Commons Sitting of 30 January 1978

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

    Caravans
    Mr. Wardasked the Secretary of State for Prices and Consumer Protection what representations he has received about trade practices on the sale of caravans.
    The Minister of State, Department of Prices and Consumer Protection (Mr. John Fraser): I have received a number of complaints about undesirable practices connected with the sale of caravans. These particularly involved the sale of holiday caravans by certain site operators.
    Mr. Ward: In view of the fact that there is a growing volume of these complaints, when does the Minister propose to introduce a code of practice, if only to govern certain practices by caravan
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    site operators? Has there been a change of heart on the part of the Trellis Scott company about its practices in Wales?
    Mr. Fraser: On the latter point I have heard from Mr. Dunstan, managing director of Trellis Scott, this morning. He asked if he could come to see me, and I shall gladly see him. On the code of practice, I shall discuss a proposal with the National Federation of Site Operators, and the Director General of Fair Trading if necessary.

    Price Commission
    Mr. Giles Shawasked the Secretary of State for Prices and Consumer Protection when he will next be meeting the Chairman of the Price Commission.
    Mr. Canavanasked the Secretary of State for Prices and Consumer Protection when he next expects to meet the Chairman of the Price Commission.
    Mr. Clemitsonasked the Secretary of State for Prices and Consumer Protection when he next proposes to meet the Chairman of the Price Commission.
    The Secretary of State for Prices and Consumer Protection (Mr. Roy Hattersley): The Chairman of the Price Commission and I meet frequently. No firm date has been set for our next meeting.
    Mr. Shaw: When the Secretary of State next meets the chairman, will he raise the matter of the propriety of the range

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    and depth of questions being asked? What will happen to the Commission's data bank of information? Will the right hon. Gentleman remind the chairman that, as he said in his report he cannot operate without the good will of British industry and it seems that that good will is being eroded rapidly?
    Mr. Hattersley: That is only the result of unsubstantiated stories in the newspapers. No good purpose would be served by my directing the Chairman of the Price Commission—I do not know whether it would even be within my power—about whether questions were proper or not.
    The information requirement was discussed in great detail with the CBI when it was first prepared, and now a working party of the CBI and the Commission is considering further provision. Anything they agree to, I shall support. That is the right way to go about matters.
    Mr. Canavan: Is the Secretary of State aware that many workers whose wages are frozen are absolutely flabbergasted by some of the price increases that the Commission allows? For example, why should the Distillers Company be allowed to slap another 50p on the price of a bottle of whisky when last year that company made a profit of £91 million and the managing director earned £50,000, yet the average wage of its workers is less than £52 a week?
    Mr. Hattersley: The application of the Distillers Company was examined and treated by the Price Commission according to the rules established by the House. The Commission will continue to adhere to those rules. My hon. Friend must recall that not all whisky prices went up by the amount that he has quoted because of the intervention of the Price Commission.
    Mr. Fell: Does the Secretary of State recall a letter than I wrote to him recently about the Eastern Electricity Board? It has applied to the Price Commission for a further rise in electricity prices. Why is he so coy about having words with the Price Commission over this matter?
    Mr. Hattersley: The Act of Parliament governing the Price Commission, which the hon. Member voted against, binds me as it binds him to seeing that the Com-
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    mission operates with a degree of independence. This was the will of the House and I subscribe to it.
    Miss Boothroyd: When my right hon. Friend next meets the Chairman of the Price Commission, will he make the point that the Whisky Distillers' argument that it needs price rises to protect export earnings is unacceptable in view of the fact that lower export prices tend to increase consumption and increase earnings? Will he further say that the action of the Price Commission in not investigating the Distillers Company disturbs those of us who gave authority for such investigations to be carried out?
    Mr. Hattersley: I have no doubt that the Price Commission and the wider public will take note of what my hon. Friend has said. However, it would be improper and undesirable if I constantly suggested to the Price Commission what it should or should not investigate. The Act provides that specific decisions of this sort should be taken by the Price Commission itself, and that must remain the case.
    Mr. Neubertasked the Secretary of State for Prices and Consumer Protection when he next expects the Price Commission to make a general report on its activities to him.
    Mr. Hattersley: The Price Commission is due to report to me during February on the performance of its functions during the three months ending 31st January 1978.
    Mr. Neubert: Does the Secretary of State recall the undertaking given in Standing Committee that the Price Commission's powers would not be used to secure planning agreements in industry? Has that held true to date, and will it in future?
    Mr. Hattersley: The law does not allow the Price Commission to use its powers in that way. I thought that I had convinced the hon. Gentleman of that during the Committee stage of the Bill.
    Mr. Canavan: Will my right hon. Friend ask the Commission to report on the inflationary effect on food prices of last week's parliamentary auction sale when the SNP tried to outbid the Tories and the Liberals by proposing a green pound devaluation of 20 per cent. per

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    annum in a cheap bid to buy the farmers' votes?
    Mr. Hattersley: One of the Price Commission's objectives is to explain the reasons for price increases, but in this case I think that the country understands that perfectly well.
    Mr. Montgomery: What is the cost to the taxpayer of each of the reports of the Price Commission, and what is the cost to the firms which have had to undergo investigation?
    Mr. Hattersley: Questions about individual costs are for the Price Commission, but I can assure the hon. Gentleman that in these cases the costs are rather like his supplementary question—trivial.
    Mr. Prescott: In view of some criticism of the Price Commission's techniques and its reports, is my right hon. Friend convinced that it has sufficient resources and personnel to carry out these important inquiries?
    Mr. Hattersley: Yes, I am. I told the House a month ago that the Price Commission wanted to employ consultants to ensure that the correct quantity and quality of manpower was available. It is doing that, and I have no reason to believe that it is operating other than efficiently. Certainly the chairman of the Commission would tell me if he feared a lack of efficiency, but he has not done so.

    Table Wine
    Mr. David Priceasked the Secretary of State for Prices and Consumer Protection if he will refer to the Price Commission the price margins in the sale of table wine.
    The Under-Secretary of State for Prices and Consumer Protection (Mr. Robert Maclennan): No, Sir.
    Mr. Price: Is the Minister aware that taxation represents more than 40 per cent. of the retail price of ordinary table wine—"plonk", in ordinary terms? Is he also aware that since the Labour Government came to power the taxation on "plonk" has increased by 333 per cent? That is the Treasury figure. What does the hon. Gentleman propose to do about it?
    Mr. Maclennan: Questions about the level of duty are a matter for my right
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    hon. Friend the Chancellor of the Exchequer.

    Price Commission Act 1977 (Information Requirements)
    Mr. Tim Smithasked the Secretary of State for Prices and Consumer Protection what steps he is taking to simplify and moderate the provision of information requirements under the Price Commission Act 1977, in the case of price pre-notification and quarterly reporting on profit margins.
    Mr. Hattersley: I am keeping the information requirements under review, but it is much too early to say whether modifications may be required.
    Mr. Smith: Is the right hon. Gentleman aware that, although there is supposed to be a degree of simplification under the new arrangements, many industrialists are finding the new forms a good deal more complicated than their predecessors?
    Mr. Hattersley: I apologise to the hon. Gentleman because I think I anticipated his question in a previous comment. I can only repeat what I said before. The information requirement as it stands is largely the result of work jointly done by the Price Commission and the CBI. They are now talking about modifications and if they are mutually agreeable I shall not stand in their way. Some of the wilder claims about information requirements are not supported or subscribed to by industry as a whole.
    Mr. Adley: In order to avoid any wild claims, can the right hon. Gentleman confirm or deny—and if he can do neither will he write to me—that each individual inquisition by the Commission costs about £60,000?
    Mr. Hattersley: Individual questions on individual costs must, under the statute, be a matter for the Commission. While the hon. Gentleman is talking about wild claims, he might like to consider wild language and the use of words such as "inquisition" which make the people who use them appear ridiculous.
    Mr. Neubert: Is the right hon. Gentleman satisfied with the reported questions of the Price Commission about the militancy of company trade unions? What

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    business is it of the Commission whether trade unions are militant or not?
    Mr. Hattersley: There has been a good deal of comment about that question and claims that it appears in a questionnaire. I have talked to the Chairman of the Price Commission about that. No such question ever appeared in a questionnaire—
    Mrs. Sally Oppenheim: Yes, it did. I saw it.
    Mr. Hattersley: A firm of independent, private and highly reputable consultants working on behalf of the Commission included such a question in some individual letters. The chairman of the Commission has told the consultants that he does not regard that as a sensible question, and I agree with him.

    Price Markings
    Mr. Maddenasked the Secretary of State for Prices and Consumer Protection if he will seek powers to require that goods displayed as "Xp off" show the price from which the reduction is claimed.
    Mr. McNamaraasked the Secretary of State for Prices and Consumer Protection if he will seek to regulate flash offers.
    Mr. Maclennan: Flash offers and similar practices undoubtedly tend to confuse consumers. I am considering introducing a requirement that when a price reduction is shown both the net price and the price from which the reduction is made should also be marked. The Office of Fair Trading has been examining the general question of bargain offers and is expected to submit recommendations shortly. When we have these, we shall decide on the action that is needed.
    Mr. Madden: Does my hon. Friend agree that offers that do not show the price from which the deduction has been made are widely regarded as a con trick by many in the retailing trade? Can he give an indication of when the regulations to which he has referred are likely to be introduced?
    Mr. Maclennan: I agree that price information of that sort is extremely misleading. I hope to be able to move rapidly on this matter and I am waiting for indications from the Office of Fair
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    Trading of how it thinks it would be most sensible to proceed.
    Mr. Ioan Evans: Will my hon. Friend take urgent action because the situation in supermarkets and shops is a jungle and people often have no real idea of what they should be paying? Is he aware that often the small print on 5p or 10p off offers shows that the customer has to send to the manufacturers to get the refund?
    Mr. Maclennan: Shoppers often do not realise that the flash offers indicating so many pence off are indicative not of the retail price but of the manufacturer's recommended price, which may bear little relationship to the price that would normally be paid.
    Mr. Kenneth Lewis: Is the hon. Gentleman aware that prices have been going up so frequently in the last two years that any shop or supermarket would have quite a choice of original prices when marking the price of goods?
    Mr. Maclennan: I am sure that the hon. Gentleman will welcome the evidence that the rate of inflation is, as the Government forecast, moderating rapidly.

    Retail Price Index
    Mr. Mike Thomasasked the Secretary of State for Prices and Consumer Protection what was the annual rate of increase in the retail price index at the latest available date.
    Mr. Gwilym Robertsasked the Secretary of State for Prices and Consumer Protection what are the latest figures available for changes in the retail price index.
    Mrs. Bainasked the Secretary of State for Prices and Consumer Protection what is the latest increase in the retail price index.
    Mr. Wakehamasked the Secretary of State for Prices and Consumer Protection what is the increase in the retail price index since February 1974.
    Mr. Hattersley: The retail price index rose by 0·5 per cent. in December 1977. This brings the annual rate of increase down to 12·1 per cent. The increase since February 1974 is 85·3 per cent.
    Mr. Thomas: Is my right hon. Friend aware that his answer is, if anything, an improvement on the forecasts that he has made since he took office and that this is welcome? Does he agree that statements by the hon. Member for Gloucester (Mrs. Oppenheim) that Government forecasts in these matters are always wrong are not only inaccurate but mischievous and that she has joined her Front Bench colleagues in seeking to promote among working people the desire to break the Government's pay policy? Is not that her real motive rather than the search for truth?
    Mr. Hattersley: Most people understand how price increases have moderated. The monthly index of prices, which shows that in the last six months the increase has never been more than ½p in the pound, is real evidence of what is happening. If there has been an inaccuracy in my predictions, I apologise, but it is that I have been over-pessimistic about the date on which single figure inflation would be reached. It may be earlier than I had anticipated.
    Mr. Roberts: Is my right hon. Friend aware that most people are very appreciative of the enormous fall in the rate of inflation which has been achieved jointly by the trade union movement and the Government? Does he agree that, in view of some of the statements from the Opposition Front Bench, there may be a case not only for a Tory Party index showing the effect of its policies on prices but for a special Gloucester index to show how high the hon. Member for Gloucester (Mrs. Oppenheim) would wish prices to be?
    Mr. Hattersley: The difficulty about a Gloucester index is that it would be published only in the Daily Telegraph. However, my hon. Friend makes a serious and important point. The achievements of the last two years, which we sometimes talk about loosely as our achievements—as though they were the Government's—are a result of the activities of the trade union leadership and the sacrifices of the British people. As the year wears on and real standards of living improve because inflation is under control, that achievement and the material benefits which it will bring will be clear and perhaps even the Opposition will acknowledge the debt owed to the trade union movement for two years of wage restraint.
    Mrs. Bain: I hesitate to interrupt the mutual admiration society on the Government Benches, but can the right hon. Gentlement tell us when he intends to take action to ensure that food price increases are at least reflected evenly throughout the country? Is he aware of the remarks of the chairwoman of the Scottish Consumers Council who said that because there is a higher proportion of people in Scotland dependent on local facilities for their food purchases they are suffering more than anyone else?
    Mr. Hattersley: In some areas—and this applies not just to Scotland, but to the South-West and parts of Wales—there are problems that result from the high cost of transport and the low turnover of supplies. I told the hon. Lady in the Standing Committee that considered the Price Commission Bill that this is a matter that we do not take frivolously or lightly. There is economic difficulty in smoothing these things out, and perhaps the Price Commission could look at this matter in one of its sectoral inquiries.
    Mr. Wakeham: Is the right hon. Gentleman aware that we will accept our responsibility for the price rises of one-sixth of 1 per cent. as a result of the increased devaluation of the green pound if he will accept the Government's responsibility for the 85·3 per cent. increase in prices since they came to office?
    Mr. Hattersley: The hon. Gentleman is a month late. It was last month's campaign to pretend that inflation began with the election of this Government in 1974. I have given the House figures that prove conclusively that the great increase in inflation started in the last six months of the Administration of the right hon. Member for Sidcup (Mr. Heath) with a 5 per cent. increase in prices then compared with 3·6 per cent. increase in the last six months of 1977. That Administration's printing of money, deficit financing and indexing were all calculated to get inflation going.
    Dr. McDonald: What contribution has the Price Commission made to the reduction in the rate of inflation? Of the 664 price increases notified between 1st August and 31st October 1977, only 50 were withdrawn or modified. Does that not show that the Commission is hardly the monster that the hon. Member for

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    Gloucester (Mrs. Oppenheim) believes it to be?
    Mr. Hattersley: I have never promised the House a monster. I have always promised the House that the Price Commission would have a significant effect on some specific prices and would have a generally favourable effect on prices as a whole. Its existence deters many companies from applying for price increases which they would certainly make if it did not exist. If the speech that the hon. Member for Gloucester (Mrs. Oppenheim) made 15 days ago has any substance, the point that she was struggling to make was that the Price Commission was deterring people from applying for price increases.
    Mrs. Sally Oppenheim: Is the Secretary of State aware that the Gloucester price index shows the highest rise in prices under the present Government that has ever taken place in this country? Is he further aware that the consumers are not so worried about the devaluation of the green pound as they are about the devaluation of the red pound, which is now worth only 54p compared to when the Government came into power? Will he explain to the House why Labour Members are so indignant about an increase of one-sixth of 1 per cent. in the retail price index produced by the devaluation of the green pound when they acquiesced without any protest to an increase of double that amount by this Government when they put a tax on food prices?
    Mr. Hattersley: Our indignation about what happened last Monday night stems from a simple cause. Nobody has suggested, least of all myself, that the green pound should remain at its old level for ever. It was important that farmers, and certainly some groups of farmers, should receive adequate reward. What happened last Monday night was that a gratuitous and unnecessary addition was made to that increase. The hon. Lady voted for it, no doubt because her Gloucester constituency contains many farmers.

    Recommended Prices
    Mr. Litterickasked the Secretary of State for Prices and Consumer Protection if he will use the Price Commission Act to stop the use of artificially inflated makers' recommended prices.
    Mr. Maclennan: Yes, Sir. My right hon. Friend shortly proposes to direct the Price Commission to examine recommended retail prices in bedding. Further directions relating to the practice in other sectors may be issued subsequently. The decision to take action on a sectoral basis does not preclude legislation or other steps at a later stage to prohibit the practice completely.
    Mr. Litterick: Is not the Minister aware that housewives are confronted in the shops with two sets of prices, one of them "phoney" and the other a statistic which is either an absolute sum of money or a percentage showing the alleged reduction from one of these phantom prices? This greatly confuses the mechanism of consumer choice, and it makes life difficult for the housewife. Does my hon. Friend agree that, given that situation, housewives through out the country would welcome the banning of the use of the recommended retail price system because it is now a ramp?
    Mr. Maclennan: I agree with my hon. Friend that the recommended retail price system gives rise to confusion of the sort to which he has referred. It was with that in mind that the House took powers in the Price Commission Act to enable the Price Commission to examine cases in which it was particularly confusing and to make recommendations for its removal. We are proceeding entirely in line with the provisions in the Act and will be looking at a number of other sectors. That is not the end of the story. It will be possible for us to proceed across the board if it is appropriate to do so.
    Mr. Freud: Would it not be possible to avoid the artificially inflated maker's recommended prices by asking the Price Commission to ensure that people refer only to prices which are charged in other shops, which would then be the opposite to "We are never knowingly undersold"?
    Mr. Maclennan: That matter will fall to be considered by the Director General in his review of bargain offers.
    Mr. Greville Janner: Is my hon. Friend aware that the pernicious system of so-called double pricing is a trap not only for the housewife but for the honest retailer who has to introduce it so that he can keep up with his dishonest competitor? Will he ensure not merely that

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    his very welcome announcement results in a recommendation being made but that action is taken swiftly?
    Mr. Maclennan: It was because of our general concern about the problem that the matter was referred to the old Price Commission, and its general report on the subject was made available to us. I can give the undertaking that my hon. and learned Friend has asked for, that any recommendation from the Price Commission for action to be taken will be acted upon most speedily.
    Mr. Giles Shaw: Will the Secretary of State confirm that in the discussion on the Price Commission Bill he pointed out—and the Conservative Party agreed with him—that the powers did not include powers to ban the practice altogether? We accept that reform may be necessary. Will the Minister confirm the Government's position?
    Mr. Maclennan: It is possible to proceed other than by the arrangements under the Price Commission Bill to which I have referred.

    Inflation
    Mr. Rathboneasked the Secretary of State for Prices and Consumer Protection whether he will forecast the rate of price inflation at the end of 1978.
    Dr. McDonaldasked the Secretary of State for Prices and Consumer Protection what is his present estimate of the likely trend in retail prices over the next 12 months.
    Mr. Hattersley: I expect the annual rate of inflation to fall to single figures by the spring. The size of further reductions is crucially dependent upon the general level of wage settlements remaining within the Government's guidelines.
    Mr. Rathbone: Will the Secretary of State confirm that other members of his Government and other Government forecasters agree with him? Will he inform the House of any other forecasters who do?
    Mr. Hattersley: There is no reputable forecast that does not show that we will reach that level and remain at that figure for the rest of the year. There is no doubt of that.
    Mr. Costain: When the Minister announces the figures, will he be fair to
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    the House and point out that the increase is an 85 per cent. increase over the figures on which the Chancellor of the Exchequer based his famous 8·4 per cent. Even a single-figure inflation rate today is equal to more than 17 per cent. on the basic pound.
    Mr. Hattersley: No. The practice in this country is to calculate the retail price index as the way of judging the level of inflation at any one time. I know that when the three-monthly annualised average painted a more gloomy picture Opposition Members chose that as their indicator. Now that it paints an advantageous picture they no longer use it. I propose to do what I have done for the last 18 months, which is to use the commonly accepted and most reputable indication of price increases. I refer to the RPI. On that basis my figures are absolutely correct.
    Mr. Giles Shaw: Will the Secretary of State comment on the equally reputable and splendid figures given by the Prime Minister in his new year BBC broadcast in respect of 1979 in which he said that price inflation would be at 5 per cent. provided that wage inflation likewise was only 5 per cent? Does he endorse that?
    Mr. Hattersley: The Prime Minister pointed out—and we must all continue to point it out—that the level of prices next year, which I believe has to be an improvement on that for this year, has an arithmetical relationship to wage increases over the same period. It seems to be no more than right that the Prime Minister and other members of the Government should make that simple fact known.

    Price Commission and TUC (Talks)
    Mr. Gowasked the Secretary of State for Prices and Consumer Protection if he expects the Price Commission to report on its consultations with the TUC.
    Mr. Hattersley: The Price Commission referred to certain discussion with the TUC in its quarterly report for August-October 1977. The extent to which it reports on any consultations is a matter for the Commission.
    Mr. Gow: If the Secretary of State is right, as I believe he is, in saying that the rate of inflation of 1974–75 arose

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    primarily out of the monetary policies of 1972–73, would it not be more honest to the House and to the country to say that the reduction in the rate of inflation is due primarily to the more stringent monetary policies which have been followed since the Government came to office rather than to the TUC and to the sacrifices of the British people?
    Mr. Hattersley: I am grateful for the hon. Gentleman's first point, which he makes with great objectivity, and I am sure that the House appreciates it. On his second point, I cannot agree. Every answer that I have given on previous Mondays has pointed out that a number of factors have enabled inflation to be brought under control, and certainly monetary restraint is one. I do not minimise its importance. It has a part to play. It is one of the factors, but over the last two years another major factor has been wage restraint.
    Mr. Heffer: Does the Secretary of State agree that the main factor has been the wage restraint of the trade unionists? Does he further agree that wage restraint cannot go on for ever? Trade unionists' earnings must keep up with the cost of living. At the same time, will he indicate to the Opposition that the Price Commission is doing a reasonable job and that it is not a monster but that it could improve its position?
    Mr. Hattersley: As my hon. Friend knows, the idea of the Price Commission behaving in a tyrannical way is regarded by both myself and most of industry as ludicrous. There are ways in which the Price Commission can improve its techniques, and perhaps some improvements are possible in the rules by which it operates.
    The most important part of my hon. Friend's supplementary question was the reference to wage restraint. I agree that there cannot be a further period in which working people in this country are required to accept a fall in their standards of living. From now on we must make sure that wage increases and increases in the inflation rates are so related that the standard of living improves. If there is a 10 per cent. earnings increase between now and 1st August, and if there is single-figure inflation in a month or two, that will add to the net
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    result which will bring about an improvement in the standard of living.
    Mr. Rathbone: Does the right hon. Gentleman agree that there is not a third but rather a second period coming up now, in that the first period, which is looked upon as a period of wage restraint, the £6 a week increase was the largest increase that many workers had ever had, and that far from restraining inflation it added fuel to the fire?
    Mr. Hattersley: Phase 1 provided for some lower-paid workers increases greater than they would otherwise have had. Those of us who wanted a phase 3 and regretted that that was not possible in a formal sense regretted it in part because it meant that we could not make proper and special allowance for the lower paid. But to suggest that phase 1 was in itself inflationary is wrong. In phase 1 prices rose faster than wages and there was a net fall in the standard of living, and workers were making a contribution to bringing down inflation.

    Prices (International Comparisons)
    Mr. Richard Pageasked the Secretary of State for Prices and Consumer Protection what was the cumulative increase in prices between February 1974 and the latest date in West Germany, the United States of America, Japan, France and the United Kingdom.
    Mr. Maclennan: The cumulative increases in prices between February 1974 and November 1977—the latest date for which comparative figures are available—were West Germany 17¾ per cent., United States of America 31 per cent., Japan 41¼ per cent., France 46½ per cent., and the United Kingdom 84¼ per cent.
    Mr. Page: Although we welcome the recent drop in price increases, the increases given by the Minister show that the United Kingdom has suffered two to three times the rate of increase of our major competitors, and that is particularly affecting small businesses. Is the hon. Gentleman aware that simply to catch up we must secure half the inflation rate of our major competitors over the next four years? Has the Minister any projections for the rate at the end of this year or next year, or can be in any way give an indication of how the damage can be rectified?
    Mr. Maclennan: The hon. Member is right to draw attention to the importance not only of bringing down our rates of inflation to those of our competitors but of maintaining them at those competitive rates. I am sure that he will be glad that in the last six months, on the comparative information available—that is to November—inflation in this country has been below the OECD average. It was 3·1 per cent. in Britain compared with 3·5 per cent. in the OECD as a whole. I think that that shows that we are getting to the sort of target that we must sustain.
    Mr. Ioan Evans: What has been the effect on the cumulative increase in this period of the CAP food policy, and do the Government need to alter that policy to secure the sort of prices we need? Does my right hon. Friend realise that, while tea and coffee have risen and fallen in price, Common Market food prices have gone up and up?
    Mr. Maclennan: The Government are seeking important changes in the CAP, and it remains a part of our policy to ensure that the common prices of food products which are in structural surplus do not go up substantially.
    Mrs. Sally Oppenheim: Is the Minister aware that the figures he gave in his original answer to this Question show that prices have risen in this country during the period in question five times faster than they did in Germany, three times faster than in the United States, and twice as fast as in France and Japan? Since all these countries were subject to the oil price crisis, and since at least some of them were subject to the CAP, is it not clear that the reason for the disparity is that those countries had the good fortune not to have this Government?
    Mr. Maclennan: If the hon. Lady reflects upon my original answer, she will realise that it referred to the rate of price increases which were started when her party was in office. They can be largely attributed to three factors. The first was the threshold arrangements which she entered into. The second was the hidden subsidisation of nationalised industry prices, which we have had the considerable problem of phasing out. The third was the Barber printing boom, which almost every Conservative is prepared to acknowledge made a major contribution
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    to the rate of inflation that we have had to reduce.

    Potatoes and Potato Products
    Mr. Edwin Wainwrightasked the Secretary of State for Prices and Consumer Protection what, in annualised terms, was the increase in the retail price index since 1st August 1977 up to the latest available month; and what were the corresponding figures for the retail prices of potatoes, potato crisps and frozen chips, respectively.
    Mr. Maclennan: Between 16th August and 13th December 1977 the retail price index rose by 2 per cent., equivalent to 6·1 per cent. on an annualised basis. Short-term fluctuations may, however, make annualised figures misleading, particularly for individual products. Since August the prices of raw potatoes and of potato products have fallen by 15 per cent. and 10 per cent. respectively.
    Mr. Wainwright: I commend the Secretary of State and the Department for holding down price increases as they have done. I know that it has been a hard and serious struggle for them. The Secretary of State ought to write a book about it. Is my hon. Friend sure that the Price Commission has the power that it should have? Is he aware that the prices of potato crisps and frozen chips have increased far beyond the price of raw potatoes? Does he realise that even fish shop owners, who are usually glad when frozen chips go up in price because it means less competition for them, are complaining that too much profit is being made from frozen chips?
    Mr. Maclennan: I am grateful to my hon. Friend for his general commendation of my right hon. Friend the Secretary of State. The price of potato products did not rise as sharply as the price of raw potatoes, and therefore the subsequent decline has not been quite as sharp. On potato crisps, following the intervention of the Price Commission in the summer, the packet and its contents were enlarged to take account of the fall in price. On chips, there is a certain amount of cross-subsidisation to offset other increases, particularly in the price of fish. The competition provided for chip manufacturers by fresh potato producers' prices will, I believe, help to hold down chip manufacturers' costs.
    Mr. Freud: Does the Minister accept that farmers in the Isle of Ely will be disappointed at the figure of 15 per cent., because one year ago potatoes were fetching £350 a tonne and farmers are now having a job getting more than £30 a tonne?
    Mr. Maclennan: The hon. Gentleman draws attention to the wild fluctuations that have taken place in the price of potatoes. That is an inevitable feature of the farming industry.

    Electricity Charges (North Western Area)
    Mr. James Lamondasked the Secretary of State for Prices and Consumer Protection if he will request the Price Commission to examine the costs proposed to be charged for electricity in the North Western Electricity Board's area.
    Mr. Maclennan: The Price Commission has responsibility for initiating investigations under Sections 4 and 5 of the Act to investigate the price increases, prices or margins of individual undertakings. My right hon. Friend has at present no plans to direct the Price Commission to examine these charges under Section 10 of the Price Commission Act 1977.
    Mr. Lamond: Would the Minister change his mind about ordering an examination if he knew that the electricity board was proposing a 20 per cent. increase on the quarterly standing charge, which will fall most harshly upon those who use little electricity—for example, old-age pensioners, the disabled and the unemployed? If the Minister will not protect these people, to whom can they look for assistance?
    Mr. Maclennan: My right hon. Friend the Secretary of State will naturally consider carefully what my hon. Friend has said. It appears that a sectoral examination initiated by him would not normally be appropriate for the charges by one area board. Such an examination can be carried out under Sections 4 and 5 of the Price Commission Act, and that is a matter for the initiative of the Price Commission.

    Advice Centres and Bureaux
    Mr. MacGregorasked the Secretary of State for Prices and Consumer
    20
    Protection whether he is satisfied with the distribution of central Government expenditure as between consumer advice centres and citizens' advice bureaux.
    Mr. John Fraser: Whilst my Department keeps all its expenditure under regular review, I am satisfied that the present distribution of Government expenditure gives a proper level of assistance to both these services.
    Mr. MacGregor: Does the Minister agree that citizens' advice bureaux cover a much wider range of subjects, including consumer affairs, than consumer advice centres and that they perform a particularly valuable service in county areas where often there are few other sources of advice available? As about 50 per cent. of their inquiries are now central Government oriented, will he consider again whether, out of the resources available, more should be concentrated on citizens' advice bureaux and rather less on consumer advice centres?
    Mr. Fraser: I pay full tribute to the services provided by citizens' advice bureaux. Indeed, I regret that some local authorities should have cut back on assistance to them. But £1·4 million a year is provided from central Government funds with a good deal of assistance from local authorities, which is 61 per cent. grant-aided. I keep the level of assistance to these bodies under review.
    Mr. Whitehead: Do not questions such as that of the hon. Member for Norfolk, South (Mr. MacGregor) throw a smokescreen over the wilful disregard of the value of consumer advice centres shown by Conservative-controlled local authorities, such as the one in Derbyshire, which has axed them against the advice of the Department? Will my hon. Friend condemn that practice?
    Mr. Fraser: I have condemned and deplored that practice. It does not save the ratepayers any money. It is an act of political vandalism. Indeed, some local authorities have practised the same economy upon CABs.
    Mr. Kenneth Lewis: Is the Minister aware that citizens' advice bureaux carry out a traditional first-class service over a wide area, as my hon. Friend the Member for Norfolk, South (Mr. MacGregor) pointed out, and that consumer advice

    21
    centres are a waste of money? The BBC has a weekly "Food basket" which is extremely useful. Therefore, it is unecessary to set up consumer advice centres throughout the country.
    Mr. Fraser: The citizens' advice bureaux service deeply regrets the cutback on the CACs.

    Form-filling and Interviews
    Mr. Adleyasked the Secretary of State for Prices and Consumer Protection what steps he is taking to increase the ability of companies to compete effectively for custom by reducing executive time spent unprofitably in form-filling and interviews with officials.
    Mr. Maclennan: To ensure that essential requirements place the minimum burden on companies, the need for completion of forms and for particular information is continuously reviewed.
    Mr. Adley: Is the Minister aware—if not, he should be from today's Question Time—that there is a great deal of discontent on both sides of the House about the activities of the Price Commission? Its activities may be splendid for accountants and management consultants, but is there not something wrong when companies are frightened to discuss openly with Members of Parliament or journalists the activities of that organisation? Is it not about time that the powers of the Price Commission and of its snoopers and form-filling officials were curbed in the interests of promoting genuine competition?
    Mr. Maclennan: The hon. Gentleman's serious charge that companies are afraid to discuss these matters is completely unsubstantiated and cannot be substantiated. Notification and form-filling are matters now being discussed between the CBI and the Price Commission.
    I wholly rebut the hon. Gentleman's wider suggestion that we would assist competition by abandoning the Price Commission Act. A major purpose in setting up the Price Commission was to ensure that competition was reinforced and that absence of competition, which is widespread in British industry, should not lead to unjustifiable price increases.
    Mr. Gwilym Roberts: Does my hon. Friend accept that the only dissatisfaction felt by Labour Members about the Price Commission is that it frequently does not have enough teeth to keep prices down? Will he inform the hon. Member for Christchurch and Lymington (Mr. Adley), if he is not already aware of it, that much of the existing machinery for form-filling was drawn up by agreement between the Department and the CBI and that there is no general dissatisfaction with it within industry?
    Mr. Maclennan: I entirely accept what my hon. Friend has said. I have received only one complaint from hon. Members on the subject of form-filling and the Price Commission.
    Mr. Neubert: Has the Minister forgotten the reprimand by the Chairman of the Price Commission to a company for making a public statement about an application to the Price Commission? What has happened to open government? Why should not these issues be discussed openly?
    Mr. Maclennan: During the passage of the Price Commission Bill, Opposition Front Bench spokesmen many times said that it was undesirable that companies' affairs should be publicly debated and discussed. It was no doubt with that consideration in mind that the Chairman of the Price Commission said what he did.

    Street Traders
    Mr. Townsendasked the Secretary of State for Prices and Consumer Protection if, in order to prevent profiteering, particularly at the expense of tourists visiting London, he will seek legislation to require street traders to display prices.
    Mr. Maclennan: The Government intend to make an order requiring price display for retail sales of food and drink and we are currently consulting interested parties on our proposals. I am considering whether to include street traders in that order as a means of dealing with most of the undoubted abuses that take place.
    Mr. Townsend: Is the Minister aware of the large number of complaints about street traders in central London last summer? Does he recall that I gave an example of a street trader charging £2 for

    23
    a tin of "Coke"? Will he get a grip on the situation? Does he accept that this is a minimum requirement these days?
    Mr. Maclennan: I accept that there has been gross profiteering of the kind described by the hon. Gentleman. I have discussed this matter with the responsible local authorities, which have been helpful, and with the London Tourist Board, which is trying to ensure that sufficient information, advice and warning is given to tourists. I believe that the proposed order on price display for food and drink should cover the most outstanding abuses. It is particularly in connection with soft drinks and ice cream prices that the worst abuses take place.
    Mr. James Johnson: Will my hon. Friend take steps to introduce legislation against the pernicious custom of flash offers?
    Mr. Maclennan: My hon. Friend may not be aware that I have already indicated that we intend to move in this area.
    Mr. Geoffrey Finsberg: Does the Minister accept that the major trouble is bound to come from street traders, many of whom are unlicensed? Does he further accept from hon. Members on both sides of the House who have had local government experience that the present legislation to control unlicensed street traders does not work because neither local authorities nor the police have the staff to control them? Before introducing further legislation, will he ensure that it can be policed effectively rather than simply put it on the statute book?
    Mr. Maclennan: The hon. Gentleman is right. Enforcement is a major problem, and it presented real difficulties last summer. In framing our proposals for dealing with this matter we shall bear that aspect very much in mind.
    Mr. Clemitson: Referring to profiteering at the expense of tourists, will my hon. Friend investigate reports that tour operators are already charging £1 to people booking air travel holidays for later this year in anticipation of the passing of the Civil Aviation Bill, whereas the Government have stated that the security charge will be only 80p? Where will the other 20p go?
    Mr. Maclennan: I shall investigate what my hon. Friend has said, as will no doubt my right hon. Friend the Secretary of State for Trade.

  CHANCELLOR OF THE DUCHY OF LANCASTER (ENGAGEMENTS)
  Mr. Canavanasked the Chancellor of the Duchy of Lancaster what are his official engagements for 30th January.
  The Chancellor of the Duchy of Lancaster (Mr. Harold Lever): Apart from my duties in this House, I have meetings today with my officials.
  Mr. Canavan: Will my right hon. Friend find time today to tell us whether he still has any advisory responsibility for negotiating the participation agreements with the oil companies in the North Sea? Will the BNOC have a chance of getting a real controlling equity stake in the new discoveries instead of some of the "phoney" participation agreements to which my right hon. Friend agreed in the previous round of negotiations?
  Mr. Lever: I am happy to tell my hon. Friend that I sometimes participate in collective decisions in this area. I do not accept that the previous participation agreements entered into by the Secretary of State for Energy were in any sense bogus or "phoney". Nor do I accept that the new agreements that will be negotiated in somewhat different circumstances will be any less valuable to the country than the previous ones.
  Mr. Gow: Will the right hon. Gentleman be able to find time today to send a letter to Dr. Witteveen confirming that it is still an essential element of the Government's economic strategy to secure a continuing and substantial reduction in the share of resources required for the public sector?
  Mr. Lever: It will be only lack of time that will circumscribe my epistolary efforts as regards the director of the Fund. If I were writing a letter, I am sure that I should state that a proper balance would continue to be maintained between personal and private expenditure and the very valuable public expenditures that we have carefully surveyed and authorised.

  COUNCIL FOR SMALL INDUSTRIES IN RURAL AREAS
  Mr. Maddenasked the Chancellor of the Duchy of Lancaster what representations he has received about the Council for Small Industries in Rural Areas.
  Mr. Lever: In the course of my study of the problems facing small firms, I have received several representations referring to the valuable work of COSIRA in this sector. I have had discussions about COSIRA's work with its chairman and the chairman of its parent body, the Development Commission.
  Mr. Madden: Does my right hon. Friend agree that both the Development Commission and COSIRA have an invaluable role to play in rural areas in combating unemployment and creating employment opportunities, especially in establishing small workshops? Is he optimistic that they will have more money available to carry on and expand their responsibilities in the near future?
  Mr. Lever: I can without reservation endorse the view that my hon. Friend has expressed about the value of the work that COSIRA has been conducting. It has recently had increases in its funds made available, and I am discussing with colleagues, and officials are discussing, whether we can give further help to this invaluable body and its most necessary work.
  Mr. Wigley: Will the right hon. Gentleman say whether there are any limits below which COSIRA or, in Wales, the Development Agency for Mid-Wales can lend money? If there are such limits, will he take steps to investigate the possibilities of having lower levels of loan available? Does he agree that that is one of the most useful aspects of help available in rural areas?
  Mr. Lever: I shall consider with sympathy the question raised by the hon. Gentleman.
  Mr. Ridsdale: Has the right hon. Gentleman made inquiries about the working of the Employment Protection Act, especially in rural areas? Is he aware that many industries that I have visited have called for the repeal of the
  26
  Act so as to get more employment in their areas?
  Mr. Lever: I have been made aware of anxieties which derive from that Act. However, the House has made its view perfectly plain about the purposes of the Act.
  Mr. Prior: What is the right hon. Gentleman's view?
  Mr. Lever: The right hon. Member for Lowestoft (Mr. Prior) wants to know my view. I endorse the purposes of the Act. I am anxious to ensure that those purposes are achieved with the minimum of difficulty for smaller firms, recognising that there are special problems that face smaller firms in relation to this and other legislation. Without in any way derogating from the purposes and standards of the Act, I should like to find ways of easing the difficulties of small firms.

  SMALL FIRMS
  Mr. William Hamiltonasked the Chancellor of the Duchy of Lancaster if he will make a statement on the progress he has made to date with proposals to assist small firms.
  Mr. Lever: The first conclusions of the study which I have been undertaking with my hon. Friend the Under-Secretary of State for Industry were announced by my right hon. Friend the Chancellor of the Exchequer in his economic statement on 26th October last year. We are pressing forward with work on a number of further proposals for helping small firms which we hope to announce over the next few months.
  Mr. Hamilton: Will my right hon. Friend indicate whether he is recommending the continuation of the employment subsidy to small firms? Is he aware that the subsidy has resulted in the conserving, if not creation, of a considerable number of jobs? In that respect and in others, will he examine the history of the new town of Glenrothes in Fife, where most of the 150 businesses fit into that category and where the industrial record is probably the best in the United Kingdom, if not in Europe?
  Mr. Lever: I should not like to particularise the recommendations that I give

  27
  in this area. I can only tell my hon. Friend that I am anxious that we should do more to help small firms, give them more assistance and give it as effectively as we know how. I shall look into the experience to which my hon. Friend has referred and derive any valuable lesson from it that he thinks might arise.
  Mr. Rhodes James: Is the right hon. Gentleman able to give any further explanation about the role of the Under-Secretary of State for Industry, the hon. Member for Keighley (Mr. Cryer), who is a notorious opponent of private enterprise and small businesses? Why does the right hon. Gentleman involve the hon. Gentleman in policies directed to small businesses?
  Mr. Lever: My hon. Friend can speak very well for himself. I can only say that we have worked together in close harmony, sympathy and effectiveness.
  Mr. Sever: When considering proposals for the development of small firms, will my right hon. Friend undertake to give special consideration to the small firms in the heart of the large cities, which are probably the areas of job deprivation, as the small firms in such areas are likely to be the only companies that will be expanding the work force in the foreseeable future?
  Mr. Lever: Yes, Sir. I think that small firms have an essential role to play in the revitalisation of our neglected inner cities. The range of services and the manufacturing achievement that they can provide in those areas are vital if we are to help to bring back life and employment on a proper scale to the inner cities.
  Mr. Rost: Will the right hon. Gentleman qualify an earlier answer? Is he recommending the repeal or amendment of the Employment Protection Act to help smaller firms and encourage employment?
  Mr. Lever: At the risk of disappointing the hon. Gentleman, which I am reluctant to do, I indicated that I was engaging in reflection. I hope that it will not be too distasteful a thought to the hon. Gentleman. I shall be engaging in reflection on how we can maintain the standards that the House set for the protection of work-
  28
  people in the Act while mitigating any unnecessary burdens that may fall upon the smaller business man in achieving our purpose.
  Mr. Heffer: Further to the point raised by my hon. Friend the Member for Birmingham, Ladywood (Mr. Sever), does my right hon. Friend agree that it is in the city centres that the greatest support needs to be given to help develop small firms as most city centres were destroyed by speculation during the period of the previous Conservative Government, in the process of which employment within small firms was destroyed? Does he agree that that is where help needs to be given, including selective support for small firms in such areas?
  Mr. Lever: I do not want to adopt my hon. Friend's somewhat oversimplified diagnosis of the problem of the inner cities, but I entirely agree with him that the small firm and support for it from the Government have a special and remarkable role to play in the inner cities. I would not say that, however, to the exclusion of the creative achievement which I expect also in the years ahead from the small firm sector outside the inner cities.

  SCOTLAND BILL (DIVISION)
  Mr. Fell: On a point of order, Mr. Speaker. It has occurred to some that the good name and repute of the House of Commons were not greatly furthered by the events that took place during the Committee stage of the Scotland Bill on Wednesday evening of last week, which gave rise to a report from the Serjeant at Arms, which was published by Hansard on Friday morning and concerning which I asked you a question on Friday. It astonishes some of us that there has been no request, so far as I understand it, to you that certain Members should make personal statements. May I ask you once again whether any Members have notified you of their wish to make such statements?
  Mr. Speaker: The answer is the same as it was on Friday: I have received no such request.

