Commons Sitting of 18 January 1979

Preamble
The House met at half-past
Two o'clock

PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  NATIONAL FINANCE

    European Monetary System
    2. Mr. Spearingasked the Chancellor of the Exchequer if he will make a statement concerning the operations to date of the European monetary system.
    The Chancellor of the Exchequer (Mr. Denis Healey): The EMS has not yet started to operate.
    Mr. Spearing: Do not the complicated delays over the system show how prudent it was for Her Majesty's Government to remain outside the system, and how foolish it was of the Opposition to advocate our entry? Does my right hon. Friend agree that if the system went ahead on the conditions that the French are now asking—namely, the phasing out of MCAs—it would mean an increase of farm gate prices in the United Kingdom of at least 30 per cent. to 40 per cent.? As the Opposition have already advocated the phasing out of the green currencies, they would be causing immense inflation that would be against the interests of housewives and consumers as a whole and the entire nation.
    Mr. Healey: Beyond saying "Yes, Sir", which I say with the greatest pleasure, I add that it is true that developments since the summit conference was held in December have shown that the views of the Shadow Foreign Secretary, as he expressed them on 19th December, were as fatuous as they were anti-British. It is true that if certain proposals for the phasing out of MCAs were accepted and the common price was
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    allowed to rise, that could have a damaging effect on the cost of living in Britain and on British food prices. I have no doubt that my hon. Friends will be referring to that in debate whenever they have the opportunity. My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs has already made it clear in Brussels that there can be no question of the British Government agreeing to a resolution of the current dispute over MCAs leading to an increase in food prices for Britain.
    Mr. Hordern: Has the right hon. Gentleman given any assurances to the EEC Finance Ministers that he will keep sterling within the present band of the basket of European currencies?
    Mr. HealeyNo. I made it clear when I spoke to the House on this matter before Christmas that the Prime Minister and I have given assurances to our Common Market colleagues that we intend to maintain the present stability of sterling, which has been stable within a narrower band than is permitted even inside the EMS, against not a basket of European currencies but a basket composed of the currencies of the countries with which we trade.
    Mr. Gould: To what extent are we now pursuing policies that are virtually indistinguishable from those that we should have to pursue if we were members of the EMS? Given the overwhelming case made against our joining the EMS, is not the case against those parallel policies equally damaging?
    Mr. Healey: To quote the poet Marvell on love:
    "But ours so truly parellel Though infinite can never meet."
    The fact that we are pursuing the stability of sterling does not mean that we are pursuing policies that could lead to Britain joining the exchange rate regime of the EMS. The important difference is that the parity grid system of the EMS would commit countries with currencies not divergent from the general trend to lose reserves to make the deutschemark more competitive. That does not seem to be in Britain's interests. That is a general view.
    Mr. Marten: Am I right in assuming that the British Government can block these proposals by the French?
    Mr. Healey: There are no specific proposals by the French. The French Government have certain objectives on MCAs which have been resisted by a number of other Community countries. We have made clear that there can be no question of our agreeing to the increase of the common price as a result of that, and we have the power to prevent it.

    Pay Settlements (Government Action)
    3. Mr. Tebbitasked the Chancellor of the Exchequer how many employers he has subjected to sanctions to date in the current pay round.
    13. Mr. Ashtonasked the Chancellor of the Exchequer whether he has decided to impose sanctions as a result of other wage settlements subsequent to his statement relating to the Ford Motor Company.
    The Chief Secretary to the Treasury (Mr. Joel Barnett): Only the Ford Motor Company was ever subject to discretionary action for a breach of the current pay guidelines, and the Government have announced that discretionary action in support of pay policy has now ceased.
    Mr. Tebbit: Why are the Government proposing new action against employers through the price code? Employers are being bludgeoned into paying excessive pay claims. Does the Minister think that the road hauliers are rushing around trying to force pound notes into the pockets of their reluctant employees? Would it not be better to try clipping the wings of over-powerful, over-arrogant and totally unworthy leaders of the trade union movement in this country today? [HON. MEMBERS: "No, no."]—Yes, that is unless the Minister thinks that these union leaders are worthy.
    Mr. Barnett: I think I heard most of that. It might be helpful if the hon. Member for Chingford (Mr. Tebbit) were to put a constructive point in the House occasionally. I have never yet heard one from him.
    Mr. Ashton: Is my right hon. Friend aware that the reason for the strike at Ford's, as with the newspapers and as with the road hauliers, was the massive profits that these firms have been making? How does he expect trade unions to stick to a 5 per cent. pay rise when the profits of their companies in
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    many cases have risen by over 50 per cent.? How can he guarantee that some of this surplus profit will be used to keep down prices in future, or at least will be transferred to the nurses, who are entitled to a decent pay rise?
    Mr. Barnett: Whatever my hon. Friend may feel about the pay guidelines and what happened at the Ford Motor Company, the fact must be that if we have an excessive pay outturn in the current round or any other round, this would be disastrous for the nurses and every other worker in this country. The sooner we recognise that the better.

    Inflation
    4. Mr. Skinnerasked the Chancellor of the Exchequer if he is satisfied with the current rate of inflation, and if he will make a statement.
    9. Mr. Temple-Morrisasked the Chancellor of the Exchequer what is the present rate of inflation.
    Mr. Healey: The retail price index rose at an annual rate of 8·4 per cent. in the 12 months to December. The rate should remain around this level for the next few months ; thereafter the rate will depend crucially on the level of pay settlements.
    Mr. Skinner: Will the Chancellor give lie to the oft-repeated claim by many people in this House and outside that a 15 per cent. increase in wages equals 15 per cent. inflation? Will he explain that last year wages went up about 15 per cent. in total while inflation was down to 8 per cent.? Were there not some other important factors involved, such as a strong pound, terms of trade in our favour, and currency reserves relatively high, which helped to ensure that inflation was kept down to 8 per cent.? Will not these factors together assist this year just as they did last year?
    Mr. Healey: It is certainly true that our rate of inflation last year was assisted by the strnegth of sterling, which in itself improved our terms of trade. I am glad that my hon. Friend supports this element in the Government's policy and presumably also the measures such as those that I took in June and November to ensure that the money supply was kept under control and that sterling remained strong.

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    It is the Government's policy in the current year, as I have already made clear, to conduct our affairs in such a way that we keep sterling strong. The strength of sterling is bound to be affected by the rate of inflation which will depend this year very largely on pay settlements. Some of the factors that helped us last year, such as a fall in world prices, are unlikely to be so favourable this year. Already, for example, there is likely to be a substantial increase in oil prices where there was no increase last year.
    Mr. Temple-Morris: Does the Chancellor agree that there is no hope whatsoever of continuing with the present rate of inflation while his Government are quite unable to reach any agreement with the trade unions of this country? Does he agree that that possible agreement represents the only claim that his party has to remain the Government of this country?
    Mr. Powell.
    Mr. HealeyI do not entirely agree with the hon. Member, and certainly his neighbour but one on his right, the right hon. Member for Down, South (Mr. Powell), disagrees very profoundly. I am glad to see that the right hon. Member dissociates himself totally from what has just been said by the hon. Member for Leominster (Mr. Temple-Morris).
    It is very important for the House to recognise that, as the Secretary of State for Employment confirmed yesterday, the great majority of settlements have been within the Government guidelines. Those that have been outside have been mainly settlements by groups which exceeded the guidelines last year, and in all cases except that of the Ford Motor Company the resulting settlement has been well below the level of last year.
    Mr. Rooker: Now that we have the retail price index for the calender year 1978, namely, 8·4 per cent., will the Chancellor of the Exchequer allow the provisions of section 22 of the Finance Act 1977 to carry through, thereby giving the low-paid a rise in personal tax allowances in line with the rate of inflation? He knows as I do that this benefits the low paid proportionately more than the well off.
    Mr. Healey: I hope that that will be possible, but I have made it clear, and
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    so has the Prime Minister, that if we had anything like the wage explosion that we had in 1975 the Government would be required to take fiscal or monetary measures in order to correct the situation.
    Mr. Wigley: The Chancellor mentioned the strength of sterling. Does he accept that there is a real possibility that sterling is over-valued, and whereas that may help with the inflation battle it does encourage imports from overseas, thereby losing jobs in this country?
    Mr. Healey: I do not accept that view, although I know it is widely held on both sides of the House. In fact one or two of my hon. Friends not a thousand miles from where I am standing now agree with the hon. Member. But, in spite of the fact that sterling remained strong throughout last year and that, as a result of increases in wage costs that were higher than those in other countries, we lost some of the competitiveness we had earlier in the year, our non-oil exports rose in volume by almost as much as they had the previous year. In fact, we maintained the increased share of world trade which many people thought we achieved in 1977 entirely from the depreciation of sterling in the previous year. The lesson of experience is that the advantages of depreciation as a cure for competitiveness have been grossly exaggerated.
    Mr. George Rodgers: Does my right hon. Friend accept that his incomes policy might be received with greater enthusiasm by working people if it were seen to apply equally to those in the upper income brackets? Is it not so that a company director in possession of a dozen or so company directorships can always accumulate another dozen directorships with a fat fee to go with them? What will he do to remedy this situation?
    Mr. Healey: It is true that some people in the higher income brackets have, by various devices, been able to increase their incomes by more than the Government would wish. This has also been true of many self-employed people at very much lower levels of income. Inevitably there is some leakage there, but a study of the general distribution of incomes in recent years shows that as a result of inflation and tax changes the better off have suffered a greater erosion

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    of their purchasing power than those lower down the scale.
    Sir Geoffrey Howe: Does the Chancellor remember telling the country—indeed, boasting to the country—at the time of the last election that he had succeeded in getting the rate of inflation down to 8·4 per cent.? Has he noted that the figures announced last week take the figure of inflation back up to 8·4 per cent. and that it is universally expected to rise above that? Does he also accept that the figures announced last week mean that since this Government came into office the value of the pound has been exactly halved? Is that not a fitting epitaph on the Chancellor's tenure of the Treasury?
    Mr. Healey: No, I do not think that that is a fitting epitaph. I well remember sitting where the right hon. and learned Gentleman now sits and hearing the then Conservative Chancellor trying to justify a 20 per cent. depreciation in one day in the value of the £ sterling. The fact is that we have succeeded, after many years, in stabilising the value of our currency—something which previous Governments did not succeed in doing. When the right hon. and learned Gentleman refers to the current rate of inflation, he should pay some tribute to the efforts of all those who contributed to that—not least those in the trade union movement. He should be ashamed to make the remarks he has made as he and his right hon. Friends are consistently pressing policies on us which would raise prices—a very good example being their approach to agricultural policy in the European Community.

    Bank of England
    5. Mr. Hoyleasked the Chancellor of the Exchequer when he intends next to meet the Governor of the Bank of England.
    Mr. Healey: I maintain close contact with the Governor of the Bank of England, meeting him on a regular basis and also as and when circumstances require.
    Mr. Hoyle: Will my right hon. Friend tell the Governor of the Bank of England, when he next meets him, that he is not prepared to act on all the advice offered by the governor, and particularly on the advice given by the Treasury man-
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    darins? Will the Chancellor instead act on the policies of the Labour Party conference and the TUC, and particularly on the advice given by myself and my hon. Friends? If he had done that, we would not be in the mess we are in today.
    Mr. Healey: I find myself subjected to advice from many quarters and from many personalities, including the governor of the Bank of England and my hon. Friend. I came to the conclusion, quite soon after taking up the office I hold that the sensible thing was to make up my own mind on the merits of the cases put to me. That is what I have done and I think that that is responsible for the enormous improvement in our performance over the last 12 months.
    Mr. Farr: Can the right hon. Gentleman say whether during his consultations with the governor of the Bank of England,, he was able to make an estimate of the amount of money involved in the decision recently announced by the Irish Government to register, and probably withdraw, all Irish nationals' funds in Britain as a result of Ireland's entry into the EMS while we stayed out?
    Mr. Healey: By saying "probably withdraw" the hon. Gentleman recognised the impossibility of making estimates of very uncertain quantities. What I can say is that the decision of the Irish Government to introduce exchange controls on certain transactions between Britain and Ireland is not likely to damage our interests. If we saw any risk of our interests being damaged as a result of the Irish Government's being a member of the EMS, when we were not, we would, as I have made clear to the House, complement their exchange controls with some of our own. At the moment the Irish Government are sticking to their declared policy of keeping their exchange rate parallel with ours. They have succeeded in doing so exactly since they took their decision and I see no reason for our taking the kind of action I have referred to.
    Mr. Atkinson: Does not the Chancellor agree that, like the Treasury, the governor has become obsessed with anti-Socialist policies which seek to minimise the public sector borrowing requirement? Does he not recollect that early this week he published figures showing that next

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    year's public expenditure will represent no more than 4½ per cent. of what he estimates to be our gross domestic product, and that, of that 4½ per cent., no less than 2½ per cent. must be deducted for capital expenditure? Is it not an absolute disgrace that a Socialist Government should want to minimise their public sector borrowing requirement to no more than 2 per cent. of the gross domestic product for expenditure purposes?
    Mr. Healey: I think, with respect, that my hon. Friend is making a great mistake if he thinks that the views which the Government hold on the appropriate size of the PSBR have anything to do with party politics. The only countries in the world which have a higher percentage of gross domestic product in their public sector borrowing requirement, or their CGBR, are Japan, which has a 25 per cent. savings ratio—about twice the size of ours—and Canada, which has much higher unemployment than ours, high inflation, and a currency which is weaker than the American dollar. I believe that our level of PSBR is appropriate to the level of capacity use and our ability to finance it without excessive increases in interest rates.
    Mr. Lawson: In the light of recent events, will the Chancellor give the House an assurance that he will take whatever steps are necessary to ensure that, at the very least, the public sector borrowing requirement does not exceed the figure given for 1979–80 in table 7 of the public expenditure White Paper published yesterday?
    Mr. Healey: Yes, Sir.

    Development Land Tax Office
    6. Mr. Michael Lathamasked the Chancellor of the Exchequer whether he will make a statement on the progress of his departmental review of the staffing of the Development Land Tax office.
    The Minister of State, Treasury (Mr. Denzil Davies): The Inland Revenue's present review of development land tax, which covers administration and financial procedures, is still in its early stages and I cannot usefully add to what I said in reply to the hon. Member's Question on 11th December.
    Mr. Latham: Is there not a scandalous bureaucratic situation here in that, when
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    a secret Inland Revenue inquiry made a recommendation that the staff should be cut by 30, the Government's response was to increase it by 20 and set up another inquiry?
    Mr. Davies: No. That inquiry was conducted on the basis of the work of the office between May and June 1977. By October 1978, the number of working cases had doubled. It was therefore necessary to increase the staff in order that people who dealt with that office should, in turn, be dealt with in a proper and efficient manner.

    Inflation
    7. Mr. Bulmerasked the Chancellor of the Exchequer whether he will introduce further measures to control inflation.
    8. Mr. Knoxasked the Chancellor of the Exchequer, whether he is satisfied that his economic policies will result in a further reduction in the rate of inflation.
    Mr. Healey: I believe that the Government's current policies of encouraging pay settlements within the pay guidelines combined with monetary and fiscal restraint will stabilise and gradually reduce inflation. However, the Government will not hesitate to bring in further measures should they consider them necessary.
    Mr. Bulmer: As the majority of union leaders are reasonable people, and as few employers wish to pay more than is justified by commercial considerations, why are the Government in such difficulty over their pay policy?
    Mr. Healey: The Government are in difficulty for two reasons. First, a powerful argument has been deployed by the party opposite that free collective bargaining is consistent with holding the rate of inflation where it is. I do not believe that even the Conservative Party could maintain the truth of that proposition in the face of recent events and I gather that the hon. Gentleman does not do so. Secondly, the Government's ability to influence the level of settlements in the private sector was gravely damaged by the decision of parties opposite to remove pay sanctions. If the hon. Gentleman would like other explanations, I shall be glad to give them to him.
    Mr. Knox: Does the right hon. Gentleman consider that the current level of

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    wage and salary settlements will cause higher inflation, higher unemployment, or both?
    Mr. Healey: As I said a moment ago, the great majority of settlements have been within the guidelines. Those that have been outside so far have been mainly in groups, or companies, which broke the guidelines last year. In all those cases—except that of the Ford Motor Company —the resulting settlement has been a great deal lower than last year. There is still time to recover control of the situation if the Government are assisted by all those with influence in the community to achieve the necessary control. For that reason, I hope that the Conservative Party will stop encouraging people to make use of their market bargaining power to produce excessive settlements which are totally inconsistent with keeping inflation down.
    Mr. Watkinson: Will my right hon. Friend be wary of claims from the Conservative Party opposite that inflation can be kept under control by slashing further public expenditure? Does he not agree that his own White Paper shows that one of the principal problems relating to public expenditure is not excessive spending, but underspending, and are Departments taking measures to ensure that the sums are actually spent?
    Mr. Healey: One of the problems that we face all the time is to persuade Departments—and this is not a problem unique to the present Government—to announce spending plans which they are satisfied they can carry out. There have been cases—some are displayed in the current White Paper—where individual Departments have failed to make use of the spending powers which were given to them. The House will have seen that there has been much less underspending in the past 12 months than there was in the previous 12 months. On the other hand, my hon. Friend will recognise that, if the White Paper does nothing else, it demonstrates the effects on growth, output and the possible level of public expenditure of the level of inflation and, therefore, the immense importance of keeping pay settlements to a level that is consistent with keeping down the rate of inflation.
    Mr. Budgen: Does not the Chancellor of the Exchequer agree that, because of
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    the difficult political situation in which he finds himself, it will be impossible for him to carry out his threats of stern fiscal measures in the near future and that therefore the only way that he can curb inflation will be to impose even higher interest rates?
    Mr. Healey: No, I do not accept anything of the sort. I hope that if it became necessary, for the sake of keeping control of inflation, to ask the House to approve difficult and unpopular measures, there would be at least one or two Conservative Members who would be prepared to respond to a call for responsibility.
    Mr. Heffer: Will my right hon. Friend and his right hon. Friends come off the cloud on which they have been sitting for some time and recognise the fact that the trade union movement was prepared to accept voluntary incomes policies for two and a half or three years but gave adequate notice to the Government that it was not prepared to accept a phase 4? Is it not clear that if we are to get out of the present situation we must recognise that reality, allow settlements to be reached on a free collective basis and face the fact that we shall have to deal with the resulting situation on the basis of those of us who pay rates having to pay more to meet the costs of wage settlements for people in the public services and elsewhere? We must not dodge the realities of the situation.
    Mr. Healey: In this area, as so often in politics and government, Governments have to take account of a number of realities, and so do peoples. As the Conservative Party has occasionally had the courage to admit, if the average level of settlements this year is significantly above 5 per cent., it will not be possible to keep down the rate of inflation. That is a fact and there is no political argument that can get rid of it.
    I have already explained that although we have had some excessive settlements they have so far been in areas where we had excessive settlements last year and their size has been significantly lower than last year's increases, except in the one case of the Ford Motor Company. It is the duty of myself and my right hon. Friends and, indeed, all my hon. Friends, as well as hon. Members opposite, to

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    put these facts in front of the people continually until they finally recognise them.
    The only alternative—and my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) was beginning to recognise it in the latter part of his supplementary question—is to allow wages to rip and to be compelled to take the sort of action that the Government had to take in 1975–76 in rigid control of further wage increases, cuts in public expenditure and rises in taxation. I do not think that that is a prospect which my hon. Friend would relish in practice, however much he may contemplate it in theory.
    Sir Geoffrey Howe: Will the Chancellor recognise that it is high time that he stopped lecturing the Opposition on pay responsibility? Is he not aware that he should count himself profoundly lucky—and I mean this seriously—that in virtually every statement that I and my right hon. and hon. Friends make on this issue we impress upon those concerned with pay bargaining the need to achieve moderate settlements in line with moderate targets of monetary growth if we are to achieve a sensible solution without rising unemployment?
    Will the right hon. Gentleman recognise that the threat to achieving sensible outcomes from responsible collective bargaining arises from the intolerable sanctions that are being imposed on employers who are trying to achieve sensible results by the increasingly disorganised bands of labour which represent the unacceptable face of what used to be called the trade union movement?
    Mr. Healey: I never complain about having the right hon. and learned Gentleman as the Shadow Chancellor of the Exchequer. That is something which I welcome and I hope that it will continue for many years. On the substance of what the right hon. and learned Gentleman said, the speeches of Conservative Members would be more convincing if they had supported the Government's attempt to achieve settlements in line with what the Opposition say is necessary, had not tied our hands behind our back by robbing us of the sanctions weapon in the private sector, had not pressed consistently for policies that would increase prices, particularly in agriculture, and had not gone out of their way on every occa-
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    sion—and this applies particularly to the right hon. and learned Gentleman—to insult the trade unionists whose support and responsibility they are canvassing.

    Contingency Reserve Fund
    10. Mr. Ashleyasked the Chancellor of the Exchequer what is the current size of the Contingency Reserve Fund; and what proposals he has in relation to it for the rest of the financial year.
    Mr. Joel Barnett: I take it that my hon. Friend is referring to the contingency reserve for the current financial year included in the public expenditure planning total. The amount now remaining in the reserve is just over £40 million. I cannot say what contingencies will arise in the next three months.
    Mr. Ashley: Is the Chief Secretary aware that some severely disabled housewives have been denied the new allowance, partly because of the semantics of the regulations which are now being considered by an advisory committee, but partly because there is no public expenditure provision? I do not wish to tie anyone's hands behind his back, but can my right hon. Friend undertake to ensure that public expenditure provision is made available for this small, but hard-pressed, group of severely disabled women?
    Mr. Barnett: That is a matter for my right hon. Friend the Secretary of State for Social Services, but I know that my hon. Friend recognises, and I hope that all my hon. Friends recognise, how much the Government have done for the long-term sick and disabled. In 1973–74, we were spending, at 1978 survey prices, £1,190 million. In 1979–80, that figure will have risen to £1,840 million and we are planning to increase it, in real terms, to £2,070 million at the end of the current public expenditure round. I hope that my hon. Friends are aware of just how much we have been able to do for the long-term sick and disabled, despite all the difficulties.
    Mr. Madden: Can my right hon. Friend confirm that the increase in earnings in the 12 months up to November justifies an increase in retirement pensions and can he tell us when pensioners are to be paid what they are owed?
    Mr. Barnett: I am not sure how that supplementary question relates to the original Question, but my hon. Friend will be aware that there was a substantial increase in pensions this year which was entirely in line with the legislation under which we were working. I hope that he will recognise, in fairness, that we have given substantial real increases to pensioners since we came to office in 1974.

    Vehicle Excise Duty
    12. Mr. Newtonasked the Chancellor of the Exchequer when he expects to give further details of his proposals for phasing out vehicle excise duty.
    Mr. Denzil Davies: We must await the outcome of consultations with the motor industry and other interested bodies. These are to begin shortly.
    Mr. Newton: If the Minister of State decides to go ahead with this policy, can he at least give us a definite undertaking that funds will be made available to compensate the disabled who receive the mobility allowance and who are exempt from vehicle excise duty from the loss that they will sustain?
    Mr. Davies: It is not for me to give that sort of undertaking, but I assure the hon. Gentleman that the points that he and others have made will be taken into account when we consider this very difficult problem.
    Mr. Gwilym Roberts: Will my right hon. Friend accept that the phasing out of the duty and the corresponding increase in petrol prices will be an enormous problem not only to people in rural areas but to urban groupings, such as Cannock Chase, which are on the borders of major conurbations and where large proportions of the population travel considerable distances to work?
    Mr. Davies: I accept that some groups will be worse off as a result of the change. But other groups will be better off. We are conscious of the problems of the disabled and we are examining them.
    Mr. Burden: Does the Minister agree that we are worried not only about the abolition of the vehicle tax but about the alternative measures to ensure that cars are properly licensed and insured? Will the Minister undertake that before
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    such measures are introduced full particulars will be published of the proposals to replace the present vehicle licence?
    Mr. Davies: It will still be necessary to have a proper system for vehicle registration, for the purposes of enforcing the law and road safety. There is no question about that. We are concerned here about the taxation aspect of the matter.

    National Association of Widows
    14. Mr. Durantasked the Chancellor of the Exchequer if he will meet a delegation from the National Association of Widows to discuss the taxation of widows.
    Mr. Denzil Davies: My right hon. Friend the Financial Secretary would be glad to meet a delegation from the National Association of Widows, as he has in previous years.
    Mr. Durant: When the Minister meets representatives of the National Association of Widows will he bear in mind their feelings of grave injustice about being taxed on their widows' pensions? Will he consider bringing them into line in the next Budget with the war widows who have been given a 50 per cent. discount?
    Mr. Davies: I do not accept that there is a grave injustice. However, I accept that widows, like other groups of people, are anxious about the amount of tax that they pay. The House decided to give the 50 per cent. exemption to war widows. I do not accept that that is the right way to deal with the problem. Income from whatever source should be taxed in the same way, subject to the rules.
    Mr. Ovenden: When my right hon. Friend meets the widows, will he tell them how he justifies singling out widows' allowance as the only short-term social security benefit which is taxed?
    Mr. Davies: Both sides of the House recognise that in theory there is no reason why other short-term allowances should not be taxed. But there is an administrative problem caused by the fluctuating nature of most of the short-term allowances. The widows' allowance does not fluctuate. It is a flat-rate allowance paid for a short period and there are no administrative problems.

    Young Workers (Industrial Clothing Tax Allowance)
    15. Mr. Frank Allaunasked the Chancellor of the Exchequer if he will now take steps to extend to other young workers the income tax allowance of £20 a year for tools and industrial clothing just granted to engineering apprentices after agreement with union representatives.
    Mr. Denzil Davies: If any trade union makes an application for apprentices to be given a flat-rate allowance, the Inland Revenue is prepared to negotiate one, provided that the allowance broadly reflects the amounts individually deductible in respect of the cost of upkeep of tools and special clothing. In the absence of any such flat-rate allowance, individual apprentices are entitled to claim the amounts actually expended for the purpose.
    Mr. Allaun: I welcome that Answer, but there are young workers in certain other industries who do not receive these allowances. Does my hon. Friend accept that, even when the allowances are available, they are often unclaimed because people do not know about them? Will the Minister publish the list?
    Mr. Davies: I shall consider publishing the list, but I make no commitment. The object of the flat-rate allowance is to ensure that people know to what allowances they are entitled. The Inland Revenue has no objection to negotiating such arrangements with the trade unions.

    £ Sterling
    16. Mr. Tim Rentonasked the Chancellor of the Exchequer in what range of fluctuation against the basket of Europeon currencies he now wishes to maintain the £ sterling.
    Mr. Healey: There has been no change in our exchange rate policy. Our aim is to maintain a stable exchange rate as measured against the currencies of all our main trading partners.
    Mr. Renton: In view of the fact that the current public sector borrowing requirement is regarded widely as excessive and is forecast in yesterday's White Paper as remaining excessive, does the Chancellor agree that his exchange rate target will be achieved in the end only by either
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    higher domestic interest rates or higher taxes?
    Mr. Healey: If the hon. Member's view were shared by those who help to determine the value of sterling on the foreign exchange markets, sterling would not have been as stable as it has been in the last 12 months. But it is not shared by those who watch our affairs from outside. The hon. Member and his hon. Friends would be wise to look at the value which foreign countries put upon our currency before seeking to denigrate our achievements.
    Mr. Jay: Has my right hon. Friend read his own expenditure paper? Has he noticed that our net budget contribution to the EEC in 1980 is to rise to £795 million? Is this not an intolerable burden on our Budget and balance of payments?
    Mr. Healey: The Government have made it clear on many occasions that they regard the budgetary burden which falls on the United Kingdom as a result of the current monetary arrangements inside the Community as seriously excessive. They are seeking to renegotiate them both in terms of the budget itself and the common agricultural policy, which is the main culprit.
    Mr. Tapsell: if the Chancellor's reply to my hon. Friend the Member for Mid-Sussex (Mr. Renton) has any validity, how does he account for the fact that other countries have reduced the proportion of their reserves which they maintain in sterling to under 2 per cent.?
    Mr. Healey: We have asked them to do so because we regard the reserve role of sterling as damaging to the interests of the country. I am glad to say that we were successful.

