Commons Sitting of 16 January 1979

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

PRIVATE BUSINESS
CHESHIRE COUNTY COUNCIL BILL [Lords]
COUNTY OF MERSEYSIDE BILL [Lords]
EAST KILBRIDE DISTRICT COUNCIL BILL
WEST MIDLANDS COUNTY COUNCIL BILL [Lords]
WEST YORKSHIRE BILL [Lords]
Orders for Second Reading read.
To be read a Second time upon Tuesday next.

ORAL ANSWERS TO QUESTIONS
  DEFENCE

    Neutron Bomb
    Mr. Andrew F. Bennettasked the Secretary of State for Defence when he next expects to discuss the neutron bomb in the NATO nuclear planning group.
    The Secretary of State for Defence (Mr. Frederick Mulley): The ministerial meetings of NATO's nuclear planning group discuss plans and programmes for the maintenance of the Alliance's nuclear forces as a whole. The next meeting is due to take place in the spring. I see no reason, however, to anticipate the enhanced radiation weapon being on the agenda.
    Mr. Bennett: Will my right hon. Friend reconsider that reply and put it on the agenda? Will he try to persuade his American allies particularly that they should not be waiting for a suitable moment to announce that they are going ahead with this bomb but should be mak-
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    ing capital out of rejecting completely any development of the bomb and challenging Eastern Europe to reject equally obnoxious weapons?
    Mr. Mulley: The American President has made very clear that, in deciding not to produce the warhead or to deploy it at this stage, he is seeking reciprocal renunciations from the Soviet Union and its allies. So far, these have not been forthcoming. This has been publicly stated on many occasions.
    Mr. Townsend: Does the Secretary of State appreciate that the West suffered a major propaganda defeat over this weapon? What is he personally doing to readjust the balance? Will he remind the House of the great predominance of Soviet armour on the central front?
    Mr. Mulley: It is well understood that the decision whether to produce the weapon is essentially one for the United States President although he has undertaken to consult NATO before reaching such a decision.
    Mr. Alan Lee Williams: Does my right hon. Friend agree that the real difficulty is the strength of the Russian tank armour on the central front? Until the Russians are prepared to thin that out, there will be further discussion about the need to take action to offset the preponderance of the Russian tank armour.
    Mr. Mulley: My hon. Friend is right to draw attention to the threat posed by the substantial tank forces of the Warsaw Pact. As I have said, the American President's line, which we have supported, is that he should seek reciprocal arrangements from the Warsaw Pact before reaching a final decision on this matter.
    Dr. Glyn: Is the Secretary of State aware that this is the only weapon, as the hon. Member for Hornchurch (Mr. Williams) said, capable of dealing with the Russian tank threat? Is he also aware that this does not affect American defence at all? It is entirely necessary for NATO for its own protection. When he meets the President, will the right hon. Gentleman try to persuade him that it is absolutely essential that we have this weapon.
    Mr. Mulley: I think it would be going too far to say that the weapon was absolutely essential or, on the other hand, that it was the only means of dealing with

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    possible attack by tanks. It was, however, designed for this specific purpose, not least to restrict the area of damage to forces and civilians in the vicinity.

    Low-flying Areas
    Beithasked the Secretary of State for Defence when he expects to announce details of the outcome of his review of low-flying areas.
    The Under-Secretary of State for Defence for the Royal Air Force (Mr. James Wellbeloved): I refer my hon. Friend to the reply I gave to the Question from my hon. Friend the Member for Gloucestershire, West (Mr. Watkinson) on 12th December 1978.
    Mr. Beith: Is the Minister aware that the Press Publicity during the Christmas Recess for an extension of low-flying areas was welcome in my constituency? Continued efforts in this direction will be welcomed if it is demonstrated that a burden shared can be a burden halved. Those areas which have borne a heavy proportion of this essential training are entitled to expect the rest of the country to accept some of it as well.
    Mr. Wellbeloved: The revised low-flying system is designed to do two things —first, and primarily, to ensure that the RAF has the right facilities to train in order to perform its role in protecting this country and maintaining the NATO alliance defence posture; secondly, to try to reallocate flying so that the burden is fairly shared throughout the United Kingdom.
    Mr. Watkinson: Will my hon. Friend accept the thanks of constituents of mine in West Gloucestershire for the reasonable attitude that he has taken on this matter? Is the new scheme fully operational and can areas such as North Gloucestershire expect a significance diminution in low flying?
    Mr. Wellbeloved: I should not like to raise any false hopes that there will be significant relaxation of the low-flying activities in any particular area, but I reciprocate my hon. Friend's kind remarks and would thank him and many other hon. Members for their support of me personally and of the RAF in the carrying out of this very intense and necessary activity.
    Mr. Stokes: Will the Minister consider using low-flying aircraft to disperse secondary pickets?
    Mr. Wellbeloved: It is not the practice of the Royal Air Force to respond to any such suggestions from the hon. Member. The RAF, like all the Armed Forces, stands ready to obey the lawful orders of Her Majesty's Government.

    Nuclear Deterrent
    Mr. Newensasked the Secretary of State for Defence what plans he has to maintain the British nuclear deterrent after the present generation of nuclear weaponry ceases to be operational.
    Mr. Mulley: The time has not yet arrived for matters to be settled over what should happen after the Polaris force is eventually phased out of service.
    Mr. Newens: Can my right hon. Friend reassure the House that neither the expenditure incurred on nuclear weapons nor nuclear tests carried out in recent years involve any departure from the pledge in the last Labour Party manifesto to the effect that we shall not embark upon a new generation of strategic nuclear weapons?
    Mr. Mulley: As my hon. Friend knows, the Government's position is that we are keeping effective the existing Polaris force but we have no plans for a successor generation.
    Mr. Wall: If we are not to have a new nuclear deterrent, and as the right hon. Gentleman said the other day that we shall not go in for cruise missile technology, can he explain how we shall counter the newly deployed Russian SS18, 19 and 20?
    Mr. Mulley: As the hon. Member knows, the plans for deterrents rely not entirely on our own forces but partly on NATO. He will not expect me to go into matters of targeting, and so on.
    Mr. Frank Allaun: Would not either a new Polaris fleet or the cruise missile system, on which some preliminary contracts and expenditure are now taking place, flout the pledge referred to by my hon. Friend the Member for Harlow (Mr. Newens)? Would it not be wiser to follow the example of Canada, which has recently divested itself of all its nuclear weapons?
    Mr. Mulley: So far as I am aware, Canada never had nuclear weapons under her own national control, but, as I have explained a number of times to my hon. Friend, the studies are being undertaken so that we can participate in an informed way in the discussions about strategic arms limitation and theatre nuclear weapon deployments within the alliance. They certainly do not involve any decision or plan to introduce cruise missiles into our own defence.
    Mr. Allaun: Not yet.
    Mr. Alan Clark: Is it not an extraordinary admission of negligence by the right hon. Gentleman and his hon. Friends that they continually say in this House that they have no plans for the succcession? Does not the Secretary of State agree that the research and development time for a new system is now already longer than the expected life of the existing system? Is he trying to let the whole thing go by default?
    Mr. Mulley: I do not accept that there is any negligence or any need. If—I underline the word "if "—it were decided at a later date to go for further nuclear weapons, there would be time to go ahead with the programme. But the present position is that we have no such plans.
    Mr. MacFarquhar: In view of my right hon. Friend's reaffirmation of that position, exactly how long does he expect the present generation to last?
    Mr. Mulley: We are confident that the present generation will last until the early 1990s.
    Sir Ian Gilmour: Does the Secretary of State realise that we regard his failure to have any plans not as negligence but merely as a prudent recognition of the fact that he will not be in office to carry them out?
    Mr. Mulley: The right hon. Gentleman is entitled to his little bit of fun. I prefer to await events.

    NATO Defence Ministers
    Mr. Frank Allaunasked the Secretary of State for Defence if he will make a statement on the NATO Defence Ministers' meeting in December.
    Mr. Mulley: At that meeting on 5th and 6th December 1978 NATO Defence
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    Ministers reiterated their concern at the growing military capabilities of the Warsaw Pact. They recognised that in the absence of equitable arms control and disarmament agreements, a satisfactory military balance could be assured only by greater efforts to modernise and strengthen the military capacity of the Alliance, and they undertook to take all possible steps to bring about the necessary improvements in their contributions to its deterrent and defence capabilities.
    A full text of the final communique of this meeting has been placed in the Library.
    Mr. Allaun: In the informal session, did not US Defence Secretary Brown warn against the likelihood of the sale of Harriers to China, as imperilling both SALT and detente? Secondly, if the Americans and the Germans can secure industrial contracts with China while refusing military contracts, why cannot we do the same?
    Mr. Mulley: It is not usual to discuss what may or may not have taken place within the NATO ministerial meetings, but to avoid any misunderstanding and to make it clear I can say that the question of the supply of arms, or, indeed, any other trade with China, was not discussed at all.
    Mr. Churchill: Does the right hon. Gentleman recall that last summer he gave the House an undertaking that by the time of the next NATO ministerial meeting in Brussels, forecast for December, there would no longer be any of the more than 10 per cent. of British Army of the Rhine's Chieftain tank force in mothballs? Has he been able to honour that undertaking? Can he say that they are now all fully operational?
    Mr. Mulley: I cannot without notice give an answer about a specific number of tanks. Perhaps the hon. Gentleman will put down a Question.

    Romanian Defence Minister
    Mr. Litterickasked the Secretary of State for Defence if he has any plans to meet the Romanian Defence Minister in the near future.
    Mr. Mulley: I have no such plans.
    Mr. Litterick: Is my right hon. Friend aware that Romanian arms expenditure is

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    $ 43 per head of population, while ours is $239 per head? In view of this and of the fact that the Romanian President has recently successfully resisted pressure from the Warsaw Pact to increase his country's defence expenditure, on the ground that his country cannot afford it, does not my right hon. Friend think that it would be helpful to the British people if he consulted his opposite number in Romania to discover how they worked this remarkable and beneficial trick?
    Mr. Mulley: My hon. Friend should be a little cautious about comparing defence expenditure of Warsaw Pact countries on the published figures. One of the difficulties that we have tried to resolve in the United Nations is to get some common basis on which defence expenditures can be compared. However, of course I agree with my hon. Friend, as was agreed when the Prime Minister and the President of Romania met in the summer, that we have a common interest in lessening military confrontation and promoting disarmament. But it would not be helpful for me to get involved in internal discussions within the Warsaw Pact.
    Mr. Grocott: Does my right hon. Friend agree that the relatively independent line being taken by the Romanian Government is one of the most encouraging things which has happened since the armed camps were established in Europe at the end of the war? Is it asking too much that there might one day be some reciprocal gesture by one of the NATO countries—preferably Britain?
    Mr. Mulley: I agree that decisions by the Warsaw Pact not to increase defence expenditure are to be welcomed. But before coming to a comparative judgment my hon. Friend should consider the disparity between the Warsaw Pact capabilities and those of the NATO Alliance.

    Tornado Aircraft
    Mr. Nelsonasked the Secretary of State for Defence what was the number of air defence variants of the Tornado and the contracted delivery date when the order was first placed by the Royal Air Force; what is the number now on order; and when delivery will be completed.
    The Minister of State, Ministry of Defence (Dr. John Gilbert): Three ADV development aircraft are under construction, but no production orders have yet been placed. We still intend to order 165 ADV aircraft, the delivery of which should be completed towards the end of the 1980s.
    Mr. Nelson: Does the Minister accept the importance of the early delivery of these aircraft in order to back up the capability of the Royal Air Force? In particular, does he accept that until these aircraft are delivered in their full complement, effectively there will be an air defence gap in our northern approaches? Does he accept that the production and full delivery of the aircraft should receive the Minister's earliest attention, in view of the statement during last year's defence debate that difficulties were being encountered in the production and delivery of the Tornado?
    Dr. Gilbert: I do not accept that there will be a gap of the kind indicated by the hon. Member. We are confident that the Lightnings and the Phantoms will be fully operational until the ADVs arrive. But I accept the tenor of the remainder of the hon. Member's remarks. It is important to ensure that delivery takes place as soon as possible. Despite the difficulties that have been encountered, the in-service dates are acceptable to the RAF.

    Ford Motor Company Limited
    Mr. Ridleyasked the Secretary of State for Defence what extra expenditure he expects his Department to incur as a result of the sanctions imposed upon the Ford Motor Company Ltd.
    Dr. Gilbert: None, Sir.
    Mr. Ridley: I accept that this matter is now of academic interest only, thank goodness. But does the Minister agree that if he had had to pay only £ 1 extra to purchase alternative cars to Ford cars, the effect would have been to create further inflation?
    Dr. Gilbert: I am obliged to the hon. Member. As he said, this is a highly hypothetical question. I do not believe in giving hypothetical answers.

    European Community Official Journal (Ministry Advertising)
    Mr. Hoyleasked the Secretary of State for Defence how many Ministry of Defence contracts have been advertised in the EEC Official Journal since the EEC directive 72/62/EEC came into force on 1st July 1978; and how many have been awarded outside the United Kingdom.
    Dr. Gilbert: Fifty-eight and five respectively.
    Mr. Hoyle: Does my right hon. Friend agree that it can be damaging to our textile industry when contracts are lost in this way? Would it not be far better, since other EEC members are not complying with the directive, for us to cease advertising until everybody comes into line?
    Dr. Gilbert: I agree with my hon. Friend about the effect on certain British industries. I cannot accept that the remedy is for us to break the rules. As my right hon. Friend the Chief Secretary said as recently as November, the present situation is thoroughly unsatisfactory. The Government are urging the Commissioners to prepare immediate remedial measures. If necessary we shall press our case in the Council or even take legal action.

    RAF Personnel
    Mr. George Rodgersasked the Secretary of State for Defence if the level of personnel in the RAF is currently in accord with the forecast contained in the defence review.
    Mr. Wellbeloved: The current strength of the RAF is about 86,000. This compares with a strength of 82,000 which was given in the 1975 statement on the Defence Estimates as the forecast manpower levels resulting from the defence review.
    Mr. Rodgers: Is my hon. Friend completely satisfied that he and hon. Members are sufficiently informed about the upward variation in the level of recruitment to the RAF, which is not contained in the defence review?
    Mr. Wellbeloved: We are always happy to answer any Question tabled by
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    an hon. Member. The more information is requested the more information will be given.

    Armaments Production
    Mr. Cryer askedthe Secretary of State for Defence what assessment his Department makes of the facilities required to switch a proportion of production for armaments to peaceful purposes.
    Dr. Gilbert: Our industrial and support capabilities are currently fully utilised and I expect that to remain the case for the foreseeable future. There would consequently not appear to be any need at present to study what might be the implications of a programme of conversion.
    Mr. Cryer: From my right hon. Friend's answer does it not appear that the Ministry of Defence does not devote any of its considerable resources to examining the possibility of switching from production for mass or minor extermination to peaceful purposes? If the Minister is really serious about implementing the Labour Party policy of reducing expenditure on defence, surely even a tiny proportion of the Department's resources should be devoted to assessing the necessity and possibility of switching to peaceful production. Should the Government not examine, for instance, the important initiative by the Lucas Aerospace shop stewards' combine? Should not the Ministry, as a gesture of support for the Labour Party, at least examine that proposal.
    Dr. Gilbert: As my hon. Friend knows, the Ministry of Defence is well aware of the proposals of the Lucas shop stewards' combine. The Department of Industry, in which my hon. Friend has had experience, has been examining those proposals and encouraging the management and staff of Lucas to discuss them.
    I must tell my hon. Friend frankly that the prime function of the Ministry of Defence is the defence of this country. The other considerations raised by my hon. Friend are extremely important but they are not primarily matters for my Department.
    Mr. Blaker: If it is easy to generate production for peaceful purposes why,

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    after the hon. Member for Keighley (Mr. Cryer) was in office for several years, are there still nearly 1.4 million unemployed?
    Dr. Gilbert: Many of us deplore the extent to which less developed countries spend such wealth as they have on weapons for military purposes, but at the recent United Nations special meeting on disarmament, most of the resistance to proposals for reducing global sales of arms came from the less developed countries. It is sad, but it is a fact.
    Mr. Cronin: Does my right hon. Friend agree that the only serious obstacle to a large reduction in arms expenditure by this country is the overwhelming and increasing superiority of the Russian armed forces in Europe, which can be explained only by a potentially aggressive intent?
    Dr. Gilbert: I do not wish to speculate about the intentions of the Soviet Union in the terms used by my hon. Friend. But it certainly is true that we have our present defence bill because of the situation behind the Iron Curtain in Eastern Europe. Britain, with others, has taken the lead in trying to negotiate mutual and balanced force reductions. If we can achieve them, there is hope that we can reduce the arms bill, which must be in the interests of everybody.
    Mr. Peter Bottomley: Is not the reason for the arms bill to maintain peace without surrender?
    Dr. Gilbert: There is nothing that I can usefully add to what I have already said.

    Armed Forces Pay Review Body
    Mr. Goodhartasked the Secretary of State for Defence when he expects to receive the next report from the Armed Forces Pay Review Body.
    Mr. Mulley: The timing of the report is strictly a matter for the review body, but as in previous years I would expect the report to be presented to the Prime Minister some time in March.
    Mr. Goodhart: At a time when the Armed Forces are standing by once again to protect the community from the effects of industrial action, may we have an assurance that the Armed Forces Pay Review Body will be free to make a recommendation for an increase in pay which is well above 5 per cent.? May
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    we have an assurance that the review will be treated by the Government as a special case?
    Mr. Mulley: I cannot anticipate the review body's recommendations or the Government's considerations of them. But I repeat the assurance on behalf of the Government which I made last May and which has been made in similar terms by the Prime Minister, that the Armed Forces will have a pay increase in April which will consist broadly of half the amount required to bring them up to the full military salary for April 1978 together with whatever amount is required to update the award to April 1979. Clearly that will be much in excess of 5 per cent.
    Mr. Hoyle: Does my right hon. Friend agree that the only way to achieve decent pay and conditions for the Armed Forces is to allow them to join trade unions, as in other NATO countries? Opposition Members laugh, but they object to what is happening.
    Mr. Mulley: I do not believe that that is the only way to deal with the matter. At this time priority should be given to restoring full comparability by April of next year. Any change in the system that appears to circumvent or throw doubt upon the commitment, which the Government intend to honour, would be regretted.
    Mr. Banks: Will the right hon. Gentleman undertake to publish the pay review undertaken by the review body of the Armed Forces? Does he expect that work to be completed either before or after the publication of the Armed Forces pay review?
    Mr. Mulley: I am not sure what the hon. Gentleman has in mind. There is no separate section of the Armed Forces undertaking a pay review. That work is done by the pay review body. I have asked that research be undertaken and consideration given within all three Services to the post-April 1980 situation. That will include the question whether the military salary in its present form and other such matters should be treated in future as they are treated now. I shall consider later whether it would be appropriate to publish the findings. That issue will not be concluded before the April pay date.

    Weapon Definitions
    Mr. Robin F. Cookasked the Secretary of State for Defence what definitions are in use in his Department for (a) defensive weapon and (b) an offensive weapon.
    Mr. Mulley: No formal definitions are in use.
    Mr. Cook: Will my right hon. Friend confirm that the reason why there are no formal definitions is that it is impossible adequately to distinguish between an offensive and a defensive weapon? Will he draw that difficulty to the attention of his right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs, who only last November described to the House the Harrier jump-jet as a defensive piece of equipment? Surely the plain fact is that that jet will give China an offensive capability against many of its dozen neighbours.
    Mr. Mulley: I think that my hon. Friend well understands that it is extremely difficult in most instances, with few exceptions, to say that weapons are wholly defensive or offensive. The answer depends entirely on the circumstances and the intention of their use. The Harrier is essentially a short-range tactical aircraft with a defensive role in support of ground troops. In that sense I think that my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs was right in indicating that it was designed for, and would most likely be used in, that defensive role.
    Mr. Adley: We have heard the voices of the right hon. Gentleman's hon. Friends echoing the line of the Kremlin, but is it not a fact that the Harrier's operational range is between 100 and 200 miles? Is it not a fact that the problem for the Chinese is the huge Soviet build-up on their frontiers? Will the right hon. Gentleman confirm that there is no other weapon that could possibly compensate the Chinese for the massive military superiority that the Soviet Union possesses and with which it threatens China on its frontier?
    Mr. Mulley: The hon. Gentleman does not strengthen his case by making allegations about my hon. Friends. That is not helpful. The Harrier's pay load and
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    range are essential for the battlefield rather than for long-range operations. It is not for me to determine the best defences for the People's Republic of China.
    Mrs. Wise: Does my right hon. Friend regard tanks as offensive or defensive weapons? As it is claimed that the Soviet forces have a superiority in tanks, I imagine that we regard them as offensive weapons. If that is so, why were the British Government prepared to sell to the Shah of Iran more tanks than are in the possession of the British Army?
    Mr. Mulley: The tank is a good example of the great difficulty of categorising weapons. One of the best ways of countering an attack by enemy tanks is by sending one's own tanks into the battlefield against them.

    NATO and Warsaw Pact Forces
    Mr. Tebbitasked the Secretary of State for Defence whether the forces of the NATO Alliance have been increasing or decreasing in strength relative to those of the Warsaw Pact.
    Mr. Mulley: In recent years trends in the balance of conventional military forces between NATO and the Warsaw Pact have been moving to NATO's disadvantage. Until realistic measures of arms control and disarmament can be achieved, NATO is determined to meet the challenge of the Warsaw Pact military build-up by such means as the long-term defence programme. This is a major cooperative undertaking designed to adapt the alliance's defence posture to meet the needs of the 1980s.
    Mr. Tebbit: Does that mean that it is Her Majesty's Government's policy to give their full weight to all measures designed to ensure that the NATO forces again reach the same level of strength as those of the Warsaw Pact?
    Mr. Mulley: As has been stated on many occasions, to sustain the NATO policy of deterrence it is not necessary to match the Warsaw Pact's capability weapon by weapon. Clearly it is necessary, in the view of our allies and ourselves, that the long-term defence progamme is operated and supported to the full. It is a matter not only of introducing extra resources but of assigning such resources as are available to the best use. We are

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    fully operating and fully supporting the long-term defence programme.
    Mr. James Lamond: What does my right hon. Friend think of the statement issued by the Warsaw Pact countries after their recent meeting in which they suggested that they were keen to negotiate a reduction in the level of arms, especially the number of tanks and the personnel that they have on the frontier facing West Germany?
    Mr. Mulley: I naturally welcome such intentions and I hope that they will bear fruit. As my hon. Friend knows, the Warsaw Pact and NATO countries concerned have been trying for a long time in Vienna to reach exactly that sort of agreement.
    Mr. Hooson: In view of the recent disclosure in the United States that a quarter of the Soviet ground military strength is now stationed along the Chinese border or the eastern border, and as it is known that many American forces are not assigned to NATO, how are these relative factors taken into account in assessing the comparable strength of NATO as opposed to the strength of the Warsaw Pact countries?
    Mr. Mulley: For the purpose of assessment we depend on intelligence sources. However, there is no doubt that the Warsaw Pact commands in Europe a considerable military capability.
    Mr. Heffer: As my right hon. Friend is aware, some countries in the Warsaw Pact—for example, Romania—are not as enthusiastic about the Warsaw Pact as others. Is it not time that we entered into discussions with such countries so as to achieve a reduction and to test the Warsaw Pact countries and their arms build-up? Is he aware that many Labour Members are not enamoured of either the Warsaw Pact or NATO? Is it not time that we had a distinctive Labour Party Socialist policy to deal with these matters?
    Mr. Mulley: I think that my hon. Friend will realise, on reflection, that these matters cannot be dealt with bilaterally and that it is essential that the multilateral character of disarmament negotiations is preserved. In Vienna, for about five years we have been trying to achieve mutual force reductions.
    Mr. Marten: Has the right hon. Gentleman noticed that the enthusiasts for the Common Market have suddenly started introducing the defence element into the Common Market debate? Will he confirm that the Treaty of Rome has nothing to do with defence?
    Mr. Mulley: I am sure that the hon. Gentleman has read the Treaty of Rome on many occasions. It is rather surprising that he should wish me to confirm that it has nothing to do with defence. As I recall from my last reading of the treaty, which was a long time ago, it contains no reference to defence.

    RAF Ely
    Mr. Freudasked the Secretary of State for Defence what are his plans for RAF Ely; and if he will make a statement.
    Mr. Wellbeloved: As successive defence White Papers have made clear, the Ministry of Defence has accepted the need to close one Royal Air Force hospital. The choice lies between RAF Ely and RAF Nocton Hall, and I shall announce a decision in due course. Closure, however, could not take place before 1982 at the earliest.
    Mr. Freud: Will the Minister accept that the hospital at Ely, which has the freedom of the city, has become an integral part of the life of my constituency and that any move to deprive the people of South Cambridgeshire of the great service of that hospital will be infinitely regretted?
    Mr. Wellbeloved: I accept without reservation that RAF stations and hospitals are welcomed in all the communities in which they are situated. We shall take very great care before coming to a final decision on the matter.
    Sir David Renton: I support the plea of the hon. Member for Isle of Ely (Mr. Freud). May I remind the Minister that there is in that part of the world probably as large an RAF contingent as can be found in any other part of the country and that the RAF hospital not only has to serve the RAF personnel and their families, but voluntarily helps many of my civilian constituents?
    Mr. Wellbeloved: I am very well aware of the substantial part that the

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    RAF hospital at Ely plays in the local community. That is why we are being very careful in our evaluation of this difficult decision.

    United Kingdom Underground Nuclear Test
    Mr. Hugh Jenkinsasked the Secretary of State for Defence what was the nature and purpose of the recent United Kingdom underground nuclear test; and if he will undertake to abandon such tests.
    Mr. Mulley: The test was required in order to maintain the effectiveness of our nuclear weapons. A unilateral decision on our part to halt nuclear testing while negotiations for a verifiable comprehensive test ban treaty are proceeding would not be in our interests, nor improve the prospects of an early conclusion to the negotiations.
    Mr. Jenkins: Can my right hon. Friend give an undertaking that it is not the real object of the tests to extend into a new generation of nuclear weapons after 1990 in breach of Labour Party policy and Government undertakings in this matter?
    Mr. Mulley: I can give my hon. Friend the assurance that the tests are not designed to give us a successor to the present Polaris force.
    Mr. Cormack: Is the right hon. Gentleman aware that that reassurance is the most shameful thing that he has said in the House this afternoon?

    Harrier Aircraft
    Mr. Blakerasked the Secretary of State for Defence if he will make a statement about the latest position regarding the supply of Harrier jet aircraft to China.
    Mr. Mulley: The Government are ready to enter into negotiations for the sale of the Harrier aircraft to China as part of a balanced trade relationship.
    Mr. Blaker: Is the Secretary of State aware that the House will welcome the Government's decision to allow the sale of the Harrier to China? Does his reply mean that the sale is to be dependent on the Chinese agreeing to buy from us a certain quantity of civilian goods as well, and, if so, is that wise?
    Mr. Mulley: The decision is that negotiations should begin between British
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    Aerospace and the Chinese Government. The final decision will depend on the outcome of those negotiations. It is right that our trading relationship with China should not be simply as a seller of arms, but should be part of a much wider relationship, and that is the policy which the Government seek to pursue.
    Mr. Jay: Can my right hon. Friend assure us that the decision on the sale of Harriers will be determined by British needs and not by threats from the Soviet Union?
    Mr. Mulley: I can assure my right hon. Friend that we shall take the decision in the best interests, as we see them, of our nation and will not be influenced one way or the other by outside interests.
    Mr. Adley: Does not the Secretary of State understand that the method that the Government have chosen to follow in this matter is more appropriate to a Middle Eastern suq than the best way of doing business with the Chinese? Does he not understand that he is far more likely to get the trade that he and the whole House seek if he makes a clear decision and completes negotiations over the sale of the Harriers first? We shall then find that other trade will follow.
    Mr. Mulley: I have already suggested to the hon. Gentleman that his choice of language is sometimes not helpful to his case and he has just given us another example of that. I know that the hon. Gentleman has taken a great interest in the Harrier, but he ought to know that a number of trade missions from China have visited this country to look at a wide range of civil, as well as military, projects. Our firms and industries are in close touch with the Chinese Government and are negotiating over a whole range of matters. It is right that these things should go along together.
    Mr. Flannery: Has my right hon. Friend given any thought to the fact that the new leadership of China includes the people who opposed the Maoist approach to the Soviet Union and that it is not beyond the realms of possibility that the new leadership may move towards a new rapprochement with the Soviet Union? The Conservative Party and some members of the Government Front Bench could get a great surprise in the

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    next year or two when that development occurs, as it undoubtedly will.
    Mr. Mulley: I cannot follow my hon. Friend, because I cannot predict the future with the assurance that he appears able to command.

    PRIME MINISTER (ENGAGEMENTS)
    Mr. George Gardinerasked the Prime Minister if he will list his official engagements for 16th January.
    The Prime Minister (Mr. James Callaghan): In addition to my duties in this House, I shall be holding meetings with ministerial colleagues and others.
    Mr. Gardiner: The Prime Minister will be aware that on Monday the House is to be lobbied by health workers, among others, during the course of a one-day strike. Will the right hon. Gentleman use Question Time today to declare that it would be deplorable for any hon. Member to agree to meet a striker whose presence here was inflicting harm on patients and that the House should boycott the mass lobby unless there is a guarantee that at least emergency ambulance services are being maintained in every part of this country?
    The Prime Minister: I would not care to give guidance to individual hon. Members who will take their own responsibility on what delegations they meet, but I certainly agree entirely with the trade union concerned in this matter that it will be a disgrace if emergency ambulance services are left unattended on Monday. That is the view of the union. I wholly support it and ask the House to endorse it.
    Mr. Arthur Latham: Will my right hon. Friend point out to everyone he meets today that the Opposition have already chickened out of today's debate by tabling the feeble motion that we should go home at 10 o'clock? Will he also indicate that many of us on this side of the House believe that a basic wage of £65 a week is a reasonable demand by lorry drivers and that, if the Opposition had had the guts to table a motion urging the road hauliers to settle on that basis, a number of us would have supported it?
    The Prime Minister: No doubt we shall hear the views of the Opposition on the pay claims that are in the pipeline.
    Mr. Robert Hughes: You will be lucky, Jim.
    The Prime Minister: Well, hope that we shall hear their view and their attitude to the Government's position which I hope to develop later. I do not think that we should start the debate during Question Time. As regards the nature of the Opposition's approach, I am grateful to them for giving a Supply Day. They have some at their command and I thank them for providing one today. It is, of course, for them to decide what motion to table.
    Mr. Cyril Smith: When meeting ministerial colleagues, will the Prime Minister take the opportunity to meet the Minister responsible for the water industry in this country to make sure that he is acquainted with the situation in my constituency and surrounding constituencies where thousands of homes have no water and the 1 million homes that are receiving water are getting water that may be contaminated? Since that contamination is due to the non-flushing of filters, and since the flushing of filters is not a highly technical job, what does the Prime Minister propose to do about it?
    The Prime Minister: I am aware that there is serious difficulty in the North-West because of the breakdown of supplies—again as a result of unofficial action, which has been deplored by the union concerned. My right hon. Friend the Secretary of State for the Environment is in touch with the area water authority, which is doing its best to ensure that water supplies are resumed. As official discussions on the pay claim are to take place on Thursday, I believe that it is in the best interests of residents in the North-West that the men who have taken the initiative into their own hands should go back to work and allow the negotiations to take place.
    Mr. Patrick Jenkin: Is the Prime Minister aware that the whole House will endorse his plea to the London ambulance men that they should at the very least maintain an emergency service next Monday? What contingency planning are the

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    Government doing in case that plea is unsuccessful? Are the Government contemplating using the Armed Forces in this emergency?
    The Prime Minister: I am not able to give a detailed reply to the right hon. Gentleman. The Secretary of State for Social Services is going into this matter in detail and I am sure that he will be glad to acquaint the House with his findings in due course, if necessary.
    Mr. Mike Thomasasked the Prime Minister if he will list his public engagements for 16th January.
    The Prime Minister: I refer my hon. Friend to the reply which I have just given to the hon. Member for Reigate (Mr. Gardiner).
    Mr. Thomas: Without wishing to embark upon the main debate today, may I ask my right hon. Friend to give the House some factual information? In his engagements today—and, indeed, in any of his engagements since last August—has he heard from the TUC, the CBI or anybody, including the Leader of the Opposition, an alternative to the Government's pay policy that would be consistent with the object of keeping down inflation?
    The Prime Minister: In view of the nature of the supplementary questions so far, it seems to me that everybody—and that certainly includes myself—is anxious to get on with the debate set down for today.
    With regard to alternative proposals coming forward, I do not think that anyone has come forward with more workable proposals that would keep down the rate of inflation to the level that we achieved at the end of 1978. Certainly if I had heard them the Government would be following them.
    Mr. Raison: Will the Prime Minister use this engagement to say whether he believes that the law of the land is being upheld and enforced in relation to intimidatory picketing?
    The Prime Minister: No, Sir, not this engagement—the next one.
    Mr. Wardasked the Prime Minister if he will list his official engagements for 16th January.
    The Prime Minister: I refer my hon. Friend to the reply which I gave earlier today to the hon. Member for Reigate (Mr. Gardiner).
    Mr. Ward: During this afternoon will my right hon. Friend ponder the statement by a trade union leader that his members do not understand macroeconomics? Will he also ponder the opinion, given on television last night by a picket, that all this talk of wages affecting inflation is so much bluff? Is there not still a serious deficiency in understanding the nature of our economic difficulties? Does my right hon. Friend agree that we should reconsider the use of public service advertising in order to get the proper message across in the national interest.
    The Prime Minister: Yes, Sir. I think that there is still considerable misunderstanding and a failure to appreciate the relationship between excessive wage settlements and inflation. I believe that the message has got across in general but not in particular, although I am bound to say to Conservative Members who are now interrupting that some of the Right-wing stewards as well as the Left-wing stewards who are leading some of these official strikes are only practising what the Opposition preach.
    Sir John Eden: Has the right hon. Gentleman taken the opportunity so far today to discuss with the Attorney-General the exact legal position concerning secondary picketing? Will the Prime Minister describe what steps he has already introduced to stop intimidation, and will he give an assurance to the House that he will make a full statement about this during the course of the forthcoming debate?
    The Prime Minister: Yes, if the right hon. Gentleman will await the forthcoming debate. I will not answer a question on the law of picketing. I have prepared a very careful statement that I shall make during the course of the debate and I do not intend to anticipate it.
    Mrs. Sally Oppenheim: Will the Prime Minister confirm that his Government's counter-inflation policies all have one thing in common, and that is that they have failed to prevent prices from more than doubling in under five years of his Government? Will he, during the course

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    of his engagements today, make an abject apology to the people of this country for the hardship that he has inflicted on housewives and others?
    The Prime Minister: The causes of the halving of the value of money are a matter of history and dispute. The hon. Lady holds one view and I certainly hold another. I somehow feel that she cannot escape and that the last Administration, of which she was a member, cannot escape total responsibility for what happened in the middle years of the 1970s.
    I do not think that inflation, despite the great pressures that we are under now, will rise to the levels to which it rose as a result of the policy followed by the Conservatives, because we intend to keep a much stricter control, as we are doing, on money supply and on interest rates than the Conservative Administration did.
    Mr. Flannery: Has my right hon. Friend noted that the thinking of the Conservative Party in this difficult situation is nostalgically heading back towards the Industrial Relations Act 1971? Will he agree with me that, if the Conservative Party were in power, the imagination would boggle at the thought of what would be happening as the working people of this country realised that the Conservatives were hopeless in grappling with the present difficulties?
    The Prime Minister: I think that we should learn from history and remember it. There is no doubt that the Industrial Relations Act did not have the impact that the Conservative Administration hoped it would have at the time. I am not sure whether the Opposition are now heading back to it. It seems to me that the Leader of the Opposition says one thing and then her spokesman on employment runs around like the White Rabbit, trying to tell everybody that the right hon. Lady did not really mean what she said.

    HEATON CHAPEL
    Mr. Andrew F. Bennettasked the Prime Minister if he will pay an official visit to Heaton Chapel.
    The Prime Minister: I have at present no plans to visit Heaton Chapel.
    Mr. Bennett: Is the Prime Minister aware of the bitterness of many of my residents in Heaton Chapel towards the North-West water authority? Is he, in particular, aware that the authority has very bad industrial relations, that it pays very low wages to many of its employees, and that it has consistently put up charges? Will my right hon. Friend consider extending the system of rate rebate to water service charges very quickly to relieve some of the hardships? Finally, will he agree that the North-West water authority requires reorganising?
    The Prime Minister: With the present pressures coming on public expenditure —which will be even higher if some of the present wage claims go through —I certainly could not undertake that we would increase public expenditure in order to introduce rebates on water service charges over and above the present arrangements. I think that it would be better if we tried to give that sort of help primarily through the social security system.
    Mr. Evelyn King rose—
    Mr. Speaker: Order. I take it that the hon. Member for Dorset, South (Mr. King) will link his supplementary question to Heaton Chapel.
    Mr. King: No.

    BARKING
    Mr. Ridleyasked the Prime Minister if he plans to make an official visit to Barking.
    The Prime Minister: I have at present no plans to visit Barking.
    Mr. Ridley: If the Prime Minister were to visit Barking or many of the places where secondary picketing has taken place, would he not feel that he would have been wiser to support the Bill which he and I designed last year to make it necessary for official pickets to be licensed, in accordance with his suggestion at the time of the Grunwick dispute? If he had helped in that proposed legislation last year, we would not be in the trouble that we are in now.
    The Prime Minister: I am not very much in favour of secondary picketing, as I shall explain later, but neither do I like being a secondary accomplice to the hon.

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    Gentleman in a Bill that he drew up and in whose preparation I had no part.
    Miss Richardson: May I assure the Prime Minister that if he cares to come to Barking he will be very welcome, as a number of my constituents would like to discuss pay policy with him? If he accepts an invitation, I ask him not to bring with him the hon. Member for Cirencester and Tewkesbury (Mr. Ridley).
    The Prime Minister: I really must take exception to this constant coupling of myself with the hon. Member for Cirencester and Tewkesbury (Mr. Ridley). I am sure that he has a very interesting and felicitous domestic life, on which I congratulate him, but I have no wish to be associated with it in any way at all.

PRIME MINISTER (ENGAGEMENTS)
Mr. FreudQ6. Mr. Freud asked the Prime Minister if he will list his official engagements for Tuesday 16th January.
The Prime Minister: I refer the hon. Member to the reply which I gave earlier today to the hon. Member for Reigate (Mr. Gardiner).
Mr. Freud: In the course of the Prime Minister's busy schedule, would he care to think back to the 1974 Labour Party manifesto, to the Queen's Speech in 1975, to the Queen's Speech in 1977 and to the Queen's Speech in 1978, and then come out with a warm welcome to the Official
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Information Bill which I propose to bring before the House on Friday?
The Prime Minister: We seem to be interested in all other business coming before the House except my Questions. It may not discourage the hon. Member for the Isle of Ely (Mr. Freud) to know that the Government have it in mind not to oppose his Bill on Second Reading.
Mr. Skinner: Reverting to the industrial situation, will the Prime Minister agree that one of the main reasons why we are being beset by minor industrial troubles from time to time is the implementation over a three-year period of an incomes policy? Will my right hon. Friend accept that the rank and file trade unionists are rebelling not only against the incomes policy as outlined by the Government and the TUC, but against the policy that has been pushed down their throats over the years by their immediate trade union leaders? Is it not fair to say that today the Prime Minister will have to review the situation?
The Prime Minister: I have been with the Cabinet reviewing the situation. There is a spasm through which the trade union movement and many workers in this country are going. But frankly, rebellion which does not acknowledge the facts will not result in an improved standard of life. That is the message that we must all get across. I repeat once again, as I have done constantly that wage settlements of 20 per cent., 25 per cent. and 30 per cent. are the road to inflationary ruin.