AGRICULTURE (GREEN POUND)
Mr. Peytonasked the Minister of Agriculture, Fisheries and Food if, in view of the unprecedented refusal by three European Community member countries to approve the recommended devaluation of the green pound, he will make a statement as to the Government's intentions.
The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Gavin Strang): The right hon. Gentleman is right to say that this refusal is unprecedented. My right hon. Friend the Minister is seeking to clarify the position with the three member countries this afternoon.
Mr. Peyton: I should like to ask the Minister whether even at this early stage he has yet been able to form an opinion whether this is just the Germans and their friends getting a bit of their own back, or alternatively something which is much more serious and which I fear—namely, the reluctance of the European Governments to abandon an increasing share of our market, which they have had presented to them on a plate as a result of the Minister's own policy in refusing to devalue the green pound.
Mr. Strang: I do not accept the right hon. Gentleman's latter comments. I am not in a position to express an opinion on the position of the three member States, but I assure him that my right hon. Friend the Minister is seeking an explanation this afternoon at the Council of Ministers' fisheries meting.
Mr. Peyton: I do not want to ask a long question—[HON. MEMBERS: "Oh."] This is not a matter for a joke. Will the Minister make a further statement to this House tomorrow so that we may be informed of what is going on?
Mr. Strang: I do not think the right hon. Gentleman would want me to commit my right hon. Friend in advance to a statement tomorrow. The right hon. Gentleman has on occasion congratulated my right hon. Friend on the punctilious manner in which he reported to the House on these issues.
Mr. Beith: Does the Minister envisage that it will be possible to make any
30
progress in the fisheries talks while the position is as it is now?
Mr. Strang: Yes. In view of the statement by the German Government that they do not link the green pound issue with the fisheries issue, it will be possible to have constructive discussions on the fisheries issue at today's Council meeting.
Mr. Spearing: Will my hon. Friend confirm that before the debate last Monday the Commission had recommended devaluation of only 3 per cent. and therefore, as the Opposition insisted on a figure of 7½ per cent., the attitude which is now being adopted by certain European countries is not as much of a surprise to Labour Members as it is to Opposition Members?
Mr. Strang: The position is fairly complicated. My hon. Friend is referring to the proposal that is on the table in the context of the price proposals which involved a devaluation of all green rates by around one-seventh. On that Monday the Commission had tabled a proposal for the Council of Ministers for a devaluation of the green pound by about 5 per cent. or a selective and staggered devaluation and a devaluation of the green lira by 6 per cent.
Several Hon. Members rose—
Mr. Speaker: I shall call four more hon. Members.
Mr. Peter Mills: Will the Minister bear in mind that, although it is important to stand up and fight for what is right for this country, surely the problem at present lies in the Minister's attitude, since he has exhausted the good will of the Council of Ministers—[HON. MEMBERS: "No."]—and has shown that he is anti-Europe? Surely what is needed in this situation is a complete change of attitude.
Mr. Strang: I totally reject the hon. Gentleman's suggestion. My right hon. Friend the Minister is continuing to fight for the interests of this country and of this House of Commons.
Mr. Torney: Would my hon. Friend agree that in the light of the gross interference by the Common Market in the democratic rights of this House on the subject of the green pound, thus adding to many other problems that we face with the Common Market, the time has now

31
come for unilateral action to protect our vital food industries, which the Minister of Agriculture is trying his hardest to do in the face of virulent opposition from the rest of the Common Market and the Opposition?
Mr. Strang: My right hon. Friend is right to be concerned about the jobs of workers in the food processing industry, and the bacon processing industry in particular. He is also right to be deeply offended by the unprecedented move by three member States to oppose this devaluation.
Mr. Biffen: As the decision to arrive at a figure of 7½ per cent. devaluation was a decision of this House, surely this House is entitled to know what is the basis of the German intransigence. Is that intransigence in respect of the negotiations on fisheries, or the general Community agricultural price review that is now in process? If the Minister cannot answer that question this afternoon, will he tell his right hon. Friend the Minister that it is an answer to which the House is entitled in view of its earlier vote?
Mr. Strang: The hon. Gentleman is right to remind the House that the Government are now putting forward a proposal which was agreed by this House. I assure the hon. Gentleman that my right hon. Friend is seeking an explanation of the German position and the position of the other two delegations. He will certainly keep the hon. Gentleman informed.
Mr. Marten: As it is well known to those who take an interest in these matters that the Germans are dragging their feet about revaluing their green "pound", when they get round to it, under pressure no doubt by the Opposition and the Government, shall we be able to block their revaluation of the green "pound"?
Mr. Strang: The position legally is that if a green "pound" or green deutschemark revaluation is proposed by the Commission, it requires only a qualified majority in the Council of Ministers.

EUROPEAN COMMUNITY (COUNCIL OF MINISTERS' MEETINGS)
The Minister of State, Foreign and Commonwealth Office (Mr. Frank Judd): With your permission, Mr. Speaker, I will make a statement about business to be taken by Ministers of the European Community during February. The monthly written forecast was deposited on Thursday, 26th January.
At present three Council of Ministers meetings are proposed for February. Foreign Ministers will meet on 7th February, Agriculture Ministers on 13th and 14th February and Finance Ministers on 20th February.
Foreign Ministers are expected to consider a mandate for negotiations with Greece about customs union, the current position on the North-South dialogue, iron and steel imports, food aid, summertime, and trade relations with Cyprus and Japan. They may also consider dentists' qualifications and training.
Agriculture Ministers are expected to consider Mediterranean agriculture and resume their consideration of CAP prices for 1978–79.
Finance Ministers are expected to consider the budgetary implications of the 1978–79 agricultural price proposals and the draft co-insurance directive.
Mr. Hurd: I thank the hon. Gentleman for his statement. May I ask him to comment on the fact that he does not include in his statement any mention of further meetings of the Fisheries Ministers who are meeting today? This is a matter of great concern and anxiety to this House. Is he saying that there is not even a preliminary or provisional arrangement for further discussions should agreement not be reached at the current meeting?
Secondly, as regards the review of farm prices, the hon. Gentleman said that the Finance Ministers are expected to consider the budgetary implications of the next price review. I think that this happened last year but had not happened before. Can he confirm—this is important—that the Finance Ministers will be fully

33
and equally involved with Ministers of Agriculture in working out the farm price review? Experience suggests that it is not sensible that three-quarters of the Community's budget should be settled by Ministers of Agriculture meeting without other Ministers.
Mr. Judd: The answer to the hon. Gentleman's first question is that we hope that the discussions on fisheries will move forward constructively, as my hon. Friend the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food said this afternoon, but if by some mischance we are not able to make the progress for which we are looking—and the House is aware how seriously the Government take their responsibilities in this respect—we shall have to look to continuing arrangements for further meetings in the months ahead.
I take the point made by the hon. Gentleman about the Finance Ministers. The financial consequences and implications of any price settlement are far-reaching for overall Government financial and budgetary policy. Finance Ministers will have a crucial part to play.
Mr. Christopher Price: Can my hon. Friend say a little more about the present crisis between the EEC and Cyprus, in particular on the matter of potatoes? Can he say how much the increase in tariff which the EEC is demanding on Cyprus potatoes, all of which come to Britain, is linked with our attitude towards the importation of French and Italian potatoes? Is my hon. Friend aware that if this issue is not solved it will sour relations between the EEC and Cyprus and will show that the EEC interferes not only with our fish but also with our chips?
Mr. Judd: I assure my hon. Friend that I am as worried about chips as I am about fish, but I can tell him that, as a result of the effective representations made by the Government of Cyprus and the strong representations made by our own Government, the Council of Ministers re-examined its position at its last meeting. The Commission has been told to go away and talk to Cyprus and come back with new proposals at its next meeting. I hope that that will enable us to move forward.
34
With regard to the anxieties in the Community about potatoes and exports to Britain. I can tell my hon. Friend that we are re-examining the situation.
Mr. Marten: May we have an assurance that the Government will do nothing to inhibit the importation of Cyprus sherry, for such an inhibition would affect the livelihood of many Cypriots working and toiling in the vineyards?
Secondly, what on earth has the training of dentists to do with Ministers of Foreign Affairs?
Mr. Judd: Councils of Ministers can sometimes be quite painful without toothache being added to the problem. I assure the hon. Gentleman that we are well aware of the consequences for the community in Cyprus of getting a satisfactory solution. It is a marginal problem for the Community, but it is almost a matter of life and death for many within Cyprus itself. Therefore, we have to take this matter seriously. There are mutual interests at stake, and sherry as it is enjoyed in the United Kingdom is one of the things that we take seriously.
I hope that the question of dentists will not take up a great deal of time in the Council of Ministers, but there is a point about considering whether directives should include the definition of an activity on which, evidently, member countries do not see eye to eye.
Mr. Faulds: If I am right in thinking that there is to be a meeting of Ministers on European political co-operation in Copenhagen on 13th and 14th February, will my hon. Friend see that at that meeting in Copenhagen there is a proper pursuit of the political aspects of the Euro-Arab dialogue which was initially launched in Copenhagen in November 1973 and which has not received the follow-up from European countries for which our Arab friends had hoped?
Mr. Judd: I assure my hon. Friend that we take the Euro-Arab dialogue seriously. We understand the anxieties of the Arabs about the many things that they would like to see covered. There are slight differences of emphasis about this, but my reading of the experience is that the Nine have moved forward fairly constructively and positively.
Mr. Eldon Griffiths: Will the hon. Gentleman, at the Foreign Ministers' discussion of the North-South dialogue, invite his right hon. Friend to take with him the text of a speech, which both he and I heard, by Mr. Ramphal, Secretary-General of the Commonwealth, in which he stressed the need for urgent action on this matter?
Will he also report to his European colleagues on the progress, or lack of same, on the Rhodesia talks, which are crucial to any North-South dialogue, and make it plain that we would be glad of help from our European colleagues as well as from Mr. Andrew Young in bringing these talks to a fruitful conclusion, including the internal dialogue?
Mr. Judd: I assure the hon. Gentleman that, on the Rhodesia issue, my right hon. Friend the Foreign Secretary is at great pains to keep his colleagues in the EEC au fait with developments and fully in touch with Government analysis and thinking.
On the matter of the North-South dialogue, I agree that it was an impressive speech that he and I heard by the Secretary-General of the Commonwealth. It is a speech which no one who is interested in these matters can ignore. It reveals that the representatives of the Third world are increasingly talking not only about economic aspirations but about political objectives in the restructuring of the international community.
Mr. Ioan Evans: Can my hon. Friend say whether, at the meeting of Finance Ministers, the Chancellor of the Exchequer will be raising our right to pay the temporary employment subsidy and take any other measures that the Government wish to take to deal with unemployment?
With regard to the Foreign Ministers' meeting, will the Government raise the question of the United Nations Year against Apartheid and urge the EEC to take action in this matter?
Mr. Judd: My hon. Friend knows that the Nine have taken seriously their responsibility towards the problem of apartheid. This has been manifested in the code of conduct which has been produced.
The answer to my hon. Friend's question about the temporary employment subsidy is that we are determined to
36
work with all the vigour at our disposal to protect the scheme. As I have already said, I do not believe that anyone in the Commission would consider lightly the consequences of any action by the Commission that would aggravate the problem of unemployment in any member country, because that would not advance the cause of the EEC.
Mr. Speaker: I shall call the two hon. Members who have risen.
Mr. Biffen: Does the absence from the agenda for the Agriculture Ministers meeting of consideration of a sheepmeat regime mean that this proposal will now take a far lower priority in the Community's deliberations?
Mr. Judd: I gather that the term "regime" is not very popular in some sections of British public life. The absence of any reference to an effective system to deal with sheepmeat on this occasion illustrates that it is not a top priority issue.
Mr. Robert Hughes: There has been great appreciation in the House and in the country of what the Government are trying to achieve with regard to fishing, but the Commission's proposals fall short of the vital needs of both the inshore and deep water fishing industries. In those circumstances, will my hon. Friend convey to all quarters of the EEC that no agreement on fishing can be acceptable until it is approved by this House?
Mr. Judd: I assure my hon. Friend that there is not a Minister in the Community, in the Council of Foreign Ministers or among the Agriculture Ministers who is not aware of the strength of feeling on this issue in all parts of the House and that that cuts across the lines which have characterised the difference of opinion within this House about other dimensions of European politics. We have argued on every possible occasion that if we are putting in 60 per cent. of the resources in the European pool of fish, any effective policy must reflect that if it is to be acceptable to our industry.

QUESTION OF PRIVILEGE
Mr. Thorne: I wish, Mr. Speaker, to raise a question of privilege. My question relates to a matter that was the

37
subject of a Select Committee report of about two years ago, but the point that I wish to raise has reached finality only during the past weekend.
A transcript of tapes was submitted to the Select Committee on the Abortion (Amendment) Bill. Reference was made to those tapes by the then Chairman of that Select Committee when questioning two of the witnesses who alleged that the transcript produced to that Select Committee was a relevant transcript of the tapes. On Monday 7th July 1975—this is in reply to Questions 1274 and 1275—the statement was made by Susan Kentish, in reply to a question from the Chairman, that the transcripts were a true and accurate record of the tapes.
Subsequently a question was put by the Chairman to Michael Litchfield, to which Mr. Litchfield replied that the transcripts were a faithful account of interviews and tapes recorded.
The tapes are still available, but there is a matter of court privilege. Very recently, Mrs. Diana Munday, of the British Pregnancy Advisory Service, has spent 300 hours transcribing the tapes and comparing them with the transcripts produced to the Select Committee. As you may know, Mr. Speaker, apologies have been made to the British Pregnancy Advisory Service and all the allegations against it have been withdrawn.
The matter has been the subject of reference in a recent report in the Sunday Times. A day or so ago the British Broadcasting Corporation recorded an interview between Mrs. Diane Munday and Michael Litchfield. I understand from the BBC that a copy of the transcript is available should you desire to see it, Mr. Speaker.
38
My point is that the Select Committee was deceived by Miss Susan Kentish and by Michael Litchfield and lies were told to the Select Committee in order to mislead and influence that Committee's conclusions. This is a serious matter. I have referred to "Erskine May" and, in accordance with that textbook, it is possible for me to submit for your consideration, Mr. Speaker, this prima facie case of contempt of the House of Commons.
Mr. Speaker: If the hon. Member has any documents, let him bring them forward.
I listened with great care to what the hon. Member said and I will give my ruling tomorrow.
Documents handed in.

STATUTORY INSTRUMENTS, &c.
Mr. Speaker: By leave of the House, I shall put the four motions together.
Ordered,
That the Representation of the People (Northern Ireland) (Amendment) Regulations 1978 be referred to a Standing Committee on Statutory Instruments, &c.
That the Representation of the People (Amendment) Regulations 1978 be referred to a Standing Committee on Statutory Instruments. &c.
That the Representation of the People (Scotland) Amendment Regulations 1978 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Slaughter of Poultry Act 1967 Extension Order 1978 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Foot.]

ORDERS OF THE DAY
  SUPPLY
  [5TH ALLOTTED DAY]—considered.
  SUPPLY

    EMPLOYMENT
    Motion made, and Question proposed, That this House do now adjourn.—[Mr. Jim Marshall.]
    3.54 p.m.
    Mr. James Prior: The proposed subject for today's debate was "Unemployment", but such is the embarrassment of the Leader of the House and the Labour Party that it appears on the Order Paper as "Employment". That is of some significance in assessing the Government's attitude to the problem of unemployment.
    In August 1975 unemployment passed 1 million for the first time in the lifetime of this Government. In 1978 it was supposed to get back to 3 per cent. of the employed population. That was the target the Government set themselves with the Trades Union Congress in the social contract. The fact is that unemployment is running at over 6 per cent.—double the target set for this year—and in Scotland, as my hon. Friend the Member for Glasgow, Cathcart (Mr. Taylor) will point out to the House if he succeeds in catching your eye, Mr. Speaker, the figure has more than doubled over the past four years and now stands at about 200,000.
    A former Secretary of State—the right hon. Member for Kilmarnock (Mr. Ross)—said that if unemployment in Scotland reached 100,000 he would resign from his job. He did not actually carry out that threat, but we shall expect to hear far more convincing reasons during his speech today why the present Secretary of State should not resign.
    Last summer a very poignant advertisement appeared in a colour supplement to one of the Sunday newspapers. It was put in by Colt, the air conditioning people. It occupied just two pages. One page said:
    "With unemployment at over 800,000, why bother to improve working condtions?"
    That advertisement was a repeat of one the organisation had put in on 4th May
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    1971. On the opposite page is just one finger pointing, with the caption underneath:
    "Six years later only the figures have changed."
    The figures have changed by a startling amount. Since the Labour Government took office in March 1974, unemployment has risen by nearly 900,000—from 590,000 to 1,484,000, an increase of 152 per cent. There are 28 times as many school leavers unemployed as there were then—2,000 in March 1974, 57,400 in January 1978. There were six times as many young people under 20 unemployed in July 1977 as in July 1973–70,000 in July 1973, 456,000 in July 1977. The number out of work over eight weeks has doubled from 491,000 to 1,043,000. The number of vacancies has been halved from 352,000 in March 1973 to 174,000 in January 1978. The numbers in employment have fallen by nearly 200,000 from 22,297,000 in June 1974 to 22,106,000 in June 1977.
    Production in manufacturing industry has fallen by 3·5 per cent. and in all industries by 1·2 per cent. Prices have risen by 85 per cent. The pound has lost one-fifth of its international exchange value. The number of company liquidations has more than doubled, from 2,575 in 1973 to 5,939 in 1976 and 4,200 in the first three quarters of 1977.
    That is the Government's record. I find it a little surprising that the right hon. Member for Bristol, South-East (Mr. Benn) should have said that he thought that the present Government would be likely to fight the next election on their record.
    Mr. Eric S. Heffer: Does not the right hon. Gentleman agree that a considerable proportion of the number of unemployed has arisen because of cuts in public expenditure and that those cuts were carried out under pressure from the Opposition and against the wishes of Labour Back Benchers? Had those cuts been even more severe, the unemployment level would have been even worse than it is at present.
    Mr. Prior: If the hon. Gentleman looks at the figures he will see that, despite some of the cuts made in public expenditure, the number of unemployed in the public sector has increased very little indeed and that nearly the whole burden of unemployment has been in the private sector.

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    But I shall be dealing with that a little later in my speech.
    During the past few years, the Government have made much of the argument that this is an international problem, that other countries have fared as badly as, or worse than, we have. But it was interesting to read the Answers to be found in Hansard for 11th January which compared the rates of unemployment among various countries in 1977, seasonally adjusted and adjusted to United States concepts. The figures show that Great Britain had 7·2 per cent. unemployment in the fourth quarter of 1977, France had 5·2 per cent., West Germany had 3·5 per cent., Italy had 3·3 per cent. and the United States had 6·8 per cent.
    Thus, not only have we had a dramatic increase in unemployment but we have had a dramatic increase in comparison with our major competitors, although we started from a far better situation than they did. By international comparisons, therefore, our record is bad.
    Two years ago, almost to the day, we had a debate on unemployment, and I shall quote one passage from it which, I think, is relevant to what the hon. Member for Liverpool, Walton (Mr. Heffer) has been saying. I then said:
    "Unemployment will be higher and will last longer as a result of what has happened in the last two years."—[Official Report, 29th January 1976; Vol. 904, c. 794.]
    That was said two years ago, and it is abundantly clear now that that is precisely what has happened.
    Had the Government taken our advice earlier both to cut public expenditure, because they could not sustain it, and to take the necessary action to avoid the pay explosion of 1974–75, and if they had not taken the legislative action which they took in certain significant measures, our position today, I believe, would have been considerably better.
    In part of his commentary in The Guardian about a week ago, Peter Jenkins had this to say:
    "Unemployment has been an instrument of policy under Labour. If it remains so Labour will have no business to hawk its social conscience round the country at election time."
    That was a comment made by someone for whom I have considerable regard but who, even in my wildest dreams, I never thought would vote Conservative.
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    We can now see the situation into which the present Government have put themselves and the country. We have had four wasted years, accompanied by a dangerous narrowing of our industrial base, and there are growing doubts about our competitive position at a time when—one hopes and prays—we are pulling out of some of our problems.
    I quote now from another source, not necessarily a source which would corn-mend itself to all my right hon. and hon. Friends. In a recent speech Sir Charles Villiers said:
    "In the last few years we have been deindustrialising. Steel is down from 28 million tons per annum in 1970 to 20·6 million tons per annum now, passenger cars from 1·8 million per annum 10 years ago to 1·3 million per annum now, energy usage has been static during this decade, with coal production, of course, well down. Inevitably, this results in less wealth, illustrated by our wage level being about half our competitors'. The overall standard of living has plateaued out at the 1973 level."
    One of the great problems which we face as a nation now is that, at a time when we are considering—indeed, I think, demanding—stimulation of demand by tax cuts, there is grave doubt about whether this will merely suck in imports instead of broadening Britain's industrial base.
    In price, in design and in delivery we have a lot of work to do if we are to ensure that our exports flourish and our imports are not greater than they ought to be, so that we get the benefit of the increase in demand for our own economy and we do not just help other people's economies.
    We should all do well to recognise not only the gravity but the long-term nature of the difficulties which the country faces. No one—positively no one, not even the Chancellor of the Exchequer—should promise any easy or early way out of our problems. The remarks of the Chancellor of the Exchequer in Glasgow on Friday did no credit to him and no credit to politics. It is irresponsible to go about talking of an increase of 1 million in jobs within two years when he bases that merely on the notion that if certain industries improve their productivity and their production, this could lead to an improvement in the balance of payments of £2½ billion which could then be used to create other jobs in other industries.

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    I do not suppose that there has been a time in the past 30 years when that same prediction and those same figures could not have been used. It is utterly irresponsible, and I thought that the matter was well summed up by The Times on Saturday morning in these terms:
    "… the figures now gaining political currency are in fact very tentative and are surrounded by so many caveats as to make them almost meaningless."
    There are over 1 million people in this country who desperately want a job, and it is totally wrong, at a time when we all should recognise that there are great difficulties ahead in unemployment, for anyone, especially someone in so responsible a position as that held by the Chancellor of the Exchequer, to make a statement of that kind.
    That statement by the right hon. Gentleman was similar to the one which he made at Budget time in 1976, when he suggested that we could get unemployment down to 3 per cent. by 1979. He had already moved on a year from 1978 to 1979. The Expenditure Committee, reporting on that matter in its Fourth Report for the Session 1975–76 had some pretty strong words to say. I quote from paragraph 9:
    "We wish to point out that the achievement of the Government's objectives stated above"
    —that was 3 per cent. unemployment—
    "presupposes a substantial improvement in the performance of the economy—indeed, by United Kingdom standards, almost an economic miracle. For example, to reduce unemployment to 700,000 in 1979 would require an increase in manufacturing output of 8½ per cent. per annum from 1976 to 1979."
    In fact, manufacturing output, far from rising at 8½ per cent. a year over the past three years, has fallen by 3½ per cent. during that period. It is, therefore, disgraceful that the Chancellor of the Exchequer should make such statements, and I believe that that view is held more widely than just on these Opposition Benches.
    I turn for a moment to structural unemployment. We have an additional problem in that there are more young people coming on to the labour market and there are more women wishing to return to the labour market than there were in years gone by. We shall, therefore, have additional problems and responsibilities in that regard. But we
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    ought not to get the structural problems of unemployment out of context or out of proportion.
    In his book "Full Employment in a Free Society" Beveridge said that an increase in the supply of labour tends to create additional demand—
    "With every pair of hands God sends a mouth."
    We ought to accept that, if we get our economy right again, there are advantages for us in having extra people coming on to the labour market. At any rate, this is a challenge that we must meet and face up to.
    In the last debate on unemployment, which took place on the Queen's Speech opening this Session of Parliament, I put forward a number of suggestions which I thought would be of assistance to us in trying to help to get over some of the problems. I dare say that many of those same suggestions, and others, will be forthcoming in this debate.
    I say, in parentheses, that I took the trouble to re-read carefully the debate that followed the announcement of the unemployment figures in January 1972. Hon. Members opposite will remember that my right hon. Friend the Member for Sidcup (Mr. Heath) came to the House that afternoon to take Prime Minister's Questions and the House had to be suspended in uproar because we had reached the figure of 1 million unemployed. That was followed by a censure debate four days later.
    That was one of the worst debates that I have heard. I think that the way in which we are conducting our affairs on unemployment in 1978 reflects a good deal more credit on the House than 1972 did. I only wish that one could have some faith that, when it is their turn to go into opposition after the next election, Labour Members will take the same sort of responsible attitude to this very difficult problem as we are taking now. I think that there is perhaps a lesson for them to learn as well as lessons for us all.
    Mr. John Mendelson: Perhaps there is a lesson for the right hon. Gentleman and his right hon. and hon. Friends to learn in approaching the great duties of Opposition on this problem. Does he recall that, when some of us put down a motion, supported by 112 hon.

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    Members, demanding changes in economic policy in order to produce more employment, rather than put down some motion on behalf of the Opposition which would have forced a vote, the Leader of the Opposition, taking part in the debate, said that she agreed with the Chancellor's economic strategy. That was the contribution of the Opposition to fighting unemployment.
    Mr. Prior: It is an extraordinary response by the hon. Gentleman to say that the Opposition should have joined in a motion signed by him and his supporters which we believed in the comparatively short run, let along the long run, would have caused much more unemployment than it would have solved.
    Let us look briefly at the schemes for employing more young people. The important point is that they should be schemes involving work experience and training, because we know from the figures becoming available that the more these young people are given a job which includes some training, the more likely they are to get a job when that training is finished.
    We should also look very carefully at what we are doing for the disabled, for we are not doing enough. I think that the jobs themselves need subsidising. It is much better to subsidise the jobs than to subsidise people to sit at home and do nothing.
    We have to put more emphasis on technical training. The last report of the Manpower Services Commission showed that the training agency was training very few people in technical education but far more people for jobs which were not of technical importance. We have to have a review of regional aid—a point that I mentioned last time. We have to give much more encouragement to small businesses.
    When the Chancellor of the Duchy of Lancaster was answering Questions this afternoon, he was asked about the Employment Protection Act, and I was interested to note that he just managed to stay in line with his colleagues, but only just. Someone on the Back Benches opposite interrupted to say "but the workers are very much in favour of the Act." That was when my hon. Friend the Member for Harwich (Mr. Ridsdale) had said that small business men were saying that the
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    Act was preventing them from taking on employees.
    The point is that the workers in favour of the Act are those in work. What we have to look at is those who are not in work, and if there are many people who could be in work but are not in work as a result of fears of the Act and its effect, it may be that we should seriously as a House be considering whether we should not make changes in the Act which would take away from small employers some of the fears they now have. One understands that major firms do not have the same worries or fears about the Act that the small firms have, but it is of very considerable concern to small firms. I do not believe that we have got the Act right at the moment, and I think that it will need amending.
    Dr. Jeremy Bray: Do we gather, from the direction of the right hon. Gentleman's speech, that he is of the view that neither the Government's economic policy nor the economic policy of the Opposition, nor any alternative policy, can provide these additional I million jobs that are needed? Is he saying that we have to resign ourselves to deal with the small change of unemployment?
    Mr. Prior: I have not said that. The hon. Gentleman says an awful lot from a seated position but never much when on his feet. I shall be coming to what I regard as the alternative strategy. I am certainly not saying that there is a counsel of despair. What I am saying is that we do ourselves no service in this House if we think that it is comparatively easy to solve unemployment. I do not believe that it is, and I do not believe that the hon. Gentleman thinks so either.
    Mr. John Evans: The right hon. Gentleman has slipped in an extremely important statement that I feel needs some clarification. He said that he believes it right that we should subsidise jobs. Is he saying that the official position of the Conservative Party is that it is in favour of retaining the temporary employment subsidy? Will he oppose any attempt by the EEC Commission to rid this country of it?
    Mr. Prior: If the hon. Gentleman had been listening he would have realised that I was talking at that stage about jobs

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    for the disabled. I made that abundantly clear. I am about to come to the question of the temporary employment subsidy. I do not know whether the Secretary of State intends to make an announcement about it today, or whether we have to wait for some time. There has been a number of trailers within the last few days suggesting that we would perhaps get an announcement this afternoon.
    The problem of such temporary subsidies is that they have a nasty habit of becoming permanent, and when they become permanent, as the temporary employment subsidy is beginning to show all the signs of becoming, the difficulty of getting rid of them becomes very great indeed. The cost of maintaining jobs in one particular firm or one or two particular industries then has to be borne by other parts of the economy in other industries. As we know, the textile industry, the clothing industry and the boot and shoe industry are getting support to the extent of about 85,000 jobs through the temporary employment subsidy.
    I do not believe that we can get rid of the subsidy in one fell swoop. I think we all recognise that dramatic changes in Government policies do a great deal of damage to confidence, employment and everything else. Nor do I believe that it would be right to go on with subsidies, at any rate at the present level, or to go on indefinitely with a temporary employment subsidy of this nature. So I expect and hope that the Government will be announcing that there will be a phasing out of the temporary employment subsidy over a period of time.
    Anyone who has studied this subsidy knows only too well that there are many cases now where it is not justified on temporary grounds. If hon. Members want me to give my views on this, I will say that the future focus must be shifted from job preservation to the creation of new jobs in new fields. We must lead the market instead of following it. I believe that to be the right attitude. The sooner that happens, the better. I repeat that I believe that the temporary employment subsidy should be phased out over a period. I do not believe that the
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    political considerations of continuing with these temporary employment subsidies in certain Labour-held cities will do the Labour Party any good when there is an election. [Interruption.] I know about the position in the Rossendale area, because I checked up on it.
    Mr. Mike Noble: The right hon. Gentleman has said everything and nothing. He talked about phasing out. We have heard the right hon. Member for Leeds, North-East (Sir K. Joseph) condemning these subsidies outright. Another member of the Tory Front Bench came to my constituency to correct the views of the right hon. Member for Leeds, North-East. But will the Leader of the Opposition give us a date when it is intended to phase out these subsidies and tell us what will be done with those industries which face unfair competition? It is no good saying "We will deal with the unfair competition", because that is now coming from Common Market countries.
    Mr. Prior: It is no use the hon. Gentleman trying to get over the difficulties of his Government by endeavouring to put the blame on the Opposition. He can fight his own battle in his own constituency, which has got into a mess largely due to the actions of the Government. Not even the temporary employment subsidy, paid at the present rate, will save the hon. Gentleman at the next election.
    Mr. T. W. Urwin rose—
    Mr. Prior: I have given way on a number of occasions and I want to get on. I shall endeavour to give way to the hon. Gentleman towards the end of my speech.
    I come to some of the themes which are of vital consequence if we are to have better employment figures than we have at the moment. Whether we succeed or not will depend very much on how adaptable to change we are as a people. [Interruption.] It is all very well for Government Members to laugh, but a figure of 1·5 million unemployed is no laughing matter. In a competitive world, changes in the pattern, variety and structure of our industries and services will come whether we will them or not. What counts is the quality of our response.

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    Preparedness to meet change is essential, whether by learning new skills, working different hours, moving house if that is necessary, accepting new responsibilities, moving to a new firm or industry, revising one's plans and ambitions in the light of altered circumstances, or perhaps starting one's own business. These are all essential if we are to reach higher employment levels and to raise living standards.
    Regrettably, there is a natural reluctance to accept change, and it has been bolstered up too easily by the promises that politicians and people in this House have made. We have shored up dying industries and regions. There has been conservatism on the part of trade unions and on the part of management. Management sometimes behaves as if change can be permanently staved off. These attitudes have done enormous damage. Perhaps management must take the biggest responsibility here, because management should be initiating change.
    One thing is certain. It is a delusion to suppose that we can enjoy the possible benefits of change—including higher living standards, brighter employment prospects and greater consumer choice—without change itself. We can be equally certain that attempts to preserve overmanned British industry with public subsidies, behind a protective wall of tariffs and controls, will produce a sluggish and ossified economy, with bleak prospects for jobs and growth. There are far too many instances, in public and private sector industry, where we are following precisely that policy.
    At this point I should like to make a brief comment on British Leyland. The Opposition have never liked the Ryder plan. We made it abundantly plain when it was being discussed in the House. We always thought that it was over-ambitious, over-costly, and would not produce the right answers. Our view has been abundantly vindicated by what has happened over the last three years.
    There are difficult and painful decisions to be made, and we should like to give to Mr. Michael Edwards all the support that we possibly can. We believe that his policy and the lead that he is setting will do more to preserve the vast majority of jobs in British Leyland than any other scheme that has been put forward.
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    There is no easy remedy for British Leyland, for the British Steel Corporation, or for a number of other industries. We do ourselves a disservice if we think that we can preserve all the jobs. By trying to preserve all jobs we end up by losing a lot more than we should otherwise have to lose. I hope that when the plans for British Leyland, the British Steel Corporation, and perhaps other industries as well, are discussed by the House, we shall have the courage to back the plans in the interests of the vast majority of the people who work in these industries. The money that has been put in so far has been largely wasted. We must balance that against what could have been done and could be done in other sectors of the economy.
    When I attack the Government for their failures—and they are legion—I do not doubt their emotional commitment to full employment, but they should not doubt ours, either. We have a different way of achieving full employment, and over the years we have been a good deal more successful than the Government have ever been.
    Mr. Urwin: The right hon. Gentleman's difficulties become manifest as he progresses with his speech. We have heard his attitude towards the temporary employment subsidy as an incentive to retain jobs. He spoke—using the executive pronoun "we", presumably referring to himself and his right hon. Friends—about the necessity to review regional aid. Does that mean that he links his party's attitude towards the temporary employment subsidy with the manifestations from Selsdon Man in 1970 about regional incentives? We were faced after 1970 with the dithering of the Conservative Party, which led to a great deal of indecision in the development areas about the future of regional incentives. These incentives were drastically reduced.
    Mr. Prior: I should hate the hon. Gentleman to get the wrong impression. Perhaps he will do me the courtesy of reading what I said in the debate on the Queen's Speech. I quoted from the report of the Cleveland County Council in which it was said—I speak without the figures in front of me—that the £48 million of aid which went into the Cleveland County Council area through regional

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    development assistance in 1976 had resulted in a maximum of 250 jobs. Indeed, it was doubtful whether the assistance had even achieved that number of jobs.
    I am saying that we need to review the type of aid that we are giving in the regions—again, this must be done sensibly and gradually, and not dramatically—in order to see whether it provides the jobs which it was thought to provide in the past. There are many people—this has not been a matter of great controversy across the Floor of the House—who do not believe that the manner in which regional aid is being given at the moment is helping regions to achieve higher levels of employment. This is something that we can debate. Certainly it has been the experience of Cleveland County Council in recent years.
    I believe that we shall have to phase out the temporary employment subsidy over a reasonable period. It cannot be kept on for ever. I believe that most hon. Members would agree that that will have to happen.
    It is the policies for achieving our goal of full employment that represent the great difference between the attitudes on each side of the House. No one can doubt that our economy has become too rigid, too structured, and too bureaucratic. Piecemeal decisions by Government to help in one direction end up by denying cash somewhere else. The job creation scheme is perhaps the classic example.
    High taxation which is required to help certain people results in other people not bothering to work. Many people are leaving Britain altogether. Government interference is constantly stifling initiative. We have the Price Commission, legislation and blacking, all of which are stopping the building up of confidence and the right climate in our economy.
    We now have the right hon. Member for Bristol, South-East at it again with regard to nationalisation. Above everything, the country needs a period of peace and quiet and no more nationalisation. Yet just at this time the right hon. Gentleman is saying that the subject is now back on the agenda. No doubt we shall hear more about it in the next few months.
    There is also the belief that the State knows best about what to do with the oil revenues. I do not believe that any
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    hon. Member on this side would accept that the State has any great knowledge of how best to use the oil revenues. We believe that this will be far better carried out by the marketplace than by any directions from the Government. [Interruption.] Those interruptions show how puerile are Labour Party policies. They show that Back-Bench Government supporters have no idea about how to get unemployment down, except by pouring more and more Government money into the problem.
    We believe that if the market is given the opportunity, the market will expand on its own and we shall get the full employment that we need.
    Mr. Tom Litterick rose—
    Mr. Prior: The hon. Gentleman has had two good goes on the last two Fridays. It is about time that he kept quiet on a Monday.
    We have a situation in which the decline of Britain goes on. The more we decline, and the more problems we have, the more we shall have ever greater demands for the State to do more. Socialist government and Socialist policies have failed the nation. The rate of relative decline in Britain is still accelerating. We now have the short-term benefits of North Sea oil. That gives us about our last chance to break free from the restrictions and the policies of Socialism. I only hope and pray that a Conservative Government will take that chance.
    4.33 p.m.
    The Secretary of State for Employment (Mr. Albert Booth): I have always recognised that the right hon. Member for Lowestoft (Mr. Prior) must be true to his philosophy. I accept that he will argue that there are alternative policies to those that are being pursued by this Government which will have a beneficial effect upon the employment situation of this country. That is a right and proper contention which the right hon. Gentleman makes and it is absolutely appropriate that we should debate this subject today when there are 1½ million unemployed in the United Kingdom.
    However, I must say that the right hon. Gentleman did nothing to improve his case by again contending that the high level of unemployment arises solely from

    53
    policies pursued by United Kingdom Government. That sort of approach and that lack of proper analysis do not help us responsibly to decide how far the measures we are now employing can be improved and developed or how much better or worse it would be to abandon them and put others in their place, particularly when some of those others are put in such vague terms by Conservative Members.
    As we talk about unemployment statistics and world economic problems, we should never forget about the problem which unemployment brings to every person who wants to work but is unable to find a job—not just financial problems but the deeper human and social problems of loss of morale and hope which unemployment can bring. I certainly keep this very much at the centre of my thoughts as I attempt to grapple with the problem.
    The main fact which we must all face is that the world has been passing through the longest and deepest recession since the 1930s. I therefore contend that we cannot look at our problems in complete isolation, nor can we find any instant solution that will dramatically reduce unemployment overnight. But I hope to demonstrate that we are doing things, and planning to do further things, which can raise the levels of employment in this country and reduce the level of unemployment.
    If there was a mistake on the Order Paper, it is possibly something that we should welcome, because raising employment and reducing unemployment are two sides of the same coin. It is that to which we should address our attention.
    Looking back over the last three years, the unemployment figures illustrate the pattern of the present recession. There was the large increase in unemployment which took place mainly in 1975 when the seasonally adjusted level of unemployment rose from 2·9 per cent. in January to 4·9 per cent. in December. Since then, we have had a sort of plateau and our unemployment percentages have increased gradually from 5½per cent. in December 1976 to 5·9 per cent. in December 1977.
    Fortunately, over the last three months there has been some decrease in the
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    seasonally adjusted figures by about 2,000 a month. What we must now seek to do is bring down the level of unemployment from that plateau.
    Mrs. Elaine Kellett-Bowman: There may have been some improvement in some parts of the country, but is the right hon. Gentleman aware that in my part of the country there has been a steady downturn in employment which is again accelerating according to the most recent figures?
    Mr. Booth: I am deeply conscious of the problem in various parts of the country which have not benefited from the downturn in the overall unemployment figures, including the important part of the country which the hon. Lady represents. But against the background of this prolonged world recession, our measures to assist industry and our special employment measures, have been remarkably successful in keeping up the number of jobs available.
    In fact, for the year up to September 1977 there was an increase of almost 100,000 in the number of people in jobs in this country. If the test whether Government measures were succeeding or failing depended on whether the number of jobs was increasing or diminishing, it could be argued that we have had marginal success. I am not asking the House to accept that as a criteria. It is right for the House to focus attention on the level of unemployment. But since I have argued earlier that unemployment and employment have a close relationship—that they are two sides of the same coin—we have to look at one side just as much as the other.
    Mr. Eldon Griffiths: I do not think that anyone would accuse the right hon. Gentleman of not trying his best to reduce the level of unemployment and, indeed, to increase job availability.
    I declare an interest as a director of a number of industrial companies. May I put these points to the right hon. Gentleman? First, many of the measures that he has taken with the best will in the world—trade union legislation, prices legislation and employment protection legislation—have simply made it too expensive for middle and small-sized firms to take on any more labour. We have

    55
    the extraordinary position where some firms which are receiving temporary employment subsidy are at the same time being pushed by the Low Pay Unit into increasing the payment of the very people for whom the TES is paid. The right hon. Gentleman's measures have all been intended in the right direction, but they have not always succeeded.
    Mr. Deputy Speaker (Sir Myer Galpern): There are more than 30 right hon. and hon. Members who desire to take part in this debate. Lengthy interventions will curtail the time available to Back-Bench speakers. I hope that interventions will be kept to the minimum and that, if they are granted, they will be as brief as possible.
    Mr. Booth: The Opposition must make up their minds about their attitude to employment protection. Over the last series of debates on unemployment that we have had, the matter raised by the hon. Member for Bury St. Edmunds (Mr. Griffiths) has come up time and time again. However, it is no solution to our employment or unemployment problems to suggest that we should take away employment protection in a period of recession and that in some way a return of the ability of an employer to hire and fire will improve the position. I believe that the contrary is true. It would be wrong at this stage to reduce the protection for any section of workers, especially those in small firms, and thereby make them into some form of second-class citizens. We have to examine carefully how to sustain employment, maintaining that statutory minimum level of employment protection that we have established and of which I believe we should be proud.
    The main cause of the increase in unemployment over the past three years has been the increase in the number of people seeking work, especially young people, married women returning to work and women seeking work for the first time. In fact between June 1974 and June 1977, there was a drop of fewer than 200,000 in the number of jobs, and that was the period of the worst fall. In the same period, unemployment increased by more than 800,000. For every job that we lost, the number on the unemployment register increased fourfold.
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    Any policy advocated in this House which is claimed to be a solution to our unemployment problem has to address itself not only to sustaining our existing employment but to increasing greatly the number of jobs available to deal with the enormous increase in the number of people coming forward for employment. We now know with a considerable degree of certainty that the number of people coming forward year by year will grow by about an additional 170,000 in each of the next four years. We have to create jobs to provide for this greater labour force.
    There are alternatives which we can consider. We can consider ways of reducing the number of people who are seeking jobs. But most of those alternatives require either an increase in the amount of wealth available to sustain people in activities other than employment or a sharing of the wealth currently available.
    The fundamental requirement for an increase in the number of jobs available is an increase in the demand for the goods and services which we produce both in world markets and at home. The level of world demand obviously is not under our control, although we could and should encourage other countries with strong economies to expand growth. I am not saying that we should sit back and wait for an improvement. There are a number of measures that we can take now, and I shall mention some of our proposals during the course of my remarks.
    I turn first to our industrial strategy. Between 1966 and 1976, employment in British manufacturing industry fell by 1,300,000. There has been an enormous structural change taking place in employment which started in the period preceding the present recession. In the same period, the number of jobs in the public sector increased by 1,350,000. Over a 10-year period, there was a movement in our employment pattern from people working in industry to people working in the public sector. Since 1976, there has been some recovery in which more than 100,000 jobs have been added to employment in manufacturing out of a total increase of 124,000.
    Later this week at NEDC, we shall be discussing the progress of the industrial strategy, and the key objective must be to

