Commons Sitting of 23 January 1978

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  INDUSTRY

    Chrysler UK Ltd
    Mr. Kenneth Clarkeasked the Secretary of State for Industry when he next proposes to meet the management of Chrysler UK Limited.
    The Secretary of State for Industry (Mr. Eric G. Varley): I have no immediate plans for a further meeting with the United Kingdom management of Chrysler Corporation.
    Mr. Clarke: Has the Secretary of State noticed that in 1977 Chrysler will not have made the £3·4 million profits estimated at the time of the rescue and will not have made the £300,000 profits estimated in the recent planning agreement, but is likely to lose £22 million, of which the British taxpayer will have to find £10 million? Can the Secretary of State at least give an assurance that there is no question of any more public money being given to this company beyond that set out in the existing agreement, and that it is now entirely up to the management and work force of Chrysler to make this a competitive concern?
    Mr. Varley: Yes, I can give that assurance.
    Mr. Henderson: Is the Secretary of State aware that there is considerable consternation at Linwood over the decision announced last week by Chrysler not to build the new model for 1979 there? Does the Secretary of State recall that in col. 1559 of the Official Report for 17th December 1975 he gave me a direct undertaking that the model for 1979 would be produced at Linwood, and that
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    it was on that basis that my hon. Friends voted for the order?
    Mr. Varley: I understand that the model policy of Chrysler UK Limited is being discussed with officials in my Department. Proposals have not yet been put to me, but I hope to be able to say something about it in due course.
    Mr. Hal Miller: Will the Secretary of State confirm that the 13-point plan agreed by the company and its unions provided a satisfactory basis on which to go forward, including with the new model?
    Mr. Varley: As the hon. Member for Rushcliffe (Mr. Clarke) said, the 1977 proposals have not been fully met, although it was always envisaged that they would be a struggle. The integration of Chrysler's European operations has been reasonably successful, but I hope that there can be improvements. I understand that at Linwood, for example, improvements have taken place over the past few weeks.

    Government Assistance (Criteria)
    Mr. Adleyasked the Secretary of State for Industry what criteria he identifies as necessary to qualify industries for Government assistance by: (a) grant. (b) loan, (c) investment and (d) protection from overseas competition; and which category of assistance, and qualifying criteria, he identifies as applying to British Leyland.
    The Minister of State, Department of Industry (Mr. Gerald Kaufman): Assistance to industry is provided according to statutory purposes and published criteria, in particular under the Industry Acts of 1972 and 1975. This applies to British Leyland, like any other company. Following the Ryder Report, British Leyland has received assistance in the form of equity capital and long-term loans.
    Mr. Adley: Will the Minister of State give an assurance that the willingness of the Government to accept and not to funk the recommendations of the Edwardes Report will be a test of their credibility in attempting to get the economy into some sort of shape after four years of Socialism? Will he give an assurance that the Government will not throw good taxpayers' money after bad

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    in financing car-making establishments such as Speke, which seem to be more like schools for industrial unrest than car plants?
    Mr. Kaufman: The hon. Member should have referred to the first four years of Socialism. I do not think that it is up to the politicians to say what can be done. It is for the management to say how it will do it. It is then up to the Government to say how much money they will put in. That is what the Leader of the Opposition said when she visited Cowley two months ago. I do not know that I go that far, but, on the whole, she was on the right lines.
    Mr. Budgen: Will the Minister accept my congratulations on the brave and sensible words that he spoke over the weekend in support of the management of British Leyland? Will he, however, assure the House that on this occasion at least he has the support of the Prime Minister and the Cabinet and that he will not have to undergo a humiliating back-down?
    Mr. Kaufman: The hon. Gentleman appears to be attributing to me words spoken by the Secretary of State, but I do not think that anyone in the House could quarrel with the statement that we must have a strategy for British Leyland which will arrest the decline and put it on a sound footing; that British Leyland will be managed by the management, not the Government; that British Leyland can succeed only on the basis of producing cars competitively, and so on. I think that those are universally accepted sentiments.
    Mr. Ioan Evans: As well as giving the financial cost of sustaining British Leyland, will my hon. Friend say how many jobs are involved at British Leyland and how many jobs are involved in the private sector components industry which supplies British Leyland? Will my hon. Friend try to ascertain whether it is still the Opposition's policy that British Leyland should have gone into liquidation?
    Mr. Kaufman: The Opposition are a bit bewildered about their policy on Leyland. They voted consistently against the rescue of Leyland, but, on the other hand, whenever there were by-elections in the Midlands, particularly Birmingham, they pretended that they were the saviours of Leyland. The Conservative Party would
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    like to wreck a good deal of this country's manufacturing industry.
    Mr. Kenneth Clarke: Does the Minister accept that the Opposition agree with the sentiments of the Secretary of State, if they are correctly expressed, in the weekend interview? We simply wait to see whether on this occasion he can carry the Cabinet and the Labour movement with him. At least, the Labour Party has realised the folly of the Ryder Plan, which appears to be being abandoned.
    Mr. Kaufman: The Ryder Plan is being looked at again by the new chairman. [HON. MEMBERS:"Oh".] That is very sensible. Just as the Conservative Party, when it published its White Paper on steel in 1973, said that such plans had to be flexible and subject to the course of events, so with any industrial plan. I am glad to see that the Opposition are regaining a little of the flexibility that they lost between 1970 and 1974.

    British Leyland
    Mr. Gwilym Robertsasked the Secretary of State for Industry if he will make a further statement on British Leyland.
    Mr. Dykesasked the Secretary of State for Industry when he expects to receive a copy of the Chairman's review report into the reorganisation of British Leyland.
    Mr. Hal Millerasked the Secretary of State for Industry when he will next meet the Chairman of British Leyland.
    Mr. Gryllsasked the Secretary of State for Industry when he last met the Chairman of British Leyland.
    Mr. Varley: The Chairman of British Leyland will shortly be submitting a revised corporate plan to the National Enterprise Board, whose report I expect to receive in March. I meet the Chairman of British Leyland from time to time as circumstances warrant.
    Mr. Roberts: Does not my right hon. Friend accept that one of the major problems of British Leyland is reflected in the fact that the price of a new Mini has trebled over the last five years, in a period when the retail price index and average wages have risen by only about twice? Does he accept that this means

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    that a smaller and smaller proportion of new cars has been bought by individuals?
    Does not the Minister agree, therefore, that one of the solutions may be for British Leyland not to go up-market but to concentrate on automating its production of a more standard vehicle, which will maintain the labour at British Leyland by increasing throughput and reducing the real cost, and also perhaps meet the real need for this type of car?
    Mr. Speaker: I hope that the rest of the supplementary questions will be briefer.
    Mr. Varley: I hope very much that the British Leyland management will have a model strategy which will command the support of the whole work force and will produce products which the British people will want to buy.
    Mr. Dykes: As we have the Secretary of State answering Questions and not the Minister of State, perhaps we shall have a more objective exchange of views. The "Easy Ryder Plan" has been totally overturned. Will the Secretary of State confirm that the report and recommendations arising from the new solution will have to be that much tougher now as a result of all that has happened, even if a no-strike agreement or a guarantee—putting it higher—with the unions is achieved in order to try to get back to a million vehicles per annum?
    Mr. Varley: The National Enterprise Board and ' the Chairman of British Leyland have told me that they want to see the participation arrangements strengthened. The arrangements were set in train two and a half years ago, and they want to ensure that they have a successful company. It is true that two of the most important ingredients of the Ryder strategy have not been met, namely, the company has not held its share of the United Kingdom market and has not generated sufficient internal resources.
    Mr. Miller: When he next meets the Chairman of British Leyland, will the Secretary of State point out to him the third criterion that the money advanced by the House was for capital expenditure and not for meeting recurrent costs? Will he inform us now whether any guarantee was given by himself or by the National
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    Enterprise Board for the recent drawings by the company?
    Mr. Varley: The recent drawings were discussed with my Department and I understand that they will be sufficient until about the end of March. Further financial requirements for British Leyland will depend on the revised corporate plan which is being discussed by the Leyland board and its work force for submission to the NEB.
    Mr. Grylls: When the Secretary of State says that he will give his unstinting support to the Edwardes Plan instead of the Ryder Plan, does that mean that he will give support when the going gets tough and there are proposals for redundancies, which may well be necessary, and, indeed, when plant closures may be found necessary, as the CPRS Report said in 1975? If he does, he is entitled to ask for the support of the Opposition.
    Mr. Varley: I want to see British Leyland a successful company. I want to support all those in British Leyland, including the Chairman, who want to achieve objectives as a substantial British company, not only arresting the decline but improving its market share where it can. Unfortunately, that has not taken place over the last two years. I think that the matter is being tackled now and being discussed with the work force.
    Mr. Mikardo: Will it not be difficult for a chairman, whatever his qualities and qualifications, who is on relatively short secondment from another company and therefore quite secure, irrespective of what happens to British Leyland, to obtain full co-operation from managers and workers whose jobs he is putting at risk? Does not this critically difficult task demand a man of longer and deeper commitment?
    Mr. Varley: I have said publicly that I support Mr. Edwardes's appointment. Not only do I support it, but the whole of the National Enterprise Board does, including the four senior trade union leaders who are members of that board. The best way of securing jobs in British Leyland is to ensure that there is comparability of performance and continuity of production. That is what Michael Edwardes wants to achieve, as does the vast majority of those who work in British Leyland.
    Sir K. Joseph: In view of the obvious difficulty for the Government of managing nationalised industries—we are coming to the subject of steel later in Question Time—what does the Secretary of State think of the proposal of the National Executive Committee of his party for a huge expansion of nationalisation, both of industries and firms, in Labour's "Programme for Britain 1976"?
    Mr. Varley: I am always in favour of the fully worked out policies of the Labour Party, especially those expressed in the manifestos of 1974.
    Mr. Hooley: What will be the repercussions on the reorganisation of British Leyland so far as its overseas investments and commitments are concerned, especially in South Africa?
    Mr. Varley: I know that my hon. Friend has some Questions on this matter on the Order Paper for answer later this week, but I understand the Board of British Leyland is reviewing all its operations, both at home and abroad.
    Mr. HordernWill the Secretary of State now answer the second question of my hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller)? Did he personally, on behalf of the Government, give a guarantee for any of the recent loans to British Leyland from the banks, totalling £50 million?
    Mr. Varley: It is not my responsibility. That responsibility rests with the National Enterprise Board, and these arrangements, I understand, are satisfactory to those from whom the loans have been received.
    Sir Nigel Fisherasked the Secretary of State for Industry what production output, in terms of vehicles per employee, has been achieved by British Leyland in the past year.
    The Under-Secretary of State for Industry (Mr. Les Huckfield): I refer the hon. Member to the National Enterprise Board's report on the performance of British Leyland which my right hon. Friend provided to the House on 25th July 1977.
    Sir N. Fisher: Can the hon. Gentleman confirm whether it is correct, as has been reported, that the equivalent Japanese output is 43 vehicles per man per year, which is an enormously higher figure than
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    ours? Is not this difference in output really the key to the future of British Leyland?
    Mr. Huckfield: While it is true that some of the productivity levels of some of our main competitors are higher than at British Leyland, I should warn the hon. Gentleman that direct comparison is not exactly of like with like because we are not necessarily talking about the same vehicle types.

    Productivity
    Mr. Formanasked the Secretary of State for Industry if he is satisfied with the increase in British industrial productivity since March 1974.
    Mr. Fryasked the Secretary of State for Industry in what respects he has so far achieved the overriding objective of improving Great Britain's industrial performance.
    Mr. Haselhurstasked the Secretary of State for Industry whether he is satisfied with improvements in output by British industry since the implementation of the industrial strategy.
    The Minister of State, Department of Industry (Mr. Alan Williams): Despite the deepest world recession for 40 years, genuine progress has been made in establishing conditions in which British industry can do well at home and abroad.
    Mr. Forman: Is the Minister aware that, according to the figures which I received from his own Department since his party came to power in March 1974, the United Kingdom is the only major industrialised country to have merely staggered back to where it was in terms of manufacturing output per employee at that time? Does this not underline the damage done to industrial productivity in this country by the mistaken and sometimes vindictive policies of his Government, especially during the first two years of their term of office?
    Mr. Williams: The overwhelming message that came from the 40 sector working parties in the industrial strategy was that the essential prerequisite for solving the problems of industry was getting the economic climate right. I draw the hon. Member's attention to an item in the

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    Observer yesterday which made the point that shares and reserves were up, the pound was up, inflation was down, interest rates were down, medium term loans were at their lowest rate for a number of years, the country was earning its keep for the first time for many years and foreigners were putting money into this country. [HON. MEMBERS:"Oh."] I know that the Opposition do not like this. The IMF has indicated that we are making better progress than expected. That is the assessment not of some wild Socialist but of Barclays Bank in its advertisement.
    Mr. Fry: Does not the right hon. Gentleman agree, however, that our industrial performance is still disappointing and that without the benefit of North Sea oil the position would not be as cheerful as he and his colleagues are constantly making out? Against this background, will he try properly to answer the question put by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph): what is the right hon. Gentleman's attitude to the proposals for the extension of Government interference as outlined in the Labour Party's "Programme for Britain 1976"? We did not hear what the Secretary of State thought about them.
    Mr. Williams: I clearly heard at our last Question Time the views of the right hon. Member for Leeds, North-East (Sir K. Joseph). Let us bear in mind that what he said then was that, for example, the Government should not be giving financial support to successful private enterprise, in which case the recently announced Ford project would be taking place in Ireland, not in Britain. The right hon. Gentleman further indicated that he deplored support for the steel and shipbuilding industries and that he would have sold out Chrysler and British Leyland. That is what the Conservatives would do for British industry.
    Mr. Haselhurst: What is the purpose of the industrial strategy if it is not to achieve a sizeable increase in output and make a dent in the appalling unemployment figures that the Government have produced?
    Mr. Williams: The Opposition seem signally unaware that we have been in a major recession, just as the rest of the world has. The industrial strategy must,
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    of course, be directed to a long-term improvement for industry. It is a medium-term to long-term policy. On 1st February there will be a discussion in NEDC on the latest proposals which will be coming from the sector working parties. The interim reports were that by 1980 they were capable of improving their market performance by £3,000 million. That is what the industrial strategy is about.
    Mr. Ronald Atkins: Does my right hon. Friend agree that British industrial productivity has been unsatisfactory since 1884? Is it not true that the problem has nothing to do with one party or the other but results from a weakness in private enterprise in this country?
    Mr. Williams: It is a valid contention that productivity in this country has suffered from the alternating stops and gos of our economy under successive Governments, Labour as well as Conservative. This has affected the investor's and the working man's attitude to new investment. What is important is that last year investment rose by 7 per cent. One can say—making certain calculations for the final quarter—that in real terms investment last year was higher than in 1972 and in 1973. As I have continually pointed out to the Opposition, they never managed to achieve again the levels of investment achieved in 1970.
    Sir K. Joseph: But does the right hon. Gentleman think that the proposals in Labour's "Programme for Britain 1976" will make matters better or worse?
    Mr. Williams: Those were proposals for discussion. The Labour Government's policy is spelt out in their manifesto. As our record has shown this time, it is then carried out during the period of Labour government.
    Mr. Haselhurst: On a point of order, Mr. Speaker. Is it not an established practice of Question Time that an hon. Member should be given notice if his or her Question is to be coupled with that of another hon. Member?
    Mr. Speaker: I think that it is a normal courtesy. The Minister may have slipped up. I do not know.
    Mr. Heffer: Is my right hon. Friend aware that the Labour Party's "Programme for Britain 1976" is a projected

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    programme for the future, and it does not necessarily follow that it will have to be carried through in this Parliament, though it is party policy? Will my right hon. Friend also explain to the Opposition that the United States, West Germany, France, Italy and most of the European countries are not run by Labour Governments but their percentage of unemployment is higher than that in this country?
    Sir K. Joseph: No. Rubbish.
    Mr. Williams: It is worth re-emphasising the point that my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) has made that unemployment is high throughout the Western world. This is an international phenomenon to which the Opposition wish to turn a blind eye. If the right hon. Member for Leeds, North-East (Sir K. Joseph) wishes to make any constructive points on this matter, I shall be glad to hear from him. All that he has said on industrial policy in the past few months has been destructive and would add to the levels of unemployment.
    Mr. Welsh: Does the Minister agree that the self-employed and small businesses can play a significant role in improving economic conditions and creating new employment? Will he take steps to set up a fund in Scotland, using a portion of Scottish oil revenues, as venture capital to set up new businesses, and will he abolish the discriminatory 8 per cent. levy on the self-employed?
    Mr. Williams: In his recent Budget Statement my right hon. Friend the Chancellor of the Exchequer made various alterations favourable to small firms. The Scots have their own Scottish Development Agency, with its own resources, which can establish its own priorities and will soon be responsible to its elective council.

    Private Sector (Grants and Loans)
    Mr. George Rodgersasked the Secretary of State for Industry what is the total sum that has been made available to the private sector of industry from public funds in the form of grants and concessionary-rate loans since February 1974.
    The Under-Secretary of State for Industry (Mr. Bob Cryer): It is estimated that since February 1974 payments of
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    about £1,062 million for grants and £126 million for concessionary-rate loans have been made under the Industry Act 1972 to the private sector of industry. The total figure of £1,188 million is at out-turn prices and is net of repayments. In addition, £557 million in the form of regional employment premium has been paid over this period.
    Mr. Rodgers: Does my hon. Friend agree that these are sensational and formidable figures? Is it not apparent that some sectors of private industry would not have survived long without public support? Has my hon. Friend had any word about the Leader of the Opposition's intentions should her party ever achieve power again? Would she long tolerate this degree of public support and public subsidy?
    Mr. Cryer: My hon. Friend will appreciate that the Opposition's policies, such as they are, are a matter for them. However, it would appear, from the occasional glimmerings of their policies that we receive, that they are prepared to cut public expenditure substantially in all areas except the individual constituencies of Opposition Members. They display their hyprocrisy by condemning public expenditure nationally but being quite happy to see it increase when they wish to make individual representations about firms in their constituencies.
    Mr. Michael Marshall: Does the Minister accept that while the schemes exist the private sector would be mad not to take full advantage of them? What estimate has he made of the total involved on the many occasions when these sums need not have been taken up if private money had been sought?
    Mr. Cryer: There have been many occasions on which private money has not been available or has not been available until the Department has made a gesture or given an indication that a grant or loan would be available. There is much that is unsatisfactory about the private money-raising market in this country. That is one of the aspects of the unsatisfactory performance of British manufacturing industry. There is no doubt that but for Government support in, for example, the clothing and textile industries, through temporary employment subsidy, those industries would have been in grave difficulties.
    Mr. Ioan Evans: Can my hon. Friend give some details of the amount of help given to private industry through the temporary employment subsidy? In view of the important help that this has been in recent months, will the Government resist the EEC demands that the TES should be suspended?
    Mr. Cryer: The matter is under consideration, but the view of both sides of industry which have made representations, including the unions, is that TES has been very important for the continued survival of many jobs, particularly in the clothing and textile industries, which are still our third largest employer, and also in a wide range of jobs. Those are considerations of the sort that the Government have very much in mind.
    Mr. Norman Lamont: Will the Minister give the House figures for the amount paid by private enterprise to the Exchequer by way of corporation tax, rates paid by companies and employers' national insurance contributions? Does he agree that in total the amount vastly exceeds the figure mentioned and that without such payments there would not he any subsidies to other companies?
    Mr. Cryer: No doubt the hon. Member will table a Question for detailed answer on that point. It is worth pointing out that there is a 100 per cent. tax allowance on investment in plant and machinery, which costs just over £2½ billion per annum. Rates are allowable against tax, which is not the case for the private individual. The hon. Gentleman's argument bears rather closer examination than he suggests.

    Hull Telephone Department
    Mr. Neubertasked the Secretary of State for Industry whether he plans to nationalise the Hull Telephone Department.
    Mr. Kaufman: My right hon. Friend has given his consent to an interim extension, to 30th June 1978, of the licence from the Post Office under which Kingston upon Hull City Council operates its own local telephone service, and is considering carefully the issue of a new long-term licence.
    Mr. Neubert: Is it not highly desirable that the Hull telephone service, which is cheap and profitable and which has
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    achieved a percentage of home installations nearly twice as great as the GPO, should remain independent to provide comparison and a stimulus to innovation to the Post Office's statutory monopoly?
    Mr. Kaufman: Clearly the hon. Gentleman has come a long way since he voted against the Bill introduced by my hon. Friend the Member for Luton, East (Mr. Clemitson) which sought to extend the powers of local authorities in relation to commercial trading activities. I welcome the hon. Gentleman's conversion to municipal socialism.

    Industrial Investment
    Mr. Canavanasked the Secretary of State for Industry what is the latest estimate of the amount of industrial investment in 1977 in: (a) the public sector and (b) the private sector; and how these figures compare with the corresponding period in 1976.
    Mr. Alan Williams: With permission, I will circulate the information in the Official Report.
    Mr. Canavan: Does my right hon. Friend agree that the Labour Government should set an example in industrial regeneration by steadily increasing investment in the public sector of industry? Why, then, is it that in the latest public expenditure White Paper we have the proposal that between 1978 and 1982 there should be no growth in the budget of the National Enterprise Board and a decrease in the amount of spending by the Scottish and Welsh Development Agencies?
    Mr. Williams: The figures are based on an analysis of what has been required in the past and on the finance available.
    Mr. Alexander Fletcher: Will the right hon. Gentleman also publish in the Official Report the return on these investments in the public and private sectors? Does he accept that unless there is an adequate return no further jobs will be provided?
    Mr. Williams: The hon. Gentleman will know that in instances of Government assistance in rescue cases an assurance of viability is sought. He will also know that the NEB, as with the Scottish and Welsh Development Agencies, is expected to make a commercial return on its investment.
    Miss Maynard: Does not my right hon. Friend agree that unless we restore the public expenditure cuts, and indeed go further and put more money into public expenditure, we shall never be able to solve the unemployment problem?
    Mr. Williams: Questions on general public expenditure levels should be directed to my right hon. Friend the Chancellor of the Exchequer. Up to June of last year an extra 100,000 jobs had been created in manufacturing as a result of the policy of giving assistance to industry.
    Mr. Adley: Is not this "industrial investment" merely taxpayers' money? Should not this House decide, and make it clear when it makes its decision, that the investments are made in the expectation of there being a profit to the companies concerned—and, as a result, increased taxes—or are they merely a form of industrial social security?
    Mr. Williams: I am at a loss to understand how the hon. Gentleman as a member of the party which abandoned investment grants in favour of a tax allowance system, can say that investment under his party's system was not taxpayers' money.
    Mr. Gwilym Roberts: Does my right hon. Friend accept that, although there is a general need to stimulate investment in the public and private sectors, there is a particular need to stimulate investment in areas of high technology—[HON. MEMBERS: "Why?"]—where we can still maintain our lead over the semi-industrialised nations, such as Korea?
    Mr. Williams: Despite the displays of incredible ignorance from the Opposition, I certainly endorse what my hon. Friend has said. This is one of the lessons that has come from the 40 sector working parties which have put forward proposals for industry schemes in those sectors where they felt that Government help was particularly relevant. Computers and electronics are cases in point, in which industries we face intense periods of development and overseas competition.
    Sir K. Joseph: Now that the question of unemployment has been raised from the Government Benches, may I ask the right hon. Gentleman to take this opportunity to correct his hon. Friend the Member for Liverpool, Walton (Mr. Heffer) and
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    to tell the House that on the Government's own figures—I take no joy in this; I state the fact—unemployment in this country is now significantly higher than it is in Germany, America or France—
    Mr. Heffer: It is not true.
    Sir K. Joseph: I am quoting the Government's own figures. Will the right hon. Gentleman confirm this? Will he also confirm that the higher unemployment is the direct result, in the view of many people, of hostility towards enterprise practised by the Government, particularly in their first years of office, under the influence of the part of the Labour Party to which the hon. Member for Walton belongs?
    Mr. Williams: It is difficult to reconcile hostility to enterprise with the right hon. Gentleman's frequent complaint that we give too much money to profligate private industry. I point out that our hostility has taken the form of £1,300 million worth of Section 8 assistance, most of which has been opposed by Tory Members. The right hon. Gentleman says that he takes no joy in the unemployment level. May I also say that he takes no constructive attitude? Over the months we have not had a single constructive suggestion from the Opposition Front Bench on how more jobs can be created.
    Following is the information:
    Total investment by manufacturing industry in 1977, including an estimate for the fourth quarter, is put at £1,775 million at 1970 prices, which is 7 per cent. greater than in 1976, and at £4,900 million at current prices, which is 24 per cent. higher than in 1976. Of the total of £3,957 million investment at current prices by manufacturing industry in 1976, £3,381 million was in the private sector, as given on page 130 of "National Income and Expenditure 1966–1976" (the National Income Blue Book). No split of the 1977 total between public and private sector investment is as yet available. However, excluding the iron and steel, shipbuilding and marine engineering and aerospace equipment industries where the public sector is dominant, investment at 1970 prices by the rest of manufacturing industry in the first three quarters of 1977 rose by 15 per cent. over the same period of 1976, compared with a rise of 6 per cent. for manufacturing as a whole.

    Post Office Telephones
    Mr. Frank Allaunasked the Secretary of State for Industry if he will give a general direction to the Post Office Corporation not to charge additional sums

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    for installing new telephones in certain districts of big cities over and above the normal charge of £50.
    Mr. Les Huckfield: No, Sir. But I understand that the Post Office is consulting the Post Office Users National Council on this matter.
    Mr. Allaun: Is it not astonishing that many residents or applicants in whole districts of a town are not able to have a telephone installed unless they pay an additional deposit of £37 or more on top of the £50 installation fee? Is my hon. Friend aware that, as a result, many people cannot have telephones installed? Is this not a blatant unfairness since it is the poorest people who have to pay more than others for a telephone, and since the telephone industry is a highly successful nationalised industry with a large surplus?
    Mr. Huckfield: I know that my hon. Friend lays stress on this point. There is concern on both sides of the House about the fact that there appears to be discrimination by area. It is because of this that the Post Office and the Post Office Users National Council are jointly studying the problem.
    Mr. Madden: Is my hon. Friend aware that some local authorities which pay the rental charge on telephones for disabled people are taking a share of the £7 bonus which has been given to all telephone subscribers? Does he realise that the local authority in my constituency is proposing to keep the whole bonus? Will he look into this matter and ask for guidance from the Post Office so that local authorities may reach a fair agreement with telephone subscribers?
    Mr. Huckfield: I am grateful to my hon. Friend for raising that matter, because I know that there is concern about what some local authorities have been doing, particularly in connection with telephones provided for the chronically sick and disabled. If my hon. Friend will let me have further evidence on this matter, I will gladly look into it.

    Industry Act 1975 Powers
    Mr. Wigleyasked the Secretary of State for Industry if he will list those powers he possesses under the Industry Act 1975 which have not yet been used.
    Mr. Cryer: Since the answer is lengthy, will, with permission, circulate the information in the Official Report.
    Mr. Wigley: I thank the Minister for that reply—which gives me little material for a supplementary question. May I ask whether he can give any indication of those areas in which powers are not being used and say why this is so? In particular, has the failure to use the powers been due to a lack of finance? Is he satisfied with the powers that exist for the setting up of public sector ventures or joint ventures on a 50–50 basis?
    Mr. Cryer: The reasons for the nonuse are twofold. The first is that some of the powers are of a comparatively trivial nature—for example, the power to vary by direction the accounting year of the NEB. Secondly, they may relate to matters considered during the passage of the Bill as being important, reserved matters—for example, the question of ownership by foreign enterprises of British firms which might involve some strategic or other relevant factor. A combination of these two aspects is responsible for the situation. The amount of money which has been advanced to the NEB, in the face of opposition from the Conservatives, has been considerable, but there is always room for improvement. The NEB has been not unsuccessful in making the sort of investment envisaged for it.
    Mr. Rooker: Will my hon. Friend assure the House that among the reasons why these powers have not been used there is not a reason to the effect that the Minister does not agree with his having the power in the first place?
    Mr. Cryer: No.
    Following is the information:
    POWERS OF THE SECRETARY OF STATE UNDER THE INDUSTRY ACT 1975, NOT USED AS AT 16TH JANUARY 1978
    Section 3—(16): power to pay the NEB's administrative expenses under this section.
    Section 8—(2): power to raise the NEB's financial limit under Section 8(1).
    Section 9—(7): power by direction to relieve the NEB or any of its subsidiaries from the duty under subsections (5) and (6) to dispose of interests in the share capital of a company which carries on a business of publishing newspapers, magazines or other periodicals for sale to the public in the United Kingdom.
    Section 13: power to make prohibition and vesting orders and (Section 16(1), (3) and (4))

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    powers incidental and consequent on the making of a vesting order.
    Section 19—(3): power to make certain provisions in compensation orders.
    Section 19—(4): power to determine the form of compensation.
    Section 21: power to pay regional development grant and assistance under Part II of the Industry Act 1972 at certain rates to planning agreement companies.
    Section 28—(1): power to serve a preliminary notice putting into motion the system of disclosure of information by companies provided for in Part IV of the Act.
    Section 28—(4): power by order to declare that that system applies to a given company.
    Section 30—(1): power by notice to require a given company to provide to the Secretary of State information concerning it.
    Section 3—(1): power provisionally to require a company to give information concerning it to an authorised representative of a relevant trade union.
    Section 32—(3): power to refer to an advisory committee any proposal that information concerning it given by a company to the Secretary of State should not be given to a relevant trade union.
    Section 32—(8) and (13): power, where there has been a reference to an advisory committee, to make a final decision as to the provision of information to a relevant trade union, either in accordance with or contrary to that committee's advice.
    Section 32—(10): power to order that a provisional notice under Section 31(1) is to be treated as containing the Secretary of State's final decision as to the giving of information specified in it to a relevant trade union, where there has been no reference to an advisory committee.
    Section 37—(2): power by direction to vary the NEB's accounting year.
    Schedule 1
    Paragraph 6: power to declare a member's office vacant.
    Paragraph 9: power with the like approval to direct the NEB to pay a prescribed sum by way of compensation for loss of office to designated members.
    Schedule 3
    Paragraph 4—(6): power to appoint the lay members of the tribunal which arbitrates disputes relating to vesting and compensation orders.
    Paragraph 12: power to determine the remuneration of members and officers of the tribunal, and of any person to whom the tribunal refer any question for expert advice.
    Schedule 6
    Paragraph 1: power, with the consent of -the Ministry of Agriculture, Fisheries and Food, to draw up and revise panels of persons who may constitute an advisory committee for the purpose of the information disclosure provisions of Part IV of the Act.
    Paragraph 7: power to determine the fees of members of advisory committees, and of any experts called in aid by such a committee.
    Paragraph 9: power to make regulations as to the procedure for reference to an advisory committee.

    Northern Region
    Mr. Radiceasked the Secretary of State for Industry whether he is satisfied with industrial progress in the Northern Region.
    Mr. Alan Williams: We shall continue to promote industrial development in the Northern Region.
    Mr. Radice: Will my right hon. Friend make a statement about Swan Hunter and the Polish order? Does not he agree that, whatever the difficulties may be at Swan Hunter, the good industrial relations record and the high quality of the labour force make the Northern Region an ideal place for investment?
    Mr. Williams: The shipbuilding situation is unchanged as reported by British Shipbuilders at the weekend. I endorse my hon. Friend's recommendation of his area for industrial investment. I am sorry that we recently lost an investment project which was to have been scheduled for his locality.
    Mr. Dykes: Will the right hon. Gentleman confirm that the Northern Region has benefited considerably from the infra-structural spending, loans and grants from the EEC through the European Investment Bank, the European Coal and Steel Community and the Regional Development Fund, without which it would not have fared so well, albeit under difficult conditions? Should not the Government therefore be less churlish about the EEC and be keener to help build up the Community institutions and allow more money to be spent in this way?
    Mr. Williams: I am glad to agree about the role of the European Regional Development Fund and the European Investment Bank in our regional work. As far as the Regional Fund is concerned, the question of the non-quota section has important long-term considerations, and there has been a less than adequate indication of how that section would be used and how its use would be monitored. We have asked the Commission to come forward with further information.
    Mr. Mike Thomas: Is it not the fact that, if unemployment begins to decline in the rest of the United Kingdom, the unemployment level in the Northern Region is usually left stranded high and dry like a whale on a beach, and that if such is the situation again, despite the progress that has been made, there will be strong criticism of the Government's failure to provide an effective regional policy?
    Mr. Williams: My hon. Friend will recognise that regional policy can operate only in the context of world growth. The international recession is not, unfortunately, within the control of an individual Government. My hon. Friend will also appreciate that recently there has been considerable discussion, stimulated by my right hon. Friends the Prime Minister and the Chancellor of the Exchequer, to try to stimulate greater growth in the world economy, which is a prerequisite to getting our own economy moving.
    Mrs. Kellett-Bowman: Is it not generally unfair that the Northern Region should receive from the Regional Development Fund three times as much assistance as the North-West receives, although the percentage of unemployment in the North-West is higher than it is in the Northern Region?
    Mr. Williams: It is difficult to draw such a comparison because the North consists predominantly of special development areas, since it has such high concentrations of unemployment. The hon. Lady must be careful in what she says on behalf of the North-West. For example, if one takes the gross unemployment figures, one finds that the South-East, strangely enough, becomes the area with the greatest problem.

    British Aerospace Corporation
    Mr. Tebbitasked the Secretary of State for Industry if he has yet received any requests from the British Aerospace Corporation for assistance in launching a new civil airliner.
    Mr. Kaufman: Apart from the special limited provisions of Section 45, the concept of launching aid for new aircraft has been ended with the Aircraft and Shipbuilding Industries Act 1977.
    Mr. Tebbit: Is the hon. Gentleman aware that I asked him not whether any launching aid had been requested but whether any assistance had been requested? Unfortunately, it seems that he can think of no form of assistance except money. Can he say now whether British Aerospace has yet approached him for any assistance of any sort in launching the HS146 airliner, which he led the workers in the industry to expect would be launched last year?
    Mr. Kaufman: I am not sure what other kind of assistance British Aerospace could ask us for. It has far better designers than we could provide in the Department of Industry, for example, and its technicians are very good. British Aerospace is involved in collaborative discussions with our potential partners in Europe. What the hon. Gentleman simply cannot get into his head is that collaboration implies joint decisions with partners. We cannot launch our part of the aircraft without the launching of the rest as well. One has heard of flying on a wing and a prayer, but this is ridiculous.
    Mrs. Hayman: Is my hon. Friend aware that, in the present unemployment situation at Hatfield, there is urgent need for a decision on the HS146? When is such a decision likely to be made?
    Mr. Kaufman: I shall give some information to my hon. Friend when her Question on the subject is reached later.
    Mr. Pattie: In pursuit of the Prime Minister's stated aim that all new civil aircraft projects must be commercially viable, should not British Aerospace at least be prepared to consider co-operation and collaboration with American companies?
    Mr. Kaufman: I agree with the hon. Gentleman. Indeed, British Aerospace has been involved in discussion with Boeing, McDonnell-Douglas and Lockheed. These are potentialities which must be considered before new projects can be decided upon, as well as discussions with our European partners.

    Electronics Industry
    Mr. Viggersasked the Secretary of State for Industry what proposals the Government have to assist the electronics industry.
    Mr. Alan Williams: The Government are already engaged in providing assistance to the electronics industry over a wide front and in developing further means of promoting its competitivity.
    Mr. Viggers: Does not the right hon. Gentleman agree that the industry can cope for itself, given a reasonable environment? Is he aware that leading industrialists have recently said that the major problem of the industry is recruiting and maintaining the best of its staff in the environment of the top tax rates in this country, which drive people abroad, as against the attractions of Government service, which offers a decent salary rate and safe, index-linked pensions?
    Mr. Williams: I do not agree with the second part of the hon. Gentleman's supplementary question, but when I met the industry's representatives on the last occasion they pointed out that, in competition with other industries, it is finding difficulty in obtaining the high quality personnel that it needs for both the production side and for research and development. I indicated my willingness to discuss the matter further with them.

    South Yorkshire
    Mr. Edwin Wainwrightasked the Secretary of State for Industry if he will take steps to offer greater inducements to private and nationalised industries to provide new manufacturing jobs in the South Yorkshire districts where large pockets of high unemployment have existed over a number of years.
    Mr. Cryer: South Yorkshire already benefits from substantial Government assistance to industry, including selective financial assistance, regional development grants on buildings and advance factories. The latest advance factory programme, announced in November, included three units in Goldthorpe and one in Barnsley, which will help areas with high unemployment. The Government do not consider that an increase in the incentives already available would be justified.
    Mr. Wainwright: Does my hon. Friend realise that, no matter what the Government have done over the past few years, there has been no help towards combating the large unemployment that exists in these pockets, especially in the Mex
    964
    borough and district employment exchange area? If the present system cannot be of benefit in reducing unemployment in such areas, should the Government not consider South Yorkshire as a special development area? If that cannot be done, let us have mini-special development areas, such as Mexborough, where unemployment is very high.
    Mr. Cryer: All parts of the country are experiencing higher levels of unemployment than are acceptable because of the general economic situation, and that is undoubtedly influencing the position in South Yorkshire. But the incentives available have done something to counteract the situation. In Mexborough, for instance, there have been 12 projects which have received offers of regional selective assistance and are expected to create some 800 jobs. We are constantly examining ways to combat the level of unemployment. It depends to some degree on private investment by private enterprise in an economy which is largely private enterprise, and our incentives and inducements are an attempt to provide that investment.
    Mr. Budgen: Will the Under-Secretary agree that it is uncertain whether regional policies will do anything to help depressed areas such as South Yorkshire but that it is overwhelmingly certain that regional policies do a great deal of harm to once properous areas such as the West Midlands?
    Mr. Cryer: The regional policies have been undertaken in this country for many years, and certainly since the last serious depression in the 1930s. It was because of the very high levels of unemployment which occurred in the regions—for example, on Merseyside and Tyneside—that successive Governments have introduced regional policies. There is no question whatsoever that if there had not been a progressive regional policy developed and maintained by the present Government unemployment in those areas would have been a great deal worse than is complained of at present.
    Mr. Woodall: Did my hon. Friend see a BBC North programme on television last year called "No Jobs for Spanner", filmed in the South Kirkby area in my constituency, where young male unemployment is over 12·8 per cent.? It is all

    965
    very well announcing advance factories but what is wanted is real assistance such as has been suggested by my hon. Friend the Member for Dearne Valley (Mr. Wainwright).
    Mr. Cryer: I understand very well the representations of my hon. Friend the Member for Hemsworth (Mr. Woodall), and this is a very serious matter, but the fact is that already very large and significant sums of assistance are being given. South Yorkshire was rightly included in the advance factory programme, and we shall have to see just how well these situations work out and whether private enterprise answers the call which my hon. Friend and other hon. Members are making for investment to take place in order to provide jobs.
    Mr. Tim Renton: On a point of order, Mr. Speaker. Is it not unfortunate that no Question has been reached on the subject of the steel industry and the great problems affecting the British Steel Corporation?
    Mr. Speaker: The hon. Gentleman's point of order should be raised at the end of Question Time. I point out to him that we reached Question No. 21.

  RACE RELATIONS (COURT CASE)
  Mr. Canavanasked the Attorney-General whether he will arrange to meet the Chairman of the Commission on Racial Equality to discuss the implications of the recent judgment of Judge McKinnon acquitting Mr. Kingsley Read.
  The Attorney-General (Mr. S. C. Silkin): I met Mr. David Lane for that purpose on 11th January.
  Mr. Canavan: Did my right hon. and learned Friend discuss with the Chairman of the Commission on Racial Equality whether the Race Relations Act 1976 is strong enough to convict pedlars of racial hatred such as Mr. Kingsley Read? Does my right hon. and learned Friend agree that the Tories do nothing to help in the cause of racial harmony in this country by defending people such as Judge McKinnon, by refusing to take part in an all-party campaign against racialism, and by mounting instead their own campaign to bash the immigrants, just like the National Front?
  The Attorney-General: We discussed a number of matters arising out of the Kingsley Read case. Among other things, I assured Mr. David Lane of my continuing intention to enforce firmly the anti-incitement provisions of the Public Order Act and to authorise prosecutions in appropriate cases. As to the efficacy of the amendment to that law under the recent legislation, we shall have to judge that as cases come forward.
  I must leave it to the Conservative Party to answer the second part of my hon. Friend's supplementary question.
  Mr. Adley: Hon. Members opposite are making a great deal of fuss about Judge McKinnon, but we do not appear to have had any reaction from them about the deplorable and disgraceful comment of the Foreign Secretary in Brussels. In relation to the European Assembly Elections Bill, he said that Britain was not the nigger in the woodpile. Is not that deplorable?
  The Attorney-General: If the hon, Member really wants a sensible reply, I suggest that he should put down a Question to the Foreign Secretary.

  JUDICIARY (DISMISSALS PROCEDURE)
  Mr. Dudley Smithasked the Attorney-General how many members of the judiciary have been dismissed from office in the past 15 years to the nearest available date; and what procedures have to be instituted in order to achieve such a dismissal.
  The Attorney-General: None in England and Wales. The procedure for dismissal varies according to the judicial office. Judges of the Supreme Court hold office during good behaviour subject to a power of removal by Her Majesty on an Address presented by both Houses of Parliament. Circuit judges may be removed from office by the Lord Chancellor on the grounds of incapacity or misbehaviour.
  Mr. Smith: In view of that reply, does the Attorney-General believe in the principle that the judiciary should always be independent of the Executive? Furthermore, is he aware that political pressure from whatever quarter should never be

  967
  applied to the judiciary, if we are to uphold the tenets of our democracy?
  The Attorney-General: The whole purpose of the provisions of the Courts Act 1971, restricting removal of circuit judges on the grounds that I have indicated, was to ensure the independence of the judiciary, and I know of no one who has ever doubted that the judiciary should be independent.
  Mr. Frank Allaun: If, after the murder of an Asian youth, a self-confessed racialist can tell a meeting "One down and a million to go", does not it mean that all our racial legislation can be flouted with impunity? Will my right hon. and learned Friend therefore consider amending the Act to prevent this kind of thing from happening again?
  The Attorney-General: Certainly there is no doubt whatever in my mind, and that of many people, that the observation to which my hon. Friend referred is not only grossly offensive but causes immense harm in regard to race relations. I think we have to wait to see how the new legislation resulting from the amendment works out. It came into operation only in June of last year and no cases have yet been heard. But certainly I shall watch it and I shall consult with my right hon. Friend the Home Secretary, whose ministerial responsibility it is to amend the law. I shall certainly let him know what my views may be about that.
  Mr. Mayhew: In view of the demands for the judge's dismissal in this case, is it not fair to him to recall that the transcript shows that he was misleadingly reported in certain sections of the Press, that he gave no judgment in the case, as earlier Questions to the Attorney-General have suggested, that he withdrew no issue from the jury but left open to the jury the decision as to the effect of those words, and that Mr. Kingsley Read was ultimately acquitted not by the judge but by the jury?
  The Attorney-General: Whatever view anyone may take about the summing-up as a whole, it is certainly true that certain of the remarks which were quoted in the Press were quoted out of context.
  Mr. Arthur Latham: Will not my right hon. and learned Friend, in defending the independence of the judiciary, agree that
  968
  it is important that judges should be seen to be impartial and non-political? Will he indicate to the House whether he has made any representations to the Lord Chancellor, and whether he feels that any jury or any legislation would be proof against the partial and partisan advice given by Judge McKinnon?
  Mr. Speaker: The hon. Gentleman left to the end of his question the reflection on the advice given by the judge. I must rule that that sort of comment can be made only during a debate on the motion which we do not have before us at the moment.
  Mr. Arthur Latham: On a point of order, Mr. Speaker. I withdraw any imputation which is against parliamentary practice, but may I ask whether the first part of my supplementary question may be answered, and also whether it is in order to ask whether the Attorney-General has made representations to the Lord Chancellor about this judgment?
  Mr. Speaker: The hon. Gentleman may ask a question in general, without making any reflection on the judge.
  The Attorney-General: I have consulted with my noble Friend about many matters.

