Commons Sitting of 20 January 1976

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

    North Wales
    Sir A. Meyerasked the Secretary of State for Employment whether he is satisfied that the Government's measures for relieving unemployment are proving effective in the North Wales area.
    The Under-Secretary of State for Employment (Mr. John Fraser): I am satisfied that the various Government measures to alleviate the worst effects of unemployment have been of considerable benefit to North Wales. These measures were not, of course, designed to solve the problem of unemployment, which I recognise is still a matter of serious concern.
    Sir A. Meyer: I am not at all satisfied with that answer. Is the hon. Gentleman aware that male unemployment in the Rhyl area has now reached 18·9 per cent. and that the Government's much publicised job creation programme, including the construction of advance factories, many of which now stand empty, is having no effect other than to impose additional tax burdens on private industry? Is he further aware that the result is that for every job created or saved by the Government, two or three jobs are lost in the private sector? Is not the whole programme a cruel hoax on the unemployed?
    Mr. Fraser: I agree about the seriousness of the figures. Throughout North Wales as a whole, unemployment was 11·4 per cent. last month. However, I do not agree that the measures have not had some effect. Job creation in North Wales has provided 210 jobs, the recruitment subsidy has provided 237 jobs and the
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    temporary employment subsidy has saved 150 jobs. A total of 23 advance factories have been approved. Help under the Industry Act 1972 in Wales as a whole has saved or created 31,000 jobs. I do not believe that these are wasted measures. They are worth while and welcome.
    Mr. Heffer: Is my hon. Friend aware that whatever happens in North Wales badly affects Merseyside, where unemployment has just risen from 74,477 to 82,280—an increase of 7,803, representing an increase from 9·9 per cent. to 10·9 per cent. in one month? Is it not clear that the Government's measures are not adequate to deal with unemployment? May I draw to the attention of my right hon. Friend the Secretary of State for Employment the fact that it is no use just talking about the situation being deplorable; we know it is deplorable. Is my hon. Friend aware that we need some positive action by the Government to bring down unemployment, otherwise the Labour movement in this country will not stand for it much longer?
    Mr. Fraser: There is a later Question on unemployment on Merseyside. In my reply I did not pretend that the Government's measures had removed the fundamental underlying problems of unemployment, but the measures are unprecedented in their size and make a useful contribution to dealing with some of the worst effects, particularly among young people.
    Mr. Gwynfor Evans: Is the hon. Gentleman aware that in the whole of Wales, the number of unemployed has increased by 13,208 in one month, to the scandalous total of 86,796, and that Wales still has the highest percentage unemployment of ail the regions and countries of this island, despite the heavy emigration from Wales? Is the hon. Gentleman not aware that these figures provide 86,796 good reasons why Wales must have an Assembly with economic and industrial powers of legislation?
    Mr. Fraser: It would be as well if I were not drawn into a devolution debate—a subject that has occupied the House during the past week. The figures in Wales are unacceptably high, but the result of regional policies has been that unemployment in Wales and other hard-pressed regions of the country has increased rather less than in the more

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    prosperous regions, though I am not complacent about that.

    Development Agencies and National Enterprise Board
    Mr. David Steelasked the Secretary of State for Employment what effects on employment prospects he expects will flow from the establishment of the Scottish and Welsh Development Agencies and the National Enterprise Board.
    Mr. Hendersonasked the Secretary of State for Employment what effects on employment prospects he expects will flow from the establishment of the Scottish and Welsh Development Agencies and the National Enterprise Board.
    The Secretary of State for Employment (Mr. Michael Foot): The Scottish and Welsh Development Agencies and the National Enterprise Board are all charged with the provision, maintenance and safeguarding of employment in their respective spheres. I and my right hon. Friends are confident that their activities will make a significant contribution to strengthening the economy of the United Kingdom, with consequential improvements in employment prospects. The further extremely serious rise of 42,000 announced today in the seasonally adjusted level of unemployment, to a total, for the United Kingdom, of 1,205,000, makes this contribution the more urgent.
    Mr. Steel: Does the right hon. Gentleman agree that these organisations will bring benefit, at best, in the long term and offer no comfort to the number of unemployed he has just announced—in particular, to the 162,000 unemployed in Scotland? Does he realise that as far as the House is concerned the stronger and stronger adjectives he uses each month, as the figures increase, are no substitute for a policy? As the Secretary of State for Scotland told us some time ago that he would resign if the figures reached 100,000, what new figure has to be reached before the right hon. Gentleman and the Secretary of State for Scotland both resign?
    Mr. Foot: What is required to deal with the problem is a long-term policy, a short- to medium-term policy and an immediate policy. The long-term policy and, perhaps, the medium-term policy, can be greatly assisted by provisions under the
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    National Enterprise Board. The short-term measures announced by the Government in September and prior to Christmas can have immediate effects that are of advantage. I fully appreciate the deep anxiety expressed by my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) and others on the earlier Question, but I believe that in the medium term what is required is a general expansion in the economy as soon as we are able to effect it. The sooner we can reach that stage the better.
    Mr. Henderson: Is the Secretary of State aware that he will be judged not by the kindness of the words he utters in the House but by results? The figure of 162,000 unemployed in Scotland is totally unacceptable to the people of Scotland. Does the right hon. Gentleman realise that it will be seen in Scotland that all the words we have heard in the last few days about the advantages of remaining in the United Kingdom, under centralised control of the economy, are totally irrelevant to Scotland's needs?
    Mr. Foot: Of course, the figure for Scotland is a terrible one, but the same problem applies in many other parts of the United Kingdom, so it is not a solely Scottish problem. What we need are policies which are effective all over the United Kingdom, and not solely in one part.
    Mr. Sillars: Is my right hon. Friend aware that Socialists in Scotland are as appalled by the 1·4 million as they are by the 162,000? Will he confess that the Labour Cabinet is using unemployment as one method of managing a capitalist economy? Will he tell us how we can honour the Labour Party's pledge to shift the balance of wealth and power in favour of the working people when we are heading for a figure of 1·5 million unemployed?
    Mr. Foot: I repudiate the statement by my hon. Friend that the Government are using unemployment as an instrument for controlling the economy. We wish to see effective measures taken to deal with unemployment. The direct measures that the Government have taken and the measures for dealing with inflation are designed to help deal with that problem.
    Mr. Prior: Is the Secretary of State aware that no one in the House can any

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    longer have confidence in the words he utters from the Dispatch Box? Time and again, when the monthly unemployment figures are announced, he expresses sorrow, but is he aware that his Government and his policy are totally responsible for what has happened? Does he realise that the public are now reaping the whirlwind of the Government's policy of allowing inflation to rip so as to win a General Election.
    Mr. Foot: Unemployment on the appalling scale indicated by these figures applies not only in this country but in most of the Western world. Indeed, the disease in most of the other countries is even more virulent that it is here. It is nonsense for the right hon. Gentleman to say that the Labour Government are responsible for it. We are seeking to cure it.
    Mr. Flannery: Does my right hon. Friend accept that, whether it be in England, Northern Ireland, Scotland, or Wales, more and more people are becoming unemployed, and that if the buying power of the working people is reduced they cannot buy the commodities they used to buy, and so the people who pro-due those commodities are put out of work? That is why the accusation is made about using unemployment to restore the balance. Does my right hon. Friend realise that the answer is to begin to reflate the economy and impose properly organised import controls, and not to continue with the Conservative policy that is now being carried out by the Labour Government?
    Mr. Foot: I do not accept what my hon. Friend said in the first part of his supplementary question. If we had not taken steps to control the rate of inflation a few months ago the danger of unemployment would be even worse that it is at present and the chance of reaching the moment when we would be able to reflate successfully would be further postponed. No one in the House is more eager than I am to reach the point when we shall be able to reflate successfully and so deal with the fundamental problem.

    Small Businesses (Training Board Exemption Limits)
    Mr. David Mitchellasked the Secretary of State for Employment by what
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    percentage the training board exemption limits for small businesses have been raised, on average in the last 12 months in those cases where exemption is defined by reference to the annual wages etc. paid.
    The Under-Secretary of State for Employment (Mr. Harold Walker): I am informed by the Manpower Services Commission that comparison of the levy orders of industrial training boards that have operated an exemption scheme related to the emoluments of small firms for the past two years shows that the limit was raised by an average of l7·3 per cent. between the 1974 levy orders and the 1975 levy orders.
    Mr. Mitchell: I think the Minister will agree that the figure he has given is considerably lower than the average increase in earnings over that period. That must mean that many small businesses have been driven by inflation into paying the levy on account of inflation and not on account of being able to benefit from the work of the training boards. In fixing future levy rates, will the hon. Gentleman ensure that exemptions for small businesses are adequate to take account of inflation?
    Mr. Walker: I understand that the exemption policy of the individual industrial training boards is aimed at keeping the number of exempted firms the same, so that the scope of the board is stabilised. The level of earnings is only one factor that has to be taken into account in setting the exemption level to achieve that objective.

    Public Sector Industries (Closed Shop Agreements)
    Mr. Gowasked the Secretary of State for Employment how many industries in the public sector operate, or are planning to operate, closed shop agreements for new entrants.
    Mr. Foot: My Department does not require employers to notify information about the terms of any collective agreements they may reach on union membership. However, I am aware of five industries in the public sector where it has been agreed, or where there are firm proposals for an agreement, that it should be a condition of employment for new recruits to some grades to join a union within a specific period.
    Mr. Gow: Will the Secretary of State tell the House what are those five industries? With his long and honourable record as a libertarian, will he take this opportunity of acknowledging that it is a serious erosion of individual freedom to make it a pre-condition of employment that a person should join a trade union?
    Mr. Foot: The five public sector industries in which it is known that closed shop agreements have been or are about to be introduced are mining—including the new agreement with clerical staff—British Rail, affecting staff below management grades, including professional, technical and research staff; British Gas, affecting manual workers; the electricity supply industry, affecting manual workers; and the Post Office, in which an agreement has yet to be concluded.
    I fully appreciate that the establishment of closed shops raises questions of the rights of the individuals as well as of the trade union concerned. Therefore, we have had discussions with the trade union movement on how that can best be dealt with. We believe that the best and most effective way of dealing with it, in the interests not merely of the trade union movement as a whole but of the individuals concerned, is to establish the tribunal which the TUC has proposed. The sooner we get it into operation the better it will be.

    Construction Industry
    Mr. Michael Lathamasked the Secretary of State for Employment whether he will now make a further statement on the current level of unemployment in the construction industry and on his Department's training and retraining programme for that industry.
    Mr. Harold Walker: In December there was a total of nearly 198,000 registered unemployed male construction workers, including the unskilled.
    I am informed by the Manpower Services Commission that the construction industry has been given substantial aid under the measures introduced to mitigate the effects of the recession on longterm training opportunities.
    Construction industry training board grants for off-the-job apprentice training have been increased in order to assist
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    in maintaining recruitment levels. The Training Services Agency has made 2,750 Training Award Scheme places available to the CITB. The Board is also offering premium grants to employers recruiting additional trainees for on-the-job training in certain occupations, and grants to companies recruiting additional apprentices for off-the-job training in their own training establishments. The training awards are financed jointly by the Board and the Training Services Agency; the other grants are funded wholly from public funds. I am also informed by the Manpower Services Commission that on 30th September 1975, 3,636 people were being trained in construction trades in Great Britain under the Training Opportunities Scheme (TOPS).
    Mr. Latham: Does the Minister agree that there is an absolutely disgraceful level of unemployment among construction workers? In the light of the extremely serious figures from the Economic Development Committee for Building, showing a further fall in output for 1977, is it not the clear duty of the Minister's Department to insist that any further cuts in public expenditure should be on transfer payments, such as food subsidies, rather than on the construction programme?
    Mr. Walker: Certainly I should not want to say anything that in any way minimised the seriousness of these figures. However, I am bound to say that it lies ill in the mouth of the hon. Gentleman to lecture the Government about the effects of possible public expenditure cuts when such cuts have been the consistent theme song of the Opposition and could only worsen the situation.
    Mr. James Lamond: Does my hon. Friend recall that there have been constant calls from the Opposition for public expenditure cuts that would particularly hit the already disastrously high levels of unemployment in the construction industry? Moreover, does he recognise that projects such as hospitals in the North-West of England are being postponed or cancelled altogether because of proposed public expenditure cuts? In the interests of the unemployed in the construction industry, will my hon. Friend resist as much as he can any proposed public expenditure cuts, whether they be

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    proposed by the Opposition or, indeed, from within the Cabinet?
    Mr. Walker: I agree with my hon. Friend that constraints on public expenditure must be considered in the light of their effects on unemployment generally, and especially on unemployment in the construction industry.

    Disabled Persons
    Mr. Gouldasked the Secretary of State for Employment when he expects to present proposals for changing the obligations imposed on employers to employ disabled people.
    Mr. Ovendenasked the Secretary of State for Employment when he expects to announce his decision on whether to place a statutory obligation on employers to make available publicly information on the extent to which they are meeting their quota obligations concerning disabled workers.
    Mr. Harold Walker: I have nothing to add at this stage to the statement I made to the House on 10th December.—[Vol. 902, c. 459–68.]
    Mr. Gould: Given that the quota system is to be retained for the time being, will my hon. Friend say which statutory provisions constitute an obstacle to more rigorous enforcement? What steps is he taking to remove such obstacles?
    Mr. Walker: If my hon. Friend will look at the terms of the 1944 Act he will see that, for a start, there is no obligation on employers to provide the relevant information to my Department. The only way in which we can obtain the information that would inform us about an employer's compliance with the statutory quota is for our inspectors to make a physical visit. In view of the limited number of inspectors and the enormous number of establishments that would need to be visited, the idea of a constant and effective monitoring system just is not on.
    Turning to the necessary changes that would be needed to correct the situation, I am sure that my hon. Friend will accept that perhaps the best thing to do for the time being is to let the Manpower Services Commission gain some experience of operating the arrangements. Then we
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    can consider what recommendations, if any, it eventually makes to us.
    Mr. Ovenden: Does my hon. Friend agree that there is some merit in the idea of making firms publicise their performance in respect of the quota system as the legal system seems to have failed to enforce the quota? Perhaps we can shame some firms, through publicity, into meeting their obligations. Will my hon. Friend consider placing an obligation on firms to publish their quota position in any job advertisement that they insert in the newspapers? Will he ask his right hon. and hon. Friends to set an example in this respect by ensuring that Government Departments and the nationalised industries publish their performance on a regular basis?
    Mr. Walker: Dealing with my hon. Friend's specific suggestion about a possible obligation in respect of advertisements, clearly this would require legislation. Here again, I must refer to what I said to my hon. Friend the Member for Southampton, Test (Mr. Gould). Perhaps we should wait to see what is the experience of the Manpower Services Commission.
    As I said in my statement on 10th December 1975, I attach the greatest importance to the publication of figures showing statutory compliance with quota obligations. We have already taken steps with regard to the public sector, and especially Government Departments. I said that we would arrange the compliance of Government Departments and that their performance would be published annually. We are looking to the nationalised industries, local authorities and other public bodies to do the same. There are obvious difficulties with the private sector, because legislative change is clearly needed. The Government are contemplating the introduction of a Companies Bill, which, I hope, will deal with this point. It has been the subject of discussion between my own Department and the Department of Trade, which is the responsible Government Department.
    Mr. Marten: Could there not be a type of negative obligation, whereby a firm that did not employ its quota was obliged to inform the Minister, but one that did was not obliged to do so?
    Mr. Walker: I must point out to the hon. Gentleman that, unfortunately,

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    what he suggests would require a change in the legislation. The only way in which the information can be required from a company at present is by a physical visit. There is no obligation on a company to take the positive step of providing the information to us, and there would need to be a legislative change to require it to do so. However, there may be something in the hon. Gentleman's point. I shall certainly consider it.

    Immingham Docks
    Mr. Brothertonasked the Secretary of State for Employment if he will pay an official visit to Immingham Docks.
    Mr. Foot: I have, at present, no plans to do so.
    Mr. Brotherton: Will the right hon. Gentleman reconsider his reply, in view of the fact that at present a serious dock strike is taking place in Immingham and Grimsby? If he cannot go there himself, will he send his friend, Mr. Jack Jones, to tell the pampered dockers that even they cannot have more than the £6 a week increase—that they cannot have that increase as well as an increase in the fallback arrangement?
    Mr. Foot: I understand that unofficial strike action has been taken by some dockers concerning the pay dispute. However, I also understand that the independent Arbitration, Conciliation and Advisory Service is in touch with the situation. I am sure that it will do everything it can to try to get a satisfactory result.
    Dr. Edmund Marshall: If my right hon. Friend goes to Immingham Docks, will he take the opportunity to visit Goole Docks, which are further up the same estuary, where there is an excellent record of good industrial relations? Moreover, Goole has the added advantage of being close to the motorway network, and being the most inland port in the whole country.
    Mr. Foot: That is the most agreeable invitation that I have received for some time.
    Mr. Prior: Will the right hon. Gentleman tell us when we can expect the Second Reading of the Dock Work Regulation Bill? Will he also take into account that one of the causes of in-
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    creased unemployment in Britain is lack of confidence caused by the introduction of measures like the Dock Work Regulation Bill, which everyone in industry regards as complete and utter nonsense, in terms of trying to solve a very difficult problem? Does he accept that the Opposition would co-operate if he would drop that Bill and introduce measures which would have a genuine effect in helping dockers without dislocating the rest of the country?
    Mr. Foot: I entirely repudiate the suggestion that the operation of the Dock Labour Scheme has been responsible for any of the difficulties at Grimsby that have been raised in the right hon. Gentleman's question. However, I am glad to see that he is looking forward to the introduction of the Bill. We certainly have no intention whatever of dropping it. It will be brought before the House—HON. MEMBERS: "When?"] Very soon. Indeed, I am sure that hon. Gentlemen will be eager to discuss it. We must get it into operation soon, because I believe it will make a real contribution to industrial peace.

    Scotland
    Mr. Crawfordasked the Secretary of State for Employment what further measures he is taking to alleviate unemployment in Scotland.
    Mr. John Fraser: Scotland is already benefiting from the measures announced on 24th September and 17th December 1975, which were designed to mitigate the worst effects of unemployment throughout Great Britain by helping up to 120,000 people obtain jobs which, otherwise, they would not have had. In addition, the whole of Scotland has development area or special development area status.
    Mr. Crawford: Is the Minister not aware that, in the light of today's unemployment figures, the Scottish people regard the Government's measures as a black farce? Regional development has been an almost total failure in Scotland. Does the Minister agree that the only way to bring Scottish unemployment levels down to the 1 per cent. and 2 per cent. of Norway, Sweden, Austria and Switzerland is to give the Scottish Assembly total control over trade and industry in Scotland and the Scottish Development Agency? Does he agree that the Scottish

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    people, on their own, could do no worse in running their own affairs and economy than this House and London are doing for them?
    Mr. Fraser: I do not agree with the hon. Gentleman that by a wave of the wand the situation in Scotland could be immediately transformed to the situation in Norway and Switzerland. If he believes that, he is fooling himself. If he does not believe it, he is fooling the Scottish people whom he purports to represent. Regional policy has meant that unemployment in Scotland has risen less than in the United Kingdom. That measure has had a real and substantial effect on alleviating some of the worst aspects of unemployment.
    Mr. Buchan: Does my hon. Friend accept that others in Scotland, who are seriously concerned about unemployment, as opposed to those who are concerned with making cheap propaganda points, recognise that the problem that we have in Scotland is even worse in the North of England and the same as the North-West of England, and that it would be worsened were we to proceed with the mad policies of the Scottish National Party?
    Does he further agree that enough is enough, that these figures are as unacceptable in Scotland as they are in the North and North-West of England, and that the time has come for an entire change in Government economic policy and for a measure of reflation designed to improve the situation?
    Mr. Fraser: I agree that unemployment in Scotland is rather less than in the contiguous area of the North of England. That is why it is nonsense to suggest that because of some greater degree of devolution the economies would diverge in a much sharper way.
    On the second point, my right hon. and hon. Friends have made it clear that as soon as the conditions for reflation are possible we shall try to get the economy going more quickly.
    Mr. Teddy Taylor: Will the hon. Gentleman bring the figure of 162,000 unemployed to the attention of the Secretary of State for Scotland, who, in Opposition, said that if the figure reached 100,000 the honourable course for a
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    Secretary of State for Scotland to adopt would be to resign?
    Secondly, bearing in mind that a major slice of unemployment in Scotland has been the result of cut-backs in State-owned industries, with more in the pipeline in the steel industry, will my hon. Friend consider whether it is in the interests of workpeople in Scotland to spend what money is available on further nationalisation instead of job creation?
    Mr. Fraser: I hope that the hon. Gentleman will tell the House the degree of increased public expenditure in Scotland that he is prepared to support. To get the matter in perspective, the unemployment figures for this month are unacceptably high. However, I should point out that the rise in Scotland, on a seasonally adjusted basis, has been not 1·4 per cent., but 0·2 per cent. A large part of the rise is accounted for by those leaving school at the beginning of the Christmas holidays and students who registered as unemployed for the purpose of obtaining social security.

    Agriculture (Lifting of Heavy Weights) Regulations
    Mr. Cryerasked the Secretary of State for Employment if he will repeal the Agriculture (Lifting of Heavy Weights) Regulations 1959.
    Mr. Harold Walker: Following the transfer of responsibility for farm safety on 1st March next, these and all other related Regulations will come within the scope of the Health Safety Commission's systematic review of legislation provided for in Section 1(2) of the Health and Safety at Work etc. Act 1974.
    Mr. Cryer: Does my hon. Friend accept that the systematic review of the Health and Safety Commission tends to be somewhat dilatory? Does he also accept that these Regulations, which place an upper limit of 180 lb on the load that a manual worker may lift, are outdated and should be swept to one side? Does my hon. Friend agree that when such workers are injured when lifting these heavy weights the Regulations make the obtaining of compensation extremely difficult? Lastly, will he urge the Health and Safety Commission to get cracking on its review of the Regulations and bring them up to date

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    in the light of current medical knowledge?
    Mr. Walker: I reject my hon. Friend's suggestion that the Health and Safety Commission has been dilatory. On the contrary, in its short existence it has done a remarkable amount of very good work. I agree with my hon. Friend's criticism of the 180 lb maximum provided in the Regulations. I hope that the Health and Safety Commission will give early attention to the eventual amendment of those Regulations when the responsibility is transferred on 1st March. The responsibility has not yet been transferred. When it is, I hope that the Commission will look carefully at what my hon. Friend and I have said with a view to including this matter in its review at an early date.
    I am sure that my hon. Friend appreciates that compensation is not a matter for me. As he knows, the Pearson Commission is considering the whole broad area.
    Mr. Mayhew: Important though safety matters are, does the Minister agree that it is not so much the weight of sacks that should be worrying agricultural workers whose jobs are being lost every week as the burden of this Government's taxation upon the backs of their employers and themselves?
    Mr. Walker: I think that the House appreciates and reflects how irrelevant and ill-judged that question is. I am sure that the whole House will deplore the fact that the hon. and learned Gentleman should make use of a serious Question, about a very serious issue affecting farm workers, as a peg on which to hang a cheap jibe.

    Unemployed Persons
    Mr. Stonehouseasked the Secretary of State for Employment what is the present level of unemployment; how he anticipates the situation will develop; and what measures he proposes to replace the present pay policy in the light of this situation.
    Mr. Foot: At January 1976 the seasonally adjusted rate of unemployment in Great Britain was 5·1 per cent. There is likely to be some further rise in the next few months, whatever developments may affect the situation and whatever measures are taken. No decisions have
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    yet been taken about pay policy for the period after 31st July 1976. This is something that the Government will be discussing fully with the TUC and the CBI and others concerned in the coming months.
    Mr. Stonehouse: Is the Secretary of State aware that there is great concern on both sides of the House about unemployment? Is he also aware that there is concern about disagreements between Ministers about what should be done about pay from July onwards? Does he agree with the Chancellor of the Exchequer that pay increases should be fixed below the £6 limit from July onwards?
    Mr. Foot: I acknowledge that there is grave concern in all parts of the House and the country about the scale of unemployment. Anyone who could not appreciate that fact would be a complete fool.
    As for any question of differences about future pay policy, as I have already said in my reply, no decisions have yet been reached on the nature of the pay policy after 31st July. We are doing what we did before. We are discussing that matter, along with the whole question of unemployment, in the greatest detail with representatives of the TUC.
    Mr. Peter Walker: Is the Secretary of State aware that this is the third time that the Chancellor of the Exchequer's predictions on unemployment figures have been proved wrong? As unemployment in the West Midlands has now more than trebled, is almost the same as in Scotland, and is more than in the North-East and in Wales, will he at last take action to stop discrimination against the West Midlands?
    Mr. Foot: I do not accept the right hon. Gentleman's figures. I do not accept that the Chancellor's predictions were necessarily incorrect. Having been to the West Midlands a week or two ago, I certainly acknowledge the seriousness of the unemployment problem there. There has been a comparative increase in relation to other parts of the country, compared with previous occasions. Trade unionists and others in the West Midlands made urgent representations to me about the situation, and I am in the course of discussing them with my right hon. Friend the Secretary

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    of State for Industry. We shall be replying to those representations at an early date.
    Mr. Madden: Does my right hon. Friend accept that he will not secure the agreement of workers on an extension of the pay limit or anything else unless there is a dramatic reduction in unemployment? Does he further accept that he will secure a dramatic reduction in unemployment in the short and medium term only if he introduces wide-ranging and effective import controls—an argument that is winning more influential supporters every day of the week?
    Mr. Foot: I agree with the first part of my hon. Friend's proposition, namely, that if the Government are to secure a general understanding about pay policy, it is clear that unemployment and employment policies must be central features of it. That is what TUC representatives have told us in discussions, and I think they are absolutely correct.
    Import control is a matter that must always be considered. It is correct, as I said earlier, that we wish to secure, as speedily as we can, a situation in which we can safely embark upon a general reflation of the economy. One factor that must be considered as a possibility in that sense is, of course, import control.
    Mr. Cyril Smith: Does the Secretary of State accept that when the present wages policy ceases on 31st July the Government will have to follow it with another kind of wages policy? Do they therefore accept the principle that there has to be a second stage of the wages policy? Whilst accepting that the Government have not yet arrived at a conclusion on what that policy should be, may I ask whether the right hon. Gentleman is able to give any indication of the Government's thinking on this matter? For example, do they accept that a percentage as opposed to a flat rate increase might be allowable?
    Mr. Foot: All these different possibilities must be considered, but what we did on the previous occasion—I think that it was the right way to secure a pay policy—was not to make decisions in advance and say that that was what we demanded the TUC should accept. If we had done that, we should have had no agreement with the TUC. It is far better
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    for us to have discussions with the TUC and the employers and others to see what is the best way of proceeding, and to reach agreement that way. The difference is that we did reach a voluntary agreement on this subject, and the way that we secured it is the best way to secure a further voluntary agreement.
    Mr. Noble: Does my right hon. Friend agree that the present level of unemployment is a result of capitalist failures rather than Socialist failures, and that we need a little bit of Socialism among Labour Treasury Ministers at the moment? Does he further agree that it is no good saying that we want to reflate as soon as we can but that import controls cannot be introduced now to control the inflow of imports that would result from a reflation?
    Mr. Foot: I agree with my hon. Friend that the crisis afflicting this country, along with other countries of the Western world, is a crisis of capitalism. It is a crisis of the dominant economic system that prevails in all those countries. In order to overcome the crisis we can take some short-term measures ourselves. We cannot ourselves take all the measures that we would like, because we are also governed by the constraints of our situation. We are governed by our balance of payments and by the price of oil. We are governed by all the legacies of right hon. and hon. Members opposite. Those factors have to be taken into account as well. Certainly, however, we wish to take, in this country, the maximum number of measures that we can to overcome the problem. Some of them are measures that we can take on our own; others we must take in co-operation with other countries.
    Mr. Hayhoe: What different language we are hearing from the Secretary of State today—[HON. MEMBERS: "Question."] Is it not a different language that the right hon. Gentleman talks now, compared to what he was saying before the last General Election? How can he equate his argument today, about wage restraint helping to deal with unemployment, with the policy, 18 months ago, of letting wages rip and contributing to the existing high levels of unemployment? Is the right hon. Gentleman not aware that with unemployment having more than

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    doubled since he took office and with the unadjusted figures now topping the 1 million mark for the seventh month in succession, he has a worse record than any responsible Minister since Miss Margaret Bondfield, in the 1929–31 Government? That is sex equality; he has equalled her bad record.
    Mr. Foot: If the hon. Member wishes to make a constructive contribution to the discussion, I suggest that he considers the position in other countries as well as here. He will then see the relevance of what I have said on previous occasions. What the Government have done, what I believe is absolutely essential for overcoming the worst economic crisis that the Western world has had to face since 1945, what we certainly have to secure, and what we promised in our manifestos, is to carry out our policies in concert with the trade union movement. [Interruption.] The yelling from Tory Members shows that they are jealous because they could never get the same kind of co-operation.
    Mr. Hicksasked the Secretary of State for Employment if he is satisfied that the various measures introduced by the Government to alleviate unemployment are sufficiently flexible in their application to meet the requirements of rural areas.
    Mr. John Fraser: Yes, Sir. Rural areas are making good use of the assistance on offer.
    Mr. Hicks: When will Department of Employment Ministers use their influence with the Chancellor to lift some of the taxation burdens placed on smaller businesses, which, after all, are the key units in rural areas? Why is it necessary for a company to have a minimum of 25 employees to be eligible to apply for the temporary employment subsidy?
    Mr. Fraser: We lowered the temporary employment subsidy figure from 50 to 25 on account of representations that we had received from rural areas—not least from Cornwall. The figure of 25 has been chosen as one that can be dealt with without overstraining administration. Of course, we shall keep the matter under review. The other points in the hon. Members prepared question are matters for the Chancellor.

    EXPENDITURE (PRIME MINISTER'S SPEECH)
    Mr. Tebbitasked the Prime Minister if he will place in the Library a copy of his public speech, made in London on 10th December, concerning the need to put industrial and economic growth before expenditure on the social services.
    The Prime Minister (Mr. Harold Wilson): I did so, Sir, on 11th December.
    Mr. Tebbit: Does the right hon. Gentleman remember that in that speech he waxed lyrical about priority being given to enable everyone to have "a full share in society"? What is the full share that he has given, under his Socialist Government, to the extra 800,000 people who have been put out of work since he became Prime Minister?
    The Prime Minister: I understand that my right hon. and hon. Friends have been answering questions on this matter for the last 45 minutes. Apart, of course, from factors like the 127,000 students, the whole House will regard the figures, as I do, as extremely grave and serious. They will recognise, as the whole world does, that this is happening in every advanced industrial country—as was said in the conference that I attended yesterday with my right hon. Friend. They will know that the steps that we are taking are the right ones to deal with this problem and that what is now happening began under the previous Government, before we came into office.
    Mr. Atkinson: Does my right hon. Friend not understand that there is a feeling of deep sadness, much misgiving and a great deal of disillusionment, certainly on the Government side of the House, after hearing these very serious unemployment figures, since many of us believe that the Socialist case is going by default and that the arguments used in the Cabinet support those in the IMF, the finance houses and the Common Market who are denying this Government the opportunity of not only rebuilding our capital equipment but making resources available for restocking—which would go a long way to providing the necessary jobs that we are now talking about? Will he give an assurance that the Cabinet will give serious thought

    1129
    to the whole of the Socialist case for reflating the economy while doing nothing to damage the Government's policy for reducing inflation?
    The Prime Minister: My hon. Friend's question does not arise, any more than did the previous one, from the speech referred to.
    Mr. Tebbit: My question does.
    The Prime Minister: That speech dealt with what this Government have done in the way of tremendous increases in the social services and the priorities that must be followed. I agree with my hon. Friend's reference to the sadness and determination that must be the reaction of all of us to figures that are hitting this country and every other advanced industrial country. I had the figures from the Chancellor of Germany and others yesterday. I do not agree with all that my hon. Friend said about his solution. It is the priority of this Government to increase investment and to resist pressure from the Tory Party for ill-considered expenditure cuts at this time, since they would greatly increase unemployment.
    Mrs. Thatcher: Is the Prime Minister aware that we agree that today's unemployment figures are staggeringly and unexpectedly high? Is he further aware that those figures are due to the failure of his Government to handle the nation's economic affairs and, particularly, to tackle the problem of inflation early enough? Judged by performance, which is the only test by which to judge any Government, the Labour Party has now become the natural party of unemployment.
    The Prime Minister: I totally reject what the right hon. Lady has said. Inflation has been a world-wide phenomenon and its consequence has caused the biggest world-wide recession in the memory of most of us. It has hit every country in the world. If I had listened for one minute to the right hon. Lady's prescription about slashing cuts in the social services there would have been half a million more unemployed.
    Mrs. Thatcher: Is the Prime Minister aware that there are no alibis now? He is the head of a Government whose policies have resulted in the highest un-
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    employment figures since the war. If he is not responsible, will he please sack whoever is?
    The Prime Minister: I did, in the General Election of March 1974—with the help of a few million votes. The right hon. Lady, who dissociates only after she leaves a Government, knows that the expansion caused by the previous Conservative Government's vast inflation and printing of money had already come to an end in the spring of 1973—before oil price increases—and that we were already heading into slump when they went out of office, before the effect of those increases began to be felt.

    CHIEF SECRETARY TO THE TREASURY
    Mr. George Gardinerasked the Prime Minister if he will elevate the Chief Secretary to the Treasury to Cabinet rank.
    The Prime Minister: I refer the hon. Member to the reply that I gave to the hon. Member for Norfolk, South (Mr. MacGregor) on 15th January, Sir.
    Mr. Gardiner: In view of today's unemployment figures, will the Prime Minister consider arranging a swap between the Chief Secretary and the Chancellor of the Exchequer and so clear out of his Cabinet those Ministers who are responsible for this deplorable situation? When he considers the unemployment figures that have been published today, will he arrange to be briefed by the Chief Secretary, who has repeatedly stressed that £1 spent on subsidies is £1 less for industrial investment and viable jobs?
    The Prime Minister: I confess that I am in some difficulty, because last Thursday the hon. Gentleman, together with six of his hon. Friends, wanted the Chief Secretary sacked. Now he wants him promoted. I believe that the half-way state between the two is just about right.
    The hon. Gentleman is totally wrong if he associates that with the unemployment figures, because my right hon. Friend the Chief Secretary, with the full support of the Chancellor and myself, has assiduously been ensuring that in the period of world recovery in 1977 and 1978 it will be very important to restrain

    1131
    public expenditure and so release resources for investment and export in that situation, so that we do not face the quick restraints on expansion that have happened in past years. That is not a case for slashing, ill-considered cuts in expenditure now—cuts for which the Conservative Party has been pressing and which they never specify, but which would lead to a large increase in unemployment.
    Mr. Duffy: Has my right hon. Friend the Prime Minister noticed the increased grounds for optimism about the performance of our economy in 1976—to which nearly every economic forecaster now subscribes—and notably about our prospects of achieving a single-figure rate of inflation by the end of the year, or even, as some believe, before the end of the year?
    The Prime Minister: Yes. By this time we had hoped to receive some comments from the Opposition about the success of the Government's policy and the acceptance by the whole population of our proposals on inflation, which the Opposition did not dare vote against or for. We had hoped that we would receive some compliments from them about the fact that the balance of payments last year showed a deficit of less than half what it was the previous year, and very much less than it was in the Opposition's last year of office, before the rise in oil prices began to hit Britain.
    Mr. Hooson: Is it not time that the Prime Minister abandoned his arid argument of loose falsities and told the House what he intends to do about it? The right hon. Gentleman says that he wants to encourage investment in industry. How does he propose to do it? Does he intend to reduce taxation and to have more Government investment, or does he intend to go along with unemployment until the end of the decade and then blame someone else for it?
    The Prime Minister: I am not in the slightest degree interested in placing responsibility on members of the Opposition, but occasionally when I am attacked I defend myself, which I am entitled to do, in my position. The hon. and learned Gentleman usually adopts a position of amiable neutrality on these
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    matters, but it is quite clear that he missed all the economic debates, the statement of the Chancellor of the Exchequer about investment, the steps that he has already taken and—one of the most significant points—the considerable resources that he has placed at the disposal of particular industries for regeneration—a measure approved by the whole House—as well as the creation of the National Enterprise Board.
    Mr. Ashley: Will my right hon. Friend ask his right hon. Friend the Chief Secretary to consider the question of industrial perks to upper management, especially as they include such provisions as housing, entertainment, free insurance and interest-free loans? In particular, will he ask the Chief Secretary to look at apparent negligence by the Treasury, which was disclosed in two Parliamentary Answers to me in December? In reply to a Question from me, one Minister said that those perks were taxable, but another Minister said that the total number of people receiving these perks was not known. Is that not an unsatisfactory situation?
    The Prime Minister: My hon. Friend will be aware that under successive Governments there has been a tightening up of tax laws in respect of income that is provided in different ways. A great deal of evidence has been adduced to show that this does not go far enough. These matters are continually considered by my right hon. Friend the Chancellor of the Exchequer, but I cannot at this stage anticipate my right hon. Friend's Budget Statement.

    EUROPEAN COMMUNITY (HEADS OF GOVERNMENT)
    Mr. Watkinsonasked the Prime Minister when he proposes next to meet Heads of Government in the EEC.
    The Prime Minister: I met some of my EEC colleagues at the meeting of European Social Democratic Parties that ended in Copenhagen yesterday, Sir. The next meeting of the European Council will probably take place in late February or early March. In the meantime, I shall be seeing the Federal German Chancellor on 7th February and the Netherlands Prime Minister on 16th February, on their visits to London.
    Mr. Watkinson: When my right hon. Friend sees the German Chancellor will he discuss with him the possibility of reflating the European economies? This has been a keynote of Government policy over the past few months. Does he see any hopeful signs, and will he encourage our Continental neighbours to expand and reflate their economies?
    The Prime Minister: When I opened the debate on this mater in Copenhagen yesterday I dealt with these questions in relation not only to Europe but to the United States, Japan, and so on, as was done at Rambouillet. The statement that we made has been issued to the Press and placed in the Library, and if my hon. Friend has any points to raise arising out of it perhaps he will table them to me as Questions.
    Mr. Churchill: Will the Prime Minister explain how it is that the country of which he is Prime Minister has, apart from the Irish Republic, the highest level of unemployment among the countries of the EEC? Is this not a cruel deception on the people whom he sought to persuade to vote for his party in February 1974 with the slogan
    "Back to work with Labour"?
    The rate of unemployment in the North-West has doubled since 1974.
    The Prime Minister: At the time of that General Election well over 2 million people were unemployed as a result of the then Conservative Government's confrontation. [Interruption.] There are not 4 million unemployed today. We discussed these matters in the EEC and again yesterday. This problem also hits advanced countries in the world. It hits this country particularly hard, because of the fact that for very long periods previously we have had totally inadequate industrial investment.
    Mr. Donald Stewart: When next the Prime Minister meets the Heads of EEC Governments, will he undertake to raise with them the question of the common fisheries policy, in view of M. Lardinois' statement that it is not being renegotiated at present, which contradicts ministerial assurances given to the House?
    The Prime Minister: Yes, Sir. The hon. Gentleman will be aware of the fact that my right hon. Friend the Minister
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    of Agriculture, Fisheries and Food has been pressing this matter very hard in Europe. There is much progress still to be made. The hon. Gentleman will be aware that even though Iceland is not a member of the EEC, there is a particularly urgent problem affecting fisheries, on which there will be a statement later this afternoon.
    Mr. Fernyhough: When my right hon. Friend meets the Heads of Government of the EEC, will he discuss with them the great contribution that they are making to our very serious balance of payments problem? Is he aware that from the time when we entered the Common Market our balance of trade deficit with the rest of the EEC has grown year by year, until this year the deficit with the EEC is greater than the overall deficit? Will he discuss with the Heads of Government how they might take more of our goods and thus provide more employment for our people, as we are buying from them commodities at prices that are higher than those that we could obtain from other countries were we not in the Common Market?
    The Prime Minister: My right hon. Friend, who always looks on the bright side of things, will have noticed from what I earlier that our overall balance of payments deficit last year was less than half what it was in the previous year. I think that that is a remarkable achievement. [Interruption.] Our balance of payments deficit last year was half of what is was the previous year, and less than it was when the Conservative Party was responsible, even though oil price rises had not then hit us. We have now a surplus on normal trade and we are covering part of the oil deficit. I am sure that my right hon. Friend will be delighted about that, and that he could not contemplate what the deficit would have been if the Conservative Party had been in power.
    Mr. Prior: When the right hon. Gentleman discusses matters of employment with the Heads of Government of the EEC, how will he reconcile the statement that he made on 9th October 1974—that unemployment was falling—with the remarks that he made this afternoon, and presumably to EEC leaders, about the problems of unemployment and inflation being with us long before October

    1135
    1974? Was it that he tells the truth now and told us something rather different during the General Election campaign?
    The Prime Minister: What I said was that our vulnerability was greater than that of other countries because of what we had been left with by the Conservative Party. That is certainly true. During the period when our exports were improving, unemployment was holding fairly steady, but once the world depression arising from oil price rises hit the whole world, we were very vulnerable to it as a result of what we inherited.
    Mr. Heffer: Does my right hon. Friend recall the posters that were put up during the referendum campaign by the Common Market supporters— posters that said "Jobs for the boys"? Does that not look somewhat sick at this moment, when unemployment is growing at a much more rapid pace than we have known for a long time? Does my right hon. Friend agree that trying to seek solutions in the Common Market, or hiding behind the fact that the capitalist system in Western Europe is collapsing, is not the answer for a Socialist Government, who ought to begin to put into effect Socialist policies to deal with rapidly rising unemployment, beginning with import controls and the control of the export of capital abroad, and a general reflation to ensure that our people obtain employment?
    The Prime Minister: My hon. Friend sometimes underrates the importance of this country as an exporter. He certainly underrates the achievements of this country in exports over the last year or two, when, for the first time, we have stopped the rot, in terms of the decline in world trade which our exports represent. I am not responsible for any posters that were put up during the referendum campaign. I did not put up a single poster. I made a number of speeches, and I stand by them. My hon. Friend suggests that the rise in unemployment coincided with the referendum result and the months afterwards, but he must sometimes ask himself—indeed, he used to do so at one time—what would have been the consequent unemployment if the referendum result had gone the other way.
    Mr. Heffer: What about these figures now?
    The Prime Minister: In my view—[Interruption.] Sweden? When I discussed this with the Prime Minister of Sweden yesterday, he was able to point out—[Interruption.] I was asked about Sweden. The Swedish Prime Minister was able to point out that there is a very large—
    Mr. Skinner: Save the steel jobs.
    The Prime Minister:—thriving, high-priced market for Sweden's principal products—forestry products—timber, pulp and paper.
    However, I say finally in regard to my hon. Friend's question, in which he said that we should not seek solutions solely in Europe, that he knows that we are not doing that. He knows, for example—[Interruption.] When the extremists on both sides have finished their laughing, I shall finish the answer. We are not seeking the solution solely within Europe. The Rambouillet Summit included the six leading industrial nations, covering three continents. My hon. Friend will know of the conference that we had with the Commonwealth, and our proposals there. He is totally wrong in saying that we are seeking a solution solely within Europe. But if we try to seek a solution without Europe, we shall not find one.
    Several hon. Members rose—
    Mr. Speaker: Order. I have a short statement to make to the House.

MR. SPEAKER (RETIREMENT)
Mr. Speaker: I have to tell the House that I have today informed Her Majesty the Queen of my intention to relinquish the office of Speaker. I propose to do so on 3rd February next, the tenth sitting day from today. This is in accordance with Standing Order No. 103A and the First Report of the Select Committee on Procedure, during the Session 1971–72, ordered to be printed on 26th January 1972.
The Lord President of the Council and Leader of the House of Commons (Mr. Edward Short): The whole House, Mr. Speaker, will have learned with very much regret of your decision to relinquish your office. I understand that it is your own wish that there should be no

1137
speeches on this occasion, but there will, of course, be an opportunity to speak on your retirement later. However, I think that it would be for the convenience of the House now that I should outline the procedure for electing your successor in accordance with Standing Order No. 103A.
On Tuesday 3rd February I understand, Mr. Speaker, that you would wish to make a statement to the House. After this, the usual motion to mark your long and distinguished service will be moved. That motion will also give the House the opportunity to pay its tributes to you.
Accordingly, after your statement and the following speeches, I would propose that the House will then proceed immediately to the election of a new Speaker under the procedure laid down under Standing Order No. 103A with you, Mr. Speaker, still in the Chair. After you have put the Question, or Questions, as a result of which the new Speaker will be elected, you will leave the Chair and the Speaker-Elect will then be conducted to the Chair. Thereafter the procedure will follow that of previous occasions.