    PRIME MINISTER (ENGAGEMENTS)
    Q1. Mr. Terry Walkerasked the Prime Minister if he will list his official engagements for 18th January.
    The Prime Minister(Mr. James Callaghan): This morning I presided at a meeting of the Cabinet. In addition to my duties in this House I shall be holding further meetings with ministerial colleagues and others.
    Mr. Walker: Is my right hon. Friend aware that neither in her television broadcast last evening nor in her speech to the House of Commons on Tuesday did the Leader of the Opposition make any reference to how the Tories would tackle the problems of inflation? [HON. MEMBERS: "Reading."] Short-term, ill-considered proposals on trade union legislation would not help the country in the present situation. [HON. MEMBERS: "Reading."] Will my right hon. Friend continue to impress upon the trade union movement that inflationary wage increases have no relevance to social justice and are not in the best interests of working people—[HON. MEMBERS: "Reading."]
    Mr. Speaker: Order. The hon. Member made copious use of notes, that is all.
    The Prime Minister: That might be so, but I did not hear all the question. If I caught my hon. Friend's first few words correctly, as I think I did, he stressed the need in all our current problems to emphasise the importance of overcoming inflation. That, of course, is right. Inflationary wage settlements, so far as they enter into the final costs of production, give rise to rising prices and rising unemployment. Nothing that I know can destory that basic fact. It should be hammered home on all occasions.
    Sir Paul Bryan: Does the Prime Minister appreciate that in the East Riding of Yorkshire we have the biggest concentration of pigs in the country? [HON. MEMBERS: "That is right."] Labour Members will laugh less when I tell them that, owing to the concentration of the Transport and General Workers' Union on the feed mills of Hull, a large number of those animals are definitely and genuinely in danger of going short of food. Hon. Members may laugh if they wish.
    Will the Prime Minister today phone up the strike committee in Hull and use his influence to persuade its members to withdraw the pickets and to show in practice the sympathy which they profess for animal welfare?
    The Prime Minister: The hon. Member will now understand how I sometimes feel when I have to give a quick reply at the Dispatch Box and I say not quite what I mean to say. The hon. Gentleman made a serious point, however I understand that there have been particular problems,
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    especially in the port of Hull and in East Yorkshire, with picketing and secondary picketing. I know that contacts have been made through the emergency unit. I believe that some changes have been made. Clearly I cannot give a definite answer to the hon. Member. I shall have something more to say about the general position in my statement later.
    Mr. Mike Thomas: Will my right hon. Friend, in the course of his engagements today, seek to ascertain from the right hon. Lady the Leader of the Opposition whether she sees any relationship between wage settlements and inflation and, if so, why she fails signally to refer to that relationship in any of her public statements?
    The Prime Minister: I am sure that the right hon. Lady is as aware as anyone else of the consequences of inflation. This is a problem to which more attention might be paid by the Opposition on occasions, instead of referring to what are in certain circumstances peripheral matters affecting powers. I do not believe that taking statutory powers is necessarily, as experience has shown, the right way to conquer inflation.
    Q2. Mr. Blakerasked the Prime Minister if he will list his official engagements for Thursday 18th January.
    The Prime Minister: I refer the hon. Member to the reply which I have just given to my hon. Friend the Member for Kingswood (Mr. Walker).
    Mr. Blaker: I understand that it is the intention of the Prime Minister to seek a voluntaryagreement with the trade unions, not simply with a view to settling the present dispute but on wider and longer-term issues. How will such an agreement differ from the solemn and binding agreement made between the trade unions and the Labour Government in the 1960s which, as the Chancellor of the Exchequer reminded us not long ago, melted away like butter in the sun?
    The Prime Minister: That is not on the list of my engagements for today, I am bound to say, and we had better wait to see what emerges from discussions with the TUC, which I shall certainly hope to have as soon as possible. I imagine that present circumstances have shown clearly how important it is for any Government

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    to secure the full co-operation of the organised workers in this country if we are to succeed.
    Mr. Stoddart: As my right hon. Friend reflects today—if he reflects at all—on the right hon. Lady's broadcast last night, will he recognise that it was an exercise in sheer damned hypocrisy, for two reasons? First, on the one hand, she is citicising the lorry drivers for following the policies advocated by herself and her right hon. Friend the Member for Leeds, North-East (Sir K. Joseph)—
    Mr. Burden: On a point of order, Mr. Speaker. In the light of circumstances today—
    Several Hon. Members rose—
    Mr. Speaker: Order. Usually we take points of order at the end of Question Time.
    Mr. Stoddart: Secondly, will not my right hon. Friend agree that the right hon. Lady was hypocritical in promising—
    Hon. Members: Withdraw.
    Mr. Speaker: Order. It is out of order, as the House knows, and quite wrong, for an hon. Member to call any other hon. Member a hypocrite.
    Mr. Stoddart: Thank you for your guidance, Mr. Speaker, but I did not call the right hon. Lady a hypocrite. I merely said that the political broadcast was an exercise in hypocrisy, and I think it was. [HON. MEMBERS: "Withdraw."] Will my right hon. Friend say whether he does not think that promising public service workers substantial increases in pay, and at the same time threatening huge cuts in public expenditure, is a hypocritical exercise?
    The Prime Minister: I am afraid that I am unable to join in this, as I did not have the privilege of seeing the television broadcast. I am not, therefore, able to pass any comments on it. What is quite clear is that if we have free collective bargaining, as a result of which public sector workers are to have large increases in pay, it is certainly not consistent with that to promise large cuts in taxation. I am sure that must be known to the Conservative Front Bench.
    Mr. Baker: If Mr. Moss Evans can produce within a matter of hours a draft
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    code on picketing, why is it not possible for the Government within a matter of days to produce their own proposals on picketing and to publish them this weekend, so that we can debate them in the House next week?
    The Prime Minister: The Transport and General Workers' Union, as I shall report a little later, is issuing a code of practice about the current dispute and the current dispute alone. That is somewhat easier than drawing up a general code that would apply to all disputes at all times. I should have thought that the Opposition, having seen some of the results of their own ill-considered legislation, would not wish to rush back into this too soon.
    Mr. Swain: Is my right hon. Friend aware that he has often said in this House that prevention is better than cure? Does he not consider that the crisis facing this country today would have been prevented had his Cabinet given a flat-rate increase right across the board during the early stages of negotiations? I am sure, having done my sums on this—[Interruption.] Listen to that lot, Mr. Speaker. If they were in India they would be sacred. Will my right hon. Friend agree that, had such a flat-rate increase been allowed, so that the man on £40 a week would have had the same increase as the man on £20,000 a year, three-quarters of the trouble which faces the Prime Minister and the Government today would have been prevented?
    The Prime Minister: One of the problems that we face at present is that while there is one view in favour of increasing the pay at the bottom end of the scale by a substantial flat rate or percentage rate, at the other end of the scale—and, indeed, in the middle of the scale—the cry by those who are organised is for an improvement and an increase in the differentials. This is one of the dilemmas facing anyone who tries to devise policy in this field.
    Mr. Montgomery: Will the Prime Minister some time today give some thought to the fact that today, in the Trafford district of Greater Manchester, four hospitals have closed down, partly due to the transport workers' strike and to picketing and partly due to the proposed threat of action on Monday by the National Union of Public Employees? Does he not think it is quite serious that

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    sick people are being penalised in this way by industrial action? What view do his Government take about, and what do they propose to do to remedy, this serious position?
    The Prime Minister: The hon. Gentleman knows full well that we clearly take a serious view of a matter of that sort, if it is as the hon. Gentleman has described. But, as he will also know, it is easier to say how serious a position is than to put it right. It would be possible to put it right by giving substantial increases in pay to all those who are coming to lobby us on Monday. If that is the Opposition's policy, they should say so clearly. If not, they should not just bellow "What are you going to do about it?".
    Later—
    Mr. Burden: On a point of order, Mr. Speaker. I am sorry to press this matter. However, over the years, there have grown up in the House certain rules of procedure and rules concerning the manner in which hon. Members are addressed. Not only do those rules preserve the dignity of this House here; they are consistent with the dignity of this House in the eyes of the country. I think that you will agree, Mr. Speaker, with the view that the terms in which the hon. Member for Swindon (Mr. Stoddart) referred to statements made by my right hon. Friend the Leader of the Opposition were against the best traditions of this House. I hope, Mr. Speaker, that you will make that perfectly clear.
    Mr. Stoddart: Further to that point of order, Mr. Speaker. I explained to you and to the House that I referred to the broadcast and the direction of that broadcast, and not to a person. I think that it does no good to this House of Commons if Members of Parliament are mealy-mouthed and do not state what they mean. I stated exactly what I meant, and I believe that it was the truth.
    —[Interruption.]
    Mr. Speaker: Order. There is not one right hon. or hon. Member who would like to be called hypocritical—not one of us.
    Mr. William Hamilton: I do not know about that.
    Mr. Speaker: Order. Every man according to his taste apparently—but it is not mine.
    I agree with the hon. Member for Gillingham (Mr. Burden) that it behoves us all to try to maintain the proper standards in the Mother of Parliaments. Hansard is read widely throughout the Commonwealth—and not always to advantage, I may add.
    Sir David Renton: Further to that point of order, Mr. Speaker. The hon. Member for Swindon (Mr. Stoddart) used the word "hypocrisy" as an accusation against my right hon. Friend the Leader of the Opposition. It is well known that to use that word as an allegation against an hon. Member is an unparliamentary proceeding. Should not the hon. Member, therefore, be called upon by you to withdraw that allegation?
    Mr. Speaker: When the hon. Member for Swindon (Mr. Stoddart) rose later, I understood him to indicate that he was not making a personal charge. Therefore, although I have the same impression as the right hon. and learned Member for Huntingdonshire (Sir D. Renton), as the hon. Member for Swindon has told us that he made no personal charge, I think that the House would be better served by accepting that.
    Later—
    Mr. Stoddart: On a point of order, Mr. Speaker. Having checked carefully with the Official Report, I now realise that I did make a personal allusion to the right hon. Lady the Leader of the Opposition which implied that she was a hypocrite. I am very happy to withdraw that remark.

    NATIONAL ECONOMIC DEVELOPMENT COUNCIL
    Q3. Mr. Gwilym Robertsasked the Prime Minister when he plans next to take the chair of the National Economic Development Council.
    The Prime Minister: I next plan to take the chair at a meeting of the National Economic Development Council on 7th February.
    Mr. Roberts: Will my right hon. Friend agree that, in spite of our present

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    problems, the usual relationship between trade unionists and management is that reflected in the useful co-operation seen in the NEDC sector working parties? Will he accept that, if we are to get the long-term benefits of the industrial strategy, even more Government involvement will be necessary to ensure the rapid implementation of the working party recommendations?
    The Prime Minister: Yes, it is the case, as is commonly vouched for, that relations in the overwhelming part of British industry are satisfactory, if not good. Indeed, they are improving. I believe that the increased communication that is taking place as a result of the sector working parties has contributed to that. Certainly they will have the full backing of the Government.
    Mr. David Steel: Is not the National Economic Development Council one of the appropriate places in which to consider some of the suggestions put forward by the Leader of the Opposition. since the scale of repeated industrial anarchy is gravely damaging to the economy?
    Will the Prime Minister not reject the suggestions of the Leader of the Opposition simply because she has come rather late in the day to the principle of inter-party co-operation? Will he recognise that there really is growing public concern about the impotence of Parliament in these situations? Will he therefore give the right hon. Lady a positive response in trying to seek a united approach on these issues?
    The Prime Minister: The right hon. Gentleman may be certain that all proposals—from wherever they may come—for dealing with the present situation or, indeed, any other discomforts in our industrial situation, will be objectively considered by the Government.
    I must say that I was impressed this morning by the article that appeared—if I may give an advertisement to such an organ—on the editorial page of The Daily Telegraph. It is well worth reading, because it shows how misconceived are some of the proposals that are put forward in—again I repeat the word "peripheral"—circles regarding the capacity of the law to deal with this situation. I do not say that in any polemical spirit,
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    but it seems to me that we must get the analysis right if we are ever to find a solution. The writer was someone who did not sign his article, but he described what he was doing from his practical experience. I hope that every member of the Conservative Party will read that article very seriously.
    Mr. Ridley: On a point of order, Mr. Speaker. It may not have escaped your attention that the hon. Members for Newcastle upon Tyne, East (Mr. Thomas) and Swindon (Mr. Stoddart) both asked questions of my right hon. Friend the Leader of the Opposition. I can quite see that it is more interesting to ask questions of the next Prime Minister than of the past Prime Minister. Would not it be more sensible if we asked my right hon. Friend to take, say one of the sessions, on the Tuesday or the Thursday, to answer her questions?

AMBULANCE SERVICE (INDUSTRIAL DISPUTE)
Mr. Michael Morris(by Private Notice)Mr. Michael Morris(by Private Notice) asked the Secretary of State for Social Services if he will make a statement on what advice he has given to area health authorities about emergency ambulance cover from Monday 22nd January.
The Secretary of State for Social Services (Mr. David Ennals): No general guidance is necessary at present. NHS authorities know that it is their responsibility to take whatever measures are needed.
I have spoken personally to the general secretaries of the unions concerned and have been assured that the unions have advised their members to maintain emergency services. I have, however, to tell the House that there is an unofficial threat to remove emergency services in London next Monday. I understand that the men are to consider the matter tomorrow. Such unofficial action could have tragic consequences, and I appeal to all those concerned to act responsibly and to maintain emergency services.
The South West Thames regional health authority, which is the authority responsible for the London ambulance service, has made contingency plans to ensure an emergency service.
Mr. Morris: As, by definition, we are dealing with matters of life and death, is the right hon. Gentleman aware that certainly the Northamptonshire area health authority has been expecting advice? Secondly, will he explain why it is to be the unions which decide what is to be an emergency, and not the medical staff concerned? Finally, will the right hon. Gentleman explain why it is that union members are apparently to be paid for next Monday although they are going on strike?
Mr. Ennals: It is certainly not wholly unions which decide whether a matter is an emergency. But there can be no question at all, whether it be a matter for unions, for administrators or for the professions, that to maintain an emergency service such as the London ambulance service clearly cannot be other than essential. Therefore, I am glad that the unions are bringing every possible pressure to bear upon their men. I hope that there will be a response.
The hon. Gentleman's second question related to pay sanctions. There should be no misunderstanding about this. Those who go on strike get no pay. The question relates to action other than withdrawing labour, where some flexibility may be necessary, depending on the nature of the action and the circumstances at the time.
Mr. Molloy: Is my right hon. Friend aware that in this dispute it is the policy of the four major trade unions involved, with particular reference to the possible situation in London—their policy and not merely their advice—that there should he complete emergency cover? Is he aware that what he can do to help them in trying to keep some form of order and a continuing exchange of views to see that this is accomplished would be appreciated by the trade unions and, I hope, everyone in the House, as an aid to the achievement of their desire that during this dispute there should be full and complete cover for emergencies?
Mr. Ennals: Quite right. It is the policy of the unions. I am in touch with them. The London ambulance service has a very fine reputation. It is a well-trained and very efficient force. I do not believe that when the men consider these
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issues properly and fairly they will leave London without an emergency service. I cannot believe it.
Mr. Geoffrey Finsberg: In regard to the possible withdrawal of emergency services in London on Monday, why is it not possible to advise the public now of what the contingency plans are? With newspapers reduced in size, and a lot of news, if this is to occur, people want to know what will happen on Monday.
I have another question, which follows a point made by the hon. Member for Ealing, North (Mr. Molloy), who asked the right hon. Gentleman whether there was anything that he could advise the unions to do to strengthen their authority over those of their members who are not following the rules. Will the right hon. Gentleman discuss with the appropriate general secretaries the "branching" of members who are disobeying union instructions?
Mr. Ennals: As to giving advice, emergency service will be provided as a contingency. There have been very productive discussions with the police force and with the voluntary organisations. I am satisfied—my Department has been totally in touch—that the authority will provide an emergency service. In any case, as I have made clear to the House, the meeting is being held tomorrow morning and I do not want to do or say anything today other than to encourage the men to act responsibly in accordance with their union policy.
Several Hon. Members rose—
Mr. Speaker: Order. This is an extension of Question Time. We are dealing with a Private Notice Question. I remind the House that there are three important statements to follow, as well as business questions. I shall allow one question from each side of the House.
Mr. William Hamilton: Does my right hon. Friend recognise that every Labour Member would deplore any action by anybody outside who threatened emergency services of any kind? Does he understand that most of those who are coming on Monday have a serious grievance, namely, low pay in the public sector, and that many of them were attacked in the first instance by the Tory Government

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as long ago as the early 1960s? The nurses were the first victims of a Tory incomes policy and have the same grievances today. Will my right hon. Friend give an undertaking to the unions that the problem of low pay in the public sector will be tackled imaginatively by the Government?
Mr. Ennals: I am sure that hon. Members in all parts of the House will not support the withdrawal of emergency services.
My hon. Friend mentioned a grievance. He will know that two days ago my right hon. Friend the Prime Minister outlined two important initiatives on pay. In line with those initiatives, there have been informal meetings with representatives of employers and unions in the hope that it may be possible to find the basis of a fair and reasonable settlement. I am sure that both sides of the House hope that such a settlement will be achieved.
Mr. Patrick Jenkin: The House welcomes the right hon. Gentleman's statement. I hope that he will prove right in his confidence that an emergency service will operate in London. Is he aware that if the Red Cross and St. John Ambulance and the police are prepared to play their part, they will be supported
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by hon. Members in all parts of the House?
Has the right hon. Gentlemen taken the advice of the management of the London ambulance service and warned the Ministry of Defence that it may be necessary to call on Service personnel to reinforce emergency services? Is he aware that his circular issued last Monday, which appeared to advise authorities not to withhold pay from those who take industrial action, gave great offence to many health authorities? It cut the ground from under their feet in deciding whether to exercise any discipline.
Mr. Ennals: On the right hon. Gentleman's last comment, I believe that there has been some misrepresentation. On the subject of strike action, the position as recognised by health authorities is clear. Unfortunately, a press report gave a totally contrary impression.
In answer to the right hon. Gentleman's earlier comments, I inform him that there has been great co-operation from the Red Cross and St. John Ambulance, and especially from the police. The question of the involvement of the Ministry of Defence is a matter with which my right hon. Friend the Home Secretary will deal in a later statement.

ROAD HAULAGE (INDUSTRIAL DISPUTE)
The Prime Minister(Mr. James Callaghan): With permission, Mr. Speaker, I shall make a statement about the road haulage strike. My right hon. Friend the Home Secretary, if he catches your eye, hopes later to make a statement on the effects of the present current industrial disputes and the Government's contingency arrangements. It will be a rather broader statement.
I regret to inform the House that there appears to be no prospect of an immediate end to the strike, and the movement of supplies of all kinds is being held up. Hardship and considerable dislocation are being caused to the general public and to trade and industry, particularly because of the severe effects of secondary picketing. I therefore asked the general secretary of the TGWU, Mr. Moss Evans, and the general secretary of the TUC, Mr. Lionel Murray, to come to see me for discussions last night.
Mr. Evans made it clear that his union stands by its agreement to maintain the priority supplies of essential goods. He also repeated that it stands by its instructions to its own members that the strike and the picketing should be confined to those companies which are in dispute with the Road Haulage Association. Mr. Evans undertook to take further action to ensure that these priority supplies are maintained and that action by pickets is not extended to companies and employees who are not involved in the dispute.
Nevertheless, it is clear that some picketing practices, and, in particular, secondary picketing, have given rise to the present serious situation. I told Mr. Evans that there had been little amelioration in the position and that it was essential that pickets, and, in particular, secondary picketing, should be properly controlled. I have already made clear to the House that in the Government's view this control is likely to be more effective by a voluntary code of practice than by attempts at unenforceable legislation.
As a result of our discussion, the TGWU has agreed to a voluntary code of practice in relation to picketing during this dispute and this has been issued by it today. The code explicitly provides that
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"Picketing should be confined to the drivers and vehicles in the hire and reward section of the industry who are employed by firms in dispute with the union"
—that is to say, it rules out secondary picketing. The union is making clear to all its members that no member of the union will be penalised or suffer in any way as regards his rights as a member of the union if he follows this code of practice.
My right hon. Friend will deal in his statement with the general question of contingency arrangements. But, in relation to the road haulage dispute, I should say that in the current grave situation the Government have given careful consideration to the question whether they should seek the powers that would become available by proclaiming a state of emergency today. The critical question is whether the proclamation of a state of emergency would increase the supply of essential goods and services. At the moment the Government's view is that essential supplies would be better maintained by the members of the TGWU observing the code of practice issued by their union and so putting an end to secondary picketing. But the Government will keep the matter under review day by day, and will keep the House informed of developments.
Mrs. Thatcher: Is the Prime Minister aware that the Opposition are astonished at the weakness and hollowness of his statement? There is nothing in the statement to re-establish the authority of government under the law. The right hon. Gentleman must daily be receiving reports of violence, intimidation and money passing.
Mr. Cryer: Where?
Mrs. Thatcher: I refer to intimidation as a result of which people are afraid to go to work. They can obtain no aid or comfort from the weak and complacent statement made by the Prime Minister a few moments ago.
Mr. Cryer: Give us the names.
Mrs. Thatcher: May I put a question to the right hon. Gentleman about the code of practice? Is he aware that one of the reasons for making the strike official was to give the union more power over secondary picketing? If a code of practice is to be effective from today, why has it not been effective until now?

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Why has it taken so long even to get one considered and issued?
Why does the Prime Minister think that neither the TGWU's undertaking to see that food is moved nor its promise to see that own-account lorries are not affected has been followed? We all know that food has been affected and that own-account lorries have been stopped. What makes the right hon. Gentleman think that a code of practice will be effective?
Furthermore, as the right hon. Gentleman well knows, it is reported that some pickets are not union pickets at all but that various other people have joined the pickets. The fact is that the strike is out of control of the union and appears to have passed from one group of militants to another. In that case, this code of practice will not be, and cannot be, effective.
I asked the Home Secretary the other day whether he had yet sent guidance, in a circular, to chief constables. If he has not done so, it is high time that he did. Perhaps he will tell the House whether he has now issued such guidance to chief constables. I have reason to think that until last night no such guidance had been sent out.
The Prime Minister always uses the argument that the law cannot deal with these matters, but he never hesitates to use the law to increase the power of trade unions. He uses that argument only when it is suggested that such power be reduced.
Finally, does the Prime Minister now think that it would be far better to reestablish the authority of Parliament by proclaiming a state of emergency in the light of this situation, with existing strikes and those threatened for next week?
The Prime Minister: I rather welcome this new non-party approach to our problems. I have no doubt that if it is maintained we shall get even more agreement between us.
As to whether there is authority under the law, the advice that I have been given—the right hon. Lady will have had similar advice—is that secondary picketing does not break the law. If the law is being broken by intimidation or in any other way, it is for the police to take action and to bring the offenders before the courts. I have no doubt that they will not hesitate to do so.
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I am not able to say whether this new approach will be effective. However, in my view we must give it an opportunity to prove effective or, indeed—I hope that this would not be the case—to prove that it cannot be effective. It has not taken a long time to establish it. The union has had difficulty in securing control because of the widespread nature of the dispute. I think that it would be better for the whole House to encourage the union to try to ensure and secure control than to abuse it before it has even begun.
As to the food and the own-account lorries that are being interrupted, the right hon. Lady will presumably have noticed from my statement—she will certainly see in the code of practice, which is being issued—that the union indicates—I shall quote exactly what is said—that
"Members of the union who are working for employers not party to the dispute or who are engaged in moving priority supplies should indicate where they stop at the request of pickets that they are proceeding to move such supplies in accordance with the Union's instructions as embodied in this code and that pickets should therefore make no attempt to prevent such a vehicle from proceeding."
This is a continuing matter. I hope that the union will be effective this time. I want to encourage all national and regional officers and the strike committees to obey this code of practice. Otherwise, it is possible that a code of law will be introduced with all the results that we have seen before.
On the question of a state of emergency, as I have said, we must keep this matter under review. There is a case for saying that if a state of emergency is declared the result will be positive, in the sense that, although we shall not be using many troops or lorries, many other people will then go back to work. That is a matter of judgment. I do not at the moment believe that that judgment would be true. We should find that we had accentuated, not lessened, the dispute. The time may come when that judgment will be accurate or, at least, when we shall have to make the judgment that it is accurate and will have the required beneficial, not adverse, effect. When that time comes, there will be no hesitation about declaring a state of emergency, but I do not propose to do so far pure cosmetic reasons. I say to the right hon. Lady that strong words and weak actions do not go well together.
Mr. David Steel: Does the Prime Minister accept that the House is at least entitled to expect an assurance from him that, unless there is a marked improvement in the situation in the next 24 hours, he will consider declaring a state of emergency tomorrow without waiting any further?
Secondly, on reflection, does the right hon. Gentleman consider that his statement that the union is making it clear that no member will be penalised or will suffer in any way if he follows the code of practice is a Gilbertian way of putting things? We want to know how they will be penalised if they do not follow the code.
The Prime Minister: This code is issued by the union. Therefore, it is not my responsibility to answer for it. It is for the TGWU, which at national level has, I think, shown its bona fides on this matter. If the document, as it is prepared, is carried out by union members throughout the country, it will undoubtedly substantially alter the situation. We shall have to see to what extent the union's members carry out the code of conduct.
The right hon. Gentleman asked whether we would consider declaring a state of emergency tomorrow. I have already made clear in my statement that we shall review the matter from day to day. That is the best way of proceeding. Whether it is tomorrow or next week will depend upon whether we judge that the declaration of a state of emergency will either get men back to work or improve the movement of goods. At the moment, our judgment is that that would not be so, and no evidence has been forthcoming from the Leader of the Opposition to show that it would improve the situation.
Mr. Loyden: Will my right hon. Friend make clear to the Leader of the Opposition, who evidently understands very little about the events that have been taking place recently, that it was the influence of the national officers of the Transport and General Workers' Union that brought the tankers drivers' strike quickly to an end and that this week those officers have been involved daily in dealing with the matters to which she referred? It is absolutely untrue that the union so far, in its instructions to its members, has not been able to penetrate the membership in that way. The membership is
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responding. The code of practice being issued today has the full backing of the union's executive. [Interruption.]
The Prime Minister: My hon. Friend is a member of the union and therefore has a more complete knowledge of its attitude than some Opposition Members who are now shouting. It is true that the union's national officers are endeavouring to ensure that this code is carried through. If it is carried through, there will be relief at the ports and in other ways. But it is now for the members of the union to accept the code that has been issued by their union. We shall certainly ensure that it gets the maximum publicity. We trust that they will then carry it out. If they do not carry it out for their own union, the Opposition still have to answer the question: for whom would they carry it out?
Mr. Peter Walker: Further to the point made by the Leader of the Liberal Party, is the Prime Minister aware that the most staggering thing about his statement is that, having called Mr. Moss Evans to Downing Street yesterday and agreed not to declare a state of emergency because of the assurances given by Mr. Evans, it was on the basis that those who complied with the voluntary code on picketing would not be punished for complying and that those who did not comply would not be punished for not complying? Did he not obtain from Mr. Moss Evans an assurance that any member of the Transport and General Workers' Union who now indulges in secondary picketing will lose his membership of that union?
The Prime Minister: I do not know whether the right hon. Gentleman's object—
Mr. Skinner: Ask him about secondary banking.
The Prime Minister: I do not know whether the right hon. Gentleman believes that that would solve this problem or bring the strike to an end. If so, his knowledge of industrial relations must be very scant.
Mr. Ward: Is my right hon. Friend aware that a number of the messy situations that have arisen in the last few days are due to appalling communications in a very difficult situation? Did Mr. Moss Evans indicate whether he intended to do

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anything to improve communications between his district officers and the local press and employers and the Government's own regional staff?
The Prime Minister: That is a matter for Mr. Evans, but certainly the staff of the various Ministries are working well together and are in touch in order to ensure, as far as possible, that essential goods go through. That communication is complete, and we get up-to-date reports regularly.
Mr. Paul Dean: Does the Prime Minister recognise that he has totally failed to give any leadership to the moderate majority in this nation? Does he accept that it is his first duty, at this grim moment, to demonstrate his resolve that this country shall be governed by the elected Government and Parliament and not by small groups of bullies and blockaders?
The Prime Minister: I think that it has always been my responsibility. I have tried to carry it out to give leadership to moderate opinion of all sorts. That is what I am continuing to do. I do not intend to fall victim to any cheap gestures that might look strong but would not produce a result. That is the test. If a state of emergency were declared in present circumstances, newspapers might tomorrow say "How strong!" and by Tuesday they would be saying "What a ghastly mistake!" This is a matter of judgment. If we believe that the moment has arisen when the situation will be improved by a state of emergency, the hon. Member for Somerset, North (Mr. Dean) need have no doubt that we shall declare one, but I have still to hear any evidence why people believe that a state of emergency would improve the flow of goods from the ports, through the warehouses and into the shops, or, indeed, would get the men back to work. There has been no evidence of that at all.
Mr. Norman Atkinson: Does my right hon. Friend agree that if this whole series of disputes proves anything it proves clearly that the Conservative Party is the party of the employers? It will not have escaped his notice that all the proposals made by the Conservative Party, in the last four days, for legislative changes would have strengthened the employers' bargaining power. Is it not a disgrace
1964
that the Conservative Party should seek to exploit the class struggle—[Interruption]—when uppermost in the minds of all of us should be a solution to the problems of inflation?
The Prime Minister: The real question, if hon. Members jeer about the class struggle, is that we are all engaged in a national struggle at the moment.
Mr. Lawson: The right hon. Gentleman is not.
The Prime Minister: If the hon. Gentleman suggests that I am not, he mistakes very much my approach to this question. That it is not a strident approach does not mean that I do not care as much as he does about the welfare of our nation—about getting men back to work and ensuring that there is justice and fair play for all our citizens. The hon. Gentleman must give me the credit for believing that what I am doing is the right way to conduct this nation through a most difficult situation.
Several Hon. Members rose—
Mr. Speaker: Order. A wider statement on the current situation is to follow. I propose to call three more hon. Members from either side.
Mr. Edward Gardner: Is the Prime Minister aware that the effects of the present strike on the North-West of England have produced a state of crisis that is now beginning to show symptoms of anarchy? In addition to being threatened by poisoning from contaminated water, people in that area are now threatened by malnutrition, due to the interruption of food supplies. Does he know that supplies of the necessities of life are being controlled not by the agencies of government but by the bully-boys of the unions? What steps is he prepared to take immediately, as a matter of urgency, to deal with that situation?
The Prime Minister: I would be astonished if the hon. and learned Gentleman's rather extravagant language about people suffering malnutrition were found to be true. We are all threatened with malnutrition in the long run, but it is absurd to use language of that sort in present circumstances, as the hon. and learned Member knows.
It is true, according to the reports that we have received, that the North-West

1965
has suffered particularly. We have to try to ensure that the normal food and water supplies are restored as quickly as possible. People are having to walk 200 or 300 yards to get water, which is a disgrace in a civilised community.
But I would point out to the hon. and learned Gentleman and to Opposition Members in their present, if I may call it, union-bashing mood—[HON. MEMBERS: "Withdraw."] All right, I withdraw and apologise. I have not heard a word said against unions this afternoon. But when Opposition Members criticize—if they will accept the word—if not attack, the unions, they should recognise that the action being taken in many cases is not under the authority of the union. It is outside its authority. It is unofficial, and therefore the problem is all the greater—unless we intend to put a few thousand citizens into gaol—to try to get a sense of responsibility back into society, which is what I intend to do.
Mr. Heffer: Does my right hon. Friend agree that the simplistic demand for a state of emergency made by the Opposition could actually lead—they must think about this for two or three minutes—to a withdrawal of labour from the docks and from the airports, and could freeze the situation entirely? Will they stop making these simplistic demands? Is it not time that the Department of Employment, despite ACAS, got the people involved in the dispute round the table in order to reach a settlement? No matter how long this strike goes on, a settlement has to be reached. The most positive thing that we can do at this moment is to concentrate on reaching a settlement and not make the sort of demands that are coming from the Opposition Benches.
The Prime Minister: I shall certainly discuss this prospect with the Secretary of State for Employment. The Road Haulage Association made a proposal yesterday which, I understand, was unacceptable because of the negotiating practices that exist in that industry. In some ways, they are rather strange practices, perhaps because of the history of the industry. The association made a proposal that was not acceptable, but if it were possible to get the parties round a table and get a settlement, the Govern-
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ment would certainly lend their best offices towards achieving that.
Mr. Hugh Fraser: Is the Prime Minister aware that since he saw Mr. Moss Evans yesterday the strike of lorry drivers has been made official in the West Midlands? Secondly, the secondary picketing of the salt works in Cheshire has increased, with serious consequences for the people.
The Prime Minister: My understanding was that the salt works position had eased, but I shall look into what the right hon. Gentleman says. We were given assurances about the movement of salt. As for secondary picketing, if the members carry out the code of practice laid down by the union that should cease.
Mr. Alexander W. Lyon: Are not the questions of the Leader of the Liberal Party and the right hon. Member for Worcester (Mr. Walker) based on a mishearing of the words in the statement from Moss Evans? Does not that passage relate not to the pickets but to the people who go through the picket lines, as long as they go through the picket lines in accordance with the instructions of the unions? In that sense. is not that passage absolutely vital? Does it not rob the picket line of its authority to stop people who are not involved?
The Prime Minister: My hon. Friend, with his legal mind, has stated the position exactly as I understand it. [HON.MEMBERS: "No."] At least I have the advantage of having read the statement, and those who are shouting have not. I shall gladly read my statement again, because I do not want any misunderstanding about it. Having said that secondary picketing is ruled out, the statement goes on:
"The union is making clear to all its members that no member of the union will be penalised or suffer in any way as regards his rights as a member of the union if he follows this code of practice."
My understanding is that it is alleged that some people have been threatened that if they go through a picket line they will suffer afterwards by the withdrawal of their union card. Therefore, when I read that sentence it seemed to me that that was a protection and advice to those who go through the picket lines that in no circumstances will they be penalised or suffer in any way.
Sir Geoffrey Howe: I should like the Prime Minister to clarify one point beyond doubt. His hon. Friend the Member for York (Mr. Lyon) said that the picket line had authority to stop—[HON. MEMBERS: "No."] Those were the words he used. The Prime Minister, inadvertently perhaps, endorsed or accepted those words. Will he make it absolutely clear to the House and the country that a picket line has no authority whatsoever to stop anybody?
The Prime Minister: With respect. I do not think that I—
Mr. Alexander W. Lyon: Before my right hon. Friend replies, may I say that I did not say that? [HON. MEMBERS: "The hon. Gentleman did."] I did not. What I said was that the picket line had authority. The authority comes out of the loyalty of the trade unionists or out of the power of the union to withdraw the card of any member who violates the picket line. That is all.
The Prime Minister: I think that if the right hon. and learned Member for Surrey, East (Sir G. Howe) studies what I said—we must not get this wrong, nor must we try to make points that are not relevant—he will agree that I certainly did not endorse any suggestion of the kind alleged. As my hon. Friend the Member for York (Mr. Lyon) says, he did not intend to make such a suggestion, nor do I believe that he did make it. The right hon. and learned Gentleman knows the law as well as I do.
There is no need for any dispute about this, and I am happy to repeat that there is no right of a picket to stop anyone. It is at the decision of the person who is approaching the picket line, as the statement says in two places. It refers on the first page to those drivers who are approaching a picket line and on the second page it says:
"Members of the union … should indicate where they stop at the request of pickets".
They themselves decide to stop, at the request of pickets. As I understand it, that is what the law of picketing is about, and always has been. There is no need for false differences over this issue.
Mr. Cryer: Will my right hon. Friend confirm and make clear whether he has received any evidence of a tacit or explicit conspiracy between the Tory Party
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and the Road Haulage Association deliberately to prolong the strike so that the Tories can make the maximum political advantage, as they think, as they did in their party political broadcast last night?
The Prime Minister: No, Sir. I have received no evidence of that sort.
Mr. Gordon Wilson: On a point of order, Mr. Speaker. I raise this point of order with some deference to you. One of my hon. Friends was trying to put a Question to the Prime Minister and failed to do so. I recognise that it is your right to choose hon. Members to ask questions, but this failure puts those who represent Scottish constituencies in some difficulty, for the following reason. The next statement will be made by the Home Secretary, who has no responsibility whatever for Scottish affairs, and I doubt whether he will be able to add any comment about the emergency in Scotland. In those circumstances, what can Scottish hon. Members do if the Prime Minister cannot answer their questions?
Mr. Speaker: I think that the whole House is aware that I lean over backwards to make sure that minority party interests are heard. The Scottish National Party can have no complaint against me.
Secondly, when so many right hon. and hon. Members are seeking to ask a question, it is impossible to watch, on a regional basis, who is called.
Mr. Wilson: Further to that point of order, Mr. Speaker. I rise again with humility and deference. As you will know, the SNP has not been very audible in relation to selection or otherwise in recent weeks. We on the SNP Bench do not have the opportunity of putting any questions to the Secretary of State for Scotland, because the right hon. Gentleman, who represents a national area of the United Kingdom, has not come forward with a statement of the position in Scotland and the way in which people are affected by the strike.
Mr. Speaker: I understand that the Secretary of State for Wales also will not make a statement. It is the Home Secretary who will be making the statement.
Mr. Tebbit: Further to that point of order, Mr. Speaker. You do yourself an

1969
injustice. It will be within the recollection of the House, even if it has slipped your mind, that you called the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel), who is the best of our belief is a Scottish Member.
Mr. Speaker: I am much obliged to the hon. Gentleman.

