GROUP 1A (Finance)

HC Deb 17 January 1978 vol 942 cc291-413

Banking. Insurance. Assurance. Merchant banking. Investment Trusts. Unit Trusts. Legal tender. Regulation of interest rates and credit. Regulation of currency levels.'.

On Thursday last my hon. Friend the Member for Clackmannan and East Stirlingshire (Mr. Reid) moved a different amendment to a different Bill. As he moved his amendment, I am moving this amendment in all seriousness. I hope that hon. Members will not impute any unfair motives to me, as they did to my hon. Friend on Thursday.

This amendment means what it says. It is the first of a series of important amendments that SNP Members are seeking to make to Schedule 10, in which we seek to transfer the vital political, economic, educational, social and arts functions and other aspects of life from the heading of non-devolved matters to the heading of devolved matters, from the heading of matters not proposed as subjects of the Scottish Assembly to the heading of matters to be subjects for the Scottish Assembly. In other words, we are seeking to increase and enhance the powers of the Scottish Assembly.

I hope that we shall take the hon. Member for Glasgow, Cathcart (Mr. Taylor) with us, because in his 1974 General Election manifesto he said that he wished to see a Scottish Assembly with economic powers. For the same reason, I hope that we take the hon. Member with us because, this being the first of a series of economic amendments, I remind him that he voted against Clause 40 and against the extension of pay policy to Scotland. He will be in some difficulty, because on 6th January, on a programme called "Ways and Means" on Scottish Television, he said that he was against a referendum if the Tories won the next General Election. Three days later his right hon. Friend the Leader of the Opposition said that she was for a referendum, so I am not quite sure where the hon. Member for Cathcart stands on that matter.

In the debate on Wednesday on certain health aspects, the Under-Secretary—the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing)—said that the Scottish Assembly would not go for lower standards. I apologise if I have got his words wrong. I may be paraphrasing what he said. I suggest that in financial matters also, the Scottish Assembly will not go for lower standards.

Perhaps this debate will help all those who complained last week that we did not have enough time to talk about finance and taxation. The amendment is much more specific than that which led to the wide-ranging debate on taxation, which raised passions and led to extreme language and vituperation against the SNP, characterised by the words of the hon. Member for Aberdeen, North (Mr. Hughes). That shows just how successful the SNP is becoming. It often seems that nothing unites the House of Commons more than the sight of the SNP being successful.

Mr. David Lambie (Central Ayrshire)

what about East Kilbride? Send for the Provost.

Mr. Crawford

In addition to the existence of an independent Church, a separate education system and a separate legal system, Scotland has for many years maintained the independence—in recent years it has been a growing independence and international outlook—of her financial community. There has been an increase in the vigour and enterprise of Scotland's financial system.

In this context, perhaps I should draw the attention of the Shadow Secretary of State, the hon. Member for Cathcart, to what was said by the Chairman of Lloyds Bank in Edinburgh on Friday to the Scottish correspondent of The Guardian and published in that newspaper on Saturday. The hon. Member will be glad to know that I have checked this with the Scottish correspondent of The Guardian, whose address and telephone number I shall be glad to give to the hon. Gentleman, although I am afraid that I do not have the postcode.

In the context of the increasing vigour of the Scottish financial community, Sir Jeremy Morse said that one of the reasons for Lloyds opening north of the border was the recent reassertion of Scotland's individuality. It is against that background that I should like to go through the amendment point by point.

The Minister of State, Privy Council Office (Mr. John Smith)

Will the hon. Member bear in mind that the gentleman to whom he is referring stated that he thought that the Government's devolution proposals in the Bill before the House were perfectly consistent with the economic and financial unity of the United Kingdom, but went on in the same speech to say that he was against any separation and economic disruption between the two parts of the United Kingdom such as the amendment proposes?

Mr. Crawford

I shall come to that point later. I should like to quote some more remarks made by Sir Jeremy Morse.

Mr. Teddy Taylor

Does the hon. Member accept that this is just one of a whole series of cases in which, in a desperate attempt to find someone anywhere in banking, finance, industry or insurance who supports his proposals, he is trying to quote someone totally out of context? In the very same speech, the words of Sir Jeremy Morse were to the effect that he was not in favour of independence and hoped that it would not happen. The full text of the speech, a copy of which I have, is a clear statement of the danger that would arise for Scotland if there were any question of disrupting the unity of the United Kingdom.

Mr. Crawford

I shall come back to this matter later. If we are going to quote from The Guardian, the hon. Member will have read—[Interruption.] I shall be happy to give way to the hon. Member for Dumfries (Mr. Monro), who seems to want to intervene from a sedentary position.

What Sir Jeremy Morse said to the correspondent of The Guardian was this: Scottish independence would be more likely to lead to increased investment in Scotland than a withdrawal of industry. It is the first paragraph of Sir Jeremy Morse's remarks. I have verified it with the Scottish correspondent of The Guardan, John Kerr. If the hon. Member wants to get in touch with John Kerr, he is welcome to do so.

Returning to the amendment, the first thing that we seek to make a devolved matter is the Scottish banks. There are two banks in Scotland which are predominantly Scottish owned—the Royal Bank of Scotland and the Bank of Scotland, the later, happily or unhappily, having been founded by a Scotsman. It may be of interest to the Committee to know that the Bank of Scotland has maintained in its head office from its very earliest years the chest that was used for the money invested in the Darien scheme, which was perhaps not a very felicitous introduction to joint Scottish-English ventures.

Mr. Alexander Fletcher (Edinburgh, North)

The hon. Member said that there are two banks in Scotland that are predominantly Scottish owned—the Royal Bank of Scotland and the Bank of Scotland. Perhaps he will clarify that point, because in the context in which he has made that remark I assume that he means that the majority of shareholders of both banks are resident in Scotland and not throughout the United Kingdom. Will he clarify that matter? If he cannot do so, his statement is completely unfounded.

Mr. Crawford

I thought that the hon. Member would be intervening on the subject of the Darien scheme. Barclays has about 35 per cent. of the shares in the bank of Scotland and I think that Williams and Glyn's and others have about 15 per cent. or 16 per cent. of the shares in the Royal Bank of Scotland.

Several Hon. Members

rose—

Mr. Crawford

Hon. Members will have time to make their speeches later

The third Scottish bank is the Clydesdale Bank, which is 100 per cent. owned by the Midland Bank. The general manager is a member of the "Scotland is British" campaign. I wonder what he would say if the Midland Bank assumed all the operations, branches and name of the Clydesdale Bank. The present situation is a result of amalgamations over many years.

One of the basic rights of banks is the right of note issue. My hon. Friend the Member for Aberdeenshire, East (Mr Henderson) will know that Scottish banknotes are not legal tender even in Scotland since he tried to introduce a Bill to make them legal tender but this was refused permission.

Dr. M. S. Miller

Can the hon. Member for Perth and East Perthshire (Mr. Crawford) confirm that the Bank of Scotland is composed of an amalgamation of two banks—the Bank of Scotland and the British Linen Bank?

Mr. Crawford

The Bank of Scotland is an amalgamation of many more banks than the British Linen Bank. The hon. Member for East Kilbride (Dr. Miller) may not know that the British Linen Bank is now back in business and that it has taken over the merchant banking functions of the Bank of Scotland Finance Company.

Until recently there was an agreement with the English banks that they would not open offices in Scotland and that the Scottish clearing banks would not open offices in England, except in London which is one of the main financial centres in the United Kingdom. This situation has changed recently and the main clearers are opening branches in Scotland.

In the same article dealing with the opening of Lloyds Bank in Edinburgh on Friday it is stated: Whatever the political outcome of this trend it was enough to make an international banker say: 'Can we be in 43 countries and not be in Scotland?'. I am pleased that Lloyds and the other clearing banks recognise that Edinburgh is a major financial centre. For that reason we wish to ensure that banking in Scotland becomes a devolved function. The seeds of erosion of financial decision-making still exist and the control of much of Scottish industry has gone from Scotland. We wish to ensure that control over Scottish finance does not go the same way.

The same applies to the merchant banks. They are flexing their muscles. They are becoming less insular. They are becoming used to the climate of independence in Scotland. They are becoming more international and the Bank of Scotland and the Royal Bank of Scotland have recently established international divisions.

I turn to the subject of insurance. Not so long ago Scotland was the home of many independent, vigorous insurance companies. Many of them have now been swallowed up by larger companies based in London and elsewhere. The decision making has been lost to Scotland. However, a few remain, including General Accident, which is based at Perth in my constituency. I can testify to its excellent work and to its contribution to the independent vigour of the community. But again the seeds of erosion are there. It is essential that an Assembly should be able to assist insurance companies to pursue independent and internationally minded policies. It is essential that it should be able to get on with its work without Government interference from Westminster.

Miss Harvie Anderson (Renfrewshire, East)

Has the hon. Member for Perth and East Perthshire (Mr. Crawford) the authority of the management of General Accident to make such a statement?

5.45 p.m.

Mr. Crawford

All I said was that the headquarters of the company remained in Scotland. I do not think that I need permission to say that because it is a fact.

Miss Harvie Anderson

I asked whether the hon. Member had the management's approval to say what he said.

Mr. Crawford

I do not need permission to say that General Accident has contributed to the independent vigour of the community of Perth. I take it for granted that it does. If the hon. Member for Renfrewshire, East (Miss Harvie Anderson) is suggesting that the company would refute my remarks, I do not believe that the management would agree with her. I have not asked permission to say that the company contributes to the independent vigour of the community.

One of the aspects of the insurance companies which Scotland has retained is life assurance. Scotland has nine life assurance companies. I see that the hon. Member for Cathcart is becoming excited at the mention of assurance companies.

Mr. Douglas Henderson (Aberdeenshire, East)

That is because the hon. Member for Glasgow, Cathcart (Mr. Taylor) has just been turned down by an assurance company.

Mr. Crawford

My hon. Friend the Member for Aberdeenshire, East has just made the most interesting remark. The hon. Member for Cathcart would be considered—at a premium.

My comments about insurance corm panics apply mutatis mutandis to the Scottish assurance companies. The "Scotland is British" campaign may huff and puff and say that such companies are leaving Scotland, but no one has yet named one assurance company which threatens to leave Scotland if there is devolution. One of the great selling points is that such companies are not directed from London.

Mr. Alexander Fletcher

The hon. Member for Perth and East Perthshire (Mr. Crawford) insists that these are Scottish companies, but he must know that assurance companies are owned by their shareholders and policy holders. The majority of policy holders and shareholders live outside Scotland. Will the hon. Member clarify his position?

Mr. Crawford

The hon. Member for Edinburgh, North (Mr. Fletcher) has refused to name one of the nine assurance companies that plans to leave Scotland. Not all the Scottish life assurance companies are owned by policy holders.

The next item on the amendment concerns investment trusts. I asked the hon. Member for Cathcart if he would write to me if he had any problems about this subject. I do not know if the post has gone astray but I have not yet received a letter from him.

Mr. Teddy Taylor

I have sent the hon. Member for Perth and East Perthshire (Mr. Crawford) a letter and two reminders asking specific questions. He has not replied. The hon. Member invited me to telephone Mr. Stout, who told me that the hon. Member was totally misquoting him out of context.

Mr. Crawford

I should be grateful for a transcript of Mr. Stout's telephone conversation. I am sure that the hon. Member for Cathcart would be happy to see more and more Scottish investment trust companies moving out of Scotland.

The retention of investment trusts as a devolved matter is of importance to Scotland. Control over Scottish financial institutions is important. The Conservative Front Bench will agree that Scottish financial institutions were built up in the 19th century as special Scottish institutions.

I must point out that the assets of the investment trusts in Scotland amount to £2 billion. The assets of English investment trusts amount to £4 billion—a much smaller amount, pro rata. These Scottish investment trusts, as Mr. Stout said and as I said he said last Tuesday, are very worried about the future. I will not repeat the issues that I raised last week, but financial circles in Edinburgh have expressed grave concern about the takeover of Scottish investment trusts by the British Rail pension fund and the National Coal Board pension fund. Also, it is not very helpful, having taken over Scottish investment trusts, for these pension funds to invest the money in works of art. If it had to be invested, it would have been better invested in Scottish industry and jobs, rather than in antiques.

The same arguments apply to unit trusts. However, I admit that Scottish unit trusts are not as Scottish as investment trusts.

These issues cover the first five or six headings in our amendment, and represent the superstructure of a modern self-governing nation. The other headings could be termed the infrastructure.

Returning to the subject of Scottish bank-notes, as I have pointed out, my hon. Friend the Member for Aberdeenshire, East attempted to introduce a Bill to make the Scottish bank-note legal tender in Scotland. This House refused him permission even to introduce it. It is disgraceful that the nation of Scotland, that has contributed so much to international financial thinking, should not even have permission to issue bank-notes that are legal tender in its own country. Even the Isle of Man has that right.

The hon. Member for Ayr (Mr. Younger) said that the Scottish banks do not want their bank-notes to be legal tender in Scotland. I emphasise that point—he actually said that the Scottish banks did not want Scottish notes to be legal tender—

Dr. Jeremy Bray (Motherwell and Wishaw)

I think that the hon. Member for Perth and East Perthshire (Mr. Crawford) is not entirely well advised in emphasising this point. Does he realise that Scottish bank-notes, held by the branches, are not counted in the calculations of liquidity rates? Therefore, if he emphasises this point too much he might be helping to put up our bank charges.

Mr. Crawford

No, they are not counted in the calculations, but they are very useful as till money and the hon. Member should note that point.

I come to the regulation of interest rates, and credit and currency levels. Last week, because of filibustering, it was impossible to debate SNP amendments that would have allowed the Assembly to borrow funds other than in sterling. Irrespective of what has been happening to sterling lately and whether it is advisable to borrow in hard or weak currencies, the Scottish Assembly should have the freedom to borrow in the currency of its own choice. Also it should not necessarily be bound by the interest rates set by the National Loans Board.

To those who say that this means having a Scottish currency, I say that the problems of a Scottish currency would be problems of strength, not of weakness. We all know that a strong currency has its own problems, but its problems are much preferable to those of a weak currency. Those hon. Members—on both sides of the House—who are smirking should talk to the Governor of the Central Bank of Ireland and find out that the poor little Irish Republic is actually considering revaluing the Irish pound compared with the pound sterling. I was told that when I was in Ireland last July. The Irish economy has grown even faster since July than the United Kingdom economy.

Unless the regulation of interest rates and credit levels becomes devolved to the Scottish Assembly, that Assembly will have no independence of action. Unless these matters are devolved it will mean that the centralised economic management of the United Kingdom Parliament will be perpetuated; Scotland will be first into recession and last out of it, and higher unemployment north of the border will continue.

It will not do for the hon. Member for Berwick and East Lothian (Mr. Mackintosh) or the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) to bemoan centralisation. They must realise that the only way to halt such a trend is to give the Scottish Assembly devolved powers over these matters.

Mr. Harry Ewing

The hon. Member is doing his best to make the case for his amendment, but he should not be surprised if the House finds it difficult to take him seriously. I wonder when he came to the conclusions that he has just been making. As recently as 1975, in an attempt to bring down Mrs. Margo McDonald from the vice-presidency of the Scottish National Party, for which he was running, he was the author of a document, leaked by himself to the Scotsman, in which he said that the economies of Scotland and England were so intertwined that it was impossible to unravel them. When on earth did he change his mind, and come to the conclusions that he is drawing this evening?

Mr. Malcolm Rifkind (Edinburgh, Pentlands)

He changed his mind when he lost the election.

Mr. Crawford

The hon. Member for Edinburgh, Pentlands (Mr. Rifkind) is trying to help the Under-Secretary by saying that I lost the election. I shall correct them both. I did not stand for the election, and Mrs. Margo McDonald is not the vice-president of the SNP. Otherwise, the Under-Secretary is 100 per cent. correct.

If I may anticipate the criticisms that will be made of our amendment during this lengthy debate, I expect that one will be that the SNP will act irresponsibly in the Scottish Assembly. I repudiate this absolutely. Last week the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn) said that my party would use any means, fair or foul, to achieve its aims. That is not true. We shall use only fair means to achieve our aims.

I should point out that a nation whose monetarism is bound up with Adam Smith can hardly be less responsible than a nation until recently worshipped at the feet of John Maynard Keynes. It ill behoves this House to impute financial irresponsibility to a future Scottish Assembly when only recently it discovered a £200 million loss by the Crown Agents, and is the victim of a system in which one of its own nationalised industries loses £500 million. That kind of criticism, coming from this House, will be taken ill by the Scottish National Party.

We would expect the Scottish Assembly to operate a system of public committees which could bring before them people engaged in the nationalised industries and which could publish the accounts and decisions of those industries in order to find out what sort of a state they were in.

The second criticism is that we would not be able to have these devolved matters in a unitary economic State. If there can be a pay policy in England without there being one in Scotland, as is envisaged in Clause 40, there is no reason why these other matters cannot be separated as well.

The third criticism is that our amendment would give Scotland unfair advantages. That depends on what one means by the words "fair" and "unfair". As I said, Scotland has suffered unfair treatment in the past. We have been first into recession and last out of it; we have had more unemployment; and we have suffered lower family incomes than England.

Why should our nation not manage its own finances? Scotland has enjoyed a financial renaissance in recent years, fuelled to a certain extent by our oil. But it is a continuing renaissance. The clearing banks are establishing international divisions in Scotland and foreign banks are coming into Scotland. There is a new spirit of adventure.

Mr. Jim Craigen (Glasgow, Maryhill)

What kind of direction would be given to the Scottish banks, given that the SNP would be directing this in the Scottish Assembly? There is a great deal of evidence suggesting that up to now the banks have been rather cautious in their investment policies. The reason why I intervene is to ask the hon. Gentleman what his policy would be on the question of foreign banks, mainly American, coming not only into London but into a Scottish situation.

6.0 p.m.

Mr. Crawford

We do not have any policy about banks coming into London, because we do not believe that we shall ever be in a position to legislate about what happens in London. If the hon. Gentleman reads the SNP monetary policy, he will discover that we are quite happy for banks to come in provided that they observe the commercial laws of the day and have regard to the social policies of an independent Scotland.

In its policy on monetary affairs, the SNP has said that we would insist on clearing banks being largely Scottish-owned, just as the Bank of England insists that they be largely United Kingdom-owned.

Mr. Sproat

Eighty per cent.?

Mr. Crawford

If the hon. Gentleman reads the SNP monetary policy, he will discover that it is actually 86 per cent. He will be aware that the Bank of England insists that the clearing banks in the United Kingdom are 90 per cent. owned. We are being slightly more liberal.

Mr. Alexander Fletcher

It would be interesting to know who will buy the shares and whether investors in other parts of the United Kingdom will be forced to sell them to Scottish residents if, indeed, Scottish residents choose to buy.

Mr. Crawford

I should be glad to sell some of the shares to the hon. Gentleman.

If these functions come under the Scottish Assembly as a devolved matter, it will save a lot of cost, travel and business hassles. Business men and financial people, instead of trailing to Government Departments in London, will enjoy a dialogue with representatives in the Royal High School and St. Andrew's House.

I realise that industry does not like change. But I would remind the hon. Member for Cathcart and others that in 1706 the people who led the opposition to the Union of Parliaments were the Glasgow merchants and the bankers. They did not like change. I accept that industrialists in Scotland are not very happy about change. Change is coming, however, and it will be for the better.

I have more news for the hon. Member for Cathcart and others in addition to what I have already given. It comes from the Chairman of Lloyds Bank. Hon. Gentlemen will be aware that it is customary in the City of London for representatives of Government discount houses going to the Bank of England to negotiate a deal to wear top hats. Hon. Members from Scotland will know them as lum hats. There is now in Edinburgh a Government discount house. On the mantelpiece the manager has a tall hat which, he says, is there in readiness for when he goes to see the Governor of the Central Bank of Scotland.

I have much pleasure in moving the amendment. I shall be interested to see how the so-called passionate devolutionists from other parties vote in the Lobbies.

For the benefit of the hon. Member for Cathcart, I close by quoting from The Guardian of 14th January, which stated that Sir Jeremy Morse, Chairman of Lloyds Bank, said in Edinburgh that Scottish independence would be more likely to lead to increased investment in Scotland than a withdrawal of industry.

Mr. J. Grimond (Orkney and Shetland)

I must start by thanking the hon. Member for Perth and East Perthshire (Mr. Crawford) for the well-deserved compliment to The Guardian and for the excellent publicity that he has afforded that noble newspaper. We shall have to extend our Scottish occupations.

However, the Committee will be glad to hear that I have no quotations from Sir Jeremy Morse. On the other hand, I have actually spoken to Irish bankers and to the governors and directors of Irish banks. One of the things they pointed out was that, although Ireland is an independent country, it has to follow London on economic matters. The Irish currency is interchangeable with the British currency and its interest rates go up and down with those of the City of London.

They told me perfectly seriously that in many ways they would welcome having some voice in London since they are bound to follow London. In fact, total independence is to some extent illusory. The chairmen of those banks feel that they have no voice at Westminster. Of course, they have no access to the Bank of England for discussions about currency and other matters which the British banks now have. I fully accept that there is a need for some overall unity in our dealings with assurance, banking and so forth.

There are one or two points about the amendment that I should like to make. I believe that the economic provisions in the Bill are one of the areas of instability. They will have to be changed and amended in the course of time. We should give more time to this during the Bill's passage through Committee.

Like all Parliaments, the Scottish Assembly will clearly take a keen interest in the economic affairs of Scotland. It will be constantly debating the rates of employment in Scotland, the general state of the economy and so on. No one will be able to stop it. On the other hand, whatever can be said about its economic powers, it will have no control over the nationalised industries or over things mentioned in this series of amendments. Its economic powers will, therefore, be largely illusory. But I do not think that the Assembly will like the fact that there will be some confusion about who will be responsible for economic affairs as they affect Scotland. I believe this is an area of instability and that in the course of time it will have to be looked at again.

I have one or two specific points that I want to make. First, in the north of Scotland at least—in spite of low wages and to some extent the poverty that has reigned there—the rate of savings has always been fairly high. Most of those savings are taken out of the area. There are no channels by which they can be kept there. They are put into savings banks or building societies and are removed from local investment. That is a bad state of affairs.

It has been extremely difficult to get building societies to lend money in the north of Scotland and in the Islands. But as soon as oil comes along the societies all begin opening offices for the purposes of collecting local savings and lending them elsewhere. Now that oil has come along, there are more savings than ever. It will be highly desirable to have some mechanism by which those savings can be invested in local industry.

Perhaps we should extend the power of the savings banks. It may well be that we should either take powers or encourage the building societies to change their policy. That is the sort of thing which the Scottish Assembly may want to look at. I merely raise that point; I do not think it is such a drawback in England. In the Islands and the north of Scotland, however, savings are taken out of the area and are not made available for housing or for investment in local industry.

I recently went to see the Mondragon co-operatives in Spain, which are extremely successful worker co-operatives. They are largely financed by local savings which are put into those co-operatives through the local banks. That kind of thing does not happen in Scotland. If there is a resurgence of Scottish nationalism, it seems to me that one of the more useful lines it may take is to encourage Scottish savings to go into Scottish industry and not to be drained off as is the case at present.

Another point relates to investment trusts. Like the hon. Member for Perth and East Perthshire, I know that there has been concern in Edinburgh about the takeover of the Scottish investment trusts by the Coal Board and railways pension funds, but the reason for this is that their shares stand far below their asset value. No one has found any way of putting this to rights. It is possible that they might be given powers to buy in their own shares. This would be a matter of importance in Scotland, even though it would be of less importance in England, and most of the reasons against allowing companies to buy their own shares do not apply to investment trusts.

There are other suggestions about ensuring their independence and bringing the prices of their shares up to a point nearer the asset value. Here again is a matter which is of more importance in Scotland than it is in England and one to which the Scottish Assembly could usefully give attention.

Despite these differences between England and Scotland and despite the fact that there are certain useful provision that the Scottish Assembly might introduce, I accept that there is a need for some unity in the general legal provisions for insurance and so forth applying to the United Kingdom. However, I think that the economic clauses in the Bill will lead to instability on the general front.

If we set up an Assembly, it will want to debate and to have an influence over the Scottish economy. When most of the Scottish economy will be determined by what is clone by the big institutions and nationalised industries in Scotland, however, the Assembly will find that its economic powers are circumscribed. In addition, there are matters of detail that the Assembly may want to take up. I do not at the moment see how this is to be done. But these are matters to be borne in mind, and it may be worth devoting more time to the economic effects of the Bill than, unfortunately, we have been able to give them.

Mr. Dalyell

After listening to the speech of the hon. Member for Perth and East Perthshire (Mr. Crawford), one is almost tempted, before making any quotation, to give a telephone number and then to name the person being quoted. I begin, therefore, by stating the number, 031–556–9181, and the name of Mr. McHarg, the assistant general secretary of the life offices. I made it quite clear to him that I wish to quote him. He made the point that the bulk of business outside Scotland came from England and that it represented some 80 per cent. of the life offices' business. He added that this work gave a great deal of employment in Scotland. Then he said that he thought that his best course of action would be to read to me a letter which he had written to the hon. Member for Glasgo, Cathcart (Mr. Taylor). So, if the hon. Member for Cathcart does not get letters from the hon. Member for Perth and East Perthshire, at least he gets them from the assistant general secretary of the life offices.

