GOVERNMENT POLICY

HC Deb 14 December 1978 vol 960 cc920-1051

3.59 p.m.

The Prime Minister (Mr. James Callaghan)

I beg to move,

That this House expresses its confidence in Her Majesty's Government and in its determination to strengthen the national economy, control inflation, reduce unemployment and secure social justice.

During Question Time I was asked about discretionary action, and perhaps I might begin by making some more references to it now, since I know the House will wish me to.

Last night, I said at once that the Government would of course review their policy in the light of the votes that had been taken, and we had a preliminary discussion about it this morning. We interpret those votes as meaning that the Government should no longer use discretionary powers in the private sector as a measure to counter inflation where settlements breach the Government's pay policy. In accordance with the resolution passed by the House the Government will therefore no longer use such powers for that purpose. Firms which have been told that discretionary action will be taken against them due to a breach of the pay guidelines will be informed that such action will no longer be taken on that ground. The Government will give further details about other matters in due course. I hope that that will be satisfactory to the House as an immediate response to the motions that were passed last night.

I accept that last night's vote reflected a genuine anxiety about the sanctions element of the Government's policy by the Opposition and some of my hon. Friends, but I am bound to add my own view that by this decision—which we accept—the House is tying one hand behind our backs in the fight against inflation.

The genuine anxiety that was felt in the House, which I readily concede, was shared by the Cabinet. We came to a somewhat reluctant conclusion about the use of these powers. We decided that sanctions should be an element in our policy because we believe—this is the difference between us—that the Government have to use all the legal powers at their disposal to ensure that the private sector plays its part in the battle against inflation.

The House has decided that it does not want us to proceed in this way. So be it. But it must make it clear to the private sector and to the small majority which supported the vote last night that there is one formidable sanction that remains. It is not a Government sanction; it is that if the private sector is not willing to stand firm in the battle against inflation and to control it—if it constantly takes, as it has in the past, the soft option of buying industrial peace and passing on the consequences to the customers in high prices—private industry will face, with the rest of the country, the consequences of once again tumbling towards hyper-inflation.

Members of the Opposition might not like that conclusion but it is irresistible from the premise from which we start. I say that to everybody, as I have done consistently and continually. I wish that Members of the Opposition would address themselves in this way. That sanction should make everybody think twice before they talk about the future and before they talk in terms of victory and defeat in this matter.

In my view the only victory that counts is the victory in the fight against inflation and unemployment. That is where the real victory and the real defeat will lie—not in the exchanges in the House. The only defeat that would matter—I say this advisedly—would be the national defeat of failing to maintain the country on the path that we have begun to tread and thereby to throw away the progress that we have made in the last few months.

Perhaps the Government would go down in such a defeat, but it would not be a defeat for the Government alone. Let there be no doubt about that. What is more, thanks to the events of the last four or five years everybody in the country understands this. Perhaps that was the reason for some of the reticence and restrained enthusiasm by the Opposition when they won the vote last night.

The Government are not willing to give up the fight now. The progress that we have made already is too substantial to be thrown away. What is more, I believe that the country at large would condemn us if we were to give up the fight. There is a climate of opinion in the country that everybody should acknowledge. The Opposition ignore it at their peril. It requires us all to try for a consensus that will keep inflation at bay. That applies to both sides of industry and to the Government.

We must try again. The measures that we chose are not acceptable to the House. We are democrats, and we accept that. We must now make another effort. The alternatives are not for us, as a House, to consider in these circumstances.

The CBI has asked to see me. I am ready to meet its members and to hear their proposals for dealing with the situation. A meeting has been arranged for next Tuesday between the TUC economic committee, which comprises a number of important trade unions, and my right hon. Friend the Chancellor of the Exchequer. The Government will listen to what is said and seek to respond. We shall be approaching and responding to the CBI and the TUC in a constructive mood. The general policy of the CBI and the TUC is the desire to keep inflation down at the present level and, indeed, to reduce it even further. I have no doubt that they will respond to us in the same spirit.

Both the TUC and the CBI are opposed to inflation increasing, as are the Government. Very well. How are we to ensure that it does not? I have asked that question repeatedly. If our measures are repudiated, we must know what other alternatives exist.

Our prospects for 1979 follow the policies that we have carried through so far. I know that hon. Gentlemen might not accept them all. But it cannot be denied that our policies have steadily reduced unemployment in the last 12 months. They have lowered the inflation rate. Exports have improved. Sterling has held steady for nearly two years. There is improved growth in the economy, at a faster rate than for some time. As a result of our policies, we have not only increased pensions and other benefits; we have reduced taxes. We have not reduced them as much as the Opposition would like, but they have come down, and that has made a substantial difference. [HON. MEMBERS: "Not enough."]

It might not be enough. Pensions are not high enough, but we have to make a choice. Benefits are not high enough. The money allocated to the Health Service is not enough. All these things are necessary. I do not believe in taking money out of people's pockets for the sake of Government spending. Of course I do not.

The Government's policy is that we must keep a balance between public expenditure and private expenditure. The complaints that come day by day and week by week about the state of the public services show that that is necessary. We must try to keep the country on a path on which there is steady economic growth. From that we shall achieve dividends in the way of additional revenue to be used as we, the House of Commons, think best.

Our purpose is to continue with those policies during 1979. We believe that it is the best combination of policies to encourage greater productivity, on which our future prosperity depends. In that connection, I am bound to tell the House that we have heard nothing so far that makes us depart from our judgment—and not only ours—that an overall level of 5 per cent. increase in earnings throughout the country is the best way to achieve those objectives.

Mr. Nicholas Ridley (Cirencester and Tewkesbury) rose—

The Prime Minister

The Government's judgment on the 5 per cent. is backed by the right hon. Members for Lowestoft (Mr. Prior) and Sidcup (Mr. Heath). We are not alone in our belief.

A steady reduction in inflation levels is the foundation for the success of all our policies, especially for our continuing success in reducing the number of men and women who are out of work and reducing inflation.

I have explained the type of policy that we intend to continue to pursue so long as we command a majority in the House. But against the background of of the debate I am entitled to ask the Opposition what they would do in 1979 to prevent inflation from increasing. What would they do to prevent unemployment from increasing? Whatever policies we have proposed—

Mr. Ridley rose—

The Prime Minister

The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) was dismissed from the Front Bench. I am addressing myself to the Front Bench.

Sir John Eden (Bournemouth, West)

Cheap.

The Prime Minister

I will not give way to the hon. Member for Cirencester and Tewkesbury. I am ready to give way, but not to him.

Whatever policies we have proposed the Opposition have almost automatically opposed. They are against the pay policy, are they not? They are against the policy for prices, are they not? The hon. Member for Gloucester (Mrs. Oppenheim) is opposed to any policy for keeping prices down—

Mrs. Sally Oppenheim (Gloucester)

indicated dissent.

The Prime Minister

Those who sat through the long debates last year will know that that is true. The Opposition are against sanctions on private firms, are they not? They are against giving financial aid to sustain industry suffering from the world recession, are they not? Textiles, shipbuilding, steel, motor cars, footwear, Meriden, KME—you name it, they are against it. Never since the 1930s has the Tory Party displayed such a Gradgrind image as it does today. This is the first time since the end of the last war that the Tory Party has so completely and slavishly succumbed to the doctrine of the free market.

The right hon. Member for Worcester (Mr. Walker) has told us where that leads. The doctrine of the free market, so espoused by his right hon. and hon. Friends above the Gangway, leads, he tells us, to social disorder, envy, division and conflict. I suggest that the right hon. Gentleman conducts his debate with his right hon. Friends on the Front Bench. The words that I have used were his, not mine. I suggest to the right hon. Member for Leeds, North-East (Sir K. Joseph) that he should get this disorder out of his blood before he can be regarded as fit for office.

The Opposition have scorned our policies and rejected them. How would they keep down inflation in 1979? I am not talking about generalisations for the mid-1980s, but about next year—

Mr. Ridley rose—

The Prime Minister

The main guide that we have is what the right hon. Lady the Leader of the Opposition said in the debate on the Loyal Address on 1st November last. She said that the supply of money is the only thing that will hold inflation.

Mr. Ridley

Hear, hear.

The Prime Minister

The right hon. Lady has at least one supporter, I notice. But the sweet simplicity of her statement hides a multitude of bankruptcies and tens of thousands of men and women out of work. Is that really the remedy for 1979?

Mr. Michael Heseltine (Henley)

Since the statistics for bankruptcies in industry were first kept about 80 years ago, the highest level was under the right hon. Gentleman's Government in 1976.

The Prime Minister

If that is so, as an index of the world recession, how many more bankruptcies does the hon. Gentleman think will arise—

Mr. Robert Adley (Christchurch and Lymington)

What about the effect of the earthquake in Nicaragua?

The Prime Minister

How many more will arise under a policy that states that the supply of money will be the only thing that will control inflation?

Mr. Heseltine

I would very much hope to go back to the level of bankruptcies under the last Tory Government, which was a lot lower than the level under the right hon. Gentleman's Government.

The Prime Minister

I note that reply. That also would mean, presumably, going back to an increase in the money supply of 25–30 per cent. I think that the right hon. Member for Leeds, North-East has to do some more conversion before he can get the hon. Member for Henley (Mr. Heseltine) on to his side on this matter.

But if that is the policy of the Opposition—that the supply of money is the only thing that will hold inflation, and therefore if we assume that they will not return to the levels of money that fuelled inflation last time to 25–30 per cent.—what becomes of the statement by the right hon. Member for Lowestoft that 5 per cent. is a good guideline for wage settlements next year? The Government's attitude is clear. What is the Opposition's attitude to that? Is their former view thrown into the trash can? Is the Leader of the Opposition saying that if inflation starts to rise again her remedy will be to tighten the supply of money, as the only thing that will hold inflation? Will she then sit back and wait for the spate of bankruptcies? Is that the policy that the Opposition choose to follow?

We all know from the right hon. Lady's speech at Penistone that she believes that wage increases in the public sector must be limited. The Opposition are hoping, perhaps with a misplaced sense of optimism, to become the Government—[HON. MEMBERS: "We will."] Very well, then they will face not the joys of opposition but the responsibilities of government.

I ask them a very clear question. What do they think should be the appropriate level for increases in pay in the public sector in 1979? I think that the Leader of the Opposition might give us an indication of her views on that. Let us have a considered reply. Is it to be the 5 per cent. put forward by the right hon. Member for Lowestoft? Is it to be more, or is it to be less? I see the right hon. Member has just come in. If I were he, I would leave again. I do not want to embarrass him too much.

These are proper questions for an Opposition to be asked to answer in present circumstances. The House and the country will not be greatly impressed if the right hon. Lady rides off with general platitudes about cutting taxes or having a referendum on hanging, or whatever is the current vote-catching platitude for the day.

Mr. James Prior (Lowestoft)

Is the Prime Minister aware that I did not put forward the figure of 5 per cent.? He put that figure forward but, unlike him, when we were in a similar position to his in 1973–74, I and my party have not sought to undermine the policy—[Interruption.]

Mr. Speaker

Order. The Prime Minister gave way to the right hon. Gentleman. The right hon. Gentleman must be heard.

Mr. Prior

We have not trotted round the South Wales miners undermining the policy.

The Prime Minister

I do not wish to make anything more difficult than I can for the right hon. Member for Lowestoft. I understand and I am grateful for the support that he gave us when he said that he thought that 5 per cent. was the appropriate figure for 1979. I am anxious that he should not resile from that position. I want him to keep the Leader of the Opposition up to it, and I hope that he will continue to do so.

The right hon. Gentleman says that he has not gone around undermining our position. I think that he is one of the members of the Opposition Front Bench who have tried not to. What about the rest of them? What were they saying when we brought forward proposals for the Armed Forces? What were they saying when we came forward with a reasonable proposal for the police? Was that not undermining our position? I exonerate the right hon. Gentleman, but not the rest of the Conservative Party. He stands like the boy on the burning deck, full of honour, but I fear that he will be left alone.

Perhaps, however, the right hon. Gentleman is not entirely alone. We know that the Opposition do not have a policy about public sector pay and that all they want in the private sector is a free-for-all. We have heard the verdict on it—the verdict given on the present Leader of the Opposition's position by the former Leader of the Opposition, the right hon. Member for Bexleyheath—[HON. MEMBERS: "Sidcup."]— Bexleyheath, Sidcup (Mr. Heath)—[HON. MEMBERS: "No, Sidcup."] The constituency might be wrong, but hon. Members should wait for what he said. I know that there is a tremble of apprehension through the Conservative Back Benches. The right hon. Gentleman was very brief, as he often is. He was very clear and very terse. On 12th October, talking about the Conservative policy on the key issue of inflation, he said: It will just not work. It will just not work. If that is the verdict of the former Leader of the Opposition and the former Prime Minister on the present Leader of the Opposition, what will she do to make it work? What practical proposals has she to put forward to make sure that it will work? We have some. Unfortunately, we have lost a part of the instrument that we had, but we intend to pursue the policy, as we have done up to the moment. If the Leader of the Opposition cannot convince her predecessor that her policy will work, how does she hope to convince the country that it will work?

Mr. Peter Bottomley (Woolwich, West)

The Prime Minister referred to his difficulty last night over part of his policy. Does he believe that his policy, his party's policy, can work when it has been rejected both by the TUC, who are supposed to be the main supporters of his party and Government, and by his own party conference?

The Prime Minister

As I said before, it makes it a lot more difficult, but the Government have the responsibility for carrying this through. We intend to do so as long as we can command a majority in this House. We intend to go on doing so. We are ready—indeed, the arrangements have been made—to discuss with both sides of industry what they can propose that will make this policy work. Let us hear from them. They will not find that I am rigid or unbending towards anything that will ensure that inflation does not rise again into double figures and, indeed, that will reduce it below its present level.

That is the task. I am willing to accept advice from anyone provided that it is practical and can be carried out I am invited—

Mr. Norman Tebbit (Chingford) rose—

The Prime Minister

No. I am very selective about those to whom I give way. Mr. Speaker, I was—

Mr. Ralph Howell (Norfolk, North) rose—

The Prime Minister

Yes, I will give way to that hon. Member.

Mr. Howell

Is the Prime Minister aware that he has been so successful in holding down wages that we now have the lowest wage rates in the EEC? Is he aware that his policy or any similar policy is bound to fail because he is intent on holding down the gross wages of all wage earners? Wage earners are interested in their net take-home pay. Out of any £10 increase, the average person is lucky if he is left with £3.50. That is why this policy cannot succeed.

The Prime Minister

I acknowledge the hon. Gentleman's sincerity in this matter, but I am always being told by people why policies will not succeed. My right hon. Friends and I are as aware as anyone else of the difficulties of maintaining these policies. The hon. Gentleman would help us more if he would put forward practical proposals—I do not ask him to interrupt me again—for making policies work, so that people realise that high productivity will ensure higher wages that really buy something.

It is not a question of how high the wages alone are; it is a question of how much those wages will buy. Although our prices have been dragged up through the Common Market agricultural prices, they are still much lower than in other countries.

Mr. Tebbit rose—

The Prime Minister

Perhaps I could proceed to the next part of my speech. Somehow, I do not think that the hon. Gentleman is going to approach this question with the sincerity of his hon. Friend the Member for Norfolk, North (Mr. Howell). I do not think that he is going to try to help me, or even help the debate forward. I am very sorry—

Hon. Members

Resign.

Mr. Speaker

Order. It is clear that the Prime Minister is not giving way to the hon. Gentleman.

The Prime Minister

I am always interested in cries that the Government should resign. There will be a decision on that matter this evening. Therefore, I do not take up the immediate cry. I should, however, like to refer to last night's vote. It is always possible for hon. Members of different parties and different beliefs and policies to combine in an uneasy and temporary alliance against the policies of the Government. They may dislike the policies on which they are voting, for diametrically opposed reasons. They may dislike one another even more.

I remember what was said about the right hon. Gentleman the Leader of the Liberal Party. There is only one Lobby for them to walk through and so they had to walk through together. Last night, we had the spectacle of the hon. Member for Cornwall, North (Mr. Pardoe), that arch-supporter of the view that all incomes should be fixed by parliamentary statute, walking hand in hand through the Division Lobby with the right hon. Lady who believes that in no circumstances should Parliament have anything to do with wage bargaining. That was a marriage of convenience if ever there was one, but the bridegroom deserted the bride almost as soon as they got out of the register office.

We know very well that the Liberal Party intends to vote with the Conservatives tonight. We know that the Liberals want an election. The right hon. Gentleman told us so again this morning on the radio. He said that they would vote against the Government this evening.

It is strange, is it not, that up to this autumn the right hon. Gentleman was not only able to support the Government in the policies that we carried out then and are continuing to carry out—policies to control inflation, reduce unemployment and secure social justice—but actually claimed that it was the Liberal Party that compelled us to adopt those policies. That is the reason, he said, why they were so successful. Now, three months later, we continue to follow those policies, but he and his colleagues have deserted. Why? Because they want an election. Was there ever a greater triumph of self-sacrifice over self-interest?

It would not surprise me if, when the right hon. Gentleman's followers pulled the sheets up over their heads in bed at night, they said, "God bless our leader. We are totally behind him. Give him his election. But please, God—not just yet." I have a feeling that they will walk through the Lobby tonight hoping against hope that they will be defeated.

Mr. David Steel (Roxburgh, Selkirk and Peebles)

indicated dissent.

The Prime Minister

Then we have the Scottish nationalists. What a pickle they are in. They voted again last night, for the umpteenth time, for the Conservatives —a fact which will no doubt be noted in Scotland, especially the West of Scotland. Each time they get the chance of supporting, as opposed to wrecking or delaying, the referendum provisions in the Scotland Bill, they vote for the Conservatives in order to delay it or to wreck it, to destroy it. That happens every time.

Last June, when we were in the final stages of the Scotland Bill, which is now an Act, after a tremendous effort had been made, the Scottish nationalists had the chance to help the Government carry it through on a vote of confidence. Did they take it? Oh, no. Although the whole Bill would have been lost, and the SNP knows that it would have been lost—after months of effort which extended over nearly two years—they voted for the Conservatives.

Nevertheless, to the secret relief of some of them, as with the Liberals, the Conservatives were defeated and the Bill became an Act—no thanks to them. Last night they voted for the Conservatives again, although they know that the referendum date is already fixed for 1st March. This arouses my suspicion that the right hon. Member for Western Isles (Mr. Stewart), for whom I have a great affection, must be carrying a torch for the hon. Member for Glasgow, Cathcart (Mr. Taylor), in view of the votes that he has cast with him on this issue time after time.

Now the Scottish nationalists attempt to escape from their confusion by dangling a red herring in front of us. I am sure that that analogy will not go amiss in Stornoway. They say, "We must know the date of the Assembly election, if the referendum is carried, if we are to believe in the Government's good faith." That is the latest one. Not only is that insulting; it is untrue. They need be in no doubt, after our efforts—despite what they tried to do to delay and defeat the referendum through voting with the Conservatives—that we shall fix the date, a timely date, for the Assembly after the referendum has been carried, as I trust it will be. We shall do it then.

Mr. Gordon Wilson (Dundee, East)

When he talks about the referendum legislation, will the Prime Minister take on board the fact that the pledge of the Labour Party in the last election was that there would be a Scottish Assembly and that there would be no need for any referendum, and, further, that his own legislation is running two years behind schedule because of the abdication of responsibility by his right hon. and hon. Friends? Does he accept that, when the time comes to judge roles in Scottish history, his party will be found missing?

The Prime Minister

That really is a lot of humbug. If the hon. Gentleman's votes had been effective, there would not be a Scotland Act today. That is the simple truth. There would have been an election and we should have had to start with the devolution legislation again—and this party would have started with it again. I therefore hope that the SNP will not attempt to trip us up for a fourth time. They have tripped us three times already, and now I understand that they will try to trip us up for a fourth time tonight. Scotland will know whose the responsibility is. We have demonstrated our good faith in giving Scotland a chance to declare itself in the referendum on 1st March and it is time that the SNP showed its good faith in this matter by not voting for the Conservatives and crawling along behind them with every chance it gets. [HON. MEMBERS: "Now deal with the Ulster Members."] Are hon. Members tempting me to discuss the Ulster Unionists? The right hon. Member for Down, South (Mr. Powell) is a unique phenomenon. He is an unguided missile. I would not care to comment on that matter this afternoon.

We face a motley crew on the other side of the House united by nothing. I have no confidence in any one of them or in the whole lot put together. The House must decide tonight. We stand by our policies. We are content for them to be judged and we are proud to defend them, for we have governed this country in the true interests of our people.

4.37 p.m.

Mrs. Margaret Thatcher (Finchley)

The Prime Minister's speech gives little ground for confidence in Her Majesty's Government, either in their record or in their future. Indeed, he hardly addressed himself to the Government's record at all.

One thing is very clear—that sanctions would not have been removed unless we had had a clear victory in two votes last night. They would have remained, in spite of what the Leader of the House, before he held that position, said about them during an earlier debate in the lifetime of the previous Parliament. On 18th March 1974, the right hon. Gentleman said this about sanctions: I have always thought that one of the reasons why the discussion of incomes policy, so called has been so difficult has been that, very often, the well-to-do or—even more offensively perhaps—the truly wealthy have been inclined to threaten sanctions or preach sermons to people who have to fight every day of their lives to keep their heads above the inflationary flood. But the threat of sanctions in such cases does not work. It leads to clashes. The sermons prove boring and ineffective. That is what happens."—[Official Report, 18th March 1974; Vol. 870, c. 702.] Holding those views, why did the right hon. Gentleman ever agree to sanctions being imposed?

We notice also that countries which the Prime Minister admires and whose rate of inflation, productivity, and growth he tries to emulate, do not have sanctions or anything like a rigid 5 per cent. policy, from which he now seems to be retreating. But yesterday he did not dare to submit his rigid 5 per cent. policy to the Order Paper of the House of Commons for a vote to be taken on it. He knew that it would be totally and utterly defeated if he had—defeated by the House of Commons as it was previously defeated by both the Trades Union Congress and by his own party.

The Prime Minister referred to the private sector taking the soft option. Does he really think that Ford took the soft option by having an eight or nine weeks' strike in support of his policy? He referred to problems of unemployment, which he has largely created, and asked what our policies were. Perhaps he will take time to read the excellent lecture given by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) on conditions for fuller employment, pointing out in a detailed analysis of about 15 chapters that jobs come from the consumer, from creating goods which the consumer wants to buy at a price that he is prepared to pay. Jobs do not come from anywhere else. It was quite clear from what the Prime Minister said later about industry, pay and prices that one thing that he is really against is successful industry, and that he is prepared thoroughly to penalise it.

The Prime Minister asked me about our policy for prices. He knows full well that competition has done more to keep prices down than any Price Commission. The irony is that while we have had very strict control on prices in this country they have risen more than at any previous time in our history. The right hon. Gentleman spoke also of the public sector, but I understand that his pay policy is to hold the public sector to a rigid 5 per cent. except when it gets too difficult, and then of course he will have a special inquiry and it will not be 5 per cent. at all. We supported him over the police pay and defence, and undoubtedly will do so when a similar situation arises in certain other cases. It was his policy to have a rigid 5 per cent.

The Prime Minister referred to the Health Service. It has been under his Government that the Health Service has gone down. During our time there were fewer people awaiting operations, the waiting list actually improved, and there were fewer people on it, because we spent more time trying to create wealth while the right hon. Gentleman has spent time wholly on restraint. In his motion the Prime Minister speaks of being determined. It is a very strange motion. The Prime Minister is determined to strengthen the national economy, control inflation, reduce unemployment and secure social justice. But the Prime Minister has been determined, whether inflation has gone up or down. He has been determined, whether or not unemployment has gone up or down. He has been determined, whether or not the Health Service has gone up or down. He has been determined, whether crime has gone up or down and he has been determined, whether putting the case for or against Europe. Whatever happens the Prime Minister is determined, but we do not get a result. It leads us to think that the only thing that he is determined to do is to try to hang on to the tenancy of No. 10.

The quarrel with the Prime Minister is not with some of the objectives which he puts in this motion. They are unexceptionable. They could have been put down by any Government anywhere in the world at any time, from the USA to the USSR: strengthen the national economy, control inflation, reduce unemployment and secure social justice. Of course. It is the methods that the Prime Minister is prepared to use and the lack of success in achieving the objectives that we criticise.

The Prime Minister did not take very much time on actually considering his Government's record, which is strange, as this is a motion of confidence in the Government. Let us have a quick look at the record of his Government. Let us start with the things with which he preferred not to deal, commencing with inflation. He has forgotten that his Chancellor of the Exchequer fought the last election on the ground that he had inflation licked—that it was already at 8.4 per cent. He has forgotten that he has the worst record on inflation of any Government in this century and, indeed, of any Government for about four centuries in this country. His is the only Government that has halved the value of the £1 during less than five years. He has the worst record on inflation in the same world circumstances.

Mr. John Ellis (Brigg and Scunthorpe)

Words and slogans.

Mrs. Thatcher

Words? Slogans? Not to the people who have had to suffer this inflation and see their savings reduced by half. They do not talk of slogans; they have felt exactly what Socialism is like. They might have put £100 into the Post Office when the Government of this Prime Minister came in. That £100 is worth now less than L51 —and the hon. Member talks of slogans! The right hon. Gentleman has one of the worst borrowing records in history. His Government have borrowed more money than any previous Government and we are now in the position when we have to borrow massively merely to meet the interest on previous borrowings. That, of course, is a total recipe for bankruptcy. His borrowing has been so great that he has had to shove interest rates up to over 12 per cent., which undoubtedly is responsible for people saying that he is quite hopeless at handling economic affairs now.

In industry the Prime Minister has a policy of encouraging success. I cannot think what happened to it because the moment he got in all he seemed to do was to reward failure and punish success. This week we heard a speech by the Governor of the Bank of England, who was putting forward policies that have been put forward from this Dispatch Box many, many times.

Mr. Robert Hughes (Aberdeen, North)

We are not surprised at that.

Mrs. Thatcher

Perhaps the Government would do better to heed them, which would be better for the home value of the pound as well as its overseas value. The Governor of the Bank of England pointed out that if the Government go on taking as much of the national income as they take now there will be little room for the private sector. There will be a continual crowding out of the private sector, and we shall not get the increase in wealth which is the only source for better social services, better prosperity and better pensions. He said that it would require a great deal of courage to do some of these things. He did not indicate whether he thought that this Government had it. It would include a readiness to adjust the balance of taxation and to increase personal incentives—thus promoting a climate more favourable to initiative and enterprise—and a willingness to work for a better living. Those are perfect Conservative policies, but they are policies that will never be put forward by this Government.

The Prime Minister spoke of the money supply but he was not very clear whether he supported the Chancellor of the Exchequer's present policy or not. The Chancellor of the Exchequer has talked about 6 per cent. or 7 per cent. this year—not very far wrong, if I may say so; just about right—but it did not seem that he had the support of the Prime Minister at all. Is the Prime Minister for or against having an appropriate money supply for the increase that one expects in output in the economy? It was not exactly clear from what he said.

