Commons Sitting of 27 June 1977

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  ORAL ANSWERS TO QUESTIONS
  Mr. Speaker: Order. There is a fair amount of grouping of Questions today and I hope, therefore, that I may expect to have brief questions and as brief answers as possible.
  TRADE

    Food and Fuels (European Community)
    Mr. Edwin Wainwrightasked the Secretary of State for Trade what were the amounts in £ sterling of the cost of imported food and fuels, respectively, from the EEC countries over the past three months ended 31st May 1977; and what were the amounts of oil and coal, respectively, which the United Kingdom exported to those countries during the same period.
    The Under-Secretary of State for Trade (Mr. Michael Meacher): In the three months ended May 1977, the value of imports of food—including live animals —and fuels from the EEC was £622 million and £261 million, respectively. Exports of petôum and petôum products and of coal, coke and briquettes to the EEC were £250 million and £12 million, respectively.
    Mr. Wainwright: What would be the cost of importing a similar quantity of food from countries outside the EEC? Is my hon. Friend aware that there are many complaints about the cost of food from the Community in view of the price of food available from other sources? Is it not time that the Department produced information on that matter? On the question of coal, is not my hon. Friend aware that 40 million tons of coal are imported—
    Mr. Speaker: Order. The hon. Gentleman is now giving information. He has asked a lot of questions. Perhaps he will ask one for luck to finish.
    Mr. Wainwright: Will my hon. Friend say what his intentions are for trying to persuade the EEC to take some of our surplus coal instead of buying coal from countries outside the EEC?
    Mr. Meacher: The National Coal Board is certainly well aware of the surplus of steam coal, although stocks declined last winter. It is making efforts to unload as much as possible on EEC markets.

    3
    As for food, an article of 11th June in the Economist estimated that the CAP adds between £500 million and £600 million a year to our trade deficit. There were two recent estimates by eminent economists on this matter. Professor Josling estimated that the saving for the United Kingdom of buying at world prices would be £380 million. Wynne Godley estimated that the saving was £200 million plus £430 million saved in payments to the CAP. I cannot give authority to these figures because they depend on factors which are systematically unquantifiable.
    Mr. Marten: I agree with the Minister that the figures are confusing, but do we not get back to the fact that the Common Market has tariffs because food is cheaper outside the EEC and that an import tariff has to be imposed to bring the price up to Community levels?
    Mr. Meacher: I accept, as everyone must, that that is the case. The aim of the EEC is to achieve as much self-sufficiency as possible in both industry and agriculture.
    Mr. William Hamilton: Has my hon. Friend read the replies given last week by the Secretary of State for Prices and Consumer Protection in which he indicated that the effect of the CAP on our retail price index was very marginal?
    Mr. Meacher: The effect on the retail food index of the estimates which I have already quoted from two eminent economists works out at between 1·5 and 3 per cent.
    Mr. Higgins: What is the basis for the Minister's statement about the EEC's policy on self-sufficiency?
    Mr. Meacher: I think the contention that the EEC and the Treaty of Rome are based on the intention that member States shall be collectively as self-sufficient as possible is well understood. It is not enshrined in any particular article, but I have no doubt that it was in the minds of the founders of the EEC.
    Mrs. Dunwoody: Is my hon. Friend aware that he would have considerable difficulty in persuading housewives that the EEC was responsible for such a small percentage of the rise in prices, particularly on basic foods such as milk
    4
    and dairy products? In the case of many basic foods such as beef, he would find it virtually impossible to do that.
    Mr. Meacher: I was quoting the results of the studies which have been undertaken by two eminent economists. I was not giving my own view.
    Mr. Nott: We have noted that the Minister's figures were rather questionable—I think that that was the term he used. However, have any estimates been made of what the margin would be between EEC and world food prices if the EEC were to start buying these products on the world market? What would that do to that margin? Would it not narrow very quickly indeed?
    Mr. Meacher: The effects of such a suggestion, which is purely hypothetical, cannot be quantified. If the hon. Gentleman wishes to pursue this matter, however, I suggest that he puts down a Question to my right hon. Friend the Minister of Agriculture, whose Department is most closely concerned.

    Air Services (United Kingdom-United States Agreement)
    Mr. Neubertasked the Secretary of State for Trade when he expects to conclude the renegotiation of the Bermuda Agreement; and if he will make a statement.
    Mr. McCrindleasked the Secretary of State for Trade if he will make a statement on the renegotiation of the Bermuda Agreement on civil aviation.
    Mr. Viggersasked the Secretary of State for Trade if he will make a further statement on the renegotiation of the Bermuda Convention.
    Mr. Tebbitasked the Secretary of State for Trade what advantages have been gained for British civil airlines in the renegotiation of the Bermuda Agreement with the United States of America.
    The Secretary of State for Trade (Mr. Edmund Dell): I made a statement to the House on 23rd June on the conclusion of the negotiations.
    Mr. Neubert: Is not the return to dual designation a remarkably rapid reversal of

    5
    Government policy since single designation was the basis for the recent distribution of routes between British Airways and British Caledonian? What efforts have been made to ensure that the balance of advantage to the airlines has not been undermined by the new agreement?
    Mr. Dell: The hon. Gentleman has, no doubt, taken part in many negotiations during his life and he will, therefore, know that in the course of negotiations certain points are given up and others are obtained. On the question of dual designation and single designation, we got substantially what we expected to obtain. As for the balance of advantage to particular airlines, we can make our own judgment, but this is something which will emerge only over a period of time. May I say how delighted I am that British Caledonian, as a result of this agreement, is now able to start its solo service to Houston in October? That is a major benefit for it, as are the provisions in respect of single designation for passenger control which will assist it to maintain its competitiveness on that route and to achieve it at Atlanta when it starts there, as I hope, in three years' time.
    Mr. McCrindle: Is the Secretary of State able to confirm that British Caledonian will retain its existing licence to fly to Los Angeles and that it will be the second British carrier flying from that city? With regard to Houston, in the light of what has happened does he agree that British Caledonian's existing licence to Atlanta and Houston might reasonably be expected to include Dallas-Fort Worth?
    Mr. Dell: The question of Dallas-Fort Worth was covered in policy guidance and is a matter for the Civil Aviation Authority in the first case. We have not decided that Los Angeles should be the second point to which we operate a dual designation. That is a matter which we must retain as an option for the time being.
    Mr. Tebbit: Does the Secretary of State recollect that, on the subject of the Los Angeles route, he said last Thursday that the reason why the Americans would have two carriers whereas we would have only one was that the British share of the traffic was so small? Does he not think that it would be a good idea to try to double the designation for the
    6
    British operators to put us on the same footing as the Americans and increase our share of the traffic?
    Mr. Dell: If the hon. Gentleman checks what I said about Los Angeles last Thursday, he will find that it was that in our view Los Angeles at the moment did not deserve dual designation. However, that was an American requirement which, in the course of negotiations, we conceded. That must mean that it will remain open for us to exercise our option in the British interest as to where our second dual designation should operate.
    Mr. Adley: Can the right hon. Gentleman confirm that the signatories to the agreement on the American side are fully competent to ensure its implementation in every State of the Union?
    Mr. Dell: The hon. Gentleman put that question to me the other day, I think. The competence of the American Federal Government must be a matter for the federal system. I am satisfied that within this agreement, on the matters on which the Federal Government are competent, we have achieved substantially what we were out to achieve.

    Concorde
    Mr. Adleyasked the Secretary of State for Trade if he will make a statement on Concorde's landing rights at Kennedy Airport, New York.
    Mr. Dell: We continue to challenge in the United States courts the Port of New York Authority's ban on Concorde.
    Mr. Adley: Will the Secretary of State tell Mr. Brock Adams that his devious attempt to divert attention from New York by seeking to hold inquiries into the interest in Concorde in other cities in the United States will fool no one and is no more revelant or helpful than if the right hon. Gentleman were to suggest, for instance, that Pan American should divert half its flights to Heathrow to Newcastle upon Tyne? Will the right hon. Gentleman continue to press the point that, once the American Government have signed a treaty, either they have the competence to enforce it or they should not have signed it in the first place?
    Mr. Dell: We have all heard a great deal from Mr. Brock Adams recently.

    7
    Mr. Brock Adams will have an important rôle in determining the future of Concorde at Washington. As for New York, the courts will decide and we are continuing with our case in the courts. We have every hope that they will decide in our favour. We have treaty rights in this matter, and those are preserved in the new agreement.
    Mr. Dykes: Would not the right hon. Gentleman agree that even if Mr. Brock Adams' suggestions, or whatever they are, for other airports have no legal force or any other kind of force, if in due course Concorde is able to fly to other airports as well as New York that would be most welcome to us and to the right hon. Gentleman?
    Mr. Dell: Certainly, but it must be absolutely clear that the next gateway in the United States to which we wish to operate Concorde is New York.
    Mr. Michael McNair-Wilson: Would not the right hon. Gentleman agree that while New York remains the stumbling block the project's future is being damaged? Can he say what plans the Government have for seeking overflying rights in other parts of the world so that the remaining seven Concordes that have not been sold may find purchasers?
    Mr. Dell: We are continuing to press overflying rights in other parts of the world to enable us to establish routes. However, I cannot conceal from the House the fact that in other parts of the world we are told that access to New York is a consideration that will determine whether those overflying rights are granted. Therefore, this is of great importance to us. I am sure that the people in the United States Administration fully understand this. It is of very great importance to us to have access to New York.
    Mr. Cronin: If the United States continues its obstinate attitude with regard to flying rights to New York for Concorde, may I ask my right hon. Friend to consider conveying to his opposite number in the United States Government the point that that may well have some unfortunate effect on the flying rights of American airlines to London?
    Mr. Dell: We have made our position over Concorde perfectly clear to the United States. I have never thought it right, in respect either of Concorde or
    8
    of the negotiations which we have just concluded with the United States, to make threats. We want to establish our rights in respect of Concorde, just as we wish to establish our rights in relation to air services generally. We shall continue to press on the United States Government our entitlement in this respect.
    Mr. Tebbit: Has the right hon. Gentleman any contingency plans for the way in which he will approach this problem in the event that the court actions do not produce landing rights for Concorde within a reasonable time?
    Mr. Dell: We are, of course, in contact with our French partners in this enterprise. I do not want to lead the House into the belief that there is any dramatic step that we have in mind to take. What we are trying to do at the moment is to establish our rights under the law of the United States, as we understand it, to get Concorde into New York.

    Product Liability Insurance
    Mr. Shersbyasked the Secretary of State for Trade what conclusions he has reached as a result of his Department's investigation into the difficulties being experienced by some United Kingdom exporters in obtaining product liability insurance for their exports to the United States of America.
    The Under-Secretary of State for Trade (Mr. Clinton Davis): My Department's investigation was announced on 13th May and information is still being collected. We hope to make a preliminary assessment next month.
    Mr. Shersby: Is the Minister aware that the effect of the American product liability insurance appears to be to erect something of a non-tariff barrier to trade? Can he say what estimate he has made of the effect of this legislation on British exports to the United States and whether he has made any representations to the United States Government?
    Mr. Davis: We are concerned about this development. We hope that it will not develop into a non-tariff obstacle for our manufacturers. We have to get this into the correct perspective. It has developed out of the American legal system and it affects manufacturers both

    9
    in the United States and elsewhere. We certainly take this matter very seriously, as is evidenced by the request for information that we have made to manufacturers here.
    Mr. Tim Renton: Will the hon. Gentleman tell us whether the report in The Times last week was correct which said that his Department, together with the Department of Industry, was considering additional ways of helping smaller companies to tackle export markets? If that is so, will he tell us what additional steps he has in mind?
    Mr. Davis: We are anxious to ensure that we consider the totality of the problem in relation to ECGD to see what effect that will have on the situation. It would be a little premature for us to divulge what the remedies are for what may be a very serious problem before we have entered into discussions with exporters.
    Mr. Richard Wainwright: Will the hon. Gentleman seek opportunities diplomatically to get the message to the American people, if necessary over the heads of their Government, that this protectionist device, especially in health products and medical products, is denying the American people marvellous benefits that are being enjoyed by much poorer people in other parts of the world?
    Mr. Davis: We have this problem in a variety of areas, including shipping and aviation. It is a matter of examining the American legal process as well as the American political process. The hon. Gentleman need be in no doubt that if, following an investigation, we consider this to be a potentially damaging problem, we shall make the strongest representations.

    Japanese Steels
    Mr. Hooleyasked the Secretary of State for Trade what progress has been made in the conversations in Osaka about the dumping of special steels by Japanese manufacturers; and if he will make a statement.
    Mr. Meacher: A Department of Trade investigation team paid two visits to firms in Osaka earlier this month in connection with the anti-dumping case on Japanese sections and flats. The team was not con-
    10
    cerned with special steels because the Japanese have given the European Commission certain forecasts of export levels to the United Kingdom which should help to ease the United Kingdom's industry's difficulties in the immediate future.
    Mr. Hooley: Is my hon. Friend aware of the rather serious position that has developed in respect of special steels over the past three years? Is he aware that import penetration has increased from 10 per cent. to 50 per cent. on the home market and that Japanese imports in particular have increased from 84 tons of tooled steel in 1974 to 914 tons in 1976, with a doubling of imports of stainless steel bars? Does my hon. Friend accept that there is a case for more drastic action than merely forecasts from Japanese manufacturers?
    Mr. Meacher: I am well aware of the serious state of the special steels industry. I have discussed this issue with my hon. Friend and representatives from the industry. On the figures that I have, the overall import penetration rate was not 50 per cent. in 1976 but 32 per cent. However, I accept that there was a considerable increase. As for Japanese forecasts, we must take into account that in virtually all previous cases where the Japanese have made forecasts they have turned out to be met. To that extent they are rather more than what we mean by forecasts. In fact, they are firm predictions.
    Mr. Edwin Wainwright: Does my hon. Friend realise that, in spite of the fact that we might have an admiration for the Japanese and how they produce special steels, their imports to this country are far greater than our industries can stand? When is he having discussions with them, and will he be firmer so as to ensure that they realise that they are harming industries in Great Britain?
    Mr. Meacher: I can assure my hon. Friend that we have been very firm. That is why the Japanese agreed in the talks of 23rd-24th May that their forecasts for this year for alloy tool steel and highspeed steel exports to the United Kingdom would be at a level that would bring them back to their 1975 export total. Furthermore, the latest forecast for stainless steel bars is 1,200 tons for this year,

    11
    which is a substantial drop on last year's figure and an even greater drop on the earlier forecast level of exports of that product to this country for this year.
    Mr. Parkinson: Will the hon. Gentleman confirm to some of his hon. Friends and to some of mine that this is an example of where our membership of the EEC has undoubtedly been of help to us in arriving at an agreement which helps British industry?
    Mr. Meacher: I think that is perfectly fair. As a result of being in the European Economic Community, it has been possible through the Commission to have a greater effect on the Japanese than we could have had alone.
    Mr. Scott-Hopkins: What was the extent of subsidisation of Japanese exports of special steels?
    Mr. Meacher: If the hon. Gentleman is suggesting that there is dumping of special steels, I must tell him that we have not received an application from our industry. If he is suggesting that there is some sort of internal subsidy that we can countervail, again the evidence has not been presented to us. However, if it were we would consider it carefully and take the necessary action.

    Tourism
    Mr. Radiceasked the Secretary of State for Trade if he is satisfied with the contribution made by tourism to invisible earnings.
    Mr. Dell: The industry is doing very well.
    Mr. Radice: Does my right hon. Friend accept that there is likely to be an even larger surplus on the travel account this year than in 1976? Does he agree that, in view of the importance of the contribution that the travel industry is making to our economy, there is certainly a strong case for upgrading tourism from sixth position in my right hon. Friend's list of I think, eight ministerial responsibilities?
    Mr. Dell: I entirely agree that it looks as though the surplus on tourism this year will exceed even last year's figure, which is very valuable. I can assure my hon. Friend that the success of tourism is a very welcome benefit to our balance of payments. I assure him that I give it the
    12
    attention that I think is necessary. I am not absolutely sure that ministerial attention is always a direct guide to the success of an industry.
    Mr. Neubert: Will the right hon. Gentleman confirm that tourist spending in the United Kingdom is now up to £5·6 million a day? Does he agree that that is remarkable in relation to tourist board grants of about £20 million a year?
    Mr. Dell: I think that the performance of the tourist industry is extremely satisfactory and that the grants we give it are small. I do not say that it does not require certain other forms of assistance that we can give. We are working out some other minor forms of assistance. The success of the tourist industry is a great credit to the efforts that the industry itself is making.
    Sir G. de Freitas: As nearly half of the enormous tourist income coming into the country comes to the London area, will my right hon. Friend ascertain what he can do to encourage the tourist authorities to do more to spread the earnings into the countryside, especially to the East Midlands?
    Mr. Dell: We have a policy of trying to guide tourists to parts of the United Kingdom other than London, which has had a certain amount of success. We shall continue pressing for that objective.
    Mr. Parkinson: I congratulate the Secretary of State on his modesty in admitting that a lack of ministerial interest may possibly lead to success for an industry. Has he heard of the slogan which was carried in the back of motor cars during the American election stating "Please do not promise to do anything for me this year. I am still trying to recover from what you did for me last year"?
    Mr. Dell: I am not aware of that poster. The hon. Gentleman should not be surprised about my comment about tourism. After all, it is a comment of the sort that I have made many times before.

    Industrial Democracy
    Mr. MacGregorasked the Secretary of State for Trade if he will make a statement on the Government's current

    13
    intentions on the Bullock Report on industrial democracy.
    Sir A. Meyerasked the Secretary of State for Trade when he expects to complete his consultations on employee participation in industry.
    Mr. Ridleyasked the Secretary of State for Trade if Her Majesty's Government have decided not to implement the Bullock Report on industrial democracy.
    Mr. Ioan Evansasked the Secretary of State for Trade what progress is being made to implement the Bullock Report on industrial democracy.
    Mr. Tim Rentonasked the Secretary of State for Trade whether he will make a statement on when the Government propose to introduce legislation implementing the Bullock Report on industrial democracy.
    Mr. Moonmanasked the Secretary of State for Trade if he will make a statement on the latest position regarding the implementation of the Bullock Report.
    Mr. Dell: A statement will be made to the House as soon as we have completed our consultations on the report.
    Mr. MacGregor: Is the right hon. Gentleman aware that continued uncertainty about whether the Government will pursue wrong-headed proposals in the Bullock Report is causing a damaging lack of confidence in parts of industry? Will he clear up that uncertainty by making clear that the Government's proposals will not be based on the majority recommendations in the report, and that such rights as are given in any legislation will not be only to those nominated or elected by trade unions but will be given to all employees?
    Mr. Dell: I hear the hon. Gentleman's views and I note his comment about uncertainty. I hope that it will not be very long before the Government make a pronouncement on the subject, but I cannot make one today.
    Mr. Evans: Will my right hon. Friend consider giving priority to this legislation rather than to legislation on devolution
    14
    or direct elections to Europe? Is he aware that there is widespread support for the majority proposals in the Bullock Report? Does he agree that it is right that workers who invest in industry, and not only those who invest money, should have a say?
    Mr. Dell: I agree that workers should have a say in the control of the companies in which they are employed. I cannot estimate the priority that the Government will place on legislation in this area as against devolution. However, I hope that we shall come forward with practical proposals.
    Mr. Renton: What are the right hon. Gentleman's own views about the Houghton Report, which was commissioned by the Prime Minister and which recommended, among other things, that all members of the work force, and not only trade union members, should be able to be chosen and nominated as employee directors?
    Mr. Dell: I do not think that the report was commissioned by the Prime Minister, but it is a valuable and interesting report and has helped us to formulate our thinking on this subject. The hon. Gentleman has put to me a specific question about the nature of the proposals we shall make. I cannot make any pronouncement on them today.
    Mr. Corbett: May I urge more speed on my right hon. Friend? Does he agree that one of the great failures of British industry in the past 30 years has been in not enabling and encouraging people on the shop floor to be more involved in and to have a greater say in what goes on in places in which they are employed? Is not that one of the keys to our industrial recovery?
    Mr. Dell: I agree with my hon. Friend that we need to do a great deal more in this country to involve employees in the control of their companies and in participation in their places of work. This is the object of the proposals we shall bring forward. I cannot say anything today on the detail of those proposals or the structures which will be proposed.
    Mr. Hall-Davis: Will the Secretary of State take a hard look at the ACAS Code of Practice 2 dealing with the disclosure of information to trade unions for

    15
    collective bargaining purposes, and particularly paragraph 11? Will he then give careful consideration to the question of whether he should allow time for that code to operate before he decides whether it is necessary to introduce compulsory legislation to change the structure of boards of directors?
    Mr. Dell: I shall look at the text to which the hon. Gentleman has referred; but he, for his part, will be well aware of the Government's commitments in this regard.

    Multi-Fibre Arrangement
    Mr. Maddenasked the Secretary of State for Trade if he will make a statement about the progress being made in the renegotiation of the Multi-Fibre Agreement.
    Mr. Dell: The Community's negotiating directives for the renewal of the MFA were agreed by the Council of Ministers on 21st June. The EEC will, therefore, be able to present its detailed proposals for substantial changes in the operation of the MFA at the next meeting of the Textiles Committee in Geneva on 5th July.
    Mr. Madden: Can my right hon. Friend give a categoric assurance that there will be no betrayal of British textile interests in these talks and that he will pursue the very tough line outlined to the House by the Under-Secretary of State some months ago? In addition, will he turn a deaf ear to the overseas textile interests which are seeking to lobby the Government, aided and abetted by Opposition Members, because the British textile industry is fully aware that there can be no weakening of the objectives which he and his colleague have spelt out?
    Mr. Dell: I assure my hon. Friend that we propose to take a strong line in the negotiations. He is no doubt aware of the nature of the mandate which we have agreed within the EEC. It will be our objective in the negotiations in Geneva substantially to achieve that mandate.
    Mr. Fletcher-Cooke: Is the right hon. Gentleman satisfied that the European stance—which appears to be one of global quotas and no categorisation with-
    16
    in those quotas—will sufficiently protect the British textile industry?
    Mr. Dell: No doubt the hon. and learned Gentleman is aware that initially we had a rather different proposal from that which the Community as a whole has now adopted. However, we are satisfied that the proposal on which we are now agreed, if operated determinedly by the Commission, can achieve all the objects we shall have in mind in the negotiation.
    Mr. Giles Shaw: Will the right hon. Gentleman bear in mind that there was a meeting this morning between the wool textile delegation and the all-party group at which there was general support for the Government line on this issue, but will he note two great anxieties? The first relates to the timing of the renegotiation, which is a matter of some urgency. Secondly, whatever the outcome of the MFA negotiation, the question of United States tariffs is still of major concern to the United Kingdom textile industry.
    Mr. Dell: As to the timing of the negotiation, the existing agreement expires at the end of this year and, if possible, we must have a new agreement in place well before that date. We propose to negotiate the question of the United States tariff within the framework of the multilateral trade negotiations, and we hope to achieve results, because the United States tariffs in this field are undesirably high.

    Trade Balance (European Community)
    Mr. Canavanasked the Secretary of State for Trade what is the latest estimate of the United Kingdom's balance of trade with the rest of the EEC.
    Mr. Martenasked the Secretary of State for Trade what has been the trade balance with the rest of the EEC for the latest period of 12 months.
    Mr. Walter Johnsonasked the Secretary of State for Trade what was the balance of trade between Great Britain and the EEC countries during 1976 and 1977 to date; and how this compares with 1975.
    Mr. William Hamiltonasked the Secretary of State for Trade if he will

    17
    make a statement on the latest trends in United Kingdom trade with other members of the EEC.
    Mr. Meacher: In the year ended the first quarter of 1977, the United Kingdom had a visible trade deficit, on a balance of payments basis, with the EEC of £2,235 million. This compares with £2,077 million in 1976 as a whole, in both cases less than the deficit in 1975.
    Mr. Canavan: As our trading position with the Common Market has become substantially worse since our entry, to such an extent that the overall deficit now is almost exactly the same as the amount we had to borrow last year from the IMF, why do we not get out now instead of having to borrow all this money to pay for our membership of this rich man's club, which is undermining our economy and contributing largely to inflation and unemployment?
    Mr. Meacher: Although the deficit with the EEC on visible trade remains a very serious one, it has, relatively, been getting less. The export-import ratio shows that it reached its lowest level in 1975, and since then it has been substantially improving. This reflects the fact that last year our exports to the EEC grew half as fast again as our imports from the EEC.
    Mr. Marten: Although the annual deficit is running fairly regularly at £2,300 million, is not one of the worrying matters the deficit on trade in manufactures of all kinds with a country like Germany which, I believe, is now running at about £1,000 million to £1,400 million a year? That was the area in which we were supposed to be doing rather well when we joined the EEC.
    Mr. Meacher: It is true that the deficit on manufactures is extremely serious. In fact, it concerns not only Germany, to which we tend to give a lot of attention, but the Netherlands. It reflects the fundamental problem of British industry, which is lack of competitiveness and lack of productivity. The basic requirement is to put that right. How far it is helped or impeded by the EEC is a matter of question.
    Mr. Johnson: Will my hon. Friend confirm that since we joined the EEC
    18
    our export position has improved by 87 per cent. as against 49 per cent. for the rest of the world? Is it not time that the Government started to tell the success story of joining the EEC instead of hearing all this nonsense time after time?
    Mr. Meacher: It is true that our trading position vis-à-vis the EEC has improved relative to our trading position with the rest of the world. For example, in the first quarter of 1977 compared with the first quarter of 1976, our visible trade deficit with the EEC worsened by £95 million, but with the rest of the world it worsened by £1,141 million. It is also true that the deficit has remained at slightly over £2 billion in money terms for the last three years. Because it is in money terms, that is a reducing proportion of our total trade deficit.
    Mr. Hamilton: Does my hon. Friend think that the situation would improve by getting out or by staying in?
    Mr. Meacher: It is extremely difficult to disentangle the exact effects of the EEC on our trade position. It depends not on short-term effects but on the long-term effects of eliminating tariffs, and that will depend on our differential economic advantage in particular sectors. There can be no doubt that it varies between sectors. For example, we have done relatively well in textiles and chemicals and potentially could do well in insurance. We have done poorly in cars, plastics and cereals.
    Mr. Scott-Hopkins: Does the hon. Gentleman agree that the uncompetitiveness of British industry is one of the main strands of the deficit with the EEC? Another strand is the fact that there has been a great switch to trading with the EEC rather than with third countries. Is it not also a fact, as the hon. Gentleman has tentatively said, that our trading position with the EEC is improving month by month, notwithstanding the machinations of the Government?
    Mr. Meacher: I indicated from the figures which I quoted that the deficit has increased. It is larger on an annual basis, taking the figures for the first quarter of this year, than it was last year. I said that the export-import ratio is improving, and there is certainly reason to suppose that it will improve further.

    Japanese Exports
    Mr. Croninasked the Secretary of State for Trade if he will make a statement on his policy on Japanese exports to Great Britain, in view of the effects on certain sectors of British industry.
    Mr. Dell: We shall continue to look for Japanese restraint in cases where their exports would otherwise disrupt our market.
    Mr. Cronin: While the long-term solution to the problem must be the increased competitiveness of British industry, will my right hon. Friend, in association with his EEC counterparts, put more forcible pressure on the Japanese to restrain their exports to this country and to Western Europe, in the short term at least?
    Mr. Dell: Both from this country and from within the European Community we are placing such pressure on the Japanese authorities and on industry, with some success. About one-third of our imports from Japan are subject to some kind of agreement about the level they will achieve. I am sure that the long-term answer to the problem is to increase our exports to Japan. It was to that end that I made a speech in Tokyo a couple of months ago. That speech was subsequently supported by the Vice-President of the Commission, Mr. Haferkamp, during his visit to Japan.
    Mr. Ridsdale: Is the Secretary of State aware that, if he wishes to increase the level of competitiveness and productivity of our industry, it will be done not by making speeches in Japan but by reducing taxation, so that our taxation can be on the same level as that of the Japanese, which is exactly half of ours?
    Mr. Dell: I did not actually think that by making a speech in Japan I should increase the competitiveness of our industry. What I thought I might achieve was an increase in the access to the Japanese market for our industry, which would help to increase its competitiveness.
    Mr. Ioan Evans: My right hon. Friend's speech in Japan was welcomed by industrialists in this country, but, having said what he has, will be go further and accept that there are many industries which feel that the Japanese are dumping in this country and that there is unfair
    20
    competition? Our industrialists do not mind fair competition, but will my right hon. Friend recognise that the Japanese are adopting practices which are much deplored by British industry?
    Mr. Dell: Wherever there is alleged dumping we look into it, but my hon. Friend must remember that it is not always a matter of dumping. Sometimes it is the fact that the Japanese are more competitive than we are. We therefore have to operate policies in a very difficult economic and social climate in order to protect industries, which are not yet competitive, against genuine Japanese competition.
    We also wish in that context and against that background to improve our export performance in Japan, and I believe that that can be done with the assistance of the Japanese authorities. There are restrictions of an informal kind which limit imports into Japan, and I think the competitiveness of our industry would improve if we were able to gain greater access to the Japanese market.

    Pilotage
    Mr. Costainasked the Secretary of State for Trade to what extent he has consulted with pilots who are actively engaged in the day-to-day running of pilotage over proposed changes to its organisation within the United Kingdom.
    Sir S. McAddenasked the Secretary of State for Trade to what extent pilots are being kept informed of his Department's views on changes which may affect their future.
    Mr. Clinton Davis: My Department attaches the greatest importance to close consultations with pilots' representatives on all matters affecting the pilotage service. The Advisory Committee on Pilotage is seeking the views of pilots and other interested parties on what changes to the organisation of local pilotage authorities are desirable. I hope that their first report on proposals for legislation will soon be available to the interested organisations.
    Mr. Costain: Will the Minister appreciate that there is a lack of confidence on the part of a large number of pilots in the representation on the Advisory Committee on Pilotage? Will he receive

    21
    a delegation of pilots who have the day-to-day responsibility of managing the ships, so that it may explain the proposals and he may take note of the views of those who operate this excellent service?
    Mr. Davis: Before we set up the Advisory Committee on Pilotage we wrote to all interested bodies—local pilotage authorities, local pilots, shipowners and port authorities. We could not please everybody in its composition, but nevertheless I believe that the Advisory Committee on Pilotage is very broadly representative. I see no reason for my receiving any delegations, nor have I received such a request.
    Mr. Ridsdale: Is the Minister aware that there is disquiet in the pilotage service, particularly in Harwich? Will he visit Harwich to talk over the problem with some of the pilots there?
    Mr. Davis: The very reason why the advisory committee was established was to ensure that we could get as wide a consensus as possible for amending legislation to the Pilotage Act 1913, but one cannot please everybody and I dare say that we may not be able to please the hon. Gentleman.
    Mr. Costain: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the reply, I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest opportunity.

    New Products (Overseas Demonstrations)
    Mr. Whiteheadasked the Secretary of State for Trade if he will review arrangements for the assistance of new British products being demonstrated abroad.
    Mr. Meacher: The British Overseas Trade Board has a number of schemes which are designed to assist firms to exhibit and demonstrate their products overseas and which are kept under constant review.
    Mr. Whitehead: Will my right hon. Friend look again at the Department's policy of helping small firms with particular products of greater investment potential which are trying to break into the American market? Will he look in particular at the firm of Dare Hydrahone
    22
    Ltd., in my constituency? This firm wanted to go to the Investment Castings Convention in Denver in October. It was told that it could not be fitted into anything until January. Is not the well-known saying about horses for courses vitiated if we persist in putting our horses on the wrong course?
    Mr. Meacher: No. I am well aware of the case of Dare Hydrahone. The point about this firm is that it wanted to demonstrate its water-jetting equipment at the Denver exhibition, because that was the most suitable forum. I accept that. But the firm wanted the Government to assist it on an individual basis, pound for pound, and I have to tell my hon. Friend that we are certainly not permitted to do that. We can assist only on a joint venture basis, otherwise, quite apart from the question of breaking international obligations, we should merely be starting an international race over credit which would not redound to our interests or those of anyone else. We therefore gave the firm the first opportunity that we could.
    Mr. Giles Shaw: Will the Minister also take note of the problems of old products, as opposed to new, and in particular the reduction of the British Overseas Trade Advisory Council's help for exhibitions? Is he aware that the wool textile industry believes that the cost of £675 a unit of exhibition space—an increase of 600 per cent.—will seriously deter British exporters of wool textiles from exhibiting in Germany? Is this a good thing?
    Mr. Meacher: The BOTB has been obliged to make reductions amounting to several thousand pounds out of a budget of £19 million for 1977– 78. This has involved a reduction in joint ventures from just under 400 to about 300. I point out that the number of joint ventures—nothing else has been touched in the programme—put out by the French and Germans is in each case about 50, and in the case of the Americans about 120. Therefore, we shall still provide a much better service than is provided by any of our main international competitors. But we have tried to ensure that the cuts will be concentrated in areas which will do the least damage to industry.
    Mr. Ford: Will my hon. Friend study carefully the document which has been

    23
    provided to him by the British Wool Textile Export Corporation, which suggests other means of distributing the savings in this respect?
    Mr. Meacher: I am certainly perfectly prepared to look at any proposal, because we are talking about 1977–78 and the cuts have not yet been made. In our view, this was the best way, the most cost-effective way, of making the cuts, but if we can find other ways of making equivalent cuts we shall look at them closely.
    Mr. Adley: Referring specifically to the question by the hon. Member for Derby, North (Mr. Whitehead), may I ask the Minister to make a deliberate point of establishing contact with Oil Recovery International in my constituency, which has received a lot of help from the Department of Industry in developing a product to pick up oil from polluted water? The only other competitor is an American company. Given maximum assistance from the hon. Gentleman's Department and everyone else, does he not agree that there is a real winner here for British industry?
    Mr. Meacher: I shall look at the particular project. I understand that the proposal is at the present time being evaluated at Warren Springs Laboratory.

    Scotch Whisky (Japanese Import Duty)
    Mr. Simsasked the Secretary of State for Trade what progress has been made in efforts to persuade the Japanese Government to lower the rate of duty imposed on Scotch whisky.
    Mr. Meacher: Both we and the EEC Commission have been pressing the Japanese Government to reduce the fiscal burden on Scotch whisky. The Commission expects to have further discussions with the Japanese next month; and the issue is also being pursued in the multilateral trade negotiations.
    Mr. Sims: Is the Minister aware that the basis on which the Japanese authorities assess duty on whisky is different as between the domestic product and imported Scotch whisky, to the disadvantage of the latter? Does he not agree that this is one of the difficulties of increasing trade between the two coun-
    24
    tries, to which his right hon. Friend referred a few moments ago? Will he therefore put every possible effort into his representations on behalf of the Government and the EEC to persuade the Japanese Government to remove this disparity?
    Mr. Meacher: Yes, I am certainly aware that imports of Scotch whisky into Japan have not only to pay an import duty but also an ad valorem liquor tax. This discrimination puts them in a disadvantageous position. We are certainly telling the Japanese and have in the past constantly reminded them about this, both bilaterally and through the EEC. My right hon. Friend raised it in Tokyo in April with the International Trade and Industry Minister, Mr. Tanaka. We are aware of the importance of the Japanese market for this purpose because it is the largest market outside the United States of America, and we shall continue with our efforts.
    Mr. William Hamilton: Can my hon. Friend say why no hon. Member from the Scottish National Party is here to get after this Question? On a more serious point, why on earth do the Japanese want to put this duty on? Surely they want more and more Scotch whisky.
    Mr. Meacher: I am sure that they want more if they know their real drinking requirements. But they are trying to develop their own particular brand of suntory.
    Mr. Higgins: May I give the hon. Gentleman another opportunity to correct a mistake that he made earlier in saying that the EEC is striving for self-efficiency in industry and agriculture, since he is not likely to succeed in the current negotiations that we are discussing on this Question if others such as the Japanese really believe that that is the objective of the EEC?
    Mr. Meacher: I am grateful for the hon. Gentleman's concern for my accuracy. I still think that I was quite correct in what I said. In this case, I hope that we shall shortly get a breakthrough with the Japanese.

    USSR (Shipping)
    Mr. Luceasked the Secretary of State for Trade what representations have been made to the USSR regarding the

    25
    undercutting of Western freight rates by the Russian merchant fleet.
    Mr. Blenkinsopasked the Secretary of State for Trade whether he will make a statement on his recent discussions with the Russian Minister for Shipping.
    Mr. Clinton Davis: A wide range of important issues was covered in discussions between my right hon. Friend and myself and Mr. Guzhenko, the Soviet Minister of Merchant Marine, during his recent visit. These included Soviet undercutting of freight rates, the provision of excessive capacity on certain liner trades and the need for a fairer balance between United Kingdom and Soviet ships in our bilateral trades. The Soviet Minister was left in no doubt that we expected real progress to be made in achieving an equitable resolution of these problems.
    Mr. Luce: Since it is very damaging to Western interests that the Soviet Union should undercut freight rates of the Western world by up to 30 per cent. and should monopolise Anglo-Soviet trade in its own ships by 85 per cent., are the Government prepared to undertake any co-ordination with the Western world in retaliatory action if no progress is made in the discussions?
    Mr. Davis: We have made it plain to the Soviet Union that we prefer a policy of accommodation rather than confrontation. Nevertheless, as the Soviet Minister well knows, there is provision in Part III of the Merchant Shipping Act 1974 for us to introduce countervailing measures. We have been discussing this whole procedure with other Ministers in the Western world. However, the picture is not always as bleak as the hen. Gentleman suggests. There has been some improvement in the bilateral trades in that the Soviet Union has agreed that an additional ship should be available to serve those particular interests. Of course that is not enough, but it is a sign of improvement.
    Mr. Blenkinsop: Is my hon. Friend aware of the general anxiety about the very rapid increase in Russia's merchant shipping fleet, which is apparently out of relation with the increase in its international trade? Will he confirm that an offer was made for some provision for a return to British shipping being used for the timber trade if that were possible?
    Mr. Davis: The last point raised by my hon. Friend refers to the matter raised earlier by the hon. Member for Shoreham (Mr. Luce). The Russian Minister was helpful as far as the bilateral lines of trade were concerned and wanted to see a movement towards parity. I think that that is an advance. The important thing about the size of the Soviet merchant fleet is that it should be in balance with the trade generated by the Soviet Union, and this was another point that we made firmly to the Soviet Minister.
    Mr. Nott: Is it correct that there are to be two further meetings on this matter in August? Are not all the facts known about Russian activities in this matter? What are these further meetings intended to discuss? Is it perhaps time that the Government showed a little of their muscle in this matter—and I do not mean that in a pejorative sense?
    Mr. Davis: The important thing is to examine the possibilities of arriving at an accommodation rather than to jump into a position of conflict and confrontation. That is the purpose of the meeting to be held in Russia in August. It will be attended by ship owners as well as departmental officials, and they will be able to continue the very helpful dialogue that has started. I hope to be able to go to the Soviet Union in October to see what progress hase been made over the course of the next three months.

    mineral Imports
    Mr. Wallasked the Secretary of State for Trade what percentage of the United Kingdom's mineral imports of antimony, vanadium, manganese, platinum and vermiculite come from South Africa; and what other sources of supply are available.
    Mr. Meacher: South Africa is the most important United Kingdom supplier of these minerals. With permission, I shall circulate in the Official Report the detailed percentages and a list of other main sources.
    Mr. Wall: Does not the hon. Gentleman agree that Western Europe is almost wholly dependent on Southern Africa for the supply of key minerals?

    27
    Does not this explain the Russian drive to replace Western influence throughout that area?
    Mr. Meacher: The degree of dependence on minerals from Southern Africa varies considerably. I suspect that there

    Percentage of imports during year 1976 consigned from South Africa (by weight)

    Other main sources

    Antimony:

    Ores

    Not available*

    Chile, Bolivia, China, USSR and Pakistan.

    Metal

    Nil

    Vanadium (including metal content of pentoxide,ashes and residues and ferro-vanadium)

    30

    Finland, USSR and Chile.

    Manganese:

    Ores

    42

    USSR, Brazil, Ghana, Gabon. India and Australia.

    Metal

    82

    Ferro-manganese and ferro-silico manganese

    39

    Platinum group metals:

    Ores

    Not available*

    USSR and Canada.

    Metal (including scrap)

    13

    Vermiculite (including perlite and chlorite),unexpanded

    99

    USA.

    * The details are not available as they would disclose confidential commercial information.

    Bankrupts
    Mr. Michael Marshallasked the Secretary of State for Trade when he intends to introduce Section 7 and Section 8 of the Insolvency Act 1976.
    Mr. Clinton Davis: It is hoped to bring these sections into force on 1st October 1977.
    Mr. Marshall: I thank the hon. Gentleman for that reply. He will recall that this Question follows correspondence that I have had with him about a constituent of mine. Does he not agree that delays of this kind are worrying because they cause not only financial loss but considerable hardship to many businesses? Does he have proposals to improve the situation for the future?
    Mr. Davis: The situation was complex. There has to be an amendment of the bankruptcy rules, which by their very nature are complicated. That had to be cleared by the Insolvency Rules Advisory Committee, set up under the Insolvency Act 1976, and it could not be done by June as I had hoped. It is now to be done in October. But this is a significant advance in the general position on what had been achieved before. I think that the hon. Gentleman's constituent will receive a significant benefit from the working of the Act.
    are many motives for Russian intervention in Southern Africa and not just this one. This, however, is a matter for my right hon. Friend the Foreign Secretary.
    Following is the information:
    Mr. Skinner: Is it not also true to say that Mr. Kenneth Cork has been set up as chairman of this review committee to look into the question of so-called small-time bankruptcies? If that is the case, why do not he and the Government turn their attention to the councillors at Clay Cross who were made bankrupt and had their cars taken away along with various other goods and possessions? Should they not be discharged from bankruptcy in order that they can take a proper and honourable part in civic life again, since they have done nothing wrong in any case apart from carrying out Labour Party policy?
    Mr. Davis: I find it a little difficult to see how that specific matter arises from the Question on the Order Paper. My hon. Friend has a vendetta against Kenneth Cork, but I have absolute confidence in Mr. Cork's ability to head this wide-ranging review into insolvency law. It is not a so-called investigation of small-time bankruptcies.

