdom—declare independence. We must be aware of that problem, which will apply more to Scotland than to Wales.

Mr. Cyril Smith (Rochdale)

Will my hon. and learned Friend refresh the memory of the House of what Kilbrandon said about the method of election to the Assemblies?

Mr. Hooson

I am always grateful to give way to, and to be reminded by, my Chief Whip.

The only unanimous recommendation of the Kilbrandon Commission was that the Welsh and Scottish Assemblies should be elected under the system of proportional representation.

The Assemblies must meet for a fixed time. The House of Commons suffers because it is not a fixed-term Assembly. Such an Assembly provides more consistent Government. The Assemblies should be relatively small. Various figures have been bandied about. A Welsh Assembly should comprise 72 Members, which is double the present number of Welsh Members of Parliament. Wales is a small country and I do not think that it needs a large Assembly.

The Assemblies must command the support of the people in Wales and Scotland. I have always been a devolutionist, but the people must agree to major constitutional changes of the kind proposed. There must be a major debate to give people the opportunity of being convinced of the rightness of this action.

The Tory Party tends to oppose devolution. In the last century Gladstone tried to give Ireland a domestic Parliament— not independence, as is often suggested by the nationalists. That body was to have been a domestic Parliament. He tried again and again to give Ireland what he called home rule, which is similar to what is proposed for Scotland under the proposed devolution legislation. However, every time he and his successors attempted to do that they were frustrated by the Tory Party. What was the result? Eventually Ireland broke away from the United Kingdom by force of arms. The devolutionary proposals were stupidly frustrated. The people of Ireland were frustrated, went to an extreme and started the break-up of the United Kingdom. That need not happen in future.

I am sure that I speak for the majority of people in Wales. We are concerned to preserve the unity of the United Kingdom. We share a common heritage with England and Scotland, although we have a separate culture and different roots. This heritage is important to the people of Wales and Scotland. That is why we must get devolution right. Although we must ensure that power is shared, this Parliament must have sovereign power over those matters which are of common concern to the United Kingdom, such as economic well-being and a common law. The law of Scotland is different, but let us not forget that Scottish and English law have gradually become closer as a result of the decisions of the House of Lords being binding upon Scotland and England. If we play the matter right on devolution, we can do a great deal of good not only for Wales and Scotland but for the United Kingdom.

6.10 p.m.

Mr. John Prescott (Kingston upon Hull, East)

I welcome many parts of the Gracious Speech. The debate has naturally been dominated by devolution. Although I am a Welshman, I wish that some of my English colleagues would realise that is it not sufficient to say that we did not take notice of the argument about an Assembly two years ago. This is very much a commitment of the Government, particularly for Scotland. I noticed that the Leader of the Scottish National Party, in answer to my hon. Friend the Member for West Stirlingshire (Mr. Canavan), was reluctant to say that he would submit his views to the electorate in a referendum as his party has been demanding for 10 or 20 years.

I am glad that the 11-plus is to be abolished. I have a vested interest in that, 15 years after failing the 11-plus, I took a degree. That is not a symbol of success of our education system, as the Leader of the Opposition seems to think, but it shows that many people could benefit from further education but are prevented from doing so by the pernicious 11-plus selection.

As a representative of a port area, I also welcome the proposal to extend the dock labour scheme, particularly on Humberside, where a number of small wharves have undercut the development of the port and exploited cheap labour. I urge the Government to take no notice of the gale of protest which is being whipped up about the strangulation by dockers of our food supplies but to treat it with the same contempt as the remarks of the Opposition about port nationalisation at Felixstowe only shortly before it sold off its interest to the State-owned British Transport Docks Board.

The Government intend to introduce a Bill to nationalise shipbuilding and the aircraft industry. Workers at the Hawker Siddeley factory at Beverley have constantly demanded the introduction of this legislation to guarantee stability and the future development of aircraft like the HS146. I assume that ship repairing will be included in the legislation, although the Gracious Speech does not say so and despite the pressure which has been building up to separate repairing from these proposals.

Humberside is one of the major areas of small-scale shipbuilding, building craft for the North Sea, military craft and other craft which play an important part in our economy. The workers in that area have been calling for some time for the nationalisation of this industry. This is one area where one can look for some expansion and which does not have the crucifying problem of over-capacity faced by most of this industry internationally.

However, what concerns me and other representatives of Hull and the workers there is that the Drypool shipping group, the largest on Humberside, which was due to be included in the last Bill on this subject, is in the hands of the receiver, despite the fact that it is building 13 ships. The receiver has made some recommendations, we understand, which are causing considerable concern. The very fact that the yards are filled with ships is an example of the problem which affects this industry internationally—that of fixed-price contracting in a period of intensive inflation. This has created tremendous liquidity problems. The Government have been asked since June to give assistance under the Industry Bill. I welcome the Government's contribution towards wages until an agreement was reached with the shipowners to increase their contractual obligations, and building continued until August.

However, the receiver's report, one understands—it has not yet been made available, however, to Members of Parliament—says that the yards suffer from trends which we have criticised in the industry generally, including deficiencies in investment, management and employment problems. That is our justification for extending public ownership to this important economic activity.

My party and the Government gave a commitment to nationalise Drypool. The group was included in the last Bill. The fact that the Government have not decided whether to include it in the next one is a retreat from that commitment. The workers last week had a meeting with the Members of Parliament to make it clear that they wanted the yards nationalised and kept in being as a single group. The receiver has an obligation in law and is more concerned with the financial obligations and finding what money he can for the profitable parts of the yards while allowing the rest to be sold off for debts. The profitable parts would be made available to those who wish to buy, but not to the Government. A sale to the private sector is under consideration and I believe that a decision is imminent. The Government seem likely to go back on their promise to nationalise this group.

It seems that the private sector would not come in simply to save jobs. A survey by consultants plainly leads them to believe that it would be profitable to buy these yards. This is, therefore, not a loss-making sector but one going through the financial difficulties which face many other enterprises. The takeover by private enterprise is opposed by me, other MPs and trade unions and local authorities in the area. Some of the reasons given are not acceptable to us. It is said that the Bill has no vesting date and that we must wait until next June. When Court Line collapsed, however, the Secretary of State set up a holding company and bought its yards for £16 million to wait for nationalisation. One of those yards, Brigham and Gowans, is in my constituency. The precedent is clearly established.

It is also said that the money involved is difficult to find in these stringent times, but the private sector wants to buy, so this is not a dud. The judgments about the money involved are in the receiver's report, which MPs have not seen. I am not prepared to put my head on the block about the view that people will form of that report without seeing it for myself. The workers demanded on Monday that the report should be made available to them so that they could appraise it and give their views to the Secretary of State about the future of the yards. I hope that the Government will see fit to provide them with the report.

There is also the idea that there is excess capacity. A Department of Energy report shows, I believe, that there is room for much expansion. This report ought to be published so that we may know the true argument about shipbuilding capacity for small vessels. It is also said that the Industrial Development Advisory Board has come out against this proposal. Taking into account the Board's record, this is not something which should be regarded as positive proof.

The Government should take into account the fact that public ownership does not just mean taking over an industry. It is about the extension of political power—the distribution of power and the ownership of the means of production. The private sector has failed. That is why the Government must introduce nationalisation measures. We hear much about unemployment in Scotland and Wales. In Hull the unemployment rate is twice the national and regional average and higher than in any shipbuilding area outside Sunderland. The Government indirectly have played some part in increasing unemployment. They have not done so intentionally.

The Imperial Typewriter closure arose from a decision by a multinational com- pany. A total of 1,400 jobs went to the wall because that company moved to Germany. The Government are the only organisation with the power to counteract such moves. There has also been the 25 per cent. increase on VAT which affects caravans. Mine is a major caravan-producing area. The payment of regional employment premium to development areas, as opposed to intermediate areas like mine, has meant that shipyards in Aberdeen—where there is an unemployment rate of 1.7 per cent. as opposed to almost 7 per cent. or an 11 per cent. male unemployment rate in Hull—receive subsidies equal to £1 million on a £5 million extension scheme to enable them to compete against the yards in Hull.

Shipyards in Ireland have received £85 million in subsidies since 1961 while those in Glasgow have received £119 million. My workers ask, "Have we to become nationalists or throw bombs before we receive assistance?" A classic historical mistake may be repeated when in nationalising industries we tend to end up with the problems of the industries that have been nationalised while the profitable parts are sold off to the private sector. This looks likely to happen here. That is not acceptable to me, the workers, the trade unions or the local and county authorities. I hope that this aspect will be dealt with in the Government's nationalisation proposals and that they will include Drypool in the Bill. If it is not included, I warn the Government that I shall carry out my obligations to my constituents and table an amendment to any legislation which is brought forward to ensure that Drypool is included. I also give fair warning to those who wish to buy up the profitable sectors that they cannot be certain that those sectors will not be nationalised.

I come now to a pertinent and topical subject, that of fisheries and the Iceland situation. I have heard a great deal about this matter. As a Member representing a fishing area, I am concerned about the conflict which is beginning to develop between this country and Iceland. It is similar to that which arose two years ago and it is likely to be based on the Government supporting the trawler owners' arguments rather than thinking out a sensible, consistent policy and one with at least some tinge of Socialism.

There are two major problems. The first concerns the level of fish stocks. That was a highly disputed matter two years ago but is no longer disputed. Everyone agrees that the massive fishing capacity which has come about as a result of new technology has led to rapidly falling stocks, not only around Iceland but in other fishing areas. There is a problem in sharing out the available fish. The second point concerns the right of the people to develop this wealth. There is too much capacity. That reflects the subsidies that are being pumped in by Governments of all countries heedless of consistent development or stocks of fish to support them. To some extent the problem is feeding on itself.

What is required is a complete review of our entire fishing policy. That will have to be done with other nations. It should be carried out at Government level, not through the international fishing organisations which have patently failed to solve the problem of conservation and the sharing of catches. Government policy should be influenced by justice and the differing burden of consequences of contracting fish stocks.

It is important to remember that Iceland spends about 45 per cent. of its gross national product on fishing and exports about 80 per cent. of its catch. For the United Kingdom the GNP figure is less than 1 per cent. The richer countries will have to make sacrifices to allow industrial development to take place. But we should not let the workers go to the wall. There must be a positive policy rather than one of grabbing what we can and living with its consequences.

We seem to be embarking on a contradictory and hypocritical policy with regard to limits. The 12-mile limit came about through custom and practice. So far 35 countries have declared in favour of the 200-mile limit and Britain is champing at the bit to do the same. Despite what was decided at the Law of the Sea Conference, we appear to be hypocritical in this matter. We extend our limit to 200 miles on the Continental Shelf when oil is involved, yet refuse to acknowledge such a limit for fishing. Indeed we refused to support the motion in the United Nations, passed 100 to none against, that fish on a Continental Shelf should be considered the wealth of that shelf, as with oil. This would have given Iceland its case.

I have been alarmed by a document issued by the industry entitled "Some Current Problems of the British Fishing Industry." This says, referring to limits: If no Convention is signed and ratified, then such breadths will in due course become a part of international law as a matter of a consensus of world opinion or 'custom and practice'. Thus it seems that the idea that international law is sacrosanct, as we have claimed it on our side in our dispute with Iceland, is now something which people must recognise is to be superseded by custom and practice, which is a reversal of our argument.

There is a further passage in this document which is worth reading, and in it the word "Iceland" could be read for "United Kingdom". The document says that, whatever happens about Iceland, Britain will require to renegotiate the common fisheries policy and will be seeking European Community help in its fight with Iceland over the 200-mile limit. It goes on to say: The fact that we are moving into a world of 200-mile fishery limits of itself demands reconsideration of those provisions of the policy concerned with access to waters. The fact that the United Kingdom devotes a much greater proportion of its effort than does any other EEC country to waters which lie outside of what will be extended Community waters, means that the United Kingdom fleet will suffer, absolutely and relatively, from the limit line extensions of third countries much more than any other EEC fleet. For all these reasons it would be inequitable if the United Kingdom were not permitted a bigger share of the fishery resources within Community waters than we have historically taken. That is the case of Iceland against the United Kingdom.

If we forced the position against Iceland and then use for our own advantage the very same argument as Iceland has used it would be hypocrisy and would not be accepted. That is why we should look for a fishing policy which is fair and which has some Socialist content.

We must recognise that each nation has the right to share and develop its own resources. I call for an international conference of all the countries involved, particularly in the North Atlantic area, at which we can decide how to maintain stability within the 200-mile economic zone. That is the only positive way of dealing with the problem. We should not hang on to the coat tails of the trawler owners, whose demands are contradictory and hypocritical and not a policy for Britain to follow in our long-term interests.

6.30 p.m.

Mr. Peter Morrison (City of Chester)

The hon. Member for Kingston upon Hull, East (Mr. Prescott) will not expect me to agree with everything he said, particularly with the contentious remark he made about aircraft workers at Hawker Siddeley. Perhaps on his side of the country they wish to be nationalised but in Chester that is not the case.

I found both the Gracious Speech and the Prime Minister's speech depressing, the Prime Minister's even more so. It was not so much that I disagreed with most of the content in both of them but the fact that in both cases, particularly in the Prime Minister's, there seemed to be a total lack of willingness to face reality. The British people are fed up with legislation. They have had enough of it, and that is the case regardless of whether the Government are Conservative or Labour. They are also frightened by inflation. Yet we have in the two speeches only lip service to the control of inflation and promises of more and more legislation.

There is general agreement on both sides of the House that we want to bring inflation under control, and there is surely some form of agreement on both sides that the only way we shall do it is by cutting Government expenditure. But the Prime Minister simply refuses to answer any questions at all when he talks about cutting Government expenditure. He refuses either because he cannot, which I am sure is not the case, or because he will not—presumably because he does not want to face reality.

Immediately after the paragraph declaring the Government's intention to counter inflation, which is merely verbiage, there is the proposal to expand the National Enterprise Board and bring the shipbuilding and aircraft industries into public ownership. The hon. Member for Newport (Mr. Hughes), who is a Left-wing member of the Labour ranks, propounded a very good case against increased nationalisation. That aside, how- ever, both the extension of the NEB and the public ownership of the aircraft and shipbuilding industries will have to be paid for. How? By increased taxation? By borrowing more money? By printing more money? I suspect that it will be by printing more money.