  LEGAL AID
  Mr. Peter Walkerasked the Attorney-General whether in the financial year 1978–79 he will take steps to extend the legal aid provisions to persons appearing before the Medical Appeal Tribunal and the National Insurance Commissioner.
  The Parliamentary Secretary to the Law Officers' Department (Mr. Arthur Davidson): It remains my noble Friend's view that extending legal aid to tribunals, including the Medical Appeal Tribunal and the National Insurance Commissioner, should be further considered when financial resources become available, but it is too soon to forecast when that may be.
  Mr. Walker: Is the Minister aware that his reply will be very disappointing to 3,500 handicapped persons who each year, on average, have to find £300 each in legal costs to meet appeals frequently made by Government Ministers against

  969
  their allowances? As hon. Members on both sides have supported a motion urging that this position be changed swiftly, will the Government give urgent consideration to it and change it?
  Mr. Davidson: I am well aware of the interest that the right hon. Gentleman and others have shown in the subject of the availability of legal aid before tribunals, but he will appreciate that when more resources become available there will be other equally desirable claims on those resources. I can assure the right hon. Gentleman that my noble Friend will take great account of what he has said today and of the motion put down in his name.
  Mr. Lipton: Can the Minister say who will decide what cases Judge McKinnon will try and whether they will involve race—
  Mr. Speaker: Order. The hon. Member has gone back to Question No. 42. We are now on an entirely different Question.
  Mr. Lipton: It is not my fault, Mr. Speaker that you did not call me on Question No. 42.
  Mr. Speaker: I apologise, and I shall try to do better next time.
  Mr. Alexander W. Lyon: Who decides upon the order of priorities in public spending? Is not the Minister being a little timid in response to appeals from all sides of the House? Will the Minister now turn to the Treasury and say that
  970
  this is a high priority and that getting justice under the social provision made by this House is as important as the provision itself?
  Mr. Davidson: I assure my hon. Friend that I shall make these representations, not in a timid manner but in a bold and forceful manner, to my noble Friend.

BRITISH STEEL CORPORATION
Mr. Tim Renton: On a point of order, Mr. Speaker. Many hon. Members will think that it is unfortunate that we did not reach the Questions on the subject of the grave problems affecting the steel industry and the British Steel Corporation. As we shall not have Industry Questions again for many weeks, and as the Secretary of State is still in the Chamber, may I ask him to state briefly when he plans to make a statement on the British Steel Corporation?
Mr. Speaker: I am afraid that that question is out of order. It was not a point of order. The hon. Member may not ask a question at this time.

BRITISH STEEL CORPORATION

  STATUTORY INSTRUMENTS, &c.
  Ordered,
  That the British Railways Board (Funding of Pension Schemes) (No. 4) Order 1977 (S.I.,1977, No. 2039) be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Foot.]

ORDERS OF THE DAY
  SUPPLY
  [4TH ALLOTTED DAY.]—considered
  SUPPLY

    AGRICULTURE (GREEN POUND)
    [Commission documents: R/2601/77, Add. 1, and R/2651/77]
    3.33 p.m.
    Mr. John Peyton: I beg to move,
    That this House, believing that it is as much in the interests of the consumer as of the producer to sustain the livestock industry, calls on Her Majesty's Government to devalue the Green Pound forthwith by 7½ per cent.
    Whatever the result of tonight's vote, at least the Opposition parties can take away a degree of satisfaction—that our concerted action has forced the Minister at last to do something. The Government have made a move. It is not as large a move as we require but at least it is bigger than anything that was contemplated before. The Minister should blame himself that he is now being forced to do something more drastic because he has dragged his feet for such a long time.
    The green currencies are hardly the subject for light conversation. They do not arouse a great deal of interest except among those who feel that they are immediately affected by them. The green currencies were invented as a transitional measure to ease the adjustment of countries to changes in the market values of their currencies. It was never the intention that they should be used to insulate the food prices of any member State against the effect of an enduring and substantial drop in the value of its currency nor was it intended that they be so used indefinitely. No other country has allowed so substantial a discrepancy to exist between the two currencies for as long as has the United Kingdom.
    There have been advantages and disadvantages. I should like to take up a little time weighing one with the other. The advantages have been shared between our own consumers and the Continental and Irish livestock producers. The disadvantages—and in my view they outweigh the advantages—have been shared
    972
    between the European taxpayers, including ourselves, our own producers and the nation, which has had to accept an addition to its food import bill of £1 billion in 1977 and £2 billion since 1974.
    I do not seek to gloss over the fact that there has been some gain to the consumer. But the verdict on this gain—which seems to be marginal—cannot be passed until the full price is known of what the consumer may have to pay in the future. The Minister would have been better advised if he had sought greatly to close the considerable gap between the green rate and the real rate. We believe that he was wrong to allow anything like this large gap to become part of the fabric. If he had gradually closed the gap he could have avoided the drastic step that is suggested in the motion. This is the minimum step. Others would go further, but this is the minimum action required to have a useful effect.
    I should make one matter clear. It would be wrong to lay down a detailed and tying programme for the elimination of the remainder of the discrepancy. Nevertheless, we should aim to eliminate something, which will do grave damage if it is allowed to continue, over the next two or three years.
    There have been some rather exaggerated reactions to the suggestions that we have put forward. Some of the estimates were so instantaneous that they gave the impression that those who made them had given them little thought and given no thought at all to those most hurt by the present situation.
    Nothing will occur in a hurry. There are stocks to be used up. It takes a long time before a farm price increase works its way through to the shops. I am sure that the Minister will be in a better position than I to give an estimate of the effect of the 5 per cent. that he is contemplating but I believe that it is likely, when it is fully felt, to add up to about 1 p in the pound on the food index.
    I should like to call the attention of the House to what seemed to me to be a responsible and balanced statement by Sir Hector Laing, which was endorsed by 14 major food companies—although no doubt farmers will complain that it does not take account of their troubles. Sir Hector said:
    "Green Currency rates are intrinsically undesirable as a permanent feature because of

    973
    the distortion of trade which they cause. It however, these rates were adjusted too rapidly, there would be significant and sudden price increases in a number of major items in our national diet, which could create problems in our first national priority—the fight against inflation.
    The question of timing is therefore all-important, but in reaching a decision, the Government has a responsibility to pursue policies which allow all links in the food chain—farmers, processors and distributors—to be sufficiently profitable within a competitive climate to invest at a level which will ensure the best possible value to the consumer."
    It is our complaint today that the Government have most lamentably failed to give the producer and some of the processors their proper turn. I have no doubt whatever that many livestock producers who have criticised the motion which we have put forward today will point with some envy to other industries which—even after enduring the bias and bad manners of the Price Commission—have not failed to recover a larger share of their increased costs than they have.
    The European producer has been the chief beneficiary of all this. He has been given a perfectly splendid armchair ride into our market. The Government's failure over many months to make a substantial move on the green pound has assured the Continental producer—I ought not to exclude the Irish producer—of a payment of a very substantial amount from the Commission. That payment is called the monetary compensatory amount and is a figure which is calculated according to formulae of quite fiendish complexity which I shall not go into now. [Interruption.] The hon. Member for Feltham and Heston (Mr. Kerr) speaks for himself. He is very much given to speaking for himself and that sort of immediate reply is so characteristic of him.
    The effect of the MCAs has been to restore to the foreign exporter the 30 per cent. or so by which the pound fell in value as against other currencies. Meanwhile, our own producers have received no such benefit. They have been paying in pounds which have been through the wringer of inflation and they are realising that there is no recovering their cost increases.
    In these circumstances it is hardly surprising what happened to imports. I referred just now to the large increases
    974
    which have taken place since 1974 and in particular to the increase of —1,000 million in our food imports last year. Butter in Germany has a wholesale price of about —1,000 a tonne more than that which prevails here. German butter, which used to be imported here in quite negligible quantities just a few years ago, has now reached a sizeable imports proportion of 50,000 tonnes or so. [Interruption.] I know how Labour Members like to go back to the original argument about why we are in Europe at all. I hope very much that instead of repeating that old fashioned argument with which they feel thoroughly familiar—I know they are fond of repetition—they will listen and try to take account of what is now happening to one of our very important industries. They should also take note of the fact that Irish beef imports into this country have about doubled in value in 1977 alone.
    I turn to bacon. The Danish share of our market is now likely to go up from about 43 per cent. to 48 per cent. The Dutch share is increasing. This leaves the pig producer of this country with a share of his own market which is hovering around 40 per cent. and going down.
    In the circumstances created by the Government's obdurate policy of refusing to devalue the green pound, the MCAs have reversed the natural order of things and countries with strong currencies have been protected from imports while those with weak currencies have been exposed. In other words, it has been exposure for the weak and protection for the strong—the very reverse of what one would wish. It is not true to blame the common agricultural policy. It has been brought about by the Minister's own failure to recognise the facts.
    Mr. John Mendelson: Tell the truth for a change.
    Mr. Peyton: The hon. Gentleman should take that advice himself. It is the hon. Gentleman's misfortune that he is unable to stop talking and it is our misfortune that we cannot stop hearing him.
    I now turn to the European taxpayer, who deserves some mention as he has been paying quite a substantial contribution to our food costs. It has been

    975
    averaging more than £1 million a day, and in such a context it deserves mention. The question I should like to ask the Minister is how he reconciles so mendicant an attitude with the recent boasts which some of his colleagues have voiced about the new economic strength of this country. It is decent that we should pause and ask ourselves what our reaction would be if other countries were to seek to take us for this kind of a ride.
    The motion today is intended to call attention particularly and seriously to the situation of our livestock industry and of the processors of its products as well as to the damage which has been sustained by that industry and with which it is now threatened by present policies. We are not just commenting upon the roughness of their situation; we are saying that the effects are such as to involve risks and dangers to the consumer which ought not to be accepted.
    In our view the producers and processors have had a very galling experience of seeing their own market taken over not by people whose costs were lower than theirs but by people with higher costs. They have seen their competitive advantage taken away as a result of MCAs which were payable as a direct consequence of the Minister's refusal to devalue the green pound.
    Mr. John Mendelson: In view of the disputation about responsibility, and the responsibility of the CAP, may I ask the right hon. Gentleman whether he listened on Saturday morning to the chairman of the NFU for the West Riding who, when introducing a forthcoming conference this week, said quite clearly and in definite terms that many farmers did not realise, and were not told when they were taken into it, what serious disadvantages would result from entry into the Common Market?
    Mr. Peyton: I think the situation was very fully explained to them at the time. I am glad that the hon. Gentleman has at least listened for a moment to someone speaking from a point of view which he does not share. It is against his habit. I think it worth while that the hon. Gentleman should, from time to time, remind himself that his own party made a big meal about renegotiating the terms of entry. If Labour Members failed to
    976
    achieve their objectives, that was not our fault. They have no one to blame but themselves.
    Mr. Thomas Swain: Is the right hon. Gentleman aware that, under the system devised by the Conservative Government it has been possible for some considerable time to export live cattle from Great Britain to Holland and Belgium, where they are slaughtered, and receive a 13p per lb. subsidy, to process them there, and then for us to reimport them?
    Hon. Members: That is the green pound.
    Mr. Peyton: I gave way to the hon. Member for Derbyshire, North-East (Mr. Swain) for a number of reasons. The first is that I rather like him.
    Mr. Swain: Is the right hon. Gentleman trying to stab me in the back?
    Mr. Peyton: My second reason was that I thought that I could do with a bit of a rest. But I can assure the hon. Gentleman that I never expected from him a useful and constructive intervention to add to my own argument. I am very grateful to the hon. Gentleman, who has made a further contribution to a friendship which I value.
    I return to the wholesale price of beef in Ireland. The price there is 129p per kilo deadweight. Here the comparable price is 110p. The United Kingdom producer's competitive advantage is more than swept away by an MCA of 29½p. Then, if we look at pigmeat prices, Denmark's is 11 per cent. above ours, but an MCA of nearly £250 per tonne on bacon again removes the competitive advantage of our own producers. I have referred already to butter which is coming in from Germany in large quantities and which in any normal circumstances would be hopelessly uncompetitive.
    It is as well that we at least look in passing at the producers' reaction. That reaction is best measured by what they have started to do, which we believe may prove the beginning of a very serious consequence for us all. First, in-pig gilts are down by 27 per cent. Secondly, in-calf heifers are down by 12 per cent. There are fewer cattle and calves than in any of the last five years. There are fewer pigs than in three out of the past four years, and the pig breeding herd at the end of 1978 is

    977
    likely to be the lowest for 16 years. As the Minister himself has admitted, the processors of pigmeat are having a miserable time, with bacon prices down and with fewer pigs available to them. Such recovery as there has been in agriculture must be judged against the background of two drought years. But the livestock producer has for the most part been fenced off and not allowed to participate in its recovery as a result of MCAs and increased imports which have held down his market.
    In these circumstances, what judgment should one make of Government policy and of Ministers who, less than three years ago, put forward the document "Food from Our Own Resources", to which still they pay a sort of pale, watery homage when they are challenged on the subject?
    I propose to quote some extracts from that document which seems highly relevant:
    …a continuing expansion of food production in Britain will be in the national interest."
    That appears in paragraph 4, which goes on to say that this
    "would remain economically valid, whether or not the United Kingdom decided to stay within the European Community."
    The point is made in paragraph 12:
    "An expanding home agriculture would also provide the basis for a bigger…food processing industry…a…high level of agricultural activitiy would be of benefit to United Kingdom supplying industries, particularly agricultural machinery production"—
    all of them sources of employment and as such to be cherished by Ministers.
    The document also contains in paragraph 21 this little gem:
    "The Government are in broad agreement with the Farmers' Unions on the order of magnitude of the increase in output which it is feasible to obtain by 1980."
    Increases in the cattle herd to 15·4 million or 16·3 million were put forward. The figure then was 15·2 million. Now it is 13·8 million. The Minister will have an awful job rewriting "Food from Our Own Resources" without confessing that he and his colleagues have been guilty of fraud.
    Mr. Thomas Torney: My right hon. Friend does not want to rewrite "Food from Our Own Resources". He wants to rewrite the CAP.
    Mr. Peyton: In composing this document, the Government had two factors in mind—comparative costs in resource terms and, in paragraph 22, the risks to the economy, which is the one which concerns the Opposition, in terms both of import prices and the reliability of supplies involved in a relatively high level of dependence upon imports. I need not remind the right hon. Gentleman again of the unacceptably steep rise in imports which took place last year as a result of his policies.
    However, Ministers have now jettisoned their earlier and more prudent judgment. They have shown themselves now to take risks which previously they regarded as unacceptable, and all the signs are that that new readiness is because of very unrespectable reasons. They are hoping simply to stay where they are, in office if not in power.
    I make one more quotation from "Food from Our Own Resources". It states in paragraph 23:
    "…it is not enough to rely on the expectation of future market price movements to bring about an expansion of production. If farmers are to invest…they need a degree of assurance about their future returns."
    I have no doubt that, when those words were used, they were used in good faith. The trouble is that that good faith has proved infinitely perishable. Ministers have neglected subsequently to do what they promised, and the Minister himself is given to a somewhat casual use of words.
    Mr. Robin Corbett: I anticipate that shortly the right hon. Gentleman will go on to congratulate my right hon. Friend on getting assurances out of the European Commission about the security of the Milk Marketing Board as one way of demonstrating that producers need a forward look at the business in which they are engaged. However, before the right hon. Gentleman comes to that, will he comment on the fact that at the heart of the problem in the pigmeat industry is not the green pound but the way in which the European Commission and the other eight nations so far have refused to have any proper calculation of these MCAs to take account of high cereal imports?
    Mr. Peyton: I congratulate the hon. Gentleman much more on his optimism

    979
    than on his perception, but I am glad that he reminds me of the point about MCAs, which I should have included in my speech. I shall deal with it now. We have repeatedly put to the Minister that if, at a much earlier stage, he had himself been willing to accept a reasonable measure of devaluation of the green pound, he could then have had a recalculation of the MCAs.
    I challenge the Minister to produce satisfactory evidence that that allegation is unfounded. If he can produce the evidence, I shall gladly withdraw it.
    The Minister of Agriculture, Fisheries and Food (Mr. John Silkin): The time when the right hon. Gentleman should gladly have withdrawn it was several months ago, when I spoke about this to the House and quoted from the letter which I had received from the Danish Government in which they said that the two issues were not in the least related and that they were going to fight against a recalculation of MCAs.
    Mr. Peyton: My point is that, when the right hon. Gentleman attained his present office and first started arguing about this matter, he had a chance, had he been willing to devalue the green pound, to get from the Commission and his colleagues an agreement to discuss the whole basis of the calculation of MCAs.
    Mr. John Silkin: If the right hon. Gentleman cares to look back—I forget how many months ago it is now—the letter predates any argument we had about the green pound.
    Mr. Peyton: If that is the best the right hon. Gentleman can do by way of rebuttal of the charge which I make and of the suspicions which we harbour, I find it unacceptable.
    I return to one of the right hon. Gentle-mans most remarkable performances, when he attended the Farmers' Club. I did not have the privilege of attending, but I recall that he referred to the occasion last week in the House, even quoting from what he said, which I found rather surprising, in view of the reports which we had heard about it. I quote now from the right hon. Gentleman's own Press handout:
    "We have all had to suffer cuts in our expectations, although I believe the Annual
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    Review White Paper, which I expect to be published tomorrow, will show that farming net income held up well in real terms in 1977."
    Having already had sight of the White Paper which was to appear the next day, the right hon. Gentleman might, I suggest, have felt it incumbent upon him to refer to these words:
    "When stock appreciation is included, aggregate net income increased by 28 per cent. to £1,835 million in 1976 and is expected to have fallen by 2 per cent. to £1,796 million in 1977. In real terms a 10 per cent. increase between 1975 and 1976 is expected to be followed by a fall of 15·5 per cent. in 1977."
    I am sure that the right hon. Gentleman has a facile explanation available for that, but nevertheless I believe that, in talking to the Farmers' Club, he would have been well advised, since he was referring to the White Paper, to refer to real incomes. He would have been well advised to include that sentence in his speech.
    We put down the motion because we sought to express our belief that the Government have treated our livestock industry in a way in which no other European Government would have treated their livestock industry, and they have treated our livestock industry in a way in which they have themselves treated no other industry in this country. In our view, by so doing they have taken grave risks which involve not just producers, not just other industries and the balance of payments, but those consumers for whom the Government so busily claim to care so much.
    My right hon. and hon. Friends and I believe, and I think that other Opposition parties believe, that the Government have fully earned—and I very much hope that they will receive—the blame of the House of Commons tonight.
    Mr. Speaker: I should have informed the House that I have selected the amendment in the names of the Prime Minister and his right hon. Friends.
    4.5 p.m.
    The Minister of Agriculture, Fisheries and Food (Mr. John Silkin): I beg to move to leave out from "House" to the end of the Question and to add instead thereof:
    recognising the special difficulties of the producers of pigmeat and beef, approves the action of Her Majesty's Government in requesting the Commission to propose an immediate

    981
    devaluation of the Green Pound by 5 per cent. as part of a move, in the course of 1978, to increase the net income of such producers by 10 per cent., an amount which corresponds to the guidelines figure in the Government's incomes policy.
    Before discussing that amendment, put down in my name and those of my right hon. Friends—[HON. MEMBERS: "Where are they? "]—one or two are around—and the motion to which it relates, I wish to spend a minute or two on the two Commission documents Nos. R /2601 /77 and R /2651/77, which deal with the whole question of green currencies.
    Document No. R/2651 is a Commission report on the use of the European unit of account in the common agricultural policy, and Document No. R/2601 proposes that monetary compensatory amounts be phased out, subject to certain limitations, over seven years.
    At the moment, we still retain effective national control over the timing of changes in our representative rate. There are obvious advantages in this situation. There could, however, also be advantages in applying the EUA to the common agricultural policy. In Brussels I have so far taken the line that decisions on these two points must be taken jointly, since decisions on the unit of account to be applied, in effect, determine the level at which prices must be aligned. I have to tell the House, however, that it is already
    clear that there is very little prospect of either the EUA or automaticity—[An HON. MEMBER: "What?"]—being agreed by the Council. I shall spell it for the hon. Gentleman a bit later.
    The motion and the amendment bring together three important and related questions. The first is whether the agricultural industry as a whole is in so difficult a position that an immediate devaluation of the green pound by 7½per cent. is required, as suggested by the Opposition. Second, if that is not the case, is the livestock sector in a position where it needs special help, and, if so, what should that help be? Third, if the livestock industry is in difficulties, are they of such gravity as to justify measures which would harm other important parts of the national interest, such as the consumer interest?
    As to the first question, we all know how the Opposition's motion originated. It resulted from the pressure of the right
    982
    hon. Member for Worcester (Mr. Walker), who, in a rather unexpected foray into the agricultural arena in December, gave as his reasons for urging the use of a Supply Day for debate that the industry's output under the Labour Government had fallen by 23 per cent. and that therefore this motion would attract all the Opposition parties to vote against the Government.
    I believe, incidentally, that the right hon. Gentleman kindly offered to use his undoubted influence to ask the Irish and Danish Governments to pay my ministerial salary, but I can only assume that his endeavours in that respect have met with no success and that in consequence I must just soldier on without payment from anyone.
    It is perhaps, a little unfortunate from the point of view of the Opposition's strategy that the Annual Review was published on 12th January and that it does not live up to the expectations of right hon. Gentlemen opposite. The fall in output in 1976 was, of course, the direct result of the worst drought this country has suffered in 500 years, and if right hon. Gentlemen opposite wish to blame us for the fall in production that resulted from that, it seems only fair that they should give us equal credit for the rise in output of 25 per cent. in 1977 that followed, with the help of the better weather of last year.
    That rise was so dramatic that it gave the agricultural industry as a whole the best year's production for four years—very nearly a record.
    Last year, labour productivity reached a record level. Cereals production was also at a record level—some 3·7 million tonnes greater than in 1976; milk production was at a record level—about 41 per cent. up on 1976; sugar beet is expected to yield nearly 1 million tonnes of white sugar; and potato production has increased by more than a third.
    Now, all these results are excellent, but I suspect that most people will tend to judge the matter by one other criterion. They will look upon the income of farmers as the best test of all. Excluding stock appreciation, this figure in current money terms represents an increase of 16 per cent. in 1977.
    Mr. John Lee: Bearing in mind that if it is 16

    983
    per cent., that is 6 per cent. over the norm that the Government have laid down, would it not be right to say that that is a very good argument for no devaluing of the green pound at all?
    Mr. Silkin: I hope that I can convince my hon. Friend a little later why it is necessary to have a devaluation of the green pound.
    Mrs. Elaine Kellett-Bowman: Will the right hon. Gentleman be kind enough to read the whole—
    Mr. Silkin: I am sorry, I had not finished dealing with my hon. Friend the Member for Birmingham, Handsworth (Mr. Lee). I hope to come to that point in a little while. I have a suspicion that most wage earners—whatever their occupation—also, like farmers, regard themselves as a special case, as doing work that is of value to the economy, and would have been delighted with an increase of that order in the same period.
    Mrs. Kellett-Bowman: Instead of being so selective in his quotation from paragraph 34 on page 7, perhaps the right hon. Gentleman would read the whole paragraph, which shows exactly how badly farmers have done in real terms.
    Mr. Silkin: If the hon. Lady calms down a little, she will realise that in 1977 we were in the depths of our economic difficulties and that there was not a section of the country that did not have to make a sacrifice, and that a fall in real terms, not just a small increase, was common to everyone. If the hon. Lady is referring to the question of stock appreciation—because I said "excluding stock appreciation"—I should be delighted to give her a very short lesson on the subject. It is this: stock appreciation, which is a traditional method in accountancy, anyway, is always excluded from the net income, for the reason that it is calculated purely on the basis of the costs incurred by the producer or whoever it may be and it is not related to what the actual sale price would be. That is why stock appreciation is removed from the figures. If the hon. Lady does that, she will find that my figures are quite correct and that the income has increased by 16 per cent.
    Mrs. Kellett-Bowman: What about disposable income?
    Mr. Peter Rost: The Minister is attempting to justify his incompetence by quoting average figures of earnings. Will he tell the House now what advice he has received from the smaller dairy farmers and mixed farmers, particularly those in such areas as Derbyshire, about the income decline that they have suffered?
    Mr. Silkin: I wonder whether the hon. Gentleman was listening at the beginning of my speech when I said that there were three questions that we needed to answer —the first relating to farmers as a whole; the second relating to the livestock industry, in which the hon. Gentleman's dairy farmers will figure quite prominently, I promise; and the third relating to the consumer. I am at present on the question of the industry as a whole. Does it not follow from what the hon. Gentleman is saying that if dairy farmers are not doing well, the increase in net income of those who are not in the livestock sector must have been even greater?
    Great play has been made of the argument that investment is falling, although in money terms it increased by 18 per cent. Taking volume of new investment in plant and machinery, the trend over the past three years has remained pretty stable at the high level of 1974. It is true, however, that investment in buildings and work fell in volume by 5 per cent. in 1977, but, given the lower incomes in 1976, the year of the drought, this is hardly surprising. The fall in interest rates, the higher incomes of 1977, the end of deferral of capital grants, and the general improvement in the economic climate will in turn, I think, favourably affect investment from now on. Indeed, we have evidence that this is already happening.
    Mr. Nicholas Fairbairn: Will the right hon. Gentleman give way?
    Mr. Silkin: I think that this will have to be the last occasion on which I give way for some minutes.
    Mr. Fairbairn: I am most obliged to the Minister for giving me the last occasion for some minutes. When I have asked

    985
    my question, it may well be the last occasion for some hours.
    Instead of relating the figure to artificial figures of average income, and that sort of thing, will the Minister give the House these figures? How many tonnes of malting barley has one had to sell to buy a tractor in 1970, 1971, 1972, 1973, 1974, 1975 and 1977? How many tonnes of beef does one have to sell for the same thing? How many gallons of milk does one have to sell? The right hon. Gentleman should relate it to the product and not to an artificial general figure.
    Mr. Silkin: The hon. and learned Gentleman will also have access to the Annual Review and 1 have no doubt that, given a little assistance, he can work those figures out for himself.
    That the agricultural industry as a whole is in difficulties we can therefore dismiss—and both the Opposition motion and the Government amendment tacitly accept that, since both limit their wording to the livestock sector. Here, indeed, we come to the heart of the matter, for what is at stake—I agree with the right hon. Member for Yeovil (Mr. Peyton)—is the continuance of United Kingdom production or the surrender of our market to foreign competitors.
    No one knows better than I do the difficulties which result from the unfairly high level of the MCA subsidy paid on our imports of bacon and other processed pigmeat. Our EEC competitors, of course, can sell bacon in our market at a price which gives them a good return but is too low to allow our curers to trade profitably and pay producers their price for their raw materials with the inevitable result of declining production and increasing unemployment.
    On beef, the greatest problem comes from the high MCA on Irish exports of carcase beef and live cattle. We must not overstate this problem. Part of the reason for the extra quantities is an unexpected increase of 14 per cent. in slaughterings in 1977 in export abattoirs in the Irish Republic. And we have seen similar quantities of Irish supplies on our market in previous years without the degree of concern that has been expressed this year. But I agree that last summer and autumn the availability of Irish beef with a large MCA undermined wholesale prices in the United Kingdom.
    986
    I accept that an unstable market hinders producers in forward planning and is better avoided if possible. This has been the basis for my continued advocacy of a dual system of support with premiums rather than intervention alone. In brief, I believe we must act now if we are to avoid a massive take-over by foreign interests of these two basic British sectors.
    Those national measures, which were at the disposal of my predecessors before we joined the EEC, are no longer available to me. Even the pig subsidy which I gave to the industry last year was, as the House knows, ordered to be ended by the European Court. Changing the basis of calculating MCAs, which I have consistently fought for, requires the unanimous consent of the Council of Ministers to a Commission proposal. There is as yet no Commission proposal and there are unfortunately other countries which have a vested interest in the present method of calculation. All I can say is that I intend to keep fighting.
    In the circumstances, and in the absence of the ability to take other national measures, the only possible remedy is to devalue the green pound. A large devaluation of the green pound would clearly help our pigmeat curers and processors. It would adjust the MCA payments on imports and would probably lead to an increase in the market price for bacon and other products. It would also be welcomed by beef producers who hope that by reducing MCAs it would stimulate better market prices.
    But, as my hon. Friend the Member for Cannock (Mr. Roberts) said on Thursday, the green pound is a blunt instrument. In the first place, it must apply throughout the United Kingdom, although problems may differ in various parts of our country. There are specific problems in Northern Ireland, for example and the Government have tried to give selective help, for example, by the meat industry employment scheme. But I reject out of hand any suggestion that there should be an all-Ireland green pound.
    In the second place, the effect of devaluation itself is uneven in agriculture. Devaluation means rises in feed costs for all livestock producers. For those whom the devaluation does not provide an automatic increase in returns, the position is

    987
    even more serious. The cost of producing eggs and poultry would go up and these producers will not experience any countervailing benefits. I know that the British Poultry Federation is concerned at the effects an overlarge devaluation would have on consumption.
    If a large devaluation is of doubtful benefit to large parts of the agricultural industry, its effect on the consumer would be brutal. The argument of the Opposition is that a large devaluation is good for consumers because it is in their interests to increase home production of food. I certainly share the belief that we should produce more of our own food, but that is a view that does not always go unchallenged in Brussels. However, I am not prepared to agree to so large an increase in the price of food that, while production of food is encouraged, its consumption is positively discouraged. Is that not exactly what is wrong with the present workings of the CAP?
    As I said earlier, I have been pressing for over a year for the recalculation of pigmeat MCAs. I still believe this to be the right solution and will continue to pursue it. But in present circumstances, a modest devaluation has become our best option.
    Mr. Ralph Howell: Can the right hon. Gentleman explain why a 5 per cent. devaluation is good and a 7½ per cent. devaluation is bad?
    Mr. Silkin: I do not believe that the latter is necessary at this time. We are talking about a devaluation now. I have tried to explain that we are seeking a fundamental recalculation of the pigmeat MCAs. In addition, there are price fixing proposals that will be examined in Brussels in the coming months. It would be absurd to make too large a devaluation now. We might overshoot the mark, and the only victim would be the consumer.
    Mr. Hamish Watt: Why did the right hon. Gentleman not listen to the advice from my party? He could have made a start by devaluing at 1 per cent. a month and, at any time, he could have said "That is enough".
    Mr. Silkin: That was a totally wrong solution in the circumstances, particularly since at the end of 1976 we had a more urgent task than looking after the whims
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    of the hon. Gentleman. We had to look after the economy of the country as a whole and see that food prices, which were going up by about 20 per cent. at that time, were kept under as strict a control as possible.
    Mr. Alexander W. Lyon: Will my right hon. Friend give way?
    Mr. Silkin: No. I have given way quite a lot. Hon. Members will have to wait a bit longer before I give way again.
    A 5 per cent. devaluation will help pig-meat processors by reducing the MCAs on bacon by £43 per tonne—about 18 per cent. I judge it right to make this devaluation despite the effects on pig producers' feed costs because it will help processors. Pig producers' returns have started to improve in recent months, but the squeeze on the processors has grown more severe and, taking account of all their problems including the effects on employment, I believe that the position must be relieved.
    The devalution which I propose will also have benefits for beet production. It will offer producers the prospect of better support levels in the future and should counteract the present fall in the beef herd. It will reduce the MCA on Irish beef by just under 3p per lb.—about 20 per cent.—and will help to firm up the market. In my judgment this change, taken together with the recent 4 per cent. increase in the buying-in price as a result of the last transitional step, is sufficient to stabilise the market without undue effects on consumption.
    Mr. Roderick MacFarquhar: Can my right hon. Friend give a more precise indication of his belief about the impact of the changes on imports of bacon from Denmark and meat from Ireland? What will be the percentage reduction in each case?
    Mr. Silkin: It is difficult to say. There is no doubt that an 18 per cent. reduction in the MCAs for pigmeat and a 20 per cent. reduction in the Irish MCAs will be a very positive step.
    It is appropriate here to consider the Early-Day Motion of the Liberal Party calling for a 10 per cent. devaluation, not immediately but over the next 12 months. In fact, of course, neither the Opposition motion nor the Government amendment excludes such a proposition. But I should

    989
    like to put two points to the Liberals. In the first place, they would, I think, agree with me that whatever devaluation is made now must be done as selectively as possible, so that it is for the benefit of livestock producers above all and does not whittle away the advantage to them by putting up their costs. Secondly, if that is the case, factors such as a change in the calculation of MCAs would be more effective than a further green pound devaluation.
    As to the first point, I have proposed to the Commission that the devaluation should apply immediately only to the livestock sector and that all the other sectors should wait until the start of their marketing year. In the case of cereals, this would mean a postponement until 1st August next. This gives us the necessary time to keep the whole position under review until the later summer—well within the 12-months period suggested by the Liberal Party.
    In making this proposal, I have weighed carefully the effects on consumers. I am very reluctant to make any increases in food prices, but I believe that the case for beef and pigmeat is now overriding and that consumers are better placed to cope with the price increase because we are now getting inflation under firm control. I estimate that the effects of the 5 per cent. devaluation phased in the way I have proposed represent an increase of 1 per cent. on food prices in 12 month's time.
    Given the difficulties of the livestock industry, I am sure that the Government's decision is the right one. It is the privilege of official Oppositions to table short-term opportunist motions such as the present motion before the House. It is for the Government to make their decisions on the basis of what they genuinely believe to be in the interests of the nation. The Opposition, whoever prompted them to do so, have had their little fling in tabling this motion. Let them now get out of the way and enable us to carry out the real strategy of radical change in the CAP that is so urgently required. I ask the House to reject the motion and support the Government's amendment.
    4.28 p.m.
    Sir David Renton: The Minister has told us that he is aiming for changes in the CAP. The House
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    will recollect that when the Government came to power in February 1974, the previous Conservative Government, with my right hon. Friend the Member for Grantham (Mr. Godber) as Minister of Agriculture, had already initiated discussions for changing the CAP.
    Negotiations have continued. My right hon. Friend was trying to change the CAP in a way that would improve the position for our farmers and housewives. No doubt this Government also have that aim in mind, but the net result of 3½ years of their abortive efforts is that the changes in the CAP have not improved the position but have made it worse. Therefore, I cannot take off my hat to the right hon. Gentleman as a negotiator. I am not impressed in the slightest by his suggestion that we should now leave it to him to carry on with the good work. It is surely far better that the House, on the advice of all parties, should now express its opinion on what should be done and for the Minister to take note of that opinion after tonight's Division.
    I ask the Minister a straight question, and I am prepared to give way to him if he will answer it. If the decision of the House tonight is in favour of a 7½ per cent. devaluation of the green pound, will he modify his approach, go to Brussels and meet the wishes of the House by asking for a 7½ per cent. devaluation? If he will not do that, does he propose to resign? I give way to the right hon. Gentleman.
    Mr. John Silkin: I think that the right hon. and learned Gentleman deserves a rest. Perhaps he will explain in the course of the debate on what basis he thinks that the Conservative Opposition's motion will win.
    Sir D. Renton: I seek refuge in a famous and ancient expression—namely, that the right hon. Gentleman should wait and see. I am prepared to wait and see as well. However, I am convinced that, in accordance with normal parliamentary practice, the House is entitled to know where it stands and where the Minister stands before the decision is taken tonight. I am surprised and sorry that the right hon. Gentleman has ducked this vital question in this vital debate.
    Mr. Mark Hughes: In accepting the right hon. and learned Gentleman's concept of the possibility of

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    a 7½ per cent, devaluation, may I ask whether he accepts that one way of achieving that objective would be to switch to the use of the European unit of account rather than the agricultural unit of account, which may be part of my right hon. Friend's negotiating brief tonight if the amendment is overwhelmingly carried?
    Sir D. Renton: I concede that that is one of several different ways of renegotiation. We should keep an open mind about that proposition. However, the Minister has conceded that the thing that must be done now is to devalue the green pound. It is always a question of judgment by how much it should be devalued in the changing circumstances. The National Farmers' Union, for example, is saying that there should be a 12½ per cent. devaluation, while others have said that there should be a 10 per cent. devaluation. We say that a reasonable exercise of judgment is to say 7½ per cent. That is 50 per cent. further than the Minister is proposing to go.
    I was about to say that one cannot be the Member for a large agricultural constituency for the whole of the post-war period, as I have been, without having experienced a good many scares and a number of real crises in agriculture. However, in my time, in the past 32 years, this has been the worst livestock crisis. Moreover, it is the one that has lasted the longest. The crisis has been developing since early in 1976, as the Minister knows perfectly well and as he has so often been reminded.
    I shall talk mainly about pigs. I do not want to talk for very long as I promised Mr. Speaker that I would not do so. In passing I should tell the House that for 15 years I was engaged in pig breeding and fattening on a fair scale with my partner. I am glad that I am not involved in it now! Pig producers in my constituency tell me that they were losing money continuously throughout 1977. Some producers have already been driven out of the business. Others are hanging on because their capital and expertise are in the business. Some of them are specialists and do little else except produce pigs. They hope that as the breeding herd continues to fall and as production continues to fall, prices will rise. That trend will be intensified as
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    their neighbours go out of business: that is the law of supply and demand.
    That is to be regarded as a natural result of the depression in our market caused by the imports with which we are familiar. It might be a good speculative opportunity for those who are prepared to hang on long enough, but it will not help the housewives.
    The housewives should have it made clearly known to them that the Minister is beckoning them into a fool's paradise when he talks about protecting consumers even if it means that farmers are somewhat hit. The Minister, like all of us, wants the housewife to be his friend. However, his only hope of having her as his friend is if he ensures that he becomes the farmer's friend first, and he shows no sign of becoming that.
    The right hon. Gentleman has let the present fiasco of the green pound run on much too long. Many months ago he could quite well have pressed for a much better devaluation than the modest ones that were achieved by his predecessor and himself. It is no good going to Brussels now and asking belatedly for a 5 per cent. devaluation. It is clear that much more urgent action is now required, especially if it is to take still longer—indeed, the right hon. Gentleman has pointed out that it will take some time—to change the MCAs. I speak as an enthusiast—I always have been—for the European Economic Community. I voted for it all along. But the irksome thing about the MCAs is that they are paid out of the Common Agricultural Fund to which we ourselves contribute substantially. In effect, we are joining with our partners in Europe to provide a subsidy for Irish, Dutch and Danish farmers to enable them to compete unfairly in our own market. So much for the renegotiation of the CAP by the right hon. Gentleman.
    Mr. Lee: I accept the right hon. and learned Gentleman's premise that he is a supporter of the CAP, but what is his view of the dilemma as presented by the court of the Community, which has invalidated or changed the basis upon which my right hon. Friend was prepared to provide a pig subsidy? We await the European Commission's remedial measure, but that is not forthcoming and may not be forthcoming. What does the right

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    hon. and learned Gentleman do in the face of that?
    Sir D. Renton: The hon. Gentleman's intervention helps me so much because it brings me to the last point that I was to make. It is a general point but it has a specific impact upon farming.
    We would not be having this debate today and the farmers would not have suffered for so long but for the inflation brought about by Government policy, by the devaluation of sterling forced upon them because the world lost confidence in us and by so many other factors with which the House is familiar. The Minister's predecessor, for whom we all had great respect, made quite a good start, and I wish that the Minister had been able to keep it up. These factors have forced our negotiators into a position in which they should have exerted themselves much more. However, they were bargaining from weakness. That is partly where the trouble lies.
    Farming is still our largest productive industry by any standards. It has a fine record of technical progress and improved productivity. It could have done better but for the difficulties so clearly described by my right hon. Friend the Member for Yeovil (Mr. Peyton). However, there is hope for the industry. If the Minister accepts what I believe will be the advice of the House tonight, acts quickly upon it, insists upon an expeditious revision of the MCAs and takes into account the alternatives and options which are open, there is no reason why our greatest industry should not make the great contribution to import saving of which it is capable.
    4.42 p.m.
    Mr. Douglas Jay: The right hon. Member for Yeovil (Mr. Peyton) and the right hon. and learned Member for Huntingdonshire (Sir D. Renton) have given the House a catalogue of the horrors and absurdities of the common agricultural policy. What we did not get from the right hon. Member for Yeovil was any understanding of the world food situation.
    There are certain basic facts underlying the debate. First, most EEC food prices are now far above world prices. The CAP levies on foodstuffs and feeding stuffs in particular are the main cause of much of the farmers' difficulties. The
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    abandonment of deficiency payments by the then Conservative Government caused the present conflict between the farmer and the consumer in this country. Therefore, the debate gives us an opportunity to realise the enormous damage that the CAP and EEC membership generally are now doing to the British standard of living, to our balance of payments situation and, indeed, to our entire economic position.
    I do not know whether the House realises that EEC food prices are in many instances double the world level of food prices. The British consumer and farmer are paying at least 50 per cent. more for food and feeding stuffs than if we were not members of the EEC, and they will be paying 100 per cent. more if the green pound is further devalued.
    Mr. Robin Maxwell-Hyslop: Will the right hon. Gentleman give way?
    Mr. Jay: I think that I had better continue, because there is not much time. Perhaps the hon. Gentleman would care to hear the facts before he puts a question.
    Mr. Maxwell-Hyslop: As Britain was the largest single importer of food, how can the facts given by the right hon. Gentleman be relevant unless world food prices are not affected by the fact that this country is now a member of the EEC and is therefore not importing to the same extent from the world beyond the EEC?
    Mr. Jay: If the other EEC countries were not exporting large amounts of food to us at present prices and if we were not a member, those countries would have to put that food on the world market at subsidised prices and it is arguable that world prices would be even lower. The hon. Gentleman obviously has not thought about that. For the purposes of my argument I am assuming that prices would stay the same.
    The damage to this country from EEC membership is measured not by short-term manipulations of the green pound but by the extent to which our food prices are above world prices. In the last 18 months world food prices have fallen even further, compared with EEC prices, because of very good world grain crops in each of the last two years.

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    World wheat production in 1976 was an all-time record, and in 1977 it was nearly as high. World output of coarse grains, which are the main feeding stuff and affect every food, were also a near record in 1977. As a result, world food prices have fallen markedly in the past year. Indeed, world retail food prices have fallen in some food exporting countries.
    The extent of the extra cost being forced on the Britsh consumer can be measured by figures, which I hope the hon. Member for Tiverton (Mr. Maxwell-Hyslop) will consider, given by my right hon. Friend the Minister of Agriculture in a Written Answer on 12th December. In October 1977, the latest date given, the import price of wheat, before levies, was £7·05 per 100 kg. The full EEC levy was £6·35 and the United Kingdom net levy was £3·57. Therefore, the full EEC levy on wheat was a tax of about 90 per cent. on the most basic of all foods. That must about double the final price. These so-called subsidies and manipulations ensure that, instead of paying 90 per cent. or 100 per cent. above the world price, we pay only 50 per cent. I suggest it is absurd to call that a subsidy to this country.
    The full levies on barley and maize, the main feeding stuffs in British agriculture, are about 70 per cent. or 80 per cent. above the world price.
    These EEC levies are one of the main reasons for the rise in costs in agriculture in the past two years, about which we have heard so much complaint. A further devaluation of the green pound would raise still further the cost of feeding stuffs, the chief raw materials of the British agriculture industry, as well as the price of food generally.
    Sir David Renton: Is the right hon. Gentleman conscious of the fact that, although our cereal harvest was tremendous last year, a great deal of it was not millable wheat and there was not good barley, either? Therefore, within our own resources there is an immense amount of feeding stuffs available at lower prices than for some years.
    Mr. Jay: That may be so, but it does not affect my argument about the present level of EEC levies.
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    The import price of New Zealand butter was £91 per 100 kg. The full EEC levy is now £140. That is a tax of about 150 per cent. on a major fodstuff. We are already paying about 95 per cent. tax compared with the world price. The figures for cheese are similar. The full EEC tax on beef and frozen beef is now well over 100 per cent.
    These taxes force up the price not only of imported food and feeding stuffs but of home-produced food too. As the Food Manufacturers' Federation pointed out in its communication to hon. Members a week ago, these CAP taxes have
    "put up the price of all commodities covered by the CAP, whether or not they are produced in this country."
    That is exactly what they are intended to do. As a result of EEC membership, we in this country are already taxing essential foods at rates of about 50 or 100 per cent., and if the policy of the Conservative Party, as I understand it, were implemented and all the subsidies were wiped out, the tax on major food stuffs would soon rise to about 100 per cent. Those are the sort of taxes that the Conservatives should talk about when they want to grumble at the high level of taxation in this country, because they are the taxes which fall most heavily on the poorest parts of the population.
    The EEC Commission's own agriculture report confirms that the consumer in this country is now being grossly overcharged. In case anyone doubts the figures I have given, let me quote one sentence from that report for 1977. It reads:
    "Import levies have gradually climbed throughout 1976–77 as C.I.F. prices have gone down. By the beginning of 1977–78 the import levies for all the major cereals were greater than the world market price of the cereal itself: i.e., the world market prices were less than half the Community threshold prices."
    That is true of cereals, which are the most basic of foods and are the United Kingdom's biggest food import. Who would have voted for EEC membership if the truth had been told two years ago?
    I cannot retail all the consequences of this policy, but the first consequence is a direct fall in the real living standards of the British public. This is seen most clearly in the actual drop in consumption of basic foods due to excessive prices.