  INDUSTRY

    Plessey Company Ltd. (Wearside)
    Mr. Willeyasked the Secretary of State for Industry if he will make a statement on the report of the National Enterprise Board about the investment potential of the areas affected by the Plessey closures on Wearside.
    The Secretary of State for Industry (Mr. Eric G. Varley): The report, copies of which are available in the Library, makes a number of useful proposals for action by the Board itself and by my own and other Departments, not only on Wearside but also in the North-East and North-West generally. The Board intends to pursue vigorously the intensified regional activities proposed in the report. It is considering setting up a contracting company to undertake certain activities on behalf of small metalworking companies in the North-East and the possibility of similar action in other industrial sectors in both the North and North-West Regions.
    The Government have accepted the recommendation that there should be a widening of the differential in regional selective financial assistance in favour of special development areas. This change will apply to all such areas in the United Kingdom. In those areas we intend to increase from two to three the number of possible interest-free years for Government loans and interest relief grants for suitable viable employment-generating projects. We shall also increase the rent-free periods for Government factories in appropriate cases.
    Mr. Willey: While we welcome publication of the report, and particularly the acceptance by the Government of these recommendations, which we shall study closely, may I ask my right hon. Friend meanwhile to look at the current issue at the Plessey factory, Sunderland, which concerns the implementation of the recommendation or suggestion of the Posner Report that the Strowger orders should be brought forward? I know that my right hon. Friend is favourable towards the suggestion. As it would mean saving hundreds of jobs that are sorely needed in Sunderland, will he do his best to get acceptance of that recommendation?
    Mr. Varley: A good deal of work has taken place already and, if necessary, discussions with Plessey will continue. It was our intention to try to get £3 million of accelerated Strowger orders for Plessey. We understand that there were objections from some other companies which manufactured this equipment. But if my right hon. Friend has any information on this that he wishes to pass on to me, I shall consider the matter further.
    Mr. Michael Marshall: Will the right hon. Gentleman say when he hopes to put before the House his findings on the general question of Plessey and the way that the company has been affected by Post Office purchasing policy?
    Mr. Varley: The hon. Gentleman is probably not aware that I appointed Mr. Michael Posner to examine the reasons for the decision of the Post Office to cut back on Strowger orders. It is not for me to say whether that report will be debated. A good many Questions have been tabled, and we have tried to answer them as fully as possible.
    Mr. Bagier: Is my right hon. Friend aware how important it is for the Strowger orders to be brought forward? Touching on another matter that he mentioned, may I ask whether he can give us some idea of how many jobs—
    Mr. Heffer: Certainly 1,400 jobs in Liverpool.
    Mr. Bagier: I hope that my hon. Friend will allow me to continue with my own question about Sunderland. Can my right hon. Friend give any idea of how many jobs he envisages being created?
    Mr. Varley: Arising out of the discussions which my right hon. Friend the Minister of State has had with Plessey, I understand that 400 new jobs will be created in the North-East as a result of the help under the Industry Act 1972.
    Sir K. Joseph: Since I saw this report only at 3.25, I am sure the right hon. Gentleman will accept that I have only been able to glance through it. Is he aware that these well-intentioned measures and suggestions will achieve little, if anything, for local needs compared with creating a climate less hostile to enterprise and effort by way of reducing wasteful Government spending and thus being able to reduce the marginal rates of direct taxation for all concerned?
    Mr. Skinner: What about the £6 million that Courtaulds had?
    Mr. Varley: I thought that the right hon. Member for Leeds, North-East (Sir K. Joseph) would give a wider welcome to the report. There are many useful suggestions in it. But no doubt he will want to consider it further. I remind him

    31
    of the measures that we have taken over the last few years in helping the climate for investment. If we look at the Government's own investment intentions, we see that investment is likely to be up by between 10 per cent. and 15 per cent. this year over last year. If the right hon. Gentleman does not wish to take notice of Government statistics about investment intentions, perhaps he will rely on the CBFs investment intentions survey, which shows that it will be even higher.
    Mr. Skinner: Is not this report a sequel to the fact that private enterprise generally and continually over a fairly long period has been unable to provide the necessary investment and thereby the manufacturing jobs, as instanced not only by Plessey but by Courtaulds, which had about £6 million of taxpayers' money to carry out the philosophy of the right hon. Member for Leeds, North-East (Sir K. Joseph) to let the free enterprise tall poppies grow? Is it not time that we, as a Socialist Government, intervened in a positive way instead of having to pick up the pieces after private enterprise has so obviously and abysmally failed?
    Mr. Varley: I want to see the investment climate improved. I agree with my hon. Friend to the extent that private industry should have invested more. Over the last few years, the Government have done their bit by the selective investment scheme and the accelerated investment scheme and also broadly by maintaining the level of investment in public industries. But in this case, concerning telecommunications equipment, the decision was governed by the over-capacity which the Post Office already had and was not prepared to see increased, apart from the £3 million of advance orders, and the technological changes going on in that industry. [Interruption.] Even if it had been publicly owned, the technological changes in the telecommunications industry would have taken place.
    Mr. Heller: In view of the fact that 1,400 workers on Merseyside are likely to be unemployed as a result of the Plessey closures, can my right hon. Friend indicate how many of these jobs will be saved as a result of the National Enterprise Board's report? Can he indicate also what positive action is being taken to bring those workers back to work?
    Mr. Varley: The unemployment position in Merseyside is intolerable, and I can understand my hon. Friend's views on this matter. It must be brought down as quickly as is practicable. I dare say that my hon. Friend has not yet had a chance to look at the report of the NEB, but it has made some useful suggestions. I have ascertained that the NEB has commercial freedom to operate in the regions, including Merseyside, and that there will be no shortage of resources for viable projects.

TEACHER TRAINING
The Secretary of State for Education and Science (Mrs. Shirley Williams): With permission, Mr. Speaker, I should like to make a statement about the future organisation of the education and training of teachers.
When, in January, I announced the Government's decision that the number of teacher training places in England and Wales outside the universities should be reduced to about 45,000 by 1981, I said that my detailed proposals for individual institutions would be the subject of further consultations before final decisions were taken. These consultations have involved a great many people over the past five months, and I should like to express my appreciation of the great effort and enormous care that local authorities, voluntary bodies and the colleges have expended in scrutinising my proposals and making their representations on them.
This has been a difficult process, and it is not yet complete, to the extent that I am not yet able to announce my final decisions about the colleges in Wales. I hope to do so shortly. I did not, however, think it right or fair to the English colleges to delay an announcement about their future.
As a result of the consultations, I have decided to withdraw the proposal to end teacher training at five institutions, namely, North Riding College, Padgate College, Portsmouth Polytechnic, Rolle College and St. Mary's College, Newcastle. I have agreed that some teacher training should remain at Eaton Hall, as part of Trent Polytechnic. I have also

33
decided that Bretton Hall and the Education Department of Huddersfield Polytechnic should not amalgamate, although the latter will have to be reduced in size.
I have agreed that the numbers proposed for the Inner London Education Authority should be increased by 150 to provide for the continuation of training at Shoreditch College.
These changes will be partly offset by minor reductions in teacher training places at a number of other institutions. The revised total of teacher training places for England alone in 1981 will be 43,770.
I am arranging for details to be circulated in the Official Report and the responsible authorities are being informed of the decisions affecting their respective institutions.
I should like to pay tribute to the staff concerned for their forbearance during a trying time and to express the hope that, now that final decisions have been taken, we may proceed to implement them in the same spirit of co-operation.
I recognise, Mr. Speaker, that my proposals have been severe, but I very much hope that those institutions that are to continue teacher training can now look forward to a period of stability in which it will not be necessary to make any further changes.
Mr. St. John-Stevas: The Opposition, while responsibly accepting that there is a need, in present economic circumstances and with changes in the birth rate, for a reduction in the number of places in colleges of education, never envisaged or asked for the holocaust that the Secretary of State has carried out. Despite the fact that we have had some reprieves today which we welcome, may we have an absolute assurance that this will be regarded as the final solution?
Despite what the Secretary of State said about consultation, is she aware that there is widespread resentment throughout the country about the autocratic and insensitive way in which these decisions have been reached in many cases, undermining the morale of both teachers' unions and teachers themselves? Is she aware that the Church of England Board of Education is outraged at the cavalier treatment it has received from her Department in being given only 24 hours' notice for major changes in three colleges of
34
education—Cheltenham, Lancaster and Chester? If this is the first instalment of the more open government that she promised, the less we have of it the better.
Mrs. Williams: Answering the first part of the hon. Member's question, may I say loudly and clearly that we have 5,000 teachers unemployed and that the number of children in schools is expected to fall by 1·6 million between now and 1985. I am not prepared to train thousands of young people for inevitable unemployment. Any decision other than this would have been an act of political defeatism of a serious kind.
My hon. Friend the Minister of State has gone to tremendous trouble to see deputation after deputation after deputation. He was willing to see these deputations, and agreed to their coming back again if they wanted to make changes, and he spent hours seeing every single local authority deputation that wanted to see him. I cannot imagine a more thorough effort being made.
The Church of England made representations to my hon. Friend asking for an additional 100 places at St. Paul's and St. Mary's, Cheltenham. In order to do this it was ready to consider reductions elsewhere. With very small reductions of only 50 places at St. Martin's, Lancaster, and Chester College, the result was an additional 100 being found for Cheltenham. It is not my fault if the Church of England does not speak with a single voice on this matter.
Mr. Ford: The Secretary of State will have great sympathy in many parts of the House for the difficult decisions that she has had to make. It would be impossible to find unanimity about redundancies. However, is she aware that her decision to retain the college at Bradford will be very warmly received in that city, particularly because of its concentration on the multi-racial aspects of training? However, we were a little disappointed that the number of places was not increased to beyond 600.
Mrs. Williams: I am sure that my hon. Friend will accept that he is expecting his cake and the icing, too, in hoping for an increase in the figures. I put great weight on the fact that Bradford is providing training for multi-racial education, and I hope that it will continue to concentrate on that aspect.
Mr. Beith: I thank the Minister for heeding the representations about St. Mary's College, Fenham, Newcastle, but is she aware that the loss of good colleges, like Northumberland College, following closely on the closure of Alnwick, brings great concern in the area? Does she not fear that teacher training concentrated to such an extent in large diverse institutions could lead to a loss of commitment to teacher training on which the Government's policy of standards so much depends?
Mrs. Williams: I regret the closure of Northumberland. It was a very good college, as were some of the others that have been closed. I wish I had been able to save every college of quality, but had I done so we would have been left with far too many institutions for the training of teachers. In the Northern Region generally, the Newcastle Polytechnic provides a substantial number of places and there is St. Mary's, Fenham, in the Northumberland area. Also we want to see a good deal of in-service education in this area. I would point out that the Northern Region will have slightly more than its statistical proportion of places.
Mr. Thorne: A great many people in West Lancashire will have welcomed the Secretary of State's appearance on the Jimmy Young show this morning, but they will not have welcomed the closure of teacher training at Preston Polytechnic. How does she square this closure with some of the aspirations that she outlined on the Jimmy Young show this morning, particularly in relation to the diminution of class sizes?
Mrs. Williams: I assure my hon. Friend that we had very great difficulty in relation to Preston Polytechnic, which is a very good college. The final decision was taken because Padgate College serves the rapidly growing areas of the new towns, including Runcorn, and we had to decide between the two. I might add that the North-West Region has substantially more than its statistical share of teacher-training places. It will have still more at the end of this operation. My hon. Friend should consider how difficult it would be, therefore, to give a greater share to the North-West.
The average pupil-teacher ratio in primary and secondary classes has
36
improved steadily over the last four years and it is our intention to continue with that improvement as soon as economic conditions allow.
Mr. Emery: I thank the Secretary of State for the reprieve of Rolle College, Exmouth, and compliment the Minister of State for seeing every delegation. Is it the right hon. Lady's intention that in-service primary training for the South-West should still be centred at Rolle College, with the reduced number of places? Does she accept that the most reasonable and very logical presentation of the case made by the students of Rolle College, rather than abusive militancy, was the right way in which to lobby Parliament and to reach the ear of Ministers?
Mrs. Williams: I gladly confirm that Rolle College continues as the major primary training centre in the South-West and that in-service primary training will be centred there. In-service training in the secondary field will be largely at St. Mark and St. John.
There is no doubt that the students of Rolle College did themselves nothing but good in the way in which they presented their case, which was well-argued and politely put. I might say that it was a privilege to hear it.
Mr. Gerry Fowler: Will the Secretary of State accept that the consultation process could not have been more intensive and that we congratulate her? An excessive number of reprieves would mean that several more colleges would be pushed closer to the precipice of non-viability. Does she agree that it is imperative to have discussions with local authorities and voluntary bodies about ways in which the buildings can be used when the colleges close for the benefit of the education service?
Mrs. Williams: We have done our best to maintain viable sizes. It is always a temptation to go about such an exercise by cutting everyone by 200 or so places and closing nothing. But that means that many colleges would be at risk for a long time. The pattern is being maintained in order to increase in-service training as soon as local education authorities come round to our view that such training should have high priority.

37
This pattern leaves a great deal of flexibility in the final figures. We shall certainly talk to local education authorities along the lines that my hon. Friend has suggested and we want to discuss how colleges might specialise in various areas of education.
Mr. Peter Rees: Does the right hon. Lady realise that although we have not picketed her Department, her decision as it relates to Nonington College in my constituency will be widely resented in Kent? Will she justify her decision on that college, first by reference to the quality of the specialised courses there, secondly by reference to the fact that there will now be no teacher-training college throughout the Kent Education Authority and thirdly by reference to the fact that considerable expenditure has been made on that college in the past few years?
Mrs. Williams: Nonington College has had to be closed as have a number of other good colleges, but Christ Church College remains at Canterbury serving Kent.
The House will appreciate that because of arrangements between the Churches and the maintained system it would be impossible to keep a maintained college in every county without excluding Church colleges altogether from educational provision in those areas. I do not think the House would want that to happen.
In regard to Nonington and other colleges, we are looking wherever possible at the educational use that can be made of colleges which are closed. I am pleased to say that educational use has been made of a substantial proportion of the last group of colleges which were closed. We are looking to educational use, if possible, for the remainder.
Mr. Flannery: Does my right hon. Friend accept that it is appreciated on the Labour Benches that the Conservatives would have made far more massive cuts than we have made? However, having said that, may I ask whether she accepts that there will be deep worry and concern throughout education, and especially among the teaching fraternity and local authorities? Will she give an assurance to the House that as soon as it is possible to do so those teachers and buildings which are available will be used to bring down class sizes to manageable proportions so
38
that the education system, instead of looking down, as many people think it is at present, will look up and become better than ever?
Mrs. Williams: On the basis of the figures that I have announced to the House and the projections of school populations as we now have them, it will be possible for class sizes to continue to fall if the teachers trained under this system are employed as teachers—and to fall quite rapidly. My hon. Friend will recognise that if we turn out more teachers than we can absorb, then with declining class sizes, because of the dramatic speed at which the birth rate is falling, I or my successors will be accused of great irresponsibility by this House—and, in my view, with every possible justice.
Mr. van Srraubenzee: Will the right hon. Lady appreciate that it is just because her Minister of State has been so exemplary in his consultations that the last-minute adjustments to which she referred in respect of the three Church of England colleges, made without notice on the end of the telephone, have caused more resentment than I can remember, speaking with some experience of Church of England Board of Education circles? If she finds on examination that, however inadvertently, there has been a slip-up, will she on detailed matters—which, with respect, are far more fundamental than she indicated—agree that they can still be discussed?
Mrs. Williams: I would be reluctant to take that course, but perhaps I can give the hon. Gentleman a little more background information. St. Mary's and St. Paul's Cheltenham, are Church of England colleges within Gloucester as part of higher education in the South-West. St. Martin's, Lancaster, and Chester College are Church of England colleges within the North-West. The North-West is very considerably over-provided with teacher-training colleges and has been for a long time. The South-West is under-provided. Therefore, we took on board representations from the Church of England to the effect that Gloucestershire should have an extra 100 places to build up the South-Western provision. To achieve this two colleges in the North-West each sacrificed 50 places, which left them with 575 places, which is

39
above average size for teacher-training colleges.
I regret any misunderstanding which might have arisen over this issue, and the fact that it has been raised by the hon. Members for Wokingham (Mr. van Straubenzee) and for Chelmsford (Mr. St. John-Stevas) suggests that there may have been some misunderstanding. I can only say that my hon. Friend the Minister of State listened to representations from the Church of England on this matter, and decided as he did in the light of a balance of provision throughout the whole country in respect of the Church of England and other colleges.
Mrs. Dunwoody: In view of my right hon. Friend's remark about economic viability, will she give an undertaking that colleges such as Crewe and Alsager, which are building up a remarkable reputation and which will have to suffer a cut, will not find their ultimate prospects changed by her announcement?
Mrs. Williams: I assure my hon. Friend that Crewe and Alsager College will retain 900 places. It has dropped by 100 places to save another college. But there is no doubt that it is a strong college and one of the largest free-standing colleges in the country.
Mr. Cormack: Will the Secretary of State clarify some figures? Will she confirm that the revised total is 1,200 fewer than she announced in January in regard to places in 1981? Will she also say something about teacher unemployment? She said today that there were 5,000 unemployed teachers, but in a Written Answer given on 16th June it was said that in January this year, at the beginning of the spring term, there were 17,500 unemployed of those teachers who left college last year. Will she reconcile those figures?
Mrs. Williams: On both points I think that the hon. Gentleman's statistics are a little confused, if he will forgive my saying so.
Let me throw some light on the situation. The figure of 43,770 enumerated in my reply applies to England alone. The original figure of 45,000 was for England and Wales. We have not yet given the Welsh total, but when we do
40
it is almost certain that the total figure will be somewhat above the 45,000 target —perhaps about 46,000 to 47,000 in all.
On the second point mentioned by the hon. Gentleman, the figure I gave today was that of 5,195 unemployed teachers— that is to say, qualified teachers on the unemployment register. The earlier figure I gave for January was a figure just over 7,000, not 17,000. The fall is due to the fact that teachers have taken up posts.
Mr. Joseph Dean: Is my right hon. Friend aware that her statement will be received with dismay by people in my constituency where children are being taught at a ratio to teachers that is much worse than the national average, because of the policies of the Tory-controlled councils? I can only suggest that the present diminution in the number of teachers will exacerbate the situation. Can my right hon. Friend give any comfort in suggesting any measures she can take to see that these children are protected?
Mrs. Williams: I hope my hon. Friend will understand that what has happened is that the Leeds Polytechnic, one of the largest teacher-training institutions in the country, is to drop by 100 places, but that is a contribution towards keeping open the North Riding College at Scarborough which has 350 places—with the overall result that Yorkshire and Humberside will be well provided for indeed.
I wish to add that in the case of the Church College at Trinity and All Saints there has been a reduction to save St. Mary's, Fenham. We have a situation in which the overall figures are higher than the target I originally set. I repeat that the teacher-pupil ratio has steadily improved nationally. It can continue to improve nationally. I think that part of the hon. Gentleman's differences are with his local education authority rather than with my Department.
Dr. Hampson: Does the right hon. Lady agree that the cut from about 100,000 teacher-training places to about 34,000 teacher-training places over four years is Draconian by any standard so that this House and the profession must be sceptical about her figures on future class size? The right hon. Member for Birmingham, Sparkbrook (Mr. Hatters-ley), as former Secretary of State for Education and Science, moved a vote of

41
censure on the Conservative Government's programme, saying that our target was far too low in respect of teacher-training places. Will the Government make positive moves to help local authorities to make alternative educational use of buildings and other provision that will become available rather than merely to express the pious hopes of recent circulars, particularly bearing in mind the amount of money due to go to the Manpower Services Commission for non-advanced further educational courses?
Mrs. Williams: I think that the hon. Gentleman's figure of 100,000 has not taken into account earlier operations in closing teacher-training colleges. If he takes those into account, including the closing of Alnwick Castle, Darlington, Middleton St. George, Wentworth Castle, Endsleigh and others, he will find that the figure for initial training was nothing like 100,000 when I began this operation.
Secondly, the Opposition cannot close their eyes to the dramatic decline in the birth rate, of the kind that I have outlined. To do so would be widely irresponsible.
Thirdly, the Opposition must recognise that there has been a fall in the pupil-teacher ratio, from about 28 to 24 in primary classes, and from about 18½ to 17 in secondary classes, over the past five years. That is a process that we want to continue. There is no doubt that there has been a steady fall in the size of classes over the past few years. In January 1977 there were the lowest figures ever recorded in the history of the education service in this country.
The answer to the final part of the hon. Gentleman's question is that some of the present group of colleges cannot yet have sought alternative uses. About five of the previous group of 22 colleges are to be changed to become secondary schools. Several others are to become training colleges, one is to be used by the Royal National Institute for the Blind—that is the likely user—and another is to be used in connection with the training of Libyan students studying with industry in this country. I could give the hon. Gentleman a list. He would find from that list that a substantial majority of these colleges, which are not yet ready
42
to close, will be used for educational or near-educational purposes. We shall try to seek similar uses for the colleges in the list that I have given today.
Mr. Christopher Price: Is my right hon. Friend aware that there will be satisfaction that she has found agreement with ILEA about the future of Shoreditch College? I should like to ask my right hon. Friend two general questions. First, is she saying that even if there is a further substantial fall in the birth rate over the next few years the Treasury will not ask her to reduce the list of closures still further but the colleges will be used to improve pupil-teacher ratios in schools?
Secondly, is my right hon. Friend aware that this cutback in the number of teacher-training places involves a severe cutback in higher education opportunities, especially for girls? What plans has my right hon. Friend to make sure that these opportunities are presented elsewhere?
Mrs. Williams: On the first part of my hon. Friend's question, I am grateful for the representations that he and others, on both sides of the House, have made about Shoreditch College. I am pleased that we have been able to retain this college, because it carries out an important function in the education system.
Secondly, we are very much aware of the need to avoid further massive changes in teacher training. Therefore, our proposals have been based upon a degree of flexibility in the system that will allow us to cater for substantial changes in the birth rate, either up or down, on the basis of the present list of colleges.
I do not think that my hon. Friend would expect me to give an assurance that if, over the next 10 years, we were to see a further dramatic decline in the birthrate we could save every college in existence. We are deliberately going for a flexible system in the hope that the operation will not have to be repeated.
With regard to opportunities in higher education, particularly for girls, I must tell my hon. Friend that we are all conscious of the fact that the traditional outlet for girls entering higher education has been teacher training. We are proposing to balance the drop in teacher-training places by additional expansion in both polytechnics and universities.

43
Finally, we are discussing with relevant bodies the possible introduction of courses in higher education of kinds that will appeal particularly to girls—for example, business management courses combining modern languages, and other courses of that kind. I hope that we can persuade our girls to look in this direction for their future employment.
Sir George Young: Is the right hon. Lady aware that her statement will be viewed with dismay in West London where the Thomas Huxley College is to be closed? How does she reconcile that with the Government's commitment last week to a new deal for education in our inner cities? Can she say whether in-service opportunities at Thomas Huxley will be increased to soften the blow?
Mrs. Williams: Regrettably, we could not exclude colleges in London from cuts occurring throughout the country. London is over-provided in terms of its national share. However, a number of colleges in London specialise, first, in training mature students—where Thomas Huxley made a considerable contribution—and, secondly, in multicultural education. We have been conscious of both those things in the decisions that we have reached in respect of ILEA.
Mr. John Evans: Will my right hon. Friend accept that her statement that teacher training is to be retained at Padgate will be welcomed not only in my constituency but throughout the mid-Mersey belt? Will she also accept that we are grateful to her for having recognised the argument put forward by all the trade unions involved in the area that Padgate is serving one of the few growth points in the North-West? Those who suggested—and this applies particularly to certain sections of the Press—that the consultation procedure at the outset would be a charade have been confounded, and my right hon. Friend, and particularly the Minister of State, have carried out a tremendous exercise in truly democratic consultation.
Mrs. Williams: I am grateful to my hon. Friend for what he said. I assure him that we have done everything possible to listen to the many representations made to us in what is necessarily an agonising
44
series of decisions. As my hon. Friend suggests, we thought that Padgate served an area of new Lancashire towns which should be allowed to continue, and we put particular emphasis on the in-service training that it is likely to be able to offer that part of Lancashire.
Mr. Ioan Evans: As my right hon. Friend is still considering the future of training colleges in Wales, will she have regard to the training colleges at Barry and Swansea, as she has received strong representations that both colleges should be kept open?
Mrs. Williams: My admiration for the articulacy of people from Mr. Speaker's country has never been so great as when listening to the representations about Welsh colleges of education, and the judgment of Solomon is what is called for from my hon. Friend and myself.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: Order. This seems a good moment for me to intervene. There are now six Members waiting to be called. It is impossible to call everyone who wants to get in to ask a question. There is another very long statement to come. I shall call one Member from one side, and three from the other—[An HON. MEMBER: "Why?"] Because there are more Members standing on one side than on the other. Sometimes it works the other way.
Mr. Kelley: Is my right hon. Friend aware that her statement will cause a great deal of consternation and indignation in the Doncaster area, following representations from myself and many other sources about the continuation of a teacher-training element in the Doncaster Institute of Higher Education? Is my right hon. Friend aware that that institute was created only a short while ago with the idea of creating a complex in the area to meet the requirements of a large industrial population? It is a catchment area where there are considerable difficulties, and where there have been problems of teacher recruitment. Can my right hon. Friend tell the House what future she intends for the teacher-training college at Melton?
Mrs. Williams: I recognise that my hon Friend regrets the ending of teacher training at Doncaster. There are many others who will share his disappointment because

45
their institutions are to cease teacher training. However, the Yorkshire Humberside region has more than its share of the national average of teacher-training places. Secondly, because Doncaster has the Institute of Higher Education it will survive as an institute and will be able to continue in-service training. It will, therefore, be able to meet that function in the region, which is important. Many other institutions are not as fortunately placed. In such a case, if teacher training ceases the institution itself has to close.
Mr. Carlisle: If I may follow the question asked by the hon. Member for Newton (Mr. Evans), may I ask the right hon. Lady whether she is aware that her decision on Padgate will be welcomed by people of both political parties? Will she confirm that she sees a substantial ô for Padgate as a college of higher education generally for an area of two new towns?
Mrs. Williams: This is very much a decision for the future and we hope that Padgate College will build up the higher education facilities for the whole area.
Mr. Speaker: Did the hon. Member for Lewes (Mr. Rathbone) wish to ask a question?
Mr. Rathbone: It has already been answered, Mr. Speaker.
Mr. Hordern: The population of Crawley new town is still expanding, its housing programme is now double what it has been in recent years and there is a special housing programme to house people coming from three London boroughs. In those circumstances, how can it be right to cut the initial teacher-training programme at Crawley College? Will the right hon. Lady reconsider her decision?
Mrs. Williams: I cannot reconsider my decisions or this process would never end. The South-East Region, into which Crawley falls, and London, are very well provided with colleges. There should be no problem for those who are keen to become teachers.
Mr. Sims: Is the right hon. Lady aware that her decision to cease teacher training at Stockwell College flies in the face of the facts presented by the college and listened to most courteously by her Minister of
46
State? Is she aware that the decision involves the overturning of carefully formulated plans for the establishment of an institute of higher education in accordance with her Department's policy and will deprive the whole of South-East London and much of Kent of valuable in-service training facilities?
Mrs. Williams: The position with Stockwell College was very difficult. It is part of the Bromley Institute of Higher Education, which will continue. As I said to the hon. Member for Ealing, Acton (Sir G. Young) who asked about the Thomas Huxley College, the difficulty with London is that it has always had a disproportionate share of teacher-training places, and in view of the Government's intention to emphasise in-service training we have to make sure that there is a reasonable geographical spread, and that necessarily means closing some very good' colleges in London.
Mr. Cormack: On a point of order, Mr. Speaker. I am sure that the right hon. Lady would no more wish to mislead the House than would I, but her answer to my question was inconsistent with the reply to which I referred. My purpose in raising the point of order is to indicate that fact and to give the right hon. Lady a chance to say something more.
Mr. Speaker: The hon. Gentleman cannot give the Secretary of State a chance to say something more, though, as it is Monday, I can. Does the Minister wish to say anything more?
Mrs. Williams Mrs. Williams indicated dissent.
Mr. Speaker: It appears that she does not.
Following is the information:

REVISED PROVISION FOR TEACHER EDUCATION IN 1981

Number of teacher training places in 1981

NORTHERN REGION

Charlotte Mason

300

Teesside Polytechnic

400

Durham New College

500

Newcastle Polytechnic

750

St. Hild and St. Bede (in University of Durham)

400

St. Mary's, Fenham (in association with Newcastle Poly)

300

Sunderland Polytechnic

500

YORKSHIRE AND HUMBERSIDE

Bretton Hall

350

Huddersfield Polytechnic

200

47

Bradford

600

Bingley/Ilkley

Hull College of Higher Education

600

Leeds Polytechnic

900

North Riding

350

Ripon and York St. John College of Higher Education

790

Sheffield City Polytechnic (including Lady Mabel)

1,000

Trinity and All Saints

550

NORTH WEST

Chester

575

Crewe and Alsager College of Higher Education

900

De La Salle

540

Edge Hill College of Higher Education

800

Liverpool Institute of Higher Education (Christ's Notre Dame and St.Katharine's)

1,000

Liverpool Polytechnic

1,000

City of Liverpool College of Higher Education

City of Manchester College of Higher Education

1,500

Manchester Polytechnic

Padgate

350

St. Martin's, Lancaster

575

WEST MIDLANDS

Birmingham Polytechnic

850

Coventry

700

North Staffordshire Polytechnic (including Madeley)

400

Newman

640

Westhill

420

West Midlands

500

Wolverhampton Polytechnic (including Dudley)

700

Worcester College of Higher Education

750

EAST MIDLANDS

Bishop Grosseteste

500

Derby Lonsdale College of Higher Education

450

Leicester Polytechnic

500

Loughborough (in Loughborough University)

600

Matlock

450

Nene

500

Trent Polytechnic (including Eaton Hall)

1,000

EAST ANGLIA

Homerton

650

Keswick Hall (in University of East Anglia)

400

GREATER LONDON

Goldsmiths'

1,000

ILEA

Avery Hill

600

Polytechnic of North London

350

Polytechnic of the South Bank

375

Thames Polytechnic

450

Shoreditch (preferably as part of Brunel University

375

Kingston Polytechnic

400

48

Middlesex Polytechnic (including All Saints, Tottenham)

750

North East London Polytechnic

100

Roehampton Institute of Higher Education

1,200

St. Mary's, Twickenham

680

West London Institute of Higher Education

900

OTHER SOUTH EAST

Bedford College of Higher Education

600

Brighton Polytechnic (including East Sussex College of Higher Education)

1,000

Bulmershe College of Higher Education (Berkshire)

700

Chelmer Institute of Higher Education (Brentwood)

450

Christ Church, Canterbury

500

Hertfordshire College of Higher Education

700

King Alfred's, Winchester

750

La Sainte Union

540

Oxford Polytechnic

400

Portsmouth Polytechnic

300

Westminster

450

West Sussex Institute of Higher Education

650

SOUTH WEST

Bath College of Higher Education

750

Bristol Polytechnic

650

Dorset Institute of Higher Education

500

Gloucestershire Institute of Higher Education

600

Rolle

350

St. Luke's, Exeter (in Exeter University)

500

St. Mark and St. John

460

REGIONAL SUMMARY

Share of 43,770 places proportional to estimated 1981 school population

North

…

…

3,140

Yorks/Humberside

…

…

4,890

North-West

…

…

6,545

W. Midlands

…

…

5,290

E. Midlands

…

…

3,685

East Anglia

…

…

1,640

Greater London

…

…

5,865

Other South-East

…

…

9,010

S. West

…

…

3,705

43,770

Proposed number of teacher training places for 1981

North

…

…

3,150

Yorks/Humberside

…

…

5,340

North-West

…

…

7,240

W. Midlands

…

…

4,960

E. Midlands

…

…

4,000

East Anglia

…

…

1,050

Greater London

…

…

7,180

Other South-East

…

…

7,040

S. West

…

…

3,810

43,770

TRANSPORT (WHITE PAPER)
The Secretary of State for Transport (Mr. William Rodgers): With permission, Mr. Speaker, I should like to make a statement on transport policy.
In April last year my right hon. Friend the Secretary of State for the Environment, published a consultation document on transport policy. The House will recall how much that document owed to the late Anthony Crosland. Since the creation of the Department of Transport in September, my hon. Friend the Under-secretary and I have had discussions with a wide range of organisations. The House debated the consultation document on 20th January.
The Queen's Speech promised that the Government would bring forward proposals for developing a transport policy best suited to economic and social needs. Our main conclusions are set out in the White Paper which is presented today by my right hon. Friends the Secretaries of State for Scotland and Wales and myself. I regret that, owing to an industrial dispute at Her Majesty's Stationery Office, printed copies are not yet available for right hon. and hon. Members, but typescripts are available in the Vote Office. In this statement, I cannot set out all the proposals in a document over 30,000 words in length. It may help the House, however, if I refer to some of the principal features.
First, public transport. The maintenance of our public services is the White Paper's main concern. Expenditure in support of public transport will not be reduced, as had been proposed in the consultation document and in this year's public expenditure White Paper. The White Paper provides for support to local bus services to be maintained at present levels in real terms to sustain essential networks and moderate fare increases.
Secondly, we intend to place more responsibility for planning and securing properly integrated local public transport on local authorities. They are in the best position to assess local needs and how to meet them. They, with the operators, are best able to co-ordinate the different modes in a practical way, taking account of the views of the consumer, of local industry and commerce and of the trade
50
unions. But outside the metropolitan areas the present arrangements are inadequate. The Government will introduce legislation to require county councils in these areas to prepare local public transport plans.
We attach particular importance to our proposals for the rural areas whose special problems we recognise. The new county public transport plans should give greater stability to conventional bus services and there will be increased support for them. In addition, the licensing system will be modified to allow for flexibility and innovation in meeting needs in the most cost-effective ways. We see scope for more self-help and more community buses, based on local initiative in the light of local conditions.
Thirdly, we provide for an increase, by 1980–81, of £25 million over present levels of expenditure on concessionary fares for the elderly, blind and disabled.
Fourthly, the White Paper marks out a central and continuing rôle for the railways, notably in long-distance passenger transport, in important commuter services, in the movement of bulk freight and in providing essential local services. There can be no question of imposing major cuts on the network. By concentrating on the tasks they do well, by increasing efficiency and productivity, and by skilful marketing, the British Railways Board, working closely together with the trade unions, can build an assured future for the railways. In the longer term, it may be possible to look to higher levels of investment. Meanwhile, we shall give the Board more flexibility to deploy the available resources to best effect and agree rolling programmes for suitable investment.
The Government have set two financial objectives for the railways: to contain, and then to reduce, subsidy to the revenue account for the operation of passenger services; and to eliminate any continuing requirement beyond this year for support to the other railways business. New arrangements are needed for setting targets for sectors of the business, but the Government have not set a specific financial objective for reducing subsidy to the London commuter services.
National resources must go first and foremost to equip the railways to carry

51
out those national tasks which they alone can perform, and where their contribution to the industrial strategy is the greatest. But the railways provide many local passenger services also, some carrying few passengers at high and increasing cost. We propose discussions with local government, the British Railways Board and the unions on how best to involve local people in any necessary decisions on the future of such services and on how best to use resources to meet local needs.
Finally, there is the level and nature of the road programme. The last 20 years have seen substantial improvements to the core of the national road system. For the future, there will be a new approach. The programme will be more selective, directed to meeting specific economic and environmental needs rather than to completing a national strategic network to a uniform standard throughout. For the next few years, at least, expenditure will remain at about the reduced levels of the current year.
The White Paper deals with many other matters which time does not allow me to describe in detail now. They include wider powers to control car parking in congested areas, while recognising the importance of the private car as a means of transport; greater attention to the needs of pedestrians and cyclists; and measures to civilise the heavy lorry. However, some matters will be the subject of later statements—notably our proposals for road safety and the future rôle and structure of the National Freight Corporation, including the ownership of Freightliners.
Transport policy must be directed towards economic growth and higher prosperity, ensuring for everyone a reasonable level of personal mobility, and minimising the harmful effects on the environment that result directly from the transport we use. It must take account of the conservation of energy and of land use planning. We have to meet these objectives within the resources of public expenditure which are available for transport. The Government's proposals make no claim on public expenditure beyond those set out in the Public Expenditure White Paper—Cmnd. 6721.
As the House knows, the transport picture is complex but there is a tempta-
52
tion to look at it in simple terms. In practice this is the position traditionally adopted by the many lobbies that bring pressure to bear in the making of policy. It is the task of Government to understand these conflicting interests and if possible to reconcile them. But, above all, transport is a service to people, industry and commerce.
Well over 1 million people are employed in the transport industry, half a million of them in public passenger transport. They all have a lesser or greater responsibility for the public's experience of it and for helping to translate the proposals in this White Paper into everyday reality. In the years ahead transport planning must remain flexible if it is to match changing circumstances and meet real needs. In the meantime I hope that the House will welcome the White Paper as a positive and major contribution to the solution of transport problems.
Mr. Norman Fowler: Is the Secretary of State aware that his statement is as significant for what it omits as for what it contains? Clearly all the transport promises in the last Labour Party manifesto have been omitted, including the promises to nationalise the ports, to extend the nationalisation of road haulage, to make this a nation that is less dependent on the car and to secure a massive shift from road to rail and water. [Interruption.] All those proposals have been abandoned.
Mr. Skinner: Yes, they have all been abandoned.
Mr. Speaker: Order. The constant interruptions from a sedentary position by the hon. Member for Bolsover (Mr. Skinner) are becoming beyond what is reasonable. The hon. Member does not realise how strong his voice is. Fortunately, I am able to hear little of it, but I must ask the hon. Member to try to control his feelings for once in a while.
Mr. Skinner: On a point of order, Mr. Speaker. I am seeking to answer some of the questions posed by the hon. Member for Sutton Coldfield (Mr. Fowler). He was trying to indicate that the Labour Party manifesto had been thrown overboard. I was trying to tell him that—
Mr. Speaker: Order. I am much obliged to the hon. Member for his explanation, but I should be grateful if he

53
would try to restrain himself in the same way as do other hon. Members in the House. If every hon. Member kept interrupting as he does, and did so in such a sustained fashion, debate would be impossible. Mr. Fowler.
Mr. Skinner Mr. Skinner
rose—
Mr. Speaker: Has the hon. Member for Bolsover a point of order? He is not going to argue with me. He might as well understand that now.
Mr. Skinner: On a point of order, Mr. Speaker. I was trying to give an explanation in response to your quest for information from me. The hon. Member for Sutton Coldfield was speaking about the failure to carry out the policies in the Labour Party manifesto.
Mr. Speaker: I did not seek information from the hon. Member. I asked him to restrain himself. He is making it difficult for me to restrain myself. Hon. Members must co-operate with the Chair when another hon. Member is trying to speak.
Mr. Norman Fowler: Will the Secretary of State now say clearly and frankly whether the proposals in the last Labour Party manifesto have been abandoned? I am sure that that would be for the convenience of myself and the hon. Member for Bolsover (Mr. Skinner).
I have three specific questions to ask the Secretary of State. My first question concerns railway policy. We also want a future for the railway industry, for those who work in it and for those who travel by it. Can the Secretary of State therefore say what improvements in productivity he foresees and what effect these will have on keeping fare increases to a minimum?
Secondly, I turn to rail transport. If the right hon. Gentleman wants to modify the licensing system, why did his Government scrap the moderate proposals in the 1973 Bill introduced by the last Conservative Government which would have achieved just that? We welcome the apparent conversion but deplore the delay.
Thirdly, what has happened to the proposal in the consultation document that there should be a National Transport Council to integrate transport? Why is it taking so long to decide on the
54
future of the National Freight Corporation and Freightliners?
Is the Minister aware that, whatever else, his statement will be taken as marking the end of the so-called integrated transport policy of the Labour Government? Is he aware that even now there is insufficient emphasis on the importance of competition and on the freedom of choice for the customer?
Mr. Rodgers: The House is in some difficulty because hon. Members have not read the White Paper, through no fault of mine but because of the custom and procedures of the House. When the hon. Member for Sutton Coldfield (Mr. Fowler) reads the White Paper, he will find—as will my hon. Friend the Member for Bolsover (Mr. Skinner)—that undertakings given in our October 1974 manifesto are very largely fulfilled. The hon. Member will also find that there is a plain reference to our intentions for road haulage. That is contained in paragraph 47 of the White Paper.
There is an omission on road safety, but the House has discussed that matter on a number of occasions and will no doubt discuss it again. The hon. Member should not say that there is so little of the October 1974 manifesto in the White Paper until he has read it.
The White Paper makes it clear that I attach the greatest importance to the Railways Board and the railway unions working together to achieve a high level of efficiency and productivity. As I have said before, I think that it is right that those whose duty it is to carry out day-to-day responsibilities should work closely with the unions. It is not my desire to set out detailed proposals for the day-to-day running of the operation. As productivity rises, the need for fare increases will be moderated.
The hon. Member was grudging about rural areas. The problems of the rural areas have been acute and are becoming more so. Although there is no need to debate this today, I greatly regret that the hon. Member's own Government did not do more in the past. I am not disclaiming responsibility, but we must concentrate on the future. Let us try to work out the proposals contained in the White Paper. There is a genuine charter for the rural areas which will do a great deal of good. The House will find that