The Prime Minister talks glibly about British oil, and well he may. But he forgets two very important factors in talking about British oil and his ability to borrow with that oil as a collateral. First, even if he can do that he is mortgaging the future for the second and third generations from now. Secondly, however, I suspect that he cannot actually borrow money with the collateral of British oil because I suspect that there is not any money to be borrowed.

Let us suppose that the estimate for our borrowing requirement is just £12,000 million—a lot of money by any standards. If we combine that borrowing requirement with the requirements of the United States, Germany, France and Japan, the five countries together need to raise £90,000 million. Where do they get it from? Apparently Kuwait is still lending money, and there is Saudi Arabia. But none of the other Arab countries is lending money. I do not believe, therefore, that these five countries can borrow it.

It seems that the Government are not going to cut public expenditure, so how do they get out of this situation? Do they return to the printing press? If they do, the inevitable consequence, despite perhaps a short-term improvement in the early months of next year, is bound to be increased inflation. That is bound to bring with it, whatever Labour Members may say, higher unemployment. I do not believe that the British people want that.

The British people want a Government who are prepared to face their responsibilities and, to take decisions in the interests of all, however difficult it might be to take them. Our people are not frightened only by inflation. They are also frightened by the increasing breakdown in law and order and the rule of law. To that extent, I welcome the statement in the Gracious Speech that the Government will maintain determined efforts to eliminate terrorism and attach particular importance to dealing through the courts with all those responsible for violence. But have we not heard that before? It seems, however, that the violence and the vandalism get slightly worse every day, and perhaps terrorism gets a lot worse.

The British people are getting more than frustrated. I hope that in this Session the Government will see that the people as a whole, the vast majority, require the reintroduction of capital punishment for terrorism. That would at least show the British people that Parliament in some way reflects what they are feeling and—perhaps more important—is prepared to take unattractive and difficult decisions.

What depressed me most about the Gracious Speech was the sheer divisive-ness of the legislation proposed. Nationalisation, whatever its merits or demerits, is certainly divisive. Hon. Members opposite talk about it as a cure for unemployment regardless of its cost. In my area, the Shotton steelworks are now under public ownership and are shedding labour, whereas Hawker Siddeley, which is in private ownership, is taking on more labour.

Then there is the abolition of pay beds. Regardless of whether the Government are committed to their ideology, surely they understand that, at this time, it is another piece of divisive legislation. The abolition of grammar and direct-grant schools regardless of the wishes of parents is also totally divisive at a time when the country would prefer something less divisive. The extension of the dock labour scheme is divisive while the abolition of tied cottages will inevitably put up the cost of food. There is a multitude of other, similar measures. In any case, there is going to be too much legislation.

However, I must go along with the Prime Minister's attitude to devolution. I cannot claim ancestry like that of the hon. Member for Dagenham (Mr. Parker), who apparently had forefathers in different parts of the United Kingdom as well as perhaps Europe, but I have some Scottish ancestry. However much they may say it has been discussed, and that now is the time to act, all we really know from Scottish and Welsh National Members in this House is that they want devolution. We do not know what sort they want. We suspect that some of the Scots want separation, but we do not know for sure whether all of them want it. We do not know what sort of Assembly they want. We do not know what sort of powers to give that Assembly. Therefore, however much the SNP and Plaid Cymru may talk about the urgency to introduce the devolution Bill, my feeling is that it will be much better to take longer over the matter and get it right than do it now and get it wrong.

The Prime Minister appealed to us all to give a year for Britain. He is far more likely to get it if he faces reality and understands that what Britain wants is a year of peace and quiet. Regrettably, the Government seem to be committed to another year of hectic change. I believe that they will live to regret their decision, and I know that the nation will suffer as a result of it.

6.38 p.m.

Mrs. Millie Miller (Ilford, North)

Most of the debate so far has dealt with either devolution or internal affairs. I want to turn to another aspect of the Gracious Speech. Pride of place is given to the declaration of the Government's intention to maintain firm support for the United Nations. Much as I support the idea of the United Nations, from the small personal experience which I have had this year, I would like to see a note of caution in that firm support which the Government are offering it.

I had the privilege of attending as a delegate the International Women's Year Conference in Mexico, where I became involved in a debate which was ostensibly on women's affairs but which turned out to be one of the most highly politicised debates in the political turn which the United Nations has taken in recent years in connection with the existence of the State of Israel. The atmosphere at that United Nations conference—one of bitterness, viciousness and hatred—prompted me at that conference to talk about not racialism, not neo-colonialism, not Zionism, but "neo-brutalism", the theory that one can brutalise international relations between countries by strength of numbers—exactly the opposite of the intention which led to the formation of the United Nations.

The State of Israel was founded by the United Nations. Among the most enthusiastic of its founders was the Soviet Union, the very State which has managed to keep the pot of hatred boiling in the Middle East, when if it and some of the other major Powers withdrew their efforts to keep this conflict going it is possible that the people living in the Middle East would have an opportunity to settle down and find their own peaceful solution. I say this having recently visited Israel, where I found that many of the people in the Palestinian State, on the West Bank of the Jordan, who are now living in occupied territory in Israel, are anxious for peace and self-government, while the spokesmen from outside that territory are still fermenting hatred.

It is deplorable that many of the nations which are guilty of some of the most heinous crimes in the book, of separating families by their political policies, of incarcerating people in mental hospitals for political crimes and of all kinds of acts against the Universal Declaration of Human Rights, should have the effrontary to attack the one social democratic State—indeed, the one democratic State—in the Middle East area.

The hon. Member for the City of Chester (Mr. Morrison) spoke of his wish to put to the British people the proposal that terrorism should become a capital offence. If there is one country in the world which has suffered from terrorism one-thousandfold more than this country, it is Israel, which has managed to resist that very temptation on the ground that it would solve nothing.

Mr. Peter Morrison

If the hon. Lady is right in saying that the State of Israel has suffered from terrorism a thousandfold more than this country, perhaps the introduction of capital punishment for terrorism would have reduced it.

Mrs. Miller

That is, of course, problematical. Israel has always contended that capital punishment would cause even greater hostility, including the taking of hostages, and therefore for the safety of her own people, on humanitarian grounds and because the Israelis do not believe in capital punishment, they have resisted its introduction. The context is entirely different. That small State is surrounded by hostile neighbours, whereas to a great extent the terrorism to which we are subjected is part of a civil war. Perhaps that is an aspect of the argument which the hon. Gentleman might consider when dealing with this matter further.

I want to comment on the situation in which those nations which comprise the majority of the nation States, members of the United Nations, are able to use their power in this way. The United States delegate to the last United Nations conference called the act of passing a resolution amounting to the virtual abolition of the State of Israel "the supreme act of deceit". In the light of the hypocrisy to which I have already referred, I think that this was a most relevant point.

To deal with other aspects of the Government's foreign policy, on a number of occasions in this House in the past year my right hon. Friend the Foreign Secretary has referred to the standing which this country has in international affairs. From my experience in Mexico I can confirm what he said, and I can say how respected are our civil servants who are employed in the United Nations mission in New York. Even those countries which disagree with our policies turn to the British civil servants for advice. I also wish to pay tribute to our Ambassador at the United Nations for the courageous speech he made on the subject of Israel.

There is, however, another aspect which is worth commenting on, and that is the Government's promise of aid to the poorest countries in the world. In Mexico I was proud that it was Britain who offered the only positive concrete help to the women in the poorest rural areas in the form of a grant, to which I hope the House will accede, of £200,000 a year for the next three years to help in small local projects. In spite of this, I think that we still have to come to terms and learn to understand how the world outside is seething about us and how revolution is bursting through in so many places.

We talk about the outside world. We talk about developing countries and we pay lip service to their aims and ambitions, but I do not think we yet understand that they are demanding that they should at last get their rights. Within the United Nations structure, the Charter of the Economic Rights and Duties of States will be more and more discussed as these people will demand, and I believe will get, their right to their share in the world's wealth.

The United Nations has not lived up to everybody's expectations. It has failed in many ways. I am not suggesting, as the United States has suggested from time to time, that we should threaten withdrawal from the United Nations. All I am saying is that we should be wary of throwing wholehearted support behind an assembly which, as it is at present constituted, provides the opportunity for such shows of force against innocent parties, while on the other hand I can see only too clearly how the agencies of the United Nations can benefit the developing countries and those whom we have deprived for generations past.

I can only hope that the Government will use their undoubted influence to improve the situation in both respects. I say this bearing in mind that only a few days ago in this House we heard one of the strongest protagonists of our entry into the Common Market confessing that the promises which had been made by the EEC countries before the referendum campaign of increased aid to the developing and needy countries were not being carried out. Therefore, at the United Nations and at the EEC we should use our good standing for the benefit of mankind and not to create further conflict.

6.50 p.m.

Mr. Michael Roberts (Cardiff, Northwest)

Several hon. Members have discussed the question of devolution. I wish to take up in particular what was said by the hon. Member for Carmarthen (Mr. Evans), who spoke of the way in which, at any rate in Wales, the subject had been debated fiercely over three generations. I could not recognise the same Principality in his reference because, although the hon. Gentleman prayed in aid Lord Rosebery, Keir Hardie and even my right hon. Friend the Member for Sidcup (Mr. Heath), I believe that anyone who knows Wales reasonably well will agree that this has not so far been a burning issue among the people. It is not a topic which up to this point has aroused any enthusiasm.

I am glad, therefore, that the Government have chosen to talk in terms of legislative proposals which will give the Welsh people, if they wish it, an opportunity to debate the matter in depth.

The hon. Member for Carmarthen said that my right hon. Friend the Member for Sidcup supported an elected Assembly for Wales. I do not know the view which my right hon. Friend currently takes, but I know what the position was at both General Elections in 1974. Our policy then was clear—for a nominated council. We did not even refer to an Assembly, and certainly we were not supporting an elected one.

The Welsh people have not yet debated this issue in depth, and the hon. Member for Carmarthen is wrong to suggest that Conservatives in Wales are trying to frustrate the wish of the Welsh people. The Welsh people—let this be made abundantly clear—may have precisely what they want. They can have any form of devolution they wish. If they opt for complete independence and return Welsh nationalist Members of Parliament, they can have that independence, they can demand separation and, without question, if that is what they want, they will achieve it.

The truth, however, is that the Welsh people, or very many of them, think of themselves as British. This is where the hon. Member for Carmarthen completely misjudges his own fellow countrymen. He does not understand that, although the vast majority of us see ourselves certainly as Welshmen, we see ourselves very clearly also as British. For the vast majority of us, it is not a question of whether we can afford this or that. We look at the great institutions, such as this Mother of Parliaments, with affection and with determined loyalty. That is why the people of Wales will consistently support the unity of the United Kingdom.

There is now opportunity for a great debate in Wales about what the Welsh people really want. They have not spoken yet, but I am certain that they will, and they will speak with a clear voice.

On another great constitutional issue, my right hon. Friend the Member for Sidcup said that we could enter the Common Market only with the wholehearted support of the British people, and that observation was taken up time after time by the Labour Party. It is inconceivable that a major constitutional change could be imposed without a considerable measure of popular support.

At present, all the indications are that the proponents of devolution, far from having wholehearted support, have not even the halfhearted support of the Welsh people. The recent Marplan poll indicated tha 51 per cent. of the people of Wales wanted no change at all and it is my belief that that poll seriously underestimated the number of people opposed to an Assembly. I happened to be one of the people who were asked questions by those conducting that poll Having been told that they were conducting a survey on the question of devolution on behalf of the BBC, I was asked "Do you want things to remain just the same?" I answered "Yes". But I submit that, when a question is framed in that way, it is almost an inducement to ask people to give the answer "No" and then to go on to discuss the alternatives to be put before them.

I remind the House of the movement of public opinion in Wales on this matter. In 1968 a poll was taken by the Western Mail, our national daily, which showed that at that time 78 per cent. of the people wanted some form of devolution and 58 per cent. wanted a Welsh Assembly. As matters now stand, 51 per cent. do not want any devolution at all. Thus, for those in favour of devolution, I suggest, the graph is falling, and for those opposed to it the tide is rising.

One of the fundamental reasons for the decline in support for devolution is that the people of Wales have woken up to the danger that one of our political parties, Plaid Cymru, is concerned primarily not with devolution but with separation and the establishment of a completely separate nation. Precisely because the people of Wales see that this may be a slippery slope down which they will be taken to a destination which they abhor—the thought of being cut away from the rest of the United Kingdom—support for devolution is declining.

The position of county councils has been brought into the devolution debate. One of the questions asked in the Mar-plan poll was "If there is a Welsh Assembly, do you think we should abolish the county councils?" As I recall it, 44 per cent. of those questioned—having, no doubt, thought the issue out very deeply—gave the answer "Yes". Some said that they did not know.

The idea of geting rid of one tier of local government always seems an attractive proposition, and especially so at a time when rates have risen and inflation has led to far higher expenditure. Our councils, both county and district, are great employers—in my area they are the biggest employer—and inevitably, wages having risen, one must expect rates to rise in consequence. It is, therefore, an attractive proposition, but its attraction is superficial and naïve. One cannot get rid of a whole tier of government as simply as that. If we are to move in that direction at all, we must think the matter out far more deeply.

Whatever else it might do, a Welsh Assembly could not take over the functions of the county councils. For example, it could not perform the functions which a county council now exercises in respect of roads or education. It would be absurd to think of a Welsh Assembly trying to administer education, or to imagine that it could deal with the home help service and all the many aspects of the work of our social services departments. Any such idea is utterly remote from reality.

Therefore, the county council tier could not simply be removed because there was a Welsh National Assembly. Neither could the present functions of the county councils be handed over to the district councils, certainly not at the drop of a hat. Those who put forward this suggestion must face the fact that it would involve another major re-organisation of local government, because it would have to be decided whether districts should merge. Some districts are too small to perform the functions of the county councils. In 1947 we took away from such counties as Radnor the function of administering education because it was much too small a county to deal with it, and that went into a rather bigger unit.

Do people now suggest that districts should take over? This matter must be thought out clearly and in depth before a judgment can be made. If a tier of local government is to be removed, it will involve a major re-organisation with all the unheaval that occurred on a previous occasion.

In conclusion, I welcome the reference to devolution in the Gracious Speech because it will give the people of Wales time to think out the consequences of all the proposals for devolution. I think that when the people of Wales think about the proposals they will respond decisively.

7.1 p.m.