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    ensure that our manufacturing base is internationally competitive. The reports of the sector working parties which are now before NEDC contain a number of suggestions about how this can be done, many of them addressed to management and to unions rather than to the Government. That is a change which I welcome.
    In the short term, it is my view, having looked at these NEDC reports and having attempted to analyse their manpower implications, that they will result in little if any direct increase in employment in the sectors concerned. I know that they do not cover the whole of the manufacturing sector. However, they cover 39 very significant industries and, therefore, give us a good guide to what is likely to happen. But in the slightly longer term the achievement of the sector working parties' objectives is vital and will improve our share of the home market as well as of the overseas market, it will be necessary to enable our economy to be expanded at a faster rate thereby providing the investment necessary for creating jobs and sustaining demand levels not only in the manufacturing sector but in the service industries as well.
    Alongside the industrial strategy there has been enormous support for industry provided through the Department of Industry. My right hon. Friend the Secretary of State for Industry and I have been guided by the sector working parties' recommendations in many of our decisions and approaches on employment matters.
    Section 7 of the Industry Act has been used to link directly with the employment objectives of the sector working parties. Under that section, between March 1974 and December 1977 offers of regional selective assistance were made totalling £307 million. Projects have been supported in assisted areas which are expected to provide altogether some 204,000 jobs, and more than half of those have still to be realised with the aid of this support. Assistance under other parts of the 1972 Act, mainly for investment and the modernisation of industry, is also being made available. I think that we can be confident that but for all of this assistance our unemployment level would have been much higher and our industrial position would have been very much worse.
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    Whatever our disagreements, even our philosophical differences, about the role of the private sector, we should be able to attain a measure of agreement in this Chamber that in the special circumstances of this recession some public support for the maintenance of industry is essential in the interests of employment.
    Mr. Peter Hordern: Dealing with the industrial strategy, how does the Secretary of State reconcile what he has just said, based on his study of the strategy, with what the Chancellor of the Exchequer said on Friday about providing a million more jobs?
    Mr. Booth: I respond to that gladly, because the right hon. Member for Lowestoft made some reference to it.
    As far as I can see, what my right hon. Friend the Chancellor of the Exchequer said is completely consistent with what I have been saying. My right hon. Friend contended that we could bring about an increase of between 500,000 and 1 million more jobs in two years—[HON. MEMBERS: "If."] My right hon. Friend qualified it, in my opinion very properly. He said that, although employment was not likely to increase greatly from improvements in productivity, the balance of payments benefits which they generated should enable the Government to run the economy at a level of demand sufficient to produce the new jobs. He added that many of the jobs would be in the private and public service sectors.
    What the Chancellor was saying is completely compatible with what I am saying. The sector working party reports in themselves do not indicate that there will be a vast increase in the number of jobs in manufacturing industry. What they do indicate is that it is possible to obtain higher productivity, get a bigger share of the world markets and thus generate the wealth to meet demand and to provide jobs in sectors other than manufacturing industry.
    Mr. Prior: Since the Government obviously have gone into this with great care, will the Secretary of State tell us how much manufacturing output must increase each year between now and 1980 in order to bring about the increase in the number of jobs in the public and service sector to which he and the Chancellor have referred?
    Mr. Booth: I cannot answer that question [Interruption.] There are a number of calculations that have been made, and I can give the bases of these to the House. However, the number of additional jobs coming about in the sectors covered by the sector working party reports depends to a considerable extent on the level of investment in those areas. Later I shall explain at length the results of some of the studies in that field.
    The number of jobs resulting from an increase in output depends on the way in which we choose to use this increased output—the way in which we direct the additional wealth created into various areas. If we used it to reduce taxation and for no other purpose, it could be argued that this would create a lot of additional demand, and one could ask how much of this would bring new jobs into this country, and how much would result in greater imports of foreign cars and clothes. If we used it to improve public services, education and the health services or to increase the number of council houses built, that would have a different job effect.
    We have done calculations showing how many jobs could be produced against a given level of public expenditure. It would be quite wrong to say precisely what these are as it would be pre-empting decisions of this House in the Budget and in other measures. What the Chancellor indicated was the range of the increase, which would be between 500,000 and one million new jobs.
    Mr. Prior: The Secretary of State has still not answered the question. My question related to the increase which the Chancellor was talking about in terms of £2½ billion in the output of this country, whether it be in import substitution or in additional exports. This presupposes that over the next two years he has worked out the increase in manufacturing output to which this will lead. Is this increase 8 per cent. or 10 per cent. a year? That is the sort of information we need in order to assess the Chancellor's views.
    Mr. Booth: What the Chancellor said in references to the sector working party reports, following references to North Sea oil, was that although in these sectors employment was not likely to increase significantly, increased productivity
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    would mean improvements in the balance of payments which would enable the Government to run the economy at a higher level and to bring about an additional 500,000 to 1 million jobs. The right hon. Member can study every sector working party report that has been produced. They are all available. They show the increased output potential judged possible by people in these areas. One can see from that that the most favourable output in the Chancellor's judgment would give about I million jobs and the least favourable would produce about 500,000.
    Mr. Peter Walker: As the Secretary of State has based his proposition on an improvement in the balance of payments, on what basis does he look upon commodity prices and the activities of most foreign industrial competitors, all of whom have surplus capacity at present? Will he not admit that once again the Chancellor is making a totally fraudulent promise of another 1 million jobs?
    Mr. Booth: No, I cannot say that. What the Chancellor was indicating to his audience was something that is completely commensurate with what I have said time and again on debates on employment. We cannot look to the manufacturing sector to produce a great increase in the number of jobs available. We must turn our minds to ways in which the increased wealth brought about the attainments of the sector working party targets can be used in other areas to produce jobs.
    If that is accepted we can look with greater objectivity at the value of some of the measures proposed. Concern is often quite properly expressed that the increase in investment destroys rather than increases the number of jobs. Certainly, there are circumstances in which this can occur. We have examined the trends in output employment and productivity over a 10-year period and this provides some rather interesting support for the view that investment and productivity growth do not necessarily lead to reduced employment.
    We have had a survey of trends in 82 manufacturing industries and this has revealed that the 10 industries with the largest growth rates of productivity increased their total employment by

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    165,000 during a period when total employment in the 82 industries fell by more than 600,000. The industries with the highest productivity growth rates were chemicals, man-made fibres and carpets, which are relatively capital intensive. In contrast, those 10 industries with the lowest rate of productivity growth saw a fall in employment. This certainly suggests that the greater competitiveness caused by productivity growth may be a larger stimulant to employment than the direct short-term contractionary effects of productivity growth on employment.
    Having said that, I stand by the general judgment that we cannot look to the manufacturing sector for vast increases in the number of jobs. Even in the faster growing industries of the manufacturing sector the number of jobs did not increase markedly.
    Last year's "Review and Plan" for the Manpower Services Commission showed that betwen 1974 and 1976, while manufacturing employment had fallen by 465,000, employment in the services had increased by 360,000. Even in that period of recession and difficulty that structural change appears to continue. The services sectors will continue as a source for providing many future jobs.
    In this respect tourism is important—
    Mrs. Kellett-Bowman: What about the intermediate areas?
    Mr. Booth: The promotion of tourism is not just valuable for our balance of payments, but also for employment. Taking just one part of the tourist trade—hotels—we see that employment has expanded by nearly 10 per cent. in the last two years to stand at some 280,000 in June last year. The support that the Government give to the tourist boards and the British Tourist Authority is aimed at further promoting this valuable industry both among foreign visitors and among people in this country, as well as giving specific help to individual tourism projects in the development areas.
    There is scope for encouraging new job opportunities, not only in firms in large industrial centres but also in small firms in rural areas. Following a Government study of rural depopulation, which found that the most practicable and cost-effective way of providing employment in rural areas was in light industry, and
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    where appropriate tourism, we decided in December 1974 to take action in these areas through the Development Commission. The Commission works in close co-operation with local authorities financing the construction of small factories in accordance with action plans for the regeneration of the rural areas concerned drawn up by local authorities. Projects are now under way for most of the areas of rural depopulation identified in the Government study costing about £4 million in the current financial year, and the Secretary of State for the Environment has announced that he is allocating from the recent construction package £2½ million for 1978–79 and £2½ million for 1979–80 for this work. In addition the Commission encourages the creation and maintenance of employment in rural areas through their agent—the Council for Small Industries in Rural Areas—which provides credit, advice and training services for small firms in rural areas. We have also taken steps to assist areas and industries which are especialy hard-hit by high levels of unemployment. Unemployment rates remain high in Scotland and Wales and in the North and North West Regions. All of these areas are assisted areas with a predominance of development area and special development area status, and therefore qualify for assistance under the Industry Act.
    Mr. Donald Stewart: Will the right hon. Gentleman consider extending the job creation scheme, which has been of tremendous assistance in my constituency and has succeeded in bringing unemployment down to 10 per cent. for the first time in my life?
    Mr. Booth: I am grateful for what the right hon. Gentleman has said. It testifies to the effectiveness of job creation in his area and I am sure that it is true of a number of other areas. I undertake to examine carefully what he has said. We are committed to a doubling of the provision of job creation and work experience programmes under the youth opportunities programme. In addition, under the special temporary employment programme, we want to make increased provision for those outside the age range of those that we hope will be catered for in the youth opportunities programme and particularly for those aged between 18 and 25.
    Mr. Julian Ridsdale: Will the right hon. Gentleman also see that the benefits of the tourism assistance go particularly to coastal areas, some of which are experiencing very high unemployment? I know of one area where the unemployment rate is 13 per cent. or 14 per cent.
    Mr. Booth: I shall consider what the hon. Gentleman has said, although from my knowledge of employment statistics I do not believe that the lack of tourism jobs is peculiar to coastal areas. I say that as one who has an attractive coastal area in my constituency.
    Mr. Wyn Roberts: Will the right hon. Gentleman give way?
    Mr. Booth: No. I hope the hon. Gentleman will allow me to proceed. I hope that he will acquit me of any discourtesy. I am not normally reluctant to give way in debates, but I have a number of things to say that the House will want to hear, about our future plans for employment, and I think that I should rapidly proceed to them.
    The construction industry always suffers disproportionately at a time of high unemployment. In November 1977 there were about 200,000 unemployed construction workers. Last year the Government allocated over £800 million extra for departmental construction programmes, and with the private sector also expected to show some recovery the prospects for the industry are now looking a little brighter. But problems will remain until we see the general upturn in the economy towards which our policies are directed.
    We are now beginning to see some of the benefits of our policies—the benefits of North Sea oil and the improvement in our financial and balance of payments positions that enabled the Chancellor to make Budget changes adding about £2·3 billion to demand last year.
    Alongside our industrial and economic policies, we have been rapidly developing our manpower policies and policies to increase investment, and when we talk of the need to increase investment, we should not forget the importance of investing in developing skills and manpower resources so that all our people can make the most of their abilities and make the maximum contribution to economic growth. That is why we have recently
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    approved a new programme of training in skills under which the Manpower Services Commission will seek to ensure that there is sufficient training in vital skills so that industrial growth is not constrained by shortages of skilled labour.
    Hon. Members opposite, who delight in focusing on the slightest evidence of skill shortages, should remember that any shortages that we are suffering result largely from the failure to make proper provision for skill training four or five years ago. It was the lack of apprenticeships during the last recession which has led to these shortages and not the lack of training now. We are benefiting from the doubling of the training opportunities scheme in the last three years, which enabled more than 100,000 people to complete training courses last year.
    We must take special measures to reduce unemployment and especially to assist those groups that have been particularly hard hit. We have done this to an unprecedented degree in the past three years, and I contend that in certain areas, particularly in the youth programme, we lead the world.
    Of the other programmes, the job release scheme came into operation on 3rd January last year on a six-month experimental basis. It has been extended but is due to close for applications on 31st March this year. However, many feel, as I do, that the scheme should continue. At present, it is limited to assisted areas—those with the highest unemployment. So far, 22,475 people have taken up the scheme in Great Britain,—that is nearly 22,500 who have left the labour market after a lifetime of work to take a well-deserved rest and leave the way open for an unemployed younger person.
    The small firms employment subsidy is a springboard to self-generating prosperity. It enables small, ambitious firms to expand immediately and create permanent jobs where they are most needed—in the special development areas. Under the scheme, which started on 1st July 1977, independent small manufacturing firms can claim £20 a week for each extra job they create. The firms must have been employing fewer than 50 workers in March last year.
    The latest figures show that 5,338 extra jobs have so far been created as a result of applications from more than 1,500

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    firms. It is interesting to note that of the jobs created, 1,381 are in the Northern Region, 1,353 in the North West, 2,000 in Scotland and 604 in Wales. That is a remarkable success story which we are only now fully evaluating.
    We reach the next important stage in the development of our measures on 1st April. The youth opportunities programme will replace or subsume all current schemes for unemployed young people and will double the provision that we make for them. The programme will provide 230,000 opportunities every year with a unique guarantee that any youngster who leaves school at Easter or in the summer and who has not obtained a job or chosen to go on to further education will be offered an appropriate place somewhere in the scheme for training and work experience. We must bend all our efforts to bring the scheme to full fruition as quickly as possible. It needs support from employers, trade unions, local authorities and hon. Members who should be anxious, as I believe the overwhelming majority are, to see the programme develop in a balanced way in their constituencies.
    Mr. Litterick: The House will notice that much of what the Secretary of State has said during the last 10 minutes has a direct bearing on the conduct and the success of small business in the British economy. This, we think, is relevant. Will he take time to refute the often-repeated allegation by the Opposition that the Employment Protection Act makes labour in Britain prohibitively expensive to any kind of business?
    Is it not a fact that the fixed cost of employing labour in Britain is about 40 per cent. cheaper than that of any of the other industrial countries of Western Europe, and that the overall cost of employing labour in the British economy is cheaper than that in any of those countries? Does he agree that that is nothing to be proud of?
    Mr. Booth: I certainly have no reason to dissent from anything which my hon. Friend the Member for Birmingham, Selly Oak (Mr. Litterick) said. I endorse what he said to this extent: I have read a number of articles urging people in other countries to invest in the United Kingdom if they want to produce on the basis of lower labour costs than other
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    countries. So that would seem to bear out the point. I believe that over the next few years we have to give considerable attention to how we develop not only those programmes for youngsters but our general skills training.
    I turn now to the other special employment measures which are operated by my Department which have the closing date of the 31st March this year. I refer to the temporary employment subsidy, the small firms employment subsidy and the job release scheme. These schemes have made a very important impact on unemployment and we plan that they should be extended in a broadly similar form for a further year from 1st April 1978 until 31st March 1979.
    We have in mind to enlarge the scope of the small firms employment subsidy by extending its geographical coverage and by increasing the size limit for qualifying firms. We also intend to increase the impact of the job release scheme. As I indicated, we plan to continue the temporary employment subsidy broadly in the same form.
    A number of my hon. Friends have expressed considerable concern about the objections of the EEC Commission to the continuation of temporary employment subsidy. The Government are putting plans to the Commission for the continuation of the TES in a way which I believe is consistent with the treaty. However, I must assure the House that it is the Government's view that it is essential to continue the support for industry that is provided by TES. Should we have to modify our TES scheme we could do so only when we are in a position to provide a scheme which would cover this area with equivalent support for employment. In this context we are considering a scheme to support short-time working. We shall shortly introduce a Bill to the House which will provide us with powers to cover alternative employment schemes and the planned extension of the small firms employment subsidy.
    Mr. Leslie Spriggs: In view of the strenuous efforts being made by my right hon. Friend and his colleagues and the Government in general to reduce the high figures of unemployment, what extra can my right hon. Friend do where industry is threatening

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    to close vital units and throw large numbers of people out of work, even now? Can he do anything about it?
    Mr. Booth: The Secretary of State for Industry and I can look at any examples of threats to close viable industry, as we both have at hand a number of measures approved by the House for dealing with any situations which can sustain employment. The announcement that I have just made means that the Department of Employment Ministers will have a range available for use in other areas and in a larger number of firms than we have had in the past. I hope that this might meet any particular case which is of concern to my hon. Friend the Member for St. Helens (Mr. Spriggs).
    I shall in due course be making a detailed statement to the House on precisely how these schemes will operate over the year from 1st April 1978. The special measures are now currently assisting over 300,000 workers. The extensions of the measures that I am announcing today, along with the development of other schemes already announced, will increase substantially over the coming year the impact of special measures on employment.
    I regret that this morning the right hon. Member for Lowestoft, having admitted, when speaking on the radio, that Britain faces some serious problems of employment, proceeded to claim that this country now had a worse employment record than any of its major competitors. That is not so. The latest comparable OECD figures, in seasonally adjusted percentage terms, show that in December at least five countries are doing worse. I do not rejoice in this, but I put to the House the facts. The OECD figures for December are that America has a figure of 6·4 per cent. unemployment, Canada 8·5 per cent., Belgium 10·2 per cent., Denmark 7·5 per cent., and Ireland 11·5 per cent. against Britain's 6 per cent.—which was also our January figure. I have checked carefully the figures from which the right hon. Member for Lowestoft was quoting. Those are figures which were provided against the US Department of Labour statistics. Had he read the footnote to them he would have seen the qualifications which explain why they are totally inaccurate.
    Mr. Prior: I was quoting from Hansard of 11th January 1978 at column 774. I referred to major countries. If the right hon. Gentleman considers major countries, rather than Denmark, Canada and Belgium, he will see that that is right.
    Mr. Booth: I assure the right hon. Member for Lowestoft that I have read the Hansard Question and the Answer. The question was designed to elicit a specific piece of information, namely, the estimation of the results produced by a particular United States Labour Office survey. But if he does not want to accept those OECD figures which I quoted, he can go to the December 1977 OECD Economic Outlook. They are not my Department's statistics. They are OECD statistics. They examine the comparative position of unemployment on a far wider basis. According to those figures, Britain is seventh in the league of those with high unemployment. The United States. Canada, Italy, Belgium, Denmark and Finland have higher unemployment percentages than we have. I do not rejoice in the fact that other countries have higher unemployment, but I hope that everything that we do in co-operation with those countries will enable them to reduce their unemployment.
    Sir Paul Bryan: Has the right hon. Gentleman read the Manpower Services Commission's report, which in graphic form shows the increase in unemployment over the last four years, starting at a common reference figure, in which our record is definitely the worst among our competitors? I will send it to him if he wishes.
    Mr. Booth: I have read the Manpower Services Commission's report. In what I have said this afternoon I have indicated why I believe that we have to be seriously concerned and take special measures to deal with our high level of unemployment. It does not help the situation when an Opposition Front-Bench spokesman goes on the radio on the day of a major debate and gives the impression that we have a higher unemployment percentage than any other country when that is not so.
    Mr. Max Madden: I am reverting to the OECD figures which the Minister has given. Will my right hon.

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    Friend also confirm that the two countries with the lowest levels of unemployment—Sweden and Norway—are outside the Common Market and have had Socialist Governments for many years in the past? Does he not think that there is a message in that?
    Mr. Booth: I do not think that I need to confirm that because my hon. Friend has said it loud and clear. I would observe that those countries have had a very high level of public expenditure. Sweden has had an extremely high level of personal taxation, and it rejoices in a level of unemployment of less than 2 per cent. Therefore, international comparisons do not necessarily help the case of the right hon. Member for Lowestoft.
    Mr. Teddy Taylor: Will the Secretary of State therefore give us some kind of comparison? He mentioned that we were seventh in the OECD league. Where were we in that league when the Labour Government came to power in March 1974?
    Mr. Booth: The latest OECD figures go back to 1975. In that year the United States had an unemployment level of 8·5 per cent. In the United Kingdom it was 3·9 per cent. The position now is that the United Kingdom has 5·9 per cent. and the United States 7 per cent. That in no way invalidates my point.
    Mr. Teddy Taylor: Does the right hon. Gentleman agree, on the one case he quotes, that America has got better and Britain has got worse?
    Mr. Booth: The figures I have quoted—in direct response to the hon. Gentleman's request—show that the United States, with all its improvements, still has higher levels of unemployment than the United Kingdom.
    Our approach will, I hope, demonstrate concern to tackle the problem of high unemployment with all the economic and social waste and human misery that it brings. With the length and depth of the present recession and the rapid growth in the number of people seeking work, we shall not get overnight results. However, if we develop these policies we shall improve our economic, industrial and manpower performance. We shall be able to provide the basis for faster and sustained growth and more jobs. In the meantime
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    we are not content to wait for these policies to bear fruit but are pressing on with the development of our special measures which make an immediate and large impact on unemployment and give valuable training or job opportunities to those who would otherwise be unemployed.
    I hope that in today's debate right hon. and hon. Members will put forward a large number of constructive criticisms both of what we have done and what we propose. I hope that the criticism will be based on an objective analysis of our comparative position and will be designed to achieve what I hope is the common objective of all right hon. and hon. Members—a return to full employment in this country.
    5.22 p.m.
    Mr. Edward Heath: First I congratulate my right hon. Friend the Member for Lowestoft (Mr. Prior) and his Front Bench colleagues on having chosen this subject for debate today. It allows us in the House of Commons to show that we care about people who are unemployed.
    There has been a period during which for far too long people have been bemused by economic remedies without looking at the personal aspect which lies beneath the problem. This, I now believe, is extremely acute. For two and a half years this country has had more than a million people unemployed. I acknowledge the fact mentioned by the Secretary of State that there may have been an increase in the number of employed. But let him not deceive himself with any increase, if such there be. It is small, and still the problem remains of more than 1 million people being unemployed for two and a half years with the figure now standing at more than 1·5 million.
    This is a disgraceful and appalling situation, and no Government should be complacent in the face of it. My right hon. Friend the Member for Lowestoft said that he hoped there would be a responsible debate on the matter. I share his hope. He recalled that when the number of unemployed temporarily went over 1 million in 1972 the House was broken up and the sitting suspended. I do not grumble about that. However, I am proud that within two years we had got unemployment down to below 600,000.

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    It may be that the fact that the House erupted on that occasion brought home even more strongly to the Government of the day the impact of unemployment on individuals, which is what concerns me in this debate. I therefore hope that the House today will demonstrate that it cares desperately about the plight of people who are unemployed. I hope that what we say will give the Government reinforcement in taking action which at the moment I do not believe they envisage.
    What are the consequences? Some hon. Members may have read the report in New Society a week ago which was the result of the Manpower Services Commission asking the Tavistock Institute to make an inquiry among those who had been unemployed for long and short periods. More than 1 million people have now been unemployed for more than two months, and a large number of them constitute the hard core of unemployment, a core which is increasing every month.
    The survey discovered a resemblance between the answers given and the answers given to a similar sort of inquiry in the 1930s. There is a political lesson to be learned here and one of the highest consequence. I am sometimes accused of being oversensitive about unemployment. I do not believe that that is possible, certainly not for anyone who lived through the 1930s and saw the political consequences of high unemployment throughout Western Europe and what happened in 1939.
    Let us look at the answers. They show that when people were first unemployed—for the first month or six weeks—there was an atmosphere of hope that the unemployment was temporary and would be short and that another job would soon come along. Then it was shown that when people did not get another job they lapsed into what they described as a sort of hopelessness leading to a laziness leading to a desire not to work. Those who, like me, have been concerned with regional employment problems know full well the difficulties of firms going to an area and finding that the people there, having been unemployed for a long period, do not measure up to what is required of the rest of the labour force.
    The third state is a final lethargic acceptance by the unemployed that unem-
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    ployment is all that awaits them. I sometimes get the impression that the Government have that same lethargic acceptance on a large scale that unemployment is all that awaits us. I am not prepared to accept that.
    The next aspect of this is the number of young people—six times higher than when we went out of office—who are being unemployed for a long period. They leave school and university with qualifications. But what future is there for them? They cannot find jobs to match up to their qualifications. Some emigrate. That is not what we want since we have paid for their education. They go abroad to help others. That may be a generous act, but it does not benefit this country.
    A further aspect is that the percentage of coloured people unemployed is three times greater than the average for the country as a whole. The percentage among young coloured people is still higher. The Secretary of State must appreciate this. In my day as Minister of Labour I encountered the problem. Some of us have foreseen this for some time. We are now receiving the generation who are the children of those who came here in the early 1960s when the Conservative Government first mooted limitations on immigration, to be fought bitterly by the Liberals and the Labour Party.
    While those proposals were going through the House a vast number of immigrants came in. Their children have had all the benefits of the British system of education, and they are asking for the same sort of jobs as those with whom they have been educated. They are being three times as disappointed, however. In those circumstances can one be surprised, with young people not able to get jobs on this scale, that there is an increase in street violence, an increase in mugging and an increase in juvenile delinquency? When all that occurs in cities that are deprived of the facilities they should have, that social situation becomes even worse. Soon a considerable number of the members of a whole generation will be accustomed to nothing but this, to unemployment, mugging, violence, and living in the centres of big cities which can offer them nothing.
    In Northern Ireland there is at least a full generation of young people who are accustomed to nothing but violence. They have grown up in it and now they expect

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    nothing else. We in the United Kingdom are in danger of having a large part of a generation of young people accustomed to nothing but unemployment and deprivation and the violence and juvenile delinquency which follows.
    The social consequences in the 1980s can be serious for the whole community. There is no point in trying to get results through legislation. We must look at the causes. They are basically unemployment and deprivation in our big cities.
    We hear a lot about the impact of this problem on young people. In my constituency by far the most heartbreaking cases are those in their forties who lose their jobs. They feel—I think sometimes wrongly—that they cannot take up any form of training and that, having served one firm loyally for probably 25 years, they will not be taken on by any other firm. When they see advertisements in the Press—almost always with a qualification about age—they become even more depressed. It may be that their wives are able to go out to work. But what compensation does that give them?
    It is interesting to note that in the Tavistock Report the one word that appears time and time again from those who have been interviewed is "shame". "I feel ashamed that, having worked until I was 44, now I have not got a job, I cannot support my wife and family and, what is more, perhaps some of them are supporting me." That is what it means in human terms.
    The last point that I wish to make in this introduction is that we refer to overall statistics, but let us not forget the immense impact on certain areas. Unemployment in Scotland is 9·2 per cent. and in the North it is 9·1 per cent. Those are very high percentages. Those are the two areas in which we have poured most money in capital investment for the infrastructure during the last 20 years. Yet, the changeover from the shipbuilding and ship repairing industries, the decline in the coal mines and the mechanisation of agriculture has led to a far greater loss of jobs than anything that we have been able to inspire to replace them.
    I mention in parentheses that there is a lesson to be drawn from this for those who appear to be only too anxious to close down everything on which they can lay their hands with the idea that in its
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    place will spring up a new industrial system employing hundreds of thousands of people.
    Anyone who has struggled to get employers to go to Scotland or to the North-East, both being areas with an infrastructure certainly comparable with any other part of the country, knows the difficulties involved in creating jobs or in seeing jobs created. One could be pleased if someone were able to create 600 jobs or if someone else had an expansion programme which meant an extra 250 jobs. But what is that against the loss of 300,000 jobs brought about by the closing down, for example, of British Leyland and all concerned with its products?
    There is a note of warning here that industries and employment do not spring up overnight. Scotland and the North, with all the capital investment that succeeding Governments of both major parties have put into those areas, still have by far the highest figures of unemployment.
    However, we should not forget the South-West. Plymouth has 9 per cent. unemployment. The whole county of Cornwall has an average of 13·1 per cent. according to the latest figures.
    The North East and the North and the North-West of Scotland are not alone, Liverpool has over 12 per cent. unemployment. The South-West has very bad figures. I think always of the North-East, because I was so much associated with it. The Hartlepools now has 13 per cent. unemployment. I was in Jarrow just before Christmas. I visualised the scene in the 1930s. But what is happening today? At that time Jarrow had just on 15 per cent. unemployment. Now it has 13 per cent. Unemployment has been fluctuating between those two figures for many months. We must recognise that within the overall figures there are areas with appallingly high figures of unemployment, particularly male unemployment.
    I want to make three points, as we have been asked to be constructive. First, North Sea oil gives us an opportunity to have a surplus on our balance of payments for a period. It will not be an enormous surplus, but it will at least be a surplus, I hope. As far as I can see, that should be the position. It will not go on for a very long period, but

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    it should go on for at least a decade or a decade and a half.
    That should give industrialists the confidence to invest without fear of a stop again. During the last 30 years, every time this country has begun to get under way it has had to stop because of balance of payments problems and their effect on the currency. We ought now to have a period in which those inhibitions, restrictions or constraints no longer exist. The big task is to persuade industrialists that they would be justified in investing and that they will get a return on it because they will not suddenly find that there is a stop.
    Analysing each crisis that has occurred since 1945, we see that it takes longer and longer for industrialists to regain their confidence and to start investing. I am afraid that this occasion will be the longest that we have ever seen. [Interruption.] It is not true of all countries. For example, the Federal Republic of Germany did not have the stops that we had. Industrialists will invest when Government policies are such that it will not be necessary to have a stop. I do not underestimate the job of convincing them of that. The forecast in the CBI report, which is coming out on Thursday, clearly illustrates the doubts that industrialists still have. Our main task should be to persuade them.
    There are difficulties caused by Government policies. I shall not go into those difficulties today. But there is the problem of the value of the pound. As a result of getting back to a reasonable balance of payments, the pound has appreciated. It is still only halfway to where it was when the Conservative Party left office. However, industrialists are worried that it will put them out of the export markets. They ought not to have these anxieties. They have a margin in hand in prices in overseas sales. If they concentrate on more efficient production from management and greater productivity from the shop floor, then, with the spur that we are getting in dealing with inflation from the appreciation of the pound, they should be able to hold their own in export markets. That will require a very big effort.
    We have seen considerable changes in public opinion recently. The NUM is prepared to accept agreements for
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    increased productivity in individual areas. That offer was made by the National Coal Board in 1973, but it was refused. The NUM said that it would agree only if everyone got the same productivity deal wherever he was working and whatever he did. There has now been a major change in attitude by the NUM and it is to be welcomed.
    We have seen an appreciation of the fact that if unions go for absurd wage claims and manage to get them through stronger muscle power, they bring about inflation, which has terrible effects on everyone else. Therefore, I do not despair of bringing about this change in attitude.
    The second matter concerns training. The Secretary of State had a certain amount to say on that aspect. There is no point in trying to blame the Conservative Party for lack of skilled manpower. The fact is that since 1945 this country has not had a proper system of training. We have not trained sufficient skilled people to meet the needs of a modern, technological, industrial society.
    Mr. Frank Hooley rose—
    Mr. Heath: I shall explain. On each occasion when Governments have got into difficulties through expansion, we have seen a shortage of skilled manpower. The loss of skilled manpower through retirement, whether as a result of the Government's scheme, which has produced only a small effect, or in general, and because of the fact that so few young people have been prepared to be trained for skilled work over the last four years means that even today, with 1½ million unemployed, some areas are short of skilled manpower. Whatever the argument may be between the two Front Benches about what the Chancellor said or meant, if he is to try to get 1 million new jobs, or even half a million, within the period that he mentioned, there is no doubt that he will come immediately against the problem of skilled manpower. I have so often heard it said "Of course we are encouraging training. We hope that you will train." I plead guilty because I said that myself in 1959 as Minister of Labour. However, there has never been a great drive in Britain to get skilled manpower.
    Sweden has been mentioned. If we were training on the same basis as

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    Sweden per head of population, we should have 2 million being trained for skills at any one time. The Germans have a similar system to the Swedes, and the French have a comprehensive system. We are just not creating the massive system of training for skills that we need.
    Mr. Hooley: The right hon. Gentleman seems to have overlooked that from 1964 to 1970 the Labour Government laid the foundation of a sensible training policy through the levy grant system and industrial training boards, which his Government set out to destroy.
    Mr. Heath: In fact, we more than doubled its use. I did not refer to that because I did not want to enter into that sort of dispute. I am making the major point that whatever figures have been thought of from either side of the House are pitiful compared with what is required if we are to have the jobs and a skilled industry.
    I have always found it difficult to understand why prima facie it is impossible for us to have a car industry or a steel industry that competes with the rest of the world. Why is it that the Japanese steel industry was able to overtake us at 20 million tons and increased its production to 120 million tons? Why are we always talking about slashing the steel industry and cutting it back? The same applies to the shipbuilding industry. I see no prima facie reason for our not being able to compete with the rest of the world, bearing in mind our industrial traditions. I see no reason for our not producing the answer and competing with other countries. But we cannot do that unless we have an infinitely greater fund of skilled manpower.
    The same issue of confidence applies. Young people will not go through the process of training if they cannot see the possibility of getting a job at the end of it. It is difficult to persuade them to do so by arguing "It is an insurance. Go through all of this and at the end of it we hope that there will be a job".
    I recall going to Gillingham, Kent, in 1973 and visiting the training centre. I do not know whether it was set up by a Labour Government or by our Government. I did not inquire about that. However, the centre was packed. When I talked to those who were receiving train-
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    ing many of them said that they were going into the construction industry. They said "We are 26 to 27 years of age. We have spent some time driving throughout the country. That was good, but we want to settle down now. We want to go into the construction industry". I asked why and they explained "We think that there is a future in the construction industry".
    Mr. F. A. Burden rose—
    Mr. Heath: They went on "There is now a programme for schools, hospitals and other public works that will continue. That is what we want to do". I shall not ask myself what those people are now saying to themselves. The Secretary of State says that the construction industry has always suffered. It has suffered because every Government have tried to use it to regulate the economy. That is another thing from which we shall have to get away if we are to create sound industry in a period in which we have a sound balance of payments to remove previous constraints.
    Mr. Norman Atkinson rose—
    Mr. Burden: My right hon. Friend will remember—
    Mr. Norman Atkinson rose—
    Mr. Deputy Speaker: Order. Mr. Burden.
    Mr. Burden: My right hon. Friend will remember that when he visited the training centre at Gillingham he was told that one sector in which there was a shortage of apprentices and others to go into training was the engineering industry, and that that applied throughout the country.
    Mr. Heath: I agree with my hon. Friend. When I referred to Gillingham I looked to my hon. Friend's usual place, but it seems that he has joined us below the Gangway.
    I give way to the hon. Member for Tottenham (Mr. Atkinson).
    Mr. Norman Atkinson: I am grateful to the right hon. Gentleman. Does he agree that the greatest contributory factor to the lack of skill in Britain is the abysmally low wages that we pay our skilled workers, especially those in the motor car industry? Is he aware that

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    the skilled rate now being paid at Fords—this is the rate for the highest skills—is £1·95 an hour, and that the highest skilled rate at Leylands is £1·81 an hour? That compares with a shorthand typist, who is also a skilled person but someone with a much easier job, being paid £2·30 an hour, which is the going rate in London.
    Mr. Heath: I have always been in favour of a high-wage-low-cost economy. That can be obtained only if we have the productivity, no one will welcome that ing inflation. If the hon. Member for Tottenham can contribute to creating a high-wage-low-cost economy by means of productivity, no one will welcome that more than I. Secretaries are paid more than other skilled workers because they are in short supply and because on the whole management likes to have secretaries close by. I am arguing that we must convince everybody that massive training is necessary, and we must provide the necessary facilities.
    The Secretary of State talked about expansion. The plain fact is that we shall get what we want only from an expanding economy. After four years of sterile discussion perhaps people are now beginning to realise that once again. However, the Secretary of State is right when he says that he or the Government should not be blamed for the whole of unemployment. I agree with that at once.
    It may be that there are two principal reasons for our unemployment. The country suffered principally because of the great inflation of 1974–75, but that may be left on one side because the whole of the Western world is now suffering from unemployment. The OECD countries have 15 million unemployed. If we had said five years ago that there were to be 15 million unemployed in those countries, everybody would have laughed in our faces, yet that is the present position. Many people take the view that that unemployment is here to stay.
    I hold the Government to some extent blameworthy for not, in my view, making a stronger attempt to deal with the problem. In the autumn of 1973 we had the OPEC oil price increases. They began an enormous transfer of monetary re-
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    sources across the exchanges mainly from the industrial world, although in parts from the developing world, into the hands of the OPEC countries. Let us say that the best figure available is $120 billion a year, going on year after year and steadily increasing.
    What is the effect of that? If sums of that size were to be paid across the exchanges, we could not be spending it ourselves, so the standard of living of the Western world was bound to fall. It has done so, and in some countries to a greater degree where inflation has been suffered more than elsewhere. If the standard of living falls but the money is spent in the Western world, at least we have the jobs. We then have a transfer of real resources because we are making things that go to the OPEC countries.
    The problem has arisen because the OPEC countries have either been unable or unwilling to spend the $120 billion. There is a gap every year which has been put at a minimum of $40 billion, although some put it as high as $80 billion That means that at least $40 billion worth of jobs are out of existence, and it is from that that the Western world is suffering.
    It is not merely a trade cycle. Business men tell me that it is taking a long time to get out of the "trade cycle", but it is not only that. It is a trade cycle on top of a heavy underlying level of unemployment that comes from a sudden imbalance.
    When I talk to friends in OPEC they say to me "You are blaming us for the world's troubles". I reply that it is not a question of praise or blame; it relates to the facts of life. We must accept the situation as such but we must decide how to overcome the problem.
    We have often assumed so far that if the Western world, through aid, helps developing countries, and if in this case we pay oil money to the OPEC countries, it will eventually come back to the West and in that way it will be spent. However, that argument is no longer true. For example, OPEC countries are spending large amounts of money on rearmament. That mostly comes back, but if, for example, there is a peace settlement in the Middle East, that return will decrease and make the situation worse. The OPEC countries also spend a great deal of money

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    on construction work, but a large part of that work no longer comes back to the West. It goes instead to Korea, Taiwan and the Philippines. Furthermore, the OPEC countries are buying more and more of their consumer goods from Taiwan, South Korea and the Philippines. That also exacerbates the problem for the West.
    Dr. M. S. Miller: Is the right hon. Gentleman not indicating another problem? If there is a $40 billion deficit, does he not accept that because the OPEC countries, generally speaking, have relatively few people, in the foreseeable future that gap will remain?
    Mr. Heath: I am coming to a suggestion of what we might do about the situation.
    Let us allow for the fact that a good deal of the money is going to the developing countries. One can say that that is a good thing because it will raise the standard of living in the developing world. But we then have to face the gap in relation to money that is placed on deposit right across the world to take advantage of the varying interest rates and the stability of those countries in which the money is deposited. However, the money is on short-term deposit and cannot be used for investment and does nothing to help jobs.
    We require a movement which can be facilitated only by our Heads of Government arranging with the OPEC countries for such money to be placed on a long-term loan to be used for investment. That money could be used for five, seven or 10 years, whatever period the OPEC countries are prepared to accept. We should be able to explain this course and to carry on the policy which we ourselves adopted in the nineteenth century when we had large surpluses on balance of payments. When we were the first industrial country, what did we do? We invested that money straight away—for example, in the Argentine for electricity and transport and in South America generally. Before the 1914–1918 War we invested money in Russia in the same way, and also in our colonial empire. In other words, we invested that money and it automatically came back and was recycled. I believe that we need some movement on the part of Heads of Government in OPEC or the Five or the
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    Seven or in the European Community on these lines.
    In my view, the Community has a special advantage in dealing with this problem. It has no colonial connections with the past, which is valuable politically. Secondly, it has almost no indebtedness. Therefore, if the OPEC countries want to lend safely on longer term, they cannot do better than to make arrangements with the Community. Furthermore, there is an assured source of revenue each year in terms of customs duties, agricultural levies and value added tax. Therefore, those OPEC countries will deal with a borrower who has no indebtedness and an assured sum of income to service the debt.
    It would be up to the Community to use part of that sum for investment purposes in reconstruction, industrial and agricultural work as required. That would be a means of dealing with our high-cost problems in agricultural policy, and it would be a means of dealing with the Mediterranean agricultural areas, because we must bear in mind that Spain, Portugal and Greece hope to be future members of the Community. But however that money is handled, we must find a solution to this problem or high unemployment will remain for a very long time.
    The consequences of that unemployment will be that young people will begin to challenge the system. They will say "Frankly, whatever system is chosen, whether it be private enterprise, State sector or the parliamentary system, it is not meeting our needs. Our basic need is to have a job". We shall then have the kind of situation that was thrown up by the Tavistock inquiry in the 1930s, which showed that in Europe a large number of young people supported those who sought to overthrow the system. It is no coincidence that the National Front is now giving just as much publicity to unemployment as it is to immigration. It is no coincidence, because that is where the National Front is obtaining support among young people who have not jobs. This is part of the political consequences in the period in which we have been living.
    The Secretary of State for Employment is in exactly the same position as that in which I found myself when I

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    was Minister of Labour. One finds oneself with no control over what happens in the economy, and all one can do is report the figures and deal with fringe matters. Therefore, I hope that the right hon. Gentleman will try to bring pressure to bear on the Prime Minister and the Chancellor of the Exchequer to examine the situation in a wider context, bearing in mind the consequences nationally, internationally in our own continent, and from a world standpoint, in view of the impact of the changes taking place in the OPEC countries. There is no reason why Britain should not give a lead—and it must be given by the Government.
    5.58 p.m.
    Mr. Max Madden: If this debate proves nothing else, it will at least prove that the right hon. Member for Sidcup (Mr. Heath) has considerably more vision, understanding and compassion about unemployment than that displayed by the right hon. Member for Lowestoft (Mr. Prior).
    As the right hon. Member for Sidcup was addressing the House, my mind went back to the newspaper reports in the early 1970s when he was reported as having toured the City in times of difficulty. He then told industrialists and others "We have given you incentives, tax rebates and an industrial climate in which to improve—what more do you need?" Unfortunately, the right hon. Gentleman did not get the response he wanted.
    Towards the end of his speech the right hon. Gentleman was driven by the logic of his argument to call for planning. He instanced planning in the economy and highlighted the need for manpower planning and the need for selective investment in industry, and he called for more international order in trade, co-operation and development with our trading partners throughout the world.
    I thought that the right hon. Gentleman lifted the debate from the petty issues and arguments with which the debate started. He demonstrated succinctly and clearly the problems that we now face in solving the unemployment problem and made clear that the difficulties did not begin when the Labour Government came into office in 1974. He rightly referred to the decline which this country has experienced in post-war years.
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    I wish to place on record two quotations from articles which apppeared in yesterday's Observer. The first is from an article by Adrian Hamilton, who wrote:
    "the state of British industry remains so decrepit that any growth is all too likely to be taken up in higher imports; that manufacturing investment and output figures are constantly being revised downwards; and that the export growth of last year is now losing pace in the face of the recession in world trade and a rising pound."
    Another article in the same newspaper was written by Robert Taylor and dealt with some comments made by an NEDC working party. That article said:
    "Detailed analysis shows that only four working party reports actually foresee any overall increase in employment. These are in industrial electrical equipment; mining machinery; heating and ventilating machinery and computer production. And these number only a few thousand.
    The main report to the council meeting from the National Economic Development Office argues: 'Most sector working parties expect to meet their market share objectives with little or no employment and several expect a decline.'"
    The article concluded:
    "Has full employment gone for good? Once we realise this is probable, attention can be turned to ways of ensuring the jobless problem does not degenerate into a social and political catastrophe."
    It is the responsibility of this debate to ensure that it does not.
    I think that we need to be honest and non-partisan in analysing the reasons for our present unemployment toll and in looking ahead to the likely trends in employment and unemployment. The Manpower Services Commission has dreamt up a new word for it. It calls it the job gap, and it argues that we shall need about 1·3 million new jobs if unemployment is to be brought down to 800,000 by 1980.
    There are innumerable forecasts which take an equally gloomy view, so let there not be any unrealistic optimism in this debate or from the threshold of the Treasury, because such optimism is not built on the long-term forecasts of qualified economists and economic commentators. All those who are closely involved with and aware of the trend that we have experienced during the post-war years are gloomy and pessimistic about future employment prospects.