55
there are responses to points made by hon. Members on both sides of the House who have constantly drawn attention to the severe problems that arise because of the decline in public transport. These are important problems.
With the establishment of the new Department of Transport, we believe that there is no point in proceeding at the moment to establishing a National Transport Council. We do not want another talking shop. The right place for decisions is the House. The House should decide.
We think that it is worth exploring the possibility of a little Neddy. These are all matters for consultation. We have had a good deal of discussion about the National Freight Corporation. There has to be a major reconstruction. I hope that it will be possible to make substantial progress by the autumn. That will be the right time for a further statement about Freightliners.
Mr. Walter Johnson: Is my right hon. Friend aware that there will be general support for his statement?
Mr. Skinner: No.
Mr. Johnson: However, is my right hon. Friend aware that I am disappointed that he shelved the question of returning Freightliners and National Carriers to British Rail? I hope that something will be done about that in the further statement later in the year.
I turn to the promise of further investment in the railways in the future. Is my right hon. Friend aware of the necessity of making an early decision on this matter, because British Rail cannot plan modernisation? For example, changes in the general network, electrification, power signalling, the modernisation of stations and track renewal require long-term planning. Is he aware that it is therefore necessary for the Government to make an early decision? May we have an assurance that adequate discussions and consultations will continue to take place even though this is now Government policy in the White Paper?
Mr. Rodgers: I greatly appreciate my hon. Friend's kind remarks giving a general welcome to the White Paper.
56
Certainly, there are several matters in the White Paper which will require a good deal of consultation even in areas where the Government have made decisions—and for the most part what I have announced today are decisions firmly made. I understand my hon. Friend's anxiety about Freightliners. He has been persistent in his questioning on this matter. But it is important that, when we make a decision, we should get it right and that it should take in the whole context of the future of the National Freight Corporation and NCL.
My statement and the White Paper recognise the importance of investment. Although short-term financial constraints make it impossible to hold out an immediate prospect of improvement, we leave the door open, so the better the railways do in the interim period the more likelihood will there be of further investment into the 1980s. But the proposals for the renewal grant, which is quite new, and for the rolling programmes should, I think, do much to please those who have the future of the railways at heart.
Mr. Penhaligon: I am sure that there is much in the White Paper which we on the Liberal Bench will be pleased to see. Will the right hon. Gentleman let us know, in particular, what legislation is likely to come out of the White Paper—30,000 words is a great deal—and when that legislation will be introduced? Further, may we know when legislation with regard to safety on the roads will be introduced? In the right hon. Gentleman's view, how many of the 8,000 people who died in the past 12 months—that is about the number dying each year—would not have died if a sensible review of the drink and drive rules and our seat-belt laws had already taken place?
Mr. Rodgers: Again, I welcome the hon. Gentleman's kind remarks. I believe that there is a great deal in the White Paper which right hon. and hon. Members on both sides will find themselves able to approve. The question of legislation is not for me but for my colleagues, including the Leader of the House. I should attach particular priority to legislation on our local transport plans. It is important that these go forward if we are to have an effective integration of public transport at local level and give the public services in many rural areas

57
real security, which has been badly lacking in the past. I should myself, therefore, attach some priority to that.
On the question of safety, there is no need for me to rehearse the sad story of the seat-belts Bill, which failed—I must recognise this—because of substantial and determined opposition by some hon. Members on both sides of the House. But I hope that we shall bring safety proposals back, and, again, in company with the hon. Gentleman, I think that proposals on drink and driving are particularly urgent and would deserve full support from both sides.
Mr. Bagier: The House will need time to study the White Paper, but will my right hon. Friend take it that we welcome the knowledge that there is to be no direct curtailment of the present railway system in a sort of Beeching atmosphere? Will my right hon. Friend examine two matters? Arising out of his statement, there appears to be a fares implication underwritten which points towards a higher fares structure. Will not this lead to less use of the system and possibly to closures in the system? Second, with reference to what my right hon. Friend said about the involvement of local authorities in the structure, will not this lead to a complex procedure, and perhaps lead to a curtailment or a weakening of the current safeguards to stop closures which now operate?
Mr. Rodgers: I agree with my hon. Friend that it will be necessary to give a good deal of time to consider all the aspects of the White Paper, and the last thing I want to do is to mislead either him or the House today. But my hon. Friend is quite right: there will not be another Beeching—and a good thing, too. There is no such proposal in the White Paper.
May I now take my hon. Friend's specific questions in reverse order? I recognise that any proposals involving local authorities in decisions on the most cost-effective way to use resources for public transport are bound to be complex, and this is one reason why the proposals in the White Paper are, perhaps, green at this point. In other words, they must be discussed very fully with the local authority associations, with the Railways Board and with the trade unions as well. But if we are to have proper co-ordina-
58
tion and integration, and if the rail and road services are to meet local needs, we must find a way. I do not believe that the man in Westminster or Whitehall knows best, even if I am there myself. I believe that there is much more scope for getting local people involved in decisions which are properly theirs.
As regards fares, there is nothing in the White Paper which would contribute to an increase in fares beyond anything expected at present. The stable financial régime and maximum managerial freedom which the Railways Board has been seeking, and which, I believe, is covered in the White Paper, should help the Board towards spacing any necessary fare increases at annual intervals, and I hope that, when it has studied the White Paper, the Board will find that it can manage without a further increase before the end of this year.
Mr. Donald Stewart: Will the Secretary of State take it that this White Paper will be regarded as direct sabotage of any chance of getting fair and economic services in the Highlands and Islands of Scotland? As regards the airways, the nationalised British Airways, which is advertising reductions from £292 to £85 on flights to Athens, is charging on flights from Stornoway and Benbecula to Glasgow double per mile what it charges from Glasgow to London? Further, will the right hon. Gentleman take it that his refusal to look at the road equivalent tariff, which has been backed by the Highlands and Islands Development Board and which has been approved in Norway, will be seen as a tremendous setback for transport in the Highlands and Islands?
Mr. Rodgers: I am sorry that the right hon. Gentleman has been so ungenerous today, and I hope that, on reflection, he will regret it, since it is not worthy of him. In so far as the right hon. Gentleman made points to which, I know, he attaches importance, my right hon. Friend the Minister of State at the Scottish Office is here and will take note of them.
Mr. Roy Hughes: As regards financial support for public transport, will my right hon. Friend appreciate that there are certain loopholes in the present system in as much as certain local authorities

59
are using at least part of the money for road schemes, and there have meanwhile been further cuts in public transport, as have already been experienced in Gwent? Will my right hon. Friend do something about tightening up the procedures?
Mr. Rodgers: My hon. Friend makes an important point. This matter has been in our minds. The present arrangements for transport supplementary grant are unsatisfactory. Not only is there a problem for the public bus services, which need a stable basis for making decisions, but money has sometimes been, if I may so put it not unfairly, diverted from purposes for which it was intended. That is why we want public transport plans on a five-year basis and a firm commitment to support bus services.
Mr. Temple-Morris: I appreciate that it is not the right hon. Gentleman's fault, but I hope he is aware that both sides of the House have great difficulty in questioning him about a White Paper of which we cannot secure a copy until he gets to his feet. I am sure that he acknowledges this. Will he, therefore, bring his influence to bear to ensure that we have a debate on the subject before very long?
Although it was belated, I welcome what the Secretary of State has said about rural transport. He mentioned the increasing ô of county councils, county plans and so on and said that the licensing provisions were to be modified. Does he accept that there is a case—it has been made by many people—for licensing powers to be given to local authorities? Even if his reforms do not go that far, may we know what power local authorities and their plans will have in respect of licensing and the traffic commissioners, the present licensing authority?
Mr. Rodgers: As the hon. Gentleman very fairly said, the first matter which he raised is not for me. I think that it would be for the Procedure Committee. I am sure that the point has been noted, since it is difficult for all hon. Members and, in a sense, embarrassing for me, but, as I said, I have followed the procedure which has always been adopted. I should welcome a debate very soon, but I know that we have a heavy programme of work between now and
60
the end of this Session. However, I shall draw my right hon. Friend's attention to the hon. Gentleman's request.
I recall the hon. Gentleman's important contribution in the debate which we had on rural transport earlier this year. We considered the question of giving licensing powers to local authorities. We rejected it, but we make clear in the White Paper that the licensing authorities must take account of the transport plans which I described, for which we shall make provision in legislation.
Mr. Spriggs: May I preface my question, Mr. Speaker, by pointing out that we have been waiting at the Vote Office for the White Paper, and that those who were waiting were informed that they could not have copies until the Secretary of State rose to make his statement? My right hon. Friend and his hon. Friend the Under-Secretary of State will therefore understand why most of us knew nothing about it until the statement was made.
Will my right hon. Friend study the present position of the Railways Board in relation to the present system of financing? Is it not time that we ended the present arrangement whereby the Board comes along with a begging-bowl and we allowed the Board now to make a contract with the Government to run the railways on a businesslike basis, with a man such as Peter Parker, one of our most successful business men, to lead it to success?
Mr. Rodgers: Yes, I hope that the provisions in the White Paper will be, in the sense in which my hon. Friend uses the phrase, a contract with the Board. We have set out the parameters. We have indicated how much money will be available. We have introduced very important flexible arrangements for financing. I hope that the Board will feel that it can proceed on this basis in the way that my hon. Friend indicated.
Mr. Wyn Roberts: The right hon. Gentleman made much of increased support for rural transport. Can he spell it out in greater detail? Is more money to be invested in rural bus services? As regards rail policy, is the right hon. Gentleman saying that there will be no rail closures under any circumstances? Finally, as regards roads, does the implied cutback mean that some schemes will

61
be taken out of the Government's preparation pool?
Mr. Rodgers: On the first point, there is an additional provision for rural transport of some £15 million, but this is not the most important point. It is an endeavour to give real stability to existing public transport in the rural areas. That is the most important aspect of that part of our rural transport provisions. But there is to be more money available. There is to be some diversion for that reason.
On the second point, I cannot say that there will never be any rail closures in any circumstances. It would be wrong to say that. What I have said is that, in so far as I now have powers which I can exercise on rail closures following certain procedures, we are now proposing that discussions should begin with a view to setting up a new procedure which will allow local opinion to make its views known on the best use of the resources available for public transport. The discussions will begin, and we shall have to see how they go.
On the third question, it would be a mistake to think that I was saying that there was to be a cutting back of a muchreduced road programme. We said in the public expenditure White Paper published earlier this year that there was to be a rise slowly towards the levels which road building reached a few years ago. That rise will not now take place. In other words, there is a straight line. There will, however, be scope for a number of very important schemes for the improvement of our roads to the ports, for example, and for bypass schemes, which have a very high amenity value. I am not saying that there will be no more motorways, but we shall have a much more sensitive and meticulous approach to make sure that we get real value for the money that we spend.
Mr. Ronald Atkins: I regret the fact that extra funds are not available for badly-needed railway investment, that being the way to increase profitability and productivity. But I welcome my right hon. Friend's statement that the present railway system will remain intact—I hope in its entirety. Bearing in mind the difficulty of formulating transport policies for years ahead in times of financial reces-
62
sion, will my right hon. Friend's attitude be truly flexible and take account of increasing improvements in the Government's finances and scarcer and more expensive oil in providing for railway investment?
Mr. Rodgers: The White Paper makes it very clear that the whole question of the future of energy supplies is a fundamental one which lies behind our decisions. I do not think that I could improve upon the way in which my hon. Friend puts it when he says that we must be flexible because of changing circumstances in that area, as in others.
The White Paper proposes that—instead of a White Paper of this kind, perhaps every nine years—there might be a much more regular procedure, perhaps a three-yearly While Paper which would enable the House to assess the very questions that my hon. Friend raises. Nobody can foreclose the options which circumstances may require in the years ahead.
I take my hon. Friend's point that, in a sense, for me, as for others, to produce a White Paper at present when there has been a severe cutback in spending on transport is much the most difficult time, when it is not easy to bring joy to anyone without making further demands on public spend, which would inevitably involve cuts in public spending in other areas which are important to us all. When my hon. Friend regrets the lack of funds for the railway network, this is one of the matters that will have to be looked at year in, year out by the House.
Mr. Crouch: Will the Secretary of State comment on a statement in the White Paper that transport can serve us best if it responds to change? May I take up the point that the right hon. Gentleman has just made and ask him to say something more about the fundamental changes which transport may have to go through in the next 30 years in the face of the changing pattern of energy supplies? In particular, has he closed the option on the Channel Tunnel, which would enable us to develop rail communications with Europe much better than relying on road transport and oil consumption?
Mr. Rodgers: On the question of the Channel Tunnel, I cannot go any further

63
than the statement made in the House by the late Anthony Crosland at the time of the Government's decision. This is a matter which will remain in the minds of right hon. and hon. Gentlemen, but I certainly cannot make a statement of a change of Government policy this afternoon.
I would love to speak on the subject of energy at length, Mr. Speaker, but you would not allow me to do so. It is easy to take a simplified view of the consequencies of the likely shortage of energy in the years ahead. But a much more sophisticated analysis is required to get a proper balance between forms of public transport and between public and private transport.
Mr. Alexander W. Lyons: Is it not unfortunate that there should have not been in the White Paper a clear decision to move more freight to rail in order to help with British Rail's income and help with conservation? What does my right hon. Friend mean when he says that rail passenger fares will not go up more than is contemplated? Does the White Paper mean that there will be higher fares for passenger rail services or not? With regard to the publication of the White Paper, is it not a fact that Departments can produce White Papers at any time they wish and that there is nothing in the rules of the House which says that they must wait until the Minister rises to speak?
Mr. Rodgers: My reply on the third of my hon. Friend's points was meant to be helpful to the House, in recognition of the fact that it is perhaps rather unsatisfactory that there should be such long intervals, as we all know there are, between serious debates on transport policy, intervals which may encourage a certain laziness in Government in introducing proposals and revising their own ideas. That is for the House and successive Governments to decide, but I thought it helpful to suggest that perhaps we should discuss transport more often.
I chose my words on rail fares very carefully. I do not think that anybody is suggesting that road and rail passengers can be shielded from the effects of inflation. We still have inflation at a higher level than we find tolerable. Therefore, we must accept that there must be some
64
catching up in this regard. What I tried to say was that, certainly for bus fares, the increases in real terms, the increases on top of inflation which would have taken place on the basis of the January White Paper, are likely to be halved on average over the country as a whole as a result of the proposals made here.
As for the question of transferring freight to rail, I draw my hon. Friend's attention to the fact that in the White Paper we have made clear that there will be no restraint on Section 8 grants to enable new railheads, new private sidings, to be established. We believe that this is a very desirable way of moving forward. As we say in the White Paper, we greatly welcome as much freight travelling by rail as possible in the areas where the railways are singularly well-equipped to carry it.
Mr. Fry: Will the right hon. Gentleman confirm that he still keeps to the view of the consultative document that any major transfer of freight from road to rail is a pipe dream? If he does, will he try to square his statement this afternoon, that transport policy should lead to economic growth and higher prosperity, with his apparent abandonment of the strategic road network? Does not he realise that that will place this country in transport terms at a severe disadvantage in comparison with most of our Continental rivals, and that investment in roads is one way to achieve higher prosperity and more economic growth? Can he please explain the apparent contradiction in his remarks?
Mr. Rodgers: I certainly have not used, and would not use, the phrase that the idea of a major transfer from road to rail freight is a pipe dream. What I have said, and will say again, is that road and rail are particularly suited to carry certain sorts of traffic. We must recognise this and allow our industry, the public sector as well as the private sector, to make a choice, because only in this way shall we ensure that industry achieves the objectives of the industrial strategy. That is plain. It is a thought which comes through in the White Paper. The more we can do to transfer freight, the better.
As for the economic strategy, we cannot have it all ways. I know that we try, but the question is one of our priorities for the sums of money available to us

65
for spending on transport. I have spoken of the substantial improvement in the road network. I remember that when Harold Macmillan opened the Preston bypass in 1959 the rejoicing was like that at the Jubilee. Since then a great deal of road building has gone on. There has been a vast improvement. As of now, we take the view that the priorities should change.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: The House can see that many hon. Members still wish to put questions to the Minister. We have been on this subject since 12 minutes past four. I am prepared to allow questions on it to continue for a little longer, but it is as clear as a pikestaff that not every hon. Member will be able to put a question.
Mrs. Dunwoody: I warmly welcome my right hon. Friend's assurances on the railways, but it is important that there should be onward investment. Is my right hon. Friend aware that there are a great deal of expertise and many jobs tied up, particularly in the engineering works end of British Rail? I hope that my right hon. Friend will give us an undertaking that the new flexible proposals will also allow us in future to put more investment into rolling stock and the other items that are particularly needed on the railways.
Mr. Rodgers: Any hon. Member representing Crewe is right to make that point. I can give my hon. Friend the assurance that our proposals for rolling programmes are meant particularly to help the railway workshops.
Mr. Mawby: Clearly, we shall not be able to comment upon the White Paper until we have looked at it closely. The right hon. Gentleman referred to concessionary fares for the elderly. Does that reference mean that he will do something at last to remove the disparity between the treatment of elderly people in the rural areas and the treatment of the elderly in many of the metropolitan areas?
Mr. Rodgers: I hope that the White Paper will help in that direction. I do not want to exaggerate. To have free fares for all old people, which is a very attractive proposition, would cost over £200 million more a year. That money
66
is not available. But there is a disparity between, broadly speaking, the GLC and metropolitan counties and the rural areas. My guess is that the £25 million will go mainly in the direction of helping those areas.
Mr. Robin F. Cook: Will my right hon. Friend explain how he reconciles his statement that the White Paper will not result in higher rail fare increases with the statement in Chapter 10 of the White Paper that the public service subsidy obligation will be £20 million less than in Cmnd. 6729? If he is to take £20 million off the public service obligation, may we at least have it back in the investment that we need?
Mr. Rodgers: There is a simple answer, which my hon. Friend will see if he reflects on the period that the White Paper covers. I hope very much that any loss of that size in the public service obligation subsidy will be made up by increased productivity and efficiency. I see a large part of the destiny of the railways lying in this area. But my statement on fares was very carefully judged. My hon. Friend may have slightly simplified the words that I used.
Mr. Evelyn King: With regard to rural transport, is the right hon. Gentleman aware that, at least in Dorset, what he said will receive a generous welcome? We are grateful to him for what he said and in particular for the added rôle of the county councils. But the warmth of that welcome depends to a considerable extent on the financial provisions, which the right hon. Gentleman has not really outlined. Does he accept that in recent years the towns in Great Britain have received great financial help while the countryside, particularly in the matter of rate grants, has been very ungenerously treated? May we ask him this time to see that a great deal of the expense—and there will be expense—falls on the Exchequer, not the local inhabitants?
Mr. Rodgers: We have discussed many times the balance of spending between town and country, and we shall do so again in terms of transport as in other areas. It is not right to attribute it simply to the decisions of Government. Some county councils have shown very little interest in maintaining public transport locally and are guilty of serious

67
neglect. For that reason we intend to place requirements on them to produce county public transport plans. At the same time, we are to make resources available. If the counties take their obligations seriously, they will recognise that maintaining a public transport system should have very high priority.
Mr. Watkinson: Is my right hon. Friend aware that in rural areas such as mine his proposals, especially his commitment to expenditure on buses, will receive a warm welcome, but that those who live in rural areas have had reforms and changes dangled before their eyes on previous occasions and have seen nothing come of them? Will he give an indication of when we may expect these changes to be implemented, and will he say something more about the county plans? My right hon. Friend referred to certain areas which had been very poor in their provision of transport, particularly in rural areas such as mine in Gloucestershire. Will he retain powers to call in the county plans and send them back if they are not adequate in their provision?
Mr. Rodgers: I agree with what my hon. Friend says. There may be cynicism about what is proposed for rural areas. One reason why I am determined that this Government shall complete their present term is to ensure that legislation goes through to deal with these serious issues. I hope very much that the House will facilitate that. The details of the planning arrangements are matters that, very fairly and legitimately, we must discuss with the local authority associations. We could not do that before my statement and publication of the White Paper. Certainly, the idea of having a requirement of this kind is to allow a local option but to ensure that that option is responsibly exercised.
Mr. Rathbone: Is the right hon. Gentleman aware that we welcome the priority given to development of transport systems to the ports but that we question whether this embraces the developing ports, such as Newhaven in my constituency, although we hope that we are correct in understanding the Secretary of State's reassurance about the new priority the Government are giving to transport systems in the South-East?
Mr. Rodgers: It would be true to say that over recent years there has been—I think quite rightly—heavy emphasis on investment in roads in the North-East and other developing areas, including the North-West. We now recognise that there must inevitably be some shift, particularly as there is a growth of ports in the South-East and East Anglia, for example. But I think the hon. Gentleman will find that the first claim on road resources for these purposes is recognised in the White Paper.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: I propose to call two more hon. Members from each side of the House.
Mr. Skinner: Is my right hon. Friend aware that he will not campaign for and succeed in achieving a Labour victory if he issues a White Paper and a transport strategy based on the disastrous White Paper on public expenditure of the year before last? If he wants to ensure a transfer from road to rail, he must shed the Lib-Lab policy which has been accepted and applauded on the Opposition Benches today and revert to the Labour Party manifesto of 1974, about which Opposition Members derided him. Until he does that, the prospects for ensuring that railwaymen and their families will take part in a great exercise to elect a Labour Government will be a forlorn one.
Mr. Rodgers: I regret that my hon. Friend is not more charitable. He takes an extremely pessimistic view. I am prepared, as I hope he is, to campaign successfully on the proposals in the White Paper. I think that they have a very great deal of attraction, and I think that we should put our full weight behind them.
As for the manifesto, I say again to him that I am prepared at any time which is convenient to him to meet him with our October 1974 manifesto and go through it word for word on the question of transport, comparing it with proposals in the White Paper. I believe that he would be satisfied in that respect. The purpose of the White Paper is to meet the nation's needs as we the Government see them. I believe that the circumstances of the White Paper are not governed by

69
any arrangements short or long-term but by the best interests of Britain today.
Mr. Burden: Since commuters are always the hardest hit by increases in rail fares, will the right hon. Gentleman indicate what effect the proposals will have upon fares and services for commuters? It seems that commuters, because they are a captive community of travellers, are often singled out for particularly harsh treatment when fares are increased.
Mr. Rodgers: I agree that it sometimes seems like that because there have been substantial increases in recent years. However, there is the real difficulty that I have mentioned to the House more than once. What we do not pay in fares we must raise in rates and taxes where the difference is not achieved through increased productivity. However, we do not spell out a specific financial objective for London and the South-East as the consultation document did. We hope very much that the Railways Board will take decisions that it thinks wise to make up the shortfall that would otherwise occur. Certainly if increases have to be made in the South-East beyond what is required by inflation they must be phased in such a way as to minimise the hardship that would otherwise occur.
Mr. Whitehead: Does my right hon. Friend accept that for those of us who have a particular interest in the railways the construction of the White Paper seems to be a long march to the least worst alternative? There is much in it to be commended, particularly the commitment to a quinquennial programme for rail freight, which will be greatly welcomed, I think, on the investment side of British Rail engineering.
Will my right hon. Friend go into more detail on one point on which I think some in the House found a little evasive, and that is the question of rail closures? If the procedures in paragraphs 99 and 100 are followed, can he honestly say that there are safeguards similar to those that now exist against hasty line closures, bearing in mind that a railway line once closed cannot be reopened in the way that a bus route can be restarted?
Mr. Rodgers: Yes, I think that there are safeguards. The arrangements are
70
complicated and subject to consultation. There are, however, a number of essential safeguards whereby I and my colleagues must decide whether it is right that there should be a local option about a rail line, and I think that this will be subject to considerable discussion.
In addition, the White Paper makes clear that we recognise that a decision made today could be outdated by a change in the energy situation, and we have in mind that in the event of any closure taking place it might be desirable to reinstate services at a later date. That view was not taken five or 10 years ago, but it is a view that is clearly taken in the White Paper.
Mr. Moate: Will the right hon. Gentleman say precisely what he means by the statement in paragraph 47 of the White Paper which says that it remains the Government's intention that there should be an extension of public ownership in road freight transport? Precisely what steps does he have in mind? Will he say when we might expect statements on the National Freight Corporation and on road safety?
Mr. Rodgers: I do not think it will be possible to make a statement on the NFC before the end of July, but I shall make it as soon as possible in the autumn. That does not mean that the actual preparation will not go forward during the recess as it must. I recognise the urgency and I am sorry for the delay, but we must bear in mind the inevitable complexities of the problems.
I would guess that the proper moment for the statement on road safety legislation will be in the Queen's Speech in the autumn, but if it is proper to make a statement to the House before then I shall do so.
Paragraph 47 means precisely what it says. We do not believe that this is something to which we can give priority in the present Session of Parliament. There are some important matters concerning the reorganisation of the NFC. We believe there are many virtues in an extension of public ownership in road freight transport.
Mr. Geoffrey Finsberg: On a point of order, Mr. Speaker. Not for the first time, we have had the problem of a White Paper being available to everyone

71
but Members of Parliament. I leave that, however, because the problem takes a new twist. As I came into the House at 4 o'clock, much of the White Paper was already on the tape, but the Vote Office was not prepared to release it to Members until the Minister had risen to make his statement. I assume that the embargo to the Press was for 3.30. May I ask you, Mr. Speaker, to use your undoubted influence to persuade the Leader of the House to refer this matter forthwith not to the permanent Procedure Committee but to the Sessional Committee? Hon. Members are getting sick and tired of the action of Governments, of both parties, in treating Members as third-class citizens.
Mr. Rodgers: Further to that point of order, Mr. Speaker. Were it proper for me to do so, I should support any such proposal. It would be a considerable embarrassment to Ministers to be in a position in which they could not make a final revised copy available to the Press before the time at which they were to speak in the House, and that procedure was followed very carefully on this occasion. I can assure the hon. Member for Hampstead (Mr. Finsberg) that, apart from the procedures affecting the Press, no copies were made available to any individual before they were made available in the Vote Office.
Mr. Burden: Further to that point of order, Mr. Speaker. Do you not agree that it is wrong for statements on White Papers to be made to the Press before the Minister or some other person puts those White Papers before the House of Commons? Would it not be proper that in future no statement regarding the contents of a White Paper should be made to the Press until the White Paper has been produced for Members of Parliament so that they also may see and comment on it?
Several hon. Members Several hon. Members rose—
Mr. Speaker: Order. We shall not be arguing this out now. If there is a point of order in it for me, I am ready to rule on it. Has anyone anything new to say?
Mr. Norman Fowler: On a point of order, Mr. Speaker. I hope that what I have to say is new. My hon. Friend
72
the Member for Hampstead (Mr. Finsberg) raised an important point. As the Secretary of State will know, we made detailed representations to the Government to improve this procedure, but those representations were specifically refused. I made a request to the Vote Office that we should have the White Paper at 3.30 and was told that it was not available. If, as my hon. Friend the Member for Hampstead says, it was available and it was in the Evening Standard, that seems to be an entirely new point. I urge that this is a point on which an inquiry should be held urgently, because the way in which this procedure is organised is scandalous.
Mr. Forman: Further to the point of order, Mr. Speaker. Is there not a legitimate distinction to be drawn between when a Minister comes to the House to make a statement, when perhaps hon. Members should listen to his statement before commenting on it, and when he comes to make a statement which is attached to a lengthy White Paper? In such circumstances, should it not be the practice that the White Paper is made available to hon. Members at least as soon as to outside interests?
Mr. Ogden: Further to the point of order, Mr. Speaker. There seem to be different points arising here. The House recognises the conventions whereby some information is made available to Opposition spokesmen or to the Press for release at a certain time. Today, because of other business arising, the White Paper was not available to Members. Surely hon. Members ought to have information made available to them inside the House at the same time as it is released publicly outside the House. That is a matter of concern to you, Mr. Speaker, as guardian of the House.
Mr. Skinner: If there is to be some form of inquiry and if you, Mr. Speaker, are to participate in setting it up, I ask you, since this problem has happened many times, certainly over the past seven years while I have been a Member, to bear in mind that increasingly over the last three or four years there have been a number of occasions on which we have debated Common Market matters without any information whatsoever being supplied to us. Not only have hon. Members not had any copies; on some occasions they have

73
had the wrong copies. We have not even had the Evening Standard or the tape to tell us what they knew about the matter. If there is to be an inquiry let us have an all-embracing one, because there is no doubt that we are being treated with more and more contempt by Ministers and others, particularly on Common Market matters.
Mr. Speaker: I have listened with especial care to the points that have been made because I consider it to be one of my duties to try to protect the rights of Back Benchers in this House. My experience is that Ministers are able to look after themselves—at least, I did when I was a Minister. Most Ministers do. This matter is not my responsibility but the responsibility of the Leader of the House. I shall discuss it with him.
May I leave the House with this thought on the subject: that for many years interviews with the Press on forthcoming White Papers have been held before the White Paper appears before the House. I did it myself when I was a Minister. I am drawing on my own experience. Of course, however, the White Paper is not available today and the Minister has explained why. I shall discuss this with the Leader of the House.

EUROPEAN ASSEMBLY ELECTIONS BILL
Mr. Speaker: I have a brief ruling to make.
Last Friday the European Assembly Elections Bill was presented in the House after notice had been given. Arrangements had been made that the Bill should be available to hon. Members immediately after presentation. On receiving their copies several hon. Members noticed that there was endorsed on the back:
"Presented by Mr. Secretary Ross"
74
instead of
"Presented by Mr. Secretary Rees".
They questioned whether this error invalidated the presentation. The proceedings in the House were, however, correctly carried out. The dummy Bill, which is invariably used for presentation, duly carried the name of Mr. Secretary Rees and the presentation was carried out by another member of the Government acting on his behalf in the normal way.
With regard to the error in the print of the Bill, I have in my hand the original manuscript which was sent to the printer. This shows clearly the name of Mr. Secretary Rees. The substitution of "Mr. Secretary Ross" was a printer's error. A correction slip was prepared as soon as the mistake was discovered and was attached to all copies of the Bill not already issued. None had been issued outside the Houses of Parliament. I hope that that satisfies hon. Members.

SCOTTISH ESTIMATES
Ordered,
That the Estimates set out hereunder be referred to the Scottish Grand Committee:—

Class III, Vote 2, Agricultural Support (Department of Agriculture and Fisheries for Scotland).

Class III, Vote 6, Other Agricultural Services (Department of Agriculture and Fisheries for Scotland).

Class III, Vote 10, Forestry.

Class IV, Vote 16, Trade, Industry and Employment (Scottish Economic Planning Department).

Class VI, Vote 3, Roads and Transport (Scottish Development Department).

Class VII, Vote 2, Housing (Scottish Development Department).

Class X, Vote 2, Education and Libraries (Scottish Education Department).

Class XIII, Vote 22, Other Services: Scottish Office.

Class XVII, Vote 3, Rate Support Grants to Local Revenues, Scotland.—[Mr. Foot.]

ORDERS OF THE DAY
  POST OFFICE BILL
  As amended (in the Standing Committee), considered.
Clause 1

  MEMBERSHIP OF THE POST OFFICE
  5.12 p.m.
  The Under-Secretary of State for Industry (Mr. Les Huckfield): I beg to move Amendment No. 2, in page 1, line 14, leave out from beginning to 'of' in line 15 and insert:
  'No order shall be made in pursuance of this subsection unless a draft of the order has been approved by resolution of each House'.
  This is a drafting amendment. I can say genuinely and honestly to the hon. Member for Kingston upon Thames (Mr. Lamont) that we thought we had this right in Committee. We had not. This amendment puts matters right.
  Mr. Norman Lamont: May I thank the Minister for his explanation and say that we naturally accept what he has said? We are pleased that he is repeating the point that the Government are prepared, provided that it is in the correct form, to accept the amendment that we originally suggested in Committee. The Government's amendment amends our original amendment. Ours was defective and so was the Government's original improvement.
  The purpose of our amendment, as the House may not be aware, was to make sure that this experiment was confined to a two-year period, which is what the Government have said ought to be the purpose of the Bill. We think that that ought to be written into the Bill, because when this measure becomes an Act certain consequences will flow and all sorts of things might happen to the structure of the Post Office. We want to make sure that the Government are compelled to come back to the House and also that the Post Office Board will revert to its normal size. I am pleased that the Government have accepted the spirit of our original amendment. I am happy to accept this amendment.
  Amendment agreed to.
  Mr. Geoffrey Finsberg: I beg to move Amendment No. 1, in page 1, line 15 at end insert
  'but before such an order is laid, the Secretary of State shall make available to Parliament a White Paper detailing the results of the experiment'.
  This is the third time that this matter has been under discussion. The first was on Second Reading when in reply to me the Minister of State said that he was attracted to my proposal that some way should be found to assist hon. Members and the public to assess the outcome of the experiment. In Committee I pressed this proposal again because I did not feel that the Government had taken the point on board.
  The Under-Secretary of State said that again I had made a reasonable point, adding:
  "at this precise moment in time I cannot give him an absolutely copper-bottomed guarantee of the precise format of what we may be able to offer."—[Official Report, Standing Committee G, 21st June 1977; c 30.]
  I accept that it was not possible for him to do that and for that reason I drafted this amendment.
  I am sure that I can accept 50 per cent. of what the Minister will tell me, namely, that the amendment is technically badly drafted. At least he and I are on an equal footing, because even the Government's draftsmen cannot get it right the first time. What chance has a Back Bencher? If this is to be an experiment of any value and if Parliament is to decide at the end of two years whether it should continue, we shall want more than a brief statement by a Minister or a statement from the Post Office Board. Parliament would wish to have some document to consider prior to having to take a decision. The matter is as brief and as simple as that.
  The Minister of State, Department of Industry (Mr. Gerald Kaufman): I fully sympathise with the desire of the hon. Member for Hampstead (Mr. Finsberg), which I know is shared by other hon. Members, that Parliament should have the opportunity to review the experiment at the end of its two-year term. The hon. Member has reminded the House of what I said on Second Reading and of what my hon. Friend said in Committee. The hon. Gentleman's amendment would lay a statutory duty on the

  77
  Secretary of State to present a report in the form of a White Paper. The hon. Member has been good enough to acknowledge that it would not be a satisfactory amendment to incorporate into the Bill.
  The amendment would not accord with normal practice in that a statute does not stipulate in what form a Secretary of State should present a report to Parliament. I am advised that the term "White Paper" is not a legal term and that it would not be appropriate to use it in statute. On the other hand, I fully accept the fundamental point behind the amendment, namely, that Parliament should be properly informed about the result of the experiment. I give the House a firm undertaking that a report on the experiment will be presented to Parliament.
  Clearly, my right hon. Friend cannot decide finally at this stage precisely what form will be appropriate for a report to Parliament on the experiment. We have been considering it. Perhaps the mast appropriate way to handle this would be for the Chairman of the Post Office to provide my right hon. Friend with a report on the operation of the experiment, which would be made available to Parliament. My right hon. Friend would invite the chairman in preparing this report to include the views of the Post Office unions as well as of the board. This approach would in no way cut across the arrangement agreed by management and unions and I believe that both sides would welcome the opportunity that such a report would provide for a full and honest review of the experiment. That being so, I hope that what I have said will have satisfied the House that Parliament will be given the information necessary to form a judgment of the success of the experiment.
  Mr. Norman Lamont: I welcome what the Minister has said. I very much hope that when deciding what form this report might take he will bear in mind the points made in Committee about how difficult it is to measure the performance of the Post Office. We have gone over this point before and I believe that the Minister accepts it. Given that the Post Office is a monopoly whose borrowings are guaranteed by the Government, profitability alone is not an adequate measure-
  78
  ment of its performance. It is important that we have available all the data about output per standard man-hour to try to assess the improvements in the performance of the Post Office.
  We pointed out, for example, that the accounts do not always conform to the best commercial practice and are thought to be somewhat vague. Net assets, for instance, are not very clearly defined and do not always visibly measure the return on capital. I feel strongly that much more information should be made available on a standard basis over a period. That is information that the Government have and that the Post Office has and that would enable us to judge much better than by profitability by itself how the Post Office is doing. That is a general point, but it applies to the period of the experiment.
  We want to see whether having union representatives on the board will make a difference to the performance of the Post Office. No doubt the consumer will be able to judge performance for himself and whether the services are improving.
  I hope that when the Minister tries to work out what form the report to Parliament takes he will bear in mind what we have discussed, namely, the need to have more information about the performance of the Post Office. That is material that he already has but that is not always made available to the public.
  Mr. Geoffrey Finsberg: The Minister has been most helpful and I press him on only one minor matter. The hon. Gentleman said that the chairman would present the report and that the unions would be consulted. As the new board is, by statute, to have some consumer representation, will he ensure that the Post Office Users' National Council is consulted before the chairman makes the report?
  On that basis I am delighted to beg to ask leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Motion made, and Question proposed, That the Bill be now read the Third time.
  5.23 p.m.
  Mr. Norman Lamont: We gave the Bill a welcome and we hope that the experiment will be a success.

  79
  We have sounded one or two notes of caution. First, we very much hope that the experiment's implementation will not delay the implementation of whatever the Carter Report recommends about the structure of the Post Office. That is one fear that we are bound to have. It seemed extraordinarily premature to put forward the proposal to enlarge the board before the issue that has been considered by the Carter Committee, namely, whether the corporation should be split into two or whether it should continue as a joint organisation, has been considered by the House. Many people will fear that a premature decision has been made. As the Post Office Workers Union and Mr. Jackson have already declared their opposition to separating telecommunications from the Post Office, the fears are bound to be the greater.
  I hope that the Minister will be able to tell us when we can expect the Carter Report. It seems to have taken an extraordinarily long time. The committee started work in January and the report was presented to the Minister in May. In the middle of that period the United States had a similar investigation into its postal services. That investigation has taken a much shorter time. I believe that it took only eight months to present the report to Congress. I hope that we can have some further information about that.
  The only other note of caution that we wanted to sound was our hope that all members of the board would act as such and not as representatives of interests. I know that the Minister has said that that is his hope and the aim of the Government, but he will understand that fears will persist.
  Some of us have read the document that was the result of the study of the Council of Post Office Unions and the Post Office management and that indicated that the unions did not initially entirely accept the need to act in such a way. In the document there were references to the unions being expected not to criticise the board's decisions in public but not actually to defend them.
  I know that the Minister went on to say that everyone accepted the responsibilities of being a board member, but
  80
  the very fact that a document had been produced containing such an absurd suggestion that board members should be expected to do nothing more than not to criticise decisions of the board did not give enormous confidence that the board would operate as a team and operate in the interests of the Post Office as a whole. It was because the Minister assured us on that issue that we withdrew one of our earlier amendments that would have enshrined the responsibilities of board members.
  We hope that the message has got through loud and clear to union representatives on the board. That is the only way in which the experiment can work successfully. Ultimately the experiment will be judged by whether it helps to speed up change within the Post Office and telecommunications and whether it results in a better service for the consumer. With those remarks, my right hon. and hon. Friends wish the experiment well.
  5.27 p.m.
  Mr. Richard Wainwright: I do not wish to detain the House at any length but Liberal Members wish to welcome the Bill. We welcome the fact that it has been unopposed and that it springs from the initiative of parties within the Post Office. It is in no way being imposed upon any parties in the Post Office.
  We are reassured by the full assurances that have been given to the House about the Carter Report not being in any way prejudiced by the experiment when it is under consideration. I hope that we can be reassured that the unions intend to produce their directors for their share of the numbers on the board by democratic processes. It is not for the House to interfere in the domestic arrangements that unions make to produce their representatives, but it is our hope, which we have expressed to each of the unions, that selection will be carried out in a manner that is seen to be democratic by all concerned.
  It is a fact that when the Bill in its original form, which provided for only 16 board members, was shown to my hon Friends and myself we were positively unable to accept it. We indicated that we would oppose it. We did not believe that the ordinary private consumer was being given adequate representation.