GUADELOUPE SUMMIT MEETING
The Prime Minister (Mr. James Callaghan): With permission, I would like to make a statement about the meeting with President Carter, President Giscard d'Estaing and Chancellor Schmidt, which I attended at Guadeloupe on 4th, 5th and 6th January.
Our purpose was to discuss political and security developments of common concern but not questions of a primarily economic nature. In particular, we wished to consult about the present position on defence, detente, and disarmament. The vital issues before us were how our people could live more securely in peace and how their security could be better assured.
We began by examining the interrelationships between ourselves, the Soviet Union and China. We agreed that significant progress had been made in relaxing tension between the Soviet Union and the West and that we would do all within our power to maintain this. We marked the significant emergence of China on to the world scene and the recognition of the Peoples' Republic of China by the United States, and examined the possible consequences.
It is our conclusion that it is in the interests of peace and global security that China should make its proper contribution to strengthening international stability, and we took a positive position on the need to develop closer relations between China and the West. But these new relations will not be at the expense of any other country. Our relations with the Soviet Union are as important to us as are our relations with China, and we emphasised that our relations with the Soviet Union must remain central to the development of detente and that she must not be left in doubt that this is so.
We discussed the requests that China has made for supplies of arms, and I explained that the British Government are ready to negotiate the sale of Harrier aircraft, which we regard as essentially a defensive aircaft, provided that this is balanced by substantially increased trade in other fields which would bring significant benefit to our civilian export industries.
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Much time was taken up in discussion about strategic arms limitation. The negotiations for a SALT II agreement are now near a conclusion and the new agreement will be an important contribution to stability and detente. Her Majesty's Government earnestly hope that, following its conclusion, it will be speedily ratified. President Giscard and Chancellor Schmidt both expressed their support for early ratification.
We also had a long discussion about our positions on the next discussions that will follow the new SALT II agreement and, in particular, whether the so-called grey areas should be included in any further negotiations, whether in SALT III or separately. This question is one that directly affects the interests and security of Britain, France and Germany. The time is not ripe for any decisions yet, and none were taken, but it was extremely valuable to have this opportunity of discussing these serious issues in depth with my colleagues. We have agreed to remain in close touch about the next steps.
We also had a useful discussion about the mutual and balanced force reduction negotiations and the new French proposal for a European disarmament conference.
Finally, we took the opportunity of our meeting to exchange views on shorter-term foreign policy issues such as the situation in Iran, Turkey, the Middle East and Southern Africa. As regards the last, I was glad to find that President Carter and I were in full agreement that the Anglo-American proposals remain the basis for a negotiated settlement in Rhodesia and on the need to continue our joint efforts.
This meeting between the leaders of the three Western nuclear Powers and of the Federal Republic of Germany, at which we were able to discuss, informally and in privacy, the central issues of peace and security, was, by general consent, of great value and importance, not only to our respective countries but to the Western Alliance as a whole. It would not have been right or possible for us to take decisions without consultation with our other allies and partners, and we took no final positions. But we did reach closer understanding of each other's points of view and improved our perception of the central political and security issues which lie ahead. The deliberate

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informality of the meeting helped us in this objective. That is a matter of considerable importance for the people of our countries and for the successful pursuit of further negotiations in the field of arms limitation without injuring the security of the Western Alliance.
Following the meeting in Guadeloupe, I paid a short official visit to Barbados, at the invitation of the Prime Minister, Mr. Tom Adams. This visit was taken for granted by the Government and people of Barbados, who would not have understood if I had visited a French island and then left without visiting a neighbouring Commonwealth country to discuss the problems and prospects of the eastern Caribbean. My discussions with Mr. Adams and his Ministers covered a number of bilateral matters, including trade and aid. Our talks, and my reception as the first British Prime Minister to visit the island since independence, confirmed that Britain has a good and true friend in that important region.
Mrs. Thatcher: May I put three brief points to the Prime Minister? Was he told by President Carter that the Americans were going to cancel their plans to manufacture, under licence, the improved version of the Harrier? A number of the components were to be subcontracted here, and we would have received considerable income from the licence fees. Did the Prime Minister have any indication that an announcement was to be made very shortly after the Guadeloupe meeting?
Secondly, I refer to SALT. SALT II is very worrying, for a number of reasons. Is the Prime Minister satisfied that the provisions of SALT II will not inhibit the ability of this country to provide a successor to the Polaris?
Thirdly, we have not yet had a full statement on Rhodesia. What the Prime Minister said in this statement was rather different from what he said when I questioned him last time. Then he seemed quite ready to depart from the Anglo-American proposals for Rhodesia and thought that it was possible to secure a settlement on a different basis. Will he indicate to the House some of his plans for his future policy towards Rhodesia?
The Prime Minister: President Carter did not give me any information about American intentions on the improved ver-
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sion of Harrier, despite the reports that are appearing. I understand that the matter is under discussion in relation to the United States budget and I have no doubt that when a final decision is taken the President will inform me. Indeed. he may decide that the matter should not go ahead. As everybody knows, a great deal of in-fighting goes on in some of the American institutions.
Secondly, I do not accept that the SALT II agreement will be worrying, for a number of reasons. Reservations have been expressed about it, but some of the information that has appeared, even in the most well-informed newspapers, has not been wholly accurate. On the question of our ability to provide a successor to Polaris, that is a decision that will need to he taken in the next two years. There is certainly nothing in SALT II that will prevent any British Government from reaching the appropriate decisions. The proposals that are concerned with the cruise missile would not inhibit development there if it were required.
As to Rhodesia, it is just a question of the number of statements that have to be made. With the permission of the House, I should like to make a statement on Rhodesia tomorrow.
Mr. Hooson: Did the other leaders express objections, or in any way indicate any reservations, about our decision to sell the Harrier jump-jet to China on the terms indicated by the Prime Minister? Secondly, were the leaders concerned about the deteriorating economic position in Turkey and the uncertainty that is raised in the NATO Alliance with regard to Turkey's present position? Were any plans made, first, to give economic aid to Turkey and, secondly, to resolve her political differences with Greece?
The Prime Minister: I am at a slight but not overwhelming difficulty with regard to the first question, because it was agreed between us that, on the whole, we would not report the views of others, but only our own. But I think that in this case it is open to me to say that no objection was raised. Indeed, France and other countries have also been approached by the Chinese for weapons, and there was a general discussion between us. I do not wish to go any further than that. If there had been

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objection, the hon. and learned Gentleman can be sure that I would have taken it seriously into account.
There was a long discussion about Turkey, and it was agreed between us that the Federal Republic of Germany, which has close connections with Turkey, should take the lead in discussing how improvements can be made and how help can be given in addition to the present help given through the International Monetary Fund to assist her economic position. But a number of countries will be associated with the lead that I hope Germany will be able to give.
Mr. Hugh Jenkins: Is the Prime Minister aware that his right hon. Friend the Secretary of State for Defence has just confirmed that the Government have no intention of proceeding to a new generation of nuclear weapons? Will he confirm that nothing he has just said contradicts that?
The Prime Minister: There is never any contradiction between the Secretary of State for Defence and myself. The decision on whether to proceed will have to be taken by the next Government. Important decisions and issues of policy that will affect the whole future of Europe will have to be considered, and I do not think that we should rush into an immediate decision without considering the political consequences of the possible acquisition of nuclear weapons by others.
Mr. Donald Stewart: Can the Prime Minister say what practical effects, if any, the talks will have on Government policy?
The Prime Minister: I think that they confirmed the broad support that we have been giving to the strategic arms limitation talks. They increased our understanding of the great concern of the Federal Republic of Germany about her own safety, especially in view of the growing number of Soviet missiles that are being deployed—the SS20 in particular. The Chancellor made quite clear his extreme concern about this. I think that this will influence our consideration of the way in which we negotiate in the next round of arms limitations, because the fact that the Soviet Union has this large advantage in what are called "grey areas ", as distinct
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from the artificial and nominal strategic situation, must be of concern to all of us, and especially to Germany, which is in the front line.
Mr. MacFarquhar: I welcome the announcement made by my right hon. Friend about trade with China, but does not he agree that in view of the great discussion on our relations with Russia and China it was extraordinary that Japan should not have been represented at this summit, since its security is highly involved both with that subject and with SALT III? Does not he also agree that if we are to have better economic relations between Japan and the Western industrial countries it is important that Japan should be associated with all our discussions at the top level?
The Prime Minister: The French President issued these invitations and there was general agreement that the talks should be between the four of us, since we have been discussing among ourselves our attitude both to the present strategic arms limitation talks and to the future. On economic matters, it is quite true that when the Tokyo summit is held, as I dare say it will be during the summer months, Japan will be the host. Of course, Japan has a growing political significance, but basically we were talking about the nuclear situation, on the security side, in which the four of us are intimately concerned.
Several Hon. Members rose—
Mr. Speaker: Order. I remind the House that another major statement is to follow, and also a Ten-Minute Bill, before we come to the main business of the day. I therefore propose to call four more hon. Members from each side of the House.
Mr. Maurice Macmillan: In the course of discussing the atomic role, did the Prime Minister and his colleagues refer to the tactical situation in Western Europe, notably the capacity to reinforce Western Europe from the United Kingdom in the light of the absence of any significant air defence of Great Britain?
The Prime Minister: I do not accept the last part of the right hon. Gentleman's question, which is not true. Tactical nuclear weapons were discussed, but

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basically our concern was about the socalled—I think, artificially called —grey areas, which in my view involve strategic weapons just as much as do the present negotiations. The question whether weapons are launched from Washington or Moscow to destroy each other seems to me to be just the same as the question whether Cologne, Liege or London is destroyed, because whatever one calls the weapons will make no difference to the result.
Mr. Pavitt: I welcome the limited steps in SALT and accept that these important negotiations are to proceed step by step, but does my right hon. Friend recall the powerful and moving speech by Lord Noel-Baker at the Labour Party conference? Will he bear in mind the lessons of that speech in his future policy-making?
The Prime Minister: Yes. My noble Friend Lord Noel-Baker made a remarkable speech, and it will certainly always have an impact on us. We were discussing how to improve our security while at the same time increasing the prospects of peace. That was the whole basis of the discussions.
Mr. Whitney: When the Prime Minister and his colleagues reached the conclusion that significant progress had been made in relaxing tension with the Soviet Union, did they take account of the recent activities of the Soviet Union and its satellites in Africa and South-East Asia, and the significance of those activities on Western interests?
The Prime Minister: Yes, we did take those activities into account. They were considered very seriously. It is our general conclusion that the Soviet Union wishes to adhere to a policy of detente, although it will certainly take advantage of targets of opportunity wherever they arise, but as far as possible it will try to avoid the intersection of its attitude towards detente and its attitude towards these particular targets. There are places where they do intersect.
Mr. Watkinson: Does my right hon. Friend accept that detente could be improved this year if advances could be made in the mutual and balanced force reduction talks in Vienna? Did he again raise the Government's suggestion that momentum be given to these talks by rais-
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ing them to Foreign Secretary level? If this subject was not discussed, will he raise it this year?
The Prime Minister: How the next round of talks should he taken has been a matter for discussion. Of course, France is not a member of the present talks, which in a considerable way is a disadvantage. The French President has put forward an alternative proposition for extending the talks from the Atlantic to the Urals. I am not sure how this proposition would be received in the Soviet Union, for example, and I would be loth to depart from the present MBFR discussions in order to start an entirely fresh scenario.
Mr. Walters: In regard to Iran, did the Prime Minister feel that serious progress was made in formulating a joint Western policy to deal with a situation that could have enormous significance to Western interests in a key strategic area?
The Prime Minister: We had a serious discussion about the attitude that should be taken. We were meeting in the middle of an unresolved situation. I therefore do not claim that we reached a precise decision on what the attitude of the West should be. But there was a mind-clearing of the matter—[Interruption.] It is a difficult situation. The Shah left only today. It is not really a matter for laughter. I think it is true to say that as our officials continue to meet we shall try to evolve a situation that will safeguard the interests of the West but will at the same time permit the people of Iran to choose their own leaders properly and, I hope, democratically.
Mr. Grocott: Is my right hon. Friend aware that although he described the Harrier as being essentially a defensive aircraft, my right hon. Friend the Secretary of State for Defence was honest enough to admit earlier, during Question Time, that it was almost impossible to distinguish between an offensive and a defensive weapon? If that is the case in this highly dangerous area, would it not be better for there to be a whole review of our arms sales policies and of the question whether we should have such a policy before we proceed with sales to China?
The Prime Minister: On the question of semantics, I do not wish to get into dictionary definitions but I can think of some weapons that I would clearly call offensive and others that I would clearly call defensive. I do not think that one can draw a sharp line between the two, although basically, in so far as the Soviet Union may express any fear about the supply of Harriers, we would regard it as being broadly a defensive weapon in terms of relations between China and the Soviet Union.
Mr. Amery: The Prime Minister stated that he attaches as much importance to good relations with the Soviet Union as he does to those with China. Does he agree that the Chinese are not, as far as one can judge, taking any offensive action against Western interests anywhere, whereas the Soviet Union is doing so by the maintenance of Soviet and Cuban troops in Angola and Ethiopia, by its operations in Afghanistan, by its declared policies over Iran, and by its support for the Vietnamese aggression against Cambodia? How does the right hon. Gentleman reconcile acceptance of these facts with saying that we can pursue an evenhanded policy towards two countries, one of which is not being offensive to us the other certainly is?
The Prime Minister: We reconcile it because we believe that it is in our interests to do so and to maintain good relations with the Soviet Union. Let me cast the right hon. Gentleman's mind back to the late 1940s and early 1950s. Does he believe that the prospects for peace in the West would be improved if we were to return to the atmosphere of the days of the Berlin airlift, which he and I lived through?
It seems to me that we should make it clear to the Soviet Union that we do not intend to play the China card against it but that we have to take account of the fact that China is emerging. We should be most short-sighted if we were to show no concern for future relations with the Soviet Union, which in a few years will have a new leadership, which should come to power believing that the West wants to establish and maintain peaceful and good relations with that great country. It would be madness to do otherwise while the Soviet Union is willing to continue discussions and negotiations
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on reducing strategic and other nuclear arms.
Mr. Christopher Price: May I ask the Prime Minister about the substantial economic aid that has been promised to Turkey? In view of the Turks' recent new reservations against Dr. Waldheim's proposals for a solution to the Cyprus problem, was any linkage proposed between this substantial aid and real progress towards a solution in Cyprus?
The Prime Minister: It is the experience of those who have conducted negotiations with the Turks that linkage of this sort is the certain way to disaster. That is what the United States found in the matter of cutting off arms supplies to Turkey. No linkage has been made, but I certainly hope that there could be discussions in parallel, following the initiative taken on the Anglo-American-Canadian proposals on the future of Cyprus, which have been taken up by Dr. Waldheim. We should like to see the Turks responding to these proposals and some progress being made.

RAILWAYS (INDUSTRIAL DISPUTE)
The Secretary of State for Transport (Mr. William Rodgers): With permission, Mr. Speaker, I should like to make a statement about the current rail dispute, which has today halted trains throughout the country.
I reported to the House on 22nd November about unofficial industrial action in the Southern Region. I explained that this resulted from a recent recommendation of the Railway Staff National Tribunal rejecting a claim by ASLEF for new bonus payments for all footplatemen.
Yesterday evening, the Board and the leaders of the three rail unions explained to me how matters now stand. The Board has put forward proposals for specific productivity improvements, and significant progress has been made in discussion. There are substantial benefits to be gained for railwaymen as a whole, for British Railways and for the travelling public if satisfactory agreements can be reached. There is every reason why constructive negotiations should continue.

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In these circumstances, I regret that ASLEF has called its members out in a national rail stoppage today and on Thursday.
In my previous statement I made it clear that industrial action was wholly unjustified, unfair to other railwaymen, damaging to the long-term prospect of the railways and inexcusable in the inconvenience that it causes to the travelling public.
I have no reason to change that view, On the contrary, I have said to the general secretary of ASLEF that it is quite senseless to embark on a course that can only damage the interests of those whom it is intended to serve. I have asked all the parties to meet me again this evening to see how best negotiations can be carried forward. I know that the whole House will feel that industrial action should be brought to an end without further delay.
Mr. Norman Fowler: Is the Secretary of State aware that we share the view that this is a damaging, unnecessary and irresponsible strike, which has today caused chaos for the travelling public? Is he also aware that we strongly endorse the last part of his statement, particularly as for tens of thousands of commuters on the Southern Region the strike comes on top of long weeks of unofficial action? Against that background I have three short questions.
The strike will cost British Rail over £2 million a day. Will the right hon. Gentleman give an assurance that these losses will not simply be passed on to the public? On freight, what effect will the strike have on goods transported by rail—for example, from the ports? Will this not simply deepen what the Government must surely now recognise is a national transport crisis? Will the right hon. Gentleman emphasise again to the union leaders that strikes of this kind can only destroy good will for the railways and undo the valuable work carried out by the British Railways Board over the last two years? Above all, may we add our appeal to the unions involved to think again and to call off the strike, which can only do serious harm to the public and to the whole railway industry?
Mr. Rodgers: I am grateful to the hon. Member for Sutton Coldfield (Mr. Fowler)
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for his support, which will command general agreement in the House as a whole. On his first question, I have made clear to all those involved that there can be no question of the Government in some way bailing out the railways from the consequences of this industrial action. They fully understand that. Whether in terms of the loss of passengers or of freight, or in any other way, the prospect is that industrial action of this kind makes it less likely that the railways will have the stable and viable future that we hope they will achieve.
The hon. Member asked me about freight. It is plainly the case, but particularly so in view of other difficulties, that there will be consequences for the railways and for our ports. I have said that freight must pay its way. This action is very damaging to that part of the railway business in which we had hoped to see improvements. The hon. Gentleman is quite right. This sort of industrial action destroys good will, which has a very important part to play in the future of the railways.
Mr. Walter Johnson: Is my right hon. Friend aware that his intervention in this dispute last night was very helpful to the parties concerned? When he meets them again this evening, will he make it quite clear that this totally unnecessary strike is very damaging to the railways? I am sorry to correct the hon. Member for Sutton Coldfield (Mr. Fowler); the chairman of British Rail said that it would cost £5 million a day in lost revenue. But, more important, it would mean the permanent loss of customers. This is grossly unfair to the travelling public and to those whose freight is carried on the railways. Is my right hon. Friend aware that my advice to him this evening is to tell the parties to get back into negotiations as soon as possible?
Mr. Rodgers: I appreciate my hon. Friend's wise words, which stem from his extensive trade union and industrial experience. I am sure that he is absolutely right. The important thing is for all the parties to get back into negotiations. There is no reason why that should not occur.
Mr. Tebbit: Is the right hon. Gentleman aware that yesterday the Home Secretary was unable to say whether the

1509
Government were on the side of the strikers or the employers in the road haulage strike?
Mr. Russell Kerr: Whose side is the hon. Gentleman on?
Mr. Tebbit: May we interpret what the right hon. Gentleman said today as meaning that he thinks that the Government ought to be on the side of the management in the railway dispute?
Mr. Rodgers: The Government's job is to be on the side of the community, and it is the community which is the victim of this industrial action. I think that I made that absolutely clear in my statement.
Mr. Pardoe: Will the right hon. Gentleman confirm that the immediate cause of this dispute has more to do with a dispute between two trade unions than one between a trade union and British Rail? What estimate has the management of British Rail given the right hon. Gentleman in the recent past of the number of railway employees who could be made redundant without that in any way affecting the efficient running of the railways? Can the right hon. Gentleman confirm that the average British Rail engine driver drives less than the average family weekend motorist? Is it not time that British Rail stopped being an expensive job creation programme?
Mr. Rodgers: I think that the hon. Gentleman is falling below a constructive level of approach to what is a highly complex dispute. Anyone who knows the railway industry will be very wary of generalising about the precise causes and the responsibility over a period of time. This dispute has something to do with productivity, but it also stems from a decision of an independent tribunal which on this occasion has not been acceptable. I think that we should look at the railways not in terms of manpower reductions but in terms of greater efficiency, and the Board is seeking to achieve with the three unions precise agreements on efficiency from which the railways themselves and individual railway workers will benefit.
Mr. Ronald Atkins: Does my right hon. Friend agree that what the railways need is a sound and just wages structure that
1510
takes account of the great increases in productivity and the reductions in manpower that have taken place, and that offers differentials commensurate with skill, thus providing incentives, which Opposition Members are always talking about? After all, these negotiations have been going on for over a year.
Mr. Rodgers: I would not dispute what my hon. Friend has said about a sound and just wages structure, but such a structure is very difficult to achieve, because many interests are involved and, as he himself said, the problem of differentials is highly complex.
Mr. Henderson: Is the right hon. Gentleman aware that travellers from Scotland are being particularly inconvenienced by the absence of sleeping cars from Monday night to Friday night this week, and that this represents a substantial loss of revenue for British Rail? Would he feel it appropriate to point out that the alternative is, of course, air travel, and that that is a very serious competitor for British Rail on long-distance routes?
Mr. Rodgers: It is not only the travellers from Scotland and those who travel in sleeping cars who are being inconvenienced by the total absence of trains today. I have pointed out to all those involved that there is genuine danger that if the strike continues people will find other means of travelling, and that would be a very great pity.
Mr. Forman: Many thousands of commuters in my constituency will welcome the firmness of the right hon. Gentleman's statement, but will he look again at the so-called independent procedures, which did so much to give rise to the problem, and see whether they can be improved?
Mr. Rodgers: This point was raised when we last discussed the matter on 22nd November. I am sure that British Rail is very anxious to try to find procedures that will enable negotiations to continue and industrial action not to take place, but I am afraid that in this situation those procedures have not been followed, which I very much regret.
Mr. Bagier: Does my right hon. Friend agree that the vast majority of railwaymen deplore the action taken today and

1511
that most of them understand that the rolling programme, together with the investment that has been put into British Railways in recent times, will benefit them all? Will he further point out to all the parties concerned that railway work is team work and that no sectional interest can take individual action of this nature without damaging the industry as a whole?
Mr. Rodgers: Again, I can only endorse what my hon. Friend said. I am sure that the vast majority of railwaymen greatly regret this industrial action and know that there are real benefits for them if the railways can be given a stable future, with the prospect of some additional investment.
Several Hon. Members rose—
Mr. Speaker: Order. I was going to propose to call two more hon. Members from each side, but if there is no one standing on the Government side I shall call two more from the Opposition Benches.
Mr. Sainsbury: I welcome the right hon. Gentleman's condemnation of this unnecessary strike and his interest in improving productivity, but can he assure us that the long-suffering railway traveller will receive at least a fair share of the benefit of improved productivity on the railways?
Mr. Rodgers: Yes, Sir. It would not be a valid productivity agreement if there were not benefits for the travelling public as well as for those involved in the industry.
Mr. Heller: Can my right hon. Friend explain to the House what the dispute is about? We have issue after issue in front of us, and no one ever tells us at any time why thousands of workers go on strike. After all, these workers are also part of the community, and if thousands of workers—lorry drivers, tanker drivers, railwaymen, Ford workers or any others—go on strike they must feel that they have a genuine grievance, and before people rush in making statements deploring the actions of workers it would not be a bad idea if we knew what the issues were about.
Mr. Rodgers: I would be delighted to tell my hon. Friend and the House, but I am afraid that it would take a very long time and I think that this is not the occasion. The question is not whether people have grievances—almost all of us do—but whether we are willing to negotiate or whether we take action that is wholly unjustified.
Mr. Eldon Griffiths: When the right hon. Gentleman surveys the chaos in nearly every sector of his transport empire —the railways, the roads, the docks—does he not just occasionally ask himself where he may have gone wrong? Does he not see that there are two common threads in these problems, namely, too much trade union power and too much readiness to use it to hammer the ordinary public? What is he doing about these two fundamental problems, which are afflicting every sector for which he is responsible?
Mr. Rodgers: I hope that we all—I include the hon. Gentleman—reflect on our failures and shortcomings, because we all have them. But these problems are immensely complex, and we should examine them very seriously and not seek to draw conclusions about responsibilities over the years.
Mr. Robin F. Cook: When my right hon. Friend meets my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) to explain to him the reasons for the dispute, will he make it plain that all parties accept that no new money can be paid until the end of April and that the reason why the current dispute is rejected by the great majority of the work force is that there is ample time to reach a negotiated settlement for everyone, and not just a small proportion of the work force?
Mr. Rodgers: My hon. Friend is right. This is not a dispute arising from the present pay round. There is plenty of time between now and 23rd April and beyond to find a solution that is acceptable to all railwaymen and from which all railwaymen can benefit.
Several Hon. Members rose—
Mr. Speaker: Order. We must move on.

STATUTORY INSTRUMENTS, amp;c.
Mr. Speaker: By leave of the House, I will put together the Questions on the seven motions relating to draft statutory instruments.
Ordered,
That the draft Aviation Security Fund (Amendment) Regulations 1979 be referred to a Standing Committee on Statutory Instruments, amp;c.
That the draft British Aerospace (Design, Development and Production of Civil Aircraft) (Payments) Order 1978 be referred to a Standing Committee on Statutory Instruments, amp;c.
That the draft Double Taxation Relief (Taxes on Income) (Norway) (No. 2) Order 1978 be referred to a Standing Committee on Statutory Instruments, amp;c.
That the draft Double Taxation Relief (Taxes on Income) (Malawi) Order 1978 be referred to a Standing Committee on Statutory Instruments, amp;c.
That the draft Double Taxation Relief (Shipping and Air Transport Profits) (Jordan) Order 1978 be referred to a Standing Committee on Statutory Instruments, amp;c.
That the draft Double Taxation Relief (Taxes on Income) (Luxembourg) Order 1978 be referred to a Standing Committee on Statutory Instruments, amp;c.
That the draft Double Taxation Relief (Shipping and Air Transport Profits) (Venezuela) Order 1978 be referred to a Standing Committee on Statutory Instruments, amp;c.—[Mr. Foot.]

GHOST WORKERS (ABOLITION)
4.9 p.m.
Mr. Nicholas Ridley: I beg to move,
That leave be given to bring in a Bill to make it an offence both to pay, and to receive, wages paid out to workers in the newspaper industry who are retired or deceased; and for connected purposes.
Right hon. and hon. Members may not know what ghost workers are. I assure the House that they are not the millions of workers who are laid off by our current industrial disputes and who are currently on what might conveniently be called a "no-day week "—which is preferable, no doubt, to a three-day week. Ghost workers "is not in any way meant to refer to the right hon. Gentleman the Prime Minister when he was sunning himself in Guadeloupe.
Ghost workers are persons employed in the newspaper industry who do not exist. They have either retired or are dead, but mostly they are fictitious people with fictitious names whose only function in the industry is to receive a pay packet. They are given such names as Sir Max Aitken, "Dukey" Hussey, Sir Gordon Richards of Tattenham Corner and even, I believe, Mickey Mouse of Sunset Boulevard. I am told that the unions are actively studying the resignation honours list of the right hon. Member for Huy-ton (Sir H. Wilson) to see what other names they may conjure up for ghost workers.
I think it is fair to say that the practice has arisen over the years because management has opted out of the control of labour in the newspaper industry, particularly in the printing of the Sunday newspapers. The unions have contracted to provide sufficient people for the printing on a Saturday evening. The number of people who are engaged in such work is not known to the management. That is determined by the fathers of the chapels, who apply for as many people's wages as they feel like applying for on that occasion. The result is that management does not know how many people it employs.
At a recent investigation by the Inland Revenue into the printing of one Sunday newspaper it was discovered that 55 people who were on the payroll were not actually present that night. In a

1515
recent television programme, the managing director of The Times, Mr. Duke Hussey, said that he went round the printing shop one night and counted the number of people at work, and it bore no resemblance to the number of pay packets which he saw made up at the end of the night's work.
Mr. Martin Flannery: It is the same in here.
Mr. Ridley: As a result of an investigation following a productivity deal, in one Sunday newspaper packets were made up to represent the bonus due to all the workers. At the end of the morning when the wages had been collected, 55 pay packets remained upon the table unclaimed. The funny thing about that was that 33 of them were for people bearing the name of Smith and 22 were for people bearing the name of Brown. But none of them was collected because the true wages had already been taken.
The practice is, therefore, that large numbers of people are putting in for wages and management connives at paying the wages out. It is advantageous to management because it means that the high wages paid in the printing industry, do not have to rank for pension purposes, which would provide an excessive burden on the balance sheets of the accounts.
The unions agree to have the work done and decide how many ghost workers shall be in attendance that evening. It is suitable for them because it gets round the famous pay policy and the 5 per cent. limit and it gets them off tax to a large extent. I am told that ghost workers have not been in the habit of paying income tax at all. I do not mind if linotype operators receive between £14,000 and £17,000 a year. I have no objection to high wages. However, I do mind that they do not pay the proper rates of income tax upon such income.
The Inland Revenue knows all about this. In an article in The Sunday Times in November of last year it was estimated that about £1 million of revenue was being denied to the Exchequer by ghost workers. Indeed, the industry tells me that about 100,000 names are used to receive wages in any one year within the printing industry. But we know perfectly well that there are only 2,000 or 3,000 people actually engaged in these trades. There-
1516
tore, the extent of this practice is pretty widespread. It is not dissimilar, of course, to the lump in the building industry. However, there, contractors engage labour-only sub-contractors who put in competitive bids for doing the bricklaying or plastering and there is competition in that management can choose the labour-only contractor who does the work at the best price. In this case, due to the operation of the closed shop, there is no such competition and the cost to the employers is within the control of the unions.
It is strange that the Government, as soon as they were elected, pursued the self-employed in the building industry by means of the 714 certificate to stop up this tax loophole. But when it comes to something to do with official trade unions the Government are remarkably slow to move. They have known about this for some time. Although they will pursue the self-employed rigorously when they are engaged in tax evasion, they have told the Inland Revenue to hold back on TUC affiliated unions of this sort. I believe that the Inland Revenue has failed to chase up this matter, and this proposed Bill is designed to provide an alternative way of stopping it by making it illegal.
It is interesting to note that ghost workers are the product of a very high tax society, coupled with pay policies, hitherto rigorously enforced, and with the encouragement of the closed shop. These are the three elements in the ghost workers scandal which make it possible.
Under the present Socialist Government, if one lifts any industrial stone a whole lot of nasty creatures start running about. They do not like the limelight. The last purpose of this proposed Bill is to put as much limelight upon them as is possible.
The Labour Government are in full retreat. People will not tolerate the privilege and abuse which Labour Governments have brought to this country. There is one similarity between Napoleon and the present Prime Minister: although Napoleon had to undertake a retreat from Moscow, the present Government are going to retreat to Moscow.
4.18 p.m.
Mr. Eric Moonman (Basildon) rose—
Mr. Speaker: Is the hon. Gentleman seeking to oppose the motion?
Mr. Moonman: Yes, Mr. Speaker.
I believe this proposed Bill to be both mischievous and frivolous. I would not delay the House by asking hon. Members to reject the Bill on those grounds alone. However, I believe that the Bill must be judged on its attempt to influence industrial relations in a particular industry, namely, the newspaper industry.
Further, I would suggest that what we have heard from the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) reveals an attempt to demean the existing practices and work arrangements within that industry. In fact, between management and trade unions the vast majority of practices have worked well and efficiently for a very long period. The Bill does not help towards reaching an understanding of the problems and complexities of the newspaper industry. I believe that it would damage the industry.
The gravamen of the hon. Member's case is to describe practices which are not substantiated and which, if they were, would be a matter for criminal procedures. But then he adds a further element of exaggeration, and the whole thing is carried off, not very well, with breathtaking impertinence.
I believe that the substance of industrial relations within the newspaper industry, of which I have many years of operational experience as a member of the National Graphical Association—[HON. MEMBERS: "Oh."]—is about three things. Those hon. Members who have just woken up to that fact have obviously not attended the three or four key debates in which I have spoken and declared my interest on every occasion. It is nice to welcome visitors.
Perhaps I may mention the three reasons—not the bogus reasons that we have heard from the hon. Member—why there are problems in the newspaper industry. They certainly do not require legislation to put them right. The first reason is the type of production. We are talking about an industry which must take its decisions within the course of four or five hours in the evening. They are decisions which are taken against a whole background of meeting transport requirements and deadlines and of machines, and these decisions are often arrived at with no precedent
1518
and as a result of on-the-spot decisions between the two sides.
The second reason why there are problems within the industry is the poor communications within newspapers themselves. That is certainly not a trade union responsibility.
The third reason is the fear of new technology. It is no good anyone, particularly if he has an ignorance of the industry, arguing that these matters are not important. The fact of new technology and what it can mean to an old and traditional craft is of great significance to the men, who understandably feel that the job for which they have trained and to which they have been apprenticed, over a period of time, will now no longer apply. That is the sort of issue that must be taken into account.
But there is another dimension to the problem, which exacerbates industrial relations and which was overlooked by the hon. Member. That, of course, arises when there are high fluctuations of demand—in other words, of requirements of newspapers —not on an annual, a quarterly or even a monthly basis, but when the differences in the number of pages are decided within the course of six or seven days. That means, therefore, that they must have a very large number of casual workers.
If there is a centre to the problem, it is the fact that about 4,600 men are required—and management understands that—to fulfil these additional roles on a Saturday night. There is no way in which this can be forecast, because it depends on the amount of advertising that is acquired in the course of the previous week. That is a basic management situation. There is nothing that can be done about it.
Indeed, the Royal Commission on the industry pointed out the problems of the casual staff. Let us consider what it means to be a casual staff member. Such staff are, first of all, in an insecure position. They are not contracted to work on a regular basis. They have to sign on at call offices, and they bear their own travelling expenses for doing so. In fact, they may get no work at the end of it. The standby casuals on Fleet Street can be in a still worse position. They may have to wait until 10 o'clock in the evening before they know whether they

1519
will be on tap that night. Again, if there is no work, they get no pay. During the ACAS inquiry associated with the Royal Commission, it was pointed out by a number of the men concerned, who were interviewed, that they were wasting their lives in the call waiting for a decision whether work would be available for them that evening.
Of course there are problems in the industry and the system. But it is mischievous to suggest that because of isolated experience this is a frequent or general pattern in the industry.
If any hon. Member wants to take up the time of the House by introducing legislation on this subject, it is totally irresponsible to suggest it in the manner we have heard this afternoon. What we
ought to be looking at is the question of establishing ways in which the industry itself can work out a system so that the labour requirements can more closely relate to the needs of the production. That is a serious matter. It is a matter at which the unions themselves are looking very seriously. I believe that progress will be made in that direction. To ridicule the industry and the existing practices between management and trade unions is sadly irresponsible.
Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and Nomination of Select Committees at Commencement of Public Business):—
The House divided: Ayes 219, Noes 177.

Division No. 311

AYES

14.45 p.m.

Adley, Robert

Emery, Peter

Jopling, Michael

Aitken, Jonathan

Eyre, Reginald

Joseph, Rt Hon Sir Kelth

Alison, Michael

Fairgrieve, Russell

Kaberry, Sir Donald

Amery, Rt Hon Julian

Fell, Anthony

Kershaw, Anthony

Atkins, Rt Hon H. (Spelthorne)

Fisher, Sir Nigel

Kilfedder, James

Atkinson, David (B' mouth. East)

Fletcher, Alex (Edinburgh N)

Kimball, Marcus

Awdry, Daniel

Fookes, Miss Janet

King, Evelyn (South Dorset)

Baker, Kenneth

Forman, Nigel

King, Tom (Bridgwater)

Banks, Robert

Fowler, Norman (Sutton C'f'd)

Kitson, Sir Timothy

Beith, A. J.

Fox, Marcus

Knox, David

Bell, Ronald

Fraser, Rt Hon H. (Stafford & St)

Lamont, Norman

Bennett, Sir Frederic (Torbay)

Freud, Clement

Langford-Holt, Sir John

Benyon, W.

Gardiner, George (Relgate)

Lawrence, Ivan

Berry, Hon Anthony

Gardner, Edward (S Fylde)

Lawson, Nigel

Biffen, John

Gilmour, Rt Hon Sir Ian (Chesham)

Le Marchant, Spencer

Blaker, Peter

Glyn, Dr Alan

Lester, Jim (Beeston)

Body, Richard

Goodhart, Philip

Lloyd, Ian

Boscawen, Hon Robert

Goodhew, Victor

Loveridge, John

Bottomley, Peter

Goodlad, Alastair

Luce, Richard

Boyson, Or Rhodes (Brent)

Gorst, John

McCrindle, Robert

Braine, Sir Bernard

Grant, Anthony (Harrow C)

McCusker, H.

Brittan, Leon

Gray, Hamish

Macfarlane, Nell

Brocklebank-Fowler, C.

Griffiths, Eldon

MacGregor, John

Brooke, Hon Peter

Grimond, Rt Hon J.

MacKay, Andrew (Stechford)

Brotherton, Michael

Grist, Ian

Macmillan, Rt Hon M. (Farnham)

Bryan, Sir Paul

Grylls, Michael

McNalr-Wllson, M. (Newbury)

Buchanan-Smith, Alick

Hamilton, Archibald (Epsom & Ewell)

McNair-Wilson, P. (New Forest)

Buck, Antony

Hamilton, Michael (Salisbury)

Madel, David

Budgen, Nick

Hampson, Dr Keith

Marshall, Michael (Arundel)

Bulmer, Esmond

Hannam, John

Marten, Neil

Burden, F. A.

Harrison, Col Sir Harwood (Eye)

Mates, Michael

Butler, Adam (Bosworth)

Harvle Anderson, Rt Hon Miss

Mather, Carol

Carlisle, Mark

Haselhurst, Alan

Maude, Angus

Channon, Paul

Hastings, Stephen

Mawby, Ray

Churchill, W. S.

Havers, Rt Hon Sir Michael

Maxwell-Hyslop, Robin

Clark, Alan (Plymouth, Sutton)

Hawkins, Paul

Mayhew, Patrick

Clark, William (Croydon S)

Hayhoe, Barney

Meyer, Sir Anthony

Clarke, Kenneth (Rushcliffe)

Higgins, Terence L.

Miscampbell, Norman

Clegg, Walter

Holland, Philip

Moate, Roger

Cooke, Robert (Bristol W)

Hooson, Emlyn

Monro, Hector

Cope, John

Hordern, Peter

Montgomery, Fergus

Cormack, Patrick

Howe, Rt Hon Sir Geoffrey

Moore, John (Croydon C)

Costaln, A. P.

Howell, David (Gulldford)

More, Jasper (Ludlow)

Crouch, David

Howell, Ralph (North Norfolk)

Morgan, Geraint

Dean, Paul (N Somerset)

Howells, Geraint (Cardigan)

Morgan-Giles, Rear-Admiral

Dodsworth, Geoffrey

Hunt, David (Wirral)

Morris, Michael (Northampton S)

Douglas-Hamilton, Lord James

Hunt, John (Ravensbourne)

Morrison, Peter (Chester)

Drayson, Burnaby

Hurd, Douglas

Mudd, David

Dunlop, John

Hutchison, Michael Clark

Neave, Airey

Durant, Tony

Irving, Charles (Cheltenham)

Nelson, Anthony

Dykes, Hugh

James, David

Neubert, Michael

Eden, Rt Hon Sir John

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

Nott, John

Edwards, Nicholas (Pembroke)

Jessel, Toby

Onslow, Cranley

Elliott, Sir William

Johnson Smith, G. (E Grinstead)

Oppenheim, Mrs Sally

Page, John (Harrow West)

Rossi, Hugh (Hornsey)

Tebbit, Norman

Page, Rt Hon R. Graham (Crosby)

Rost, Peter (SE Derbyshire)

Thomas, Rt Hon P. (Hendon S)

Pardoe, Arthur

Sainsbury, Tim

Townsend, Cyril D.

Parkinson, Cecil

Shelton. William (Streatham)

van Slraubenzee, W. R.

Pattie, Geoffrey

Shersby, Michael

Walnwrlght, Richard (Colne V)

Penhaligon, David

Silvester, Fred

Wakeham, John

Percival, Ian

Sims, Roger

Walker, Rt Hon P. (Worcester)

Peyton, Rt Hon John

Sinclair, Sir George

Wall, Patrick

Prentice, Rt Hon Reg

Smith, Cyril (Rochdale)

Walters, Dennis

Price, David (Eastleigh)

Smith, Dudley (Warwick)

Warren, Kenneth

Prior, Rt Hon James

Smith, Timothy John (Ashfield)

Weatherill, Bernard

Pym, Rt Hon Francis

Speed, Keith

Wells, John

Raison, Timothy

Spence, John

Whltelaw, Rt Hon William

Rathbone, Tim

Sproat, lain

Whitney, Raymond

Renton, Rt Hon Sir D. (Hunts)

Stainton, Keith

Wiggin, Jerry

Renton, Tim (Mid-Sussex)

Stanley, John

Winterton, Nicholas

Rhodes James, R.

Steen, Anthony (Wavertree)

Ridsdale, Julian

Stokes, John

TELLERS FOR THE AYES:

Rifkind, Malcolm

Stradling, Thomas J.

Mr. Nicholas Ridley and

Roberts, Michael (Cardiff NW)

Taylor, Teddy (Cathcart)

Mr. Ian Gow.

Roberts, Wyn (Conway)

NOES

Allaun, Frank

Garrett, W. E. (Wallsend)

Moonman, Eric

Archer, Rt Hon Peter

George, Bruce

Morris, Alfred (Wythenshawe)

Armstrong, Ernest

Gilbert, Rt Hon Dr John

Morris, Rt Hon Charles R.

Ashley, Jack

Graham, Ted

Morris, Rt Hon J. (Aberavon)

Ashton, Joe

Grant, George (Morpeth)

Morton, George

Atkins, Ronald (Preston N)

Grant, John (Islington C)

Mulley, Rt Hon Frederick

Atkinson, Norman (H'gey, Tott'ham)

Grocott, Bruce

Newens, Stanley

Bagler, Gordon A. T.

Hamilton, James (Bothwell)

O'Halloran, Michael

Barnett, Guy (Greenwich)

Hamilton, W. W. (Central Fife)

Orbach, Maurice

Bates, Alf

Hardy, Peter

Ovenden, John

Benn, Rt Hon Anthony Wedgwood

Harrison, Rt Hon Walter

Park. George

Bennett, Andrew (Stockport N)

Hart, Rt Hon Judith

Parker, John

Bidwell, Sydney

Hattersley, Rt Hon Roy

Pavitt, Laurie

Bishop, Rt Hon Edward

Hayman, Mrs Helena

Pendry, Tom

Blenkinsop, Arthur

Heffer, Eric S.

Price, C. (Lewisham W)

Booth, Rt Hon Albert

Hooley, Frank

Rees, Rt Hon Merlyn (Leeds S)

Bottomley, Rt Hon Arthur

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

Richardson, Miss Jo

Bray, Dr Jeremy

Hoyle, Doug (Nelson)

Roberts, Albert (Normanton)

Brown, Hugh D. (Provan)

Hughes, Robert (Aberdeen N)

Robertson, George (Hamilton)

Brown, Robert C. (Newcastle W)

Hughes, Roy (Newport)

Rodgers, George (Chorley)

Buchan, Norman

Hunter, Adam

Rooker, J. w.

Callaghan, Jim (Middloton & P)

Irving, Rt Hon S. (Dartford)

Roper, John

Campbell, Ian

Janner, Greville

Sandelson, Neville

Canavan, Dennis

Jay, Rt Hon Douglas

Sedgemore, Brain

Carmichael, Nell

Jeger, Mrs Lena

Shore,Rt Hon Peter

Cartwright, John

Jenkins, Hugh (Putney)

Sllkin, Rt Hon S.C.(Dulwich)

Castle, Rt Hon Barbara

Johnson, James (Hull West)

Sillars, James

Clemitson, Ivor

Johnston, Walter (Derby S)

Skinner, Dennis

Cocks, Rt Hon Michael (Bristol S)

Jones, Alec (Rhondda)

Spearing, Nigel

Cohen, Stanley

Jones, Barry (East Flint)

Springs, Leslfe

Colquhoun, Ms Maureen

Jones Dan (Burnley)

Stallard, A. W.

Concannon, Rt Hon John

Judd, Frank

Stewart, Rt Hon M. (Fulham)

Corbett, Robin

Kelley, Richard

Stoddart, David

Cowans, Harry

Kerr, Russell

Stott, Roger

Cox, Thomas (Tooting)

Kinnock, Nell

Summerskill, Hon Dr Shlrley

Cralgen, Jim (Maryhill)

Lambie, David

Swain, Thomas

Crowther Stan (Rotherham)

Lamborn, Harry

Taylor, Mrs Ann (Bolton W)

Cryer, Bob

Lamond, James

Thomas Ron (Bristol NW)

Cunningham, Dr J (Whiteh)

Latham, Arthur (Paddington)

Thorne, Stan (Preston South)

Davies, Bryan (Enfield N)

Leadbitter, Ted

Tierney, Sydney

Davies, Ifor (Gower)

Lestor, Miss Joan (Eton & Slough)

Tilley, John

Dean, Joseph (Leeds West)

Lewis, Ron (Carlisle)

Varley, Rt Hon Eric G

Dempsey, James

Litterick, Tom

Walker Terry (Kingswood)

Dormand, J. D.

Lofthouse, Geoffrey

Ward Michael

Duffy, A. E P.

Loyden, Eddle

Watklns, David

Edge, Geoff

McCartney, Hugh

Watkinson, John

Ellis, John (Brigg & Scun)

McDonald, Dr Oonagh

Wellbeloved, James

English, Michael

McElhone, Frank

White, Frank R (Bury)

Ennals, Rt Hon David

McKay, Alan (Penlstone)

White' James (Pollok)

Evans, Fred (Caerphilly)

MacKenzie, Rt Hon Gregor

Wigley, Dafydd

Evans, loan (Aberdare)

McMillan, Tom (Glasgow C)

Willey, Rt Hon Frederick

Faulds, Andrew

McNamara, Kevin

Williams, Alap Lee (Hornch'ch)

Fernyhough, Rt Hon E,

Madden, Max

Williams, Rt Hon Shirley (Hertford)

Fitt, Gerard (Belfast W)

Mahon, Simon

Wilson, William (Coventry SE)

Flannery, Martin

Mallalieu, J. P. W.