ESSENTIAL SUPPLIES AND SERVICES
The Secretary of State for the Home Department (Mr. Merlyn Rees): With permission, Mr. Speaker, I will report to to the House on developments in the arrangements for ensuring that essential supplies and services are maintained.
As the House knows, the broad picture has been one of some deterioration in the last day or so in the supply situation, though the extent of this varies from region to region.
Food shortages are becoming more marked all over the country, more so in some regions than others. There has been some improvement in supplies of salt, but in some areas there are difficulties in the supply of some basic manufactured foodstuffs, such as sugar and margarine.
As to animal feedingstuffs, there has been or is expected to be some improvement in Humberside and in Wales, though the situation at Hull remains critical. The general situation is still, however, one of growing shortage.
On the health side, there are reports of difficulties in supply to hospitals as a result of production disruptions at suppliers.
Looking at industry as a whole, layoffs have increased in some degree. Many industries and firms face problems in the supply of raw materials and in the storage of stocks of products, which are not being moved out to customers.
Many of these problems are the result of secondary picketing. Picketing is not being confined to drivers and vehicles in the hire and reward section of the industry, and it is interfering with the movement of essential supplies and services covered by the list of priorities that we have agreed with the unions concerned. I have had reports from chief officers of police about the conduct of the picketing. On the whole it remains peaceful, but there are beginning to be some exceptions to that, and there have in some instances been signs of intimidation.
The police, as always, will carry out their responsibilities under the law. But the need is to confine the picketing in accordance with the code of practice described by my right hon. Friend the

1971
Prime Minister. Arrangements have been made, under my direction, for Government officials and senior officials of the Transport and General Workers' Union to meet, so that any problems relating to priority supplies or extension of the dispute to unauthorised areas that are reported to the Government from the regions can be taken up forthwith with union officials. Monitoring meetings will be held daily, and the Government and the union officials will maintain continuing contacts.
The implementation of the code of practice on picketing to be issued by the Transport and General Workers' Union and the monitoring arrangements that I have described to the House would lead to an early and marked improvement in the movement of essential supplies and services all over the country. As my right hon. Friend has said, the Government believe that the balance of advantage lies in those voluntary measures to control the dispute and maintain priority supplies rather than in the Government's introducing direct emergency action. But we continue to be ready to call on the assistance of the Services or to proclaim a state of emergency if need be, and the necessary contingency plans for this are at a very high state of readiness.
As for the unofficial dispute in the London ambulance service, my right hon. Friend the Secretary of State for Defence and I have already made contingency plans for emergency arrangements to be provided by the Services, if this should prove necessary.
On the question of water, in the Pennine division the North-West water authority is maintaining piped water supplies to the vast majority of the population with industry. Of 350,000 households in the division, about 2,200 are without piped water owing to burst mains that have not been repaired. Most of these are scattered across the division in small groups. No one is without access to water. Standpipes have been erected for all except a few properties. Elsewhere, people are able to go to neighbours down the street. Sewage is a difficult matter. Nearly all sewage treatment plants are fully working, but it has been necessary to divert into the river parts of the flow at Bolton. Water flow in the river is reducing the effects of pollution.
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Negotiations on pay in the water industry are taking place today and we must await the outcome. However, I can assure the House that there are contingency arrangements to help the North-West water authority at short notice.
Mr. Whitelaw: Does the right hon. Gentleman recollect that on Monday he said:
"We are not near a crisis"?—[Official Report, 15th January 1979; Vol. 960, c. 1328.]
Surely his statement today and that of his right hon. Friend, and everything that is happening in this country, must convince even him that we now are. He will also remember that on Monday, on behalf of the Opposition, I promised full cooperation to the Government in any measures that they undertook to maintain essential supplies. Does the right hon. Gentleman not equally have to admit today the harsh reality that his own statement shows that the Government have not succeeded in carrying out their duty of maintaining essential supplies? Feedingstuffs are still not getting through as they should, there are mounting lay-offs, and the result is that in failing to maintain essential supplies the Government have actually failed the nation.
Will the Home Secretary now make clear his position in respect of chief constables of police? Has he issued any advice to them? If not, why not? In view of the arrangements that have been made about picketing with the Transport and General Workers' Union, should not the chief officers of police be advised by the Home Secretary exactly what those arrangements are?
Next, if he believes that the best way of proceeding—which is a very dubious way—is by these monitoring meetings, will he at least be prepared to make sure that the police are associated with those monitoring meetings and know what is going on and what is being arranged?
Next, in reference to the water situation, is it not pretty poor comfort to people in the areas concerned to be told that they are able to go to their neighbours down the street, in some of the weather we are having at the present time, in order to obtain water?
Lastly, is it not very eloquent testimony to the mounting chaos that we have today that a statement on maintaining essential services in industrial disputes

1973
makes no reference at all to the national rail strike today?
In these circumstances, will the Home Secretary undertake in all these matters to make a further statement to the House tomorrow?
Mr. Rees: I shall deal first with the matter of the police. I am glad that the right hon. Gentleman has raised it, because I can refer to what the right hon. Member for Finchley (Mrs. Thatcher) said earlier, since I have checked on the point that she made.
Mr. Michael Morris: Get on with it.
Mr. Rees: That is just what I am going to do. It is rather complicated, so perhaps hon. Gentlemen will listen.
Mr. Morris: It is a quite simple matter; there is no need to draw a diagram.
Mr. Rees: The point at issue is that I do not have powers to instruct the police. The right hon. Lady did not know that. The right hon. Lady then, and the right hon. Gentleman now, said that I could advise the police, so I checked on the occasion referred to. The right hon. Lady talked about a circular. There was no circular. All that happened was that the Secretary of State of the day met some Labour Members of Parliament during the miners' strike. They said "Why do not the police locally get together with the officials?" A telex went down the line saying that the Labour Members of Parliament advised that there should be co-operation locally. There was no circular; there was no advice. I am quite prepared to spell that out. The right hon. Lady and the right hon. Gentleman have got it wrong.
All I propose to do is to advise down the line of the existence of the debate in the House today and what the right hon. Gentleman said. I cannot tell them what to do; in no way can that be done. There was no circular in the way the right hon. Lady suggested in the House the other day, and I have a letter here spelling it out.
With regard to the reality of the situation, I have no contingency arrangements that I want to deal with with regard to a railway strike. If right hon. and hon. Gentlemen will think about it, the judgment I have to make when I advise
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my colleagues, as I did a week or two ago when I was responsible for the oil position, concerns putting in soldiers with the vehicles that they have—and it would not necessarily mean a state of emergency because in the first instance they would use their own vehicles and a state of emergency would not be necessary for that. The judgment I have come to quite clearly is that the amount that could be supplied by the Army in the current situation would be less than is being supplied at the moment, and it would be the height of folly to have a state of emergency if as a result one supplied less than is being supplied now. I stick by that fact: the facts of the matter are quite clear.
With regard to the comments about a crisis situation, we are in a very grave situation. It is not universal in the country. The situation in the South-West, for example, has improved, I am advised. Therefore, what I am arguing against is the idea that the country is on its knees. It is not. There is a very serious and grave situation, but the argument that we have been brought to our knees is extremely silly.
Mr. Frank R. White: I am grateful to my right hon. Friend the Home Secretary for his comments relating to the North-West water situation. I should also like to acknowledge the efforts of the chairman of the North-West water authority and the union officials to try to bring about a speedy settlement and to ensure the maintenance of services. But would not the Home Secretary agree with me that it is not sufficient to say to my constituency that the action is unofficial and expect that to be accepted as some kind of panacea for all our problems?
Does my right hon. Friend agree that good, clean water is a condition of efficient public health, and that great concern exists when those in the community, especially the young, the elderly and people in hospital, have to consume or use water that people would think twice about before putting down for pigs? If the dispute continues after today's negotiations, does he agree that urgent action will have to be taken by the Government to ensure public health standards? Is he aware that no one, least of all those in the House of Commons, would be excused from criticism if typhoid were to break out?
Mr. Rees: I agree with everything that my hon. Friend says. My responsibility is in aid of the civil power. The arrangements are ready to be set in train. It is for the water authority to make the request, and when it does the Services will move in to provide what is necessary for essential supplies.
Mr. Cyril Smith: Is the Home Secretary aware that my constituents will welcome the part of his statement that deals with the Pennine water authority, if only for the reason that it is the first statement that the Goverment have made about the water industry in my area? Some of us find it disgusting that the first Government statement is made nearly eight days after consumers have been advised that before they touch one drop of water they should boil it. Is the right hon. Gentleman aware that thousands of homes have no water?
For how long does he propose to wait before setting in motion the contingency arrangements to which he has referred? Secondly, is he as concerned about the quality of water, to which his statement does not refer, as he is about the supply of water, to which his statement does refer? What action does he propose to take to ensure that the water that is being supplied is pure water which people may drink with confidence?
Mr. Rees: The method is important. I with my right hon. Friend the Prime Minister have been ready for a number of days. The contingency plans are ready. I have no power to order in the soldiers. I have no powers to tell them to go into the hon. Gentleman's area. They have to be asked in, and the judgment of those concerned was that they did not want the soldiers in yet. There would be problems. If the soldiers go in, we shall need the co-operation of some of the water authority's personnel who know their way round. When soldiers go into that area, they will need to be guided. Some of the supervisory staff will be needed to help in those circumstances. Opposition Members are laughing at the advice that the Army has given.
Mr. Corbett: May I ask my right hon. Friend to add calor gas supplies to the list of priority supplies, bearing in mind that many people in rural areas of my constituency and in other parts of the
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country rely solely on calor gas for cooking and part of their heating?
Mr. Rees: That is a matter that has been discussed since the original code. If my hon. Friend has in mind his area, perhaps he will let me know the facts.
Mr. Peyton: As the right hon. Gentleman's statement refers to difficulties concerned with food supplies both for human beings and for animals, will he consider making arrangements for his right hon. Friend the Minister of Agriculture, Fisheries and Food to put in an appearance on Monday to give some details of the situation?
Mr. Rees: I shall pass on the right hon. Gentleman's remarks to my right hon. Friend, who has been concerned every day and night with these matters.
Mr. Peyton: Nobody is doubting the concern of the Minister of Agriculture, Fisheries and Food. We should like him to give some details.
Mr. Skinner: Does my right hon. Friend agree that there are two common threads running through the whole of these industrial disputes? One thread is the fact that these workers, whom many people did not care tuppence about for ages, have now seemingly turned out to be extremely important and necessary to the nation's lifeblood. Secondly, they are, in the main, low-paid workers. Is my right hon. Friend aware that the so-called imbalance of power, with a shift towards the unions, has meant that lorry drivers are still on £52 a week—they are striving to get a bit more—and that 1 million public sector workers will be on strike on Monday, some of whom are receiving less than £40 a week take-home pay? However, the Tory press and the Tories are commiserating this morning because Michael Edwardes, the British Leyland chairman, cannot manage on £100,000 a year.
Mr. Rees: Who is essential to the community? There has been discussion about that recently. Those who are essential are not only people who are on strike. I think that the right hon. Lady the Leader of the Opposition said that those who are essential could go on strike and bring the country to its knees. There are small groups in that position throughout the country. At the end of the day the right

1977
hon. Lady would find that she would be giving higher wages to not a small group but an extremely large group. Over the past 20 years and beyond, and certainly in recent years, one of the problems about payment for the lower paid that has applied within the trade union movement is that some in that movement say "Yes, pay extra to the lower paid, but we want the extra as well." That is a great difficulty in operating a pay policy.
Mr. Buchanan-Smith: Will the right hon. Gentleman acknowledge that one area of supply vital to the British economy that he has not mentioned is that of supplies to the North Sea oil industry? Is he aware that there have been repeated warnings to the Department of Energy both last week and this week that supplies of vital fluids, such as those for the servicing of blow-out prevention equipment, are not getting through? In these circumstances, there is a risk not only to human life but of pollution in the North Sea on a scale that has never been seen before. The Department of Energy is doing nothing. Will the right hon. Gentleman do something about it?
Mr. Rees: The hon. Gentleman has referred to one problem in the North Sea. There are other problems. My right hon. Friend the Secretary of State for Scotland is involved—
Mr. Buchanan-Smith: Where is he?
Mr. Rees: We are aware of the problem. We have been discussing the problem and obviously steps will be taken to deal with it. It is a matter not only of doing something about it but of discussing it in the Aberdeen area.
Mr. Noble: Is my right hon. Friend aware that the dispute in the Pennine area of the North-West water authority is only partially caused by pay, and arises especially from the deep-seated grievance of employees that has grown over the five years since the gang on the Opposition Benches reorganised the water industry? Is he further aware that inflammatory actions and words at this stage, and the movement of the Army, would only exacerbate the feelings of the men, who feel isolated from their union and from the management.
Mr. Cyril Smith: What about the consumer for a change?
Mr. Noble: I shall come to that. The men are affected as well. Will my right hon. Friend join with the Minister of State, Department of the Environment in ensuring that a full inquiry takes place into the conditions of those who are engaged in the dispute so that we may get the men back to work, provide better employment for them and, as a result, provide a better service for the consumer?
Mr. Rees: I shall pass that on to the Minister concerned. My hon. Friend is absolutely right. I have one view on the need to bring in the soldiers, but there are others with different views who believe that the dispute would spread. We ought to be careful about what we say.
Mr. Mayhew: Does not the Home Secretary agree that his freedom to act in the interests of the nation is gravely restrained because in the House there are 21 right hon. and hon. Gentlemen who are members of the Transport and General Workers' Union and who are all members of his party? Seven are members of the Government and two are members of the Cabinet.
Mr. Rees: The hon. and learned Gentleman should be on the "Dick Barton" show.
Mr. Ioan Evans: Does my right hon. Friend realise that there are 2 million members of the Transport and General Workers' Union in this country, so there certainly should be some members in this House? There is great resentment at the orchestrated attack on 11 million trade unionists and their families, particularly the TGWU workers.
Does my right hon. Friend recall that in the recent petrol tanker drivers' dispute he was receiving demands from the Opposition to declare a state of emergency? The Government were right and the Opposition wrong in that case. Whilst we on this side of the House recognise that there might need to be a state of emergency, we hope that we can settle the matter without that. We continue to seek co-operation with the trade union movement and not the confrontation that the Tory leader and her party want at present.
Mr. Rees: With regard to oil, I repeat that we had co-operation from the Transport and General Workers' Union and, indeed, very importantly, from the oil companies. Although we were asked

1979
to bring in the Army and declare a state of emergency in that dispute, it would have been a waste of time. We were right then. In the present situation, it is too early to make a judgment because the dispute is nowhere near finished.
Several Hon. Members rose—
Mr. Speaker: I appeal to hon. Members to ask as brief questions as they can rather than to advance arguments.
Mr. Maxwell-Hyslop: In view of the Prime Minister's categoric statement that no picket has any right to stop any vehicle, will the Home Secretary embody that in a circular to all chief constables tonight so that they enforce the law? This has not been happening outside Avon docks.
Mr. Rees: I shall ensure that the hon. Gentleman's view as to the role of the police at Avon docks is passed on. As to advising the police, when an Act is passed in this House it is brought to the notice of the police in the form of a circular.
The day before yesterday, I discussed the situation in the London area with the Metropolitan Police Commissioner. He gave me an example which illustrates the problem. He knows the law and does not need to be advised on it. He told me of an industrial estate on the east side of London where a policeman reported that a vehicle came along and was flagged down by the pickets, who were official pickets. They had a word and the vehicle turned round and went back. There was nothing wrong in that. There was no violence or intimidation used. It is not the job of the policeman to make a judgment on that when it is done peacefully. That is the law of picketing.
Mr. Molloy: My right hon. Friend referred to the possibility of contingency plans which might be required in the Greater London area because of the ambulance drivers' dispute. May I remind him, as I did his right hon. Friend the Secretary of State for Social Services, that the official policy of the four major trade unions involved is for them to provide, with their colleagues, proper cover or the Greater London area, although that might not be possible in some parts of London?
1980
My right hon. Friend mentioned that he has contingency plans. Will he be prepared to discuss the possibility of using these plans with the executives and officers of the trade unions involved, who, I feel sure, will be glad to co-operate in them?
Mr. Rees: We will be happy to do that and this is a matter for my right hon. Friend the Secretary of State for Social Services. It will have to be done, and I think that that is the best way of doing it.
Mr. Crouch: Does the Home Secretary realise that when he described the situation that has developed in this country many of us felt that he was describing the need for an immediate declaration of a state of emergency? I, too, have been making investigations this morning, from a large feedingstuffs manufacturer in my constituency. I learned that the machinery for making an arbitrary judgment on the picket line on whether to issue a dispensation certificate is not working efficiently. A certificate issued in Canterbury is not accepted at Tilbury docks or across the estuary in Essex. Surely the Secretary of State and the Prime Minister should again go back to Moss Evans and ask him whether he can control the situation effectively. The system does not seem to be working efficiently.
Mr. Rees: I have checked on all occasions when a state of emergency has taken place over the past 16 years, and states of emergency were used far more by the Conservatives. In the column "Action Taken", it says "nil". When I inquired why it was done, I was told that it was for cosmetic effect and that the Tory Party believed in cosmetics. We are not prepared to deal with this in a cosmetic way. I shall bring the hon. Gentleman's point to the notice of the emergency committee.
Mr. Litterick: Does the Home Secretary agree that for over 100 years the law has given working men and women the right to picket in furtherance of an industrial dispute, but that the physical assaults on pickets widely reported in the press are a violation of that right? Secondly, will he look at an article in the Daily Express on Tuesday, which can only be construed as an incitement to violence?

1981
Will he bring it to the attention of the Attorney-General? There is a danger that the press, in its anxiety to make a party cause, will create civil disorder and cause bloodshed.
Mr. Rees: I shall certainly bring it to the notice of my right hon. Friend, Physical assaults and intimidation are against the law. That is absolutely clear. The chief constables have reported to me that to a large degree, unlike the position in the strikes four years ago, there is very little physical violence. Where it does take place, it is illegal.
Mr. Onslow: Having listened to the Prime Minister and the Home Secretary, I think that most people must have grave doubts as to the effect of the voluntary code. Has the Home Secretary nothing to say about what will happen if unofficial secondary picketing continues, when drivers are obliged to turn back either because of intimidation or fear of the consequences if they do not obey the pickets? Will there be any follow-up by the police to question the drivers and find out why they turned back, or is the Home Secretary content to see the matter dealt with in the way that the pickets outside Cadbury-Schweppes were swept away by the girls inside?
Mr. Rees: I read about that occurrence; it may happen in a number of places. The pickets must take that into account. The other problem is that, with the police being scattered around, intimidation may take place on pickets when there is no policeman present. The police cannot cover every eventuality. Where there is intimidation, it is illegal, wrong and against the best traditions of the trade union movement.
Mr. Ashton: Is my right hon. Friend aware that much of the problem is still being caused by panic buying in shops? [Hon. Members: "Rubbish."] Is he aware that night after night on television the leaders of the supermarket chains tell housewives that certain commodities will be in short supply within a few days? Many of them are making great profits out of creating shortages and encouraging housewives to buy everything. Will my right hon. Friend ask for a little more responsibility on television to stop this sort of panic being created by people with a vested interest?
Mr. Rees: There is no doubt that this is one aspect of the problem, but it is by no means the major aspect. It has been reported to me that panic buying—people buying more than they normally would—undoubtedly plays a part in our troubles. When people hear on television lists of things that may be in short supply, they are influenced. But it is not a major aspect of the situation.
Mr. Haselhurst: Does not the Home Secretary realise that the country is disinclined to believe that assurances extracted from Mr. Moss Evans represent the most that might be done in the present situation in order to bring it under effective control? With people thinking like that, there is a danger that they may decide, as increasing numbers of them are laid off, to take the law into their own hands.
Mr. Rees: The figures that were given for lay-offs in the press last weekend were wrong. That is not to say that there are no lay-offs. I am prepared to give the estimates that I have from the regions. We must face up to one essential fact. There are large numbers of vehicles in the complicated distributive trade in this country which do not just go down the motorway and turn round and come back again. If we bring in the Army, we shall not be able to do more than deal with the essentials of life. It is wrong for people who might quite properly believe that not enough is being done to think otherwise. The same thing happened in Northern Ireland when my right hon. Friend asked for a state of emergency to be declared there. Northern Ireland had no petrol. The following day people were complaining that the petrol was not available to them because, in the same terms there as here, it was reserved for essentials only. I do not want to see a state of emergency declared or the Army used. There is no need for it yet.
Mr. Andrew MacKay: Is the Home Secretary aware that the TGWU pickets outside the Cadbury-Schweppes factory in Birmingham, only three hours ago on local radio, said quite bluntly that they would play no part in the voluntary code of practice? Against the advice of their regional trade union organiser, they said that they would continue secondary picketing. Does not this mean that the

1983
trade union leaders have lost control of their militants, and does not this put the ball right back in the Government's court?
Mr. Rees: I understand that the new arrangements were issued at 3 p.m., so that the pickets in Birmingham obviously knew about things that had not then left London. It is up to the Transport and General Workers' Union to see to it.
Sir David Renton: Will the Home Secretary confirm that it is perfectly lawful for people whose jobs are threatened by lorries not being able to get through to their factories with raw materials to picket the pickets? Would not a lot of this trouble be stopped if the pickets were picketed peacefully in this way?
Mr. Rees: It would certainly not be against the law. It is not for me to give a judgment of what should be done, but certainly if it is done peacefully it will not be unlawful.
Mr. Shepherd: Does the Home Secretary appreciate that the statement he has just made, together with that of the Prime Minister, is less than satisfactory in that it makes no reference to a time scale for the introduction of this discretionary code of conduct? Will he enlarge upon this and ask the Prime Minister to ask Mr. Moss Evans, as a demonstration of his good intent, to have every secondary picket in the land off the streets by 8 a.m. tomorrow so that feedingstuffs and raw materials can start to move, and exports can catch deadlines?
Mr. Rees: If a trade union could be run in that way, it would not be a voluntary organisation and it would also remove one of the important elements in local organisation. That cannot possibly be done.
Mr. Ian Lloyd: The Prime Minister and the Home Secretary have described to the House in modest and restrained terms, which we respect, the definition of the public interest and aspects of their policy to uphold it, which many of us find totally unconvincing. Many people in the country will also find it unconvincing. Has the Prime Minister addressed himself to the possibility that, when the people of this country find that the definition of their interests in unconvincing and that the Government are unwilling or unable to uphold it, they will seek to uphold their
1984
Interests themselves? In that contingency, will these people enjoy the same immunities as those enjoyed by trade unionists and secondary pickets?
Mr. Rees: The hon. Member is a great supporter of illegality in Rhodesia, and now he is doing the same thing here.
Mr. Burden: Will the Home Secretary agree that the Government were greatly influenced over the declaration of a state of emergency by the meeting last night with Mr. Moss Evans and the hope that the code of practice which he agreed to produce would bring about an improvement in the situation? Is it not a fact that we have been bedevilled by unofficial strikes recently over which the trade union leaders have been unable to exercise control? Therefore, is it not a pious hope that they will be able to stop this secondary picketing? Will the Home Secretary ensure that one of his staff goes to London Broadcasting this afternoon and gets a report of a statement by a man picketing London docks who claimed that the picketing would be intensified and all movement would be stopped?
Mr. Rees: If that is what has been said, it shows the great difficulties in getting this voluntary policy through. On the question of the state of emergency, of course what was said was important, but the judgment that we had to take in the oil tanker dispute and again now involved the practical result of bringing in the Army at this stage.
Mr. Johnson Smith: Is the Home Secretary aware that, despite assurances given in the past few days, feedingstuffs are not getting through? What value are we supposed to place on the reassurances given in the past? And what value does the Home Secretary put on reassurances that he must have been given in the past few hours?
Mr. Rees: I know of the problem of feedingstuffs and I know that in a number of cases reported to me feedingstuffs have been allowed through as a result of discussions between our regional committee and the regional secretary of the TGWU. In the discussions that took place nationally with the TGWU today, the problem of Hull was raised, as was the problem of edible fats and the serious difficulties about animal feedingstuffs, particularly in the North-West. The latter

1985
could result in the slaughter of pigs and poultry. I know that in the last week, as a result of the discussions, there has been some improvement when matters have been brought to the union's notice.
Mr. Sainsbury: Does the Home Secretary recognise that the buying of excessive quantities by shoppers has made only a very minor contribution to the shortages of foodstuffs in the shops? It is the generally agreed view of those responsible for food manufacture and distribution that shortages are almost entirely attributable to secondary picketing, and in some cases to the illegal actions of secondary pickets which have been carried out in clear breach of previous agreements. Will the Home Secretary assure the House that, in view of the deteriorating situation, either he or one of his right hon. Friends will report to the House tomorrow on the food supply position and, if it has not improved, tell us what action he intends to take?
Mr. Rees: The hon. Gentleman repeated what I said to my hon. Friend the Member for Bassetlaw (Mr. Ashton), that panic buying is only a small part of the problem. He spoke about secondary picketing being illegal [HON. MEMBERS: "He did not"] Very well. If he did not, I will not pursue that point. But there is no doubt that secondary picketing —which is a very general description of what goes on—is the major cause of our problems.
Several Hon. Members rose—
Mr. Speaker: Order. I propose to call two more hon. Members before I call the right hon. Member for Penrith and The Border (Mr. Whitelaw).
Mr. Gow: Since the Home Secretary has told us that the major cause of our difficulties is secondary picketing, will he also give an undertaking to the House, in the clearest terms, that if, as we all fear, the new voluntary code of conduct does not turn out to be effective, he will come back to the House to propose legislation of the sort suggested by my right hon. Friend.
Mr. Rees: When one is defining secondary picketing, we should remember that it is not just a simple happening. This sort of picketing happens in a variety
1986
of ways. If, at the end of the day, the House were to turn to legislation—I can only give my view of it—unless that legislation were to be generally accepted it would be an inferior way of dealing with the situation compared with the voluntary agreement which we are endeavouring to put into effect. Legislation was tried in the 1970s—in different aspects maybe—but I think that the House would be very foolish to turn to legislation in this respect.
Mr. Hastings: Is the Home Secretary aware that there are several thousand people in this country who suffer from severe kidney diseases—there are at least six in my constituency—all of whom depend for life upon dialysis? This, in turn, depends on a constant supply of clean water, and if this water is denied them for about a week they face imminent death. What specific proposal have the Government to deal with this problem? If the threat to such innocent sufferers is not a national emergency, in Heaven's name what is?
Mr. Rees: I take it that the hon. Gentleman refers not to certain pharmaceutical products, which have been looked at, but to fresh water. I have discussed the problem with the Secretary of State for Social Services and I do not have the slightest doubt that where any union is concerned something will be done about that. If the hon. Member has particular people in mind, perhaps he will let me know.
Mr. Whitelaw: Quite understandably, the right hon. Gentleman has missed one of the questions that I asked. I therefore repeat it as I believe that it has some importance. In view of the very widespread anxiety on both sides of the House, will he undertake to make another statement to the House tomorrow on the developing situation?
Mr. Rees: Certainly a ministerial statement on one aspect of the situation will be made. Perhaps I should explain to the House that my responsibility on a co-ordinating basis is for contingency arrangements. I understand—and we have given some thought to this—that on the agricultural, transport and industrial sides there are details which do not come within my remit. We have that in mind and, of course, we will take the appropriate steps. but I hope that the House

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will understand my precise responsibilities.
Mr. Ian Lloyd: On a point of order. Mr. Speaker. A moment ago when I was putting a question to the Home Secretary arising from the situation in which large numbers of people in this country might be persuaded, ill advisedly, to break the law, the right hon. Gentleman replied that I had advocated or supported illegality in Rhodesia. I have never done so, and I challenge him to produce one shred of evidence, written, spoken or otherwise, or to withdraw his totally unworthy statement.
Mr. Rees: In my time in this House I have thought that the hon. Gentleman was on the side of those in Rhodesia who are not looking to the future. If he tells me that he is against illegality—and that is my only point—I willingly withdraw my statement.
Mr. Maxwell-Hyslop: On a point of Order, Mr. Speaker. Earlier, a Scottish Member asked why the Secretary of State for Scotland was not here and you, Mr. Speaker, replied that the Secretary of State for Wales was not here either. The point I want to raise with you is whether the Secretary of State for the Home Department has certain responsibilities to this House which cover not only England but Wales, but which do not cover Scotland, and that the Secretary of State for Scotland has responsibilities in the area of law and order which are not covered by the Home Secretary. May I ask therefore that, when crucial statements are being made in a very serious situation, the Home Secretary should make clear whether he is speaking only of England and Wales, and whether the Secretary of State for Scotland will come to the House as well? This is a matter of more than technical importance.
Mr. Speaker: I am much obliged to the hon. Gentleman. May I say that I am glad to see a member of the Scottish National Party here because I can say to him that I realise that what I said earlier, in a very crowded and excited House, about the Secretary of State for Wales not being here was incorrect. Of course, the position is, as the hon. Member for Tiverton (Mr. Maxwell-Hyslop) has said, that the Secretary of State for Scotland has functions not covered by the Home Secretary.
The Prime Minister (Mr. James Calaghan): On a point of order, Mr. Speaker. I am sure that you do not mean to cast any imputation upon the absence of my right hon. Friends the Secretaries of State for Scotland and Wales. Let me make clear to the hon. Member for Tiverton (Mr. Maxwell-Hyslop) that under my direction the Home Secretary is coordinating, as makes sense, contingency plans for the whole of the United Kingdom.
Mr. Speaker: I must make clear to the Prime Minister that I was not casting any reflection on the Ministers. I was trying to explain that I had made a mistake. Everyone seems to he hypersensitive this afternoon.
Mr. John Page: On a point of order, Mr. Speaker. The Secretary of State for Social Services informed us that there is a possibility that on Monday the whole of London may not be covered by the London ambulance service, and that discussions will be taking place tomorrow morning at his Department between the ambulance service and himself. If those talks break down, would it be possible for a statement to be made at the end of tomorrow afternoon, say, at 4 p.m. or 4.30 p.m., by the Secretary of State so that we know what contingency arrangements can be made to cover this potentially dangerous situation in London?
Mr. Speaker: It depends what requests come in. We should have to look at a change in our normal rule. On Fridays, the time belongs to other people.