  81
  However, now that the board has been increased to 19 members—possibly 20 with the chairman—there is opportunity for representatives to be put on the board, as has been specifically promised, who will be there for no other reason than their specific familiarity with consumer affairs.
  When we take into account that every member of the board will by definition, in common with every other British citizen, be a consumer of Post Office services, we think that the consumer interest will be well taken care of for the purposes of the experiment, always provided that the Government, as I believe they intend, carry out the most elaborate and careful search for persons adequate to voice consumer interests on the board.
  On that basis we wish the experiment well and hope that other industries will take note of the need to proceed by experiment rather than by dogma. I am glad that the Bill has come thus far.
  5.29 p.m.
  Mr. Ioan Evans: I join briefly in welcoming the Bill. I am pleased to note that it has made such speedy progress through Committee. I hope that it will soon pass through this place and another place and that the Post Office will soon be given the opportunity to bring the experiment into being.
  The Minister is to be congratulated on the way in which the Bill has been expedited this Session. My hon. Friend's Department have given its passage every encouragement. It is good to find that the Post Office and the trade unions within it have come together to promote an experiment in worker participation in the running of the Post Office. It is not a question of whether the experiment will be successful. I am convinced that it is a question of the extent of the success. The Post Office is to be congratulated.
  There is great talk about the Bullock Report, and industrial democracy will be on Parliament's agenda for months and years ahead. However, the Post Office has gone ahead and it will be implementing the experiment. In Tom Jackson of the Post Office Workers Union and in Bryan Stanley of the Post Office Engineering Union we have two public spirited general secretaries. If the unions are to be involved in the experiment so as to make it a success, I am convinced
  82
  that both the Post Office unions will make it a success.
  I hope that consideration will be given to the making of an interim report showing how the experiment is progressing and that an appendix will be published pointing out how the workers have been brought into the running of the Post Office. I am convinced that, with workers and consumers on the board, we shall have a more efficient service in the Post Office. I hope that the Bill will soon be on the statute book and that in the next few months we shall witness the beginning of a great experiment in industrial democracy.
  5.31 p.m.
  Mr. Michael Marshall: I hesitate to strike a slightly carping note in the agreeable atmosphere that has been engendered today, but, as one who, unfortunately, could not take part in the Second Reading debate and therefore was not involved with the Bill in Committee, although I have read the Official Report of the Committee proceedings, I feel that we cannot allow the Third Reading to pass without recording the basic objective, which should be redefined, of the newly reconstituted board.
  I realise that some reference was made to these matters in Committee, but it would be wrong to leave the House and the country with the impression that this experiment by itself will solve all the problems of the Post Office. No hon. Member would argue that. However, it is right that we should consider briefly what we want to determine as the acid test to decide whether the experiment has been a success.
  It is not the structure and forms of the board but the results that they produce that interest us. We should consider what the three groups—management, trade unions and outside interests—will contribute in trying to overcome some of the problems. We cannot hide from the fact that there is massive discontent among the public about the service in the Post Office, particularly on the postal side, or from the anxiety of the taxpayer as he has seen considerable amounts of investment going into the postal and telecommunications sides in a difficult and uncertain course in recent years which has not been charted with great skill and which is still very worrying. This is a

  83
  matter that perhaps primarily must be measured against the future of the management group and the contribution that it will make.
  Anyone who considers the rise of one-third in postal charges since 1971—well ahead of inflation—must ask upon what basis management decisions were made and on what basis they will be made in future. We must also consider the tripling of charges within the context of the withdrawal of Sunday collections—a matter that has caused a good deal of upset and inconvenience to my constituents and to the constituents of many other hon. Members. Therefore, one of the first priorities of the management group in the newly reconstituted board must be its ability to look at these matters anew and perhaps to show a little more flexibility in its thinking about providing services and, in particular, the withdrawal of the Sunday service.
  I should like to hear from the board and to read in the report which the Minister has undertaken to bring before the House that new thought has been given to the question of technological development in telecommunications—
  Mr. Deputy Speaker(Sir Myer Galpern): Order. The Third Reading debate is a narrow debate. If the hon. Gentleman were to proceed on the lines that he is at present following, he could cover every facet of the services being provided. That is not the purpose of this debate. The intention is to increase the maximum number of members of the Post Office Board. If the hon. Gentleman proposes to go in depth into every separate department of the Post Office and say that these are matters to which the board must address itself, regretfully I should have to tell him that he is out of order.
  Mr. Marshall: I am grateful for your guidance, Mr. Deputy Speaker. The newly reconstituted board will consist of seven management members, seven trade union members and five members representing outside interests, and I am trying to show that we look to the board to overcome many of the problems of the Post Office. I have been running briefly through some of the problems and considering which matters the reconstituted board might be expected to tackle. I
  84
  hope that you, Mr. Deputy Speaker, will bear with me if I move to the trade union side of the equation. It will be difficult for the House to consider whether the experiment has been a success if we have not brought out what we expect from the board—
  Mr. Deputy Speaker: Order. We are appointing a board. It will be the board's job to run the services of the Post Office. If the hon. Member goes into detail on matters to which he thinks the board should address itself, the whole purpose of the board becomes valueless.
  Mr. Marshall: I understand what you say, Mr. Deputy Speaker. A number of these matters were discussed on Second Reading and in Committee, and I am trying to pull together the strands—
  Mr. Deputy Speaker: Order. That is precisely the point. This is not a Second Reading debate. It is a Third Reading debate and it is confined to the question whether we should increase the number of members of the Post Office.
  Mr. Marshall: I do not wish to challenge your ruling, Mr. Deputy Speaker. It is difficult for Members who have not had an opportunity to take part in the previous debates, but, out of deference to you, Mr. Deputy Speaker, I shall try to confine my remarks within the terms you have indicated.
  I hope that the structure, planning and forecasting of the Post Office will move in the way suggested by my hon. Friends. I hope that the fact that the union group has a commitment to its constituents will not inhibit it, because the pattern of the board will be meaningless if its responsibilities to its constituents supersede its responsibilities to the board as a whole.
  Above all, the newly reconstituted board must, by definition, have as its prime concern a new deal for consumers and taxpayers. They have a right to expect that. If the board does not achieve that, it will have failed, not only from an industrial democracy point of view, but in doing the important job of resolving the problems that I have attempted to discuss.
  5.38 p.m.
  Mr. Kaufman: The hon. Member for Kingston upon Thames (Mr. Lamont)

  85
  asked when the Carter Report would be published. It is being printed, and we hope to be able to publish it next month. That is the intention.
  The hon. Gentleman, in referring to the relationship of the experiment with the Carter Report, said that our decision to authorise the experiment was premature. Like many of us on both sides of the House, the hon. Gentleman was subscribing to the famous doctrine of "unright time". It can be argued that no time is the right time to make a decision. We decided to go ahead with the experiment. We realise that there might be criticisms, but, particularly in view of the way the House has received the Bill, we hope that the experiment will be shown to have been worth while.
  It is satisfactory that, while we were considering the Bill in Standing Committee last week, the Post Office Engineering Union at its annual conference was voting to endorse the experiment. The Union of Post Office Workers, as the other major union involved, had already endorsed it. We are anxious to have the support of the other unions.
  I think that my hon. Friend the Member for Aberdare (Mr. I. Evans) was right to pay tribute to Tom Jackson and to Bryan Stanley for the way in which they have been receptive to points put to them by Ministers and by other
  86
  hon. Members to make sure that the experiment is widely acceptable.
  I think it is right, too, that we should pay tribute to Mr. Tony Carter of the Council of Post Office Unions and to Sir William Ryland and Mr. Ken Young of the Post Office, who have devoted themselves wholeheartedly to making this agreed document available to us.
  Both the unions and the Post Office—particularly the unions, I think—are accepting a great responsibility in participating in this experiment. This is not simply conferring upon them or upon the independents—including those with consumer experience—some kind of privilege. They are taking on a very great responsibility in running the greatest business in Western Europe, a business expected to make large profits for the taxpayer. They are taking on a great responsibility in what I think we can agree to be a great and historic venture.
  I am grateful to the House for the speedy and unhampered passage that it has given to the Bill. I think that it is possible for me, on behalf of the House, to say to all who are taking part in this experiment "We wish you well".
  Question put and agreed to.
  Bill accordingly read the Third time and passed.

SOCIAL SECURITY BENEFITS
The Minister for Social Security (Mr. Stanley Orme): I beg to move,
That the Social Security Up-rating Order 1977, a draft of which was laid before this House on 15th June, be approved.
Mr. Deputy Speaker(Sir Myer Galpern): I gather that it may be convenient to the House if we consider the three social security motions together.
Mr. Orme: As you have said, Mr. Deputy Speaker, it may be for the convenience of the House if we discussed at the same time the second and third motions, the Child Benefit and Social Security (Fixing and Adjustment of Rates) Amendment Regulations 1977 and the Supplementary Benefits (Determination of Requirements) Regulations 1977, drafts of which were laid before the House on 15th and 20th June respectively.
I must offer my apologies to the House that, owing to industrial difficulties, printed versions of the three instruments and of the accompanying Government Actuary's report, Cmnd. 6848 on the up-rating order, are not available this afternoon, but very clear copies of all four documents have been prepared and I very much hope that right hon. and hon. Members will find those helpful.
The purpose of the first two instruments is to bring into effect in the week commencing 14th November most of the increases in benefits that my right hon. Friend the Secretary of State for Social Services announced to the House in his statement on 25th May. I say "most of the increases" because those for war pensioners are dealt with in separate Prerogative Instruments.
The second instrument, the Child Benefit and Social Security (Fixing and Adjustment of Rates) Amendment Regulations 1977, is complementary to the uprating order and it may be appropriate for me to explain its relevance before going on to deal with the order itself.
Last year's uprating order operated from a date prior to the introduction of child benefit in April 1977. It therefore contained dependency increases for children which did not take account of adjustments consequent on the child benefit scheme. Those adjustments were made
88
by a later set of regulations, which came into effect on 4th April and which reduced by £1 the national insurance benefits payable in respect of first children and by £1·50 the benefits for later children.
In the schedule to the uprating order which is now before the House we have set out the actual rates which it is proposed to pay for children from November onwards. Accordingly, there is no longer a need to impose any further reduction by means of child benefit regulations. The purpose of the regulations now before the House is therefore to discontinue these reductions with effect from 14th November or the first pay day thereafter for the benefit concerned.
Let we now turn to the uprating order itself and the national insurance and industrial injuries benefits which it covers. A list of the principal benefit rates can be found in Appendix 1 to the Government Actuary's report on the uprating order. It might be helpful if I refer to some of the main items.
I must begin with the most significant item in both social and financial terms—the standard rates of retirement pension. The order would raise these from £15·30 to £17·50 for a single pensioner and from £24·50 to £28 for a married couple. These represent increases of 14·4 per cent.
It is proposed that other long-term benefits should rise by corresponding amounts. Thus, for example, the top rate of attendance allowance will rise from £12·20 a week to £14 and the pension payable to a 100 per cent. disabled person under the industrial injuries scheme will go up from £25 to £28·60. In accordance with the recent change in the law which links the level of operation of the earnings rule with the general level of earnings, the amount a person may earn before his pension is reduced will rise in November from £35 to £40.
The standard rate of sickness and unemployment benefit will rise from £12·90 to £14·70 for a single person and from £20·90 to £23·80 for a married couple. These are increases of around 14 per cent. and other short-term benefits will rise by corresponding amounts. The order also provides for an increase in mobility allowance from £5 to £7 a week.

89
The order itself is quite straight forward. Article 1 is formal. The increased rates are provided for by Article 2, together with the schedule. Article 3 provides for the dates from which the various increases in benefits are to take effect in the week beginning 14th November.
In this connection, I ought to explain to the House why the Order Paper still bears, in relation to the order, the intimation that the Joint Committee on Statutory Instruments has not yet completed its consideration of if. This relates entirely to a detailed point on the commencement provisions for short-term benefits in Article 3(2) of the order, and the point is one on which our legal advisers are offering an explanation to the Joint Committee which will, I think, satisfy it that what we have done is in accordance with precedent and is right. Article 4 provides for the increase in the weekly earnings limit for pensioners and some pensioners' wives. Articles 5 and 6 are technical. One updates the Social Security (Pensions) Act 1975 and the other formally revokes last year's uprating order.
The order fulfils my right hon. Friend's statutory duty to raise benefits by the amount he expects to be necessary to match price inflation. But it also meets the repeated undertakings which the Government have given that we shall maintain the value of benefits and improve them whenever possible. Since coming into office in 1974 we have increased social security benefits four times—in July 1974, April 1975, November 1975 and November 1976. This uprating will take effect exactly a year after its predecessor and will be the fifth in just over three and a half years.
Between October 1973, when the Conservative Government last increased benefits, and November 1976, when the current levels of benefit came into force, retirement pensions went up by 97 per cent. In cash terms that has meant a rise from £7·75 to £15·30 a week for a single pensioner and from £12·50 to £24·50 for a married couple. Short-term benefits over the same period rose by 76 per cent. By comparison price inflation was 72 per cent. Thus over that period the purchasing power of pensions and other long-term benefits increased by 15
90
per cent. Any short-term benefits more than held their own.
Let us consider also the relationship between pensions and earnings. In October 1973 the single person's pension was 26 per cent. of the net earnings of a male industrial manual worker. By November 1976 it had risen to 34 per cent. of net pay.
By any comparison, therefore, the Government have stood by their pledges to protect the position of pensioners and other social security beneficiaries during a period of economic difficulty. We are once again acting to protect the poor, the sick and the unemployed. The fight against inflation is far from over, but it is slowly and surely being won. All the indications are there. By November the effects of last year's drought and of the falling exchange rate will have worked themselves through the economy. The improvement in our balance of payments means that we have a stable exchange rate.
I am confident that the rate of inflation will fall by November and that the year-on-year prediction of around 13 per cent., which my right hon. Friend mentioned to the House last month, will prove realistic and will mean that the increases in benefits contained in this order will be more than sufficient to sustain the 1976 values.
I turn now to the draft regulations that provide for increases in the supplementary benefit scale rates laid down in Schedule I to the Supplementary Benefit Act 1976. The increases that we propose are the same as those in the related national insurance increases and will come into force at the same time. We propose that the long-term scale rates, which apply to supplementary pensioners and to people, other than the unemployed, who have received supplementary allowance continuously for two years, should be increased from £15·70 to £17·90 for the single householder and from £24·85 to £28·35 for a married couple. The ordinary scale rates, which apply to the unemployed and to other people who have received a supplementary allowance for less than two years, will be increased to £14·50 for a single householder and to £23·55 for a married couple.
Scale rates for other adults and for children are also being raised. The special rates which apply to the blind will go up

91
by the same cash amounts as the corresponding rates for sighted persons, so that the special preference for the blind will continue. Regulation 2 also ensures that the increases in attendance allowance are passed on to supplementary beneficiaries who need attendance. The standard weekly addition for rent in the case of a claimant who lives as a member of another person's household is to be increased by 25p to £1·45. As a result of these increases, the income of adult non-householders will go up by £2 a week for supplementary pensioners and other long-term recipients and by £1·70 for other non-householders.
I should also like to mention two other changes which, though not provided for by the regulations, are an important element in the uprating. As my right hon. Friend announced on 25th May, the Supplementary Benefits Commission has decided to increase the discretionary additions for extra heating and the standard additions for special diets. These changes will take effect from the week beginning 14th November 1977, at the same time as the increases in the scale rates.
In conclusion let me say a few words about the way in which the increases in contributory benefits will be paid for. More than 12 million people, many of whom are drawing more than one benefit, will receive increases next November from this uprating. However, there is no question of there being any alteration in contributions until April 1978. The contributions which came into force last April made adequate provision for the additional cost of benefits between November 1977 and April 1978.
The increases in benefits embodied in the order will increase the outgo from the National Insurance Fund in a full year by about £1,250 million. Of course, income into the fund will also rise as earnings rise, but the extent to which this will match increased outgo will depend, among other things, on the level of earnings and the level of unemployment in 1978–79. It is too early yet to make firm predictions about these matters.
Indeed, a further complicating factor is the introduction in April 1978 of the new pensions scheme. This will mean one level of contributions rates for the
92
majority of employees, who will then begin to earn an earnings-related addition to their basic pension, and it means a lower contribution rate for employees who are contracted out because they are members of good occupational schemes.
All these factors will be taken into account in the Secretary of State's annual review of contributions in the autumn, when more up-to-date information will be available. The House will have a further report from the Government Actuary showing the effect of the changes already legislated for and of any new proposals arising out of the review. Any new rates of contributions would, of course, be subject to the approval of Parliament.
Mr. Patrick Jenkin: Can the right hon. Gentleman say something about the Government's expectation of the number of people likely to be contracted out, and what effect that might have on what has hitherto been thought to be the likely rise in contributions to take account of the effect on the National Insurance Fund?
Mr. Orme: As the right hon. Gentleman is aware, the Occupational Pensions Board is dealing with this matter at the moment. I have publicly urged, and do so again, schemes to come forward, because time is running out. I accept that one of the factors in the equation is the problem of incomes, and the Government are fully aware that the negotiations now going on must take account of it. I have often been told that while there are perhaps 12 million people in occupational pension schemes, another 13 million people are not, and their views have to be taken into account. I am sure that the right hon. Gentleman wants to see, as I do, as smooth a turnover as possible—that is certainly the Government's desire. We have no basic information yet that I could give him, because schemes are coming in and are being analysed. I shall certainly keep the House informed as we go along.
I hope that I have said sufficient to show hon. Members what we propose by way of improved benefits for pensioners and other social security beneficiaries this autumn and how we envisage the cost will be met. I have much pleasure in commending the order and both sets of regulations to the House.
5.58 p.m.
Mrs. Lynda Chalker: It is convenient for the House to be able to take these three measures together, because they cover much of the same ground. We are talking about persons who, for reasons of age or disability, or simply because they are individuals hit by the level of unemployment, must be dependent on the State. I strongly echo the welcome given by my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) on 25th May to the upratings in benefits. No one in this House on either side is unaware of how greatly the most hard pressed in our society need these increases—the Minister said so himself.
Bearing that in mind, I note with some dismay the absence of the co-proprietors of the Government, the Liberals, whose Bench is once again empty, and also the fact that the Minister, apart from a few faithful followers, is on his own. Yet we are talking about a most important matter. It is a shame that this is always the situation when we face an enormous amount of public expenditure. Other hon. Members do not show as much interest as some of us would wish.
Mr. Orme: I am sure that the hon Lady does not want to mislead the House. She is correct about the Liberal Benches and my own. However, the Benches behind her are hardly crowded.
Mrs. Chalker: The change of subject matter has only just taken place. I am sure that we shall soon see more of my right hon. and hon. Friends here. They intimated to me earlier that they wished to listen to this debate.
Hard-pressed people in our society may well argue that the need is more immediate than 14th November, and we have previously asked the Minister why uprating takes so long. But in welcoming these measures perhaps I shall be allowed to ask the right hon. Gentleman what progress he sees in speeding up this process. I gather from various parliamentary answers that his Department has been looking into the matter, and it would help all of us if we knew how long it will take the Minister and his staff, with their new computers, to process upratings. It should be possible to reduce the time greatly. In saying that 14th
94
November seems a long way off I echo the view of the potential beneficiaries.
Veterans in social security debates are used to hearing Ministers of both complexions say that they are presenting the fourth or fifth increase and that they have done so much. However, none of us will be bemused into thinking that they have not had to do it under considerable pressure. I can understand why the Minister feels pleased that he has been able to make a little progress here and a little progress there and that he can to some extent, to use his own words, "maintain and improve the benefits" and to carry out his pledge to protect the poor, the sick and the unemployed.
What I am about to say implies no personal antagonism towards the Minister and his Under-Secretary. Both are utterly sincere in this matter. But no increase in benefit of any kind brings anything but temporary and partial relief as long as we go on suffering the present appalling rate of inflation, and there are very worrying indications about it even as late as today. We see in this morning's newspapers that the increase in the price of food is costing the average family 18½ per cent. more per annum. This is the burden everyone faces, but especially those families dependent on benefit, who do not have the same opportunities to shop around or to stock up goods.
We know that food prices rose by 20·2 per cent. in the first three months of this year. This is not a turndown. It is in fact the increased rate of inflation in food prices which affects those families very much.
Today, we have seen an announcement by the OECD. According to The Times,
"… the OECD experts suggest that inflation will run at 13 per cent. during the second half of 1977 … Gross forecasts show the economy expanding faster than in the last six months, but not fast enough to stop unemployment rising."
It is with this in mind that we offer a special welcome to these measures on behalf of those who cannot get jobs and for whom there should be the increase in benefit that is proposed.
We know from all that we have seen that the tough times will continue and continue a good deal longer than the Minister and his friends wish. It is against this background that we must

95
examine the upratings and the welcome improvements for the hardest pressed, but also we must make a critical analysis of the rôle of these benefits alongside the rest of the Government's economic strategy.
I was somewhat relieved when the Prime Minister asked the House in March to regard the financial policy of the Government as a whole. We must do that, because the level of benefit is crucially dependent on what is happening to the rest of the Government's financial policy. The hardest pressed in our society are, increasingly, the families with children. They are the recipients of one benefit or another. Every child now has an entitlement to child benefit. This is a step that has our fullest support. But that benefit is a great deal smaller than any of us would wish. It seems to be smaller for reasons not decided by this House, which is a situation to which right hon. and hon. Members on both sides are very much opposed.
Not only are we crucially aware of the position of families with children, we are also aware of the plight of the disabled, the handicapped and the unemployed, who carry a double burden. They have the double trauma of additional financial pressures as well as that fast-growing burden of family costs.
Over the period of high inflation and in our discussions about social benefits various accusations have been made in this House and outside it against the Opposition Front Bench. I want to put one or two of them in context.
Let me make it clear that there is no intention on the part of the Conservative Party to dismantle the Welfare State. However, there is every determination to bring a lot more sense to the distribution of the resources that we have. There is also every determination eventually to increase the resources so that those who are hardest hit really benefit. They need to be encouraged by incentives to do more for themselves than they are at present.
Then, as my right hon. Friend the Member for Wanstead and Woodford said in a most valuable debate on the poverty trap on 17th June, we need also to make it possible to raise issues of tax and social security together when we are debating legislation. He
96
went on to indicate that we have to arrive at a procedure in this House that allows us to take a sensible look at the combined effects of tax and social welfare benefits. I am aware that those procedural changes have not yet occurred, so although, outside the Chamber we continue to review taxation and benefits together, in this debate I shall restrict my remarks to the benefit half.
My conclusion is exactly that of the right hon. Member for Blackburn (Mrs. Castle). On 30th March she said that the Government were continuing the trend of recent years of financially discriminating against families and that there was no real additional help where there were large numbers of children in the way that she would like. It cannot happen under the present system.
More recently, in our debate 10 days ago, there were streams of examples of the combined problem that families face. Even if they were to get other benefit increases, if they were recipients of an existing benefit or of one of the special allowances, the area where there is no increase is that of child benefit.
The Minister referred to "an adjustment" in child benefit. It is an adjustment to get all the figures in one place in the uprating order. There is no increase in child benefit in the measures that we are discussing today. Yet we know that every household cost is up—clothing, especially for children, shoes, food, heating and school bus fares. I could go on; there is a long list.
I felt a great deal of sympathy for the Under-Secretary when he said in that same debate:
"We have been struggling for three years with the problems of reducing dependence on means-tested benefit."
Those people whose earnings are insufficient, therefore, require to turn to the Government for help. In saying that, the Minister explained why means-tested benefits for the present had to go up and that the dependence on means-tested benefits would continue for some time to come.
Then the hon. Gentleman referred, even more clearly, to the joint problem. He said:
"We have not been able to afford the cost of eliminating the overlap between tax thresholds and social security benefit levels.

97
The other reason is that we have the responsibility to ensure that disadvantaged members of society are given an adequate minimum standard of living. That has meant increases in social security benefits and rates that have overtaken the increases that we would have been able to make in tax thresholds."—[Official Report, 17th June 1977; Vol. 933, c. 804–9.]
I would only say that any other step that we take now on the present tramlines on which we are travelling will add to the problems of making people increasingly dependent on benefits. When the whole review—which we hope is going on now—is completed, we hope that it will lead to getting more people off benefits and enabling them to cope for themselves without having to turn to the Government. That means a universal form of benefits and it means that we should not endlessly increase the number of benefits.
We all know that to increase each of these benefits is right in present circumstances, but it is not the long-term answer to the problem of increasing family poverty and increasing dependence on benefits. We must encourage people to do more for themselves. We must look at the priorities put on the money that is available.
I am not in a position to tell the Minister that he should have upped one benefit and not increased another. That is very difficult for Governments and almost impossible for Oppositions. But we have to review the Chancellor's package of £2,250 million against the Secretary of State's draft uprating orders, which the Minister said will cost £1,250 million.
The Government Actuary's report, Cmnd. 6848, informs us that an increase in benefits will cost the National Insurance Fund £466 million this year and £1,234 million in a full year. He expects the National Insurance Fund surplus to fall to £698 million in 1977–78, based on the tragically high figure of 1,350,000 unemployed. It is also based on the assumption that between March 1977 and March 1978 average earnings will have increased by 10 per cent. I hope that the Government Actuary is correct. The National Institute for Economic and Social Research has said in its second quarter review that it believes that a 15 per cent. increase in annual average earn-
98
ings is much more likely. This was reported in The Times on 16th June.
If that latter figure is correct, there will be an increase to the National Insurance Fund but there will be steeper inflation and higher prices and many more groups of people will sink deeper into difficulty in meeting everyday normal costs—not luxuries—but ordinary costs of living for which benefits are designed.
The Government Actuary also says that every 100,000 more unemployed cost the National Insurance Fund £115 million. I am slightly surprised about this. It indicates to me that an increasing number of people will no longer be recipients of long-term unemployment benefit, but will become supplementary benefit recipients. Otherwise, that figure would be a great deal higher.
When the Under-Secretary replies to this debate, I hope that he will tell us how the Government expect the figure of 1,350,000 unemployed will break down. How will it divide among those on unemployment benefit plus earnings-related benefit for the first six months, those on unemployment benefit only, and those on supplementary benefit? How will this be affected when the new upratings take effect?
From the upratings there will be minor relief for the long-term unemployed. But it will be very minor compared with the fact that these people want to work. It is not much solace to give them an extra pound here and there when every one of them is inclined to run up debts for essential costs of living, such as heating. We should not just look to a solution by adding a little here and there but we should seek a real solution to bring that number down. This means looking at the matter in the context of the total management of the economy.
The Government Actuary's assumptions are worrying. In the OECD's background document there is an indication of the continuing likelihood of an increasing number of unemployed, so the costs may be greater than currently estimated.
It comes back to the upratings, where there is an even more worrying situation. On 25th May the Secretary of State said that he was confident of a 13 per

99
cent. inflation rate on a November-to-November basis. Of course this has its effect on the retail price index and the way in which families can or cannot manage on the benefit that they get. The same day my right hon. Friend the Member for Wanstead and Woodford pointed out that in the five months since the last uprating costs had increased by 9p in the pound. He asked the Secretary of State:
"Is he seriously expecting a rise of only just over 5p in the pound between now and next November?"
That was a perfectly genuine question to which the right hon. Gentleman replied:
"… I believe that a figure of 13 per cent. is a realistic forecast…".
He continued to adhere solidly to this 13 per cent. estimate throughout all his replies to questions on that statement.
Today's OECD report gives the six months annualised rate of inflation as 17·2 per cent. for the period from January to June and 13 per cent. for the period from July to December. That means that the annual rate of inflation based on May to November 1977 must be over 15 per cent., although the Secretary of State claimed that he stood by his seven months at 5p in the pound, or 13 per cent. I have no inside information about the OECD figures, but all this points to the problem raised by my right hon. Friend on 25th May. The Secretary of State stuck to his 13 per cent., but on the basis of the OECD figures there is no way in which we can possibly anticipate a level of less than 15 per cent.
If this is the case, the right hon. Member for Blackburn was right in her warning to the Secretary of State on 25th May when she said:
"Is not my right hon. Friend gambling on reductions in the rate of inflation in the next seven months of next year compared with the first five months?"—[Official Report, 25th May, 1977; Vol. 932, c. 1402–4.]
She knew and we suspected that this was the problem. If these are the circumstances, the 14 per cent. increase in short-term benefits and the 14·4 per cent. increase in long-term benefits will not meet the law of the Social Security Act 1975. What are the Government to do?
I hope that the Government will tell us what action they propose to take if the upturn of inflation is level with the OECD
100
forecast. OECD forecasts have not often proved wrong in the past, and this one is not what the Secretary of State was hoping for. As a result, will the Government consider returning to the historic calculation of inflation which served them before they avoided the April to November 1975 level in last year's up-rating? If they do that, we must know what is going on. There are a number of dark alleys down which the Secretary of State has been leading us and I hope that the Minister will throw some light on them tonight.
Mr. Orme: The Government's forecasts are based on the best possible figures available. Reports come out, one giving one figure and another giving some other. All reports are based on assumptions made about the situation between now and November, and the Government are fully aware of that. I reiterate that the figures given will be met, and if they are not, the Government will deal with the situation.
Mrs. Chalker: I am grateful to the Minister for saying that if the situation is not met the Government will cure the situation. The question we wish to ask, bearing in mind the Minister's earlier remarks on how long it takes to get an uprating through, is when this will happen.
There is a further comment I wish to make about the Government's estimates. I have more faith in the OECD figures than I have in the present format, which has existed for the past five years. I hope that the Minister will tell the House how long this process will take. Will it take as long as 20 weeks, or will it be a faster operation? Furthermore, will they return to the historic method of calculation, because this is most important for the future?
It seems ironic that the Civil Service pension increases are still calculated historically on a June-to-June basis, but, because the right hon. Member for Blackburn was forced to change her calculation period for benefit increases, those most in need are left to the vagaries of part historic and part estimated increases. I hope that that anomaly will lead the Minister to think that it would be fairer to ensure that increases are either all historic or all part historic and part estimate regarding future levels

101
of benefit, whether for the Civil Service or anybody else.
The situation is that the law may force this to happen. I gather that the Child Poverty Action Group has been granted leave to appeal in the Metzger case. If that case is won on appeal, what plans have the Government to cope with the situation?
Mr. Orme: The matter is sub judice.
Mrs. Chalker: It falls into the same category in that one is unable to calculate the full period in line with the law, and the Government must act. We must have an answer about what the Government intend to do if that case goes against them.
I turn to the question of the 14·4 per cent. increase in pensions. The Minister, as one would expect, made a good deal of this. I know that all pensioners will welcome it, but they will do so only if that money means something to them. I ask the Minister to consider the 10p, 20p and 30p heating additions, and I ask him to consult the Secretary of State for Energy to see that the scheme for next winter is a great deal more applicable than was the electricity discount scheme which came in this year for those on supplementary pension and benefit. That reflected only a 44 per cent. take-up, which was not the level of take-up one expected for those hard-pressed people.
We await the Government's review of all supplementary benefits, which we know is now taking place at all levels of benefit. We welcome the extension of non-contributory invalidity pension and its application to disabled housewives. I was sorry that I could not discuss the matter earlier today because of this debate. There are certain difficulties, and I hope that in the implementation of that benefit we shall have a good all-party approach to ensure that the benefits reach those who are entitled to them.
In the eyes of their local authorities, a large number of disabled persons are not even registered. Many people at present—in some areas probably about 50 per cent. of those entitled—are not receiving the benefits that would help them to cope with the present rampant rate of inflation. We want to see upratings and benefits to help people to become more finan-
102
cially independent in their own homes. We want to see fewer people being forced into local authority care and hospitals because they are unable to cope with life. We want those people to acquire aid and sufficient benefit to keep them out of local authority care. Surely the Government wish to keep people independent in their own homes as long as they can. Therefore, anything in these upratings that assists that aim will be welcomed.
I wish to ask one question on the Statutory Instruments. There is an overlapping benefits rule which will be brought out again when the rates rise in November. Will the Minister examine that rule in so far is it may be a disincentive to widows or anybody else to retrain? I have raised this matter with the Minister for Social Security on other occasions because it has caused a great deal of distress.
If such training were encouraged, fewer people would be benefit-dependent and better benefits could be given to a large proportion of people. At present there is a disincentive for such people to retrain compared with married women who are supported by their husbands.
I turn to the question of the taxation of short-term benefits. This is an issue that has been raised on many occasions by the hon. Member for Islington, South and Finsbury (Mr. Cunningham). The House was told on 28th April that there would be £355 million in extra revenue if all short-term benefits were taxed. I know that on previous occasions the Minister has accepted the need—
Mr. Deputy Speaker: Order. I have allowed the hon. Lady a good deal of latitude, as I am sure she appreciates. She is now exceeding that latitude by discussing issues of taxation. The point with which we are concerned in these measures is the adequacy or otherwise of the changes proposed. Therefore, I am afraid that the subject of taxation does not enter into this evening's deliberations.
Mrs. Chalker: In no way do I wish to go against your ruling, Mr. Deputy Speaker. I said earlier how difficult this matter was because it is sometimes impossible to discuss benefits without making some reference to taxation.
Mr. Deputy Speaker: Order. If hon. Members seek to sweep up everything on these measures, we shall end up by not knowing what we are discusing. The issue before us is quite clear.
Mrs. Chalker: May I just ask about the comment made by the Secretary of State on 25th May in answering Questions concerning the social security upratings, which we are now discussing? The right hon. Gentleman said—and this is set out in detail in c. 1409 of Hansard for 25th May—that the short-term benefits in this respect were under review and that the matter was now being considered by the Government. Will the Minister say when we may expect a statement on this matter, because if that amount of additional revenue could be brought forward, it could be used to assist those who are most hard pressed.
We welcome the conference that is to be held on 5th July on social security priorities. That conference will be concerned with these upratings and the priorities will be most important. I hope that the results of that conference, combined with efforts made in the House, will add weight to the sense of wanting to keep families together, whether their recipients are in receipt of child benefit, attendance allowance or whatever it may be. Whatever the outcome of the situation—whether we go by the OECD figures, as I do, or take the Secretary of State's forecast of the problem—the effect of three years of Labour Government has not given good measure for those who are most dependent on benefits. I do not think the Minister would disagree with that.
Mr. Orme: I would.
Mr. Deputy Speaker: Perhaps we should uprate the Government's performance, too.
Mrs. Chalker: I am grateful for that intervention, Mr. Deputy Speaker.
One of the things that is worrying us is that people on benefit are becoming increasingly bitter, even allowing for the increases that will take effect in the autumn. One gentleman who wrote to my hon. Friend the Member for Workington (Mr. Page) said that he had to be dependent upon benefit even though he had done his duty, often in long and bitter circumstances. That sentiment can
104
be echoed many times, regardless of the level of uprating because more and more people have become dependent upon benefit.
Throughout the debate on upratings we have come up against the problem that more children could do with help. We heard from the right hon. Member for Blackburn why there is not an uprating in child benefit. We know from a recent survey that it costs 34p a day to feed a child aged between one year and two years, yet the increase in child benefit is only 30p a week.
None of the things happening today will alter the system. The troubles that families are facing stem from the fact that there has been an increased rate of withholding money. There has been no real improvement in benefits to make up for the hardship that families face by not being able to retain a little more of what they earn.
I repeat the words of my right hon. Friend that in this debate we have become thoroughly boxed in, as I was a few moments ago. On 17th June—column 813 of Hansard—my right hon. Friend said exactly the same thing. He said that we cannot possibly discuss this matter if we cannot refer to other aspects of income for a family or for the disabled.
We read in the Sunday Times at the weekend that the Secretary of State wants to raise the family benefit by 50p a week from next April. To do that we might have to wait until the next Finance Bill. Is it to be accompanied by a reduction in child tax allowance, or will help come from some other source?
I have a few questions to put to the Government on that matter, because it concerns the attitude that we take to upratings and the support of children within the family. If the Government are prepared to do something about this level of child benefit, which they are not uprating today, will they accept this net addition to spending that was agreed upstairs in Committee on the Finance Bill, or will they not take 2p off income tax? Will they withdraw the additional £450 million in allowances and replace that by an increased child benefit? The whole criticism of what is going on with benefits and benefit uprating stems from the fact that the Government have done less for the married couple with two children than

105
for the single person and for the married couple without children.
If we can do anything about the situation, it will be through a universal child benefit scheme that will require uprating. We need greater synchronisation of benefits and taxation. We have had some of that. We know that many small additions are now being considered at the same time as local authority benefits, although two years ago they were not.
We find ourselves in the difficulty that for the family that is hardest pressed there is not the help that we wish them to receive. We eagerly await the opportunity to make changes that will lead to a strong economy and to decent benefits for those who are hit daily by the measures of this Government. Despite all their sincere upratings in these measures tonight, we can surely only say that this is the Government of all-time inflation.
6.36 p.m.
Mr. William Molloy Mr. William Molloy (Ealing, North) rose—
Mr. Tony Newton: On a point of order, Mr. Deputy Speaker. I wonder whether I might seek a little guidance from you on your ruling about the relationship of benefits to taxation. Some of the allowances that we are discussing, including the mobility allowance, are subject to tax. It seems, therefore, that if we are to discuss whether the proposed increase is adequate we must take some account of what the taxation system does to reduce the allowance paid to people.
Similarly, on the question of benefits that are not taxed you suggested that we should discuss whether the increase was big enough or small enough. One wants to compare the situation of the people concerned with that of those who are in work. It seems to me that one cannot discuss these matters without some reference to the effects of the taxation system.
Mr. Patrick Jenkin: Further to that point of order, Mr. Deputy Speaker. It cannot be only on this side of the House that some dismay was felt at the narrowness of your ruling. Perhaps I might draw your attention to an exchange that took place during a debate on the Finance Bill on 10th May. I had raised with the Financial Secretary to the Treasury
106
the problem of the impact of taxation on the child benefit and the effect of offsetting the addition of child benefit against social security allowances. The Financial Secretary said:
"The right hon. Member should…await a debate on social security before bringing these matters forward."—[Official Report, 10th May 1977; Vol. 931, c. 1261.]
Now, in a debate on social security matters, when my hon. Friend the Member for Wallasey (Mrs. Chalker) seeks to test the impact of taxation on social security benefits, you rule that she cannot do that as it is a matter of taxation.
Mr. Deputy Speaker: I think that the right hon. Member has answered his point of order. I am most grateful to him for the help he has given me. He referred to a debate on social security. Were this such a debate, I should have no objection to the matter referred to by him being raised, but I have yet to hear somebody demonstrate that with these three measures we are having a general debate on social security. A mere reference to taxation would be in order, and I should allow it, but I cannot allow hon. Members to go into the whole question of the basis of taxation and what we should do with taxation.
I must reaffirm that I shall hold to my ruling during my occupancy of the Chair in the debate on these three Statutory Instruments. What we are discussing is the adequacy or otherwise of the upratings provided by the three measures.
Mrs. Chalker: Further to that point of order, Mr. Deputy Speaker—
Mr. Deputy Speaker: Order. I think that when the hon. Lady reads Hansard she will realise that I allowed her to go fairly wide in her speech. My difficulty was brought out in the point raised by the right hon. Member for Wanstead and Woodford (Mr. Jenkin). If I allow the subject of taxation to be raised by one hon. Member, I cannot prevent others from debating the matter further.
Mr. Molloy: Thank you, Mr. Deputy Speaker. Had you not made your ruling I might have transgressed, because I should have been tempted to compare the relief paid by way of subsidy and tax relief to company directors who receive in one week what some of these recipients receive in a year—
Mr. Deputy Speaker: Order. I know that the hon. Member will not do that. Let us get on with the debate.
Mr. Molloy: I shall, of course, Mr. Deputy Speaker, adhere strictly to what I regard as your correct ruling.
I join the hon. Member for Wallasey (Mrs. Chalker) in her general appreciation of the endeavours of my right hon. Friend in introducing these uprating measures and the increased benefits that will flow from them. Having said that, I do not go one step further along the way with the hon. Lady, because what we have to appreciate is that these upratings and increases are necessary because we are in a state of inflation and we have not solved the problem of unemployment.
Regrettably, I am old enough to know that when I was a child Tory Governments did not even consider increasing unemployment benefit as unemployment increased. Instead, they debated how to reduce unemployment benefit when unemployment increased. That was the attitude of the Tory Party. Despite the nice words of the hon. Member for Wallasey and some of her colleagues, there is still a Dr. Jekyll and Mr. Hyde attitude among the Opposition. Today we see Dr. Jekyll being portrayed, but it will not be long before he is banished and the Tories show their true Mr. Hyde attitude.
It is important that the increases in the regulations and order are large enough to try to combat the price increases that fall hardest on the lower paid and the more unfortunate people in our society. My right hon. Friend has endeavoured to achieve this. No matter how much he had increased the benefits, there would still be criticism that they were not high enough. The best answer is to try to abolish unemployment and the need for these benefits.
It is easy when we have virtually full employment and no one on the breadline to debate what to do about the minority who need assistance from the State. It requires guts and courage to do what my right hon. Friend has done at this time of enormous problems. He had to fight very hard for these benefits, and I congratulate him on his courage on achieving increases across a wide range of benefits.
108
I had difficulty believing my ears when I heard the hon. Member for Wallasey talking about price increases. One would not believe that we had a record sitting last week because the Government wanted to help keep prices down by a form of control and the Opposition attacked us for the whole of one day, all through the night and right through the following day for doing so. It is a little nauseating to see Opposition Members leaping to their feet, with their eyes blazing with insincerity, to blame us for price increases.
It is, of course, far better for people to be employed than to be receiving benefits. I am with the hon. Member for Wallasey 100 per cent. about that. But we must look at the firms, one of which has been causing an enormous uproar recently, which pay wages at a disgusting rate so that people are better off receiving benefits than they are working for some of the rotten bosses who impose this sort of wages and conditions on working people. It is better to get people off the dole and off benefits, but we must remember that these instruments would not be necessary if some employers paid proper wages.
The hon. Member for Wallasey referred to the OECD Report. Half the people in my constituency are eagerly awaiting the next OECD Report so that they, like the hon. Lady, can examine it in great detail. The other half of my constituents read other reports in order to make their comparisons.
We are trying to combat inflation and unemployment. Food and other prices in many European countries, including France, Germany and Belgium, are far higher than they are here. We have managed to hold prices to a degree, but the upratings are necessary in order to maintain the balance.
I also agreed with the hon. Member for Wallasey when she spoke about the need to alter the system. Of course, what she means by "the system" and what I mean may be different. I should like to abolish—
Mr. Deputy Speaker: Order. The system that I have to try to enforce includes the Standing Orders of the House. The subject that the hon. Gentleman is now discussing does not come within the ambit of these measures.
Mr. Molloy: The thought would never have entered my mind but for a submission by the hon. Member for Wallasey. She spoke about the need to alter the system and said that the regulations would not be necessary if we did so. The hon. Lady gave her idea of the system and said that many people had given their lives to an industry or a calling—
Mr. Deputy Speaker: Order. We are not discussing the whole social security system. There are three measures under discussion and, according to the Standing Orders of the House, hon. Members must say that they approve or disapprove of the upratings.
Mr. Molloy: I approve of the upratings and, like the hon. Member for Wallasey, I should like to see a system in which there was no need for them. I should like to see the abolition of the system under which we have to ask Ministers, irrespective of party, to bring in such measures to sustain and help those in need while the system also allows some people to receive golden handshakes that would keep the recipients of benefits for the rest of their lives. Perhaps one day we shall achieve that. In the meantime, I congratulate my right hon. Friend on trying to maintain a decent standard for those who will benefit from the upratings.
6.48 p.m.
Mr. Robert Boscawen: There is no doubt that these upratings are desperately needed, and I welcome the extent to which the Government are obeying the law in uprating the pensions annually; but I go no further than that.
I give no great praise for the system under which we make vast changes in social security benefits by way of affirmative resolutions in one and a half or two hours. These measures will in due course levy very large sums in contributions from working people in order to transfer similar sums to those whose needs are greater.
As I said last year, it is high time that we considered going back to the system of the Government having to come to the House with a Bill for upratings, so that the subject could be dealt with in detail, the various benefits could be set out and compared, the rigidities in them could be altered from time to time and we could ensure that the Government would be
110
using contributors' money in the areas where, at varying times in the development of our economy, benefits are most needed. We need a proper Bill that we can discuss in detail in Committee. I hope that my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) will pay attention to that need when he comes into office, as he will.
We should examine the social security system and look at each benefit again in Committee to see whether each is doing the job that it should be doing. For example, some of the grants have not been uprated for many years. We need to ask what good they are doing. What good do the maternity benefit and death grant do, and to whom? It is time that we went through the system, because we have not done so since 1974.
The retail price index is of growing importance to the level of all benefits. The RPI has become the arbiter of the rate of increase of all the benefits. We must ask whether it reflects the true needs of the needy, the old or the disabled. The RPI in fact reflects the requirements of everybody, whether in work or not. It is time to reconsider it. Today we learned that the increase in food prices over the past 12 months has been about 20 per cent. Expenditure on food takes up a large part of a retired person's pension. We should be discussing whether we have the arbiter of these levels of benefits right.
Under the Social Security Act 1975 the Secretary of State is allowed to choose the index or method of bringing the pension up to the level of price increases in the previous 12 months. He has a right to choose the RPI or other machinery. We should examine that now, because certain items such as food, bus fares and other means of transport have increased in price considerably faster than the general level of prices.
We have heard constantly from the Government since they came to office that they have done pretty well with pension upratings in terms of their real value. The Secretary of State claimed when he announced this uprating that the present Government had more than doubled the rates of pension. If he was talking about the rates in cash terms, that is meaningless because we now have confetti money. If he was talking about

