REDUNDANCY PAYMENTS

HC Deb 28 July 1977 vol 936 cc1377-95

Order read for resuming adjourned debate on Question [27th July],

That the draft Redundancy Payments (Variation of Rebates) Order 1977, which was said before this House on 25th July, be approved.—[Mr. Harper.]

Question again proposed.

1.40 p.m.

Mr. Geoffrey Finsberg (Hampstead)

On a point of order, Mr. Speaker. It will be within your knowledge that the House had to adjourn this debate because the Leader of the House and the Government had not provided papers. May I draw attention to the fact that the House still has not got the proper papers?

This debate was adjourned because the Leader of the House admitted his failure. What is now in the Vote Office is something that purports to be an Act of Parliament. I ask you to have a copy examined, because I suggest, without any proof, that it is a "phoney". It has no imprint, and we do not know whether it was printed by Her Majesty's Stationery Office. I ask the Leader of the House to come here and explain, or perhaps the security services could look at this matter as well as at the bugging allegations that appeared in the Press today.

Mr. Deputy Speaker(Mr. Bryant Godman Irvine)

Mr. Speaker gave a ruling on the matter of papers and said that this was not for the Chair. Therefore, the hon. Member's point does not arise.

Mr. Finsberg

Further to that point of order, Mr. Deputy Speaker. May I point out that after an hour and a quarter's debate last time the Leader of the House came here and very courteously admitted his fault. I urge the Secretary of State, who has deigned to come here today, to send for the Leader of the House, because this so-called Act is not a genuine document unless it can be proved to be so.

For the sake of accuracy, I have obtained two copies of it in case someone should suggest that the first was merely a printer's error. The second document is identical. Having examined a copy of the genuine Act, I find that it has the authority of Mr. Thimont, who is the Controller of the Stationery Office and the Queen's Printer of Acts of Parliament. Therefore, it is up to the Secretary of State to send for the Leader of the House to tell us whether this document is genuine and how we can be certain that this is the Act that received Royal Assent on 22nd July.

The Secretary of State for Employment(Mr. Albert Booth)

Since I was responsible for laying the order, Mr. Deputy Speaker, it is appropriate that I should reply. When my right hon. Friend the Leader of the House proposed the adjournment of this debate on a previous occasion, he took note of the very strong feelings about the absence of a print of the Redundancy Rebates Act 1977 under which the draft order was proposed to be laid. But it was my responsibility to lay the order, just as the responsibility for the printing of Acts of Parliament lies with the authorities of the House.

I am advised that I was correct in believing that power was vested in me from the moment that Royal Assent was given to the Act. It does not require the printing of the Act by the Queen's Printer to vest the power in the Secretary of State to make an order.

The hon. Member for Hampstead (Mr. Finsberg) can check whether the Act is valid for the purpose. All he needs to do is to check his copy against the final form of the Bill upon which the signification of Royal Assent was given. If he does that, he will find that the Act is valid.

If the hon. Member wishes to have further assurance, I can tell him that the print in the Vote Office is a photostat copy of a facsimile of a proof print being used by the Queen's Printer to make that copy. It can be checked and it is identical to the Bill which got Royal Assent and which is the operative Act under which I have power to make an order.

Mr. Finsberg

Further to that point of order, Mr. Speaker. On 28th July the Lord President said: Therefore, I now ask the House to adjourn this debate, and I hope that before the end of the week the matter can be brought back to the House again in a proper form, with the Act printed as the House would wish."—[Official Report, 27th July 1977; Vol. 936, c. 840.] Those are the words to which I direct your attention, Mr. Speaker. By no stretch of the imagination can this copy be called an Act printed in the form that the House would wish.

I accept the Secretary of State's word, but it is not for me to examine a document that is somewhere else. It is for the Leader of the House to provide us with a document printed by Her Majesty's Stationery Office. That is the way in which we do our business. Could the Leader of the House be brought back again to say why he has failed to comply with his honourable undertaking?