BOMB INCIDENTS
The Secretary of State for the Home Department (Mr. Merlyn Rees): With permission, I wish to make a statement. At 10.40 p.m. last night a bomb exploded at a Texaco oil terminal on Canvey Island, producing an 18-in diameter hole in a tank containing aviation fuel. The fuel escaped from the tank into a safety moat and did not catch fire. The Essex police had received no advance warning that a bomb had been planted.
At midnight a caller told the Press Association that the Provisional IRA had planted a bomb on Canvey Island and another bomb in the Blackwall tunnel,

1989
both of which were to explode at midnight. This message was passed immediately to the Essex police and the Metropolitan Police, but the explosion at Canvey Island had already taken place. The Metropolitan Police searched the Black-wall tunnel, and while they were doing so, at 12.40 a.m., a bomb exploded at a gasholder near the south exit of the tunnel, causing an explosion and fire. At 1.30 a.m. a second gasholder caught fire. By 3.15 a.m. both fires had been extinguished, and a secondary fire at 4.15 a.m. was quickly dealt with.
There were no injuries as a result of these explosions. In addition to the two bombs that exploded, a further explosive device was discovered yesterday lying partly covered at the side of the M6 in Leicestershire. Army bomb disposal experts were called and safely defused the device. The police are carrying out detailed investigations into all these incidents. The debris from the bomb that exploded and the unexploded device will be carefully examined for any evidence that may help the police to trace those responsible for these and the earlier incidents. It was fortunate that no one was killed or injured by these explosions, but their potential danger cannot be overstated. No estimate has yet been made of the damage caused to property.
I am sure that the House will join me in condemning these attacks and will support the Government in their determination not to be swayed by such methods. The vigilance of the public and co-operation with the police are of the utmost importance as the threat of further attacks remains high.
Mr. Whitelaw: Is the right hon. Gentleman aware that, whatever criticisms we may have made of his last statement, we well recognise the extra strains placed on him at this time when such a problem arises? On this statement we entirely support what he said. What has happened is clearly a new development and, like all new developments in this area, it requires careful security on all sides, careful action by the police and the fullest possible co-operation between the police and the public. Of course, I join the right hon. Gentleman in condemning such attacks. He and I have both had experi-
1990
ence of condemning such attacks over, alas, far too long a period.
Mr. Rees: I am grateful to the right hon. Gentleman. He and I know that the police can operate only on information. Their success is not due to luck. They gain successes from little bits of information that may seem unimportant when they first come in. Fortunately, we have not been in the same position as the people of Northern Ireland, who know the importance of vigilance, but I hope that the people of this country will appreciate that it is important for them to cooperate with the police.
Dr. McDonald: Is my right hon. Friend aware that I share his concern about these incidents and that Thurrock, which is a neighbour of Canvey Island and which experienced great fear last night, suffers equally from the dangers of such an explosion, since there are two oil refineries, power stations and oil depots intermingled with housing in one part of the Thurrock constituency? Will my right hon. Friend ensure that all possible support is given to the Essex police in their attempts to deal with further threats, and direct their attention to the dangers that exist in Thurrock as well as on Canvey Island?
Mr. Rees: It is quite proper for my hon. Friend to raise these matters, but the Essex police are fully aware of them and were involved in IRA matters earlier this week. It will be of interest to my hon. Friend and the hon. Member for Essex, South-East (Sir B. Braine) to know that I have checked with the Department of Energy and am told that it has warned all the oil and gas industries in the country to take special precautions against further attacks. Warnings have also gone out to other fuel industries to be especially on the alert. I emphasise that that is most important.
Sir Bernard Braine: Is the right hon. Gentleman aware that while, mercifully, the Canvey bomb did not kill anyone, this terrifying incident followed closely on the tanker explosion in Bantry Bay and that the tanker was similar to those that dock at Canvey and Thurrock almost every day? Is he further aware that at Flixborough, Aberfan and Bantry Bay disaster and death stemmed from a single neglected source, and that at Canvey

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Island there is a multiplicity of risks, each compounding the others and all close to a large residential population?
In view of the repeated warnings that I have given the Government on this issue, and on which we are still awaiting action, will the Home Secretary now heed my words and give three undertakings here and now? First, will he ensure that the appalling lack of security at all these installations, not just in Canvey but in Thurrock, is remedied forthwith?
Secondly, the Health and Safety Executive investigation into the safety of Canvey Island was incomplete, as the Executive has admitted, and gave no thought to sabotage. Will the right hon. Gentleman ensure that the HSE is instructed to look at the problem again and to come up with realistic recommendations this time? Thirdly, will the Government give urgent consideration to removing as quickly as possible the gas methane terminal, which is the major hazard to my constituents?
Mr. Rees: The last two points are not my responsibility, and it would be better if I put them to my right hon. Friend who has a direct responsibility for those matters. It will reassure the House if I tell the hon. Gentleman that the HSE has sought information about the explosion at Bantry Bay in order to judge its relevance in the wider scene. On the security aspect of all the oil and gas installations in various parts of the country, it would be better not to talk about the problem in the full public gaze because, as the right hon. Member for Penrith and The Border (Mr. Whitelaw) knows, the more one talks publicly about these matters the more one gives ideas to certain people. However, I shall be happy to discuss the matter with the hon. Member for Essex, South-East (Sir B. Braine).
Mr. Edward Lyons: Is it not an interesting aspect of the explosion at Canvey Island that it took place one hour and 20 minutes before the telephone warning was given to the Press Association? Does that not expose the callous unconcern of the IRA for human life?
Mr. Rees: When one considers what has happened over the years, one finds that the words of my hon. and learned Friend are an understatement.
Mr. Powell: In these circumstances, if they are to continue, will the right hon. Gentleman be careful, as far as possible, to avoid, and to advise others to avoid, giving unnecessary publicity to claims and statements purporting to emanate from the Provisional IRA, since that publicity is the main object at which the terrorist aims?
Mr. Rees: The right hon. Gentleman is absolutely right. Publicity is what is required by the terrorists, and the more that their actions are given publicity—I understand why they are—the more they believe that they have been successful.
Mr. Alan Lee Williams: Does my right hon. Friend appreciate that there is public anxiety about fire coverage on the lower reaches of the Thames? Will he agree to have urgent discussions with the Port of London Authority about this aspect, as it is causing considerable concern.
Mr. Rees: I shall do that in so far as it is my responsibility, and where it is not I shall see that it is pressed in the right quarter.
Mr. Hooson: Is the Home Secretary aware that Liberal Members appreciate the additional burden that is placed upon him and the police at this juncture when we have a number of industrial disputes taking place at the same time? We echo entirely his sentiments about the importance of public and police vigilance, but three bombs were planted without anyone being aware of them. Is it not necessary to use the media to draw attention to the sort and size of bombs that were planted and what the public should look out for? We are used to a peaceful regime in this country and, since we are not facing the same circumstances in Northern Ireland, it is sometimes difficult for people fully to appreciate what we need to look out for.
Mr. Rees: I am grateful for what the hon. and learned Gentleman said about the police. There is a danger in his suggestion that goes back to what was said by the right hon. Member for Down, South (Mr. Powell). My experience—I am sure that it has been shared by the right hon. Member for Penrith and The Border and my right hon. Friend the Secretary of State for Northern Ireland—is that when I used to return from Northern

1993
Ireland I was amazed by the laxity of security in this country. People in Northern Ireland are used to tight security. What matters is vigilance by people for anything the slightest bit unusual, rather than a detailed knowledge of what they should be looking for. I know from reading police reports that they knit together bits of information that seem almost useless when they are first received. When taken with other information, they add up to the final story. That is what good policing is all about. The police want information, and I am sure that people will be telephoning and contacting their local police station, and that in that way the police will find the people responsibly for planting the bombs.
Mr. Cartwright: Is my right hon. Friend aware that the gas plant at Greenwich occupies a large, exposed site, which has many consequent internal security problems? In view of the obvious risk to many thousands of homes in the area if such a site is to be a target for attacks, is my right hon. Friend sure that the gas industry can provide the security cover that is needed without a great deal of outside assistance?
Mr. Rees: The fuel industries receive a great deal of advice. It would be better if my hon. Friend and I spoke about how this advice should be given outside rather than in the House. The fuel industries do not like advice.
Mr. Peter Bottomley: Does the Home Secretary agree that we should congratulate not only the police but the fire services that had to deal with the initial consequences of the explosions? Will he repeat his advice to members of the public that they should not be frightened to pursue a wild goose chase by reporting information which they believe to be relevant or what might be a bomb? Is he aware that many people fear that they put an extra load on the police by reporting something that turns out to be unimportant?
Mr. Rees: People certainly should not fear that they are making fools of themselves by reporting something that turns out to be unimportant. Any piece of information matters. The fire service did a remarkable job overnight and showed the excellent work that it does.
Mr. Ward: Will my right hon. Friend include in his appreciation the stretched members of the emergency services who also had to deal with a major fire in the Strand and a large-scale evacuation of residents in Kennington? Will my right hon. Friend comment on the reasons for that evacuation?
Mr. Rees: The latest information that I have about the, fire in the Strand is that it does not involve the IRA. understand that there was a hoax at the Kennington Oval gasholder. I am glad to say that a man is helping the police with inquiries.

BUSINESS OF THE HOUSE
Mrs. Thatcher: May I ask the Lord President of the Council to state the business for next week?
The Lord President of the Council and Leader of the House of Commons (Mr. Michael Foot): The business for next week will be as follows:
MONDAY 22nd JANUARY—Motion to appoint the Joint Committee on the Special Commission on Oil Sanctions
TUESDAY 23rd JANUARY—Remaining stages of the Social Security Bill.
WEDNESDAY 24th JANUARY—Completion of remaining stages of the Public Lending Right Bill.
THURSDAY 25th JANUARY—Supply [5th Allotted Day]: debate on an Opposition Motion on the doubling of prices in under five years.
Motion on EEC documents R /1135/ 78, R/1221/78, R/1292/78 and R/3454/ 78 on the steel industry.
FRIDAY 26th JANUARY—Private Members' Bills.
MONDAY 29th JANUARY—Second Reading of the Weights and Measures Bill
Mrs. Thatcher: When do the Government propose to make any judgment whatsoever about the new arrangements that the Prime Minister announced this afternoon, whether they are effective, and when they propose to have a debate on the current situation?
Mr. Foot: As was indicated earlier by the Prime Minister and the Home Secretary, there should be another statement tomorrow and, no doubt, on Monday. We should wait and see how we proceed from there.
Mr. Radice: Will my right hon. Friend tell the House about the arrangements for the lobby of local authority and other workers on Monday?
Mr. Foot: I shall make a brief statement in reply to my hon. Friend. Hon. Members will be aware that a large number of people are expected to take part in a mass lobby of the House of Commons on Monday. The usual arrangements agreed by the Services Committee will be in operation. These arrangements are designed to ensure the orderly admission of as many lobbyists as possible to meet their Members, but we cannot hope to admit more than a small proportion of the lobby into the precincts. I therefore appeal to hon. Members to co-operate.
In particular, I ask hon. Members to refrain from taking parties of lobbyists from the queue outside the building, because that is always seen by others as queue jumping and causes unnecessary resentment.
Hon. Members can also help by assisting lobbyists to leave the Grand Committee Room by the North Door of Westminster Hall to New Palace Yard and by limiting their discussions with individual lobbyists in the Central Lobby.
If hon. Members have a complaint about the conduct of the lobby, they should speak to the Deputy Chief Whip, the Serjeant at Arms or myself. Notes of guidance on mass lobbies are available in the Whips' offices for any hon. Member who wishes to examine them.
Mr. Michael Marshall: In his statement the Home Secretary spoke mainly about the regions. Will the Lord President tell his right hon. Friend the Secretary of State for Industry that it would be helpful if we knew which industries are worst affected, so that we can identify them when giving help?
Mr. Foot: I shall take into account what the hon. Member has said and see how best we can deal with that in a statement next week.
Mr. Madden: Is my right hon. Friend aware that the director general of the BBC is seeking money from the Government in advance of the further increase in the price of the television licence? A prayer was tabled against the last increase in the television licence fee. When will the debate that was promised some time ago take place?
Mr. Foot: I cannot say at the moment, but I am aware of the undertaking that I gave.
Mr. Grylls: Will the Leader of the House reconsider this afternoon's business? We are to discuss a Bill that proposes to raise the borrowing limit of the National Enterprise Board to £4,500 million. The matter is of great importance to many hon. Members. Will the right hon. Gentleman reconsider the business so that we may have a proper debate in an adequate amount of time?
Mr. Foot: I understand the unavoidable inconvenience to which the House is subjected as a result of today's situation, but it is necessary for the Bill to proceed. We must accommodate the whole of the House. It would not be convenient for the House to change today's business.
Mr. Spearing: Does my right hon. Friend remember that he and the Government have yet to redeem the pledge given in November 1977 about a motion to be moved on the Floor of the House about Ministers assenting to Brussels legislation? When will the Government table the motion? Will it be before or after the promised debate on the Select Committee's report on procedure generally?
Mr. Foot: I cannot give my hon Friend a date, but I can assure him that I am fully aware of what has occurred. I am sure that if my memory lapses my hon. Friend will remind me.
Sir David Renton: We understand that the Attorney-General has been advising Ministers on the law of picketing. Will the Leader of the House ask the Attorney-General to make a statement to the House about that early next week, especially on its application to the present circumstances?
Mr. Foot: I shall consider that request without making a commitment. We shall have to deal with statements on the

1997
general situation. Such statements eat into the time of other debates. I am not sure whether we should have a statement on the legal aspect next week, but I shall consider the suggestion.
Mr. Hoyle: Will my right hon. Friend arrange for an early debate on microelectronics and word processing, because that will affect the life of all the people in the nation? It is an important and vital subject, which should be debated.
Mr. Foot: The Government issued an important statement on that subject just before Christmas. It is a strong candidate for a debate when we have the time.
Several Hon. Members rose—
Mr. Speaker: I shall call those hon. Members who have been standing.
Mr. Rhodes James: Will the Leader of the House ensure that the Minister of Agriculture, Fisheries and Food makes a statement to the House early in the week? There is profound concern, not only among those who represent agricultural constituencies, about the impact of the crisis on their areas.
Mr. Foot: That is a proper suggestion, and I shall consider it. We must consider which Ministers the House wishes to hear.
Mr. Wells: Will the Lord President arrange for the Home Secretary to make a statement early next week, or as soon as possible, about the staffing in the prison service and in particular in such prisons as Maidstone, where very naughty men are imprisoned for long periods?
Mr. Foot: I shall consult my right hon. Friend, but there are other strong candidates for statements in the next few days.
Mr. Silvester: Will the Lord President undertake to provide time for a debate on the report of the Select Committee on Procedure before Easter?
Mr. Foot: Yes, I certainly hope that we shall have one before Easter.
Mr. Michael Latham: Will the Lord President clarify the chain of command for dealing with the emergency, so that hon. Members may raise constituency problems directly? Many hon. Members, including myself, have had useful co-
1998
operation with the regional emergency committees and also with the private office of the Secretary of State for Transport. Are we now to deal with the Home Secretary, as it appears that he is in command of these matters, as far as anyone is?
Mr. Foot: As the hon. Gentleman has acknowledged, he has had useful results from the representations that he has already made, and I suggest that he should continue in that sense. But, as the Home Secretary indicated from the Dispatch Box in reply to a number of questions, he can also receive representations on the subject from Members of Parliament.
Mr. Teddy Taylor: I appreciate what the Prime Minister said this afternoon about the Home Secretary having a coordinating role in the present emergency. Will the Leader of the House invite the Secretary of State for Scotland to make a statement to the House early next week on the position in Scotland, bearing in mind that some aspects of the emergency are more serious in Scotland and that the Secretary of State for Scotland is alone responsible for most of the emergency services north of the border?
Mr. Foot: As has already been indicated, the Home Secretary presides over the committee dealing with this matter. Whether it would be helpful to the House to have a, series of Ministers who are also on the committee making replies is a matter for consideration. I am doubtful about it. but I shall take into consideration the hon. Gentleman's representations.

ESSENTIAL SUPPLIES AND SERVICES
Mr. William Shelton: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the present food shortages throughout the country and the hardship that these will increasingly cause as a result of the picketing taking place by the striking lorry drivers."
I have reason to believe that a state of emergency exists today, whatever the Government may say, and that the position is rapidly deteriorating. As we have

1999
heard from today's statement, the Government refuse to recognise the position, and this is having increasingly damaging consequences.
Responsible authorities today and yesterday have said that only 10 per cent. of processed food is reaching shops, that only 25 per cent. of all foodstuffs is reaching one major food chain, and that other food chains are in similar circumstances. It is also said that several major food companies have been forced to shut. These include Kelogg, Heinz, Cadbury-Schweppes, Cow & Gate, and no doubt many others. Thousands of tons of animal feed are locked in the docks. Cargoes of fruit are rotting in the docks and elsewhere. The consequence of this is that already certain basic foodstuffs are unobtainable in many stores. These include salt, sugar, butter, margarine, cereals and many processed foods. Bread will soon be in short supply because of the shortage of salt. Meat will soon be in short supply because the slaughterhouses will, I understand, have to be closed.
If supplies do not improve, the position will deteriorate in an accelerating fashion. I am led to believe that by the end of next week there will be serious hardship and, indeed, possibly hunger in parts of our country, especially for the old, the disabled and the poor.
It is clear that the unions have lost control over the strikers and that, in the words of a union leader, anarchy prevails. The Government have a duty to safeguard essential supplies. Clearly they are not doing so. This is a state of emergency, and it must be recognised as such by the Government.
Mr. Speaker: The hon. Member for Streatham (Mr. Shelton) gave me notice this morning that he would ask leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"the present food shortages throughout the country and the hardship that these will increasingly cause as a result of the picketing taking place by the striking lorry drivers."
As the House will understand, I have obviously been giving a great deal of thought to this matter throughout the day. I listened with great care to the exchanges earlier today. I am prepared to look at the hon. Gentleman's appli-
2000
cation on Monday, with the possibility of a debate on Monday night. I think that that is the only action I can take at the present time. I give the hon. Gentleman an undertaking that I will look very closely at this application on Monday.

WATER SUPPLY (NORTH-WEST ENGLAND)
Mr. Churchill: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the continuing threat to public health in the North-West, where 1 million people are without a filtered and chemically treated water supply."
The Home Secretary has today made a statement. I fear that it will be regarded by the 1 million consumers as grossly inadequate. It was a statement of supine complacency and was directly in line with the Government's attempts to play down the gravity of the threat to vital supplies existing in so many aspects of our national life. In the course of his statement, the Home Secretary said that the North-West water authority is maintaining piped water supplies to the vast majority—
Mr. Speaker: Order. The hon. Member for Stretford (Mr. Churchill) must not make the speech that he would make if his application were granted. He must seek to make out the case for it to be granted.
Mr. Churchill: I can assure you, Mr. Speaker, that I shall make a different speech should the debate be granted. I was merely seeking to point out that the statement made to the House today by the Home Secretary in no way meets the point that is being made by hundreds of thousands of people who have been for a whole week now without any properly filtered and purified water supply.
The Home Secretary said that they still had water. That is true; but it is what is officially termed dirty water. It is not clean or purified water. The Minister of State, Department of the Environment is shaking his head. Perhaps he wishes to catch your eye, Mr. Speaker, so that he may put a different point of view

2001
on this, but I am assured by the North-West water authority officials that the present position constitutes a serious hazard to the health of up to 1 million of our citizens. From this point of view there is no question but that this is a specific and important matter, for so long as the present position persists—and the Home Secretary has made clear that no action is to be taken by the Government to resolve the problem—there is the serious possibility of an epidemic breaking out, or of children or others consuming unpurified water.
That it has become a matter of urgency is also clear in that today there are many Labour Members, as well as the hon. Member for Rochdale (Mr. Smith), who are very anxious that the matter should be debated in the House so that they may represent their constituents' anxieties.
As a matter of added urgency, there is the fact that several hospitals in the North-West of England are now having to close down as a result of the other industrial actions taking place. In the constituency represented by my hon. Friend the Member for Altrincham and Sale (Mr. Montgomery) and in my own constituency, no fewer than four hospitals have closed today because of the failure of surgical supplies to get through.
In the light of this position, Mr. Speaker, I submit that the question of a debate has become one of urgent necessity.
Mr. Speaker: The hon. Member for Stretford (Mr. Churchill) gave me notice this morning before 12 o'clock that he would seek to raise this matter today. The hon. Member asks leave to move the Adjournment of the House under Standing Order No. 9 so that the House may discuss
"the continuing threat to public health in the North-West where 1 million people are without a filtered and chemically treated water supply."
The hon. Member has undoubtedly raised a very important matter. I have given the same consideration to his application as I did to two further applications that are to come before the House, and I have applied the same criteria to this application as I did to the earlier one and as I shall apply to the two succeeding applications. I am quite prepared to look at it with great seriousness
2002
and urgency on Monday to see whether it is necessary to have a debate at seven o'clock on Monday night.

RAILWAYS (INDUSTRIAL DISPUTE)
Mr. Moate: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration. namely,
"the national rail strike and the threat of continued disruption of the nation's railway system."
For the second time this week the whole of the railway network has been paralysed. hundreds of thousands of people have been prevented from going to work or have suffered immense inconvenience, essential freight movements have been prevented and British Rail will lose £2 million for every day of the stoppage.
That this matter is specific and important is self-evident. It is a matter which the House ought to consider urgently. Further daily stoppages now seem certain for next week and mention has also been made of other industrial action in the form of withdrawal of overtime working and a ban on weekend working. Negotiations have so far made matters rather worse and not better.
Furthermore, Mr. Speaker, whilst this issue is quite separate from other transport disputes, it is clearly exacerbating the situation—in particular, the stopping of goods moving in and out of ports.
In view of the nature of this dispute and its interlinking with major questions of productivity and the annual pay claim, possibly the nation could be facing weeks and months of disruption of the railway system. I therefore submit that this is a matter that should be urgently considered by the House.
Mr. Speaker: The hon. Member for Faversham (Mr. Moate) gave me notice before 12 o'clock this morning that he would submit this application to the House in order that the House may discuss
"the national rail strike and the threat of continued disruption of the nation's railway system."

2003
The hon. Gentleman will have heard the comments that I made on the last application, and I say to him and to the House that I shall look at this question again on Monday with a view to the possibility of a debate at seven o'clock on Monday night.
I hope that the House will not be under any misapprehension. If I agree to an emergency debate on Monday night, it can be on only one of the subjects mentioned today and not on all of them.

PICKETING (LIVERPOOL)
Mr. Steen: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the ruination of the port of Liverpool by unlawful picketing and its disastrous effect upon the future economy of the region."
The survival of Liverpool has always depended upon its ability to run a thriving port. The wealth of the city and the welfare of the people are intertwined with the prosperity of the port. The present strike has already laid off 1,900 dockers as well as many support staff. This means that the dock and harbour company is having to pay out at least £60 per week in fall-back pay to each docker without work, and the company will soon find itself unable to continue making payments while receiving nothing in return.
The tragedy is that the port of Liverpool has made great strides forward in business revival over the last few years with the full co-operation of the dockers, who are now deeply outraged and concerned as they helplessly watch their livelihood slip away.
For the smaller, independent dock employer, the present situation may well spell bankruptcy. In London today a private company in business for many years, employing 500 stevedores, is going into liquidation, I am told, because of the catastrophic effect of illegal picketing. This could well sow the seeds for a national
2004
dock strike. The matter is therefore, of the utmost urgency.
The port of Liverpool is today at a standstill. It is in the stranglehold grip of massive, unlawful picketing. The situation deteriorates hour by hour. The dock entrances are barred, swarming with this new infestation of the colloquially termed "secondary pickets". The port has ground to a halt, savaged by strikes and strangled by pickets.
The matter is specific. No goods can get into the port. This means that thousands of companies in the massive hinterland behind the port, which includes the Midlands and the Lancashire industrial belt, are either having to stockpile products or lay off workers, or a combination of both.
British companies are unable to fulfil their contractual dates for delivery and companies overseas arc picking up new business at our expense. This must affect the balance of payments, nationwide. Ships bound for Liverpool are being diverted to Continental ports and business will be permanently lost from Merseyside in both the short term and the long term as suppliers lose confidence that the port can reliably handle their cargoes.
Liverpool is set on a suicidal course with the major plank of the Government programme—the rejuvenation of the inner cities—in ruins. The matter is specific. urgent and of the utmost importance.
Mr. Speaker: The hon. Member for Liverpool, Wavertree (Mr. Steen) gave me notice before 12 o'clock this morning that he would seek, under Standing Order No. 9, to ask leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"the ruination of the port of Liverpool by unlawful picketing and its disastrous effect upon the future economy of the region."
I have no doubt about the importance of the matters raised by the hon. Gentleman. He will have heard that I apply the same criteria to his application, and I shall look at this matter and let my opinion be known to the House on Monday.

INDUSTRY BILL
Mr. Hordern: On a point of order, Mr. Speaker. The time is now after a quarter to six and the House is due to consider a very important Bill which authorises the National Enterprise Board to spend, altogether, up to £4,500 million. I submit that any proper debate in the time that is available is now impossible. Ail we should get would be, I regret to say, a rather long speech by the Secretary of State for Industry setting out the matter for debate and most of the remaining time would be taken up by Front Bench speakers.
However much I regard the ability—as do my hon. Friends—of all Front Bench speakers in this House, the fact is that there will be very little time indeed for any Back Benchers to develop their arguments on this most important Bill.
I therefore ask, through you, Mr. Speaker, whether the Leader of the House will scrap the debate today and put it off to another occasion.
Mr. Henderson: Further to that point of order, Mr. Speaker. It is reasonable that today we should have dwelt on the statements which we have had, which were more important statements on matters of great concern. It is reasonable that we should be prepared to change our procedures and our systems of working when it is necessary to do so.
The debate on the Industry Bill on which we are about to embark does not cover just the National Enterprise Board. It covers the Scottish Development Agency and the Welsh Development Agency. I shall certainly seek—I hope with more success than previously—to catch your eye, Mr. Speaker, in this debate, as, I have no doubt, will other parliamentary colleagues from other parties who have Scottish constituencies, and as will Plaid Cymru Members and their parliamentary colleagues from the Welsh constituencies.
There are three very strong interests involved in this matter. Although the Secretary of State for Industry may be the soul of brevity, if not of wit, I hardly think that there will be sufficient time left after the opening speeches, and taking off the time for winding-up speeches,
2006
to allow all of us to express our views on this important matter.
There is no desire on cur part to see the Bill held back. I am sure that if the Lord President were to seek to catch your eye, Mr. Speaker, and announce that next week he would find time for this Bill, he would find a ready response on the Opposition Benches.
Mr. Richard Wainwright: Further to that point of order, Mr. Speaker. Only a few minutes ago you reminded the House that, in the event of your granting an evening's debate on Monday under Standing Order No. 9, only one of the subjects that have been drawn to your attention today could be debated. May I respectfully remind you, Mr. Sneaker, that the Bill which we had honed to be debating for the last two hours contains three quite separate and distinct matters relating to three separate statutory bodies—a sum of £3 billion, another sum of £500 million, and yet a third sum for a quite separate statutory body of £250 million.
In these circumstances, Mr. Speaker, with respect, your ruling that only one matter can be discussed in an evening seems to me to apply to this evening's proceedings.
Mr. Alexander Fletcher: Further to that point of order, Mr. Speaker. I should like to support the points made by my hon. Friend the Member for Horsham and Crawley (Mr. Hordern) and other hon. Members about tonight's business being held over. There are many reasons for this. It would be impossible for you, Mr. Speaker, to arrange the debate so that it dealt with all the local and regional interests in the country and contained discussion of the two Agencies and the NEB.
May I also respectfully suggest that the rail strike today does not help the situation, because there are no sleepers to the North tonight, and there is a threat of a strike at Heathrow airport tomorrow morning, which means that Members wishing to get home urgently for meetings in their constituencies tomorrow will have very little chance of doing so unless they can catch an aircraft later this evening. Therefore, Mr. Speaker, I would ask you whether you can see about something being done about holding over tonight's business
Several Hon. Members rose—
Mr. Speaker: Order. I shall take the points of order of those hon. Members who have been rising, but before doing so perhaps I may say that the arrangement of business is not my concern.
I should like to say to the hon. Member for Aberdeenshire, East (Mr. Henderson) that it always grieves me when I cannot call him. But I am not grieved very often.
I have no doubt that the House is anxious to get on to the business.
Mr. Michael Marshall: Further to that point of order, Mr. Speaker. I think that it would be fair to say that one must have a slight quarrel with my hon. Friend the Member for Horsham and Crawley (Mr. Hordern). We expect a very full statement from the Secretary of State. Indeed, the basis of the reasoned amendment which has been tabled by the Opposition is arguing that we are not getting sufficient information. Therefore, a grave responsibility hangs on the shoulders of the Secretary of State this evening.
Further to that, Mr. Speaker, to put some kind of numbers in this matter, if we assume one and a half hours for the Front Benches in opening the debate and one hour for them in closing it, we shall then have one and a half hours for Back-Bench speakers, three from each side, which would make it literally impossible for members of the Liberal Party, Plaid Cymru or the SNP to speak and we would have only three speakers from the Conservative Benches.
Sir Keith Joseph: Further to those points of order, Mr. Speaker. Perhaps I may emphasise what my hon. Friend the Member for Arundel (Mr. Marshall) has said.
As a House, we look to the Secretary of State to fill out the knowledge which has been so far lacking on why the vast sums of money referred to in the Bill should be needed. It is not good enough for the Secretary of State to promise to be brief. This is not an occasion when it is in the public interest for him to be brief. There just will not be enough time for the very large number of hon. Members who will want to put their questions and express their points of view to be heard. Therefore, Mr. Speaker, I appeal to the Lord President, through you, to consider
2008
whether the debate today—no one is blaming the Government for the truncation of time today—could be abandoned today and reinstated next week.
The Lord President of the Council and Leader of the House of Commons (Mr. Michael Foot): I really have nothing very much to add to what I said in response to an earlier question on the same subject. I fully appreciate the concern about the truncation of this very important debate. I am not minimising its importance in any sense. But, of course, one of the Government's concerns is that we must get the Bill through before—[HON. MEMBERS: "Why?"] That is one of the matters that will come out in the debate. We must get it through before Easter. If we were to hold up the Bill now, there would be further difficulties later.
I certainly think that it would be for the convenience of the House if we could proceed to the Second Reading very soon. without further hold-up.
However, let me say to my right hon. Friend the Secretary of State for Industry and to the right hon. Member for Leeds, North-East (Sir K. Joseph), who is in charge of the Bill for the Opposition, that I think that we shall have to take into account the fact that there has been somewhat less time for the Second Reading than had been previously arranged. and I would hope that if we have normal progress during the Committee stage, that can be—[HON. MEMBERS: "Oh."]
Sir Keith Joseph: That has nothing to do with it.
Mr. Foot: It has. [Interruption.] Hon. Members have not heard yet the conclusion of my remarks. Of course, I believe that that should be taken into account on Report. Therefore, I strongly urge the House not to devote any further time now to points of order but to proceed, because every point of order can only take away further time from the debate. I ask hon. Members to see how we proceed with the debate—[HON MEMBERS: "NO."]—and then after-wards to have the normal discussions that take place between the usual channels.
Sir Keith Joseph: Perhaps I may put a constructive suggestion to the Lord President. Will he take time to consider whether, if the Government defer this

2009
debate until next week, any day in Committee will be lost, because it is my bellef that the Committee of Selection does not meet until the middle of next week? If the Second Reading is deferred until next week the Bill can proceed to Committee, if it gets a Second Reading, no later than if the Second Reading took place in a totally unsatisfactory form today.
I ask the Lord President to bear in mind that there will he very few opportunities indeed for hon. Members, from both sides of the House and representing vital regional interests, to have their say at all if we embark upon the debate now.
Several Hon. Members rose—
Mr. Speaker: Order. I shall call another hon. Member in a moment, but I remind hon. Members that, since it is quite clear that we shall he getting down to the business, it will enable me to call additional Members if we are not too long.
Mr. Grylls: On a point of order, Mr. Speaker. I, of all people, do not want to cause any financial embarrassment to the NEB, but I should like to ask whether the Government are able to explain why it is essential to have the Bill tonight. Perhaps I may make a suggestion which might help you, Mr. Speaker. You have suggested that one of the Standing Order No. 9 debates referred to earlier might take place on Monday if you so decide. Are you able to give an instant reconsideration of one of the Standing Order No. 9 applications put forward by my hon. Friends and bring one of them forward now? Then we could have a debate on the NEB in a proper length of time
2010
on Monday. Would not that be a happy solution, help you and help the Government to explain their case?
Mr. Speaker: It would be a solution. It is a very ingenious suggestion, but I am afraid that I cannot do that.
Sir Anthony Meyer: Further to that point of order, Mr. Speaker. I am sure that the Lord President would not wish to put you in the very individious position of having to preside over what will clearly be a farce of a debate in which Back Benchers representing Wales will simply not be able to make any contribution to a debate which is of primary importance to Wales.
Mr. Teddy Taylor: Further to that point of order, Mr. Speaker. May I ask you whether there is some procedure whereby the House could decide itself not to proceed with the debate, bearing in mind that one of the Agencies dealt with in the Bill has been described by the Government as their main instrument for reviving the Scottish economy? It would be a farce if we had a debate with possibly only two Scottish speakers taking part. Under our rules, is the House able to determine that it shall adjourn?
Mr. Budgen: Further to that—
Mr. Speaker: Order. We follow the order of business as it is laid down. I think that it is in the interests of the House if I ask the Clerk to read the Orders of the Day.
Several Hon. Members rose—
Mr. Budgen: Further to that point of order, Mr. Speaker—
Mr. Speaker: Order. I shall take the point of order afterwards.