The Prime Minister's record on unemployment is as bad as his record on inflation, and this is an extremely important point when people consider the record of a Government and how they shall vote next time. Over the lifetime of this Government there has been a tremendous increase of about 731,000. Added to that, the right hon. Gentleman has achieved the extraordinary double not only of increasing unemployment but of having a considerable shortage of skilled labour. We know why; because the continued incomes policy of the type that he has chosen—he did not have to choose that type—has deliberately compressed differentials, so that he cannot get skilled engineers to go into industry. That is one of the problems that is facing us today—one of the problems that he is totally ignoring.

The Prime Minister has had the good fortune to have a great deal of North Sea oil coming ashore. This year, taking oil and gas, the net effect on current and capital account is expected to be about £4.3 billion. Even with that he can only just achieve a balance of payments. The record without that tremendous free enterprise achievement would have been appalling indeed. We are finding that through his economic policies industry is totally uncompetitive and the level of imports one of the worst that we have ever known.

We are finding also that the social services are not better but are indeed a good deal worse than before, so the extra expenditure we have had has not gone to improve the social services in any way.

That is the record that the Prime Minister did not tell the House about, and that perhaps he would rather not have heard. The Prime Minister asked me what are our policies on incomes and pay. It seems to be part of his objective to get the whole of the debate on X per cent., as if the highly complex questions that face this country could be dealt with just by any statistical percentage. Of course they cannot. The problem is much more complex and varied, and any approach on incomes policy must be regarded as part of a total approach towards the economy. We have not exactly heard that from the right hon. Gentleman. Part of its must be restraint on Government expenditure and borrowing. That is one of the main problems. The Government take such a large proportion of the national income —52 per cent.—that there is just not enough either for incentives to individuals or for incentives to industry. Until the Government try to match the restraint that they expect from individuals with restraints in Government spending and borrowing, we shall have no chance to reduce inflation or to increase prosperity.

This was all said in the debate on the Queen's Speech. The Prime Minister appeared to quote a speech of mine which was supposed to have been made at Penistone. As a matter of fact, I made no speech at Penistone. I did, however, make a speech at the Conservative Party conference. When speaking of the prob- lems that face us and the levels for increased pay, I spoke of the desire to have more, and I said: But where is this ' more' to come from? There is no more. There can be but there won't be unless we all produce it. That is the key. But the Prime Minister's policies give no incentive whatever to bring about extra output. They give no incentives to those who are capable of starting small businesses, building them up, and taking on more employees. Incidentally, it is the small businesses that we have to thank for the availability of bread in the last few weeks. Those small businesses are to be congratulated. We should note that they did not attempt to put up prices in any way. We got our bread, despite some of the worst efforts by some trade unionists.

Our policy must involve a reduction in Government spending as a proportion of national income. The present Government will never make such reductions. Their whole philosophy, as expressed by the right hon. Gentleman the Secretary of State for Prices and Consumer Protection yesterday, was that he and the Government know better how to spend people's money than people do themselves. That is the collectivist approach of Socialism. It does not want people to have more of their own money in their own pockets to achieve their own independence and to spend it on what they desire, on houses they wish to have, or on their own children. Socialism prefers to take away that money and to spend it through the collective genius, if I might put it that way, although I doubt it, of the Government.

The Labour approach to Government expenditure has always been interesting. They feel that whatever they think is necessary—we are not told exactly what they think is necessary must somehow be raised by taxation. But the fact is that people have rebelled against high taxation. The fact that we were able to push through tax changes against the Government—they were Tory and Liberal tax cuts—illustrates the failure of the Government's expenditure policy.

There was one Chancellor of the Exchequer who managed to match his expenditure—

Mr. T. W. Urwin (Houghton-le-Spring)

On a point of order, Mr. Speaker. Is it in the best interests of the House for several Tory Back Bench Members to sleep while their leader is speaking?

Mr. Cranley Onslow (Woking)

On a point of order, Mr. Speaker. Is it not wholly against the traditions of debate in the House that the Prime Minister should have sent a message to his supporters, through the Whips, to whisper and try to disturb my right hon. Friend in her remarks?

Mr. Speaker

Order. What is in the best traditions of this House is that on a major occasion such as this both Front Benches should be allowed to express their point of view.

Mrs. Thatcher

The hon. Member for Houghton-le-Spring (Mr. Urwin) must have been hard put to it to make that intervention. He did not like hearing the record of the Labour Government. Their performance on inflation is the worst on record. That is true of their record on employment and industry. It also is true of the Government's record on output—which, after all the Labour Government's efforts, is not even back to where it was in 1973. That is the Government's record, and it is on that record that we are judging them today.

There was a President of the United States who had a notice on his desk saying "The buck stops here ". That does not apply to the present Prime Minister. He is always prepared to hand the buck to somebody else. If he has had a bad record, it is always due to world recession, world prices, or something of that nature. However, that is not true, because other countries in exactly the same circumstances have fared so much better than this one under the Labour Government. That is the yardstick by which we judge the Labour Government.

The fact is that one cannot judge pay policies, or policies involving pay restraint, other than against the background of something that is much more important. I refer to policies for the creation of wealth. That is a policy which the Labour Government have never possessed, and they will never do so.

The Prime Minister asked me what our policies are. They are based on the fact that if one seeks to curb and confine free enterprise, it cannot produce the wealth on which social progress and increased prosperity so largely depend. That wealth depends on the control of the money supply. The Chancellor agrees with that view, even if there is a split between him and the Prime Minister. It depends on reducing the proportion taken out of the economy by Government expenditure and on increasing the proportion spent by the citizen and that which goes to the marketable sector. It depends on having an incentive policy of taxation by reducing personal taxation at all levels. Unless these things happen, we shall not get the extra skills, the managerial expertise, or the small businesses that we require.

When I go round construction sites or factories, I am often told that the person in charge has the lowest pay and the lowest net take-home pay. That is a ridiculous way to run a country. Because this is the case, people will not take on extra responsibility, and those are the people we need.

We also have a recognition of the need for varied rates of pay. The profit element is the cash limit of the private sector. When dealing with pay claims many companies do not do so on the basis of x per cent. Indeed, they cannot deal with them in that way. They are prepared to operate on the basis that if the company does well, those who work for it will do well. That is a Tory principle, but it does not appear to be a Socialist one. It is ironic that the Prime Minister is seeking to stop that principle prevailing.

We need to divide up the added value in respect of the wage element, and there must be enough for investment, some profits and the inevitable tax. All these matters have to be dealt with when considering policies of pay restraint.

The Prime Minister did not say very much about his own policy. Indeed, he asked for an expression of confidence in the Government's policy. However, he was less than frank in explaining the general lines of his expenditure proposals or his strategy.

We have had two indications—indeed three indications—of what Government policy amounts to. First, we had the Labour Party programme of 1976 fully endorsed by the Labour Party conference. Then we had "Into the 80s ", a document agreed betwen the TUC and the Labour Party, and last wekend we had the leaks on the manifesto, which I understand contained nothing new but was a scissors-and-paste job.

There is not much doubt about what the Government have in store. The Government try to conceal some of these deficiencies under the phrase "a mixed economy ". That phrase conceals the fact that under this Government the economy is getting progressively less mixed on the free enterprise side, and more and more mixed on the nationalisation, public ownership and State control side.

Mr. Ian Mikardo (Bethnal Green and Bow)

I wish that it were.

Mrs. Thatcher

I am grateful to the hon. Member for Bethnal Green and Bow (Mr. Mikardo) for confirming what I suspected was the case.

There is not much doubt about what the Government have in store. There will be further substantial measures of nationalisation. Where they cannot nationalise, they will take over control—as, for example, in regard to people's savings in pensions and insurance funds. They will reduce the citizen's capacity for independence by imposing higher taxes, there will be cuts in mortgage relief, cuts in defence, and so on.

All these things the Government have in store. The only question is not about the ends but about the pace at which the Government propose to move. What the right hon. Gentleman failed to say was that if these policies were put into action they would put paid to any attempt to halt inflation and to secure a better standard of life in Britain.

Is the Prime Minister as loyal a supporter of Labour Party policy as the Secretary of State for Energy? I know that the Prime Minister likes to distance himself from these matters. Or is the only difference that he wants to keep the programme under wraps for the time being? Is the argument about ends, or about the pace at which these proposals should be introduced?

The Prime Minister asked the House to express confidence in his Government. He did not tell us what his immediate policies on pay and on economics were. A Government without a policy is nothing. Over and over again, the Prime Minister in- sisted that the 5 per cent. pay restraint was essential to his Government's whole strategy. We have had that time and again. Many of us think that the 5 per cent. was thought up just in time for an election, assuming that there would be one. The Prime Minister hoped that the TUC would approve it for the time being, so that later, after an election, and if he won, he could virtually deliver the country to further TUC power. Unfortunately, the election did not come. The TUC rejected the policy. The Labour Party, on whose electoral support a Labour Government must rely, decisively rejected that policy. Now the House of Commons has rejected it.

According to the Chancellor, only sudden and large deflationary cuts in public spending and heavy increases in taxation are left for him to implement. Will the Labour Party support those? Will they help to restore prosperity to industry and create jobs for the unemployed? The Government are left with no vestige of an economic policy that is relevant to the country's needs.

What else in the Government's policies are we to feel confident about? Are we to feel confident about the Government's foreign policy—about the Foreign Secretary's handling of the Rhodesian crisis? Are we to feel confident about the Home Secretary's dynamic approach to the problem of crime and violence? Are we to feel confident about the state of the National Health Service?

The fact is that the Government have no policies to deal with any of these problems. They have no policy except a determination to cling to the sweets of office without effectively discharging any of the responsibilities of office. It would be better if we told the people the truth—that this Government and this Parliament are dying and that the time has come to rid ourselves of yesterday's men and give Britain the chance for a fresh start.

5.03 p.m.

Mr. Geoffrey Lofthouse (Pontefract and Castleford)

I am sorry that so many hon. Members should be leaving the Chamber as I rise to take the opportunity of making my maiden speech and of attempting to bring to the notice of the House what the people of the outside world are thinking and what they want. After my experience over the past three or four weeks in this House, I am beginning to wonder how many hon. Members, especially those on the Opposition Benches, realise what the people at home want.

I understand that it is customary, when delivering a maiden speech, to refer to one's predecessor. Even if that were not the custom, I would not have been able to make my first speech in this House without referring to the late Joe Harper. I was a personal friend of his. We both had our origins in Featherstone. I felt his loss deeply, and so did everyone in Pontefract, Castleford and Featherstone, because he was their friend too. He was a friend in the true sense. People could always accept what he said, even if he disagreed with them. They knew that he was speaking the truth as he saw it, no matter how unpopular it might be. He never coveted popularity and, for that reason, was extremely popular. No duty was ever too small for him and no burden ever too heavy. He remained always one of the people, outstanding because he had extraordinary common sense and judgment. He wore himself out in the service of the people. We shall certainly miss him.

Although I have been associated with the late Joe Harper for all of my life, and was well aware of his outstanding abilities, it was a little frightening, in my early days in this House, when being introduced to different people, to have almost every one of them, from all parts of the House, bring to my attention the fact that I have a great deal to live up to. I hope that as a result of our close association over the past 30 to 40 years some of Joe's abilities and integrity will have rubbed off on to me.

My constituency is a varied one. It has two super Rugby League teams, in Featherstone and Castleford. Like the incomes policy, they have lost a few points recently, but I assure the House that they are on the way back. My constituency has an ancient castle, fine buildings, good libraries and excellent schools. It has a progressive district council, which is trying to uplift and enhance the area. It also has slag heaps galore.

I am delighted when I hear of the concern for the environment which is being shown in connection with the development at Selby. This means that the people there will not suffer what we have suffered. We believe that it is time that some consideration of a financial nature was given to those of us who have lived our lives amid the dereliction of opencast mining. Our parents and our parents' parents have suffered in the same way, and we shall continue to suffer for a long time to come. Cannot the same concern be expressed about us as is expressed about the "pretty places," or is it a case of "they are used to it, it doesn't matter."?

The inner cities have their problems. Quite rightly, money has been forthcoming from Government to assist them. We have similar problems of decay and dereliction. Because they are on a smaller scale, it is easy to dismiss them. If the problems are left to fester, there will be a stronger drift away from the freestanding towns, to the pretty houses being built in Selby, with the result that the public money invested in our schools, housing, water and electricity supplies, will lie idle while more will have to be spent elsewhere. I do not wish to be a prophet of doom and make a gloomy maiden speech, but I point out that it often seems to us that the largest cities get everything, to the detriment of the smaller towns.

In my constituency we need a greater diversity of employment, for men and women but especially for men. We need national assistance to get rid of the eyesores of the coal tips, which are the byproducts of the wealth of the country and which have created ugliness for our area. How long must we wait? My constituency is at the centre of Britain and of a rapid communications network involving the M62, the Al and the Ml. If my right hon. Friend the Secretary of State for the Environment would like to send money to us now, it could be there in two and a half hours' time.

I well remember the reports in the press of the maiden speech of my predecessor. One newspaper referred to it as fresh air sweeping through the House of Commons. I do not profess to be able to create fresh air. There has certainly been a lot of air created during the past month when I have been here—from the Opposition Benches. It has not been so fresh. The wishes of the electorate in Pontefract and Castleford are still fresh in my mind. During the election compaign it came over clearly that the majority of the people whom I met, with whom I have lived all of my life, felt that the main priority was to support the Government in their attack upon inflation and in their attempt to control it. That is what they mandated me to do. I am not here for the sake of making party political points to the disadvantage of Britain. If I were so to do, my electorate would never forgive me.

It is only a short while ago that I left heavy industry. Therefore, I can speak on it with some authority. I have some first-class knowledge of the immediate past in industry. Those in heavy industry, and certainly those in the mining industry, of which I am privileged to he a part, do not want wage claims and wage awards that will create inflation. The miners in my area and throughout the country have not forgotten the 1970–71 Wilberforce awards. At that time they enjoyed probably the highest wage increases that were ever awarded to the industry. In a matter of months those wage increases did not mean a thing to them. They represented merely confetti money and their purchasing power was just not there.

The message has come to me—I have been instructed so to inform the House, including my right hon. Friend the Prime Minister and the Government—that what is needed is an increase in real wages and that that can be achieved only by the policies of my right hon. Friend the Prime Minister and the Government.

I do not want to let the occasion pass without referring to the speech of the right hon. and learned Member for Surrey, East (Sir G. Howe) in yesterday's debate. I refer to column 782 of yesterday's Hansard. The right hon. and learned Gentleman made reference to the productivity deal in the mining industry. He and others should get the facts right before they briefly refer to percentages. That is tantamount, without assembling all the facts, to misleading the House.

I can speak with some knowledge on the mine workers' incentive scheme as I have only recently ceased administering that scheme. The comparison made by the right hon. and learned Gentleman of the first three months of this fiscal year with the first three months of the preceding year was not representative of the scheme. I admit that the scheme was negotiated area by area and was introduced piecemeal. The scheme started in late December in parts of Nottinghamshire and spread steadily throughout the coalfields until the last coalface agreements were being completed in late March and April. That meant a slow build-up in the early part of the year. Pits had to settle down to operate a unique and novel system that was extremely complicated. The effect was patchy at first and gave a low overall average increase rate.

Results have steadily improved as time has passed and the teething troubles have been overcome. In the first 36 weeks of the current fiscal year productivity at the coalface was 10.8 per cent. better than for the same period last year while overall productivity is 3.9 per cent. better. All that is against a background of falling productivity in the previous three or four years. To show that this is a progressive trend, the same result for the most recent 13 weeks up to 2nd December is an improvement in face productivity of 12.3 per cent. and overall of 6.2 per cent. Deep mined output is now more than 500,000 tons up on the same period last year, again showing a complete reversal of the trend of the past three or four years when production as well as productivity declined. Perhaps the most significant fact is that this has been achieved with 7,000 fewer men than at this time last year.

If we assume that those 7,000 men had been available and had been producing, at a conservative estimate, 10 tons a week per man, they would have produced an additional 70,000 tons per week, or a revenue of more than £5.5 million for the fiscal year. Even without those 7,000 men we have increased output by about 500,000 tons. It is not right to suggest, as was suggested yesterday, that the miners' productivity scheme is merely a myth. That is not true. Based on my own experience, I can tell the House that it is working and that it is cutting even. I have made these statements because the House could have been misled by the remarks of the right hon. and learned Gentleman.

As I have said, I come to the House to throw my weight behind the No. 1 priority, namely, that which is most beneficial to Britain—country first, politics second. It has been proved beyond a shadow of a doubt that the Government's policies are working and that the Government should be allowed to remain in office to conclude them.

5.16 p.m.

Mr. Peter Walker (Worcester)

I am sure that the whole House will wish me to congratulate the hon. Member for Pontefract and Castleford (Mr. Loft-house) on an eloquent and confidently delivered speech. It was full of the common sense that we always associated with Joe Harper, the hon. Gentleman's predecessor.

The House sadly misses Joe Harper. He was popular on both sides of the House. He made a considerable contribution to not only the Labour Party but the House of Commons as a whole. To judge by the hon. Gentleman's maiden speech, he, too, will be making a similar contribution. I am sure that both sides of the House will look forward to hearing him on many occasions in future.

The debate is remarkable in that the Prime Minister has announced that, due to a vote yesterday, the Government have abandoned what the right hon. Gentleman previously described as the main plank in the battle against inflation.

When I was listening to the Prime Minister I was reminded of an occasion when a predecessor of his, a leader of the Labour Party, was speaking as Leader of the Opposition. He, like the Prime Minister, used many phrases about courage, and fighting for this and fighting for that. I remember Harold Macmillan turning to me and saying that he had known many courageous men in his life and that the only thing they all had in common was that they seldom spoke of courage.

Considering the Prime Minister's position in our economic scene, and having listened to his speech, I detected little in terms of real courage. The Prime Minister is presenting an economy that is doing rather well. He used phrases about unemployment reducing, production beginning to rise, and the rate of inflation improving. The whole atmosphere was that everything is going swimmingly and that if we stay with him it will be even better. On behalf of his party he has created the biggest and the most successful pre-election boom that we have seen in post-war Britain. The standard of living of the British people this year has increased in real terms by between 6 per cent. and 7 per cent. That is a staggering achievement. It will be a boom Christmas for the retailers. More new motor cars will be registered this year than in any post-war year. Half of them will be foreign cars.

The Prime Minister has created that condition not by any remarkable achievements of a Labour Government that have improved production and not upon the base of any great improvement. We have the measure of the achievement of the Government. It is described in two basic statistics. The first statistic is that manufacturing production for the lifetime of the Government has decreased by 1.6 per cent. The second statistic is that manufacturing wages have increased by 114 per cent. That is the measure of the strength of the economy.

A condition has been created where there can be a pre-election boom based upon three factors. The first factor is last year's improvement in the terms of trade, which represented a substantial improvement. Probably that is a once-for-all benefit for our future prospects. The second factor is the benefit of North Sea oil. This year North Sea oil has brought an improvement to our balance of payments of £1.4 billion. The third factor is that the Chancellor has once again borrowed a substantial sum, namely, £8.5 billion.

In his first Budget speech the Chancellor said that the worst handicap that he had inherited from his Tory predecessor was a public sector borrowing requirement of £4.5 billion. In his first Budget speech he told us that he would reduce it to £2.7 billion and that thereafter he would eliminate it. In fact, he doubled it the next year, he trebled it the year after, and it has remained at massively high levels ever since.

The economy that this Government leave at the end of their term of office is an economy deeply in debt, with a debt servicing bill of £9 a week for every family in the country, a public sector wage bill which now amounts to £44 a week for every family of four in the country, stagnant production, and an economy which we know is not competitive by world standards.

What do we find when we measure the balance of trade going on at the present time? We have had the benefit of North Sea oil and we have had the benefit of the terms of trade, and yet those benefits are dissipated by a massive import of manufactured goods. Two years ago we had no benefit at all from North Sea oil. This year we benefit by a figure of £1.4 billion. But this year we shall have imported, in finished manufactured goods, £5.6 billion more than two years ago. Four times the benefit of North Sea oil, therefore, is being dissipated in the pre-election boom organised, managed and arranged by the right hon. Gentleman.

In those conditions, does the right hon. Gentleman expect to create an atmosphere of sacrifice? The problem of the right hon. Gentleman is that the basis of his strategy was a voluntary incomes policy. His only problem is that there are no volunteers. Trade unionists who asked for only 5 per cent. would be the subject of a Bateman cartoon. There are not any such trade unionists. Well, that is a lie. I inquired whether there were any, and I gather that one agreement has been made, without any strings attached, without any attendance allowance, without any production agreement. I am told that this was achieved by the wages council for the wigmakers, feathermakers and allied trades. Apart from that, the claims have been 17 per cent., 20 per cent., and 40 per cent. That is the atmosphere of the economy.

What is tragic is that while the Prime Minister is evading the realities of the economy this afternoon by saying that it is all going splendidly well—based not on his achievements but on factors largely outside his control, other than the achievement of borrowing a substantial sum of money and putting us further into debt—the country goes on escaping the basic weakness of our economic position.

All three major parties in this House are agreed—at least, the leadership of the three parties are agreed—on the importance of incomes restraint. The Labour Party says that it wants to achieve this by a voluntary incomes policy, but there are no volunteers. My right hon. Friend the Leader of the Opposition, quite rightly and sensibly, says that she wants to achieve it by responsible free collective bargaining. The tragedy is that there is not much sign of the availability of responsibility. The Liberal Party wants to achieve it by a statutory incomes policy, but with 13 Members of Parliament it does not have very much chance of introducing a statutory incomes policy.

We have a position, therefore, in which all three political parties are agreed on the necessity of incomes restraint. The real problem is that nobody wants to admit that that desire to obtain incomes restraint is not being achieved because of what the Prime Minister described as employers taking an easy route in order to settle with the unions. It is not being achieved because at this time the unions have decided to exercise their economic power to obtain increases in incomes way beyond what the Prime Minister, the Leader of the Opposition and the Leader of the Liberal Party consider to be sensible. Therefore we continue to go on in the way that I have described. No doubt, we shall borrow some more money. We shall use up not just this year's North Sea oil revenues but several more years of North Sea oil revenues.

We see areas gradually crumbling. The hon. Member for Pontefract and Castleford mentioned his desire to improve the environment of his area. I think that I can say that, when I was Secretary of State for the Environment, more slag heaps were removed from the hon. Gentleman's part of the country than at any other time. I remember launching the campaign for the massive improvement of old houses. It is under this Government that the housing programme has collapsed. It is under this Government that the derelict land programme has gone back. It is under this Government that the improvement of old homes has stopped, while 250,000 construction workers are unemployed.

This Government, by using courageous phrases and the right sounding oratory, are trying to create the facade that they are facing the realities of the economic scene. In fact, they are hoping to sweep back into power by the deceit of a pre-election boom, based upon borrowed money and the improvement in last year's terms of trade. If they succeed in doing that, the country may still be left with the appalling problem of not facing the economic realities which confront this country.

I believe that the Prime Minister pas ailed to give the right lead to the country. We have had a Chancellor of the Exchequer who has blustered and bullied at the Dispatch Box for four years. They have been four years of declining production, four years of increasing debt, and of dissipating the benefit of North Sea oil. At the end of it, the country is producing less, it has less opportunity, and it is competing less than ever before. For those reasons alone, I hope that the Government will be defeated tonight.

5.26 p.m.

Mr. Ronald Atkins (Preston, North)

I. add my tribute, Mr. Deputy Speaker, to the speech of my hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse). It was a very able speech, and the great quality of it was its sincerity. In that respect, my hon. Friend is a very worthy successor of Joe Harper, who was dedicated to the Labour movement. Indeed, I know that within hours of his death Joe Harper was working for that movement. In bringing sincerity to this House, where it is badly needed, my hon. Friend has brought a breath of fresh air. Unfortunately, I have to disappoint him by saying, with equal sincerity, that when I voted for the Government last night it was not because I had complete confidence in the Government's policies but because I had complete lack of confidence in the Opposition.

Both Front Benches seem to be obsessed with the view that wages and money supply are the causes of our problems, and that we can overcome them by budgetary controls. Both Front Benches have held these views. Some change in their views occurs when they move from the left to the right of your Chair, Mr. Deputy Speaker, or vice versa. But the problems are only symptoms of the disease. No one with cancer of the skin would treat it with vanishing cream. It needs to be burnt out. The trouble is that in this House we have for too long not dealt with the essential problems.

I should like to refer to a study made by eight economists into the effectiveness of Government economic policies. It is entitled "British Economic Policy 1960–74 ". It was financed by the Treasury and produced by the National Institute of Economic and Social Research. These years, let it be remembered, include two disastrous periods of Tory Government. The right hon. Member for Worcester (Mr. Walker) was a notable member of one of those Tory Governments. The dates also include a period of Labour Government, when that Government had to pick up the pieces. In the study there is criticism of both Conservative and Labour Governments and, incidentally, there is also criticism of the Liberal Party.

Mr. Frank Blackaby, the editor, writes: As an economic policy, demand management is not enough. Let us remember that each party has been guilty of this. The writer goes on: In sum, the problem of devising policies appropriate for a country with a relatively inefficient manufacturing sector, and an unreformed pay bargaining system, remained unsolved.…Industrial policies seem limited to a peripheral role of tidying up the edges of the economy, rather than providing any central thrust to alter and improve industry's performance and that of the economy as a whole. On industrial relations, the study says that an assessment of the policies pursued by Governments of both parties: suggests that, in so far as new forms of legal regulation "— and we must not forget the legal regulations of the Conservative Party when in power, and the demands of the Liberals— contain provisions designed to curb industrial action by imposing new constraints on unions, this certainly did not help, and indeed, possibly hindered, the longer-term objective of reforming collective bargaining practices and institutions. Such measures tended to exacerbate industrial conflict in a way that was politically counter-productive and proved particularly harmful when the Government concerned was trying simultanously to develop an effective counter-inflation policy. The Government are, of course, aware of the relative decline of the British economy in the world. Indeed, the Prime Minister recently stated at Question Time that this decline started after the First World War. In fact, the general opinion is that it started over 100 years ago. Certainly, in the 1880s Lancashire cotton was being driven out of many markets by the Americans using the ring spindle, and was saved by the protected market of the British Empire, especially in India.

A decade or so later, Chamberlain—then a Liberal—led a campaign of business men in the Midlands for protection against German imports competing too well with Birmingham goods. No one can say that this early British decline was due to Government interference. We could not have had a freer market. It can even be said that in Germany Government intervention helped industrial progress, as it has done since in other countries, especially in Japan in the 1950s and 1960s.

Even in the nineteenth century Bismarck was aware of the need for higher education in science and technology, and at that time established technical institutions when the basis of education in English public schools was a mixture of classical, stoic philosophy and Anglicanism, which today is inappropriate to modem business practice and much else. We have not yet caught up in respect of education.

At the same time, we had an empire, at once a drain on the public purse and a protected market which sapped the competitive spirit. But the chief factor in Britain's decline was that we were lumbered with a lot of out-of-date industrial equipment and machinery owing to our early industrial start, at a time when our competitors were starting from scratch. This was apparent even in 1913, when an official report showed that there was more skilled labour in the United Kingdom, and more obsolescent equipment, than in the rest of the world put together. In other words, even in 1913 Britain needed much new investment, and the position got progressively worse.