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    The Financial Times of 17th January shows that meat consumption is
    "going down to the level of the 1950s".
    It adds that one
    "main cause of the reduction in meat eating is steadily rising prices."
    Butter consumption is also falling, according to the EEC Commission's report. That means a direct and unnecessary fall in real living standards in this country. That, with the rise in oil prices, was the real cause of the fall in living standards here in 1976–77. The rise in oil prices was unavoidable, but the additional tax on essential foods was wholly unnecessary and is due to EEC membership.
    The next consequence of this extravagant rise in prices is extravagant pay claims and all the damage done to industrial relations. That was one of the factors which started the wage-price spiral, and it is not very surprising, if food prices rise 15 or 20 per cent. a year as a result of Government action, that there are pay claims of 15 to 20 per cent. at the same time.
    If there was a world recession before we joined the EEC, our food prices would fall, and that was one of the causes of recovery. That can no longer happen. How helpful it would have been if some food prices had fallen in this country as they have in the United States and Switzerland as a result of the world recession in the last two years.
    The next consequence of the CAP is a huge self-inflicted burden on the United Kingdom balance of payments. The most careful estimate we have had of this so far was by Mr. Wynne Godley and a group of Cambridge statisticians who even six months ago put it at between £650 million and £900 million a year. Since then, the gap between world prices and EEC prices has widened considerably and, therefore, the cost of the CAP must have risen considerably further. We are now dissipating some of our hard-won oil revenues by paying these extra unnecessary amounts for imported food.
    In addition to all this, we are now building up increasingly ridiculous surpluses of food which the consumer is not allowed to obtain. According to my figures—my right hon. Friend the Minister can tell me whether they are wrong—the cereal mountain and the skimmed milk mountain are now over 1 million tons. What
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    is worse, major intervention stocks of essential foods are now being built up in this country because they are too dear for the people to buy.
    The Financial Times of 4th January stated:
    "A sizeable proportion of this year's home butter production seems certain to be taken straight from the churn to the intervention mountain' "—
    and that is in this country. It continues:
    "Grain, too, will soon be going into intervention store."
    On top of this, the CAP is unnecessarily forcing up agricultural rents in this country. While all the poorest families are being taxed by the levies and unnecessarily high prices, the agricultural landlords are not doing at all badly. According to the Minister's own White Paper, farm rents were up 19·3 per cent. in 1976 and 15·9 per cent. in 1977. That is one of the rises in costs that farmers bear that has not been mentioned by the Opposition.
    The capital value of agricultural land has increased fivefold or tenfold since we joined the EEC, and that may be one explanation why the Tory Party supports the CAP and is so anxious for a rapid devaluation of the green pound.
    Finally, the CAP, by its extreme protectionism, is damaging food production in low-cost countries, notably in the United States and Australia. The United States, only two or three years after grave grain shortages, is actually restricting production of grain again, and, according to my information, in Australia about 80,000 head of beef cattle have been destroyed and their carcases have been burnt because the EEC is completely excluding exports of Australian beef to this country. I should like to know how true that is.
    The interesting fact is that the CAP, far from building up world reserves which would enable us to keep going in bad times, is leading to falling production in the lowest-cost countries. The most pathetic consequence of this situation—admittedly not the most serious—is that the Liberal Party has now apparently become the most extreme dear food party in the country and the advocate of even higher taxes on food That would be the consequence of a bigger devaluation of the green pound.
    More serious, however, is the fact that by abandoning the deficiency payment

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    policy and indulging in all this extraordinary manipulation of the CAP we have now created a direct conflict in this country between the farmer and the consumer which did not exist under the previous policy. We have created unnecessarily a vested interest in agricultural protection.
    Last autumn my right hon. Friend the Prime Minister in his letter to the Labour Party promised drastic early reforms of the CAP. So far, we have had none of them. It is surely now obvious that there can be no lasting revival of this country's economic fortunes while we are crippled by the common agricultural policy. In my view, if we do not have these reforms very soon, there is no other remedy than withdrawal from the CAP altogether.
    5.10 p.m.
    Mr. Jim Spicer: It gives me great pleasure to follow in debate the right hon. Member for Battersea, North (Mr. Jay). We have the same speech from him whatever the debate. I give the right hon. Gentleman a word of warning. He talks about the cheap food that we can buy in the world but never reminds us of what will happen to the world's population between 1978 and 2000. If he does not know, I shall tell him. The world population will increase from 4·9 thousand million to 7,000 million in that time. Therefore, it is in our interests, and in the interests of the world, to maximise our production.
    Mr. Jay rose—
    Mr. Spicer: I shall not give way at this stage.
    I am sorry that the Minister is about to leave the Chamber. I was hoping that he might remain for what I have to say. I remind the other Ministers present that in December 1976 three of my hon. Friends—the hon. Members for Bodmin (Mr. Hicks), Devon, West (Mr. Mills) and Wells (Mr. Boscawen)—and I went to see the right hon. Gentleman to talk about the problems of the pig industry. I must admit that he received us very cordially and gave us his views on that matter.
    We were then facing a remarkably large fall in the size of our breeding herds. We faced heavy slaughterings at an increasing rate. There were no gilt replacements. We had Dutch and Danish pene
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    trations of our market on an increasing scale, and factories were closing, as I am sure the Under-Secretary of State will remember. We also faced the closure of a particular factory in Acton—a very important factory—with a switchover to Holland of its production.
    We made these points to the Minister, and he said that he was well aware of the situation and extremely concerned about the future. He said that he would take action. Action he took, but it is now possible to say that it was a palliative and not a cure.
    The Minister has talked about the subsidy that he gave to pig producers. That worked for a few months, but it was channelled out and its use had ceased by the time the action was taken to prevent it from continuing. The situation today is much worse than it was in 1976. Those of us who have been involved in agriculture over the years know and accept that there is a pig cycle, with a peak and a trough and then a peak and a trough. What we have never seen before is that pig cycle on a continuous downward trend, when each peak is lower than the previous one. This is continuing at a serious rate.
    Both my right hon. Friend the Member for Yeovil (Mr. Peyton) and the Minister talked about the built-in advantage for importers in this situation. They already hold, I believe, 55 per cent. of the market. These figures change almost daily. The Dutch and the Danes, who have been the most aggressive in this market, are now being joined by the Irish, who are increasing their pig herd at a dramatic rate. In this year and next year that penetration will increase.
    The reason is quite clear. There has been a reduction of over 20 per cent. in our breeding herd. What is most serious, as my right hon. Friend the Member for Yeovil mentioned, is that the gilts are down by 25 per cent. on the 1976 total. I hope that we may have a view from the Government on whether they expect that trend to continue. We should very much like to hear.
    There may be a temporary level when the slaughterings are taking place and when the processing factories are seemingly not doing too badly—though they are doing badly enough. But if the trend continues for another two years

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    factories will close down in this country on a massive scale. Once they have closed they are lost and gone for ever, and the production in this country will never come back because there will be nowhere for the processing to take place. That is why the position is more serious than it was in December 1976.
    I remind the House of the way in which the Irish Government tackled this situation. They did not whine and moan about the fact that there was a gap of 30 per cent. They went straight into the matter in December 1976, with their initial devaluation, followed by two other devaluations. They, too, had problems with inflation, but they faced up to the reality of the position for their farmers. Now there is a gap of only 4 per cent. If we had followed the Irish pattern we should be much better off today. We all know that disaster lies ahead, particularly for our pig industry. I am dealing with that tonight rather than spreading the shot across the field.
    The Minister has been consistently wrong in saying that there will be no advantage for pig producers from devaluation of the green pound because they will have to pay the increased cost of the cereals that they use. I can see the Minister of State nodding, and he is right up to a point. But I think that he would agree that if we had a 5 per cent. devaluation of the green pound the real benefit to the pig producers would be about 2 per cent. A devaluation of 7½ per cent. would mean a benefit of about 3 per cent. A devaluation of 12½ per cent. would mean a 5 per cent. benefit.
    On that calculation, if we accept that at present the average pig producer is losing £3 on a pig, a 2 per cent. change will mean that he is losing only £1 per pig. If there was then a 7½ per cent. devaluation the pig producer would be running absolutely level, fair and square, and could face the future with a little more confidence but without making a great profit.
    But the point has been made, and I accept it, that MCAs are the real culprit, certainly for the pig producer. Everyone accepts that the MCAs will have to be readjusted, just as the green pound will have to be readjusted. Discussions are under way now in Brussels, and we can
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    all hope that the conclusion will be a recalculation of the MCAs.
    I know the Commissioner for agriculture in Brussels. I knew his predecessor well. Both had nothing but good will for this country. In December and January of last year they were ready and willing to help, but the problem—there is no point in mincing words—is that the attitude to our Minister in his first contact with the Council of Ministers was one of absolute intolerance.
    I am sorry that the right hon. Gentleman is not here, because I should like to say that he was operating in the role of a wrecker. He said to us at our meeting "Of course, you cannot expect me to show my cards. I must keep them fairly close to me just now, because if I give way on the main point, without getting something on the MCAs, we may be in some difficulty." That situation applied then and it applies today. We cannot expect other people to play square with us when we are giving absolutely nothing away in exchange.
    In my view, we are giving the Minister the right support. If we were asking for more, that would destroy his bargaining position. If he goes into the current round of negotiations with this 7½ per cent. devaluation the grudge that our partners in the Community have rightly borne against our Minister will disappear. They will treat us as fair and equal partners within the Community. I believe that we shall be helping the Minister when, as I hope, we carry the motion.
    5.10 p.m.
    Mr. Robin Corbett: I congratulate the right hon. Member for Yeovil (Mr. Peyton) on his sharp wit in his opening speech for the Opposition. It is a pity his knowledge and feel for the industry did not match his wit and attempted witticisms.
    One of the most remarkable features of the debate so far is that the right hon. Gentleman was unable to call in aid the National Farmers' Union. This must be the first time the Opposition have tabled a motion on agriculture and have not quoted extensively from the mass of documents with which we have been so kindly provided by the NFU. But all the right hon. Gentleman's arguments in favour of a green pound devaluation have been outbid by the NFU. I hope that the

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    Opposition will explain why they did not adopt their customary stance and agree with the NFU on the basis that—if the green pound needs to be devalued—the bigger, the better for the industry.
    This debate is not only about the devaluation of some perceived Brigadoontype currency. It is also about the price of food at a time when we are asking the people of this country for the third year running to co-operate in a policy of voluntary pay restraint. Every hon. Member knows full well that no one in farming either expects to be or can be insulated from the economic blizzard through which we have passed. Inflation touches both the industry and those who eat food. As my right hon. Friend the Minister said, it is bad enough asking the people to go through that kind of period without adding the monstrous distortions of the CAP, which make food dearer than it need be.
    Even if the NFU has not yet cottoned on to it, food producers will be only too conscious that in the past two or three years people in this country have been consuming less food. That is something that all sectors of the industry overlook at their peril. Perhaps one might expect red meat consumption to be down at this time, but consumption of poultry meat is also well down. There are also danger signals about the consumption of milk delivered to doorsteps.
    The one certain consequence of any devaluation of the green pound is that food will become dearer in our shops. Devaluation may help some food producers, but it will mean that consumers pay more when they do their weekly shopping. I accept that when we consider the interests of the consumer and the producer it is a matter of making a judgment. For the future and stability of the industry there are times when we shall have to say that some food will have to become dearer.
    We have entered into an idiot auction, with people putting forward figures of 5 per cent., 7½ per cent., 10 per cent. and 12½ per cent. It is a matter of balance. In doing what is best for the producers we must be very careful not to encourage producers in this country to think that there is no limit to what they can ask consumer to pay for the food they are producing.
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    The Government have said that they believe 5 per cent. is right at this time. If that qualifies as a cheap food policy, as it is the lowest of the auction figures before us, I congratulate my right hon. Friend and his colleagues on it.
    Mr. Geraint Howells: Before the hon. Gentleman continues with his theme, which is to drive a wedge between consumers and producers in this country, it would be gratifying to know his views on the following matter. Does he agree that the price in the shops will rise by only 1p or 1½p in the pound during the coming 12 months as a result of devaluation, whereas within a week or so the price of beer is to go up by 2p a pint? Perhaps we should have our priorities right before we develop our arguments further.
    Mr. Corbett: I accept what the hon. Gentleman said about prices, but people have more need of food than of beer. I have suggested that deciding by how much the green pound should be devalued is a matter of judgment, but the hon. Gentleman and others should consider the matter in the context of the economic position.
    At the 1970 General Election the Conservatives promised to cut food prices at a stroke. It is extraordinary that they should now have become the party of dear food. It is no good Conservative Members wagging their fingers at me. That is the consequence of their motion.
    I might ask, because the right hon. Gentleman forgot to mention this, what the Conservatives did about the parity of the green pound during the year they had in office when this policy came into operation. They did nothing about it. The present Government have carried out three devaluations.
    The bidding goes up even more. The Liberals have now proposed a 10 per cent. devaluation. If the Opposition are the dear food party, the Liberals seem to want to wear the hat of the dearer food party. It is no good the Liberals saying that the devaluation is needed to help particular sectors, especially the livestock industry, because while such sectors receive some assistance from a green pound devaluation there is a penalty to be paid. One farmer's price increase will be another's cost increase. Some farmers

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    receiving the so-called increase will have to meet higher feed prices.
    It is not without significance that most of us have received a communication from the Food Manufacturers' Federation, representing people vitally concerned with the matter. Many of its members involved in the processing side have an interest in green pound devaluation. In a joint statement with other interests the Federation says:
    "Green' Pound devaluations are blunt and inefficient instruments with which to tackle the problems of any particular sector of agriculture. They put up the prices of all commodities covered by the Common Agricultural Policy, whether or not they are produced in this country, and whether they are imported from elsewhere in the EEC or from countries outside the EEC."
    The Federation adds—and this can be no comfort to the Opposition—that in its view
    "it would be short-sighted for Parliament to call for such an immediate devaluation"—
    of 7½ per cent.
    That distinguished journalist and former colleague of mine, John Cherrington, who is also a farmer, and who writes regularly and clearly for the Financial Times, delivered an unseasonable attack on the NFU on 23rd December, when he described as "dangerous nonsense" the NFU claim that a massive and immediate devaluation of the green pound was needed to solve all the problems facing the whole of agriculture, the claim that it could put everything right at a stroke.
    A farmer in Suffolk to whom I spoke over the weekend does not agree with the NFU. He milks 60 cows on 60 acres, and is appalled by the NFU demand for a 12½ per cent. devaluation. He gave me these facts. The sugar beet that he buys for winter feed for his cattle is £15 a ton cheaper than at the same time last year. The dairy nuts that he buys are about £10 a ton cheaper than they were a year ago. The hay that he can buy—although few are buying it this year—costs about half what it cost a year ago. The cost of barley straw, brewer's grains and other feedstuffs is well down on this time last year. The average price for rearing calves is about £31 compared with £48 a year ago. The bonus was when he said that the December pool milk price was 2½p a gallon more than in December 1976. I liked his final comment: "When people tell me that they are in a bad
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    way with the dairy farm, I say to them 'You had better go back and see what you are doing wrong.' "
    At the end of the day the producer must be sure that he can sell what he produces to the consumer. It is not without significance that the National Consumer Council, reporting on the decision of 19 organisations representing a wide spread of consumer interests, has decided to oppose any immediate unconditional devaluation of the green pound and believes that it would be precipitous to do so. This type of warning from an organisation representing millions of people must be taken into account by the industry.
    If the NFU is not careful, it will be seen to be pursuing a policy of leaving the industry to the larger farmers and driving out the small farmers.
    Mr. David Crouch: The hon. Member for Hemel Hempstead (Mr. Corbett) is giving the House advice which he wants hon. Members to pass on to farmers. I visited a pig farm this morning. It was a farm with 2,000 pigs and in 1976 it made a profit of £10,000. According to the audited accounts, last year it made a loss of just under £7,000. The NFU is saying that such a farm should go out of business or that the banks should drive out the farmer. What should I tell a pig farmer who is running his business at a loss?
    Mr. Corbett: The answer to the problem in the pig sector lies not so much with the devaluation of the green pound as with a recalculation of the MCAs.
    In these excitable debates all hon. Members are wedded to the idea that we must encourage farms to produce more of our own food. That is a shared ambition. We need more food from our own resources to help our economic recovery. However, we shall not achieve that while there are voices declaring that all that needs to be done is to devalue the green pound, as if the effect of that would be equal across the industry. It will not. In large sectors of the industry the price increase achieved by one farmer will be the cost increase for another. That will not help the industry.
    5.23 p.m.
    Mr. Geraint Howells: I hope that during the next few hours we

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    shall confine our remarks to the plight of the pig and beef farmers and that we shall not develop the theme whether we should stay in the Common Market or pull out. The matter is so serious that we must devote all the time at our disposal to the plight of the farmers. Since I am a hill farmer, I have a vested interest in agriculture, and I declare an interest.
    It is generally accepted on both sides of the House that it is necessary to encourage the expansion of the agriculture industry and to increase production so that we get as much fod as possible from British sources. This is seen to be for the benefit of the consmer as much as for the farmer. That principle was underlined in the now famous White Paper produced by the Labour Government in 1975, "Food from Our Own Resources". Unfortunately, production has declined in many sectors of the industry in the last two years.
    As I have said before, if confidence and stability were restored in the industry—and this is the view of the majority of farmers—we could increase production from the marginal and hill land by between 50 per cent. and 100 per cent. Unfortunately, during the past two years the trend has gone the other way.
    It is acknowledged that agriculture has plenty of natural hazards such as droughts, gales, floods, and frosts. The industry is only just recovering from the disastrous effects of the 1976 drought. It is therefore no wonder that the farmer feels that he is being treated unjustly when other avoidable hazards are put between him and a reasonable return for his labours which he can then reinvest in his life's work. The green pound is such a hazard. It keeps prices artificially low and promotes unfair competition from heavily subsidised industries in other countries.
    The consumer lobby, whose views I respect, argues that farmers have experienced a 16 per cent. increase in income over the last few years. That is a spurious argument which can be demolished easily. The 16 per cent. increase does ont follow a trend but merely corrects the disastrous results of the decline in 1975 and 1976. The years 1976 and 1977 went from one extreme to the other. In 1976 there was a drought.
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    Farmers had to spend more capital to feed their cattle during the summer because of the shortage of grass. But 1977 was one of the best years that farmers have ever had. There is no comparison between the figures for those two years.
    One can play about with figures as much as one likes. For example, I can increase my net income this coming year by 100 per cent. I have just begun a scheme to reclaim 20 acres of land. I am told that the fertiliser bill will be £4,000. If I decide at the last moment not to go ahead with the scheme, my net income will be up by £4,000 in 1978 but production from my land will go down.
    Let us examine the net income of the industry. It decreased from £1,835 million in 1976 to £1,796 million in 1977. That represents a fall of over 15 per cent. and is the lowest level of remuneration in agriculture since the early 1970s.
    The truth is that certain sectors of the industry are still suffering hardship mainly as a result of the green pound. Figures published in the annual review bear this out. The national breeding herds of beef and pigs are declining. Beef and pig producers are in danger of becoming bankrupt and are selling their stock. I should not be surprised to see many of them getting out of the unequal struggle altogether.
    There is no need to stress that, in general, the agriculture industry is extremely efficient, and those who work in it produce more per head than workers in any other British industry. It has dedicated and skilled workers who put all their energies into their efforts and get a great deal of job satisfaction, possibly more than most people do. But it is wrong that agricultural workers should be getting about £15 less a week than the average skilled worker in other industries. It is all due to Government policy. The farmers, particularly in some cases, simply cannot afford to pay the average industrial wage without Government encouragement and the guarantee that they will not be penalised by unfair agricultural policies.
    Mr. Gwilym Roberts: The hon. Gentleman said that agricultural workers are badly paid, and I am sure that everyone here agrees. Of course there are farmers who are facing difficulties,

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    but would not he agree that there is not much evidence that rich farmers—and there are also rich farmers—are paying their workers over the odds?
    Mr. Howells: The hon. Gentleman is a Welshman. Some time ago, he went on Welsh television and said—and it is fortunate for him—that there are only 12 farmers in his constituency. Worse is to come. He added that there are 12 too many. So I do not think that the hon. Gentleman will intervene again.
    The signs are that more and more people are turning from the land in despair, and more will do so unless conditions change. They see the cost of machinery and fertilisers soaring. Yet they fail to get the right price for the products that they have worked so hard to produce.
    I do not wish this debate to deteriorate into a battle between the consumers and the farming interests. One section depends very much on another. As I have said before, without the consumers the farmers are doomed to failure. We must work together in harmony in the years to come. It must be our task ultimately to ensure that agriculture is capable of producing what the consumers in Britain need. We should not be put off by short-term considerations. Let us instead look to the future and ensure a healthy agriculture producing the maximum amount of food. The industry must expand and the farmers' net income must be at a reasonable rate. We must put back the incentive into farming.
    In my view, there has been a trend recently towards greater understanding of farmers' problems by the British consumers. I believe that they have come to understand the value and importance of the farmers' efforts to the economy. They must, therefore, realise that, as with any other industry, agriculture, must be given the proper incentives and that those involved should be allowed a reasonable reward for their efforts. They must also realise that the farmers' success in the long term will bring benefit to them.
    I intervened when the hon. Member for Hemel Hempstead (Mr. Corbett) was developing the theme of driving a wedge between consumers and producers. What are we arguing about tonight? If we had a 10 per cent. devaluation of the green
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    pound, the cost of food would go up by 2p in the pound during the coming year and the beginning of next year. It is a shame that we should be debating whether the price of food should go up by 1p when all the other industries, including the nationalised industries, can increase their costs without arguing on the Floor of the House. I make an appeal to hon. Members on both sides of the House that we should not argue in the years to come on the Floor of the House whether the price of food should go up by 1p or 2p every year.
    I want to turn in particular to the problems of the sheep farmer. Here I congratulate the Minister. He certainly deserves praise this time from the sheep sector. Last year, he was very helpful. He decided in his wisdom to give a 31 per cent. increase on the price of wool and 24 per cent. on the price of lamb. I hope that the Minister who is to reply will give an assurance that if his right hon. Friend accepts any kind of cheap meat regime proposals he will keep the guaranteed price system within that regime. It has served us well over the past 25 years. I do not want to elaborate on the French-Irish deal, but I hope that the Minister will bring pressure to bear on the Commission to safeguard the interests of our sheep farmers during the next few months.
    I turn next to the beef sector. I have said on many occasions that I consider the intervention system to be a complete waste of the taxpayers money, conferring benefit neither on the producers nor on the consumers. I said it before we joined the Common Market. It is our duty to try to persuade our counterparts in Europe that we had the best support and marketing system before we joined the EEC. I believe that many of our counterparts in Europe in years to come will accept that fact, and—who knows?—perhaps within the next five years we shall have a scheme that will be acceptable to the farmers and which will return the stability to agriculture that we all look forward to.
    The pig sector is suffering particularly badly from unfair competition, and we must insist that there is parity with other producing countries within the EEC. The shackles of the green pound and the MCAs are gradually destroying all vestiges of confidence, and immediate

    1011
    steps must be taken to save the pig sector from extinction.
    How many hon. Members know the problems facing agriculture at present? If he has a minute to spare during the next few days, I advise the Minister to go to Barclays Bank and ask for its latest book on agriculture, called "The Agricultural Common Market Beyond Transition".
    On page 13 there is an explanation of the problems facing the industry. We have been talking about parity. Since 1st January 1978, we have been full members of the Community. Let us see what our counterparts in Europe received for their commodities, taking first the prices for fat cattle in pence per kilogramme. The figure for Belgium is 104p., for Denmark 81p, for France 85p, for West Germany 101p., for the Irish Republic 66p, for Italy 92p, and for the Netherlands 96p, but United Kingdom producers received only 57p per kilogramme.
    I now give the relative figures for pigs. The figure for Belgium was 77p per kilogramme, for Denmark 68p, for France 89p, for West Germany 78p, for the Irish Republic 81p, for Italy 59p, and for the Netherlands 67p, but the poor British pig producers received only 53p. On top of that, our pig producers have to compete with the MCAs, and the Danes get approximately £240 per ton for exporting pig meat to this country. I challenge anyone in this House to tell me how pig producers in Britain can compete with the Danish producers who are selling their pig meat in this country.
    Mr. Lee: The hon. Gentleman issued the challenge. The answer surely is related to the domestic subsidy, which we have had debarred by the court of the Community. Will the hon. Gentleman join with me in making a two-finger gesture to the court of the Community and in persuading the Minister to do the same?
    Mr. Howells: If the green pound were devalued by another 5 per cent. the price would come down to £150 per ton. The Government, in their wisdom, should persuade the Europeans to do something to help the pig producers immediately.
    Mention was made earlier of the National Farmers' Union. In Wales we
    1012
    have two unions, and I have received messages from both of them. I think they are worth reading to the House. I have a statement by the National Farmers' Union of England and Wales, the National Farmers' Union of Scotland and the Ulster Farmers' Union. It says:
    "We welcome the fact that all the main political parties are now agreed on the need for a devaluation of the green pound. The real argument is over how much. But the Government's devaluation proposal and reference to net income, unless intended to be followed very quickly by a further devaluation and other measures during the current European price fixing, will not be sufficient to bring us anywhere near parity of competitive conditions. Farmers' net incomes are not like salaries or most other industrial profits. The agricultural industry is being called on for major expansion in the national interest. The unions insist that the resources for the necessary investment must be made available."
    I received the following message from the President of the Farmers' Union of Wales:
    "The main message that the Farmers' Union of Wales has for the British Government is that Government should ensure that farmers in the United Kingdom are given the same opportunities as Continental farmers to compete on equal terms for the consuming market both at home and abroad. The key word is 'parity'. Given fair rules our industry can meet any challenge from the Continent and elsewhere, and ensure that our people will have a continuous, guaranteed supply of home produced food to meet their requirements at prices fair to all."
    I am well aware that prices will go up when the green pound is devalued, and I have sympathy for those on fixed incomes, particularly our old-age pensioners. Why cannot the EEC's social funds—which, by all accounts, are under-used—be brought in to help with problems of this kind?
    However, everyone should be aware of the social problem that could be caused by keeping the green pound at an artificially high level, and that is the decline of the agriculture industry, the consequent decrease in the number of agricultural workers and the depopulation of rural areas.
    I agree with many of the sentiments expressed by the Minister of Agriculture this afternoon, but my colleagues and I wish to see a devaluation of the green pound by 10 per cent, within the next 12 months. Unless we get a firm promise from the Government that such a devaluation can be achieved, with a definite date fixed—and there seems to be no sign of

    1013
    that at present—we can do no other than oppose the Government today on this vital matter. I believe that we owe it to the agriculture industry, and in the long term to the British consumer.
    5.43 p.m.
    Mr. Andrew Welsh: It is a pleasure to follow the very sensible and thoughtful contribution of the hon. Member for Cardigan (Mr. Howells).
    The more I listen to debates of this sort, the more I realise that Governments whether Labour or Tory, do not seem to give agriculture the status or position that it deserves. We are not talking about some minor esoteric, constituency-based interest which is lucky to get some parliamentary debating time. We are discussing one of the mainstays of the Scottish and United Kingdom economies —the agriculture industry. It has an estimated £1,600 million of capital formation. There is an associated food packaging, processing and manufacturing industry producing annually goods worth about £8,000 million. It is a major utiliser of national energy resources as well as being a contributor to valuable foreign exchange earnings.
    If that is true in United Kingdom terms, how much more is it true in Scotland, in which agriculture, as the Minister is no doubt well aware, is our major single employer of labour? Agriculture is near enough a £1 billion a year industry. Because of its past record, it has given us self-sufficiency in basic temperate foodstuffs as well as being an exporter of valuable high quality foodstuffs. This makes Scotland a food producer on a European and indeed world-wide level.
    This is no small-time, ailing industry crawling to Parliament for handouts, but a potential giant with a positive contribution to make to employment, to foreign currency earnings and the wellbeing of the whole economy. Agriculture is no longer isolated. It is an integral part of the whole economy. The wellbeing of agriculture, because of its inputs, affects the rest of the economy, and vice versa. I therefore ask the Government to begin to treat the industry with the respect that it deserves.
    The green pound is one such issue on which the Government should treat the
    1014
    industry with respect. I contend that any money invested in agriculture now will pay handsome dividends well into the future. I say that because of the industry's record. In any terms that we care to measure it, it has been a success story since the last war, whether in terms of increased productivity, the use of new technology, or the adaptation to changing demands. It has been a great success story which should be a lesson to other sectors of the economy. The industry as such will therefore respond to Governments if it is sure what exactly Governments are asking of it. The industry must be given a clear way ahead. By its very nature, it cannot be turned on and off like a tap. It has to be able to see some sort of future.
    In "Food from Our Own Resources" it looked as if the industry was at last being given a lead, but that document is now a very old, tired and sick joke. Farmers are, quite simply, confused by Government policy, whether Tory or Labour.
    Mr. Peyton: Before the hon. Gentleman dismisses it as a tired and sick document, I hope that he will concede, as he ought to, that the basic arguments contained in that document remain sound. What is shameful is the Government's betrayal of them.
    Mr. Welsh: I could not agree more with the right hon. Gentleman. He is perfectly correct. There has been a betrayal of the guidelines laid down in "Food from Our Own Resources", and that is what makes it a tired, sick joke to the farmers who believed that the Government meant what they said in that document.
    It is that sort of failure to plan ahead politically which has been the bane of the agriculture industry and which is at the very heart of today's debate. I ask the Government to have the courage of their convictions and to trust the agriculture industry with adequate investment. I ask them to institute forward planning rather than the sort of sticking plaster solution of limping from one crisis to another that has always coloured United Kingdom agricultural policy. They should treat the industry with the respect that it deserves and give it a sensible devaluation of the green pound to allow it to thrive and survive.
    Mr. Watt: Does my hon. Friend agree that as well as being not genuine when they brought out "Food from Our Own Resources" the Government have since that time got off the hook because there is now a favourable balance of payments due to the oil off Scotland's shores which is coming in?
    Mr. Welsh: I do not wish to indulge in a double act with my hon. Friend, but I could not agree more. The results of this failure in agricultural policy—and I indict both Labour and Tory Governments —are plain to see. There has been a lack of confidence especially in the future of the livestock industry. It can be seen in the damage being done to livestock and livestock products which are being decimated. I remind the Minister that livestock and livestock products are no small interests, especially in Scotland. They make up three-quarters of total Scottish agricultural production. That is an extremely serious issue in Scotland. It is at the heart of today's debate. I do not want to see the Minister dismiss this issue.
    Every target set in the White Paper is now doomed to rather sickening failure. Some of the figures have been mentioned in detail. Beef, pig and other animal numbers are all down, with the inevitable shortages in the future that this presages for United Kingdom, and Scottish housewives. This problem can also be seen in the continuing decline of investment in buildings and works. In total, therefore, we have in our hands a thoroughly demoralised agriculture and livestock industry and that means a loss of jobs.
    I remind the Minister that North-East Scotland is the heartland of the Scottish pig industry. It is there that the effects of his policy are being felt most acutely, whether in terms of actual production or with regard to ancillary industries.
    I have sent to the Minister a letter from a farmer in my own constituency, Mr. James Jackson of Mains of Melgund, by Brechin. This is a man who has never before written to a Minister but who is so scunnered and sickened by the present position that he has put pen to paper. He points out that he and his son have farmed their farm for over 50 years using a combination of cereals and livestock. They employ two men. The wage bill is £8,000 a year, of which a large section
    1016
    goes to the Government straight away. But they are now beginning seriously to think of discontinuing the livestock section because of the Government's policies. That will mean unemployment for those two people. That is one of the consequences of the Government's policy. I look forward to the Minister's answer to my constituent, which should make good reading indeed.
    The Government have failed to recognise and respond to the needs and importance of the United Kingdom and Scottish agriculture industries. That is what today's debate is about. Green pound and MCAs distortions have meant that our livestock farmers are fighting with one hand, and sometimes two, firmly tied behind their backs.
    Massive subsidies of Irish beef and Danish pig imports are pouring into the United Kingdom market. Dutch potato exports will soon not be far behind. All this is happening to the detriment of our home production, and a simple look at our import figures proves that.
    The green pound is at the root of our industry's failure to compete, not through any lack of expertise or quality or efficiency, but through the financial international monetary handicap which is strangling home production.
    Government policy is creating a vacuum in this country, and the more our home production goes down the more that vacuum will be filled by high-priced subsidised food dumping from our EEC competitors. That will be accompanied by a consequent loss of jobs, loss of foreign currency, strain on the balance of payments and the weakening of the Scottish agricultural base, with all that implies. Once lost, these home agricultural markets will not be easily regained and in some cases the damage could be irreparable.
    The SNP amendment, which sadly has not been selected for a vote, supports the 7½ per cent. devaluation but realises its inadequacies. I believe that the SNP has put forward the most sensible solution both in terms of the agriculture industry and consumer needs. We see the dangers of a one-off devaluation situation because we believe there will be a need for a future devaluation which will lead to more pressure being put on consumers

    1017
    More than one and a half years ago the SNP suggested a 1 per cent. per month devaluation which, according to the Government's own figures, would have meant a pressure of only ·05 per cent. on average retail prices. With this gradualist approach, we could have eased the burden on the industry and also helped the housewife.
    Mr. Caerwyn E. Roderick: Perhaps the hon. Gentleman will explain whether he means that this 1 per cent. devaluation should go on indefinitely, in which case in a year we would have a 19½ per cent. devaluation. If that is so, it is even greater than anyone else is asking for.
    Mr. Welsh: The beauty of the SNP scheme is that it overcomes some of the failures of a one-off solution. What we have said is that this is a scheme which the Minister himself could stop at any time if he believed there was too much pressure on the consumer. We want to see a continuing review situation so that the Minister himself can stop it if he believes that too great a burden is being placed on the housewife in comparison with the benefits given to the industry. That is a much more sensible solution than the one produced by the Government or by the Opposition. We believe it is the most sensible approach which is in the interests of both the consumer and the producer.
    The green pound devaluation has been called "a blunt instrument". The SNP amendment would have sharpened that blunt instrument. Any green pound alteration should not be looked at in isolation. It must be viewed as part of a more general agricultural package and strategy.
    In addition to a devaluation, the SNP wishes to see action taken immediately on MCAs—for example, action on the method by which they are calculated. We should also like to see action taken immediately on a more general reform of the CAP. We believe that externally Scotland must have a bigger independent presence within the Common Market to argue for the particular and immediate interests of its agriculture industry and at all times to make constructive suggestions and to argue the case against proposals that will have a detrimental affect on the level of Scottish food production.
    1018
    We also need an internal plan using the resources of an independent Scotland to back up and bolster and give investment which is badly needed by our farming community. The SNP regards Scottish agriculture as a long-term priority investment, as an industry with a tremendous export potential that will be realised only through expansion plans set against a determined Government policy of sustaining growth through unavoidable periods of fluctuation. So far, this has not happened in the United Kingdom. The Government should devalue the green pound by more than 7½ per cent. and also institute a further urgently needed package of MCA and CAP reform.
    The opposition to green pound devaluation has tended to be shortsighted since the little extra that housewives are being asked to pay now will save much larger amounts in future. The housewife also gets the long-term benefit of assured high quality home production at reasonable prices.
    I am afraid, therefore, that the Government amendment fails to bring much help to the agriculture industry. In the wording of their amendment, with its talk of a 10 per cent. increase in farmers' incomes, the Government are promising jam tomorrow. Agriculture has heard that time and time again. It does not want jam tomorrow. It needs money and investment ploughed into the industry today. Therefore, the Government amendment is camouflage and simply not good enough.
    For reasons that I have explained already, the Opposition's amendment is inadequate in that it proposes only a one-off revision. There is a need to go beyond that and to introduce a review and further revision. But ultimately there must be devaluation of the green pound, because producer and consumer interests are the same in the long term. Investment in Scottish and United Kingdom agriculture will bring handsome dividends to the housewife if we take action now.
    6.0 p.m.
    Mr. Mark Hughes: With the indulgence of the House, I wish to look at this proposal from the viewpoint of another Assembly where some of us discuss the problem of the green pound and monetary compensatory amounts not

    1019
    through the periscope of a single nation but from the point of view of the whole Nine.
    It is clear that the rod by which we measure the relative plus or minus monetary compensatory amounts is, by the Commission's own definitions, no longer adequate. The calculation of the sum of monetary compensatory amounts by which the United Kingdom is below the unit of account level, by the use of that unit of account, distorts our problem. To put it in a metaphor, we are both in a tunnel, and we assume that it is the other train which is moving when, in reality, we have no means of knowing whether it is this train or the other. Every increase in the value of the deutschemark or the guilder consequent upon Dutch gas can cause a devaluation in sterling which it is then assumed it is the responsibility of Her Majesty's Government to correct by altering the value of the green pound.
    This lies behind a great deal of our difficulty. The use of the snake currencies as the basis for the green pound has, over the past two or three years, led to major distortion. It has meant that, every time we have wanted to bring our own currency and that of the Community into closer parity, we have faced having to foot the bill, and others have got away without carrying their due weight.
    If, for agriculture—as for every other activity in the European Community since 1st January—we turn to the European unit of account, which is the weighted average of all nine currencies, suddenly we see a totally different mirror image to our current problem. The problem then is that the German farming community is being paid 22 per cent. more than the average to produce the goods and we are being paid some 18 or 12 per cent. less. In that way, suddenly we twist the argument.
    Listening to the right hon. Member for Yeovil (Mr. Peyton), what worried me was that there appeared to be not a glimmer of recognition of this fundamental problem. We all accept that, especially in the pig and beef sectors, British producers are massively uncompetitively priced as a result of monetary compensatory amounts themselves and also as a result of the ways in which they are operated and administered. There
    1020
    is no difference in this House about that basic premise.
    However, we disagree when some say that the blame is wholly, exclusively and totally upon my right hon. Friend and others, myself among them, say that the blame in large measure lies upon the nature of the business of calculating units of account.
    Mr, Fairbairn: Without casting blame on the Minister or anyone else, the fact is that the green currency system was intended to correct minor fluctuations between the currencies. A distortion of 30 per cent. between the green currency and the real currency should never have been allowed. I am afraid that blame there must rest on this Government. The pain of recovering it is the penalty that we have to pay for the Minister's indolence.
    Mr. Hughes: With great deference to the hon. and learned Gentleman, that is a total contradiction of the reason why it was introduced. I accept that in the first instance it was the French devaluation, quickly followed by the revaluation of the deutschemark. But, thereafter, the Council decision upon which this Government and every other Government in the Community have acted is that it should be the prerogative of the unit of account to remain constant whatever happened in reality. It is the failure of the agricultural unit of account to reflect reality about which I complain.
    In this instance, therefore, since 1st January we have faced a price package proposal from the Community which includes, among others, an increase in the price for commodities of which we are in gross surplus.
    I take, first, milk and dairy products. With our present surplus, do we really wish to increase the supply of them? I take, secondly, the Community's problem with sugar. We produce roughly 11 million tons a year. We import from Lomé countries another million tons, making a gross supply of 12 million tons. We consume 9 million tons. The result of my right hon. Friend's decision about the green pound is to increase the return for the least efficient sugar beet producers in the Community. The United Kingdom sugar beet industry has the lowest yield per hectare in the Community. We are producing one-third more sugar

    1021
    in the Community than we can consume. But, by having to use the green pound, we are doing exactly what we do not as a Community wish to do and adding to our mountains.
    Whether we decide to devalue the green pound by 5 per cent., 7½ per cent., 10 per cent. or the Scottish National Party's figure of 1 per cent. per month—cumulative, I presume—this is not the right answer. This cannot be the instrument.
    We must look to a much more selective means. I see considerable evidence that our Danish, German and other competitors have now accepted that the method of calculating the compensatory amounts for pigmeat is erroneous. If a proper calculation method can be negotiated—I believe that the opportunities within the present price proposals are considerable—that will be of far more value to this country's sick pig industry than even the generous 5 per cent. that my right hon. Friend has suggested.
    When we look at the problem of the beef industry, does it really benefit producers in the Community as a whole, when consumption is going down, to encourage them to produce yet more to be sold into intervention because the consumer is unable or unwilling to buy it? That is the situation in beef that we are approaching rapidly. To increase the price of beef will not benefit other than intervention stocks in the countries where intervention is applied.
    If we make an alteration, using the green pound, not only shall we have to pay more as consumers for our beef, if we are willing, but we shall have to pay the Irish and others the cost of intervention buying for their beef. If anyone believes that to be in our interest, I am afraid that we must beg to differ.
    Thus, by the attention of the Press, the public and the House being concentrated exclusively on the green pound, farmers' interests in this country have, I believe, been done a disservice. There is a much more complex series of relationships. I acknowledge that the National Farmers' Union mentioned the means of calculation in its brief, but there is the problem of the basis of the unit of account and the difficulty of what we do with surpluses when we have them.
    It is no good this country going unilaterally for a devaluation or revaluation
    1022
    of the green pound if by so doing we simply add to the butter mountain. If that happens, the House as a whole, and the Opposition in particular, will again take occasion to condemn the existence of these mountains, but in so far as, by devaluing the green pound, we make consumption per head fall, so we inevitably increase the mountains if there are surplus products. There is no doubt about that.
    I hope, therefore, that the House will support what seems to me to be, if anything, over-generous—that is, the 5 per cent.—adding its support also to my right hon. Friend in the package of negotiations upon which he will be engaged later this week and over the next two months at Brussels, covering the use of the unit of account, the home price and all the rest of it. I am convinced that to commit my right hon. Friend and the House to a yet further increase beyond the 5 per cent. would be most unwise.
    6.12 p.m.
    Mr. Gwynfor Evans: I imagine that there can be no more important quality in an agriculture statesman than that of foresight, for, if agriculture is to flourish and expand, farmers must be able to look forward some five or 10 years. When they cannot do that, it is not they alone who suffer. In the long run the consumer suffers as well.
    It seems to me that the Minister has not always succeded in showing foresight of that kind. Too often, I feel, he has taken the short-sighted view. I realise that he has done so often with the best of motives, wishing to keep prices down and so on, but a consequence of that attitude has been his apparent lack of success in the Brussels negotiations, where the trust and co-operation of the other EEC Agriculture Minister is essential.
    If the Minister had agreed to a modest 4 per cent. devaluation of the green pound when he took over—I believe that his predecessor might well have done so—in order to help our farmers through the awful period of drought at that time, he would, I believe, have been readily granted a number of concessions.
    The right hon. Gentleman's cry for a change in the method of calculating pig-meat MCAs is a case in point. The Commission and the Council of Ministers were, it seems to me, ready to agree to this

    1023
    change in exchange for a 4 per cent. devaluation. Instead, however, the Minister threw away his chance and added insult to injury by introducing the illegal pigmeat subsidy which he had hastily to withdraw a few months later, under Brussels pressure. The United Kingdom pig industry has thus been brought to its knees by a combination of ruinously low prices and a flood of cheap pigmeat imports, both of which would not, or might not, have happened if the Minister had accepted the modest measure of green pound devaluation proposed at that time.
    Similar short-sightedness has been shown in regard to sheepmeat. In Wales we have pressed for years for support for the Irish demand for a sheepmeat regulation in the Common Market, but the British Government have not raised their little finger to assist in that matter, and the result is that the French have been able to close their market to Welsh lamb and mutton time and again, despite the United Kingdom's dominant position in this market, in which Wales, of course, has a big part. The Government have made no effort to get a sheepmeat regulation. This, I believe, is a notable illustration of the need for our having a Welsh Assembly which would have a permanent office in Brussels.
    When Mr. Gundelach was in Ireland last year—he has never been to Wales—he spoke of the likely introduction of a sheepmeat regulation in 1978. Nine months ago Irish representatives at Brussels told a Plaid Cymru deputation there that in the circumstances the Irish would be forced to make their own independent agreement with France. This they have done, and the first to cry out against it is the British Minister, who threatens to take them to court.
    I think that his energies would be better devoted to getting a sheepmeat regulation, since he is very unlikely to secure for Wales an agreement similar to that which Ireland now enjoys. I shall be interested to hear from the Government at the end of this debate the date on which the Minister thinks a sheepmeat regulation will come into effect.
    Ireland, which has about the same population as Wales has, is fortunate in having her own Government, with representation in the Council of Ministers, in the Commission and on important com
    1024
    mittees in Brussels, and she has been able to do as she wishes in this matter of the green pound. Ireland has twice recently devalued her green pound substantially, so that today there is a 26 per cent. difference between the green pound's value in Dublin and its value 80 miles away in Holyhead.
    Moreover, Ireland is able to sell top quality beef in Wales at 44p per pound because of the export refund which is attracted to Irish exports. The Anglo-Irish agreement has eased the position of the Irish and the common currency aggravates the situation, but the result is that Wales has become a dumping ground for subsidised exports of Irish beef and cattle.
    Beef imports are about 100 per cent. higher than they were two years ago, and Welsh beef producers have no real defence against subsidised Irish imports of that kind. The production of veal and of beef is falling. The prices of steers and suckled calves at the autumn sales are badly down, and this will have a long-term effect on prices in the shops.
    To make matters worse, it is rumoured that some of the Irish imports are going into intervention in southern Wales. I want to hear the Minister's comment on that. Here, again, one sees the need for a Welsh Assembly with representations at Brussels.
    That need is seen also in connection with marginal land, which is extremely important in Wales, since one-third of all the hill acreage of Wales is termed "rough grazing". This land does not attract the hill cow subsidy, which needs increasing anyway. The calf subsidy is being phased out and the heifer subsidy has been abolished; yet the future of beef production is related closely to the number of calves reared.
    Nor is this marginal land given the lime subsidy, which has now ceased for most agricultural land, despite its high level of acidity and its great need for lime to restore and maintain fertility. The restoration of the lime subsidy would have other beneficial side effects, since it would be valuable in giving employment in the production and distribution of lime.
    In this matter of marginal land we have a field—to use an agricultural simile