Mr. George Cunningham Islington, South and Finsbury) rose—

Mr. Speaker

There is no need for any further points of order. The Secretary of State has said that the Bill is in order. I can do nothing. Hon. Members could raise points of order until Sunday night and we would still not be any further ahead.

Mr. Finsberg

On a point of order, Mr. Speaker. In the previous debate you referred on several occasions to the fact that it was not your responsibility, but nevertheless you were quite firm in saying that it was someone's responsibility to see that proper papers were provided. In response to the firm view that you expressed, the Leader of the House accepted the position and gave us an undertaking. He has not complied with his undertaking.

Mr. Speaker

I understand that the Bill is there.

Mr. George Cunningham

Am I right in thinking that, as things stand at the moment and as provided for on page 569 of "Erskine May", the responsibility for producing the normal final copy, made available as an Act of Parliament, rests with the Clerk of the Parliament? God forbid that it should rest with the Government of the day. Therefore, it has nothing to do with the Government and there is nothing they can do if the process of printing—

Mr. Speaker

I understand that the Bill is there. Therefore, it is not a question of who is responsible for providing it.

Mr. George Cunningham

I realise that you came in during the middle of this, Mr. Speaker. The text made available to you is not in the form in which an Act of Parliament is normally available because, I presume, the printed copy has not gone back to the Clerk of the Parliament to be approved in the normal way. If this is the case, it has nothing to do with the Government at all.

The Government have gone out of their way to get a properly attested text, have it printed and make it available to hon. Members. They have done everything that a Government could do. They are not able to force the Clerk of the Parliament to produce the Act more quickly than usual.

Mr. Speaker

Order. There is no need to argue the case. The point of order, as far as I am concerned, is that the Act is available. I do not know what form it is in, because I have not seen it. However, it is there and, therefore, we should go on.

Mr. Peter Viggers (Gosport)

On a point of order, Mr. Speaker. On Wednesday the Leader of the House, explaining the basis upon which he was moving that the debate should be adjourned, said: I hope that the large numbers of hon. Members who have turned up tonight will be here for the full length of the debate on this matter on Friday if that is when we shall bring it back to the House. I promise that I shall be here and I shall be glad to welcome all these hon. Members who are now celebrating this great parliamentary victory. He went on: On that basis, I beg to move, That the debate be now adjourned."—[Official Report, 27th July 1977; Vol. 936, c. 841–842.] The right hon. Gentleman is not here. I had to leap aside to avoid being run down by his car as I was coming into the House. I am not suggesting that the breach of faith by the Leader of the House constitutes a point of order, although he has broken a promise that he gave solemnly to the House. However, the right hon. Gentleman said: On that basis, I beg to move …". The basis was, inter alia: I promise that I shall he here". The right hon. Gentleman is not here. How can we continue the debate when one of the conditions of the adjournment has not been met?

Mr. Speaker

I allowed the hon. Gentleman to make his point, but I am concerned with decisions of the House and not arguments used during the debate. The decision of the House on Wednesday was to adjourn the debate.

Mr. Dennis Skinner (Bolsover)

On a point of order, Mr. Speaker. Everyone else is joining in, so I might as well.

Mr. Speaker

Order. I hope that that was not the hon. Gentleman's point of order. When I am on my feet, the hon. Gentleman must resume his seat.

Mr. Skinner

I was here when the debate was adjourned on Wednesday and I remember the hon. Member for Brent-ford and Isleworth (Mr. Hayhoe) threatening us with a vote. It is remarkable —well, it is not really remarkable, but it needs to be said—that the hon. Gentleman is not here for the debate either.

Mr. Speaker

Order. Will the hon. Gentleman tell me what his point of order is? I am not listening to anything that is not a point of order.

Mr. Skinner

The other point that I wanted to come to was the fact that on Wednesday and today we have listened to Tories trying to delay this order. I assume that the time taken so far will come out of the one and a half hours allocated for the order and that, there- fore, my point of order will also come out of that time.