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    I believe that we must address ourselves to a number of matters in the face of likely employment prospects. First, I believe that we must be extremely concerned about what we do with our oil revenues. If they are frittered away in a personal tax-cutting bonanza, which will probably result in the lion's share going on overseas investment, we shall have lost an important opportunity to do something to solve the problem.
    The right hon. Member for Sidcup highlighted what we should do with oil revenues. It is particularly important to ensure that they are allocated to those sectors of industry that are capable of creating jobs. These are in high technology, high risk areas, and it is important that public agencies, such as the NEB, are given adequate resources to ensure that money is allocated to those areas in which jobs can be created.
    We should pay far more attention to the service sector. I was glad to hear my right hon. Friend the Secretary of State refer to this. We must pay more attention to tourism. I had the unfortunate experience recently, when I visited the Department of Industry to discuss these matters, to meet a lukewarm response when I suggested that far more could be done to ensure that resources were given to tourism, not only to ensure that more prosperity came to our regions, but to create more jobs. I believe that the incentive grants that are available to tourist areas within the special and development areas should be extended to all assisted areas because that would make an important contribution to providing more jobs.
    I ask the Minister who is to reply to the debate to address himself to some of the issues to which my right hon. Friend referred, though not in any depth, in opening the debate. First, I should like further information and some assurance about the continuation of the temporary employment subsidy. My right hon. Friend, using a rather Delphic phrase, said he could assure the House that the scheme would continue "in broadly the same form". It is important for the House, for industrialists and for trade unionists, particularly in constituencies such as mine where the TES has been of great assistance in safeguarding jobs, to have clear information about how the scheme will be continued "in broadly the same form".
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    Secondly, much more could be done to make the job release scheme more attractive. We have had figures today of the number of workers who have chosen to retire at 64 to provide employment for younger persons. Although the scheme has been relatively successful, I think that it would be more successful if the upper age limit were reduced to 63, and ultimately to 60 on a phased basis. I should like to hear from the Minister what obstacles stand in the way of a rapid improvement of the scheme. I understand that there could be some taxation problems related to phasing down the retirement age, but I am sure that the House would like to know exactly what stands in the way of a radical improvement of the scheme.
    Thirdly, the special employment subsidy scheme could be improved. We heard from my right hon. Friend about the success of the scheme. I should like to see it extended to cover all the assisted areas because I believe that that could be useful in providing a considerable number of extra jobs.
    In the general debate about how to combat unemployment there has not been any reference to the need to co-ordinate Government action. The right hon. Member for Sidcup sympathised with my right hon. Friend, saying that he had to cope with similar problems when he was Minister of Labour in the 1960s. Far more should be done to co-ordinate action by Government Departments in a major attack on unemployment.
    When one visits a Government Department the sort of remark that one hears is "You should go to Trade about that", but when one goes to the Department of Trade one is told "You should go to Industry with the problem". It is important to co-ordinate economic and social policy between the Treasury and the Departments of Trade, Employment and Industry so that there is a central, co-ordinated campaign to provide employment, to identify areas where assistance should be given, and to initiate social policies such as earlier retirement, longer holidays and shorter working hours, because these are vital if we are to make progress.
    The right hon. Member for Sidcup spoke about the need for much greater international co-operation. We are living

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    at a time when there is no stability in international trading and economic relationships. America is urging Japan and Germany to do more to reflate their economies to help the world order, but both Germany and Japan are replying "Why should we?".
    We are seeing the development of the Third world and the Fourth world. We are seeing the use of more technology and the production of more goods and services globally, but less and less order, less and less planning, and more and more difficulties as a result. I therefore agree that far more could and should be done to bring about a world recognition of the need to provide good and adequate jobs for all people. Unemployment is not a preserve or a worry of this country or the countries of the Western world. It is an international problem, and it will continue as such.
    I hope that after tonight's debate we shall not conduct the argument about unemployment in petty, partisan, yahoo debates of the sort that we have had so far. We must realise that the problems are deep-seated and endemic, and are due to a crisis in our economic order as well as the economic order of the world. The crisis will not be overcome by words. It will be overcome only by action.
    I believe that only the Labour Government can take that action. That is why I think that the future of this country will be determined within the next year or 18 months. It is imperative that at the next General Election we have the right policies addressed to the right problems. Because of the way in which my right hon. Friend opened the debate, and because of the way in which the right hon. Member for Sidcup developed it, I hope that the rest of the debate will be addressed to the real problems, and not to petty, party sniping of the sort that leads us nowhere and leaves the jobless without jobs.
    6.9 p.m.
    Mr. John Pardoe: The right hon. Member for Sidcup (Mr. Heath) put unemployment in its true and serious context. No one who has studied his period in office can be in any doubt but that he takes unemployment very seriously indeed. Indeed, there are some in his party who believe that his anxiety
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    and concern on the subject of unemployment led him into somewhat inflationary paths. Very few of us, apart from some very Right-wing Conservatives, would think that that was a criticism of any politician.
    Before the right hon. Gentleman spoke the debate was undoubtedly in danger of descending into an argument about the correctness of some rather phoney international comparisons. I suppose debates on unemployment are rather inseparable from a certain amount of intellectual dishonesty. To use the figures given in the Written Answer to the hon. Member for Blaby (Mr. Lawson) on 11th January as a major battering ram with which to beat the Government's economic policy over the head was the height of economic idiocy.
    I do not blame the Conservative Party for attacking the Government's economic record. I blame the Conservatives for attacking that record with these figures, because they purport to compare unemployment figures in various countries on a common basis. They do no such thing because there is no common basis. I do not want to analyse these figures in detail. The right hon. Member for Leeds, North-East (Sir K. Joseph) has analysed them in the House in the past. After all, the right hon. Gentleman has studied the literature on the subject rather more carefully than some of his right hon. and hon. Friends.
    There are two reasons why international comparisons are so difficult. First, different countries collect their statistics in different ways. Secondly, different countries have different definitions of unemployment. It is clear that the figures used by the right hon. Lady the Leader of the Opposition at Question Time, and by the right hon. Member for Lowestoft (Mr. Prior) this afternoon in opening the debate, were nonsense and cannot be the basis for any conclusions about the British level of unemployment.
    Mr. Teddy Taylor: The hon. Gentleman should stop being so self-righteous and accept that what my right hon. Friend was seeking to do was to get across to the hon. Gentleman and others that Britain has done worse than other countries over the past two and a half years. Whether he looks at that comparison or at the Manpower Services Commission's

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    statistics or any other statistics he will see that it is clear that Britain has done worse than any of our major competitors. It is time that we started putting the record straight.
    Mr. Pardoe: It is utterly impossible to conclude from those figures that even that is correct. I remind the hon. Gentleman that his right hon. Friend the Member for Leeds, North-East has said in the past that there are fewer pepole seeking work in Britain than the official unemployment figures indicate. In 1976 the right hon. Gentleman calculated that the correct number of unemployed seeking work in Britain was half that of the official figure. Does the hon. Gentleman believe that? Does he accept what the right hon. Member for Leeds, North-East said, or does he invent figures of his own?
    It would be rather more constructive if we concentrated on employment figures. What the right hon. Member for Sidcup said about the seriousness of unemployment figures would then come through. The employment statistics in two of the most successful economies in Western Europe—Switzerland and West Germany—show that the problem is far worse than the increase in their unemployment figures would appear to indicate. In Germany in 1973 there were 26,200,000 in the work force. In the first half of 1977 there were 24,290,000 in the work force. That is a fall of 1,800,000 jobs—a reduction of 6·9 per cent.
    The Opposition will say "Look at the unemployment figures." What happened to those who ceased to work? We know what happened. They went home to other countries. The Germans exported their unemployment.
    Between 1973 and 1977 Switzerland lost 300,000 jobs, or 10 per cent. of the work force. We have not lost 10 per cent. of our work force. If we had lost 10 per cent., there would be 3 million people unemployed today. So it is not true to say that Britain has done very much worse in the creation of jobs.
    When we consider Conservative policies, the real hypocrisy of Conservative crocodile tears over unemployment can be seen. It is not too much to say that in all the things the Government have done which have tended to increase unemployment the Conservatives
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    have given the Government fulsome support.
    Mr. Teddy Taylor: The hon. Gentleman should produce evidence of that.
    Mr. Pardoe: I will produce evidence in a minute. In all the things that the Government have done which have tended to reduce unemployment they have been consistently attacked by the Opposition.
    One of the major reasons for the rise in unemployment has been the Government's cuts in public spending and in their level of borrowing.
    Mr. Robert Kilroy-Silk: Not only were the Government attacked by the Opposition for the measures that they were taking to sustain or create employment, but the hon. Gentleman will recall that the Opposition heartily opposed the rescue of British Leyland and of Chrysler and the formation of the three co-operatives now in existence in Britain. Yet they have the temerity to pretend, with fake hands on their fake hearts, that they are concerned about sustaining employment.
    Mr. Pardoe: I am grateful for the hon. Gentleman's intervention. It supports my point that the Conservatives have pressed time and again for bigger cuts. Even now their view is that the Government have cut too little and too late. The right hon. Member for Lowestoft, answering an intervention by the hon. Member for Liverpool, Walton (Mr. Heller) this afternoon, made the most astonishing assertion. He said that there was no link between the public expenditure cuts that the Opposition are constantly calling for and the reduction in the number of jobs because, he said, employment in the public sector had stayed up. Does the right hon. Gentleman really believe that all council houses are built by direct labour? Such an assertion would be nonsense. The employment in my constituency in Cornwall has largely collapsed over the past two years in the private sector because of the cut in public spending, because it is public spending, in the construction industry in particular, that feeds through. The idea that there are two sectors of the economy—public and private—which are totally isolated and that spending in one has no effect on the other is economic illiteracy.

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    Moreover, the Conservatives have an extraordinary ambivalence towards the employment subsidies and employment protection measures which have been introduced. In the document—I said that I would produce evidence—issued last year by the Conservative Bow Group the right hon. Member for Leeds, North-East expressed strong criticism of the job creation programme and maintained that it actually cut the number of jobs. I doubt if the right hon. Member for Lowestoft would deny that Conservative policies would increase unemployment in the short term, though he would probably claim that it was a necessary price to pay for increasing the number of jobs in the long term. That is exactly what the Government say. That is the trouble. My doubt is whether any party has any idea how to increase the number of jobs. I have that doubt, too, about Western Governments in general.
    We can and must increase the number of people with skills, as the right hon. Member for Sidcup said, because they will reduce the number of bottlenecks that will crop up. We have faced this in the past every time we have tried to get the economy going. We need to be far more ambitious about our training programme. I forget exactly how many years ago it was—it must have been in about 1944—that the House afforded support for county colleges. We still do not have them or the kind of skilled training programme they would have provided between school leaving age and 18.
    What we need now is a massive extension of youth training by means of a two-for-one scheme. In other words, employers must take on two young people—they must be subsidised to do so—for every one job available. Each person so taken on must work for the firm half time and spend the other half of his time training. That is why I call it the two-for-one formula.
    We must accept, too, that there will always be unskilled people and that they cannot be condemned to permanent unemployment. Therefore, expansion of certain service employment for the unskilled is of the greatest importance. Much of it will have to be in the public sector or arising as a result of expenditure in the public sector.
    Mr. Hordern: The hon. Gentleman is making a most important point, and it is part of Liberal policy, I am sure. Is he saying that two extra young people are to be taken on by every firm on the condition that young people are not only to be paid for it but also that they are to work only half time?
    Mr. Pardoe: No, of course I am not. I am suggesting that the firm should pay the salary of one such person, that half of that salary should go to one person and half to the other, that each person should spend half his time working for the firm and half his time training, and that the Government should pay the other salary.
    There is no secret about how to cure unemployment. We know how to do it, because Keynes told us. The present recession in the Western world is a Keynesian recession and requires Keynesian remedies. I was interested to hear the right hon. Member for Sidcup, in effect—though he did not put it in so many words—define it as a Keynesian recession. A large part of the wealth formerly circulating with active economic effect in the Western economies has flowed into savings in the surplus accounts of the oil producing countries. These savings are not now being spent, and they are not, therefore, producing economic activity.
    The correct remedy is for Western countries to borrow this money back and put it to use. Of course, they are inhibited from so doing—the right hon. Gentleman did not touch on this—by fear, and largely by fear of inflation.
    Mr. Ian Lloyd: In his Keynesian analysis where would the hon. Gentleman place weight on another fact which my right hon. Friend the Member for Sidcup (Mr. Heath) did not mention, namely, that the annual indebtedness to the oil producing countries is almost exactly matched by the United States balance of payments deficit?
    Mr. Pardoe: Again, that is mere statistical sleight of hand. In fact, there is an enormous balance in the oil producing countries, and it is not matched in any way by economic activity-creating funds in the United States or in the Western countries as a whole. The British Government are no exception. They cut

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    their borrowing far too much for this stage of the cycle, largely, if I may say so, by mistake. I do not believe that they ever intended to bring their borrowing requirement down to the point at which it will be, perhaps just above £7 billion this year—which will be less than 5 per cent. of the gross domestic product.
    The Government ought to reflate in their next Budget by about £3,000 million. That is what is needed. But they are terrified that such a boost will simply feed through into prices, largely through increased wages. It was never more true to say that an effective incomes policy is the price of full employment, and the present level of unemployment is the price we are paying for having an insufficiently effective incomes policy.
    The Chancellor keeps telling us that the present incomes policy is effective, and so it is, as far as it goes, but the Chancellor is behaving very much like a child riding a bicycle, looking for admiration with the cry "Look—no hands." It is marvellous to behold, but there are safer and better ways of getting from A to B.
    If reflation in the Budget is to be sufficient—I believe that £3,000 million is the right figure—we need a much more robust and stringent phase 4 than the present phase 3.
    Apart from general reflation, many selective measures are needed. I represent a part of Cornwall, and Cornwall now has just over 13 per cent. unemployed. I should not dream of claiming that all of them are desperately anxious for work, but, even taking account only of those who want work, the unemployment level is intolerable.
    Where can the job be found? The Government will talk in terms of industrial strategy and manufacturing industry. In Cornwall, manufacturing industry is only a small part of the total economy. We need special development area status. I should have thought that 13 per cent. unemployment plainly justified that.
    But the small firms employment subsidy is the most important part of that status. Not all the new jobs can come in manufacturing, and three other sectors are extremely important—agriculture, tourism and construction.
    In agriculture there is an interesting comparison to be drawn with the German economy. The Germans employ 1·6
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    million people on the land. We employ 500,000. The Germans are 75 per cent. self-sufficient. We are 50 per cent. self-sufficient. That goes to show that in the German economy agriculture is efficient in its output per acre, whereas ours is efficient in output per man.
    In my view, it would be better if we tried to emulate the Germans who use another I million people on the land. I do not say that we could ever increase our total employment in agriculture to that level, but there is room open to us if we could reach something approaching the 75 per cent, self-sufficiency which the Germans have with the same cultivable land area and about 7 million more mouths to feed. I believe that we could create hundreds of thousands more jobs in agriculture.
    Mr. Teddy Taylor: I think that the man is mad.
    Mr. Pardoe: The hon. Gentleman thinks that I am mad. Will he commit himself to the view that a Conservative Government could not conceive of creating any more jobs in agriculture? Is that what he says?
    Mr. Teddy Taylor: The hon. Gentleman talks of 1 million extra jobs in a move towards efficiency. We already have the most efficient agriculture in the world. I am staggered by what he says.
    Mr. Pardoe: But that is the point. We have not got an efficient agriculture. Our agriculture is efficient in terms of output per man, but we have an inefficient agriculture in terms of output per acre. Which are we short of—men or acres? We are short of acres in Britain. We have the ment to put to work. That is the essence of the arguments, and I wish that the hon. Gentleman would not carry on repeating the garbage about British agriculture being the most efficient in the world. It is not; it is one of the least efficient in Western Europe.
    I turn now to tourism, which also is important for large parts of the development areas, not just in the South-West.
    Mr. Russell Fairgrieve rose—
    Mr. Pardoe: No, I want to get on with the subject of tourism, the second

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    of the three important sectors to which I referred.
    What is needed here is not another new series of grants in aid. Far better would be an extension of the small firms employment subsidy to tourism and agriculture. This would be enormously helpful in many rural areas, and that is what is really needed. One other valuable step would be to name hotels as industrial buildings for the purposes of tax write-off. That would create a building boom—not too big, I hope—in many development areas.
    As for the Development Commission, so far, so good, but will the Minister confirm that the commissioners themselves have been to the Secretary of State for the Environment and told him that, on the figures which he has given them, they could not keep up their factory building programme even to meet their target of 1,500 new jobs in the countryside each year, and there will not be any new money for COSIRA loans next years?
    The total which the Government are making available to the Development Commission is about £10 million, and the commissioners' estimate is that they need at least £16 million to do the job which the Government have given them and which they are committed to trying to do.
    I come now to the speech by the Chancellor of the Exchequer at the weekend. He said:
    "We must lead the market instead of following it. This task, as always, will primarily be the task of alert and energetic entrepreneurs.' '
    I do not suppose that that finds a great echo among all hon. Members on the Labour Left wing, but the question is how we encourage these alert and energetic entrepreneurs. Where have they been all this time, and where will they come from?
    If the Chancellor really believes what he said in his weekend speech, he will take the need for a massive change in the tax system much more seriously than he has so far. The report of the Meade Committee published this week not only offers sensible tax reforms but proposes ways of aiding and abetting those alert
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    and energetic entrepreneurs to bring Britain back to full employment.
    6.29 p.m.
    Mr. Robert J. Bradford: The House will appreciate the immense importance of the subject of this debate for Northern Ireland when I share with it the statistic that one in eight persons in Northern Ireland capable of working is without a job. It is right that each region of the kingdom should seek to underline its particular and peculiar problems in respect of unemployment, but Northern Ireland merits special mention not only in the light of that overall statistic of one in eight unemployed but because in certain parts of the Province as many as 30 per cent. of the work force do not have jobs.
    I think that it would be helpful if I outlined some of the reasons for our very high level of unemployment. Plainly the first reason is the recession in major industries such as shipbuilding and textiles. Great Britain provides the greatest amount of investment in Northern Ireland so that—as in the case of the textile industry—when there is recession and contraction to the centre, a region such as Northern Ireland suffers immeasurably. When such contraction takes place through recession, an eventual improvement is slow to reflect in the regions, as the central operations require and desire to utilise their own resources to the full—in other words, once bitten, twice shy.
    The second reason for the high level of unemployment in Northern Ireland is the exorbitant average cost of gas and electricity. Gas in the Province costs three times what it does in the rest of the kingdom, while the cost of electricity is twice as high. There are those who suggest that we should get a subvention, perhaps 10 per cent., for these costs as they relate to industry, but that is not the best way forward. The Province is all too conscious of the word "subvention". It is not hand-outs that we are looking for but a way in which we can retain our dignity as well as an effective way of beating the problem. I do not believe that a subvention is the best way to tackle the problem. It is not the best way also because it is not the only way. There is a possibility of a link-up with the national grid.
    The third reason for the high level of unemployment in Northern Ireland is

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    transportation costs. We have this problem both ways. We have it in terms of the high cost of transporting raw materials into the Province and in transporting out the finished articles. On the other hand, it is true that added assistance is afforded to Northern Ireland. But it is also true that operational costs erode that increased assistance. There is also a difficulty in relation to infrastructure, and there are two problems in that respect.
    First, in areas like Strabane there is no easy access by way of good quality roads, and so it comes as no surprise to discover that, in areas like Belfast, Craigavon and Ballymena, where the road structure is excellent, unemployment is as low as 6 per cent. or 7 per cent., but that, when we go to places like Londonderry, Strabane and Omagh, in the western part of the Province, where the road net work is inadequate, unemployment is as high as 26 per cent. to 30 per cent.
    The second problem is the availability of workers. There was a recent attempt to introduce industry into an unemployment black spot in Northern Ireland, but unfortunately the important issue of the availability of the work force was not properly taken into account. The attempt was made to produce a highly sophisticated piece of hi-fi equipment in an area where there was no background of manufacturing skill. Again, it was introduced into an area where the male work force was largely unemployed, and yet, as in countries where a similar product is being made, a female work force was used. For these reasons, the venture was not a success. Therefore, it is important, when siting new industries, particularly complex industries, to take properly into account the availability of work forces.
    We have a further problem in that competition is encountered from the Irish Republic. The Republic has certain advantages in attracting investment from Europe and America. For instance, there is a flexibility in the grant aid situation. Capital grant and replacement grant can be obtained up to 50 per cent. in Eire, whereas Northern Ireland's maximum level is 40 per cent. Then there is in Eire the wonderful bonanza of the tax holiday up to 1990—perfectly legitimate within the Community regulations, as I understand it. Of course, if an industry is being granted such a tax holiday in
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    Eire in respect of export-generated profits, it will not come north of the border where that wonderful bonanza does not exist.
    The Quigley Report states that if unemployment in Northern Ireland is to drop by 1980 to 7 per cent. from the level of almost 12 per cent., 41,000 jobs have to be found by 1980. If it is to drop to something like the national average of 5 per cent. by 1980, 55,000 jobs have to be found in Northern Ireland.
    It is bad that, since 1972, a total of 23,000 jobs in the manufacturing sector have been lost to the Province. It is bad that the construction industry in Northern Ireland is in a chronic state. But it is even worse when the Government add to that intolerable level of unemployment by the closure of defence establishments in the Province, and particularly when they transfer to the mainland operations for which there is no ready made work force there.
    We can well understand contraction to the centre where it will mean economic saving, but we cannot understand the closure of certain defence establishments when it is simply a matter of moving job opportunities from one part of the kingdom to another, and when there is no work force to take advantage of those newly emerging jobs in that other part of the kingdom. So we ask the Government even at this late stage to look again at the question of the closure of these defence establishments and, where they have not yet taken place, to rethink. It is not too late.
    From the Quigley Report it is obvious that we need 30,000 jobs immediately in manufacturing industry if we are to produce in Northern Ireland the same number of people, pro rata, involved in the manufacturing sector as Great Britain. There are those who hold that the present constitutional position means that the decision-making is not on the same basis as in Scotland and Wales, and that this situation militates against Northern Ireland obtaining its fair quota—one-fortieth—of the economic spread. As an example of that, they point to the exclusion of the shipbuilding and aerospace industries in Northern Ireland from the Aircraft and Shipbuilding Industries Act.
    Others say that because the difference exists added assistance can be given to

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    industry in Northern Ireland. They point to the 40 per cent. grant aid for capital expenditure and the 40 per cent. grant aid for replacement of machinery. But the comparison of numbers in the various categories of manufacturing industries shows that, by and large, Northern Ireland has a reasonable percentage of manufacturing activities. What is needed is investment, and that brings me to my first constructive point after this rather depressing analysis.
    We require immediate investment in manufacturing industry if we are to produce the 30,000 jobs which would bring us to our pro rata equivalents. Investment is required in terms of home-based industry—industry which is not so prone to contraction to the centre in terms of recession. Only 22 per cent. of the firms employing over 250 people in Northern Ireland are home-based. The rest come from the United Kingdom, America, or Europe.
    How is this investment to be injected? We believe that investment can be injected by reasonable tax levels being struck. This would allow industry to gain higher profits, which in turn would be ploughed back, creating more jobs. This in turn would bring about a higher productivity level, and create a far safer basis for industry's activities.
    A second way in which the Government might help would be to increase the capital grants to as much as 60 per cent. I accept that this might sound intolerable to those who represent other regions of the United Kingdom, but I ask them to bear in mind our peculiar problem of being the only part of the United Kingdom which shares a land boundary with another sovereign though foreign State which has real incentives to attract industry from America and Europe. In asking for this increase of capital grant to 60 per cent., I hope that the request will be understood, and that the Government will feel able to respond to it.
    If investment is not increased, the potential for growth which resides in our apprenticeship schemes will never be realised. The right hon. Member for Sidcup (Mr. Heath) mentioned the deficiency in the apprenticeship schemes which exist in Great Britain as a whole. I am glad to tell the House that this is one
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    respect in which Northern Ireland certainly does not lag. We have excellent schemes. Although I differ from the Government in their constitutional policies, it must be said—it would be very churlish not to do so—that they have inaugurated some of the finest apprenticeship training schools to be found anywhere in the Kingdom. They ought to be congratulated on that.
    After endeavouring to inject investment and having a new level of capital grants, attention must be given to an immediate improvement in the cost of energy supply. It would not be impossible for Northern Ireland to be linked with Scotland in terms of gas supply. We do not share the bonanza of North Sea gas, and there is no reason why Northern Ireland should not find itself in the very near future with a pipeline link to Scotland.
    There are those who tell us that such a link would cost between £70 million and £100 million. That sounds a lot of money until we consider the sums which the Government have had to give by way of subventions to write off debts to the 13 gas undertakings in Northern Ireland. The money spent on such a pipeline would soon be recovered. Its immediate effect would be to reduce the erosion of added assistance. The same argument applies to electricity. About £250 million was needed in order to write off the debt in Northern Ireland. Would not a link with the national grid make economic sense for Northern Ireland—and, indeed, for the national Exchequer? We believe that immediate improvements in the cost of energy supply can be made only if there is a link-up in terms of both gas and electricity.
    We must secure fair competition in the textile trade. The House is well aware that in Northern Ireland we have more than one-third of the man-made fibre industry of the United Kingdom. It was encouraging to hear the Secretary of State for Employment confirm that the temporary employment subsidy would not be removed until there was some equivalent to put in its place, but it is not just a question of finding an equivalent or perpetuating the temporary subsidy. It is a question of establishing fair competition in the textile industry. I ask the Secretary of State—and, indeed, the Chancellor of the Exchequer—to apply their minds to that problem.

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    We must encourage home ownership by giving more assistance to those who are prepared to build their homes. In this way we can help the construction industry. That industry in Northern Ireland certainly requires stimulation. I shall be going back later this evening to negotiate with the Northern Ireland Office and the Department of Commerce to try to keep a complete firm of 350 people in being. I shall be back here for the votes tomorrow night.
    One hundred people lost their jobs in my constituency last Friday evening. This Friday it will be the turn of 350 people. Although I do not in any way misunderstand the good-natured exchanges in the House, I think that the House will appreciate that the construction industry in Northern Ireland simply cannot afford this sort of weekly loss. We must stimulate that industry. Perhaps one way to do that is to encourage those who will buy or build their own homes, rather than to rely on public sector housing.
    I stress to the House the importance of making it worth while to work in Northern Ireland. I know that this is not a very popular thing to mention, but the fact is that in 1975 the average wage outside the Belfast area was £44 per week. The benefit level for a family—and not an Irish family at that but a family of two or three children—was £7 above that level. There is therefore no incentive to work. I think that this point was made in an intervention during the speech of the right hon. Member for Sidcup. Somehow we have to raise the wage level to a realistic level. We must at the same time reduce the benefit level to a correspondingly realistic level. I am not suggesting that those who are without jobs should be penalised yet further. In fact, the emphasis should be on the other side of the coin. We should be able to raise the wage level in order to give those for whom jobs can be found the incentive to take up job opportunities.
    Finally, I turn to the question of violence. This must not be underestimated in relation to the erosion of job opportunities in Northern Ireland. In the past, the productivity rate in Northern Ireland was superior to that in most parts of the United Kingdom. Given the industrial relationships in the Province, which are superior to those in most parts of
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    the United Kingdom, I am quite sure that, if we could solve the problem of violence, we could achieve prosperity for the Province. But that possibility is not helped by a recent report from the Fair Employment Agency, based on the census taken in 1971. The report plainly stated that there was a sectarian bias in employment. History and facts prove the opposite to be true.
    It is most unfortunate that such a report should be brought out at this time to follow in the steps of the right hon. Gentleman the Minister of State, Northern Ireland Office, as he tours America and Europe to speak of the job possibilities and the grant possibilities. With this report following him around, what sort of reaction will there be from industrialists in America and in Europe? I should like the Government to take this opportunity of telling the Fair Employment Agency that if it must produce a report it should produce an up-to-date report. An up-to-date report would establish beyond peradventure that job opportunities are afforded to all in Northern Ireland, irrespective of religion or political allegiance.
    6.50 p.m.
    Mr. Robert Kilroy-Silk: This debate took on the first element of an air of unreality when the right hon. Member for Sidcup (Mr. Heath) exonerated the Government from a major part of the blame for the present level of unemployment. That level of unreality went further when the hon. Member for Cornwall, North (Mr. Pardoe) approved almost all the areas of Government policy and anticipated—perhaps he knows—what the Government expect to do within the next few months. This culminated in the approval of the hon. Member for Belfast, South (Mr. Bradford) for the most wonderful apprenticeship scheme envisaged and implemented by the Government. All that we need now is for the hon. Member for Aberdeenshire, East (Mr. Henderson) to get up and say that the devolution Bill before the House is the best that we ever had and the best we could expect.
    The right hon. Member for Sidcup presented the better, more sensible part of Conservative Party unanimity with regard to the approval of various aspects of Government policy. He contributed to the

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    debate in a constructive and sensible manner.
    Indeed, with the exception of two speakers, every hon. Member who has spoken has made a careful, sensitive and constructive contribution. That has been with the exception of the right hon. Member for Lowestoft (Mr. Prior) and his bullish friend, the hon. Member for Glasgow, Cathcart (Mr. Taylor), both of whom took the opportunity in interventions to make party political points and introduce an element of pettiness and squabble in what otherwise has been an important and sensitive debate.
    Indeed, the hon. Member for Cornwall, North made the most telling criticism of the Tory Party by stating that it wants high and continuing unemployment. In spite of protestations to the contrary, the Conservative Party has consistently shown itself in this House and elsewhere to be in favour of deliberately creating a higher level of unemployment than we actually possess at present. If that is not the case, how can the Conservative Party explain its refusal to support—indeed, its opposition to—the Government's rescues of British Leyland, Chrysler, Alfred Herbert and the creation of the National Enterprise Board?
    Even in my own constituency, there was a great shriek from the Opposition when the Government rescued the former Fisher Bendix factory, which has now become the prosperous and successful Kirkby Co-operative. That was in an area of 20 per cent. male unemployment.
    On all these occasions the Conservative Party has demonstrated to the country that it deliberately wants a higher level of unemployment. It has gone further than that and actively opposed job creation and job-assisting measures. Indeed, not content with all that, it has called for larger cuts in public expenditure which, as the hon. Member for Cornwall, North has clearly pointed out, would contribute to even greater unemployment, particularly in the construction industry. That was a problem which the right hon. Gentleman highlighted. It was further highlighted by the hon. Member for Belfast, South. The hon. Member for Belfast, South was so constructive in his speech that I almost thought he was making out a strong if not powerful case for the unification of Ireland.
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    As is right and proper, and as other hon. Members have done, I want to turn to my own area and to my own parochial problems. Unlike the right hon. Member for Sidcup, I do not want to talk in global terms or put the economic problems from which we are suffering in an international context. Instead, I want to talk about the localities, the special development areas and the areas such as Merseyside which are at the sharp end of the problem and which have major and serious structural problems and high levels of unemployment.
    Merseyside certainly figures on all those counts. It does have the highest rate of unemployment in the whole of the United Kingdom. More people are unemployed in Merseyside alone than throughout the length and breadth of Wales. There is certainly a higher percentage of unemployed than in Scotland.
    Between 80,000 and 100,000 job losses have taken place on Merseyside in the last 20 years. I do not deprecate what the hon. Member for Belfast, South said about the 200 or 300 jobs at present in jeopardy in his constituency. But in my own constituency about 5,000 jobs are in jeopardy at the present time. Many thousands of other jobs would also have been lost had it not been for the rescue of those jobs by the Government and the expedient of the temporary employment subsidy which many Conservative Members wish to see abolished.
    Many tens of thousands of jobs on Merseyside—many thousands in my own constituency—are in existence today simply because of the various palliatives introduced by the Government. I accept that these are temporary measures, but they are welcome and important measures which the Government have seen fit to take.
    Yet unfortunately Merseyside is a living example of the failure of regional policy. I direct that criticism not just at my own Government but at successive Governments since the 1945 period and the take-off into new concepts of regional policy.
    The main shortcomings of present regional policy are, to begin with, that Merseyside has not received a share of regional aid commensurate with its unemployment problems or commensurate with its structural difficulties due to

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    declining and obsolescent industries which need to be replaced. Very little regional aid has reached inner areas or the unemployment black spots of Merseyside, such as Kirby. It is also the case that a disproportionately large share of the aid that has been received on Merseyside tends to flow to large capital-intensive businesses or industries, because that is the way it is done nationally, and because they are regarded as the glamorous projects.
    Indeed, the main thrust of regional policy has been only relatively very recently to encourage manufacturing industry, whereas on Merseyside better prospects for job creation and new industries are to be found in the employment growth area of the service industries. Unfortunately, these areas have received very little or only scant attention. Merseyside is not a manufacturing or engineering industry area although it has representatives of all the major manufacturing sectors. It is primarily a service area. We could benefit a great deal from increased public expenditure by placing greater emphasis on the service sector than we do at the moment.
    Finally, regional policy efforts of one kind or another are not concentrated on the priority regions, in spite of protestations to the contrary by Ministers. They are dispersed over an increasing number of areas of priority. For example, the priority previously given to Merseyside through the regional policy has been progressively undermined by the national industrial strategy.
    The emphasis on different sectors is supposed to help the regions, but Merseyside is under-represented in the manufacturing industrial sectors which are receiving the major portion of the funds devoted to the national industrial strategy. What we have in the country as a whole is a blanket-like effect. It is assumed that because we have a national industrial strategy, Merseyside will benefit along with other regions of the country. That is not the case, because compared with other regions such as the West Midlands, Manchester and certainly Northern Ireland, Merseyside is under-represented in the major manufacturing sectors in our economy. They do not exist on Merseyside in the same way as they exist in other areas, and we get less aid from the Government as a result.
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    Therefore, I submit that a much more selective and sensitive approach is necessary if regional policy is to be effective. Certainly it is far more important that we have that approach in the future than the present blanket approach, which must give way to one which takes account of the needs, problems and opportunities of regions such as Merseyside.
    The elements of this approach include, first, a regional development programme and budget. This is just as much applicable to other regions of the country such as the North-East and perhaps Northern Ireland. We want to see the preparation of an annual regional development programme and budget for Merseyside. This would be one way of ensuring that Merseyside received its fair share of aid, and it would also mean that the regional budget provided an appropriate basis for the preparation of EEC programmes, which could be identified clearly as additional instead of being, as they are at the moment, subsumed under general regional aid. At the moment, we do not know what is coming from central Government and what can be expected in addition from the EEC. We have the strange position that what we get from the EEC is taken away by central Government from what they might otherwise have put into the Merseyside kitty.
    The second element would be the development of new initiatives. New initiatives are required, despite those we have had in the past to meet local needs and priorities. I have in mind initiatives to stimulate the independent smaller business sector where new products and new markets can be generated to cater for likely demands, for example, by introducing credit guarantee facilities, advisory services, and so on. There seems to be no reason why the Small Firms Working Party should not have advanced further and been able to move into the area of instituting a guarantee scheme for small businesses and services. This would be crucial to the small business sector represented in Liverpool and on Merseyside.
    Again in terms of new initiatives, there should be some encouragement of the naturally labour-intensive service sector, for example, by building advance offices. We build advance factories. They have been built all over Merseyside. If they

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    are not filled now, it is hoped that they will be filled and that they are waiting for an upturn in the economy and for prospective manufacturers wishing to tenant them. But we do not build advance offices. I cannot understand why. The concept is the same. We know that on Merseyside there is a demand for office building. However, many builders are not prepared to build them on a speculative basis. They would be tenanted if the Government could act as a guarantor and if they took over the job themselves and built advance office accommodation.
    Another possibility, as a number of other hon. Members have said, would be the development of tourism. We have a great potential for tourism on Merseyside not just because of the many cultural facilities available there, not least of which are the two football teams, but also because of the close proximity to North Wales, Ireland, the Lake District, the Peak District and the rest of the beautiful countryside in the North-West. Merseyside has been left behind in the development of tourism. Again, it is labour intensive, and we have all the professionalism, all the skills and all the aptitudes which could make a success of such a venture.
    Still on the development of new initiatives, in unemployment black spots such as Kirkby—and there are only three in the country: Sunderland, Kirkby in my constituency, and Skelmersdale on the borders of my constituency—we need a package of negotiated assistance, tailored to suit the needs of particular companies, including capital grants up to, say, 50 per cent. and other financial assistance by way of grants, loans, guarantees and security. These are extremely important in areas such as Merseyside where so many firms operate at the margins of profitability and productivity.
    The third element would be an economic appraisal and a review of the effectiveness of policies so far. We have had too many one-off studies of regional problems. We have had too many one-off studies of Merseyside's problems, such as the recent National Enterprise Board report commissioned by the Prime Minister following the Plessey closure in my constituency. But we have no regular economic appraisal of prospects in the
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    regions and no review of the effectiveness of regional measures to deal with their problems.
    Closely tied into the preparation of regional programmes and budgets, therefore, there should be an annual review of prospects, of current problems and of performance based upon what has happened previously and on what is continuing.
    Mr. David Hunt: May I seek to analyse the performance of this Government and to give the hon. Gentleman's constituency a yardstick by which to judge his abilities and what he has achieved? The hon. Gentleman speaks of Kirkby as being an unemployment black spot with an unemployment rate of 20 per cent. Will he say what the rate was when he was first elected and when his Government came to power?
    Mr. Kilroy-Silk: The hon. Member for Wirral (Mr. Hunt) makes exactly the point which I made at the beginning of my speech and about which I was jeered at by every hon. Member.—[HON. MEMBERS: "Answer!"] I shall answer the question. I am not afraid of the question. The hon. Member for Wirral is now the third hon. Member in this debate to have introduced a political, petty partisan element. It so happens that we have had speakers from Government supporters, from Conservatives, from the Liberals and from the Irish nationalists but that the only three hon. Members who have been petty and partisan are the three Conservative Members who have spoken so far. They are exhibiting that their concern is not about unemployment, and not about the people in my area and elsewhere who are waiting in dole queues, whose lives have been made a misery and whose futures are bleak. Their concern is to harvest political capital and votes.
    To answer the question put to me by the hon. Member for Wirral, it may come as a shock and a surprise to him—and I do not boast about it—to know that in Kirkby in 1974 the rate of unemployment was verging on 25 per cent. It has come down to 20 per cent. However, 20 per cent. is a terrible indictment of any system of regional policy.
    In view of your request, Mr. Deputy Speaker, for brief speeches, I go on to the fourth element of the initiatives which

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    I should like to see. It is to get a regional dimension into the national industrial strategy.
    A regional dimension should be introduced into any planning agreement made with any company or multinational company. Unfortunately, we do not seem yet to have achieved any kind of real planning agreement with any company. An explicit regional dimension should be written into the NEB's investment priorities. The investment secured as a result of direction by the NEB and planning agreements will need then to be specified in the regional budget.
    The required approach to regional development on Merseyside should be positive and outward looking, able to call upon financial and managerial expertise and assistance, able to supply appropriate finance on a negotiable basis, capable of experimentation and new departures, and operated with far more adventure and imagination than is possible with the present machinery.
    Clearly, the suggestions which I have made reflect the areas in which the Government are failing to take action or to perform in an efficient and satisfactory way on Merseyside. It seems likely that no Government in the foreseeable future will be able to improve their performance without some change or reorganisation of the way in which regional policy is conducted.
    If my suggestions are to be adopted, other changes wil lhave to follow. For example, although suitable powers are provided by the Industry Acts, the present regional machinery does not have the considerable decision-making power and the financial discretion required to implement the strategy that I have outlined on Merseyside. What is necessary is a shift in the focus of power, decision making and executive responsibility from central to a more local level.
    There is also a pressing need to discriminate effectively on behalf of Merseyside within the framework of British and European regional policies. The blanket of assisted area coverage could be reduced by descheduling some areas where economies have improved and where industrial requirements are satisfied by other national policies or industrial strategies. The real black spot areas are not getting the kind of resources or
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    the degree of attention they need. At present, well over half of the United Kingdom is designated an assisted area of some kind. That makes a nonsense of regional policy. We cannot blanket the country with this kind of financial assistance. We need a far more effective use of our resources and fairer and more just treatment of those areas with the greatest problems. We should concentrate our financial and managerial resources on them.
    I believe that there should be a preparation of regional programmes and budgets to produce an effective and coordinated approach to Merseyside's problems. At present, there is considerable fragmentation in the implementation of our policies and programmes. On Merseyside alone we have the Department of Industry, the English Industrial Estates Corporation, the National Enterprise Board and a proliferation of local authorities. Obviously there is a clear need for a unified approach through which the diverse activities of the agencies could be brought together in a co-ordinated and more effective way. It is important that the focal point of this should be based on Merseyside and not at a distance, so that policy is responsive to local circumstances.
    The most effective way of satisfying the general principles that I have outlined and the suggestions that I have made is to establish on Merseyside a Merseyside development agency analogous to those existing in Scotland and Wales. We are not asking for any more than our dues—I stress this as a Socialist—and we do not want more than our fair share. However, we do have very severe problems and very high unemployment. Our problems are as severe and our unemployment as high as those in Scotland and Wales.
    The nationalist Members who sit for Scottish and Welsh constituencies will, in their more objective moments, testify to the fact that their development agencies have improved investment and regenerated industry. On Merseyside we have just as much need and desire for the same kind of machinery. I would hope for the support of people in Scotland and Wales on this issue.
    We must accept that ad hoc machinery or the modification of existing institutions and measures on an ad hoc basis is not enough. That will not cure our problems

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    or deal with the deep-rooted structural malaise on Merseyside.
    I ask the Government very seriously to look at our problems and to enable Merseyside people to have more say in dealing with these problems in the future than they have had in the past.
    7.15 p.m.
    Mr. Michael Roberts: If the hon. Member for Ormskirk (Mr. Kilroy-Silk) is correct in his description of this debate as having an air of unreality he at least has contributed to it. Having made the complaint that party points had been made on this side of the House, he went on to say that the Conservative Party was the party of high and continuing unemployment. If he takes that high-minded view he should have been thoroughly ashamed of his party in 1972 for the way in which it treated the subject of unemployment. I do not know how things have gone in the past four years on Merseyside. I gather from the hon. Member's figures that things are improving, but from the rest of his speech I would assume that things were far from improving.
    Certainly I can tell him the facts about Wales. In Wales we elected a substantial number of Socialist Members. They came in with the splendid slogan "Back to Work with Labour". The right hon. Member for Huyton (Sir H. Wilson), a neighbour of the hon. Member for Ormskirk, said:
    "We will not have our own people unemployed."
    We are used to what Socialists mean by "their own people". We know that they mean jobs for the boys, but a lot of people in Wales thought that they meant that they would give work to the people. When the Conservatives left office there were 38,000 unemployed in Wales. Now there are 93,000.
    I welcome the opportunity to say something about the unemployment position in Wales. Unemployment is synonymous with politics. It always has been. In 1971 the present Secretary of State for Wales said:
    "People in Wales know that the Conservative Party is synonymous with unemployment and they will not forget it."—[Official Report, 23rd November 1971; Vol. 826, c. 1220.]
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    The hon. Member for Bedwellty (Mr. Kinnock) went one step further in 1972 when he said:
    "Ever since the day of John Maynard Keynes any Government allowing unemployment rates to rise not even as high as this rate have been guilty, if not of a criminal act, certainly of criminal negligence."—[Official Report, 24th January 1972; Vol. 829, c. 1089.]
    That is the sort of material that we have been fed from the Labour Party ever since the 1930s. I do not think that either the right hon. and learned Member or the hon. Member would make such a statement today except in very selective and uncritical circles.
    I do not blame hon. Members opposite for believing their own propaganda. Wales has been fed with this propaganda for a long time, and the time has now come when the Welsh people realise that it is just not true. I do not believe that hon. Members were attempting to mislead the Welsh people at the time. I am sure that they actually believed their own line.
    I shall illustrate to the House the way in which unemployment has developed in the Principality. In December 1973 there were 158 school leavers unemployed. In December 1974 this figure had risen to 698. By December 1977 it was 4,905. This is a bad record. There is a considerable amount of disillusionment among the young, and this disillusion is matched by the middle-aged and people in their early 50s and 40s who are facing unemployment. Despite what my right hon. Friend the Member for Sidcup (Mr. Heath) said, I believe that their morale is surprisingly high. I believe that they still have hope for the future and that they are not totally disillusioned. They believe that, if the right policies are implemented, something can be done to help them.
    I want the House to appreciate the nature of the unemployment problem in Wales. If those 93,000 men and women lined up in a column it would stretch from the headquarters of the Transport and General Workers Union in the Prime Minister's constituency of Cardiff, South-East and make a trail through Bedwellty to end on the steps of the Liberal Club in Ebbw Vale, the constituency of the Lord President of the Council.
    I hope that this column illustrates one thing in the context of unemployment in

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    Wales, namely that with the best will in the world—and I am prepared to give my political opponents that—unemployment can still occur. All I ask is that, in years to come, when we face similar problems, we shall get a recognition from all parts of the House that unemployment is often caused by world problems. However, it would be totally wrong to argue that world problems were entirely responsible for the unemployment that has struck Wales.
    We have high unemployment figures in the Principality and reasonably high figures in Cardiff where the male unemployment rate is 9·5 per cent. and the female rate 4·3 per cent. We have considerable opportunities in commerce, shopping and general administration which provide many jobs for our women.
    South Wales has been built on steel and coal, but we know that it is unlikely that those industries will maintain high levels of employment. We suspect that in the coming months, redundancies from East Moors will increase unemployment in Cardiff and South Glamorgan by 2,000 or 3,000. It is said that the men will receive generous compensation, but however good that may be for them, and however much it will soften the blow of unemployment, it will mean the loss of a substantial number of job opportunities in the capital city and, worse than that, lost opportunities for training apprentices because GKNS at East Moors was one of the major employers of apprentices in the area.
    If we encourage our entrepreneurs in small businesses to invest, we could tackle a substantial part of the unemployment problem. I listened carefully to the Secretary of State, who referred to the small firms subsidy, which has been a success in the special development areas in Wales. It has encouraged small companies to take on additional labour and to make a positive attack on unemployment. I am not sure whether the right hon. Gentleman intends to extend the subsidy to the intermediate areas. If so, I welcome it, and if not, may I ask him to consider doing so? It would give a substantial impetus to small firms.
    I wish also to say a few words about skilled workers. The skilled, highly trained worker is a dynamic force in a small company. It is fairly easy to train
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    people to do repetitive jobs; they are important, and the people who mind and run machines are doing a tremendously important job. I do not underestimate their significance, but the key workers in any small engineering factory are those such as the tool makers who set, maintain and design the machines. We are witnessing throughout the country, and certainly throughout Wales, a decline in the numbers of these skilled workers.
    The Secretary of State referred to the need for retraining. This is enormously important, and we should not argue about which Government introduced schemes first or which party had more people in training. However, in addition to training and retraining, we must stop the drift of skilled workers from key positions in industry.
    I spend considerable time talking to people in this category. They have given me so many examples of friends who have left key work in the engineering industry, perhaps because the differentials have not been good enough or have been eroded, or because they have seen production workers getting substantially more pay and have been tempted to more lucrative jobs demanding less responsibility. When people such as toolmakers leave an industry, their skill is lost to the industry for all time. It is possible to retrain other men, but seldom to the standard and calibre of those who leave. I know of one such worker who left his industry to become a manager of a sub-post office.
    It is possible to attract key men back into industry if they are given the opportunities. When the National Coal Board in Wales was faced with the problem of an earlier retirement age, it knew that it had to bring back into the industry as many people as possible in addition to attracting new workers. With the introduction of better wage rates, the Board was able to launch an advertising campaign that resulted in large numbers of face workers returning to the industry because of the opportunities that existed and because they saw that the prospects were good. That must be done for key workers in industry now.
    The encouragement of small firms and the skilled man will not solve all our problems, but it will make a substantial dent in unemployment throughout the United Kingdom.
    Several Hon Members rose—
    Mr. Deputy Speaker (Mr. Oscar Murton): Order. Before I call the next speaker, I must warn the House that long speeches reduce the opportunities for others to take part in the debate. Many right hon. and hon. Members still wish to catch my eye.
    7.28 p.m.
    Mr. Douglas Henderson: Two of the most significant speeches that we have heard today were those by the hon. Members for Ormskirk (Mr. Kilroy-Silk) and Belfast, South (Mr. Bradford). It does not help the prospects for reconciliation and peace in Northern Ireland if there is the high incidence of unemployment that the hon. Member for Belfast, South mentioned. He asked whether it might be possible to arrange for Northern Ireland to get its gas from Scotland. As we are always interested in such commercial propositions, I hope that he will pursue the matter further, particularly as most of the gas comes from the Frigg field into my constituency at St. Fergus.
    The hon. Member for Ormskirk raised some fundamental points about the position of Merseyside. He referred to this Bench, and I should tell him that it is no part of our policy that we wish Scotland to receive advantages to the extent that people on Merseyside are placed in difficult circumstances. He said that in these islands, particularly over the past 30 years, economic power has followed political power and we have had increased centralisation from Westminster.
    All the remedies that have been put forward, including the Government's remedies, have been based on concentrating power and economic control here and giving the rest of the United Kingdom a bit of this and a bit of that in the hope that this will redress the balance Over a long time, certainly since the end of the war, there has been very little fundamental change in the position of places such as Merseyside, Wales and Scotland relative to the power centre in the South-East of England.
    When we hear the Conservative Party talking about the wonderful things it will do it is salutary to remember that Scotland suffered under the Conservative Government almost as much as it suffers
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    under the present Government. The monthly average unemployment figure in 1959 was 89,000, in 1960, 75,000, and in 1963, 98,000. Throughout the 1950s and 1960s the level of unemployment in Scotland remained at between 75,000 and 90,000. During that time, possibly because there was a period of expansion in the Commonwealth countries—in Canada, Australia, New Zealand—and elsewhere, many people left Scotland. From 1955 to 1964 under 10 years of Conservative government 300,000 people left Scotland—30,000 a year—because there was no opportunity for them in their own country. We must remember these salutary figures.
    In the six years of the Labour Government from 1964 to 1970 the unemployment figure remained at 180,000. It has not made a great deal of difference to the basic underlying situation of our economy, whichever party has sat on the Treasury Bench.
    Dr. M. S. Miller: Surely the hon. Member is not suggesting that because people emigrate or leave a country and go elsewhere it necessarily follows that the reason is that they cannot obtain employment. Scotland has always been responsible, for example, for sending doctors and dentists all over the world. It is not because they cannot obtain work in Scotland, but because they feel they have a mission to help other people.
    Mr. Henderson: I agree. Perhaps the hon. Member for East Kilbride (Dr. Miller) will go on a mission abroad to help other people after the next election. I accept his view that there is some idealism in some people. But he must realise that if those 300,000 people had not left Scotland during the 10 years of Conservative government the unemployment figure in Scotland would have been 300,000 greater.
    So 300,000 people left in that period and 180,000 people left in the six years from 1964 to 1970. In the space of 15 years almost 500,000 people left Scotland, for whatever reason. In many cases, including the constituency of the hon. Member for East Kilbride and my constituency, people left because there were no opportunities or prospects for them in Scotland. Who could blame them for leaving in those circumstances?