The best opportunity for investment came in the 1950s and early 1960s, when the terms of world trade came back in our favour. Our competitors—Japan and Western Europe—grasped this opportunity, at first equalled our performance and then passed us, progressively increasing the gap between us until it is now almost impossible to close. It should be remembered that this period was a period of 13 years of unbroken Conservative Government.

In his book "Development of the British Economy 1914–ofessor Sidney Pollard has suggested reasons for this lack of investment. The strongest reason he advances, based on a consensus of economic opinion, is that British investors were deterred from investment in the United Kingdom by a series of stop-go policies caused by financial crises based on the loss of exchange abroad. The cause of this was not imbalance of trade but, mainly, the cost of keeping British military forces abroad and paying for them with foreign currency. There was also a loss of exchange from British investments abroad, but this was a poor second. Even today, there is a loss of exchange of probably between £600 million and £700 million on maintaining troops abroad, particularly the British Army of the Rhine.

However, today—with increasing oil revenues—Britain is in a position to invest heavily at home. It is clear that private investment, which has failed the nation for so long, will not be enough. There must be Government action, as there has been by our leading competitors in the Far East and in Europe, to provide —in the words of the National Institute of Economic and Social Research: that central thrust to alter and improve industries' performance and that of the economy as a whole ". The Labour Government are aware of what has to be done. The Conservative Opposition do not have a clue, or they would not have opposed Government actions to revitalise British industry or even to save it from dying. The Government have pushed in the correct direction. They now need courage to make a thrust. If they do, they will have the support of the Labour movement and of the nation for ever more.

5.37 p.m.

Mr. David Steel (Roxburgh, Selkirk and Peebles)

I was fortunate to catch the eye of the Chair in yesterday's debate, and I spoke at length then on the economy and on my party's views on the counter-inflation policy. The House will therefore appreciate it if I now do not dwell too long on it in this no-confidence debate. I therefore want to be very brief.

In his opening speech, the Prime Minister quite understandably castigated the Conservative Party, the Liberal Party and the Scottish National Party for what we did last night. He carefully left out, judiciously, the right hon. Member for Down, South (Mr. Powell)—" the unguided missile ", as he described him. He also left out one group which shared in the responsibility, namely, his own supporters. I thought that that was a striking and strange omission.

We now learn from Question Time this afternoon that the Prime Minister believes in the doctrine of going to bed by 11 o'clock at night. That explains why he listens to me on the radio at breakfast time. But I would appreciate it a little more if he actually listened to, or at least read, what I said in my speech yesterday, because it was not a short radio interview but a detailed statement of our views. Had he done that, he would not have fallen into the error of using the description of our attitudes which he used in his speech today.

'The Prime Minister described this as the same policy that we supported last year. It is not. I accept that it has the same intention in the Government's mind, but the conditions are entirely different. First, at the time when the Lib-Lab pact was formed in the spring of 1977, we faced a crisis of inflation of about 20 per cent. and we were prepared to accept the policy in the short term, whatever its defects. Second, the great difference between the agreement we made then and the position now is that the policy then had the backing of the trade union movement. What I objected to yesterday was the fact the the trade union movement had withdrawn its support and was putting pressure on companies to increase wage settlements, which resulted in penalisation measures being imposed on the companies. That was not a policy that we could defend. Therefore, it is not the same as the policy we had before.

Again, the policy of the Liberal Party was slightly misrepresented by the Prime Minister, when he referred to my hon. Friend the Member for Cornwall, North (Mr. Pardoe). It is not that we think Parliament has to lay down in detail what the policy is. The key to our position on pay policy is that it must be enforceable, and that can be done in one of two ways. It can be enforceable either by voluntary agreement with the employers and employees—that is, in effect, what the semi-successful policy was of last year—or by the decision of Parliament. It is not acceptable to have a pay policy which is neither enforceable nor declared to be acceptable in the country as a whole.

The Prime Minister said that the Government were entitled to use any lawful means in pursuit of their policy, but I must disagree. That cannot be the position.

Mr. Leslie Spriggs (St. Helens)

The right hon. Member is misinforming the House.

Mr. Steel

I am not misinforming the House. The Prime Minister said that it was right for the Government to use any lawful means. I dissent from that proposition. I repeat the example that I gave yesterday of a voluntary organisation, dependent for its work on Government grants, that was told by the relevant Government Department that, if it increased the salaries of its employees above the 5 per cent. level, the grants might be in danger. The same policy has not been applied to the employees of the TUC, for perfectly sensible and understandable reasons. But nobody can say that that is a fair or justifiable policy, even though it is using every lawful means. That is where we dissent from the policy that has been described by the Prime Minister. If the Government want lawful means, let them create lawful means and declare them openly so that everybody knows exactly where they stand.

I believe that the Government—and any minority Government—have only two options. They can construct an agreement with other parties, singular or plural, to form a majority on an agreed programme. That is what the Government did in the spring of 1977. I would argue at length on another occasion that that was a successful recipe for the period that it lasted. Inflation came down. The interest rates and the mortgage rates that we have seen going up again, did come down to quite low levels. That is one option open to a minority Government. But if, as happened in July last, we find that there is no basis for agreement for a fifth Session of Parliament, the other option of a minority Government is to go to the country and ask to be returned as a majority Government. Those are the only two clear options.

I thought that the Prime Minister was less than fair to me as Leader of the Liberal Party when he described what he called our changing of minds. I told him privately in July, I said it publicly at our party conference in September, I repeated it after the Prime Minister's broadcast in October when he did not have an election, we registered it again in our vote against the Queen's Speech in November and we will register it again consistently tonight in the Division Lobby, that if the Government are in a minority, in the absence of an agreement with any other party it is better to go to the country than to stagger on from day to day.

I have said it consistently, month after month, since the Lib-Lab pact ended. It is quite wrong for a Government to suffer defeats on particular aspects of their policy and to say the next day that they will have no-confidence votes. Will this happen on every Supply Day through the spring and summer? That is perfectly possible, but it is not a coherent and sensible way to run the country. For that reason, we think that the Government should go to the country.

It is perfectly understandable that the Government in their speeches have spent a lot of time attacking the Opposition for not declaring their pay policy. But a vote of confidence tabled by the Government is a vote about the position of the Government and not about the policy of the Opposition. I, too, would welcome the Conservative Party stating its policy. But that is a matter for argument at a General Election when people can then see what Conservative policy is.

Mr. Levin, for once, had it very well summed up on Friday 13th October in his column, when he talked about pay policy. He referred to the right hon. and learned Member for Surrey, East (Sir G. Howe). He said: Sir Geoffrey called not for free collective bargaining but for 'realistic, responsible ' free collective bargaining, which gives a future Tory government quite as much elbow-room as is necessary to develop any incomes policy it pleases, up to and including a statutory wage-freeze, backed by martial law and the threat of deportation to Australia for anyone who attempts to break it. That is the position. The options are open, but during an election the Conservatives would at least have to tell the country what they would actually do.

The motion invites the House to express confidence in the determination of Her Majesty's Government to strengthen the national economy. The determination of the Government is not in doubt. I have never doubted the determination of the Prime Minister on this question in the 18 months that I worked closely with him. I have not changed my mind about his determination. But that determination must be capable of translation into action.

I echo what the right hon. Member for Worcester (Mr. Walker) said. The commitment to a pay policy that is effective, even if the commitment is not more closely defined than that, is one which is widespread in this House. The Labour Party, as at present constituted is unable to introduce such a policy and lay it before the House. The Conservative Party might well be unable to introduce it and lay it before the House. For the same reason there are groups within its ranks which are unable to accept it. I believe, however, that it is worth taking these arguments to the people to seek a new Parliament with a fresh mandate within which we can construct a majority with the necessary determination to act in the national interest.

5.46 p.m.

Mr. R. B. Cant (Stoke-on-Trent, Central)

I have listened to speeches from both sides of the House. I am sorry that the right hon. Member for Worcester (Mr. Walker) has gone, because I was about to pay him a tribute. I shall wait for the Leader of the Opposition to go through the door before I say something that might not be polite.

I was extremely depressed last night and this morning. Before speaking I thought I would read the Financial Times, which is always a great solace to people like myself. I read the review by Joe Rogaly of the new publication Social Trends ". He ends by saying: The overall effect of this large compendium of figures remains, however, suggestive of a rather better state of the nation than most commentators indicate. Our politics may be in poor shape, and industrial relations may be fraying our nerves…almost beyond endurance. But the general condition of life is probably better than it ever has been and is certainly in line with that of other advanced industrial nations. That gave me courage to continue.

The important point relates to the economy. We have discussed—and I have contributed to the discussion—so many of our economic problems in money terms. We have believed—as an overhang of this great Keynesian period through which we have lived—that one can have a demand management situation in which, if only one can get it right, all things follow. This has been followed by the equally hysterical period in which we now believe—as I believe, having been converted—that monetarism is the solution to our problems.

I stress that until we get down to the state of the real economy of this country—as the Chancellor of the Exchequer has so named it—the future prospects of this nation, given any financial policy, are not very bright.

The reason why I support this Government's continuation in office is a positive one. I believe that they are the only Government with the right approach to the future of British industry and the service economy. If one talks to the people of this country—bankers and working people alike—one finds that they are pro-Labour in a purely negative sense, because they are horrified at the thought of the economic destiny of this country being handed over to the Leader of the Opposition and other occupants of the Opposition Front Bench. The concept that the market economy will solve all our industrial problems is, even to me who is slightly Right of centre, a nonsense in historical terms.

If any impact is to be made upon our declining industries and upon new industries based on microprocessing or biotechnology, the Government must take an important stake and have positive policies towards these industries or we shall have no future at all. It is no use talking about incentives, dynamism and the managerial approach, because we have had it all before.

In my lifetime, spanning the period from the depressed 1930s up to the present day, we have had all the things that the Opposition want—no taxation, no Government interference, and so on. Yet the development of technology and innovation in business enterprises has landed this country where it is. The only hope for us is that we have a Government in office like this one or like the Japanese Government. If there is any economy in the world, outside the Communist countries, which is directed and almost dictated to by the Government, it is the Japanese. Without Government nurture, support and intervention this country will have a very difficult time in the future.

I shall spend the other few minutes of my speech on falling out with the Government. I am in the odd position of not believing in any incomes policy at all. At least, I can claim to be con- sistent. In 1968, two years after entering the House, I made a speech to this effect. Ironically, the right hon. Member who on that occasion was sitting behind me and who was an ex-Minister kept muttering all sorts of ominous statements about "betraying the party ". That right hon. Member is now a distinguished Member of another place. I had breakfast with him this morning in the hotel in which we were staying. I shall not mention his name, but I said to him "Well, Fred, are you still such a wholehearted supporter of an incomes policy?" He replied that perhaps his commitment fell a little short these days.

During the period that I have been in the House I cannot remember an incomes policy which has succeeded in fulfilling its major objective, which is that of reducing inflation. I know that people could say to me that last year or the year before the Government's policies were successful. But it is no good trying to look at incomes policies in that way. The trend is significant and undeniable. We have had levels of inflation, as a result of an incomes policy of the most draconian kind, that other countries with a more laissez-faire attitude have escaped.

From the point of view of the development of our skilled manpower, we have lost out as a consequence of incomes policies. One cannot escape that conclusion. One thing that really worries me about incomes policies is the element of social divisiveness that they introduce into the body politic in this country. I do not say that they have made any inroads into the freedoms that we enjoy, or that I am against the bureaucrats who operate sanctions from their offices in Whitehall. I am saying that the tensions that have developed between the Government and management, between the unions and politicians, and between the public and the private sector we can well do without. The sooner we look at this and evaluate an incomes policy from that point of view the better for all of us.

I said all this in 1968, and I have not changed my mind. I have been loyal to the Government, whatever my own convictions and whatever Government policy has been followed. I have faithfully marched through the Division Lobbies in full support of the Government. But one can get locked into a situation. We are not in a state of tabula rasa, if my Latin education has not let me down. We are in a state in which the Prime Minister is here, the Liberals have turned against him and he is obviously worried. If he changes his policy, can he take a step away from the 5 per cent. and from sanctions and say that he is prepared to relive and recollect the emotions of the Labour Party and the Trades Union Congress? He has heard trade unionists tell him to trust them and let them conduct responsible collective bargaining. Many would say that that would be the other extreme, but I would take that risk. I say here and now that however much we are locked into an incomes policy vis-á-vis our political situation, I would still take that risk.

If we have an incomes policy and try to force it through with all the social and economic consequences, the increase in incomes will still be 11 per cent. to 12 per cent. If the Prime Minister and the Chancellor say that there will not be an incomes policy at all, there will still be about the same increase in incomes—11 per cent. to 12 per cent. If one looks logically at the position confronting the private and public sectors—and I say this as a longstanding member of a local authority—one sees that it is not impossible to keep increases down to 10 per cent. or 11 per cent. in the public sector. This is how it would work. The right hon. Member for Worcester was quite right when he spoke on these matters. Just because someone on the Conservative Benches says something, that does not mean that it is automatically wrong. The 16 per cent. increase in the wage bill that we suffered last year gave us 7.8 per cent. inflation, because world prices fell, the terms of trade moved in our favour and the pound became stronger. That may not happen again, but I believe that we should take a chance. I hope that we shall soon begin a period in which we rebuild the bridges to the trade union movement and even management in British industry. I hope that that does not upset my hon. Friends, because I feel that I carry some of them with me in my argument.

Mr. Mikardo

My hon. Friend will not upset us with that statement.

Mr. Cant

I said in 1968 that we were beginning a very difficult process which must be built on "co-operation, cajolery and education." That is true again. It may be a long process, but I have always believed that persuasion, however difficult and long the apprenticeship, is better than legislation. I have always believed that light is the sovereign antiseptic and the best of all policemen.

6.1 p.m.

Mr. Julian Amery (Brighton, Pavilion)

The walls of the House have reverberated yesterday and today with the pros and cons of a 5 per cent. pay policy and of responsible free collective bargaining, but there is an Alice in Wonderland quality about our discussions. No one believes that the 5 per cent. can be maintained, and there is not much sign that free collective bargaining will be responsible.

Exactly what the mixture is to be has yet to be discovered. On another occasion, if I had more time, I would advance some views on that question, but I wish now to make a briefer point. While we are splitting hairs in the Chamber about the right economic course to pursue, the barbarian is at the gate.

No economic policy will avail us anything if we are denied access to the oil of the Middle East or the minerals of Southern Africa. My principal reason for supporting the vote of no confidence in the Government is that I see no sign of their ability, determination, or even anxiety, to protect our vital interests in those areas. I had my say on our African interests in the recent debate on Rhodesia, and I shall not repeat it.

The sun of my approval and encouragement does not often shine on the Foreign Secretary, but he was right, if not felicitous, when he made a statement recently in support of the Shah of Iran. I cannot say the same of the Prime Minister. His statement on Tuesday that, if events in Iran continued as they have recently, he would not advise the Queen to go there was totally gratuitous.

The safety of the Sovereign must, of course, be the first concern of the Prime Minister, but all he had to say was that he would advise Her Majesty in the light of the circumstances prevailing in February when the time came for her visit. It was also wrong for the Prime Minister to say that a visit by a Head of State did not imply support for the regime of the other Head of State. The Shah is our ally and there is no reason for us to deny that, when one Head of State visits an allied Head of State, it is a symbol of the solidarity that exists between allies.

The situation in the Gulf is of immense seriousness for our economic future, and the chickens are coming home to roost with a vengeance. A previous Labour Government withdrew from Aden and decided that we should withdraw from the Persian Gulf. If those bases still existed, our allies could reinforce them, even though we might not be able to do so ourselves, but it is one thing to reinforce an existing base and quite another to set up a new one. We are facing grave dangers as a result of the policies pursued by the Labour Party, both in a previous Administration and in the current one, which surrendered our last positions in Gan and Masirah.

I also have no confidence in the Government's handling of our relations with China. The issue of the Harriers has been under discussion for too long. It is high time that a favourable reply was given and that we recognised that, whatever our ideological differences with the People's Republic, it is our friend against Soviet imperialism.

Whatever the outcome of tonight's vote, I do not believe that the Government command the support of a majority of the House. They certainly do not have the support of Conservatives or Liberals or even of many of their own supporters for the policies they are pursuing. It may be that, technically, they will get through, but I wonder whether it is healthy for our constitutional system that a Government should cling to power in those circumstances. I believe that it is not. We should say to the Government, as Cromwell said to the Long Parliament—" You have sat here too long for any good that has come from you ".

6.6 p.m.

Mr. Ian Mikardo (Bethnal Green and Bow)

I am normally meticulous about beginning any speech in the Chamber with a reference to the observations of the hon. Member who has preceded me, but I find it difficult to do so on this occasion because, with the best will in the world, I cannot think how the question whether the Queen should or should not visit Iran is highly relevant to whether we have con- fidence in the operation of the Government's pay policy and sanctions.

I should be happy to debate the points made by the right hon. Member for Brighton, Pavilion (Mr. Amery), but I would not wish a visit to Iran, especially at this time, on my worst enemy, let alone on a gentle and gracious lady who would probably be much more comfortable in any one of her homes than in the city where her embassy has been set on fire.

Let us leave that for another occasion and return to the subject of the debate which is, to coin a phrase, phase 3 of an operation that was supposed to begin on Thursday last week with the sanctions debate that never was. It was continued yesterday and is with us again today. I wonder whether we shall have a phase 4 or a phase 5.

Even though it is manifest that the Government have abandoned their pay policy —and that was done not in the Prime Minister's speech today but in his speech a week ago to the Parliamentary Labour Party—I was a little perturbed when he said that the Government must try again. That made me wonder whether, after phase I last Thursday, phase 2 yesterday and phase 3 today, we might not have a phase 4 or phase 5 in future. I shall say something later to give my right hon. Friend the Leader of the House notice about what might happen if we have other phases.

I had hoped to speak in the debate that never was last week. As I hurried into the Chamber, I was handed a sort of brief from the office of the PLP telling me what I ought to say. In nearly 30 years in the House, that is the first time that I have come across anyone thinking that it was necessary to give members of his party a brief about what they should say.

I read the document with great interest and I wish to draw on it to make some serious points. It said: Opinion polls have consistently shown that the great majority of voters are solidly behind our approach to incomes policy. I say to my right hon. Friend the Lord President, in all seriousness, that I believe that the Prime Minister is making a great mistake. I do not want him to make any mistakes. I want him to win. I want him to lead a successful party in an election. However much I differ from him, I have a great deal of good will for the Prime Minister. I have been a friend of his for a long time, over 30 years, when we were both at that time together in membership of the Keep Left group. Of course, he has moved a bit since then, as we all know.

I want to warn the Prime Minister not to get carried away by this. He is always saying—he said it today—" Perhaps the House did not go with me ", or whatever. He said it last night. "The country is with me ". He is resting on these idiotic—and I weigh the word—opinion polls. There has not yet been an opinion poll which asked a question that was sufficiently accurate, precise and clear to obtain the view of the country on the matter that we are discussing today. I invite my right hon. Friend—I understand that the Government have machinery for taking soundings of public opinion—to do it. If he does not want to do it, I should be prepared to join with others in financing a real public opinion poll. [An HON. MEMBER: A General Election."] No, a General Election is about many things. I am quite happy to go into a General Election. I am not running away from that. I dare say that my Tory opponent would lose his deposit again as he did last time.

On this specific question that we are discussing today, I shall tell the Prime Minister how one can test public opinion, how one can conduct a poll which is real. One has to ask two questions, not one; not the very imprecise and unclear one which "Mr. Gallup" asks. Question one is: "Are you in favour of all wages and salaries being restricted in 1979 to an increase of not more than 5 per cent. while there is no restriction on incomes that are derived from rent, interest and profits?" That is the situation. Some people in this country get incomes by working for them, and some get incomes without working for them. The only one on which there is a limit is the income which one works for. If one gets an income from rent, interest, profits or capital gains, there are no restrictions at all.

Therefore, one has to ask this question: "Are you in favour of a 5 per cent. limit on increases in incomes derived from wages and salaries with no restriction on any other sort of income?" That is question one.

Question two is:" If your answer to question one is' Yes ', do you think that this restriction should apply to your own wages or your husband's wages?". Let us not believe anybody who says "Yes" to the first question if he says "No to the second question, because what he is saying is not" I am in favour of wage restraint "but" I am in favour of the restraint of all wages except my own."

There are a great many people who take that view. They are in favour of wage restraint, but they can make what they believe to be—and what in some cases genuinely is—a cogent case for arguing that they are an exception. Unless one can get an opinion poll with a "Yes" to both of those questions, unless a majority of the people say that they arc in favour of wage restriction even though other incomes are not restricted, and that they are in favour of it being applied to their own wages—until one gets that, it is idle for my right hon. Friend the Prime Minister to kid himself that he has got the support of the country.

I shall quote another passage from this document which purported to tell me what I ought to say in my speech. It says: Our unit wage costs in manufacturing have recently been rising faster than in any other major industrial country. That is a little imprecise. It does not say by how much, it does not say over what period, and it does not say what "recently" means. To tell the truth, as one who has looked at some of the statistics of other countries, I am very sceptic about whether that statement is true.

For the moment, let us give the Government the benefit of the doubt and say "All right, unit wage costs are rising ".

On this I make two points. The first is an elementary and, indeed, a rudimentary one. Unit wage costs consist of two things—wages and what is produced by those wages. The unit wage cost is total wage cost divided by the number of units. It goes up when wages go up and/or units go down, and it goes down when wages go down and/or units go up. There are two ways of reducing unit wage costs—by holding down wages or by getting more for the wages that one pays.

My hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant), in what was an enormously impressive speech—and if he goes on making speeches such as that he will not be able to continue to describe himself as being Right of centre of our party—made the point absolutely clearly. The plain fact of the matter is that unit wage costs for any given type of product are lowest in high wage countries and highest in low wage countries. If one got prosperity out of holding down wages, Delhi would be prosperous and Dallas would be a slum. Exactly the opposite is the case.

My second point is that all this hoo-ha about unit wage costs is about two things —our competitiveness and the extent to which increasing prices contribute to inflation. But our competitiveness, the final cost of the product, is affected by a lot of other things besides wage costs. Where I think the Chancellor has fundamentally gone wrong—apart from the minor point that he insists that anyone who dares to disagree with His Excellency has got a tiny Chinese mind—is that one never hears a word from him about any other factor contributing to inflation. As far as he is concerned, the only thing that raises costs or raises prices is an increase in wages, the only thing that brings them down is the holding down of wages.

I ask any Member of this House: when have we heard the Chancellor of the Exchequer talking about any factors which enter into product costs other than wages? Indeed, when he talks about confetti money, what he is always saying is "What is the point of getting 10 per cent. more in wages, because prices will go up by 10 per cent.? You will only get the same goods." In other words, he is literally saying that for every 1 per cent. increase in wages there will be a 1 per cent. increase in prices because no other element enters into the fixing of prices.

We all know that that is a nonsense. Certainly any one of us who, unlike the Chancellor, has ever been involved in manufacturing or marketing goods knows that it is a nonsense. If there is any doubt about that, Ford itself has proved that it is a nonsense, because that company has said that it can absorb the 17 per cent. wage increase and keep the increase in the price of its product down to below 5 per cent. Therefore, as far as that company is concerned, wages are, at most, 30 per cent. of its costs, because 5 per cent. is, as near as damn it, 30 per cent. of 17 per cent. The Chancellor does not understand that.

Mr. Amery

The hon. Gentleman began his remarks by describing me as being guilty of an irrelevance by introducing the question of Iran into this debate. What I was talking about was the importance of raw material prices and access to raw material supplies in comparison with the whole question of pay. In fact I was agreeing in advance with what he just said. Pay itself is only 50 per cent. of the problem. Material costs are at least another 50 per cent. That is what I was trying to say.

Mr. Mikardo

Being a charitable chap, I am glad that I have provided the right hon. Gentleman with the opportunity to find a rationalisation to explain away his manifest and obvious irrelevance. Of course raw material prices enter into costs, as he rightly said. They, however, are a factor over which individual Governments have little or no control. But many of the things that have put up our prices are things which derive precisely from Government decisions and Government policies. No one ever talks about those things. It is only wages that people talk about.

One of the biggest items in any estimator's cost sheet for price fixing purposes is the cost of capital—interest charges. The rise in interest charges has been an enormous contributor to higher prices—I would think at least as much as any wage increases.

The Government's decision to make the fuel and power industries recover all their costs may have been a right decision. I do not know. It is arguable. Nevertheless, it resulted in a very large increase in fuel and power costs, which, of course, enter into the cost of every product that we make.

Some elements of taxation add to the cost of products and, therefore, to inflation. I need not remind hon. Members that some of the EEC directives do all that.

The rise in land values—everything that is made is made in a building standing on a piece of land—is an enormous contributor to costs. The fact that we have no effective control of margins has great bearing. When we are talking about inflation, we must remember that it is not costs that matter but what people must pay for the goods. Between the costs and what people pay for goods is the profit of the manufacturer, the wholesaler and the retailer. That is a great contributor. My right hon. Friend the Secretary of State for Prices and Consumer Protection exercises a degree of control which does no more than arouse a giggle amongst all those people he purports to control.

Most of all, however, the biggest single contributor to rising prices is high unemployment. If a factory is doing badly—I speak now from personal experience, but other hon. Members will have had the same experience—and is not competitive, and unit costs are rising, one gets someone in to have a look to see why. What is the first thing that he looks at? He looks to see what is the percentage of machine-idle time and man-idle time. Anyone who tried to run a factory on 5 per cent. man-idle time would be thought of as a lunatic. We are running a country on 5 per cent. idle time. The consequence is that the fixed on-costs are spread over a much smaller number of units than we ought to have and that adds very considerably to the costs.

So we have all these factors between costs and price. Most of them—not raw materials, as the right hon. Gentleman said—are directly within the Government's control and are factors that they have totally ignored in the fight against inflation. The Chancellor of the Exchequer never even mentions them in his speeches.

We are talking about—at least, we were; I do not know whether the policy has really been abandoned—the exercise of discrimination against a company and some workers, but not others, who have reached pay agreements, within the law, freely negotiated. I said "some workers but not others." My own union has negotiated more than 20 pay settlements above 12 per cent. The Secretary of State for Employment knows about every one of them. No sanctions.

Would it not be nice to apply sanctions to British Oxygen, and to say to the British Steel Corporation "You must not buy gases from British Oxygen? Where the heck would the BSC get them from? BSC would shut down. Perhaps we should say to the hospitals "You must not buy gases from British Oxygen.' Given three or four months, they would probably arrange alternative supplies from West Germany and Canada. But what happens during the three or four months? How does one apply sanctions?

Any minute now the oil companies—all British oil companies negotiate together—will make a settlement outside any sort of guidelines with some of their employees—tanker drivers and some others. So what do we do? Do we say to British Airways "You must not buy from any British oil companies?" Do we say to British Rail and to the hospitals "You must find some other means of heating your place?" Do we say that to the schools? What sort of nonsense is this?

The bakers have just settled for 14.4 per cent. However one describes it—one can always describe wage increases in any way one likes—it is more than 14 per cent. What shall we do? Shall we tell the Army that it must not buy bread from British bakers and that it will have to import bread from France? There would be a few hungry soldiers about. What sort of nonsense is all this?