I want to emphasise to you, Mr. Speaker, as I have before, that, when matters are raised concerning publications that we need in order to take part in debates, we should be even-handed. On many occasions we have had to take part in Common Market debates when we have not been supplied with all the necessary documents.

Mr. Speaker

Order. That may be, but it has nothing to do with what we are discussing. If the hon. Gentleman does not have a point of order, I must ask him to resume his seat.

Mr. Skinner

The point that I am trying to emphasise is that I want to see even-handedness about the arguments and your decisions when matters are raised concerning documents not being available or not being in the form that some people think they should be.

Mr. Speaker

I can give the hon. Gentleman that assurance.

David Mitchell (Basingstoke)

I started this speech a long time ago. Like the Bill, it appears to be subject to unexpected delays. I do not know whether the problems to which my hon. Friend the Member for Hampstead (Mr. Finsberg) has drawn attention arise from blackleg printing carried out in secret in the basement in order to assist the House, but the matter need delay us no further.

The House is entitled to an explanation about the timing of the order. This matter started in July 1976. The order gives effect to the purposes that the Secretary of State indicated. The order was not included in last week's Business Statement and we may therefore assume that it was not considered to be a matter of urgency. Yet we were told when we started our debates 36 hours ago that it was urgent. The House is entitled to know what happened between Thursday of last week and Wednesday of this week. Was it, as is rumoured, that the Department of unemployment was overlooked by the Leader of the House, or is there some urgency arising in the policy?

Perhaps we may be given an assurance that the order was not deliberately laid at the last minute, after many hon. Members had planned to go away for the holidays, because it was known to be ill-judged and ill-timed and likely to increase unemployment. If any hon. Members below the Gangway opposite were present, they would wish to refer to the serious unemployment-creating aspects of the order. Why has it taken from July 1976 to the last few hours before the Summer Recess of 1977 for the order to be laid?

I am anxious about the effect of the timing of the order on the business community. If there were present any hon. Members below the Gangway opposite, they would no doubt be saying that the Tories think only about the business community. I remind the House that we do not get any employment without employers and what weakens employers and drives them into bankruptcy will lead to increased unemployment.

I have had representations about this legislation from the Smaller Business Bureau and other outside organisations anxious about its impact and, particularly, its timing. The media create a caricature of hard-faced employers, but the reality is that firms desperately try to avoid having to make employees redundant. Like me, my hon. Friend the Member for Croydon, North-East (Mr. Weatherill) is a small business man. He will agree that no business man, particularly no small business man, will lay off an employee if he can possibly avoid it.

The small business man does not think of employees merely as numbers but as George and the fact that Ben has a wife who is not well. Such things actually go into the calculation. For these reasons, such employers hold up paying people off until the last conceivable point. It is at that precise moment that they have to make the redundancy payment.

That is bad enough. But the Secretary of State is asking us to approve an order which actually increases the proportion of that redundancy payment which has to be met by the employer. This means that at the precise time in the life cycle of the business concerned when it is most in financial difficulties, the Secretary of State is putting added financial burdens on it.

The effect of that will inevitably be that companies which were on the verge of being able to recover and succeed will now be driven to a larger liability and have to go bankrupt. Indeed, if one relates the figures of unemployment to the numbers of firms that have gone bust, one realises that today the number of small businesses—and they are important in this area; more important than the large businesses, because they have fewer financial resources—which have gone bankrupt has reached the highest figure not only since the war but since the depths of the depression in the 1930s and since the worst of the 1920s. The figures are the worst ever since bankruptcy statistics were kept in 1914. If one looks at the effect that this has had on the Fund, one can appreciate that this is a matter of considerable importance.

I do not wish to interrupt the Secretary of State's consultation with the Government Chief Whip. Is it in order, Mr. Speaker, to ask the Secretary of State whether he will be kind enough to listen to the point being made, because he will naturally find it difficult to answer if he does not? I am grateful to him for now doing so.

If the right hon. Gentleman will look at the statistics published by his Department, he will find that the number of instances in which employers have been unable to meet their liabilities has increased considerably. These instances in which employers cannot meet their liabilities are those in which firms will be going bust because of this liability.