    1025
    —which offers at least as great an opportunity for increased production as does any other category if the land is fertilised and properly limed. The people who farm this land, of which there is a great deal in my constituency, are not themselves able to apply the lime—they cannot afford to do so—and it would be very much in the interests of the whole country if they were adequately assisted.
    There is the prior difficulty of defining what marginal land is. However, that difficulty can surely be overcome. One looks forward to seeing the report which, I understand, the Welsh Office is producing on the whole issue.
    Coming to those parts of lowlands which do not grow fat on the growth of cereals but which depend on dairy farming, we find once again the green pound thwarting the kind of financial return which would enable and encourage farmers to make the investment required for continued development. The Minister's statement nearly a year ago gave us reason to believe that by now farmers would be receiving some 52p per gallon for their milk, but the amount that they actually receive falls disappointingly short of that sum.
    It is very good to know that the Milk Marketing Board is likely to continue. One can comment on that by saying that another referendum in five years' time is not the best way of ensuring a feeling of security among the thousands employed by the Board, nor among the farmers who depend upon the Board for the distribution of their milk.
    It would be unfortunate, too, if a 45 per cent. to 55 per cent. ratio for manufactured and liquid milk were adhered to rigidly. Welsh-produced milk can be and should be used in Wales in much greater quantities for manufacturing purposes. In this we can take a leaf from Ireland's book. The Irish advance in milk and food-processing plant, as in other industies, is most impressive.
    To insist on 50 per cent. of the output of liquid milk being sold as liquid milk is far too inflexible. Faced with the kind of rural unemployment that we have, and depopulation, there is urgent need to use much more of the milk for manufacturing purposes.
    There is also need to look at the unfair Continental competition that we suffer in
    1026
    some of the rural milk industries. In my constituency, for example, the cheese industry employs about 700 people. Although the farmers receive less for their milk than their Continental counterparts, although our farmers' employees receive less wages, and despite heavy investment in sophisticated machinery, management of a very high order, excellent relationships with employees and the high quality of the produce, stocks today are well over twice what they should be, and this at a time when the milk flow is at its lowest. This is tying up millions of pounds of companies' capital.
    One would like to have the full truth about the situation and to know how it is possible for Continental countries, and New Zealand and Ireland, to ensure that their cheese is imported at a lower price than that at which our's can be produced in Wales and other countries within the United Kingdom. This is at a time when institutional farm prices in Britain are further from the EEC levels than they were when we went into the Common Market.
    Lastly, on liquid milk, there should be pressure to ensure that the levy on milk production is used, perhaps through the Common Market, to advertise the value of drinking milk. This habit, together with the consumption of milk foods, should be the custom in the schools of our country. It should be fostered in all ways, and milk should be available to children of all ages, taking advantage of the EEC grant for this purpose. I well remember the Labour Party's outcry when the Tories reduced the upper qualifying age for free milk in schools. Let the Labour Government restore it.
    This is not the time to deal with taxation. Therefore, I make my general conclusion, which must be that, in the interests of the farmer and the consumer, agriculture must immediately be given a fairer deal and better reasons for long-term confidence, and action at last so that "Food from our own Resources" becomes something more than a sterile document.
    6.24 p.m.
    Mr. Richard Body: I hope that you have known me long enough, Mr. Deputy Speaker, to agree that I do not often get very emotional. However, when I dispersed

    1027
    my pig herd, as I did just over two years ago, I did so with bitter feelings. I had had that herd for some 20 years. It had won many prizes in the show ring, including firsts at the Royal Show, and we had sent progeny abroad to six or seven countries to found herds.
    When I made that decision, it seemed to me that very few people in the livestock sector could be assured of a reasonable livelihood. I formed that view at a time when prices were high, and I think that at that time they were perhaps too high. Far too many people were coming into the livestock industry then. What was more serious was that across the Channel there was developing a major glut not only in pigmeat but in other forms of meat.
    I suppose that that decision of mine was right enough. Quite obviously, the pig industry in particular, but also other livestock sectors, is now plunged into a state of real gloom. I agree entirely with the quotation made by the hon. Member for Hemel Hempstead (Mr. Corbett) of John Cherrington when he said that total devaluation of the green pound would be no panacea. I fear that the problems of the livestock industry are much more deep-seated than that.
    The essential fact about this sector is that, apart from sheep, it has become over the years gradually more and more dependent upon feed grain. I think that the latest figure is that the industry will be consuming no less than 12 million tonnes of feed grain. This is because over the last 30 years we have had access to the cheapest feed grain in the world. As a result, our breeding, housing and systems of management have all been geared up to that fortunate fact. Throughout the years that I had a herd, I never paid more than £27 per tonne for feeding stuffs, and neither wheat nor barley was ever more than £24 a tonne. Those days are now over. The essential reason why they are over is that we must now submit to a system of import levies. As long as we subscribe to the CAP, we shall deny ourselves access to the cheapest feed grain in the world.
    The right hon. Member for Battersea, North (Mr. Jay) was chided by one of my hon. Friends for making the same speech as he had made many times pre
    1028
    viously, but there was one precious nugget that he produced. It came from the European Commission's report that the import levies on feed grains this year would exceed the world price of feed grain. That is a very startling fact. It means that we are doubling the price of our feed grain, yet all of us in the House know that that is the item that makes up between 60 per cent. and 80 per cent. of the expenditure of all of us in the livestock industry. This means, therefore, that we are burdened by a kind of taxation that we have never previously experienced. We in this House must look anxiously at whether the rate of taxation is not too high, as the Commission's report indicated.
    I recognise, of course, that this system of high import levies has had the effect—some of my hon. Friends would say that it was a desirable effect—of displacing imports. However, I am not altogether sure whether the long-term end will be in the interests of British agriculture.
    We now have tens of thousands of acres that are put down to winter wheat. They have previously never had a cereal crop. Only last Saturday my recreation took me over a field of winter wheat, where I verily believed that the surface was covered by more flints than soil. No doubt at the end of the year the farmer concerned will make a loss on his winter wheat. What I regret so much is that the high prices offered to wheat growers in recent years have goaded so many marginal farmers into going into wheat production, with the result not only of flooding the market with an excess of wheat but of causing so much ill feeling among farmers themselves.
    The cost of producing that wheat is about double the cost of producing wheat in the areas in North America that are now going out of production. The system of import levies, which are effectively doubling the price of feed, is shutting out of this country many tons of wheat from Canada and North America.
    Some of my hon. Friends brush that aside and say that it is good for British agriculture because we should grow all the food we can, no matter how expensive it may be. They echo the view of Sir Henry Plumb, who argues that if we keep out cheap food, imports will be displaced by home-produced food, no matter how high

    1029
    the cost may be. But that assumes that the British housewife will be willing to continue buying the same quantities and sorts of foods despite the higher prices. That view is not shared by those close to the retail trade, and I am not speaking only of the Food Manufacturers' Association.
    Food consumption in this country is going down, and that is an alarming fact for all those concerned with British agriculture. The National Food Survey makes that fact plain. All those concerned for the future of British agriculture should read and digest the disturbing facts that are shown in the survey. The trend is downwards in respect of the consumption of every sort of important foodstuff grown in this country.
    It is significant that the greatest fall is in meat consumption. Ever since comparative figures have been available, we have among the most prolific meat eaters, but that is no longer the case. Our meat consumption has fallen to the level of the 1950s—just after the end of meat rationing.
    Any devaluation of the green pound is likely to accelerate that fall in consumption. I accept that a devaluation must take place. I see no hope of the Minister being able to persuade the Council of Ministers to change the pig-meat MCAs while there is on the Continent a glut of pigmeat which European countries want to export here and while they are determined to secure a hold on our market.
    We must look seriously at the longterm consequences for the livestock industry. For the past decade, those concerned with the industry have had to live with the threat of synthetic meat. We have withstood it, but I am not sure that we shall be able to continue to withstand it as well as we have done in recent years. Rapid research is being done to make synthetic meat more palatable and to give it more eye appeal. Experts say that within five years a large part of our existing meat consumption will be displaced by synthetic meat and that in another 20 years the scene on our farms could be transformed by the threat of synthetic meat.
    I recognise the need for a 7½ per cent. devaluation now for the reasons that I have indicated, but I hope that we shall
    1030
    look long and earnestly at the threat and recognise that, the higher the artificial price of meat as a result of import levies, the greater will be the risk of a collapse of our meat consumption. Unless we face that risk now and act accordingly, the future of the livestock industry will be very gloomy.
    6.35 p.m.
    Miss Joan Maynard: The problems which agriculture faces and which we are facing in the debate are basically due to our membership of the EEC. We would be doing the industry and consumers the greatest good if we were discussing how quickly we could get out of the Community.
    The Opposition took us into the EEC with the votes of 69 of my hon. Friends—to their everlasting shame. They should not come here and lambast our Minister and our Government for not carrying out the provisions of "Food from Our Own Resources" and expanding the industry. EEC officials are questioning the old concept of expanding British agriculture because of the surpluses which already exist in the Market.
    The threat to the expansion of our industry comes not from our Minister of our Government but from the EEC and the way that it is structured and operates. We do not find many supporters of EEC membership in the House or anywhere else nowadays. They are pretty thin on the ground, and with good reason when one considers what we are facing in this industry and in many other ways.
    We are talking about a devaluation of the green pound. Farmers are demanding a devaluation of 12½ per cent. I am not sure what the Scottish nationalists are demanding, but the Liberals are calling for a 10 per cent. devaluation, the Tories for 7½ per cent. and the Government for 5 per cent. I reckon that the consumers would prefer no devaluation at all.
    It is rather like a Dutch auction, and I do not think that it is a very satisfactory way to deal with our most important basic industry. What a crazy system it is that gears prices to the least efficient producers and thereby creates mountains of various foods. While we have these mountains, we also have high food prices in this country combined with restrictions on wages. It is no wonder that there is

    1031
    a drop in the consumption of food, and that cannot be good for the farmers or for our industry as a whole.
    I am pleased that my hon. Friends and the hon. Member for Holland with Boston (Mr. Body) have effectively made the point about how much cheaper we could buy feed grain in other parts of the world. I recently had a visit from a Canadian friend who is a prairie farmer. Canadian granaries are bulging with grain which the Canadians cannot sell.
    In answering Questions in the House last Thursday, my right hon. Friend the Minister said that our food prices had increased by 128 per cent. since we joined the Common Market. They have gone up again this month as we have reached the end of the transitional period. A devaluation of the green pound will put them up again, and the price review will put them up still further in the spring.
    It is not much consolation to tell people, particularly those on low incomes, that a devaluation of the green pound now will not put up the price of food immediately but will do so in due course. These people are the hardest hit by high food prices. Low-paid workers, including farm workers, particularly those with large families, and old-age pensioners are those who are being hammered by high food prices. I hope that my right hon. Friend will be able to maintain the butter subsidy. At least, that would help consumers and the industry.
    Mr. John Silkin: My hon. Friend knows that Conservative Members much resented the butter subsidy and attacked it when it was introduced. The latest figures show that this year there has been a 16,000-ton increase in butter consumption. It seems that for the whole marketing year there will be an increase of 23,000 tons, whereas in every other country there is a decrease in butter consumption.
    Miss Maynard: That makes the point that the subsidy helps the industry and consumers.
    Is the industry as badly off as it claims? I accept that pig producers are having a difficult time. I accept, too, the difficulties that livestock farmers are facing. However, that does not alter the fact that agricultural land is being sold in some areas at
    1032
    £1,800 an acre and that rents in some areas are being offered at £50 an acre. Wherever land is for sale, there is tremendous demand for it. That is not the stance of people who are facing serious financial difficulties. The farmers admit that after two years, when their production was affected by weather conditions that were extreme for our country, net output is once again increasing. They admit that that means that productivity continues on an upward trend.
    Increased productivity is not reflected in the wage award that will be paid to farm workers this month. I describe the award as peanuts, especially when we bear in mind the skill of farm workers and their productivity record. Many farm workers will be worse off as a result of the award because of the poverty trap. They will lose means-tested benefits. I remind the House that there are more farm workers receiving family income supplement than any other group of workers. Many farm workers will be about 45p better off per week. I know it is argued that high wages make for high prices, but no one can say that high wages are making for high food prices in this country. The gap between the average earnings of farm workers and those in industry is running at about £17 a week.
    Many hon. Members have said that we shall not solve our problems by devaluing the green pound, but that cannot be said too often. What is needed is a recalculation of the MCAs in respect of pigmeat and beef. We know what is needed, but much depends on the Minister's ability to obtain the agreement of Ministers in Europe. However, a recalculation of the pigmeat and beef MCAs would be a much more effective way of helping those in the industry who have problems.
    It would have been more sensible to delay devaluation until the price review and then to have used it as a practical counter at least to freeze the artifically high EEC support prices. That would have benefitted consumers and encouraged farmers to expand into Continental markets.
    In the meat processing industry, workers are facing redundancies. One of the arguments that is used by those who are against membership of the EEC and

    1033
    who were against our going in is that membership makes for greater unemployment in this country. Alas, that has proved only too true. Some of us forecast that it would be the British people who would carry the can for membership of the Market. They are doing so in two ways in particular—loss of jobs and high food prices.
    That brings me to where I began—namely, that the only solution for the agriculture industry and the people is to take this country out of the EEC
    6.45 p.m.
    Mr. Joseph Godber: I do not often take part in debates in the House nowadays but I feel impelled to do so on this occasion because of my deep concern about the underlying total lack of confidence in the farming industry.
    I start by reminding the House of my outside interests. In particular, I am Chairman of Sidney Banks Limited, a country corn merchants and seed merchants business which is directly affected by changes in the green pound. Most of my other interests are more concerned with food manufacture and distribution. Many people would say that they are more likely to be harmed than helped by what I am about to say. I do not share that view, for reasons that I shall give.
    I speak today primarily as spokesman for my own farming constituents and for all those connected with the land throughout the country, whose anxieties I understand and share. I make clear straight away my full support and endorsement of the line that my right hon. Friend the Member for Yeovil (Mr. Peyton) has taken in recent months and in his speech today. The Minister's action in preempting the debate by his announcement last Friday is in itself a justification of the pressure that my right hon. and hon. Friends have been constantly putting on the right hon. Gentleman in recent months
    I do not pretend for one moment that farming is in dire straits. Last year's cereal harvest was a record one in terms of weight. Bad weather at harvest had a disastrous effect on quality, but the heavy yields compensated for this to some extent. In a way, the bad harvest weather helped to spread the benefits of the big harvest. It meant that large quantities of
    1034
    low-quality grain were available for animal feeding stuffs. That has undoubtedly helped to keep the price of animal feed at a lower level than would otherwise have been the case, and that must have helped our hard-pressed pig farmers.
    The Government's White Paper tells the story clearly enough. Net income is barely holding its own with the low level of the previous year. It is still almost 20 per cent. below the level reached during the period of the last Conservative Government. It is scarcely surprising, therefore, that investment continues to sag and that confidence is virtually non-existent.
    I do not propose to go into detail about the problems affecting the different sectors of the industry. Others of my hon. Friends have made clear already, and will be doing so again during the debate, the special difficulties of pig producers and of those involved in beef production. I only add that I agree entirely with what has been said on behalf of these sections of the farming community. It is undoubtedly on the livestock side that the greatest hardship exists, and the latest figures for the breeding herds of both pigs and beef cattle tell their own story.
    Rather than deal with the problems of individual sections of the farming industry, I turn to the heart of the problem as I see it. In my view, the problem rests with the basic attitude of the Government towards farming. Farming is one of the most efficient of our industries, if not the most efficient. Many of us connected with the industry have known that for years, but it first gained official recognition in the publication of Lord George-Brown's National Plan. That showed that in terms of increased production and of productivity per man agriculture stood out head and shoulders above any comparable industry.
    Similarly, if we consider the international scene, there is little doubt that, with the possible exception of Holland, we are probably the most efficient farming country in the world. More than that, it surprises many people to be told that in terms of quantity we produce more food than Australia and New Zealand put together, but it happens to be true. I give these facts not to boast of our achievements but to remind the Minister that in British farming he has an enormous asset in his hands and that he should

    1035
    be using it for the long-term national good and not throttling and depressing it in the pursuit of short-term political gain.
    For a century after the repeal of the corn laws, this country benefited from cheap food imported from all over the world. In recent years, the growth of world population and the efforts to achieve a higher standard of living by those in the developing world, so many of whom live on the edge of starvation, have meant that world food surpluses have become much less freely available, and serious shortages have begun to appear.
    We may still be able to buy world surpluses from time to time, but has the Minister already forgotten 1974, when the world price of grain doubled in months and the price of sugar rose to £640 a ton while supplies disappeared from our shops? Has he forgotten the World Food Conference in Rome in that year, when most dire forecasts were made of world population outstripping food supply?
    We in this country can never be self-sufficient in food, but in joining the European Community we joined a Community which in total should be self-sufficient and where, as we all know, large surpluses of particular commodities have appeared from time to time. As a full member now of that Community—we have only recently become a full member—we should be playing our part, on the one hand, by securing Community price levels designed to deter surpluses and avoid shortages as far as possible, but, on the other hand, by giving our farmers the same level of support and encouragement as their counterparts in Europe to produce on level terms with them.
    When the so-called green currencies were evolved, they were designed merely to ensure short-term stability of prices when national currencies were still fluctuating. At that time, most Community currencies were held within narrow limits by the operation of the so-called snake in the tunnel, but it should not be forgotten that it was then confidently expected that we should be moving to European monetary union by 1980. Indeed, that was the objective during the period when I was in Government. Green currencies were therefore looked
    1036
    upon only as an interim measure. Thus, their control was left to national Governments. Had it been in the hands of the Commission, as it probably should have been, the abuse to which the present Government have put it could not have happened.
    When the Conservative Government, in which I was the Minister responsible for these matters, went out of office in March 1974, there was a disparity between the £ sterling and the green pound amounting to a few percentage points. and I certainly felt it my duty at that time to bring it back to parity. I recall saying in Brussels, on the last occasion that I attended the Council of Ministers, that it was my intention to do that in the near future. The change of Government prevented that from happening.
    The trouble is that the present Government did not fulfil that responsibility from the start. When their policies in other areas led to a disastrous fall in the value of the pound, they tried to hide from the people of this country the truly savage effect which a falling pound was bound to have on their standard of living. and they took advantage of the fact that they could delay devaluing the green pound. They thus offloaded on to the taxpayers of the other members of the Community—notably those of Germany—the additional costs which would otherwise have had to be met by the British housewife.
    I do not deny that that was of short-term benefit to the housewives of this country. But we cannot seriously expect the other countries of the Community to subsidise our standard of living for ever. In passing, I should say that I am amazed that those who still campaign against our membership of the Community should overlook the enormous financial help that we have had during the last two to three years.
    The pound has now recovered part of its losses—thanks to the IMF and to North Sea oil—but the gap is still large. The Minister took one small step by his announcement last Friday—of course, we welcome that—but we shall not be playing our proper part in the Community until we are much nearer parity than this. Meanwhile, our farmers have been denied rewards comparable with their competitors in the Community and, what is

    1037
    worse, they have been subjected to grossly unfair competition through the operation of the MCAs.
    In a letter to me dated 30th December last, the Minister said:
    "I have not lost sight of the underlying problems of the degree of over-compensation which exists in the present method of calculating the monetary compensatory amounts in the pigs sector for in my view it is this rather than the level of the Green Pound itself which is at the root of our industry's problem I have lost no opportunity to maintain the pressure on the Commission and my colleagues in the Council to recognise this unfairness and to provide a remedy."
    I agree that the right hon. Gentleman should exert maximum pressure to that end, but the MCAs achieve such importance only because the green pound has become so much out of line. If we reduce the disparity of the green pound, we also automatically reduce the degree of harmful effect of the MCAs.
    Mr. John Silkin: If the right hon. Gentleman's argument were correct, only the United Kingdom would be concerned. However, much of the pressure in the Community at the moment is on the overvalued green deutschemark.
    As the right hon. Gentleman knows, because he was a distinguished predecessor of mine, the French and the Italians are making the running just as much as I am on the recalculation of the MCAs.
    Mr. Godber: I accept that this is not purely a United Kingdom matter. I was directing my remarks to our problem. However, if need be, I could go on much longer and deal with the problems of other countries. I accept that not only the United Kingdom but Germany, and other member countries, should bring currencies into line. This is not a single country problem. However, as the right hon. Gentleman is the only Minister to whom I have immediate access, I make my observations to him.
    Having quoted the Minister's words, I point out that if we reduce the disparity of the green pound we also reduce the harm that the MCAs can do to us. By all means let us work on the MCAs, but we should do far more about the disparity of the green pound.
    The greatest need of my friends in the food manufacturing and distributive trades is continuity of supply and the avoidance of wild fluctuations in price.
    1038
    They remember, if the Minister does not, all the difficulties with which they had to cope in 1974 when sugar became almost unobtainable. In the past year, they have been faced with difficulties over coffee and cocoa. These last two commodities are tropical products, but the same principle applies. If we want to benefit from the low prices of surplus, we must also be ready to face the difficulties of shortage. An orderly production at a relatively stable price is, in my view, in their best long-term interest.
    Our farmers could and should be producing more for the benefit and security of food supplies of all the people in this country. What has prevented and is preventing them from doing that is the much-too-great disparity between the green pound and the £ sterling. The Minister has taken a small step in the right direction, but that must be followed by others in the same direction if confidence is to be restored and production raised. Surely that is what the debate is about—the restoration of confidence and the raising of production.
    In farming circles, the Minister is at this time a very unpopular man. It may help him to realise the extent of that unpopularity if I tell him that the frequent comment to me from farmers I meet is "Come back, Joe. All is forgiven."
    6.58 p.m.
    Mr. Wm. Ross: The right hon. and learned Member for Huntingdonshire (Sir D. Renton) said that he had always voted for entry into the Common Market. I take great pleasure in drawing the attention of the House to the fact that Ulster Unionist Members have always voted against the Common Market and all its works and that they intend to do so in future. That is for many reasons, but I shall not detail them all tonight. I shall simply concern myself with agriculture as such.
    I have been against the Common Market because of the dangers that I saw for the agriculture industry and the farming structure of the United Kingdom in a truly common market. If the House will consider the truly common market in the United States of America, it will see the end result that we can expect from a truly common market in the European context.
    I and those who share the view that I take about the Common Market are fed

    1039
    up to the teeth with the consumer screaming at the price of food in the EEC. If those consumers had accepted the sensible advice that we gave them at the time of the referendum, we would not now be in the Common Market. I therefore confess that I do not share the sympathy for them which is shown by anti-Marketeers on the Labour Benches.
    I wonder how those consumers would feel if the breadwinners in their homes came home with a pay packet containing pound notes worth only about 75p. They would not like it, but they do not accept that that is how the farmer is being paid, at least in part.
    There are one or two aspects of the green pound which are peculiar to farming in Northern Ireland. We are not 80 miles from the border with the Republic. We can take a short walk across it at any time of the night or day. If that border had been closed, that would have been of benefit not only to the farming community but to Northern Ireland generally in the problems it faces.
    I want to express to the Minister my concern about the future of the meat industry employment scheme in Northern Ireland. It is short-term. It has been introduced not to protect the farmer but to protect the meat industry and to ease the pressures which are being put upon it by other EEC members.
    I want to express, too, the deep concern I feel about the future of the milk industry in Northern Ireland, which is not in the happy position enjoyed by the milk industry in the rest of the United Kingdom. I believe that the Minister is well aware of this problem, and in some measures he has met the industry's needs temporarily. I am concerned, however, not with the next three or six months but with the years that lie ahead and with what will happen if in a United Kingdom farming context we are given a special status we do not desire. We want to be treated exactly the same as the rest of the United Kingdom's farming industry, but that is not possible because of the difficulties created by the border.
    The Minister drew attention to imports into Great Britain from Ireland, particularly from the Irish Republic. Will he explain the effect of the large outflow of beef cattle from Northern Ireland to the
    1040
    Republic for slaughter on imports from the Irish Republic to Great Britain? Is some of the increase in those imports recently simply Northern Ireland beef travelling through the Republic to the United Kingdom, or is it the result of increased production in the Republic?
    My next point concerns the lamb deal recently made between the Irish Republic and France. There has been an inflow from Ireland into Great Britain of between 80,000 and 90,000 lambs a year. While this deal operates, those lambs will go to France, not Britain, and that must inevitably raise the price of lamb on the British market. What thought has been given to that aspect of the deal?
    My right hon. and hon. Friends and I are delighted to hear that the Minister does not accept the concept of an all-Ireland green pound any more than we do. No doubt he is aware of the stand of the Ulster Farmers' Union on that because of the inherent political dangers in the concept. We consider ourselves to be British, and we are prepared to be treated as British people.
    In Northern Ireland and in this House, we hear comment on the prices paid for farm produce in the Republic. But everyone should be wary about the figures that are bandied about. The Irish Republic is a foreign country. It may in many ways be treated as part of this country, but it is not part of this country. It has its own economic order and its own farming structure. It has its own system of taxation, which is totally different from ours. Its system of farming cannot therefore be compared with the British system. It is not as simple as that. We must look for comparison to the profit of comparable farms at the end of the year, not at the price being paid for cattle in the market or being received for lambs exported to France. With a proper comparison of that nature, a very different picture of the profitability of Irish farming emerges.
    If we want to put that into its proper context, the United Kingdom should withdraw its support for the Irish currency so that it could find its true value. We should then see whether the Irish green pound was at its proper level in comparison with the British green pound. This matter should be looked into to ensure that we are not subsidising the Republic to an undue degree to the

    1041
    detriment of our farmers and our economy. Hon. Members tend quietly to ignore that fact, but it has a far greater effect on our economy, on the level of the green pound and on farming production than we believe.
    I turn now to that most excellent document "Food from Our Own Resources", to which a lot of lip service has been paid but about which, unfortunately, very little has been done. I wonder whether that, too, has been quietly forgotten and buried.
    Recently, when the Minister was speaking to milk producers, he said that we were getting the milk production we required. How widely is that attitude held about other farm produce? How much food do we need now from British farming?
    The Government and possibly the Opposition Front Bench have already assessed the potential for food production of the Continental farming industry. That potential must be enormous. If farmers on the Continent are grossly inefficient and they produce food mountains, what will be the position when their farms become as efficient as ours? Is that seen as a source of cheap food for the British in future years? Is that the way the Government and the Opposition Front Bench see the future of British farming?
    We had a cheap food policy in Britain for many years. The world prices of foods bought for Britain came under a downward pressure all the time because of that policy of cheap subsidised food production in Britain. A lot of farmers are beginning to wonder just what are the real intentions on the part of those who rule the country for the future of farming.
    There are a number of questions to be answered which probably will not be answered, but they must be asked and asked again. I have said in the House before that farmers in the United Kingdom and many hon. Members in the House have never got used to the idea that we have moved by being in the Common Market from a position of food deficit to acutal or potential fod surplus. I believe that this is nt well enough understood.
    If we are seeking changes in the CAP, we must realise that the present food and farm policies of the EEC do not allow subsidised production. Therefore, we
    1042
    must have a greater national freedom. If we start seeking that greater national freedom, as an opponent of the EEC I make no apology for saying that I shall certainly support the Minister of Agriculture. I hope he realises, however, that in doing that he must protect the home producer. If he does not do so, we have no bargaining power; we have no base on which to expand in the future. We are prepared to strengthen his hand by giving him a bloody nose tonight if the necessity arises. The Minister of Agriculture must always be able to show his colleagues in Europe that the House of Commons is not happy with many aspects of food production and market policy.
    Will the Minister tell us in greater detail how he proposes to bring about the changes which he believes are needed in the common agricultural policy? Will right hon. Members on the Conservative Front Bench tell us in greater detail the changes that they would like to see and how they would propose to pursue their objectives?
    Our farmers need to know where they are going. They need to have clear-cut decisions. If there is a lack of decision on future Government policy, regardless of which party is in power, producers do not know where they are going. The producers will always go for the maximum devaluation. There will always be the twist. There will always be the difficulty between Government and farmers about the green pound and the common agricultural policy. We can argue about the percentage of change needed to secure objectives. I do not think anybody knows what the answer is. Therefore, it has to be an ongoing process until we find the proper level.
    The people who are sending us pork, bacon and beef will not stop sending it simply because there is a 5 per cent. or a 7 per cent. devaluation of the green pound, because the piglets are born and the calves are born and they are growing up. That stuff is in the pipeline and there is nowhere else to send it. So it will come here if they can get it here. Any change that is made will not take effect for six, seven, eight or nine months. I have been a farmer for too long not to know this.
    In the light of what I have said, I have to ask a final question on behalf of the farmers whom I represent in Northern

    1043
    Ireland. Where is British agriculture being asked to go? What is now expected of it?
    7.14 p.m.
    Mr. Thomas Torney: Having listened to many Opposition speakers this afternoon, I would say that if the position were not so terribly tragic it would almost be funny. We have had a kind of bingo session, with 5 per cent., 7½ per cent., 10 per cent. or 12½ per cent., devaluation of the green pound mentioned, and, of course, the bonanza of the Scottish National Party. One would imagine that the salvation of British agriculture and the British food production factories that to some extent depend on British agriculture will rise or fall dependent on the decision about the green pound.
    The green pound can have but an ambulance effect on the serious situation faced not only by the British farmer but by the food manufacturing industry, and in particular one section of it. The downhill run of the whole of our food producing industry commenced not a few months or a few years ago but when the Conservative Party took us into the Common Market. One cannot help feeling that the CAP could not have been properly and deeply thought through by the Conservative Prime Minister and his Cabinet colleagues.
    I said at the time of the referendum, and have said repeatedly since, that inadequacy of the CAP for Britain was enough to cause people to vote "No" in the referendum. It should have been enough, if members of the Conservative Party had thought it out properly, to have stopped them taking us into the Market without gaining a basic change in the rules of the Common Market that would have allowed a very different CAP from the one that is the basic cause of the trouble faced by the food production industry, whether it be the man on the farm with his pigs or the man in the bacon curing factory with his bacon.
    I want to talk about the meat manufacturing industry. Members may be interested to know that people in that section of food production are not convinced that a 5 per cent., 7½ per cent., 10 per cent. or a bonanza change in the value of the green pound will save their industry. This section of food manufac
    1044
    ture is dying, and it is not a pleasant sight. The industry consists of a great variety of producers. There are the big boys, the middle-sized boys and a lot of small people. There are some small producers in my constituency. Many of my hon. Friends have bigger producers in their constituencies. I have received pleadings from all parts of the United Kingdom from small and large firms for help for this industry.
    At present a deputation from the employer and trade union sides of the industry is waiting upon Mr. Gundelach in Brussels. I only hope that it has managed to see him to try to persuade him to make some change in monetary compensatory amounts, because that it what is required.
    In 1977 the Danes and the Dutch increased their imports to the United Kingdom by 2 per cent. for bacon, 16½ per cent. for canned ham and 8 per cent. for canned pork products. This was when United Kingdom pigs were plentiful and we should have been increasing our own production. The 1978 forecast is that Danish pig kills will increase. There will be no increase in United Kingdom production and there could be a considerable rise in the percentage that the Danes and the Dutch will be sending us. That is because of the MCAs. If they could be calculated for meat manufacture, bacon, ham, and so on, as they are calculated for poultry and pigs, the subsidy on Danish, Dutch and other imports would be halved, and this would help our own industry.
    I do not know whether those in the opposition parties—perhaps with the exception of the hon. Member for Londonderry (Mr. Ross), speaking for the Irish people—are just naïve about this matter, which I should find difficult to believe, or are simply trying to make political capital, or being awkward. One Opposition Member made a personal attack on my right hon. Friend—that is sinking low—in describing the way in which he is regarded in Brussels and the way in which he is going about his job there. We on the Labour Benches feel that our Minister is doing a good job.
    The Opposition seem to imagine that one has only to go to Brussels and say to Gundelach or the others "We want a reduction in the MCAs to help our bacon and meat manufacturers" in order to

    1045
    obtain it. That is not so. There has been talk today and in the Press as if the Government were responsible for the position of the meat manufacturing industry. I have had discussions with the Minister, the industry and the trade unions concerned. They at least now understand that the responsibility lies not with my right hon. Friend but with the inadequacies of the CAP.
    Mr. Robert Banks: The greater the devaluation of the green pound, the greater the reduction in MCAs, and the better it is for the pigmeat industry. Why, then, will not the hon. Gentleman vote with us tonight to ensure that the Minister accepts a 7½ per cent. reduction in the green pound?
    Mr. Torney: Because there is no guaranteed link between the green pound and the MCAs. There is no guarantee that the 5 per cent. reduction in the green pound that the Government are offering will be matched by a 5 per cent. reduction, or any other reduction, in the MCAs. The two are separate.
    I accept that the Government can deal with the green pound, but it has been made clear by my right hon. Friend and others that devaluing the green pound is not in itself the solution. The solution lies in basic changes in the CAP. Why ever did the last Conservative Government negotiate on the CAP the kind of policy that was really framed for the original Six? That policy was framed for many countries that are self-supporting or near-self-supporting in food. We produce only about half the nation's food and are dependent on imports for the rest.
    Mrs. Kellett-Bowman: If the hon. Gentleman thinks so ill of the CAP, why did not his Government renegotiate it in their so-called renegotiation?
    Mr. Torney: I wish they had. At the time of the referendum I said on the streets that renegotiation was not possible. I advised people to vote "No". I am clear. I do not suppose that the hon. Lady is. I am not on trial. The people on trial are those who, whatever their political colour, advised their constituents to vote "Yes", and did so themselves. How could anyone have accepted a policy designed to protect food industries that were mainly self-supporting, contrasted
    1046
    with our own, which produces only about half the food we need?
    We should not talk about the green pound as if it were the be-all and end-all. We should look at the record of the CAP and the beef, cheese, butter and milk mountains that have existed for some time. It is ludicrous that every so often the mountains become too big and the lakes overflow, so that we must sell the products to third countries at giveaway prices, with the taxpayers of the Common Market footing the bill. The way in which the CAP is framed encourages surpluses that cannot be used, and encourages higher prices.
    The food manufacturing industry and farming would not face the present problem if we still had our system of guaranteed prices which operated before our entry into the EEC. The farmers, like the Opposition, must take a great deal of the blame. Sir Henry Plumb and his National Farmers' Union advised people to go into the Common Market. They said that it would be a good thing, and they are suffering today as a result.
    I want to deal a little more fully with the question of reform of the CAP, quoting the following small paragraph:
    "Some responsibility for subsidising the incomes of inefficient producers should shift from the Community or the consumer to national Governments."
    That is very important.
    "Special measures will be needed on the part of national Governments or the Community to safeguard certain forms of agriculture for particular social or regional purposes."
    I am reading from the Prime Minister's letter of intent to Ron Hayward, the general secretary of the Labour Party. I could read much more.
    I have had considerable correspondence with my right hon. Friend the Prime Minister on this matter, because I am trying to discover what action the Government are taking. I am sorry that my right hon. Friend the Minister of Agriculture is not present. I hope that my right hon. Friend the Minister of State will ask him to convey to the Prime Minister the fact that some time has elapsed since the letter of intent was written, and we are still waiting to know what basic steps are being taken to move towards changing the CAP.

    1047
    It is no use tell me of all the work my right hon. Friend the Minister of Agriculture is doing; I am well aware of that. But he goes to Brussels with not one hand but both hands tied behind his back. The common agricultural policy is the most uncommon thing.
    Let us face facts. The representative of each country goes to Brussels to look after that country's interests. The work is not done in a spirit of compromise and agreement. It is largely a matter of "Will you help me to get this if I help you to get that?" That is no way to have an efficient farming and food production industry in the whole of the market. It is certainly no way to have an efficient industry in this country.
    What I and many of my right hon. and hon. Friends want to see is basic changes in the CAP, a matter referred to by my right hon. Friend the Prime Minister in his letter of intent. Basic changes are required to make Britain an equal partner in the matter of food. It is not an equal partner now, whatever we do with our green pounds, and so on. It call never be an equal partner until we change the rules.
    If we cannot change the rules, it is useless continually to attack the Government and Ministers. We must act unilaterally. I am sure that it would be far more effective with the French, Germans and the rest if our negotiators went with a mandate from the House that if we cannot achieve some fundamental changes we shall reserve the right to act alone. I am sure that that would have greater effect than all the criticism that I have heard today. Opposition Members have said that the Minister is perhaps too harsh and tough and that he should go cap in hand and beg from Mr. Gundelach. That is not the way. We must make the Common Market countries understand that, if we cannot get at least part of our own way, we are out. If they respond by saying "Good riddance, get out", I and many of my right hon. and hon. Friends shall be happy.
    I turn to the question of milk. I declare an interest because I am sponsored by the Union of Shop, Distributive and Allied Workers. Representatives of that union have gone to Brussels today with the meat manufacturers because we are worried about redundancies in the
    1048
    meat manufacturing industry. We are anxious because other redundancies might occur and the situation might become worse.
    My union is also involved in the dairy industry. We are worried because profits in the dairy processing and distributive industries are expected to be so low in the next 12 months that they will not even offset the 10 per cent. wage rise that is expected to be claimed in the next round of wage applications. If the dairy distributive industry is unable to sustain these wage rises, our daily delivery of milk will be threatened. If that threat became real, there would be more redundancies than in the meat manufacturing industry because many more workers are involved in milk distribution.
    I hope that the Minister will respond to the suggestion made by the industry, in collaboration with the trade unions concerned, that there should be an equalisation fund. We are not sure whether our Common Market masters would allow us to have such a fund, but the industry's representatives have said that they would. I cannot vouch for that. The Minister has not yet said whether he is satisfied that that is the case. An equalisation fund would help keep workers in employment and keep our vast dairy industry viable.
    We have received some assurances about the Milk Marketing Board. An Opposition Member—I think he represents a Welsh consituency—spoke about advertising the drinking of milk. I do not know what happens in Wales but in England plenty of money is spent on persuading people to drink milk and milk products. I was under the impression that this also happened in Wales. The Milk Marketing Board does an excellent job. However, the hon. Member was worried because the Government were not doing enough about milk. The Minister had to put up a hell of a fight to retain the Milk Marketing Board, and I am not sure whether that retention is temporary or permanent.
    Hon. Members agree that the Milk Marketing Board does an excellent job for the industry. We might have got away with it for the time being, but the EEC does not like organisations of this type. That is another reason for wanting basically to alter the CAP.

    1049
    I do not know whether the Government will be defeated tonight, but this is a stupid issue on which to defeat a Government. The green pound will not make or break the industry. The making of the industry will be the result of basic changes in the CAP. We can only beg, argue and plead with the EEC about MCAs. We do not have the power to say that it must make the change. That is not our fault but the fault of those who took us into the Common Market in the first place.
    7.37 p.m.
    Mr. John Wells: My habit is to speak about horticulture rather than general agriculture, but tonight I am anxious to indicate the total solidarity in the farming community. Labour Members, who know little about the subject, have sought to drive two wedges, one between the farmer and the consumer and the other between the meat producer and the cereal producer. I remind the House of the speeches by my right hon. Friend the Member for Grantham (Mr. Godber) and my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton), both of whom come from cereal-producing districts. I come from a fruit-growing district. The farming community as a whole is solidly behind the meat producers.
    The only good sense that we have heard from the Government Benches came from the hon. Member for Durham (Mr. Hughes), who dealt with the fundamental method of calculating units of account. He reminded us that the unit of account is currently tagged on to the four strong currencies called the "snake", as opposed to being calculated on the basis of all the currencies of the Community. Until we can move to that, we shall have continuing difficulty. I understand that the Government are seeking a negotiation in that area. That is of greater importance than a temporary renegotiation of the MCAs.
    If we had not tabled this motion, we should not have prodded the Government into their 5 per cent. devaluation. Some hon. Members seem to be completely unaware that had we not put down the motion nothing would have been done.
    It is imperative that we get continuity of supply. That dear old gentleman the right hon. Member for Battersea, North
    1050
    (Mr. Jay) keeps harking back to the past and yearning to get out of the Community.
    Mr. Lee: My right hon. Friend is quite right.
    Mr. Wells: We now hear another dear old gentleman. The right hon. Member for Battersea, North fell into the blissful error of seeming to think that some 300,000 tons of butter from New Zealand would somehow or other, at New Zealand prices, feed us who consume about 1,800,000 tons of butter a year. There was a total failure to understand that small supplies at cheap prices cannot possibly be blown up like a balloon to feed millions of people.
    Labour Members have been having a happy day, yearning to be out of the Market. I urge them to visit Sweden or Norway and to pay for their food there. Let them visit any developed Western country that it outside the Community and see what the prices are there.
    I have sought to make only these three points. I hope that my hon. Friends will continue to push this matter after today. This is only a start. If we can keep up the pressure, we shall get another 5 per cent. out of the Government a bit sooner.
    7.40 p.m.
    Mr. Caerwyn E. Roderick: As time goes by, I become increasingly worried because I find it difficult to trace those vast numbers who used to support the common agricultural policy. Wherever I go in the country, I hear complaints about it. It is difficult to track down those who seem to have supported it in the past. What is even more worrying is that I find it difficult to find supporters of the policy in the House. Yet we had substantial majorities for our entry to the EEC. Now, issue after issue crops up and we find criticism mounting.
    I hope that my right hon. Friend the Minister has taken note of the pleas that have been made to the effect that we should carry out the promises we made about fundamentally changing the structure of the CAP. I hear criticism from the Tory Benches suggesting to me that those hon. Members are now ready to see such changes. The Tories are continually bleating about the situation. I hope that

    1051
    they will now come along with us and try to persuade my right hon. Friend to spend some time on renegotiating the terms under which we operate in the Community and, indeed, in renegotiating the whole structure of the Community.
    I know that my right hon. Friend has a busy time going back and forth to Brussels patching up this worn garment. It is time that the whole Community got together to look at the fundamentals. Whatever we may think of the structure, we have for the time being to live with it. We have to make the best of it and try to get the best for our agriculture industry and our consumers.
    I was encouraged by the speech of my right hon. Friend today. He displayed a good understanding of the problems we face in the livestock sector. I appreciate his understanding of the issue, and I hope that it will be evident in the coming months. He has offered a small devaluation of 5 per cent. at this stage. This is only part of a package which we shall be dealing with during the coming, months.
    Other hon. Members are asking for a bigger devaluation. That has its attractions but it has disadvantages in that, if my right hon. Friend is to take part in negotiations on other aspects, we should be tying his hands behind his back if we were to insist on finishing the job now. We would be doing so in only one sense, because in his argument my right hon. Friend displayed his appreciation of the fact that a major devaluation at this time would affect so many other areas which are not in such need of help as is the livestock industry.
    My right hon. Friend and my hon. Friend the Member for Durham (Mr. Hughes) displayed a better understanding of the position than did the Opposition Front Bench when they spoke about a revision of monetary compensatory amounts. I know that my right hon. Friend has had no luck hitherto with the pigmeat industry. It would be much more helpful if we could be selective.
    There is one type of action that we can take. One of the dangers of relying entirely on devaluation of the green pound is that other areas are affected, such as foodstuffs and cereals. To alter the prices of these would be counterproductive, for the pigmeat industry at
    1052
    least. We could cause food prices to escalate, which would obviously have a detrimental effect. We know that food prices will rise, but we should beware of making too many inroads in this way.
    What is currently dealing us a body blow is the import of Irish beef in a manner which constitutes unfair competition. My farmers tell me that they can stand competition, but they cannot stand unfair competition If we were to go for a fairly substantial devaluation of the green pound to counter this type of competition, it would not be effective. There is the further danger that within a short time the Irish would devalue once more, and we should be back to square one. That method will not solve the problem in the long term. There is an excellent case to be made for supporting the livestock industry. I do not feel that it was made by the right hon. Member for Yeovil (Mr. Peyton). I felt that he had no case at all. My right hon. Friend the Minister made a much better case.
    Average incomes have been mentioned. It has been said that there was an average increase in incomes of 16 per cent. last year as against the previous year. As a mathematician, I am suspicious about averages because they always conceal a good deal. In this case they conceal the weakest sector, namely, the livestock sector. Here there have been much lower income figures, and even losses. We should take this figure with the proverbial pinch of salt.
    We need to be selective in our approach. That is why I appeal to Tory Members to go for a selective policy rather than a blanket one. The devaluation of the green pound involves an average mechanism. It affects everyone equally. This is why we ought to pursue a policy which will directly benefit the weaker sections of the industry.
    I am glad that my right hon. Friend has agreed to have a small devaluation now and to seek to deal with the unfair competition from which we are suffering. I look forward to the further action which he proposes to take in the coming weeks to deal with the price mechanism. I should like to see him take more direct action—in support of marginal farmers, for instance. There are many things that can be done to boost their incomes indirectly, and not necessarily in the market place.

