GOVERNMENT ECONOMIC STRATEGY

HC Deb 11 March 1976 vol 907 cc634-758

3.51 p.m.

The Prime Minister (Mr. Harold Wilson)

I beg to move. That this House do now adjourn.

I want to make it clear at the outset that, as my right hon. Friend the Leader of the House has explained, this motion is on the Adjournment. That is dictated by the procedural rules of the House. Nevertheless, the House must understand that this is a vote of confidence in the Government and the Government's financial and economic policies. No one in any part of the House should be in any doubt concerning what he is voting about tonight.

The fact that this decision of confidence has to be put today at all arises out of one of the most unholy parliamentary alliances in the history of Parliament. Nothing like it has been seen since the Shinwell-Winterton alliance, described in its day as "arsenic and old lace". This time, it is arsenic and red chiffon.

What happened last night was an alliance of hon. Members who would not normally be seen dead with one another. The distinction on this occasion was that the Conservative Opposition, who voted last night, had begun the debate by tabling a serpentine amendment, which was voted down, and which was designed, in its snake-like way—like so many of the Conservative Opposition's proposals these days—to get unaccustomed allies from this side of the House. But my hon. Friends must recognise that they were giving their sedentary support to an Opposition who, throughout the debate, which centred on public expenditure, had the following record: first, the Opposition did not tell us what they would cut; secondly, they did not tell us what they would increase.

By abstaining, my hon. Friends were giving support to an Opposition party whose Shadow Chancellor has said: There is no escaping from the fact that this"— he meant cutting public expenditure now, this year— will increase unemployment in the short term". I may be fastidious, but I would think many times before giving any help whatsoever to an Opposition who have made their policy on unemployment as clear as that, because that statement has not been withdrawn by the Shadow Chancellor, nor was it repudiated by the Opposition in this week's debate.

The whole House knows that the Tories are committed to massive increased expenditure—of course they are. We have been through all this before in many debates. They are committed to Maplin. [HON. MEMBERS: "Oh."] It is all right for them to try to forget it now, but they supported it. They have supported it in Opposition as well as in Government. I know that the Leader of the Opposition is repudiating everything which the Government of which she was a member did, but one does not repudiate what one has done in Opposition—on the contrary.

The whole House knows that the increases in public expenditure which the Opposition are advocating include Maplin; the massive rail expenditure on the Channel Tunnel, for which they voted last year, and against which we voted in Opposition; their Leader's election bribe on mortgages and rates, which would have meant hundreds of millions of pounds in expenditure, and which, to their credit, they have not since repudiated; not to mention their demand for large increased expenditure on defence.

So I say to my hon. Friends who gave aid and comfort to the Conservative Opposition last night that they were allying themselves with obscurantism on the main issue of the debate, public expenditure; with a party which has demanded a policy which, on its own admission, would mean increased expenditure this year—it has not denied it; with a party which has advocated a housing policy, including massive rent increases and a local authority housing policy based on ghettos, mainly for slum clearance, the disabled and pensioners. [HON. MEMBERS: "No."] I am relating this to the speeches of the Leader of the Opposition.

My hon. Friends were associating, in their funny way, with a party whose proposals this week would mean staggering increases in food prices, and, I repeat, to underline the strange nature of this unwritten alliance last night, a party whose proposals would mean massively increased defence expenditure.

It is not necessary this afternoon to go over all the issues raised in the public expenditure debate. [Interruption.] I would like to leave time for the Opposition to tell us what they are going to cut. My right hon. Friends, in their speeches in the debate, starting——

Mr. Nigel Lawson (Blaby) rose——

The Prime Minister

The hon. Member for Blaby (Mr. Lawson) has had more than his fair share of sedentary interruptions today. We must get on. [HON. MEMBERS: "Give way."] If anyone thinks that I am afraid of the hon. Gentleman, my reply is that I used to respect him when he was an editor but I neither fear nor respect him now.

My right hon. Friends, in their speeches during the debate, starting from a highly detailed White Paper, dealt very fully with the main issues, and I do not propose to go over them all again today. What I cannot accept from anyone are those repeated and unwarranted allegations about Her Majesty's Government cutting essential public expenditure. Taking 1979–80, the last of the five years set out in the White Paper, compared with 1973–74, the last year of the Conservative Government, the provision for housing, at constant prices—real value—will have risen by 22.8 per cent. Does anyone in the House object to that? On health and personal social services, the increase will be 12.4 per cent.; for social security, the expenditure will be up by 23.3 per cent., and on other public services by 15.7 per cent.; while on essential capital expenditure in publicly owned industries it will be up by 27.4 per cent.

Those are real increases in necessary expenditure. Whereas the Conservative Government had decided to abolish the regional employment premium, we not only maintained the premium, we doubled it. We are making massive provision for the regeneration of industry, not only through direct financing through the National Enterprise Board but in the successive schemes for modernisation and development of individual industrial sectors including wool textiles, machine tools and the foundry industries. [Interruption.] I hope that my hon. Friends who gave aid and comfort to that lot last night now realise the sort of people they are dealing with. There is no accounting for taste.

The figures I have given of increased real expenditure show, in our view, a concentration of public expenditure where it is most needed for social and industrial purposes. Where the programmes are restrained it is in almost every case a restraint in the previous rate of increase, not a cut.

As the House knows—I will not go over the whole argument—there is a need for this degree of restraint in public expenditure because, as world and national recovery proceeds we have to release resources for exports and for increasing industrial production and employment. I hope that Conservative Members will be as ready as we are to recognise that for nearly 30 years under successive Governments we have seen industrial expansion cut off in its prime time after time by the constraints arising from lack of capacity—including lack of skilled manpower—just at the moment when the expansion should continue.

Mr. Peter Rost (Derbyshire, South-East)

Expansion in unemployment.

The Prime Minister

I have said that in every boom since the war it has been cut off by constraints. I hope that hon. Gentlemen understand that. We are concerned as a Government to increase industrial strength by strengthening the size of our industrial manufacturing production. We have also, even in this difficult year, made massive increases in the provision for retraining and industrial training. These are relevant to the question of constraints.

What we have had to face under successive Governments—I make the point impartially—is that over recent years there has been another problem. The period of the boom has tended to get shorter as these constraints bite, and unemployment, both at the top of the boom and at the depths of the depression, has been higher with each turn of the cycle over at least the past 20 years. That is why we are determined, through our industrial policy, the National Enterprise Board, the Scottish and Welsh Development Agencies, the policies endorsed by the National Economic Development Council and the little Neddies and other means of encouraging investment, to ensure that as recovery gets under way and the pace of economic activity grows, we are not plunged back into the depression and, once again, increased unemployment.

My right hon. Friend the Chancellor of the Exchequer has given the House his assessment of the changing industrial situation. This has been the subject of all recent confidence surveys including the monthly indices of the CBI and the Financial Times. The deep depression which began in the summer and autumn of 1973, before oil hit us, is now beginning to give way slowly to expansion. I have given the references—the CBI and the Financial Times. Those hon. Members who can read and study statistics will have seen them. I am referring here particularly to industrial production plans, capital investment intentions and new orders, particularly export orders.

We have all recognised that a pick-up in employment lags some months behind the first signs of an increase in the other economic indices. [Interruption.] I can tell the House that——

Mr. Speaker

Order. Constant interruptions from a sedentary position amount to barracking. This is a democratic Chamber. I hope that both Front Benches will be heard in reasonable silence.

The Prime Minister

Particularly since I was referring to unemployment. I can tell the House that all the signs now are that the rate of increase in unemployment is running at a very much smaller rate than that which we had last year, including particularly the last three months of last year. I say to my hon. Friends, "Do not throw all this away by these voting and abstaining habits involving the Conservative Party—in the House or elsewhere".

In today's debate the Government are asking, as we have the right to ask, for a vote of confidence in our financial and economic policies. There can be no doubt that our counter-inflationary policies command wide support throughout the country. I know that some—not a great number—of my hon. Friends are opposed to our counter-inflation policy and to our pay policy, as they demonstrated when the legislation went through last summer.

What happened then was a curious inverse of what happened last night. On that occasion the alliance was in a different posture. Then it was my hon. Friends who voted against the Government's incomes policy while the Conservatives did the abstaining. Last night it was the Conservatives who voted against it while our hon. Friends did the abstaining. [Interruption.]We are always hearing from right hon. and hon. Ladies and Gentlemen on the Conservative Benches about Marxists. They seem very pleased with their new allies. [HON. MEMBERS: "Oh."] Right hon. and hon. Ladies and Gentlemen opposite have always seized on the Tribune Group when they have used that definition. Now they are welcoming its Members as allies.

Even so, I say to my hon. Friends, the fact that on anti-inflation policy they were out of step with the TUC General Council, with last September's Trades Union Congress, with the Labour Party Conference's unanimous decision—[Interruption.] They are entitled to be out of step with all of these. They are entitled to be out of step with the mass of the people, including the great majority of trade unionists.

If this is how they feel, they have the right to do this and in consequence to luxuriate in an odour of sanctification. I appeal to them not to sully that sanctification by giving aid and comfort to a Tory Opposition, particularly one like this. Compared with recent Tory Opposition Front Benches and even Tory Governments—over the years, we have studied them—the postures and pronouncements of right hon. Members opposite are more reactionary, more regressive, than this House has known from the Tory Party for a generation. The Tory Party has nailed to the mast what its leadership has proclaimed as "the opportunity to be unequal". I have never heard any Tory Leader say that in the last 30 years.

The purposes and ideals of this party, proclaimed in two elections, are to build on what previous Labour Governments have done, to achieve a greater equality of opportunity, social equality and sharing of social rights.

Mrs. Margaret Bain (Dunbartonshire East) rose——

The Prime Minister

No, I will not give way. The barracking has taken too much time and I want to leave time for other speakers. I have only a short speech to make.

Mrs. Bain

On a point of order, Mr. Speaker. The barracking has come not from this Bench but from the Tory Benches——

Mr. Speaker

Order. The direction from which it came is not a matter that we are discussing. We had better return to the debate.

The Prime Minister

I said at Question Time in answer to the hon. Member for Blaby that I would refer to the position of sterling. The counter-inflation policy is basic to strengthening the economy and stabilising the value of the currency. Sterling has been relatively firm for some months—[Laughter.] I wish that the House was televised. The Opposition laugh at unemployment. They laugh at questions of sterling. I wish that the House was televised. I have always voted for it. I hope that the Opposition will listen more seriously.

I said that sterling has been relatively firm for some months. Although there was a good deal of disturbance in exchange markets affecting other currencies in recent weeks, sterling has enjoyed a welcome period of calm. We have to face the fact that the sterling exchange rate is determined basically by market forces. Although we have made substantial headway in bringing inflation down in this country over the past months, our inflation rate is still above that of other important countries and it was inevitable that the market should at some stage exert some downward pressure on the exchange rate, which is what we have seen in the last few days.

In line with our concern to minimise the disturbance both domestically and internationally, we have shown our determination by appropriately-directed intervention to restore stable conditions. We all agreed to act in this way at Rambouillet last year. We shall continue to do this to the extent necessary. Although obviously it would be wrong for me to say more in public about the techniques or intentions about intervention policy, I repeat that the Government are prepared to assert their full determination to provide whatever protection is necessary.

This whole episode underlines once more the fact that the key need for the future is tackling inflation, which is precisely what the Government are doing and what the Tory Party did not even have an opinion about when we debated it. I repeat that the House is aware of—I hope that I can say that hon. Members in all parts of the House are pleased with—the progress made in the battle against inflation. Further figures published this week demonstrate a continuing and favourable trend in this matter, although inevitably they were overshadowed by other widely-reported events.

The Bank of England, which we all know is never fearful of expressing its own assessment and judgment and criticism, whatever party is in power, has published this morning its analysis of future prospects. On inflation, its conclusion is: It will be surprising if, later this year, the retail price index was much out of line with the Chancellor's target. I would have hoped for some murmur of approval from the Tory Party at that statement. I suppose that it must be a great disappointment to them because they played no part in this improvement. When the great call came and the debate was held, they sat on their hands without a policy.

Therefore, however this may be concealed or confused in economic discussion, the whole House knows that a successful attack on unemployment depends on success in dealing with the challenge of inflation. The Government have made this our primary task. We rejected the policy of forcing anything on the people by statutory incomes control. Our policy has been accepted by the country, because, as we always urged, it is based on agreement, on consent and co-operation.

I repeat—this policy had the support of the majority of the people, including those engaged at all levels in industry. Therefore, the Government have the right to ask the House for the vote of confidence in our financial and economic policies which we seek today. It is on that basis that I ask for that vote of confidence.

4.16 p.m.

Mrs. Margaret Thatcher (Finchley)

I see nothing in what the Prime Minister has said today or in his Government's economic performance which would justify any vote of confidence in him tonight. One would scarcely think from his catalogue that, in their first two years his Government had slashed nearly a third off the value of the pound in the pocket, that they had made unemployment rise to levels to which it never rose under any post-war Conservative Government or that they had borrowed anything like as much as this Government have done. One might say with the Paymaster-General that the Chancellor of the Duchy of Lancaster is the most unequal Socialist of them all.

Yesterday evening, after two days of full debate on the Government's economic strategy as set out in the White Paper, and in the absence of the Prime Minister, the Government were decisively defeated and their White Paper policy completely discredited. That defeat took place when the Government's overall majority in the House was three and their practical majority at least seven.

All that the Prime Minister had to do to ensure the continuation of his Government's policies was to carry his own side with him and to win the confidence of his own people. In that he totally failed. In view of his policy of calculated insult today, that is not surprising. He unwittingly revealed the wide gulf which separates the two wings of the Labour Party——

The Minister of State, Department of Industry (Mr. Gerald Kaufman)

What about yours?

Mrs. Thatcher

What the Prime Minister has is a coalition of Socialists and near-Marxists. He, and only he, is responsible for that failure to keep his own party behind his own Government. That is why he is so angry today—because it is his own failure that is on trial.

There is no precedent for defeat on such a major matter on Supply. The defeat was not on a minor matter such as we have seen before. Governments have been defeated on single clauses in the past, and they have altered a clause. They have been defeated on an Order, and they have altered an Order. No one has suggested that these were resigning matters. The Government were defeated recently over the salary of the Secretary of State for Industry and no one suggested that that was a resigning matter. But when there is a defeat on a matter of major economic strategy, a matter central to the historic nature of the power of the House of Commons over the Executive, that is a resigning matter.

The Government laid before the House a White Paper which they described as their plans for public expenditure until the end of the decade—if they stayed in office. But they did not put down a motion to approve the White Paper, because the Government presumably thought they would be defeated if they were as straightforward as that. Instead they used another motion as a device to avoid defeat. That device proved to be their own undoing and led to their defeat Indeed, it brought about the very defeat they sought to avoid.

The Prime Minister then comes to the House and asks for a vote of confidence today. But a vote of confidence cannot, and is not meant to, paper over a fundamental divide in strategy, a divide which goes to the root of policy. I quote from The Times of this morning a remark made by the hon. Member for Padding-ton (Mr. Latham) referring to a vote of censure or a motion of confidence: Our abstention is not against the Government but against one very important aspect of its policy, namely the general economic strategy now being followed. That was what the vote was about. It was against the general economic strategy which the Government are following.

Today we have further revelations. The hon. Lady the Member for Wolverhampton, North-East (Mrs. Short) says there will have to be a reply from the Government and, she says: Our reaction will depend on what they say. If they are not prepared to budge, then they will get a similar reaction again. If the Prime Minister gets a bigger vote tonight they will not have had a miraculous conversion to the Government's strategy. Those people will still disagree with his strategy and, according to what they say, still intend to go on doing so unless it is changed. But the Paymaster-General in winding up for the Government shortly before the vote said: I believe we have no choice other than to follow the policies set out in the White Paper."—[Official Report, 10th March 1976; Vol. 907, c. 554.] So the rift is still there and would still be there in spite of any vote tonight. It is a rift which goes to the root of the Government's policy, and it is a rift which cannot be cured by any vote of confidence tonight.

It shows the main difference between the two wings of the Labour Party. One wants to continue with a mixed economy, the other wants a totally controlled economy. Between those two there can only ever be conflict. Further, we must look at the position of the Chancellor of the Exchequer negotiating on Britain's finances with other nations. He cannot say to them, "This is my policy and I can carry it through because I have a majority in the House of Commons". All he can say, whether in Washington or in any European capital, is "I can get through the House only what the Tribune Group will allow me to get through", and he will have to go on to say, "And I would rather stay in office under their thumb than carry out the policies which I and moderate Socialists believe are right for Britain".

What will happen, assuming that the vote goes the way the Prime Minister wants tonight, when we come to some of the Budget proposals and the right hon. Gentleman has the same kind of revolt from his own left wing? Are they going to say, "Yes, we have confidence in you to keep you in office but only if you do the things which we, a small minority, wish you to do"? The Chancellor is selling his soul, and Britain, for a handful of votes to keep himself in office. The Government are in this position. We, the Opposition, disagree with the Government's economic strategy. The Tribune Group disagrees with the general economic strategy now being followed. The Prime Minister therefore is asking the House to support him, provided his Government do not carry out their economic strategy. What a ridiculous and absurd position to get the House of Commons into!

The right hon. Gentleman is asking his hon. Friends to support him in principle even though they disagree with him in principle. It is his Government who are on trial. The Prime Minister is asking for the confidence of his own hon. Friends even though he knows that he has not got it and cannot get it. He is asking to stay in office even though he cannot command the authority to govern. He cannot follow the policies of his Government and in particular of his Chancellor. Last night there was a vote of no confidence in his strategy. Today's vote is a device to keep him in power—power without authority, power without principle. That is a position admirably suited to the right hon. Gentleman.

Several Hon. Members rose——

Mr. Speaker

Order. May I tell the House before I call the next speaker that today I am not following a list of hon. Members who have sent in their names. I shall do my best to hold the balance of debate as I look at the House.

4.28 p.m.

Mr. Jeremy Thorpe (Devon, North)

I want to address to the Prime Minister a question to which I suspect this House would value an answer and to which I believe the people of this country would require an answer. It is this: when the right hon. Gentleman is looking to the economic strategy of this country, what is his first priority? Is it to unite, in the weeks and months ahead, the Parliamentary Labour Party for the backing of the Government's economic strategy? If so, I suggest that the right hon. Gentleman will have to pay such a high price that the economy of this country will founder. Or is his first priority to evolve an economic strategy that will gain the overwhelming support of the House of Commons and the backing of the British nation? If it be the latter, I suggest that the price that he would have to pay for achieving that objective would be to bypass his own left wing, because last night, as he has been the first to admit, he was not defeated by the combined vote of the Opposition; he was defeated by the desertion of Members of his own party.

Just as every Member of this House is proud to claim that he represents not only those who voted for him at the General Election but all the voters within his constituency, so, on a national scale, the Prime Minister of this country is responsible for the affairs of the whole nation. I say straight away that that is a grave and very lonely burden, and those who have shouldered it have been, and must have been, dedicated to the public service of this country, whether or not one agrees with their policies.

The Prime Minister and the Chancellor of the Exchequer know that in the coming months we may have to take tougher economic measures than we have seen since the war. The Prime Minister is dealing with irreconcilable forces. On the one hand, he is supported enthusiastically by the Social Democrats, who are for Europe, for a mixed economy, for free trade, and for a prices and incomes policy, voluntary if possible but, I suspect, statutory if necessary. On the other hand, he has, physically and geographically, those on his Benches who are not Social Democrats but Socialists. They have a perfectly straightforward and logical philosophy, which I respect but with which I profoundly disagree. They are against Europe. They are in favour of import controls. They believe that the contribution of private enterprise to the economy is minimal. They believe that investment must be State-controlled and largely State-instigated. They are in favour of a level of public expenditure which, in my view, would have a catastrophic effect on our economy.

We know that in July, when the £6-a-week limit comes to an end, tougher measures will have to be taken which may command the support of the TUC but which I doubt will command the support of a majority of the Parliamentary Labour Party. The Prime Minister knows that this will not be the first time that his Government have been unable to command support for measures that he is convinced are in the national interest.

The right hon. Gentleman talked about the way in which the Tribune Group had been overruled. I remind him that, on the great issue of Europe, he was overruled by the votes of the Parliamentary Labour Party, the National Executive of the Labour Party, the special conference of the Labour Party and the TUC itself. Therefore, the right hon. Gentleman rightly believed that he had to appeal over the heads of his own party, and the referendum produced a two-to-one majority in favour of Europe.

The Prime Minister

The right hon. Gentleman is talking about Europe and the appeal to the public. That decision was taken long before any of these events. It is true that there were the votes of some of my hon. Friends, of the National Executive, and of the special conference, but as we had already put the matter for decision to the country, all that mattered was the decision by the country.

Mr. Thorpe

All I was saying—I do not think that the Prime Minister and I are in disagreement—was that on the issue of Europe, the Parliamentary Labour Party, the National Executive of the Labour Party, the special conference of the Labour Party and the TUC took a different view from that of the right hon. Gentleman and his Cabinet colleagues. I accept straight away that the idea of a referendum was conceded long before those votes. The Prime Minister is sometimes very far-sighted, and I congratulate him on that. I believe that he foresaw and prepared for such an eventuality. All I am saying is that it will be within his recollection that on certain issues, when he believed he was right, he was unable to carry with him the majority of the Labour Party and therefore had to look for a wider measure of support from outside.

That happened on the issue of Europe. The Conservative and Liberal votes, added to the pro-Europe votes of the Government, got a majority. Without those votes, there would have been no majority. I can proudly claim that, under the Premiership of the right hon. Member for Sidcup (Mr. Heath), on Second Reading of the European Communities Bill, in the final analysis the vote of the minority of Liberals saved that issue. All I am saying is that there are occasions when Governments have to go beyond the confines of their own political parties to gain support for measures which they think are right. I recall that much the same happened on the issue of prices and incomes.

This is not a new situation. I suppose that, historically, the House of Commons was never stronger than when a Government, to gain a majority for their measures, had to convince the majority of the House through the sheer intellectual force of the argument by the Minister of the day. That was before Governments could rely on the luxury of Whips and automatic majorities.

I do not believe that opposition should be an automatic reflex because parties sit on the Opposition Benches. Since 1968 the major political parties have tried— in my view, with success—to maintain a united approach to the question of Northern Ireland. Indeed, as I have already indicated, there has been cross-party support for Europe. Why? Because we believed that those two issues transcended the normal differences which divided the political parties in this House. Northern Ireland presented a desperately serious situation. We believed that the issue of Europe would affect the whole economic and political future of this country. I believe that view was taken whether people were pro- or anti-Market.

Is the economy of this country of any less importance or significance to this House than the problems of Northern Ireland and Europe, upon which we had cross-party support? We are considering the collapse of the pound. Whatever the right hon. Gentleman may say, the pound dropped below two dollars yesterday. If that had been prophesied three years ago, we would have regarded it as an impossibility. That can affect the jobs and savings of our people and the survival of Britain itself. Therefore, is it not possible for there to be some greater measure of accord on our economic strategy?

The right hon. Member for Finchley (Mrs. Thatcher) has a very simple solution. She did not go so far as to say it, but she implied it. The right hon. Lady implied the traditional formula—that all we require is for the party in power to go out and for the party in opposition to take over. I do not believe that in that context the right hon. Lady, in her heart, can claim that the measures that this country will require will be carried on the authority of any one political party in this House. It will need a certain—[Interruption.] Perhaps I may be allowed to explain. I am not suggesting a coalition, or anything comparable with that. I hope that the House will agree that the degree of cross-party unity that has been shown on Northern Ireland and on Europe has been commendable to the people of this country.

There is no question that jobs depend upon investment; there is no doubt that investment depends upon stability, and that stability depends on political continuity. Since the war we have had a three-year cycle of government.

On average no Government has lasted more than three years. They have usually spent the first year in office reversing—[Interruption.] The average cycle of Governments has been three years. "Average", if the House is unaware of the definition, means that some have been in office for longer and others for shorter periods.

The first job of any Government on coming into power has been to reverse what their predecessors did. In the second, third or fourth years they then reintroduce the legislation in a different guise. One example is the prices and incomes policy. In 1966 the Labour Government tried to introduce a prices and incomes policy, so the Tory Opposition opposed it. In 1973 the Tory Government reversed their decision and introduced a prices and incomes policy, so the Labour Opposition opposed it. In 1975 a Labour Government tried to introduce a £6-a-week policy, and the Tories, with a slight variant, merely abstained. That is the way policy has gone on in this country, and it is crazy.

It should be possible for certain guidelines in the economy to be agreed in the House. I believe that industry is less interested and that indeed the trade unions, strangely enough, are more interested in stability for the next five to 10 years than in the particular hue or depth of the colour of the party in power. For example, if industry knew that for the next five years there was a clear and agreed strategy for investment, and if workers in industry knew that there was a definite policy of economic growth, which would be backed by an agreed investment policy, and that the tax system would be used to reward those who shared profits, and that the rate of profit would not be guaranteed but would at least be regulated, so that people could plan for the next five years, we would reduce that degree of instability and uncertainty in the economy which has bedevilled investment and caused British industry to lag behind the rest of the world.

It should be possible to achieve a measure of agreement on prices and incomes, but it will happen only if it is thought to be fair and it is not thought that there is an Opposition waiting in the wings to repeal it as a matter of political vote-getting and expediency.

I believe that in July it will be much tougher than anyone has yet foreseen. I do not believe that the right hon. Gentleman will have a majority in his own party. He may well have to appeal beyond the confines of his own party in the Division Lobby.

We should try to get agreement not only on some of the guidelines in the economy but within the European dimension itself. Now that the Government have rightly overridden their left wing on Europe—as I now advise them to do on the economy—there is scope for planning with our European partners.