I should like to illustrate this point with figures. In the first quarter of 1974 there were 1,851 employees for whom the Fund had to pay out because the employer was not able to pay. For the first quarter of this year that figure has increased from 1,851 to no fewer than 8,431. This is an indication of the very serious position that is arising because of employers having desperately strained financial resources and finding that they have to pay out more than they can afford. The order that we are asked to approve today makes that situation much worse.

Comparing the overall figures for 1973 with the present figures, one sees that there were 9,012 employees in 1973 who were affected by employers who could not afford to meet the redundancy payments. But this year it is running at the rate of 33,000 employees for whom employers cannot meet the amount. Instead of it costing £2,467,000, it is now costing over £16 million for that reason.

This is a very serious situation. It reinforces and confirms what I have been saying to the Secretary of State and to his Minister of State. That is that the effect of this legislation is to turn employers from being in financial difficulties into employers who have gone bust. One will not get employment unless one has employers. That is the reason why there are more people on the dole at present than was expected and more than the country can afford.

One has to see this matter against the background of small businesses having been hammered in so many other ways by the Government, with their increased corporation tax, their increase in national insurance contributions, the multitude of regulations and controls and the destruction of incentives and the like, all of which are hammering the small business into the ground.

There is a cycle in jobs. This is desperately important. There is a life cycle for a business. When they are young, thrusting and vigorous, businesses grow. Like people, they grow old and tired and they die, and their places are taken by new ones. The desperately unfortunate thing about the order is that, first, it will make more businesses die because of the liability and, secondly, it will make employers wary of taking on new employees. It will make employers wary of even starting businesses, because they know that there are greater and greater liabilities being piled up to await them if they run into financial difficulies. No business can be other than in considerable difficulties at present.

I am anxious that my right hon. Friend the Member for Lowestoft (Mr. Prior) should have the opportunity to contribute to the debate, so I should like to put to the Secretary of State one final point. It was part of the Government's economic package in 1976 that they would restrict the money supply. This was part of that operation. I am sorry that the Secretary of State's hon. Friends below the Gangway are not present. Does it mean that what he is making starkly clear, and tightening up with the urgency with which this order has been introduced at the last minute, is that the results of any increases in wage demands and settlements will be even further rises in unemployment? That is the effect of what the right hon. Gentleman is doing.

It is, by contrast, a total destruction of the strategy that the Chancellor of the Exchequer told this House that he was pursuing—shifting resources from the public sector into the private sector and into the wealth-producing sector of the economy. That is what he said in his Budget Statement was his purpose. Here we have an order that will take money out of the private sector, from the part of the private sector which can least sustain it and is least able to afford it and where unemployment is most likely to follow.

I put it to the Secretary of State for unemployment that he should take this order back and at least, if nothing else, wait until some of his hon. Friends below the Gangway are present here and until it is not the fag end or the last part of the eleventh hour—or perhaps I should say the last half of the twenty-fourth hour, in view of the night through which we have all just passed—before he asks the House to approve it.

7 p.m.

The Secretary of State for Employment (Mr. Albert Booth)

The hon. Member for Basingstoke (Mr. Mitchell) has suggested that I have delayed the laying of the order until the very last moment. Had he taken the simple precaution of checking the laying of the order against Royal Assent to the Act, he would have found that the truth is the very reverse of what he has said and that Royal Assent came three days before I laid the order. I laid the order at the earliest possible date. Therefore, there is no question of my delaying the order until the last moment.

The effect of the order is to change the rebate paid to employers in respect of redundancy from 50 per cent. to 41 per cent. The case for doing this was debated a great many times during the passage of the Redundancy Rebates Act 1977. I hope, therefore, that I shall be acquitted of any discourtesy to the House if I do not go over the whole case at length but merely refer to the points which have been raised today.

