ECONOMIC AFFAIRS

HC Deb 25 November 1975 vol 901 cc681-811

Mr. Speaker

I have announced the amendments which I have selected. I know already of over 40 right hon. and hon. Members who wish to speak in this debate and I have a pile of correspondence here in which every one of them seems to have an equal right to be called. Many of them will be disappointed. The way in which right hon. and hon. Members can help is by making as few interruptions as possible, by giving way as little as possible and by making speeches as concise as is reasonable.

The second amendment I have selected is that standing in the name of the right hon. Member for Devon, North (Mr. Thorpe) and his hon. Friends: But humbly regret that the Gracious Speech contains proposals for the docks which, if carried out by an extention of the areas covered by the National Dock Labour Scheme, will lead to further unemployment in those areas, further strangulation of Great Britain's successful ports and higher costs and inefficiency.

4.15 p.m.

Sir Geoffrey Howe (Surrey, East)

I beg to move, at the end of the Question, to add: But humbly regret that the Gracious Speech contains no practical policies to solve the United Kingdom's serious financial and economic problems, but proposes measures which only increase the powers of a centralised bureaucracy and diminish the freedom of the citizen I wish to draw attention immediately to the inadequacy of the economic policies foreshadowed in the Gracious Speech. If anything was needed to make that inadequacy clear, it was the confusion and complacency of the Prime Minister's backward-looking speech in the debate last Wednesday. His speech was one that he must have made so many times before in and out of office that I sometimes wonder how Shakespeare ever came to conclude that "Old men forget". In the Prime Minister's case the hardening of the intellectual arteries that is taking place is assuming a particularly unfortunate form. The right hon. Gentleman seems to have forgotten nothing, to have learned nothing and yet still seems to believe that the people of this country have managed to forget everything that he has said. Many of them sometimes wish that they could.

The Prime Minister's speech reflected only too accurately the content of the Gracious Speech. This was, first, because of its total failure to recognise, let alone spell out, the appalling gravity of the economic situation, which is still facing us and which is increasingly perceived by those whom we represent and who look to the Government to give a much firmer lead in solving our problems. In human terms, the most striking and yet quite inescapable feature of our situation must be the high and rising level of unemployment. Today's figures, seasonally adjusted, show that in the United Kingdom as a whole unemployment has risen by 36,800 to a total of 1,125,300 while vacancies have fallen by about 9,000.

We also face continuing stagnation of production and inescapable reductions in the nation's living standards imposed by the continuing rise in oil prices. The Prime Minister made some reference to this. It is a pity that he was not prepared to do so 21 months ago. We also have a continuing substantial deficit in our balance of trade at a time when other countries have long since ceased to be content with meeting just their non-oil deficit. Our deficit of £2,000 million is now almost exactly equal to the expected deficit for all of the OECD countries taken together.

Next there is the gross imbalance of a situation in which the State is taking and spending more than 60 per cent. of the nation's total wealth. This is a state of affairs which makes the recovery of industry impossible and which places on the shoulders of our people a burden of taxation and control which is and which will be seen to be absolutely intolerable. The Prime Minister failed entirely to spell out the continuing and overwhelming gravity of our inflation, not just at its present pace, but even if—and one must be doubtful about this—the Government succeed in reducing the level to anything near their target.

All of these factors add up to a formidable threat to the survival of civilised existence in a democratic society. Britain is still very close to the brink and there is little prospect of our moving away from that brink without leadership of a quite different order from that which the Prime Minister sought to display last week—still less if we have to face the kind of programme foreshadowed in the Gracious Speech.

I shall not say much about what the Prime Minister had to say about the past. He spoke as though he bore no responsibility whatever for our present situation. There was a time when he seemed glad to take the credit for almost everything from clearing the beaches of oil to the success of England in a football match abroad: but not today. He once had the confidence of an impresario of a television quiz show. He has now assumed the mantle of a Soviet historian—anxious only to expunge large tracts of the past from the record.

I take just one example. The Prime Minister was asserting at one point last week that the die was cast on inflation".—[Official Report, 19th November, 1975; Vol. 901, c. 42.] and that the die was cast equally in relation to unemployment as long ago as March 1974. What did the Prime Minister and the Chancellor of the Exchequer have to say about that 13 months ago? Six months after the time when they now say that the die had been cast, so that the problems now facing them were inescapable, in a Press conference on 9th October 1974 the Prime Minister said—and it is scarcely credible now: Unemployment…is beginning to fall;…the pace of inflation and price rises is moderating". The Chancellor of the Exchequer inevitably found a chance of claiming credit for himself when he said on "Panorama" on 23rd September 1974: I have cut the inflation rate I inherited by half". So much for the argument that the die was cast as long ago as March 1974.

Whatever became of the social contract? In the Queen's Speech last year it was described as an essential element in the Government's strategy for curbing inflation, reducing the balance of payments deficit, encouraging industrial investment, maintaining employment…and promoting social and economic justice."—[Official Report, 29th October 1974; Vol. 880, cols. 49–50.] Since then, what have we seen? We have had roaring inflation, sagging investment, soaring unemployment, and growing social and economic injustice. No wonder we did not hear a word last week about the social contract, for in the whole history of agreements between man and man no contract has ever been more totally unfulfilled than that.

There is no escape for the Government from their responsibility for the present situation, and it is high time that they faced up to it. Tragically, the Prime Minister's speech contained example after example of self-deception, and there is not possibly time to deal with them all. He said that we were facing the same problems of inflation and depression as other countries: not so; the United Kingdom almost alone faces a situation in which industrial production is at levels below those of five years ago. Our inflation remains twice as high as that of our competitors and looks like continuing to do so.

The Prime Minister suggested that inflation was worse when he took office than it is today: not so. In March 1974 the annual rate was just over 13 per cent. and in September 1974, if we are to believe the Chancellor of the Exchequer, it had been reduced to 8.4 per cent. Today it is up again, on the annual basis, to 26 per cent. What is more, in contrast with other countries, we are still moving into further substantial depression, while the Chancellor of the Exchequer is looking to others—who were more courageous and more honest years ago—to help us by moving out of their own depression as well. It is time for the Prime Minister and the Government to stop deceiving themselves and to stop deceiving the nation.

What are we to make of the policies actually foreshadowed in the Queen's Speech? We all took some comfort—perhaps unwisely—from the fact of the meeting at Chequers. We noted with some satisfaction that the Government, elected to office on the claim that they had found an industrial strategy which would create something close to a new Jerusalem, had at last recognised the need to set out in search of a new industrial strategy. Some of us were sceptical about the prospect, if only because the meeting was timed to take place, with characteristic sense of timing, on Guy Fawkes' day. It turns out that the scepticism has been wholly justified.

I ask the House to consider for a moment the contrast between the Chequers document and the contents of the Gracious Speech. We were glad to see a statement from Chequers to the effect that the public sector had been pre-empting too large a share of our resources; glad to see it being said that it was essential to restore the profitability of industry, glad to see it being said, above all, that it was for the Government to set about restoring an atmosphere of confidence between Government and industry.

A new spirit seemed to be abroad in the land when the Leader of the House, of all people, said a word or two in praise of profits, but those words turned out to be about as sincere as a recitation of the Beatitudes by Beelzebub—perhaps Beelzebub would have said it a great deal more cheerfully than the Leader of the House. What we find now is a series of measures that have shattered whatever confidence has been implanted as a result of the Chequers statement, a series of measures that, far from doing any good, will do nothing but damage in our desperate situation.

First, the nationalisation of the aircraft and shipbuilding industries will serve only to add to the size of a grossly mismanaged and flatulent public sector and add to the size of the public debt. Secondly, the extension of the dock labour scheme—literally for miles beyond anything that anyone would recognise as a dock—is a charter for the extension of anarchy and blackmail.

Thirdly, there is the final removal, if the Government have their way, of any right for a trade unionist to have an independent right of appeal against expulsion or exclusion from his union, a right proposed by the last Labour Government and now to be taken away. This is an absolute licence for tyranny. Fourthly, instead of anything to comfort and encourage industry, we have the maintenance and extension of price control, a prescription for the extinction of profits, and a prescription for the destruction of jobs.

Why, in Heaven's name, do we have to face this when we have, as my right hon. Friend pointed out during Questions this afternoon, a Government deeply divided amongst themselves. Hon. Members opposite may laugh, but let them listen to the case that I am going to make.

I begin with the Paymaster-General. The Paymaster-General in speech after speech genuinely argues the case for profits and profitability. On the other hand, there are those, like the Secretary of State for Energy, who argue precisely the opposite.

In a speech on 15th October to the Aluminium Federation—[Interruption.]—I invite hon. Members opposite to listen and to say whether they agree. The Paymaster-General said that what industry wanted from the Government was a recognition of the importance of profitability to the private sector, greater continuity in the policies of the Government, and, above all, a conviction in the Government that the success of the private sector was essential to the success of our mixed economy.

He went on to ask himself why the case for profit had not yet got across. He said that the problem was that many people have not been persuaded by the statements either of Government or employers. No wonder, when we compare the totally different case being put forward in speech after speech, day after day and month after month by the Secretary of State for Energy.

These deep divisions surfaced yesterday in the two speeches by the Secretary of State for Energy and the Secretary of State for the Environment. The Secretary of State for Energy was addressing, not surprisingly, the Greater London Labour Party Young Workers' Forum. The Secretary of State for the Environment was arguing precisely the opposite case. He was apparently in such despair of ever getting sympathy for his views within the Cabinet Room in this country that he chose to expose his thoughts to, of all people, members of the Costa Rican Government.

Where does the Chancellor of the Exchequer stand in all this? He often seeks to present himself as a bluff, robust exponent of harsh economic truth, but even he speaks with a most uncertain voice. If we look at what was reported in the national Press on 2nd October—[Interruption]—it is serious enough—

Mr. Deputy Speaker (Mr. George Thomas)

Order. Hon. Members heard Mr. Speaker's appeal earlier. Almost every Member shouting wishes to take part in the debate. Hon. Members will help themselves if they will be quiet for a moment.

Sir G. Howe

Government supporters must remember that they are not now taking part in a Tribune Group rally. I wish to quote from a report in the national Press of the uproar at the Tribune Group rally at Blackpool on 1st October. It is interesting that one headline carried on the following day said in bold print: Healey attack over 'torrent of abuse'. The report went on in The Times: With advance knowledge of Mr. Mikardo's speech, Mr. Healey, speaking at Bolton, delivered a devastating counterblast. So the national Press has that picture of the heroic Chancellor charging into the breach. When we study the headline in the Bolton Evening News for the same day we see it reported that 200 expectant members of the Labour Party turned up at the Bolton Labour club in order to hear the Chancellor make this great pronouncement. We see the report by the only reporter who was able to be there. He writes: Mr. Healey, who came from Labour's conference at Blackpool, did speak briefly about the movement's unity—but the words he is reported to have said never crossed his lips…Instead of launching his counter attack on the Left, Mr. Healey told a joke about his days in the Army, said thank you for being invited to open the club and drank a pint of bitter. There is an inescapable ring of truth about that last sentence. So the brave Chancellor, facing 200 comrades, turned tail and declined to tell them the truth. It is no wonder that he has had so little success in saving the nation from the disastrous diet of Socialism that his colleagues are thrusting upon it.

Let me tell the Chancellor something of the policies that he and the Government should be adopting in face of the grave dangers threatening the nation. Let them begin first by abandoning many of the measures foreshadowed in the Gracious Speech which are expensive, provocative and wholly irrelevant to the nation's needs.

Secondly, let the Chancellor and the Government adopt in their place policies which give some substance to the Chequers declaration. If profits, jobs and confidence are to be restored, industry is entitled to look to the Government for practical measures, for prompt acceptance of the Sandilands Report, for relaxation instead of tightening of price control, for deeds instead of words, and for deeds of the right kind.

Mr. John Mendelson (Penistone)

Higher prices.

Sir G. Howe

The hon. Member for Penistone (Mr. Mendelson) shouts, "Higher prices". Higher prices are part of the policy that the Chancellor of the Exchequer is taking credit for wishing upon us. He is claiming credit for the elimination of nationalised industry deficits. That is right. But the inescapable fact that the hon. Gentleman must recognise is that in the circumstances in which we find ourselves today living standards cannot be maintained—the Government say so from time to time. For a time prices are bound to have to rise faster than wages. Otherwise, there is no escape.

That is why, thirdly, there must be a plain recognition of the continuing menace of inflation. Even if everything else were to come right, the Chancellor's target figures until the end of the year would still be much too high. Let the Prime Minister and other members of the Government stop speaking, as they do, of only a few months of hardship and of the need only to give a year for Britain. It will be a much longer haul than that. It is time for members of the Government to stop raising false expectations and to stop looking for a false dawn.

We welcomed the Prime Minister's recognition last week that an old-fashioned Keynesian reflation would be disastrous. If that message really has sunk in, we should be prepared to look more sympathetically at more selective measures. If the Chancellor remains absolutely resolute in opposition to any general reflation, he can count on our support—

The Chancellor of the Exchequer (Mr. Denis Healey)

Like we got it in July.

Sir G. Howe

Let the right hon. Gentleman reflect on the discreditable record of the Labour Party during the years when he and his right hon. and hon. Friends did nothing but oppose the fight against inflation by the previous administration.

Fourthly, it is time for the Chancellor and his colleagues to come clean about public expenditure and to tell us something about his discussions with the International Monetary Fund and about the conditions that he expects it to require if and when he applies for a further tranche of the funds available.

Substantial cuts are inescapable. Speaking on 19th November, the Chief Secretary said that cuts in public expenditure were "absolutely vital". About a month before, the Paymaster-General described them as "imperative". So they are. The Chancellor of the Exchequer knows that only too well. He has even said as much to the Parliamentary Labour Party. So he should stop denouncing those of us who have been urging this course on him for months and he should start today to tell the House and the people the truth about what is inescapable.

I want now to comment on the Chancellor's strategy for the timing and scale of public expenditure cuts and for the handling of the public sector borrowing requirement. The right hon. Gentleman advances two defences of this present inaction. First, he says that the public sector deficit is no bigger than that of some countries in a comparable position. When he made the original claim on 6th November, he was very confident about it. Since then, I have been following this up in correspondence with him, and I have asked him to spell out the basis on which he reached that conclusion.

This morning, I received a letter hedged about with qualifications making very clear the fragility of the foundation upon which that assertion has been repeated. I shall not weary the House with the entire text of the right hon. Gentleman's letter. But he says that for various statistical and other reasons it is very difficult to make adequate international comparison of public sector deficits.

Mr. Healey

Of course it is.

Sir G. Howe

There is a sharp contrast between that and his confident assertions at the Mansion House and in this House. On two occasions in the course of replying to Questions to Treasury Ministers the right hon. Gentleman said clearly that he gained confidence from the comparability of our position with that of other countries. In his letter he goes on to say that comparable figures for 1975 were obviously not yet available for any country, but that it was possible to get some idea of the orders of magnitude likely to be emerging by using past experience to adjust these tentatively to a general Government basis.

The Chancellor's conclusion is quite important. It is that, broadly speaking, therefore, on the basis of official forecasts it seems likely that the financial deficits on a general Government basis of all three countries mentioned in the letter will fall within the range of 5 to 8 per cent. of GNP. This is also expected to encompass the general Government deficit of the United Kingdom.

What follows from that? The right hon. Gentleman is talking about a general Government deficit ranging between 5 and 8 per cent. of the GNP. We put that at about £5 billion to £8 billion for the general or central Government deficit. We have to add to that a further £3.5 billion for the deficit of local authorities and nationalised industries, and a further £1.5 billion for the additional financial transactions to arrive at a total public sector borrowing requirement. So if the GNP is taken at about £100 billion, 5 to 8 per cent. is a general Government deficit of £5 billion to £8 billion. If we add in the other figures, we arrive at a public sector borrowing requirement of £10 billion to £13 billion.

We get some support for that from what the Chancellor is supposed to have said at a meeting of the Parliamentary Labour Party. He is reported to have said that the public sector borrowing requirement amounted to about 20p in the pound of public spending. If we accept that the public expenditure total is, as set out in the Red Book, £53.5 billion, the Chancellor is implying a borrowing requirement of about £10.7 billion. If we assume that total spending is now £58 billion, the implied borrowing requirement is now about £11.5 billion.

What a ridiculous way to deal with these matters this is. The Chancellor makes generalised assertions at the Mansion House and in reply to questions by the Parliamentary Labour Party, but refuses to substantiate them to the House. It is time that he came clean about this if his policy is to have any credibility.

In fact, the whole basis of his international comparison is gravely misleading. Public expenditure here is a dangerously high proportion of our GNP. Our deficit should be less than that of other countries because the recession, according to the Chancellor, is less deep here, and the tax loss should be lower. Again, as the Chancellor said, to the extent that other economies are reflating, their deficits should be higher. Therefore, the defence is inadequate and conceals rather than clarifies the danger of our economic situation.

The second argument advanced by the Chancellor is that the time is not yet right for lowering the public sector borrowing requirement. He suggests that we should wait until the upturn begins. But he is wrong, because it will not and cannot work like that. We are now dangerously close to the situation where there is no room for an upturn to start. Investment and stocks have reached a dangerously low level. As they begin to pick up, where and how on earth is industry to find the necessary finance?

The Secretary of State for Energy puts his estimate of what is necessary at £6 billion. So how does the Chancellor propose on his time scale to stop the threat of the destruction of still further jobs? It clearly follows that he cannot go on indefinitely deferring inescapable cuts in public expenditure. The £900 billion in constant price terms proposed for the next financial year will not be enough.

Indeed, the Chancellor told the Parliamentary Labour Party what would be necessary. According to reports on the following day, he said that even to hold next year's level of public spending over the following two years would mean that the average worker would have to pay about 50p in tax and contributions from every extra pound he earned. If that is the situation, the burden of taxes will be intolerable. Indeed, it is already. As we saw last week, widows—the poorest members of the community—just drawing their pension at the age of 60 find that they have immediately risen above the tax threshold. Is that the kind of situation for which Labour Members voted? It is inconceivable.

If we try to take the arithmetic through, we find that the present marginal rate, including national insurance, is just over 40p in the pound. If the Chancellor sees a prospect of contributions of 50p in the situation to which he looks forward, the difference between 40p and 50p—10p extra in income tax—is about £3,600 million. That is the additional burden of public spending to require that level of taxes a year or two ahead.

It would be folly for the Chancellor to believe that he could postpone further action in the direction of public spending cuts for another 18 months. The present situation is the consequence of the incontinence of the Government. In the two years since the Conservative Government left office total public expenditure has increased from £32 billion to £53 billion—an increase of 67 per cent.—while prices went up by only 47 per cent. In each of the last two years for which the Chancellor has been responsible, public spending has been 10 per cent. in real terms above that laid down in the plans left by the previous Government. The incontinence and failure on the Chancellor's part to control the programme for the Government have landed this country in its present desperate serious plight.

The Government must cease pretending. Why do they remain so coy about the realities of the situation that even the increase in prescription charges, about which we heard last week, was announced in a Written Answer on Thursday rather than disclosed to and discussed in the House during the speech by the Secretary of State for Social Services on Friday? That kind of equivocation will not do.

That is why we urge the Government to drop further nationalisation, and to drop it now, to start now on the reduction of subsidies, to begin now to explain the widespread nature of the cuts, as painless as possible, which will be necessary across a large section of public spending, and to spell out and implement the manpower ceilings for public services about which the Chancellor told the House as long ago as last July. We can no longer go on running into deficit at the rate of £500 per annum per family without continuing to hurtle on a course towards disaster.

The Government must continue to stand firm in their resistance to pay claims in the public sector which are not justified. However much we may sympathise with particular cases, they must have the courage to stand on the policy which they have put forward, which can be criticised in detail, and, instead of misrepresenting the position of the Conservative Party, as the Chancellor tried to do a few minutes ago, to give full credit to our repeated statements both inside and outside this House that we shall support them in that essential task.

The most remarkable contrast of all is that today we find the Secretaries of State for Social Services and Employment, unharried by contrary arguments from this side of the House, never ceasing to argue the proposition that there can be no special cases, that any exception to the policy would destroy it, and that any alternative would be unfair to the 2 million workers who have settled within the policy. This is a question not of an incomes policy or not, on which there are as many opinions in Fleet Street as on both sides of this House, but of how the Government are to recover control of their own wages bill and expenditure.

One cannot help asking the Secretary of State for Employment, for example, whether there is no echo in his mind of the same propositions we hear him mouthing week after week throughout the country, quite rightly, being advanced by members of the previous Government, particularly by my right hon. Friend the Member for Sidcup (Mr. Heath). Is there no recollection in his mind of his repeated support for claim after claim, for industrial action after industrial action, from the postmen to the miners? Is there no recollection in his mind of the Labour Party's repeated attacks and votes against the attempts of the previous Government to grapple with this same problem? In short, has the Labour Party no sense of shame whatever?

The Prime Minister should cease suggesting that there is any disunity in the Conservative Party, for which I speak. We shall give firm support to any attempt that the Government may make to adopt and follow policies in the interests of this nation. Indeed, we stand ready to implement those policies ourselves.

We call for the support of hon. Members on both sides of the House in condemning the measures now proposed, because the measures foreshadowed in the Queen's Speech totally fail to measure up to the appalling perils facing all the people of this country from price inflation at rates far higher than those of our competitors. They show no understanding of the immense threat to investment and employment in the continued uncontrolled growth of public spending and the vast dependence on borrowed money. They propose nothing to make room, through lower State spending, for lightening tax burdens, which are now bearing down even on the poorest sections of our community and on working people in general. They contain no measures to halt the growth of centralised bureaucracy and the burden of administrative overheads upon industry and commerce.

It is high time for the Government to abandon their partisan dogma, to give up their pursuit of selfish minority interests, and to bring forward economic policies which will help to restore monetary stability and industrial confidence and so encourage the creation of wealth and job opportunities for all the peoples of these islands.

4.50 p.m.

The Chancellor of the Exchequer (Mr. Denis Healey)

The official Opposition have asked for practical policies for dealing with our country's economic problems. Given the build-up earlier in the summer about the way in which the Opposition would reconcile their differences and come out with a clear decision on all the major issues that have divided them for the past year, one might have expected to hear some of the Opposition's practical policies this afternoon, but all that we had from the right hon. and learned Member for Surrey, East (Sir G. Howe) was a flaccid mumbling of Central Office propaganda handouts studded with more irrelevant quotations than we have had since the dear days of Konni Zilliacus. I shall deal with the few points of substance that the right hon. and learned Member for Surrey, East raised, but I want to start by saying something of what has been happening to the economy since we last debated it in July, about the prospects for the coming year, and about our policies for dealing with them.

In the short term, the key to the solution of all our problems remains the control of inflation, and here the record is encouraging. Between June and October the retail price index rose by only 3.9 per cent. This means that inflation has been running at well under half the rate that we had to endure during the first half of this year, and, as I predicted in my Budget speech, the annual rate of inflation in the second half of the year will be between 12 per cent. and 16 per cent.

So far the £6 limit on pay increases has not had a marked impact on the rate of inflation, but if we had not reached agreement on that limit in July we should have seen inflation taking off again at the beginning of next year. As it is, the year-on-year rate of inflation should drop steadily throughout 1976, to under 10 per cent. by the end of the year, provided of course, that there is no unexpected major increase in our import prices in the meantime.

We shall achieve that objective only if the £6 limit is observed as universally in the next eight months as it has been to date. The response of both our industrial workers and our salaried employees has been magnificent, and I think it has demonstrated to the world that whenever it comes to the crunch the sense of unity in the British Isles is far stronger than the disagreements on minor issues. Now that the policy of a £6 limit has been launched so successfully I have every confidence that it will be maintained throughout the year and that the dividend it will bring in terms of a slow-down in inflation will help in carrying it forward in future years.

Settlements covering about 2 million workers have been notified direct to the Department of Employment, and all are within the pay limit. About 1,000 settlements have been notified through the new procedures, for example in the course of price applications. These cover more than 500,000 workers, some of whom are included in the 2 million whom I have mentioned. Of these settlements, a few were originally outside the policy, and all but two, which are still under consideration, have since been brought within it. In addition, 750,000 workers have been covered by Wages Council proposals for increases in statutory minimum remuneration within the policy. About 3 million people have already settled for £6 or less, and I think the House will agree that this is a most impressive record and a tribute to the Government's wisdom in seeking a voluntary agreement with the trade unions rather than relying on legal sanctions against working people.

The House will have noted that the executive of the NUM has voted to limit its claim next year to £6, and this makes it all the more important that the junior doctors should accept the same sacrifice as the rest of the country is prepared to make for the sake of mastering inflation. Incidentally, if the right hon. and learned Member for Surrey, East is sincere in offering support for this policy I hope that we shall hear him speaking in the country on this matter in these terms to the junior doctors.

The record on the balance of payments is also encouraging. It now seems probable that our current deficit in 1975 will be about half that of 1974. In other words, we shall not only have eliminated the whole of the massive deficit on non-oil trade that we inherited in March 1974 but we shall also have covered one-third of the £3,000 million increase in the cost of our oil this year.

Some of that improvement is, of course, due to the recession, and particularly to the running down of stocks in industry, but we can take pride in the fact that we have at least maintained our share of world trade at a time when competition is fiercer than ever before, and we may even have increased it. It will, however, be difficult to maintain this rate of progress in the next 12 months as the expected recovery in our output leads to increased imports and the rebuilding of stocks. Moreover, the terms of trade could begin to move against us, and our invisible earnings will be reduced by the payment of interest on past borrowings.

That is one reason why I decided that it would be right to apply to the International Monetary Fund for a loan of £975 million through the first credit tranche and the oil facility. This money is available at substantially lower rates of interest than we could hope to obtain elsewhere, and, as I explained to the House the other day, if we had not decided to apply now, the oil facility might have been exhausted by the time we did so. On inflation and the balance of payments, the record is encouraging.

The position is much less satisfactory on output and employment. It looks as though our GDP may have fallen by nearly 5 per cent. over the past 12 months, the biggest fall that we have seen at any time since the war, but smaller than the fall that most of our major competitors have suffered. There are some signs that the recession in Britain may now be bottoming out. Whereas many of the indicators were falling sharply until May or June, the past three or four months have shown approximate stability in, for example, the trend in industrial production and retail sales. Car registrations also, while erratic from month to month, no longer reveal a declining trend. House building is continuing to increase, and the October CBI inquiry showed an improvement in most of the key indicators, including the general state of confidence and prospects for investment.

An improvement in confidence could herald an end of the massive destocking that has been a major cause of this year's recession in Britain. Next year we should see a modest but accelerating recovery in output, the pace depending in part on the extent of the recovery in world trade. As the Prime Minister told the House last week our major partners at the Rambouillet summit were all confident that the measures they have already taken will produce a steady increase in economic activity over the next 12 months, and they have all stated that they are ready to take further measures if their confidence proves to be misplaced.

Unfortunately, the increase in output on which we can now count will take at least six months to reduce the level of unemployment, and it may be that the lag between output and employment will be somewhat longer this time than at the same stage in earlier cycles. This is even more likely to be true of some of our competitors. In Germany, for example, there is an exceptionally high proportion of short-time working, and in Italy and Japan many workers are carried on the company pay roll even when there is no work at all for them. The unemployment register is unlikely to fall significantly in those countries until all those now on company pay rolls are working full time. Unemployment in Britain is unlikely to be above 1,200,000 by the end of this year—and today's figures confirm this—as I predicted some months ago, and the rate of increase has been falling in recent months. Nevertheless, unemployment is likely to continue increasing for some months into 1976 as a consequence of the fall in output in the second half of 1975.

At Rambouillet the Heads of Government were all unanimous that the most urgent task was to ensure the recovery of their economies and reduce the waste of human resources involved in unemployment. The same view is taken by the authors of the two Community documents of which we are invited to take account in today's debate.