Wise Mrs Audrey

Fletcher, Ted (Darlington)

Marks, Kenneth

Woodall, Alec

Foot, Rt Hon Michael

Mason, Rt Hon Roy

Young David (Bolton E)

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

Maynard, Miss Joan

TELLERS FOR THE NOES:

Freeson, Rt Hon Reginald

Mikardo, Ian

Mr. Ernest G. Perry and

Garrett, John (Norwich S)

Miller, Dr M. S. (E Kllbride)

Mr. Arnold Shaw

Question accordingly agreed to.
Bill ordered to be brought in by Mr. Nicholas Ridley, Mr. Ian Gow, Mr. Andrew MacKay, Mr. Peter Rost, Mr. Neville Trotter, Mr. Robert Banks, Mr. Peter Blaker, Mr. Anthony Nelson, Mr. William Benyon and Mr. George Gardiner.
GHOST WORKERS (ABOLITION)
Mr. Nicholas Ridley accordingly presented a Bill to make it an offence both to pay, and to receive, wages paid out to workers in the newspaper industry who are retired or deceased; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 16th February and to be printed. [Bill 49.]

ORDERS OF THE DAY SUPPLY
[4TH ALLOTTED DAY]—considered
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Bates.]

INDUSTRIAL SITUATION
4.37 p.m.
Mrs. Margaret Thatcher: Whatever view the Prime Minister may take about the situation in Britain, the Opposition took the view that we were in a position of grave trouble of crisis proportions—I should have thought that that was no longer in doubt—that it was of such a nature and of such proportions as to be of great concern to the House, and that we should debate it at the earliest opportunity. The Prime Minister took a different view, and after a month's recess was not prepared to provide a day from Government time, so we have provided a Supply Day of our own.
Inquiries around the several organisations about the precise position have revealed a very grim picture indeed. Own account transport operators such as supermarkets are officially not in dispute, according to the agreement with he Transport and General Workers' Union, and should be exempt from picketing. However, the Freight Transport Association, which represents such operators, reports that own account vehicles have been widely picketed. It also reports that basic food supplies are being stopped.
The Road Haulage Association confirms that picketing is affecting the supplies of essential goods. The Freight Transport Association also reports a new problem —shortage of diesel fuel, particularly in the South-West, because of picketing al the oil terminal at Avonmouth.
British Rail reports quite simply:
" There are no trains today ".
The British Transport Docks Board, the nationalised ports sector, says that on nationalised ports sector, says that, on average, traffic at its ports is down 40 per ting in and out of Southampton. The rail strike has added to the burden.

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The report from the Confederation of British Industry is that many firms are being strangled. There is a shortage of materials. They cannot move their own products. Exports are being lost. It says that secondary picketing, picketing of firms not in dispute, is very heavy all over the country. It is particularly affecting such items as packaging materials and sugar and all vital materials necessary if industry is to keep going. Lay-offs known to the CBI are at least 125,000 already, and there are expected to be 1 million by the end of the week. There are telegrams and telexes from many companies saying that their exports are not being allowed through and that they might lose the orders for ever.
There are messages from firms such as Marks and Spencer which last week lost 20 per cent. of its food production, approximately £2 million. Unless secondary pickets are removed this week the estimate is of a 30 per cent. loss. Over last week and this week, unless there is a change, the company says that it will not shift 50 per cent. of its exports.
The food industry in particular is shambolic. There is pressure on edible oils, yeast, salt, sugar and packaging materials. No maize came through Tilbury yesterday. Associated Biscuits has already laid off 1,500 people in Huyton and 400 in Southampton and will lay off more by the weekend. Cold stores are laying off people, and all large oil mills in Hull were picketed yesterday, except the one visited by BBC television. If that is not mounting chaos, it is difficult to see what is.
The strikes today are not the only ones we have experienced recently. The tanker drivers' strike, thank goodness, is over. We have had the bread strike, hospital strikes, strikes at old people's homes, and strikes in newspapers, broadcasting, airports and car plants. Many people who thought previously that strikes were a characteristic only of large firms and that most firms were strike-free received a rather rude shock from a new piece of work by the Social Science Research Council, a Government-financed body, which found that nearly half our factories had some form of industrial conflict, stoppages, overtime bans and go-slows in the past two years; and
1526
nearly one-third suffered from all-out strikes.
This is the picture in Britain today, and the troubles will not be over when the immediate strikes are settled. Not only are there more problems in the pipeline but many of the problems arising from the present strikes will carry on for very much longer than the strikes themselves. Many export orders might never be regained. Companies and firms which have struggled hard to get them may have to lay off their workers. Some of the small firms upon which Britain depends so much may be forced into bankruptcy and they, too, will have to lay off their workers. It was interesting to hear on the BBC this morning a typical road haulage man who said that he knew what he could afford. He could survive only about another four days because he was already losing £1,000 a day.
What is our approach to this grievous strike situation? Unlike the Prime Minister, we do not go around supporting strikes when we are in Opposition. We never have and we never shall. These things are a weapon of the present Government party and the nation is reaping a bitter harvest from the attitude and approach that they have taken.
The Prime Minister will not like it, but it is pertinent that he should be reminded exactly of the attitude he took in the miners' strike during our phase 3. The offer was approximately the same as that being offered by the road haulage employers now. When the miners were being offered 16 per cent., the Prime Minister said this of my predecessor:
" Unless he has more money to put on the table, he has a bigger struggle on his hands than he has ever imagined. Mr. Heath is arguing that he is fighting inflation. That is utter drivel."
The Prime Minister obviously expects the Opposition not to follow his example. Indeed, we shall not follow that example. We shall act responsibly, and he is very fortunate that we shall do so. No one on this side of the House will be urging the road hauliers to pay more. No one will be quoting the minimum amounts that they are paid. They are much more likely to believe the comments of many lorry drivers, heard on radio and television, that their regular pay varies from £75 to f100 a week.

1527
The Prime Minister's answer to all our troubles is a statistic—X per cent. This year it is to be 5 per cent. But we cannot have rigid pay policies for ever. That is not a possible way of conducting affairs in a free country which has a great deal of varied industry and where industry must always be changing to keep abreast of the times and one step ahead of competitors if we are to survive. It is not a possible way. It is not even possible in the way that the Government propose to carry out their present policies. There is no way in which it will work. I thought that that was admitted by the Lord President of the Council on television last Sunday during a very long interview. He pointed out that the low-paid workers would get far more than 5 per cent. That had already been arranged.
We know that under schedule 11 to the Employment Protection Act workers just above the low-paid level can use that provision to break through any incomes policy and to get higher pay because other people in the area are getting higher pay. The Prime Minister introduced that schedule and that legislation. It was part of the price he paid to the unions for the earlier stages of incomes policy. He knows and we know that unless he has proper provisions for differentials for people who take the trouble to acquire extra skills, knowing the years this takes, industry cannot be kept going because we shall not have the skilled labour that we need. His policy cannot and will not work.
The Prime Minister said this afternoon, when tackling the problem of inflation, that he believed in money supply. That is common ground between us. Five years of Labour Government have debased the coinage to a greater extent than have any other Government for three centuries. That is not in dispute; opinion as to how or why it came about may be.
The right hon. Gentleman knows and I know that unless he holds the money supply inflation will mount again. He knows and I know that if he goes on spending money at the rate at which the Government are spending at the moment and goes on borrowing the amount the Government are borrowing at the moment interest rates will be very high indeed and industry will be in considerable trouble. It already is. That is not the way to get productivity going.
1528
The right hon. Gentleman knows equally that the real problem is that we have lived through a long period of increasing trade union power. That period has been characterised by a series of what I would call package deals between the Government and the unions in which the Government have offered certain advantages in return for certain co-operation. The trouble has been that the advantages have tended to become permanent and enshrined in legislation, and the cooperation only temporary. In fact, the package deals got unpacked. That happened even with some of ours, as there were a number of advantages for the unions in the Industrial Relations Act. A good deal of the restraints were abolished by the present Government. It has been a very unequal situation.
That time of mounting power for the trade unions has also been a period when we have seen increasing Left-wing militancy in control of the unions. [HoN. MEMBERS: "No "1 Yes, we have, and the country knows it. The right hon. Member for Huyton (Sir H. Wilson) knows it, the Prime Minister knows it, and the people in the rank and file of the unions know it. Just at a time—
Mr. Sydney Bidwell: Does not the right hon. Lady understand that in a debate of this importance she must be much more specific than she apparently wishes about the dispute at issue? The characteristic of this dispute is that the rank and file have been balloted all the way through. It is only now that the leadership of, the Transport and General Workers' Union has made the dispute official and is taking a hand in it. That is the reality of the situation. The right hon. Lady's arguments are pure fantasy.
Mrs. Thatcher: The hon. Gentleman suffers from the fact that I understand him perfectly. He knows as well as I do that perhaps one of the reasons that this strike was made official was that it was already out of control. It went out of control because of the mounting Left-wing nature of that union.
We have been through a period of increasing trade union power. The unions have had unique power and unique power requires unique responsibility. That responsibility has not been forthcoming. That is the reason for the position in

1529
which the country finds itself today—about which they can be no dispute.
There has already been a good deal of comment and argument between the two sides on the vexed matter of picketing, which is playing an enormous part in these strikes. The Home Secretary had a go yesterday. He said two things with which I want to quarrel immediately. I do not like quarelling with the Home Secretary, but he gives one many opportunities to do so in some of the things he says.
He said, first, that, apart from one difference in the law which the Government side brought in, the law on picketing had remained the same. The difference which he said that the Government side brought in is that one cannot now picket at a person's home. That was not brought in by the Labour Party. It was brought in by the Industrial Relations Act—
The Secretary of State for the Home Department (Mr. Merlyn Rees): It was in the 1974 Act.
Mrs. Thatcher: It was in the 1974 Act, but it was not an improvement, or a greater protection to people in their homes, brought in by the Labour Party. It was introduced by the Conservative Party in the 1971 Act and it was one of the things that the Labour Government retained. So the right hon. Gentleman was wrong on that.
He also said:
"I have no power to instruct chief constables in their duties."—[Official Report, 15th January 1979; Vol. 960, c. 1323.]
He has power to send a circular to chief constables. Does he not remember, when we had debates and emergencies before, his right hon. Friend the Secretary of State for Education and Science debating with my right hon. Friend the Member for Chipping Barnett (Mr. Maudling) at the time when he was Home Secretary? The right hon. Lady said:
" That is why I welcome, but regard as very late indeed, his—>
my right hon. Friend's—
" circular to chief constables, which was sent out last Friday giving advice on what steps they should take.—[Official Report, 14th February, 1972; Vol. 831, c. 48.]
The Home Secretary should be giving advice on the present grievous difficulties.
Mr. Merlyn Rees: I have no power to instruct chief constables. That is what I said yesterday, and I repeat it. The right hon. Lady is wrong.
Mrs. Thatcher: Will the right hon. Gentleman give the chief constables advice by means of a circular? Why has he not done so already? He has power to give advice in a circular and, in view of the seriousness of the situation, he should already be doing it.
We on this side take the view that it is far better to take emergency powers early rather than leave it until the situation has escalated. That is the practice that we followed. Emergency powers were usually taken comparatively early. The negotiations with industry should now have been completed on what regulations it would be necessary to add to the corps which is already there, ready and waiting, under the Emergency Powers Act 1920. I doubt whether those steps have been taken and I think that that is why the right hon. Gentleman is not bringing in emergency powers as the position is now. When one has those powers there is no need suddenly to use the Army. The Army is there if the contingency plans have all been properly made.
May I continue on the question of the law on picketing? Apart from the one change to which the Home Secretary referred, which we made, he is right to say that the law on the nature of picketing has not changed for a very long time. The best exposition that I know on this—it is not for me to lay down what it is or what it is not—is an exposition given by the Conservative Attorney-General, then Sir Peter Rawlinson, now Lord Rawlinson, in a speech in September 1972. He went into it in language which is so simple that one would not have thought that a lawyer could have written it.
He set out very well the position on the nature of picketing. The only right is that of peaceful persuasion. There is no right to stop a vehicle. There is no right to threaten loss of a union card. There is no right to intimidate. There is no right to obstruct, and numbers themselves can be intimidating. He also pointed out what few other people have said—that every person in this country has a right to go about his daily work

1531
or pleasure free from interference by anyone else. That right is not being exerted or exercised at the moment.
My right hon. and noble Friend also pointed out:
" The right to proceed about one's lawful business is not in any way subordinate to the right of peacefully persuading. This has always been the case."
So the right of a person to do as he wishes should be upheld by the police and by this Government.
But now we find that the place is being practically run by strikers' committees and that they are using such language as "allowing" access to food, "allowing" certain lorries to go through. They have no right to prevent them from going through. They have no right to stop them. Lorry drivers should look to the Government and all the agencies of government to protect their right, first, not to stop if they do not wish it and, secondly, to go through to the docks or anywhere else with their loads. That is not happening and it is most reprehensible that firmer steps are not being taken by the Government to protect the ordinary citizen's right to go about his lawful business.
Some disturbing reports are coming in from parts of the country about what is happening. I am getting a large number. I am pledged not to use any names, SO—
Mr. Robert Hughes: Why not?
Mrs. Thatcher: We on this side respect confidence. Of course the hon. Member would like names, would he not?
Mr. Robert Hughes: Could not the right hon. Lady at least tell us how she can reconcile her support for Ford to settle at any price and for the Government to have no influence over Ford with her sudden desire now to prevent trade unions from carrying out legitimate strike action? If she has information which she says is confidential, what value is it if she is not prepared to name exactly where and when it is taking place?
Mrs. Thatcher: At no stage, even though frequently invited to do so, did I support the Ford strike. It was a strike in breach of an agreement. We on this side believe that unions should uphold their agreements as a matter of honour.
Mr. Robert Hughes rose—
Mrs. Thatcher: I have not finished with what the hon. Gentleman said. The argument that I am developing now is that there is no right to intimidate any citizen in this country. Bit that intimidation is taking place. I propose to use actual reports in the press in which names are given. They are substantiated by many telegrams. I am not prepared to mention names, because that is what a number of people would like me to do—and then those concerned would be exposed to intimidation as well.
It is reported in The Daily Telegraph today—[Horn. MEMBERS: "Ah! "] This relates to the animal feed compounders, a very important group. I thought that everyone recognised that it was important for food to get through to animals—but it is not, apparently, recognised by Labour Members below the Gangway. The spokesman states:
"' We are finding that essential ingredients —fat, salt and vitamins—are not being allowed through in a number of cases.' "
They are not being "allowed" through. The report continues:
" It is a very alarming situation.'
One Reading feed firm was told its nonunion driver would have to pay £16.64, a year's membership subscription to the Transport and General Workers' Union, before he would be allowed in to collect animal feed at Southampton docks.
Mr. Charles Cooper, a director of the firm, Walter Parsons and Sons, said: I think it's blackmail. I thought this was a free country. If our chaps want to join a union, they can. We don't see why we should force a chap to join '."
No union has any right whatsoever to do that. I believe that it is an offence against the law to do it. Action should be taken to ensure that lorry drivers are not threatened and to ensure that they are not told that they cannot get through unless they have a union card or take one out.
One of the problems about the present law on the nature of picketing is that it is extremely difficult to enforce. Intimidation and violence are unlawful. I believe that intimidation and violence are happening and are a daily occurrence. If the present law is unenforceable, we must change it so that it becomes enforceable. If the Prime Minister wishes to embark upon that, we shall certainly support him.
The Home Secretary said that the law has not changed. He was being less than

1533
complete in his assessment of the law. The law on the nature of picketing has not changed, but the law on the occasions when and places where it can take place has changed. It was changed by this Government.
There were considerable debates in the House during the passage of the Trade Union and Labour Relations Acts of 1974 and 1976. Hitherto the position was that trade unions had immunities from the process of the law only provided, first, that there was a trade dispute and, secondly, that the immunity applied only in the case of a contract of employment. That was all. But that was not good enough for this Government. They extended the immunity of trade unions in a vital way. They made trade unions immune in a trade dispute not only in relation to a breach of contract of employment but in relation to breach of any commercial contract whatsoever.
There were constant arguments in Standing Committee on this matter. The Government were warned what would happen if they took that action. A long letter from Campbell Adamson was puhlished in The Times and was quoted during those proceedings. Campbell Adamson was not exactly the staunchest ally of the Conservative Party. He said:
" If the Bill is passed as at present drafted, unions … will be free in law … to ' black ', blockade or boycott, or threaten to do so, whenever they like… in respect of a trade dispute anywhere in Great Britain or in the rest of the world. Secondly, it will be lawful to use the picket line for the purpose of establishing boycotts or blockades whether against an employer in dispute or against employers, companies … or bodies which have nothing to do with the dispute in question."
The Government were warned that if they passed that section of the legislation it would lead to blacking, blockades and boycotts. That is what they wanted and that is what we have got.
Mr. Joseph Ashton: The right hon. Lady referred to the law as it was in 1972. Is she not aware that the picketing that took place at the Salt-ley coke depot which was led by Arthur Scargill—[HON. MEMBERS: "It was illegal."] It might have been illegal, but it worked from the union point of view.
Hon. Members: Oh.
Mr. Speaker: Order. The right hon. Member for Finchley (Mrs. Thatcher) gave way to the hon. Member for Basset-law (Mr. Ashton). He is making a brief intervention.
Mr. Ashton: Whatever laws are on the statute book or whatever is written on a piece of paper do not guarantee the prevention of picketing.
Mrs. Thatcher: The hon. Member for Bassetlaw (Mr. Ashton) has made one at the most revealing and significant interventions that I have heard. He is not concerned with legality. He is not concerned with protecting the rights of the ordinary citizen to go about his business. He is concerned with the convenience of the trade unions. It is because of that attitude that today many of our citizens have to apply for permits to a strike committee of the Transport and General Workers' Union. That is exactly what this Government have landed our people in. It is totally and utterly wrong.
The Government have changed the law on picketing—not on the nature of picketing but on the extent. They were warned what would happen. It has happened and they are responsible for it in large measure.
Mr. Thomas Swain: Will the right hon. Lady give way?
Mrs. Thatcher: Of course I shall. I am only too delighted to do so. Hon. Members are being most helpful.
Hon. Members: Oh.
Mr. Swain: Stop baying, hounds. We have not killed the fox yet.
Does the Leader of the Opposition agree that she has missed out two important sections of society—members of the British Medical Association and members of the associations for the legal professions? They operate a closed shop and, above all, unlike trade unions, operate their own kangaroo courts.
Mrs. Thatcher: Neither the Law Society nor the Bar Council operates a closed shop. The hon. Member for Derbyshire, North-East (Mr. Swain) should read the last presidential address of the current president of the Law Society. Of course people must acquire qualifications. That is different. A solicitor does not have to belong to the Law

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Society to practise as a solicitor. A barrister does not have to belong to the Bar Council to practise as a barrister. A doctor does not have to belong to the British Medical Association to practise as a doctor.
I understand from a number of the Prime Minister's comments about picketing that he does not like the present situation either. We do not always judge the Prime Minister by what he says because he does different things. Most of us did not like what happened at Grunwick, but he did not stop his Ministers joining that picket line. That picketing involved numbers, and numbers themselves can be intimidating—that is apart from the violence. The Secretaries of State for Education and Science and for Defence joined the picket line when they were not involved in the dispute in any way.
The Secretary of State for Education and Science and Paymaster General (Mrs. Shirley Williams): Will the Leader of the Opposition also tell the House what a number of her colleagues have not said in letters to the press, that the moment that there was violence on the Grunwick picket line—which was many weeks after I was there—I immediately denounced it publicly?
Mrs. Thatcher: The right hon. Lady was not involved in that dispute. She was not in dispute with anyone, so far as I know. Nevertheless, she added her presence to the picket line and added to the numbers, when numbers themselves can be intimidating.
Mrs. Shirley Williams: The right hon. Lady knows that what I have said is true. Will she now concede that my remarks are true?
Mrs. Thatcher: The right hon. Lady concedes that she went on the picket line. I should never accuse her of wanting or condoning violence. However, she was not in dispute. She ought never to have gone on that picket line. Her action encouraged others to turn up in larger numbers. When one of my hon. Friends tackled the Prime Minister about that during Prime Minister's Questions he said that he hoped that others, including Opposition Members, would join that picket line.
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The Prime Minister does not have exactly the world's best record on picketing. In a more recent quotation he said:
" Not crossing the picket line has become an expression of solidarity to a degree which I certainly did not know in my younger days when I was an active trade unionist. But that kind of solidarity if carried to extremes means that life could seize up in a closely knit industrial society such as our own."—[Official Report, 1st November 1978 Vol. 957, c. 53.]
It seems that the right hon. Gentleman, too, is having second thoughts. If he is, if he will carry out an inquiry and investigation into picketing and will undertake, first, to repeal the extension of the law that his Government introduced and, secondly, will ascertain how both the law and practice may be changed to ensure that we do not have the problems that we are now encountering, the Opposition will support him.
Closely allied to picketing and the giving of tremendous power is the powerful weapon of the closed shop. I do not say that it allows pickets to intimidate because they are not allowed to do so, but in practice it enables them to intimidate. At present we cannot catch that and take it to the courts. It is illegal. It is the most powerful weapon for any group to have. When a lorry driver meets a line of pickets he may be alone in the cab. Therefore, he has to face a line of pickets alone. He can be identified because of the number of his lorry and the name on it. He is so fearful that he is almost bound to stop. As one driver said, "What choice have I? Who will stand up for me when I am sacked? "
In the vexed and vital area of the closed shop the Government have enhanced the powers of the trade unions. They have made it legal to have a statutory closed shop. They have made it legal for the unions to ensure that a person may be sacked from his job without compensation and without right of appeal to the courts of law. That is what the Government have done to enhance and increase the powers of trade unions. The Government have introduced legislation that allows picketing to take place at a greater number of places. The picketing that we now see taking place and the closed shop provisions have put into the hands of trade unions a considerable weapon leading to violence, and to intimidation that we cannot detect.
Mr. John Gorst: Will my right hon. Friend associate an additional feature with her remarks? Does she agree that many picket lines are being used—this applied to Grunwick and other disputes—in current disputes by extremist parties, such as the Socialist Workers Party and the Communist Party, solely as a background for making political trouble?
Mrs. Thatcher: I want to remove all possibility of violence on picket lines. I want to re-establish the circumstances under which people may go about their business without interference and without fear of losing their jobs. At present they are in grave fear.
The Prime Minister has been saying various things about the closed shop. He voted to change the earlier legislation but he has been making new statements about the closed shop. On 12th July 1977 he said:
"I always took the view that there was a right not to belong to a trade union, when I was a trade unionist myself, and I take that view now."—[Official Report, 12th July 1977; Vol. 935, c. 219.]
If he wishes to repeal the legislation that his Government enacted, we shall support him in doing so. If he will bring forward proposals to mitigate the effects of the closed shop. again we shall support him in doing so. If he asks the unions to minimise its effects, we shall support him in that approach.
It is not impossible to do that. It has just been done at County Hall. At the instance of Horace Cutler about 17 unions have entered into a new agreement at County Hall which means that the closed shop in its present form will not continue. What has been achieved is one of the greatest breakthroughs under present Conservative government in the GLC. If the Prime Minister will secure similar agreements for all unions under all circumstances, it will be a great advance.
Let me tell the Prime Minister what has been agreed. Horace Cutler said:
" What we have now agreed is that any worker who genuinely objects to trade union membership on the grounds of religious belief or personal conviction can opt out without question; that there will be no Star Chamber' type of inquisition into the genuineness of such belief; and that any worker opting out will make a charitable donation equivalent to the trade union subscription."
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The Government made the closed shop possible and legal in circumstances in which it would never have been possible and legal before. They enabled trade unions to compel a person to lose his job without compensation if he refused to join a union.
If the Prime Minister will secure by agreement that each and every person who does not want to join a trade union because of personal conviction is able to opt out, we shall support him. If he will undo some of the measures that he supported to give greater power through the closed shop provisions of the 1974 and 1976 Acts, we shall support him. He has a chance. We shall now see whether his statements that he is against the closed shop and that there is a right not to belong to a trade union were meant in the sense that he is prepared to take action, or whether they were mere talk. If he takes steps to minimise the closed shop provisions, we shall support him.
Mr. Eric S. Heffer: Was not the agreement recent]) reached with the GLC made under the existing law? The trade unions are supposed to have enormous power, yet they are willing to enter into agreements of that sort. Is not the right hon. Lady undermining the whole of her argument? The trade unions have proved that they are willing to enter into agreements provided that they can be freely arrived at.
Mrs. Thatcher: Of course I am not undermining my argument. The hon. Gentleman knows that. I believe passionately that no one should be compelled to join a trade union as a condition of keeping his job. The Government do not share that belief. The Government believe—they introduced legislation to this effect—that a person should be compelled to join a trade union and that if he does not he should lose his job. That is in the 1974 and 1976 legislation. The hon. Gentleman knows that people who have worked for British Rail for years in a perfectly satisfactory manner have lost their jobs without compensation because the Government passed legislation that enabled that to happen. We must seek to change the law and the extent to which the trade unions seek to operate it.
I appreciate, Mr. Speaker, that I am taking rather a lot of time but I am not

1539
occupying all of it by a long chalk. It the Prime Minister will do something to reverse the effect of the 1974 and 1976 Acts which his Government and his predecessor's Government enacted, we shall support him.
Another complaint that is frequently made is that we cannot have free collective bargaining—I stress that we have always used the term "realistic and responsible collective bargaining "—between two sides when there is no true balance of power between the sides. There is a great deal in that argument. If we are to be able to bargain freely, there must be a pretty good balance of power between the two parties to the bargaining. That is why the powers of trade unions were strengthened many years ago when the employee was very much on the adverse side of the balance. Today it is the employer who is on the adverse side.
In many instances—this is not known by Labour Members sitting below the Gangway—a strike of three to four weeks can put an employer totally and utterly out of business, although it may scarcely affect the income of those who previously worked for him. Until that balance is a true balance once again, I believe it will be difficult, if not impossible, to get free collective bargaining.
Every freedom—trade union freedom as well—requires very grave responsibility in its exercise. I can see what will happen. Unless the Prime Minister is prepared to redress the balance of trade union power so that there is an even balance between the two sides, what he is going for will be a State in which one can never get free collective bargaining and in which he will try to have incomes policies year after year. This will mean that industry in this country seizes up and we never reach that state of prosperity to which our talents and abilities entitle us.
A good deal has been said about the way that the PAYE system works, but I might point out that the most obvious way to deal with this problem is one which the Chancellor will never take. If one did not pay so much in tax out of one's pay packet, there would not be as much to come back during a strike. But the Labour Party is the party of high personal income tax. It increases it every time it is in power, and it has
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many effects. It means that people have no incentive to work harder and it means —this is another side effect—that people look at their net take-home pay and demand bigger pay increases than they would otherwise get if they paid less tax.
Some unions are so powerful that they are able to deprive the community of the essentials of life, and there are people in some occupations who would not go on strike at all. The Army would not, nor would the police, and we should be very grateful to them for their loyalty in all kinds of situations.
Are there not other unions whose members' work is so essential that one would expect them to be prepared to enter into no-strike agreements? Would it not be reasonable to take them out of the usual processes of bargaining in return for different methods which could be negotiated with them? I heard someone say "water ". I know that we went against the Donovan report and took away the limitation on striking in the water, electricity and gas industries. Some of us now think, with hindsight, that we were ill-advised to do that, but the nature of the prohibition was a criminal sanction which we did not like. Moreover, it had not been used for many years. There was a third reason, that people could get round the strike provision and have go-slows or overtime bans. Donovan recommended keeping that limitation to remind people that there were particular occupations which were not entitled to inflict immense harm and damage on the community out of all proportion to their numbers.
What I am suggesting to the Prime Minister is that he enters into negotiations with some of the unions to see whether he could get a no-strike arrangement in return for a different method of bargaining which they would Lind satisfactory. Again, if he does that we will support him.
Doubtless the Prime Minister now regrets his attitude to "In Place of Strife ". We certainly regretted his attitude in 1974 when he pledged to do away with the Industrial Relations Act and to enact new legislation which, in his own words, Labour had already agreed with the TUC.
We are concerned with the well-being of all our people. The question of the

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powers of unions in relation to the community, Parliament and the law has been raised again by events and by crises which even the Prime Minister cannot ignore. While we are very critical of his complacency, and while we are critical of the way in which matters have hardened and he has not been prepared to take the requisite action, and while we are critical of much of his political philosophy, if he will take steps to deal with the situation of trade union power and consider new laws and new practices against picketing, of alleviating the effect of the closed shop and of trying to achieve more secret ballots so that people do not go on strike before they have been consulted about a matter which affects their whole livelihood—if he will agree to take action on these issues, we will support him through and through.
We believe that this is a matter of great significance for democracy and a free society, and we will support him if he will take steps to deal with these problems. I hope he will set them in hand soon. May I point out that this is a more generous offer than he ever made to us when we were in government. I hope that he will take those steps. If he does not, I hope that he will step aside for a party that will.
5.26 p.m.
The Prime Minister (Mr. James Callaghan): I congratulate the right hon. Lady on a most effective parliamentary performance. It was in the best manner of our debates and the style in which it was delivered was one of which the right hon. Lady can be proud.
I wish I could offer quite the same compliment about some of the content. I think that anger and indignation are emotions that it is right to display, and when they come from a deeply felt passion it is right that the House should listen to them. But I would seriously and earnestly beg the right hon. Lady not to give way to overmuch indignation when she is negotiating on these issues. We have found by a long experience of history that it is not sufficient to refer to a large number of one's fellow citizens, as one of the Sunday newspapers did, as enemies within the gate. That is not the way that one can handle these matters. [Interruption.] Well, I suggest that hon. Gentlemen go
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to the House of Commons Library and look up the headings in the Sunday newspapers and they will see.
I propose to deal with what I have to say under three headings. The first heading I take is the present situation, and in view of the fact that the right hon. Lady spent the greater part of her speech on the power of the trade unions and strikes and picketing—as I intended to do myself—it would be proper to spend time on that. But I shall also embark upon a subject that she did not mention. Not one word passed her lips, as far as I can remember, about the overall question which faces this country and that is the prospect of runaway inflation. I will come to all of these matters in turn.
First, the right hon. Lady began by giving us her assessment derived from the reports reaching her of the situation in the country. I have of course, through the Department of Transport and the Ministry of Agriculture, Fisheries and Food, been getting similar reports. It is very difficult to give an overall picture, because the situation seems to change from hour to hour, and as the right hon. Lady said, from place to place. Regional officials, I am told, of the Transport and General Workers' Union are being very active in seeking to ensure that the limits of industrial action, particularly in relation to secondary picketing, are respected, and they are taking positive steps with strike committees on the basis of the priority list that the Government handed to them.
Priority supplies, I am told, are moving out of a number of ports, although usually on a restricted basis and not at all at Hull or Felixstowe. Picketing of some food manufacturers and suppliers of animal feedingstuffs continues, but has eased. In general, while vehicles belonging to the Road Haulage Association, even when carrying priority supplies, continue to face problems, what are called own account operators are not being restricted. [HON. MEMBERS: "Nonsense."] I prefaced my sentence by saying "In general ". I ask the House to accept that these reports are compiled on the basis of what is sent in by the regional officials assessing the situation for the Departments.
On the other hand, there are clearly occasions when the recommendations of the union are being ignored. There are regional differences. It is said that exports

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are being held up and raw materials are not reaching factories. The situation is easier in the South-West and is improving in the North-East, but the North-West and South Yorkshire continue to cause serious concern.
Mr. Michael Brotherton: Will the Prime Minister give way?
The Prime Minister: No. As regards supplies in the shops—
Mr. Christopher Brocklebank-Fowler: Will the Prime Minister give way before he leaves this point?
The Prime Minister: I am not leaving any point. I am trying to give the House the best up-to-date account I have from the regional officials of the Departments concerned of the overall picture.
Mr. Brotherton: It is out of date.
The Prime Minister: I can only reply to the hon. Gentleman that the report was assembled at 2.30 this afternoon. As I said, the situation changes from hour to hour and it is not possible to get an overall picture.
Mr. Brotherton: Will the Prime Minister give way?
The Prime Minister: No, not at the
moment. Basic foods such as milk, meat and bread are widely available, and we expect that position to continue. We expect supplies of most foods to get through to the shops in reasonable amounts for the time being, although there are a number of difficulties to be resolved with important raw materials such as salt, edible oils, fats and sugar in order to get the food factories moving again and the pipelines replenished.
The effect of the instructions issued by the TGWU to its members has yet to be seen, but, if secondary picketing of own transport vehicles is removed, there will be a resumption in the flow of some of the important raw materials to which I have just referred. If the union ensures that secondary picketing of vehicles moving food is brought to an end, all these vehicles should be able to go about their business and that would greatly reduce the interruption of food manufacture and distribution and of essential supplies of animal feed.
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The broad conclusion that we have reached is that the situation for trade, industry and employment in this country is serious. We shall continue to keep under review, day by day, whether a state of emergency would increase the flow of supplies, food and materials. That is the ultimate test. As of today, we do not believe that the declaration of a state of emergency would increase that flow of supplies, food or materials. Indeed, it might lessen the flow.
If the situation changes, the right hon. Lady and the Opposition need have no doubt that, as in the case of the oil tanker drivers if their dispute had continued, we would not hesitate to come to the House with a declaration of a state of emergency and ask the House to support us on it.
A number of hon. Members want to raise matters with me. I shall give way gladly, but I am sure that they will understand that I have a lot to say about other matters.
Mr. Brocklebank-Fowler: Many of us will interpret the Prime Minister's remarks as being an extremely complacent assessment of the current situation. What hope can he give to companies such as the Dow Chemical Company in my constituency which is totally blockaded by secondary strikers even though no member of its staff is in dispute with anyone? As a result of that action, an important export order to Egypt which cannot be replaced is likely to be lost and will never be won again.
In addition, because of the shortage of fuel oil and the damage that will be caused to experimental greenhouses containing plants, insects and animals essential to research, three years' important research work will be lost. What steps will the Prime Minister take to ensure that fuel and other essential supplies can get through to that firm?
The Prime Minister: If there is obstruction under the existing law, action can be taken. If the criminal or civil law does not allow action to be taken, I should like to ask the hon. Gentleman what action he thinks I should take—apart from conceding the claim.
Mr. Brocklebank-Fowler: The right hon. Gentleman is the Prime Minister and claims to have influence with the

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trade unions. I shall be grateful if he will use his influence to ensure that the Transport and General Workers' Union removes its pickets and enables the firm to get on with its work.
The Prime Minister: If I had the influence with the Transport and General Workers' Union that the hon. Gentleman ascribes to me, the strike would never have started.
Mr. Reginald Eyre: Will the Prime Minister give way?
The Prime Minister: No. I shall not give way again. I am sure that in every constituency there is a complaint that every hon. Member could raise.
Mr. Brotherton: Will the Prime Minister give way?
The Prime Minister: No.
Mr. Speaker: Order. It is clear that the Prime Minister is not giving way. The House must acknowledge that fact.
Mr. Brotherton: Will the Prime Minister give way?
The Prime Minister: No. I promise the hon. Gentleman that Ministers will make reports as soon as is necessary and every day. I have a long speech to make and I have given way. I must get on.
I have given the up-to-date position in so far as any general assessment can be made.
Mrs. Winifred Ewing: Will the Prime Minister give way?
The Prime Minister: No.
Mrs. Ewing: Give way. The Prime Minister: No.
Mr. Speaker: Order. May I say to the hon. Lady the Member for Moray and Nairn (Mrs. Ewing) that we shall not have a reasonable debate if the right hon. or hon. Member addressing the House is not allowed to continue.
The Prime Minister: The interruptions of the hon. Member for Moray and Nairn (Mrs. Ewing) sound to me like secondary picketing.
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I want to come to the question of picketing, but let me utter a word about strikes in general. The Leader of the Opposition said that the balance of forces has changed. I agree with her. There was a time when the employers were in the ascendance and when strikes were very much a matter of last resort—unlike now. Indeed, in those days men often stayed at work and accepted intolerable conditions with great bitterness rather than strike because of the privations they and their families would endure if they went on strike.
Lord Donovan, in his outstanding report—and I was a general supporter of his conclusions—said of men on strike:
" It would hardly be human if they viewed with composure the spectacle of other workmen endeavouring to take over their jobs ".
The origin of picketing was to stop the blackleg from doing one's job and the method used was to interrupt the flow of supplies to and from one's employer. The struggle was between the employer and the workmen who had combined to assert their right to decent living conditions.
The Leader of the Opposition quoted Lord Rawlinson's remarks about the legal issue. I am not a lawyer, but I understand that there is no legal distinction between primary picketing and secondary picketing in either the criminal or the civil law. However, the plain man can draw such a distinction, and I do.
Picketing, even today when the balance of strength has changed, is intended to stop the blackleg from doing the work of the man on strike.
Secondary picketing has always been with us, but not to the extent that it is today. It grew up, I may say—without, I hope, raising too much heat—especially during the period of the ill-fated Industrial Relations Act. But it is not designed to stop the blackleg from doing the job of the man on strike. It is intended to stop another worker from doing the job that he usually does. That is the distinction that I make as an ordinary citizen and not as a lawyer. It is my view that in these circumstances indefensible hardship can be imposed on innocent people and on people who are not connected with the dispute. That is why the spectacle of secondary picketing has aroused widespread criticism, and the Transport and General Workers' Union has attempted to limit

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picketing to its original purposes, although so far with only some partial success.
Striking used to be a measure of last resort, because of the privations that resulted. Nowadays it is not so. Indeed, the privations are hardly to be seen in certain circumstances, although in the Grunwick case there was an indefensible attitude on the part of the employer concerned. Workers today are part of society, and I thought that one of the elements missing from the right hon. Lady's speech was a recognition that they are part of society. Workers today accept fewer constraints than they did in the past about the effects of their actions on the general public. They intend—and by using secondary picketing they succeed—to bring pressure to bear on the employers and on Governments, to make us concede the claims which are put forward.
The present actions have highlighted the problems of secondary picketing, which did not attract continuous attention, at any rate in the past, and the Government certainly have a responsibility to consider what should be done to alter the present situation. I am bound to say, however, in view of our long history in these matters, that it is much easier to analyse than it is to find a proper solution, but we must try.
I begin by asserting two fundamental principles of our society. First, we cannot deny the right of men and women to withdraw their labour and still call ourselves a free society. That to me is fundamental. The second principle that I assert is that the community has an overriding right against all sectional interests. These principles must be reconciled. This is the difficulty of a modern society.
I point out to Opposition Members that it was a trade unionist, John Boyd, the general secretary of the Amalgamated Union of Engineering Workers, who summed up the position the other day. He said that it was wrong to cause other people to be thrown out of work, food wasted, animals slaughtered and health put at risk. He said that that is not the function of the trade union movement. I am with him 100 per cent. I address the road haulage drivers particularly when I say that hey have to measure their sense of grievance against the effects that their actions are having on the community at large.
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I deduce, from the speeches of some Opposition Members who have studied these matters, that they are far from clear that a change in the law would solve the problem. The right hon. Lady this afternoon made a number of suggestions, but, as far as I could understand her approach, she was saying not that these were suggestions that she would like to put into force but that if we came forward with them she would support them. I am only trying to interpret what I understand the right hon. Lady's position to be.
Mrs. Thatcher: It would help if the right hon. Gentleman were to repeal the 1976 Act which his Government passed.
The Prime Minister: I will come to that particular point a little later. I do not think it would help.
I have read the recent comments of the hon. and learned Member for Cleveland and Whitby (Mr. Brittan) and of the right hon. Member for Lowestoft (Mr. Prior). They have spoken in the last week about this matter of picketing. They have referred to the need for a voluntary code of conduct. Certainly I believe that that would have a better chance of survival than ill-considered legal provisions, which could be ignored in the future as they have been in the past.
There is the example—it was referred to earlier—of the position in 1972 with Arthur Scargill and the Saltley coke works, which led the National Union of Mineworkers in 1974 to lay down voluntarily strict rules governing the conduct of picketing. These controls were effective. Why? Because they had the force of law? No. These controls were effective because they were voluntarily agreed measures, drawn up by the union itself and accepted by its members. They could not have been enforced if they had not been accepted by those concerned, or if there had been competing factions, for example, within the union who did not accept the overall decision. But the National Union of Mineworkers has usually—indeed, I would say almost invariably—accepted decisions of this nature when they are taken, and it did so on that occasion. What I am saying to the House, and what I beg the House to believe, is that the law is only a second—no, a third—best in these circumstances unless we have the agreement and consent of those who are bound together.