As to the reason for my approving the measure in relation to the employment factor in this country, I am, as a member of the Government, most keenly concerned about employment and most keenly aware of the extent to which the strength and health of this country's economy affect employment. It was as one of a series of measures designed to improve the health of the country's economy that the Act which gives power to lay the order was brought forward—simply because it could achieve a reduction in the public sector borrowing requirement. There are many arguments about the merits and demerits, but no one can deny that one of the effects of changing the level of rebate is to reduce the public sector borrowing requirement. I think that generally Conservative Members support the Government in that regard. The order will achieve a saving of about £16.2 million a year, or £l.35 million a month.

While I do not say that this is a big figure in relation to the whole of the package, I hope hon. Members will agree that it is not insignificant and that it is certainly a worthwhile saving on the public sector borrowing requirement.

Mr. David Mitchell

I have listened carefully to what the right hon. Gentleman has said. He is spending large sums of money to try to encourage new jobs. Does he not think that the taking of money out of the small business sector in particular is resulting in the loss of more jobs than the equivalent sum spent elsewhere by his Department creates?

Mr. Booth

If the hon. Gentleman will bear with me a little longer, I shall make it clear that that is not the case. I cannot deploy all the arguments today with regard to the actual sums we are spending in order to assist the small business man. What I can discuss briefly is the effect of the order on businesses in general and small businesses in particular.

Mr. Geoffrey Finsberg

The right hon. Gentleman has spoken about £1.35 million of public expenditure. Is it not a fact that the money being spent is all money that is being supplied by industry and none of it by the Exchequer?

Mr. Booth

Whether the money being spent in redundancy rebates is money com- ing from industry or from the Exchequer depends on whether the fund is in surplus or in deficit. There is a sense in which this is all money coming from industry, but in any case, when the fund is in deficit, although there is a borowing from the National Loans Fund the interest is paid from the fund, which is contributed to by industry. The point I was making was that it affects the public sector borrowing requirement. That is undeniable, because if money is taken from the National Loans Fund it is money which comes from general public sector borrowing.

If the fund is in surplus, a substantial part of that surplus can be put into Government borrowing, and that, I believe, is public money in the borrowing sense. What I am claiming is that the rebate affects public sector borrowing. That cannot be contested.

Mr. James Prior (Lowestoft)

On that point, is not the right hon. Gentleman using the Redundancy Fund as a means of reducing the Government's borrowing requirement? In that respect, it is a kind of tax on all employers, because he is using the argument that it reduces the public borrowing requirement and he is using the money that he will now take from all employers as a means of reducing the amount of money which the Government would have to borrow from other people. That is using the Redundancy Fund for a purpose for which it was not set up.

Mr. Booth

There is a sense in which one can say that the Redundancy Fund is a tax on employers provided one operates it in that way. But all Governments have operated it in that way. If one wanted to ensure that the fund, in so far as it affected public sector borrowing and the payment of interest, did not have that effect on employers, the only alternative would be to put the payment of the interest into general taxation. One can choose whether we should tax the community as a whole or tax that part of industry which is honest. But the practice by this and preceding Governments of different political complexions has not changed. Every Government have used the same practice. It is a tax on industry now and it has been a tax on industry in the past during periods when the fund goes into deficit.

As to the actual amount which is paid, the average which an employer pays on a redundancy is about £600. He will qualify for a 50 per cent. rebate or £300, but under the order the amount of rebate will be dropped to £246 for an average redundancy. To that extent a greater cost falls upon the employer.

Some concern has been expressed on precisely this point about the effect of the reduction on small business men. I would remind the House of the provisions of Section 32 of the 1965 Act. This section permits assistance to be given in cases of genuine financial difficulty so that in the first instance the full cost of redundancy payment may be made directly from the Redundancy Fund, following which arrangements are made with employers for the recovery of their share of the cost.

Therefore, I do not accept that the reduction in rebate will be such as to put the small employer in a position where jobs will be lost which might otherwise have been preserved. I say that knowing that I cannot debate all the other measures that we are taking to assist employers in that direction.