Mr. John Lee (Birmingham, Handsworth)

This is inevitably a wide-ranging debate. One can only hope that the comparative emptiness of the benches is no indication of the degree of interest in the debate. The first few days of debate on the Gracious Speech are some of the most interesting days of debate that Parliament provides.

Before I turn to more weighty matters and say a few things of a more critical nature, it would be churlish of me not to say a few words of unstinted welcome for one or two things that appear in the Gracious Speech. They are not the only matters worthy of comment, but they are matters which so far have not been commented upon, and they deserve a passing reference.

All hon. Members will welcome the reference to a public lending right for authors. For years many people have struggled—this has been an across-the-parties activity—to put right the rank injustice which arises in relation to this aspect of creative activity. A person's whole intellectual activity can be channelled into writing a book and other people get the benefit of it. One welcomes that, but up to now the author has received the least consideration. It is said that at present the average earnings of an author is about £500 a year. If the proposed legislation is properly and carefully framed, it is to be hoped that that little injustice will be put right.

On a rather more controversial note, all hon Members on the Government Benches should welcome the proposed long overdue reform of the law of conspiracy. Many of us have watched, not only as politicians, but as lawyers, the growing way in which the law of conspiracy has come to be applied over a whole range of activities. It has for long been an absurd anomaly that certain civil wrongs which in themselves are not crimes can become crimes when perpetrated as a result of a conspiracy, using that word in the generic sense, although the substantive matter is not a crime.

Many of us have viewed with alarm the way in which the law of conspiracy has been used, not necessarily to put down acts of violence, but to deny people the right of expression or the right of demonstration in perfectly peaceful circum- stances. As the law stands, tenants' associations and other people demonstrating in support of all manner of causes, and doing so peaceably, run the risk of being indicted under an Act which requires lower standards, in terms of the laws of evidence and proof, than those ordinarily required, and for a crime which is not subject, at least in theory, to any penalty limit. This matter is long overdue for reform and I wholeheartedly welcome the reference to reform in the Gracious Speech and hope that it will be dealt with expeditiously, not because I wish there to be any licence for violence or lawlessness—I certainly do not want that—but because I believe that this law is an anomaly and has, perhaps inadvertently, been misused in a number of ways over the past 20 years.

I listened with considerable interest and sympathy to the speech of the hon. Member for Carmarthen (Mr. Evans) on the subject of devolution. I hope that I do not sound ingratiating when I say that the hon. Member is regarded in the House as a very sympathetic person; we respect and admire him for his sincerity. The same can be said about the hon. Member for Western Isles (Mr. Stewart). I have a great sympathy for their views.

I utter this word of warning for the Government. I should be very sad if the United Kingdom ever broke up—if we ever reached the situation in which either Wales or Scotland, or both, were to sever from England; but the one way of making that more likely would be to procrastinate or to appear to procrastinate and to be evasive about the measures for devolution. I therefore hope that the excuses which have been advanced about the delay in legislation are genuine and are not a form of procrastination and are not seen to be that; because, if they are, in the end we shall all pay the price.

I am a Member for a city which produced one of the ablest and also one of the nastiest politicians of the nineteenth century—Joseph Chamberlain—whose remains still pollute a graveyard in the city. If any one individual can be blamed, he was the man who, more than anyone else, bore responsibility for the tragedy of Ireland.

If what the hon. and learned Member for Montgomery (Mr. Hooson) described as the measure of devolution—for that is what it was—had taken place nearly 100 years ago and had not been stultified, not only by the Conservatives, but also, and primarily, by the secessionist activities of Joseph Chamberlain and the House of Lords, much of the terrible tragedy which has taken place in Ireland over the past 100 years, and which is still continuing to this day, might have been avoided. I certainly am not comparing the hon. Member for Carmarthen with a militant Irish nationalist, because he is a most gentle and passive person.

The hon. Member for Cardiff, North-West (Mr. Roberts) may be correct in his claim that the support for devolution in Wales has declined. However, if there is a ground swell of desire for a national assembly—it is more evident in Scotland than in Wales at present—if it should turn out to be genuine and enduring, and if we frustrate it by trying to outsmart it by procrastinating, we shall regret it in the end, and things may occur on a scale which at the moment we cannot visualise, although I do not wish to be alarmist.

One looked in vain for a reference to an amendment to the Parliament Act of 1949. Indeed, I did not really expect one, for two reasons: first, because we have got a heavy enough legislative programme anyway, and, second, because if there were introduced a measure to truncate or abolish the powers of the other place, no doubt the other place, not wishing to participate in an act of suicide, would throw it out, or at any rate do its best to delay it.

But that is not the end of the story, because there is on the Government side of the House—I suspect it is shared to some extent by some of the minority parties on the Opposition side—a growing impatience with the absurdity of a non-elected Chamber which has of late used its delaying powers on a scale unknown since before the First World War. Some of us are waiting to know what the Prime Minister proposes to do about it.

It has been argued eloquently enough—both in this House and repeated in The Times today, when Lord Hailsham wrote a letter on this subject eloquently pleading for it—that there is a case for a revising Chamber. It has also been argued that this House is so powerful that it must have some restraining influence to prevent it from acting in an arbitrary fashion.

The trouble with that argument is that it applies only to one party. There never has been in this century—nor, so far as I know, before it—a situation in which there was a non-Conservative majority in the other place. Therefore, that revisory function operates in practice only when there is a non-Conservative Government in this House.

At least it could be said of the Australian Senate—whatever one may make of the embroglio into which it has got itself—that the second Chamber there is an elected one and has at least a little more moral authority for using its powers. Whether those powers have been prudently or fairly exercised may be open to argument, but at least it had some elected status to give force to its activity.

What has struck me as most peculiar is that it has never been suggested—not even by leaders of my own party—that when the Conservatives take office there should be a non-Conservative majority in the other place. I do not believe that when the Conservatives took office in 1951, or again in 1970, it was ever suggested by the outgoing Labour Minister that a large number of Labour peers should be created in order to provide for a Conservative Government a corresponding degree of revisory power in relation to Conservative Governments that operates in relation to Labour Governments when they are in power.

A few days ago, therefore, I wrote to the Prime Minister and suggested that it was time that he created enough Labour peers to provide a Labour majority in the other place. One cannot have one constitutional rule for one set of Governments and another constitutional rule for another set of Governments. Either the other place is to perform its revisory functions for all Governments or it should not be permitted to perform those revisory functions for either. If the Government are not prepared to take the kind of action that I suggest—perhaps I may borrow the famous phrase of the right hon. Member for Sidcup (Mr. Heath)—and deal with this matter "at a stroke", it is reasonable for us to suppose that they are not so much in earnest about getting through their legislative programme, because once their Lordships have tasted blood, as they did in the last Session, it is only too reasonable to suppose that they will go on digging in their teeth—to complete the metaphor—into our legislation again and again in the coming months.

Mr. Ian Gow (Eastbourne)

The hon. Gentleman said that he had written to the Prime Minister about this matter. Did he offer to the Prime Minister a list of candidates who might be ennobled from his side of the House?

Mr. Lee

I did not—and the hon. Gentleman tempts me. Perhaps I should say—I do not think that the hon. Gentleman will be too displeased with the remark, although I am not quite sure that my Front Bench will like it—that I should not have thought that the qualificaton for membership of the other place is particularly demanding, to judge by the voting performance of some of the Labour peers who are there already. Some of my friends have been doing an analysis of it. I am bound to say—though this may well be an argument against me—that, according to the analysis made, the voting performance of some of the peers, presumably for the purpose of giving some support in the other place, has been so disgraceful that they may as well not have been there at all. They include some surprising names, although I shall not go into that matter now. However, I should have thought that there are enough political deadbeats left lying around in retirement who could perform a last—in some cases, a first—service to the party by being put up into that geriatric ward—to borrow a recent expression of the hon. Member for Cornwall, North (Mr. Pardoe)—and helping to carry through our legislation.

Mr. Deputy Speaker (Sir Myer Galpern)

Order. I know that the hon. Gentleman would like to go into details. I do not want him to fall into any trap. I think that he would agree that it might be a suitable assignment for Hughie Green's programme "Opportunity Knocks" to make the selection.

Mr. Lee

I accept your gentle chiding, Mr. Deputy Speaker, in the way in which it is delivered. I shall leave that aspect alone, save only to say—I think that my hon. Friend the Member for Tottenham (Mr. Atkinson) referred to this the other day when the impasse was reached on the Trade Union and Labour Relations (Amendment) Bill—that for the next year there will be a dangerous hiatus and a dangerous uncertainty as to the law of tort as it applies to trade unions, because for 12 months at least the Trade Union and Labour Relations (Amendment) Bill has fallen. Can anyone seriously suggest that this is the kind of situation about which we can be happy, and in which trade union relationships with employers can be enabled to be improved—something which I should have thought all of us had an interest in seeing promoted?

The consequence of the impasse over the very narrow point about editors and rights of access for contributors to newspapers is not only that these segments of the Bill are in abeyance, but that the whole piece of legislation remains in abeyance, and the law stands in the unsatisfactory state in which is was left by the trade union legislation of last year when we had a minority Government.

I now turn, perhaps a little abruptly—because it is not fair to range over all of the "King Charles's heads" that one would like to raise, as other hon. Members wish to speak—to a matter of a totally different kind, concerning the behaviour of certain financial institutions. I tried to work this into a very recent debate and I nearly tripped over the rules of order. You, Mr. Deputy Speaker, were in the Chair at the time and will no doubt remember the occasion.

People have been coming to me and writing to me from other constituencies—I have had to tell them of the convention of the House that one does not deal with other Members' constituency matters—about the behaviour of certain secondary banks and the debt collecting activities that are taking place. A number of institutions have been brought to my attention, as has the behaviour of certain secondary banks, such as Cedar Holdings, Moorgate Mercantile, and London and Counties. I ask hon. Members to note those names. They are the names of companies that were part of the City's rescue operation that took place about 18 months ago. They have been pursuing people in the most rigorous way, and the number of instances of foreclosures that have resulted is very disturbing.

The most discreditable aspect is the financing of activities ostensibly unrelated to pyramid selling, but, in reality, so related. People are made licensees of disreputable pyramid selling companies—I think this will be dealt with under the Consumer Credit Act 1974 in due course—and they find easy money forthcoming, at extortionate rates of interest. They cannot sell the goods, because there are far too many people operating in a saturated market and the goods themselves are of dubious merchantable quality. They find themselves defaulting on second mortgages, and the procedures for foreclosing start to apply. This began in my own constituency and involved a large number of people-mainly, though not exclusively, immigrants. They had quite clearly been "taken to the cleaners" in a thoroughly disreputable way. As a result of investigations, it is clear that this kind of thing has been going on all over the country.

One of the unfortunate consequences of the Government's rather rigid limitation of eligibility for improvement grants at £175 rateable value is that some people who want to improve their properties cannot raise a mortgage from a reputable source. In many cases, the properties are too old for ordinary building societies to lend on and the occupiers are not eligible for improvement grants, so they turn to the more disreputable, fly-by-night finance houses. The most miserable tales have reached me of people falling behind and losing all their possessions as a result of foreclosure proceedings. I do not pretend that every case is of equal merit. A number of people get into a financial pickle as a result of their own folly, but there are instances in which banks have behaved with the rapacity of village moneylenders. As a full-blooded Socialist, I have to say that the average reputable building society does not behave in this way. When people get behind in payments, the societies tend to be considerate and forbearing. In the end, of course, the stage comes when they have to move in, but, then, so would anybody.

The current situation is reminiscent of the snatch-back days of hire purchase, before regulatory legislation was introduced. The Consumer Credit Act comes into effect on 1st February next year, and banks and all kinds of moneylenders will be subject to licensing. I shall look with great interest to see that licence applications are vetted with great rigour, and that the kind of conduct of which I have given just a few examples will tell against an applicant with the Director General of Fair Trading when he evaluates applications. If it does not, the Act will not be powerful enough.

In theory, the power of the Director General is enormous. In terms of banking franchises he is in a situation similar to that of the Independent Broadcasting Authority in respect of the franchise of various programme companies and in the past that power has been the kiss of death for some companies.

A number of institutions will require to be vetted by the Office of Fair Trading. The list is so extensive that there may be as many as 100,000 applications to be considered. I fear that, because of the scale of the operation, the effectiveness of the vetting system will not be as great as we would hope. I know that this subject is somewhat aside from the matters discussed so far in this debate, but I make no apology for that. It is a problem which has ramifications all over the country. For some reason, I find myself at the centre of the exposing of this scandal. Many hon. Members have co-operated and co-ordinated with me in my campaign.

I hope that the Government will bear these matters in mind. I know that the Minister of State for Prices and Consumer Protection is well aware of this matter, because I have been on his doorstep on numerous occasions. This is one of the unpleasant and unacceptable faces of capitalism that we hope will be radically changed in future.

7.26 p.m.

Mr. Charles Morrison (Devizes)

I do not think that the hon. Member for Birmingham, Handsworth (Mr. Lee) is as nasty as he makes out, but he must realise that when he makes the sort of comments he made about the remains of Joseph Chamberlain, who by any standards must be regarded as one of our greatest statesmen, he leaves a nasty taste in the mouths of those who listen to him.

The hon. Member wishes to reform the House of Lords, and I am not totally unsympathetic to that. Judging by our experiences on the last occasion when we attempted to reform the House of Lords, there would not be much time for anything else this Session. It would be better to try to reform the House of Lords and fail rather than introduce the legislation outlined in the Gracious Speech.

The hon. Member for Handsworth was talking nonsense when he said that the whole of the Trade Union and Labour Relations (Amendment) Bill was in abeyance because of the House of Lords. The whole Bill is in abeyance because the Government were not prepared to accept one amendment in connection with editorial freedom. If they had accepted that, the Bill would now be an Act. Even if the Government continued to disagree with the Lords amendment, they could have dealt with the matter by introducing an amending Bill this Session. The Bill is not law purely because of the stubbornness of the Government.

After the usual excellent introduction to our proceedings, the Prime Minister started the more formal part of the debate as depressingly as I thought he would. He made a characteristic speech, overflowing with unreality and brimful of complacency. He went out of his way to play down our economic problems in comparison with those of other countries. Even if he were right today—which he is not—he would certainly be wrong when comparing our record with those other countries over a longer period of time.