ICELAND (FISHERIES DISPUTE)
The Minister of State for Foreign and Commonwealth Affairs (Mr. Roy Hattersley): With your permission, Mr. Speaker, and that of the House, I should like to make a statement about the fisheries dispute with Iceland.
Royal Naval vessels which have been protecting British trawlers fishing in international waters around Iceland are being withdrawn today. Flights by Royal Air Force Nimrod aircraft which have been overflying the area have also been suspended. This course of action was determined by the Prime Minister and the Foreign and Commonwealth Secretary in Copenhagen yesterday morning and was subsequently confirmed following a full discussion between the Foreign Secretary and the Secretary-General of NATO, Dr. Luns, in Brussels last night. The Ministry of Defence has issued the necessary instructions today.
The decision to go ahead was taken in the light of Dr. Luns' account of the visit he made to Iceland last week and
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in the expectation that our trawlers will not be harassed by Icelandic coastguard gun boats. It was taken despite the unfortunate complications represented by the Icelandic Government's announcement yesterday of their intention to break off diplomatic relations with the United Kingdom.
As a result of the full protection and skilful interception measures of our naval vessels, no trawler wires have been cut since 3rd January and fishing has continued, despite Icelandic harassment. But it has always been the hope of the British Government that this dispute would end by negotiation.
If, contrary to our hopes, there is further harassment, then naval protection will be restored. However, in the light of Dr. Luns' account of his discussions in Reykjavik we believe that the withdrawal of the frigates and the Nimrods will now create an atmosphere in which talks between Britain and Iceland can proceed. The Prime Minister is therefore sending a message to the Prime Minister of Iceland, Mr. Hallgrimsson, inviting him to come to London as soon as possible.
Her Majesty's Government remain ready to negotiate an agreement which would recognise Iceland's special dependence on fishing and the need to take adequate measures to conserve the cod stocks. However, Her Majesty's Government will also very naturally take full account of the importance of these fisheries to the livelihood of our own trawlermen and the communities in Britain which depend upon them.
Mr. Mandling: Is the Minister aware that my right hon. and hon. Friends would welcome anything that would bring to an end on a fair basis this tragic dispute, which has brought little benefit to Britain and no benefit whatever to the credibility of Her Majesty's Government?
On that basis, I ask the Minister to answer two questions. First, it is essential to make clear the present position of our fishermen. Is it the Government's advice to them that they should or should not continue to fish as they were yesterday, and in the same places?
Second, the industry wants an agreement, and it may be that negotiations require the withdrawal of the Royal Navy, but this should be with a simultaneous

1139
agreement that there will be no further harassment. The Secretary of State for Foreign and Commonwealth Affairs said last month that a precondition of talks was that harassment should end. Is there any understanding or undertaking to that effect? If there is not, why has the Navy, which has done so very well, been withdrawn? If it is said that it can return if necessary, how far will it be withdrawn and how long will it take to return?
Does the right hon. Gentleman recall that on 12th December I suggested that the Government might invite a distinguished international figure to try to help solve this problem? The right hon. Gentleman brushed that suggestion on one side, saying that the Icelanders did not want that sort of thing. In fact, the Icelanders took the initiative and invited the intervention of Dr. Luns, which appears to have made some progress possible. Would it not have been better if the British Government had taken that initiative many weeks ago?
Mr. Hattersley: The right hon. Gentleman has asked a number of questions and I shall try to answer them in detail. I must begin by saying that I am sorry to hear that he regards this incident as doing little for the Government's credibility. On every occasion until today he has endorsed the Government's policy. We are following a pattern identical to that which was followed by the Government of which he was a member two years ago. Criticism may be made of that fact by some of my hon. Friends, but such criticism hardly lies in the mouth of the right hon. Gentleman.
I now turn to the specific questions asked by the right hon. Gentleman. First, he seeks the assurance that there will be no harassment. I must tell him that, in the light of what Dr. Luns told the Secretary of State yesterday, it is our hope and our judgment that there will be no harassment following the withdrawal of the British Navy. If our hope and judgment prove wrong, naval protection will be restored. At this moment ships of the Royal Navy are moving to an area more than 200 miles from the Icelandic coastline, but they will be in a position to return quickly if harassment should continue, or if it should be renewed. I emphasise that it is our hope
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and belief that that will not be the case.
As regards the position of the fishing fleet I talked this morning to Mr. Austen Laing, the director-general of the federation. He agreed with me that it is in the interests of the fleet, as well as in the interests of the British Government and NATO, that a negotiated solution should come about. In the light of that, he applauded our renewed attempt to negotiate a settlement. He also understood our obligation to protect the fishing fleet if protection again became necessary. I assured him that that was our position.
Mr. James Johnson: Is my right hon. Friend aware that many skippers and their men in Hull and other ports are not happy about the action which has been taken but accept it stoically because they have the assurance that if they are in difficulties the Navy will return to their aid within the alleged limit of 200 miles?
Does my right hon. Friend understand that I welcome the Government's initiative because I do not think it possible to end the deadlock otherwise, and because it is the only way of testing the sincerity of the Icelandic negotiators, and particularly the Icelandic Cabinet? Given that situation, our constituents fish on in Arctic darkness until the Law of the Sea conference takes place months ahead. We must continue to try to reach a solution in some way or other.
Will my right hon. Friend confirm that the Icelandic Government have offered a total allowable catch of approximately 85,000 to 90,000 tons provided that we catch fish other than cod? Is that the position? Has my right hon. Friend explored the possibility of a mediator from a third State? A Scandinavian State might be acceptable. Such a State might not be Norway or Sweden, but I understand on good authority that Finland might be acceptable to the Icelanders.
Mr. Hattersley: My hon. Friend has asked me a number of specific questions and I deal first with the catch offer made to us by the Icelanders. No offer has been made other than a total catch of 65,000 tons. At one time that was interpreted as 65,000 tons of cod. The sort of figure to which my hon. Friend has referred has never been put on the table by Iceland. If, as we hope, negotiations begin in the next few days on a total

1141
tonnage, it will be up to the Icelanders to make their proposals and for us to make ours, and for the two nations to arrive at a mutually acceptable figure. I fear that no figure such as that quoted by my hon. Friend has up to now been offered by the Icelandic Government.
As regards my hon. Friend's point about mediation, I can only confirm what I have already said. The Government would welcome mediation if it proved likely to produce a successful settlement, but that is not our judgment. In fact, Dr. Luns has not carried out the réle of a mediator. Despite what has been said, Dr. Luns said specifically in his news conference yesterday that he was not mediating but doing his best to bring the parties together.
Mr. Maudling: What is the difference?
Mr. Hattersley: The difference is that a mediator would negotiate a figure acceptable to the two parties whereas Dr. Luns' function has been to bring the parties together—that is what we hope—so that they may determine an acceptable figure. There is a total distinction between the two rôles which I would have thought the right hon. Gentleman would recognise.
My hon. Friend made some general comments, and not for the first time they represent reasoned, practical moderation. In putting forward his suggestions, he represents the practical, reasoned moderation of the fishing fleet. I think he also represents the view of the Government.
Mr. Grimond: Is the Minister aware that we very much hope that the talks will take place and that they will be successful? Is he also aware that the ultimate solution to these difficulties is an international agreement for the extension of fishing limits and for the conservation of stocks? Will the right hon. Gentleman give the House news of the success or otherwise of the Government's efforts to achieve such a solution? Will he do so when the Law of the Sea Conference or similar negotiations result in some extensions of limits, and ideally an extension up to 200 miles, as well as some agreement on conservation?
Mr. Hattersley: The Law of the Sea Conference reconvenes towards the end of March. When the conference reconvenes Her Majesty's Government will be
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playing their part in bringing about the sort of solution which the right hon. Gentleman has outlined. We are in a situation in which the conference is temporarily suspended. It may be many months before it comes to an overall conclusion, and until then international matters of this sort have to be conducted in an orderly fashion. That is what we have tried to do during the past three months.
Mr. Wall: I welcome the Government's initiative which will go a long way to disprove the propaganda to the effect that Great Britain has bullied the Icelanders. When negotiations begin, will he give his mind to the long-term aspects, and will he consider an exchange of quotas between Great Britain and Iceland when both countries under international law are allowed to extend to 200 miles?
Mr. Hattersley: I agree with the hon. Gentleman that this is essentially a longer-term question, in respect not only of the Law of the Sea Conference but also of the EEC common fisheries policy, about which my right hon. Friend the Foreign Secretary is making a speech literally at this moment in Brussels. There are long-term considerations to be borne in mind. If the Prime Minister of Iceland comes to London, as we hope he does in the next few days, we must seek to forge an interim agreement to see us through the period between the present time and the coming into operation of new arrangements that are appropriate to represent the interests of the two fishing communities.
Mr. McNamara: Is my right hon. Friend aware that it would be wrong for this House not to place on record our appreciation of the action of the Royal Navy during this difficult period and the degree of restraint it has shown? Does he agree that we should also put on record appreciation of the restraint shown by the British fishing fleet, skippers and men, engaged in difficult, hazardous and dangerous conditions? Is he further aware that many hon. Members deplore the headline in today's Daily Express as most despicable? Will he make clear that Her Majesty's Government have not surrendered on any point?
We must bear in mind in the discussions which are to take place that the vast majority of people in this country have

1143
a lower standard of living than do the people of Iceland, and this particularly applies to our fishermen. Any reduction in catches will have a most adverse effect on employment on Humberside and in other areas, and will hit not only fishermen but also many workers in ancillary industries who depend on fishing. If we can do so much for Chrysler, cannot we do a lot more for fishermen?
Mr. Hattersley: The Government are conscious of the problems on Humberside and elsewhere that would be brought about by any unreasonable reduction in catches. It must be said that unemployment in those areas is high whereas unemployment in Iceland is negligible. We have tried to pursue those interests in the last three months.
I agree with my hon. Friend that we are all grateful to the Royal Navy for its conduct in these difficult matters, and I am sure that we all share his view. Certainly my hon. Friend the Under-Secretary of State for the Royal Navy, who is at present in the House, will wish to tell the Fleet of our appreciation expressed in the House this afternoon. As for the Daily Express, in my view its front page today falls even lower than that paper's own deplorable standards. It is a matter on which I do not wish to dwell.
Dr. Reginald Bennett: The Minister has not made clear whether fishermen are to be permitted to continue to fish in areas in which they have been engaged in the last few days or whether they will be ordered to withdraw. Will he make the situation clear?
Mr. Hattersley: I think that I have made the situation clear, but let me repeat it in case there is any doubt. Our fishermen will continue to fish in the hope and judgment that within the next few days, although the Royal Navy will not be there, they will not be harassed by Icelandic gunboats. I have already told the House that I have spoken to Mr. Austen Laing, the director-general of the federation, this morning. It was his belief that trawlers should continue to fish, on the assumption I have just made.
Mr. Watt: Will the Minister recognise that we on the SNP Benches welcome the statement and wish to say how relieved
1144
we are that no lives have been lost in this unnecessary squabble? Do the Government also recognise the need for there to be an agreement negotiated only for the next six months so that the outcome of the Law of the Sea Conference will not be prejudiced? Do the Government also recognise that there is an urgent need to re-establish good relations with Iceland? Following the Law of the Sea Conference, is it not obvious that we must seek to reach some agreement ton by ton with the Icelanders?
Mr. Hattersley: We want to establish—or re-establish, if that is the appropriate verb—good relations with Iceland. In regard to the duration of the agreement, every supplementary question the hon. Gentleman asks me is a plea that I should undermine the interests of the British fishing fleet. That I am not prepared to do.
Mr. Stonehouse: The Minister has spoken a good deal about judgment, but is he aware that the Secretary of State for Foreign and Commonwealth Affairs has been very much at fault on this whole question and that this has lead to the humiliation that we have had to suffer—
Mr. McNamara: Rubbish.
Mr. Stonehouse: That humiliation could have been avoided if the Minister had been allowed to carry on the negotiations in Iceland months ago and had agreed the 65,000 ton annual figure put forward by the Icelanders. Will the Minister now take the authority to go into the negotiations for a sensible agreement rather than be instructed to carry on with a big-Power mentality, which has done this country absolutely no good during the past three months?
Mr. Hattersley: I am anxious not to prejudice the situation in any way since we hope that in the near future the Icelandic Prime Minister will come to Great Britain, when we hope that a successful agreement will emerge. I must tell my right hon. Friend the Member for Walsall, North (Mr. Stonehouse) that the only way the difficulties of the past three months could have been avoided was for the Icelandic Government to be prepared to negotiate with us, which was something they were unwilling to do. It

1145
was the Icelandic Government who broke off negotiations. It was the United Kingdom Government who wanted to negotiate at a time when we were willing to reduce our proposals even further to meet the Icelanders' wishes. Therefore, anybody who objectively examines the facts will see that they do not relate to the history described by my right hon. Friend.
Mr. Clegg: Is the Minister aware that the ball is very much in Iceland's court? Is he aware that on television today the Icelandic ambassador was not at all forthcoming on the question of harassment? He said that our fishermen were still open to harassment. He also indicated that the figure of 65,000 tons related to cod, but that there could be an increase in other fish—an impression reinforced by the hon. Member for Kingston upon Hull, West (Mr. Johnson), who thought that such an extra quota might be available. Will the Minister ensure that the other quotas are related to white fish and not to the type of fish on which Iceland recently reached agreement with Germany?
Mr. Hattersley: The hon. Gentleman will understand that although it is our definite intention robustly to represent the interests of the British fishing industry, he will hardly expect me to reveal our negotiating hand or to say what my right hon. Friend the Prime Minister may wish to say to the Icelandic Prime Minister when, as we hope, he comes to Great Britain towards the end of the week. I heard the Icelandic ambassador on television, and indeed I always listen with interest to what he says on the innumerable occasions on which he broadcasts. He said in the past that if the British Navy were to be withdrawn from what the Icelandic Government regard as their waters, a new agreement could be achieved within a few days. Therefore, I hope that that earlier statement by the Icelandic ambassador will prove to be correct and that the statement he made today will prove to be wrong.
Mr. Spriggs: I am sure that hon. Members on all sides of the House wish to thank the Minister for his statement. May I ask him one question on the subject of conservation? Will he make it possible for the delegates attending the Law of
1146
the Sea Conference to raise the subject of conservation, which is so relevant when we are dealing with these vital subjects? Does he agree that unless conservation is dealt with, none of the nations will ever agree on fishing limits?
Mr. Hattersley: Every statement we have made about fishing has specifically acknowledged the need to conserve cod stocks in the waters around Iceland as part of our general policy to apply the needs of conservation to a world-wide fishing policy. I assure the House that when my right hon. Friend the Minister of State for Foreign and Commonwealth Affairs represents Her Majesty's Government at the renewed Law of the Sea Conference, the principles outlined by my hon. Friend the Member for St. Helens (Mr. Spriggs) will be high on the priorities we advocate.
Mr. Maxwell-Hyslop: How soon does the Minister think the Government can enter into agreement and prevent the confrontation with Iceland over fish stocks being transferred elsewhere? Is he aware that mackerel stocks in the South-West—on which several thousand fishermen in Cornwall, which is a development area, and Devon depend for their livelihood—will be put at hazard if extra fishing operations are transferred to the Western Approaches of the English Channel? Does he agree that in reaching a settlement with Iceland we should not reproduce the same problem elsewhere?
Mr. Hattersley: With great respect to the hon. Gentleman, that is a different question. I understand the geographical reasons why he puts it, but it is not a question which relates to today's statement.
Mr. Luard: Is it not a fact that there are as many—or more—British fishermen concerned with reserving stocks around our own coasts for British fishing fleets as there are concerned with distant water fishing? Does my right hon. Friend accept that although the forthcoming Law of the Sea Conference is most unlikely to reach overall general agreement about a 200-mile limit, it is the case that a large number of Governments will at that time seek to claim 200-mile zones and that there will be pressing demands for the British Government to do the same, not least from our own fishing fleet? Will

1147
the Minister bear in mind, in his forthcoming negotiations, the difficult situation in which we should find ourselves if we were to be seen to make an abrupt transition, first trying to claim rights in waters far from our own coasts and then immediately trying to reserve our own waters against the distant-water fishing fleets of another country?
Mr. Hattersley: I understand the paradox to which my hon. Friend refers. It is a task with which the Government must deal. I believe that it is logically perfectly possible both to express our determination to exercise our traditional right to fish in some distant waters and eventually—when the Law of the Sea Conference meets again and reaches its ultimate conclusion—to follow an orderly pattern of division of the resources of the sea. The real obligation upon us and other countries is to do this in a lawful and orderly way. That is what Her Majesty's Government have tried to do.
Mr. Brotherton: While I welcome this initiative on the part of the Government, may I press the Minister a little more on this question of how far the Royal Navy is being withdrawn? May I express the hope that the Navy is being withdrawn only up to the claimed 200-mile limit so that it will be no more than 10 hours' steaming distance away from any incident within the 50-mile limit? May I also ask the right hon. Gentleman to make sure that maximum publicity is given to the fact that it is Britain who has taken the initiative in this matter so that internationally this country may be seen to be doing the right thing by Iceland?
Mr. Hattersley: The Royal Navy is being asked to withdraw to a distance 200 miles from the Icelandic coast. That is where it will remain until it is clear whether talks are to take place and whether those talks have been successful. We shall certainly do our best to demonstrate the reasonableness of our position. I believe that our position has been reasonable throughout. Sometimes it has not been represented in British newspapers as reasonably as I believe it ought to have been. I certainly intend to make sure that the gesture which has been made by my right hon. Friend in Brussels, despite considerable provoca-
1148
tion, receives the sort of publicity which it deserves.

UNEMPLOYMENT
Mr. John Mendelson: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely.
"the rising level of unemployment, which has now reached 6 per cent. and the urgent need for Her Majesty's Government to take effective measures, includng early reflationary measures, to deal with this serious problem".
I intend to argue three brief reasons—all connected with the procedure involved under the Standing Order and in no way approaching the subject matter of this motion—in my attempt to persuade you, Mr. Speaker, to grant my submission.
First, governmental responsibility is clearly established for this situation, as has been shown today at Question Time when a large number of hon. Members from all sides of the House submitted questions on this subject to the Government who accepted their share of the responsibility while at the same time rightly claiming that it was also partly the international economic situation which had led to the tragic level of unemployment now reached in the United Kingdom.
My second reason is that we cannot, under present circumstances, raise this matter in any other way because of the underlying agreement between the two Front Benches over general economic strategy. Given the prominent position enjoyed by the official Opposition under our rules of procedure, the fact that there is such a common strategy binding the two Front Benches who are agreed that reflation must not be used at this stage means that there is no way in which the House of Commons or any segment of it can express an opinion on what is the most important part of my motion.
My third reason concerns the time lag involved in any economic measures the Chancellor might take. I do not enter into the rights or wrongs of the Chancellor making statements outside the House. During the time when the House was adjourned the Chancellor has taken

1149
the occasion, on television, at Press conferences, in Jamaica and on all legitimate occasions to speak about this matter. There is no constitutional criticism implied here whatsoever. I am not fanatical about a senior officer of the Government not being allowed to say anything outside this House. My right hon. Friend must use the means available to explain his policies and elaborate them.
It so happens, however, that since the House was in recess the main political and constitutional forum of the nation was not in a position to question the Chancellor on the most important policy pronouncement he has made since last we debated economic matters. The Chancellor committed himself to a number of policy statements, including his rejection of any hope of our doing anything to begin reflating the economy. It is therefore right—given the fact that it will take at least seven to nine months before economic measures taken by the Chancellor now can percolate through the economy and have a serious effect in reducing the number of unemployed—that we should debate this matter.
We must bear in mind also that there are approaching 1½ million unemployed and that the Chancellor, like everyone else, cannot be certain that his figures are correct. Nor can those who advise him be absolutely certain. It is now the duty of this House of Commons forthwith to debate these measures so that we may ask my right hon. Friend to explain his policies and so that we may pass judgment on those policies.
I conclude with a general point. There has been great debate in this Chamber and throughout the land in recent years about the suggestion that Parliament is falling into desuetude. More and more, people are looking for other means, such as additional assemblies, of discussing matters. They feel remote from Government. I submit, without going into detail, that if there is such a dangerous development it is because we do not use often enough the means at our disposal—as previous generations of parliamentarians used to do when I was a younger man—to debate issues immediately. Here is an opportunity to do so and to return to a good tradition.
Mr. Speaker: I am grateful to the hon. Member for Penistone (Mr. Mendelson)
1150
for the notice he gave me of his intention to make this application. I have listened to him carefully. He has put forward very persuasive arguments. This is a continuing problem. I have a procedural decision to take—
Mr. Skinner: Go on, rebel.
Mr. Speaker: In view of what I said a little earlier I can perhaps be rather freer in expressing my opinion. I think that this is a matter which should certainly be debated by the House for a full day. I do not think that a debate under Standing Order No. 9 is suitable. It may come to that. I think that notice should be taken of what the hon. Member has said and that there should be a full and proper day's debate in the House on this matter. In that spirit I must say "No" to the hon. Member's application.
Mr. Atkinson: On a point of order, Mr. Speaker. While welcoming the statement that you have made and noting the fact that the Leader of the House is in the Chamber may I—
Mr. Speaker: Order. The hon. Member has risen on a point of order. This is not a point of order. I would, with respect, suggest that he should not push it too hard for the moment. It might be counter-productive.

LEBANON
Mr. Amery: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the threat posed to the European Community and the North Atlantic Treaty Alliance by the aggression from Syria into the Lebanon."
I shall not try to argue the merits of the case in any way. I apologise at the outset, Mr. Speaker, for not giving you notice that I intended to raise this matter. I had hoped that it would be possible to raise it on one of the Prime Minister's Questions which related to his meeting—
Mr. Speaker: Order. I must interrupt the right hon. Gentleman. Standing Order No. 9(3) is quite specific:
"A Member intending to propose to move the adjournment of the House under the

1151
provisions of this order shall give notice to Mr. Speaker by twelve o'clock, if the urgency of the matter is known at that hour."
I am afraid that the right hon. Gentleman is precluded from raising it because of that order. The mere fact that a Minister did not make an answer which the right hon. Gentleman hoped might be made, or that the right hon. Gentleman did not get the chance to put a supplementary question, does not bring him within the terms of the Standing Order.
Mr. Amery: On a point of order. I did not have the information which is now at my command before 12 o'clock, therefore, Mr Speaker, I was not in a position to approach you before.
Mr. Speaker: I must ask the right hon. Gentleman to be very specific. I thought that he was asking me to allow a debate on the question of some action by the Syrian Government. Is the right hon. Gentleman suggesting that that action was not known before 12 o'clock by anybody?
Mr. Amery: It was not known to me. I received a telephone call from Beirut after 12 o'clock.
Mr. Speaker: I really do not think that the right hon. Gentleman can bring himself within the terms of the Standing Order. I should have had notice.
Mr. Amery: On a point of order. The matter is extremely urgent. The Foreign Office may or may not have the information. It may well have information which I do not possess, but, according to my information, there has been an invasion overnight—[Interruption.]
Mr. Speaker: Order. May I ask the right hon. Gentleman when he received this information? When did this information arrive?
Mr Amery: I personally received it by telephone after 12 o'clock today.
Mr. Speaker: No suggestion was made to the Chair until about twenty-five minutes past three. The right hon. Gentleman must try to raise it by a Private Notice Question tomorrow.
Mr. Amery: I am sorry, Mr. Speaker, to press this point, but by 12 o'clock tomorrow the situation may be such that it is too late. An invasion—[Interruption.]
Mr. Speaker: Order. The right hon. Gentleman must allow me to be quite firm and definite with him. On what he said, certainly I do not think that I should allow the matter to be raised under Standing Order No. 9 on a telephone call. I should need to know much more about it. I had no notice of it at all until about twenty-five minutes past three. My answer must certainly be "No". I am not prepared to disrupt the business of the House on a matter on which it would appear that the Government have not at the moment any immediate responsibility. It is a matter which can be raised by Private Notice Question tomorrow, and I shall consider it then.

BUSINESS OF THE HOUSE
Ordered,
That, at this day's Sitting, any Question necessary to dispose of proceedings on the Trade Union and Labour Relations (Amendment) Bill may be put after Ten o'clock, though opposed.—[Miss Margaret Jackson.]

EDUCATION (ABOLITION OF CORPORAL PUNISHMENT)
4.13 p.m.
Mr. Dennis Canavan: I beg to move,
That leave be given to bring in a Bill to abolish the use of corporal punishment in all educational establishments and to make provision for alternative forms of punishment.
Just before the Christmas Recess I sat up all night outside the Public Bill Office to ensure that this would be the first Ten-Minute Bill to be introduced in this parliamentary Session. Perhaps it was appropriate that I should undergo some physical discomfort to enable me to introduce the Bill. If it eventually becomes law it will mean the end of a great deal of physical discomfort suffered by thousands of schoolchildren throughout the country.
The use of corporal punishment in our schools is one of the last vestiges of legalised formal violence left in our society today. Virtually every other country in Europe has abolished this practice. Indeed, Poland is approaching the two-hundredth anniversary of its abolition.
Article 3 of the European Rights Convention states:
"No one shall be subject to torture or to inhuman or degrading treatment or punishment."
Despite such lofty and well-meaning pronouncements, despite the fact that the Plowden Report recommended the abolition of corporal punishment in primary schools at least and despite the fact that even the most hardened criminal who has committed the most heinous crime cannot legally be subject to any form of corporal punishment, many children are daily subjected to a violent form of punishment with the full approval of our educational system.
We could have the anomalous situation whereby a child is given corporal punishment for a minor misdemeanour in school but if he or she commits a very serious criminal offence the law does not approve of corporal punishment for that crime.
I am informed, to my surprise, that it is still legal to administer corporal punishment to handicapped children. I
1154
submit that the use of corporal punishment has a brutalising effect on the teacher-pupil relationship, which should be based on mutual respect and not on violent confrontation. The use of corporal punishment is degrading both to the giver and the receiver.
I speak with some experience of both positions. Until I became a Member of this House some 15 months ago I had spent the major part of my working life teaching in comprehensive co-educational schools in Scotland. Soon after entering the teaching profession I learned that I was expected, if not specifically instructed, to administer corporal punishment. Through experience I learned how to eliminate its use completely in my own classroom situation but it was still particularly difficult to avoid it when latterly, as head of a large department, and then as assistant headmaster of a large comprehensive school, I was expected to support other teachers in circumstances in which children had refused to accept corporal punishment. But, of course, such a confrontation could not possibly occur if corporal punishment were abolished completely.
Many young teachers come into the profession with great pacifist ideals but soon find themselves caught up in the system. They see their older, more experienced colleagues resorting to corporal punishment and they soon find that they are likely to be branded as "soft marks" unless they follow suit. Corporal punishment is therefore endemic in many schools, and the only way to eliminate it completely is by legislation.
In my experience corporal punishment is also ineffective. It may act as a temporary form of suppression of bad behaviour, but it is by no means a long-term deterrent. Indeed it may be counterproductive, because violence breeds violence. If a pupil sees the teacher using violence to solve a behavioural or social problem, this legalising or formalising of violence may have a lasting effect on a child at a very impressionable age. If child-beating is legal in our schools, is it any wonder that there is child-battering and other forms of violence in society at large? In extreme cases the excessive use of corporal punishment could lead to sadism on the part of the teacher and to masochism on the part of the pupil.

1155
It has been argued that all that is required is control or a code of practice. There is a code of practice in Scotland but it is not mandatory and it is frequently flouted. For example, the code states that corporal punishment should not be administered for failure or poor performance in a task, even if the failure appears to be due to inattention. Recently, however, I received a letter from a parent complaining about a whole class of primary schoolchildren being belted for allegedly not paying attention to a lesson.
The Scottish code also states that in secondary departments only in exceptional circumstances should any pupil be strapped by a teacher of the opposite sex or should girls be strapped at all. That part of the code referring to "exceptional circumstances" is very open to interpretation and is frequently abused.
Lest any of my English or Welsh colleagues think that this is a practice confined to Scotland alone, I point out that I noticed a Press report last week stating that a Tyneside headmaster had caned some girl pupils. Furthermore, the Sex Discrimination Act may mean that it is no longer permissible to distinguish between the punishment code for boys and the punishment code for girls, and some individual heads and teachers may take advantage of this to increase the administration of corporal punishment to girls.
Surely it is not beyond our wit or the wit of the teaching profession to think of some alternative, non-violent form of punishment. Extra homework, for example, is a far more appropriate punishment for an offence such as late-coming, and withdrawal of privileges may be more appropriate in other cases. In some large schools it may be possible to set up special centres for pupils with extreme behavioural difficulties. The pupils in such a centre could be taught in small groups by an experienced teacher—and there are teachers particularly gifted in dealing with difficult pupils. The main educational aim of such a centre would be social education and not just academic education, with the eventual aim of reintroducing the pupil into the ordinary classroom after the cause of his antisocial behaviour had been identified and, hopefully, eliminated.
1156
For some pupils who are repeatedly guilty of bad behaviour, detention may be the appropriate form of punishment. I propose to include in my Bill additional powers for school authorities to detain pupils beyond the normal school hours, even, say, on Saturday mornings, when they could do some useful community service. The parents must, of course, be brought into consultation at an early stage when a child's behaviour is antisocial to that extent.
I would also be willing to listen to other constructive suggestions from teachers themselves and from the teachers' unions about how best the Bill can be phased in and what other alternative powers of punishment might be required.
One matter is clear, however. The continued legalised violence in our schools is quite clearly not the answer. Parliament did not go on its knees to ask the permission of chimney sweeps to stop children being shoved up chimneys. Parliament did not go on its knees to ask the permission of the hare-hunters to ban hare coursing. Parliament should also have the guts to stand up now and show a lead to the nation by saying clearly that hitting children has no place in our educational system.
4.22 p.m.
Mr. Patrick Cormack: I do not think that this House has ever heard so much rubbish in so short a period. Like the hon. Member for West Stirlingshire (Mr. Canavan), I have been on both sides of this problem, but if he had taken a little time, as I did this morning, to consult the Secretary General of the National Association of Schoolmasters he would have got a rather more astringent reply than he will get from me.
I feel that the proposals which the hon. Gentleman has put before us ought to be thrown out as the ludicrous set of specious, do-gooding nonsense that they are. [Interruption.] It is a pity that discipline, with or without corporal punishment, is not better on the Government Benches today. Discipline is an essential part of teaching, and it is very significant that people who pretend to believe in consultation do not listen more carefully to those who have the duty and the difficult job of trying to enforce discipline in some of our schools.

1157
It is regrettable that a former colleague who is now able to enjoy himself in this theatre should attempt to withdraw from the teaching profession a sanction without which many of those in it could not carry on in their jobs. [Interruption.] I am gratified to have a significant measure of support from the Government Benches for what I am saying, because people should consider this problem.
People who have the future of our children truly at heart will agree that there is something to be said for the old adage that if one spares the rod one spoils the child. When Baroness Burton attempted to introduce a Bill to ban corporal punishment two or three years ago, even she acknowledged that it was necessary for parents to be excluded from the provisions of her Bill. The fact is that in many of our more difficult areas the teacher is increasingly in loco parentis. The teacher has the job of seeking to instil civilised values and a proper sense of order into very often extremely rebellious children. [Interruption.] The hon. Member for Hemel Hempstead (Mr. Corbett), who from a sedentary position shouts his customary stupidities, is, if he did but know it, contributing towards that climate of vandalism and illiteracy which is far too prevalent in our schools today, and it is a matter which gives real concern to all those who have the future of British education at heart. [Interruption.] It is—
Mr. Deputy Speaker (Mr. Oscar Murton): Order. The hon. Member for Staffordshire, South-West (Mr. Cormack) should be allowed to make his counter-argument without interruption.
Mr. Cormack: Thank you, Mr. Deputy Speaker.
We ought to reflect on one or two facts when we are discussing an issue like this. One is the frighteningly high
level of illiteracy. One reason why it is so high is the lack of discipline in our schools. Another factor which we should consider is that juvenile vandalism is costing the country something like £8·5 million a year. About £32 million is spent on the provision of penal facilities for delinquents, and one reason for the need for this is the increasingly lackadaisical, permissive and libertarian atmosphere pervading many of our schools. Anyone who has read even a few paragraphs of the activities at the William Tyndale School and what free expression can destroy must consider carefully the sort of proposal that the hon. Member for West Stirlingshire is putting before the House today. [Interruption.] It seems to me that if anyone should go back to the nursery it is the crew at present occupying the Government Benches below the Gangway—
Mr. Deputy Speaker: Order. The Chair will make decisions regarding interruptions, not the hon. Member for Staffordshire, South-West. I ask all hon. Members to allow the hon. Gentleman to finish his speech uninterrupted.
Mr. Cormack: Anyone listening to this debate will know that those who are truly concerned and who have really reflected on the issues that we are discussing cannot but think that the move of the hon. Member for West Stirling-shire, however well intentioned, can only do destructive damage to the country's education system and the future of countless millions of children.
I beg to oppose the motion.
Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of Public Business):—
The House divided: Ayes 120, Noes 181.

Division No. 26.]

AYES

[4.28 p.m.

Allaun, Frank

Canavan, Dennis

Faulds, Andrew

Ashley, Jack

Carmichael, Nell

Fitch, Alan (Wigan)

Ashton, Joe

Cartwright, John

Flannery, Martin

Atkinson, Norman

Colquhoun, Mrs Maureen

Fletcher, Ted (Darlington)

Bain, Mrs Margaret

Corbett, Robin

Freeson, Reginald

Bates, All

Cox, Thomas (Tooting)

Garrett, John (Norwich S)

Benn, Rt Hon Anthony Wedgwood

Crawford, Douglas

George, Bruce

Bennett, Andrew (Stockport N)

Davies, Bryan (Enfield N)

Graham, Ted

Blenkinsop, Arthur

Dean, Joseph (Leeds W)

Grimond, Rt Hon J.

Booth, Albert

Dunwoody, Mrs Gwyneth

Hayman, Mrs Helena

Boothroyd, Miss Betty

Edge, Geoff

Heffer, Eric S.

Bottomley, Rt Hon Arthur

Edwards, Robert (Wolv SE)

Hooley, Frank

Bray, Dr Jeremy

Ellis, John (Brigg & Scun)

Horam, John

Buchan, Norman

Evans, Gwynfor (Carmarthen)

Hoyle, Doug (Nelson)

Callaghan, Jim (Middleton & P)

Evans, Ioan (Aberdare)

Huckfield, Lee

Hughes, Roy (Newport)

Mellish, Rt Hon Robert

Short, Mrs Renée (Wolv NE)

Hunter, Adam

Mendelson, John

Skinner, Dennis

Jackson, Miss Margaret (Lincoln)

Mikardo, Ian

Snape, Peter

Janner, Greville

Miller, Dr M. S. (E Kilbride)

Stallard, A. W.

Kaufman, Gerald

Miller, Mrs Millie (Ilford N)

Steel, David (Roxburgh)

Kelley, Richard

Molloy, William

Storehouse, Rt Hon John

Kerr, Russell

Morris, Alfred (Wythenshawe)

Stott, Roger

Kilroy-Silk, Robert

Morris, Charles R. (Openshaw)

Taylor, Mrs Ann (Bolton W)

Lamond, James

Noble, Mike

Thomas, Dafydd (Merioneth)

Latham, Arthur (Paddington)

O'Halloran, Michael

Thomas, Ron (Bristol NW)

Lever, Rt Hon Harold

Orbach, Maurice

Thorne, Stan (Preston South)

Litterick, Tom

Orme, Rt Hon Stanley

Tomlinson, John

Loyden, Eddie

Ovenden, John

Urwin, T. W.

McCartney, Hugh

Palmer, Arthur

Wainwright, Edwin (Dearne V)

MacCormick, lain

Park, George

Wainwright, Richard (Colne V)

Mackintosh, John P.

Parry, Robert

Ward, Michael

McMillan, Tom (Glasgow C)

Pavitt, Laurie

Watkins, David

McNamara, Kevin

Pendry, Tom

Watkinson, John

Madden, Max

Price, C. (Lewisham W)

White, James (Pollok)

Mahon, Simon

Radice, Giles

Wigley, Dafydd

Mallalieu, J. P. W.

Richardson, Miss Jo

Wilson, Alexander (Hamilton)

Marquand, David

Roderick, Caerwyn

Wise, Mrs Audrey

Marshall, Jim (Leicester S)

Rodgers, George (Chorley)

Maynard, Miss Joan

Rooker, J. W.

TELLERS FOR THE AYES:

Meacher, Michael

Sedgemore, Brian

Mr. Bob Cryer and

Selby, Harry

Shaw, Arnold (Ilford South)

Mr. Bruce Grocott.

NOES

Adley, Robert

Hamilton, Michael (Salisbury)

Molyneaux, James

Alison, Michael

Hampson, Dr Keith

Monro, Hector

Awdry, Daniel

Hannam, John

Montgomery, Fergus

Beith, A. J.

Harper, Joseph

More, Jasper (Ludlow)

Bennett, Sir Frederic (Torbay)

Hastings, Stephen

Morgan, Geraint

Bennett, Dr Reginald (Fareham)

Hawkins, Paul

Morris, Michael (Northampton S)

Berry, Hon Anthony

Hayhoe, Barney

Morrison, Hon Peter (Chester)

Biggs-Davison, John

Henderson, Douglas

Mudd, David

Boscawen, Hon Robert

Hicks, Robert

Neave, Airey

Bottomley, Peter

Higgins, Terence L.

Nelson, Anthony

Boyson, Dr Rhodes (Brent)

Holland, Philip

Neubert, Michael

Bradford, Rev Robert

Hooson, Emlyn

Nott, John

Brotherton, Michael

Howell, David (Guildford)

Onslow, Cranley

Bryan, Sir Paul

Howells, Geraint (Cardigan)

Oppenheim, Mrs Salfy

Buchanan, Richard

Hutchison, Michael Clark

Page, John (Harrow West)

Buchanan-Smith, Alick

Irvine, Bryant Godman (Rye)

Page, Rt Hon R. Graham (Crosby)

Buck, Antony

James, David

Pattie, Geoffrey

Budgen, Nick

Jenkin, Rt Hon P. (Wanst'd & W'df'd)

Penhaligon, David

Burden, F. A.

Jessel, Toby

Percival Ian

Campbell, Ian

Johnson, James (Hull West)

Peyton, Rt Hon John

Cant, R. B.

Jopling, Michael

Price, David (Eastleigh)

Chalker, Mrs Lynda

Joseph, Rt Hon Sir Keith

Prior, Rt Hon James

Channon, Paul

Kershaw, Anthony

Rathbone, Tim

Clegg, Waller

Kilfedder, James

Rees-Davies. W. R.

Cocks, Michael (Bristol S)

King, Evelyn (South Dorset)

Reid, George

Cooke, Robert (Bristol W)

King, Tom (Bridgwater)

Renton, Rt Hon Sir D. (Hunts)

Cormack, Patrick

Kitson, Sir Timothy

Renton, Tim (Mid-Sussex)

Corrie, John

Knight, Mrs Jill

Ridley, Hon Nicholas

Costain, A. P.

Lambie, David

Ridsdale, Julian

Dean, Paul (N Somerset)

Lamont, Norman

Roberts, Michael (Cardiff NW)

Dempsey, James

Langford-Holt, Sir John

Ross, Stephen (Isle of Wight)

Doig, Peter

Latham, Michael (Melton)

Ross, William (Londonderry)

Douglas-Hamilton, Lord James

Lawson, Nigel

Rost, Peter (SE Derbyshire)

Drayson, Burnaby

Le Marchant, Spencer

Sainsbury, Tim

Dunlop, John

Lester, Jim (Beeston)

Sandelson, Neville

Durant, Tony

Lewis, Kenneth (Rutland)

Shaw, Giles (Pudsey)

English, Michael

Lewis, Ron (Carlisle)

Shepherd, Colin

Fairgrieve, Russell

Lipton, Marcus

Silvester, Fred

Farr, John

Mabon, Dr J. Dickson

Sims, Roger

Finsberg, Geoffrey

McAdden, Sir Stephen

Sinclair, Sir George

Fletcher-Cooke, Charles

McCrindle, Robert

Skeet, T. H. H.

Fookes, Miss Janet

McCusker, H.

Small, William

Forrester, John

Macfarlane, Nell

Speed, Keith

Freud, Clement

MacFarquhar, Roderick

Spence, John

Fry, Peter

MacGregor, John

Stainton, Keith

Garrett, W. E. (Wallsend)

Marshall, Michael (Arundel)

Stanbrook, Ivor

Gilmour, Sir John (East Fits)

Mates, Michael

Stewart, Donald (Western Isles)

Ginsburg, David

Mather, Carol

Taylor, Teddy (Cathcart)

Goodhew, Victor

Mawby, Ray

Tebbit, Norman

Grant, George (Morpeth)

Maxwell-Hyslop, Robin

Tinn, James

Gray, Hamish

Mayhew, Patrick

Trotter, Neville

Grylls, Michael

Miller, Hal (Bromsgrove)

Tuck, Raphael

Hall, Sir John

Mills, Peter

Vaughan, Dr Gerard

Hall-Davis, A. G. F.

Mitchell, David (Basingstoke)

Viggers, Peter

(Hamilton, James (Bothwell)

Moate, Roger

Wakeham, John

1160

1161

Walker, Terry (Kingswood)

Welsh, Andrew

Woof, Robert

Walker-Smith, Rt Hon Sir Derek

White, Frank R. (Bury)

Young, Sir G. (Ealing, Acton)

Wall, Patrick

Whitelaw, Rt Hon William

Warren, Kenneth

Wiggin, Jerry

TELLERS FOR THE NOES:

Watt, Hamish

Wilson, Gordon (Dundee E)

Mr. Cyril Smith and

Weatherill, Bernard

Winterton, Nicholas

Mr. Iain Sproat.

Wells, John

Woodall, Alec

Question accordingly negatived.
Mr. Cyril Smith: On a point of order, Mr. Deputy Speaker. During the Division a right hon. Gentleman was nodded through the Aye Lobby. I asked the Member nodding him through where I could see the right hon. Gentleman. I was advised that he was in the Library. I have had the Library checked, and he is not there. The Member concerned is the Chancellor of the Duchy of Lancaster. What action may be taken, Mr. Deputy Speaker?
The Minister of State, Department of Industry (Mr. Gerald Kaufman): Further to that point of order, Mr. Deputy Speaker. It so happens that I was in the company of my right hon. Friend the Chancellor of the Duchy of Lancaster in the House five minutes ago.
Mr. Kevin McNamara: Further to that point of Order. I received information that my right hon. Friend wished to be nodded through. The word of one gentleman to another being taken, he was nodded through.
Mr. Ray Mawby: I could not remember the name of the right hon. Gentleman concerned, but I saw him during the course of the Division, and it is certain that he was in the House.
Hon. Members: Withdraw.
Mr. Cyril Smith: In view of the information given to the House, I withdraw. But I say in self-defence that I asked where the right hon. Gentleman was, and I was told that he was in the Library. I had the Library checked, and he was not there.