    1053
    I have had arguments put to me time and again to the effect that the livestock producer is facing increasing costs. I have had figures quoted to me for fertilisers which show this. The price of nitrate is three times as high as it was 11 years ago. Fuel is eight times as expensive as it was 15 years ago. Machinery is expected to go up by 20 per cent. to 25 per cent. in price this year alone. The industry cannot stand a disproportionate increase in costs when it has a low increase in income. We have to protect the industry against such increases in costs.
    I am told that in 1975 we were 91 per cent. self-sufficient in beef. By 1977 that figure was down to 80 per cent. That cannot be good for the long-term interests of the producer or the consumer. That is why I am anxious that the consumer at this stage should recognise that an efficient agriculture industry is essential.
    We must restore what my farmers call confidence, because confidence seems to be lacking. I do not think that the Opposition's suggestion of a 7½ per cent. devaluation of the green pound would work. I believe that a 5 per cent. devaluation, plus the other measures proposed by the Government, is the more sensible way to proceed.
    There are other factors which affect us and to which I hope some solution will be found. The French levy on the export of our lambs is not yet a real problem, but one is on the way. Unless we do something, there will be trouble. I know, however, that the Government are taking action to deal with the situation. I have said again and again that what is good enough for the French should be good enough for us. If they can take unilateral action in such cases, surely we are entitled to consider doing the same to counter it.
    There is also the question of the transport of live animals. Normally, the heading of that subject is, emotively, "Export of live animals". I prefer to use the word "transport", because that word also applies to the movement of animals in this country. They can be moved over long distances here too. I hope that my right hon. Friend will press hard to ensure that the transport of live animals receives top priority for safeguards. It is so easy for someone to claim negligence or malpractice. Surely, the best
    1054
    thing to do is to ensure that these things do not occur.
    I hope that the Government will not only ensure eternal vigilance but will try to get the Community to agree to increasing the carcase trade. We must have international agreement on the subject. We cannot expect to go it alone, because that would be detrimental to our own industry. The Government should try to persuade the Community to increase the carcase trade and to insist upon slaughter as near the point of production as possible.
    As I have said, I would not wish to tie my right hon. Friend down to a figure for devaluation of the green pound that would be too high at this stage. Thereby, his negotiations in the coming weeks would be fruitless. Yet that is the way that the Opposition want to proceed. I would prefer to see a policy based on selective help—to the livestock industry in particular—rather than on blanket help.
    7.53 p.m.
    Mr. Alick Buchanan-smith: The hon. Member for Brecon and Radnor (Mr. Roderick) has shown some realism and understanding of agriculture, but how he could think that the Minister put his case for a 5 per cent. devaluation of the green pound better than my right hon. Friend the Member for Yeovil (Mr. Peyton) put the case for a 7½ per cent. devaluation, I cannot imagine. From the conditions that the hon. Gentleman described, I hoped that he would argue for a 10 per cent. devaluation.
    I agree with the hon. Gentleman and with the Minister that one of the real problems in the industry is its uneven pattern, with some sectors, particularly livestock, doing very much worse than others. I accept that this has made difficulty for the right hon. Gentleman in some respects in that, in the options open to him, he may feel that he has to do something across the board whereas, in an ideal world, he would prefer to be selective. That was a fair point to put.
    Yet, in the amendment, having mentioned pigmeat and beef producers, it is claimed that the Government's measures will increase the income of such producers by 10 per cent. How does one increase by 10 per cent. the income of a pig producer who is working at a loss? The

    1055
    amendment is a play on words. It is precisely such phraseology that creates cynicism and distrust in the farming industry and destroys its confidence. I ask the Minister in his reply not to deal in word play but to tell us precisely what an increase of 10 per cent. in the net income of a pig producer actually means. If we are to have any faith in what the Government are doing, they must tell us more precisely about it rather than merely play on words.
    Because the Minister has to deal across the board with agricultural commodities, this does not mean that we wash our hands of having to deal with the overriding problem of the green pound. As my right hon. Friend the Member for Grantham (Mr. Godber) said, in perhaps the most telling speech of the debate, we must remember that it is the Government who, by their mismanagement of the economy and the devaluation of the pound, carry responsibility for the situation. We must not let the Government duck out from underneath by saying "We cannot deal with the green pound across the board but must deal with it selectively." The problem is of their own creation, and what is of their own creation they must cure.
    I agree with the right hon. Gentleman that it would be better if we did not have this fiction of the green pound. I believe that it is a fiction, an artificial thing that must be removed over a period of years. But until we get rid of it, we will not be able to have the same freedom to deal individually with each commodity. I put this in the context of the negotiations in Brussels over the next few months. If we did not have the green pound and there was parity of currencies among the members of the EEC, we would be able to deal with each commodity on its merits. But when one tries a selective policy, the effort is made unreal because of the fundamental weakness of the green pound system.
    Although it sounds soothing and constructive of the right hon. Gentleman to say that he would love to deal selectively with each commodity, he cannot do so until we get rid of the fiction of the green pound. So long as we have it, he must deal with it. That is why we must know what devaluation we are talking
    1056
    about, and why we are having to go on talking about it until there is more realism in the situation.
    We have heard from right hon. and hon. Members opposite the ritual attack on the common agricultural policy. Those who attack the CAP should not forget that it has been successful in many respects. Let us look at the way it has increased food production in Europe while bringing about a massive reduction in the manpower behind it. The biggest increase in the world in the efficiency of agriculture industries has taken place in Europe in recent years.
    Nor should the Government forget that, in the period during which they have tried to carry through their incomes policy, and when they were working on the second phase just over a year or so ago, the price rises of commodities covered by the CAP were lower than price rises for commodities not covered by it. The Government and those who seek to attack the CAP have received from the CAP positive achievements that have helped the Government's general economic policy over the last 18 months.
    However, I do not intend to go into a general discussion on the CAP. My hon. Friend the Member for Devon, West (Mr. Mills) and I have put forward publicly certain suggestions which we believe are necessary to deal with the green pound in the longer term.
    I say to the right hon. Member for Battersea, North (Mr. Jay) and others who attack the CAP that what we are dealing with tonight, necessary though long-term reform may be, is the position we face now. We have the green pound, we have the discrepancy, and we have the artificiality. We have the unfair competition which British agriculture has to face. We also have the matters spoken about in the White Paper reviewing agriculture. We have to face the consequences of the present position, and in that context we call for the devaluation of the green pound by 7½ per cent.
    I will not go over the arguments about the unfairness of competition, the lack of investment and the decline in the breeding herds. I want to deal specifically with the position of the hill farmer, who is completely dependent on the fortunes of the beef industry and the meat industry generally.

    1057
    It is not without significance that the most recent pressure for the devaluation of the green pound has come from a group of farmers in West Scotland, in Argyll. That is a stock-rearing area if ever there was one. The very existence of this fighting group demonstrates the problem of the hill farmer today.
    I should like to quote from the experience of a hill farmer in my constituency; I hope that it will put into perspective some of the Government's claims about farmers' incomes. The Government do not always give full credit to the costs involved. This farmer, an efficient one, valued his main inputs in terms of the value of the number of calves he produced. I will give four examples comparing 1973 with 1977. The wages in both 1973 and 1977 relate to the same man. His wage in 1973 required a production of 4·2 calves. The figure for 1977 was 6·25 calves—an increase of over 14 per cent. The feeding for hill cows of 10 tons in 1973 cost 4·2 calves. In 1977 it was 6·25 calves—an increase of nearly 50 per cent. The figure of 1,000 gallons of diesel in 1973 represented 0·97 of a calf, and in 1977 the figure was up to 2·16—an increase of 122·7 per cent. The purchase of a tractor in 1973 involved an output of 22·1 calves, but in 1977 the figure had increased to 39·4. That is one example of the input of an average hill farmer in Scotland, Wales and the hill areas of England. It demonstrates the problems of cost that farmers are facing today.
    The hill farmer will get no immediate benefit from any devaluation of the green pound, whether it is 5 per cent., 7½ per cent., 10 per cent. or anything else. One hopes that the hill farmer will get some benefit in the longer term, if there is an improvement in the beef industry, when he sells his calves next autumn. But meanwhile he has these costs to face and he gets no immediate benefit.
    There is one way in which the Minister and the Government can help the hill farmer of Britain. The compensatory amounts that the hill farmers get are related to the unit of account as at 1st January each year. I hope that the devaluation of the green pound will be by 7½ per cent. as a result of the vote tonight, but even if it is 5 per cent., I ask the Minister to tell us whether it will be back-dated to 1st January, so that we can see an adjustment in the compen
    1058
    satory amount which will be of immediate advantage to the hill farmer in Britain, as the main source of store stock in the beef industry.
    Mr. Fairbairn: There is, I suggest, one further figure which should be on the record in addition to the astonishing figures that my hon. Friend has mentioned. In 1973 one had to sell 35 tons of malting barley in order to buy the same tractor for which in 1977 one had to sell 68 tons of malting barley.
    Mr. Buchanan-Smith: My hon. Friend has made the same point in relation to the arable farmer. My particular concern is for the hill farmer and the livestock producer, because they do not have the alternative forms of production which are so often available to those who farm on the lower ground.
    The Government have tried to put up today, as in the past, three main objections to a devaluation of the green pound of a sufficiency to meet the urgency of the situation. Their first argument concerns pay policy, and this is implict in their amendment, but I remind them that one cannot compare ordinary incomes in this country with incomes in farming. The Government totally forget that it is not only a question of the income and the living expenses of the farmer and his wife; it is also a question of investment for the future prosperity of the industry. More than in any other industry, investment in the farming industry depends on income. Therefore in trying to hold down, on the ground of pay policy, income earned by the farm industry, the Government are in fact holding back the future prosperity of the industry and of Britain.
    Secondly, I believe that, in their thinking towards the consumer, the Government are totally wrong. They are thinking of the consumer simply in this year, 1978. We in the Opposition are thinking of the consumer not today but in one, two, three, five or 10 years ahead. If agriculture is strangled now, the consumer will be strangled in the years ahead as the result of an increase in prices, following shortages in production.
    Thirdly, as to the national economy, let not the Government forget that, despite all the benefits of North Sea oil—or home-grown oil, as some call it—homegrown food has been and will be with

    1059
    us for far longer than the oil. Let not the Government, in all their euphoria over oil, forget about the farming industry, which will continue for generations to come. The Government's policy is one of hand to mouth. What I ask them and what the motion asks them is to look ahead with realism and with honesty.
    The CAP, of course, requires reform. I am one of the first to admit that and to argue what the reforms should be. But we have to say to the Government—and I hope that we shall say it resoundingly in the vote tonight—that unless the Minister acts now, and acts sufficiently, he will be destroying British farming in the meantime.
    8.8 p.m.
    Mr. Alexander W. Lyon: The House has heard emotional demands from the farmers' lobby in the House throughout the debate, but, as I once told the National Farmers' Union when it wrote to me about my constituents, I have one farmer in York and 100,000 consumers. The voice of the consumer has not been heard quite so much in the discussion from either the Opposition or the Government side.
    I could not support the Government in their amendment tonight, because I think that the tenor of the Minister's argument in opening the debate was that there really should not be any devaluation of the green pound at the moment, so that he may be allowed the maximum degree of latitude in the negotiations which ought to take place in order to correct the imbalance in the CAP and in the arrangements which have been made for compensation under the CAP in the immediate future. If that argument were logically followed through, the answer ultimately would be a better future for the farmer in this country, but equally a more assured future for the consumer.
    I listened to the rousing speech of the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) and heard his affirmation that he is also interested in a renegotiation of the CAP in order to benefit the consumer. I suggest that that would have more immediate and perhaps more long-term effects upon the standard of living of our people than a future viability for our agriculture industry, bearing in mind that we have always
    1060
    been and always will be partly dependent upon our own home-produced food and partly dependent upon imported food. That balance will continue—it may shift slightly—into the future. But the CAP dominates a price mechanism with regard to the food of our people. If we can achieve a genuine renegotiation of the CAP, it will be of immense value.
    The hon. Member for Lancaster (Mrs. Kellett-Bowman) intervened to put her point about why we did not renegotiate the CAP at an earlier stage. The answer is clear. We did not then have the bargaining capacity to affect the fundamental basis of the economic policy of the Community. We could not at that stage hope to persuade our partners in Europe to change the CAP.
    But we have a most important bargaining weapon now. We have the bargaining weapon of the discrepancy between the green pound and the standard of the pound sterling. If we can use that in order to achieve the kind of changes in the CAP that we have been asking for for so long, I suggest that we would get a great deal of good out of this temporary embarrassment to our farming industry.
    I accept from those who know better that this is having a bad effect upon our livestock farmers. The Minister himself accepted it. But he said that there was a better way of dealing with it rather than by a devaluation of the green pound. I think that that argument was overwhelming. If that argument had been put at a normal seminar, where we would not be whipped through the lobbies according to our party positions, I am sure that the audience would have agreed with the Minister's argument and felt that it carried the greatest conviction of all the arguments that we have heard.
    But we all know that we have taken up party positions. We all know that at the end of this debate the Government will probably be defeated because the Liberals will not support the Government. It seems to me that the argument about 5 per cent. has been put surreptitiously only as a way of buying off Liberal resistance. It has not been good enough and it has not succeeded.
    The answer is that we should defeat both the amendment and the motion in order that the Government may have the

    1061
    maximum possible room for negotiation in any further negotiations in Europe.
    The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Gavin Strang) rose—
    Mr. Lyon: I am sorry. The Minister did not give way to me earlier, and I cannot give way to my hon. Friend at this moment.
    The maximum possible room for negotiation is surely what we ought to leave to our negotiators in Europe. The case will be difficult enough to argue in any event. The farmers' lobby in Europe is just as strong, perhaps stronger, than it is in this House. I do not believe that we should hobble our Minister by making him devalue the green pound now, thus throwing away an important negotiating instrument.
    The Opposition think differently, although the answer will be that prices will go up. No one can deny that. It may be that the right hon. Member for Yeovil (Mr. Peyton) can argue that it will not happen immediately, but it will certainly happen. Come the next election, when we have the campaign about rising food prices, I hope that Opposition Members will be honest enough to tell their constituents that by voting tonight they put 1p or perhaps 2p in the pound on the cost of living and threw away the chance of getting a permanent reduction in the cost of food in this country because they bound the Minister in future negotiations. I should not like to argue that with the housewives of York. I am sure that it might be welcomed by the farmers in some of the hill areas, but we must remember that even farmers' wives are consumers.
    I personally believe that the only possible way to give people the best opportunity of lowering the cost of their standard of living and raising the standard of living ultimately for everyone more efficiently by defeating both the motion and the amendment. I shall do my best to do that.
    8.15 p.m.
    Mr. Charles Morrison: The hon. Member for York (Mr. Lyon) chose certain excerpts from the speech of my hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith) with
    1062
    which to agree and certain parts with which to disagree, but the difference between my hon. Friend and the hon. Gentleman is that my hon. Friend was thinking not only of the short-term interests of the consumer but of their medium-term and long-term interests, whereas the hon. Gentleman was thinking only about today and tomorrow.
    Time and again throughout the debate, beginning with the Minister himself, there has been criticism of the CAP. I have a feeling that the Labour Party treats the CAP in exactly the same way as it treats capitalism and private enterprise —it restricts and distorts it, ties it up in ribbons, makes it impossible to operate and grumbles about the outcome. If instead of adopting such a destructive attitude the Labour Party adopted the kind of attitude demonstrated by my hon. Friend the Member for North Angus and Mearns about how a policy should evolve —hon. Gentlemen will know that it was a policy which originated in 1958—we would be able to have a more sensible debate.
    The basic question underlying the debate is whether the Government want an expanding agriculture industry or a contracting one. That is what the debate is all about. Instead of answering that question, the Government are pretending that the debate is simply about farmers trying to further their own interests at the expense of financially hard-pressed consumers. Setting aside the obvious responsibility of the Government after four years in office for any hardship felt by consumers, nothing could be further from the truth.
    The debate is about the interests of farmers and consumers alike, but not only of those general groups. Only 10 days ago in my county there was a meeting of representatives of ancillary agriculture trades at the end of which a statement was issued. Attending that meeting were not only farmers, land owners, bankers, and people who served the agriculture industry like feed and seed merchants and agriculture machinery merchants, but brewers, vets, representatives of the Women's Institute and representatives of the National Union of Agricultural and Allied Workers. They indicated that they wished to support the aims of the NFU in its campaign against

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    what was referred to as "legalised dumping" and demanded a devaluation of the green pound, stating that it was
    "imperative for the confidence of the industry as a whole and the longer term interests of the consumer."
    In particular, it is worth referring to the comments made by the representatives of the National Union of Agricultural and Allied Workers. The county vice-charman said that the union
    "supported the devaluation of the green pound as in the best long term interests of the consumer and their members."
    The county chairman of Wiltshire Womens' Institute said that it was
    "felt that not to devalue the green pound was short-sighted".
    It seems to me yet again that those comments give the lie to the comments made by the hon. Member for York.
    Mr. Fairbairn: If the hon. Member for York (Mr. Lyon) felt that the Government should throw away the opportunity of devaluing the green pound, surely the logic of what he said was that they should revalue the green pound in order to force the policy which the Minister pretended he was trying to achieve.
    Mr. Morrison: My hon. and learned Friend makes a very good point. I hope that he will have time to develop it a little later. No one should be in any doubt that the interests of the widest cross-section of people are involved—short and longer-term—in the question of the value of the green pound.
    We have heard a great deal about the White Paper "Food from Our Own Resources". Whatever the real attitude of the Government at the time of its publication—and, to be fair, I suspect that they really wanted expansion—now that it is, if not an election year certainly a period of run-up to a General Election, the Government want not so much expansion as votes. In this context, it is worth recalling that agricultural production, for which the Minister took considerable credit today, is still only at the level which was envisaged as the launching pad from which "Food from Our Own Resources" could proceed.
    What are the Government about now? In my opinion, they are less concerned with increasing agricultural production than with making a cynical political mis
    1064
    use of the proceeds of North Sea oil, while the balance of payments is no worry, so as to be able to purchase foreign grown subsidised food, instead of using those North Sea oil funds for investment for the future.
    It is all very well for the Prime Minister to write to the National Executive Committee of the Labour Party that
    "United Kingdom agriculture should be selectively expanded."
    I do not think that anyone will disagree with that general comment. But when is it to happen?
    This year's White Paper shows that production in 1977 is no higher than it was in 1971, that it is below that of 1973 and 1974, and that there is still a continuing decline in the beef herd and in the pig breeding herd. There is even a threat to the potential expansion of the dairy herd, with a fall of 12 per cent. in the number of heifers in calf during the past year.
    All this is happening because the green pound reduces the returns of farmers and makes investment uneconomic and because the MCAs make more expensively produced beef, pig-meat and butter, especially from Germany, Denmark and Ireland, advantageously competitive against home products. We have all heard of the luck of the Irish, but our Government, by their incompetence, are turning lucky pennies into gift pounds, marks and kroner at the expense of the British farmer.
    It is high time that the Government changed their approach before the deterioration of British agriculture gets past the point of no return. The Government have given themselves enormous credit for proposing a 5 per cent. green pound devaluation. I prefer to think that that is not only the result of the pressure which has been put on them by all opposition parties but also because the Government think that it will keep the farmers quiet. It will not. In any event, that may be an impossible proposition. What is more important is that it will not even inspire British agriculture with renewed confidence.
    Seven and a half per cent. is not just a bare minimum. It is at the moment a reasonable compromise between the interests of farmers and consumers alike. I hope that the House will so decide tonight.
    8.23 p.m.
    Mr. John Watkinson: The hon. Member for Devizes (Mr. Morrison) totally distorted Government policy, as I hope to show in the course of my argument.
    I begin by saying that I support the devaluation of the green pound because, representing an agricultural area, I am only too well aware of the difficulties which pig producers have been through and beef producers are experiencing at present. There is no doubt that the green pound in itself is a blunt instrument to deal with the livestock sector. However, it is the only instrument available to us and, therefore, it has to be used.
    I do not agree with the hon. Member for South Angus (Mr. Welsh) that changes in the MCAs, which are so vital to our beef producers, can be engineered by a stroke of the pen in Whitehall. These are matters for complex and difficult negotiations, and it is by no means certain that our counterparts in Europe are prepared to yield. Therefore, I take the view that we have to devalue the green pound in order to provide some relief for the livestock sector. I hope, too, that it will involve some increase in income to that sector.
    This debate centres around the concept of the green pound. As the right hon. Member for Yeovil (Mr. Peyton) pointed out, the green pound is a subject of intense complexity and difficulty. We consumers live in the real world. Farmers have to practise in the real world. But there is this strange nether world of the green pound, and the ramifications of this nether world spin off on to farmers in a very serious manner.
    My hon. Friend the Member for Durham (Mr. Hughes) said that, within the operation of the green pound itself, the very calculation of the essence of the green pound—namely, the unit of account —was a subject which needed examination. When that unit of account was originally set, it was set against the hard currencies—the so-called snake currencies —and there is no doubt that, if the green pound were now set against the new European unit of account, we would have a lower price structure in Europe.
    Because of the complexity and mysterious nature of the green pound, it is thrown around by the NFU and
    1066
    those who represent the farmers' lobby as an almost magical potion which can cure our farmers' ills. But anyone who has listened to this debate will realise that that is not the case. There is no way in which we can return to parity. If we managed to return to parity, there would be an enormous supply of food produced in this country at high prices and sold into intervention, and that would be much worse for farmers and consumers than the present position.
    But there is an element which cannot be ignored. Basically, it comes from Government supporters and it is interpreted by the Opposition as merely being the expression of consumerism in its crudest form—namely, what is in the best interests of the person buying food in the shops. Farmers and the Conservative Party in this House tend to see farm produce as being simply there: it is produced, and in some miraculous way it will be bought or sold. But there has to be a balance. There is an inescapable balance of supply and demand. It is the demand factors which the Opposition are not taking properly into account.
    Mr. Anthony Nelson: Surely the way to match supply and demand is by a more accurate common pricing system. One cannot in the long run sustain a substantial differential between one's current exchange rate and the green pound because that would nullify the whole effect of one's common pricing policy. We should understand the effects of that, and the object should be to get a balanced price rather than compensation for imbalances of prices.
    Mr. Watkinson: In my view, the hon. Gentleman is entirely wrong. If we return to parity, the net result will be a vast increase in prices in this country and we shall face the very problem which I have been emphasising—that with higher and higher food prices the demand for food in this country will not match the supply.
    We all know that real incomes since 1970 have increased by 18 per cent., yet food consumption is going down. This is where the inescapable problem for agriculture lies. In my view, agriculture generally must look seriously at the whole marketing problem. In the pigmeat sector, for example, we have suffered dreadfully, but it must be admitted that the

    1067
    Danes have run a superb advertising campaign, marketing and pushing their products in this country. One cannot escape the marketing consequences of food production. Food does not just sell itself.
    My second point about the NFU's case is that it seems to me to have exaggerated its own arguments in support of its claim. Until the annual review was published, I had the impression that agriculture was virtually in a state of collapse, yet, as hon. Members opposite know, a former Minister of Agriculture on their own Benches had to admit that agriculture in general was not at present in dire straits. We know that income has risen, that rents for land have risen and that costs have come down. I agree that there are problems in certain sectors, but the general position of agriculture in this country is not nearly as bad as Opposition Members suggest.
    It has been said in the debate—indeed, I think it is generally acknowledged—that British agriculture is highly efficient. So it is, but we should be wary of our position vis-à-vis the rest of the Common Market. It has already been pointed out that British agriculture faces a serious threat from European competition in terms of climate and in terms of physical geography. Farmers on the Continent are in a strong position completely to dominate European agriculture in future from a Continental base.
    That is a matter of considerable concern for Britain. We can no longer satisfy ourselves by saying that we have the most efficient system of agriculture in Europe. Anyone who read the article by Hugh Clayton in The Times recently, describing the resurgence of French agriculture, will understand the threat which is posed to British agriculture. We must, therefore, look to the future of our agriculture and provide the necessary funds to push it forward.
    The Government and, indeed, the British are often castigated as "the bad boys" of Europe. It is said that we are out of line with the rest of the Community. But do the Opposition appreciate that the green mark is significantly out of line? One of the reasons why Danish bacon is flooding into this country is that the green mark itself is so out of line
    1068
    that that natural market for the Danes is now denied to them because they have to pay a levy to get into Germany whereas they receive a subsidy to come into this country. It is not, therefore, just a matter of the British. The Germans need to rethink their position on their green currency. And, although hon. Members may not know it, the French also are following a policy similar to the one which we are pursuing in Britain. They are out of line as well, and they are not seeking to return to parity overnight because they recognise the impact of so doing on prices and consumers in their country.
    All of us here are concerned for the future of agriculture, and I think that it has clearly emerged from the arguments put on both sides that if British agriculture is to survive we must invest in it. I should like to see the Government bring forward proposals which would encourage investment in agriculture. We have talked for a long time, for example, about tax-averaging systems. The little NEDC has talked about the idea of a tax-free investment fund.
    I should like to see those and other concepts seriously examined, for it is vital that investment—which we know from the annual review has fallen in real terms—should pick up.
    I conclude on this note. Although no one wishes to see prices rising in Britain, I believe that the consumer must face the necessity for a small increase in prices here in order to provide our farmers, especially in the livestock sector, with a fair and reasonable income.
    8.35 p.m.
    Mr. Peter Mills: I must declare an interest in these matters, but I should like first to answer the suggestion which has been put from the Government side of the House that some of us who are critical of the CAP should never have voted for going into the Common Market. I am still very pro-Community, though I am highly critical of the CAP. I do not think that that is a wrong outlook.
    I believe that much is at stake in this matter. I just wonder how many hon. Members realise how crucial it is to the future of agriculture and food production in this country. It is almost a watershed. It is as serious as that. I for one do

    1069
    not believe that consumers' and producers' interests are at variance. I beg Labour Members not to widen the gap between the producers and the consumers. They both need to go together. They depend upon each other.
    I should like to see a change in the name of the CAP. I should like to see it changed to CFP—common food policy. That would apprehend the variety and breadth of interest involved. It would make clear to all, the consumer and the producer alike, that "food" is the key word. That is what we should be talking about tonight. We should be talking not about the consumer or the producer but about the food. That is the important matter.
    It is important that the consumer realises that he has to pay a fair price for food today. It is also important that manufacturers have continuity of supplies, because between 60 per cent. and 70 per cent. of all the food that we produce is now manufactured. Farmers, too—I take the point made by Labour Members—have to realise that it is not simply a matter of producing food but a matter of seeing that it is produced at a price that the consumer can afford. "Consumption" is a word that will become more and more important as the years go by.
    I welcome this debate. My right hon. Friend the Shadow Minister called for a 7½ per cent. devaluation of the green pound. Let us get the record straight. It was not my right hon. Friend the Member for Worcester (Mr. Walker) who started this debate. It was, indeed, some of us encouraging the Shadow Minister to propose this devaluation, which he has done. I think that it was a very wise step in the interests of agriculture.
    It is interesting to note that in months gone by the Liberals were saying "No devaluation." Then they went to 4 percent. Then we put down 7½ per cent. Now they put down 10 per cent. Let us get the record straight. We took the step to begin with, and the Shadow Minister is to be congratulated on this matter.
    Why is there a gap of 28 per cent. or more in relation to the green pound? I am afraid that the reason rests very much on the Government's shoulders and the drop in the value of the £ sterling. There is no question about it. There are other factors, but the Government must bear the main responsibility.
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    Why cannot the British housewife and British consumers pay the price to cover the costs of production? It is because this country is in a position of stagnation economically. We are not getting the output and growth in order that we can pay our people the money that is required to pay the price of food. It is as simple as that. Once we start to get under way again in Britain, housewives will be able to pay the fair price for food, as they ought to do.
    This devaluation is, of course, in the interests of the consumer as well as the producer. There will be a slight increase in cost, but I believe that this is right so that we can maintain home supplies. The most important thing about this debate and about the 7½ per cent. figure is that it is an act of confidence in the producer.
    Many people in beef and pigmeat production will be watching what happens tonight and asking what the House wants in these matters. Just what do the Government want? They and their supporters must make up their minds about what they want from British producers. Must we depend more and more on Continental producers for our food? Is that what they want? It is not what I want. That is not what we went into the Common Market for. I want a fair share of the Community's production of food, but we should not be put in a position where, because of heavy subsidisation, the British farmer is not supplying the home consumer.
    This is a sad state of affairs, and that is why the debate is a matter of confidence. How can standards and wages of farm workers, let alone those in the food production and manufacturing industry, be raised if returns do not cover the cost of production?
    Recently, 20 or 30 shop stewards from Unigate in Torrington asked me to try to persuade the Government to do something about the green pound. Their wages are low, and they realise that unless their industry is profitable they cannot be paid the proper wages that they require.
    Do the Government and their supporters really want to deny farmers the increases to cover their costs of production? It is obvious that some farmers are making a lot of money, but there are not many beef or pig producers in that

    1071
    number. Do we want to abandon the production of beef and pigmeat and allow Continental producers to have that market?
    Mr. Dennis Skinner: Leave the Common Market. That is the answer.
    Mr. Mills: The devaluation is a token of confidence in the industry, and I hope that we shall pass the motion. What upsets me and many producers is the unfairness of the situation. Producers are looking with dismay at what is happening to beef and pig production in this country. There is dismay over the Irish situation. We cannot blame the Irish because they are taking advantage of the system, but it is a matter of real concern and I hope that we shall look at these matters not just on sectional interests but from the point of view of what is best for the country as a whole.
    I believe that the consumers' interests and the producers' interests met a long time ago and that this devaluation should have taken place months ago. I criticise the Government for their delay. Production has dropped and, despite what we may do tonight, it will be difficult to get confidence back into the industry.
    I hope that the House realises the importance of the debate and that the decision we take will be crucial for the livestock industry.
    8.43 p.m.
    Mr. George Rodgers: We have to recognise that, by the terms of his appointment, my right hon. Friend the Minister of Agriculture must endeavour to represent and respect the views to the consumer and the producer. In everyday language, he must protect the interests of the housewife and the farmer. This may appear to be an unenviable task, since the housewife seeks to purchase food at the lowest possible price and the farmer is anxious to ensure the best return that the market will allow. Yet I do not believe that these aims are irreconcilable.
    The farmer must recognise that any substantial increase in the cost of food will be resisted and, I believe, strongly resented by the customer. Large price increases would certainly stimulate inflation, and any prospect of curbing wage demands would be swept away.
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    When we speak of food prices, we enter a particularly sensitive area. Families on low incomes invariably suffer more if food prices increase. A greater proportion of their incomes is spent on food, and they are hit most when food prices increase that course of events takes place—there, indications that there is now a resistance to the purchasing of food—it will not be in the interests of the farming community. Equally, I accept that if the price of food is too far depressed there will be no incentive for investment or any margin to enable the still deplorable wage levels of agricultural workers to be improved.
    I have always found it vastly puzzling that, to persuade and encourage landowners and farmers to increase investment and productivity, it is considered necessary to capture their elusive confidence, whereas the confidence of the farm worker or factory worker is not considered necessary. I have never heard it advocated by the National Farmers' Union or at any other level that we should inspire confidence in the farm worker by establishing higher rates of pay or long-term security of employment. It appears that different social groups are expected to respond to different stimuli.
    I do not deny that in some sections of the agriculture industry the farmer is not being adequately compensated for his effort or investment. The livestock and pig production sectors are glaring examples of inadequate returns. However, I consider that the remedy being proffered by the Conservative Opposition is simplistic and will not provide any long-term solution.
    It has been pointed out repeatedly that devaluation of the green pound on the scale that is suggested is a cumbersome and bludgeoning weapon and that what is needed is a method that is selective and not sweeping. I agree that devaluation on the scale suggested by the Conservative Opposition would improve the lot of pig producers and one or two other deserving and perhaps deprived sections of the farming industry. However, it is clear that it would throw funds in the direction of others who are not in need, who are thriving and prosperous.
    The farming community is not one industry but a variety of interests which have been given one label. Milk

    1073
    producers, for example, are having their best year for many years. The grain crop is an all-time record. The net income of farmers has increased by 16 per cent. I realise that contained within that percentage are many who have received less than 16 per cent., but it must be true that others have received substantially more.
    Mr. Edward Gardner: Is the hon. Gentleman aware that in the North-West, in the area which includes his constituency, livestock farmers are worried sick by the threat of what they see to be the collapse of their industry? Does he understand that no way other than that which the Opposition are suggesting should be adopted will help those farmers to deal with the problem?
    Mr. Skinner: Get out of the Common Market. That is the answer.
    Mr. Rodgers: The problem has been clearly identified by the hon. and learned Member for South Fylde (Mr. Gardner), but he has not proffered any remedy apart from the proposition which has been put before us by his party. The real cure lies in the past. The fact is that we entered the Common Market and accepted the terms of the common agricultural policy. Support for Britain's entry came from the Conservative Benches. That was when the decision was taken.
    A heavy devaluation must set up a chain reaction and must obviously influence prices directly for the farmers and indirectly for the food processors. I expect that hon. Members have received correspondence from various agencies which represent food manufacturers expressing strong objection to the Conservative Party's proposal for a 7½ per cent. devaluation. The National Farmers' Union has issued and circulated a counterblast communiqué dissociating itself from those expressions of objection and blasting trade associations for their impudence in becoming involved.
    It is surely a sad and strange day when the Tory Party finds associations of business men reprimanding it for its attitude and simultaneously its old friends in the NFU criticising it for suggesting a devaluation of only 7½ per cent. rather than the 12½ per cent. that the NFU desires. We are witnessing old alliances crumbling before our very eyes.
    1074
    We must accept that the 12½ per cent. devaluation suggested by the NFU will secure scant sympathy. Indeed, the consequence of such action would lead to a dramatic upheaval and change in the price of food. In my view, food would go up by 5 per cent., superimposed on increases of 128 per cent. which have taken place during the five years since our entry into the Common Market. The term "devaluation of the green pound" is a euphemism. There is great reluctance on both sides of the House by those who are pressing for devaluation to say frankly and clearly that they are advocating an increase in the price of food.
    During the 1974 General Election campaign, the NFU issued leaflets which invited people to "Vote for Food". That was a rather curious request which concealed the true purpose of the campaign, which was to raise food prices. But the pamphlet was so elaborately and carefully worded that few people understood its message. It is up to those who are advocating a substantial devaluation of the green pound to make clear to the housewife that their intention is to increase the price of food.
    Surely, whatever the view of the nation when it voted for our continued membership of the Common Market, it cannot be disputed that neither the Government nor the farmers' lobby examined with sufficient care the impact of the common agricultural policy, which was disastrous to the needs and circumstances of the United Kingdom.
    It seems that many of those in positions of responsibility, who were blindly enthusiastic for our membership of the EEC, failed to understand that other member States were eager for United Kingdom participation and that much more favourable terms were available than were accepted.
    Few people would now deny that the CAP is totally absurd. In my view, in a hungry world it is totally obscene. Any organisation that destroys food and artificially increases the price of food is a disaster. Unless there is a major reform, the system will always operate to the disadvantage of the British people. Even those who once were keen advocates of our membership of the Common Market—some still carry the torch—are dismayed and dejected by some of the lunacies of the common agricultural policy.

    1075
    I should like to quote the words of my right hon. Friend the Secretary of State for Prices and Consumer Protection. On 30th November 1977, according to the Financial Times, my right hon. Friend, who is an ardent and devout Marketeer, was reported as follows:
    "'It is preposterous that within the EEC the price of commodities in almost permanent surplus should be so increased that farmers are encouraged to produce even more. It is absurd that prices should be fixed which keep the least efficient farmer in business and that the surplus production which is exported, destroyed or hidden away should almost invariably be produced at figures well above the cost.… The Community would have to buy out thousands of inefficient farmers'. Until it did … it would remain at its present level of severe and potentially disastrous unpopularity.'"
    Truly, there is greater
    "Joy … in heaven over one sinner that repenteth".
    It has been estimated that the extra balance of payments cost of buying expensive food and making a contribution to the EEC agricultural budget was about £650 million in 1977. The products mainly affected by the CAP were 18 per cent. more expensive last year than they would have been if we had been free to purchase them from the cheapest sources throughout the world. That is probably an understatement of the position.
    The impact of the CAP has been modified by the complex device known as the green pound, and that is really an effect rather than the cause of our food pricing policies. The real reform of the process of establishing fair prices can be achieved only if fundamental changes are made to the CAP along the lines already proposed by the Labour Party. Until that comes about, if ever it does, the green pound must remain an essential means of lightening the burden of the CAP.
    My right hon. Friend the Minister has so far successfully resisted pressure by the mandarins of the EEC to phase out the green pound, and he must continue to do so or the British housewife will have to meet astronomically high prices for ordinary foodstuffs of a magnitude now seen in several Community countries.
    The National Farmers' Union must recognise that it is in the interest of its members to press for substantial reform of the CAP. That is the only way ahead.
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    An increasing number of farmers now recognise that the terms of membership which bind us to Europe are obstructing the advance of the agriculture industry, and it is only by reforming the CAP that the mutual concern of the farmer and the consumer will be relieved. Until we are prepared to grapple with the realities of the situation, we shall but tinker with the symptoms rather than the disease.
    My right hon. Friend faces a formidable task in his negotiations in the coming months. Many of the more curious features of the CAP have been designed to accommodate the incompetent farmers of other member States and their representatives will not welcome change and progress. My right hon. Friend's accomplishments in Europe to date are considerable. They have earned him the support and respect of hon. Members and of their counterparts across the Channel.
    It is regrettable that the somewhat insipid motion before us should seek to distract our attention from the real issue, which is surely how best we can secure an adequate reward for farmers and for farm workers and reasonable prices for the customer. The two are not in contradiction, as was demonstrated between 1945 and 1972 when food prices were consistently low and the agriculture industry achieved a high level of prosperity.
    8.59 p.m.
    Mrs. Elaine Kellett-Bowman: I declare an interest, having graduated from the Women's Land Army to be a farmer.
    The only other lady Member to have spoken in the debate, the hon. Member for Sheffield, Brightside (Miss Maynard), should get her facts right. She said that the European Community had led to price rises. Nothing could be further from the truth. Those food items which are covered by the CAP have risen in price by 9 per cent. whilst those not covered by it have risen by 26 per cent. I reckon that that is a fair bargain.
    I am glad that the Conservative Party has devoted a Supply Day to this debate. Farming has never been at a lower ebb than it is at present, and if the House carries the motion against the Minister I hope that he will be sufficient of a democrat to give effect to the will of the House and to devalue the green pound by the required amount.