Mr. David Mitchell

If that is the case, can the Secretary of State tell us how many of these employers—we have read that large sums and large numbers are involved—will actually get the money back and how many have gone bust so that they cannot get their money back?

Mr. Booth

I cannot give the hon. Gentleman that information, but if employers go bust in those circumstances the hon. Gentleman cannot logically content that it was the payment of redundancy contributions which caused the employers to go bust. I do not think that the hon. Gentleman is on a valid point.

Finally, I would say that although I have indicated that the reduction of the public sector borrowing requirement is one of a whole series of measures necessary to restore the country to a state of economic health as quickly as possible, we nevertheless look forward to the day when it will be possible to increase the rebate. I hope that that will be reasonably soon.

In all the circumstances, I have no hesitation in asking the House to signify its approval of the order as laid in draft.

2.17 p.m.

Mr. James Prior (Lowestoft)

This is a rotten and unnecessary little order. But before I come to the order perhaps I may express my thanks to the Secretary of State for the courtesy that he has shown in presenting the order today. The right hon. Gentleman has waited patiently for a long time and we are grateful to him.

I also apologise for the fact that my hon. Friend the Member for Brentford and Isleworth (Mr. Hayhoe) is not present. He has speaking engagements all day in the Leicester area and he has asked me to convey his apologies to the House.

I am glad that the Leader of the House has popped his head in through the door on this occasion so that we can to that extent say that he has kept his promise to be here on Friday morning, even though several hon. Members who showed such enthusiasm with regard to the order on Wednesday night are no longer with us.

Having got the courtesies over, perhaps I may add that at 2.20 p.m. on the Friday before the long recess I wish the right hon. Gentleman a good rest during the summer. He has a difficult winter in front of him but we can shorten the problem that he will have if he will agree to an election in October. I am certain that no Conservative Member would raise any objection and the right hon. Gentleman would be able to have a much longer rest. In so far as he will need to get as much strength as possible before the winter, I wish him a happy and peaceful Summer Recess.

Now for the order. I think that it is a cheat because what the Government are saying is that in order to reduce their borrowing requirement they will use the cash in the Fund for their own purposes. They are entitled to do that. It saves their having to borrow money elsewhere and also avoids their having to pay interest on the money borrowed.

The right hon. Gentleman the Secretary of State for Employment is saying that if the Fund should run into deficit, it would work the other way because the Government would then have to lend the Fund money until such time as it increases its overall assessment on employers. But the Fund is now in surplus to the extent of about £10 million and has been in surplus ever since the Government decided to bring in this measure. Going back into the mists of time, I recall that it was largely due to a miscalculation that the Government at one time thought that the Fund might be getting into deficit.

The only other explanation of the Government's wishing to increase the employers' share is that they fear the number of redundancies to come and feel that the Fund will go into deficit. Although employers, particularly small employers, are expected to pay out increased contributions of their own, it makes them all the less willing to employ fresh labour. This has been one of the great problems of the past two or three years. Small employers who wish to take on extra labour will face this further burden. It is not a major burden, and the Secretary of State has said that if small employers cannot afford to pay, the money can be paid out of the Fund and they can repay it later. We know those facts, but we also know that the psychological effect on small employers is damaging to employment generally.

The point made by the Opposition is that it is no good the Government destroying the confidence of small employers and then saying "We spend a great deal of money in other directions which helps those employers". The one does not make up for the other. That is why we object to this order. We believe that it is an imposition on industry as a whole at a time when the Government do not need the money, when the Fund is in surplus, and when employment prospects and the employment situation generally are causing everybody deep anxiety. We believe that this is another extra measure that will prevent some employers from taking on more people and creating more jobs. For that reason we regard it as a bad measure.

We see no urgency for these provisions. The Minister of State the other night said that this matter had become urgent because these provisions had been in existence for a year and had not got through. That surely was a contradiction in terms. It is a bad measure, and I am certain that the Secretary of State and his Department are not keen on it. Indeed, they have had it pushed on them by the Treasury.