So far as Britain is concerned, I have made it clear on many occasions that we cannot plan to reduce the level of employment by a general reflation at this time. That would involve an unacceptable increase both in our balance of payments deficit and in our public sector borrowing requirement. We could not expect to finance either of those increases at a time when our inflation rate is still running so far above that of our competitors, except in ways that would be destructive to the economy—[Interruption.] That is the way that Mr. Barber financed the increase in 1973, by printing money. I have no intention of following that road.

The aim of avoiding a general reflation at this time was endorsed by the recent Trades Union Congress and by the Labour Party conference. In any case, given the lags to which I have referred, a reflation of demand could not be expected to reduce the level of unemployment before it is in any case likely to be turned down.

I have no intention of making the mistake here which was made by Mr. Barber in 1972. Broadly speaking, experience suggests that £1,000 million-worth of extra demand, achieved for example through a reduction in taxation, generates between 30,000 and 50,000 jobs only after an interval of 12 months. In current circumstances, it is possible to save jobs and reduce the expected level of unemployment much faster and more cheaply by selective measures directed at sectors of the economy which are particularly vulnerable to unemployment in the trough of a recession.

The £75 million-worth of such selective measures which the Government announced in September are likely to save as many jobs in about three months as £1,000 million-worth of demand reflation can save in a year. The temporary employment subsidy, which involves almost no net addition to public expenditure, has already saved 7,500 jobs. Similar methods have been particularly effective for school-leavers. About 3,000 applications were made in the first fortnight after the introduction of the recruitment subsidy on 13th October and I have little doubt that this has contributed to the dramatic fall in unemployment among school leavers from 65,000 a month ago to 40,000 announced today. The fall has been twice as great as is normal in this month. Those figures compare with 158,000 unemployed school leavers in August, so we have reduced that total already by three-quarters.

A total of 93 projects of work creation have already been approved and 13 started, and the £20 million extra for training in the September package excludes provision for another 8,000 places, mostly for young people. Similarly, the selective measures taken to encourage new investment have prompted a substantial increase in private investment. For example, about £12 million has already been committed out of the funds made available to bring forward investment projects which would otherwise have been delayed or gone abroad, and this has generated £69 million-worth of new investment—a ratio of six to one.

The Government are now considering further selective measures intended to save or create jobs during the recession. We have made it clear that we are prepared to seek agreement to limit imports in selected areas, so as to protect firms or industries which will be viable when world recovery arrives but might otherwise suffer crippling damage during the recession.

The Government are also discussing with both sides of industry the means of avoiding in 1977 those bottlenecks which have previously frustrated trade and recovery when output is rising rapidly, as they did in 1973. The £25 million scheme for restructuring the ferrous foundry industry is an example. A substantial further expansion of training facilities will also be required, and we are considering means by which those who become redundant in certain industries, may be helped to move to vacancies in other industries, particularly engineering, when the upturn comes.

All these measures at the micro-economic level are designed to produce a more rapid effect on employment more cheaply than a demand reflation of the traditional type.

I turn to the question of public expenditure and the public sector borrowing requirement. As my right hon. Friend the Secretary of State for Industry made clear last Thursday, while in the short term the control of inflation is the key to our very survival, in the longer term we must aim at improving our industrial performance relative to that of other countries. We must transform our economy into one based on high output, high earnings and full employment and we can achieve this only if we secure a significant improvement in the performance of our manufacturing industry.

This, in turn, depends primarily on what we do about investment in three fields. First, we must improve the rate of investment in manufacturing industry. Second, we have to direct that investment more wisely. Third, and above all, we have to achieve a better return in productivity per unit of investment through better management and labour practices.

I hope that no one will imagine that there is a simple or single answer to the problems of our manufacturing industry. The decline in its relative performance has been pretty continuous since at least the Second World War, irrespective of the rate of inflation, the rate of return on capital and the decline in profitability. This is not the time to discuss the problems of British industry in detail—we debated them last Thursday—but I hope that both sides of the House will agree on at least one fundamental syllogism.

We could increase the productivity of our industry without any new investment if we could make as good use of our existing plant and equipment as many of our overseas competitors. Indeed, in theory, that would be by far the easiest and quickest way to increase our output and reduce our unit costs. It would have dramatic consequences both in reducing inflation and in cutting the balance of payments deficit. But in so far as the better use of existing capital depends on more economic manning levels, working people will be slow to accept its implications, particularly during a recession, unless they can see new investment taking place to create new jobs.

At the same time, industrialists will be reluctant to undertake new investment unless they are satisfied that it will be fully used. In other words, more investment depends on the better use of investment and the better use of investment depends on more investment. I believe that both sides of industry are nearing the point at which they could strike a bargain for breaking into that vicious circle. I certainly hope so, and I shall do everything in my power to make it possible.

But if we are to get the new investment which all of us so dearly want, the Government must ensure that the economy is managed so that the resources required for this new investment are not pre-empted by either private or public consumption. The central problem here is timing. I will deal now with some of the points made by the right hon. and learned Member for Surrey, East.

All over the industrial world, Governments are now, quite rightly, running public sector deficits higher than at any time since the war—for the obvious reason that the current recession is deeper than any since the war. I hope that the House will forgive me if I demonstrate this fact in detail, particularly as the right hon. and learned Gentleman sought to obscure some of the facts which I sent him in a letter that he received this morning.

As my right hon. Friend the Chief Secretary to the Treasury pointed out in a Written Answer to the hon. Member for St. Ives (Mr. Nott) on 12th November, the central Government forecast at the time of the May 1975 Budget was 11.8 per cent. of GNP for Ireland, 6.3 per cent. for Italy, 4.7 per cent. for the United States, 4.5 per cent. for Denmark, 4 per cent. for the United Kingdom and 2.5 per cent. for Germany. But we can make a closer and more up-to-date comparison by taking the concept of a general Government deficit as defined in United Nations and OECD national accounts, which, broadly speaking, measures the deficits of central, State and local governments. Information on this basis is available for some countries in 1974 from the official sources quoted in the Paymaster-General's reply to the hon. Member for Braintree (Mr. Newton) on 26th June.

Comparable figures for 1975 are obviously not yet available for any country, but it is possible to get some idea of the orders of magnitude likely to be involved—this was the passage that the right hon. and learned Gentleman quoted—by taking the most recent official forecasts of central Government deficits on national definitions and using past experience to adjust these tentatively to a general Government basis. It is not a perfect way of doing it, but there is no perfect way and I made it clear in my Mansion House speech that there were difficulties in doing this other than in broad orders of magnitude.

However, on this basis, the German general Government deficit was officially forecast last summer as 7.2 per cent. of GNP, and that was taking a July forecast of GNP which may well prove too optimistic. It could be higher. In the United States, the Federal deficit in the financial year beginning 1st July 1975 was forecast at $75 billion to $90 billion. An independent forecast by Data Resources Incorporated gives the figure of $74 billion for the Federal deficit in calendar year 1975. On the OECD basis this would be over 5 per cent. of GNP.

The Italian general Government deficit calculated by similar methods would be around 7½ per cent. of GNP in calendar year 1975. Our general Government deficit in this calendar year would be some 5.5 per cent. of GNP on the basis of the Budget forecast, and even if it turned out that the PSBR was as high as the £12 billion often quoted in the newspapers, that would represent as a general Government deficit 6.5 per cent. of gross national product. In other words, high as it is, our general Government deficit this year is running at a rate well within the range of other major industrial countries.

Let me return to the more familiar concept of the public sector borrowing requirement which, so far as I know, is unique to Britain, since it covers all spending and lending by all public authorities, not only central and local government, but also the nationalised industries—a much bigger aggregate than the central or general Government deficit.

The size of the PSBR is likely to be somewhat higher this financial year than I forecast last April, partly because the recession had been deeper than we then expected, and that means less tax take and higher expenditure on benefits. However, there has been no significant addition flowing from policy changes, nor is any addition foreseen. We can finance this exceptionally high PSBR at present without fuelling inflation or producing unacceptable increases in the money supply, because companies are investing less than normal and private individuals are saving a much higher proportion of their earnings than in normal times.

Perhaps I should interpolate here that all over the developed world Governments have been baffled by the exceptionally high increase in the savings ratio. It is running at 13 per cent. to 14 per cent. in Britain as against under 10 per cent. in normal times. One of the many uncertainties which bedevil forecasting at present is our ignorance about the precise reasons for this very high savings ratio and our consequent inability to predict whether and to what extent it will fall as inflation and unemployment fall. [HON. MEMBERS: "Inflation."] It is no good saying that it is just inflation because the savings ratio is much higher in Germany than it is in Britain although the inflation there is lower. There is no secure ground for believing that it necessarily depends on inflation. It is not clear to what extent it depends on employment either. The plain fact is—the right hon. Lady the Leader of the Opposition must accept this—that no one knows why this is so. No one expected it on this scale and, therefore, no one knows precisely how or when it will cease.

Nevertheless, it is difficult to believe that the savings ratio will not fall to some extent as recovery gets under way. It must be our intention to ensure that investment rises. When this time comes, and only then, there will be a danger that the PSBR will crowd out investment if it remains at its present level. A significant part of our current PSBR results directly from the recession and can be expected to disappear when we return to full employment. Even in normal times a substantial PSBR should be expected so that surplus private sector savings can be offset against public sector investment. How large it should be is very difficult to estimate, but it could well be of the order of 4 per cent. of GNP.

However, there remains a substantial gap which the Government must plan to close as recovery resumes, by increasing their revenue, by reducing their expenditure or by a mixture of the two. There is no doubt in my mind that the emphasis must be put on reductions in the planned level of expenditure, as there is little scope for increasing taxation without unacceptable consequences in other areas of the economy.

Mr. Norman Atkinson (Tottenham)

I hope that my right hon. Friend will not be influenced by the noises opposite in the sense that he is now taking an apologetic posture for the size of the public sector borrowing requirement when, in his own words, it is not exceptionally high. If it is only 6.5 per cent. of GNP, he has no reason to apologise to the House. He has certainly no reason to start talking about cuts in the public sector.

Mr. Healey:

I dare say that one of my weaknesses as a parliamentarian is that I am not, perhaps, sufficiently apologetic to the party that happens to be sitting on the Benches confronting me. I do not think that any of my hon. Friends would believe that my attitude on these matters was ever calculated to inspire cheers from the Opposition. I assure my hon. Friend that cheers embarrass me more than they help me. With respect, my hon. Friend did not listen to what I was saying. I was talking about the size of the general Government deficit which is well in line with those of other countries. However, like other countries, we must plan drastically to reduce both the general Government deficit and the public sector borrowing requirement once recovery gets under way. Other countries are planning to do so and so must we. I warn my hon. Friend that if we do not, that big increase in investment, on which he counts as much as I do, will be physically impossible. There just will not be room in the economy for it. This was accepted by the Labour Party conference unanimously because the point was made in the policy document, which was presented by my right hon. Friend the Secretary of State for Energy.

As I pointed out at the Labour Party conference in Blackpool, if all income after tax above £6,000 a year were completely confiscated, the additional yield would be only £450 million—one twentieth of this year's PSBR as I estimated it in the Budget speech. So, if we try to reduce the PSBR by increasing taxation, the main burden would have to fall on average and below average earners who already carry a heavy load.

Moreover, the tax system has become seriously distorted in recent years under successive Governments. I am particularly concerned by the extent to which the balance of taxation has shifted from indirect to direct taxes. Yet at a time when the fight against inflation must take priority, it is difficult to increase indirect taxes, even by what is required to take account of inflation because of the effect on the cost of living. That is why, for example, in my first Budget last year, although I increased the specific duties on drink and tobacco, I did not feel able to increase them sufficiently to take account of the increase in inflation in the last increase. The plain fact is that one always has to strike balances in the light of the priorities of the moment.

The scope for increasing company taxation is equally limited, since much of this would feed through into prices unless it reduced company liquidity and the return on investment. If it did that it would jeopardise the foundation of our industrial policy.

Capital taxes can make a useful contribution towards reducing the PSBR without reducing employment as their resource content is low. But, by the same token, they cannot help significantly to achieve a better distribution of resources inside the economy. This is one of the major objectives that we must seek to achieve in reducing the public sector borrowing requirement. Therefore, there is no escape from it—income tax must be the main source of additional revenue if we seek to reduce the PSBR by increasing taxation.

But income tax is already bearing heavily, not only on the average worker but also on the low paid. I agree with the right hon. and learned Member for Surrey, East about this, but it has been happening under Governments of his colour as well as mine. There are now significant numbers of men and women whose earnings are below the level for supplementary benefit, but who are now being taxed on those earnings. Yet to have kept such people out of tax by further increasing the personal allowances again would have thrown even heavier burdens on the average man and woman. If I had fully restored the real value of personal allowances in my last Budget to the level I fixed in my first, in March 1974, I would have had to increase the basic rate of income tax by a further 3p, to 38p in the pound.

For all these reasons I believe that the Government must plan on reducing substantially the planned level of public expenditure in the years when recovery is assured and the pressure on resources is bound to reach its peak. That is why I warned the House in July that public expenditure programmes could not be allowed any significant increase in the two years beyond the reduced level planned for 1976–77. The precise size and distribution of the required cuts in programmes will of course be announced as usual in the annual public expenditure White Paper. [An HON. MEMBER: "When?"] When it is completed.

Equally important, we must devise more effective ways of ensuring that programmes, once published, are not exceeded in the event. Local authorities in particular, under successive Governments—this happened particularly in the last two years of the previous Conservative Government—have been regularly spending far more in constant prices than central Government laid down for them. This problem has been made far worse by the exceptionally high rates of inflation in the last few years.

For these reasons the Government have decided, as I told the House in July, to introduce cash limits for those programmes which are appropriate for them. These limits will initially cover approximately half of the public expenditure programmes, on the definition used in the public expenditure White Paper—not the whole. It would be ridiculous to apply cash limits to all programmes, as the right hon. and learned Member for Surrey, East proposed at his party conference the other day, because that would mean cutting the old-age pension if people lived longer and reducing unemployment benefit if more people lost their jobs. The right hon. and learned Gentleman did not seem to have thought of that when he proposed doing that.

But the programmes which do not depend on such variable factors will be subject to cash limits in the next financial year. In particular, the local authorities, as my right hon. Friend made clear on Friday, will not only have cash limits imposed on much of their capital spending, which was always subject to Government control, but will also have cash limits fixed for the rate support grant—and at a slightly lower percentage of their total planned expenditure than last year. This should mean that, provided they stick to the planned programmes, there should on average be little increase in the rates or in rate poundage next spring over the country as a whole.

Mr. Graham Page (Crosby)

Is the limit entirely on the rate support grant and not on the expenditure of local government, however it is raised? Am I to understand that it is not an overall limit on local authority expenditure?

Mr. Healey

We have debated this matter many times. If the local authorities stick to their planned programmes, there should be no significant increase in the rates or rate poundage next spring, and cash limits will then be applying to about 75 per cent. of local authority expenditure—that is, to capital expenditure and to two-thirds of current expen- diture. [HON. MEMBERS: "Wands-worth?"] With great respect, I should love to know more about Wandsworth in the future, but I am trying to explain an important and complex point.

As I say, if the central Government attempted to control all local authority expenditure, we would not have local government. One must give local government some freedom to decide how to spend its money. But the fact is that, roughly speaking, three-quarters will be directly controlled by cash limits and the rest will be controlled by the political consequences of exceeding limits and then having to raise the rates so as to pay for the excess.

I believe—and I hope that both sides of the House can agree about this—that the Government have taken steps over the last few months, both in applying cash limits and in setting up the consultative council between central Government and local authorities, which give us the best chance we have had in our history to bring local authority spending under some effective sort of control. I hope that we shall not have any unnecessary party arguments about this because my own experience of local officials and councils is that they are desperately anxious to co-operate with central Government in getting some control over a thing which has been getting totally out of control over the recent years, notably in the last two years of the previous Conservative Government and the first year of our Government, when the increase in local authority expenditure was precisely twice that which had been laid down by central Government.

Details on the application of cash limits to central Government Departments will be published around the beginning of the financial year and the Government will then welcome the opportunity of debating them.

I now turn to the alternative policies put forward by the Conservative Front Bench—if they really justify the name of policies, because the right hon. and learned Gentleman's speech presented the usual spectacle of confusion and contradiction—[HON. MEMBERS: "Reading."]—combined with a complacency in the face of his own record which almost baffles the imagination. Having listened to the right hon. and learned Gentleman on many occasions, I had no problem whatever in preparing to comment on his speech before I have actually heard it. There never was a spokesman the style and content of whose speeches was more predictable.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

We are all very grateful to the Chancellor of the Exchequer not only for giving way but for adopting many of the things that he has been told to adopt by the Opposition Front Bench. However, what is the virtue now in reading out a written castigation which was prepared before he ever knew he was going to adopt these measures?

Mr. Healey

I have known of the measures that I am going to adopt for a long time. The difficulty has been in knowing what views expressed by individuals on the Conservative Benches and groups of Conservative Members I should regard as the policy of the Conservative Party, because there is no single major issue of economic policy on which the Conservative leadership is not deeply divided. Indeed, as the right hon. Member for Sidcup (Mr. Heath) made clear in a notable speech in Rome last week—not Costa Rica—the strident defence of the crude values of popular capitalism proclaimed by the new leader of the Conservative Party have already alienated millions of those who previously supported it.

Incidentally, if Conservative leaders are determined to carry their party political battles into foreign countries I suppose it is better, like the rt. hon. Member for Sidcup, that they confine themselves to attacking one another rather than attacking their country, like the rt. hon. Lady the Leader of the Opposition and the rt. hon. Member for Leeds, North-East (Sir K. Joseph), still playing Rasputin to his hockey stick Tsarina.

The right hon. and learned Member now claims to support the Government's policy for incomes. He claimed it this afternoon, and "firm support" were his words. But only four months ago he and his hon. Friends voted to deny a Second Reading to the Bill to implement it. They tabled a motion declining to give the Bill a Second Reading. But when the right hon. and learned Gentleman had a chance actually to vote against the Second Reading, he and his hon. Friends preferred to skulk in their tent. I can tell the right hon. and learned Gentleman that I shall never go to him for lessons in courage, after watching his behaviour on that night in July when he and his party dodged giving any view whatever on the most important problem facing the nation. Meanwhile, the right hon. Member for Leeds, North-East—

Mr. Peter Tapsell (Horncastle)

Will the right hon. Gentleman give way?

Mr. Healey

No. I was specifically asked by Mr. Speaker not to give way.

The right hon. Member for Leeds, North-East—

Sir G. Howe

The Chancellor must desist from this pattern of falsehood. He knows that the Opposition tabled an amendment setting out precisely their view of the Government's policy, urging the Government to adopt controls on public expenditure and urging them to adopt cash limits and to adopt many of the policies that he is now claiming as his own. Our views are on record. We voted in support of them on that amendment, and the right hon. Gentleman should cease denouncing them.

Mr. Healey

The right hon. and learned Gentleman is too good a lawyer to use the word "falsehood" so lightly. The statement that I made is literally true.

Sir G. Howe

We voted for our amendment.

Mr. Healey

The right hon. and learned Gentleman tabled a motion declining to give a Second Reading to the Bill which made a reality of our counter-inflation policy. That having been defeated, he abstained and persuaded the bulk of his right hon. and hon. Friends to abstain on the Second Reading of the Bill. Nothing can erase the memory of that cowardly night.

On unemployment the Conservative Party is even more divided. Half of the Conservatives tried to win votes by weeping crocodile tears over a level of unemployment which their own policies would double. But the right hon. Member for Leeds, North-East—bless his heart—continues to claim that unemployment is only half as high as it appears and that between September and October it was actually falling.

When the Government took steps in September to moderate the rise in unemployment we were fiercely attacked by spokesmen of the Conservative Party in one of their fits of instant opposition. Yet the main target of their attack, the work creation scheme, had been specifically recommended by the right hon. Member for Lowestoft (Mr. Prior) in a speech a few weeks earlier.

But the conclusive demonstration of their unfitness to form an Opposition, still less to present themselves as potential leaders of a Government, is their position on public expenditure. When they were in office, public expenditure rose over 3 per cent. as a percentage of our gross domestic product. It was 6 per cent. higher in their last year of office than the year before. They fought two General Elections last year on promises to increase public expenditure by amounts of up to and beyond £3,000 million. They have consistently voted, even in opposition, for increases in public expenditure and against reductions made by the present Government—on defence, on Maplin, the Channel Tunnel, as my right hon. Friend pointed out last week. The hon. Member for St Ives, one of their official spokesmen and the high priest of fiscal probity, attacked me only the other day for cutting capital expenditure in the public sector too far.

At the same time they promise to cut taxes. They are going to abolish the capital transfer tax and the land development tax. They are going to reduce the highest rate of income tax to 50 per cent. Incidentally, it is comforting to see that the right hon. and learned Member for Surrey East has abandoned his campaign for flooding the United Kingdom with thousands of Bay City Rollers and is concentrating on managers and professional people who have left the United Kingdom. But once again his mathematics is as unreliable as his judgement. There would be an immediate loss in yield of £200 million if the highest rate of income tax was reduced to 50 per cent.—something which could not conceivably be made up by the return of his well-heeled prodigals.

Yet in face of all these commitments to increases in public expenditure and cuts in taxation, he still claims that he wants to cut the public sector borrowing requirement and cut it now. He had the neck to lecture me about it today. Yet he will not tell us by how much or at what cost in employment or where the cuts in public expenditure must fall.

I am going to do it when the levels of employment are increasing and the cuts are being taken up by demand in the private sector. The right hon. and learned Gentleman wants to cut the borrowing requirement this year and to make savage cuts next year when there is no chance of the slack being taken by a general increase in activity.

He will not tell us where the increases in taxation must come. Until he answers some of these questions and renounces some of the follies he has committed himself to in recent months, his posture will remain one of self-evident and undignified hypocrisy.

The Conservative Party's policies are confused and contradictory because its leadership is deeply divided on every issue of importance to the nation. Rampant opportunism is the only factor that keeps them together and similar opportunism has led the Liberal Party and other fringe groups to join their quarrelling ranks—an attraction which will play for one night only.

I ask all hon. Members who take the country's problems seriously to unite and rout the most unholy alliance ever seen in the history of British politics.

5.33 p.m.

Mr. Graham Page (Crosby)

Because of the shortage of time, I shall not endeavour to follow all the points made by the Chancellor of the Exchequer. I ask the House to turn for a moment to the relationship between the Government and local government and its effect on the economic state of the nation.

The Chancellor of the Exchequer just touched on the question of local government expenditure and the Prime Minister referred to it fairly substantially in his speech on Wednesday. Today's debate will concentrate on economic affairs, but a vital factor in that is the level and trend of public expenditure, and in one year of this Government total public expenditure has gone up by more than 50 per cent. The Prime Minister said in his speech last week: 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. That figure of 25 per cent. of total public expenditure is not surprising. The spending of local government accounts for 30 per cent. of total public spending, and the fact that it accounts for only 25 per cent. of the increase in total public expenditure might be a cause for congratulations to local government.

There are two reasons for increases in local government expenditure. First, there are the increased functions placed on it by this House. That was recognised by the Prime Minister in his speech, but he appears to be doing nothing about it in the policy outlined in the Gracious Speech. The speech says: My Ministers will pursue vigorously their programmes of social reform by legislative and other means, within available resources. That is imposing more responsibilities and duties on local government.

The Speech goes on: They will take energetic action to encourage the provision of more houses in both public and private sectors; and following from a comprehensive review they will bring forward recommendations for future housing finance policy. Again, further duties are being laid on local government. Houses are being transferred from new town corporations to local authorities and there is to be legislation to abolish tied cottages. These actions, together with those stated in other paragraphs in the Gracious Speech, show that local authorities will have yet more duties to carry out.

We must add to that the abolition of direct grant schools, the refusal of the Government to adopt the simplified town and country planning procedures set out by Mr. Dobry in his report and the tens of thousands of people who will have to be employed by local authorities as a result of the Community Land Act. Furthermore, I understand the House is to deal with a Bill from the Labour-controlled West Midlands local authority which wishes to give every conceivable retail trade and service to the local council to carry out.

The second reason for increased local government expenditure is the increase in national wage rates, and the Prime Minister did not acknowledge this in his speech. Local government is labour intensive—teachers and typists, builders and bin men, road menders and the rest. Local government expenditure is greatly affected by national wage increases which are quite out of its control.

The Prime Minister discovered two other reasons for increases in local authority expenditure. The first was expressed in this mixed metaphor: 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. That is a pretty fantastic picture of a mass of chiefs with bureaucratically-bared teeth autocratically lording it over a handful of Indians with sharp-ended tails! If he really believes this, what is he going to do about it? His only suggestion to local authority representatives at Eastbourne was to create more chiefs by setting up a watchdog committee, for every council, consisting of unelected busybodies. This would be totally undemocratic and wholly impracticable. I do not know who on earth thought that one up for him. I cannot believe it was Ministers in the Department of the Environment.

More chiefs, and this time with no teeth—that has been the only suggestion to emerge since the Prime Minister's speech last Wednesday. This is the only solution offered to control local authorities in their possible overmanning at the top as against those whom the Prime Minister described as being as the sharp end.

I do not think that this overbalance is universal, but I am ready to admit that in some places there is overmanning at the top such as in some places in Yorkshire and Leicestershire. Any Government must appreciate that no one takes the trouble to stand for his local council without the determination to see that his council does a good job and provides the services for which the public ask. That is our democratic form of local government. But our current national economic circumstances impose a duty on Ministers to curb the natural enthusiasm of local councillors.

Late in 1973 it was obvious to me in my then position as Minister for Local Government and Development that the new councils, even before they had started their work, were in many cases building empires. I set up an inquiry to look into the new establishment of local authorities and the salaries being offered. It was obvious that some authorities were poaching the staffs of others by offering attractive salaries and were building up establishments which were unnecessary for the functions being transferred to them. That report was to be put before the Pay Board, but there was a General Election before the report was made. A Labour Government took office, the Pay Board disappeared and I think that the report, too, disappeared without trace.

Mr. John Evans (Newton)

Does the right hon. Gentleman accept that during the course of 1973 when the new authorities were forming upon amalgamation they were following the lines recommended by the Bains Report which he and his Government endorsed and put before the local authorities? If there are too many chiefs it is because they followed the Bains Report.

Mr. Page

I completely deny that that was the tenor of the Report. It was a very good Report which, properly followed, would have meant that the local authorities did not increase their establishments or pay the sort of salaries which some of them were doing at that time. What action do the Government intend to take now on that Report? The Prime Minister complains of the situation, but he has given no indication of the action he might take to deal with it.

There must be a partnership between central and local government, particularly in the present circumstances, in the use of total national resources. The Chancellor of the Exchequer mentioned the consultative committee. I fear that it is about as effective in bringing about this partnership as a kitten would be. We have heard not even a squeak from it. The Government should, while allowing freedom to local authorities within an overall limit, fix that limit on the total expenditure of authorities, however raised, whether through the rate support grant or by means of the rates, but not by the rate support grant alone.

The Chancellor admitted that in the past we have failed to contain local government expenditure merely by fixing the rate support grant. If we squeeze the balloon in one place it merely bulges out elsewhere, and the local authorities collect the difference through the rates. Central Government have a right to put a strict limit on the establishment of local authorities and to be firm in negotiating wage scale rates.

Actually, the figures of local government staff might well show that the increase in employment levels is due to a significant rise in the number not of chiefs but of Indians. It is Labour policy to encourage local councils to employ more and more direct labour, not only on building, and this is where the increases are occurring at present.

One of the best ways to reduce local government expenditure is to make local councillors directors rather than operatives, and by that I mean that local government functions should be let out to private contract. House building, road making and maintenance, refuse collection and disposal, libraries, parks upkeep swimming baths, and so on should be let to outside contractors. By that means the staff of local government could be reduced substantially and the work would be done at competitive prices.

Mr. Bob Cryer (Keighley)

The right hon. Gentleman's suggestion is outrageous. In Keighley the house repairs contract was given out to private enterprise and it proved a total disaster. The Conservative-controlled local authority had to rescue the position by setting up its own direct works department.

Mr. Page

That is not so in other areas. I am sorry that the hon. Gentleman represents a failure in local government.