Since 1961 our gross domestic product has increased less than that of any of the other five nations represented at Ram-bouillet last weekend. Our rate of inflation during that period has been second only to Japan, and perhaps it does not matter so much in Japan because its GDP has increased far more than that of all the other countries. Our output per man hour in manufacturing has increased less than the output in four of the other nations and only more than the United States, which, however, had a much higher starting point.

The share of investment in the gross domestic product in this country has been less than in all the other countries. Over far too long a period Britain has been in economic decline compared with its main competitors. How can people be persuaded to believe that and to face up to what it means for our future standard of living, the requirements of education, social services and the like if the Prime Minister, the so-called leader of the nation, adopts the pose he adopted today?

Presumably the Prime Minister believes that we can muddle through, but that is no longer good enough. Nor is it what the British people deserve. I was surprised that at the end of his speech he did not wave a piece of paper and shout "Peace in our time". Unless he pulls himself together and attempts to bring home to the nation the realities of our situation, I see nothing ahead but further decline.

Meanwhile we must be thankful for small mercies. The Gracious Speech states: My Government will continue to give highest priority to the attack on inflation and unemployment. If that attack is not effective, it will lead here, as it has done elsewhere in the world, to an economic and political breakdown. Already there are frightening signs of that happening.

One of the major consequences of our economic performance over the years has undoubtedly been the growing support for devolution. My right hon. Friend the leader of the Opposition mentioned the opportunity that devolution would provide to scale down the amount of government which is imposed upon the backs of the people. However, she also mentioned the dangers implicit in devolution and the risk that it could lead to a break-up of the United Kingdom. That situation would be supported by no more than a handful of hon. Members and certainly by very few people outside. We must therefore move very carefully and slowly in this respect. It will be necessary to have the public debate to which the Prime Minister referred. Constitutional devolution is probably irreversible and there is no room for mistakes.

Devolution is inextricably bound up with three issues. The first is the state of the economy. It is involved, too, with the emphasis and encouragement given by Labour Ministers and Labour spokesmen to envy, malice and jealousy. It is also inextricably involved with the centralisation of decisions and appointments. If these three issues could be dealt with satisfactorily, the cries for constitutional devolution would subside. Even if I were wrong on that score, at least devolution would be discussed in a much calmer atmosphere.

However, far from these issues being dealt with, they are being mishandled and they are steadily worsening. The Gracious Speech provides evidence of still more centralisation. Nationalisation of the aircraft and shipbuilding industries, the loss of discretion by local education authorities over comprehensive education, the abolition of pay beds in National Health Service hospitals and all that goes with that are all prime examples of greater centralisation.

Implicit in one section of the consultative document on pay beds is a proposal for the direction of State-trained labour—in this context those who work in the health services. I suspect that the Government wish to make these changes in the relationship between the Health Service and the private sector because of the growing success of BUPA and similar schemes. The Government's proposals all mean more central control, but that is a trend which must be reversed.

Why, too, should we not reduce central patronage? I cannot understand why the regional authorities and organisations which have been established in recent years should have their chairmen appointed by a Minister. I can see an argument for a chairman being appointed in the first instance. After the first chairman has completed his term of office on the board—be it a regional health authority, a regional water authority, a regional sports council or a regional economic planning council—his successor should be appointed by the members of the board. The local authorities, too, should be given much more discretion and many more powers. "Trust the people" is a much more attractive proposition than the view that the man in Whitehall knows best.

The state of the economy is the most important factor in the devolution argument. It is not surprising that many Scots and some Welsh feel that they could do better than our poor economic performance if they went their own way. Scotland and Wales, particularly Scotland, have always come off worse in any recession. With the Labour Party preaching envy unlimited there is bound to be a backlash against those who are blamed or against the better off, and usually these people are thought to control affairs from London or to live in England.

If there was a national recovery in the economy, the cries for devolution would be muted. With the present Government in power, however, there is no solution in sight. Even if they achieve their economic targets, which is doubtful, those targets are inadequate. The currency will be weaker, inflation will be higher and economic growth slower than in other European countries. The Government are planning for Britain to remain the poor man of Europe. I view the immediate future with profound apprehension.

7.39 p.m.

Miss Joan Maynard (Sheffield, Brightside)

I wish to refer to two points in the Gracious Speech, one a matter for congratulation and the other a matter for criticism.

I congratulate the Government on at last including in a Gracious Speech a pledge to abolish the agricultural tied cottage system, after 30 years of promises. We look forward to action on the pledge.

I was astounded that one Conservative Member said that abolition of the tied cottage system would increase the cost of food. The price of food is already very high while we have the tied cottage system. Is the cost of keeping it at its present level to be the retention of this feudal, out-of-date system? I believe that my people have paid that price for too long, and they do not intend to pay it any longer.

My right hon. Friend the Prime Minister talks of giving a year for Britain. Farm workers have given many years for Britain. In our society the meek do not inherit the earth. Many farm workers are taking home less than £30 a week, and one of the main reasons is the inhumane tied cottage system.

In a consultative document issued on the day the House rose for the Summer Recess, the Government made two fundamental points. They said that they were not discussing whether to abolish the agricultural tied cottage system, but how, and that they intended to disengage farm workers' employment from their homes. Those are admirable sentiments, and we look forward to their being put into effect.

The Government suggest two possible ways. One way is to give security of tenure under the Rent Act, suitably amended. I remind the House that farmers already have security of tenure, and we ask only for the same security for farm workers. The other way is to register all agricultural tied houses with the local authority or to register a selected number, based on key workers or the locality in which they work. When difficulties arose the local authorities would have to find suitable alternative accommodation for the people living in those registered houses. Both my union and I find that solution unacceptable. Registration does not spell abolition. It is another word for "tied". It means, in effect, that the farmers' problem would be solved at the expense of people on the waiting list, who would have to wait even longer.

There are people—I am sure that they include quite a number of hon. Members—who maintain that the industry cannot be run without the tied cottage system. I point out to them that nearly 50 per cent. of farm workers already live in rented property, and we do not hear the farmers for whom they work saying that they find it impossible to run their farms.

I want in particular to say something about the farmers' campaign of fear against the abolition of the system. To hear what they say, one would think that abolition would mean the destruction of the houses. They say that farm workers will have to pay high rents when we abolish the system. The fact is that the same farmers will still own the houses, but as landlords instead of employers, and they do not have to put up the rents. The matter will be entirely within their discretion. It is a dishonest campaign calculated to frighten our people into saying "We want to retain the tied cottage system".

We also hear a great deal from the landowners and farmers about the shortage of houses in the countryside. I have lived in the countryside nearly all my life, so I know something about it. I also know who is responsible for the shortage, and it is certainly not the workers. To some extent it is the landowners who have sometimes been unwilling to sell land or have been willing to sell only at very high prices. Many of the people concerned have not only been the owners of the land but have dominated the local authorities.

The other reason why we find it difficult to build houses is the high interest charges. As much as 80p of every £1 spent on housing is interest. That is a pernicious racket. The people involved should not now complain about the lack of houses in rural areas. The problem can be laid not at the door of my people but rather at the door of those people.

In 30 years there have been 27 Acts of Parliament for farmers and three for farm workers. As always, we have had less than our fair share. I very much hope that on this occasion the Government will do something towards redressing the balance.

My point of criticism concerns the reference to our desire to give higher priority to the attack on inflation and unemployment. Those are fine words too, but we need to match them with deeds. Here I think particularly of the steel industry. I represent a constituency based on steel, where we see a serious situation in the industry. Almost every other day I receive letters from constituents about the growing unemployment in the industry, the growing redundancies and the fact that young people leaving school cannot obtain a job. Only yesterday I received a letter saying that the situation in steel was as serious today as it was in the 1930s, or more serious. Yet the Government are allowing large imports of steel from Germany and cheap steel from Japan. If the Government seriously want to attack unemployment, they should impose import controls on steel, motor cars and textiles in particular. While we are importing large quantities of steel, the British Steel Corporation is running below capacity. That is madness.

We hear a great deal about the importance of the Government's agreement with the TUC. I agree that it is important. The TUC has agreed to go along with the Government's wages policy on the understanding that the Government will bring down unemployment. We were not elected to increase unemployment. We were elected on a policy of full employment, and we should take action to carry out that pledge in the manifesto. We must remember that we were elected to represent workers. I never see any sign of Conservative Members forgetting which class they represent.

7.49 p.m.

Mr. Geoffrey Pattie (Chertsey and Walton)

I wish to direct my remarks to one part of the Gracious Speech which does not readily fall into the debates which have been allocated on any of the other days, the part which says: They"— the Government— will sustain their support for the North Atlantic Alliance as an instrument of détente as well as defence, fostering the fullest possible co-operation amongst its members, not least in the procurement of defence equipment It is the last phrase that I wish to examine.

I welcome the Government's repeated support for the North Atlantic Treaty Organisation and also their desire to have the fullest possible co-operation among the NATO allies, but there are certain dangers about how the procurement of defence equipment can be carried out. I assure the House that this is not an esoteric matter to be considered by just a few so-called experts in the defence field. It is extremely important to the balance of payments and also to the employment prospects of a very large industry employing in excess of 200,000 people.

What co-operation in defence procurement actually means, in plain English, is standardisation. It is rather significant that standardisation has been mentioned in the Gracious Speech, because I cannot imagine that it has been mentioned many times before, if ever. The case for standardisation in defence procurement is fairly easy to make out. It would not take many minutes to deploy the arguments in favour of it. There are many recent examples of shortcomings in the North Atlantic Treaty Organisation's operations. There has been a recent air exercise in which a large proportion of the interceptions were by NATO aircraft on other NATO aircraft, due to communications difficulties.

All too often there are great difficulties about inter-operability, which means that many defence aircraft are restricted in the number of airfields they can use throughout NATO. It depends on whether or not certain airfields have the relevant equipment.

There is, indeed, a huge duplication in research and development throughout all the NATO Powers, and this is certainly an area which could produce a significant increase in efficiency and also savings in the defence budget. This duplication is most pronounced in the missile field, where we have far too many missiles throughout the whole of Europe doing the same job and designed and produced by different people. I suggest that, if it were not for the financial pressures bearing down on all the NATO partners at the moment, the outlook for standardisation would not be in any way a good one. People have been talking about this since the NATO Treaty was signed in 1949, and nearly 30 years later we are not that much further down the road.

There have, of course, been certain collaborative projects, such as the MRCA, Jaguar, Lynx helicopters and so on, and I welcome these, but all the time the key basic issue has been avoided, namely, the establishment of a clear operational NATO requirement, so that everybody knows right from the outset what he is supposed to be doing. So far this question has been fudged.

The NATO Defence Ministers, meeting in The Hague on 5th November 1975, have agreed to set up a European Defence Procurement Secretariat, and I recognise and pay tribute to the leading rôle played in this by the Secretary of State for Defence.

In The Times of 6th November 1975 it was stated that The ministers also decided to establish a working party, whose terms of reference have yet to be defined, but which together with the new secretariat will assemble and co-ordinate information on future NATO military equipment requirements. The same report stated that The ministers urged West Europe to co-ordinate and harmonise its equipment planning more effectively than up to now. The report also points out that: The initial task of the secretariat will be to provide a centre for the collection of information on future military equipment requirements. So far so good. It has also been argued that the NATO Military Committee could, if it had the necessary additional staff, address itself to this task of sorting out future operational requirements.

We have also recently received EEC Commission Document R2461/75 which proposes, among many other things, the establishment of a Military Equipment Agency which would co-ordinate all research and development and production once the overall powers and funding had been vested in the Commission.

Indeed, the President of the European Association of Aerospace Manufacturers, Mr. Allen Greenwood, has said very recently in a conference held in Spain: We delude ourselves if we believe that, in the long run, single European nations can stand up to competition from outside. But we can reassure ourselves that united we can be a match for our competitors". The report of his speech went on to say: Unity within the European industry was no easy task. The necessary reconciliation of conflicting industries must take place 'otherwise our own factories will become mere subcontractors.'". Everybody seems to be agreed on what the end should be but no one seems to have any shadow of agreement, so far as can be discerned, as to what the means should be for achieving that end. I think this is very understandable. On the one hand we have nations such as France which choose to adopt a rather outrageously chauvinstic rôle and pursue their own aims to the disregard of any other requirements, and on the other hand each nation has to consider its own balance of payments situation and its own industrial employment situation.

I submit that at the present time, with all these European nations having the great pressures of inflation upon them and feeling the need to standardise but being unsure of how to achieve it, the threat to European integration, certainly in the defence industries, comes from one further source—the United States. This may be surprising to many hon. Members. The United States has a highly sophisticated, highly developed and highly successful defence armament industry. It has been forged and tuned in the white-hot heat of competition. Since the war this particular industry has set about achieving its ends with a quite ruthless determination, the aim being to make the maximum number of sales to all its allies and also to any third countries in competition with its allies.

Of all people, we on this side of the House certainly should not grumble about the virtues of competition as long as we recognise them for what they are. The United States industry, as I have said, is totally single-minded in what it wants to achieve. It is completely determined, and the United States Defence Department regards itself almost as a sales arm for the United States industry. That is fine, as long as we recognise this. The United States has always since the war used whatever arguments were current at the time to clothe with a certain degree of respectability its particular sales aims.

In the 1950s, when it was selling equipment to Germany, the United States was reminding Germany of the need to enter into satisfactory offset agreements, otherwise Germany could become dangerously isolated and might not get the equipment. Nowadays the call is for standardisation.

Lest I should be misunderstood, may I assure the House that I am not claiming for a moment that the United States does not believe in standardisation, but its form of standardisation is standardisation on United States equipment. If we are not very careful, and unless we can agree among ourselves in Europe on exactly what we want to achieve, we shall have standardisation almost by default forced on us.

The former Secretary for Defence, Mr. Schlesinger, started this idea of the two-way street, and when it comes to selling equipment to the United States the American attitude seems to be "Whenever we have a gap in our own requirements, we shall let you know". Very occasionally—and it is very occasionally, too—a gap actually appears, and it is filled by us, as in the case of the Harrier. It also happened with the Roland missile, although I happen to think that the Americans made the wrong decision and should have chosen the British Rapier missile. But that is by the way. The United States protects its own industries extremely carefully, and we can well take an object lesson from the United States in that particular respect.

The two-way trade should not simply be about what we want to sell to the United States but should be in persuading the United States that, if it wants to see a unified and cohesive European armaments industry, it has to hold back some of its own determined selling. That is a lot to task of an industry which is as tough and competitive as is the American industry.