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As the House knows, the Secretary of State for Employment has given a lot of consideration to the question of picketing. Last October he sent to a number of bodies, such as the TUC, the CBI, and to the right hon. Member for Lowestoft, the Scottish National Party, the Liberal Party, and others, including ACAS, a series of proposals for trying to clarify the issue of picketing, to try to turn it into something that would be generally acceptable and would not result in the kind of position that we have seen today. It is a prickly subject and, as the present position shows, a little progress has been made in the comments that we have had so far from some of those whom we have asked to give us the benefit of their advice. My right hon. Friend has asked them to expedite their replies, and the Government intend that we should proceed as quickly as we can to draw up a code of conduct that will adhere to some of the principles I outlined at the beginning of my remarks. My right hon. Friend will report progress to the House on this matter from time to time.
I come now to the question of the law, which the right hon. Lady raised. It has been suggested by other Tory spokesmen that industrial relations legislation which this Administration introduced has made secondary picketing more likely because of the repeal of the Conservative Administration's Industrial Relations Act 1971.
The Conservative Administration put that Act on the statute book in good faith, with the intention that it should introduce a system which they hoped would be fair between the unions, the employers and the public, but let us recall what was the basic underlying purpose of the Act. It was to make most strikes and picketing actionable. That was the purpose of the Act. People came under the law directly in that sense. What happened? Some action was taken. I hardly like to remind the House that five picketers were arrested, five picketers were charged, five picketers were imprisoned, and the Official Solicitor was called in to get them out.
It was during the lifetime of the Industrial Relations Act that secondary and flying picketing became the nuisance that it is today. The legislative change which we have made, which it is alleged has made secondary picketing easier, is that
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in the Trade Union and Labour Relations (Amendment) Act 1976 the immunity, as the right hon. Lady correctly said, for acts done in contemplation or furtherance of a trade dispute was extended to inducement to break a contract instead of, as previously, only a contract of employment. That was the extension that was made.
The right hon. Lady says that this was intended to give great new powers to the unions and was part of the whole ethos. The truth is that this change was made because of a number of court decisions in the late 1960s. These decisions had made the application of the law extremely unclear. This was commented upon by Lord Donovan who said in his report that whether legal liability was or was not incurred depended on—and here I quote the words of the report—
" whether a legal maze is successfully threaded or not."
That was the result. As it was drafted, the Act was acting capriciously and inequitably between different groups of workers and in different industries.
I have examined this carefully, and in the light of the experience that we have had it is highly doubtful, if the change-back was made, whether this would effectively curtail secondary picketing. I still recall the Trade Disputes and Trade Unions Act 1927. That Act provided for the measure that the right hon. Lady has asked us to reinstate. I was deeply opposed to it because it prevented Civil Service unions from being affiliated to the TUC. That was eventually repealed. What I would like the right hon. Lady to check is this. The law was totally ignored and unused despite that provision from 1927 until the time that it was repealed.
We must be careful about the law in these matters. I am not in principle opposed to the law in trade union matters. As a Conservative spokesman said the other day, we have introduced more law than almost anybody else. We have done so, but we must be careful where we go with these laws unless we are to bring them into contempt and ridicule. That surely is not the purpose of the Opposition in putting forward suggestions of this sort.
The 1927 Act is one that I well recall, and it is for this reason among others that the Government believe in and would

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favour a code of conduct drawn up in any approved way. The right hon. Member for Lowestoft suggested this, but not the right hon. Lady, as I understand it. I am not trying to make a distinction between the two, but I will if the House wants me to, and it will not be very difficult. Everybody is trying to think his way through this. I agree with the right hon. Gentleman that a voluntary code of conduct, reaffirming the existing law, would be the best way to proceed as a solution to this problem.
Mr. Eyre: May I press the matter of urgency upon the Prime Minister. He mentioned raw materials, great quantities of which are being held up at the ports by secondary strikes and other activities. The consequence of that limitation of supply will be devastating in the industrial towns and cities within a week.
The Prime Minister: I cannot undertake on a long-term issue of this sort, which has been growing up for several years, that a new voluntary code of conduct would be drawn up and agreed within a week. That is not possible. We must try within the limits of the present civil and criminal law to ensure that secondary picketing does not go beyond the proper limits. With the help of the regional officers and the aid of the police, I trust we shall be able to do that.
Several Hon. Members rose—
The Prime Minister: I must pass on. I gave way only 30 seconds ago. I turn now to the question of pay policy. My right hon. Friend the Secretary of State for Employment reports that in this pay round there have so far been 45 major settlements covering 1½ million employees. Thirty of those settlements, covering 800,000 employees, are within the guidelines. At least eight settlements covering over half a million employees are not within the guidelines. I add that most of those in breach had settlements within single figures, although, since the Government's defeat on sanctions in December and our consequent withdrawal, the situation has worsened. Some offers are being made of more than 10 per cent. and productivity conditions are being dropped from the offers.
Up to the time of the sanctions debate there were two highly publicised, confirmed breaches—Ford and British Oxy-
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gen. These breaches, together with the oil tanker drivers and now the road haulage drivers, tend to set a pattern. There is a knock-on effect, an attempt to set a going rate. Everybody who has anything to do with negotiations knows that this is true.
I shall enumerate some of the agreements that were outside the limits just to give an indication of where they were. There were the merchant seamen at 8¼per cent., British Oxygen at 9½ per cent., motor vehicle repair workers at 8 per cent., narrow fibre workers at 8 per cent., and electrical contracting workers at 10½ per cent. It could be claimed that this kind of settlement, although not in accord with the Government's views of the best results for the country as a whole, would not be regarded as totally intolerable. But experience has shown that when there have been some highly publicised breaches the knock-on effect works through subsequent negotiations and indeed accelerates. This is the problem and the issue that the country has to face today.
I draw the attention of the House and of the country to the warnings—the awful warning in some ways—of 1975. At the start of the pay round—history can judge the reason for it and what effect the money supply had—we had some settlements in double figures. There were those who considered this tolerable, just as we now consider that we can perhaps tolerate something that we do not really want. The settlements started in double figures, but they gradually built on each other. By the end of the year, by the end of the round, settlements were not just in double figures. They had rocketed to over 30 per cent. The right hon. Lady said nothing about this this afternoon. She said not a word about it, but here, in a sentence, is the reason why the Government do not intend, wherever they have influence, to depart from the guidelines they have laid down and which are best for the country as a whole.
I noted what the right hon. Lady said about not encouraging the road haulage workers in any way at all. The discussion on their pay has all been in terms of basic rate. I will repeat the figures accurately as I do not wish to mis-state them. Their basic rate is £53 a week. They have been offered a further £7 to bring this rate up to £60. They are on strike for an extra

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£12 a week to bring it up to £65. On the basis of overtime and bonus payments, their present average earnings are £84 a week. The offer made to them would increase those earnings to £95 a week—that is, by £11 a week. If they were to get the £65 a week basic rate, their average earnings would increase from £84 to £103 a week—an increase of £19 a week or nearly £1,000 a year. I put it another way—the increase they would get is as much as a single old-age pensioner has to live on in the course of a week. Is that reasonable? Is this what free collective bargaining is about?
Mr. Alexander W. Lyon: These figures are fairly well known, but I understand from some lorry drivers in my constituency that they are affected by the reduction in the number of hours that are permitted under EEC regulations. The result of this for one of the drivers whom I questioned yesterday was that he had already lost £5 a week on the first instalment of the hours regulations. He expected to lose more progressively as the regulations continued to be implemented. In those circumstances, is there not a case for saying that the lorry drivers' claim should be viewed in a different light from the rather naked figures that the Prime Minister has just given?
The Prime Minister: It is my experience that every group of workers has some particular problem that affects them and them alone. I have never known a case that is not unique. These are matters that must be dealt with by negotiation.
The road haulage workers' union has already negotiated an increase of about 15 per cent. this year. That is too high, in our view, for the health of the economy. These workers also received 15 per cent. a year ago at a time when inflation was running at 8 per cent. a year. They have had tax cuts like everyone else and increase in child benefit and children's allowances, yet now they say they will not settle for less than 22 per cent. I have no doubt what the answer should be in those circumstances. They have had a better deal than could have been expected and they should now go back to work.
Mr. Norman Tebbit (Chingford) rose—
The Prime Minister: No, I shall not give way at the moment. We now face claims in the public services from the local authority manual workers, the water workers, National Health Service ancillary workers, ambulance men, railwaymen, postmen, steel workers, gas supply workers, electricity supply workers and miners. These settlements are crucial to the future health of our country. The Government's policy is that the country should not go through once again what it went through four or five years ago. We shall adhere as closely as possible to the pay limits that have been laid down. We are at present seeing the first bitter fruits of free collective bargaining.
We have been deprived, by the vote of the House, of the instruments we were using to influence the holding down of pay settlements. Therefore, we must make the best use of such instruments as are available to us.
First, I make it clear that we do not intend, as a Government, to finance inflation. We do not intend to have a situation like that of a few years ago when the money supply snowballed out of control. We intend to adhere to monetary targets, with inevitable effects both on the level of activity in the economy and on the level of unemployment.
What has been remarkable so far has been steadiness of sterling. It has not slipped; it has wavered very slightly. As long as the Government are known to be holding to those targets and to this policy, we can be certain that our currency will not slip in the way that it did previously.
The Government do not prefer these alternatives. They are not our choice. However, we reject the alternative of allowing inflation to increase unchecked. If we do. we shall all be far worse off in the long run.
What would be the result of a small increase—and that is what it would be, only a small increase—in the quantity of money financing very large wage settlements of 20 per cent. or 30 per cent.? There could only be one result—the weakest firms would go to the wall and there would be more unemployment. In addition, instead of easing interest rates the country would be faced with further tightening. These rates are already higher

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than we would like. A further rise would cause industries and distributors to postpone investment where it has been running high—a 13½ per cent. increase in new investment last year. That will have to be postponed if higher wages are to be paid.
Secondly, in the public sector big settlements will push up the public sector wage bill. If settlements in the public sector were at the rate of 15 per cent., public expenditure would increase by more than £2 billion next year. The borrowing requirement would increase, on present estimates, by rather less than £2 billion.
If the local authority pay settlements are as much as 10 per cent., domestic rates will increase on average by as much as 18 per cent. If local authority pay settlements arc as high as 15 per cent. domestic rates will increase on average by up to 27 per cent. What are the consequences? Excessive pay settlements to public servants will mean worse and poorer services for the public generally. The tragedy will be that, if pay settlements are excessive, there will be cuts in rail services, longer hospital waiting lists, poorer education and fewer jobs. Let us have some sense in this situation.
None of us wants to go through this kind of situation again. I warn the House that if we were to increase the borrowing requirement by anything like that figure—and even the Leader of the Opposition would find difficulty in cutting that—sterling would slip. We would then have an increase in inflation once more and we should be off on the same old merry go round, except that it would be a tragedy.
We have considered the Government's attitude against this background. I come immediately to the question of low pay. Paragraph 17 of the White Paper correctly labelled "Winning the Battle against Inflation "said that the Government would be ready to see higher percentage increases than 5 per cent. in cases where earnings were less than f44'50 for a normal full-time week. The condition was that those on higher earnings should accept the consequential improvement in the position of the lower paid. This provision was of potential benefit to about 2 million employees nearly 10 per cent. of the total.
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At the Labour Party conference at Blackpool where this policy was rejected, a number of delegates said that the Government had not gone far enough for the lower paid. I indicated that this was a matter on which the Government would be prepared to talk further with others, including the TUC. We had those talks and I regret that the result was not ratified by the General Council.
Nevertheless, the Government have continued to give further thought to this matter. We have concluded that we should go further in an attempt to ease the situation and help the lowest paid. Therefore, we propose that, in addition to the existing exception of those earning up to £44·50 for a normal full-time week, there should be a bigger increase for those in the earnings bracket immediately above this figure.
What we have in mind is that increases might be allowed, up to a specified cash figure of £3·50 a week for a normal full-time week, where this amount will be more than 5 per cent. of weekly earnings. In order to allow the maximum flexibility for negotiators, this increase, like the 5 per cent., can be applied as a kitty among those benefited, but obviously on condition that the benefit is shared between those for whom it is intended and not transferred to the more highly paid grades within the same negotiating group. Of course, it is our view that this should apply throughout the whole sector, public and private. In the case of the private sector, negotiations would have to go on as they are going on now.
As to local authorities, this development in the pay policy would have implications for next year's cash limits. It was stated in the White Paper that the 197980 cash limits would reflect the Government's policy on pay, but so far the only cash limit which has been announced has been that for the rate support grant. I should like to make clear to the local authorities that the Government will be ready to meet their share of the extra cost to the local authorities of these proposed increases to the lower paid. The cost would similarly be taken into account where appropriate in setting the rate of the other 1979–80 cash limits. For central and local government the cost will be about £60 million.
I come now to the aspect of fixing fair rates of pay for those employed in the

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public sector. One of the real difficulties which always emerge when one is in a period of free collective bargaining, as we are now, is that fairness is rooted deeply in the conceptions of what should be the proper rewards. Some public service groups already make use of comparisons with rewards paid to employees in the private sector in their negotiations. The Government will be ready to see in some additional areas of the public sector, other than those engaged in trading, where there is a different set of negotiations, a greater role for comparability in determining pay.
The guiding principle should be the achievement of comparable pay for comparable work and comparable effort. Where the employers and the unions concerned make a request, therefore, the Government will be prepared to agree to an investigation into the possibility of establishing, for particular groups of workers, acceptable forms of comparison with terms and conditions for other comparable work. We will be prepared that the results of negotiations based on such comparisons should be implemented by stages in subsequent years. This is by no means an ideal solution, but it seems to us that, if we have to try to find our way through the present difficult situation, it is something on which we should be ready to take a chance.
Obviously, if we are to achieve the desired effect of setting fair and equitable relationships, such an arrangement depends upon the recognition by those groups with whom the comparisons are being made that it will be self-defeating if they seek to use the consequential increases in the public sector as a basis for their own next round of claims.
Mr. Terence Higgins: Has not the Prime Minister yet learned the lesson, which was pointed out by the original three wise men about 15 years ago, that if one has productivity agreements in some parts of the public sector and comparability in the other—indeed, if one has productivity agreements generally and comparability in the public sector—this must be inflationary and there is no way in which that can be avoided?
The Prime Minister: That is an argument of the economists. It is one on which I have heard both sides argued. I
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am not attempting to insult the hon. Gentleman by calling him an economist, but in practical terms I think that this is the best way forward. But in case the hon. Gentleman has misunderstood, I am not proposing that there should be indexing, that the public sector should be able to index its earnings against others. I believe that this argument will go on, but decisions have to be taken and I believe that this is a way of trying to get through the present situation without resulting in runaway inflation.
Ministers have begun discussions with employers and unions concerned—with local authority manual workers, with National Health Service ancillary workers and with ambulance men—to see whether a comparability investigation on the lines that I have described has a contribution to make in the context of their current negotiations. The Government will naturally be prepared to give sympathetic consideration to joint approaches for comparability to be applied to other public service groups. Here I have in mind nurses, for example, because it seems to me that there there is an opportunity to try to get some sense into the present situation.
I turn now to price controls. The Government will strengthen price controls. My right hon. Friend the Secretary of State for Prices and Consumer Protection will introduce a Bill to strengthen the powers of the Price Commission by repealing the provision in the Act under which firms in both the private and public sectors are able to put up prices automatically. When the prices policy was introduced in 1977, it was the intention that the Price Commission should make judgments about price increase applications on their merits. But, because fears were expressed about the way in which the Price Commission would act, the Government introduced a requirement for my right hon. Friend to make regulations which would ensure that there would be a certain level of profitability, whatever the circumstances of individual firms and irrespective of the views of the Price Commission. These fears have been wholly exaggerated, as, indeed, we expected at the time. But these regulations apply quite arbitrarily. They allow firms to maintain profit levels by putting up prices, whether or not the same level of profit can be achieved in other ways—by cutting costs or by improving efficiency.

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The effect of the new Bill will be to abolish the requirement for such regulations during and after Price Commission investigation of individual enterprises. There will then be no restriction on the Commission's ability to consider the extent to which firms can reasonably absorb costs. In this context it will be obliged to look at all relevant costs. The Bill will also provide that firms which pre-notify price increases after today-16th January—will not qualify for safeguards if the Price Commission decides to investigate those price increases. But the Bill will maintain safeguards where the Government direct the Price Commission to examine the profit margins of whole sectors of industry as opposed to individual firms, since it will not always be possible for either the Price Commission or the Government to assess clearly how hard the recommendations of the Commission, which might be proposed for a whole sector, would bear on the financial position and viability of individual firms.
The Bill will maintain the present discretion of the Price Commission to grant interim price increases to companies under investigation where justified by the circumstances of the case. This power has already been used by the Price Commission in several cases despite the existence of safeguards, and it will continue to use it.
I want to come to a conclusion. We put these proposals forward at a time —and I do not wish to re-open old sores —when the Government have not been left with many instruments in their hands to try to control the prospects for inflation in a free collective bargaining situation.
Mr. John Pardoe: The Prime Minister has repeatedly throughout his speech made the point that all these troubles seem to stem from the time when the House voted against sanctions. Will he accept and admit that throughout the whole of the 18 months of the Lib-Lab pact I and my hon. Friends did everything we could to persuade him to put effective sanctions to Parliament? We were told that the Government could not do so because a section of the right hon. Gentleman's party would not support them.
The Prime Minister: I do not accept in any way the last part of what the hon. Gentleman has said. Although we expect
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the hon. Gentleman to quote private conversations in public, at least he might quote them correctly.
We have put forward these proposals in the belief that they will help the position of the lower paid and ease their lot, in an attempt to create a greater sense of fairness among employees in the public sector in the light of the changed situation we are now in, in which free collective bargaining holds the stage, and with the belief that the proposal on prices will not discourage good and efficient firms but may make less efficient firms more ready to overhaul their practices.
These proposals will not meet, and are not intended to meet, the demands of those who seek increases of 20 per cent. or even more. The best way we can help the lower-paid, the pensioner, the sick and those unable to help themselves is by having a strong and effective counter-inflation policy. In such a policy excessive wage settlements have no place. Public opinion should reject those who put them forward.
It is the Government's view that the country has been moving in the right direction up to this year, is the present setback a reason for going into reverse on all our policies? The answer is "No ". Our approach is right on incomes, on industrial strategy and on the need for a meaningful understanding with the trade union movement on how powers are limited and worked out and used by consent. Although we have not yet succeeded in carrying it out, our approach is right in relation to the uses of North Sea oil. None of these objectives needs to be changed.
No Government could today spare Britain from a bumpy ride for as long as the attack is being made on the anti-inflation programme. We shall not seek to make scapegoats of any group. We shall do everything we can to make possible the return to a realistic and rational level of settlements. We shall continue to hammer the message home. I say to the right hon. Lady the Leader of the Opposition that we shall seek to build bridges, not to blow them up. No doubt we shall lose some battles in the course of this fight.
However, our strategy must survive because it is the right one. We have heard no alternative. It is the only one for

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Britain. In whatever time remains in this Parliament we shall do our best to carry it out. In so far as we do not succeed in this Parliament we shall carry it out in the next.
6.22 p.m.
Mr. J. Enoch Powell: As the public out of doors endeavour as best they can to cope with their hardships and inconveniences, there is one aspect of our affairs which strikes them irresistibly. That is the ironical similarity—not to say symmetry—between 1974 and 1979. It seems curious to them that the 1974 Parliament is coming to a close amid industrial confusion and unrest so similar to that which marked the close of the 1970 Parliament.
I do not myself think that this similarity is accidental. I do not believe that it is just an amusing historical curiousity. I believe that there is an important lesson to be learnt from it —still more so when we notice that in each case, although this unrest comes at the end of a period of endeavour to control prices and wages in some measure by Government action, the crisis itself did not arise as a direct clash between Government and the law on the one side and the trade unions on the other. The miners at the beginning of 1974 were at no time in breach of the Counter-Inflation Act, and this crisis comes at a time when, voluntarily or involuntarily, part of their power of control has, as the Prime Minister has reminded us several times, been struck out of the hands of the Government. It is not the details but the essence of the attempt by Government—in the one case, though it was more intensive, the attempt lasted two years, while in this case, with greater flexibility, it has lasted some four years—to combat inflation by controlling prices and wages which has led to this result.
The phrase "free collective bargaining" has run through both speeches in this debate so far. When I listened to the Home Secretary yesterday afternoon and again to the Prime Minister this afternoon it occurred to me that I had never thought I should live to hear a Labour Home Secretary and a Labour Prime Minister using "free collective bargaining" as a term of abuse, one of those terms of abuse which have merely to be thrown and not
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argued, like "fascist" or "racist ". Apparently it is "free collective bargaining" which is the trouble.
But we do not have free collective bargaining. There is a sense, admittedly, in which there is always a contradiction between the word "free" and the word "collective ", in that the outcome of bargaining when it is conducted between collectivities on both sides is not necessarily exactly the same as it would have been otherwise. However, it is not that quibble with which I am concerned. I am concerned with the fact that those who are engaged in negotiations now know perfectly well that they are not free agents. The unions know that the Government are determined, so far as in them lies, that they shall not be free agents in the transactions. The employers cannot participate openly and fully in a genuine negotiation because they can either take refuge behind and use as a lever the known requirements of Government and the risks that they run if they override those requirements, or else they complain that they are bound to negotiate and consider individual applications within the framework, within the ground rules, laid down by the Government.
In those circumstances it is intelligible that we find ourselves now, as we found ourselves five years ago, in something which looks desperately like industrial chaos.
In the course of the discussion earlier this afternoon on the situation on the railways a number of hon. Members commented upon the apparent folly of the railwaymen in engaging in self-damaging, self-destructive action, action not only arguably harmful to the community but harmful to their own interests. This is a consequence of the framework into which the unions and the employers have both been pinned by the policies of the past three or four years.
Both the men who negotiate and those who follow them—indeed, those who decline to follow their union leaders, too —are for the most part not fools. They are no more fools than hon. Members in this House. They understand that for three or four years the real relativities have been grossly distorted if not destroyed. They are perfectly well aware of that and understand it. They will understand that what the Prime Minister announced just now

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in regard to lower-paid workers will merely be a recipe for an attempt to distort relativities further.
Relativities are not the outcome of greater or lesser bullying. They represent real necessities—the real needs of the economy. In the last resort they are irresistible. The men who are concerned in these disputes and negotiations sense an irresistibility which both they and the Government attempt to confront in vain. They also understand perfectly well that if their remuneration is pushed above a level which can be sustained in that firm or industry it means for them a loss of employment—they do not need us to lecture them about that. They also understand that if inflation in the next 12 months is to run at 8 per cent. or 10 per cent., or whatever the estimate, it is likely that on average the level of settlements will be 1 per cent. or 2 per cent. on either side of that line. But that does not help them. It provides no guide in settling the point at which they can and ought to settle their remuneration in their industry and in their circumstances.
So the whole process of collective bargaining has been rendered nonsensical by the framework in which it is placed through the attempt to cope with inflation by enforced control of remuneration. The word "enforced" is appropriate. The control is a detailed control, LI detailed prescription of formulae as to productivity and so on, which may be true or bogus but which has at any rate to be worked out and applied. That control is the true cause which has rendered collective bargaining impracticable and brought the country to this pass.
So we are here contemplating the work of our own hands. We may apportion the blame variously between different parts of the House; but it is this House, the policies we have supported, the legislation we have passed, that have placed the workers in a position in which their employers and their unions can no longer act rationally, can no longer use the instrument of industrial bargaining which their whole lives have been spent in practising and refining.
What, then, are we to do about it? The right hon. Lady the Leader of the Opposition said—this was not the whole of her answer, but it was a big part of it —that we must change the law so as to deal with secondary picketing and with
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unacceptable picketing and, perhaps, to increase the use of the ballot in the context of strike action. I do not believe that those matters, although they are, of course, important, come anywhere near the heart of the issue.
Let us suppose that all those reforms had been made and that the law had been altered to the heart's desire of the right hon. Lady. The Prime Minister aptly pointed out that we went through all this five years ago under the 1971 Act with its provisions, such as they were, designed to produce exactly those results. Let us assume all that had been done. Does anyone seriously suppose that there would be such a great difference between then and now?
The Prime Minister said that once upon a time strike action was the last resort. I will tell him why strike action is now the first resort. It is that men know that the restrictions which it is attempted to place upon their remuneration in the next 12 months are unreasonably drawn and unsustainable, and they see instances where, by strike action, that unsustainability has been demonstrated. So they say to themselves "Very well, we know what to do. We will strike first and negotiate afterwards."
It is not deficiencies in the laws governing trade unions—though they may be serious—which are the cause of the trouble. They might slightly, but no more than slightly, alter the balance of power —although I dispute the whole conception—between the trade unions and the community. The trouble arises because of the entire setting which we have created by the pursuit of control of wages and prices as an antidote to inflation.
Mr. Frank Hooley: The right hon. Gentleman appears to be arguing that the imposition or acceptance of a framework of what he calls restrictions has somehow created the industrial problems into which we are now running and which we encountered in 1974. But surely, while that framework was accepted in stages 1, 2 and 3 over a fairly long time, there was no such industrial chaos. It is the abandonment of a framework or the refusal to accept one which has produced the industrial chaos we now have.
Mr. Powell: I invite the hon. Member to consider an alternative explanation. It is that while wages can of course be

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frozen for a short time, can be distorted for an appreciable time, yet, if that course of action is persisted in, those concerned—the employers and employees—are placed in an increasingly impossible situation out of which they have eventually to break. Men behave unreasonably if they are treated unreasonably. The accumulation of the consequences of attempted price and wage control has put employers and employees in an inherently unreasonable setting. We have to undo the harm that we have done.
First, and apparently most difficult, though the Prime Minister came near to it, we have to admit what it has been so politically profitable and convenient for us to deny—that inflation is not caused by increase of prices or of wages, any more than rain is caused by the pavements being wet. We have been trying to prevent the rain from falling by ordering people to keep the pavements dry. The rising prices and wages are the consequence, not the cause of inflation. Inflation is caused by Government —it is well known exactly how the machinery works —but because there are certain political advantages in being able to put the blame on to sections of the community instead of carrying it ourselves, we persist in denying the necessary deductions from the conclusion to which most of us have at last come.
So we must be straightforward and candid with our fellow citizens. It is not individual rises in wages and prices that add up to inflation. The individual rises in wages and prices, however attuned, however varied, are merely an index of the inflationary forces which have been released by the Government.
The second thing we in this House have to do is to stop voting public expenditure when we are not prepared to vote the means of financing it. It is thereby that we have caused the problem of which we have wished the consequences on to our fellow citizens. We all know what the consequence is—the Prime Minister's speech was shot through with the acceptance of it—of awarding votes to ourselves by voting expenditure and declining to finance that expenditure honestly.
Mr. Ron Thomas: Would the right hon. Gentleman
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be a little more specific? Let us take the case of the retail prices index—for example, food has gone up in price very rapidly. Would he explain, in his militant monetarist terms, how the price of food has gone up in this way as a result of factors such as the common agricultural policy?
Mr. Powell: The common agricultural policy has made food dearer in relation to everything else. That is one of the reasons why it is so much against the interests of the greater part of the people of this country—certainly against the interests of those on lower incomes—in that the CAP has made food relatively dearer in comparison with other things. That is the effect of the EEC. But a rise in price which makes one thing relatively dear compared with others has nothing to do with inflation. Inflation is the rise of all prices or fall in the value of money.
When we have resolved upon the first two necessaries the third will follow. We cannot make our fellow citizens whom we think so unreasonable reasonable by coercing them; we cannot knock into their heads what we pretend to be, but know is not, economic wisdom by compulsion, direct or indirect. Indeed, this House of all places ought to resist the suggestion that our fellow citizens are foolish and misguided, and that it is for us to instruct and direct them. We must stop making laws or enforcing policies whereby we purport—for it has to be done in detail if is to happen at all, and the Prime Minister read out a whole chunk of detail this afternoon—to decide in detail exactly what should be the remuneration of this section of workers or that section of workers or the other section of workers in an economy and a world that is constantly changing and in which, if our economy does not change, it will perish.
The fault—the buck, as they say—has come home. It has come back to us. But if we were to resolve upon this self-reformation tomorrow, we would still have a hard two or three months ahead of us.
The Prime Minister indicated dissent.
Mr. Powell: I seem to have a rather higher estimation of the shrewd good sense of the trade unions and their leaders than the right hon. Gentleman. I think that most of them have a pretty good

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judgment of where the market lies, a pretty good judgment of how they are going to arrive at what they consider to be the break-even point. But the fact that we still have to live this through is no excuse for repeating our errors, no excuse for not recanting. It is only by telling the people the economic truth, and refraining from attempting to transfer our misdemeanours of expenditure and budgeting to their shoulders, that we shall make free collective bargaining in the real sense of the term possible again; and there is no other way whereby wages in this country can be satisfactorily fixed over a great part of the economy except by free collective bargaining.
6.44 p.m.
Mr. William Hamilton: I recollect, as others must do, when the right hon. Member for Down, South (Mr. Powell) was arguing, not so very long ago, in precisely the opposite direction from that in which he has argued today. He was then arguing that if the unions did not exist the workers would be no better off than they are today. Now he argues that the trade union leaders are sagacious, calculating and cool, and know exactly what the market will bear, and that if we leave them alone they will come to the right answer. He cannot have it both ways.
Mr. Powell: I am sorry, but there is no inconsistency at all. I do believe that if the trade unions did not exist—if we could theoretically imagine them out of existence—the real wages of the workers would be approximately what they are, or, if not, probably slightly higher. But I also believe what I have just said—that in this country as it is it is only through free collective bargaining that relative wages can be fixed. There is no inconsistency between the two statements.
Mr. Hamilton: The right hon. Gentleman may think that there is no inconsistency, but I think that those two statements are diametrically opposed in the sense that in the first he said that the unions were irrelevant, that the workers, if left to themselves individually, could get as much if not do better, and now he is saying that the union leaders are so calculating and shrewd that they can squeeze every penny out of the economy for their workers. If he can satisfy his own conscience that those two speeches are
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consistent, he will satisfy no one else, and he will certainly never satisfy me that the two arguments he has put are mutually agreeable.
But I want to come back directly to the speech of the Leader of the Opposition. She is obsessed with the attainment of one target—to put up her curtains in No. 10 Downing Street. Everything else goes by the board. There is no consideration of the difficulties we are facing; there is no regard for the merits of any proposal that she puts forward as to whether they will solve the problems that the nation is facing. She has one calculation to make—" How far will my rhetoric, how far will my ideas, however changeable they might be, delude the electorate into voting for me and my party so that I shall get power? "That is the one calculation that the right hon. Lady makes every time she appears on television and every time she makes a speech in this House. That is why what she says lacks conviction all the time.
Let us look at what the right hon. Lady said last week to Brian Walden on "Weekend World ". There was no mention of referendums this time—that argument is now dropped. For example, would she have a referendum today among the lorry drivers? How long would it take? What does she think the result would be if there was a referendum among them? But let us leave that aside.
On "Weekend World ", the right hon. Lady was plugging the line that we must have secret ballots among trade unionists, paid for by the Government. If they did not have them, what would she do? She was going to stop the supplementary benefit payments not to the strikers, who do not get them anyway, but to their wives and kids. The Tory Party makes great play of law and order, but what the right hon. Lady was saying was that the wives and children of strikers are more heinous individuals than the wives and children of rapists, of criminals on long-term sentences, because they get supplementary benefit. But according to her the wives and children of strikers would not. The right hon. Lady must know, and every reasonable man and woman in the Tory Party must know, that that is demagogic rubbish that contributes nothing towards a solution of the problems we are facing.

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On "Weekend World ", the right hon. Lady went on, as she has done today, to her favourite theme—one that is never far distant from the mouth and mind of every hon. Member opposite—hatred of the trade unions. They hate the unions. They wish that they could get rid of them. They wish that the unions did not exist. But we had better all understand that, however much we may dislike what the unions do or say, no Government in this country can live without understanding them and cooperating with them. That is a basic fact that we had all better face.
Of course there is a lot wrong with trade unions—but there is a lot wrong with this House. There is a lot wrong with our political institutions, right from the top to the bottom. But that is not to say that we have to go round saying that, if only we got rid of one of them somehow or other, or put it into shackles, we would solve our problems.
The right hon. Lady, on "Weekend World" a week ago, said that she would declare a state of emergency forthwith. I think that she made that statement—I hope that she did—without consultation with any of her colleagues on the Front or Back Benches, without any thought of how such a declaration would ensure the supply of all goods that were in danger of being threatened by industrial action.
No, it was a design to cash in, along with the media, to create alarm and despondency which was not justified by the facts of the situation. In any case, if a state of emergency had been declared, as was made quite clear by the Home Secretary yesterday and by the Prime Minister today, it would not have tackled, except minimally, the problems that we are now facing.
I made a note before the Prime Minister rose to speak that at no stage in the right hon. Lady's speech today did she mention the crucial factor underlying the basic problems that we are all facing. The problem of inflation will not go away by the demagogic rhetoric in which the right hon. Lady and her colleagues engage. We still have not heard — she did not make it clear this afternoon—whether the right hon. Lady opposes, regrets or would argue against an outright across-the-board increase in wages and salaries,
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at present, of 15 per cent. or more. Do the Opposition or do they not regret that that is now happening?
Tomorrow a lobby of nurses will be coming here. Everybody in this House knows that I have a great soft spot in my heart for the nurses, and always have had, ever since I married one. I have a great emotional attachment to the nursing profession. I believe that, compared with lorry drivers or anybody else that one could name, the nurses are the most grossly exploited section of our community and have been over the years, long before pay policy.
When we had free collective bargaining, it did not matter much to nurses. The great argument against free collective bargaining always was, always is, and always will be, that it is essentially a capitalist argument: that everyone grabs as much as he can, depending not on the justice of his case but on the strength of his muscles, and to hell with everybody else. That, to me, is an obscenity that we cannot tolerate in a civilised society.
I do not know how it is to be done—nor does anybody else in this House, and we ought to be humble about it—but somehow we have got to find an acceptable alternative to free collective bargaining. Nobody knows what that acceptable alternative is. It is certainly not the free market, which the right hon. Member for Down, South was suggesting. There must be some body, some machinery created, which will try to assess the national interest and match that against social justice towards other sections of the community and their interests. We shall not solve these problems unless we get some kind of centralised machinery of that kind.
Some years ago we had the National Board for Prices and Incomes. It is with a great respect for Aubrey Jones that I say that he received a lot of abuse from his own party for taking the job in the first instance. But I think that he did a marvellous job in seeking to educate the people as to the merits of each individual case as it came along. The reports which that board produced were a model of objectivity, a model for the kind of education that the British people so desperately need in these matters today.
I hope that the Government will not throw out of the window the suggestion

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made recently by the Manifesto Group that this kind of machinery should be reintroduced. When we get conflicting sectional interests parading their virtues and their claims to be treated as special cases, we in this House do not take the brunt—not that I fear that—but it ought not to be left to political pressures exerted on Members of this House without the intermediary influence of an objective assessment by an independent board of that kind.
Mr. Ian Percival: I am sure that the hon. Gentleman will remember that at the time of the industrial action that preceded the General Election in February 1974, there was a Relativities Board, which seems to me to have been assigned just the sort of task that he is saying that there should be a board to fulfil, and that the Conservative Government of the time had referred the alleged special case advanced by the miners to the Relativities Board. What was the hon. Gentleman's attitude towards the Relativities Board at that time?
Mr. Hamilton: To start with, the board got its sums wrong concerning the miners' wages. But I agree entirely that that is the kind of machinery that we ought to be thinking of reintroducing. My attitude has been consistent on these matters, although the hon. and learned Gentleman may think I am wrong in that. I am simply stating my recollection that I have always, consistently, taken the view that we shall not get social justice, and we shall not get inflation tackled in the way that the Government have tried, unless we get sectional interests to understand and believe that by free collective bargaining one may get a short-term gain, but if that short-term gain is eroded by longterm heavier inflation, which will do damage to them and to the nation as a whole, we shall not get out of the dilemmas that we are facing.
I have said before in the House that we shall not get very far, either, if we seek to apportion blame to one side as against another here, or to one institution outside as against another. It is no good the Opposition saying that this is a failure of Socialism, nor is it any good on our part to say that it is a failure of capitalism. It is a failure of the British people collectively.
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In high places in many institutions we have boy scouts where we should have generals, or girl guides where we should have air commodores. The kind of leadership that we are getting at all levels is inadequate to the challenges that we are facing as a nation. I exclude entirely from that my right hon. Friend the Prime Minister. I believe that he is trying to educate the British people into believing that there is no easy or short-term solution to the problems that we face. I beg my friends in the trade union movement to understand that a little restraint over the next 12 months will pay the same kind of handsome dividends that the restraint which they have so gallantly exercised over the last three years has paid up to now. I appeal to them to have a regard for the political and economic consequences of what they are now doing.
Several Hon. Members rose—
Mr. Deputy Speaker (Sir Myer Galpern): Order. I ought to acquaint the House at this early stage that in the remaining two hours that we have for the debate before the winding-up speeches 26 right hon. and hon. Members wish to take part in the debate. How that is worked out is for each individual Member and his conscience.
6.58 p.m.
Mr. Maurice Macmillan: I think that most of us have a certain sense of unreality in this debate. The events are real enough and serious enough; more serious, perhaps, because what seems to be unreal is the relevance to the present situation of this House of Commons compared with other organisations which are having more effect, even though they are less accountable.
As the right hon. Member for Down, South (Mr. Powell) hinted, in some ways the debate is like the return of a bad film. The actors have changed, but the parts that they are playing are very much the same. We need not only a new cast but a new script. For there is one very big difference between what is happening now and what happened in 1974. Our domestic tragedy is now being played out against the darkening back-drop of our position overseas, where the whole strength of the West is being weakened. Iran is but the latest example of a series of reverses.

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In these circumstances, we need the greatest possible political unity and economic strength so that we can strengthen our position not only at home but in the world of today. Yet we are trying to operate with our hands tied behind our backs with a three-strand rope, the two main strands of which are, by common consent on both sides of the House, inflationary wage settlements and what might be called the negative power of the unions—as was well put yesterday by the hon. Member for Warley, East (Mr. Faulds)—which, while claiming a share in the framing of policies and demanding consultation about and responsibility for making policy decisions, are not able to exercise any control or responsibility within their own sphere. That was admitted by the Home Secretary when he said, referring to union responsibility:
" I do not know how it can be done, but I know that all of us—the trade unions, the employers and the political parties—have a responsibility for this in the modern world."— [Official Report, 15th January 1979; Vol. 960, c. 1325.]
Despite that, there seems to be no method by which either unions or Government can control the evil effects of secondary picketing or can even try in any way to prevent these pressures that are now beginning to lose trade unionists and other workpeople their jobs.
It is indeed difficult to know who is in control now. However, we can learn much from looking back at the past. It may be difficult to see what the precise situation is, but it is perhaps worth trying to discover how we got into it and whether our past experiences can give us any indication of a way out from where we find ourselves, whether we can find any way compatible with government by consent of all the people, and not simply the consent of organised labour, important though that is.
Successive Governments have tried to buy union co-operation in various kinds of incomes policy, applied to the public sector, to the private sector and to both. They have tried to buy this union co-operation with varying degrees of success in the beginning but always ending in the sort of situation that we now have, whatever the price paid.
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My right hon. Friend the Member for Sidcup (Mr. Heath) paid what was, in effect, a short-term price. He agreed, rightly in the circumstances, to try to create more jobs to deal with the problems of unemployment, and to do everything in the Government's power to stimulate new investment. That worked at first, but then we had circumstances in which we tried to negotiate, unsuccessfully, a voluntary incomes policy. Then we went to a statutory policy, which worked for a while. As the right hon. Member for Down, South pointed out, that was destroyed by the distortions that it had itself created.
The same sort of thing happened when the right hon. Member for Huyton (Sir H. Wilson) and the present Prime Minister also tried to buy union co-operation. Unfortunately, the price they paid was higher, because it was a continuing price, which is still being paid by the people of this country, for what was, in effect, a short-term gain. They paid the price of the Trade Union and Labour Relations Acts of 1974 and 1976 and the Employment Protection Act, all of which strengthened the negative power of trade unions to obstruct, to be difficult and to abuse their power in a destructive way, and made it difficult, if not impossible, for responsible leadership to act constructively or to control unofficial disruption. If one creates a situation in which those who go on strike as soon as they can do so do better in their wage bargaining than those who wait until after their agreements have run out, it is only to be expected that rational human beings, seeing the success of such tactics, will continue to use them.
The price that this Government paid in terms of concessions to the trade unions for their so-called social contract went quite contrary to their own earlier attempts to curb the abuse or onion powers. Successive Governments have in fact tried to go down that road also. They have tried to curb the abuse of union power without in any way weakening the unions' essential role. Indeed. in many cases the attempt to curb the abuse was meant to strengthen the proper and constructive capabilities of the trade union movement.
Both Labour and Conservative Governments failed. "In Place of Strife" was stillborn, and the Industrial Relations

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Act was murdered in infancy. Yet both my right hon. Friend the Member for Sidcup and the right hon. Member for Huyton accepted the need to include the trade union movement in consultations when framing general economic policy, to include the trade unions with other organisations and with other interest groups that were powerful and would be affected.
Now we face strikes on the railways and in transport, and we face the threat of further trouble with local authority manual workers, ambulance workers, hospital ancillaries, postmen, gas workers, miners and power workers. All those groups have one thing in common: they are part of the public services.
Whilst I would go a long way with the argument of the right hon. Member for Down, South that the one thing we in this House must do is to curb public expenditure to the amount that we are prepared to finance out of taxation, there is an element in the groups that I have just mentioned that makes it harder to put that argument into practical effect. Each of those groups, being part of the public sector, is inevitably part of public expenditure. Its remuneration and the level at which it is paid must to some extent determine the total level required to be spent to provide any given level of services. Here I cannot see that there is a market that would enable responsible collective bargaining to be undertaken with the freedom that would be desirable were it practicable, because the great weapon available to those groups of workers in particular is the fact that they can cause more disruption without damage to themselves than other groups can.
The response of the Prime Minister on how he proposes to deal with this situation seems to be to look for a new social contract, hopefully somewhere about the 5 per cent. limit or at least not going up to double figures, backed by more powers for the Price Commission, creating more rigidity in the system, generating less profit for genuine reinvestment and distorting further those all-important relativities by his efforts to help the lower-paid. I have no doubt that we shall see the link between the public sector and the private sector applied in a way which will turn out to be inflationary. I also have no doubt that when we see all the pressures on the private sector reducing the level of private investment, we shall face demands
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for increased public investment of taxpayers' money through the National Enterprise Board. This course must be disastrous for employment, for real investment and, above all, in preventing change in the structure of our industry, which it will tend to freeze in its present pattern. It will lead inevitably to either more Inflation or higher taxation—or both.
In these circumstances is it too much to expect the Prime Minister to forget the fact that he was largely responsible for the destruction of "In Place of Strife "and to give up his policy of finding out what the unions want and seeing that they get it regardless of the possible effect not only on other people but also on members of trade unions themselves?
Is it too much to ask the right hon. Gentleman to make a real effort to lead the country away from the sort of adversary politics which he tends to encourage and to try to unite the nation behind Government policies which will broadly be acceptable at least for the remainder of this dying Parliament, and, in so doing, to strengthen Britain abroad by playing the statesman in home policies? He should certainly consult the trade unions —and also industry and commerce. This must not simply mean the CBI but should include representatives of smaller industries and smaller organisations representing small firms, the unquoted companies, the unincorporated businesses and the self-employed.
The Home Secretary yesterday referred to the responsibility of the political parties in all this. I suggest the Prime Minister should also consult the leaders of other political parties to see whether he could not work something out. The Prime Minister himself said he believed it was necessary to try and find some code of practice to control secondary picketing. He quoted Mr. John Boyd as being strongly in favour of that. He quoted the result of the mass picket by the National Union of Mineworkers.
Can the Prime Minister try to work out in the sort of consultation I have suggested an acceptable and enforceable method limiting union action in a way which, as he said, will need support from within the trade union movement itself? I recognise that this is the negative aspect of policy—preventing people from doing things in their self-defence which

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are too damaging to their fellow citizens —but it is a necessary part of any policy to restore confidence, not so much in his Government but in the trade union movement among people who are now beginning to fear and dislike it when they have never done so before.
Could not the Prime Minister try to make some coherent method of determining wage levels and methods of bargaining allowing different groups to negotiate pay and conditions with a degree of flexibility but without the full dangers of escalation?
In all such consultations he should also talk about direct taxation. I said at the beginning that I thought that we were fighting the economic battle with our hands tied behind our backs with a three-strand rope, two strands being inflationary wage settlements and the abuse of union power. I believe that the third is over-high direct taxation on the average and below-average wage-earner. The Inland Revenue raises in direct taxation about £19 billion a year. Of that, 94.6 per cent., over £18 billion, is paid by people at the standard rate of tax or less. Only 5-4 per cent. is paid by people who are taxed at 34 per cent. and above. It is the standard rate taxpayer and the taxpayer below that level who is bearing the whole brunt of direct taxation. This means that any increase in money wages is doubly reduced in real terms. It is lessened because it puts the wage-earner into a higher tax bracket. At the same time, inflation makes what remains of his real wage worth less.
This kind of consultation would be difficult and probably could not take place in time to have any direct bearing on our immediate problems. But it could help to deal with them, for it would at least give hope of some authority for this Government in handling the various matters with which they are now trying to deal. It would provide some authority in dealing with the public sector wage claims, some justification for the Prime Minister's appeal for restraint, and some credibility to his Government in the last months or weeks of their somewhat shoddy life.
7.18 p.m.
Mr. John Ellis: If the right hon. Member for Farnham (Mr. Macmillan) will forgive me, I want
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to dwell more on the present strike and why it has occurred.
I speak as a member of the Transport and General Workers' Union and as a Member sponsored by that union. Some very unfair things have been said in the debate. Some of them were actually wrong. We have to understand what has happened in this industry and talk about the actual problem. I do not remember a strike in which more misinformation was given, more fanciful headlines were written or there were more false portrayals of people. Moss Evans, for instance, seems to be a villain dripping with blood from every claw.
Therefore, it is instructive to start by saying how this strike happened. It happened simply because the union was negotiating wages. One must remember that we have moved away from central negotiations following the Advisory, Conciliation and Arbitration Service Report No. 6. Hon. Members should read it to see what was involved. The TGWU did not feel that the Road Haulage Association was capable of entering into any meaningful arrangements and rather than any national collective bargaining machinery it favoured the development of the assenting haulier agreements at local level. So hon. Members should understand that in some 19 locations up and down the country representatives of the Transport and General Workers' Union and the road hauliers in their local committees were trying to negotiate an agreement. In area after area, they failed.
It is not the case that Moss Evans then ordered the strike because he was in conflict with Government policy. The customary process is that the union representatives put in an application that they want to go on strike because the negotiating channels have been exhausted. That is then considered by the finance and general purposes committee. That has happened in every area except the Midlands. The employers there agreed to accept whatever was agreed in the other negotiations.
There are many ideas about why this strike will break. I believe that it will break on these regional committees which are talking with the employers, who then get together. I understand from the unions that some areas are willing to reach agreement on a 40-hour week for £66. That cannot be bad.