I want to turn now to the prime Prime Ministerial red herring. The right hon. Gentleman said: 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 reorganisation carried through in local government—duplication, double banking, a vastly increased bureaucracy, superchiefs taken on to supervise existing chiefs, and divided responsibility."—[Official Report, 19th November 1975; Vol. 901, c. 47.] The Prime Minister did not complain about duplication when, during the course of local government reorganisation, he led a deputation to me asking that I should divide a district which I had intended should be one, to divide St. Helens from Huyton, which is in his own area. By his reference to duplication and double banking, I assume that he means the two-tier system of local government reform. Labour Government policy at the time was set out in White Paper Cmnd. 4276 in February 1970. It was Labour policy to leave Greater London with the two-tier system, a county with 32 districts. Maud also recommended three metropolitan counties with 20 districts. The Labour Government accepted that recommendation. It did not say "This far and no further". Labour policy created two more metropolitan counties—West Yorkshire and Hampshire—with eight districts. I think that the duplication was merely in the Prime Minister's speech and not in local government reorganisation. Labour policy put half the population of the country into the two-tier system yet the right hon. Gentleman claims that the duplication and double banking have caused this great increase. He did not say that at the time.

Then Labour policy went crazy in the rest of the country. The rest of the country was to be governed by 51 unitary authorities. That would have resulted in disastrous remoteness of local government from the people and an enormous bureaucracy for these large authorities. Our reduction from 1,300 to about 300 local authorities brought them down to the right figure.

I admit there is possible overlapping in functions at present in the transitional arrangements provided for in the Act. These arrangements were to cover the situation where an authority had a good team, say in planning or in road engineering, which it would have been foolish to break up at once. There were therefore arrangements between the counties and the districts to carry out each other's functions.

These have not all proved successful and the Secretary of State has the power to remedy that. He should give careful consideration to the transitional arrange- ments. I am not advocating a Big Brother attitude by central Government to local authorities except on these selected points. It was always intended that the Secretary of State should take another look at the transitional arrangements.

One of the main purposes of local government reorganisation was to reduce the nit-picking by Whitehall over what local authorities were doing in their town halls, particularly on individual capital projects. The desire was to reduce the number of civil servants overlording the local authorities. Indeed, we abolished many supervisory acts by central Government. Why then has the number of civil servants increased by 32,000 in one year since the Labour Government came to office? Why was the number not reduced as a result of local government reorganisation? To take the main Department concerned, why has the cost of the staff of the Department of the Environment increased by £45 million in the year that the Labour Government have been in office? That cost should have been substantially reduced by dealing with local government reorganisation as was intended.

There was nothing wrong with the policies of local government reorganisation. What has gone wrong in some respects is that the Labour Government have failed to enter into the right partnership with local authorities. The Prime Minister's disclosure of his ignorance of local government and its system since last Wednesday has served only to make matters much worse.

5.51 p.m.

Mr. A. E. P. Duffy (Sheffield, Attercliffe)

I am sorry that the right hon. Member for Crosby (Mr. Page) was not impressed by the speech of my right hon. Friend the Prime Minister at Eastbourne last week. I was heartened by it, seeing it as reflecting a more realistic approach to economic and financial matters.

All the proposals in the Queen's Speech, foreign as well as domestic, are based on the success of the Government's economic and financial policies. That is acknowledged explicitly in the Gracious Speech and in the necessary qualification, "within available resources", tacked on to several proposals.

The real test of the Government, and therefore the real political battle, will not come from anything specifically in the Gracious Speech. They will arise from the Government's management of the economy between now and next summer. None of us can be in any doubt about the Government's prime economic objectives. They are: first, ensuring recovery in industrial activity and investment, and thus limiting the rise in unemployment; secondly, bringing about an improvement in the balance of payments; and, at the same time, thirdly, establishing a permanently lower level of inflation. But those objectives will not be achieved unless certain preconditions are met.

For example, the Government must set about strategy-making in the right way. The recently-announced policy following the Chequers conference, of diverting resources to the most promising sectors, suggests that Government economic policy is at long last swinging round in the right direction.

The Government must follow that strategy and cling to it. They perhaps have only just enough time to do so between now and the next General Election. What will impress public opinion is the Government's ability to carry through a coherent economic strategy in the face of all temptations to bow to sectional pressure of one sort or another. Otherwise, the necessary changes to reverse our long-term industrial decline cannot begin.

There is no virtue in going on producing goods for which there is a declining market, or perhaps no market at all. I have the utmost sympathy for those who become unemployed, but goods must sell. Economic well-being lies in producing goods and services that people want and will pay for. Thus, the strengthening of the country's industrial base must take priority over all other aims.

That calls for investment, as we hear on all sides. I was glad to hear from my right hon. Friend the Chancellor of the Exchequer this afternoon that what is needed is not necessarily a greater volume of investment but, as recent research suggests, a change in its direction. Investment implies a higher level of profitability in both the private and public sectors. None of us on the Government Benches need shrink from that, although I think that profitability is a misleading word. Rather, we should talk of internally-generated cash flow. I know that that sounds forbidding, because it is a technical expression, but it is perfectly understood by those trade union representatives who will negotiate only when there is money on the table. I want to see all trade unionists understand it and look for it in their firms. I want them to think more and more in money terms, to want to see as much of it as possible generated by themselves and their firms, and to ask questions, preferably the right questions, when it is not. Without internally-generated cash flow, no business can grow.

It will not be enough to pursue the various objectives of Government economic policy by themselves. They must be reconciled. That will be very difficult. For example, none of us should minimise the complex dilemma which faces the Government when jobs are threatened. It is too easy in a debate of this kind to gloss over the fears and the sheer human misery caused by unemployment. I suspect that tens of thousands of workers are scared stiff of losing their jobs. I hope that we are all fully sensitive to those fears.

Presumably the IMF loan is intended, in addition to the explanation offered by my right hon. Friend the Chancellor, to reconcile the limited rise in unemployment with the limited improvement in the balance of payments until the Government feel that they can hold public and private consumption to a level within our means. But, live within our means we must, and preferably at the earliest possible date. That is an argument that no one understands more readily than a working-class household, because every head of a working-class household has been brought up in the belief that above all one lives within one's means, and one has nothing but contempt for other families that do not.

That is not the only argument. If we do not live within our means our problems will only multiply—not least unemployment, contrary to what I suspect some people believe. Further public expenditure increases will not reduce unemployment but increase it.

Therefore, as my right hon. Friend acknowledged this afternoon, the Government are bound to give the highest priority to bringing their own expenditure under control. My right hon. Friend said a week or so ago that Government borrowing was now running at about 20p in the pound. The public sector borrowing requirement is consequently running at a level that I cannot bring myself to quantify and my right hon. Friend cannot bring himself to reveal. When Parliament is confronted next month with the figures in the public expenditure White Paper and the consequences, we shall all be well aware of the country's predicament. If we have to have resort once again to the IMF, it will be on quite different terms to those for the recent loan. No hon. Member will resent those terms more than I and my hon. Friends shall. That is why I want to avoid that situation.

However, the axe should not be swung indiscriminately. Public expenditure cuts should be undertaken only with the greatest care and selectivity. Personal services rather than productive skills should be a target. Our burgeoning bureaucracy has been nominated as a target by my right hon. Friend the Prime Minister.

Cuts in defence contracts in the aerospace industry are to be avoided. I am mindful of an article in the Financial Times on 17th November this year by Michael Donne, its aerospace correspondent, who stressed the value of our aerospace industry to the country as a whole, to our balance of payments situation, and also in terms of the employment created by that industry. Mr. Donne went on to justify the claims of the aerospace industry with its exceptionally high conversion ratio, and wrote of the industry: Every poundsworth of raw materials it imports is turned by engineering skills into aircraft, engines and other products worth up to 26 times more, while maintaining employment of over 200,000 workers. Therefore, we should be extremely careful not to make men with such skills redundant.

Similarly the temptation to impose temporary import restrictions might be regretted by the Government. Such a policy is bound adversely to affect the domestic price level and will run counter to the Government's policy on inflation. Action on these lines is sure to bring retaliation and a queue at the door of the Department of my right hon. Friend the Secre- tary of State for Trade. There will be scarcely a Member of this House who will not wish to take refuge under the protective cloak of any restrictions in respect of any local industry that finds itself in trouble. I have already hinted as much to the Secretary of State for Trade. I informed him that recently I saw a deputation on behalf of Sheffield's special steels. That delegation feared loss of jobs because of competition from the dumping of cheap Japanese steel. We are well aware of the difficulty of trying to limit the number of "special cases".

Perhaps the highest priority this Session should be awarded not to legislation, or even to any proposal in the Queen's Speech—apart from the important paragraph on economic policy—but to the education of parliamentary opinion in the realities of our economic problems. Members of Parliament need to be given a much deeper understanding of the realities of our economic situation. Without that knowledge, as I know all too well from recent personal experience, we are unlikely to have an honest debate of our real problems and there will be an unwillingness to utter or indeed to accept uncomfortable truths.

I have no doubt that hon. Members are lagging behind the public at present. Ordinary people know that it is no use arguing about the distribution of wealth until we find more effective ways of creating it. The mood of the nation is now very different from the mood only two years ago. People are very worried indeed about unemployment and also about inflation, especially the latter. Yet although the political, social and economic problems faced by the Government are menacing and seemingly intractable, they can be transformed by a modest economic recovery.

Therefore, that is the key to the situation. The Government may have a modest parliamentary majority, but they govern an orderly country which, though weak, is still relatively prosperous. If only Britain can be kept from dissolution and persists with its more relevant and realistic economic policies, a harsh winter may yet give way to a more hopeful future.

6.4 p.m.

Mr. John Pardoe (Cornwall, North)

I shall not follow the tenor of the speech of the hon. Member for Sheffield, Attercliffe (Mr. Duffy) because I wish to move an amendment that stands on the Order Paper in the names of my right hon. Friend and other Liberal Members—

Mr. Deputy Speaker

Order. The hon. Gentleman knows that he cannot move an amendment now. The opportunity for him to do so will come later in the proceedings.

Mr. Pardoe

It is most important that I get the message across to the House that we intend to move the amendment at a later stage, otherwise it might be left out of consideration. It is gratifying to know that the procedures of the House have now been changed to enable us to move a second amendment, as we intend to move it in due course.

I wish to direct attention to our amendment, which deals with the Dock Labour Scheme. I am glad to see in his place the right hon. Gentleman the Secretary of State for Employment since I wish to say a few words about the scheme. I do not wish to debate the subject by the use of political slogans. I can appreciate that there might be some advantages in extending the scheme to non-scheme ports, but the advantages have to be stated and proved.

There is a commitment in the Queen's Speech to extend the Dock Labour Scheme to non-scheme ports and places of work that are not even ports at all. So far we have had no indication why the Government believe that these advantages exist. The facts appear to boil down to two only. The first is the fact that freight traffic in those ports covered by the scheme has been falling. Those ports have lost out from competition by foreign ports and also in competition with non-scheme ports. Secondly, productivity in ports covered by the scheme is low—very much lower than in most European ports with which we are competing and certainly not as high as in non-scheme ports.

This does not necessarily point to the failure of the whole scheme, but it is obvious that the Government must answer these points and come forward with other positive advantages that may show why we are being asked to extend the scheme to non-scheme ports.

The second part of the proposal is infinitely worse. It seeks to pretend that something is a port when manifestly it is not. It must be obvious to any reasonable person that a port requires some kind of access to water. The Secretary of State for Employment is a lover of the English language and he will understand my meaning when I say that this is indulging in Orwellian fantasy.

The proposal arises out of the 1972 dock strike when the dockers claimed the right to jobs in the new cold stores and container bases.

Mr. Eddie Loyden (Liverpool, Garston)

The hon. Gentleman so far has displayed unparalleled ignorance about the dock industry, and particularly the history of the container bases. He has not attempted to analyse the situation in the dock industry that prevailed before any scheme came into existence. He has failed to inform the House—

Mr. Deputy Speaker

Order. I must remind the hon. Member that there is great competition among hon. Members to speak in this debate. He must not make an intervention of that length.

Mr. Pardoe

I thought the hon. Gentleman would realise that in view of the indication given by Mr. Speaker at the outset of the debate, I am trying to compress my remarks on this subject. Although I should be most happy to go into the whole history of the dock scheme and to debate the matter with the hon. Gentleman all day and all night if he wishes, I do not now intend to take up the time of the House in doing so.

I was saying that the proposals arise out of the 1972 dock strike. The hon. Member for Liverpool, Garston (Mr. Loyden) might not agree with that statement, but the dockers claimed the right to jobs in the new cold stores and container bases. That may have been a reasonable course for the dockers to take because they saw warehouses, container bases and cold stores being set up on the very edge of areas in which they had been working. Understandably those dockers felt them to be an extension of the port in which they worked and claimed a right to a job when work in the ports was declining. But it is a different matter when the Government now step in and seek to claim that any warehouse, cold store or container base five miles from any port or navigable waters is to be regarded as a port. It is a most extraordinary proposition to be put forward by the Secretary of State for Employment.

In 1972 a compromise was reached at the cost of £30 million of public money. I repeat that we paid £30 million in good faith under the leadership of the then Conservative Government as a result of a compromise solution between Lord Aldington and Mr. Jack Jones. We thought that we had met the dockers' demands, and indeed I am sure that most people in the country thought that to be the case. Probably they thought that the £30 million was well spent. Now we find that that money did not buy off that demand. Apparently the money was entirely wasted. The demand remains. The dockers still want those jobs and presumably they want to keep the £30 million. I should like to hear what the Secretary of State will do to get the money back. Apparently the Government intend to surrender.

We can afford to take a humane attitude.

Mr. Kevin McNamara (Kingston upon Hull, Central)

rose—

Mr. Pardoe

I shall not give way. Mr. Speaker asked for short speeches. He specifically warned at the outset against interventions and giving way.

Whatever the economic problems of this country, we can afford to be humane and generous to men and women who are employed in what is inevitably a declining industry. It is the kind of industry to which the hon. Member for Sheffield, Attercliffe referred. We can afford to compensate those workers for the loss of their jobs and to pour large sums of money into retraining them for new kinds of jobs. I even agree—some members of the Conservative Party would not agree—that the Government can put money legitimately into the creation of new jobs to replace the jobs lost in the declining industries. We should take those steps which will lead to a more efficient and humane society.

We cannot afford to guarantee to every man and woman in this country that they can stay in their present jobs for the rest of their lives. That way lies economic degradation and desolation. That is what the Secretary of State is proposing to do. We shall be faced, as will any industrial society, with a series of such situations. We must prepare for future shock. People will not like the pace of change that will affect their lives over the next 15 to 20 years. However, change must occur in this country: and faster than in many other countries.

I would have thought that the Secretary of State at some stage in his career was a radical; and that he would then have said that change was his ally. In fact he stands shouting and proclaiming to all the world the words of the title of Anthony Newley's musical show Stop the world, I want to get off". The right hon. Gentleman cannot face the problems of change; he cannot face the problems of future shock.

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

I intervene as this is an important matter. It is right that this important proposal in the Government's programme should be discussed in the House of Commons. Indeed, the Government decided that the matter must be brought to the House of Commons instead of being dealt with under the inquiry system which was set up under the 1947 Act. Therefore, I do not complain about the matter being discussed here. We shall produce our proposals with the Bill, which can be discussed in detail.

However, the hon. Gentleman would be well advised to contain his criticisms until he has seen our proposals. That is the great danger in the course which the Liberal Party appear to be embarked upon in the proposed vote on this matter, if that is what they intend to do tonight.

Some of us have visited the docks in Liverpool, London and elsewhere. We say this to the dockers: we think it is right that the difficult question of the docks should be settled by Parliament and by legislation. The Advisory, Conciliation and Arbitration Service, which helped to end the appalling dock strike in London a few months ago, recommended early legislation. That is what we propose to do. We appeal to the dockers to respect Parliament and to agree that Parliament should settle the matter. If the Liberal Party now opposes the introduction of a measure into the House of Commons to deal with the matter, that is inviting trouble of a different character. I invite Liberal Members to reserve the question whether they will vote on this matter until they have heard the proposals.

Mr. Pardoe

The right hon. Gentleman is wrong. He made a long intervention. I understand his wish to answer the point I made. I am grateful to him for attending this debate. However, I hope that the time taken by that intervention will not be deducted from my entitlement.

It is all very well to say that the Government will introduce the legislation proposed in the Queen's Speech but that we must not discuss it this afternoon—indeed that we must postpone our discussion until the whole matter is debated, when a fait accompli, a printed Bill, is placed in front of us. That is not parliamentary democracy.

The House knew the issues involved before the right hon. Gentleman rose to the Dispatch Box. The right hon. Gentleman appears to have forgotten some of the lessons in parliamentary democracy which I thought he learned under the mantle of Aneurin Bevan in his constituency.

Mr. Foot

I suggest that before Liberal Members vote on the proposals they should know what the proposals are.

Mr. Pardoe

The general outline of what the Government propose is clear. Will the Secretary of State say that he is not proposing to extend the Dock Labour Scheme to non-dock-labour-scheme ports, or that he is not proposing to extend it to inland warehouses? No. We know what the general outlines of the scheme are. It is all very well for the right hon. Gentleman to say that he and some of his colleagues have traipsed up and down the country talking to dock workers, but has he spoken to the warehousemen and to the people whose jobs he will take away? Has he spoken to the workers in the cold stores? He should visit some of the cold stores and face the music. He should speak to them.

Mr. Cyril Smith (Rochdale)

They are just as good members of the Transport and General Workers' Union as are the dockers.

Mr. Pardoe

The first effect of this scheme will be the creation of a monopoly situation. Only registered dockers will be able to handle the work in all our ports. That will create an inevitable potential for disruption in the train of monopoly. That is the first principle which we oppose.

The Secretary of State should see what effect this scheme will have on the prices of imported food. Will the Government say "This is having a disastrous effect on our pay policies. The trade unions will not accept the £6 limit because our Dock Labour Scheme has put up the cost of imported food. Therefore we must ask the Treasury for more money for subsidies with which to hold down the price of food."

The Government are putting forward an extremely conservative solution. They have already indicated that the registered dockers will virtually be guaranteed jobs for their lifetime regardless of the work situation in the ports. The hon. Member for Attercliffe drew attention to the problem of shoring up industries where change is required. We cannot continue to do that. We must find other ways which do not include a guarantee of a job for life.

Has the Secretary of State visited the small ports? Has he talked to many of the dockers in those small ports which are not part of the scheme but which will become so? They do not want the scheme to be extended to their operations. They are not crying out for it either through their trade union structure or through their Members of Parliament.

It is legitimate for the House to consider this important matter in this final debate on the Queen's Speech. This is an appropriate moment to do so. It is time that the House fired a shot across the bows of the Government's scheme long before it receives every full stop and comma, or crossed T and dotted I, long before all the details are filled in.

Mr. Cyril Smith

Is my hon. Friend the Member for Cornwall, North (Mr. Pardoe) aware of the fact—as the Minister certainly is, as I wrote to him on this matter a month ago—that I met in the House of Commons 34 shop stewards, including three branch secretaries, all of them members of the Transport and General Workers' Union, and the General and Municipal Workers' Union, from the perimeter area of the Port of London, who are totally opposed to the Government's plans for the extension of the dock labour scheme? Those people told me that they represented 15,000 members of trade unions who were opposed to the Government's scheme. I asked the Secretary of State whether he was prepared to meet a deputation from those trade unions—

Mr. Deputy Speaker

Order. I am almost forgetting who is addressing the House. Mr. Pardoe.

Mr. Pardoe

I am grateful for my hon. Friend's intervention, which bears out my point that while the right hon. Gentleman may be concerned to secure the jobs of certain people he is supporting he has entirely neglected the jobs of those who work in warehouses and cold stores—the jobs which the dockers will take over. What will the right hon. Gentleman do when these workers knock on his door? I know what he will do. He will do what he has already done. Presumably he will draw another line, an inner circle, another five miles inland. He will say that all the workers in the warehouses and cold stores within that five-mile limit can have the jobs within that inner limit. Sooner or later he will get to the centre of Britain and will be unable to go any further!

I make no apologies to the right hon. Gentleman for raising this matter at this time. The cacophony it has raised on the Labour Benches shows that Labour Members are extremely anxious about the opposition to the scheme which stems from many of their own supporters. The Liberal Party intends to speak out about the people whose jobs are being endangered by the right hon. Gentleman even though the Labour Party has forgotten where its duty to them lies.

I wish to speak briefly on the economic debate and to answer the arguments put forward by the Chancellor of the Exchequer. In a typically bombastic outburst at the end of his speech he said that the Liberals would indulge in a terrible alliance by supporting the Opposition motion. He is right in that we shall support the Opposition motion, and we hope that the Conservative Opposition will support our motion as a quid pro quo, but that is not an alliance. If it so happens that we are allied in believing that the proposals contained in the Queen's Speech are less than are required, either for the present or for the future, so be it, but we are certainly not allied in believing that the Conservative Party has any better answers to these problems than has the Labour Party. It clearly has not.

In the general economic discussion on the opening day of our debate on the Queen's Speech two points emerge from the speeches made by the Prime Minister and the Leader of the Opposition. Each side seems to be saying that what it has done is a little less awful than what the other side did last time. The Conservative Party has a new twist. It seems to be saying that what it will do next time is a little less awful than what it did last time. That prospect does not thrill me with confidence for the future.

The second point which emerges is the pretence that our economic problems are the same as or no worse than those of other countries and stem entirely from what the other side did last year, last week or last month. Nothing could do greater disservice to the country than to pretend that what is happening to the British economy is due to what was done by the previous Conservative Government or what this Government are doing. All right, of course there are short-term effects but this country of ours is in fundamental long-term decline, and the trifling remedies proposed in the Queen's Speech will not help matters.

Before the Chancellor congratulates himself on the success of his pay policy he might at least have the good grace to admit that in the last two General Election campaigns he told the nation and everyone who would listen that no pay policy could work. The Liberals were going round the country saying that the nation needed a pay policy. We told him that he would have to have one. Now he has one, and he claims credit for its success. I am glad that it has succeeded, and I say only that I told him that it would. Had he listened to me and my colleagues he might have achieved a better pay policy.

Now that will have to come in August. According to the Prime Minister, the Chancellor is responsible for the extension of the pay policy in August, when the present pay policy ends. The country cannot afford £6 per week from August 1976 to July 1977. Someone will have to shoulder the burden of telling the nation that. It is time we started preparing our fellow countrymen for the shock of that realisation.

I do not believe that the measures that have been proposed either on the incomes policy and its continuation or on cuts in public expenditure will solve the fundamental long-term problems of the British economy. The only thing that will solve that is a new political settlement. From the evidence which the House has received in Select Committees, particularly on the regional development schemes, and the evidence which emerged from a recent report published by the National Economic Development Office about the major constraints that existed up to 1973 on manufacturing investment in Britain, it can be seen that the reasons given for the lack of investment by industrialists are not economic, not industrial and not financial. A survey was conducted by the National Economic Development Office into industrial attitudes in the manufacturing sector. The survey tried to find out why companies had not invested in the years up to 1973.

The conclusion of the report on that survey for the larger companies reads as follows: In general, companies did not see themselves as having been constrained, in their investment, by lack or cost of finance.… The availability or cost of finance was not a significant contraint for most companies prior to 1973.… Clearly factors such as uncertainty about continuity of Government economic policies applied to a considerable extent throughout the 1960s and the early 1970s. Coming to the smaller companies the conclusion was as follows: The comparatively low level of investment of small companies since the mid-1960s has not been caused by a shortage of funds. Instead, the prime constraining factors for these smaller companies seem to have been; a lack of confidence in the consistency of Government economic policies. That is the issue which we all have to face. We have to find a solution to that problem. British industry will never regain the confidence it needs under either Government until we have abolished a political settlement which constantly works against stability, consistency and continuity.

I end by quoting some words which I hope will strike a chord in the hearts of some Conservative Members at least. They come from a pamphlet published recently by an ex-Conservative Member of Parliament, a much respected lawyer and an ex-Minister—Sir John Foster. He said: Britain, the country with the most primitive electoral system"— [Interruption.] Hon. Gentlemen must listen to an argument even if they do not agree with it. Sir John Foster said: Britain, the country with the most primitive electoral system is also the country suffering the greatest economic problems in the industrialised West. The link is clear for all to see. That clear and unhappy link makes electoral reform an essential element in the regeneration of Britain". That and a new political settlement are the only way to solve this country's long-term economic decline.

6.28 p.m.

Mr. Norman Atkinson (Tottenham)

I hope that the House will forgive me if I do not go into the depths of Liberal philosophy. I look forward to the time when my colleagues from the dock areas are able to participate in the debate and put the record right. None of my hon. Friends, apart from Ministers, has a clear idea of the proposals, so I do not see how we can discuss them in advance of the announcement that is to come. I have read the document but the Government still have to make their decision and their announcement. I have a suspicion that this will be the last of the experimental intrusions. Other recommendations will be made to Mr. Speaker after our experience this afternoon.

During my intervention when my right hon. Friend the Chancellor of the Exchequer was speaking I mentioned the borrowing requirement when I should have been talking about the Government deficit. I wish to put that right to avoid confusion. I was then arguing that the Government should not be embarrassed in any way by the 6.5 per cent. figure—if that is what it ultimately is as a proportion of the gross national product. That is a very different thing, of course, from the borrowing requirement.

The amendment standing in my name and the names of some of my hon. Friends is not, unfortunately, to be called. It sets out succinctly and powerfully the alternative case and alternative policy which we believe the Government should now be pursuing to put right the problems from which the people Labour Members represent are suffering. By the amendment we direct the attention of the House to our argument for an immediate reflation of the economy, but we have taken a great deal of trouble to qualify that blunt statement, recognising all the problems inherent within our system and that there are major difficulties in terms of immediate reflation. Our case is based on the necessity for the Government to control our imports and external trade and, as the amendment says, to re-define the criteria of price control regulations.

We believe that these things are essential to our case because we recognise that by immediate reflation it is possible to worsen the situation and to make money supply difficulties even greater in certain circumstances. It is possible to defeat the Government's policy of bringing down the rate of inflation to single figures by this time next year—a policy to which we subscribe totally—and we do not wish in any way to inhibit that policy. We must find ways of modifying the system to prevent the conversion of reflation into either a higher date of price inflation, or a sucking in of additional imports, which the country cannot stand in the present situation.

We therefore qualify our argument by saying that some modification in the system must take place if we are to implement the conditions that we lay down. We think that that is a total and convincing argument for taking the steps now necessary to reflate the economy and to reduce the level of unemployment. In the amendment we also mention the £6 a week agreement. We do so because we believe that following next August we shall argue the case for the return of free collective bargaining but set against new price criteria. We believe that in that situation it is much more necessary that ever to start free wage bargaining against price maxima. Therefore, we have tried to set out our case in that regard.

We also recognise that the amendment is in no way inhibited by our membership of the European Economic Community, or by the recent IMF loan, or by the terms of our membership of GATT. The Government use these reasons for not accepting the terms we have set out in the amendment calling for the imme- reflation of the economy. The right hon. and learned Member for Surrey, East (Sir G. Howe) said that we were to have a longer haul than months and that substantial cuts were inevitable. He spoke of cuts in the social services and Government expenditure generally. He reiterated that there would be cuts in living standards as a result of decisions already taken by the Government.

I do not know whether my right hon. Friend the Chancellor of the Exchequer had some problems with his collar, but he seemed to be nodding his head. He did not intervene. He did not object to what the right hon. and learned Gentleman was saying. I am sorry that he is not here, because otherwise we could discuss the matter and get a clear understanding from him of the Government's intention.

It is a very serious business indeed, and one of some sadness to the whole of the Labour movement, if the leadership is now saying that the movement has no answers to the unemployment problem and no policy to remedy this situation. If the leadership is saying that we are in a very serious situation, that is an immense challenge to the organised workers.