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    When the present Government came to office great claims were made. There was tremendous enthusiasm after all those years. In their manifesto in 1974 they said—
    "The first and overriding priority facing Scotland … will be to create more and better jobs."
    In fact, unemployment has now risen to about 200,000.
    Secondly, the Government said in their manifesto—this referred to the period between February and October 1974—that—
    " We have doubled the regional employment premium thus bringing another £4 million to Scotland every year."
    Since then they have abolished the regional employment premium. I am still waiting for an answer from the Government on the report which appeared in The Scotsman which said that there was a confidential report circulating in St. Andrew's House which had been seen by Ministers which projected that by 1980 the loss of regional employment premium would cost Scotland a further 20,000 jobs. It then said—
    " We intend to make the Scottish Development Agency the main instrument for the regeneration of the Scottish economy."
    That is very good.
    I smiled when the hon. Member for Ormskirk mentioned how wonderful it would be to have a Merseyside development agency to rival the Scottish Development Agency. The Scottish Development Agency, for all the excellent work which many of its people are doing, has made very little impact on the Scottish economy. Its Chairman said:
    " We make it clear that £300 million measured against the total needs of Scotland will certainly not be sufficient for a complete and effective regeneration of the Scottish economy."
    The other factor that we can now look forward to in the unemployment situation is that, thanks to the Government's own legislation, we now have a trailer, as it were, an advance warning, of redundancies. In 1974 there were 12,000 redundancies notified—about 1,000 a month. In 1975 there were 18,000 redundancies notified—1,500 a month. In 1976 there was a slight improvement to 12,000–1,000 a month. In 1977 the figure up to October was almost 16,000–1,600 a month. There is no indication that this trend is likely to be reversed.
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    The position in regard to young people has been mentioned by many hon. Members. It is always hard to choose the right month in which to make a proper comparison, but taking the month of October, which is a month after all the school leavers have been out of school for a considerable time, the figure of unemployed school leavers in 1975 was approximately 5,500. In 1976 it had risen to 10,600 and in 1977 to 12,300.
    I welcomed what the Secretary of state for Employment said today about what is to be done about school leavers, but we shall need far more information about it before we can pass a final judgment.
    It is perhaps even more significant to look further ahead to see what the size of our labour force will be within the next 15 years. When the hon. Member for Chorley (Mr. Rodgers) asked the Secretary of State for Employment his forecast of the numbers, he was told that for Great Britain the figure was expected to rise by 2·2 million people in the next 15 years.
    I asked the same question of the Secretary of State for Scotland. I do not know what is wrong with the statistical services in the Scottish Office, but it was totally unable to provide any forecast of the expected numbers coming on to the labour market in Scotland. That is extremely unusual, because either the Secretary of State for Employment has plucked the figure out of the air or he was able to get the figure for Scotland, which in any event is kept separately by the Registrar-General. The Scottish Office ought to get itself sorted out on that matter as well as on other matters, so that we may clearly assess the size of the labour market in the next 10 to 15 years.
    The speech of the Chancellor of the Exchequer has been mentioned. He came to Glasgow to make it. That is perhaps significant. He talked of the prospect of half a million or a million—however many jobs it would be. I find it incredible that a Cabinet Minister, particularly the head of the Treasury, should say in an almost flippant, off-the-cuff way to the Glasgow Press Club "Another million jobs or so will be turning up before too long, so don't worry too much about it." That is not an assurance which I would accept with any great confidence.

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    Mrs. Helen Liddell, Labour's Scottish secretary warned that
    " she would be ' looking for blood ' over Scotland's unemployment figures."
    But she said after leaving the Chancellor
    " there were no points on which the party in Scotland now disagreed with the Chancellor."
    I do not know whether she was advertising herself as an extra for a horror film, but she said that she was looking for blood. She will be disappointed in that, and I am sure that she will be disappointed in that, and I am sure that she will be disappointed politically as well.
    I find it incredible that the Labour Party in Scotland should have swallowed this, as it seems to have done, and sent the Chancellor back feeling very much better. There is nothing in the Government's record and nothing in what they have told us today that leads us to believe that they will reverse the situation—quite the opposite.
    The Co-operative Wholesale Society has announced the closure of a factory in Clydebank employing 300 people. I have a letter from the Provost of Clydebank District Council asking in a bewildered way how the co-operative movement arrived at this decision. It might have been better if the co-op had remained in Scottish hands in Scotland instead of being taken over by the English CWS. This closure comes fairly soon after the closure of Beatties biscuit factory at Drumchapel, which is within the Garscadden constituency, with a loss of 600 jobs.
    The latest announcement on this front is from the Chrysler company which I thought had concluded a planning agreement with the Government. I do not know what value that is because Chrysler has decided that the new 1979 light car is not to be produced at Linwood, as was promised by the Secretary of State for Industry on 17th December 1975, but elsewhere.
    These are all ominous signs for the Scottish economy. It is significant that the Government have adopted a defensive attitude on this matter by asking the Secretary of State for Scotland—not the Secretary of State for Industry, the Secretary of State for Energy or even the Chancellor of the Exchequer—to reply to the debate. The Secretary of State for Scotland is to do the job because the Gov-
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    ernment must be extremely concerned about the situation in Scotland.
    We have looked in vain to the Government for constructive policies to deal with the situation. Their promises of 1974 are no longer valid. I therefore recommend right hon. and hon. Friends to vote against the Government in the Lobby tonight.
    7.42 p.m.
    Mrs. Renée Short: We have heard a series of serious and thoughtful speeches from hon. Members representing different parts of the country. I endorse what many of them have said about the difficulties in their areas of Wales, Scotland and Merseyside, because these are areas that the Select Committee which is looking at the problems of unemployment and anti-unemployment legislation has visited. A moment ago three other members of the Committee as well as myself wanted to get into the debate, and so clearly the Committee's members take their duties very seriously.
    It is a matter of great concern that although there are several signs that the economy is improving—the Secretary of State referred to the improvement in the pound, in the balance of payments, and in industrial profits, and to the flow of North Sea oil—nevertheless the problem of unemployment seems just as intractable as ever. Although wage and salary earners have made their contribution and have endured a long period of wage restraint, structural unemployment stands at 1·5 million.
    It is clear from evidence we have had from the Treasury that, given the whole range of anti-unemployment proposals, if there is a 3 per cent. growth of output unemployment could be held at its present level. This is something we cannot latch on to with any certainty. The Treasury expects a growth of 3½ per cent. in 1978, but it cannot be certain that that will happen, or whether, if it happened, it would reduce unemployment. That depends on how many firms have held on to labour at present instead of shedding it. It depends on how much productivity would rise, and no one can say what will happen about that.
    To say that we must wait and see what happens is not good enough for the 1·5

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    million who are unemployed, many of whom are forming a hard core of persistent unemployment. This applies to older as well as young workers, and that is serious. I endorse what the right hon. Member for Sidcup (Mr. Heath) said in this context when he referred to those elements within our society which are making political capital out of the fact that there is a large disadvantaged and disgruntled group within the unemployed who provide fertile ground for Fascist ideology, to the great detriment of the nation if they ever made any progress.
    The White Paper published recently said that everything depended on the growth of world trade and on what happened to inflation and productivity. If all these three things come right and if the next round of earnings increases are in single figures, the Treasury reckons that the 3½ per cent. growth will be possible. But there are many imponderables there and no one can guarantee that they will bear fruit.
    We live in a competitive world and British industry must be competitive. For how many years have we been saying that and deploring the lack of investment in modern science- and technology-based industries? We must have a more efficient industry, and that of course implies more investment in new technology. But new technology can mean a further shakeout of people as it introduced, and unless new industries come forward in order to take up the shakeout as well as those who are now unemployed, or some of them, it could be that the introduction of the new technology will create further unemployment.
    It would be nice to think that unemployment could be down, as the Treasury estimates, to 1 million by 1981–82. That means we must provide more jobs for those who are out of work and those who will be displaced in the future. How are we to create the demand? The Treasury thinks that we could meet the demand for more jobs if there were more demand for goods that are produced. But that depends on the spending power of working people. If they have better wages and salaries they can afford to spend more money on goods of all kinds, and whether they have more money to spend depends on whether they are in work or not. It is therefore a vicious circle.
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    Public service employment could take up some of the existing unemployed. In certain areas of the health services and education, where public spending cuts have gone very deep, there is scope for increasing employment. The fact that employment in manufacturing industries fell between 1966 and the beginning of the present recession by about 700,000—and that has been happening in other Western European countries—together with the cuts in public expenditure, has made a serious inroad into our levels of productivity and employment. I hope that my right hon. Friend the Chancellor of the Exchequer will take on board the need to put something back into those two particular areas of education and social services because they have a distinct contribution to make to a solution of the problems that exist all over the country.
    We must feel great concern for the men and women of 40 or over who are thrust out of work but have family responsibilities. However, in many cases they seem able to seek out jobs and to be more adaptable than the young in the sort of work they are prepared to do. My greatest concern is for the young school leavers and for the dire effects upon them of long periods of unemployment. The Holland Report expects 50,000 more young persons to enter the labour market in 1981 than entered it in 1976. It expects also an increasing number of 17 and 18year-olds to come on to the labour market after longer periods in further education. The total labour supply is expected to rise from 25·75 million to 26·5 million and then we shall have more problems to contend with.
    The job creation programme, as we in the Committee have seen from our visits all over the country, has been of enormous value to young persons, especially in depressed areas where unemployment is high. I pay tribute to the people working in the Manpower Services Commission. They have done a splendid job in working out and developing schemes and in finding the people to operate those schemes in different areas of the country.
    The Select Committee has seen the work of the Scottish Development Agency and the Development Board for Rural Wales. We have visited areas where parliamentary Committees have never before ventured. We were gratified by

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    the welcome that we received from members of local authorities, employers, trade unionists and all those concerned with dealing with the difficult problem of unemployment.
    We have been to the Western Isles as well as to Liverpool, Merseyside, Manchester, Glasgow, Edinburgh and Devon.
    Mr. Albert Roberts: Did the Select Committee travel to the North-East, particularly to South Yorkshire?
    Mrs. Short: My hon. Friend has anticipated what I was about to say. We intend to travel to the North-East and to South Yorkshire shortly. I hope that we shall be able to learn a great deal from our visit and perhaps make some suggestions as to what might be done.
    The job creation programme—once over its teething troubles—since it was first announced in September 1975, has provided jobs and thereby dramatically reduced unemployment in certain areas of high unemployment. In January 1976 unemployment in the Western Isles was 21·6 per cent.—an absolutely fantastic level of unemployment. By October 1977 it had fallen to 10·5 per cent.—the lowest figure ever recorded for that area. That was due entirely to the job creation programme. I think that my right hon. Friend the Secretary of State might take some comfort from that improvement.
    At a cost of £2·2 million, provided by the Manpower Services Commission, over 2,000 jobs were created in the Western Isles. We have been told by the Western Isles Council of the value of the scheme under which many young people have been able to learn valuable traditional skills which will be of use to the crofting community in future. That is important for the Western Isles. It has enabled the community to provide much needed facilities, which would have been just beautiful dreams for years ahead but for the job creation programme. We have had an opportunity to see some of those schemes in operation.
    Generally, the job creation programme has proved that people want to work. It is not true that they want to be lazy, idle and good for nothing. They want jobs they want to work. They want to acquire experience and skills. As the
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    Western Isles' experience has shown, people have proved that they can run such schemes efficiently. They have proved that they are capable of creating their own jobs and running the schemes very well.
    The Western Isles Council would like the scheme to continue. It presumably will not continue in its present form. However, I hope that what follows the JCP will be as valuable to the Western Isles as the JCP has been. The Western Isles Council is anxious that, whatever scheme takes the place of the JCP, it should be regarded as a seed bed for future industries. The job creation programme and its successor, by providing resources and cash, could inject money into schemes to enable small employers to employ small numbers of people.
    For example, when we were in Fife we saw the toy library. We were most enthusiastic about it, because it provides what the commercial toy market does not provide. It is of great value to handicapped children who cannot use toys from ordinary toy shops. There is every hope that the toy library will become an active and profitable concern. However, it started as a JCP project. I hope that my right hon. Friend will not close his mind to that possibility, because it can provide useful and urgently needed permanent jobs.
    In Clwyd we found the highest unemployment rate in Wales and the fourth highest in Great Britain after the Western Isles, Gwynedd and Cornwall. Clwyd needs 6,500 new jobs to bring down its unemployment rate to the national average. The county council wants Wrexham declared as a special development area. It has lost over 80 per cent. of its mining jobs, and unemployment stands at 13 per cent. On Deeside, Courtaulds has followed the practice adopted in other parts of the country of sacking many hundreds of workers—1,500 on Deeside. Altogether, 2,000 textile jobs have been lost since 1972.
    Shotton steel works has shed 2,500 jobs. The aerospace industry has recently shed 600 jobs. In chemicals, bricks, electronics and vehicle building, many hundreds of jobs have been lost. Areas of dereliction are left in many parts of the country when that happens.

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    We have heard a great deal about tourism today. The coastal areas of Wales and, indeed, other parts of Wales are good prospects for tourism. Wales is a beautiful country with charming and helpful people. They are nice to strangers and foreigners who go to Wales. However, we cannot have a good tourist industry with a poor hotel industry. We must spend money on improving hotels in Wales if we are to develop the tourist industry there.
    Crucial problems affect the West Midlands. Many manufacturing jobs have been lost. Between 1964 and 1974 more than 100,000 jobs in manufacturing industry were lost. However, 85,000 extra jobs were created in service industries. Many people went into local government, the National Health Service and other jobs. However, in the last year that progress was lost, because another 60,000 jobs in factories disappeared. For the first time in the West Midlands the service industry sector has replaced manufacturing industry as the largest single employer. Again, the job creation programme helped to provide a large number of jobs in the West Midlands. I hope that progress will continue.
    The crucial problems facing school leavers of low attainment have been brought to our attention wherever we have gone, as has the problem of finding jobs for girls and women. The careers service works extremely hard to find jobs for all school leavers, but for those of low attainment it is a difficult problem. I hope that the YOP and STEP will be able to help some of the less advantaged of all age groups.
    There has been little progress in finding jobs for girls and women since the Committee produced its report on the job creation programme. We drew my right hon. Friend's attention to the fact that on the area action committees that have been set up there were only two women, neither of whom was a chairman. Now that we are to have a larger number of area boards we shall be taking evidence from the Manpower Services Commission—probably this week—to discover how many women have been found to sit on area boards and whether any women chairmen have been appointed. It is not much use saying that the schemes that have been set up are open and provide equal opportunities for both sexes if
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    we do not provide opportunities for women, especially those with young children, to take jobs. It is a sad fact that we do not, and that holds back the opportunities for many women to take jobs or to train for jobs.
    We have many teachers who are out of work. We have nursery nurses and accommodation, but we do not have enough day nurseries or nursery classes providing good day care to enable women to train or to work. I hope that my right hon. Friend will speak to the Chancellor about this matter. If he will put money back into the public sector, funds must be earmarked to provide facilities for day care.
    I hope that my right hon. Friend will say that the subsidy for jobs that the EEC is unwilling that we should continue—TES—will be continued. It would be intolerable if what we want to do here to relieve serious unemployment by creating new jobs were to be thwarted by the EEC, particularly when we have shown that many of these schemes have brought good results in different parts of the country.
    8.0 p.m.
    Mr. Hector Monro: I know that other hon. Members want to speak, so I hope that the hon. Member for Wolverhampton, North-East (Mrs. Short) will forgive me if I do not take up the main features of her speech, except to say how glad I am that she and her colleagues have visited the whole of the United Kingdom so extensively in examining the job creation programme.
    I am pleased that the Opposition have chosen the subject of unemployment, and rightly chosen to criticise the Government's total failure. As has been brought out frequently today, unemployment has increased by 900,.000 to nearly 1½ million since the Government took office. It has risen to 200,000 in Scotland. All that has happened subsequent to the two elections in 1974, when everything was under control.
    The exceptional rise in unemployment has run parallel to a fall in those in employment, which is equally serious, although perhaps not in terms of the human problems that arise. That must be coupled with the fact that production is still falling by 3·5 per cent. Prices have risen by 85 per cent. over the period of

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    the Government's administration. That is why we are now in such chronic trouble.
    The national problem is very much more serious than that to which the Government are prepared to admit. That was brought home to the House by my right hon. Friend the Member for Sidcup (Mr. Heath), who spoke in the broadest possible context.
    To highlight the position, I shall refer to the horrific unemployment figures in my constituency. There has been a 100 per cent. increase in unemployment since October 1974. There were 1,319 unemployed in October 1974, now there are 2,639. That is not much for the Government to crow about. In some areas there has been an exceptional rise in unemployment. In the old mining district of Sanquhar there is 15 per cent. unemployment, whereas in most parts of the constituency it is about 7·5 per cent. As hon. Members on both sides of the House have said time and time again, these rates of unemployment have brought tremendous human problems and real personal problems to families and children. That has arisen because of the unemployment of the mother or father.
    In the Upper Nithsdale area, where there is high unemployment, we made substantial progress from the 1963 Act right through to 1974. There was the construction of advance factories. That was continued with one advance factory being built under the present Government. At long last that factory has a tenant. I am delighted that that is so, but I am afraid that a further pit closure is a possibility.
    I hope that the Secretaries of State for Employment and Scotland will again consider introducing an increased differential incentive between areas of exceptionally high unemployment and other areas where the level is bad enough but not so high. With unemployment in some constituencies running at 15 per cent., and in others at even 20 per cent., surely it is worth while to have as great a differential as we had with the old development districts before there were blanket incentives for the much larger development areas, designed to push industries to where they are so desperately needed. I accept that that might mean a reduction elsewhere, but if we can reduce the level of unemployment where there is great
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    deprivation and despair, areas where there is 15–20 per cent. unemployment that goes on and on, it would surely be a good start. We need to make a redoubled effort where the position is as serious as that.
    The Government's general economic policies have been so bad and so disheartening that I am afraid they have had a much more adverse effect on unemployment than the positive and advantageous effect of measures such as the temporary employment subsidy, the job creation programme and work experience.
    I ask the Secretary of State for Scotland and the Minister of State, Scottish Office—I am glad that they are both on the Front Bench tonight—to think again about the point that I put to the Minister of State at Question Time not so long ago, when I said that the SEPD, the SDA, and most local authorities have effective and hard-working industrial development committees, and it is questionable whether we are getting sufficient co-ordination between the three sectors. There are also many lesser bodies that are equally involved in bringing industries to areas where they are required. Have we not too many organisations all working to the same ends? Do we not need greater co-ordination? Might that not trigger off the spark of greater enthusiasm among some industries that are contemplating coming to Scotland?
    I believe that industries are being approached by too many people with too little information, and that a concentrated effort by perhaps one organisation might be more successful. I commend the Scottish Office to think about greater coordination, especially among major bodies such as the SDA. We sometimes express some differences of philosophy about the SDA, but by and large I think that it is doing a good job in attracting industry, and is being helpful. That is certainly the position in my constituency.
    Almost every hon. Member who has taken part in the debate has spoken about the job creation programme. I welcome the opportunity that is given to young people to get their teeth into employment. However, at the same time it is right to remember that many of the jobs that are being created will not, as a result, be done by those presently in employment because they may have lost

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    them as a result of the job creation programme. I am thinking especially of local authorities where expenditure is now controlled tightly. Employees of local authorities may frequently think "We could be doing that job. We should be doing it if the money were channelled to the authority rather than to the job creation scheme." I do not want to see unemployment in local authorities because the work has been given to the job creation programme.
    There have been some bright spots. I would never say that all is gloom when discussing unemployment. I hope that in future we shall see new jobs coming to Scotland. Indeed, they cannot come too soon. The fact is that we are only just keeping ahead of redundancies. That is a factor that causes concern to many.
    It is wrong to give the impression tonight, as perhaps has been given throughout the day by the Secretary of State for Employment, that we are beginning to turn the corner. We have a much longer road to travel before the corner is reached. I think that perhaps there is misunderstanding about the words of the Chancellor of the Exchequer. There may have been misunderstanding among the Press. I think that the quotation has given, wrongly, a tremendous feeling of optimism to those who read it. It is a statement that I feel the right hon. Gentleman will wish he had not made when he thinks about the impact of public opinion.
    We are trying to give constructive thoughts to the Government as well as underlining our severe criticism of the plight in which we find ourselves. If we are not to have a change of Government—that change may not be for months to come—let us think about what can be done, bearing in mind that we want to see not an overall increase in public expenditure but a redirection of priorities within a ceiling. I do not want to be criticised for shouting out for more Government expenditure. I could explain without any difficulty where spending could be reduced so that more money might be spent where I think the greater importance lies, but that would take too long.
    As I have said, I believe that special incentives should go to those areas where it is established they are required. When we consider the effect of regional employ-
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    ment premium on cash flow in industry, I believe that we should ask the Government to re-examine this subject in the future. We always took the view that it should be phased out, but we did not give the indication that nothing would take its place. Therefore, the Government owe a duty to the House to give advice on the future of that valuable inflow of money to industry.
    I am glad to see that the Secretary of State for Employment is to continue his incentives to small businesses. However, more needs to be done by the Chancellor of the Exchequer about the level of VAT, profit limits, capital taxes and particularly capital gains. All these matters require urgent attention in the Budget.
    I am glad that the right hon. Gentleman mentioned the subject of tourism. Much more could be done to stimulate that activitiy. It is a tremendous growth industry and if there is any money available it should be channelled to that industry to give additional support, through tourist boards, to the hotel industry. That source of income should be developed increasingly in Scotland.
    Furthermore, if a balance can be struck, I believe that immediate help should be given to road construction, particularly in rural areas where major routes urgently require attention. The right hon. Gentleman knows that I am thinking principally of the A75, which is the only part of the trunk route between Dover and Belfast which does not have a dual carriageway.
    I wish to deal finally with the issue of the Thames Board mill at Workington. I hope that the Secretary of State will think further into the future before he takes a decision like this again. The earlier decision to expand the mill may have serious consequences on unemployment in South-West Scotland, and indeed we may end up with no chipboard or sawmill industry.
    I hope that the Secretary of State for Scotland will consider with his right hon. Friend the Secretary of State for Industry the impact on our indigenous chipboard industry in relation to foreign imports. The situation is having a serious effect on the Scottish factories. It is impossible to produce this material at a price that is competitive with the dumped prices. Therefore, this matter should be urgently examined by the Government. I hope

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    that we are not having to take on the Polish deal at the expense of our having to take excessive Polish imports in this respect.
    I believe that the Government can do a great deal—and this does not necessarily have to involve great expense—to soak up this vast amount of unemployment. But the Government will deserve, and will certainly receive, the criticism that is due to them in the Lobby tonight, and I hope that they will sit up and take notice and move faster in the future.
    8.16 p.m.
    Mr. Roy Hughes: I listened attentively to the opening speeches from the Front-Bench speakers. The only startling feature of those contributions was in the conundrum which they tried to unravel—namely, whether this debate related to employment or unemployment.
    I was reminded of the policies of Keynes which have had such a profound effect on all our lives, particularly in the post-war years. Keynes's general theory of employment was essentially about unemployment. Likewise, in this debate although the word "employment" may be mentioned on the Order Paper, we all know that we are seeking to deal with unemployment.
    I personally am not convinced that the present Goverment's policies will cure this dreadful rate of unemployment. I derive no pleasure from that fact. Unfortunately, the right hon. Member for Lowestoft (Mr. Prior) almost gave the impression of being quite happy with the present situation.
    The best speech of the debate was undoubtedly that made by the right hon. Member for Sidcup (Mr. Heath), whose contribution was constructive and compassionate. It was compassionate because it expressed an understanding of the social evils that arose from unemployment. It dealt with the effect of unemployment on young people and the long-term effects on our social systm.
    The right hon. Gentleman's remarks on the Middle East were also interesting in this context. However, I disagree with his view that there is not as much scope in that part of the world for our exports as in earlier times. I believe that if we have salesmen with initiative, if our delivery dates are right, and if we sell
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    quality products we should be able to export profitably in those areas. I have for a long time felt that successive British Governments have been unwise in not adopting a more even-handed attitude towards that area of the world.
    The right hon. Gentleman suggested that the OPEC countries should invest in the Western capitalist countries. I agree with that proposal, and I believe that we should appreciate that the OPEC nations are not wholly composed of Arab countries. When certain Arab interests have tried to buy their way into our industry and commerce here, there has been a great outcry in certain sections of the media. I have never understood the reason for that response. We have allowed a great deal of American investment in this country as well as investment by Germany, Holland and Japan. I do not see why Arab investment is as outrageous as some people try to suggest.
    I would take the right hon. Gentleman to task over the fact that in his speech he ignored the Common Market. Some years ago he and some of his acolytes stressed that entry into the Common Market would provide the answer to most of our problems. We were given to understand that there were to be jobs and investment in abundance, but that situation has not materialised. My view is that five years of EEC membership has been highly detrimental to Britain. What is more, I believe that our membership has been a positive hindrance to our Government in taking the necessary measures to solve our economic problems.
    The cost to public funds of our having 1,500,000 unemployed must be prohibitive, let alone a sheer waste of resources. In simple terms it is similar to a tap that is left running. This situation still exists despite all the ameliorative measures which have been introduced by the Government. My right hon. Friend the Secretary of State for Employment said that we are to have a new version of the temporary employment subsidy because of the opposition of the EEC to the original scheme—a scheme which some Labour Members will say has been highly beneficial to their constituencies and the industries therein. Furthermore, we have had job creation schemes and programmes, work experience programmes, community industry and vast development area policies. If Wales is

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    anything to go by, I believe that development area policy is illogical and is wasting millions of pounds of Exchequer money. In Wales our bread and butter industry is steel, which is in a parlous state. That industry may add yet again to my right hon. Friend's problems in the future.
    I wish to draw my right hon. Friend's attention to an article which appeared in the Daily Mirror on 25th January this year on the subject of the steel industry. It is written by Mr. Geoffrey Goodman, one of the best informed correspondents in the business, who is accredited as having the ear of certain Ministers. That article points out that a secret report has been prepared by the Minister of State, Department of Industry, the hon. Member for Manchester, Ardwick (Mr. Kaufman). That report is apparently 100 pages long. Geoffrey Goodman in his article says:
    "It could well have been labelled The Dynamite Report ".
    One option suggested in the article as flowing from that report is that the industry should be cut down to size. It suggests that of the 200,000 work force a total of 50,000 could be made redundant. This means that steel works at Ebbw Vale, East Moors and elsewhere would be in jeopardy. He goes on to say that the Prime Minister is sceptical about this report and I say "and well he might be".
    But we have been through this situation before in Wales, in regard to coal. Many pits were closed, and that lovely anthracite that we used to mine in West Wales would now be worth a crock of gold in international markets. Many thousands of jobs were lost as a result of those closures, and that was in areas where it was difficult to get new employment. It was only the NUM that had the vision to understand the situation and appreciate that the oil could be turned off at any moment. The union was proved to be right, and coal is coming back as the No. 1 in the fuel economy league.
    Bearing in mind the implications for employment in the steel industry I feel that the House should be given details of the report, if it exists, as Geoffrey Goodman alleges that it does. I have no wish to embarrass either the Government on the BSC over the report, but
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    many steelworkers in my constituency read the Daily Mirror and have undoubtedly read this article. The effect on their morale must be catastrophic.
    The state of the steel industry is not untypical of many other sectors of British industry. The serious nature of what is happening is camouflaged by the discovery of and the revenue now beginning to flow from North Sea oil, but if we are not careful all these resources will be frittered away. We can live in a fool's paradise for another decade or so, but if we use this asset widely to put manufacturing industry back on its feet the benefits will flow and our people will appreciate them.
    8.22 p.m.
    Mr. John Wakeham: Unemployment is a difficult and more persistent problem than any other that anybody has experienced in his adult lifetime, particularly those who are trying to solve it. It is therefore encouraging that so much of the debate has been about the human problems that are created by unemployment rather than just the economic ones.
    I recognise that the Government have taken a number of measures that have helped, but at what cost and with what effect on job creation in other areas is another matter. I recognise, too, that many industrial nations other than the United Kingdom have many similar problems. It seems to me that those two factors, plus one other, have, at least in part, stopped the Government from looking at the fundamental problem and therefore producing a lasting solution.
    The third factor is that nobody starves when he is unemployed. Prolonged unemployment is a terrible experience—my father was unemployed for many years in the late 1920s—but the imperative seems to have been dulled, and the great danger is that whole generations of young people will grow up never having sensed the satisfaction of a worthwhile job.
    As I look at the problem in the United Kingdom I see three main sources of employment—the public sector, the major manufacturing and processing industries, and the small and medium private sector. Over the past few years there has been a shift of about 1 million people into the public sector. It does not seem, therefore,

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    that, in practical terms, that sector is likely to be looked upon as a source of new jobs. My experience and my postbag indicate that the reverse is more likely to be true.
    If one looks at major manufacturing, this vast sector that was the traditional area of employment for the greatest number of people, one sees that it has all the signs of overstaffing rather than understaffing. Many industries are coping with the serious problem of too large a work force. Whatever the problems of the British Steel Corporation, and however we solve them, it is hardly likely that the solution will lie in an increase in the work force.
    British Leyland has many substantial problems, but nobody seriously suggests that that organisation—and many firms like it—is likely to be a serious contributor to additional jobs for the 1½ million unemployed. As each new productivity deal advances the fortunes of any particular company the potential for a reduction in employment is there and has to be faced.
    The Secretary of State pointed to certain successes in manufacturing industry, but he agreed that we cannot look to that industry as an area in which one is likely to find a solution to the problem of 1½ million unemployed.
    In my analysis I come to the third sector which is the small and medium sized one. This sector covers about 1 million employers and about 8 million employees engaged in all manner of activities, but obviously with a high proportion of them in service industries.
    The structure of British industry seems to indicate that, compared with many of our more successful international competitors. we tend to be weakest in the small and medium sized sector, and here I declare an interest. In my business I employ about 1,000 people. There are too few small firms, and too few new firms engaged in manufacturing. Even if they get off the ground they are not able to keep going for long before they are taken over by bigger firms and cease to be the driving force that they were when they were small or medium sized.
    If we are to make any serious impact on our unemployment figures we must recognise that it is in the small and
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    medium-sized private sector that we are most likely to be successful. Indeed, it is the one area that offers some real hope for substantial improvement in the foreseeable future.
    The biggest condemnation of the Government on unemployment is their failure to take effective steps to help small businesses. The Government's record has been littered with a series of measures. I do not say that as one who would necessarily oppose every step in those measures. Many of the Government measures may contain intrinsic merit. However, they may well have had the effect of dissuading many small business men from expansion when opportunities were there. Every small business man with whom I come into contact reduces his staff to the minimum level and it takes strong persuasion for him to hire new staff. Whatever the intrinsic merits of some of their measures, the Government have seriously underestimated the effect on employment in the one area where a substantial improvement could be made.
    8.30 p.m.
    Dr. M. S. Miller: Few people would deny that the twin evils bedevilling our society are unemployment and inflation. The relationship between the two has been hammered home time and again as though it formed part of the wisdom handed down from Sinai on tablets of stone.
    There is an almost universal acceptance of the theory that a high level of inflation leads inevitably to increasing unemployment. The theory goes that, if we keep paying ourselves more and more, our production costs will rise and this will make our exports less competitive. We then have to devalue the currency to compensate for this, which means that our import bill for raw materials rises. This in turn leads to higher prices and to demands for pay rises. Eventually products become too expensive to be sold either at home or abroad. Factories shut down and the dole queues lengthen. That is the theory.
    The theory has considerable validity, but I question whether it has been conclusively proved. Countries with minimal requirements of imports do not necessarily suffer the ravages of inflation, which for them is more or less an internal

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    matter. For them devaluation is not such a serious affair. Similarly, countries with a maximum of skill and high technology can withstand a very much higher level of import costs because their manufactured products are so highly specialised that they retain their desirability. They can therefore resist devaluation.
    I accept that these matters are finely balanced. I accept further that there may not be a great many examples of the countries to which I refer. Nevertheless, the alleged direct and inevitable connection between inflation and unemployment deserves very close scrutiny. Every effort must be made to get more people to work, even if it takes a little longer to reduce inflation to a more acceptable level. That is my first suggestion. Working people have derived some benefit from a moderate degree of inflation in the past. We do not want to return to the days when men went on strike for an extra penny an hour in their wages.
    This would be one modest contribution to the reduction of unemployment. Unfortunately, the causes of unemployment are deeper and demand more radical measures. Britain's share of world trade has dropped from 20 per cent. to about 10 per cent. during the past 10 to 15 years. However, even 10 per cent. is by no means a bad proportion considering the number of countries which can now manufacture goods which were once our monopoly.
    Can we look for an appreciable increase on this 10 per cent.? I am not a pessimist, but I think that the odds are against us. Our old industries are only shadows of what they were. Coal, steel, shipbuilding, railway engines, machine tools, bridges—these industries have all met a similar fate.
    True, we have developed and are still developing new industries, but here we have a big problem. When I say "we", I refer not merely to this country, since the problem confronts all industrial nations. The advance of technology has resulted in the industrial nations having the ability to produce more with relatively fewer people, and this trend shows every evidence of being maintained.
    Paradoxically, therefore, investment in new machinery tends to create more unemployment rather than the opposite. This was not always so, but, unfortun-
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    ately, our industrialists in the past—and even in the recent past—failed miserably to take advantage of increasing investment in their industries at a time when this would have given a distinct advantage and put us in a far better position than we are in today. But be that as it may, it is rather late in the day to bemoan it now. Moreover, advancing technology tends to produce a greater demand for skill, which, in relative terms, is a diminishing commodity, and a decreasing demand for unskilled labour, which is a commodity growing in supply.
    In my view, our whole attitude to work and the lack of it needs radical reappraisal. I think that we should begin by exposing two myths, which have been referred to time and again in the debate.
    First, the situation today is totally unlike that of the 1930s both in the level of unemployment and in its consequences. In the 1930s, unemployment was twice what it is now, and if a man did not have a job in those days he and his family simply did not eat. That was the stark reality of that tragic era.
    Second, talk about the demoralising effect of unemployment as such is absolute nonsense. It is not the lack of a job which does the damage. It is the lack of a wage packet which does the damage. I have encountered very few people who work because they love the job which they are doing. The vast majority work in order to earn the means to obtain some of the creature comforts of life.
    I pay considerable tribute to the Government for the measures which they have already taken—the job creation scheme, the temporary employment subsidy, the measures for investment in industry, and so on—but I submit that these are at best medium-term measures. In fact, they are probably only short-term measures, for it seems to me unlikely that remunerative full employment is achievable at least in the near future if our technical advance continues and if a high wages policy is our aim.
    In my view, therefore, the following steps will have to be considered urgently by the Government. First, there should be implementation of a shorter working week. I mean here not just knocking a couple of hours off; there should be a drastic reduction in the number of hours worked.