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Tory Members say that we should consider all the factors that bump up earnings. Both the Leader of the Opposition and the Prime Minister referred to this. All sorts of wages are paid in all sorts of conditions in this industry. This is part of the difficulty over secondary picketing. Even when firms have their own drivers, all sorts of other people are going in and out delivering goods.
The Price Commission report on the road haulage industry was published on 24th October 1978. It revealed that average weekly gross earnings ranged from £120 right down to £65. About the middle was the general haulage rate of £80 per week. At the top end were the car transportation men in the motor industry. They are not concerned in this strike because they belong to another industry and are classed as skilled.
There is a tradition that what one is paid depends on one's job and one's industry. This industry used to be badly organised and the strains have been greater. If people want to blame something, it may be the fact that a licence is needed to drive an articulated truck. In the old days, anyone could drive a lorry and the wages over the years have been a disgrace.
About 20 or 25 years ago, I was a shift worker at Dishforth, near Darlington. I owe something to my union, which has made it possible for people such as me to be in this place today. At about 3 o'clock in the morning I would see these drivers going past hunched over the wheel, with red-rimmed eyes, coming from Fraserburgh and Peterhead to the London fish markets. Every night I would see at least one lorry stuck on the new roundabout because the driver was tired and, although he knew the road like the back of his hand he had gone straight on to the new roundabout.
There is better organisation. Now, in Annie's Cafe somewhere, drivers will meet own account operators on vastly different wages. The majority of drivers are paid according to the carrying capacity of their vehicle and not according to the licence held. Current basic wages range from £49 to £53. The large amounts of money are paid not to RHA drivers but to the own account people who are linked to motor car factories and have better conditions. Low basic
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rates have been a scandal for years and have led drivers to do the maximum overtime.
As for road safety, the Price Commission report said:
" Looked at on the basis of occupation, gross earnings of Heavy Goods Drivers generally (hire and reward ' and other ') have remained significantly above those of other Goods Drivers, both on a weekly and hourly basis. Heavy Goods Drivers also worked substantially longer than average weekly hours —overtime hours being nearly three times the average for all manual occupations."
Lorry drivers work that much more overtime because they have this low basic wage.
Mr. David Madel: As the hon. Gentleman said, the ACAS report showed that there should not be a national negotiating forum, that it should be done regionally. Will he accept that if future negotiations are done regionally there is a danger that a region which cannot settle will not be able to immunise itself against trouble from another region? Did not that report suggest also a new national forum for, say, organising a new national negotiating structure? Does not the industry need a brand new national wage negotiating structure?
Mr. Ellis: That is as may be, but until the road hauliers have an organisation which can work in that way there are difficulties. One of the hon. Member's main points relates to the difficulty of getting the boys back at the same time, although they all came out together. The union does face this difficulty but it has always been the tradition of the industry to have many disparate wage rates negotiated locally. There are some organisational difficulties in this fragmented industry.
I was talking about the overtime, which is three times the average. My hon. Friend the Member for York (Mr. Lyon) made a good point, which the Prime Minister brushed aside. He referred to the effect of all the talk about Common Market regulations on drivers' hours. The lads talk among themselves and realise that in every week they must have 24 hours off and will be able to drive only a certain number of miles or for eight hours. They become concerned about the effect on their wages. It is not by

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chance that they fixed on the basic working week. They have to consider that their earnings will drop. For all these reasons, the militancy was strongest at local level, where the strains were particularly telling.
The first action taken by the unions when the strike was declared official was on Friday night. It has had really only 24 hours in which to operate. There are many sections of this big empire to be considered—various organisations and regional offices have to be notified. But the union is well aware of its responsibility. Someone should have at least commended its role in the strike of petrol drivers. I am sure that Northern Ireland Ministers would have something to say about that matter were they taking part in the debate.
Union officials work themselves into the ground. The national officer, Jack Ashwell, worked for 23 hours on one occasion and 17 hours on another over Christmas in order to persuade union members to take a wise decision. Now regional committees are being established. An instruction has been sent out about those who are not directly involved in the strike. The unions are doing everything they can to ensure that union members co-operate with the Government and the regional committees.
However, we should make no mistake that the unions are determined to achieve what they consider to be a reasonable remuneration for their members. I do not think that £66 is unreasonable for a 40-hour week. The House would do well to look at the arguments.
Mr. Kevin McNamara: Will my hon. Friend bear in mind the figures mentioned by the Prime Minister? He referred to £3.50p and 5 per cent. In fact, £3.50p is 5 per cent. of £70 a week. The Prime Minister was talking about £4 more than the lorry drivers are asking for.
Mr. Ellis: That is the relevant point. EEC legislation has an impact and it is bedevilling the current dispute. I have spoken to union officials and all that they are anxious to do is to sit round a table and negotiate as they should. They want to get the country out of its present difficulties. But union officials insist on
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doing their job—to look after the pay and conditions of their members.
Hon. Members and the media should do more homework about the dispute. They should investigate the situation in depth rather than merely asking "Why are you holding the country to ransom and instructing pickets to stop good men from going to work? "The TGWU has authorised me to say that it would be willing to demonstrate its case and argue it out. Then perhaps people would realise that. this industry, which has been the Cinderella for so long, should be regarded more seriously. One should remember that motorways are built without provision being made for lorry drivers to sleep.
It would have been courteous for the so-called quality newspapers and the BBC to get in touch with the union and ask for a proper presentation of the case so that people might understand it. Instead of that they are hacking at the subject, as always.
7.33 p.m.
Mr. Donald Stewart: The hon. Member for Brigg and Scunthorpe (Mr. Ellis) has defended cogently the lorry drivers' case. In the past there have been many reasons for wage restrictions. I was not in the House at the time, but I remember that the aim of the last Labour Government was to get the balance of payments right. Wages were restricted for that reason. Hey presto, the balance of payments was put right, but it never made the slightest difference to those who suffered during that time.
It is right that there should be a debate on that issue. But the Tory Party has acted precipitately by forcing a vote. After the screams about chaos, the Tories have retreated to a paltry procedural motion. The Tory Party leadership is behaving like a chicken with its head cut off. Perhaps that is what led journalists to say that the Leader of the Opposition was making policy "on the wing ".
There are numerous instances of changes in the Tory Party's policy. The right hon. Member for Cambridgeshire (Mr. Pym) said at the weekend that devolution would be well down in his party's priorities if it came to power. He was saying that he had reneged on all 1968 policies.
The Tories should make up their minds where they stand on industrial relations

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and how they would deal with the unions. The Leader of the Opposition and the right hon. Member for Lowestoft (Mr. Prior) remind me of the old weather-house. The lady came out and, according to the weather, went back into the house and the man came out. In this weather-house the right hon. Lady comes out for a stormy bit of union bashing. When she goes back in the right hon. Member for Lowestoft comes out and says "We shall all be good boys when we come to power and everything in the garden will be lovely."
There is no doubt that the position is serious. But it is part of the malaise which is spreading throughout the United Kingdom. It is not confined to the unions. There is much to be said for the claim that the unions have taken over the worst aims of their capitalist opponents. Mr. Buckton of ASLEF wants to get his hands on the kitty first. He does not worry about what will be left for members of the NUR.
As the hon. Member for Briggs and Scunthorpe said, there is a case for claiming that the lorry drivers' basic wage is low. It has been cut back because of EEC directives, and there will be a further cut-back on 1st July. The lorry drivers have real cause for concern and it is not enough to bandy figures about.
The Home Secretary said yesterday that those who voted against the Ford sanctions would have to live with free collective bargaining. But free collective bargaining is part of a free society.
The hon. Member for Fife, Central (Mr. Hamilton) suggested that there should be a centralised bureau to fix wages. But the more that such agencies are multiplied, the quicker free society goes out of the window. Nothing will work 100 per cent. perfectly. We must make the best of a free society. We must have free collective bargaining. It is odd that the Labour Government should try to penalise those firms which are eager to give their workers rises.
We have experienced years of wage restraint. I was pleased that the Prime Minister should talk about attempts to control prices. I do not know whether that will work. But I am sure that one will not work without the other. There is no sense in expecting workers to con-
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tinue year after year with wages restrained and prices escalating. It is unrealistic to expect anybody to accept that.
I object to secondary picketing. It is totally indefensible and there is no justification for it. I am sorry that there seems to be a willingness on the Labour Benches to overlook breaches of the law by trade unionists. Nobody needs the law to be upheld more than working people and those who are unprotected. Wealthy and powerful people do not need to worry much about laws. They will always float to the top.
Miss Joan Lestor: The right hon. Member is making an important point. Can he explain where secondary picketing is breaking the law and which law it is breaking?
Mr. Stewart: It is totally indefensible that pickets should go—
Miss Joan Lestor: That is another matter.
Mr. Stewart: The hon. Member for Bassetlaw (Mr. Ashton) referred to certain action that may have been illegal. He spoke about that in an airy-fairy manner as if it did not matter tuppence. That cannot be accepted.
Miss Joan Lestor: My hon. Friend said that it was an illegal act.
Mr. Stewart: The hon. Gentleman condoned that action. He seemed to imply that it did not matter because it was being undertaken by trade unionists. Trade unionists, and certainly people in the lower brackets of society, have more need for the protection of the law than the wealthy and the powerful who can always look after themselves.
Scotland has been suffering the result of the road haulage strike for two weeks longer than the rest of the United Kingdom. The severe weather conditions have had an exacerbating effect. Some areas have had their lowest recorded temperatures for 100 years.
The half-hearted regional policies of successive Governments have resulted in the creation of a branch-line economy in Scotland that has left us dependent on distribution centres beyond our borders in the Midlands and the South of England. The scattered communities of the Scottish islands and the rural areas

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are the most frequently affected by transport difficulties. For that reason I wish to thank the Secretary of State for Scotland for the assurance that he gave to my colleagues who saw him yesterday about safeguarding essential food supplies, animal feed supplies and supplies to hospitals, old folks' homes and welfare services generally. I welcome the arrangements made to safeguard the fishing industry by agreement with the unions.
The Tory Opposition have moved too quickly against the Government. It appears that the situation is in hand for the moment. The Government should be given the chance to see how matters develop. However, I warn them that they are on trial. If the situation deteriorates, or if there is any change that departs from the assurances that have been given, my party will take the necessary action. In the meantime we shall give them the opportunity to continue in the hope that conditions will return to normal. My party will vote with the Government on the technical motion that is before the House.
7.42 p.m.
Mr. Cyril Smith: When the Prime Minister returned to the United Kingdom last week he referred to the present situation as parochial. He said that there was no chaos and spoke about people being jealous. My experience in Rochdale over the past weekend is that those remarks caused much greater offence than the effects of the strike. People were prepared to have a go at putting up with those effects, but they were not prepared to be insulted by the Prime Minister in the process of so doing.
I hope that the right hon. Gentleman has sorted out those who misinformed him. Clearly, he had been ill informed on his arrival. His remarks were native, offensive and ill informed and I hope that whoever advised him has been sorted out.
The present situation is serious and, in the view of my hon. Friends and myself, it warrants Government action and interference, even if such action upsets some of the Government's paymasters or some members of the Gov-
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eminent. Surely, the Government have a responsibility to ensure adequate food supplies and supplies of feedingstuffs. Wherever a danger to public health arises, they have the duty to ensure that that danger is contained and overcome.
Before I proceed further, I shall make a few remarks about the deep and real effect that the water dispute is having on health in my constituency and in about 10 constituencies which surround mine and form the area of which my constituency is part. I hope that other hon. Members will be interested in the dispute because my information is that it may spread to other areas before Friday, and certainly on Friday.
I do not blame the strikers entirely. It is an unofficial strike. I spent some considerable time yesterday trying to persuade the chairman and the chief executive of the North-West water authority to meet the unofficial strikers. The strikers were prepared to have a meeting with the water authority. The chairman said that on no account was he prepared to meet the strikers. He said that the only people that he was prepared to meet were the official union leaders.
The leaders of the strike are shop stewards. It is a committee of shop stewards that is running the strike. The strike has not been declared official by the trade union. Therefore, the chairman sits in his ivory tower miles away from the centre of the dispute and says that he is not prepared to meet the strikers. That is a stupid and idiotic posture, and I said so on television last night.
That does not alter the fact that, while all the silly wrangling is going on, the health of my constituents, and of constituents in other areas, is very much in doubt and at risk. The water filters in the reservoirs are not being cleaned or flushed. They have not been cleaned or flushed since Thursday of last week. The result is that the water supply is suspect. It is so suspect that thousands of leaflets have been issued and advice has been given on television to the effect that everybody should avoid consuming water unless it has been boiled.
If the dispute continues and the filters are not flushed, they will be clogged in two or three days and it will be a question not of whether the water is contaminated but of whether we shall get water. The

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Government have a moral responsibilty to act.
have been in touch with the water authority and with the strike committee. I have reason to believe that the cleaning of filters is not a highly technical job. I asked both sides of the dispute separately whether troops could undertake the cleaning of the filters. I asked them whether it was a task that required highly technical training. Both sides agreed with me privately that troops could be moved in immediately to clean the filters. I am not saying that troops should be moved in to undertake that work. I am merely saying that both parties agree that if troops were moved in they could do the job.
The Government cannot sit back and ignore what is happening. They have a responsibility to ensure that the health of those that I represent is protected. At present they are not acting in that way. The Government must keep the matter under constant review. I raised the issue with the Prime Minister at Question Time this afternoon. He said that there are to be further discussions on Thursday on the wage negotiations. If the strike continues and if the discussion does not resolve the difficulty by Friday morning, I hope that the Government will not hesitate to bring in troops to clean the filters. The Government have a real and basic responsibility.
That responsibility is one of the three responsibilities that I have outlined. The first responsibility is the safeguarding of animal feedingstuff supplies. The second responsibility is the protection of food supplies. The third responsibility is to protect the health of the people, or to avert dangers to health. Those three matters are vital and it is essential that the Government act to provide that protection.
It has been argued that we are overemphasising the present situation. I received a phone call this morning from Span Express Parcels Ltd. of Rochdale, which has already negotiated a new wage deal with its lorry drivers. I am sorry that the hon. Member for Brigg and Scunthorpe (Mr. Ellis) is no longer in the Chamber. The hon. Gentleman is sponsored by the Transport and General Workers' Union. The firm negotiated an agreement with its drivers in September
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1978. It pays the wage that the TGWU is now demanding, but there is picketing outside the depot. The picket line will not allow the firm's drivers to leave the depot.
My hon. Friend the Member for Colne Valley (Mr. Wainwright) received a telegram this afternoon while the debate was proceeding. It states:
" TGWU pickets illegally halting our own account transport. Home delivery services also food distribution affected at Heywood. If not removed thousands of your constituents' jobs at risk."
I received a telephone call this afternoon from a large manufacturing company at Old Trafford. I was told that the factory was being picketed and that food was not being allowed to be taken out of the factory and that raw supplies were not being allowed in. It is no good pretending that everything in the garden is lovely, because it is not. The Government must make strenuous efforts. They must say clearly to the unions that, unless they take away the pickets—I am not saying that they are acting illegally because I am prepared to accept that the action is open to argument, but they are acting against the interests of innocent people in terms of the dispute—the Government will be compelled to take action. They must make it clear that secondary picketing must cease.
The truth is that picketing took place before the Industrial Relations Acts of 1974 and 1976. I accept that. I am not blaming those Acts for the fact that people are picketed. What I am saying is that secondary picketing is going on and shortly I hope to say another word about it.
That is one side of the story. The other side is the circumstances in which these activities are taking place. The fact is that they are happening, no matter what anybody may say, in the context of free collective bargaining. Certainly, pickets are not barred by statute. Free collective bargaining is, as I understand it, exactly what the Conservatives want. This is their policy and they cannot have their cake and eat it. They cannot on the one hand argue that all this is a disgrace and should not be happening, and on the other hand argue that they are a party which is in favour of free collective bargaining.

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I know that the Conservatives want responsible free collective bargaining, but do they have some sort of secret weapon in a phial which they can inject into somebody which says that if there is a Tory Government then free collective bargaining is responsible, but if there is a Labour Government it is not responsible and in such circumstances becomes something like blackmail? Yesterday the Home Secretary, in answer to my hon. Friend the Member for Cornwall, North (Mr. Pardoe), accused him, and in consequence his colleagues—I refer to column 1323 of yesterday's Hansard—of voting for free collective bargaining in December.
This is totally untrue. We voted in December against sanctions and I would like to place on record why we voted against sanctions, which is not the same thing as voting for free collective bargaining. Sanctions we found were ineffective. They were not credible. For example, there were regions where regional grants were not being withdrawn. In other words, they were selective—they were not applied to all—and they were selective even amongst offenders. Some offenders got away with it and some did not. Sanctions were not even a deterrent: as my hon. Friend says, it depended on which constituency the company was located in. A deterrent is something that one knows is going to happen to one. We know that if we break the law something will happen to us and therefore we are deterred from breaking the law. But if sanctions are applied only to some people and not to others, and if when one breaks the law there is no certainty anyway that sanctions are going to be applied, how on earth can it be claimed that sanctions are a deterrent if the determination to apply them is made only after the offence has been committed?
In any case, these sanctions were not approved by Parliament, so certainly we voted against them. My party, and that includes all of us, has never swayed from its belief in a statutory prices and incomes policy. Anyone who says otherwise makes a gross mis-statement of the truth. I very much hope that when the Home Secretary reads these remarks tomorrow he will feel it worth while dropping a line to my hon. Friend the Member for Cornwall, North and perhaps apologising for a misinterpre-
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tation of that vote in December. The Liberal Party wants a statute-backed policy, but we do not place sanctions in that particular category.
I want now to deal with one or two of the remedies which have been suggested. My party does not believe, and I certainly do not, that one can legislate to stop strikes. Experience has shown that to attempt to do so is useless and it often leads to an escalation, rather than a cessation, of strikes. We cannot legislate to stop strikes, but what we can do is to legislate in an attempt to make sure that striking becomes less easy, or at any rate less attractive. I have heard all sorts of remedies suggested—for example, that there should be balloting. That remedy is not as attractive as it looks, because if one takes a ballot amongst people about whether they want to strike the odds are that they will vote "Yes". One may therefore get more strikes as a result of a ballot rather than fewer.
A secondary question is: if there is a ballot to decide whether there should be a strike, will there not also have to be a ballot to decide when the strike is to be called off? If people take the one decision, presumably they will take the other. Therefore, the issue of balloting before a strike takes place is not as attractive as it may appear. That is not to say that ballots for the election of trade union officers for example, ballots at factory floor level, and postal ballots, should not be encouraged by the Government. Certainly, the Liberal Party will be very much in favour of balloting in those circumstances.
On the question of taxing benefits to the members of strikers' families, I have made it clear, and I have never varied from this—I took this view when I served on Committees in 1974—that I support the principle of State benefits being taxable, but not just State benefits to strikers. It seems to me that if a bloke draws £50 from working and is liable to pay tax on it, the same man should pay the same tax if he draws £50 from the State. If he is not eligible for tax on his £50 at work. he is not liable to pay tax on the £50 from the State. But if he receives a benefit from the State sufficient to render him liable for tax, he should pay tax. But I would certainly not be in favour of taxing benefits to strikers' families and not taxing such benefits to anybody else.

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The Leader of the Opposition has raised the question of the closed shop. It is extremely important, but I am bound to say, and I am prepared to be corrected, that I had not understood that it was any part of Conservative Party policy to make the closed shop illegal. Indeed, I seem to remember that the very opposite argument was advanced at the Tory Party annual conference two years ago—namely, that there were circumstances in which the closed shop must be legalised and must be continued. I have always taken the view, and I confess that it is easier to do this in a minority party than it would be in a majority party—though perhaps that is one of the functions of a minority party—that the closed shop was illiberal and that it was incompatible with liberalism. I have never been in favour of the closed shop and I would be prepared to see legislation to alter its legality or minimise the strength given to the closed shop.
Closed shops make unions extremely powerful on the basis that people can lose their jobs as a consequence of closed shop legislation. I am therefore prepared to vote for legislation that reduces the power of a closed shop. When the Leader of the Opposition spoke of what the Conservative Party did in 1974, she overlooked the fact that the Conservatives could not have done anything without the support of certain minority parties including my own. The power of the closed shop is something I want to see reduced.
Let me say something on secondary picketing. I do not believe that secondary picketing has been made possible by the Trade Union and Labour Relations Act 1974. I think it was possible before then. As far as I know, picketing rights go back as far as the 1906 Act and were not introduced by a Labour Government as such. New clauses were certainly introduced into the 1974 Act because that Act repealed the 1971 Act, and if such amendments had not been written into it we would not have had any laws on picketing at all. That was the reason for the amendment. There is considerable doubt as to whether secondary picketing is legal. I have heard it said in the House today that there is no difference in law between first and secondary picketing. My legal advice is that it is highly doubtful as to whether secondary picketing is legal. I do not know, but there is a
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recent court ruling in a case concerning the National Union of Journalists which certainly casts some doubt on whether secondary picketing is legal.
If secondary picketing is illegal, the law should be enforced. If it is legal, the law needs to be looked at to see if there are ways in which it can be stopped or the effects of such picketing considerably reduced. That is all I want to say about the suggested remedies.
I turn to the causes of strikes. The first thing is that we desperately need in this country to recreate the will to work —that is, to make it attractive to work. My party and I have never strayed from our belief in a statutory incomes policy. We do not believe that free collective bargaining is the answer and we said so at the last General Election. There are those in the party, including myself, who believe that that view cost us votes in October 1974, but we stuck by it and my hon. Friend the Member for Cornwall, North took some stick behind the scenes from party candidates who believed that our speeches in favour of a statutory prices and incomes policy had a detrimental effect on the response received by the party. But at least we had the courage to preach that view and we have never wavered from it.
We take that view because we believe that there must be rationality in wage settlements and relationships between settlements. We cannot, for example, expect dustmen to settle for 5 per cent. when they see others receiving 12 per cent. or 15 per cent. rises.
The BBC settlement has not been mentioned in the debate, but I saw in my local paper that one member of the Cabinet was taking great credit for being one of the Ministers who met the BBC and ensured that we got our television programmes over Christmas. Ministers have claimed great credit for their part in those negotiations, but that led to a settlement which was far in excess of 5 per cent. and, indeed, well over 10 per cent.
Mr. Emlyn Hooson: Is it not important to remember, in the context of the Prime Minister's speech today, that the Government control the income of the BBC and, indeed, the BBC itself, yet still sanctioned a pay settlement of 16 per cent.?
Mr. Smith: That is a relevant point. The people of this country, including rank and file trade unionists, are decent and honest and seek only fair play. They will not sit back and accept a 5 per cent. pay rise when they see other- 15 per cent. increases. That is why we say that there must be rationality and that that can be achieved only by statutorily backed State interference, including permanent machinery for solving disputes and dealing with differentials, and so on. We want to see the strike weapon being the last resort rather than the first.
My party has also long advocated—and I hope that Labour Members will note this fact—a statutory minimum wage. We were the only party preaching that policy when the TGWU was pressing for it. I have preached that message from these Benches in the past four years. There is a great deal to be said in favour of statutory minimum wages, but I have never advocated a minimum wage without telling members of the audience, whoever they were, that they had to understand that some of them would have to stand still on one occasion until the problem of low pay was solved. That means lifting the person at the bottom and not the person on the second rung. I have never run away from the consequences of a statutory minimum wage.
The Liberal Party has always preached profit sharing, which we believe would help. The hon. Member for Honiton (Mr. Emery) is making a noise which sounds as though he has stomach ache or indigestion. He should understand that profit sharing is not as daft as some people imagine. I have practised it in my own company for the past seven years. I am talking not about dishing out shares but about dishing out money from the profits that have been made. If many of the people who are being asked to forgo high wage settlements understood that some of the increased profits that will accrue to their companies as a consequence of those deferred wage increases would be passed on to workers at the end of the year, that would not be irrelevant in helping to solve our problems.
The meaningful application of worker participation in industry, and I do not mean its use as an excuse to increase union power, would also make a considerable contribution. That is why we strongly advocate worker participation,
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though we stress worker, not merely trade union, participation, which is where we part company with some Labour Members.
We cannot go on as we are. Parliament is not the place rationally or logically to discuss a long-term solution, especially with a General Election round the corner. However, a way forward must be found and discussions must take place between all parties involved, not just the CBI and chambers of commerce, but political parties as well. We must not be afraid of getting round the table to see whether we can find a way forward. Of course we shall not all agree and have a common policy, but we could at least pool our ideas and see whether there is anything we can get out of it.
Political slanging matches are not the answer. People are sick and tired of strikes and if the Labour Party went to the country early they would find that out in a big way. People are fed up with being urged and pushed into strike action when they do not want to strike. Many of the people on strike do not wish to take that action, but they feel that they have no alternative.
There is an abuse of power by some unions and some union leaders—not all —and that cannot go on. If the Government cannot stop it, they should get out. However, if they made the effort, the), could stop it and they could succeed because all people want is fair play. If the Government want to sit down and produce a sensible prices and incomes policy with statutory backing and Government intervention to guarantee the supply of food, animal feedingstuffs and supplies such as water, where a danger to public health may be involved, they would convince the people of this country that there was a point in holding out and would have our guarantee of support throughout the period involved in order to enable them to do what was necessary.
Several Hon. Members rose—
Mr. Deputy Speaker: Order. We have had four speeches in the past hour. I appeal to hon. Members to limit their speeches to five minutes are, in my opinion, unjust.
8.7 p.m.
Mr. George Rodgers: My constituency lies in central Lancashire,

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in the heart of the North-West region—an area which has felt the full impact of the current spasm of strikes and industrial upheaval. Of course, people resent the misery and confusion brought about by this disruption to their everyday lives and by shortages of essential commodities.
The situation has been worsened considerably by inflammatory speeches by Opposition spokesmen who are determined to snatch some political advantage, regardless of the fact that the policies they have advocated have encouraged the present state of industrial discontent. Hysterical headlines in the Tory Press have stimulated panic buying and generated artificial scarcity in the shops. So the country has already paid a heavy price for this activity.
It is surely time that we examined the causes of the disputes instead of concentrating exclusively on the consequences. The original and essential role of the trade union movement is to protect and enhance the living standards of its members and there should be no great surprise that it is attempting to fulfil that obligation.
It is to the enormous credit of the trade union organisation that it has extended its area of concern and for many years has been acting to serve the wider community by campaigning for improved pensions, health provision and social benefits. This community concern is in marked contrast to that of the employers' organisations. I cannot, for instance, recall the CBI pressing for better pensions or facilities for children or disabled people. Indeed, the reverse is true. Its only pressure has been on behalf of those who are already prosperous but who object to paying income tax at appropriate levels.
Few tributes are paid to trade union shop stewards, but every day throughout the country they resolve a multitude of industrial relations problems without cost to their employers or the nation. Yet we find that at every opportunity certain Conservative Members heap abuse on trade unionists in general and on shop stewards in particular.
It is no coincidence that in circumstances where it is most difficult to recruit and organise trade unions wage rates are low and working conditions often deplorable. Farm workers are a good ex-
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ample. Despite high skills and ferocious physical effort, the rewards are very meagre indeed.
The simple truth is that if workers do not organise and demonstrate their solidarity they and their families are penalised and disadvantaged. This is why so many Conservative Members wish to see the unions diluted and eventually destroyed. But the strength of trade unionism lies in the spirit and unity of the members. Anyone foolish enough to believe that the members can be bludgeoned into submission by legislation designed to punish the wives and children of the workers who take strike action is in for a rude awakening. We have all travelled this road before, yet there are still those who cherish the rather bizarre fallacy that industrial harmony can be achieved through laws and imprisonment.
If the Government are to move towards a long-term understanding with the trade unions, certain facts of life must be recognised. When my right hon. Friend the Member for Huyton (Sir H. Wilson) introduced his incomes policy, he conceded that it contained rough justice. It is now surely time that we set about rectifying such injustices, especially in the public sector. It is not sufficient simply to ask workers, who are hard-pressed economically, to look at the wider economic picture. Indeed, those of us who have gazed upon the wider picture are not very impressed with what we see, for it is apparent that many people in our lopsided society are doing very well for themselves despite the incomes policy.
I have here a copy of a Labour research document which lists 38 company directors who receive over £1,000 per week. I know all about the story that they pay tax at 83 per cent. on taxable income above £23,000 a year, but I am fairly confident that the lorry drivers would accept that taxation burden if their wages were adjusted so that they could qualify to pay tax at that level.
In reality, of course—and this is revealed by Kay and King in their recent book, "The British Tax System "—the average rate of tax paid by people in these high income brackets is only 50 per cent. In addition, there are all sorts of fringe benefits, such as the company car, low interest loans, private medical insurance, aid with children's education

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and so on. The present incomes policy tolerates this and also allows one individual to accumulate a multitude of company directorship. From the same publication I note that last year employees of the Distillers' Company received a 72 per cent. pay rise. Their chairman, one J. R. Cater, fared rather better. He was awarded a 92.9 per cent. increase, to give him an annual income of £50,440 a year, or £4,204 a month.
It is against this background that working people assess the incomes policy, and who can blame them if they take a somewhat jaundiced view of its selective impact? Incomes policy has never set about securing a redistribution of wealth, and that should be the first purpose of any incomes policy. I see the necessity for an honest incomes policy as an important ingredient in an overall Socialist economic strategy. I see no merit in a collective bargaining free-for-all, as is advocated on some days of the week by the right hon. Lady the Leader of the Opposition.
However, the economic mix must include an effective control of prices. We have had examples recently where petrol retailers have charged as much as £3 a gallon for petrol—and petrol is a tool that many workers have to use. But there was no restriction imposed and no breach of the law took place when the position was abused in that way.
There must be a direction of investment. I find it hazardous to leave investment in the hands of investment trust managers, whose outlook is narrow and usually confined to the prospects of making a quick return on behalf of their investors.
Finally, I accept absolutely that trade unionists possess enormous power. The country's food supplies, industrial capacity and communications operate by means of a very fine mechanism. The fact that this delicate mechanism is only very infrequently disturbed should remind us that trade unionists also have a very high sense of responsibility. I am convinced that an agreement between a Labour Government and the trade union movement can be achieved, and that such an agreement would bring immense benefits to our people.
The policies recommended by the main Opposition party would bring about an
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industrial calamity that would make our present problems seem small and insignificant. I would much prefer a common sense approach that would recognise the rights and entitlement of our whole people, including the many millions of trade union members. I believe that only a Labour Government, implementing a Socialist programme, can secure this invaluable understanding.
8.15 p.m.
Mr. Hugh Fraser: I shall not follow the speech of the hon. Member for Chorley (Mr. Rodgers). It was a speech, made at a time when we face really serious problems, which reminded me of a speech made by a member of the Duma in 1917.
I want to report what is happening in Staffordshire. We depend very much on the port of Liverpool, which at the moment is entirely controlled not by the port authorities but by what is called a special committee of the Transport and General Workers' Union. It is for that committee, not the Government, to decide what goods go in and what goods come out. Some hon. Gentlemen may find it amusing, but it is not amusing for the farmers of Staffordshire that there is picketing of the two molasses companies which are necessary for the survival of their cattle. This picketing is going on in areas which are not concerned with the dispute, and it is a very serious matter indeed.
I do not want to talk about what the political or long-term solutions of the dispute may be, but the fact is that there is what the Prime Minister referred to as a knock-on effect in inflation. There is also a knock-on effect when administrative action is not taken, and the position is worsening.
The Prime Minister this afternoon made two proposals, one of which seemed to affect prices, when he suggested a further restriction of prices. That is like putting a weight on a boiler which is about to explode. Secondly, he said that there should be some alleviation of the proposals in relation to the lower-paid workers. That would only tend to heighten the dispute by throwing out the arrangements for the various differentials.
Despite this very serious position, the Prime Minister and other Ministers have so far failed to give any confidence to the general public, who by the end of this

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week may be facing considerable deprivations in regard to food and employment, not to mention the difficulties of the farmers.
It is quite clear, from what the Prime Minister said, that the port of Hull is not working at all. It is fairly clear, from information I have, that the port of Liverpool is working only at a very low level indeed. This is a crisis for the Executive, for the Government of the day. So far, the Government of the day seem to be totally incapable of dealing with it.
If the Government propose to adopt a low-key approach, the least they can do is to talk to the Transport and General Workers' Union, and ensure that the Government's own special regional committees are working alongside and in control of the special committees set up by the union. I know of a case in Staffordshire where a lorry went up to the port last Friday and was given permission by the Transport and General Workers' Union to go through. When it went up again on Monday, the driver was told that it could not proceed. That lorry will not be going again. Can hon. Members imagine anyone driving an empty lorry from Staffordshire, and back again?
Two of the Government's so-called regional offices, in Hull and in Bristol, have caused problems. Their telephone numbers were announced by the Minister of Transport on Thursday, but by Monday it was quite clear that these numbers were not working and that the wrong ones had been given. Yesterday the telephone numbers were newly issued for the so-called regional organisers, but even now it is impossible to get through after nightfall on the numbers given by the Minister.
This is a very serious situation which the Government should face. They seem not to be facing it. I suggest that at this stage talks should be opened with the TGWU. At the moment that union is being allowed to control the ports, which, constitutionally, is a quite extraordinary conception. These committees, which are called the dispensation offices of the union, should be put under some sort of Government control, with priorities being laid down—priorities for food, cattle food and essential materials for running industry. Otherwise, the Government will be seen for what they are. They have lost their
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nerve, and the sooner they get out the better.
8.21 p.m.
Mr. Giles Radice: The right hon. Member for Stafford and Stone (Mr. Fraser) has given a graphic account of the serious situation in his constituency, but he has not said what should be done about it. All he has done is to suggest that talks should be opened with the TGWU, but that is already happening. He also suggested that some agreement should be made on the priorities of vital supplies. That also has been done. Therefore, I do not think that he made a helpful contribution to the debate.
The Leader of the Opposition made a very skilful speech, but once again she did not say what should be done. She made vague hints about changing the law as it relates to the trade unions. She said nothing about counter-inflation policy or how one can get men who are out on strike back to work. She seemed to be trying to exploit the undoubted anti-union feeling which exists at present without making any real commitment as to what should be done.
As a contrast the Prime Minister at least tried to face up to the serious problems in a way which would not irreparably divide this nation, yet would prevent us from returning to the 20 per cent. to 30 per cent. inflation that we had in 1974–75.
I do not want to refer to the road haulage dispute—my hon. Friend the Member for Brigg and Scunthorpe (Mr., Ellis) made a very able speech supporting the lorry drivers—except to say that clearly it is a serious situation which affects a large number of jobs in my constituency. I hope that it is settled very soon.
I wish to comment on the local authorities claim. As a General and Municipal Workers Union-sponsored Member of Parliament, I have a great deal of sympathy for the local authority workers. They are among the lower paid members of the community by any standards.
However, I do not see how one can improve their situation except within the context of an incomes policy. If we had totally free collective bargaining, their

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lack of bargaining power inevitably would put them at the bottom of the queue. But if we have an incomes policy, particularly a flat-rate policy as we had in 1976 or a low paid exceptions policy as we have now, we have the tools to help the low-paid workers. Therefore I welcome the Government's improvement on the low paid exceptions, and the discussions about comparability which are about to open. This offers a basis for an honourable settlement for local authority and other associated workers without a costly strike and without having a highly inflationary pace setter in the public sector which would be bad for everybody, including the local authority workers.
I refer to the speech of the right hon. Member for Down, South (Mr. Powell) who supports free collective bargaining. I am strongly in favour of joint regulation of wages and conditions and a lot more besides. I want to widen the area of joint regulation and I am a strong supporter of industrial democracy. However, collective bargaining by itself is not and cannot be enough in the determination of wages. What the advocates of free collective bargaining seem to forget is how the wage round really works. Perhaps that is because they have not really been involved in industrial relations.
Such advocates forget the concept of the going rate within a wage round. Bargainers take account of a lot of things, and in the ideal world of the right hon. Member for Down, South they would take account entirely of the free market. However, they must take account of things such as the cost of living, the profitability of the company, and so on. But the really crucial factor is what the bargainers believe is, or is likely to be, the going rate which will be negotiated in other comparable companies and industries.
Clearly this approach is inherently inflationary. What one company or industry may be able to afford out of profits another will be able to pay only by raising prices and passing on the costs to the consumer. This idea of the going rate becomes particularly inflationary when the going rate keeps going up as we saw in 1974-75. As the Prime Minister said, we started the wage round that year with a 13 per cent. going rate and
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ended up with a 30 per cent. going rate. Obviously there is a clear danger of going down the same road this time.
The task of an incomes policy is to push down the going rate to something approaching what the country can afford. Without some form of incomes policy—and do not forget that one-third of employees are under Government control—the Government can have no direct influence on the wage round, and the result in terms of both inflation and employment can be disastrous, as we saw in 1974–75.
I cannot go along with those who suggest that the answer is free collective bargaining. However, although I am in favour of an incomes policy, I am strongly against a statutory policy or using the law to weaken the power of the trade unions. This is not just a question of principle—it is a question of practical expediency and experience.
It is extremely difficult to make any policy stick if it has not got support, and this gives the opponents of statutory policy an argument which they would not otherwise have. They can argue that it is restricting and that it is bringing the law into incomes where it should not be.
On the question of using the law to weaken the power of the trade unions, we saw in 1971-74 that this does not work. The employers did not use the powers, and that is a major argument against anybody who talks about reintroducing the law into industrial relations in this way. The employers do not want to use the powers because they have to negotiate, bargain and live with the employees. Also the Government, as we saw in that period, were very chary about using the powers. They did so once and got their fingers burnt. Therefore, I am against using the law in the way which has been hinted at vaguely by the right hon. Lady.
There is certainly a case for strengthening the powers of the Price Commission in order to prevent companies from automatically passing on wage increases to the consumer. I am glad that the Prime Minister mentioned that and suggested proposals.
My right hon. Friend also made the right point with regard to secondary picketing. It is much better to get voluntary agreement, because if one can get voluntary agreement it is likely to be obeyed. One can have all the laws in the world,

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but if people do not want to obey them they will not.
In a democratic society there is no alternative to persuasion or voluntary agreement —persuasion to bring home to people the consequences of their actions, that, in the words of the cliche, one man's wage can be another man's price increase, or that one man's dispute can be another man's job loss. As to a voluntary agreement, there is no alternative but to work with the trade union movement. There is no other way. That is the only way to achieve an agreement which will include a general view as to the way wages should go in the economy. This certainly ought to be part of a wider social and economic policy. As has been said, we must look at the question of having a general monitoring body, which I personally would like to be on a voluntary tripartite basis.
In the end it is a question of democratic leadership, the kind of leadership which this Government arc trying to give. At this time, I am extremely glad that Conservative Members are not in power. Otherwise, my goodness, we would be in a frightening situation. There is no other way than that kind of leadership unless it be the totalitarian way, and I do not believe that any hon. Member wants that.
8.31 p.m.
Sir Nigel Fisher: I know that the hon. Member for Chester-leStreet (Mr. Radice) will forgive me if I do not follow him, because I have promised to be very brief.
Last week was a very bad one for the British people and also for the credibility of the British Government. I do not want to enlarge on that, except to say that the Ministers mainly concerned said and did very little. We hoped that when the Prime Minister returned we could expect a more decisive grip on a rapidly worsening situation. All we got was a complacent, dismissive, totally irrelevant and inappropriate comment on "little local difficulty" lines. The Prime Minister really should know by now that he does not have the style to try to emulate Mr. Harold Macmillan, nor were the circumstances the same.
The nation was looking for a lead and for a positive policy. So far, Ministers have failed to provide one. The Govern-
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ment's only reaction to this crisis in our affairs has been to appeal ineffectively to the unions to refrain, in the interests of party loyalty, from embarrassing Ministers and losing them the next election. I quite understand that, because the unions are the Labour Party's paymasters and no doubt the Prime Minister does not dare to offend them. But it is not a very elevated appeal. Worse than that, it will not work.
Even in electoral terms. I believe that the Prime Minister would do better to appeal to the people to support a strong policy, because the British have a sure instinct when a section of society is becoming too powerful for the national good. The barons, the church, the king and, in the last century, the industrialists, all became too powerful in their turn. Now it is some of the trade union leaders and the factory agitators who are too powerful and who are, therefore, becoming unpopular in the country and even among some of their own members.
The climate of opinion, certainly in my constituency and probably in many other areas, is very different from what it was five years ago. People today are simply longing for a lead and would respond to one, even from this Government, if resolute action were now taken.
I cannot believe that price curbs will be a sufficient sop to the unions, and they will certainly cause further unemployment. As many hon. Members are I hope aware, I am not the sort of Conservative who normally advocates what might be described as Right-wing measures. But the circumstances and dangers today seem to me to be such that I believe strong steps to curb union power and irresponsibility have become absolutely essential in the national interest.
Many people believe that the law on picketing should be changed. It must be made clear, simple and effective, which it certainly is not today. Only those involved in a dispute should be allowed to picket their premises; the number of pickets should be limited and so-called secondary picketing should not be allowed.
Some people also believe—I subscribe to this myself—that secret ballots should be held before a strike. Tax rebates could be delayed until a strike is over.