My right hon. Friend the Chancellor of the Exchequer at least seemed to confirm the suspicions of many of us by saying that now was not the time to reflate the economy. By hints and suggestions he has said what he has said before—that the Government could not intervene in the sense of reflating the economy until such time as the rate of price inflation was down to single figures, on the assumption that this would be by this time next year or later. My right hon. Friend the Foreign Secretary recently said that this would possibly be a much longer period than the Government expected three or four months ago. If that is so we could be well into 1977 before the Government start to take the necessary initiatives that will not only arrest the rise in unemployment, but do something positive about implementing remedial measures to bring it down.

That is an intolerable situation. The TUC, the General Council, and most of my hon. Friends would not go along with such a policy. I think that there is unanimity about the view that we could not possibly survive politically if we tried to ride out this typhoon in that way.

I remember my right hon. Friend the Secretary of State for Employment saying we had to batten down the hatches, face the problems head on and ride through the storm. If that is to take us on to 1977, certainly the crew will not be going through the storm in that fashion. There will be storms of a different kind altogether. The Labour movement will be faced with self-destruction long before we get to that stage unless the Government intensify the measures necessary to put matters right.

I see that my right hon. Friend the Chancellor of the Exchequer has now returned. He referred in his speech to the 1,200,000 unemployed, recognising that the figure was likely to increase to over 1,500,000.

Mr. Healey

I am afraid that my hon. Friend is once again totally misrepresenting what I said. I said nothing about the figures rising to 1,500,000. I said that the rate of increase had been declining in recent months, but that there would be some increase in the early months of next year.

Mr. Atkinson

I certainly do not want to misquote my right hon. Friend. I have never done so before. I have been most precise in referring to whatever statements he has made. I have no desire to do him an injustice, but let us look very clearly at what has been said. We are faced with an extremely serious situation. I hope that my right hon. Friend understands that. We are not nit-picking at all. These are major issues and so we have to get them right.

Am I to take it that the Chancellor of the Exchequer has said this afternoon that the British Labour movement does not know the answer to this situation and that we cannot start the reflationary process long before the figures rise well above the 1,200,000 unemployed workers mentioned by my right hon. Friend? Is it being said that we cannot take immediate steps to reflate the economy? If that is the situation, our credibility has gone. Our credibility has gone if we are to tell workers that we are sorry but we cannot solve the problem of unemployment in this country before other things happen.

If that is what is being said, it is very different from 12 months ago when the Chancellor of the Exchequer said at the Labour Party conference that he was not there to preside over rising unemployment, over massive unemployment, and that it was not the function of the Labour movement to use unemployment as an economic regulator. If we are now to use unemployed people as a means of decelerating the rise in inflation, so that we are down to single figures by this time next year, that is a very serious situation.

Is the message to go out to our movement that, after all we have said for 30 years, after claiming that we understand clearly the remedial measures necessary in a situation like this, we are now completely bankrupt of initiatives, so that we have to ride through the storm, batten down the hatches, make the best way we can, and hope that we can arrive in 1977 intact as a political movement? I do not think that it is on. I do not think that we can possibly do that. I do not think that we can maintain the unity of the Labour movement over that period with the pressure that such a policy is bound to create for those who represent organised workers in this country. Therefore, I hope that we shall have some very serious discussion about the situation now facing us.

I do not think that our industrial strategy was adequately debated on Thursday. I take it, by the way, that the Treasury has won, in the sense that we are to have the publication of the document on public expenditure before we get the Government's statement on industrial strategy—in other words, that the document intended to fix the guidelines is to come first and then the industrial strategy, which presumably will be manœuvred to fit the guidelines laid down in the earlier White Paper. I hope that that situation will be reversed so that we can really talk about the regeneration of British industry.

Mr. John Watkinson (Gloucestershire, West)

I have been following my hon. Friend's argument closely. He seems to be arguing for increased consumption, increased public expenditure and increased investment. Given that the economy is not growing at the present time, how does he intend to finance all these at once?

Mr. Atkinson

I was talking not about increased consumption but about

increased capital investment. I was talking about maintaining living standards,. not increasing them. I do not think that anyone on this side of the House would consistently argue the case for increasing living standards at the moment. I do not believe that we can consume more in this situation, but I do not accept that of necessity we must consume less. That is why we have drafted the amendment as we have.

One of the tragedies of our post-war experience has been the price we have had to pay for the behaviour and performance of the City of London and the influence it has had on the British economy. The fact that the City has made a tremendous contribution in making up the deficit that has always existed in visible trade has put us at the mercy of the very criteria that have been constantly accepted and used by the City. When the City has allocated resources, it has been against our interests, but we have always been in that inescapable dilemma, because our invisible earnings have made up the deficit on our visible account. We have always been at the mercy, therefore, of methods and techniques quite contrary to our own needs as a Labour movement.

This is the price that we have paid over the post-war years for the dominance of the City's monetary policies. This is why we have consistently argued that we must try to get our visible trade balance right. We have to get our manufacturing right so that we can escape from the clutches of the City and the disastrous consequence it has had for us over the years, with all the implications of international borrowing and the effect that has had on our economy. These are the reasons for our placing so much emphasis on getting the manufacturing sector right.

I should like briefly to mention import controls, which are central to our thesis and to every aspect of the argument. Some people say that we cannot use import control in any way because it is a protective device and against the interests of world trade.

The Third World comes into this argument. It is in no way a benefit to Indian workers for us to import goods which have been manufactured in the conditions prevailing there. There is a lot more that could be said about aid programmes. The problems of some of these countries could be solved by a very different sort of aid programme if it ran alongside a policy of planned imports on our part, rather than the importing of cheap products made in very bad conditions of exploitation.

It is not always in the interests of workers in the Third World for the developed countries to import unlimited quantities of cheap goods. We know that in some of the under-developed areas of the world there are places like Hong Kong or countries like Taiwan which are highly capitalised in the manufacture of large quantities of cheap goods. But that is another aspect.

The only way in which a modern industrial country can retaliate against import controls is by itself introducing import controls, by itself introducing planning into its external trade. There is no other way in which it can retaliate in a market economy, whether we are speaking of West Germany, the United States, or any country of the EEC.

Such countries can retaliate only by adopting the same policies as ourselves, and in combination this is an instrument for the growth of world trade.

Even if the retaliation were purely destructive, it would be in the interests of British external trade, because it so happens that we have a massive deficit not only with the EEC, but with the United States, West Germany and Japan. That being so, retaliation—even in the crudest sense—must be to the good of world trade if our deficit is causing us to use these deflationary policies and to cut back the growth of our trade generally.

The arguments against import controls do not wash. They are not constructive arguments at all. Let me suggest one or two more seductive arguments about import planning, which is what we mean when we talk about imports.

If Richard Marsh, the Chairman of British Rail, said suddenly that British Railways would be going German tomorrow and that all our engines and rolling stock would come from Germany, there would be uproar here and so many Early Day Motions that it would be impossible to see daylight on the Order Paper. But if Arnold Weinstock of GEC decided to go German for certain machinery and if a number of other major British companies went German, there would be no notices of motion on the Order Paper. No one would object. But why is it good for Dick Marsh to say "British engines" but not for others to say "British engines" in their planning? Why is there this difference between the private and the public sectors?

I remind the House that it was the Government who took the biggest-ever import control decision when they decided to go British and to have only British-built nuclear power stations. We turned down American nuclear power. That was the biggest-ever import control imposed anywhere in the world. It was a massive decision to build British power stations. We did it in the interests of our nuclear technology and in our manufacturing interests.

The reason why Dick Marsh and others are applauded for refusing to go German is that it makes good planning sense and is good for British industry. In the same way, in every other sector there should be planning agreements giving our people a chance, whether they be in machine tools, the ferrous foundry industry, or wherever. We should say to them "You can have a long, uninterrupted run with no pressure from the world." Let us plan our own store to put right our manufacturing problems. If that is the key to our difficulties, we should have the guts to take these planning decisions.

In getting out of the situation, in reflating the economy, in doing something about reducing the level of unemployment and in doing something about putting right the problems of the private sector about which we have known for years, I hope that we can depend on the Labour Government. Capitalism and the free market economy can never solve these problems. Therefore, we depend on the Government to intervene in the ways that we suggest in our amendment. By this means, we believe that the British Government and the Labour movement can survive.

6.53 p.m.

Mr. William Clark (Croydon, South)

I hesitate to interfere in the internal wranglings of the Labour Party about the economic situation.

After the Chequers meeting, most people thought that the Government were at last seeing a little sense. Not to put it too highly, the message coming from Chequers was encouraging. Now we have the Gracious Speech, and we have to ask ourselves whether it carries out the spirit of the Chequers report, or whether it helps the country's economic situation.

If nothing else, the House welcomes the conversion of the Chancellor of the Exchequer to the view that there is something in profits and that it is economic madness to try to tax people out of existence. We also welcome the right hon. Gentleman's comment that it is impossible at the moment to reflate, irrespective of what the Tribune Group says, and impossible to confiscate the income of anyone earning more than £6,000 a year, which would be only a "one off" job and produce £450 million.

But we should look at the present scene as the backcloth to the Queen's Speech. We have a record number of bankruptcies. We have record high unemployment, with the possibility, as the hon. Member for Cornwall, North (Mr. Pardoe) said, that it will increase when the £6 limit comes in, since there are many firms in the private sector which cannot afford £6 a week across the board.

There is a lack of cash flow in many companies. That does not apply to the public sector as much as we should wish, but it does apply to the private sector. We have dividend limitation, rigid price controls, ever-increasing taxation and the attack over the past 15 or 20 months on initiative. That is the backcloth to any view that we may take of the Gracious Speech.

It is a speech which offers more nationalisation and more monopolies. I do not think that anyone would be against nationalisation if it could be proved that it would give consumers lower prices. However, no one in his senses would advocate that nationalisation has reduced any price. In fact, the reverse has happened. Nationalisation is not a panacea. It is all very well for Government supporters to say, "Hear, hear" when they hear talk of nationalisation. The general public want no more nationalisation.

To their credit, Labour Governments have always spoken up against monopolies, and they have been right to do so. But in the Gracious Speech they are proposing to create two more monopolies, one with regard to the Press, and the other in terms of the Dock Labour Scheme. I agree with much of what the hon. Member for Cornwall, North said about this. I applaud his ingenuity in starting his remarks on dock labour, mentioning in passing the economy, and ending up with a rousing speech on proportional representation. In any event, with the Dock Labour Scheme a monopoly is being created.

From an economic point of view I can see no incentive in the Gracious Speech to the private sector. The reverse is in fact true. But whether Government supporters like it or not, the private sector produces 97 per cent. of our exports, and it is on our exports that we live. It is on exports that the standard of living of every working man and woman depends, and 97 per cent. come from the private sector. The Gracious Speech does precisely nothing for the private sector, and the only conclusion about it that we can reach is that it is irrelevant, irresponsible and divisive.

The country needs more incentives, and they are long overdue. The capitalist system is vilified and castigated by Government supporters for not investing. But what incentive is there for the private sector to invest—and I repeat that it produces 97 per cent. of our exports? Investment will come not, as the Chancellor said, from increased productivity. Investment will come only from profitability. That is the key to investment, and we shall not get investment if we have price control and limitations on dividends and profitability. If we want investment, there is no point in offering the industrialist only doctrinaire Socialism based on the lowest common denominator.

In the Gracious Speech, what has a certain influence on the economy is the question of choice. If the Government of the day control investment, dividends, prices and the rest and they go on to control choice, whether it be in terms of pay beds or education, psychologically this has an effect on our investment potential. I cannot understand why the Labour Government, the Labour Party and particularly the Tribune Group, which always claims to look after the underdog, should not say to a taxpayer "Whatever you earn, at the end of the week you will pay your tax, your PAYE, and your national insurance contribution and whatever you have left, albeit a small amount, you have the freedom to spend as you wish." No Government have the right to say whether a man should spend his net income on bingo or BUPA.

Mr. George Cunningham (Islington, South and Finsbury)

The hon. Gentleman speaks as though business men in this country are bursting with efficiency and enterprise and are being frustrated only by the activities of the Government. Does he not think that we might suffer even more from our business men than from the Government over the years?

Mr. Clark

I am delighted that the hon. Gentleman realises what I have been saying. The business man in this country is a good business man. He is prepared to invest, he is able to manufacture and, despite castigations about the City, he can produce the invisibles on which our standard of living depends. If the hon. Gentleman wants a clear answer, the business man is being hamstrung by this Government because of restrictions and controls.

The Government pay lip service to a mixed economy. It appeared that in his speech the Chancellor was coming round to the idea that possibly the public sector was large enough. However, I believe that the Government merely pay lip service to a mixed economy, because year after year, whenever we have a Labour Government, we have more State control.

Can the Government's policy succeed? It is obvious that we shall have more civil servants and more bureaucracy. There is the continuous cosseting of State enterprises and less understanding on the Government Back Benches of the profit motive. The profit motive applies not only to business, but to every person in this country, whether he be in business or selling his labour. The profit motive should be encouraged. More help should be given to the private sector. Again I ask whether the Government's policy can succeed. I should think the answer is anything but satisfactory.

One matter has been slightly glossed over. When comparing our borrowing requirements and overspending with other countries, the Chancellor glossed over the fact that our rate of inflation is higher than that of other countries. The frightening thing is that our borrowing requirement—the Chancellor has not denied this; in fact, he tacitly agreed—is about £12,000 million per year. That is £1,000 million per month.

We have been to the IMF and borrowed one month's money. The next time we go to borrow another month's money presumably the IMF will want to look at the books. Following the arithmetic through, £1,000 million a month means that we are overspending by £230 million a week, or £33 million per day. Hon. Gentlemen opposite should not shake their heads. That is the arithmetic. I have had it checked. We are overspending to the extent of £1.4 million per hour. That works out at £23,000 per minute, and each second we are overspending to the extent of £380. We cannot laugh that off. That is a frightening amount to have to borrow.

One thing which worries me and some of my hon. Friends and many industrialists and others is that unless we grasp hold of the nettle of doing unpopular things and telling the public, as one Minister did, that the party is over, we shall run ourselves into economic chaos. The only party that thrives and prospers on economic chaos is the Communist Party. Some members of the Government who would like to see the demise of the capitalist system are on record as having said so. We do not think that it would be right for the capitalist system to be buried. But some hon. Members opposite—in fact, some members of the Government—are absolutely determined on their records to get rid of the capitalist system. It is essential that all moderates should realise the precarious position in which we find ourselves. We must stop this profligate spending.

The Conservative Party is often asked where it would cut Government expenditure. It is stupid to spend nearly £1,000 million on food subsidies when many people do not need them. I do not need food subsidies for my bread. Nor do many other people. However, there are some who need double the subsidy on bread and milk. It is stupid to give blanket subsidies for food or housing. The Conservative Party and any member of any party must have compassion, but overall blanket compassion is a waste. Compassion should be directed to the people who really need it.

Mr. Ron Thomas (Bristol, North-West)

Means tests.

Mr. Clark

Means tests, call them what we like. No Government, whether Labour or Conservative, have the right to spend the taxpayer's, not the Government's, money unless the taxpayer gets full value for it. There is no point in taking money from the taxpayer and giving it to somebody who does not need it. That is merely creating a two-tier social structure.

The Queen's Speech, despite the glimmer of hope that we had from Chequers, does nothing to help the economic revival of this country. The sooner the Prime Minister and his colleagues resign, the better it will be for this country.

7.7 p.m.

Mr. John Horam (Gateshead, West)

I support the present direction of the Government's policy and I want to suggest that my right hon. and hon. Friends should press it even more forcefully than they have so far. The situation demands boldness, not timidity. The people of this country will welcome boldness. Indeed, the natural inclination of my right hon. Friend the Chancellor of the Exchequer is towards boldness. If we do not have this kind of resolution from the Government, despite the successes which they may enjoy, they may ultimately fail in the task to which they have set their hand.

A clear strand in the strategy being pursued by the Government is to push additional resources into industry and commerce. I should like them to do even more than they are doing now. I want them to cut public expenditure more quickly than they intend—I mean in the next financial year 1976–77, not 1977–78—and simultaneously to stimulate demand for industrial and commercial products by approximately the same amount as they cut public expenditure.

Some of my hon. Friends have put down an amendment calling for reflation. I partly agree with that, but not entirely, because they do not simultaneously suggest cuts in public expenditure, except in defence. I do not wholly disagree with their objective, but I simply cannot understand their arithmetic. Such demands on the economy are bound to lead to further inflationary pressure. Indeed, in the present situation it would be inflationary disaster.

Mr. Ron Thomas

I hope that my hon. Friend will spell out the economic logic behind his last statement. As the Chancellor pointed out, one of the main reasons for the high public sector borrowing requirement is the high level of unemployment. Is my hon. Friend suggesting that a cut in public expenditure will increase unemployment and the public sector borrowing requirement?

Mr. Horam

On the contrary, what I am suggesting will decrease the level of unemployment, and my last remark before I was interrupted was that I do not agree with my hon. Friends on this issue. The consequence of their policy would be further unemployment, because it would lead to further inflation. That is the logical consequence of what they are proposing. I am suggesting a compromise between the two arguments whereby we cut public expenditure and fill that hole by an additional demand for consumer products, which would reduce unemployment.

From the Conservatives we get an equally fallacious argument: they want to cut public expenditure and leave it at that. If we were to do that alone, we should dig a deflationary hole that would take many mountains to fill and result in many thousands being unemployed. I do not see how one can follow that road without disastrous consequences for the economy and the social fabric of this country.

Instead, we should continue with the general approach towards which the Government are working, but we should do so more resolutely and forcefully, and with more imagination than the Government have so far shown. My right hon. Friend the Chancellor has done a lot to help industry. Last November he put through a controversial Budget which was attacked by many of my hon. Friends, but he was right because fundamentally what he did helped industry where it needed helping.

Since then, my right hon. Friend has brought forward further micro-economic measures to assist industry, but I am more sceptical than he is about the effects of these measures. I do not believe that they will create employment on the scale that he imagines and at the small cost that he thinks will be necessary. More important, my right hon. Friend's measures are essentially on the supply side. They give more resources to industry if it wants to invest but they do not stoke up demand for industrial products, which is the other essential criterion for industrial investment.

What is the situation which faces industry at the moment? My right hon. Friend said that the industrial cycle had possibly reached bottom, but it may not have done. There may be a further fall during the next six months. We cannot be sure about it. But even if it has reached bottom here and is recovering in other countries—we see some expansion in America and some in West Germany and Japan—the process is bound to be slow, and it will continue to proceed slowly over the next year.

Also, how much of that expansion shall we get? We face strong competition from West Germany and Japan, with a low utilisation of their capacity. Our prices are increasing considerably faster than theirs. We are thus at a competitive disadvantage. I fear that we may not get much of a stimulus during the next 12 months from the foreign trade sector.

On the contrary, there could be a net decline in our foreign trade balance, because although we may improve our export position, imports will begin to flow in faster. A major part of the decline in our imports over the last 12 months has been due to destocking. If we are bottoming out and going up again, there will be restocking and that will undermine the foreign trade balance. Equally, if we have to depreciate the pound to allow for an inferior price performance, that, too, will add to the cost of our imports. I therefore argue that, in addition to cutting public expenditure to allow for additional demand in the industrial and commercial sectors, we should consider the case for import controls.

I know that I am entering into a controversial and hotly topical subject, and I am aware of the argument against import controls. I think that there is a possibility of retaliation by some countries, though I do not think that the case for import controls can be made strongly by our major competitive trading partners. I do not think that they would retaliate. I think, too, that import controls would to some extent add to inflation, but so will devaluation of the pound, which is the likely alternative.

In addition, and this is perhaps the most important argument against them, import controls would not help the efficiency of our industry in those sectors where they are imposed. The history of industrial and economic progress over the years has been the history of reducing trade barriers so that competition can flow freely, and it would be a step back to re-erect trade barriers, even in some small way.

What worries me is that we may have reached the situation where we, in the United Kingdom are too weak to take the exposed position of having no clear trade strategy and no element of protection in this area. Indeed, I fear that we may not take the positive measures that alone will secure our continued industrial improvement, if we are not more secure in this quarter and we shall be frozen into an attitude where we dare not take those measures because they will have too many consequences. To use a military term, it may be that we need to retreat a little before we advance again. That would help us to move strongly and purposefully towards the industrial strategy to which we have set our hands.

Professor Nield has made the case for this strategy, and as the months have gone by I have become more impressed by it than I was at the beginning. We are told that the Government will shortly introduce selective import controls. There is a danger in their present approach because they are being selective. As one of my hon. Friends said, if there is a selective approach, there will immediately be a queue of people at the Department of Trade asking for protection for their industry.

I would rather that the Government aimed for the total balance of payments affect which they want from import controls and then allowed particular industries to argue the matter out within that effect, so that if one industry got more protection, another would get less. Nevertheless, much though I regret it in many ways, there is a lot to be said for some form of protection for British industry.

Import controls by themselves would be reflationary, and I would rely on them for part of the effect in making up the gap that I would create by cutting public expenditure more than the Government intend to do. But I would also stimulate home demand, because that is now the bigger part of the problem in terms of total demand deficiency.

The Conservatives will object that if we do that we shall not change the total public sector borrowing requirement. They will say that that will be left untouched if on the one hand we cut public expenditure and on the other reflate a little. That is true, but, none the less, we are improving one important element of the policy, namely, that within the total we are shifting resources away from the Government towards the industrial sector, and that is a shift in the right direction. Equally, as my hon. Friend the Member for Bristol North-West (Mr. Thomas) said, part of the huge size of the public sector borrowing requirement is due to the slump and these measures would reduce that and thereby reduce the public sector borrowing requirement.

On the question of inflation, the kind of the advance on the Government position that I am suggesting would have beneficial effects in terms of an incomes policy. If we try systematically to help the industrial and commercial sectors more than it appears to be the present intention to help them, and if we go for a clear and understood strategy for import controls we shall, I hope, achieve a better rapport with the TUC than might otherwise be the case. The TUC would not like cuts in public expenditure, but it cannot have everything. The CBI would not like import controls. What I have suggested is the way in which the Government should advance on their present strategy.

I want to say one thing on a totally different subject but one which is, none the less, in a way related to what I have been saying. I am becoming increasingly concerned—and reference has been made to this topic by a number of hon. Members—about the effect of tax and inflation on the lower income groups. I have pressed my right hon. Friend about this before and he has said that there is a Cabinet sub-committee monitoring the effect of these evils—a necessary evil, perhaps, in the case of taxation—on the lower income groups. But so far we have heard nothing from it.

The statistics are truly terrifying. For example, we are raising £750 million a year from people earning less than the supplementary benefit level, plus an addition for rent and rates. That is a staggering fact. We are taking 10 per cent. now in taxation from people who are earning only two-thirds of the national average wage, while 10 years ago we were taking nothing from them.

I know that my right hon. Friends have done a great deal to help those who are not working, with a 70 per cent. increase in the pension and, most recently, a new benefit for the totally disabled. I should like them now to consider seriously those who are in work, for it is on them that we ultimately depend for this country's salvation.

7.21 p.m.

Mr. J. Enoch Powell (Down, South)

I hope that I shall do no harm to the hon. Member for Gateshead, West (Mr. Horam) if I say that I am glad to follow a speech which was not only courageous but in many respects clear sighted. I do not agree, for reasons which will presently appear, with his point of view upon import controls, but as a whole I feel that his was an important contribution to this debate.

It may be helpful if, at the outset, I relieve any anxieties which the Government Whips may still have after last night's Division, and destroy any residual hopes of the Whips on the Opposition Front Bench, by saying that my hon. Friends on this Bench and I do not feel called upon to support a motion of economic censure upon the Government moved by an Opposition whose past administration is still a major factor in the inflationary difficulties from which this country suffers—and, moreover, an Opposition who have still not reached the point of being able to answer in an incisive and intelligible manner questions as to the course of action which they are pressing upon the Government.

The Chancellor of the Exchequer, whose absence during most of this debate we have regretted, was more frank than he or any previous Chancellor has been in examining the problem of the public sector borrowing requirement and exposing quite candidly the criteria which he takes into account in deciding how large a requirement it is wise to tolerate in the coming financial year.

The right hon. Gentleman certainly recognised plainly that that figure, that datum, is the crucial and pivotal point in economic policy, but I want to approach it from a different point of view by quoting a sentence from the early part of the Gracious Speech. It was in the foreign affairs part of the Gracious Speech, in fact, in which Her Majesty was advised to say that her Government would maintain their full support of international efforts to…reduce…imbalances of payments. The most remarkable aspect of that statement is that hardly anyone who heard it or read it would regard it as in any way remarkable. Yet it is upon the face of it plain nonsense—nonsense to which we have become so used that our critical faculties have ceased to operate.

There are no imbalances of payments, for the simple reason that a deficit or a surplus on the balance of payments cannot exist, and for the most simple of all reasons: that is, that a balance of payments is not two things, but one. What we are pleased to call the balance of payments is the total of pounds sterling which have been relinquished to acquire other currencies and which have been acquired by the relinquishment of other currencies. It is, in fact, one total which we are pleased, for certain purposes, to analyse into two columns, and then we torment ourselves when, for various reasons, we do not get the figures on either side quite to add up. However, thanks to a most gracious dispensation of Providence, the number of pounds relinquished in any given period in exchange for foreign currencies is exactly the same as the number of pounds which are acquired by relinquishing foreign currencies—for, indeed, they are the same pounds.

If it be objected that I am being too captious in treating the balance of payments as referring to the overall balance of payments, in which, as aforesaid, there never can be, by definition, either surplus or deficit, but that, clearly, the meaning here was deficit or surplus on current account, then the statement is just as absurd and the aspiration to reduce such imbalances equally irrelevant.

Of course it is true that if one compiles figures in two columns by analysing the motives with which sterling is relinquished or obtained, and if one then proceeds to draw a horizontal line across these two columns and denote the part above as the current account and the part below as the capital account, then it will be an extraordinary accident if the totals balance above and below the line. Except by a freak, there is bound to be a deficit on current account and a surplus on capital account or vice versa.

However, by another and even more gracious dispensation of Providence, the deficit or surplus upon what we are pleased to call current account is always exactly equal, though in the opposite direcction, to the surplus or deficit upon capital account, and there is no reason in the world why any particular country should not at any particular time have a deficit or a surplus on one part of its analysis of payments, confident in the assured knowledge that there is a corresponding surplus or deficit, as the case may be, on the remainder. Indeed, the great countries of the western hemisphere—the United States, Canada—would literally not exist as nations today unless, for a great part of the nineteenth and a a good deal of the twentieth centuries, they had had howling deficits on their current account; for a deficit on the current account is the necessary condition of a surplus on the capital account—it is the necessary condition of an inflow of capital.

So we might say to ourselves, applying this cheerful doctrine: if we have a deficit on our current account, that means that the rest of the world is investing in Britain, and what an excellent thing; and on the other hand, if we should happen to have a surplus on current account, then that would mean that Britain was investing in the rest of the world, and what an excellent thing that, too, would be!

Mr. Frank Tomney (Hammersmith, North)

What is the right hon. Gentleman's own position?

Mr. Powell

I can understand the anxiety of the hon. Member, and, perhaps, of other hon. Members, that I should resume my seat, but I am intending presently to apply these general propositions, which are not widely understood—otherwise, statements like this would not be placed in the mouth of Her Most Gracious Majesty.

Mr. Tomney

But what is the right hon. Gentleman's view?

Mr. Powell

I shall hope to carry the hon. Gentleman and others with me in inquiring, as I now proceed to do, why then it is that we are so feverishly anxious about what we call the deficit on our balance of payments, by which we mean our deficit on trade, or sometimes even only our deficit on visible trade? Why is it that we have proposals from all sectors or many sectors of the party opposite for controls upon imports in order to—I am sure that I am quoting—

rectify the deficit on the balance of payments as though that were an evil? Why do we have the Government going round the world—in fact, I do not think they go much farther than the Middle East; at any rate, going to the Middle East and to the International Monetary Fund—to borrow huge sums of money in order, we are told, to pay for the deficit on the balance of payments; that is to say, to ensure, since a deficit on the current account is always equal to a surplus on the capital account, an even larger surplus on the capital account than we would otherwise have? [Interruption.] That is indeed the meaning of borrowing from abroad and of Government borrowing in particular. The Government are increasing the capital surplus in order to counterbalance a current deficit.