The plain fact of the matter is that what the Government have been doing is not a policy. It is a caprice. A policy is something which is applied equally in all circumstances. A policy which is applied sometimes but not applied in other identical situations is a caprice. The Government are not daft, so we must ask why they do this silly thing of a caprice. The fact is that these sanctions, as we all know, had nothing whatever to do with the Ford Motor Company or with its employees. These sanctions were designed to give the Government a platform from which they could hold down the wages of low paid workers in the public sector. That is what the discussion was all about.

That is why some of my hon. Friends and I in this corner of the Labour Benches are worked up about it—much more than we would be worked up if it were simply a matter of the Ford thing. That is what it is about. It is to give the Government credibility. When the public sector workers come along, the Government will be able to say "No, you cannot have more. This is the policy. We are determined to carry it out. To prove our determination "—the word" determination "is in the motion—" we have a big company such as Ford and we have beaten it over the head." It is pour encourager les attires. It is nothing to do with Ford at all.

Digressing for a moment, it is the fact that the debate is about low-paid workers in the public sector that makes the attack by the Conservative Party so utterly hypocritical, because everyone knows that if the Tories were in power and had the opportunity—indeed, the Tories' own speeches and their policy documents indicate this—they would be mounting the most massive attack on the living standards of the working class that this country has seen since the General Strike.

Mr. Spencer Le Marchant (High Peak)

Rubbish.

Mr. Mikardo

Given a little leisure, I should be quite happy to quote passages. The hon. Gentleman shouts" Rubbish." I think that he is the best authority in this House on rubbish. He speaks with authority on that matter. However, given a little time, I would be prepared to find passages in the speeches of right hon. Ladies and Gentlemen of the Opposition and in publications of the Conservative Party which bear that out. If the Tories were in office, they would be mounting a massive attack on working-class living standards. That is what all their talk about cutting public expenditure is about. It is about cutting expenditure on the social services, and the rest of it.

I found yesterday and I find today one of the 10 or so big occasions of the 30 years that I have been in this House. But I do not believe that even Conservative Members thought that their Leader rose to it. We saw a very sharp contrast between the attack on the Government mounted by the right hon. Member for Worcester (Mr. Walker) and that which the Leader of the Conservative Party attempted to mount. There were two great differences between those two speeches. One was that the right hon. Member for Worcester spoke from his heart with great fluency, keenness, originality and vigour, whether or not one agreed with him. The other difference was that the right hon. Gentleman composed his own speech. Here we were on this almost traumatic occasion, and the attack upon the Government was launched by the Leader of the party of Disraeli and of Churchill gabbling away in a monotone a speech written by the fifth most junior partner of Messrs. Saatchi, Saatchi, Saatchi, Saatchi and Saatchi. Ye gods, what an anticlimax it was!

As I said earlier, it is manifest that the Government have changed their policy. That was manifest from a speech which I understand was made by the Prime Minister a week ago at a meeting of the Parliamentary Labour Party. I was not there, so I did not hear it. I was here with others trying to ensure that never again would this House be put into a position in which it voted more than £20 billion without being allowed to look at how the money was being spent. So I did not hear my right hon. Friend's speech. Those who did say that it was obvious then that the policy was abandoned. But why has it gone on so long? It has gone on to save face, not so much the face of the Prime Minister as the face of the Chancellor of the Exchequer.

Now that the policy has been discarded, I hope that it will be properly discarded and will be put into the dustbin of the history of industrial relations. I was a bit worried when the Prime Minister said that we must try again. I hope that the Government do not put it in the freezer and try to bring it out again and dust it down.

I voted with the Government last night with the utmost reluctance and with deep unhappiness. I voted for a policy in which I did not believe and only because I did not wish to be a party to an attack from the Opposition Benches which was manifestly hypocritical. I supported the Government with great unhappiness, but I must tell my right hon. and hon. Friends that I shall not do it again.

Mr. Cecil Parkinson (Hertfordshire, South)

Until the next time.

Mr. Mikardo

Mr. Deputy Speaker, hon. Members are not supposed to make observations from the other side of the Bar of the House.

Mr. Deputy Speaker (Sir Myer Galpern)

The hon. Member for Bethnal Green and Bow (Mr. Mikardo) is absolutely correct. However, I thought that he was concluding his remarks.

Mr. Mikardo

The offence is greater when the observation which is made cannot conceivably have any basis in fact. The hon. Member, if he is an hon. Member—I cannot even recognise him when he is on the other side of the Bar of the House—has not the gift of prophecy and cannot possibly know.

I say to my right hon. Friend the Leader of the House, who has known me a long time, that I shall not do it again. I shall leave this House rather than do it again. My right hon. Friend and his colleagues must not go on counting on their ability to overtax the loyalty of some of us and expect us to come up smiling again and again.

Now that the policy has been discarded, let it be buried.

Several Hon. Members rose—

Mr. Deputy Speaker

Order. The Chair is very anxious to accommodate the 14 right hon. and hon. Members who are indicating their wish to take part in the debate. That can be achieved if each of them will try to limit his contribution to 10 minutes. I might point out that the right hon. Member for Brighton, Pavilion (Mr. Amery) took only four minutes and that the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) took only 10 minutes. I am sure that all hon. Members can make their contributions and take only 10 minutes each.

6.35 p.m.

Mr. Giles Shaw (Pudsey)

In order to shorten the amount of time for which I shall delay the House, I shall not take up any of the remarks of the hon. Member for Bethnal Green and Bow (Mr. Mikardo), and I shall abide by your request to the letter, Mr. Deputy Speaker.

The one aspect about which we must agree with the hon. Member for Bethnal Green and Bow is his general observation that the Government's policy in this area of economic management is capricious and is designed chiefly to be capricious and to be cosmetic. We have to conclude that the case against the Government is simply that they have run out of ideas and are rapidly running out of time. If a Government endeavour to contain inflation and to operate an economic policy with an economy that is gravely wounded, they cannot afford at the same time to be a Government who have run out of ideas about how to do it and who are rapidly running out of time in which to achieve any degree of success.

The problems are not new, of course. They have been with us for very many years, and we know that many different techniques have been tried—wages policies, borrowing, price controls, Government grants, nationalisation, the operations of the National Enterprise Board, social contracts and free bargaining. Every possible permutation has been tried in order to put the economy right and to generate more jobs and more prosperity. But it is this Government's woeful lack of determination which is the real problem, because they have not the political backing with which to do it. They have no mandate with which to operate effectively. As they cannot command an overall majority in this House, they have been limping along on the basis of one alliance after another and, what is worse, from time to time they have sought alliances outside this House to continue with their version of economic policy.

It was significant that the Prime Minister withdrew the sanctions policy without offering any alternative and without saying that the Chancellor of the Exchequer would announce tomorrow what the Government intended to do. The Prime Minister merely said that the Government would meet the TUC, the CBI and anyone else who might help them to provide a policy which they themselves could not produce. If that is the state of affairs, how can we possibly have confidence in the Government?

The big problem now, with the trade union movement and large portions of the Labour Party so doubtful about the Government's handling of inflation and with the positive rejection last night of what was to be one of the main planks in their battle against inflation, is: where do the Government stand?

The case for consulting the electorate is overwhelming, and that must be one of the two possible ways out of the Government's dilemma. Either they must consult the electorate, and quickly, to provide a Government who have a majority and can continue to operate strong economic policies, or they must continue to limp on in search of one crutch, one piece of dressing or one blood transfusion after another until eventiually their time runs out.

The country's morale cannot stand this charade much longer. Opinion polls and subtle bits of market research to determine loaded questions with half-truths mixed with half-bricks are all very well, but the morale of the average person in the street today is at a very low ebb, despite what might happen in retail trading or, indeed, at Christmas.

The people know that in terms of negotiating the Government are drifting and impotent in the major councils of the world, whether it be on the EMS, the reform of the common agricultural policy or in search of a solution in Rhodesia. They know that we have a lame duck Government speaking for Britain. That is why morale in this country is low.

We all agree that the central issue is economic. My right hon. Friend the Member for Worcester (Mr. Walker) advanced a most significant argument when he related this to our failure to produce. It is our failure to produce and our low output per man which make up the most significant factor in our overall economic performance. It is a factor under this Government which must be looked at as the most important of their shortcomings.

The Labour Government believe that intervention is the way to redeem the failure to produce. Scores of national bodies have the right to investigate British industry, to tell them what to do and to advise them. British industry can now do nothing about taking management decisions without being told that they must not exceed a particular wage norm or a certain employment practice.

Last year, Ford Motor Company was the apple of the Government's eye with the Bridgend contract. Now that company is the rotten apple in the Government's barrel because it has decided to try to manage the company's business in the long-term interests of the work force and the marketing of its products.

It was said that what was good for General Motors was good for the United States. I believe that what is good for Ford, ultimately, will be good for Britain.

Tragically, Government intervention is not confined to the top. It extends throughout British management. Yesterday the Secretary of State for Prices and Consumer Protection went to great pains to defend the Price Commission. He mentioned many matters with which the Commission had been involved. He explained the way in which it had held the price of dry batteries and tea.

Today I received a communication from a company that runs a distribution business in the North-East of England. It received information from the Food Trade Employers' Wages Council. On an open postcard that company was told that it must pay employees who were over the age of 21 an additional £7.40 a week —a 22 per cent. increase in earnings.

That is reasonable, since those workers are on a low base rate of £33.90. It should be corrected. But one can imagine the consequences. Undoubtedly one will be price increases of between 5 per cent. and 7 per cent.

Is that admissible? Will the Price Commission allow it? In many instances, the Price Commission has refused to operate in that way. The Commission is a huge distortion. The Government have allowed it to develop, not as a major part of their anti-inflationary Package, despite the protestations of the Secretary of State yesterday. He was the first to admit that its contribution to keeping the retail price index low was about 0.5 per cent. in a year. That is not what is important. What is important is the breadth and scale of intervention.

If we really want to get cracking with the management of our economy, we must reduce non-productive time. We must make more time available for that which really matters. We must make decisions. We do not want more consultations or more factors to be considered. We must have more time and more opportunity to create more sales, more profit and more jobs. The Government give no encouragement. We must seek a Government that will encourage the reduction of non-productive time.

Mr. Deputy Speaker

I am obliged to the hon. Member for Pudsey (Mr. Shaw). He was well within the limits. If all hon. Members follow his example, we shall be able to add to the list of those who are anxious to take part in the debate.

6.43 p.m.

Mr. Eric S. Heifer (Liverpool, Walton)

I shall begin my remarks by analysing one or two of the points made by the Leader of the Opposition. One could describe her speech today as her "gobbled" philosoply. I have never before heard in the House a sharper or quicker speech with such old-fashioned ideas. The Prime Minister wanted to know the Opposition's answers to our economic problems. He was right. We all want to know. I have been critical of the Prime Minister's views on incomes policy.

This is the $64,000 question. I listened with interest to hear what the hon. Lady would say. She said that if we curb private enterprise we cannot achieve advancement. That amounted to her philosophy—her policy. She said that if we allow private enterprise to rip and give it unbridled support in every way, the economic problems of the country will be solved. It does not work like that.

We have already had unbridled capitalism. Private enterprise was let rip during the 1930s, when there were enormous high levels of unemployment, with real poverty amongst working people. A former Prime Minister, Mr. Macmillan, wrote a book, "The Middle Way ". Even he accepted the Keynesian view that Government intervention in economic affairs is necessary to bring down unemployment, to control the economy and to ensure that there is an element of order and planning for the resources of the country.

The right hon. Lady rejects that entirely. Many of my hon. Friends and I have made it absolutely clear that we are opposed to the incomes policy of the Government, but we did not abstain from voting on the motion or the amendment tabled by the Conservative Party last night. The alternative to the Labour Government's policies, if we do not win the next General Election, are the so-called policies—or lack of policies—of the right hon. Lady. That is not acceptable. Last night's motion was hypocritical. The hon. Member for Chingford (Mr. Tebbit) is smiling. He was in this House when, from the Opposition Benches, we had to fight the Industrial Relations Act, which was brought in by a Conservative Government.

That Government were prepared to introduce measures that would curb and control the trade union movement. The Conservatives will be happy to bring in legislation to control the trade union movement. It is all very well for them to say that they do not want curbs or sanctions. They proved by their actions in a Government of which the right hon. Lady was a prominent member that they would introduce such sanctions.

My hon. Friends were not prepared to support a hypocritical motion designed to ensnare us. We have been totally opposed to the 5 per cent. policy and the incomes policy put forward by the Government.

Mr. Tebbit

Will the hon. Member give way?

Mr. Heffer

No, I shall not give way. When I do give way I find that my speech becomes much longer.

Mr. Deputy Speaker

I agree with the hon. Gentleman.

Mr. Heffer

Recently I was interrupted about 10 times. I had to reply to each point. That added to the length of my speech, as has happened now, in my saying that I shall not give way. I apologise to the House for that.

Mr. Deputy Speaker

The hon. Gentleman's reply has been as long as the intervention would have been.

Mr. Heffer

I doubt that, Mr. Deputy Speaker. In any case, the hon. Member for Chingford (Mr. Tebbit) does not usually make very good interventions.

The Government's policy was clearly outlined in the manifesto of October 1974. Our criticism of that policy is that along the way it has become distorted. The manifesto said The Social Contract is no mere paper agreement approved by politicians and trade unions. It is not concerned solely or even primarily with wages. It covers the whole range of national policies. And yet the social contract became identified with incomes policy. We did not have a statutory incomes policy, but we had legislation which, while not embodying the old type of statutory policy, contained a form of incomes policy. We have opposed that consistently.

I echo the words of my hon. Friend the Member for Poplar and Bethnal Green (Mr. Mikardo), who made a brilliant speech.

Mr. Ronald Bell (Beaconsfield)

Tower Hamlets.

Mr. Heffer

I must be out of date. I mean my hon. Friend the Member for Tower Hamlets.

Mr. Robert Mellish (Bermondsey)

It is Bethnal Green.

Mr. Heffer

I took the advice of my right hon. Friend the Member for Bermondsey (Mr. Mellish), the former Government Chief Whip, so it is his fault.

Mr. Mellish

It is Bethnal Green and Bow, so the hon. and learned Member for Beaconsfield (Mr. Bell) is wrong.

Mr. Heffer

Whatever the constituency, I am referring to my hon. Friend who was speaking from behind me a few moments ago. He made a brilliant speech, and I echo his point.

Miss Joan Lestor (Eton and Slough)

It is Tower Hamlets.

Mr. Heffer

Does it matter? It does not matter whether it is Tower Hamlets or Bethnal Green. His name is Ian Mikardo—

Mr. Deputy Speaker

Order. It is out of order to refer to an hon. Member by name. The hon. Member for Liverpool, Walton (Mr. Heller) must refer to an hon. Member's constituency.

Mr. Heffer

It is somewhere in the East End of London. I have been there on a couple of occasions.

I take issue with those Conservatives who sneered at my hon. Friend when he said that he would not vote for the Government again in such circumstances. I know from the lengthy debate and discussion that I had with him yesterday that, faced with that situation, nothing would induce my hon. Friend to go into the Government Lobby. He, like many of us, feels passionately about this issue.

I hope that we have seen the end of this policy. I am worried, because the emphasis has been on the private sector. That seemed to leave open the whole sphere of the public sector. I hope that we shall not witness conflict in the public sector. Is there to be conflict in the Health Service, in the electricity supply industry, and in the coal mines? One has only to list the industries concerned—they include the railways—to envisage the damage that could be done to the economy if my right hon. Friends persist in the belief that they can stick rigidly by the 5 per cent. policy for the public sector.

Apart from mining and perhaps the electricity supply industry, most public sector employees are among the lowest paid workers in the country. I am not forgetting the farm workers, who are also low paid. I hope the Government will not stick to a rigid 5 per cent., but there seemed to be a hint that the Prime Minister intends to continue the battle in that way and apply sanctions on the public sector. I trust that that approach will be totally rejected.

The Labour Party and trade union conferences stated clearly that they wanted the 5 per cent. limit removed for both sectors. The manifesto dealt with this clearly. It said The unions in response —that is in response to the various social policies of the Government— confirm how they will seek to exercise the newly restored right of free collective bargaining. We have to face that fact. There must be free collective bargaining without Government interference in the public sector. I realise that that means that we may have to pay more for our public sector goods and services, but if the workers in those industries are to get a decent wage why should we not pay more in the form of higher taxes from those who can afford them? I am not against those who can afford it paying for the various services through higher tax.

The right hon. Member for Worcester (Mr. Walker) made what was, in contrast to the speech of the Leader of the Opposition, a brilliant and vigorous contribution. He said, however, that under this Government the Health Service, like other services, had suffered badly. I do not accept that, although I accept that there have been cuts. But who demanded those public expenditure cuts more than the Conservatives? Day in and day out, for week after week there were Tory demands for public expenditure cuts. When the cuts were made, and many Labour Members were not prepared to accept them, the Conservatives merely accused the Government of playing at making cuts that were insufficient.

Why do they not come clean and make clear where they stand on these policy matters? The Evening Standard or the Evening News earlier this year carried a story about a document that had supposedly been stolen from Conservative Central Office at Smith Square. It outlined some of the Tory policies on public expenditure cuts, which in some cases were as high as 20 per cent. The chairman of the Tory Party denied that the document was his party's, but he said that there was a lot of good common sense in it. What was he talking about? He was referring to future public expenditure cuts under a future Tory Government. Therefore, I shall without hesitation support the Government in the Lobby tonight.

The Conservatives are as divided on incomes policy as we are. Some of them —notably the right hon. Member for Worcester and the right hon. Member for Sidcup (Mr. Heath) want an incomes policy, as some hon. Members on the Government Benches want an incomes policy. To talk about going to the country on this issue, as though there were a fundamental difference between the two parties, is absolute rubbish. There are people in both parties who argue much the same on incomes policy. My party is opposed to it. That is what is important. When I talk about the party, I mean the party conference and not the individuals in it.

I hope that the Government come through tonight. Their record, if one looks at what has been achieved on the basis of their manifesto, and given their minority position—despite the criticisms that I and many of my colleagues have had—gives them the right to continue until some time in the summer and have a General Election on a better basis.

7.1 p.m.

Mr. Graham Page (Crosby)

The first part of the speech of the hon. Member for Liverpool, Walton (Mr. Heifer) was devastatingly destructive of a main item of his Government's policy, in the same way as was the speech of his hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo). This is complete justification for voting against the motion tonight. Those two hon. Members have shown in their speeches the division that exists on the Government side of the House over major matters of policy. The Government are not supported by their own party.

The hon. Member for Walton was careful to say that he was talking for his party and not for his Cabinet as he waved towards the Front Bench. We are put in an extraordinary position tonight when being asked to vote our confidence in Her Majesty's Government—which must surely mean our confidence in Her Majesty's Government's policy. The debate arises from the Government's having been defeated on a major item of their policy. They may have been defeated on the specific issue of sanctions, but one cannot divorce sanctions from the whole pay policy. Having been defeated, the Government ask the House for confidence in their policy, but the very first line of the Prime Minister's speech shows that he is abandoning the policy on which he was defeated yesterday. It may be quite right, quite constitutional and conventional that he should follow the feeling of the House. But what are we asked to vote on now? In what policy are we asked to have confidence? The Prime Minister said that the policy had been abandoned. He was very mysterious about what was to take its place. Yet we are asked tonight to show confidence in a policy about which we know nothing.

The motion asks us to express our confidence in Her Majesty's Government, while the facts seem to indicate that Her Majesty's Government have lost confidence in themselves. That lack of self-confidence set in as a result of the events leading up to the Lib-Lab pact. No Government with confidence in themselves could possibly have entered into that sort of arrangement with a minority party. However, the arrangement. to give it its due, did restore some confidence of the Government in themselves while the pact lasted, but it did not sufficiently restore that confidence, when the pact had faded away, to enable the Prime Minister to say" I will now go to the country ". He had not got enough confidence in himself, his party, his policy, or his supporters, either inside or outside the House, to face the country in a General Election.

Instead of an election this autumn, we returned to the House of Commons. The lack of confidence of Her Majesty's Government in themselves during the few weeks of this Session has been pathetic. The Prime Minister might just as well have extended the Summer Recess to next Easter for all that this House has been called upon to do.

In the business that the Government have brought before the House there has been a lack of what I would call hard politics, the absence of fierce controversy. Only yesterday and today has the situation changed—and the Government would not have brought this issue before the House if we had not had the device of Supply Days—the continuous unbroken thin line which represents the one-line Whip. All this has reduced the House, in my view, to the status of a parish meeting. It is that degradation of the House by the Government in order to keep out of trouble that justifies us in saying tonight that the House has no confidence in the Government. That is one reason why the Government should go.

However, a vote of no confidence in the Government has some illogical results. If the House, by its vote tonight, says that it has no confidence in the Government, not only will the Government be dissolved; so will Parliament. There is the occasion when a new Government can emerge without a dissolution of Parliament, but that is hardly likely in the circumstances. Therefore, the House, by voting the Government out of office, votes itself out of office. By saying that we have confidence in ourselves—the House —and thereby defeating the Government, the House brings about its own demise.

A vote of no confidence in the Government, in answer to the motion that we are debating, is the equivalent of a vote of no confidence in the House as it is at present constituted. Although that is illogical, it may be the most appropriate result. The lack of confidence in the Government stems from, and is bound up with, the composition of the House as it is today. There are the minority parties, and there is the party within a party on the Government side of the House. I suppose that we shall have to live with the minority parties for a long time. We shall have to put up with what may be corridor bargaining in order to reach decisions in the House. But when the Government party itself is so divided, as we have seen today, it is time for both Government and Parliament to go.

Let us examine the other part of the motion, in which we are asked to express confidence. It mentions the determination of the Government to strengthen the national economy. How? By the policies of the Front Bench or by the policies of the hon. Member for Bethnal Green and Bow and the hon. Member for Walton? The motion mentions the determination to control inflation. How? By which policy—the policy of the Government Benches below the Gangway, the policy of the Front Bench, or, perhaps, the policy of the Benches behind the Front Bench? The motion speaks of determination to reduce unemployment. Again, how? I do not want to he tediously repetitive, but in which policy are we to have confidence?

In whose policies would the House be expressing confidence if it accepted this motion tonight? We have reached a situation in which the Government cannot continue to govern. They can certainly try to govern, as they did on the sanctions issue. They can try to govern by administrative action alone. They can try to govern merely by acting as the Executive without coming to the House for approval of their policies or their actions. This is what they have tried to do over pay policy and the enforcement of their pay policy, without legislative consent of Parliament, without legislative consent even of subordinate legislation brought before Parliament.

That is another good reason why the Government, this Parliament and the Prime Minister should go— the resort by the Government to administrative action to the exclusion of parliamentary decision. Thank heavens we have in our parliamentary system the device of Supply Days. Otherwise, I do not know what would have happened to this Session of Parliament. This debate would never have been held. When Parliament has a controversial debate of this sort, it is at its best. We should have debated other matters of controversy between Opposition and Government.

It is evident that if the Government remain they will have to resort more and more to executive action, to the exclusion of Parliament. This is the point at which the Government of a democracy such as ours should go.

7.11 p.m.

Mr. Robert Mellish (Bermondsey)

The right hon. Member for Crosby (Mr. Page) will, I think, be surprised to hear that I hope that there is an early General Election. I should not be unhappy if we lost this vote and Parliament were dissolved. It would certainly show that neither the Prime Minister nor the Government were running away but that the sovereign House of Commons had decreed that there should be an appeal to the country.

I do not intend to defend what appears to be the impossible. This Government are working under impossible conditions. Last night, by sovereign decision of Parliament, there was a tremendous encroachment on one of the Government's major policies—sanctions to enforce a 5 per cent. limit. That was eroded by Parliament, as it has the right to do, so I welcome a General Election.

I still have a great deal of faith in the intelligence and the wit of ordinary people. They will decide whether this Labour Government have done an honourable job in the past four years. They will have the balance sheet put to them through the media. I do not attack the media, because whatever else they have done—television in particular—they have made our people better informed.

I do not take much notice, however, of opinion polls. The 1970 Gallup Poll was enough for me. When a party was shown as 14 points ahead on the eve of polling day and then lost the election, that undermined my confidence for ever. I urge all hon. Members utterly to disregard opinion polls for the rubbish they are. The vast majority of people do not see Gallup Poll people anyway.

I believe, therefore, that there should be an election and that my party will be able to put forward a fair and honourable balance sheet.

I was appointed a member of the Cabinet in 1974, when I was also made Chief Whip. The fact that I did not want to be Chief Whip may have helped to put me in the Cabinet—as a sop. History will show whether that is true. I do not disclose Cabinet secrets when I say that I was on a sub-committee in 1974 which dealt with a whole mass of wage claims from the public sector which had come in when what is called the "Heath policy" on wages was finished. We had no policy in that area and we had to settle those claims.

We were settling claims at 30 per cent. 32 per cent. and 35 per cent. Doctors, teachers, nurses—everybody, but everybody—asked for it and got it. That was the ideal outcome of what I gather from some of my hon. Friends is the real free collective bargaining argument. Inflation was running at about 18 per cent. and we were advised—correctly, without a doubt —that on that rate of expenditure, particularly on that front, inflation would rise to 35 per cent. in one year.

From that moment, this Government showed guts and courage. They were unpopular; they took rotten decisions; they did not have an easy time inside their own party or in the House. They showed courage which I believe the vast majority of the British people respect.

The Government came to an agreement with the trade union movement, which also comes in for a good deal of criticism. It is sneered at and jeered at and gets a bad press. One evil, dirty strike at one noble hospital gets a full blast of publicity until anyone would think that every trade unionist in the hospital world was on strike. That is so unfair. The vast majority of trade unionists are decent, intelligent and honourable citizens, as they demonstrated by the concordat that the movement had with this Government, when for three years there was a wage freeze or a wage agreement—call it what you will—without legislation.

The £6 policy did more for the lower paid worker than anything that I have known in the history of so-called collective bargaining. It will be for the people to decide, not hon. Members. We have our views, our political prejudices and our loyalty to our own Front Benches. But the people who will vote have to answer one simple question "Am I better off today than I was in 1974?" Let them answer that, bearing in mind what we have had to go through in the last four years.

That is what elections are about. With respect to my hon. Friend the Member for Liverpool, Walton (Mr. Heffer), people do not read manifestos as deeply as he does. I have news for him: neither do I. I believe that this Government have governed fairly and honourably.

I was born into the trade union movement. My father was an 1899 dock worker. That may mean nothing to many hon. Members, but it was in that atmosphere that I was brought up. No one—on the Left or the Right of this party—can talk to me about trade unionism. I joined it when I was 15—and not to become a union official, either. Funnily enough, I joined the Labour Party at the same age—and I did not join it to become an MP, like some I could name.

I have been in the trade union movement all my life and I understand what it is about. In the Past three or four years, trade unionists have shown a patriotism the like of which I never thought even they were capable of. It is all right to sneer and jeer, but the public and many firms understand this. I have never been opposed to private profit. After all, this is a mixed economy and private profit is essential. What people do with profit is the all-important matter. The private sector could not be expected to show the patriotism of the trade union movement.