I think that I am entitled to read the letter, and no doubt the hon. Member for Cathcart will corroborate it. Mr. McHarg says in his leter: neither the fact of devolution nor the atmosphere created by its taking place should be such as to discourage people outside Scotland placing business with us. That is a fairly carefully worded statement. However, I have to comment that it is precisely because we believe that the Bill will lead elsewhere that some of us have worries not only about the position of the hon. Member for Perth and East Perthshire but about the whole situation—precisely because it will lead elsewhere.

If I become in any way generalised on this issue, Sir Myer, doubtless you will ask me to stick to the amendment. That is what I intend to do.

For generations now, Scottish financial institutions such as banks, investment trusts and insurance companies have been a byword for probity and excellence throughout the United Kingdom. Since so high a proportion of their business is done outside Scotland, it is hardly suprising that those who run them are fiercely opposed to devolution. As major producers of wealth and the source of significant employment in Scotland, they can be expected to give an informed opinion on the cost of the exercise and the implications of this for their own businesses.

I begin to quote in relation to the insurance companies, and I quote strictly on the record remarks which have been put in written form. I leave out accounts of private conversations. Private conversations seem to be couched in terms a little less moderate than published statements.

6.15 p.m.

Mr. I. H. Stuart Black, Chairman of the General Accident Fire and Life Assurance Corporation, one of the largest composite insurance companies in the United Kingdom, told those attending his annual general meeting in 1976 that it was hard to imagine that devolution, in whatever form, would not affect their pockets. He went on: As a leading Scottish company, but with very extensive business both in England and worldwide, we must express our fears that additional costs whether in the form of rates, taxes or any other way, will put us at disadvantage with our competitors south of the Border and overseas. It would be even worse if legislation were to impose restrictions or controls which imposed on us Scots, but not on the English. That is precisely the worry which many of those who work in the insurance companies have. They fear that they will be subject to controls imposed by what many of us think will necessarily be a meddling Assembly—controls which will not be imposed from Westminster.

Mr. James Sillars (South Ayrshire)

Is my hon. Friend arguing that, if we had the ability to impose Socialist controls on Scottish capitalism while people south of the border continued not to have such controls imposed upon them, we would be worse off north of the border in terms of economic control potential than people south of the border? [HON. MEMBERS: "Yes."] Is it not significant that the shouts of "Yes" come from the Conservative Benches?

Mr. Dalyell

Perhaps, in the light of recent comment, I shall be allowed to say that what my hon. Friend means by "Socialist controls" may itself be a source of argument between the two of us. There are differing views about what precisely is meant by "Socialist controls".

Mr. Sillars

Let us take my hon. Friend's definition of "Socialist controls".

Mr. Dalyell

We could enter into a long and interesting argument about it, but I would—

Mr. John Smith

No one is asking my hon. Friend to do that.

Mr. Dalyell

If my hon. Friend the Member for South Ayrshire (Mr. Sillars) had control of all these matters, I wonder how much business would be done by the life offices outside Scotland.

Mr. Alexander Fletcher

Will the hon. Member for West Lothian (Mr. Dalyell) consider the situation which has arisen in Canada? I think it is relevant to point out that, in the province of Quebec, the Sun Life Assurance Company of Canada has decided to pull out and go to the province of Ontario. As a result, 1,800 jobs in Quebec are at stake. The Federal Prime Minister, Mr. Trudeau, has intervened and, at his request, Sun Life has postponed its decision to pull out of the province of Quebec. To my mind, that is an example of the sort of difficulties which could apply in Scotland if the statements of the hon. Member for Perth and East Perthshire (Mr. Crawford) were allowed to take effect.

Mr. Dalyell

I am prepared to accept that, having attended a conference organised by The Times Educational Supplement some two years ago when Mr. René Lévesque, not then the Premier of Quebec, gave a long lecture. Having listened to him, it is indelibly imprinted on my memory that that is just the kind of problem which occurs when people begin to exhibit separatist instincts.

Similar views to those of Mr. Stuart Black were expressed by Ian Isles, the retiring general manager of one of Scotland's oldest and largest insurance companies, Scottish Equitable, in March of last year. He pointed out that 86 per cent. of the new business contracted by Scottish Equitable in 1976 came from England. He feared that an Assembly could lead to a separate Scottish Government with its own currency, tax laws and financial regulations, in which case his company might well be forced to move its 800 employees down to England rather than risk losing its most profitable source of business.

Before my hon. Friend the Minister of State intervenes to say that I am talking about separation in this context and not devolution, I have to remind him yet again that some of us act very much on the assumption that if my hon. Friend gets his legislation it will be separation that we are talking about, and not devolution, because we see this as a motorway to separation.

Mr. Buchan

I take on board the point that there is a difference between controls, whether or not they be Socialist controls. But will my hon. Friend consider the position of a publicly owned financial institution such as the Post Office Savings Bank where 95 per cent. of the accounts come from England? It would be inconceivable that a separate England would have 95 per cent. of individual citizens' accounts held in a foreign country. Therefore, that would be subject precisely to this kind of problem. No amount of Socialist control in Scotland could deal with that situation.

Mr. Dalyell

That is a sobering and practical point which, I hope, is taken on board by those who work in the Post Office Savings Bank.

In his annual report, the Chairman of Scottish Equitable, Ernest Dawson, said that the Scottish life offices had examined the document entitled "Financial Management after Self-Government," in which the SNP suggests how an independent Scottish economy might operate. He wrote: These proposals, if implemented, are bound to lead to adverse financial consequences for Scottish policy holders. He went on to say: We must therefore resist these proposals too. Senior executives of Standard Life and Scottish Widows tell me that their minds boggle at the thought of operating in a different way in Scotland from the rest of the United Kingdom. They point out that altering or dismantling an operation within an existing unitary State to meet the special requirements of one part of it would be infinitely harder than starting from scratch and winning business in a foreign country. It is on these grounds that at least part of the proposition of the hon. Member for Perth and East Perthshire should be resisted.

Mr. Crawford

Has a Standard Life representative made any comment about the difficulties or otherwise of operating in North America?

Mr. Dalyell

Not in the remarks from which I am quoting. I am being scrupulously careful about sticking to remarks that have appeared in public. The answer to the hon. Gentleman's question is "No". I do not know myself of any comment on the North American market.

Mr. Alexander Fletcher

Is the hon. Member for West Lothian (Mr. Dalyell) aware that the main market of Standard Life and other companies is in England and that what happens in England is of much greater concern to them than what happens in North America?

Mr. Dalyell

I was about to say that the North American experience is probably marginal in this context.

As for the banks, ironically enough one of the many petty irritants on which the SNP has thrived has been the occasional refusal by English shopkeepers to credit Royal Bank of Scotland or Clydesdale Bank pound notes. As many Scots are, frankly, only too ready to take offence, it is possible to make too much of that sort of trivial annoyance. It goes without saying that the picture on the note is fiscally irrelevant. For those concerned with the purely monetary aspects of banking, the existence of Scottish banknotes is an irrelevant if agreeable anachronism, with no bearing on the very real problem of whether devolution might eventually lead to the establishment of a separate Scottish Treasury.

It is on the establishment of a separate Scottish Treasury that I think we should dwell for a moment or two. I should be at one with those who regret that in our discussions last week we did not get as far as the clauses dealing with the vital matter of borrowing requirements. However, if we have a separate Scottish Treasury as is embodied in the amendment, we really have a separate State. I need not detain the Committee by arguing at length that it is purely logical to go along that road if we want a separate State. Anyone who does not want a separate State must surely oppose this sort of amendment.

I am aware that there are others who wish to speak. There is much more that could be said, but, as there are so many others who wish to take part in the debate, I shall leave my remarks as they stand.

Mr. W. Benyon (Buckingham)

If the proposal were not so ludicrous, I might have a sneaking sympathy for it. There is the situation that is envisaged by the hon. Member for South Ayrshire (Mr. Sillars). There is also the situation whereby Scotland could become the Cayman Islands of the United Kingdom.

I understand what went through the mind of the Scottish National Party as it proposed the amendment. If we consider the list of amendments, we must recognise that the same point will be made over and over again. This is the way in which the penny will drop.

As the Assembly starts its work, if it is established, the points that are set out in the amendments will over and over again become the grit in the machine. That argument has already been raised in relation to Ireland by the right hon. Member for Orkney and Shetland (Mr. Grimond), and the same views as are expressed by the business community in Ireland would be expressed by the Scottish business community. Throughout our debates, the argument that was advanced in the Committee's previous debate, which lasted such a long time, is equally valid—namely, the ability of the Assembly to pass legislation. If we pass from there to the administration issue, we are losing the real substance of the argument.

No one pays greater tribute than myself to the business acumen of the Scots, whether in savings banks, investment trusts or in banking, and perhaps even more so in shipping. However, all the activities that I have mentioned are intertwined in the whole of the United Kingdom's position, especially in the City of London. To put forward the amendment and to support it with the sort of arguments that we have heard from the Scottish National Party is to laugh it out of court. That is because it is completely ludicrous.

Mr. Dennis Canavan (West Stirlingshire)

I would like to comment briefly on some of the rubbish that we have heard from the Benches of the Scottish National Party. In common with most of the SNP amendments, this is a separatist amendment. The thinking behind it appears to suggest that if Scottish hands are controlling something—for example, a financial institution such as a bank or an investment trust—that is necessarily in the best interests of all the people of Scotland. I am not so sure whether the SNP in its heart of hearts believes that to be so. I am very sure that it has not been consistent in expressing that belief in practice.

We may remember that last year that well-known Scottish philanthropist and SNP benefactor, Sir Hugh Fraser, was reported to have sold £7 million worth of shares in his investment trust—SUITS—to Lonrho. The following day, the Scotsman reported the comments of one leading Scottish politician, who said: This is … the unacceptable face of Scottish capitalism collaborating with the unacceptable face of international capitalism. That was myself. Unfortunately, my views and my concern for the interests of the people of Scotland were not shared by all Scottish politicians.

I noticed that in the same edition of the Scotsman there appeared the following: The Scottish National Party last night welcomed the investment. Mr. Douglas Crawford, finance and industry spokesman, said 'we welcome this investment'". How on earth can the SNP argue that Scottish control over banks and investment trusts, for example, is a good thing and in the best interests of the Scottish people, when the same party welcomes publicly a deal that to my mind brings even Scottish capitalism into disrepute, if it is not in enough disrepute already?

Similarly, I do not know why the SNP welcomed the statement that was made by Lloyds the other day that it is opening a branch in Scotland. No one has yet explained to me or to the working people in my constituency, or anywhere else, how the opening of a branch of Lloyds in Scotland will help the people of Scotland. Lloyds is opening a branch in Scotland merely to make money for itself, which will not necessarily be of benefit to the majority of the people of Scotland.

Mr. Crawford

I did not welcome or oppose the opening of a branch of Lloyds in Scotland. I welcomed the comments of its chairman, who said on the opening of the branch that Scottish independence would be more likely to lead to increased investment than to the withdrawal of industry. That is what I welcomed.

Mr. Canavan

I do not know whether the hon. Gentleman read the speech of the Chairman of Lloyds, but from my reading of it in the newspapers it appeared that he specifically stated that independence would be a bad thing and that he was not in favour of independence for Scotland even by his capitalist standards.

6.30 p.m.

Mr. Sillars

Given that my hon. Friend and I take a certain Socialist standpoint, does he agree that it might be to the enormous benefit of Scottish working people if the Assembly were to have legislative power to prevent Lloyds opening the branch to which he referred, which we both agree is an avenue for putting and taking money into and out of the pockets of ordinary Scottish working people?

Mr. Canavan

I agree that there must be Socialist control over the flow of capital, not only within Scotland, but throughout the United Kingdom and elsewhere. In view of the integrated structure of the United Kingdom economy, I think that a United Kingdom strategy on this matter is better than a national or separatist strategy within Scotland alone.

I shall give an example from the present mix of our economy, which I do not accept is the best possible mix. The Scottish Amicable Insurance Company employs many of my constituents as well as many of the constituents of the Under-Secretary of State, my hon. Friend the Member for Stirling, Falkirk and Grange-mouth (Mr. Ewing). Many of that company's policyholders come from south of the border.

The hon. Member for Perth and East Perthshire (Mr. Crawford), after an intervention by the hon. Member for Edinburgh, North (Mr. Fletcher), said that he had not heard any spokesman on behalf of the assurance or insurance companies in Scotland state that those companies would pull out if Scottish independence came about. That may be true, but it is not the spokesmen, managements or chairmen of the assurance or insurance companies who alone dictate whether they pull out, close down offices or make some of their staff redundant. Rightly or wrongly, many policyholders south of the border would be concerned about the setting up of a completely separate Scottish State. Many of those policyholders would withdraw their money and invest elsewhere. That is one example of the integrated structure of our economy and the way in which it affects jobs, irrespective of whether we accept the present mix of our economy.

I should like finally to pose a more fundamental question. How can we debate the devolving of something if we do not already control it? How can we control anything unless we own it? We need a fairer distribution of wealth and more democratic control of banking, financial institutions, investment trusts and the other sectors mentioned in the amendment. That means a change of ownership—Socialist ownership. Socialism, not nationalism, is the answer. This amendment is irrelevant to the needs of the people of Scotland.

Mr. Teddy Taylor

I was impressed by what the hon. Member for Perth and East Perthshire (Mr. Crawford) said about the success of Scottish financial institutions. I think we would all agree that, whether we want to socialise, nationalise, encourage or cut them back, Scottish financial institutions have a very good record.

The banks, insurance companies and investment trusts in Edinburgh and elsewhere have had a remarkable degree of success. There is no doubt that that success has been the basis for their following certain principles. I suggest that we should generally take the advice of anyone who has been successful in these matters. The hon. Member for Perth and East Perthshire, who proposed that we should have separate Scottish control—virtually an independent economic system—over banking, insurance, assurance, merchant banking, investment trusts, unit trusts, legal tender, regulation of interest rates and credit and regulation of currency levels, as set out in the amendment, should have regard to those who have achieved success in those spheres.

I have met many people concerned with those activities. I have received letters and telephone calls from them, sometimes on my own initiative and at other times at the request of the hon. Member for Perth and East Perthshire. So far as I am aware, no one believes that Scotland or Scottish business or commerce would benefit if we applied the policies advocated by the Scottish National Party.

What are those policies? We have some indication in the amendment. There is another indication in a document published by the SNP headed "Financial Management after Self-Government." What does the SNP propose? Limitations on bank lending to non-residents and limitations on borrowing abroad by Scottish residents could be among the first necessities. That appears at the foot of page 2 of this document.

The Scottish investment and banking scene has taken full advantage of the use of capital all over the world to benefit Scottish business. Many businesses in Perth and Edinburgh depend on Scottish finance and banking having access to money from other parts of the country and abroad. How successful does the hon. Member for Perth and East Perthshire think the activities of Scottish banks south of the border—for example, the Clydesdale Bank in London and elsewhere—would be if we applied that kind of silly policy?

The SNP document proposes that insurance companies in Scotland should be limited to buying Scottish securities. That would be nonsensical.

The hon. Gentleman is, we are told, the financial expert of the SNP. That worries us considerably. Indeed, from time to time he has based his arguments on comments made by people who agree with his views. We have had many examples. The latest was today. The hon. Gentleman referred to Sir Jeremy Morse. I spoke to Sir Jeremy Morse yesterday on the telephone. Sir Jeremy confirmed that his speech, which has been published, is a straight indication that Economic union had not been a zero-sum game. Scotland, who had started as the poorer of the two partners, had derived a greater relative benefit from the Union than England. Time and again he emphasised in his speech that to upset the economic union of Scotland and England would do great damage both to Scotland and to England.

Even the famous article in The Guardian ends with the statement: He"— Sir Jeremy Morse— was not personally in favour of independence and hoped it would not happen. This is not just a matter of a whole series of similar comments. For example, I had a letter from the hon. Member for Perth and East Perthshire. I must be careful and accurate. It was not from the hon. Gentleman. It was signed on his behalf by a lady called Rosie. This letter, which is dated 7th January 1977, referring to the clearing banks, states: The thinking behind their"— the clearing banks'— comments accepts that self-government will be of benefit to all the people of Scotland and there are only one or two matters of technical details which still have to be worked out. The SNP looks forward to their"— the banks— continuing help over these matters of technical detail. We had a clear indication—

Mr. Crawford

indicated assent.

Mr. Taylor

The hon. Gentleman nods assent. We had a clear indication that the clearing banks liked the idea. The SNP had been in touch with them and required further discussions over matters of technical details".

I wrote to the Committee of Scottish Clearing Bankers and received a reply from the Secretary, Mr. J. C. Sutherland, on 3rd February last year. I had asked him to tell me about the Scottish clearing bankers' support for SNP policies. The answer was: The first thing that has to be said is that there has been no liaison of any kind whatsoever between this Committee and any political party on this particular subject. I could quote many more examples, but I shall quote only one—an article which appeared in the Perthshire Advertiser on 6th July. It has a good heading: Why MPs collapse under the strain … by Douglas Crawford". He said: I had very interesting discussions in London last week with senior officials of Barclays Bank and the Leicester Building Society"— financial name-dropping all the time— it is worth pointing out that these executives are now accepting that Scottish self-government is a virtual fait accompli". We got in touch with both organisations. A representative of Barclays Bank said: I can, however, assure you that neither the executives concerned, nor the Bank as a whole, subscribe to the views set out in the last paragraph but three of Mr. Crawford's article. A representative of the Leicester Building Society told us: We certainly had a discussion over dinner with Mr. Crawford, which is a practice that we have pursued with all Parties in regard to their housing policies, and this meeting was in pursuance of our policy in this respect. Any question of Scottish self-government being a fait accompli is certainly not our interpretation of the discussions and is a matter on which we expressed no opinion. I could go on to give the views of the life companies, which were quite clear. The hon. Gentleman had indicated that they were sympathetic, but when we contacted them they said that the SNP's plans would simply mean higher premiums and lower benefits. Any insurance company that must charge higher premiums and give lower bonuses to its customers has ahead of it only a loss of business, and the implications for jobs in this competitive area are clear.

The life companies are worried because 85 per cent. of their business is south of the border, and the proposal in the financial paper, which I presume is still policy, is that every life fund would have to split itself into Scottish and English pounds for Scottish and English policyholders. That would be an administrative nightmare. There are many people, including myself, who have policies with Scottish life companies and would have to choose whether to be paid in Scottish or English pounds.

Mr. Crawford

Perhaps I may read from the agreed policy of the SNP on this matter. The published document says: Holders of existing long-term policies"— this refers to life insurance companies— with underwriters continuing in business in Scotland should be given a period to decide in which currency claims and future premiums are payable.… Generally, the growing strength of the £ Scots will encourage underwriters and policy-holders to choose a Scottish currency as the vehicle for claims and premiums. That is the officially agreed policy. Perhaps the hon. Gentleman has another document.

Mr. Taylor

It is the officially agreed policy that I have. Its title is "Financial Management after Self-Government". I understood that the hon. Gentleman wrote it. I hope he is not denying it, because the words that I would quote are exactly the same: Holders of existing long-term policies with underwriters continuing in business in Scotland should be given a period to decide in which currency claims and future premiums are payable. In other words, all of us with a policy with a Scottish life company will have to decide, if the amendment is passed, whether to have our bonuses in Scottish or English pounds. It will be necessary to split up the life funds into a Scottish currency fund invested in Scottish securities and an English currency fund invested in English securities, which will make for administrative upheaval.

The hon. Gentleman has not asked the life companies what they think. We have. They say that the proposals are nonsense and would mean a loss of business and jobs. That is the picture we get from the whole of the Scottish financial world.

Mr. Sillars

I do not pretend to be an expert on life offices, but, if the hon. Gentleman is saying that currency differences, in terms of denomination, create insuperable problems for the expansion or continuation of the Scottish life offices' business, is not the logic of his argument that in no circumstances can they go into Germany, Denmark, Holland, Italy and the other countries of the Common Market, or that they cannot hope to expand inside the Common Market?

Mr. Taylor

Eighty-five per cent. of the Scottish life companies' business is in England. It is not a question of Denmark, Holland and the rest. There are difficulties in securing business in those countries because of the different currencies and separate monetary policies.

Scottish banking and finance have been successful because they have done a better job. The Scottish life companies, assurance companies and banks have a name throughout the United Kingdom for being the best. They are the best, and they have provided jobs for Scots in Edinburgh, Perth and elsewhere because they have access to the English market and the use of a common currency, because there is no silly Government control. We do not have the hon. Member for Perth and East Perthshire as Chancellor of the Exchequer to impose artificial restrictions.

6.45 p.m.

It is pathetic to see how the hon. Gentleman is trying to find Press cuttings of somebody somewhere in the banking world who may say that the SNP's policies make sense. There was a row between the hon. Member for Aberdeen, North (Mr. Hughes) and the hon. Gentleman about whether the name Goebbels should be used. The hon. Gentleman's kind of propaganda makes Goebbels look like a Sunday school teacher.

The hon. Gentleman should abandon his policies. He should ask the financial institutions what effect those policies would have. We all know what would be the effect not only on finance and banking but on industry if we had a separate currency. Has the hon. Gentleman consulted the industrialists about the effect on them if they had to work to, say, a higher Scottish pound? How would they gain business, unless with a reduction in wages? We should see the creation of an impossible situation in which two monetary and financial policies were being pursued in a United Kingdom where we had economic unity.

If the amendment shows nothing else, it shows that the SNP's financial policies are not only nonsense but are rejected by the whole of banking, commerce and the insurance world and would create more problems for Scotland. They would mean a major loss of jobs. I hope that the Committee will reject them.

We deplore the way in which the hon. Gentleman tries to misinterpret the views of various people in the financial world. Scottish banking and insurance as a whole are wholeheartedly and absolutely opposed to the SNP's silly financial plans.

Mr. Robin F. Cook (Edinburgh, Central)

My hon. Friend the Member for West Stirlingshire (Mr. Canavan) said that the distinction between him and the hon. Member for Perth and East Perthshire (Mr. Crawford), who moved the amendment, was that my hon. Friend believed that the important question was that of ownership. It is certainly correct that the hon. Member for Perth and East Perthshire does not regard that as an important question. To SNP Members, the important question is not who the owner is, not where ownership rests, but where the decision is taken and what passport is held by the person taking it and administering the policy that results from the decision.

The hon. Member for Glasgow, Cathcart (Mr. Taylor) is perhaps rather unfair on SNP Members, because they have a perfect right, and it is consistent with their policy, to table the kind of amendments that they have put on the Notice Paper, which would automatically and inevitably lead to a separate State and could be made to work only within the context of a separate State.

The hon. Member for Perth and East Perthshire would not give way to me on the question of the Darien scheme. I wish that SNP Members would show a greater sense of the history of the nation they claim to represent. It will not do to claim that the Darien scheme was a joint venture and failed for that reason, with the result that it made Scotland reluctant to work hand in hand with England. It is a bad example, because one of the reasons for its failure was that it was a solitary venture of the Scots, in flat contradiction to the policy of the London Government. If there is a moral in that tale, it is the failure of an attempt to pit the commercial policies of Scotland against those of England.

We have several times gone over the merits or otherwise of devolving trade and industry powers to the Scottish Assembly, which is what this amendment and the next amendment are about. The case against devolving those powers was authoritatively set out in the report of the Kilbrandon Commission, and it has been repeated in every official study and most unofficial studies since. It revolves around four points. Increasingly, this is an area of our political life governed by external, international regulations, particularly through the Common Market. It is an area of political life that is regulated by national organisations representing management and national organisations representing the employees' side. They are operating within a single commercial market in the economy.

That is why the Stormont Parliament, which had similar powers to those outlined in the amendment, rarely exercised them. It was impossible to embark on separate policies and separate legislation within a single commercial market. In so far as there has been pressure from the commercial bodies and the legal profession in Scotland for change in this area, it has been for change towards conformity, to reduce the problems of cross-border business and trade, rather than towards any particularly distinctive, different policy. That is an authoritative case which I have always found compelling.

What I found interesting about the speech of the hon. Member for Perth and East Perthshire in moving the amendment, which seeks to give such separate policies to the Assembly, was that he did not attempt to answer one of those arguments when he came to ask himself, rhetorically: how can the amendment be made consistent with unity in a purely devolutionary situation? The only answer he gave was that, after all, the Tory Front Bench had voted to remove Clause 40, and if it is against a pay policy being applied to Scotland it will obviously have no problems about this issue.

I did not vote with the Tory Front Bench on Clause 40, so that argument does not convince me. Even if I were on the Tory Front Bench, which God forbid, I would have to recognise that this is a purely rhetorical argument which does not confront any of the serious issues involved. The reason why the hon. Member for Perth and East Perthshire did not confront any of the issues is that he is not bothered in the slightest. It does not concern him that industry and commerce are increasingly regulated by outside international bodies, because the hon. Gentleman looks forward to the time when Scotland is independent and is a member of international bodies such as the IMF, GATT and the EEC. It does not bother the hon. Gentleman that there are national organisations which organise those bodies, because that, presumably, will have to change in his independent Scotland. It does not bother him that this arrangement is part of a single commercial economic market in the United Kingdom, because, presumably, the main aim of his party is the achievement of independence and the breaking up of that single economic market.