Each time there is a requirement for a new piece of defence equipment the United States, many years in advance, has seen the market opportunities. It uses the same "divide and rule" technique, so that one European nation is encouraged to compete against another. There is then the suggestion that country A will not buy from country B, and vice versa, but always the product is available to be bought from the United States.

The blandishment often is that the particular piece of equipment is available "off the shelf". That is a difficult problem because, with the pressure of the finances, it is tempting for a Secretary of State to say "We have been able to buy this ready-made from the United States at a tremendous saving". That happened recently with the proposed purchase by this country of Sub Harpoon.

That was a bad decision on three grounds. First, the French badly wanted to co-operate with us on this further development of the Sub Martel. We worked very closely with the French. That so rarely happens that it would have been nice to take matters a stage further, but no, we have to purchase from the United States. Secondly, the cash saving about which the Secretary of State trumpeted will be largely illusory because of the extra development required to change the firing system from the American to the British version. Thirdly, the weapon is not available in an "off the shelf" form. It will not be available for many years. It will hardly be available any earlier than the British competitive product would have been. That adds up to a very bad decision.

The crucial question is that decisions of that sort increase European dependence on the United States and, above all, undermine the future capability of Europe to supply the United States when any market opportunities occur.

A new project is being touted round Europe, the airborne early warning and control system, AWACS. The aircraft cost £40 million a time, which puts Concorde into the shade. Already the United States is having to decide whether the aircraft that is being touted round NATO is the best because there is another aircraft which it is thought might be better for the United States.

This is a challenge that the United States has to sort out for istelf, for I detect that there are many key American personnel who are concerned about this ambivalence in American policy whereby the United States Government say "Let us standardise, let us get together and we shall be pleased to know about what you can sell to us" and, on the other hand, do everything they can to render us non-competitive.

In considering the phrase in the Gracious Speech concerning the desire to co-operate in procurement for the defence industry, we must be careful not to take steps which are wrong in the short term and lead eventually to the diminution of effectiveness of the British defence and aerospace industries.

8.4 p.m.

Mr. Bob Cryer (Keighley)

I welcome the parts of the Queen's Speech which refer to the abolition of pay beds, the abolition of tied cottages, action on the conspiracy laws when the Law Commission's recommendation is received and the promise to develop industrial democracy in the private sector. However, there are some omissions which should be highlighted, particularly following the speech of the hon. Member for Chertsey and Walton (Mr. Pattie), which was more suitable for a defence debate.

Defence is mentioned in the Queen's Speech, but not in the context which I should like to see. In the next few months the House will debate cuts in public expenditure. To sustain public expenditure on the Health Service, education and the social services—for which the Labour Government were elected—we must consider our existing resources, too many of which are lavished on defence. We spend £4,500 million on defence. The Queen's Speech contains a few platitudes about it, but does not get to the core of the matter. We lavish on defence money which we cannot afford.

Japan spends 0.87 per cent. of its GNP on defence, while we are spending about 5.8 per cent. of our GNP. Arms sales abroad involve weapons which mutilate and slaughter. People who raise their hands in horror when they read of a bomb exploding in a London restaurant talk blandly about weapons which kill hundreds of thousands of people. There is a credibility gap in our morality. It is not the job of the Labour movement or a Labour Government to participate in arms exports.

Apart from the moral issue, let us consider the commercial prospects. Japan has banned arms sales. She does not need to sell arms, because she is conquering the world commercially. We spend more than £550 million on military research and development and £125 million on peaceful research and development. Our effort is warped. That £550 million is spent on something that is wholly against the interests of the human race. It should be spent on developing the goods that people need. Few members of our society are interested in developing an anti-aircraft gun or a new tank that they cannot buy; they want durable domestic consumer goods, such as those that we import from Japan. That is where cur research and development should go.

The Queen's Speech should have announced the cancellation of the Lance tactical nuclear weapon. That would not affect employment, and it would save the expenditure of £55 million, over the next five years, to the Radio Corporation of America. The updating of Polaris should go. We have heard platitudes to the effect that Polaris is not really being updated but that it will cost £100 million. We have a Labour Government which are supposed to be radical and not designed to prop up Conservatives or to further defence policies. When the Secretary of State for Defence says that he is preventing the left wing of the Labour Party from influencing him, cheers come from the Opposition. The Labour Party represents the rank and file of our people and the feelings of people at large.

I am talking not about the total abandonment of defence but about abandoning those sections of defence expenditure which are totally unnecessary and dependent on the mythical notion that the Russians are collecting their tickets to board trains to come and conquer us—the notion on which this £4,500 million is being spent.

Mr. Pattie

Do I understand the hon. Gentleman to say that he believes in some form of defence?

Mr. Cryer

Yes, I believe in some form of defence, but to have in the hands of field commanders weapons which are four times as powerful as the bombs dropped on Hiroshima and Nagasaki is neither useful nor democratic. If we reach a point of nuclear holocaust, decisions will be taken without consultation with anyone. I shudder to think that 7,000 of these horrific weapons are in the hands of field commanders. Members of Parliament do not know how they will be used. People such as General Walker, who is an ex-NATO Chief of Staff, make me shiver. We must consider the kind of politician he has turned out to be. Are we sure that there are no other General Walkers in NATO?

The Labour Government must produce a plan—I regret that it is not mentioned in the Queen's Speech—to transfer armaments industries to peaceful uses. The Labour Government are trying to create a planned society. We must not jib at the fact that cutting down on defence expenditure will produce unemployment. There must be a plan to move people from the arms industry so that their skill, energy and ingenuity can be used for peaceful purposes. The Labour Government have been in office for about 20 months. If we continue to put this matter on one side, the Government are liable to be criticised for not producing a plan to transfer our resources to peaceful uses.

I welcome the pledge to reintroduce the Trade Union and Labour Relations (Amendment) Bill, about which there has been an immense amount of hypocrisy from the Opposition benches and a tiny proportion of Government supporters. The sections dealing with the freedom of the Press concern the tiny group of people who control the media and the retention of their privileges. They concern the right of editors to vilify the Left and to misrepresent and distort facts. The notion that editors are God-given people who should be treated separately from the rest of humanity is incredible. Almost every Member of Parliament has criticised the Press for the way in which it has treated his speech. That happens when one man is given discretion. The Bill will not narrow democracy. The trade unions should be involved in the operation and control of the Press. The Bill will therefore broaden democracy and will result in a wider measure of Press freedom. Editors will no longer suppress items when a person involved is a friend or a Mason, or print items when they wish to present one aspect of society in a good light.

The Bill will not limit Press freedom. The Press is not free now; it is in the hands of a tiny group. My hon. Friend the Member for Birmingham, Selly Oak (Mr. Litterick) put down an Early-Day Motion which demonstrated the extent of the ownership and oligopoly of Press ownership in the Midlands. In 99 cases out of 100, access to the Press depends on the political character of the contributor. I support the Government's pledge to reintroduce that section of the legislation and to ensure that Parliament expresses its will.

I am disappointed that the Government have not faced up to the anti-democratic group in the House of Lords. Some may say that this is a diversion from our economic situation. Nevertheless, the Labour Government must correct this situation. If the Labour Government dare to confront the House of Lords and to promise to reform that Chamber under the Parliament Act 1911, it will ensure that economic matters are solved in a radical way. For too long the House of Lords has been an affront to the democratic aspirations of the British people. Apart from the inherited traditions, the notion that by bolstering up the House of Lords with friends of successive Prime Ministers the Government will imbue it with a democratic tradition ignores the truth that that extends the power of patronage, which is already far too great in this Chamber.

Mr. Skinner

Is my hon. Friend aware that our joint right hon. Friend the current Prime Minister has created more life peers during his several terms of office as Prime Minister, using the patronage system referred to by my hon. Friend, than any other Prime Minister in British history? The Prime Minister has so far created 228 peers. Is it not incredible that, the Prime Minister having created 228 life peers, the Government should lose votes in the House of Lords and be able to obtain a majority of about 80 if they are lucky?

Mr. Cryer

My hon. Friend the Member for Bolsover (Mr. Skinner) made a good point. I have no criticism of the present leader of the Labour Party. However, it is strange that my right hon. Friend should have used the patronage system to a greater extent than did the Conservative Party, which is supposed to support it.

Mr. Skinner

My hon. Friend, as usual, is right. But is he aware that on the first day of the Labour Party conference the well-known columnist Peterborough referred to the fact that while the Labour Party conference was taking important decisions, or failing to take them, more than 300 peers clocked in on one day, although fewer than half of them voted that evening.

Mr. Cryer

That is so scandalous and shocking that it requires no further comment.

A major review of Parliament is long overdue. However, my right hon. Friends may consider changing the decision-making process, which is part of the patronage system, so that more members of the majority party are involved in decision-making. We might also examine the question of local government organisation, where matters are decided not by one Minister surrounded by civil servants but by elected members of the political party. We are custodians of the manifesto. That custodianship is not confined to 20 or 30 members of the Cabinet.

I am disappointed that there was no reference in the Queen's Speech to the fact that the Health and Safety at Work Act would be tightened up, so that the absolute standards of safety contained in the Factories Act 1961 would be protected. The same applies to the mines and quarries legislation. I am similarly disappointed that my Ten-Minute Bill on the subject was not accepted by the Government.

The Queen's Speech made no mention of selective import controls. My hon. Friend the Member for Sheffield, Bright-side (Miss Maynard) said that import controls were necessary to protect jobs. The Government have made much noise over the past few months about the possibility of using selective import controls. It was pointed out that the textile industry in the North is bleeding as a result of cheap imports. The textile industry in Lancashire, Yorkshire and the West Riding faces one mill closure per week. Each week, 200 jobs vanish in that area, where there is already high unemployment and where there is no alternative employment for mill operatives.

That is not the fault of militant unions. The textile unions are what might be called collaborative, even supine, in their attitude—or they were in the past, when the General Secretary of the National Union of Dyers, Bleachers and Textile Workers was Jack Peel, who tended to grovel a good deal before the bosses. It has improved since then, but they are still people who have collaborated a great deal with the employers' side. They demand protection through selective import controls.

I should like to bring to the Minister's attention—wherever he may be—the question of the machine tool industry. That, too, is facing grave difficulties in maintaining a fine export record. Although we do not want to invite retaliation, any Labour Government who seek to plan the economy internally should also want to plan externally and not to allow this country to be a free market for imports. Yet that is what they seem to be allowing.

If machine tool firms want to sell abroad, in Latin America, for example, they find that Argentina has a duty of 90 per cent. and Brazil a duty of 20 per cent., plus 5 per cent. and that in Mexico import licences are required, plus a duty of about 20 per cent. If they try to break into the Japanese market, they face a duty of 15 per cent. on automatic lathes, yet in our market, the Japanese face a duty of only 8 per cent. There seems no fairness here. To control the economy, which is part of our philosophy and history, the Government should plan and should consider selective import controls to ensure that we plan imports as well.

There are difficulties and crises in regard to Chrysler, which is fighting for a share of the market approximating that of Datsun. This country will have to pay out between £35 million and £100 million to prop up an ailing American giant. I am disappointed that there will be no legislation to take over redundant assets from multinationals. Why should we prop up an American company? These assets are valueless. Can we not say that we will take over the plant and machinery and give compensation out of profits? Profits will not come for a long time, but that is just too bad. We should set against those profits any investment required to introduce new models, and so on. The Chrysler work people have made it clear that, whether there is legislation or not, they will not allow asset-stripping by Chrysler or any other multinational. A Labour Government should back up that sort of attitude with legislation.

I welcome large sections of the Gracious Speech, but I feel that economic matters are not touched upon sufficiently. The momentum of the Labour Government, which began in November last year, seems to be slowing down considerably. For example, where is the legislation really to shift wealth in this country? Only today, there was a report in the Yorkshire Post that 90,000 acres have been bought for the son of some duke. The British people are very tolerant—they are giving this Government a lot of support and a lot of rope—but if they see that the justice that the Labour Government promise is not being fulfilled, they will start looking at the Government critically. We shall see just how critically in the local elections in the near future. I want this Labour Government to set about the transfer of wealth and to bring forward legislation to ensure that assets are placed in the hands of those who create the wealth—the working class.

8.26 p.m.

Dr. Alan Glyn (Windsor and Maidenhead)

I am sure that the hon. Member for Keighley (Mr. Cryer) will forgive me if I do not follow his interesting discourse with his hon. Friend the Member for Bolsover (Mr. Skinner) or his disagreement with his own Government over defence—

Mr. Skinner

Take your hands out of your pockets. It is disgraceful.

Dr. Glyn

Perhaps the hon. Member could get his socks to match his shirt.

This debate allows us to consider not just an aspect of the Queen's Speech but the Government's programme for the year. We must judge both its good points and its bad points. There are some useful points, for instance on the first page. My general criticism, however, is that the Gracious Speech is an attempt to remove rights from the citizen and represents in many respects a reduction of choice. Finally, it does not meet the economic requirements of the country. None of us would deny that the country faces a grave economic situation. I do not believe that the plan set forth in the Gracious Speech meets those requirements. I shall show my reasons why, but first I shall deal with what I consider the good points.

I am glad to see that the Government are to have more co-operation with the EEC countries. Although our association with those countries has given us a greater strength for borrowing purposes, our own recovery can be determined not by membership of the Community but only by a programme which makes this country economically viable.

On the subject of the North Atlantic Treaty, we see spelt out in the Gracious Speech the importance of a subject which has been debated for nearly 30 years—the vital necessity in NATO of standardisation of equipment. I would agree in part with what the hon. Member for Keighley said, that one of the great wastes of money in defence is that we do not have a programme of standardisation which would be a great saving to our defence budget.

I also welcome the reference to Cyprus. We want to see a peaceful solution not only for the people of Cyprus but because the island is an important base for operations for our forces. That is of importance not only to us but to our allies. The hon. Member for Keighley is right to say that defence is expensive, but it is a question of priorities. I and most of my party believe that it is important to make adequate preparations to defend our country. However, we should look at our defence with specific reference to our new obligations to protect our North Sea interests.

Then there is the general point that I have raised a number of times in this House that this country bears too heavy a proportion of defence expenditure, and we should look to our European allies for assistance. Our defence assists them and there is nothing wrong in asking them to make a larger contribution to our defence. We all belong to the same Community. [Interruption.] Defence has to be paid for, and our allies in the Community could well afford to make a contribution.