The Treasury, as usual, has not done its homework properly. The Treasury has no understanding of the psychology of these matters and the Secretary of State has allowed the Treasury to get away with it.

2.24 p.m.

Mr. Geoffrey Finsberg (Hampstead)

I wish to ask the Secretary of State for Employment a detailed question. I understand that this order, and a similar order which is being made in another place, must be approved by the Privy Council. If that is correct and it is an affirmative order, perhaps we may be told on what date the appropriate procedure will be gone through with the Privy Council. I shall spin out my remarks a little to allow the Secretary of State to obtain an answer.

Mr. Booth

My understanding of the matter is that if the order requires affirmation by both Houses, once that is done it is put into effect. The mechanics of putting it into effect will take about one week.

Mr. Finsberg

Am I right in saying that it does not require the approval of the Privy Council?

Mr. Booth

I shall check that. I believe that that is the practical effect of having the matter affirmed by both Houses today.

Mr. Finsberg

I am grateful to the right hon. Gentleman for that information.

My right hon. Friend the Member for Lowestoft (Mr. Prior) and my hon. Friend the Member for Basingstoke (Mr. Mitchell) both made important contributions and I wish to stress one further matter. If, as seems likely, there is a horrible upturn in the unemployment figures, more firms might have to make employees redundant. This order has been conceived in the Treasury and I acquit the Secretary of State for Employment of blame. I do not believe the Secretary of State or his Department, knowing the problems involved, would have gratuitously suggested this reduction in redundancy rebates. This is part of the overall package accepted by the Chancellor, and the unfortunate Department of Employment has had to carry the baby.

It means on the one hand that the Chancellor and the Prime Minister, both of whom are Treasury Ministers, are saying to the country and to industry "We wish to co-operate with industry so that there will be more jobs and exports. We want to create a certain climate of opinion that might not be desired by the left wing, and we dislike it as much as do the Tories. We feel that a mixed economy can work." Yet the effect of reducing the rebate from 50 to 41 per cent. throws an extra burden on industry at a time when the Prime Minister has been caning for the co-operation of industry.

It seems a trifle two-faced—and I am not here referring to the Secretary of State for Employment—for the Government to smile with one face at industry and say "We shall create the right climate for you to operate" and with the other face to say But we shall take away 9 per cent. of the rebate which you can obtain when you are unfortunate enough to have to make people redundant because of our economic policies". That is the picture that is painted, and it does not help to get the best co-operation from the CBI or the rest of industry.

I put that point to the Secretary of State perhaps to reinforce his hand if, alas, he is still in his office at a later stage when the Treasury again comes back for more money.

Mr. David Mitchell

When my right hon. Friend refers to a mixed economy, will he point out to Labour Members that their view of a mixed economy is rather akin to that of the French chef who was asked to make a paté 50 per cent. horse and 50 per cent. hare, and

who took one horse and one hare and made a paté in that way? That is the view of Labour Members of what a mixed economy might be.

Mr. Finsberg

Knowing what I know of the views of the right hon. Gentleman the Secretary of State for Employment on the subject of the Common Market, I must tell my hon. Friend that horse is a great delicacy in many parts of the Continent. I would point out that horses do not suffer from myxomatosis but that rabbits and hares do.

Mr. Prior

Hares do not suffer from that disease.

Mr. Finsberg

I thank my right hon. Friend for that information. I think I would prefer my paté to be 50:50.

It is not even in the interests of a mixed economy because the nationalised industries and local government have to make redundancy payments. Therefore, the extra 9 per cent. will mean a further burden on the rates, which will presumably mean that more money will come from a supplemental rate support grant order. Even with the admittedly higher profits of the nationalised industries, in the end the customer will have to pay, whether it be the customer of nationalised industries or private industry, if this 9 per cent. reduction is made.

The Secretary of State has not convinced me on this point. I think that he is making a great mistake in trying to obtain the co-operation of industry by acting in this way.

Question put:—

The House divided: Ayes 102, Noes 6.