I deeply regret that that concordat with the trade union movement was not renewed. I read the news of that vote with regret, because I knew that from that would stem so much trouble and so many heartaches and that they would overflow in my own party.

No Government can legislate to control wages: it is not possible. I should have thought that we had learned that lesson, anyway. It can be done only by agreement and understanding. It is not possible to devise legislation which will stick. We have enough legislation today as it is. If everybody abided by the legislation we have, we should be living in Utopia. We do not want legislation—my God, we have enough of it. If it all worked, nobody would beat his wife, nobody would steal or rob, and everybody would be well behaved. There are laws for all of that.

The important thing is not the law but a change of heart. How do we achieve a change of heart by ordinary people? I thought that I had seen some understanding of this in the past two or three years. I mean no disrespect to anyone when I say that I do not mix with people in the West End and places such as that. Londoners do not go to the West End: they leave that to the Scots and the tourists. I stay in my suburb among my own people. I know what they say. Although they concede the point so often made by some of my hon. Friends, among them my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo), that while of course it is true that wages and wage increases are not the be all and end all of inflation—and of course that is not so—certainly it is part of the problem ; and no one, including my hon. Friend, can deny that from 1974 onwards the control that was exercised by the trade union movement in relation to wage explosions at that time contributed to the fact that our inflation rate is now down to about 8 per cent. Most people in Britain understand that, because, if I understand the present situation, it is the view of some of my hon. Friends—I am not sure what the Conservative view is; I must be forgiven for saying that I have not a clue as to what they are talking about, but that is not unusual with the Conservative Party; I do not know what its policy is—that somehow if we let wages rip all will be well because that is not inflationary. I am not prepared to agree with that.

Mr. Mikardo

I did not say that.

Mr. Mellish

With great respect to my hon. Friend, then I do not understand what people are saying, because those who are against that policy of Government control must surely be in favour of what is called free collective bargaining and the strongest get the most.

Mr. Mikardo

With the greatest respect to my right hon. Friend—and he knows that I do not use the term "friend" conventionally—he cannot possibly have read anything I have ever said or written. We have not said that we are against control of wages. We have said that, if there are to be controls—and if we are to control the whole of the economy—wages, too, can be controlled. What cannot be done is have a planned wages sector and an otherwise unplanned economy.

Mr. Mellish

My hon. Friend is going to get very excited because I now move a long way towards his argument, in the sense that I accept that if we are to talk in terms of wages being planned there should be much stricter control over prices. People who think for themselves outside, in the back streets, do not understand how it is that rail fares can go up astronomically by perhaps 10 per cent., 12 per cent. or 14 per cent., and bus fares and other things go up astronomically and yet we talk in terms of wage rises of only 5 per cent. That is a very fair point. Unless the Government show that they are determined to deal with the prices front also, they cannot be expected to have too much success on the wages front.

I understand that the Tory Party does not believe in controls of any prices at all and would let the whole thing rip. That must surely be part of its statement when it goes to the nation—if we lose this vote tonight. The Tories must say" We believe that prices and wages should be uncontrolled" except, I suppose, they will say that that will not apply in certain areas of the public sector "Where we think we might be able to kick them around and stop them from getting more." The Tory Party says" We believe in cuts in public expenditure but not in cuts in defence." That is an extraordinary argument. I say to this House tonight that one thing is certain. I believe that the average Briton recognises today that, whatever happens in the future of our nation, Governments have to intervene. The idea that we could go back to the past when there was no Government interference, when Governments stood aside and let the trade unions and private enterprise and the whole machinery of what is called the free enterprise system work itself out, has gone for ever.

Governments must more and more intervene. For proof of that, hon. Members should go abroad and see how Governments intervene even to get export orders abroad by sending Government teams with private enterprise representatives, Government funds and the rest to get the orders. That is true and every Conservative here knows it to be true, and we cannot get out of that race, so the Government have to intervene. I believe we have a balance sheet of which this Government have every right to be proud. They should not be at all unhappy tonight if we lose, and I have sufficient confidence in the British people, despite the fact that the Election would be fought on a lousy, out-of-date register. I have every confidence that the British people would support this Government who have shown that they have not only the guts but also the policies.

7.26 p.m.

Mr. Peter Emery (Honiton)

I shall be as short as possible and try to limit my remarks to five minutes. May I make quite clear that I am always delighted to follow the right hon. Member for Bermondsey (Mr. Mellish). Nobody speaks with greater honesty or greater directness and I believe that he has voiced much of what I shall not be criticising in my speech when he says that it is right and proper that this Government should be ready to go to the people; because it is my judgment, following on from what he has said, that the real problem we are faced with in the House tonight is that of a Government hanging on to power purely for the sake of power itself. This Government are staying in office although they are entirely discredited. There is nothing they can do constructively from now on during this period of office. This Government have been defeated on a major plank of their economic policy. These are not my words but the words of members of the Cabinet, spoken over and over again—that sanctions have to be maintained as a major plank of economic policy.

If that is swept away, there is little this Government can turn to as an alternative, because they have refused to do so in the past and have resisted all the blandishments of the Left wing of their own party who have wanted to see this alteration in policy. They can carry forward no other major piece of legislation. There is not one major item in the suggested Labour Party manifesto of its conference of 1976 that this Government could dare bring to the Floor of the House as a Bill with any possible thought that it could be got through this Parliament at present. We are a hung Parliament. We might well be described, in American terms after the presidential election, as a "lame duck" Government, except that this is not a lame duck Government but a dead duck Government, as the Leader of the House is a dead duck.

The Lord President of the Council and Leader of the House of Commons (Mr. Michael Foot) rose—

Mr. Emery

I will give way, but 1 have been asked to speak for only five minutes. I will try to do so because those on the right hon. Gentleman's side have spoken for over 90 minutes while those on this side, the same number of speakers, have spoken for only about 40 minutes.

When we have a dead duck Government we are faced with a major constitutional problem, and it is that one point which I want to try to hammer home tonight. I believe that the difficulty facing the House is that this present minority Labour Government have changed and are changing the constitutional rules about staying in office. I have had two sources trying to check on this point since last night. I do not believe there is any Prime Minister—I do not believe the Minister who winds up this debate tonight can quote me any example of any Prime Minister of any Government who has done so—who has actually opted to stay in power when that Government have had the whole of their economic policy knocked from underneath them. This Government are just hanging on for the sake, as I have suggested, of staying in power. This is the damage. It is here.

Any other Government having suffered a defeat such as this Government suffered last night—I admit that it was not classed as a vote of confidence, although there have been many other times when Governments have been defeated—would have resigned. As the Chief Whip will know, this aspect of confidence is something quite new, and used never to come in. The confidence lay in whether the Government could get their policy accepted by the House and it was shown here last night that this could not be the case. So what have we? It seems to me that at any time when the Government are defeated on any issue, until next October, they have only to come back here and put down a confidence motion to try to unite their own Harty—and let us be frank, the chances of their not doing so are pretty slight. So this Government march on doing absolutely nothing.

Mr. Mellish

The hon. Gentleman should be fair. If they did not do that and then resigned, what would be said by him and his hon. Friends when they resigned—that they were running away?

Mr. Emery

That is not what I am suggesting. I suggest that if the Government win the vote tonight, they should go to the people immediately.

We have seldom seen a Government maintained by such a disparate force. There are many different views being forced into the Lobby tonight to sustain the present Government. It is being done, not to sustain a policy or a programme or even to sustain what was laid down in the election, but because the Government are seeking to sustain themselves in power for the sake of power itself. If the Government have reached that position, I believe that they are vastly undermining the democratic structure of this Parliament.

If the Prime Minister is convinced that he has the confidence of the people, as lie so glibly and loudly states, why does he not put it to the test? Let us prove that that statement is bravado. Let us prove what the British people want. I believe that they want a change of Government, but I am convinced that they want the opportunity to choose. Therefore, this House tonight should decide that there will be an election as soon as possible.

7.31 p.m.

Mr. William Hamilton (Fife, Central)

Shortly after the party conferences in October, Kenneth Fleet, editor ofThe Sunday Times Business News, wrote an article that is extremely relevant to this debate and has not been touched on up to now. Mr. Fleet quoted a letter that appeared inThe Timesin the name of Sir John Partridge. Let me quote the relevant part of that letter, with which I so much agree: Since the end of 1973 industrial earnings have risen by 106 per cent., prices by 101 per cent., gross domestic product by 4 per cent. Within gross domestic product industrial production has risen by 1½ per cent., and manufacturing production has fallen by 4 per cent. There are three elements in the equation: pay, prices and output. It is the last of these which points most directly to the magnitude of our problems. I very much agree with that comment. Sir John went on to say something else with which I agree: a nation or a business which pays itself vastly more for a relatively static volume of production is playing ducks and drakes with its future. I say "Amen" to that.

The performance of the Leader of the Opposition this afternoon was a flop; it cannot be otherwise described. It comprised a bunch of meaningless platitudes, which got us nowhere. It is easy to criticise the Government, as I have myself, but when we seek a possible alternative and a better policy we are left waiting in vain for any positive response from anywhere in the House or outside it.

The right hon. and learned Member for Surrey, East (Sir G. Howe) said yesterday that the Tory answer to the prices and incomes policy was contained in "The Right Approach to the Economy ", a Tory policy statement document. What does that document say? I think it says —I am not being unkind—that there is something to be said for an incomes policy, but that it does not seem to work for long. That is the dilemma in which Tory and Labour Governments have found themselves over the years.

The right hon. Lady the Leader of the Opposition frequently talks about these matters outside the House. Early this year she spoke to Scottish people and said: We all want to see Government withdrawal from interference in prices and profits. In other words, industrialists want complete freedom to put up prices as they see fit and to pay out and earn profits as they see fit. She went on to say: We also want non-governmental interference with wage bargaining. In other words, she wants to give complete freedom to industrialists on one side to obtain maximised profits and prices and on the other hand she wants to see the trade unions battling it out with the industrialists by seeking maximum wages for their union members.

It is curious how on these matters the views of the right hon. Lady and those of the Left wing of the Labour Party—or the self-styled Left wing of the Labour Party—seem to coincide. They both argue for a free-for-all. Mr. Moss Evans has been specific about it. The principle seems to be applied with no regard for social justice, with scant respect for the national interest, and with no interest in the welfare of the neediest or the weakest. It is a matter of believing that brute bargaining strength on either side will give the biggest prizes.

However, that will be the case only in the short term. Short-term gains undoubtedly can be made by sections of the community—whether they be business men or trade unionists—making threats of one kind or another by the use of powerful bargaining muscle. But the long-term consequences in the pursuit of short-term sectional interests will lead to national impoverishment, in which the greatest suffering will be endured by those whom the Labour Party was created to protect. Let me say to my so-called Left-wing colleagues that in my view such a policy does not have the remotest link with Socialist principles. On the contrary, it is the very antithesis of all that we presume to stand for.

I wish to quote from a New Statesman pamphlet issued in January 1950 in the name of the Keep Left group of the Labour Party. My hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo) said that at that time he was associated with the Prime Minister. He said that the Prime Minister had moved his ground since then. I consider that they have both moved their ground. I quote from that pamphlet, which was signed by my hon. Friend and also by my right hon. Friend the Member for Blackburn (Mrs. Castle). This is what it said about wage fixing: Economic planning in a democratic Socialist economy cannot operate successfully if wage bargaining is left either to the arbitrary decision of a wage stop or to the accidents of uncoordinated sectional bargaining. It went on: There must be the recognition by the trade union movement that wages in any industry are no longer the business only of the employers and the workers in that industry but of the whole nation. It later said: We need a strong lead from Downing Street. Nothing could be plainer than that.

We in the Socialist Party have always argued that we believe in a planned economy, but we must plan the whole economy and not part of it. When people talk of more rigid control of prices, they must remember that the price of labour is wages. So we must include the price of labour in price controls. That is what the Government have been doing. Nobody can complain about or criticise the present Government or the Prime Minister on the grounds of weak leadership. They might argue whether he is right or wrong but over the years in this House I have watched seven Prime Ministers trying to grapple with these self-same problems. None of them, in my experience, has been more honest and more forthright than the present Prime Minister in putting the facts fairly and brutally before the House and before our people.

We must all face the fact that the most difficult exercise in a democratic society is to persuade the generality of our people to forgo present short-term gains for the sake of long-term benefits. It was Nye Bevan who put that in its context when he said that to forgo satisfactions now would be to the benefit of our children and our children's children in 20 or 25 years, but that to advocate such a policy would be going the right way about losing an election. This is one of the dilemmas of our democratic society. Our people realise this and now know what difficulties we face in the context of an international crisis that cannot be brushed aside as if it were irrelevant.

I am not saying that I am indifferent to the result of the vote tonight. If it goes against the Government the problems will remain. The people know that, and they also know that the Tories have absolutely no valid or credible alternative to offer. Time and time again they have been asked by the Government to state their alternatives and they have steadily refused to do so, for their own very good reasons. [HON. MEMBERS: "What about an election? "] Hon. Members ask why we should not have an election. I shall tell them. If we look at the record of the Government over the past four years in the context of the deep international economic crisis, if we examine the yardsticks—particularly on inflation—and if we remember that people in Europe speak of the very impressive record of this Government in reducing the rate of inflation from the 20 per cent. to 25 per cent. of a few years ago to a quarter of that figure, we realise why we should not have an election.

The difficult problem of unemployment in Western European countries is also discussed and is seen to be coming down. Whatever yardstick, under social justice, by which we judge the achievement of the Government—whether we talk about the disabled, old people, or whatever—the spirit is there, even though we may not be doing enough.

All the indications are that the clock will be turned back in many of these directions if there were an alternative Government. So, although the Government might have sustained a temporary setback over sanctions, I hope that very soon they will spell out the fiscal and other measures that they will adopt in the light of the decision that the House took last night. Certainly, no national purpose will be served by having a General Election in the next few months. I hope, therefore, that the Government will be enabled by tonight's vote to soldier on with their policies, as amended in the light of the vote last night, of social justice and fair play to everybody.

I would also like the Government to think about the setting up of a new Ministry for productivity, because there lies the clue to what we need to do in so many directions. We can talk about redistributing the national cake. Our basic problem is to increase the size of the national cake. If we can do that we shall be on the high road to success as a nation.

7.43 p.m.

Mr. Robert Rhodes James (Cambridge)

I am in full agreement with remarks of the hon. Member for Fife, Central (Mr. Hamilton) at the end of his speech and I also find myself in agreement with the right hon. Member for Bermondsey (Mr. Mellish). The one feature that has struck me since I became a Member is the reluctance of hon. Members, particularly Ministers, members of this Government and of former Governments, to admit that mistakes have been made by successive Governments over the past 15 or 20 years.

These have mostly been honest mistakes, and our task surely is to learn from our own mistakes and those of others rather than constantly to go back over periods such as the 'thirties, or even the First World War, to cast blame and by debating the past begin to lose the future. If we start from that premise, when we examine this debate and this motion we ask whether we have confidence in any Govenment. In short, should we not be asking whether this country is governable. Do we have a future as a nation, and are the established institutions of government, Parliament and the trade unions relevant to the situation that we face? We should not be discussing percentages and sanctions and the conduct of Ministers. We should be debating how we—I emphasise the word "we"—to whatever political party we belong, are to emerge from the condition so aptly described by the late Lord Nuffield when he said that we were a nation in semiretirement.

These are the fundamentals which lie far deeper and far beyond the issue that we are talking about today. We recognise that the gulf between the political parties has grown steadily wider since the war. I am one of those who regret this, though I do not cast blame. However, this has led to a series of lurches by successive Governments, which have shaken public confidence in our institutions and in our future as a nation. If it is supposed to be unforgiveable to speak in support of moderation and national unity, I can be charged with that, because I believe in these things. I believe that there is such a thing as consensus politics, and I believe that these are public virtues. None of us, institutions or individuals, has the prerogative of being right.

I do not wish to enter into a detailed examination of the Government's proposals or the events of yesterday. My dominant concern is for the future of this nation and its safety in a bitterly hostile and dangerous world. I am concerned for its economic prosperity and its standards. For that reason I agree with many of the points made by the hon. Member for Fife, Central and the right hon. Member for Bermondsey when they spoke of social justice.

My quarrel with the Government lies not so much with their policies, although I do have some disagreements about them, as with the emphasis on division. I disagree with the increasing use of what I regard as cynical opportunism and a mounting disdain for the individual. These things seem to be quite alien to the old Labour Party—the party of protest. Perhaps in the process of becoming the party of government the Labour Party has lost many of its former virtues, which hitherto commanded the respect of even those most strongly opposed to it as a party. When I look at the condition of the Labour Party now I am reminded of the words of Johnathan Swift—I have included them specially for the right hon. Gentleman the Leader of the House—who wrote that Party is the madness of many for the gain of a few ". I say that the politics of envy and of division have no place in our future and I would hope that when this Government come to an end we shall return to the politics of incentives and of realism—to the politics of common sense. I hope that we shall return to a Government and to a Parliament genuinely dedicated to the resurrection of our nation by our faith in our fellow citizens and their right to chart their own destinies. [Interruption] Does the right hon. Member for Down, South (Mr. Powell) wish to intervene?

Mr. J. Enoch Powell (Down, South)

I did not intend my sotto voce remarks to be heard, but as they were I must tell the hon. Gentleman that in the Conservative Party one is not allowed to talk about a nation. That is an old-fashioned idea. We are to become a province in the European State.

Mr. Rhodes James

The right hon. Gentleman has not been in the Conservative Party for some time. I can assure him that we are still dedicated not only to one nation but to the concept of the preservation of that nation. The basis of my opposition tonight has not so much to do with individual policy as with the lack of morality that has characterised this Government's period of office.

7.50 p.m.

Mr. Alexander W. Lyon (York)

The right hon. Member for Crosby (Mr. Page) suggested that a vote to bring down the Government must inevitably mean a vote to end this Parliament. That is true only in theory. Clearly, it would be possible for the Queen to send for the leader of one of the minority parties to form a Government. But that is not true in practice. If the Government had gone last night, how would any other party in this House have been able to deal with the central issue facing us?

The truth is that we could have lost a vote of confidence at any time in the past two years since we lost an overall majority as a result of the inevitable toll of by-elections. We have been able to proceed with two years of industrious work because all the minority parties, other than the Conservative Party, have been so suspicious of a future under the Conservatives that they have not wished to unite to bring down the Government. I hope that that message will be heard loud and clear by the electorate. If there were to be an adverse vote tonight, saying that the House has no confidence in this Government, it would, equally, be clear that the minority parties have no real confidence in the Opposition either, and for good reason.

The central theme of our debate, today and yesterday, is what the Government of the day ought to do to deal with the problem of income inflation. Over the years some consensus has developed on the Opposition Benches, shared to some extent on the Labour Benches, to the effect that it is impossible to deal with this problem by any method of incomes policy. One would be impressed by such a growing consensus if it were the first time that it had happened. This is not the first time round. I remember, as did my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant), the situation which obtained in the first major attempt at incomes policy in the late 1960s. I also remember what happened in 1969 when we abandoned such a policy. I remember coming to the House on that occasion, admitting that throughout the whole of the policy I had supported it, and saying that I regretted its passing but that I thought it was inevtable that it would pass. I said that I did not think that we should see its like again.

It may be right that we never actually saw a statutory incomes policy again. But we very soon saw an incomes policy, even though the Government of the day were elected in 1970 on a programme which included a pledge that they would not operate an incomes policy. Within a short time they had such a policy. They were fighting for it tooth and nail until they had to bite the dust in 1974 because of the opposition of the unions to that in comes policy. The Labour Government then came into power amid a consensus that there could not be an incomes policy, that, in the words of my hon. Friend the Member for Stoke-on-Trent, Central, it did not matter about an incomes policy because, after all, things were decided by the market and, in the end, the rise in incomes would be the same, with or without an incomes policy.

Nevertheless, within 12 months the experience of the market was enough to show that we needed an incomes policy. Now there is this increasing consensus on both sides of the House that we can abandon an incomes policy and return to the state of the market. I dare say, even before we have the election, whatever the circumstances of that election and on whatever platform it is fought by the Conservative Party, if it was then to come into power accepting that there would be no incomes policy and saying that we would organise the market by monetary policy, within a few months— perhaps as long as 12 months—we would be back here again with another type of incomes policy. If that is what we must look to, we must ask ourselves why it is that successive Governments have been driven to that irresistible conclusion. It must surely be that, whatever the difficulties of operating an incomes policy, such a policy, of some kind, is inevitable. It is inevitable, at any rate for the public sector because within that sector the Government are either the employer or the final arbiter of how much money the employer has to be able to pay for an increase in incomes.

Within the public sector at least the Government must have a view. When people use that neutral phrase, what they mean is that the Government must have an incomes policy, some view on how much in any given year, in any given economic circumstance, they can allow for the increase in the public sector. I can imagine that the Conservatives might well operate a policy for the public sector—as they did in 1970–73—which was extremely discriminatory against those in that sector and extremely discriminatory against the pricing policy of the nationalised industries. I can also imagine that a Conservative Government might attempt to operate a wholly different type of policy for the private sector. I cannot understand how anyone on the Labour Benches can believe that it is possible fairly to operate that kind of policy.

In 1973 the Conservatives showed that it was not possible for any length of time to operate such a discriminatory policy because the tensions within the public sector were such that they ultimately broke down the barriers. It was shown that either there has to be fairness for all, with the private sector taking its measure of restraint, or else the public sector says that it will not stand for such a policy. There is now sufficient muscle within the unions in the crucial areas of the public sector for that message to make itself felt.

In those circumstances it seems that the arguments yesterday and today—while they may be all very well within the context of a dying Parliament—are totally irrelevant to the future and to the question which the electorate will have to answer in due course. The electorate will have to say what is to happen with incomes in the immediate future. The major reason why this motion ought to succeed is that, if the Government were to lose the motion, we should be launched into the chaos of an unorganised General Election. That election could not take place for at least two months. There would be a period between now and then during which a number of major claims would have to be settled by some type of co-ordinated policy. The most important is the NUPE claim.

The NUPE claim has to be settled by some Government, even an interim Government. It has to be done now, as a result of the arguments about sanctions, by consent. Who is best able to tide us over such a difficult period? In my view, it must be the Prime Minister and the Government, because they are most able to form a new concordat with the unions. I hope that the result of the events of last night will not mean that there will be a defeat tonight, but that instead there will be a further opening of negotiations, a deepening of the discussions which took place a couple of months ago, which will produce a new concordat to deal with this problem.

7.58 p.m.

Mr. Ronald Bell (Beaconsfield)

The motion on the Order Paper asks the House to express its confidence in Her Majesty's Government. It does not ask the House to express its confidence in Her Majesty's Opposition, which is what we seem to have had a good deal of discussion about today. I propose to address myself to the motion. The motion affirms the Government's determination to do various obviously worthy things, such as getting rid of inflation, unemployment, and so on. It does not express any method by which this will be achieved. What concerns the House and the country is not the Prime Minister's determination but what it is that he, his Government and his party want to do.

It has been a most interesting debate. It has shown explicitly the way in which the Labour Party has lost its way, has become disillusioned with Socialism and has found no other theme. That is an excellent reason for it now being turned out to grass and for an opportunity to be given to more purposeful guidance of the country's destiny.

When the legislation for the Monopolies and Mergers Commission was introduced in the 1945–50 Parliament it regulated employers but did not regulate or control in any way the activities of labour—trade unions. That was justified by the Minister who introduced that legislation. He said that labour was different in kind from the products of labour. He argued that it was all right to control employers but wrong in principle to control labour. Mr. R. A. Butler, who spoke for the Conservative Party on that occasion, agreed with that theme. He said that labour was totally different and that it would be wrong ever to seek to control it. That is the way in which we started after the war, and that is the root of our present troubles.

It is incredible, almost unbelievable, that for the first six years after the war, in a time of total shortage and rationing of everything, Bank Rate was held at 2 per cent. without a day's break. That was called oiling the economy with cheap money. The result was that we started the process of bidding up the price of labour without any corresponding increase in production. Hon. Members from both sides of the Chamber have given the figures. The hon. Member for Fife, Central (Mr. Hamilton) was the last to do so. The figures epitomise succinctly the result of the process as it has emerged in our immediate times—for instance, the past four years. It has been a period of rising money incomes and virtually stagnant production.

That is the problem that we face and we ask for the Government's solution. The Labour Party rejected from the start after the war the market control of labour. They said that in principle it was wrong and they tried other systems. I suppose that in effect they tried nothing. They began to have doubts, and the Leader of the House will remember the occasion when the Labour Government decided that the process could not continue any longer. They said that we must have a market in labour and that it must be a fair market. They produced a White Paper entitled "In Place of Strife ". What is more, they prepared a Bill based upon it. Further, they introduced that Bill.

The Bill was read a First time and printed. Thereafter the present Prime Minister and his right hon. and hon. Friends wrecked it. After an inglorious period of some weeks, it was withdrawn without a Second Reading. They abandoned again the attempt to have a market in labour. If we have no market in labour on the specious argument that it is totally different from all other human concepts, activities and products, we must have something else. The only other system is control. However, the Labour Party does not like that either.

We have heard speech after speech from Labour Members denouncing the concept of the specific control of labour. Over the past few years the Government have been sliding along on an unofficial compromise. There have been guidelines and unofficial sanctions. Today at about four o'clock the Prime Minister said that in obedience to the decision of the House last night the unofficial sanctions would be dropped.

If we are considering whether we should have a new Parliament, is it not relevant to ask ourselves what is left? There is no free market because we cannot have a free market in labour unless we diminish some of the immunities of the trade unions. We have heard that said repeatedly, even from the Labour Benches. The hon. Member for Fife, Central said that the trade unions have too much muscle to enable such a system to work. That is the system of free collective bargaining. The hon. Gentleman is right. Therefore, we must reduce the muscle and the immunities. That means repealing the Trade Union and Labour Relations Act 1974, and much else. That must be done to create a balance in the constitution.

The Labour Party will not touch that, but on the other hand it will not accept control by legislation of the processes of remuneration. That is absolutely right. That would not work. It is not necessary to look too far back. We have had statutes of labourers for 400 years. They have never worked. We do not want to start on a new history of statutes of labourers.

The Labour Party faces a stark dilemma, neither horn of which it is willing to touch. That being so, the only course is for the Government to go to the country and let someone take over who has some thoughts on these subjects. It is not the Oposition that is on trial today. It is not the Opposition's job to provide detailed proposals. However, we have a theme to offer to the country, whereas the Labour Party has lost its theme and has lost its way. It is not as though the public disagree with the Government or Socialism. The public have lost interest in Socialism. It used to be the 'ism that people talked about, but nobody talks about it now. I suppose that it has been tried. That is the trouble. It has been tried, so it is finished.

The Opposition believe in the free society. We believe that in a mature democracy such as ours it would be possible to have a market in labour that avoided the excesses and the admitted evils of a part of the nineteenth century. We believe that it would be possible to have a system that removed Governments from the fixing of remuneration. We shall never get any sense while Governments fix remuneration. The present policy is the perfect example of that. The policy is 5 per cent. for those who cannot avoid it. However, there are so many who can avoid it that the policy is meaningless.