The reference in the Gracious Speech to Northern Ireland is also important. Unfortunately the Secretary of State for Northern Ireland is not present. I have always thought that sealing the border and giving the Army a proper rôle was vital. A lasting solution cannot be brought about through military means. The correct solution is to replace our military forces gradually by some form of civilian organisation. It is not the right rôle for the Army. Further, it means removing a large element of our forces from NATO.

Mr. Doug Hoyle (Nelson and Colne)

How would the hon. Gentleman recruit such people? Would it be from this country or Northern Ireland, with all we know about people who are recruited into paramilitary units in Northern Ireland? I would like to know more about this intriguing suggestion.

Dr. Glyn

It is obviously not desirable to recruit people from this country. They have to be recruited from Northern Ireland. They must know the country. I see no reason why they should not be recruited from Northern Ireland if they are properly paid and organised. I am sure the hon. Member will agree that this is not a proper rôle for the Army. It is a policeman's rôle.

Mr. Hoyle

The hon. Member must realise that there have been allegations of bias against people who have been recruited in the past. This is what fills me with dismay. How would he deal with that?

Dr. Glyn

The hon. Member is on to a good point. He is saying that it is much easier to recruit from the Protestant community than from the Catholic community. I entirely agree. This has been the difficulty all along. We have somehow a persuade people that this is not a proper rôle for the Army. Both communities must work together in the same organisation for the protection of the whole community. It will take time. The Army will have to stay there meanwhile. I am sure the hon. Member would agree that it is simply not on to keep the Army in Northern Ireland indefinitely. Something has to replace it, and the only replacement is a civilian organisation.

Mr. Skinner

What about the Warsaw Pact?

Dr. Glyn

That is an intriguing suggestion but I do not think it is relevant.

The Government speak of controlling inflation. The only way to do this is to control public expenditure, which means cutting back on many of the things we would all like to see carried out. Many hon. Members will object to so much being spent on defence, but it is a question of priorities. I believe that in the next two or three years this Government will have great difficulty in cutting back on public expenditure.

Mr. Eddie Loyden (Liverpool, Garston)

We hear so often from the Opposition Benches that the present unemployment figures are intolerable. We constantly hear of demands for further cuts in public expenditure. Does the hon. Member agree that the result of further public expenditure cuts is increased unemployment? What would be the position if next year local authorities had to carry out mass sackings as a result of public expenditure cuts?

Dr. Glyn

The hon. Member has raised an interesting point. No one will deny what he says. If public expenditure is cut, it means cutting work on roads and schools and many other projects that we all want to see carried out. I know that the hon. Member for Bolsover will follow this up. I can see it in his mind. He will say that this will make men unemployed.

I say that while no one wants unemployment I would rather see a short period of higher unemployment than a recession in this country lasting for a number of years. Public expenditure cuts are necessary to control inflation. If we accept that, we must accept the consequences of such cuts. I want to see the economy put straight and our rate of inflation reduced, our borrowing cut down and our economic situation straightened out. I still believe that this country has great potentialities, but in this period I am certain that that is the only policy that will work.

The Gracious Speech refers also to a subject about which I rarely speak, the National Health Service. I do not believe that the phasing out of the pay beds is as important as people say. What I believe is important is the effect that it is having on the doctors. They are worried and concerned that the whole of medicine will change and that this is the beginning of an attack to abolish the private sector of medicine, which many believe is the right of the citizen to use if he wishes.

The phasing out of pay beds is only one facet of the Government's programme in which they are attempting to make the National Health Service the only medical service available. I believe that the patient has the right to choose whether he takes private or National Health services. I see nothing wrong or undemocratic in that choice. Similarly in education, why should not parents have the choice if they wish to exercise it? To do otherwise is to take away the rights of the citizen.

All through the Gracious Speech one finds an attempt by the State, either through nationalisation or through attempts to take away the individual's rights, to create a monolithic society. I want to see a country in which the rights of the individual are preserved. The difference between the Conservative and Labour Parties is about the right of the individual as against the right of the State. I want to see individual rights preserved, a person allowed to do what he likes within the framework of the law, and freedom preserved. I do not want our country to be run as a bureaucratic society with everyone controlled from Whitehall.

8.37 p.m.

Mr. James Johnson (Kingston upon Hull, West)

I am delighted to see in the Gracious Speech that we are to bring the aircraft and shipbuilding industries into public ownership early in the Session. As Member for a constituency in Hull, where thousands of workers are employed at the Hawker Siddeley plant, I am delighted, and it will please our people on the shop floor.

I want to make a short factual speech about the situation of Iceland. The Gracious Speech says: My Government will actively protect the interests of the fishing industry, and will play their full part in international conservation measures. What are the facts? The argument is about two things—first, limits, but that is on the surface because, secondly, behind it all lies the question of the conservation of stocks.

Every fisherman, every skipper and every politician in the North-East Atlantic area accepts the need for the conservation of stocks. We are over-fishing—I do not say that we are fishing out, but we are exhausting stocks. Therefore, all of us are attempting, in the best way we can, to conserve the stocks and, by quotas, to share out what is left. We have the North-East Atlantic Fisheries Conference for this purpose, but it is not quite doing what it should.

What is the future of the industry here? What are the Government attempting to do, or what can they do, in face of Iceland's action in enforcing a 200-mile limit? I do not believe that anyone in the fishing industry does not accept the inevitability of the extension of limits. That is not the question anywhere, whether one is a Bulgarian or an Icelander. We accept that inevitability. Where there is not 400 miles of sea between two countries, a median line is drawn—for example, between Aberdeen and Bergen. We accept this. As civilised States we meet together at the United Nations, at its different conventions, including the United Nations Law of the Sea Conference. We are meeting there soon, and I believe that within the next six months we shall have settled this matter. If not, there is no doubt that we shall accept the fact that we are moving out towards wider limits because there will be a consensus. Whether one is a Norwegian or an Englishman, there will be general acceptance that the limits must be extended.

We want an agreement so that nobody is in any doubt about the ultimate objective. The Norwegians want agreement as much as we and the Icelanders want it. The Norwegians, however, are going about it in a civilised fashion. They are meeting their neighbours and discussing the question with them.

Our difference of opinion about the appropriate action to be taken lies in the manner in which the Icelanders are behaving, and not in the ultimate objective. We need not go back in history to the International Court at The Hague. We have had disputes about this subject before, and we have had judgments in our favour. Our men are fishing in those waters now in the knowledge that the Government are backing them and that they are fishing lawfully on the high seas, awaiting such time as we have an agreement at the United Nations Conference perhaps in six months' time.

The Government, quite rightly in my view, say that their duty is to protect their citizens. I support that attitude. Speaking as chairman of the Labour Party fisheries committee and as a member of the all-party fisheries committee, I know that none of my colleagues on either of those committees would deny the facts as I have stated them. The Icelanders are taking the law into their own hands at this moment—I emphasise "at this moment"—cutting the warps of vessels from Fleetwood or from Hull. We have sent some tugs and North Sea vessels to act as a form of buffer. Their job will be, as in the last dispute, to get between the Icelandic vessel, such as the "Thor" or the "Aegir", and our vessels whose warps the Icelandic ship is trying to cut. This is a possible means of avoiding the head-on collision which we all fear and which we wish to avoid.

The Minister of State has been negotiating, but we are in the farcical position in which those on one side of the negotiating table say "We start at 65,000 tons and we finish at 65,000 tons" whereas those on the other side say "We are starting at something like 130,000 tons, which was our catch last year, but we will come down." In my view, we should come down to below 110,000 tons. I hope that both sides will be able to agree to a certain figure, to 80,000 or 85,000 tons or whatever it might be. I should have thought that that was not impossible, but unfortunately it seems to be impossible and we are having these incidents.

In this situation, we look forward with interest to the statement to be made tomorrow. It is not possible for that statement to be made today—we cannot even expect a statement about a bombing in Mayfair on this, the first day of a new Parliament—but we have been promised a statement and we look forward to hearing from my right hon. Friend the Minister of State. We shall then know what the position is, but in the meantime I emphasise again that our people are there lawfully fishing, and they ask for support, help and succour in the event of any incident.

This Labour Government, my Government, have pledged that they will give that help, but we hope and expect that we shall be able to avoid something which none of us wants. Our skippers have been told to avoid any provocative acts, and I can tell the House from what I know, having spoken to my constituents in Hull, that they are doing their best to avoid incidents. However, we are only one side of the bargain, only one side of the situation, as it were. Nevertheless, I hope that we shall avoid incidents and soon see the future a little more clearly, although I must say that the outlook is not hopeful.

On the wider issue of conservation of stocks, undoubtedly we must cut back. But our difficulty is that when we go to conferences, although we are prepared to cut back—whether it be in herring, mackerel, haddock or anything else—we find that our colleagues, partners or neighbours in the North-East Atlantic do not quite play the game as we expect it to be played.

Inevitably, sooner or later, we shall push out our limits. That is another story altogether—it is mentioned in the Gracious Speech—and we shall come to it in due time. For the moment, our job is to avoid any mischief, any incidents or anything which could cause what I should term a head-on collision or confrontation in the waters off the Icelandic coast. In the event of any incident, however, I should expect Her Majesty's Government to go to the protection of our fellow citizens who are fishing there. This has been pledged by the Prime Minister and down the line by others, including my right hon. Friend the Minister of State. We expect it, and we await with interest what will be said tomorrow.

8.47 p.m.

Mr. Ian Gow (Eastbourne)

Over the past 11 years, Gracious Speeches have revealed markedly differing economic objectives. For the four years 1964–67 the overriding economic objective was the strength of sterling. In October 1967 the Gracious Speech contained these words: The principal aim of My Government's policy is the achievement of a strong economy. This should combine a continuing surplus on the balance of payments sufficient to meet our international obligations"— I emphasise these words— and to maintain the strength of sterling… It will come as no surprise to the House to be reminded that less than three weeks after that Gracious Speech the Government devalued the pound. It will equally come as no surprise to learn that, after that devaluation, the economic objectives changed. After the devaluation, there was no further reference to the strength of sterling. The objective had changed, and in 1968 it was to achieve a continuing and substantial balance of payments surplus. In 1969 the commitment was the same. By 1970, the commitment had changed, and in that year we were told that My Government's first concern will be to strengthen the economy and curb inflation. The following four Gracious Speeches contained the same commitment about inflation. In 1971 it was: Their aim will be to curb inflation… In 1972— …they will…establish an effective means of enabling a faster growth of national output and real incomes to be maintained consistently with a reduction in the rate of inflation. The Gracious Speech in 1973 contained these words: My Government will continue their efforts to counter inflation. In October 1974 these words were used: At Home, My Government, in view of the gravity of the economic situation, will as their most urgent task seek the fulfilment of the social contract as an essential element in their strategy for curbing inflation, reducing the balance of payments deficit… So we see throughout the last 11 years a story of failure; for the three specific economic objectives set by successive Governments, including that formed by my own party, were to maintain the strength of sterling, to achieve a surplus on the balance of payments, and to curb inflation. However, the uncomfortable and unerring witness of truth—history—shows only too starkly the gulf between promise and performance. In 1964 there were $2.80 to the pound. Today there are$2. So far from there being a balance of payments surplus, the deficit last year was £3,800 million. As for inflation, it has recently been running at the unprecedented level of 26 per cent.

It is against that history of successive failure over the past 11 years that I believe that we need to consider the commitments in the Gracious Speech. So far I have made no mention at all of the other objective of economic policy, namely, full employment. I want to examine the precise commitment contained in the Gracious Speech that My Government will continue to give the highest priority to the attack on inflation and unemployment. Success for the wide range of anti-inflation measures introduced in July is essential for the future health of our economy and our society. The White Paper published in July, to which the Gracious Speech refers, was entitled "The Attack on Inflation". The Prime Minister and the Chancellor of the Exchequer chose, appropriately enough, to stage their Press conference to launch that White Paper in the Ministry of Defence. But the fight against inflation is a daily business. If the battle is to be won there are bound to be casualties. Not a single new measure or proposal in the Gracious Speech is designed to win the battle against inflation, yet this is the dominating—the supreme—issue of our time, as the Gracious Speech acknowledges.

I deplore that omission from the Gracious Speech. It makes the commitment to wage war on inflation no more likely to be achieved than were the commitments given in the five previous Gracious Speeches, all of which, as I have shown, contained words almost identical to those in this Gracious Speech.

Though the Prime Minister, when challenged by my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe), refused to tell the House exactly what was the latest Government estimate of the public sector borrowing requirement for the current year, my guess is that it is probably nearer £13,000 million than £12,000 million.

That is a really terrifying figure. Borrowing on this scale simply cannot go on. The Chancellor of the Exchequer knows that it cannot go on. Perhaps he is waiting for the International Monetary Fund to impose upon the Government that policy which he knows in his heart ought to follow.

My hon. Friend the Member for Devizes (Mr. Morrison) told the House that he was surprised that the Prime Minister this afternoon had not waved a piece of paper saying "Peace in our time." The analogy drawn by my hon. Friend between the 1970s and the 1930s is by no means far-fetched. The Government of that day were prisoners of their past. When they announced limited increases in expenditure on armaments, they dared not and could not go further, because at that time the more they in- creased expenditure on armaments the greater was the condemnation of the failure to arm earlier. So today, I believe that the Prime Minister and the Chancellor are prisoners of their own past. Too large a cut in public expenditure now is an indictment of the level of public expenditure which has been going on not only under the present Government but under their predecessors, too.

I turn to the question of where the cuts may fall. Of course, that question is often put by my right hon. and hon. Members on the Government side of the House, particularly to my right hon. Friend the Leader of the Opposition. The question of where public expenditure cuts should fall could, perhaps, be answered by another: which area of public expenditure today can be regarded as sacrosanct? The answer is that when we are overspending to the extent that we are, no area of public expenditure can be regarded as sacrosanct.

However, I want to offer a few thoughts to the Government. The first two are uppermost in the mind of the Chancellor himself, because in the Budget Statement on 15th April the Government announced that they were planning to reduce food subsidies and housing subsidies. That is not, therefore, a monopoly policy of my right and and hon. Friends; it is the policy of the Labour Party. Of course, although in April the Chancellor committed himself in principle to the "phasing out"—those were his words, not mine—of food subsidies, they are nevertheless running at £550 million today. I therefore urge the Government to take their courage in their own hands today to follow through their own policy and make those substantial cuts in food subsidies which they have themselves said they will make in due course.