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    Second, I suggest that there must be a move towards earlier retirement. Third, there should be longer holidays for workers. Fourth—I make this proposal in no canting spirit—we should consider selective import controls.
    Fifth, I suggest that we should consider the possibility of resuscitating old skills. I do not see why we cannot have a comprehensive system of State enterprises producing craft goods, hand-made goods, not necessarily on an economic basis.
    Finally, I think that we should at least examine the possibility of some system for pooling wages.
    I realise that there are many parts of the world where poverty is so rife that the inhabitants of those countries lack even the basic commodities. But, by and large, we are not producing for those countries. We are selling to ourselves—one industrial nation is selling to another—and we are producing for waste rather than for use. Unless we proceed with caution, we shall exhaust all the world's resources of raw materials.
    My final point, therefore, is that we should have a long hard look at that incestuous kind of trade. By all means, as an industrial nation, we should satisfy our own needs with products designed to last a little longer, but we should not forget to turn our eyes to the underdeveloped world before it is too late.
    8.40 p.m.
    Mr. Peter Hordern: This has been a very serious debate. It was characterised by the Secretary of State for Employment, who did not seem, to me at any rate, to share the optimism of the Chancellor of the Exchequer about the prospective movement in employment. The Secretary of State said that he saw, in the reports of the working parties, no evidence of any increase in employment from their best forecasts of what would happen in their different sectors. As I understand it, the Chancellor said that there could only be an improvement in employment on the basis of a real increase in the resources from North Sea oil, and only then if manufacturing industry invests and employs people to spend the whole of that process. But that is something that lies perhaps years ahead.
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    I have been struck by two statistics in the debate, one of them mentioned by the Secretary of State. This is the increasing number of people coming on to the employment market. There will be another 15,000 people coming on to the employment market every month in the foreseeable future. I understand, too, that the unemployment figures are much worse than they appear for the second figure that struck me most was for those who have been unemployed for over a year.
    In January 1976, the number of people who had been unemployed for over a year was 182,000—a high enough figure in all conscience. The latest quarterly figure, for last October, showed that this had risen to 324,000, which means that almost 25 per cent. of our unemployed have been out of work for over a year. That is a very serious indication of the position of industry and employment.
    So many hon. Members have commented on the various measures that the Government have taken to help employment—measures such as the temporary employment subsidy and the Employment Protection Act. I say to those who have mentioned those devices that, excellent though some of them may be in protecting employment, or in finding some temporary employment, those who have received protection in this way know in their hearts that they are not performing a job for which there has been a genuine demand but that theirs is a temporary patching-up operation. They know it, and they cannot get very much satisfaction out of it.
    Let us look at the position in our great basic industries—steel, shipbuilding and cars. We know that productivity in our steel industry is so far behind that of other countries. We know about the protective ring created by the EEC to protect us from steel imports from third countries. One sees the figures for the developing countries. Taiwan, South Korea, India and Brazil now produce 20 per cent. of the world's free steel at one-sixth of our labour costs and at twice our level of productivity. So, on any rational guide, one cannot expect—and I do not believe that any hon. Member expects—to see an improvement in our steel industry. Indeed, quite rightly, the Government are discussing redundancy payments and special redundancy payments for those in

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    the steel industry. The same is true of shipbuilding and everyone knows the position of British Leyland. So our industrial position is very much worse than the Secretary of State made out, and I do not think that there is any reason to suppose that there can be any satisfactory improvement in unemployment while present policies and trends continue.
    I wish that I could share the hopes of my right hon. Friend the Member for Sidcup (Mr. Heath) in some global solution, some great initiative by the OPEC countries with $40 billion, as he said, which they have been unable so far to invest. But I fear that the position is not as it was when, in Victorian Britain, we were investing money. In those days, people invested money for a return. The fact is that there are no banks which are short of a desire to invest money. It is difficult for them to find anything to invest in which will give a proper return. That is true not only of this country but of Europe, the United States and many other parts of the world. There is an unsatisfactory rate of return.
    Perhaps my right hon. Friend would prefer that the OPEC countries should make some such grand gesture as the Americans made at the end of the War with the Marshall Plan, but I do not see why the OPEC countries should make it in our direction. They might be more prepared to make it towards the Organisation of African Unity or some other bodies of that sort. I do not envisage any satisfactory solution coming quickly from that source.
    We have to consider what we can do in our own economy, and in the structure of the economy, to make some improvement. I do not say that it is possible to make any dramatic improvement. I do not think that in the present state of world trade or industry such a thing is possible, but I think that there could be some improvement.
    The first thing to recognise is the burden that industry has suffered in recent years. In the year 1976 industry made a loss—if we take out the effect of inflation—of £1,778 million. That represent 3·5 per cent. of the total value of assets. If shareholders are considered to own half of all our industrial assets, that means that in that year the country was eating up its assets at the rate of 7 per cent.
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    per annum. In every succeeding year since 1973 industry has made a loss. It is still not yet making a profit. If that goes on, there can be no prospect of any improvement at all in real employment.
    It is no use looking to the Government to provide employment. We hear about temporary employment subsidies and job creation programmes, but these are funded by people who are earning money in profitable industries. That money is given, by definition, to those who are not earning money. That is the real position.
    There is only one prospect of any genuine improvement in industry. That is if industry and business become more profitable. I think that one has to accept that there has to be a smaller proportion of the gross national product taken up by public expenditure and a larger proportion taken up by industry and industrial profits, otherwise real employment will not increase. That is the fact of the matter.
    I make one final suggestion, because I think that there is one avenue by which the Government could bring about a real improvement. I refer to the prospects for small business. It has already been said that small business employs 8 million people. I think it was also said that there are a million small firms. That is a very large sector of our economy, but for years past the small businesses have complained about the burden of taxation and about Government intervention in every form.
    I know that the Government have sent the Chancellor of the Duchy of Lancaster to see the small businesses. Whenever the Government are in trouble they use him as a sort of odd job man. It is he who goes to look for the trouble and to help those in capitalist circles to feel slightly happier. It is a very pleasant experience for them, as some hon. Members will know. They are asked to his flat in Eaton Square, which is very enjoyable, and their susceptibilities are calmed down. It happened with the oil companies and now it is happening with the small companies. I am sure that he is giving them some sort of balm, but let me offer him a practical suggestion, because I think this is a very serious matter.
    I believe that several substantial improvements could be made in the position of the small businesses. First, for

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    the purposes of value added tax, the turnover limit should be raised to £10,000. That would exempt altogether a great many companies from the ambit of VAT. Think what a difference that would make to a large number of small firms. They would no longer have to fiddle about with forms. There would be thousands of small firms in that category. The cost of this concession would be minimal—about £9 million. There is no reason at all, in terms of our membership of the European Economic Community, why we should not do it.
    My second point is that all small companies, as defined under the Act, should be exempted altogether from corporation tax. In that way I believe that existing companies would be encouraged and that more would be set up.
    One also has to recognise the burden of taxation which is needed in order to pay for these devices and aids of one description or another. The fact is that, taking a proportion of the weekly earnings taken up in taxation, France pays 0·8 per cent., Germany 8·5 per cent., the United States 1·9 per cent., Japan nothing at all and the United Kingdom 22 per cent. Those figures show what an impost there is for industry at present. There will be no improvement in employment until the burden of taxation is lifted from industry and unless business and industry recognise that there is some prospect for profit in employing more people.
    8.50 p.m.
    Mr. Arthur Blenkinsop: I do not intend to follow the hon. Member for Horsham and Crawley (Mr. Hordern) except in one or two quick points. With regard to the burden of taxation on industry, it must always be remembered that in some respects industry in this country is fortunate because its contribution towards social service benefits is far less than in most other countries with which we compete. That must be taken into account when one is looking at the tax burden and so on.
    The hon. Member for Horsham and Crawley referred to the special problem of people who have been out of work for a particularly long time. I want to quote an example from my own constituency of South Shields, although it applies to an area in the North-East run-
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    ning from Tyneside down to the Tees and along the coast, taking in big towns such as Sunderland, Hartlepool and others. This area has a particularly long-standing problem from which it has had only relatively a temporary release. It has been a long-standing problem for many years, not only during this recent period.
    At this moment in my own constituency about 875 men have been out of work for more than a year. That is a terrible figure. Of the total, about 312 are over 55, some of whom might benefit from early retirement provisions. The terrible thought is that 116 of those who have been out of work for more than 12 months are under 24 years of age. That is a shocking figure.
    Mr. Madden: Will my hon. Friend give way?
    Mr. Blenkinsop: My hon. Friend has already spoken and I want to ensure that other hon. Members have a chance of taking part.
    We are all very conscious of the size of this problem. A large number of those who have been out of work for a long time—this is true about the whole of the North of England—are connected with the construction industry. One of the practical areas where further help can be given by the Chancellor and others relates to further encouragement in the housing and general construction sectors. There is room for making some little inroad into the figures that I have mentioned. Certainly investment in all firms, both public and private, is vitally required.
    I share the anxieties and doubts about whether the industrial investment that is unquestionably needed is likely to lead to very much in the way of relief with regard to the employment figures. Indeed, I share the worry of many of my hon. Friends that in many of the practical cases at present before us this is likely to lead to less employment rather than more.
    Alas, we have the example on the River Tyne of what looks like self-imposed unemployment and the utter tragedy of the loss of possible employment in the shipyards, about which all of us who worked to achieve those orders feel bitter. But we must recognise the problems lying behind it. It is easy enough to say, as many people do, that until we can get

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    full interchangeability of work in the shipyards, as has been achieved in a few, we cannot hope to see a revived and vigorous shipbuilding industry. That is vital. But when we say that, do not let us turn our backs on the reality of the size of problem that that involves. We are talking about people in effect giving up a lot of what we would call rigidities of their employment, but they are related in many cases to historic crafts and to attitudes which in another period would have been admired by everyone as a sign of their concern for their skills and for their own viability as members of a trade or craft. Attitudes of this kind cannot be overturned very quickly.
    If, as we must, we want to overcome this difficulty—and it is one which affects not only the shipbuilding industry but many others—we need greater flexibility in the pay structure and in the attitudes which have been enforced for very understandable reasons, with the support of the Government, to achieve the success we have had in mitigating inflation, to avoid the other damaging effect of imposing rigidities which might contribute to this inability to overcome this kind of industrial problem.
    I welcome what the Secretary of State said about the continuation of the temporary employment subsidy in one form or another and, we understand, very much on the present level. In the Northern Region there are some 21,000 men whose work depends upon that at the moment, and we cannot contemplate its withdrawal. We welcome very much the very valuable effort which has gone into the job creation schemes of a varied and valuable kind.
    We in the North welcome the first faltering step to establish a special regional committee of the National Enterprise Board with certain valuable powers of its own to get going, with executive powers in certain areas, especially smaller industrial developments on which we rely a great deal.
    But I hope that we shall have the assurance that that first step is one which can be developed and that the Government are prepared to re-examine the position after there has been a chance to see how it works so that we can decide whether the Scottish example is one which we might follow, as well as Merseyside, because there is still a strong belief that we
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    need far greater clarification between all the number of agencies which exist already. We do not believe that proliferation is necessarily enormously valuable. Very few of us believe that the greater investment that we need urgently to bring our industries fully up to date, and to take advantage of our opportunities, will solve the deep seated unemployment problem.
    I agree with my colleagues who have said that earlier retirement must be looked at as one way in which we can give greater opportunities to younger people in the community. We welcome what the Government have already done in this area. We have had no word or hint from the official Opposition of any positive contribution in this area. We heard nothing from the right hon. Member for Lowestoft (Mr. Prior). He did not give us a single idea on this issue.
    At least we had some imaginative ideas from the right hon. Member for Sidcup (Mr. Heath). I feel rather sad that when he was Prime Minister we heard fewer imaginative comments from him than we have heard today.
    It is clear that the Opposition are merely offering us a return to the market of which we have had such tragic experience in the past. With all the new possibilities from our slightly improved financial position I hope that the Government will give that extra stimulus in public investment that is so badly needed, particularly in the North.
    9.1 p.m.
    Mr. Alan Haselhurst: One of the difficulties in this debate is in trying to establish the true extent of unemployment and the likely trends. The present figures do not tell the whole story. Many people do not register for unemployment, particularly ethnic minorities in inner cities. We have heard estimates of the number of people likely to join the labour market in the next few years. It would be much more helpful if the Government could bring before us all the estimates in the various Departments—estimates vary widely from one Department to another—and the estimates of the Manpower Services Commission. If they did so we could look at them as a whole and assess the size of the problem that must be overcome.

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    I take a rather gloomy view of the prospects of being able easily to mop up the present degree of unemployment. It is being slowly recognised by more and more people that if there is more investment and more economic expansion it will not produce as many new jobs as it has in the past. The evidence for this is coming thick and fast. There is evidence to this effect in the latest report of the Manpower Services Commission and there is evidence from many learned institutions and industrial companies.
    When a company like ICI—one of our more successful—is quoted as saying that it must lose 4 per cent. of its labour force annually to remain competitive, that is a sober realisation. The Government's much vaunted industrial strategy depends on high investment and high productivity. The Government must realise that their policies will not lead to the generation of more jobs through economic expansion, or at least not a sufficient number of jobs to deal with the problem.
    I wish the Government would not be so dismissive about complaints from this side of the House about restrictions on small businesses, whether they are disincentives of taxation or those of labour legislation. We are not trying to turn the clock back the whole way, but we are entitled to say that such restrictions inhibit the rate of employment in a climate where unemployment is much more serious than the Government imagined when they introduced these measures. The Government should have the grace to recognise this fact.
    I do not accept that the Government have done all that is reasonably necessary to curb the present level of unemployment. We heard a great many excuses from the Government and claims that it is just as bad everywhere else and they have brought forward all these measures to improve the situation. It has been a case of too little, too late. The Government have come here too often with yet another package of proposals, but all they can tell us, even in their latest publications, is that they are helping more than 300,000 people a year. I do not dismiss that as negligible, but it is only 300,000 against a total of 1½ million. That is the measure by which the Secre-
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    tary of State deserves to be judged and not his pathetic statement that there are a few more people in employment now than when he took up his responsibilities.
    If we are to plug the gap between the number of people available for employment and the likely number of jobs that will be generated, even with a successful expansion of the economy where everything happens as we would wish, we must find a new and comprehensive scheme that adds up to more than the hotch-potch of different measures that the Government have put before us. We have to look for radical answers.
    My right hon. Friend the Member for Sidcup (Mr. Heath) spoke about training and rightly pointed out the fact that we train far less than many of our leading competitor countries. That is the direction in which the minds of the Government should be turned if we are to achieve success.
    May I suggest for discussion that we have to start thinking in terms of lifting the age of expectancy of work from 16 to 18? It needs a solution on that scale, which would take 1·3 million people out of the labour market, for us to try to get a sensible balance of figures.
    There are many useful steps that could be taken with young people aged between 16 and 18 to get them ready for employment. We do not train sufficiently in technical skills and in what I call the life skills, which many young people, who will not be of the highest educational attainment, will need if they are to gain satisfaction at work.
    Something on this scale will sooner or later have to be considered by the Government and by the House if we are to make any sense of our unemployment figures and if we are to bring any sort of justice to the many thousands of young people who are waiting for the hope of employment.
    9.7 p.m.
    Mr. Robert Edwards: I suppose that I am the only hon. Member who has led an unemployment march on London. I did so in 1934 and was ejected from the Gallery for interrupting the Prime Minister, Ramsay MacDonald. I was disgusted at his wistful rhetoric which had no meaning for the 2½ million working people who were unemployed.

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    Many millions feel today as I felt then. That is one of the reasons that we have riots in my constituency and one of the reasons for the frustration of young people, black and white, who have never had the opportunity to work and who feel that they are outcasts in our society and that there is nowhere in this big world where they can fit in.
    In the 1930s, the consequences of large-scale unemployment across Europe led to the military dictatorship in Italy, the rise of Hitler and the military dictatorship in Germany and to the Second World War. Fundamentally, it arose out of our failure to maintain the dignity of our people by providing them with useful and constructive work. That shows how important this problem is.
    All the efforts of the Government, useful as they are, can be wiped out by a half a dozen multinational companies closing factories and moving them to Latin America, South Africa or other places where there are tax havens or where the workers are not organised in unions and pay is low.
    I have an example in my constituency. A multinational company took over San-keys, one of the oldest firms in Bilston—it was established 100 years ago. The firm was employing 650 workers and only a month ago a new agreement was signed and everyone was satisfied. Then last week the management informed the unions and the workers that the factory was to be closed as though it had never existed. No hon. Member can afford to lose 650 jobs in his constituency like that. I do not know why, but multi-national companies take over these old-established firms with markets and know-how, strip them of their assets and close them down. They possibly build factories somewhere else and invest their capital somewhere else.
    I do not know whether it is true of the firm in question, but it happens so frequently that I suspect it is happening there. Only two years ago in my constitutency 2,000 jobs were lost in the motor-bicycle industry. Norton-Villiers had to close down because the Japanese manufacturers could put a million motor cycles on the market. They could put them into any market in the world.
    The Bilston steel works in my constituency is threatened with closure, although it has never run at a loss. It is
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    still a profitable factory. I do not know why we allow private enterprise firms or nationalised organisations to close down factories that are viable and that supply local services to local industry and to the local community. Many factories are being wiped out in this way.
    There is a big difference between what happened in the 1930s and what is happening now. In the 1930s, if a man's unemployment benefit ran out, he obtained public assistance. The public assistance was 2s. for every child per week. We used to say that we received 2s. for an unemployed man's child, and it cost £40 a week to keep one of Lord Derby's racehorses.
    It is to the credit of successive Governments that social benefits are now a reasonable percentage of the basic wage. That creates a cushion in society. It creates demand and prevents the marches on London that we had in the 1930s. But everything is relative. It will not last for ever. There will be a rising tide of discontent which will lead to all kinds of changes in our society and structure unless we take drastic action. What is needed is a revolutionary social policy reducing hours of labour and the working week, a lower age for retirement, improved education, and more training—all the big social developments that no party in government has been ready to put into effect.
    9.12 p.m.
    Mr. Nicholas Scott: I say to the Secretary of State that it is a scandal that with unemployment at the present levels there has been no Minister from the Department of Employment on the Government Front Bench to listen to the arguments put forward on what might be done about the problem. The Secretary of State could have seen that one of his numerous Ministers at the Department was here to listen to the debate.
    Britain is failing a substantial number of its young people by not providing them with the jobs that they need and with the education and training to fit them to compete happily and hopefully in the jobs market. This is not just some sort of cyclical short-term problem which will go away when North Sea oil begins to flow and the economy expands. The underlying trend is that the percentage of young people of the total unemployed has been increasing for some years. The hard-core

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    element has been increasing, too. Over the last two years alone the number of young first-time job seekers who have been without work for more than a year has doubled. The number who have been out of work for more than six months has increased four or five times.
    The underlying problem is immensely serious. None of the Chancellor's glad tidings has anything to do with it. The kindest thing that one can say about the Chancellor's speech is that it is a pity that he did not realise that the pantomime season ended when the children went back to school.
    What ought we to be doing about the problem? There is a short-term problem which could be tackled imaginatively. I welcome the Government's commitment to community industry and the job creation programme. I have some doubts—I hope we can be reassured about this in the winding-up speech—about the timetable of 234,000 jobs coming on stream on 1st September under the terms of the Holland Report. I have my doubts about that timetable especially when I hear of the lack of activity surrounding it. It will be an absolute scandal if that budget is underspent when so many people are out of work.
    Why cannot we achieve more? This country is calling out for a large-scale programme of modernisation of older homes, for example. For many of those homes a standard plan could be developed. Energy will be immensely precious through the world in the 1980s, and we need to be embarking upon a programme of insulation of homes to save energy and conserve heat. That could be done by teams of unemployed young people led by a skilled man, after a short training programme. That sort of imaginative approach is expected from the Government, but there is no sign of it coming.
    There is both a long-term and short-term aspect to the problem. Part of the answer lies in a resurgence of the small business sector of the economy. We should also look at our urban planning techniques in this respect. London is still losing about 60,000 jobs a year, substantially because we are getting rid of nonconforming users when sites are bulldozed down and rebuilt. None of the
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    small businesses which used to occupy those sites can afford the rates to be able to go back there, yet these are the sort of places where young people in London sought their first jobs.
    In future, as we become a comparatively wealthier economy, we must look to a shorter working life, a shorter working week and a shorter working day. We must be able to offer our people increasing leisure. I certainly agree wholeheartedly with my hon. Friend the Member for Saffron Walden (Mr. Haselhurst) who said, in his brilliant speech, that we must look at the early part of the working life, that transition from school to work. From as early as the age of 14 up to 18, within a single period, there should be the opportunity of education and training to help those who are least able and least qualified.
    It is surely a paradox that our most able young people in this country are educated until they are well over the age of 20, whereas the education of the least able effectively ends at 15, and such people get precious little help with their careers and precious little occupational guidance once they go into work. The concept of the person between the age of 14 and 18 being throughout that period in training and able to return to the resources of the educational and careers services for help he does not get elsewhere is immensely important.
    Unless we solve the problem of unemployment among young people, and particularly among immigrants and immigrants' children, we shall be sowing dragons' teeth of social disorder of frightening proportions for the future. We need Government action on this now.
    9.18 p.m.
    Mr. Teddy Taylor: My hon. Friend the Member for Chelsea (Mr. Scott) has pointed out the important human aspects of unemployment. The House is right to debate this subject at a time when unemployment stands at 1·5 million for the country as a whole, and at 200,000 in Scotland for the first time since the 1930s.
    The debate has certainly been most constructive and a great deal quieter than many previous debates we have had when unemployment has been a lot lower. My right hon. Friend the Member for Sidcup (Mr. Heath) was right in pointing out

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    how different the situation was today in the House of Commons from the time when unemployment reached 1 million and the Sitting had to be suspended.
    We have had, rather unusually, constant pleas from the Government Benches today that we must not engage in party wrangles or try to blame anyone for what has happened. Instead, we are told, we must look for positive solutions. That comes ill from a party which constantly used and distorted the issue of unemployment for blatant party purposes. My hon. Friend the Member for Cardiff, North (Mr. Grist) pointed out how it had been used in Wales. All my hon. Friends from Scotland can confirm that movements in unemployment have been used in a blatant and distorted way by the Labour Party not only for political gain but almost to incite class hatred, which has done no good to our economy.
    If there had been 1½ million unemployed under a Conservative Government, there would have been marches, demonstrations and riots, and I am sure that we would have seen the right hon. Member for Ebbw Vale (Mr. Foot) leading the marchers with his red flag and all his friends.
    Mr. John Page: Has my hon. Friend noticed that there are only five Back Benchers and one Minister on the Government Benches for the winding up of this vital debate to the Labour Party?
    Mr. Taylor: Yes. I cannot blame that on my sex appeal. As far as I am aware, that I was to wind up for the Opposition was not known to hon. Gentlemen opposite. The reason they are not here is that they are thoroughly ashamed of their record. They know that the Labour Government have failed not only the people of Britain but the economy. Indeed, they have created a situation in which young people are in a more hopeless position than at any time since the 1930s.
    What is the charge that we lay against the Government? We accept that Britain cannot be isolated from world events. If there is a world recession, we can get through it without trouble only if we have an upsurge in efficiency and production to enable us to grab a larger share of production and trade in the world
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    or if we have a total siege, planned and controlled economy—an option that is not open to us because of our dependence on imports and because of Common Market rules. There has been a recession in trade. To that extent, we do not blame the Government for all that has happened, but we blame them for a lot.
    We make five specific charges against the Government. First, we make the charge that, in a totally dishonest way, they have in their programme used unemployment to gain and to retain power by raising false hopes and expectations. In the period between February and October 1974—when there were 500,000 unemployed in Britain; about a third of what the figure is now—the Labour Party ran its campaign on the slogan "Back to Work with Labour". Certainly in Scotland it was suggested time and again that the then level of unemployment was the fault of the callous Conservatives.
    A few months later, July 1974, the Leader of the House—at that time the Secretary of State for Employment—said that he was not prepared to sit in this place and preside over mass unemployment—mass unemployment of 566,000. The right hon. Gentleman kept his word. He moved to another job in the Government.
    In September, when unemployment was 590,000, the Chancellor of the Exchequer was asked for an estimate, just as he was asked at a dinner in Glasgow recently. He gave us a clear estimate at that time. In September 1974, just before the election, he said not "I think" but
    "I am certain that we can get through the whole of next year with well under 1 million unemployed."
    We know that shortly after the election we had well over 1 million unemployed.
    During the election, the then Prime Minister the right hon. Member for Huyton (Sir H. Wilson) said:
    "Unemployment represents the difference between our parties."
    Therefore, we had a situation in which the Government had a special responsibility to perform well on unemployment, because they used that issue, when unemployment was far less than it is today, as a means of getting and staying in office.
    Frankly, the kind of deception that we then got, particularly from the Chancellor of the Exchequer—the Government

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    should be ashamed—was repeated in Glasgow. We have had weeks and months of gloomy indications from the Government, with Ministers saying "We are terribly sorry about unemployment, but there is a world recession and we cannot do anything about it. Other countries are in trouble. We are doing our best." Now we have the Chancellor of the Exchequer going to Glasgow with joyous news. I was astonished to see in my newspaper the headline:
    "A million new jobs says Chancellor."
    He said that we could get 500,000 to 1 million new jobs. It is significant that this came when we heard of the possibility of the Garscadden by-election, which the Government seem to think important. However, when we look closely into this matter we see that it is not a promise of a million jobs but an indication that, if we had a dramatic rise in productivity and if our balance of payments thereby improved dramatically, we would have far more money in the kitty and the Government could employ more people. After making that proposal, which I know was wrong, he said that many of the jobs will be in the service sector.
    I tell the Secretaries of State for Scotland and Employment that the one thing that does not encourage unemployed young people is politicians playing ducks and drakes and using them as political counters. The Chancellor has misled us time and time again. It is an affront to the young unemployed of Scotland to talk about 1 million new jobs that are merely in his imagination, especially when every previous estimate that he has given us has been entirely wrong.
    Our first charge against the Government is that they have used unemployment deliberately for political purposes, and have used it irresponsibly.
    Our second charge is that the Government's economic policies have created unemployment. There is little doubt about that. First, we had the irresponsible inflation of 1974. We had the spending spree that brought the nation to its knees and forced the Chancellor to go to the IMF for a massive loan to save the country from bankruptcy. As a consequence of that loan, we had to apply tight restrictions on spending and on all Government
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    activities. It is generally accepted that that was a major contribution to unemployment. We also had the high tax policies.
    The Under-Secretary of State for Scotland (Mr. Frank McElhone): Get on with it.
    Mr. Taylor: The Under-Secretary of State, the hon. Member for Glasgow, Queen's Park (Mr. McElhone) is starting to warble. I should like to know the present unemployment in his constituency and what it was when he went before the people of Glasgow and said "Vote Labour and save jobs". I should like to hear that. We do not hear a great deal of common sense from the hon. Gentleman, but I should like to hear those figures before we finish.
    Next, we have nationalisation, which has undoubtedly eaten up cash that could have been better used if left in private industry. Small businesses have been hammered by the Government's activities. We believe that in that way the Government have contributed to unemployment. They have done so by their bad economic policies.
    Thirdly, we condemn them for the fact that we have a worse relative performance than most other OECD countries. Complaint was made about my right hon. Friend the Member for Lowestoft (Mr. Prior) using figures from Hansard. If Ministers do not want to know about Hansard, perhaps they will examine a new glossy document that I have purchased called "MSC Review and Plan 1977". On page 13 they will see graphs that set out the performance of Canada, the United States, the United Kingdom, France, West Germany and Japan. In every instance the rate of increase in Britain has been slower than in those other countries.
    Although there was a world recession, we complain to the Government that Britain went into the recession rather better off in unemployment terms and is emerging rather worse off than other countries.
    We also condemn the Government on the basis that production and productivity are below that of our competitors and have remained stagnant after three years. Those who make a study of these matters will be interested in the Question asked by

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    my hon. Friend the Member for Carshalton (Mr. Forman) to the Minister of State, Department of Industry on 19th January at column 370 of Hansard. The Answer stated that while almost every other country has been increasing its productivity over the last three years, in Britain productivity has been absolutely stagnant.
    We have a tragic situation of which the Government should be ashamed. Annual unemployment in a relatively short period has increased from 590,000 to over 1½ million. The number of vacancies has been halved. In some areas—we have heard about some of them in Cornwall, Devon and elsewhere—there are catastrophic unemployment percentages of 30 per cent. and more. The Government have every reason to be ashamed. In Scotland the deception has been even more blatant. In Scotland the Labour Party went to the electorate in 1974—when unemployment was about half what it is now—with a manifesto that stated,
    "We cannot tolerate the high levels of unemployment from which Scotland has suffered during the past 20 years. We must find a practical solution to the problems caused by the decline and decay of urban industries."
    Mr. Henderson: What would you do?
    Mr. Taylor: I hope that the nationalists will keep quiet. I shall be coming to them shortly. If there is one thing that will result in a massive loss of jobs in Scotland, it will be to pursue the hon. Gentleman's policies. If he is so certain about his policies, why is it that not one Scottish business man or industrialist of any repute—
    Mr. Deputy Speaker (Sir Myer Galpern): Order. I think that in order to avoid trouble the hon. Gentleman should address the Chair.
    Mr. Taylor: I am sure that there would be an even more favourable response from you, Mr. Deputy Speaker, because with your knowledge of Glasgow and of Scotland you will be aware of the fact that there is not one prominent industrialist or trade union leader there who believes that SNP policies would help relieve unemployment.
    In regard to the Labour Government, it must be pointed out that for the first time since the 1930s we have in Scotland over 200,000 unemployment—a situation
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    in which there are 12 unemployed persons for every vacant job. Some may recall the remarks of the former Secretary of State for Scotland, the right hon. Member for Kilmarnock (Mr. Ross). In 1973, when the Conservatives were in power and Scottish unemployment was around the 60,000 mark, the right hon. Gentleman said that the situation was shameful and that he had always feared the day in Scotland when the figure would reach a total of 100,000 unemployed. We all know that the figure now stands at 200,000.
    The present Secretary of State for Scotland is far from innocent in this matter. He will remember what happened in 1972 when there was a prospect of some steelworkers being made redundant. He then said that Labour was not willing
    "to accept 7,500 steel redundancies, or for that matter any redundancies, without providing alternative employment in the industry."
    I hope he will also recall Labour's promise in the 1974 General Election to provide jobs. The statement then made by the Labour Party was,
    "We have ended the delay and dithering over Hunterston."
    Can he now say when there will be a prospect of the delay and dithering over Hunterston being ended?
    We now face an appalling situation in which in Scotland the unemployment figure has more than doubled. Even more serious has been the unfortunate move of relative unemployment after an improvement in recent times. In January 1965 the Scottish relative unemployment position was bad. In other words, although unemployment in Britain was low, in Scotland the situation was 128 per cent. worse. In 1973 it was 79 per cent. worse. There was a steady improvement in Scotland's relative position until February 1976, when we were only 19 per cent. worse off. From that date we have seen the Scottish unemployment figures grow much worse every month. We are now 37 per cent. worse off.
    Unlike the situation in England, in Scotland we face two choices—to go either for Conservative policies or for the policies of the SNP. We have not heard a great deal from the SNP in this debate, apart from one minor indication of parochial concern, but I think that the House should be well aware

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    that the people of Scotland are now becoming even more convinced that if they follow the ideas of the SNP there will be a devastating loss of jobs in Scotland.
    In the past I have mentioned some industrialists who have spoken of taking away jobs and factories from Scotland. I can give a number of examples. A major employer in my constituency is the firm of Weir and the chairman of the board recently said—[Interruption.] This is no laughing matter for the 6,000 people who may be affected. The chairman of the board said
    "We would only survive by attempting some solution that would probably involve moving south."
    Another important employer is Scottish and Newcastle Breweries—and the SNP should know all about the brewers. Mr. Peter Balfour of Scottish and Newcastle Breweries recently said,
    "If we are going to remain competitive with the English, we would have to move because England is by far Scotland's biggest market."
    Another large employer is Christian Salveson, a major transport company. Its representative recently said that that firm, too, was considering moving its headquarters south. Yet another firm, Collins Publishers, a major Scottish publishing firm, has also put forward the possibility of moving operations south of the border.
    Those are four major firms which are considering moving operations. If only one major employer took the view "We want to move to Scotland"—but in view of the fact that they feel that the United Kingdom may well break up, they are obviously taking the opposite view. The Labour Party has failed abysmally to attract major industry to Scotland or indeed to keep it there, and we have a nationalist party which offers solutions which would make things worse.
    That being so, what should be done? First, the Government must not hope to rely on creating phoney jobs with temporary schemes as a permanent solution to the problem. We accept that at a time of high unemployment such things as job creation have an important role to play in keeping people at work, but it would be a mistake to regard this as solving the basic problem of the economy.
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    One reason for saying that is that all the money has to come from private, profitable industry. Secondly, private industry can face unfair competition, as one sees with the TES when, in a declining situation, one firm receives the TES while others are in difficulty. A person does not get job satisfaction from an artificial job.
    What should be done on the positive side? We believe that the only long-term answer to unemployment is to remove a great deal of the unnecessary uncertainty that exists. This could be done by removing the threat of nationalisation, which undoubtedly holds back growth in many sectors of industry. Secondly, the Government must avoid sudden changes, such as the sudden abolition of the regional employment premium. Thirdly, the Government must not go forward with any major constitutional change. I repeat that uncertainty is one of the greatest problems facing industry.
    We must make sure that we encourage small firms to develop, instead of the Government's policy of damaging them. I have in mind such things as capital transfer tax, excessive burdens of taxation and unfair competition from municipal enterprises. All those things have done great damage.
    If we think of dealing with unemployment in terms of spending more money on creating artificial jobs the problem will never be solved. The Government must accept that the only answer to unemployment is to create a climate of confidence in which private industry believes that there is a sound case for expanding and offering more employment. We must create a situation in which we encourage people to become employers. We must remove some of the major burdens on industry and commerce. Here I am thinking of some aspects of the Employment Protection Act which have destroyed jobs rather than created them.
    Ever since the Government came to power and abandoned the previous Conservative Government's policies and went forward with their own, there has been a massive increase in unemployment. Let us put the matter not in annual figures but in daily figures. I wonder how many Labour Members are aware that every day since the Government came to power

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    in February 1974 an additional 650 people have joined the dole queue, while the figure for Scotland is 83. Those are net figures. We have a situation in which production is stagnant, and our record has deteriorated faster than has that of most comparable nations.
    We take the view that that is a record of which the Government should be ashamed. It is a record which has created massive unhappiness and hardship. Britain, in common with other nations, has suffered from world events, but we have emerged with less success and more people out of work than have other countries.
    We believe that the main reason why we have suffered more and why the outlook is bleak is that we have suffered from the extra burden of an inept and irresponsible Government who, for the sake of the employed, as well as the unemployed, we could well do without.
    9.39 p.m.
    The Secretary of State for Scotland (Mr. Bruce Millan): We have had, by and large, a serious debate, though I would not count the speech of the hon. Member for Glasgow, Cathcart (Mr. Taylor) as a serious contribution to the problem with which we are dealing. We have had a serious debate for the appropriate reason that we are dealing with an extremely serious problem. No one on this side of the House, and certainly no member of the Government, is complacent about the present very high—unacceptably high—unemployment figures.
    Hon. Members who have spoken about the social and economic consequences of the very high rate of unemployment have made significant and appropriate points. I accept what has been said about the dangers to our social fabric that would arise if we were not able to make a serious impact on this very difficult problem.
    Of course I shall not pretend that the problem arises solely from the world background of economic recession that we have had over the past few years. If we were to attribute all our problems to that, it would be a policy of despair, because that would be tantamount to saying that we were not able to deal with these problems in any effective way unless the world situation improved. I am not claiming that that is so.
    162
    Nevertheless, I think that it is appropriate—I was glad that the right hon. Member for Sidcup (Mr. Heath) made this point in the introduction to his speech—to consider the general world background against which we are dealing with our problems in the United Kingdom at present. In the OECD countries as a whole there are now rather more than 15 million unemployed. As to the unemployment experience of other industrialised countries, however we may argue about them and about where we stand respectively in the league table, the only conclusion is that we are dealing with a world-wide problem and any United Kingdom solution will have to be arrived at within that context.
    I want to put in perspective recent trends in the unemployment figures in Britain. A number of speeches have been made on the assumption that over recent months the unemployment figures in Britain, as seasonally adjusted, have deteriorated every month. That is not so. Over the past four months in the United Kingdom as a whole, and taking seasonally adjusted figures, we have shown a slight improvement on the situation that obtained last September—[Interruption.] I will come to the Scottish figures shortly. That is a very slight improvement on a very large figure. However, it is true that in recent months the figures have stabilised, though they have stabilised at far too high a level.
    As to the Scottish figure, I agree immediately that a figure of more than 200,000 is unacceptable. I accept that that is a very much higher figure than we have had since the 1930s, but I do not accept the point made by the hon. Member for Cathcart about the unemployment relative, because today's figure of 135, which is too high for Scotland, compares with the typical figure in 1973, which was the last year of Conservative government, when the figures varied between 172 and 166. So there has been a considerable improvement in the position in Scotland. But, as I have said, the figure is still too high.
    Mr. Teddy Taylor: Does the Secretary of State accept that the situation improved from 1965 until February 1976 and that since February 1976, under the leadership and guidance of the present

    163
    Government, after three years of Labour Government, it has risen every month?
    Mr. Millan: I do not accept that at all. [HON. MEMBERS: "Why not?"] The figure deteriorated significantly between February 1972 and 1973, which was the last year of the Conservative Government.
    Passing on from the figures and looking at the present general economic situation in the United Kingdom, which is very relevant to this debate, over the past year many of the economic indicators—the balance of payments, the inflationary factors, the interest rates and what we have been able to do in wage restraint—have moved favourably for this country, not only comparing it with what happened in earlier years but also comparing it with what is happening in some of our industrial competitors in Europe and elsewhere.
    Therefore, as the Chancellor of the Exchequer made clear in answering Questions only last week, our present position is that, provided we can maintain the restraint, particularly in incomes, that we have managed to achieve over the past two years, it will be possible for my right hon. Friend—he has said this explicitly—to give a stimulus to the economy in the spring Budget.
    However, I accept at once that, whatever is done in the Budget and whatever happens to the economy of the United Kingdom as a whole over the next year or two, we shall be left with a residual unemployment problem of considerable dimensions. I do not think that there is any serious dispute between the two sides of the House on that.
    Therefore, the measures which we have introduced—the so-called temporary measures—must have a validity beyond dealing simply with a temporary situation. We cannot look upon these measures as providing just a stop-gap, and there are certain elements in them which we should carry forward so long as we are dealing with an unemployment problem on anything like the scale which we have now.
    I have noted in today's debate a considerable change of emphasis in the Opposition's attitude to these temporary measures compared with their attitude when my right hon. Friend the Secretary of State for Employment introduced them.
    164
    At that time, whether on the job creation scheme, the temporary employment subsidy or the small firms employment subsidy, there was a tendency to disparage what we were doing as being of little significance in reducing unemployment.
    Today, however, there has been an appeal from both sides of the House that we should continue with our measures, and I am sure that the House was glad to hear my right hon. Friend say when opening the debate that three, in particular—the temporary employment subsidy, the job release scheme and the small firms employment subsidy—which at present have a terminal date of 31st March 1978 are to be continued, broadly on the same lines but with a rather extended basis beyond 31st March.
    The various measures which we have introduced—the temporary employment subsidy, the job release scheme, the job creation programme, the work experience programme, the youth employment subsidy and the small firms employment subsidy—are at present together assisting more than 300,000 people, of whom more than 50,000 are in Scotland, and it is estimated that about 790,000—again, over 100,000 of them in Scotland—will have benefited from these special measures between the introduction of the first one in April 1975 and the terminal date of the programme. As I say, the House has heard the announcement that certain schemes will be continued on a rather extended basis beyond April this year.
    Mr. Wyn Roberts: I should like further information about the small firms employment subsidy. Is it the Government's intention to extend it to the intermediate areas?
    Mr. Millan: I think that my right hon. Friend said that we intended to extend the geographical coverage. I ask the hon. Gentleman to await the definitive announcement which my right hon. Friend will make a little later. I think that he will find that we have made a considerable improvement in the small firms employment subsidy.
    I was asked to give assurances—my right hon. Friend has already done so—regarding the temporary employment subsidy and the problem which we have at present with the European Commission. I can do no more than repeat

    165
    what my right hon. Friend said in opening, that we intend, if there are to be modifications in the temporary employment subsidy, that these modifications will be made good by some other system for protecting employment directed to particular jobs which may be affected by any modifications which we have to make. I do not say what modifications, if any, there might have to be in the temporary employment subsidy in view of our present difficulty with the EEC Commission, but there is a guarantee that we shall make up any difficulties that we may find there.
    We have been asked to provide a constructive response to the situation. It is extraordinary, therefore, that all we had from the right hon. Member for Lowestoft (Mr. Prior) about our temporary measures was his advocacy that the temporary employment subsidy should be phased out. Presumably, that is now the policy of the Tory Party. But he did not suggest any measures to put in its place. Therefore, we must assume that the Opposition are advocating complete elimination of the TES. Yet that is the particular programme that more than anything else helps to keep people in jobs at present. In Scotland 45,000 people have been helped to stay in jobs by the TES. The figure for the North-West of England is 102,000; for the Northern Region it is more than 21,000; for Wales it is more than 25,000. It would, therefore, be a disaster to remove the TES as advocated by the right hon. Gentleman.
    Another theme that has run through the debate is the question of the industrial strategy and the emphasis that the Government have put on it. I make clear that the emphasis we put on the industrial strategy does not arise because the Government believe that the only way in which we can add to the number of jobs at present is through manufacturing industry. As has been brought out in the work done by the sector working parties, covering a very wide area of industry and a very wide range of aspects of industrial activity, such as financing, productivity, export assistance, relations between customer and supplier, it has been recognised that even if we achieve success in individual sectors of industry the immediate impact on manufacturing jobs will be quite small.
    166
    It nevertheless remains true that, unless we get a more efficient and competitive manufacturing industry, the other jobs we have to support, whether in the public sector or in the service industries, will not be supported at a level anywhere near solving the present unemployment problem. Therefore, the key to solving these problems will remain through the industrial strategy. That is not a strategy that deals only with the larger firms. As my right hon. Friend made clear, there are elements in it which are of particular significance to small firms.
    The statement made by my right hon. Friend the Chancellor of the Duchy of Lancaster in October about small firms—including, for example, the major concessions on capital transfer tax—was and is intended only as the first instalment of help to small industries. Perhaps at this stage I should take up the point made by the hon. Member for Cornwall, North (Mr. Pardoe) about the Development Commission and the work it does, particularly in rural areas.
    My right hon. Friend, in his opening speech this afternoon, mentioned the creation and maintenance of employment in rural areas which came through the Development Commission and in particular through the Council for Small Industries in Rural Areas. I accept that there is a problem of finance for the Development Commission at the present time, and I give the hon. Gentleman the assurance that the Government are giving urgent and serious consideration to the cash needs of the Commission. I believe that we shall be able to get a solution there which would enable the Commission to carry on with the significant work which it is doing
    However, if we are to be concerned with the protecion of employment and to take seriously the points that were made this afternoon by the right hon. Member for Lowestoft about protecting jobs, and if we are to take seriously his comment about de-industrialisation—he quoted with a certain amount of approval a comment made the other day by Sir Charles Villiers about the de-industrialisation of the British economy—we are entitled, bearing in mind the attitude of the Opposition in the debate, to look at the record of the Tories over a number of industrial issues that have arisen over recent months.

    167
    We recall the Chrysler matter. On Chrysler the Tories—including the hon. Member for Cathcart—voted against the Government, but at the present time there are 22,000 people employed directly by Chrysler and very many more employed in component industries supplying the Chrysler factories. Several thousand of these direct employees are in Scotland. If we had listened to the Opposition and if we had done what the Tories wanted us to do in their vote in this House, 22,000 jobs—indeed, very many more—would already have been lost.
    Mr. Teddy Taylor rose—
    Mr. Millan: The situation in shipbuilding is the same. Without the nationalisation of shipbuilding, we would have lost thousands and thousands of jobs, including thousands of jobs in Scotland. Let me remind the House that in the debate the other day on the Polish shipbuilding order the Opposition also voted against that, although there will be thousands of man hours involved in the order.
    The prescription of the right hon. Member for Lowestoft for dealing with North Sea oil revenues was that we ought to leave the whole question to the market. I do not believe that there is any serious body of opinion in this country—certainly there is no serious body of opinion in Scotland, which is well aware of the potentialities of the oil revenues—which believes that we can get the kind of relief
    for the economy of this country which will allow us a long-term improvement in our basic prosperity simply by leaving the oil revenues to the operation of the market.
    The Government are determined that one of the first priorities for the use of the oil revenues—whether we look at this in terms of the improvement in the balance of payments that the oil revenues are already producing, or whether we look at it in terms of the direct revenues which come to the Government—must be industrial investment and improving our industrial structure in the United Kingdom. We shall not do that by simply leaving these matters to the operation of the market.
    If I might give one further example on the Scottish scene, I remind the House that the Opposition voted against the Scottish Development Agency, but already the Agency has investments in 27 companies which together employ about 9,000 people in Scotland. Many of these jobs would have been lost without the establishment of the Scottish Development Agency.
    In conclusion, I say that we have had not a single constructive Tory alternative to our policies, and I ask my hon. Friends to support the Government in the Lobby.
    Question put, That this House do now adjourn:—
    The House divided: Ayes 280, Noes 296.

    Division No. 87]

    AYES

    [10.0 p.m.

    Adley, Robert

    Brotherton, Michael

    Dodsworth, Geoffrey

    Alison, Michael

    Brown, Sir Edward (Bath)

    Douglas-Hamilton, Lord James

    Amery, Rt Hon Julian

    Bryan, Sir Paul

    Drayson, Burnaby

    Arnold, Tom

    Buchanan-Smith, Alick

    Durant, Tony

    Atkins, Rt Hon H. (Spelthorne)

    Buck, Antony

    Dykes, Hugh

    Atkinson, David (Bournemouth, East)

    Budgen, Nick

    Edwards, Nicholas (Pembroke)

    Awdry, Daniel

    Bulmer, Esmond

    Elliott, Sir William

    Bain, Mrs Margaret

    Burden, F. A.

    Emery, Peter

    Baker, Kenneth

    Butler, Adam (Bosworth)

    Evans, Gwynfor (Carmarthen)

    Banks, Robert

    Carlisle, Mark

    Ewing, Mrs Winifred (Moray)

    Bell, Ronald

    Chalker, Mrs Lynda

    Eyre, Reginald

    Bennett, Sir Frederic (Torbay)

    Channon, Paul

    Fairbairn, Nicholas

    Bennett, Dr Reginald (Fareham)

    Churchill, W. S.

    Fairgrieve, Russell

    Benyon, W.

    Clark, Alan (Plymouth, Sutton)

    Farr, John

    Berry, Hon Anthony

    Clark. William (Croydon S)

    Fell, Anthony

    Biffen, John

    Clarke, Kenneth (Rushcliffe)

    Finsberg, Geoffrey

    Biggs-Davison, John

    Clegg, Walter

    Fisher, Sir Nigel

    Blaker, Peter

    Cockroft, John

    Fletcher, Alex (Edinburgh N)

    Body, Richard

    Cooke, Robert (Bristol W)

    Fletcher-Cooke, Charles

    Boscawen, Hon Robert

    Cope, John

    Fookes, Miss Janet

    Bottomley, Peter

    Cormack, Patrick

    Forman, Nigel

    Bowden, A. (Brighton, Kemptown)

    Costain, A. P.

    Fowler, Norman (Sutton C'f'd)

    Boyson, Dr Rhodes (Brent)

    Crawford, Douglas

    Fox, Marcus

    Braine, Sir Bernard

    Critchley, Julian

    Fraser, Rt Hon H. (Stafford & St)

    Brittan, Leon

    Crouch, David

    Fry, Peter

    Brocklebank-Fowler, C.

    Davies, Rt Hon J. (Knutsford)

    Galbraith, Hon T. G. D.

    Brooke, Peter

    Dean, Paul (N Somerset)

    Gardiner, George (Reigate)

    Gardner, Edward (S Fylde)

    MacCormick, Iain

    Rifkind, Malcolm

    Gilmour, Rt Hon Ian (Chesham)

    McCrindle, Robert

    Rippon, Rt Hon Geoffrey

    Gilmour, Sir John (East Fife)

    Macfarlane, Neil

    Roberts, Wyn (Conway)

    Glyn, Dr Alan

    MacGregor, John

    Rodgers, Sir John (Sevenoaks)

    Godber, Rt Hon Joseph

    MacKay, Andrew (Stechford)

    Rossi, Hugh (Hornsey)

    Goodhart, Philip

    Macmillan, Rt Hon M. (Farnham)

    Rost, Peter (SE Derbyshire)

    Goodlad, Alastair

    McNair-Wilson, M. (Newbury)

    Sainsbury, Tim

    Gorst, John

    McNair-Wilson, P. (New Forest)

    St. John-Stevas, Norman

    Gow, Ian (Eastbourne)

    Madel, David

    Scott, Nicholas

    Gower, Sir Raymond (Barry)

    Marshall, Michael (Arundel)

    Shaw, Giles (Pudsey)

    Grant, Anthony (Harrow C)

    Marten, Neil

    Shelton, William (Streatham)

    Gray, Hamish

    Mates, Michael

    Shepherd, Colin

    Grieve, Percy

    Mather, Carol

    Shersby, Michael

    Griffiths, Eldon

    Maude, Angus

    Silvester, Fred

    Grist, Ian

    Maudling, Rt Hon Reginald

    Sims, Roger

    Grylls, Michael

    Mawby, Ray

    Sinclair, Sir George

    Hall-Davis, A. G. F.