The national newspapers are an example. We have never seen so many editors on each newspaper. There is the editor, the political editor, the sports editor, the City editor and the woman's page editor. One has only to reclassify a job to break through the Government's guidelines. That can be done without any effort. We all know that companies may have an infinite number of directors. When jobs are reclassified the 5 per cent. policy means nothing. It is only those such as Members of Parliament who cannot be reclassified who become caught by such policies.

The Government's policy is bankrupt and useless and it is now time for the Government to recognise that fact and accept defeat tonight. I think that the right hon. Member for Bermondsey (Mr. Mellish) was willing to help with a little encouragement. If that comes about, we shall have a General Election, get rid of a Government who have nothing to tell the people and install a Conservative Government with a new, fresh and interesting approach to these temporary problems of our time.

8.10 p.m.

Mr. Eric Ogden (Liverpool, West Derby)

The debate has inevitably emphasised the differences between the two sides of the House. Yet hon. Members may agree that this Chamber can be a very strange place. Last Friday I came here prepared to make a massive contribution on the subject of the needs of the outer urban areas and the debate was cancelled. When the House debated the Consolidated Fund Bill this week, I waited 15 hours, hoping to be called, and was silenced by my own Government's guillotine. Tonight I came in only to listen and have been able to join in the debate almost at once and at will.

Yesterday we had the debate on sanctions. From time to time the House gives an importance to words that the words do not deserve. The question of "the arbitrary use of sanctions," which we had debated over many days in the past weeks, seems to me to be quite simple. The Government, as a purchaser, came to a supplier and offered advice. That supplier, who happened to be Ford, would not or could not accept the advice. The Government then proposed to take their custom elsewhere. I should be in exactly the same situation were I to go to a commercial company, say, Sainsbury. I may say "I hope that you will do this ". The company may say that it cannot or will not do what I ask, and so I am free to take my custom elsewhere, to Budgen, Tesco, the Co-op or anywhere else. It is exactly the sort of situation which we have with "sanctions," but a situation which does not deserve the use of the term "sanctions."

Too often, trade unions—whether it be my own union, the National Union of Mineworkers, or others — concentrate almost exclusively on wages, as though that were the most important or only factor in which they are interested. Wages seem sometimes to become the be-all and end-all of a union's activity, whereas in my opinion the questions of wages, investments and profits are all bound up together.

It would be no use if my own union, for example, received such a large award as a result of a wage claim that inevitably three, four or six collieries had to be closed. It is no use in each and every coalfield having higher wages today if that means unemployment tomorrow. I hope that we can at least change that part of the picture, as my Government have been trying to do in many instances, so that the argument about what shall be received each day can become an argument about how much an industry can afford to pay. When we have a planning agreement for the coal industry, a national bargain between the Coal Board, the NUM and the Government which takes account of investment, productivity, and wages, we are in a different ball game altogether.

As the hon. and learned Member for Beaconsfield (Mr. Bell) said, this is a debate on confidence in the Government. If I speak from my knowledge of the opinions of the people of Merseyside, I can say that from Merseyside there would be a massive vote of confidence in the Government.

Mrs. Elaine Kellett-Bowman (Lancaster)

The hon. Gentleman must be joking.

Mr. Ogden

No, I say this in spite of the unemployment on Merseyside. The position is clearly understood by the people on Merseyside. It is Government support for the private sector that is keeping a major part of the private sector viable on Merseyside.

Mrs. Kellett-Bowman rose—

Mr. Ogden

I shall give way to the hon. Lady in a moment. If it were not for the massive aid being poured in by day and by night to Merseyside, more and more private companies would be leaving Merseyside. Certainly we have problems, but they would be far worse if it were not for the aid being provided by the Labour Government. Merseyside Members are the nearest thing in that part of the world to the Hare Krishna people of London. Perhaps we are not quite so happy, because we do not go around with bells. We are continually asking for aid for the area, whether it is for the public or the private sector. There was to be a £78 million investment in Ford at Halewood in the latest Ford investment programme. There has also been similar Government aid for investment in GEC in Liverpool. My view about the sanctions on Ford is that perhaps the Ford management and the unions in Ford deserve each other. It is the weakness of the management that when they said "No" they meant "Maybe ", and when they say "Maybe" no one knows what they mean.

Mrs. Kellett-Bowman

Will not the hon. Gentleman agree that the North-West gets the worst possible deal from the Government? Our unemployment throughout the North-West is extremely serious, but a great deal of the aid is biased towards other areas, such as Scotland, Wales and the North-East. From the regional fund of the EEC the Government have directed six times as much aid to every unemployed person in the North-East as to the North-West. Does the hon. Gentleman really believe that the North-West will therefore put its confidence in this Government?

Mr. Ogden

I am not a betting man. If I were, I should certainly put my money on the electors of the North-West showing confidence in the Labour Government. They have done so consistently in the past. If the hon. Lady is really claiming that the North-West is neglected or disadvantaged, I can only refer her to a speech made by my hon. Friend the Member for Houghton-le-Spring (Mr. Urwin) in the debate on the situation of Plessey telecommunications. That debate affected the North-East and the North-West. It certainly affected Lancaster, Liverpool, Preston, Accrington and many other places. In that debate my hon. Friend said that the complaint against Labour Members in the North-East was that the Merseyside Members and the Members in the North-West are getting much more help from the Government for industry than the Members in the North-East are getting. Indeed, my hon. Friend the Member for Burnley (Mr. Jones) complains that Merseyside gets a great deal more help than North-East Lancashire.

I claim that when all the Government aid for various areas is considered, we have more than a fair share of help in the North-West, and that includes Lancaster.

Mrs. Kellett-Bowman

No, it does not.

Mr. Ogden

The people will decide. when the time comes.

Mrs. Kellett-Bowman

They will.

Mr. Ogden

Government money and taxpayers' money pours into Merseyside like a torrent. Other areas think that we are the golden hand to which Government money comes along all the time. Certainly, if it were not for Government aid, our unemployment, bad as it is, would be a great deal worse. Our record in housing management on Merseyside is bad. We are about the worst managed housing authority in the business, whether the council is Labour-controlled. Conservative-controlled or Liberal-controlled. We are continually asking the Government to provide money for homes on Merseyside, homes our own local authorities are not prepared to provide.

The Secretary of State for Employment came to Merseyside three weeks ago bringing £2.8 million in his pocket to provide money for the district council in Liverpool, to help get rid of the 40,000 repairs which are waiting to be done in the city. The Liverpool city council is £10 million underspent in its housing account, and it has taken the Government's job creation programme to get rid of part of the backlog of work.

In the matter of homes, jobs, education, hospitals and social care, there would be a vote of confidence on Merseyside in the Government.

It has been said that the people should be allowed to say "Yes" or "No" now and to make up their minds. The suggestion has been made that perhaps we have not a policy, or that we have been too Socialist or not Socialist enough, but whenever the General Election comes, whether it is next month, in two months or three months—certainly some time before October 1979—I am sure that the result will be reasonably close. The old days when there were majorities of 50 or 100 have gone by. I should like to see my party in Government with a sufficient enough majority to be effective and small enough for it to be influenced. That will be the position next time. We have not a system of proportional representation but in reality we have almost come to that.

When the time comes for the people to make their choice, I hope that my party will not pretend that things are going to be easy, or that things do not have to be paid for. Similarly, I hope that the Conservative Party will make a little clearer than it has in the past that it is easy to have cuts in income tax and also more public expenditure on certain items. If taxes are reduced, obviously the money has to be raised in other ways. I am confident that, when the time comes for the people to decide, they will return their own Labour Members and a Labour Government, with their failures as well as their successes, which are a great deal better than anything the Opposition could produce.

8.19 p.m.

Mr. Timothy Raison (Aylesbury)

I shall not follow the hon. Member for Liverpool, West Derby (Mr. Ogden). I would rather go back to the main subject matter of the debate today.

One simple point has come over and I want to concentrate on it. It was made by the right hon. Member for Bermondsey (Mr. Mellish), by the right hon. Gentleman the Leader of the Liberal Party and by my hon. Friend the Member for Honiton (Mr. Emery), in their different ways. It was that, whatever the result tonight, the time has come when the country must have a General Election. There is absolutely no question now about that. It may well be that the Government will win. I do not pretend to know, because I have not been following all the chit-chat and gossip going on outside in the Tea Room, because I happen to have been here.

This is the message which must come out of the debate, and I hope that my right hon. Friend the Member for Penrith and the Border (Mr. Whitelaw) will put it from the Front Bench this evening, because the truth is that the whiff or the odour of decomposition is now about this Government—and also, perhaps, about this Parliament. The Government have been living from hand to mouth for months and, indeed, for years. It may be argued that they have been quite clever and that there has been some virtuosity about the way in which they have managed to do so. I do not denigrate their parliamentary skill, but the truth is that they are no longer in power. They can no longer get their business. It is not just that they cannot get their business on minor matters in Standing Committee—they cannot get their business on the major central issues of policy.

Of course, all the textbooks say that this is one of the crucial tests, and that when the time comes when a Government cannot get their business, that is the time when they should throw in their hand and either have a General Election or hand over to someone else. After all, we must face the fact that yesterday's defeat was not really just about sanctions. Of course, the Prime Minister tried to pretend that it was just about sanctions, that it was a great pity that they could not go on with sanctions, but there it was.

But the fact is that the Government tabled a motion. A Government who were in control of the situation, and who were genuinely in power, would have won their motion. In a sense, it was a motion of confidence, because it was a wide-ranging one about the economic handling of the country's affairs. But they could not even win their main motion last night, which is another proof of the fact that they are no longer in power.

Indeed, the astonishing fact is that for literally years now this Government have not commanded the support of the House in respect of their economic policies. They have maintained their position by a series of tactical ruses, devices and odd little alliances here and there with minority parties and, frankly, very often by ducking the issue. I should like the House to consider what has happened in our important economic debates over the past three years or so. Let us take the three main ingredients of economic policy —the Budget or the raising of revenue, expenditure and incomes policy, which has dominated so much of our discussions over the last few days and which in a sense is a kind of epitome of our economic problems.

As to the Budget, or the raising of money, I accept that on the whole the Government have done it. They have had one or two rather rude shocks in the Finance Bills over the last few years. Indeed, I seem to remember either the Chancellor of the Exchequer or the Chief Secretary saying after one of these defeats that the whole of the Government's economic strategy had been undermined by the tax changes which had been imposed by the House. Therefore, they have not had an easy ride even on Finance Bills.

What about their record on expenditure, which we have come to see to be a very much more important part of our politics and government than we had thought in the past? The record is pathetic. We should look at what has happened when we have debated the expenditure White Paper. In 1976, the Government were defeated on the main Question before the House by 256 votes to 284. In other words, they had a major defeat in the public expenditure debate of 1976. In 1977, the debate was held on a motion for the Adjournment. But that was not the whole story, because the result was 293 votes to none. The Government knew that they would lose, so they said to their supporters "Do not bother to vote. We are quite prepared to let the House adjourn tonight. We shall get up tomorrow and say ' The House adjourned last night. So what? It does not make any difference '." That has been one of the more discreditable episodes in the life of this Government.

In 1978, with a great rush of courage to their head, they put down a motion—one to "take note" of the public expenditure White Paper. There was something about approving the increases, but they very sedulously ducked the question of whether the proposed levels of public expenditure were acceptable to the House. So once again, the Government funked the issue of whether their public expenditure proposals were acceptable to the House.

I turn to the third arm of economic policy—incomes policy. Here the record is contemptible. I give the Government one bit of credit. In 1975 they brought forward a White Paper which was approved by the House, and backed it by one of the statutes which underpinned the so-called non-statutory policy. Therefore, speaking in these terms, 1975 was not too bad a year from their point of view. But in 1976 they brought forward the White Paper, on the basis of which presumably they would impose sanctions —certainly pay limits—and had a "take note" debate. As a result, the House never approved the 1976 White Paper or the policies which it embodied.

There was a slight variation in 1977, because the debate on the White Paper took place on the motion for the Adjournment. Once again, the Government funked putting down a motion asking for the support of the House. We had a motion this year, but the Government quite deliberately did not ask the House specifically to endorse the pay limits on which the whole of this fabric that we have been debating in the past few days was based.

Time after time over the past three years we have seen the Government totally lack the courage to bring their own measures before the House. They have relied on a succession of the most shabby and repellent devices. It is appalling beyond belief for the Leader of the House to sit there, with past echoes of his renown as a parliamentarian, and play such a prominent part in a Government who have behaved in this way.

The truth is that in respect of economic policy the Government have lived on bluff for the past three years. I believe that last night their bluff was called. That is crucial. The Leader of the House should tell us how he can possibly justify any claim that the Government are in control of the situation and that they can get their business. How can he possibly say that their economic policies command confidence with anyone? I have already shown how the Government have refused to put them before the House, so we have not been able to say whether they command confidence—at least until last night.

What about the Government's own supporters? What about the Tribune group, which does not seem to be present in very large numbers? Do they support the Government's economic policies? What about the Government's allies in the trade union movement? Even their own friends do not support these economic policies, and the country as a whole is completely disillusioned with them.

As a number of my hon. Friends and, indeed, several Labour Members have pointed out, the essential truth is that on the key matter—the record on productivity—the Government's record has been appalling. I shall not embark on a long string of statistics, but the fact is that output per person employed in manufacturing industry, which is really the crucial economic indicator, has gone up by a pitiable amount. It went up by about 1½ per cent. between 1973 and 1977. But that is not just a statistic, because the corollary is that at the same time real wages have also risen by the most abysmally small amount. The contrast between us and our major competitors is that their wages and productivity have both risen by a greater amount.

We have been in a state of stagnation because of the Government's economic mishandling. They have totally failed to get to the heart of our economic problems. Overriding this is the total failure of the Government to make the country see that work is and can be worth while. They have utterly failed to encourage skill and to reward enterprise in any shape or form.

Anyone who looks at the next few weeks, assuming that the Government remain in power, will see that what we are in for is a phase of broken-backed politics. It will be like 1940 or 1951 before the changes of Government took place. The message that comes through from this debate is that the country must now be allowed to decide how it wants to be governed and by whom.

8.29 p.m.

Mr. Michael Marshall (Arundel)

I support what my hon. Friend the Member for Aylesbury (Mr. Raison) said about the mood of the debate today. It has been made clear that this is a dead Parliament. In fact, as my hon. Friend the Member for Honiton (Mr. Emery) said, it is a dead-duck Parliament. An essential feature of this dead-duck Parliament is the fact that the wages policy itself is now a dead duck. Hon. Members on both sides have put persuasively the reason why that is so.

Wages policy is not something that can be spelt out in a scientific way. It must react to the mood of the country, of industry, of employers and trade unions. It is quite clear that after a decade and more of wages policy, a swing of the pendulum is necessary. This requires a Government with new thinking. This Government have run out of ideas on the subject.

Those who try to urge upon us a precise definition of our policies must recognise that they are asking us to fall into the same trap that they have fallen into themselves. Such policies must be a matter for very careful judgment in office in the precise circumstances of the time.

Today we are considering not just the Government's activities and record of the last year or two; we are looking at their record over five years. One of the missing ingredients in the Prime Minister's argument today was the Government's failure in industrial strategy. The question of Ford and sanctions is an indication of the kind of disparate activity here. Many hon. Members—even on the Labour side—recognise that it is the height of industrial illiteracy to attack some of the most successful companies simply because by beating them with a big stick the Government can sustain a policy which, as almost every speaker has pointed out, has not been successful.

The industrial strategy that has failed to materialise is much wider than simply a wages policy. Governments of both parties have had a vested interest in trying to achieve a successful economy. I do not suggest that this Government have been lacking in good intentions, but I do say that they have misapplied resources in the industrial area time and time again.

The accelerated investment schemes that Ministers like to talk about provide one example of this. Anyone who follows these matters seriously can give example after example of cases in which such investment has been mere window dressing. We had a classic example of this just before we rose for the Summer Recess, when Unilever gained help to put up a new mill at Thames Board Mills in Workington. This is a company with substantial profits, and it was hard to believe that it was incapable or unwilling to go ahead with investment. In cases where the Government are willing to push money to those who are willing to accept it we cannot take these as serious exercises in the creation of real jobs. If we do, we defraud ourselves and the country.

Equally, in the ferrous foundry and machine tools schemes many companies are sustained because of this, when rationalisation is essential. By the very process of inhibiting that rationalisation, the market has suffered. Some of the major manufacturers have not been able to take on additional employment as they would have done otherwise. In that area we have seen a distortion of the market that has not served this country well.

On the broad question of the five-year record of the Government, it must be said that over the last year or two they have been trying to rectify the mistakes of the first three years in office. It is not inaccurate to describe the Prime Minister's activities as "attempting to ape a Tory Government ". Examples of this are seen in the whole range of matters that we have urged upon the Government from the Opposition Benches—cash limits, a review of public expenditure and the way in which the Chancellor talks about the money supply. These seem to be manifestations of a Government trying to steal our clothes. We do not object to that if it is in the national interest.

It all adds up to the fact that we have a Labour Government trying to carry out half-baked Tory policies. In doing so, they have alienated their own Left wing. They cannot command its support and they cannot carry out policies effectively which are better emanating from this side of the House. In that situation it is time for the Government to go.

If we are to have any chance of real, thriving, industrial development in the economy we need a Government with a clear mandate. That mandate has expired for this Government. I do not accuse them of failing to carry out their manifesto commitments. Indeed, one of our problems is that they have carried out many commitments that have been shown to be unrealistic. Their extension of nationalisation in aerospace and shipbuilding was typically badly planned, as has been so much of their nationaliastion in the past.

We know now that the Government wish to extend that process if they are returned to office. The time has come for the country to give its opinion. No hon. Member has dissented from that. I join those who say "Let it be soon."

8.35 p.m.

Mr. Hugh Jenkins (Putney)

The problems that we have been facing for many years are, as I think most hon. Members will agree, problems of the mixed economy. In a wholly regulated society there is no great problem about determining the share of the product due to the consumer and the share due to the producer.

In our economy, which is in motion and is moving gradually, but inevitably, from private enterprise towards a Socialist-type economy—I hesitate to use the word" Socialist" because it may upset some Conservative Members—great difficulties are placed on any Government in regulating society, particularly a form of society, such as our own, which is highly dependent on external trade and greatly involved in the world at large.

There are many influences and pressures put upon us, including, for example, our mistaken decision to join the EEC, that tend to resist the inevitable move towards a more planned type of economy. We are under contradictory pressures. We have become part of an organisation that is dedicated to the notion of total free enterprise, in theory if not in practice. It could indeed be argued that at least some EEC countries are more Socialist than we are. Their welfare expenditure is an example.

My right hon. Friend the Member for Bermondsey (Mr. Mellish) made one of the best speeches that I have heard from him. I have heard him make speeches in a style with which I agreed, but tonight I was in considerable agreement not only with the style but with the content.

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

The right hon. Member for Bermondsey (Mr. Mellish) suggested that we should have a General Election very soon. Does the hon. Member for Putney (Mr. Jenkins) support his right hon. Friend on that, and will he do so in the Lobby tonight?

Mr. Jenkins

I shall be happy to have a General Election at any time. I have no doubt that I shall hold my highly marginal constituency whenever the election comes. I have no difficulty about that, but I prefer electioneering in fine weather so I would choose to win my seat in the spring rather than in the winter.

Mr. Arthur Latham (Paddington)

What about July?

Mr. Jenkins

I do not know that I want to go as far as July. My hon. Friend is distracting me from what I intend should be a short speech. I shall not follow him through the calendar.

Before I interrupted myself I was referring to the speech of my right hon. Friend the Member for Bermondsey. There was a conflict between him and my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo), who intervened in my right hon. Friend's speech to point out that there would be no objection to regulated wages if we lived in a society in which everything else was regulated. That is precisely the problem. How can we plan wages in an essentially market economy in which other things are unplanned?

I believe that the Government deserve support. I am sorry that they lost the vote last night, but they did not lose it because of me. The Government would help us more if they did not seem to be so keen on planning the wage sector of the economy and rather less keen on planning the rest of the economy. The planning agreements which were supposed to bring an element of regulation into our society on a larger scale have not been enforced. I well understand those of my hon. Friends who are closely associated with trade unions and who found themselves in very great difficulty, facing a situation in which the Government appeared to be excessively keen on restraining wages and not so keen on restraining incomes as a whole—not worried too much about profits and not even capable, apparently, of controlling prices.

The situation of such a mixed economy is, therefore, one which faces those of us on the Labour Benches with very great problems. The question arises—and this is the point of this debate—in such a situation and because we find ourselves in this difficulty: do we say that because of that we must run away from it and hand over to the free market operators on the Opposition Benches? Not so. It is really quite absurd to suppose, in the kind of world in which we live in 1978—nearly 1979 now—that the nostrums which the Conservative Party puts forward have anything to offer to us at all.

At a time in which, in their wiser moments, Opposition Members are prepared to admit that this is the sort of society that is inevitably more regulated and in which the Government have got to play a larger part— they will inevitably be held responsible anyway whether they do or do not intervene, and therefore the Government have got to intervene—it strikes me as peculiar that the Conservative Party should have decided to retreat even from its own idea of intervention, moving backwards into a condition in which it existed prior to the Second World War and even before that.

I take the view that the Opposition have nothing to offer to us. Therefore, we have no alternative but to maintain the present Government in office. But I think that we are entitled, in return for the inevitability of our loyalty—because there is no realistic alternative—to ask the Government to look again and consider the fact that—if the economic trends which we have been studying recently tell us the truth, and I am afraid that they do—the rich have got richer under Labour in the last few years. One of the reasons why the rich have got richer and the poor have got relatively poorer—and this is a sorry thing to have to say about a Labour Administration—is precisely that very loyalty about which my right hon. Friend the Member for Bermondsey talked—the loyalty of the trade union movement towards the Labour Government. The trade union movement has restrained itself in an inflationary situation and has made the contribution of wages to inflation considerably less than would otherwise have been the case.

This is a matter of which the Government cannot be proud. I believe that although we shall go into the Lobby tonight firmly in support of the Government, and although, on balance, they deserve their vote of confidence, they will not continue to deserve it unless they themselves are truer to the whole basis, theory and instincts of this party than they have been hitherto.

8.44 p.m.

Mr. Patrick McNair-Wilson (New Forest)

The hon. Member for Putney (Mr. Jenkins) was preceded by a number of Labour Members who condemned the performance of the Government over the past four years. The hon. Member's last comment, that the poor have got poorer, makes a mockery of the fact that we are supposed to have confidence in the Government's ability to repair social justice.

It is entirely appropriate that this debate is being held at the beginning of the pantomime season for this Christmas. It is a season when magic wands turn mice into horses and pumpkins into golden coaches, and massive defeats, such as that of last night, into apparent victories, which the Government hope for tonight.

What happened last night in this House was a defeat for the Government and it was the loss of a vote of confidence, because the Government now have no economic policy worth talking about. It is in total disarray. It has been brought down not merely by Opposition Members but by the total division of the Government party itself.

The genesis of this failure is the failure of the Government's economic policies for four years. They are policies which have halved the value of the money of our people and created record inflation, record unemployment and record numbers of bankruptcies. Yet we are asked tonight to have confidence in the Government's ability to manage our economy in the future.

Of course, the reason why the Government have failed so dismally is that they live in this strange mixed-up world of part-Socialism and part-free enterprise. They do not understand how to make free enterprise work. They have not yet—because they are afraid to let the British public see it—dared to show us how red in tooth and claw they would like to be if we had the pure Socialism that the Chancellor has threatened to let us have on many occasions.

It is a fact that because the Government cannot go the full distance which Left-wingers on the Labour Benches have been suggesting—of controlling rents, prices and profits, with all the paraphernalia of government—they cannot make their incomes policy work, and it is a failure. This afternoon the Prime Minister told us that because he is a democrat and because of the decision that was taken last night, he is now beginning to dismantle that policy.

It was the Prime Minister's vagueness about what is to follow after the collapse of this policy that entitles us to believe that the present Government have truly run their course. They have rested their argument, over the last three years, at any rate, on the belief that the wage claims of the people of Britain have created inflation. That is totally false.

Inflation has been created by the Government, not by the people who are trying to keep their standard of living together and who see it falling as a result of the Government's policies. The Government's policies have led to the run on our currency and the fact that we now find that things which we were able to buy at one time are now beyond our reach. The failure of this incomes policy has been caused by the man coming home at the end of the week and showing his wage packet to his wife, who says "It is not enough for us to live on. It does not buy the same as it bought last week." People have been asked to shoulder new burdens all the time, with visions of the promised land, and it has never come.

The Government's incomes policy will not work. Who are the Government to tell anyone what he should earn? This argument is not about merely numerical formulae—5 per cent., or whatever it is about freedom or totalitarianism. If we are to have the Government dictating how much people should earn, it will not be long before the Government are telling people where they can earn it as well.

It is because of this fear that I, as a private entreprenuerial member of a party which believes in private and free enterprise, totally reject the wages policy that is being employed by the present Government. Whether or not the Government stand by their 5 per cent. policy and ask the people to support it, they will not be stopped from driving up interest rates, mortgage rates, and all the rest, and asking people to digest that as well. It is because these things have failed that we are here tonight.

Mr. E. Fernyhough (Jarrow)

Will the hon. Member give way?

Mr. McNair-Wilson

No, because the time is very short. I apologise to the right hon. Gentleman.

The Prime Minister is no longer in command of his Government. He is not able any longer to give us firm government. Indeed, I think that it was the right hon. Member for Huyton (Sir H. Wilson), on another occasion, who described a Government as the fag end of a fag-end Parliament. Those words are very appropriate tonight.

Like King Canute, the Prime Minister sits on the beach hoping and praying that the threat of inflation will go away. But unlike King Canute, none of his supporters any longer believe in him. With the Chancellor of the Exchequer, he is alone with a wrecked policy surrounding him. If he has the confidence that he ways tells us he has in what the people feel about his policies, let him put them to the test now'. I can tell him that he will get a very rude shock.

8.50 p.m.

Mr. Arthur Latham (Paddington)

Earlier today my right hon. Friend the Prime Minister extolled the virtues of being in bed early. I must confess that that is where I was last night—too early. But I must make it clear that it was a quite deliberate abstention on my part because, along with a lot of other Government supporters, I felt that the aspect of the Government's policy that was being debated had to be challenged. I have no regrets about joining in the abstentions and thus contributing towards the consequence of the votes, save that sometimes in this House if an hon. Member wishes to support a point of view he finds himself in rather strange company. I never feel happy when I go into the Division Lobby with the Conservatives. I must also confess that sometimes when I go into the Division Lobby with my own party I also find myself in strange company. It is not always an easy choice to make.

The two matters to which I wish to draw attention do not amount to a rehash of last night's debate. However, they raise two very important factors which ought to be dealt with and which I want to put to my right hon. Friend the Lord President.

First, I remind my right hon. Friend of the submission which I made to the Procedure Committee—and it has been made by others in the past and since— that a Member of this House is often put in an extremely difficult position when he has two courses of action open to him either of which might be regarded as unacceptable.