ORDERS OF THE DAY

  POST OFFICE (BANKING SERVICES) BILL
  Order for Second Reading read.
  4.43 p.m.
  The Minister of State, Department of Industry (Mr. Gregor Mackenzie): I beg to move, That the Bill be now read a Second time. [Interruption.]
  Mr. Deputy Speaker (Mr. Oscar Murton): Will hon. Members who wish to leave the Chamber kindly do so quietly?
  Mr. Mackenzie: As hon. Members will know from the White Paper "The Development of National Giro", which was published at the same time as the Bill and which, I hope, was helpful, the Bill is concerned with only one element of the Post Office's wide range of activities: namely, the National Giro. The National Giro is not a separate legal entity. It is part of one of the Post Office's main businesses, and its assets and liabilities are held by the Post Office. This is why the Bill in conferring powers, imposing obligations and cancelling liabilities does so in terms of the Post Office.
  The decision to introduce a National Giro service in the United Kingdom was announced in the White Paper "A Post Office Giro" presented to Parliament in August 1965. The service was intended to provide a cheap and speedy money transfer system which would provide an easy way of settling bills, sending money and receiving pay. For the business community the speed in clearing transactions and the frequency and detailed nature of the accounting data which Giro would provide at modest cost were seen as attractive propositions. Also, it was considered that the introduction of Giro would provide the Post Office with the opportunity to modernise its remittance services, which had remained virtually unchanged for nearly a century.
  The National Giro service went into operation in October 1968. In three short years of preparation it had built up from scratch an elaborate system involving one of the largest and most advanced computer systems in Europe.
  1164
  Our 1965 White Paper forecast 1·2 million account holders in five years. This forecast was based on the best available evidence, including European experience and market research. In fact the evidence of this research pointed to an even greater number of accounts than 1·2 million. But it was, properly, cautiously interpreted. With the benefit of hindsight we might have been more cautious. But the decision had to be taken without that benefit, and the results of having planned too small a system would have been very serious.
  Judgments had to be taken and forecasts made in a difficult area, and to some extent the expectations were not fulfilled. Giro built up more slowly than had been hoped, and although initial losses had been expected these were both larger and lasted longer than our forecasts had allowed. Last financial year, for the first time, it made a profit after paying interest on capital, although the amount was small, and some specially favourable factors contributed to it. Welcome though this profit is, it would be wrong to build too much on it.
  More important for the future of Giro is the fact that trading results have steadily improved. Giro is fulfilling a useful role. I trust that I take hon. Members with me because it is a fact that the Opposition recognised when they decided in 1971, after a long and searching review, that it should continue. The mere fact of that review put the future of Giro in doubt and slowed its progress. In the meantime competition from the banks has proved more severe than expected, especially as they are able to offer—as they did not when Giro started—current account facilities on favourable terms, as a result of profits made on other services.
  I would at this point, having visited them recently, wish to pay tribute to the staff of Giro, who by their efforts in the difficult early years have brought Giro to the healthier position in which it now stands.
  Mr. Nicholas Ridley: Will the Minister also pay even stronger tribute to the banks, which have been more successful in competition, if he is paying tribute to people who succeed?
  Mr. Mackenzie: I am talking about the Giro Bill. I know that the hon. Gentleman holds sincere views on this and that he does not agree with a word that I am saying. He did not agree with Mr. Christopher Chataway or with his hon. Friend the Member for Bridgwater (Mr. King), and I do not seriously try to persuade him.
  Mr. Ridley: Will the Minister not be so partial? He has just paid a tribute to the staff of Giro, which on the whole has been a failure. It is right that he should acknowledge the extraordinary commercial strength and acumen of the private sector banks, which have beaten Giro in the competition.
  Mr. Mackenzie: I do not understand why the hon. Member wants to make such a fuss about my paying tribute to the staff of Giro, who have brought it to a much healthier position. If he wishes me to pay tributes all over the place I shall do so, but I think it right to pay this small tribute to 2,000 or 3,000 people who work hard in the Giro interests. I do not think I can persuade the hon. Gentleman that Giro is a useful service. Christopher Chataway could not do it, although the hon. Gentleman was a member of the Government when the review was going on. He had nothing to say about it then.
  I turn now to the Bill. Under present legislation Giro is able to offer a limited range of banking services, in particular loans and overdrafts, but if Parliament agrees the Bill will enable Giro to extend those services to include others offered by the banks, thus stimulating competition. Giro is now an established institution and the Bill removes certain handicaps which have denied it its full potential. This extension of its range of activities was anticipated by the statement of my right hon. Friend the Paymaster-General on 31st July 1974, when, in outlining the Government's decisions on the recommendations of the Page Committee, he said that so as to provide a more complete banking service for Giro's customers the Government were in principle ready to see an extension in its facilities which would be comparable with those to be afforded to the Trustee Savings Banks.
  Although the 1965 White Paper saw Giro as meeting the banking needs mainly of lower income groups, experi-
  1166
  ence has shown that it is handicapped in attempting to do this without a profitable base of other business. Giro's competitive position in the personal sector has been weakened by the free personal account facilities now offered by the banks.
  In order to achieve the financial target set by the Government in 1972 of breaking even in 1977–78—which was achieved last year ahead of schedule—Giro has concentrated its efforts on those segments of the money transfer market most likely to provide early profits. But experience has shown that if this strategy is to be fully successful and if the money transmission service is to become viable Giro must also be able to build up an integrated range of banking services to its personal customers and to the corporate sector so as to encourage the retention of balances within the Giro system.
  The basic money transfer service remains the primary rôle of Giro, but it is important to permit Giro to offer a more balanced range of services. This will involve making full use of the system. By expanding its facilities so as to provide a total service, Giro can attract more customers to make use of its transfer service. While there has, as the White Paper describes, been a growth in the number of Giro's corporate customers, it needs more of their high-value business. By offering corporate customers wider facilities, Giro will be in a stronger position to persuade them to make greater use of their accounts instead of using Giro for in-payments and then withdrawing balances for credit with other banks for making payments.
  In short, the Giro must be able to offer an attractive package of facilities under the one roof. Clause 1 of the Bill therefore seeks to extend the powers of the Post Office to provide banking services.
  Mr. Tim Renton: Clause 1 of the Bill simply refers in very loose terms to "banking services". The Minister has been using cliche-ridden phrases like "total banking facility". Could he enlighten us by saying more specifically what new functions Giro will be offering through its banking sector?
  Mr. Mackenzie: The hon. Member anticipates my comments by just a few

  1167
  paragraphs. I am sure he will not mind waiting until I get deeper into my speech.
  Giro has already, from 2nd June 1975, begun to offer personal loans to account holders who have their pay credited to a Giro account and it has been agreed that Giro can also make limited overdrafts available to local authorities and nationalised industries. These new facilities are being operated on a modest and experimental scale. Thereafter it is our hope and intention that Giro, as circumstances permit and in the light of experience, will expand to offer new services like overdrafts for businesses, overdrafts for personal account holders, both of which it can provide under existing legislation, cheque guarantee cards and so on.
  New services will be introduced, but on a phased basis with the precise timing and terms of their introduction subject to the usual controls exercised by the monetary authorities and to consultation with the Government. The loan funds available for personal loans and overdrafts, the first facility to be introduced, will be carefully controlled and initially kept to a modest level.
  The intention generally—not only with those facilities—is to proceed with prudence, testing the market, carrying out the detailed studies and building up the expertise needed to handle the new business. In some cases pilot schemes will be introduced first and progress will be carefully reviewed. There is, I repeat, no question of quick, dramatic change in the range of Giro's activities.
  The Government believe it is socially desirable that a full range of banking facilities should be available to all, particularly to weekly-paid people, who are the largest sector of the community without bank accounts. Giro, with its countrywide network of post offices, has an excellent opportunity for achieving this. Apart from the socially desirable aim of increasing the availability of bank accounts to the man in the street, Giro has great potential for reducing the amount of cash in free circulation, with considerable benefit to security. About two-thirds of the working population are paid in cash. This generates more cash transactions than would otherwise be the case.
  The weekly-paid tend to form the "unbanked" section of society, despite
  1168
  the large numbers of deposit accounts which this section of society owns. The weekly-paid include some of the more highly-paid industrial and skilled workers who, for reasons of convenience or choice, do not use branches of the clearing banks. Hon. Members will appreciate the advantage for all sections of the community in reducing the volume of cash payments. Its use is expensive and has serious security problems. The weekly cycle of wage and other payments represents a cost to the economy which could be reduced by a conversion from pay in cash to pay by credit.
  Mr. Ray Mawby: The hon. Gentleman will remember that in 1963, when I reported to the House what I had found on the Continent, I pointed out that even where Giro systems had been started in the 1920s the majority of wage earners, although they might use the system to pay bills, were not generally holders of Giro accounts. I agree that it would be a good thing if ordinary wage earners had Giro accounts and did not take cash, but is there any new way which the hon. Gentleman or the Post Office has found to convince these people, in this country and on the Continent, that they ought to do this? Is there any sign that they would do it even if Giro set out to meet their needs?
  Mr. Mackenzie: I recall the hon. Gentleman making this point when we last discussed the issue on the borrowing powers Bill some time ago. We took note of it then. This Bill allows the Post Office to fulfil the functions that it wishes to have. The Post Office has made a judgment and I am simply here to ask that it shall be permitted to go ahead. It is a matter for the commercial judgment of the Post Office. Knowing the sales force within Giro as I do, I am sure that it will take the opportunities afforded to it by a Bill like this as a real challenge to get out and sell as it has been doing very successfully recently.
  Mr. Tom King: Is the Minister really saying that he is merely acting as a postbox for the Post Office? It is stated in the White Paper that the Government have authorised the Post Office to extend this service. A judgment has been made by the Government, and the Minister cannot simply wash his

  1169
  hands of the matter and say that he is merely a reporter to the House.
  Mr. Mackenzie: The hon. Gentleman knows perfectly well why I am coming to Parliament to seek these powers for the Post Office. As I have often told him, I am no longer the Postmaster-General. The question asked by the hon. Member for Totnes (Mr. Mawby) related to the marketing effectiveness of Giro. Nobody expects me, as a Minister, to go out and do the selling for Giro. I simply wish to ensure that the Post Office has the power to do it effectively.
  The removal of the existing restrictions on Giro's operations will enable it to compete on equal terms with the banks. It is important, therefore, to ensure that its position as an entity within the Post Office does not involve any element of subsidy. Competition with the banks will be fair.
  It is the intention that the new Giro credit operations will be self-supporting—that is, Giro does not expect to seek further capital from the Government to finance those operations. We do not intend that Giro's public sector status or its position as an entity within the Post Office should in itself be employed to affect Giro's competitive standing.
  Giro will not be subsidised by the rest of the Post Office. It will continue to pay on a commercial basis for its use of Post Office services, and it will continue to publish separate accounts so that its performance can be properly maintained and assessed. Giro will be subject to the same guidance from the monetary authorities on, for example, credit controls as that applied to the banks. It is also our intention that Giro will satisfy the requirements of monetary policy as it extends its services.
  I now turn to the financial provisions of the Bill, namely, the writing-off of losses and the introduction of public dividend capital under Clauses 3 and 4. Whilst Giro's losses until last year had a number of causes, a major one was the restriction on its freedom of action. We believe, therefore, that it would be right for the removal of these restrictions to be accompanied by a fresh financial start and a firm base on which to build.
  Since the review by the previous Government, Giro has concentrated its efforts
  1170
  on those segments of the money transfer market most likely to lead to early profits. By its marketing initiative and containment of costs Giro progressively reduced its losses until it achieved a modest profit last year, despite a heavy burden of interest on past losses. With its present capital structure, however, it cannot hope to overtake the accumulated losses within the foreseeable future. We have, therefore, decided to recommend to the House a level and form of write-off which we consider properly suited and related to Giro's future profitability and which is pitched at a level which gives Giro a reasonable prospect of servicing its remaining capital.
  The capital reconstruction provisions in Clauses 3 and 4 can be summed up as follows. Giro's capital base will be reduced by about 40 per cent—that is, from £42·5 million to £25·8 million—the reduction of £16·7 million constituting half of Giro's accumulated losses to 31st March 1975 of £33·4 million. In place of the existing capital, which consists entirely of long-term loans from the National Loans Fund, Giro's new capital of £25·8 million will be half in the form of public dividend capital and half in the form of National Loans Fund loans.
  I have described the effect of the financial provisions of the Bill, namely Clauses 3 and 4, in what may be described as practical accounting terms. The actual presentation in the Bill is rather different as it had to be framed in terms imposed by the form of the parent Act of 1969. Clause 4 provides for reduction in Post Office indebtedness of £29·7 million subdivided between the reduction in the commencing capital debt—namely, £8·48 million—and the reduction in subsequent indebtedness to the National Loans Fund. £13 million of the £29·7 million reduction in debt will be re-created in the form of public dividend capital. Clause 3 provides for a payment of dividends on this public dividend capital by the Post Office to the Secretary of State.
  As hon. Members are aware, PDC is a form of equity which makes up part of the capital structure of certain public sector trading bodies. It has already been provided to some nationalised industries. While Giro is not subject to cyclical trading conditions it is, as a member of the banking community,

  1171
  affected by changes in monetary conditions, which can have a significant effect on Giro's profits. Hence, Giro qualifies in principle for PDC.
  There is no question of PDC being introduced as a soft option to relieve Giro from repaying interest on loan capital. In order to ensure a proper return on the dividend capital, Clause 2 requires the Secretary of State to set Giro a financial objective. Although the Bill does not require this to be set until three months after enactment at the latest, I believe that the House, in considering the Bill, would wish to know what objective we have in mind as a material consideration in discussing these proposals.
  The financial objective is that over the three years 1975–76 to 1977–78 Giro will, after paying interest on its remaining loan capital, earn an average annual return of 12½ per cent. on its public dividend capital plus retained profits. I trust that any fair-minded Member will accept that this is realistic, though demanding. This objective will call for a successively better performance in each of the three years in question and constitutes a genuine discipline for Giro to reach.
  There is also the linked but separate question of dividend policy, which in accordance with Clause 3(3) will be the subject of discussion with the Post Office and the Treasury each year. The Secretary of State will be concerned to secure dividends consonant with the profits earned and the capital requirements of the business. In the foreseeable future capital requirements are expected to be small. We have in mind, taking one year with another, that the dividend return on the PDC should not be less than the interest which would have been paid on the equivalent amount of loan capital.
  We are, as the House will see, proposing in Clause 4 to repeal the powers still available to the Secretary of State under the Post Office (Borrowing) Act 1972. These powers were sought by the then Minister to enable him to release the Post Office from the liability to repay debt incurred in respect of the postal and remittance services up to March 1973, subject to an overriding maximum of £200 million. By virtue of that provision the Post Office has already been released from approximately £177 million
  1172
  of debt, leaving the power to release approximately £23 million more of its debt not exercised. Those powers were sought in respect of the postal and remittance businesses of the Post Office. That is why they are not being used for the writing off of Giro's losses.
  The White Paper, with the further explanation I have offered this afternoon, will, I hope, have set out clearly the nature, purpose and motives of our proposals. They are made not in any doctrinaire spirit but to establish a satisfactory basis on which Giro can build for the future. That Giro is now an established and valuable institution is not a matter of dispute. When their party formed the Conservative Government, hon. Gentlemen opposite considered whether Giro should continue and decided that it should. We are taking a further logical step—to secure that it should continue more effectively than we can fairly expect it to do while its freedom to compete is restricted and while it carries its present burden of debt. No one is compelled to use Giro, and it will not be subsidised. We believe that it will succeed by its own competitive efforts.
  In short, in asking the House to give the Bill a Second Reading we are recognising that Giro has the potential to make a very effective contribution to society.
  5.10 p.m.
  Mr. Tom King: We are grateful for the Minister of State's conscientious presentation of the Bill. Opposition Members have some sympathy with him because of the task that he has had to perform today. However, there is a slightly uncanny coincidence, because once again the Secretary of State for Energy has graced this area of the Post Office with his presence, laid down the plans, and departed to another area.
  If we consider the history of this measure we find that one of the biggest liabilities against which Giro has had to fight since the beginning has been its disastrously optimistic launch by the then Postmaster-General, the right hon. Member for Bristol, South-East (Mr. Benn). I do not understand why, as the Secretary of State for Energy, the right hon. Gentleman is a sponsor of the Bill, but his sponsorship is symbolic. He was responsible for telling the House that the

  1173
  forecasts of 1 million private accounts and 200,000 commercial accounts within five years showing an 8 per cent. return were merely conservative estimates of the likely prospects and that they were likely to be much greater than that. I admire the Minister's ability to talk clearly and lucidly with his tongue deep in his cheek when he refers to the earlier forecasts made for Giro.
  Mr. Gregor Mackenzie: I think that the hon. Gentleman does me less than credit. He will recall the exchanges we had during the passage of the Post Office (Borrowing) Act 1972 when his right hon. Friend the Member for Bournemouth, West (Sir J. Eden) was the Minister of Posts and Telecommunications. I am sure that he will recall that I put what I thought to be a fair case and a fair wind for Giro. I have not changed my views. My views are reflected in the Bill that I am presenting to the House today.
  Mr. King: I accept what the Minister says. However, I was referring to the rather hazy gloss that was nut on the earlier launch of Giro. That is also mentioned in the White Paper where it rather rapidly speeds over the point by saying:
  "there has been a growth of business not foreseen when the service was launched".
  The existence of Giro today is due to the fact that it has taken directions different from those indicated by the then Postmaster-General, the right hon. Member for Bristol, South-East. My then right hon. Friend, Christopher Chataway, described that peculiar mixture of social euphoria and self-deception which the the right hon. Gentleman brings to most of the measures he tackles.
  Some of us, including my hon. Friend the Member for Totnes (Mr. Mawby), did our homework on the history of Giro. I did not go back as far as my hon. Friend, but I read the debate which took place in 1965. Mr. Hynd, the then hon. Member for Accrington, initiated the debate on the postal Giro.
  The debate was answered by the right hon. Member for Bristol, South-East who, at the beginning of his involvement in this matter, made a quite extraordinary remark. He said that he saw the Post Office as the Ministry of Communications and he thought that this transfer of money was
  1174
  concerned with spreading the good news that a man is rich, but concealing as far as possible the bad news that he is poor. If that is to be the basis upon which the overdraft facilities have been planned, and if the Post Office is to be engaged in concealing as far as possible the fact that someone cannot afford an overdraft, it is a strange basis on which to begin.
  It is clear that the right hon. Member for Bristol, South-East made the greatest contribution to killing the Giro system before it had even started. In view of the measures before the House today, it is interesting to note that he made it clear when the proposals were originally announced and he launched the scheme that Giro must not in any circumstances give overdrafts. Times have changed. We have moved on.
  The next stage in the history of Giro occurred when the Conservatives were returned to office. I am sorry that the Minister of State accused Christopher Chataway of putting the future of the service in doubt by instituting a review. What put the service in doubt was the fact that when we took office, we found that Giro had lost £12 million in the previous two years. It was rapidly heading downhill.
  It would have been an act of total irresponsibility merely to have allowed it to continue without seriously reviewing the situation. As the Minister knows, Cooper Brothers conducted an urgent review and made a number of recommendations. They recommended better management, stronger financial control and improved marketing, and those recommendations were implemented.
  There is no doubt—and the Minister was right about this—that since then Giro has changed course and has had much better success. Its trading results have improved steadily. We are particularly conscious of the success that it has had with commercial agents' deposits. Where it undoubtedly provides a most useful service, a social service and, I hope, a profitable service, although one does not have full information, is in connection with local authority rent collection. Undoubtedly this service is of major social benefit by eliminating the risk of violence to local authority rent collectors.
  It would be right to pay tribute to what has been done by those in Giro,

  1175
  and particularly to the work of Mr. Singer, who has led the operation. His work has been especially directed towards restoring the fortunes of a service which had been launched on a quite disastrously optimistic basis and in quite the wrong directions. By going for those areas where there was a clear market need and profitable business, he has been able to achieve far better results for Giro.
  I was about to say that under these new measures it is proposed to offer overdrafts. However, it is clear that they have already been authorised by the Government. It is also proposed to write off £16·7 million of previous loss and to convert a further £13 million to public dividend capital. For reasons that I shall spell out, we have substantial reservations about the Bill, and we shall certainly be opposing it in the Lobby tonight.
  Our first reservation concerns the evidence of any need for the Bill at all. The Minister of State has read some fairly bland statements such as "The Post Office was convinced" and "It could be, it should be and it looks as though there might be a market". However, we have had no concrete evidence. We have had no specific evidence about how much market research has been done. I have not received a single letter from my constituents saying that they find it an appalling hardship that Giro cannot offer them an overdraft. I do not know whether other hon. Members have discovered a burning need in their constituencies for such a service. There is one feature for which we can be thankful—no one has tried to suggest that these proposals were in the Labour Party manifesto. To have done so would have been the ultimate insult.
  It is claimed that the growth of private accounts—about 480,000 after seven or eight years, and well below a million within the five years originally intended—is being handicapped by the inability of Giro to offer the full range of banking services. However, I wonder what evidence there is for putting forward that case.
  Anyone with commercial experience knows that when people are trying to sell something and not succeeding, they always have excuses and will claim there is some obstacle stopping them from
  1176
  breaking through and doing extremely well.
  The commonly alleged handicap of Giro is that it cannot offer the full range of banking services. What evidence is there for that? I understand that Giro will not be offering overdrafts, for example, at any more attractive rates than the banks. In fact, its rates are likely to be slightly higher than the bank rates. In the light of that, what is the evidence that there will be a flood of new private accounts going to Giro?
  The Minister of State talked about the shape of the banking services and the facilities that are available, which again seemed to indicate the theme of a people's bank for the weekly wage earner. The hon. Gentleman will be aware of the Bill, now going through the other place, with the object of widening the facilities available through the Trustee Savings Bank. Does it make sense at this time, when Government policy is to extend the range of services of the Trustee Savings Bank, to allow Giro to expand in the same direction?
  Giro has been successful in the corporate commercial area. The strength of the Trustee Savings Bank lies more with the private account area. The TSB has 11 million accounts. At the moment, Giro has fewer than 500,000. It seems strange that, with the expenses that will be involved in these new measures, the Government should authorise both to proceed at the same time.
  Mr. John Golding: Has the hon. Gentleman considered the position of many people living in communities where there is neither a Trustee Savings Bank nor a joint stock bank, and the advantages that Giro has to offer them?
  Mr. King: I do not know whether those people have made representations to the hon. Gentleman. I have a whole range of constituents living in fairly remote places, some of which do not even have a post office either, and I have had no representations about the lack of Giro providing a full banking service being a great hardship. The hon. Gentleman may have evidence to the contrary and will no doubt tell the House about it.
  Our next great reservation is about the basic ability of the Post Office management to cope with a development of this

  1177
  kind. It is easy to give authorisation to widen the range of banking services, but that will move Giro into a completely new area of activity. Instead of the speedy transmission of funds, which was the original concept, Giro will be involved with sophisticated banking services.
  The Minister of State made it clear that Giro is an integral part of and comes under the overall management of the Post Office. I seriously wonder whether, when there is considerable concern about the organisation, structure and management of the Post Office, it is wise to proceed with a measure of this kind. The Government have conceded and recognised the worry about the present situation in the Post Office, because they have just set up a review. Mr. Carter, the Vice-Chancellor of Lancaster University, is to chair the review, the appointments to and terms of reference of which the Minister announced. Without question, Giro and its position within the Post Office will come within the terms of reference of that review. The review is to be fairly urgent. I understand that the report is expected within a year. It seems extraordinary to set Giro off on a new course without waiting for the outcome of that review.
  There are those who consider that there is an argument for separating Giro from the Post Office. Others suggest that it could become a subsidiary of the Treasury rather than be involved with the Post Office and the Department of Industry. It seems extraordinary that the Department of Industry should be launching Giro in one direction and that at the same time the Government should be setting up a review to decide what should happen to it.
  Apart from the capacity of the Post Office to cope with the timing of the move, there is the question of expertise in banking services and overdrafts. The Minister said that this measure would enable a full range of banking services to be built up by Giro. The strange thing is that it will apparently be done with no extra public service employees. That seems a remarkable achievement. When hon. Members read the Bill, they will find that it indicates no
  "direct effect on the number of public sector employees".
  We should like to know whether the people whose productivity is mounting
  1178
  steadily on the processing of the various documents connected with Giro are automatically to become assessors of credit and manage the other banking services which are offered. Looking at this idea to extend the range of Giro services, I question whether it is equipped to move into the complicated area of banking services. I am not a banker. I think that it will have to deal with some of the more difficult areas of credit assessment and control. This could be a complicated and costly area.
  I turn now to Giro's performance. It has incurred losses to date of £33·4 million. The Minister claimed that Giro had matched its target on the criteria set by my right hon. Friend in 1972. One is entitled to query whether that is a fair statement. If, as the White Paper states, in 1974–75 it had already met its target for 1977–78, which was the full recovery of costs, I should point out that that is achieved only by adding back unrealised losses on investments, which are due to a favourable position on the Stock Exchange. The Minister cannot have it both ways. That factor was disregarded in the achievement of the target in 1972–73 because it was adverse at that time in establishing that Giro had matched that target. Therefore, there is some reason to query whether it has achieved the target set for 1977–78.
  The Minister of State fairly tackled the point that Giro would compete with the banks and that the Government were determined to ensure that competition would be fair. However, he was less than clear about what areas would be covered by this total comparability. The hon. Gentleman referred to reserve ratios. Will he clarify whether they will be subject to such things as special deposits? Will they be subject to qualitative guidance from the Bank of England? What is the situation regarding the liquidity of resources?
  A serious allegation has been made, according to information which I have seen, about the way that the capital structure has been set up. It is suggested that there are negative or minus free resources in Giro, as defined under the Bank of England rules, and that no commercial bank with a balance sheet as set out in the White Paper would be allowed to trade. That allegation, if true, is extremely serious. On that basis,

  1179
  Giro would be unable to protect depositors by its own reserves and it would need recourse to the Government, which would perhaps involve a further writing off of losses.
  The Minister of State told us, as I suppose endless Ministers of State have told us in bringing forward measures of this kind, "We intend that Giro shall be self-supporting. It will not be subsidised." Those are brave words. However, the hon. Gentleman knows that even if he believes them he has covered the position in Clause 3(1) by writing in
  "The Secretary of State may from time to time pay to the Post Office … such sums".
  That has an awfully familiar ring about it. We were told that Giro would not be subsidised and that it would be entirely self-supporting. None the less and predictably, there is this power to ensure that Giro can continue to receive funds from the Government.
  The Government in this measure are relieving Giro of up to £20 million of loan charges in the next five years. That is being replaced by a possible public dividend capital payment of about £8·75 million—that is, if the Post Office pays a dividend. Everybody knows the history of PDC. It started with great intentions, but it has an alarming habit of not being paid. In Clause 3(3) there is the standard waiver that excuses the Post Office from having to pay PDC if circumstances do not permit it.
  It is important to recognise what could be meant by fair competition in this area. It has been calculated that a trading profit of about £10 million a year would be required to enable Giro to service its capital and loans, to build up proper free capital resources to the level required of ordinary commercial banks by the Bank of England, and to protect those resources against inflation. Its last trading profit was £3·9 million, which shows how far it is from making the sort of recovery which is needed.
  Is it only Giro itself which will be competing with the banks? My hon. Friend the Member for Mid-Sussex (Mr. Renton) fairly said that the wording of the Bill would enable the Post Office to go into banking services. We should like this point clarified and, if necessary, corrected in Committee.
  1180
  I am pleased that the Minister of State spelt out the financial objectives of Giro. Considering that this matter was notified to the House last March, it would have been preferable if we had had this information before the debate. But at least we have not had to wait until three months after the Bill becomes law. On an admittedly hasty first consideration, we are not particularly impressed by a target of l2½ per cent. pre-tax when inflation at its lowest is running at 14 per cent. Something nearer 20 per cent. would be more realistic.
  Our next objection to the Bill is its retrospective nature. We had a White Paper in November after a statement in March, and we are told that overdraft facilities have already been authorised and are already being implemented on a trial basis, that the Bill is intended only to remove any doubt about the powers of the Post Office to introduce new facilities and that the capital write-off and the conversion of the loan to PDC will take effect from 1st April 1975. It is intolerable that we should be invited to consider this matter so long after the event. The House is being treated with considerable contempt.
  A more fundamental and perhaps philosophical point concerns us. The House should consider carefully before extending State control into such an intimate and vital area as the citizen's own money. This might seem a frivolous and exaggerated point, and under a Government of a different party that might be true. But we know the present Government's policies and their attitude to the clearing banks, so we are entitled to have the gravest doubts.
  The Home Policy Committee of the Labour Party has said in turbid words:
  "… the party is already committed to public ownership of the banking system by Composite 33 at the 1971 annual conference".
  It went on to say:
  "Given the dominance in British banking of the 'big four' clearers, the nationalisation of these four as separate banks, as in France and Italy, could give the same result in terms of public ownership".
  It is against the background of fatuous statements of intent like that, which we hope will never materialise but in which some elements in the Labour Party still believe, that we should be irresponsible if we did not face the fact that there is

  1181
  this intention to spread the activities of a State corporation yet wider into the public banking services and to create some sort of people's national bank.
  It is against that background, and against the background of the conflict with the Trustee Savings Banks and the lack of any evidence of a clear need for such a service—and recognising that Giro has been rescued once from the machinations of the present Secretary of State for Energy and we do not want to have to do it again—that we shall oppose the Bill tonight.
  5.36 p.m.
  Mr. John Golding: I declare my interest, first as one Giro account holder who very much welcomes the prospect of Giro overdraft facilities and, second, as an Assistant Secretary of the Post Office Engineering Union.
  Although the major unions involved are the Union of Post Office Workers, including those who work on the counters, whom I have consulted, and the Civil and Public Services Association, the Post Office Engineering Union represents some key workers in Giro business. My hon. Friend the Member for Thornaby (Mr. Wrigglesworth), if he catches you eye, Mr. Deputy Speaker, among the pressure of Labour Members, may like to speak for the CPSA.
  I should like, on behalf of the POEU and the UPW, to congratulate the Government on bringing the Bill forward. We must be grateful to the Ministers concerned and also for the vision of the present Foreign Secretary and Secretary of State for Energy in creating Giro in the first place. We should also acknowledge the part which the hon. Member for Bridgwater (Mr. King) played, as PPS to Mr. Christopher Chataway, in reprieving Giro. Since the uncertainty created at the time by the Cooper Brothers inquiry, it has been extremely successful. Indeed, if every business in which Conservative Members are involved were equally successful, we should have no economic crisis.
  I echo the tribute by the hon. Member for Bridgwater to the management of Giro, particularly to Mr. Singer. Perhaps he did not follow up that tribute by expressing the confidence for the future which one might have expected, but I
  1182
  echo his earlier sentiments. Each year since 1971–72, Giro's trading position has improved from a loss of £5·6 million to a profit, admittedly before interest, of £1·3 million in 1974–75.
  Christopher Chataway set the target dates in March 1972. He wanted Giro to make a positive contribution to Post Office finance by March 1973 and to break even by July 1977. As has been said, Giro has achieved both those targets well before time—it has achieved the second target two years early. That is a sufficient reason for the Government to introduce the Bill now. Had Giro not achieved its targets and had not the hopes of Christopher Chataway and the hon. Member for Bridgwater been fulfilled, we might have been critical of the Government for bringing the measure forward.
  Mr. Tom King: I do not want to press the point but I know that the hon. Member for Newcastle-under-Lyme (Mr. Golding) will appreciate that Giro can claim to have achieved its target two years ahead of time—which he believes is fair justification for the Bill—because of the performance of the Stock Market. It is because the Stock Market has recovered that Giro is able to report the figures that it has.
  Mr. Golding: As I understand the position, Giro's possible previous poor performance was itself related to poor performance of the Stock Market. This is a question of swings and roundabouts. If Giro is to be castigated when the Stock Market is doing badly, it is worthy of praise when the Stock Market does well.
  Additionally, Giro has provided useful business across post office counters. It is important that we take into account the fact that Giro created a £1·5 million credit for the postal service. That should be added to the profitable side of the Giro service. It has also made the admittedly small net profit of £0·1 million.
  The financial results have been good and have been made possible by impressive increases in productivity. The hon. Member for Bridgwater did not stress sufficiently the contribution of the staff in achieving that productivity. Since 1969–70 there has been a doubling of productivity in the Giro service. All hon.

  1183
  Members must pay tribute to that. I am sure that my hon. Friend the Member for Bootle (Mr. Mahon) would want to tell his many constituents who work at Giro that the House sincerely recognises their efforts.
  Giro has done well and we want it to do even better. However, in relation to the original White Paper there is room for the criticism that Giro has tended to concentrate on the business user and has, perhaps, paid too little attention to the individual. Although its business deposits have shot up from £600 million in 1972 to £3,500 million in 1975 and rent payments, covering 100 local authorities and 750,000 tenants, have increased from £500,000 to £19 million, the total of transactions, although doubling, has not grown to anywhere near the same extent.
  The number of transactions has grown too slowly and certainly more slowly than the unions connected with Giro would have liked. That may be due partly to the management's pre-occupation with achieving the financial targets set by Christopher Chataway. It has been easier to make money by concentrating on the commercial market than by attracting individual accounts. To that extent the strictures of the hon. Member for Bridgwater are justified.
  If Giro is to fulfil its social purpose, it must further expand the number of individual accounts. It has to find a way of increasing the number of salaries and wages paid into it. This needs to be done for social as well as security reasons. Giro is already very attractive to customers such as me because of its counter opening hours, which are matched only by the Trustee Savings Banks and the Co-operative Bank Ltd. Perhaps it is significant that the private sector is unable to give the standards of service in terms of the opening hours of its counters that the public sector gives at present.
  Mr. Michael Marshall: I am most interested in what the hon. Gentleman has said, because he has great experience in these matters. I am sure it would help the House if he told us his view about the recent Press report that the Post Office as a whole is considering Saturday afternoon closing in its search for economy. Will not this move tend to
  1184
  make matters more difficult, in view of the argument that he pursues?
  Mr. Golding: I asked the Union of Post Office Workers about this matter. It has said that it would discuss the problem with management, which proposed the idea. It is interesting that this is a management proposal and that there has been no pressure from staff to restrict the hours during which Giro counters are open to the public. Even if Giro counters were to close on Saturday afternoons, Giro, like the Trustee Savings Bank and the Co-operative Bank Ltd, would still provide a valuable and useful Saturday morning facility. It is still possible to withdraw money after a shift at work.
  The Saturday morning facility and at present the Saturday afternoon facility, together with the ability to withdraw money after three o'clock in the afternoon, provide a most valuable service to the customer. It is bettered only by the service extended to hon. Members by the House of Commons Post Office, from which we can withdraw money day and night when the House is sitting.
  Despite this valuable facility, there are drawbacks for those who are customers of Post Office Giro. The hon. Member for Bridgwater may not need an overdraft facility—he may be so readily recognised that he does not need a bank guarantee card. I assure him that for those of us who are more humble the fact that Giro cannot provide the normal overdraft facilities, loans and bank cards is a disadvantage.
  There is one particular disadvantage. When one draws a cheque on one of the joint stock banks—one of the members of the Committee of Clearing Banks—one does not have to be particularly neurotic about whether there is the precise amount of money in one's current account. With Giro one has to be very precise in this matter. This must be and is a drawback to the Giro account holder. I believe that Giro account holders will welcome this facility. Perhaps I may comment more on that matter later.
  I turn from the hon. Member for Bridgwater to my hon. Friend the Minister of State. I say to him that while Giro must strive to obtain more individual customers, the Government themselves should give it more support. I have

  1185
  listened patiently this afternoon to suggestions that there might be unfair competition. I do not think that there has been any evidence that the Government have smiled particularly sweetly on Giro over the last two years. Giro's share of the Government's money transmission business at present is, I understand, only about 4 per cent. The Government, through their Departments of State, must give it more business. They have not fulfilled their obligations to Giro.
  One drag on Giro has been the Paymaster-General's Department running its own banking service. I am always happy to receive the drafts drawn on the Paymaster-General's Department, but I think that it is a nonsense that there should be a Government Department providing banking services alongside Giro. The Treasury should transfer this aspect of the Paymaster-General's Department to Giro and create a single Government banking unit. I have raised this matter previously. At the time of the creation of Giro I said that it was a nonsense for the Paymaster-General's Department to be duplicating the facilities with a similar computer.
  I have the impression that the Treasury has made things difficult for Giro not only by providing duplicate facilities in the Paymaster-General's office, but by siding too strongly with the private banking sector. Opposition Members may be surprised to hear me advancing this argument, but I believe that in order to develop Giro to the full, in order that we can attain the most efficient service, it is important that Giro be accepted, as the Co-operative Bank has recently been accepted, into the Committee of Clearing Banks. There is no reason why this should not be done. The Government must use all their influence to see that the publicly-owned Giro is given a place within the established banking system. That ought to be the Government's aim.
  The Treasury, too, must be careful about not asking too much of Giro in its early stages. I pick my words carefully, because although there is not a Treasury Minister on the Government Front Bench this afternoon, I suspect that these decisions have been taken in the Treasury. I should be very surprised indeed to learn that my hon. Friend the Minister of State had been allowed to take them on his
  1186
  own. The Treasury must not ask too much of Giro at present.
  The Bill represents no more than what should have been done in 1972 when the then Government told Giro to carry on. The deficit with which we are dealing was accumulated partly because of the uncertainty created by the inquiry established by Christopher Chataway and conducted by Cooper Brothers. Incidentally, I was horrified to hear the hon. Member for Bridgwater suggesting that further doubt be cast on the future scope of Giro by waiting for the results of another inquiry which we know to be predominantly into the postal letter and parcel service. I should be appalled if the Government were to say that they would hold up the progress of Giro for yet another year while this inquiry was carried out. Giro came to prosper only after Christopher Chataway gave an assurance to its potential customers that it would continue. All of us who were involved in the debates at the time would acknowledge that that was so.
  The Bill will still leave Giro with an accumulated deficit of £16·7 million. I should like the deficit wiped out altogether and a fresh start made. I declare again my interest as a Post Office Engineering Union Assistant Secretary. It could well be in the interests of Giro that there be intensive investment in computerisation when the 1968 computers see the end of their useful life. I assume that this will require at least £2 million, and it would seem logical to integrate this re-equipment programme with that of the Paymaster-General's office. That is the very least that ought to be done in public sector banking.
  The Union of Post Office Workers sees the desirability of creating direct links from post office counters to the Giro computer centre and I am pleased to see my hon. Friend the Minister of State, Civil Service Department, who has more direct links with the UPW than I have, taking a personal interest in the debate.
  I was surprised by the size of the target that the Government announced for Giro with its new financial reconstruction. The Minister described it as "realistic but demanding". I put the emphasis on the word "demanding" and I ask, with some respect, whether it is

  1187
  realistic. Can the Minister assure me that this target is not too high for Giro's early years? Can he tell me from where the funds for investment will come? Has he considered how Giro can meet this target while expanding its individual business, with all the cost of promotion and preparation that that might entail? The Minister will know the importance that I place upon the nationalised industries paying their way. I have argued for many years that telecommunications should do that. However, I wonder whether the target set for Giro is not too ambitious and whether in failing to reach the target, some sense, of disappointment may be created later, some sagging of morale. I wonder whether the Minister is not creating an early opportunity for hon. Members opposite to taunt Giro with having failed to achieve a target, giving them an opportunity to knock it very hard indeed.
  I do not want to leave my hon. Friend on a critical note. He knows that the Post Office trade unions hold him in the highest regard and respect. That regard will be enhanced by the manner in which he introduced this measure. The Bill will be warmly welcomed by all the Giro staff.
  We do not share the antagonism expressed by the hon. Member for Bridgwater from the Opposition Front Bench. Although I have said "antagonism", I thought that by his standards the hon. Gentleman made a relatively mild speech.
  He asked what evidence there was of demand. I do not know whether the hon. Gentleman is a Giro account holder, but I am, and I talk to fellow Giro account holders. In the Post Office many of the staff have taken advantage of the opportunity to have their salaries paid into Giro, but they want the facilities offered by the other banks.
  There are many Giro account holders who hold two bank accounts—a Giro account to take advantage of the open-counter facilities and the efficient monthly account that is rendered, and an account in another bank so as to avail themselves of facilities such as bridging loans and overdrafts. This means a loss of finance to Giro as well as being inconvenient to Giro account holders. However, I declare that after the Bill is passed I shall retain
  1188
  my account in the Co-operative Bank as well as my Giro account.
  Mr. Peter Viggers: In view of the hon. Gentleman's expert knowledge and experience of Post Office staffs and the Giro staff, will he comment on the passage in the Bill which suggests that the Bill will have no direct effect on the number of public sector employees? Does he think that the service can be operated with no increase in their numbers?
  Mr. Golding: That is a question that should be directed to my hon. Friend. We must consider the precise meaning of "public sector employee" as set out in the Bill. The normal expression is "public service manpower". I am not absolutely certain whether the Government are saying that there will be no increase in staff in the responsible Department, or whether they are saying there will be no increase in staff in Post Office Giro.
  Mr. J. W. Rooker: Surely the distinction that my hon. Friend has just made is a consequence of the Sex Discrimination Act in that we now refer to public sector employees and not public sector manpower.
  Mr. Golding: That may be so. If all these new facilities are created, and given that all things are not equal, as productivity is rising very rapidly, I shall be surprised if there is no increase in employment in Post Office Giro. However, I leave the Government to take up that theme. I do not consider it a decision for me to have to defend.
  I was surprised to hear the hon. Member for Bridgwater argue that basically Post Office Giro had no knowledge and no expertise of creditworthiness or credit rating. One of the problems that has been faced by the Post Office unions has been that some of their members have objected because Post Office Giro has refused to allow them to become account holders, without giving any reasons. We know that this has been because of the lack of creditworthiness of the individuals concerned. Whether the decisions have been right is another matter. Post Office Giro now makes an assessment of the credit worthiness of every one of its new customers. It would not be a new departure for it

  1189
  to do so in respect of the extended facilities.
  The hon. Member for Bridgwater implied that there had been no market research behind this proposal. In fact, market research has taken place. The Post Office unions would be bitter if they thought that decisions of this sort were taken and recommendations made to Government without any inquiries having been made.
  Mr. Michael Marshall: The hon. Gentleman has touched on an important point which I am sure many of my hon. Friends will wish to probe. Perhaps we shall hear more about market research from the Minister, but no doubt the hon. Gentleman, with his special connections, can help the House now. It would be valuable if he would tell us more about the market research that has taken place.
  Mr. Golding: I understand that there have been studies by Lancaster University, Marplan and other organisations.
  I do not want to speak for too long—indeed, I may be criticised by some of my hon. Friend for speaking at such length. I believe that the hon. Gentleman has raised a Committee point. No doubt it is a matter that we shall explore in Committee, if I have the misfortune of being selected.
  The hon. Member for Bridgwater said that he had briefed himself well, but I do not think that he did his homework in investigating the present state of the business. I thought that his speech was a political knockabout. It seemed that he was trying to score debating points from previous debates and previous White Papers. It did not appear to be an Opposition speech based on a serious and critical analysis of the present state of Giro.
  At one stage the hon. Gentleman asked why we wanted to expand Giro when at the same time we were giving the Trustee Savings Bank a firmer basis. The answer is that in one sense Giro is carrying on the tradition of the old Post Office Savings Bank. It is cashing in on the availablity of a great number of Crown Post Offices and on the availability of buildings and competent staffs.
  It is not an alternative for the people who live in the small communities in my
  1190
  constituency who cannot always get to the Trustee Savings Bank very easily and who cannot get to a normal clearing bank. In any case, some may feel quite uncomfortable and uneasy in them. They should not be told that they must go to the Trustee Savings Bank or a normal clearing bank.
  It is most important that the Post Office should continue to give a banking service. I believe that that service should be provided not merely via the old Post Office Savings Bank facility, but through the most modern and efficient facility the Post Office can give.
  I shall not take odds with the hon. Member for Bridgwater about the retrospective nature of the legislation. It is a nit-picking criticism. We should instead be debating whether the Bill is in the interest of Giro and of our constituents. The hon. Gentleman referred to philosophy and said that we were here dealing with the citizen's own funds, but nobody is forcing a person to open a Giro account. Each and every individual will be free to bank with Giro, the Trustee Savings Bank, or with one of the joint stock banks.
  I want to be free to put my money in a bank that will use those funds in the interests of the community. I do not want to bank my money with a private bank so that a private banker will use the money in his private interest. That is why I strongly support Giro. That is why, while keeping my Co-op account, which also fulfils the condition of using my money in the community's interest, I shall continue to bank with Giro. I give the Bill my full support.
  6.12 p.m.
  Sir Paul Bryan: The Minister of State in opening the debate was more humble in his salesmanship of Giro than I expected. The hon. Gentleman has plenty to be humble about. Giro has not been as big a disaster as many schemes fathered by the Labour Party, but as a private concern Giro would have been adjudged bankrupt some years ago. The scheme began by losing £12 million in two years.
  Then came the stage when the Conservative Government more or less stopped the service in its tracks for a couple of years. Following an investigation by Cooper Bros, the service was put

  1191
  on sound lines and under sound management; it was given commonsense objectives which have been successfully met. We now come to the present situation where the rot has been stopped. Giro has found itself a reasonable role and can hope to break even.
  Although providing what is in some ways a unique service, it will take a long time before it makes up its losses, but it must be said that the Bill does not require it to do so. The Bill does not talk with modest appreciation of the achievements with which I have dealt. The Bill aspires to new ambition for the Giro. This legislation will launch Giro into new banking activities. At the same time it takes the opportunity to sweep the financial mess under the carpet. Obviously it is hoped that the past will be forgotten for ever.
  I have been active in business all my life, apart from the time when I was a Minister. I am a director of three companies and I know from my experience of business that from time to time a company must assess its success and decide whether to expand. In reaching a decision two questions must be asked. The first question is "Exactly what have we done well?" The second question, which is far the harder to answer, is "Why exactly have we done well?" We are all vain and wishful thinkers. We do not like to say that part of our success is due to luck, or the geographical position of the company, or whatever it may be, but it is important that that question should be properly answered before launching into new activities.
  In answer to the first question "What has Giro achieved?", I say straight away that it has achieved an effective transfer of money. A good many of the 50 per cent. of the population who do not have cheque books are now using Giro to good effect. It is good for the customer, convenient, takes money off the road and in that way takes temptation from criminals. I think that is a good thing.
  I understand that Giro is used very much more these days for the collection of rents. Manchester, for example, now has its rents collected by Giro. That has released 150 rent collectors—but, typical of the Labour Party, what has happened is that those gentlemen have been retained as estate management officers. Therefore,
  1192
  there has been no saving in staff. It is the old game at work once again. However, let us concede that the Giro is a useful, and in some ways a unique, service.
  I come to the question why it has succeeded. I must give full credit to Mr. Singer. I always give credit to good management because it is always a major factor in a successful operation. An inherent advantage of Giro is that it began as a banking service with 21,000 ready-made outlets, an advantage that cannot be over-estimated. Any private bank with such a start would think that it could not go wrong.
  What is more, those 21,000 outlets are familiar to the very customers for whom the banks are looking. I know from conversation with directors of joint stock banks that they have great difficulty at present in getting the public away from the idea of the marble hall image presented by banks—an image foreign to a person who has not had a bank account before. Giro now has a perfect image as a place familiar to everybody, high or low, who uses the Post Office. In addition, Giro at its 21,000 outlets has staff trained in handling money. That is another enormous advantage.
  Yet another advantage is the fact that Giro is open at hours unfamiliar to any bank. Furthermore, the Government take every opportunity to press the nationalised industries to use Giro. Therefore, all these items add up to a huge asset on the side of Giro.
  Mr. John Ovenden: The hon. Gentleman stressed the point that the Government show preference to Giro. Will he say how successful the Government have been in transferring their own business to Giro rather than to the Paymaster-General's office? Is there any evidence of preferential treatment? I suspect that the boot is on the other foot.
  Sir P. Bryan: I am merely saying that the Government are in a position to encourage the nationalised industries to use Giro. I do not press that point very hard, but it cannot be a disadvantage.
  Giro has used its great assets with diligence and skill, but we must face the fact that it has never had to use any

  1193
  banking judgment. It has never had to take any risks or to assess anybody's credit or credit potential. Using these assets, I am all for it expanding in its present area. There is a long way to go.
  One of the areas of business with which I am familiar is that of television rental. There are throughout the country millions of sets on which rental has to be collected. On the whole that is done by people calling in at the shops. Millions of payments could be taken up by Giro. Yet at the moment only a fraction of such payments is made in that way. I do not doubt that, even given its present remit, Giro could expand its business if only it kept within the bounds of its advantages, on which it has shown such good form.
  But now Giro is moving into this new area of loans. I see no inherent advantage for it at all. It is at a disadvantage when compared with its competitors for the first time. In an article in The Times about the joint stock banks there is mention of the Trustee Savings Banks which are going into the loan business. The article says of them:
  "Getting permission to lend money is only the first step. They then face the formidable problem of teaching the managers of 1,560 branches all over the country the lending skills which are second nature to the clearing banks. And while the TSBs are already operating a range of ancillary financial services, they generally lack the sophistication and breadth of the clearers."
  This is what Giro is now—not presuming to do—risking. How will it tackle this? How does it know about credit? To whom will it give credit—individuals, firms, businesses? The secondary banks which got into such trouble in the past few years did so because they did not lend the right amount of money to the right sort of people. This is exactly the area into which Giro is venturing to go. It is at a great disadvantage.
  Even in a Second Reading debate we should know more about what further areas Giro hopes to enter. The White Paper talks of bridging loans. That suggests housing loans. Is Giro going into that world? The building societies will say that it is necessary to be very wise when dealing in that area.
  I say all of this in an entirely nonpartisan way. This is a business assess-
  1194
  ment of Giro. I believe that it is entering an area about which it does not have the necessary knowledge.
  Consider the situation in my constituency—in, say, Driffield, a small town of 5,000 to 6,000 inhabitants. If someone wants a loan he presumably goes to the bank. The banker will know the person and his business. He will probably know his accountant. He may know where the person lives and may even know him socially. The banker is in a strong position to say how much credit that man should have. Under the proposals in the Bill someone can go into the Post Office in Driffield and say "I want a loan". Who will judge whether he is creditworthy? The postmaster would be highly embarrassed to be asked to do such a thing. He does not know. Will there be extra staff trained to do this?
  The Under-Secretary of State for Industry (Mr. Neil Carmichael): I am not suggesting that this is necessarily the way it will be done, but the hon. Gentleman will surely acknowledge that a large number of loans are made not on a personal basis—which is probably the right way to do it—but on a points system. Many large and respectable credit companies use this method and never see the person who asks for the loan.
  Sir P. Bryan: I do not claim to know the banking world from within. I can merely point to this article in The Times which speaks of the great difficulty which the Trustee Savings Banks recognise as their main stumbling block in getting their scheme under way. It seems that Giro will have even more trouble because the new category of loan seekers at whom it will be aiming are the sort of people about whom there will not be many records. I may be wrong about this. I shall be interested to hear the Minister's reply.
  There is the question, therefore: Why is Giro moving in this direction? We on the Conservative side of the House are suspicious about the whole question of nationalisation. My hon. Friend the Member for Bridgwater (Mr. King) cited the Labour Party's actions in this respect. We fear this. The latest cutting I have on the subject is dated 29th December.