ORDERS OF THE DAY

  INDUSTRY BILL
  Order for Second Reading read.
  6.6 p.m.
  Mr. Nick Budgen: On a point of order, Mr. Speaker. May I point out that there will be about two hours available for those who are not members of either Front Bench—at most? I am trying to put the case against myself at its strongest. I am sure, Mr. Speaker, that you hope that a Member of the Welsh National Party will catch your eye, as will a Member of the SNP and a Member of the Liberal Party. But it is almost certain that nobody from the Back Benches proper will be able to catch your eye, particularly if a Privy Councillor happens to catch your eye.
  These are important issues. It is true, as the Lord President said, that we do not wish the Bill to pass. This measure goes to the root of the dispute between the Tory Party and the Labour Party. The Government believe that State power should be extended, and we have a right to be heard on this important matter. The high-handed action of the Lord President is preventing us from representing our constituents in this House.
  It is ridiculous to pretend that this matter is urgent. In the recently published Government White Paper on public expenditure there was no proposal for increased expenditure by the NEB in the next two or three years. This is an important partisan matter, but in terms of the practical running of the Government or of the NEB the Bill is unnecessary. A week's delay will do no harm to the Government or to the NEB, but it will allow us, on behalf of our constituents, to make proper representations in this House.
  The Lord President used to be a great supporter of Back Bench rights. It used to be said that, above all, he loved this House and believed that it was vital that every Back Bencher had an opportunity to represent his constituents. His behaviour tonight is a denial of everything that he has stood for in the past.
  Mr. Speaker: Order. Hon. Members must confine themselves to points of order which I can answer. I cannot
  2012
  answer the point of order which has just been raised.
  Mr. Robert Rhodes James: On a point of order, Mr. Speaker. It is clear that the House and you yourself are in a considerable difficulty. I wonder whether you would entertain a motion "That this House do now adjourn". If you were prepared to entertain that motion, I should be honoured to move it.
  Hon. Members: Hear, hear.
  Mr. Speaker: I am afraid that hon. Members have misunderstood the conversation that was under way at the Table. The advice that I was getting was not very encouraging to the hon. Gentleman as to my powers on this matter.
  Mr. Rhodes James: Further to that point of order, Mr. Speaker. The motion for the Second Reading of the Bill has not yet been moved. I am asking whether you would entertain a motion, which I shall now move, "That this House do now adjourn".
  The basis of that motion is that there are now fewer than four hours left in which to debate this extremely important Bill which affects a considerable number of hon. Members and their constituencies. I suggest that, in these circumstances, the most appropriate action for the House to take would be to move to adjourn and for the Leader of the House to find an alternative date next week or the week after. This matter could then be dealt with in a proper manner, which would enable hon. Members to deploy their arguments in full and to justify their constituents' interests in the Bill.
  Mr. Speaker: Standing Order No. 1 makes it clear that
  "no Member other than a Minister of the Crown"—
  and no Minister looks as though he intends to do so—
  "may make such a motion on any day before the orders of the day or notices of motions shall have been entered upon".
  Mr. William Clark: On a point of order, Mr. Speaker. I cannot understand the technicalities of this matter, and I seek your guidance. Many points of order were curtailed and the Orders of the Day were called. I

  2013
  understand that we are now in the technical position that only a Minister can move the Adjournment of the House. Many Opposition Members still wish to raise points of order. I am asking why it was necessary to call the Orders of the Day before those points of order were dealt with.
  Mr. Speaker: Because I wanted to call them and to get on. I was not trying any quick trick on the House. That is neither my way nor my custom. I thought that I was helping the House. But we have not yet proceeded with the motion that is before the House. We have not embarked upon it.
  Mr. William Clark: Further to that point of order, Mr. Speaker. You have ruled that, the Orders of the Day having been called, only a Minister of the Crown may move the Adjournment of the House. [HON. MEMBERS: "No. It is the other way round."] My hon. Friend the Member for Cambridge (Mr. Rhodes James) moved the Adjournment of the House and I thought you said that that could not be allowed because a Minister of the Crown had not called for the Adjournment of the House.
  Mr. Speaker: I am sorry that I did not make the position clear. I said that
  "no Member other than a Minister of the Crown may make such a motion on any day before the orders of the day or notices of motions shall have been entered upon".
  We have not entered upon the notices of motions.
  Mr. Kenneth Clarke: Further to that point of order, Mr. Speaker. It seems to me that we have entered upon the Orders of the Day. You called upon the Clerk to read the Orders of the Day, and we have now reached the stage where they have been entered upon. If that is not the case, could you indicate for the convenience of the House what steps have to be taken before the Orders of the Day are entered upon so that we know at what stage my hon. Friend the Member for Cambridge (Mr. Rhodes James) may rise to move such a motion?
  Mr. Speaker: When the motion has has been made for the Bill to be read a Second time, we shall have entered upon
  2014
  the business. No Question has yet been proposed by the Chair on that issue.
  Mr. Kenneth Clarke: Will you clarify my mind and the minds of other hon. Members on this matter? Is it the case that so soon as the Clerk of the House has risen to read the Order for the Second Reading, then, immediately before any speeches have begun, my hon. Friend the Member for Cambridge may rise to move his motion?
  Mr. Speaker: No. That may happen only after I have proposed the Question from the Chair. When I have proposed the Question, "That the Bill be now read a Second time", the dilatory motion, the moving of the Adjournment, would be in order.
  Mr. Rhodes James: With great respect, Mr. Speaker, it is not possible for the House to have two motions before it at the same time. The point of the procedure under Standing Order No. 1 is that after the House has entered upon the Orders of the Day and after the Clerk at the Table has read the title of the business, a motion for the Adjournment can be moved. It happens frequently in foreign affairs debates and on other occasions. It is not possible to move a motion for the Adjournment of the House immediately after you have proposed the motion that the Bill be read a Second time. The House cannot have two motions before it. I urge that the House should now be debating the motion which I ventured to propose, namely, "That this House do now adjourn".
  Mr. Speaker: With every respect to the hon. Gentleman, he seems to have forgotten that when, from time to time, the motion is moved "That this House do now adjourn" before we enter on business, it is always moved by a Minister of the Crown. That is the case without exception, and that is what the hon. Gentleman has overlooked.
  Mr. Alexander Fletcher: On a point of order, Mr. Speaker. It might help the House to consider the matter if the Lord President will elaborate a remark that he made a few moments ago. He said that it was important for the Bill to reach the statute book by Easter. If he will explain why that is the case, hon. Members might be able to consider the position more effectively.
  Mr. Michael Jopling: On a point of order, Mr. Speaker. I think that there is a way in which you could help the Government and the House in general on this difficult matter. It seems clear that when we reach the end of this important debate the closure will have to be moved. "Erskine May" says on page 449 that the
  "question must be put forthwith, without amendment or debate, unless it appears to the Chair that the motion is an abuse of the rules of the House or an infringement of the rights of the minority."
  In view of what has been said in points of order, it seems clear that there is a great likelihood—in fact a certainty—that the rights of the minority are likely to be abused very much indeed if this debate is held straightaway. You can help the House, Mr. Speaker, by indicating that you believe that if a vote were taken or asked for at 10 o'clock it would be an abuse of the rights of the minorities in this House. If you were to give that ruling or indication now, it may be that the Lord President of the Council would have the wisdom to decide to put off this debate.
  The Lord President of the Council and Leader of the House of Commons (Mr. Michael Foot): Further to that point of order, Mr. Speaker. The hon. Member for Westmorland (Mr. Jopling) is perfectly right in his assessment of the position, as I understand it. I was urging that the House should embark upon the debate. I believe that is still the right course. Indeed, I think that it would have been wise if we had done that 20 minutes ago [Interruption.] I am just as much entitled to give my view to the House as hon. Members. I believe that it would have been better to have émbarked upon the debate.
  At 10 o'clock you will have to decide the matter. I presume, that you would not give a hypothetical ruling at this stage. I suggest that the House should start the debate, and at 10 o'clock you will be able to make up your mind about the submission that has been made to you. I suggest that to ask you to give a hypothetical ruling at this stage would be contrary to normal procedure. I suggest that we should start the debate. When we reach 10 o'clock you, in your wisdom, will give your judgment on what is put to you at that time.
  Mr. Hal Miller: Further to that point of order, Mr. Speaker. I wish that the Lord President would reconsider the urgency of the matter. It is now appreciated that the larger part of the NEB funds would be required for British Leyland. We were informed at Question Time earlier this week that the report of the NEB will not be available in the Library until next month. Therefore, it is not easy to understand why the debate has to be started tonight.
  As my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) has pointed out, the Committee of Selection will not have met and Members will not have had enough information about British Leyland in particular, which, whatever view one takes, must account for the lion's share of the funds which are said to be required. Therefore, there seems to be every reason for postponing the debate.
  Finally, on that point of order, I should wish to take part in the debate because I have an extremely strong constituency and industry interest.
  Several Hon. Members rose—
  Mr. Speaker: Order. I request that any hon. Members I now call submit points of order that I can answer rather than further argument against proceeding with the Bill tonight. That is not a matter for me. That is out of my hands.
  Mr. Churchill: Further to that part of order, Mr. Speaker. Would it be possible for the Lord President to assist you and the House in its difficulties by undertaking that, in the light of the lack of time left in which to debate this important matter, the Government will not tonight move the closure at 10 o'clock and the debate will be continued on Monday and the vote taken at 7 p.m.? That would leave time for a Standing Order No. 9 debate.
  Mr. Patrick Cormack: Would it not be helpful for the House to be suspended for half an hour, so that the usual channels can get to work?
  Mr. Budgen: Further to the point of order raised by the Lord President, Mr. Speaker. I respectfully suggest that you,

  2017
  from your great store of wisdom and knowledge of our proceedings, offer some advice to the Lord President. It would seem to be a most unsatisfactory procedure to start the debate and to break it off in order to conclude it at some time in future.
  In the old days, when the Lord President was true to himself, he used to demonstrate that the most important feature of a debate was that one hon. Member replied to the views of another, so that there was a genuine debate. If we start this debate today and attempt to conclude it, for instance, in 10 days' time, there will be no debate. There may be some reading of prepared statements, but the whole intimacy, the sense of giving and taking of ideas, will be gone. There will be no debate. It will, once again, be a denial of everything for which the Lord President used to stand.
  Mr. Robert Kilroy-Silk: It will be within your recollection, Mr. Speaker, that on many previous occasions when frivolous and irrelevant points of order have been raised, you have risen in your place and said that you will take no further points of order and that we shall begin the serious business of the House. Every point of order tonight has been frivolous. There is a clearly organised conspiracy to filibuster these proceedings. I ask you, Mr. Speaker, to stand up and ensure that we have no more frivolous points of order but begin the serious debate in the House.
  Mr. Speaker: I should tell the hon. Gentleman that I do not welcome such remarks. I do not expect the hon. Gentleman to apologise, but I do expect him to know that I shall choose the moment. Much as he might regret it, I do not need his assistance. I shall manage without it.
  Mr. Peter Ros: It would be helpful, Mr. Speaker, if you could give some guidance to the House and to the Leader of the House along the lines that you would not be likely to consent to the closure being put at 10 o'clock, in view of the fact that a large number of Members will not have had an opportunity to speak in the debate. Using precedents which obviously exist for such guidance—that not enough time is likely to be available—we
  2018
  should then know where we stand and the Leader of the House would be less likely to delay matters even further by trying to get the debate started.
  Mr. Speaker: I had that put to me earlier. Obviously, I cannot anticipate what will happen at 10 o'clock. I do not think that we can hold up a Bill by points of order which are simply delaying us.
  Sir Keith Joseph: Will die Lord President take into account that even if points of order had not been raised, after an opening speech from the Secretary of State, the response from the Opposition and the two winding-up speeches, there would have been left only 30 minutes each for the interests of Scotland and Wales and for the views of any other parties in the House. Surely, that cannot be justified for a Bill involving public spending on this scale.
  There is no suggestion of any defeat for the Government. We are only asking the Lord President to do his duty to all interests in the House, including those below the Gangway on the Government side. He should ensure that we have sufficient time in which to debate this important Bill. That would not lose any time, assuming that the Bill is given a Second Reading, before it goes to Committee.
  Mr. Foot: I suggest to the House that the best way to proceed is as I suggested. If my suggestion had been adopted we should already have embarked upon the debate on this important Bill and a considerable amount of time could have been devoted to it. At 10 o'clock the question of how much time has been devoted to the Bill will have to be taken into account by you, Mr. Speaker, and, before then. it may be taken into account by the usual channels.
  I suggested how we might take that into account. I believe that the proper way is by discussion in the usual channels. I urge the House to embark upon the debate which has been put down for today. In addition to those who have raised points of order, many other hon. Members have interests in this matter. Some hon. Members are very eager that the Bill should get on to the statute book. I know that some hon. Members, including the right hon. Lady the Leader of the Opposition, do not want it on the

  2019
  statute book at all. They are perfectly entitled to take such precautions as they can.
  I suggest that the right course is to follow the procedures which have been announced upon the Order Paper. We should start upon the debate and see how matters proceed. In the meantime, I am prepared to have discussions through the usual channels, without any commitment about what we might propose at 10 o'clock.
  I believe that the best suggestion was the one that I made about three-quarters of an hour ago. We can discuss these matters through the usual channels. If hon. Members insist on raising points of order for another half an hour or so, they will merely waste the time of the House of Commons.
  Mr. Norman Lamont: I should point out to the Lord President that although this is an extremely important Bill, it is also extremely short. The idea that there will be a prolonged Committee stage and that there is any real danger of the Government not getting the Bill before Easter is totally unreal, as the right hon. Gentleman must know. The Committee stage, by the very nature of this brief Bill, cannot be very long. Therefore, the right hon. Gentleman's fears and reasons for not having the debate on another day are totally groundless.
  Mr. Peter Hordern: On a point of order, Mr. Speaker. Will you advise us on how the interests of Back Benchers can be protected in this situation? The Leader of the House said that he was not prepared to give any undertaking now whether the debate would be extended. He prefers to do that through the usual channels. How can the interests of Back Benchers be properly protected?
  The Bill concerns not only the total sum to be advanced to the National Enterprise Board but the interests of Scotland, Wales and England and, not least, the Treasury. As one of my hon. Friends pointed out, whereas the Bill provides that the NEB is to be authorised to spend £4,500 million, the public expenditure White Paper allows no more than about £270 million for each of the next four years. Therefore, the least that the House should expect is the pres-
  2020
  ence of the Chancellor of the Exchequer or the Chief Secretary, but neither of those two right hon. Gentlemen is here. As time draws on, the possibility of any of these arguments being advanced dwindles into nothing. Therefore, will you advise the House how, in your opinion the interests of Back Benchers can be protected in this situation?
  Mr. Speaker: There is no means open to the House to stop the order of business on the Order Paper.
  Mr. Peter Bottomley rose—
  Mr. Speaker: Order. I believe that I have called everyone except the hon. Member for Woolwich, West (Mr. Bottomley). I shall take his point of order and then call on the Minister. [Interruption.] Order. I do not propose to stay here until 8 o'clock taking points of order because hon. Members do not want the Bill to be proceeded with. That is not my function. I cannot be expected to do that. I have been here since 2.30 p.m. as it is.
  Mr. Peter Bottomley: On a point of order, Mr. Speaker. I shall try to keep to my point of order rather than go into points which might be made in the debate on the Bill, if and when it comes.
  I understand that the Lord President, in his last point of order, made one suggestion and one recommendation which he put as a suggestion to the House. In his first suggestion he said that there should be discussions between the usual channels. It is quite plain that you alone, Mr. Speaker, have discretion to suspend the sitting so that those discussions can take place.
  The second suggestion made by the Lord President was that the House should continue to consider the Bill. He is far more expert than I am on these matters. I do not believe that he would have put that forward as a suggestion for the House to accept if it were not in some way possible for the House not to accept it.
  When you were ruling on the point of order raised by my hon. Friend the Member for Cambridge (Mr. Rhodes James) you kindly read part of Standing Order No. 1. You said that, in certain circumstances, it was not possible for any Member other than a Minister of the Crown

  2021
  to move the Adjournment of the House. Notwithstanding the difficulties which you expressed just now of having been here since half-past two, this seems to be a serious point. If there are circumstances in which the Chair may accept the motion for the Adjournment of the House proposed by my hon. Friend the Member for Cambridge, we need to be clear about the circumstances in which the restriction to a Minister of the Crown applies. I should be grateful if you could give us the information on that matter as well as dealing with the point made by the Lord President that he was making a suggestion on which, in one way or another, the House could find the opportunity to decide.
  Mr. Speaker: If the hon. Gentleman, when he has an opportunity, will look at page 354 of "Erskine May" he will find in the last paragraph the knowledge for which he has been searching.
  Mr. Bottomley: Further to that point of order, Mr. Speaker. The point that I was making related to Standing Order No. 1, of which you were kind enough to read all or part. That suggested that there certain circumstances when only a Minister of the Crown was able to move a motion for the Adjournment of the House. Is it possible that we are now in a different circumstance which is not covered by the provision that you read at that time?
  Mr. Speaker: The reference in "Erskine May" to which I directed the hon. Gentleman's attention was dealing with Standing Order No.1.
  Several Hon. Members rose—
  Mr. Speaker: I shall take one more point of order, and then I intend to call the Minister.
  Sir Keith Joseph: A number of constructive suggestions have been made. I wonder whether through you, Mr. Speaker, I may again draw to the attention of the Lord President the fact that because of the possibility that you will decide to devote the last three hours of Monday's business to a debate under Standing Order No. 9, that will leave a slot in the earlier part of the day when this debate could be continued. We would
  2022
  then, in effect, have a full day's debate, though spread over two days.
  I think that that suggestion would meet the convenience of the House more than any attempt to rely upon the uncertain chance of the Government not trying to move the closure and your inevitably uncertain response—we cannot know what you would decide at that stage—of trying to cram important matters of principle and of finance into so short a time today.
  No Opposition Member is seeking by any improper means to gainsay the Government's right to have the Bill considered. What is at stake is a matter of a couple of days if we adopt the proposal which has been put forward. That will not even delay the entering of the Bill into Committee, should it receive a Second Reading.
  Mr. Foot: On a point of order, Mr. Speaker. If the House will proceed on the lines that I have suggested, I believe that the whole matter can be perfectly well accommodated. If the right hon. Member for Leeds, North-East (Sir K. Joseph) had acceded to what I suggested earlier, it could have been dealt with.
  I suggest that we should start upon the debate now. I wish that it could have been done earlier. We can then have discussions through the usual channels—[HON. MEMBERS: "They have had them."]—and reach the same conclusion as I suggested to the House earlier. I believe that that is a reasonable way in which to proceed. How we proceed to continue the debate at a later stage is, I suggest, a suitable matter for discussion through the usual channels. I suggest that we can deal with that matter at 10 o'clock and in a further announcement in the House tomorrow. The whole matter can be dealt with satisfactorily. I suggest that the best course would have been for the House to have listened to me in the first place.
  Several Hon. Members rose—
  Mr. Speaker: Order. The House should be aware that discussions through the usual channels seem to have borne fruit. In my own interests, I shall suspend the House for 10 minutes.
  6.30 p.m.
  Sitting suspended.
  On resuming—
  6.40 p.m.
  Mr. Foot: May I suggest that the best way in which the House should proceed is to start upon the debate now but not to seek to reach a conclusion on the Second Reading at 10 o'clock. We shall make an announcement at the beginning of business tomorrow as to how we shall proceed with the Bill again at the beginning of next week.
  I hope that that will satisfy the requirements of the Government in wishing to proceed with the Bill but also satisfy the requirement of the House to have time to discuss it.
  Mr. Speaker: It seems that the suspension of the House was good for all.
  Sir Keith Joseph: I thank the right hon. Gentleman for what he has said, and I hope that Opposition Members will regard what he has suggested as a satisfactory method of carrying on with the debate.
  6.41 p.m.
  The Secretary of State for Industry (Mr. Eric G. Varley): I beg to move, That the Bill be now read a Second time.
  The purpose of the Bill is to raise the financial limits of the National Enterprise Board, the Scottish Development Agency and the Welsh Development Agency, and to amend the Acts governing them so that all the borrowings of their subsidiaries count against their financial limits.
  My right hon. Friend the Secretary of State for Northern Ireland intends to introduce an order increasing the statutory financial limit of the Northern Ireland Development Agency. This order, too, will require that borrowings by the Agency's subsidiaries should be charged against its financial limit. Because of the arrangements for legislation relating specifically to Northern Ireland, this order will be dealt with separately.
  The NEB is by any objective assessment one of the great success stories of British industry. It was a central feature of the industrial policies put forward in the Labour Party's manifestos in 1974. The legislation setting it up was carried as a matter of priority in the first Session of this Parliament. It has now been in
  2024
  operation for a little over three years, and it is already impossible to imagine the British industrial scene without it.
  Nine months ago I asked the House to approve an increase in the financial limit of the NEB in the manner provided under section 8 of the Industry Act 1975. We had a very full debate then, covering the whole range of the NEB's activities, at the end of which the House approved an increase in the limit from £700 million to £1,000 million. Now we must now look ahead to the time when the NEB has reached that limit.
  The charges that at present lie against the NEB's financial limits include issues of public dividend capital to the NEB, borrowings made and guaranteed by the NEB; and commercial borrowings by the NEB's wholly-owned subsidiaries whilst in the NEB's ownership. At 31st December last the NEB had drawn £439 million in public dividend capital; borrowed £160 million from the National Loans Fund; and guaranteed loans amounting to £5 million. At the same date its wholly-owned subsidiaries had borrowed £56 million. The total currently charged against the NEB's limit stands at £660 million. This figure is the charge that the law requires should be made against the NEB's financial limit. But the NEB is continually entering into firm forward commitments, to its subsidiaries and associates, which will present charges against the limit in due course. The total of these commitments varies widely over time, but at 31st December it stood at £170 million, excluding provision for British Leyland and Rolls-Royce.
  The total of firm commitments and actual charges now already amounts to £830 million, plus whatever is required for BL and Rolls-Royce. The latest corporate plans of these companies will not be endorsed for some time yet, but there is every reason to think that substantial investment will be required in the course of the coming months, and although some of this may be met by private sector borrowing and internally generated funds, a major part will be the responsibility of the NEB to provide.
  Mr. Kilroy-Silk: Can my right hon. Friend tell me why we should tonight support an additional grant of funds to

  2025
  the NEB, given its very shoddy performance in the North-West and on Merseyside, its persistent refusal to support the Kirkby co-operative, the fact that it is almost totally unaccountable to Parliament and the fact that the Secretary of State consistently refuses to give it directions? It has such a total disregard for the high unemployment in the regions that it can locate the headquarters and research and development facilities of INMOS outside an intermediate area. Given all the kind of things—
  Mr. Deputy Speaker(Mr. Bryant Godman Irvine): If the hon. Gentleman is making an intervention, it should be brief.
  Mr. Kilroy-Silk: May I ask my right hon. Friend to take some time to explain to his colleagues on the Labour Benches why we should support an enterprise which is becoming increasingly like a commercial bank?
  Mr. Varley: If my hon. Friend had been able to contain himself for 10 minutes or so, I should have into some of the areas that he has covered. He is factually wrong on a number of the points that he has raised, but I can understand his frustration and anger at not yet having been able to make his speech. I am not sure that I can take up his points now, because so many of them are wrong.
  Perhaps the best thing for my hon. Friend to do would be to try to catch the eye of the Chair and make his speech rather than make these wild assertions. I am sorry that I must say that to my hon. Friend. I am about five minutes into my speech, and he says that I have not explained everything. I object to that kind of intervention.
  The NEB's present financial limit is likely to be reached within a fairly short time of the Bill's becoming law. The Bill makes provision for a total increase of £3,500 million. If the Bill is carried, the borrowing limit will include all the borrowings of the NEB's subsidiaries, and we envisage that these might amount to perhaps £1,500 million over the next five years. After taking account of that, the Bill provides for an additional £2,000 million to enable the NEB to pursue its statutory purposes of promoting the effic-
  2026
  iency and competitiveness of United Kingdom industry, and so generating increased employment.
  We have taken account of the fact that over a period of five years the NEB's present annual public expenditure provision of £275 million would require £1,375 million. We also have regard to the desirability of no longer augmenting NEB funding of BL from funds provided under section 8 of the Industry Act 1972. and to the contingencies of many sorts which could present themselves for the NEB. I know that the hon. Member for Colne Valley (Mr. Wainwright) was very interested that we should go to the NEB for the funding of organisations such as BL rather than rely overmuch on the Industry Act 1972. We therefore concluded that it would be sensible to envisage a provision of £2,000 million for the purposes I have described. This sum, as I have said, when added to the £1,500 million for subsidiaries' borrowings, points to this increase of £3,500 million in the NEB's financial limit, for which this Bill provides.
  However, as is usual, the Bill provides that this increase should be approved by the House in stages, and therefore the limit initially is set at £3,000 million, an increase of £2,000 million, with further increases subject to affirmative order within the ultimate limit of £4.500 million. These increases in the financial limits of the NEB will not of themselves add a penny to public expenditure. What they will do is to enable the NEB to continue entering into financial commitments. Fly no means all the commitments involve public expenditure. We believe that between one-third and a half of the increases that we are seeking in the NEB's limit will be drawn from private sources of finance.
  Now I come to the borrowings of the NEB subsidiaries, which are specifically mentioned in the Bill. The secondary purpose of the Bill is to amend the Industry Act and the Scottish and Welsh Development Agencies Acts so that the borrowings of all their subsidiaries are charged against their financial limits.
  In the case of the NEB, under section 8 of the Industry Act 1975 the charges against the NEB's financial limit include the borrowings of its wholly-owned subsidiaries and loans of any sort which are

  2027
  guaranteed by the NEB. There are similar provisions in the Agencies' Acts.
  In March 1977 BL's auditors sought an assurance from the directors that BL's accounts could be prepared on a going-concern basis.
  The directors in turn sought assurances from the NEB. In reply, with the Government's approval, the NEB drew attention to the provision in the NEB guideline that
  "in deciding on their practice in relation to the debts of their subsidiaries the NEB shall have regard to the practice of companies in the private sector"
  and went on to say that, in the judgment of the NEB,
  "in the private sector, a company whose relationship with BL was the same as that of the NEB, by virtue both of the size of its shareholding and the closeness of its involvement in the affairs of BL, could not allow BL to be left in a position where it would not be able to meet its obligations."
  That assurance was made public when I reported it to the House, as hon. Members will recall, on 26th May 1977.
  We were advised that the assurance, which covered all BL's obligations, was not a guarantee in law, and so there was no question of BL's borrowings being charged against the NEB's financial limit on that account. Nor is BL a wholly owned subsidiary of the NEB, which would also require its borrowings to be charged against the limit. But we recognise that the assurance has a degree of force which makes it difficult to distinguish, for all practical purposes, from a guarantee, and we thought it right, therefore, to take the first legislative opportunity to charge BL's borrowings against the NEB's financial limit.
  Because the same principles apply to all NEB subsidiaries, it was appropriate to provide that all their borrowings should be included within the limit in future. In reaching that view we were fortified by recent views expressed by the Public Accounts Committee about financial limits.
  This has meant that we have to seek a much higher limit than would otherwise have been necessary, and the Government think that it would be right to extend the provisions to which I have referred to the Scottish Development Agency and the Welsh Development Agency, because their industrial investment tasks are essentially the same as those of the NEB. Subsections (5) and (7) of clause 1 have that effect.
  Mr. Hal Miller: Does that mean that creditors of BL are now in receipt of a Government guarantee? Has the principle been extended to that degree, or is the right hon. Gentleman referring only to the later borrowings of the company?
  Mr. Varley: The principle has not been extended. That is why I took a great deal of care over the words that I used, and I ask the hon. Gentleman and those who have an interest in these matters—companies, suppliers and the rest—to take careful note of what I have said. I have no doubt that this matter will be gone into much more thoroughly in Committee.
  Mr. Michael Grylls: May I ask for clarification? The Secretary of State has given a figure for the borrowings against the NEB on the present system under the 1975 Industry Act of the wholly-owned subsidiaries. Can he give us a new figure on the new accounting practice as if the Bill had received the Royal Assent today? Can he give us the figure which would be the equivalent of the £660 million which he is giving us now?
  Mr. Varley: The hon. Gentleman will, I am sure, recognise, that it is extremely difficult to do so. It is difficult, even if one knows exactly what the borrowings are, to give a figure, but, as he knows, and as the House knows, these figures are changing all the time, and we cannot give an accurate estimate at this stage. It may well be that in Committee something can be done—perhaps the Committee can be given a snapshot of the situation at that time—but I am not prepared to give that figure today. I understand the hon. Gentleman's point, but I hope he will understand the relevance of what we are doing and the explanation that I have given.
  I should like to come to the NEB's record. It is, of course, dominated by BL and Rolls-Royce, and really those two companies take up a great deal of the NEB's responsibility and time.
  BL is the NEB's largest subsidiary, and the Government's position on future funding remains exactly as I told the House when we debated the 1978 injection of equity funds in April last.
  Of the £1,000 million of public funds which the Ryder report recommended

  2029
  should be made available to BL between 1976 and 1981, £400 million remains to be provided. As I told the House last year, the Government are willing in principle to release sums up to this amount in total between now and 1981 if BL's performance and prospects remain in line with its corporate plan.
  No one concerned with BL's future—whether part of management or the work force or simply a taxpayer—should be under any illusion that the Bill implies an additional commitment on the Government's part to convey yet more funds to BL beyond the £1,000 million. But I must make clear to the House that unless this Bill is carried the NEB will not he able to fulfil the existing commitment. Failure to carry the Bill will throw the whole future of BL into jeopardy.
  The objective of the Government, the NEB and BL management continues to be to restore BL as a major commercially viable motor manufacturer. I want to make it clear to all concerned that the investment funds which an international motor manufacturer needs year by year to keep up with its competitors are on a scale well beyond what could possibly be spared out of public funds. BL will have to provide funds out of its generated profits, and certainly there will have to be borrowings from the private market. So, to survive into the 1980s, BL mast achieve a commercially acceptable level of profitability so that it can draw investment funds both from its own resources and from finance attracted from the private sector.
  Mr. Hal Miller: I am sorry to interrupt the right hon. Gentleman again, but can he tell us whether BL is still required to match on a 50-50 basis, or is he referring to some level of profitability? Is the original requirement to match over the period to 1981 still in existence?
  Mr. Varley: As the hon. Gentleman knows, we missed that objective some time ago owing to the troubles that we had, which we explained at the time during the toolmakers' dispute. I want to emphasise however—[interruption.] Of course I said it, and at that time it was utterly realistic to say it. There were internal difficulties in British Leyland at that time, which I need not go into now. But I assume that all hon. Members want
  2030
  British Leyland to be a success. I shall come in a moment or two to say exactly what success it has had over the last few weeks. I want to be as precise as I can. The original Ryder commitment was for £1,000 million of public funds, and we are ready to provide the other £400 million that remains out of that over a period to 1981, provided we are satisfied with the performance of the rest of it.
  Mr. Hordern: The right hon. Gentleman will recognise that the Public Accounts Committee considered BL's borrowing and the letters of comfort. It is plain that BL will have further recourse to letters of comfort. I think the right hon. Gentleman recognises that in the last resort the Government will be expected to stand behind BL. I believe that those are the words that he used. My recollection is that that was the recommendation of the PAC. That being so, is it not clear that that constitutes an addition to the central borrowing requirement? I understand that it need not come through from direct public dividend capital in grants toward BL or the NEB, but does it not follow from the letter of comfort that if the Government are standing behind the company that should constitute part of the general borrowing requirement? If so, where is that part of the general borrowing requirement expressed in the public expenditure White Paper?
  Mr. Varley: I am tempted to go into a long explanation. As the hon. Gentleman realises, that section of the NEB's responsibility to BL is a matter of much commercial sensitivity. Any words of mine in the House must be carefully weighed. At this stage I do not want to add to the words that I have used in clear and precise terms, which will be considered closely outside the House.
  The PAC's views were taken into account in drafting the Bill and in my speech. I shall return to accountability and the views of the PAC. It is not the Government who are standing behind BL but the NEB. I refer the hon. Gentleman to the guidelines. The NEB will treat BL as any other major holding company would treat one of its subsidiaries. The hon. Gentleman has raised an important matter and I do not want to say or imply that we are doing something that we are not.