Why is it that the leaders of all the political parties—minority and majority parties—can sit down with the right hon. Gentleman in Downing Street and discuss security in Northern Ireland? Why is it that on such issues we can get agreement, and yet when we deal with the question of the economy we have to fight it in the full gladiatorial atmosphere of a parliamentary debate? [Interruption.] I believe that a party which cannot even make up its mind on prices and incomes and the £6-a-week policy, and has to abstain—a party which puts out two different sets of statistics on unemployment; those from Conservative Central Office and those from the Think-Tank of the right hon. Member for Leeds, North-East (Sir K. Joseph), for both of which the right hon. Lady is responsible—does not have an alternative policy in the wings. However, everyone knows that the Government's White Paper on public expenditure is not what the Chancellor wanted. It is not what the Cabinet wanted. It was as much as the Government thought they could get away with and still retain the support of their own left wing. But events have shown that they went a little too far—not as far as they would have liked—for that purpose.

Therefore, in the coming months the Prime Minister has to show, in his management of the economy, whether he is the pawn of the Tribune Group or the tribune of the people. That is the choice he has to make. If he adopts the latter position he is entitled to the support of the British people, in all political parties, for agreed measures. But it will mean that many items must be dropped and that the country and its economic management is more important than the holy writ of the Labour Party manifesto. If the right hon. Gentleman does not take that view, and his first priority is the Tribune Group, I believe that he does not deserve the confidence of this House. Certainly on the basis of the speech that we have heard today my right hon. and hon. Friends and I shall not be voting that the House should give him a vote of confidence tonight.

4.56 p.m.

Mr. Donald Stewart (Western Isles)

Unlike the right hon. Member for Devon, North (Mr. Thorpe), I have never been invited to Downing Street to discuss affairs in Northern Ireland, and if that is regarded as the result of consensus politics, I am delighted that I have no responsibility for that type of arrangement. I thought that the right hon. Gentleman made a better speech in defence of the Government than did the Prime Minister. I agree that the right hon. Lady the Leader of the Opposition is in a poor position from which to attack the Government on economic affairs. As my hon. Friend the Member for Argyll (Mr. MacCormick) pointed out in Committee today, this is a caretaker Government. In terms they have a very inconsiderable mandate indeed, and despite that they set out on an orgy of legislation most of it contentious—which is fair enough—but much of it irrelevant. Some of it is mischievous and part of it possibly dangerous.

My hon. Friends and I do not look with any favour on the advent of a Conservative Government. Both the Labour and the Conservative Parties are guilty of the decline and fall of the United Kingdom since the end of the war. It is curious how often Labour Front Bench spokesmen repel attacks with the defence that what they are doing is what was done by the previous Administration. They never seem to think that that is an insufficient defence.

Both Conservative and Labour Governments are guilty of acting like the prodigal son, wasting their substance in riotous living and in supporting lunacies like the Concorde, of which Scotland's share is the share of the losses and nothing else.

In one period of sanity—and I congratulate the Government on it—they cancelled the Channel Tunnel project, but they should have killed two birds with one stone and blocked each end of the tunnel with a Concorde aircraft and cemented the ends up.

It surely is not possible for the Government, having been defeated on the question of their future economic programme, to seek to stagger on. When the economic forecasts are based on figures of which the Treasury spokesmen have virtually said, "If you do not like them, think of some figures on your own", it is time to call a halt.

The Prime Minister and the Chancellor of the Exchequer are promising light at the end of the tunnel several years hence. The Prime Minister is a great exponent of "jam tomorrow". In the Labour Government between 1964 and 1970 he made the following forecasts. In December 1964 he said: Now that the decks are cleared I see every reason for confidence. In February 1965 he said: The future is bright with promise". In September 1965 he said: I believe we are now at a turning point". At the Labour Party Conference in 1965 he said: The economy is strong. Sterling is strong. Employment is strong". In October 1967 he said: We are now able to look forward to rising production and rising employment". It is interesting that in the 1964 election he declared: You cannot go cap in hand to the central bankers, as the Tores have done, and maintain your freedom of action whether on policies maintaining full employment and even on social policies". The £6 pay limit was sold to the unions as the alternative to unemployment and now we are landed with both. What is the carrot that the Government will use for the donkey the next time round?

In Scotland unemployment is up by about 60 per cent. on the figures at the time of the last General Election. The construction industry is in the doldrums. We have a lobby this very day of Scottish fishermen whose fishing grounds have been attacked by the EEC partners—the Danes, the Belgians and the French. The fishermen are now closing the West Coast to their own fishing vessels in the hope of preserving the stocks.

Two items from today's Press pinpoint the Scottish situation. First, there is the report of a tremendously valuable new oil find, and. second, a report on regional survey research shows that Scottish families have the second highest cost of living of any region in the United Kingdom—in short, a nation of great resources whose people are obliged to be deprived of their birthright.

Then there was a sell-out on the Assembly Bill. It was unfortunate for the Leader of the House to be speaking in Scotland yesterday and selling the devolution proposals as a package which the Scots would be well advised to take up as his hon. Friends in Scotland were cobbling together a new package which they say would much improve the existing one. Yet the one that existed before was perfect, according to the Leader of the House.

Under Westminster practice Scotland has received scurvy treatment from the Government. We have suffered, whether under Conservative or Labour Governments. It makes no difference. The Labour Government is alleged to be in business to inaugurate Socialism. I am not saying whether they are right or wrong in that, but it seems that they lack the guts to inaugurate Socialism and the competence to administer capitalism, and therefore it is time that they were away.

We are in the situation of $1.90 to the pound, where India, regarded as one of the poorest countries in the world, has revalued the rupee twice against the pound sterling. We wish to depart. As Scots we have never had any confidence in any Government in this place, and this Government have run true to form. They will certainly not receive a vote of confidence from my party.

4.52 p.m.

Mr. Les Huckfield (Nuneaton)

I intend to return to the subject which the House should be debating tonight, which is the Government's general economic strategy. Although I had some severe reservations about that policy, I was in the Lobby with the Government last night. Anyone who made that decision and is a member of the Tribune Group should not only explain himself to his parliamentary colleagues, but should explain to the Government why he has those reservations.

I regard many of the proposals in the White Paper as particularly regressive for working-class families. The penal increases on such things as school meals charges, bus fares and food prices will bear particularly hard on the people who elected the Government, the people who thought that this Government could best represent the interests of working people. When a Government like that almost desert the people who must have put them in power, it gives rise to severe reservations about the strategy which is being pursued.

However, I have noted—and I hope that many of my hon. Friends have, too—that the Chancellor has at least said that he would be prepared to listen to alternatives, that he is prepared to discuss matters within that strategy. I hope that my right hon. Friend the Chancellor will listen to some of the points now being put forward by the trade union movement, because it must be the trade union movement with which he must discuss the next phase of his counter-inflation policy.

There is bound to be tremendous pressure during the next round of wage negotiations if trade union members are faced with paying some of the increased charges which will result directly from the strategy in the White Paper. If my right hon. Friend wants to gain the support of the trade unions and of their rank and file, he must listen carefully to some of the objections which they will put forward to the strategy.

Anybody who opposes the strategy of the Government has an obligation and moral duty to put forward a viable set of alternatives. It is there that I part company with some of my hon. Friends with whom I am normally in close alignment. I have severe doubts about the viability and practicability of their economic proposals. I ask my hon. Friends to respect the fact that I have been consistent, because I expressed severe doubts about the alternatives they put forward at the time that the £6 limit was being discussed. I still have severe doubts about the practicability of their alternatives in facing the more serious economic situation at present before the country. I have read the article by my hon. Friend the Member for Luton, West (Mr. Sedgemore) in Tribune very carefully, and a very good contribution it is to this debate. I only wish that we had had such excellent contributions from the Conservative side. But, with respect to my hon. Friend, it is not the percentage of gross national product which goes into public expenditure which is important. It is not important that other countries may have had just as fast an increase in their percentage of GNP going to the public sector. It is not important that other countries may be paying just as much of their GNP in tax revenue. The most important point was that made by my right hon. Friend the Chief Secretary—that no country in the world can continue paying 60 per cent. of its GNP to the public sector without economic growth on which to base it.

A logical and consistent alternative strategy must be proposed. It must initially give us the growth and the industrial structure on which we can base increased levels of public expenditure, which all members of the Labour Party would like to see Consequently, when my hon. Friends object to the Chancellor's proposals, they must recognise that there cannot continue the 20 per cent. increase in public expenditure of the past three years when in the past two years there has been only 2 per cent. economic growth and, in the last quarter, a fall in economic growth.

Given the National Institute prediction of a 1.3 per cent. increase in growth this year, that is insufficient to support the levels of public expenditure that some of my hon. Friends would like to see. Our object should be to create alternatives which will give us the economic structure and the rate of economic growth which will then enable us to move on to increasing public expenditure.

I do not believe that a policy of import controls will result in a saving of £3,000 million of imports and 4 to 5 per cent. per annum rate of growth. The imposition of import controls will result in immediate retaliation from many sectors, and we need many of those countries to buy our exports if we are to get that export-led growth. Apart from that, a policy of import controls could even further undermine confidence in this country both for investment and loans.

The strategy put forward by my hon. Friends, which is based on import controls, is not the main answer to this problem. It is only by a major shift of resources into the manufacturing capacity of British industry—this is where the Chancellor is right—that we can achieve the rate of growth that we need. We must have the regeneration of British industry before we can achieve the rate of growth to which the Chancellor referred.

I am not so much critical of the kind of proposals for cuts which the Chancellor mentioned, but I do not believe that my right hon. Friend's proposals to shift resources into industry will give us the industrial regeneration that the country so badly needs. I represent a Coventry car-manufacturing constituency. Throughout the West Midlands the only significant investment is that being made with Government money. My right hon. Friend said that he moves £500 million a year on his Department's Vote into industry. I regret that that will not produce the increase in manufacturing capacity that the country needs.

At present private industry has a comparable rate of return with private industry on the Continent. There is the record of private industry during the deliberate Barber boom of 1972–74 when British industry put money not into factories but into office blocks. For every £100 million of investment that private industry wants it can increase its prices by at least £20 million under the Price Code concession. In spite of all the facilities now being afforded to private manufacturing industry, it still will not invest. Therefore, what else can my right hon. Friend do to get private industry to invest?

Mr. E. Fernyhough (Jarrow)

It is not true that private industry is not investing. If my hon. Friend looks at the figures he will appreciate that investment is being made in the Common Market, not in this country.

Mr. Huckfield

My right hon. Friend cannot escape the fact that British private industry is now investing less in real terms than it did 20 years ago.

Mr. Patrick Cormack (Staffordshire), South-West

Rubbish.

Mr. Huckfield

The hon. Member for Staffordshire, South-West (Mr. Cormack), who occasionally comes down from the clouds, cannot explain it all by lack of profit. The comparable rate of return in Europe is roughly the same as that in this country. There are comparable marketing situations. The hon. Gentleman cannot explain it by excess capacity.

Mr. Cormack

What about tax?

Mr. Huckfield

Or by taxation differences. He can explain it only by the total unwillingness of British private industry to invest in new manufacturing capacity.

Mr. Huckfield

I conclude from the fact that private industry is not investing in my constituency that the Government will have to invest for it. Over the next four years the National Enterprise Board will have only some £950 million to invest £400 million of which is already pre-empted by what we have pledged to do for Rolls-Royce and British Leyland.

If we look at the period of the Industrial Reorganisation Corporation between 1964 and 1970 and allow for a rate of inflation of 160 per cent. since that period, it is plain that the NEB will have at its disposal no more money to intervene than the IRC had before it. Far from being the major source of regeneration of British industry, I am sad to say that the NEB will be little more than a cottage hospital. That is the kind of future which seems to be shaped for the NEB.

Mr. Mike Thomas (Newcastle-upon-Tyne, East)

Has my hon. Friend noticed, as I have, that after the extraordinary fuss that was made in this House last night—I notice the hon. Member for Kingston-upon-Thames (Mr. Lamont) sliding towards the Dispatch Box—not one Opposition Member deigns to listen to this debate, let alone take part in it?

Mr. Huckfield

Many of us noted the lack of sincerity on the face of the right hon. Member for Finchley (Mrs. Thatcher) last night when she asked for the Government's resignation. That is one of the least enthusiastic duties that I have yet seen the right hon. Lady perform. When we note the absentees on all Opposition Benches, we have reached a situation in which we have more prayer cards than hon. Gentlemen. Perhaps that is an indication of the place where the Conservative Party places its faith.

Mr. Cranley Onslow (Woking)

What does the hon. Gentleman expect when he is speaking?

Mr. Huckfield

If the hon. Gentleman rises, even the Strangers' Gallery will empty.

Many of us supported the Government last night only with great difficulty. We do not enjoy seeing the kind of effects which the Chancellor's proposals will have on our constituents. We do not particularly enjoy the regressive indirect taxes—that is what they are—which many of our constituents will be forced to pay.

When I fought the two General Elections in 1974, I thought that this Government would secure a massive, irreversible and fundamental shift in the balance of power in favour of those I was elected to represent. We take a step backwards with the strategy outlined in the White Paper.

However, I sympathise with the Chancellor because I recognise that he has only a limited degree of manoeuvrability. His ambition to shift resources into manufacturing industry to enable growth is right. Unless we have economic growth and investment in manufacturing capacity, we cannot have further public expenditure, irrespective of how much we want it.

The Chancellor's idea was right, but it needs improving if we are to get the industrial regeneration that this country so sorely needs. That industrial regeneration will not come from placing the main emphasis on private enterprise. The regeneration of British industry will come only if the Government invest. That has been shown to be the case in the Midlands and will be the case in all other parts of the country. If there is not investment in the Midlands and the development areas—which we are traditionally supposed to help—all those areas that have depended upon the offshoots of Midland firms cannot be expected to survive.

I shall continue to support the Government, because their basic idea of placing the emphasis on industrial capacity is correct. However, we have not gone far enough in that direction.

5.08 p.m.

Mr. Julian Amery (Brighton, Pavilion)

The hon. Member for Nuneaton (Mr. Huckfield has raised major and serious economic issues. However, they are of an order that we have discussed for the past two days. I hope that he will forgive me if I direct my attention, in what I hope will be a brief intervention, to the major constitutional issue that faces us today.

It is a melancholy fact that there are only about 30 parliamentary democracies left in the world today. Each of us has our own definition of democracy but, broadly speaking, it is a constitution where the electorate is able to dismiss and appoint the party of its choice even if, through an accident in the way the votes are cast, as in our case, less than 30 per cent.—to be accurate 28 per cent.—of the potential electorate have returned the present Government. However, I do not dissent from that aspect of the principle because it has been part of our constitution for a very long time.

Equally, it has been part of our tradition that Parliament is supreme, and that, while it would be absolutely wrong that on any hole-in-the-corner, snap vote on some minor issue the Government should have to resign, at the same time, when there is a defeat of the Government on an essential issue of policy it is very questionable, to say the least, whether the Government should not reconsider their position, when they find themselves in the position in which the present Government found themselves last night.

Our debate today takes place on the Adjournment. The last time there was a vote of confidence on the Adjournment, to the best of my knowledge, was in the Norwegian debate in 1940. Filial duty forbids me from plagiarising what my father said on that occasion—and with some effect—but perhaps I might be allowed to recall what Mr. Lloyd George said, in the last great speech that he made in the House of Commons, to Mr. Churchill. I would address the same remarks to the present Chancellor of the Exchequer. That is, that he should not allow himself to be made into an air-raid shelter to defend the Prime Minister in present circumstances.

In his opening remarks, the Prime Minister talked about an unholy alliance between his hon. Friends below the Gangway and those of us on the Opposition side of the House. I am not sure that it was an unholy alliance. I think that it was an alliance against humbug. Of course, our views are totally different from those of Labour Members below the Gangway, but there is a certain sense in which, while not agreeing on the issues, we see them equally clearly. Just as right hon. and hon. Members below the Gangway have a very definite point of view in their attack upon the mixed economy and the capitalist system, so we have a very clear view in our reasons for defending it. This clarity of minds produces a certain understanding between us which is fudged and blurred on the Benches above the Gangway.

After all, we in this House know each other fairly well—thanks to all-night sittings and so on. We know that the Chancellor of the Exchequer, the Home Secretary, the Prime Minister, the Secretary of State for Defence and a great many of the top hamper of the Government are, on economic matters, very much closer in their thinking to us on the Opposition side of the House than they are to their hon. Friends below the Gangway.

Sir Winston Churchill insisted, rightly or wrongly, that the House of Commons should be rebuilt in its present rectangular form, which accentuates the division between the parties. However, we all know—it is said as much below the Gangway as it is on the Opposition Benches, and perhaps more—that the real alliance is between the Opposition side of the House and those who are sometimes called the Social Democrats. We know that in the House of Commons today and in British political life outside the House there is a real split between those who believe in the mixed economy and all that goes with it, to a greater or lesser degree, and those who want to see Socialism interpreted in a different form, and no longer in the form of a Social Democracy such as has been advocated by the Labour Party over many years.

This does not apply to the economy alone. It applies in foreign policy and in defence policy. We have had repeatedly an alliance between the Government Front Bench and the Opposition on defence. We have had an alliance on not all but many aspects of foreign policy, but with a dissentient voice on both policies from the Benches below the Gangway. I am not complaining about this, but it is a fact of life which in a sense contradicts the geography of the House of Commons. If we had a semi-circular Chamber the whole thing might be expressed very differently.

The vote last night turned on a major central issue of Government policy. It was an issue that had been debated over two days. It was a Budget, in a sense —a Treasury issue—on how the economy of this country should be conducted, and from the decisions taken flowed a whole host of issues, affecting foreign policy, defence policy, social policy, industrial policy and the whole of our national life. On this great issue there was a clear split in the Labour Party. Whatever papering is put over the division tonight, it can never be glad, confident morning again. The division has brought the split out into the open. We all knew that it was there, but it is now there for all to see.

What is sad about it is that the solidity of British political life, which has been so much admired and respected abroad, is now shown up to be something very different from what it was. Perhaps it is no coincidence that the slide of the pound should coincide with the deterioration of the House of Commons into something not unlike the Italian Assembly of Deputies, where no one is quite sure where the power lies or what the combinations—combinaziones—are, and how the Government will get out of their difficulty and what concessions they will have to make to buy the next round.

It seems to me that this is a negation of the strong tradition of this country that the Queen's Government rests upon the support of the House of Commons. It is now seeking to rest tonight on the support of a party which, on a central issue, has admitted its own division. This cannot be healed or bound up in any easy way, because if the Government were to make concessions to the views of the Left wing, the pound would disappear, and if they do not and the Left wing accepts it, the Left wing will be sacrificing its principles for the rather worn out concept of party solidarity.

Which way will things go? I should have thought that the course of honour would be for the Government either to resign or to dissolve. It could be for the Government to resign, and if we on the Opposition side of the House were unable to form a Government—perhaps to form a new Government in different circumstances—to dissolve and put these great matters to the test of public opinion, as indeed they will be put in the by-elections tonight.

5.19 p.m.

Mr. Tom Litterick (Birmingham, Selly Oak)

I fear that if there were a General Election next week or soon afterwards, all that would happen would be that there would be a rehearsal of the shared views of the two Front Benches, which would be magnified and amplified by the media once again, so that the people would once again feel that they had no choice.

The debate on this occasion has been brought about by the fact that we here recognise that there is a need to define differences in politics and that there are real differences to be reflected in this Chamber. I think that the Chancellor, inadvertently, in his behaviour to hon. Members the day before yesterday, reflected the fact that he found more friends on the Opposition Benches than he could find on the Government side of the House. His abuse of my hon. Friends was a reflection of this interesting fact of our political life.

When I first spoke in the Chamber 15 or 16 months ago I was, as it were, wishing the Government well. I spoke about the need to capture the confidence of the ordinary family. Behind us was all the rhetoric that was mentioned by my hon. Friend the Member for Nuneaton (Mr. Huckfield) about making a shift in the balance of power and wealth to the advantage of ordinary families.

There was then a statement to the effect that the oncoming crisis, that was then advancing rapidly upon us, should be used as the occasion for a radical transformation of society and not as an excuse for running away from the need to transform.

Since then we have had a series of retreats and a blurring of issues. I regret to have to say it, but it is fairly obvious that the Government have attempted to frighten the British people into accepting certain policies on the basis that there is but one possible set of policies, the alternative to which is total catastrophe. We all know that they have succeeded in frightening many people into believing that.

As all my hon. Friends know, those who are connected with the Labour movement and those who habitually vote for the Labour Party have a great loyalty to the movement and the party. It is on that loyalty that the Government Front Bench capitalise. It is so far still living on it, but I have a duty to warn it that this capital is rapidly being eroded.

A short time ago the Prime Minister asserted that no cuts were being made. He said that the whole matter was relative and that there were only cuts in the estimates. My right hon. Friend is not the only one of my colleagues to make that assertion.

Let him recognise that my city of Birmingham is a stricken city, a city which now has to bear the burden of more than 50,000 unemployed for the first time in living memory. It is a city which is having to endure cuts by the health authority of about 40 per cent. It is having to face cuts in social services of the order of 20 per cent., cuts in school building of about one third, and almost the total annihilation of the pre-school building programme. It is having to endure cuts in public transport subsidies, which mean higher fares for the lower income groups. Cuts are being made to house improvement grants. There is a total freeze on municipal house mortgages and there are cuts in the house improvement spending programme.

It happens that three days ago I received a letter from the chief city housing officer. It refers to a set of municipally owned properties in Har-bourne Lane, Selly Oak, which look as if they have been shelled. Not one of them is weatherproof. Families are living in these houses, and every time it rains they get wet. The children suffer from asthma and the usual physical disorders associated with living in uninhabitable houses.

There is a plan—there always seems to be one—to demolish and redevelop the area. There are also intermediate plans to repair the houses. But the housing officer wrote: In the light of the proposals cutbacks in local authority spending this scheme will have to be put back even further. That means that these families will have to look forward to yet more years of living in ruins which look as if they have been shelled. I advise the Prime Minister, whatever his delusions about the contents of the White Paper, to recognise that his views are not shared in Birmingham. In Birmingham they know about real cuts. They are painfully aware of them. I represent that city.

Mr. Norman Tebbit (Chingford)

Part of it.

Mr. Litterick

You may have noticed, Mr. Speaker, that the Labour Party dominates Birmingham.

We were presented with a White Paper. As I have always understood the theory, a White Paper is a subject for discussion and debate. The implication is that the proposals contained in a White Paper can be changed. But that is not the spirit in which the Prime Minister presented it today, or in which the Whips presented it last night. Their attitude is "It may well be a free country and this might be a democratically elected Chamber in which free speech is permitted, but you will submit." The Prime Minister says "You must accept our view." It is the view of an oligarchy. It is the view of those who control the governmental system. They expect automatically to control us.

The very first time we fire what is no more than a warning shot across their bows—many people outside the House feel that the Government have gone too far in the wrong direction—we are accused of entering into unholy alliances. I recollect in the recent past a number of unholy alliances between the entire membership of the Conservative Party and a minority of the Labour Party. I do not recollect anyone then being accused by the leader of the Labour Party of entering into unholy alliances. The will of the Labour Party was totally nullified by that sort of unholy alliance.

In the life of this Parliament certain Labour Members have voted without hesitation with the Opposition, or abstained in the face of three-line Whips. Nothing has been said about that. What then of unholy alliances? It seems that the Prime Minister is rather partial in his ability to observe an unholy alliance. My hon. Friends have no doubt who was damaged by the alliances to which I have referred—namely, my constituents and the British working people.

The people of Birmingham will not be unmindful that in spite of the rhetorical differences between the two Front Benches, there is agreement between them on many fundamental issues. For months the Government Front Bench has been saying that it is making defence expenditure cuts. No such cuts have emerged. The White Paper demonstrated that clearly. I remind the Prime Minister that if he advances the argument that certain figures in the White Paper show an increase in public expenditure, he cannot at the same time argue that defence expenditure is being cut. The White Paper shows quite clearly that defence expenditure is being increased and will be increased into the foreseeable future—in fact, to the end of the decade.

The Government Front Bench has been fraudulent in its advertisement of its own defence policy. It has been telling people that it has been cutting defence expenditure. It has been deliberately mobilising the opinion of foreign generals and foreign defence ministers to support that claim. In fact, it is not true. The White Paper shows that it is not true. There is a simple word for that sort of behaviour but I understand, Mr. Speaker, that it is not permitted in the House—[HON. MEMBERS: "Socialism?"] I did not have that word in mind. It is certainly culpable behaviour.

During the two-day debate it was shown that the central weakness of the Government's economic strategy is its failure to adopt a positive and aggressive industrial strategy. We could not help but notice that while the right hon. Member for Leeds, North-East (Sir K. Joseph) was making his contribution to the bicentennial celebration of Adam Smith, the Government Front Bench was not disagreeing with him. The Government Front Bench is proposing to make certain funds available to the private sector through tax concessions which it hopes it will invest in industry. That is what was hoped by the right hon. Member for Sidcup (Mr. Heath) when he was in Government. The right hon. Gentleman tried the same thing and it did not work.

At the same time the National Enterprise Board has been gutted of the strength it should have had, the strength it was intended to have if the Labour Party had had its way. I distinguish between the Labour Party and the Government Front Bench. It is now necessary to make that distinction. That is what last night's vote was all about.

The NEB is now a broken reed. As my hon. Friend the Member for Nuneaton demonstrated, the funds available for the activities in which it is allowed to participate are totally inadequate. It is deprived of the power to intervene to compel the co-operation of the private sector, and, more important, it is deprived of the funds which would be the means of enabling it to do that. This will not bring about the regeneration of British industry.