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Payments to strikers' families, which have already been mentioned, should be made by the union concerned in the first instance, and by the State only when union funds are exhausted. Even then, they could be paid as a loan instead of as an outright gift and repaid out of earnings when the men have gone back to work.
As The Daily Telegraph pointed out recently, there is no other country where the Government, and therefore the taxpayers, finance a strike through the social security system, or where the victims of a strike pay benefits to those who are causing it. The 1966 Labour Government passed the Act which brought about that result. This Government should now repeal it.
We are today the poorest industrial nation in Europe. I believe that trade union power is at the very centre of our problems. We face food shortages for people and for animals, a crippling rail strike and mass unemployment in productive industry. We are moving, in the words of the Chancellor of the Exchequer, towards the precipice. Yet, as I read in one newspaper on Sunday, Mr. Moss Evans is simply standing on the edge of the precipice admiring the view, no doubt determined to prove his militancy as the new general secretary of the Transport and General Workers' Union. Let him remember the fate of one of his predecessors, Mr. Frank Cousins, who tried the same trick and was humiliatingly defeated by kin Macleod in the London bus strike 20 years ago.
The truth is that union power today is being abused and some union leaders are acting with complete irresponsibility. They are blackmailing the country and operating a veto on Government and Parliament. They should remember the words of Aneurin Bevan, quoted on Sunday by Lord George-Brown, the former deputy leader of the Labour Party. Thirty years ago Bevan said:
" If there is one thing we must assert it is the sovereignty of Parliament over any section of the community."
I believe that the Prime Minister should assert that sovereignty today or, if he lacks the will to do so, he should hold a General Election. But I can see the difficulty about that. The Government's only electoral card has hitherto been that they alone can deal with organised labour.
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That card can no longer be played. It will not win a trick or a vote.
Hon. Members opposite may say that the Conservatives could not cope with union power any better than they can. That is the same as saying that this country is now ungovernable by any political party. If that is so, the last hope for parliamentary democracy may well be a National Government, a coalition, or at least a temporary alliance to deal with the present emergency.
The offer of that is most unlikely to come from the Treasury Bench because it would split the Labour Party. But that is what the people want and it is what the country needs. I hope that my right hon. Friend the Leader of the Opposition, who is now almost certain to win the next election, will rise above party politics and make this offer from these Benches. There would be a ready response to it from the beleaguered and long-suffering people of this country.
8.38 p.m.
Mr. Austin Mitchell: A depressing sense of realism compels me to say that in this debate we have come to bury pay policy—to praise it, yes, but essentially to bury it. For practical purposes the 5 per cent. pay policy is dead. To work, a pay policy has to have credibility. It has to be seen to be fair, and it has to be seen to be working, which is more important. The 5 per cent. pay policy now, tragically, has none of these characteristics. To deny that is the politics of the boy standing on the burning deck.
I say this with regret because I believe in an incomes policy, in contradiction to the theoretical points made by the right hon. Member for Down, South (Mr. Powell). The three years of incomes policy that we have had have prevented the currency of this country degenerating into the confetti paper money which it would have become, faced with the inflationary pressures coming from outside, if there had not been an internal pay policy.
The problem with pay policy is that it is used as the emergency treatment of the economy. It is almost the poultice of the economic system. It is slapped on hot and hastily and is then messily scraped off in disarray. To use it in this way, as both parties have, and, no doubt, will again, undermines the contribution that pay policy could and should be making

1607
over the long term. It is a way of allocating reward which is more effective and more sensible and more in the national interest than to have worker putting worker on the dole as is happening now. It is more fair than the situation in which muscle, which means the ability and the readiness to disrupt, determines priorities and rewards. That situation is to me neither sense nor Socialism. So I believe in a pay policy.
When I say that the 5 per cent. pay policy is dead, I say it with genuine regret. It was right to try it. It was the right level that the country could afford without pushing the rate of inflation up again. It was popular—the polls showed that two-thirds of the public supported it. But we have to recognise that it has now failed. It has failed because, of the pressures, anomalies and problems built up under three years of pretty strict incomes policy. Indeed, the lorry drivers' case is one of those pressures and anomalies.
One of the key elements in their claim is that in December, thanks to EEC regulations which are being phased in over three years, they lost two and a half hours' driving time a week and in July next year they will lose another two and a half hours' driving time. There is an anomaly, too, because of the dependence on long hours of overtime with comparatively low basic rates. It is the long hours of overtime that has kept up their wages and that kind of anomaly has built up under incomes policy and now explodes to the fore.
These pressures mean that we have not been able to secure the fourth year of pay policy that we hoped for. It is inevitable that as an incomes policy disintegrates, as this one is doing, we shall face both strong inflationary pressures and a resurgence in industrial unrest and an increase in strikes. That has always happened in the past.
Secondly, the pay policy has failed because in the sanctions debate last December a vital prop was knocked away. To be fully effective, a pay policy has to have influence in both the public and the private sectors, and sanctions—an imperfect weapon, admittedly, and no one has said that they were anything better than that—still provided a means of influencing settlements in the private sector.
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They were a weapon that the Government could use because of employers' ability to hide behind it and say "We would like to pay but we cannot because of sanctions."
The Conservative Opposition were against stanctions, as they are against every aspect of incomes policy—that is, until they find themselves in power and introduce their own, worse, policy. The Liberals, who favour a stronger stautory incomes policy, voted against the only incomes policy politically practicable at this moment. The Scottish National Party, on its usual political strategy of gangin' "aft a-gley ", voted against it, too. That destroyed incomes policy effectively for this year, because to be effective a pay policy must have influence in both the public and the private sectors.
What was decided in the House in December means that the incomes policy is effectively dead therefore. It is true that there are two last ditches in which the Government could still fight in the pretence of maintaining a policy. I would not like to fight in them, however. First, there is now no justification for imposing on the public sector a norm that has effectively been shattered in the private sector. Equity demands that the going rate—a rate that is certainly going up—should be applicable in the public sector as in the private sector, and even if considerations of equity were ruled out altogether the same pressures would be developing there, the same reluctance to abide by a norm that has been exceeded by everyone else. Therefore, I think that we cannot, for considerations of equity, hold the line in the public sector in the way that has been urged.
There is no justification either for the kind of deflationary retaliation against the increase in incomes which has been talked about, whether through cash limits, control of the money supply, or cuts in Government spending. Such retaliation would not only be electorally disastrous, which is one consideration on this side of the House, but nationally and economically disastrous as well, which is far more important, because it makes no sense to react in that fashion with unemployment at the level it is, and to treat an economy that has been expanding so painfully and so slowly to that kind of deflation, which drives up unit costs and

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so stimulates rather than controls inflation. It checks investment and depresses expectations, and it increases unemployment. It also increases the demands on welfare expenditure and, therefore, the burden of Government expenditure. In other words, it amounts to kicking the economy when it is down simply for reasons of retribution.
So we have lost this year's incomes policy, and I think there is no effective alternative at the moment. The Opposition cannot take any pleasure in this. It is an outcome that they wanted, it is an outcome which they have worked for and it is an outcome to which they have no alternative suggestion, because their only alternative is to cut Government spending, which, in turn, would produce a massive increase in unemployment.
What should Government policy now work towards? I think that it has to recognise that inflation will go back up again. Having made this tremendous achievement of getting inflation down below 8 per cent., we shall now, because of this situation, see it go back up again. There is no way of escaping that fact. The only way that we can cope with that is to stop the increased demand which will come into the economy, sucking in more and more imports, in the way that imports have been sucked in in the last year so that the consumer boom which took place in fact meant an import boom and not a major expansion of manufacturing and employment in this country. In other words, it has to be a policy of controlling imports.
I shall not argue now about the way to control imports, but it seems to me that, in this situation in which inflation will increase, the only effective way to ensure that that inflation stimulates demand, which in turn stimulates manufacturing and employment in this country, is to control imports.
Secondly, I think that we need a recognition of the fact that this is, for all the rhetoric and all the drama about the crisis, only an industrial dispute, and that all the emotion that has now been engendered is largely irrelevant to the solution of that industrial dispute. There are no easy solutions. Indeed, the right hon. Lady the Leader of the Opposition recognises this in her tactic. Her tactic
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is one of a willingness—which is shared by far too many on the Opposition side of the House—to stir the pot, to stimulate every grievance against the unions, to hint and to grumble but never to propose solutions to the problems that they pose.
In other words, the right hon. Lady will say that she is thinking about—and that in itself is a brave political stance —venting the sins of the fathers on the sons by withholding social security benefits. She will think about making ballots on strikes compulsory. She will mutter about the closed shop. She will stand there, as all too many of the Opposition do, willing to wound and yet afraid to strike.
In this situation, the Opposition have no positive solution, because they know that what they would like to do was tried and failed in 1971. What they most want to do they recognise they cannot do. Therefore, it amounts to a chorus of muttering against the unions.
Indeed, it could be argued that many of these solutions are not the kind of solutions that the Opposition should press. What they want is a weaker union system to redress, they say, the bargaining balance. Yet the proper solution is stronger unions, unions which are better organised and which are better able to lead and better able to commit their members. We want stronger unions, not the kind of union bashing that trips readily from the tongues and hearts of Opposition Members.
I believe that the basic need is to get back to co-operation with the trade unions, which has been weakened and undermined in the past year. I am glad to see that it is now being pursued in the talks which are now taking place between the Government and the unions. It must be pursued not in a spirit of retribution because of the present dispute but in a spirit of compromise, to bring Government and unions together by concessions on both sides, concessions of economic policy on the part of the Government and concessions on the union side, to bring them together to work out a new framework of incomes policy. Recognising that the incomes policy has been lost, effectively, for this bargaining year, we have now settled down to the serious job, the long-term job, of devising a new structure of incomes policy for the next bargaining year.
8.50 p.m.
Mr. Hector Monro: We are in a sorry mess. The policies of the present Government have come home to roost in a big way. The Government have rightly received universal condemnation for their complacent attitude. The Prime Minister gives the impression of being out of touch with reality.
The problem started earlier in Scotland, where the transport strike was called officially somewhat earlier. Yet what has the Secretary of State for Scotland being doing? There seems to have been a deathly hush from St. Andrew's House. He should get out and about in Scotland to give some leadership and see the problems for himself—problems which have certainly been added to by the exceptional weather, which has turned to hard frost again tonight.
The Government try to shelter behind the unions. But who put the unions in this position of power? It was this Socialist Government. It was this Socialist Government who introduced the social contract—" Yes, we can deal with the unions. Yes, all will be peace and quiet." But what have we got? Absolute chaos.
The myth that the Labour Government can handle the unions has been blown away during the recent months. Never again can the country believe in the Prime Minister's perpetual optimism. Tonight it merely highlights his incompetence.
The legislation passed by the present Government in the trade union Acts of 1974 and 1976 and in the Employment Protection Act gave immense power to the unions. We have discussed that in detail today. There has been built-in encouragement to picket. From that has developed secondary picketing. But the blame lies with the Government for their legislation and the disastrous economic climate, bringing with it high unemployment.
Tonight the Government really ought to go a great deal further in the winding-up speech than the Prime Minister did in relation to the legal position on picketing and secondary picketing. More importantly, the Government should give us an idea of what action they propose to take to protect the lawful citizen.
Industry cannot last much longer, yet the Road Haulage Association is only
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trying to hold a responsible line. What help is it getting from the Government? Some small hauliers will be forced out of business. They cannot recover what has been taken from them by the pickets and union officials.
There is no joy anywhere, and strikes abound. We have been talking about them throughout the debate. We know of the rail strike and the road haulage strike. But can the Minister give us any information tonight on, for instance, whether the runways at Edinburgh and Glasgow airports will be kept open? The pickets will not permit de-icing fluid to be moved there. Can he give us any information on the authentic news that the pickets are charging the drivers of the vehicles wishing to cross on ferries to the islands, particularly to Arran, £26 per vehicle? That is the sort of problem affecting Scotland at present.
Why should agriculture dance to the tune of union officials? Why should it have to go to union officials to get clearance to move goods? Why should industry be without raw materials? Why should it be impossible to move finished goods? Why should newspapers be without newsprint?
My hon. Friend the Member for Fife, East (Sir J. Gilmour) has just handed me a telex message from the Guardbridge paper mill saying that the strike committee in Fife today has refused it permission to move its own paper on its own lorries out of the mill. That is the sort of problem that we are facing.
I wanted to mention agriculture specifically because the Minister of Agriculture keeps stating that all is going well. The Prime Minister's complacency seems to have rubbed off on him, as well. The Minister says that food is protected—but that just is not so. Milk is food. Does the Minister know what is happening in South-West Scotland? Does the Secretary of State for Scotland know? If he does not know, he ought to, because I have been telephoning his office to pass him the information. This is the one area in the United Kingdom where a local official of the union will not allow milk tankers of private hauliers to operate. Only a superhuman effort by farmers and farmworkers, helped magnificently by the staff of Express Dairy and the Carnation Foods creamery have kept this vital food moving.

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The Scottish Milk Marketing Board has done well to organise the emergency service, helped by its own tankers, but in the main farmers have had to take milk by tractor and trailer to the creamery over dangerous, icy roads. Hours and hours are wasted, yet one official seems to be able to veto, against union headquarters advice, the return to work by the tanker drivers, who are keen to return. Therefore, this movement of milk is taking place despite the union, and the Government's voice is totally inaudible. What surprises me, as the position is so serious in Scotland and the Government's voice is so inaudible, is that the Scottish National Party, which has agricultural interests, is not joining us in voting against the Government tonight.
My next point concerns food again. Picketing and secondary picketing of auction marts and slaughterhouses are preventing the movement of beef and lamb to—eventually—the housewife. Livestock that is ready to kill cannot leave the farms. This will eventually cause a shortage of food supplies. Here again the Minister's grandiose words do not seem to be effective.
With stock being kept unnecessarily on the farms, winter keep will be running short and will dwindle fast if something does not happen soon. The Minister says that concentrates will be available for livestock, but I share the view of my right hon. Friend the Member for Stafford and Stone (Mr. Fraser) that hauliers going to the docks have not had success. The Minister must give more information tonight about feedingstuff and tell us that it will be freely available in the mills to manufacture concentrates for livestock in the immediate future.
The procedure is complicated. One must go through the NFU to the strike committee and then to the docks. Why should a decision by a union official, who perhaps knows nothing about agriculture, be crucial in this regard?
Can the Minister give a firm assurance that agriculture will be safeguarded in a much more practical way than he has spoken about over the past three or four days? Time has been wasted and food is being wasted. Livestock are at risk. Is a trade union official to be the regional dictator who will control agriculture in my part of Scotland?
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Let us keep matters in proportion. Let us see the Government take an initiative and be seen to be running the country. The situation is desperately serious. The Government's inactivity has given the country a great feeling of depression. The Prime Minister must wake un and move from his hyper-complacency, take effective action to curb the activities of certain union officials and give the country a chance to survive until the General Election.
8.58 p.m.
Mr. James Prior: It has been a quieter debate than one might have expected having read the press at the weekend, and I think that it has been the better for that. It has been a very responsible debate. The speech of my right hon. Friend the Leader of the Opposition was one of the best speeches I have heard in this House for a long while.
The Chancellor of the Exchequer (Mr. Denis Healey): The right hon. Gentleman has got over that point quite nicely.
Mr. Prior: I shall say just one thing to the right hon. Gentleman. I might as well get this out of my system early in the debate. I watched him on television the other night. He was up to all his old tricks again. He put words into my mouth and tried to say that I had said them in an interview with Mr. Day about my right hon. Friend the Leader of the Opposition. As usual, the right hon. Gentleman was totally wrong. I have not even had an interview with Mr. Day about my right hon. Friend's speeches.
I hope that the right hon. Gentleman has read what was said about him last night by his hon. Friend the Member for Luton, West (Mr. Sedgemore). That was just about the best thing that has been said about him for a long time. The right hon. Gentleman has behaved absolutely disgracefully on this matter and should apologise to me tonight. I hope that he will have the courtesy to do so.
There is a crisis. Many of the speeches, particularly those by my right hon. and hon. Friends, have made that perfectly clear. Food supplies are endangered, exports are suffering, and animal feed is not getting through. As my right hon. Friend the Member for Stafford and Stone (Mr. Fraser) and my hon. Friend the Member for Dumfries (Mr. Monro) pointed out, there are many cases where

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animal feed has been coming out of the mill but no raw materials have been going in. When the decision is left to the local strike committee, or often not to the strike committee but to the pickets who happen to be on duty, they really do not understand—there is no reason why they should—what commodities need to get through in order that a run of production can be sustained. It is not much good letting some commodities get through if other commodities such as salt are not there, and this also applies to packaging material. If no packaging material is getting through, the goods cannot be produced.
There have been a number of very serious cases. My hon. Friend the Member for Barkston Ash (Mr. Alison) has produced a telegram which I would like to read to the House:
" Requesting any assistance you can give by way of pressure on Government and for information the following facts are relevant. Supplies to our Selby and Thetford factories ceased due to picketing at Grimsby and Harwich, this despite our own transport company, AngloDanish Food Transport, not being in dispute. Many hundreds of tons of bacon lie at extreme risk at quay, being 10 days old. On Monday, we laid off 830 and put 275 on short time. Next week, the 275 will be laid off and about 200 more will be on short time. We face cash flow problems and already several of our customers in the distributive trade appear likely to face liquidation. Requests to the strike committees have failed, even those made by our own employees' branch of the Transport and General Workers Union ".
The telegram is signed by the managing director of Danepak.
That is a typical example of what is happening up and down the country. We are in a very serious situation. There has been a certain amount of stocking up from the supermarkets. That is all right for those who have the money and can afford it but the people who really get hit at a time like this are poor people who cannot afford to stock up. Those are the people that the pickets are hitting most. We should make that absolutely plain.
A number of schools are running out of oil. I gather that buses in the North-East are also affected. That is a matter which does not involve people directly connected with the strike. It should not be taking place.
There have been a number of nasty incidents. I heard of an incident this morning where the picket line was
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manned by a number of people including one who carried a crowbar. When a lorry driver was trying to get through, the crowbar was much in evidence. So the lorry driver complained to the police. The police officer said that he recognised that the chap had a crowbar but that, unless he actually used it, he would not take any action. This sort of thing is not good enough. I would like to hear from the Chancellor of the Exchequer a firmer condemnation than we have perhaps heard from some of his hon. Friends in this debate.
I have been especially asked by my hon. Friend the Member for Manchester, Withington (Mr. Silvester) to mention the water strike in the North-West. It has become the forgotten strike, but it is a real danger to health for people in that area. In a case where it is not possible for management to carry out the duties that are normal in emergencies of this nature, troops should be brought in straight away. It is fantastic that large numbers of people are being asked to boil their water or not to drink their water and that there should be a positive danger to health. Surely, this is a case where emergency powers should be used.
Let me say to the Prime Minister that there has been no pressure from this side for the hauliers to increase their offer. When my right hon. Friend said that today, some Labour Members below the Gangway laughed. It is clear that the pressure for increases across the board has come not from this side but all the time from Labour Members. It is the Prime Minister's own troops who have undermined his position time and time again.
It is no use the right hon. Gentleman or any Labour Member saying that the present position has arisen because sanctions are not now operating. This strike has taken place after an offer of 15 per cent. Does anyone really suggest that if an offer of 5 per cent. had been made and stuck to there would not have been a strike? Of course no one can make that case. Therefore, I cannot see how sanctions have possibly affected this case. In any event, Ford workers settled for 17 per cent. before sanctions came off. It was only the gross, arbitrary and unfair nature of the sanctions against Ford in the first place, when they were not used against a number of other companies

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which was the basis of the House of Commons reaching its decision.
Although a number of us had made considerable efforts to help the Government to sustain a figure of round about 5 per cent., the pass had been sold, chiefly by Labour Members, a long while before the sanctions debate.
The question that we must ask ourselves also is—if there is a crisis, which we think there is, are we satisfied with the Government's performance? Of course it appears to everyone—it certainly does to the national press, even to the press friendly to the Labour Party —that the Government were caught completely napping over this crisis. They were totally unprepared, although they had been warned.
I know, for example, that people in the food industry and agriculture were ringing up the Minister of Agriculture and his Ministry telling him what was happening and the difficulties they faced. They thought that the Minister was adopting an extraordinarily complacent point of view.
In the absence of the Prime Minister, the Government made no efforts to keep the public informed in any way. What happened to the Chancellor? He did not even speak on Leeds Radio. Normally, I get fed up with hearing the right hon. Gentlemon on Leeds Radio—he is there at the drop of a hat—but he was singularly quiet in the period over Christmas. There was never a word from him until the Prime Minister returned to London.
There was never a word from the Lord President; he made no effort to defend his own policy, or to bring any pressure to bear on the unions, particularly the TGWU. We heard simply nothing from the Government until the Prime Minister came home and made that ghastly bloomer of trying to make out that there was no crisis and saying how parochial it all looked. Then, by God, it hit him —and I presume he hit the rest of his colleagues very soon afterwards.
Where the Secretary of State for Employment has been in all this, heaven alone knows. [HON. MEMBERS: "Where is he now? "] He is not even here now, but I do not think that it makes any difference. The trouble with this Govern-
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ment and the Government Front Bench is that the whole way through their period of government they never quite realised what they were letting themselves in for.
The Prime Minister: Yes, I did.
Mr. Prior: The right hon. Gentleman says that he did, but they kept saying "We will not have hyper-inflation," yet we got it; "We will not have more than 1 million people unemployed," but we did; "We will not have trouble with the unions, "but we have had. Throughout the last five years, they have made no effort to come to grips with the central problems of our economy. They have trimmed and they have balanced. They have bullied and cajoled. They have lived from day to day. Where has that got us? It has led to a standard of living which will soon fall in absolute terms and which has fallen relative to almost every other nation in Europe.
Today the Prime Minister announced that he will introduce a Prices Bill. More than most people he must know, with all his contacts, that profits in Britain have halved in the past 10 years. That has meant that investment has fallen. When investment falls our competitive position declines and our unemployment rises. It is not a question of needing to put any more pressure on prices. Competition and the present measures are more than sufficient for that. Competition has done more on the High Street in the last year to keep down prices to the consumer than anything that any Government could do.
Once again we are faced with a totally irrelevant measure which is to be introduced as a sop—I am not quite sure to whom—to try to keep prices down when inflation is on an upward course again.
The Government won the 1974 election because of their so-called special relationship with the unions. There is no doubt that such a relationship no longer exists. The price of sustaining that special relationship or seeking it through the social contract was too great for any Government or any country to sustain. It was too great in terms of the public expenditure which was the price that the unions demanded for some form of wage control, and too great in terms of legislation. We are seeing the fruits of some of that legislation today

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with its damaging effects on the life of the country. During this period our industrial base has narrowed, our economy has become less competitive and our prosperity relative to Europe has declined.
We must ask why we have been less successful in running our affairs than many of our competitors. Some people would say that it is the nature of our people. We are a free and non-deferential society. Some people would say that it is the history of the industrial revolution. Some would say that it is the effect of two world wars, or the nature of our union negotiations which are born out of conflict rather than co-operation—the order of things in a number of other countries.
Whatever one believes to be the cause, there is an imbalance of bargaining power. It will not be put right easily. It is there whether we have statutory policies or free-for-alls or responsible collective bargaining. There is an imbalance between the bargaining power not only of unions with employers but of groups of workers within the unions. That must be dealt with by the House.
Because of the imbalance in bargaining power we have become involved in incomes policies. Governments do not advocate incomes policies with alacrity. They are forced into them because that is the only way that they can see of dealing with a situation.
I enjoyed the speech by the right hon. Member for Down, South (Mr. Powell). I do not wish to become involved in an argument with him.
Mr. Powell: Why not?
Mr. Prior: Because I might come out of it the worse. The right hon. Member underestimates the reality of union power. He also neglects the course of history. He overlooks the psychological need for groups of workers to form associations. But that is bound to happen. Therefore, union power is a force with which we have to reckon. It does not seek to conform to the laws of supply and demand or the free market in the way that the right hon. Gentleman would suggest.
The constant change between incomes policy on the one hand and freedom on the other has resulted in our bad econo-
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mic performance. As my right hon. Friend the Leader of the Opposition said, it has resulted in the narrowing of differentials, the creating of anomalies and so many people considering that it is no longer worth while following a skill because those who do will not be properly rewarded. All these factors have been destroying our economy in the past 10 to 15 years. At a time when we need trained and skilled people more than ever before, we cannot afford to allow that situation to continue. Parliament must act, and let it be now.
We offered the Government and the country as a whole the proposition that we would stand on industrial relations legislation as it was at the beginning of August 1974. When the Labour Government took office they repealed the 1971 Act. They did not leave matters there. They gave new and greatly extended immunities and privileges to the trade unions. At the time we were highly critical of that legislation, but we could not stop most of it from reaching the statute book.
A number of important changes were made. The House of Commons made those changes. They were made with Conservative, Liberal and other party support. There was cross-party support. Those changes did something to mitigate what we thought were the worst effects of the Trade Union and Labour Relations Bill.
The first and the most important of the changes that we made had the result of confining the immunity from action for inducing breaches of contract to immunity for inducing breaches of contract of employment—in other words, a trade union would not be immune from action if it went beyond persuading workers to go on strike and tried to stop the supply of goods to those who had nothing to do with the industrial dispute.
In addition, the House insisted that workers who were arbitrarily or unreasonably expelled from a union, or not admitted to it, should have a right of appeal to an industrial tribunal.
The third protection was that the House decided that a worker should be entitled to compensation if he were sacked because, on reasonable grounds, he refused to belong to a trade union. The fourth protection was that we required union

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rule books to contain rules covering certain basic aspects of the organisation, al-thought we did not specify what the content of the rule book should be.
The House made it clear that action could not be regarded as in the course of a trade dispute if it was in support of an overseas dispute having no effect on people in this country. That was, perhaps, the fifth change.
That was not the basis that we would have liked, but it was the one on which we thought the nation as a whole should stand. In 1979 I think that what we said in 1974 was a good deal more acceptable than the present situation.
We were bitterly disappointed. The moment that the Labour Government came back into office in October 1974, that time with a clear majority, they insisted on returning to the fray. They sought to remove all the protections that the House had inserted in the 1974 Act. The new Bill was delayed for a year on the issue of press freedom, but finally the Government had their way and forced the Act on to the statute book.
The Act extended trade union immunities to the inducing of all breaches of contract, not only contracts of employment. The Act took away the right of appeal against unfair exclusion or expulsion from a trade union. It denied workers compensation if they were sacked because on reasonable grounds they refused to join a trade union. It removed the provision about union rules and it encouraged industrial action in support of overseas disputes. It was a sustained piece of partisan legislative intolerance. It repealed what we had placed on the statute book and went a great deal further in putting on to the statute book an Act that has caused so many of the troubles from which we now suffer. Those are some of the issues which have to be put right. I do not put that forward in a partisan frame of mind, but as something which the House itself should do.
There are other things that we have to do as well. We must go in for secret ballots on a much larger scale. It would be useful to have a secret ballot before a strike is called. I looked up recently "In Place of Strife" which said:
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"It is, however, a matter for concern that at present it is possible for a major official strike to be called when the support of those involved may be in doubt."
If that was true in 1969, it is 100 times more true today.
Mr. Heiler: I did not support certain parts of "In Place of Strife" and I did not support the right hon. Gentleman's Industrial Relations Act. If he is in favour of secret ballots before a strike takes place, does he also favour secret ballots being held before strikes are called off? There could be a time lapse of three or four weeks before a dispute could be settled if the union's executive committee is not given power to call off a strike.
Mr. Prior: I know all the arguments. The hon. Gentleman should at least give me credit for having gone into this matter in great detail. Of course if there is a secret ballot before a strike is called, there would have to be a secret ballot before the action was called off, but there is no earthly reason why a secret ballot should take long to organise. It could be organised very quickly and, if help is required in the organisation of ballots, let us give it as quickly as we can. The more representation there is by people within unions, the better the results will be for unions themselves and for the whole nation. Let us get on with that. I have heard it commended by the Prime Minister and by his predecessor. Let us get it in operation.
It is all very well for the Prime Minister to tell us that the Secretary of State for Employment is now proposing to draw up a code of practice for picketing, but during the Committee stage of the Employment Protection Bill, we put down an amendment calling on ACAS to draw up a code of practice. It was defeated by the then Secretary of State for Employment, the present Leader of the House, and his colleagues on the basis that, although the Home Secretary was not prepared to allow lorries to be stopped on the highway, they claimed that there was no ground for having a code of practice as laid down by the National Union of Mineworkers during its strike. It went by the board and we never got our code of practice.
It ill becomes the Prime Minister to come along almost four years later and

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say that a code of practice is now being prepared. Why have we had to wait all this time? Why could we not have had it before?
The Prime Minister conceded that immunities were extended by the 1976 Act and that it had contributed to an increase in so-called secondary picketing. However, the right hon. Gentleman then tried to say that the effects were minimal and that what the Government had done was justified by what Lord Donovan had said. All I can say on the first point is that the Prime Minister should have been on the Committee that considered the 1976 Bill. He should have heard the Lord President and his colleagues. They did not think that it was an unimportant issue. They fought it tooth and nail all through. If it was not an important issue, why did the Government go to the extent of re-enacting it in that Bill? It was regarded as an important issue and was rightly thought at that time that it would make a big difference. That was why it was done.
When Lord Donovan recommended that immunities should be extended to commercial contracts, he recommended as well that they should be restricted to registered trade unions and those acting on their behalf. In the House of Lords debate on "In Place of Strife ", Lord Donovan said:
" But if unofficial elements and ephemeral combinations which are here today and gone tomorrow are to have the same licence then a prospect is opened up which I find alarming. Yet this is apparently what is contemplated, and I find it all the more alarming because it is true, as the noble Lord, Lord Cooper said, that there are those who have a vested interest not in industrial peace but in industrial unrest, and here we give them another opportunity for exploitation of a licence which they should never have."—[Official Report, House of Lords, 18th March 1969; Vol. 300, c. 852-3.]
That is why we fought the immunities provisions in the 1974 Act and in the 1976 Act. I think that we were absolutely justified in doing so, and I believe that it would be right for this House to return to the 1974 position.
I turn now to the question of changes in the Employment Protection Act. We all know that the Chancellor of the Duchy of Lancaster wants to make them. We know that he is not satisfied about the recognition clauses and about the operation of the unfair dismissal procedures,
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and so on. He makes no bones about the fact that he considers that for small businesses the Act is a deterrent to taking on additional employees. Why do not the Government do something about it? There is not much between us on this. We know that schedule 11 is operating very much against the interests of controlling inflation, but nothing is done about it. This is another matter on which we could get all-party agreement.
I turn next to the closed shop. It is just possible, where there is a strong Conservative council, such as the GLC, and one is dealing with responsible unions, to negotiate an agreement which gives reasonable exemption for those who, on grounds of conscience or for other reasons, do not wish to belong to a trade union. But hon. Gentlemen must recognise, as we do, that those exemptions and those cases have been few and far between in the last four years. It did not apply to the 40 or so people in British Rail, some of whom had worked for British Rail for 30 years. They lost their jobs.
One of the great worries of lorry drivers now is that if they go through the picket line their names will be taken and that they will be marked down from that moment onwards. They are frightened. We know that on a number of occasions lorry drivers have been told that if they want to go through the picket line they must join the union, and that pressure is put on them in that way. Of course, it is totally unjust and totally wrong that a man should lose his job, or indeed be subject to dismissal, simply because he has been working for a company which has made an agreement about union membership, and so the man has to join the union. Surely we ought first to have the provision that we wrote into the 1974 Act which governed exclusion or expulsion, and also a proper code of practice, which everyone should follow, dealing with the closed shop.
The Prime Minister mentioned comparability with the private sector for certain sections of the public service and local government service. We must have a proper regard for the public sector, but we should not look at this in isolation from the suggestion that there should be a form of non-aggression pact to ensure that certain sections of the community, particularly the old and the suffering, are

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looked after in a proper way. in exchange for comparability there should be an undertaking not to strike. That suggestion should be followed up, and only in those circumstances should we entertain what the Prime Minister said about comparability.
We have to carry through a number of reforms. They may not do everything, but they are necessary and they will help. One of course understands the difficulties about legislation in this field, but the amount of legislation that this would require is very limited indeed. The House of Commons must not be frightened of carrying out legislation of this nature and seeing it enforced. It will not always be easy to enforce, and I recognise what the Prime Minister said. But that should not deter us from putting on to the statute book what we know is in the interests of the whole nation. This is in the interests of the whole nation. What is more, these changes are best carried out by agreement in this House and across the Floor of the House. As my right hon. Friend the Leader of the Opposition said this afternoon, we offer the Government the opportunity to put these measures through speedily.
The performance of our nation in the last 15 years has been poor. Our social and medical services are now far behind those of other countries. We must make greater efforts. Our standard of living is only about half that of Germany and about two-thirds that of France. [HON. MEMBERS:" That is not true." I am afraid that it is true. It has never been a question of talking my country down, but one sometimes has to ask the country to face the facts. When the British face the facts they come out on top. I believe that we can do that again, but not unless we make the sort of changes that my right hon. Friend and I have suggested today.
9.32 p.m.
The Chancellor of the Exchequer (Mr. Denis Healey): The right hon. Member for Lowestoft (Mr. Prior) told the country on 3rd January:
"It is better in these matters to play a quiet game rather than to shout too much."
He went on to say that it was better to take a balanced and reasonable view, and to look at the practical side rather
1626
than rush into statements which would be very difficult to fulfil and which would immediately result in less co-operation and less conciliation and lead hack once more to confrontation. Those are wise words, and I propose to accept the right hon. Gentleman's advice.
This has been mainly a quiet and certainly a very concerned debate and I shall try to observe the spirit in which most Members on both sides of the House have tried to deal with the problems. I know it is not easy to keep calm and to keep one's head when much of the country is gripped by a justifiable mood of anger, bitterness and frustration. That mood is easy to understand, but it will not assist the House of Commons in finding a solution to the problems if we allow it to infect our approach.
In spite of what the right hon. Gentleman said, we have just ended a year of exceptional achievement for Britain. I do not think that the country will agree with the jeers from the Opposition when I remind the House that we have halved the rate of inflation, we have had a higher rate of growth in Britain than any country in Europe except Ireland, we have reduced unemployment by over 100,000, the pound has been strong, the money supply is under control, and we are paying our way in the world despite the fact that our invisible earnings fell more than we gained from the increase in the production of North Sea oil.
The value of our exports last year rose twice as fast as the value of our imports and their volume rose 5¾ per cent. We maintained the increase in our share of world trade which was established in 1977. One of the consequences of this achievement was the biggest increase in living standards for the British people in one year than at any time since the war.
There were some areas of disappointment, and I shall face those as the right hon. Member for Lowestoft suggested I should. Pay increased somewhat faster than the Government had hoped and productivity somewhat less. Manufacturing output was well below the growth in national wealth as a whole. Like all Chancellors of the Exchequer, I am always under pressure from both sides of the House to take action to increase

1627
demand. But there is no point in increasing demand for goods in this country if British industry is not producing the goods to satisfy that demand.
It is true that the disappointing record in manufacturing industry has been concentrated in a few areas—above all in the motor car industry. Last year demand for motor cars and sales rose by over 20 per cent., but output actually fell over the year as a whole. It fell because there was widespread industrial disruption caused by strikes and stoppages which, until the Ford stoppage at the end of the year, were mainly unofficial.
This year we could get very close to last year's performance, provided that we deal with the rate of inflation and the number of industrial stoppages. We have started badly in both areas, and that is the subject of our debate today.
Several hon. Members, particularly the right hon. Member for Down, South (Mr. Powell), have pointed to some similarities between the beginning of 1979 and the beginning of 1974. But the right hon. Gentleman, of all hon. Members, should have drawn attention to one striking difference—that the country is not now awash with money which has been printed by the Government to accommodate inflation.
I remind the House of the words of the hon. Member for Oswestry (Mr. Biffen), who has recently rejoined the Opposition Front Bench. The other day he wrote:
" In the light of Conservative economic policy between 1971 and 1973 it is extremely difficult to mount a sustained and fundamental criticism of Labour's economic policy."
The fact is that our money supply is still below the lower end of the range which I set for it in the middle of the fiscal year. Public expenditure is under firmer control than it has ever been in our history, due to the introduction of cash limits and a firm observance of the contingency reserve.
As a result, in spite of the difficulties we have faced in recent weeks, the pound remains strong. The stability of the pound is mostly a reflection of our performance on inflation and of our financial policies. Also, of course, it is a very important contribution to it.
Mr. William Clark: What about the German mark?
Mr. Healey: I should point out to the hon. Gentleman that in Germany the money supply targets are three or four times higher than the level which the Germans set themselves. In Switzerland the money supply is running at about six times higher than the target. Therefore, I do not think that on this occasion we need take any lessons on monetary control from either the Germans or the Swiss, who are often held up as examples.
Because the Government are pursuing, and will continue to pursue, firm and adequate fiscal and monetary policies, I do not believe that we shall have runaway inflation such as we had in 1974-75 following two years of fiscal and monetary profligacy under the Conservative Government. But because we are observing strict monetary and fiscal policies, if wage increases continue at the sort of level at which they have been running since the Ford settlement, the result will be seen in rising prices, fewer jobs, lower output and more bankruptcies. I am glad that the hon. Member for Croydon, South (Mr. Clark) feels so abashed by the irrelevance of his recent intervention that he has decided to go and consult the oracle.
It is not too late for us to put the situation right. On the pay front, the proposals that the Prime Minister announced this afternoon will help us to achieve responsible settlements in the public sector. I believe that the £3.50 underpinning for the low paid will be of great assistance in reaching sensible settlements in the public services, and I believe that the offer to endorse comparability studies on a job-for-job comparison, where both unions and employers want to pursue this approach to pay bargaining, will also be of assistance. I also believe that strengthening the powers of the Price Commission by abolishing safeguards for companies under investigation will be of significant importance.
What the right hon. Member for Lowestoft said a few moments ago gives me some ground for hoping that on the pay front we shall get support from the Conservative Opposition from now on. The Conservative Opposition must be somewhat abashed—particularly the right hon. Lady the Member for Finchley (Mrs. Thatcher)—at the consequences of the gospel of free collective bargaining which are now visible to the nation as a whole, a

1629
free collective bargaining which she promoted at her own party's conference as something which should be limited only by market power. I know that many firms which supported pressure from the industrial organisations for the abolition of sanctions against excessive pay increases in the private sector are now bitterly regretting the vote which the Conservative Opposition forced on the House before Christmas.
After what the right hon. Gentleman has just told us, I hope that the Opposition as a whole will now publicise the fact that they support 5 per cent. as the right average for pay claims. The right hon. Gentleman has said that. So has the right hon. and learned Member for Surrey, East (Sir G. Howe), Lord Carrington, and, a very recent convert, the hon. Member for Henley (Mr. Heseltine).
Of course, there is some flexibility in the 5 per cent. But I found it rather odd that this afternoon the right hon. Lady should have pointed to the evidence of the flexibility as a criticism of the Government's policy rather than as a reason for supporting it. We have introduced two new elements of flexibility by the changes in our pay policy announced by the Prime Minister this afternoon. I hope that some day the right hon. Member for Lowestoft will reciprocate. I explained to him some months ago why I now thought that he had been right and I wrong when he was arguing that the 10 per cent. last year should be a norm and I was arguing that it should be an average. He is now taking the position that I then took, but he must see from experience in recent pay settlements how difficut it is to establish an average as low as 5 per cent. unless it is treated as a norm.
I now turn to the second question raised in the debate, that of industrial disruption. The whole House and the country are, I believe, worried about two aspects of recent industrial behaviour—first, excessive use of the strike weapon, particularly as a first resort in pay negotiations, and, secondly, the application of the strike weapon in a way which damages the interests and livelihoods of millions of people who have no direct interest or responsibility in the matter under dispute.
1630
As has been made clear by the Home Secretary, the Prime Minister and by all other Ministers who have spoken, the Government have an inescapable responsibility to take whatever action is possible and required in order to reduce damage to the innocent caused by industrial disputes. As the Prime Minister said this afternoon, the key to our approach to a state of emergency must be that of course we will introduce it at any moment when we believe that its introduction will increase the flow of food and materials.
In answer to those many hon. Members who cited the difficulties faced by firms and workers in their constituencies, perhaps I can say that in all cases of such difficulty the first step to be taken is to get in touch with the 24-hour emergency committees in every region. [HON. MEMBERS: "Oh ".] With great respect, hon. Members must recognise that these committees are making a major contribution to easing the impact of the current dispute. If they are unable to get in touch with them, they can contact the private office of my right hon. Friend the Secretary of State for Transport.
Dr. Keith Hampson: Surely the right hon. Gentleman, as a Leeds Member, knows full well that the telephone numbers issued for the committee in that part of the country were all wrong. How can the Government be satisfied with the position in which by now cliques of local shop stewards issue dispensation, for example, for medical supplies while at the time time halting the supply of sulphuric acid from ICI, which means that Beechams cannot produce antibiotics?
Mr. Healey: I shall come to those issues immediately.
The House must recognise what the right hon. Member for Lowestoft accepts. There are limits to what any Government can do—there were limits to what the Conservatives could do when they were in power during the three-day working week—whatever the state of the law, and however widespread the use of troops. That is true not only in a democracy but in a dictatorship, too, as we can see from what has happened in Iran in recent weeks.
It is significant that when the hon. Member for Norfolk, North-West (Mr.

1631
Brocklebank-Fowler) naturally complained to one of my right hon. Friends about difficulties faced by some of his constituents, and when he was asked what action the Government should take, he stated that the Government should talk to the unions. Of course, that is right. There is no way of dealing with many of these problems unless the Government talk to the unions, and unless the Government are capable of talking fruitfully to them.
The right hon. Member for Lowestoft said the other day:
"I do not think there is any particular way in which you can deal with an individual strike",
and he made it clear that it is not his party's intention to go for a whole range of legislative change. He made it clear in the same interview that the current Conservative leadership had no intention of repeating the experience of the last Tory Government by reintroducing the Industrial Relations Act, which, as he rightly said, had not been a conspicuous success. The only specific proposal that he made at that time was to facilitate, not to compel, secret ballots, a proposal that he has repeated today.
The right hon. Gentleman admitted, however, in that interview, acting very fairly as he usually does, that secret ballots might often help the extremists rather than the moderates in trade unions. Of course, he is right.
Mr. Ron Thomas: Does not my right hon. Friend agree that, like the Opposition, the media have blown up this so-called crisis out of all proportion? Would it not be informative and salutary if the Robin Days of this world were made to disclose their salaries when lecturing lorry drivers who drive 30-ton wagons for £53 a week?
Mr. Healey: I think that there has been a tendency at earlier points in the current phase of industrial relations for some of the newspapers and the commentators to exaggerate the nature of the problem. I hope, however, that the House will accept the truth of what I said last Thursday which has been repeated since by many representatives of various interests. I forecast that 100,000 people would be laid off by last weekend if the strike continued along the lines on which it was proceeding. That was
1632
right. If it continues for the rest of this week, a million people could be laid off, and I do not think that any hon. Member could regard that prospect as being tolerable in any respect.
The right hon. Lady raised the question of banning strikes, trying to get the unions to abandon the right to strike in certain areas, but she rather engagingly admitted why the Government of which she was a member decided not to pursue that course with the electricity and gas workers. It was on the ground that there were too many other methods of disrupting industry for a ban on strikes to be adequate. She must also know that to define essential services in a society and economy so interdependent as ours is today is a mammoth and probably impossible task.
There are far too many groups in the country at the present time—and by no means all in the trade union movement—which have the power to inflict great damage on society and on the economy. The right hon. Lady talked of dealing with the problem by withdrawing social benefits from the families of strikers, but I note that in one of the weekend newspapers it was reported that
"in the twilight days of the Heath Government the very same notion was put forward. Mrs. Thatcher was there when the Cabinet discussed it.
She read the compelling case made out against the plan by one of her senior colleagues…Sir Keith Joseph."
The fact is that that is not a way which offers very much promise of dealing with the problem.
The whole House is deeply concerned with the question of secondary picketing. But here again the right hon. Member for Lowestoft has admitted that it is far from clear how the law could help. Whenever attempts have been made to use the law to punish people for industrial action, the result has been a catastrophic failure, discrediting the law and humiliating the Government concerned. That happened in the case of the wartime Emergency Powers Act, as was reported in an annexe to Lord Donovan's report on the trade unions, and of course it happened in recent memory when the tip-staff was called in to release pickets who had been imprisoned under the Conservative Government's Industrial Relations Act.