111
percentages, he must look at it more carefully. The exceptional increase of July 1974, which was about 30 per cent. above the previous level of pension, was no doubt made possible through the advent of earnings-related contributions which had just come in and which were first paid in April 1975. Since that exceptional increase of July 1974 the record of the present Government has not been conspicuously good.
In the three years since the July 1974 uprating to May 1977 pension levels went up by 53 per cent. During the same period prices went up by 66 per cent. Beneficiaries have been falling back from the gains that they achieved in July 1974. Of course, in November the benefit levels will be bumped up by 14½ per cent., but by then prices will have risen again. Even if the Chancellor's most optimistic figure of only a 13 per cent. rise in the RPI from the end of 1976 to the end of 1977 were to be achieved, the November uprating would represent a total rise of 75 per cent. in benefits compared to an increase of 77 per cent. in prices since July 1974. Since that date, therefore, there has been little improvement in the level of pensions, other than that which was necessary to keep pace with the cost of living. There is no room for complacency.
The level of a married person's pension is about one-third of the national average wage. That is a low level for the basic State pension, and there has been no improvement in it in the last three years. It is no wonder that we are now seeing other concessions in both cash and kind from other agencies.
For example, many urban and metropolitan areas provide concessionary bus fares for retired people. They are available indiscriminately in some areas, but they are not available to people who live in other areas. That is not satisfactory. These concessions occur because local authorities feel strongly that pensioners do not receive sufficient cash in their pockets, and they try to supplement the cash by aid in other ways. Basically it is done because the general level of the basic pension is not high enough. The electricity boards give concessions to pensioners for their winter heating bills. That arises because the basic pension is not sufficient in these difficult times for
112
people in certain parts of the country to live a satisfactory life and be able to keep themselves warm. But the concession does not go to everyone in need.
Neither the Government nor my party has any room for complacency about the general level of pensions. It is true that a new earnings-related system is being introduced next year to try to bridge the gap between the basic pension and the average national wage, but that will not help for a long time and will not help much those on low levels because of the slow build-up in the rate of benefit for this second pension.
It is time to say that we are not doing at all well by our pensioners. It is true that since July 1974 they have more or less kept pace with the level of inflation, but only just; but their increases come in fits and starts, and pensioners fall back substantially in the intervening months, particularly at this time of the year and during August, September and October, when their pensions have fallen behind the level of inflation.
Apart from the increase in July 1974, which was about 28 per cent. above the previous rate and was largely based on the fact that we had moved to an earnings-related system of contributions, I do not think that we are doing very satisfactorily by our 9 million or 10 million pensioners, many of whom have little more than their basic State pension. I see no reason for anyone to congratulate the Government on anything, save that they are carrying out the minimum requirement of law as laid down in the Social Security Act 1975.
7.1 p.m.
Mr. Graham Page: On the Order Paper, underneath the motion that we are debating, there appears the statement
"The Joint Committee on Statutory Instruments have not yet completed their consideration of the Instrument."
I always think that this wording sounds rather like a reflection on the Committee, of which I have the honour to be Chairman. I would rather have it stated that someone has seen fit to put down an order for debate before the Committee has had time to consider it—and in this case before it has had time to obtain the memorandum for which it asked the

113
Department, explaining a certain part of the order about which the Committee had doubt as to the vires.
I shall tell the House the point on which the Committee had doubts, and I hope that I shall receive from the Minister the answer for which the Committee asked the Department. This order is made under Section 124 of the Social Security Act 1975, which gives the Secretary of State power to increase any of the sums set out by reference in that section. If in any part of an order of this kind there is a decrease in those sums, I submit that the order is ultra vires.
Article 2 of the order makes increases permitted by Section 124 of the Act, and in Article 3, which sets out when the increases will occur, in paragraph (l)(a) it is stated that for retirement pensions and others the increases will start on 14th November 1977. Under Section 14(6) of the Act it would follow from that that certain other benefits also should be increased at the same time. For example, those who go on working after they reach the age at which they are entitled to the retirement pension are entitled to unemployment and sickness benefits at a rate equal to the retirement pension. That is set out clearly in Section 14(6) of the Act. Therefore, if the retirement pension were increased, those benefits would follow unless the Act were altered.
By Article 3(2) of the order the Secretary of State purports to alter Section 14(6) of the Act. The order states that unemployment and sickness benefits shall not—as the Act says they shall—follow the retirement pension for a period of three days, from 14th November to 17th November 1977. There is, therefore, a reduction for a short period in what a person entitled to unemployment and sickness benefits would be entitled to under the Act.
It may be said that this is a small matter of only three days. If, however, one recognises that the Secretary of State has power by this order to alter the 1975 Act in order that a person entitled to benefit shall not receive that benefit for three days, one must also recognise his power to reduce the benefit not just for three days but for longer periods, perhaps for as long as 12 months, involving quite
114
large sums. That was why the Joint Committee on Statutory Instruments asked the Department for a memorandum justifying, if it could, the apparent power of the Secretary of State to reduce the benefit.
As it appears in the order, it is a small matter. It may be a matter of administrative convenience that the unemployment and sickness benefits should not increase for those three days. I do not know the reason for this, or why the dates vary, but it seems to me that there is no power under Section 124 of the 1975 Act to alter Section 14(6) of the Act, or Section 15(4), to which the same argument applies.
I am sorry that the order has been brought on for debate before the Department could provide the memorandum to the Joint Committee and before the Committee could report to the House on whether after studying the memorandum, it thought that the order was ultra vires. It is very unfortunate when orders are brought on for debate in this way, before the Joint Committee on Statutory Instruments, which is charged by the House to see whether orders are being made in accordance with the parent statute, can report whether the instrument is or is not ultra vires.
7.7 p.m.
Mr. Tony Newton: I wish to raise only a few points and put some questions to the Minister. Some of these points follow remarks that my hon. Friends have made. I should like to press the Minister on a matter raised with great effect by my hon. Friend the Member for Wallasey (Mrs. Chalker) relating to the inflation forecasts on which these upratings are said to be based.
The Minister for Social Security has stated several times in the House, as he stated when the uprating was announced, that the Government's view was that inflation would be at around only 13 per cent. In response to Questions both then and this afternoon from my hon. Friends suggesting that no one else in the country believed this forecast, even if he did, he said "That is what the OECD thinks, that is what the National Institute thinks, and that is what the Opposition think, but we think that it will be 13 per cent. and we are sure we are right". This afternoon he went a little further and said that if by some remote chance, against all the weight of evidence, the

115
Government turned out to be wrong, then—I hope I quote his words exactly—"the Government will deal with it." That is all very fine and splendid. It sounds dynamic, determined and guaranteed to instil confidence in his listeners, but what does it mean?
We are long past the date, on the Government's own statements, for making any adjustment to benefits in November. It takes anything up to six months or so to make any adjustment at all. We also know that these adjustments are normally made in November and that there has been strong resistance to the idea of having them twice a year. We are being told that if the Government are wrong and practically everyone else is right about the inflation forecasts this will become clear in November, by which time retired people and others will already have suffered from the extra inflation At that point, since the Minister says that the Government will deal with it, this presumably means that 12 months after that something may be done in the following uprating.
In short, if 13 per cent. turns out to be as optimistic a forecast as nearly everybody else in the country, apart from the Minister for Social Security, thinks, our retired people will be cheated for the second year running, and it will be, perhaps, over 12 months before anything can be done about it. The Minister looks perturbed now that I have spoken of cheating. I would not want to debate that matter, because it is really last year's orders. I am referring to what I have always regarded, along with many other hon. Members, as the fiddle which occurred last year.
Mr. Patrick Jenkin: Is it not a little ironic that the self-same right hon. Lady, the right hon. Member for Blackburn (Mrs. Castle), who described the Government as now taking a gamble on the inflation rate should have been the Secretary of State who introduced the fiddle last year?
Mr. Newton: The present Secretary of State is probably a deeply embarrassed man. It was probably a measure of the Government's embarrassment that the uprating was announced some weeks after it would normally have been announced and after some agonising nights spent by
116
the Minister for Social Security with Treasury Ministers deciding how on earth they would deal with it at all.
My first point is, then, what does the Minister mean when he says that if the forecasts are wrong he will deal with it? What does it mean in terms of dates and actual action which will be taken?
Secondly, to come to a slightly delicate point, Mr. Deputy Speaker, the ruling of your predecessor in the Chair this evening on the question of discussing taxation means, if I have it right, that it is possible to refer to tax matters in relation to their effect on some of these increases but not to debate the tax system in general. I hope that I shall manage to stay within that somewhat difficult guideline.
The Under-Secretary of State for Health and Social Security (Mr. Eric Deakins): On a point of order, Mr. Deputy Speaker. I would not wish in my winding up for the Government to trespass beyond the ruling given by your predecessor in the Chair this evening. It was clear to me, if not to the hon. Member for Braintree (Mr. Newton), that any discussion of taxation on these orders was not in order.
Mr. Newton: Further to that point of order, Mr. Deputy Speaker. Before you rule on that I would like it to be firmly recorded that, although your predecessor resisted any discussion in general on the taxation system, my recollection is that he did accept that one could hardly discuss benefits which were taxable without looking at the effects of taxation upon them, and equally that, in comparing the effects of non-taxable benefits with what is available to those in work, one must necessarily refer to the lax system.
Mr. Deputy Speaker (Mr. Bryant Godman Irvine): I suspect that what my predecessor in the Chair was saying was that anything relevant to the increases would be relevant to the debate. If taxation can be related closely to this argument, that is in order.
Mr. Newton: I am extremely grateful to you, Mr. Deputy Speaker. You still give us a difficult tightrope along which to walk. I hope that I shall stay at least precariously perched upon it.
I would ask the Minister—this is relevant to our overall judgment on the

117
uprating—how much of the gross cost is expected to be taken back in tax, on the benefits that are taxable. In particular, how much of the proposed increase in the mobility allowance from £5 to £7 per week will be removed from the recipients in increased income tax?
This considerably affects one's judgment on whether the increase in the mobility allowance is adequate. In my view, £7 a week is in any case plainly inadequate if it is remotely to replace the invalid trikes which it is supposed to be replacing for some recipients. Many of those recipients, if they have invalid trikes, will have been using them to go to work, so that they will have other earnings apart from the mobility allowances. That means that any increase in the mobility allowance will be subject to a deduction of at least 35 per cent.—the current basic rate of tax—and the increase of £2 will be worth only £1·30. That is even more inadequate, if I may put it like that, than £2, and makes it even more understandable how much concern there is still about the level of the mobility allowance.
It is relevant to know how many people who are in receipt of mobility allowance are expected to lose 70p in tax out of the increase, and, of the total increase in the mobility allowance, how much is expected to be clawed back in this way.
Before departing from the mobility allowance I would like to make one further request to the Minister arising out of the fact that the effects of this taxable situation may be particularly severe for a number of groups, including, in particular, married women who receive the mobility allowance and whose mobility allowance is not taxed as their own earned income, as the Minister will know. It is taxed as their husband's earned income. That means that it will be taxed at the husband's full marginal rate, which could in some circumstances be quite high. It could mean that the grant of a mobility allowance to a married woman in her own right—not on her husband's insurance—could be virtually nullified by the tax system.
I ought to tell the Minister, if he is not already aware of it, that this is a matter which we discussed in the Finance Bill Standing Committee last week, when there was a tied vote on an amendment
118
of mine. His colleagues in the Treasury have undertaken again to look at this point. It is a very serious point, and I hope that we may hear from the Minister that he will support efforts to remedy an injustice to reduce the effectiveness of the mobility allowance for some of those to whom the increase proposed in the orders is designed to bring benefit.
Thirdly, I come to the question of retired people and widows. This is, perhaps, a little bit of a hobbyhorse of mine, for which I make no apology. The tax position and the social security position taken together mean that many single women and widows between the ages of 60 and 65 would have been taxed on this pension increase. I think I am right in saying that that is what would have happened to their basic national Insurance pension, even if they had had no other income, on the basis of the Budget proposals originally introduced by the Chancellor. That certainly was a fear on both sides of the House. The Standing Committee has raised the tax allowance, which may have obviated the problem in this year, but I would be grateful, however, if the Minister could tell us how many such women would have been taxed on the basic national insurance pension had the original Budget proposals gone through along with this uprating, and what the situation will be now if the changes made in the Standing Committee are allowed to stand.
At the same time, on the subject of retired people generally, will the Minister answer a question which he was unable to answer when I raised it at the time of the statement? How much of the increase in pensions as a whole will be clawed back through the tax system? Last year it appeared that over £100 million would be taken back from pensioners and widows by the operation of the tax system, out of a total increase of around £1,000 million. I would like to know what the comparable figures are this year.
Apart from that, I would like to make the point that very large numbers of retired people who happen to have a little bit of extra income from another pension or their own savings, over and above the national insurance pension increased in the orders, will receive very little benefit from the proposed increase, because the

119
tax system will take most of it away from them. That situation is becoming steadily worse.
The Government have not altered the ceiling on the age allowance in the tax system. Anyone who has a total income of some £3,250 a year, which is well below the level of average earnings now, may easily be losing 45 per cent. or 50 per cent. of the increase in pensions which is proposed in these orders. That is plain wrong. It takes no account of the financial pressures on those people. It is calculated to discourage people from saving and looking ahead to their retirement with occupational pension schemes and other savings. It is high time the Government took another look at the whole matter.
I come now to the question of the poverty trap and the disincentive to work, which are, admittedly, slightly separate issues which it would not be proper to debate now in broad terms. Here again, we come to an area in which the tax system is critical in judging the proposals before us. No hon. Member on either side of the House would say that the increases in short-term benefits in the orders are excessive, looked at on their own. No one could say that the income for someone who is unemployed or sick will make him particularly well off. Many of us would find it very difficult to live on the benefits.
Therefore, the issue is not whether the benefits are large enough in absolute terms but what they do to the position as between those in work and those cut of work. We are entitled to a word from the Minister on that. It is my clear impression that the inflation-proofed increases proposed in the order are bound to bring about in the autumn a further narrowing of the gap between what people can received while working and what they can receive when they are not working. That is an increasingly serious problem. It worries many of the Minister's hon. Friends, and it was debated in the Standing Committee considering the Finance Bill last week. I hope that the Minister will read what was said then by his hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham).
I have spoken of the contrast between what some people can get when they are
120
in or out of work, so that some people are better off out of work, especially where they may be out of work for one part of the year once they have consumed all their tax allowances on their earned income. If the Minister agrees with that worry, which is now generally accepted on both sides of the House, what action can we look forward to, so that next year we do not again have to debate such orders in a policy vacuum?
The Minister and his ministerial colleagues in the Department and in the Treasury all agree that short-term benefits should be taxable. We on this side of the House agree. Practically everyone agrees that they should be taxable and that such orders as we are debating make little sense in terms of their effects on the structure as a whole unless they are taxable, but every proposal to make them taxable and to make sense of such orders is resisted, and the Government come forward with no positive proposals or plans of their own. That is not good enough. We cannot go on debating these orders in this way, year after year, without a further sign of Government action to resolve the fundamental problems that underlie the whole discussion we have had tonight.
7.23 p.m.
Mr. Terence Higgins: I very much agree with many of the points that my hon Friend the Member for Braintree (Mr. Newton) has just made. I want merely to elaborate on one aspect of what he said and to ask the Minister a set of specific questions.
I share my hon. Friend's concern that the Government's forecasts of inflation will probably prove wrong and that this will have a serious effect on those whom the increases in the measures are designed to help. I believe that the increases are inadequate to help those living on fixed incomes. Over the years there has been a tendency for Governments to say "We shall uprate the benefits in line with inflation" and totally to disregard the position of those who are not living solely on those benefits but who have some savings or pensions. The real value of those savings and pensions has steadily declined, with a resulting steady decline in the real standard of living of those concerned. Their absolute and relative standard of living is constantly drifting further and further down. In discussing the

121
measures we must have that very much in mind. The answer can come only from some other specific proposal or from the taxation system, as my hon. Friend said.
Many of the problems that we now face stem from the present Government's determination not to go ahead with the tax credit scheme devised by the previous Conservative Government, on which we should have legislated had we been returned to power in 1974.
My specific questions relate to what are now described in the jargon, I understand, as category D retired pensioners. We are told that the lower rate for them is to rise from £5·60 to £6·30, while the upper rate is to rise from £9·20 to £10·50. The people in that category are those who were covered by what was known at the time as the over-80 pension arrangements. I introduced a Private Member's Bill on the matter, and it was the first matter on which the Conservative Government legislated on coming to office in 1970. The principle was that we believed that those who were excluded from the original National Insurance Scheme should be given a pension as of right and a part pension related to the extent to which the existing pension at that time had not been covered by contributions.
Successive Governments have failed to give this group—people who must now be 85 or 90, and very small in number—the same absolute increase as the normal national insurance pensioner has received. I see no justification for that. Although I am strongly of the view that these increases are absolutely necessary, they have not been covered by the contributions of those who are already retired. I recently had an answer to a Question to that effect.
The increase in the normal national insurance pension has not been covered by the contributions of those already retired who are to receive it, nor has it been covered by the contributions of those receiving the part pension in category D. If neither group has contributed towards the increase, I cannot understand how in logic it can be that the non-contributory people are not as entitled to that increase as those who are within the contributory scheme but who have not contributed to the increase.
122
I should be grateful for an explanation why this group—the category D pensioners, who have suffered more than anyone from the effects of inflation and are not in a position to argue the case for themselves—should not receive the full increase rather than only the proportionate increase. I do not believe that there has been any discussion of the matter in any of the ministerial speeches. I hope that we shall not hear from the Minister the old hackneyed argument that it is a contributory scheme. That is not relevant in this context, for the reasons I have given.
I do not wish to pursue the point at length. Compared with some of the issues affected by these measures it is simple and straightforward, but I shall be grateful for a reply because the Minister has, no doubt, given the matter considerable thought. I believe that the Government have reached the wrong decision.
7.28 p.m.
The Under-Secretary of State for Health and Social Security (Mr. Eric Deakins): There seems to have been a general welcome for these measures, though a number of criticisms have been made and questions have been asked. I shall do my best to deal with the criticisms and questions.
The hon. Member for Wallasey (Mrs. Chalker), who opened for the Opposition, asked first about progress in speeding up the paying out of benefits. The difficulty is not with a computer. It is not even a difficulty of national insurance benefits. It is mainly a difficulty on the supplementary benefits side. All the supplementary benefit recipients must have their amounts, requirements and resources calculated individually. It is not an operation that could ever be put on to a computer. That is the key factor in determining the length of period. The 20 weeks are needed basically on the supplementary benefits side. Perhaps I may use the simple analogy that the speed of a convoy is dictated by the speed of the slowest ship—in this case the longest period needed to uprate a major part of the social security benefits.
The hon. Lady asked about uprating of child benefits. Child benefit will be increased from April of next year with the second stage of the phasing out of

123
child tax allowances and the transfer of financial support to child benefit. Whether any money will be available for an increase in addition to the transfer from child tax allowances will depend on the economic situation. Each additional 1p on the rate of child benefit would cost £6 million.
I cannot say when the new rate of benefit will be announced, although my Department needs to know that rate by the autumn for operational reasons. It is those reasons which would make it extremely difficult and expensive to up-rate child benefit this November—in particular the need to overstamp millions of order books already issued which include payments for November, and the need to recover supplementary benefit and other benefit order books in order to reduce them to take account of the new rate of benefit.
Mrs. Chalker: Does this not underline what we have said repeatedly, that the two matters of child benefit level and supplementary benefit level are so interlocked that we should look at the possibilities of units of payment being introduced? In that way, the unit could be changed in the post office rather than the books having constantly to be recalled and reissued. Does the Minister agree that this problem will bedevil the whole of the child benefit system for evermore unless we get it straight now?
Mr. Deakins: I think that the difficulties in doing what the hon. Lady is suggesting are rather greater than she makes allowance for. She might like to put down a Question, or perhaps I shall write to her about it. There are considerable operational difficulties. We have to safeguard public funds, and we have been under a certain amount of criticism or public surveillance about the measures taken to reduce the incidence of fraud. Any new system to achieve what the hon. Lady and many of us would wish to see would have to be at least as fraudproof as the present system but not involve any greater administrative complexity. However, I shall drop her a line about that because, quite frankly, there is a lot that could go wrong in a system which departed from the present administrative arrangements.
124
The hon. Lady asked how the figure of 1·35 million unemployed, which was assumed by the Government Actuary in his report, was made up. She asked for a detailed breakdown by benefit category, but without notice I am unable to provide that information. However, I shall write to her as soon as possible and give her such information as I can.
I should like to correct one point that the hon. Lady made—I believe it was a misunderstanding on her part. She referred to the cost of the increase being £1,250 million. The figure of £1,250 million mentioned by my right hon. Friend relates to outgoings from the National Insurance Fund. The total cost of all the benefits, not all of which come out of the National Insurance Fund, is £1,409·5 million in a full year.
The hon. Lady, supported by the hon. Member for Braintree (Mr. Newton), went on to criticise our inflation or price increase forecast. In order to estimate the likely increase in prices between last November and next, the Secretary of State weighed the evidence open to him and took the view that inflation of around 13 per cent. was likely during that 12-month period. Although this is lower than the latest available figure of year-on-year inflation—17·1 per cent. in the year up to May 1977—all the indications still are that the rate of inflation will fall in the autumn to the anticipated level. The increases proposed in this order are of nearly 14½ per cent. for long-term benefits and 14 per cent. for short-term benefits. These will be sufficient not merely to maintain their November 1976 value but to give a small improvement in real terms.
I might be asked what would happen if prices were higher in November than had been forecast. We should have to face that situation when it arose. By November the effects of last year's drought and the falling exchange rate will have worked themselves through. The turnabout in the balance of payments indicates that we have a stable exchange rate. The money supply is firmly under control. There are other good signs, not the least of which is that the retail price index rose by 0·8 per cent. in May over April compared with 2·6 per cent. in April over March. I am confident that inflation will fall by November and that the year-on-year forecast of

125
13 per cent. that my right hon. Friend mentioned in the House last month will prove a realistic one. Our record demonstrates our commitment to protect the position of pensioners. We have said that we shall look at the situation again were unforeseen circumstances to arise, and that I undertake we shall do.
Mrs. Chalker: I am grateful to the Minister for saying that he will look at this matter again should the unforeseen circumstances arise—and we hope that they do not. If they arise and the Minister has to take this back, when will the make-up percentage be able to be brought forward? What he has said already seems to indicate that it will take another 20 weeks for the situation to be dealt with.
Mr. Deakins: I can understand the keenness of the hon. Lady and of the hon. Member for Braintree in wanting to know what the Government would do in this hypothetical situation. However, I cannot commit us to any particular way of dealing with the situation should it arise. It is hypothetical at this stage even though, on the evidence of the first five months, it seems to the outside world that the rate will be higher than the 13 per cent. which the Chancellor and my right hon. Friend are confidently forecasting.
The basis of calculation to which the hon. Lady referred—that is the change from the historic to the forecasting method—is one which, I know, has exercised the minds of many right hon. and hon. Members on both sides of the House. But in deciding over what period increases in prices should be taken into account for the purposes of uprating, my right hon. Friend has followed last year's precedent in considering their likely movement between the date the current rates came into force and the date when they will be superseded. This means, on the present occasion, the year between November 1976 and November 1977.
The legality of this forecasting method was recently challenged in the High Court, but the judgment given in March confirmed that the forecasting method complied with the provisions of the 1975 Act. I know that this matter has gone to appeal and, therefore, I would not wish to trespass any further on the likely outcome.
126
The hon. Lady also referred to fuel costs. In so far as fuel customers are receiving social security benefits, the increased pensions and supplementary benefit rates which we are debating, taken together with the increased heating additions decided on by the Supplementary Benefits Commission for supplementary beneficiaries who have extra heating needs, should be adequate to meet any increase in the cost of living—of which heating forms only a part—up to November next. More generally, the matter of the fuel prices and their impact on the poor consumer, bearing in mind the electricity discount scheme, is primarily a matter for my right hon. Friend the Secretary of State for Energy. However, my Department is closely involved in the current consideration of these issues.
The hon. Member for Wells (Mr. Boscawen) criticised us for taking a base figure in the middle of 1974 after the initial uprating of social security benefits by a very large amount by the Government when they first came to power as a minority Government in July 1974. I think that the Government are entitled to look at their record as a whole and to be judged on it as such. We are not complacent, but we are proud that at a time of the most serious economic crisis that this country has faced since the 1930s we have protected the poor, the sick, the unemployed and the pensioners.
We have been asked whether we expect the new rate to keep pace with inflation. The answer is quite clearly "Yes", for the reasons I have given. Since we took office we have increased the single rate of pension introduced by the Conservatives in October 1973 by 97 per cent. in money terms. By November this year the increase will be 125·8 per cent. Between October 1973 and May 1977—the latest month for which figures are available to us—prices increased by 88 per cent. Therefore, allowing for the rise in prices between May and November this year, there is still an adequate margin—an increase in real terms—which I find most satisfactory.
The hon. Gentleman seemed to be implying that he wanted us to spend more on certain social security benefits, and I would not wish to gainsay that as desirable. However, since the hon. Gentleman is a member of the Conservative Party, which does not want public

127
expenditure increased but wants it cut quite drastically, I suspect that he would pay for his increased benefits in some areas perhaps by cutting them out in others.
Indeed, I was a little alarmed to hear the reference to the death grant, to the fact that it has not been increased for a long time and that it does not seem to be serving very much purpose. In view of what the hon. Member for Wallasey said earlier about looking again at the whole system, I hope that the Conservative Party in Opposition will not come out with a suggestion at the next General Election that the death grant, for example, should be abolished altogether. That would be electorally and socially undesirable. Although the grant has not been increased for some time, it plays some part in assuring older people that there will be some contribution towards their funeral expenses, apart from what the Supplementary Benefits Commission can do for beneficiaries.
I turn to the point raised by the right hon. Member for Crosby (Mr. Page) and say at once that no discourtesy whatever was intended by my Department towards his Committee. We have a very great respect for it. The reasons why we are debating these measures today rather than next week are not for me. Since I was away for four days last week, I do not know why we are debating them today rather than any other day of this or next week. It is a matter for my right hon. Friend the Leader of the House.
An explanation is on its way to the Committee on this point. I have a draft of the letter with me but I think it would perhaps be inappropriate to read it out. I should be happy to do so if pressed. I could not possibly read out extracts, because it is a series of technical, detailed and involved legal points which, I am sure, will be appreciated by the right hon. Gentleman although not, perhaps by other hon. Members.
I say to the right hon. Gentleman generally on this point, because some explanation is due since he has raised the matter, that we are not in these measures proposing any different procedure or method of operation from that which was in the uprating order of last year or the uprating order in the previous year. In-
128
deed, I am told that the general point about having different starting dates within the week is something which, in principle, has been accepted by all Governments since the early 1950s. The Department is therefore entitled to assume that what was correct last year is correct this year, even though the Committee—and it is entirely up to the Committee—may have changed its mind. I trust that the explanation will satisfy the Committee.
Mr. Graham Page: The Minister will appreciate the difficulty that if, when the Committee receives the memorandum from the Department, it comes to the conclusion that the Secretary of State has acted outside his powers, the House will already have approved this draft order. This is most unfortunate because the Committee would be doing its duty, as charged by the House, in reporting that it considers the action to be ultra vires. If it is to report that finding after the order has been approved, the whole point of the Committee sitting at all is null and void.
Mr. Deakins: I take the right hon. Gentleman's point. It is rather unfortunate. All I can say at this stage is that my Department is confident that it will be able to satisfy the right hon. Gentlemen and members of his Committee, and its advisers, that what we have done is in accordance with precedent. I trust that we shall be able to satisfy the Committee that we have not trespassed in any way nor acted ultra vires.
The hon. Member for Braintree asked a number of questions about taxation. I regret to have to say to him—I have debated these matters with him on a number of occasions—that these are primarily matters for my right hon. Friend the Chancellor of the Exchequer. I would not wish to trespass on my right hon. Friend's territory. The hon. Gentleman asked about mobility allowances, for example, and wanted my Department, through me, to support representations which, I understand, are being made to my right hon. Friend. I can say that I shall look at the point the hon. Gentleman has made. I have not been a party to what has been going on in the proceedings in Committee on the Finance Bill. I shall look at this to see whether there is any need for my Department to take appropriate action.

129
The hon. Gentleman raised the more important point dealing with income when at work and out of work. The question is whether the unemployed are treated too favourably as compared with the working population in what we are proposing. For some years there has been a differential between the flat rate of pension and that for short-term benefits. The flat rate payable to the unemployed is about five-sixths of the standard pension rate, and this relative difference is preserved in the uprating. To increase the gap by raising unemployment and sickness benefit by less than the estimated rise in prices would not merely be contrary to my right hon. Friend's legal duties; it would mean cutting the living standards of some of the poorest families in our society. In comparing the level of unemployment benefit and supplementary allowance with the living standards of low earners—we had a long debate on this just over 10 days ago—it has to be remembered that low earners will in general have benefited from a pay rise under phase 2, that family income supplement is being raised next month and again in November, and that the poor working families have acccess to rent and rate rebates and certain other means-tested benefits. Further, the tax concessions in the Budget have meant a rise in take-home pay.
That does not dispose of the problem but at least it indicates that we are aware of it. Whether there can be any longer-term solution is not for me to say in this debate. The hon. Gentleman knows that we have given this matter a thorough airing on other occasions in the House recently.
I am well aware of the point made by the hon. Member for Worthing (Mr. Higgins) on category D pensions. These are uprated in accordance with a provision in the Social Security Act, I think Section 39. In calling for additional increases, the hon. Gentleman is calling for more public expenditure. While, as a member of the Government, I am not opposed in principle: to that, although I find it surprising coming from a member of the Opposition, we have nevertheless to determine priorities and we feel that in this uprating order we have maintained the sort of balance in uprating the different social security benefits—there are
130
several pages of them—in a way that best preserves social justice and equality between the poor, the sick, the unemployed and pensioners.
Mr. Higgins: I take the broad point about public expenditure, but I do not think that anyone on either side of the House will argue that we should not, none the less, make increases which are equitable and just and that we should not create anomalies. It seems clear that this is an anomaly for the reason I mentioned—namely, that those to whom the normal pension increase is being given have not contributed to that increase any more than the people in category D have contributed. To give a higher absolute amount to one group rather than the other cannot be logically justified. I am sure that the Minister would not wish, on public expenditure grounds, to perpetuate that type of anomaly. I hope that we shall not have the old chestnut about its being a contributory scheme and so on, because that is totally irrelevant in this context. I hope that the Minister will be able to look at this again, because the numbers must be absolutely trivial. To suggest that it is relevant to public expenditure in relation to the management of the economy would be too silly for words.
Mr. Deakins: I take the hon. Gentleman's point. He is perfectly entitled to put forward an argument for a particular section of the community, albeit a very narrow one. I have not made any point about this pension being lower than is necessary because it is non-contributory rather than contributory. I do not rest my case on that. If the hon. Gentleman looks at Part III of Schedule 1 to the main uprating order, he will see that there are a number of other non-contributory periodical benefits. They are being uprated by varying amounts, and they include these category D pensioners. If we were to say that there was a case for looking again at category D, it might be argued that there was a case for looking at something else—for example, attendance allowance, invalid care allowance, age addition or guardian's allowance, all of which affect small sections of the community. We have to be guided by and large not only by legislation, which affects some of these non-contributory benefits,

131
but by the general financial and economic situation.
I do not think that on behalf of the Government I can see my way clear to saying that we would look again at category D pensions without looking again at the whole of non-contributory periodical benefits. We would then have to try to determine priorities for increased expenditure as between them. I regret that I do not believe that I can satisfy the hon. Gentleman on that point.
The cost of the uprating will be about £1½ billion in a full year. We believe that it will maintain the value of the November 1976 level of pensions and other benefits. Pensions were then worth 15 per cent. more than those that we inherited from our predecessors. No increase in contributions will be needed before next April, when the contribution structure will need in any event to take account of the coming into force of the new earnings-related pensions scheme. Proposals will be put before the House next winter for the contribution levels to operate from next year. In the meantime the House is invited to approve the order, which will set a pension level 75 per cent. higher than the level that the Government first brought forward in 1974.
Question put and agreed to.
Resolved,
That the Social Security Up-rating Order 1977, a draft of which was laid before this House on 15th June, be approved.
Resolved,
That the Child Benefit and Social Security (Fixing and Adjustment of Rates) Amendment Regulations 1977, a draft of which was laid before this House on 15th June, be approved.—[Mr. Orme.]
Resolved,
That the Supplementary Benefits (Determination of Requirements) Regulations 1977, a draft of which was laid before this House on 20th June, be approved.—[Mr. Orme.]

LOCAL AUTHORITIES (RESTORATION OF WORKS POWERS) BILL
Not amended (in the Standing Committee), considered.
7.52 p.m.
The Minster for Housing and Construction (Mr. Reginald Freeson): I beg to move, That the Bill be now read the Third time.
The Bill does no more than restore the powers given to the 25 authorities under temporary orders under the Local Government Act 1972. Those orders were needed initially because that measure of local Government reorganisation did not deal with the position of direct labour organisations. The temporary orders that we made did no more than give the 25 authorities concerned the power to carry out new construction work for another local authority within the former borough or county borough area concerned. There is no question of any of the authorities being permitted to carry out work outside their own administrative areas.
As I indicated on Second Reading, I hope that before too long we shall be able to introduce the comprehensive measure that we had originally intended. That legislation will provide a uniform basis for the operation of direct labour organisations throughout the country. In the meantime we need the Bill to restore the powers that expired at the end of March.
The Bill imposes no mandatory duty on local authorities to exercise the powers. Indeed, whether the powers are exercised must also depend upon a client authority wishing to award work to the DLO authority concerned.
As for the scale on which the powers under the Orders have been used, the total was about £3·6 million in the financial year 1976–77. That shows the modesty of this measure. However, without it there could be unnecessary redundancies in some of the organisations. The sole purpose of the Bill is to deal with the problems that resulted from local government reorganisation as previously enacted.
7.56 p.m.
Mr. Keith Speed: I thank the Minister for his brief remarks. I

133
shall try to take up what he has said while being as brief as possible.
The issues in the Bill and outside the Bill concerned with direct labour generally have been well ventilated both on Second Reading and in Committee. The right hon. Gentleman will know that a few days ago all sides of the construction industry went to see the Prime Minister because of the parlous state of the industry. I do not think that they came away with very much. The Bill will not be of immense help, either.
In Committee my hon. Friends and I were resisted by the Government in our attempts to try to inject an element of competition and accountability. There is agreement on both sides of the House that direct labour organisations should be subject to those conditions. The principles of accountability and competition cannot be gainsaid by anyone.
It was interesting to hear the right hon. Gentleman say that he hopes that the comprehensive measure will be introduced before too long. Given the present composition of the House, it is my understanding that it is unlikely to be introduced until after a General Election. It will either be introduced by the right hon. Gentleman and his right hon. Friends if they win, or by my right hon. Friends if my party happens to win. It seems that the comprehensive Bill that would lead to a major extension of direct labour organisations is not acceptable and would not command a majority in the House. That being so, I accept that if we were to have a comprehensive Bill it would apparently include within it the accountancy and competition procedures that we all want.
I can give a firm undertaking that if we introduce such a Bill when we are the Government the Bill will be largely concerned with accountancy and competition. If we are to believe what emanated from the Prime Minister and his right hon. Friends over the weekend, there is not to be a General Election for at least 12 months. I personally put a question mark over that, but, that being so, it appears that we must wait for 12 months, if not more, before we have comprehensive legislation from whichever party wins the General Election. That is why I think it is a pity—I repeat what I said on Second Reading—that we cannot obtain all-party support and an
134
all-party agreement to the introduction of a Bill that would at least inject the elements of accountancy and competition.
In Committee I put forward a suggestion which received a partial welcome from the right hon. Gentleman. I repeat that the provision to deal with competition and accountancy is largely complete in the Bill with the exception of the CIPFA recommendation on maintenance, which nobody has yet had a chance to look at. The Minister said that he would be receiving those recommendations later this year, and one would hope that by that time—
Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. We are discussing the contents of the present Bill.
Mr. Speed: Indeed, Mr. Deputy Speaker. The Bill deals with 25 local authorities and their direct labour organisations. I hope that those 25 direct labour organisations will be in a position to gain in management experience and expertise when we have a proper accountancy procedure. They would have to put out their jobs to proper competition.
Before that is laid down upon the 25 direct labour organisations, it would surely be advantageous for all concerned, as the Minister said in Committee, for there to be a full-scale public debate, including the 25 local authorities, the local authority associations, the building associations and anyone else who may be interested. If that is done, when we bring forward the legislation it will be more comprehensive. It will, of course, affect the 25 direct labour organisations and—
Mr. Deputy Speaker: Order. Whatever such a Bill may or may not bring before the House, we are discussing the Bill before the House.
Mr. Speed: I take your point entirely, Mr. Deputy Speaker. That is why I hope that the comprehensive Bill—the Minister admitted in Committee that this can be only a temporary measure before the introduction of the comprehensive measure—will be introduced only after the maximum debate. I hope that that is so regardless of which party introduces the Bill. I do not go

135
further than that as I do not wish to stray beyond the bounds of order.
The Minister has given us the figures and it is clear that the various powers that elapsed on 31st March, which the Bill seeks to restore, have not been widely used. A minor but not unimportant point is that the city of Stoke-on-Trent is responsible for a third of the expenditure of £3·6 million in 1976–77. If I am correct, Stoke-on-Trent undertook works to the value of £1·2 million.
It is unfortunate, or perhaps timely, that we read in our national Press this morning that the Stoke-on-Trent direct labour department has had its own Silver Jubilee for the past 25 years. It seems that employees of the department have received travelling and expense allowances without the knowledge of the council. The council's chief executive has said that the payments are irregular. I have read reports that suggest that they might total £1 million over 25 years. That is a novel way of celebrating the Silver Jubilee, but not one that commends itself to the Minister or myself. Stoke-on-Trent is one of the local authorities directly affected by the Bill.
The Government had an opportunity, if they had so wished, to introduce more comprehensive legislation that would have had the backing of all parts of the House. They did not so wish. They brought in this Bill which, in a very small way, renews the powers of direct labour departments in so far as those powers lapsed on 31st March and which will be restored if and when the Bill receives Royal Assent.
The Government have failed to provide what is needed, namely, the twin disciplines of competition and fair accountability, and even if, on a very modest basis, the Bill extends the direct labour powers, we do not like that, either. In that view we have the support of not only the construction industry but two of the three major local authority associations.
Therefore, I have no hesitation in recommending the House to decline to give the Bill a Third Reading.
8.0 p.m.
Mr. Michael Latham: I wish to make two points.
136
First, in moving the Third Reading the Minister said that some of the local authorities concerned with direct labour departments were likely to have to declare redundancies if the Bill was not passed. I asked him in Committee whether those local authorities had given any consideration to the workers concerned being deployed to the county council direct labour departments, which is the whole purpose of the Bill. The Minister was unable to give an answer on that occasion. I noticed that he did not choose to mention it tonight. The impression he has tried to give is that the men would be unemployed altogether. There is no reason for that statement.
Secondly, my hon. Friend the Member for Ashford (Mr. Speed) has mentioned, as many hon. Members mentioned in Committee, the unsatisfactory situation which has often arisen in the direct labour departments of some of the 25 local authorities involved in this Bill. As we are placing the 25 local authorities back in the special position which they enjoyed mostly as a result of Private Act powers, which lapsed with the coming into operation of the new local government structure, I hope that there will be proper monitoring of the use of the powers in future so that when we table, as probably we shall, Questions to the Minister about the use of those powers, the nature of the contracts, and the success or otherwise of the direct labour departments which have carried them out, we shall get proper information and statistics. It is important that Parliament, ratepayers and taxpayers should have proper financial information.
I never thought that the Bill was necessary or desirable. Nothing that I heard on Second Reading or in Committee and nothing I have heard tonight has convinced me that it was necessary to bring it before the House. I am glad that we shall vote against it.
8.2 p.m.
Mr. Norman Tebbit: Although we have found the Bill to be objectionable, I thought that the Standing Committee which considered it was a very agreeable and useful Committee on which to serve. Few hard words were used. In fact, the hardest words were

137
uttered by the Government Whip when he reminded me at the second sitting that I had not declared the interest that I declared at the first sitting, namely, that I work in the information department of the National Federation of Building Trades Employers. Certainly the federation thinks that this is an unnecessary Bill.
I have considered the Bill throughout from the point of view not of the industry but of the ratepayer. The powers with which it deals are little used. The Minister quoted the figure of £3·6 million, of which £1·2 million is accounted for by an organisation which did not know what it was spending. Therefore, we must take the figure of £3·6 million a little generously into account, because it is clear that the Stoke council did not know, and has not known for the past quarter of a century, its expenditure in this respect.
Therefore, after the Stoke story, the Minister can hardly maintain that the Bill is designed to tighten or maintain financial control in the town halls or to ease the burden on ratepayers. Nor can a Minister in a Government who have destroyed 750,000 jobs in three and a half years seriously make his stand on the possibility of redundancies in local authority direct labour organisations, particularly as jobs that might disappear from the DLOs would not disappear entirely, as the 750,000 jobs have disappeared, but would be merely transferred from the public sector to the private sector.
Nevertheless, I am grateful to the Minister for being as forthcoming as he was in Committee about the accounting and financial controls which he thinks necessary for direct labour organisations. My only difference with him is that I think that they are necessary now whereas he does not. I think that they should be imposed on the authorities in respect of the works which they are granted power to carry out under the Bill; he does not think that it matters particularly. We like his words more than his actions, because he does nothing, although he talks.
I liked his words so much that I embodied a whole mass of them in a proposed new clause. The words of it were not perfect, but they were not bad.
138
They were really quite good. The only trouble was that when I tabled them the Minister decided that he did not like them and refused to have anything to do with them. I was deeply disappointed in him. I should have though that he would have grabbed the chance to embody in legislation the principles he had enunciated so clearly at the Dispatch Box.
I still hope that the Minister will agree to our proposal that his draft DLO Bill should be published as a Green Paper. I do not know why the Minister refuses to do that. It could make a great deal of difference to the progress of this Bill in another place and when it comes back to us, perhaps amended. After all—
Mr. Deputy Speaker Mr. Deputy Speaker rose—
Mr. Tebbit: If we knew what was in the right hon. Gentleman's mind for the long term, we might be more prepared to tolerate the shortcoming of this Bill—
Mr. Deputy Speaker: That is getting a little better.
Mr. Tebbit: I hope that the Bill will get a little better, Mr. Deputy Speaker.
If we knew what was in the Minister's mind, we could possibly be a little more tolerant. Perhaps we would be more intolerant, but at least we should know where we stood. It is desirable for us to find what common ground we can, although there is a difference in principle in dogma or philosophy between us and the Government concerning the rôle of municipal and State trading as opposed to private enterprise trading.
Unless the Minister is prepared to raise the curtain on his mind more than simply by uttering words, and unless he is prepared to put it, of not into legislative form, in the form of a Green Paper, it will be wise of us to reject the Bill.
8.8 p.m.
Mr. Michael Morris: This is one of those short Bills that are viewed in different ways by the two sides of the House. As I understand it, the Government's view is that the Bill merely regularises what 25 local authorities have been doing for a number of years. The power is permissive, so it is up to the authorities to do what they wish within the permissive power. It is said that only seven authorities have used the powers, so what is all the fuss about?