Like Mr. Micawber, the Chancellor is living in hope. He talks about the upturn. Mr. Micawber talked about an upturn, though he called it something else. The Chancellor does not know when this upturn is going to happen or even whether it is going to happen. Nor does anyone else with faith in capitalism. It is a pathetic posture for a Cabinet Minister who would have us believe that he is a Socialist.

The Secretary of State for Employment cranks up his agony machine every week-end and goes around the country telling people that he deplores the level of unemployment and that it is unacceptable. But he leaves people feeling bewildered, because, like the Chancellor, he assures them that unemployment will go on rising. We on this side have to draw the line somewhere and indicate that there is a level of disaster which we will not accept as an act of God and beyond which we feel compelled to act on behalf of the people.

We are not slaves to a mindless economic system like devotees of some eighteenth century doctrine of economics. We believe that men acting in concert can change their economic destiny. That is what I believe Socialism to be about. Men can will changes in their economic destiny. A commitment to capitalism means lying back and letting things happen. That is nihilism and it consigns the most defenceless people in society to disaster.

Mr. Frank Hooley (Sheffield, Heeley)

I have a good deal of sympathy with some of my hon. Friend's arguments, but how are we to control the price of oil, copper, tin, rubber, jute, wool, cotton and the other industrial materials we have to import? It is totally beyond the capacity of this country to exercise control over those commodities.

Mr. Litterick

The one-word reply to my hon. Friend is "planning". We plan our needs for these things and insulate the British people internally from the consequences of these outside changes. We should plan our trade with other nations and not leave it to accidents of commodity price movements or speculative movements in currency values. We, more than all the nations of the Western world, are the inheritors of democracy and we have an obligation to advance the thesis that democracy and Socialism are inseparable. If hon. Members have no faith in the ability of men collectively to plan their own destiny, they have no place in politics.

It is to be deplored that the Government Front Bench consistently play what I call their loyalty card, saying that people, particularly those connected with the Labour movement, have a duty to be loyal. People are exhorted to be loyal to good old Denis, good old Michael and all the other people who, as my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) has said, have made a legendary contribution to the Labour movement. I do not believe in legends or in loyalty in this individualistic way. I believe in loyalty to principles, and it is to this kind of loyalty that we on this side appeal.

We ask the British people to be loyal to certain principles of collective action and not to individuals who ruthlessly and without principle trade on their reputations and their past. We say to the British people that we represent Socialism and urge them to consider that Socialism is the answer to this crisis and not the expedients of desperate individuals.

5.35 p.m.

Mr. Gwynfor Evans (Carmarthen)

However much the proposed cuts in public expenditure affect areas like the Midlands or the region in which this imperial Parliament is situated, it is undeniable that they will affect Wales far more. The standards of material living in Wales are already much lower and our economy and social life have been weakened by the kind of Governments we have had for generations.

One massive fact stands out to illustrate our situation—unemployment. Although we have suffered so much depopulation and emigration—we lost 500,000 people between the two wars—we still have the highest unemployment rate of any region or country in these islands. In that kind of society, the proposed cuts are almost immoral. We have only 4.9 per cent. of the population of Great Britain, but in that small number there are 76,000 people out of work and the employment activity rate in Wales is about 20 per cent. behind the level in England. The wealth per head of the Welsh people averages less than three-quarters that of the English.

Our language and culture, to which we attach so much importance, although the Government and this House do not often agree with us, are being depressed terribly by the economic situation and the Government's failure to establish cultural institutions to assist us. For instance, we have long been promised our own television channel, but this has been affected by the cuts. Nothing does more harm to the Welsh language than the hours of English television which are poured into Welsh homes every day. We must have our own channel, but this is one of the casualties of the cuts. The annual cost of running a Welsh TV channel would be the same as the cost of two multi-rôle combat aircraft. The Government can afford these aircraft, but not an institution which could save the Welsh language and culture.

We think the Government's priorities are wrong. We are the last people who should be bearing the brunt of what is now proposed. Our education is being badly hit and our schools are already much older, on average, than schools in England. Capital expenditure is being reduced from £19 million to £6 million. Our roads are also being affected and the transport system is an essential part of our infrastructure and we already have so much leeway to make up in comparison with England. Local government expenditure on roads is being reduced from £16 million to £9 million.

The reduction in the number of rural bus services will almost paralyse movement for many elderly people in rural areas and will hasten still further our depopulation. The same is true of the standstill in social services. It may be possible to maintain the standards of services elsewhere, but they will undoubtedly be depressed in Wales because of the cuts.

We also find that the Welsh Development Agency, which promises some hope of balanced development, will now have available only £130 million instead of the £500 million demanded by the Welsh TUC. Wales needs a housing programme of 25,000 new houses a year. The most we have achieved in the last decade is 16,000 houses. Now we are to have a drop from £205 million to £136 million in the housing programme.

If 25,000 houses a year were built in Wales, that would mean nine houses per thousand of the population. Let us compare that figure with the figures achieved in other small countries in Western Europe. In Finland it is 15.4 per thousand; Switzerland, 11.8; Holland, 10.9; Iceland, 10.5; Sweden, 10.5; Norway, 9.8; and Denmark, 9.6. If we had only nine per thousand, we would have 25,000 houses a year. We have never had more than 16,000, and now that number is likely to be halved.

The cut in the housing programme is immoral, and that is why we challenge it. No Welsh Government would be guilty of a proposition of that kind. Wales is a very rich country, although it is so small. If we had a Welsh Government, the levels achieved would be equal to those achieved in the Scandinavian countries.

Although the Government's policy will do so much economic and social damage in my country, I hope that it will do a lot of good politically by driving Welsh people to see that they must take control of their lives into their own hands. We need more power for the people of Wales.

I hope that the Government will take seriously the vote last night and will resign so that we have a General Election. The Welsh people will see that what is needed is to return more Members of Parliament who will stand independently in the name of Plaid Cymru to fight for their country. That is the one way to get things done for Wales.

5.42 p.m.

Mr. Giles Radice (Chester-le-Street)

With great respect to the hon. Member for Carmarthen (Mr. Evans), the debate is about more than Wales. It is about the Government's economic strategy and policies, policies on which everything else for which the Labour Party stands must depend and I would remind hon. Members of a strategy which was defeated in the Lobby last night.

During 1974 and the early part of 1975, I had doubts about my Government's economic policies, but, since the introduction of the £6 wage policy last July, the Government, with the support of the trade union movement, have had a credible economic policy which they have pursued with consistency, determination and vigour. In the past two or three months there have been strong signs that these policies are beginning to pay off. The rate of inflation has come down considerably—it must, of course, come down much further. The volume of exports rose sharply in the last quarter of 1974 and our share of world trade, including manufacturing, has risen against all the trends.

The impact of the improvement in our trading position and the volume of exports, combined with an increase of stocks, has meant increased industrial activity. Although there is still a substantial level of unemployment—far too high—the number of vacancies is beginning to rise for the first time.

It is becoming increasingly clear that we shall go into the upturn in world trade with a unique combination of great unused capacity and a currency which is considerably undervalued. I do not say at some stage in this upturn we shall not have to introduce import controls or stimulate home consumption. I am arguing that the Government, perhaps for the first time since the war, have a unique opportunity to obtain what every Government have wanted—export-led growth.

It is against that background that we should judge the White Paper. The case for the White Paper is that in a period of almost no growth there has been a rapid increase in public spending, perhaps more rapid than at any time since the war. At a time of high unemployment it would be madness to rein back public expenditure, as we are asked to do by the Conservatives, and it would be madness to increase taxes. But, inevitably, the policies we have pursued in public expenditure mean a high level of borrowing and a high burden of debt interest; and any Government would have to do something about that problem.

If we are to come out of the recession with export-led growth, there has to be some restraint on domestic consumption, and that has implications for taxation and public expenditure. As my hon. Friend the Member for Ashfield (Mr. Marquand) said on Tuesday, is it likely that consumption will be restrained if there are massive increases in taxation in the years ahead? It is here that I find the arguments of some of my hon. Friends less than convincing.

I am sure that they are aware of the impact of increased taxation in the late 1960s on the rate of inflation. All the studies have shown that. Is it likely that we shall be able to maintain the competitiveness of our exports and the growth we all want if our incomes policy is undermined by massive increases in taxation?

The inescapable conclusion is that there must be some reining back in public expenditure increases. We can argue legitimately about how much and about distribution. But it is not legitimate to argue that there should be no reining back. I believe that I am just as good a Socialist as those who abstained last night, but I do not believe in soft options. Every hon. Member knows that there are no soft options left for this country. If hon. Members do not know that, the British people do. It was no part of our manifesto at the last election to claim that there was any easy way out, or that we could escape having to make hard choices.

And if the growth assumptions on which the White Paper is based are challenged as being over-optimistic—as some of my hon. Friends have argued—it will not do to argue that Government spending should be increased. The logical conclusion of my hon. Friends' argument is plain: there should be a reining back, not an increase.

I believe that the Government have the support of the vast majority of Labour Members for their economic policies. They have the support of the trade union movement, of Labour supporters in the country and of the people. They will continue to retain that support if they keep their nerve. I hope that hon. Members will support the Government in the Lobby tonight.

5.50 p.m.

Mr. Maurice Macmillan (Farnham)

The whole House will wish to congratulate the hon. Member for Chester-le-Street (Mr. Radice). He made a splendid speech in defence of his Government's policies. That is more than can be said of the speech of the Prime Minister, who tried to get out of the position by saying that the Tory amendment was defeated. So it was, but that has nothing to do with what happened to the Government last night.

The Primet Minister tried to pretend that an unholy alliance had led Members of the Conservative, Liberal and Ulster Unionist parties into the same Lobby, and led some hon. Gentlemen below the Gangway to abstain. That is not an unholy alliance: that is parliamentary democracy at work. The Government of the day can continue only as long as they retain the ability to get their measures through by a majority in this House. It does not matter how that majority is arrived at.

I fear that something may be happening today that is perhaps more serious for the future than many of us yet realise. I suspect that there is indeed an unholy alliance—to maintain the present Government in power, or at least in office, when they no longer have the full confidence in their major economic strategy of those who purport to support them. If I am right—and if the thinness of the House in debate on this great occasion shows that already it is known on the Benches opposite that those who so bravely abstained last night will troop obediently into the Lobby tonight—then, indeed, there is an unholy alliance, then, indeed, there is a blow to parliamentary democracy.

The hon. Member for Birmingham, Selly Oak (Mr. Litterick) made the position very clear. He pointed out with great frankness and clarity, as did other hon. Gentlemen, the major differences between the sorts of policies put forward by the Government, apparently with the support of some hon. Gentlemen sitting immediately behind me and the sorts of policies the hon. Gentleman would like to see. He made it very clear that those policies are not compatible. If they are patched up in the short term, it will be solely for the shabby reason of maintaining the Government in office at all costs.

The hon. Member for Selly Oak, holding the views he expressed this afternoon, could with honour do nothing except resign the Whip. The Prime Minister, faced as he is with the permanent division—and he knows it is permanent—in his own party, can himself with honour to do nothing except resign.

It was suggested—I think by the hon. Member for Selly Oak—that the country wanted Socialism and his brand of Socialism. If that is the view of the Labour Government, let them try it. Let them seek a dissolution and a General Election. That is their duty to this House, to their constituents, and to the country.

5.54 p.m.

Mr. John Roper (Farnworth)

I regret that we are debating this matter tonight on the Adjournment, in spite of the parallel quoted by the right hon. Member for Brighton, Pavilion (Mr. Amery). I believe that it would have been preferable to have a debate on a clear motion reasserting the Government's economic and financial policies, including its medium-term economic strategy incorporated in the White Paper. But I realise that, in the present uncertain state of the economy, it is necessary that there should be a clear decision tonight.

That is why I am glad that my right hon. Friend the Prime Minister made it clear that what we shall be doing tonight is endorsing the Government's economic and financial policies. That is what we shall be voting upon tonight, not making a relative choice between the two Front Benches in this House.

There is perhaps another difference between tonight's debate and last night's debate. Last night we could get involved in the minutiae of Treasury predictions five years ahead—the exact arithmetic of which is, of course, open to dispute. Tonight we are considering the Government's medium-term economic strategy—the strategy which is the essence of the White Paper. Indeed, the function of the White Paper this year, as every year, is to act as a crystallisation of the Government's thinking in the whole range of policy fields for the period ahead.

That policy was right yesterday and the vast majority on these Benches voted for it then. It is equally right tonight, and the vote at the end of the debate tonight is to make that clear beyond peradventure.

It is totally misleading to suggest that the Government's position is opposed to public expenditure, or even to a growth of public expenditure. The Government are quite rightly against allowing the economy to become so unbalanced that the chance of a healthy growth of output—which is the essential prerequisite of any long-term increase in either public or private consumption—is put at risk or impeded.

The argument of my right hon. Friends in the last three days on that matter is clear, and must not be confused. While over the coming 12 months the economy will still be in the trough of the recession, it is right that public expenditure should be allowed, as it will be, to continue to expand, to prevent any further deflation. When the economy picks up, in 1977, 1978 and 1979, the additional resources which become available must not be pre-empted by further growth in public expenditure, however worthy the objectives. They must be used, first, for the growth of exports, to allow our balance of payments to get back into equilibrium, enabling us to buy the essential raw materials from abroad. Secondly, they must be used to allow for that increase in investment in manufacturing industry without which we have no chance of long-term growth or any long-term growth in public expenditure.

We can quibble about the details, but I do not see how that broad strategy can be disputed. These are surely the essential building blocks, irrespective of our views on other matters, for the healthy economy on which any chance of the long-term growth of output—and therefore of the resources needed for our objectives of social spending—must be based.

This particular part of the argument is not necessarily a Socialist position. It is not a Tory position either. It is not a bankers' position. It is surely the logic of economic arithmetic, and this is the arithmetic from which the Government's position inevitably starts. It is where any policy would have to start.

The Government strategy is spelt out in detail in the White Paper, in the light of the current economic statistics, but, quite clearly, the whole history of Government economic management since the War shows that no White Paper is sacrosanct. Things can change over the five-year period of this White Paper. The Government, of course, like any other Government, will make the appropriate changes. The detail will inevitably change over the three-year period, but if we are to have any chance of achieving our objectives, we must be clear that the broad lines of strategy are right in the present situation.

Of course it is true that politics is about something more than economic arithmetic. That is why the Government's decisions about the programmes for which we all care deeply were painful for them to take and painful for us to accept. But the central problem must be seen. We must get an increasing rate of economic growth in order to get the funds we need to carry out our programmes of social expenditure.

One may ask whether this strategy will succeed and give us the resources, at the end of the period in 1980, to carry out our social objectives. No one can tell. But I believe that there would have been considerably greater risk—indeed, there would almost certainly have been much more serious problems—if the Government had continued the plans in last year's White Paper. That would have created a very serious crisis for our economy in the short term and the medium term. The Government's financial and economic strategy is right tonight, as it was last night. The difference is that it will be endorsed tonight by the vote at 10 o'clock.

6.2 p.m.

Mr. Cranley Onslow (Woking)

I hope that the hon. Member for Farnworth (Mr. Roper) will forgive me if I say no more about his speech than that he is totally mistaken about the Tightness of the Government's economic strategy on any night.

I want to hark back to the speech by the right hon. Member for Devon, North (Mr. Thorpe). It is unfortunate that he is not with us any more, because I do not wish to take advantage of his absence. It can give none of us any pleasure to see any man hounded as he has been. Personally, we must all regret that.

But I think that politically we should also regret the way in which the publicity which has surrounded him has distracted the country from the essential irrelevance of the Liberal Party. In his speech today he reminded us of the irrelevance of the alternative he claimed to advance. I detected with regret that his only approach and advice to his followers was that they should nail their colours to the fence.

Until I heard the Prime Minister today, I would have been inclined to suggest to the House that his absence from the Chamber last night, which caused so much remark, must have been caused by a lack of courtesy or a lack of courage. Having heard him, I regret having come to that conclusion, because it was crystal clear today to every hon. Member who heard him that the reason for his absence must have been that he could muster no confidence in himself either last night nor yet this afternoon.

The Prime Minister made a speech uncharacteristic in one respect at least-it lasted only 25 minutes. For 21 of those minutes he abused his opponents. For four of those minutes he sought to justify the Government's economic policy. If I can take his scale of value inversely, I will deal briefly with the criticism and abuse that he sought to heap on his opponents.

To us on this side of the House the Prime Minister's main argument appeared to be that because, he alleged, we were committed to fantastic Government expenditure on Maplin, the Channel Tunnel, defence, and so on, our arguments deserved no hearing. I was reminded of a technique which used to be known as the "big lie". You would rule me out of order, Mr. Speaker, if I were to suggest that he was the last of the big liars. But I must say that there are times when he must make Dr. Goebbels turn in his grave.

Mr. Speaker

Order. I hope that the hon. Gentleman is not casting any personal reflection on the Prime Minister. As he knows, that would be unparliamentary.

Mr. Onslow

I am not casting such an aspersion, Mr. Speaker, I am merely deploring a technique which we all find deplorable and about which I intend to say no more.

As far as the Prime Minister's friends are concerned, he was not in the least in the fastidious mood that he claimed to be in. He accused them of promiscuity in the political sense. He accused them of reviving the "arsenic and old lace" unholy alliance. He described some of them roundly as Marxists. I suppose that fastidiousness prevented him from going so far as to suggest that many of them might be Trotskyites. The impression he gave to many of us was that of a man who felt that he was not likely to win their support by soft words or any other.

Those upon whom I suppose the Prime Minister hopes that he can rely were also present for his speech. I counted 35 departmental Ministers sitting on the Back Benches—unusual enough in itself, but remarkable in the absence of noise they made. If the payroll has its advantages on these occasions, it must be to form some kind of compact to applaud points with which those on the payroll agree when made by the man who leads them.

But there were no great valedictory cheers from them today. They will vote for him tonight, but they will not be very enthusiastic about it. They know that the Government's counter-inflation and economic strategy has been exposed as a bluff and a failure and—still worse—as a recipe for disaster for the country.

Those of us who look back over the past two years know that they have been marked by a massive fall in the value of money and of people's savings and earnings, by industrial disruption, caused, as often as not, by deliberate Government policy, with the threat of nationalisation hanging over the aviation industry and creating a total decision-vacuum in the minds of management and customers alike, and by the depression, of the motor industry, including the buying of jobs for reasons which have never been satisfactorily explained to us. There is the homelessness, the joblessness, the growing queues for hospital beds, the running-down of the social services for which the Labour Party was once so proud to claim every ounce of credit.

I do not believe that departmental Ministers tonight will go into the Lobby with high hearts and proud consciences to vote for the policies which their leadership has led them into. I do not believe that there are many amongst them who believe the wildly optimistic projections of gross national product upon which the Government's future plans appear to rest. Those projections were effectively and totally exploded in the debate on public expenditure—most effectively of all in the winding-up speech by my hon. Friend the Member for St. Ives (Mr. Nott).

When the country comes to judge this debate, its judgment may not necessarily depend on the figures in the respective Lobbies. Its judgment may well depend on its own experience of vindictive fiscal policies, social policies, the runaway wage inflation—all of the things which people are learning that Socialism means and all the mistakes which they can see to be the direct result of Socialist policies under the leadership of this Prime Minister. Some of them could judge those who vote tonight by the standard of loyalty to principle—a standard which will not be apparent among many hon. Members opposite tonight. I wonder how those who voted, or did not vote, will measure up to that test.

For most of us the importance of this occasion is that it marks the end of the Labour Party. It is the end of that party as well as the end of the distribution of goodies by the Government. Whatever happens, the Labour Party can never be the same again. Whatever happens, the divisions and distrust within it, the mutual dislike which is growing up within it, must become more obvious day by day to its members and to the country. Whatever is the result of the Division this evening, this is a party, a Government, in which the country will never again have confidence.

6.11 p.m.

Mr. Joe Ashton (Bassetlaw)

I was one of the 37 or 39 Labour Members who abstained last night. I understand that there is a rumour spreading round the House that after the vote tonight I am to be sacked as Parliamentary Private Secretary to the Secretary of State for Energy. I welcome this chance to explain why I did not support the Government last night. I do not think that anyone on the Labour side who stayed out of the Lobby last night did so with a feeling of joy. Many of us did not make up our minds to do so until 10 minutes to 10 o'clock, and after most serious consideration. We did it not just on the strength of the two-day debate but as a result of our experience going back to 1968–69, when we saw the previous Labour Government carrying out policies that could be described as Tory policies. We supported things like Vietnam and the pay freeze, which ultimately lost us the election in 1970.

There came a time when many of us felt that we could again be heading in the same direction unless we made a stand. I might have been politically naive and innocent when I came to this House seven years ago. My background is similar to that of many in the Labour Party. We come from trade unions and local councils. We came here through democratic organisations. Before the governing body in those organisations arrives at a decision there is argument. That argument can be rough. We would fight it out among ourselves and then we would stick to the policy decided upon.

I found, much to my regret, that Parliament does not work that way. All too often Back Benchers on both sides of the House are asked to be sheep and to go through the Lobby like so much fodder, just because their leaders—the Conservatives are just the same—have agreed on a certain policy, or on a U-turn. They have decided that something is blue when it is red, or vice versa. I do not think that this does Parliament any good. It does Parliament no good when people stand up at Blackpool in October and say one thing but come back here and do another.

The public have great respect for politicians, either on the extreme Left or Right, who stand by what they believe in, whether it costs them a job or their career prospects. This Parliament is enhanced by Members with the guts to stand up for what they believe in. I do not regret abstaining last night. I am sure that I shall not regret it in two years' time. Then it will have been proved just who was right and who was wrong.

What happened when this grand strategy was announced? A White Paper was produced. Before that, we had a long series of nods and winks, looks and innuendoes saying that "Denis wants £500 million off defence" and "Roy has managed to cut it down to £125 million". Carefully the scenario is presented—"Barbara has put up a great fight for this" and "Denis is doing the other". The whole thing is orchestrated. It is dressed up. It is just the same with the Tories. The last Tory Prime Minister used to announce policy from Lancaster House when the House of Commons was in recess. He said that the wage increase would be £1 plus 4 per cent. All Tory Members were expected to follow their right hon. Friends into the Lobby, like sheep.

This is what is happening today with the Cabinet. The Cabinet thinks that it can operate on the basis of caucus rule and that the rest of us will always be there to rubber stamp things. It does Cabinets good to know that there are men of principle who will not be led by the nose. However much Cabinets may stage-manage the occasion, whether at Blackpool or Downing Street, and however much they may present things in a favourable light, Back Benchers have the right to be heard, and to stand up and be counted.

What happened after we were presented with the White Paper? We had a party meeting, which lasted two hours. The Prime Minister came for the first 10 minutes to listen to us. I took careful note. The Chancellor stayed for the two hours and replied to the meeting in 15 minutes. Many who wanted to speak were not able to do so. That was supposed to be democratic consultation with the Back Benchers in this party.

Mr. Dennis Skinner (Bolsover)

After the event.

Mr. Ashton

After the event. This is not prior consultation. This is not the sort of discussion that is held in Labour groups or in trade unions. The branch, the group or the council, comes to a decision and sticks by that policy.

What has happened over the past two years? There was the Common Market issue. The majority of the members of the Parliamentary Labour Party were against the Common Market. Conference was against the Common Market. So was the TUC. But blithely the leaders of the party went on to the hustings and campaigned for it.

Mr. Alan Lee Williams (Hornchurch)

Tell us about the people.

Mr. Ashton

The people had the referendum, but we are talking about party policy. In that case party policy was blithely ignored. What about the party policy on import controls? I had to go to my constituency last Thursday because a factory was closing down as a result of unfair competition from cheap imported shoes. The shoes made by the workers in my constituency could not be sold because of the cheap shoes flooding into the country from Taiwan, Korea and beyond the Iron Curtain. What am I supposed to do—tell the people in my constituency that I am sorry, but I must go like a sheep through the Lobby, because there is a three-line Whip on import controls? Or do I stand up here like a man and speak against the Government's policy? That is what I was sent here for. Unemployment is growing in our constituencies. Are we supposed to stand here like meek little mice and never express an opinion, except, perhaps, in Committee?

Mr. Alan Lee Williams

What are you going to do tonight?

Mr. Ashton

I shall make my own speech. I shall come to that point in a moment. Unless we are careful we shall be treading down the Tory path. We are getting to a situation in which we shall be a popular Government with the Press and the Tories. We are carrying out Conservative policies. Make no mistake, if it had not been for the by-election the Conservatives would not have come off the fence and forced us into the position they did last night. They are finally realising that we have a Tory Labour Government. The Press is happy with what has been done about unemployment and expenditure cuts. We are having to carry the can, and will regret it in two or three years' time.

The vote last night was not just about expenditure cuts; it was about future policy and the way we are going. It was about what will happen in the Budget, and what will happen to the pay policy in August. If the Government had received a unanimous vote from us last night they would have thought that they could carry out any policy they liked, no matter how Right Wing or Conservative it was, because there would be no protest from the Back Benchers.

I want to say how I shall vote tonight. Our vote last night was not meant to smash the Labour Government; it was a shot across the bows, to show that we were dissatisfied with the direction in which we were heading. It was to show that we felt that we were heading in a Conservative direction rather than in the direction of our manifesto. We should have been moving in the direction of our party conference. We believe that we were not elected to preside over growing unemployment and its use as an economic weapon. We were not elected blithely to accept Common Market policy or to allow cheap imports to flood the country. We believe that we were heading in the wrong direction. There comes a time when, although we do not want to bring the Government down——

Mr. Onslow

Why not?

Mr. Ashton

Because the Government have done some fine things. We who abstained agree wholeheartedly with the Government's housing policies, rent policies, their trade union protection legislation, and their nationalisation of the shipbuilding and aircraft industry. We agree with perhaps 80 per cent. of the Government's policy and we do not want to bring them down to return to the policies of 1970–74. That does not mean that we shall sit back and behave like sheep. That does not mean that we have no right to express an opinion. We shall not accept everything.