1633
The fact is—and the House and the country must face it as a fact—that when the Conservative Government had the powers which the right hon. Gentleman has asked us to restore secondary picketing grew in frequency and in effectiveness. Much the same is true about dealing with the closed shop.
The right hon. Lady quoted the agreement recently made by a number of unions representing people employed by the Greater London Council. This agreement was made under the existing law, and the right hon. Gentleman himself said in his speech in Huddersfield only last Friday:
" Therefore, we believe that the best way of protecting and upholding individual rights. including press freedom "—
this was in the closed shop context—
" is for union membership agreements to be drawn up in keeping with a sensible Code of Practice."
The fact is that there is no obvious way of dealing with these problems by legislation. The right hon. Gentleman himself has pointed out again and again, in honest, thoughtful contributions to debate over the last few weeks, that this problem, like the problem of secondary picketing, can best and probably only be dealt with by agreements inside the trade union movement itself.
Mr. Prior: The right hon. Gentleman really must not go on distorting what I have said. In that speech, I made it abundantly plain that I believed that we had to have a code of practice and that we also had to be prepared to change the law to allow compensation for unfair dismissal in a closed shop situation, and that no one should be expelled or excluded from a trade union without recourse to a proper court. Why does the right hon. Gentleman miss all that out, because it totally alters the concept of what he is saying?
Mr. Healey: Of course I accept—the right hon. Gentleman has just quoted himself, in his speech a moment ago—that he made these specific suggestions. But they do not deal with the core of the problem which may be created by the closed shop. The right hon. Member for Down, South was so right about all the proposals made by the Conservative Party in this field. In so far as they are
1634
precise, they are scarcely relevant to the problems which the nation is facing.
There is an extraordinary contrast between the approach of the right hon. Member for Lowestoft to these problems and the approach of the Leader of the Opposition. Her weekly changes of position on this particular matter reflect nothing except a desperate opportunism. She is very skilful. She has the skill of the demagogue, in recognising public feeling and giving it voice. I think that we can all concede that. But she does so by inflaming emotions, particularly the emotions of fear and hatred.
The right hon. Lady started last year by doing it on immigration. She then did it on the question of law and order. She then picked, even a year ago, the question of union power. But then her proposal was to have referendums on strikes—something which, mercifully, she has not resurrected in the intervening nine months.
The other day the right hon. Lady made no specific proposals whatever, and she made none this afternoon. The only specific proposal she made this afternoon was that if the Government could devise any means of using the law to deal with these problems the Opposition would support them. But she made no suggestion whatever as to what means the Government could find.
While I think that there is scope for a wide measure of agreement on these matters between the two sides of the House, it must be on the basis of the recognition of the right hon. Gentleman that the law has a very limited role, if any, to play in dealing with our present discontents and that these problems can be dealt with only by talking to those concerned, both in industry and in the trade unions, and talking on a basis of reason, common sense and patriotism, rather than by inflaming the emotions of fear, hatred and greed, as the right hon. Lady always insists on doing.
9.58 p.m.
Mr. Michael Marshall: The House has rarely heard a more disgraceful speech from the Chancellor of the Exchequer. His attitude was incomprehensible. He made not a single constructive comment. He simply wound himself up into the old party political routine—[Interruption.]
Mr. Speaker: Order. I cannot hear what the hon. Gentleman is saying.
Mr. Marshall: I am obliged, Mr. Speaker.
It is typical of the Government that they are so far out of control of things that the Chancellor cannot any more even talk up to 10 o'clock. His speech tonight was unmitigated nonsense. He did not respond in any way to the sensible views put forward from the Opposition Benches. Nor did he face up to the problems affecting many companies, includ-
ing those in my own constituency —[Interruption.]
Mr. Speaker: Order. Perhaps the House is not aware that all this noise is being broadcast.
Mr. Marshall: If the Government seriously want to take advantage of views on both sides of the House, they must think again, and quickly.
Question put, That this House do now adjourn:—
The House divided: Ayes 277, Noes 301.

Division No. 32]

AYES

10.0 p.m.

Adley, Robert

Durant, Tony

Howe, Rt Hon Sir Geoffrey

Aitken, Jonathan

Dykes, Hugh

Howell, David (Gulldford)

Alison, Michael

Eden, Rt Hon Sir John

Howell, Ralph (North Norfolk)

Amery, Rt Hon Julian

Edwards, Nicholas (Pembroke)

Howells, Geraint (Cardigan)

Arnold, Tom

Elliott, Sir William

Hunt, David (Wirral)

Atkins, Rt Hon H. (Spelthorne)

Emery, Peter

Hunt, John (Ravensbourne)

Atkinson, David (B'moutit, East)

Eyre, Reginald

Hurd, Douglas

Awdry, Daniel

Fairbairn, Nicholas

Hutchison, Michael Clark

Baker, Kenneth

Fairgrieve, Russell

Irving, Charles (Cheltenham)

Beith, A. J.

Farr, John

James, David

Bell, Ronald

Fell, Anthony

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

Bendall, Vivian

Finsberg, Geoffrey

Jessel, Toby

Bennett, Sir Frederic (Torbay)

Fisher, Sir Nigel

Johnson Smith, G. (E Grinstead)

Bennett, Dr Reginald (Fareham)

Fletcher, Alex (Edinburgh N)

Johnston, Russell (Inverness)

Benyon, W.

Fookes, Miss Janet

Jones, Arthur (Daventry)

Berry, Hon Anthony

Forman, Nigel

Jopling, Michael

Bitten, John

Fowler, Norman (Sutton C'f'd)

Joseph, Rt Hon Sir Keith

Biggs-Davison, John

Fox, Marcus

Kaberry, Sir Donald

Blaker, Peter

Fraser, Rt Hon H. (Stafford amp; St)

Kershaw, Anthony

Body, Richard

Freud, Clement

Kilfedder, James

Boscawen, Hon Robert

Fry, Peter

Kimball, Marcus

Bottomley, Peter

Galbraith, Hon T. G. D.

King, Evelyn (South Dorset)

Bowden, A. (Brighton, Kemptown)

Gardiner, George (Reigate)

King, Tom (Bridgwater)

Boyson, Dr Rhodes (Brent)

Gardner, Edward (S Fylde)

Kitson, Sir Timothy

Bradford, Rev Robert

Gilmour, Rt Hon Sir Ian (Chesham)

Knox, David

Braine, Sir Bernard

Gilmour, Sir John (East Fife)

Lamont, Norman

Britten, Leon

Glyn, Dr Alan

Langford-Holt, Sir John

Brocklebank-Fowler, C.

Godber, Rt Hon Joseph

Latham, Michael (Melton)

Brooke, Hon Peter

Goodhart, Philip

Lawrence, Ivan

Brotherton, Michael

Goodhew, Victor

Lawson, Nigel

Brown, Sir Edward (Bath)

Goodlad, Alastair

Lester, Jim (Beeston)

Bryan, Sir Paul

Gorst, John

Lewis, Kenneth (Rutland)

Buchanan-Smith, Alick

Gow, Ian (Eastbourne)

Lloyd, Ian

Buck, Antony

Gower, Sir Raymond (Barry)

Loveridge, John

Budgen, Nick

Grant, Anthony (Harrow C)

Luce, Richard

Bulmer, Esmond

Gray, Hamish

McAdden, Sir Stephen

Burden, F. A.

Grieve, Percy

McCrindle, Robert

Butler, Adam (Bosworth)

Griffiths, Eldon

Macfarlane, Neil

Carlisle, Mark

Grimond, Rt Hon J.

MacGregor, John

Chalker, Mrs Lynda

Grist, Ian

MacKay, Andrew (Stechford)

Channon, Paul

Grylls, Michael

Macmillan, Rt Hon M. (Farnham)

Churchill, W. S.

Hall-Davis, A. G. F.

McNair-Wilson, M. (Newbury)

Clark, Alan (Plymouth, Sutton)

Hamilton, Archibald (Epsom amp; Ewell)

McNalr-Wilson, P. (New Forest)

Clark, William (Croydon S)

Hamilton, Michael (Saffsbuty)

Madel, David

Clarke, Kenneth (Rushcliffe)

Hampson, Dr Keith

Marshall, Michael (Arundel)

Clegg, Walter

Hannam, John

Marten, Neil

Cockcroft, John

Harrison, Col Sir Harwood (Eye)

Mates, Michael

Cooke, Robert (Bristol W)

Harvle Anderson, Rt Hon Miss

Mather, Carol

Cope, John

Haselhurst, Alan

Maude, Angus

Cormack, Patrick

Hastings, Stephen

Maudling, Rt Hon Reginald

Costain, A. P.

Havers, Rt Hon Sir Michael

Mawby, Ray

Craig, Rt Hon W. (Belfast E)

Hawkins, Paul

Maxwell-Hyslop, Robin

Critchley, Julian

Hayhoe, Barney

Mayhew, Patrick

Crouch, David

Heath, Rt Hon Edward

Meyer, Sir Anthony

Crowder, F. P.

Heseltine, Michael

Miller, Hal (Bromsgrove)

Dean, Paul (N Somerset)

Hicks, Robert

Miscampbell, Norman

Dodsworth, Geoffrey

Higgins, Terence L.

Mitchell, David (Basingstoke)

Douglas-Hamilton, Lord James

Hodgson, Robin

Moate, Roger

Drayson, Burnaby

Holland, Philip

Monro, Hector

du Cann, Rt Hon Edward

Hooson, Emlyn

Montgomery, Fergus

Dunlop, John

Hordern, Peter

Moore, John (Croydon (C)

More, Jasper (Ludlow)

Rhodes James, R.

Stradling, Thomas J.

Morgan, Geraint

Ridley, Hon Nicholas

Tapsell, Peter

Morgan-Giles, Rear-Admiral

Ridsdale, Julian

Taylor, R. (Croydon NW)

Morris, Michael (Northampton S)

Rifkind, Malcolm

Taylor, Teddy (Cathcart)

Morrison, Hon Charles (Devizes)

Roberts, Wyn (Conway)

Tebbit, Norman

Morrison, Peter (Chester)

Rossi, Hugh (Hornsey)

Temple-Morris, Peter

Mudd, David

Rost, Peter (SE Derbyshire)

Thatcher, Rt Hon Margaret

Neave, Airey

Royle, Sir Anthony

Thomas, Rt Hon P. (Hendon S)

Nelson, Anthony

Sainsbury, Tim

Thorpe, Rt Hon Jeremy (N Devon)

Neubert, Michael

St. John-Stevas, Norman

Townsend, Cyril D.

Newton, Tony

Scott, Nicholas

Trotter, Neville

Nott, John

Shaw, Giles (Pudsey)

van Straubenzee, W R.

Onslow, Cranley

Shelton, William (Streatham)

Vaughan, Dr Gerard

Oppenheim, Mrs Sally

Shepherd, Colin

Viggers, Peter

Page, Rt Hon R. Graham (Crosby)

Shersby, Michael

Wainwright, Richard (Colne V)

Page, Richard (Workington)

Silvester, Fred

Wakeham, John

Paisley, Rev Ian

Sims, Roger

Walker, Rt Hon P. (Worcester)

Pardoe, Arthur

Sinclair, Sir George

Wall, Patrick

Parkinson, Cecil

Skeet, T. H. H.

Walters, Dennis

Pattie, Geoffrey

Smith, Cyril (Rochdale)

Weatherill, Bernard

Penhaligon, David

Smith, Dudley (Warwick)

Wells, John

Percival, Ian

Smith, Timothy John (Ashfield)

Whitelaw, Rt Hon William

Peyton, Rt Hon John

Speed, Keitn

Whitney, Raymond

Pink, R. Bonner

Spence, John

Wiggin, Jerry

Prentice, Rt Hon Reg

Spicer, Michael (S Worcester)

Winterton, Nicholas

Price, David (Eastleigh)

Sproat, lain

Wood, Rt Hon Richard

Prior, Rt Hon James

stainton, Keith

Young, Sir G. (Ealing, Acton)

Pym, Rt Hon Francis

Stanbrook, Ivor

Younger, Hon George

Raison, Timothy

Stanley, John

Rathbone, Tim

Steel, Rt Hon David

TELLERS FOR THE AYES:

Rees-Davies, W. R.

Steen, Anthony (Wavertree)

Mr. Spencer Le Marchant and

Renton, Rt Hon Sir D. (Hunts)

Stewart, Ian (Hitchin)

Mr. Michael Roberts

Renton, Tim (Mid-Sussex)

Stokes, John

NOES

Abse, Leo

Cowans, Harry

Gilbert, Rt Hon Dr John

Allaun, Frank

Cox, Thomas (Tooting)

Ginsburg, David

Anderson, Donald

Cralgen, Jim (Maryhill)

Golding, John

Archer, Rt Hon Peter

Crawford, Douglas

Gould, Bryan

Armstrong, Ernest

Cronin, John

Gourlay, Harry

Ashley, Jack

Crowther, Stan (Rotherham)

Graham, Ted

Ashton, Joe

Cryer, Bob

Grant, George (Morpeth)

Atkins, Ronald (Preston N)

Cunningham, Dr J (Whiteh)

Grant, John (Islington C)

Atkinson, Norman (H'gey, Tott'ham)

Davidson, Arthur

Grocott, Bruce

Bagier, Gordon A. T.

Davies, Bryan (Enfield N)

Hamilton, W. W. (Central Fife)

Bain, Mrs Margaret

Davies, Rt Hon Denzil

Hardy, Peter

Barnett, Guy (Greenwich)

Davies, Ifor (Gower)

Harrison, Rt Hon Walter

Barnett, Rt Hon Joel (Heywood)

Davis, Clinton (Hackney C)

Hart, Rt Hon Judith

Bates, Alt

Deakins, Eric

Hattersley, Rt Hon Roy

Bean, R. E.

Dean, Joseph (Leeds West)

Hayman, Mrs Helene

Benn, Rt Hon Anthony Wedgwood

Dell, Rt Hon Edmund

Healey, Rt Hon Denis

Bennett, Andrew (Stockport N)

Dempsey, James

Heffer, Eric S.

Bidwell, Sydney

Dewar, Donald

Henderson, Douglas

Bishop, Rt Hon Edward

Doig, Peter

Home Robertson, John

Blenkinsop, Arthur

Dormand, J. D.

Hooley, Frank

Boardman, H.

Douglas-Mann, Bruce

Horam, John

Booth, Rt Hon Albert

Duffy, A. E. P.

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

Bottomiey, Rt Hon Arthur

Dunn, James A.

Hoyle, Doug (Nelson)

Boyden, James (Bish Auck)

Dunnett, Jack

Huckfield, Les

Bradley, Tom

Eadie, Alex

Hughes, Rt Hon C. (Anglesey)

Bray, Dr Jeremy

Edge, Geoff

Hughes, Robert (Aberdeen N)

Brown, Hugh D. (Provan)

Ellis, John (Brigg & Scun)

Hughes, Roy (Newport)

Brown, Robert C. (Newcastle W)

English, Michael

Hunter, Adam

Buchan, Norman

Ennals, Rt Hon David

Irving, Rt Hon S. (Dartford)

Buchanan, Richard

Evans, Fred (Caerphilly)

Butler, Mrs Joyce (Wood Green)

Evans Gwynfor (Carmarthen)

Jackson, Colin (Brighouse)

Callaghan, Rt Hon J. (Cardiff SE)

Evans, loan (Aberdare)

Jackson, Miss Margaret (Lincoln)

Callaghan, Jim (Middleton amp; P)

Evans, John (Newton)

Janner, Greville

Campbell, Ian

Ewing, Harry (Stirling)

Jay, Rt Hon Douglas

Canavan, Dennis

Ewing, Mrs Winifred (Moray)

Jeger, Mrs Lena

Cant, R. B.

Faulds, Andrew

Jenkins, Hugh (Putney)

Carmichael, Neil

Fernyhough, Rt Hon E.

John, Brynmor

Carter, Ray

Flannery, Martin

Johnson, James (Hull West)

Carter-Jones, Lewis

Fletcher, L. R. (Ilkeston)

Johnston, Walter (Derby S)

Cartwright, John

Fletcher, Ted (Darlington)

Jones, Alec (Rhondda)

Castle, Rt Hon Barbara

Foot, Rt Hon Michael

Jones, Barry (East Flint)

Clemitson, Ivor

Ford, Ben

Jones, Dan (Burnley)

Cocks, Rt Hon Michael (Bristol S)

Forrester, John

Judd, Frank

Cohen, Stanley

Fowler, Gerald (The Wrekin)

Kaufman, Rt Hon Gerald

Colquhoun, Ms Maureen

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

Kelley, Richard

Concannon, Rt Hon John

Freeson, Rt Hon Reginald

Kerr, Russell

Conlan, Bernard

Garrett, John (Norwich S)

Kilroy-Silk, Robert

Cook, Robin F. (Edin C)

Garrett, W. E. (Wallsend)

Kinnock, Nell

Corbett, Robin

George, Bruce

Lambie, David

1638

1639

Lamborn, Harry

Ogden, Eric

Stewart, Rt Hon M. (Fulham)

Lamond, James

O'Halloran, Michael

Stoddart, David

Latham, Arthu' (Paddington)

Orbach, Maurice

Stott, Roger

Leadbitter, Ted

Orme, Rt Hon Stanley

Strang, Gavin

Lee, John

Ovenden, John

Strauss, Rt Hon G. R.

Lestor, Miss Joan(Eton & Slough)

Owen, Rt Hon Dr David

Summerskill, Hon Dr Shirley

Lever, Rt Hon Harold

Padley, Walter

Swain, Thomas

Lewis, Ron (Carlisle)

Palmer, Arthur

Taylor, Mrs Ann (Bolton W)

Litterick, Tom

Park, George

Thomas, Daiydd (Merioneth)

Lofthouse, Geoffrey

Parker, John

Thomas, Jeffrey (Abertillery)

Lomas, Kenneth

Parry, Robert

Thomas, Mike (Newcastle E)

Loyden, Eddie

Pavitt, Laurie

Thomas, Ron (Bristol NW)

Luard, Evan

Pendry, Tom

Thompson, George

Lyon, Alexander (York)

Perry, Ernest

Thorne, Stan (Preston South)

Lyons, Edward (Bradford W)

Phipps, Dr Colin

Tierney, Sydney

Mabon, Rt Hon Dr J. Dickson

Price, C. (Lewisham W)

Tilley, John

McCartney, Hugh

Price, William (Rugby)

Tinn, James

MacCormick, lain

Radice, Giles

Tomlinson, John

McDonald, Dr Oonagh

Rees, Rt Hon Merlyn (Leeds S)

Torney, Tom

McElhone,Frank

Reid, George

Tuck, Raphael

MacFarquhar,Roderick

Richardson, Miss Jo

Varley, Rt Hon Eric G.

McGuire, Michael (Ince)

Roberts, Albert (Normanton)

Wainwright, Edwin (Dearne V)

McKay, Alan (Penistone)

Roberts, Gwilym (Cannock)

Walker, Harold (Doncaster)

MacKenzie, Rt Hon Gregor

Robertson, George (Hamilton)

Walker, Terry (Kingswood)

Maclennan, Robert

Robertson, John (Paisley)

Ward, Michael

McMillan, Tom (Glasgow C)

Robinson, Geoffrey

Watkins, David

McNamara, Kevin

Roderick, Caerwyn

Watt, Hamish

Madden, Max

Rodgers, George (Chorley)

Weetch, Ken

Magee, Bryan

Rodgers, Rt Hon William (Stockton)

Weitzman, David

Mahon, Simon

Rooker, J. W.

Wellbeloved, James

Mallalieu, J. P. W

Roper, John

Welsh, Andrew

Marks, Kenneth

Ross, Rt Hon W. (Kilmarnock)

White, Frank R. (Bury)

Marshall, Dr Edmund (Goole)

Rowlands, Ted

White, James (Pollok)

Marshall, Jim (Leicester S)

Ryman, John

Whitlock, William

Mason, Rt Hon Roy

Sandelson, Neville

Wigley, Defydd

Maynard, Miss Joan

Sedgemore, Brian

Willey, Rt Hon Frederick

Meacher, Michael

Selby, Harry

Williams, Rt Hon Alan (Swansea W)

Mikardo, Ian

Sever, John

Williams, Alan Lee (Hornch'ch)

Millan, Rt Hon Bruce

Shaw, Arnold (Ilford South)

Williams, Rt Hon Shirley (Hertford)

Miller, Dr M. S. (E Kilbride)

Sheldon, Rt Hon Robert

Williams, Sir Thomas (Warrington)

Mitchell, Austin (Grimsby)

Shore, Rt Hon Peter

Wilson, Gordon (Dundee E)

Molloy, William

Short, Mrs Renee (Wolv NE)

Wilson, Rt Hon Sir Harold (Huyton)

Moonman, Eric

Silkin, Rt Hon John (Deptford)

Wilson, William (Coventry SE)

Morris, Alfred (Wythenshawe)

Silkin, Rt Hon S. C. (Dulwich)

Wise, Mrs Audrey

Morris, Rt Hon Charles R.

Sillars, James

Woodall, Alec

Morris, Rt Hon J. (Aberavon)

Silverman, Julius

Woof, Robert

Morton, George

Skinner, Dennis

Wrigglesworth, Ian

Moyle Rt Hon Roland

Smith, Rt Hon John (N Lanarkshire)

Young, David (Bolton E)

Mulley, Rt Hon Frederick

Snape, Peter

Murray, Rt Hon Ronald King

Spearing, Nigel

TELLERS FOR THE NOES:

Newens, Stanley

Spriggs, Leslie

Mr. James Hamilton and

Noble, Mike

Stallard, A. W.

Mr Donald Coleman.

Oakes, Gordon

Stewart, Rt Hon Donald

Question accordingly negatived.

BUSINESS OF THE HOUSE

Ordered,

That the Motion relating to Ways and Means may be proceeded with at this day's sitting, though opposed, until any hour.—[Prime Minister.]

HOUSING (SCOTLAND)
10.17 p.m.
The Under-Secretary of State for Scotland (Mr. Hugh D. Brown): I beg to move,
That the draft Housing Support Grant (Scotland) Order 1979, which was laid before this House on 8th December, be approved.
This is the first order of its type to be laid before the House under the Housing (Financial Provisions) (Scotland) Act 1978. It was accompanied by a report which explains its provisions. It may be helpful if I explain some of the background and the reasons for the introduction of the new grant.
The reasons for the new grant system were set out in a Green Paper on Scottish housing which was published in June 1977.
Mr. Douglas Henderson: On a point of order, Mr. Deputy Speaker. It is impossible to hear what the Minister is saying because hon. Members are making so much noise in leaving the Chamber.
Mr. Deputy Speaker (Sir Myer Galpern): I sympathise with the Minister, who is doing his best. I do not want him to strain his vocal chords.
Mr. Brown: Normally hon. Members do not make such complaints.
The Green Paper was an attempt to outline a housing system which would respond to people's needs and aspirations and at the same time ensure that adequate Government financial support could be applied where it was most needed. HSG is therefore an important part of the whole housing picture.
In a sense the introduction of HSG is the second stage of the reform of local authority housing finance arrangements. The first stage was the introduction of housing plans from and including the financial year 1978–79. "Housing plans" is a system for planning housing policies and programmes based on a local assessment of needs, and from 1979-80 housing plans, with the complementary HSG, will provide an integrated and sensitive approach to the provision of the resources both capital and current.
The need to reform the existing housing subsidy system for local authorities was
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widely accepted. The basis of the new system was discussed at length with the Convention of Scottish Local Authorities and there were extensive consultations with the convention before the laying of the draft order before the House.
The present system has several serious defects. First, it still reflects the rent philosophy of the 1972 Act. The 1972 Act set a 10-year timetable for the payment of subsidies linked to direct control of rents which the Government abolished in the 1975 Act. In particular, the phasing out in 1982-83 of all housing subsidy would, if allowed to take its course, seriously disrupt the financing of local authority housing.
Secondly, present subsidy arrangement are both unduly complex and less than fair. They consist of five separate subsidies to housing revenue accounts, for one of which no authority has so far qualified. These subsidies interact in curious ways and clearly result in unfair distribution of support for different authorities, regardless of the balance of activities required to meet local needs, and leave wide differences in the level of costs which have to be met from local resources of rent and rate fund contributions.
Housing support grant was designed to overcome these defects, to secure fairness of distribution so that the burdens of housing expenditure borne locally are more consistent, to provide for adaptability to meet changing needs and circumstances and to disengage central Government from unnecessary detailed control and oversight.
The 1978 Act provided a framework of power and principles within which the amount of Government assistance and the basis of its distribution to authorities would be decided annually.
I shall give the House a brief explanation of the draft order and report.
The 1978 Act requires the Secretary of State to estimate the expenditure and income on the combined housing revenue account of the local authorities for the grant year and lays down guidance for him to follow. This he has done and the proposed aggregate amount of grants for Scotland is £.151.7 million. As can be seen from paragraphs 4 and 10 of the report, this figure might be slightly

1643
misleading in current circumstances, since the expenditure part of the calculation has been estimated at November 1978 prices while the income element had been estimated at 1979-80 outturn prices. This is a very important distinction and I am sure that everybody appreciates the significance of it. For example, if interest rates were to rise substantially during the year, full account can be taken of such an increase by the use of a variation order under section 3 of the 1978 Act. A variation order would also take care of any substantial inflation of housing revenue account general expenditure. The need for a variation order will be considered during the course of the 1979-80 financial year.
The Secretary of State is grateful for the co-operation which the convention has given throughout the long consultations leading up to the first determination of this grant—
Mr. David Lambie: On the point of consultation with COSLA—
Mr. Brown: If my hon. Friend does not mind, I would rather not go into that matter at this stage. I am sure that h' will be making a speech. I shall certainly reply to any points raised by my hon. Friend.
Mr. Lambie: If the Minister will reply now, 1 might not make a speech.
Mr. Brown: That is a tempting proposition, but I should like a guarantee before giving way.
Mr. Lambie: The Minister referred to the consultations with COSLA. Did the convention agree unanimously to the final figures arrived at under this formula, or was there just a general opinion, with many areas voting against?
Mr. Brown: The convention does not vote on these matters. There was general agreement with COSLA and the specific points on which the convention did not agree with our estimates are included in the report. It is part of the democratisation of the procedure that we are obliged to show where there has been disagreement. I am sure that the House will appreciate the fact that my hon. Friend has guaranteed that he will not make a speech.
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It can be seen from paragraphs 26 and 27 of the report that COSLA expressed qualified approval of the methods used in estimating eligible expenditure and relevant income. Its first reservation is a technical one concerning the interest rate applied to new borrowing between September 1978 and March 1979. The rate used was the average local authority pool interest rate in the autumn of 1978 which was based on a corrected sample collected jointly by the convention and the Scottish Development Department. Allowance has been made for new borrowing in 1979-80. However, the method used accords with long-established practice in regard to rate support grant in Scotland. The difference would affect not the amount but merely the timing of payments.
The second reservation is COSLA's preference for the use of local authorities' 1978–79 budget estimates as the base for calculation. This matter had been gone into most carefully over a long period. There were difficulties concerning the use of any particular year as a base, but the unanimous view of the working party had been that the most satisfactory year to use, since reasonably firm figures were available, was 1977–78. No arguments had so far been put forward to lead the Secretary of State to the view that that was not the right decision.
The housing support grant—HSG—for 1979–80 will be divided into three portions for apportionment purposes—the general portion, the transitional portion and the hostel portion. The method of apportionment has been determined after consultation with the convention.
It can be seen from paragraph 28 of the report that the convention was satisfied with the proposed method of apportioning the aggregate grants for 1979–80. It has been agreed that further study and refinement should be carried out for future years.
For the first year, the general portion will account for just under one-third of the total grant available. The formula for the general portion is shown in the schedule to the order and is described in paragraphs 16 to 20 of the report. First, each authority's expenditure needs are assessed using the actual 1977–78 loan charges returned by the authority, adjusted so that aggregate loan charges for

1645
Scotland equate to the total loan charges allowed for in the calculation of the total amount of HSG for Scotland. A standard amount per house, adjusted by two objective weighting factors, related to the incidence of high rise houses and sparsity of population coupled with small stocks of houses, is allowed for management and maintenance expenditure. The aggregate of those amounts equates with all expenditure other than loan charges included in the calculation of the total amount of HSG.
Net expenditure is then calculated by deducting the basic income amount. That amount is calculated using two components, the first related to the number of houses of the authorities and the second related to the population of the authorities. A safety factor has been built in to ensure that authorities with small proportions of houses per head of population do not have to contribute more than a standard amount per house. That was considered to be necessary to ensure that such authorities had some incentive to continue to provide houses where there was a need for local authority housing.
Perhaps I should clarify what is meant by the distribution percentage. It has nothing to do with the total grant for Scotland, which will meet 100 per cent. of the difference between estimated eligible expenditure and estimated relevant income. It is related only to the distribution of grant—not to the total —and is considered to be necessary to ensure that each authority meets a proportion of expenditure over the basic income amount.
The transitional portion accounts for approximately two-thirds of the grant and has been apportioned in relation to each authority's estimated entitlement in 1978-79 to the subsidies which are being replaced by HSG. These estimates were based on the near actual outturns of subsidies for 1977–78. A further transitional adjustment has been made to ensure that the maximum potential increase in local contributions—due to loss of subsidy—would be an equivalent of 1 p on the rates.
The other portion, the hostel portion, which provides for deficit support for the operation of hostels and lodging houses by local authorities, accounts for a minor part of the aggregate grant and affects very few authorities.
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It was originally intended that another special portion of HSG should cover housing management training and, like the special hostel portion, should also be treated separately in order to give a subsidy boost to a priority activity. However, the Secretary of State decided to accept a later recommendation by the housing finance working party that such a special and complicating feature would not be justified because of the very small part of the grant involved, and because it was felt that the onus of encouraging training should be with the new housing training council. Housing management training has, however, been included in the activities of which account has been taken in the estimates of eligible expenditure.
Mr. George Younger: Will the Minister tell the House what assumption he has made about future levels of rents in coming to those conclusions?
Mr. Brown: It is in the order and the report which goes with the order. The assumption is that there will be an increase of earnings of 7 per cent. That is not new. That was declared by the Chancellor of the Exchequer some months ago. Therefore, that has to be reflected in the calculations which are made on local contributions—not on rent but on rent and rate contribution combined. The assumption is related to the figure that I have given for earnings. It is not necessarily in a particular year. The phrase is "year by year ", and over a period rents have to increase in relation to earnings.
Mr. Younger: I accept that, but the hon. Gentleman is assuming an increase in earnings of 7 per cent.?
Mr. Brown: That is correct.
Finally, the amounts of HSG to be received by authorities in 1979-80 are listed in Annex C to the Report. The sums shown have been calculated to the nearest £1,000 but before payment they will be recalculated to the nearest £1. These amounts are shown at order prices, that is, at the same price levels as the aggregate grant for Scotland. If there is a need for a variation order, the relative shares of total grant of individual authorities could be changed, depending on the relative movement of the different categories of expenditure.

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I make no apology for having been very brief on what I know seems to be a complicated subject, but I hope that my explanation has been helpful and is adequate in view of the importance of the amount of money for distribution that we are approving tonight.
10.35 p.m.
Mr. Jain MacCormick: I suppose I speak for most Members on both sides of the House when I say that this ought to have been an occasion when we could have congratulated the Under-Secretary of State on bringing in this new scheme. But even though he spends so much of his time making witty pronouncements in Argyll when he is on holiday, he has to a certain extent fallen into the same trap as have his political compatriots on Clyde regional council when they think about the future provision of housing in areas such as that covered by the Argyll and Bute district council.
From my point of view as a constituency Member, and also from the point of view of others of my hon. Friends —for example, my hon. Friend the Member for Dunbartonshire, East (Mrs. Bain), who represents the area covered by Strathkelvin district council—the new housing support grant will not fulfil the aims which it sets out to fulfil.
Argyll and Bute covers the biggest area of any district council in the whole of Scotland. The people of Argyll and Bute are scattered among many islands, perhaps even more than the constituents of my right hon. Friend the Member for Western Isles (Mr. Stewart). Yet we find that this order is so framed as to exclude Argyll and Bute district council from the areas covered by the sparsity arrangements. They have been excluded simply because the Government have fixed an arbitrary figure of 5,000 houses.
I seriously ask the Minister whether it is possible to change the number of houses run by a council from 5,000 to, say, 10,000. What difference would it make anyway, when one considers the whole thing as a total? Is it suggested that the island of Coll, with about a dozen council houses, or the island of Mull, with a large area but comparatively few council houses, is to be cut off from the beneficence or munificence of the Government simply because some civil servant has
1648
chosen a particular figure as the cut-off point?
I know that I speak for everyone in Argyll and Bute, regardless of their political beliefs, when I say that we are sick and fed up not only with the present housing position but with the attitude of the central belt whereby we in Argyll are hit in relation to rates and revaluation. We are now to be hit further because it will be made that much more difficult for our local authority to provide the people of Argyll and Bute with the houses which they require.
We are sick and tired of the fact that this Government are not allowing the people in the rural areas of this country to enjoy the quality of life to which they are fully entitled, and to which they contribute as fully as anyone else in the country.
10.39 p.m.
Mr. Robin F. Cook: As this is the first time on which the House has considered the order, I should like to begin by making a few comments about the general nature of the procedure.
We are debating this matter after 10 o'clock at night, at an hour which is generally recognised outside the House as being an inane hour at which to proceed with a major financial decision. This debate can last at the most 1½ hours, which, given the hour at which we began, is perhaps merciful, and we are debating a motion which cannot be amended.
Mr. Dennis Canavan: That is a good reason for an Assembly.
Mr. Cook: I shall come back to my hon. Friend's comment in a moment.
This is perhaps an odd way in which to spend £150 million of public money. I do not think that there is a legislature elsewhere in the Western world which would spend public money of that order on that kind of basis.
Hon. Members who follow these matters, as opposed to those who happen to have joined us at this late hour, will be aware that these observations do not come from me anew. I made similar comments when we considered the financial provisions Bill in Committee.

1649
I tabled an amendment in Committee suggesting that when we considered this order it should be submitted to a Select Committee which could hear witnesses and examine the issue over a matter of weeks. That amendment was not selected for the perfectly proper reason that we cannot change the procedures of the House in the course of the consideration of any Bill. But if we were serious about examining how we spend public money we would proceed in that fashion so that we could hear those who have objections.
As I understand the comment of the hon. Member for Argyll (Mr. MacCormick), and as I understood the sotto voce comments from this side of the Chamber that were drowning his words, the rural areas feel strongly about this order. I am an urban Member and I hold no brief for the rural areas. It may be that when I get down to examining the matter I may find that I disagree with the points put forward by the rural local authorities, but it seems to me perfectly proper for those rural authorities to have a committee or some other arrangement under which they could discuss their grievances and concern with hon. Members and give those who are concerned about this issue the opportunity to hear their evidence.
I can hear some of my hon. Friends who are misguided but are trying to be helpful saying that devolution will resolve all these problems. I cannot comment on whether that will come about, but if the intention and hopes of my hon. Friends come to fruition and this House proceeds to deal with the block grant order in the way that it now disposes of the rate support grant and housing support grant orders we shall look very foolish. It is time we grasped the thistle and devised a proper system for controlling the way in which we spend money, because then the House would be more likely to command the respect of the electorate.
I believe that my hon. Friend the Under-Secretary has the two key elements of the order right. I calculate that the increase of local income is assumed to be 16 per cent. over two years. That is a reasonable and modest figure. The message should go out that there is no basis within the figures in the order for any substantial rent increase, certainly in any urban housing authority. Nor is
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there any basis in the order for any local authority to decide that it will not proceed with a capital building programme because of any lack of housing support money, because that money is provided.
My hon. Friend has the second element right in that when he provides for the total budget it is no less than it would have been had the previous subsidy system existed. In other words, the order does not provide for any cuts. [Interruption]. My hon. Friend the Member for Paisley (Mr. Robertson) says that is codswallop. If he is to carry on a running commentary on every speech that is made, he has an obligation to make a speech—which, since my hon. Friend is leaving, we are mercifully to be spared. If nothing else, my remarks to my hon. Friend have achieved their desired effect. When challenged to say something, his party, as usual, has nothing to contribute.
The money being provided through the new housing support grant is at least the same as it would have been under the previous subsidy system. But I am rendered nervous when I see the tripartite division of that subsidy. Under the general portion, which is intended to be the main subsidy, one-third of expenditure is provided. Under the transitional portion two-thirds of the moneys are provided.
When the Bill was debated on Second Reading and in Committee last Session, I and others expressed some concern about the wide element of discretion that was, in effect, being given the Secretary of State to alter the overall expenditure on housing susidies. I am quite happy that so long as my right hon. and hon. Friends remain in charge of housing policy in Scotland there will be no cutback in the housing subsidy expenditure. But when I look at this order and find that two-thirds of all housing subsidy is included under the heading "transitional ", I cannot help but wonder whether, and to what extent, money from that transitional subsidy would disappear altogether from the housing subsidies rather than be transferred to the general provision heading if there were a change of Government, and other people, perhaps less enlightened and perhaps less committed than my right hon. and hon. Friends are to defending the position of the council tenants and those on the waiting lists, were in charge. That very division, in which the great bulk of

1651
the money is marked as "transitional ", underlines the extraordinary extent to which the measure we passed last Session grants discretion to the occupant of the chair of Secretary of State for Scotland.
One positive merit which emerges from the order which I did not anticipate in the debates on the Bill and which I believe no other Member anticipated is that at least in the order there is a separate heading for expenditure on hostel provision. I welcome that separate identification for hostel expenditure. I represent more hostel beds than any other Member for Scotland, with the possible exception of my hon. Friend the Member for Glasgow, Central (Mr. McMillan).
I find it indicative of the priority that we attach to that type of accommodation that, out of a total expenditure of £151 million, we allocate £750,000—half of 1 per cent.—to it. Over the past 30 years, we have made genuine progress in housing the bulk of the population. I am one of the first to cavil about how much still has to be achieved and how much is left undone. Nevertheless, we have made real progress in the past 30 years. The majority of the people now live in accommodation which before the war could have been the aspiration only of a small minority.
Yet in those three decades the standard of accommodation for those who live in hostels has stood still. I could take hon. Members to hostels in my constituency which have not changed since the day when war was declared, which have exactly the same standard of accommodation as they had during the 1930s. It is the old story that the weaker one is, the more vulnerable one is, the less articulate one is, the less likely one is to get help because one is less able to demand it.
I do not blame my hon. Friend the Under-Secretary of State for this situation. I certainly do not blame him for the relative expenditure figures contained in the order. The situation is, sadly, a reflection of the sum of a number of decisions taken by local authorities. As my hon. Friend said, only a very few local authorities have chosen to get involved in this sector.
Over the last two years, I have been involved in Edinburgh in attempting to persuade the district council to take over the Castle Trades Hostel, which is the
1652
largest hostel in Edinburgh, because its management announced two years ago that it would have to close next March. Only last week did the housing committee finally commit itself to taking over that hostel, at a point which was too late to prevent notices going out to the men advising them that they would have to quit because the hostel would close at the end of March. Even then the housing committee has set aside only £250,000 for expenditure on it, and since that includes the purchase price of a large central area site it is self-evident that it does not intend to spend particularly much money on improving the quality of the accommodation at the hostel. In other words, the men in that hostel will have to put up with accommodation which is grossly inferior to anything which would be tolerated by any other tenant of the housing committee in Edinburgh.
We face an enormous task, not only in Edinburgh but in many other urban centres, if we are to provide the kind of accommodation for people in that position that the rest of our constituents see fit to demand today for themselves. It will be helpful if, in the course of meeting that task, we can preserve a separate heading for hostel expenditure in the housing support grant order so that we can monitor how the expenditure goes and so that this House can press for an annual increase in it.
10.50 p.m.
Mr. Hector Monro: I intervene only briefly to see whether the Minister can help us by explaining exactly what this is all about. The explanatory note is perhaps the briefest I have ever seen on an order expending so many millions of pounds, and it is not particularly helpful in explaining how the money is to be spent.
The Government keep professing their wish for open government, and I suppose that had hon. Members anticipated this debate earlier the Minister would have sent us a report by the Secretary of of State for Scotland under section 1 of the Housing (Financial Provisions) (Scotland) Act 1978. Most of us have this information only through the courtesy of Strathkelvin district council, which was kind enough to send us a copy today together with its criticism of its content.
It would seem to us to be in the interests of better government and to be

1653
helpful to us if we could have this kind of information available to us earlier. [Interruption.] It is not available in the Vote Office. The Secretary of State may live with his head in the clouds, but not everybody knows every report produced by St. Andrew's House. He would probably go in fear and trembling if we did. It would be helpful if we knew what documents were available when we were considering an order such as this. We would then be better informed in our criticism.
Hon. Members did not know that this report was available. How could they? It is all very well for the Secretary of State to sit there in that smug way. He has a large staff to explain matters to him, but we have not. All we need is a little help to enable us to know that the money is being spent in the best interests of all concerned in Scotland. I do not know whether the document the Secretary of State has which nobody else has gives a comparison. In annex C there is no comparison with last year for the district authorities. There are comparisons in annex A and annex B with the figures for the last financial year and for the coming year, but that is not so in annex C.
It would have been helpful to know what reductions or increases the various district councils were receiving. In that way we could have known whether the new formula, which is incredibly complicated to understand, is working for the benefit of our own districts.
I know that this is a revenue grant and that it is not particularly related to capital expenditure, but I am surprised that in this formula there is no comparing of housing waiting lists, which is far more important to an area. As the hon. Member for Argyll (Mr. MacCormick) said, the number of houses being built and the number of people waiting for them are far more important than the population, but they do not seem to be taken into account.
It would also be interesting to know whether the Minister takes into consideration the quality of housing in an area, because all of us, without exception, want to see a much higher quality of building in our constituencies. Many of us are particularly sad at the quality of housing built in the first 10 years after the war, housing which has deteriorated much
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more quickly than was expected when it was built. Many of those houses now need to be replaced after a comparatively short life. That ties in with the perennial argument about whether we should modernise or demolish the prefabs in which many elderly folk still have a great wish to live.
The Minister might comment on how he is getting on with improving the quality of houses through the district councils and the Scottish Special Housing Association, because many in my constituency require improvement at the earliest opportunity. However, I should like the Minister not to read out a complicated brief which left us none the wiser but to give us a little information, because this is hard to understand.
10.54 p.m.
Mr. David Lambie: I should like to take up a point made by my hon. Friend the Member for Edinburgh, Central (Mr. Cook) on the history of the Committee stage of the Housing (Financial Provisions) (Scotland) Act. During that Committee stage, my hon. Friend, myself and a group of Labour Members were disturbed about the powers that were being given to the Secretary of State. Tonight the Secretary of State has honoured one of the assurances that he then gave us. He said that in real terms the total amount of subsidy paid under the housing support grant would be equivalent to what it would have been under the old system. He has kept to that. We are getting £151,700,000.
However, like my hon. Friend, I am disturbed that roughly two-thirds of that money is to be given by way of a transitional grant. I am more disturbed now, and astonished, that following the speech of my hon. Friend the Under-Secretary, no Tory Front Bench spokesman rose to speak. Why? The Tories are in favour of this. They see the Trojan horse that the Labour Government have put into their hands if by some chance the result of a General Election is that the Labour Government are replaced by a Conservative Government.
The Labour Government have changed the whole system of housing subsidy in Scotland, a tradition that had been built up over 50 years, in order to make roughly two-thirds of the money available for housing subsidy to Scotland next year

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a transitional grant. What will happen to the people in my constituency in Cunninghame if by some chance the hon. Member for Glasgow, Cathcart (Mr. Taylor) replaces my right hon. Friend the Member for Glasgow, Craigton (Mr. Millan) as Secretary of State for Scotland? If ever there were to be again a hanging judge in relation to council tenants and council rents, it would be the hon. Member for Cathcart. We would have no ground for complaint, because the hon. Member for Cathcart would say honestly" It was your Government who put this weapon into the hands of the Conservative Party."
Although I am happy that the total amount of subsidy, in real terms, is equivalent to what it would have been under the old system, I am disturbed about this Trojan horse that we have put into the hands of a possible future Conservative Government.
Also, during the Committee stage of the Bill, I and quite a number of my hon. Friends went out of our way to put pressure on the Government to make sure that we had complete negotiations with COSLA before the figure for the housing support grant was reached and before the distribution formula was settled. In spite of the assurances that have been given, I am disturbed that very little consultation has taken place between the Under-Secretary and COSLA—not through any fault of my hon. Friend but because we are finding that COSLA is too big. Following the reorganisation of local government, we have one organisation representing all the local authorities in Scotland. That organisation is too big. It does not have the machinery to negotiate on equal terms with the Government and their advisers in St. Andrew's House.
Mr. Teddy Taylor: In case any of those who read what is said in this important debate might misunderstand, will the hon. Gentleman at least agree that, when he and some of his hon. Friends proposed that in the event of disagreement between COSLA and the Government there should be a form of arbitration, the Conservative Members on the Committee supported him, there was a tied vote, and we lost only because unfortunately the SNP representative on the Committee either was not there or did not vote?
Mr. Lambie: I accept that. Sometimes we have strange bedfellows as well. We cannot help that.
I was making the point that, although we were assured that there would be negotiations between COSLA and the Minister, those negotiations have not taken place to the extent that we expected, not through any fault of the Minister but because COSLA does not have the organisation to deal with negotiation on an equal basis with Ministers and their advisers.
In a letter to my hon. Friend the Member for Edinburgh, Central on 12th January, the secretary of COSLA wrote:
" The paper by our financial adviser was only issued to local authorities at the beginning of this week because the implications of the Order have proved to be very difficult to determine."
He said that he could not give a brief to Members of Parliament because the implications had
" proved to be very difficult to determine ".
We are passing an order of which we do not know the full implications. If COSLA does not understand them after having a working party discussing the order, and after having close consultations with my hon. Friend, how are ordinary Back Benchers expected fully to understand them?
Those of us who have been consulted by our own local authorities have been told by them how they think the order will affect their own districts. I am one of the Members representing Cunninghame district council, which has informed me that the amount of money to be given to it next year by way of housing support grant will be £800,000 less than it would have received under the old system; £500,000 more would have been received under the old system, instead of an estimated £300,000 less under the new system.
I accept the concept of the order that the areas of urban deprivation should be helped, but I do not accept the principle that my electors in Cunninghame should pay for that. If the total is to be the same throughout Scotland and the Government think that certain areas, such as the urban areas of Glasgow and the greater Glasgow conurbation, should receive more, that money should be provided in addition.