It is true that neither the Kilbrandon Commission nor any of the other studies that have been carried out has dealt with the issue of currency levels and interest rates being devolved to the Scottish Assembly. It never occurred to those carrying out these studies to imagine that within a devolved situation we could transfer control of currency regulations and interest rates. Those are the trappings of a separate, independent State. They are not something that can be given within a framework of unity.

I noticed that the hon. Member for Perth and East Perthshire referred to North America and to the experience of Standard Life over there. I was surprised that he should choose to pick on the North American experience. I know that he has been to North America this past summer, as I have. Indeed, I spent a lot of my time trotting around North America in the path of the hon. Member, smoothing down the ruffled feathers which he had left behind and reassuring people on the future of Scotland, about which he had raised grave doubts in the course of his passage through various cities.

The important thing that the hon. Member should have noticed is that when he passed from state to state in North America he did not pass from one currency level to another. It is rare to pass from one interest rate to another. Those are not matters which are devolved, even within a highly federal system such as that in North America. In the United States the currency levels are settled at the centre. I do not know of any situation in which currency levels—separate monetary decisions—are handled within a single state by members of a devolved assembly within that single state. Those functions are the trappings of a separate state, and that is why the hon. Member wants them.

I have forborne from quoting against the hon. Member for Perth and East Perthshire the paper published by his party. I cannot forbear from quoting one sentence from the paper which says, under the heading of "Exchange Rates": We are strongly of the view that it will be advantageous initially to try to keep the £ Scots at parity with the £ sterling. In other words, having gone through this exercise, having achieved independence and set up separate Scottish banks, having achieved legislative and administrative control of the exchange rates, what happens? The SNP would seek to keep everything the same. It will be seen that for the SNP it is not the substance of the matter which is important: it is the trappings of a separate exchange rate which matters.

Mr. Buchan

To be fair to the SNP, it also says the opposite in different policy statements. For example, in relation to life assurance, it points out the importance of going into the Scottish currency because it will be a stronger currency.

Mr. Cook

I take my hon. Friend's point. I notice that SNP Members do not seek to contradict us when we try to inform the Committee of the course it would pursue. The hon. Member for Perth and East Perthshire ended his speech by saying that the SNP would act responsibly in an Assembly. I entirely accept that the SNP has a sincere, genuine and dedicated commitment to achieving independence.

We are faced, in this debate on devolution concerning an Assembly which should be set up within the framework of a unitary State, with an amendment which cannot possibly be reconciled with that framework. The SNP must know that. Its Members are prepared to move, within the context of devolution, an amendment which can only be reconciled with total independence. We are bound to ask what kind of legislative amendments the SNP would bring forward within a Scottish Assembly. The very doubts about the behaviour of the SNP in a Scottish Assembly cannot but pose the question whether it would be wise to create such a forum in the first place.

Mr. Sillars

I have been struck by the coalition which has again emerged between a fair number of Conservative Members and a number of those on the Labour Benches, irrespective of the position that they would normally take in the political spectrum. The hon. Member for Glasgow, Cathcart (Mr. Taylor) argued—as, I think it is fair to say, did the hon. Member for West Lothian (Mr. Dalyell)—that Scottish capitalism in the form of banks, insurance and investment institutions has been highly successful. Yet an examination of the Scottish economy—which determines the life style and the overall ability of the majority of Scottish people who do not own capital assets—shows that the Scottish economy has been weak and the position of the people extremely poor.

We now have about 200,000 people in Scotland who are without any prospect of permanent employment, despite the boasts of the hon. Members for Cathcart and West Lothian about the great success of Scottish capitalism over the years. It took the right hon. Member for Orkney and Shetland (Mr. Grimond) to point out that one of the difficulties, for example in the West of Scotland, is that, while there is an accumulation of wealth, it is siphoned out of that area, an area which, as we know, has a massive problem of deprivation and where there is the possibility of economic and industrial collapse.

I would have thought that a legislative ability in the hands of a Scottish Assembly even within the framework of devolution—I concede that is not an all-powerful factor—which would allow us to introduce the publicly owned banking and invest- ment institutions to redress that terrible imbalance of wealth created but not reinvested would be worth having.

Mr. Crawford

Does the hon. Member not think it scandalous that British Railways' pension fund, having taken over a Scottish investment trust, is now investing some of the money earned by that trust in antiques rather than using it to create jobs in Scotland, which might have happened otherwise?

Mr. Sillars

That is probably something which could be referred to the Select Committee on Nationalised Industries, to be examined after the Committee has gone through, in and out of the British Steel Corporation. I will not be dragged into the realms of antique buying, about which I do not know a great deal, since I do not have enough money even to enter an antique shop.

Before leaving Cathcart and West Lothian let me point out that if there is to be any great recovery in the Scottish economy it will have to be through the public sector—

Mr. Teddy Taylor

No.

Mr. Sillars

If the hon. Member for Cathcart ever gets into Government any recovery thereafter will almost certainly have to come wholly from the public sector. Therefore, some degree of legislative control over the banks and investment institutions would be a worthwhile power to give to an Assembly in Edinburgh.

I turn now to what was said by my hon. Friend the Member for West Stirlingshire (Mr. Canavan)—

7.0 p.m.

Mr. Alexander Fletcher

Before he does that, may I revert to what the hon. Gentleman said about a coalition, as he called it, between West Lothian and Cathcart? In this instance there is obviously a coalition between South Ayrshire and Perth and East Perthshire, for the simple reason that the hon. Member for Perth and East Perthshire (Mr. Crawford) said that 86 per cent of the ownership of the Scottish banks should be vested in Scotland—in an independent Scotland, if he got his way. That would require nationalisation of the banks, which, presumably, would suit the purposes of the hon. Member for South Ayrshire (Mr. Sillars).

Mr. Sillars

I am happy to confess to that, though I greatly doubt that the hon. Member for Perth and East Perthshire (Mr. Crawford) will go along with me in that confession. I am sorry to disappoint the hon. Gentleman.

Mr. Teddy Taylor

I appreciate that the hon. Gentleman has always sincerely held the view that Socialist intervention, public intervention and the nationalisation of everything would help to solve Scotland's problems. Has he the slightest evidence from anywhere else in the world showing that that could happen?

Mr. Sillars

Yes, there is a good deal of evidence in various parts of the world—

Mr. Teddy Taylor

Where?

Mr. Buchan

There are various examples—Renault or Volkswagen, for instance.

Mr. Sillars

I note what my hon. Friend says. There is a good deal of evidence.

Mr. Canavan

In France the banks are nationalised.

Mr. Sillars

My hon. Friends are pouring information over to the hon. Member for Cathcart. It is a rare occasion when my two hon. Friends are so readily prepared to help me in these matters.

I come now to what was said by my hon. Friend the Member for West Stirlingshire. There is no basic difference between us on the Socialist argument, but I put it sincerely to my hon. Friend that he is in danger of falling into the trap into which a lot of people fell at the time of the EEC referendum. The interests of capital, whether English, Scottish, British or European, put the frighteners on the workers by saying "If you have the audacity to exercise a political judgment different from the one which we hold, given our capital interests, we shall withdraw the benefits of our capital." That was said before the Common Market referendum, and there is a danger of its being said during the campaign for a referendum on the Scottish Assembly.

My hon. Friend talked about policy holders, saying that we must take account of the opinions of such people, and in so doing he came dangerously near to saying to Scottish working people "Be careful. There are strict limits upon the political judgment which you can exercise, because capital has a political view which says Thus far and no further'."

My hon. Friend the Member for Edinburgh, Central (Mr. Cook) made what amounted to a powerful case for a centralised European Government, because the logic of his argument, within the context of the EEC—which was one of the external factors that he mentioned—means that one would have to have an extremely powerful central European Government in order to overcome all the other external influences, such as those exerted by multinational companies.

One of the reasons why I support the amendment before us is that I believe that we must have a redressing of the imbalance now apparent, a redressing of the centralising factors which are bound to be evident within a capitalist European Economic Community.

My hon. Friend the Member for Edinburgh, Central said that for many years Stormont had substantial devolved economic and financial powers but did not exercise them because it could not exercise them. I argue that the Stormont Government did not exercise those powers because they would not do so, because the economic state of ordinary working people in Ulster was not something which terribly bothered the Ulster Unionist brigade who controlled the Province at that time. They were more concerned with constantly playing the Orange card than with raising the basic social level within Ulster itself.

To give an illustration of what I mean, I recall something said by John Brewis, who used to be the Member for Galloway. He told me that he was quite astonished when he went over to a Conservative Party meeting in Ulster and made what one may call the standard speech, referring to the level of benefits, the question of housing allocation and financial resources, the problem of economic development, and so on. He got virtually no response. Then the Ulster Unionist at his side stood up and virtually played the Orange card over and over again, without reference to the underlying social and economic problems of Ulster. I do not, therefore, think that Stormont is a good example to bring into this argument.

I return to the point that I made earlier. There is a great danger of Left-wing members of the Labour party playing the capitalist game, allowing folk such as Lord Weir of Cathcart to threaten his workers that, unless they vote as he says and as he believes to be in the best interests of everyone concerned, the dire consequences of unemployment will automatically follow.

Mr. Teddy Taylor

Quite untrue.

Mr. Dalyell

There is not only Lord Weir of Cathcart; there are also such people as Willie Boyle, convener of shop stewards of the AUEW.

Mr. John Smith

There is the Scottish TUC on the other side.

Mr. Dalyell

There are also such people as David Graham of the AUEW. Throughout central Scotland there is strong feeling on this matter.

Mr. Sillars

David Graham is not the best example to choose, because he played exactly the same game during the run-up to the EEC referendum. My hon. Friend the Minister of State has a more substantial case when he refers to the TUC.

Mr. Buchan

If my hon. Friend wants three Left-wing sources making the same sort of point, he can take the Communist convener at UCS, the Communist convener at Rolls-Royce and the Communist convener at Babcock and Wilcox, all of whom say exactly the same. Does my hon. Friend reject the Left-wing credential?

Mr. Sillars

On the question whether we should stand idly by and allow the employer to threaten his workers because of their potential exercise of political judgment, making no protest whatever about his ability or right to do so—I do not challenge his power to make that statement, because of his ownership of the capital—yes, I do question the Left-wing credential.

Mr. Teddy Taylor

Lord Weir does not own the capital of Weirs, which is a public company owned by shareholders on behalf of Scottish pension funds, and so on. Moreover, he has not threatened anyone. Finally, he is not Lord Weir of Cathcart; he is Lord Weir of Eastwood. The title to Cathcart is still vacant.

Mr. Sillars

More likely to be taken by the hon. Gentleman than by anyone else in this place, no doubt. I do not make any apology for getting the final part of the name confused. Plainly, my mistake made no difference to the way the Committee understood my point. Everyone knows the person to whom I am referring, and where I come from he is known colloquially as Weir of Cathcart. If the hon. Member for Cathcart studies Lord Weir's statements, he will find inherent in them the same expressions of view as were put to the workers of Scotland and elsewhere during the EEC referendum campaign.

I ask my hon. Friends on the Left seriously to think about some of the alliances in which they are getting involved—alliances which are being used against the interests of the workers of Scotland.

Mr. Teddy Taylor

What about the hon. Gentleman's alliance with the SNP?

Mr. Sillars

No, I am in no such alliance, because I do not agree with what SNP Members say about total independence, which is a classically separate issue.

Mr. John Smith

I think that I can sum up briefly, because the hon. Member for Perth and East Perthshire (Mr. Crawford) put forward a series of assertions rather than arguments. His assertions have been pretty well knocked down by hon. Members on both sides of the Committee. The hon. Gentleman does not do a great deal to buttress his argument when he tries to pray in aid all sorts of financial sources. Either his arguments are good in themselves, in which case it would make no difference whether the financial institutions approved or disapproved of them, or they are not.

One of the unfortunate features of our debate in the Committee is that we have my hon Friend the Member for West Lothian (Mr. Dalyell) quoting a long list of people who have said something about devolution or other matters, and then we have another list from the hon. Member for Perth and East Perthshire. It is our job to listen to the arguments and make up our own minds on the basis of the case before us, recognising that those institutions or individuals may be wrong in what they say.

I thought that my hon. Friend the Member for South Ayrshire (Mr. Sillars) put a better gloss on his case, since he at least argued it, unlike the hon. Member for Perth and East Perthshire, who offered no more than a series of assertions.

The basic point is that the amendment, if carried, would create what amounted to economic separation. It would mean that the United Kingdom Government and the British Parliament, which we regard as the appropriate vehicle, would

not be in charge of the economy as a whole, regulating the framework of trade. Nor would they have responsibility for preserving a fair balance in industry and commerce between different parts of the kingdom, or responsibility for distributing resources between parts of the kingdom in accordance with need.

I think that the detail of the argument has been sufficiently rebutted by others in the Committee. We want to make progress with other important matters in the schedule and I think, therefore, that it would be wise to say little more, because the feeling of the Committee has been clearly expressed.

Question put, That the amendment be made:—

The Committee divided: Ayes 12, Noes 291.

Division No. 62]	AYES	[7.10 p.m.
Bain, Mrs Margaret	Sillars, James	Wilson, Gordon (Dundee E)
Evans, Gwynfor (Carmarthen)	Stewart, Rt Hon Donald
Henderson, Douglas	Thompson, George	TELLERS FOR THE AYES:
MacCormick, Iain	Watt, Hamish	Mr. Douglas Crawford and
Reid, George	Wigley, Dafydd	Mr. Andrew Welsh.
Robertson, John (Paisley)
NOES
Allaun, Frank	Carlisle, Mark	Fletcher, Ted (Darlington)
Archer, Rt Hon Peter	Carmichael, Neil	Foot, Rt Hon Michael
Armstrong, Ernest	Carson, John	Ford, Ben
Arnold, Tom	Castle, Rt Hon Barbara	Forrester, John
Atkins, Rt Hon H. (Spelthorne)	Clark, William (Croydon S)	Fowler, Gerald (The Wrekin)
Atkins, Ronald (Preston N)	Clarke, Kenneth (Rushcliffe)	Fraser, John (Lambeth, N'w'd)
Atkinson, Norman	Clemitson, Ivor	Freud, Clement
Bagier, Gordon A. T.	Cocks, Rt Hon Michael (Bristol S)	Gardiner, George (Reigate)
Barnett, Guy (Greenwich)	Cohen, Stanley	Garrett, W. E.(Wallsend)
Bates, Alf	Coleman, Donald	George, Bruce
Bean, R. E.	Cook, Robin F. (Edin C)	Gilbert, Rt Hon Dr John
Beith, A. J.	Corbett, Robin	Gilmour, Sir John (East Fife)
Bell, Ronald	Cox, Thomas (Tooting)	Ginsburg, David
Bennett, Andrew (Stockport N)	Crawshaw, Richard	Glyn, Dr Alan
Bennett, Sir Frederic (Torbay)	Crowther, Stan (Rotherham)	Golding, John
Benyon, W.	Cryer, Bob	Gould, Bryan
Berry, Hon Anthony	Cunningham, G. (Islington S)	Gourlay, Harry
Bidwell, Sydney	Dalyell, Tam	Gow, Ian (Eastbourne)
Biggs-Davison, John	Davidson, Arthur	Grant, George (Morpeth)
Bishop, Rt Hon Edward	Davies, Rt Hon Denzil	Grant, John (Islington C)
Blaker, Peter	Davies, Ifor (Gower)	Grimond, Rt Hon J.
Blenkinsop, Arthur	Deakins, Eric	Grist, Ian
Boardman, H.	Dean, Joseph (Leeds West)	Grocott, Bruce
Body, Richard	Dempsey, James	Hamilton, James (Bothwell)
Booth, Rt Hon Albert	Doig, Peter	Hardy, Peter
Boscawen, Hon Robert	Dormand, J. D.	Harrison, Rt Hon Walter
Boyden, James (Bish Auck)	Douglas-Hamilton, Lord James	Harvie Anderson, Rt Hon Miss
Bradford, Rev Robert	Douglas-Mann, Bruce	Hastings, Stephen
Bray, Dr Jeremy	Dunnett, Jack	Hawkins, Paul
Brittan, Leon	Durant, Tony	Hicks, Robert
Brown, Hugh D. (Provan)	Dykes, Hugh	Hodgson, Robin
Brown, Robert C. (Newcastle W)	Eadie, Alex	Hooley, Frank
Buchan, Norman	Edge, Geoff	Hooson, Emlyn
Buchanan, Richard	Ellis, John (Brigg & Scun)	Horam, John
Buchanan-Smith, Alick	English, Michael	Howells, Geraint (Cardigan)
Budgen, Nick	Ennals, Rt Hon David	Huckfield, Les
Butler, Adam (Bosworth)	Evans, Ioan (Aberdare)	Hughes, Robert (Aberdeen N)
Callaghan, Rt Hon J. (Cardiff SE)	Ewing, Harry (Stirling)	Hughes, Roy (Newport)
Callaghan, Jim (Middleton & P)	Fairgrieve, Russell	Hunter, Adam
Campbell, Ian	Fernyhough, Rt Hon E.	Hurd, Douglas
Canavan, Dennis	Flannery, Martin	Hutchison, Michael Clark
Cant, R. B.	Fletcher, Alex (Edinburgh N)	Irving, Rt Hon S. (Dartford)
Jackson, Colin (Brighouse)	Moate, Roger	Silverman, Julius
Jackson, Miss Margaret (Lincoln)	Molloy, William	Silvester, Fred
Jay, Rt Hon Douglas	Monro, Hector	Skeet, T. H. H.
Jeger, Mrs Lena	Moonman, Eric	Skinner, Dennis
Jenkins, Hugh (Putney)	Morris, Rt Hon Charles R.	Small, William
John, Brynmor	Morris, Rt Hon J. (Aberavon)	Smith, Cyril (Rochdale)
Johnson, James (Hull West)	Morris, Michael (Northampton S)	Smith, John (N Lanarkshire)
Johnson, Walter (Derby S)	Morrison, Hon Peter (Chester)	Spearing, Nigel
Johnston, Russell (Inverness)	Moyle, Roland	Spriggs, Leslie
Jones, Alec (Rhondda)	Murray, Rt Hon Ronald King	Steen, Anthony (Wavertree)
Jones, Barry (East Flint)	Neubert, Michael	Stewart, Rt Hon M. (Fulham)
Jones, Dan (Burnley)	Newens, Stanley	Stoddart, David
Kaberry, Sir Donald	Noble, Mike	Stott, Roger
Kaufman, Gerald	Oakes, Gordon	Stradling Thomas, J.
Kelley, Richard	Ogden, Eric	Strang, Gavin
Kerr, Russell	O'Halloran, Michael	Summerskill, Hon Dr Shirley
Kershaw, Anthony	Onslow, Cranley	Swain, Thomas
Kilroy-Silk. Robert	Orme, Rt Hon Stanley	Taylor, Mrs Ann (Bolton W)
Kinnock, Neil	Ovenden, John	Taylor, Teddy (Cathcart)
Knight, Mrs Jill	Page, John (Harrow West)	Thomas, Mike (Newcastle E)
Lambie, David	Page, Rt Hon R. Graham (Crosby)	Thomas, Ron (Bristol NW)
Lamborn, Harry	Park, George	Thorne, Stan (Preston South)
Lamond, James	Parker, John	Thorpe, Rt Hon Jeremy (N Devon)
Lawrence, Ivan	Parkinson, Cecil	Tierney, Sydney
Lee, John	Parry, Robert	Tinn, James
Le Merchant, Spencer	Pavitt, Laurie	Trotter, Neville
Lewis, Ron (Carlisle)	Penhaligon, David	Varley, Rt Hon Eric G.
Lipton, Marcus	Perry, Ernest	Vaughan, Dr Gerald
Litterick, Tom	Prior, Rt Hon James	Wainwright, Edwin (Dearne V)
Loyden, Eddie	Pym, Rt Hon Francis	Walker, Harold (Doncaster)
Lyons, Edward (Bradford W)	Radice, Giles	Walker, Terry (Kingswood)
McCartney, Hugh	Rathbone, Tim	Ward, Michael
McCusker, H.	Rees-Davies, W. R.	Watkins, David
McDonald, Dr Oonagh	Richardson, Miss Jo	Watkinson, John
McElhone, Frank	Rifkind, Malcolm	Weatherill, Bernard
MacGregor, John	Roberts, Albert (Normanton)	Wellbeloved, James
McGuire, Michael (Ince)	Robinson, Geoffrey	White, Frank R. (Bury)
MacKenzie, Rt Hon Gregor	Roderick, Caerwyn	White, James (Pollok)
Mackintosh, John P.	Rodgers, George (Chorley)	Whitlock, William
Maclennan, Robert	Rodgers, Sir John (Sevenoaks)	Willey, Rt Hon Frederick
Macmillan, Rt Hon M. (Farnham)	Roper, John	Williams, Rt Hon Alan (Swansea W)
McMillan, Tom (Glasgow C)	Rose, Paul B.	Williams, Rt Hon Shirley (Hertford)
McNamara, Kevin	Ross, Stephen (Isle of Wight)	Williams, Sir Thomas (Warrington)
Madden, Max	Ross, Rt Hon W. (Kilmarnock)	Wilson, Alexander (Hamilton)
Magee, Bryan	Ross, William (Londonderry)	Wilson, William (Coventry SE)
Mallalieu, J. P. W.	Rossi, Hugh (Hornsey)	Wise, Mrs Audrey
Marshall, Dr Edmund (Goole)	Ryman, John	Woodall, Alec
Marshall, Jim (Leicester S)	Sandelson, Neville	Woof, Robert
Marshall, Michael (Arundel)	Sedgemore, Brian	Wrigglesworth, Ian
Mather, Carol	Sever, John	Young, David (Bolton E)
Maxwell-Hyslop, Robin	Shaw, Arnold (Ilford South)	Young, Sir G. (Ealing, Acton)
Maynard, Miss Joan	Shaw, Giles (Pudsey)	Younger, Hon George
Mikardo, Ian	Sheldon, Rt Hon Robert
Miller, Hal (Bromsgrove)	Shore, Rt Hon Peter	TELLERS FOR THE NOES:
Miller, Dr M. S. (E Kilbride)	Short, Mrs Renée (Wolv NE)	Mr. Ted Graham and
Mitchell, Austin	Silkin, Rt Hon S. C. (Dulwich)	Mr. A. W. Stallard.
Mitchell, David (Basingstoke)

Question accordingly negatived.

Mr. Henderson

I beg to move Amendment No. 466, in page 48, line 4, at end insert—

'GROUP 1 B (Industry and the Economy)

Industrial promotion. Regulation and monitoring of investment grants, aids and incentives. The Scottish Development Agency. The Highlands and Islands Development Board. New Towns' industrial powers. Provision of venture capital.'.

The First Deputy Chairman (Sir Myer Galpern)

With this we may take the following amendments:

No. 505, in page 66, line 18, leave out from beginning to end of line 19 on page 67.

No. 142, in page 66, line 18, leave out from "included" to end of line 46.

No. 429, in page, 68, line 19, leave out from beginning to end of line 11 on page 69.

Mr. Benyon

On a point of order, Sir Myer. The last debate showed how the Committee felt about Amendment No. 465. The next three groups of amendments involve exactly the same principle, although dealing with different subjects. Could we not, as a Committee, take them together and vote separately at the end, thereby saving time?

The First Deputy Chairman

I can hardly agree that they are exactly the same. There is quite a mixed bag. I think that we shall have to proceed with the amendments as grouped at present.

Mr. Henderson

I regret that the hon. Member for Buckingham (Mr. Benyon) should have suggested that we might proceed to consider these matters without having heard the argument, because it might well be that the unholy alliance of Government, Conservatives and Liberals against the first Scottish National Party amendment, on which we have just voted, will crack as hon. Members listen with perhaps a little more care to the arguments advanced in favour of the amendment and those that are to come subsequently.

Mr. Benyon

I was suggesting not that the amendments should not be discussed but that they should be discussed together.

Mr. Henderson

I accept the hon. Gentleman's qualification as to the words he uttered, but his remarks seem to indicate a certain impatience on the part of some hon. Members with the fact that the SNP is putting forward proposals which in its opinion would strengthen the powers of the Scottish Assembly and allow it to tackle some of the real problems which exist in Scotland.

In the amendment we are coming to the crux of much of the argument about what form of relationship Scotland ought to have with the other countries in these islands. In the course of our debates many arguments have been advanced and some esoteric suggestions have been made on the question why the SNP has gained in strength, and why, as a result of that, the Government have seen fit to introduce this legislation.

I recall the hon. Member for West Lothian (Mr. Dalyell)—who is only temporarily, I trust, not with us—saying that it was because there were different rates of pay for primary teachers in Scotland. I can remember other people making similar strange suggestions. But when we look at the question in all fairness—to use one of the favourite phrases of the hon. Member for Glasgow, Cathcart (Mr. Taylor)—it will be seen that it is because the people of Scotland are more and more of the opinion that the present system has not worked for them in terms of jobs and opportunities.