The same is true of housing subsidies, which today are running at the rate of £1,200 million. The Chancellor has said that he proposes, over a period, to reduce those subsidies. He ought to have the courage to do now what he knows he should do.

I turn to specific measures of commitment in the Gracious Speech. The proposals to nationalise the aircraft and shipbuilding industries should be dropped. We are now spending £255 million on subsidising school meals, but what divine or other law is there which decrees that parents who can afford it should pay 15p for a school dinner for their children when the actual cost for that dinner is 31p? There is scope for substantial savings in public expenditure on subsidies for school meals, while at the same time continuing and even extending generous allowances for those who really cannot afford to pay.

I believe that we need to examine the whole question of charges in the public sector. We were told in a Written Answer last month—an answer which can only have caused embarrassment to the Labour Party—that the Government are deducting £35 million a year from the pensions of retirement pensioners who have been in hospital for eight weeks. That is nothing less than a boarding charge, and if it is right to make such a charge for these pensioners, why is it not right to adopt the same principle for other people? Many of my constituents who have to suffer because of very long hospital waiting lists would willingly make a contribution towards the cost of food, heating and board if it meant shorter lists.

The July White Paper mentioned the importance of imposing cash limits on public expenditure. I regret that there is no recommitment to cash limits in the public sector or on local authorities. An Iron Chancellor is needed today, and we should have had that spelt out in the Gracious Speech.

Over the past 15 years, politicians have promised too much and have encouraged the British people to believe that, somehow, they can opt out of the real world and escape the harsh truths of economic reality. They cannot. Each Gracious Speech provides the Government of the day with an opportunity to break with our unhappy past. The opportunity has been missed today. The Government continue on their profligate path. Despite the military metaphors, the war against inflation is still a "phoney" one. Meanwhile, the nation stumbles on, unled, towards increasing humiliation and disaster.

9.2 p.m.

Mr. Doug Hoyle (Nelson and Colne)

There are a number of points in the Gracious Speech with which I completely agree, particularly the phasing out of private practice in National Health Service hospitals. No doubt the constituents of the hon. Member for Eastbourne (Mr. Gow) can well afford to pay for their stay in hospital, but that does not apply to constituents like my own. We should treat people on the basis of their need and not on the depth of their pockets. I take issue with the hon. Member for Windsor and Maidenhead (Dr. Glyn), who said that it was all right for people to have to pay for medical treatment. He was saying that treatment should be based on the depth of people's pockets and not on their need.

Dr. Glyn

I may have said that in the past, but I did not say it today. I said that the Government were attempting to stop private practice and thereby to deny citizens the opportunity to choose beween NHS facilities and private practice.

Mr. Hoyle

There is no choice for the majority of people. They cannot afford the choice. They are the people neglected by the system of private practice which the hon. Member is defending. The change proposed in the Gracious Speech is long overdue. It was envisaged by Nye Bevan when he introduced the National Health Service, and we are only just catching up with the idea of the service being available on grounds of need.

I also welcome the proposed nationalisation of the aircraft and shipbuilding industries. This is vitally necessary, and in view of the present uncertainty in these industries I hope that the Bill will be brought forward early in the Session. Many shipbuilding firms are in trouble, and perhaps when they are nationalised we can look again at the idea of building ships for stock. I know that Swan Hunter is in trouble because it did exactly this. The ships, however, were ordered at the peak of the boom, and they are being finished as the turn-down in economic activity takes effect. Now is the time for orders for ships to be placed. That would enable them to be available as the next boom approaches and as world trade begins to pick up.

I welcome the passage in the Gracious Speech dealing with industrial democracy. It is long overdue. It is wrong that people at work should be denied freedoms which they enjoy at all other times. When a man is at work he is subject to the decisions of people who may not even be in this country, and it is time that employees were given at least the same rights as shareholders. I hope that there may be amendments to company law to ensure that this is done.

It is when the Gracious Speech states that the Government will attack inflation and unemployment that I begin to have doubts about the whole programme. It would be impossible for any Government, particularly a Labour Government, to preside over rising unemployment. All the signs are, however, that unemployment is continuing to rise. That trend will persist, unless action is taken, during the whole of 1976, when it could reach 1.8 million, and early in 1977, again unless there is some check, when it could exceed 2 million. The Government are too dependent on a revival of world trade, and that revival is being continually pushed back.

I welcome the Rambouillet summit and the pledge of all the countries there to work towards reducing unemployment. However, there is a difference between giving a pledge and making it work. In the meantime world trade is not recovering sufficiently to affect beneficially unemployment in Britain. I do not believe, therefore, that the Chequers strategy offers any solution to these problems. That strategy returns to the idea of using the National Enterprise Board as an investment bank, as a new Industrial Re-organisation Corporation after which my right hon. Friend the Prime Minister has always hankered. It will offer no short-term solutions to our problems. Those solutions lie in import controls. Today my right hon. Friend said that the Government were studying them closely. In the meantime certain industries are bleeding to death.

The textile industry is one example. One mill a week is closing. But mill closures are not the only concern. It is worrying, too, that the mills which have been modernised, which operate on three-shift working, which are equipped with the latest machines and which have been stockpiling over a considerable period, are also coming under attack. Unless early action is taken, these progressive firms will be closing, and that would spell the ruin of the British textile industry. They cannot wait much longer for help.

There is a similar situation as regards footwear. British manufacturers are having to compete with low-cost imports which are taking up to 30 per cent. of the home market. They have made repeated appeals for help, and crisis point is fast approaching. It is a question of how much longer they can hold on while a decision on import controls is taken.

There must be something wrong with a modern, forward-looking industry such as that which manufactures television tubes when I million of the 1.8 million sets that will be sold this year will have foreign tubes in them. Already the most modern factory in Europe—Pilkington's, at St. Helens—has closed, and other companies will be following suit unless help is given.

Even help to those industries will not be enough. We must have much wider import controls if we are to save key sectors of our industry. We must save about £3,000 million in imports, which will mean saving about 300,000 to 400,000 jobs.

In view of our manufacturing capacity, there is something wrong with an import bill such as we had in 1974, when semi-manufactured imports totalled £4,789 million, which exceeded the total fuel bill of £4,627 million. We were told then that the whole trouble was the rise in the price of oil, yet we, a manufacturing country, are spending more on importing more semi-manufactured products than we are spending on fuel. We see a similar story in manufactured items, where the import bill in 1974 was £3,902 million, which exceeded food imports at £3,372 million.

It is time to introduce import controls if we are not to see key sectors of our manufacturing industry collapse. But we should not introduce them to protect inefficient industry, to let it shelter for ever behind high tariff walls. [Interruption.] Of course, they are all inefficient as things stand. It is difficult to find a success story.

We must use the time to get investment into efficient industries. We should be planning to do that before world trade begins to increase. If we fail to do it, there will be some revival here as world trade revives, but it will be short lived. Our industries will be ill equipped to meet the need, and we shall be dragging in imports. We shall be told that deflationary measures are necessary, and we shall be back again on the old cycle. We must use the time available to strengthen and modernise the key sectors of our manufacturing industry.

One of my criticisms of our investment policy, and one that we are always hearing from both Front Benches, is that we have not had the same kind of return from investment in industry as many of our competitors, such as Japan, West Germany and France, have had. There is a reason. Far too often our investments have been in high technology when we should have had a better return if we had gone for medium and low technology.

We have missed our opportunity in a number of directions—for example, the opportunity to supply the demand for small tractors to the developing nations. Our machine tool industry is old-fashioned and ill-equipped to meet the needs of manufacturing industry. We have failed to supply the vital equipment necessary in the North Sea. We are only just beginning to meet the demand that is there. Far too much of the equipment for the oil rigs is still imported into this country when we ought to be manufacturing it ourselves.

We have been talking of the crisis facing us in the car industry, and reference has been made tonight to Chrysler. We are being asked by a multinational company to take over plant that it does not want when already we have an excess capacity in our car industry.

When we compare the developments taking place overseas, we see very little of forward planning in our car industry. We see very little research and development concerned with the production of a diesel car when we know that our competitors are going ahead in this sector. We can go on in this way over a wide range of missed opportunities and lack of investment, and this is really where the trouble lies.

I do not agree with any hon. Member who says, as is very often said outside, that it is the British worker who is failing the nation. The British worker has never failed the nation. Indeed he is always asked, as on this occasion, to help to solve a crisis that is not of his creation. He is just as efficient and productive and has the same skills as any other worker in the world. What has been lacking has been the investment to back up that skill.

Time is running short, but I believe that the problem can be solved by a combination of import controls, on a more massive scale than that envisaged by the Government, backed up by the proper channelling of investment.

Mr. Cryer

Would not my hon. Friend agree that the only way in which we can ensure that investment is channelled properly into areas of high priority, and not into, for example, speculative property deals, is through control of the banks and insurance companies? Would not my hon. Friend also agree that that policy is contained in the Labour Party election manifesto of last October and that it is time the Government got round to doing something about it, instead of the leader of the party having rather lavish dinners in the City and receiving applause from the enemies of the Labour movement?

Mr. Hoyle

I could not agree more with my hon. Friend on the point he is making. Indeed, I was just coming to that. Of course my hon. Friend is right. We are reminded of the archaic way in which the City operates when we see these dinners on television. When we hear references to the small menus of 100 years ago, we are reminded that the thinking of the City is 100 years behind the times.

There are funds available for the investment for which we are calling in the key sectors. Those funds lie with the banks and the insurance companies. Indeed, if we did not take them over in the way my hon. Friend and I are advocating, and if we merely followed the Swedish pattern, taking 20 per cent. of the new insurance policies and insurance funds, that would provide roughly £700 million towards modernisation.

Mr. Keith Speed (Ashford)

I have followed this argument very closely. Would the hon. Member care to apply his mind to the mass of investment we have all made and that the Government have made as banker to the British Steel Corporation at Llanwern, and tell us when he thinks that will be utilised?

Mr. Hoyle

I am always hearing attacks of that kind from Conservative Members. All that the unions concerned are demanding is that they share in that investment and that some reward comes to them. That is all being considered at the moment. That is the answer to our difficulties. What we on the Government side have said and continue to say in relation to investment is that this must be a two-way traffic. The workers in the steel industry must have some reward from the investment that is being made. I do not see anything wrong in that. It cannot be challenged.

Mr. Gow

The hon. Member said a moment ago that the Labour Party manifesto of October 1974 contained a commitment to nationalise banks and insurance companies—

Mr. Hoyle

No, I referred to control, as a step towards complete public ownership later.

I notice that the Conservatives do not challenge my figures. A 20 per cent. subvention from new insurance and pension funds would raise £700 million to finance the investment that we demand. A special deposit by clearing and merchant banks of 2.5 per cent. would raise £1,000 million. The money is available. It is a question of using it. Too often in the past it has been used for the wrong purposes.

Mr. Cryer

That last interjection was made by the hon. Member for Eastbourne (Mr. Gow) who promoted the Eastbourne Harbour Bill. Had it not been for the efforts of Labour Back Benchers, £50 million would have been syphoned off into a superficial development, that is to say, the Eastbourne marina.

Mr. Hoyle

I am grateful to my hon. Friends who helped to prevent that waste of public money. We intend money to be used to bring benefit to the whole country.

Funds are available to back the investment. What machinery should be used to channel the investment into the right place? The National Enterprise Board is the weapon we should choose. The Board should not go into the unprofitable sector, which appears to be desired by the Opposition. Sometimes I despair of my right hon. Friends on the Front Bench who appear to regard the rôle of the NEB as going into the loss-making companies that nobody wants. If we are to have a new national plan, with teeth, to channel investment, the NEB must be allowed also to go into the profitable companies. That must happen if we are ever to get the modernisation of British industry that we so much desire.

We should also examine the possibility of two-tier corporation tax so that a higher rate is applied to distributed profits than to profits retained in a company. We should have to ensure that the money retained is used for investment and not kept to benefit shareholders at some future date.

I appreciated what my hon. Friend the Member for Keighley (Mr. Cryer) said about defence cuts. Here we can make savings in the public sector, although we do not hear much about that from the Opposition Benches. Those savings should be used for investment in the manufacturing sector. That is what we must do if we are to begin on the road to recovery.

If we take money from insurance and pension funds, it may be said that there will be difficulty in financing the public sector borrowing requirement because much of that money goes into gilts. People fail to recognise that such a plan would provide jobs for 300,000 or 400,000 workers. At present more than 1 million people are out of work, and the cost to the country in earnings-related benefit and supplementary benefit must be about £50 million a week. By tackling unemployment we could save £2,000 million, which could be channelled in the right direction. At the same time we should be providing jobs and giving people a future instead of the despair and gloom they face at present.

It has been said that if we imposed barriers against other countries they would take reprisals against us. Such action has been taken twice in the post-war period and no reprisals were taken. It has been the result more recently in the case of Italy. There were grumblings, but no reprisals were taken against Italy. Although there would be a cut-back in semi-manufactures and manufactured products, if people were put back in employment there would be a greater demand for raw materials. It would not be a complete cut-back. Some countries would benefit. If the developing countries benefited, that would be all to the good as it would provide them with the wherewithal to partake in world trade.

The measures which I have outlined are essential. No Government can survive when 1 million people are unemployed. There is a danger that that figure will rise to 1,800,000 or to 2 million. Least of all could a Labour Government survive, as the Labour Party is dedicated to a policy of full employment. The sooner we see a shift away from the present policies, the better. We must impose import controls on a wide variety of products. However, we must also re-equip our industries. The sooner we do that, the better. The sooner we restore confidence in the Labour Government, the better.

9.27 p.m.

Mr. David Walder (Clitheroe)

It is appropriate that I should speak after the hon. Member for Nelson and Colne (Mr. Hoyle) as our constituencies share a boundary. However, I sometimes wonder whether we live in the same world. I love to hear members of the Labour Party talk about encouraging investment. I see the beckoning fingers of the Chancellor of the Exchequer, the Secretary of State for Trade, the Secretary of State for Industry and the Secretary of State for Energy, but I wonder from whence will come the incentives for investment.

We are in a dilemma. Past Governments of both complexions have always taken credit for the good economic times, on which their policies have had little influence. In consequence, when the economy is in a poor state they are, naturally enough, blamed. A myth has arisen from that situation to the effect that the Government of a democracy can control the economy.