In fact, there is a certain sardonic irony in the very same Government, who would not be able to increase net borrowing unless there were a corresponding deficit on the current balance of payments, treating that very deficit which enables them to carry out their borrowing as though it were a most undesirable and regrettable phenomenon.

So, proceeding, I hope, in the direction in which the hon. Member for Hammersmith, North (Mr. Tomney) wishes me to proceed, I inquire again why it is that these proposals are constantly made and these steps are constantly taken. For I fear we have had indications that the Government may, indeed, be contemplating proceeding to direct intervention in our current account by arbitrarily controlling imports. Why are these steps so constantly taken or advocated in order to deal with what, on the face of it, is no problem at all, with something which, as the ship's steward in Punch said of seasickness many years ago, "Does itself"?

There are two causes; for when men behave irrationally they may not do so for reasons but at least they always have causes for doing so. Both of the causes are bad and, therefore, dangerous. The first cause is to avoid payments balancing at a lower exchange rate than that which prevails at the moment, or, to put it conversely, to ensure by intervention that the balance which will take place anyhow takes place at a slightly higher or, indeed, substantially higher—my argument does not depend upon degree—rate of exchange for sterling in terms of other currencies than it otherwise would.

It is a profound fallacy to suppose that there is anything to be regretted in a fall in the exchange rate. A fall in the exchange rate mirrors one or both of two things. It either mirrors a decline in our real terms of trade, or else, or also, it mirrors differential inflation in this country compared with inflation in the other countries with whose currencies we are comparing the exchange value of our own. On neither of those grounds is a fall, if there be a fall, in the exchange rate a sign that something is wrong with us or that the fall ought to be suppressed and forcibly reversed.

If a fall in the exchange rate reflects a fall in the real terms of trade—if it really means that an item we are producing at the moment exchanges in Toronto or Timbuctoo for less than it formerly did—that is due to an alteration in the economic pattern of the world as a whole. The sooner and the more accurately we know about it, the sooner and the more accurately we shall adapt and alter our behaviour and productive efforts to fit those changes in the real world of which, in the end, we are the servants and not the masters, whether under a Labour Government or under any other sort of Government in this country.

However, for the most part a fall in the exchange rate, certainly in our recent experience, mirrors not a real deterioration in our terms of trade or an alteration in world supply and demand for those items which our brains and hands produce for export, but differential inflation. But the fact that differential inflation is mirrored by a falling exchange rate does not make us any the worse off.

One can prove that by simple experiment. Suppose that the quantity of money in circulation in this country were multiplied by 10 overnight. Everyone knows what the exchange rate, if free, would be in the morning. The decimal point would be moved one place to the left. Yet a given quantity of British goods, tourist attractions in this country or anything else you, Mr. Deputy Speaker, like to specify, would exchange in exactly the same way as the day before for the same quantities of what we wish to procure from the rest of the world.

Thus, to suppress or distort alterations in the exchange rate is pure evil. It is simply denying ourselves the knowledge of what is happening in the real world or denying ourselves the knowledge, so far as it is worth having, of the differential rate at which inflation is proceeding here and elsewhere. The fall in the rate is, in short, either harmless or beneficial.

It is a misconception to suppose, as has been said at least once or twice in this debate, that a fall in the exchange rate is inflationary. A fall in the exchange rate increases the price of imports relative to everything else and the profitability of exports relative to everything else, but it does not cause all prices to rise. It simply shifts the internal price schedule in the country, making some items dearer and others, therefore, cheaper in real terms, in such a way that we can adjust ourselves—indeed, it is the mechanism by which we do continuously adjust ourselves—to the changes and demands of the real world.

However, there is another reason which prompts the attempt of Government by the use of their power and resources, to intervene in what is called the balance of payments. Certainly it is one of the motives with which the right hon. Gentleman the Chancellor of the Exchequer goes a borrowing. Here we come at last to the one really deplorable aspect of the British deficit on the balance of payments or, if we like so to describe it, the British surplus on capital account. It is that so much of the inflow of capital into this country—so large a part of the capital surplus which balances the current deficit—is not inward investment by the rest of the world in British industry. It is not even voluntary lending by the rest of the world to British borrowers, because the rest of the world has decided that this is the best place to put its money. It is a forced or politically-contrived loan from the rest of the world in order to sustain the level of public expenditure in this country at a point which constantly exposes this country to the risk of a recurrence of runaway inflation.

And so I return to the key point in the Chancellor of the Exchequer's speech. The right hon. Gentleman knows perfectly well that with a net borrowing requirement of £9,000 million or £12,000 million, he is walking a knife edge. That might not matter—some of us might be so callous as not particularly to mind whether the right hon. Gentleman was walking a knife edge, but he is leading the country along the knife edge. A brief period in which he fails to do what he would have us believe he is substantially doing at present, namely, covering that deficit from internal savings or external borrowings, would plunge us back into a higher rate of inflation than we have yet experienced. The right hon. Gentleman knows that. A great many right hon. and hon. Members know that perfectly well. We are gambling with a risk of inflation far more severe than what we have experienced. We are gambling with all that that would mean not merely to our economic but to our social structure when we envisage the continuation of the public sector borrowing requirement at the sort of level which the right hon. Gentleman is apparently still prepared to contemplate for the coming financial year.

The situation is still malleable. Unless habits in the Treasury have altered in a way that I do not believe that they have, there is still time for a major influence upon the shape of public spending— capital, I think, much more than current—to be exercised by the Chancellor of the Exchequer and the Government in the months immediately ahead. The Chancellor has the duty—it is an overriding duty—to diminish the scale of risk which he is taking by the size of the net borrowing requirement he maintains. In asking him this I ask neither of him nor of Labour Members that they should abate one jot of their political aspirations. I am not arguing for or against a transfer of more or less of the national wealth or national resources to or from public or private control. I am only saying that it is the Chancellor's duty—and he knows that it is—to ensure that that transfer, if it is the political will of the Labour Party that it should take place, takes place at such a rate that it does not bring with it the risk of financial and social chaos.

At the beginning of this Parliament, a year ago, my hon. Friends and I said that we recognised that in making any advances in that direction the Chancellor of the Exchequer would find himself bereft of some of his fairweather friends and would need all the understanding and support which this House and the country can give him. I say again this evening that as this is the overriding duty of the Chancellor and the Government, the overriding national requirement, in so far as the Government and the Chancellor fulfil it, he shall have what support we can give to him.

7.43 p.m.

Mr. Eric S. Heffer (Liverpool, Walton)

The whole House will agree that once again we have had a very important and interesting speech from the right hon. Member for Down, South (Mr. Powell). Some of us have been treated to his logic for many years. At times we have agreed with much of what he has said, but at other times we have found ourselves in fundamental conflict with him.

I remember the right hon. Gentleman advocating in the House in many past economic debates that we must have the floating pound. He seemed to imply that if there were a floating pound this would, not entirely but within reason, solve most of our economic problems. We have the floating pound now, and our economic problems remain.

Of course, if we cut public expenditure in the way the right hon. Gentleman suggests, no doubt we could balance our national budget—although he seems to argue that it is of no consequence to be concerned with the deficit on our balance of payments. However, something that apparently does not concern the right hon. Gentleman seems to concern just about everyone else in the House. For many years we have heard about almost nothing else but efforts to deal with the deficit on the balance of payments, and the great agonies that we have gone through in the House were precisely because of efforts made in that direction.

We can, of course, cut public expenditure to the bone. We can then have mass unemployment. But surely no one in the House is suggesting that for one moment. It is true that it would solve the problems in one sense, but do we want to solve our problems in that way? I should have thought that no hon. Member who was concerned with ordinary people and their lives would ever suggest a policy which would lead to misery and poverty among masses of people who are in any case, already suffering much too much from the present high level of unemployment.

Mr. Powell

The hon. Member has been very courteous and I apologise for interrupting him. It is only to say that surely he appreciates that the transfer of a block of resources from private to public control or vice versa does not diminish the quantity of them.

Mr. Heffer

I accept that absolutely—if it means just that and that only. But I am not certain that that is precisely what is meant in relation to the right hon. Gentleman's argument.

I did not come to the Chamber purely to debate with the right hon. Gentleman, obviously, and I want to turn to other matters. I agree entirely with my right hon. Friend the Chancellor of the Exchequer that we are in the most serious economic crisis that this country has known since before the Second World War. We have, as it were, two crises in one. On the one hand, there is the world crisis, which affects us. On the other hand, we have the peculiar British crisis grafted on to the world crisis.

The British crisis is very much due to the fact that our capitalists, as capitalists, have actually failed. Whereas capitalists in other countries were not taking the maximum out in profit and were putting a great deal back into their companies and industries in the form of investment, machinery and growth in technology, our capitalists were taking a maximum out without putting very much back. [HON. MEMBERS: "Rubbish.") Hon. Members may say "Rubbish", but it is a fact that we are now taking out of Cammell Laird, for example, machinery that was installed in 1904. That is pretty outdated, and I should have thought that if we went to Japanese, American or continental shipyards we should find that they had got rid of that sort of machinery years ago. That is one of the reasons why we are in our present situation.

Mrs. Elaine Kellett-Bowman (Lancaster)

Can the hon. Gentleman guarantee that if new machinery is put in it will be operated by the unions concerned, unlike some of the steel plant and unlike the grain terminal not far from his home?

Mr. Ridley

Answer.

Mr. Heffer

I trust that the hon. Gentleman will not keep interrupting me. If there are to be these interruptions there will not be much opportunity for other hon. Members to speak in the debate. The answer is very simple. The hon. Lady knows that the grain terminal is now working. If there were problems with the terminal, they were caused by the intransigence not only of the dockers but of the employers who were not prepared to get round a table to solve the problem. Some of us argued for a solution at the very beginning of the argument. The men are not holding up the grain terminal and new technology is being used.

In her speech to the Conservative Party Conference, the Leader of the Opposition said that this country's problems were caused not by too much capitalism but by too much Socialism and that Socialism had been intervening and ruining the economy. In that case, the Governments she has supported have been first-class Socialists. They have intervened as much in economic matters as any Governments we have ever had and, in some respects, even more. We have not had Socialism, we have had controlled capitalism. That is what we have now, and it is much closer to the corporate State than to Socialism. We have to decide whether to go back to the type of society for which the Leader of the Opposition has been arguing, or to go forward to a genuinely planned Socialist economic system.

Mr. Nick Budgen (Wolverhampton, South-West)

Communism.

Mr. Heffer

The hon. Member is like a little pip-squeak. Every time you push him with your finger, he shouts, "Communist". Some hon. Members expect more than that sort of nonsense in arguments.

I am trying to argue a very serious case in relation to this country's problems. One hon. Member opposite has said that the motive force in a capitalist society is profit. If we have restraints on dividends and profits, together with price controls, then sooner or later the capitalist will not invest because his profit has been removed. The logical answer is not to go back to the system which has failed us up to now anyway, but to advance beyond that to a society with planned investment where we put our industries where they are required in a planned way and create a system of full employment. Unlike the hon. Member for Cornwall, North (Mr. Pardoe), I do not believe that our economic problems will be solved by proportional representation. It will need much more than that.

I believe that we have to move stage by stage towards a national planned Socialist policy. I must say to my colleagues on the Front Bench that the Chequers statement was a retreat from what we said at the Labour Party Conference. The Chancellor of the Exchequer is very keen on selectively quoting the part of the document "Labour and Industry" which says that we cannot have a general reflation. I will quote to him another part, typical of many, in the document. It says: The Government must also, we believe, give much greater emphasis to planning Britain needs a new economic and industrial plan. The Chequers statement says: One response to the problem might be for the Government to get in hand a new National Plan. The likelihood is that any plan which erected a single complete and mutually consistent set of industrial forecasts and targets would rapidly be falsified by events and have to be discarded. etcetera, etcetera. On the one hand we have members of the Government in the NEC endorsing a document calling for a national plan while, on the other hand, the Chequers statement says we are not to have a national plan. I just point this out to Ministers because they ought to know that there is an inconsistency in this matter.

Import controls are a matter of great importance, and although I do not think they are a Socialist solution to our problems, we must realise that in our transition to a policy of planned investment and growth and the development of the National Enterprise Board, which, I fear, will not be used as effectively as we had hoped, we shall need some immediate, concrete policies to deal with the rising level of unemployment. Import controls, selective up to a point, are an immediate way of, if not bringing down the level of unemployment, at least stopping it from rising. We ought to have a 15 per cent. surcharge on about three-quarters of the imports of manufactured and semi-manufactured goods and there should be quota controls in relation to other sectors such as textiles, footwear and television tubes.

Some hon Members may say that this will lead to retaliation, but in America in 1971 they had a 10 per cent. import surcharge for a number of months. Denmark has had a similar surcharge and Sweden had a 15 per cent. surcharge. Even Japan, which has never suggested that it has import controls, has environmental and safety regulations through which it has controlled imports since the Second World War. There are plenty of examples of countries which have controlled imports for a period as a necessary measure to deal with an immediate problem.

We should be doing that now. We should have had a statement about it from the Government today, and I am sorry that we have not. Import controls could be imposed even within the GATT and EEC provisions. In one respect I agree with the CBI for once. It said that if other countries were operating import controls for a temporary period Britain should do something similar. The TUC has the right approach, too, but I would go further than the TUC in order to save more jobs and create more work.

I am absolutely horrified at the complacency which seems to have developed on the Government Front Bench over the growth of unemployment. I upset one of my hon. Friends the other day when I said that a period of unemployment for the Front Bench would do it the world of good. It would clarify the minds of my right hon. Friends about unemployment. There would be nothing better than a bout of unemployment to drive home to them what unemployment really means. Most hon. Members have never been unemployed, although I konw that some of my hon. Friends have experienced it. It is a tragedy for the individual and the family. The Labour Government and the Labour Party have always been dedicated to a policy of full employment. We therefore argue against public expenditure cuts because we do not want unemployment to go up.

Our amendment says that we want no cuts in essential public expenditure, apart from defence where we would like to see less spending. We do not say that all public expenditure is necessary, and it is not. There has been an enormous growth in local authority public expenditure, and much of it totally unnecessary. We do not want cuts which are likely to throw people out of work. I must tell my right hon. Friends that if such cuts are proposed they will not go through this House easily. We shall not sit idly back and watch unemployment grow.

My right hon. and hon. Friends have an enormously difficult job to do, and I sympathise with them. It would not be a bad idea if one or two of them were moved around so that they could have a rest, as well as for other reasons. To be in that sort of job for a long time does no one any good, and it is not good for the country.

I believe that the Government could take more positive action to deal with the situation in the construction industry. On Mersey side alone, 10,000 building and construction workers are unemployed. Of that number 3,000 are highly skilled craftsmen. The Chancellor said that in the future when the upturn comes perhaps there will be financial aid to get these people to move to other parts of their country. What does he expect them to do? Are they to take their homes on their backs? It is all very well talking along those lines—

Mr. Loyden

Is my hon. Friend aware that out-of-work building and construction workers on Merseyside represent more than 50 per cent. of total unemployment in the construction industry in the North-West? Does he realise that the figure is running at about 13,500, yet there are 22,000 people on the waiting list for houses?

Mr. Heffer

My hon. Friend has made precisely the point I had intended to make about the housing situation. The Government must look very closely at the construction industry and at the need to pump more money into it in order that more houses can be built and work provided.

We do not criticise the Queen's Speech for what is in it but for what has been left out. We support all the proposals which will advance us along the road towards the type of egalitarian Socialist society in which we believe. We shall support the measures that were promised in the manifesto. But we deplore the fact that the Government basically are not getting to grips with the economic crisis and are not dealing with it in a Socialist fashion. That is why we tabled our amendment, and that is why, had we been given the opportunity, we would have voted for it this evening.

8.6 p.m.

Mr. David Price (Eastleigh)

I thought that the hon. Member for Liverpool, Walton (Mr. Heffer) was at his best tonight. I accept that he is a full-blooded Socialist, but I think that much of what he said followed logically. Not being a Socialist myself, however, I propose to move in a different direction from the hon. Member, but I think that at least we understand each other. I appreciate his deep feelings and anxiety about the employment situation. Many of us who are not Socialists share those anxieties. Equally, I hope he understands that inflation at 26 per cent. a year brings its own personal agonies, which include growing unemployment. In many ways unemployment and inflation are two sides of the same coin.

I do not intend to attempt my own tour d'horizon of our economic situation. Instead I shall take up only three points from the Gracious Speech which I hope will tie up with what has been said by other hon. Members. The Gracious Speech says: Proposals will be put forward for a major review of the practice and procedure of Parliament. In the context of our economic performance and of seeking a better and more effective control of public expenditure through the economic, social and political objectives of Parliament, our present time scale of events is a total nonsense.

In a normal Session, Parliament is opened and the Government present the Queen's Speech at the end of October, laying before us all the Government's proposals and general aspirations. We then have to wait until the early New Year for the Estimates, the details of how the proposals will be paid for. The White Paper on public expenditure, the key document, which looks five years ahead on a rolling average, appears at the end of February or in early March. The Budget, which sets out how we pay for all these measures, does not appear until April. It would be far more convenient all round if these four events happened more or less simultaneously.

I suggest, therefore, that when we set up a committee to look at these matters, very urgent attention should be given to this matter. Then we should have a much more meaningful and intelligent discussion in the House. This is a non-party point which I hope will appeal as much to those on the far Left as to those on the Right.

My second point concerns planning agreements. The Gracious Speech says: My Government will also embark on a series of Planning Agreements with large companies in selected key sectors of industry". I believe that the hon. Member for Walton praised that idea.

As a seeker after truth, I ask the Government what they mean by "planning agreements". The Secretary of State for Industry said last Thursday: Sectoral planning is, of course, a key component in our approach to an industrial strategy, but a sector cannot make, cannot keep and cannot deliver an agreement. Only a company can do that, and only a company can benefit from the relationship with Government that a planning agreement entails, and from the stable framework that planning agreements can provide—and, incidentally, from the reciprocal information provisions".—[Official Report, 20th November 1975: Vol. 901, c. 187–8.] What do the Government mean by that? Any investment decision maker, whether in the public or the private sector, naturally looks at the potential return on capital before deciding to make an investment. Are the Government proposing to guarantee a minimum return on capital to those firms which make planning agreements with them?

Let us look at the sort of factors that are considered by a would-be investor in deciding whether to invest. He obviously considers the market projections at home and abroad. Do the Government think that they can contribute to that? The would-be investor considers the projections of world trade and domestic economic trends, the probable rates of inflation, trends in the exchange rates of sterling, changes in British and other countries' tariff policies, changes in world commodity prices, and what is likely to happen to wages. Can the Government offer any guarantee on any of those factors? I suggest that they cannot, and therefore I wonder where is the reciprocity in the proposed planning agreements.

I cannot see how the Government can even pretend to do it unless they return to the old illusion of a detailed national plan in the style of Lord George-Brown. But the idea of a return to that style of planning has been rejected by the Government, as came out very clearly in paragraph 10 of the White Paper on the Chequers talks. What will the planning agreements contain? Above all, what is the reciprocity the Government claim to be able to offer to firms which make company agreements, no doubt with the Department of Industry in most cases? We should know, because Minister after Minister keeps returning to the importance of these agreements.

The third feature of the Gracious Speech to which I wish to draw attention relates to industrial democracy. We read: My Ministers will continue to encourage the development of industrial democracy in both public and private sectors. Ministers have been using the phrase a great deal in recent months. What do they mean by it? It can mean many different things to different people. Many of us are by no means unsympathetic to some of the ideas that can be contained in that broad expression, but I hope that the Government do not simply mean, as they appear to mean, two-tier boards on the German pattern and worker directors on the supervisory board. It is a grave mistake to put the two issues together.

The question whether it would be right to change our company law and have two-tier boards and the question whether by law there should be worker directors should each be examined in its own right. Perhaps those questions come together eventually, but they should not do so in the first instance. There are substantial objections to both which do not come entirely from management or the Conservative Party. I know quite a number of trade unionists who would object to worker directors. I counsel the Government to move carefully in both areas, and at least to try a few experiments before embarking on general legislation.

If by their use of the phrase "industrial democracy" the Government are trying to say that all is not well in human relations in industry and that we must try to find ways to improve those relationships, to make them more meaningful, I am entirely with them. I have been saying so in a quiet way for the past 30 years. My maiden speech more than 20 years ago was on precisely that theme.

Although the problem in industry remains, I believe that it is no longer limited to industry and that it covers much of our national life. There is an increasing alienation of ordinary people of all types from our emerging society and from what they consider to be the Establishment. The feeling of "them" and "us" is no longer a peculiarity of the shop floor in a large engineering works. It is more and more the normal feeling of ordinary people throughout the country about that amorphous thing, the Establishment, the "them" who are increasingly impersonal. People feel more and more remote from them, whether "they" are making decisions about the rates, the problem of the doctors, or the self-employed.

That is why we as Members of Parliament have so many constituents coming to see us or writing to us on matters which are well outside our jurisdiction. They come to us because they do not know to whom else to go. We appear in a curious and vague way to represent authority, or at least to have access to authority. A measure of the alienation in our society is the vast increase in the problem cases which we have and which we did not have 20 years ago, because people then recognised that they were not within our province.

There is also the problem of the revolution of rising expectations. That expression used to be applied to the underdeveloped countries, but it now applies even more to the developed countries. The public have been unprepared for economic setbacks. They have expectations of affluence unrelated to past or present performance. There seems to be an assumption that it is one's right, by virtue of citizenship and nothing else, each year to be materially a bit better off than one was the year before, irrespective of one's own efforts or the efforts of one's company or organisation, or one's country's efforts. The old cry of "Jam yesterday; jam tomorrow; but never jam today" has been replaced by the cry of "Tomorrow's jam today, and we'll strike if we don't get it".

It follows that the heart of our inflationary problem lies not in economics, but in people's attitudes. There is the allied problem of how to re-establish legitimate authority, the power to say "No" and the certainty that the decision "No" will stick. To my mind that is largely what the vague phrase "industrial democracy" is about—re-establishing legitimate and acceptable—I emphasise "acceptable"—authority.

Therefore, we must try to strike a new bargain—a new social contract, in the language of the present Government—but it must be with all the people and not just with the TUC or the CBI. I disagree with the Government's putting too much emphasis on the machinery of the trade union movement in discussion about industrial democracy. I hope that the Government realise that in people's minds the machinery—the Germans would call it the "apparat"—of the trade unions is as much "they" as the "apparat", of big business or the "apparat" of central Government; and they are alienated by all of them.

I suggest that the answer to this difficult problem is not to be found in a new social contract between Government and TUC. I am in no way opposed to good relations between Government and TUC. I believe that the social contract must be firmly based on realities and not merely on expectations. But those realities must include the satisfaction of people's innate needs.

I suggest three dominant innate needs in all of us that must be accommodated in any effective social contract, needs that are denied in our present arrangements. I refer first to identity, the opposite of anonymity; secondly, to stimulation, the opposite of boredom; thirdly, to security, the opposite of anxiety. Unless a new social contract satisfies these three innate needs, it will not stick. Alienation will continue to grow. Legitimate and acceptable authority will not be restored.

To my mind this new approach—which is rather more fundamental than the approach of the Liberal spokesman, who sees these things in terms of electoral arrangements—is basic to our problems. It must be seen on the shop floor as well as in the villages in which people live. If the present alienation of rulers from ruled continues its downward course, the days of parliamentary democracy could well be numbered.

There is no inevitability about the demise of parliamentary democracy. But with a 26 per cent. annual rate of inflation, time is running short. I beg the Government to realise that these matters are urgent and that the problem is wider even than the problems of industry. The national problem is even larger, but in many ways it is similar.

Having said all this, I remain an incorrigible optimist. I could not have survived 20 years in this House unless I were an optimist.

8.22 p.m.

Mr. E. Fernyhough (Jarrow)

I wish I could deal with many of the points raised in a thoughtful speech by the hon. Member for Eastleigh (Mr. Price), but I wish to keep my remarks brief. However, I recommend the hon. Gentleman to go to the Library tomorrow and to obtain a copy of a book by Aneurin Bevan called "In Place of Fear". He will find in that volume answers to some of the problems he posed.

The Conservative amendment was moved by the right hon. and learned Member for Surrey, East (Sir G. Howe). The amendment dares to say that the Conservatives humbly regret that the Gracious Speech contains no practical policies to solve the United Kingdom's serious financial and economic problems, but proposes measures which only increase the powers of a centralised bureaucracy and diminish the freedom of the citizen. But we must remember that the right hon. and learned Gentleman was one of the major pilots of the EEC legislation. He and his right hon. and learned Friend the Member for Hexham (Mr. Rippon) told us what a wonderful transformation would take place in the whole of our economic and financial circumstances once we were part of this great brotherhood. Never before have two former Ministers so misled this House.

We are now grappling with a balance of payments problem, the largest part of which derives from our relationship with the EEC. My right hon. Friend the Chancellor of the Exchequer said today that in general we had reached a balance in our trade and had reduced our oil deficit by a third. But what my right hon. Friend must know is the fact that in the first nine months of this year our trade deficit with the EEC was £280 million more than it was in the first nine months of last year. Our deficit with the EEC amounted to £1,900 million. Unless we can drastically reduce that figure and unless the rest of the Nine are prepared to play ball with us, we must back hook, line and sinker those of my hon. Friends who suggest that we should introduce import controls.

When I examine the trade figures of the EEC compared with the United Kingdom figures, I become a little upset when I see the difference in the amount of trade that we undertake with China, for example, and the trade which the other eight countries in the EEC carry out with that country. That also applies to our respective trade with the Comecon countries. The other eight members of the EEC, without us, do 10 times more trade with COMECON than we do; they likewise do seven times more trade with China than we do. It is a fantastic situation that in pursuing the cold war we are turning up our noses at trade with Eastern countries. The Germans, the French and the Italians spend a great deal of time in obtaining trade agreements in Peking, Moscow, Sofia, and in almost any other Communist capital. Such trade would afford substantial help to our Exchequer.

I hope that from now on we shall make the same attempts as our EEC colleagues to get into Communist markets. Germany for many years has taken great advantage of the situation. We must remember that initially West Germany said that it would have no communication with Eastern countries, but they have always done more trade with Eastern countries than the rest of the so-called free nations in Europe put together.

I now wish to turn to the proposals to nationalise the shipbuilding, ship-repairing and the aircraft industries. Some Conservative Members have stressed the point that the aircraft industry has had a marvellous export record. But we all know that, if it had not been for Government investment, there would be no aircraft industry. Since the end of the war hundreds of millions of pounds of public money have been ploughed into that industry. If the industry produced a plane that could fly, it claimed that aircraft as its own. But if the aircraft was unsuccessful, the industry put it on the Government's plate. Surely in view of all the money we have poured into the aircraft industry, we now have a right to take it over.

I am particularly pleased that we are taking over the shipbuilding and ship-repairing industry. I believe that risk capital cannot provide the funds necessary if the industry is to be updated and made really competitive so as to be in a position to compete effectively in a world where our percentage of gross annual shipbuilding tonnage is becoming lower and lower.

The men working in the shipbuilding and ship-repairing industries were disappointed that the Bill was not dealt with in the last Session. I am sure that they will be delighted that it will be dealt with this Session. They will welcome the Bill with every enthusiasm. It is important that a few of the principals in the shipbuilding industry have already indicated that they will be prepared to co-operate in ensuring the success of the nationalised industries.

No one represents a constituency with more experience of unemployment than I do. For 29 years I have dealt with this problem, which we have never overcome. I reiterate this warning: we can discuss democracy as much as we like. We can say that our people are peaceable and responsible. But if we take from men and women the dignity and self-respect which come from earning a living, they will become discontented and dangerous.