    Maxwell-Hyslop, Robin

    Skeet, T. H. H.

    Hamilton, Michael (Salisbury)

    Mayhew, Patrick

    Smith, Dudley (Warwick)

    Hampson, Dr Keith

    Meyer, Sir Anthony

    Smith, Timothy John (Ashfield)

    Hannam, John

    Miller, Hal (Bromsgrove)

    Spence, John

    Harrison, Col Sir Harwood (Eye)

    Mills, Peter

    Spicer, Jim (W Dorset)

    Haselhurst, Alan

    Miscampbell, Norman

    Spicer, Michael (S Worcester)

    Hastings, Stephen

    Mitchell, David (Basingstoke)

    Sproat, Iain

    Havers, Rt Hon Sir Michael

    Moate, Roger

    Stainton, Keith

    Hawkins, Paul

    Monro, Hector

    Stanbrook, Ivor

    Heath, Rt Hon Edward

    Montgomery, Fergus

    Stanley, John

    Henderson, Douglas

    Moore, John (Croydon C)

    Steen, Anthony (Wavertree)

    Heseltine, Michael

    More, Jasper (Ludlow)

    Stewart, Rt Hon Donald

    Hicks, Robert

    Morgan, Geraint

    Stewart, Ian (Hitchin)

    Higgins, Terence L.

    Morgan-Giles, Rear-Admiral

    Stokes, John

    Hodgson, Robin

    Morris, Michael (Northampton S)

    Stradling Thomas, J.

    Holland, Philip

    Morrison, Charles (Devizes)

    Tapsell, Peter

    Hordern, Peter

    Morrison, Hon Peter (Chester)

    Taylor, R. (Croydon NW)

    Howe, Rt Hon Sir Geoffrey

    Mudd, David

    Taylor, Teddy (Cathcart)

    Howell, David (Guildford)

    Neave, Airey

    Tebbit, Norman

    Howell, Ralph (North Norfolk)

    Nelson, Anthony

    Temple-Morris, Peter

    Hunt, David (Wirral)

    Neubert, Michael

    Thatcher, Rt Hon Margaret

    Hunt, John (Ravensbourne)

    Newton, Tony

    Thomas, Dafydd (Merioneth)

    Hurd, Douglas

    Normanton, Tom

    Thomas, Rt Hon P. (Hendon S)

    Hutchison, Michael Clark

    Nott, John

    Thompson, George

    Irving, Charles (Cheltenham)

    Onslow, Cranley

    Townsend, Cyril D.

    James, David

    Oppenheim, Mrs Sally

    Trotter, Neville

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

    Osborn, John

    van Straubenzee, W. R.

    Johnson Smith, G. (E Grinstead)

    Page, John (Harrow West)

    Vaughan, Dr Gerald

    Jones, Arthur (Daventry)

    Page, Rt Hon R. Graham (Crosby)

    Viggers, Peter

    Jopling, Michael

    Page, Richard (Workington)

    Wakeham, John

    Joseph, Rt Hon Sir Keith

    Paisley, Rev Ian

    Walder, David (Clitheroe)

    Kaberry, Sir Donald

    Parkinson, Cecil

    Walker, Rt Hon P. (Worcester)

    Kellett-Bowman, Mrs Elaine

    Pattie, Geoffrey

    Walker-Smith, Rt Hon Sir Derek

    Kershaw, Anthony

    Percival, Ian

    Wall, Patrick

    Kilfedder, James

    Peyton, Rt Hon John

    Walters, Dennis

    Kimball, Marcus

    Pink, R. Bonner

    Warren, Kenneth

    King, Evelyn (South Dorset)

    Prentice, Rt Hon Reg

    Watt, Hamish

    King, Tom (Bridgwater)

    Price, David (Eastleigh)

    Weatherill, Bernard

    Kitson, Sir Timothy

    Prior, Rt Hon James

    Wells, John

    Knight, Mrs Jill

    Pym, Rt Hon Francis

    Welsh, Andrew

    Knox, David

    Raison, Timothy

    Whitelaw, Rt Hon William

    Lamont, Norman

    Rathbone, Tim

    Wiggin, Jerry

    Langford-Holt, Sir John

    Rawlinson, Rt Hon Sir Peter

    Wilson, Gordon (Dundee E)

    Latham, Michael (Melton)

    Rees, Peter (Dover & Deal)

    Winterton, Nicholas

    Lawrence, Ivan

    Rees-Davies, W. R.

    Wood, Rt Hon Richard

    Lawson, Nigel

    Reid, George

    Young, Sir G. (Ealing, Acton)

    Lester, Jim (Beeston)

    Renton, Rt Hon Sir D. (Hunts)

    Younger, Hon George

    Lewis, Kenneth (Rutland)

    Renton, Tim (Mid-Sussex)

    Lloyd, Ian

    Rhodes, James R.

    TELLERS FOR THE AYES:

    Loveridge, John

    Rhys Williams, Sir Brandon

    Mr. Spencer Le Marchant and

    Luce, Richard

    Ridley, Hon Nicholas

    Mr. Michael Roberts.

    McAdden, Sir Stephen

    Ridsdale, Julian

    NOES

    Abse, Leo

    Bean, R. E.

    Bray, Dr Jeremy

    Allaun, Frank

    Beith, A. J.

    Brown, Hugh D. (Provan)

    Anderson, Donald

    Benn, Rt Hon Anthony Wedgwood

    Brown, Robert C. (Newcastle W)

    Archer, Rt Hon Peter

    Bennett, Andrew (Stockport N)

    Brown, Ronald (Hackney S)

    Armstrong, Ernest

    Bidwell, Sydney

    Buchan, Norman

    Ashley, Jack

    Bishop, Rt Hon Edward

    Butler, Mrs Joyce (Wood Green)

    Ashton, Joe

    Blenkinsop, Arthur

    Callaghan, Rt Hon J. (Cardiff SE)

    Atkins, Ronald (Freston N)

    Boardman, H.

    Callaghan, Jim (Middleton & P)

    Atkinson, Norman

    Booth, Rt Hon Albert

    Campbell, Ian

    Bagier, Gordon A. T.

    Boothroyd, Miss Betty

    Canavan, Dennis

    Barnett, Guy (Greenwich)

    Bottomley, Peter

    Cant, R. B.

    Barnett, Rt Hon Joel (Heywood)

    Boyden, James (Bish Auck)

    Carmichael, Neil

    Bates, Alf

    Bradley, Tom

    Carter, Ray

    Carter-Jones, Lewis

    Howells, Geraint (Cardigan)

    Orbach, Maurice

    Cartwright, John

    Hoyle, Doug (Nelson)

    Orme, Rt Hon Stanley

    Castle, Rt Hon Barbara

    Huckfield, Les

    Ovenden, John

    Clemitson, Ivor

    Hughes, Rt Hon C.(Anglesey)

    Padley, Walter

    Cocks, Rt Hon Michael (Bristol S)

    Hughes, Robert (Aberdeen N)

    Palmer, Arthur

    Cohen, Stanley

    Hughes, Roy (Newport)

    Pardoe, John

    Coleman, Donald

    Hunter, Adam

    Park, George

    Concannon, Rt Hon John

    Irvine, Rt Hon Sir A. (Edge Hill)

    Parker, John

    Conlan, Bernard

    Irving, Rt Hon S. (Dartford)

    Parry, Robert

    Cook, Robin F.(Edin C)

    Jackson, Colin (Brighouse)

    Pavitt, Laurie

    Corbett, Robin

    Jackson, Miss Margaret (Lincoln)

    Pendry, Tom

    Cowans, Harry

    Janner, Greville

    Penhaligon, David

    Cox, Thomas(Tooting)

    Jay, Rt Hon Douglas

    Perry, Ernest

    Craigen, Jim(Maryhill)

    Jeger, Mrs Lena

    Phipps, Dr Colin

    Crawshaw, Richard

    Jenkins, Hugh (Putney)

    Prescott, John

    Crowther, Stan(Rotherham)

    John, Brynmor

    Price, C. (Lewisham W)

    Cryer, Bob

    Johnson, James (Hull West)

    Price, William (Rugby)

    Cunningham, G.(Islington S)

    Johnson, Walter (Derby S)

    Radice, Giles

    Cunningham, Dr J.(Whiten)

    Johnston, Russell (Inverness)

    Rees, Rt Hon Merlyn (Leeds S)

    Davidson, Arthur

    Jones, Alec (Rhondda)

    Richardson, Miss Jo

    Davies, Bryan(Enfield N)

    Jones, Barry (East Flint)

    Roberts, Albert (Normanton)

    Davies, Rt Hon Denzil

    Jones, Dan (Burnley)

    Roberts, Gwilym (Cannock)

    Davies, Ifor (Gower)

    Judd, Frank

    Robinson, Geoffrey

    Davis, Clinton (Hackney C)

    Kaufman, Gerald

    Roderick, Caerwyn

    Deakins, Eric

    Kelley, Richard

    Rodgers, George (Chorley)

    Dean, Joseph(Leeds West)

    Kerr, Russell

    Rodgers, Rt Hon William (Stockton)

    de Freitas,Rt Hon Sir Geoffrey

    Kilroy-Silk, Robert

    Rooker, J. W.

    Dell, Rt Hon Edmund

    Kinnock, Neil

    Roper, John

    Dempsey, James

    Lambie, David

    Rose, Paul B.

    Doig, Peter

    Lamborn, Harry

    Ross, Stephen (Isle of Wight)

    Dormand, J. D.

    Lamond, James

    Rowlands, Ted

    Douglas-Mann, Bruce

    Latham, Arthur (Paddington)

    Ryman, John

    Duffy, A. E. P.

    Leadbitter, Ted

    Sandelson, Neville

    Dunn, James A.

    Lee, John

    Sedgemore, Brian

    Dunnett, Jack

    Lestor, Miss Joan (Eton & Slough)

    Selby, Harry

    Dunwoody. Mrs Gwynetn

    Lever, Rt Hon Harold

    Sever, John

    Eadie, Alex

    Lewis, Arthur (Newham N)

    Shaw, Arnold (Ilford South)

    Edge, Geoff

    Lewis, Ron (Carlisle)

    Sheldon, Rt Hon Robert

    Edwards, Robert (Wolv SE)

    Lipton, Marcus

    Shore, Rt Hon Peter

    Ellis, John(Brigg & Scun)

    Litterick, Tom

    Short, Mrs Renée (Wolv NE)

    Ellis, Tom (Wrexham)

    Lomas, Kenneth

    Silkin, Rt Hon S. C. (Dulwich)

    English, Michael

    Loyden, Eddie

    Skinner, Dennis

    Ennals, Rt Hon David

    Luard, Evan

    Smith, John (N Lanarkshire)

    Evans, Fred (Caerphilly)

    Lyon, Alexander (York)

    Snape, Peter

    Evans, Ioan (Aberdare)

    Lyons, Edward (Bradford W)

    Spearing, Nigel

    Evans, John (Newton)

    Mabon, Rt Hon Dr J. Dickson

    Spriggs, Leslie

    Ewing, Harry (Stirling)

    McCartney, Hugh

    Stallard, A. W.

    Faulds, Andrew

    McDonald, Dr Oonagh

    Stewart, Rt Hon M. (Fulham)

    Fernyhough, Rt Hon E.

    MacFarquhar, Roderick

    Stoddart, David

    Fitch, Alan (Wigan)

    McGuire, Michael (Ince)

    Stott, Roger

    Flannery, Martin

    MacKenzie, Rt Hon Gregor

    Strang, Gavin

    Fletcher, Ted (Darlington)

    Maclennan, Robert

    Strauss, Rt Hon G. R.

    Foot, Rt Hon Michael

    McMillan, Tom (Glasgow C)

    Surmmerskill, Hon Dr Shirley

    Ford, Ben

    McNamara, Kevin

    Swain, Thomas

    Forrester, John

    Madden, Max

    Taylor, Mrs Ann (Bolton W)

    Fowler, Gerald (The Wrekin)

    Magee, Bryan

    Thomas, Jeffrey (Abertillery)

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

    Mallalieu, J. P. W.

    Thomas, Mike (Newcastle E)

    Freeson, Rt Hon Reginald

    Marks, Kenneth

    Thomas, Ron (Bristol NW)

    Freud, Clement

    Marshall, Dr Edmund (Goole)

    Thorne, Stan (Preston South)

    Garrett, John (Norwich S)

    Marshall, Jim (Leicester S)

    Tierney, Sydney

    Garrett, W. E. (Wallsend)

    Maynard, Miss Joan

    Tinn, James

    George, Bruce

    Meacher, Michael

    Tomlinson, John

    Gilbert, Rt Hon Dr John

    Mellish, Rt Hon Robert

    Tomney, Frank

    Ginsburg, David

    Mendelson, John

    Torney, Tom

    Golding, John

    Mikardo, Ian

    Urwin, T. W.

    Gould, Bryan

    Millan, Rt Hon Bruce

    Varley, Rt Hon Eric G.

    Gourlay, Harry

    Miller, Dr M. S. (E Kilbride)

    Wainwright, Edwin (Dearne V)

    Graham, Ted

    Mitchell, Austin

    Wainwright, Richard (Colne V)

    Grant, George (Morpeth)

    Mitchell, R. C. (Solon, Itchen)

    Walker, Harold (Doncaster)

    Grant, John (Islington C)

    Molloy, William

    Walker, Terry (Kingswood)

    Grocott, Bruce

    Moonman, Eric

    Ward, Michael

    Hamilton, W. W. (Central Fife)

    Morris, Alfred (Wythenshawe)

    Watkins, David

    Hardy, Peter

    Morris, Rt Hon Charles R.

    Watkinson, John

    Harrison, Rt Hon Walter

    Morris, Rt Hon J. (Aberavon)

    Weetch, Ken

    Hart, Rt Hon Judith

    Moyle, Roland

    Weitzman, David

    Hattersley, Rt Hon Roy

    Mulley, Rt Hon Frederick

    Wellbeloved, James

    Hayman, Mrs Helene

    Murray, Rt Hon Ronald King

    White, James (Pollok)

    Healey, Rt Hon Denis

    Newens, Stanley

    Whitehead, Phillip

    Heffer, Eric S.

    Noble, Mike

    Whitlock, William

    Hooley, Frank

    Oakes, Gordon

    Willey, Rt Hon Frederick

    Horam, John

    Ogden, Eric

    Williams, Rt Hon Alan (Swansea W)

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

    O'Halloran, Michael

    Williams, Alan Lee (Hornch'ch)

    Wise, Mrs Audrey

    Young, David (Bolton E)

    Williams, Rt Hon Shirley (Hertford)

    Woodall, Alec

    Williams, Sir Thomas (Warrington)

    Woof, Robert

    TELLERS FOR THE NOES:

    Wilson, Alexander (Hamilton)

    Wrigglesworth, Ian

    Mr. Joseph Harper

    Wilson. William (Coventry SE)

    Wison, Rt Hon Sir Harold (Huyton)

    Mr. James Hamilton

    Question accordingly negatived.

    EUROPEAN COMMUNITY (EXCISE DUTY HARMONISATION)
    10.15 p.m.
    The Financial Secretary to the Treasury (Mr. Robert Sheldon): I beg to move,
    That this House takes note of Commission Documents Nos. COM (72) 225, R/2113/73 and R/1966/77 on Excise Duty Harmonisation.
    These harmonisation proposals were first set out in the Commission's proposals to the Council in 1972 in the form of draft directives. There were several draft directives on that occasion, one of which was a framework directive from the Commission which had the intention of limiting excise duties to only a few of the numerous categories that were in operation at that time. The purpose of that directive was to limit the use of excise duties to hydrocarbon oils, tobacco and alcoholic drinks generally. At the same time, there were other directives for the harmonisation of the structure of the alcohol duties, beer and wine duties and alcoholic drinks duties generally. All these directives dealt with the structure and methods of administering the particular excise duty taxes.
    The harmonisation of tobacco taxation was a separate matter. There was a directive agreed towards the second stage of the harmonisation and the debate that we had on these matters concluded that part of the harmonisation of tobacco duties.
    We are now considering the other excise duties. Following the first proposals from the Commission, there was little further progress and harmonisation was left in abeyance for some time. Attention has now returned to excise duties and the Commission suggests that a fresh start should be made on some limited problems on alcohol and beer duties.
    I should mention that excise duty harmonisation in general is a quite separate matter from the Commission's recent proposals for a common organisation of the market for alcohol. Hon. Members will recall the problems concerning the Scotch whisky industry, but that is separate from the problems that we are discussing. That problem concerns pricing and marketing and not the raising of revenue, which is the subject of the present proposals. These proposals concern the structure of the excise duties
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    and there is no proposal for the harmonisation of rates of duty. That is obviously a long way off. We are talking about the structure itself and how it should be determined. Of course there has been and will be continual discussion and consultation in order to get the views of the trade and the current and long-term views of the industries—beer, wine, spirits and so on.
    At this stage I think that it is suitable and appropriate to discuss the problems for the United Kingdom in proceeding along this path. The original draft framework directive, which was intended to limit the excise duties to a specific range of products, has now been satisfied. The purpose of the directive was to say that excise duty should not cover the wide variety of articles now subject to excise duties. For example, in some of the countries there are excise duties on tea. In other countries there are excise duties on coffee. In Germany and Italy they have excise duties on playing cards. We ourselves have our excise duties on matches and mechanical lighters.
    It is clear that in the proposed form that was originally intended it was suggested that alcoholic drinks in general should be suitable for excise duties and that if it was wished to increase the duties on tobacco, hydrocarbon oils and other items, in some way, a suitable tax would be the value added tax. But action here is not being contemplated for the time being.
    As I mentioned earlier, we are concerned with a structure and with getting it right for any subsequent move towards further harmonisation, which is a long way off. As for the structural changes, it seems likely that our trade interests will, on balance, see advantages here for this country.
    The problem about all these matters is that when any Minister stands at the Dispatch Box he has two audiences to consider. If he says to the House of Commons that we are likely to do very well out of these harmonisation proposals, we can satisfy the House of Commons readily, but we weaken our negotiating position when I or some of my colleagues may be going to Brussels. On the other hand, if I were to say that we shall do badly out of it, the House of Commons would naturally be outraged, but that is

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    quite a useful negotiating stance to take. So we have this kind of problem which always makes it more difficult.
    Mr. Ian Mikardo: Tell the truth.
    Mr. Sheldon: My hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo) has changed once or twice. I know that he is a very shrewd negotiator at all times. I do not think that he always takes the advice that he is now proferring to me. This is a particular problem. I will try to explain it and put the position as I see it.
    The Scotch whisky industry is anxious to end discrimination. Harmonisation is a method of removing very many of its most important grievances. It sees considerable advantages in moving towards harmonisation. Bearing in mind the very large amount of Scotch whisky exports in this enormous industry—£500 million worth—it is of some advantage to us. As regards the brewing industry, the Brewers Society considers that the proposed system has a number of technical advantages and does not oppose its introduction.
    I ought to make an important point about the proposed duty exemption on heavy fuel oil. It is a point that I shall weigh very carefully in any discussion and negotiation. I refer to the proposed exemption for heavy fuel oil when it is used as a source of energy by industry or when it is used in the generation of electricity. If the proposals were to be implemented the revenue loss would be about £150 million and, incidentally, it would reduce energy costs and conflict with what I think is the overriding need to conserve energy now.
    There are a number of problems concerning the made wine industry. Under the directive most United Kingdom produced made wine is treated as a product chargeable at the full rate of duty. Because of this there will be special consideration given for this part of the trade.
    In turning to table wines, I deal with the most difficult aspect of the whole of the harmonisation proposals. There are two major producing countries who have no duty on table wine. Italy has no excise duty on wine, and in Germany there is only an excise duty on sparkling wine. For those countries, bearing in
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    mind their consumption, harmonisation produces particularly difficult problems. Therefore, it was proposed that these matters be left aside for the time being.
    However, I have made representations on this matter, and in a telegram received today I learn that the Danish presidency is proposing the timetable for the discussions as follows: on beer, 13th and 14th February; on spirits, 2nd and 3rd March; and on wine, 16th and 17th March. I mention this to show that the advantages we see for us and the problems that some of the other Community countries see for themselves will be discussed at about the same time and not at a different period when some countries might have certain advantages at one stage of the discussions and others might have advantages at other stages.
    Given the important issues that are before us, it is right that I should have the views of the House of Commons on the proposals as they have been so far presented. The Government are now entering discussions with our Community partners. I look forward to hearing the coments of the House and I shall be taking them into account in working out our strategy for the Brussels negotiations.
    10.26 p.m.
    Mr. Peter Rees: Although the House will no doubt be gratified to know that the Financial Secretary is anxious to canvass its views, it should be said that even by the extraordinarily dilatory standards of this Government in European matters this has been a long-drawn-out affair. The right hon. Gentleman might have found it more useful had he chosen to embark upon this debate a long time ago. He has been candid and reminded the House that the original proposals emanated in 1972. I appreciate that he was not responsible for these matters at that time. I believe that the first date for implementation was 1st January 1974.
    A considerable body of evidence was given to the Select Committee on European Secondary Legislation in January 1975, including evidence from the Paymaster-General. In two successive reports the Select Committee has suggested that the House of Commons should devote itself to these matters. I suppose that the reason for the Minister's reluctance to come here is based on his candid

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    admission that he has to face in two directions. May I suggest that he has to face in three directions—he has to face the Opposition, his hon. Friends below the Gangway and the other negotiators on the Continent.
    Well, I suppose that we are all Europeans now—
    Mr. J. Enoch Powell: So are the Russians.
    Mr. Rees: I know that the right hon. Member for Down, South (Mr. Powell) probably sees the broad sweep of history in the same light as the late General de Gaulle, that is, a Europe stretching from the Pyrenees to the Urals, but at the moment perhaps we should contract our gaze a little to the European Community. At any rate, shall I say that we are all Communautaire now since the Division last Thursday? Of course, hon. Members below the Gangway will find a certain sympathy and support from some of their right hon. Friends who either abstained or went into the Lobby with them on Thursday night.
    I do not want to open these old wounds, but we on this side of the House are conscious that we are debating this measure, uncontroversial though it may seem, against a background of a certain history which may not be entirely relished on the Government side of the House. We are bound to consider these proposals to see whether they are merely matters of technical detail, or whether implicit in them are high questions of constitutional and fiscal principle.
    Mr. Dennis Skinner: They may not be the right papers.
    Mr. Rees: The hon. Member does well to remind us because I seem to remember on an earlier occasion—
    Mr. Skinner: It has happened before.
    Mr. Rees: The hon. Member will no doubt make representations to his right hon. Friends who have control over these matters. I agree that on several occasions we have found ourselves disabled from mounting an effective debate because we did not know, and the Financial Secretary was unable to tell us, whether the right papers had been laid in the Library for us to consider. If the hon. Gentleman feels that we are not suitably
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    equipped on this occasion, no doubt he will seek to catch your eye, Mr. Deputy Speaker, and put his right hon. Friend right on this matter.
    Mr. Skinner: I will do it now. In view of what happened last week when we debated the matter for about an hour—until about midnight, I believe—and then found that we had the wrong documents—that has happened on several occasions since we entered the Common Market—may we have a cast iron guarantee from you, Mr. Deputy Speaker, that we have got the right documents tonight?
    Mr. Deputy Speaker (Mr. Oscar Murton): I assure the hon. Gentleman that, to the best of my knowledge—and I think that my knowledge is correct—the debate is perfectly in order.
    Mr. Skinner: That is a change.
    Mr. Rees: I am sure that we shall proceed reassured by what you have told us, Mr. Deputy Speaker. On that basis, the Financial Secretary will no doubt be encouraged by the support that you have given him, and we must take it that all the relevant documents are before us. Whether we would be any wiser if there were more documents before us I doubt, as there is a complete morass to be threaded through.
    I am bound to say that the Financial Secretary, with all deference to the courteous way in which he deployed his argument, has not perhaps covered the matters that need further investigation tonight.
    First, we need to be reassured whether we are debating questions merely of technical detail or of high constitutional and fiscal principle. The right hon. Gentleman has endeavoured to reassure us that all the major industries in this country will he more or less advantaged by the proposals. I am not entirely reassured, and I suspect that there are one or two points of detail that he will need to take up in reply.
    Since in these debates we are apt to leap from the particular to the general and from the general back to the particular, I should be grateful if the right hon. Gentleman would reassure the House on the precise areas covered by these proposals.
    The Financial Secretary told us that we have disposed of manufactured tobacco

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    Indeed, I remember a debate of sparkling clarity, if inconsiderable length, on the wrappings of tobacco. I think that it was a proposal for a Statutory Instrument that we debated upstairs The right hon. Gentleman had to reassure us as to what exactly was meant by the covering which constituted a cigar as opposed to an ordinary cigarette. Are we to take it that these matters have now been harmonised and that we need no longer concern ourselves with that question? Is the tobacco industry completely reassured about the harmonisation of this structure of excise duties in this area?
    The right hon. Gentleman told us that these proposals covered alcohol and beer and, I believe, mineral oils. But what about wine? Is wine to be covered by these proposals?
    I understand that, though the right hon. Gentleman has not touched on the matter, mixed beverages are no longer a matter of concern in this debate. Why not? What is covered by "mixed beverages" in this context?
    I am sure that the House and the country will be reassured to know that there is now no proposal emanating from the Community to impose excise duties on tea, coffee and playing cards. Does that mean that they are to be exempt for all time, or is this a purely temporary respite?
    There is one particular question on which the Financial Secretary has not touched at all. I understand that an excise committee is to be set up, ostensibly to consider technical matters. The House is well aware that taxation is pre-eminently an area where detail is all-important, even crucial. Questions such as whether malt whisky should be classed as eau de vie may at first sight seem to be matters of detail, but they may he crucial to distillers and to consumers.
    Are these all the matters that will be left to the tender scrutiny of the excise committee? If so, who will represent this country on the committee? Who will be answerable for its conclusions in the House? Who will draw its terms of reference, and who will decide whether a point has to be regarded as technical or one of principle?
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    It emerged from the evidence given to the Select Committee that the excise committee may be concerned with checking procedures. Since the Finance Act 1976, of unhappy memory, many hon. Members on both sides of the House are a little wary of investigatory powers. Will the Minister give us an assurance that there will be no extension of these powers directly or indirectly through the excise committee in respect of excise duties?
    There is another point of principle on which the Minister has not completely reassured me. How will the health tax that his right hon. Friend proposes for tobacco square with this process of harmonisation? Could there be an extension of a health tax to beer or spirits? Has that matter been canvassed in Brussels? If so, with what result?
    The right hon. Gentleman has said only a little about industries that are likely to be affected. He has endeavoured to reassure us that on this side of the Channel they will all be advantaged by the proposals that the excise committee will consider. However, will there be discrimination as between beer, wine and spirits.
    It is probably fair to say that as a nation we are still largely—if after the debates on the Scotland Bill we can still regard ourselves as one nation—beer and spirit drinkers. If Greece and Spain were to join the Community, there might be a preponderance of wine drinkers within it. Will that affect our pattern of national consumption?
    The right hon. Gentleman has said that at present there are certain measures that are discriminatory against whisky. I am bound to observe that the hon. Members who represent the Scottish National Party and who affect to represent the Scotch whisky industry, as they affect to represent Shetland oil, are singularly absent from the debate. However, that is a matter of choice for them. It may be that they have read the writing on the wall. As I have said, their absence is a matter of choice for them, and I pass on to consider matters of more substance.
    As I understand it, there is at present discrimination against whisky on the continent of Europe. There is a surtaxe de compensation imposed by France to preserve the position of Pernod. I do not know whether there are hon. Members

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    who prefer Pernod to whisky, but if there are I leave it to them to debate the respective merits of the two drinks. Our concern is that there should be no discrimination of that sort. In Italy I understand that there are compensatory taxes to preserve the position of Italian brandy. What is the future for Italian brandy and Pernod in this country if this measure of harmonisation goes through?
    Mrs. Gwyneth Dunwoody: Very, very small.
    Mr. Rees: If the hon. Lady catches your eye, Mr. Deputy Speaker, she can inform the House of her personal tastes in the context of these esoteric matters.
    I understand that there are seven actions for infractions of Article 95 in respect of whisky. Are those actions likely to be dropped while we consider these measures of harmonisation? I hope not. I want to see the position of whisky put on the same level as that of all other spirits on the continent of Europe.
    It may be embarrassing to recall, but I understand that there is a case against the United Kingdom concerning light white wine. The Financial Secretary was singularly coy on the issue. I hope that the right hon. Gentleman will tell us exactly the position that his Government take.
    As a curiosity, I understand that the excise duties proposed on whisky are likely to be higher if whisky is mixed with water than if it is mixed with wine. I do not know whether there is any hon. Gentleman or hon. Lady on the Labour Benches who wants to mix his or her whisky with wine, but this demonstrates the pitfalls we must seek to avoid in this delicate field.
    I gather that the whisky industry is most exercised about its right to send out free samples. Is the Financial Secretary battling sufficiently vigorously to preserve this right for the distillers of Scotland, and it may be even of Ulster? This obviously is a matter of great moment to the industry and so far we have had no assurance from the Financial Secretary.
    Perhaps I might be forgiven at this point of the night for waxing mauldin' over beer. I wish to ask the right hon. Gentleman some technical questions. Are we to move to an end product tax? Will
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    the tax be on unfermented wort? Will there be continuous or discontinuous bands of duty, and what effect will this have on the strength and quality of United Kingdom beer?
    On the subject of mineral oils, what consultation have the Government had with the various oil companies? Are the measures for harmonisation of the duties on mineral oils another aspect of the Community's energy policy, or can we regard this as a purely fiscal matter?
    It would be too dramatic for me to suggest tonight that we are waging a battle to preserve whisky against Pernod in the British pub, or beer against light white wine. But the Minister has left many questions unanswered.
    If I have taken up the time of the House unduly, I hope that the House will forgive me and will realise that there are important budgetary and constitutional considerations and other important matters affecting not only industry but the pattern of consumption in this country. Therefore, I hope that before this debate concludes we shall hear a great deal more from the Financial Secretary on these recondite matters than we have had so far.
    10.43 p.m.
    Mr. Douglas Jay: The hon. and learned Member for Dover and Deal (Mr. Rees) asked a number of questions which suggested that he was no clearer about what my right hon. Friend the Financial Secretary is intending to do than are a number of other hon. Members in the House this evening. My right hon. Friend seemed to make a soothing rather than an illuminating speech, implying that whatever he did in Brussels, we could be sure that all would be well and no great harm would come to us. However, he did not tell us what he intended to do.
    On matters of taxation we should be extremely sceptical and vigilant about all incursions of the EEC into British policy. Whatever else is indicated here, it certainly concerns taxation. I wish to ask my right hon. Friend a few guestions. I am sorry to add to the catalogue, but these matters require an answer.
    My right hon. Friend said that in this context we were not concerned in any way with rates of taxation, and that none of the negotiations he intends to carry out will have any effect on rates

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    of taxation. May we have an assurance that before we conclude this debate he will not commit himself in these discussions to any change in the rates of these excise duties as opposed to the structure?
    Secondly, the Financial Secretary said that what was to be discussed was the structure of these duties. Could he explain a little more clearly what he means by the structure of the duties? Does the mixing of wine and whisky come under the heading of the structure of the duty. What is meant by this structure in respect of beer duty? Some hon. Members may understand this all clearly, but it would help the rest of us if the situation were clarified.
    Thirdly, I think that the House as a whole is uncertain about what it is the Financial Secretary may agree to as a result of these discussions. May we have an assurance that when specific proposals have been provisionally agreed my right hon. Friend will come to the House and set out, in language that is usually contained in Budget resolutions in a Finance Bill, what it is he proposes in the name of this country? If my right hon. Friend can assure us that when he has finished his negotiations we shall be told what has been settled before it is put into force, that will be a great help.
    Finally, what is the purpose of the whole of this exercise anyway? My right hon. Friend said at the beginning that certain ingenious suggestions made earlier had been, I think he said, "set aside by the authorities in Brussels". Is there any reason why we should not set aside all the suggestions in these papers before us tonight?
    10.45 p.m.
    Mr. Nicholas Ridley: I find myself in the unusual position of agreeing with every word that the Financial Secretary said. I find this to be a wholly admirable exercise to harmonise these structures of excise duty, and I hope that it will be implemented when the due time comes.
    I start with one rather small matter, and that is that I imagine that the structural harmonisation of rates of duty on spirits will lead to the abolition of proof as a measure. I sincerely hope that it will, because proof is about the most stupid of all the measures ever included
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    in the imperial system or, for that matter, in any system at all.
    Proof is that concentration of alcohol in water which will light if set fire to with a match at room temperature. If we are to assess the alcoholic strength of sipirits by working out what proportion of that it is, it is no wonder that nobody has any idea of the strength of any spirit that is put before him.
    I am delighted to see in the draft directive that we are to move to a system based on measurement of alcoholic content. It says that
    "the excise duty shall be fixed per hecto litre of pure alcohol at a temperature of 15 degrees centigrade."
    That seems to be a major improvement. I know that people grieve the passing of the imperial system of measures. We hear a lot about the pint, the mile, the foot and the yard, but surely we should rejoice at the passing of the proof measure.
    I steered through the House on rather a similar occasion the abolition of the minim, the scruple and the drachma, which were also part of the imperial system. The right hon. Member for Battersea, North (Mr. Jay) and the right hon. Member for Down, South (Mr. Powell) did not appear to object to the fact that an Englishman's traditions were being trampled upon by this derogation of the measures with which he was so familiar. I hope that neither of them will raise tonight the importance of maintaining proof. Indeed, I think that it would be a major improvement if we could do away with it altogether, and that, I think, the directive seeks to do.
    My second point relates to my personal experiences as a traveller, particularly by air. I am fed up with walking along long corridors while carrying plastic bags containing 3 litres of spirits and 2 litres of wine, or whatever I am allowed to take.
    Mr. Neil Marten: It is 3 litres of wine and 1½ litres of spirits.
    Mr. Ridley: I accept my hon. Friend's correction. He has been to Brussels more often than I have.
    Mr. Marten: I am going there next week.
    Mr. Ridley: If we could do away with this it would be a great help to travellers, and it would improve air safety if the aeroplanes were not carrying more spirits than passengers, which it seems to me they usually are. We could put emergency rations on aeroplanes so that if they crashed on top of the Alps or the Peruvial mountains passengers would not have to eat one another, which they did on one occasion, because the aeroplane carried no food but plenty of duty-free whisky
    Mr. Ronald Atkins: Is the hon. Gentleman including the spirit in the passengers or merely that on the aircraft?
    Mr. Ridley: I am saying that if passengers want a drink there should be some drink available for them. An enormous amount of whisky is carried, either in the possession of passengers or for sale to them, in every aeroplane. This is absurd. At least within Common Market countries we should be able to make it not worth people's while to carry bottles of liquor. I have always thought that as a start we could say that passengers could buy their duty-free drink at the airport of landing rather than the airport of takeoff. If we cannot do that, at least we can cut out the differences between European countries.
    Mr. Powell: How would the attraction of duty-free purchases be removed by the harmonisation of duties? It is not the disharmony of the duties but the objection to duty itself which causes this indulgence.
    Mr. Marten: No.
    Mr. Ridley: This brings me to the point I want to make. Although we cannot do this in relation to countries outside the European Community, within the European Community we could have a harmonised structure of duties and harmonised rates of duties so that there was no advantage and no free allowance as between one European country and another. It would be very much easier if a Customs and Excise official were handing out three pound notes to everyone landing at each airport.
    10.57 p.m.
    Mr. Powell: Even if the duties were the same at both termini, it would still leave the attraction of duty-free liquor undiminished.
    Mr. Ridley: No, because I am saying that there should be no duty-free liquor between the countries of the Common Market. As I read the draft directive, that indeed would be the case if it came into force, because the rates of duty would be the same in every country. [Hon. Members: "No.] Perhaps I am wrong. I stand to be corrected. If I am wrong, I think that the situation should be as I say that it should be. Will the Financial Secretary have the directive amended so that it brings about what I say should obtain?
    Mr Mikardo: Does not the hon. Gentleman realise that if we did what he suggests and obtained duty-free liquor it would be very much more difficult to recruit Members for the European Assembly?
    Mr. Ridley: I think that the hon. Gentleman, as a good Socialist, will admit that the proposed allowance for Members of the European Assembly exceeds by a considerable amount the likely benefit to be derived from duty-free liquor on each trip, even after allowing for the effects of united Kingdom taxation, if such there will be.
    Next, I note that the duty on sparkling wine is to be the same as that on still wine. This, again, I welcome. I have never understood how other countries could have a tax on carbon dioxide, which is what the difference really is between a still wine and a sparkling wine. I know that sparkling wine is a particular bogy of hon. Members opposite. They think that it smacks of privilege, of extravagance, and so on. I believe that we must override the prejudices of the Labour Party and adopt the system that wines of all sorts should be taxed at the same rate. Again, I agree with the directive on this point.
    I turn, finally, from the pleasant topic of alcohol to the less pleasant topic of fuel oil. It seems wrong that fuel oil should be taxed at all. It is a myth in the minds of the Government that energy policy consists of taxing certain energy at a higher rate than might otherwise be the case. I have always thought it wrong that their policy for energy should consist of soaking the motorist for his petrol, as though in some way this would affect the amount which he consumed. We know that petrol is very price-inelastic,

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    and he motors whether they put up the tax or not.
    I do not think it right to discriminate against fuel oil in this way when we do not discriminate against coal, against gas or against other fuels. Now that we have found so much oil, and the Government are so proud of it, it seems wrong to continue to place a tax on fuel oil when we do not put a similar tax on coal, and, indeed, we pay subsidies on coal.
    I, therefore, look forward to implementation of the directive, but I wish to talk for a moment about the harmonisation of rates, because it is of small value to harmonise the structure if we are not to harmonise the rates. Harmonisation of rates would mean that there was a much easier flow of goods between the countries of the Common Market, and it would be one of the small advantages which, I believe, to be inherent in membership of the Common Market.
    I have always been a supporter of membership because I considered that there would be far bigger things than the matter before us now which would be of great benefit to us. This is just a small matter, but let it be noted that in the directive there are some benefits not only of the kind of which we can say that we shall get more out than we put in. I do not look at everything on that basis. I know that my hon. Friend the Member for Banbury (Mr. Marten) does—
    Mr. Martin: No.
    Mr. Ridley: I can tell his attitude from the way my hon. Friend is shaking his head. But I do not agree with him. I regard this as a sort of clearing up of a rather messy and troubled area of taxation which will lead to greater equality for both producers and consumers and to an easier flow of trade in that most important of products, alcoholic beverages.
    10.51 p.m.
    Mrs. Gwyneth Dunwoody: I shall not detain the House for long, but I was rather concerned when my right hon. Friend the Financial Secretary said that this should be taken as just a structural matter, almost in a vacuum. It is my experience of any legislation that when someone says "You can accept this because it is a quite harmless measure and it will not be used to do what you most fear", inevitably, within a short time,
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    we are told that we agreed to the original measure, so why should we disagree to something else later?
    I was worried when my right hon. Friend said that this was not directly connected with any common organisation of the market in alcohol and the harmonisation of rates. I spend a good deal of time listening to people who tell us that if Britain would lower her rates of duty or tax on alcohol, whether direct or indirect, that would greatly facilitate the solution of the problems of the southern wine producers.
    I do not regard structural measures as capable of being separated from the subject matter. One of the hazards which we face tonight is that this directive will inevitably lead on, as the harmonisation directive on tobacco did, to measures which are not examined in depth in the House before they are accepted and which inevitably produce considerable problems.
    I hope that when my right hon. Friend speaks again, if he has leave to do so, he will tell us, first, that there is no real need for a change in our existing structure, which is perfectly adequate for its function, and second, that should any changes come about they will not lead to central direction of taxation policy so that the House of Commons will no longer be able to bring about changes which we regard as desirable. There are social implications in all taxation, and such matters must not be decided elsewhere than in a democratically elected House of Commons.
    11.0 p.m.
    Mr. Roger Sims: Like the hon. Lady the Member for Crewe (Mrs. Dunwoody), I noted with interest the comments of the Financial Secretary implying that no immediate harmonisation of the rates of duty is likely to materialise. I hope that he will be more specific about it.
    I was also rather surprised that the right hon. Gentleman implied that this had nothing to do with the recent brouhaha about the price of whisky exported to the Continent. I suggest that the two matters are closely related. Having said that, I am not trying to take over the task of the Scottish nationalist Bench. Nor do I have an illicit whisky still in the London suburbs.
    Mrs. Dunwoody: Shame.
    Mr. Sims: I am not going to own up to it, anyway. My interest in this topic is that, for many years I have been involved in a company responsible for marketing whisky in various countries abroad.
    We are discussing a natural corollary to the problem that has arisen regarding a differential price structure in this country and for the export of whisky. At the moment, whisky is very unfairly placed in export markets, particularly on the Continent. My hon. and learned Friend the Member for Dover and Deal (Mr. Rees) referred to some of the discrepancies.
    For example, in France the excise duty on Scotch is nearly double that on rum, and whereas the advertising of Scotch is prohibited, the advertising of rum is permitted. So Scotch is clearly discriminated against. In Italy, the stamp duty on Scotch is six times higher than on Italian brandy and 17 times higher than on grappa. There are laws in Belgium preventing the sale of spirits in public bars, and in Denmark the tax on Scotch is almost double that on aquavit.
    Almost all the talk of the last few weeks has suggested that Scotch should be so priced that there is fair competition in the market. While these rates of duty apply, they will do anything but ensure that. It was put neatly by The Times shortly before Christmas, when it commented that on the Continent, everywhere except Denmark, the discrimination results in whisky still being cheaper in most shops than in Britain. The distortion in trade resulting is of a vastly greater order than what would result from arrangements limiting exports of the major British manufacturers of spirits to the Continental countries. So these two matters are allied. If we could have some great harmonisation of rates of duty throughout the EEC, whisky would at any rate have a far better crack of the whip.
    The other aspect on which I hope the right hon. Gentleman will be more forthcoming is the relationship between duties on spirits and duties on wine. Until his comments, we were given to understand that wine was not to be involved at this stage. He spoke of possible discussions, and no more. It seems logical that, if there is to be some sort of harmonisation of the structure at this stage, it should
    192
    be on all forms of alcohol, preferably on some sort of basis that the tax on alhoholic beverages should be on alcohol content rather than on the type of beverage.
    Currently, the tax on spirits is far higher than on any other form of beverage. The tax on spirits in the United Kingdom is over one and a half times as much as on imported wine and twice as much as the duty on sherry, and on spirits one pays two and a half times as much as on the equivalent alcohol content of beer. There is, therefore, a strong case for greater harmonisation activity. Whatever happens with regard to structure, this directive will be a step to a more realistic and logical harmonisation of duties on all forms of alcoholic beverage throughout the Community.
    11.5 p.m.
    Mr. Frank Hooley: I suspect that these proposals go rather further than the neurotic obsession of the Common Market with harmonisation, which excited the scorn and contempt of Professor Dahrendorf some time ago.
    I should have thought that the essence of an excise is that it is a domestic form of taxation, as opposed to a tariff which clearly has international applications. We accept as a Common Market theory that a common external tariff is an essential part of the system, but an excise is a different matter. It is a domestic tax and one which should remain firmly under the control of the House, for a great many very powerful reasons.
    My hon. Friend the Member for Crewe (Mrs. Dunwoody) spoke of the change in the structure as opposed to the rates of the tax. I echo the point put by my right hon. Friend the Member for Battersea, North (Mr. Jay). I hope the Minister will be kind enough to say a bit more about what he means by structure, because, candidly, I do not understand at this moment what are the implications of it. I do not believe that we can divorce the structure of a tax, of whatever sort it is, from the rate. Incidentally, in the course of his speech he said that changes in the structure of duty on heavy duty oil would have implications for the revenue. Therefore in that case there clearly must be some impact on the rate, because we cannot affect the revenue seriously unless we change the rate as well as the so-called structure of the duty.