That does not mean that I, as a humble PPS who is going to be sacked tonight, after the vote, is going to sit back and blindly accept it. I do not regret it. But some of my hon. Friends, if they were honest, may wish that they had abstained. In two or three years from now they will regret that they did not stand up at the right time and try to change Government policy when they had the chance.

Tonight I shall vote for the Government because their policies on shipbuilding, the aircraft industry and the trade unions are the policies for which we have campaigned for a long time. The policies on public expenditure are not.

Mr. Mike Thomas

My hon. Friend must have heard the Prime Minister say, in terms, that the vote is one of confidence in support of the Government's financial and economic policies.

Mr. Ashton

I have been in the House longer than my hon. Friend, who is a bit of a rash character at times. Unfortunately, he often believes what the Whips tell him. When the Whips said yesterday that there would be no vote of confidence if the vote was lost last night, some of us realised that the pressures were being exerted. But there is a vote of confidence after all. The rules and procedures of the House meant that pressures were being exerted in devious ways. Votes have to be registered, whether on the Adjournment or on some other matter, irrespective of what is on the Order Paper, but the Government know why these votes are being cast.

I hope that the Government have learned sense and that the vote last night will influence them in the Budget and in future negotiations with the TUC. I hope that they will accept that they cannot have it all their own way and override Members of the party and the contents of the manifesto.

6.22 p.m.

Mr. Cecil Parkinson (Hertfordshire, South)

We always enjoy speeches by the hon. Member for Bassetlaw (Mr. Ashton). He has a reputation for speaking his mind, for being fearless and for doing what he believes to be right. I am not saying that as an Opposition Whip who was glad to see him in his seat last night. I listened to him with a great deal of interest today. But I cannot understand why, at the end of his speech, he turned a somersault and said he was going to vote with the Government tonight. The vote will be on the policies about which he and his hon. Friends expressed their disapproval last night. There has been no change since then.

Far from apologising in any way for the policies that were on trial yesterday, the Prime Minister boasted about them. He talked about his hon. Friends in a way which was quite scandalous. I thought Big Bossism had died in Britain. I cannot imagine any industrialist or manager daring to talk to his staff and fellow workers in the way in which the Prime Minister talked to his hon. Friends today.

Mr. Ronald Bell (Beaconsfield)

Perhaps my hon. Friend is confusing the relationships between employer and employee with people whom the Prime Minister once described as having dog licences.

Mr. Parkinson

When the Prime Minister talked of dog licences we thought the remark was a temporary aberration but it is obviously the way he feels about his Back Benchers. When the paid vote sat here yelping every time the Prime Minister looked up with his PPS orchestrating the barking, one began to believe that the Prime Minister was right and that what he resents is that there are 30 people in his party, not who are lap dogs but who are not. The Prime Minister was angry with them for not being lap dogs and he could not forgive them for that.

Today I went to the Library and asked for five simple statistics about the Government to get some measure of the Government's performance since it came to power, because tonight we shall vote about our confidence in the Government. The statistics show that when we left Office in February 1975 the pound stood at $2.27, yesterday it was $1.91, and today, as a result of the expenditure of millions of pounds of our inadequate reserves, it crept back to $1.93. In February 1975 the rate of inflation was 13.2 per cent. Now it is 23.4 per cent. Unemployment stood at 551,600, whereas the last available figure was 1,184,800. Taking the index of production in 1974, during the three-day working week, as 100, in December 1975 it was 96.9. That is an appalling record for any Government to have and it is certainly not a record of which any Government should go to the House or the country and ask for a vote of confidence. But the Prime Minister says he knows what the problems are and that the Government are tackling them. The twin problems that they are determined to deal with are those of inflation and of broadening the industrial base of the country. The Prime Minister has fully accepted the importance of the private sector, and that resources must be made available by cuts in Government spending so that the private sector can invest.

Can we take seriously the Government's declared aim of dealing with inflation and broadening the industrial base? What is their principal weapon? The weapon which the Prime Minister boasts about is the co-operation of the TUC. That is going to be the key, the way to control inflation, because the TUC is going to yield to a set of norms or agreed increases which will enable inflation to be controlled. But the Prime Minister has no grounds for making that claim as if it were a fact. The co-operation which he has received in the past from the TUC were first under the Social Contract and more recently under the pay policy. But the settlements demanded have been grossly inflationary—they have fuelled inflation.

As I sat listening to the Prime Minister today talking about the need for wage restraint, my mind went back to February 1974 and the miners' wage claim; to the huge wage claims which, as a Government we tried to resist. I received a letter last week from a constituent who had also written to the Secretary of State for Energy and who said that he had been a trade unionist for 35 years and a member of the Labour Party for 40 years. He wanted to know what had happened to this country. He said that it was now acknowledged by the Government that pensioners could not afford to keep warm this winter on their pensions. The Government accept this and tell pensioners not to pay their bills. They say that they accept that the pension is not enough to pay for needs such as heating. They say "We cannot help you with that, so just run into debt." My constituent—a pensioner—ended his letter: I have now come to the conclusion that the Government are only concerned to please the unions at all costs and to hell with the elderly. He does not see the trade unions as his great shelter and shield any more. Another thing he said was: I hope you will fight for the pensioners, Mr. Parkinson". We did, in two General Elections. In 1974 I did just that, because I fought those elections on the basis that if people were to get 40 per cent. wage increases that would push up the price of coal, heating and electricity—to such an extent that the elderly and the vulnerable would not be able to afford them; and these were the very people for whom we were fighting in February 1974.

We did not want to fight the miners. No Government in their right mind would wish to do so. But we knew then what the Government are now trying to tell their own Back Benchers and the Prime Minister's kennel master, his Parliamentary Private Secretary, who is sitting there barking. But I bet that in February 1974 he was telling all his electors that there was no limit to what the country could afford to pay the miners, and that we, the Conservatives, were just being bloody-minded in trying to resist their claim.

We were defending the elderly, because we knew what the Government now recognise, that inflation is Public Enemy No. 1 and that no group of the public is more threatened by it than are the elderly. The Government have no cause or ground for being optimistic that their co-operation with the trade union movement will help them reduce inflation. We heard that Mr. Murray said yesterday— "We have been to see the Chancellor and of course he cannot say anything to us, but it would not be unreasonable to say we have been given the impression that there could easily be modest reflation." I must warn the TUC, which makes no secret of it and is very open about what it wants, that if it gets its current "shopping list" inflation will rocket, and there is absolutely no ground for the Government's being optimistic about the fact that because they have TUC co-operation, on the TUC's terms, they have the answer to inflation."

The second objective of the Government is to broaden the industrial base. The Prime Minister spoke today of how he was going to do it. I made a note of the things that he listed as evidence of the Government's serious intentions. He said that we have the National Enterprise Board, the Scottish Development Agency, the Welsh Development Agency, the National Economic Development Council and all the little "Neddys"—and, he might have added, we have British industry flat on its back, totally lacking confidence in this Government and its policies. But because the Prime Minister can produce a battery of agencies he really feels that he has a battery of solutions to the country's problems.

The truth of the matter is that we all want to see the industrial base of this country broadened; but the very policies that the TUC has been demanding—all those things of which the hon. Member for Bassetlaw boasted as the part of the Government's policy of which he approves; their approach to subsidies, rent freezes, nationalisation and taxation; things on which he would like the Government to continue with their policies—are the very things that are undermining industrial confidence. It is no good creating a battery of agencies and carrying on with the policies which this Government have been following and then say that in 1978–79 they will release resources so that the private sector can invest.

It is the great confidence-destroying activities of this Government—very largely, I am sorry to say, at the behest of the TUC—and their attempt to achieve TUC compliance with their policies, that will prevent them from achieving their second objective, which is a broadening of the industrial base. It is no good piling tax upon tax so that the successful man, about whom the right hon. Member for Bristol, South-East (Mr. Benn) always spoke so glowingly—the entrepreneur, the risk taker, the creator of jobs—is rewarded by a battery of at least six taxes, with a top rate of 98 per cent. on one tax alone. That is what will discourage industrial investment—the huge tax burden with which the successful industrialist or middle manager, or the successful workman, is faced.

Another thing that will destroy and is destroying industrial confidence is the absolute armoury of privileges which the Secretary of State for Employment is again handing over to the trade unions in his attempt to buy their co-operation—the huge legislative measures that have been pushed through by this Government and which, frankly, have achieved the very objective that the Government do not want, of making the employment of people an unattractive proposition. People are now very careful about creating anther job or taking on another person because the sheer volume of legislation which this Government has imposed on employers is a further disincentive to employment.

Mr. Litterick rose——

Mr. Parkinson

I had better not give way to the hon. Gentleman. He made a good speech, and a long one. I want to emulate the first but not the second aspect of his speech. Today we are to vote on a motion of confidence in this Government. I would suggest that on the statistics which I gave on their record they have no right, on their past record, to ask this House for that vote of confidence. I would suggest that on its declared policies for dealing with the two big problems which they have identified they have no grounds either for asking the House for its confidence.

In conclusion, I would further suggest to hon. Members on the Government side that those who abstained last night—those who sat on those Benches because they did not agree with the Government's strategy—will be voting tonight on exactly the same issue, and they will have the problem of squaring their consciences. Last night it was desirable and honourable—and the hon. Member for Basset-law thinks he proved his virility by doing it. If, tonight, they rush into the Lobby they will reveal last night's exercise as a sham and a charade, and they will be giving a vote of confidence to a Government who last night they declared did not deserve one.

6.36 p.m.

Mr. Mike Thomas (Newcastle-upon-Tyne, East)

The contribution of hon. Gentlemen on the Opposition Benches illustrates a central tenet of our debate today—that the real argument once again is not really between those hon. Gentlemen and ourselves but within the Labour Party, within the Government side and within hon. Members on these Benches. I do not regard that as something of which to be ashamed, something on which we should feel vulnerable, because at least we are having a genuine debate about the welfare of this country and the policies being pursued. I am afraid that is not the description I can apply to the approach of the Leader of the Opposition this afternoon or of some of those who spoke after her on the Opposition Benches.

I rise because I am anxious that we should be clear what this debate is about and the degree to which the debate on and within this side of the House is a legitimate debate which we should be pursuing; because it seems to me that we have heard this afternoon two defences of the events of yesterday evening—one from my hon. Friend the Member for Bassetlaw (Mr. Ashton) which was a tactical defence, the other from my hon. Friend the Member for Birmingham, Selly Oak (Mr. Litterick)—who I am not sure is still in the Chamber—which one could call an intellectual defence.

I would say to my hon. Friends that I believe there is no tactical defence for the action that was engaged in in this House last night by some of them. We have heard the view of the Prime Minister on it, and I agree with him. I believe the central fact of the argument is that some of my hon. Friends are trying, in this matter and others, to have it both ways. They are trying, on the one hand, to say, as my hon. Friend the Member for Bassetlaw said "We support 80 per cent. of the Government's policies but there are just some odd things about which we are a bit worried". On the other hand, they are trying to suggest that they disagree fundamentally—and this is their absolute right—with the central economic strategy of the Government, upon which the achievement of almost 100 per cent. of the Government's policies is based, let alone 80 per cent. [Interruption.] It may be that some of my hon. Friends feel that it is lack of achievement, and that that is the view of their Government that they wish to put to the country. It is not the view of their Government—and my Government—that I wish to put to the country, because I believe this Government have had achievements of a considerable kind and that they have now found themselves—partly by accident, I concede that, because I do not believe my right hon. Friends are endowed with God-like wisdom and so should be believed all the time—on the road to setting right the economy of this country; and if some of my hon. Friends do not know it, and if hon. and right hon. Gentlemen opposite do not know it, I believe the people know it.

The central difference between a tactical and an intellectual defence of an abstention is that I should find it hard to live with a tactical defence, because almost every point in it can be argued the other way.

How would my hon. Friend the Member for Bassetlaw like it if whenever there were sections of Government policy with which I disagreed I decided to abstain? I think that he will concede that he is a fairly regular attender in this respect. Would he like it if 10 other groups in the Labour Party regularly behaved in that way? My hon. Friend said that the Government were elected on one policy and went on to carry out another. He is to resign or to be kicked out from his Parliamentary Private Secretaryship. Is that accusation true of the Secretary of State for Energy? If so, why is he still in the Cabinet? Is that accusation true of the Secretary of State for Employment? If so, why is he still in the Cabinet? I do not believe it to be true of either of my right hon. Friends.

My point is that one can make these arguments either way. That is why I believe a tactical defence is wrong. I do not respect it. I do not believe that it should be made on the Floor of the House. I should not make such a defence of my own actions, whether in support of or against the Government.

An intellectual defence, an intellectually respectable criticism or critique of the Government's economic policies, was in part made by my hon. Friend the Member for Selly Oak. Frankly, I have heard it made better by my hon. Friend the Member for Liverpool, Walton (Mr. Heffer). The tragic thing is that the only intellectual defence of any substance which has been made in the last two days and, indeed, in the week before, was by my hon. Friend the Member for Luton, West (Mr. Sedgemore). He made an intellectual case against the Government's economic strategy. I agree with my hon. Friend the Member for Chester-le-Street (Mr. Radice) that the intellectual criticism of the Government's economic strategy by my hon. Friend the Member for Luton, West falls, because, if his forebodings and criticisms of the Government's forecasts are true, the implication is not that we can spend and expand our programmes but that we must cut our programmes in a worse and more damaging way.

Mr. Brian Sedgemore (Luton, West)

I agree with my hon. Friend that if my forebodings about the Government's targets for the shift of resources to the balance of payments and the growth of GDP are right, the logical conclusion would be further public expenditure cuts. Whether he agrees with my speech or not, if he listened carefully he would have heard me outline an alternative to achieve the growth rate that we need.

Mr. Thomas

I thought I paid my hon. Friend credit for that. I accept that he put forward an alternative. I pay credit to him for that. The logic of what he said was that taxation would have to increase. What he did not fit into the jigsaw and explain was how that would square with several other important aspects of the Government's economic policy, not least their wages policy. How would increases in direct and indirect taxation of a more substantial nature than the White Paper implies—it already implies an increase of between 2p and 6p in the pound in income tax—square with the survival of the Government's wages policy? I submit that it cannot be done. It is trying to square the circle. It cannot be done within what my right hon. Friend the Member for Battersea, North (Mr. Jay) on another occasion called the laws of arithmetic.

Mr. Neil Kinnock (Bedwellty)

Will my hon. Friend give way?

Mr. Thomas

No. I am moving to a separate part of my speech now.

Passing from the defence of abstention last night, whether tactical or intellectual, the thing I find most difficult to cope with and to stomach is the claim that the actions indulged in in some way reflected the views of the people—or, if not of the people, of the Labour movement. That is a dishonest claim. The actions taken last night may reflect the views of a section of the Labour movement. We can all claim to do that, at one time or another. But to claim that those actions reflected the views of the broad mass of the Labour and trade union movement is demonstrably not true. That must be said today in a straightforward and honest way.

Mr. Ashton

I am glad to hear my hon. Friend bring out the point that we do not represent the general view of the party. Would he agree to a special party conference, which we have advocated, to ascertain the views of the party?

Mr. Thomas

I am happy to rest on the decision that has been taken by the National Executive of the Labour Party not to hold one. I hope that my hon. Friend will allow me to beg leave to believe that the NEC is more representative of the views of the Labour movement than is any individual or group of individuals here.

I turn now to the question who is supporting the Government's economic strategy. The idea that it was dreamed up by the Chancellor of the Exchequer and the Prime Minister, with the occasional talk about it with Len Murray, and that nobody else was involved is a parody of the situation. The broad mass of the trade union movement has supported the Government's general economic strategy not only through the TUC but through its actions. There has not been a single significant break in the £6-a-week policy. Everyone is now talking not about whether there should be a policy after 1st August, but what kind of policy it should be. Hugh Scanlon, the President of the Amalgamated Engineering Union, said that he supported the Government's general economic strategy. The TUC and the Labour Party have said that they support the strategy. In the past I recall my right hon. Friend the Secretary of State for Employment, making a speech at Blackpool—I was in the hall and many of my hon. Friends were there as well—in which he said that the Labour Party supported the germination of the policy on which we have now embarked. Indeed, that conference supported the £6 limit. It was with great pleasure that I listened to the speech that was made by my right hon. Friend on that occasion.

I shall watch with interest the behaviour of my hon. Friends tonight. Let us get it on the record again, so that it is there. They are being asked to go into the Lobby to support a motion of confidence in the Government's financial and economic policies. I shall wholeheartedly respect any one of my hon. Friends who abstained last night who feels unable to support such a motion. That is a tenable position. What is not tenable is to have one's bite at the cherry, one's bark, or one's shot across the bows, as my hon. Friend the Member for Bassetlaw put it, and then to run for cover when it comes to the crunch.

Mr. Richard Buchanan (Glasgow Springburn)

My hon. Friend need not worry about that tonight.

Mr. Thomas

I am sure that my hon. Friend is right. That is what this debate is all about. I hope that I shall never put myself in a position to be accused of being prepared to damage my own party and Government when it did not matter, but that I felt so slightly about it that I ran away when it really did matter.

6.50 p.m.

Mr. Norman Tebbit (Chingford)

I have been listening to the speech by the hon. Member for Newcastle-upon-Tyne, East (Mr. Thomas). It is unusual, charming, or even quaint to hear a Labour Back Bencher supporting the Prime Minister, and in such fulsome terms. I am not sure whether his speech was a tactical or an intellectual defence of the Prime Minister or whether he fell somewhere between the two stools, but let not the hon. Member for Bassetlaw (Mr. Ashton) think that the seat he is about to vacate tonight will be left to grow cold. There are obvious candidates to look after the conscience of the Labour Party and ensure that the Secretary of State for Energy does not deviate from the true path of the manifesto. We have seen a fair guarantee of that tonight.

The hon. Member for Western Isles (Mr. Stewart) said that the rupee had been revalued in terms of sterling. The hon. Gentleman omitted to notice that it has been revalued twice this week against sterling. I would not rest my case that my right hon. Friend the Leader of the Opposition would make a better Prime Minister than the present incumbent solely on what has happened in India and what has happened here—of course that is a very interesting comparison—but a sinking pound and a rising rupee is a fair commentary on what is going on in the world these days.

We all know that today's debate is not really about economic policy—it is about the Government's ability to command a majority in the House and their right to continue governing. In my view, they have lost the support of the British people. There is only one way to find out whether that is so.

The hon. Member for Birmingham, Selly Oak (Mr. Litterick) said that the Government had lost the support of the Labour Party and of the Parliamentary Labour Party at that. Last night, that was so but it seems that tonight the dogs will go back to the kennel, or whatever the "in" expression is, and, lo and behold, the hon. Member for Selly Oak will be proved wrong. The Members of the Parliamentary Labour Party will run along and support the Prime Minister despite what he has said about them.

I recollect a Labour Back Bencher, who is not present at the moment and whom I shall not name, saying to me some years ago. "The one thing I envy about the Conservative Party is that at least you conduct your quarrels decently". Certainly this particular quarrel has not been conducted very decently in view of what the Prime Minister was calling his Back Benchers today.

The Prime Minister is a curious man. He has been a specialist for some years in shovelling the blame for events which he does not like on to other people. I am sure that the next recipients of the blame for what goes wrong will be the 39 mavericks who did not vote last night. Whenever anything goes wrong—if sterling moves the wrong way, if the wind blows from the east instead of the west, or if there is a wet summer—they will be blamed, because so far the Prime Minister has never taken responsibility for anything that has gone wrong.

The right hon. Gentleman does not blame his Treasury Ministers for the fact that the economy has gone to hell. He does not blame his Treasury Ministers who have spoken in the debate during the past two days for the fact that their case was lost. He blames his Marxist Friends.

Whatever the motion says, the Prime Minister is on trial. We must consider above all his ability to govern at the head of an increasingly unstable coalition—a coalition which the Prime Minister himself today identified as one in which the troublesome element is the Marxist wing.

When deciding whether the Prime Minister is a fit man to govern, the House must consider what he said today about sterling. He said that it had been through a period of calm. He said that it had been steady for some months. How did he describe that little flutter which I see from the evening papers today led to the decline from last night's 33.8 per cent. devaluation to a worst ever of 34.2 per cent. average devaluatiion? The Evening Standard says: So in the past week, the pound has suffered a devaluation of about 6 per cent. against the dollar and of more than 13 per cent. against the 10 major currencies. How did the Prime Minister describe that today? He described it as a downward pressure on the exchange rates. A downward pressure implies that there was something pressing back. There was more than a downward pressure: there has been a downward movement clearly as great as the last formal devaluation over which the right hon. Gentleman presided. The only difference is that it has taken a week instead of a day. However, on that occasion it took only a week to get round to it, but this time it has happened rather more gradually.

Everyone in the House and throughout the country must become more and more worried about the Prime Minister's retreat from reality, a retreat which impelled him to hide last night instead of coming to the Dispatch Box. He is getting worse and worse. He retreats into imagination, plots and paranoia about South African business interests which think that the Liberal Party is so important that it is worth spending money on nobbling. Good gracious me! The next story will be that Lockheeds thought it worth while to bribe the Liberal Party! We could not get more ridiculous than that.

All this must raise doubts about his fitness for office. He labels my right hon. Friend the Leader of the Opposition and my right hon. Friends on the Front Bench as Marxists because we voted last night against him. But the Marxists sat in the Chamber and did not vote at all. He is becoming downright confused.

The Labour Party, of course, is now too split to govern, and it ought to go. If it does not go, if it hangs on, what will be the course of events over the next few months? The Budget is not far away and there will be a new series of delicate negotiations on it. Those negotiations will be based not so much on what is good for the economy as on how much the Marxist wing of the Labour Party will tolerate without biting back again. That is how the country will be run over the next few months if this Government stay in office. I can only say that if that is how it will be, I hope that the Social Democratic wing will gain a little courage and be willing to bite back if necessary, because if it does so, it might even find that we shall help it out.

The Liberals suddenly seem not to want an election and the Leader of the Liberal Party, for the time being, came up with a new constitutional dream today. He does not want a coalition now but cosy chats to arrive at a mutually agreed policy. No responsibility for him and, worse still, no posts for his chums.

Mr. Kinnock

What chums?

Mr. Tebbit

He is an easy-going man, he must have a chum somewhere. ————I he hon. Member for the Isle of Ely (Mr. Freud) might have got a job if the Liberals had entered a coalition. He would make a very good Whip—with dog food for the dogs that get their licences renewed. He might even get them into the Lobby. But there was reasoning behind the suggestion by the Leader of the Liberal Party that this cosy chat on agreed policies, which did not involve taking office in a coalition, was a good idea.

The policy which he said had continued as a bipartisan or tripartisan policy in that way for some years was, believe it or not, the policy on Ulster. That is the right hon. Gentleman's idea of success. In the six years of bipartisan or tripartisan policy and cosy chats we have moved from the situation where there were mobs throwing stones on Sundays to the stage where the politicians in Ulster have to carry .38 pistols in their pockets to protect themselves against threats of murder and where the bombings and murders of Londonderry have spread to London. That is the Liberal Party's idea of a successful policy.

We are not of course trying the Liberals tonight. We are trying the Prime Minister and Parliament itself, and the most worrying factor of all—and this is where there is common cause among many of us—is the way in which over these past years power has been drifting away from Parliament. That was the burden of a great deal of what the Tribune Group Members have said, and it is a perfectly reputable contention. I wish they had believed in that from 1970 to 1974 as well. But since they believe in it now, I will join with them in expressing my anxiety.

That is why this place is often deserted when major debates are in progress, and that is not the fault of this Government alone. There has been a drift to a corporate style of government more than once in the past, more than once a tendency to package up deals in private outside Parliament with other powerful bodies and then to bring them back here, expecting Parliament to rubber stamp them, or sometimes not even bringing them back here before they have been announced under the television arc lights at Lancaster House.

There is only one way in which we can get this matter right and by which we can bring the power back to this House. That is not to drift on with a Government split and divided, bargaining internally to try to keep its supporters in the same Lobby now and again. The way to do it is to go for a General Election now so that the people of this country can come to a clear decision on which way they want to go, whether they want to go on stumbling as they have for the past two years towards an Albanian economy and a South American currency, or to get back in the mainstream towards a prosperous economy, a free economy and free men in poltics. That way is the way back to a capitalist economy and to a free market economy.

So let us have the election now and let Labour Members vote with us tonight and bring down the Government. Then let them get to the hustings and make their policy and their pitch for power, and we will do the same.

7.4 p.m.

Mr. John P. Mackintosh (Berwick and East Lothian)

I agreed with a small part of the speech of the hon. Member for Chingford (Mr. Tebbit), but I fear that if the Conservatives came back to power they would be running back to meetings at Chequers with the powerful groups outside as they did so frequently when they were in office. This tendency of Governments to make arrangements with groups outside is endemic, and we need a thorough reform of this House in order to get us, the Back Benchers representing the public, back into the discussion of these isues.

I accept this point, but we are not dealing with the reform of the House of Commons tonight; we are discussing the continuation of the Government and, as the Prime Minister emphasised so strongly—and, I think, rightly—the continuation of the Government on the economic policies which they have presented to this House. That is the issue upon which we will be voting tonight.

As someone from the Opposition pointed out, the last time a Prime Minister came to this House and appealed for its confidence on an Adjournment motion was in May 1940. We should face the fact that today the Prime Minister did not make an appeasing speech; he made an aggressive and strong speech, emphaising that in no way was this Government going to change the economic policy that it had put before the House and which was rejected by my hon. Friends below the Gangway last night. I hope they realise that if they vote for the Government tonight they are voting for the Government's continuance and the continuance of that policy. That is the key point at issue.