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The £151 million is not a fair figure. Although in real terms it is equivalent to what the amount would have been under the old system, it is wrongly distributed by giving more to certain areas of Scotland and taking that away from other areas, such as Cunninghame.
We are in a difficulty tonight. We cannot amend the order. We can only vote against it, and if we do that no money will be provided for housing finance in Scotland. We cannot do that. All that we can do at this stage is to make a protest on behalf of our own district councils, and tell the Minister that if he wants money for the areas of greater need, if he wants money for the greater Glasgow conurbation, I support him, but let him introduce another order to provide extra money for those areas, and not take it from areas such as Cunninghame and the others that are not part of the greater Glasgow conurbation. I ask my hon. Friend to consider an increase in the amount of money being provided in this order to give a fairer share to areas like Cunninghame district council.
11.5 p.m.
Mr. Jim Craigen: The Minister sought to assure us that this order would introduce the flexibility required for housing policies in the 1980s. I hope that he is right. Like my hon. Friends the Members for Central Ayrshire (Mr. Lambie) and for Edinburgh, Central (Mr. Cook), I did not agree with this argument during the Second Reading debate. I am pleased, however, that the new system proposes to allocate more or less the same resources this year towards housing in Scotland. What worries us is not so much that this year the cloth is the same size but how the scissors will be exercised by future Secretaries of State in dealing with the housing support grant.
I understand that the city of Glasgow would have preferred to see far more emphasis on the general element within the housing support grant and less on the transitional element, which at present is by far the larger. The Secretary of State, I believe, has already accepted the city's housing plan as a sound and constructive analysis of the major housing issues. It is clear that one of the principal elements in that plan is a sizeable
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modernisation programme within the local authority sector. I believe that this will be the dominant feature of the city's housing development during the next five years or so.
I want to make one or two points about the housing support grant formula. It must be obvious that if there is a sizeable modernisation programme in hand there will be a loss of rental income to the local authority. Indeed, this will affect the anticipated revenue, because in many ways the housing support grant is really a housing deficit grant in the way that it operates. The Minister might be able to say how he sees the role of the Scottish Special Housing Association in assisting Glasgow with its programme of modernisation, although this would involve, in some instances, the transfer of property to the Association.
From time to time, we have discussed in this Chamber the problem of Glasgow's population decline. We shall be faced with a problem of surplus housing in Glasgow. Various calculations of the size of surplus have been made. Here again, the city could well be faced with a fairly substantial loss of rental income, which will also affect the housing support grant calculations.
I want to turn to the question of new build. The figures have been going down. I would like the Minister to say how he sees the new build programme in Glasgow. We shall require a much more specialised housing programme, with more attention and wider access to groups such as single persons, the elderly and middle-aged couples.
The explanatory notes with the order refer to the difficulties of standardising management and maintenance costs. Glasgow is about to embark on a fairly ambitious programme of opening up new district offices, which will clearly require substantial commitments of capital and staffing expenditure. The Department should be devising a formula here, as well as on the problem of demolishing local authority houses, which will loom larger over the next five years.
The recent severe weather conditions during the Christmas and new year period will land Glasgow district council with substantial bills—
Mr. John Robertson: And other places.
Mr. Craigen: Yes, but I shall speak only for my own area. There will be substantial bills for repairs to houses and multi-storey blocks. Can the Minister say something about introducing a contingency element into future housing grant orders? Apart from the problems of the last month or so, more and more local authorities are having to deal with severe problems of dampness and condensation in their buildings that will be a substantial burden on housing expenditure, both present and future.
11.11 p.m.
Mrs. Margaret Bain: It is surprising that the hon. Member for Edinburgh, Central (Mr. Cook) should complain about the procedures of the House when he is actively campaigning against the establishment of a body in Edinburgh which would allow us to discuss Scottish housing problems at a reasonable time.
I share the surprise of the hon. Member for Central Ayrshire (Mr. Lambie) at the failure of any Front Bench Conservative spokesman to reply to the Minister. Perhaps this is a day on which they are short of breath: at 10 o'clock they could hardly raise enough to force a Division.
The Minister referred to paragraphs 26 to 30 of the explanatory notes in connection with the Convention of Scottish Local Authorities. COSLA was consulted in some detail several months ago, but the director of finance for Strathkelvin district council pointed out to me that the inflexibility of the procedures in the instrument became known to the council only a fortnight ago. I congratulate the district council on its work in giving hon. Members background material for this debate. This delay is of great concern, particularly since the operation of the grant will lead to a total reduction in previous housing subsidies. In my constituency, Cumbernauld and Kilsyth district council will lose £300,000, with only two transitional stages, and Strathkelvin has estimated a loss of £1 million.
These points have been raised before with the Scottish Office, which, in a letter on 19th December 1978 to Provost Gordon Murray of Cumbernauld and Kilsyth district council, pointed out that his representations in a previous letter had been raised at COSLA.
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The letter continued:
" The effect of the distribution of grant on the burdens of individual authorities will be monitored and each year it will be possible to give fresh consideration to its fairness in consultation with the Convention."
We all endorse the view that reconsideration must be given, but the effect of this order is small compensation to those local authorities that will lose in the near future, because programmes on which they have already embarked will be seriously affected. In areas such as Cumbernauld and Kilsyth, and Strathkelvin, no compensation is built in to cover high rise or sparsely populated areas. But such councils have undertaken massive modernisation schemes in villages which they are trying to make more attractive. Strathkelvin district council has been in the van of attempts to solve the horrific condensation problem to which so many council tenants are subjected.
The cut-back in the order, in addition to the capital expenditure cut-backs which local authorities have experienced in the years of Labour Government, means that housing in Scotland, rather than being improved, will become worse.
I urge the Minister to refer to the recommendations made by Strathkelvin district council on page 3 of its report. It asks that at least paragraph 1 (1) of the schedule be amended to allow for the insertion of the charges paid by each authority in 1979-80. This would provide accurate rather than hypothetical distribution.
Mr. Teddy Taylor: Will the hon. Lady give way?
Mrs. Bain: I am sorry, but I have little time. The Conservative Front Bench has missed its opportunity in this debate.
The second recommendation is that estimated housing support grant figures should be redrafted to reflect the best estimated current charges for 1979-80 available to local authorities. This would prevent some local authorities subjecting tenants to substantial rent and rate increases.
I urge the Minister to examine the possibility of building in an alternative factor whereby consideration would be given to the percentage of housing which is local authority-owned. In some areas more than 50 per cent. of the housing stark is

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local authority-owned, and in others the figure is over 75 per cent., but no compensation is provided.
I ask the Minister to take back the order. It is to come into operation on 1st April. This is 16th January. It is not beyond the ability of the Scottish Office to look again at the legislation, in view of the representations that have been made from all parts of the House and by local authorities in my constituency.
11.18 p.m.
Mr. Dennis Canavan: If the debate has shown nothing else so far it has revealed two of the many faces of Scottish nationalism. The hon. Member for Argyll (Mr. MacCormick) said that he had something in common with the hon. Member for Dunbartonshire, East (Mrs. Bain), but he went on to say that his constituency was being penaliised by the housing authorities in the central belt because most of the money went to those authorities. A few minutes later the hon. Member for Dunbartonshire, East, who represents a central belt constituency, complained that the central belt authorities were not receiving enough. I wonder whether she thinks that is at the expense of the people in Argyll.
However, I sympathise with the hon. Member for Dunbartonshire, East on at least one point. I reiterate the case put to us both by Strathkelvin district council, which is one of five housing authorities covering part of my constituency. The problem may also affect other authorities. It involves the method of calculating assessed net expenditure for the purpose of distributing housing support grant. The largest item in the expenditure column of the housing revenue account is in respect of loan charges, amounting usually to about 70 per cent. of the total housing revenue account expenditure. Paragraph 1(1) of the schedule, under the heading "Amounts included in Calculation of Assessed Net Expenditure ", refers to
" Estimated loan charges due to be debited to the authority's housing revenue account for 1977–78…multiplied by the ratio which the Secretary of State's estimate of the Scottish aggregate of such loan charges for 1979-80 bears to the aggregate of these estimates for 1977–78."
I understand that the Secretary of State has used the estimated 1977–78 loan charge for each local authority as the base figure and multiplied it by 115.8 per cent.
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That is because 15.8 per cent. is the average Scottish growth in loan charges between 1977-78 and 1979-80. These are estimates, because we cannot get actual figures. It may be that the argument put to us by the director of finance of Strathkelvin was not strictly accurate because he referred to actual figures. There are no actual figures at this stage. We have to talk about estimates. We are talking about one estimate that might be better than another.
Strathkelvin suggested that on account of its special circumstances the Secretary of State should consider an alternative formula for the calculation. As I said, the average Scottish growth figure over the two financial years is 15.8 per cent., in terms of loan charges, but the average for Strathkelvin is 65 per cent. There may be other authorities with percentages that are considerably above the average. Instead of taking the average growth figure for the whole of Scotland, why not take the estimated growth for each local authority in the calculation of each local authority's share of the housing support grant? That appears to be a reasonable approach. Under the present system all local authorities with a higher than average Scottish growth in loan charges will be penalised, at least in the early years of their borrowing.
Strathkelvin claims that its share of the housing support grant next year will be £1.326 million. It claims that it will lose almost £1 million. The figure given was £969,000. That is the reduction compared with the previous system of subsidy. If the old system had continued, Strathkelvin would have been almost £1 million better off. It claims that the main reason for the reduction of the subsidy is the method of calculation of the distribution of housing support grant relating to increased loan charges.
The result could have a bearing on such matters as building and modernisation programmes. I am one of those who have been encouraging local authorities in my constituency to go ahead as much as possible with building programmes and much-needed modernisation programmes. It may be that Strathkelvin was a wee bit slow in getting off the ground as a new authority, but at least it is better late than never. It is now coming to a year when it proposes a sudden increase in its capital requirements. I do not see why it

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should be penalised. It should be given encouragement, especially by a Labour Government, to go ahead with much-needed capital projects that will affect my constituents and others in the district.
The alternative—this is latent throughout the whole argument about housing support grant—if there is not enough grant, it to put an excessive burden on the ratepayer or rent-payer, or both. It would play into the hands of those such as Provost Gordon Murray of Cumbernauld and Kilsyth district council. My hon. Friend the Under-Secretary of State knows that I have been campaigning for a long time for modernisation programmes for the prefabs in Kilsyth. If the authority includes that programme in its housing plan for next year, applies for the necessary capital expenditure, obtains borrowing permission and does not get an adequate housing support grant to meet the increased loan charges, obviously Gordon Murray will be up to his old tricks and blaming the Labour Government for increased rents. That is a point worth considering.
Strathkelvin council said that it realised the implications of the proposal only about a fortnight ago. Why were they not brought out earlier in the negotiations? Could local authorities have discovered the implications earlier if they had been better prepared?
We now have Hobson's choice. The negotiations have taken place between the Minister and his representatives and COSLA behind our backs. No hon. Member is a member of COSLA and we were not privy to the arguments that took place in the negotiations, There is an important point of principle here. We are asked to approve or disapprove millions of pounds of public expenditure, and surely, if it is the forum of the people that it is supposed to be, the House should have the opportunity to amend orders put before us. I feel tempted to vote against the order, but that would be a vote for a zero housing expenditure and a zero grant for Strathkelvin, Cumbernauld and Kilsyth, Stirling, Falkirk and all the other housing authorities in Scotland. We are left in a difficult position‥
It may be too late to do something about it this year, but I hope that the Government will produce a better order next year and will make the formula retroactive to make it fairer to local au-
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thorities such as Strathkelvin with a much larger than average increase in loan charges.
11.27 p.m.
Mr. George Younger: I am highly flattered that the House has felt the lack of my intervention so far. I made the usual decision that Front Bench spokesmen have to make about when is best to intervene in a debate. I thought that the hon. Members for Central Ayrshire (Mr. Lambie) and Dunbartonshire, East (Mrs. Bain) would know the procedures of the House well enough to realise that that is the custom, but I have noted that it appears to be regretted if, when I take part in a debate, I do not do so as early as possible. I shall reverse that in future, to the benefit, I hope, of the House.
It may be that the hon. Member for Dunbartonshire, East is suffering from acute embarrassment in the remarks she made about the reservations of Strathkelvin district council about the order. I hope that her constituents in Strathkelvin who read the report of the debate—I support them in raising their problems—will note that the problems that they face, of alleged unfairness in the way the formula has been calculated in their case, could have been avoided if the SNP Member had voted with us in Committee, when we took the Government to a tied vote. If the SNP representative had voted with us, Strathkelvin's problems would have been solved. I hope that the hon. Lady will, in the usual appropriate manner behind the scenes, make that known to her hon. Friend who let her down on that occasion.
I am not prepared to judge the new system of dealing with housing finance on the basis of one order, but everything said in the debate reinforces the reservations expressed about the new system by hon. Members from both sides in Committee. I accept the good faith of everyone concerned. I know that the Minister is always exceptionally anxious to provide information to hon. Members and the Opposition, and I pay tribute to him for that, but the system as it has been arrived at this year will not do for the House.
I am sure that it was not intentional, but its effect is that the details are decided in two forums behind the scene—first, among officials of local authorities on the

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COSLA working parties, who do by tar the bulk of the technical work on figures and so on, and, secondly, among officials of the Scottish Office, who have to do the same.
I am certain that they understand what they have done and believe that it is absolutely fair. I am certain that they have put into the report and the order the basic facts that they think are necessary. However, the Minister will agree that it is clear from what has been said that hon. Members have not had sufficient information on which to make any worthwhile judgment. I do not know whether £151 million is sufficient to carry out the housing policies that I would like; neither does any other hon. Member. Therefore, I hope that those members of local authorities who look to us to be the last long stop against any difficulties and who read the report of this debate will note that we have been absolutely unable, because of a lack of useful information, to make any worthwhile impact on the Minister.
I shall try to be constructive and state what I think should be done. What is needed is much more information for hon. Members before a debate of this type takes place. We have the order and a report by the Scottish Office which most of us have seen by courtesy of Strathkelvin district council. I understand that some hon. Members have received the report, but when I obtained my copy of the order from the Vote Office I was told, in answer to my specific question, that there was no explanatory document to be handed out with it. Therefore, had I not been able to get a copy of the report from the Strathkelvin district council I should have come to the debate armed with only the order.
Secondly, the form of the information must be much fuller and better. I ask the Secretary of State to note carefully that what we require before we can have a sensible debate is a full statement of what each local housing authority is to receive and, if possible, a comparison with what it relates to for previous years. Only in that way can we attempt to assess the accuracy of the new figures being given.
The Minister was wide of the mark in comparing the old system with the new system, and criticising the old. I am not
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standing up for the old system for ever and a day—it has gone, and that is the end of that—but a least we knew with the old system what the subsidies were given for and we knew what percentage they represented. We knew what the high cost subsidy was. We knew what the housing expenditure subsidy was. We could argue about it. We could say what it was. With the best will in the world, we have not the faintest idea what the transitional subsidy is for or what the general element in the subsidy is about. We are told a few of the assumptions. One of the assumptions is the somewhat startling one, in view of present events, that the average increases of earnings this year will be about 7 per cent. I hope that that is so. It is in the country's interests that it should be so, but I very much doubt that it will be so. I hope that the Minister will tell us that he will bring forward a variation order if that assumption should prove to be wrong, so that housing authorities can know that they will not be suffering as a result of it.
The main problem this evening is that we are not able meaningfully to discuss the order. As the hon. Member for Edinburgh, Central (Mr. Cook) said, it is not right to have this debate limited to one and a half hours starting after 10 o'clock. This is the only time that we shall discuss meaningfully what is to be spent on Scottish housing for the coming year. We are required to do that in one and a half hours. It is not possible for all hon. Members who wish to take part in the debate to do so. We have all been fairly brief this evening and have been as helpful as we could be The new system may be very good. I hope that it is. If it is to continue, it must involve changes in the practice of the House and the way in which we debate the subject. We must have a debate that lasts longer than one and a half hours. It would be preferable to have a debate on two mornings in the Scottish Grand Committee, or a day's debate, or at least a debate lasting several hours in the House if we are to have any chance of making an impact on the subject.
Mr. James Siliars: Cannot we start to change the practice tonight by voting against the order? If we carry the day against the Government they are bound to produce an amended order. That will give us another hour

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and a half in which to elicit the information and discuss the subject further.
Mr. Younger: The hon. Gentleman will no doubt decide what he wants to do. I think that if we were to do that it would not give enough time for the reassessment of the whole system that I think is needed. I do not think that we shall get anywhere this year. We need a lot more information, and we need it a lot earlier.
I should have liked to talk about the vital things affecting Scottish housing. I should have liked to talk about the disastrous fall in house building over which this Government have presided. I should have liked to talk about the very difficult problem of condensation—I know the Minister shares my concern about it—which affects thousands of council houses in Scotland. Tenants are finding their houses very difficult to live in, due to condensation, and no one has a solution. Up till now, no one—I except the Minister from this criticism—has shown that he really cares about it. Some of us care very much indeed.
I should have liked also to talk about the other very great problem of Scottish housing—I hope that it is covered in the order, and that the money is provided for it—which concerns the declining areas in every town, where there are houses which, through the vicious circle of deprivation, problem tenants and falling standards of maintenance, are going downhill all the time. These are comparatively modern houses, which will become out of date long before their time, yet we have not time to discuss that or to ask the Minister how much there is in the housing support grant to deal with those matters. This is an area in which an immense amount of leadership is needed from the Scottish Office. It seems to have run out of ideas on these matters, and we do not get a chance to probe these things properly.
I have always applauded the Minister for his approach to housing, which is becoming nearer and nearer to that which has for many years been advocated by the Opposition. His approach to housing is one that I have very much appreciated, as have all Conservative Members. He is, I think, the best person to tell his Department that if, in a future debate of this importance, the House of
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Commons is given so little and such inadequate information, it simply will not stand for it. I ask him to do something about it.
11.38 p.m.
Mr. Hugh D. Brown: I prefer it when the hon. Member for Ayr (Mr. Younger) attacks me, Mr. Deputy Speaker. I have enough trouble with my hon. Friends without the hon. Member complimenting me.
I apologise to the House. I was not aware that there had been any printing difficulties over the explanatory report. I know that when it was laid at the beginning of December there were difficulties, and that it was typewritten. Members will recall that that was on 8th December. I had assumed that everything was in order at least for the last three or four weeks. I rather suspect that it has been. If I am wrong, I regret it. I will check up on it. Part of the whole exercise is in giving more information, and the Government are entitled to some credit for this. Under the rate support grant system or order there is no obligation to show where there has been disagreement or failure to agree even with COSLA. This is a genuine and complete fulfilment of the commitment that was given to the Committee about providing more information. There is no question of that.
The only respect in which feel that we have not gone far enough is still a matter for the House, and that is in terms of the lack of time. That will not be amended or altered in the context of one housing support grant order, albeit that we are talking about £151 million. I think that this is an argument for an Assembly, or at least for some improvement in the procedure in this House and for more time to he given. I have always held this view—I make no secret of it—and I regret that circumstances have not permitted us to do anything about it on this occasion.
As hon. Members will appreciate, have only a few minutes in which to deal with the detailed questions that were asked. With regard to Argyll and Bute, I gave a personal assurance when I last met COSLA—it is contained in the minutes agreed between COSLA and myself—that the problem of Argyll, and the sparsity allowance point, would be looked at urgently in the context of next

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year's order. I repeat that assurance, because it was a real point that was raised.
It is no good the hon. Member for Argyll (Mr. MacCormick) making nice, parochial speeches. I know that there is no responsibility on the part of any Opposition party, particularly the SNP, because it is not likely to be in government and can therefore be totally irresponsible, but it is not good enough to take a constituency-by-constituency attitude.
Mr. MacCormack rose—
Mr. Brown: I cannot give way, because of the time. In other words, if Glasgow comes out of this too well at the expense of rural authorities, I would expect the SNP group in Glasgow to say "No, we do not want the money. Give it back to the rural authorities ". The point about Argyll or any other remote area with sparsity problems has been taken into account by COSLA. There is general agreement that the authority with an outstanding query is Argyll, and I have already given a commitment to review it.
My hon. Friend the Member for Edinburgh, Central (Mr. Cook) repeated comments that he made in Committee. To some extent he raised the same point as that raised by my hon. Friend the Member for Central Ayrshire (Mr. Lambie) when, having suggested that it was all right under the present Government, he asked what safeguards there were if there was a change of Government. We have absolutely none in strict accountancy terms, although we have the check of public opinion at both local and national level. In other words, the system, commended for its flexibility on the one hand, presents opportunities for any unscrupulous Government who want to cut the element of support for housing. I admit that quite frankly. But they must still come before this House, and I would hazard a guess that no Government at present would contemplate cutting resources on housing, because the demands are still there to be met.
Now that authorities have been in existence for a few years and have been required to assess their real needs, they are beginning to create more demands on Government, which will have to be met sooner or later. The authorities them-
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selves are becoming more efficient and more confident in their own ability to spend money.
Mr. Teddy Taylor: Oh!
Mr. Brown: The hon. Member for Glasgow, Cathcart (Mr. Taylor) queries that. I assure him that that has been my impression of the many and varied authorities that I have met. Indeed, I welcome it.
I am afraid that the calculation on Cunninghame, to which my hon. Friend the Member for Central Ayrshire referred, is not correct. It is £300,000, not £500,000. To some extent it is hypothetical. This applies equally to Strathkelvin, because it depends on certain expenditures taking place before we can assess accurately whether the authorities' calculations are right.
It is not true that there has been a lack of consultation. There has been more than adequate consultation with COSLA. I cannot give a guarantee that the degree of housing support is adequate to meet every demand from every authority. Authorities must choose their own priorities. We have asked them to do so. If dampness or condensation is a problem in Kilsyth it should merit a priority in that authority's budgeting and programming. We shall not be able to meet the demands of every authority for every item of expenditure this year or in any single year.
The hon. Member for Ayr (Mr. Younger) was very fair in presenting this issue. He said that he wanted more time to discuss housing policy. I could not agree more. But we are not tonight discussing housing policy. There are other opportunities for that. We are discussing the detailed mechanism of a new system of calculating how much support is needed for Scottish housing generally and the formula for distributing that amount of aggregate grant.
There are winners and losers. There is no secret about that. But I am satisfied that the new system is fairer, and is capable of adjustment and flexibility. What is needed is a stronger will on the part of more people, including government, to spend more on housing, so that the people of Scotland can look forward to better housing than they now have.
Question put and agreed to.
Resolved,
That the draft Housing Support Grant (Scotland) Order 1979, which was laid before this House on 8th December, be approved.

WAYS AND MEANS
BANKING (TAXATION)
Resolved,
That for the purposes of any Act of the present Session to confer functions on the Bank of England with respect to the control of institutions carrying on deposit-taking businesses and to give further protection to persons who are depositors with such institutions, it is expedient that charges to income tax and corporation tax be imposed by provisions relating to the treatment for the purposes of the Tax Acts of payments made to institutions by the Deposit Protection Board established by that Act.—[Mr. Bates.]

MACHINE TOOL INDUSTRY
Motion made, and Question proposed, That this House do now adjourn.—[Mr.Bates.]
11.47 p.m.
Mr. Tom Litterick: I wish to bring to the attention of the House the subject of the British machine tool industry and its capability to meet the needs of the British motor vehicle industry. This subject is an important component in our economic thinking and is certainly a crucial element in the long-term success of the economy.
I am particularly pleased that my hon. Friend the Member for Nuneaton (Mr. Huckfield) is here in his ministerial capacity to respond to my speech. I know of his long-standing and enthusiastic interest in the subject.
The decline of the machine tool industry has been due to familiar factors—the failure of old-established firms to adapt to new circumstances, their failure to invest, their failure to produce new designs and their over-reliance on factoring and old standard products. The result has been that their ability to survive or resist the damage of slumps has been significantly reduced.
The decline has reached the stage at which the industry is unable to meet the current and future needs of British industry. For example, Ford United Kingdom last year had quite literally to scour
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the world looking for tooling capacity to meet the needs of its current investment programme. This included searching in places as exotic at Taiwan and Brazil, places we had hitherto thought were underdeveloped. Ford's procurement director reported to a startled British public that he had visited these places because he could not find the tooling capacity he required within the United Kingdom economy.
British Leyland, too, has been unable to discover within the British economy adequate tooling capacity to meet its current requirements. Imports of numerically controlled machine tools outnumber their exports by about three to one.
Such facts are evidence that in this sector of the economy at least the Government's industrial strategy, in spite of the efforts of my hon. Friend the Under-Secretary, has been inadequate and ineffective.
One of the contributory factors in the decline of this industry has been the decision of motor manufacturers to run down their design capacity. During the last decade Ford, Vauxhall and Chrysler have all run down their tool design capacity quite significantly. Chrysler used to employ 47 design engineers in the United Kingdom; it now employs five. Its most successful recent model, the Avenger car, was designed in France, Germany and Italy. That was not an accident. Chrysler deliberately brought it about.
Ford has eliminated its design centres in Birmingham, Doncaster and Southampton, and has greatly reduced its design capacity in Dagenham. Meanwhile, Ford Cologne has virtually taken over the design function for Ford Europe. Vauxhall has virtually centred all its design function on the Opel organisation in Germany.
British Leyland has attempted to rebuild its design capacity. For example, at one time it employed 80 jig designers; by 1977 it employed only 20. In 1972, it employed 182 designers; by 1977 it employed only 70. In 1977, it had to subcontract out 22,000 man-hours in design work abroad because the facility was not available within British Leyland and was not available, apparently, within the British economy. Now British Leyland is having great difficulty in recruiting skilled design staff in its efforts to rebuild its design capability.

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The current explanation by British Leyland for its placing of orders on a subcontract basis abroad is that at the moment the foreign service is better than that available in Britain, although within the trade union movement there are voices of dissent from that claim.
The importance of this situation is that, if the crucial design facilities of these vehicle manufacturing companies are being located outside the United Kingdom, it should not surprise us if these companies look abroad for the more advanced equipment that they need for their own production, since it is inevitable that the people who design the equipment will have connections with the people who produce it. Thus we discover, for example, that German machine tool design is becoming predominant in Western Europe.
One consequence of this is that not only can British Leyland not get all its machine tool requirements met within the United Kingdom but it cannot recruit the design staff that it needs to rebuild. On that will be based the ability of British Leyland to survive as an autonomous vehicle producer in the long term, since in the long term a company survives in so far as it has a significant slice of a large market and to the extent that the company is able to produce new designs as the market demands. For that a company needs people with the appropriate skills.
We have lost large numbers of highly skilled design staff from the British vehicle industry, partly, as I have said, as a result of deliberate decisions by multinational companies to relocate the design function elsewhere, and partly as a consequence of years of wages policy, which has imposed rigidities on companies such as the motor vehicle companies—indeed, on all companies—that make it impossible for them to create the kind of salary level which we now know this category of highly skilled work can command.
Foreign competitors of the British car industry are prepared to pay qualified and well experienced design draughtsmen up to £15,000 a year. So far as I know, there is no motor car manufacturer operating in Britain which could offer a design draughtsman £15,000 a year, because to do that he would have to rejig his entire salary structure; and to do that he would
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have to challenge whatever wages policy was in force. We all know that for a long time there has been one or another version of wages policy in force. Manufacturers simply cannot pay the going rate for this function which has become, not peculiarly, but certainly noticeably, internationalised.
People in jobs of this kind can move internationally and can command high salaries because their skills are scarce and because international conglomerates are seeking to buy them. For that reason, some sub-contracted design projects have cost British Leyland, for instance, a great deal more than they would have cost it had it been able to use an internal design facility and had it not destroyed its design capacity, or at least greatly reduced it, in the 1960s; it has been unable to recreate it.
That is one of the penalties, but there is a greater penalty. It is a penalty which is to be paid and is being paid by the British people as a whole. We would all agree that, given the development of countries which have hitherto been relatively primitive in industrial terms, we can succeed only if we offer the fruits of technical skills which are relatively rare.
What we have witnessed in the machine tool industry and in other industries, as my hon. Friend knows from his ministerial experience, is that industries which have been run down have been those which required the kind of high skills which once carried a premium in the British economy, and which could have been the industries which developed further high skills in the modern era but did not do so partly because of structure, partly because of ownership, and partly because of some of the factors I mentioned earlier.
Therefore, because so many organisations have in the past taken the easy way out, we are in danger of losing precisely the kind of element in our economy which would ensure that we should go on being a significant economy in industrial terms through the foreseeable future. It is costing dear both our British motor car manufacturers and the British people in general because we have neglected these high skills. For instance, the British Leyland design staff establishment is, as I understand it, currently about 148; that is the theoretical number of design staff it says it needs. In fact, it currently employs only about 90 qualified design engineers. A report from TASS—the

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Technical, Administrative and Supervisory Section of the AUEW—which I know my hon. Friend the Minister has read—has suggested that its real requirement is about 260 qualified design staff. If British Leyland is having difficulty in recruiting the more modest number of 148—an extra 50 more than it has—it seems to have precious little chance of recruiting 100 more than that, given the present situation.
That would not appear to be a prescription, if applied throughout the British economy, for Britain as an industrialised nation. I do not believe that our future lies in ice cream-making and flogging insurance, notwithstanding the importance or attractiveness of those two businesses, which I use as an example. Our future lies in our ability to sell the products of industry, which is based, if not on high technology, at least on the intellectual skills which constitute the basis of high technology in modern times. That means having highly trained people. We are allowing multinational companies to siphon off from the British economy those whose creative efforts are so necessary to the future survival of our economy as a genuine industrial economy.
Therefore, it seems to me that a number of prescriptions for courses of action are necessary to stem and reverse this trend. First, we must ensure that a tooling design capacity exists in Britain which is not vulnerable to the whimsical or opportunist decisions or interests of foreign-based multinational companies. So long as ownership is vested in those foreign-based multinational companies, there is not very much that we can do about it. 'Therefore, it would seem to me that if we are to create a British tool design capability which could serve all of British industry, this can be done, directly or indirectly, only through the State, since the character of private enterprise is such that we can never guarantee that it will not be snapped up by some foreign-based multinational conglomerate.
Thus, there must be an agency which, in effect, is a tool design servicing agency not simply for the British motor car industry but for all of British industry, which would serve as a nucleus of the highly skilled engineering design manpower that is available within the British economy, and one which would be guar-
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anteed a stable and permanent existence. With respect to my hon. Friend the Under-Secretary—I am pretty sure that he will agree with me on this—the agency would be underwritten only by the State and would, therefore, derive its stability and permanence from the State itself.
Whether we do this through the National Enterprise Board or through some other structure is neither here nor there. But we have the NEB, and there is no reason, therefore, why we cannot use the NEB for this purpose.
I know very well—I am sure that my hon. Friend will refer to this—that there is a fund, which has, I think, a maximum spending power of £30 million at present, which is available for investment in machine tools, or in machine tool design and so on. But it seems that that kind of control and influence is less powerful and less likely to create what we need than would be the creation of an institution, a firm, or an agency—whatever one wishes to call it—which had the single purpose of offering a high-skill design facility to every manufacturer in British industry.
Of course, it could also operate for the rest of the world, as now defunct firms such as Fisher, Ludlow used to service virtually the world at one time but no longer do so because of the influence of foreign-based multinationals. I think that it would be a valuable asset to the British economy. It would be a valuable policy tool. It would certainly be a valuable investment in the future.
Secondly, although I know that this matter is not within my hon. Friend's bailiwick, I think that the Government must recognise the urgent need for flexibility in salary administration in those large organisations which employ highly skilled staff. The fact is that these years of pay policy have driven out highly skilled staff from the British economy, and we cannot afford to allow this to go on. A means must be found to enable those companies to have flexible salary policies —to put it bluntly, to enable them to pay those people the international going rate for the job. It is no good the Treasury's saying "If we allowed this to happen the floodgates of inflation would be opened." We are bleeding to death through a lack of high skills, and that must be stopped.

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Thirdly, we should be more vigorous in our encouragement, if not our compulsion, of private industry to engage in more expensive, and certainly more ambitious, training programmes for young people, aimed at producing people skilled in high technology.
Fourthly, there should be an investment programme, which can be conducted only through the NEB, in research and development in engineering technology. It now seems fairly obvious that the private firms by themselves will not—for whatever reasons—do it.
Fifthly, one lesson is that there must be compulsory planning agreements with the large multinationals, particularly aimed, by incorporating clauses in the agreements, at compelling those companies to conserve high skill functions within the British economy. There must be no shenanigans about this. They should not be allowed, for instance, to export design functions to other countries and leave Britain bereft of these creative functions.
Lastly, we should seriously consider nationalising the machine tool industry. After all, it is partly nationalised anyway, and the bit that is not nationalised is limping along on public money. It would give the British people a better opportunity to restructure and reorganise their machine tool industry on a national, more stable and therefore more permanent basis if it were in public ownership.
Sixty per cent. of all the machine tools in this country are more than 10 years old. By itself the fact that so many of our machine tools are so elderly should tell us that there is a huge market for machine tools in this country. An age of 10 years is the commonly used benchmark in the machine tool industry for incipient obsolescence.
Beyond our own economy there is a vast market which we, an old industrial nation, are singularly unable to tap. This has happened because we have allowed the basic skill of this kind of industry, the skill of the creative people within it, to be destroyed.
The prescriptions I have suggested are the ones we should follow if we are to retrieve the situation for the long-term benefit of the British economy.
12.7 a.m.
The Under-Secretary of State for Industry (Mr. Les Huckfield): My hon. Friend the Member for Birmingham, Selly Oak (Mr. Litterick) has been a long-term advocate on behalf of the machine tool and the tooling and design industries in this country. I congratulate him on the detailed, comprehensive and patient way in which he has put his case tonight. As a Midlands Member myself, I can assure him that there is a great deal of interest in the machine tool industry in West Midlands constituencies, but I see from the number of skilled Amalgamated Union of Engineering Workers Members present tonight that there is also an interest in the North-East. I recognise the interest of my hon. Friends the Members for Gateshead, East (Mr. Conlan) and Wallsend (Mr. Garrett).
The facts and figures that my hon. Friend has put before the House tonight present some of the worst sides of the picture. I should like to put it in full perspective.
In 1977 the United Kingdom machine tool industry had a turnover of just under £400 million. Nearly half—£185 million —was exports. Imports in the same period were £144.4 million, giving a surplus of £40 million, which is not bad in a market that is fiercely internationally competitive.
Many types of United Kingdom machine tools, such as multi-spindle automatic lathes and special purpose machines for engine block lines, are recognised as being as good as anything produced anywhere in the world. We have the capacity and can do as well as, and better than, other countries that are producing such goods.
My hon. Friend referred to some of the skill shortages in the industry. I should like to send him some material that was prepared for the discussion that took place in the National Economic Development Council on 6th December last year, in which the matter was discussed. Some of the shortages to which he referred were mentioned then.
I do not think that it is understating the case to say that the relationship between the car manufacturers and related companies, particularly those in machine tools, is possibly one of the most important examples of customer-supplier relationships in the engineering industry. That

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is why we in the Department of Industry have encouraged the motor car manufacturers, the motor vehicle producers and the machine tool producers to have the closest possible liaison. When we referred this issue, including some of the points raised by my hon. Friend, to the Secretary of State's tripartite group on the motor vehicle industry, the group submitted it to the Society of Motor Manufacturers and Traders. As a result, we have developed a much more close liaison between the SMMT and the Machine Tool Trades Association. I am glad to say that this is a flourishing relationship. From both the machine tool manufacturing side and the SMMT side, it has been felt to be definitely beneficial.
Also, through direct discussions between the MTTA and BL, the member companies in MTTA have been able to gain a clearer impression of British Leyland's requirements. I say to my hon. Friends that if the MTTA feels that a similar exercise would be useful in Ford, Chrysler UK and Vauxhall, I am willing to do all I can to assist.
Mr. Bernard Conlan: I should like to ask about a specific case concerning Churchill's of Blaydon. Machine tools are being ordered by British Leyland from a German firm when Churchill's can supply comparable machines. What does my hon. Friend think about that when all of us are proclaiming that people should buy British Leyland?
Mr. Huekfield: I echo my hon. Friend's sentiment about driving British Leyland cars, representing a constituency with British Leyland interests myself. I cannot give an on-the-spot answer on the case to which he has referred, but now that he has raised it, I shall look into it and write to him in as much detail as I can.
Mr. W. E. Garrett: Will my hon. Friend be assured that the matter will be brought to his attention at a later stage?
Mr. Huckfield: I take that underlining which my hon. Friend has just given, and I shall have to do something about it.
I give all three of my hon. Friends that assurance. I have taken some initiatives in conjunction with TASS and its
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former deputy general secretary, the late John Forrester, and with Gerry Eastwood, general secretary of the patternmakers' union. I have been able to organise a series of meetings between the tooling companies, trade associations, such as the Federation of Engineering Design Companies, and some of the major car manufacturers, which have brought their interests together. I received in November a letter from Gerry Eastwood saying that this initiative was going well.
I am glad that my hon. Friend referred to the useful presentation made to me by TASS in November. I note the similarity of some of the figures he used and some of those in this presentation, but I want to testify to the underlying interest these two unions and many more have taken in this issue since I have had some responsibility for it in the Department of Industry.
Although we have been able to do something in bringing together the trade associations, the trade unions, some of the manufacturers and some organisations with design capability, I want to stress that get-togethers and meetings between trade associations are no substitute for customers and suppliers getting together. That is most important. I want to do all I can to encourage it.
Michael Edwardes made a general commitment when he took office—a very public commitment—that no capital contract exceeding £1 million would be placed overseas by British Leyland without his personal permission and no capital contract exceeding £5 million would go abroad without his board's express approval. I assure my hon. Friend that British Leyland has established much closer links with machine tool manufacturers and my Department maintains a very close day-to-day liaison with British Leyland.
British Leyland Cars seeks to give us advance notice of machine tool purchases. When there is the prospect of an order being placed abroad, this arrangement ensures that my Department can bring to the notice of British Leyland all the United Kingdom capability available in that sector. These discussions between my Department and British Leyland are on an engineer-to-engineer basis. When British Leyland Cars has placed a sub-

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stantial contract for machine tools overseas there have been prior discussions with officials in my Department, including qualified engineers, who have been satisfied that there are overriding reasons for the decisions taken.
We are talking about substantial sums of money. Last year, British Leyland spent almost £200 million on capital equipment, an increase of one-third over 1977. An important element in that total will have been expenditure on machine tools. If we examine the purchasing performance of machine tools by British Leyland, we find that over the past three years about three-quarters of British Leyland's orders have been placed in the United Kingdom. United Kingdom industry as a whole in 1977 imported 46 per cent. of its requirements. British Ley-
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land therefore had a better overall performance than United Kingdom industry as a whole.
I understand that the policy of Ford and Vauxhall is to secure products from the United Kingdom whenever they can do so. We hope that a very important project, the Ford engine plant at Bridgend, will be a most substantial source of orders for the United Kingdom tool industry. I also want to stress that Chrysler UK purchases—
The Question having been proposed after Ten o'clock on Tuesday 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 seventeen minutes past Twelve o'clock.