This is what hurts me. If this country was at war we would mobilise all these people. We would put them in factories to make shells, bombs, torpedoes and blockbusters. We would then give those arms away. The people we gave them to would not want them. Nevertheless, we would insist on giving them away. The more we gave away the happier we would be. The country with which we were at war would do the same. Why, then, when there are so many human needs unsatisfied throughout the world can we not organise our economic affairs so that men and materials are brought together, so that the unsatisfied desires of millions can at last be met?

8.30 p.m.

Mr. George Reid (Clackmannan and East Sterlingshire)

I shall confine my remarks to the situation in Scotland, as my country has been poorly served by both the Government and the Conservative Opposition in the past week.

Ever since my hon. Friend the Member for Moray and Nairn (Mrs. Ewing) won the Hamilton constituency in 1967, the response of Government, whether Conservative or Labour, to the needs of the Scottish people has been cynical, enforced and dilatory. Even today, when the great devolution debate in Scotland has been argued at all levels for 10 years, there are those in the House who would further delay, castrate and render ineffective the Scottish Assembly.

The fact that there are now only to be legislative proposals, and not a firm and guaranteed Assembly this Session, lends credence to the charge that London does not know what Scotland wants. It confirms what The Sunday Times said in a recent leader: Most English politicians do not understand Scotland; care little for it; have neglected to find out about it; rarely visit it; and never debate it. That being so, hon. Members may not appreciate why Scotland has been on the warpath for the past week. They may not know of the carefully orchestrated interviews which have appeared with full ministerial blessing in the Scottish Press over the past year. I shall quote three of them.

First, I quote the words of the Undersecretary of State for Scotland with responsibility for devolution. On 31st January he said: It is wrong to say that there has been a slippage. We are bang on target, and if anything we are ahead of schedule. I see nothing to suggest we will not publish the Devolution Bill by the beginning of November". The Minister went on to stand by a timetable that would put the Bill on the statute book by July 1976, with the first elections to the Assembly by the end of 1976 or early 1977.

Next I quote the words of the Lord President of the Council on 30th April, when he was reported as saying: The Assembly Bill will be the major bill of the new session". He subsequently confirmed to the Scottish Labour Executive on 21st July that a White Paper would be published in October, that the Bill would be out by the end of the year, and that legislation should go through in the 1975–6 session. Against that background is it surprising that the people of Scotland should feel that their patience and trust have been cynically abused?

By dragging their feet on devolution, the major parties have made their pledges now worthless and have deepened the disillusion with Government from Westminster. The Scots are shrewd enough to appreciate that devolution would never come this far without the Scottish National Party. The corollary is that the pressure will now be maintained, and the most effective way will be to strengthen the SNP.

I now turn to the reason why these Benches want a strong Assembly, and why we wish to build on whatever devolution comes down to us. There are three main reasons. First, there is a fundamental need for self-control over our own national life. Secondly, there is a need for control over our own economy, both to stimulate indigenous growth and to eradicate the appalling problems of poverty. Thirdly, there is a need, given the shift of power towards Brussels, for a corresponding growth of political power on the periphery, in Scotland.

Devolution concerns not only a transfer of powers, but how we adjust the relationship between Scotland and England, England and Wales. It is the process by which two minority peoples—the Scots and the Welsh—adjust their relations with the majority, the English. I am glad to see such percipience on the Labour Benches, for those words are contained in an article by the hon. Member for South Ayrshire (Mr. Sillars).

The real problem is the repeated refusal of English Members of Parliament to recognise that the United Kingdom is not a nation but a multinational State. The Union of 1707 may have created one Parliament, but it did not create an indivisible people. The pervasive Scots consciousness remains unchanged. The traditional carriers of nationalism—our institutions—have given us a prickly pride against alien domination. In law, English methods and concepts are profoundly foreign.

Put bluntly, we need self-government to satisfy our people's belief in their own identity, to ensure external recognition as a full and dignified member of world society, and to satisfy a fundamental need for self-control over our national life. [Interruption.] Hon. Members may say that that is disgraceful. Yes, the problems of poverty in Scotland—our legacy from London—are indeed disgraceful. If we take the supplementary benefit level as the qualifying point for poverty, 1,200,000 Scots are currently living in poverty. Scotland has 77 per cent. of the 5 per cent. most deprived areas in the United Kingdom.

Scotland has 97.5 per cent. of the 1 per cent. of worst multiple deprivation. Our incomes are 10 per cent. below the United Kingdom level. The percentage employed in low-paid jobs is 26 per cent. above the United Kingdom level. One child in 10 in Scotland is born to fail compared with one in 47 in the home counties of England. Our overcrowding is twice the United Kingdom average, our infant mortality is 12 per cent. higher, our sickness rate for men is 25 per cent. higher.

Yet we are rich in primary products—in agriculture, in fish, in forestry. We have surpluses in invisibles, in tourism and in financial services. We export 14 per cent. more per manufacturing worker than does the rest of the United Kingdom, and we possess £200,000 million worth of oil.

This is the central question. Will devolution create conditions in which indigenous growth will flourish? Will it create the new wealth in Scotland to wipe out the old poverty? That is the dilemma which the Secretary of State, during his long tenure of office, has had to face unceasingly. Given the centralisers at the Treasury and in his own party, if the United Kingdom is booming, there is no need for a regional policy. If the United Kingdom is stagnant, all the incentives in the world will not move industry from the South-East to Scotland. How can Scotland expand when the centre is contracting or resisting expansion?

I say this quite bluntly: devolution itself will be unstable if it remains subject to central Keynesian management. If the Keynesians remain at the Treasury, still taking a single aggregate view of the British economy, there is no question of the Assembly having any meaningful economic autonomy.

Mr. Loyden

No one would argue with the hon. Gentleman's analysis of the problems in Scotland. Does he agree that it is not where the decisions are made but what decisions are made that will alter the situation?

Mr. Reid

Scottish decisions should be made in Edinburgh. Let the hon. Gentleman follow that argument.

There is an alternative way of promoting the movement of Scotland's unemployed resources, which is to compare the Scotland-England economic relationship with the Britain-West Germany relationship. If the situation is considered in these international terms, current Treasury policy is difficult to understand. When one country starts a deliberate boom, creating excess demand in a neighbouring country, the second country need only release for export the resources which the reflating country requires. That is the case which the Treasury argued with West Germany. Why not a similar Scotland-England relationship, with exported growth for England as Scotland moves towards the full employment of her resources? That implies a fully devolved Government in Edinburgh—with a Scottish Treasury and a Scottish Consolidated Fund—willing and able to finance their own balance of payments.

Lastly, I shall briefly refer to the European connection. Although for England joining the EEC probably meant the final, formal abdication of imperial pretensions, in Scotland it has brought a reawakened appreciation of our rôle as a small North European nation. As power grows at the centre, so does the need for corresponding power on the periphery. It is significant that Lord Kilbrandon, who sat through the proceedings of the Royal Commission on the Constitution for five years, should now give it as his opinion that Westminster will gradually wither away, with power being concentrated in Edinburgh and Brussels. The words "separatism" has no meaning within the Community.

Many hon. Members have prated endlessly about economic, social and religious freedom. Can they not now consider that most basic of all freedoms, the freedom of a distinctive people to take up again the reins of their national life? They talk unceasingly about too much government. That has been our experience in Scotland—too much misgovernment, too much London government. The House has ample experience of rewriting statutes for nations which have gained their freedom. The events of the past week have brought that process much closer for Scotland.

8.40 p.m.

Mr. John Evans (Newton)

I trust that the hon. Member for Clackmannan and East Stirlingshire (Mr. Reid) will not mind if I do not follow him down the Scottish path which he pursued. I am a Tynesider with Welsh grandparents and I represent a Merseyside constituency. Many of the economic problems of Scotland apply equally to North-West and North-East England, but we English do not advocate the division of England into two parts. The problems of the United Kingdom, North England, Scotland and Wales are similar.

I am a member of the European Parliament. There is much that the European Parliament can learn from the House of Commons, but there is one respect in which the House can learn from the European Parliament. In the European Parliament when a Member puts his name down to take part in a debate he knows at the beginning of the debate whether he will be called. A list is published and he is able to find out when he will take part in the debate. If this practice were adopted in the House, it would save hon. Members having to sit for many hours trying to get into the debate before realising that they will not be able to do so.

I add my voice of protest in the strongest possible terms at the lack of a clear programme or clear statement by thse Government in the Queen's Speech that they intend to tackle the evils of unemployment which pervade our society. I represent a large constituency in the North-East and I have lived for most of my life on Tyneside. I had personal experience of a great deal of unemployment when I worked in the shipyards on Tyneside. Not many hon. Members appreciate just what employment means, particularly to a man with a wife and young family to support. Unemployment as an economic weapon is unacceptable to me and to my constituency party.

The use of unemployment as an economic weapon is also unacceptable to Socialist parties in the European Parliament. A document called "Towards a Social Europe", produced by the Ninth Congress of Socialist Parties of the European Community, on page 4, paragraph 10, reads as follows: The European Community and its member States must pursue a policy that guarantees the right to work. The right to work involves three basic requirements:

1. (a) Full employment, i.e. creation and maintenance of secure jobs.
2. (b) Equality of occupational opportunity hand in hand with the elimination of discrimination.
3. (c) Employment opportunities in keeping with the abilities and preference of workers throughout their working life thus providing the basis for social mobility.

This includes the provision in regional policy of alternative employment opportunities for workers. Unemployment is not spread equally across the United Kingdom and to use terms such as "national average figure", of 4.4 or 4.5 per cent., is meaningless to areas such as mine.

If we got anywhere near to 4.5 per cent., we should believe that the millenium had arrived and that we had full employment, because our figures reach 12 or 14 per cent.—and higher for males. The problem is not simply the number of men and women who are unemployed. There is also the much greater social evil of the number of school leavers unable to obtain any sort of employment and, more particularly, any employment that will provide them with training to become the highly skilled workers Britain will need in the future.

I say to the Government that we neglect training of our young people at our peril. A recurring theme in areas such as the North-West is that of declining industry, lack of skilled job opportunities, poor environment, poor educational facilities and the emigration of our best young people to the more prosperous parts of the country. This leads to a vicious circle of a further decline in industry, fewer skilled job opportunities and increasingly poor environment and greater emigration of our most able young people. There is also the ever-increasing problem of the effect of continuing unemployment on the minds and attitudes of our youngsters, and the hysterical and hypocritical braying of well-heeled sections of the community that our young people will not and do not want to work is bitter music indeed to young people in the dole queue waiting to claim their pittance.

The Government should also deal with the problem of working-class youngsters who cannot obtain skilled job apprenticeships, and I remind my right hon. Friend that if youngsters do not obtain apprenticeships in the first year after leaving school, the vast majority of them will be doomed to spend the rest of their working lives as unskilled labourers, with little opportunity of ever obtaining steady, worthwhile, well-paid jobs. The Government should seriously consider that the State should take on completely, through the network of industrial training boards, the entire responsibility of employing and training all apprentices and guarantee every boy and girl the right to learn a skill, trade or profession. It makes a nonsense of the education system which we are striving so hard to achieve and which would guarantee every child equality of opportunity, if, at the end of their school days, many children on Merseyside face unemployment and a desolate future, whereas the children in more prosperous areas face a bright and prosperous future.

This socially just policy should be implemented by utilising to the full the considerable amount of spare capacity in industry and the spare capacity available in technical colleges and polytechnics. This would have the added advantage of employing more school teachers. It is a scandal that in Britain, which is so short of those who can pass on skills, so many of our teachers should be unemployed.

I ask the Government and the TUC in the longer term, to give consideration to the amount of overtime being worked in our society. It is a scandal and it brings bitterness to people in areas such as mine, where there are many thousands unemployed, that some firms are working far too much overtime. We all appreciate that it is cheaper for the employer to have his workers on overtime than to employ more labour, but it creates bitterness, and I suggest that the Labour movement, particularly the trade union movement, should dwell upon it.

We recognise that there will be fewer job opportunities in future and fewer jobs to go round for the working population. Is it not time that we started to examine reducing the retirement age progressively from 65 towards 60? I have always regarded it as strange that the professional classes retire much earlier than 65 whereas those doing hard manual work retire at 65. I have always thought that it should be the other way round. Those who do jobs involving hard manual work should have the benefit of early retirement.

In the recent past the pro-Marketeers were telling those who took a contrary view about the EEC that Britain was at the bottom of the holiday league table. We are still bottom, and there has been no progress whatever towards increasing the holidays enjoyed by the British worker. Such a policy would also assist in the sharing of job opportunities.

I recognise that the NEB and planning agreements will affect our future beneficially, but I put it to my right hon. Friends that there is growing concern, and deep and increasingly bitter feeling, in areas such as the North-West, which in many ways were responsible for returning Labour to office in the February and October elections last year, about the level of unemployment from which we are now suffering. The people in the North-West are making it clear to me and to other hon. Members from the area that they did not help to return a Labour Government in order that not only they but their children should suffer unemployment. I beg my right hon. Friends to appreciate that we must re-kindle the spirit and feeling of our people and prove to them that we are the party of full employment, and to ensure that full employment plays a leading part in all our future policies.

8.57 p.m.

Mr. Peter Hordem (Horsham and Crawley)

In the short time available to me I shall not be able to follow very closely the remarks of the hon. Member for Newton (Mr. Evans), except to say that I am convinced that there can be no real cure of unemployment other than with the revival of the private sector and of private industry in particular. That is what concerns me most in our present position. I cannot envisage any possible revival in the private sector during the course of the coming year.

The Prime Minister, who opened this debate on the Gracious Speech, was very optimistic, but one would never have thought, in listening to him, that we face a position today in which sterling, in relation to the dollar, has been declining in the last four months at an annual rate of some 20 per cent. One would never have thought, in listening to him, that the volume of imports is growing while the volume of exports is declining.

I hope the Leader of the House will say how we are to handle the situation when there is a revival of world trade, for, if things go on as they are, there will be an even larger increase in imports, while there is no guarantee that our exports will rise commensurately unless there is room for them to do so—and there cannot be unless room is made by reductions in the public sector.

The Government have said that they will introduce selective import controls. I am against these in principle, and I also ask the House not to think that they provide any short-term solution. They are, in effect, nothing more than a further devaluation of the pound in terms of the value of the particular commodity.

The Chancellor of the Exchequer said a good deal about the financial deficit and the borrowing requirements. He made a comparison with West Germany. It is true that the West German deficit is expected to be some 75,000 billion deutschemarks this year—about 7½ per cent. of their GNP.

I thought that I heard the Chancellor of the Exchequer say that even if our borrowing requirement were £12,000 million, that would represent only 6.5 per cent. of the GNP. In the first six months of this year, the GNP was running at an annual rate of £86,000 million. Taking an inflation rate of 21 per cent. and going to the end of the financial year, that would mean a GNP of £89,000 million. If the borrowing requirement is £12,000 million and it represents only 6.5 per cent. of the GNP, that suggests a GNP in the nature of £150,000 million. That is an unconscionable figure, and we shall have to read the right hon. Gentleman's speech carefully when it appears in print.

In relation to £150,000 million, what do the proposed cuts in public expenditure next year of £1,200 million mean? They are chicken feed. What room will they leave for the investment required if we are to have an industrial revival to cure the unemployment of which Government supporters complain? What room is there for any increase in personal expenditure? There is none at all. The Chancellor of the Exchequer said that personal savings were running at a high ratio at the moment. It is just as well that they are. They are running at an annual rate of £800 million a year. If the public sector borrowing requirement is £12,000 million, that still leaves a lot to borrow from the market, and there is no room for any revival of investment or for any increase in puersonal expenditure. Of course, the Government should have cut public expenditure a year ago to make room for the increase in private sector investment that we need so sorely. But at that time they were more intent on winning the General Election.

The Chancellor of the Exchequer made a comparison with West Germany. I saw a report today from the West German Council of Economic Advisers. The Germans are cutting what they call "the structural component" of the public sector deficit by half—which represents 35,500 million deutschemarks of their total ex- pected deficit—by 1978. This Goverment have no proposals of that kind. This is the competition that we are up against, and we should be aware of it.

I refer next to the Sandilands Report. I hope that the Government will publish their recommendations about it very soon. The accountancy profession is ready for it. I hope, too, that the Government will respond favourably to the Report and accept its broad conclusions. If they do, they must bear in mind that the terms of reference of the Price Commission will have to be altered to take account of the effect of inflation on stocks—

Mr. Dennis Canavan (West Stirlingshire)

Rising prices.

Mr. Hordern

Inevitably it will mean some price increases. But we cannot expect a revival in private investment, thus creating the jobs that we want, unless we revise the terms of reference of the Price Commission.

The past few years have demonstrated beyond belief the fault in the whole Plowden approach to public expenditure. When inflation was at a low level, it seemed a reasonable way to control public expenditure. But even now the Chancellor says that, with the cash limits proposed for next year, he knows that only 50 per cent. of public expenditure will be covered.

When the CBI negotiates with the Government it is rather like negotiating with an avalanche. The Government do not know what the public expenditure deficit will be, and they do not know by how much public expenditure is rising. Even if they did, they have no means of controlling it. The situation is not only an unknown quantity, but it will clearly get worse.

We have been served very badly by advice from the Treasury for far too long. It is not the fault of Ministers in this or the previous Government. Successive Governments have suffered too long from inadequate advice from the Treasury. However, that is a personal view.

I am certain that unless the Government make room next year for a reduction in public expenditure, we shall not be able to achieve the kind of economic revival that this country sorely needs.

9.0 p.m.

Mr. John Peyton (Yeovil)

We have now had five days of debate on the Gracious Speech. Many hon. Members who have sought to catch your eye, Mr. Deputy Speaker, have been unsuccessful. Many speeches have been thoughtful and sensible. However, it is unhappily true that they will not receive their just deserts or share of public attention. I wonder how many of those who took part in our debate feel in these times that their words will receive the attention which they warrant or make any impact at all upon events or, indeed, upon the thoughts of the Government.

The present plight of Parliament, which seems to have lost so much in prestige, power and influence, must be a matter of concern to all of us.

Mr. Canavan

Nostalgic nonsense.

Mr. Peyton

The hon. Gentleman describes himself when he talks about nostalgic nonsense. That is the state of his mind, and I will not intrude into it in any depth.

Not even the most devoted admirer of this administration could possibly claim that the Gracious Speech has been received with rapture; nor, indeed, have Ministers in the parts that they have played at the Dispatch Box done anything to garnish it with enthusiasm.

On Wednesday the Prime Minister, as my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) said this afternoon, turned on his talent for history. Indeed, he touched it up as he went along. But during the course of his remarks he made little reference either to the contents of the Gracious Speech or to what was to happen in future. One hoped that he did not talk like that when he was at Rambouillet.

The next day the Secretary of State for Industry issued one of those now conventional laments about the state of British industry. It is a pity that the Labour Government do not sometimes remember that they have been in power for eight of the last 12 years. Perhaps the time is coming when they might accept some responsibility for the state of British industry instead of always blaming it upon others.

The Secretary of State for Industry, on the nationalisation of the shipbuilding and aircraft industries—unwanted, I think—contented himself with the rather bland remark: Each of these industries has problems and weaknesses, which can best be tackled through public ownership."—[Official Report, 20th November 1975; Vol. 901, c. 188.] The right hon. Gentleman's speech had the merit of being honest enough to show that he had no heart for the job at all.

On Monday—I leave out the Secretary of State for Social Services, because 1 was not here on Friday—the Secretary of State for Education and Science, in quite a long speech, hardly referred at all to the problems of education and was almost totally opaque as to his future intentions.

Today, the Chancellor of the Exchequer, who I recognise is always embarrassed by support from these benches and I therefore would not wish to give him too much support because this must be very difficult for him—[Interruption.]—The Chancellor blows me a kiss. That is one of the most eloquent things he has done today. The right hon. Gentleman started by placating the serried ranks behind him in his normal role of bruiser, but what he said later began seriously to worry his hon. Friend the Member for Tottenham (Mr. Atkinson).

The right hon. Gentleman said four things of interest. First, he recognised that the reduction in our balance of payments deficit was partly due, so he said very modestly, to the recession that we now have. Secondly, he recognised the need, at long last, to make good use of plant and machinery, as do our competitors. This is a lesson which I hope he will preach far and wide, and I hope that he will be listened to with more than usual attention.

The right hon. Gentleman put the dilemma very neatly. He said that what happens will depend upon work people seeing that more investment is being made, but in turn that investment will depend upon resources not being preempted by public or private use. My hon. Friend the Member for Croydon, South (Mr. Clark) pointed out very clearly and firmly how necessary it was that investment should be encouraged. I pause for a moment to ask right hon. and hon. Members on the Government Front Bench how much time or trouble they have taken while they have been in office to give encouragement to anyone whose political ideas they do not share.

Thirdly, the right hon. Gentleman recognised that it was important that the Government should close the gap between income and expenditure—something which I think I can modestly claim has been urged on him fairly frequently from these benches—but he seems to put off the need until such time as recovery begins. I begin to wonder whether it will begin at all if he does not grasp the nettle and grasp it early enough.

There is a further point that I wish to put to the right hon. Gentleman, and I hope that he will pay attention to it. If and when recovery does start, many firms that have been living with reasonable comfort off the shelf, off existing stocks, will be hard hit by the new price of restocking and will find themselves short of working capital. Many of the hopes which the right hon. Gentleman expressed to himself with some comfort are likely to be wrecked on that rock.

The right hon. Gentleman made it clear that he understands the difficulties of bringing income and expenditure into balance. He said fairly clearly that he could not resort to indirect taxation because this would increase the cost of living. He could not go for companies because that would have a damaging effect upon the investment which he recognises we desperately need.

Lastly, the Chancellor of the Exchequer appeared to say that increased income tax, the main source to which he could look for some reduction of the borrowing requirement, would place an excessive burden on individuals who already carry enough.

As I said at the beginning of that little passage, I do not want to embarrass the right hon. Gentleman excessively but he does deserve at least some commendation for those remarks and I desperately hope that for the sake of us all he will carry those lessons into practice. However, we were ready for the fact that the right hon. Gentleman could not go too far on that sensible theme, and we were not unduly surprised when he reverted to his more natural rôle of thug.

It is sad to have to say it, but the content of the Queen's Speech is a lot of dull, indigestible fare—from which, however, there clearly emerge a few facts. The first is that Parliament will be kept busy, although the attention of the House will be diverted to a large extent to things which, though important in themselves, will have little serious impact on the way in which we get through our present crisis—the tied cottage, dock labour, the aircraft and shipbuilding industries, harassment of private practice and a development land tax. Neither I nor any outsider can believe that these things will make a major contribution to our country's welfare. We are also told that the working of Parliament will be reviewed. If past experience is any guide, this will mean simply that the power, prestige and influence of the House of Commons will be further curtailed to make life more comfortable for the Executive.

The third fact which emerges clearly is that there will be more control, more taxes and more bureaucracy. In fact, as my right hon. Friend the Leader of the Opposition said, there will be more power to the Government and less to the citizen. However, I recognise that, far though the Government have gone, they will not go far enough to satisfy the hon. Member for Liverpool, Walton (Mr. Heffer).

One does not have to look far through the Gracious Speech to find a series of fairly empty pieties. First, we are told that the attack—so-called—on inflation will receive the highest priority. The Government should remember that they have been in office for many years since 1964, and that they share a large part of the responsibility for the troubles for which they seek to blame others. It is time that they admitted this. They have yet to tell us in this fight, as they call it, against inflation, whether there is any limit at all in their view, either in time or in amount, to the extent to which they can borrow their way out of trouble.

My hon. Friend the Member for Horsham and Crawley (Mr. Hordern), in a speech which was much curtailed, made several important points to which I hope the Chancellor will give his careful attention. He said that over the past four months the pound has been declining against the dollar at an annual rate of over 20 per cent., and that the volume of our imports is increasing while the volume of our exports is falling. I hope that the right hon. Gentleman will give his attention and call the attention of the Prime Minister to these matters. In his public speeches at any rate, he appears to neglect them altogether.

The Gracious Speech goes on to say that the Government will continue to strive for a constitutional settlement to the problem of Northern Ireland. The Government have had and have acknowledged, considerable support from this side of the House in dealing with this agonising problem, but they should not ignore the deep anxiety which now exists about security in the Province.

The motion in the name of the hon. Member for Antrim, South (Mr. Molyneaux), couched, as it is, in restrained terms, must command the support of all thoughtful people throughout this country.

I take note of what the right hon. Member for Down, South (Mr. Powell) had to say. I must sadly observe that recent experience has taught me that I have no grounds whatever to hope—not even, as the right hon. Gentleman said, "a residual hope"—that he would find himself in the Opposition Lobby tonight.

The third point which arises in the Gracious Speech is the announcement by the Government that there will be comprehensive employment safeguards for dock workers. We are entitled to ask the Secretary of State for Employment—I am sorry to see that he is not here, although we welcomed his arrival earlier—what safeguards dock workers now lack which are available to the generality of workers.

We have reached a time when we should cease to conduct our affairs against a background that has long passed away. The old and barbaric arrangements for dock labour are gone. We now have other problems. As the hon. Member for Cornwall, North (Mr. Pardoe) pointed out, those problems are of low productivity leading to loss of trade. Yet the Government declare their intention to press on in their determination to extend not only the Dock Labour Scheme but also its physical boundaries and thus to present to one more section the power to bring the nation to its knees. No one should ignore the fact that the impact of a strike on imported food supplies would be both immediate and total.

For those reasons we give our support to the amendment tabled in the name of the Liberal Party on this subject. Hon. Gentleman may laugh, as they always do when anyone does not agree with them, but this will not help our country to solve its problems.

I turn to the remarks made by the hon. Member for Sheffield, Attercliffe (Mr. Duffy). I want to cite four points that he made. They should be borne in mind, not merely in this House but throughout the land. He honestly attempted to touch upon our difficulties, not in any emotional way but with understanding, sympathy and intelligence. He said, first, that there was no future in Britain continuing to produce goods for which there was either a declining market or no market at all. He said that it was too easy to gloss over the fear and misery caused by unemployment. I beg Labour Members to accept that the miseries of unemployment are understood elsewhere than on their Benches and that there is deep sympathy for those miseries. We are concerned that failure by the Government to show courage in time will multiply the penalty and will make the miseries even worse than they would otherwise be.

The hon. Member for Attercliffe referred to the need to live within our means, preferably at the earliest moment. He added that if we do not, our problems will multiply, including that of unemployment. Labour Members cannot ignore the logic of what the hon. Gentleman said. He said it in a very powerful speech. I have heard him make a number of speeches. Whether or not I agree with him, he never fails to match up to the standards of courage and intelligence which we very badly need at these times.

The hon. Gentleman concluded by saying that one matter of the highest priority was that Members of Parliament should have a deeper understanding of the issues which confront us today. Looking at some right hon. and hon. Members, I echo that most deeply. There are many people in the world as a whole who are watching this country and wondering whether we shall ever emerge from our problems. They are hoping for some signs of realism and resolution to replace the dissension and disarray which they now associate with our affairs. These people are watching this House hoping that the barren ritual argument which colours so much of our affairs will be replaced—

Mr. Ted Lead bitter (Hartlepool)

Like the right hon. Gentleman's argument.

Mr. Peyton

—by some sense of clear national purpose. The hon. Gentleman's interventions are distinguished always for one thing—the self-revelation. If, surprisingly and exceptionally, the hon. Gentleman has anything to say, I shall gladly give way.

Mr. Leadbitter

Yes, give way. [HON. MEMBERS: "Oh."] I am helping the right hon. Gentleman out, because he has been boring for 20 minutes. When the right hon. Gentleman starts to talk about what other countries think of Britain, he should consider the comments he has made tonight, because he has made the greatest contribution of all towards other people's points of view. The Government side of the House does not share his argument about other countries.

Mr. Peyton

As I understood that remark, what the hon. Gentleman said was that he thought that I had made the greatest contribution myself tonight. For that I am grateful, I suppose—in a way, because one's reception of compliments always has to be conditioned by the source.

Mr. Leadbitter

Knocking Britain.

Mr. Peyton

I am not knocking Britain. This is just the kind of cheap—

Mr. Leadbitter

The right hon. Gentleman is knocking Britain. I am helping him out.