The extent to which it is as a result of the present constitutional arrangements is arguable, but without doubt it is the basic feeling and the basic sentiment among people in Scotland that the present system, whether a Tory or a Labour Government have been in office, has failed to meet the reasonable expectations and ambitions of the people of Scotland concerning the standard of life and the opportunity to which they feel they are justly entitled.

That is the long background to the rise of the Scottish National Party and the birth of this legislation in the House—that over the years there has been a shrinking area of opportunity for the people of Scotland, brought about partly by the concentration of economic and financial decision making in London and elsewhere. Gradually the area of discretion left to the people of Scotland to make decisions for themselves in industrial and financial matters has shrunk. Over the years this has been accompanied by the need for people of talent and ability in Scotland, who wanted to get on in life, to leave Scotland in order to realise their ambitions. It has meant that in Scottish society we have had great losses of people of vigour and determination whom we would dearly like to see in Scotland at the present time.

I think that the people of Scotland will judge this legislation not on the sort of ping-pong type of argument that we have had here but on whether we establish some form of constitutional system which is reactive to the Scottish people's desire to have more control over the economy and more control over job creation and job opportunity within their own country.

I think that there will be widespread disappointment throughout Scotland when people realise that the legislation as it now stands, unamended, will not provide the power and will not have the ability to influence in any decisive way the whole question of the industrial structure of Scotland.

I am expecting to hear the Government's response to this, because I can remember the policy they sold to the Scottish electorate at the last General Election, when there was talk about "power-house Scotland". This was to put right all the wrongs and difficulties in Scotland and in Scottish society by transferring power to the people of Scotland and to their representatives in an Assembly in Edinburgh.

I believe that there will be a strong sense of disillusionment on the part of the people of Scotland when the Bill is implemented and it is realised that it contains no substantial power to deal with questions of job opportunity and job creation. This power has been retained by the Government on a centralised basis.

The acid test of centralisation must be applied by asking has it worked. To many people in Scotland the answer would be, quite decisively, "No, it has not worked." It certainly has not worked over the years, and when people use phrases such as "the unity of the United Kingdom" and talk about the marvellous advantages that Scotland has had from the Union, many people in Scotland—not least the almost 200,000 unemployed—will have only hollow laughter for that kind of argument and that kind of response.

In the amendment the SNP is proposing to give additional powers to the Assembly to enable it to tackle many of these basic problems. This is necessary when we examine the background of Government policies. Let us take, for example, the Government's withdrawal of the regional employment premium, one of the most scandalous steps taken by this Government, and a step taken despite opposition from Scottish industry, the STUC and much informed opinion in Scotland.

7.30 p.m.

I gather—perhaps the Minister can confirm this—that there is a confidential report circulating in the Scottish Office which forecasts that Scotland will lose up to 20,000 jobs by 1980 following the withdrawal of REP. That report appeared in The Scotsman. This is an appropriate time for the Minister to confirm or deny the existence of that report. If he confirms that it exists, perhaps he will give his reactions to it.

There is no doubt that the premium was extremely valuable to many industries in Scotland in providing additional cash flow and in reducing labour costs. The Department of Employment Gazette shows that such costs were reduced by a figure of roughly 4 per cent., a useful and significant advantage but one which we have now lost if we wish to recreate our industrial structure in Scotland.

The recent Government White Paper on Government spending shows that although the combined spending of local authorities and the Government in the United Kingdom as a whole is planned to increase by 6½ per cent. in the period from now until 1981–82, the present expenditure which is the responsibility of the Secretary of State for Scotland will rise by only 3.8 per cent. and the allocation to trade, industry and employment will fall in that five-year period. The figure is estimated at £109 million for 1977-78 and £117 million for 1978–79; it falls to £104 million in 1979–80 and £96 million in 1980–81 and is £97 million in 1981–82. That means a fairly substantial decrease in the amount of Government commitment to improved employment prospects in Scotland over that period.

This will mean a decreased central Government commitment to the improvement of employment prospects in Scotland in the next five years, and that situation is reflected in the expenditure White Paper and in the withdrawal of REP. Given the fact that the oil revenues in 1980 will be about £3 billion, one must ask what response the Government and the Scottish Assembly will make to the undoubted cries that will emerge for them to take some action and initiative on unemployment and to create new opportunities. I see that the hon. Member for West Lothian has happily rejoined us, and if he wishes to intervene, I shall be happy to allow him to do so. It is a poor speech that does not contain an intervention from the hon. Gentleman.

Mr. Robert Hughes

The hon. Gentleman should resist the temptation to give way.

Mr. Henderson

Perhaps the New Year resolution of the hon. Member for West Lothian is to intervene only in alternate speeches rather than in each speech. I think that he is wise to accept the advice given to him by the hon. Member for Aberdeen. North (Mr. Hughes).

We all know that in political terms the Scottish Assembly will face lobbies from the STUC and from the business community on the grounds, "What do you intend to do about unemployment and to give new opportunities to school leavers?" The Scottish Assembly, when asked about these matters, will say, "We do not possess these economic powers", and those concerned will have to go to hammer on the door of No. 10 Downing Street until they obtain them.

Surely it would be more realistic for the Government to invest these powers in the Scottish Assembly, to give it control over the guidelines to be set for the Scottish Development Agency and the Highlands and Islands Development Board, to afford the Assembly powers in respect of venture capital, which will be most important in enabling Scotland to make progress, as well as to give it responsibility for industrial promotion and the regulation and monitoring of investment grants, aids and incentives. If we do not take responsibility for these matters ourselves, we shall never make progress.

I am not saying that there are not brilliant people who do not have other ways of achieving these ends, but I wish to emphasise that in taking the responsibility for these decisions we shall also be accountable to the people of Scotland. It is far better that we should do this in a directly elected Scottish Assembly and Scottish Government than that the Assembly should be impotent in these matters, which so affect the lives of those in Scotland.

This is the crux of the argument. We either have a centralised economic system with tight control by the Treasury over industrial matters, or we make a start and give these powers to the Assembly, allowing that body to make the decisions and to face the electorate with the decisions that it has made.

We believe that this is the best way to make the decisions. At present the Government, in putting forward this legislation, are trying to have their cake and eat it. They are trying to sell the idea to the Scottish people that somehow or other the Government are transferring power when, instead, they are strictly retaining it. We cannot have a situation in which the reality does not correspond with the appearance—or not for long. It will not be long before there will be increased agitation, activity and representation to have these powers added in any event.

I thought that the Minister associated himself at one time with those who formed other parties and adopted the view that some form of economic power should be devolved to Scotland. Therefore, he should reflect on these matters and see whether he can persuade his colleagues to reconsider the situation on the subject of economic management. This is the crux of the argument, and touches what the hon. Member for Renfrewshire, West (Mr. Buchan) constantly refers to as the instability of the situation. If we are not to obtain economic powers, we shall not have very much real power at all.

I hope that those hon. Members who have listened to these arguments will take the view that it is far better to be generous on this matter now and to take a long-term view, saying "We may not entirely like this, but let us give it a try and trust the people of Scotland and those whom they elect".

I believe that this is a key amendment. I commend it to the Committee and hope that the Minister will respond sympathetically.

Mr. Eric Moonman (Basildon)

Will the hon. Gentleman give a little more detail about the concept of regional strategy in relation to new towns mentioned in the amendment?

Mr. Henderson

I am grateful for that constructive intervention. We have included it because we think that it has to be part of an overall approach to the question of building up the Scottish economy. The new towns in Scotland have had a fair degree of success in attracting industry and giving people a new chance in life, in some cases taking them from derelict environments and giving them a good chance in life in high-paying and high-productivity industries.

The industrial powers of the new towns should be a matter for the Assembly to consider, as should be the powers under the other provisions.

Mr. Buchan

The whole burden of the hon. Gentleman's speech is either that we should have no devolution or that we should have independence. I understand that. But I disagree with him in that I do not believe that the Assembly would have independent economic action even in an independent State. I enter that caveat.

Is it not true that to a large extent the economic success of the new towns has been due to regional policies which have put industry into the new towns and which must, by definition, stop when one cuts off at the border the moving in of new industry? What the hon. Gentleman has to do to make his case is not just to say that the British economy is bad, that the British Government have not behaved very well on public expenditure, and that the SNP analysis will make it better. All the objective economic factors suggest the opposite.

Mr. Henderson

I do not think that the hon. Member for Renfrewshire, West (Mr. Buchan) will ever agree on the fundamental basis of the matter. I am sorry that he takes a pessimistic view. I take a different view. I believe that the amendment would do several very important things in Scotland. I think that Scotland would be a much more lively community, for example. There would be degrees of energy released among people in Scotland if they were taking decisions for themselves. That is an important psychological factor, which should not be underestimated.

I hope that we shall have a fairly constructive exchange of views on this matter. We get to the nub of the argument in this amendment, and I commend it to the Committee.

Mr. Robert Hughes

There is common ground in all quarters of the Committee that there are serious industrial problems in Scotland. That is not denied. Differences appear immediately one begins to discuss and think of how we can provide solutions to those industrial problems. It is not necessary to rehearse what those problems are. There are industries which have been in decline for many years, very often because of lack of investment, a lack of venture capital, as the saying goes, and the fact that Scotland, no less or no more than any other part of the United Kingdom, is not isolated from the world in economic trends. When the harsh winds blow, whether they blow to the north, south, east or west, they reach Scotland.

It is true that recent history has shown us that we have very often suffered very early from the effect of economic depression, and very often we have been the last to move out of it. We would not deny that. Nor do we deny that at present the levels of unemployment in Scotland are unacceptably high. Much more needs to be done to try to resolve those problems. But when we begin to try to find methods of resolving them we run into different sets of conflicts.

I should like to make a passing reference to the recent Select Committee which considered the steel industry. That Committee reckoned that one of the future aims of the steel industry is to see that there is a proper investment programme so that, when the upturn in the world's economy conies, we are able to produce steel at a price at which we can sell it, not only abroad but in our own countries, because if Scotland can import steel cheaper from elsewhere the laws of economics of industry demand that we do not look at labels on the steel. It does not matter whether the steel comes from Dorman Long or some German or Japanese steel company or whatever. The law of economics demands that people buy the primary product for their industry which is cheapest. It could not be other-wise.

But if one approaches the problem of investment in steel, it leads to the question of whether the industry can sustain the same level of work force. We get demands from the SNP Benches that, whatever else happens in the steel industry, in other parts of the steel industry and other parts of the United Kingdom, no Scottish worker should lose his job in the steel industry. That means, presumably, for ever, irrespective of whether the steel can be sold and irrespective of the price that can be obtained for it.

We cannot isolate the Scottish economy from the British economy. Nor can we isolate the British economy from the world economy. If one takes the view of the Scottish National Party that a separate nation status automatically confers all the benefits and none of the ills of separation, that does not pass any test either.

7.45 p.m.

I should like to make a brief reference to a recent report from Norway. In our previous devolution debates not one speech went by on the economy or social services without Norway being held up as the example to which the new Scotland under the SNP would aspire. A recent report states that, despite Norway's independence, despite its immense oil riches, its economy is running into great difficulty. Norway has found that inflation is rising and that the proceeds from oil are not matching its needs. It is running into economic problems. The fact that there is an independent country with an apparently independent economy does not mean that the economic problems disappear or that all is well with the world.

Mr. Andrew Welsh (South Angus)

Will the hon. Gentleman give way?

Mr. Hughes

Not at this point.

Part of the SNP's case inevitably is always to compare Scotland with England and to draw the inference, from facts which it produces, that Scotland is always doing much worse than other parts of the United Kingdom. That is a constant thread running through every argument. One of the favourite arguments, which has not been used tonight, is that of the difference in wage levels between Scotland and England and between Scotland and the rest of the United Kingdom. We are always told that Scottish wage levels are far below those in England and that this could be remedied only by the establishment of a Scottish Assembly, in the first instance, or would eventually be eradicated only by the establishment of a separate Scotland.

However, if one looks at recent history—I am afraid that I shall have to quote a fair number of figures to the Committee—one finds that the trend which they suggest exists is no longer present and Scottish wage levels are rapidly approaching the average wage levels of the rest of the United Kingdom and are higher than those in parts of England.

Mr. Donald Stewart (Western Isles)

Big deal.

Mr. Hughes

The right hon. Gentleman says "Big deal". He cannot have it both ways. He cannot complain when Scottish wages are low and when Scottish wages are catching up. He cannot then say "Big deal". I thought that he would be delighted at this happening.

On page 154, table 13.70, of the Central Statistical Office regional statistics, we see that for Great Britain as a whole, for people in full-time employment, average gross weekly earnings were £71.8 per week. These figures are for April 1976. The second figure, for Scotland, is £71.6 per week. That is not a big difference. For Yorkshire the average gross weekly earnings were only £67.3. In Greater Manchester, a big industrial conurbation, the average weekly wage was £69.8. I could go through all the figures.

The only figure which stands out as being much higher than that for Scotland is that for Greater London, which was an average of £82.2 per week. There are reasons for that. It is much higher than the figure for England, Northern Ireland and Scotland itself.

If one takes the case of manual workers—in case it is thought that bringing more people into account takes in those on higher wage levels—one finds a similar kind of pattern. I shall quote only two figures. For Great Britain as a whole, average weekly earnings were £65.1 a week. For Scotland, they were £66.2 a week. On that level, we are higher than the average for the country as a whole, whereas it was always argued that we were very much below it.

When one has produced statistics such as these in the past, SNP Members have always argued "But that is the wrong figure to take because that will include things such as overtime earnings and all the rest." The table on the length of the working week and overtime shows that the pattern throughout the country is now very similar. We are not working more overtime or more hours per week than other parts of the country.

When faced with that argument, SNP Members again change their ground. They never stand firm on a single argument. They then say that what we should really take into account is total personal income per head. This very valuable document—[Interruption.] The right hon. Member the Leader of the SNP does not like it when one tells him that the Scots are not doing as badly as SNP Members would like them to believe. Whatever the hon. Member for Aberdeenshire, East (Mr. Henderson) has said, he is correct to this extent: SNP Members have capitalised where there have been differences to the disadvantage of Scotland by shouting from the rooftops how badly we are doing. They do not like it when their propaganda is disproved, and they are not men enough to admit that things are not as they see them.

The hon. Member for Aberdeenshire, East said that it was necessary to separate the reality from the myth, although "myth" was not the word he used. I am separating the myth from the reality, and he does not like that.

This is a very long document. I shall not quote all the figures. I understand that there is pressure to move on to other debates. However, I agree to this extent with the hon. Member for Aberdeenshire, East: this is a very key amendment in relation to the Scottish economy and the possible prospects for the people who live and work in Scotland. In deference to time, I shall not quote all the statistics, but on page 175, in table 15.8, total personal income per head in England, as a region, in 1972—taking the United Kingdom figure as 100—is shown as 102.4, whereas in 1972 the figure for Scotland was 90.8. That is a difference to Scotland's disadvantage. We find that in 1975, for England as a region the figure had slightly decreased to 101.9, a decrease of 0.5 points on the comparative scale, whereas the figure for Scotland had risen to 96.0, an increase of 5.2 points to Scotland's benefit.

We are not in parity yet with England as a region. However, in 1972, the North of England figure was 88.7. It is now only 94.2, so we are ahead of some of the English regions.

I have had this argument previously with SNP Members in other places. They say "You do not want to take total income per head. What you ought to take is personal disposable income as the real test of comparative value and comparative earnings." Therefore, I turn to page 176 and take table 15.9, not giving all the figures, which would take far too long. I find there again that Scotland's figure was 92.6 in 1972 and had risen to 97.6, an increase of five points, by 1976. The only comparable region of the country which had seen a similar increase was the North of England, and for the South-West of England, in fact, the figure decreased by two points.

Without going into every statistic, the point I am making proves conclusively that the trend concerning the general prosperity of people in Scotland is upwards. This shows to a great extent how regional policy has been working. I am as big a critic as anyone of the efficiency of regional policy and of the way in which it has been working. Much more needs to be done in order to stimulate the Scottish economy, to see that more work comes to Scotland and so on. But the trend is not as the SNP would lead us to believe. There is no question of Scotland sliding into industrial disaster.

As I have said, I accept entirely that we have too much unemployment and still have difficulties in our basic industries. But it is not all one way. It is not a question of Scotland doing badly in every sphere. The figures show that where people are in employment they are making more money than they were previously. I hope that all of us agree about that.

How are we to see that this trend continues? As a good Socialist, I have always wanted to see the levelling up of incomes and living standards throughout the country and among people of different strata of society, as we tend to describe them. How do we do it? We certainly do not do it by giving the Scottish Assembly economic powers, because there cannot be two power centres in the economy. One cannot have a power centre based solely in Edinburgh. Nor can one have it simply at Westminster.

I do not mind SNP Members laughing. When they are embarrassed by the paucity of their case, they always laugh.

We have two methods of providing assistance to industry. One is the Scottish Development Agency, to which considerable funds have been granted. It has been made perfectly clear that if the SDA needs more money, it will get more money from the Treasury. That has been made clear.

Second, we have the National Enterprise Board, which is dealing with parts of industries which have their centres of work in different parts of the country. It is essential that where industries such as the car industry, for example, are located in different parts of the country, some body such as the NEB is able to monitor and oversee what is happening and is able to provide investment.

I want investment to come from every source. If SNP Members were to get their way with the amendment, it would be very difficult to persuade the NEB to commit its money. It is our money as well. It is not some abstract money that is involved. It is taxpayers' money, and the Scottish people pay taxes in the same way as everyone else. It would be difficut to get the NEB to commit money from its budget to solve problems in Scotland if these economic powers were given to the Scottish Assembly. The NEB would rightly say "You have demanded economic powers to solve your problems. You deal with them first, and we shall deal with the rest of the country". If that were so, we would have what the SNP would like to see, or what SNP Members pretend is the case now: the NEB being referred to as the National English Board. SNP Members would transform the NEB from being a United Kingdom economic motivator to being a regional motivator for England and possibly Wales.

I should certainly not like to see arising the problem of arguing with the United Kingdom Departments, the Departments of Industry and others, about industrial stimulation or other matters on a regional basis.

Consistently, the SNP has seen the problem. I give it credit for that. However, it is easy to see the problems. But SNP Members have consistently gone to the wrong source for the solution. They go for the solution to geography, nationality or independence. It is not in that at all. The reason why London stands out more than any other place in the figures to which I have referred is not, incidentally, because of the great cohesiveness of the nationhood of Londoners. It is far from that. It has been a matter of capitalist economics. Until the SNP understands that the reason why we have faced disparities as to where industries have grown up is the capitalist nature of the economy, it will never get anything right. It is no use continuing the sterile argument of Scotland versus England and Wales and the argument of geography. The SNP should try to argue along Socialist solutions. We shall never solve the problems otherwise.

Mr. George Younger (Ayr)

I am sure that the hon. Member would not want to mislead the Committee. Surely it is Socialist policy towards the British Steel Corporation which has centralised in London a previously decentralised industry. Will he admit that?

8.0 p.m.

Mr. Hughes

I do not know London very well, but I am not aware of any steel-making complexes in London. Steel is produced mainly in the industrial hinterlands of the country. I do not believe that the decline of the steel industry has anything to do with nationalisation or with taking people under one group. If we had been dealing with the old steel-makers, we should now be in a more difficult position. Many steelmaking concerns would have been closed down months ago, and that would not have helped the economic situation.

There is nothing wrong with conflict between politicians, but the conflict should be about the type of economy that we have. It should be about how we spend our money, not where we spend it or about the geography. I hope that the Jeremiahs in the SNP will cease to refute the facts of life. Scotland is on the move. We are progressing again, and with a Socialist economy we can build on that. The SNP way will lead to disaster and industrial chaos.

Mr. Russell Johnston

The amendment raises important questions which are germane to the centre of the argument about devolution itself. Among those who favour devolution, in whatever form, there is general agreement that in varying degrees the object is to allow people within the Scottish community as far as possible to do things in their own way. In the context of the benefits derived from and given to the Union, the rest—apart from the root and branch opponents of devolution such as the hon. Member for West Lothian (Mr. Dalyell)—differ not in principle but in degree.

Hon. Members would be wise to consider this amendment as an amendment, instead of saying that it must be dismissed because it was moved by the nationalists. It is a carefully constructed amendment. It does not necessarily lead to separatism or a break up. To give the Assembly the industrial powers which are currently exercised by the Secretary of State for Scotland would not break up the United Kingdom. To allow the Scottish Assembly control over the specific way in which the Highlands and Islands Development Board and the Scottish Development Agency operate would not result in the break-up of the United Kingdom.

Let us examine the arguments that have been expressed about the HIDB since it was set up in 1965. Those arguments have been mainly about giving it a certain amount of discretion, so that it has a certain amount of money to spend without having to rush back and forth to the Scottish Office. That is a reasonable request. However, this discretion is exercised by bureaucrats and is not under any democratic control except in the loosest sense by way of annual reports.

It is absurd to suggest that a detonator would be placed under the United Kingdom if the £7½ million-£8 million per year that the HIDB receives to spend was put under the control of an Assembly. That opinion derives from the centralised thinking of those who are frightened to allow people to do things in different ways.

The Scottish Development Agency is on a different scale. It is in receipt of a larger budget and is likely to receive even more. There are two aspects to that situation. First, the total budgetary allowance to the SDA is as effective a means of controlling it as is the idea that one must state exactly that grants must be of a certain percentage and that allowances for rent-free factories, and so on, will apply only for an exact number of years. It is not necessary to specify the detail.

Secondly, economic and political realities mean that the SDA must spread its resources and operate in a normal fashion. I do not agree with the fear that if one allows the Board freedom it will blow all its money on one project. That is an unreasonable fear.

Mr. Nick Budgen (Wolverhampton, South-West)

Would the hon. Member for Inverness (Mr. Johnston) comment on the proposition that more and more of the regulatory influences for trade, such as the EEC and the General Agreement on Tariffs and Trade are looking, not so much at tariffs, but at forms of subsidies by way of grant and State support for industry which have the same effect upon fair trading as do tariff barriers? Does the hon. Member agree that so long as we adhere to any of these international agreements it will be impossible to devolve to any form of Scottish Assembly these wide-ranging powers of financial support to industry?

Mr. Johnston

Of course it would be possible. Naturally, a Scottish Assembly, through the Westminster Parliament, would be bound by the international agreements into which the United Kingdom entered and would not be able to breach them. I recognise that.

The argument that the devolution of industrial powers would lead to greater expense is invalid. I agree with the hon. Member for Wolverhampton, South-West (Mr. Budgen) that the matter must be set in the EEC context. Those who oppose any form of devolution should bring that to the forefront of their minds.

In the European Assembly at Luxembourg yesterday I introduced a report on the second annual report of the Regional Fund. That report and the discussion on it showed an implicit recognition that throughout the European Community the poorer areas were the responsibility of all to help. It was recognised that common guidelines throughout the Community should be devised. It was also recognised that we were still some way off that. However, that is a developing factor which must be remembered, and one which operates against the arguments sugesting that to devolve these matters would have a profound effect on the economic unity of the United Kingdom. The United Kingdom economy itself is in the process of fitting in with the broader EEC economy.

Industrial promotion is referred to in the amendment. I do not see why the Assembly should not be concerned with industrial promotion. Even local authorities are concerned with this. People will, quite rightly, expect the Assembly to be concerned about this issue, and nobody will object. If the Assembly is involved in these matters it is right and proper that it should monitor the aids and incentives which it is involved in directing.

We must face the fact—and this has a lot to do with why we are here at all—that for a long time central Government has been spending large sums of money in Scotland with the intention of correcting regional disparities. Large sums of money are still being spent with that intention. Attention has been drawn to the size of those sums many times in this Committee. This policy has not worked—

Mr. Younger

It has worked very well.

Mr. Johnston

When I say that it has not worked I am not saying that it has not worked altogether. [Interruption.] If they wait a minute, hon. Members will see what I am getting at. If the plans had worked as they were intended to work it would not be possible for hon. Members, one after another, to quote figures, as the hon. Member for Glasgow, Cathcart (Mr. Taylor) has done, about 25 per cent. differentials between Scotland and England in certain matters. If the money spent had really worked as intended this persisting disparity would not exist.

Mr. Alexander Fletcher

It would help the House to understand the hon. Member's case a little better if. having said that regional policies have not worked well in Scotland, he would tell us where they have worked more successfully. Will he give an instance where money has been spent and its return been more successful in the cause of decentralisation? Has this happened elsewhere in Europe?

Mr. Johnston

It has worked, for example, where there are federal systems operating, as in Germany. There it results in a better dispersal of industry and growth centres. Germany is the best example in Europe of a decentralised economy.

Mr. Alexander Fletcher

It also has the best economy in Europe.

Mr. Johnston

Precisely. The two things must be related in some respects.

Mr. Dalyell

The hon. Member for Inverness (Mr. Johnston) and my hon. Friend the Member for Berwick and East Lothian (Mr. Mackintosh), both of whom should know better, are very fond of using the German example. What is before the House tonight has very little to do with the German example. It is as if places such as Baden and Würtemberg were represented in Bonn, each with a government of its own. Both hon. Members really should know better.