  1195
  I read that the Home Policy Committee of the Labour Party under the chairmanship of the Secretary of State for Energy has made certain recommendations. The article says, speaking about the public ownership of the four main clearing banks:
  "The most favoured proposal, apparently, is to nationalise all four banks, forming them into a British banking corporation."
  That is from a leading member of the Government and a leading committee of the Labour Party. The article also said that the committee had been reminded that
  "the party conference has been patient for four years, but a statement has been promised for the 1976 conference."
  I am not going back into quotations of years ago. This is something which we Conservatives genuinely fear. I believe that Giro is getting above itself and it ought not to do so.
  On the monetary side we need to expose some of the cosy verbiage in the White Paper. There is for instance the reference to "cancellation of debt". The debt is not being cancelled; it is being horribly "un-cancelled". The debt remains, and someone, somewhere, has to go on paying the interest. This is simply a transfer of debt. Off it goes into that well-known borrowing requirement for which we all have to pay. This is not a cancellation: it is getting rid of it under the carpet to no great advantage.
  There is also the marvellous phrase "public dividend capital". This is not an interest-free loan, but a loan which Giro can have and upon which it need not pay the interest unless it has the money. That is a lovely situation. Anyone in business would love to have a loan of that sort, one that need only be paid when convenient. By any standards in private enterprise that is a straight subsidy. It is an advantage that no private enterprise could possibly enjoy.
  In Committee we shall try to maintain the service as it is at the moment and develop it. I believe that that can be done. I will resist an expansion of the service, not because I am hostile to Giro—I have already said I believe that it can be greatly expanded on its present tracks—but because I believe it is moving into an area foreign to it and in which it will make another mess.
  6.27 p.m.
  Mr. Simon Mahon: I do not suppose that there is any need for me to declare my interest. My interest in Giro has been absolute since its early days. I represent what was the county borough of Bootle and is now the area of Sefton. Giro has been a considerable boon to my constituents. Any hon. Member who represents the town where Giro is situated has to be honest and say that he is speaking predominantly in the interest of his constituents.
  Let me try to give my reasons for doing so. I support the Bill. I shall take two words, both from the speech of the Minister today, and enlarge upon them. One word was "prudence" and the other was "non-partisanship". The hon. Memmer for Howden (Sir P. Bryan) and I have been in this House long enough to have a little altercation now and again. He and the hon. Member for Bridgwater (Mr. King) spoke about private banks and private enterprise generally. I have no antipathy towards such things. However, when I think of my youth—it was a long time ago—and the days when I was on Liverpool docks as a boy of 14 and then hear people eulogising about the capitalist system, I simply do not recognise it as the one I knew then.
  I am reminded of a story my father told me about a wake in Ireland. They had laid out the farmer and his fellow farmers were coming in and saying eulogistic things about him. The widow sent her daughter over, saying to her "Will you make quite sure that is really your father in that coffin?"
  We all suffer a little from original sin. I do not know anybody born without it. I can recall many terrible things that happened in the past in the private banking world, to which I shall not refer today except to say that vast profits were made. I do not think that any right hon. or hon. Member would support that kind of operation today. It would now be regarded as completely and utterly immoral. Indeed, it was the right hon. Member for Sidcup (Mr. Heath) who, when he was Prime Minister, spoke of the "unacceptable face of capitalism". Of course this side of capitalism exists, and we should all recognise it. We are not living in a perfect world, and we are all capable of doing less than justice to the interests of our own country.

  1197
  It is for these reasons that I support the Bill in what I hope may be regarded as a prudent and moderate way.
  Mr. Tom King: There may be less between us than the hon. Member for Bootle (Mr. Mahon) appreciates. He was very actively concerned and represented his constituents very conscientiously during the period of the review of Giro. The purpose of that review was to attempt to rescue Giro from some very imprudent measures that it had taken. The hon. Gentleman is pleased to state that it is now running on more satisfactory lines. Our concern today is that Giro does not step off again in an imprudent direction which could once more put it in peril.
  Mr. Mahon: I welcome the hon. Gentleman's intervention and understand exactly the sentiments expressed by him. If I thought that Giro was extending itself beyond its prerogative I would be perfectly honest about it, but I do not think that is the case.
  I should not have needed to be reminded of the opportunity that I now have of thanking the hon. Gentleman for the very courteous way in which he and the Minister of his Government treated me during the troublesome days when I was full of anxiety about the future of Giro. I was always treated with kindness and the utmost consideration.
  I am equally grateful to the Minister of State, the Under-Secretary of State and their officials for giving me so much of their time recently and for coming to my constituency. I have represented my constituency for 21 years, and I was born in it. Having been born in one's constituency, one feels rather more keenly and immediately what happens to people one knows. It is possible to get too close to events and to become too emotionally involved with what happens in one's home town, especially when it gets an opportunity which it could never have anticipated.
  Never in our wildest dreams did we think that a great banking establishment would one day come to Bootle. We never imagined that the President of the Board of Trade in a Conservative Government would take a step of this sort. There were also other Ministers who gave us great consideration at a time when we had lost certain types of industry. They, as well as those in subsequent administrations,
  1198
  were responsible for bringing about a great social change in what had always been a very industrialised and working-class town.
  With the advent of a large number of Government officers in the Inland Revenue and the Health Department, together with others, my constituency has become what could be termed middle class, although I object to the use of the word "class". The simple fact is that our people are living today in much greater dignity, and I am all for that.
  I have only one lifetime, and most of it has gone. I have worked all the time in Bootle in the interests of my constituents. I have never taken a partisan line. I have only wanted what was best for them, because basically what is good for them and good for Merseyside must inherently be good for the country—at least, I hope so.
  In Bootle and the Sefton district we have not only Giro. We have gone to tremendous trouble to bring in other great banking establishments. We have the Trustee Savings Bank computer centre only 100 yards away from the Giro centre. We have the Midland Bank computer and computer training centre. We went to great trouble to attract them.
  Reference has quite rightly been made to the skills that are needed. I do not want these skills that we are producing in my constituency to be available only to nationalised industries or nationalised banking systems, neither do I want them to be used only in private enterprise and private banking. I believe that skill is a great national asset.
  I do not believe—every hon. Member knows this—in wholesale nationalisation. I have never done so. I was not elected on that premise. I was elected as a moderate man who believed in a mixed economy. I cannot say less than the truth. I want nationalisation when it is in the best interests of the country. Perhaps the banking system is one such item, but it requires a lot of consideration.
  I do not want to be accused of asking for opportunities for Giro that I am not prepared to afford to anyone else, but what is wrong with a prudent, calm, measured approach on the part of Giro to try to improve its situation? I know how very hard it has been for Giro, but when we are dealing with public money

  1199
  we have to be terribly tough, and I want that approach to be maintained.
  If the Bill is to provide, as my hon. Friend the Minister of State has said, for a modest approach so that we can extend slowly and carefully the obligations and facilities of Giro, I think that will be for the good of the country. With my previous experience very much in mind, I urge that we may progress slowly. I have always believed in the Latin phrase "festina lente". It is a question of making haste slowly. In all my years in public life it has been my experience that the faster we have tried to do things, the slower we have been in achieving them. We must go forward with as much prudence as possible, and I suggest that that is the policy to be applied in relation to the Bill.
  Giro is not only a banking system. It has had social effects within the confines of Merseyside. This has to be understood. If Giro had failed, what would have been the position? Suppose that there had been other Ministers at the time who took a harsher view. What would have been the position on Merseyside? It would have been said that our people had failed, as well as the Giro system, and that would have caused great anxiety.
  In my area we have just emerged from a strike which has lasted five solid years. It should never have lasted five minutes. The people who kept that strike going, whether managers, employees or workers, deprived my constituents of 3,500 Civil Service jobs. They would have been an important backing to bring prosperity to the town, alongside the Giro. But I ask hon. Members to imagine what would have happened. The same would have happened as happened when Sir Arnold Weinstock called into my constituency. These are the anxieties of a Member of this House who is a modest fellow trying to represent his constituents and who was not sent here because he was building houses or visiting hospitals. That is why I was sent here.
  Right behind the Giro, I and my colleagues in my local government days built a great grammar school. People talk about the difficulties in education. I believe in all kinds of education. I believe
  1200
  in the comprehensive system, but in my time I have built two grammar schools right alongside the Giro. We thought that people leaving those schools would go into the Giro. It was well and truly planned. At the back we also had a great engineering factory on 90 acres of land providing 5,000 jobs. After we had made 8,000 houses available for its key workers, however, along came General Electric, and those jobs disappeared overnight. It is understandable, therefore, how I felt as I waited to be told that Giro had been saved from the fate which I thought might befall it.
  Giro has made modest progress, and it has been steady progress. The figures are relatively modest. It has increased its turnover to a level of £25 billion a a year, the level of its transactions, its balances and to a smaller extent—reflecting the strategy adopted to secure the financial objectives—the number of accounts. It has made very real growth in a progressively more difficult economic and financial climate in the market in which it has been operating. Everyone—private banking, private citizens and the Government—has been working in one of the worst economic climates that we could possibly have. We had the stop and go and the Cooper inquiry. I believe that my people have not yet had a fair opportunity to show what they can do.
  This may bring some encouragement to people who worried about whether we could start the Giro and whether we had people to manage on this level. We found that girls from the modern secondary school were ideally suited to the computerised world just as in other days Lancashire girls were ideally suited to the cotton industry, and that pleased us no end. So when people ask, as right hon. and hon. Members have asked, "Where will you get your staff?", I ask them where the private banks get their staff and where the universities get theirs. What have I been doing all my life on an education committee if I have not produced people able to go into private banking or private enterprise? When people have got PhDs or economics degrees, I have not said "You will not work for ICI" or "You will not work for one of the nationalised industries". I believed when I helped them in my younger days that they would work in the interests of the country.

  1201
  Let no one claim the prerogative of producing the country's financial brains and say that they must work only in private enterprise or in the nationalised industries. People can work where they like. If we can attract them to Giro, we shall be able to extend its services and make them pay. I should much prefer to look into the activities of the National Giro, with all its troubles, than into some of the activities of other finance houses. However, I do not want to allow myself to be side-tracked into that argument.
  A good point was made by the non. Member for Howden (Sir P. Bryan) about rents. We are not doing enough in Giro with local government. It is an ideal situation, but we have only just over 100 local authorities using the rental system. That figure could be increased greatly. However, I must point out that a rent collector should not only be a rent collector. We heard about Manchester's rent collectors not being reduced in number. When I first went into local government, there was an organisation called the Octavia Hill system of housing. If such a system had existed in conjunction with Giro, it would have resulted in the social uplift of people combined with a financial obligation in respect of the payment of rent.
  When I was a boy, living in a terraced house, the first charge in our house was a sum of money placed on the end of the sideboard which every child could pay. That was working-class custom and practice. I could pay the rent for my mother when I was about six years old, and I paid the rates as well when I left school. That was the system of payment. Working-class people lived by cash, and too many still do it. I agree that we must extend the present acceptable norm of custom and practice inside the Giro.
  The Bill says that there will be no increase in personnel. In my view that is wrong. This massive headquarters is in my constituency. If we extend our business, I hope that we can extend profitably and usefully the number of people engaged and so bring in people who at present are out of work. What is the idea of trying to diversify industry? What have we been shouting for years on these Benches about diversifying industry? We do not shout just because
  1202
  we want a change of industry, because we want to get away from the match works, the dye works and the tanneries into these white-collar jobs, or away from the docks, because they are not quite respectable, and into something else. We are trying to create an entirely new system.
  What we have to do is change the public mind about how to utilise money. Most working-class people still live from week to week. There is a saying in Liverpool even today that people who are better off are only a month away from the workhouse. If some of us examine our consciences, we shall probably think that we are not all that secure. I hope, therefore, that the system that we intend to bring into the Giro by virtue of the Bill will be such that, if anyone decides to have a bank account and he walks into a post office, the same range of facilities will be available under that single roof as is available from the National Westminster, Barclays or the Midland Bank. I ask only for the same range of facilities.
  I do not want to push anyone on one side. It is not the greatest priority in the world. This is merely a Bill extending the facilities of the banking world to the National Giro. People are still conservative. They are conservative in the way they buy their clothes, in the way they wear them and about money. They do not want to spread it all over the world, despite my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) hanging on to his Co-op account and his Giro account. Most people like to keep their money under one roof. The bank manager gets to know them and advises them on how to avoid the difficulties which may arise. Why, therefore, should not the facilities which are available in these excellent establishments be available to those who use Giro?
  The right hon. Member for Taunton (Mr. du Cann), who is famous for his financial activities, did not say that he was against Giro. He said:
  "It may be of assistance if I explained that I have never been opposed to Giro cheques. As a believer in the expansion of the banking habit and a believer in savings, I welcome any improvement in the facilities for money transfer. I am exactly the antithesis of what the hon. Member for Newcastle-under-Lyme (Mr. Golding describes—I am a supporter of the Giro system."—[Official Report, 13th Jan., 1975; Vol. 884, c. 84.]

  1203
  I appeal to the House not to approach the Bill in a partisan manner but to seek a proper balance. It is no less than my duty to plead for more of this sort of employment to be directed to Merseyside. Any hon. Member faced with the closing down of a business in his constituency could gain little comfort from today's unemployment figures. I am horrified that in spite of all the capital investment in Merseyside by both Governments—Giro was a good example and so was the Gladstone Dock, which cost £50 million—there is unemployment of 11·2 per cent. there. The unemployment figures were 63,805 males and 18,475 females, giving a total of 82,280. That figure has gone up by another 6,000 today. That gives some idea of the need on Merseyside for the extension of the sort of employment we are discussing tonight.
  A eulogy has been offered to those who work in Giro. I accompanied my hon. Friend the Minister of State on a most encouraging visit that he paid to Giro. He saw the beauty of the girls of Merseyside, and they were charmed with him. We should consider what these people are doing with their wages. They are buying homes and motor cars, and they are trying to uplift themselves. That is what the Giro has done for my constituents.
  I thank Governments of both parties for the way they have helped my constituents during the 21 years that I have represented them. In particular I thank the Minister for introducing this measure, because I hope that in a modest way it will bring to even fuller fruition an excellent banking system.
  6.55 p.m.
  Mr. Neville Trotter: Everyone recognises the sincerity of the hon. Member for Bootle (Mr. Mahon). I hope that he will have full and frank discussions with the Prime Minister and the Secretary of State for Employment about the present sad state of employment in his home town.
  I approach the debate with no feeling of antagonism towards Giro, but rather in an attempt to be realistic. I recognise the good work done by Mr. Singer which has been commented upon by other hon. Members. I do not object to the continuation of the work for which Giro has
  1204
  shown itself to be suited, but the Bill represents a completely new venture. The White Paper contains a prospectus for a new public banking system. A prospectus normally sets out the past financial and management records—I shall come to those shortly—and the forecasts for the future. Here there is none of the latter. It is the only prospectus I have seen which contains no such forecasts.
  We are told by the Minister that the aim is a 12½ per cent. return, but we are given no evidence to suggest that this aim can be achieved and no independent report has been produced to this House about the venture. Some Labour Members have suggested that there has been market research. If that is so, why has the House been kept in ignorance of it?
  Let me now deal with the financial record. The annual report and accounts of the Post Office show a loss in the first year, 1970–71, of £6 million. For the second year they show a loss of £6·4 million, but now confusion arises as the White Paper shows a loss for that year of £7·8 million. In 1972–73 the accounts represented a loss of £5·1 million, whereas in the White Paper the loss was put at £7·1 million. It seems that a mere £2 million or so does not matter to the Government.
  The original accounts for 1973–74 showed a loss of £4·1 million but the following year's accounts, which give comparative figures for 1973–74, put it at £6·5 million. The White Paper has chosen to show £5·1 million—perhaps because it is half-way between the other two. I hope that we may have an explanation from the Minister about the extraordinary way in which these figures vary between official documents. The 1974–75 report shows a splendid profit of £60,000. That figure is the same both in the accounts and in the White Paper. Much has been made of the way in which Giro has returned to profitability, but a very different picture emerges when account is taken of provisions for unrealised losses on investments. As an accountant I know that this factor must be included so as to reach the true figure.
  Mr. Arthur Lewis: I did not know that the hon. Member was an accountant. As such he may appreciate my interjection all the more. Is he aware that the figures he

  1205
  has quoted may or may not be correct? We hear almost daily that civil servants and Ministers are uncertain whether the figures they produce are correct today or will be wrong tomorrow. Almost every day of the week a Department or Minister confesses that wrong or false figures have been issued. How can we be sure of these figures?
  Mr. Trotter: As an accountant I fully share the hon. Gentleman's concern.
  The true figure in the 1974–75 accounts should be a loss of £2·5 million. Normal accounting practice adopted by any normal concern would have revealed the result thus. The treatment of this writing back of a provision was shabby and, indeed, somewhat shady. There is a note on page 23 of the 1973–74 accounts carefully pointing out that £3·1 million of the loss for that year was due to the need to create the reserve. There is no such note in the 1974–75 accounts to point out that the so-called profit came from the writing back of most of this provision. If we allow for the creation in one year and the writing back in the following year, which had nothing to do with the trading results, we find that the loss has actually gone up. The adjusted true loss in 1973–74 was only £2 million, whereas that for 1974–75 was £2½ million.
  Therefore, it is not right to say in the last accounting period that Giro has been trading at a profit. Although there is confusion about the exact losses, there can be no doubt that there have been trading losses every single year and that last year was worse than the year before. The financial record is bad.
  Let us now look at the management record. The Post Office, which is the overlord of the Giro, has a bad management image. Those concerned are not the best people to put themselves forward to be bankers using public money.
  I turn as an accountant to the extraordinary qualifications on the auditors' report of the Giro which go back to the start. In 1969–70 the auditors pointed out that a satisfactory system for control of Giro operations had not been established. The next year they said that further improvements in the Giro controls were necessary before a satisfactory system was in operation. The next year they said that weaknesses remained to be overcome before the level of control
  1206
  could be considered satisfactory. In 1972–73 the auditors' report said that the level of control could not yet be considered satisfactory. In 1973–74 it said that until the new Giro accounting and control system was shown to be operating effectively a satisfactory level of control would not be secured. In 1974–75 they still talked about reconciliation problems persisting. That is not a very happy picture of the internal control and management of a public corporation of any sort and certainly not of one which is attempting to come into the field of banking.
  I now turn to the new facilities which are suggested, beginning with personal overdrafts. The only advantage I can see of personal overdrafts would be the social gain of attracting new banking customers. It is, of course, easy to secure new business if one is handing out money, and I suggest that the first customers will be those that the joint stock banks are glad to see the back of. The Giro's loans will be cheaper than those of their competitors only if they are subsidised by the taxpayer.
  We have heard about the services being available through 21,000 post offices, but who is to do the interviewing? Will it be the sub-postmaster or the sub-postmistress? Is there to be a separate loans counter, or would one queue up with customers waiting for stamps in order to obtain a loan? With the present cost of stamps, that might be a happy arrangement. One could perhaps negotiate a loan for the purchase of stamps for Christmas cards.
  Has any thought been given to the administrative arrangements in the Post Office buildings? Is there to be a whole set of new offices? The Trustee Savings Bank, of course, already has buildings for such purposes. Is a new office to be opened by the Giro in every High Street?
  Where is the expertise to come from? The hon. Member for Bootle spoke of the skill of his constituents in computer operations. It seems as if Bootle has become the centre of the computer industry. No doubt people there are very skilled, but I do not believe that they can hold themselves out to be judges of creditworthiness, which is a very personal matter acquired by experience over the years by those working in the joint stock banks. We shall, I fear, see a large number of bad debts if there is to be a

  1207
  system, which seems likely, for introducing overdrafts over the Post Office counter.
  Mr. Ian Wrigglesworth: The National Giro has been providing loans for its customers since 1971. This is not such a radical new departure as the hon. Member suggests.
  Mr. Trotter: I inquired at the Post Office in the House and found that Giro loans were available to people whose wages or salaries had been paid through a Giro account held for not less than a year. That is different from someone coming in off the street to borrow. Secondly, I have read that an overdraft of, I think, £2,000 has been given to one gentleman in circumstances in which it seems that there might be some difficulty in recovering it. Thus, where there have already been a few overdrafts, they have not always been very well handled.
  What social reasons can there be for making business overdrafts? What knowledge has anyone in the Post Office about how to judge a loan to a business? When I consider the wide range of services now offered by the banks, I wonder whether Labour Members really believe that the Post Office should provide the same range of services as the banks. We accountants are not always happy about the way in which banks are ready to complete income tax returns. They act as trustees and do insurance work. Is it suggested that Post Office staff should start filling in income tax returns? The matter has not been thought through by the Government.
  It is suggested that credit cards should be introduced by the Giro. But there are already too many credit cards. I use one of mine to clean the frost off my car windscreen. It is perhaps not appreciated that the costs of starting such a scheme are enormous, running into millions of pounds. At the existing rate of interest the present schemes find it hard to attract enough business.
  Mr. Ovenden: I have not heard, certainly not from this side of the House, any suggestion that the Post Office should go into the credit card business. The suggestion, as I understand it, is for cheque guarantee cards. There is no question of introducing credit cards.
  Mr. Trotter: I refer the hon. Gentleman to paragraph 16 of the White Paper, which reads:
  "It is also accepted in principle that Giro should be authorised to provide other banking services such as credit cards."
  In 1969–70 it was said in the report of the Post Office that market research had indicated that there was a heavy potential demand for the new Giro service, but, sadly, the initial response had been very disappointing. This time it seems that there has not even been any market research. If there has, I hope that we shall be told about it.
  It has been decided to write off half the accumulated losses at a cost of £16·7 million to the taxpayer. Why was half chosen? Who thought of half? Why not one-quarter, two-thirds or all of it? It is a very arbitrary figure. The figure might well have been none, because the taxpayer is, in effect, being asked to pay the cost of the past inefficiency of the Giro service. Alternatively he is being asked to subsidise it through writing off the initial costs of setting up the new venture. That, not being possible for a private firm, will mean unfair competition.
  I turn to the question of the management of the economy. Where is the additional money to come from? Is it to come as new credit, which will create further inflation? I do not believe that the Treasury would be very keen on that. Or is it to come out of present credit limits? If the latter is the case, that must harm the competition which is already giving good service to the public through its banking facilities. The 1974–75 report talks of there being intense competition. Why get involved in a field where there is already very intense competition, competition which benefits the public?
  In this new venture the Giro is trying to run before it can walk. One comes across people who say when times are difficult that if only their organisation was bigger all would be well. The most likely result at the end of the day is that they are in an even worse situation than they were at the start. One does not organise one's way out of trouble by getting bigger. Size for size's sake is not a wise venture, especially in the field of banking. Let Giro make a complete success of its present venture first.

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  There have been some muddled motives behind the Bill. There has been the suggestion that a State bank would be popular among certain Labour Members. Perhaps they see this as a way towards that ideal. It has also been suggested that the Bill will help Giro. We do not want to harm Giro, but why should we want to help it grow? We have created a State creature and now we are being asked to find more for it to do for its own sake. Why must we help it to get bigger just because it is a State creature? There is also the argument that it will help Bootle. No doubt if Giro was in my constituency I would like the jobs, but this is not a reason for going into a State banking service.
  We have here a bad financial record, a not very good management record—there has been a most extraordinary series of qualifications in the auditors' reports—no forecast for the future and no independent report on whether the proposals are viable or wanted. It would be wrong for the House to pass the Bill.
  7.11 p.m.
  Mr. Arthur Lewis: I apologise for not being here during the earlier part of the debate. I had to attend several Committees and I missed the opening speeches. I have grave doubts about supporting the Bill, though for different reasons from those of the hon. Member for Tynemouth (Mr. Trotter).
  My hon. Friend the Member for Bootle (Mr. Mahon) made an excellent speech, as always, both about the Bill and on behalf of his constituents. Of course, I support his claim for help and I believe that assistance should be given to workers in Bootle and, indeed, in all distressed areas where there is high unemployment. Giro has done an enormous amount to help my hon. Friend's constituency and it has now reached the stage where customers do not have too many problems. In the early days, it was the most shocking set-up one could imagine. Perhaps we could call those teething problems.
  I am not as much concerned about whether there should be banking services or whether Giro should be expanded as about why it should be controlled by the Post Office. When the right hon. Gentleman the Member for Walsall, North (Mr. Stonehouse) introduced the Bill to
  1210
  set up the Post Office Corporation, I opposed it for reasons which have since been fully substantiated. I said that this giant corporation would be a bureaucratic, mishandled blot on our country. Yet it is to be this most inefficient, badly run, deplorable Post Office, overburdened with top-paid executives, which is to run this new banking service.
  Mr. Roger Stott: I do not normally rise from this Bench because I am normally precluded from speaking. I have to tell my hon Friend, however, that I have been employed in the Post Office all my working life and that what he has said is completely and utterly untrue. If he wishes to make a constructive contribution to Post Office debates, he should acquaint himself more fully with the conditions and the facts in the Post Office before denigrating the people who work there.
  Mr. Lewis: My hon. Friend has just made a statement which is completely untrue. He should have been here long enough to know that the rules and procedures of the House do not preclude anyone from speaking in a debate. Only Mr. Speaker can do that. These new boys come in crawling around to get PPS jobs—these great PPS jobs. The hon. Member has not been here long enough or in the Post Office long enough. My first job was in the Post Office—long before he was born.
  I remember being able to post a letter for a penny. In those days we had five collections a day, with six or seven collections in central London. There were five deliveries every day, and if one posted a letter up to 7.30 p.m.—or even up to 9 p.m. in London—it would arrive at its destination in the first post the following day—and that was before the time of fast trains and vans and electronic sorters. Now we are told that we may have to pay 2s. 1d. for a first-class letter and 1s. 5d. for a second-class letter and we shall not be sure that they will be delivered the following day. As I said, the Post Office is overburdened and overstaffed with overpaid top executives.
  When the hon. Member for Westhoughton (Mr. Stott) says that I have no experience in these matters, he should ask Sir William Ryland. I went to see Sir William in his office. My hon. Friend should ask him how many flunkies and

  1211
  top executives were waiting there, standing about doing nothing. Sir William Ryland has whole files of complaints.
  In case my hon. Friend the Member for Westhoughton has not been here long enough to find out, County Hall is on the other side of Westminster Bridge from this House. The Clerk of the Greater London Council sent a first-class letter to this House and marked it "Urgent Priority". It took from Monday to Friday—yes, that is right, five days—to arrive. I took up the matter but I never got an answer as to why it had taken so long. I told Sir William Ryland that if the letter had been dropped in the gutter outside County Hall some kind person would have found it and delivered it quicker. This is not an isolated case. I have had thousands of such cases.
  My hon. Friend the Member for Westhoughton should read the article by Christopher Brasher in the Observer last Sunday when he wrote about his difficulties with telephones. My hon. Friend should ask some of his own constituents, as I have done, about this so-called efficient Post Office. If you put 2p in a telephone coinbox, Mr. Speaker, and, through no fault of your own, lose the money and then ring the operator to connect the call, she will say that the call which you could have got for 2p will cost 50p if she connects it. One told me to try to get my 2p back. I said I was unable to do so. In such cases, after a long rigmarole, the operators tell you to write and claim your money back. You have to pay 81-p or 62p to get 2p back. That is the efficient Post Office. Sir William Ryland tried to be difficult and sarcastic with me by having 2p delivered to me at the House of Commons Post Office after I had complained about this problem. There is no private or public firm in the country which expects a person to pay four times as much as he lost to get back his money.
  Mr. Ovenden: What about vending machines?
  Mr. Lewis: I do not have to use vending machines. I do have to use the Post Office.
  It is the Post Office, this grossly inefficient service, that is to run Giro. My
  1212
  first job was with the Post Office. I challenge any hon. Member who remembers what happened 50 years ago to defy me when I say that the service then was faster, more efficient, more expeditious and more reliable than it is now. That applies to both the telephone and the postal services. Each day last week there were quarter-page advertisements in the newspapers telling people that they could telephone to Hong Kong and Timbuctoo and what it costs to telephone friends and relatives in Australia and New Zealand. Thousands of pounds were spent on these advertisements in the Daily Telegraph, The Times and other newspapers. It is unnecessary to spend that amount of public money to tell people who want to use the telephone what they already know. That is the inefficient body that will run Giro. I am not sure that the right hon. Member for Walsall, North was right when he set up Giro within that organisation.
  The Post Office has lost £300 million. Just before Christmas Sir William Ryland said in a BBC phone-in programme that the Post Office revenue would be up to the level of last year and that the Post Office would lose nothing. As soon as the House was in recess for the Christmas holiday, the Post Office released the information that it had made a loss. An inefficient service can be made to work without a loss if it prices itself out of existence. If there is no service, there will be no loss. That is what is happening.
  Firms are collecting and delivering their own mail, and I read that Sir William Ryland is to do the same. By all means let us have an efficient Giro service under an efficient administration but not under an inefficient one. I guarantee that 12 months hence the figures will be found to be wrong, just like the false figures we get daily from civil servants and Government Departments on immigration and other matters. The Minister said that the Bill would have no direct effect on the number of public sector employees and subsequently said that he hoped it would. "No direct effect"—I shall make a prophecy. There will be many top-paid executives, and jobs for the boys will come along. Large fees and large salaries will be paid and no doubt another lord will be appointed.

  1213
  There is a rule in the House that a Member of Parliament must not hold an office of profit under the Crown, but every lord who wants a job gets one on a Government board either full-time or part-time. Age and nationality do not count. Provided that a person is a lord, he can be a chairman or a vice-chairman and earn on a part-time basis far in excess of what the average full-time worker earns. Invariably such people have vast incomes in addition. The Government say that they want to cut down Government expenditure to overcome inflation. My constituents who live in hovels and rat-holes are told that they will have still longer to wait for a house because of cuts in the housing programme. The poor kids who cannot get a decent education because of the lack of classrooms will have to wait still longer for their education because of cuts in public expenditure. Yet the Government appoint a dear lady at …10,000 a year as Chairman of the Equal Opportunities Commission and, to make it fairer and so that there shall not be any opposition, they appoint Lady Howe as deputy. She does a part-time job at …7,000 a year.
  The Government are suggesting the same set-up for the administration of a Giro banking service. I am not against a banking service for Giro and I am not against the development of Giro, but I object to the Post Office and the Post Office officials—who admitted that they made a complete hash of the postal services and have almost done the same with the telephone service—being in charge of it, in the knowledge that it will mean additional staff at extra expense to the taxpayer and jobs for the boys, when there are to be cuts in other public expenditure.
  By all means let Giro go ahead, but let it not be controlled by Sir William Ryland. The Post Office has not been a great success. I know that he received his knighthood during the Christmas before last when he made such a mess-up and letters were not delivered. I know that he will get his peerage and probably, when he does, another Government job. He will retire on a pension of …10,000 a year. It is that set-up to which I object on principle.
  7.28 p.m.
  Sir George Young: Like the hon. Member for Newham,
  1214
  North-West (Mr. Lewis), I am an ex-employee of the Post Office. I deplore the ill-considered, bitter, personal attack that he launched on the Chairman of the Post Office. When he reads in Hansard that he referred to Post Office employees as abysmal staff—
  Mr. Arthur Lewis: Top executives.
  Sir G. Young:—I hope that he will agree that his criticisms were unjustified and that he will withdraw them.
  The only part of the hon. Gentleman's speech with which I agree is that in which he referred to the plush jobs. I only wish that they applied to baronets as well as to peers. Much of what the hon. Gentleman said related not to Giro but to the telephone service and posts, and we are debating a Bill relating to Giro—
  Mr. Arthur Lewis: Will the hon. Gentleman give way?
  Sir G. Young: No. I have heard enough from the hon. Gentleman.
  I begin by declaring two interests. First, as a previous economic adviser of the Post Office, I saw and commented on some of the long-term plans for developing Giro. Secondly, as a Giro accountholder, I am interested in the service provided. I look at the Bill from three viewpoints—as an ex-employee, a customer and a Member of the House responsible for scrutinising legislation.
  As a customer, I have found Giro inexpensive and reliable but inflexible, remote and restricted in the service it provides. In the five and a half years that I have had a Giro account, it has operated 3,735 transactions at a cost of £69·73. Hon. Members will already have calculated that that is an average cost per transaction of 1·86p, which compares favourably with charges made by clearing banks, especially when one takes into account the small average balance that appears in the bank acocunts of most hon. Members.
  It is a most inflexible system. There is no question of ringing up the friendly local bank manager and trying to fix an overdraft for a few hundred pounds to deal with an exceptional purchase. The computer at Bootle decrees that no one shall overdraw, and it ruthlessly rejects any cheques drawn which exceed the

  1215
  current balance, whatever the circumstances, as I know to my cost.
  In addition to being inflexible, the system is somewhat remote. As it is located in Bootle, the only contact is by telephone or letter. Telephoning Bootle can take a long time as the lines often seem to be congested. Moreover, it is hard to build up any sort of relationship with the girls who answer the telephone as they are interested only in one's Giro account number. Writing to Giro is also a rather impersonal business, as signatures at the bottom of letters have the characteristic illegibility of the signatures of nearly all civil servants.
  Therefore, the service is inflexible, remote and, at present, it is also restrictive. This is where the Bill comes in. Customers of Giro are currently denied facilities that most other bank customers can expect. They have no cheque guarantee card and there is no way of persuading suspicious shopkeepers to accept a Giro cheque, because there is no equivalent of a banker's card to put forward in support.
  Mention has been made of the absence of credit cards. I understand that at present they are unprofitable. If Giro proposes to move into that area, perhaps it could do so by arrangement with one of the existing two companies rather than by branching out on its own. The procedure for obtaining traveller's cheques, for example, is cumbersome and complicated and could usefully be simplified.
  Giro customers are denied the means of placing any money on deposit, a valuable facility that all the other banks provide. My hon. Friend the Member for Tynemouth (Mr. Trotter) mentioned other services that Giro does not currently provide. It would be helpful if the Minister could say whether Giro proposes to move into the areas of trustee services and financial advice on unit trusts, insurance and so on.
  As a customer, I welcome the proposed extensions of services. However, by its nature Giro will remain a centralised and computerised system in Bootle and will therefore be remote and inflexible. In my view, this is inherent in the concept of Giro. I know that many of my hon. Friends would prefer Giro to remain a money transmission service and not to
  1216
  poach on the banks. However, I hope to refer to that argument later.
  The hon. Member for Newcastle-under-Lyme (Mr. Golding) looks forward to obtaining a loan through Giro. I remind him that the Post Office can be very restrictive. When I worked for the Post Office as an economic adviser—a job with a modest remuneration—I applied for a loan through the Post Office but was turned down. Therefore, the hon. Member for Newcastle-under-Lyme may be disappointed. The credit control system, if it has not changed, is extremely tight.
  As someone who was involved at one stage in looking at the plans for Giro, I view the White Paper and the Bill in a slightly different light. In effect, Giro now wishes to compete for custom with the clearing banks. I find nothing philosophically objectionable about that, so long as some important safeguards, which I shall mention later, are given. I believe in competition and choice. It seems that enabling Giro to compete on equal terms with the banks will widen the area of choice. It is worth recalling that when Giro was set up the banks responded by cutting some of their own charges to their customers and by improving the range of services. Therefore, one can argue that the extension of Giro will prompt the clearing banks into providing a better service for their own customers. I am all in favour of more competition along those lines.
  I accept that the original concept of Giro as a pure money transmission service has had to be modified in the light of experience. It now wishes to provide a wider range of services enabling it to be profitable and to try to increase the number of accounts with which it deals. Given that Giro has been accepted by both major political parties and that it is here to stay, it makes sense to allow it to provide a wider range of services and to seek to be more profitable so that it is no longer a burden on the taxpayer.
  However, my interest as a customer and as an ex-employee of the Post Office must take second and third place to my interest as a Member of Parliament examining legislation passing through the House. I should like the Minister to clarify some key questions already mentioned. Will the Minister say when he

  1217
  proposes to move to the new system, which he outlined in his speech, whereby Giro will be treated identically to the clearing banks when it comes to using the banking systems as instruments of monetary policy?
  Secondly, is the Minister satisfied about giving wider powers to Giro when it is technically bankrupt? Even when its balance sheet has been reconstructed, Giro will still be technically insolvent. Clearly, this is not a satisfactory situation for any company, let alone a bank.
  Is the Minister telling the House that Giro is now on a proper financial footing and well placed to dabble in the dangerous world of banking where it is all-important to have adequate reserves? As my hon. Friend the Member for Bridgwater (Mr. King) said, the Bank of England would not allow a commercial bank with Giro's capital structure to start trading.
  According to the two different assumptions that one can make, Giro has a negative equity of between £3·7 million and £10·5 million. I do not think that the Minister's reply in his speech dealt with Giro's totally inadequate capital structure. We shall be looking for clarification on this subject when the Minister winds up the debate. Perhaps he will also tell the House whether, in the light of the criticisms of my hon. Friend the Member for Bridgwater, he proposes to restructure Giro's capital in the near future in order to provide the protection that depositors are entitled to have and to enable it to compete with the commercial banks. Does he propose to write off further accumulated losses, or to convert more of the loan capital to public dividend capital?
  What will be Giro's position if for any reason it finds itself in trouble? Will it be entitled to go to the Government through the back door, or will it be in the same position as other clearing banks and have to apply to the Bank of England or the "Lifeboat Committee" should it need a sudden injection of funds?
  Another vital feature is the financial target. The Minister recognised the lack of courtesy to the House in the failure to set out the financial target in the Bill. He has now given us some indication. I am bound to say that, unlike some hon.
  1218
  Members, I found the target not nearly high enough. If no further reconstruction is to take place, Giro must recognise that it must make a sufficient return on capital and build up free capital resources to the appropriate level for a bank.
  It must also increase the amount of free capital resources in the light of the current rate of inflation. I am not sure that a return of 12½ per cent. on public dividend capital in any way measures up to those objectives. I wonder whether the Government have considered Giro's objectives bearing in mind that it is a bank. It is said that the Government wish Giro to make a return of 12½ per cent. on assets. That is the type of target that has been set for other nationalised industries.
  However, I am not convinced that this is the right target for a bank. I wonder whether the target should not be expressed more in terms of assets or turnover rather than capital. I am not sure that we have the right sort of target. What will Giro's profits have to be over the next few years if the target of 12½ per cent. is to be obtained? Can the Post Office achieve that target without putting up its tariffs for Giro?
  I turn to the way in which Giro accounts have been presented. My hon. Friend the Member for Tynemouth made some penetrating criticisms in this respect. It would be helpful to the House if in future Giro's accounts were presented on the same commercial accounting practice as other banks. In that way one could make a crude comparison of like with like and try to isolate the one-off transactions that now confuse any analysis of the Post Office.
  Finally, perhaps the Government could state more clearly how they expect Giro to develop. Reference has been made to the social rôle of Giro.
  Does the Minister see Giro as having a welfare role justifying subsidies that might merely assist it to undercut its competitors in its commercial role? Will he give us an absolute assurance that no social obligations will be devolved on Giro that in any way prevent us from treating it as a commercial operation?
  Will the Minister tell us whether he proposes to separate Giro entirely from the rest of the Post Office to eliminate any cross-subsidisation that might be now