The Leader of the Opposition went in for some fireworks and arguments attacking the Labour Party. It is cheap and fruitless in this House—and I think some Conservatives agree with this—to argue about which of the parties is the more monolithic, which contains the wider divisions. There is nothing disgraceful in the fact that the right hon. Member for Sidcup (Mr. Heath) does not always agree with his former Front Bench colleagues, or that the Labour Party contains a wide spectrum of opinion. What matters is the governing of this country and the sustaining of a viable policy by the Government through this House. The position we have to face here is that there are divisions in this House. Had I been called last night I would have entered into the merits of the very genuine argument about the different economic strategies between my hon. Friends below the Gangway and the Government and those of us who do not necessarily support the Government's social priorities on cuts but accept the Government's overall strategy.

There is a vital difference here, as my hon. Friend the Member for Ashfield (Mr. Marquand) said, between the argument that the precise cuts represent the right package and the much deeper argument that the whole strategy of maintaining a certain balance between public and private sectors should be continued. The strategies are wide apart, but on the social arguments I agree with many of my hon. Friends. This strategy difference was the cause of the defeat last night. There is no point in glossing it over. It is deep and genuine, but it is not dishonourable. Minister's speeches have shown that the Government have a coherent point of view. They are saying that we have a mixed economy, that we have got to the pitch where the public sector has grown to a certain level, and that over the next few years they want it to grow at only 1 per cent. per annum in a 5 per cent. growth period. So that they are saying in effect that the public sector must stand still and we are expecting the growth which the Government hope will take us out of this situation to come from the private sector.

This is a coherent strategy, and it fits in with what the Secretary of State for Industry said at Chequers, when he announced that in future the Government would back a viable, profitable industry. The whole approach is that the private sector must get the export-led growth to take this country out of this recession. That coherent strategy is in line with the White Paper. My hon. Friends below the Gangway make a different case.

Their case is, and it was admirably put by my hon. Friend the Member for Luton, West (Mr. Sedgemore) and many other of my hon. Friends that if we had a strong system of import controls and investment steered not through the private sector but through the public sector, through the National Enterprise Board which would have far stronger teeth, if we had a publicly-owned or directed economy of that kind, we would get the investment, growth and the progress we want.

There is a difference between the two strategies, but we still have much in common. While there is this difference what matters is that we accept the danger of the present economic situation of this country. There has been too little said about that in the debate. That is what I admired in the speech by the right hon. Member for Sidcup when he pointed out that we have been in depressions before but that we have never been as boxed in before by the currency, by the balance of payments, by a still high rate of inflation and by the endemic weakness of the economy as we are at the moment.

I take this very seriously for its effect on democracy. It is always said, and now I am beginning to believe it, that there will be difficulty in sustaining democracy in this country over the next few years if Government after Government, whether Right-wing, Left-wing or centre, disappoint the people who put them in power, if the Government say that they will do one thing but something else happens in practice.

The Scottish National Party does not get support because of the speeches its Members make in this House. It is not because of what they say, but because of the deep disappointment of the Scottish electorate with the performance of both major parties, and the fact that they have an opt-out which is not available to the English electorate.

We have a serious problem. A Government have to produce a coherent policy and to stick to it. The policy advocated by the Prime Minister and the Chancellor of the Exchequer is now reasonably coherent, although I disagree with aspects of its application. However, the Government must persist with it.

The great danger to the country and to the Government—what matters to me is the danger to the country—is that the Government, faced with the type of rebellion that they had last night, will pay, what used to be called in the history books, Danegeld to marauding bands of strong-arm men, whether they are outside in the economic sphere or show the courage that my hon. Friends below the Gangway showed last night in abstaining. I admire them in the sense that I have always wanted to maintain my position against Government. I would never criticise anyone for doing what he believed right. However, the fact is that my hon. Friends below the Gangway flexed their muscles. I do not blame them, but I shall blame the Government if the Government deviate from their strategy, to buy them off here or there.

For instance, it is utterly disgraceful for a Government to issue circulars to local authorities telling them to cut their expenditure to the bone, that "the party is over" and then, five minutes later, when Ministers are facing a conference of the Labour Party, to think "My God, a little Danegeld, and we will get over this"; so they issue another circular and provide £175 million for "job creation". They tell the same local authorities that that money is available but not for any of the important projects which they had to shelve in the cuts; the money must be used for something sillier and less necessary. That kind of Danegeld sickens people, leads to lack of coherence, and damages the credibility of Government.

I shall cite another example. No sooner had the Government agreed to a solid piece of industrial strategy at the Chequers meeting last November—that it would back viable industry but not losers—than out they came with £162 million in Danegeld for Chryslers. That sort of thing destroys a Government's credibility.

I would rather that the strategy of my hon. Friends below the Gangway was pursued and was coherently and strongly put before the people, than that the Government should start on a strategy and then lean over backwards to do a left wing thing here or there, and then make a genuflexion in the direction of the nationalists and the Tribune Group, so that the country has no coherent government at all.

This Government have a strategy. The country is in dire economic danger, so they should apply that strategy. Everyone knows that there is a minority group in the Labour Party that has a different strategy. We respect them for it. However, the Government must not be blown off course by them. I ask my hon. Friends below the Gangway to realise that if they vote tonight for the continuance of the Government, they must do so knowing that they vote for the maintenance of the existing strategy that the Government have put before the House.

7.13 p.m.

Mr. Nick Budgen (Wolverhampton, South-West)

The sad duty of this House tonight is to intrude upon the private agony of the Labour Party. The hon. Member for Berwick and East Lothian (Mr. Mackintosh) directed his attention to the Government. The hon. Member for Newcastle-upon-Tyne, East (Mr. Thomas) directed his attention to his hon. Friends below the Gangway. I want to take up the logical and courageous argument put forward by the hon. member for Newcastle-upon-Tyne East. He asked what the Tribune Group will do tonight. That is the question that the whole nation will ask as it listens. [Hon. Members: "No."] Oh yes, it will. However, some people will believe that the Tribune Group is not only courageous but consistent. They will believe that having attacked the central philosophy of the Government's economic policy, the Tribune Group will follow that up by abstaining tonight. There is a consistent course which the Tribune Group could follow. It could abstain tonight and say frankly and sincerely that it is totally different from the Social Democrats in the rest of the Labour Party. The time has now come when the only honourable thing that the Tribune Group can do is to recognise that it is a different party, to abstain, and to do that which in every other sphere it has always advocated, namely, to appeal to democracy. It should allow the people of this country to vote on its distinctive philosophy.

It is clear that it is no good papering over the differences. It is here that I fundamentally disagree with the hon. Member for Berwick and East Lothian. There is no difference in tactics or strategy between the Social Democrats and the Tribune Group. The Tribune Group has a totally different vision of society. It does not want a society in which the Government of the day rules in order to serve the interests of the whole nation. It wants the Government of the day to serve the interests of only one class. It consistently says that it is here to deliver the goods to that small section of the community that sent it here, and blow the rest of the nation.

The Tribune Group also has a clear view about the role of the State and of public expenditure in our society. It is no good papering over the differences between the hon. Member for Luton, West (Mr. Sedgemore) and, for instance, the Home Secretary. The Home Secretary put it better than any Conservative Member when he said recently that when more than 60 per cent. of the gross domestic product is controlled by the State, it is not just an economic matter but something that infringes upon the liberty of the individual. That was the spirit of his remarks. That is not a difference in strategy or tactics between the Tribune Group and him—it is a totally different vision of society. The sooner we recognise that the better.

Tonight we are debating this issue because of the Tribune Group's disagreement with the Social Democrats about the way in which the economy should be controlled. The Tribune Group wants a totally controlled Marxist economy. First, it wants a general reflation. It believes that a general reflation could be best achieved by shovelling money into manufacturing industry, because, on the whole, manufacturing industry is good and service industry is bad. It makes a moral judgment about various sectors of the economy. It also wants import controls.

Broadly speaking, the Tribune Group does not want a free trade economy or a mixed economy, as the Social Democrats want. Nor does it want the free movement either of people or capital. Time and again we hear of pop stars going to live elsewhere. Pop stars comprise only one class of entrepreneurs. It is not a question of different practice.

I suppose that many Labour Members will smugly say to themselves "Well, we have had our little protest, we have placed a shot across the bows of the Government, given them a little warning, told them that they must do better and be more Socialist in the future; that we would not stomach any more cuts, and that we were gratified by the way in which many Opposition Members explained in detail that the White Paper was no more than a spoof, that it did no more than just predict future cuts." It reality the White Paper indicates not the worst position but the best position. All the figures in the White Paper are based not upon the worst assumptions but the best ones. The assumption about growth is based upon the proposition that the people of Britain will respond to the glories of the Socialist millenium and will work harder than they have ever worked previously, and that we shall have a higher rate of growth than we have had over the last 30 years.

Every Government make the same arguments. We all have to believe that our particular philosophy will inspire the people. The same attempts at the most favourable assumptions were made about the figures for debt interest, yet we know that if Britain emerges from the present recession the demands that the State will make for funds will inevitably drive up interest rates. Therefore, once again the assumption about debt interest is probably much more favourable than the facts will turn out to be. The assumptions made about exports are made on the assumption that there will be no competitive devaluations which other countries may wish to make in order to counter our recent devaluation. Again, let us look at the assumptions made about North Sea oil. All those assumptions are made on the proposition that OPEC will continue to hold up the price of oil and that the price will never drop below $7 a barrel.

All these assumptions must come true if even the cuts forecast in the White Paper are the minimum that are necessary. However, the reality is that something worse will be required and that there will be not just further cuts but deeper and harsher cuts. If there are not such cuts, what will happen? There will be a need for yet further taxation. The days when the rich can be soaked have gone, as the Chancellor and others have made so clear to the House during the last few days. Therefore, once again it will be ordinary workers who have to bear increased taxation.

Again, there will possibly be an attempt at higher borrowing. If we are to have a continuation of a mixed economy, the increased demand that the State makes upon resources will drive up interest rates, and once again we shall see an even more struggling private sector.

Again, there will be the third alternative of allowing the requirement to be printed, and if that is done we shall have more inflation which will hit, most of all, ordinary working people and the 7 million pensioners, and people who are no part of the TUC.

Therefore, it would be more honourable, more consistent and more in keeping with the bravado that has been so frequently shown, if the Tribune Group said honestly to themselves that they were no part of the Social Democratic Labour Party but that they were a separate Marxist and, in some instances, Trotskyist element within our society. They frequently talk about the need for democracy. Let them stand as an independent party and let them put their views to the nation. The alternative is too awful for words.

Mr. James Wellbeloved (Erith and Crayford)

A Conservative Government.

Mr. Budgen

No, I meant the alternative of stumbling along with the present Government making concession after concession. It is already clear that the Chancellor has given the nod and said that perhaps the cuts can be redistributed. So they can. It may be, for instance, that the Prime Minister, with his genius for rearrangement, will appoint a rather stronger Secretary of State for Education and Science, a Secretary of State who can fight a little harder against the Treasury. It may be that arguably, in the next couple of years, there will be less of a cut in nursery education, for instance. Here I agree with the hon Member for Wolverhampton, North-East (Mrs. Short), who so often and so eloquently speaks about the need for more nursery education. It may be, for instance, that the Prime Minister will get rid of the Secretary of State for Defence and put a weaker man in his position so that possibly the Left wing will be placated when they see that there will be more cuts in defence expenditure. Again—for there is no last ditch in which the present Prime Minister will die—it may be, for the sake of argument, that the Tribune Group could be placated if we got out of Northern Ireland. If that is the price that the Prime Minister has to pay to the Tribune Group, pay it he will, and back the troops will come. We shall, therefore, muddle along, paying first one bit of Danegeld and then another.

Would it not be a more honourable course if the Tribune Group recognised its unique and important position in the political spectrum, and recognised that, like all other European countries, we have what is effectively a Communist Party in this country? If the people of this country want a Communist Party, let them have it. Let them decide the matter democratically. But let us not have a Government who have to stumble along and who cannot enter upon any consistent or coherent policy because all the time the Marxists and the Trotskyists have to be bought off.

7.25 p.m.

Mr. Frank Hooley (Sheffield, Heeley)

It is a pity, in a way, that our debates on public expenditure tend to be conducted on the lines that more public expenditure is anathema or is splendid, or less public expenditure is anathema or is splendid, as though public expenditure were a homogeneous thing right across the board and that it is good or bad, or that more is splendid and less is bad. In fact, however, public expenditure is not only for many radically different purposes but has quite different economic impacts.

For example, we could raise pensions by £1 a week. My mother and father want an extra £1 a week. I could contribute, say, another 35p out of my pocket, and the charge on the country's resources arising from that would be nil. It is a transfer from me to them. However, it appears in the public expenditure bill as an increase in pensions. It is multiplied by 7 million. Seven million times £1 a week, then multiplied by 52, appears as a huge increase in public expenditure, but that is taking no account of the transfer effect from those who pay social security contributions or taxation.

Mr. Robert Boscawen (Wells)

Will the hon. Gentleman give way?

Mr. Hooley

No, I am sorry. Many hon. Members wish to take part in the debate.

This is taking no account of the fact that expenditure of that kind is essentially a transfer between different groups in society and does not essentially affect the total economy.

There are other forms of public expenditure which are very different. Much higher expenditure on housing makes a real demand on labour, materials, imported materials, and so on. This is a matter that one must judge as part of the total strength or otherwise of the economy.

It is unfortunate that these things are all lumped together and argued about together, as though their impact in different ways was the same. We ought to distinguish a little more clearly between what in effect are transfer payments and those aspects of public expenditure which are a real demand on the economic resources of the country, and those other aspects of public expenditure which are a real reinforcement of the economy in terms of investment in machinery, equipment, factories and the training of skilled manpower. These are very different categories and it is quite wrong to argue as. if it were all expenditure in one pattern.

The other curiosity of our debates is that at present steel, railways, telecommunications and mines are in the public sector, and therefore we count the investment in those industries as public expenditure. At present, the aircraft and shipbuilding industries are not in the public sector, so investment in them is regarded as private expenditure. It is regarded as outside the debate. We say "We are not talking about aircraft and shipbuilding; we are talking about the investment in the publicly owned industries." However, within a short time aircraft and shipbuilding will come into public ownership. Then, suddenly, investment in the shipbuilding and aerospace industries will become a matter of public expenditure.

The real debate is not whether investment in steel, telecommunications, shipbuilding, aircraft and so on is public or private. The real debate should be about whether we are getting the right volume of investment in these essential industries so as to make them competitive in export markets and so that they can make a contribution to the economy generally. All sorts of emotion is generated about investment if it is made in the public sector, but we do not argue that it matters quite so much if it is made in the private sector. That brings an element of unreality into the whole debate.

We are debating our economic strength. The background to the Government's general strategy can be illustrated by one or two figures. Let us consider, for example, the production of steel from 1964 to 1975. Between 1964 and 1973 we produced about 26 million tons a year. It varied slightly both up and down, but it was about that amount. In 1974 it fell to 22 million tons, and by 1975 it had fallen to 20 million tons. In 1974 the car industry produced the smallest number of private cars for the past 12 years. Commercial vehicle production was the lowest but one over the same period.

Therefore, in two important centres of industry we find that we are producing substantially less than 10 years ago, and less than we have been producing in recent years. That is an index of our national wealth. That is the real wealth of the country. We can play around with figures, but steel, cars and other forms of industrial output represent our real wealth.

Perhaps more disastrous in some respects are the import and export figures for iron and steel products. Until 1973 there was a surplus of exports over imports and to that extent we were in pocket. However, in 1974 we went into deficit. In 1975 there was another deficit. In 1971 we had a 2½ million ton surplus in the export of steel and steel products over imports. In 1974 and 1975 we had a 750,000 ton deficit. That is the index of the failure of our manufacturing industries over recent years. It is that failure that must be made good if the country is to have any prosperity in future.

Somewhere along the line we must pay for the raw materials which our industries find essential on the world markets. In an intervention I pointed out that we have to import iron ore, copper, bauxite, tin, rubber, jute, sisal, wool, cotton, tungsten, molybdenum, and practically every other raw material with the exception of coal, as well as oil. Those are the raw materials that our industries need and that must be imported and paid for. Raw materials have to be paid for at prices that we do not control. I am afraid that some of my hon. Friends talk about managing the economy as though all the factors involved were directly under the control of the Government of the day, whether Conservative or Labour.

Oil provides the most glaring example. In 1971 we paid £1,184 million for our oil imports. In 1975 we paid £4,168 million. In other words, we paid about £3,000 million more for a smaller quantity of oil. We do not have any control over that. I hope that over the years to come it will be possible to arrive at international agreements which will tend to stabilise raw materials and commodity prices. There is to be an important United Nations conference in Nairobi in May at which I hope some progress will be made. However, at the moment we do not have control over prices. They are clearly a vital factor in our economy.

We must work on the assumption that we must have an industrial base that is powerful enough, efficient enough and developed enough in terms of machinery and manpower to pay our way in the world economy. In so far as my right hon. Friend the Chancellor of the Exchequer is designing his policies and moving towards the strengthening of our industrial base, I think he is right and has little option. But what surprises and puzzles me is that it is precisely in these categories that the White Paper appears to be somewhat weak.

The table in page 14 shows that projected expenditure on trade, industry and employment is to be reduced from this year to next from £2,618 million to £2,249 million. Likewise, capital expenditure on the publicly-owned industries is to be reduced from £3,358 million to £3,050 million. If we aggregate the two figures, which represent major public spending on trade, industry and investment, we find that between the current financial year and the next financial year there will be a decline from £6,000 million to £5,300 million. I hope that the Treasury Bench will provide an explanation. The figures seem to run counter to the Government's strategy and the strategy which I support.

I turn to the more detailed figures that are provided in pages 32 and 33. Regional support and regeneration declines from £584 million to £574 million. Industrial innovation, which I consider to be of cardinal importance, declines from £354 million to £218 million. General support for industry goes down from £597 million to £479 million. Support for nationalised industries goes down from £185 million to £99 million. The only category which shows an increase in the table is employment and industrial training. Taking the table as a whole, we find that there is a fall from £2,681 million to £2,272 million.

I do not understand those figures and that drift in terms of what I understand to be the Government's general strategy, which I support. I believe that there should be a more powerful injection of public funds within those categories. I support those of my right hon. and hon. Friends who say that the National Enterprise Board is not being given the facilities, power and money that it needs to do its job. The £1,000 million that is proposed for the NEB is inadequate. It needs about £3,000 million or £4,000 million over the next three or four years if we want successfully to regenerate British industry. That is an essential objective.

I am satisfied that the future economy and prosperity of the nation can be achieved only by an infinitely more powerful industrial base than at present exists. Unless we pump money into industrial investment, manpower training and the redeployment of labour, the slide in our prosperity which has occurred in the past two or three years must, alas, continue.

7.37 p.m.

Mr. Peter Rees (Dover and Deal)

I am bound to say that I find myself in agreement with the conclusions reached by the hon. Member for Sheffield, Heeley (Mr. Hooley), although possibly he and I disagree slightly on the methods by which money should be pumped into industry. However, the hon. Gentleman at least lifted the debate from what has been described as the private agony of the Labour Party. I should prefer to describe it as the continuing farce, coloured at times with drama, over what we must describe as the soul of the Labour movement.

It must be painful for the Prime Minister, who has obviously seen himself as the Stanley Baldwin of our times—the leader of the natural party of government—to find that after all he is only the Ramsey MacDonald. It must be painful for him to discover that once again he has the intractable and unhappy problem of leading the Labour Party.

It is equally bizarre to find that the Chancellor, with not a tiny Chinese but a capacious Muscovite mind, is cast as the Philip Snowden of our times. It is not often that I extend a little sympathy to the Chancellor, but on this occasion I must do so. The present situation must be galling for him. He has tried so hard to conciliate his erstwhile Friends below the Gangway. If only they could read the figures, they would realise how many concessions he has made to their point of view. The pity is that with their tiny Chinese minds they have not grasped how far he has moved in their direction. However, these are the brutalities of public life.

I am not over-concerned about the soul of the Labour movement. I am bound to say that I find it a rather hard and unattractive little object, which does not move me or my electors. I am more concerned about the country's future and the implications which can be spelled out in the public expenditure White Paper that we have debated this week and which introduce the great constitutional issues we are debating tonight.

If there were needed a short, sharp, clear and objective verdict on the White Paper, it is to be found in the performance of the pound on the currency markets. The best test of how we are performing economically is the extent to which foreigners are prepared to hold our currency and to pay for it. It would have been inconceivable three or four years ago to predict that the pound would slide, with only a tremor of concern from the Government, to a value below two dollars.

Some countries sink under the weight of empires and the effort of maintaining a position in the world which their economic base does not justify. We have stripped ourselves of our imperial trappings and responsibilities and have rendered ourselves virtually incapable of intervening outside our own shores or, in the case of Northern Ireland, almost within our own shores. The vision of sending troops to Rhodesia is only a vision.

Why is our economic performance so poor? Why have we relaxed our grip? It is because we have loaded ourselves with a superstructure of government and government services which is way beyond our means to support.

My right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) was challenged to say on Tuesday which cuts he would have made. It would be an arid exercise to go through all the White Paper figures, but my conclusion can be summarised by saying that this country is carrying an insupportable surden of fixed overheads. The most revealing part of the White Paper analyses Government expenditure into capital and revenue expenditure. The level of capital expenditure has remained static while revenue expenditure has increased, so that the ratio is now one to four, where it was once one to three.

It is always the capital projects that are cut in the moments of frenzy and agony. Over the past two years no one has had the nerve to cut the enormous superstructure.

Expenditure on hospitals and schools is cut, and that is why the main hospital in Dover, the premier gateway to the United Kingdom, is still housed in a Poor Law institution which dates back to the early years of the last century. While the hospitals and school programmes are being cut, public sector employment increases annually, and the Government have not had the nerve to face that challenge.

Fumbling through the White Paper, we see the projections for the next three or four years provide £80 million annually to buy new accommodation and office space for the Civil Service, with another £80 million set aside for rents. This may be a relatively small amount out of the total burden of public expenditure but it is an indication of the sort of direction in which the Government have been channel ling our funds. It is interesting to note, also, that the cost of tax collection has now risen to £440 million a year.

The Secretary of State for Environment has told us recently that the party is over. Unaccountably, the guests linger on. The figures in the White Paper are suspect and the assumptions on which they are based are even more suspect.

I think the Chancellor will be back. He is faced with a dilemma. He may have to come back with even greater cuts, in which case the Tribune Group will have to reconsider its position. We know that the Patronage Secretary will get them into the right Lobby tonight, but they will be faced with the same political test again, if not this summer, then next autumn or the following spring. The Chancellor's only alternative is unmanageable tax increases. In a remarkable speech earlier this week by the Chief Secretary, which will repay close study and provide my hon. Friends and myself with quotations that we shall relish to the end of our political days, it was made clear that the Government have realised at last that we have reached the limit of our taxable capacity and have rejected the possibility of further considerable tax increases.

The Tribune Group Members rose to the challenge last night, and I admire them for that. At least they took up a position. But now they have had their one bark, to use the Prime Minister's classic phrase, and they will still have to face the challenge again and again. We shall understand it if they vote with the Government tonight, but we shall watch carefully what happens when the Chancellor comes back—as he will—in six or 12 months' time, if the Government survive that long.

The only real cuts in public expenditure in recent years were made by Lord Barber in May and December 1973. They were not cuts to be implemented in two or three years' time; they were 1,700 million of cuts to take effect in 1975–76.

If the collapse of this Government, which cannot be long delayed, is traced to its origins, it will be found to be due to two fatal decisions taken by the Chancellor of the Exchequer in 1974. The first was to relax the reins to cancel the cuts ordered by his predecessor, and to allow the level of Government expenditure to rise; the other was his decision to reduce the rate of VAT.

The Crossman Diaries assure us that the fall of the 1964–1970 Labour Government could be traced to the decision not to devalue in the autumn of 1964. The ultimate collapse of this Government will be traced to those two fatal decisions in the summer of 1974.

The writing is on the wall. Perhaps it would be a little far-fetched to describe London as the Babylon of the twentieth century. Even the hon. Member for Luton, West (Mr. Sedgemore), who is given to rather lurid imagery, would hardly describe the Prime Minister as Belshazzar, and there are not many feasts nowadays. But the writing is on the wall.

Perhaps Biblical precedents are a little out of date, but there is a shameful precedent of another country with a long history, even though latterly its performance in the world has not been as glorious as ours. In the nineteenth century, Egypt was loaded with a burden of debt that it could not support. As the International Monetary Fund will now keep an eagle eye on our performance, so then the great Powers had to bail out Egypt. Lord Cromer—then Sir Evelyn Baring—was sent to sort out Egypt's affairs. History has a way of repeating itself. His distinguished descendant may yet have another chance to sort out our finances. I hope not, because I believe that it is the pre-eminent duty of this House and British Governments to undertake this task.

There is no law which guarantees a country against the consequences of its own economic follies. I do not want to feed paranoiac delusions of the Prime Minister by suggesting that he has been squandering our public finances on dancing girls. It is true that he maintains an elaborate court, which has had more than its share of ribbons, peerages and public appointments. The hon. Member for Fife, Central (Mr. Hamilton) is right to aim his austere anti-monarchical shafts at the Prime Minister in this regard.

The real count against the Prime Minister—and it is the Prime Minister whose future is at stake tonight—is that he has narrowed the productive base of the country. He has padded the public payroll with so many that he believes that he can count on a majority with a vested interest in perpetuating the present economic and political structure. He has debauched us with our own money.