Mr. Johnston

It grieves me that I should be wearying the hon. Member for West Lothian (Mr. Dalyell). However, if I am irritating him I am succeeding in putting my case. In response to his assertion—and that is all it was—I simply assert the opposite.

I am not criticising central Government for failure to spend money. I am simply arguing that the money spent has not yielded the return that many people expected. That is why we are now engaged in trying out a new way of doing things. To allow people to make their own decisions is likely to result in better administration of services and a better economic response. I do not think that this necessarily leads to separatism in the context of this Bill. It does not even lead to federation. If the Bill, as it stands, is to succeed we must recognise that most people in Scotland would like to see a degree of economic power given to the Assembly. If this power is given in the terms of the amendment it will not do the damage which the centrists fear. Instead it will bring a great deal of benefit to Scotland and to the United Kingdom as a whole.

8.15 p.m.

Mr. Mackintosh

I am glad to follow the arguments of the hon. Member for Inverness (Mr. Johnston) and go very much along the same track. I believe that some of the earlier speeches pitched too much upon this amendment. It has not got the scope or the depth that has been attributed to it by my hon. Friend the Member for Aberdeen, North (Mr. Hughes), who raised the whole question of separation.

In introducing the amendment the hon. Member for Aberdeenshire, East (Mr. Henderson) gave the impression that if it were passed it would make more things possible than it actually will. If hon. Members study the amendment in detail they will see that it is proposed to devolve industrial promotion, which I take to refer to the powers under Sections 7 and 8 of the present Industry Act, currently in the hands of the Secretary of State for Industry. The amendment proposes not to change but to regulate and monitor the investment grants, aids and incentives already in the hands of the Scottish Office, which decides and advises the Government what areas are suitable for application of the grants, and special applications in particular cases.

The amendment proposes devolution of the Scottish Development Agency, which, in fact, is already devolved. All that is not devolved are certain guidelines which must be applied. The amendment also proposes the devolution of the Highlands and Islands Development Board, which, again, is already devolved. Here again, it is a question of devolving guidelines. The amendment means a marginal transfer to the devolved Assembly of certain special powers which are in the hands of the Secretary of State. Also included are the new towns' industrial powers, which are powers to encourage industry in those new towns. At present these powers lie with the Secretary of State.

The only new proposal in the amendment is the provision of venture capital. I do not see why legal power is necessary for this. There is nothing to stop a future Scottish Assembly or particular Ministers from going to the Scottish banks and proposing a fund which would be available for helping Scottish projects. None of this is impossible. The amendment simply provides that the Assembly should have this industrial promotion power which has accrued to the Secretary of State in the years since regional economic planning became fashionable, first under the Conservatives, in the last years before 1964, and in the period since then.

It is important and interesting to ask where the regional powers came from in the first place. How did they come into the hands of the Secretary of State originally? I wish that my hon. Friend the Member for Aberdeen, North was still here. He would support the point that I am making, that the powers that have been given to the Secretary of State, one by one, were in response to a demand from the Scottish electorate. The Scottish people told the Scottish Secretary that he was Scotland's Minister, responsible for Scottish affairs. In these circumstances the Scottish Secretary said that he must have the powers. These are not powers to invest enormous sums of money and destroy the United Kingdom economy; they are simply powers to apply existing Acts, which would normally lie with Ministers in London.

If these powers are devolved, the only question is whether they will stay in Edinburgh, with the Secretary of State in the United Kingdom Cabinet, or will be transferred to the Assembly. That is not an enormous point.

I was a member of a deputation of Scottish Back Benchers who went to the Scottish TUC to discuss whether these powers should be devolved. I remember arguments at the Scottish Conference of the Labour Party, where it was stated that these powers should be devolved. It was not a question of any of our becoming quasi-members of the Scottish National Party, or supporting the break-up of the United Kingdom, or doing other dangerous things; the package simply gave the Secretary of State the power to implement the Scottish end of certain economic policies, the overall magnitude and United Kingdom context of which was determined in London. The Scottish end was to be determined by the Secretary of State. All that we are discussing is whether the Scottish end of the determination should be passed to the Assembly or retained by the Secretary of State.

I understand—the hon. Member for Inverness perhaps knows more about this than some of us—that the question whether these powers should be devolved was discussed when the Bill was recooked after the original Scotland and Wales Bill was lost. The reason why the powers were not put in the Bill was not that there was any vast question about its being a distortion of the EEC, or anything like that. It was a rather narrow point. Certain hon. Members who represented the North-East of England felt that if these powers were devolved the Scottish Assembly would have more power in its hands to make devolution work, in the economic sense, and that that might be damaging to the North and North-East of England.

I understand those fears. I believe that if devolution does work those hon. Members will themselves be wanting a devolved Assembly for the North of England before very long.

There is a further point. I should have thought that those fears would have disappeared after last week, when it became clear that no extra financial powers would be given to the Scottish Assembly. Any extra penny which the Assembly spends on its devolved powers of assistance and encouragement would have to come out of roads, housing or health. There is a severe restriction on any extra moneys that can be spent in this way.

There is no chance of the total money available to Scotland now going beyond the block grant which the United Kingdom Government will give. The only question is whether the Scottish Assembly, in rearranging the priorities may look at the question of industrial promotion and industrial assistance as well as health and housing, for example, among the priorities available under the block grant.

The hon. Member for Edinburgh, North (Mr. Fletcher) asked what would happen if these things were devolved. I do not think that a real deal would happen, because these are existing powers.

I was discussing this question with some industrialists at lunch time. We talked about the sort of powers that had been devolved to Northern Ireland. The Northern Ireland Minister of Industry and Commerce had these powers available in Northern Ireland. No one said at the time that this would break up the United Kingdom or destroy or spoil anything.

What it did mean—I was glad to have this confirmed by industrialists of experience—was that if an industrialist wanted to set up a factory in Northern Ireland the fact that these powers were devolved meant that the decision about infrastructure was closer and was made more quickly. Speed is often of the essence.

In my constituency one of the great difficulties that I have experienced relates to industrial estates. When an industrialist comes along the matter is referred to the Scottish Office, which then refers it to the Treasury. There is then a long discussion, and the question of a grant is often decided after nine months. There is also the problem of housing and roads. The whole thing is very slow.

I have it on the evidence of industrialists that in Northern Ireland, where this type of power was devolved, the matter was dealt with more quickly.

Mr. Budgen

Will the hon. Gentleman comment on the proposition put forward from the Ulster Unionist Bench that because of the uniquely Unionist history of Northern Ireland they desired above all else to conform in every detail with similar arrangements for the remainder of the United Kingdom? As I understand it, the hon. Gentleman wants to be in a position to be able to say that Scotland. if need be, could give bigger and better incentives—or smaller incentives—than the remainder of the United Kingdom. If that happened, we should have quite a different situation.

The hon. Gentleman is not appealing to industrialists on the grounds of efficiency and being able to deal with their applications more quickly; he is appealing to them on the basis of being able to distort the economy in favour of Scotland.

Mr. Mackintosh

In the first place, I remind the hon. Gentleman that there were differentials in Northern Ireland. There were special grants because of the economic problems of the area. I also remind him that these distortions could not be bigger in Scotland, because of the limit on the total block grant available. I further remind him that the United Kingdom Government practises distortion between certain areas. In some areas grants are not available and in others they are. Is the hon. Gentleman seriously suggesting that it would distort the economy of the United Kingdom if, instead of the Secretary of State designating Dundee or Glasgow as special development areas, that power was left to an Assembly?

That is what we are talking about. It is magnifying the problem out of all proportion to suggest that this would happen by allowing a group of people in Scotland to decide which will be a special development area instead of its being done by a Member of this House resident in Edinburgh as Secretary of State.

I remind the hon. Gentleman that any extra cash given in this way comes out of the block grant. That would come out of other things which the Scottish electorate demanded. This is a very limited and restricted proposal.

Mr. Alexander Fletcher

I do not disagree with many of the things that the hon. Gentleman has said, but the critical difference is that under the present system the United Kingdom holds the ring. Under the system proposed in the amendment we are getting the beginnings of a fairly strong competitiveness within the United Kingdom, between one part of the country and another. I do not think that Northern Ireland is a particularly good example. It is a rather small area, and particularly remote.

Mr. Mackintosh

I am not clear what the hon. Gentleman means by holding the ring. In the devolved situation the financial ring is still in the hands of the Treasury. The block grant is still in its hands. Had the Assembly been given tax-raising powers these fears might have had some reality, but those powers do not exist.

I am surprised that the hon. Gentleman seems to be of a little competition. This competition already exists between local authorities. The hon. Gentleman should consider the case of a factory considering expansion. There is a queue of local authority people, people from the Scottish Development Agency and people from the new towns, hammering on the door and saying "We shall do it quicker and faster". What is wrong with that?

All we are suggesting is that these powers to compete ought to be with the Assembly rather than, as at present, with the Secretary of State in Scotland. That is the situation which is being proposed.

Mr. Alexander Fletcher

I shall not comment on all the points mentioned by the hon. Gentleman, but I believe that the local government analogy is not relevant, because local government may argue within a given area. For example, a local authority in Lothian can say whether a factory should go to East or West Lothian, but a local authority in Edinburgh does not compete with a local authority in Manchester about a factory. That situation does not apply.

Mr. Mackintosh

I do not think the hon. Gentleman knows much about industrial development if that is what he is saying. I am surprised that he did not mention the fact that we also have competition outside this country. For example, there was a factory which I wanted for my constituency. I could not get it, because the development powers were so slow that it went to Holland. It did not even go to anywhere in this country. This sort of thing happens now. The question is whether or not these powers should be in the hands of the Assembly.

8.30 p.m.

These powers were transferred to the Secretary of State for Scotland within the framework of the United Kingdom by the demand of the Scottish electorate that, bit by bit, these things had to be, done in Scotland. It is my contention that if the Scottish Assembly is regarded by the Scottish people as an organisation that is looking after domestic, internal application of United Kingdom policies, they will expect it likewise to operate these powers. My guess is that the first series of amendments that this House will have to consider is handing over these powers to the Scottish Assembly once it is set up.

I hope that no hon. Member imagines that the inclusion of these powers will solve the Scottish unemployment problem or distort the United Kingdom economy. Regrettably, the sums available are far too small.

Dr. M. S. Miller

Will my hon. Friend fulfil his promise and indicate in what way the situation will be different if the Committee accepts what is proposed in the amendment?

Mr. Mackintosh

I have indicated the two ways in which the amendment will improve the situation. The first is that the Scottish electorate will expect the people who are responsible for Scottish affairs to wield these limited powers, and they will be frustrated if that does not occur. The second is that these are limited powers but they are powers that will be wielded more quickly, more effectively, and closer to any industrialist going to Scotland if they are in the hands of a Scottish Administation which can provide the package of incentives that is currently available. If the industrialist does not have to dodge between the Assembly, the Secretary of State, the Department of Industry, the SDA and the other bodies involved at present, the situation will be improved. I do not say that it will be a great improvement, but I suspect that if we fail to put these powers into the Act, these will be the first amendments moved in this House in time to come.

I hope that the Government will think about them. They have been considered seriously by many aspects of the Labour movement. They were supported by the Scottish Labour Party conference. I hope that the Government will consider their inclusion even at this late stage.

Miss Harvie Anderson

The hon. Member for Berwick and East Lothian (Mr. Mackintosh) will not expect me to support his argument, although I listened to it with care. There is a wealth of difference between devolving within this sovereign Parliament and handing powers to a rival Parliament. I do not expect the hon. Gentleman to agree with me. However, he has not tackled the kernel of the argument, because any provisions which create the kind of conflict which many of us have referred to time and time again will not be acceptable to us.

We all see the problems of industry and of unemployment. We are in constant danger of seeing them in emotive terms. As they are presented by the Scottish National Party, they lack reality. The degree to which they lack reality is illustrated best by referring to those to whom we look to provide industry and commerce in Scotland.

We have heard the views of many people in this debate, but most of those views have been from organisations which are provided by the taxpayer with Government money so that they may hand it on to encourage industry and employment. It is my intention to refer briefly to two of those which I think have greater experience in the provision of industry and commerce and more than most hon. Members present in the Chamber at the moment.

The first quotation which I make is a very simple one from the President of the CBI, who considers that devolution is a piece of industrial and economic nonsense. We may accept or reject that view, but we have to consider it since that body embraces those to whom we look for development in the future.

I turn next to what is said by the director-general. This is a report which I do not intend to go into in any depth. Hon. Members who doubt it can look into it for themselves. He reports simply that a number of English companies are getting worried about establishing industries in Scotland under different conditions". It may be that other hon. Members have not had the experience that I have had with companies which seek to come to Scotland having very serious doubts about the future. It is to be hoped that companies will come to Scotland and that they will come in increasing numbers. But any change, whatever it may be, makes it more difficult, and the changes and uncertainties written into the Bill make it extremely hard for those of us who are trying to get companies to come to give these people assurances, which we cannot give ourselves because we do not know what developments may come from the operation of the Bill.

There can be few organisations that have followed more carefully and closely the Bill's developments and the proposals for devolution than the Glasgow Chamber of Commerce. I quote from the thoughtful speech that the president made quite recently. He said: There is no doubt… that business will be damaged; first, because prospects for future investment in this area, whether inward or indigenous, will be diminished. He went on to give illustrations based on present-day Quebec. I note that the hon. Member for Berwick and East Lothian throws up his hands. He must understand that what I am conveying to the Committee is the views of responsible people upon whom we depend to develop industry, extend commerce and employ those who are now tragically without work. Surely no one will quarrel with the objective that I have in mind, which is to extend employment. That is the intention of the members of our chambers of commerce.

The President of the Glasgow Chamber of Commerce said: Many people would be fearful to bring new capital into the area because they think that it may end up part of a small nation on the periphery of the great European Community. As it happens, most of us present in the Chamber support the Community. Nevertheless, there is a fear that within a decade that will be the result if we devolve as suggested and separate as the nationalists wish. We must look to those who are now looking for somewhere to bring industry and to develop it, and we must consider their attitude in the next decade.

Comment has been made about increased bureaucracy. The hon. Member for Berwick and East Lothian will argue that the bureaucracy that would be introduced if the amendment were accepted is already present. I wonder whether the present agencies will continue to stand as at present with the bureaucracy which is contained within the amendment. I suspect that there will be increased bureaucracy in the departments of the Assembly that will service them as they are now serviced from Government elsewhere. In all these matters we are in real danger of extending bureaucracy at a time when we can little afford to do so.

I merely wish to re-emphasise that whatever the political theorists' hopes may be, and whatever may be the thoughts of those who can so well express such hopes and who look to a totally different concept from what we have at present and from what is written into the Bill, we must not allow ourselves—I hope that we shall not do so—to be misled into believing that the hopes of the hon. Member for Berwick and East Lothian are reconcilable even with the Bill.

When we turn to the amendment, which the hon. Gentleman suggests will have little effect, we must look once again at what he finds so distasteful—namely, the purpose of the Bill. We are all too easily trapped into making Second Reading comments. That is because, although the amendment may be argued in isolation, when it is considered in terms of the Bill we are thrown back on the whole concept of what we are trying to do. I believe that it is inevitable that we are creating that very conflict, and nowhere more acutely than in the amendment. That would result in the separation which we all fear and which is my reason for total resistance to the Bill at all its stages.

Mr. Dalyell

On the issue of bureaucracy, referred to by the right hon. Member for Renfrewshire, East (Miss Harvie Anderson), I say to my hon. Friend the Member for Berwick and East Lothian (Mr. Mackintosh) that it is all very well and possibly attractive to say that the north-east of England will also demand an Assembly, but, if it does—presumably it will be a subordinate Parliament no less than the Scottish Assembly—we shall have to ask whether the whole of the United Kingdom wants to be fragmented into a series of subordinate Parliaments.

I see my hon. Friend the Member for West Bromwich, East (Mr. Snape) in his place. If there is to be an Assembly in the Royal High School which would be a subordinate Parliament, and if there were to be one in Sunderland or Newcastle, which again would be a subordinate Parliament, would there not be pressure by the electors of West Bromwich for an Assembly, a subordinate Parliament, to be set up for Mercia?

This matter raises central issues. The idea of having subordinate Parliaments, not local government assemblies, in Norwich for East Anglia, in Winchester for Wessex, in Birmingham for the Midlands and in Leeds and so on, would create an increase in bureaucracy to such a mind-boggling extent that we should be submerged by tremendous expense.

Mr. Mackintosh

My hon. Friend seeks endlessly to have it both ways in these debates. Every now and then he says that it is wicked of hon. Members to compare devolution for Scotland with the systems practised in Bavaria, Schleswig-Holstein or others of the 11 Länder of West Germany. My hon. Friend said that if it were being proposed for the whole of the United Kingdom it would be welcome, but not for part of the country. The moment that it is suggested that devolution might spread to the whole of the United Kingdom, if it looks satisfactory my hon. Friend declares that it would be intolerable for different reasons. I suggest that he cannot go on endlessly having it both ways.

Mr. Dalyell

I rely on my hon. Friend the Member for Berwick and East Lothian to persuade my hon. Friend the Member for West Bromwich, East to go back to West Bromwich and say " Let us have a subordinate Parliament for Mercia". That would be an absolutely convincing answer.

Before my hon. Friend the Member for Berwick and East Lothian goes to his supper, perhaps I may detain him on one more issue. He said that if the Bill were passed this kind of amendment would be the first of a series of amendments to take place, because these powers would be asked for in a new Parliament. That is what some of us have been saying all along. This proposal is no kind of settlement.

What does my hon. Friend say? The first thing that he will do, if he is reelected to this Parliament, will be to ask for more. That compares with the tenor of the speech made by the hon. Member for Aberdeenshire, East (Mr. Henderson), who moved the amendment. I suggest that in this matter the hon. Gentleman is right. If an Assembly is established, people will expect it to provide the economic goodies. Of course, they will be exceedingly discontented if it does not tackle economic issues.

We come back to the question of thwarted expectations. I make no apology for returning to this matter before continuing with the rest of my speech. No one will be content with what is put forward. I think that the speech by the hon. Member for Aberdeenshire, East should be obligatory reading for every member of the Cabinet. It is a matter of regret—I mean no disrespect to my own Front Bench—that members of the Labour Cabinet have not been present to hear some of these proceedings. Listening to that kind of speech would surely persuade them of what is really going on.

8.45 p.m.

I turn to the amendment and the manufacturing industry. [Interruption.] Whatever my hon. Friend the Minister of State may mutter, it is no good his saying that he resents a repetition of views from leaders of industry or of trade unions. We are entitled to put forward the views of the people at the sharp end of the trade unions or leaders of industry and to ask for some comment on them. I shall not be deflected from going through at some length, and rather slowly, some of the views that have been put forward about the issues.

No pressure group has opposed devolution longer than the men who run manufacturing industries in Scotland, the Scottish CBI and the Scottish Association of Chambers of Commerce. Their initial scepticism has developed into outright opposition as devolution has changed from a vague daydream to a real possi- bility. Business men and industrialists at all levels and seniorities—from the nationalised industries to the local manufacturer, from multinational corporations to purely Scottish industries—are united in their opposition. If their doubts took some time to incubate, that was at least partly because few industrialists ever imagined that the politicians were serious about devolution, and they felt that there was little point in wasting time and energy on a subject that they thought would die a natural death anyway.

Mr. John Robertson (Paisley)

Does not my hon. Friend agree that the industrialists are also united in their opposition to the Labour Party and the Labour movement in general? What does he make of that?

Mr. Dalyell

First, I welcome the hon. Gentleman's appearance at these debates, but it is rich to be lectured by him on this issue. I shall reply in kind: that prominent members of his own union, the Amalgamated Union of Engineering Workers, are now associated with the Labour "Vote 'No' " campaign.

Until the spring of 1976, the attitude I have described was certainly the attitude of the President of the Scottish CBI, Douglas Hardie, a medium-sized employer based in Dundee. He has dismissed the proposal for an Assembly as a gratuitous burden on industry at a time when the nation's breadwinners have more than enough problems to cope with already. He is particularly concerned about the complications facing medium-sized firms which could be tossed from Westminster pillar to Royal High School post and back through their dealings with Government Departments. Therefore, my first question to the Minister of State is to ask whether there is any substance in the fear of the medium-sized firms that they will be tossed from pillar to post between Westminster and the Assembly.

Now we come to Lord Weir. I am not a member of the "Scotland is British" campaign, but in view of what the hon. Member for South Ayrshire (Mr. Sillars) said we should look at the substance of Lord Weir's arguments. We should consider what he said rather than indulge in invective. Lord Weir says: The Scottish engineering industry, one of the largest emloyers in the West of Scotland, believes that the establishment of a separate Scottish legislative assembly must almost inevitably lead to the separation of Scotland from the rest of the United Kingdom. It views this eventuality with the gravest concern. Most large engineering firms depend upon a healthy home market to survive, for it means substantial and regular orders from government departments and government-controlled industries— the armed forces, water supply, road construction, transport and the like. It is seldom the practice of modern states to award this kind of contract to foreign firms. Therefore, recognising the limitations of future oil based development in Scotland and the healthy number of competent British engineering firms based outside Scotland, the Scottish engineering industry could only regard the reduction of its domestic market by 90 per cent.—which is what Scottish independence would mean—as a disaster of the first magnitude. The certain consequences for employment in an area of Scotland where jobs are already scarce do not need to be described. He goes on to say: Independence would present us with very serious problems indeed. And for that reason we are opposed to the SNP's policy…We may be an extreme case in public sector work, but there are many other people in the same position. Less than 5 per cent. of Weir's products in Scotland go to the home market, while about 45 per cent. of its Scottish production goes to English public sector industries such as electricity, steel, water, coal and the Ministry of Defence. The statement adds that this is inherent in the nature of its business and that, with these facts in mind, Weir would be dealing with a foreign Government. In all of these areas it has established competitors in England.

Lord Weir goes on to say: Self interest being what it is, we would expect to lose virtually all of that business right away. To adjust our system under independence we would be placed somewhere between difficulty and impossibility. We would only survive by attempting some solution that would probably involve moving south. We would have to consider very, very seriously whether we would move from Scotland. Just now we feel there are positive things about being in Scotland. It is better being a big frog in a small pond. We get tremendous help and are well looked after by Government Departments. If we went independent we would be employing about 2,000 people for whom we had no work and obviously this would spread widely through ancillary and related industries. That is the view of that firm, and I remind my Front Bench that it is one shared by an increasing number of people on the Labour Benches who believe— for the reasons given by my hon. Friend the Member for Berwick and East Lothian and the hon. Member for Aberdeenshire, East—that we are not dealing with a static situation.

I come now to the views of Mr. Peter Balfour, Chairman of Scottish and Newcastle Breweries, who says: We have a company with two-thirds of its production in Scotland and two-thirds of it marketed in England. If our products are going to be more expensive because of any fiscal arrangements then we are going to have to shift. If we are going to remain competitive with the English we would have to move, because England is by far Scotland's biggest customer. I would look on independence as being unfavourable to industry in Scotland. I would reckon that as many as 2,000 of our jobs could be affected. Mr. Gerald Elliott, managing director of Christian Salvesen, the transport, oil services and food group, says: With a lot of our activities in England any change in taxation would affect our competitiveness and make life very difficult. As a multi-national we would have to consider moving our headquarters south. My hon. Friend the Minister of State is muttering. The hon. Member for Aberdeenshire, East has moved an amendment relating to this situation.

Mr. David Nickson, vice-chairman of Collins, the publishers, says: We have not formed a company policy on this, but I view the possibility of independence with the utmost horror and dismay. I have yet to meet anyone in any walk of industry who has a good word to say about the prospect. Our monetary exchange rates are inextricably linked with England. We have been the beneficiary over recent decades. Oil is only a short-term stop-gap which will last no more than a decade. The literary market place is, sadly, not in Scotland but in London and Europe. A £1.50 Scottish pound would make our job harder. About 60 per cent. of our market is outside the United Kingdom. Sir Eric Yarrow, Chairman of Yarrow and Company and Yarrow Shipbuilders says: As one of three specialist naval shipbuilders in the United Kingdom it is most important that work continues at the existing rate in that the Ministry of Defence requires two-thirds of our capacity. The rest is used for export orders. Any alteration of these arrangements would not only mean redundancy at Yarrow Shipbuilders but also among the many subcontractors in Scotland supplying us with equipment. It is understandable that those responsible for managing great industries should have displayed a circumspect reticence about indulging in public controversy on the issue of devolution, but with the almost unique exception of Sir William McEwan Younger, the brewer, their private views are firmly opposed to an Edinburgh Assembly. Most of their companies operate on a United Kingdom basis, and even within an international framework, and the last things they want to have to deal with are extra fiscal and commercial conditions.

So one could go on and on. It is not only those who are responsible for industries who have that concern. It is shared by an increasing number of people with equally responsible jobs within the trade union movement.

I must reiterate that, of course, it is an easy answer for my hon. Friend the Minister of State or others putting the Government's case to say "But you are talking about an independent Scotland, and we are not in business to have an independent Scotland."