Mr. Peyton

Let me just mention, for the education of those right hon. and hon. Members of the Labour Party who are content to listen to their opponents for a moment, an article which appeared the other day and which was written by the London correspondent of a Swiss newspaper. He suggested that this country, since the war, had suffered from the continuation of too many stuffy attitudes. Whether or not hon. Members will accept it, he said that there was too much class arrogance on both sides of the class barrier. Interestingly enough, at the end of the article he said—it might be an oversimplification to say this—that the upper classes in this country had produced since the war only officials, no entrepreneurs; the working class had produced no labour leaders, only strike organisers.

That is the view of an outsider to this country, a fairly shrewd observer. I think it is a reasonably painful one. [Interruption.] The right hon. Gentleman the Patronage Secretary is, as I have said before, one of the most voluble Chief Whips we have ever had. We long to hear him back making speeches again, but his utterances from a sedentary position do him no credit.

The Government, facing perhaps the most serious state of affairs that has ever confronted this country in peace time, are still pretending to the majority of the nation that there is an easy way out. I do not believe there is and I do not believe that the Government will be forgiven for the lax and sloppy way in which they have shunned their duty and run away from their obligations.

Hon. Members

The right hon. Gentleman has finished five minutes early.

9.25 p.m.

The Lord President of the Council and Leader of the House of Commons (Mr. Edward Short)

It is not like the right hon. Gentleman to run out of words, but on this occasion he has clearly done so. I shall come back to him in a moment.

I think the House would wish me to say something about devolution, which has occupied a fair amount of time during the debate. I want to make absolutely clear that we have no intention of going back on our commitment to devolution. We said in the White Paper in September last year that we should set up Scottish and Welsh Assemblies and we repeated that in the October General Election. We mean it. Some people still seem to think that we are just going through the motions. I ask them to read the White Paper on Thursday and think again.

Mr. Donald Stewart (Western Isles)

rose—

Mr. Short

Perhaps the hon. Member will contain himself for a few moments. We are not devoting all this time and effort to something we do not intend to happen.

I flatly reject any accusation that we are going slow on the legislative timetable for devolution. The general drift of some comments has been that the Government are deferring action on devolution and dragging the matter out as much as possible in the hope that it will go away. That is ridiculous, as anybody who reads the White Paper will see. We are not deferring action or dragging the matter out.

Mr. Donald Stewart

rose—

Mr. Short

Perhaps the hon. Member will wait until I have finished this section of my speech. If I have not covered his point, I shall give way.

The work programme of officials and Ministers has been far more intense than anything I have previously encountered. I should like to pay tribute to my officials, who have had to endure the almost killing pace that I have forced upon them. We neither hope nor believe that devolution will simply go away, and nobody should believe that the status quo is any longer an option in Scotland. This has to go ahead.

However much hon. Members may protest, they must recognise that devolution is a tremendously complicated matter involving many different aspects of Government, and it cannot be rushed. Work on the drafting of the Bill started some time ago, and a great deal of progress has been made on drafting the constitutional arrangements involved.

However, the drafting of the legislation on the functions and powers of the Assemblies has proved an enormously complex job, involving searching and, where necessary, amending United Kingdom legislation going back to the Act of Union. This section of the Bill will probably not be finished until the spring. Reluctantly, we have come to the view that its passage will inevitably take us into the next Session. There are several reasons for this, including the complications that I have just mentioned.

For example, a whole range of problems arises out of the treatment of Scottish private law. This is a candidate for devolution if anything is. It covers a wide field that interacts at many points with commercial matters such as the law of contract, consumer protection and bankruptcies, which, within a single United Kingdom market, inevitably affect people and firms outside Scotland.

The interface between Scottish private law and United Kingdom law presents peculiarly difficult problems on which we are still carrying out an intensive study. I do not suppose that nationalist Members have given so much as a moment's thought to that aspect. When hon. Members read the White Paper on Thursday, they will readily appreciate that there are a number of similar problems, which cannot be ignored or swept under the carpet.

There is then the need for consultations with organisations that will be affected by our proposals. I do not mean general talk, because there has been plenty of that already. I mean detailed comments on the nuts and bolts of our scheme. We cannot ride roughshod over all the bodies and individuals who will be affected. They must see what is proposed and have the opportunity to say what they think of it.

We are concerned with the whole range of government. This will take time, following publication of the White Paper. Upon publication of the Bill, we expect that in the spring there will be a second stage of more definitive public consultation directed towards the specific legislative proposals.

I understand that our timetable is a great disappointment to some people. It is a disappointment to me, too. I know, however, that many of the criticisms of it come from those whose aim is not devolution but separatism. They seem not to want a completely researched proposal for devolution which has received public endorsement by consultation and debate. That would not suit their book.

They would rather see a half-baked scheme introduced immediately, one which would prove completely unsatisfactory, an unstable arrangement which they could exploit because of its deficiencies. No doubt they would then claim that devolution did not work and that the only complete solution was separation from the United Kingdom. They can pursue that course if they wish, but I am sure that the vast majority of people in Scotland and Wales will not be deceived by their tactics. We shall not be drawn into this trap. We do not want devolution to fail. We are determined that it shall work, and work well.

Since virtually all the parties in the House have committed themselves in terms to devolution in Scotland at any rate, I trust that our future debates will be concerned not with whether there should be devolution, but with the best way of implementing it.

Mr. Donald Stewart

I do not believe that the right hon. Gentleman is one of the great obstacles in the Cabinet to devolution. The Chancellor of the Exchequer, the Home Secretary and others have been the niggers in the woodpile, if to say that is not an offence against the race relations laws. Does the right hon. Gentleman agree, regardless of the difficulties set out in the White Paper, that his time scale on his promises to the House has fallen behind? Is he not on record as saying that the Bill would start its progress through the House in November 1975?

Mr. Short

The Bill will be published next spring. I have said that the fact that it cannot get on the statute book in this Session is a great disappointment to me.

Mr. Wyn Roberts (Conway)

As the White Paper has quite clearly been made available to members of the Press and to others connected with the media, will the Leader of the House consider advancing its publication date to tomorrow?

Mr. Short

I am not prepared to do that. The same procedure has been followed on this as on other occasions with other White Papers. My right hon. Friend the Prime Minister said at Question Time today that he was looking into this matter.

Mr. John Mendelson

My right hon. Friend said that he hoped that the debate from now on would centre not on whether there should be devolution, but on how it should come. Does he not agree, however, that there must be an opportunity for people in the country generally to consider the grave implications of these proposals for the unity of the United Kingdom? Does he accept that there can be no restriction whatever on the debate which must now begin?

Mr. Short

My right hon. Friend the Prime Minister has made it clear that we want a big national debate on the matter. The timetable will make that possible in two stages—a general debate on the White Paper and then a more definitive debate when the Bill is published in the spring.

I turn to the Opposition amendment. I find it hard to believe that it can possibly provide the basis for united opposition to the Government's policies among the Opposition parties. The right hon. Member for Devon, North (Mr. Thorpe) admirably summed up the feelings of many of us about the first part of the amendment in his comments on the speech made by the hon. Member for Henley (Mr. Heseltine) on the second day of the debate.

I hope that the hon. Member for Henley, who does not seem to be present, will not think me churlish if I point out that, apart from one vague reference to the repayment of tax to the successful, there were no practical suggestions of alternative policies. Nor were there any such suggestions in the speech of the right hon. and learned Member for Surrey, East (Sir G. Howe), who opened the debate today, except for one to which I shall come. The right hon. and learned Gentleman showed himself today to be the pedlar of trifles that we have always known him to be. I very much hope that Liberal Members will follow the logic of their leader's comments by rejecting the Conservative amendment in the Division Lobby.

The truth is that the Conservative Party has no practical proposals, to use its own phrase, to solve our serious financial and economic problems. Not a glimmer of a policy has emerged in the whole five-day debate. Listening to my hon. Friend the Member for Tottenham (Mr. Atkinson) tonight, I felt that a certain section of my party was doing much better than the Opposition in proposing alternative policies. I hope that the Leader of the Opposition will be grateful to the members of that section for doing her job for her, as she is not doing it.

The only policy, if one can call it that, of the Conservatives is immediate savage cuts in public expenditure. Calls for such cuts were made in every speech. Nothing could make less economic sense than immediate savage cuts in public expenditure, as my right hon. Friend the Chancellor of the Exchequer has consistently pointed out. If industry were in a position to employ those released from public service, if investment were high and productivity were rising, it could be argued that there was a case for such cuts. Indeed, my right hon. Friend has made it clear that, looking ahead to the prospects of an upturn in world trade, we shall bear that case in mind in considering public expenditure from 1977–78 onwards. We have already announced expenditure reductions for 1976–77, and my right hon. Friend made clear again today, in a speech which I understand had the approbation of the right hon. Member for Yeovil—

Mr. Peyton

Only the middle bit.

Mr. Short

It is the bit that I am talking about.

My right hon. Friend made it clear that substantial economies would be necessary in 1977–78 and 1978–79. That will be the time to make resources available for exports and investment, as my hon. Friend the Member for Horsham and Crawley (Mr. Hordern) said in a very good speech this evening [Interruption.] I am sure that the hon. Gentleman is my friend as well.

If we cut public expenditure now, at a time of high unemployment, in the trough of the worst world recession since the early 1930s, we should be digging a hole in our economy that nothing could fill, and so adding to unemployment and therefore to the public sector borrowing requirement. Therefore, I believe that such a course would be utterly unproductive.

Mr. Hordern

I am grateful to my right hon. Friend for giving way. I think that there must be some confusion of identity. I do not recognise my speech from the words the Lord President just read out.

Mr. Short

I left the hon. Gentleman's contribution some time ago. He was talking about the need to make expenditure cuts in the years to which I referred.

Perhaps the right hon. Lady the Leader of the Opposition, who constantly advocates cuts that would lead to high unemployment, would like to go off the country house circuit that she frequents and go to Merseyside. She will find in that area 12.1 per cent. male unemployment. Perhaps she will tell the people there about the effect of her policies on employment.

I know that the right hon. Lady is very concerned about the public sector deficit, but I would remind her that the recession hits twice—first, through the loss of tax revenues and, secondly, through claims in terms of benefits. Her policies would do nothing whatever to decrease that deficit on both grounds, or to avoid the deepening recession that we are now experiencing.

The right hon. Member for Yeovil (Mr. Peyton) always comes up with an interesting Press comment. He obviously reads all the papers and he quoted some extracts today. Did he read the Observer last Sunday with his usual diligence? If so, I would remind the House what the Observer said: We should establish an environment of courage and self-restraint by not talking cuts and acting expenditure. I commend that thought to the right hon. Gentleman and his right hon. Friend the Leader of the Opposition.

Perhaps they would cast their minds back to 29th January this year. On that day on the earnings rule they and their Conservative colleagues voted for increased expenditure at a cost to the Government of £60 million this year and a further £325 million over the next two years. That is what the Observer meant by talking cuts and acting expenditure. Again, I wish to remind the right hon. Lady the Leader of the Opposition that she and her Front Bench colleagues abstained on the issue of the 25 per cent. rate of VAT on television sets. By so doing they ensured a defeat for the Government—a defeat which over the next four or five years will cost up to £250 million. That also is talking cuts and acting expenditure.

Sir G. Howe

Now that the Labour Government have made a modification in national insurance contributions well sufficient to cover the abolition of the earnings rule, which was widely welcomed, will the right hon. Gentleman say whether the Government intend to reverse the decision of the House and to restore the earnings rule to its former limit? Secondly, will he acknowledge that if his right hon. Friend the Chancellor of the Exchequer had not reduced VAT from 10 to 8 per cent. to win an election, the revenue would have remained far higher?

Mr. Short

The fact remains that the additional expenditure has been put upon us by the very people who are now asking for cuts. [HON MEMBERS: "Answer."] Perhaps I could give a third example from this year. On 7th May the Opposition voted against a Government motion on defence that recognised the need …to ensure that the level of public expenditure is contained within available resources…". That, too, is a matter of talking cuts and acting expenditure". I do not wish to be unfair to the right hon. and learned Member for Surrey, East because he is not alone in his hypocrisy. He shares this record with most other Members of the Opposition Front Bench, including the right hon. Lady the Leader of the Opposition. If they wish to possess any credibility, they must be more consistent.

They were both senior members of a Government which came into office in 1970 and inherited a negative borrowing requirement—that is a surplus—of £18 million. A few months later, in October, in their White Paper "New Policies for Public Spending", they imposed the most humiliating cuts, cutting out the Consumer Council, regional development boards and imposing museum charges. When the Conservative Government left office three-and-a-quarter years later, they bequeathed to us a public sector borrowing requirement of £6,325 million. I shall not attempt to calculate the percentage increase in the borrowing requirement in those disastrous years, but the Conservatives' record has been this year, and still is, one of talking cuts and acting expenditure with a vengeance.

The right hon. Member for Down, South (Mr. Powell) in a brilliant speech—if I may say so without sounding patronising—said that the policies pursued by the previous Government were a major factor in any objective assessment of our present economic problems.

Mr. Peyton

The right hon. Gentleman is fully aware that since his Government came into office the borrowing requirement has escalated rapidly. Will he answer the question which I asked him? Do the Government now think that there is any limit in time or amount to the extent to which they can borrow their way out of trouble?

Mr. Short

I dealt with that a few minutes ago, as the right hon. Gentleman would have heard had he been listening. Of course the public sector borrowing requirement has increased in the past 20 months. It would have been impossible to prevent the increase. It was caused, first, by the roaring inflation which the Conservatives bequeathed to us and, secondly, by the need to protect the poorest members of the community from the worst effects of inflation, particularly by increasing social benefits and by food and housing subsidies. Even in the circumstances we inherited, we have made substantial improvements in pensions and other social security benefits. We have increased benefits three times in the 18 months since we took office. We have brought the total increase in pensions and related long-term rates to about 70 per cent. Pensions are now 33 per cent. higher than they were a year earlier, and that is a much bigger increase than the rise in prices.

For the future, we have committed ourselves by law to increasing pensions in line with earnings or prices, whichever rise the faster. This month, we are introducing a new non-contributory invalidity pension, doubling the supplementary benefit disregard and increasing by 37½ per cent. the special heating addition payable with supplementary benefits, which now benefit some 700,000 people over pension age and 100,000 under pension age.

These measures reflect the priority which the Government give to improving the position for the poorest members of our society. I shall ask the right hon. Lady a question, and I shall give way to her so that she may answer it. I have read out a list of what we have done to protect the poorest members of the community. They represent one reason why the public sector borrowing requirement has risen as it has. Which of them would the right hon. Lady not have done?

Mrs. Margaret Thatcher (Finchley)

The Lord President got many of his facts and figures wrong. Many of the measures to help the poorest members of the community come under the National Insurance Fund, which is paid for by the contributions of employers and employees. Many of the other measures he quoted would affect the public sector borrowing requirement much less if they were confined to the poor and were not indiscriminate. The right hon. Gentleman is paying indiscriminate subsidies to himself as well as to the poor.

Mr. Short

The right hon. Lady knows that that does not even begin to be an answer. She knows why the public sector borrowing requirement has risen.

Food subsidies would undoubtedly have been a first target for the right hon. Lady's axe. Members of the Oppositon have said so. Given the chance, the right hon. Lady would cut them at a stroke. Supposing she did so, what would happen? This year we expect to spend £550 million on food subsidies. The right hon. Lady is against subsidies. What would happen if the subsidies were dropped? I will tell her. The average family of two adults and two children would find that their weekly bill had risen by 73p. The right hon. Lady would stop food subsidies. She would put up the price of bread by 2½ p a loaf, the price of flour by 3p for a 3 lb. bag. She would add 8p on the cost of 1 lb of tea. She would put 12p on 1 lb of cheese, 2p per pint of milk, 11p on 1 lb of butter.

What about rents? Whatever the right hon. Lady did about food subsidies, she would cut council house subsidies. This is what the policy of the Opposition would mean. This is what they advocate.

If the right hon. Lady cut only this Government's increased council house subsidy, the council house dweller would be faced with an extra rent of £l.27p a week on top of the increases already experienced. Would the right hon. Lady have the nerve to ask that of a worker who settles for no more than £6 per week? I understand that the right hon. Lady supports that subsidy. Cutting out food subsidies and removing only the council house rent subsidy which we have introduced in the past 20 months would add £2 per week to the budget of the average family.

Sir G. Howe

Will the Leader of the House confirm what the Chancellor of the Exchequer and the Secretary of State for Prices and Consumer Protection have said on many occasions—that it is the policy of the Government as soon as reasonably possible to phase out the food subsidies about which the right hon. Gentleman has been making so much?

Mr. Short

We shall do so as soon as reasonably possible. But the Conservatives say that they would do so immediately.

I now turn to the amendment in the name of the right hon. Member for Devon, North and his hon. Friends. It mentions higher costs and inefficiency in the docks. I hope that the right hon. Gentleman will take a little more trouble to learn about the docks before we debate the Bill. On Monday he claimed that it was cheaper to ship tea via Hull than London. I suppose that the right hon. Gentleman does not realise that Hull is part of the existing Dock Labour Scheme. He did not know that. He speaks of increased costs, but rates of pay in non-scheme ports are settled by the normal process of collective bargaining. Those ports do not form part of the scheme and are irrelevant to the proposals for its extension. It was asserted that the gross figure of tons shifted per man-hour in Dock Labour Scheme ports is about a quarter of the figures for private enterprise ports. However, the scheme already covers many private enterprise ports. I suspect that his assertions, inaccurate on this point, will prove just as groundless as those of the right hon. Member for Lowestoft (Mr. Prior). He said that Antwerp dockers move seven times more goods per shift than London dockers.

The Parliamentary Secretary to the Treasury (Mr. Robert Mellish)

That was a lie.

Mr. Michael Latham (Melton)

On a point of order, Mr. Speaker. Is it in order for the Patronage Secretary to use the word "lie" in the House?

Mr. Speaker

The word "lie" is un-parliamentary language.

Mr. Mellish

Further to that point of order, Mr. Speaker. I willingly withdraw the word "lie" and say that the statement was a misconception and that the right hon. Gentleman has not had the decency to apologise.

Mr. Short

The right hon. Gentleman also had to withdraw his remarks because it was discovered that he was comparing the movement of iron bars with general cargo.

The Liberal amendment assumes that the extension of the Dock Labour Scheme to ports not already covered will lead to industrial action. There is no evidence at all for that assumption. The 1972 dock strike was, to a very large degree, the product of anomalies which our proposals seek to correct. That strike left no one in any doubt that industrial action in any or all of our ports has damaging and lasting effects. It is for this very reason that we are introducing this Bill, which is to try to prevent a similar deterioration in industrial relations in Britain's docks, exposing the country to such risks in the future. That is what the Liberals do not understand. This Bill will diminish and not increase the risks.

The Opposition accuse us of policies which increase bureaucracy and diminish freedom. But nothing they have said dur-

the course of this debate substantiates that ritual accusation. Their amendment is nothing more than a mirror of their own predicament, their lack of alternative policies, and their unconcern for the freedom and security of our people. Whose freedom will be served by immediate public expenditure cuts? Who will be freer by ensuring extra unemployment in the depths of a recession?

The problem with the right hon. Lady the Leader of the Opposition is that her definition of "freedom" is the freedom of the jungle. It is the freedom of a small group of people to jump the queue for a pay bed in a National Health Service hospital, for example. This amendment is typical of a party which, in opposition, has shown itself not as an alternative Government, but as a home for lost causes. The concern of the—

Mr. Humphrey Atkins (Spelthorne)

rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly, That the amendment be made:—

The House divided: Ayes 280, Noes 294.