139
We have learned that the simpler the Bill, the more carefully it must be assessed. Our reasons for rejecting the Bill are, first, practical. Thirteen of the 25 authorities have not used the powers; five authorities have hardly used them. Seven authorities have used them, and only a couple have used them to any great extent. We are disappointed that the Minister has not allowed one of the district councils, Grimsby, to opt out of the scheme. As the original order was a temporary order, we wonder why he could not make it temporary in this instance.
My hon. Friend the Member for Chingford (Mr. Tebbit) mentioned accounting control, and his view was supported by my hon. Friend the Member for Ashford (Mr. Speed). That is an appropriate matter for consideration.
The Minister knows that there is no majority in the House in favour of the permissive powers in the Bill. If there were a little more substance to the Liberals, they would not be allowing the Bill to go through this evening. Perhaps they will reflect on whether to vote against it tonight, as we hear differing views on their attitude.
The one question that remains on the Bill as it now stands relates to safeguards for the ratepayers. The Minister said in Committee that where appropriate that was the role of the Attorney-General or the district auditor. We asked him in Committee what safeguards there were for proper monitoring, particularly in the period since 31st March, and my hon. Friend the Member for Melton (Mr. Latham) has raised that this evening. That is a major query area. Will the Minister indicate what are the safeguards?
With regard to the district auditor, as the Minister knows, there have been considerable criticisms of direct labour organisations. Indeed, as my hon. Friend the Member for Ashford has said, even this morning we heard reports of the situation in Stoke. I took the opportunity to make some brief inquiries about Stoke this afternoon. One of the projects which comes under the Bill is that undertaken by the Hanley Museum and Art Gallery. The cost of the scheme, whichever way it turns out, will be borne by the Staffordshire County Council ratepayers. The original tender was £1,470,000 versus the
140
lowest private contractor's tender of £1·9 million. That was some 25 per cent. below the lowest private contractor's tender.
At the time there were complaints from the President of the National Federation of Building Trade Employers to the late Anthony Crosland, who was then Secretary of State for the Environment, asking him to withhold loan sanction until there was a proper public inquiry into the scheme. That request was rejected by the Government. Now we are told that the costs are rising and that they will come in at well over £2 million. Added to that, we do not know whether the 25 years' cost of allowances, or that part which is relevant to this Hanley Museum and Art Gallery, is included in this over-expenditure. Stoke is the prime example of a local authority using these powers, and yet again we see evidence here that the system is being abused.
There is an additional factor, upon which the Minister touched lightly, relating to the need for safeguards. The difference between the 25 local authority direct labour organisations covered by the Bill and those elsewhere is that those in the Bill are acting on a trading basis. They run risks that their own ratepayers will suffer a loss as a result of their activities. Where are the provisions that will enable ratepayers in these 25 districts to see whether the powers are being exercised by councillors and officers in a way that seems justifiable to them?
This is not just some small and insignificant Bill. We are opposed to it on an important matter of principle. It is not just a correction of a small or unforeseen inconvenience resulting from the reorganisation of local government. The Bill seeks to perpetuate in permanent legislation a method of carrying out new building work that is against what we believe to be the interests of the country and of the ratepayers. Any DLO involves more public expenditure and brings into question the efficient use of resources. It is no good the Minister sighing. He knows as well as I do that those are the facts of the case.
We believe, frankly, that all direct labour needs to be questioned, challenged and scrutinised as fairly and competently as we have the powers to do. We know

141
that there are many examples where it tends to hoard labour and where it is resistant to movements in a market situation. The tragedy about direct labour organisations is that they appear to be dependent for their survival on political protection. Indeed, it is political protection that the Bill is all about.
No case has been made out by the Minister or by any member of the Government why the 25 authorities had to be treated so differently and why their needs are so great that they must be given these exceptional powers. On the contrary, the deeper we delve, the more murky the water becomes. If I were a ratepayer in any of the seven authorities using these powers actively and extensively—Gates-head, Plymouth, Sheffield, South Tyne-side, Derby, Barrow and Stoke—I should want the district auditors to look very carefully at my authority's direct labour organisation. If allowances can remain hidden from the councillors not for just a few years but for 25 years, we are right to ask what else is hidden.
We reject the Bill. It is not needed. It is impracticable and it continues a dangerous precedent. We reject totally the principle embodied in it, and I urge my hon. Friends to resist the Bill.
8.16 p.m.
Mr. Freeson: I find so many of the Opposition speeches on this matter sad, to say the least, as I think I said on Second Reading. There is a kind of reflex action against any kind of direct labour organisation. Opposition Members do not seek to make judgments about these matters or, indeed, wherever private industry caters for the public authorities, in any dispassionate or impartial way. They do not attempt to adopt a pragmatic or rational approach. They have taken a very tough, firm and—whether they like the word or not—consistently doctrinaire line, which prevents them from looking at this matter in any kind of pragmatic way. We have come to expect it, but hope remains that one day they will get around to looking at these matters in a totally pragmatic way and not with reflex actions such as will lead them to vote against a Bill of this modesty. To do so really is a nonsense.
As I have said before, I say again: if the Opposition had wanted us to pur-
142
sue our ideas about legislating in order to put direct works organisations more fully on to a comparable base with independent commercial companies, they could have resisted the temptation to oppose, before they had even been introduced to the House, the ideas on which we were hoping to legislate.
Mr. Tebbit Mr. Tebbit rose—
Mr. Freeson: Perhaps the hon. Gentleman will allow me to complete this passage. If I may say so, I note always the interruptions from the hon. Member for Melton (Mr. Latham). I do not believe for a moment that he is interested in having direct labour organisations that can compete equally with private enterprise in particular situations. He is interested in restricting DLOs. At least he honestly says that, and I understand it, but he cannot have it both ways.
With one or two exceptions, all the Opposition Members who have spoken so far in the debate—and, indeed, when we discussed this matter not many months ago—have made it perfectly clear that, while they pay lip service to the concept of putting DLOs more fully on a comparable basis, as far as this can be done, in practice they do not wish to support moves in that direction.
I made no secret about what was in my mind with regard to the proposed ideas. Had they made clear that which the leading spokesman for the Opposition, the hon. Member for Ashford (Mr. Speed) has put once more, namely, the idea of establishing common agreement to put DLOs on a fully fair and competitive basis with private enterprise, we should have welcomed such an approach. But when it came to the test it was the Opposition who objected and forced the parliamentary situation that required us to act as we have; in other words, to suspend or defer for the time being the proposals that we have in mind to introduce by legislation.
Mr. Tebbit Mr. Tebbit rose—
Mr. Freeson: If the Opposition would care to state quite openly that they will support such moves in legislation and reassure us on that point, we can all stand united in the House on the matter and we can reconsider our proposal. But I suspect that, if we were to do so,

143
should immediately produce once again a reflex action of opposition from Conservative Members.
Mr. Tebbit: The Minister has said that the Opposition opposed his proposed Bill, but of course we never saw it. Why does he not look for the common ground and make sure that we are all talking about the same thing by publishing his draft Bill in a Green Paper? The words that we used were not words of legislation. They were very loose words, which I am sure he will accept could mean many different things to many different people. We want to know what the right hon. Gentleman means so that we can discuss with him whether we can come to an agreement with him.
Mr. Freeson: We may come to that, but I shall deal with the point shortly.
In the meantime, as hon. Members should know, contrary to the impression given by the hon. Member for Ashford, there has been open discussion of what we have in mind. There have been consultation documents, which were issued to the industry; there have been Questions and Answers in the House; there have been references in previous debates. I shall not now go into detail, but I refer the hon. Member for Chingford (Mr. Tebbit) to Hansard of 17th May, column 247. There he will see a summary of what we thought should be the content of that Bill.
Mr. Speed: Can the right hon. Gentleman tell us, according to this summary of his Second Reading remarks, whether the proposed legislation was, as it were, to be a skeleton to be filled in, or whether it was to contain the details of the CIPFA recommendations?
Mr. Deputy Speaker: Order. The hon. Member for Ashford (Mr. Speed) is asking the Minister to go rather wider than is necessary.
Mr. Freeson: In any case, Mr. Deputy Speaker, I suggest that the hon. Gentleman's question and the answer that it sought to elicit would be redundant to the point I am making—indeed, to the point of the debate. The information is all set out. The documents are available.
We have also made clear, on Second Reading and in Committee, why it would
144
be inappropriate to include the accounting and charging provisions in this Bill. They could relate to only part of the direct labour organisations of the 25 authorities covered in the Bill, and the effect would therefore be marginal. They would not apply generally. Indeed, they would not affect the greater part of the DLO activities of the 25 authorities. It would be wrong and inefficient to have different accounting systems operating within a single authority.
There is another fundamental objection to the inclusion of such accounting provisions. The whole of the financial framework needs to be dealt with at the same time. It would not be right merely to bring accounting practices into line with those of private contractors. It would be necessary to give the DLOs the ability, like private contractors, to seek work on a wider basis. While DLOs are part of local authorities, it will not be possible to make them comparable in every way with private contractors. Our proposals would enable local authorities to set up independent trading companies and would put them on the same basis as the private contractors.
Those proposals were welcomed, if inadvertently, by the hon. Member for Chingford in Committee, although I am not sure that he knew what he was doing when he took my words on Second Reading and incorporated them in a new clause that he proposed and that the Committee rejected.
Mr. Tebbit: I knew perfectly well what I was doing. I wanted the right hon. Gentleman to defend his proposals in detail. But he said that he did not like his propoals and he turned down my new clause. How can we understand what he has in mind if he will not stand by his own words, even when they are incoporated in a new clause?
Mr. Freeson: I shall resist the temptation of the Committee practice of repeating myself. I disliked the hon. Gentleman's proposals—there were other reasons for rejecting them, as he knows. I continue to look forward to the time when we can make better comparisons between DLOs and private contractors. The Opposition say that they are not afraid of competition under proper rules, but they do not wish to give DLOs the

145
opportunity to compete for work with other bodies on a fair basis.
Nor do the Opposition take account of client authorities. The client authority is concerned to safeguard the interests of its ratepayers in putting out work to organisations, whether they be private or public. Whatever power may be given to DLOs to undertake work, the client authority will undertake to ensure that the work is done economically and efficiently.
We have heard a great deal about the need for proper accounting and charging provisions. We have indicated our intentions in many ways. When the Conservatives were in office, both in their 13-year period and in their three and a half years last time, they took no steps to deal with the question of greater efficiency of DLOs. The last Labour Government set up the working party that led to the 1969 manual of procedure being published, but from the moment that the Conservatives came back to power in 1970 until they left office in 1974 they did nothing to monitor the operation of that manual by the local authorities. It was again left to the present Labour Government to set up a working party to establish what should have been monitored by the Conservative Government and to find out what was going on in the wake of the 1969 manual.
Again, it was left to the 1964–70 Labour Government to introduce measures—under the guidance of my right hon. Friend the Member for Bermondsey (Mr. Mellish) as Minister of Public Building and Works—to improve the efficiency

Division No. 185]

AYES

[8.28 p.m.

Anderson, Donald

Cunningham, G. (Islington S)

Hardy, Peter

Armstrong, Ernest

Cunningham, Dr J. (Whiteh)

Harper, Joseph

Ashton, Joe

Dalyell, Tam

Harrison, Rt Hon Walter

Atkins, Ronald (Preston N)

Davis, Clinton (Hackney C)

Hatton, Frank

Atkinson, Norman

Deakins, Eric

Hayman, Mrs Helena

Barnett, Guy (Greenwich)

Dean, Joseph (Leeds West)

Hooley, Frank

Bales, Aif

de Freltas, Rt Hon Sir Geoffrey

Horam, John

Beith, A. J.

Dempsey, James

Howells, Geralnt (Cardigan)

Blenkinsop, Arthur

Doig, Peter

Hoyle, Doug (Nelson)

Booth, Rt Hon Albert

Dormand, J. D.

Huckfield, Les

Bray, Dr Jeremy

Dunwoody, Mrs Gwyneth

Hughes, Robert (Aberdeen N)

Brown, Robert C. (Newcastle W)

Eadle, Alex

Hunter, Adam

Brown, Ronald (Hackney S)

Ellis, Tom (Wrexham)

Jackson, Colin (Brighouse)

Callaghan, Jim (Middleton & P)

Evans, loan (Aberdare)

Jackson, Miss Margaret (Lincoln)

Campbell, Ian

Evans, John (Newton)

John, Brynmor

Carter-Jones, Lewis

Ewing, Harry (Stirling)

Johnson, James (Hull West)

Cartwright, John

Fernyhough, Rt Hon E.

Jones, Alec (Rhondda)

Cocks, Rt Hon Michael

Flannery, Martin

Jones, Barry (East Flint)

Coleman, Donald

Fletcher, Ted (Darlington)

Jones, Dan (Burnley)

Cook, Robin F. (Edin C)

Fowler, Gerald (The Wrekin)

Kaufman, Gerald

Corbett, Robin

Freeson, Reginald

Kerr, Russell

Cowans, Harry

Freud, Clement

Kilroy-Silk, Robert

Crawshaw, Richard

Graham, Ted

Lambie, David

Crowther, Stan (Rotherham)

Grant, George (Morpeth)

Lamborn, Harry

Cryer, Bob

Hamilton. W. W. (Central Fife)

Lamond, James

of direct works inside the Government. It was not done by the Conservatives. Never in Government did they take such a step. All this should be put on the record.
When we wished to introduce our proposals to bring about true comparability—now being adopted by hon. Members-opposite—they were complained about, even though the Opposition did not know the details. They complain now that we are not doing anything about them. They have responded with outright opposition in areas where we have taken action.
Mr. Deputy Speaker: It would be as proper for the Minister to confine himself to the content of the Bill as it is for the Opposition to do so.
Mr. Freeson: I thought that I should get these facts on the record, Mr. Deputy Speaker.
I ask the House to reject the doctrinaire and negative approach that we have consistently from the Opposition whenever the phrase "direct labour organisation" is introduced. It is we who have taken action to improve the situation. The Opposition have never done so when in Government. When we get the opportunity—I hope that it will not be in the too far distant future—we shall take steps to introduce further legislation in this area.
Question put, That the Bill be now read the Third time:—
The House divided: Ayes 147, Noes 119.

Latham, Arthur (Paddington)

Perry, Ernest

Wainwright, Edwin (Dearne V)

Lomas, Kenneth

Phipps, Dr Colin

Wainwright, Richard (Colne V)

Loyden, Eddie

Price, C. (Lewisham W)

Walker, Harold (Doncaster)

Luard, Evan

Richardson, Miss Jo

Walker, Terry (Kingswood)

Lyons, Edward (Bradford W)

Roberts, Albert (Normanton)

Ward, Michael

McCartney, Hugh

Robinson, Geoffrey

Watkinson, John

McDonald, Dr Oonagh

Rose, Paul B.

Weetch, Ken

McGuire, Michael (Ince)

Ross, Stephen (Isle of Wight)

White, Frank R. (Bury)

Maclennan, Robert

Rowlands, Ted

White, James (Pollock)

McMillan, Tom (Glasgow C)

Silverman, Julius

Whitlock, William

Madden, Max

Skinner, Dennis

Willey, Rt Hon Frederick

Maynard, Miss Joan

Small, William

Williams, Rt Hon Alan (Swansea W)

Mikardo, Ian

Smith, Cyril (Rochdale)

Williams, Alan Lee (Hornch'ch)

Miller, Dr M. S. (E Kilbride)

Smith, John (N Lanarkshire)

Williams, Sir Thomas (Warrington)

Molloy, William

Snape, Peter

Wilson, Alexander (Hamilton)

Morris, Charles R. (Openshaw)

Spriggs, Leslie

Wilson, William (Coventry SE)

Oakes, Gordon

Stallard, A. W.

Wise, Mrs Audrey

Ogden, Eric

Stoddart, David

Woodall, Alec

Orbach, Maurice

Taylor, Mrs Ann (Bolton W)

Woof, Robert

Orme, Rt Hon Stanley

Thomas, Ron (Bristol NW)

Wrigglesworth, Ian

Ovenden, John

Tierney, Sydney

Young, David (Bolton E)

Padley, Walter

Tinn, James

Palmer, Arthur

Tomlinson, John

TELLERS FOR THE AYES:

Park, George

Torney, Tom

Mr. Thomas Cox and

Pavitt, Laurie

Varley, Rt Hon Eric G.

Mr. James Hamilton.

Penhaligon, David

NOES

Atkins, Rt Hon H. (Spelthorne)

Hawkins, Paul

Page, Richard (Workington)

Bell, Ronald

Higgins, Terence L.

Percival, Ian

Bennett, Sir Frederic (Torbay)

Holland, Philip

Powell, Rt Hon J. Enoch

Berry, Hon Anthony

Howell, Ralph (North Norfolk)

Price, David (Eastleigh)

Biffen, John

Hunt, John (Bromley)

Raison, Timothy

Boscawen, Hon Robert

James, David

Renton, Tim (Mid-Sussex)

Boyson, Dr Rhodes (Brent)

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

Rhodes James, R.

Brocklebank-Fowler, C.

Johnson Smith, G. (E Grinstead)

Roberts, Michael (Cardiff NW)

Brooke, Peter

Joseph, Rt Hon Sir Keith

Roberts, Wyn (Conway)

Buck, Antony

Kimball, Marcus

Rossi, Hugh (Hornsey)

Butler, Adam (Bosworth)

King, Evelyn (South Dorset)

Shaw, Michael (Scarborough)

Carlisle, Mark

King, Tom (Bridgwater)

Shelton, William (Streatham)

Chalker, Mrs Lynda

Kitson, Sir Timothy

Shepherd, Colin

Clark, Alan (Plymouth, Sutton)

Knox, David

Shersby, Michael

Clarke, Kenneth (Rushcliffe)

Lamont, Norman

Silvester, Fred

Clegg Walter

Latham, Michael (Melton)

Speed, Keith

Cockcroft, John

Lawrence, Ivan

Spicer, Jim (W Dorset)

Cope, John

Lester, Jim (Beeston)

Spicer, Michael (S Worcester)

Corrie, John

McCusker, H.

Sproat, lain

Dean, Paul (N Somerset)

Macfarlane, Neil

Stainton, Keith

Dodsworth, Geoffrey

MacGregor, John

Stanbrook, Ivor

Drayson Burnaby

MacKay, Andrew James

Steen, Anthony (Wavertree)

Durant, Tony

McNair-Wilson, M. (Newbury)

Stewart, Ian (Hitchin)

Dykes, Hugh

McNair-Wilson, P. (New Forest)

Stradling Thomas, J.

Edwards Nicholas (Pembroke)

Marshall, Michael (Arundel)

Taylor, R. (Croydon NW)

Emery, Peter

Mather, Carol

Taylor, Teddy (Cathcart)

Fairgrieve, Russell

Mawby, Ray

Tebbit, Norman

Fletcher-Cooke, Charles

Maxwell-Hyslop, Robin

Temple-Morris, Peter

Fookes, Miss Janet

Meyer, Sir Anthony

Townsend, Cyril D.

Forman, Nigel

Miscampbell, Norman

Wakeham, John

Fowler, Norman (Sutton C'f'd)

Mitchell, David (Basingstoke)

Walder, David (Clitheroe)

Fry, Peter

Moate, Roger

Walker-Smith, Rt Hon Sir Derek

Gardiner, George (Reigate)

Monro, Hector

Wall, Patrick

Glyn, Dr Alan

More, Jasper (Ludlow)

Warren, Kenneth

Goodhew, Victor

Morgan, Geraint

Weatherill, Bernard

Gow, Ian (Eastbourne)

Morris, Michael (Northampton S)

Young, Sir G. (Ealing, Acton)

Gower, Sir Raymond (Barry)

Nelson, Anthony

Younger, Hon George

Grist, Ian

Newton, Tony

Grylls, Michael

Normanton, Tom

TELLERS FOR THE NOES:

Hamilton, Michael (Salisbury)

Osborn, John

Mr. Nigel Lawson and

Hannam, John

Page, Rt Hon R. Graham (Crosby)

Mr. Spencer Le Marchant.

Question accordingly agreed to.
Bill read the Third time and passed.

INDUSTRY (FINANCIAL ASSISTANCE)
8.35 p.m.
The Minister of State, Department of Industry (Mr. Alan Williams): I beg to move,
That the Financial Assistance for Industry (Increase of Limit) Order 1977, a draft of which was laid before this House on 16th June, be approved.
I shall be brief in my introduction, although I shall want to provide some up-to-date informal ion to the House since it is a little while since we debated this legislation.
The order will serve to increase the financial limit which currently exists in terms of assistance provided under Section 8 of the Industry Act 1972. The House will recollect that under amending legislation carried into force last year the initial limit on the first stage was raised to £600 million. We provided for increases of up to £250 million to be made on four separate occasions by order.
The purpose of this order is to obtain the first tranche of those four £250 million elements. I remind the House that by Section 8(6) of the Industry Act the total to be counted against these limits consists of money that has been paid, plus liabilities under guarantees, from which we deduct repayments of loans and of principal paid against guarantees where the firm has recovered sufficiently to recompense the Government. We felt that to be an inadequate adjustment. Indeed, we feel that the adjustment should be higher. The important point is that payments do not necessarily take place at the same time as commitment. The payments can be spread over a lengthy period.
In the debates that took place earlier this month on the offshore scheme, my right hon. Friend the Minister of State, Department of Energy made the point that in some of the schemes payments would be phased over an eight-year period. The Government believe that we should count the total commitment rather than the payment because we think that this provides more appropriate parliamentary scrutiny and control of the level of Government expenditure under this legislation. This is best demonstrated by pointing out that at present
150
total payments which count against the £600 million limit are only £170 million, but the actual firm commitments are £520 million. Therefore, only £80 million of the initial tranche remains.
Before I explain why the increase is needed, I shall seek to explain why the commitment of £520 million is about £200 million higher than at the time of Second Reading of the amending legislation in April last year. The commitments have risen by approximately £200 million in the space of one year. This has been primarily because of the existence of the accelerated projects scheme, individual industrial sectoral schemes, offshore schemes and a payment to Leyland.
Of the present figure of £520 million so far committed, £245 million has been committed to individual companies, but the largest element—£162·5 million—has been committed to Chrysler. A figure of £275 million—over half the money—has been committed under Section 8 schemes under various industrial aid schemes.
I should like to examine particular schemes because their development is the justification for me to come to the House to ask for these extra resources. I suggest to the Opposition that if, when they have heard what has been achieved under these schemes, they still feel that they should vote against the order, those outside the House will find that judgment difficult to understand.
If we first examine the accelerated projects scheme, we see that this year it has been incredibly successful. The applications had to be completed last year and the expenditure had to be initiated by the end of November last. When the scheme was finalised, for £84 million of Government expenditure we generated £640 million of new investment. Conservative Ministers constantly ask us what we are doing to secure new investment. The accelerated projects scheme secured £640 million worth of it.
Mr. Michael Marshall: On what basis does the right hon. Gentleman form the judgment that £640 million worth of new investment arose as a result of Government action? Much of that was likely to come forward in any case. Can he substantiate his claim?
Mr. Williams: I thought that the hon. Gentleman was aware of this. What

151
happens is that when a firm submits a proposal it is assessed by specialists within the Department. They look into company records, into decisions taken at board meetings and so on, to establish that the project had not been intended to take place prior to 30th November last. There is the most detailed scrutiny before we approve projects, and many have been turned down. The hon. Gentleman shakes his head, but I can tell him that many projects were turned down because they could not meet the criteria under the scheme.
I should like to indicate the impact of this £640 million worth of new investment because it is highly relevant to issues that are disturbing the country. The spread of the new investment under the accelerated projects scheme has been quite wide across manufacturing industry. About one-third of it has gone to clear potential shortages and potential bottlenecks identified by the sector working parties under the industrial strategy.
This investment has led to the creation of £400 million worth of orders for the British construction industry and for plant and machinery suppliers in this country. Under the £640 million that will arise from this scheme, £400 million will be placed in orders with the construction industry and with the plant and machinery suppliers in this country, thereby generating extra employment in those sectors. Although job creation was not the objective of the exercise, it was a counter-cyclical operation and it will create 13,000 permanent jobs. That, again, is a highly desirable attainment in the heart of a recession, deep in the trough, when it has been difficult to obtain new investment and new jobs.
Not only will there be £400 million of extra domestic orders and 13,000 new jobs as a result of the scheme but by 1980 the projects that will have been financed by this money will be contributing £500 million a year towards the balance of payments. All this is for the expenditure of £84 million worth of Government money, yet Tory Members will have the effrontery to vote against the order later this evening.
In addition, there are 12 sectoral schemes related to individual industries. These are sometimes called industry
152
schemes. Commitments there total £70 million.
Let us again see what it is that Conservative Members will vote against tonight. We are seeing a repeat performance of their antics last week on prices. Hon. Gentlemen opposite are to vote against legislation that will enable us to have the ferrous foundry scheme. A short while ago I attended an exhibition at the National Exhibition Centre of the ferrous foundry industry. This industry, although in a recession, was in an astonishing state of optimism. It was seeing expansion and development such as it could not recollect having seen before—all as a result of this scheme. The industry is a critical supplier to many other industries. It is a critical supplier to the engineering steel and construction industries.
We have received 513 applications under the ferrous foundry scheme from an industry which in the past has been noted for its unwillingness to invest.
Those 513 applications have already resulted in offers amounting to £35 million for 200 projects that will generate £165 million worth of investment in an industry that is noted for its lack of investment. We are still considering other applications under the scheme. It has now closed, but it was so successful that we have a backlog of applications.
The machine tools scheme was slower to get started and proved an interesting demonstration of the value of the relationships that have been built up under the industrial strategy through the sector working parties. Industry convinced us that one of the reasons why the scheme did not get off the ground was that the initial threshold for projects was too high. With this scheme, as with the clothing scheme, we readily agreed to a lower threshold to see whether that would attract more applications. The result is that we have 50 projects in hand. For £6 million of Government assistance, we shall be obtaining £30 million worth of investment in an industry that has caused concern to successive Governments because of its inability to invest at the right time. We are getting this investment at the time when economists and Governments have always told the machine tool industry that it should invest—namely, during a recession—in anticipation of an upturn.

153
A total of 175 companies are taking advantage of the scheme in the clothing industry. More than half are engaged in consultancy projects. They are making expertise, rather than hardware, available to the industry, and it should benefit from this outside advice.
Mr. Max Madden: Has my right hon. Friend had any intimation from companies participating in the clothing industry scheme about its effect on their labour requirements? A significant number of redundancies are pending at Burton's. Has that company had discussions with my right hon. Friend's Department to see whether the redundancies could be averted?
Mr. Williams: The company undertook the normal procedures and notified the Government of its likely intentions. It will be aware of all the assistance available. I shall have to write to my hon. Friend about whether detailed discussions took place. I cannot answer offhand about an individual case. Assistance is available if it is relevant to the company's needs, though I suspect from what I have read of its problems that the scheme would not be able to save many, if any, of the jobs involved. I know of my hon. Friend's long-standing interest and concern for the problems of this sector.
The rest of the schemes are newer than those to which I have referred. We are as yet unable to indicate the likely eventual uptake, but the initial response is quite encouraging.
The offshore supplies scheme was discussed in detail in the House recently and commitments totalling £115 million have already been given. It is unnecessary for me to duplicate our recent lengthy discussion.
We still have £80 million of the existing £600 million limit available to us, but projects under the existing schemes and any Section 8 schemes will exceed this limit and it is sensible now to have this extra tranche available. For example, the selective investment scheme which was announced by the Chancellor of the Exchequer only in December has £100 million available for investment. That is an indicator of what; is happening in the economy to those who doubt that there is
154
the start of the upturn. By the end of the first three months of operation, the scheme had received more applications than were received for its predecessor, the accelerated projects scheme. This suggests that there is a growing impetus in the will to invest in industry.
It is a new scheme and most of the projects are still being processed. A total of nine have been approved. For £4 million of Government assistance, we shall obtain £43 million of investment. That is literally in the first couple of months. A further 80 applications are under consideration. I must stress that some of them probably will be rejected if they do not meet the criteria, but there is a long time to go for further applications to be made. Should those 80 applications be approved, they would generate another £414 million of investment. That is what the Opposition intend to vote against tonight.
We need the funds in order to continue that scheme and the industry schemes. We are in a situation where £520 million of the £600 million is committed. There is the possibility of another £150 million of commitments arising under the existing sectoral industry schemes. There is the possibility of another £96 million of commitments arising under the selective investment scheme. There is the certainty of further commitments arising under the offshore scheme which the Conservatives introduced. There is the possibility—but we hope that it will not arise—of assistance to some other individual companies. That is the potential of further commitment which already amounts to £250 million. Since we have only £80 million of the initial tranche left, there is a clear need to raise the limit. I therefore commend the draft order to the House.
8.58 p.m.
Mr. Kenneth Clarke: The Minister of State has courteously given a detailed exposition of the purposes for which he asks for £250 million and the schemes to which he intends to devote that money. With respect to his careful and conscientious delivery to the House, I thought that he seemed remarkably complacent about the contribution that these funds are making to the industrial strategy. It is a bland way of asking the House to approve the expenditure of a

155
further £250 million of taxpayers' money. It will not come as a surprise to the Minister to hear that we intend to resist this attempt to increase expenditure under Section 8 at this time. We are not satisfied with his explanation.
Our reasons are, first that we believe that the Government are grossly overspending taxpayers' money on this part of the Industry Act. That does not mean that we are against the use of public funds to assist industry at all times and in all circumstances. We believe that public funds should be injected into industry in exceptional circumstances and when finance from the private market is not available. The Government are spending excessive sums in a way far beyond that which is justifiable and which is not plugging large gaps in the market which, in our opinion, do not exist.
This means, above all, that Section 8 of the Industry Act is an area of policy where, as the Minister has just said, the Government still measure success in terms of the amount of public money actually spent or the number of applicants coming forward and queueing up for taxpayers' money—£X million for this sectoral scheme and £Y million for that. It is a shopping list for taxpayers' money. In our judgment, this is not an adequate measure of the success of any industrial policy. The Government in our view are grossly and unnecessarily overspending taxpayers' money on these projects.
We believe that a policy is needed to stimulate investment in this country, so long as proper use is made of that investment by industry when it is made. But the principal policy for investment that the Government ought to adopt is to create a climate in which industrialists are encouraged to contemplate investment in new projects, using the private markets in almost all cases for their investment funds. We are in no way denying the need greatly to increase investment in manufacturing industry in the United Kingdom, but the Government are having to spend taxpayers' money on a vast scale and, in substitution for a policy of encouraging private investment from the market. They are asking to be allowed to spend more money because they have failed to create the right atmosphere in which investment would take place in any event.
156
If industrialists are confident in their growing markets, in a stable economy and in a stable currency, and, in particular, if they can see a proper level of profitability on any investment that they make, they will come forward and seek to invest without any injection of public money on the scale contemplated by the Minister.
Where there are schemes for investment in industry which can demonstrate the prospect of adequate profitability, finance is readily available from the private market on a suitable scale. There is more money available at the moment in the City of London than there are industrialists with good projects coming forward to seek it. That is our second objection. The Government are overspending, and they are also failing in the proper policy for investment, which is to so manage the economy as to create a climate in which investment is self-generating and largely privately financed.
Our different approach is not one of a slight difference of degree about the amount of money being spent under our original Industry Act 1972. It is a difference in kind about the circumstances in which public funds should be used. These differences are so great as to present a complete difference in style, a difference which the Conservative Government, who passed the 1972 Act, contemplated just as much as we do when in opposition now. I have no doubt that the Minister of State will try to suggest that we are repudiating our 1972 Act. That is not so at all. I have no sense of guilt whatever about the fact that I was a supporter of the Act then and remain one now. There is no question of repudiating the essential powers which any Government need in present circumstances to enable them to intervene with funds occasionally and for limited purposes.
When the Act was passed in 1972 by the Conservative Government, the financial limits were exceedingly circumscribed. There was an initial limit of £150 million, with four further tranches available of £100 million each. The present Government had to change that by legislation in 1976 to new limits of £600 million in the first place and four further tranches of £250 million each time. It is the first tranche that we are discussing this evening. Thus the total limit contemplated in 1972 of £550

157
million has been transformed by this Government to a total of £1,600 million, but the way in which the limit is being eaten up by this Government is proceeding at a pace which is somewhat frightening to anyone genuinely concerned about the level of public expenditure.
When in office, we gave grants under Section 8 of the Act as follows. In 1972–3, there were 30 individual applications from companies for Section 8 assistance, and the then Conservative Government made grants to two companies only. In 1973–74 there were 17 individual applications, and the then Government made no grants to any company. However, we began two schemes under the Industry Act. The wool textile scheme was intended to rationalise an industry which was in great difficulties, and the scheme which we initiated has been of great assistance to the areas involved, in Yorkshire and elsewhere. Secondly, we introduced the offshore supplies interest relief grant scheme, to which the Minister has referred.
When we left office in 1974 we had expended £63 million under Section 8 of the Industry Act. As soon as this Government took office they inherited commitments greater than that, I accept, but the way in which they have transformed the Section 8 schemes and the way in which they have poured out money changed the policy under that Act out of all recognition.
The Minister has just said that there are no fewer than 12 sectoral schemes that he has on hand. There were £271 million worth of commitments entered into in 1976 alone. Another £200 million worth have been entered into since the Second Reading of the Act last year, so the £550 million total limit has been changed to £1,600 million, and it is being used up at a very great rate of knots by the present Government. Not only have this Government transformed expenditure under Section 8 but they have the budget of the National Enterprise Board and a variety of other ways of pouring public money into industry which they have introduced.
The idea, therefore, that somehow we are now going back on a policy that we pursued or that the Government are pursuing basically the same approach as that of the latter years of the Conservative
158
Government is a myth that is growing in current politics but it belies the fact that the Government, particularly in this field, but in others as well, have transformed our policy into one which expends a vast and growing amount of taxpayers' money on a scale which not only we can not afford but which would be unnecessary if the right kind of climate for investment were created in other ways.
Mr. Madden: The hon. Gentleman is making clear his position and that of his party on the allocation of financial assistance. But is he aware that in the constituency represented by his right hon. Friend sitting next to him on the Opposition Front Bench, the right hon. Member for Leeds, North-East (Sir K. Joseph), some 40 companies have successfully applied for financial assistance under the 1972 Act? Has the right hon. Gentleman protested against the allocation of those funds to the companies in his constituency?
Mr. Clarke: I do not make my right hon. Friend's constituency speeches. But if 40 companies had successfully applied under the Act—I am not sure under what scheme that would be—and had sound projects with good prospects of a commercial rate of return on capital employed, we suspect that they would have been able to raise their capital on the market without having to have recourse to Industry Act funds.
Let us suppose that those firms have applied under the accelerated projects scheme. A great deal of public money has been expended on projects which supposedly were to be accelerated, but which in fact—particularly in the case of the best of them, where they could show a good rate of return—would have gone ahead anyway without the taxpayer's money being expended.
Mr. Madden: But on either count would not one expect the hon. Gentleman's right hon. Friend to have protested about the allocation of funds to such companies in his own constituency?
Mr. Clarke: I do not think that my right hon. Friend is known in Leeds or elsewhere as the greatest exponent of spending public money on unnecessary assistance for investment in private industry. If there is a misunderstanding of his views in his constituency, I would be startled to hear it.

159
The Minister's answer is that the Government are careful and selective. He tried to reassure us that there was a most detailed study to ensure that money was only given to accelerate projects that would not otherwise have gone ahead. The feedback that one gets from industry is that the Government were led into expending money by those skilled in applying for grants in a way that the Minister now denies. But, because they measure success in this field in terms of money that they can spend and financial statistics of grants given, the Government are touting for business and inviting applications for Section 8 funds by potential investors.
Some schemes, when the money has been on offer, have not always been taken up, despite the fact that generous funds have been available. People have not come forward to make use of those funds until the Minister has gone out of his way to encourage them.
The Minister referred to the machine tool industry scheme and the clothing industry scheme, both of which were failures by the time their initial closing date was reached—failures, that is, in the Minister's terms, because the money made available under the schemes was not taken up. What both schemes illustrated was that if markets are depressed and firms are not competitive no amount of public money will ever reverse such a trend. That was particularly so in the case of the machine tool industry, where markets were depressed and uncertain and there was no clear possibility of proper levels of profitability being maintained by many companies.
In other areas the Government have not been selective in the sectors in which they applied their schemes. We had the accelerated projects scheme, the first real breakaway from any selectivity by sector. They spent £77 million on that scheme, which I have already criticised. In the selective investment scheme since December 1976 they have been eating up a potential budget of £100 million. The selective investment scheme is not regionally or sectorally oriented. Anybody who can sell a project to the Department, who can persuade it that the project comes within the criteria laid down by the Department, can obtain large sums of
160
public money to assist with the investment.
I have before me a Press statement issued only a day or two ago about the Minister of State appealing to the chemical industry to put forward projects and speaking of the amounts of money available under the selective investment scheme and various design schemes. In those industries where there are perfectly proper investment projects which can be financed in the market this is touting for ways of spending public money which can produce an impressive speech, if one chooses to count something as impressive in terms of the spending of public money.
One matter that the Minister has not mentioned is that a few large schemes have taken very large sums. The grants to Chrysler have exhausted a large amount of the previous Industry Act limits. The agreement with Chrysler involved a contingent liability of no less than £162·5 million to the British taxpayer. The company is still losing money. I pay tribute to the efforts it is making and I wish the company's success. I realise that it has transformed a great deal of its operations.
However, we should look at the matter from the taxpayer's point of view. That is what Ministers and Parliament should do. In its first year since the agreement the company lost more money than it told the Government it expected to lose. That cost the taxpayer £41·5 million. The company has now entered into a planning agreement, because it undertook to the Government that it would. It is losing more money already than the targets in the agreement indicate. Therefore, the contingent liability of more than £160 million does not look to us a sound commercial way of devoting such large sums of other people's money.
That is the criterion that the Minister and Parliament should have in mind when we look at the amounts of money already expended and the extra sums being sought. The overriding consideration must be that it is other people's money, taxpayers' money, that is going, through the sectoral and selective schemes, to those firms which can sell a project to the Department. The money is coming out of the pockets of those working in other industries which are not at present obtaining any part of the bounty.