Mr. John Smith

True.

Mr. Dalyell

It may be true at one level, and I have given my hon. Friend and others on our Front Bench the benefit of the doubt, recognising that their intentions are honourable—I do not for a moment doubt that they believe it—but, after listening to the hon. Member for Aberdeenshire, East and my hon. Friend the Member for Berwick and East Lothian, can anyone suppose that this will be any kind of fixed settlement? Of course, my hon. Friend, the hon. Gentleman and his friends and others will not be satisfied, because, if an Assembly is established, the electors will expect it to do all sorts of things in economic affairs. I do not mean economic miracles, but they will certainly expect it to take control of the economy and be able to produce the economic goodies. But they will be disenchanted. Therefore, unless we go even further along that road, there will be disenchantment in a big way with the Assembly, if it is established.

I put it to my hon. Friend the Minister of State that it will be only a matter of time—some of us think a smaller rather than a greater number of years—before we are down the road to precisely the state of affairs described by those who are responsible for industries. There are some of us who believe that, if we reach that situation, it will be a considerable employment and standard of living disaster for those who sent us to this place.

That is why, even on a seemingly harmless amendment, if one takes the interpretation of my hon. Friend the Member for Berwick and East Lothian—which I do not—we are so reluctant to go along this road.

Mr. Alick Buchanan-Smith (North Angus and Mearns)

Although one is interested in the views expressed by the hon. Member for West Lothian (Mr. Dalyell) and those whom he has quoted, I must remind him that there are others of us who believe equally strongly that to do nothing in relation to the deep constitutional problems facing our country today could have consequences just as dramatic and serious in leading towards separation and independence, which I do not want any more than he does.

However, I do not wish to follow that line now. I shall turn to the amendment and the points raised by it. It has once again shown how much we are at risk in this whole debate of becoming victims of illusions. One illusion was rightly referred to by the hon. Member for Aberdeenshire, East (Mr. Henderson) and, on the Government side, by the hon. Member for Berwick and East Lothian (Mr. Mackintosh). Unless we are prepared to give the Assembly a proper job to do, we shall give it the illusion of power. I, for one, believe that if we give it only the illusion of power the situation will not be stable.

The other illusion, to which the hon. Member for Berwick and East Lothian referred, is that this is a radical amendment. It is probably not so radical, given the financial restrictions of the Bill. This is where I think that our debate last week on financial powers went far more to fundamentals and less to what is illusory than does the debate on the amendment now before us.

9.0 p.m.

I think that there is a cosmetic element in denying the Assembly these powers, because under the Bill as it stands these powers will be circumscribed anyway in terms of competitiveness with other parts of the United Kingdom. That is due to the tight budgetary control which the Treasury and the Government in the United Kingdom will be able to exercise over the activities of the Assembly. Therefore, in those two respects, on this amendment more than on any other we are debating in a whole area of illusions.

Having said that, I go on to say that I have considerable sympathy for what motivates the amendment. I feel strongly—I am not talking of an Assembly, or anything else—that regional policy—and it is regional policy that is at the nub of the amendment—does not necessarily benefit by being standardised over the whole of the United Kingdom.

Regional policy has become monolithic and centralised, and the various measures under it lose all their bite and effectiveness by applying broadly as blanket measures over the whole of the United Kingdom rather than being tailored, changed and varied to meet the needs of different situations in different parts of the country.

I think that under the current regional policy the thing that benefits Scotland most in national terms is not the positive but the negative aspects of such a policy. I am thinking particularly of IDCs. It Scotland is looking for benefit from a regional policy that covers the whole of the United Kingdom, it is from that aspect of the present policy that she would have most to lose if the amendment were carried. I am cynical about and critical generally of regional policy on its own merits, or demerits, in terms of whether it achieves the effects that the architects of the policy sought for it.

I return to what was said by my hon. Friend the Member for Edinburgh, North (Mr. Fletcher). I do not think that one can dismiss Northern Ireland in this context. This is one of the successes of Northern Ireland that we can take away from the political and constitutional system that existed there prior to direct rule. Northern Ireland had more success with regional policy than did other parts of the United Kingdom. I say that in two senses. One is in the simple sense, that it was easier to get things done. One has only to read the Parliamentary Commissioner's report or learn of the experience of individual industrialists to realise that things were done more quickly. Speed does count.

Regional policy in Northern Ireland had all the positive aspects that I should like to see in a regional policy for the United Kingdom as a whole. After all, regional policy for the rest of the United Kingdom was modelled on what happened in Northern Ireland. That country provided an opportunity for innovation and a chance to try out new methods to attract industries in much more difficult economic and industrial circumstances than prevailed in the rest of the United Kingdom.

I have considerable sympathy for the motivation behind the amendment, because one thing that is effective for Scotland is the negative aspect of regional policy, and that is what is done with regard to IDCs. We could gain a great deal by tailoring regional policy to the needs of Scotland. However, I do not believe that that applies only to Scotland. Regional policy should ensure the effectiveness of the North-West, the North-East, the South-West and other areas of the country. Therefore, I repeat that I have sympathy for what motivates the amendment in the context not only of devolution but of the United Kingdom generally.

The kind of thinking that motivates me towards getting a more positive policy was not, frankly, given any encouragement by what was said by the hon. Member for Aberdeenshire, East in moving the amendment. I found his approach thoroughly negative—power for power's sake. Earlier I mentioned two illusions, and to those I would add a third—power for power's sake—which I believe would be totally ineffective.

This was exemplified by what the hon. Gentleman said in relation to the regional employment programme. I agree that it would be serious for Scotland if it were withdrawn, but I would not regret its withdrawal. The negative attitude of the hon. Gentleman in this respect indicates that some very barren thinking about the regeneration of the economy in Scotland. I would hate to see the economy resting in the future on such a negative device as the regional employment programme. I regard it as a relatively temporary measure to try to bolster employment in a difficult time of general unemployment. I cannot understand why anyone should want to argue for the continuation of such a measure—which I believe simply solidifies the employment and industrial situation in a particular way—rather than using resources to innovate or regenerate the industrial structure in Scotland in a positive way.

I was also not attracted by what the hon. Gentleman said about public expenditure. We all regret the reduction in the proportion of public expenditure to be spent in Scotland, but the hon. Gentleman ignores that public expenditure in Scotland starts at a very much higher level proportionately than in the rest of the United Kingdom. It is misleading people outside the House to talk as though there were to be a cut in absolute terms. I am not here to defend the White Paper or the Government, but it is misleading to talk in those terms. All that will happen will be a slight whittling away of the relative advantage which Scotland has over the rest of the United Kingdom, and Scotland will not be put absolutely into a worse position.

I am not happy, either, with the reasoning behind the provision of venture capital. The hon. Gentleman glossed over this. It is something that I opposed, as did my party, in relation to the Scottish Development Agency, which has certain good functions in other directions. I find it unfortunate that in the amendment we should see the Scottish National Party again moving towards an even more interventionist policy for industry in Scotland than I believe is necessary or justified for the future.

I believe that the Government have made a mistake in not giving the Assembly powers in relation to regional policy. I believe that in terms of devolution it is good to have a vigorous, active and dynamic regional policy and to have some variation in this respect in different parts of the United Kingdom. But the SNP, in its negative and rather barren attitude to matters such as the regional employment programme and public expenditure, gives me great cause to ponder whether the amendment in its present form should be supported.

Mr. Heffer

I oppose the amendment. I apologise for not hearing the speech of the hon. Member for Aberdeenshire, East (Mr. Henderson) in moving it. I understand that he made a very moderate speech which was not full of the usual argument that only Scotland matters. Nevertheless, whether it was moderate or not, if the amendment were to be accepted it would undoubtedly be a further step along the road to a final separation where it hurts most and where it is most important—that is, on the whole question of industrial development and industrial powers.

I want to speak as an ex-Minister of the Department of Industry for a very short period. I am not suggesting that regional policy under the present Government or any other Government has by any means solved all the problems of the regions. Anyone who suggested that that was so would be talking through the back of his head.

On the other hand, the hon. Member said that regional policy had made the position much worse. He is talking utter nonsense. The truth is that certain parts of Scotland and areas such as Merseyside, South Wales and the North-East Coast, with their special regional imbalance, would be in a far worse situation than they are now but for our regional policy. Anybody who is honest must admit that that is so.

It is interesting that Conservative Members, for a very short period in the first year or so of the 1970 Administration, dismantled a certain amount of what the previous Government had done on industrial investment and so on, but within 18 months the Conservative Government came back with a Bill which was much stronger than anything that a Labour Government had put forward. It was interesting because the present Industry Act was built upon that basis. It was utilised, and we went on from there. I do not know whether we could conceivably begin to plan our industry intelligently, to develop the underdeveloped regions, unless we had the type of centralised control required for that type of regional development and planning.

I am not suggesting that there ought not to be some latitude and flexibility within the regions so that they can have their own ideas on industrial promotion, development and so on. That to some extent happens now. It happens in every locality. It happens in local authorities. In the case of Scotland, we have the Scottish Development Agency.

I say to my Scottish colleagues in the Committee, to whichever party they belong, that the SDA is looked upon with some jealousy by English Members, particularly those from places such as Merseyside, where there is a higher level of unemployment on this side of the Irish Sea than in any other part of the United Kingdom, excluding Northern Ireland. Even in comparison with Northern Ireland, Merseyside is a concentrated area and has a higher level of unemployment.

I have heard Scottish National Party Members in the Committee talking about the terrible problems of the West of Scotland. Of course there are such problems, but they are no different from, and in some respects are not as bad as, those in the area from which I come. In parts of my constituency, 33 per cent. of the people are unemployed. That means whole streets, practically, of people who are unemployed. No doubt in the West of Scotland one can point to some areas such as that.

The answer to the problem is not to do as the hon. Member for Aberdeenshire, East suggests and say "Let us try to solve it purely within the Scottish context." That is not possible. If we are to solve our problems of unemployment and iron out the imbalances in the regions, we can do it only with a policy of central Government making certain that all the areas which have these problems receive their fair share. I should say to hon. Members from Scotland that some of us from England do not think that we have got our fair share over the years.

9.15 p.m.

We all know the figures. They show that the Scots do a lot better than the rest of the United Kingdom, yet they complain that they are being badly served and trodden on by the awful English. The only people who are being trodden on, as far as I can judge, happen to be the English.

It is a nonsensical argument even in relation to wage rates. Wage rates on Merseyside, incidentally, are lower than they are in the West of Scotland. It is no wonder that we get industrial disputes and that our people are constantly struggling for better wages and conditions in those circumstances.

Mr. Sproat

I should like to give the hon. Member another fact to add to his argument, with which I am in total agreement. I agree about Merseyside being worse off. Not only are wage rates on Merseyside worse than those in the West of Scotland. The Scottish national average manufacturing wage is higher than the United Kingdom average.

Mr. Heffer

I am pleased that the hon. Member has underlined my point and has further made the point.

Let us turn for a moment to the question of industrial development certificate policy. One of the ways in which we got industry into Scotland, the North-East and Merseyside was precisely because of the use of IDCs. Any Minister of the Department of Industry will tell hon. Members of the deputations that used to come from the Midlands, London and other parts of the country complaining that all the factories and so on were going to the North-East, Scotland, Merseyside and so on.

Mr. Budgen

Quite right.

Mr. Heffer

Of course it was quite right. What the hon. Gentleman wants is to have all industry either in the Midlands or in the South-East. Perhaps he would like it all to be in Wolverhampton. I do not know. However, that is the very opposite to the intelligent approach to the question. That was an unintelligent approach. That is precisely why IDCs were introduced. Even the hon. Member's Government maintained IDCs, although in a slightly different form. They maintained the principle.

There is logic in this case if one couples it with the total control of oil resources. If Scotland had complete control of all the oil resources around the Scottish coast, it would be in a marvellous situation as compared with the rest of the United Kingdom. It could take over industrial development and the promotion of industry, and it could do all sorts of things which would be to the disadvantage of the rest of the United Kingdom.

Dr. M. S. Miller

For a time.

Mr. Heffer

That is precisely the point I was about to make—for a time. The oil revenues will last for about 15 years. They will amount to £1½ billion next year and about £2 billion the year after, and they will amount to between £3½ billion and £4 billion in the mid-1980s. However, from 1990 they will be tailing off, unless we are lucky and keep striking more oil.

The point is that it will be a bonanza for a very short period. It is really only the ice on the cake. We have to be very careful how we use that ice, because we could fritter it away. This must be used to the benefit of the whole of the United Kingdom. Even if the SNP thinks that the oil revenues will solve Scotland's problems, we all know that Scotland will not even have total control of the oil for that 15-year period. It will not obtain control of that oil, so the SNP Members might as well live in the real world and not in some mythical world.

The other matter I wish to mention concerns the regional employment premium. That applies to every part of the United Kingdom. We all suffer when aid is withdrawn. One has only to hear the views of the people in the various localities when aid of that kind is withdrawn, because they know that that money has helped to create employment in an area of high unemployment.

I hope that the Committee will turn the amendment down flat. It was never part of Labour's devolution policy. It may have been peddled around Scotland, but it was certainly not peddled around in England. It was not in my manifesto or in my literature. I do not even remember devolution being in my party literature, but that, perhaps, was an oversight on my part.

Mr. Robert Hughes

It will be in there next time.

Mr. Heffer

I doubt whether it will be in there next time either. I believe that this is way beyond even what the Government propose, and, therefore, the Committee should reject the amendment.

Mr. Russell Fairgrieve (Aberdeenshire, West)

This has been a most interesting debate. Having heard speakers from both sides of the Committee, one notices the clear dilemma which they face. If one is approaching this debate with the idea of improving the Bill, a dilemma arises. If one is just for or against the Bill that problem does not arise, but if one tries to improve it one is up against the dilemma that we face on this clause.

I had sympathy with the arguments at the beginning of the speech of the hon. Member for Aberdeenshire, East (Mr. Henderson), who has now departed from the Committee, but the speech turned out to be irritating and petty, with nothing constructive in it. His arguments were also dealt with by the hon. Member for Berwick and East Lothian (Mr. Mackintosh).

I wish to deal with the remarks made by the hon. Member for West Lothian (Mr. Dalyell), who gave the views of various Scottish industrialists and mentioned by name the views of Sir William McEwan Younger in a personal rather than an industrial capacity. It is only right that I should put the hon. Gentleman right on certain matters. In the mid-1960s the Scottish Council, which hon. Members know to be an independent body, without political bias and made up of trade unionists, industrialists, local government representatives representing all facets of Scottish life, set up a committee headed by Sir William McEwan Younger. That Committee sought to analyse the problem of the drift to the south, the closing of branch factories and the fact that managers were having to go south to obtain promotion in their firms. Although at that time, as I know from personal knowledge, Sir William might have had broadly anti-devolutionist views, he came to the final conclusion that in spite of IDCs in coercing factories to move North, and various other incentives, unless there were some political focus in Scotland all these other efforts would still be unsatisfactory. That was the main catalyst that caused the talks which have been going on in Scotland now for over a decade on the subject of devolution.

Mr. Dalyell

I said that that happened with the almost unique exception of Sir William.

Mr. Fairgrieve

That is a fair point.

I turn to the subject of this debate, which concerns Schedule 10 and devolved subjects. I do not wish to bore the House with all the details in the schedule, but it deals with such matters as health, social welfare, housing, education and pollution. They have one thing in common. They are basic and local to any country anywhere in the world. They are matters that have been with any country throughout its history. When we turn to this amendment, which deals with industry and the economy, we are looking at something that is completely different.

I point out to hon. Members of the SNP that the union of Parliaments took place before the Industrial Revolution. That makes a fundamental difference, because there is no Scottish economy or Scottish industry. There is only a United Kingdom industry and economy, which have developed since the Industrial Revolution.

I happen to have been involved in line management for many years, with firms that have been registered in Scotland. We have firms operating throughout the United Kingdom. It is totally impossible to separate the activities, the economics, the finance or the operations of these firms. One cannot divide them into Scottish or English firms.

Mr. Sproat

In the previous debate it was said that the Chairman of Lloyds Bank, Sir Jeremy Morse, went along with the SNP view, whereas Sir Jeremy made it clear in his speech on Friday that if it had not been for the Act of Union, Scotland would have been far worse off. Does that not make total nonsense of the SNP claim that Sir Jeremy was backing their case?

Mr. Fairgrieve

My hon. Friend is correct. When the Union took place we were given a huge export market in England which we did not have previously and which was a pre-run to the Common Market that the United Kingdom now enjoys in Europe.

This brings me to the crux of the problem. It was also mentioned by the hon. Member for West Lothian, the hon. Member for Inverness (Mr. Johnston) and my hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith), which shows that there is a common denominator for all parties. This problem would not arise if we were dealing with a federal solution. This Bill is nonsense. That is why we have this dilemma with this schedule. Everyone is beginning to realise that there are only three possibilities—the status quo, a federal solution or the break-up of the United Kingdom. I do not know why we keep on talking about a Bill that is impracticable and unworkable.

Mr. Robert Hughes

If the hon. Member for Aberdeenshire, West (Mr. Fairgrieve) looks at federal constitutions, he will find there disparities in employment, wages and industry that are just as prevalent as they are between the different regions of the United Kingdom.

Mr. Fairgrieve

I absolutely disagree. As the hon. Member for Aberdeen, North (Mr. Hughes) was not in the Chamber when his hon. Friend the Member for West Lothian was talking about the German economy and its federal solution, may I remind him of another statistic which has little to do with this Bill but is interesting? The West German Parliament sits for fewer hours than any other Parliament in Europe, and we sit for more hours. There is some significance for industrial performance here.

There are three possible solutions, and the federal solution, with a Bill of Rights and a written constitution, is the only practical one. I have every sympathy with what is behind the amendment, but it is basically unworkable, in the same way that the Bill is unworkable. I shall therefore vote against it.

9.30 p.m.

Mr. Russell Johnston

I agree with the hon. Member that the logical solution is a federal system, but will he take the opportunity to refer to the remarks of the hon. Member for Berwick and East Lothian (Mr. Mackintosh)? Since this is the only Bill that we have, will he indicate his opinion of the hon. Member's parallel with Northern Ireland regarding the industrial powers proposed in the amendment and the fact that when these powers were operated through the Ministry of Commerce in Northern Ireland they did not affect or detract from the unity of the United Kingdom?

Mr. Fairgrieve

I have never subscribed to the idea that the Parliament of Northern Ireland was not a success, particularly industrially. But there were different reasons for setting it up. I accept the basis of the hon. Member's argument over Northern Ireland, but that was a Parliament set up for a different purpose. Certainly from the point of view of industry it worked.

Mr. Canavan

I have a certain amount of sympathy for this amendment. I always thought that the whole purpose of devolution was to democratise the powers of the Secretary of State for Scotland as vested in him as a Minister of the Government.

Part of the difficulty and part of the misunderstanding by some hon. Members, particularly those from south of the border, is that they just do not realise how much power is vested in the Secretary of State. They do not realise how much power is in the hands of the bureaucracy at St. Andrew's House, simply because we do not have a big enough ministerial team to make that huge bureaucracy accountable to the elected representatives of the people. I emphasise that I am not criticising any members of the ministerial team personally.

Today it was revealed that the Secretary of State for Scotland is one of the biggest landlords in the whole of the United Kingdom. I wonder how many hon. Members knew that. One has only to look at all his other powers. He is Minister for Education, Housing and Health in Scotland, as well as having responsibility for local government. Also, to a certain degree, he has industrial power at present, before we even begin thinking about devolution in the legislative sense. Surely it makes good sense to try to democratise the administrative or ministerial devolution that already exists, particularly in the industrial field.

In an earlier debate on devolution before this Bill was published, I put these points. I said that while I gave a general welcome to the Government's White Paper, as it was then, I would like to see the Scottish Development Agency being devolved and being completely accountable to the Scottish Assembly. At that time the proposals of the White Paper were to split the SDA and make some of its functions accountable to Westminster and some accountable to the Scottish Assembly through the Scottish Executive.

Mr. Welsh

Would the hon. Member also like to see the SDA's funding in- creased to give it more financial leeway and power?

Mr. Canavan

It is a question not of the amount of money but of what one does with the money. Anyhow, that has nothing directly to do with the amendment. I shall come to the expenditure question later.

Mr. Heffer

On the question of devolving powers relating to industry, does my hon. Friend really suggest that the Scots, or the people of South Wales, or those in Northern England or the North-West, should have powers in this area to compete with each other? Does he suggest that there should be no central direction at all for industry? Does he not realise that we would then have people in London and the Midlands joining in and competing as well? That would mean total chaos in industrial development. However, if my hon. Friend means democratic control over what we have already, I agree entirely. I am not really certain what he means.

Mr. Canavan

I think there is a good case for regional development agencies in England. One can call it a decentralisation of the National Enterprise Board if one likes. I certainly do not think that the only Socialist vision of an integrated economy is a huge monolithic structure with no decentralisation at all. I believe that decentralisation could bring a greater degree of accountability and democracy to elected representatives as well as industrial democracy by making those powers accountable to the trade union movement. I believe that would help. It is very relevant to what we are discussing.

Mr. Buchan

Although I agree with many of my hon. Friend's points, they are not the point at issue. The point at issue concerns Clause 39 and the guidelines under which the Scottish Development Agency will operate.

The real point is, are we prepared to have regional development agencies in England and the Scottish Development Agency empowered to give what incentives or grants they wish so that there is nothing but a straightforward "De'il tak' the hindmost", in which case the weaker regions of population or wealth must lose?

The second point is that it would remove all Socialist controls and encourage our good capitalist employers to come on the maximum possible profit. Surely that is the kernel of the argument. It is not about democratic control over the operations.

Mr. Canavan

I shall come to that point later, because it is important to strike a balance between decentralisation or devolution and retaining some power at the centre in order to make sure that most goes to areas that are most in need.

Before I gave way to my hon. Friends, I said that I made this point about a year ago in an earlier debate on devolution. I thought that the proposals in the original White Paper regarding the Scottish Development Agency were imperfect because the Agency's power would be split between the Government down here and the Scottish Assembly and Scottish Executive in Scotland.

Clause 39 is headed "Industrial and Economic Guidelines". It states that The Secretary of State shall with the approval of the Treasury prepare guidelines—

1. (a) as to the exercise by a Scottish Secretary of the powers under the Scottish Development Agency Act"

and adds that The guidelines prepared under this section shall he contained in or determined under an order of the Secretary of State. Later, Schedule 10 lists certain enactments which refer to earlier groups of either devolved or non-devolved matters. That schedule contains the Scottish Development Agency Act 1975 under the column headed Whether, or how far, matters dealt with are included in the Groups. The schedule states that the Scottish Development Agency Act is Not included, except for the matters dealt with in and there is a whole list of various sections. That appears to be a pretty cumbersome way of going about things. I wonder whether the Minister can explain how this list was drawn up. Can he give some details about what guidelines the Government have in mind under the terms of that Act?

Mr. Harry Ewing

Perhaps I can clear up this point with my hon. Friend now. In Schedule 11, Group D, paragraph 2, The following powers under the Scottish Development Agency Act 1975 are clearly defined although the guidelines are not there simply because they have not yet been drawn up. It is worth while remembering that the Scottish Development Agency at the moment operates under guidelines which are published. That is why the Bill says that my right hon. Friend will be under an obligation to publish these guidelines in the form of an order.

Mr. Canavan

I am grateful to my hon. Friend for explaining that. Nevertheless, I still have some degree of apprehension about exactly what these guidelines will mean in practice.

The man who said that no one can serve two masters is a better man than I. No agency can serve two Ministers or two Executives. How is the Scottish Development Agency to be in one sense controlled by the Government here and in another sense controlled by the Scottish Executive?

Mr. Teddy Taylor

Would it not be nonsense if the Scottish Executive appointed members to the SDA to carry out a policy laid down by someone else?

Mr. Canavan

I have some sympathy for that argument. How can a body be appointed by and be accountable to one Executive when the guidelines are laid down by another Executive?

It may be difficult to draw a distinction between the various dimensions of industrial problems, but I do not think that it is impossible. The Government have admitted already that there is a very valid and logical distinction between what might be called industrial and employment problems of a Scottish dimension and industrial and employment problems of a United Kingdom or even international dimension. That is why the Government did not merely set up, for example, the National Enterprise Board, which is more apt to deal in an interventionist way with industrial situations or problems of a United Kingdom or larger dimension, whereas with industrial problems in a purely Scottish context the more appropriate body to my mind is the Scottish Development Agency.

I accept that it is not always possible to define an absolute division between a problem in a Scottish context and a problem in a United Kingdom context. Indeed, I believe that it is possible to devolve too much industrial power. So much may be devolved that workers in Scotland will lose out because decisions will still he taken here. If we lose our political voice in this place, there will still be an economic dimension affecting the job opportunities of the people of Scotland, yet there will not be the political dimension for us to come here to try to influence the economic outcome.

The Labour Party in Scotland and the STUC have both said that they want the Scottish Development Agency to come under and to be accountable to the Scottish Assembly. My hon. Friend the Member for West Lothian (Mr. Dalyell), who is very fond of quoting Lord Weir, should pay a bit more attention to what the trade union movement and the Labour movement in general in Scotland say about the need to decentralise industry and about their wishes and hopes for the future of the Scottish Development Agency.