  1219
  taking place? That would be helpful for taxation reasons, because it would not enable the Post Office to offset any profits it might make on Giro against losses on the postal side.
  I listened carefully to the perceptive speech of my hon. Friend the Member for Bridgwater. I hope that he will accept that I am not as hasty as some of my colleagues to condemn the Bill, in view of my past association with the Post Office. But I look to the Minister for substantial reassurances on the subjects that I have raised if he is to entice me out of the "No" Lobby when the vote is taken at 10 o'clock.
  7.42 p.m.
  Mr. John Ovenden: It is a pleasure to follow what has probably been the most constructive speech on this subject made from the Opposition Benches today. The tone of the rest of the comments by hon. Gentlemen opposite was summed up in the immortal phrase uttered by the hon. Member for Howden (Sir P. Bryan) that Giro should not be allowed to get above itself.
  I agree with the hon. Member for Ealing, Acton (Sir G. Young) about the speech made by my hon. Friend the Member for Newham, North-West (Mr. Lewis). I thought that his speech had the degree of sensationalism and the characteristic lack of any constructive suggestion which we have come to expect from his comments upon the Post Office. I regard those comments, as did the hon. Member for Ealing, Acton, as a gross slander on the people who work at all levels within the Post Office. I believe that that is the manner in which those comments will be taken by Post Office staff.
  I welcome the chance to commend the Bill to the House. The main purposes of this meaure have been amply justified. The first purpose is to extend to Giro the power to provide the services given by its competitors. No one on this side of the House is asking for any privileges for the Giro system. We are merely asking that it should have the right to compete on equal terms with its main competitors, the clearing banks.
  The second purpose is to give the Giro system a proper and sound financial basis from which it may move forward. It is a great pity and source of regret to most
  1220
  people in the Post Office that over the years Giro has been the victim of so much political football and the subject of so much ill-informed and often malicious comment.
  The decision taken by the last Labour Government to set up the Giro system has been justified because it has brought immense benefits to a wide range of people who would never have entered into the traditional banking system. It must surely be the aim of all of us—certainly it must be the aim of Opposition Members—to encourage as many people as possible into the banking system to avoid the problems and dangers which cash transfers and the consequent cash-carrying processes involve.
  Giro has enabled the Post Office to make greater and more efficient use of its other services—for example, the postal services and post office counters. It is true that in many areas, were it not for the Giro services which are provided over post office counters, many smaller offices would no longer be commercially viable and might be threatened with closure.
  I think we all accept that these offices provide an essential public service not only for postal sales and normal Post Office business but for the payment of pensions, family allowances and other social benefits. They are often useful to Governments in times of emergency as outlets for such things as petrol coupons and other campaigns of that kind. As I said, if it were not for Giro many of those offices would no longer exist.
  It is because of the number of outlets which the Post Office has that Giro is so convenient for its users. It provides the ability to obtain cash from any one of thousands of post offices for "gold card" holders. The Giro system is more convenient to the majority of working people than the strange and almost inexplicable hours which the banks appear to keep in this country.
  It is not only the number of outlets which is important but the areas in which they are located. In most villages, including the one in which I live, there are no branches of any clearing banks, but there are post offices, most of which conduct Giro transactions. It would be uneconomic for banks to provide facilities in such areas. It is only the wide range of services provided by the Post

  1221
  Office from each of these outlets which enables the Giro system to be operated.
  The hon. Member for Totnes (Mr. Mawby) made the point that far too few working people—weekly-paid people—were entering into the banking system. In the past, many unions representing large sections of the work force—manual workers in local government and agricultural workers in particular—have steadfastly refused to accept the payment of wages by cheque on any large scale. The reason has been the difficulty which their members have had in cashing cheques, particularly in rural areas. The establishment of Giro goes some way towards overcoming those objections and will inevitably lead to an increase in the number of weekly-paid people who are paid by cheque. Now that we are to have a wider range of services provided by Giro, the system will be very attractive to people who at the moment resist the pressures to have their wages paid by cheque.
  The Giro system has enabled millions of people to pay their bills for things like gas and electricity either by post, if they are account holders, or, if not, conveniently at local post offices. It is far more convenient for most people, particularly in isolated areas, than trudging along to join the long queues at banks or at the offices of nationalised industries. It often saves them the appallingly high cost of bus fares.
  As has been said many times today, Giro has also provided local authorities with the opportunity of introducing rent collection schemes. That system is convenient for the tenants involved, it is certainly cheaper for the local authorities and it avoids the dangers which exist in the collection of large amounts of rent through the system of rent collectors.
  We must also consider the benefits which Giro has brought to many voluntary organisations by enabling them to secure easy methods of collecting subscriptions. A number of organisations have taken advantage of this system, but perhaps not as many as could have done so. I am sure that many organisations, when they look into the benefits provided by Giro in this direction, will take up its services.
  It can fairly be stated that Giro has been a welcome and worthwhile improve-
  1222
  ment to the banking services of this country. After taking account of all the advantages which exist for Giro account holders, however, there have still been difficulties for many of its customers, particularly those who rely exclusively on Giro and do not have separate bank accounts. These have been dealt with in some detail today, but I want to go over them again because they are important to any proper consideration of the Bill and the extra services which it proposes to give to the Giro system.
  The Post Office Giro has so far been prevented from permitting personal overdrafts. Therefore, cheques issued for very small amounts have to be bounced, even if the accounts manager knows that within a few days he will receive a payment into the account of a salary many times greater than the amount involved in the cheque. This has deterred a number of potential customers from joining Giro, even those who do not normally overdraw, because they fear that, through some inadvertence, they may do so and subsequently face great personal embarrassment through a cheque being bounced. I am not suggesting—I do not think anybody has suggested today—that the Post Office should allow its account holders to behave in a manner of financial irresponsibility and abandonment. We are suggesting only that it should be permitted to exercise the same kind of discretion as the banks in respect of customers.
  It has been suggested that the Post Office cannot gain the skill of assessing creditworthiness that the banks possess. I do not know what it is about the banking profession which makes its members believe that they are a separate breed, born to the life, and that no one else can be trained to do it. I have no doubt that people in the Post Office could be trained in that sphere and that the Post Office can attract people who can exercise that responsibility. There is no special mystique about banking which makes it understandable by only a tiny group of special people and a mystery to the rest of us.
  Mr. Tom King: The hon. Gentleman is speculating, and I suggest that the reason why he is speculating is that the Minister has given no indication of how this can be done. Many banks recently have had trouble over giving credit and

  1223
  have incurred real losses. Now, a public body will undertake the same function and, remarkably enough, without recruiting any of the people to whom the hon. Gentleman refers. The Bill makes it clear that there will be no increase in public service manpower.
  Mr. Ovenden: I said that the Post Office could probably recruit these people in time and I am sure that it already has people who could be trained. But it is wrong to suggest that the Post Office has never been involved in assessing creditworthiness. Giro already operates the "gold card" system, which gives certain account holders the right to cash cheques up to £30 at any post office. That system is open to abuse. Therefore, the Post Office must ensure that the cards are issued only to people with a reasonable credit rating, who are likely to behave responsibly.
  Consequently the Post Office is already involved—to a more limited extent, I agree, than personal overdrafts would involve—in assessing creditworthiness. I see no reason why it cannot expand that service. It has also been involved in granting personal loans in co-operation with a finance company. Presumably it has had to satisfy its partner that it will take on only creditworthy customers.
  I accept that the Post Office needs to gain more skill in this respect, but it is wrong to say that it has no expertise or experience. It is even more wrong to suggest that this expertise cannot be acquired by a public body. It is always implied that this sort of mystery and skill is beyond public industry but comes naturally to people in the private sector. It is that sort of suggestion that those working in the public sector would deeply resent and completely refute.
  The inability of Giro to grant personal overdrafts has deterred many potential customers. Equally, the absence of cheque cards has occasionally caused great difficulty to account holders. Under its present powers the National Giro cannot issue such cards, because it cannot give anyone accepting the cheque a financial guarantee which would put its customer, even temporarily, into debt.
  One Opposition Member has told me that the White Paper refers to credit cards, but of course it refers only to powers that
  1224
  the Post Office could take, not those that it will take under the Giro system. I would not want the Post Office to enter the credit card business, which has resulted in so many people running into financial difficulty and has contributed, through its charges to retailers, to an increase in prices. I wish that the banks had never entered that business, but it is too late to put the clock back. I just hope that the Post Office will not repeat those mistakes.
  The Giro is also debarred from giving bridging finance for house purchase. This is hardly a risky venture: in fact, it is one of the safest fields in which the banks operate. There is great security and sufficient collateral. It is particularly galling to a Post Office account holder to have to go to the clearing banks even for the 10 per cent, deposit that he may require on his new house, particularly when he can offer rock-solid security and has an impeccable financial record with Giro. When will Giro be allowed to move into these free areas—overdrafts, cheque cards and bridging loans? An early statement would allow Giro to attract the extra customers it needs. Any delay in such an announcement would adversely affect Giro's efforts to obtain extra customers.
  In March 1972 the previous Government reprieved Giro and set certain targets. Giro has excelled in meeting them. It is strange now to hear the hon. Member for Tynemouth (Mr. Trotter) carping about its achievements. I did not hear him say that it had not met the targets laid down by Mr. Chataway, but he seemed to be seeking to change the ground rules. He seemed to be saying that, although it had met the objectives laid down by the last Conservative Government, those objectives were not a realistic way to measure Giro's financial performance. I hope that some Conservative Members will be magnanimous and recognise that Giro has achieved those targets. Most of us would be prepared to give the Conservative Government credit for the realistic targets they set if the Conservative Party was prepared to give Giro credit for meeting them.
  The first target was to make a positive contribution to Post Office finances, which was met four months ahead of schedule in July 1973. The second and more

  1225
  onerous target of covering its own overheads, including depreciation and interest on both assets and liabilities, was achieved at the end of the financial year 1974–75, two years ahead of the target of July 1977.
  It has been said that Giro's profit of £100,000 is small, even derisory. But it is important to improve the contribution of Giro to the postal services, which also helps Post Office finance. It is realistic to estimate that at £1½ million—a much larger profit.
  Mr. Eddie Loyden: Would not my hon. Friend agree that the benefit of this method of paying electricity, water and rates bills cannot be assessed in terms of money but must have meant a tremendous saving to the bodies involved and avoided many unpaid bills? This tremendous service by Giro has not been mentioned tonight.
  Mr. Ovenden: I am grateful to my hon. Friend for raising that point. It is important to realise how much Giro has contributed to the electricity boards, the gas boards and the local councils, whose money is now collected not only more cheaply but also more promptly. Therefore, Giro contributes towards the financial viability of those bodies. Certainly it assists local authorities in reducing the amount of money they have to borrow on the market to meet their obligations. That is another feather in Giro's cap and should be recognised.
  One other point which should be recognised but which has not been widely mentioned in the debate is the record of productivity within the Giro system, which is a credit to the staff involved. The number of transactions processed each week per person employed has risen from under 400 in 1969–70 to over 750 five years later. In those circumstances, and if one takes account of the increases in productivity and the meeting of the financial targets ahead of time, the Government's proposals concerning the accumulated deficits are not overgenerous. In some ways they are a recognition of the efforts of the Giro staff and their achievement—an achievement which would have been greater had it not been for the uncertainties caused by the political controversy which has unfortunately plagued Giro throughout most of its life.
  1226
  I turn to the proposals for financial reconstruction. I hope that the burden of interest which it is proposed to place on the public dividend capital will not hinder Giro in its need to re-equip itself. We must accept that before very long it will be necessary for Giro to replace its 1968 computers if it is thought to be in a position to compete effectively with the banks. I hope that the financial restraints which the Minister is placing on Giro will not hinder it in being properly equipped and kept up to date.
  Finally, I want to express one regret. I was disappointed to hear no reference in the Minister's speech to any proposals for transferring more Government work to Giro. The duplication of Giro's equipment by the Paymaster-General's Department is a ridiculous waste of resources. Perhaps in his reply the Minister will tell us what discussions have been held with other Government Departments about the transfer of business. In particular, is he satisfied that the costings of the services provided by the Paymaster-General's office are realistic? Is he satisfied that those costings take full account of the true costs incurred by the Paymaster-General's office?
  The Minister spoke about fair competition between the Post Office Giro and the banks. Is he completely convinced that the competition between the Paymaster-General's office and Post Office Giro is on the basis of fair competition? It has been suggested by at least one Conservative Member that the Government discriminate in favour of Giro. I wish that were true. I wish that in recent years there had been a sign from Governments that they were doing all they could to support the new venture of Giro. However, I suspect that the evidence is to the contrary and that Giro has in many respects been discriminated against by Government Departments in favour of giving their business to the Paymaster-General's office.
  I should like there to be a full examination of the reasons why we need separate departments within what is virtually a public sector banking set-up and why we need the Paymaster-General's office, National Giro, the Department of National Savings and the Trustee Savings Banks. Virtually all of them are public bodies involved in banking services. Could

  1227
  they not be brought together to form a unified and comprehensive public sector banking system? Their total assets and the volume of money they handle are sizeable, and if they were brought together they could provide a formidable base for launching an effective and successful publicly-owned bank. I realise that that is a long-term objective and that what concerns us tonight is the Bill.
  I commend the Bill to my hon. Friends. I hope that it will be given full support because it is vital to any proper development of the Giro system. We have reached the position with Giro where we cannot stand still. Giro cannot continue to provide merely the limited services that it provides at present, otherwise many of its loyal account holders will move back to the clearing banks where they can enjoy a wider range of services.
  We are not asking in the Bill for preferential treatment for Giro. We are asking that Giro should be allowed to compete for customers on the same terms as the clearing banks, that it should be allowed to provide the same services to its customers as those provided by the clearing banks and that it should not be hindered by unnecessary restrictions which are at present placed on it by the Act of Parliament under which it functions.
  8.5 p.m.
  Mr. Tim Renton: This has been a moderate debate, apart from the intemperate contribution by the hon. Member for Newham, North-West (Mr. Lewis). That is as it should be, because this afternoon we are discussing a statutory corporation which in its last financial year suffered a loss of £306 million and which has an actuarial deficiency on its pension fund of £1·1 billion. Therefore, it is right that all hon. Members should seriously consider how they can help the Post Office to improve its profitability and build it up to a more successful future.
  However, none of the arguments advanced this afternoon has convinced me that it is appropriate for the Post Office to move from its present quite successful money transmission scheme—the present Giro—into a fully-fledged banking services operation. Apart from the fact that it has an embryonic scheme in existence, no argument has been
  1228
  advanced that justifies the Post Office becoming a true competitor of the clearing banks. Would it not be better to try to improve the efficiency of the mail distribution service and get mail more cheaply and quickly in particular to business users in large cities? Why not try to get more customers for the telecommunications side? Would not these be better roads back to profit for the Post Office than for it to become a bank?
  The first sentence of last November's White Paper says:
  "In his statement of 12th March 1975, the then Secretary of State for Industry told the House of Commons that the Government had decided upon a number of measures designed to set Giro on a surer foundation."
  This afternoon it has been questioned—and properly questioned—whether going into banking would set Giro on a surer foundation. The hon. Member for Gravesend (Mr. Ovenden) poured a good deal of scorn on what he called the "mysteries and skill" of banking. Here I declare an interest as a director of a bank, though one with its business largely overseas, and I doubt that we shall find ourselves in much competition with Giro.
  The fact of the matter is that the whole trend in the world at present is to be worried about banks and to be cautious about the very basis on which banks are built. The Lombard column of the Financial Times today quotes:
  "If it is in the public interest to relax direct regulation of risks that banks may assume and yet keep their failure rate low, one appropriate change in policy would be to begin charging each bank a deposit insurance premium based upon the risks that it assumes."
  "Failure rate of banks" and "deposit insurance premiums for the risks they asume" is the language in which banks are being talked about at present. That quotation, as one Labour Member recognised, is from the current issue of the bulletin of the Federal Reserve Bank of St. Louis. It emphasises the worry about the banking system in the United States of America.
  Fortunately we do not have the same worry about the leading banks in this country. However, the discussion here is also about the future regulation of our banking system. The banking system here was liberalised early in the 1970s, most notably by the Bank of England's own paper "Competition and Credit Control". This led the Section 123 banks

  1229
  to proliferate, to bid for deposits and to increase their advances very substantially. Now, as we all know, that upsurge of the secondary banks ended in tragedy, and the whole thrust of the movement is reversed by the Bank of England.
  Banking is not a triple "A" business into which Giro can venture in the total certainty that it is going to make money. It is against that background that my greatest worry about the extension of Giro is set.
  Quite simply, I am worried that if Giro goes into banking in a wholehearted way it may lose a very great deal of money. Of course, I hope that this will not be so. However, let us look back for a moment at the secondary banking crisis. It is often said that that was primarily caused by the secondary banks going into property lending, but the fact of the matter is that the large clearing banks, either directly or through their subsidiaries, went into property lending as well. So did the large American banks. They had the strength to withstand the shocks when they came. The secondary banks did not. Often the secondary banks had much more prudent balance sheet ratios than some of the large clearers, but what they lacked was the confidence of the public and they also lacked really experienced bank men running their operations.
  This is what I fear will also happen with the Giro: that the quality of lending, when Giro really starts to try to lend in a massive way, on both personal overdrafts and corporate lending, will not be good enough, because it will be run by non-bankers who do not know the business.
  I am told that the way that personal overdrafts will be set up initially will be very much on the lines of a hire-purchase type operation, concentrated on Bootle, and that an applicant for a personal overdraft will probably be assessed on a number of points on a computer. If he has enough points he will get the overdraft, but if not, his application will be rejected.
  That all sounds fine in theory, but what happens when the bad debts begin? Who will go and collect them? The man from Bootle cannot go all over the country to collect the bad debts. Will it be the sub-postmaster who gets on his bicycle and
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  pedals down country lanes to tell someone whom he has known for years that he is behindhand in regard to his Giro overdraft? These men are not trained to do this job, yet it is precisely in success in keeping down bad debts that the secret of banking lies. I do not see where the necessary expertise and the necessary control in the Giro system to deal with bad debts is to come from.
  If that is true on the personal overdraft side, how very much more true it is as regards corporate lending.
  Mr. Leslie Spriggs: We must respect the hon. Gentleman's knowledge of banking, and he has declared an interest in banking. However, is he not aware that sub-postmasters all over the United Kingdom are in close touch with the communities around them? There is a great under-used capacity in our sub-post offices all over the country. Does not the hon. Gentleman realise that sub-postmasters could be of great assistance not only in a new type of Giro banking but also to the public generally?
  Mr. Renton: I accept what the hon. Member says to the extent that obviously sub-postmasters throughout the country have a great knowledge of their customers. However, I make two points in reply to the hon. Member. First, the actual granting of the overdraft, as I understand it, is to be done on a totally computerised basis in Bootle. Secondly, I do not believe that most sub-postmasters, when they applied for that job, ever envisaged having to go out on their bicycles and collect bad debts from their friends and neighbours in the village. I do not think it is on that basis that they sought the job or will seek it in the future.
  I return to the subject of corporate lending. Here, experience with all banks has shown that it is not possible for this to be centralised. For corporate lending to be successful it is essential that the customers are known and that their business is understood. This can be handled only on a county or regional basis.
  The Minister of State ducked detailed questions about the operation of Giro in this respect. He told my hon. Friend the Member for Bridgwater (Mr. King) that it was not for him, the Minister,

  1231
  to act as if he were running the Post Office. However, in my judgment that reply is not good enough. I could never vote for the Second Reading of a Bill setting up a banking operation in a nationalised industry when it is unclear that it would be professionally run, and when I have grave doubts about how the losses will be limited.
  I should like to ask the Under-Secretary some specific questions that the Minister of State left unanswered in his opening remarks. I hope that these questions will be dealt with in the winding-up speech. The Minister of State mentioned that Giro would be set a financial target of 12½ per cent. May we be assured that this will be monitored and that the House will be told regularly about how Giro is performing in relation to this financial target?
  We were told that there would not be unrealistic pricing subsidies, but may we be assured that there are no hidden subsidies from the Post Office in relation, for example, to telephone bills or to the data processing service? I mention these two points purposely because between them they account for £13½ million of Giro's costs last year, against a total expenditure of £24½ million. This shows the degree, therefore, to which Giro, as a Post Office department, is dependent on the prices charged to it by the Post Office for the basic services that it is using.
  Mr. Wrigglesworth: Perhaps I may help the hon. Gentleman on that point. If he studies the Post Office accounts for last year a little more closely, he will find the profit on the amount paid for this service stated there. It is a profit of some £2·7 million, which, on the £31 million that he has mentioned for this service, is a rate of profit of about 10 per cent., which seems to me to be a fair commercial rate.
  Mr. Renton: That is not quite the point I am making. My point is that in any banking service a great deal of money is spent in communication charges, on telephone bills and the transfer of information. What I should like to be assured of is that these things have been costed on a totally independent basis, so that if a clearing bank, for example, were also using the computer at Bootle it would be
  1232
  charged on the same basis as Giro is being charged. I am not saying that historically the prices are not fair. However, a large part of Giro's expenditure is in transfer payments to the Post Office. Hon. Members on both sides of the House would like to know that these are being costed on an independent basis.
  I should like to be assured also that Giro will be given identical treatment—I stress the word "identical"—to that given to the clearing banks in terms of monetary and credit controls.
  I take up a point made by my hon. Friend the Member for Bridgwater. We should like to know that Giro was subject to identical treatment to that of the clearers in the future as regards reserve asset ratios, special deposits, interest-bearing eligible liabilities and qualitative guidance, and what the time span during the transition from a non-banking operation in this respect to a banking operation would be.
  It is also important that the House should be assured that Giro will take no deposits from the public sector at subsidised rates. Giro should bid for its deposits in the open market. This is particularly important because, of its present deposits of £145 million at 31st March 1975, £27 million came from the Government and £40 million from public corporations.
  It is essential if Giro is to be in fair competition with the banks, as the Minister of State suggested, that it should quote alongside the banks for public sector business and not be in a preferred position.
  We should all like to know the forward forecasts of business for Giro and how it will reach the targets that the Minister of State has set for it. I should particularly like to know what allowance is being made in these forecasts for bad debts. If I may give a hint to Giro, an allowance of less than ½ per cent. of its advances for this purpose is a good deal too low. If it succeeds in keeping down its bad debts to ½ per cent. of its advances, it will have done a good job.
  We all accept that the Post Office wishes to make money and that it needs to make money, but banking is not a blank cheque towards that route. We would like to know the Government's real intention in moving Giro in this

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  direction. Is it that the Government still have in mind nationalising one or all of the clearing banks? Is this their means of finding out more about the banking business before they take that step? It is too much to ask the present Government for honesty in declaring whether that is their intention, but let us recognise that the process of Giro learning about the banking business could prove very costly for the taxpayer.
  8.22 p.m.
  Mr. Ian Wrigglesworth (Thomaby): I begin by apologising to the House for not being in the Chamber for the opening speeches. I was unavoidably detained on other duties. I also declare an interest, which I have previously declared, as a former Post Office employee and as an adviser to one of the trade unions which has a substantial representation in the Post Office, especially in National Giro. My job in the Post Office was as Press and public affairs manager of National Giro. Therefore, I have a deep interest in this subject. But that is not my only experience in banking. I have worked for the Midland Bank in the private sector. I therefore know a little of both sides of the coin.
  The hon. Member for Mid-Sussex (Mr. Renton) spoke of the possibility of nationalisation and queried the Government's intentions towards banking. We must recognise that banking has been going through a period of unprecedented change and unprecedented difficulty in post-war years. One of my criticisms of the Government is that their banking responsibilities between different Departments are split too widely. The Treasury has responsibility for the Bank of England and for overall supervision. The Department of Trade is responsible for supervision under the Companies Acts and the Department of Industry is responsible now for the banking part of the Post Office. I wish that the three different Departments responsible for the different sectors of banking could work in closer harmony.
  This is not a matter that has suddenly arisen under the present Government. It has been with us for a considerable period. At times, there is not the direction and supervision of banking that many people in the industry, quite apart from people in the parties, would like
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  to see. In considering the Bill we must set it against that background and against the developments in the Trustee Savings Bank. We must also bear in mind current discussions and the proposals, to be brought forward shortly, for licensing banks, as well as all the prudential regulations that the Paymaster-General and the Chancellor of the Exchequer have spoken about.
  The development of a third force in banking started with the publication of the Page Report in 1973. It was rather disappointing that that body was a little vague about including National Giro in its investigations. It would have been much better if it had done so. Its principal objective was to review the position of the National Savings Department and the Trustee Savings Bank. It also considered National Giro. In recommending the wholesale reorganisation of the trustee sector and building it up into a third force, it suggested that National Giro should have closer links with the National Savings Bank than then existed.
  I am much in favour of the development of the third force and the development, enshrined in the Bill, of National Giro. I hope that we shall also see closer links between National Giro and the National Savings Bank so that there is a deposit side to its operations, so that it will be even more comprehensive in the facilities it provides for the public than is proposed in the White Paper and the Bill. I want to see the development of a strong public sector, because, like the clearing banks, I think that it is good to have a lot of competition in banking.
  That is possibly the answer to one of the questions posed by the Opposition. They have asked why Giro is being developed. It is being developed to provide a wider range of services for the public and to provide increased competition within banking. I should have thought that Opposition Members would have applauded greater choice, greater freedom and greater competition. But they can be provided only by extending the range of facilities provided in the public sector by the Trustee Savings Bank, National Giro and the National Savings Banks.
  Another development that I should like to see take place was referred to by my hon. Friend the Member for Gravesend

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  (Mr. Ovenden)—namely, a link between the Paymaster-General and National Giro. It seems ludicrous that we have two matching computer services in the public sector. The Paymaster-General's office makes millions of payments for Government Departments which could be adequately dealt with by one organisation. I hope that the Government will consider the possibility of amalgamating the services, thereby saving this duplication and saving public funds. That would be to the benefit of the Government in providing a more efficient service and saving public expenditure.
  As the White Paper recommends, it is right to proceed with prudence. It seems that some Opposition Members have overlooked some of the paragraphs in the White Paper, and particularly that referring to the prudential development of the service. Paragraph 17 of the White Paper says:
  "Commercial prudence and the need to build up financial and administrative resources and expertise to handle the new business dictate that the expansion of Giro's services should be gradual."
  The White Paper then sets out the way in which that expansion is to be achieved.
  Great play has been made of the lack of expertise available in National Giro for vetting loans. National Giro has now been in existence for some years and has built up considerable expertise. Indeed, as a result of bad debts it has made considerable, well-publicised losses. The system of vetting accounts for creditworthiness had to be introduced. No organisation can give somebody a cheque book with the facility to cash up to £30 without imposing a system of credit vetting. The ability of National Giro to be able to undertake such vetting has been clearly shown by the success of its trade operations in the last three or four years.
  There were teething troubles in the early stages and the National Giro administration has learned from them, but it is not good enough to suggest that the Giro staff has no experience of vetting account holders. It is a grave responsibility to give somebody a cheque book, with which, at the stroke of a pen, he can buy goods and services. National Giro undertakes that responsibility
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  responsibly and its staff has done so with considerable success in the last three or four years. I wish to emphasise that the expertise is there.
  There has also been the relationship of National Giro with Mercantile Credit—a link that has existed since 1970. Again, National Giro has learned a considerable amount from that relationship, particularly about the credit vetting necessary to provide people with loans—bridging as well as personal loans. That experience is there and it is backed by the undertaking in the White Paper and by the prudence of the management of National Giro. Therefore, it is reasonable that the House should agree to this extension of facilities so that the Post Office may be able to come to the Government to discuss proposals, to be implemented first on a pilot basis and then, if successful, to be extended to a wider range of people.
  We must not get the Giro operations out of perspective. It must be emphasised that the number of account holders in the Giro operation is tiny compared with account holders in the Trustees Savings Bank—and certainly very much smaller compared with the clearing banks and the National Savings Bank. Therefore, in dealing with Giro we are dealing not with another Midland Bank or National Westminster Bank, but with a very small organisation. I repeat that we should not get the matter of size out of perspective, although we hope to see the organisation grow rapidly in the coming years.
  I hope that the Government will encourage Giro by re-examining the way in which it offers Government business on tender to the banks. In a number of instances it has not been possible for National Giro to be able to tender for the banking business carried out by Government Departments. The present situation is not good enough. It would be unfair if any bank had a monopoly of the business engendered by Government Departments. On the other hand, it would be unfair if all the banks, including Giro, were not given an opportunity periodically to tender for the business put out by Government Departments. I hope that the Government will give Giro a fair wind, that they will examine the banking services, and provide an opportunity for Giro to tender alongside the banks.

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  I should like to say a few words about the rôle developed by National Giro in the last few years, a role that the Bill will help develop even further in the next few years. We must congratulate National Giro on the way in which it has developed. It began as a people's bank—a great concept involving a mass banking organisation to provide accounts for people who did not already possess them. When National Giro found that it was not successful in terms of the number of accounts originally envisaged, it found new, profitable markets to dovetail in with the services provided by the clearing banks and other banks. Therefore, in that respect, we should pay tribute to Giro.
  It was able to see, for instance, that the cash collection service provided for retail organisations could give those organisations something which the clearing banks could not provide. That is because the Giro is open from 9 a.m. to 5 p.m. six days a week. The clearing banks do not have the speed of transmission possessed by the centralised accounting system of Giro. Here was a market in which it could clearly provide a profitable service that could not be rivalled.
  The same is true of the rent collection service for local authorities. This has been developed over the years, but it was not envisaged in the White Paper published in the 1960s. It was a facility needed by the local authorities. There were problems about collecting rents. Rent collectors were being attacked—one or two were killed—while collecting vast amounts of money from tenants. The authorities needed to get the money into their accounts as rapidly as possible.
  What better way to do it than through the Post Office? Families need to go to the Post Office at least once a week to collect pensions and social security benefits, to purchase stamps and postal orders and to make use of a whole range of other services. This was a service for which Giro was ideally suited. It has gone for it with great vigour and success. That service is proving profitable to Giro and of benefit to the community.
  We should congratulate Giro on seeing these opportunities, grasping them firmly and developing them, so making its trading operations profitable. I want these services to be developed even more. The
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  two bull points of the Giro are these 21,000 outlets around the country open from 9 a.m. to 5 p.m. and for six days a week, and the speed of transmission. Money that is put into the system on one day is at the centre the next day and available for use the day after. The amount of time that money lies in the account can be negotiated with Giro management if speedy transmission is not required.
  These key factors can be developed in providing services for a wide range of organisations. These social benefits as well as the economic benefits have to be taken into account. In addition, the services provided under the Bill, like the cheque cards and the credit cards and the other current account services, will extend the range of facilities.
  These are all essentially current account facilities. There is no intention expressed in the White Paper or the Bill of Giro providing services of the kind suggested by some Conservative Members. The hon. Member for Tynemouth (Mr. Trotter) spoke of income tax advice and trustee services. I do not think that there is any intention of providing such services. It is purely a question of providing current account services to modern standards.
  I turn now to the Bill. I believe that we can easily justify the restructuring of the capital of Giro and the write-off of the debts if we look at the wounds inflicted on Giro during the early 1970s—the period of the review carried out by the last Conservative Government. I can think of nothing worse for a bank than to have its whole future called into question. The great enemy of any banker is lack of confidence in his services. This has been mentioned by hon. Members earlier in the debate. One need only consider the example of the building society in Derby, when there was some question whether deposits could be repaid. Immediately there was a rush on the building society by depositors wishing to withdraw their money.
  In 1971 there was the dreadful period when the whole future of Giro was called into question. It is remarkable that not only did National Giro manage to keep its head above water during that period, but it continued to grow, albeit not at anything like the rate envisaged. It did not, as might have been expected, wind

  1239
  up its operations solely as a result of the enormous question mark hanging over its future. That question mark inevitably affected the morale of the staff as well as the confidence of customers.
  Some anxiety has been expressed about cross-subsidisation. The accounts show that the services provided for National Giro by other parts of the Post Office are paid for in full, and there is an adequate rate of return on the services provided. It is stated quite clearly in the White Paper that there will be no cross-subsidisation, and I am sure that the Minister will be only too pleased to repeat that assurance. It is down in black and white in the White Paper. I do not know what further reassurance hon. Members want.
  Hon. Members who criticise National Giro for cross-subsidisation might ask themselves about cross-subsidisation in the clearing banks. The payment of 15p for National Giro services often irritates people when they pay money into an account, but it is here that the true cost of using counter services is seen. The clearing banks run their credit transfer services at very little cost, so who is paying for the banks' credit transfer services? Is there not an element of cross-subsidisation there?
  We are told that the credit card services of the clearing banks have been in difficulties for some years and making losses. Who is paying for the losses of the credit card services run by the clearing banks? Does not the service exist because by using credit cards the clearing banks are saving money on the number of transactions going through the very expensive branch and clearing system? It is not only National Giro that might be accused of cross-subsidisation—although I do not accept the charge and, clearly, nor does the White Paper.
  We have also heard comments about the unfairness of the competition provided by National Giro and likely to be provided in future. If there has been any unfairness, it has surely been the other way round, because National Giro has been operating with one hand tied behind its back. There has been a tight restriction on the services it could provide, and particularly on what it could
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  do with its funds. It could not lend funds at 18 per cent.—or whatever the going rate might be—to the holders of credit cards, or people with overdrafts. There has been a tight restriction on the markets in which it could lend its money.
  In addition, it has been tightly retricted in its liquidity ratios, and will be restricted for some time in the future in this respect, placing it at a disadvantage in relation to the clearing banks. If there has been any disadvantage, therefore, it has been suffered by National Giro. The unfair competition has been from the other direction. So I hope that the charge of unfairness will be taken back by those hon. Members who have made it, because clearly it is not possible to operate fair competition between two organisations one of which is not even allowed to provide the full range of services that the other has.
  As for the accounts published by the Post Office and by the clearing banks, the 1974–75 Post Office accounts give more information about the activities of the National Giro than the clearing banks' accounts give about clearing banks. They are much fuller in many respects than those published by the clearing banks. I wish only that the clearing banks would give the same degree of information as that contained in the last accounts in the Post Office Annual Report and Accounts for 1974–75.
  But we need to ask ourselves whether the National Giro in the public sector needs to have the same prudential controls and free reserves as the commercial banks. By its very nature, as a public sector organisation, does not it have the guarantee that depositors require? What is the need for prudential regulations? What is the need for free reserves? Surely it is not to give guarantees to customers.
  Surely the case for them is that of fairness between the two sides and so that we shall have the means to monitor the progress of the organisation and to compare it with its competitors in the private sector. That is the real justification, and if anyone says that the clearing banks have these prudential regulations to cover the fears of their customers, we might ask about the "Lifeboat" operation.

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  Surely the implicit argument of the "Lifeboat" operation, in which £1·5 billion has been put in to rescue banks in the private sector and property companies, is that without it 30 banks in London today would not be in operation. Surely that is also a form of State guarantee. The money has come from the clearing banks and from the Bank of England, but does anyone believe that the Bank of England would allow one of the clearers to go down with massive losses against the background of the "Lifeboat" operation which has rescued all the secondary banks? Clearly, the same sort of guarantee exists there. But the argument for restructuring Giro is so that it can be monitored by this House and by the public to see that it is developing in the way that we have laid down in the White Paper and so that a degree of fairness can be exercised as between the private and the public operations.
  The Opposition have been schizophrenic in their attitude, and I was disappointed to hear that they intended to vote against the Bill. They want more competition, but they do not want to encourage it. They do not want losses, but it is they who have been responsible to some extent for creating the losses in the National Giro by carrying out their review. They want nationalised activities to be run on a commercial basis, but, by voting against the introduction of a commercial basis, apparently they are opposed to the National Giro being run in that way. They set targets for the organisation to achieve, but they ignore them when they have been achieved and they do not give the organisation a fair run when it has achieved those targets not only on date, but even before they were due.
  This is a very irresponsible attitude for the Opposition to take. It is the attitude of a group in opposition rather than of a group taking the responsibility of the running of an organisation. It is a complete about-turn on their previous attitude to Giro, and I hope that, some of them will reconsider their decision to vote against the Bill. If they stand by what they decided when they were in office, they will not do so.
  If we pass the Bill tonight, it will be to the benefit of the Post Office, the taxpayer and the public who wish to use these banking services.
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  People will have a greater option of services. There will be greater competition and that is a wholly welcome development that will receive the support of the vast majority.
  Mr. Deputy Speaker (Mr. George Thomas): Before calling the next speaker, I remind hon. Members that the Front Bench speakers wish the winding-up speeches to begin at 9.10 p.m.
  8.51 p.m.
  Mr. Peter Viggers: It is a pleasure to follow the hon. Member for Thornaby (Mr. Wrigglesworth), although I cannot support his arguments, rooted as they are in a misconception. I do not understand the purpose of the Bill. I have tried hard to understand exactly what it is meant to achieve, but I cannot. I feel in all humility that as a solicitor, a director of a merchant bank and a director of a company which is a licensed dealer in securities, I should be able to understand it, but I have failed.
  The Bill deals with two subjects—banking and the Post Office—and whether they should be joined. I have no doubt that the clearing banks are inefficient in many ways. They are extravagant in the use of premises and they should have grasped the halls are expensive and insufficiently productive. The clearing banks are unadfact years ago that their palatial banking venturous in the services they provide, and they appear reluctant to innovate. Their hours compare unfavourably with banking hours in other countries. They advertise some ancillary services which they perform not wholly well, and these include trustee services where the bank takes a fee, as does the solicitor who handles the estate, and the provision of advice on investments, when they usually call in a stockbroker who advises a client to go into unit trusts, and there the fee is split with the stockbroker and the unit trust managers.
  Often the senior management of the clearing banks is of high calibre, but the banks work together so closely that they are insufficiently competitive. The public suffers because of this lack of competition, and there should be scope for the Government, through the Office of Fair Trading or the Monopolies Commission, to consider whether there are ways in which the clearing bankers could be encouraged to

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  develop a greater sense of competition. We have to consider whether this competition should come from the Post Office.
  In turning from banking to the Post Office one is confronted with a comparatively lifeless and dull sector. The queues at post office counters are an eloquent testimony to inefficiencies in the system. I have not found that the standard of courtesy at post office counters is of the highest level. The postal service is in the throes of a vicious downward spiral of services, which is the obverse of a vicious upward spiral in prices. It seems clear from rumours and leaks that the 101p post will be with us before long. The postal service was slow to put through its post code system, which is not working particularly successfully. The telephones are expensive.
  The Giro system was slow to build up its activities. It now has a better turnover but it must be a bitter disappointment to its protagonists. Giro compares unfavourably in terms of turnover with its European counterparts. I could understand why it is now sought to develop the service by expanding it. The traditional cry where a service is not being overwhelmingly successful is that it should be allowed to move into pastures new so that it may develop more profitable activities.
  More than anything the Post Office needs a breath of competition, and I believe that there is a great deal to be said in favour of and not very much against a modest and controlled experiment in selected areas to allow the private sector to take over some of its activities, perhaps the telephones or the postal delivery. Almost everything that has been said in favour of Giro has been a defence of its service as a method of money transmission, but the Post Office is not fulfilling its present rôle successfully, and it does not need new duties.
  The Bill says:
  The Bill will have no direct effect on the number of public sector employees.
  That is a remarkable statement. The Ministers presenting the Bill must feel that banking services can be carried on without extra staff. That can mean only that the duties of existing staff will be increased, leading to even longer queues
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  in post offices and even less efficiency in the Post Office's activities.
  I understand that at 31st March 1975 the Post Office Giro staff totalled 4,401, including 3,019 in the computer centre. There are 21,000 post offices. How on earth can that staff handle banking services? I do not think that Ministers understand the nature of banking if they believe that no new staff will be needed.
  There has been no attempt to deal with the important points made by my hon. Friend the Member for Mid-Sussex (Mr. Renton), who asked how bad debts were to be collected. Is the sub-postmaster to get on his bicycle and collect them? The question must be answered. It is obvious that 4,000 staff cannot control banking activities in 21,000 branches.
  Giro is at present a transmission service for money. It is a revolution that we are discussing, not just a mild extension allowing holders of Giro accounts to have modest overdrafts. It is a new system of operation dealing with the commercial world of banking, a completely different concept and not just the shunting of money from A to B. It means entering the viciously commercial world of credit banking.
  It is obvious to everyone except the Government Front Bench that if the Post Office is to engage in banking activities it will need to recruit expert staff. Where will it recruit them from? It will get them from existing banks. How will it do it? Will the sparkle and lustre of working for the Post Office be reward enough to encourage people to work for Giro, or will it need to pay recruits rather more than it does now?
  The new banking operation will be expensive and inflationary, because the staff will need to be paid more if they are to be recruited from the banks where they are currently working. Those trying to keep down prices and wages may be interested to know that staff joining the Post Office will be free to accept much more than £6 a week in excess of their current wage.
  The Minister said that the extension of Giro banking services would enable the amount of cash in movement around the country to be reduced. That is a laudable aim, but the way to achieve it is to eradicate the remaining effects of the old Truck Acts, which make it difficult