  2031
  I have said that the funds remaining under the original Ryder proposals amount to about £400 million. Provided that in terms of the corporate plan BL makes satisfactory progress towards the target set by the BL board and approved by the NEB and the Government, we are prepared to make that money available.
  Mr. Michael Edwardes, BL's chairman, put the matter of further Government funding plainly enough last February in his speech to management and employees. I agree entirely with what he said:
  "There is no way that the Government can provide the funds we need"—
  those are the funds that it needs—
  "unless it is clear we are working as a team and towards the common objective of restoring BL to health and success."
  To operate profitably in fiercely competitive world markets BL needs to achieve sustained production, which in turn depends very largely on the avoidance of constant unofficial disputes.
  I am sure that the vast majority of the BL workforce want the company to succeed. Before Christmas we saw some encouraging signs. There was the two to one majority by which the BL work force accepted the management's pay and productivity package. That was an encouraging sign. BL's car business was turned from loss to profit in the first half of 1978. The new Rover saloons were successfully launched in Europe, with production at Solihull roughly doubling over the past 12 months. New engines were introduced into several of the company's vehicles.
  As I said at Question Time on Monday, decisions about public funding for 1979 must await the NEB's report on BL's 1979 corporate plan. I expect to receive the plan shortly. When we have studied it, I shall put the Government's conclusions before the House. This debate will not deprive the House of the opportunity to study and discuss funding arrangements for BL on a later occasion. I told the House on Monday that I wanted to provide additional information so that the House would have as much information as practicable.
  I must stress that the Bill is not a blank cheque for assistance to the company. The survival of the company and of the hundreds of thousands of jobs dependent upon it can be achieved only by the efforts of management and the work force.
  2032
  The only valid guarantee of their future is to maintain their competitiveness.
  If 1978 was a turnabout year for BL—I think it was—it may equally have been a commercial turning point for Rolls-Royce. In March it received an order for its RB211 engines to power the Lockheed TriStars for Pan-Am in the face of fierce competition from American engine manufacturers, especially General Electric. That was a vital deal for the company. It ensured that Rolls-Royce retained its position as the only engine supplier for the TriStar. It broke new ground with one of the world's major airlines.
  Since then, the RB211–535 engine has been chosen as the launch engine for Boeing's new 757 aircraft, which has been ordered by British Airways and Eastern Airlines. The Government have approved the launch of that engine, which will also be suitable for other aircraft in the new generation of civil airliners. The development will secure many jobs not only in Rolls-Royce's own factories but among the company's many suppliers throughout the country. It will preserve Britain's position in this high technology industry.
  The company has done well in other areas. The RB211 has been chosen to power the Boeing 747s used by both Cathay Pacific and Qantas. The company's other engines continue to sell well, and the Spey deal with Romania will help to ensure the continued production of the engine over the next few years. I must make it clear that the development of the 535 engine and the further improvements to the basic design of the RB211 will involve substantial expenditure over the next few years—expenditure which is vital if the company is to remain in the big league of world aeroengine manufacturers. Let the House be in no doubt that the passage of the Bill is essential for the continued prosperity of Rolls-Royce.
  Mr. Ian Lloyd: Will the right hon. Gentleman inform the House whether the scale of the research and development commitment for the new mark 211 engine is at the same level of magnitude as for the original 211 engine?
  Mr. Varley: Frankly, I do not know. I do not know whether the scale is the same. I assume—if this were not so I should not have had the recommendation that I received—that the scale of R & D

  2033
  and other resources devoted to it is adequate. I do not know whether it is on the same scale. I should think that it is not, given that perhaps there is some carry-over of transfer technology taking place from the original 211 engine to the 535. That is a, matter of interest to me. It is a matter on which I should obtain more information, and I shall write to the hon. Gentleman about it.
  BL and Rolls-Royce are the NEB's major commitments. However, it has important and profitable investments in other significant companies. Ferranti is a great success story. The NEB increased its shareholding in ICL last week and is now the principal single shareholder. Substantial profits are expected for 1978 from Fairey. Then there are the small companies for which the NEB is a crucial new source of capital.
  Mr. Frank Hooley: Has any directive been given to the NEB, or is it operating on any understanding, about the activities in South Africa of the companies for which it is the holding agency? It is known that British Leyland has important and expanding activities in South Africa. We know that ICL is indulging in the supply of computers to the South African police and armed forces. That supply has political implications, apart from economic ones. Has the NEB received any directives on this matter from the Government? If not, is it intended to give it any such directives?
  Mr. Varley: I should have anticipated my hon. Friend's question. I know that he takes a great interest in these matters. We have had correspondence on them. British investment in South Africa is something to which the Government have given some attention recently. My right hon. Friend the Minister of State has had discussions with ICL on that very issue. We shall have to ascertain the result of the discussions with ICL. When that has been done, and if it becomes necessary, we shall make suitable arrangements to inform the House.
  The NEB is an important instrument in the action in relation to the Government's industrial strategy. A notable success is the role that it is playing in computers, computer software and micro-
  2034
  electronics. The actions of the NEB in these sectors have helped. A major impetus has been given to the ability of the United Kingdom to compete in what promises to be a major new development between now and the end of the century.
  Another area of crucial importance is the development of the NEB's regional boards. I want to see the Board's interest increase. It has a statutory responsibility to promote productive employment throughout the United Kingdom. That is its primary responsibility. But sometimes the impression is given that it has little employment interest in the regions. That is not true. There is not a region in the United Kingdom in which the NEB does not have an interest. For example, it has a stake in companies in the North-West region, which are employing more than 25,000 people.
  I am sorry that I was rude to my hon. Friend the Member for Ormskirk (Mr. Kilroy-Silk) but he should realise that the NEB has a stake in the North-West. There are 25,000 jobs dependent upon the NEB. It ought to do better and I agree with him on that. It has to do more in the regions. There is no limit in the NEB's total budget to the funds available for regional purposes.
  Mr. Kilroy-Silk: I am grateful to my right hon. Friend for giving way, but he said that everything I had said was wrong. I hope that he will now contradict me and say that I am wrong when I say that the NEB will not help the Kirkby co-operative as a fall-back position and that the INMOS headquarters research and development facility will not be located in Bristol.
  Mr. Varley: With regard to Kirkby, my hon. Friend knows that that was not a recommendation of the working party. The working party on Kirkby was set up at the request of the workers' cooperative. We agreed to it and they agreed to abide by the findings. We now know they are not doing so, and there is an application by Kirkby before the Department. We are statutorily required to consider that under the terms of the Industry Act 1972 and we shall do so. Kirkby has been closed for the past two weeks, not by any action by the Government but by industrial action. I cannot understand why the Transport and General Workers' Union, by primary or

  2035
  secondary picketing, should want to close that co-operative. I hope my hon. Friend is using his influence to ensure that it gets the necessary supplies. It will not serve any purpose to keep that cooperative closed.
  With regard to INMOS, the headquarters has not been located in Bristol. The decision has been taken to locate the technology centre in Bristol but not the headquarters. I hope that the INMOS project will be a success. Even that must be put in perspective. About 90 per cent. of the expenditure and 90 per cent. of the jobs will be in the assisted areas. Everyone is expecting me to give the NEB some direction. At some stage one must follow the judgment of those with the responsibility.
  Some Conservative Members may say that the NEB should not be in microelectronics at all. I must rely on the judgment of the Board. Provided that it acts within the statute—and it does act within it— there is no reason for me to put my judgment over that of the Board. I should have been delighted if the technology centre had been located in Manchester or somewhere else in the North-West. I could not say to the National Enterprise Board and people with greater knowledge of microelectronics than mine that their judgment was wrong.
  With regard to general financial duty, on each investment that it undertakes on its own account the NEB is required to seek an adequate return within a reasonable period, not losing sight of profitability. On these investments the NEB is under a financial duty to earn a return on capital employed of 15 per cent. to 20 per cent. by end-1981, and to make steady progress towards that rate in the meantime. It is not essential that each and every investment should secure this rate, but the NEB's investments as a whole, other than in BL and Rolls-Royce, must do so.
  So the NEB has clear responsibilities in relation to financial performance. The duty is an essential discipline, and one to which the Government attach great importance, since it is the only satisfactory way of appraising the NEB's success. This was of great significance in the difficult issue of the NEB's accountability to Parliament.
  Mr. Michael Marshall: The House is grateful to the Secretary of
  2036
  State for giving way a number of times. The last unaudited accounts that we have were received some time ago. Will he give us the latest figures for return on capital as at 31st December on unaudited accounts?
  Mr. Varley: I cannot give that information, but steady progress is being made on these investments to meet that target of 15 per cent. to 20 per cent. by the end of 1981. It is significant and I do not want to play it down. I want to give the House as much information as I can about the National Enterprise Board, its targets and its performance. It is an organisation that is well worth supporting. I hope that Conservative Members will not in subsequent speeches stick to their original hostility or pursue a vendetta against the NEB.
  On the question of accountability, the Public Accounts Committee has urged that the Comptroller and Auditor General should have access to the NEB's books in order that the Committee may be advised in detail of the way in which the NEB has made its investment decisions. I know that this is a matter on which the Committee has the support of many hon. Members. The Government, for reasons which the Committee presented very fairly in its reports, has taken a different view.
  There are, however, some points that I should like to make briefly. It would be wrong to imagine that the NEB is somehow escaping parliamentary control. The NEB is accountable to Parliament and there is no doubt about that. My Department has clear arrangements for monitoring the NEB's activities, for examining its plans and for authorising major new investments and financial commitments. All my Department's records are accessible to the Comptroller and Auditor General. The Public Accounts Committee has every opportunity of examining the Department and the NEB about any aspect of the NEB's affairs. I am answerable to Parliament for the NEB's overall performance, within the well-established limits and procedure of parliamentary practice, as explained by my right hon. Friend the Leader of the House on 18th December 1975.
  But these matters need to be considered in the wider context of the Comptroller and Auditor General. My right hon.

  2037
  Friend the Minister of State, Civil Service Department, told the House on Monday that the Government had taken careful note of the views of the Expenditure Committee, the Public Accounts Committee and the Procedure Committee on this matter. In particular, the Expenditure Committee has made various recommendations concerning public audit arrangements, including the suggestion that the Exchequer and Audit Departments Acts need revision.
  The Government have been considering this carefully, together with the recommendation by the PAC that the Comptroller and Auditor General should have access to the books of the National Enterprise Board and the British National Oil Corporation. I hope the House will accept that our response should be made within the framework of a considered response and a proper look at this, rather than a piecemeal response.
  This would probably be done best by fresh legislation defining more directly and explicitly the responsibilities of the Comptroller and Auditor General in modern conditions. The Government have noted that the Comptroller and Auditor General has himself expressed support for this view. Accordingly, the Government have decided to put in hand a study of the Comptroller and Auditor General's present-day role and the corresponding new legislation that would be necessary, with a view to considering the introduction of a Bill in the next Parliament.
  We have noted that the Public Accounts Committee will conduct a further inquiry into its own possible developments in the role of the Comptroller and Auditor General. The Government will wish to consider any further proposals which may result and will, in any event, arrange for the appropriate parliamentary Committees to have the opportunity to express views in due course on the Government's specific proposals.
  Mr. Michael English: I thank my right hon. Friend.
  Mr. John Garrett: What kind of study is this? My right hon. Friend seems to have announced a major constitutional reform in the course of a debate where such an announcement would not be expected. Is this study to be a parliamentary one? Will a Com-
  2038
  mittee of the House carry it out? Also, what will be its relationship with the studies that have already been undertaken?
  Mr. Varley: It will be held in connection with studies which have already been carried out. The Procedure Committee had a good deal to say about this. My right hon. Friend the Chief Secretary to the Treasury will be in charge of this aspect, because it spans several Departments and organisations. He will fill out the details at an appropriate time.
  Mr. Hordern: The Secretary of State has made an important announcement. The powers of the Comptroller and Auditor General are very old and very important. Will he assure us that there will be no diminution of the responsibilities and powers of the Comptroller and Auditor General?
  Mr. Varley: It is certainly not in our mind to have any diminution in the powers. That has not been considered by the Government at all. I can give that assurance.
  Mr. Edward du Cann: The proposal that there should be an examination by Government of the function of the Comptroller and Auditor General and the Exchequer and Audit Department is to be welcomed. So is the rapid timetable that the Secretary of State has suggested in that regard. However, the rest of the statement is far from satisfactory. The suggestion that the Comptroller and Auditor General cannot have access to the books of the National Enterprise Board or the British National Oil Corporation is not acceptable. A Select Committee of this House has twice recommended—the first occasion 18 months ago —that a different situation should obtain, and the Secretary of State has a duty to accept that recommendation. There is no logic in the proposal that this should not be allowed.
  On Monday it was agreed that the Comptroller and Auditor General should have access to the books of the national Housing Corporation, and there can be no sense in denying him the opportunity to see the books of the NEB if he is allowed full access to the books of the Scottish Development Agency. I hope the Secretary of State will reconsider this.
  Mr. Varley: I stand by what I have said tonight. We shall have to see how the review takes place. I am not yet persuaded to go as far as the right hon. Member for Taunton (Mr. du Cann) has suggested, for the reasons that we have made plain on previous occasions. The Government's views have been conveyed to the PAC.
  An impression has been given that, by some means or another, the Government are evading their responsibilities under the 1975 Act. That is not true. The right hon. Gentleman and some of his hon. Friends say that this is inadequate, and that is a defensible point of view. Probably it is inadequate in their eyes, but we think it is satisfactory at present and that there is adequate scrutiny by Parliament of the NEB.
  At the end of the day the PAC has the power of all Select Committees and can send for persons, papers and records. It can hand those papers over to the Comptroller and Auditor General who can then decide, report and advise the Committee. I do not think that we shall persuade one another. As a Government we have gone a long way to meet the points that have been made.
  Mr. Budgen Mr. Budgen rose—
  Mr. Varley: No, I really must get on. I have already given way a great deal. I am not being discourteous to the hon. Member.
  I move on to the Scottish Development Agency and the Welsh Development Agency. Like the NEB, they have an important role as a source of investment finance for industry. The SDA and the WDA have powers that parallel very closely those of the NEB. But, in addition, the Agencies have powers and duties to undertake environmental improvement schemes, to build factories, to clear derelict land, to engage in industrial promotion and to provide loans and advisory services to small firms. My right hon. and learned Friend the Secretary of State for Wales and my right hon. Friend the Secretary of State for Scotland have asked me to pay a special tribute today to the imaginative and effective way in which their respective Agencies tackle their formidable and challenging tasks—[HON. MEMBERS: "Where are the Secretaries of
  2040
  State?"] I cannot understand the sudden enthusiasm of the Tories, because they voted against both these Agencies coming into being.
  The Scottish Development Agency has firmly established itself in the industrial scene and has gained widespread and genuine acceptance and support from the Scottish banks and industry and commerce generally. The SDA has built up equity investments in 35 companies throughout Scottish industry, amounting in total value to £20 million. That is in addition to its loan investments and the special help that it gives to small firms. Upwards of 35,000 jobs already depend directly or indirectly on the SDA's work. It has built and converted factories to the extent of 1·5 million sq. ft. It has taken a leading part in the special environmental and industrial renewal projects in the east end of Glasgow, and it is responsible for other major environmental schemes on Clydeside. It has approved £60 million worth of schemes for the clearance of derelict land in Scotland and developed a steadily expanding effort in industrial promotion both at home and overseas.
  The Welsh Development Agency has comparable achievements to its credit. In addition to its important role as a source of investment finance for Welsh industry, it is responsible for an ambitious and successful programme of factory building and for forming a "land bank"—
  Mr. Dafydd Wigley: The Secretary of State mentioned the number of equity holdings of the SDA in Scotland. How many equity holdings does the WDA have in Wales? Can he confirm that these are substantially fewer and that if £250 million is going to the WDA there is a strong case for more work in this direction?
  Mr. Varley: I do not think that I have the information with me, but when my right hon. Friend winds up this debate, whenever that may be, he will try to give that information. If the hon. Gentleman is saying that the Agencies must do even more—and he is one of the first to pay credit to their efforts so far—I agree with him.
  The hon. Gentleman knows that the WDA provides new sites for industry,

  2041
  housing and schools, especially in the South Wales valleys where industrial land is scarce. The WDA is responsible for a growing programme of environmental improvement which is important in the older industrial areas. Through its small business unit, the WDA provides loans and advisory services to many small businesses which are such a significant source of employment in the Principality. It is doing an outstanding job in promoting the attraction of Wales as a location for industrial development. In the three years since its establishment, the Agency has worked to support the Government's strategy in creating a diversified, modern industrial base in Wales. Its philosophy has been that of the industrial strategy. The key to better employment prospects lies in the creation of efficient, internationally competitive industries.
  The Agency's role as an instrument of economic development is widely accepted by both sides of industry in the Principality. I am sure that the House will recall the opposition of the Conservative Members to the Welsh Development Agency Bill—they voted against the Second Reading—although I understand that they have since had a change of heart. I hope that that is so and that the Scottish Tories have had a similar change of heart about the Scottish Development Agency. I hope that the English Members will also have a change of heart about the NEB at some stage.
  Mr. Wyn Roberts: In November we were told in the Welsh Grand Committee that the Welsh Development Agency had spent just under half of the £100 million that it was allowed to spend under the Welsh Development Agency Act 1975. The Government could, of course, have followed that up by coming hack to the House for an extra £50 million some time in the next financial year. Can the Secretary of State explain why there is this hurry to increase the money available to the Welsh Development Agency at this time when no increase in the rate of spending is anticipated?
  Mr. Varley: I do not want to avoid that question, but, as the hon. Gentleman knows, the WDA has the same powers of investment as the NEB. Even though Conservative Members opposite voted against the Agency, I expect, as does the
  2042
  Secretary of State for Wales, that the resources to be allotted to it will be needed over this period. I shall come to that in a moment. I think that the hon. Member for Pembroke (Mr. Edwards), who speaks on Welsh matters for the Opposition, will be the first to acknowledge that, far from being seen as some sort of menace to industry in Wales, the WDA is now very welcome and is encouraged—and I am sure the hon. Gentleman is encouraged—by the support that it gets from industry and the banks.
  Mr. Nicholas Edwards: The right hon. Gentleman has not so far given us a single figure about the Welsh Development Agency. Can he, therefore, give us the aggregate amount outstanding against the present limit and tell us how much of that aggregate amount outstanding relates to the general external borrowing of subsidiaries which is being brought in, we understand, for the first time?
  Mr. Varley: I am coming to those figures, but I am saying to the hon. Gentleman that I think he now realises that the Agency has an important role to play. He did not actually say so when he intervened, but I take it for granted that the Scottish and Welsh Tories have now repented on these matters and that they really do support the Agencies. The Agencies support the economies of Wales and Scotland and the Bill will give them the financial security to plan ahead. The point on which the two hon. Members from Wales who have just intervened ought to focus their minds is whether the Agecies will have the financial security to plan ahead. They need to know exactly what they have spent and that is the question to which I am coming now.
  The initial limit of the SDA is increased from £200 million to £500 million, which may be raised by an affirmative order to £800 million. In total, the limit is raised by £500 million, and this represents, as far as we can estimate, about five years of further activity for the Agency.
  Nobody can be absolutely precise about this matter. It may be that the spending will be higher, and in that case, with the encouragement of the House, we should have to come back and look at that. That is the plan at the moment. So far the

  2043
  Agency has spent, or committed, about £170 million against its financial limit, and my right hon. Friend the Secretary of State for Scotland thinks it right to take this opportunity to seek to raise the limits as a reflection of the Government's confidence in the Agency's work and of their determination, often stated in the House, that the Agency should not be hampered in discharging its vital task because of uncertainty about its finances.
  For the same reasons, the Bill provides for the raising of the Welsh Development Agency's financial limit to £250 million in the first instance, and to £400 million subject to affirmative order. The total increase envisaged is £250 million, which represents about five years' activity for the Agency.
  Mr. Richard Wainwright: Before the right hon. Gentleman leaves the two Agencies, will he be good enough to explain to the House—because he has already explained the many similarities between the Agencies and the National Enterprise Board, and has also explained his concern that the Agencies should not in any way be hampered—in what way the Agencies have suffered from the inspection of the Comptroller and Auditor General which they have to bear, while the National Enterprise Board has not?
  Mr. Varley: I understood the point made by the right hon. Member for Taunton although I did not take it up. I think that I can give the House the explanation. I am an honest fellow, as the hon. Gentleman knows and if I do not know all the answers I am prepared to come to the Dispatch Box and say so. But the significant difference is that the Agencies have environmental responsibilities. They have additional responsibilities over and above those of the NEB. We know that the Agencies, both in size and in their resources, are different. They have taken over some of the responsibilities that are currently borne by some local authorities. That is one explanation and I hope that the hon. Gentleman will consider that and take it into account.
  Mr. Douglas Henderson: Can the right hon. Gentleman tell us, concerning the figures put forward for the Scottish Development Agency in particular, whether any percentage of the National Enterprise
  2044
  Board's money has been invested in Scotland over and above the figures he has given to us, and if so how much?
  Mr. Varley: I cannot give the actual figures of the amounts which have been invested, but Rolls-Royce has operations in Scotland, as does British Leyland and other organisations. For example, when I referred to a point made by my hon. Friend the Member for Ormskirk (Mr. Kilroy-Silk), I said that the National Enterprise Board had a presence in every region and country within the United Kingdom. The interests of the NEB in Scotland are significant. During the debate on the NEB (Financial Limit) Order last April we had a lot of talk from the Opposition—and I dare say that we shall have a lot of double-talk today—about their hostility to the National Enterprise Board. They are changing their attitude somewhat from total hostility, so that we no longer have the kind of speeches from the right hon. Member for Leeds. North-East (Sir K. Joseph) that we used to have from the hon. Member for Henley (Mr. Heseltine) when he was the Opposition's industry spokesman. The right hon. Gentleman is not quite as hostile to the concept of the National Enterprise Board as was the hon. Member for Henley.
  However, I hope that the Opposition do not try to pretend, as their reasoned amendment suggests, that they can vote against the Bill without inflicting damage on the vital work being carried out by the Scottish and Welsh Development Agencies. The defeat of the Bill would be a serious blow to confidence in Scotland and in Wales, and I hope that they will not pretend that they can vote against the Bill without doing harm to British Leyland and to Rolls-Royce. The defeat of the Bill would inflict irrevocable harm on those companies. British Leyland and Rolls-Royce and other subsidiaries of the NEB must continue, and I do not think that the Opposition can cancel out their votes by saying that they would create some other methods of dealing with the Agencies, with BL or with Rolls-Royce. They cannot do that. They can be sincere when they say that they want to support Rolls-Royce and British Leyland only by re-thinking their opinions.
  We shall be voting for the continuation and progress of the good work of the Agencies and the National Enterprise

  2045
  Board, and that is why I confidently ask the House to give the Bill a Second Reading.
  Mr. Deputy Speaker: I should inform the House that Mr. Speaker has selected the amendment in the name of the right hon. Lady the Leader of the Opposition.
  7.40 p.m.
  Sir Keith Joseph: I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:
  "this House, while accepting the usefulness of a significant part of the work of the Scottish and Welsh Development Agencies, declines to give a Second Reading to a Bill which is based on totally inadequate documentary evidence of the performance and prospects of the National Enterprise Board."
  The House will have seen from our amendment that we distinguish between the work of the Scottish and Welsh Development Agencies and that of the National Enterprise Board. My hon. Friends the Members for Pembroke (Mr. Edwards) and Glasgow, Cathcart (Mr. Taylor) and other hon. Friends from Scottish and Welsh constituencies tell me that much of the work of the Agencies, which have functions over and above those of the NEB, is valued in Scotland and Wales. That is particularly true of the functions of the Agencies that are not connected with industrial investment and, subject to watching the powers and the spending of the Agencies, we intend when we are returned to office to leave them in operation.
  We have noted the work done by the Agencies. It is particularly interesting to us that in its investment activities the SDA has taken care to go into partnership with private enterprise on a number of occasions rather than embarking on ventures on its own. The main point for the debate is that there is no need for the Agencies to appear in the Bill. The Secretary of State tried to give the impression that the Bill is vital to the work of the Agencies. He knows that that is rubbish. They have packets of head room within their present spending powers. However fast they go, it is inconceivable that they could use the money available to them within the next significant parliamentary period. We have the impression that the Agencies feature in the Bill and are given huge increases in their borrowing powers
  2046
  simply in order to demonstrate to the Scottish and Welsh nationalists how much the Government love them.
  It is necessary to point out to any who may be gulled by this apparent affection that, while the Government have proposed in the Bill to increase the borrowing powers of the Agencies, no provision appears to have been made in the public expenditure White Paper published yesterday for any extra spending power for either of the Agencies or for the NEB. The Bill is strictly a cosmetic operation, and I am sure that constituents in Scotland and Wales will see it for what it is.
  Mr. Ted Leadbitter: I want not to change the right hon. Gentleman's chain of thought but to follow it through. He made abundantly clear that a future Conservative Government would leave the SDA and WDA alone, but he omitted to say what was the intention of the Conservatives in regard to the NEB.
  Sir K. Joseph: I have nothing new to say about our intentions in relation to the NEB. We have explained them a number of times. We shall keep the Board to run its existing fortfollo, with the instruction that it should, with due care for the public interest, sell its assets when it can, which will, no doubt, mean that it will retain British Leyland and, perhaps, Rolls-Royce for a little longer than it will retain a number of its other assets.
  I am coming now to discuss the NEB because we regard it as a symptom of a deep Labour misunderstanding of the national economic position and need. I shall be saying some critical things about the function of the Board, but it is not my purpose to say anything critical about the members of the Board or the NEB staff. I have a respect for those whom I know. They are hard-working, diligent, well-intentioned, public-spirited figures and nothing that I say is meant to be critical of them. In fact, every time that the hon. Member for Ormskirk (Mr. Kilroy-Silk) attacks the NEB for what he regards as its disgraceful prudence, the Board members go up in my estimation. Indeed, I shall add to their reputation for prudence by mentioning that the Board has sold three companies, two at a profit and one at a loss. We should like to see the NEB release its assets to the

  2047
  private investor as frequently and as fast as possible.
  I must tell the House that one group of business men who had had dealings with the Board took the trouble to come to see me, entirely spontaneously, to say that they had found the staff of the NEB extremely effective and courteous in their negotiations. I say nothing critical about the Board members or the staff.
  Indeed, I must recognise that industry's own attitude to the Board is ambivalent. On the one hand, industry welcomes, in the dangerous world that Governments, particularly Labour Governments, have created for business people in this country, another possible source of help, particularly if that help can be obtained at slightly below the going rate. I am not suggesting that it is always obtained below the going rate, but can one blame business men for being glad that there is another possible source of help?
  On the other hand, the same people and some other business men resent the Board because it provides yet another unpredictable factor in an already excessively unpredictable economic world. Which business man can be sure, as he assesses the competition and risks faced by his venture, when or whether the NEB will plunge in with what is, in effect, subsidised, unbankruptable competition?
  I shall not try to assess the performance of the NEB because my hon. Friend the Member for Surrey, North-West (Mr. Grylls) and other hon. Friends will have a number of valid points to make in that regard. As we emphasise in our amendment, the House is being asked to approve a massive increase in the authorised funds of the three Agencies with disgracefully minimal information, reports and prospects before us.
  On two essential pieces of information, the Government are behind their own timetable. I think that we have a right to expect that by now the target rate of return for Rolls-Royce should have been announced and I am sure that we have a right to expect that the promised review of British Leyland, which was intended to start in November, should have begun. I gather that it has not yet even started.
  The Secretary of State said that I must deal with the charge that, in voting
  2048
  against the Bill, we shall be jeopardising the immediate future of British Leyland and Rolls-Royce. That is rubbish. The NEB has, on the Secretary of State's own admission, a total of £170 million head room under its present authorised capital. In addition, it could sell some of its assets, and if there remained a gap and a sum necessary to deal with the immediate needs of Rolls-Royce and British Leyland—and the Opposition have much confidence in Michael Edwardes and his colleagues being able to judge when, and how much of, the promised help to British Leyland should be released—the Government have the power to vote money, the same money that they are proposing to make available through the Bill, by other means. There is no validity in any charge that we are endangering the next stages of development of British Leyland or Rolls-Royce.
  We are grateful to the Secretary of State for not skimping on the time he devoted to the Bill, though we still feel that he has not given us nearly enough information on which to make judgments on these important matters. I do not propose to emulate the length of the Secretary of State's speech, much of which was taken up by answering questions. I intend to go to the nub of our objections to the concept of the National Enterprise Board. It exists. For the moment it has the function of looking after Rolls-Royce and British Leyland. We intend to keep it for that purpose for the time being.
  Our objection to the Board starts from the grandiose and pretentious claims that accompanied its birth and which still reverberate in the mouths of Labour Ministers and Back Benchers. I have a series of quotations from the right hon. Member for Bristol, South-East (Mr. Benn). I shall not weary the House with the bombast of their claims. But even in recent publications the Scottish Development Agency has been spoken of as being likely to promote the regeneration of Scottish industries. The Secretary of State did not insult us by saying that the Board will regenerate British industry, but he said that it will promote "national competitiveness and efficiency". We regard such claims as grossly unjustified and overrated. We believe that words such as "regeneration" associated with one body, however well-meaning, reveal a lack of understanding of our economic

  2049
  plight which makes this Government a danger to the nation.
  Labour's attitude to private enterprise has been hostile since the birth of the Labour Party. I have a personal regard for the Secretary of State, and Ministers have learned in a hard school. They have learned that it is not easy to make business decisions as one hurtles from one nationalised industry crisis to another, under-briefed, under-slept, under-informed and under-educated about the risks and the options of a bitterly difficult and competitive economic world.
  I can sum up what the Labour Party, in its no doubt sincere attitude to industry, has taught its supporters. First, it has taught that there is a conflict of interest between workers, managers and owners, and that that conflict should lead to obstruction rather than co-operation on the shop floor. That has been Labour's preaching in recent generations. Alas, it has been emulated in many of the trade unions.
  The second lesson which the movement taught was that people matter more as producers than as consumers. But it is consumers, at home and abroad—and only consumers—who are the real employers of producers.
  The third thesis which the Labour Party has taught is that profits, even when earned in competition and subject to the law, are evil and involve exploitation.
  I do not accuse present Ministers of saying that now. I am explaining the teaching of the Labour Party over the generations. I can provide innumerable examples of that teaching. Only too often has the Labour Party given the impression that wealth comes from Governments and that jobs can be created by Governments. The plight of our economy today —partially de-industrialised, competitive only thanks to low rates of pay and low rates of profit—is the result largely but not entirely, because the Conservative Party has played its part in not managing the economy brilliantly, of decades of discouragement by Labour preaching of enterprise, co-operation on the shop floor and economic success.
  Let us examine the results. The principal feature of our economy is control. We have exchange controls, pay controls,
  2050
  price controls, dividend controls and rent controls. We have a more controlled economy than any other free society. Our economy is dominated by high personal taxation at a vicious level which is resented by those earning at all levels of income, earned and unearned. Our economy is dominated by an anti-enterprise spirit. It is an economy with a large element of nationalisation with the immunity from bankruptcy that breeds indifference to the consumer interest.
  Mr. Varley: The right hon. Member says that this Administration have learned some lessons over the years. Perhaps he would like to tell us about the lessons he learned between 1972 and 1974. As a senior Minister in a Conservative Government the right hon. Member put on the statute book the Industry Act 1972, which gave all the powers which we now use.
  The right hon. Member was a member of a Government with a statutory incomes policy. That Government had price controls and dividend controls. He was a member of a Government which falsified all the accounts of the nationalised industries and by their counter-inflation policy plunged each of them into huge deficits. If he talks of lessons, he must tell us the lessons that the Conservative Party has learned.
  Sir K. Joseph: I do not deny that we have learned lessons. The country would be more comforted if the present Government accepted the mistakes that they have made. I shall not be diverted from this brief catalogue of the real problems of the economy. I have already referred to nationalisation. On top of all these evils there is high Government spending, borrowing and printing which leads to high interest rates and the crowding out of private enterprise.
  The Minister of State, Department of Industry (Mr. Gerald Kaufman): The Conservatives were the greatest printers of money of all time.
  Sir K. Joseph: Should not the Minister of State avoid the mistakes that the Government blame upon others? They are not avoiding them. On top of the other evils is pervasive Luddism sanctioned by the strike threat. All those evids will remain, alas, when present miseries have disappeared.

  2051
  This unique combination of disincentives, disadvantages, discouragement and controls has weakened British business. This is the evil that results largely from Labour attitudes. This is what must be corrected.
  Against that background the National Enterprise Board and the Bill are not only irrelevant but misleading. So long as these major evils go uncorrected—and Ministers tend to make them worse rather than better—what is the point of fiddling around with the National Enterprise Board?
  I have searched my memory of school days to find a phrase which summarises the situation of the NEB in this context. It is ignis fatuus—a will-o'-the-wisp. That is a natural phenomenon which leads people into quagmires, swamps and away from safety.
  The NEB, because it symbolises the Labour Party's belief that the economy can be saved by intervention which distracts it from putting right the economic evils, operates as a will-o'-the-wisp. The Board is a token of the Socialist illusion that one can bash and bash private enterprise but that it will still deliver the goods to support the endless public spending promises which Socialists make.
  But, as we see, private enterprise will not be able to go on delivering the goods. That is not because of an inherent weakness or managerial inefficiency. It is not because of a weak capital market but because of the conditions that successive Governments—particularly Labour Governments and more particularly this Labour Government—have created. Against that background, the NEB is a distraction down a blind alley. It has some uses, as I have explained, in connection particularly with British Leyland and Rolls-Royce. A prospering economy could afford it and would not want it. A weakened economy, such as ours, does not want to see its role magnified in the way that the Bill proposes.
  What can it usefully do? It can manage a portfolio of assets. Some of those assets and some of those investments will be successes. Some will be failures. I am not suggesting that it would be more successful if it managed more, but, if it is suggested that we have to have a National Enterprise Board to buy into British equities because the British capital
  2052
  market is not strong enough, let us see what is reducing the strength of the British capital market. Let us at least wait to see what the Wilson committee finds. But in the light of the enormous success of the British capital market in financing North Sea oil, I do not see that there is much evidence of weakness other than caused by the high taxation, the high inflation and the crowding out to which I have referred.
  The Secretary of State suggested that the NEB is needed for innovation and spoke of microprocessors. It is true that the NEB has awakened the media to the drama inherent in microprocessors, but are we in this House really to be asked to believe that until the NEB came along the great firms in this country and abroad, the General Electric Company, Racal, Plessey, Texas Instruments and all the others—I do not wish to insult any of them by leaving them out—were not watching closely and with passionate interest the fate and prospects of different developments of the microprocess world? After all, recent industrial history is littered with the corpses of firms which embarked too soon or in the wrong way on microprocess developments.
  I do not believe that the NEB can justify itself by what it has done by awakening media interest in microprocessors. Are we to believe that the NEB is to be justified by some venture—if it ever embarks on such a thing—into restructuring British industry? I have no evidence of such an intention, but how could we tell, even if it were to propose some great restructuring, that the project would turn out to be a GEC rather than a British Leyland? Initiatives taken in the past by agencies such as the NEB have often made things worse and not better.
  I shall try now to sum up our case. Britain does not need Enterprise with a capital "E" enthroned in the midst of an over-manned, over-taxed and over-regulated economy. What Britain needs is enterprise with a small "e" in hundreds of thousands of firms, resulting from an encouraging economic climate. We do not think that it makes sense to seek salvation by the route of Enterprise with a capital "E" while ignoring completely the need to create an encouraging economic climate for enterprise with a small "e".