I wonder whether we shall hear from my hon. Friend the Under-Secretary whether these guidelines will affect the working of the public enterprise role of the Scottish Development Agency—the power to take equity in companies. Incidentally, it is a power which neither the SNP nor the Tories supported. Both voted against it. They wanted the SDA to have a fund of public money which it could dole out to all the opportunist characters in Scotland such as the hon. Member for Perth and East Perthshire (Mr. Crawford) and his friends in industry and commerce. In other words, they wanted it to be an investment bank for capitalists using public money. Our concept of the Scottish Development Agency was quite different.

9.45 p.m.

Mention has been made from the Opposition Benches of the potential loss of jobs due to the ending of the regional employment premium. We regret that such a loss has occurred or will occur. Mention was also made of public expenditure cuts, or the lack of growth of public expenditure in Scotland. The last time that I studied the figures—I do not think that anybody has seriously challenged them—it appeared that for every £1 of public expenditure given to the people of England the people in Scotland were receiving approximately £1.20p. That is the extent to which Scottish public expenditure is above the level of public expenditure south of the border.

I agree with the need for more public expenditure, not only in the social services, where it is essential, but in industry. Industry would be even more crippled if it were not for public investment. If public expenditure is to be used in Scotland or anywhere else, the spending of public money must be accompanied by public accountability. The best way to achieve that is by making it public investment and by taking equity in companies—in other words, accompanying public expenditure with public ownership.

I think that every hon. Member will agree with the need to regenerate the Scottish economy, especially manufacturing industry. I am not pretending that devolution, the setting up of a Scottish Assembly or even the nationalists' completely separate Scottish State as envisaged by the SNP would be a panacea for the Scottish people. However, if we are to make devolution meaningful, the Assembly must at least be given an opportunity to play some part in the regeneration of Scottish industry and the economy.

Mr. Budgen

When the hon. Member for Berwick and East Lothian (Mr. Mackintosh) was explaining why he looked so favourably upon the amendment, he tried to make out that it was a small matter. He fairly stated that as a result of the Committee's earlier discussion it was clear that all financial aid to industry would have to be within the terms of the block grant. As he fairly said, increased aid to industry would result in decreased expenditure upon roads and hospitals. No doubt he would have agreed that the proposal in Clause 62, which gives the Westminster Parliament, as it might become, stringent control over all matters that impinge upon our relations either with other foreign Powers generally or with the Community, is yet another constraint upon these proposed powers.

I disagree with the hon. Member when, in extending his argument, he says that it would be a good thing to have regional variation between various forms of grant. The hon. Gentleman said that it does not much matter whether such decisions are taken in Scotland or Westminster. It seems that he takes that view because the variations would be small and it would not much matter if they were taken in Scotland. With respect to the hon. Gentleman, I entirely disagree.

First, the argument has to be considered from Scotland's point of view. It has often been said in these debates that the centre of dissatisfaction will be directed towards England. It will always be said in Scotland that they have high levels of unemployment, they do not have good enough roads, or they do not have good enough hospitals. That will be said because of the restrictions on public expenditure imposed by the Westminster Parliament. From that point of view there will be a never-ending source of friction and discontent.

It is perhaps appropriate for me to mention the English side. As the hon. Member for Liverpool, Walton (Mr. Heffer) said, there is a great deal of resentment in the West Midlands against the whole concept of regional policies. I do not want to argue whether regional policies are basically and philosophically good or successful.

The essential argument about a United Kingdom Parliament is that it is a machinery for the evolution of consent. If I go to one of my constituents and discuss with him the principle of how an IDC works, he will point out that regional policy has two sides. It has the positive side, as the hon. Member for Walton would put it—namely, the financial encouragement that is given to some areas of the United Kingdom—and the often less emphasised financial discouragement, through planning procedures, that is put upon areas such as the West Midlands. Indeed, the West Midlands would argue that regional policies have been extremely effective in that area. If there has been a wish to damn down economic activity in the West Midlands, that has been achieved. Regional policies have been effective to that extent

Mr. Heffer

The downgrading of industry in the Midlands and in London was not due to regional policy; it was precisely because there was downgrading of industry throughout the entire country. Incidentally, the development areas suffered even worse than did the Midlands and London.

Mr. Budgen

The hon. Member for Walton and, indeed, many of my right hon. and hon. Friends believe that to be so. However, I disagree with that view. The proposition that I make is widely shared by many industrialists in both the West Midlands and the South-East. They say that successive Governments, by their planning restrictions and IDCs, have done them a grave disservice. They rightly point to the Westminster Parliament and say to me, for instance, "Your Tory Administrations have been as bad in this respect as Socialist Administrations."

Mr. Canavan

Worse.

Mr. Budgen

Maybe worse.

Mr. Sproat

Certainly not worse.

Mr. Budgen

As had.

Mr. Heffer

Equally good.

Mr. Budgen

It is a fair point. What industrialists do not say—this is important to the unity of the United Kingdom—is that people in Scotland have grabbed for themselves special and preferential treatment, and have given themselves excessively large regional employment premiums and especially large grants for investment in industry. They do not feel any sense of resentment against areas of the country which have a particularly preferential position. The whole essence of regional policy is that it comes from the parliamentary machine and, therefore, consent is given to it. It is not grabbed by any particular section of the United Kingdom.

I fear that the amendment and, indeed, the whole concept of devolution will, on the Scottish side of the border, lead to a greater demand for bigger and better powers and, when those powers are granted or grabbed, to greater and greater resentment among the English people. Therefore, I believe that as those powers are taken there will be a risk at least of a horrifying movement of opinion within England. People may say "If they want to grab so many powers, for God's sake let them go independent".

Let us be very wary of these greater powers and the whole spirit of devolution. They will create resentment, uncertainty and instability in Scotland, and then, on the other side of the coin, we may well see a great sense of resentment growing in England.

Mr. Robin F. Cook

The hon. Member for Aberdeenshire, West (Mr. Fairgrieve) prefaced his remarks by referring us to the rest of the schedule. There is indeed quite a lot of the rest of the schedule to be gone through. We have only just completed the first group of devolved matters and there are Groups 2 to 26 ahead. It is increasingly evident that when the guillotine falls tomorrow night we shall not even have reached Group 2, let alone Group 26, although we were supposed to be considering them today, tomorrow and last Wednesday.

That puts every hon. Member in a difficult position. It puts a particular strain on those of us representing Scottish constituencies who have been approached over the past few weeks by organisations and individuals with particular points of detail that they want to have clarified and to have raised in the debates. All hon. Members from Scotland recently received a circular from the Scottish Consumers' Association, which is concerned about one aspect of the devolution of consumer law and powers that it wants tidied up. As I seem to represent half the museums in Scotland, which are located in Central Edinburgh, I have been approached by two organisations speaking for Scottish museums, because there is no reference to them and they wonder where this leaves them.

People ask us to raise matters in Committee because they understand that that is where we can ask detailed questions and where the Government can expand on points of detail. It is obvious that we shall have to tell them all "These points were not considered in Committee. Indeed, in Committee we considered the first group out of a schedule containing 26. The other 25 also covered the areas to be devolved". It is most unsatisfactory.

If I understood him correctly, my hon. Friend the Member for West Stirlingshire (Mr. Canavan) made the point that comparatively few hon. Members for English constituencies fully understood the extent of the power and remit of the Scottish Office and the Secretary of State for Scotland. One could go further. It is probably true that very few Scots fully understand the extent to which there is decentralisation to the Secretary of State within the present system.

The Kilbrandon Commission, which carried out a poll on the matter, reported that only 51 per cent. of the Scottish population had ever heard of the Scottish Office—a figure that must have been very disappointing to those Conservative right hon. and hon. Members on the Front Bench who then represented the Scottish Office.

I well remember the former hon. Member for Perth and East Perthshire, when both of us were Members between February 1974 and October 1974, describing what would happen if we took our constituents into a room and said "We have a plan to create a specific office to head and look after Scottish affairs. We shall so arrange it that the Minister in charge of it will automatically be guaranteed a place in the Cabinet, where he can bat for Scotland on every issue, and as a result there will be more expenditure per head of population in Scotland than anywhere else in the United Kingdom. We shall also arrange for Scotland to be grossly over-represented in the House on a population basis." He said that if we put that to our constituents everybody in the room would vote for it and perhaps one in 100 would recognise it as the present state of affairs. That is the position that Scotland enjoys and has done very well out of over the past two decades.

10.0 p.m.

What concerns me about this amendment is that we undoubtedly jeopardise a lot of those advantages if we accept it. My hon. Friend the Member for West Stirlingshire seemed to suggest—I am sorry if I did not hear him correctly—that all functions held by the Secretary of State should be devolved to the Scottish Assembly, including those functions concerning trade and industry currently exercised by the Secretary of State. These would include the Secretary of State's decentralised powers under Sections 7 and 8 of the Industry Act. If we did that it is difficult to see what there would be left for the Secretary of State to do. It is difficult to see his office and his views carrying any weight within the British Cabinet when he spoke on regional development matters. He would have absolutely no remit and no departmental responsibility.

I was shaken to hear the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) say that while he believed the one advantage to Scotland in terms of regional policy was the possession of industrial development certificates, he was prepared to risk the loss of that benefit to gain the rather doubtful benefit of regional promotion schemes for a Scottish Assembly. It is clear to me that if we gave the Assembly local and political control over regional incentives and regional policy there would be no way in which we could retain the present system of negative industrial control over the South-East, the West Midlands or anywhere else in the United Kingdom.

It is worth reminding ourselves that we are a comparatively small land mass with a dense population. The hon. Member for Aberdeenshire, West said that the problem we face tonight would not arise if we had a fully federal solution. Of course it would arise. Anyone who goes to the United States and examines the fully federal system there, finds that even there, when regional promotion powers are given to the local states, there are federal laws preventing any single state promoting a regional development policy which would poach jobs from neighbouring states, or, indeed, elsewhere in the United States. Even within a well developed, traditional, federal system they have to wrestle with this problem and have to control the extent to which any one state can poach jobs and development from other areas.

We are a long way removed from the United States, and not merely in terms of spatial dimensions. We are a small land mass with a densely packed population, quite distinct from the United States, which has to deal with the same problem of preventing local states from poaching.

Mr. Dalyell

Does my hon. Friend recollect that in December 1976 my right hon. Friend the Member for Battersea, North (Mr. Jay), who is a former President of the Board of Trade, said that at the time when he had been responsible for directing policy he had not felt the same immediate responsibility for Northern Ireland as we felt for Scotland, Wales, and the North-East coast of England. As a result, when major English and American firms asked for advice from the Board of Trade on location, they were more often steered to Scotland and Wales than to Northern Ireland. Perhaps it was wrong, but that is how administration works ".—[Official Report, 15th December 1976; Vol. 922, c. 1592.] Does not that back up my hon. Friend's point?

Mr. Cook

That is one of the more telling of the many quotations with which my hon. Friend has enlivened these proceedings. It makes the point adequately. If we are to give some responsibility for regional policy it does not matter whether there is someone down here with nominal responsibility for industrial promotion in Scotland. His voice will be weak and will not be listened to by those responsible for answering to their own electorate on how they carried out industrial development in England.

The hon. Member for Wolverhampton, South-West (Mr. Budgen) made a useful contribution to the debate when he pointed to the fact that at present it is possible, if there is the will, to answer electors who asked why there was negative control of industrial development in the Midlands and the South-East by saying that they and Scotland were part of the same unitary State, with one central authority responsible for regional development. We have to ask ourselves whether that would be a politically feasible answer if we gave to the Assembly regional policy and control over regional promotion.

If we were to pass the amendment, and if we were to give the Scottish Assembly the right to promote industrial development in its area, presumably with power to handle grants under Sections 7 and 8 of the Industry Act to support industries which were in difficulty locally and the power to promote development by industries which were expanding and which could be attracted to Scotland rather than elsewhere, how should we then answer the complaints from people in difficult areas—of which Merseyside is one—in the rest of the United Kingdom?

My hon. Friend the Member for Lanarkshire, North (Mr. Smith), who is now Minister of State, Privy Council Office, was formerly Minister of State at the Department of Energy. He will be aware of the difficulty which he experienced in meeting delegations coming to him from Teesside, behaving in an aggressive fashion and demanding additional orders for Graythorpe oil rigs. I believe that my hon. Friend handled those matters extremely well and was able to convince those who came of the reasons why they could not at that time have an additional order. But he must be aware that there was some criticism in the locality to the effect that, as a Scots Minister, he may not have been so motivated to support Teesside as he would have been if he had represented a North-East constituency.

How much more difficult would that role have been if my hon. Friend was operating in a climate in which there was an Assembly in Edinburgh which had direct responsibility for its own industrial promotion and its own Section 7 and Section 8 grants? How much tolerance could my hon. Friend expect from an English work force facing a difficult situation in those circumstances?

Mr. John Smith

I agree with my hon. Friend's opposition to the amendment, but I do not wish his remarks to pass without comment. I do not know what he knows about my interviews with delegations, but when I was Minister of State at the Department of Energy I received no aggressive delegations from the North-East or anywhere else. I met reasonable delegations, and not once was my nationality or that of anyone else distinguished. I was regarded as a United Kingdom Minister, which, indeed, I was.

Mr. Cook

But my hon. Friend makes the point for me. He was a United Kingdom Minister. He now has to ask himself, as the Member for Lanarkshire, North, whether he would be accepted as a United Kingdom Minister in the circumstances of a separate Scottish Assembly with separate control, separate responsibility and separate funds.

Mr. John Smith

It is a different matter.

Mr. Cook

Of course it is. I wish that my hon. Friend would heed the argument which I am advancing. I am saying that if he were in those circumstances his position would be much more difficult. I am quite happy to accept his assurance that the delegations were never aggressive. All I say to him is that in those different circumstances they would be much less reasonable.

Mr. Ted Leadbitter (Hartlepool)

I intervene only briefly because this point concerns my area. I confirm that the Minister conducted himself in the manner which he described.

Dr. M. S. Miller

An unsolicited testimonial.

Mr. Cook

I am happy to embody that testimonial in my speech. I hope that nothing that I have said has been taken as casting any aspersions whatever on my hon. Friend the Minister of State. I shall take care to read Hansard tomorrow, and I shall be surprised if anything that I have said was critical of my hon. Friend's conduct. I was seeking merely to use his position as an illustration of the difficulties which would arise were we to carry the amendment and were he then to be a United Kingdom Minister. That dilemma highlights the difficulties which Scottish Members will have to face if the Bill is approved.

I conclude by returning to the point made by my hon. Friend the Member for West Lothian (Mr. Dalyell) concerning the delusion which may be created in people's minds. From 1974 and 1975—

Mr. Buchan

For two and a half days I have observed abstinence or a self-denying ordinance, but I wish now to repudiate the comments in relation to the Scottish TUC and the Labour Party in the matter of industrial powers. At no point have they sought industrial powers which would give unequal grants in relation to the United Kingdom. I may not maintain my abstinence much longer.

Mr. Cook

I am not quite sure where that intervention fitted into my argument, but I am quite happy to accept my hon. Friend's observation. It is worth reflecting that in the Labour Party manifesto put before the Scottish people at the General Election in October 1974 the sole reference to trade and industry powers was to the effect that it might be appropriate at some future date to devolve the Scottish Development Agency to the Scottish Assembly. We have gone beyond that position in the manifesto by agreeing to devolve the SDA, subject to qualifications, and to do so straight away rather than later. We have more than fulfilled the manifesto commitment.

Having said that, I return to the point on which I was about to conclude, which is the illusion that will result if the amendment is carried. In 1974 and 1975, those who were active in politics had to put up with large numbers of speeches endorsing devolution and calling for an Assembly, on the ground that it would help to cure the economic problems of Scotland that it would reduce unemployment, that it would help the attack upon inflation and that it would provide a remedy for low wages.

Fortunately, we have heard rather fewer of those speeches during the past 18 months because it is now self-evident that that argument cannot be maintained on the basis of the Bill. There is nothing in the Bill that will lend the slightest credence to claims of that kind. If the amendment is accepted, the Assembly will not be given the substance, the power and the real responsibility to meet these problems. It will be unable to do more than attack the very margin of unemployment and the very margin of low wage problems in Scotland. But we shall give it a superficial remit to do those things. We shall help to raise expectations which, fortunately, have ebbed over the past two years. Having raised the expectations, it is inevitable that the Assembly will be unable to meet them, with heaven knows what consequences in the political situation in Scotland.

I feel that it would be right to face the reality that even were we to give such powers to the Assembly it could do little to tackle these problems. In the light of that, rather than raise expectations that the Assembly could deal with the problems, we should oppose the amendment.

Mr. Younger

At this stage I should like to intervene briefly, because we must all be conscious of the fact that time is running out and we are desperately anxious to get on to many other subjects. I think particularly of the great controversial issues still to be considered and which we hope will be covered in these debates. I shall therefore be as brief as possible.

It seems, in a way, to be churlish if I criticise the hon. Member for Aberdeenshire, East (Mr. Henderson) for his speech, because it was a positive triumph of oratory compared with that of his hon. Friend the Member for Perth and East Perthshire (Mr. Crawford), and to that extent I welcome what he said. Unfortunately, his introduction of his amendment seemed to get cut off half-way. He began to develop what I thought was an interesting argument—although most of what he said seemed to be almost complete nonsense—but he sat down just when I thought he would try to explain what his amendment would do and the scope of it.

I thought that the hon. Member for Berwick and East Lothian (Mr. Mackintosh) was right in his assessment when he said that, if one looked at the amendment and the provisions it would include, one would find them to be remarkably minor in terms of the effect that they would have. For that reason, I think that we have made much more of a meal of this debate than was necessary. That is a pity, because the time could have been spent on other subjects. However, I do not regret the debate because it has been an interesting exercise in going over much of the economic side of the devolution argument.

It was on that aspect that the hon. Member for Aberdeenshire, East fell down. It is all very well, as the hon. Member for West Lothian (Mr. Dalyell) said, for the hon. Gentleman to argue for more and more powers for the Assembly—because that is what he wants and believes in—but in these debates we are discussing the issues in the context of devolution and not separation. The hon. Gentleman failed to make any sensible case to show how it would help Scotland's problems if we were to alter the devolution proposals in the way that he outlined.

It is not on from the point of view of hon. Members on both sides of the Committee for the hon. Member for Aberdeenshire, East to start his argument by trying to make out that all the regional policies pursued for nearly 20 years by Governments of different complexions have been a complete waste of time. That was the tenor of his remarks. I put it to the hon. Gentleman that if those various aspects of regional development policy had not been pursued by different Governments for all these years the situation in Scotland's industry would have been immeasurably worse and literally thousands of people would not now have jobs.

10.15 p.m.

I pay tribute to people from both sides who have worked so hard on regional policy. It does not do for the hon. Gentleman to ignore the basic fact that, under whichever Government or system and whether or not there had been devolution for the last 20 or 30 years, nothing would have altered the fact that, for historical reasons, the Scottish economy ran into a phase in which a large proportion of its industry became old at the same time. This was mainly because of the great success it had had in the previous century. Nothing can change this fact, whatever may be said to the contrary.

Successive Governments have struggled for many years to produce better regional policies—some more successfully than others—and they ought to be given credit for doing so. I do not need to remind the hon. Member for West Lothian that many of his constituents would not be in work if there had not been regional policies created by Westminster Governments which were determined to ensure that something was done to correct the imbalance.

We are grateful to the hon. Member for Aberdeenshire, East for starting the debate, but I hope that if he produces arguments on any other amendment later in the debates he will start by trying to recognise the realities of what has happened in Scotland.

Mr. Hamish Watt (Banff)

If the hon. Gentleman really believes his own argument, will he tell the House why a country such as Norway, with similar assets and with similar geographical problems, has had virtually no unemployment problem during the same period?

Mr. Younger

I am delighted to see the hon. Gentleman, and I am terribly sorry that he has not been able to grace us with his presence throughout the debate. I can only say that I have been elected to represent a constituency in Scotland, not in Norway. I know what goes on in Scotland and what are the troubles of Scotland. As to Norway, neither I nor my constituents wish to live there, although it is a charming country.

As the hon. Member for Berwick and East Lothian said, the difficulty is that the amendment really has nothing to do with devolving these matters—or most of them, anyway—from Westminster to Scotland. The question here is whether most of them should continue to be exercised, as of now, by the Secretary of State for Scotland and the Scottish Office, or what remains of it after devolution, or should be transferred to the Scottish Assembly. That is all we are discussing here.

I start from the very firm position that I have taken all through the arguments on devolution over many years—the Committee knows my general views on this—and that is that the one thing we should not devolve to an Assembly is general economic powers. I have felt that strongly all through, in spite of other views that I may have held on devolution.

My reason is very simple and clear. The plain fact is that what ought to determine economic matters of policy is the shape of industry and of the economy itself. The various constitution makers in the House ought to bear in mind that on matters of economy the primary consideration must be the shape of industry and the economy as a whole and how they are run. Industry does not work in a purely Scottish context. This applies to almost all industry in Scotland.

As some hon. Members have pointed out, about 90 per cent. of the home market is outwith Scotland. There are very few firms in Scotland—although, obviously, there are some—which do not rely very largely on sales outwith the boundaries of Scotland. There are very few industries in Scotland which do not rely very largely on imports of parts or products or raw materials from out-with the boundaries of Scotland. Whether we like it or not—I like it, but others may not—the fact is that Scottish industry works in a United Kingdom context. Its markets are elsewhere in the United Kingdom, its managers very often come from different parts of the United Kingdom, and its workers very often come from different parts of the United Kingdom. The whole of the economy, whether we like it or not, is very much a United Kingdom economy.

One or two hon. Members have pointed out the historical side of this. We ought to recognise that if there had never been a Treaty of Union, if there had never been a Union between Scotland and England, the Scottish economy today would be totally different from what it is. For that reason, we should think very carefully before we start splitting up the economic side of our life by putting parts of it to other parts of the constitution such as a Scottish Assembly. I have always felt this, and I feel it very strongly.

There is a second reason, which I have not time to spell out. It goes back to what the hon. Member for Liverpool, Walton (Mr. Heffer) said, with which I strongly agree. We must look briefly at the nature of regional policy and what it is all about if we are to understand why it would be unwise to diffuse the decision-making on it to different bodies, such as the Scottish Assembly.

Surely, the nature of regional policy—as it affects Scotland, anyway—is this. The problem is not to try to distribute industry more within Scotland, to different parts of Scotland. There are good reasons for trying to do something along those lines, but it is not by any means the major problem. If it were, there would be some logic in saying that a Scottish Assembly could undertake such a task.

The nature of regional policy is to try to redistribute industry in the United Kingdom to take account of the areas which are in a particular difficulty with unemployment problems and so on. The hon. Member for Walton was right about that. That is why I believe that those matters must remain responsibilities of a United Kingdom Minister. The United Kingdom Minister most suitable—for most of these subjects, anyway—is the Secretary of State for Scotland, who has a Department relatively newly set up, the Scottish Economic Planning Department, which is geared to do precisely that economic planning and has had passed to it, during the course of United Kingdom decisions on regional policy, some of the decision-making which was done previously in the Department of Industry.

Mr. Dalyell

The hon. Member having had his ministerial experience, for how long does he think that the office of Secretary of State would last in a Conservative Cabinet?

Mr. Younger

If the hon. Member means if a Scottish Assembly were set up on the lines proposed in the Bill, I have no doubt that a Conservative Cabinet would retain the Secretary of State for Scotland, for the very good reason that the Conservatives give a high priority to Scottish matters. I think that the hon. Member was leading on to the point that I was going to make and which he has made. I thoroughly agree with him that if a substantial amount of the powers of the Secretary of State, particularly in the economic sphere, which are proposed to be left with him were to be removed and put with the Scottish Assembly, his influence in the Cabinet would be gravely weakened. He would hardly be able to speak with great authority in the Cabinet on matters affecting the Scottish economy if a large proportion of the running of that economy and the decisions on the economy were to be handed over to the Assembly.

My final point is to make a plea for the Assembly itself. If the Bill becomes law and the Assembly is set up, it will have a massive task. The Assembly will have a tremendous number of difficult decisions to make. It will be an immense upheaval. Let us not overload it with many extra matters at this stage.

That brings me back to the hon. Member for Aberdeenshire, East and to some of his remarks at the beginning and the interventions made during his speech. Nobody in the Committee, as I recall, has suggested tonight the specific way in which such a transfer of responsibilities as is proposed in the amendment would improve matters.

Mr. Mackintosh

Oh, come on.

Mr. Younger

No one has said so.

Mr. Mackintosh

I said so.

Mr. Younger

A general feeling has been expressed by some hon. Members that, just because there is to be an Assembly and because some people in it might like to have such powers, it must be a good thing to give such powers to them. But nobody has said that they will be able to do more, do it with more money, do it better or have any new ideas. Therefore, if one is to have devolution, there are many good arguments for giving a proper remit to the Assembly and for its having a good, clear task to carry out.