Division No. 3.]	AYES	[10.0 p.m.
Adley, Robert	Channon, Paul	Fisher, Sir Nigel
Aitken, Jonathan	Churchill, W. S.	Fletcher-Cooke, Charles
Alison, Michael	Clark, Alan (Plymouth, Sutton)	Fookes, Miss Janet
Amery, Rt Hon Julian	Clark, William (Croydon S)	Fowler, Norman (Sutton C'f'd)
Arnold, Tom	Clarke, Kenneth (Rushcliffe)	Fox, Marcus
Atkins, Rt Hon H. (Spelthorne)	Clegg, Walter	Fraser, Rt Hon H. (Stafford & St)
Awdry, Daniel	Cockcroft, John	Freud, Clement
Bain, Mrs Margaret	Cooke, Robert (Bristol W)	Fry, Peter
Barker, Kenneth	Cope, John	Galbraith, Hon. T. G. D.
Banks, Robert	Cordle, John H.	Gardiner, George (Reigate)
Beith, A. J.	Cormack, Patrick	Gardner, Edward (S Fylde)
Bennett, Dr Reginald (Fareham)	Corrie, John	Gilmour, Rt Hon Ian (Chesham)
Benyon, W.	Costain, A. P.	Glyn, Dr Alan
Berry, Hon Anthony	Crawford, Douglas	Godber, Rt Hon Joseph
Biffen, John	Critchley, Julian	Goodhart, Philip
Biggs-Davison, John	Crouch, David	Goodhew, Victor
Blaker, Peter	Crowder, F. P.	Goodlad, Alastair
Body, Richard	Dean, Paul (N Somerset)	Gorst, John
Boscawen, Hon Robert	Dodsworth, Geoffrey	Gow, Ian (Eastbourne)
Bottomley, Peter	Douglas-Hamilton, Lord James	Gower, Sir Raymond (Barry)
Bowden, A. (Brighton, Kemptown)	Drayson, Burnaby	Grant, Anthony(Harrow C)
Boyson, Dr Rhodes(Brent)	du Cann, Rt Hon Edward	Gray, Hamish
Braine, Sir Bernard	Durant, Tony	Grieve, Percy
Brittan, Leon	Dykes, Hugh	Griffiths, Eldon
Brotherton, Michael	Eden, Rt Hon Sir John	Grimond, Rt. Hon J.
Brown, Sir Edward (Bath)	Edwards, Nicholas (Pembroke)	Grist, Ian
Bryan, Sir Paul	Elliott, Sir William	Hall, Sir John
Buchanan-Smith, Alick	Emery, Peter	Hall-Davis, A. G. F.
Budgen, Nick	Evans, Gwynfor (Carmarthen)	Hamilton, Michael (Salisbury)
Bulmer, Esmond	Ewing, Mrs Winifred (Moray)	Hampson, Dr Keith
Burden, F. A.	Eyre, Reginald	Hannam, John
Butler, Adam (Bosworth)	Fairbairn, Nicholas	Harvie Anderson, Rt Hon Miss
Carlisle, Mark	Fairgrieve, Russell	Hastings, Stephen
Carr, Rt Hon Robert	Farr, John	Havers, Sir Michael
Chalker, Mrs Lynda	Fell, Anthony	Hawkins, Paul
Hayhoe, Barney	Mayhew, Patrick	Sims, Roger
Heath, Rt Hon Edward	Meyer, Sir Anthony	Sinclair, Sir George
Henderson, Douglas	Miller, Hal (Bromsgrove)	Skeet, T. H. H.
Heseltine, Michael	Miscampbell, Norman	Smith, Cyril (Rochdale)
Hicks, Robert	Mitchell, David (Basingstoke)	Smith, Dudley (Warwick)
Higgins, Terence L.	Moate, Roger	Speed, Keith
Holland, Philip	Monro, Hector	Spence, John
Hordern, Peter	Montgomery, Fergus	Spicer, Jim (W Dorset)
Howe, Rt Hon Sir Geoffrey	Moore, John (Croydon C)	Spicer, Michael (S Worcester)
Howell, David (Guildford)	More, Jasper (Ludlow)	Sproat, Iain
Howell, Ralph (North Norfolk)	Morgan, Geraint	Stainton, Keith
Howells, Geraint (Cardigan)	Morris, Michael (Northampton S)	Stanbrook, Ivor
Hunt, John	Morrison, Charles (Devizes)	Stanley, John
Hurd, Douglas	Morrison, Hon Peter (Chester)	Steel, David (Roxburgh)
Hutchison, Michael Clark	Mudd, David	Steen, Anthony (Wavertree)
Irvine, Bryant Godman (Rye)	Neave, Airey	Stewart, Donald (Western Isles)
Irving, Charles (Cheltenham)	Nelson, Anthony	Stewart, Ian (Hitchin)
James, David	Neubert, Michael	Stokes, John
Jenkin, Rt Hn P. (Wanst'd & W'df'd)	Newton, Tony	Stradling Thomas, J.
Jessel, Toby	Nott, John	Tapsell, Peter
Johnson Smith, G. (E Grinstead)	Onslow, Cranley	Taylor, R. (Croydon NW)
Johnston, Russell (Inverness)	Oppenheim, Mrs Sally	Taylor, Teddy (Cathcart)
Jones, Arthur (Daventry)	Osborn, John	Tebbit, Norman
Jopling, Michael	Page, John (Harrow West)	Temple-Morris, Peter
Joseph, Rt Hon Sir Keith	Page, Rt Hon R. Graham (Crosby)	Thatcher, Rt Hon Margaret
Kaberry, Sir Donald	Pardoe, John	Thomas, Dafydd (Merioneth)
Kellett-Bowman, Mrs Elaine	Pattie, Geoffrey	Thomas, Rt Hon P. (Hendon S)
Kilfedder, James	Penhaligon, David	Thompson, George
Kimball, Marcus	Percival, Ian	Thorpe, Rt Hon Jeremy (N Devon)
King, Evelyn (South Dorset)	Peyton, Rt Hon John	Townsend, Cyril D.
King, Tom (Bridgwater)	Pink, R. Bonner	Trotter, Neville
Kitson, Sir Timothy	Price, David (Eastleigh)	Tugendhat, Christopher
Knight, Mrs Jill	Prior, Rt Hon James	van Straubenzee, W. R.
Knox, David	Pym, Rt Hon Francis	Vaughan, Dr Gerard
Lamont, Norman	Raison, Timothy	Viggers, Peter
Lane, David	Rathbone, Tim	Wainwright, Richard (Colne V)
Langford-Holt, Sir John	Rawlinson, Rt Hon sir Peter	Wakeham, John
Latham, Michael (Melton)	Rees, Peter (Dover & Deal)	Walder, David (Clitheroe)
Lawrence, Ivan	Rees-Davies, W. R.	Walker, Rt Hon P. (Worcester)
Lawson, Nigel	Raid, George	Walker-Smith, Rt Hon Sir Derek
Lester, Jim (Beeston)	Renton, Rt Hon Sir D. (Hunts)	Wall, Patrick
Lewis, Kenneth (Rutland)	Renton, Tim (Mid-Sussex)	Walters, Dennis
Lloyed, Ivan	Rhys Williams, Sir Brandon	Warren, Kenneth
Loveridge, John	Ridley, Hon Nicholas	Watt, Hamish
Luce, Richard	Ridsdale, Julian	Weatherill, Bernard
McAdden, Sir Stephen	Rifkind, Malcolm	Wells, John
MacCormick, lain	Rippon, Rt Hon Geoffrey	Welsh, Andrew
McCrindle, Robert	Roberts, Wyn (Conway)	Whitelaw, Rt Hon William
Macfarlane, Neil	Ross, Stephen (Isle of Wight)	Wiggin, Jerry
MacGregor, John	Rossi, Hugh (Hornsey)	Wigley, Dafydd
Macmillan, Rt Hon M. (Farnham)	Rost, Peter (SE Derbyshire)	Wilson, Gordon (Dundee E)
McNair-Wilson, M. (Newbury)	Royle, Sir Anthony	Winterton, Nicholas
McNair-Wilson, P. (New Forest)	Sainsbury, Tim	Wood, Rt Hon Richard
Madel, David	St. John-Stevas, Norman	Young, Sir G. (Ealing, Acton)
Mates, Michael	Scott, Nicholas	Younger, Hon George
Mather, Carol	Shaw, Giles (Pudsey)
Maude, Angus	Shaw, Michael (Scarborough)	TELLERS FOR THE AYES:
Maudling, Rt Hon Reginald	Shepherd, Colin	Mr. Spencer Le Marchant and
Mawby, Ray	Shersby, Michael	Mr. Cecil Parkinson.
Maxwell-Hyslop, Robin	Silvester, Fred
NOES
Abse, Leo	Bradley, Tom	Concannon, J. D.
Allaun, Frank	Bray, Dr Jeremy	Cook, Robin F. (Edin C)
Anderson, Donald	Brown, Hugh D (Provan)	Corbett, Robin
Archer, Peter	Brown, Robert C. (Newcastle W)	Cox, Thomas (Tooting)
Armstrong, Ernest	Brown, Ronald (Hackney S)	Craigen, J. M. (Maryhill)
Ashley, Jack	Buchan, Norman	Crawshaw, Richard
Ashely, Jack	Buchan, Richard	Cronin, John
Atkins, Ronald (Preston N)	Butler, Mrs Joyce (Wood Green)	Cryer, Bob
Atkinson, Norman	Callaghan, Jim (Middleton & P)	Cunningham, G. (Islington S)
Bagier, Gordon A. T.	Campbell, Ian	Cunningham, Dr J (Whiteh)
Barnett, Rt Hon Joel (Heywood)	Canavan, Dennis	Dalyell, Tam
Bates, Alf	Cant, R. B.	Davidson, Arthur
Bean, R. E.	Carmichael, Neil	Davies, Denzil (Llanelli)
Benn, Rt Hon Anthony Wedgwood	Carter, Ray	Davies, Ifor (Gower)
Bennett, Andrew (Stockport N)	Carter-Jones, Lewis	Davis, Clinton (Hackney C)
Bidwell, Sydney	Cartwright, John	Deakins, Eric
Bishop, E.S.	Castle, Rt Hon Barbara	Dean, Joseph (Leeds West)
Blenkinsop, Arthur	Clemitson, Ivor	Delargy, Hugh
Boardman, H.	Cocks, Michael (Bristol S)	Dell, Rt Hon Edmund
Booth, Albert	Cohen, Stanley	Dempsey, James
Bottomley, Rt Hon Arthur	Coleman, Donald	Doig, Peter
Boyden, James (Bish Auck)	Colquhoun, Mrs Maureen	Dormand, J. D.
Douglas Mann, Bruce	Kinnock, Neil	Roberts, Gwilym (Cannock)
Duffy, A. E. P.	Lamborn, Harry	Robertson, John (Paisley)
Dunn, James A.	Lamond, James	Roderick, Caerwyn
Dunnett, Jack	Latham, Arthur (Paddington)	Rodgers, George (Chorley)
Dunwoody, Mrs Gwyneth	Leadbitter, Ted	Rodgers, William (Stockton)
Eadie, Alex	Lee, John	Rooker, J. W.
Edge, Geoff	Lestor, Miss Joan (Eton & Slough)	Rose, Paul B.
Edwards, Robert (Wolv SE)	Lever, Rt Hon Harold	Ross, Rt Hon W. (Kilmarnock)
Ellis, Tom (Wrexham)	Lewis, Arthur (Newham N)	Rowlands, Ted
English, Michael	Lewis, Ron (Carlisle)	Sedgemore, Brian
Ennals, David	Lipton, Marcus	Selby, Harry
Evans, Fred (Caerphilly)	Litterick, Tom	Shaw, Arnold (Ilford South)
Evans, Ioan (Aberdare)	Loyden, Eddie	Sheldon, Robert (Ashton-u-Lyne)
Evans, John (Newton)	Luard, Evan	Shore, Rt Hon Peter
Ewing, Harry (Stirling)	Lyon, Alexander (York)	Short Rt Hon E. (Newcastle C)
Fernyhough, Rt Hon E.	McCartney, Hugh	Short, Mrs Renée(Wolv NE)
Fitch, Alan (Wigan)	McElhone, Frank	Silkin, Rt Hon John (Deptford)
Fitt, Gerard (Belfast W)	MacFarquhar, Roderick	Silkin, Rt Hon S. C. (Dulwich)
Flannery, Martin	McGuire, Michael (Ince)	Sillars, James
Fletcher, Raymond (Ilkeston)	Mackenzie, Gregor	Skinner, Dennis
Fletcher, Ted (Darlington)	Mackintosh, John P.	Small, William
Foot, Rt Hon Micheal	Maclennan, Robert	Smith, John (N Lanarkshire)
Ford, Ben	McMillan, Tom (Glasgow C)	Snape, Peter
Forrester, John	McNamara, Kevin	Spearing, Nigel
Fowler, Gerald (The Wrekin)	Madden, Max	Spriggs, Leslie
Fraser, John (Lambeth, n'w'd)	Magee, Bryan	Stallard, A. W.
Freeson, Reginald	Maguire, Frank (Fermanagh)	Stewart, Rt Hon M. (Fulham)
Garrett, John (Norwich S)	Mahon, Simon	Stoddart, David
Garrett, W. E. (Wallsend)	Mallalieu, J. P. W.	Stonehouse, Rt Hon John
George, Bruce	Marks, Kenneth	Stott, Roger
Gilbert, Dr John	Marquand, David	Strang, Gavin
Ginsburg, David	Marshall, Dr Edmund (Goole)	Strauss, Rt Hon G. R.
Golding, John	Marshall, Jim (Leicester s)	Summerskill, Hon Dr Shirley
Gourlay, Harry	Mason, Rt Hon Roy	Swain, Thomas
Graham, Ted	Maynard, Miss Joan	Taylor, Mrs. Ann (Bolton W)
Grant, George (Morpeth)	Meacher, Michael	Thomas, Jeffrey (Abertillery)
Grant, John (Islington C)	Mellish, Rt Hon Robert	Thomas, Mike (Newcastle E)
Grocott, Bruce	Mendelson, John	Thomas, Ron (Bristol NW)
Hamilton, James (Bothwell)	Mikardo, Ian	Thorne, Stan (Preston South)
Hamilton, W. W. (central Fife)	Millan, Bruce	Tierney, Sydney
Hardy, Peter	Miller, Mrs Millie (Ilford N)	Tinn, James
Harper, Joseph	Mitchell, R. C. (Soton, Itchen)	Tomlinson, John
Harrison, Walter (Wakefield)	Molloy, William	Tomney, Frank
Hart, Rt Hon Judith	Moonman, Eric	Torney, Tom
Hattersley, Rt Hon Roy	Morris, Alfred (Wythenshawe)	Tuck, Raphael
Hatton, Frank	Morris, Charles R. (Openshaw)	Urwin, T. W.
Hayman, Mrs Helene	Morris, Rt Hon J (Aberavon)	Varley, Rt Hon Eric G.
Healey, Rt Hon Denis	Moyle, Roland	Wainwright, Edwin (Dearne V)
Heffer, Eric S.	Mulley, Rt Hon Frederick	Walden, Brian (B'ham, L'dyw'd)
Hooley, Frank	Murray, Rt Hon Ronald King	Walker, Harold (Doncaster)
Horam, John	Newens, Stanley	Walker, Terry (Kingswood)
Howell, Denis (B'ham, Sm H)	Noble, Mike	Ward, Micheal
Hoyle, Doug (Nelson)	Oakes, Gordon	Watkins, David
Huckfield, Les	Ogden, Eric	Watkinson, John
Hughes, Rt Hon C. (Anglesey)	O' Halloran, Micheal	Weetch, Ken
Hughes, Mark (Durham)	O'Malley, Rt Hon Brain	Weitzman, David
Hughes, Robert (Aberdeen N)	Orbach, Maurice	Wellbeloved, James
Hughes, Roy (Newport)	Orme, Rt Hon Stanley	White, Frank R. (Bury)
Hunter, Adam	Ovenden, John	White, James (Pollok)
Irvine, Rt Hon Sir A. (Edge Hill)	Owen, Dr David	Whitehead, Phillip
Irving, Rt Hon S. (Dartford)	Padley, Walter	Whitlock, William
Jackson, Colin (Brighouse)	Palmer, Arthur	Willey, Rt Hon Frederick
Janner, Greville	Park, George	Williams, Alan (Swansea W)
Jay, Rt Hon Douglas	Parker, John	Williams, Alan Lee (Hornch'ch)
Jeger, Mrs Lena	Parry, Robert	Williams, Rt Hon Shirley (Hertford)
Jenkins, Hugh (Putney)	Pavitt, Laurie	Williams, W. T. (Warrington)
Jenkins, Rt Hon Roy (Stechford)	Peart, Rt Hon Fred	Wilson, Alexander (Hamilton)
John, Brynmor	Perry, Earnest	Wilson, Rt Hon. H. (Huyton)
Johnson, Walter (Derby S)	Phipps, Dr Colin	Wilson, William (Coventry SE)
Jones, Alec (Rhondda)	Prentice, Rt Hon Reg	Wise, Mrs Audrey
Jones, Barry (East Flint)	Prescott, John	Woodall, Alec
Jones, Dan (Burnley)	Price, C. (Lewisham W)	Woof, Robert
Judd, Frank	Price, William (Rugby)	Wrigglesworth, Ian
Kaufman, Gerald	Radice, Giles	Young, David (Bolton E)
Kelley, Richard	Rees, Rt Hon Merlyn (Leeds S)	TELLERS FOR THE NOES:
Kerr, Russell	Richardson, Miss Jo	Mr. John Ellis and
Kilroy-Silk, Robert	Roberts, Albert (Normanton)	Miss Margaret Jackson.

Question accordingly negatived

Mr. Speaker

I now call the right hon. Member for Devon, North (Mr. Thorpe) formally to move his amendment.

Amendment proposed: At end of Question, add— But humbly regret that the Gracious Speech contains proposals for the docks which, if carried out by an extension of the areas covered by the National Dock Labour Scheme.

will lead to further unemployment in those areas, further strangulation of Great Britain's successful ports and higher costs and inefficiency.—[Mr. Thorpe.]

Question put forthwith pursuant to the Order of the House this day, That the amendment be made:—

The House divided: Ayes 288, Noes 294.

Division No. 4.]	AYES	[10.17 p.m.
Adley, Robert	Eyre, Reginald	Kimball, Marcus
Aitken, Jonathan	Fairbairn, Nicholas	King, Evelyn (South Dorset)
Alison, Michael	Fairgrieve, Russell	King, Tom (Bridgwater)
Amery, Rt Hon Julian	Farr, John	Kitson, Sir Timothy
Arnold, Tom	Fell, Anthony	Knight, Mrs Jill
Atkins, Rt Hon H. (Spelthorne)	Fisher, sir Nigel	Knox, David
Awdry, Daniel	Fletcher-Cooke, Charles	Lamont, Norman
Bain, Mrs Margaret	Fookes, Miss Janet	Lane, David
Baker, Kenneth	Fowler, Norman (Sutton C'f'd)	Langford-Holt, Sir John
Banks, Robert	Fox, Marcus	Latham, Michael (Melton)
Beith. A. J.	Fraser, Rt Hon H. (Stafford & St)	Lawrence, Ivan
Bennett, Dr Reginald (Fareham)	Freud, Clement	Lawson, Nigel
Benyon, W.	Fry, Peter	Le Marchant, Spencer
Berry, Hon Anthony	Galbraith, Hon. T. G. D.	Lester, Jim (Beeston)
Biffen, John	Gardiner, George (Reigate)	Lewis, Kenneth (Rutland)
Biggs-Davison, John	Gardner, Edward (S Fylde)	Lloyd, Ian
Blaker, Peter	Gilmour, Rt Hon Ian (Chesham)	Loveridge, John
Body, Richard	Glyn, Dr Alan	Luce, Richard
Boscawen, Hon Robert	Godber, Rt Hon Joseph	McAdden, Sir Stephen
Bottomley, Peter	Goodhart, Philip	MacCormick, Iain
Bowden, A. (Brighton, Kemptown)	Goodhew, Victor	McCrindle, Robert
Boyson, Dr Rhodes(Brent)	Goodlad, Alastair	McCusker, H.
Bradtord, Rev Robert	Gorst, John	Macfarlane, Neil
Braine, Sir Bernard	Gow, Ian (Eastbourne)	MacGregor. John
Brittan, Leon	Gower, Sir Raymond (Barry)	Macmillan, Rt Hon M. (Farnham)
Brotherton, Michael	Grant, Anthony (Harrow C)	McNair-Wilson, M. (Newbury)
Brown, Sir Edward (Bath)	Gray, Hamish	McNair-Wilson, P. (New Forest)
Bryan, Sir Paul	Grieve, Percy	Madel, David
Buchanan-Smith, Alick	Griffiths, Eldon	Mates, Michael
Budgen, Nick	Grimond, Rt Hon J.	Mather, Carol
Bulmer, Esmond	Grist, Ian	Maude, Angus
Burden, F. A.	Hall, Sir John	Maulding, Rt Hon Reginald
Butler, Adam (Bosworth)	Hall-Davis, A. G. F.	Mawby, Ray
Carlisle, Mark	Hamilton, Michael (Salisbury)	Maxwell-Hyslop, Robin
Carr, Rt Hon Robert	Hampson, Dr Keith	Mayhew, Patrick
Carson, John	Hannam, John	Meyer, Sir Anthony
Chalker, Mrs Lynda	Harvie Anderson, Rt Hon Miss	Miller, Hal (Bromsgrove)
Channon, Paul	Hastings, Stephen	Miscampbell, Norman
Churchill, W. S.	Havers, Sir Michael	Mitchell, David (Basingstoke)
Clark, Alan (Plymouth, Sutton)	Hawkins, Paul	Moate, Roger
Clark, William (Croydon S)	Hayhoe, Barney	Molyneaux, James
Clarke, Kenneth (Rushcliffe)	Heath, Rt Hon Edward	Monro, Hector
Clegg, Walter	Henderson, Douglas	Montgomery, Fergus
Cockcroft, John	Heseltine, Michael	Moore, John (Croydon C)
Cooke, Robert (Bristol W)	Hicks, Robert	More, Jasper (Ludlow)
Cope, John	Higgins, Terence L.	Morgan, Geraint
Cordle, John H.	Holland, Philip	Morris, Michael (Northampton S)
Cormack, Patrick	Hordern, Peter	Morrison, Charles (Devizes)
Corrie, John	Howe, Rt Hon Sir Geoffrey	Morrison, Hon Peter (Chester)
Costain, A. P.	Howell, David (Gulldford)	Mudd, David
Crawford, Douglas	Howell, Ralph (North Norfolk)	Neave, Airey
Critchley, Julian	Howells, Geraint (Cardigan)	Nelson, Anthony
Crouch, David	Hunt, John	Neubert, Michael
Crowder, F. P.	Hurd, Douglas	Newton, Tony
Dean, Paul (N Somerset)	Hutchison, Micheal Clark	Nott, John
Dodsworth, Geoffrey	Irvine, Bryant Godman (Rye)	Onslow, Cranley
Douglas-Hamilton, Lord James	Irving, Charles (Cheltenham)	Oppenheim, Mrs Sally
Drayson, Burnaby	James, David	Osborn, John
du Cann, Rt Hon Edward	Jenkin, Rt Hn P. (Wanst'd & W'df'd)	Page, John (Harrow West)
Dunlop, John	Jessel, Toby	Page, Rt Hon R. Graham (Crosby)
Durant, Tony	Johnson Smith, G. (E Grinslead)	Paisley, Rev Ian
Dykes, Hugh	Johnston, Russeil (Inverness)	Parkinson, Cecil
Eden, Rt Hon Sir John	Jones, Arthur (Daventry)	Pattie, Geoffrey
Edwards, Nicholas (Pembroke)	Jopling, Michael	Penhaligon, David
Elliott, Sir William	Joseph, Rt Hon Sir Keith	Percival, Ian
Emery, Peter	Kaberry, Sir Donald	Peyton, Rt Hon John
Evans, Gwynfor (Carmarthen)	Kellett-Bowman, Mrs Elaine	Pink, R. Bonner
Ewing, Mrs Winifred (Moray)	Kilfedder, James	Powell, Rt Hon J. Enoch
Price, David (Eastleigh)	Silvester, Fred	Townsend, Cyril D.
Prior, Rt Hon James	Sims, Roger	Trotter, Neville
Pym, Rt Hon Francis	Sinclair, Sir George	Tugendhat, Christopher
Raison, Timothy	Skeet, T. H. H.	van Straubenzee, W. R.
Rathbone, Tim	Smith, Dudley (Warwick)	Vaughan, Dr Gerard
Rawlinson, Rt Hon Sir Peter	Speed, Keith	Viggers, Peter
Rees, Peter (Dover & Deal)	Spence, John	Wainwright, Richard (Colne V)
Rees-Davies, W. R.	Spicer, Jim (W Dorset)	Wakeham, John
Reid, George	Spicer, Michael (S Worcester)	Walder, David (Clitheroe)
Renton, Rt Hon Sir D. (Hunts)	Sproat, lain	Walker, Rt Hon P. (Worcester)
Renton, Tim (Mid-Sussex)	Stainton, Keith	Walker-Smith, Rt Hon Sir Derek
Rhys Williams, Sir Brandon	Stanbrook, Ivor	Wall, Patrick
Ridley, Hon Nicholas	Stanley, John	Walters, Dennis
Ridsdale, Julian	Steel, David (Roxburgh)	Warren, Kenneth
Rifkind, Malcolm	Steen, Anthony (Wavertree)	Watt, Hamish
Rippon, Rt Hon Geoffrey	Stewart, Donald (Western Isles)	Weatherill, Bernard
Roberts, Wyn (Conway)	Stewart, Ian (Hitchin)	Wells, John
Ross, Stephen (Isle of Wight)	Stokes, John	Welsh, Andrew
Ross, William (Londonderry)	Stradling Thomas, J.	Whitelaw, Rt Hon William
Rossi, Hugh (Hornsey)	Tapsell, Peter	Wiggin, Jerry
Rost, Peter (SE Derbyshire)	Taylor, R. (Croydon NW)	Wigley, Dafydd
Royle, Sir Anthony	Taylor, Teddy (Cathcart)	Wilson, Gordon (Dundee E)
Sainsbury, Tim	Tebbit, Norman	winterton, Nicholas
St. John-Stevas, Norman	Temple-Morris, Peter	Wood, Rt Hon Richard
Scott, Nicholas	Thatcher, Rt Hon Margaret	Young, Sir G. (Ealing, Acton)
Shaw, Giles (Pudsey)	Thomas, Dafydd (Merioneth)	Younger, Hon George
Shaw, Michael (Scarborough)	Thomas, Rt Hon P. (Hendon S)	TELLERS FOR THE AYES:
Snepherd, Colin	Thompson, George	Mr. Cyril Smith and
Shersby, Michael	Thorpe, Rt Hon Jeremy (N Devon)	Mr. John Pardoe
NOES
Abse, Leo	Cunningham, Dr J (Whiteh)	Harper, Joseph
Allaun, Frank	Dalyell, Tam	Harrison, Walter (Wakefield)
Anderson, Donald	Davidson, Arthur	Hart, Rt Hon Judith
Archer, Peter	Davies, Denzil (Llanelli)	Hattersley, Rt Hon Roy
Armstrong, Ernest	Davies, Ifor (Gower)	Hatton, Frank
Ashley, Jack	Davis, Clinton (Hackney C)	Hayman, Mrs Helene
Ashton, Joe	Deakins, Eric	Healey, Rt Hon Denis
Atkins, Ronald (Preston N)	Dean, Joseph (Leeds West)	Heffer, Eric S.
Atkinson, Norman	Delargy, Hugh	Hooley, Frank
Bagier, Gordon A. T.	Dell, Rt Hon Edmund	Horam, John
Barnett, Rt Hon Joel (Heywood)	Dempsey, James	Howell, Denis (B'ham, Sm H)
Bates, Alf	Doig, Peter	Hoyle, Doug (Nelson)
Bean, R. E.	Douglas-Mann, Bruce	Huckfield, Les
Benn, Rt Hon Anthony Wedgwood	Duffy, A. E. P.	Hughes, Rt Hon C. (Anglesey)
Bennett, Andrew (Stockport N)	Dunn, James A.	Hughes, Mark (Durham)
Bidwell, Sydney	Dunnett, Jack	Hughes, Robert (Aberdeen N)
Bishop, E. S.	Dunwoody, Mrs Gwyneth	Hughes, Roy (Newport)
Blenkinsop, Arthur	Eadie, Alex	Hunter, Adam
Boardman, H.	Edge, Geoff	Irvine, Rt Hon Sir A. (Edge Hill)
Booth, Albert	Edwards, Robert (Wolv SE)	Irving, Rt Hon S. (Dartford)
Bottomley, Rt Hon Arthur	Ellis, John (Brigg & Scun)	Jackson, Colin (Brighouse)
Boyden, James (Bish Auck)	Ellis, Tom (Wrexham)	Jackson, Miss Margaret (Lincoln)
Bradley, Tom	English, Michael	Janner, Greville
Bray, Dr Jeremy	Ennals, David	Jay, Rt Hon Douglas
Brown, Hugh D (Provan)	Evans, Fred (Caerphilly)	Jeger, Mrs Lena
Brown, Robert C. (Newcastle W)	Evans, Ioan (Aberdare)	Jenkins, Hugh (Putney)
Brown, Ronald (Hackney S)	Evans, John (Newton)	Jenkins, Rt Hon Roy (Stechford)
Buchan, Norman	Ewing, Harry (Stirling)	John, Brynmor
Buchanan, Richard	Fernyhough, Rt Hon E.	Johnson, Walter (Derby S)
Butler, Mrs Joyce (Wood Green)	Fitch, Alan (Wigan)	Jones, Alec (Rhondda)
Callaghan. Jim (Middleton & P)	Fitt, Gerard (Belfast W)	Jones, Barry (East Flint)
Campbell, Ian	Flannery, Martin	Jones, Dan (Burnley)
Canavan, Dennis	Fletcher, Raymond (Ilkeston)	Judd, Frank
Cant, R. B.	Fletcher, Ted (Darlington)	Kaufman, Gerald
Carmichael, Neil	Foot, Rt Hon Michael	Kelley Richard,
Carter, Ray	Ford, Ben	Kerr, Russell
Carter-Jones, Lewis	Forrester, John	Kilroy-Silk, Robert
Cartwright, John	Fowler, Gerald (The Wrekin)	Kinnock, Neil
Castle, Rt Hon Barbara	Fraser, John (Lambeth, N'w'd)	Lamborn, Hary
Clemitson, Ivor	Freeson, Reginald	Lamond, James
Cocks, Michael (Bristol S)	Garrett, John (Norwich S)	Latham, Arthur (Paddington)
Cohen, Stanley	Garrett, W. E. (Wallsend)	Leadbitter, Ted
Coleman, Donald	George, Bruce	Lee, John
Colquhoun, Mrs Maureen	Gilbert, Dr John	Lestor, Miss Joan (Eton & Slough)
Concarmon, J. D.	Ginsburg, David	Lever, Rt Hon Harold
Cook, Robin F. (Edin C)	Golding, John	Lewis, Arthur (Newham N)
Corbett, Robin	Gourlay, Harry	Lewis, Ron (Carlisle)
Cox, Thomas (Tooting)	Graham, Ted	Lipton, Marcus
Craigen, J. M. (Maryhill)	Grant, George (Morpeth)	Litterick, Tom
Crawshaw, Richad	Grant, John (Islington C)	Loyden, Eddie
Cronin, John	Grocott, Bruce	Luard, Evan
Cryer, Bob	Hamilton, W. W. (Central Fife)	Lyon, Alexander (York)
Cunningham, G. (Islington S)	Hardy, Peter	McCartney, Hugh
McElhone, Frank	Park, George	Strauss, Rt Hon G. R.
MacFarquhar, Roderick	Parker, John	Summerskill, Hon Dr Shirley
McGuire, Michael (Ince)	Parry, Robert	Swain, Thomas
Mackenzie, Gregor	Pavitt, Laurie	Taylor, Mrs. Ann (Bolton W)
Mackintosh, John P.	Peart, Rt Hon Fred	Thomas, Jeffrey (Abertillery)
Maclennan, Robert	Perry, Ernest	Thomas, Mike (Abertillery)
McMillan, Tom (Glasgow C)	Phipps, Dr Colin	Thomas, Ron (Bristol NW)
McNamara, Kevin	Prentice, Rt Hon Reg	Thorne, Stan (Preston South)
Madden, Max	Prescott, John	Tierney, Sydney
Magee, Bryan	Price, C. (Lewisham W)	Tinn, James
Maguire, Frank (Fermanagh)	Price, William (Rugby)	Tomlinson, John
Mahon, Simon	Radice, Giles	Tomney, Frank
Mallalieu, J. P. W.	Rees, Rt Hon Merlyn (Leeds S)	Torney, Tom
Marks, Kenneth	Richardson, Miss Jo	Tuck, Raphael
Marquand, David	Roberts, Albert (Normanton)	Urwin, T. W.
Marshall, Dr Edmund (Goole)	Roberts, Gwilym (Cannock)	Varley, Rt Hon Eric G.
Marshall, Jim (Leicester S)	Robertson, John (Paisley)	Wainwright, Edwin (Dearne V)
Mason, Rt Hon Roy	Roderick, Caerwyn	Walden, Brian (B'ham, L'dyw'd)
Maynard, Miss John	Rodgers, George (Chorley)	Walker, Harold (Doncaster)
Meacher, Michael	Rodgers, William (Stockton)	Walker, Terry (Kingswood)
Mellish, Rt Hon Robert	Rooker, J. W.	Ward, Michael
Mendelson, John	Rose, Paul B.	Watkins, David
Mikardo, Ian	Ross, Rt Hon W. (Kilmarnock)	Watkinson, John
Millan, Bruce	Rowlands, Ted	Weetch, Ken
Miller, Mrs Millie (Ilford N)	Sedgemore, Brian	Weitzman, David
Mitchell, R. C. (Soton, Itchen)	Selby, Harry	Wellbeloved, James
Molloy, William	Shaw, Arnold (Ilford South)	White, Frank R. (Bury)
Moonman, Eric	Sheldon, Robert (Ashton-u-Lyne)	White, James (Pollok)
Morris, Alfred (Wythenshawe)	Shore, Rt Hon Peter	Whitehead, Phillip
Morris, Charles R. (Openshaw)	Short, Rt Hon E. (Newcastle C)	Whitlock, William
Morris, Rt Hon J. (Aberavon)	Short, Mrs Renee(Wolv NE)	Willey, Rt Hon Frederick
Moyle, Roland	Silkin, Rt Hon John (Deptford)	Williams, Alan (Swansea W)
Mulley, Rt Hon Frederick	Silkin, Rt Hon S. C. (Dulwich)	Williams, Alan Lee (Hornch'ch)
Murray, Rt Hon Ronald King	Sillars, James	Williams, Rt Hon Shirley (Hertford)
Newens, Stanley	Skinner, Dennis	Williams, W. T. (Warrington)
Noble, Mike	Small, William	Wilson, Alexander (Hamilton)
Oakes, Gordon	Smith, John (N Lanarkshire)	Wilson, Rt Hon H. (Huyton)
Ogden, Eric	Snape, Peter	Wilson, William (Coventry SE)
O'Halloran, Michael	Spearing, Nigel	Wise, Mrs Audrey
O'Malley, Rt Hon Brian	Spriggs, Leslie	Woodall, Alec
Orbach, Maurice	Stallard, A. W.	woof, Robert
Orme, Rt Hon Stanley	Stewart, Rt Hon M. (Fulham)	Wrigglesworth, Ian
Ovenden, John	Stoddart, David	Young, David (Bolton E)
Owen, Dr David	Storehouse, Rt Hon John	TELLERS FOR THE NOES
Padley, Walter	Stott, Roger	Mr. J. D. Dormand and
Palmer, Arthur	Strang, Gavin	Mr. James Hamilton.

Question accordingly negatived

Main Question put and agreed to.

Resolved, 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 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.

To be presented by Privy Councillors or Members of Her Majesty's Household.

c811
1. FRESHWATER AND SALMON FISHERIES (SCOTLAND) BILL 16 words
c811
1. ADJOURNMENT 12 words