My right hon. Friend will recall that it was put to him yesterday, as at other times, that it might have been reasonable for the Government to table an enabling motion which would have made it possible for a third point of view not only to be heard in this House but to be voted on in the Division Lobbies. I cannot understand why there is such difficulty about making it possible, when there is strong feeling among a substantial number of hon. Members, for that point of view to be debated in the general debate and then voted on by means of a second amendment called by the Chair.

The problem about the Chair's selecting a second amendment is that procedurally there is not the time available for a vote on such an amendment unless the Government themselves table an enabling motion. However, there is an argument that if that facility were granted to a substantial number of Back Bench Members on either side of the House it would create difficult precedents for minority parties. I cannot understand that argument, because it is perfectly proper for minority parties on occasion to express a distinctive point of view. It is healthy and democratic that if a point of view is held by a substantial number of Back Benchers, that view should be heard and voted upon.

I hope that my right hon. Friend will try to explain to the House what insurmountable difficulties he sees in the way of providing that facility on future occasions. That would have been one way of avoiding the difficulty which occurred last night.

Against that, in retrospect I suppose what happened last night was not such a bad thing. It is about time that, as Members of the Mother of Parliaments, we got away from the rather juvenile assumption that the Government must win every vote, however minor or however major, and that the Prime Minister of the day has to be in command of his supporters so that he can tell them, via the Chief Whip, what they should do and which way they should vote.

In historical terms, one development that can evolve from last night's events is that parliamentary control over the Executive can be enhanced. Whenever the Government lose on a particular matter that they have recommended, we go through the pantomime of a motion of confidence. We should accept that it is proper for Parliament to have the opportunity to pronounce on particular issues.

The Leader of the Opposition argued, when my right hon. Friend the Member for Huyton (Sir H. Wilson) was in office, that there is a distinction between a minor issue on which a Government might be defeated and an issue that is regarded as a major plank of their policy. I can see that distinction. But if Government supporters believe that many of their policies commend themselves and that the alternatives offered by the Opposition are unacceptable, what is undemocratic, improper, unhealthy or unconstitutional about a group of Members taking the opportunity to express that view? What is wrong with their using the parliamentary process to arrest the Executive in the path that it is treading and to cause it to have further thought?

There were sneers from the Opposition about the Prime Minister's statement, but I welcome what my right hon. Friend said at the begining of his speech today. It could be regarded as a magnanimous acceptance of the views and will of the House. I think that that is healthy.

Some people argue that in a so-called hung Parliament more power is given to Back Benchers to arrest the Executive. That is a desirable development. I do not see why we must have a hung Parliament for that to be possible. Hitherto, when a Government had a majority of 30, 40 or 50 and when 31, 41 or 51 of its members felt strongly or hostile about a particular policy, it was regarded as wrong and disloyal for those members to give expression to that point of view because confidence in the Government would be shaken and there would have to be a vote of confidence or censure the following day.

Before I became a Member of the House, I spent a number of years in local government. In local government each member of a council, whether Labour or Tory, is a member of the administration in one sense or another. Certainly those who belong to the majority party regard themselves as members of the administration. One of the desirable features of collective decisions is that members pool their votes into a collective judgment and agreed decision. In that sense, the principle of whipping and the proposition that the administration has its way is sound, because all members take part in the democratic process.

I do not wish to criticise the Labour Government in particular. My criticism is of the way the system of government has worked over the decades and centuries. The system is based upon the orginal authority of the Monarch, which is handed on to the Prime Minister. Extreme powers of patronage are exercised by the Prime Minister of the day. The Chief Whip is an appointee of the Prime Minister. His coterie, who are called the Government, make the decisions, not the members of the majority party.

If the events of last night and today move us away from that situation and towards a more mature constitution, in which the House of Commons can exercise a functional control over the Executive, that will be desirable. Whatever the arguments about confidence tonight, I hope that in the long term that will be the effect of the events of the last 48 hours.

Some people outside the House might ask why, if I did not vote with the Government last night, I vote with them tonight. Last night we were invited to vote on a specific issue. The House took the right decision. Tonight we are being asked to vote on a different issue—whether the Government should continue in office. I believe that the House will take the right decision again. We should give two marks to the House of Commons. One should be given for last night, and one for tonight. I hope that this will be the forerunner of many occasions when Back Benchers will be able to assert themselves.

9 p.m.

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

The hon. Member for Paddington (Mr. Latham) said that the House would tonight make the right decision. The right hon. Member for Bermondsey (Mr. Mellish), the former Labour Chief Whip, said that he wanted a General Election. I gather, therefore, that the House will tonight make the right decision—one which will lead to a General Election.

Let us consider what has happened in the debate. We heard from a rather tired Prime Minister who seemed rather despondent at the shock he suffered last night. He said that the economy was in ruins, and he reminded me of the cartoon showing the person who had had a smash on the motorway. He said that he would take the advice of the CBI, the TUC and the Tribune group. That is a very good mixture.

We heard the hon. Member for Liverpool, West Derby (Mr. Ogden) admit that he had been brought in by the Whips to make a speech. He had been trying to make a speech for three days, but the House had been too busy. Tonight the Prime Minister could get so few people to support him that the hon. Member was able to speak.

Next came the hon. Member for Putney (Mr. Jenkins). I have the privilege and honour to sit on the Public Accounts Committee with him. He makes a great contribution to it, but when one works closely in a Committee with a member of that sort one can tell whether he has done his homework. It was obvious from his speech tonight that he had not. He was brought in at short notice.

Throughout the debate the Labour Benches have been empty. That was because the Prime Minister was unable to get the support he wanted. We are seeing the pathetic end of what could have been a successful Administration.

We all know what happened. Labour came to power and for six months it carried out a good sales trick in order to get re-elected. The Government then indulged in a binge, spending the nation's money until the IMF came in and told them to get back to proper policies. Ever since the IMF restricted the Government's expenditure the Prime Minister has had difficulty with the Tribune group and others who accused him of failing to carry out Socialist policies. The IMF told the Prime Minister that the country was going bankrupt. We had the dramatic experience only last week when we saw that this once great nation was not even strong enough to take its part in the European monetary system.

Let us consider for a moment what has gone wrong with the Labour Party. The trouble is that it has gone looking for votes. Its housing policy is in ruins. That is because the Government were after votes. They thought there were more votes to be won from tenants than from landlords, with the result that the only thing in short supply in this country is housing. The only commodity that has been controlled since the Labour Party came back after the war has been housing.

At one time pension funds would invest in residential property, but because Labour imposed control to help the tenant housing has dried up. The same has happened with jobs. Unemployment today is higher because the Labour Government thought they could get more votes by passing laws making it difficult to sack workers. They thought that that would keep men in work, but it has meant that employers have been reluctant to take on labour. There would be far less unemployment but for the Labour Government's legislation.

Time is too short for me to follow the pattern through, but Labour Governments have always failed because they have considered control to be more important than incentive. Instead of defending his policies the Prime Minister sought today to chide my right hon. Friend the Leader of the Opposition about her intentions. He wanted to know what she would do. The time for her to tell the country that is during a General Election campaign. If the Prime Minister is so curious to know what is Opposition policy, he should give it a chance. Let us have a General Election.

9.5 p.m.

Mr. Norman Buchan (Renfrewshire, West)

We are no longer simply discussing the question of incomes policy but the question of which Government should be in power. I would humbly suggest to the hon. Member for Folkestone and Hythe (Mr. Costain) that history is against him. It is becoming necessary to have a social involvement. Facing me is a party which has the impertinence to seek power on the strength of a demand to return not to the early twentieth century but to nineteenth centurylaissez faire

Mrs. Kellett-Bowman

Let the people judge.

Mr. Buchan

Yes, indeed. Let the people judge. If there were no other argument for voting for the Government tonight, it is that the economic power of this country, left to thelaissez-fairepolicy of the Opposition, has been passing into fewer hands. In 1910, the top 100 companies of this country owned 15 per cent. of the output. In 1950, the figure had increased to only 20 per cent. In the last 20 years, however, that figure has shot up. Two-thirds of the wealth being produced is now owned by the top 100 companies. That is not many companies. The directors I see opposite probably control between them over 100 companies.

The question is whether we allow this great accretion of power to be left in the hands of the companies or whether we move over to a closer social ownership and social control. "Leave it to the people" means leaving it to the social control of the people and not to the companies.

At the same time, we see the beginning of what may be the first technological revolution. We are stepping over the threshold from pre-history to history with fewer and fewer people required to produce output.

It has to be asked whether increased leisure time in future should be equated with mass unemployment. That is what will happen if matters are left to the companies and to the party which represents them. The alternative is social control genuinely in the hands of the people, which can be achieved only through the expression of the working people of this country. That means a Labour Government.

The hon. Member for New Forest (Mr. McNair-Wilson) made great play of the fact that he supports the Opposition demand to defeat the Government tonight on the grounds that he is himself a private entrepreneur. As Mandy Rice-Davies said "He would, wouldn't he?" That is precisely the argument with which we are dealing.

I want to say a few words to my own Government. My hon. Friend the Member for Paddington (Mr. Latham) is right. It is an intolerable situation when we place so much emphasis on one aspect of policy that if it is rejected by the House, this is seen as a crisis for the Govern- ment which must demand, perforce, a vote of confidence.

I voted with the Government last night and I am voting for them tonight. If I may quote Rab Butler, they are not only the best Government we have but, in the light of the alternative, the best Government that we can have. We need a Labour Government responsive to the working people.

By placing emphasis on incomes policy and a bad incomes policy—it is a policy of wage restraint and not an incomes policy—the Government are giving the argument for a Socialist incomes policy a bad name. We cannot ask working people alone to shoulder these burdens or plan one-third of the economy while leaving the planning of the private sector untouched.

We can do only three things with our output. The first part is what we spend on the social wage, on roads and schools and so on. The second is what is returned to industry in the shape of investment. The third area is private income. The Government have tried to solve the problem by dealing only with the third. No wonder there was opposition to them in the working class movement. This they must rectify. They now have the opportunity, and it is for that reason that we support them.

9.11 p.m.

Mr. William Whitelaw (Penrith and The Border)

My first and pleasant task is to congratulate the hon. Member for Pontefract and Castleford (Mr. Lofthouse) on his maiden speech. He said some very nice things about his predecessor, the late Joe Harper, which struck a chord in the House. Many bon. Members will understand why I have a fellow feeling for anyone in either party who has spent a long time in a Whips' Office. I certainly had such a feeling for Joe Harper.

The hon. Member for Renfrewshire, West (Mr. Buchan) could not have read the Prime Minister's motion, because he said that he was making a choice between two different Governments. The motion in fact asks him to support this Government at this moment or to get rid of this Government and this Parliament and have an election. That is the choice in the motion, not the one that he described,

In devising this motion, the Prime Minister realised that he could not seek a vote of confidence on the basis of his Government's record. No one can be surprised at that, as my hon. Friend the Member for New Forest (Mr. McNair-Wilson) said, when setting out the facts of the Government's record. No wonder the Prime Minister could not do that. Nor did he favour his chances of getting his hon. Friends below the Gangway to support him on a motion directed to pay policy. If he had heard the speech of the hon. Member for Bethnal Green and Bow (Mr. Mikardo), he would have realised how right he was.

So the right hon. Gentleman has asked the House just to support his Government's "determination" in future—nothing else. That in itself is a sorry commentary on almost five years of Labour government and upon the amount of support that the Prime Minister can expect from some of his own followers, on whom he relies if he is to stay in office.

My right hon. Friend the Leader of the Opposition not only exposed the extent of our decline under Socialism; she also set out clearly how a Conservative Government will seek to reverse that miserable slide. Those of us with experience of the Prime Minister have learned to look behind the facade and to study the realities. Some of those realities were exposed in the brilliant speech of my right hon. Friend the Member for Worcester (Mr. Walker).

Any judgment by the House about the Prime Minister's future determination must surely rest not on the impression that he would like to give about his past record but on what he has actually done. Today he poses as the strong man fighting inflation in the best interests of the nation. He has referred at times recently to the difficulties that the nation has faced over prices following the fourfold increase in oil prices in 1973. He may now like to give the appearance of total resolution against inflation. He may even persuade himself that, as he said today, he has consistently and continuously fought against it.

But what was the right hon. Gentleman up to when the nation was seeking to fight inflation following the oil price increase in 1974? I remember it very well, because I was Secretary of State for Employment at the time. He was in Aberdare and this was what he was saying, and he must listen to it over and over again: I wanted to come into the mining valleys to place the Labour Party firmly behind the miners' claim for a just and honest wage. Mr. Heath is arguing that he is fighting inflation. That is utter drivel. Mr. Ioan Evans (Aberdare): The Aberdare speech of my right hon. Friend has been referred to on numerous occasions. He spoke on a large number of topics and what the Opposition are failing to say, and what my right hon. Friend modestly has not stated, is that the Tory candidate lost his deposit in that seat.

Mr. Whitelaw

The hon. Gentleman seemed for a moment to be trying to excuse his right hon. Friend for what he had done on that occasion, but his right hon. Friend did not wish to be excused. He reaffirmed it, and so he is now polite, or finds it convenient to be polite, to my right hon. Friend the Member for Sidcup (Mr. Heath); but at that time the Prime Minister did everything he could to undermine the efforts of my right hon. Friend to contain inflation. What is more, I am in a position to know just how much his words mattered at that time and how much they did to undermine that policy; and so I can assure the right hon. Gentleman that whatever we may think about his policies today we as a Conservative Party have not and will not undermine what he has been doing.

Today the right hon. Gentleman seeks to portray himself as the man who is standing up to powerful unions in the national interest. But in fact he sold the pass long ago and he himself inflicted grave damage on the nation and, I believe, on the long-term interest of the trade union movement when he deliberately undermined his right hon. Friend the Member for Blackburn (Mrs. Castle) in 1969. So when he considers the NUPE action in the Cheshire homes today, let him remember that he is reaping where he sowed.

When we come to the appalling inflation record of the Labour Government in 1975 and 1976 the Prime Minister has two means of trying to get out of it, two alibis. The first is that he really was not anything at all to do with the Government at that time and it was all the fault of his right hon. Friend the Member for Huyton (Sir H. Wilson). But of course he was the Foreign Secretary and one of the most important men in the Government. Another is that it was all the fault of the previous Conservative Government. But there again the true situation was plainly exposed by the right hon. Lady the Member for Hertford and Stevenage (Mrs. Williams) in October 1974 when she said: There is no evidence at all of price increases stored up in the pipeline So much for the alibi of blaming the previous Conservative Government.

The Prime Minister talks today of his determination to provide full employment, but the hard fact is that his determination will not help the 400 people who have lost their jobs every day that this Labour Government have been in office. Even during the period when he admits responsibility for the Government he has contrived and continued to run away from reality. He tried at one time to show his interest in education. A great education debate took place and the reality is that nothing happened. He then expressed great interest in the family. Very good; but no new policies resulted from that initiative. The right hon. Gentleman seems prepared to take responsibility in unusual areas.

The Prime Minister

There were a lot of babies, so do not try to undermine me.

Mr. Whitelaw

The Prime Minister can take whatever responsibility he likes in that area.

The right hon. Gentleman then felt that people were worried about vandalism. He became concerned about that topic, and the Home Secretary was asked to hold a conference to which the Prime Minister sent a special message. But again nothing happened.

In October we had the prize charade of all. The Prime Minister went on television and told the country that he did not intend to have a General Election because there was no need to do so in the national interest. [HON. MEMBERS: "It was not in October."] Well, it was just about that time. The truth was that when he was trying to pretend that not to hold an election was in the national interest, he was at the same time not going to the country because the private polls told him that if he did so he would lose.

Then, once again, the Prime Minister began to try to present a grubby retreat as a glorious advance, which is another of his techniques. But, alas for this mirage, the Left wing has refused to lie down. The right hon. Gentleman failed to convince the Labour Party conference on the central issue of Government policy. Indeed, he also failed to convince the TUC. Now he has been humbled by his own Back Benchers.

All the time the right hon. Member for Bristol, South-East (Mr. Benn) is breathing down the Prime Minister's neck. [HON. MEMBERS: "Where is he? "] The front is the moderate middle-of-the-road Callaghan, but the reality is the manifesto of Mr. Benn and his friends, and everybody knows it.

Even if the Prime Minister really wanted to be what he pretends to be and not what he is, I doubt whether he could take his colleagues with him. Certainly, the hon. Member for Putney (Mr. Jenkins) and others who devoted their remarks to pleading for more Socialism, would seem to indicate that.

Nobody can portray the Leader of the House as a realistic figure any more. Personally, I feel sorry for the right hon. Gentleman. He was at home below the Gangway as a brilliant speaker and rebel. Now, not surprisingly, he has not taken kindly to being an establishment figure.

Many speakers in the debate, faced with what is undoubtedly a retreat from reality, have stressed the underlying dangers that face Britain. The tactic—it can hardly be called a policy—of making tough-sounding speeches about figures of 5 per cent. is being shown up for what it always was—namely, one more attempt by the Prime Minister and the Labour Government to dodge reality.

Nothing the Prime Minister said in his speech this afternoon gave any hope that even now he intends to face the facts as they are. Our charge against the Government is that they have done, and are doing, nothing whatever to give the spirit of responsibility even a glimmer of encouragement. There is noting in their policy to give hope to responsible people in industry, to the trade unions and others who want to get on with the job. There is nothing which in any way will restore a sensible bargaining balance and allow fair and reasonable negotiations to proceed.

On the contrary, in everything the Government do, from their grubby sanctions efforts to their tax policies, from their so-called industrial strategy to their casual attitude to the respect for the rule of law, they have helped to undermine the fight for responsibility in our country and in our nation today. More incentives to work the extra hours or to acquire the extra skill—the Government have destroyed them. More encouragement in setting up new businesses and creating new job opportunities—the Government have made it as difficult as they possibly can for a business to take on more staff. More chance to buy one's own home from local authorities—the Government hate the idea. Better standards of education—the so-called debate has long since run into the sand. More chance for responsible and democratic voices in trade union affairs—the Government have nothing at all to suggest.

There will be no closing of the gap with other countries. There will be no lifting ourselves out of the" less prosperous countries club "to which the Prime Minister has now elected us until the Government's policy starts flowing completely the other way on all these fronts. We must leave behind the escapist charade and face the real task of making responsibility pay once more in this country. We must pay attention to creating more wealth and pay more attention to bringing up our industrial productivity, at least to the level of many of our competitors in the world, where it sags so sadly at present. That is the task to which we on these Benches will dedicate ourselves whenever we have the opportunity. But, apparently, for the moment the Prime Minister will simply use all his energies to cling to office somehow.

Like the Leader of the Liberal Party, I am convinced that it is against the best interests of our country for this phantom Parliament to continue. That has been the underlying theme of many speeches today from both sides of the House. However hon. Gentlemen may vote tonight, I cannot understand how it can be in the interests of any part of the United King- dom, whether Scotland, Wales or Northern Ireland, for this particular Parliament, and this particular Government, to carry on any longer. I accept that the underlying problems in these countries will certainly not be solved by a Government without authority. Nor is there any reason why the solution to their special problems should suffer a setback from the election of a new Parliament.

I would like to make it clear to the Scottish nationalists that after Parliament has decided to implement the Act, if there is a "Yes" vote in the referendum, we believe that the first Assembly elections should not be long delayed. We believe that they should be held—that is exactly what the Prime Minister himself says, so I do not know why he laughs —within six months of the day of the referendum. Like my right hon. Friend the Member for Brighton, Pavilion (Mr. Amery), I do not believe that the Government have the genuine confidence of this House on which their constitutional position so crucially depends.

Perhaps I might interpose a non-controversial note at this point, since the right hon. Member for Anglesey (Mr. Hughes) has just entered the Chamber. I am sure that it is one which will be echoed throughout the whole House, even at this point in the debate. May I say that while I do not welcome the fact that his vote will be in the wrong place tonight I am sure that we are all delighted to see the right hon. Member back again. Whatever has been achieved by him, no one in this House will ever doubt that he has done his very best to gain some comfort for this country.

If I may now return to the motion, I believe with my right hon. Friend the Member for Brighton, Pavilion that the Government do not have the genuine confidence of the House on which their constitutional position must depend. The truth, therefore, is that whatever subtle manoeuvrings the Prime Minister may make now, he and his Government have lost the authority to govern in this Parliament. I do not believe that they will be able again to govern effectively so long as this Parliament continues. That is why I ask my right hon. and hon. Friends, and all hon. Members in this House who have the true aims of parliamentary government at heart, to vote against the motion.

9.30 p.m.

The Lord President of the Council and Leader of the House of Commons (Mr. Michael Foot)

I want first to join with the right hon. Member for Penrith and The Border (Mr. Whitelaw) in two of his remarks with which I heartily concur. First, I thank him for the gracious way in which he received the return of my right hon. Friend the Member for Anglesey (Mr. Hughes) who entered the Chamber towards the end of the right hon. Gentleman's speech. I am sure that the whole House knew, when the announcement was made, that the mission on which my right hon. Friend was going was bound to be extremely difficult. However, my right hon. Friend took on that task immediately and I am sure that he has discharged it with the great skill and integrity which this House knows he possesses. I thank the right hon. Gentleman for the way in which he received my right hon. Friend back to the House.

I also join with the right hon. Gentleman in the remarks he made about my hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse), who made his maiden speech earlier in the debate. Those of us who heard it agreed that it was a speech which greatly contributed to the debate and to the subject which has been uppermost in the debate. My hon. Friend paid a special tribute at the beginning of his remarks to Joe Harper, the previous Member for that constituency. Those of us who saw Joe Harper, even on the day before he left and before his death, who remember how he was facing up to his trials on that occasion, are greatly indebted to my hon. Friend for the tribute that he paid to Joe Harper.

In his earlier remarks the right hon. Member for Penrith and The Border sought to indicate that the official Opposition were doing all that they could to assist with the Government's pay policy. The right hon. Member said, if I have his words correct, "We have not and will not undermine the policy in any way whatsoever." That is not quite the impression that I received, but it may well be the case that the Oppositionhave been going around the country secretly, urging people, behind the scenes, to back the Government's pay policy at every turn. As was said in another context and on another occasion" They have done good by stealth. The rest is on record."

Most of us can recall exactly the way in which the Conservative Party and the newspapers that give it such support have acted. I know that there is a distinction to be made concerning the right hon. Member for Lowestoft (Mr. Prior). I do not wish to snatch from his brow the garlands bestowed upon him a little earlier in the proceedings by the Prime Minister. For the rest of the Opposition, it would be much more true to say that they have attacked the Government's policy in a way that makes the criticisms of the Daily Mailand theSunnewspapers look tame by comparison. They have done everything in their power to undermine the Government's policy and should not, at the end, pretend anything different.

I have heard almost every speech made in the debate and it is right that I should seek to reply, in so far as I am able to do so, to the general debate that has taken place on incomes policy and pay policy, as that has been the dominant feature of the debate. The right hon. Member for Worcester (Mr. Walker), my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo) and others engaged in that debate, and I shall do so too. Before doing so I shall make a few comments on some other aspects.

Contrary to the general idea that has been purveyed from Conservative Members, it is the fact that this Parliament, despite the domination of economic policy, incomes policy and matters of that nature, and despite its difficulties and the Government's narrow majority—some think that that is an advantage but I still think that it is a disadvantage, from time to time—has carried through considerable measures in other areas. I believe that they have been carried through greatly to the advantage of the United Kingdom.

Despite all the difficulties, we have carried through great programmes, including the proposed establishment of Assemblies in Scotland and Wales. Many Members of Opposition parties have assisted us in so doing, including the hon. Member for Cardigan (Mr. Howells). We have carried through those measures despite all the opposition from many quarters. We have carried them through despite many setbacks.

The hon. Member for Cambridge (Mr. Rhodes James) writes history as well as failing to make it, and I am sure that he will acknowledge that in the period that he has covered in his historical writings there have been numerous occasions in British history when the House and the country have acted too slowly in the face of tumultuous events in other parts of the world, especially in parts of the British Commonwealth.

I believe that what we have done in this Parliament is to act in time. We have recognised the demands that have come from Scotland, Wales and other parts of the United Kingdom. We have acted in time, and because we have had the determination to carry matters through this Parliament will be able to claim that it has made a momentous contribution to maintaining the unity of the United Kingdom and holding it together generally.

We have done so because we have been prepared to recognise the just demands that have come from different parts of the United Kingdom. The House would make a sad mistake if it were to set aside those demands, to set aside the achievements and the way in which demands have been translated into practical action, and say that they did not count. That would be the way to injure what has been done. When we go forward to the referendums on 1st March I believe that the people of Wales and Scotland will express their view and they will thereby underwrite what the House has spent a considerable part of its time in dealing with during the present Parliament.

Conservative Members, especially the hon. Member for Aylesbury (Mr. Raison) and others who took a similar approach, said that during this Parliament we have not been dealing with major matters and that in the present Session the measures before us are not considerable, and that it is contemptuous for the House of Commons to deal with great sections of the community in that way. I happen to know that for the past two or three years the seamen, through their union, have been urging and demanding that we should introduce a Bill to deal with their industry. Such a Bill has been introduced and we shall carry it forward. I do not know why the Opposition Chief Whip should think me so funny—[Interruption] I do not know why the two Chief Whips should think it is so funny. When we catch both of them laughing together we have a right to be suspicious. I have to watch that very carefully.

I say to the hon. Member for Aylesbury—if it has not been brought to his attention before, I am bringing it to his attention now—that this measure, among many others, is one that has been urged on us by a great section of the people in the country.

There are measures such as the Education Bill that we are introducing. A huge amount of work has to go into the preparation of the measure, apart from the Bill itself. There is also the Public Lending Right Bill, and I know—[Interruption] We can see from the reaction of Conservative Members what sort of intellect the nation can expect from the Conservative Party. We intend to carry that measure through, and I am sorry that the Shadow Leader of the House has not been able to come along and give his support.

On a series of other themes we have carried through great legislative changes, and there will be others going forward in this Session. When we return to the House in the middle of January—[Interruption] The House of Commons voted the other day to come back on 15th January and we are accepting the decision of the House. [Interruption] Laughter seems to be breaking out on the Opposition Benches. I think that the right hon. Member for Lowestoft misunderstands the position. When we come back next month, one of the major measures that we shall be carrying through the House—admittedly a highly controversial measure—will provide considerable extra funds for the National Enterprise Board and for the very necessary work that we want to carry forward. Let no one tell me that that is not an important measure, and let no one tell me that it is an uncontroversial measure. It is one that is of vital importance to large numbers of people throughout the country, because it concerns their jobs, their industries and their protection.

Indeed, anyone who looks over the whole period of this Parliament will see that, despite all the pressures, difficulties and dangers with which we have had to contend, we have carried through major measures of reform concerning industry and industrial relations. We have wiped out the measure that the right hon. and learned Member for Surrey, East (Sir G. Howe) helped to place upon the statute book, and have put in its place a far more comprehensive set of laws than we have ever had before for dealing with industrial relations. They will stand this country in very good stead in the years to come.

I say to Conservative Members, who wish to brush these matters aside, that through these four years we have carried through a series of great reforming measures. During the remaining months of this Parliament we shall keep up that record.

Mr. Amery

The right hon. Gentleman has made what I might call a retrospective Business Statement. Will he tell us whether, before the House rises finally, his right hon. Friend the Member for Anglesey (Mr. Hughes) will be making a statement on his mission to Africa, or whether a Minister will be making it on his behalf?