  2053
  The NEB is a sort of Janus, a two-faced totem of Socialism. The recommendation of the Select Committee that private borrowings should be counted into the authorised capital of the NEB is no doubt an honourable one, but it is also very convenient for the Government, because it allows them, at no cost in public spending, to dress up a massive figure of public finance authorised for the three agencies. The result is that the Bill contains figures which no doubt Labour Ministers will peddle round the country as demonstrating their powerful support for interventionist Socialism, while at the same time they are stressing to the City and to the financial press that no extra public spending is involved.
  The Bill fosters further the illusion and error that salvation can come from intervention, and further indifference to and incomprehension of the real problems. The Government and the Bill focus on a fraction of the economy instead of on the economic climate as a whole. The Bill is a token of a wrong diagnosis and a wrong prescription. That is why I shall ask my right hon. and hon. Friends to vote for the amendment and against the Bill.
  8.5 p.m.
  Mr. David Watkins: The right hon. Member for Leeds, North-East (Sir K. Joseph) really let the cat out of the bag in relation to his party's policy towards the NEB when he indicated that that policy would be to use the NEB with the public resources at its disposal to spend public money to rescue failures, and that as soon as they had been made profitable at the public expense they should be handed over to private interests. That, combined with the vast cuts in public expenditure which his party is also proposing—in order to give large tax relief to the very private interests to which he proposes to hand over industries which have been made profitable at the public expense—would give the country a singularly unattractive and disastrous bargain.
  When my right hon. Friend the Secretary of State made his telling intervention about the Tory Government's record and about the Industry Act 1972, he could also have added that that Act had to be introduced by that Government be-
  2054
  cause of their doctrinaire and disastrous sweeping away of the apparatus for regional development which had been set up by the previous Labour Government. The right hon. Gentleman talked about a wrong diagnosis of the national position but his own diagnosis and his own party's record in office, and currently in opposition, lay his own and his party's diagnosis very much open to question.
  I want to deal particularly with the provisions of the Bill which relate to the NEB. As my right hon. Friend said in opening the debate, the NEB clearly needs more money for its requirements in order to fulfil its existing obligations, and he listed BL and Rolls-Royce among those cases where that applied. I suggest to him that it also needs a much more dynamic approach to the use of the resources allocated to it than has been seen hitherto. The NEB has played relatively little part in regional policy or in the development of industrial democracy, and the main theme of my remarks is that the NEB should certainly receive the increased finances proposed in the Bill but that it should be accompanied by Government directives for a more dynamic approach in those two directions.
  As my right hon. Friend said, the NEB has some regional dimension, but it is really a sadly inadequate regional dimension. The scope of its activities, for example, within the assisted areas, in the more needy regions of England, is nothing like that of the Scottish Development Agency or the Welsh Development Agency. That, I emphasise to the Government, is a matter of very considerable concern in many regions of the country.
  The NEB has a regional presence in the Northern region but it has a disappointing record in industrial development there. Such efforts as have been made in the region have been small-scale rescue operations necessitated by entrepreneurial failures and they have been no more than mini-replicas of what it has done on a vastly bigger scale when it had to intervene in BL and in Rolls-Royce, for example.
  There has been in the Northern region —and, I think, in others of the most needy regions of England—no drive to establish new publicly-owned industries, which those of us who supported the idea from the start always thought would

  2055
  be one of the main features and policy operation of the NEB.
  In areas such as my constituency, over the years, where there has been an almost total rundown of the whole mining industry, and now a very severely contracting steel industry, not more than one job in four which has been lost has been replaced, notwithstanding that this is a special development area where the maximum subsidies and incentives exist in order to attract new industry. That is true not only of my constituency but of the West Durham area, the Northern region and other black spots of that region, as well as other regions in the country.
  Mr. T. W. Urwin: I am sure that my hon. Friend has not overlooked the intensity of the problems throughout the Northern region. He is quite justified in his remarks about his own constituency and similarly about others, but the general situation is applicable to virtually the whole of the Northern region.
  Mr. Watkins: I entirely agree with what my right hon. Friend has said. If I may hark back to the disastrous record of the previous Tory Government, one of the things that they did was to cut down the incentives as between the black spots and the lesser black spots and correspondingly worsen the whole situation. My right hon. Friend is absolutely right. I have obviously selected a certain area of the Northern region. He is quite right in saying that the Northern region as a whole is certainly in that category which I have already described in my earlier remarks as being among the needy regions of the country.
  I am well aware that the contractions in the coal and steel industries of which I have spoken arise from technological change and changing demands and that the creation of new employment opportunities, furthermore, is seriously hindered by the continuing world slump. But the NEB was created to provide an alternative system to counter that situation, not to go along with it, which is very largely what it has, in practice, done.
  In the Northern region there is too much Civil Service and academic thinking that is prepared to write off areas,
  2056
  such as West Durham which I have mentioned, as no-growth areas of declining population where new developments are no longer to be encouraged. I completely reject that attitude and I think that my right hon. and hon. Friends who are here from our region would similarly completely reject such an attitude.
  If the NEB is to receive the increased finances proposed in the Bill, it must use them much more dynamically and positively to establish new industries and new employment opportunities in areas such as the Northern region and other hard-hit regions of England.
  Unlike Scotland and Wales, the Northern region has no development agency. Until such time as that deficiency is rectified—and I choose my words very carefully—the NEB must have a much stronger regional role and its increased finance must be accompanied by clear Government commitment that it will have it.
  Mr. Leadbitter: This brings us to a point for my hon. Friend to underpin. The right hon. Member for Leeds, North-East (Sir K. Joseph) made abundantly clear what the objective of his party was regarding the NEB. He described the NEB as ambivalent, and said that there was a degree of opposition to it in the private sector and that he could not find much support for it anywhere. In underpinning his point, will my hon. Friend make it clear to the House that in the Northern region we find no evidence of that? The position is to the contrary. We want more intervention by the NEB, which could work in a complementary role with the private sector and with the public sector. With the contraction of the two main industries that my hon. Friend has mentioned, private enterprise and entrepreneurial decisions alone will not suffice.
  Mr. Watkins: My hon. Friend is, of course, entirely right, and I agree with what he has said. The remarks of the right hon. Member for Leeds, North-East (Sir K. Joseph) and the ambivalent nature of his own and his party's approach to the NEB and the economy in general is another demonstration of the schizophrenic splits which obviously exist in their thinking, which, if matters were under their control, would only result in an industrial wasteland in areas such as the Northern region.

  2057
  The reason why the geographically remoter regions of England did not get the development which they could have had previously was said to be the application of so-called market forces. In fact, powerful forces in the so-called market were just not interested in development in the Northern region and were in a position to rig the market to the disadvantage of that region and other regions similarly situated.
  Turning to the second part of my remarks, I shall refer to the NEB's involvement in industrial democracy. This is something which is at the heart and core of whether we as a nation shall be able to create the wealth which is absolutely necessary for us on a vaster scale than has been so previously. In the creation of wealth we continue to fall more and more behind other countries, and we have done so since well before the First World War. It is something that has not happened, as Opposition Members are so fond of saying, only within the last few years. Our economy, relatively, has been in a state of decline compared with those of other countries since well before the First World War. One reason the situation continues is the general failure to infuse people with a general sense of involvement in the enterprises, whether they are large or small, within which they work.
  It is for that reason that I stress that the NEB's role, as I see it, is that it should have some involvement in industrial democracy. The advancement of industrial democracy is nominally among the objectives of the Board, but in practice, in all of the NEB companies, from the giants such as BL or Rolls-Royce to the small ones, where the NEB has either complete ownership or major ownership and intervention it continued on an entirely conventional and—I put it in inverted commas—"two sides of industry" basis.
  Incidentally, if I may insert a parenthesis, we have talked a great deal about "BL", but I have always been at a loss to understand why the name was changed from British Leyland to BL. It seems to me to be one of the dafter episodes to take place during what I would call the "Edwardes regime". I am entirely at a loss to understand what is supposed to have been the advantage accruing from that change.
  2058
  These industries, although owned by the public through the National Enterprise Board, have no provision for the members of the public who work in them to exercise control except the established management. The NEB rightly requires all its companies to draw up detailed development plans. With the added finances which are proposed in the Bill, I would submit that the Government should issue a directive to the Board that the production of a democratic structure should be included in those company development plans, that financial support for companies will be conditional upon the adoption of a democratic structure and that each company—because it is each company's and each concern's own business—should be required to produce its own agreed proposals to meet its needs for industrial democracy within a given period of, say, six months.
  I remind the House that in the case of small firms we have legislation on the statute book which meets exactly the bill. I refer to the Industrial Common Ownership Act 1976 which—[HON. MEMBERS: "Hear, hear".] I am grateful for the cheers of my hon. Friends. They will be aware that I am referring to a specific legal definition of democratic ownership of enterprises which is contained within a Bill which I had the privilege of introducing and piloting through this House. I remind the House that I had the privilege of piloting it through the House with a strong measure of support from both sides of the House. Indeed, it could not have been put through the House if that had not been the case.
  The NEB's problem in the past has been that it has tried to operate too much within a conventional capitalist framework. It is rather interesting that we have not as yet in this debate heard the phrase "creeping Socialism" which hon. Gentlemen opposite are so often fond of using to describe the National Enterprise Board. But, far from being anything of the sort, it has been a pillar of State capitalism. The whole approach of that sort is no use in a country whose fundamental problem is a dying capitalist system, a system which uses every device of mass advertising to encourage people to expect ever-rising living standards but which has totally failed to produce the wealth to provide those standards.

  2059
  In many ways that is, perhaps, the crux of the whole argument in which we are indulging in this debate—the different analysis which the right hon. Member for Leeds, North-East put upon the approach to that, and that which we on the Labour Benches put upon it.
  If the NEB is to be an effective force in grappling with this fundamental national problem, it must have the additional finances proposed in the Bill, but it must also use its resources much more dynamically and more positively than it has done in the past.
  8.20 p.m.
  Mr. Michael Marshall: It is always a pleasure to be called to speak following the hon. Member for Consett (Mr. Watkins). He made a thoughtful speech, upon which it is worth pondering. I certainly recognise the work which he did in the Industrial Common Ownership Bill, which, as he said, carried support in all parts of the House.
  The reason why I particularly welcome the opportunity to speak in this debate tonight is that I think it comes directly into the Secretary of State's orbit. I am glad that he is present in the Chamber. I think that he would be the first to concede that this week he has had full warning of what was expected of him. At Question Time on Monday it was made abundantly plain that we required detailed documentation and, indeed, that we wanted to know precisely what the picture was in looking at the NEB. In his speech tonight the Secretary of State has helped us in a number of directions, but it would be disguising my criticisms right at the beginning if I implied that he had done anything other than a superficial job.
  The Secretary of State is an agreeable and elegant figure in his own right, but he reminded me of nothing so much as a grasshopper in a minefield. He skipped and he hopped, and he touched on a number of issues, but we got absolutely no depth. I intend to devote some attention to what the right hon. Gentleman said and to the omissions in his speech. I do that with no disrespect to the right hon. Gentleman. I hope that his right hon. Friend the Minister of State will pick up some of these points in his winding-up speech, because I genuinely want this information.
  2060
  However, I could not help feeling that the right hon. Gentleman was anxious, looking with one eye over his shoulder towards Ormskirk, and with the other eye looking over his other shoulder at the industrial chaos in the country behind him, and he has my sympathy. However, he must accept that what he gave tonight was a very cursory examination indeed.
  I put it in this context. The right hon. Gentleman rightly emphasised that much of the NEB's work is pre-empted by Rolls-Royce and British Leyland. I think that £400 million is intended for British Leyland, and £200 million or £300 million for Rolls-Royce. I take the view that that is the inheritance which has been put upon the NEB. In many ways, in trying to evaluate its performance and its prospects, one ought, therefore, to consider much more carefully the 45 investments that the NEB currently holds, I believe, which go much beyond those two inheritances—a very difficult inheritance in the case of British Leyland.
  In an intervention, the Secretary of State made clear that he does not have any overall trading results as at 31st December. That adds to our difficulties. I hope that the Minister of State will make clear at what point in Committee he hopes to let us have at least unaudited accounts for the year ended 31st December 1978. Otherwise, all that we have is the annual report and accounts for 1977. That is the only full document that we have. It is dated April 1978.
  Mr. Urwin: Having regard to the hon. Member's remarks a few seconds ago about not having enough information about the NEB's accounts from the end of December—only a few days ago—I wonder whether, during his peroration, he could give us some information about any private company which has a so highly advanced degree of accountability as to be able to provide such information.
  Mr. Marshall: Yes, I can. I think that the right hon. Gentleman is making a very fair point. We are now talking about an increase in borrowing of up to £4½ billion. If the right hon. Gentleman, a company or I wanted to go out and get that kind of money, we should have to justify our recent earning potential. We might have to show figures up to the end of October or November, or the

  2061
  latest figures that we could give. To leave us with the only up-to-date trading results which we have, which now go back to the half-year results as at 30th June, is going back a very long way. I hope that the Minister of State will make clear what more up-to-date figures will be made available to hon. Members in Committee.
  A whole range of other matters are part of the stautory obligations of the NEB, but the Secretary of State made no attempt to discuss them. The first and, perhaps, the most startling omission was that he told us nothing about the annual planning cycle, the corporate plan of the NEB. We know that this is something that must be looked at annually. We must carefully balance the needs of the major concerns, such as British Leyland and Rolls-Royce, against acquisitions, joint ventures and assistance operations. According to the NEB draft guidelines of 1976, those three categories of NEB work are examined annually. Between the Board and the Government there must be an annual discussion of the balance struck in those three areas. We heard nothing from the Secretary of State about that aspect of the matter. For example, where is the corporate plan, what is the latest assessment, and what confidence has the Secretary of State in its relevance?
  As for the statutory objectives required of the NEB, we heard nothing from the right hon. Gentleman about industrial efficiency and international competitiveness. He told the House nothing about the effect of various investments in companies in improving areas, other than to make in blanket passing reference to the fact that the Board would regenerate national competitiveness and efficiency. Surely we should have been given some case histories.
  On the subject of productive employment in areas of high unemployment, the right hon. Gentleman gave a figure of 25,000 in the North-West and instanced other figures. But as for the encouragement of exports, import substitution and the connection between service industry and manufacturing industry, in which investment has a vital link, we heard nothing. These are part of the detailed statutory objectives of the NEB. I am glad to see the Minister of State back in
  2062
  the Chamber. If he has a chance to catch up on my speech, he will see that I have dealt with a number of major omissions in the Secretary of State's speech.
  Mr. Kaufman: I am intervening not on the substance of the hon. Gentleman's remarks but to tell him that because of the rearrangement of this debate I shall have the advantage of reading the full text of his speech.
  Mr. Marshall: Then I shall have the advantage of a full answer—which will be something of a change for us both.
  This has been a good-humoured debate, but this is a serious and important matter. It goes much wider than the Secretary of State's view that if we do not pass the Bill British Leyland, the Scottish Development Agency and many other bodies will be in danger. This matter has already been argued. There are ample facilities for both the Scottish and Welsh Development Agencies. There are other ways in which British Leyland's financing can be carried out. Therefore, we must examine the Bill in totality and in a fair amount of detail.
  I wish to strike my own balance sheet, and I shall be as fair as possible. In considering what the NEB has been up to in the last year, it is unfortunate that we have been given no overall trading results, beyond the half-year figures to June 1978. I hope that the Minister of State will bear that factor in mind.
  The NEB can claim for companies such as Monotype that a good relationship with the bank has enabled it to convert the debt to Barclays Bank into an equity stake of £3·5 million. That is a significant achievement and is what my hon. Friend the Member for Horsham and Crawley (Mr. Hordern) regards as good merchant banking practice. The Fairey acquisition, which was made after the receiver was appointed, involved the NEB in a pragmatic piece of good sense. The Board picked up the company after the receiver came in, because that was a better way to get the company back on to its feet. I believe that that was a reasonable argument.
  On the other hand, in that context we should bear in mind Early-Day Motion No. 149. Many hon. Members feel somewhat aggrieved about the way in which

  2063
  that acquisition was carried out, particularly from the point of view of the selling off of prime site marinas on the Hamble river without giving British tenderers a proper opportuity to bid. It was insensitive if, as is claimed in the Early-Day Motion, the chairman was unwilling to see hon. Members of this House.
  Certainly, on the INMOS computer chip development the NEB can claim some pace-setting work. As my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) said, one cannot imagine major companies in this area sitting on their hands betimes. I believe that the NEB can point to a certain pacesetting role in this merchant banking concept.
  It is ironical, but clear, that for carrying out that kind of investment the proposed amounts are minute in relation to the total national need. In addition, the difficulties involved in carrying out the INMOS investment have been heightened by the Government's own taxation policies which have driven many managers in this area to work in the Santa Clara Valley in California. We are now having the devil's own job to get them back. This is directly relevant to what my right hon. Friend was arguing—that the Government should be examining these matters, even if they are trying to help the NEB, let alone the rest of British industry.
  On the question of disposals made by the NEB, as my right hon. Friend said, three companies have been disposed of in this period—two at a profit and one at a loss. I do not believe that there is any need to run through the list in detail. Looking at previous disposals—the trading losses and closure costs of Fairey of £2·2 million and the £1·4 million loss provision for British Tanners—one can say that, in a commercial banking context, in simple terms the NEB can claim to have won a few, lost a few, but on balance is ahead. In the trading figures provided—I am taking on trust figures since 30th June—the NEB can show that its return on capital moving up to 10 per cent., leaving out British Leyland and Rolls-Royce, is moving in the right direction.
  I hope that I have shown to the House that I am trying to be fair in assessing the overall activities of the NEB. If the
  2064
  House is being asked to consider helping the NEB over the coming years, it has to ask itself: in what way is the NEB carrying out work which could not be carried out elsewhere?
  This is my first basic objection. I have described the activities of commercial banking. On balance, I am not convinced that this could not have been mopped up within the commercial banking system. However, I am not doctrinaire on the matter. I recognise that the NEB will be with us for a number of years. Therefore, I would not automatically say that the opportunity for this kind of flexibility should be ruled out.
  The speech made by my right hon. Friend was one which we should study. I believe that he is absolutely right. He put the essential differences between two major parties in clear form. He pointed to the whole paraphernalia of control, the whole notion of interventionism, which in so many ways I believe the Government are overstating in the case of the NEB. It simply cannot achieve all that is claimed for it by the architects on the other side. From our standpoint, it is a form of window dressing, a diversion away from tackling the necessary matters which have to be faced, such as high taxation.
  Mr. Leadbitter: The hon. Gentleman has approached this problem in a flexible manner in order not to emphasise too much the basic objections of his own party to the NEB. To that extent, there is some merit in his approach. Does he agree that without the NEB's proposals for INMOS and the silicon chip there would not be a pacesetting element in this direction? This is imperative, because hitherto competition has not come from private enterprise to meet the Japanese and the American rivals. Therefore, the complaint should be not that the NEB has intervened and is a pace-setter but that there should be a greater allocation of funding because it is imperative that we in England should get into the work on the silicon chip.
  Mr. Marshall: The hon. Gentleman has not quite taken on board what I said. I accepted that there was a certain pacesetting element in the NEB's approach to that subject. But I went on to say that what it was doing in relation to the massive need here was a drop in the ocean.

  2065
  There is no way that the NEB, with the assistance of the House, could begin to get into that sphere on the kind of scale to which the hon. Gentleman pointed. It is to the GEC-Fairchild mergers and the massive extension of commercial operations that we must look in this sphere. I believe that I fairly accepted the argument initially put forward by the hon. Gentleman.
  In view of the ruin of the Government's pay policy and the fact that we face industrial disputes, furthered by the Government's legislation, in overall terms the NEB has a limited part to play in industrial regeneration. Because of the numbers involved, it cannot begin to tackle the problems about which my right hon. Friend the Member for Leeds, North-East spoke earlier. In a philosophical sense this diversion—this window dressing element—is in governmental terms misleading and positively dangerous.
  I should like to voice my appreciation of those who work for the NEB. They are people of ability. They have worked hard and come forward in the national interest. But so would any similar group of people for any democratically elected Government. That is not the argument at stake here tonight. It is not an argument whether British Leyland or Rolls-Royce will be in difficulty. That has already been disposed of. In view of the way that subsidiary company borrowings have been handled, it is a way of artificially inflating figures. We are talking about figures on paper for the Scottish and Welsh Development Agencies which seem to have little relation to their take-up.
  Because of those areas of vagueness, the specific areas of missing information which I have instanced, and the fact that the Secretary of State is, in effect, trying to put through yet another piece of unquantified, wasteful and unjustified legislation—indeed, it is an exercise in public relations—I shall certainly have no hesitation in voting for our reasoned amendment.
  8.37 p.m.
  Mr. John Sever: I should like, first, to refer to some of the comments made by the right hon. Member for Leeds, North-East (Sir K. Joseph). I feel sure that hon. Members and, indeed, people throughout the coun-
  2066
  try will be somewhat startled at hearing the right hon. Gentleman on at least two occasions refer to British Leyland and Rolls-Royce being retained by any incoming Conservative Administration for the time being.
  It is interesting to try to understand the philosophy which prompts an Opposition Front Bench spokesman on industry, speaking for a party which believes itself to be capable of government, to argue in that flippant fashion that it will have to look to two of the largest employer companies within the framework of the National Enterprise Board being retained. That will be disappointing to many people who look to those two companies for their livelihoods, and it will be worrying in the extreme to those areas in this country which look to those companies as being fundamental to the growth of their regions.
  Those of us who came into Socialist political activities in the 1960s were fired with an imagination which expected movements, however slight and exploratory, by future Labour Governments towards public participation and even control of the "commanding heights of the economy".
  My hon. Friend the Member for Consett (Mr. Watkins) referred to Conservative Members not having mentioned the Labour Party and Labour Government going headlong into Socialism. But some of us would like us to move gradually and more enthusiastically along certain avenues towards what we consider to be a Socialist environment. Some of us were a little disappointed at the slow rate of progress along those roads. None the less, today, 15 years on, we can see definite progress. The commanding heights may not yet have been scaled in these sectors from which the taxpayer, as a shareholder in a State enterprise, might expect a profit, though large dividends are paid in the form of public service provisions. We can, at least, see Government participating in supporting industry and commerce in sectors vital to the national economy and fundamental to the provision of employment opportunities for hundreds of thousands of householders, none more clearly than in BL.
  BL is a source of income, directly and indirectly, for the largest single group of workers in the greater Birmingham area.

  2067
  The major plant at Longbridge and ancillary and dependent companies in the West Midlands are of paramount importance to the economic well-being of the region. We on this side of the House recognise the value and the wisdom of the interventionist policies of the Labour Government at a time when the future of the West Midlands region was in great jeopardy.
  I welcome the additional support for the National Enterprise Board provided in the Bill. I am confident that these measures will confirm and stimulate the growth of support from inside and outside BL and its associated companies that is now beginning to show. There is evidence of a build-up in confidence. Only this week, the company secured an order for £12 million worth of vehicles, won in competition. The order is for representative models across the company's product range.
  There is an increased product demand generally, encouraged by the spendid motor show presented at Birmingham's national exhibition center, to which, I hope, the show will return for several years to come. A most important ingredient for success at BL seems to have been the recent agreement on parity payments—a matter which had for so long bedevilled that company—which will, we hope, bring a degree of stability to BL wage bargaining in the future.
  In addition to continuing to support its existing commitments, I should like the Minister who responds to the debate to indicate whether the NEB can look more closely into the possibility of providing funds from these additional resources towards the establishment and development of new industry and new technology in Birmingham and the West Midlands. Our region has traditionally led the country in the progress of scientific and technical innovation, particularly in its commercial exploitation. The men and women who work in our large industrial complexes and in small engineering shops such as those in Ladywood will produce the goods. Those people need the encouragement that this Bill, as part of Labour's industrial strategy, can give, especially when we reflect upon the lack of investment from capitalists who seem shy of pushing forward West Midlands industry.
  2068
  Let us ask, then, with full justification, that the National Enterprise Board give a lead in this direction. No longer should it be assumed that the West Midlands can be left alone and forgotten. We demand and we have the right to expect additional Government support. We have been at the back of the queue in Britain's industrial development in the last few years. That is too long. We demand our place again in the economic development of the country. I am sure that the Minister will indicate how the West Midlands can benefit from policies now being pursued.
  8.44 p.m.
  Mr. Wyn Roberts: I shall not take up directly the remarks made by the hon. Member for Birmingham, Lady-wood (Mr. Sever), but he was surely wrong in his interpretation of what my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) said about an incoming Conservative Government's treatment of British Leyland and Rolls-Royce. I advise the hon. Gentleman to look in the Official Report at what my right hon. Friend really said.
  As you may have guessed, Mr. Deputy Speaker, I wish to speak briefly about the Welsh Development Agency. Our amendment makes clear that we accept the Agency and the value of its work in Wales. My hon. Friend the Member for Pembroke (Mr. Edwards) said so at the last Welsh Grand Committee meeting on 29th November last year. He said:
  "As for the Welsh Development Agency and the Development Board for Rural Wales, we shall keep them and support their work in stimulating and assisting commercial enterprise … although, certainly, as we have always indicated, we would wish to see safeguards over their powers to buy into profitable firms and ensure that they do not hold equity shareholdings in industrial firms on a permanent basis."—[Official Report, Welsh Grand Committee, 29th November 1979; c. 17.]
  My hon. Friend's view was amply confirmed by my right hon. Friend the Member for Leeds, North-East. Therefore, there is no dispute between us and the Government on this score so far.
  As matters stand, the Agency's financial limit is £100 million, which can be increased with parliamentary approval to £150 million. The Bill proposes to change. those limits to £250 million and £400 million respectively. The subject was raised in the Welsh Grand Committee in

  2069
  November. Perhaps that is why we did not have many figures and details from the Secretary of State for Industry when he opened today's debate. He still should have given details of the Agency's expenditure now that he is asking for more money for the Agency. The case must be made out and the request for more money justified.
  The outcome of our discussion in the Committee was the Government's explanation that, although the Agency had so far incurred a charge of £45·7 million against the statutory financial limit, less than half the amount allowed,
  "The Agency is likely to exceed its current limit of £100 million in the next financial year."
  In that last sentence I was quoting the Under-Secretary of State for Wales, the hon. Member for Rhondda (Mr. Jones), who, alas, is not here but was present earlier. He added:
  "The increase by order to the maximum possible, £150 million, would prolong its life only by a further year or so."
  Therefore, under the present limits, the Government would have to come to the House some time in the next financial year to seek approval for the upper limit of £150 million. The House would then have an opportunity to consider the Agency's activities and the way in which its affairs were being conducted, because the increase of moneys available is subject to parliamentary approval.
  Assuming that the Agency is using up its allocation at the rate of about £50 million a year—an assumption clearly justified by the Under-Secretary's remarks in the Welsh Grand Committee and by the fact that there is no increase in the White Paper in the moneys to be made available to the Agency—if the Bill is passed, it will be by my calculation 1982–83 before the Government have to ask the House for approval for the new upper limit of £400 million.
  The Secretary of State confirmed that it was expected that the Agency would spend about £250 million over five years. So it would then be about 1982 to 1983 before the Government had to ask the House for an increase of the borrowing limit to £400 million.
  While I am referring to the lack of figures given by the Secretary of State, I
  2070
  must refer also to the fact that he seemed to fail totally to reply to the question of my hon. Friend the Member for Pembroke about the meaning of the change in terminology from "wholly-owned subsidiaries" to "subsidiaries" in general.
  This delay of five years before the Government come to the House to obtain the upper limit of £400 million seems to me to be postponing discussion for a considerable time, and the Welsh Office is laying itself open to the charge that it is seeking to avoid such discussions. The Government currently make much of the point that they wish to bring government closer to the people, yet it is noticeable that when there are opportunities for discussing the financial operations of governmental organisations and quasi-Government organisations the Government avoid those opportunities like the plague.
  Mr. Nicholas Edwards: Is not the truth summed up by what my hon. Friend is saying, that the Government, as is made clear in the White Paper on public expenditure, are not increasing the funds available to the Agency but simply removing any parliamentary control over that expenditure or over the work of the Agency?
  Mr. Roberts: My hon. Friend is absolutely correct. They are doing simply that; they are removing parliamentary control, and certainly postponing the day when the Government will have to ask us for approval of the higher limit.
  Of course, we appreciate the Welsh Office's point of view, which was well expressed by the Under-Secretary of State in the Welsh Grand Committee debate:
  "We are taking the opportunity of a Bill, which in any case would have to come to the House to deal with the funds of the National Enterprise Board, to ensure the continuation of the Agency's work and to enable it to plan ahead on a firm basis … it is absolutely essential that the Agency knows in advance what moneys are to be available so that it can plan ahead."—[Official Report, Welsh Grand Committee, 29th November 1978; c. 85–6.]
  I do not think that the Under-Secretary is as ingenuous as his explanation made him sound in the Welsh Grand Committee. He knows as well as I do that plans for public spending of this sort can be changed in any financial year and that this Bill does not give the Agency an absolute assurance that certain sums will be available to it. Many factors can affect

  2071
  the situation, and we were warned only yesterday by the Chief Secretary to the Treasury that public expenditure this coming financial year may be drastically altered if pay settlements in the pubic sector are higher than expected.
  I am therefore tempted to think that these higher limits are a bit of political window dressing—and we have heard that phrase before from these Benches. The proposed changes, of course, read well in the Queen's Speech at the beginning of the Session and no doubt impressed certain Members below the Gangway on both sides of the House, and helped to secure the support of some Labour Members below the Gangway, who, alas, are not with us this evening.
  Our vote against the Second Reading of this Bill will no doubt be interpreted to the Welsh electorate by the Secretary of State as opposition once again to the Agency and to increased finance for it, but I shall hope against hope that he will not mislead the electorate in that way. It would be very improper for him to do so in view of our amendment, which specifically accepts the usefulness of a significant part of the work of the Welsh and Scottish Development Agencies.
  By the Government's own admission the higher limits are not yet necessary. Even the higher limit under the 1975 Act is not necessary until later this year. Why not leave the matter until then? The real answer is that Welsh Office Ministers need a pre-election boost. However, that will not boost them back into office.
  The Government's industrial record in Wales has been deplorable. It is getting worse daily as a result of current industrial actions that are bringing work to a halt. Tomorrow will be a black Friday for many who are laid off in Wales. There may be more black Fridays to come.
  My right hon. Friend the Member for Leeds, North-East was right in his criticism of the principles behind the NEB. The same is true, to some extent, of the Welsh Development Agency. The same principles apply. However, we commend the Agency's activity because our worst fears have not been realised. It has operated on lines of which we approve. I am bound to say that it is the Government's one and only bright start in what
  2072
  is otherwise an abyss of governmental ineptitude.
  When all the praise has been given to the Agency, let us be clear that it will never be the salvation of the Welsh economy.
  8.57 p.m.
  Mr. Ivor Clemitson: I hope that the hon. Member for Conway (Mr. Roberts) will forgive me if I do not take up his line of thought. The hon. Gentleman was naturally and properly concerned with the Welsh dimension of the Bill. Although I have a Welsh name, I have no other connection with the Principality. I shall devote my remarks to the broad context in which I think the Bill should be considered.
  There is little argument between the parties in the House that more investment is needed in British industry. That is common ground. We may disagree in our analysis of why investment in British industry has been too low. We may also disagree about what should be done. We have heard yet again the analysis of the right hon. Member for Leeds, North-East (Sir K. Joseph). The right hon. Gentleman proved again what I have always suspected, namely, that he was born 100 years too late. I preferred the analysis offered by my right hon. Friend the Secretary of State.
  By and large, there is agreement about the need for investment. However, we pay far too little attention to the consequences of investment and where we should direct our investment. The result of paying insufficient attention to such matters is that we are in danger of assuming that merely by increasing investment we shall consequently and dramatically solve our other economic problems, especially the problem of unemployment. It seems that we look to investment in itself as a panacea.
  The thesis that I wish briefly to argue is that other policies are needed to deal with the consequences of the investment that we make. Indeed, they are needed if investment is to take place at all, and certainly if we are to reap from the investments that we make the returns for which we hope. Our problem has been that, by and large, we have had too little investment. In addition, we have failed to make the fullest use of the investment