161
Therefore, the effect of such expenditure has a direct bearing on the levels of taxation paid by other industries. What happens when expenditure is undertaken to save jobs in particular industries, as the hon. Member for Sowerby (Mr. Madden) wishes his right hon. Friend to do for the clothing industry? The money given to firms to save jobs in them often improves their competitive position compared with other firms in other parts of the country and merely results in the loss of somebody else's job.
I shall not dwell in detail on a recent case. I had an exchange with the Under-secretary about the money expended on the Kirkby co-operative, contrary to all advice and despite the fact that it could demonstrate no commercial viability. That project was to save 400 jobs in Kirkby in the boiler and radiator section of the company. At the same time we have recently seen Penrad, which also made boilers and radiators, going bankrupt in Wales, partly as a result of the competition from Kirkby, and 200 jobs have been lost there.
The Secretary of State for Wales was putting public money into Penrad to try to save jobs in the suburbs of Cardiff. The situation arose in which the big guns of the Department of Industry were putting their money into 400 jobs on Merseyside and outgunned the Welsh Office which was trying to say 200 jobs in Cardiff. One subsidises a firm which is loss-making on the scale of the Kirkby organisation in a declining market and a competitive sector such as radiators and boilers only at the expense of other and potentially more competitive firms in the same sphere.
I think that I have probably given an adequate review of our reasons for being sceptical about the expenditure of Industry Act funds on this scale or anything like it. I emphasise that we certainly fully recognise the need for more investment in industry and the need to stimulate manufacturing investment. I certainly accept that it cannot be taken for granted that the private market can cover every project, although the cases must be exceptional in which it cannot. One must look to Finance for Industry the new Equity Bank, and the ways in which the market is trying to cover the gaps which industry insists are there in the provision of funds.
162
If one needs a real policy for investment it must primarily be a policy to generate private investment, and that investment will take place once industrialists are stimulated to look for funds and to bring forward projects because they have confidence in the market, in the economy, in the currency and in the Government, which they do not have at the moment. That investment will take place when lower interest rates can be achieved and maintained by the Government so that industrialists can afford the rate of interest they are expected to pay on the money they invest. In particular, investment will come forward when a real shift is made towards greater profitability in industry so that the anticipated level of profits from projects can safely exceed any rates of interest which the industrialists and investors might be expected to pay.
The Government have a bad record on profitability, and it is a record which does not improve. The Minister reminds us of the Price Commission Bill which went through the House last week With its threats to the level of profitability in industry, but I do not think that he can point with pride to that Bill as being any part of an industrial strategy to stimulate investment, and we certainly do not see it that way.
Mr. John Ryman: Will the hon. Gentleman explain how he reconciles the present argument he is developing on the Price Commission Bill with the concession that the Government made in the Committee stage of that Bill, namely, to lift all control of dividends within a period of 12 months?
Mr. Clarke: We would certainly welcome the end of dividend control when it came, but let us consider the powers that the Government have taken in the Bill to intervene selectively and unpredictably in various sectors and to investigate sectors chosen by themselves and by popular or Socialist demand. They can impose a price freeze while the investigation continues, but they are unable to satisfy industry that there will be a guaranteed and adequate rate of profitability either during or after the investigations. That does not seem to me to be designed to stimulate profitability on investment and thereby to stimulate investment.

163
To stimulate capital investment from the private market is a prime duty of Government. The Government are using our 1972 Industry Act as a substitute for their failure to do that. One would never guess from the Minister's speech that the level of investment in this country dropped last year. The Department's forecast of the increase in the level of investment keeps being revised to ever more distant horizons and lights at the end of the tunnel when the big breakthrough in investment is supposed to come.
We do not believe that our Act should be used in this way, and we do not believe that just pumping in money is any substitute for a real public policy which will stimulate the investment. We shall be voting against the £250 million for which the Minister is asking, therefore.
I saw the hon. Member for Colne Valley (Mr. Wainwright) in his place a short time ago and I wondered whether we should be voting alone. He spoke on the 1976 Act and the Liberals voted with us against increases in expenditure of the kind the Government are now proposing under the Industry Act. It may be because the hon. Member does not wish to go back on his earlier speeches and commitments that he has decided that the Lib-Lab pact would be best preserved this evening by the Liberals leaving the Chamber, as is frequently the case.
Mr. Michael McGuire: The hon. Gentleman has seen the light at the end of the tunnel.
Mr. Clarke: I do not believe that the light he has seen will be any great help to industry. The hon. Member for Colne Valley has simply seen the hope of survival by keeping the Lib-Lab pact together. In terms of a sensible industrial strategy he would do well to come back and vote with us against this proposal.
9.20 p.m.
Mr. Michael McGuire: In listening to the hon. Member for Rushcliffe (Mr. Clarke), one would never imagine that there was any problem about investment. He said that, given the right climate for industrialists, if pro-
164
fits are right there will be no investment problem. I remind him that the then Prime Minister, the right hon. Member for Sidcup (Mr. Heath), said in 1973 when speaking to industrialists "We did everything you wanted. Profits were right. We had no restraint. Everything was as you demanded. But you still did not invest." I remind the hon. Gentleman, too, that when I sit on these Benches listening to Question Time I do not get the impression that the Opposition are asking the Government not to do anything. My impression is that they are asking what the Government intend to do about investment. When they join in lobbies, Tory Members, like Labour Members, say that they want the Government to do more of this or that.
Like most other hon. Members, I am concerned about my constituency. In my constituency we have the highest male unemployment rate of any town in England. That has to be set against the fact that I am speaking of the new town of Skelmersdale, which has the highest form of grant aid, yet the male unemployment rate is in excess of 20 per cent. We want more investment, not less.
I led a deputation of industrialists today to see the Secretary of State. We had a very fruitful discussion and he gave us a bit of "injury time". Certainly we had longer than we are accustomed to get from Ministers. But we needed it. The deputation was to some extent anticipating this debate. I am not concerned with the political complexion of the industrialists—I take it that there will be Liberal, Conservative and Labour supporters—but they are managers of factories who are putting up practical suggestions to my right hon. Friend, suggesting how the Government can help them. I hope that Skelmersdale will receive some of this £250 million to help overcome our difficulties.
I am particularly interested in the accelerated projects scheme, which we discussed at great length with my right hon. Friend. He told us that for a modest investment of £84 million the Government had generated about £640 million worth of new investment. He instanced another modest investment scheme where, for about £70 million, there was a return in excess of £500 million. This is expected to be a continuing operation.

165
My constituency has problems in that there are factories there which do not qualify for these schemes. The Government have laid down qualifications in terms of the number of new jobs which will be created or the amount of investment needed. I impress upon my right hon. Friend that there is a need to view with deep sympathy areas such as mine which have special problems. Whatever the criteria that are laid down on a national scale, they should not be rigidly adhered to in areas such as Skelmersdale. I am not saying that it is the only area in the country with special problems, but there is 20 per cent. male unemployment. If investment schemes to expand existing factories in Skelmersdale are put forward and they do not meet the guidelines laid down by the Government in terms of the jobs that will be created or in terms of new investment, I want the Government, through my right hon. Friend, to give me an assurance that they will be considered sympathetically.
One of the problems that we have on Merseyside—I see with us my hon. Friend the Member for Ormskirk (Mr. Kilroy-Silk), who is always putting these arguments to the Government—is that people fight shy of coming into our area. The Government, through my right hon. Friend, did all that they could about 12 months ago to induce a certain employer to come to Skelmersdale, but in the end he would not come. I and the industrialists in Skelmersdale say that they should be given some small but special help to expand their factories rather than that the Government should go out of their way to give special inducements over and above the special development grant to try to attract industrialists who at the end of the day are not really interested, for a variety of reasons, in coming to Skelmersdale.
If we have well-established factories which want to expand and their expansion schemes do not come within the criteria laid down by the Government, I ask the Government not to reject them merely on that basis. I want to ensure that a large enough portion of the £250 million goes to Skelmersdale so that we can get some of the expansion schemes put into effect that the industrialists put forward today.
I hope that we shall have an announcement from the Government that they mean
166
what they say when they declare that they will give all the help they can to those in Skelmersdale. I look forward to my right hon. Friend's reply on the criteria for firms within Skelmersdale.
9.28 p.m.
Mr. Michael Grylls: The hon. Member for Ince (Mr. McGuire) rightly talked about his constituency and the severe problems of Skelmersdale. Everyone will know something of the difficulties in that area. The strange thing about industrial policy is that many of us who are worried about certain areas are on the same side, for we want to see successful industry. We are arguing about the means to achieve that end.
The Minister went through the same ritual in opening as he did in October 1976. The right hon. Gentleman tried to frighten off the Opposition. In October last year he warned Conservative hon. Members what would happen if they voted against the Industry (Amendment) Bill. That debate took place shortly before the Walsall by-election. The right hon. Gentleman asked us to consider what would happen at Walsall if we voted against the Bill. He said:
"What will happen in Walsall and the West Midlands if hon. Members carry the vote tonight?"—[Official Report, 28th October 1976; Vol. 917, c. 830.]
The right hon. Gentleman was not a very good forecaster. We won the Working-ton and Walsall by-elections.
We should not be frightened of standing up for what we believe. Many of the things that we said when debating the Industry (Amendment) Bill and before that were right. The comments that we made when the previous two tranches brought in by the Government under the 1972 Act were fully justified. We were right to vote against the Industry (Amendment) Bill.
The hon. Gentleman has given the House a large amount of detail about the amount of money expended on different schemes such as the accelerated project scheme and the various investment schemes. However, I must say to the right hon. Gentleman that I am critical of his bringing forward this tranche before we have had the latest report under the Industry Act 1972. We had a

167
very full report last year. It was laid in the House in July 1976. Presumably the report for the current year up to March 1977 will shortly be available. When it comes before us, we shall have all the details on which to base a debate such as this.
It was a slight affront, although the Minister tried to give as much detail as possible, not to have waited until the document was published when we could have seen in far more detail than could be covered in a debate how many firms were concerned, which category they came under, and so on. I hope that if the Minister thinks it necessary to bring forward further tranches at this time of the year—perhaps he will not be in office next year—he will make sure that we have a proper report on which we can discuss these matters.
I wish to look shortly but critically at the sectoral industry schemes. The wool textile scheme, which was started under the Conservative Government, was a modest scheme, but it was well founded. What has happened while the present Government have been in office? Schemes have proliferated. The worse the economy has become, the more difficulties the Chancellor of the Exchequer has got into. In direct proportion almost to the Government's economic failures, we have had schemes floating round like confetti.
It is rather like a cook putting herbs into a dish. Whenever the right hon. Gentleman cannot think of anything else to do, he announces in a Budget Statement that he proposes to bring forward another industry or sectoral scheme, so he pops in the odd scheme or two. Why? I suppose that it has been done as a sop to Government Members below the Gangway and to the TUC, but it has been a conjuring trick, because the schemes bear no relation to the creation of fresh employment.
Sectoral schemes have nothing to do with employment. In most instances they are helping industries to contract. That may be right or wrong. That is not the point of what I am saying. To produce such schemes simply as a conjuring trick, or, indeed, as a confidence trick, is totally irrelevant to the country's industrial problems. Such schemes have nothing to do with job creation.
168
I am very critical of the schemes, with the exception of the wool textile scheme. [An HON. MEMBER: "I wonder why."] I shall tell the hon. Gentleman. The wool textile scheme was based on the Economic Development Committee's detailed study of the industry. It was well founded. Under the scheme, 102 applications have been approved. But I would not pretend that the scheme has been an overwhelming success. Probably it has helped some wool textile companies. I am, however, sceptical about most of the other schemes which have been introduced. Under the wool textile scheme, £1·3 million has been paid to eliminate marginal capacity. Therefore, it has nothing to do with job creation.
Mr. Alan Williams: Does the hon. Gentleman believe that the £640 million of investment under the accelerated projects scheme is a failure? I do not understand the hon. Gentleman's point about jobs. The hon. Gentleman decried the assistance we gave for a cracker development at Lindsey because it was capital intensive and did not create jobs. The hon. Gentleman cannot have it both ways.
Mr. Grylls: On the accelerated projects scheme, there was no proof that the investment would not have come forward. I remember that the scheme was described in the Investors' Chronicle as the biggest rip-off of all time. The Minister tried to frighten us by saying that the officials in his Department would go around looking at minutes and files. I do not believe that that happens. The officials in the Department behave properly and do their job in carrying out the Minister's instructions, but they must take the word of industrialists who may say, "We are not keen on this scheme, but if you give us a bit of money, we might bring it forward."
I do not want to digress any further because I do not want to talk about accelerated project schemes. I want to deal with the sectoral industry schemes. This is where the biggest mistake of all has been made. I believe that no proper strategy was established before the machine tool industry scheme was introduced. No one did a proper market survey of competition from abroad, what type of machine tools were required, or the new designs for the next generation

169
of machine tools in the 1980s. No one looked at the competition to be expected abroad, or the best export markets to aim at.
The Minister said that he looks at schemes in order to decide whether to approve them and that he turns some of them down. I am sure that he does, but I believe that the whole strategy of the schemes has been ill thought out. We have not concentrated, as have many of our European competitors and the Japanese, on one particular market or area and on the very best firms.
With regard to the ferrous foundry schemes, I accept that many of the old firms were lacking in modernisation and in meeting the legislative requirements concerning health, safety and clean air. Many of them in any case could not find the money to do it. I accept that the environmental aspect of that sort of industry is very important, but no one really sat down, before deciding whether there should be a ferrous foundry scheme, to establish what was needed, if anything, for that industry. In the ferrous foundry industry there is no particular international trade and it is mostly a national business.
The lack of strategy in these schemes is perhaps the most serious criticism that can be made of them. It seems to me to be the wrong approach to announce a scheme before establishing a suitable strategy for it as a result of discussion with those concerned.
There is now a non-ferrous foundry scheme coming forward. The Minister has not said much about it, because it is in its early days, and I accept that. These foundry schemes have been announced and started, but we have not yet heard a single word about what British Leyland is doing. I understand that it is going into the foundry business, perhaps quite rightly. Many motor car manufacturers go in for their own foundries, but is it sensible in Britain to pretend that we can set up a proper ferrous or non-ferrous foundry scheme when it is probable that the biggest single purchaser of the products of these foundries is setting up its own scheme?
Details have not yet been announced, and if the Minister is unable to say something about it in reply, I hope that he will write to me letting me know how
170
much British Leyland is to spend on setting up a British Leyland foundry. Again, if such a foundry is to be set up, what will be the effect on Birmid Qualcast, which is a very big foundry?
These schemes have been only very superficially planned by the party of planning. What has emerged from the Minister's opening speech is that they have been based on a quantitative rather than a qualitative assessment. No one has asked where these industries are going. The Minister said that £80 million has been put in under the accelerated project scheme and that this had created £400 million worth of investment. He has not told us whether it is the right investment. We ought to be concerned with that rather than with the quantity of investment involved.
The situation for foundries is serious. It is no use pretending that there is a scheme when there is not a strategy. Perhaps after all British Leyland will not go into the foundry business, but if it does in a big way, the scheme will be absolute nonsense.
Since we debated the subject last October, when the Industry (Amendment) Bill had its Third Reading, we have had further schemes concerned with such industries as paper and board, printing machinery, poultry meat processing, and so on. Is there a strategy for these schemes? I do not know. Is there a strategy for the textile industry? The Minister has not told us what is the Government's strategy in these industries.
If the Government are to have this proliferation of schemes—which we do not, on the whole, think that they should have, because we do not believe that the schemes are really worth while—for different industries, they should tell us what the strategy is. They should not merely come here and tell us how much money has been paid out. Let the Minister tell us what the results have been, what new export markets have been achieved, what limitations there are on excess production, for example. On the details of all these schemes there has been a deafening silence broken only by other industries asking for their own schemes.
There is no ground for believing that sectoral schemes are either well conceived or well planned, and there is no strategy for them. The majority should be brought

171
to an end. We should first establish what the strategy is and take a long, hard look before allowing any further schemes to be established, because under the present system money is being taken from successful firms and poured in an unselective way into generalised schemes for one industry or another.
That is the wrong way to spend the taxpayers' money and in the end it will not achieve the Government's hopes and will not make matters any better. The only way is to get the economic strategy and framework right, and then industry once again will prosper.
9.42 p.m.
Mr. Robert Kilroy-Silk: The hon. Member for Surrey, North-West (Mr. Grylls) made disparaging comments about Government assistance to industry. He frequently used the words "lunatic" and "lunacy". He said it was lunatic for the Government to support industry with financial assistance as they are doing. But what could be more lunatic than the private enterprise system, which is so woefully inefficient and inadequate that 1½ million people within it are condemned to unemployment and the economy is condemned to the absence of their resources? It is utter lunacy that someone should try to defend a system which is so grossly unfair and incompetent.
I wholeheartedly defend Government assistance to industry. Without it, a great number of firms in my constituency and on Merseyside in general would not now be in existence. The temporary employment subsidy, for example, has been responsible for saving 63,000 jobs in the North-West. That may be lunacy to the Opposition, but it is not lunacy for the workers involved. It is not regarded as lunatic by their families who depend on them. That is but one example. There are ment assistance, hidden or covert, to industry and over which we have no control or authority in this House.
Hundreds of thousands of people in the country owe their jobs in private industry to taxpayers' money, to handouts from the Department of Industry to the ever-rapacious private entrepreneurs.
On Merseyside we have suffered tremendous job loss in the last three or four years. We had the loss of jobs at
172
Thorn's, in Skelmersdale; we have had the loss of jobs at Courtaulds. There has been the further loss of 1,400 at Plessey's in the last couple of weeks. More jobs have been lost at Albright and Wilson's in my constituency. There have been the 400 redundancies at GEC-AEI and those at Hygena. We have lost in all about 80,000 jobs on Merseyside in the last 10 years.
Yet the Opposition have the temerity to talk about the "lunacy" of Government assistance to industry. In particular, the hon. Member for Rushcliffe (Mr. Clarke) has been conducting a tawdry, small-minded vendetta against the Kirkby co-operative, where 800 people are employed who would not have jobs there but for Government assistance to the co-operative. There are 800 men with wives and families dependent on them who are in jobs and who feel useful to themselves, to the company and to the economy solely because this Government had the decency, common sense and, let us say it, the heart to give financial assistance to the company. Yet, all that the hon. Member for Rushcliffe can do is constantly deride it, constantly bemoan it and constantly try to find fault with that enterprising co-operative.
What more can the Opposition ask? They want something called "self-help". They are the apostles of self-help. Here we have a company which has found all the cold winds of private enterprise blowing through it. Constantly it has experienced the vicissitudes of private enterprise closing the doors to the work force. For the first time in their lives, the members of that work force said "No. We intend to keep our jobs. We are not prepared to allow irresponsible individuals to take decisions about our future in private. We are not prepared to do that any more. We shall fight for our jobs."
When those people fought for their jobs and got the backing of my right hon. Friend's predecessor in 1974, when that backing was continued throughout the life of this Government and when the members of that work force worked tremendously hard in terms of entrepreneurial skills and changed their working methods to make a success of that co-operative, all that the hon. Member for Rushcliffe could do, as we have seen again today, was parade around the

173
country in his blighted ignorance searching for easy headlines constantly to bemoan the facts.
I ask the hon. Member for Rushcliffe to come to Kirkby, to walk on to the shop floor and to tell those 800 men and women that he wants to see them on the dole. The hon. Gentleman does not want to see them getting an income in productive employment. He prefers to see them queueing outside the office of the Department of Employment in Kirkby.
Mr. Kenneth Clarke: Will the hon. Gentleman accept that I am by no means indifferent to the fate of the people of Kirkby? I am concerned, as I explained, about the effect of giving almost £5 million to a company in Kirkby which remains incurably loss-making to save 400 jobs in the radiator and boiler sector example which I chose, thus putting others out of work with similar consequences elsewhere. I quoted the case of Penrad getting assistance down in Cardiff. Continuing subsidies a little longer for loss-making jobs in Kirkby is not giving these people long-term job security. If we wish to give people long-term job security on Merseyside and elsewhere, we have to make sure that investment goes where it is competitive.
Let me read a short passage from the Government's own criteria for assistance to industry under the Act:
"more and not less emphasis will be required on competitiveness in home and export markets. Failure to achieve this would in the end be the enemy of job security."
Those criteria have been ignored in the case of Kirkby because of the political pressure of the hon. Member for Ormskirk (Mr. Kilroy-Silk).
Mr. Kilroy-Silk: I am grateful to the hon. Member for Rushcliffe for paying tribute to my political pressure. He says constantly that the Government bowed to political pressure. I am over-flattered to think that my pressure alone could get the Government to give this amount to KME. But it was not as a result of political pressure. It was because the Government recognise that in Kirkby there is unemployment which is unmatched in any part of Western Europe and that it requires special attention. That is why the money was given. It was also given in recognition of the fact that the
174
workers there have contributed enormously to making a success of the co-operative.
The hon. Member can turn round and say that the money should go elsewhere. One can always say that about every single aspect of Government industrial and social services policy. We can talk about money for the disabled being better used in industry or on a variety of other things. But that is not the point. The Government always must take account of the overall strategy and judge each case on its merits.
The Conservatives have not yet admitted that this particular case has merits in the social and unemployment context. This case demands and warrants the special treatment that it has received. The hon. Member for Rushcliffe has not answered my question. Is he prepared to see 800 men and women unemployed? That is what he has said in effect, although he does not have the guts to say it in practice. But the answer to my question obviously is an unequivocal "Yes," and I see that the hon. Member is not taking this opportunity to deny it.
Mr. Kenneth Clarke: So far it has been the case that almost £5 million has been spent to keep 700 people temporarily in employment in Kirkby. If that sort of money is paid on that scale to keep jobs going for a year or two, in the long run others will be made unemployed elsewhere, and at the same time, by incurring public expenditure, it will threaten everyone's job security.
Mr. Kilroy-Silk: Very well. Will the hon. Member therefore condemn the £6 million given to Courtaulds, or is this an example of his double standards? Is it wrong to give money to KME because it is a workers' co-operative and there is something strange, ugly and bemusing about workers' co-operatives yet it is perfectly respectable and proper to give £6 million to Courtaulds when that company is making record profits and announcing 1,000 redundancies on Merseyside? If that is the Opposition's attitude, it is indefensible.
Also, this money is not supporting jobs temporarily, as the hon. Member keeps insisting. The more that he pours scorn on Kirkby, the more he hopes that this will lead to wish fulfilment and

175
he will bring about the demise of the company that he talks about. But this is not temporary maintenance of jobs. That was being claimed by his predecessors in 1974. Now, three years later, the company is still in existence, is still viable and is winning export orders. A lot of other companies receive a great deal more money without the special merit of KME.
If the hon. Member is so concerned about viability and is so sincere, as he claims, about the future prosperity of Kirkby and its workers, he should keep his big mouth shut and get off their backs. In that way they could properly pursue their proper interests and bring prosperity both to the company and to Kirkby.
I turn to the situation on Merseyside as a whole. While we are grateful for the degree of Government assistance that the area has received—and it has received a great deal—it is still not sufficient and it will not be sufficient until the Government have a far more vigorous and dynamic look at the problems of Merseyside.
In a sense, this has been promised in the National Enterprise Board's report which has been forwarded to the Prime Minister. What we really need is a close examination of Merseyside's industrial and economic problems, resources diverted to the region that are tailor-made to meet its needs, and investment. We shall not get that while we continue to have the gross discrimination between the way in which Merseyside and the North-West are treated on the one hand and the way in which the North of England is treated on the other hand.
For example, I understand from answers given to me that in terms of the amount of regional assistance in various forms given by the Department of Industry in 1975–76 the North-West received £71·3 million, of which Merseyside received £43 million. On the other hand, the Northern Region received £121·2 million. Given the great discrepancy in those figures, what makes the situation worse is that whereas in the North-West the unemployment figure is 191,876, the unemployment figure in the Northern Region, which received considerably more in terms of grants from the Govern-
176
ment, is by comparison a mere 100,822. Furthermore, Scotland received £53 million more than the North-West was allocated, although Scotland has 27,000 fewer unemployed than the North-West.
There is an even greater imbalance between the resources given to Wales compared with those allotted to Merseyside. Although Merseyside has more unemployed than the whole of Wales, we received a mere £43 million compared with £64·4 million given to Wales. The Welsh figure does not take account of other industrial assistance given by the Welsh Office. Similar discrepancy applies to Scotland and to grants given to various development organisations with responsibility for promoting investment in the regions.
It seems strange that that kind of money should have gone to Scotland and to Wales—we know how vociferous those countries are about certain aspects of self-government—and that it also should have gone to the Northern Region, which is one region in which a large number of hon. Members have caused the greatest fuss about devolution and the kind of benefits that will be received if devolution is carried out for Wales and Scotland.
Mr. Alan Williams: What my hon. Friend says will be read in the North-West, and it is appropriate that the situation should be clearly set out. The figures per head for regional preferential expenditure in Merseyside amount to £47, in Scotland £43 and in Wales £37. Therefore, Merseyside receives more money per head than do the other two areas.
Mr. Kilroy-Silk: But Merseyside still has more unemployed than other areas. The North-West has 27,000 more unemployed than is the case in the length and breadth of Scotland. It is no good trotting out these figures unless one relates them not only to expenditure per head but to the degree and severity of the problems with which one is trying to cope. One factor—and there are many others—which shows the kind of problems with which we are dealing relates to the total number of unemployed.
Mr. Robert Hughes: I would not seek to deny my hon. Friend his case or to counter his

177
argument about the largest number of unemployed, nor would I seek to deny that money should be spent to try to cure that unemployment. However, he should take account of the fact that in Scotland we have had endemic unemployment for decades and a long period of industrial decline. It does my hon. Friend's case no good by posing comparisons, by seeking to set one region against another or by making the point that it has something to do with devolution. The fact is that an unemployed man is an unemployed man. Surely we should be sticking together and trying to cure unemployment problems instead of seeking to play one area against another, which is what the SNP is doing. My hon. Friend should not fall into that trap.
Mr. Kilroy-Silk: My hon. Friend makes an important point, and I agree with him. I am asking for fair shares for Merseyside and the North-West. I submit that we have not been given our fair share. I do not want any more for Merseyside than it deserves or is equitable. I do not want to take away from Scotland or Wales or from the Northern Region that which they need and which we do not need. Unfortunately, Merseyside has a higher rate of unemployment than is experienced in other areas—areas which, for one reason or another which has never been adequately justified, appear to obtain far more resources than we do.
My hon. Friend says that unemployment is endemic in Scotland, and I accept that. Many social problems in Scotland are similar to those on Merseyside, but unemployment, too, has been endemic on Merseyside for generations. It is not a new phenomenon. The best unemployment figure on Merseyside is the figure about which the West Midlands is screaming as a calamity. An unemployment figure of 4·6 per cent. is prosperity for Merseyside. That is our normal figure.
I am asking not that dog eats dog but that there should be a proper Socialist distribution of resources. I am arguing that limited and scarce resources should go to the areas where they are needed most. They are needed most in the North, and in Merseyside and the North-West, but for one reason or
178
another Merseyside and the North-West do not appear to be getting their fair share of the available resources.
Perhaps my hon. Friend could answer another question. I hope that he will be able to answer it. Why is it that when a group of United States industrialists come to this country looking for places to invest they are taken everywhere but Merseyside? They are taken to Wales, Scotland and to the Northern Region, but for some reason they have to be kept away from Merseyside. Why is no attempt made to steer far more companies to Merseyside than to the Northern Region? The Minister's figures reveal that many companies are shown the delights of Washington—and this has to do with Government assistance because they are subsidising the firms—and new towns in the North, but none comes to Skelmersdale. Few, if any, come to Kirkby, and fewer still come to Merseyside or the North-West.
Mr. Kenneth Lomas: I think that far too much has been made of Merseyside. Yorkshire has suffered considerably. I take the view that we are not getting a sufficient supply of the resources that the Government could provide. We are sick and tired of hearing Merseyside mentioned in every debate. Yorkshire is almost as big as Scotland and has a population of almost the same size, and we are entitled to similar resources. I ask my hon. Friend the Member for Ormskirk (Mr. Kilroy-Silk) to stop playing the game about Merseyside and to deal with the British counties in particular.
Mr. Speaker: Order. I hope that nobody else will interrupt the hon. Member for Ormskirk (Mr. Kilroy-Silk), who has already been speaking for 20 minutes. The debate ends at 11.30 p.m.
Mr. Kilroy-Silk: I take your gentle hint, Mr. Speaker.
I say to my hon. Friend the Member for Huddersfield, West (Mr. Lomas) that people on Merseyside who are unemployed, and have been unemployed for a long time, are sick and tired not of hearing their Members of Parliament champion their case and asking for more resources but of the kind of attitude exhibited by the hon. Member for Rushcliffe. They are sick of waiting for more positive

179
Government action than they have seen so far.
Why is it that new companies such as Hitachi, Sony and Toyota go to places other than Merseyside? We had a good case for the headquarters of British Shipbuilders to come to Merseyside, but it went to the Northern Region. We did not even catch a whiff of Jimmy Carter on Merseyside. This kind of discrimination has been exhibited throughout.
We on this side of the House do not object to Government assistance to industry. What we object to is that that assistance is often sought from the Government and from Members of Parliament by a method that is tantamount to blackmail. On many occasions employers in my constituency—employers who are
180
proud of showing the flag of private enterprise and private industry—have said "We want Government grants. We want Government assistance. We want Government subsidies. If we do not get them, X number of men will be unemployed next week." They want all the grants and subsidies, but without strings and without control by the Government.
We are forced to assist industry in order to save jobs, but that assistance would be more productive if it led to more ownership and control over industry. We shall not get a more rational distribution of resources or be able to allocate them more fairly between, as well as within, regions or be able to plan and control investment and growth until the Government stop giving handouts to private industry and start taking a stake in the industry and ultimately controlling it.
10.5 p.m.
Mr. Robert Taylor: The hon. Member for Orms-kirk (Mr. Kilroy-Silk) started his speech with some vitriolic remarks about the avarice of private enterprise and ended in the same vein by slating private industry. It is time he realised that most of those involved in private industry are not avaricious for Government help. They pay the taxes through which the Government can find money to subsidise the Kirkby co-operative ad infinitum. It is the revenue from these firms that allows the Industry Act, the Industry (Amendment) Act and this order to come before the House.
In his opening remarks, the Minister of State referred only briefly to applications by individual companies for Government funds. This is the area to which I wish to pay attention. There is nothing more calculated to annoy the directors of private companies than to find that, through taxes, they are paying for one of their competitors to be subsidised. There is nothing more annoying than to pay taxes out of profits and find that they are being used to prop up inefficient companies. This is happening under the Industry Act and will happen under the Industry (Amendment) Act.
On Second Reading of the amending Act, the Minister of State said that the Government intended to use it as a proper job-creating and investment-inducing measure. It is not easy for hon. Members to find out quickly who is responsible for the Government largesse under that Act. We have to await the annual report on the operation of the legislation.
I should like to refer to an example quoted by my hon. Friend the Member for Rushcliffe (Mr. Clarke). I have asked 10 Questions about this company since March last year. It is a typical example of the Government handing out money that is totally unjustified, and it greatly angers the business community. The firm is Penrad Ltd., a radiator manufacturing company in Cardiff. In the year ended 31st December 1975, the Government invested £300,000 under the Industry Act through a loan to the company. It was on the basis of two years free of interest, which means that interest is just about to become payable.
182
In March and April 1976—one year after the £300,000 loan—the company made a rights issue, and the offer document contained the following statement:
"Your Directors are also most encouraged by the offer from the Secretary of State for Wales who has conditionally agreed to subscribe for 100,000 First Preference Shares of £1. The terms of the original loan agreement from the Secretary of State for £300,000 remain unchanged. By this offer the Secretary of State for Wales has shown that he is prepared to give further support to a company which has invested heavily in modern equipment, and where the private sector is also ready to advance funds.
Your Directors are hopeful that these arrangements may herald the beginning of a new era in this country where Government and private enterprise combine in a successful partnership to building profitable and sound companies."
That means that from that date £400,000 of taxpayers' money was involved in this small enterprise. Presumably that statement induced many other shareholders to invest in the company.
On 25th May—only four weeks ago—I asked the Secretary of State for his estimate of the current value of that investment. In a Written Answer he estimated the value to be £533,000. That sounds a nice profit for the taxpayer. It sounds a good investment. In one year it had risen from £400,000 to £533,000. That sounds as if it is the type of project for which the Industry Act was intended.
However, the reply also reflected a complete lack of interest and control over that investment. Two days before the reply, a receiver had been appointed to the company. I gave the Secretary of State the benefit of the doubt and, wishing to be charitable, I tabled a further Question asking him on what date he was informed of the appointment of a receiver. To my astonishment, he said that the receiver was appointed by him. This shows the inability of Ministers to control investments which they make. It shows the folly of investing in second-rate companies. It shows the folly of putting taxpayers' money into concerns that cannot turn to the private sector for finance. It is a disgrace that other shareholders were induced to put forward money on the basis of the Secretary of State's support.

183
There are other examples involving similar circumstances. It is not easy for Back Benchers to obtain details quickly. Recently the Financial Times, reporting that British Steel Constructions had made a deficit of about £1,415,000, quietly noted that one of the firm's subsidiaries, a Merseyside company called Barry Staines, had received a loan from the Department of Industry. I do not know the details, but this group of companies has been in trouble for a long time. It cannot turn to the private sector, so it turns to the Government. The result will be similar to that at Penrad.
I regret that I did not oppose the Industry Act 1972. It is a pity that it came on to the statute book. It has certainly been used by this Government to cause great harm to the taxpayer. I took forward to the Division, when we shall be able to show our opposition to these new proposals.
10.14 p.m.
Mr. John Ryman: I intervene to make one or two points on matters that have already been raised. I deplore the partisan and parochial approach in the speeches of some hon. Members on both sides of the House. Although hon. Members naturally push their constituency problems, there has been irresponsible criticism of both public and private industry. The correct criteria to be used should be the safeguarding of jobs and the cure for unemployment. In my constituency, and in other areas of the North-East, Government expenditure to create fresh jobs has been welcomed.
A legitimate criticism of Government policy by private industry can be made. There has not been a sufficiently close monitoring of Government funds once they have been allocated. As a taxpayer, I deplore any waste of Government money. The Government have not been sufficiently careful once grants have been made to specific industries. They have not taken care to ensure that the grants have been used for the purposes for which they were originally earmarked. They have not controlled extravagances and excesses.
The case of Brentford Nylons in my constituency last year was a success story. It was a company in the textile business that had been grossly mismanaged before
184
its collapse. A receiver was appointed in February 1976, but because the work force was loyal, the Department of Industry provided £5 million, and a private company—a wholly-owned subsidiary of Lonrho—bought the company as a viable proposition as a going concern, it has gone from strength to strength. Instead of there being about 1,600 men and women losing their jobs, the company is expanding, creating fresh jobs and contributing substantially to the export drive.
That is one example, and by no means the only example, of a company which fared badly before intervention with Government aid occurred, but that intervention was coupled with great effort on the part of private industry and great loyalty on the part of the work force, creating a success story.
I was involved with the trade unions in the negotiations with the Government Department concerned, however, and I was struck when I met the civil servants and Ministers by their nonchalant attitude towards the spending of public money. When I spoke, for example, not to my right hon. Friend the Minister of State but to the Minister then dealing with the matter, a Member of the other place, I was appalled by his nonchalant attitude to the expenditure of public money in the North-East. I told him, for instance, that Courtaulds was interested in making a bid for Brentford Nylons but only a few weeks earlier it had closed a factory immediately adjacent—that is, the Exquisite Knitwear factory—and it was now opening up factories in Ireland.
I was appalled when the Minister and the senior civil servants said "What do you expect us to do? Do you expect us to sit at the end of the M1 to see whether firms in the North-East are shifting machinery out from Cramlington in the North-East and taking it elsewhere?"
The point I make now, which I made also during those negotiations, is serious. I am sure that there are cases in which Government money is wasted, in which a company which gets money for a particular purpose—the creation of jobs in the North-East and the purchase of machinery—but uses that money for different purposes, such as buying machinery in the North-East and then

185
transporting it to factories in the South-East.
I gave the Minister and his civil servants many examples, and I was somewhat appalled by their nonchalant attitude. I gave the example of Courtaulds and Exquisite Knitwear. I gave the example of English Numbering Machines in Shire-moor. I gave the example of Magnatex in Blyth, a company dealing in car components. There were three companies which received substantial Government aid, and rightly so, to create jobs, yet when those grants expired the money was pumped into the internal system of the companies, which had factories elsewhere in England. I respectfully suggest, therefore, that the money was not used on a long-term basis for the purpose for which it was originally intended.
Nevertheless, I welcome the Government's moves to spend public money for investment, provided that it is worth while. But the Government must recognise that private industry makes legitimate criticisms when it sees that they are not creating a sufficiently favourable climate to encourage private investment. I recently met a substantial group of industrialists in Cramlington, in my constituency. It was not a party political occasion of any kind. They were simply people trying to run their businesses successfully, trying to create fuller employment and trying as hard as they could to contribute to the export drive. I was given example after example of situations in which the Government were just not making it sufficiently attractive for private industry to invest in the North-East. Whilst I strongly support our Labour Government's policy on public investment, it should be coupled with a sensible and constructive approach to encourage private investment as well.
This applies particularly to foreign-based companies. American business men have told me that they are thinking very seriously—I hope they can be dissuaded of discontinuing investment in the North-East because they can, on a comparable basis, operate more efficiently and profitably if they manufacture their particular goods in factories in, for example, Belgium or back in the States. I am referring to factories in the chemical industries and in other industries in the North-East. The Government must understand that if they wish, as part of the
186
industrial strategy, to encourage foreign companies to invest in this country, they must make it sufficiently attractive for those companies or we shall lose their custom.
The warning signs are all there. I know of several companies in the North-East which are seriously thinking of reorganising their companies in such a way in the not too distant future that the principal producers of their goods will be either in Europe or elsewhere abroad. I am sure that the Government wish to avoid this at all costs.
This should not be a partisan debate, and I deplore the partisan note which has been injected into it by a number of speakers. The Government should be supported by all Members to cure the terrible question of unemployment by the use of public funds. The Government must recognise their own shortcomings, not only in the lack of supervision of public funds which I have demonstrated, but to some extent in a lack of firm decision and of prevarication in making important commercial judgments. I deplore the attitude of the Department of Industry in sometimes not being able to make sensible commercial judgments quickly enough.
I should like to give two short examples. The first is the preremptory and sudden abolition of the regional employment premium in the Chancellor's statement before Christmas of last year. There is a strong case for not having that type of regional aid, I recognise. But there is no case at all for withdrawing it at three weeks' notice, thereby increasing unemployment in the North-East and bringing about a cut-back in industrial training.
The other example—I do not want to take up much time on this, because it is a complicated question—is the disgraceful behaviour of the Department of Industry on the question of Parsons and the award of the Drax B contracts, the negotiations for which have now been conducted for weeks and weeks on end. There, although the negotiations are complicated, the issue is simple. The Government—my right hon. Friend the Prime Minister has personally taken responsibility for this decision—simply cannot make up their mind as to what form the restructuring of the industry should take, given a substantial contribution of public

187
money through the National Enterprise Board. There have been endless meetings between representatives of the unions, management, the Government and so on, and it has been made abundantly clear to the Government that the work force at Parsons, one-seventh of whom live in my constituency, will not accept a takeover of Parsons by GEC, led by Sir Arnold Weinstock.
That was made clear to the Government many weeks ago. Having had it made perfectly clear to them, the Government said that in principle the Drax B contracts would definitely be awarded. They know perfectly well that already 1,600 redundancy notices have been issued, yet here we are in the summer, the discussion having begun last year, still waiting for a Government decision. That is unfortunately a perfect example of Government procrastination, indecision and lack of commercial judgment in an urgent case requiring decisive action.
One has to recognise the force of criticisms when an objective observer from private industry asks how one can have confidence in a policy of investment of public money when one sees this sort of thing going on. The right approach is that there should be—this is why I support the Government on this—a strong injection of public money. But that must be accompanied by a sensible and competent display of policy by Government Ministers and their civil servants. The waffling, shilly-shallying and general incompetence that we have seen over the Parsons business and the power stations are deplorable.
There was a reference, in a somewhat partisan speech by one of my hon. Friends, to the visit of President Carter to the North-East. My right hon. Friend the Prime Minister, who accompanied President Carter, told demonstrators from Parsons—it was not at all funny—"I suppose you think I have a power station in my pocket for you." Not surprisingly, President Carter was cheered to the echo and my right hon. Friend's welcome was somewhat less enthusiastic.
Unemployment in the North-East is a tragic problem. Here is a specific example of how the Government, by competent use of public resources and a display of good commercial judgment, could save the jobs not only of 1,600 men at Parsons but of
188
many other people throughout the country whose orders depend on the success of Parsons. The Government must look at Parsons not in isolation but as part of the whole future of the industry. I strongly support the Government in their general policy on this matter, but I strongly criticise them for a display of prevarication and indecision in these respects.
It is wholly irresponsible for Conservative Members to complain of Government policy and the injection of public funds when companies in the private sector are only too pleased to grab those funds and use them for their own purposes. In the past two years many private industrialists have asked me whether they could obtain this or that grant from public funds. They are only too glad to grab public money, but many companies have not sufficient integrity and foresight, having accepted public money, to act responsibly when economic difficulties arise and they are under pressure of one form or another.
It is immoral for a company in the North-East to accept a large amount of money from a Government Department on the basis that it is creating new jobs and then, when times are difficult, to sack the people for whose jobs it obtained the grant and then disappear from the district—
Mr. Ray Mawby Mr. Ray Mawby (Totnes) rose ߞ
Mr. Ryman: I shall give way in a moment.
It is wrong to accept money on the pretext of creating jobs and then, when things are difficult, to close down the factory, as Courtaulds did in Cramlington with Exquisite Knitwear. I now give way to the hon. Gentleman.
Mr. Mawby: I was only going to ask the hon. Gentleman to name the company about which he was talking, and he has now done so.
Mr. Ryman: Courtaulds behaved disgracefully. I saw some of the members of the management who were involved. They had a factory that made some garment for women. I cannot remember what it was—skirts, trousers, or something like that. The company spent a vast sum of Government money buying the machines, but then, apparently, the fashion changed and women no longer wore those garments. Those very expensive machines in a factory in Cramlington