    1077
    For far too long the Minister has tried to drive a wedge between producer and consumer, posing as the champion of the consumer and implying that the interests of the consumer and producer are antagonistic. That is way off the mark. By far and away the best safeguard of the British housewife against shortage and famine prices is soundly based home agriculture, able to expand production swiftly and keep up with the most modern techniques. Most women learned that when they had to queue for sugar. We must keep home production up.
    It is absurd that, although in 1977 agricultural output increased from the low levels of 1976, aggregate net farm income, including stock appreciation, declined by 2 per cent., and in real terms, net income was at its lowest for many years. Page 7 of the Government's White Paper says that real farm incomes will have fallen by 15 per cent. in 1977. When the right hon. Gentleman says that farm incomes must keep in step with other incomes he totally ignores the fact referred to by my hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith) that farm income is not merely a farmer's wage and that of his wife: it is also the return on his capital from which he must replace his working capital and such items as machinery, the cost of which is prohibitively high and is all too often left out of the reckoning, as it was in the recent ICI survey. It will be interesting if the Minister will follow a suggestion by my hon. Friend the Member for North Angus and Mearns and put the price of items in real terms, in tons of wheat or gallons of milk, the things that farmers have to provide as their inputs.
    Farming, by any reckoning, is an exceedingly good national bargain. It has the most impressive possible growth record. The level of output per person is substantially higher than that of any other sector of United Kingdom industry. If the record of British industry was a patch on that of agricultue, it would be described by all hon. Members as an economic miracle. It makes sound sense to expand agriculture—selectively, of course—at the very time when North Sea oil is generating funds for investment. We must have something left when the North Sea oil has gone. What we shall
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    have is our land and the talent of our farmers to farm it.
    Agricultural expansion can take place only if the agriculture industry can invest in the machinery and the new strains of corn and cattle and the buildings and stock necessary for that expansion. It can do so only if farm prices are set at levels to generate funds for such investment.
    Given the EEC market situation, that means a substantial adjustment of the green pound. We speak of a common agricultural policy, but such a thing does not exist because of the distortions of the green pound. The maintenance of exchange rates for agricultural products at levels wholly different—currently a 30 per cent. gap—from market exchange rates has created serious problems. Trade patterns have been completely distorted and it is high time this situation was rectified.
    The only way to remedy the appalling situation is to bring the green pound and ordinary rates nearer together. My right hon. Friend the Member for Grantham (Mr. Godber) pointed out that the Minister and the Government allowed the present situation to occur. The Minister and his Government took over a relatively stable pound and he sent it right down the spout. It is only because of the North Sea oil that it is beginning to come up again.
    We need a 7½ per cent. devaluation of the green pound now, and later on, in the spring, we shall need another devaluation. If the Minister does not take action to meet the will of the House, agriculture will not survive.
    9.2 p.m.
    Mr. Michael Jopling: I could have listened for a great deal longer to the speech my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman). The debate has been unusual in one way.
    As my right hon. Friend the Member for Yeovil (Mr. Peyton) said in his opening remarks, as a result of the motion which the Conservative Party has tabled and the way that it has gathered support from a number of other parties, the Government have at last done something about the state of agriculture and the green pound. Nothing has been said since my right hon. Friend's speech which

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    alters the significance of the way in which the opinion of the House has altered Government policy in action. There was a remarkable transformation of policy last Friday when the Government announced that they were prepared to devalue the green pound by 5 per cent. How much in the end the will of the House will have the green pound devalued we shall see in an hour's time. I must begin by declaring, as I have done many times before, my interest as a farmer.
    The other thing that has come out of the debate is the clearest and loudest message that warnings over the future supply of home grown food in the United Kingdom, particularly from the farming industry, have not been made needlessly. From speaker after speaker from the Conservative Benches there have been indications of the way in which our livestock industry is suffering extremely badly today.
    Various figures have been given demonstrating how the pig and beef sectors in particular have been running down in the past few years, especially over the past year. The pig herd is down by 16 per cent. over four years and the beef breeding herd is down 13½ per cent. in two years. The number of heifers in calf in the milk sector is down 12 per cent. in only one year. My right hon. Friend the Member for Yeovil drew attention to all these figures very fully in his opening speech.
    One set of figures that has not been mentioned should not be passed over. Most of the figures that have been discussed refer to the past year. I have heard no reference to the forecast for this year. It is clear from the rundown in the past years of our breeding herds that it takes years to restore the damage and ravages. The Meat and Livestock Commission estimated recently that during 1978 supplies of pigmeat would be down by 10 per cent. and supplies of beef would be down by 2½ per cent. Those are the startling figures that follow the folly of allowing the breeding herds to run down.
    We have heard repeatedly during the debate how the industry's income has declined in real terms. We have heard about the loss of markets. My hon. Friend the Member for Dorset, West
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    (Mr. Spicer) had it absolutely right when he said that when one loses a market, whether to the Danes or to the Germans, it takes years to restore it. It often cannot be restored because the damage has been done. We have not heard much in the debate about the problems of the meat processers, who have suffered catastrophic losses and threats of unemployment.
    All the figures and the evidence demonstrate the present bewilderment of farmers. In his notable speech early in the debate, my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) said that he thought it the worst crisis he remembered in 32 years in the House, and the longest-lasting he had ever known.
    Production in agriculture today is still below the level in 1973–74. It is below the starting point of the 1975 White Paper, "Food from Our Own Resources", the Government's statement of intent to have an average 2½ per cent. expansion in food production at home in the years between 1975 and 1980. But in 1977 net production at constant prices was below the starting point of 1974.
    If we had enjoyed the expected rate of expansion over the past three years from the starting point of the White Paper, production from our farms today would be about 9 per cent. higher than it is. On the figures in the Government's most recent White Paper, that means that if agriculture had been allowed to expand as the Government told us three years ago they were determined it should, there would be from our farms extra production at the rate of about £635 million this year. It is tragic that the country is being deprived of that level of home production merely because of this Government's actions.
    As my hon. Friend the Member for Devizes (Mr. Morrison) said, this shortfall in production is the cause of the debate and the motion. We are determined to cut the shortfall, to begin with by means of the 7½ per cent. revaluation suggested in the motion. We believe that the Government could have avoided the shortfall if they had been so minded. We are certain that we could have been on target if the Government had really meant in their hearts the target in "Food from Our Own Resources" and if they had provided the necessary incentives to allow

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    the target to be fulfilled. If we had helped home food production by earlier green pound revaluations, this shortfall would never have occurred.
    Mr. Welsh: Why did not the hon. Member support the SNP move for a 1 per cent. devaluation over a year ago? Why does he settle for a one-off situation rather than a continual review?
    Mr. Jopling: I shall come to that matter later. We do not see green pound devaluations as the only way of helping agricultural production at this time. We want the Minister to succceed in his endeavours to alter the method of calculation of the pigmeat MCAs. We have always supported him in his quest. But we still believe that he missed the boat in the autumn of 1976. It is no good him coming to the House repeatedly and waving before him a letter from the Ambassador of Denmark saying that the Danish Government would oppose our moves in this direction. If he is put off by such a letter he is not much of a negotiator. This is a very weak argument to justify saying that it was impossible to get a recalculation at that time.
    During the debate we have heard, as we have in the past, some Labour Members, particularly those below the Gangway, saying that we should return to the old system of support based on guaranteed prices and deficiency payments. We have always welcomed the moderate use of beef premiums within the CAP, but we are convinced that they should not be the basis of the agriculture support system in this country.
    In the 1960s we saw the failure of a system of support through deficiency payments and guaranteed prices which depended entirely on the taxpayer. We saw the reluctance of the taxpayers and therefore of the Treasury to allow more money to become available for food production. Under both Governments in the 1960s we saw the expansion of home food production lose the momentum that it acquired in the years just after the war.
    Before Labour Members start hoping that we can move back to deficiency payments, they should do their calculations and realise how fiendishly expensive it would be to go back. I have asked for some research to be done. The figures given to me today lead me to believe that it would cost about £1,000 million a year
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    if we were to support agriculture in this country by returning to the old system.
    Mr. Jay: Is the hon. Member aware that we now contribute far more to the EEC budget to put food in store to prevent people consuming it—it will cost £600 million in 1978—than we ever paid in deficiency payments?
    Mr. Jopling: All I say to the right hon. Gentleman is that if we move back to a deficiency payments system we shall lose the £1 million a day subsidy through the MCA system that we are now enjoying.
    We have been told by Labour Members that we would be better off as a nation if we relied much more on cheap, plentiful food which is supposed to be available around the world. We believe that that would be a short-sighted and dangerous policy. If we were to change the rules of the Community—if we could do so—to allow us to buy this so-called cheap and plentiful food, we believe that it would be the worst possible service that we could render to the consumers.
    The truth is that food which is available today on the world markets has a nasty habit of disappearing overnight or of suffering from wildly volatile price movements in the short term. My right hon. Friend the Member for Grantham (Mr. Godber) made this point in a graphic fashion, drawing on his wide experience. My hon. Friend the Member for Devon, West (Mr. Mills) pointed out earlier how foolish we would be to rely on food from the open world market in view of the likely rapid escalation in world population.
    No one could disagree that the best service that we could provide for consumers is that which ensures stability as far as possible. Our task must be to ensure that housewives are not subjected to wild fluctuations in food prices. My hon. Friend the Member for Maidstone (Mr. Wells) pointed out that small quantities of food at low prices can soon become small quanties at high prices. If we were to rely on food supplies from worldwide sources, the evidence is that such a policy would be likely to expose our housewives to wildly fluctuating prices. My hon. Friend the Member for Lancaster said that she does not want to have to queue again for sugar. That was a

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    classic example of the way in which commodity prices swung wildly two or three years ago.
    There is evidence on this point of commodity price fluctuations readily available in the Commission's 1976 agriculture report. There is a table in that report showing how Community producer prices have varied as a percentage of world market prices during the four years up to 1975–76. In more recent years these prices have been relatively stable, although some might say that they have been too high.
    Let me demonstrate, by quoting from the table, the way in which world food prices have fluctuated in the period covered by the report. Community wheat prices varied between 79 per cent. and 153 per cent. of world prices, barley prices fluctuated between 96 per cent. and 137 per cent. of world prices, sugar fluctuated between 41 per cent. and 127 per cent. and beef by between 110 per cent. and 162 per cent.
    These figures demonstrate the folly of allowing ourselves as a nation to rely on food supplies in such a way as to lead to the possibility of us being held to ransom. If housewives were exposed to such wild fluctuations in prices there would soon be a furious demand for a return to the present system under which, for most commodities, farm prices are modestly higher than world prices, giving farmers a fair return so that they can provide reasonably stable supplies.
    We would agree that over the years Community farm prices have been too high. This is why, in the past two years, we have supported the Government in their quest at Brussels for minimal price increases during the Community's review of prices. But that is no reason why British farmers should be held back artificially by the green pound mechanism from getting prices which are fair to them and which would help them to win a larger share of their own home market.
    Expansion at home must be in the interests of the country's economy, and the Opposition believe that, at a time when the Government have acquired for themselves, by the green pound device, a system whereby they can, in effect, operate an independent agricultural policy within the EEC, it is culpable of them
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    to have allowed large sections of our agriculture industry to decline in the past few years.
    We believe that the 5 per cent. devaluation proposed by the Government is insufficient to give incentive and confidence to our food producers. The right hon. Gentleman announced on Friday a 5 per cent. devaluation, but has buttered it up today by saying that much of it will not come into effect until August. So, having calculated the effect of food prices, I suppose that the way in which the right hon. Gentleman has amended his announcement means that the devaluation will not be 5 per cent. for the next year but nearer 4 per cent. I hope that the Parliamentary Secretary will explain. A great deal of the devaluation will, it seems, be deferred.
    Mr. John Silkin: Would the Opposition defer the devaluation of the green pound on cereals, or would they want it straight away?
    Mr. Jopling: We have made it clear that we believe that the Government must devalue the green pound forthwith by 7½ per cent. It is in our motion, and it could not be more clear. We believe that the current trend to retrenchment and declining production in many sectors of the industry is bad for the consumers. We believe that there should be a 7½ per cent. devaluation so that retrenchment goes and we see expansion once more.
    The hon. Member for Londonderry (Mr. Wm. Ross) said that the Opposition should explain their views a little more. As my right hon. Friend the Member for Yeovil said, quite apart from an immediate 7½ per cent. devaluation, we believe that the green pound discrepancy should be eliminated altogether over the next two or three years. My right hon. Friend has said that before, and he repeated it today.
    That brings me to the point raised by the Scottish National Party. I think that it would be a mistake to tie ourselves to a strict timetable of a devaluation of 1 per cent. a month. I believe that if it was well known in advance that the British Government were to devalue the green pound by 1 per cent. a month it would be impossible for the Minister to use green pound devaluation as any sort of bargaining power in Brussels. We must

    1085
    accept that this is a device which can bring with it assistance and changes in policy in other directions, such as recalculation of the pigmeat MCAs. I do not agree with the SNP that we should tie ourselves to a timetable. That would create many difficulties in negotiations.
    Mr. Welsh: Does the hon. Gentleman agree that the situation should be subject to a review? If he does not agree with the 1 per cent. a month, surely he agrees that it should not be a one-off devaluation which would be minimal and which would have to be reviewed anyway?
    Mr. Jopling: I thought I had covered that in saying that, apart from the immediate 7½ per cent., we would wish to eliminate the rest—roughly 22½ per cent. —over the next two or three years, but we would not wish to tie ourselves down to a particular timetable.
    We are certain that if consumers want reasonably assured supplies of food at fair prices, their best bet in the long run is to back home sources of supply for their food. But, as many of my hon. Friends have said in the debate, this must be done as a partnership between consumer and producer. I resent the way in which Labour Members have been trying to drive a wedge between consumers and producers during the debate.
    We cannot see the logic in the Government's amendment, which attempts to tie the 5 per cent. devaluation to attempts to ensure an increase in producers' incomes by 10 per cent. over the next year. We believe—a number of my hon. Friends have made the point—that it is quite wrong for the Government to try to put producers' incomes within the guideline figures in the way that they have. The Government have not told us how they intend to do it. I do not believe that the House can accept the undertaking unless we know in what way the Government intend to ensure that producers' incomes go up by 10 per cent. The difficutty—I did not think that I would have to tell the Minister this—is that incomes in food production are far too variable for this sort of fine tuning at the beginning of the year. The influences of the weather, of the markets and of cost make it impossible to take steps of this sort.
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    As a number of hon. Members have said, farmers' incomes are not just what is left in the pocket, like a wage. Farmers' incomes have to cover the reinvestments, which in the past year are already badly down. They have to cover not only the work they do but the work that their families do on the farm. Farmers' incomes have to cover some compensation for the risk they take in being in business. Industry is not subject to profit control because it is subject to variations and imponderables. If industry does not have this stricture imposed upon it, why should agriculture be made to have it?
    The only difference lying between the Government side and the opposition parties is with regard to a 2½ per cent. devaluation—
    Mr. Corbett: No, the whole lot.
    Mr. Jopling: It may be that there are some hon. Members below the Gangway who do not want any devaluation of the green pound. Tonight we shall be voting on whether we should have a 5 per cent. or a 7½ per cent. devaluation. This amounts in practice to between ½p and ¾p in the pound. It is equivalent to only about ⅛p in the cost-of-living index.
    Support for our motion has come from many quarters in the House. If by mischance we were to get into a muddle tonight, in that the Government amendment were to be defeated, and then by mischance, when the main Question came to be put on our motion, that were also to be defeated—I suppose one ought to be prepared forf every eventuality—we should expect the Minister to go on with the devaluation of 5 per cent. in the green pound straight away, in spite of the result on the first vote. [Interruption.] The truth is that there is little that lies between the two main parties in the House tonight. We believe that the extra 2½ per cent. is vital if we are to get the livestock industry going ahead and thriving once more. If we win tonight and the House decides that there should be a 7½ per cent. devaluation of the green pound—
    Mr. Maxwell-Hyslop: Forthwith.
    Mr. Jopling: Forthwith—then let us speak of it not as a victory for our party, or for whatever party we belong to, but primarily as a victory for the will of the

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    House of Commons. Many people say that the voice of the House of Commons is not strong enough. If ever there was a topic on which the House had better qualifications to decide than this one, I have yet to hear of it. This is exactly the sort of issue on which the House is perfectly well capable of deciding tonight.
    In view of the support we have had from so many hon. Members, I hope that we shall take this motion into the lobby and that the House will decide that the Minister should go to Brussels tomorrow and announce a 7½ per cent. devaluation.
    9.31 p.m.
    The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Gavin Strang): I do not propose to deal with the substance of the speech of the hon. Member for Westmorland (Mr. Jopling). At this stage, how, ever, I simply want to make this comment with regard to one of his last remarks. He claimed that this was above all an issue that should be decided by a vote in the House of Commons. I shall seek to explain in the course of my speech that he is thoroughly wrong, because a number of hon. Members, particularly Opposition Members, clearly do not fully understand the implications of the green pound devaluation. I shall substantiate that statement. They do not recognise, even within the context of the CAP, that there is a case for a degree of flexibility in this area which is important for agriculture.
    Let me turn to the general debate. It has been good and wide ranging. Points of view have been expressed by a wide spectrum of opinion in the House. I think it is fair to say that three broad strands of arguments ran throughout the debate. The first relates to the European dimension, if I may call it that. That was touched on mainly by Opposition Members—including the right hon. Member for Yeovil (Mr. Peyton), who made some interesting remarks in that connection—but also by some of my hon. Friends.
    Secondly, we heard about the position of agriculture and the understandable concern expressed by hon. Members on both sides of the House about the state of two sections of the livestock industry. Thirdly, and quite rightly, hon. Members, particularly my hon.
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    Friends, addressed themselves to the wider economic implications of a devaluation of the green pound, and in particular the implications of changes in the green currencies for consumer prices.
    Let me first take the European dimension—the theory and practice of the green pound, as we might call it. For me, one of the most surprising aspects of the debate has been the stance adopted by the right hon. Member for Yeovil, because he committed the Conservative Party not just to an immediate 7½ per cent. devaluation right across the board for every commodity but, furthermore, committed the Conservative Party to a complete phasing-out of the green pound —in other words, to parity. We ought to appreciate what the right hon. Gentleman has committed his party to. He will hear a great deal more about this commitment to a dear food policy, because that is what it means, too—not so much a 7½ per cent. devaluation, but the commitment to parity.
    However, that was not the most staggering part of the speech of the right hon. Member for Yeovil. For me, it was his lack of understanding of the basic negotiating issues in Brussels. He spoke about MCAs and the discrepancy between the green pound and the £ sterling as though we ought to be on the defensive about it in Brussels, and as though it was slightly disreputable to allow the MCA system to bring some benefit to our food producers against a background of high CAP prices.
    Mr. Peyton: Before I said what I did today, I had considered fully the possibility of my remarks being widely misrepresented by the Minister and his colleagues. What he has just said has confirmed me in that likelihood, but it has also confirmed me in the rightness of what I said.
    Mr. Strang: I made a careful note of what the right hon. Gentleman said. Let me remind him. He said that we ought to aim to eliminate something which would do great damage if it was allowed to continue over the next two to three years. He was referring not, of course, to a 7½ per cent. devaluation but to the remainder after the 7½ per cent. devaluation.
    Let me come to the real issue, which is that somehow we as a country should

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    move to this new high-price policy. That is what it involves. The right hon. Member for Yeovil is saying that, although this system of MCAs was introduced, as it was, before we joined the Community in order that the German Government could protect their farmers from the logical consequence of a revaluation of the green mark, which would have meant a fall in their farm prices, and although it was right for the German Government to do that, now that we have joined the Community after it has been in operation, and now that we have these relatively high prices and these food surpluses in the Community, somehow it is wrong on Community grounds and on national interest grounds for us to use the system which is there in order to enable us to make a national judgment, which is what this debate is about.
    I come to the practical point. I have tried to explain that it is nonsense to pretend, as Opposition Members have done, including the right hon. Member for Grantham (Mr. Godber), that there is something disreputable about our holding the green pound at a level which is reasonable and so avoiding an explosion in food prices.
    I come to the position of the farmers—the practice of the green pound and not the European theory. This, too, has not been recognised. I am glad that my hon. Friend the Member for Hemel Hempstead (Mr. Corbett) spoke to his Suffolk dairy farmer over the weekend. A lot of farmers who think this issue through realise that one thing that British agriculture does not want is parity. Parity, certainly at the rate advocated by the Scottish National Party—this very sharp increase in prices—is not what agriculture wants. It would increase cereal prices, which are the basic cost of the livestock producer. It would not solve the problem of the livestock producers. What sense would it make suddenly to jack up prices with the inevitable effect on consumer demand? Is that in our farmers' interests? Of course not.
    The Opposition do not seem to have grasped that parity is against the interests of the European Community, because it will mean higher prices and more surpluses—I shall come to that later, and I am glad that my hon. Friend the Member for Durham (Mr. Hughes) referred to it—
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    and it is also against the interests of our farmers.
    Mr. Jim Spicer: To say the least, the hon. Gentleman is working himself into a lather against MCAs and all the other iniquities of the Community, but will he come back to the point made by my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman)? He and his friends, both inside and outside the House, were pushing for renegotiation. Why did the renegotiation not take place on the terms of the common agricultural policy, and particularly in terms of MCAs and the green currency, as he is now arguing?
    Mr. Strang: I do not understand. Frankly, that does not make sense. I shall have more to say later, if there is time, about the position of the beef sector, which is one of the two areas of concern, but I point out now that it is in a much better state than it was the last time when we last had what was a real crisis in the beef sector, and it is in a very much better state than it would have been had there not been the renegotiation by this Government, securing the variable premium which is essential for beef producers.
    I hear the hon. Member for Argyll (Mr. MacCormick) making noises. I do not know when he came into the Chamber, but I have been sitting here throughout the debate and I do not intend to give way to hon. Members who just slip in here during the last few minutes.
    Mrs. Winifred Ewing: Feart to give way.
    Mr. Strang: I turn now to the position within agriculture as a whole. [Interruption.] The hon. Member for Moray and Nairn (Mrs. Ewing) is making noises now. I think that some of her hon. Friends sitting a little further along the Bench may be a little feart about the policy commitments to high food prices which her party is adopting tonight.
    Mr. Welsh rose—
    Mrs. Winifred Ewing rose—
    Mr. Strang: I may give way later if there is time.
    I turn now to the state of agriculture as a whole, which is the centre-piece of the debate. I assure the hon. Member

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    for North Angus and Mearns (Mr. Buchanan-Smith) that I shall not get involved in an arcane discussion on the question of net incomes. He will recognise that we do not have time for that now, but I put this important practical point to him. What counts when we talk about the state of agriculture is not average income, whether average income including stock appreciation or average income excluding stock appreciation. What counts is the position in the different sectors.
    There can be one sector doing exceptionally well and another doing exceptionally badly. I know that it is the Opposition's policy to give even more increases to the sectors which have been doing exceptionally well, but that is not the Government's policy, and in our view it is not one which makes sense.
    Since there is not much time, let me go through the sectors quickly, starting with cereals, a very important sector. Is anyone suggesting that our cereal farmers have been hard pressed over the past two or three years? Of course not. Everyone recognises the big increase in cereal prices which came a few years ago and which benefited, in particular, the big barley barons in East Anglia, for example. Moreover, the increased yield this year, as indicated in the Annual Review White Paper, will probably, in terms of gross receipts, more than offset the moderation in price level which has taken place. Therefore, if there is one group in the country who have not been hard pressed during this period of incomes policy, it is the cereal growers, whom the right hon. Member for Yeovil wished to reward, among others.
    I shall not touch on horticulture, because the green pound has only a small bearing on that. I shall not say anything about the other arable sectors. However, let us be fair to the Opposition. In their motion they isolate the livestock sector, as do the Government, so there is no argument. If there is a basis for any concern—and I believe that there is justification for some concern about the agriculture industry—it relates to the livestock sector, but not, I emphasise to the right hon. Gentleman, to the whole of the livestock sector, as he sought to imply and, indeed, said implicitly in his speech.
    1092
    Let us take the most important and the biggest livestock sector in terms of agricultural gross domestic product, a sector that is even bigger than cereals—milk production. Milk producers have done very well. They have had higher net returns in the last year, 1977, than they have had for a very long time. [Interruption.] I am sorry, but that is true. I see some hon. Members showing surprise. They ought to talk to some of their practical dairy farmers, who perhaps take a somewhat different view from some agricultural politicians. They should actually look at the facts of the situation. The position is that the margins in the dairy industry, as anyone who studies the agriculture industry knows, have been relatively good over the last year, and the prospects are relatively good.
    Let us come right away to the two areas of concern. The beef industry—
    Mr. Peyton: Will the hon. Gentleman give way?
    Mr. Strang: For one very quick last intervention.
    Mr. Peyton: As the hon. Gentleman has specifically mentioned milk, would he care to state the view of the Milk Marketing Board on the devaluation of the green pound?
    Mr. Strang: I assure the right hon. Gentleman that the farmers, be they cereal farmers or farmers for the Milk Marketing Board, will not—[Interruption.] Individually, the farmers for the Milk Marketing Board do not look a gift horse in the mouth. They will not turn down this increase, but it is not needed. The right hon. Gentleman does not appreciate the situation. He ought not to believe everything that everyone says to him. [HON. MEMBERS: "Answer."]
    The position of the beef industry is one that gives rise to concern. That is one of the reasons why we are proposing an immediate 5 per cent. devaluation of the green pound from 1st February, as it affects the beef sector. I emphasise that.
    Mr. Iain MacCormick: Will the Minister give way?
    Mr. Strang: No, I shall not give way.
    The position of the beef industry is a matter for concern. It will be helped by this reduction in the MCAs. But here

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    again—I do not want to play down the seriousness of the situation—hon. Members should not pretend that we have here a crisis on the scale of that which we had in 1974. It is nothing like that. Prices have firmed up, although we had a difficult period in the autumn, and the Government's 5 per cent. devaluation of the green pound will improve matters further.
    I come to the second area of concern.
    Mr. Watt: Will the Minister give way?
    Mr. Strang: I refer to the position of the pigmeat industry. We accept that there is a matter for concern in the pigmeat industry. Of course, here again the position has improved a little recently. The reduction in costs has helped the position, but there is still a need for further help for the pigmeat industry. In particular, there is a need for help for the pig processing industry.
    I come now to a very important point. This is the matter to which I was referring when I said that I did not really believe that the question of the precise rate at which we devalue the green pound is best decided on the Floor of the House of Commons. It is for this reason. My right hon. Friend said, although no one picked this up except the hon. Member for Westmorland, who mentioned it cursorily in his winding-up speech, that we intend to go for a selective devaluation of the green pound. The reason for this is clear. It is to enable us to give the benefit to the people who need it—the beef and pig producers—and to avoid giving the benefit to people who do not need it—the cereal producers.
    Mr. Watt: Will the Minister give way?
    Mr. Strang: No.
    Mr. MacCormick: Will the Minister give way?
    Mr. Strang: No.
    At least, some hon. Members opposite have, I hope, recognised that in doing what we propose and by holding back increases in the cereal support prices and the reduction in the cereal MCAs until August—a full six months—we shall maximise the impact in those areas which need help, particularly the pig industry. That selective devaluation would be worth more to the pig industry than the difference between a 7½ per cent. and a 5 per cent. devaluation.
    Mr. Jopling: Does the Minister recall that, over a period of many years, the Commission and the Council of Ministers have been strongly opposed to selective devaluations? [HON. MEMBERS: "So what?"] Will he tell us whether the Government have a guarantee from the Commission and the Council of Ministers that their proposal is acceptable?
    Mr. Strang: That is an interesting intervention. I wonder whether, if we give the hon. Gentleman a commitment, he will be prepared to withdraw his troops in the interests of the pig industry.
    Mr. Jopling indicated dissent.
    Mr. Watt: Will the Minister give way?
    Mr. Strang: No.
    Let me give the hon. Member for Westmorland his answer. The Commission has supported the Government's proposed selective devaluation.
    Mr. Jopling: The Minister has answered only one part of the question. What about the Council of Ministers? Have the Ministers agreed as well?
    Mr. Strang: Of course not. The matter has not been discussed by the Council of Ministers. However, I suggest that the hon. Gentleman should look at the record. I do not want to sound big-headed, but I have been going to Brussels for a long time. Let the hon. Gentleman tell me of one occasion when the Council of Ministers has turned down a devaluation selective or otherwise, which has had the support of the Commission.
    Time is short, and I want to come to the other side of the coin—the position of the consumers. The remarkable thing about the speech of the right hon. Member for Yeovil was that he showed more interest in European taxpayers—a thoroughly misguided interest, since the increased cost of disposing of surpluses if we increase prices will more than offset the MCA savings—than in British consumers.
    We make no apology for the fact that we want to minimise increases in food prices in the current year. We make no apology for the fact that we do not seek an increase when there is no need for an increase in price for the consumer, whether it is the broad consequence of

    1095
    an increase in the price of cereals as a result of a devaluation or the immediate impact of a sugar price increase, where there is already a surplus. We make no apology for that.
    Mr. Welsh rose—
    Mr. Strang: We are in a situation in which the Government's strategy on deflation and their policy on incomes comes into play. Of course, we have to strike a balance.
    Mr. Peter Mills rose—
    Mr. Strang: I am not giving way any more.
    How can we possibly move through the difficult period of a third phase of incomes policy after two years when real living standards have fallen, and how can we urge the workers to accept a reasonable level of restraint while we move into a period of falling inflation and rising incomes, if suddenly we are to devalue across the board so as to give a totally unjustified increase to cereal producers and other sectors of the agriculture industry?
    There is another point that should be made in answer to some of my hon. Friends who are concerned that there should be no green pound devaluation. In fact, the devaluing of the green currency is no longer an important bargaining weapon. It is now realised by Commissioner Gundelach that any saving achieved by the cutting of MCAs is more than offset by the increased cost in the budget through further generating a larger surplus, such as the milk surplus. That fact is brought out clearly if we consider the figures. That is the answer to my hon. Friend the Member for York (Mr. Lyon). That is why the Commission has proposed no more than a 5 per cent. devaluation for any of the green currencies, including the United Kingdom green currency.
    As for the consumer interest, there is a reason for its being important to make some small devaluation. We want particularly to help the food processing industries. I do not think that anyone could have failed to be impressed by the speech of my hon. Friend the Member for Bradford, South (Mr. Torney). He said, quite rightly, that the way that we are imple
    1096
    menting the devaluation means that the processing industry will have an immediate benefit. We need a 5 per cent. devaluation to save the jobs of the members of USDAW, my hon. Friend's union.
    I am grateful to my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) for handing me a letter from Schweppes Ltd. in his constituency. The letter brings out the point that I have just been making. It says:
    "While some adjustment in the green pound exchange rate may be necessary, we think 7½ per cent. is excessive and inflationary."
    That is not the view of the unions alone in the food industry. It happens to be the view of management in that industry.
    The debate has been founded on a regrettable misunderstanding. It seems that Opposition Members do not appreciate that, although a green pound devaluation is a relatively blunt weapon, it is crucial that there is some fine tuning. It is a pity that some hon. Members in the minority parties have perhaps not fully appreciated that need.
    Mr. MacCormick rose—
    Mr. Strang: The debate has been characterised by an incredible performance by the right hon. Member for Yeovil, who is clearly prepared to throw away any negotiating position that we might have at Brussels. I remember my right hon. Friend the Member for Huyton (Sir H. Wilson) describing the right hon. Member for Sidcup (Mr. Heath) as a puppy lying on his back. I can say that the posture of the right hon. Gentleman was positively decent compared with the Laurel and Hardy act from the Opposition Front Bench this afternoon.
    This is a question of national judgment. It is a question of protecting the sectors of the agriculture industry that need protecting. It is a matter of providing further incentives, and that is precisely what the Government's policy will achieve. That is not the policy set out in the Opposition's motion.
    Furthermore, the debate is about the Government's economic policy. It is about the whole question of how we can make progress and continue to move forward while reducing the rate of inflation and avoiding any unnecessary increases in prices. It is about achieving the economic

    1097
    progress that we all want. The farmers, too, will benefit from the fall in the rate of inflation. They welcome the fact that inflation this year is likely to be in single figures. That is the position. We have
    won the argument tonight.
    Question put, That the amendment be made:—
    The House divided: Ayes 280, Noes 291.

    Division No. 70]

    AYES

    [10.0 p.m.

    Abse, Leo

    English, Michael

    Lewis, Ron (Carlisle)

    Allaun, Frank

    Ennals, Rt Hon David

    Lipton, Marcus

    Anderson, Donald

    Evans, Fred (Caerphilly)

    Litterick, Tom

    Archer, Rt Hon Peter

    Evans, Ioan (Aberdare)

    Lomas, Kenneth

    Armstrong, Ernest

    Evans, John (Newton)

    Loyden, Eddie

    Ashley, Jack

    Ewing, Harry (Stirling)

    Luard, Evan

    Ashton, Joe

    Fernyhough, Rt Hon E.

    Lyons, Edward (Bradford W)

    Atkins, Ronald (Preston N)

    Fitch, Alan (Wigan)

    Mabon, Rt Hon Dr J. Dickson

    Atkinson, Norman

    Fitt, Gerard (Belfast W)

    McCartney, Hugh

    Barnett, Guy (Greenwich)

    Flannery, Martin

    McDonald, Dr Oonagh

    Barnett, Rt Hon Joel (Heywood)

    Fletcher, Ted (Darlington)

    McElhone, Frank

    Bates, Alf

    Foot, Rt Hon Michael

    MacFarquhar, Roderick

    Bean, R. E.

    Ford, Ben

    MacKenzie, Rt Hon Gregor

    Benn, Rt Hon Anthony Wedgwood

    Forrester, John

    Maclennan, Robert

    Bennett, Andrew (Stockport N)

    Fowler, Gerald (The Wrekin)

    McMillan, Tom (Glasgow C)

    Bidwell, Sydney

    Fraser, John (Lambeth, N'w'd)

    Madden, Max

    Bishop, Rt Hon Edward

    Freeson, Rt Hon Reginald

    Magee, Bryan

    Blenkinsop, Arthur

    Garrett, John (Norwich S)

    Mahon, Simon

    Boardman, H.

    Garrett, W. E.(Wallsend)

    Mallalieu, J. P. W.

    Booth, Rt Hon Albert

    George, Bruce

    Marks, Kenneth

    Boothroyd, Miss Betty

    Gilbert, Rt Hon Dr John

    Marshall, Dr Edmund (Goole)

    Bottomley, Rt Hon Arthur

    Ginsburg, David

    Marshall, Jim (Leicester S)

    Boyden, James (Bish Auck)

    Golding, John

    Mason, Rt Hon Roy

    Bradley, Tom

    Gould, Bryan

    Maynard, Miss Joan

    Bray, Dr Jeremy

    Gourlay, Harry

    Meacher, Michael

    Broughton, Sir Alfred

    Graham, Ted

    Mellish, Rt Hon Robert

    Brown, Hugh D. (Provan)

    Grant, George (Morpeth)

    Mendelson, John

    Brown, Robert C. (Newcastle W)

    Grant, John (Islington C)

    Mikardo, Ian

    Brown, Ronald (Hackney S)

    Grocott, Bruce

    Millan, Rt Hon Bruce

    Buchan, Norman

    Hamilton, W. W. (Central Fife)

    Miller, Dr M. S. (E Kilbride)

    Buchanan, Richard

    Harper, Joseph

    Mitchell, Austin

    Butler, Mrs Joyce (Wood Green)

    Harrison, Rt Hon Walter

    Mitchell, R. C. (Soton, Itchen)

    Callaghan, Rt Hon J. (Cardiff SE)

    Hart, Rt Hon Judith

    Molloy, William

    Callaghan, Jim (Middleton & P)

    Hattersley, Rt Hon Roy

    Moonman, Eric

    Campbell, Ian

    Hayman, Mrs Helene

    Morris, Alfred (Wythenshawe)

    Canavan, Dennis

    Healey, Rt Hon Denis

    Morris, Rt Hon Charles R.

    Cant, R. B.

    Heffer, Eric S.

    Morris, Rt Hon J. (Aberavon)

    Carmichael, Neil

    Hooley, Frank

    Moyle, Roland

    Carter, Ray

    Horam, John

    Mulley, Rt Hon Frederick

    Cartwright, John

    Howell, Rt Hon Denis (B'ham, Sm H)

    Murray, Rt Hon Ronald King

    Castle, Rt Hon Barbara

    Hoyle, Doug (Nelson)

    Newens, Stanley

    Clemitson, Ivor

    Huckfield, Les

    Noble, Mike

    Cocks, Rt Hon Michael (Bristol S)

    Hughes, Rt Hon C. (Anglesey)

    Oakes, Gordon

    Cohen, Stanley

    Hughes, Mark (Durham)

    Ogden, Eric

    Colquhoun, Ms Maureen

    Hughes, Robert (Aberdeen N)

    O'Halloran, Michael

    Conlan, Bernard

    Hughes, Roy (Newport)

    Orbach, Maurice

    Corbett, Robin

    Hunter, Adam

    Orme, Rt Hon Stanley

    Cowans, Harry

    Irvine, Rt Hon Sir A. (Edge Hill)

    Ovenden, John

    Cox, Thomas (Tooting)

    Irving, Rt Hon S. (Dartford)

    Owen, Rt Hon Dr David

    Crawshaw, Richard

    Jackson, Colin (Brighouse)

    Padley, Walter

    Crowther, Stan (Rotherham)

    Jackson, Miss Margaret (Lincoln)

    Palmer, Arthur

    Cryer, Bob

    Janner, Greville

    Park, George

    Cunningham, G. (Islington S)

    Jay, Rt Hon Douglas

    Parker, John

    Cunningham, Dr J. (White)

    Jeger, Mrs Lena

    Parry, Robert

    Davidson, Arthur

    Jenkins, Hugh (Putney)

    Pavitt, Laurie

    Davies, Bryan (Enfield N)

    John, Brynmor

    Pendry, Tom

    Davies, Rt Hon Denzil

    Johnson, James (Hull West)

    Perry, Ernest

    Davies, Ifor (Gower)

    Johnson, Walter (Derby S)

    Prescott, John

    Davies, Clinton (Hackney C)

    Jones, Alec (Rhondda)

    Price, C. (Lewisham W)

    Deakins, Eric

    Jones, Barry (East Flint)

    Price, William (Rugby)

    Dean, Joseph (Leeds West)

    Jones, Dan (Burnley)

    Radice, Giles

    Dell, Rt Hon Edmund

    Judd, Frank

    Rees, Rt Hon Merlyn (Leeds S)

    Dempsey, James

    Kaufman, Gerald

    Richardson, Miss Jo

    Doig, Peter

    Kelley, Richard

    Roberts, Albert (Normanton)

    Dormand, J. D.

    Kerr, Russell

    Roberts, Gwilym (Cannock)

    Douglas-Mann, Bruce

    Kilroy-Silk, Robert

    Robinson, Geoffrey

    Dunn, James A.

    Kinnock, Neil

    Roderick, Caerwyn

    Dunnett, Jack

    Lambie, David

    Rodgers, George (Chorley)

    Dunwoody, Mrs Gwyneth

    Lamborn, Harry

    Rodgers, Rt Hon William (Stockton)

    Eadie, Alex

    Lamond, James

    Rooker, J. W.

    Edge, Geoff

    Latham, Arthur (Paddington)

    Rose, Paul B.

    Edwards, Robert (Wolv SE)

    Leadbitter, Ted

    Ross, Rt Hon W. (Kilmarnock)

    Ellis, John (Brigg a Scun)

    Lestor, Miss Joan (Eton & Slough)

    Rowlands, Ted

    Ellis, Tom (Wrexham)

    Lever, Rt Hon Harold

    Ryman, John

    Strang, Gavin

    Weetch, Ken

    Sandelson, Neville

    Strauss, Rt Hon G. R.

    Weitzman, David

    Sedgemore, Brian

    Summerskill, Hon Dr Shirley

    Wellbeloved, James

    Selby, Harry

    Swain, Thomas

    White, James (Pollok)

    Sever, John

    Taylor, Mrs Ann (Bolton W)

    Whitlock, William

    Shaw, Arnold (Ilford South)

    Thomas, Jeffrey (Abertillery)

    Willey, Rt Hon Frederick

    Sheldon, Rt Hon Robert

    Thomas, Mike (Newcastle E)

    Williams, Rt Hon Alan (Swansea W)

    Shore, Rt Hon Peter

    Thomas, Ron (Bristol NW)

    Williams, Rt Hon Shirley (Hertford)

    Short, Mrs Renée (Wolv NE)

    Thorne, Stan (Preston South)

    Williams, Sir Thomas (Warrington)

    Silkin, Rt Hon John (Deptford)

    Tierney, Sydney

    Wilson, Alexander (Hamilton)

    Silkin, Rt Hon S. C. (Dulwich)

    Tinn, James

    Wilson, Rt Hon Sir Harold (Huyton)

    Silverman, Julius

    Tomlinson, John

    Wilson, William (Coventry SE)

    Skinner, Dennis

    Torney, Tom

    Wise, Mrs Audrey

    Smith, John (N Lanarkshire)

    Tuck, Raphael

    Woodall, Alec

    Snape, Peter

    Varley, Rt Hon Eric G.

    Woof, Robert

    Spearing, Nigel

    Wainwright, Edwin (Dearne V)

    Wrigglesworth, Ian

    Spriggs, Leslie

    Walker, Harold (Doncaster)

    Young, David (Bolton E)

    Stallard, A. W.

    Walker, Terry (Kingswood)

    Stewart, Rt Hon M. (Fulham)

    Ward, Michael

    TELLERS FOR THE AYES:

    Stoddart, David

    Watkins, David

    Mr. James Hamilton and

    Stott, Roger

    Watkinson, John

    Mr. Donald Coleman

    NOESf

    Adley, Robert

    Durant, Tony

    Hurd, Douglas

    Alison, Michael

    Dykes, Hugh

    Hutchison, Michael Clark

    Amery, Rt Hon Julian

    Edwards, Nicholas (Pembroke)

    Irving, Charles (Cheltenham)

    Arnold, Tom

    Emery, Peter

    James, David

    Atkins, Rt Hon H. (Spelthorne)

    Evans, Gwynfor (Carmarthen)

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

    Atkinson, David (Bournemouth, East)

    Ewing, Mrs Winifred (Moray)

    Johnson Smith, G. (E Grinstead)

    Awdry, Daniel

    Eyre, Reginald

    Johnston, Russell (Inverness)

    Bain, Mrs Margaret

    Fairbairn, Nicholas

    Jones, Arthur (Daventry)

    Baker, Kenneth

    Fairgrieve, Russell

    Jopling, Michael

    Banks, Robert

    Fell, Anthony

    Joseph, Rt Hon Sir Keith

    Beith, A. J.

    Finsberg, Geoffrey

    Kaberry, Sir Donald

    Bell, Ronald

    Fisher, Sir Nigel

    Kellett-Bowman, Mrs Elaine

    Bennett, Dr Reginald (Fareham)

    Fletcher, Alex (Edinburgh N)

    Kershaw, Anthony

    Benyon, W.

    Fookes, Miss Janet

    Kilfedder, James

    Berry, Hon Anthony

    Forman, Nigel

    Kimball, Marcus

    Biffen, John

    Fowler, Norman (Sutton C'f'd)

    King, Evelyn (South Dorset)

    Biggs-Davison, John

    Fox, Marcus

    King, Tom (Bridgwater)

    Blaker, Peter

    Fraser, Rt Hon H. (Stafford & St)

    Kitson, Sir Timothy

    Body, Richard

    Freud, Clement

    Knox, David

    Boscawen, Hon Robert

    Fry, Peter

    Lamont, Norman

    Bottomley, Peter

    Galbraith, Hon T. G. D.

    Langford-Holt, Sir John

    Bowden, A. (Brighton, Kemptown)

    Gardner, Edward (S Fylde)

    Latham, Michael (Melton)

    Boyson, Dr Rhodes (Brent)

    Gardiner, George (Reigate)

    Lawrence, Ivan

    Bradford, Rev Robert

    Gilmour, Rt Hon Ian (Chesham)

    Lawson, Nigel

    Braine, Sir Bernard

    Gilmour, Sir John (East Fife)

    Lester, Jim (Beeston)

    Brittan, Leon

    Glyn, Dr Alan

    Lewis, Kenneth (Rutland)

    Brocklebank-Fowler, C.

    Godber, Rt Hon Joseph

    Lloyd, Ian

    Brooke, Peter

    Goodhew, Victor

    Loveridge, John

    Bro herton, Michael

    Goodlad, Alastair

    Luce, Richard

    Brown, Sir Edward (Bath)

    Gorst, John

    McAdden, Sir Stephen

    Bryan, Sir Paul

    Gow, Ian (Eastbourne)

    MacCormick, Iain

    Buchanan-Smith, Alick

    Gower, Sir Raymond (Barry)

    McCrindle, Robert

    Buck, Antony

    Gray, Hamish

    McCusker, H.

    Budgen, Nick

    Griffiths, Eldon

    Macfarlane, Neil

    Bulmer, Esmond

    Grimond, Rt Hon J.

    MacGregor, John

    Burden, F. A.

    Grist, Ian

    MacKay, Andrew (Stechford)

    Butler, Adam (Bosworth)

    Grylls, Michael

    Mackintosh, John P.

    Carlisle, Mark

    Hall-Davis, A. G. F.

    Macmillan, Rt Hon M. (Farnham)

    Carson, John

    Hamilton, Michael (Salisbury)

    McNair-Wilson, M. (Newbury)

    Chalker, Mrs Lynda

    Hampson, Dr Keith

    McNair-Wilson, P. (New Forest)

    Churchill, W. S.

    Harrison, Col Sir Harwood (Eye)

    Madel, David

    Clark, Alan (Plymouth, Sutton)

    Harvie Anderson, Rt Hon Miss

    Marshall, Michael (Arundel)

    Clark, William (Croydon S)

    Haselhurst, Alan

    Marten, Neil

    Clarke, Kenneth (Rushcliffe)

    Hastings, Stephen

    Mates, Michael

    Clegg, Walter

    Havers, Rt Hon Sir Michael

    Mather, Carol

    Cockroft, John

    Hayhoe, Barney

    Maude, Angus

    Cooke, Robert (Bristol W)

    Heath, Rt Hon Edward

    Maudling, Rt Hon Reginald

    Cope, John

    Henderson, Douglas

    Mawby, Ray

    Cormack, Patrick

    Heseltine, Michael

    Maxwell-Hyslop, Robin

    Corrie, John

    Hicks, Robert

    Mayhew, Patrick

    Costain, A. P.

    Higgins, Terence L.

    Meyer, Sir Anthony

    Crawford, Douglas

    Hodgson, Robin

    Miller, Hal (Bromsgrove)

    Crouch, David

    Holland, Philip

    Mills, Peter

    Crowder, F. P.

    Hooson, Emlyn

    Miscampbell, Norman

    Davies, Rt Hon J. (Knutsford)

    Hordern, Peter

    Mitchell, David (Basingstoke)

    Dean, Paul (N Somerset)

    Howe, Rt Hon Sir Geoffrey

    Moate, Roger

    Dodsworth, Geoffrey

    Howell, David (Guildford)

    Molyneaux, James

    Douglas-Hamilton, Lord James

    Howell, Ralph (North Norfolk)

    Monro, Hector

    Drayson, Burnaby

    Howells, Geraint (Cardigan)

    Montgomery, Fergus

    du Cann, Rt Hon Edward

    Hunt, David (Wirral)

    Moore, John (Croydon C)

    Dunlop, John

    Hunt, John (Ravensbourne)

    More, Jasper (Ludlow)

    Morgan, Geraint

    Rhys Williams, Sir Brandon

    Stokes, John

    Morgan-Giles, Rear-Admiral

    Ridley, Hon Nicholas

    Stradling Thomas, J.

    Morris, Michael (Northampton S)

    Ridsdale, Julian

    Tapsell, Peter

    Morrison, Charles (Devizes)

    Rifkind, Malcolm

    Taylor, Teddy (Cathcart)

    Morrison, Hon Peter (Chester)

    Roberts, Wyn (Conway)

    Tebbit, Norman

    Mudd, David

    Ross, Stephen (Isle of Wight)

    Temple-Morris, Peter

    Neave, Airey

    Ross, William (Londonderry)

    Thatcher, Rt Hon Margaret

    Neison, Anthony

    Rossi, Hugh (Hornsey)

    Thomas, Dafydd (Merioneth)

    Neubert, Michael

    Rost, Peter (SE Derbyshire)

    Thomas, Rt Hon P. (Hendon S)

    Newton, Tony

    Sainsbury, Tim

    Thompson, George

    Normanton, Tom

    St. John-Stevas, Norman

    Thorpe, Rt Hon Jeremy (N Devon)

    Nott, John

    Scott, Nicholas

    Townsend, Cyril D.

    Oppenheim, Mrs Sally

    Shaw, Giles (Pudsey)

    Trotter, Neville

    Osborn, John

    Shaw, Michael (Scarborough)

    van Straubenzee, W. R.

    Page, Rt Hon R. Graham (Crosby)

    Shelton, William (Streatham)

    Vaughan, Dr Gerald

    Page, Richard (Workington)

    Shepherd, Colin

    Viggers, Peter

    Paisley, Rev Ian

    Shersby, Michael

    Wainwright, Richard (Coine V)

    Pardoe, John

    Sillars, James

    Wakeham, John

    Parkinson, Cecil

    Silvester, Fred

    Walder, David (Clitheroe)

    Pattie, Geoffrey

    Sims, Roger

    Walker, Rt Hon P (Worcester)

    Penhaligon, David

    Sinclair, Sir George

    Walters, Dennis

    Percival, Ian

    Skeet, T. H. H

    Watt, Hamish

    Peyton, Rt Hon John

    Smith, Cyril (Rochdale)

    Weatherill, Bernard

    Pink, R. Bonner

    Smith, Dudley (Warwick)

    Wells, John

    Powell, Rt Hon J. Enoch

    Smith, Timothy John (Ashfield)

    Welsh, Andrew

    Prentice, Rt Hon Reg

    Speed, Keith

    Whitelaw, Rt Hon William

    Price, David (Eastleigh)

    Spence, John

    Wiggin, Jerry

    Prior, Rt Hon James

    Spicer, Jim (W Dorset)

    Wigley, Datydd

    Pym, Rt Hon Francis

    Spicer, Michael (S Worcester)

    Wilson, Gordon (Dundee E)

    Raison, Timothy

    Sproat, Iain

    Winterton, Nicholas

    Rathbone, Tim

    Stainton, Keith

    Wood, Rt Hon Richard

    Rawlinson, Rt Hon Sir Peter

    Stanbrook, Ivor

    Young, Sir G. (Ealing, Acton)

    Rees, Peter (Dover & Deal)

    Stanley, John

    Younger, Hon George

    Rees-Davies, W. R.

    Steel, Rt Hon David

    Reid, George

    Steen, Anthony (Wavertree)

    TELLERS FOR THE NOES:

    Renton, Rt Hon Sir D. (Hunts)

    Stewart, Rt Hon Donald

    Mr. Spencer Le Marchant and

    Renton, Tim (Mid-Sussex)

    Stewart, Ian (Hitchin)

    Mr. Michael Roberts.

    Rhodes James, R.

    Question accordingly negatived.
    Main Question put:—
    The House divided: Ayes 291, Noes 281.

    Division No. 71]

    AYES

    [10.17 p.m.

    Adley, Robert

    Churchill, W. S.

    Fry, Peter

    Alison, Michael

    Clark, Alan (Plymouth, Sutton)

    Galbraith, Hon T. G. D.