The matter of economic control in the country as a whole is dictated by the pattern of industry and the pattern of the economy. If we make the constitution different so that it does not reflect those, it will not work so well and it will be to the disadvantage of all parts of the United Kingdom, and particularly to parts such as Scotland.

It will also have been noted, although I really do not have time to go into the matter, that a couple of other amendments have been linked with this amendment for discussion tonight. They concern the Scottish Development Agency and the Highlands and Islands Development Board. I make only one remark about those amendments. Their point is to draw to the Government's attention what we regard as the very anomalous situation of having divided responsibility for the SDA. It is extremely difficult to envisage how the Assembly—I think I am right on this point—will appoint the members of the Agency and how its guidelines are to be determined under the auspices of the Secretary of State. I should have thought that that was a recipe for extreme difficulty in administration. I hope that the Minister will be able to comment on the matter, either now or later.

On the general matter of Amendment No. 466, the hon. Member for Aberdeenshire, East moved it with all the wrong arguments. I think his argument is a bad one. Perhaps the most telling point was made by my hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith) when he pointed out—although not coming to the conclusion to which I would come—that the industrial development certificate has in many ways been the most valuable regional aid of all of them for Scotland. There is no way in which that would continue for long if economic powers and regional development were diffused to a Scottish Assembly.

For those reasons, I hope that the Committee will not accept the amendment, which would be actively harmful to better development in the future.

Mr. Harry Ewing

I begin by answering the point raised by the hon. Member for Ayr (Mr. Younger) about the Scottish Development Agency. It is true, as he said, that the appointments to the SDA will be made by the Scottish Administration. The guidelines will be devised and laid down by the United Kingdom Parliament, albeit through the person of the Secretary of State for Scotland.

The reason for that is perfectly obvious. It is because the Government's approach to devolution is an approach to devolution within the context of maintaining the economic unity of the United Kingdom. It is really against that background that we see it as necessary to devise those guidelines. However, the guidelines themselves will come up for discussion at a later date when my right hon. Friend the Secretary of State deals with them.

The point I made earlier about the SDA is relevant. At present it is operating under published guidelines, so it is not as though something new will happen. It has been happening for some time.

Mr. Canavan

Is my hon. Friend saying that the guidelines under which the SDA will be asked to operate after devolution will be exactly the same as the present guidelines?

Mr. Ewing

No, I am not saying what the guidelines will be post-devolution. That will be a matter for discussion and decision at the time. However, the point made by my hon. Friend the Member for Renfrewshire, West (Mr. Buchan) is worth making again. At no time has the Labour Party in Scotland or the Scottish TUC—in making this point I turn to my hon. Friend the Member for West Lothian (Mr. Dalyell)—in coming to see my hon. Friend the Minister of State or my right hon Friends the Secretary of State or the Lord President ever suggested that industrial or economic powers that would put Merseyside, North-East England or any other part of the United Kingdom at a disadvantage should be devolved to Scotland.

Mr. Leon Brittan (Cleveland and Whitby)

On that point, will the Minister confirm that, although the Scottish Assembly and Executive will not be able to act in accordance with the powers that those proposing the amendment would wish them to do, what they will be able to do out of the block grant is to choose to spend more money on SDA activities within the guidelines than would otherwise be the case? To that extent, those from the North-East, part of which I represent, and from the Merseyside area have a legitimate fear that the Scottish Assembly could, if it wished, choose to spend more money exercising the powers allotted to it on regional development, possibly at the expense of other parts of the country.

10.30 p.m.

Mr. Ewing

I know that it will not be satisfactory to the hon. Member or to the Committee, but the best answer I can give is that this is surely a matter that my right hon. Friend the Secretary of State and the House will consider when discussing the guidelines. To a certain extent, the hon. Member for Cleveland and Whitby (Mr. Brittan) is correct, and it is something that will be weighed during consideration of the guidelines.

Mr. Watt

In order to put the record straight, can the Minister tell the Committee and the world that originally, in the first White Paper, powers over the Scottish Development Agency were included?

Mr. Ewing

I have great difficulty in getting the Committee to listen to me at times, without trying to persuade the world to listen to me. In the original White Paper the SDA was not included. I hope that there is no misunderstanding about that. I do not think that we should pursue the question of the SDA. I realise that it is important, but it can be dealt with later.

Mr. Brittan

Is it not the case that the guidelines deal with the manner in which the power can be exercised and cannot reduce the power of the Assembly to spend more money out of the block grant on the SDA if it wishes to do so?

Mr. Ewing

That is true. If the Assembly decides to spend more money through the SDA, it will have to spend less on, for example, housing, hospitals and schools. It is a question of priorities and it will involve electoral popularity or unpopularity.

It is dangerous for the Committee to reject an amendment merely because it is an SNP amendment. In asking the Committee to reject it, I emphasise that I am asking it to do so not because it was moved by a member of the SNP but because of the dangers to the economic unity of the United Kingdom and because of what it would do to the preservation of that unity.

I sense that the Committee is heavily against the amendment. When the hon. Member for Ayr was speaking, I was concerned lest the hon. Member for Aberdeenshire, East (Mr. Henderson) had seduced the Committee with his fancy words. With respect to the hon. Member for Aberdeenshire, East, I must tell him that he did not address himself to the amendment but went wide, through the courtesy of the Chair. I do not criticise the Chair but compliment it on allowing the hon. Member to go as wide as he did. Without that, we should not have discovered some of the SNP's policies.

It was astonishing that the hon. Member for Aberdeenshire, East should try to convince the Committee that the SNP is the only party that has any concern for the 200,000 unemployed in Scotland and for the need to regenerate Scottish industry and do something for school leavers. If the world, and particularly Scotland, listens to me now, it might hear something to its benefit.

The Scottish National Party's track record in encouraging industry to go to Scotland is not one that stands examination. At the public inquiry into the development of the Hunterston peninsula, the SNP gave evidence against that development. I have a letter on headed notepaper from the Aberdour branch of the SNP in Dunfermline trying to encourage civil disobedience to prevent industrial development in the constituency of my hon. Friend the Member for Dunfermline (Mr Hunter). I hope that when Scottish nationalists next speak publicly about the need to attract jobs to Scotland they will be honest and say that they are more interested in cattle grazing in the field than they are in people getting jobs. I hope that we do not hear any more of this sort of hypocrisy about who has the monopoly of concern about the terrible unemployment situation in Scotland.

I have hurt the feelings of the hon. Member for Aberdeenshire, East—the truth always hurts—but he has got all that he asked for. I hope that we do not hear him giving any more hypocritical, tear-jerking statements about concern for the unemployed when the record of his party is displayed in this letter—[Interruption.]

The Second Deputy Chairman (Mr. Bryant Godman Irvine)

Order. The Committee is doing itself no credit.

Mr. Ewing

The record of the Scottish nationalists, as displayed in this letter and in their evidence to the public inquiry, will not bear examination.

My hon. Friend the Member for Aberdeen, North (Mr. Hughes) dealt adequately with the time-honoured SNP argument that people in Scotland are paid less than in the United Kingdom as a whole, so I shall not dwell on that aspect.

I draw my remarks to a conclusion—[Interruption.] If SNP Members want me to continue, I have a whole host of figures about their record on these matters.

Mr. Mackintosh

I want to correct one small point that the Minister has made. There was no suggestion on my part that the STUC or the Scottish Labour Party Conference suggested that Scotland have jobs at the expense of other areas when they were invited to consider the content of the Scotland Bill in economic terms. The question that the STUC and the conference posed was that if the SDA were devolved it also made sense to devolve the Section 7 powers of the Industry Act. These went together. I was on the deputation discussing this matter. The Minister must realise that these go hand in hand and that there is a legitimate case to make here. There is no question of depriving other parts of the country.

Mr. Ewing

It occurred to me when my hon. Friend the Member for Berwick and East Lothian (Mr. Mackintosh) was making his speech that he was making the fundamental error of thinking that we are discussing executive devolution of the kind of functions that the SNP has been talking about. We are not. We are discussing legislative devolution.

Looking at the terms of the amendment, I must point out that the SDA is basically devolved, apart from the point made by the hon. Member for Cleveland and Whitby; the Highlands and Islands Development Board is basically devolved, as are the new towns industrial powers.

The rest of the amendment is why I am urging the House to reject it. The rest deals with industrial promotion, and the regulation and monitoring of investment grants, aids and incentives. Areas such as those represented by my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) and other hon Friends from the North-East and North-West would be at a disadvantage if the amendment were passed. If the Scottish Assembly had legislative competence to legislate in such matters as industrial promotion, and the regulation and monitoring of investment grants, aids and incentives, other parts of the United Kingdom would suffer. It would be no time at all before other parts of the United Kingdom rightly would be asking for exactly the same powers which the SNP is asking should be given to the Scottish Assembly.

Mr. Donald Stewart

So what?

Mr. Ewing

The right hon. Member for Western Isles (Mr. Stewart) says "So what?" If the other parts of the United Kingdom asked for exactly the same powers, would the right hon. Gentleman then say "So what?"? At that stage the competition would be between Scotland and Merseyside for jobs. The competition would turn inwards and be between Falkirk and Forfar, Stirling and Stranraer. It is no good the right hon. Member for Western Isles shaking his head. That is what would happen. The competition would be between Falkirk and Forfar, Stirling and Stranraer, Grangemouth and Greenock. That would divide rather than unite the Scottish people.

That is why the amendment is so dangerous. It is precisely because of that point—not because it is an SNP amendment—that it is basically an argument about where devolution stops and separation begins.

For the first time ever I agree with my hon. Friend the Member for West Lothian. It is probably at that point that separation is in danger of starting. That brings me to my hon. Friend the Member for West Lothian. I say bluntly, frankly and in all fairness—[Interruption.] I shall wait for quietness because I do not want these remarks to be missed.

I get a little sick of Lord Weir, Peter Balfour, Gerald Elliott and Sir Eric Yarrow telling my hon. Friend that if Scotland goes separate they will pull their works out of Scotland. There is not much point in telling my hon. Friend that. The quicker they start telling their workers, the better we shall be able to get through to the SNP and the rest of the people of Scotland the dangers of separation.

Instead of telling it to my hon. Friend, Lord Weir should be telling it to the people who work in Clackmannan and East Stirlingshire which is represented by an SNP Member.

Mr. Younger

To be fair to Lord Weir and everyone else, the hon. Member for South Ayrshire (Mr. Sillars) complained that Lord Weir had done precisely that.

Mr. Ewing

I shall not take up that comment; I shall let it stick on the wall. I hope that my hon. Friend the Member for West Lothian will report back my remarks to those who are making those statements and will tell them that it would be helpful if they made those statements publicly so that people at long last realised the danger of separation.

It would be futile to take up more time on this amendment. Although it is an important issue, I believe that I have dealt adequately with the points that were raised by the hon. Member for Aberdeenshire, East. The hon. Gentleman did not really speak to the amendment, but he made some points that had to be answered. I hope that what I have said will convince the Committee that the amendment ought to be overwhelmingly rejected.

The Second Deputy Chairman

Mr. Douglas Henderson.

Mr. Dalyell

rose—

The Second Deputy Chairman

Order. I have called Mr. Henderson.

Mr. Henderson

If one were to measure the success of a speech by the intemperate and ridiculous reply given by the Minister, mine would achieve very high marks. When combined with the glib and rather superficial comments from the Government Front Bench, it must have been a doubly battling speech in that sense.

I take up one point with the Minister. When, in an extremely intemperate frame of mind, he quoted from an individual member of the SNP from the Fife area, he might have been fair enough to have disclosed that the member's action has been disowned by the constituency association concerned. I hope that he will have the grace to admit this and to admit that the Scottish National Party has never supported this type of policy in any form.

10.45 p.m.

Mr. Harry Ewing

It is time-honoured practice in the SNP that, when someone at branch level says something which is likely to incur electoral unpopularity, the national council immediately denies that it is part of its policy. The letter is signed by Mr. R. B. Irvine who is described in brackets as "National Council Delegate", and the letter is on headed notepaper. I had better quote it, because it is only fair to the hon. Member for Aberdeenshire, East (Mr. Henderson) that he should know what he has to answer. It reads: I have been requested to write to you regarding the proposal for the above. The matter has been discussed among executive members of this Branch of the Scottish National Party. That is hardly the opinion of an individual.

Mr. Henderson

I am surprised that the Minister should attempt to compound his original smear with this additional one. There are, after all, 600 national council delegates in the Scottish National Party. The Minister is aware that the constituency association has issued a statement completely exonerating the party from any responsibility for this letter. I ask him to accept that. He would show some grace and common sense for a change if he accepted it. I am the last person to say that, because one individual member of the Labour Party who happens to be a member of some executive council somewhere says something, that necessarily is the policy of the Labour Party. If I made that mistake and a member of the Labour Party corrected me, I would accept it gracefully. I am afraid that it is the Minister's concern for his seat and his concern about his inability to answer the arguments in this debate which has led him up this blind alley.

During this debate, we have seen the emergence of the division between those who believe fundamentally that it is right to settle matters on a centralised basis and those who believe fundamentally that it is right to settle them on a decentralised basis. There is a dichotomy in the argument. On one side, the hon. Member for Ayr (Mr. Younger), in a rather glib summing-up. said that this proposal would be bad for Scotland. On the other side, the hon. Member for Wolverhampton, South-West (Mr. Budgen) said that the problem about this proposal was that it would make the power too good for Scotland. We heard from the Minister that the proposal would be bad, but the hon. Member for Wolverhampton, South-West said that it would be too good for Scotland.

The Minister seems to agree more with the hon. Member for Wolverhampton, South-West. He said that it would be disadvantageous to Merseyside and that in that sense, therefore, it was too good for Scotland to have this power. This is the dichotomy. If there is a transfer of power to Scotland, there are people who will say that this is very bad for Scotland because the Assembly may make a hash of it or be irresponsible. On the other side, there are people who say that this transfer will give it an unfair advantage or that it will handle it so well that it will be a disadvantage to Merseyside and North-East England.

Mr. Heffer

The hon. Gentleman obviously does not understand this. If these powers were given to the Assembly and thereby Scotland gained an advantage, there would be an immediate reaction and then a disadvantage. Scotland's existing advantages would disappear, and it would not get the advantages which the SNP thinks it would get. If the hon. Member for Aberdeenshire East (Mr. Henderson) cannot understand that, he cannot understand the ABC of economic development.

Mr. Henderson

The hon. Member for Liverpool, Walton (Mr. Heffer) delivers that stricture, but I am not entirely sure whether he is saying that it is an advantage or a disadvantage to Scotland.

If we accept that it is right to transfer power to the people of Scotland, it is for discussion and debate to decide of what that power should consist. Those who in general terms are in favour of transferring power and responsibility to people in Scotland will tend to favour the argument that an ever greater degree of power should be transferred, while those who are totally opposed to the transfer of power will tend to argue on every individual subject under the sun. If we think back to all the days on which the Committee has met and review all the Hansard reports, we realise that it is clear that those who are opposed to the transfer of power will always say, no matter what the subject, "It is a bad thing to do this. It is rash and unwise."

Mr. Robert Hughes

rose—

Mr. Henderson

No. I have already given way to the hon. Gentleman tonight.

What is to be the role of the Secretary of State for Scotland? That is a key and fundamental question. I tend to agree with the hon. Member for Berwick and East Lothian (Mr. Mackintosh), who said that it is ridiculous to imagine that the Secretary of State can continue to carry out his present Cabinet role irrespective, for example, of the loss of civil servants.

The fact is that we shall have an Assembly that has been directly elected by the people of Scotland. The Assembly will have electoral legitimacy. We shall have a Chief Executive, or Prime Minister, as undoubtedly he will be called. It does not matter what the Bill says or what hon. Members say, he will be called the Prime Minister of Scotland. He will be the person to whom the Scottish people look to put their case, their point of view

and their representations. It is absurd to cling to this totem pole of the Secretary of State for Scotland, and to incant the importance of his role in the Cabinet of persuading and other such functions. It would be better to face the facts now and to say "Let us transfer these powers from the Secretary of State's office to the Assembly, and let that body get on with the job as we are getting on with the job in our sphere of responsibility".

The hon. Member for Ayr, who summed up from the Opposition Front Bench, gave a good example of why the Conservative Party is down to 16 seats in Scotland. The hon. Gentleman was complacent. He told us how wonderful it had been when the Conservative Party was in office with its regional policies. The fact is that the Conservative Government were found out just as the Labour Government were found out.

Mr. Robert Hughes

rose—

Mr. Henderson

No. I am almost at the end of my remarks. The hon. Gentleman may be able to speak in a moment. I shall not give way to him.

At the end of the day it is goals that matter. It does not matter how many corners one gets, it is goals that count. Neither the Conservative Party in government nor the Labour Party in government has delivered the goods as the people of Scotland see them and want them. This last-ditch attempt to cling on to every piece of power is doomed to failure. Once the Assembly begins to function, it will not matter what decision the Committee takes tonight. The Assembly will demand these powers and it will get them. It would be better for the Committee to grow up and to look ahead constructively. It would be better for it to say "The Assembly will have these powers anyway. Let us be fair about it and grant them in a spirit of good will and generosity rather than having to have them prised out of us, as undoubtedly will happen at a later date".

Question put, That the amendment be made:—

The Committee divided: Ayes 23, Noes 202.

Division No. 63]	AYES	[10.55 p.m.
Bain, Mrs Margaret	Evans, Gwynfor (Carmarthen)	Johnston, Russell (Inverness)
Beith, A. J.	Henderson, Douglas	MacCormick, Iain
Canavan, Dennis	Hooson, Emlyn	Mackintosh, John P.
Crawford, Douglas	Howells, Geraint (Cardigan)	Penhaligon, David
Reid, George	Steel, Rt Hon David	Watt, Hamish
Robertson, John (Paisley)	Stewart, Rt Hon Donald
Ross, Stephen (Isle of Wight)	Thomas, Dafydd (Merioneth)	TELLERS FOR THE AYES:
Sillars, James	Thompson, George	Mr. Andrew Welsh and
Smith, Cyril (Rochdale)	Thorpe, Rt Hon Jeremy (N Devon)	Mr. Gordon Wilson.
NOES
Allaun, Frank	George, Bruce	Orme, Rt Hon Stanley
Archer, Rt Hon Peter	Gilbert, Rt Hon Dr John	Ovenden, John
Armstrong, Ernest	Glyn, Dr Alan	Palmer, Arthur
Atkins, Ronald (Preston N)	Golding, John	Park, George
Atkinson, Norman	Goodhew, Victor	Parry, Robert
Bagier, Gordon A. T.	Gould, Bryan	Pavitt, Laurie
Barnett, Guy (Greenwich)	Gourlay, Harry	Pym, Rt Hon Francis
Bates, Alf	Gow, Ian (Eastbourne)	Richardson, Miss Jo
Bean, R. E.	Grant, George (Morpeth)	Roberts, Michael (Cardiff NW)
Bennett, Andrew (Stockport N)	Grant, John (Islington C)	Robinson, Geoffrey
Benyon, W.	Gray, Hamish	Roderick, Caerwyn
Bidwell, Sydney	Grocott, Bruce	Rodgers, George (Chorley)
Bishop, Rt Hon Edward	Hardy, Peter	Rooker, J. W.
Blenkinsop, Arthur	Harrison, Rt Hon Walter	Roper, John
Boardman, H.	Hattersley, Rt Hon Roy	Rose, Paul B.
Booth, Rt Hon Albert	Heffer, Eric S.	Ross, Rt Hon W. (Kilmarnock)
Bradford, Rev Robert	Hodgson, Robin	Sandelson, Neville
Bray Dr Jeremy	Hooley, Frank	Sedgemore, Brian
Brittan, Leon	Horam, John	Sever, John
Brown, Hugh D. (Provan)	Huckfield, Les	Shaw, Arnold (Ilford South)
Brown, Robert C. (Newcastle W)	Hughes, Robert (Aberdeen N)	Sheldon, Rt Hon Robert
Buchan, Norman	Hunter, Adam	Shore, Rt Hon Peter
Buchanan, Richard	Irving, Rt Hon S. (Dartford)	Silkin, Rt Hon S. C. (Dulwich)
Budgen, Nick	Jackson, Miss Margaret (Lincoln)	Silverman, Julius
Callaghan, Jim (Middleton & P)	John, Brynmor	Skinner, Dennis
Campbell, Ian	Jones, Alec (Rhondda)	Small, William
Cant, R. B.	Jones, Barry (East Flint)	Smith, John (N Lanarkshire)
Carlisle, Mark	Jones, Dan (Burnley)	Snape, Peter
Carmichael, Neil	Kaberry, Sir Donald	Spearing, Nigel
Carson, John	Kaufman, Gerald	Spriggs, Leslie
Castle, Rt Hon Barbara	Kerr, Russell	Sproat, Iain
Clemitson, Ivor	Knight, Mrs Jill	Stallard, A. W.
Cocks, Rt Hon Michael (Bristol S)	Lambie, David	Steen, Anthony (Wavertree)
Cohen, Stanley	Lamborn, Harry	Stewart, Rt Hon M. (Fulham)
Coleman, Donald	Lamond, James	Stoddart, David
Cook, Robin F. (Edin C)	Le Merchant, Spencer	Stott, Roger
Cox, Thomas (Tooting)	Lester, Jim (Beeston)	Stradling Thomas. J.
Crawshaw, Richard	Lewis, Ron (Carlisle)	Strang, Gavin
Crowther, Stan (Rotherham)	Litterick, Tom	Summerskill, Hon Dr Shirley
Cryer, Bob	Lyons, Edward (Bradford W)	Swain, Thomas
Dalyell, Tam	McCartney, Hugh	Taylor, Mrs Ann (Bolton W)
Davidson, Arthur	McCusker, H.	Taylor, Teddy (Cathcart)
Davies, Rt Hon Denzil	McDonald, Dr Oonagh	Thomas, Mike (Newcastle E)
Davies, Ifor (Gower)	McElhone, Frank	Thomas, Ron (Bristol NW)
Deakins, Eric	McGuire, Michael (Ince)	Thorne, Stan (Preston South)
Dean, Joseph (Leeds West)	MacKenzie, Rt Hon Gregor	Tinn, James
Dempsey, James	Maclennan, Robert	Varley, Rt Hon Eric G.
Doig, Peter	Macmillan, Rt Hon M. (Farnham)	Wainwright, Edwin (Dearne V)
Dormand, J. D.	McMillan, Tom (Glasgow C)	Walker, Terry (Kingswood)
Douglas-Hamilton, Lord James	McNamara, Kevin	Ward, Michael
Dunnett, Jack	Madden, Max	Watkins, David
Eadie, Alex	Magee, Bryan	Watkinson, John
Ellis, John (Brigg & Scun)	Mallalieu, J. P. W.	White, Frank R. (Bury)
English, Michael	Marshall, Dr Edmund (Goole)	White, James (Pollok)
Ennals, Rt Hon David	Marshall, Jim (Leicester S)	Whitlock, William
Evans, Ioan (Aberdare)	Mendelson, John	Williams, Rt Hon Alan (Swansea W)
Ewing, Harry (Stirling)	Miller, Dr M. S. (E Kilbride)	Wilson, Alexander (Hamilton)
Eyre, Reginald	Mitchell, Austin	Wilson, William (Coventry SE)
Fairgrieve, Russell	Molloy, William	Woodall, Alec
Faulds, Andrew	Monro, Hector	Woof, Robert
Fernyhough, Rt Hon E.	Moonman, Eric	Wrigglesworth, Ian
Flannery, Martin	Morris, Rt Hon Charles R.	Young, David (Bolton E)
Fletcher, Alex (Edinburgh N)	Morris, Rt Hon J. (Aberavon)	Young, Sir G. (Ealing, Acton)
Fletcher, Ted (Darlington)	Morris, Michael (Northampton S)	Younger, Hon George
Foot, Rt Hon Michael	Moyle, Roland
Forrester, John	Murray, Rt Hon Ronald King	TELLERS FOR THE NOES:
Fowler, Gerald (The Wrekin)	Newens, Stanley	Mr. James Hamilton and
Fraser, John (Lambeth, N'w'd)	Noble, Mike	Mr. Ted Graham.
Garrett. W. E. (Wallsend)	Oakes, Gordon

Question accordingly negatived.

It being after Eleven o'clock, The CHAIRMAN left the Chair to report Progress and ask leave to sit again, pursuant to Order [16th November].

Committee report Progress; to sit again tomorrow.

WELSH GRAND COMMITTEE

Ordered, That, during the proceedings on the matter of the Welsh Development Agency, the Welsh Grand Committee have leave to sit twice on the first day on which they shall meet; and that notwithstanding the provisions of Standing Order No. 64 (Meetings of Standing Committees) the second such sitting shall not commence before Four o'clock nor continue after Six o'clock.—[Mr. Walter Harrison.]

STATUTORY INSTRUMENTS (JOINT COMMITTEE)

Ordered, that the Standing Order of 3rd December 1975 relating to the nomination of the Joint Committee on Statutory Instruments be amended by leaving out Mr. Nicholas Fairbairn and inserting Mr. Geoffrey Dodsworth.—[Mr. Walter Harrison.]