The consequences of a decade of Wilsonism are there for all to see in the public expenditure White Paper. Against that background the Prime Minister asks us for our confidence. We know that he will survive tonight. The Patronage Secretary has done his job. He has no doubt threatened, cajoled, browbeaten—I know not what—but we know, and the country knows, that the Prime Minister no longer has the confidence of his own party, the House, or the electorate.

7.51 p.m.

Mr. Alan Lee Williams (Hornchurch)

Inevitably at this time of night one begins to flag and the arguments tend to be used up by the time one comes to speak. The hon. and learned Member for Dover and Deal (Mr. Rees) had to go back to Biblical times and to ancient Greece for his inspiration. He did so with great wit, but we need not take him too seriously.

The dilemma we face has been somewhat lost sight of in the last hour or so. While listening carefully to the debate, on the odd occasion I dozed off. On waking I wondered whether I was listening to a foreign affairs or defence debate. The debate seemed to lack the sense of urgency which I would expect a debate of this kind to produce. No one seems to be taking it very seriously, and that is a great mistake.

Last night some of my hon. Friends placed the Government in a tremendous dilemma. In so doing they have also placed themselves in a dilemma. To use a phrase coined by the right hon. Member for Sidcup (Mr. Heath), boxes have been erected around the Tribune Group as well as round the Government. Their action last night in abstaining so ostentatiously and the way in which they will be able to vote for the Government tonight without seeing the inconsistency are worrying. Perhaps they do see the inconsistency and disregard it. I hope not. I still firmly believe that politics is about great battles of principle and not about nods and winks.

I am by no means an unqualified admirer of the Treasury Bench. In many respects the Government have a great deal to answer for. In handling several issues they have taken away the clash of principle which brings out the best in politics. The way in which the Government handled the debate yesterday fell below the level of events. It was unwise for the Government Front Bench spokesmen to concentrate so narrowly. I did not hear the Financial Secretary, and I exclude from that stricture the Paymaster-General, who spoke last night on the great issues. What he said was as much a lesson to the Government as to my hon. Friends.

The real question is whether the Government will take on board the lessons. They cannot be totally excluded from blame. They are not the world's best communicators. The way in which policies are produced and explained sometimes leaves a great deal to be desired. That is part of the problem faced by certain segments of the Parliamentary Labour Party.

On the other hand, tonight we have seen a certain awareness. It will not be possible for my honourable Friends to think that they can behave in the future exactly as they did last night. It will not be possible for them to select a certain issue which they find unpalatable and hope that if the Government are defeated on that issue, they will be able to vote for the Government on a motion of confidence. Parliamentary government and, above all, this Government could not survive those tactics.

I hope that in future my hon. Friends will act with great restraint, without necessarily abandoning their beliefs or principles, but bearing in mind that only as a disciplined party can we govern the country. Some of my hon. Friends do not like belonging to a governing party, but that is another dilemma.

When the Government came to office in 1974, we all knew that we should have to take appalling decisions on Government expenditure. We have waited a long time for the expenditure review. It has now arrived, with all its imperfections. No hon. Member can go along completely with any one package which the Government produce. Nevertheless, there is recognition that at long last the Government are tackling the broad economic problems which face the country. That is recognised by the Labour Party in the country and by independent commentators and observers outside the House.

I hope that my hon. Friends in future will show a degree of confidence in their own leaders, who have at long last recognised the need for a tough, resolute attitude which will tackle inflation with no flinching or running away. If there is any temptation to do so, it would be far better for my hon. Friends to bring down the Government than to go on in a piecemeal way eroding the Government's will to discharge their responsibility to the country and the British people.

7.59 p.m.

Mr. A. P. Costain (Folkestone and Hythe)

As a member of the Public Accounts Committee, I was not able to take part in the debate yesterday, so I welcome the opportunity to say a few words now. We must realise what the debate is about. I understand that last night a group of the governing party decided that they could not support the Government. In ordinary circumstances, according to democratic tradition, the Prime Minister should have offered his resignation and dissolved Parliament.

But the Prime Minister decided in his wisdom that the right course was to defend his record tonight in a censure debate. He wanted the opportunity to make an outstanding speech to convince those who abstained last night that they ought to support the Government. Instead, we heard a poor, pathetic Prime Minister trying to build up his hopes and ambitions to stay in office. It was the most pathetic speech we have ever listened to in this House.

One Parliamentary Private Secretary told the House that he expects to be sacked after this debate. I had a good deal of sympathy with him, because I was a Parliamentary Private Secretary to the same individual in five Ministries. I know precisely the feeling that Parliamentary Private Secretary had when he did not support his Government. It will be interesting to see whether he is sacked or made a scapegoat.

I can assure the hon. Gentleman, and all the other hon. Gentlemen who abstained last night, or who were brave enough to vote with the Opposition, that they will not lose the whip. Do not let them be kidded by the Patronage Secretary that if they do not support the Government tonight, they will lose the whip. Let them use their common sense. If one of them loses the Whip, the Government lose their majority. If the Government lose their majority, they will lose their majority in the Standing Committees. There is no risk whatever of any of these hon. Gentlemen being disciplined by having to lose their Whip.

In this debate we are concerned with the failure of the present Government to live up to the promises they made at the last General Election. I have always said that the Prime Minister is one of the best salesmen I have ever met, but he is one of the worst statesmen, because the qualities needed in a statesman are precisely the opposite to those needed in a salesman. It was pathetic to see this salesman standing at the Dispatch Box trying to defend a product which has gone completely wrong.

Why has it gone wrong? All through our economic debates we have been told that private industry has not invested enough in capital structure, and that therefore as a nation we are not producing enough. When a board decides whether to make a capital investment, it has to consider three factors. First, if new plant and machinery is installed, will it be more economical? Will the trade unions allow it to be used to its full capacity? Secondly, will there be sufficient sales of the products produced? Thirdly can the company borrow money cheaply enough to make it a viable proposition? What better example have we than the £10 million invested in a new steelworks, where the machinery lay unused because the union feared it would cause redundancies?

Any board has to consider what confidence it can rightly have in the Government. The Government have been boasting for years about their plans to nationalise industry. They are continually adding to their shopping list. How can any private enterprise be expected to put more capital into its factories or plant if it knows that in due course it will be nationalised?

Only this week the chairman of one of the largest of our nationalised industries told us in the Public Accounts Committee that his industry was so controlled by this House that it could not carry out a long-term policy. It has to deal with Minister after Minister, so that the board becomes a mere cypher, having to try to deal with policies which change from month to month, and sometimes almost from hour to hour.

For this reason the nationalised industries cannot get the right people to take senior executive directors' jobs. One of the most important posts in any industry from the angle of long-term strategy and success is that of finance director, yet several of our nationalised industries have been unable to get a finance director.

They do not offer enough money. They do not offer as much as a junior partner would get in a firm of chartered accountants. There is no provision whatever for pensions. There are some eminent industrialists who might be glad to fill these posts, but there is a limit to the sacrifices that a man can expect his wife and family to accept. These are men with well-paid jobs, good pension rights, and the job satisfaction that comes from not having their policies interrupted or interfered with. It is impossible for the nationalised industries to attract the right people in those circumstances.

What are our chances of selling overseas, of getting a better return for investment, and better production? I can claim to have sold as much as any hon. Member of this House. That was when I worked in the Middle East. But one of the great problems of this country throughout the last 10 years has been our failure to deliver the goods on time.

In one instance an order for 700 Land Rovers could have gone to the Middle East. One of the oil States would have been glad to take them at the price quoted, but there was, unfortunately, no guarantee of delivering them on time because of the number of strikes taking place. The entire order went to Japan instead. Some of these strikes occur not because the people on the shop floor feel they ought to strike but because those concerned fear that otherwise they may be considered blacklegs.

Some hon. Members may change their minds this evening and vote with the Government because they do not want to be called blacklegs. The militant Left have always had control over the workers in the industries of this country because they have been able to frighten them with the threat of being called blacklegs. I wish that these people would appreciate that by taking these unnecessary measures they are in fact export saboteurs. They ought to realise that it is worse to be an export saboteur than it is to be a blackleg.

We know that a group of hon. Members are disappointed with the results they have had from their Government. They showed their feelings by abstaining in the Division last night. I believe that two of them voted with the Opposition. I suggest to them that they will never live with their consciences if tonight they change their minds. They have no excuse for doing so. The Prime Minister's speech did not thrill them into realising that his was the way.

Ms. Maureen Colquhoun (Northampton, North)

The hon. Gentleman is the best excuse for changing one's mind.

Mr. Costain

I have never had a lady say that to me before. But I do not think that we should go any further into that, because it would be out of order.

But what the hon. Lady is saying is that she is going to change her mind because she knows that the Conservative Party will sweep the board in an election and she will lose her seat. That is what she really means.

When the Conservative Government in February 1974 felt that they needed the support of the nation, my right hon. Friend the Member for Sidcup (Mr. Heath), without any pressure from Parliament, called a General Election. He lost office because of it, but I believe that he gained the respect of the nation.

So many people write to me asking "What can we do? We are so worried about the cost of things and the way the country is running down. Should we go on protest marches to Whitehall? Should we stop paying our rates? What can we do? We feel so helpless. The country is going to the dogs and we can do nothing about it." But they can do something about it if the Government face their responsibilities and hon. Members opposite stick to the principle about which they felt so strong last night and do not support the Government tonight. Then the nation will be given the chance to decide, and on that decision democracy will really exist again.

8.12 p.m.

Mrs. Audrey Wise (Coventry, South-West)

It is a trifle comical to listen to the hon. Member for Folkestone and Hythe (Mr. Costain) struggling to understand the working-class concept of solidarity amongst workers facing a strike situation. It is perhaps too much of a strain for him, and he does not do much better in dealing with the concept of the traditions of democracy in this House. Some of us think that the traditions of democracy in this House could themselves do with a little improvement. For example, some of us think that it is monstrous that a large group of hon. Members can table an amendment which can be ignored, and is ignored, by the Chair, so that they are deprived of an opportunity to vote to express their views. However, that is a situation that we face and we have to grapple with it. We grappled with it last night.

Hon. Members on the Opposition Benches suggest that the Patronage Secretary, as they call him—it is an interesting title—has had a lot of work, amounting to threats and even bribery—which was a word one of them used, not watching his language. I assure them that we have not put our Chief Whip to that sort of strain at all. My hon. Friends and I are perfectly capable of taking ourselves into the Lobby of our choice on our own terms. We do not accept the right even of our own right hon. and hon. Friends to define the terms on which we enter that Lobby.

When I enter the Lobby in support of the Government tonight, I shall do so to sustain the Government in office. When I refrained from entering the Government Lobby last night, I was expressing a view of the Government's economic strategy and my desire that they should go back to the economic strategy outlined in our manifesto. Other hon. Members may have other reasons for entering a Lobby or not doing so, but I shall define my own terms and they can define theirs.

We have had a lot of abuse, not least, I regret to say, from my right hon. Friend the Prime Minister himself. He clearly was not setting out to win friends and influence people. One of my hon. Friends took the precaution of staying outside the Chamber in case, having heard the Prime Minister, he found it harder tonight to enter the Lobby in support of the Government. Being made of stronger stuff, I managed to survive the Prime Minister's speech with my intentions undimmed.

Some of the abuse involved accusations of forming alliances. We have shown, both in the public expenditure debate and today, that there is no conceivable alliance between ourselves and the Opposition. That has been abundantly demonstrated. But there have been, as other hon. Members have pointed out, forcefully and correctly, notable alliances between a minority on this side of the House—unfortunately, including a majority of the Cabinet—with hon. Members opposite on the subject of the Common Market.

Reference to the Common Market is in order in this debate because that decision was argued a good deal in economic terms, although some of us also argued it in political terms.

Undoubtedly, had the people voted to withdraw from the Common Market, and had we still had the current unemployment figures, we would be told that those high figures were the direct result of our withdrawal from the Common Market. Were food prices increasing, we would be told that that was the result of coming out of the Common Market.

But we stayed in, and it is remarkable how little the Common Market has been mentioned since 7th June last year—how it has gone into the background of economic and political consideration, because, of course, the people were deceived into thinking that our economic strategy as a nation would somehow be helped by our remaining in the Common Market. Having been proved wrong, all the members of that unholy alliance which led the people astray on the Common Market maintain a discreet silence. The facts are going to force many of us to get a little noisier on that topic, and increasingly so.

The right hon. Member for Devon, North (Mr. Thorpe) referred to unofficial coalitions. He seemed to find it a little indecent that an incoming Government should undo some of the measures taken by their predecessors. I do not find that indecent. I thought that the whole concept of a pluralistic democracy concerned the right of the people to elect an alternative Government which would then do other things. But the right hon. Gentleman finds that sinister. He seems to suggest that the nation would be healthier if there were a pretence of pluralism, of alternative Government, but in fact a nice cosy arrangement at least amongst three-quarters of Members of this House.

I do not think that things go quite so far, but I have noticed that there are many occassions when there appears to be some sort of de facto agreement, to my great distress, between the Front Benches on things such as industrial strategy and the Industry Act itself. When the Act was going through Committee, our Front Bench was saved on many occasions by support from the Conservatives. I regard that as very regrettable.

The justification given for the White Paper on Public Expenditure is, in essence, the thought that, as the economy goes into upturn, if it does, capital and manpower will need to be released in order to supply manufacturing industry. On the basis of that claim the Government tell us that we will not be able to spend our resources on many of the things which we claimed during our election campaign were necessities—not luxuries or frills, but social improvements. This is unacceptable to me.

It is curious, because nowhere in the White Paper in the talk about releasing capital, do the Government spell out how they will ensure that resources not used in the public sector will be invested in this country in manufacturing. Nowhere do they spell out how they will prevent such resources being siphoned abroad, into property. We are all familiar with the desire of many of those represented by Conservative Members to invest abroad if they feel that that is the more profitable area.

I would feel happier about the Government's strategy if they seemed to take any cognisance of the fact that there is no historical, logical, political, economic or philosophical evidence that investment in manufacturing industry in this country will take place by curtailing expenditure in the public sector. I agree with many of the points made by my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley). He said that in any case public expenditure is dealt with in too undigested a fashion. He made various suggestions about the section-by-section examination we should be making. He was correct in many of the things he said.

For instance, my hon. Friend distinguished between transfer payments and other kinds of expenditure. We could also distinguish between one kind of transfer payment and another. My hon. Friend instanced pensions. We would all agree with increased transfer payments of that kind. Some of us met a lobby yesterday and demonstrated our agreement with that idea. Another kind of transfer payment is that which, regret-ably, has to do with unemployment pay. Many of us feel that the economic strategy of the Government will lead to an increase in unemployment and thus in unemployment pay.

That leads naturally to the question of the release of manpower. It is extraordinary to claim that we need a release of manpower when we have between 1½ million and 1¼ million unemployed and when the labour force will grow by about 600,000 by 1980. It is a pity that it is apparently only recently that the Chief Secretary to the Treasury has realised this latter figure. It is a pity that he was not aware of this, apparently, when he helped to draw up the White Paper which talks about needing a release of manpower. One would have thought that keeping an eye on the likely growth or diminution in the labour force would be an important aspect of manpower planning. The Chief Secretary seems to have overlooked this, on his own public admission, until recently.

I suggest that the definition of economic strategy being used by the Government is not only wrong but is far too narrow. There are many things which we ought to be discussing, such as getting value for money and resources expended in useful areas. I would like to discuss that subject, but we do not do so. There is an assumption in many parts of the House that private expenditure is good and public expenditure bad. We all know of the waste and misuse of resources that occurs in both the public and especially the private sectors. Why do we not get down to examining that? Why do we not ram down the throats of Conservative Members the ways in which their policies have led to waste in, for example, local government reorganisation? Why do we allow our local authorities to take the blame fore increased costs when that blame does not belong to them? Instead of abusing his hon. Friends the Prime Minister could more legitimately have abused Conservative Members.

Mr. Costain

Will the hon. Lady explain why, when the Report of the Public Accounts Committee was debated in the House, she was not in her place? There was only one Labour Member present, and he was a member of the Public Accounts Committee. What is the good of saying those things if the hon. Lady does not bother to attend?

Mrs. Wise

I am willing to compare my record of attendance, voting and work in this House on behalf of my constituents with that of any other hon. Member. I am not willing to discuss my attendances on a particular day with the hon. Member.

Another aspect of economic and industrial strategy at which we should look concerns the wasteful practices of private enterprise, such as the policy of built-in obsolescence. If we are thinking about the scarcity of resources and the difficulty of paying for raw material imports we ought to look at the misuse of those raw materials. This would cause some Conservative Members some embarrassment. We should also look at the reallocation of resources devoted to arms expenditure. By that I do not mean that we should add to the number of those requiring unemployment pay. I mean that alternative, useful work should be found. There are all these areas of consideration of industrial strategy which would be appropriate and which I contend are being neglected.

Mr. Nicholas Winterton (Macclesfield)

Is the hon. Lady aware how many people are employed in our defence industries? Is she further aware of the export record of the companies involved and of how much the Government receive from those employed by the companies by way of PAYE and other forms of taxation—in addition to the company profits paid to the Government?

Mrs. Wise

We know that Conservative Members think that all that workers can make is armaments. We reject that. We know to our peril about the export trade in armaments, which is placing our economic health at the mercy of wars conducted overseas.

Mr. Nicholas Winterton

What about the Russian tanks in Angola?

Mrs. Wise

We know that Conservative Members feel secure only when they are encouraging people to fight one another. They think that the economic health of this country depends on such actions. I do not believe that any of my hon. Friends shares that view.

In firing the famous shot across the bows last night we were indicating to the Government that it would be a good idea for them to take a wider and deeper look at their economic and industrial strategy. I sincerely hope and expect that they will do this. That is why I can go into the Lobby tonight to sustain this Government, and I am glad that Opposition Members disapprove of my action. I can go into the Lobby with perfect equanimity, knowing that I have shown not only that my views are sincerely held but that they are seriously held. I am confident that the Government will take note of our demonstration.

8.31 p.m.

Sir Anthony Meyer (Flint, West)

At the beginning of the speech by the hon. Member for Coventry, South-West (Mrs. Wise) I was tempted to lure her to sin in the "No" Lobby, but this temptation ebbed from me as her speech proceeded. In any case, to do that would be inconsistent with the argument that I want to deploy.

The Liberal Benches have been somewhat empty throughout most of the proceedings and I can only assume that the Liberals are playing the time-honoured game of hunt-the-deposit at Carshalton. I listened with interest to what the Leader of the Liberal Party (Mr. Thorpe) had to say about the need for concerted action by all political parties to overcome the frightening difficulties facing the nation. I found myself wishing that at a critical moment in our history in February 1975 the right hon. Gentleman had been prepared to translate his ideas into action. I thought that he might have been a little less coy in using the word "coalition".

I must emphasise that I am speaking only for myself, but I believe, as I have for the past two years, that the country needs a national coalition Government if it is to overcome the formidable difficulties that face it. The country needs such a Government because the choices that have to be made are too harsh in terms of the cost that they involve to the living standards of everyone—including the living standards of the poorest—too frightening in terms of the choices that have to be made on foreign policy, particularly in Africa. They are too unpopular to be born by a single political party faced with an Opposition that would exploit that unpopularity to win the next election.

I admit that such a coalition is unlikely to emerge in present circumstances. But whatever Government takes the measures that are necessary to get the country out of its difficulties will need some degree of support extending beyond a single party. In particular this Government, if they are to take the measures that must be taken, will require support extending beyond the Labour Party, because they will not always be able to rely on their own left wing, as yesterday's vote showed only too clearly.

The Prime Miinster will need support from someone else and he will have to pay the price for it. Although today he insulted and publicly humiliated Members of the Tribune Group, he knew that they would vote for him tonight. Everyone knows that in due course this Prime Minister will have to pay the Tribune Group in real currency—the currency of concession to their demands in higher Government expenditure.

We had an example of that yesterday when the Secretary of State for Wales told the Welsh Grand Committee that, despite all the talk of cuts in housing allocation, there would be £20 million for expenditure on housing. That proves that there are always concessions available when they are needed. Members of the Tribune Group know that after today's insults and humiliation they will get their money in real currency.

The Prime Minister sometimes likes to boast that he is a national leader, but he has been described in an unforgettable phrase by Paul Johnson as "the Chatham of the Cod War". If the Prime Minister has to pay the price for the support of people outside his own party, he will pay them with a cheque that bounces. [An HON. MEMBER: "With our money."] With our money, but even then he will disregard the cheque. I found it very instructive to contrast the Prime Minister's performance and, for that matter, the Chancellor's performance at the beginning of the two-day debate on the White Paper with the offensive language and insults hurled at his left wing and at the same time the little nods and winks which said "You know that I am obliged to insult you in public, but come round and sec me afterwards in my office and there will be a little something for you."

It was very instructive to contrast that with the one honest speech I heard from the Government Front Bench in the debate, that of the right hon. Gentleman the Paymaster-General at the end of the proceedings last night. I feel sure in my own mind that had any Minister other than he wound up last night, those Tribune Group Members would not have sat on their hands, all 36 of them, and refused to vote. His honesty was something they just could not take, and honesty is something this country badly needs from this Government and has not got.

There was the long shameful so-called social contract, which was a device for concealing from the trade union movement the need for sacrifices from everybody if the nation was to pull out of its troubles. We have been fed a steady diet of deception and deceit. The Prime Minister may have made a thorough hash of sterling, but he has been a liberal pedlar of LSD to the British public. He cannot now command the confidence that is needed if this country is ever to stage any kind of economic recovery. He himself is now the greatest obstacle to this nation's well-being. It is time for him to go.

8.38 p.m.

Mr. John Watkinson (Gloucestershire West)

It will be no surprise to the House that I do not propose to follow the remarks made by the hon. Member for Flint, West (Sir A. Meyer). He has criticised the Prime Minister of this country for being a liberal spender of £. s. d., and, if I may say so, that testifies to the attitude of certain hon. Members opposite in relation to public expenditure.

We have been debating public expenditure and its worth and value in terms of the community. I was not part of the abstention last night, though I understand the motivating forces which drove hon. Members on this side to abstain, because their abstention meant—and in that context it is worth reminding ourselves of it—that they were taking a stand about certain values in our society. They were saying that those values in our society, values which we on this side hold dear, are presently endangered by the cuts in public expenditure.

No one who knows anything at all about the way supporters of the Labour movement and workers for our party feel can deny that public expenditure is of the essence of their faith. It is why many of us came into the movement—to sustain a high level of public expenditure, to provide those services which we regard as vital to the community.

We heard in eloquent terms from my hon. Friend the Member for Eton and Slough (Miss Lestor) and my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) of cuts which are already taking place. In this debate it is as well to remember when we trade insults across the Floor and laugh at each other just what it happening in this country now as a result of cuts. I have here a document from the British Association of Social Workers which points out, for instance, that in Coventry two small homes for elderly people will be left vacant, and a home for the physically handicapped and a home for discharged psychiatric patients will remain empty for two years.

That is the context in which we must view the debate. We are taking decisions of the utmost concern to hon. Members on this side and, I hope, on the other side of the House. Therefore, I can understand the reaction of my hon. Friends in abstaining.

Mr. Nicholas Winterton

Will the hon. Gentleman give way?

Mr. Watkinson

I do not want to give way. My hon. Friends were saying that the values for which they stand and which they hold dear are in danger. The Labour Party is not about consumerism or simply providing television sets. T. S. Eliot summed it up when he wrote, What is going to be the monument of this age? The tarmacadam road and a thousand lost golf balls. We believe that other things are more important. The provision of services for the old and the handicaped is of the essence.

The business of Government is choosing priorities. Within our public expenditure we must make certain agonising choices. I have indicated some areas where I think the choices must be made—the provision of services for the old, the mentally handicapped, and so on. But I also say—and this is why I found myself voting with the Government last night—that it does not matter how far we go along the road about which I have just been talking, for sooner or later we shall come up against a brick wall called economic reality. We must look over that wall to see the consequences of our actions.

At the end of the day there is always that still small voice which asks "How are you going to pay for it?". My hon. Friend the Member for Luton, West (Mr. Sedgemore), in a lucid speech, quite openly said that he would pay for it out of increased taxation.

Mr. Nicholas Winterton

Tell that to the people in Wirral and Carlshalton.

Mr. Watkinson

In saying that, my hon. Friend admitted something which I think is vital to our understanding of the economic situaton—namely, that we cannot go on borrowing at the rate at which we have been borrowing. In support of that argument, I pray in aid the TUC report, which admits that one of the prime concerns of the Government is the present level of the public sector borrowing requirement. Can we go on financing that requirement? I do not see how we can.

The Government have been extremely fortunate in the way that they have been able to finance that requirement, because they have not been forced into the banking sector to get that money. As a member of the Labour Party and as a Socalist, I find the banking mechanism of this country extraordinary. The banking system can and does hold this country's economic policy to ransom. Under the rules of the banking system, if the Government, in order to finance their debt, are forced into that sector, the system is able to create bank deposits: in other words, to fuel inflation.

The Opposition should take this on board. Whether they like it or not, that factor ruined their Administration. The Barber boom failed on this rock. The Government have been in power for two years and still the banks have this unlimited power to create money if the Government are forced into that sector to raise their borrowing requirement.

So far the Government have been lucky in being able to finance their borrowing requirement. However, there is no gainsaying the fact that if expansion is to be financed in our industrial base, which we all want, the funds which are presently afloat in the City of London and which are made available to the Government to draw on for borrowing will not be available to the Government, and we may well be faced with inflationary expansion of money supply over which we have no control.

A White Paper will soon be published on the control of the banking sector. I believe that that control should come in rapidly, because there is no reason why we should be held to ransom in the way the Conservative Administration was held to ransom in previous years.