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  to pay people by cheque instead of in cash, rather than to extend the Giro. I do not understand how the Minister's point can be valid to support the extension of the Giro.
  When this measure to allow the Giro to move into banking is allowed, will it compete efficiently? Experience with the Post Office makes it clear that it will not. Herculean efforts to encourage the use of Giro have not been particularly successful. Nearly all our experience of State industries is that they do not like competition to be fair.
  I draw a parallel with which the Minister will be familiar. When the British National Oil Corporation was created it was said that it would operate fairly, but the first thing the Government did was to relieve it from the payment of petroleum revenue tax. They then allowed the oil investments of the National Coal Board in the North Sea to be sold to the Corporation at cost, not commercial value.
  I do not believe that the Government understand the meaning of fair competition. The siren voices from the Eack Benches calling upon the Giro to take a greater share of Government business must be an indication that there will be immense pressure to encourage State corporations and institutions over which the State has authority to use the Giro rather than the commercial banking system.
  Mr. Gregor Mackenzie: The hon. Member's own right hon. Friends, when they were in office, went to a great deal of trouble to let the facilities of Giro be known to Civil Service heads and nationalised industries in precisely the same way as we are doing.
  Mr. Viggers: I take the point. I am sure it is a fair one, but at present only £2,000 million out of the £50,000 million of Government transmission of money goes through the Giro system and there has been considerable Back-Bench pressure from the Government side during this debate for more money to be transmitted through the system. This pressure would increase if Giro operated banking services and we would see pressure, both overt and covert, for nationalised industries to use the system for the transmission of money.
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  I do not think that the Government understand the meaning of truly fair competition. It can be proved. The capital structure of Giro is completely inadequate for a banking operation. No banking operation with a capital base of £13 million could rise to more than modest size. My hon. Friend the Member for Tynemouth (Mr. Trotter) made some important points about qualifications in the accounts of Giro. No bank would be allowed to operate with such qualifications in its accounts. Quite apart from the fact that we are writing off large sums of money, the Bill has been conceived in unfairness and will operate in unfairness.
  Lloyd's Bank International, a commercial bank, sustained losses which, if I remember correctly, totalled £33 million as a result of unauthorised dealings by its branch in Lugano. Is anyone telling me that if Giro, through some malfunction of operation or misuse of power, sustained a £33 million loss, there would not be a Minister here late one night putting through a little Bill to relieve Giro of the loss? Of course there would be. We have recently had an Act to relieve the Crown Agents of losses. It is obvious that we would have a Bill to relieve Giro of any such loss. The whole concept of a Giro banking system is conceived in unfairness.
  If the Post Office engages in banking activities we can expect the Government, through the use of their tentacles of power, to draw in business for the Post Office banking sector.
  The Bill is one of two things. It may be a comparatively small measure to write off debts and inject new capital—a use of resources which cannot be justified at this time and which would be a burden on the Post Office. If that is the case, Giro is under-capitalised and short of staff and we must know where the new staff will come from. Alternatively, the Bill could be the thin end of the wedge to set up a State bank to satisfy those on the Government Benches who wish to expand State control for its own sake. I believe that there are different people within the Government who have different views about what the Bill is meant to achieve. I do not know which force will eventually be predominant, but, whichever it is, the Bill should not be passed.
  9.4 p.m.
  Mr. Douglas Crawford: I am grateful to the Government and Opposition Front Benches for enabling me to make a brief contribution to this debate from the Scottish National Party Bench. The House will not be surprised to hear me say that the Scottish banking system is, to a certain extent, different from the English system. The Scottish system is, dare I say it, more efficient. It is also at least as old as the English system. The Bank of England was formed in 1694 and the Bank of Scotland in 1695.
  The House will also be relieved if I do not go into the question of the relationship between the Scottish pound and the English pound—the petro-groat and the petro-merk—after independence except to say that I believe that the Scottish pound will become stronger than the English pound.
  I am concerned with the mechanics of banking in Scotland. There are two main differences between Scotland and England which are relevant to the Bill. The first concerns the position of the Trustee Savings Bank, which in Scotland is stronger than it is in England. The Trustee Savings Banks in Scotland have recently been reorganised and are developing well. The second difference is the position of the clearing banks. The recent history of banking in Scotland has been one of mergers, as in England. There have been more mergers in Scotland than there have been in England. There have been mergers between the Bank of Scotland and British Linen, National Commercial and Royal, and Clydesdale and North of Scotland.
  Mr. Carmichael: Which is the parent company of the Bank of Scotland? Which company holds the biggest share? Surely it is Barclays Bank.
  Mr. Crawford: Barclays Bank does not have a majority shareholding in the Bank of Scotland. The Midland Bank has an almost total control over Clydesdale. To my knowledge, Barclays Bank does not have a controlling interest in the Bank of Scotland.
  I am speaking here purely about mechanics. My experience is that one seldom finds queues of people in Scot-
  1248
  tish banks waiting to perform transactions. In England—certainly in London—queues are longer. I agree entirely with what the hon. Member for Gosport (Mr. Viggers) said about queues at GPO counters.
  I agree with the hon. Member for Gravesend (Mr. Ovenden) that Giro as it stands is not a bad system. My constituents in rural areas who pay rents via Giro would be in difficulty if it did not exist.
  I agree with the Minister of State, Department of Industry that Giro needs a better financial base, so that transactions carried out by people who are not dealing with large amounts of money can be profitably processed. Perhaps a self-governing Scotland will have a Scottish Giro linked to the English Giro, although there may not be enough people in Scotland to sustain that system.
  Does the Bill mean that there will be a build-up of jobs in Bootle Presumably it does. If so, will competition from Giro take job opportunities and employment from Scottish clearing banks? If this proposal, in the words of the hon. Member for Gosport, is the thin edge of the wedge and leads to nationalisation of the banking system on a United Kingdom basis, the SNP will be against it. That would lead to still more centralisation of commercial decision-making in London, and we have had enough of that.
  Scottish clearing banks and Trustee Savings Banks in Scotland are as good as any in the world. My party is not happy with certain implications of the Bill for employment in the Scottish banking system, especially in the Trustee Savings Banks. The Bill does not pay sufficient attention to the differences between the banking systems in Scotland and England, and for that reason we shall vote against it. It seeks, directly or indirectly, to take even more decision-making away from Scotland.
  9.8 p.m.
  Mr. Michael Marshall: I welcome the debate, though not for obvious personal reasons. We have heard many useful contributions from both sides of the House. Without being invidious, I mention the speech made by the hon. Member for Newcastle-under-Lyme (Mr. Golding), who has a long connection with

  1249
  the Post Office Engineering Union, the brief intervention of the last Assistant Postmaster-General, my hon. Friend the Member for Totnes (Mr. Mawby), the speech of my hon. Friend the Member for Mid-Sussex (Mr. Renton), who spoke with all his knowledge and experience as a banker, and the trenchant comments of the hon. Member for Thomaby (Mr. Wrigglesworth), although he rather spoilt his case by indulging in attack as the best form of defence. Finally, we had two useful speeches, one from the hon. Member for Perth and East Perthshire (Mr. Crawford), whom I am glad to see with us tonight—despite the events of the past few days, the United Kingdom is still intact—and last, but not least, my hon. Friend the Member for Gosport (Mr. Viggers), drawing on his professional and business experience, made a signal contribution.
  Having made those observations, it is only right that we should immediately decide what this debate should be about. There has been great difficulty and perhaps a temptation for many hon. Members to regard this as an opportunity to justify the existence of Giro. Basically that is not what we have been present to discuss today.
  I welcome the debate because fundamentally we are looking at a commercial proposition. We are, as my hon. Friend the Member for Mid-Susesx said, considering whether Giro should go into secondary banking. That is a massive subject and one of the greatest importance. Therefore, we must approach it in that spirit.
  Equally, it is perhaps a relief to hon. Members on both sides of the House that we are considering a commercial proposition rather than yet another rescue operation in which we simply talk about saving jobs at any cost. To that extent I recognise the progress which Giro has made. I shall return to that matter later.
  We have heard many important contributions during the debate and, therefore, I should like briefly to highlight one or two matters which have been raised. I am sure that the Minister has noted these points but I should like to add to them because a number of them are extremely important. Moreover, during this debate the anxieties and genuine concern for
  1250
  the future of Giro were properly reflected, and therefore they should be answered by the Minister.
  First I shall deal with one of our basic worries about the White Paper and the Bill. Frankly the White Paper is extremely thin, and there is no disguising that fact. When the Minister of State opened the debate he was prepared to admit as much. Indeed, I think he went even further with his characteristic directness and, if I may say so, the very honest approach that he brings to our proceedings. He as good as said that he was transmitting to us today what the Post Office had put to him. In my view that is a fair account, but it raises the great problem about the way that we conduct business in this House when considering proposals of this kind and anxiety as to whether within the Department of Industry there are people of the right calibre and experience in banking to vet proposals of this kind. I hope that the Minister will say a word about that matter.
  I turn to the points made by my hon. Friend the Member for Bridgwater (Mr. King). It is important that the Minister should try to set our minds at rest on the important question of whether Giro should be allowed to trade within its present capital structure granted, as has been stated and certainly has not challenged so far, that no commercial bank would be allowed to trade with the debt ratio envisaged even under the capital reconstruction contemplated by the Bill.
  The hon. Member for Newcastle-under-Lyme, in view of his intimate connection with the Post Office, is to be especially congratulated on making a fair speech. His observations about failure to identify markets accurately in the original estimates are timely and true and reinforce the need for us, in any agreement which might be reached in this House, to be equally clear about what we are doing for future forecasts. I support the argument, which I understood the hon. Member to advance, that the Government should be seeking to expand existing business from within Government customers with the proviso of my hon. Friend the Member for Gosport that it must be on a fair basis and not through undue coercion. The hon. Gentleman's point seemed valid. There is a great deal of scope. Perhaps

  1251
  the Minister will tell us the Government's view of that matter.
  We have heard a number of arguments about the evidence of demand. We should try to encapsulate the problems which lie ahead for Giro as it hopes to move into secondary banking. The hon. Member for Newcastle-under-Lyme frankly told us that he had two accounts, one with Giro and one with the Co-operative Bank. I do not believe that the hon. Gentleman is in any way untypical. I wish that we were able to produce the figures. We are all to some extent working by hunch and on the basis of the inquiries that we have been able to make in a limited time.
  The hon. Member for Newcastle-under-Lyme said that he would wish to maintain both his accounts despite the move into commercial banking. I regard that as a prudent and sensible course. I am sure that it will be followed by many people who use both Giro and the commercial banks.
  That brings back what is to my mind the basic worry that, in a sense, there is contradictory thinking behind this proposal. We all remember, without getting too emotive over Benn's Bank and the people's bank, that the whole notion of Giro has changed dramatically. The original idea of handling large numbers of personal accounts has been superseded largely by the money-making advantages of a relatively small number of commercial accounts. The idea that we should in some way see a complete change yet again cannot be entered into without the greatest care and consideration.
  Before moving to my summary of how I see the arguments we have heard tonight, I cannot leave out mention of the speech made by the hon. Member for Bootle (Mr. Mahon). I hope that he will not regard it in any sense as a patronising remark from one relatively new to this position on the Opposition Front Bench, but I thought that the hon. Gentleman made an admirable, indeed a model, constituency speech. He spoke with great sincerity, and we all respected him for that. I should like to highlight the hon. Gentleman's speech not only because of its sincerity, but because of its great realism. I noted
  1252
  carefully the words that he used. He said that Giro had made modest progress. I agree. That is a fair summation.
  I fully recognise the temptation of the hon. Member for Thornaby, being so intimately concerned with these affairs, to claim too much credit for what has been happening in Giro. This is a matter to which I shall return.
  I turn now to my own conclusions as we reach the end of what has been a valuable debate in which the House has been able usefully to bring to bear expert views from both sides. I put it to the Minister that we are concerned with two main questions: first, can the financial reconstruction of Giro be justified; secondly, what are the prospects for success? In effect, we are rubber stamping the proposals in the White Paper which would give Giro the opportunity to offer personal loans and overdrafts, to extend overdrafts to commercial customers, to local authorities and to nationalised industries, and the much wider opportunities made clear in the White Paper, which states:
  "It is also accepted in principle that Giro should be authorised to provide other banking services such as credit cards, cheque guarantee cards and bridging loans, subject to detailed discussions with the Government."
  Those are very wide, indeed massive, prospects. If we were to give the Bill our blessing, we should be making an open-ended commitment on Giro's behalf that would allow it to move not only into secondary banking, but into areas which, as many hon. Members on both sides of the House have pointed out, have been fraught with difficulty and which raise many of the worries of some of us over the whole economy.
  I turn now to the justification for the financial reconstruction of Giro. I need not labour this subject. My hon. Friend the Member for Tynemouth (Mr. Trotter) gave us a first-class professional assessment based on his vast accountancy experience. My hon. Friend the Member for Ealing, Acton (Sir G. Young), in a different context, given his connection with the Post Office, while supporting the activities of Giro, equally touched on our concern about financial reconstruction.
  Whichever way we try to slice this, when we talk about the cancellation of debt, as my hon. Friend the Member for Howden (Sir P. Bryan) pointed out, we

  1253
  are, in effect, saying that we are prepared to make £30 million available to Giro. of which £16 million is a write-off which, in the normal course of events, the taxpayer is entitled to see repaid and of which another £13 million has been used for the notional investment of public dividend capital, as it is described.
  Like many hon. Members, I get a little tired of the jargon with which we belabour ourselves. Public dividend capital is a fraud, simply a way of writing off debts and saying that money will be put in as a fresh investment when that is not true.
  Mr. Gregor Mackenzie: British Airways.
  Mr. Marshall: One might equally quote the British Steel Corporation where the return on so-called public dividend has been very limited. The Minister knows the problems that lie ahead if we ever hope to see a return on that dividend.
  In this case, we are saying that we have lost so much that, in addition to cancelling half Giro's current debt to the nation, we might as well forget any chance of the taxpayer's being paid on a quarter of the remaining debt and treat it as an investment on which he may receive dividends. In case the taxpayer gets too excited at that prospect, we say "You must not expect too much. We are keeping the right for Giro to discuss how much of its retained earnings should go back into the business. Out of what is left, you might receive notional dividends—that is, some payment back to the Treasury." As my hon. Friend the Member for Howden said, what we are really saying is "Pay when you can." This new form of business is hard to justify.
  This financial restructuring means a £30 million minimum investment in Giro. Apart from the £16 million cancelled out, we must recognise that the £13 million, which is now a commitment to the National Loans Fund, is pre-empting resources that could be used more effectively. All hon. Members must be able to think of causes close to their hearts for which £30 million would come in handy.
  All that paragraph 11 of the White Paper promises is that dividends are expected to be "not less than" interest
  1254
  earned on the £13 million. What is the prospectus upon which we are to determine whether we should agree to this tiny return and which should encourage us to move into new business?
  What are the prospects for success? All hon. Members tonight have admitted the difficulty of considering such a limited White Paper, which gives no details of market research and scanty information about the basis on which these decisions have been reached, about what bits of business Giro is thinking of moving into, why it rejected the possibilities of building up its existing business and why it has not considered other avenues.
  We do not oppose free competition from the nationalised industries or anyone else, provided that it is completely above board and not subsidised secretly. But we equally accept that competition in this instance will be wide open. The clearing banks have not sought to thwart Giro. I applaud that public-spirited approach, but to be realistic, is it not true that they are themselves unenthusiastic about what business Giro will pick up? I shall return to that point shortly. When we speak of secondary banking we have to be clear about what is now available.
  What is Giro's current track record? Some hon. Members tried to overstate their case when they made the general argument for Giro. We are concerned only with the extent to which the Giro track record is appropriate to new business. We are not talking about the justification for Giro as such. There has been widespread agreement tonight about the need to let Giro get on with its development. So far it has made modest progress. It is particularly hard to follow the notion of loss that is being written off at a time when we are told that if Giro continues on its present course without taking on any other extra business, it will be into clear profit by 1977, even leaving aside the repayment of debt interest. If that is the case, we should be far better advised to see Giro get totally into the clear and to put forward proposals before it goes into new business.
  Aside from the particular needs of Giro, we face an important question of principle. Are we simply to accept that from time to time yet another nationalised industry can come to the House, particularly if it wants to compete or is

  1255
  competing in the commercial world, and say "Things did not go very well, but if you will write off our past losses, we shall do very well in the future"? The precedent is very important. It makes it much harder for those concerned about the levels of public expenditure in this country to say "No", when yet another cause is put to us.
  That is why we have brought the searchlight pretty sharply to bear on Giro's record. I share the view that in the last year or two Giro has made great efforts to improve its position and under the new management there has been progress.
  The tributes paid to my hon. Friend the Member for Bridgwater and to Christopher Chataway for the work that they set in hand—tributes naturally accepted with pleasure by Conservative Members—show that there is a common commitment that is a basis for our discussions. Therefore, when I criticise Giro in its present situation, it is because I am concerned about whether it is ready and right to move into new business.
  The answer to that has been given again and again tonight. We are told—and I should be interested to hear whether the Minister wishes to deny it—that Giro is technically insolvent. It carries a debt ratio that would certainly prevent its operating as a commercial bank under the rules of the Bank of England as now drawn. We have to face the fact that Giro has been running at an average loss of £6 million a year and that it made a tiny profit of £100,000 only in its seventh year of operation.
  Although I am willing to accept that there is a more optimistic tone about Giro moving into continued profit within its present framework, there is also another school of thought, as typified by the Economist's banking survey last August. The article was not critical of Giro as such, but regarded this profit as a flash in the pan. As has been explained by some of my hon. Friends, that profit has to be looked at hard in relation to the adjustment by which provision for losses in a previous year was transferred back to give Giro a profit in the last year for which we have results.
  1256
  Therefore, Giro's earnings record is poor. The attempts that have been made to improve it are certainly commendable, but this is no basis upon which to launch new business.
  We also have to ask ourselves precisely what we mean by new business. This presents some difficulty. We have no breakdown of the way in which market research has gone and how far Giro expects the personal business in loans and overdrafts to be a major part of its business as compared with corporate business, that is, the business with local authorities or nationalised industries. We understand the commercial confidentiality of these matters, but if the Minister could give us a breakdown in rough percentage terms, it would help.
  However, I believe that all hon. Members can agree that if this development is allowed to go ahead the chase will be on for the personal loan and overdraft business. It is this kind of new business that is particularly tough. My hon. Friend the Member for Howden pointed to the article of 9th December in which Christopher Wilkins, a correspondent of The Times, described what he called
  "the banks' 10-year fight to mop up the market".
  I shall return to that article shortly, because it was written from the standpoint of the Trustee Savings Banks and the problems that they would face, and it could not in any sense be regarded as a biased piece against Giro. However, it highlights the very tough and difficult conditions that will apply in getting this share of personal banking business.
  I believe that we cannot divorce the prospects for Giro from Giro's image. That point has been brought out fairly. The hon. Member for Gravesend (Mr. Ovenden) put it as fairly as anyone when speaking of the problem that people have experienced with cheques bouncing. Working with a computer, that is the way that it works—bang—down goes the stop and one's cheque is stopped. I believe that many existing Giro account holders will think very carefully before approaching the question of an overdraft if they have had this kind of experience. The use of a computer, which is part of the Giro image, rather than the friendly bank manager will be a serious hurdle that

  1257
  all hon. Members must recognise from their own experience in money matters.
  Furthermore, we have had a very vague discussion tonight. We have been told so little in the White Paper. Perhaps the Minister can help us. What are these "term loans"? We know that they are at present allowed for between £150 and £1,000 and are repayable over three years. We have a certain amount of information of this kind, but the kind of business which is currently being taken on and the kind of business that is envisaged is not at all clear.
  There is some reference in the various write-ups on these matters—not in the White Paper; I am thinking of Press comments—to the possibility of giving preferential types of personal loans connected with house improvements. It is clear that if this business is to develop in any meaningful sense, the £150 to £1,000 range will bring Giro, if it has not already brought it, into the consumer durable field. We therefore get off to the whole subject of whether repossession facilities are to be made available and whether sub-postmasters come into the scheme of things. Seemingly, we are to accept in faith that the whole apparatus will be constructed. There is no positive indication that any of it is there.
  The mind boggles at the thought of post offices at which we may find ourselves unable to pick a way through the doors because of repossessed motor cars, or unable to clamber over a mountain of repossessed television sets originally owned by people unlucky enough to be unable to meet the payments. That is the kind of possible development. I take the point when hon. Members say that these are matters for discussion in Committee, but I urge upon the House that we have an opportunity to look at these matters now and not simply to treat this occasion as the normal rigmarole and away we go to Committee.
  These are some of the real difficulties. I have mentioned increased competition and the article in The Times of 9th December, which I shall not repeat at length, because my hon. Friend the Member for Howden read out the appropriate extract. However, a number of other points appear in the article. The argument was on the question of Trustee Savings Banks, and the correspondent of The Times said,
  1258
  "Much depends upon how quickly the TSBs can react … for during the past two or three years the clearing banks have become noticeably more concerned …."
  with the so-called "great unbanked." The figures and the whole basis upon which that article is drawn up are very interesting. The article suggests that half of our population are now banking with the clearers, and that another 10 per cent. split their business between Trustee Savings Banks and Giro, and that 80 per cent. is regarded as saturation point. That means, in other words, that there is another 20 per cent. of the market to shoot for.
  The same article, based on detailed research of individual clearing bank figures, shows that clearing banks are gaining personal accounts on overdraft business at a rate of between 4 per cent. and 5 per cent. per annum. That is on their own turnover. If that rate is continued, the market will be mopped up within the next eight to 10 years. That is precisely the period when, by any normal scheme of things, Giro, if it is to be successful in commercial banking, is expected to achieve success.
  There are obvious questions which follow. The suggestion that there will be no increase in public service manpower is one that I find totally staggering. I cannot believe that that proposal can be put forward seriously. I am the last person to want to see an increase in the public sector by the massive recruitment of top level bankers to help Giro to get into the banking sector, but if it can be done from within good luck to Giro.
  We must all know that what has been said about manpower requirements cannot make sense. Let us have a clear answer from the Minister. Let him remember the manpower requirements within his own Department to vet these matters. Let him remember the mechanism that will have to be established from within Giro.
  It has been claimed that this kind of business can be carried through because of the special advantages of Giro. The evidence is not as clear cut. It will be recognised that sub-postmasters throughout the country are highly independent. We know that not all of them open their branches for business during weekends. Control and staffing

  1259
  pose massive problems and will need careful consideration.
  In conclusion, I highlight two points that stem from the debate. First, there is the notion that we shall give a rubber stamp to a blank cheque of a White Paper. That is a notion that should be resisted from both sides of the House. It is fair to say that in the past few days we have had the opportunity on a matter of great constitutional importance to take not necessarily a party line. I recognise the great call for party loyalty, but in a matter such as this it would be the height of folly to let that be the overriding consideration. We are people whose time is money. The contributions that we make cost the State money. For us to refer the Bill to a Committee, despite the total lack of information and despite all the fearful signs that are evident from not only the history of secondary banking, but future problems, would be a dangerous course.
  Anyone who hopes to see Giro succeed must ask himself carefully whether this is the best way for Giro to proceed. We must ask ourselves whether we would advise a constituent to put money into Giro if he were free to invest. Anyone who can answer in the affirmative to both those questions is completely confusing his thinking on this project. We wish it well, but we do not wish it well in the way now proposed.
  9.38 p.m.
  The Under-Secretary of State for Industry (Mr. Neil Carmichael): First, I congratulate the hon. Member for Arundel (Mr. Marshall) on his first duty from the Dispatch Box. I think that he brought to it a great deal of knowledge and understanding. As well as being a great honour it is also a duty to be put in the position he has occupied tonight. I am sure that we shall hear a great deal more from the hon. Gentleman from the Opposition Dispatch Box.
  Having listened to the debate, I have learned a great deal from contributions made from both sides of the House. A great deal of expertise and understanding has been displayed from different angles on the whole question of Giro and banking. It is perhaps a little sad that the hon. Member for Bridgwater (Mr. King) and myself are both engaged in another Committee. Unless we can substantially
  1260
  speed up the progress in that Committee, it is hardly likely that we shall be able to take part in the Committee proceedings on this Bill.
  In dealing with some of the questions that have been raised, I begin with those of the hon. Member for Bridgwater. He made an extremely exhaustive and meticulous speech in going through the Bill and posing the various questions that arise from the Opposition's point of view.
  A number of hon. Members made quite a bit of play with the competition of the Trustee Savings Banks. On 31st July 1974 the Paymaster-General announced that the Government had agreed after discussions with the Trustee Savings Bank Association that its banks should be given power to provide a full range of personal banking services, including personal loans to depositors.
  A Bill is being brought forward alongside the present Bill to implement the majority of the Page Committee's recommendations. The effect will be to increase the range of banking services available to the public. The timing of the Bills is not coincidental. It is right that the extension of services envisaged for Giro and the Trustee Savings Banks should be in harness.
  I cannot accept that it is unfair on the Trustee Savings Banks—and it is far less so on the clearing banks—that Giro should also operate a banking service. I maintain that it is unfair on Giro customers not to have access to such services if they want them. It is not our primary aim to set up Giro in competition with the Trustee Savings Banks or other financial institution but rather to give Giro customers wider facilities.
  Giro will retain its primary function as a money transmission service. For their part Trustee Savings Banks will for some years to come concentrate on their traditional savings rôle but, like Giro, their role will expand to cover a wide range of personal banking services. We have no intention to give Giro any advantage over the Trustee Savings Banks. In terms of what is fair or unfair, it is part of our case that Giro's growth and financial performance has been handicapped—unfairly, so it might be said—by its inability to provide the banking services we now propose.

  1261
  A great deal was said by the hon. Member for Bridgwater and his Conservative colleagues about management expertise. Many hon. Members have rightly paid tribute to the role of Mr. Singer in leading the Giro team. I remind the House that Giro has been in the banking business since 1968. I know that in normal banking terms it is fairly young, but it is no longer a fledgling. It has carried out its banking tasks under the scrutiny of the monetary authorities, has acted with due prudence and has demonstrated that it can provide wide-ranging services for business and personal account holders. As the White Paper recalls in respect of the business deposit services, the value of such transactions by March last year had reached a level of £3,500 million a year.
  Giro has proved that it can meet the sophisticated needs of business. More recently, on 2nd June last, the personal loans service was launched on a basis agreed with the Treasury. The rate of lending since June is in line with the £2 million ceiling agreed with the monetary authorities for the first year of operation of the service. I am confident that the results of the pilot scheme will show that the fears of Conservatives about Giro and its lending rôle are groundless. The extension of the Giro service will be gradual. No sudden explosion is intended.
  Some hon. Members have mentioned the question of additions to staff. Some people have painted a picture of little Mrs. Marples, the postmistress, riding on her bicycle to repossess a television set. We believe that there will be no addition to senior management levels. Fourteen additional staff, headed by the loans manager, have been employed to operate the personal loans service. It is expected that that number of staff will be capable of administering a personal loan portfolio of £2¾ million.
  Mr. Tim Renton: If Mrs. Marples on her little bicycle is not to repossess the television set, who is to do so? Who is to collect bad debts? This point has often been raised but has still not been answered.
  Mr. Carmichael: I thought that that question had been answered by my hon. Friend the Member for Thornaby (Mr. Wrigglesworth). He spoke about the comparison between Giro and groups
  1262
  like UDT and the kind of credit given by them. In an intervention I said that many lending services do not work on a purely face-to-face basis. The idea put forward by some Conservative Members of the local postmaster making an assessment is a bit fanciful. We know that large sums are given without anyone ever seeing the person to whom the loan is made. It is done on a points system. I am sure that Conservative Members, who know a great deal more about banking and loan services than I do, know a great deal about this.
  Mr. Tom King: The Minister has announced that the average loan for the loan portfolio will be of the order of £2¾ million. I am not sure where that figure has come from. It is not in the White Paper. We have not had it before. If we take an average loan of £1,000, this means that there will be 2,750 people obtaining an overdraft. That means that one in 200 of the customers of Giro in future will obtain an overdraft. Is that the purpose of the Bill—to give an overdraft to only one in 200 of Giro customers?
  Mr. Carmichael: I shall give figures making a comparison of Giro with the clearing banks. Much is being made of this. When the figures are looked at—they are in the White Paper—it will be seen that we are not dealing with some definite threat. The figures I am talking about involve the total for Giro as against the total for the clearing banks. We are dealing with a relatively small but expanding section.
  Mr. Tom King: The Minister has said that 14 people under a manager will administer the loan portfolio of £2¾ million. These figures are not in the White Paper. We have never seen them before. Can the hon. Gentleman amplify them?
  Mr. Carmichael: I have already lost five minutes of my speech. I have dealt with the question of staff. A total of 14 additional staff headed by a loans manager have been employed to operate the personal loan service. That is in terms of Giro. The Post Office may have to take on additional people, but this would be if the banking service expanded. It would therefore be a profitable organisation.
  My hon. Friend the Member for Bootle (Mr. Mahon) said he hoped that

  1263
  there would be a sufficient expansion of total business. The Financial Memorandum stated that there would be no effect on manpower in respect of the Civil Service—not in respect of Post Office staff. As the Post Office banking service expands, more staff will be needed, but only to a modest degree. Giro's banking services will be profitable. Therefore, hon. Members have no right to criticise the employment of more people, particularly in the Bootle area.
  There has been some concern on the Conservative Benches that the proposals for Giro may lead to unfair competition. Conservatives appear to be worried about the provision in Clause 3 (1) which empowers the Secretary of State to provide further sums of dividend capital. How, they ask, can this be reconciled with the statement that the banking operations of the Post Office undertaken by Giro will be self-financing? No future advances of dividend capital are expected in the foreseeable future. Any provision of further Government investment would be solely of working capital to advance Giro's capital investment and not to finance its banking operations.
  A great deal has been made about the horrors of a State bank. I have tried to explain the relative size of Giro as against the rest of the banking world. Conservative Members are trying to make our blood curdle with pictures of Giro as a State bank driving out of existence all the other banks and establishing itself in a monopoly or dominant position as the national banking corporation.
  I shall make no comments on the merits or demerits of the involvement of the State in banking in the sense in which the Opposition are raising it. That simply is not what we are talking about here. Ours is a much more modest proposal, namely, to enable the Post Office to improve and expand on a basic service which is already being provided and which is appreciated by individuals and business concerns.
  There is nothing in our proposals—they are explained fully in the White Paper —which could possibly justify the exaggerated fears of Opposition Members. The figures for the clearing banks' customers' balances, liquidity, capital structure and profits amply demonstrate this.
  1264
  Opposition Members know this well enough. For the immediate future, Giro's extension of facilities will be on a limited and experimental basis.
  At present Giro provides certain elements of a current account system, Giro-cheques being much the same as bank cheques. It provides facilities for standing orders and for in-payments by non-account holders. Latterly it has been offering personal loans on a limited scale to certain account holders. It hopes to offer overdrafts to local authorities and to nationalised industries during the coming year—again, on a limited and experimental basis. Thereafter, other services will be introduced on a phased basis.
  Mr. Tim Renton: How are overdrafts to be offered on a limited basis? Surely they are either to be offered to Giro customers or they are not. If, as my hon. Friend the Member for Bridgwater (Mr. King) has said, they are to be offered only to one customer in 200, how will Giro differentiate between those who are to get overdrafts and those who are not?
  Mr. Carmichael: Obviously, the banks must have their methods of doing this. Many people come to me who are not able to get bank loans or credit. The money will obviously be loaned on the basis of the creditworthiness of applicants. It has already been explained by one of my hon. Friends that before getting personal loans customers must have banked their wages with Giro for a year and must have been using Giro for a year. Ultimately—I am looking several years ahead—Giro could be offering the full range of banking services as normally understood.
  In addition to the services that I have mentioned, Giro sees personal overdrafts, cheque guarantee cards and business overdrafts as items for early implementation on an experimental scale. The overdrafts will be designed to cater for unforeseen and convenience overdrawings rather than to provide credit to individuals or working capital for companies. The introduction of these facilities and their timing will be dependent on discussions with the Government against the background of the requirements of monetary policy.
  I can see nothing sinister or doctrinaire in this, and I see no reason to be defensive about the Post Office as a public

  1265
  institution extending its banking facilities. As long as the competition with other banking institutions is fair, I can see no ground for complaint.
  I am surprised by the attitude of Opposition Members on two grounds. First, they habitually preach the virtues of competition in other contexts, and, secondly, their concern for the mighty banking institutions seems to be grossly overstated. To suggest that these institutions, with their vastly greater resources and numbers of account holders, need to be cosseted and protected from competition in the way that hon. Members are implying hardly seems to be complimentary to them. [Interruption.] I should not have thought that it was in Giro's interest—
  Mr. Michael Marshall rose—
  Mr. Carmichael: The hon. Member has taken five minutes of my time already. I am not criticising him. I had hoped to have half an hour for my speech but I have only 20 minutes. I certainly do not believe that it would be in Giro's interest, in banking terms, to provoke the retaliation of these very powerful institutions with, for example, something like a price war.
  I shall deal with the points made by the hon. Member for Tynemouth (Mr. Trotter) if I have time and with the question of the auditing. This is a very important point, and I have not yet had time to deal with it.
  The accounts will be separate. There will be commercial negotiations with the Post Office for the use of its counters, standard rates of interest on loans and overdrafts, and self-financing for the banking operations. In extending Giro's banking services we are not doing it for the purpose of competing with the banks, though competition may well be to the benefit of their customers. We have three main reasons. First, we think that it is wrong to deprive people who prefer to use Giro of the opportunity of availing themselves of a banking service. Secondly, we think that Giro as a banker will be attractive to people who do not want to use other banks and so spread the socially desirable banking habit. Thirdly, we want to assist
  1266
  Giro in getting more business and thereby increasing its profitability by complementing its money transmission services.
  The figures that I was speaking about earlier to the hon. Member for Bridgwater are as follows. Customer balances in the clearing banks are £25 billion. In Giro they are £147 million. The number of accounts in clearing banks is 20 million. In Giro it is 460,000. The profits of the clearing banks are £200 million. Those of Giro are £64,000. It is not a matter about which the Opposition need get too excited. It is a service which we are extending to people who so far in the main have not been involved in the banking system. It is a service complementary to the money transmission services of Giro. We believe that this is a relatively modest little Bill.
  During the debate we have heard a wide range of comment about the rôle and the usefulness of Giro. Some of the comment has been helpful and constructive. Some of it has represented the substitution of prejudice for thought—that has been exemplified especially in the more recent interruptions—always disguised as reasoned interruptions which have been politely delivered.
  The House has recognised that this measure is sensible and useful. It is not an extravagant measure. It is a carefully weighed proposal, tailor-made to relieve Giro of just so much of its indebtedness to enable the employment of its banking powers and the continuance of its money transmission services to be financially viable. We could have proposed a much higher level of write-off, but in our view this would not have been right. We do not want to present the Giro management or its staff with an extreme change in its fortunes. It will still have a serious challenge to meet after the capital reconstruction. Some hon. Members have argued that we are writing off too much and that the Government should not invest public dividend capital in Giro for its banking services. That, too, in our view, would have been wrong.
  The Bill presents a challenge not to the big banks but to Giro. It will set a demanding target for future performance. How Giro develops its banking service will be open to scrutiny, and separate accounts will ensure this.

  1267
  I recommend the Bill to the House, and I hope that when it goes into Committee those who serve on the Committee will be as expert as many of the hon. Members who have spoken during this debate. I am sure that we have enough hon. Members on the Government side
  of the House who are expert in these matters of give the Bill a very thorough scrutiny.
  Question put, That the Bill be now read a Second time:—
  The House divided: Ayes 288, Noes 249.

  Division No. 27

  AYES

  [9.68 p.m.

  Allaun, Frank

  Ennals, David

  Latham, Arthur (Paddington)

  Anderson, Donald

  Evans, Gwynfor (Carmarthen)

  Leadbitter, Ted

  Archer, Peter

  Evans, loan (Aberdare)

  Lee, John

  Ashton, Joe

  Ewing, Harry (Stirling)

  Lestor, Miss Joan (Eton & Slough)

  Atkins, Ronald (Preston N)

  Faulds, Andrew

  Lewis, Arthur (Newham N)

  Atkinson, Norman

  Fernyhough, Rt Hon E.

  Lewis, Ron (Carlisle)

  Bagier, Gordon A. T.

  Fitch, Alan (Wigan)

  Lipton, Marcus

  Barnett, Rt Hon Joel (Heywood)

  Fitt, Gerard (Belfast W)

  Litterick, Tom

  Bates, Alf

  Flannery, Martin

  Loyden, Eddie

  Bean, R. E.

  Fletcher, Raymond (Ilkeston)

  Luard, Evan

  Beith, A. J.

  Fletcher, Ted (Darlington)

  Lyon, Alexander (York)

  Benn, Rt Hon Anthony Wedgwood

  Foot, Rt Hon Michael

  Lyons, Edward (Bradford W)

  Bennett, Andrew (Stockport N)

  Ford, Ben

  Mabon, Dr J. Dickson

  Blenkinsop, Arthur

  Forrester, John

  McCartney, Hugh

  Boardman, H.

  Fowler, Gerald (The Wrekin)

  McElhone, Frank

  Booth Albert

  Fraser, John (Lambeth, N'w'd)

  MacFarquhar, Roderick

  Boothroyd, Miss Betty

  Freeson, Reginald

  McGuire, Michael (Ince)

  Bottomley, Rt Hon Arthur

  Freud, Clement

  Mackenzie, Gregor

  Boyden, James (Bish Auck)

  Garrett, John (Norwich S)

  Mackintosh, John P.

  Bradley, Tom

  Garrett, W. E. (Wallsend)

  Maclennan, Robert

  Bray, Or Jeremy

  George, Bruce

  McMillan, Tom (Glasgow C)

  Brown, Hugh D. (Provan)

  Gilbert, Dr John

  McNamara, Kevin

  Brown, Robert C. (Newcastle W)

  Ginsburg, David

  Madden, Max

  Brown, Ronald (Hackney S)

  Golding, John

  Magee, Bryan

  Buchan, Norman

  Gould, Bryan

  Mahon, Simon

  Buchanan, Richard

  Gourlay, Harry

  Mallalieu. J. P. W.

  Butler, Mrs Joyce (Wood Green)

  Graham, Ted

  Marks, Kenneth

  Callaghan, Jim (Middleton & P)

  Grant, George (Morpeth)

  Marquand, David

  Campbell, Ian

  Grant, John, (Islington C)

  Marshall, Jim (Leicester S)

  Canavan, Dennis

  Grimond, Rt Hon J.

  Marshall, Jim (Leicester S)

  Cant, R.B.

  Grocott, Bruce

  Maynard, Miss Joan

  Carmichael, Nell

  Hardy, Peter

  Meacher, Michael

  Carter, Ray

  Harrison, Walter (Wakefield)

  Mendelson, John

  Carter-Jones, Lewis

  Hayman, Mrs Helene

  Mikardo, Ian

  Cartwright, Ivor

  Healey, Rt Hon Denis

  Millan, Bruce

  Cocks, Michael (Bristol S)

  Heffer, Eric S.

  Miller, Dr M. S. (E Kilbride)

  Cohen, Stanley

  Hooley, Frank

  Miller, Mrs Millie (Ilford N)

  Coleman, Donald

  Horam, John

  Molloy, William

  Colquhoun, Mrs Maureen

  Howell, Denis (B'ham, Sm H)

  Morris, Alfred (Wythenshawe)

  Conlan, Bernard

  Howells, Geraint (Cardigan)

  Morris, Charles R. (Openshaw)

  Cook, Robin F. (Edin C)

  Hoyle, Doug (Nelson)

  Morris, Rt Hon J. (Aberavon)

  Corbett, Robin

  Huckfield, Les

  Mulley, Rt Hon Frederick

  Cox, Thomas (Tooting)

  Hughes, Rt Hon C. (Anglesey)

  Murray, Rt Hon Ronald King

  Craigen, J. M. (Maryhill)

  Hughes, Mark (Durham)

  Newens, Stanley

  Cronin, John

  Hughes, Robert (Aberdeen N)

  Noble, Mike

  Crosland, Rt Hon Anthony

  Hughes, Roy (Newport)

  Oakes, Gordon

  Cryer, Bob

  Hunter, Adam

  Ogden, Eric

  Cunningham, G. (Islington S)

  Irvine, Rt Hon Sir A. (Edge Hill)

  O'Halloran, Michael

  Cunningham, Dr J. (Whiteh)

  Irving, Rt Hon S. (Dartford)

  Orme, Rt Hon Stanley

  Davidson, Arthur

  Jackson, Colin (Brighouse)

  Ovenden, John

  Davies, Bryan (Enfield N)

  Jackson, Miss Margaret (Lincoln)

  Owen, Dr David

  Davies, Denzil (Llanelli)

  Janner, Greville

  Padley, Walter

  Davis, Clinton (Hackney C)

  Jeger, Mrs Lena

  Palmer, Arthur

  Deakins, Eric

  Jenkins, Hugh (Putney)

  Pardoe, John

  Dean, Joseph (Leeds W)

  Jenkins, Rt Hon Roy (Stechford)

  Park, George

  Delargy, Hugh

  John, Brynmor

  Parker, John

  Cell, Rt Hon Edmund

  Johnson, James (Hull West)

  Parry, Robert

  Dempsey, James

  Johnson, Walter (Derby S)

  Pendry, Tom

  Doig, Peter

  Jones, Alec (Rhondda)

  Penhaligon, David

  Dormand, J. D.

  Jones, Barry (East Flint)

  Perry, Ernest

  Douglas-Mann, Bruce

  Jones, Dan (Burnley)

  Phipps, Dr Colin

  Duffy, A. E. P.

  Judd, Frank

  Prentice, Rt Hon Reg

  Dunn, James A.

  Kaufman, Gerald

  Price, C. (Lewisham W)

  Dunnett, Jack

  Kelley, Richard

  Price, William (Rugby)

  Dunwoody, Mrs Gwyneth

  Kerr, Russell

  Radice, Giles

  Eadie, Alex

  Kilroy-Silk, Robert

  Rees, Rt Hon Merlyn (Leeds S)

  Edge, Geoff

  Kinnock, Neil

  Richardson, Miss Jo

  Edwards, Robert (Wolv SE)

  Lambie, David

  Roberts, Albert (Normanton)

  Ellis, John (Brigg & Scun)

  Lamborn, Harry

  Roberts, Gwilym (Cannock)

  English, Michael

  Lamond, James

  Robertson, John (Paisley)

  Roderick, Caerwyn

  Spearing, Nigel

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

  Rodgers, George (Chorley)

  Spriggs, Leslie

  Walker, Harold (Doncaster)

  Rodgers, William (Stockton)

  Stallard, A. W.

  Walker, Terry (Kingswood)

  Rooker, J. W.

  Steel, David (Roxburgh)

  Ward, Michael

  Roper, John

  Stewart, Rt Hon M. (Fulham)

  Watkins, David

  Rose, Paul B.

  Stoddart, David

  Watkinson, John

  Ross, Stephen (Isle Of Wight)

  Stott, Roger

  Weetch, Ken

  Ross, Rt Hon W. (Kilmarnock)

  Strang, Gavin

  Wellbeloved, James

  Rowlands, Ted

  Strauss, Rt Hon G. R.

  White, Frank R. (Bury)

  Sandelson, Neville

  Summerskill, Hon Dr Shirley

  White, James (Pollok)

  Sedgemore, Brian

  Swain, Thomas

  Whitehead, Phillip

  Selby, Harry

  Taylor, Mrs Ann (Bolton W)

  Whitlock, William

  Shaw, Arnold (Ilford South)

  Thomas, Dafydd (Merioneth)

  Wigley, Dafydd

  Sheldon, Robert (Ashton-u-Lyne)

  Thomas, Jeffrey (Abertillery)

  Williams, Alan (Swansea W)

  Shore, Rt Hon Peter

  Thomas, Mike (Newcastle E)

  Williams, Alan Lee (Hornch'ch)

  Short, Rt Hon E. (Newcastle C)

  Thomas, Ron (Bristol NW)

  Williams, W. T. (Warrington)

  Short, Mrs Renée (Wolv NE)

  Thorne, Stan (Preston South)

  Wilson, Alexander (Hamilton)

  Silkin, Rt Hon John (Deptford)

  Thorpe, Rt Hon Jeremy (N Devon)

  Wilson, Rt Hon H. (Huyton)

  Silkin, Rt Hon S. C. (Dulwich)

  Tierney, Sydney

  Wise, Mrs Audrey

  Sillars, James

  Tinn, James

  Woodall, Alec

  Silverman, Julius

  Tomlinson, John

  Woof, Robert

  Skinner, Dennis

  Tuck, Raphael

  Wrigglesworth, Ian

  Small, William

  Urwin, T. W.

  Smith, Cyril (Rochdale)

  Varley, Rt Hon Eric G.

  TELLERS FOR THE AYES:

  Smith, John (N Lanarkshire)

  Wainwright, Edwin (Dearne V)

  Mr. James Hamilton and

  Snape, Peter

  Wainwright, Richard (Colne V)

  Mr. Laurie Pavitt.

  NOES

  Aitken, Jonathan

  Dykes, Hugh

  Jessel, Toby

  Alison, Michael

  Eden, Rt Hon Sir John

  Johnson Smith, G. (E Grinstead)

  Amery, Rt Hon Julian

  Edwards, Nicholas (Pembroke)

  Kaberry, Sir Donald

  Arnold, Tom

  Elliott, Sir William

  Kershaw, Anthony

  Atkins, Rt Hon H. (Spelthorne)

  Emery, Peter

  Kilfedder, James

  Awdry, Daniel

  Eyre, Reginald

  Kimball, Marcus

  Bain, Mrs Margaret

  Farr, John

  King, Evelyn (South Dorset)

  Baker, Kenneth

  Finsberg, Geoffrey

  King, Tom (Bridgwater)

  Banks, Robert

  Fisher, Sir Nigel

  Kitson, Sir Timothy

  Bennett, Sir Frederic (Torbay)

  Fletcher-Cooke, Charles

  Knight, Mrs Jill

  Bennett, Dr Reginald (Fareham)

  Fookes, Miss Janet

  Knox, David

  Benyon, W.

  Fowler, Norman (Sutton C'f'd)

  Lamont, Norman

  Berry, Hon Anthony

  Fox, Marcus

  Langford-Holt, Sir John

  Bitten, John

  Fry, Peter

  Latham, Michael (Melton)

  Biggs-Davison, John

  Galbraith, Hon T. G. D.

  Lawrence, Ivan

  Blaker, Peter

  Gardiner, George (Reigate)

  Lawson, Nigel

  Boscawen, Hon Robert

  Gilmour, Rt Hon Ian (Chesham)

  Lester, Jim (Beeston)

  Bottomley, Peter

  Gilmour, Sir John (East Fife)

  Lewis, Kenneth (Rutland)

  Bowden, A. (Brighton, Kemptown)

  Glyn, Dr Alan

  Lloyd, Ian

  Boyson, Dr Rhodes (Brent)

  Goodhart, Philip

  Loveridge, John

  Bradford, Rev Robert

  Goodhew, Victor

  Luce, Richard

  Brittan, Leon

  Goodlad, Alastair

  McAdden, Sir Stephen

  Brotherton, Michael

  Gorst, John

  MacCormick, Iain

  Brown, Sir Edward (Bath)

  Gow, Ian (Eastbourne)

  McCrindle, Robert

  Bryan, Sir Paul

  Gower, Sir Raymond (Barry)

  McCusker, H.