On one occasion I partook of a large dinner on the lines of those enjoyed by the Prime Minister in the City. However, my dinner was provided at the expense of the People's Republic of China, which is not a democracy. It has a State-controlled economy. That Government can control only the internal market; they cannot control external markets. Neither can we.

I agree with what the hon. Member for Nelson and Colne said about the textile industry. Any Member of Parlia- ment representing a constituency in Lancashire or Yorkshire is bound to be concerned. I do not go as far as the hon. Gentleman did when he said that he wanted to see selective import controls over a wide area. That would only provoke retaliation. However, I should like to see our textile industry put on terms of equality with the textile industries of our European partners.

As no member of the Liberal Party is present, I shall cause no offence by saying that our trade policy is too liberal. We seem always to be making concessions to exporting countries which, as part of a deliberate State policy, flood our markets by means of a process which is almost akin to dumping. I join the hon. Member on that one issue.

I feel a little like Commodore Casa-bianca's son—the boy who stood on the burning deck, Whence all but he had fled. But it would be wrong of me not to mention one item in the Gracious Speech, on which I must declare an interest—the public lending right. I understand that it will be on a loans system. Inevitably, in these times, one asks whether we can afford it. It is a little extraordinary to see this one nugget of capitalism enshrined in a Labour Government's policy statement. If the Government suggest a loans system, it will operate on the principle of recognising the market forces in a way which even the right hon. Member for Down, South (Mr. Powell) would appreciate.

The system will be based on the number of books in a library at one time. Sad though it may be, one will find more copies of "The Carpetbaggers" or "The Confessions of a Window Cleaner" than Greek lexicons. I should hate to comment on the worth of any other author's work, but if there are five copies of "The Carpetbaggers" that author will get more money than the author of the Greek lexicon. That is an example of pure market forces and wicked capitalism. I look forward to the Government resolving that difficulty of principle.

Devolution is probably the most important constitutional issue which will face this Parliament. I wonder whether it will be real or bogus. It will be bogus if there are established in Edinburgh and Cardiff a couple of talking shops. It will be real if the two Assemblies are given some power. But if they are, we will create another governmental tier, which will cost more money. Even on this side of the House we have learned one or two lessons from our reform of local government, which was not exactly the most popular measure of the last Conservative administration.

These Assemblies will cost money and will be of doubtful efficiency. If they are to be real, they must contain elected members—whether from this House or not, I do not know. But if real, they must play some part in the legislative process and they must control money. That is where legislative power lies, and that is what distinguishes a legislative assembly from a talking shop.

I understand that the demand for this sort of Assembly is stronger in Scotland than it is in Wales. I say that with respect to you, Mr. Deputy Speaker. I am half Scots, so perhaps I achieve semi-parity with you. I think that the demand is stronger in Scotland. Are we to hand over to the members of the Scottish and Welsh Assemblies the Committee stages of Bills? Will the Bills travel to Edinburgh and Cardiff and back? That process will be real only if the Government of the day say "When they have completed their journey and come back to Westminster, we guarantee not to swamp or wipe out your conclusions with our big English battalions."

Unfortunately the Scots, the Irish and the Welsh are in a minority. If they are to be given some sort of parity, the Government must say "Deal with your own affairs. We shall not swamp your considerations with the use of the English majority." Whether it is possible to identify a Scots Budget, a Welsh Budget and an Irish Budget I am not sure. What worries me is the attitude of the English Member of Parliament to devolution. With one or two honourable exceptions, his attitude is ostrich-like. He hopes that the problem will go away. I suspect that the Government party managers have a leaning towards that attitude, that they hope that if we have a great debate on devolution—English Members, I hope, speaking with trepidation—the debate will be a shambles and the process delayed.

If the Government hope for that, they are closing their eyes to the possibility of disaster. There is a demand for control over local affairs. This should be recognised. If it is, it should be recognised on terms of equality, so that if we say that there is to be an Assembly for Scotland and Wales we must also say that there should be one for Ulster. We cannot deal with one minority and make it special, thus creating further inequalities.

I notice that in the Gracious Speech there is talk about looking at the procedure and practice of this Parliament. Plainly, Parliament is inefficient. We have only to look at this assembly this evening. There are six hon. Members who have to be here and five who remain by choice. My hon. Friend the Member for Eastbourne (Mr. Gow) is here purely out of friendship, so that I do not feel lonely on these Benches. This is inefficient. A short while ago, on the Community Land Bill, we were here all night, until 10 o'clock in the morning. That is yet another form of inefficiency. I am sure that the public look at those two extremes and say "What a damned foolish way to run a country." We know that our constituents say this.

The trouble is that the weapon of an Opposition is time. Delaying tactics are the only control an Opposition has over governmental plans. All Governments, for curious reasons I have never fathomed, want to get through as much legislation as possible, good, bad or indifferent. This is in the hands of the ordinary Back-Bench Member. If 50 or 25 of us on both sides stayed away for three or four days and said, through the usual channels, that we would not sit after 10 o'clock, we could impose that condition quite easily. We could impose any other sensible control on the use of our time Unfortunately, we do not.

Mr. Hoyle

I am interested in what the hon. Gentleman says. There is a measure of agreement between us because I believe that we go through a time-wasting process here. Would not the hon. Gentleman agree that time is wasted in the morning? Could not Parliament sit in the morning rather than begin its work in the afternoon?

Mr. Walder

I have no objection to that, although I would remind the hon. Gentleman that that was tried as an experiment and it was not successful. I would certainly rather sit in the morning than into the following morning. The outsider, looking at the workings of this House, would say that such a system seemed more efficient and was more akin to the way in which he conducted his own business. We tread a difficult tightrope over our behaviour here as well as with our procedures. If we shout at one another, the public say that we are behaving like fourth-form schoolboys. If we agree with one another, they raise the old myth about this place being the best club in Europe. We cannot please everybody.

Still on the subject of efficiency, I find that in the Gracious Speech 16 items of legislation are proposed. I wonder how a Government who wish to introduce all of these items can possibly spare the time or energy to consider our procedures and practices. All that the Government will be doing in the next 12 months is trying to push legislation through. We as an Opposition—what else can we do?—will use our only weapon, that of time. If we are considering the form of this place, we should try to make up our minds whether it is a workshop or a debating chamber.

We need also to consider how much more this Chamber would be occupied tonight if, for instance, the microphones were on and the cameras were here. I know that technically I am addressing you, Mr. Deputy Speaker, but I sometimes wonder who I am addressing in fact. We have to take into account that we do not in this Chamber address a very large audience unless we get our speeches to Press, television or radio. At the same time we have the function of being a workshop and dealing with legislation. It is the uneasy balance between the two which makes it difficult for any Government to approach the idea of reform of parliamentary procedure without forgetting that it is their duty to get their legislation at top speed, and the items in the Gracious Speech will inevitably take a considerable time.

The content of the Gracious Speech is to be carried through in 12 months. I do not think I need say more on that than refer to the two pictures of our Gracious Sovereign in the current edition of the Economist and the comments thereto attached.

9.42 p.m.

Mr. Stan Thorne (Preston, South)

There has been a tendency in the British Press recently to refer to a Socialist crisis in Britain. It is a mischievious reference, because we still live in a capitalist society. If there were any doubt about that, it must have been dispelled by the Gracious Speech. I can find little in it that has anything to do with the question of a Socialist solution to our present economic difficulties.

At the beginning of the Gracious Speech, reference is made to the attack on inflation and unemployment. When discussing inflation in an earlier debate, the right hon. Member for Sidcup (Mr. Heath) said that it was nonsensical to talk about attacking inflation in the way the Government propose whilst maintaining the present level of employment. We have seen the results of the attack on inflation, in that it has created more unemployment in Britain. It is precisely the question of unemployment that causes me most concern in reading the Gracious Speech.

The nationalisation of the aircraft and shipbuilding industries will be welcomed in my constituency, where the workers of BAC have made it plain, over several months, that they are anxious that the matter should be resolved and that they are anxious to participate in consultations which they hope will be established before the Bill finally becomes an Act.

One thing noticeable by its absence from the Gracious Speech is the question of the nationalisation of the docks, although it is part of the Labour Party manifesto. The last Labour Government introduced a Bill to nationalise the docks, but it died before it could become an Act, and it looks as if the issue is not very much alive in the Government's priorities at present.

Another absentee is any reference to the control of banking and financial institutions. There is nothing in the Gracious Speech to suggest that the Government are intent on making a real effort to control the activities of the multinational profit takers. I am always impressed, as many of my hon. Friends are, with the ability of the multinationals to obtain access to those who take decisions about our economy. They obviously have some expert contacts both within the Government and within the Treasury, which enable them to play a significant rôle in determining the nature of our economic decisions.

One is reminded of one of the final paragraphs in the manifesto—a paragraph of considerable significance, in that it refers to an irreversible shift of power towards working people and their families. I can see nothing at all in this Gracious Speech which takes us within even a fumbling step forward towards that goal.

I refer now to the question of the National Enterprise Board. There are some on the Government side of the House who would claim that the planning agreements which are proposed will begin to attack the source of power and redistribute some of the wealth in Britain. But I am at a loss to understand how the Gracious Speech can refer to an important step towards the identification and achievement of agreed national objectives", against the background of the reiteration by the Chancellor of the Exchequer that there can be no reflation of the economy at this time or in the early foreseeable future. How can we utilise the National Enterprise Board and establish planning agreements that suggest investment in certain industries that we consider are in need of it, without reflating the economy? Surely any investment in industry must have a multiplier effect within the economy. Therefore, it seems to me that there is a measure of gobbledeygook in that paragraph of the Gracious Speech.

Having read the recent economic statement by a number of hon. Members on the Government side of the House who, from time to time, meet to discuss some of the problems faced by the Government, and who brought out a seven-point programme, it seems to me that with reflation it is possible to look hopefully to the future. The reflation of the economy through the appropriate utilisation of the National Enterprise Board would certainly have a major impact on the problem of unemployment.

I am one of those representing Lancashire constituencies—of whom there are many on the Government side of the House—who are called upon by the Lan- cashier County Council and other bodies in Lancashire to face up to the problems of the county as part of the North-West, a continuously depressed area, and who have posed to them the question "When will this Government establish new factories and new industries, and put real investment into those areas?" As I have said, there is nothing in the Gracious Speech that suggests that such action is in any way imminent—and by "imminent" I mean within a period of a year or two.

Previous speakers, notably my hon. Friend the Member for Nelson and Colne (Mr. Hoyle), have emphasised the need for import controls. Few of us on the Government Benches have said that there is anything sacrosanct about import controls. What we have said is that in the situation which immediately faces Britain, with the problems in textiles, footwear, glass and other industries, even if only on a short-term basis import controls are absolutely necessary if we are to prevent those industries from going under. I believe that this Government will subsequently be judged, by many who are employed therein, on the basis of the action that they took in regard to some of those industries.

Unhappily, there is no reference in the Gracious Speech to the question of the privately-owned overseas investment portfolio. As I see it, there is the sum £4,500 million here which could well be used by the Government, with some judicious work on the part of the Chancellor of the Exchequer, to give a fillip not only to our reserves but to needy industries in Britain today.

We regularly hear a good deal, either directly or indirectly, through the media, about suggested cuts in public expenditure. Here again, it is necessary to emphasise what some of my hon. Friends, including my hon. Friend the Member for Keighley (Mr. Cryer), have said on this subject, namely, that there is one massive area which could be subject to cuts. I refer to the enormous sum—about £4,500 million, I believe—spent on armaments. I do not say "spent on defence", because a lot of it is not defensive. It seems to me that a certain amount of it goes to protect some of our overseas investments in the interest of private capital. I am certain that, especially in this sector, cuts could be made.

Mr. Ron Thomas (Bristol, North-West)

Does my hon. Friend agree also that in our present economic situation it is ludicrous for us to be spending about £600 million of hard-earned foreign currency abroad each year, about £320 million of which goes to Western Germany?

Mr. Thorne

I entirely agree. My hon. Friend the Member for Preston, North (Mr. Atkins) has time and again drawn attention to the amount we spend on the defence of Germany, for which we receive absolutely nothing into our Treasury kitty. From time to time the Government have paid lip service to that complaint, but no agreement has been reached which would give us some return in real terms.

There is reference in the Gracious Speech to the whole question of price control, but, unhappily again, the boat seems to have been missed. Large sections of the British people, including most of those who supported us in two elections in 1974, looked to this Government to take rigorous action on prices.

Mr. Hoyle

Has my hon. Friend noted—this certainly appears from the document issued afterwards—that the recent discussions at Chequers indicated that there would be a relaxation of the Price Code? I agree with all that my hon. Friend is saying about prices not being properly controlled at present, but it seems that there is to be a relaxation of even those controls that we have.

Mr. Deputy Speaker (Mr. George Thomas)

Order. May I ask that there should not be many more interruptions, since we hope that the hon. Gentleman will sit down just before 10 o'clock.

Mr. Thorne

I take it from that, Mr. Deputy Speaker, that you would like me to finish in about four minutes. I am rather pleased about that because you usually indicate to me that it is time I shut up.

It would be extremely valuable if, during the next two or three days, we could impress upon the Government that the need to freeze the prices of certain essentials—food and domestic necessities—remains vital. Inevitably, we shall have to return to that, because, as my hon. Friend has just said, there; are suggestions that there is to be relaxation rather than further freezing of prices. My right hon. Friend the Chancellor said that it was necessary to relax controls to encourage commercial enterprises to expand their activities. Although profit margins may not be as high as firms would like, they have enabled the firms satisfactorily to maintain their standards. This could hardly be said for those on fixed incomes, who have been forced to face inflationary prices for necessities.

We have heard recently of a further loan from the International Monetary Fund. Statements have been made implying that there are no conditions attached to the loan but that if we instituted some form of import controls we would have to discuss the matter with the fund, which might not agree with us. The fact that the fund has agreed to make a loan to us means that we are yet again taking decisions about our economic problems on the basis of what suits financial interests outside Britain.

It is against that background, and in the absence of a reference to any intention on the part of the Government, that I cannot give the Gracious Speech the wholehearted welcome that I should have liked to do, as one who viewed it with some optimism before it was made.

Debate adjourned. [Mr. Dormand.]

Debate to be resumed tomorrow.