I understand the arguments of my hon. Friends who say that there is no mechanism at work which will ensure the funds which we wish to release go into the industrial base. As has been pointed out, there is any amount of funds at present in the City of London to go into industry, but they are not being called upon.

Mr. Parkinson

The reason why people do not want to invest is that most of the Government's other actions in connection with tax and the activities of the Secretary of State for Employment make it unattractive to invest and to employ people. The hon. Member is right, but his own Government are creating the conditions which prevent what he wants.

Mr. Watkinson

I agree that there must be a certain amount of stability at least in our economy. That means that we must get inflation under control. That is one of the reasons why I do not support the contention of my hon. Friend the Member for Luton. West that we can increase taxation dramatically. I know, and the trade union leaders know, that the level of taxation has now become a significant factor in wage negotiations. That cannot be denied. It is one of the reasons why the social contract failed economically. Taxation is an integral part of every wage demand. Therefore, we cannot increase taxation. We cannot finance our borrowing requirements out of increased taxation, for the reasons I have given and for the further reason that the Government in their coming Budget should cut taxation.

My hon. Friend the Member for Birmingham, Selly Oak (Mr. Litterick) pointed this matter out very forcefully to the right hon. Member for Leeds, North-East (Sir K. Joseph) yesterday when he said that one of the factors underlying the recession in this country was the severe lack of demand in the economy. Keynes may be out of date, but this is a Keynesian explanation which we must consider.

There is a deficiency of demand in the economy at present. One way in which demand can be increased is by giving to people at the lower end of the spectrum some tax concession. That is vital in the coming Budget. I hope that the Government will follow that course in order to get demand moving again and to encourage economic growth.

If we are to increase consumption and investment and turn resources into the balance of trade in the nil growth economy which we have at present, something has to give. I have to accept the logic of the argument that in that situation public expenditure will have to bear its share of the burden. If we say that investment and the balance of trade are of prime importance and that consumption must be given a boost, public expenditure must be diminished.

I conclude on one note, which should have been driven home more forcefully yesterday from the Government Front Bench, which is that the White Paper is a negotiable document. The debate within our party has been to consider the manner in which the cuts will be made.

I do not want to elaborate on which cuts should be made, but there is a serious debate in the party about whether it is to be MRCAs or schools, through-deck cruisers or hospitals. That is the logic of the present situation. I welcome the debate, but I am forced to accept the logic of the Government's argument on economic strategy.

8.52 p.m.

Mr. Nicholas Winterton (Macclesfield)

I congratulate the hon. Member for Gloucestershire, West (Mr. Watkinson) on his thoughtful comments in the middle and latter part of his speech. I hope that the message he endeavoured to transmit to the Treasury Bench will be well and truly taken on board, because many of my hon. and right hon. Friends would entirely endorse the views he expressed. I shall take him to task for one or two things that he said at the beginning of his speech relating to cuts in public expenditure. He led the House to believe that the cuts in the Government's White Paper were having an effect now. He talked about the plight of the handicapped, the mentally ill and other deserving sections of the community that we want to help to a greater extent. However the cuts which are included in the White Paper are on projected expenditure, not on current expenditure. If there is a reduction in what local authorities and Government can do at the moment, it is because of inflation and not because of the Government's cuts.

The Government have brought this vote of confidence upon themselves. In two years they have proved themselves to be the worst Government ever in the history of this country. Their priorities are not in the interests of this country as a whole. Many of them may be in the interests of hon. Members below the Gangway and the alien philosophy which they follow. The extension of the Dock Labour Scheme is being debated in Committee—a doctrinaire measure par excellence. Here the Government will put in the hands of a certain minority control over our food supplies and our animal feeding stuffs to such an extent that this minority can hold the majority to ransom.

In the Education Bill the Government are allocating £25 million, not to help nursery education or to replace primary and infant schools which are Victorian and Dickensian, but purely to facilitate party political dogmatic philosophy which will provide not one extra school place. We have had the Trade Union and Labour Relations Act, which, again, is a punitive measure and a palliative to Jack Jones, to try to buy his continued support for what goes under the terms of the social contract. As we all know, the trade unions supply the money with which the Labour Party fights its elections.

Mr. Fernyhough

Will the hon. Gentleman give way?

Mr. Winterton

I will not at this stage. There are a number of other measures which the Government seek to introduce. Many hon. Members have mentioned how we can achieve savings in public expenditure. There is the National Oil Corporation and the activities of the National Enterprise Board. Between £500 million and £800 million could be saved and that money could then be devoted to projects which many Members of the Tribune Group have described to the House. I wonder whether the Members of the Tribune Group will make representations to the Treasury Bench to ensure that the likes of Lord Kearton, who, as head of the National Oil Corporation, is on £80,000 a year, devote some of their money to those deserving projects. The National Enterprise Board spends a great deal of taxpayers' money.

The hon. Member for Gloucestershire, West made the interesting remark that there must be a transfer of resources from the public sector back into the private sector. It was Professor Hayek who quite rightly said in his book "The Road to Serfdom"—this, perhaps, is appropriate in relation to Members of the Tribune Group—that when local and national government of this country take more than 50 per cent. of the gross income in any one year there is a danger of a totalitarian régime of the Right or Left. Inevitably that régime would be very much of the Left so far as this Government is concerned. I remind the House that the Government take 60 per cent. of the gross national product of this country. That is a dangerous level.

My hon. Friend the Member for Flint, West (Sir A. Meyer) was quite right to draw our attention to the fact that possibly last night the Paymaster-General was the only honest man on the Treasury Bench because he quite rightly showed the House that the present trend could not continue. There must be a transfer of resources back to the private sector. More than that, we must draw people out of the Civil Service and the bureaucracy, and get them back into private industry. I shall not criticise those people individually, because many are hard-working, worthy people, but not one is productive. It is only from production that we get profits and it is only out of profitability—I remind the hon. Member for Coventry, South-West (Mrs. Wise) of this—that we can pay for the projects and all those deserving causes which are so close to her heart.

Mrs. Wise

Does the hon. Gentleman agree that so-called private enterprise is distinguished for the extent of its bureaucracy?

Mr. Winterton

I most certainly do not. If the hon. Lady refers to some of the large institutions that were formed by Labour Governments, and unfortunately occasionally assisted and supported by Opposition Members, she may be correct, but it is the small and medium-sized business in this country which produces the profits out of which this country can provide its social, welfare and educational facilities.

I hope that the shock and confusion that has been created for the Treasury Bench and for the Prime Minister on his birthday by the result of the Division last night will bring reality back to this House. I have been a Member of Parliament for only four and a half years—[HON. MEMBERS: "Too long."] Labour Members can say "Too long", but I leave the decision to my constituents. I hope that this House will return to reality and once again realise that sound money is the only way to achieve sound progress.

I do not like referring again to the hon. Member for Gloucestershire, West, but how right he was when he said that we cannot continue to borrow into tomorrow. We have borrowed up to the hilt, whether it be from the International Monetary Fund, from the Shah of Iran, or from other sources abroad, or even the hard-pressed taxpayers of Britain. We must earn our way in the world.

I hope that the message that comes out of this debate, which is really upon a motion of censure upon the Government, is that the Government must adopt policies to suit not the rabble below the Gangway but the hard-working majority of people in this country who want to make their own way of life and decide how they spend their money, and not to have the Government and the men in Whitehall, who seem to think that they know best, telling them how to spend their money.

Reality, perhaps, is what will come out of the debate. I hope that the Minister who replies will clearly show to his hon. Friends below the Gangway that the Government know what they are about—although they are not going far enough—and will not be led astray by the meanderings of the Marxists below the Gangway.

Mr. Speaker

Both Front Benches have agreed to delay the winding-up speeches until 9.10 p.m. Perhaps that will be borne in mind.

9.2 p.m.

Mr. John Mendelson (Penistone)

The formula "The hon. Gentleman will not expect me to follow him in the arguments that he has deployed" is not one that I intend to use tonight, because no arguments were deployed and there is nothing to follow. I think that I shall carry both sides of the House on that simple proposition and have their support in addressing myself instead to the main argument of the debate.

Mr. Nicholas Winterton

Intellectual arrogance.

Mr. Mendelson

The discussion so far has indicated and underlined the essential need to maintain a Labour Government in office in order to make possible the implementation and fulfilment of the purposes desired by all Members on the Government side of the House and their supporters throughout the United Kingdom. It has also underlined the fact that there is no alternative for any of those who wish to see these purposes fulfilled in real political and social life. Anyone who has listened to the last three days of debate will know that this is true.

The debate started with a clear admission from the leading spokesman of the Opposition, which was underlined by most Back Bench Opposition speakers, that if the country were to adopt the policies that the Opposition advance, from Front Bench and Back Bench, the consequences would be increased unemployment and an immediate curtailment of the major social services that are benefiting the people of Britain. Of that there can be no doubt. That must be the starting point for every Labour Member and every Labour supporter.

That being so, I do not believe that there can be anything gained for the political life of this country if we engage in the kind of propagandist speeches that so many Opposition Members are apt to make. There has been very little policy advanced so far. I did not expect any policy from the hon. Member for Macclesfield (Mr. Winterton), but I listened carefully to the right hon. Lady the Leader of the Opposition. I also listened carefully to former Conservative Ministers. Hardly any policy has been put forward. Therefore, they are completely misguided in any attempt——

Mr. F. A. Burden (Gillingham) rose——

Mr. Mendelson

No, I shall not give way. The Opposition are misguided if they believe that their appeals will have any effect on the British people.

It is essential to realise that the constitutional requirement of the present political situation is the affirmation of the Government's standing, but not immediate resignation. We are not in a situation in which, over a period of weeks or months, the House of Commons has been consistently refusing Supply to the Government.

The demands of the Leader of the Opposition and other Opposition Members for immediate resignation are completely beside the point. The right hon. Lady knows very well that she has no case for that demand. All the constitutional authorities—[Interruption.] I hope that Conservative Members will be prepared to listen. After all, we are after the dinner hour. We might just as well listen to each other.

The right hon. Lady will recognise that only the House has the power to refuse Supply over a period and, by virtue of refusing it, to bring the Government to a standstill. If the House had done that over a period, it would be impossible for the Government to govern. On constitutional grounds there is no case for the right hon. Lady to demand the resignation of Her Majesty's Government.

Mr. Amery

The hon. Gentleman says categorically that there is no case. Surely he agrees that as Supply is of the essence of the matter and as we have been debating economic policy for two days, it is questionable, or in the balance, whether there is a case.

Mr. Mendelson

I welcome the right hon. Gentleman's question. I deliberately and categorically say that the authorities make it clear that there is no case on which to base the right hon. Lady's demand.

It is right that the Prime Minister should have tabled the motion today. I have set out the constitutional case, but we must consider the political case, which is only slightly less important. Although there is no constitutional requirement for resignation and, therefore, for the demand for resignation, there is a great political interest for the United Kingdom and the British people. It should be clearly seen at home and abroad that the Government have behind them the confidence of Parliament. That is a powerful reason for having the debate and a vote. That is an equally powerful reason for all Labour Members to give their full backing to Her Majesty's Government when the Division takes place—[HON. MEMBERS: "Oh!"] Opposition Members may be as angry as they like. If they expected me to repeat the silly case that they have made, they are to be disappointed. I shall make the case as I see it and they will have to listen for as long as I am on my feet. This powerful and important political case leads to the conclusion I indicated and also to a third relevant argument.

When the Paymaster-General was winding up last night, I intervened to ask him a simple question concerning the education budget, which had been criticised by hon. Members in all parts of the House, some of whom supported the general proposition of the Government and some of whom were hostile to it. I asked whether the Paymaster-General's assurance about priorities still having to be finally decided was specifically directed at the educational budget, and he assured me that this was so.

All hon. Members who care about the education budget should recall that important fact. Whatever happens in the highways and byways of political disagreement and whatever has happened here this week, all discussion on the White Paper is now the property of Parliament and those who support the Government.

We should not lose any agreement we have reached merely because there has been disagreement on the general purpose and the policy behind it. There is nothing to be gained by, for reasons of political anger and discrimination, losing sight of that fact. It is therefore important that in his reply the Chancellor conveys his message in a spirit that makes such agreement easier.

9.13 p.m.

Sir Geoffrey Howe (Surrey, East)

Some hon. Members might find it slightly difficult to follow the dialectic of the last speech, but one thing emerges clearly from that speech and, indeed, from the whole debate. It is that the issue we are debating tonight is at the very heart of the rôle of this House and that the Government of this country are drawn from and must depend upon the support they can command in the House.

They have a right to survive only for as long as they can continue to command a majority in this House for their essential policies. Tonight we are debating an issue even narrower than that. The Prime Minister made clear that he is seeking the confidence of the House for the financial and economic policies of the Government—the very same issues that this House has debated and voted upon in the last two days.

In these circumstances, it is not in the remotest degree relevant for the Prime Minister to argue by whom and on what basis he was defeated and by what kind of alliance. He should address himself to the right question—can he and his colleagues in this Administration any longer command the support of the House?

If a Government suffer a major loss of support, it is their clear duty to resign. If they are actually defeated, as this Government were last night, their duty is even plainer: they should resign forthwith.

It is strange to have to look for guidance to the words uttered by Neville Chamberlain in May 1940.

Mr. Ashton

He is a good example!

Sir G. Howe

He is an example which the Prime Minister could do worse than follow. He said: it is grave, not because of any personal consideration—because none of us would desire to hold on to office for a moment longer than we retain the confidence of this House—".—[Official Report, 8th May 1940; Vol. 360, c. 1266 That is the standard which the Prime Minister should apply. The question is whether the Prime Minister will live up to that standard. [HON. MEMBERS: "Where is he?"] My hon. Friends ask where he is. Perhaps they will allow me to ask the same question.

Last night the Prime Minister did not even have the courage to come and face the House. When he was asked about it today, he gave us the bizarre and disreputable excuse that he was celebrating his own birthday. I do not know whether the celebration is continuing now. Perhaps while he was celebrating his party he had a chance to look at Harpers' Queen for this month, and see his horoscope under Pisces. It reads, happily, as follows: as far as your personal and emotional life is concerned, there are no problems which you cannot resolve or overcome. Unfortunately, the same cannot be said for your financial affairs, as you will know only too well…there is bound to be some kind of critical situation for you to face and from which there is no escape". There was no excuse for the Prime Minister's failure to be in the House last night.

I come now to consider the Prime Minister's conduct today. When the Prime Minister was calling upon the House to express its confidence, one might have expected him to give the House an exposition of the case for which he expects that support. But we heard from the Prime Minister about the financial and economic policies of the Government scarcely a word. He had neither the courage nor the confidence even today to advance that case. Can one imagine any previous holder of that high office—Mr. Attlee, for example, or even the one who was unable to hold office, Mr. Gaitskell—or any previous Labour Party leader daring to come along on a motion which asked the House to support the Government and saying not a word about the Government for which he stood?

The Prime Minister launched into an attack upon almost everyone he could find, upon the Conservative Party, on whose support he has been glad to count often enough, and upon his hon. Friends below the Gangway. It is a long time since the Labour Party has behaved in that way.

The real question is what we are being asked to vote for tonight. The hon. Member for Bethnal Green and Bow (Mr. Mikardo) made clear that we are not being asked to vote tonight for the manifesto on which the Labour Party was elected. The facts of economic life have forced the Labour Party to move right away from the unrealistic, gravely misleading manifesto on which they went to the people. That document was not only misleading but knowingly misleading and it did great disservice to the cause of democratic Government. If we are not being asked to vote for the manifesto, which is now thrust aside, are we being asked to vote for the same White Paper which the Labour Party declined to support last night—or are we not? Where do the Government stand?

Our view is clear. The White Paper does not go far enough towards solving the country's economic problems, but at least it shows some signs of recognising the urgent reality of our situation. The stark introduction at least spells out something of the truth. The Chancellor of the Exchequer deserves some credit for that.

My hon. Friends are entirely right to say that it is wholly disgraceful for the Prime Minister, having shirked the issue last night, to be absent again now. It is wholly disgraceful but wholly in character. But I give the Chancellor of the Exchequer credit for having got into the White Paper at least some of the truth about our situation. Unfortunately the Chancellor of the Exchequer has not in the end the authority or the support of his colleagues, or even the guts to carry into action the diagnosis he has set out in the White Paper. He succeeded, by getting the words written in there, in achieving the maximum political odium for the minimum economic gain.

But where does the Prime Minister stand on the White Paper? It might be a good thing if the authorities of the House were to investigate the locking arrangements of the Prime Minister's room. He seems to find it unaccountably difficult to escape from it to the Chamber.

Where does the Prime Minister stand on the White Paper? He dwelt in his speech on the past policies of his Government, but there was not a word about their future economic policies. To the extent that he addressed himself to economic matters, he asked the House to believe that there were no real cuts being made at all. [Interruption.]

Mr. Speaker

Order. The right hon. and learned Gentleman should be given a better hearing.

Sir G. Howe

Perhaps we can understand why it is, Mr. Speaker, that the Prime Minister had nothing to say even about the introduction to the White Paper. The reason is that even that stark introduction is alien to the nature of the Prime Minister, because at least it is honest.

What, then, is the answer to the question posed by the hon. Member for Bethnal Green and Bow? He asked a very relevant question when he spoke on the second day of the debate. He said that …it would be a wholly salutary lesson if what happens between now and 10.20 p.m. induces the Government to take back the White Paper for another think and to produce a second and improved issue of it."—[Official Report, 10th March 1976; Vol. 907, c. 487.] Is that what is to happen? The answer to that question is critical.

If hon. Members below the Gangway do not know whether they are voting tonight on the same economic policies as they declined to vote for last night, how can they change their mind? It is all very well huffing and puffing and, if I may use the phrase, sitting on their hands last night, but unless they carry it through with their votes tonight, they will turn out to be nothing better than White Paper tigers.

But the answer to that question is no less important for those who voted for the Government. They know that the White Paper's diagnosis is right, but do they know whether the White Paper's policies still stand? Have concessions been made behind closed doors to Members below the Gangway? Have the Government come to some secret compact as a means for hanging on to the trappings of power, while the real authority has moved elsewhere below the Gangway?

How far can the moderates, who voted for the Government last night, be content with the way in which the centre of gravity in their party has shifted—and shifted visibly—away from them? They once regarded themselves as preventing their party from committing the occasional lunacies which the Left wanted to force upon them. Now the wheel seems to have turned full circle and the Left has put itself in the position where it is able to prevent the occasional sanities which the Right might force upon it.

How much longer are those who supported the Government last night to be expected to go on making sacrifices in the cause of party unity? How much longer are those who sit below the Gangway to go on calling the tune?

Finally, what about the position of the Prime Minister himself? [HON. MEMBERS: "Where is he?"] What about his capacity and the capacity of his party now to have no regard whatsoever for the interests of the nation whom they seek to govern?

The Prime Minister has been 13 years at the head of the Labour Party. Those of us who have watched him from this side of the House have found it difficult to identify his achievements. It is hard, indeed, to identify any achievements which stand to his credit.

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

The Prime Minister has won more elections than the Opposition have won.

Sir G. Howe

The Patronage Secretary has regard for that only. Perhaps the only thing which stands to the Prime Minister's credit is his regard for dramatic inconsistency—over Europe, over industrial relations, over incomes. Many people in the Labour Party, if they were to tell the House the truth, would admit that they take the same view as I do about the minimal nature of his achievements. When one presses them hard and asks "Why do you go on liking the man?", at the end of the day they say "At least he has done one thing—he has held the Labour Party together."

Up to a point and for a time that had some validity. Through U-turn after U-turn, through somersault after somersault, on to high wire and off high wire, with a policy of inertia disguised in Socialist rhetoric, the Prime Minister has succeeded in doing that. Where was this outstanding political trapezeologist last night? Where is he now?

The Prime Minister cannot now even lay claim to the proposition that he has maintained a sense of comradeship in the Labour Party. As my hon. Friend the Member for Woking (Mr. Onslow) said, we have seen the atmosphere of mutual distrust grow. The most remarkable feature of the Prime Minister's wholly unremarkable speech came in only three phrases. They were the only three reminiscent of the gems of wit with which he sometimes entertained the House in the past. All three of those phrases were directed to his hon. Friends, so-called, below the Gangway.

Who did the Prime Minister describe as the arsenic in the unholy alliance but his own hon. Friends, so-called? Who are the Marxists he condemned us for being in alliance with? Finally, to use his kindliness and courtesy of phrase, who are the lap dogs? It is not the first time that canine metaphors have been used in the Labour Party. The Patronage Secretary has been unusually vociferous tonight. He may remember that only about nine months ago, after another sad incident such as we saw last night, he said that sometimes people thought that he was a guard dog, but he added My experience in the last few months has been that I am no longer that, but regarded only as a pet poodle. That came after two previous occasions on which he—who can blame him?—had struggled to resign from his onerous office. The Prime Minister prevented him on one occasion by pointing out, according to The Times, …that unity and continuity within the parliamentary party were now of vital importance, and that he wanted his warning to the rebel MPs carried out to the letter.

Mr. Mellish

So that we can get the record straight, will the right hon. and learned Gentleman now tell us of his experience when he opposed the right hon. Member for Finchley (Mrs. Thatcher) for the leadership of the Conservative Party and how many votes he got?

Sir G. Howe

Even the Patronage Secretary's wit is not up to his standard of last year.

It is worth looking back also to the other part of the canine history of the Labour Party at those brave days when dog licences were issued to the Parliamentary Labour Party by the Prime Minister. Those were the days of headlines such as: Threat to dissolve Parliament if duty is not recognised". This is the description of the Prime Minister's performance: As many of his rank and file saw him, he was threatening, sarcastic, contemptuous and despotic. How is the despot faded today! As members of the Government saw him, he was firmly stopping a rot in morale that could be dangerous". Not much firmness today. We look at the grave original phrases: All I say, Mr. Wilson said…is 'Watch it'. Every dog is allowed one bite, but a different view is taken of a dog that goes on biting all the time. If there are doubts that the dog is biting, not because of the dictates of conscience but because he is considered vicious, then things happen to that dog. He may not get his licence renewed when it falls due. Those were the days. That is the measure of the change that has overtaken the Labour Party.

The Prime Minister is no longer in a position to distribute or award licences to anyone, even to lap dogs. Even the Prime Minister—this is a sad day—is licensed—by the Tribune Group and no one else. In those circumstances, Heaven help the country. The Prime Minister and his colleagues certainly do not deserve the confidence of this House.

Fortunately, the nation will not have to endure their presence much longer. After last night's vote, things can never be the same for the Prime Minister and this lame duck Administration. As my right hon. Friend the Member for Farnham (Mr. Macmillan) pointed out, the unholy alliance that is the Labour Party is falling apart at the seams, and not before time.

At the heart of our constitutional practice is the principle that Her Majesty's Government consists of an Administration that is able to command the support of the majority of this House. Last night's vote made it plain beyond doubt that the Prime Minister and his colleagues are no longer in a position to do that. Last night this Administration was placed under suspended sentence of death. Tonight is the night to put them out of their misery.

9.33 p.m.

The Chancellor of the Exchequer (Mr. Denis Healey)

I do not think that the House is under any illusion but that the vote at 10 o'clock is a vote of confidence in the financial and economic policies of Her Majesty's Government. The circumstances which make this vote necessary inevitably surround the debate with intense political excitement, and the flames have been fanned by party hopes and fears.

I start by responding to the Leader of the Liberal Party and by trying to identify at least some areas about which I hope we can agree. First, the economic problems facing the United Kingdom at this time are the most serious and difficult it has faced since the war. We have at the same time, like all other industrial countries, unemployment without precedent since the war, allied with inflation without precedent since the war. All countries in the industrial world face this combination of problems because of the explosion in oil prices and the fact that the world is faced by the biggest recession since the 1930s.

Our inflation rate is still a good deal higher than that of most other countries. Our unemployment rate is still lower than many. We entered the oil crisis with an economy that was far weaker than that of any other industrial country in the world. Growth in Britain came to a halt in the second half of 1973 and fell heavily in January and February 1974, owing to the three-day working week. The balance of payments was running at an appalling deficit in 1973 and the Governor of the Bank of England, speaking on 15th January 1974, well before the General Election, used these words: Last year the current account showed a large deficit which, this year, will be further greatly increased by the rise in the price of oil.…But even before that factor became important, our balance of payments deficit on current account in the last quarter of the year"— 1973— was running at a rate equivalent to 4 per cent. of our national product"— —that is, a rate of about £4,000 million a year.

That was the situation which faced this Government when they took office.

Mr. William Whitelaw (Penrith and The Border)

The Chancellor of the Exchequer is describing the Government's position. Will he please explain where is the Leader of this Government? His whole position as Leader and Prime Minister of this country is at risk tonight, yet he does not have the courtesy to come to the House. Where is he? If there is a good reason why he is not here, let us be told. Where is he?

Hon. Members

Where is he?

Mr. Healey

I well understand——

Hon. Members

"Happy birthday to you".

Mr. Speaker

Order. If hon. Members are not silent, they will never know the answer. Music had better be confined to other places.

Mr. Healey

I well understand why the right hon. and learned Member for Surrey, East (Sir G. Howe) is reluctant to face the facts, but if, as he has pretended, or rather his right hon. Friend pretends he—[Interruption.]

Mr. Speaker

Order. The right hon. and learned Member for Surrey, East (Sir G. Howe) was heard in reasonable silence—not absolute silence but reasonable silence—and the Chancellor of the Exchequer is entitled to be heard in the same way.

Mr. Cormack

On a point of order, Mr. Speaker. Throughout the winding-up speeches, the Leader of the Opposition has been on the Front Bench. It is a gross insult to the House that the Prime Minister is not here.

Mr. Mellish rose——

Mr. John Nott (St. Ives)

Go and get him.