189
were no longer of any use to the company, so Courtaulds closed the Exquisite Knitwear factory there. I asked why and was told by members of the management "We have an enormous number of Exquisite Knitwear factories all over the country. There is one in Ashington, quite near by, and there are others in the Midlands. We decided to close the one in Cramlington for purely financial reasons, because women no longer want these garments." As a result, 200 of my constituents lost their jobs.
That is the tragedy of the failure by private industry. The only criterion for Courtaulds was that it was losing money at the factory in question. The company took no account of social need or responsibility. It had no thought for the work force. In fairness to Courtaulds, however, I must explain that the management was very decent to the workers in terms of redundancy pay and in trying to find alternative work. It was irresponsible, however, in putting all its eggs in one basket and in failing to diversify. There are other examples.
Mr. Ian Gow: Is the hon. Gentleman suggesting that Courtaulds should have continued to make those skirts or trousers for which he readily concedes there was no longer any market?
Mr. Ryman: Courtaulds should have diversified in sufficient time to avoid being wholly dependent on the production of a single article. The Conservatives blame the Government quite wrongly and unfairly for falling to exercise sufficiently good commercial judgment in these matters, but here is a perfect example of a large public company failing to anticipate the changing trends in a market and putting all its eggs in one basket because it knew that the Government would foot the bill. All those beautiful machines that I saw were bought with public money. They are still there. As a taxpayer, I complain that it is a disgraceful waste of public money.
Mr. Gow: The hon. Gentleman is making the most perfect case for not agreeing to the order and for not making further public money available for this purpose. I think that he could almost be described as my hon. Friend in this matter, so powerful is his case against the order.
Mr. Ryman: The hon. Gentleman misunderstands me. I believe that the Government are right in putting forward the order and I strongly support them. They are absolutely right on both economic and moral grounds. That expenditure of public money, however, must be accompanied by the exercise of sound commercial judgment, and that has been lacking in both public and private industry.
The hon. Member for Eastbourne (Mr. Gow) is one of the few Conservatives for whom I have any respect in matters of fairness, and so I know that he will consider this point fairly and will see that substantial errors have been made by both private and public industry. I hope that the Government will learn from their failures in the past. They cannot go on spending vast sums in this way without exercising competent commercial judgment.
It is imperative that the North-East gets more Government aid in the form of public expenditure. The rise in nationalism in Scotland and Wales has led to increased public expenditure in those two countries. One of the reasons behind the revolt by North-Eastern MPs on the devolution Bill, with their refusal to support the guillotine, was undoubtedly related to the feeling in the North-East that the Government were neglecting the North-East as a area for industrial expansion through the medium of public expenditure.
We do not have a development agency as Scotland and Wales do. The Government must take this warning seriously. The Minister of State is well aware of these problems because he has been good enough to attend our meetings with the subject. We have had meetings with the Prime Minister and with other Ministers. The Minister of State must be aware of the strength of feeling which exists in the North-East on this matter. The Government must not rely indefinitely on the loyalty of the North-East. They must display competent commercial judgment and they must increase public expenditure in order to encourage industrial expansion in the North-East and do something about the terrible unemployment there.
10.35 p.m.
Mr. Michael Marshall: As this debate has gone on it has become

191
a fascinating exercise. As the criticisms have come from all parts of the House I have reached the stage when I am beginning to have some sympathy with the Minister of State. My sympathy arises only because I recognise that the claims being pressed upon him go far beyond his departmental responsibilities in some cases, and the task of satisfying all parts of the United Kingdom is clearly a taxing one.
The Minister of State did himself no good in the way he opened the debate. The claims which he made for the present legislation and for the need for the order were sweeping and grandiose and they have been totally destroyed by the speeches of the hon. Member for Blyth (Mr. Ryman), the hon. Member for Orms-kirk (Mr. Kilroy-Silk) and many of my hon. Friends. In laying claim to the amount of investment being drawn in by Sections 7 and 8 of the Industry Act 1972, the Minister has not been able to find support in any part of the House, whereas criticism of the way in which this help has been working in practice has come from all quarters.
I single out what is, to me, a crucial element of Government strategy that is totally wrong. The criticism of detail that has been made is in many cases valid. I agree with much of what the hon. Member for Blyth said. The broad argument, the problem that the Government are failing to recognise, is that they are consistently falling for the idea of subsidising each side of a competitive equation. They seem to feel that if money is put into a competitive situation, in which one company operates against another, great good will somehow result. The examples quoted are revealing. We have heard of the position as between Penrad the Kirkby Co-operative. What that is now coming down to is an ongoing battle between the Secretary of State for Wales and the Secretary of State for Industry, with no apparent benefit in either direction.
It is significant that the one area to which the Minister of State did not refer was Chrysler. As my hon. Friend the Member for Rushcliffe (Mr. Clarke) pointed out, we are still in Chrysler with a commitment of £162 million. It is still making a loss. What is the background of Chrysler's future intentions?
192
It is surely that it is engaged in a vigorous battle with British Leyland, to which the taxpayer is committed, this time up to a possible £3,000 million. Once more we have the Department of Industry effectively competing with the National Enterprise Board. This notion requires the most vigorous and careful examination, otherwise we shall be in an impossible situation with the Government's industrial strategy.
The criticisms that have come from Government Back Benchers about where aid has gone and the effect that it has had on unemployment are honest reflections of the fact that the Government's industrial strategy is in many ways a window-dressing performance. If the Minister of State could say that he took this point in he would find that many of us were more sympathetic towards him. It was his right hon. Friend the Secretary of State for Industry who, when we debated British Leyland, was in no doubt that he was in favour of British Leyland in preference to Chrysler. It is well known that his right hon. Friend the Chancellor of the Duchy of Lancaster was brought in at the last moment, and from that day on there has been this unhealthy, indeed, counter-productive process of saying that provided money is pumped in and the pressures are great enough something good will result. I fear that all the evidence is now moving very much to the contrary.
The Minister of State tried to argue that the accelerated project scheme is bringing in £640 million of new investment for £84 million-worth of Government loan. That argument has been countered again and again. For those of us who try to get around and talk to industrialists, it is difficult to accept sweeping assertions about the attraction of new investment. It is not difficult for industry that is seeking to attract Government money to put up a good case. At what stage does a new project become a gleam in someone's eye. When it is known that there is a scheme available, surely it is not difficult to put up a set of effective criteria. Many of the arguments advanced on both sides of the House demonstrate the real disquiet about the way in which Government funds are put into parts of industry when funds could well have been provided from the market.

193
I turn to sectoral schemes and the ferrous foundry scheme in particular. I had some experience in the ferrous foundry sector, and in talking to a number of people in the industry I am bound to say that the Minister's claim that 513 applications are a mark of the Government's success is one of the most worrying aspects. Anyone who examined the industry before the sectoral schemes knew that there were too many foundries. A number were out of date, while there were some good ones with modern equipment. There was a need for rationalisation and for the industry to get together. The need for more mergers was there for all to see.
That whole process has now been put in aspic. Every part of the industry has felt free to apply for Government money for further investment. Anyone offered a new lease of life will take it. The Government's prime task, as the Minister said, should have been to get the right sort of products at the right price to supply to other parts of the engineering industry. The Government have not backed a winner and they have not done their homework anything like well enough.
In some of his remarks the hon. Member for Blyth touched on an important aspect of the argument. There is no doubt that the country is ripe for a good deal more foreign investment, and it could be attracted. In many ways it would ease the Government's problems. Indeed, it would ease the nation's problems. If we consider the North-East, about which the hon. Gentleman spoke, there is no doubt that the IBM development, with which he is familiar, is the largest computer centre of technology anywhere in the Western world outside the United States. That sort of investment should be attracted to this country and should be actively sought. But it will not be attracted in the present climate of opinion and by the economic policies followed by the Government. It requires some imagination. It requires some courage and some major tax incentives.
Why should we see people putting their savings into Liechtenstein or the Cayman Islands when we have not only the City of London but major parts of our industrial hinterland that are still capable of substantial expansion by pros-
194
perous companies? Sadly, we do not have enough prosperous companies. That is largely because of the Government's own action, but there is still scope to bring in foreign investment.
The Minister of State overstated his case and tried to bully us. He said that unless we went along with him we should be damaging employment. The right hon. Gentleman must admit the employment effects of the order and all the assistance put in so far are relatively modest. That modesty has been brought out by his hon. Friends with their complaints about the Government's overall policy to tackle unemployment. I agree with my hon. Friend the Member for Rushcliffe. We cannot rule out the possibility that at some place and at some time there will be Government help for a particular purpose where the case is made, but so long as the Minister and his colleagues continue to make their sweeping assertions they must expect us to try to get them down to detail. Tonight the right hon. Gentleman has not given us enough detail to support him on a Division.
10.39 p.m.
Mr. Alan Williams: The hon. Member for Arundel (Mr. Marshall) referred to schemes that are a gleam in someone's eye. If we have managed to turn a gleam in someone's eye into a practical investment project we have done something worth while. In the post-war period we have had too many gleams and too few projects. If the indictment is that we have turned the gleams into projects, I am happy to accept it.
The hon. Gentleman also said that the country is ripe for foreign investment. I spend a lot of time speaking to foreign business men who are considering investing in this country, and to them the Section 8 assistance, which we are talking of tonight, is of considerable importance, because they are well aware of the levels of assistance available to them in other possible export centres. We have considerable discussion with them on the range of investment incentives available.
There was reference to the opportunities in computers. I accept this. I give the assurance that there will be considerable investment in computers by foreign firms in Britain in the foreseeable future. On Sunday night I was with the Cummins

195
Engines people. They have just undertaken a major expansion project in Britain. This is an American firm, and we now produce about a quarter of its worldwide production.
I understand the need for foreign investment and welcome it. Twenty per cent. of our manufacturing industry is overseas-owned. We want the investment, the managerial ability and the technological know-how, and the type of assistance I am asking the House to provide is a type that is often talked about.
Mr. Michael Marshall: The Minister has just given an important assurance, and I am sure it is very important to have it on the record. Will he say whether he is satisfied that enough is being done by his colleagues on the Treasury Bench to take it further, for surely fiscal policy has to come into this?
Mr. Williams: Yes, but any company that now has a meaningful investment programme is not paying corporation tax; therefore the Treasury is already making important concessions in that regard. The Chancellor of the Exchequer has indicated his willingness, as circumstances permit, to move further along this route.
My hon. Friend the Member for Blyth (Mr. Ryman) referred to the need for monitoring. Yes, we do monitor. Indeed, I announced at this Dispatch Box, during a debate on closures initiated by my hon. Friend the Member for Ince (Mr. McGuire), that I was reclaiming a regional development grant from Courtaulds in relation to its terminating investment. We claimed back that money.
The important point is that the Government grant follows the expenditure. We do not give them the money and say "Go away and spend it as we told you". We say "Spend it and then we shall provide the balance". There is that degree of monitoring.
My hon. Friend the Member for Blyth referred to firms moving equipment from a factory in an assisted area to a factory outside the assisted area. I receive a great many letters and also some deputations from hon. Members on both sides asking me to reconsider our decision to reclaim original development grants from
196
firms which move their assets within the first four years. That is the requirement. They must keep the asset in use in approved premises in the assisted areas in the first four years. After the four years the obligation disappears.
Mr. Ryman: That may well be Government policy, but does not the Minister appreciate that the problem is one of enforceability? It is all very well to promulgate this policy, but how is it enforced in practice when a company in an assisted area closes the factory, as has happened in my constituency again and again, and physically moves that machinery, within the four-year period, from an assisted area to a factory which it has in, say, the South-East of England or elsewhere? It is no use having these fine policies unless the Minister's Department has the effective means of imposing them in practice
In the Brentford Nylons negotiations, when I raised this question with the Department, the Minister's civil servants did not take my suggestion seriously and made the vexatious comments to which I have already referred: "Do you expect us to sit on the end of the M1 watching machinery come from the North-East to the South?" There is a flagrant abuse of taxpayers' money. It is no use giving these companies money unless there is—
Mr. Deputy Speaker (Sir Myer Galpern): Order. I remind the hon. Member for Blyth (Mr. Ryman) that he spoke just a little while ago. Mr. Williams.
Mr. Williams: I congratulate my hon. Friend on his succinct second speech. A considerable degree of monitoring does take place. If officials said what they did to him perhaps it was remiss of them, but I am not sure of the circumstances. I hope that my hon. Friend will be reassured that we have four regional grant offices, one of them not far from his constituency. They carry out follow-up visits to factories that have received grants, to ensure that the assets are still in the use for which they were originally intended and have not been removed. We withdraw grants for quite limited removals of these assets from the approved premises.
The hon. Member for Surrey, North-West (Mr. Grylls) was easier to understand. He lives in a simple world, where

197
all Conservative industry schemes are good and all Labour industry schemes are bad. It may be short on economic analysis, but it is clear in its destructive dogma. He got it wrong when he said that the industry schemes were a sop to the TUC. Many of the industry schemes in operation or under consideration arose from the tripartite discussions of the sector working parties in the industrial strategy, and have been the result of collective recommendations by the Government, the unions and managements operating together.
My hon. Friend the Member for Ince, in a telling speech, referred to the deputation that he led to see me today. I was grateful not just to him but to the industrialists with him for the constructive approach that they took to the problems. I wish that hon. Members on the Opposition Benches had heard them. They were talking about Section 8 schemes and trying to think of ways in which they could be made even more relevant to the circumstances operating in Skelmersdale, particularly, perhaps, for the smaller firms that may feel somewhat limited by their thresholds.
I promised my hon. Friend that I would look at the points put to me today, and I know that he will accept my assurance. I also assure him that we would still consider any project in Skelmersdale, even if it fell outside a Section 8 scheme, if it offered employment opportunities under Section 7. We do not want to lose employment there. We understand the severity of the situation.
The speech of the hon. Member for Rushcliffe (Mr. Clarke) was fascinating. Indeed, it was incredible. I find it strange that the Conservative Party, which reorganised local Government, should feel able to talk about efficiency. The hon. Gentleman accused the Government of being complacent in the way in which we deal with these industry schemes. I do not, I repeat, understand how the Opposition can seriously go into the Division Lobby tonight against this measure when they know that they are voting against such things as the accelerated projects scheme, which produced £640 million of investment, which is creating 13,000 jobs and which will give a balance of payments advantage of £500 million a year—all in return for £84 mil-
198
lion investment. They say that it was not a good decision on our part. I have given the figures for the ferrous foundry scheme, which is equally important to an industry that could not find enough private investment.
Mr. Kenneth Clarke: There is no way of closing the gulf between us, but I make one last effort. It is not the case that we accept so uncritically that the Minister's contribution has generated the investment and employment which he describes. His figures could equally be used—and, in our opinion, could accurately be used—for saying that there had been investment of £4 million, of which the taxpayer had chosen to contribute a proportion, but it is our view that most of that investment and most of those new jobs would have come about in any event So long as it is in projects with a sound prospect of profitability, there is plenty of finance in the market for it.
Mr. Williams: The hon. Gentleman knows that that is not the case. He knows the record of the ferrous foundry industry. The industry did not exist as a coherent industry until the scheme was used. More than 700 units operating in the ferrous foundry sector surfaced and are now beginning to develop into a coherent industry. Many were submerged in other industries. The hon. Gentleman knows that the scheme has generated that employment. Let him ask the people who have already had the money and are in a position to cock a snook if they choose. There is no doubt in industry. There is no doubt in other industries. The only doubt is on the Opposition Front Bench. The previous record of investment in that industry supports what I am saying.
If the Opposition had had their way we would have lost not only Leyland and Chrysler but many of the 3,000 firms that supply goods and services from all over Britain to those car producers. With their right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), they would stand in the ashes of British industry, patting themselves on their backs and saying "This is Conservative industrial policy."
The Tories say that we need investment. Of course we do. But look how impressive they are in the eyes of the Stock Exchange when it looks as though they

199
have a chance of becoming the Government. The Stock Exchange quakes at the thought of their being able to implement some of the inanities that we hear from them.
The Opposition say that we are failing to encourage investment from the market. As one of my hon. Friends pointed out, their own Prime Minister, when they were last in office, indicated that they, too, were unable to generate investment from the market.
We are now beginning to get the increase in investment that we want. In the fourth quarter of last year it was up 5 per cent. on the first quarter. I do not pretend that it was a marvellous year for investment, but it was the start of the upturn. This year, according to our own assessment, we shall see a 6 per cent. to 10 per cent. increase in investment and, next year, a 20 per cent. increase. That is our assessment. If that takes place, by the end of next year we shall be back to the level of investment that was attained in 1970. That was an achievement that the Conservative Government, despite all the waffle that we hear from them about their understanding of business and their creating the right circumstances, were never able to equal. We

Division No. 186]

AYES

[11.0 p.m.

Armstrong, Ernest

Grant, George (Morpeth)

Molloy, William

Ashton, Joe

Hamilton, James (Bothwell)

Morris, Charles R. (Openshaw)

Atkinson, Norman

Hardy, Peter

Oakes, Gordon

Barnett, Guy (Greenwich)

Harrison. Rt Hon Walter

Orme, Rt Hon Stanley

Bates, Alf

Hatton, Frank

Ovenden, John

Blenkinsop, Arthur

Hayman, Mrs Helene

Pavitt, Laurie

Booth, Rt Hon Albert

Hooley, Frank

Penhaligon, David

Bray, Dr Jeremy

Horam, John

Perry, Ernest

Brown, Ronald (Hackney S)

Howells, Geraint (Cardigan)

Phipps, Or Colin

Callaghan, Jim (Middleton & P)

Hoyle, Doug (Nelson)

Price, C. (Lewisham W)

Canavan, Dennis

Huckfield, Les

Roberts, Albert (Normanton)

Cocks, Rt Hon Michael

Hughes, Robert (Aberdeen N)

Robinson, Geoffrey

Coleman, Donald

Hunter, Adam

Rose, Paul B.

Cook, Robin F. (Edin C)

Jackson, Miss Margaret (Lincoln)

Ross, Stephen (Isle of Wight)

Cowans, Harry

John, Brynmor

Rowlands, Ted

Cox, Thomas (Tooting)

Johnson, James (Hull West)

Silverman, Julius

Crowther, Stan (Rotherham)

Jones, Alec (Rhondda)

Skinner, Dennis

Cryer, Bob

Jones, Dan (Burnley)

Smith, Cyril (Rochdale)

Cunningham, Dr J. (Whiteh)

Kaufman, Gerald

Smith, John (N Lanarkshire)

Dalyell, Tarn

Kerr, Russell

Snape, Peter

Davis, Clinton (Hackney C)

Kilroy-Silk, Robert

Spriggs, Leslie

Deakins Eric

Lambie, David

Stallard, A. W.

Dean, Joseph (Leeds West)

Lamborn, Harry

Steel, Rt Hon David

Dempsey James

Lamond, James

Stoddart, David

Doig Peter

Latham, Arthur (Paddington)

Taylor, Mrs Ann (Bolton W)

Dormand J D.

Lestor, Miss Joan (Eton & Slough)

Thomas, Ron (Bristol NW)

Dunwoody, Mrs Gwyneth

Loyden, Eddie

Tierney, Sydney

Eadie Alex

Luard, Evan

Tinn, James

Ellis, Tom (Wrexham)

Lyons, Edward (Bradford W)

Torney, Tom

Evans loan (Aberdare)

McDonald, Dr Oonagh

Varley, Rt Hon Eric G.

Evans, John (Newton)

McGuire, Michael (lnce)

Wainwright, Edwin (Dearne V)

Ewing, Harry (Stirling)

Maclennan, Robert

Wainwright, Richard (Colne V)

Fernyhough Rt Hon E.

McMillan, Tom (Glasgow C)

Walker, Harold (Doncaster)

Flannery, Martin

Madden, Max

Walker, Terry (Kingswood)

Fletcher, Ted (Darlington)

Maynard, Miss Joan

Ward, Michael

Freeson, Reginald

Miller, Dr M. S. (E Kilbride)

Watkinson, John

shall be at that level in real terms by the end of next year—and those findings are endorsed by the CBI's analysis of the future.
We are told that the Conservatives know how to create investment. Within weeks of coming to office in 1970, with the country free of balance of payments constraints, they abandoned investment grants and put investment on a downward path from which it is only just beginning to recover. Within six months, industrial development certificates in the development areas fell to one-third of what they had been previously. That was the attainment of Conservative understanding of the operation of our economy.
I understand that the Tories intend to vote against the order. I hope that those who do so will not also come to the doors of my Department asking me to assist firms in their constituencies. I am fed up with the arrant hypocrisy of right hon. and hon. Members who know that what they are saying they could never hope to be able to implement in the unfortunate eventuality of their ever coming back to office.
Question put:—
The House divided: Ayes, 117, Noes 94

White, Frank R. (Bury)

Wise, Mrs Audrey

Williams, Rt Hon Alan (Swansea W)

Woodall, Alec

TELLERS FOR THE AYES:

Williams, Sir Thomas (Warrington)

Woof, Robert

Mr. Joseph Harper and

Wilson, Alexander (Hamilton)

Wrigglesworth, Ian

Mr. Ted Graham.

Wilson, William (Coventry SE)

NOES

Bennett, Sir Frederic (Torbay)

Hunt, John (Bromley)

Normanton, Tom

Berry, Hon Anthony

James, David

Osborn, John

Biffen, John

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

Page, Richard (Workington)

Boscawen, Hon Robert

Johnson Smith, G. (E Grinstead)

Powell, Rt Hon J. Enoch

Brocklebank-Fowler, C.

Joseph, Rt Hon Sir Keith

Raison, Timothy

Brooke, Peter

King, Evelyn (South Dorset)

Renton, Tim (Mid-Sussex)

Buck, Antony

King, Tom (Bridgwater)

Rhodes James, R.

Butler, Adam (Bosworth)

Kitson, Sir Timothy

Roberts, Michael (Cardiff NW)

Carlisle, Mark

Knox, David

Shaw, Michael (Scarborough)

Chalker, Mrs Lynda

Lamont, Norman

She-lion, William (Streatham)

Clark, Alan (Plymouth, Sutton)

Lawrence, Ivan

Shepherd, Colin

Clarke, Kenneth (Rushcliffe)

Lawson, Nigel

Silvester, Fred

Clegg, Walter

Le Merchant, Spencer

Speed, Keith

Cope, John

Lester, Jim (Beeston)

Spicer, Jim (W Dorset)

Dean, Paul (N Somerset)

Macfarlane, Neil

Spicer, Michael (S Worcester)

Dodsworth, Geoffrey

MacGregor, John

Sproat, lain

Durant, Tony

MacKay, Andrew James

Stanbrook, Ivor

Dykes, Hugh

McNair-Wilson, M. (Newbury)

Stradling Thomas, J.

Emery, Peter

McNair-Wilson, P. (New Forest)

Taylor, R. (Croydon NW)

Fletcher-Cooke, Charles

Marshall, Michael (Arundel)

Taylor, Teddy (Cathcart)

Forman, Nigel

Mather, Carol

Tebbit, Norman

Fowler, Norman (Sutton C'f'd)

Mawby, Ray

Temple-Morris, Peter

Fry, Peter

Maxwell-Hyslop, Robin

Wakeham, John

Gardiner, George (Reigate)

Meyer, Sir Anthony

Walder, David (Clitheroe)

Goodhew, Victor

Miscampbell, Norman

Wall, Patrick

Gow, Ian (Eastbourne)

Mitchell, David (Basingstoke)

Warren, Kenneth

Grylls, Michael

Molyneaux, James

Weatherill, Bernard

Hamilton, Michael (Salisbury)

Monro, Hector

Younger, Hon George

Hannam, John

More, Jasper (Ludlow)

Hawkins, Paul

Morgan, Geraint

TELLERS FOR THE NOES:

Higgins, Terence L.

Morris, Michael (Northampton S)

Sir George Young and

Holland, Philip

Nelson, Anthony

Lord James Douglas-Hamilton.

Howell, Ralph (North Norfolk)

Newton, Tony

Question accordingly agreed to.
Resolved,
That the Financial Assistance for Industry (Increase of Limit) Order 1977, a draft of which was laid before this House on 16th June, be approved.

HALLAMSHIRE HOSPITAL, SHEFFIELD
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Snape.]
11.11 p.m.
Mr. Martin Flannery: I am grateful for the opportunity to raise what is a very serious question in Sheffield and South Yorkshire—the question of the future of the splendid new Hallamshire Hospital in Sheffield. This hospital, which is almost completed, and very urgently needed, is liable to remain closed for many years to come unless more money is made available through the regional health authority, which has used up practically all the funds that it has been allocated. Therefore, this is really an appeal to the Government to help us in what we consider to be a real emergency.
202
Sheffield and South Yorkshire people were dumbfounded when they realised that this immense and splendid hospital, which they have seen being built since about 1969 in the university area of Sheffield—one of the more salubrious areas—was liable, because of a shortage of funds, to stand there, with its equipment in it, expensively empty for a long time.
I say "expensively empty" because, these days, to keep a great building in a state of repair, with all that that means, with all the wonderful medical equipment that is in that hospital, is expensive. I do not know what the exact cost would be. I do not think that it has been costed, but it would amount to a large sum of money just for the building to stand there unused.
Sheffield Members of Parliament have been seized of this problem for a considerable time, and you will have noticed, Mr. Deputy Speaker, that only last week three Sheffield Members raised this matter on a Question. I know that all the Sheffield Members are deeply worried about this hospital and that all our people are taking note of this short debate. More interest has been shown in it since it became known that it was to take place than

203
in almost anything that I can recall during the few years that I have been in the House.
Sheffield Area Health Authority is keenly aware of the financial difficulties that the Health Service is facing. How could it not be aware? It knows of the general public expenditure cuts, and many members of its members deplore them. They are aware of the needs of the Health Service. The authority has proposed to the Trent Regional Health Authority that a once-for-all allocation of £4 million over a period of three years should be made to enable the hospital to be commissioned and to put into use all these beds, in modern surroundings, for acute cases of various illnesses. This money would prime the pump and enable the authority to fund the new development on a permanent basis.
We are not asking for special favours. The Government have made a serious effort to enable us to catch up, but the whole Trent region, for reasons that many of us still do not understand, has fallen behind in allocations for medical training and health generally.
There are three hospitals in my constituency. The Royal Infirmary was opened in 1797 and was literally next door to the great hammers of the developing Sheffield steel industry. It is surrounded by the small back-to-back houses of the Industrial Revolution as well as some of the good houses of the employers. It was near the squalor of industry. I saw it when I was a boy, and now it is cluttered with additions that have been built on to it because it was not designed to deal with the sick of today.
The Royal Hospital was built in 1832 and is almost in the city centre. It is outdated and difficult for patients and medical staff. One wonders how they manage to do such a wonderful job in the hospital.
The new hospital is long overdue and is destined to improve the facilities for patients in Sheffield and to replace the other two ancient hospitals that are still functioning. It will be a referral centre for adjacent areas in basic medical and surgical specialities, including neurology, neurosurgery, renal transplants and haemophilia.
204
The general quality of hospital accommodation in Sheffield is poor and has been known to be poor by almost everyone for a long time. Only the splendid new Hallamshire Hospital and the accident and emergency department in the Northern General Hospital, in the Bright-side constituency, are programmed for the near future. Even after the commissioning of the new hospital, only 700 of the 2,000 "acute beds" for the really sick will be in modern accommodation. Conditions in other old Sheffield hospitals should be mentioned. They are woefully deficient in quality and quantity, and inadequate for the clinical teaching needs of medical and other students.
Unless the Hallamshire Hospital is opened, Sheffield will be the only area of South Yorkshire without a modern general hospital by 1980. What is proposed in the Brightside constituency indicates that we need two district general hospitals. We have one that is almost completed. The equipment is inside, and it stands ready. People have watched it being built since 1970 and taken pride in it. Now it is likely to stand empty—a veritable medical Centre Point that will not make the money that Centre Point made while standing empty. It will stand idle for many years because the regional health authority cannot provide the funds to open it.
I recently received a letter from Professor Crane, Dean of the Faculty of Medicine. Since Sheffield is a university area, the new hospital would be a teaching hospital. He said:
"You may find it helpful to know that the Sheffield Medical School has given offers to admit 150 medical students this coming October in response to Government pressure for an increased number of doctors needed for the National Health Service. These admission offers, which we are legally obliged to honour, when taken in conjunction with our previous expansion figures means that we have a 25 per cent. increase in clinical medical students to teach in our existing hospitals. One of the important factors that influenced our decision to respond to Government to expand our numbers in the national need was the expected completion and commissioning of the Hallamshire in 1978. It was due for completion in 1975".
This hospital, which is to stand empty for a long time, cost £27½ million to construct and equip, only to stand idle. The university medical school has committed itself to increasing its intake per annum.

205
It is alarmed by the difficulties to be faced if the hospital does not open.
The old hospitals have lived in uncertainty, because the staffs have been told that they are only there until the other hospital opens. These two hospitals have been partially run down because the staffs were expected to move into the great new hospital. These dedicated people are carrying on in uncertainty, in adverse conditions. They are bound to suffer a loss of morale as a result.
It has been calculated that to run the infirmary—the older of the two hospitals—until the 1980s will cost £3½ million. To run the other hospital will cost the same. We are asking for only £1·8 million, at the most, for one of the three years over which we would need £4 million for our splendid new hospital.
I am told by an authoritative source that the effect on the morale of the medical staff in Sheffield cannot be overstated. They have put up with poor conditions and accepted a deteriorating standard of maintenance because they expected to move into the wonderful new hospital. It is particularly demoralising to ask people to work in old premises when every day they pass the empty, brand-new hospital which is lying there idle.
Sheffield is a great industrial city and part of an even larger industrial complex. Steel is its heart-beat. Cutlery is part of Sheffield's past and is still a great trade. Sheffield is on the edge of the greatest expanding coalfield in Great Britain—the Yorkshire coalfield. Our people have worked hard and are proud of the work that they have done. Sheffield used to be one of the dirtiest cities on earth because of the major part that it played in the Industrial Revolution. Through smoke abatement, and so on, its people have made their city the cleanest in Europe, and possibly in the world. Its people have suffered adverse conditions for a long time. They have seen more salubrious areas receive better treatment.
Now they see this beautiful hospital. They regard it as their own, but public expenditure cuts have interfered. They think that they have earned their new hospital. It stands there, modern and, medically, completely up to date. The sick and others in the area expect to see it used.
Mr. John H. Osborn: This hospital is in the Hallam constituency. The headquarters of both the area and regional health authorities are also there. Is not one of the problems that the balance of expenditure in the region is outside Sheffield rather than inside? Should not the appeal be to the regional authority to make that £4 milion available and to the Minister to put pressure on the regional authority?
Mr. Flannery: That is an important point. We ask the Minister to bring the imbalance to the attention of the regional authority, which has received powerful petitions from the area health authority. Much as I should like that: imbalance redressed, I also make a plea for more money to go to the regional authority, because it has been held back for many years and has fallen behind.
As I was saying, the hospital stands there splendid but not about to be used. Therefore, we ask my hon. Friend to make the necessary moneys available so that our sick and injured may look forward with confidence to treatment in this great new hospital. I emphasise the need for the treatment of the injured, because in an area such as this one never knows whether or when industrial accidents will take place. That was one of the matters that my hon. Friend the Member for Sheffield, Brightside (Miss Maynard) knows we have to take into account, since hers is the industrial area.
For all those reasons, we plead with my hon. Friend to make the moneys available so that the sick, the injured and all of us when in need may look forward with confidence to splendid hospitalisation of the highest order in the new Hallamshire Hospital.
11.26 p.m.
The Minister of State, Department of Health and Social Security (Mr. Roland Moyle): I am grateful for the opportunity to reply to my hon. Friend the Member for Sheffield, Hillsborough (Mr. Flannery), because I know that the matter that he has raised is of great concern to all Sheffield Members, as was demonstrated both by his speech tonight and by the Questions put to me on 21st June, when the Department was first for Questions.
The matter is of close concern also to the health authorities—both the area

207
health authority and the regional health authority responsible for Sheffield, South Yorkshire and the rest of the Trent region—as well as to my right hon. Friend and myself.
First, I want to sketch in briefly the background to the development of the Hallamshire Hospital. It consists of an integrated teaching hospital and medical school, with 746 acute beds, including 12 day beds, with appropriate supporting services—out-patients, accident and emergency services, and so on—together with teaching facilities for about 120 medical students in order to provide for the growth of medical teaching in accordance with the Government's policy of expanding medical education, and particularly medical education in the Trent region, since we have good reason to believe that to a noticeable extent medical students, when qualified, practise in the area where they are trained. This would provide extra medical help to the Trent region.
The first phase of the development, the provision of the main part of the outpatient department, was brought into use as early as 1961. Then the excavation and foundation works for the main buildings and extension of the out-patient department were completed in 1969, and for residential accommodation in 1975. The medical school was completed in September 1973 and brought into use in October 1973, and the main hospital building is being handed over to the Trent Regional Health Authority by the contractors, floor by floor, on completion. I understand that two-thirds of the floors have so far been handed over in this way, and the remaining floors are likely to be handed over very soon. The total cost of the scheme is £28½ million at current prices.
It is hoped also that after the usual period of commissioning it will be possible to admit in-patients progressively from April 1978 to February 1979, if resources permit. That is the problem—to get the resources to permit the opening of the hospital.
The Trent Regional Health Authority estimates that the new revenue consequences of opening the hospital, after allowing for planned closures, is likely to be about £5· million up to the financial year 1980–81. Of this additional
208
revenue sum that has to be found more than half is likely to fall in the next financial year 1978–79.
The Hallamshire Hospital is not the only new development in the Sheffield area. An accident and emergency department and a mental illness unit are also under construction at the Northern General Hospital, as is new provision for geriatric patients at Nether Edge Hospital. Further units of the Sheffield Mental Handicap Project are also due to come on stream during the period in question. Thus, although the cost of commissioning the Hallamshire is undoubtedly the major financial commitment facing the Sheffield Area Health Authority, there is also the problem of funding these other smaller schemes to add to its difficulties. The Trent Regional Health Authority estimates that the revenue consequences of these and other capital schemes in Sheffield in the period to 1980–81 total about £8 million spread over the years 1976–77 to 1980–81.
I should like to say that the regional heatlh authority will be able to fund the area health authority's need for additional revenue to operate the new buildings in full, but this will not be easy. At present it is far from the case, because the regional health authority in its turn is facing substantial financial difficulties. It estimates that it faces a possible shortfall of about £14 million needed to meet the claims for revenue to run new buildings that need to be commissioned from its eight areas, of which Sheffield is only one.
Basically, this is the problem in the area, that Trent was always regarded as under-funded and under-provided. A great drive has been made in the region to catch up. Every area has a new hospital or a new substantial scheme coming on stream, and the problem is to meet the financial consequences of this large number of hospital schemes.
Earlier this year the regional health authority faced the question how it might allocate to areas the revenue funds allocated to it by my Department and give areas revenue assumptions for the subsequent three years. Among other things it decided was that any area whose estimates of additional revenue needed to operate new buildings for the four years exceeded the amount needed to bring that area up to its special target figure

209
in 1980–81 should be restricted to the amount of half of 1 per cent. growth, with the exception of Sheffield, which, because of its existing and planned teaching commitment and the regional services it provides, should by 1980–81 be allowed to move further above the target figure than it is now. So that Sheffield will be allowed to have rather more than its fair share of the region's resources, no area likely to be below target in 1980–81 should receive less than a half of 1 per cent. increase in revenue growth.
I have set out these two points because they have a crucial bearing on Sheffield's ability to fund the additional revenue commitments in the period in question, including those of Hallamshire. The level of health service provision in Sheffield is much higher than in any other part of the Trent region, and bears comparison with that in the country as a whole.
The net effect of the regional health authority's adoption of the principles I mentioned on the actual allocation of revenue to Sheffield, and on its assumed level of revenue funding in the subsequent three years, will be to hold Sheffield's revenue growth down to not more than about half of 1 per cent. per annum. This means that it is likely to have less than £1 million of additional revenue over the period in question, when it is estimated that it faces additional revenue commitments totalling about £8 million. That is the gap to be closed.
The regional health authority estimates that even so, Sheffield will still enjoy the most favourable overall revenue position in the region and will be running at about 108 per cent. of its area target. If it were doing what it should do, it should clearly be working towards 100 per cent.
Mr. John H. Osborn: I think that the Minister is referring to the per capita revenue figure, which I believe is £192 in London, whereas in Leicester and other areas it is £62 and in Sheffield it is round about the £100 mark. The point is that the capital expenditure has been incurred. There is a need to balance capital with revenue predictions and to balance capital commitments with likely revenue commitments. To mothball that hospital now would be a disaster in
210
Sheffield. The Minister has given nothing to overcome the difficulty.
Mr. Moyle: I am grateful for support from the Opposition for increasing public expenditure. That is an exceptional point of view to be held by a Conservative.
I was referring to the target and not to the per capita expenditure for the local population. The position of Sheffield cannot be considered in isolation from that of the rest of South Yorkshire. The Barnsley Area Health Authority is preparing to open phase 2 of its new district general hospital. The Rotherham Area Health Authority hopes to open phase 1 of its new district general hospital in 1978. Those two will therefore be coming on stream and the regional health authority had to work out the order of priority for the opening of the new hospitals in those two towns and in Sheffield. It decided to concentrate first on Barnsley, followed by Rotherham, with Hallamshire following behind. It was important for it to adopt that order because it wants to reverse the flow of patients travelling into Sheffield from the other two towns for hospital services, and to be treated instead in Barnsley and Rotherham.
Barnsley and Rotherham would have had major difficulties in recruiting manpower to staff their district general hospitals had Sheffield been allowed first to call on available staff. The financial problem facing Sheffield, therefore, is both immediate and substantial and the authority has reacted swiftly and constructively. It has pointed out that the approach adopted by the health authority assumes that the population served by the Sheffield area will be reduced by about 100,000 by the end of 1981 as the patient flow into Sheffield from Barnsley and Rotherham is progressively reversed.
The authority feels that strong action by the regional health authority in association with all concerned will be necessary in order to make sure that this reversal takes place, or Sheffield will be left at the end of the period with a reduced financial allocation but serving an excessive population.
At its meeting, therefore, on 2nd May, the area health authority resolved, first, that the regional health authority be

211
informed that the area authority is prepared to commission the Hallamshire Hospital to the extent needed to replace existing services, and to carry out a substantial proportion of other developments, provided that the Barnsley and Rotherham district general hospitals assume responsibility for the full population that they were planned to serve during 1978–79, and provided that a non-recurring allocation of £4 million over the next two or three years is made.
The authority resolved, secondly, that unless the conditions set out in the first resolution could be met, the Hallamshire Hospital could not be opened. Thirdly, it resolved that the regional health authority be asked to receive a delegation to put forward a case supporting this proposal. The RHA has agreed to meet such a delegation, and that meeting will take place shortly.
While Sheffield has been discussing these matters with the RHA, the authority, in its turn, has been making strong representations to my right hon. Friend and myself about the financial problems it faces. We met a deputation on 11th May from the Trent Regional Health Authority, led by the chairman of the RHA and including the Vice-Chancellor of Sheffield University, the deans of the medical schools of Leicester and Nottingham, and the regional administrator and regional treasurer.
The deputation drew attention to the major financial difficulties that the region faces in meeting the estimated cost of the major capital schemes in their three teaching areas, each of which has a teaching hospital coming on stream. These amount to about £20 million, with a peak estimate of about £10 million in 1978–79. It drew attention to the continued deprivation of health provision and the under-financing of the region as a result,
212
and expressed regret that we had been unable to implement the recommendation of the Resource Allocation Working Party that below-target regions such as Trent should be allowed a 5 per cent. annual growth rate.
It indicated that such a level of resources would have gone a long way towards resolving the region's financial difficulties. It also pointed out the region's inability to open on time certain major capital developments and said that the region was asking for a special advance allocation of £10 million over the next four years, of which £4 million could be non-recurrent. That covers my hon. Friend's point.
Reference was made to the special problems of Sheffield and the Sheffield Medical School, which the region had been encouraged to build in accordance with national priorities and which had increased its intake to 132 students in 1975, with 150 coming in 1977–78, on the assumption that Hallamshire was to provide the clinical facilities for 120 students The region was hoping that the hospital would be open by the time the students began their training. My right hon. Friend told the deputation that we fully accepted that the Trent region is deprived and under-resourced. But we said that the Resource Allocation Working Party recommendations are being implemented as fast as national resources allow, in spite of some pretty firm pressure from some other areas to shelve the RAWP report—
The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at nineteen minutes to Twelve o'clock.