Mr. Foot

We do not often have the advantage of the attendance of the right hon. Member for Brighton, Pavilion (Mr. Amery) at Business Statements, but I shall be happy to arrange for my right hon. Friend to make some kind of statement when we return after the recess. I am doubtful whether we should have a statement on the subject tomorrow. I do not believe that that would be the best way to proceed. I think that we should first of all see what my right hon. Friend the Member for Anglesey has to report to the Prime Minister and the Foreign Secretary on the matter. I think that that is the way in which to make the best use of his report on his mission.

I want now to turn to what has been a major part of the debate today. I do not want to avoid it at all, because I believe that the subjects dealt with in the debate have dominated British politics for many years past and will influence British politics for many years to come.

Those hon. Members who were absent from the earlier part of our proceedings should read the speeches of many of my hon. Friends and, indeed, those of some Opposition Members. I think in particular of the right hon. Member for Worcester, my hon. Friend the Member for Bethnal Green and Bow, my hon. Friend the Member for York (Mr. Lyon), my right hon. Friend the Member for Ber- mondsey (Mr. Mellish) and my hon. Friend the Member for Putney (Mr. Jenkins), all of whom made major speeches discussing what have been agonising arguments that have continued in respect of this matter, particularly on the Labour side of the House. They are also arguments that continue throughout the country, and it is as well that this House of Commons should face up to them.

The right hon. Member for Worcester is an honest man, and we know what he means. He did not spell it out today, although he has done it on previous occasions with such clarity that no one can dismiss it, but I know that he favours, as does the Liberal Party, a full-scale statutory incomes policy laying down what should be paid and what should not be paid in different spheres, possibly creating some board to perform that function and no doubt attaching to it some of the penalties involved in a full-scale statutory policy.

That is what the right hon. Gentleman and the Conservative Party introduced when last in power, and that is what the right hon. Gentleman still favours. That is also what the Liberal Party favours.

Mr. David Steel

indicated dissent

Mr. Foot

I am sorry that the hon. Member for Cornwall, North (Mr. Pardoe) is not present, because he might stick up for his own policy. I am not sure whether the Liberal Party continues to do so, but it is a fact that the right hon. Member for Worcester favours a return to the full panoply of a statutory policy.

I was a member of the Government in 1974 who spent a considerable part of their time dismantling that statutory policy. From what I saw at the Department of Employment at that time, and from what we inherited, I would not recommend that the country or this House should ever again return to that kind of statutory policy. I say that most strongly, because I believe that in some circumstances, as we saw during that period, it introduces the criminal law into industrial relations, which is a very foolish thing to do. I also believe that it can be done only by the most bureaucratic apparatus. Although the Pay Board was presided over by a most skilful and eminent civil servant, there is not the slightest doubt that that approach imposes a kind of unworkable corporate body on the whole economic system of the country. I hope that the House and the country will never seek to return to that kind of solution. I know that the right hon. Member for Lowestoft is not quite cured of that, because every now and again he agrees with his right hon. Friend the Member for Worcester. However, I let that pass.

My hon. Friend the Member for Bethnal Green and Bow took an exactly opposite view. He argued with devastating force that any kind of policy of that sort, and what we have sought to establish over the past few months, is riddled with so many anomalies, injustices, awkward aspects and difficulties that it becomes either unworkable or unfair or both, and that it should never be embarked upon. My hon. Friend argued that with very great skill, but what he did not face was what will happen if inflation on the scale of 10 per cent. 15 per cent. or 20 per cent. is recreated. My hon. Friend may believe that will not happen. If he believes it will happen he should tell us whether there are other methods by which it can be avoided, or whether he is arguing that it does not matter.

I do not think that my hon. Friend would accept the last proposition, because nobody could argue that a return to an inflation rate of 10 per cent. or 15 per cent. would be anything other than a disaster, particularly at a time of such international danger. In 1979 and 1980 the whole Western capitalist world will be in a state of motion and difficulty such as we have not known since the 1930s. If, in that period, we were to see such a scale of inflation as that recreated, it would be utterly damaging to this country. It would also rob this country of any power to have a major influence on the other nations of the world.

I understand as well as anyone the dilemmas and difficulties that hon. Members describe. Quite often the most serious arguments take place inside the Labour Party and not with the Opposition. We do not have to make any apologies on that score, particularly when we have listened to the whole debate and seen what has happened.

My hon. Friend the Member for Bethnal Green and Bow recalled that some of us had contributed to a "Keep Left" pamphlet—which has already been quoted by my hon. Friend the Member for Fife, Central (Mr. Hamilton). In that we discussed some of these questions, questions of incomes policy and wages policy and how they related to the rest of economic policy. My hon. Friend the Member for Bethnal Green and Bow, the Prime Minister, myself, my right hon. Friend the Member for Blackburn (Mrs. Castle) and others all signed that pamphlet. We were all arguing that we should seek to get some form of planning into this sphere as into other spheres of economic policy. I believe we should certainly seek to do so

My hon. Friend the Member for Bethnal Green and Bow has sometimes asserted that one can move to that end only when planning has been established over a much wider field. I quite appreciate the argument, and when we have the full power and authority in the next Parliament I shall certainly agree. That is one of the things on which we shall fight the election. I am glad that hon. Members understand that. There will not be any concealment, because we believe that in order to create the extra 1 million jobs necessary to solve our real problems, we must have planning on a much bigger scale.

If we tell the country that we will agree to the measures necessary for the planning of incomes and wages only when we have secured planning in all other fields, we shall never achieve that end, because we shall never be able to make the transition from here to there.

Mr. Mikardo

I know that my right hon. Friend would not intentionally misquote me. I must remind him that at no time have I or any of my friends said that wages can be planned when we have planned everything else. We have said and do say that we can concurrently have a planned wages sector when the rest is being planned. We cannot pick it out and have a planned wages sector in an otherwise unplanned economy.

Mr. Foot

I agree that we should move in that direction at the same time. In many fields that is what we have been doing. We have pressed regional policy more strongly than we ever did before. We have sought to sustain our major industries—the motor industry, the steel industry and many more—with more direct Government action than we have ever had before. In all those fields there has been planning on a much more ambitious scale than ever before.

My hon. Friend the Member for Putney put this well when he said that it was happening in many other countries. It is happening in many of those paraded by Opposition Members as a model. These are countries which, in many cases, have beaten us on some of the questions of development of an industrial system. The argument on these issues that we have had in this country, this House and the Labour Party over the weeks and months can bear important fruition for Britain as a whole.

I believe that if we examine the incomes policy and turn it this way and that, we shall be forced back to the general proposition that we can only run it on a voluntary basis—

Mr. Adley

Can we join in the argument?

Mr. Foot

The hon. Member will have to think up something to say first. He had his opportunity during the afternoon. He is now seeing the real debate.

Mr. David Steel

The Leader of the House is asking us to accept as a great virtue the fact that an intense debate has gone on in the Labour Party. We do not deny that that is a good thing. We are complaining about the fact that the Government lost the argument.

Mr. Foot

The right hon. Member has not followed it exactly. The first argument that we have not lost is the one that he started and the one to which he adheres—the full panoply of the statutory policy. For all the reasons that I have sought to describe, and all the experience that we have had over the past 10 years, I say that that should be ruled out altogether. This Government have ruled it out. But we must search for a

Division No. 28]	AYES	[10.0 p.m.
Abse, Leo	Atkinson, Norman (H'gey, Tott'ham)	Bidwell, Sydney
Allaun, Frank	Bagier, Gordon A. T.	Bishop, Rt Hon Edward
Anderson, Donald	Barnett, Guy (Greenwich)	Blenkinsop, Arthur
Archer, Rt Hon Peter	Barnett, Rt Hon Joel (Heywood)	Boardman, H.
Armstrong, Ernest	Bates, Alf	Booth, Rt Hon Albert
Ashley, Jack	Bean, R. E.	Boothroyd, Miss Betty
Ashton, Joe	Benn, Rt Hon Anthony Wedgwood	Bottomley, Rt Hon Arthur
Atkins, Ponald (Preston N)	Bennett, Andrew (Stockport N)	Boyden, James (Bish Auck)

different way of doing it and I believe that the only way this can be done is by persuasion and consent. This involves arguments and discussions.

The Conservatives put a pistol to the heads of the trade unions and told them that they had to agree. Of course that did not work. They had a great challenge on the question who governed Britain. That was not the issue at all. The miners were engaged in a perfectly legitimate, constitutional action but the Opposition told them they were not entitled to do it. We had to come in and save the country.

In some respects the appalling industrial relations situation with which we were left in 1974, bad as it was, was the easiest problem that the Tories left. They also left us the biggest deficit in our balance of payments—[HON. MEMBERS: "Oh."]—The Opposition do not want to hear about that. They are not interested in the deficit on the balance of payments, but we had to spend our first year in office overcoming it. We thought that the deficit left behind by the previous Conservative Government in 1964 was bad enough. That left by the Leader of the Opposition and the right hon. Member for Sidcup (Mr. Heath), when they were still talking, was 10 times worse.

We had to deal with that and also with the worst inflation for years. I remember it well. [HON. MEMBERS: "What about the 8.4 per cent? "] The only thing that the hon. parrots on the Tory Benches can say is "8.4 per cent." They have not advanced beyond October 1974. The rate of inflation that they left us was appalling.

I believe that the vote of confidence will be carried tonight by a thumping majority, and when it is we shall come back after the next election—at a time chosen by the Prime Minister—with an even bigger majority.

Question put:—

The House divided: Ayes 300, Noes 290.

Bradley, Tom	Graham, Ted	Morris, Rt Hon Charles R.
Bray, Dr Jeremy	Grant, George (Morpeth)	Morris, Rt Hon J. (Aberavon)
Broughton, Sir Alfred	Grant, John (Islington C)	Morton, George
Brown, Hugh D. (Provan)	Grocott, Bruce	Moyle, Rt Hon Roland
Brown, Robert C. (Newcastle W)	Hamilton, W. W. (Central Fife)	Mulley, Rt Hon Frederick
Brown, Ronald (Hackney S)	Hardy, Peter	Murray, Rt Hon Ronald King
Buchan, Norman	Harrison, Rt Hon Walter	Newens, Stanley
Buchanan, Richard	Hart, Rt Hon Judith	Noble, Mike
Butler, Mrs Joyce (Wood Green)	Hattersley, Rt Hon Roy	Oakes, Gordon
Callaghan, Rt Hon J. (Cardiff SE)	Hayman, Mrs Helene	Ogden, Eric
Callaghan, Jim (Middleton & P)	Healey, Rt Hon Denis	O'Halloran, Michael
Campbell, Ian	Heffer, Eric S.	Orbach, Maurice
Canavan, Dennis	Home Robertson, John	Orme, Rt Hon Stanley
Cant, R. B.	Hooley, Frank	Owen, Rt Hon Dr David
Carmichael, Neil	Horam, John	Padley, Walter
Carter, Ray	Howell, Rt Hon Denis (B'ham, Sm H)	Palmer, Arthur
Carter-Jones, Lewis	Howells, Geraint (Cardigan)	Park, George
Cartwright, John	Hoyle, Doug (Nelson)	Parker, John
Castle, Rt Hon Barbara	Huckfield, Les	Parry, Robert
Cocks, Rt Hon Michael (Bristol S)	Hughes, Rt Hon C. (Anglesey)	Pavitt, Laurie
Cohen, Stanley	Hughes, Mark (Durham)	Pendry, Tom
Colquhoun, Ms Maureen	Hughes, Robert (Aberdeen N)	Perry, Ernest
Concannon, Rt Hon John	Hughes, Roy (Newport)	Phipps, Dr Colin
Conlan, Bernard	Hunter, Adam	Prescott, John
Cook, Robin F. (Edin C)	Irving, Rt Hon S. (Dartford)	Price, C. (Lewisham W)
Corbett, Robin	Jackson, Colin (Brighouse)	Price, William (Rugby)
Cowans, Harry	Jackson, Miss Margaret (Lincoln)	Radice, Giles
Cox, Thomas (Tooting)	Janner, Greville	Rees, Rt Hon Merlyn (Leeds S)
Craigen, Jim (Maryhill)	Jay, Rt Hon Douglas	Richardson, Miss Jo
Crawshaw, Richard	Jeger, Mrs Lena	Roberts, Albert (Normanton)
Cronin, John	Jenkins, Hugh (Putney)	Roberts, Gwilym (Cannock)
Crowther, Stan (Rotherham)	John, Brynmor	Robertson, George (Hamilton)
Cryer, Bob	Johnson, James (Hull West)	Robertson, John (Paisley)
Cunningham, G. (Islington S)	Johnson, Walter (Derby S)	Robinson, Geoffrey
Cunningham, Dr J (Whiteh)	Jones, Alec (Rhondda)	Rodgers, George (Chorley)
Dalyell, Tarn	Jones, Barry (East Flint)	Rodgers, Rt Hon William (Stockton)
Davidson, Arthur	Jones, Dan (Burnley)	Rooker, J. W.
Davies, Bryan (Enfield N)	Judd, Frank	Roper, John
Davies, Rt Hon Denzil	Kaufman, Rt Hon Gerald	Rose, Paul B.
Davies, Ifor (Gower)	Kelley, Richard	Ross, Rt Hon W. (Kilmarnock)
Davis, Clinton (Hackney C)	Kerr, Russell	Rowlands, Ted
Deakins, Eric	Kilroy-Silk, Robert	Ryman, John
Dean, Joseph (Leeds West)	Kinnock, Neil	Sandelson, Neville
de Freitas, Rt Hon Sir Geoffrey	Lamborn, Harry	Sedgemore, Brian
Dell, Rt Hon Edmund	Lamond, James	Selby, Harry
Dempsey, James	Latham, Arthur (Paddington)	Shaw, Arnold (ilford South)
Dewar, Donald	Leadbitter, Ted	Sheldon, Rt Hon Robert
Doig, Petor	Lee, John	Shore, Rt Hon Peter
Dormand, J. D.	Lestor, Miss Joan (Eton & Slough)	Short, Mrs Renée (Wolv NE)
Douglas-Mann, Bruce	Lever, Rt Hon Harold	Silkin, Rt Hon John (Deplford)
Duffy, A. E. P.	Lewis, Arthur (Newham N)	Silkin, Rt Hon S. C. (Dulwich)
Dunn, James A.	Lewis, Ron (Carlisle)	Sillars, James
Dunnett, Jack	Litterick, Tom	Silverman, Julius
Dunwoody, Mrs Gwyneth	Lofthouse, Geoffrey	Skinner, Dennis
Eadie, Alex	Lomas, Kenneth	Smith, Rt Hon John (N Lanarkshire)
Edge, Geoff	Loyden, Eddie	Snape, Peter
Edwards, Robert (Wolv SE)	Luard, Evan	Spearing, Nigel
Ellis, John (Brigg & Scun)	Lyon, Alexander (York)	Spriggs, Leslie
Ellis, Tom (Wrexham)	Lyons, Edward (Bradford W)	Stallard, A. W.
English, Michael	Mabon, Rt Hon Dr J. Dickson	Stewart, Rt Hon M. (Fulham)
Ennals, Rt Hon David	McElhone, Frank	Stoddart, David
Evans, Fred (Caerphilly)	MacFarquhar, Roderick	Stott, Roger
Evans, Gwynfor (Carmarthen)	McGuire, Michael (Ince)	Strang, Gavin
Evans, loan (Aberdare)	McKay, Alan (Penistone)	Strauss, Rt Hon G. R.
Evans, John (Newton)	MacKenzie, Rt Hon Gregor	Summerskill, Hon Dr Shirley
Ewing, Harry (Stirling)	Maclennan, Robert	Swain, Thomas
Faulds, Andrew	McMillan, Tom (Glasgow C)	Taylor, Mrs Ann (Eolton W)
Fernyhough, Rt Hon E.	McNamara, Kevin	Thomas, Dafyod (Menoneth)
Fitch, Alan (Wigan)	Madden, Max	Thomas, Jeffrey (Abertillery)
Flannery, Martin	Magee, Bryan	Thomas, Mike (Newcastle E)
Fletcher, L. R. (llkeston)	Mahon, Simon	Thomas, Ron (Bristol NW)
Foot, Rt Hon Michael	Mallalleu, J. P. W.	Thorne, Stan (Preston South)
Ford, Ben	Marks, Kenneth	Tierney, Sydney
Forrester, John	Marshall, Dr Edmund (Goole)	Tilley, John
Fowler, Gerald (The Wrekin)	Marshall, Jim (Leicester S)	Tinn, James
Fraser, John (Lambeth, N'w'd)	Mason, Rt Hon Roy	Tomlinson, John
Freeson, Rt Hon Reginald	Maynard, Miss Joan	Tomney, Frank
Garrett, John (Norwich S)	Meacher, Michael	Torney, Tom
Garrett, W. E. (Wallsend)	Mellish, Rt Hon Robert	Tuck, Raphael
George, Bruce	Mikardo, Ian	Urwin, T. W.
Gilbert, Rt Hon Dr John	Millan, Rt Hon Bruce	Varley, Rt Hon Eric G.
Ginsburg, David	Mitchell, Austin (Grimsby)	Wainwright, Edwin (Dearne V)
Golding, John	Mitchell, R. C. (Soton, ltchen)	Walker, Harold (Doncaster)
Gould, Bryan	Moonman, Eric	Walker, Terry (Kingswood)
Gourlay, Harry	Morris, Alfred (Wythenshawe)	Ward, Michael

Watkins, David	Willey, Rt Hon Frederick	Woodall, Alec
Watkinson, John	Williams, Rt Hon Alan (Swansea W)	Wool, Robert
Weetch, Ken	Williams, Alan Lee (Hornch'ch)	Wrigglesworth, Ian
Weitzman, David	Williams, Rt Hon Shirley (Hertford)	Young, David (Bolton E)
Wellbeloved, James	Williams, Sir Thomas (Warrington)
White, Frank R. (Bury)	Wilson, Rt Hon Sir Harold (Huyton)	TELLERS FOR THE AYES
White, James (Pollok)	Wilson, William (Coventry SE)	Mr. James Hamilton and
Whitehead, Phillip	Wise, Mrs Audrey	Mr. Donald Coleman.
Whitlock, William

NOES
Adley, Robert	Fisher, Sir Nigel	Kitson, Sir Timothy
Aitken, Jonathan	Fletcher, Alex (Edinburgh N)	Knight, Mrs Jill
Alison, Michael	Fletcher-Cooke, Charles	Knox, David
Amery, Rt Hon Julian	Forman, Nigel	Lamont, Norman
Arnold, Tom	Fowler, Norman (Sutton C'f'd)	Latham, Michael (Melton)
Atkins, Rt Hon H. (Spelthorne)	Fox, Marcus	Lawson, Nigel
Atkinson, David (B 'mouth, East)	Fraser, Rt Hon H. (Stafford & St)	Lewis, Kenneth (Rutland)
Awdry, Daniel	Freud, Clement	Lloyd, Ian
Bain, Mrs Margaret	Fry, Peter	Loveridge, John
Baker, Kenneth	Galbraith, Hon T. G. D.	Luce, Richard
Banks, Robert	Gardiner, George (Reigate)	McAdden, Sir Stephen
Beith, A. J.	Gardner, Edward (S Fylde)	MacCormick, lain
Bell, Ronald	Gilmour, Rt Hon Sir Ian (Chesham)	McCrindle, Robert
Bendall, Vivian	Gilmour, Sir John (East Fife)	Macfarlane, Neil
Bennett, Sir Frederic (Torbay)	Glyn, Dr Alan	MacGregor, John
Bennett, Dr Reginald (Fareham)	Godber, Rt Hon Joseph	MacKay, Andrew (Stechford)
Benyon, W.	Goodhart, Philip	Macmlllan, Rt Hon M. (Farnham)
Berry, Hon Anthony	Goodhew, Victor	McNair-Wilson, M. (Newbury)
Biffen, John	Goodlad, Alastair	McNair-Wilson, P. (New forest)
Biggs-Davison, John	Gorst, John	Madel, David
Blaker, Peter	Gower, Sir Raymond (Barry)	Marshall, Michael (Arundel)
Body, Richard	Grant, Anthony (Harrow C)	Marten, Neil
Boscawen, Hon Robert	Gray, Hamish	Mates, Michael
Bottomley, Peter	Grieve, Percy	Mather, Carol
Bowden, (Brighton, Kemptown)	Griffiths, Eldon	Maude, Angus
Boyson, Dr Rhodes (Brent)	Grimond, Rt Hon J.	Maudling, Rt Hon Reginald
Bradford, Rev Robert	Grist, Ian	Mawby, Ray
Braine, Sir Bernard	Grylls, Michael	Maxwell-Hyslop, Robin
Brittan, Leon	Hall-Davis, A. G. F.	Mayhew, Patrick
Brocklebank-Fowler, C.	Hamilton, Archibald (Epsom S Ewell)	Meyer, Sir Anthony
Brooke, Hon Peter	Hamilton, Michael (Salisbury)	Miller, Hal (Bromsgrove)
Brotherton, Michael	Hampson Dr Keith	Mills, peter
Brown, Sir Edward (Bath)	Hannam John	Miscampbell, Norman
Bryan, Sir Paul	Harrison, Col Sir Harwood (Eye)	Mitchell, David (Basingstoke)
Buchanan-Smith, Alick	Harvie Anderson, Rt Hon Miss	Moate, Roger
Buck, Antony	Haselhurst, Alan	Monro, Hector
Budgen, Nick	Hastings, Stephen	Montgomery, Fergus
Bulmer, Esmond	Havers, Rt Hon Sir Michael	Moore, John (Croydon C)
Burden, F. A.	Hawkins, Paul	More, Jasper (Ludlow)
Butler, Adam (Bosworth)	Hayhoe, Barney	Morgan, Geraint
Carlisle, Mark	Heath, Rt Hon Edward	Morgan-Giles, Rear-Admiral
Chalker, Mrs Lynda	Henderson, Douglas	Morris, Michael (Northampton S)
Channon, Paul	Heseltine, Michael	Morrison, Hon Charles (Devizes)
Churchill, W. S.		Morrison, Hon Peter (Chester)
Clark, Alan (Plymouth, Sutton)	Hicks, Robert	Mudd David
Clarke, Kenneth (Rushcliffe)	Higgins, Terence L.	Neave, Airey
Clegg, Walter	Hodgson, Robin	Nelson, Anthony
Cockcroft, John	Holland, Philip	Neubert, Michael
Cooke, Robert (Bristol W)	Hooson, Emlyn	Newton, Tony
Cods John	Hordern, Peter	Normanton, Tom
Cormack, Patrick	Howe, Rt Hon Sir Geoffrey	Not), John
Corrie, John	Howell, David (Guildford)	Onslow, Cranley
Costain, A. P.	Howell, Ralph (North Norfolk)	Oppenheim, Mrs Sally
Crawford, Douglas	Hunt, David (Wirral)	Osborn, John
Critchley, Julian	Hunt, John (Ravensbourne)	Page, John (Harrow West)
Crouch, David	Hurd, Douglas	Page, Rt Hon R. Graham (Crosby
Crowder, F. P.	Hutchison, Michael Clark	Page, Richard (Workington)
Dean, Paul (N Somerset)	Irving, Charles (Cheltenham)	Paisley, Rev Ian
Dodsworth, Geoffrey	James, David	Pardoe, John
Douglas-Hamilton, Lord James	Jenkin, Rt Hon P. (Wanst'd&W'df'd)	Parkinson, Cecil
Drayson, Burnaby	Jessel, Toby	Pattie, Geoffrey
du Cann, Rt Hon Edward	Johnson Smith, G. (E Grinstead)	Penhaligon, David
Durant, Tony	Johnston, Russell (Inverness)	Percival, Ian
Dykes, Hugh	Jones, Arthur (Daventry)	Peyton, Rt Hon John
Eden, Rt Hon Sir John	Jopling, Michael	Pink, R. Bonner
Edwards, Nicholas (Pembroke)	Joseph, Rt Hon Sir Keith	Prentice, Rt Hon Reg
Emery, Peter	Kaberry, Sir Donald	Price, David (Eastleigh)
Ewing, Mrs Winifred (Moray)	Kellett-Bowman, Mrs Elaine	Prior, Rt Hon James
Eyre, Reginald	Kershaw, Anthony	Pym, Rt Hon Francis
Fairbairn, Nicholas	Kilfedder, James	Raison, Timothy
Fairgrieve, Russell	Kimball, Marcus	Rees, Peter (Dover & Deal)
Farr, John	King, Evelyn (South Dorset)	Rees-Davies, W. R.
Fell, Anthony	King, Tom (Bridgwater)	Renton, Rt Hon Sir D. (Hunts)

Renton, Tim (Mid-Sussex)	Smith, Timothy John (Ashfield)	van Straubenzee, W. R.
Rhodes James, R.	Speed, Keith	Vaughan, Dr Gerard
Rhys Williams, Sir Brandon	Spence, John	Viggers, Peter
Ridley, Hon Nicholas	Spicer, Jim (W Dorset)	Wainwright, Richard (Coine V)
Ridsdale, Julian	Spicer, Michael (S Worcester)	Wakeham, John
Rifkind, Malcolm	Sproat, lain	Walker, Rt Hon P. (Worcester)
Rippon, Rt Hon Geoffrey	Stainton, Keith	Walker-Smith, Rt Hon Sir Derek
Roberts, Wyn (Conway)	Stanbrook, Ivor	Wall, Patrick
Rodgers, Sir John (Sevenoaks)	Stanley, John	Walters, Dennis
Ross, Stephen (Isle of Wight)	Steel, Rt Hon David	Warren, Kenneth
Royle, Sir Anthony	Steen, Anthony (Wavertree)	Weatherill, Bernard
Sainsbury, Tim	Stewart, Rt Hon Donald	Wells, John
St. John-Stevas, Norman	Stewart, Ian (Hitchin)	Welsh, Andrew
Scott, Nicholas	Stokes, John	Whitelaw, Rt Hon William
Scott-Hopkins, James	Stradling, Thomas J.	Whitney, Raymond
Shaw, Giles (Pudsey)	Tapsell, Peter	Wiggin, Jerry
Shaw, Michael (Scarborough)	Taylor. R. (Croydon NW)	Wilson, Gordon (Dundee E)
Shelton, William (Streatham)	Taylor, Teddy (Cathcart)	Winterton, Nicholas
Shepherd, Colin	Tebbit, Norman	Wood, Rt Hon Richard
Shersby, Michael	Temple-Morris, Peter	Young, Sir G. (Ealing, Acton)
Silvester, Fred	Thatcher, RI Hon Margaret	Younger, Hon George
Sims, Roger	Thomas, Rt Hon P. (Hendon S)
Sinclair, Sir George	Thompson, George	TELLERS FOR THE NOES:
Skeet, T. H. H.	Townsend, Cyril D.	Mr. Spencer Le Marchant and
Smith, Cyril (Rochdale)	Trotter, Neville	Mr. Michael Roberts.
Smith, Dudley (Warwick)
Question accordingly agreed to
Resolved,
That this House expresses its confidence in Her Majesty's Government and in its determination to strengthen the national economy, control inflation, reduce unemployment and secure social justice.