    193
    There is another matter which we have to consider here. It is obvious that, for example, the wine industries of France and Italy play a very important part, quite reasonably, in the economies of those countries. The Governments of those countries, quite reasonably, in establishing any structure of excise on wine, must pay attention to the place of the wine industries in the Italian and the French economies and, indeed, in the whole rural structure of France and Italy.
    That does not apply in this country at all. There is virtually no wine-growing industry in Britain. Certainly it has no economic importance of the consequence that that industry has in Italy and France. It would be quite unreasonable for the German, French and Italian people to accept a form or structure of excise on wine which we might regard as appropriate in this country but which would be wholly inappropriate to the wine industries of their countries. Per contra, the importance of whisky to the Scottish economy means that we might want to take a rather different attitude towards excise on spirits from that which the French, the Italians or the Germans might want to take.
    Some mention has been made of excise on tea and coffee. I hope that this is not seriously in contemplation in this debate. This is one of the hazards of the harmonisation obsession. We start off with something which the Front Bench always say is quite innocent. They tell us that it does not matter and will not affect anyone very much, and that we can do it quite happily. Then, lo and behold, within a month, six months or twelve months, we find that it has progressed and that it is not at all innocent and is causing damage or difficulties to our own country.
    Alcohol is another aspect which has already been touched on briefly. Everyone will accept that the consumption of alcohol in this country, as well as elsewhere, raises formidable social problems. These are becoming more and more recognised and more and more difficult to cope with. They were the subject of an excellent report by a Select Committee of which I was a member at the time. They have also been the subject of a recent Government White Paper on preventive medicine.
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    It is abundantly clear that the House must retain control over rates of excise on alcohol and also, I suspect, on structure—whatever structure means—if we are to have some sensible social policy in the future on the social problem of the consumption of alcohol, where it should be consumed, the amounts, and so on. We cannot divorce the question of price from the rate of consumption, and also the important revenue consequences of raising or lowering price.
    I therefore approach these proposals with considerable scepticism. I do not regard them as a light matter at all. They impinge on the tax raising powers of this House and, incidentally, on the possible balance between indirect and direct taxation which my right hon. Friend the Chancellor might wish to consider on some future date.
    We do not want a position in which a Labour Chancellor of the Exchequer comes to the Dispatch Box and says: "I would like to alter the balance of income tax as against indirect taxation but, unfortunately, the structure of the tax on alcohol and tobacco, and heaven know's what else, has been determined in Brussels. Therefore, I have no freedom of movement on this particular matter".
    I am sure that the Minister will say we are wandering into areas that were never intended by the directives. But I suspect that sooner or later we shall find ourselves tangled in these problems.
    Mr. Nigel Spearing: Is it not possible that that situation could arise even before that stage? If the wine lakes continue to grow and the consumption is held back by relatively high excise duties, will there not inevitably be some pressure from our partners in the EEC who wish to help with this problem, just as they are putting a co-responsibility levy on our farmers with regard to milk to help overcome the surplus which our farmers did not create?
    Mr. Hooley: I am sure that my hon. Friend is right. That was one of the points I had in mind when I talked about the social impact of what are called "structural changes" in these excise duties.
    Mr. Marten: I merely wanted to point out that what the hon. Gentleman said

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    about a future Labour Chancellor being constricted could also apply to a future Tory Chancellor. My hon. and learned Friend the Member for Dover and Deal (Mr. Rees) may well be in that team. If he wants freedom of action, I believe that he should vote against this motion tonight just to protect his own position.
    Mr. Hooley: The hon. Gentleman will forgive me if I do not express any concern about a Conservative Chancellor, but he has made a fair point.
    I am quite sure that if we go forward with the harmonisation of these excise duties it is absolutely certain that in one, two or three years we shall be involved in the same ludicrous nonsense over green excise duties as we now face with green currencies, including green pounds.
    I seriously suggest that the Minister should say to his colleagues in the council of Ministers and in the Commission "Drop this nonsense before we get into even greated idiocy than the CAP".
    11. 12 p.m
    Mr. Graham Page: Like the hon. Member for Sheffield, Heeley (Mr. Hooley) I cannot see how one divorces structure from rates. Indeed, that is confirmed in one of the documents before us—the rather fat document produced in 1972—which has not wholly been overtaken, I understand.
    The proposal on page 13 starts off by saying:
    "It is evident from the above that the harmonization of excise duties is essential if one is to achieve free movement of goods between Member States, and this without any distortion of competition …"
    I go along with that. It is what one expects from the European Community and I have no objection to the free movement of goods. I am not quite sure what is meant by
    "without any distortion of competition".
    The document then goes on:
    "it is also evident that the implementation of this harmonization means that one must stipulate the excise duties which must be levied in all the Member States on a harmonized basis, both with regard to structure and rates."
    Again, I am not sure whether I go along with that. It is rather what some of us expected from the Common Market. What I am eager to know are the boundaries of the debate on which we are embarking at present. I am perhaps a
    196
    little fussy and pernickety about this. But I like to debate a specific subject and not be told afterwards that I have given certain consents and approvals to something that I was not debating at the time.
    That is one point. I want to come to an entirely different subject, if indeed it is a different subject. That is the phrase which the Minister used about "methods of administration".
    The administration of excise in this country is performed by the Commissioners of Customs and Excise. It is they who have to come to decisions, executive and quasi-judicial. There are authorisations, licences, rights of entry, and so on, all connected with the implementation of excise. Is this excise committee to take over the job of our Commissioners? Does that come under methods of administration"? Is the excise committee advisory only, or is it executive? Will it exercise the quasi-judicial decisions which we have come to trust from the Commissioners in administering this kind of tax?
    It should be made clear whether our Ministers, in negotiating and talking about these directives or regulations, will commit us to some new administration of excise as well as eventually, it seems, to new rates. These will affect the individual in this country perhaps far more than the change of rates. That is a matter for the Government to decide. When the individual is managed, as he is in this way in dealing with excise by the Commissioners, he has a certain trust in them. But if there is to be a change, let us tell the public frankly who is to decide these matters in future.
    11.16 p.m.
    Mrs. Audrey Wise: My hon. Friend the Member for Crewe (Mrs. Dunwoody) was right to say that we cannot discuss these matters in a vacuum, and this one has not arisen in a vacuum. We are told clearly in one of the documents that the various excise proposals stem from the Council resolution of 22nd March 1971 for the gradual achievement of economic and monetary union.
    That is all very well if one is seeking economic and monetary union, but this is for from a matter which can be regarded as a vacuum. It is very important and

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    I suggest that it cannot be adequately dealt with in this kind of debate.
    The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) gave the game away a little. He has informed us previously that he does not mind being ruled from Brussels. He prefers it to Her Majesty's present Government. So it is not surprising to hear his candid remarks about the need to harmonise rates. But we are not dependent on the indiscretion of the hon. Member for Cirencester and Tewkesbury in this regard. The document to which I have just referred also says:
    "However, as these initial proposals related only to the structures of the excises, the liberty of Member States to fix the levels of excise rates was unaffected."
    That is nice to know. For the moment, we still have liberty to determine our own excise rates. However, the use of the word "initial" makes it clear that this proposal is embarking on a particular road.
    My hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) has explained how this may affect the balance between direct and indirect taxation. But the matter is even more far reaching. Any harmonisation of rates would affect the balance within indirect taxation itself and, as my right hon. Friend the Financial Secretary must know, the effect of the forms of indirect taxation which we choose is quite different from those in the rest of the EEC with its heavier reliance on VAT.
    The possible effect of an interference in our freedom to fix rates can be seen. Let us suppose that we were harmonising downwards and that our rates were being harmonised with those of the other EEC countries. In a study made by the CBI in 1972, it was shown that the reduction in our revenue would be no less than £1,272·8 million at 1972 prices. Where would we recoup this loss of revenue? Would we see this as part of the harmonisation of VAT—of all indirect taxation?
    We are told that the objective is the rationalisation of indirect taxation. But who decides what is rational? I think it is infinitely more rational to impose indirect taxation on goods such as alcohol and tobacco than to extend VAT to food and medicines. How do I know that my view will match the view of the EEC, which so far has chosen to levy
    198
    VAT on food and medicines and to levy much lower rates on tobacco and alcohol? If we were rationalising by adjusting our VAT to recoup this kind of revenue we would need to increase our rates by nine or 10 points.
    The prospect before us is really quite appalling. We are opening a door to something that would gravely distort our social policies as well as our ability to control taxation. I am more concerned about distorting our social policies than about any so-called distortion of competition. The latter is a matter that I can regard with equanimity.
    Even leaving aside the question of rates and sticking to the question of structures, we are told in the 1972 document, which has not been fully superseded, that
    "It should be noted, however, that the fact that only five excise duties are to be maintained and harmonised at the present time should not constitute any obstacle to the later establishment, at Community level, of other excise duties, should these be felt necessary."
    We may find that we have passed over to the Community the right to bring in new excise duties. I am favourably disposed to many of the present excise duties, but I may not be favourably disposed towards any new ones introduced at Community level.
    Whether one looks at the levels or at the rates, all one can say to the Financial Secretary is that all this must be resisted.
    11.23 p.m.
    Mr. Ron Thomas: The Financial Secretary seemingly did not realise just how many of us on the Government side of the House are completely opposed to the harmonisation of taxation of any kind within the EEC. Knowing how we feel on this principle—and I say this in a kindly way—he tried to get us to look at individual pieces of the structure that may apply.
    The hon. and learned Member for Dover and Deal (Mr. Rees) began by asking whether any high principles of fiscal policy were involved here. Any move towards harmonisation involves high principles of fiscal policy. He then went on to talk about wine, beer and different items.
    I want to stick to the main principle. The right hon. Member for Crosby (Mr. Page) and my hon. Friend the Member for Coventry, South-West (Mrs. Wise)

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    talked about the 1972 document. There is also a 1973 document, which puts even more clearly what the 1972 document suggests. The 1973 document reads:
    "taxes on consumer goods, and therefore excise duties, be harmonized between the member countries in such a way that conditions of competition are not distorted".
    The whole philosophy there is that this House would lose control over expenditure taxation of all kinds. The document goes on to emphasise, perhaps even more than the 1972 document, that:
    "Liberalization of taxes within the Community is only possible if taxes on imports and remission of taxes on exports and frontier controls are abolished".
    But the sting is in the tail. It concludes that such action
    "would require the prior harmonization of excise duty rates which would in turn require the prior harmonization of the structures of such taxes."
    That means that before we can harmonise rates we must harmonise the structures. It makes clear that if we harmonise structures, that is the final step to the harmonisation of rates. Otherwise, I can see no purpose in it.
    When the Financial Secretary talked about fuel he spoke of revenue implications and fuel policy implications arising out of harmonisation. We may become self-sufficient in oil, but our control could be taken away from us to a considerable extent if fuel policy implications are part of this harmonisation of structures.
    The Financial Secretary's own document says that the harmonisation proposals raise questions of policy in regard to the administration of previous exemptions and reliefs in the interests of harmonisation.
    Unless we get answers to some of the questions that we have raised, the only thing we can do is to make clear again that it is the policy of our party and the majority of Labour Members in the Chamber—if not of the Parliamentary Labour Party—not to give up our control over taxation to the EEC.
    Mr. Spearing: Is that not also the policy of the Government? Did not the Prime Minister write a famous letter saving that he believed in the defence of the powers of
    Governments and Parlia-
    200
    ments to determine their own national economic policies?
    Mr. Thomas: I want to believe that it is the Government's policy.
    Mr. Mikardo: Let us see the proof of the pudding.
    Mr. Thomas: When we get such documents referring to the harmonisation of structures as a prelude to the harmonisation of rates, we must realise that we could, by default, lose control of important areas of taxation and that could have implications for economic, industrial and social policies that are of major importance to a party such as ours.
    The Financial Secretary talked about being a negotiator. On taxation, the only body with which he should negotiate is this House—no other body.
    11.30 p.m.
    Mr. Robert Sheldon: A great deal of the comment on this matter, particularly from the Government side of the House, has come from those who were worried that we might be losing control over taxation. I respect the fears expressed in these matters, but I assure my hon. Friends that those fears far from represent the Government's intention or belief. We are going nowhere near that stage in these discussions. Certainly I do not accept that as being any part of the negotiations that are to take place. That would pitch the talks at a much higher level than anything we have conceivably thought about. That is no part of our present proposals.
    We are here discussing arriving at a form of structure within which we can not only fix our own rates but even alter parts of the structure. Let me give an example. We dealt with this matter when we discussed tobacco tax harmonisation. In those debates we were talking about a second stage, not the first stage we are discussing here, of harmonisation. That harmonisation was not of rates but of structure, and within that structure there were opportunities to vary the incidence of the tax, not just the rates.
    At that stage matters were raised concerning how much of the tax should be a specific duty on the end product, the cigarette itself. The arrangements that we came to allow us, as they do all Community countries, to charge as a specific duty element of that tax an element

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    within the range of 5 per cent. and 55 per cent. In addition, we can charge whatever total rate we like. We have therefore a twofold flexibility. I mention that to show how far we are from fixing rates and how far we are from control over taxation, as feared by some of my hon. Friends.
    Mr. Jay: My right hon. Friend said that as a result of the previous negotiations we were allowed to do certain things. The implication is that we are no longer allowed to do things that we otherwise would be able to do.
    Mr. Sheldon: We would not be allowed to increase the specific duties more than 55 per cent., but no one has ever shown any desire to go beyond that figure. We were trading away something that no one ever conceived as being desirable.
    I understand those who say that within the whole range of possibilities open to us we will not have the freedom to do as we wish. Those who argue in that way can find no virtue in any of the various kinds of harmonisation that come before the House. But we have to consider what we can gain. For the industries that I mentioned, in view of the exports they have to consider, there are the advantages that I set out in my opening remarks.
    Mr. Spearing: My right hon. Friend mentioned the unlikely necessity of going beyond 55 per cent. If a limit is set in principle, would it not be possible for that limit to be reduced in the future, perhaps to 25 per cent. or even 10 per cent.?
    Mr. Sheldon: Of course that is possible, but whoever presented that proposal to the House would have to explain his reasons for settling on a limit below which the industry would wish to go, below which employment opportunities would tend to diminish—
    Mr. Douglas Hoyle (Nelson and Colne): My right hon. Friend fails to realise that the principle has been given away, and it is for that that we are fighting.
    Mr. Sheldon: I realise that some of my hon. Frends oppose the principle of harmonisation in whatever form it may be, but that is a separate matter from the reasons that I have adduced why
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    these harmonisation proposals do not have the disadvantages that some of my hon. Friends claim.
    I have been asked by my hon. Friend the Member for Sheffield, Healey (Mr. Hooley) and by the hon. and learned Member for Dover and Deal (Mr. Rees) and other to give details about the proposed structure of alcohol taxation. The present structure consists of a number of elements. The spirits duty is based on a proof gallon, which is to change to a system based on the percentage of alcohol contained in spirits, using, incidentally, the system we have devised. Therefore, some advantage to us will result in that respect. The Community has decided on 20 degrees Centrigrade as the temperature at which the alcohol content is to be assessed. Spirits taxation is to be based on their alcoholic content. Nobody can disagree with that.
    On table wines, at present two rates of duty are applicable—one for wines up to 10 per cent. and one for wines up to 15 per cent. There are three rates of duty for fortified wines—15 per cent. to 18 per cent., 18 per cent. to 22 per cent., and anything more than 22 per cent. There are also the beer duties.
    My hon. Friend the Member for Crewe (Mrs. Dunwoody) pointed out some of the problems that she envisaged if we were to make these changes. The changes are to be in spirits, on the basis of the alcohol content; naturally fermented drink, such as beer and wine, is to be taxed at a different unspecified rate—it is up to us to choose as we like—and there is to be exemption for such commodities as toiletries and for industrial and medicinal purposes.
    There are pluses as well as minuses in the changes. I have not heard anybody say anything about these, but there are pluses, and the big plus is for the Scotch whisky industry. The infraction proceedings for the industry are continuing, but anybody who knows anything about these matters realises that the process is very slow and the Community, with whose view I have much sympathy, sees this as being perhaps the quickest and final way of resolving the problem to its advantage and to our advantage nationally.
    Mr. Mikardo: We could have resolved it without these proposals.
    Mr. Sheldon: We have been trying to resolve the problem for years, with only limited success. The representatives of the Scotch whisky industry—this has emerged from discussions that I have had with them—see this as an opportunity to deal with the situation.
    The hon. and learned Member for Dover and Deal asked about the excise committee. I dealt with the framework directive and said that it was no longer to be put forward; in fact, it was being set aside. The excise committee was an essential part of the framework directive, and its purpose was to be advisory to the Council of Ministers. But it is not to exist now, because the framework directive is to be put aside. Under this directive it was thought that we could remove some of commodities, such as tea and coffee, as well as our own matches and mechnical lighters, from the list of excise duties and have excise duties on a more limited range of goods. However, this part of the operation of harmonisation is not to continue.
    Mr. Marten: The Minister used the phrase "set aside". The usual terminology is "withdraw". Do the two phrases mean the same thing?
    Mr. Sheldon: The words are a translation. I am simply repeating them. "Set aside for the time being" are the words—[HON. MEMBERS: "For the time being?"] No one can give a commitment for all time. I certainly would not wish to do that.
    What does a framework directive mean? It means that certain items should be chargeable under VAT and others under excise duty. Can any hon. Member give one good reason today why mechanical cigarette lighters and matches should be subject to excise duty rather than VAT? It we were to change the excise duty on mechanical lighters and matches and to call for value added tax instead, I doubt whether many constituents would be all that upset.
    Mr. Mikardo: We can do that ourselves.
    Mr. Sheldon: Of course we can. If everything that we do is a minus, what my hon. Friend said has some validity. If we can trade away that which is not important for something that we may think may be of value, there is something to be
    204
    said for coming to an arrangement whereby we can obtain something of value and possibly forgo something that is not of value. That was the position as I saw it.
    My hon. Friend the Member for Heeley referred to the social problems of alcohol and its consumption. I agree with him about that. Our duties on all forms of alcoholic drinks have not been based purely on their alcohol content. The duty on spirits has always been greater than the duties on beer and wine based on their alcohol content. For the good reason that spirits are more likely to lead to drunkenness, the tax on spirits, which is partly social in character, is higher than the duties on beer and wine.
    Let us consider how the situation has changed over the years. Real duties on spirits have been coming down. Since 1968–69, when spirits were being taxed at their highest level, there has been a decline in spirits duty. The basis is not purely alcohol content. That is why it is right to have a separate category for spirits and another for more naturally fermented drinks, such as beer, wine, cider, and so on. These proposals retain that distinction, which is essential in view of the social problems involved.
    Reference was made to infraction proceedings. The Commission has been in correspondence with those countries which are in breach of the commitment concerning whisky and the preferential rates of duty on those commodities which are said to compete with whisky. The discussions are continuing. I am trying to hurry them along, but these matters, by their very nature, are slow and not easy to speed up.
    The hon. and learned Member for Dover and Deal asked about the investigation powers and whether there were to be any increases in them. There will be no increase in investigation powers. There are no proposals for any increase in investigation powers as a result of or apart from these proposals.
    The oil industry, oil and taxation of oil are purely fiscal matters and have nothing to do with the problems of energy. When I mentioned the way in which oil was to be partly exempted, I said that it was to be so treated as a source of

    205
    energy, as a source of electricity. However, we must remember that these are only propsals. There is to be discussion and debate, negotiations and further consultations have yet to take place. In this debate we are concerned with the initial reactions and views, that will have to be taken into account when we proceed further. We are only at the first stage.
    There is a great deal for which to play. If we are successful in obtaining the sort of adjustments that I wish to see, we can gain real advantages for our industries and those who work in them.
    Question accordingly agreed to.
    Resolved,
    That this House takes note of Commission Documents Nos. COM (72) 225, R/2113/73, and R/1966/77 on Excise Duty Harmonisation.

    OPPOSITION PARTIES (FINANCIAL ASSISTANCE)
    Motion made,
    That the Resolution of the House of 20th March 1975 shall have effect from 1st January
    Mr. Marten: Will the right hon. Gentleman report to the House after the negotiations and let us have another go at this problem, when we know more about the sort of thing that we are supposed to be discussing? Will the Minister please answer? There is plenty of time.
    Mr. Sheldon: I shall be happy to take part in any debates that my right hon. Friend the Lord President sees fit to arrange for the benefit of those who are interested.
    Question put,
    The House divided: Ayes 74, Noes 25.

    Division No. 88]

    AYES

    [11.45 p.m.

    Archer, Rt Hon Peter

    Fry, Peter

    Page, Rt Hon R. Graham (Crosby)

    Armstrong, Ernest

    George, Bruce

    Palmer, Arthur

    Bates, Alf

    Golding, John

    Penhaligon, David

    Bishop, Rt Hon Edward

    Gower, Sir Raymond (Barry)

    Rhodes, James R.

    Bray, Dr Jeremy

    Hamilton, James (Bothwell)

    Ridley, Hon Nicholas

    Brown, Hugh D. (Provan)

    Harper, Joseph

    Roper, John

    Brown, Robert C. (Newcastle W)

    Harrison, Rt Hon Walter

    Rowlands, Ted

    Cocks, Rt Hon Michael (Bristol S)

    Havers, Rt Hon Sir Michael

    Sever, John

    Cohen, Stanley

    Hicks, Robert

    Sheldon, Rt Hon Robert

    Coleman, Donald

    Horam, John

    Sims, Roger

    Cox, Thomas (Tooting)

    Hunter, Adam

    Smith, John (N Lanarkshire)

    Crawshaw, Richard

    Jackson, Miss Margaret (Lincoln)

    Stallard, A. W.

    Crowther, Stan (Rotherham)

    Janner, Greville

    Stott, Roger

    Cryer, Bob

    Johnston, Russell (Inverness)

    Strang, Gavin

    Cunningham, G. (Islington S)

    Jones, Alec (Rhondda)

    Taylor, Mrs Ann (Bolton W)

    Davidson, Arthur

    Knox, David

    Trotter, Neville

    Deakins, Eric

    McElhone, Frank

    Walker, Harold (Doncaster)

    Dempsey, James

    MacGregor, John

    Walker, Terry (Kingswood)

    Dormand, J. D.

    MacKenzie, Rt Hon Gregor

    Weatherill, Bernard

    Douglas-Mann, Bruce

    McMillan, Tom (Glasgow C)

    Whitehead, Phillip

    Dykes, Hugh

    Mallalieu, J. P. W.

    Woof, Robert

    Eadie, Alex

    Marks, Kenneth

    Wrigglesworth, Ian

    English, Michael

    Marshall, Dr Edmund (Goole)

    Ewing, Harry (Stirling)

    Marshall, Jim (Leicester S)

    TELLERS FOR THE AYES

    Eyre, Reginald

    Millan, Rt Hon Bruce

    Mr. Ted Graham and

    Ford, Ben

    Miscampbell, Norman

    Mr. James Tinn.

    NOES

    Ashton, Joe

    Forrester, John

    Powell, Rt Hon J. Enoch

    Atkins, Ronald (Preston N)

    Hoyle, Doug (Nelson)

    Richardson, Miss Jo

    Canavan, Dennis

    Jay, Rt Hon Douglas

    Skinner, Dennis

    Cook, Robin F. (Edin C)

    Kerr, Russell

    Thomas, Ron (Bristol NW)

    Craigen, Jim (Maryhill)

    Lambie, David

    Wise, Mrs Audrey

    Dunwoody, Mrs Gwyneth

    Loyden, Eddie

    Evans, Ioan (Aberdare)

    Madden, Max

    TELLERS FOR THE NOES

    Evans, John (Newton)

    Marten, Neil

    Mr. Nigel Spearing and

    Fernyhough, Rt Hon E.

    Mikardo, Ian

    Mr. Frank Hooley.

    Flannery, Martin

    Parry, Robert

    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. Jim Marshall.]
    Hon. Members: Object.

  PETITION

    Retirement Age
    11.56 p.m.
    Mr. Greville Janner: I beg leave to present a petition signed by hundreds of thousands of citizens, representative of many millions, asking that men should have equal rights with women in connection with retirement.
    The petition, with signatures collected by my hon. Friend the Member for Preston, North (Mr. Atkins) and myself over the past 18 months, reads as follows:
    To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled.
    The Humble Petition of Citizens of the United Kingdom Showeth
    That women now have equal rights before the law;
    That women, whose expectation of life exceeds that of men, are entitled to retire at 60; but
    That men must work until they are 65, to receive a pension and
    That the said discrimination between men and women is unjust and lacks both reason and compassion.
    Wherefore your Petitioners pray that your Honourable House will do all within its power to ensure that men do receive the same right as women to retire, if they wish, on pension at the age of 60.
    And your Petitioners, as in duty bound, will every pray, etc.
    To lie upon the Table.

  ARMY YOUTH TEAMS
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Jim Marshall.]
  11.58 p.m.
  Mr. Neville Trotter: It is my task tonight to express the serious concern that is felt throughout the country at the decision of the Government to abolish the Army youth teams which have been in existence for about 15 years. The Minister, in reply to a parliamentary Question, described their role as giving
  "practical assistance to youth organisations to provide young people with the opportunity to take part in character-building activities, both indoor and outdoor, which might otherwise be beyond the scope of individual clubs, to inform them about life and conditions in the Army, and by so doing, to encourage those who are suitable to join the Army."—[Official Report, 14th March 1977; Vol. 928, c. 80.]
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  There are 79 of these teams, each composed of five men. They are recruited from local regiments, and based all over the country. All who have dealt with the activities of these teams agree that they have been a great success. It seems that the only exception to that might be the Minister, who will no doubt advise us of his views later.
  The benefits to the Army have been threefold. The first is recruiting, although a low profile has been the attitude adopted in recent years. Secondly, they have improved the image of the Army. The teams have helped to dispel the false image of Army life among those who have no acquaintance with the Army. This has led to a sympathy with the aims, needs and problems of the Army. Thirdly, the teams provide excellent experience for the soldiers on them.
  Warrant Officer Preston, writing in the British Army Review recently, said that the teams
  "offer a unique opportunity to young NCOs to mature and to accept responsibility far in excess of anything which is normally asked of them at regimental duty."
  I have a host of testimonies from all over the country speaking of the benefit that the community at large has obtained from the duty performed by these teams. A youth club spokesman writes saying that without the teams many youth clubs
  "will revert to the dreary old routine of darts and shove ha'penny competitions, discos and quizzes. Gone will be the wholesome and worthwhile activities for many organisations."
  and he names the outdoor activities for which his club relied on the teams. The chairman of a regional sports council writes saying that these teams are an essential service, especially for all that they have contributed to alleviating the problems of youth in inner cities. I have comments here from a city council and from ICI which expresses its
  'highest regard for Army Youth Teams following our experience in running Adventure Training for unemployed boys."
  One of the particular aspects of the work of the youth teams is the help that they have given to young unemployed people who today, sadly, are to be counted in their hundreds of thousands. The head of a comprehensive school says that
  "the school's outdoor activities…would other-have been impossible had it not been for Army Youth Team expertise. The work they do is

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  aiding the fight against boredom and apathy amongst impressionable people."
  A youth centre says that
  "the local Army Youth Team's public relations image, as far as young people and local youth workers go, has been outstanding. They have shown the Service as a modern and up-to-date professional career."
  A county council refers to the excellent relations which always existed between the members of the teams and the voluntary and professional youth workers.
  An authority in Ulster says:
  "I am very well aware of the vast amount of good work the Army Youth Teams did and the even greater extent of the influence they had and impetus they gave youth work in the Province, which will be sadly missed."
  That is particularly relevant in view of the sad situation in Ulster.
  The head of a nautical school writes that
  "The contact with the Army Youth Team has been particularly beneficial to the lads who have found enthusiasm and inspiration from these men who they have come to respect and admire."
  I was particularly impressed by this comment from the head of an approved school.
  I could go on quoting that level of praise. There is no doubt that these teams have done an excellent and well worthwhile job. Why, therefore, are they to be disbanded, when they are leaving a clear void and when all concerned in civilian life agree that they are irreplaceable?
  The first answer advanced by the Government referred to the cost. It was pointed out that the cost could be met on the Civil Estimates. So the reason was changed to a shortage of men, and that now appears to be the main argument. Are the Government seriously saying that they cannot find the 395 men required for this excellent service? It is interesting to note that a junior civil servant, writing to people in answer to their complaints about the disbandment, said that it was because the men were specially needed to fill shortfalls in field force units. What shortfalls? Has the House been informed of them? I am not aware of it? I sometimes think that the Minister is not terribly keen on Members of Parliament knowing what the problems of the Army are. He can tell us tonight how the shortfalls have come about. Have the
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  Government allowed the Army to become overstretched? If so, how has this come about, and why?
  The answer is really simple; it has arisen as a result of the Government's axe. The 1975 defence review cut 14,000 men from the Army and planned for 6,000 men to be made redundant. The plan, according to evidence given in the House, was for Army recruiting to be cut from 27,000 to 23,000 a year.
  When, after the General Election, the Minister is seeking a job, he may care to apply for a job in Saudi Arabia—not, perhaps, to run the army there, but no doubt his skill with an axe will recommend him for employment as an executioner to deal with matrimonial problems.
  Recruiting is to be cut by 4,000 a year. Are the Government saying that they cannot recruit an extra 40 men a year to provide the fewer than 400 needed for the Army youth teams? Perhaps the Government are finding it hard to recruit because of their lack of interest in the Services. Their attitude to Service pay has certainly harmed recruiting. However, the House will not believe that it is not possible to recruit the few men needed to man these teams.
  I return to the question of cost. The running costs of these teams are £500,000 a year. The pay and allowances amount to just over £2 million. To put this in perspective, the running costs are equivalent to the loss by British Steel every eight hours of the day and, including the pay and allowances, the total costs are equivalent to one working day's loss by British Steel. Put in another way, the loss by the Crown Agents would keep these youth teams running for a century. Both the Army and the country receive splendid value for the money spent on the teams. It is a matter of priorities. The total annual cost is only half of what we can afford to give to support the Marxist regime in Mozambique.
  I suggest that at least part of the cost should be borne on the Civil Estimates The teams are of great benefit to the community, and the saving as a result of young people being led along the right lines in their formative years can be very great. It as false economy to cut down by abandoning these teams.

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  It is disgraceful that there has been a complete lack of consultation. Was the Home Office consulted? Were the police consulted? Were the magistrates consulted? Was the Minister responsible for sport and recreation consulted? Apparently, he was not, because I have seen a letter written by him to the head of a regional sports council in which he said that he written to the Secretary of State for Defence after the announcement of the disbandment, suggesting that there was a case for expansion and not disbandment of the youth teams. Have the local authorities been consulted? They may well he prepared to meet part of the cost.
  To apply the axe to the Army youth teams is a shabby and ill-considered act, destroying a most important youth support group. It is not an act of God over which there is no control. It has been suggested in letters sent to various protesters that it is an irreversible decision. It is not. It is a deliberate Government act, and as such it can be reversed.
  Surely the Minister is a sincere man and not a stubborn man. I beg him, therefore, to consult, even late in the day, all those concerned with young people and to propose the transfer of all or most of the cost to the Civil Estimates or the local authorities. I am sure that his colleague the Prime Minister would not wish to see these teams disbanded. The right hon. Gentleman tells us that we are in the spring, and that things are getting better. I appeal to the Minister to work with the Prime Minister to see that there is a reprieve for the Army youth teams.
  12.6 a.m.
  Mr. Hector Monro: It is good of my hon. Friend the Member for Tynemouth (Mr. Trotter) to give me a few minutes of his Adjournment debate time to speak from the Front Bench as the Opposition spokesman on sport and recreation and to ask the Minister to think again about his decision to disband the Army youth teams.
  As my hon. Friend said, these teams have been extremely valuable, not only in the indoctrination, in the quietest and best way, of many recruits to the Army but, more important, in the close contact they have had with the community, especially in sport and recreation.
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  In company with my hon. Friend, I have had many objections from the Central Council for Physical Recreation, which represents all the individual governing bodies of sport in England, and from the Sports Council, which has taken an extremely serious view of the Ministry's decision. We have received objections also from the National Association of Boy's Clubs and the Girls Venture Corps, which, I know, has used the facilities of the Army for its adventure training.
  I endorse what my hon. Friend said about consultation. I am surprised that there has been so little consultation between the Ministry of Defence and all those who are involved. I want the Minister to explain why he apparently did not have full consultation with our sports authorities and with the local authorities. All in all, we seem, for a comparatively small saving, to be losing something really worth while, which has been much appreciated since its inception some years ago.
  The only comfort I had from the Minister was his letter to me in November, when he gave me his assurance that there would be no reduction in the joint use of shared Service facilities for sport. I know—I have visited the facilities at Aldershot—that this has been of great benefit to sport in this country. Although that is to continue, the physical participation of the youth teams with the local community will be lost. That is the serious loss about which we are complaining tonight.
  I believe that the value of the teams far outweighs what could be set against the Ministry of Defence budget. I do not believe that, if the spirit of Ministers was willing to continue this most worthwhile involvement by the Army in sport and recreation, in which it is particularly active and keen to help, this most retrograde step would have taken place.
  The Minister is getting rather more time than he expected, because I promised to speak very briefly. Perhaps this will give us a chance to intervene in his reply if we do not agree, which I fear is likely. I emphasise that he should think over this decision and have the courage of his convictions, which I am sure must be to continue to encourage the Army and the community to work together in this joint venture.
  12.11 a.m.
  The Under-Secretary of State for Defence for the Army (Mr. Robert C. Brown): I have listened with much interest to the hon. Members for Tyne-mouth (Mr. Trotter) and Dumfries (Mr. Monro). I thank the hon Member for Tynemouth for raising this matter and providing an opportunity to discuss a subject that is, as I am well aware, of great concern to many hon. Members on both sides of the House as well as to the general public.
  It is fair to say that, in my three and a quarter years as Under-Secretary of State for the Army, I do not think that any issue has raised as much cross-party interest as this one. In that respect, I pay particular tribute to my hon. Friend the Member for Bury and Radcliffe (Mr. White), who, I hope, will not mind my saying that no one in the House has hectored and badgered me on the issue as much as he has. Had he not been away ill I am sure that he would have been here for this debate, in a not uncritical manner.
  The Army has been well aware of the good will won by the Army youth teams, and the decision to disband them was taken only after long consideration and with the greatest possible reluctance. However, as I have explained in anwer to several parliamentary Questions, there were pressing reasons which could not be gainsaid. In particular, the need was paramount to find financial savings throughout the Services as part of the defence review, and, most important of all, the need to find extra trained manpower for areas of greater priority, particularly in the combatant branches of the Army.
  To deal with the financial aspects first, I should explain that the defence review has made it necessary to reduce recruiting expenditure in the three Services by nearly £3 million in this year and a further £3 million next year. Therefore, the decision to disband the Army youth teams was only part of a much larger package of measures that had to be taken, such as the replacement of single-Service recruiting offices with combined offices for all three Services wherever possible. Forty-three recruiting offices alone are due to close by April of this year, and 58 military posts and about 45 civilian ones
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  will have been abolished by the same date.
  When considering the position of the Army youth teams, several possibilities were looked at in an effort to find the necessary savings without affecting their work too seriously, including the reduction of the size of the teams or the maintenance of a much smaller number of teams. Unfortunately, cuts of sufficient size to yield the required saving would have meant reducing the youth team strength so much that they could no longer have performed a meaningful task.
  The financial decision, which was inevitably a compromise, was to disband the youth teams completely by 5th April 1978 and to transfer some of the men to the cadet training teams, where they will continue to carry out a more limited range of the work they now do as part of the youth teams. The actual date for disbandment is set by district commanders, according to circumstances, and some teams have already disbanded.
  Mr. Trotter: Can the hon. Gentleman tell us whether the remaining men will be able to give help to the bodies that are not part of the cadet force? Can he also tell us what efforts were made to get civilian Departments to bear the cost of the youth teams?
  Mr. Brown: Of the 395 men in the youth teams, 102 will join the cadet training teams. The particular work they will continue will be the provision of adventure training facilities to the Army cadet forces and the organisation of visits to Army units under the work experience scheme.
  Some may ask why it was decided that these aspects of the Army youth teams' work, that is, support for the cadet forces and visits to Army units, are to be continued at the expense of others which may seem of greater immediate benefit to the community, particularly at a time when, as I recognise, with high unemployment among the young the role of youth clubs in providing recrational facilities and constructive work is at its most important. The simple answer would be to say that the cadet forces must have first call on defence resources and that support to them can be provided more effectively, more cheaply and with less administrative effort than it can to other

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  organisations. However, I should like to elaborate a little.
  First, it must not be forgotten that the first duty of the Army recruiting organisation, of which the youth teams are a part, is to recruit. Its second duty is to use the resources allocated to achieve the necessary recruitment in the most efficient and economic way. Therefore, while there is no doubt that the work of the youth teams in assisting organisations not linked to the Army, such as youth clubs and schools, is of eventual benefit to recruitment and to the Army's reputation, it does not show direct results in terms of young people joining the Army. Unfortunately, in times of financial stringency the principal function of the organisation must come first when the difficult choice between priorities has to be made.
  In this context it is worth mentioning that, while the Army recruiting position is in general good, there are certain shortages at the moment in certain areas, especially technical grades. It is, therefore, essential to concentrate scarce recruiting resources in these areas. I am afraid that the Army youth teams do not have a specific role to play in this, because the shortages are in the specialist groups. This position is true of all three Services. The hon. Member will no doubt have seen the new emphasis on RAF aircrew recruiting in the Press, which is another example of the changes of approach that the recruiting organisations have to make according to circumstances.
  Another important reason for concentrating the remaining resources in the cadet training teams is that their work has a more wide-reaching effect. This is because the cadet training teams' main task is to train the volunteer officers who run the cadet forces, and who in their turn train the cadets. A soldier's time with a cadet training team is, therefore, of greater value, in that this training is multiplied through the people he teaches. He can in this way reach more young people than he could by working with them directly.
  The total cost of the Army youth teams in 1976–77 was approximately £2·7 million. As I have said in answer to several parliamentary Questions, the direct savings arising from their disbandment will be about £500,000 a year at present prices.
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  That is not a great deal in itself but it is a significant proportion of the total cutbacks that have had to be made in the recruiting area—the £6 million in two years to which I referred. The remainder of the total, about £2·2 million, is the cost of employing the soldiers in the teams. This will not be saved directly, as they are to be reassigned to work of greater priority, but the overall cost, I re-emphasise, is £2·7 million.
  As I explained in answering the same Questions, the need to release manpower for those areas of higher priority was just as important a consideration as the need for financial savings in the decision to disband the youth teams.
  Mr. Trotter: The Minister has not said why there was no attempt to pass the bill over to the Civil Estimates or to local authorities.
  Mr. Brown: If the hon. Gentleman will contain himself, I shall get to that. As I was saying, in answering these Questions on the decision to disband the youth teams, I am sure that I do not need to remind the hon. Member of the reductions in Service strength which have taken place in recent years, or of the increased demands that the Army has had to meet and will have to meet for some time to come. Short-term emergency duties, such as those created by the firemen's strike, do no more than add to a burden that is in itself already onerous.
  There have been many similar crises recently and the Services, in particular the Army, have had to handle them all. The unsuccessful general strike in Northern Ireland last year, the disturbances in Bermuda and the continuing tension in Belize are only the most recent examples. At the same time, as part of the defence review the Army is currently carrying out a major restructuring programme in an effort to reduce manpower without a corresponding reduction in the number of units in the field.
  Finally, as the hon. Member is well aware, we have continuing commitments to NATO and the need to provide adequate security forces for Northern Ireland. In these circumstances it is difficult for units, especially infantry battalions, to work to acceptable annual training routines at the same time as preparing for and carrying out emergency tours of duty.

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  At the same time new, more modern, weapons and equipment are being introduced at an increasing pace and they are more demanding in terms of both training time and training standards.
  Lastly, there is the ever-decreasing amount of recreational time and the constant separation in family life that the reduction of manpower to a minimum inevitably entails. It is against this background that the need to release the men of the Army youth teams for service in operational units should be viewed. Even such a small number as 293 will in these circumstances make a significant difference, especially as a high proportion of those men are officers or NCOs and all of them are very highly trained. Even the junior ranks are exceptionally experienced and responsible as they have to be to work with young people.
  The Secretary of State for Education and Science is aware of the decision to disband the youth teams and regrets it, as we all do. She is aware of their great contribution to the Youth Service and the gaps that their withdrawal will leave. However, no doubt there will be discussions locally among organisations and authorities to decide what, if any, additional facilities may be made available.
  Although, as I have said, the soldiers currently serving in the youth teams are urgently required in other areas of greater military priority and cannot be spared, I am sure that the garrison commanders in each area will give the local authorities all the cooperation possible in any schemes they wish to start on their own initiative—dependent, of course, on the availability of soldiers and of Service facilities.
  Mr. Jim Craigen: Was there any discussion with the Scottish Office abut this matter? My hon. Friend has referred to the Secretary of State for Education and Science, but did he consult the Secretary of State for Scotland?
  Mr. Brown: That I cannot say. There was discussion generally about education.
  It has been suggested many times that the simple way to keep the facilities of the Army youth teams would be a simple transference of £500,000 from the Department of Education and Science Vote to the Defence Vote. I only wish it were as
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  simple as that. It is not usually appreciated that it is for the Secretary of State for Education and Science to disburse money, but that it is for local education authorities to decide how to dispose of that money.
  If the hon. Member for Tynemouth is a fair-minded man I am sure that he will appreciate that it is not just a simple question of the transferrence of £500,000. Indeed, I do not think that my right lion. Friend the Secretary of State for Education and Science would feel that I was downgrading her job if I said that she was a cheque signer. She signs cheques to universities and local education authorities, and they decide how the money shall be disbursed.
  Mr. Trotter: Surely the hon. Gentleman's colleague who is responsible for sport and recreation is not so tied and could have been the person who dispensed the money. In many ways the local authorities, if consulted, might have been prepared to accept that burden.
  Mr. Brown: The hon. Gentleman and I spent many years together serving on a local authority. I know that he is not so naive as to suggest that agreement among the multitude of local authorities down throughout the country would be easy. I do not think that it would. It is something that might well be pursued in areas with groupings of local authorities. I hope that it will be.
  So far, I have been painting a very negative picture, I know, and there is indeed no pleasure to be gained in making the decision to disband such a worthwhile organisation. One of my correspondents wrote that he thought
  "that the good will created by the Army youth teams was beyond price."
  Unfortunately, in the present circumstances good will is not beyond price—far from it.
  It is not, however, either my intention or that of the Army to allow the good will won by the youth teams to evaporate without vigorous efforts to preserve it. As I have said, the cadet training teams will continue some of their work, and the cadet forces will now be the main focus of the Army's efforts to maintain contact with the young. Although one of the purposes of the cadet forces is to give an insight into the Services to those who

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  may be considering a career in the Regular or the reserve forces, their first aim is to develop in young people the characteristics of good citizenship and a spirit of service to the community, which benefits from the responsibility and maturity they acquire. At the same time, Service men in the United Kingdom will be given every encouragement to continue on a voluntary basis the work that the Army youth teams now do. It will, of course, be only a small proportion of the previous amount of assistance that can be continued—as I have said, soldiers' recreational time is under constant pressure—but I hope that it will, with understanding from the public, help to continue the high reputation won for the Army by the youth teams.
  Similarly, commanding officers will be encouraged to open their facilities, such as shooting ranges and assault courses, to outside organisations whenever they are not in use and the necessary manpower is available to run them.
  In response to my hon. Friend the Member for Glasgow, Maryhill (Mr. Craigton), I can say that no one will be more interested than the present GOC Scotland, Sir David Barrett, in seeing at
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  least the same spirit of the Army youth teams being pursued by the Army in Scotland. They will also try and take on some of the youth teams' work on a short-term basis should resources become available. I know that the Army is keen to carry on Army support to handicapped children at the very least.
  In conclusion, I take this opportunity of expressing my thanks—I am sure that the House would wish to join me in this—to the many Service men who have served with the Army youth teams and by their professional and human efforts shown that the Armed Services can make a valuable contribution to the needs of the younger elements of our society and forge valuable links with local communities. I share the regret on the passing of the youth teams, and I assure all hon. Members that it is for this reason that every opportunity—
  The Question having been proposed after Ten o'clock on Monday evening, and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at twenty-eight minutes past Twelve o'clock.