Division No. 234	AYES	[2.30 p.m.
Armstrong, Ernest	Crowther, Stan (Rotherham)	Hamilton, W. W. (Central Fife)
Ashley, Jack	Cryer, Bob	Harper, Joseph
Atkinson, Norman	Cunningham, G. (Islington S)	Harrison, Rt Hon Walter
Barnett, Guy (Greenwich)	Davidson, Arthur	Hattersley, Rt Hon Roy
Barnett, Rt Hon Joel (Heywood)	Davies, Bryan (Enfield N)	Hayman, Mrs Helene
Bates, Alf	Davis, Clinton (Hackney C)	Horam, John
Benn, Rt Hon Anthony Wedgwood	Deakins, Eric	Huckfield, Les
Bishop, Rt Hon Edward	Dell, Rt Hon Edmund	Hughes, Robert (Aberdeen N)
Booth, Rt Hon Albert	Dormand, J. D.	Jackson, Miss Margaret (Lincoln)
Bottomley, Rt Hon Arthur	Edwards, Robert (Wolv SE)	Janner, Greville
Brown, Hugh D. (Provan)	Ellis, John (Brigg & Scun)	Jay, Rt Hon Douglas
Brown, Robert C. (Newcastle W)	English, Michael	Jenkins, Hugh (Putney)
Brown, Ronald (Hackney S)	Ennals, David	John, Brynmor
Butler, Mrs Joyce. (Wood Green)	Evans, Ioan (Aberdare)	Judd, Frank
Callaghan, Rt Hon J. (Cardiff SE)	Foot, Rt Hon Michael	Kaufman, Gerald
Carmichael, Neil	Fraser, John (Lambeth, (N'w'd)	Latham, Arthur (Paddington)
Clemitson, Ivor	Freeson, Reginald	Lever, Rt Hon Harold
Cocks, Rt Hon Michael (Bristol S)	Garrett, W. E. (Wallsend)	Litterick, Tom
Colquhoun, Ms Maureen	George, Bruce	Luard, Evan
Corbett, Robin	Ginsburg, David	McDonald, Dr Oonagh
MacFarquhar, Roderick	Owen, Rt Hon Dr David	Stewart, Rt Hon M. (Fulham)
Maclennan, Robert	Pendry, Tom	Stoddart, David
McNamara, Kevin	Perry, Ernest	Thomas, Mike (Newcastle E)
Mason, Rt Hon Roy	Rees, Rt Hon Merlyn (Leeds S)	Urwin, T. W.
Meacher, Michael	Richardson, Miss Jo	Varley, Rt Hon Eric G.
Mikardo, Ian	Rodgers, Rt Hon William (Stockton)	Walker, Terry (Kingswood)
Millan, Rt Hon Bruce	Roper, John	Ward, Michael
Miller, Dr M. S. (E Kilbride)	Sandelson, Neville	Williams, Alan Lee (Hornch'ch)
Molloy, William	Shaw, Arnold (Ilford South)	Williams, Rt Hon Shirley (Hertford)
Morris, Charles R. (Openshaw)	Shore, Rt Hon Peter	Williams, Sir Thomas (Warrington)
Morris, Rt Hon J. (Aberavon)	Silkin, Rt Hon John (Deptford)	Wilson, Rt Hon Sir Harold (Huyton)
Moyle, Roland	Silverman, Julius
Ogden, Eric	Skinner, Dennis	TELLERS FOR THE AYES:
O'Halloran, Michael	Spearing, Nigel	Mr. A. W. Stallard and
Orbach, Maurice	Steel, Rt Hon David	Mr. Thomas Cox.
Orme, Rt Hon Stanley
NOES
Biggs-Davison, John	Temple-Morris, Peter
Butler, Adam (Bosworth)
Durant, Tony	TELLERS FOR THE NOES:
Neubert, Michael	Mr. Geoffrey Finsberg and
Tebbit, Norman	Mr. David Mitchell.

Question accordingly agreed to.

Resolved, That the draft Redundancy Payments (Variation of Rebates) Order 1977, which was laid before this House on 25th July, be approved.