Mr. Speaker

Order. Everyone knows that I am not responsible for who is in the Chamber.

Mr. Healey

The hon. Member for St. Ives (Mr. Nott) is obviously tired. Can any arrangement be made for him to lie down before he falls down?

Mr. Speaker

Order. It is quite clear that the House is in danger of bringing disgrace upon itself if hon. Members will—[Interruption.] Order. I have but one request. If hon. Members will contain themselves until 10 o'clock I shall be grateful.

Mr. Healey

Thank you, Mr. Speaker. I was explaining the situation of the economic legacy of an economy distorted worse than our economy had ever been in our history. Immediately we took office we faced an increase in our balance of payments burden of £2,500 million imposed by the increase in the price of oil, which cut our real national income by 5 per cent. We survived, and during our first year in office we carried out a large part of the social programme on which we had been elected.

We introduced the biggest increase in pensions this country had ever seen. We introduced the first increase in family allowances since 1968, benefits to the disabled, allowances for invalid care, food subsidies, the largest increase in council housing for nearly 10 years and the capital transfer tax. During that same period we started constructing new tools for our industrial policy in the National Enterprise Board, planning agreements and the Scottish and Welsh Development Agencies. We doubled the regional employment premium, which the previous Government had undertaken to phase out. Because we did these things, and only because we did these things, we established a relationship with the British trade union movement which has made this Government the envy of every Government all over the world.

The £6 pay limit introduced last July, against the votes of the Conservative Opposition, which voted to refuse a Second Reading to the necessary legislation and had not the courage to vote at all on the main Question, has transformed this country's economic prospects and has achieved unanimous support among the working people of this country and from the employers of this country. The industrial policy we introduced at the Chequers meeting now also has solid support from both sides of industry.

Now the construction of a new relationship between the British Government, the working people and the employers of this country, and the progressive elimination of an arm's-length relationship which more than anything has been responsible for our inferior economic performance since the Second World War, has inevitably required compromise and sacrifice from all concerned. It has put a real strain on the loyalties of the trade union movement and of the business community. But this new relationship has been established, and on that relationship depends the future of this country's economy. As a result of the new relationship between the Government and people of this country, in the last nine months inflation has been cut by well over half what it was a year ago. The balance of payments deficit, which, despite the increase in oil prices in 1974, we managed to hold to the level we inherited from the Conservative Government, was cut by more than half last year.

Sir G. Howe

Will the Chancellor tell the House how he conceivably describes as the envy of the world an economy in which inflation is now running at three times the rate of 8.4 per cent. on which he secured election in October 1974?

Mr. Healey

The right hon. and learned Gentleman was rightly described in a Conservative newspaper yesterday as a sheep in a rage. [HON. MEMBERS: "Answer."] The question, to which he has finally nerved himself to ask, I answer as follows: France, the United States, Canada and Holland—countries which are facing problems of increasing wage costs—are now seeking to solve those problems by the methods already adopted by this Government, and adopted with success against the continued opposition of the Conservative Party. Although the right hon. Member for Finchley (Mrs. Thatcher), in this annual spasm of courtship of the trade union movement to which the party is used, has attempted to reverse the policy which she put to this House nine months ago, her medieval and metallic charms as an iron maiden are unlikely to seduce the trade union movement, because every policy she has sponsored from the Opposition Dispatch Box since she became Leader of the Conservative Party has been calculated to provoke the maximum hostility from the working people of this country.

When the right hon. and learned Member for Surrey, East——[An hon. Member: "What about spending?"] When the right hon. Lady and the right hon. Member for Leeds, North-East (Sir K. Joseph) were spending themselves silly—we heard something of this from Lord Barber in the House of Lords only yesterday—the right hon. and learned Member for Surrey, East was driving the Industrial Relations Act through this House, which provoked the Director-General of the CBI and soured and sullied industrial relations and which the right hon. Lady has now decided to abandon because she recognises that it was a disaster to industrial relations. The policies put forward by the Opposition two days ago of cuts of £4,000 million this year concentrated on subsidies, which would raise the cost of living by 5 per cent., and transfer benefits which would punish the sick and the unemployed.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

Will the right hon. Gentleman give way?

Mr. Henley

The policies put forward then are a recipe for revolution in this country.

Mr. Ridley rose——

Mr. Speaker

Order. The hon. Gentleman knows that if the Chancellor does not give way, he must resume his seat.

Mr. Healey

The reason why we are having this debate today is that 37 of my hon. Friends thought it right last night on this issue to contrive a situation in which they knew that the Conservative Party would defeat the Government on public expenditure. They chose the day before two by-elections, in order to contrive this defeat of the Government. [Hon. Members: "Oh."] They chose a moment when sterling was under greater pressure than it has known for many months.

We all know the strong and sincere feelings which inspired many of my hon. Friends but let me say that the feelings of those of us who find it necessary to level off public spending programmes for some years after next year were no less genuine and sincere than theirs. So, indeed, were the feelings of those like my hon. Friend the Member for Penistone (Mr. Mendelson), who has never hesitated to express his views in the House but has never conspired with the Conservative Opposition to defeat a Labour Government.

All I say to those of my hon. Friends who thought it right to behave in that way yesterday is this: they had every right to share the credit won by this Government for successes but only—[Interruption.]

Mr. Speaker

Order.

Mr. Graham Page (Crosby)

On a point of order, Mr. Speaker. If the right hon. Gentleman will not address the House, but only a quarter of it, will he at least address it through you, Mr. Speaker?

Mr. Speaker

Order. I shall stand a far better chance of hearing the Chancellor if hon. Members are quiet.

Mr. Healey

I know the strength of the feelings which inspired my hon. Friends, but I ask them to recognise that millions of ordinary men and women in the trade union movement in this country have made sacrifices for their country and for their Government in the past 12 months in order to give this country a chance to defeat inflation and to improve its industrial performance.

The policies which are followed by the Government at present in the financial and economic area have the public support of the leaders of the trade union movement. They have been supported in practice at the cost of real personal financial sacrifice by 5 million working men and women who have settled within the £5 pay limit—I mean the £6 pay limit—in the last nine months.

All of these men and women have shown loyalty to the Labour Government. They expect the Members of the Parliamentary Labour Party to show the same loyalty, because they know that if this Government were to throw away the gains made in the past 12 and 24 months by so much sacrifice and through so many painful and difficult decisions, they would be betraying the faith placed in them by the movement which put them into power.

I hope that what happened last night will be a lesson to the whole of our movement. I make no apology for speaking now primarily to my hon. Friends. I think that those of my hon. Friends who thought it right to take the action that they did last night must know that they were falsifying the hopes of those in the trade union movement who have made sacrifices to help the Government and the country in the last few years. We have evidence of that multiplying day after day in speeches by trade union leaders. There was Mr. Hugh Scanlon on Monday and Mr. Joe Gormley this afternoon.

I must tell my hon. Friends who thought it right to take that action yesterday that to behave in such a way on another occasion will be to threaten surrender to the right hon. Lady the Member for Finchley. To surrender to her would be to betray the whole of our Labour movement to its enemies. If they really believe that the party they support and the trade union movement from which so many of them come will be better served by a Government under her leadership than by the present Government, they

must vote for her tonight or once more contrive her success as they did last night.

If, however, they believe, as I am certain they do——

Mr. Norman Buchan (Renfrewshire, West) rose——

Hon. Members

Give way.

Mr. Healey

If they believe——

Mr. Buchan rose——

Mr. Speaker

Order. We can have only one hon. Member speaking at a time.

Mr. Healey

If they believe that nothing can damage this movement more than a change of Government at this time, they must give the same loyalty to the Government as it receives from the trade union movement and the overwhelming majority of members of the party in the country.

No Government can be a Government if they surrender to blackmail. We cannot and will not surrender in this way. I believe that the events of the last 24 hours are and must remain a lesson for all of us, and I ask all who fear for the welfare of this country, all who wish to protect and extend the benefits attained by our sacrifices in the last two years, to vote for the Government tonight and to maintain their support on future occasions of this nature.

Question put, That this House do now adjourn:—

The House divided: Ayes 280, Noes 297.

Division No. 85.]	AYES	[10.0 p.m.
Adley, Robert	Boscawen, Hon Robert	Clark, William (Croydon S)
Aitken, Jonathan	Bottomley, Peter	Clarke, Kenneth (Rushcliffe)
Alison, Michael	Bowden, A. (Brighton, Kemptown)	Clegg, Walter
Amery, Rt Hon Julian	Boyson, Dr Rhodes (Brent)	Cockcroft, John
Arnold, Tom	Braine, Sir Bernard	Cooke, Robert (Bristol W)
Atkins, Rt Hon H. (Spelthorne)	Brittan, Leon	Cope, John
Awdry, Daniel	Brocklebank-Fowler, C.	Cordle, John H.
Bain, Mrs Margaret	Brotherton, Michael	Cormack, Patrick
Baker, Kenneth	Brown, Sir Edward (Bath)	Corrie, John
Banks, Robert	Bryan, Sir Paul	Costain, A. P.
Beith, A. J.	Buchanan-Smith, Alick	Crawford, Douglas
Bell, Ronald	Buck, Antony	Critchley, Julian
Bennett, Sir Frederic (Torbay)	Budgen, Nick	Crowder, F. P.
Bennett, Dr Reginald (Fareham)	Bulmer, Esmond	Davies, Rt Hon J. (Knutsford)
Benyon, W.	Burden, F. A.	Dean, Paul (N Somerset)
Berry, Hon Anthony	Butler, Adam (Bosworth)	Dodsworth, Geoffrey
Bitten, John	Carlisle, Mark	Douglas-Hamilton, Lord James
Biggs-Davison, John	Chalker, Mrs Lynda	Drayson, Burnaby
Blaker, Peter	Churchill, W. S.	du Cann, Rt Hon Edward
Body, Richard	Clark, Alan (Plymouth, Sutton)	Durant, Tony
Eden, Rt Hon Sir John	King, Evelyn (South Dorset)	Ridley, Hon Nicholas
Edwards, Nicholas (Pembroke)	King, Tom (Bridgwater)	Ridsdale, Julian
Elliott, Sir William	Kitson, Sir Timothy	Rifkind, Malcolm
Emery, Peter	Knox, David	Rippon, Rt Hon Geoffrey
Evans, Gwynfor (Carmarthen)	Lamont, Norman	Roberts, Michael (Cardiff NW)
Eyre, Reginald	Lane, David	Roberts, Wyn (Conway)
Fairbairn, Nicholas	Langford-Holt, Sir John	Rodgers, Sir John (Sevenoaks)
Fairgrieve, Russell	Latham, Michael (Melton)	Ross, Stephen (Isle of Wight)
Farr, John	Lawrence, Ivan	Rossi, Hugh (Hornsey)
Fell, Anthony	Lawson, Nigel	Rost, Peter (SE Derbyshire)
Finsberg, Geoffrey	Lester, Jim (Beeston)	Royle, Sir Anthony
Fisher, Sir Nigel	Lewis, Kenneth (Rutland)	Sainsbury, Tim
Fletcher-Cooke, Charles	Lloyd, Ian	St. John-Stevas, Norman
Fookes, Miss Janet	Loverldge, John	Scott, Nicholas
Fowler, Norman (Sutton C'f'd)	Luce, Richard	Shaw, Giles (Pudsey)
Fox, Marcus	McAdden, Sir Stephen	Shelton, William (Streatham)
Fraser, Rt Hon H. (Stafford & St)	MacCormick, lain	Shepherd, Colin
Freud, Clement	McCrindle, Robert	Shersby, Michael
Fry, Peter	Macfarlane, Neil	Silvester, Fred
Galbraith, Hon T. G. D.	MacGregor, John	Sims, Roger
Gardiner, George (Reigate)	Macmillan, Rt Hon M. (Farnham)	Sinclair, Sir George
Gardner, Edward (S Fylde)	McNair-Wilson, M. (Newbury)	Skeet, T. H. H.
Gllmour, Rt Hon Ian (Chesham)	McNair-Wllson, P. (New Forest)	Smith, Dudley (Warwick)
Gilmour, Sir John (East Fife)	Madel, David	Speed, Keith
Glyn, Dr Alan	Marshall, Michael (Arundel)	Spence, John
Godber, Rt Hon Joseph	Marten, Nell	Spicer, Michael (S Worcester)
Goodhart, Philip	Mates, Michael	Sproat, lain
Goodhew, Victor	Mather, Carol	Stainton, Keith
Goodlad, Alastair	Maude, Angus	Stanbrook, Ivor
Gorst, John	Maudling, Rt Hon Reginald	Stanley, John
Gow, Ian (Eastbourne)	Mawby, Ray	Steel, David (Roxburgh)
Gower, Sir Raymond (Barry)	Maxwell-Hyslop, Robin	Sleen, Anthony (Wavertree)
Grant, Anthony (Harrow C)	Mayhew, Patrick	Stewart, Donald (Western Isles)
Gray, Hamish	Meyer, Sir Anthony	Stewart, Ian (Hitchin)
Grimond, Rt Hon J.	Miller, Hal (Bromsgrove)	Stokes, John
Grist, Ian	Mills, Peter	Stradling Thomas, J.
Grylls, Michael	Mitchell, David (Basingstoke)	Tapsell, Peter
Hall, Sir John	Moate, Roger	Taylor, R. (Croydon NW)
Hall-Davis, A. G. F.	Monro, Hector	Taylor, Teddy (Cathcart)
Hamilton, Michael (Salisbury)	Montgomery, Fergus	Tebbit, Norman
Hampson, Dr Keith	Moore, John (Croydon C)	Temple-Morris, Peter
Hannam, John	More, Jasper (Ludlow)	Thatcher, Rt Hon Margaret
Harrison, Col Sir Harwood (Eye)	Morgan, Geraint	Thomas, Dafydd (Merioneth)
Harvie Anderson, Rt Hon Miss	Morgan-Giles, Rear-Admiral	Thomas, Rt Hon P. (Hendon S)
Hastings, Stephen	Morris, Michael (Northampton S)	Thompson, George
Havers, Sir Michael	Morrison, Charles (Devizes)	Thorpe, Rt Hon Jeremy (N Devon)
Hawkins, Paul	Morrison, Hon Peter (Chester)	Townsend, Cyril D.
Hayhoe, Barney	Mudd, David	Trotter, Neville
Heath, Rt Hon Edward	Neave, Airey	Tugendhat, Christopher
Henderson, Douglas	Nelson, Anthony	van Straubenzee, W. R.
Heseltine, Michael	Neubert, Michael	Vaughan, Dr Gerard
Hicks, Robert	Newton, Tony	Viggers, Peter
Higgins, Terence L.	Nott, John	Wainwright, Richard (Coine V)
Holland, Philip	Onslow, Cranley	Wakeham, John
Hooson, Emlyn	Oppenheim, Mrs Sally	Walder, David (Clitheroe)
Hordern, Peter	Page, John (Harrow West)	Walker, Rt Hon P. (Worcester)
Howe, Rt Hon Sir Geoffrey	Page, Rt Hon R. Graham (Crosby)	Wall, Patrlck
Howell, Geraint (Cardigan)	Paisley, Rev Ian	Walters, Dennis
Hunt, John	Pardoe, John	Warren, Kenneth
Hurd, Douglas	Pattle, Geoffrey	Watt, Hamish
Hutchison, Michael Clark	Penhaligon, David	Weatherlll, Bernard
Irving, Charles (Cheltenham)	Percival, Ian	Wells, John
James, David	Peyton, Rt Hon John	Welsh, Andrew
Jenkin, Rt Hon P. (Wanst'd & W'df'd)	Pink, R. Bonner	Whitelaw, Rt Hon William
Jessel, Toby	Price, David (Eastleigh)	Wiggin, Jerry
Johnson Smith, G. (E Grinstead)	Prior, Rt Hon James	Wigley, Dafydd
Johnston, Russell (Inverness)	Pym, Rt Hon Francis	Willson, Gordon (Dundee E)
Jones, Arthur (Daventry)	Raison, Timothy	Wood, Rt Hon Richard
Jopling, Michael	Rathbone, Tim	Young, Sir G. (Ealing, Acton)
Joseph, Rt Hon Sir Keith	Rawlinson, Rt Hon Sir Peter	Younger, Hon George
Kaberry, Sir Donald	Rees, Peter (Dover & Deal)
Kershaw, Anthony	Rees-Davies, W. R.	TELLERS FOR THE AYES:
Kilfedder, James	Reid, George	Mr. Spencer Le Marchant and
Kimball, Marcus	Renton, Rt Hon Sir D. (Hunts)	Mr. Cecil Parkinson
	Renton, Tim (Mid-Sussex)
NOTES
Abse, Leo	Ashton, Joe	Bean, R. E.
Allaun, Frank	Atkins, Ronald (Preston N)	Benn, Rt Hon Anthony Wedgwood
Anderson, Donald	Atkinson, Norman	Bennett, Andrew (Stockport N)
Archer, Peter	Bagier, Gordon A. T.	Bidwell, Sydney
Armstrong, Ernest	Barnett, Rt Hon Joel (Heywood)	Bishop, E. S.
Ashley, Jack	Bates, Alf	Blenkinsop, Arthur

Boardman, H.	Grant, George (Morpeth)	Moorman, Eric
Booth, Rt Hon Albert	Grant, John (Islington C)	Morris, Alfred (Wythenshawe)
Bottomley, Rt Hon Arthur	Grocott, Bruce	Morris, Charles R. (Openshaw)
Boyden, James (Bish Auck)	Hamilton, James (Bothwell)	Morris, Rt Hon J. (Aberavon)
Bradley, Tom	Hardy, Peter	Moyle, Roland
Bray, Dr Jeremy	Harper, Joseph	Mulley, Rt Hon Frederick
Broughton, Sir Alfred	Harrison, Walter (Wakefield)	Murray, Rt Hon Ronald King
Brown, Hugh D. (Provan)	Hattersley, Rt Hon Roy	Newens, Stanley
Brown, Robert C. (Newcastle W)	Hayman, Mrs Helene	Noble, Mike
Brown, Ronald (Hackney S)	Healey, Rt Hon Denis	Oakes, Gordon
Buchan, Norman	Heller, Eric S.	Ogden, Eric
Buchanan, Richard	Hooley, Frank	O'Halloran, Michael
Butler, Mrs Joyce (Wood Green)	Horam, John	O'Malley, Rt Hon Brian
Callaghan, Rt Hon J. (Cardiff SE)	Howell, Rt Hon Denis	Orbach, Maurice
Callaghan, Jim (Middleton & P)	Hoyle, Doug (Nelson)	Orme, Rt Hon Stanley
Campbell, Ian	Huckfield, Les	Ovenden, John
Canavan, Dennis	Hughes, Rt Hon C. (Anglesey)	Owen, Dr David
Cant, R. B.	Hughes, Robert (Aberdeen N)	Padley, Walter
Car mi cha el, Neil	Hughes, Roy (Newport)	Palmer, Arthur
Carter, Ray	Hunter, Adam	Park, George
Carter-Jones, Lewis	Irvine, Rt Hon Sir A. (Edge Hill)	Parker, John
Cartwright. John	Irving, Rt Hon S. (Dartford)	Parry, Robert
Castle, Rt Hon Barbara	Jackson, Colin (Brighouse)	Pavitt, Laurie
Clemitson, Ivor	Jackson, Miss Margaret (Lincoln)	Peart, Rt Hon Fred
Cocks, Michael (Bristol S)	Janner, Greville	Perry, Ernest
Cohen, Stanley	Jay, Rt Hon Douglas	Phipps, Dr Colin
Coleman, Donald	Jeger, Mrs Lena	Prentice, Rt Hon Reg
Colquhoun, Ms Maureen	Jenkins, Hugh (Putney)	Price, C. (Lewisham W)
Concannon, J. D.	Jenkins, Rt Hon Roy (Stechford)	Price, William (Rugby)
Conlan, Bernard	John, Brynmor	Radice, Giles
Cook, Robin F. (Edin C)	Johnson, James (Hull West)	Rees, Rt Hon Merlyn (Leeds S)
Corbett, Robin	Johnson, Walter (Derby S)	Richardson, Miss Jo
Cox, Thomas (Tooting)	Jones, Alec (Rhondda)	Roberts, Albert (Normanton)
Craigen, J. M. (Maryhill)	Jones, Barry (East Flint)	Roberts, Gwilym (Cannock)
Crawshaw, Richard	Jones, Dan (Burnley)	Robertson, John (Paisley)
Cronin, John	Judd, Frank	Robinson, Geoffrey
Crosiand, Rt Hon Anthony	Kaufman, Gerald	Roderick, Caerwyn
Cryer, Bob	Kelley, Richard	Rodgers, George (Chorley)
Cunningham, G. (Islington S)	Kerr, Russell	Rodgers, William (Stockton)
Cunningham, Dr J. (Whiteh)	Kilroy-Silk, Robert	Rooker, J. W.
Davidson, Arthur	Kinnock, Nell	Roper, John
Davies, Bryan (Enfield N)	Lambie, David	Rose, Paul B.
Davies, Denzil (Llanelli)	Lamborn, Harry	Ross, Rt Hon W. (Kilmarnock)
Davies, Ifor (Gower)	Lamond, James	Rowlands, Ted
Davis, Clinton (Hackney C)	Latham, Arthur (Paddlngton)	Sandelson, Neville
Deakins, Eric	Leadbltter, Ted	Sedgemore, Brian
Dean, Joseph (Leeds West)	Lee, John	Selby, Harry
Delargy, Hugh	Lestor, Miss Joan (Eton & Slough)	Shaw, Arnold (llford South)
Dell, Rt Hon Edmund	Lever, Rt Hon Harold	Sheldon, Robert (Ashton-u-Lyne)
Dempsey, James	Lewis, Arthur (Newham N)	Shore, Rt Hon Peter
Doig, Peter	Lewis, Ron (Carlisle)	Short, Rt Hon E. (Newcastle C)
Dormand, J. D.	Lipton, Marcus	Short, Mrs Renee (Wolv NE)
Douglas-Mann, Bruce	Litterick, Tom	Silkin, Rt Hon John (Deptford)
Duffy, A. E. P.	Loyden, Eddie	Silkin, Rt Hon S. C. (Du)wlch)
Dunnet, Jack	Luard, Evan	Sillars, James
Eadie, Alex	Lyon, Alexander (York)	Silverman, Julius
Edge, Geoff	Lyons, Edward (Bradford W)	Skinner, Dennis
Edwards, Robert (Wolv SE)	Mabon, Dr J. Dickson	Small, William
Ellis, John (Brigg & Scun)	McCartney, Hugh	Smith, John (N Lanarkshire)
English, Michael	McElhone, Frank	Snaps, Peter
Ennals, David	MacFarquhar, Roderick	Spearing, Nigel
Evans, Fred (Caerphilly)	McGuire, Michael (Ince)	Spriggs, Leslie
Evans, loan (Abordare)	Mackenzie, Gregor	Stallard, A. W.
Ewing, Harry (Stirling)	Mackintosh, John P.	Stoddart, David
Fernyhough, Rt Hon E.	Maclennan, Robert	Stonehouse, Rt Hon John
Fitch, Alan (Wigan)	McMillan, Tom (Glasgow C)	Stolt, Roger
Fitt, Gerard (Belfast W)	Me Namara, Kevin	Strang, Gavin
Flannery, Martin	Madden, Max	Strauss, Rt Hon G. R.
Fletcher, Raymond (llkeston)	Magee, Bryan	Summerskill, Hon Dr Shirley
Fletcher, Ted (Darlington)	Maguire, Frank (Fermanagh)	Swain, Thomas
Foot, Rt Hon Michael	Mahon, Simon	Taylor, Mrs Ann (Bolton W)
Ford, Ben	Mallalleu, J. P. W.	Thomas, Jeffrey (Abertillery)
Forrester, John	Marks, Kenneth	Thomas, Mike (Newcastle E)
Fowler, Gerald (The Wrekin)	Marquand, David	Thomas, Ron (Bristol NW)
Fraser, John (Lambeth, N'w'd)	Marshall, Dr Edmund (Goole)	Thorne, Stan (Preston South)
Freeson, Reginald	Marshall, Jim (Leicester S)	Tierney, Sydney
Garrett, John (Norwich S)	Mason, Rt Hon Roy	Tinn, James
Garrett, W. E. (Wallsend)	Maynard, Miss Joan	Tomlinson, John
George, Bruce	Meacher, Michael	Torney, Tom
Gilbert, Dr John	Mellish, Rt Hon Robert	Tuck, Raphael
Ginsburg, David	Mendelson, John	Urwin, T. W.
Golding, John	Millan, Bruce	Varley, Rt Hon Eric G.
Gould, Bryan	Miller, Dr M. S. (E Kilbride)	Wainwright, Edwin (Dearne V)
Gourlay, Harry	Miller, Mrs Millie (llford N)	Waiden, Brian (B'ham, L'dyw'd)
Graham, Ted	Molloy, William	Walker, Harold (Doncatler)

Walker, Terry (Kingswood)	Whitlock, William	Woodall, Alec
Ward, Michael	Willey, Rt Hon Frederick	Woof, Robert
Watkins, David	Williams, Alan (Swansea W)	Wrigglesworth, Ian
Watkinson, John	Williams, Alan Lee (Hornch'ch)	Young, David (Bolton E)
Weetch, Ken	Williams, Rt Hon Shirley (Hertford)
Weitzman, David	Williams, Sir Thomas	TELLERS FOR THE NOES:
Wellbeloved, James	Wilson, Alexander (Hamilton)	Mr. Tom Pendry and
White, Frank R. (Bury)	Wilson, Rt Hon H. (Huyton)	Mr. James A. Dunr
White, James (Pollok)	Wilson, William (Coventry SE)
Whitehead, Phillip	Wise, Mrs Audrey
Question accordingly negatived.