  Buchanan-Smith, Alick

  Grant, Anthony (Harrow C)

  Macfarlane, Nell

  Buck, Antony

  Gray, Hamish

  MacGregor, John

  Budgen, Nick

  Grieve, Percy

  McNair-Wilson, M. (Newbury)

  Bulmer, Esmond

  Griffiths, Eldon

  McNair-Wilson, P. (New Forest)

  Butler, Adam (Bosworth)

  Grist, Ian

  Madel, David

  Carlisle, Mark

  Grylls, Michael

  Marshall, Michael (Arundel)

  Carson, John

  Hall, Sir John

  Marten, Neil

  Chalker, Mrs Lynda

  Hamilton, Michael (Salisbury)

  Mates, Michael

  Channon, Paul

  Hampson, Dr Keith

  Mather, Carol

  Churchill, W. S.

  Hannam, John

  Maude, Angus

  Clark, Alan (Plymouth, Sutton)

  Harvie Anderson, Rt Hon Miss

  Maudling, Rt Hon Reginald

  Clark, William (Croydon S)

  Hastings, Stephen

  Mawby, Ray

  Clarke, Kenneth (Rushcliffe)

  Havers, Sir Michael

  Maxwell-Hyslop, Robin

  Clegg, Walter

  Hawkins, Paul

  Mayhew, Patrick

  Cockcroft, John

  Hayhoe, Barney

  Meyer, Sir Anthony

  Cooke, Robert (Bristol W)

  Heath, Rt Hon Edward

  Miller, Hal (Bromsgrove)

  Cope, John

  Henderson, Douglas

  Miscampbell, Norman

  Cormack, Patrick

  Heseltine, Michael

  Mitchell, David (Basingstoke)

  Corrie, John

  Hicks, Robert

  Moate, Roger

  Costain, A. P.

  Higgins, Terence L.

  Molyneaux, James

  Crawford, Douglas

  Holland, Philip

  Monro, Hector

  Critchley, Julian

  Hordern, Peter

  Montgomery, Fergus

  Crouch, David

  Howe, Rt Hon Sir Geoffrey

  Moore, John (Croydon C)

  Crowder, F. P.

  Howell, David (Guildford)

  More, Jasper (Ludlow)

  Davies, Rt Hon J. (Knutsford)

  Howell, Ralph (North Norfolk)

  Morgan, Geraint

  Dean, Paul (N Somerset)

  Hunt, John

  Morris, Michael (Northampton S)

  Dodsworth, Geoffrey

  Hurd, Douglas

  Morrison, Hon Peter (Chester)

  Douglas-Hamilton, Lord James

  Hutchison, Michael Clark

  Mudd, David

  Drayson, Burnaby

  Irvine, Bryant Godman (Rye)

  Neave, Airey

  du Cann, Rt Hon Edward

  Irving, Charles (Cheltenham)

  Nelson, Anthony

  Dunlop, John

  James, David

  Neubert, Michael

  Durant, Tony

  Jenkin, Rt Hon P. (Wanst'd & W'df'd)

  Newton, Tony

  1270

  1271

  Normanton, Tom

  Rossi, Hugh (Hornsey)

  Thomas, Rt Hon P. (Hendon S)

  Nott, John

  Rost, Peter (SE Derbyshire)

  Thompson, George

  Onslow, Cranley

  Royle, Sir Anthony

  Townsend, Cyril D.

  Oppenheim, Mrs Sally

  Sainsbury, Tim

  Trotter, Neville

  Page, John (Harrow West)

  Shaw, Giles (Pudsey)

  Tugendhat, Christopher

  Page, Rt Hon R. Graham (Crosby)

  Shelton, William (Streatham)

  van Straubenzee, W. R.

  Pattie, Geoffrey

  Shepherd, Colin

  Vaughan, Dr Gerard

  Percival Ian

  Shersby, Michael

  Viggers, Peter

  Peyton, Rt Hon John

  Silvester, Fred

  Wakeham, John

  Pink, R. Banner

  Sims, Roger

  Welder, David (Clitheroe)

  Powell, Rt Hon J. Enoch

  Sinclair, Sir George

  Walker, Rt Hon P. (Worcester)

  Price, David (Eastleigh)

  Skeet, T. H. H.

  Wall, Patrick

  Prior, Pt Hon James

  Speed, Keith

  Walters, Dennis

  Raison, Timothy

  Spence, John

  Warren, Kenneth

  Rathbone, Tim

  Spicer, Michael (S Worcester)

  Watt, Hamish

  Rawlinson, Rt Hon Sir Peter

  Sproat, lain

  Weatherill, Bernard

  Rees, Peter (Dover & Deal)

  Stainton, Keith

  Wells, John

  Rees-Davies, W. R.

  Stanbrook, Ivor

  Welsh, Andrew

  Reid, George

  Stanley, John

  Wiggin, Jerry

  Renton, Rt Hon Sir D. (Hunts)

  Stewart, Donald (Western Isles)

  Wilson, Gordon (Dundee E)

  Renton, Tim (Mid-Sussex)

  Stokes, John

  Winterton, Nicholas

  Ridley, Hon Nicholas

  Stradling Thomas, J.

  Wood, Rt Hon Richard

  Ridsdale, Julian

  Tapsell, Peter

  Young, Sir G. (Ealing, Acton)

  Rifkind, Malcolm

  Taylor, R. (Croydon NW)

  Rippon, Rt Hon Geoffrey

  Taylor, Teddy (Cathcart)

  TELLERS FOR THE NOES:

  Roberts, Michael (Cardiff NW)

  Tebbit, Norman

  Mr. Spencer Le Merchant and

  Roberts, Wyn (Conway)

  Temple-Morris, Peter

  Mr. Cecil Parkinson.

  Ross, William (Londonderry)

  Question accordingly agreed to.
  Bill read a Second time.
  Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

  POST OFFICE (BANKING SERVICES) [MONEY]
  Queen's Recommendation having been signified—
  Motion made, and Question put:—
  That, for the purposes of any Act of the present Session to extend the powers of the Post Office to provide banking services, to
  make capital available for the provision of those services and to reduce the capital debt of the Post Office, it is expedient to authorise—

  (a) the payment to the Post Office, out of moneys provided by Parliament, of sums to be used by it for the purposes of its banking services and the payment into the Consolidated Fund of sums paid by the Post Office in consideration of sums received or deemed to have been received by it for those purposes; and

  (b) the reduction, by an amount not exceeding £29·7 million and with effect from 1st April 1975, of the liability of the Post Office to repay the debts assumed by it under section 33(1) of the Post Office Act 1969 or incurred by it before 1st April 1975 under section 35(2) of that Act.—[Mr. Stoddart.]

  The House divided: Ayes 286, Noes 247.

  Division No. 28.]

  AYES

  [10.13 p.m.

  Allaun, Frank

  Cant, R. B.

  Dormand, J. D.

  Anderson, Donald

  Carmichael, Nell

  Douglas-Mann, Bruce

  Archer, Peter

  Carter, Ray

  Duffy, A. E. P.

  Ashton, Joe

  Carter-Jones Lewis

  Dunn, James A.

  Atkins, Ronald (Preston N)

  Cartwright, John

  Dunnett, Jack

  Atkinson, Norman

  Clemitson, Ivor

  Dunwoody, Mrs Gwyneth

  Bagier, Gordon A. T.

  Cocks, Michael (Bristol S)

  Eadie, Alex

  Barnett, Rt Hon Joel (Heywood)

  Cohen, Stanley

  Edge, Geoff

  Bates, Alf

  Coleman, Donald

  Edwards. Robert (Wolv SE)

  Bean, R. E.

  Colquhoun, Mrs Maureen

  Ellis, John (Brigg & Scun)

  Beith, A. J.

  Conlan, Bernard

  English, Michael

  Benn, Rt Hon Anthony Wedgwood

  Cook, Robin F. (Edin C)

  Ennals, David

  Bennett, Andrew (Stockport N)

  Corbett, Robin

  Evans, Gwynfor (Carmarthen)

  Blenkinsop, Arthur

  Craigen, J. M. (Maryhill)

  Evans, loan (Aberdare)

  Boardman, H.

  Cronin, John

  Ewing, Harry (Stirling)

  Booth, Albert

  Crosland, Rt Hon Anthony

  Faulds, Andrew

  Boothroyd, Miss Betty

  Cryer, Bob

  Fernyhough, Rt Hon E.

  Bottomley, Rt Hon Arthur

  Cunningham, G. (Islington S)

  Fitch, Alan (Wigan)

  Boyden, James (Bish Auck)

  Cunningham, Dr J. (Whiteh)

  Fitt, Gerard (Belfast W)

  Bradley, Tom

  Davidson, Arthur

  Flannery, Martin

  Bray, Dr Jeremy

  Davies, Bryan (Enfield N)

  Fletcher, Raymond (Ilkeston)

  Brown, Hugh D. (Provan)

  Davies, Denzil (Llanelli)

  Fletcher, Ted (Darlington)

  Brown, Robert C. (Newcastle W)

  Davis, Clinton (Hackney C)

  Foot, Rt Hon Michael

  Brown, Ronald (Hackney S)

  Deakins, Eric

  Ford, Ben

  Buchan, Norman

  Dean, Joseph (Leeds W)

  Forrester, John

  Buchanan, Richard

  Delargy, Hugh

  Fowler, Gerald (The Wrekin)

  Butler, Mrs Joyce (Wood Green)

  Dell, Rt Hon Edmund

  Fraser, John (Lambeth, N'w'd)

  Callaghan, Jim (Middleton & P)

  Dempsey, James

  Freeson, Reginald

  Campbell, Ian

  Doig, Peter

  Freud, Clement

  Garrett, John (Norwich S)

  McGuire, Michael (Ince)

  Selby, Harry

  Garrett, W. E. (Wallsend)

  Mackenzie, Gregor

  Shaw, Arnold (Ilford South)

  George, Bruce

  Mackintosh, John P.

  Sheldon, Robert (Ashton-u-Lyne)

  Gilbert, Dr John

  Maclennan, Robert

  Shore, Rt Hon Peter

  Ginsburg, David

  McMillan, Tom (Glasgow C)

  Short, Rt Hon E. (Newcastle C)

  Golding, John

  McNamara, Kevin

  Short, Mrs Renée (Wolv NE)

  Gould, Bryan

  Madden, Max

  Silkin, Rt Hon John (Deptford)

  Gourlay, Harry

  Magee, Bryan

  Silkin, Rt Hon S. C. (Dulwich)

  Graham, Ted

  Mahon, Simon

  Sillars, James

  Grant, George (Morpeth)

  Mallalieu, J. P. W.

  Silverman, Julius

  Grant, John (Islington C)

  Marks, Kenneth

  Skinner, Dennis

  Grocott, Bruce

  Marquand, David

  Small, William

  Hamilton, James (Bothwell)

  Marshall, Dr Edmund (Goole)

  Smith, Cyril (Rochdale)

  Hardy, Peter

  Marshall, Jim (Leicester S)

  Smith, John (N Lanarkshire)

  Harper, Joseph

  Maynard, Miss Joan

  Snaps, Peter

  Harrison, Walter (Wakefield)

  Meacher, Michael

  Spearing, Nigel

  Hayman, Mrs Helene

  Mellish, Rt Hon Robert

  Spriggs, Leslie

  Healey, Rt Hon Denis

  Mendelson, John

  Stallard, A. W.

  Heffer, Eric S.

  Mikardo, Ian

  Steel, David (Roxburgh)

  Hooley, Frank

  Millan, Bruce

  Stewart, Rt Hon M. (Futham)

  Horam, John

  Miller, Dr M. S. (E Kilbride)

  Stoddart, David

  Howell, Denis (B'ham, Sm H)

  Miller, Mrs Millie (Ilford N)

  Stott, Roger

  Howells, Geraint (Cardigan)

  Molloy, William

  Strang, Gavin

  Hoyle, Doug (Nelson)

  Morris, Alfred (Wythenshawe)

  Strauss, Rt Hon G. R.

  Huckfield, Les

  Morris, Charles R. (Openshaw)

  Summerskill, Hon Dr Shirley

  Hughes, Rt Hon C. (Anglesey)

  Morris, Rt Hon J. (Aberavon)

  Swain, Thomas

  Hughes, Mark (Durham)

  Mulley, Rt Hon Frederick

  Taylor, Mrs Ann (Bolton W)

  Hughes, Robert (Aberdeen N)

  Murray, Rt Hon Ronald King

  Thomas, Dafydd (Merioneth)

  Hughes, Roy (Newport)

  Newens, Stanley

  Thomas, Jeffrey (Abertillery)

  Hunter, Adam

  Noble, Mike

  Thomas, Mike (Newcastle E)

  Irvine, Rt Hon Sir A. (Edge Hill)

  Oakes, Gordon

  Thomas, Ron (Bristol NW)

  Irving, Rt Hon S. (Dartford)

  Ogden, Eric

  Thorne, Stan (Preston South)

  Jackson, Colin (Brighouse)

  O'Halloran, Michael

  Thorpe, Rt Hon Jeremy (N Devon)

  Janner, Greville

  Orbach, Maurice

  Tierney, Sydney

  Jeger, Mrs Lena

  Orme, Rt Hon Stanley

  Tinn, James

  Jenkins, Hugh (Putney)

  Ovenden, John

  Tomlinson, John

  Jenkins, Rt Hon Roy (Stechford)

  Owen, Dr David

  Tuck, Raphael

  John, Brynmor

  Padley, Walter

  Urwin, T. W.

  Johnson, James (Hull West)

  Palmer, Arthur

  Varley, Rt Hon Eric G.

  Johnson, Walter (Derby S)

  Pardoe, John

  Wainwright, Edwin (Dearne V)

  Jones, Alec (Rhondda)

  Park, George

  Wainwright, Richard (Coine V)

  Jones, Barry (East Flint)

  Parker, John

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

  Jones, Dan (Burnley)

  Parry, Robert

  Walker, Harold (Doncaster)

  Judd, Frank

  Pavitt, Laurie

  Walker, Terry (Kingswood)

  Kaufman, Gerald

  Pendry, Tom

  Ward, Michael

  Kelley, Richard

  Penhaligon, David

  Watkins, David

  Kerr, Russell

  Perry, Ernest

  Watkinson, John

  Kilroy-Silk, Robert

  Phipps, Dr Colin

  Weetch, Ken

  Kinnock, Nell

  Prentice, Rt Hon Reg

  Wellbeloved, James

  Lambie, David

  Price, C. (Lewisham W)

  White, Frank R. (Bury)

  Lamborn, Harry

  Price, William (Rugby)

  White, James (Pollok)

  Lamond, James

  Radice, Giles

  Whitehead, Phillip

  Latham, Arthur (Paddington)

  Rees, Rt Hon Merlyn (Leeds S)

  Whitlock, William

  Leadbitter, Ted

  Richardson, Miss Jo

  Wigley, Dafydd

  Lee, John

  Roberts, Albert (Normanton)

  William, Alan (Swansea W)

  Lestor, Miss Joan (Eton & Slough)

  Roberts, Gwilym (cannock)

  Williams, Alan Lee (Hornch'ch)

  Lewis, Arthur (Newham N)

  Robertson, John (Paisley)

  Williams, W. T. (Warrington)

  Lewis, Ron (Carlisle)

  Roderick, Caerwyn

  Wilson, Alexander (Hamilton)

  Lipton, Marcus

  Rodgers, George (Chorley)

  Wilson, Rt Hon H. (Huyton)

  Litterick, Tom

  Rodgers, William (Stockton)

  Wise, Mrs Audrey

  Loyden, Eddie

  Rooker, J. W.

  Woodall, Alec

  Luard, Evan

  Roper, John

  Woof, Robert

  Lyon, Alexander (York)

  Rose, Paul B.

  Wrigglesworth, Ian

  Lyons, Edward (Bradford W)

  Ross, Stephen (Isle of Wight)

  Mabon, Dr J. Dickson

  Ross, Rt Hon W. (Kilmarnock)

  TELLERS FOR THE AYES

  McCartney, Hugh

  Rowlands, Ted

  Mr. Thomas Cox and

  McElhone, Frank

  Sandelson, Neville

  Miss Margaret Jackson.

  MacFarquhar, Roderick

  Sedgemore, Brian

  NOES

  Aitken, Jonathan

  Blaker, Peter

  Butler, Adam (Bosworth)

  Alison, Michael

  Boscawen, Hon Robert

  carlisle, Mark

  Amery, Rt Hon Julian

  Bottomley, Peter

  Carson, John

  Arnold, Tom

  Bowden, A. (Brighton, Kemptown)

  Chalker, Mrs Lynda

  Atkins, Rt Hon H. (Spelthorne)

  Boyson, Dr Rhodes (Brent)

  Channon, Paul

  Awdry, Daniel

  Bradford, Rev Robert

  Churchill, W. S.

  Bain, Mrs Margaret

  Brittan, Leon

  Clark, Alan (Plymouth, Sutton)

  Baker, Kenneth

  Brotherton, Michael

  Clark, William (Croydon S)

  Banks, Robert

  Brown, Sir Edward (Bath)

  Clarke, Kenneth (Rushcliffe)

  Bennett, Sir Frederic (Torbay)

  Bryan, Sir Paul

  Clegg, Walter

  Bennett, Dr Reginald (Fareham)

  Buchanan-Smith, Alick

  Cockcroft, John

  Benyon, W.

  Buck, Antony

  Cooke, Robert (Bristol W)

  Biffen, John

  Budgen, Nick

  Cope, John

  Biggs-Davison, John

  Bulmer, Esmond

  Corrie, John

  1274

  1275

  Costain, A. P.

  Jessel, Toby

  Price, David (Eastleigh)

  Crawford, Douglas

  Johnson Smith, G. (E Grinstead)

  Prior, Rt Hon James

  Critchley, Julian

  Kaberry, Sir Donald

  Raison, Timothy

  Crouch, David

  Kershaw, Anthony

  Rathbone, Tim

  Crowder F. P.

  Kilfedder, James

  Rawlinson, Rt Hon Sir Peter

  Davies Rt Hon J. (Knutsford)

  Kimball, Marcus

  Rees, Peter (Dover & Deal)

  Dean, Paul (N Somerset)

  King, Evelyn (South Dorset)

  Rees-Davies, W. R.

  Dodsworth, Geoffrey

  King, Tom (Bridgwater)

  Reid, George

  Douglas-Hamilton, Lord James

  Kitson, Sir Timothy

  Renton, Rt Hon Sir D. (Hunts)

  Drayson, Burnaby

  Knight, Mrs Jill

  Renton, Tim (Mid-Sussex)

  du Cann, Rt Hon Edward

  Knox, David

  Ridley, Hon Nicholas

  Dunlop, John

  Lamont, Norman

  Ridsdale, Julian

  Durant, Tony

  Langford-Holt, Sir John

  Rifkind, Malcolm

  Dykes, Hugh

  Latham, Michael (Melton)

  Rippon, Rt Hon Geoffrey

  Eden, Rt Hon Sir John

  Lawrence, Ivan

  Roberts, Wyn (Conway)

  Edwards, Nicholas (Pembroke)

  Lawson, Nigel

  Ross, William (Londonderry)

  Elliott Sir William

  Le Marchant, Spencer

  Rossi, Hugh (Hornsey)

  Emery, Peter

  Lester, Jim (Beeston)

  Rost, Peter (SE Derbyshire)

  Eyre, Reginald

  Lewis, Kenneth (Rutland)

  Royle, Sir Anthony

  Farr, John

  Lloyd, Ian

  Sainsbury, Tim

  Finsberg, Geoffrey

  Loveridge, John

  Shaw, Giles (Pudsey)

  Fisher, Sir Nigel

  Luce, Richard

  Shelton, William (Streatham)

  Fletcher-Cooke, Charles

  McAdden, Sir Stephen

  Shepherd, Colin

  Fookes, Miss Janet

  MacCormick, lain

  Shersby, Michael

  Fowler, Norman (Sutton C'f'd)

  McCrindle, Robert

  Silvester, Fred

  Fry Peter

  Macfarlane, Nell

  Sinclair, Sir George

  Galbraith, Hon T. G. D.

  MacGregor, John

  Skeet, T. H. H.

  Gardiner, George (Reigate)

  McNair-Wilson, M. (Newbury)

  Speed, Keith

  Gilmour, Rt Hon Ian (Chesham)

  McNair-Wilson, P. (New Forest)

  Spence, John

  Gilmour, Sir John (East Fife)

  Madel, David

  Spicer, Michael (S Worcester)

  Glyn, Dr Alan

  Marshall, Michael (Arundel)

  Sproat, lain

  Goodhart, Philip

  Mates, Michael

  Stanbrook, Ivor

  Goodhew, Victor

  Mather, Carol

  Stanley, John

  Gorst, John

  Maudling, Rt Hon Reginald

  Stewart, Donald (Western Isles)

  Gow, Ian (Eastbourne)

  Mawby, Ray

  Stokes, John

  Gower, Sir Raymond (Barry)

  Maxwell-Hyslop, Robin

  Tapsell, Peter

  Grant, Anthony (Harrow C)

  Maxwell-Hyslop, Robin

  Taylor, R. (Croydon NW)

  Gray, Hamish

  Meyer, Sir Anthony

  Taylor, Teddy (Cathcart)

  Grieve, Percy

  Miller, Hal (Bromsgrove)

  Tebbit, Norman

  Griffiths, Eldon

  Miscampbell, Norman

  Temple-Morris, Peter

  Grist, Ian

  Mitchell, David (Basingstoke)

  Thomas, Rt Hon P. (Hendon S)

  Hall, Sir John

  Moate, Roger

  Thompson, George

  Hamilton, Michael (Salisbury)

  Molyneaux, James

  Townsend, Cyril D.

  Hampson, Dr Keith

  Monro, Hector

  Trotter, Neville

  Hannam, John

  Montgomery, Fergus

  Tugendhat, Christopher

  Harvie Anderson, Rt Hon Miss

  Moore, John (Croydon C)

  van Straubenzee, W. R.

  Hastings, Stephen

  More, Jasper (Ludlow)

  Vaughan, Dr Gerard

  Havers, Sir Michael

  Morgan, Geraint

  Viggers, Peter

  Hayhoe, Barney

  Morrison, Hon Peter (Chester)

  Walder, David (Clitheroe)

  Heath, Rt Hon Edward

  Mudd, David

  Walker, Rt Hon P. (Worcester)

  Henderson, Douglas

  Neave, Airey

  Wall, Patrick

  Heseltine, Michael

  Nelson, Anthony

  Walters, Dennis

  Hicks, Robert

  Neubert, Michael

  Warren, Kenneth

  Higgins, Terence L.

  Newton, Tony

  Watt, Hamish

  Holland, Philip

  Normanton, Tom

  Weatherill, Bernard

  Hordern, Philip

  Nott, John

  Wells, John

  Howe, Rt Hon Sir Geoffrey

  Onslow, Cranley

  Welsh, Andrew

  Howell, David (Guildford)

  Oppenheim, Mrs Sally

  Wiggin, Jerry

  Howell, Ralph (North Norfolk)

  Page, John (Harrow West)

  Wilson, Gordon (Dundee E)

  Hunt, John

  Page, Rt Hon R. Graham (Crosby)

  Winterton, Nicholas

  Hurd, Douglas

  Parkinson, Cecil

  Wood, Rt Hon Richard

  Hutchison, Michael Clark

  Pattie, Geoffrey

  Young, Sir G. (Eating, Acton)

  Irvine, Bryant Godman (Rye)

  Percival Ian

  Irving, Charles (Cheltenham)

  Peyton, Rt Hon John

  TELLERS FOR THE NOES:

  James, David

  Pink, R. Bonner

  Mr. Anthony Berry and

  Jenkin, Rt Hon P. (Wanst'd & W'df'd)

  Powell, Rt Hon J. Enoch

  Mr. Michael Roberts.

  Question accordingly agreed to.

  TRADE UNION AND LABOUR RELATIONS (AMENDMENT) BILL
  Considered in Committee.
  [Sir MYER GALPERN in the Chair]
  The Deputy Chairman: In accordance with the terms of the Order made by the House on 9th December 1975, this Com-
  mittee stage can be formal only since I am required to put forthwith the Question for reporting the Bill, without amendment, to the House.
  Question put, That the Chairman do report the Bill, without amendment, to the House:
  The Committee divided: Ayes 273, Noes 260.

  Division No. 29]

  AYES

  [10.28 p.m.

  Allaun, Frank

  English, Michael

  Latham, Arthur (Paddington)

  Anderson, Donald

  Ennals, David

  Leadbitter, Ted

  Archer, Peter

  Evans, loan (Aberdare)

  Lee, John

  Ashton, Joe

  Ewing, Harry (Stirling)

  Lestor, Miss Joan (Eton & Slough)

  Atkins, Ronald (Preston N)

  Faulds, Andrew

  Lewis, Arthur (Newham N)

  Atkinson, Norman

  Fernyhough, Rt Hon E.

  Lewis, Ron (Carlisle)

  Bagier, Gordon A. T.

  Fitch, Alan (Wigan)

  Lipton, Marcus

  Barnett, Rt Hon Joel (Heywood)

  Fitt, Gerard (Belfast W)

  Litterick, Tom

  Bates, All

  Flannery, Martin

  Loyden, Eddie

  Bean, R. E.

  Fletcher, Raymond (Ilkeston)

  Luard, Evan

  Benn, Rt Hon Anthony Wedgwood

  Fletcher, Ted (Darlington)

  Lyon, Alexander (York)

  Bennett, Andrew (Stockport N)

  Foot, Rt Hon Michael

  Lyons, Edward (Bradford W)

  Blenkinsop, Arthur

  Ford, Ben

  Mabon, Dr J. Dickson

  Boardman, H.

  Forrester, John

  McCartney, Hugh

  Booth, Albert

  Fowler, Gerald (The Wrekin)

  McElhone, Frank

  Boothroyd, Miss Betty

  Fraser, John (Lambeth, N'w'd)

  MacFarquhar, Roderick

  Bottomley, Rt Hon Arthur

  Freeson, Reginald

  McGuire, Michael (Ince)

  Boyden, James (Bish Auck)

  Garrett, John (Norwich S)

  Mackenzie, Gregor

  Bradley, Tom

  Garrett, W. E. (Wallsend)

  Mackintosh, John P.

  Bray Dr Jeremy,

  George, Bruce

  Maclennan, Robert

  Brown, Hugh D. (Provan)

  Gilbert, Dr John

  McMillan, Tom (Glasgow C)

  Brown, Robert C. (Newcastle W)

  Ginsburg, David

  McNamara, Kevin

  Brown, Ronald (Hackney S)

  Golding, John

  Madden, Max

  Buchan, Norman

  Gould, Bryan

  Magee, Bryan

  Buchanan Richard,

  Gourlay, Harry

  Mahon, Simon

  Butler, Mrs Joyce (Wood Green)

  Graham, Ted

  Mallalieu, J. P. W.

  Callaghan, Jim (Midleton & p)

  Grant, George (Morpeth)

  Marks, Kenneth

  Cambell, Ian

  Grocott, Bruce

  Marshall, Dr Edmund (Goole)

  Cant, R. B.

  Hamilton, James (Bothwell)

  Marshall, Jim (Leicester S)

  Carter, Ray

  Hardy, Peter

  Maynard, Miss Joan

  Carter-Jones, Lewis

  Harrison, Walter (Wakefield)

  Meacher, Michael

  Cartwright, John

  Hayman, Mrs Helene

  Mellish, Rt Hon Robert

  Clemitson, Ivor

  Healey, Rt Hon Denis

  Mendelson, John

  Cocks, Michael (Bristol S)

  Hooley, Frank

  Millan, Bruce

  Cohen, Stanley

  Horam, John

  Miller, Dr M. S. (E Kilbride)

  Coleman, Donald

  Howell, Denis (B'ham, Sm H)

  Miller, Mrs Millie (Ilford N)

  Colquhoun, Mrs Maureen

  Hoyle, Doug (Nelson)

  Molloy, William

  Conlan, Bernard

  Huckfield, Les

  Morris, Alfred (Wythenshawe)

  Cook, Robin F. (Edin C)

  Hughes, Rt Hon C. (Anglesey)

  Morris, Charles R. (Openshaw)

  Corbett, Robin

  Hughes, Mark (Durham)

  Morris, Rt Hon J. (Aberavon)

  Cox, Thomas (Tooting)

  Hughes, Robert (Aberdeen N)

  Mulley, Rt Hon Frederick

  Craigen, J. M. (Maryhill)

  Hughes, Roy (Newport)

  Murray, Rt Hon Ronald King

  Cronin, John

  Hunter, Adam

  Newens, Stanley

  Crosland, Rt Hon Anthony

  Irvine, Rt Hon Sir A. (Edge Hill)

  Noble, Mike

  Cryer, Bob

  Irving, Rt Hon S. (Dartford)

  Oakes, Gordon

  Cunningham, G. (Islington S)

  Jackson, Colin (Brighouse)

  Ogden, Eric

  Cunningham, Dr J. (Whiten)

  Jackson, Miss Margaret (Lincoln)

  O'Halloran, Michael

  Davidson, Arthur

  Janner, Greville

  Orbach, Maurice

  Davies, Bryan (Enfield N)

  Jeger, Mrs Lena

  Orme, Rt Hon Stanley

  Davies, Denzil (Llanelli)

  Jenkins, Hugh (Putney)

  Ovenden, John

  Davis, Clinton (Hackney C)

  Jenkins, Rt Hon Roy (Stechford)

  Owen, Dr David

  Deakins, Eric

  John, Brynmor

  Padley, Walter

  Dean, Joseph (Leeds W)

  Johnson, James (Hull West)

  Palmer, Arthur

  Delargy, Hugh

  Johnson, Walter (Derby S)

  Park, George

  Dell, Rt Hon Edmund

  Jones, Alec (Rhondda)

  Parker, John

  Dempsey, James

  Jones, Barry (East Flint)

  Parry, Robert

  Doig, Peter

  Jones, Dan (Burnley)

  Pavitt, Laurie

  Douglas-Mann, Bruce

  Judd, Frank

  Pendry, Tom

  Duffy, A. E. P.

  Kaufman, Gerald

  Perry, Ernest

  Dunn, James A.

  Kelley, Richard

  Phipps, Dr Colin

  Dunnett, Jack

  Kerr, Russell

  Prentice, Rt Hon Reg

  Dunwoody, Mrs Gwyneth

  Kilroy-Silk, Robert

  Price, C. (Lewisham W)

  Eadie, Alex

  Kinnock, Neil

  Price, William (Rugby)

  Edge, Geoff

  Lambie, David

  Radice, Giles

  Edwards, Robert (Wolv SE)

  Lamborn, Harry

  Rees, Rt Hon Merlyn (Leeds S)

  Ellis, John (Brigg & Scun)

  Lamond, James

  Richardson, Miss Jo

  Roberts, Albert (Normanton)

  Smith, John (N Lanarkshire)

  Walker, Harold (Doncaster)

  Roberts, Gwilym (Cannock)

  Snape, Peter

  Walker, Terry (Kingswood)

  Robertson, John (Paisley)

  Spearing, Nigel

  Ward, Michael

  Roderick, Caerwyn

  Spriggs, Leslie

  Watkins, David

  Rodgers, George (Chorley)

  Stallard, A. W.

  Watkinson, John

  Rodgers, William (Stockton)

  Stewart, Rt Hon M. (Futham)

  Weetch, Ken

  Rooker, J. W.

  Stoddart, David

  Wellbeloved, James

  Roper, John

  Stott, Roger

  White, Frank R. (Bury)

  Rose, Paul B.

  Strang, Gavin

  White, James (Pollok)

  Ross, Rt Hon W. (Kilmarnock)

  Strauss, Rt Hon G. R.

  Whitehead, Phillip

  Rowlands, Ted

  Summerskill, Hon Dr Shirley

  Whitlock, William

  Sandelson, Neville

  Swain, Thomas

  Williams, Alan (Swansea W)

  Sedgemore, Brian

  Taylor, Mrs Ann (Bolton W)

  Williams, Alan Lee (Hornch'ch)

  Selby, Harry

  Thomas, Jeffrey (Abertillery)

  Williams, W. T. (Warrington)

  Shaw, Arnold (Ilford South)

  Thomas, Mike (Newcastle E)

  Wilson, Alexander (Hamilton)

  Sheldon, Robert (Ashton-u-Lyne)

  Thomas, Ron (Bristol NW)

  Wilson, Rt Hon H. (Huyton)

  Shore, Rt Kon Peter

  Thorne, Stan (Preston South)

  Wise, Mrs Audrey

  Short, Rt Hon E. (Newcastle C)

  Tierney, Sydney

  Woodall, Alec

  Short, Mrs Renée (Wolv NE)

  Tinn, James

  Woof, Robert

  Silkin, Rt Hon John (Deptford)

  Tomlinson, John

  Wrigglesworth, Ian

  Silkin, Rt Hon S. C. (Dulwich)

  Tuck, Raphael

  Sillars, James

  Urwin, T. W.

  TELLERS FOR THE AYES:

  Silverman, Julius

  Varley, Rt Hon Eric G.

  Mr. J. D. Dormand and

  Skinner, Dennis

  Wainwright, Edwin (Dearne V)

  Mr. Joseph Harper

  Small, William

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

  NOES

  Altken, Jonathan

  Eden, Rt Hon Sir John

  Jenkin, Rt Hon P. (Wanst'd & W'df'd

  Alison, Michael

  Edwards, Nicholas (Pembroke)

  Jessel, Toby

  Amery, Rt Hon Julian

  Elliott, Sir William

  Johnson Smith, G. (E Grinstead)

  Arnold, Tom

  Emery, Peter

  Kaberry, Sir Donald

  Atkins, Rt Hon H. (Spolthorne)

  Evans, Gwynfor (Carmarthen)

  Kershaw, Anthony

  Awdry, Daniel

  Eyre, Reginald

  Kilfedder, James

  Bain, Mrs Margaret

  Farr, John

  Kimball, Marcus

  Baker, Kenneth

  Finsberg, Geoffrey

  King, Evelyn (South Dorset)

  Banks, Robert

  Fisher, Sir Nigel

  King, Tom (Bridgwater)

  Beith, A. J.

  Fletcher-Cooke, Charles

  Kitson, Sir Timothy

  Bennett, Sir Frederic (Torbay)

  Fookes, Miss Janet

  Knight, Mrs Jill

  Bennett, Or Reginald (Fareham)

  Fowler, Norman (Sutton C'f'd)

  Knox, David

  Benyon, W.

  Fox, Marcus

  Lamont, Norman

  Berry, Hon Anthony

  Freud, Clement

  Langford-Holt, Sir John

  Bitten, John

  Fry, Peter

  Latham, Michael (Melton)

  Biggs-Davison, John

  Galpern, Sir Myer

  Lawrence, Ivan

  Blaker, Peter

  Gardiner, George (Reigate)

  Lawson, Nigel

  Boscawen, Hon Robert

  Gilmour, Rt Hon Ian (Chesham)

  Le Marchant, Spencer

  Bottomley, Peter

  Gilmour, Sir John (East Fife)

  Lester, Jim (Beeston)

  Bowden, A. (Brighton, Kamptown)

  Glyn, Dr Alan

  Lewis, Kenneth (Rutland)

  Boyson, Dr Rhodes (Brent)

  Goodhart, Philip

  Lloyd, Ian

  Bradford, Rev Robert

  Goodhew, Victor

  Loveridge, John

  Brittan, Leon

  Goodlad, Alastair

  Luce, Richard

  Brotherton, Michael

  Gorst, John

  McAdden, Sir Stephen

  Brown, Sir Edward (Bath)

  Gow, Ian (Eastbourne)

  MacCormick, lain

  Bryan, Sir Paul

  Gower, Sir Raymond (Barry)

  McCrindle, Robert

  Buchanan-Smith, Alick

  Grant, Anthony (Harrow C)

  McCusker, H.

  Buck, Antony

  Gray, Hamish

  Macfarlane, Neil

  Budgen, Nick

  Grieve, Percy

  MacGregor, John

  Bulmer, Esmond

  Griffiths, Eldon

  McNair-Wilson, M. (Newbury)

  Butler, Adam (Bosworth)

  Grist Ian

  McNair-Wilson, P. (New Forest)

  Carlisle, Mark

  Hall, Sir John

  Madel, David

  Carson, John

  Hamilton, Michael (Salisbury)

  Marshall, Michael (Arundel)

  Chalker, Mrs Lynda

  Hampson, Dr Keith

  Marten, Neil

  Channon, Paul

  Hannam, John

  Mates, Michael

  Churchill, W. S.

  Harvie Anderson, Rt Hon Miss

  Maude, Angus

  Clark, Alan (Plymouth, Sutton)

  Hastings, Stephen

  Maudling, Rt Hon Reginald

  Clark, William (Croydon S)

  Havers, Sir Michael

  Mawby, Ray

  Clarke, Kenneth (Rushcliffe)

  Hawkins, Paul

  Maxwell-Hyslop, Robin

  Clegg, Walter

  Hayhoe, Barney

  Mayhew, Patrick

  Cockcroft, John

  Heath, Rt Hon Edward

  Meyer, Sir Anthony

  Cooke, Robert (Bristol W)

  Henderson, Douglas

  Miscampbell, Norman

  Cope, John

  Heseltine, Michael

  Miller, Hal (Bromsgrove)

  Corrie, John

  Hicks, Robert

  Mitchell, David (Basingstoke)

  Costain, A. P.

  Higgins, Terence L.

  Moate, Roger

  Crawford, Douglas

  Holland, Philip

  Molyneaux, James

  Critchley, Julian

  Hordern, Peter

  Monro, Hector

  Crouch, David

  Howe, Rt Hon Sir Geoffrey

  Montgomery, Fergus

  Crowder, F. P.

  Howe, Rt Hon Sir Geoffrey

  Moore, John (Croydon C)

  Davies, Rt Hon J. (Knutsford)

  Howell, David (Guildford)

  More, Jasper (Ludlow)

  Dean, Paul (N Somerset)

  Howell, Ralph (North Norfolk)

  Morgan, Geraint

  Dodsworth, Geoffrey

  Howells, Geraint (Cardigan)

  Morris, Michael (Northampton S)

  Douglas-Hamilton, Lord James

  Hunt, John

  Morrison, Hon Peter (Chester)

  Drayson, Burnaby

  Hurd, Douglas

  Mudd, David

  du Cann, Rt Hon Edward

  Hutchison, Michael Clark

  Neave, Airey

  Dunlop, John

  Irvine, Bryant Godman (Rye)

  Nelson, Anthony

  Durant, Tony

  Irving, Charles (Cheltenham)

  Neubert, Michael

  Dykes, Hugh

  James, David

  Newton, Tony

  1280

  1281

  Normanton, Tom

  Ross, William (Londonderry)

  Thomas, Dafydd (Merioneth)

  Nott, John

  Rossi, Hugh (Hornsey)

  Thomas, Rt Hon P. (Hendon S)

  Onslow, Cranley

  Rost, Peter (SE Derbyshire)

  Thompson, George

  Oppenheim, Mrs Sally

  Royle, Sir Anthony

  Thorpe, Rt Hon Jeremy (N Devon)

  Page, John (Harrow West)

  Sainsbury, Tim

  Townsend, Cyril D.

  Page, Rt Hon R. Graham (Crosby)

  Shaw, Giles (Pudsey)

  Trotter, Neville

  Pardoe, John

  Shelton, William (Streatham)

  Tugendhat, Christopher

  Parkinson, Cecil

  Shepherd, Colin

  van Straubenzee, W. R.

  Pattie, Geoffrey

  Shersby, Michael

  Vaughan, Dr Gerard

  Penhaligon, David

  Silvester, Fred

  Viggers, Peter

  Percival Ian

  Sims, Roger

  Wainwright, Richard (Colne V)

  Peyton, Rt Hon John

  Sinclair, Sir George

  Wakeham, John

  Pink, R. Bonner

  Skeet, T. H. H.

  Walder, David (Clitheroe)

  Powell, Rt Hon J. Enoch

  Smith, Cyril (Rochdale)

  Walker, Rt Hon P. (Worcester)

  Price, David (Eastleigh)

  Speed, Keith

  Wall, Patrick

  Prior, Rt Hon James

  Spence, John

  Walters, Dennis

  Raison, Timothy

  Spicer, Michael (S Worcester)

  Warren, Kenneth

  Rathbone, Tim

  Sproat, lain

  Watt, Hamish

  Rawlinson, Rt Hon Sir Peter

  Stainton, Keith

  Weatherill, Bernard

  Rees, Peter (Dover & Deal)

  Stanbrook, Ivor

  Wells, John

  Rees-Davies, W. R.

  Stanley, John

  Welsh, Andrew

  Reid, George

  Steel, David (Roxburgh)

  Wiggin, Jerry

  Renton, Rt Hon Sir D. (Hunts)

  Stewart, Donald (Western Isles)

  Wigley, Dafydd

  Renton, Tim (Mid-Sussex)

  Stokes, John

  Wilson, Gordon (Dundee E)

  Ridley, Hon Nicholas

  Stradling Thomas, J.

  Winterton, Nicholas

  Ridsdale, Julian

  Tapsell, Peter

  Wood, Rt Hon Richard

  Rifkind, Malcolm

  Taylor, R. (Croydon NW)

  Young, David (Bolton E)

  Rippon, Rt Hon Geoffrey

  Taylor, Teddy (Cathcart)

  TELLERS FOR THE NOES:

  Roberts, Wyn (Conway)

  Tebbit, Norman

  Mr. Carol Mather and

  Ross, Stephen (Isle of Wight)

  Temple-Morris, Peter

  Mr. Michael Roberts

  Question accordingly agreed to.
  Bill reported, without amendment; to be read the Third time tomorrow.