    Amery, Rt Hon Julian

    Clark, William (Croydon S)

    Gardiner, George (Reigate)

    Arnold, Tom

    Clarke, Kenneth (Rushcliffe)

    Gardner, Edward (S Fylde)

    Atkins, Rt Hon H. (Spelthorne)

    Clegg, Walter

    Gilmour, Rt Hon Ian (Chesham)

    Atkinson, David (Bournemouth, East)

    Cookroft, John

    Gilmour, Sir John (East Fife)

    Awdry, Daniel

    Cooke, Robert (Bristol W)

    Glyn, Dr Alan

    Bain, Mrs Margaret

    Cope, John

    Godber, Rt Hon Joseph

    Baker, Kenneth

    Cormack, Patrick

    Goodhew, Victor

    Banks, Robert

    Corrie, John

    Goodiad, Alastair

    Beith, A. J.

    Costain, A. P.

    Gorst, John

    Bell, Ronald

    Crawford, Douglas

    Gow, Ian (Eastbourne)

    Bennett, Dr Reginald (Fareham)

    Crouch, David

    Gower, Sir Raymond (Barry)

    Benyon, W.

    Crowder, F. P.

    Gray, Hamish

    Berry, Hon Anthony

    Davies, Rt Hon J. (Knutsford)

    Griffiths, Eldon

    Biffen, John

    Dean, Paul (N Somerset)

    Grimond, Rt Hon J.

    Biggs-Davison, John

    Dodsworth, Geoffrey

    Grist, Ian

    Blaker, Peter

    Douglas-Hamilton, Lord James

    Grylls, Michael

    Body, Richard

    Drayson, Burnaby

    Hall-Davis, A. G. F.

    Boscawen, Hon Robert

    du Cann, Rt Hon Edward

    Hamilton, Michael (Salisbury)

    Bottomley, Peter

    Dunlop, John

    Hampson, Dr Keith

    Bowden, A. (Brighton, Kemptown)

    Durant, Tony

    Harrison, Col Sir Harwood (Eye)

    Boyson, Dr Rhodes (Brent)

    Dykes, Hugh

    Harvie Anderson, Rt Hon Miss

    Bradford, Rev Robert

    Edwards, Nicholas (Pembroke)

    Haselhurst, Alan

    Braine, Sir Bernard

    Emery, Peter

    Hastings, Stephen

    Brittan, Leon

    Evans, Gwynfor (Carmarthen)

    Havers, Rt Hon Sir Michael

    Brocklebank-Fowler, C.

    Ewing, Mrs Winifred (Moray)

    Hayhoe, Barney

    Brooke, Peter

    Eyre, Reginald

    Heath, Rt Hon Edward

    Brotherton, Michael

    Fairbairn, Nicholas

    Henderson, Douglas

    Brown, Sir Edward (Bath)

    Fairgrieve, Russell

    Heseltine, Michael

    Bryan, Sir Paul

    Fell, Anthony

    Hicks, Robert

    Buchanan-Smith, Alick

    Finsberg, Geoffrey

    Higgins, Terence L.

    Buck, Antony

    Fisher, Sir Nigel

    Hodgson, Robin

    Budgen, Nick

    Fletcher, Alex (Edinburgh N)

    Holland, Philip

    Bulmer, Esmond

    Fookes, Miss Janet

    Hooson, Emlyn

    Burden, F. A.

    Forman, Nigel

    Hordern, Peter

    Butler, Adam (Bosworth)

    Fowler, Norman (Sutton C'f'd)

    Howe, Rt Hon Sir Geoffrey

    Carlisle, Mark

    Fox Marcus

    Howell, David (Guildford)

    Carson, John

    Fraser, Rt Hon H. (Stafford & St)

    Howell, Ralph (North Norfolk)

    Chalker, Mrs Lynda

    Freud Clement

    Howells, Geraint (Cardigan)

    Hunt, David (Wirral)

    Monro, Hector

    Shersby, Michael

    Hunt, John (Ravensbourne)

    Montgomery, Fergus

    Sillars, James

    Hurd, Douglas

    Moore, John (Croydon C)

    Silvester, Fred

    Hutchison, Michael Clark

    More, Jasper (Ludlow)

    Sims, Roger

    Irving, Charles (Cheltenham)

    Morgan, Geraint

    Sinclair, Sir George

    James, David

    Morgan-Giles, Rear-Admiral

    Skeet, T. H. H.

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

    Morris, Michael (Northampton S)

    Smith, Cyril (Rochdale)

    Johnson Smith, G. (E Grinstead)

    Morrison, Charles (Devizes)

    Smith, Dudley (Warwick)

    Johnston, Russell (Inverness)

    Morrison, Hon Peter (Chester)

    Smith, Timothy John (Ashfield)

    Jones, Arthur (Daventry)

    Mudd, David

    Speed, Keith

    Jopling, Michael

    Neave, Airey

    Spence, John

    Joseph, Rt Hon Sir Keith

    Nelson, Anthony

    Spicer, Jim (W Dorset)

    Kaberry, Sir Donald

    Neubert, Michael

    Spicer, Michael (S Worcester)

    Kellett-Bowman, Mrs Elaine

    Newton, Tony

    Sproat, Iain

    Kershaw, Anthony

    Normanton, Tom

    Stainton, Keith

    Kilfedder, James

    Nott, John

    Stanbrook, Ivor

    Kimball, Marcus

    Oppenheim, Mrs Sally

    Stanley, John

    King, Evelyn (South Dorset)

    Osborn, John

    Steel. Rt Hon David

    King, Tom (Bridgwater)

    Page, Rt Hon R. Graham (Crosby)

    Steen, Anthony (Wavertree)

    Kitson, Sir Timothy

    Page, Richard (Workington)

    Stewart, Rt Hon Donald

    Knox, David

    Paisley, Rev Ian

    Stewart, Ian (Hitchin)

    Lamont, Norman

    Pardoe, John

    Stokes, John

    Langford-Holt, Sir John

    Parkinson, Cecil

    Stradling Thomas, J,

    Latham, Michael (Melton)

    Pattie, Geoffrey

    Tapsell, Peter

    Lawrence, Ivan

    Penhaligon, David

    Taylor, Teddy (Cathcart)

    Lawson, Nigel

    Percival, Ian

    Tebbit, Norman

    Lester, Jim (Beeston)

    Peyton, Rt Hon John

    Temple-Morris, Peter

    Lewis, Kenneth (Rutland)

    Pink, R. Bonner

    Thatcher, Rt Hon Margaret

    Lloyd, Ian

    Powell, Rt Hon J. Enoch

    Thomas, Dafydd (Merioneth)

    Loveridge, John

    Prentice, Rt Hon Reg

    Thomas, Rt Hon P. (Hendon S)

    Luce, Richard

    Price, David (Eastleigh)

    Thompson, George

    McAdden, Sir Stephen

    Prior, Rt Hon James

    Thorpe, Rt Hon Jeremy (N Devon)

    MacCormick, Iain

    Pym, Rt Hon Francis

    Townsend, Cyril D.

    McCrindle, Robert

    Raison, Timothy

    Trotter, Neville

    McCusker, H.

    Rathbone, Tim

    van Straubenzee, W. R.

    Macfarlane, Neil

    Rawlinson, Rt Hon Sir Peter

    Vaughan, Dr Gerald

    MacGregor, John

    Rees, Peter (Dover & Deal)

    Viggers, Peter

    MacKay, Andrew (Stechford)

    Rees-Davies, W. R.

    Wainwright, Richard (Colne V)

    Mackintosh, John P.

    Reid, George

    Wakeham, John

    Macmillan, Rt Hon M. (Farnham)

    Renton, Rt Hon Sir D. (Hunts)

    Walder, David (Clitheroe)

    McNair-Wilson, M. (Newbury)

    Renton, Tim (Mid-Sussex)

    Walker, Rt Hon P. (Worcester)

    McNair-Wilson, P. (New Forest)

    Rhodes James, R.

    Walters, Dennis

    Madel, David

    Rhys Williams, Sir Brandon

    Watt, Hamish

    Marshall, Michael (Arundel)

    Ridley, Hon Nicholas

    Weatherill, Bernard

    Marten, Neil

    Ridsdale, Julian

    Wells, John

    Mates, Michael

    Rifkind, Malcolm

    Welsh, Andrew

    Mather, Carol

    Roberts, Wyn (Conway)

    Whitelaw, Rt Hon William

    Maude, Angus

    Ross, Stephen (Isle of Wight)

    Wiggin, Jerry

    Maudling, Rt Hon Reginald

    Ross, William (Londonderry)

    Wigley, Dafydd

    Mawby, Ray

    Rossi, Hugh (Hornsey)

    Wilson, Gordon (Dundee E)

    Maxwell-Hyslop, Robin

    Rost, Peter (SE Derbyshire)

    Winterton, Nicholas

    Mayhew, Patrick

    Sainsbury, Tim

    Wood, Rt Hon Richard

    Meyer, Sir Anthony

    St. John-Stevas, Norman

    Young, Sir G. (Ealing, Acton)

    Miller, Hal (Bromsgrove)

    Scott, Nicholas

    Younger, Hon George

    Mills, Peter

    Shaw, Giles (Pudsey)

    Miscampbell, Norman

    Shaw, Michael (Scarborough)

    TELLERS FOR THE AYES:

    Mitchell, David (Basingstoke)

    Shelton, William (Streatham)

    Mr. Spencer Le Marchant and

    Moate, Roger

    Shepherd, Colin

    Mr. Michael Roberts.

    Molyneaux, James

    NOES

    Abse, Leo

    Bradley, Tom

    Corbett, Robin

    Allaun, Frank

    Bray, Dr Jeremy

    Cowans, Harry

    Anderson, Donald

    Broughton, Sir Alfred

    Cox, Thomas (Tooting)

    Archer, Rt Hon Peter

    Brown, Hugh D. (Provan)

    Crawshaw, Richard

    Armstrong, Ernest

    Brown, Robert C. (Newcastle W)

    Crowther, Stan (Rotherham)

    Ashley, Jack

    Brown, Ronald (Hackney S)

    Cryer, Bob

    Ashton, Joe

    Buchan, Norman

    Cunningham, G. (Islington S)

    Atkins, Ronald (Preston N)

    Buchanan, Richard

    Cunningham, Dr J. (White)

    Atkinson, Norman

    Butler, Mrs Joyce (Wood Green)

    Davidson, Arthur

    Barnett, Guy (Greenwich)

    Callaghan, Rt Hon J. (Cardiff SE)

    Davies, Bryan (Enfield N)

    Barnett, Rt Hon Joel (Heywood)

    Callaghan, Jim (Middleton & P)

    Davies, Rt Hon Denzil

    Bates, Alf

    Campbell, Ian

    Davies, Ifor (Gower)

    Bean, R. E.

    Canavan, Dennis

    Davies, Clinton (Hackney C)

    Benn, Rt Hon Anthony Wedgwood

    Cant, R. B.

    Deakins, Eric

    Bennett, Andrew (Stockport N)

    Carmichael, Neil

    Dean, Joseph (Leeds West)

    Bidwell, Sydney

    Carter, Ray

    Dell, Rt Hon Edmund

    Bishop, Rt Hon Edward

    Cartwright, John

    Dempsey, James

    Blenkinsop, Arthur

    Castle, Rt Hon Barbara

    Doig, Peter

    Boardman, H.

    Clemitson, Ivor

    Dormand, J. D.

    Booth, Rt Hon Albert

    Cocks, Rt Hon Michael (Bristol S)

    Douglas-Mann, Bruce

    Boothroyd, Miss Betty

    Cohen, Stanley

    Dunn, James A.

    Bottomley, Rt Hon Arthur

    Colquhoun, Ms Maureen

    Dunnett Jack

    Boyden, James (Bish Auck)

    Conlan, Bernard

    Dunwoody, Mrs Gwyneth

    Eadie, Alex

    Lambie, David

    Roberts, Gwilym (Cannock)

    Edge, Geoff

    Lamborn, Harry

    Robinson, Geoffrey

    Edwards, Robert (Wolv SE)

    Lamond, James

    Roderick, Caerwyn

    Ellis, John (Brigg & Scun)

    Latham, Arthur (Paddington)

    Rodgers, George (Chorley)

    Ellis, Tom (Wrexham)

    Leadbitter, Ted

    Rodgers, Rt Hon William (Stockton)

    English, Michael

    Lestor, Miss Joan (Eton & Slough)

    Rooker, J. W.

    Ennals, Rt Hon David

    Lever, Rt Hon Harold

    Rose, Paul B.

    Evans, Fred (Caerphilly)

    Lewis, Ron (Carlisle)

    Ross, Rt Hon W. (Kilmarnock)

    Evans, Ioan (Aberdare)

    Lipton, Marcus

    Rowlands, Ted

    Evans, John (Newton)

    Litterick, Tom

    Ryman, John

    Ewing, Harry (Stirling)

    Lomas, Kenneth

    Sandelson, Neville

    Fernyhough, Rt Hon E.

    Loyden, Eddie

    Sedgemore, Brian

    Fitch, Alan (Wigan)

    Luard, Evan

    Selby, Harry

    Fitt, Gerard (Belfast W)

    Lyon, Alexander (York)

    Sever, John

    Flannery, Martin

    Lyons, Edward (Bradford W)

    Shaw, Arnold (Ilford South)

    Fletcher, Ted (Darlington)

    Mabon, Rt Hon Dr J. Dickson

    Sheldon, Rt Hon Robert

    Foot, Rt Hon Michael

    McCartney, Hugh

    Shore, Rt Hon Peter

    Ford, Ben

    McDonald, Dr Oonagh

    Short, Mrs Renee (Wolv NE)

    Forrester, John

    McElhone, Frank

    Silkin, Rt Hon John (Deptford)

    Fowler, Gerald (The Wrekin)

    MacFarquhar, Roderick

    Silkin, Rt Hon S. C. (Dulwich)

    Fraser, John (Lambeth, N'w'd)

    MacKenzie, Rt Hon Gregor

    Silverman, Julius

    Freeson, Rt Hon Reginald

    Maclennan, Robert

    Skinner, Dennis

    Garrett, John (Norwich S)

    McMillan, Tom (Glasgow C)

    Smith, John (N Lanarkshire)

    Garrett, W. E.(Wallsend)

    Madden, Max

    Snape, Peter

    George, Bruce

    Magee, Bryan

    Spearing, Nigel

    Gilbert, Rt Hon Dr John

    Mahon, Simon

    Spriggs, Leslie

    Ginsburg, David

    Mallalieu, J. P. W.

    Stallard, A. W.

    Golding, John

    Marks, Kenneth

    Stewart, Rt Hon M. (Fulham)

    Gould, Bryan

    Marshall, Dr Edmund (Goole)

    Stoddart, David

    Gourlay, Harry

    Marshall, Jim (Leicester S)

    Stott, Roger

    Graham, Ted

    Mason, Rt Hon Roy

    Strang, Gavin

    Grant, George (Morpeth)

    Maynard, Miss Joan

    Strauss, Rt Hon G. R.

    Grant, John (Islington C)

    Meacher, Michael

    Summerskill, Hon Dr Shirley

    Grocott, Bruce

    Mellish, Rt Hon Robert

    Swain, Thomas

    Hamilton, W. W. (Central Fife)

    Mendelson, John

    Taylor, Mrs Ann (Bolton W)

    Harper, Joseph

    Mikardo, Ian

    Thomas, Jeffrey (Abertillery)

    Harrison, Rt Hon Walter

    Millan, Rt Hon Bruce

    Thomas, Mike (Newcastle E)

    Hart, Rt Hon Judith

    Miller, Dr M. S. (E Kilbride)

    Thomas, Ron (Bristol NW)

    Hattersley, Rt Hon Roy

    Mitchell, Austin

    Thorne, Stan (Preston South)

    Hayman, Mrs Helene

    Mitchell, R. C. (Soton, Itchen)

    Tierney, Sydney

    Healey, Rt Hon Denis

    Molloy, William

    Tinn, James

    Heffer. Eric S.

    Moonman, Eric

    Tomlinson, John

    Hooley, Frank

    Morris, Alfred (Wythenshawe)

    Torney, Tom

    Horam, John

    Morris, Rt Hon Charles R.

    Tuck, Raphael

    Howell, Rt Hon Denis (B'ham, Sm H)

    Morris, Rt Hon J. (Aberavon)

    Varley, Rt Hon Eric G.

    Hoyle, Doug (Nelson)

    Moyle, Roland

    Wainwright, Edwin (Dearne V)

    Huckfield, Les

    Mulley, Rt Hon Frederick

    Walker, Harold (Doncaster)

    Hughes, Rt Hon C. (Anglesey)

    Murray, Rt Hon Ronald King

    Walker, Terry (Kingswood)

    Hughes, Mark (Durham)

    Newens, Stanley

    Ward, Michael

    Hughes, Robert (Aberdeen N)

    Noble, Mike

    Watkins, David

    Hughes, Roy (Newport)

    Oakes, Gordon

    Watkinson, John

    Hunter, Adam

    Ogden, Eric

    Weetch, Ken

    Irvine, Rt Hon Sir A. (Edge Hill)

    O'Halloran, Michael

    Weitzman, David

    Irving, Rt Hon S. (Dartford)

    Orbach, Maurice

    Wellbeloved, James

    Jackson, Colin (Brighouse)

    Orme, Rt Hon Stanley

    White, James (Pollok)

    Jackson, Miss Margaret (Lincoln)

    Ovenden, John

    Whitlock, William

    Janner, Greville

    Owen, Rt Hon Dr David

    Willey, Rt Hon Frederick

    Jay, Rt Hon Douglas

    Padley, Walter

    Williams, Rt Hon Alan (Swansea W)

    Jeger, Mrs Lena

    Palmer, Arthur

    Williams, Rt Hon Shirley (Hertford)

    Jenkins, Hugh (Putney)

    Park, George

    Williams, Sir Thomas (Warrington)

    John, Brynmor

    Parker, John

    Wilson, Alexander (Hamilton)

    Johnson, James (Hull West)

    Parry, Robert

    Wilson, Rt Hon Sir Harold (Huyton)

    Johnson, Walter (Derby S)

    Pavitt, Laurie

    Wilson, William (Coventry SE)

    Jones, Alec (Rhondda)

    Pendry, Tom

    Wise, Mrs Audrey

    Jones, Barry (East Flint)

    Perry, Ernest

    Woodall, Alec

    Jones, Dan (Burnley)

    Prescott, John

    Woof, Robert

    Judd, Frank

    Price, C. (Lewisham W)

    Wrigglesworth, Ian

    Kaufman, Gerald

    Price, William (Rugby)

    Young, David (Bolton E)

    Kelley, Richard

    Radice, Giles

    Kerr, Russell

    Rees, Rt Hon Merlyn (Leeds S)

    TELLERS FOR THE NOES:

    Kilroy-Silk, Robert

    Richardson, Miss Jo

    Mr. James Hamilton and

    Kinnock, Nell

    Roberts, Albert (Normanton)

    Mr. Donald Coleman.

    Question accordingly agreed to.
    Resolved,
    That this House, believing that it is as much in the interests of the consumer as of the producer to sustain the livestock industry, calls on Her Majesty's Government to devalue the Green Pound forthwith by 7½ per cent.
    Mr. Peyton: On a point of order, Mr. Speaker.
    Mr. Eric S. Heffer: The party of high prices.
    Mr. Peyton: What a lovely voice the hon. Member for Liverpool, Walton (Mr. Heifer) has. I should like to ask the

    1107
    Minister of Agriculture whether, on his return to Brussels, he will take advantage of the advice now given twice by the House of Commons and recommend that it be implemented without delay.
    Mr. John Silkin: Further to that point of order, Mr. Speaker. Against the advice of the Government, the House of Commons has tonight voted for higher food prices. The Government accept the deci
    1108
    sion of the House, but the people will remember where the blame lies when the prices go up in the shops.

    AGRICULTURE (GREEN POUND)

      BUSINESS OF THE HOUSE
      Ordered,
      That the motion relating to Developments in the EEC Civil Aircraft Sector may be proceeded with at this day's sitting, though opposed, until half-past Eleven o'clock or for one and a half hours after it has been entered upon, whichever is the later.—[Mr. Bates.]

  EUROPEAN COMMUNITY (CIVIL AIRCRAFT)
  Commission Documents: R/2461/75, R/1860/76, R/222/77 and R/1964/77.
  10.36 p.m.
  The Minister of State, Department of Industry (Mr. Gerald Kaufman): I beg to move,
  That this House takes note of developments in the EEC Civil Aircraft sector as outlined in the Government's memorandum of 17th January 1978.
  Mr. Nigel Spearing: On a point of order, Mr. Speaker. I wonder whether you will assist the House. The Commission documents which are listed in italics on the Order Paper are to provide for and suggest the control of aircraft design and manufacture and a European defence procurement agency.
  The Government have moved a motion to say that the House is taking note of these developments, and the Government's view is outlined in the Government memorandum of 17th January. I understand that that memorandum is not a public document, as the Commission documents are. I believe that it is the right of the House to take note of whatever documents it likes. I understand why the Government have done it in this way, because they are indicating their view to the House, but I shall be grateful, Mr. Speaker, if you will confirm that the House can take note in a motion of memoranda which are not available to the public. Perhaps the Minister will tell us in the course of his speech whether such memoranda will be made public, to make the motion understandable.
  Mr. Speaker: I am obliged to the hon. Gentleman for giving me notice of the point of order. I am therefore able to say at once that the fact that a document which is available to Members is not available to the general public does not make this discussion out of order.
  Mr. Kaufman: I assure my hon. Friend the Member for Newham, South (Mr. Spearing) that, while it is not for me to comment on the ruling given by Mr. Speaker, I hope that in what I have to say the intent of the memoranda which have been tabled will be made available
  1110
  to the general public. If it turns out that my hon. Friend requires any amplification, I can rely upon him above all to make sure that he obtains it.
  The documents which are relevant to the motion that we are considering have, as my hon. Friend has pointed out, been the subject of explanatory memoranda, and I hope that the House will agree that it is unnecessary for me to discuss them in great detail.
  It was in October 1975 that the European Commission submitted to the Council of Ministers what it called the "Action Programme for the European Aeronautical Sector." That was communication R /2461/75. The main proposals of the action programme were contained in what was called a
  "proposal for a Council decision concerning the creation of a common policy in the civil air-raft and aviation sector",
  supplemented by a draft resolution on the establishment of an EEC military procurement agency. These proposals were the response of the Commission to the Council resolution of 4th March 1975 calling for consultation and concertation—I apologise for these terms—on future aircraft projects among the member States.
  Communication R/1860/76 of July 1976 is a Commission document entitled "The European Aerospace Industry: Position and Figures", which supplemented and updated the statistical information contained in the action programme. Communication R/222/77 is a more recent development. It is concerned with aeronautical research and recommends initial programmes in the fields of helicopter technology and airframe structures. These, in brief, are the documents which form an important part of the background to the debate.
  The action programme itself has not been considered in full by the Council of Ministers, but I think it is fair to say that there has been general agreement amongst the member States that the Commission's proposals as originally conceived were unacceptable. This view, with which the Government agree, has greatly influenced the course of action stemming from the action programme.
  At the request of the Committee of Permanent Representatives, a study of the proposals for the establishment of a joint

  1111
  programme for civil transport aircraft was carried out. This study resulted in the identification of a number of objectives for the future development of consultation between member States, notably a strategy for the manufacture of new large civil aircraft; joint action by European manufacturers towards co-operation with American manufacturers; and joint research efforts. These objectives were approved by the Council in a statement in March 1977. It was also decided that member States examining potential civil aircraft projects in their countries should assist the Commission in the preparation of a report, for submission in due course to the Council, on the opportunities for co-operation offered by those projects. The Commission is at present preparing this report.
  Mr. Neil Marten: The memorandum keeps on referring to "promoting European co-operation". Does that actually mean "European" or does it mean "Community"? The two things are quite different.
  Mr. Kaufman: The hon. Gentleman is, of course, correct in the sense that "European" is wider than the Community. I take it that it means the Community in this case. That is what has been proposed. The hon. Gentleman must offer his own interpretation. I am merely describing what it says.
  I am sure that hon. Members would rather I devoted more time to what is happening now than to a step-by-step account of what is largely history. It is, however, necessary to go back a little into past events in order to bring out that member States, including ourselves, have adopted a practical approach, based on actual projects, and that action has been aimed at those proposals which, by general agreement of the member States, offer the most scope for promoting genuine collaboration and concerted efforts in Europe. This is an objective, certainly in the manufacturing sector, which we can all share. It is the means by which we achieve this objective that is of paramount importance to the manufacturers, including our own British Aerospace.
  It is accepted throughout the world's aerospace industries that major new civil aircraft projects have to be collaborative.
  1112
  This is so not only because it is hard for one country to find the very large sums of money involved, amounting to several hundred million pounds, but also because it is necessary to widen the market appeal of projects and to spread the risks among several partners. Even the major American companies, which have such a large share of the world market, are now forced to think in terms of collaboration.
  As hon. Members will know, British Aerospace has since last summer been engaged in intensive discussions with the principal French, German and Dutch aircraft manufacturers about the possibility of collaboration on one or more projects. These discussions are concerned with two main types of aircraft: first, a short/medium haul aircraft with between 130 and 170 seats, and, secondly, a 200 to 220-seat derivative of the A300B airbus.
  With regard to the 130- to 170-seater, the four manufacturers agreed in July last year to set up a number of study groups to consider such subjects as engineering, marketing, organisation, finance and work-sharing. These groups have made good progress, and in December the manufacturers agreed to go ahead to a further stage of studies. I must make it clear to the House that no agreement has yet been reached on a particular project, or, indeed, to launch any project at all. Launch will depend on there being satisfactory market and commercial prospects; and before these can be assessed it will be necessary to hold intensive discussions with the airlines.
  At the moment, work is concentrated on what is called the JET aircraft, after the joint engineering team which studied it in detail. This would be a new twin-engined design, basically of about 160 seats but capable of being developed into both smaller and larger versions. The smaller version would have about 130 seats and the larger about 190. All three versions could be powered by variants of the CFM-56 engine, now under development jointly by the French firm SNECMA and the United States firm General Electric, though the larger version would require a substantial increase in the thrust of the engine over what would be likely to be available when it first entered service.

  1113
  Work is also in hand in relation to the crucial areas of organisation, finance and work-sharing. This is a matter for the manufacturers to consider in the first instance. But I have no doubt that British Aerospace, as the largest aircraft manufacturer in Europe, will feel that it is entitled to a substantial part of the work on any aircraft may eventually be launched and to an important role in its design and development.
  Mr. Anthony Nelson: To assist hon. Members who, like me, do not know, will the Minister indicate whether this design is a derivative of any existing aeroplane or a completely new design? My understanding is that the cost of a completely new design is very substantial, whereas the cost could be mitigated substantially if it were an improvement on or a derivative of an existing one.
  Mr. Kaufman: If the hon. Gentleman will allow me to proceed with my speech, he will discover that these are matters on which I have some comments to make. He has made a fair and relevant point, and I shall be coming in a moment to derivatives as opposed to new aircraft.
  A crucial question on organisation will be the relationship between any new programme and the existing Airbus Industrie organisation. Clearly, it would be right to market a new aircraft in a way that was properly concerted between the manufacturers and as part of a European family of aircraft including the airbus. It is, however, arguable that it would be a mistake to centralise operations within the existing Airbus Industrie organisation. An alternative might be to set up a parallel organisation but in close cooperation with Airbus Industrie.
  Consideration of the JET aircraft has been given priority, but the X11—here we come to the matter raised by the hon. Member for Chichester (Mr. Nelson)—which is a derivative of the BAC111 of about 150 seats, is still a possibility for discussion should it prove that the JET aircraft is not either technically or commercially feasible.
  The House will recall that possible collaboration on an aircraft for the 130-to 170-seat market was one of the topics discussed last month between the Prime Minister and President Giscard. In his statement to the House after that meeting, my right hon. Friend made it clear
  1114
  that both Governments regarded the project as essentially a commercial, not a political, matter. Both sides very much hope that the manufacturers will come forward with firm recommendations one way or the other as quickly as possible.
  The other main programme under consideration between the European manufacturers is the B10.
  Mr. Ron Thomas: Will my hon. Friend say a little more about the X11 as against the JET project? He seemed to indicate that the X11 had been pushed into the background and that the JET would be the decision maker, with the X11 being considered only if it was decided not to proceed with the JET.
  Mr. Kaufman: That is exactly right. British Aerospace takes the view that the X11 is very much a possibility but that it is committed to collaborative discussions with our European partners. It has signed a memorandum of understanding, which is not a hard commitment but which nevertheless commits it to these discussions. The view is that it is best to get a collaborative arrangement, if possible, with our European partners, though there is an American possibility. to which I shall come in a moment.
  The X11 has been set aside during the course of these discussions. If the discussions turn out not to be fruitful, the X11 will return to the front of the stage as a possibility for British Aerospace. But I hope my hon. Friend will accept that for us to launch an aircraft of our own, even a derivative, without partners would be very expensive. The view hat we have taken is that the only plane that we are likely to be able to launch on our own, should it be necessary and should it be approved, is the HS146, a much smaller plane, to which I shall come later in my remarks.
  Mr. Geoffrey Pattie: On the point regarding the X11 which his hon. Friend the Member for Bristol, North-West (Mr. Thomas) has rightly raised, will not the Minister agree, however, that the proposal which is being canvassed by British Aerospace calls for collaborative involvement, with French engines on the X11, and that to suggest, as I think he may have done, without intending to mislead the House, that we

  1115
  were talking about an entirely British project versus a collaborative one is not right? They are both collaborative projects.
  Mr. Kaufman: I have never sought to do that, but at this stage I am talking about airframe, and the X11 would be an entirely British airframe unless we decided to go ahead as a prime promoter but sought collaborators on that. But, as the hon. Gentleman will hear when I come briefly to the possibilities of American collaboration, there are other possibilities as well.
  I return now to what I was saying about the airbus project, the B10. As hon. Members will know, British Aerospace is not a member of the Airbus Industrie consortium. But it has a sub-contract to make the wings, it has an overall design consultancy, and British Aerospace staff are seconded to Airbus Industrie and have played an important rôle in marketing and other areas. The House will have noted that sales of the airbus have increased in recent months and that, in consequence, substantial new orders have been placed with British Aerospace.
  Since the summer of last year, British Aerospace has been taking part with the members of the Airbus Industrie Consortium in discussions relating to the B10. The aim is to establish whether there is an adequate market for an aircraft of this type, and, if there is, whether the market would be met better by a major redesign, which would inevitably be costly, or whether it would be preferable to go for a less elaborate and, therefore, cheaper development.
  Although views have been expressed by some airlines in favour of a major redesign, known as the B10X, those views are, no doubt, subject to revision. Obviously, it will be very relevant to the final decision of the airlines what prices have to be charged for the different designs in order to recover expenditure on development.
  It will also have to be decided whether British Aerospace should join Airbus Industrie as a full member and, if so, on what terms. It is common knowledge that the French and German Governments have had to provide their industries with very large sums of money in assistance for the airbus programme. and we
  1116
  would not think it reasonable to contribute to those past costs. Moreover, it will be necessary for any changes in British Aerospace's relations with the Airbus Industrie consortium to take full account of the existing and very profitable sub-contract to make the wings, no less than of the future commercial prospects of an exteneded airbus programme.
  The House will understand that these are complicated and interlinked matters. However, both the Government and British Aerospace are aware of the need for early decisions, and I hope that definite recommendations will be coming forward progressively in the next few months. I repeat, however, that what the Government will be looking for is firm evidence of commercial viability. We are not interested in political aircraft that do not sell, and we are quite clear that such aircraft will not provide a foundation for a healthy industry either in this country or in Europe as a whole.
  Hon. Members will remember that Hawker Siddeley Aviation, as it then was, suspended work on the HS146 project in 1974 and that the Government subsequently asked the firm to continue development work under a Government contract and with Government funding in order to keep open the possibility of proceeding with the project. Since vesting day, the work has been funded as a normal part of the capital investment programme of British Aerospace.
  The aircraft is now at an advanced stage of development, and extensive studies of its potential market have been carried out. It is a four-engined design, which would be available in two civil versions, one of about 70 seats and one of about 90 to 100 seats. These versions would be largely, though not exclusively, intended for use on short-haul and feeder routes.
  Mr. Nelson: What about the marginal seat?
  Mr. Kaufman: The hon. Member for Chichester must make up his mind whether he wants aircraft. Political slanging will not make the decision easier one way or the other. Indeed, earlier today the hon. Member for Chingford (Mr. Tebbit) was demanding an early decision.
  Mr. Norman Tebbit: But the Minister, of course, has not said, and nor have I, what was the decision for which I asked.
  Mr. Kaufman: That is an exceptionally sinister and incomprehensible intervention. No doubt at some stage the hon. Gentleman will elucidate it.
  The versions that I have described would be largely, though not exclusively, intended for use on short-haul and feeder routes. The HS146 might also be made available in the freighter/military version. All versions would be very suitable for operation from difficult airfields; and they would also have a more general appeal because the HS146 would be an outstandingly quiet aircraft.
  We are actively discussing the HS146 with British Aerospace in the context of other potential civil aircraft projects, and I hope that decisions will be taken as soon as possible. In the meantime, British Aerospace is continuing to fund work on the project.
  If it were decided to go ahead with the HS146, British Aerospace would welcome collaboration with other European partners. Discussions are taking place with possible associates in Europe but no definite conclusions have yet been reached.
  Mr. Michael McNair-Wilson: Before the Minister—
  Mr. Kaufman: I hope that the hon. Gentleman will allow me to proceed. I have been fairly liberal about giving way. A large number of hon. Members wish to contribute to the debate. I do not wish to cut them out. If the hon. Gentleman catches your eye, Mr. Deputy Speaker, perhaps I may be permitted to reply in the closing moments of the debate to what he has to say.
  British Aerospace has communicated to the other European manufacturers, as part of the JET discussions, the results of its discussions with Boeing on possible collaborative projects, such as the use of the fuselage of the 737 as the basis of a new European design. And, in general, British Aerospace naturally keeps closely in touch with Boeing and the other United States manufacturers, since there are so many areas of common interest, including collaborative military
  1118
  projects such as the Harrier. The House will understand that the work immediately in hand is for British Aerospace to carry forward discussions with its European colleagues as quickly as possible and to assess the situation in the light of those discussions.
  As far as aeronautical research and the underlying technology are concerned, the Government accept the importance of setting up significant collaborative programmes within Europe. However, our view is that, while the topics for collaborative research proposed in Document R/ 1964/77 are acceptable in principle, such further work might best be done through the already established machinery such as the Group for Aeronautical Research and Technology in Europe or under the auspices of NATO.
  Within the United Kingdom, we already probably have the most fully developed ways of bringing together the needs of industry, on the one hand, and of the defence and civil limbs of Government, on the other. The procurement executive of the Ministry of Defence is at the hub of this, though my Department is also involved. In addition, the aviation interests in the Department of Trade, the Civil Aviation Authority and, most important, the aircraft manufacturing and operating industries themselves are very deeply involved.
  My defence colleagues collaborate with our allies in this field, largely through NATO. But in many areas where the underlying technology is common to both military and civil interests some aspects of civil collaboration are also covered. The same, of course, is true for our allies. A recent activity is a good example, Those of us who have had to deal with the aircraft industry are aware of the importance of adequate test facilities, such as wind tunnels. It is only by the use of such equipment that we can build up our technological capability; they serve to reduce to an acceptable level the risks inherent in real aircraft projects. But they can be very expensive to build and operate, as, indeed, we have seen in other areas of technology. So we, in conjunction with the Ministry of Defence, have agreed to join with colleagues in France, West Germany and Holland in a study of a possible future wind tunnel. We would all like to have a facility like the one we are studying. None of us can afford it

  1119
  alone. And this is a good basis for collaborating with others.
  We have also come together again with military colleagues with similar authorities in these same nations in the Group for Aeronautical Research and Technology in Europe, more commonly known by the elastic acronym of GARTEUR. This was set up in 1973. It is intended to work together on matters which approach the limits of military and commercial security; just as far as we think is wise in an environment fully open to our competitors in the world market. Industry is involved to some extent, and we are presently looking at taking this further. Again, this is the stuff which makes collaboration necessary and which makes it work.
  The European Commission has sought to add to this with a view to increasing the collaboration between the industries directly involved within the Community. My officials, together with colleagues in the Ministry of Defence, have been working with the Commission staff in looking at the responses from industry. Of the many areas which could be worked on, two have been selected, as hon. Members will have seen from the papers before the House. One concerns some aspects of fixed-wing aircraft design, the other is concerned with helicopters. These proposals are still working their way through the Brussels machinery and are expected to come before the Committee of Permanent Representatives next Thursday.
  It is not for me to prejudge the attitudes taken by other nations in Europe. As far as we are concerned, the House will have understood from what I have already said that the Government are in favour of building up collaboration, but it must be the sort which will enhance the commercial success for future aircraft and their components, both civil and military. As to the specific proposals now being looked at in Brussels, I strongly suspect that, if they do not proceed on a Community basis, they may well be picked up in some other way, like GARTEUR.
  It seems unlikely that the particular Community documents referred to in the motion will lay down the lines of progress or will lead in the near future to formal actions by the European Communities.
  1120
  We are taking the more practical approach of encouraging the manufacturers to try to reach agreement on the basis of actual projects. This does not, of course, mean that either the Government or the industry regard the decisions which will have to be taken on aircraft before the 1980s as other than urgent and important.
  11.2 p.m.
  Mr. Norman Tebbit: It seems hard to believe that the first of these documents has been lying around for two and a half years—since October 1975. That is so long ago that I cannot remember whether it was then Government policy even to remain in the EEC. I doubt whether the Minister can even remember whether he was in favour of direct elections at that time, though no doubt he knows now.
  The Minister has added nothing to what he has already told the Press. The only extraordinary thing is that he has been so late in coming here to tell us what he has told the Press. In an interview just before Christmas with M. Jean-Marie Riche, the distinguished editor of the French magazine Air et Cosmos, the Minister masqueraded as the Secretary of State for Industry. In a footnote on the following page, there is a reference to "Mr. Eric Varley, the Minister of Industry."
  The hon. Gentleman does not change very much does he? In that interview, he suggested that these were entirely domestic matters. He said:
  "Il va sans dire que dans cet esprit nous rejetons fermenent le rapport Spinelli."
  My less than adequate French got stuck on the word "fermenent". I was not sure whether it derived from "ferme" and meant that he rejected Spinelli in a workmanlike way or from "ferment" and that he rejected Spinelli with excitement and unrest.
  However, the Minister can relax. The Spinelli style of approach has not found favour on this side of the House either. But if we are not to follow that route, along which road do the Government intend to lead Lord Beswick or Lord Beswick the Government? We are not much wiser or even better informed than we were before the Minister started his speech.

  1121
  The Minister said that the X11 had been shelved. The hon. Gentleman keeps saying that. It is nonsense. The Minister has killed the X11. There is no prospect of an aircraft being taken off the shelf, especially after having been sold so hard to the American market. It is not possible for the promoting company to go to the Americans and say "Sorry, that was not a very good aeroplane. We are not interested in proceeding with it. We have thought of a better idea", only to turn round and say "No, we do not like the better idea. We are going back to the X11." The Minister and his colleagues know that the X11 will not be proceeded with now. There is no prospect of that happening. The reason is that he has cut its commercial throat.
  We must even be a little gloomy about the prospect of selling 100-seat aeroplanes, especially after Air France has given British Airways an example by buying 13 737s. So much for the brave words of M. Cavaille. No doubt the Minister will remind him of his words when he next sees him.
  The Minister talks about a 130–160 seater. That was the X11. The hon. Gentleman referred to the A200 project. What are the results of all the Minister's talks?
  Let us turn to the JET project or the A200, whatever the hon. Gentleman likes to call it. Presumably before we shelved the X11 and thereby killed it, and with it our last change of unilateral programme in that area, we must have had certain understandings with our prospective partners. Have we any understanding that we shall have the design leadership on that aircraft? Have we any understanding that the final assembly and testing of the aircraft will be in the United Kingdom? Is there any understanding on the number of assembly lines? If we did not get those understandings clear before we threw away our own project, we threw away far more than the Minister has admitted tonight.
  As for the A300 programme, the Minister does not seem to have clear ideas on which parts of it we are going into. The hon. Gentleman does not seem to have any clear idea whether we should be in it or whether there is any proposition of a formal return to a partnership in the programme, or an entry into part
  1122
  nership. That is because we have not been full partners since the Labour Government walked out of the programme and left it to the private enterprise of Hawker Siddeley to maintain a foothold in the only large European civil aircraft still in production.
  The Minister had something to say about the HS146. Again, he earlier told not the House but the French journalist that British Aerospace was to deposit its report on the project before the finish of the year. Did British Aerospace give him a report on the project before the finish of last year? Does he have the report on the HS146?
  Mr Kaufman: I have had an interim report from British Aerospace. In that respect it kept its undertaking to me. British Aerospace is not yet in a position to decide whether it wishes to make a recommendation for the plane to go ahead. It wants to examine the market prospects and the collaborative prospects. It also wants to examine the freighter-military possibilities before making a final recommendation. The hon. Gentleman is constantly pressing for a commercial approach, and that is what British Aerospace is taking.
  Mr. Tebbit: So the Minister has not yet had any recommendation from British Aerospace to go ahead with the aeroplane. It seems that British Aerospace is still unable to make up its mind whether it is a commercial aeroplane on which it has been spending public money for a considerable time. I am grateful to the hon. Gentleman for that admission.
  Mr. Kaufman: British Aerospace is keeping the matter open. Hawker Siddeley definitely and specifically decided that it was not a commercial proposition and said that it would go ahead only if the Labour Government paid 100 per cent. of the cost.
  Mr. Tebbit: The company prudently and sensibly said that as it could not envisage a viable market it would not risk its money upon it but that if Her Majesty's Government required the project to go ahead it would naturally, like any other company, carry out as subcontractors to Her Majesty's Government any task that it was asked to undertake provided that the price was sensible.