  FAIR TRADING
  10.42 p.m.
  The Minister of State, Department of Prices and Consumer Protection (Mr. Alan Williams): I beg to move:
  That the Restrictive Trade Practices (Services) Order 1975, a draft of which was laid before this House on 9th December, be approved.
  It seems to be the lot of the hon. Member for Gloucester (Mrs. Oppenheim) and myself to command the peak viewing hours in the House. I gather from the attentive audience behind the hon. Lady that we can expect some critical but, I trust, constructive interventions. I note that the hon. Member for Pudsey (Mr. Shaw) can hardly contain himself. That bodes ill for our hopes of finishing before our due hour and a half.
  As hon. Members will appreciate, the Order requires the registration of restrictive agreements in the supply or acquisition of all services except those covered by Schedule 4 of the Fair Trading Act, a subject about which the least said the better, and those covered in the schedule to the Order.
  The Order does not prohibit those agreements but it brings them into the open, subjecting them to public examina-
  1282
  tion and critical court supervision and scrutiny where that appears appropriate. That includes not only agreements between firms and between individuals but the recommendations of associations to their members. It will be for the Restrictive Practices Court to give decisions. It is not for us to decide which agreements are in or against the public interest. The court has the power, the authority and the knowledge that is necessary.
  It is interesting to consider the results of similar measures introduced in relation to the supply and the acquisition of goods when registration was required and 3,000 agreements were registered. Of those 3,000 agreements, a mere 37 were contested in court. Of the 37, 11 were eventually decided as not being against the public interest. It is interesting that only one in 300 of the agreements registered eventually came through the procedure as not being against the public interest. All the rest were abandoned. We must accept that that stage of the operation was very much in the public interest and achieved a great deal for the consumer. Naturally, we hope that we shall have similar success at this stage.
  The process should be explained to the House, although I am sure that most hon. Members are familiar with it. The Order will come into force on 22nd March. Existing agreements, written or oral, must be abandoned or registered by 21st June. Within that time span, registration is required if the agreement

  1283
  has not been cancelled or abandoned. New agreements not already in existence must be registered within three months of being made, or if restrictions would apply in less than three months from the time they are made they must be registered prior to the date when the restrictions would apply.
  The Director General of Fair Trading has a duty to refer all these agreements to the court unless he sees fit, under Section 9(2) of the Restrictive Trade Practices Act 1968, to make representations to the Secretary of State that the agreements are, in his opinion, insignificant. If my right hon. Friend the Secretary of State agrees with him, she can direct that the agreements need not go before the court. In some instances agreements which conceivably would go before the court may, with modification, after discussion with the Director General, be subject to the Section 9(2) procedure and could conceivably escape the court procedure.
  For those who face court scrutiny, there are the established gateways under the old and new Acts against which they can plead their case. I do not need to go into the matter at this stage, but if hon. Members wish me to deal with the point in my reply I shall be happy to do so. Those established gateways can be claimed on behalf of those entering into agreements in an attempt to persuade the court that they are not operating against the public interest.
  While the court is considering any registered agreement, the agreement stays in force until the court decides against it. Failure to register makes the agreement void and lays the people involved in the agreement open to action for damages as a result of an unlawful agreement. After the court has decided against it, if it should do so, to continue to operate the agreement, whether overtly or covertly, would be contempt of court, with all the drastic penalties that could ensue against the individual concerned.
  Perhaps I may be allowed to explain briefly the steps of the Order, in case any question arises as to the way in which it has been arrived at. In August 1974 we published a copy of our intention to make an Order, and we are required to allow 28 days for the making of repre-
  1284
  sentations. Various groups sought exemptions. It is astonishing how many people find virtue in their own restrictive practices.
  Three basic reasons were put forward for seeking exemption. The first was that if the Order were to be introduced it would be a fundamental interference with the freedom to trade. It is open to question whether it is freedom to trade or freedom to rig, but it was an argument which I found to be totally unacceptable and which I immediately rejected. Parliament has already decided that the legislation should be extended. This is surely the wrong time at which to base an argument on grounds of fundamental interference.
  The second argument put forward was that the agreements concerned were meritorious in their own right and in the public interest. No doubt the Jockey Club and the bookmakers were singularly convinced of the merit of their agreements. It may be that after scrutiny by the court they will be vindicated in their confidence. It seems that the purpose of the court is to decide whether an agreement is meritorious. It is not for the Secretary of State or for me to do that. We would be pre-empting the rôle of the court by doing so. Those who feel that their agreements are so evidently of merit and to the benefit of the public will have ample opportunity to expose their virtue before the court and have it publicly acclaimed, should that be the appropriate consequence.
  There were those who argued that their agreements were already adequately controlled because of existing legislation and procedures or that there were problems in relation to international jurisdiction. The hon. Lady will know that her party, like mine, recognises the difficulties for shipping and so on in this regard. This argument was accepted for the kinds of agreements listed in the Explanatory Note.
  The Office of Fair Trading will be issuing notes of guidance. We appreciate that, while those of us who have been following the Fair Trading Act and its ramifications, modifications and consequences over the years may realise what is involved, it is not fair to expect that commerce generally should be familiar with the processes. The Office of Fair Trading will therefore be producing an

  1285
  introductory guide to registration. It is ready to give assistance, and is doing so in some instances, to those who wish to know whether their agreements come within the jurisdiction of the Order and to those who want to know whether any amendment of their agreements would be acceptable. Those who want advice from the Office of Fair Trading should discuss the matter with the London or Edinburgh offices.
  I believe, and I hope the House will accept, that this will bring necessary scrutiny and control to an important sector of commerce which so far has escaped such scrutiny—namely, services. I commend the Order to the House.
  10.52 p.m.
  Mrs. Sally Oppenheim: This Order marks an auspicious occasion—one to which I am surprised the Minister did not refer—in that it is the first to be laid under the Fair Trading Act, itself the most significant and comprehensive piece of legislation for the protection of consumers enacted this decade—introduced, of course, by the last Conservative Government.
  The Order, as explained so lucidly by the Minister, is intended to regulate restrictive agreements in the provision of services. I find a certain irony in the Government's new-found enthusiasm for the objectives of this measure as described by one of their departmental officials in The Times on 10th December 1975 when he said that it was:
  "to encourage companies to be more competitive and, hopefully, for this to be reflected in their prices."
  If the Government are interested in encouraging competition, they could have fooled me.
  All they have done since they came to power has been massively to erode competition, with one nationalisation measure after another, at a time when consumers are having to pay through the nose for nationalised goods and services. This is due as much as anything else to the fact that such industries are not subject to competition and apparently are so vulnerable that, at the very thought of it, the Post Office, for instance, found it necessary to prevent a vicar in a little Cotswolds village from delivering letters for one of his pensioner parishioners who could not afford the postal rates.
  1286
  Not only have the Government discouraged competition by the introduction of nationalisation measures, but they have encouraged restrictive labour practices through the Employment Protection Bill and measures such as the Dock Labour Scheme. This debate is about competition. The Dock Labour Scheme will encourage restrictive labour practices that will have the effect of raising prices. This Order is meant to prevent restrictive practices from raising prices. If the Government are converted—even if it is only a small conversion—to the idea of competition, we on the Conservative side are happy to welcome their conversion.
  I never cease to be surprised by the extent to which the Minister has been tamed by ministerial responsibilities. We observe his timorousness now as Minister of State, but we remember the columns of Committee reports and the columns of the Official Report that he filled with his furious indignation during our deliberations on the Fair Trading Act when discussing the exclusions of Schedule 4. I now find that, after the Government have been in power for two years, Schedule 4 of the Fair Trading Act has not been repealed, and the Order tonight comes with exactly the exclusions to which the Minister took such great objection when in opposition.
  However, I agree with everything the Minister has said about the need for the introduction of rules of this nature, relating for the first time to the supply of services, a respect in which consumers lack protection in a number of ways. It is extremely disappointing that the Minister is not able in this Session to introduce legislation to deal with exclusion clauses in the provision of services to consumers.
  It is positively scandalous that the Minister's Department has been deprived of legislative time to such an extent that, rather pathetically, the Minister has had to ask one of his hon. Friends to introduce his own fireworks safety regulations.
  Mr. Alan Williams: When the Law Commissioners reported on exclusion clauses in relation to goods, not only did the Conservative Government not introduce the consequential legislation in that Session, but they did not do it in the following Session, nor in the one after

  1287
  that. It took them several years to get round to it.
  Mrs. Oppenheim: The Conservative Government got round to it. They introduced it and it was enacted, and consumers are now benefiting from it. I wonder whether during the lifetime of this Labour Government we shall have similar legislation concerning the exclusion clauses in the provision of services. In one way I hope that we do and in another I hope that we do not.
  I return to the objectives of the Order. A number of the restrictive agreements that it should be preventing are so far only suspected. They cannot possibly come to light until agreements are registered. Others are not merely suspected but only too well known, as the Minister of State has rightly said.
  My own first foray in to the realms of consumer protection was many years ago when I raised with my right hon. Friend the Leader of the Opposition—who at that time was my Member of Parliament—the subject of restrictive agreements among London dairies, because in London, and only in London, customers cannot choose the dairy which is to deliver their milk. The reason, I was told, is that there was an agreement between the two major dairies not to encroach on ch other's areas. This does not apply to the Co-op. I am talking about the two major dairies in London.
  I put it to one of the dairies at the time that, as its products were so much more popular and it was delivering in the next road to me, I did not see why, if it delivered in my road, it should not take over the whole road. I was told that there was an agreement concerning encroachment. I hope, therefore, that, as the delivery of milk is a service, this sort of agreement will be scrutinised. Perhaps the Minister of State would like to deal with that.
  The Minister has referred to the number of people who have expressed concern about the Order. Like him, I have received some of these expressions of concern—for example, from estate agents who were worried that the provisions might militate unfairly against them and encourage cut-price operations, which could lead to failures similar to those seen in the insurance business. However,
  1288
  because the Department of Prices and Consumer Protection has issued a consultative document—with some recommendations which, I hope, will be approved and introduced—there should be a safeguard. I hope that it will mean that any fears will be allayed for the provisions in that document are likely to be extremely helpful.
  As the Minister knows, I have expressed some concern to him that an accompanying order under Section 108 of the Fair Trading Act regulating information agreements has not been introduced with this. The Minister was good enough to get his Department to write to me about this subject. However, when we debated the matter in Committee on the Fair Trading Bill, it was accepted that orders under these two sections should be introduced in tandem, as it were. That was as recently as 1973. It was accepted that Sections 107 and 108 should go hand in hand and that complementary orders should be made. There was no question then, five years after the Restrictive Trade Practices Act 1968, of there still being a problem with regard to information agreements in the supply of services.
  The Minister will also recall that when powers were taken under the Restrictive Trade Practices Act 1968 to regulate information agreements, his right hon. Friend the Member for Grimsby (Mr. Crosland) said:
  "… information agreements, particularly relating to prices, are being used to circumvent the object of the 1956 Act, and often replace agreements which have themselves been swept away by the Act. The parties can evade the Act in this way because the definition of a registrable agreement is not wide enough to include all information agreements which can be so drawn as to produce the same effect as common price agreements."
  Following that, the right hon. Member for Birkenhead (Mr. Dell) said:
  "We decided that we must have power to call up information agreements other than those covering prices because there is a danger—and it is a danger against which we have a right to safeguard ourselves—that the other kinds of information agreements could, in certain circumstances, be a cover for agreements relating to prices."—[Official Report, 30th April 1968; Vol. 763, cc. 1009–46.]
  That is equally true in this case. Just such a loophole exists which could destroy the objectives of this Order.
  The Minister's Department informed me, for example, that there was no

  1289
  evidence to suggest that information agreements in this sector existed in any quantity. Obviously not, because some of the practices that this measure will invalidate will come to light only when agreements are registered. Therefore it is impossible to know whether there is evidence at the moment on information agreements.
  Furthermore, the Department's explanation went on to saY that when the restrictive practices legislation of 1968 was introduced, there was a strong suspicion that such agreements were being used as substitutes for restrictive agreements. But I submit that it was much more than a strong suspicion, because there were two successful prosecutions under the order subsequently laid to regulate information agreements in the supply of goods. One was to do with electricity meters and the other with cement manufacturing companies. This is much more than a suspicion.
  I accept that not all information agreements are contrary to the public interest. But if information agreements are permitted in the supply of services when they have been banned in the supply of goods, agreements contrary to the public interest, contrary to the spirit of this measure, and certainly contrary to the intentions of both the restrictive practices legislation and the Fair Trading Act will come outside the scope of the Office of Fair Trading, and I cannot think that that will be in the interest of the consumer.
  I hope that the Minister will watch the situation carefully and, if necessary, lay the relevant order. However, I am not filled with optimism about that prospect. It has taken more than 12 years to get the first of the restrictive practices legislation before the House on the supply of services. I hope that it will not take another 12 years for the hon. Gentleman to review the situation. As the Government have already shown themselves to be so parsimonious over the allocation of time to the hon. Gentleman's Department, I hope that it will not be another 24 years before we get such an order before us.
  However, I do not wish to appear churlish or lacking in enthusiasm in my welcome to a measure which has the potential to be of importance to the con-
  1290
  sumer. I suppose that the proverbial half a loaf is better than none. I am sure that all hon. Members will wish to join in welcoming a measure that should eventually lead to lower charges than would otherwise be made and to a number of practices that are certainly not in the interests of the consumer being prevented.
  11.5 p.m.
  Mr. Greville Janner: I am sure that no one would accuse the hon. Member for Gloucester (Mrs. Oppenheim) of being churlish. Her welcome was as generous as one would have expected from her, having regard to her activities in these matters. Her sense of frustration is to an extent shared on my side of the House.
  We welcome what is in the Order and we pay wann tribute to the present Administration for having produced the first order under what was about the only worthwhile statute produced by the last Administration. The order contains useful material, but perhaps I should briefly indicate one or two other matters not contained in it so that people should be warned not to expect too much from it.
  It deals with the provision of services. There is the all too common belief that contracts of service have anything in common with contracts for the provision of services. For example, a non-poaching agreement between competing companies, that is, an agreement not to take on members of the staff of the other company, is not covered. Also not covered is the agreement by which one company will not take on workers who leave the service of the other, even though by that time they will have left that company's employment. We hear a good deal about deliberate poaching of other companies' employees and about agreements which are sub rosa.
  I hope that the Minister is right to say that the Order subjects agreements that are covered to open public scrutiny where appropriate. Like the hon. Lady, I fear to some extent that too many agreements will not be laid open to public scrutiny, because those who make them will take great care to avoid that. They will stick to oral agreements and avoid committing anything to writing or other documentation. That is no reason for not having the Order, but it leads

  1291
  to my second warning that we must not expect too much from the Order in its present form.
  The Order covers
  "the terms or conditions on or subject to which designated services are to be supplied or obtained".
  When the hon. Lady said that exclusion clauses were not covered, I am sure that she intended to say "individual exclusion clauses", because collective exclusion clauses are. The situation will be covered in which interests make agreements that they will among themselves include exclusion clauses in all the various contracts they make. They are comparatively rare, however. Far more common are those which are not covered by the Order and which I hope will be dealt with shortly, one way or the other, and those are the individual exclusion clauses. These are employed by travel agents, by furniture removers, by launderers and dry cleaners. They are used by everyone from the cleaners of nappies at the birth to the carriers of the coffin at the funeral. All those supplying any sort of service may still exclude the rights of the consumer by one of these clauses.
  Happily, the Director General of Fair Trading is to be congratulated on the efforts that he and his team are making. They are doing a first-class job carefully and cautiously, and, although some of us would wish for more vigour, we must recognise that they are starting to get results. For example, National Car Parks have agreed voluntarily to remove those disgraceful and highly misleading exclusion clauses which appear on notices on walls and on the tickets saying that people park at their own risk and responsibility. I trust that all others in that business will follow its example, without the necessity for legislation or orders.
  However, this is only a beginning. We have an Order which we should be pleased to have. Subject to the warning that it does not cover contracts of service and those agreements which are, and will remain, sub rosa, and subject to the anguished hope that more will be done swiftly to implement the recommendations of the Law Commission, however unsatisfactory some of them may be, in connection with individual
  1292
  exclusion clauses, I extend a cordial Welcom to the Order.
  11.10 p.m.
  Mr. Nicholas Ridley: I join those who have welcomed the Order. I am amazed that we have it now; I thought that it had already been made. I must have failed to do my parliamentary duties.
  I remember writing to all the professions when I was in charge of these matters in the Department of Trade and Industry asking them whether they were doing wrong, so that we could tell them to stop. We sent hundreds of letters and the most irate answers came back, after long delays, answers from which it was clear that all services should be included in the scope of the restrictive trade practices legislation. I was pleased to see the powers included in the Bill, even though I was not destined to take it through the House.
  It is astonishing to realise that only now has the Order been laid. I welcome it, because I am certain that of all the things the present Government have done since February 1974, this is the only one which could conceivably have the effect of reducing prices. They have produced much legislation which is likely to put prices up. It is a pity that so few hon. Members are here to welcome the one conversion towards understanding the causes of high prices which the Government have chosen to enact. They are to be congratulated on it.
  It is a pleasure to me to be able to congratulate the Government on a contribution to reducing inflation. I have for so long wished to be able to say something favourable that tonight is a happy and special occasion for me. I am extremely pleased to see the Order. but I must make a few comments.
  It is not what is in the Order but what is not in it that worries me. I am surprised by the exclusions. I know that the Minister can say that many of them are in the Act and not in the Order. That is a fair point, but I must disclaim responsibility, because I was not a member of the Administration which introduced the Act. [Laughter.] The hon. and learned Member for Leicester, West (Mr. Janner) has no right to a laugh, because he is excluded. Why is the legal profession not subjected to the rigours of competition?

  1293
  I often heard from Labour Members when they were in opposition that barristers were all in a closed shop, that solicitors had their ring, and that the legal profession was too expensive and needed a dose of competition. I became convinced by their arguments, having always respected lawyers and thought of them as people of above the ordinary aspirations of us ordinary mortals. I began to realise that maybe it would be healthy to write to three or four barristers and ask for tenders for defending oneself, or ask solicitors to put in quotations for looking after one's affairs or doing one's legal business. But we are not allowed to do that. The hon. and learned Gentleman should not laugh, because he has got away with it scot free in his profession. I do not see why he should. I want to hear what plans the Government have for extending this legislation to lawyers and perhaps to estate agents, architects, surveyors and all sorts of other professions.
  Mr. Deputy Speaker (Sir Myer Galpern): Order. I have allowed the hon. Member to develop his argument, but I must now rule him out of order. He is dealing with something not covered by the Order. He is dealing with questions relating to other Acts.
  Mr. Ridley: The hon. and learned Member for Leicester, West is relieved indeed to hear your ruling, Mr. Deputy Speaker, and of course I accept it.
  The schedule to the Order contains a whole list of other exclusions which, I understand, it would be in order for me to discuss.
  Mr. Deputy Speaker: I thought the hon. Member had concluded on a very nice note when he welcomed the Order. I am surprised that he is continuing.
  Mr. Ridley: I am grateful for your encouragement, Mr. Deputy Speaker. I am glad that you liked the first part of my speech. I hope you will equally like the second part on which I have only just started.
  One can always tell the friends of the Government by seeing who is excluded from their stricter legislation. I wonder why the Order excludes all public industries, including the Post Office, air, sea and land transport, and the Treasury.
  1294
  If anybody ought to be in the Order, it is the Treasury. All the excluded institutions could do with a good dose of competition, and none more than the Post Office.
  The hon. and learned Member for Leicester, West spoke about exclusion clauses. The worst exclusion clause of all is that operated by the Post Office, which takes no responsibility for delivering letters, seeing that letters are returned if they are not delivered, or ensuring that compensation is paid if letters are lost. Yet we are told that the cost of posting a first-class letter is going up to 10½p. About 3 per cent. of my constituents' letters never reach me and 3 per cent. of my replies never get back to them. This is an area in which a little competition might do a bit of good.
  Let us have lots of Post Offices. Why is the Post Office given exemption under the Order? It is the most restrictive organisation. Why should the Gloucestershire vicar to whom my hon. Friend the Member for Gloucester (Mrs. Oppenheim) referred not be allowed to deliver Christmas cards in his parish? Why should people not be allowed to pay others to deliver their letters?
  This is a serious state of affairs. I am not laughing any more. The postal system does not work in this country. The Post Office fails to deliver letters and it is losing £350 million a year. We should remove the Post Office from the list of exemptions and let other people have a go. The Director General of Fair Trading could also look at what restrictive agreements in the Post Office are doing to the service. People are fed up with the nationalised post service. They would far rather have the Gloucestershire vicar than Sir William Ryland and his merry men. At least the vicar might deliver the letters. Many people in the City of London would like their own private delivery services. It is the failure of the Government to exclude the Post Office from legislation like this that is standing in their way.
  I believe that the Order is to be welcomed, but we have to take on board one further point. Not only do the professions have to be included, but the idea that the State, by taking unto itself a monopoly, is somehow immune from the abuses of monopoly and can safely be

  1295
  entrusted to discharge that monopoly unchallenged must go. Whatever we think about private or public ownership, it is the monopoly element in the State provision of gas, electricity, postal services, railways and so on which is offensive and a failure.
  If the State not only owns an industry but is able to subsidise it to any extent it chooses, it cannot demand a monopoly as well. That is having one's cake and eating it, and it is resulting in the poorest services the country has ever known. The moral for the Government is that they should look to their own friends, look at the mote in their own eyes before they start complaining about the beams in other people's.
  I hope that the hon. Gentleman will take on board that it is time to break up the public sector monopolies. Monopolies in this country are no longer to be found in the private sector or in the professions—or, at least, only to a small extent—but in the monstrous creations of Herbert Morrison and others who believed that, because a monopoly was nationalised, it was immune from public scrutiny.
  11.22 p.m.
  Mr. Alan Williams: The congratulations proffered by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) are the only cause I have had in the debate for doubting whether I am doing the right thing. But it seems that on occasions even he will agree with me on certain matters.
  However, I am surprised by the change in the hon. Gentleman's approach. A short while ago, in Committee discussing legislation on safety matters, he talked about our being over-governed. Tonight he wants even more government than I am bringing in this Order. Perhaps he is becoming one of the leading interventionists of his party. No doubt the transformation will delight his leaders.
  He was convinced by our arguments about lawyers when we were in opposition, and I am delighted to have heard him say so. The tragedy was that when we had the relevant schedule struck out of the Fair Trading Bill, his enthusiasm and conviction did not carry him along with us, with the result that the then
  1296
  Government were able to re-insert the schedule.
  The hon. Gentleman asked who were the friends of the Government. Apparently, in his view anyone excluded from the Order is a friend of the Government. It seems that friends of the Government are probably front organisations for wicked Socialism. Among them we find the insurance companies, building societies and the City Take-over Panel—and we know what leading proponents of Socialism and public enterprise they are.
  But the hon. Gentleman is wrong about the Post Office. The Post Office is covered in so far as it enters into restrictive agreement with any other party. It is covered as anyone else is covered in the same sort of situation. If the hon. Gentleman wants to talk about monopoly, that is way beyond the scope of the Order.
  Mrs. Sally Oppenheim: But does not the hon. Gentleman accept that the Post Office has a restrictive agreement between itself and the Government not to allow any competition in its operations?
  Mr. Williams: It is late in the evening and I am sure that we shall forgive the hon. Member for Gloucester (Mrs. Oppenheim) a point like that at this stage. I am sure that she would not want it to be subjected to a particularly close analysis.
  The hon. Lady said that she did not want to be churlish. She said it at the end of her speech and it came as some surprise to me. Her enthusiasm would have curdled most of the milk on the London milk floats of which she complained.
  When the hon. Member for Gloucester began her speech rather optimistically I thought that she was about to refer to the Order. However, I then realised that she was more intent on getting perhaps a couple of paragraphs in the Press than on any issue. That is not a target that I would in any way disdain. I well recollect my own activities when I was in opposition.
  The hon. Lady was quick to take credit on behalf of the Conservative Party for the Fair Trading Act. However, she failed to point out that that legislation was introduced in sackcloth and ashes as

  1297
  penance for the assassination of the Consumer Council and because of pressure from the consumers, who were infuriated by the short-sightedness of that particularly penny-pinching activity on the part of a previous Government.
  The hon. Lady accused me of being tamed and timorous. I am sorry that my apparent excesses of previous years have waned somewhat. I suppose that it must be a matter of advancing age. But let it be remembered that in the end I introduced the Order, which the Conservative Party failed to produce. Therefore, I trust that any allegation of timorousness that she levels at me she will level even more forcefully against her own party.
  The hon. Lady complained that she was disappointed that exclusion clauses were not covered by the order. However, as my hon. and learned Friend the Member for Leicester, West (Mr. Janner) rightly pointed out, collective exclusion clauses are and would be registrable.
  I know that that was not what the hon. Lady was primarily talking about. She was talking about the Law Commission Report. She will be aware that consultation started almost immediately on the exclusion clause recommendations of the Law Commission. However, her own Government took several years from the stage of receiving a report to actually producing legislation in the form of the Supply of Goods (Implied Terms) Act.
  The hon. Lady referred to estate agents. For a moment I thought that she would slip into the role of protector of estate agents, but at the last moment her political corns started to nag her, she drew back her toes and decided that that matter would best be left to someone else. In this instance her political judgment was right.
  I am glad that the hon. Lady felt a certain enthusiasm for the consultative document that I have produced for control of estate agents. I suppose that that is another example of my timorousness in tackling problems with which her own party flatly refused to deal.
  The hon. Lady regretted that information agreements were not covered. One of the problems of being in opposition is that one cannot say that what the Government are doing is right. Therefore, one has either to state that it is wrong—she dare not saY that about this
  1298
  particular item—or that it does not go far enough. I am delighted that when referring to Section 108 the hon. Lady took the opportunity to say that it did not go far enough. I assure her that I discussed this very point with the Director General of Fair Trading, who informed me that he was not yet clear what the initial flow of work would be in June, when registration begins, and that he would not at this stage welcome the information agreement order which the hon. Lady apparently wants, because he feels that administratively he could not cope with it.
  I see that the hon. Lady is raising her eyebrows. I remind her that on many occasions she has enthusiastically urged the Government to cut public sector manpower and public expenditure. Therefore, I trust that this modest recognition of the need to contain public service manpower and, in so far as it appears necessary, to phase the introduction of the restrictive agreements and the information agreements orders as separate items will be welcome to the hon. Lady.
  Mr. Ridley: If all these Government services and industries were not included in the exclusions, surely we should reduce manpower by much more. Cannot the hon. Gentleman see the difference between promoting competition in the private sector, which has beneficial results, and at the same time reducing manpower in the Government's services, which are totally excluded from competition? That is where the economy is to be found.
  Mr. Williams: On another occasion I shall be delighted to hear how the hon. Gentleman would introduce competition in the domestic supply of gas through the same or parallel mains and in the domestic supply of electricity through the same or parallel mains. This is not the appropriate time. However, I suspect that if the hon. Gentleman does that, he will achieve a technological feat which no one has yet equalled in the consideration of the activities of the nationalised sector.
  Mrs. Sally Oppenheim: I welcome the hon. Gentleman's conversion to the thought of perhaps restricting Government expenditure. But as there are two separate statutory consultative procedures under the two orders, would it

  1299
  not have saved both time and manpower if these procedures had taken place at the same time?
  Mr. Williams: No, because we should have had to take on extra people to deal with the extra agreements coming forward. The hon. Lady must make up her mind. I shall be delighted to hear from her when she has made up her mind. No doubt as the Opposition spokesman she will let us know her priority. I find it difficult to keep pace with the capriciousness of change in the priority of policies that the hon. Lady advocates from the Opposition Front Bench.
  Having had this amicable, constructive and not terribly relevant debate, I commend the Order to the House.
  Question put and agreed to.
  Resolved,
  That the Restrictive Trade Practices (Services) Order 1975, a draft of which was laid before this House on 9th December, be approved.

  STANDING COMMITTEE ON STATUTORY INSTRUMENTS, &c.
  Ordered,
  That, notwithstanding the provisions of Standing Order No. 73A (Standing Committee on Statutory Instruments, &c.), the Standing Committee considering Commission Document No. S/1185/75 relating to Imports of Textiles from India shall be able to sit for up to two and a half hours after the commencement of its proceedings.—[Mr. Snape.]
  Ordered,
  That, notwithstanding the provisions of Standing Order No. 73A (Standing Committee on Statutory Instruments, &c.), the Standing Committee considering Commission Document No. S/1212/75 relating to Imports of Textiles from Pakistan shall be able to sit for up to two and a half hours after the commencement of its proceedings.—[Mr. Snape.]
  Ordered,
  That, notwithstanding the provisions of Standing Order No. 73A (Standing Committee on Statutory Instruments, &c.), the Standing Committee considering Commission Document No. R/2685/75 relating to International Trade in Textiles and Modification of EEC Regulation 1439/74 shall be able to sit for up to two and a half hours after the commencement of its proceedings.—[Mr. Snape.]
  Ordered,
  That, notwithstanding the provisions of Standing Order No. 73A (Standing Committee on Statutory Instruments, &c.), the Standing Committee considering Commission Document No. S/1235/75 relating to Imports of Textiles from the Republic of Korea shall be able to
  1300
  sit for up to two and a half hours after the commencement of its proceedings.—[Mr. Snape.]
  Ordered,
  That, notwithstanding the provisions of Standing Order No. 73A (Standing Committee on Statutory Instruments, &c.), the Standing Committee considering Commission Document No. R/2627/75 relating to Overall Concept for the Next Multi-Annual Research Programme of the Joint Research Centre shall be able to sit for up to two and a half hours after the commencement of its proceedings.—[Mr. Snape.]
  Ordered,
  That, notwithstanding the provisions of Standing Order No. 73A (Standing Committee on Statutory Instruments, &c.), the Standing Committee considering Commission Document No. R818/75 relating to Data Processing shall be able to sit for up to two and a half hours after the commencement of its proceedings.—[Mr. Shape.]
  Ordered,
  That, notwithstanding the provisions of Standing Order No. 73A (Standing Committee on Statutory Instruments, &c.), the Standing Committee considering Commission Document No. R/2297/75 relating to Data Processing shall be able to sit for up to two and a half hours after the commencement of its proceedings.—[Mr. Snape.]

  PETITION

    Abortion
    11.33 p.m.
    Mr. Ian Campbell: I have great pleasure in presenting this petition tonight on behalf of the Society for the Protection of the Unborn Child. This society was supported by many other similar organisations when it sought the support of women of the age of 16 years and over and in fact obtained more than 425,000 signatures in its efforts. Those signatures were obtained mainly from ordinary women who know the problems of raising children and who feel strongly enough about the way the Abortion Act is working to have been prepared to sign a petition asserting the basic statement:
    "That abortion destroys human life …
    That it negates the Declaration on the Rights of the Child adopted by the United Nations on 20th November, 1959, which states that children are entitled to appropriate legal protection before as well as after birth
    That the majority of women in this country repudiate the elitist minority calling for abortion on demand who claim to speak for women
    Wherefore your Petitioners pray that the House of Commons should pass legislation to

    1301
    limit abortion and instead institute programmes which will provide justice for women under pressure and which will include those recommendations put forward in the Finer Committee Report to assist single-parent families."
    Petition to lie upon the Table.

    ADJOURNMENT
    Motion made, and Question proposed, That this House do now adjourn.—[Mr. Shape.]

  NEWSPAPERS (NORTHERN EDITIONS)
  11.34 p.m.
  Mr. Alan Fitch: I welcome the opportunity tonight to ventilate in the House the future of the newspaper industry in the North of England, because I think that the proposal to cease publication of certain national newspapers in Manchester and to transfer their publication and printing to London is a retrograde step. We in the North—and my geographical definition of the North includes not only the North-West, but Yorkshire and the North-East—believe that we are in danger of becoming an economic and social no-man's-land between Scotland, with its newly found oil resources, on the one hand and, on the other hand, the Midlands and the South, with their ready access to the Continent of Europe.
  We are witnessing another drift to the South, this time in newspaper production. It is ironic that, while the Government are pursuing policies to give more power to the regions, a policy of decentralisation or devolution, the newspaper owners are pursuing a directly opposite policy. They want a centralised industry, which would mean less news space devoted to regional problems and, as a North-West Member of Parliament, I deplore this. Regional democracy is not served by a withdrawal to London.
  I have sometimes criticised the newspaper industry for being faceless and too remote, but this will make it even more so. Since 1752, the printed word originated and published in Manchester has gone out in an ever growing volume until it has become the representative viewpoint of the whole of the North of England. Now it is in danger of being swallowed up and disappearing from sight
  1302
  because of that centralisation, albeit here in the professed search for viability, which is affecting all our lives more and more. Centralisation in the national newspaper industry comes with the introduction of new technologies for printing, which are costly to finance and costly in human terms for those who are about to lose their employment in order to pave the way for the maximisation of profits.
  Certain production stages are to be moved from Manchester to London, with the eventual loss of more than 700 jobs in an area where unemployment is already causing concern. Other switches already completed have yet to be seen to be having the effect desired of them. The Manchester Guardian did not succeed in staving off financial problems by dropping "Manchester" from its title and assuming a national role. Commendable though its efforts were, the Daily Express did not maintain its Scottish circulation in full after switching production from Glasgow to Manchester.
  How may we be sure that centralisation, even with the new technology, will give the newspaper industry the viability it needs and the readers the service they should have? Manchester journalists at the Daily Mirror, whose group is spending a total of £2·8 million in new printing methods, point out that between December 1974 and December 1975 northern sales went up by an average of 17,000 copies a day, despite disruption resulting from the company's announcement of its plans. In the same period, the London published Daily Mirror dropped 229,000 copies.
  The management does not even seriously challenge the claim that the lion's share of the newspaper's profits comes from its Manchester operation. It says that the £1 million-plus savings in 1977 from the implementation of its plans will be almost certainly swallowed by increased newsprint prices in 1976.
  With the narrowness of these margins and the limited amount of capital available for investment, the smallest error in expected performance could put in jeopardy the London operation and the jobs of those workers transferred to produce editions formerly planned and produced in Manchester.
  What of the new technology, its costs and implications? There is a belief.

  1303
  which has some substance, that a product such as a newspaper that is "master-minded" 200 miles away will lack that amount of local flavour that maintains its acceptability and sales. It will not be enough to include only the Andy Capp cartoon to keep up the sales of the Daily Mirror in the North. Northern readers too will be denied some of the convenience of access to the columns of the papers of their choice.
  Already there is concern about the drawing up of the shopping list for the new technology hardware by the Daily Mirror group newspapers. One supplier says that the equipment for which the company is paying £1 million could be bought for £300,000. This equipment is planned to be in use by the autumn of this year. However, the Daily Telegraph, which is spending over £2 million on its plans and prints at the same Manchester premises with the same staff as the Daily Mirror, does not envisage its method operating before the autumn of next year.
  Although employers and unions are taking part at national level in talks on the new technology and manpower, the haste to implement the Manchester proposals is worrying. A printing research authority views five years as necessary to evaluate fully the functions and requirements of the new technology and only in very favourable circumstances could the operation be completed in just over two years. Mr. Rex Winsbury, in a working paper prepared for the Royal Commission on the Press, warns of the American experience of using the "big bang" approach to the introduction of the new technology, where all the old methods are discarded at one go and are substituted by the new. Some phasing was found to be preferable.
  The Daily Mirror's Manchester journalists have already produced alternative proposals which would lessen the number of redundancies among themselves and printers and give them more immediate control over maintaining the northern element in the publication. The National Union of Journalists, too, is seeking to ensure that the new technology is the servant rather than the master. It believes that the process should be tailored to suit the product rather than
  1304
  the other way round. To that end the union is seeking the co-operation of the print unions in obtaining an independent investigation of the possibilities and suitability of new technology for newspaper production. It is also seeking to ensure that any new technology that is adopted is capable of meeting the editorial needs of the Press, and it stresses the need for full consultation and agreement with journalists before commitment to its introduction.
  It is at this point, perhaps, that we should ask how the industry might heed the recommendations of the Royal Commission on the Press. Already it has been necessary to delay the Commission's interim report by a month. The severity of the crisis in the national newspaper industry should not obliterate the need to heed the Commission's recommendations, nor presage the massacre of newspaper production in Manchester and those involved in it.
  The crisis is the result of a number of factors, including pricing policy, reliance on advertising revenue, failure to bring in previously new methods of production and the correctly-sized work forces to go with them, soaring newsprint prices, charges for transport, postage and telephones, and the general economic situation, of which the activity of the newspaper industry is one of the earliest indicators, if not the first.
  The industry cannot and should not be relieved of the responsibility to find solutions to many of its problems, but in its present state it will be unable to do so in a form that is tolerable to publishers and workers without some outside help. Certainly proprietors of the older type condemn Government aid as a threat to editorial integrity. However, with Continental examples at hand, there is a growing feeling, especially among the managers and accountants who are now increasingly responsible for the running of newspapers, that a one-off operation could be assimilated without harmful effects.
  It might be in the national interest for Government aid through preferentially-rated loans to be offered to enable the industry to re-equip and meet its social obligations to those made redundant by lump sum compensation income maintenance or the improvement of pension provisions. Another suitable area for

  1305
  Government assistance might be towards the stabilisation, not the subsidisation, of newsprint prices. Yet again, consideration might be given to preferential rates for post and telecommunication facilities.
  Important also is the retraining of employees, either to work the new processes in the industry or to work elsewhere. For example, most of the 400 highly skilled printers in Manchester are unlikely to be able to find comparable employment elsewhere. All these factors must be thoroughly considered and approached rationally at a time when there is much concern that the variety of views and news presentation in the national Press should be maintained and, if possible, extended. The position in Manchester, which for a number of newspapers also distributes copies to Scotland, Northern Ireland and parts of Wales, must be subject to special scrutiny with regard to maintaining and furthering regional interests at a time when Parliament and the country is giving consideration to the need for devolution.
  A healthy newspaper industry is essential to our democratic system. Production in London will mean not only redundancies. Redundancies can lead to lack of faith in the future prospects of an industry. I understand that the United Kingdom Press Gazette, once teeming with "situations vacant", has now a virtual famine of orthodox newspaper jobs. If there are not jobs, good people will cease to be attracted to journalism.
  Journalists want to see the chance of a stable career. When redundancies occur in smaller numbers, they do not make the same impact as large-scale redundancies, but they have the same individual effect. Unemployment is as much a personal problem whether a person is one of a hundred or one of a thousand redundant people.
  Perhaps I may finish on a slightly literary note. My memory is getting dimmer and dimmer, but I can remember a master at my school talking about Shakespeare and saying that he thought the most tragic lines in all of Shakespeare's works was "Othello's occupation gone." When the occupation of a journalist goes, or that of Plessey worker in Wigan, or a Thorn worker in Skelmersdale, it means for him a certain amount of personal tragedy.
  11.48 p.m.
  Mr. George Rodgers: I am deeply grateful, Mr. Deputy Speaker, that my hon. Friend the Member for Wigan (Mr. Fitch) has invited me to share his debate. I promise that I shall not abuse his generosity by invading the time which the Minister will require to reply to the many interesting and valid points that have been raised.
  I accept completely, if somewhat reluctantly, that the purpose of the Press in our system of society is to operate at a profit. However, I am not prepared to accept that that is its sole function. Surely the role of a newspaper industry is to provide a service, to present information and entertainment to a wide range of readers whose interests are influenced by various factors—by their own particular surroundings, their local authority, their local football team, the economic and industrial prospects of the region in which they reside, the activity, or lack of activity, of their Member of Parliament, and a whole host of neighbourhood issues.
  I seriously suggest that the flow of information from all these quarters and from many others is placed at risk by the intention of national newspaper proprietors to concentrate production of national newspaper proprietors to concentrate production of national dailies in London. It has been mooted that northern people, being rough, uncouth characters, would hardly notice whether a newspaper was published in Manchester or Timbuktu, so long as it contained its quota of "crime, crumpet and comics". In fact, the advance of the very newspaper that contains all these ingredients in abundance has been halted in the North.
  The truth is, indeed, that the northern editions of the national newspapers have demonstrated their ability to cover late stories and sporting events with great accuracy and that their staffs have a true identity with their readers because they live and work in the North. I am convinced that even with the greatest technical advances in the world a London-based operation could not continue to serve the North as efficiently and as successfully in circulation terms as the present operation.
  It is unfortunate, to say the least, that plans should be announced for a major

  1307
  upheaval in the industry at the very time when a Royal Commission is conducting an inquiry into the state of the Press. My overwhelming anxiety is that there should not be a diminishing of the quality of a service that is the entitlement of those living in the northern regions.
  The other factor of substance is the devastating effect the introduction of a facsimile process of publishing would have on the work force of the northern base of the industry. I appreciate that I must tread delicately as I do not wish to intrude on any negotiations between unions and management. A useful understanding has been reached that any redundancies should be of a voluntary nature, although future job opportunities in an area already under terrible stress would vanish for ever.
  The loss of jobs that is envisaged is devastating. The programme of planned unemployment affects those who serve the Daily Mirror group, the Guardian and the Daily Telegraph. The Daily Telegraph employs 137 people and that work force is to be reduced to 47. It employs 55 journalists and the intention is to thin the number down to 10.
  We have devoted considerable time recently to devolution, yet we witness a situation in which people who have put down roots and committed themselves to mortgages and families in the North-West now face a total change in their living standards and life styles. This is the consequence of yet another industry centralising its activities in the already overcrowded South-East.
  I conclude by emphasising that the trade unions concerned are not being bloody-minded. It is recognised that new technology could eliminate much of the duplication and over-manning, and the unions suggest that this could be met by voluntary redundancies and voluntary early retirements to lessen the social consequences.
  The production of many news features, advertising and racing pages could well be sent North by photo-composition without disturbing the special qualities of the Manchester editions. All this can be accommodated, albeit painfully. However, it remains essential that other pages should retain and enhance the northern flavour. The alternative proposals put forward by the unions are genuine and
  1308
  realistic. It would be tragic if no action were taken to prevent a drift towards strife and hostility. I hope that tonight my hon. Friend is able to indicate the Government's awareness of and concern about this looming problem.
  11.53 p.m.
  The Under-Secretary of State for Trade (Mr. Eric Deakins): The whole House will be grateful to my hon. Friend the Member for Wigan (Mr. Fitch) for initiating this short debate on one aspect of the newspaper industry. My hon. Friend was kind enough to give me some indication of the points he would be making and I am grateful for that courtesy. This is an important subject and my hon. Friend has made his points fully and clearly in a moderate and helpful way.
  Before turning to the particular points my hon. Friend has made I shall devote a little of the time available to me to putting them in the perspective of the British newspaper scene. The industry is of special importance to the life of the community. We have a large and varied Press compared with many other countries. Although over the years there have been casualties, we still have a fair number of national daily and Sunday newspapers giving a wide range of views and comment. By what in its way is a formidable distribution operation, they circulate widely throughout Britain day in and day out.
  Then, in addition to this daily availability of national newspapers, there are regional morning, evening, and Sunday newspapers which serve sizeable catchment areas and particularly in the North. They begin to focus rather more closely than the national Press on issues of particular importance in particular areas.
  I now turn to the subject with which my hon. Friend has dealt this evening and the issues which are of particular concern to him. I refer to the implications of the changes which may come about from the way national newspapers propose to tackle their very real problems. The House will know that many national newspapers, although centred on London, produce their northern editions in Manchester. Concern was expressed by my hon. Friend, and also by my hon. Friend the Member for Chorley (Mr. Rodgers), that changes in the techniques of newspaper production would include

  1309
  less composition in Manchester. There may be differing views about particular proposals, but I am sure there will be general agreement that it is right that the industry should be giving careful, realistic and constructive thought to its future.
  We are all aware of the general criticism that British industry has been slow in adjusting to the need for change and, in particular, in grasping the opportunities offered by new technology. This new technology is not only a question of producing goods faster and cheaper, but of providing a better working environment for those who spend their lives in an industrial setting.
  Among British newspapers, it is fair to say that provincial and local newspapers have been in the lead among those taking advantage of new technologies; the nationals less so. But there has been a change of outlook and a growing awareness on both sides within the national newspaper industry that the new technologies have potential for achieving a more secure future. I am glad to say that managements and unions are now together taking a fundamental look at the industry's needs and future.
  Such a review has implications for what has to be done, how it is to be done and where it has to be done. In the age in which we live, we must accept that this will bring into play questions of carrying out some operations in one place and some in another, of using to the best advantage techniques for receipt of news in one place, and doing all or part of the production process in another. In a sense, the production process is not complete until the reader has his copy of the newspaper in his hands. New techniques make possible better newspapers and the means of restraining costs. The industry needs to take advantage of them. The stark alternative is a decline in the number of newspapers, with all that that involves for job opportunities and employment.
  I have said that the new techniques offer greater efficiency, but they also involve fewer jobs. Essentially, this is a matter for the industry itself. Where a major change in operation is in prospect, it is important that it should be made carefully and in an atmosphere conducive to getting the answers as nearly right as it
  1310
  is ever possible. There must be the fullest possible consultation between management and the unions concerned. Both sides of the industry must work together in a constructive spirit in joint approaches to problems, each bringing, on the one hand, the contribution of its practical experience and, on the other hand, a determination to help the industry to enjoy the full benefit of the latest technology.
  My hon. Friend raised the question whether, if editing and composition of the northern editions of national newspapers were transferred from Manchester to London, their northern content and flavour would be lost. This is a perfectly valid point, but it is not one which is peculiar to the northern editions. It is already familiar to the national newspapers, because regional editions for other parts of the country are also produced. Some are produced in Manchester and some in London. Some national newspapers produce all their regional editions in London.
  But wherever the editing and composition are done, the news is local and is gathered locally. The regional editions have to appeal to readers in the region. If they do not meet the needs of those readers, if the quality of service referred to by my hon. Friend the Member for Chorley is not there, they will not sell. It will certainly be important for the industry to watch the situation carefully, but the managements concerned are well aware of the possible problems and have expressed their determination to ensure that the northern flavour of the northern editions is maintained.
  The House will know that the Press is the subject of a remit to a Royal Commission which has already done a good deal of work on the various issues germane to its inquiries. When, in the autumn of last year, both sides of the national newspaper industry were expressing anxieties about the economics of their industry, the Royal Commission saw this as a matter in which it should be involved. With every blessing from the Government, a team from within the Royal Commission got to work on a special and urgent inquiry into the national newspaper industry. The Commission was aiming at an interim report on this sector by the end of the present

  1311
  month. However, both sides of the industry asked the Royal Commission to defer its report so that it could take account of a submission reflecting these deliberations between management and unions.
  The Commission agreed and I understand it now has the end of February in mind for its interim report. My right hon. Friend the Secretary of State has told the House that when the report is available the Government will give it the closest attention. My hon. Friend will recognise that in the meantime it might be better for me not to comment in detail on the points he has made. I have noted them and will, of course bear them in mind. For the present, I will go back to something I said earlier—namely, the importance we attach to the fullest possible consultation between management and unions.
  1312
  I think that we would all agree that it is inevitable that operating practices must change. This cannot be done without affecting in one way or another those who work in the industry. But we are always anxious that everyone should have full opportunity to contribute to the thinking on the way new developments are handled.
  I am very grateful to my hon. Friend for giving me the opportunity of making clear the Government's interest in these developments and saying that at the appropriate time we—and I am sure everyone in the industry too—will give close attention to the interim report of the Royal Commission.
  Question put and agreed to.
  Adjourned accordingly at one minute past Twelve o'clock.