  1123
  The Minister said that there had been talks on the HS146 with other European firms. But he omitted to say that there had also been talks on the HS146 with at least one major American firm. Will he tell us about those talks with the American company? Are they going well? Has there been a positive response from that American company? Why did he not mention that matter? I suggest that lie seems reluctant to come clean on that project.
  The Prime Minister and the Minister have constantly stressed commercial viability. What interests us is what has changed since the February 1977 market survey report. Who will be the launch customers for the aeroplane to be launched? How large a market is envisaged? The F28, which is already well established, is selling at about 15 a year. That does not suggest that there is a huge market for that aeroplane.
  Mrs. Helene Hayman: It is a different aeroplane.
  Mr. Tebbit: I am aware that it is a different aeroplane, but it is essentially selling in the same market. We shall want to know what break-even forecasts have been made. We shall want to know whether there is a partner in a risk sharing, not just a sub-contract, sense.
  There has been talk of the proposed engines being changed. The Minister did not mention whether the Avco Lycoming engine was still proposed for the aeroplane. Would he care to add anything to that matter? Are different engines under consideration?
  Some time early last year, after the February 1977 market survey forecast was in the hands of the company, I discussed the HS146 with some of the senior executives. I asked them what they thought about it. They were not overwhelmingly optimistic at that stage. Perhaps there has been a great change since. At the end of the conversation I asked "What are you going to do?" The answer was "We shall put it up to the Government". I asked "Would you have put it up to Sir Arnold Hall?" Answer "Oh, no". That was their opinion of the commercial viability of that aeroplane. It was not very encouraging.
  Mr. Michael McNair-Wilson: Does my hon. Friend recall the visit paid by representatives of the Fokker Company to the Conservative Back-Bench aviation committee? They pointed out how the HS146 could damage the F28 market and reminded us that Short Brothers and Harland, which is a nationalised company, made a number of sub-assemblies for the F28.
  Mr. Tebbit: I remember it particularly well, because Rolls-Royce makes the engines, and a large amount of the systems for the F28 are manufactured in Britain.
  It is a question of the balance of advantage. Anybody can be wrong, even in the industry, let alone politicians looking at the matter from the outside. [An hon. Member: "Even you".] Indeed. Originally I thought that the HS146 looked a promising aeroplane on the basis of the information given by Hawker Siddeley at the time that it wanted to launch it. So did the company. Sometimes second thoughts may be better than first. One cannot rule out that third thoughts would be even better. We would like some clear thinking on that subject. It seems that the HS146 will have an early launch only if the hon. Member for Welwyn and Hatfield (Mrs. Hayman) resigns as a Member of this House and causes a by-election. I should imagine that the aeroplane would then be launched fairly rapidly in the normal manner of the Labour Government running by-elections.
  The Minister said very little about the engines. Is Rolls-Royce in the running for the contract to supply engines for any of the likely major aircraft projects in Europe which are under discussion today? Does he fear that the CF56 will be the only engine of the right size for any of those projects? Has Rolls-Royce, having given up the programme with Pratt and Whitney for a similar size of engine, now not got an engine in the right class for the European projects?
  Does the Minister not agree that it is time that decisions were taken on the cropped fan 535 variant of the RB211 if that engine is to have a chance of being installed on any of the projected Boeing aircraft—perhaps the 757, as I understand that rather stretchable and

  1125
  squeezeable aircraft to be called? Many hon. Members and many people outside the House will want to know what the Minister feels about Rolls-Royce's engine strategy in relation to the strategy for airframes to which he has referred but not described.
  I do not wish to raise too many points for the Minister to answer because I do not want to hog too much time in this brief debate. I do not want to let the Minister off the hook by asking so many questions that he can avoid them all.
  I want to mention the question of the agreed certificate of airworthiness standards. Progress towards common standards and mutual acceptance of certificates of airworthiness is to be encouraged, and we hope that that baby has not gone out with the Spinelli bath water. We also feel that Document R1964/77, the action programme of aeronautical research, had considerably more merit than the Spinelli grand vision document. I welcome the Minister's reactions to the proposal for the large trans-sonic wind tunnel. That is a sensible way to approach these matters, to see where we can establish joint facilities when otherwise we would have inferior facilities for each country. It is no good being second best in any of these matters in this industry.
  We are glad that the Minister has got to first base in understanding that the military order book is the backbone of the industry. He has referred to that not so much this evening as in this illuminating interview with the magazine Air et Cosmos. As he now realises, it is sales of weapons, of fighting aeroplanes, of bombers and of vehicles to deliver napalm and guns and all those terrible things that the Left are always going on about, to the Saudi Arabians, the Iranians and the South Americans which keeps well over 60 per cent. of the work force in this industry in jobs. I know that my hon. Friend the Member for Chertsey and Walton (Mr. Pattie) will say more about the defence aspects of the Spinelli proposals and what we generally think of them.
  We are glad that the Minister has embraced commercial viability, at least until the next election.
  Mr. Hugh Dykes: My hon. Friend rightly said that the original
  1126
  outline of this document and the philosophy behind it has been overtaken by events. But in the context of my hon. Friend's remarks, could not the Community be involved in some planned and concerted action of some kind, although this is primarily a NATO function, in regard, for example, to the need for the new Canadian tighter by 1984–85? This is one area where the Community countries could appeal to the Canadian authorities to consider a European plane such as the Tornado, particularly within the context of the Canadian contractual agreement.
  Mr. Tebbit: My hon. Friend is much more of an idealist than I if he can see the French appealing to the Canadians to buy MRCA as a European aeroplane when it has no French content. That is a difficulty. There seems to be a considerable lack of agreement, springing principally from the fact that the various European partners in the EEC have different timings for the introduction of new aircraft. They seem reluctant to co-ordinate their timings in order to achieve these things. I would welcome any collaboration which would enable workers in British factories to sell more military equipment to the Americans so that we could travel along the two-way street—
  Mr. Deputy Speaker (Mr. Oscar Murton): Perhaps I may interrupt the hon. Gentleman. Admittedly, he is answering a question, but the main theme of the debate is the civil aircraft sector. Therefore, references to military aircraft should be merely incidental. Only one paragraph of the memorandum, paragraph 11, refers to the question of military aircraft. The Minister made only incidental reference to the military aspect, and the rest of the House should follow that example.
  Mr. Robin Maxwell-Hyslop: Is it not true, Mr. Deputy Speaker, that no major aircraft producer in the world can live off its civil aircraft, and we are in our present position because the American civil aircraft manufacturers have had immense military programmes on which to carry the overheads?
  Mr. Deputy Speaker: The hon. Gentleman may know the point I am trying to make. I do not dispute his statement,

  1127
  but I am trying to put to the House that only incidental reference may be made to the military aspect of what we are discussing, which is principally the civil aircraft sector.
  Mr. Tebbit: If you refer to the basic document, R/2461/75, and turn to the annexes, Mr. Deputy Speaker, you will find large sections, page after page, dealing specifically with the military industry. They propose the formation of a European military aircraft procurement group. Therefore, you will perhaps conclude, Mr. Deputy Speaker, that it is perfectly proper that we should deal with these matters, which are in the document under discussion.
  Mr. Deputy Speaker: This is a civil aviation debate. That is the heading on the Order Paper.
  Mr. Tebbit: The heading may be whatever it likes, Mr. Deputy Speaker, but the European Community documents which are the subject of the debate refer to the formation of a military procurement group for European armaments and refer extensively to the European industry.
  Mr. Deputy Speaker: Those documents may relate to the relevance of the matter, but this is a civil aviation debate, and military reference should be purely incidental.
  Mr. Pattie: Is it not possible that the description on the Order Paper is at fault, Mr. Deputy Speaker, as it says that the debate is about civil aviation, when even a cursory glance at the Community documents makes clear that we cannot make a distinction between the two parts?
  Mr. Deputy Speaker: I refer the hon. Gentleman to the terms of the motion, which is to take note
  "of developments in the EEC Civil Aircraft sector."
  That is what is on the Order Paper, and that is what we are debating.
  Mr. John Cope: On a point of order. Perhaps the Minister could help by assuring us that there will be another opportunity to discuss EEC developments in the military aircraft sector, to which large parts of the documents will also be relevant.
  Mr. Deputy Speaker: That is not a point of order nor a matter for the Chair.
  Mr. Tebbit: I shall continue with my glancing reference to the major items in the documents.
  I was saying that my hon. Friend the Member for Harrow, East (Mr. Dykes) was a little idealistic if he thought that our European colleagues would give up so many of their rights to produce the aircraft that they think proper for their own purposes—whether civil or military is another matter.
  Mr. Dykes: I should like to return to the question of the Canadian fighter and why it is so important for the future of European collaboration. Like my hon. Friend, I should prefer the Canadians to go for a British plane. We must think, reluctantly, that that is unlikely, to say the least. Therefore, is not the essence of the matter to try to get practical European collaboration going, so that that order—an enormous order for a single aircraft vehicle—goes to a joint European project, not for an American plane?
  Mr. Tebbit: My hon. Friend is right, but, as the Minister said, the great thing is the market. The aeroplane must suit the market, whatever it is. I have no doubt that if that market is to be filled from Europe it is more likely that it can be filled by a British project than by any other, although we would welcome people coming in to collaborate with us.
  I am glad that the Minister has agreed with us that the factories of this industry are there not primarily to supply jobs but to supply aeroplanes to people who can choose to buy them anywhere in the world. For that reason they must be aeroplanes which people want to buy and not just those which the industry thinks that it might like to produce. But we only wish that the Minister's somewhat slothful and somewhat devious actions matched the policies which he has begun to annunciate in this area—the policies of the market and not of the producer.
  11.26 p.m.
  Mr. Ron Thomas: I wish to make one or two remarks, but briefly, since I know that my hon. Friend the Member for Welwyn and Hatfield (Mrs. Hayman) wishes to

  1129
  take part in the debate. I was disappointed that the Minister did not spend more time on the 1975 programme, which indicates the thinking of the bureaucrats in Brussels.
  We have heard statements that the Council will make major policy decisions on programmes. We have heard the bureaucrats talk rather humorously about creating European air space, as if there were not already air space over Europe. We continually hear references to European air space which would stretch from Southern Ireland to the Urals and from Iceland to North Africa.
  In the document dated 17th January 1978, the only real reference to the 1975 action programme reads,
  "It was recognised that member States were reluctant to begin discussion of the wider issues of civil aviation policy …"
  I had hoped that the Minister would say more positively that, having brought British Aerospace into public ownership, the Government had no intention of handing it over to the bureaucrats in Brussels now or in the future. The programme indicates clearly what some of the people who are running the Common Market would like to see happen—that British Aerospace, Rolls-Royce and the rest should be handed on a plate to the Commission to run as it thinks fit.
  I was disappointed to hear what the Minister said about the X11. I understand from Press reports that it is ready for launching whereas the A200 is unlikely to be ready before the American competitors come into the field. We are thinking forward to the need for 1,200 civil aircraft by 1990. Although I accept that we must think in terms of collaboration, workers in the industry feel that there is not enough positive and ruthless thinking about such British projects as the X11.
  I have a constituency interest in the engine of the HS146. What is the situation concerning the Rolls-Royce M45 engine as opposed to the Canadian engine? I understand that Rolls-Royce says that it can deal with the problems that are said to be associated with it in terms of its competition with the Canadian engine.
  I turn to the question of future research. I hope that we shall have another
  1130
  opportunity to look at the document because I am disturbed about parts of it. It deals with harmonisation of design and non-destructive testing procedures, the structure of aircraft and so on. There are two or three paragraphs on what will happen to know-how and inventions and how these, presumably, will be shared in some way between the contractors, even though they are qualified in certain ways. It seems that there are a number of dangers in this for our own publicly-owned aerospace industry. On the other hand, we are all agreed that if Britain is to retain any semblance of a manufacturing nation, industries such as aerospace have to be the industries on which we should concentrate.
  The aerospace industry has the highest conversion ratio in the sense that it takes a small quantity of imported materials and injects into them the skills of the workers in the industry and produces products of high quality and value. All of the time it is pushing forward the frontiers of technological advance. I hope that the Minister will make it clear, as he has made it clear on so many other occasions, that, having brought this industry into public ownership, we have no intention of allowing it to become a sub-contractor for the Americans or any European country. We want collaboration in terms of equality, but all the time pushing forward the interests of the British industry. It is on that basis that I hope that the Minister will make it clear that the main principles and thinking behind the 1975 programme from the bureaucrats in Brussels are completely unacceptable to the Government. They are certainly unacceptable to those who work in the industry.
  11.32 p.m.
  Mr. David Walder: One could be forgiven for thinking that in his opening speech the Minister was not talking about the Commission's proposals at all. He mentioned a large number of trees and the need to cut one down but he never seemed to make any reference to the wood. He juggled, as we all do in a debate of this sort, with acronyms. I think that followed most of them.
  I agree with the Minister that it is impossible for one, two or perhaps three European nations to support an aircraft

  1131
  industry. The United States does so and it is possibly the only nation in the Western world that could do so. Co-operation must be the order of the day in future.
  We have seen for many years attempts at co-operation in the area of the manufacture of military aircraft. Some results have been obtained. The Tornado and Jaguar are obvious examples. Standardisation and inter-operability are equally applicable to the civil sector. All those military atempts at co-operation, and previous attempts in the civil area, have had the disadvantage that each nation probably had a different timescale for its programme. Naturally enough there have been nationalistic rivalries. Over and above that there has been a tendency in Europe for the larger nations—France, Germany, Italy—to squeeze out the other members of the Community. That process affects other industries, those directly concerned with aeronautical matters and the technological industries backing them up.
  We know that these proposals have a long history, dating from 1975. They may be over-ambitious to some. They may suggest an orderliness throughout Europe to which those who do not like the Community would object. The pursuit of common standards, common air transport policies and common commercial projects can make nothing but sense for the future.
  Perhaps I am doing the Minister an injustice, but I do not think that it is a very constructive policy, for the EEC or for our aeronautical industry, to say of what the hon. Gentleman calls commercial aircraft as distinct from political ones "We shall proceed with these, but perhaps not with others".
  In considering, as I hope it did, the reams of documents with which we are concerned in this debate, and certainly the last three attempts, if I may call them that, before the final result was achieved, the European Parliament, I noted, was more enthusiastic even than the Commission. We have had one example tonight of Parliament overruling the Government. My enthusiasm sides with the Parliament rather than with the Commission. Certainly I have more enthusiasm for cooperation than the Minister has expressed.
  11.36 p.m.
  Mrs. Helene Hayman: It has been pointed out that this debate provides more of an opportunity for a general discussion on civil aviation and aircraft policy than perhaps a detailed study of the Commission documents. I welcome that. The House would be disturbed if it were considering the detail of these documents as the plan under which British Aerospace had to work.
  Some of us have been anxious that decisions should be taken on various projects and at times we have despaired over the difficulty of getting decisions from one national industry and one national Government. The thought of trying to get decisions made among the nine members of the EEC is horrifying.
  No one with any knowledge of the aircraft industry in this country would deny the necessity for collaboration or the benefits which it can bring and has brought to our industry. Because of the cost of funding any new major civil project and because of the competition in terms of the market share which is always offered by the Americans, it is plain that we shall need partners in major projects. However, I firmly believe that collaboration between strong and successful national industries is different from the central control and funding outlined in the documents and that the former is the more healthy path for our industry to take.
  The HS146 project has been referred to by my hon. Friend the Minister and, in slightly more Delphic terms, by the hon. Member for Chingford (Mr. Tebbit). The hon. Gentleman takes a universally depressing view of the world, but tonight his argument was even more difficult to follow than usual. On the one hand, he seemed to be berating the Government in the most scathing terms for their inability to make a decision on the HS146. On the other hand, he posed a further series of questions without the answers to which he seemed to think it would be totally irresponsible for any decision to emanate from British Aerospace or from the Government. He became even more Delphic about the decision that he would like to be made about that in an intervention in my hon. Friend's speech.

  1133
  I have no doubt that his is a non-question when it comes to the HS146 and that his febrile imagination is so anxious to ensure that it does not come about that he had to go off on the red herring of my resignation. I hope that the hon. Gentleman will not canvass the suggestion too enthusiastically throughout Welwyn and Hatfield. It might be considered by some of my constituents the ultimate sacrifice that a Member should make for his or her job. But I think that a positive decision on the HS146 can be and should be and will be made without recourse to quite such a melodramatic excursion on my part.
  The HS146, as my hon. Friend pointed out, is the one project that is near to getting into production. The thing that the British industry needs desperately at the moment is production work. When we look at the possibilities of JET and the further possibilities, if JET is rejected, of going back to the X11, we are talking of a very long time scale. The same is true of the B10.
  What we need desperately in this industry, not simply from the industrial welfare aspect or whatever it is termed by the Opposition at the moment, but also in terms of actually taking up the market which exists in Europe for a new generation of European aeroplanes, is to get on with the decision-making, to the business of production of that new generation of aeroplanes now.
  The HS146 offers the British industry the chance of getting in on a project for which there is a definite market which has been shown over a number of years. The hon. Member for Chingford seemed to think it a bad omen for the aircraft that the F28 had been selling only at 15 a year. I take the opposite view. I think that it is a god omen, since there is obviously still a market which is not being filled by the F28 for many reasons, including its lower performance of fuel consumption, noise and other problems. It means that, despite these desperately depressing delays, the HS146 has still not lost out on the market. We could still make the right decision; we could still go into a commercially viable project which would also give our industry a position of strength from which to collaborate in Europe. It can do that only if a decision is taken within the very near future.
  Mr. Tebbit: The hon. Lady said that what the industry needs is production. What it actually needs is orders for aeroplanes to produce. Does she happen to know who it is, by name of airline, that will buy the HS146? If it is as near launching as that, those names ought to be known by now.
  Mrs. Hayman: The hon. Friend reads Flight and other magazines as assiduously as I do, and he will have looked, as I have, at the airlines of the world that are looking for replacements for their Viscounts, for aeroplanes of the type of the HS146, in order to fill a gap. He knows that until one has an aircraft it is difficult to get orders for it. One has the chicken and egg situation. I am not the Chairman of British Aerospace and have not been out selling to the airlines of the world, but all the indications are that that slot in the market has to be filled and that it can be filled by the HS146.
  My hon. Friend answered a Question of mine earlier today and used the phrase "as soon as possible". He used it again tonight. That phrase is becoming awfully familiar in the context of the HS146. I recognise that there are many questions to be answered, and the hon. Member for Chingford added a few more in his speech. Could my hon. Friend give a little more detail than the phrase "as soon as possible"?
  We are getting to the point within the industry, if we are to decide rationally what its future is to be, when we have to know what the decisions are. Good or bad, it is necessary to have them in order to plan a future for the industry. I would be grateful for anything further that my hon. Friend has to say.
  11.44 p.m.
  Mr. Geoffrey Pattie: The hon. Lady the Member for Welwyn and Hatfield (Mrs. Hayman) was, as always, eloquent in her advocacy of the HS146, and, of course, she had a point when she talked of the problem of the chicken and egg situation. But she should know that there has been some pretty heavy toting of this project around the world. To my knowledge, there is no single airline—sadly from the hon. Lady's point of view—which is as yet prepared even to say that it will be interested in purchasing, which is what is meant by

  1135
  the market potential for the aircraft. But we are here tonight to talk about the Commission documents and must keep to the matters under review.
  The Commission's proposals, in my opinion, are not very intelligent and are not very well based, even allowing for the fact that considerable time has elapsed since they were first drawn to the attention of the House.
  There are two major failings in the documents. First, they fail to draw any distinction at all between what I would call the administrative and organisational dimension and the commercial dimension. By the administrative and organisational dimension I mean airworthiness, safety, air traffic control, and so on, where collaboration and co-operation are eminently sensible. It ought to be even more advanced than it is now.
  On the commercial dimension—which means obviously marketing, selling, construction and so on—we find in the Explanatory Memorandum on Document R/2461/75 the proposal that European aircraft policy is to be
  "worked out and managed by the Commission, who would evolve a coherent programme for the manufacture of a large civil air transport with the industries, airlines and Governments."
  I do not think that the House ought to dwell for more than a moment on a suggestion as bizarre as that. Questions such as who is to decide what are the market opportunities, what the airlines need, what type of aircraft should be built for them, and so on, must remain entirely with the people whose job it is to build aircraft. If the day comes when civil servants, be they British or Eurocrats, are organising the commercial side of the business, it will be close to going into complete decay and becoming moribund.
  Similar comments apply to a common European commercial policy for aerospace, and to Community financing to replace national financing of aircraft policy.
  There is a suggestion about joint basic research. This may seem to be quite a good idea. My hon. Friend the Member for Chingford (Mr. Tebbit) talked about wind tunnels. That is very important, because it is rather foolish to build lots
  1136
  of these and to duplicate the resources. But even here there is quite a serious snag. The aerospace corporations of different countries are concerned at the moment that if they get European funds, these same funds, or an equivalent amount, are likely to be debited by their own domestic Governments. This will not be incremental money. They will involve themselves in some difficult budgeting arguments. Even the apparently straightforward suggestion of common research projects is not quite as straightforward as it seems.
  The suggestion is made in Document R/2461/75 that there should be the establishment of an European defence procurement agency. Since the first document was tabled in October 1975, there has been established in January 1976, as is clearly stated in Document R/222/77 and R/1964/77, the European military procurement agency, known as the independent European programme group. The document says that this has been established as a forum for increasing collaboration on defence equipment and research; therefore it is a matter, obviously, that we have to consider to-night. The aims of this particular—
  Mr. Deputy Speaker: I must warn the hon. Gentleman about what is being considered tonight. Incidental reference is in order but not a detailed discussion on the question of military aircraft.
  Mr. Pattie: I shall endeavour to make only incidental references. Of course, if we are considering the inter-relationship between the civil parts of the industry in any of the European countries, we have to bear in mind that a group of the sort that we are talking about has to permit the effective use of funds for research and development, which is one of its main aims, and must ensure the maintenance of a healthy European technological base. What groups of this sort have been able to achieve over the last 12 years is to analyse the future requirements for the next 15 years because there has been a great muddle for many years past as to what the future needs of both civil and military requirements will be. Groups have been set up to analyse specific areas and these analyses and detailed reports have been extremely valuable on both the civil and military sides.

  1137
  Because the Commission documents tail to make this distinction between what I call the administrative and the commercial, and by a similar token have failed to distinguish adequately between civil and military—whereas on the military side we have talk of two-way streets, standardisation and interoperability, none of which could ever apply on the civil side, yet they are all lumped together—the logic behind the documents is that we can apply the same arguments to the civil as to the military. Taken as a whole the documents are no more than proposals and a recipe for collaborative drift.
  11.51 p.m
  Mr. Anthony Nelson: I wish to interevene briefly. I follow my hon. Friend the Member for Chertsey and Walton (Mr. Pattie) whose detailed knowledge of this subject I certainly cannot surpass.
  I wish to make one simple point with regard to research and development. Looking through the documents cursorily it seems to me that given that one of the major reasons for most of the international airlines renewing their fleets over the next decade is the examination of stricter noise and fuel consumption requirements, this is one of the prime areas of research study which should be undertaken.
  It may well be that this is undertaken by other establishments not mentioned in the documents. I note that some reference was made in the Commission documents to airframe vibration, propellor vibration and noise emanating from helicopters. This seems to be a very important area for both applied and primary research both in projects on a collaborative or on a unilateral basis over the next decade.
  My second point takes up the short reference in the Minister's introduction to the option of collaboration with American companies. I should like to make a personal observation and plea that this option should be kept firmly open. It seems to me that some sort of collaboration with an American manufacturer, either by British Aerospace or jointly with other European companies, will be vital if we can break into that market.
  I understand the estimates are that over the next 12 years or so about 1,200 air
  1138
  craft will be renewed. Given the fact that approximately half the world market for commercial aircraft is the American commercial airlines, and given the historical and actual preference towards American manufacturers—and to some extent our failure in this market in the past—I feel it essential, if we are to apply the strict commercial criteria to which the Minister referred, that we should keep a very open option towards some sort of collaborative programme with them.
  In this context there are a number of specific advantages. I take the point about the danger of becoming a subcontractor of American industry. While that is a possibility, equally it has been a possibility with regard to the joint collaborative programme with some European manufacturers of aircraft. I believe that we have the expertise to contribute equally to a joint European programme or, indeed, to one with American manufacturers. I have the underlying belief that aircraft manufacture is an industry which this country ought to be in. It is a simple gut reaction from a politician, and I try strictly to restrict my remarks to those made in a general sense, without getting into the many commercial and factual questions which, in my view, should be more matters for British Aerospace, if it is run as an autonomous body.
  But these general matters of principle and policy and the options for the future are very important, given the skilled workforce in this industry, and given the historical and prospective financial commitment for which the British taxpayer will be liable.
  It is very important that we keep open these options. Other European countries are doing it. I understand that the French company. Dassault, has options open with McDonnell-Douglas for the joint production of an aircraft in this competitive range of 150 to 200 seats. I hope that the Minister will take this opportunity to reaffirm that this option is still open and perhaps give us a little more insight into how it might become a reality rather than a possibility.
  11.56 p.m.
  Mr. Kaufman: It was inevitable that, starting with the speech of the hon. Member for Chingford (Mr. Tebbit), the

  1139
  contributions from the Opposition became more and more positive, and I congratulate the hon. Member for Chichester (Mr. Nelson) on a very positive and constructive contribution. There was very little that he said with which I disagreed.
  The hon. Member for Clitheroe (Mr. Walder), I am sure unwittingly, misrepresented me wthen he implied that I was negative on the subject of collaboration. Any hon. Member who has troubled to follow what I have said during the period in which I have had my present responsibilities will know that I have stressed constantly the necessity for collaboration in aircraft projects, sometimes to the dismay of the shop stewards in the aircraft factories who mistakenly believe that it is possible for us to go it alone. I have always made it clear that, except perhaps for the HS146, it is not possible for us to go it alone any more and that we have to consider either European partners, which is the principal subject of debate tonight, or, as the hon. Member for Chichester pointed out, American partners, or possibly both. In many ways, if we could get a European-American venture, that might be the best outcome of all. But we have a commitment first to pursue our discussions with out European partners, and we must see where we go from there.
  My hon. Friend the Member for Bristol, North-West (Mr. Thomas), understandably, would have preferred me to speak in rather more detail about the largest of the documents before us, and perhaps speak about it in opprobious terms. I did not feel it necessary to do so, because the document is now very much past history. Not only is it a very old document, but the Commissioner who was responsible for it has departed. The Italian General Election took him away, and he has now been replaced by Commissioner Davignon, who has a very different approach to these matters. It is a far more pragmatic approach. When Commissioner Davignon came to see me not long ago, we discussed these matters, and he made it clear that he regarded the Commissioner's role not as being a grand ringmaster of the European aircraft industry but simply as being a kind of post box for it. I thought that was a modest and self-effacing but realistic role, and I very much appreciated the way in
  1140
  which Commissioner Davignon was approaching his responsibilities in this regard. He is being extremely helpful in that way.
  When it comes to specific projects, it is inevitable that those of my hon. Friends who have taken part in the debate should concentrate on the HS146 because, as my hon. Friend the Member for Welwyn and Hatfield (Mrs. Hayman) pointed out, it is the only project which could be launched very quickly and could get work into our factories. Understandably, my hon. Friend, as Member of Parliament for a constituency in which the factory most to benefit is sited if that plane went ahead, is especially interested.
  My hon. Friend's exchange with the hon. Member for Chingford was not really a chicken and egg exchange. In fact, the HS146 is not like the larger planes in that it needs a large launch order. It is not that kind of plane at all. With his knowledge of these matters, the hon. Member for Chingford ought not to have implied that it is. I am sure that he realises that it is the type of aircraft which, if constructed, will sell in small numbers to each of a wide variety of airlines. It is not the sort of aircraft for which one looks for two or three large initial orders, as one would in the case of a 150- or 200-seat aircraft. That is why the approach to it has been very different from the approach to those aircraft on which we should require collaboration because of their expense.
  The hon. Member for Chichester pointed out that there is a very different kind of expense between launching a completely new aircraft and a new design such as the JET would be and launching a derivative. One of the reasons why the advocates of the X11 have been so ardent in proposing it is that it combines the merit of being a British aircraft, which would provide a lot of work for our factories, with being a derivative, which means that the cost of launching it would be considerably less than it would be for a new aircraft, though still a considerable sum of money, as I know the hon. Gentleman recognises.
  The hon. Member for Chingford asked about engines. I did not go into great detail about that for the simple reason that it is not possible to do so. What I can say is that there could be a role

  1141
  for Rolls-Royce in an HS146, if it were launched. Rolls-Royce is still in the running as a potential engine supplier for that aircraft. There could be a role also for Rolls-Royce in a JET project, and there could be a role for Rolls-Royce in the tri-jet version of the 757. These are all potentialities for it. I would not go further than that.
  Mr. Tebbit: May I confirm what the Minister is saying? In the case of the HS146, it is not yet decided which engines the aircraft will have, and in relation to the other matters, I take it that he is referring to the cropped fan 535 version of the RB211 as the possibility for these aircraft.
  Mr. Kaufman: The 535 could be the possibility for the others. That is certainly so. Clearly, if I say that Rolls-Royce is still in the running for the HS-146, it means that a final decision has not been made. Otherwise, I could not honestly have informed the House on that.
  I hope that the House will forgive me if I do not go into further detail on these documents. This has been a useful debate, and it is interesting that it is the first debate which we have had on aircraft since the passage of the Aircraft and Shipbuilding Industries Act. Hon. Members have asked about the possibility of a further debate. I am not the one to give a commitment about that. It is the responsibility of my right hon. Friend the Lord President.
  But this is a fast-moving situation in the sense that the potential projects are constantly changing. If we had been debating these matters six months ago, save for the HS146 we should have been talking of other possibilities entirely, and, knowing the ingenuity of my hon. Friends and hon. Members opposite, I am sure that they will find many further opportunities for debating the subject.
  Question put and agreed to.
  Resolved,
  That this House takes note of developments in the EEC Civil Aircraft sector as outlined in the Government's memorandum of 17th January 1978.

  OPPOSITION PARTIES (FINANCIAL ASSISTANCE)
  Motion made,
  That the Resolution of the House of 20th March 1975 shall have effect from 1st January 1978 with the substitution of the following paragraph for paragraph 2 of that Resolution:—
  'That for the purpose of determining the annual maxima of such assistance the following formula shall apply:
  £550 for each seat won by the party concerned plus £1·10 for every 200 votes cast for it at the preceding General Election, provided that the maximum payable to any party shall not exceed £165,000.'—[Mr. Walter Harrison.]
  Hon. Members: Object.

  OPPOSITION PARTIES (FINANCIAL ASSISTANCE)

    SHIPBUILDING (REDUNDANCY PAYMENTS) [MONEY] (No. 2)
    Queen's Recommendation having been signified—
    Resolved,
    That, for the purposes of any Act of the present Session to provide for the making of supplementary payments to or in respect of employees of certain shipbuilding and other companies in respect of redundancy or transfer to less well-paid employment, it is expedient to authorise the payment out of money provided by Parliament of any sums payable by the Secretary of State to British Shipbuilders under the said Act of the present Session in respect of—

    (a) payments made or to be made by British Shipbuilders under any scheme for Great Britain made by the Secretary of State under that Act for the purpose of providing financial assistance to or in respect of employees of British Shipbuilders or any subsidiary (within the meaning of section 154 of the Companies Act 1948) of British Shipbuilders (in addition to any wholly owned subsidary within the meaning of section 150 of the said Act of 1948 of British Shipbuilders) who are—

    (i) made redundant or transferred to less well-paid employment; or

    (ii) about to be made redundant or so transferred; and

    (b) expenses incurred or to be incurred by British Shipbuilders in connection with the administration of any such scheme for Great Britain.—[Mr. Kaufman.]

  SHOTELY BRIDGE GENERAL HOSPITAL
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Coleman.]
  12.4 a.m.
  Mr. David Watkins: The matter that I am raising on the Adjournment this evening is the allocation of resources to Shotley Bridge General Hospital. This is a hospital of nearly 600 beds, situated in my constituency near the town of Consett, which enjoys, and has enjoyed for a long time, a high level of public esteem throughout the area that it serves. It is situated in the North-West Durham health district, which has a population of about 100,000.
  An important point that I want to make at the beginning, because it will have a great bearing on everything that I propose to say in my speech, is that 90 per cent. of all hospital services in the district are provided by this one hospital. To put it another way, 100,000 people, or thereabouts, are totally dependent upon it for nine-tenths of their hospital requirements. That is the measure of the importance to the community of this hospital.
  Like hospitals throughout the country, Shotley Bridge has felt the effects of inadequate financing of the National Health Service over the years. I am not making a political point in saying that. I am stating a fact. Indeed, I am sure that my hon. Friend the Minister of State, who is to reply to the debate, would be at one with me and with all my hon. Friends in regretting the circumstances which have brought about cuts in the NHS provision of late years and would certainly look forward to the time when this situation can be remedied and there can be a greater allocation of resources to the whole NHS.
  My hon. Friend the Minister will be aware that I have been writing letters to him and have been asking Questions in the House about this hospital and its resources and facilities for the past two years or so. The situation is now so serious that I feel forced to raise it on the Adjournment.
  The situation that has been developing has been accentuated recently by two particular developments. First, there is the
  1144
  transfer of the cardiothoracic unit to Newcastle upon Tyne. Second, there is the acceptance by the Secretary of State of the 1976 report of the Resources Allocation Working Party—RAWP, to give it, I suppose, its inevitable but singularly ugly jargon name. Indeed, when I say "RAWP", it sounds almost as though I am making a rude noise. I am not doing that, though I am aware of the fact that in the NHS there are many who think that RAWP is a rude noise.
  The transfer of the cardiothoracic unit has resulted in a reduction in the district budget for the forthcoming year of about £1 million, from about £7·3 million to to about £6·3 million. It is proposed that the facilities vacated by the transfer of the cardiothoracic unit should be used by existing services. If this proposal were implemented, there would be no real saving at all financially. If the RAWP report is implemented at district level, that will mean further cuts, on top of the £1 million, of about £250,000. Such a further cut could be achieved only by a reduction in the complement of beds overall, including, of course, a reduction in the complement of beds for the treatment of actue cases in medicine, surgery, orthopaedics, gynaecology and the treatment of children, for which there is currently provision of about 340 beds. Such a cut would mean cutting the present 340 beds for acute cases to about 230—a very substantial and serious reduction.
  The figures that I have quoted are for the district. As I have said, 90 per cent. of the total provision for the entire district is in this one hospital. There is no alternative provision. There can be little question of people in the area shopping around and looking for other hospitals in which they might be treated. Any reduction in the number of beds such as that to which I have referred would clearly have the most serious consequences, and the hospital provision would be well below the requirements of the patients.
  There is a further development to which I must refer—namely, the proposed closure of the Lee Hill geriatric hospital. This is also in the North-West Durham district, though it is not in my constituency. It is in the constituency of my hon. Friend the Member for Durham, North-West (Mr. Armstrong), the Under-Secretary of State at the Department of

  1145
  the Environment. He is aware that I shall be referring to the hospital.
  Lee Hill has 130 geriatric beds and its closure is proposed by December of this year, with the transfer of patients to Shotley Bridge, but already—well in advance of the ultimate closure—geriatric patients are being accommodated at Shotley Bridge and are taking beds required by other patients, including acute, surgical, medical and orthopaedic patients. The proportion of orthopaedic beds occupied by geriatric patients has already reached 40 per cent, of the available total. This has produced an intolerable situation. Far from any reduction in orthopaedic services being possible without serious reductions in the services being provided by the hospital, there is an urgent need for an increase in resources.
  Orthopaedic waiting lists can only be described as impossible. The latest figures show that there are 463 people on the list and that the waiting time between appointment requests and examination by the senior of the two consultant surgeons is 115 weeks—getting on for two and a quarter years. And that surgeon's colleague is seeing only urgent cases.
  This situation is, in effect, destroying the whole purpose of the waiting list because it means that less urgent cases have no hope of treatment. These cases may be regarded as less urgent, but that does not mean that they are any less uncomfortable or painful for the patient. It is little less than scandalous that such a waiting list should exist. The less urgent cases, whose condition may be uncomfortable and painful, can hope for treatment only if there is an increase in the allocation of resources to the hospital.
  I have mentioned the transfer of the cardiothoracic unit. Facilities will be left that should be utilised, but, because of the lack of funds, they cannot be properly utilised. The vacated operating theatres and intensive care unit cannot be staffed because that would need an additional 24 nurses at the hospital at a cost of about £100,000 a year, while the appointment of a third orthopaedic surgeon with support services to deal with the huge waiting list and the demand for treatment would require the allocation of another £90,000.
  1146
  The plastic unit at the hospital serves the entire region—a population of 877,000 —and the demands on it are increasing rapidly. The latest figures show 253 people on the inpatient waiting list. The appointment of a third plastic surgeon is required and has been approved nationally and regionally, but the appointment cannot be made unless there is an increase in funds.
  On the general issue of staffing, an important feature of the national figures is that 75 per cent. of hospitals' budgets is for salaries, with 44 per cent. paying for the provision of nurses. Only 5 per cent. of the budgets is for drugs. So the overwhelming effect of a reduction in budgets is in staff.
  There is already a desperate shortage of nurses in the hospital. Instances have been drawn to my attention where only two nurses have been on duty in wards of 44 beds. The Halsbury Report recommended better conditions of employment for nurses, and it was calculated that to implement it 14 additional nurses would be required at Shotley Bridge Hospital, but the budget allocation was for seven, only half the number required to implement the report.
  In an effort to avoid redundancies among long-term staff in the general rundown which I am describing and which is taking place, all new staff have been given only short-term contracts. That is something that has been agreed with the appropriate unions, and it is a situation that will last until the run-down figure is reached. However, when those coming to the hospital are given a contract for a few months, which at the end is perhaps renewed for another two months, it is a desperate and demoralising situation. The fact that desperate and demoralising expedients have had to be introduced is a measure of the existing situation in the hospital.
  I have made it my business to meet a wide and represenative cross-section of those who are concerned and involved. I have talked with general practitioners in my constituency, with hospital doctors and consultants, with nurses and nurses' representatives. Furthermore, I have talked with the representatives of a wide range of supporting staff. It goes without saying that I have talked with patients, many of whom are among my constituents and who for a long time have

  1147
  been making complaints to me, principally about the length of the waiting lists.
  I find myself amazed by the high level of morale among the staff at all levels in what is an impossible situation. However, I have found that there is a general air of growing depression among staff at all levels and, furthermore, a growing level of public concern at the deteriorating service. That has been reflected in the discussions that have taken place on the North-West Durham Community Council, which is equally concerned about that with which we are confronted in the hospital.
  The hospital is faced with an acute shortage of finance. That is the basic problem. The shortage has arisen from circumstances that obviously are beyond the control of the hospital authorities. Services are being maintained only by heroic efforts within the hospital. That means that in practice there are constant expedients internally in trying to shift resources as required between departments as crises arise one after another. It is a policy that was described by one of the senior members of the consultant staff as robbing Peter to pay Paul. That has to go on all the time of the hospital is to provide any sort of service. The overall situation has resulted in waiting lists for treatment and a continuing crisis.
  As the hospital provides 90 per cent. of all the hospital services in a district of 100,000 people, who have no alternative place for treatment, the situation is especially acute. However, in the fact of the conditions that I have described it is proposed that resources are to be reduced. The amount of treatment that is needed is not diminishing. There seems to be a firm prospect of closures, curtailed facilities and even longer and lengthening waiting lists.
  I recognise that there is a difficult national situation that has been worsened by the Opposition's demands for still further cuts in public expenditure without regard to the effect of such cuts. The hospital is a classic demonstration of the effect of public expenditure cuts on ordinary people, and the effect of a policy that a combination of Opposition parties have so pitilessly used their majority to
  1148
  introduce so further to increase the price of the people's food.
  I recognise why this arises in a national context, but I must put it squarely to the Minister of State that the situation can be corrected only by an allocation of additional resources so that this fine hospital can provide the public with the service which everyone connected with it wants to give, and which the public in the area—patients, former patients and potential patients—want it to give and are justifiably entitled to expect.
  12.20 a.m.
  The Minister of State, Department of Health and Social Security (Mr. Roland Moyle): I can well understand that my hon. Friend wishes to raise the subject of Shotley Bridge General Hospital, since the health services in the North-West district of Durham are suffering the tribulations of change as the Health Service changes its stance in that area. However, I can commend to his constituents the assiduity and energy with which my hon. Friend the Member for Consett (Mr. Watkins) has pursued this matter on their behalf over the last couple of years.
  Before I describe the future plans for the health services in the district, it would be useful if first I explained the circumstances behind the transfer of the cardiothoracic services. This is basically because, in the late 1960s, the former Newcastle Regional Hospital Board planned and subsequently built a new hospital at Freeman Road, Newcastle. This is to be the centre of the regional specialties.
  Now that the hospital has been built, the regional specialties, with one exception, are being moved into the new hospital. That part of the plans for the Freeman Hospital which directly affect Shot-ley Bridge Hospital is the transfer of the cardiology, thoracic surgery and urology beds. This means that 155 beds at Shotley Bridge are to be vacated, 130 of them in cardiothoracic services, which were transferred last year, and 25 in urology services, which are expected to transfer in April this year.
  The transfer of these beds has enabled the area to work out a programme for the implementation of its plans—to rationalise and redeploy its services—which will result in health services related to the population served by the district. The key to the plan for the district

  1149
  is the development of Shotley Bridge as the district general hospital for the North-West Durham district. It will have a pivotal role in the health services there, although perhaps not with the glamour that is associated with the regional specialties. This redevelopment will be achieved primarily by the relocation of the cardiothoracic and urology beds, the development of the Maiden Law Hospital for long-stay provision, and the development of South Moor Hospital as a community hospital with general practitioner cover.
  The actual number of beds to be provided to meet the needs of the population in the district is under consideration between the area health authority and the North-West Durham district, but the district's current bed numbers are in excess of the national bed norm. For example, by the end of December 1978 the district plans to have 200 geriatric beds, excluding those at South Moor hospital, compared with a national bed norm on the basis of 10 beds per thousand of the population over 65, which would give 130 geriatric beds.
  Nationally we aim at 2.8 beds per thousand of the population on the acute side, and this would give an allocation of beds in that sphere at Shotley Bridge of 230, compared with the actual number of 320. It is to be expected that the district plans are likely to result in a planned reduction of beds over the years in order to bring the numbers in the district more closely into line with national targets. This is the district's outline plan for its future services. I can appreciate, from what my lion. Friend said, that he is concerned about the detail of these plans.
  First, the Lee Hill Hospital is concerned with geriatric patients. These will be transferred both to the Maiden Law Hospital and the Shotley Hospital—100 beds to each. This is in line with departmental policy that 50 per cent. of geriatric beds should be on the district general hospital site with access to diagnostic, therapeutic and rehabilitation services, because it is clear that the greatest users of acute services in the country are the geriatric population. It is expected that there will be a gradual transfer of patients from Lee Hill Hospital throughout 1978 leading to its eventual closure in December this year.
  Before the transfer of beds from Lee Hill Hospital can be effected, the vacated
  1150
  wards at Shotley Bridge need to be converted and improved. Those are the wards vacated by the cardiothoracic and neurology services. The capital for this will be found on the area and district's capital allocations for 1978–79 and from the district's allocation of extra moneys for aid to the construction industry which my right hon. Friend the Chancellor of the Exchequer made available in his autumn Budget last year. Therefore, there is no question of the vacated wards lying unused because there is a lack of money to convert them. They will be gradually brought into use as they are converted and upgraded, using revenue from the 1978–79 revenue allocation together with savings from Lee Hill Hospital when it closes.
  My hon. Friend referred to nursing staff and the redeployment of nursing staff in the district. We have to rely on the best professional advice that we can get. The district nursing officer believes that during the next three or four months, while the wards are being converted and improved, she will be able to maintain an adequate service with the nurses available, including those transferring from Lee Hill. By the time Lee Hill closes, there will be sufficient nurses available to man the newly converted wards at Shotley Bridge. There has recently been a small reduction in the numbers of untrained nurses in post, but this is due to the new policy of increasing the numbers of trained staff within the nursing budget.
  My hon. Friend expressed considerable concern about orthopaedic waiting lists. This is an aspect of a national problem. I shall not go into detail, but orthopaedic waiting lists throughout the country are substantial. The waiting lists at Shotley Bridge are a local manifestation of this national problem. There is now an opportunity to work towards an improvement in the orthopaedic services as the long waiting lists in this speciality have been a matter for concern for some time. This improvement will follow the rationalisation of the services taking place in and around the Shotley Bridge Hospital.
  Now that the cardiothoracic service has moved to the Freeman Hospital, the triple theatre suite can be upgraded to permit a reallocation of accommodation and facilities. The orthopaedic service will occupy 60 beds and have exclusive use of

  1151
  the hillside theatre facilities close by with the service of a full theatre sterile supply unit. That will improve throughput and lessen waiting times.
  As my hon. Friend said, the district has put in a bid for an additional consultant orthopaedic surgeon. The post has been approved by the Central Manpower Committee and the region expects to accord the post to North-West Durham. Up to there I think that we are in agreement.
  The region is awaiting this year's revenue allocations from my Department before deciding whether it can fund the additional post. Initially, it is intended to allocate an equivalent number of beds and theatre sessions to the existing consultants, but there will be room for expansion when the third consultant is appointed, which should lead to a considerable further reduction in waiting times and increase throughput.
  I mentioned that one regional specialty was being retained at Shotley Bridge. That is the regional plastic unit. The demand for plastic surgery is increasing nationwide, because of improved techniques, and there is an increase in cosmetic surgery in addition. To meet this demand North-West Durham district will be making improvements to the operating suite. This is a fairly big design job due to commence this year, and it is already in the capital programme.
  The appointment of a third consultant plastic surgeon will not be feasible until the theatre suite is nearly finished, but the district has put in a bid for this additional appointment. The consultant's salary will of course be paid by the regional health authority, but the district will have to fund the revenue consequences of the appointment.
  I assure my hon. Friend that the Durham Area Health Authority will take account of the population it serves when preparing its strategic and operational plans, and the district's basic need will be met by building up a good district general hospital at Shotley Bridge.
  In some cases my hon. Friend and I agree on the facts, but possibly he regards them as rather dismal and gloomy, whereas I regard them as being desirable in some respects. We do not agree as to some of the other facts, but I hope that
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  my hon. Friend will take my view as ground for optimism for the future.
  An important background element to all this rationalisation of services is the Resource Allocation Working Party policy, to which my lion. Friend referred. My hon. Friend should commend and support that policy, because it means a substantial movement of national funds to the northern part of the country. If RAWP goes, the growth money of the National Health Service will end up in London with the teaching and postgraduate hospitals and not up in the North around Newcastle.
  Although my hon. Friend's district may be having a rather difficult time as a result of the working party's report, the area as a whole is benefiting from it. The Northern Region has been given a 3 per cent. growth in funds as a result of the working party.
  Within the region, revenue allocation must be made to each area. Originally the North-West District of Durham was given an allocation of £7½ million, aginst a target allocation of 8·3 million, but then the regional specialties were moved away from the district, and that accounted for about £2½ million of revenue costs. On the basis of an allocation of £7½ million, the North-West Durham District, following the removal of the regional specialties, is receiving a sum somewhat in excess of that needed to run the services at Shotley Bridge and the other hospitals after that transfer.
  That means that the funds going to the North-West Durham Area Health Authority will have to be reduced over a period of years, but we accept that reallocation of resources of that kind is a matter that must be discussed between the region, the area and the district. It must not be hurried. The pace of change should not be so fast as to endanger essential services. The figure of eventual allocation to the district is a target to be achieved over a number of years. It is not expected to be achieved within a few months as a result of Draconian measures.
  I hope that as a result of that approach to the problem, the fears expressed by the patients and staff at Shotley Bridge and by my hon. Friend tonight will not be realised.
  Question put and agreed to.
  Adjourned accordingly at twenty-six minutes to One o'clock.