  2073
  that we have had. The evidence that we have and the demands of logic indicate that the overall—note the adjectives—long-term effect of investment is to reduce the demand for labour, certainly in manufacturing industry and probably in the economy as a whole. Some of us have argued this for years. It is now common coinage and everybody seems to be saying the same. I welcome recent converts to this point of view. But we have yet to realise the consequences of adopting it or to devise adequate policies to deal with it.
  I want to rehearse one or two points of my argument to justify that proposition. First, there is abundant evidence that where large investment has taken place and large growth has been achieved—for example, in the chemical industry, oil refining, gas and electricity supply—the number of people employed has fallen, often substantially.
  Secondly, if we are to be competitive with other countries, logic demands that we should move increasingly either into new industries that are technologically advanced—I welcome the moves that the NEB has made in this area and believe that this should be the major thrust of the NEB's future activities—or we radically alter the production methods in existing industries. Both options mean a move to a less labour-intensive situation. The corollary is that certain older industries will and should die, or at least become less important in the economy. Those industries are of necessity labour-intensive.
  Thirdly, while certain other countries, such as Germany, Japan and France—they are always the three countries instanced—may have increased employment in manufacturing for a time, this was short-lived and it is now in decline. OECD reports confirm that that is mainly because of technological advances and investments that have been made over the past few years.
  Furthermore, no country has expanded employment in the manufacturing sector at the expense of the service sector. It is absurd to take the experience in other countries 15 or 20 years ago and assume that we should follow the same path in employment if we were to adopt a high investment strategy. This totally ignores the advance of technology in that period
  2074
  and the advancing pace of technological development over the coming years.
  I am not arguing against the necessity for investment or for growth in the economy. I am pointing out the obvious consequences. In passing, I should say that not all investment is desirable, nor is all growth. Cancer, after all, is a form of growth. We must be selective in our investment and in the areas in which we grow. One of the major arguments for funding investment through public agencies is that they can, in a better way than private investors, invest in a desirably selective fashion.
  Given that investment will increasingly have negative employment consequences, what do we do? First, we must regard it as an opportunity and not as a potential disaster. We must devise a policy of alternatives—note the plural—to unemployment. While, clearly, employment is one alternative to unemployment, it is not the only one. In any case, the only area in which I foresee increasing job opportunities in the longer run is in the public service sector. I am not talking about bureaucrats; I am talking about people in face-to-face service jobs.
  The other alternatives are shortening the working week or the working life, whether it be through early retirement or sabbatical leaves or whatever, and increasing the opportunities for such non-work alternatives to unemployment as increased educational opportunities.
  These things must be seen as an advance of human welfare and not just as a juggling of statistics from one column to another. We must work out a coherent and consistent package of such measures, and we must do it now.
  Unless we develop such policies at the same time as we increase investment, we shall not have the right climate for investment to take place, nor shall we reap the full benefits of that investment. We shall be faced inevitably and understandably with resistance to change because of fear of loss of jobs.
  We need also to advance towards greater industrial democracy, a point that my hon. Friend the Member for Consett (Mr. Watkins) stressed strongly earlier today. This will take different forms in different industries and companies. Of course, legislation in this area has its limits, though that does not mean that it is

  2075
  not important. Unless decisions about investment become more truly shared, too many arguments will be conducted in basically negative terms.
  We need to develop an incomes policy which is aimed primarily at getting people into a fair and agreed relationship with one another. The trouble with incomes policies up to now is that they have been primarily directed at restraining the growth of incomes. We can never satisfactorily, for longer than a couple of years, agree to reasonable restraint unless people feel that there is a basic fairness in the beginning. That basic fairness is lacking. Of course, what I am suggesting is incredibly difficult, but we must make an attempt. If we do not, there will be serious consequences for the size and success of investment.
  We need investment, and we need it in the right places. To channel that investment through public agencies is right, but wherever the investment comes from, public or private agencies, must must at the same time—note I say "at the same time"—as we invest provide the framework within which the investment is encouraged and is able to pay off.
  This can be done only if we deal with the consequences of investment in terms of a lower demand for labour. We must have a strategy of alternatives to unemployment and we must make a rapid advance in industrial democracy. We must also devise more rational and fairer pay structures.
  I welcome the Bill, but I fear that its intentions may be frustrated if these other policies are not pursued at the same time.
  9.10 p.m.
  Mr. Douglas Henderson: We have heard a very interesting contribution from the hon. Member for Luton, East (Mr. Clemitson) —one of a type which we rarely hear. Very often what we hear from the Government Front Bench is the claim that their Bill is the best thing since sliced bread, while from the Opposition Front Bench we hear that the Bill is the most terrible thing that the House has ever had to consider.
  One of the difficulties about the Bill was expressed by the hon. Member for Luton, East and can be seen only in terms of the total concept of where we are going. The Bill is only a small piece
  2076
  in a very big jigsaw, which represents the sort of world into which we are moving. I very much agreed with the hon. Gentleman's analysis that we face a situation where the demand for manufacturing will be satisfied more and more by investment in equipment and technology and less and less by the hands and brains of human beings. That is inevitable.
  There have been forecasts that by 1990 the entire manufacturing output of the world will be carried out by about 10 per cent. of the employed population. One cannot tell how accurate or sensitive that forecast is, but certainly that is the direction in which we are moving. The fact that we are seeing the export of almost entire industries to the countries of the Third World is a factor which will affect us most seriously. We are also seeing—and we have seen it with the oil producers—that countries which supply primary commodities—and let us be fair about the fact that we have had them in the past at very advantageous rates—are now demanding what they regard as a fairer price for their products, which are about all they have to sell. The advanced and industrial countries of the Western world will have to face these prices in the future.
  When we look at a Bill of this kind and other measures it is useful to relate them to a conceptual framework. I am sorry to say that, in that framework, the Bill is only a very small part of the jigsaw. I cannot understand the display of great indignation and anger against what is contained in the Bill.
  Naturally, I am concerned about the situation in Scotland, just as the hon. Member for Conway (Mr. Roberts) was concerned for the situation in Wales, and I shall not deal with the affairs of the National Enterprise Board but will stick to the Scottish Development Agency and its effect on the Scottish economy. I am amazed at the way in which the Conservative Party has completely turned its coat since 1975 when the Scottish Development Agency Bill came before the House.
  The Secretary of State for Industry said, in his usual kindly way, that he thought the Conservatives had had a change of heart. I should have thought that perhaps a change of head might have been more useful to them than a change of heart, but if they have had such a

  2077
  change and have abandoned some of their earlier reservations—and I can remember some of the wild comments that were made when the Bill was introduced—that is to be welcomed. It would be very useful to the development of the work of the Scottish Development Agency if there were a general measure of all-party support for its work.
  I am not saying that the Agency should be above criticism or that it should escape scrutiny, but I think that there should be a general all-party appreciation of the work that it is doing when such appreciation is justified. It is right to pay tribute to the board of the Agency, and to its staff, with whom many of us come into contact. We have found them to be interested, sympathetic, ready to listen to problems, and ready to deal with the problems of our constituents.
  The question that we have to ask in looking at the Bill is: to what extent will it affect the Scottish economy, and to what extent will it be an influence for good in the years ahead? The position in Scotland is that there are some features which have been good and some which are extremely black. Scottish exports have been a very bright feature. They were up by 24 per cent. in volume between 1974 and 1977, compared with a 14 per cent. volume increase in the United Kingdom as a whole. It speaks very well for the workers and managers in Scottish industry that they have produced such an increase right across the board, in chemicals, mechanical engineering and in every aspect of the Scottish economy in that period. Our growth rate between 1971 and 1976, mainly as a result of an increase in exports, has been above that of the United Kingdom by 2 per cent. per annum.
  The undoubted black spot of the Scottish economy is unemployment. When the former Secretary of State for Scotland, the right hon. Member for Kilmarnock (Mr. Ross), introduced the Scottish Development Agency Bill in 1975 he described the economic scene in Scotland as "sombre" because unemployment had risen to 4·7 per cent. I am sorry that the right hon. Gentleman is not in the Chamber because we always welcome his robust contributions to any debate on Scottish unemployment, and I am sure that he welcomes the robust answers that
  2078
  he gets from other people on the same subject. I do not know what he would say now that the Scottish unemployment rate is 7·8 per cent.
  We also have the depressing spectacle of a large number of redundancies that will come into effect in the next few months, having been notified to the Department of Employment. Redundancies are proposed at Massey-Ferguson in Kilmarnock, at Dunlop at Inchinnan and at Singer's at Clydebank. There is also the unknown factor, of which the Secretary of State may be able to tell us more, of what is to happen at British Shipbuilders in Scotland.
  I remember the Secretary of State wisely declining to give the guarantees about future employment in the shipbuilding industry for which we asked when the nationalisation Bill was before the House. It looks as though the chickens are coming home to roost in that sector of the economy.
  One of the incredible aspects of the Scottish economy is the shortage of skilled labour in many key areas. I have had reports that there are shortages of millers, turners, grinders and fitters which are holding up development in many Scottish companies. Of course, when that skilled labour shortage cannot be satisfied, opportunities do not exist for the semiskilled and unskilled jobs that come in the wake of the creation of skilled jobs. What are the Government doing about that?
  The Financial Times carries a report today published by estate agents Kenneth Ryden and Partners and written by Professor Donald MacKay of Heriot-Watt university. He predicts that manufacturing investment in Scotland will continue to rise in the first half of this year but will drop sharply in the remaining part of the year. He gives as the reason the fact that private investment has been squeezed out and says that
  "the higher the rate of wage and salary settlements this year, the more private investment will be crowded out".
  Professor MacKay makes an important point which is relevant to our discussion of the SDA. The report says:
  "the activities of the Scottish Development Agency would not be sufficient to make up the deficiency. So far the agency had been spending only about £24 million a year on industrial projects. This had been more than

  2079
  offset by a substantial fall in the level of government expenditure on regional industrial aid to Scotland."
  The regional employment premium. which was worth £70 million a year to Scotland, has been withdrawn, and when one looks at the amount spent by the SDA one realises that it is totally inadequate to make up that shortfall. We have to ask whether the amount proposed in the Bill is anywhere near enough to cope with the problems of the Scottish economy.
  The right hon. Member for Kilmarnock said that the Scottish Development Agency Bill was one of "historic significance." He said on Second Reading that the prime purpose of the Agency would be the provision, maintainance and safeguarding of employment. There is a danger that the Government may have oversold the benefit of the SDA to the Scottish community by letting people believe that it can do far more than it can. The Government will have much more credit and respect if they make clear that the Agency can, at best, make only a marginal contribution to the Scottish economy.
  A total of £19 million or 25 per cent. of the Agency's total budget spent on jobs is not likely to create much. It is inadequate when compared to the spending of the Northern Ireland Development Agency. A report in the Financial Times refers to figures released this month which show that it approved over 30,000 new jobs in industry in 1978. If the Minister responsible for the Scottish Development Agency could say that that Agency has been responsible for providing over 30,000 jobs in Scotland, many of us would feel that that was an outstanding result and that it was the type of job that the SDA should be doing. One wonders to what extent the Government are relying on cosmetics. One wonders to what extent the figures meet the needs of the Scottish economy.
  Perhaps the Minister should examine the matter referred to by the hon. Member for Luton, East of the contraction in manufacturing industry and the growth in service industry As I see the SDA portfolio, little is done for service industry. When I saw the chairman and chief executive of the Agency, I asked if there was any inhibition to invest in the service industries. In all countries that is
  2080
  the growth sector. I was told that there was no inhibition. I hope that the Minister will bring home to the chairman that manufacturing industry, in terms of job creation, is declining but that service industry has a great potential and a great future in terms of the Scottish economy.
  The money involved is peanuts compared to the Scottish oil revenue which is preserving the United Kingdom's balance of payments. The oil revenue will be worth about £3 billion in the coming year. A few extra hundred million pounds is only a small slice of what the people of Scotland would have if they had control of the revenues, as they will decide to have shortly.
  We shall support the Bill. The Government are right to introduce it. But the sum involved is totally inadequate. We expect to hear more about additional remedies.
  9.23 p.m.
  Mr. Richard Page: I shall deal only with the part of the measure which involves the National Enterprise Board. I shall leave to other hon. Members who are more directly concerned with the Development Agencies matters which involve Scotland and Wales.
  The NEB was unaware that such a large sum was to be proposed and I understand that it has no immediate plans for the utilisation of anything more than a part of the sum involved for British Leyland and Rolls-Royce. I regret that I do not take a charitable view of this Bill. The sheer amount of the sums involved points to the conclusion that it is simply a straight political measure which is way and above the future requirements of British Leyland and Rolls-Royce. In this I declare an interest, and I believe that the requirements of Rolls-Royce and British Leyland should be honoured. Nevertheless, these requirements could be part funded by the disposal of other NEB assets.
  My hon. Friend the Member for Arundel (Mr. Marshall) asked some searching questions. Perhaps the most important one was "Where is the Board's corporate plan?" He asked where else in any financial institution one could propose such a vast sum of money without providing a full prospectus. We do not have such a prospectus tonight.

  2081
  The hon. Member for Consett (Mr. Watkins) said that he had not heard any cries about creeping Socialism. I wish that he were here because I am about to cry that the Bill is not creeping Socialism but galloping Socialism. The Bill is designed, in a devious way, to satisfy the appetite for nationalisation of the Left wing of the Labour Party. The amount involved is equivalent to taking £140 out of the pockets of every working man and woman in the country. It could be the oblique instrument for achieving the manifesto of the home affairs committee of the NEC which was published just before Christmas by courtesy of that organ of democratic thought, the Morning Star.
  Despite the NEB's wish to have independence of thought, word and deed, it must be accepted that these amounts could so easily be used as a back-door method for State control. It is a very short step from the close relationship at the moment between the regional sector working parties and the NEB to further future directives from the Minister.
  It will not be surprising to find that, as time ticks by, the NEB receives greater and greater pressure from the working parties. From that base in each sector I can see the tentacles of State control wriggling their way in and expanding. This huge sum of money to be taken from the taxpayers' pocket has raised quite a lot of comment and remarks, but it is a typical example of what happens when the electors place rabbits in Government in charge of the lettuce patch. We must not be surprised when they start eating the lettuce, and the more they eat the bigger they grow.
  Mr. Henderson: It is the breeding.
  Mr. Page: I do not want to get on to the subject of the Government's breeding. The more they eat, the bigger they grow, and the bigger they grow the more they want. What I know for certain is that the British taxpayer is getting sick and tired of providing the lettuce.
  I should not mind any investment that was successful. With my industrial background, having worked on the shop floor, I have a fairly pragmatic approach to investment and to the utilisation of finance, provided that one criterion is
  2082
  achieved, and that is the criterion of success. During the last Session I pointed out to the Minister, at one Department of Industry Question Time, the concern that we are already heading down the road taken by the Italian equivalent of the NEB. I hope that the House will forgive me if I do not try to pronounce the name of the Italian equivalent. That organisation, six months ago, had debts of £11 billion, and it urgently needed then an injection of new funds of over £1,000 million to complete its investment programme. Does not that have a familiar ring about it? In addition, there was a figure of £2,000 million to cover the accumulated losses of certain of its investments.
  When we look at the record of the NEB, we have an awful feeling that the story is to be repeated, as more and more companies add their names to the list of the NEB.
  Mr. Kaufman: The hon. Gentleman talks about more and more companies adding their names to the list of the NEB. Why did he write to me asking for INMOS to be sited in his area?
  Mr. Page: I have two comments to make on the Minister's intervention. First, I did not say "my area". I mentioned the Northern region, and I particularly referred to the university advantages, not in my area but in the Northern region. Second, it is the duty of any Member of Parliament, while this Government are throwing money around, to grab as much for his constituency as possible. That is the truth.
  Mr. Kaufman: The letter reads:
  "Whilst I fully recognise that the west coast of Cumbria is most unlikely to be chosen for this new technology, I do feel that the Northern region as a whole does have an extremely strong claim. Naturally, I hope there will be a spin-off in the whole of the region which will benefit industry which is located on the west coast."
  Mr. Page: Is not that what I said? There are now over 40 companies in the NEB, and it is only right that we should carry out some comparison between the NEB and other industrial companies to measure the success of the NEB operation. There are, of course, the straight accounting difficulties of drawing direct comparisons, and my hon. Friend the Member for Arundel pointed

  2083
  out the difficulty of doing any form of comparison with some unaudited sixmonths-old figures. In this case I shall take those first six months' figures of 1978 because they appear to be marginally better than before. However, I suppose that if one were to take into account inflation accounting, one would find that in real terms the situation had regressed.
  Nevertheless, from its own figures, the NEB, without British Leyland and Rolls-Royce, has made a profit of £5·6 million on a turnover of £153 million. If we include Rolls-Royce and British Leyland, the NEB shows a profit of £18·5 million on a turnover of just over £2,000 million. If we compare other industrial companies, we find that on a similar turnover GEC made a profit of £325 million. If we were to look at ICI in 1977—and I take the Minister's point about the difficulty in preparing annual accounts so quickly, so the ICI figures are for 1977—its profit, on just over a double turnover, was £483 million. If we equate it back to the same turnover as that for the NEB, it is a profit of £210 million. Again, one can carry these examples on and cite Trafalgar House, with its profit of £60·6 million on a turnover of £825 million.
  All those organisations show between 10 and 20 times more profit on turnover than the NEB and they can generate their own investment from their earnings. Obviously, the NEB cannot do so from its profits.
  Mr. George Rodgers: Does not the hon. Gentleman think that it would be more reasonable at least to compare like with like? Would he not accept that the National Enterprise Board rescued many industries which were previously in the hands of private enterprise? Would it not be common sense and common fairness to strike a comparison along those lines rather than to pretend that there is a comparison between what private enterprise is currently doing and what the National Enterprise Board is doing?
  Mr. Page: I take the hon. Gentleman's point. I believe that this is one of the problems with the NEB, that it is trying to be several things it should not be, and I should like to come on to the point of what I see as the real role of the NEB in our economy later.
  2084
  The NEB, of course, cannot provide the investment required from this sort of profitability. As I have already said, parallels with the Italian equivalent of the NEB become even more obvious. I am aware that I have taken companies which are market leaders, but in comparison the NEB regrettably lags behind. It must be only too obvious that, whilst this funding operation might seem desirable in theory, it is almost certainly bound to end in disaster, possibly because the percentage of companies that come to the NEB for help, particularly in the early days, are those that have been rejected by the usual financial institutions for aid without severe financial and managerial changes which have been too painful for them to accept—changes which, in some cases, the NEB did not initially find necessary.
  I regret that I cannot accept that this organisation can continue to operate effectively in this way, to watch over, as we have now, investments of £1,000 million, with a full-time staff of about 100 people, let alone increasing it to £4,500 million. The amounts become so large that they are almost unbelievable.
  I proposed to move on from this point to the question of non-accountability, but in view of the Minister's statement I should prefer to leave that well alone and leave it to my right hon. Friend the Member for Taunton (Mr. du Cann). No doubt my hon. Friend the Member for Surrey, North-West (Mr. Grylls) will also wish to say a few words on this matter. The only thing that I shall say about it is that paragraph 21 of the NEB's guidelines, drawn up by the Department of Industry, states:
  "It follows that the appropriate accounting officers will be answerable to the Public Accounts Committee for having satisfied themselves that the NEB has adequate arrangements for monitoring the financial assistance provided for companies."
  I could go on and on about that point, but shall make one generalised comment on financial controls in our public industries. It seems to me that the controls that this House should have do not exist. They seem to have slipped from our fingers. Sadly, Parliament today is a political law-making sausage machine without the power or the time to monitor the activities of the very children that it has created.

  2085
  Finally, I comment on what I see as the future role of the NEB under a Conservative Government after the next election. Whilst I appreciate that the NEB wishes to establish itself as an independent body, in its enthusiasm to do so it has rushed many of its investment decisions. I do not see it as a vast State holding company. If it were that, it would inevitably multiply the errors already made and would require vast armies of staff and investigating bodies to investigate companies in which it had invested. From then on, it is but a short step to direct State control.
  I see the NEB far more in the role of a State doctor. Taking companies of national and strategic importance, we can say that Rolls-Royce and British Leyland fall very firmly into that category. I see it taking companies of importance which are in economic trouble and sending in teams of skilled, highly knowledgeable people to provide the expertise to repair those companies and bring them back to profitable operation. Then, when they are profitable, they can be put back on to the open market. I see the NEB as a casualty clearing station—not the present tendency towards a geriatric ward—a role of vital importance within the framework of our democratic society.
  9.38 p.m.
  Mr. Donald Dewar: I do not intend to follow the hon. Member for Workington (Mr. Page) in his dissertation on the dietary habits of rabbits. However, I noted his remarks about the splendid profit performance of some parts of British industry. The hon. Gentleman concedes to some extent that there is room for increased industrial costs to be met without added impact on the consumer. That is an argument about which we shall hear more in the next few weeks when the Price Commission Bill comes before the House.
  I suppose that we are all parochial in our interests. I want to look at the problems of Scotland and the Scottish Development Agency. I agree with the hon. Member for Aberdeenshire, East (Mr. Henderson) that unemployment is one of the dominating and difficult issues which all parties will have to face in Scotland over the next year or so, irrespective of
  2086
  whether they are in Government or in opposition.
  At my by-election the view was taken by some before it started that one could afford to be cynical, at least in electoral terms, about unemployment. The theory was that the only people who worried about unemployment were those actually unemployed and that, as something that cost one votes, it was comparatively unimportant. Certainly, from talking to electors at the time, and since, I have found that large numbers of people are properly alarmed about what is happening in the Scottish economy at present, not only in the immediate short-term but in terms of the obvious structural difficulties that we shall face on a continuing basis over a considerable time.
  The hon. Member for Aberdeenshire, East mentioned, in particular, the shipbuilding industry. Of course, I share his anxieties about that. The Garscadden constituency is firmly based on shipbuilding. A number of shipyards are either in or on the edge of my constituency, and they are major employers. None of us is looking forward to the difficult period which undoubtedly will mean contraction in terms of the labour force over the coming months. I hope that in Scotland there will be a certain amount of unanimity in seeking to minimise these difficulties and in seeking to persuade the Government, shipbuilders and ship owners to preserve a viable industry in order to cope with the hoped-for upturn in the market in the mid-1980s.
  I have one reservation about the speech of the hon. Member for Aberdeenshire, East. He spoke of certain matters coming home to roost, as though suggesting that these difficulties were avoidable or had been lightly discounted by my Front Bench colleagues.
  Mr. Henderson: The hon. Gentleman was not in the House at the time when the shipbuilding industry legislation went through. It was our bitter experience that, although the Government pretended that nationalisation would be a panacea and would protect employment, it did not happen.
  Mr. Dewar: I was not in the House at that time, but I was an interested spectator. I have been fairly closely in

  2087
  touch with opinion in the industry since. At no time was the Bill held out to be a panacea. It was understandably seen as a necessary defensive measure to try to make nationalisation more effective and humane and to ensure that resources of capital development were available.
  People who work in the industry whose jobs are directly at risk are anxious to obtain all that they can out of British Shipbuilders. However, it is wrong to suggest that nationalisation was put for-ward as an easy option. My right hon. Friend the Minister of State did not suggest that no hard bargaining took place, or that there were no redundancies in prospect as a result of nationalisation.
  Mr. Kaufman: I have made it clear, not only in the House but on visits to many shipyards in England and Scotland—including a visit to Govan in April last year, and also in a meeting with the Scottish TUC in Glasgow two yearsago—that nationalisation would not guarantee one job in industry. I have said that to every group of shop stewards since the shipbuilding legislation went through the House.
  Mr.Dewar: My right hon. Friend's visit in April last year was most welcome. I accept that a great deal of tough, realistic talking has taken place, and will take place in the months ahead, in the shipbuilding industry.
  We must face these problems. The activities of the Scottish Development Agency must be seen in that context. I agree with the hon. Member for Aberdeenshire, East that there is always a danger of overselling an agency. If one has to defend such a body against ignorant and prejudiced attacks from the Scottish Conservative Party, one may push the boat out too far and back a prospectus which the Agency cannot live up to. I am very much aware of that danger. However, the Opposition parties tend to take that view also. That is clear from the extravagance of their attack.
  The hon. Member for Aberdeenshire, East said that the SDA was not getting enough money to cope with the problems of the Scottish economy. However, he cast the Agency in far too ambitious a role. There is no way in which the SDA can cope in global terms with the problems of the Scottish economy. The
  2088
  Agency was designed to make a valuable and useful contribution in providing risk capital, in preserving and creating jobs, and in assuming the role of an industrial catalyst. That applies particularly to areas such as west-central Scotland, in which there are many structural problems and the looming threat of unemployment.
  Mr. Gordon Wilson:Does the hon. Gentleman appreciate that the Scottish Development Agency has spent under £380,000 in risk capital or equity investment in the city of Dundee, which he will agree is an insufficient amount? There are whole areas of the country which are not covered by the Agency.
  Mr. Dewar: The hon. Gentleman says "not covered by the SDA". The SDA is an organisation which must consider where its money can most usefully be used, where there are opportunities to invest sensibly and to create jobs and thereby help the Scottish economy. I do not know enough about the situation in Dundee to say whether opportunities there have been passed up. I agree that there are problems in Dundee. I hope that the SDA will find opportunities to help Dundee at some date. However, I am not prepared to accept the implied criticism that in some way Dundee has in the past been neglected by the Scottish Development Agency—if that is what the hon. Gentleman was endeavouring to suggest.
  We all have reservations about the policy. I think that sometimes we spend too much of the SDA's money on environmental improvement and that we could do more in terms of industrial investment. That is a matter of argument. Environmental improvement work has been valuable. There is no doubt that the SDA has made a valuable contribution. I have seen evidence of that in my constituency. Such evidence has under-lined the worth of the organisation. For example, the SDA provided £50,000—not a large sum, but an amount which was vital in my area—to the Singer Sewing Machine Company. The SDA, with encouragement from Ministers, for which I was grateful, put up the necessary £50,000 to get the consultants' report off the ground to produce an alter-native strategy because 4,800 jobs were

  2089
  to be cut to 2,000. That may not sound overdramatic, but it was a severe blow not only in absolute terms but in morale terms in an area which could ill stand that kind of punishment.
  With the help of some able, imaginative shop stewards, we worked out a compromise solution with management which the work force accepted. That will save another 500 jobs, and that is important. I know that there is an enormous amount to be done and that there is along and no doubt at times rocky road still to travel, but if we can make that plant viable and establish it on a long-term platform for future development, in cost-effectiveness terms that £50,000 will have been extremely well spent. One can go to many parts of Scotland and find plants in strategic positions which owe their existence and continued prosperity to the SDA having been prepared to invest.
  Of course, there have been failures and mistakes. But if there had not been failures and mistakes we might today be complaining about the timidity and conservatism of the Scottish Development Agency. I am prepared to see it lose money on occasions if there have been honest attempts to preserve platforms for future prosperity in areas where they are very much needed.
  I make the obvious point that the SDA, in addition to its environmental improvement and industrial investment aspect, has played a central role in the restructuring of some of the difficult city areas in west-central Scotland. It has played a key part in the "GEAR" project for the rejuvenation and reconstruction of the east end of Glasgow.
  I suggest that we have to look not only at the SDA but at the NEB and its contribution. We in Scotland are some-times very parochial. We see the SDA only in terms of a specific Scottish institution. The very word "Scottish" receives almost exclusive attention, and that is not a healthy or necessarily accurate picture.
  The Albion works in my constituency remind me of the enormous contribution that the NEB has made to British Leyland. I appreciate that this is criticised particularly by many Opposition Members, but I believe that a viable car
  2090
  industry is an important aim and objective in this country. The intervention of the NEB, despite all the troubles and difficulties at British Leyland, has been extremely helpful and valuable. The NEB has made a real contribution to Bathgate and to the Albion works in my part of Glasgow.
  About 24,000 jobs in firms in Scotland are supported by NEB money. Frankly, at the end of the day, however much people may carp and see the NEB as offensive to the pure doctrine of the free market economy, those 24,000 jobs are very important in Scotland. Therefore, I should support any organisation, such as the NEB, which did something constructive and important in an effort to preserve those jobs. It underlines the point that the Scottish economy is not a self-contained unit that can be lifted out of the British context and left to flourish. We shall always have close connections with the market south of the border, which will remain our main market, and the public sector ordering power of the British Government will be the foundation of the prosperity of a large part of Scottish industry. The self-evident sense of that proposition has coloured a lot of the political attitudes over the last few months in Scotland.
  It has contributed—if I may say so without rubbing salt into the wounds of the Scottish National Party—to the dramatic decline in the fortunes of that party and the popular support which it temporarily enjoyed. I believe that the Labour Party in Scotland can look for-ward to an election, whenever it happens, with considerably more confidence—it is a qualified boast—than the Scottish National Party.
  We are seen as an integrated economy. It makes no sense to cast ourselves off and to see ourselves as some sort of self-contained economic unit, removed politically and, in a sense, economically from our main markets.
  Another reason for our confidence stems from the attacks by, and the prejudiced, bigoted and almost instinctive reaction of, the Scottish Conservative Party to any suggestion that we should intervene and extend the public sector. We should use agencies such as the Scottish Development Agency to prime the pump, to put in risk capital and to try to ameliorate the difficulties of a free market

  2091
  economy in an area that is particularly vulnerable to swings and to recession. So long as hon. Members on the Conservative Benches take the narrow view, their approach will have no relevance to the problems of the economy of Scotland and to the future of Scotland. That is why the Conservative Party will continue to be a rump in Scottish politics—a party which has to look south of the border in the hope that something will happen to sweep that miserable minority to a position of some transitory power in Scotland.
  No one is suggesting that the Scottish Development Agency has not made mistakes. I agree with the hon. Member for Aberdeenshire, East. I should like to see it pay more attention to the service sector. That is an important and relevant point. Its investment policy has probably been too narrowly based, and attention should be paid to the service sector which will expand and make a considerable contribution on the East and West coasts of Scotland.
  I am certain that the Scottish economic future and prospects would be distinctly impoverished if we did not have the SDA, and adequate funds for the SDA. It would come as a great shock to a large number of people who are perhaps tempted occasionally to look with a benign glance at the Conservative Party if they realised the opposition to this kind of development that, on occasion, is mouthed by representative and import-ant figures in the Scottish Conservative Party. I believe that people in Scotland appreciate what the SDA has done and see that its contribution, although limited, is valuable. I hope that the Bill will receive a resounding Second Reading.
  9.54 p.m.
  Mr. Richard Wainwright: Had the Government treated the House in a civilised and reasonable way and brought first before the House a separate Bill devoted just to the two Agencies, even the extravagant sermonisings of the hon. Member for Glasgow, Garscadden (Mr. Dewar) would not have deterred my hon. Friends and myself from following him into the Lobby in support of some extra borrowing powers for the two Agencies. But the Government, carried away by the superficial success of their atrocious combination of shipbuilding and aerospace in one Bill, have chosen
  2092
  —as some of us warned at the time—totreat the House in an appalling way by serving up three separate bodies for almost astronomical sums belonging to two quite disparate orders of statutory organisation.
  The NEB has virtually nothing in common in its structure with the two Agencies which are so badly coupled with it in the Bill. It is asking far too much to expect the House—in the ragged way in which we must debate the matter, with a weekend for reflection in between, and goodness knows what that may pro-duce—to have to discuss the three bodies all in one debate.
  As regards the NEB, we consider that the debate is ill timed in addition to being ill structured. To produce this demand for extraordinary increases in borrowing powers just a few weeks, presumably, before at any rate the unaudited accounts for 1978 become available is very little short of sharp practice. It has already put the House into a very difficult position when trying to assess the NEB's record.
  We have also had the usual sad illustration, which causes so much despair throughout industry, of the real curse of British industry, which is the zigzag of British politics. Tonight, for example, we first had a gross over-selling of the NEB which was, to put it kindly, premature. Even if some people have golden hopes of that organisation, no one can say that they have been realised in the latest accounts that we have before us, those for1977. The uninistructed among us do not know what the 1978 accounts have in store.
  On the other side, we have the most remarkable scenario. First, we have an extraordinary example of the way in which the powerful intervention of a thirdparty—in this case the Scottish nationa-lists—can induce the Tory Party to turn the most inelegant of somersaults. Agencies which were gall and wormwood only a few years ago and which have attracted, even to my anglicised know-ledge, some appalling attacks from the hon. Member for Glasgow, Cathcart (Mr.Taylor) now receive encomiums of praise in an amendment on the Order Paper. That is undoubtedly because the Tory Party is only just convalescent in Scot-land at present and needs to nurse its

  2093
  wounded voting figures with every possible care, even to the sacrifice of consistency.
  As for the major matter, the NEB, we were treated to an extravaganza by the right hon. Member for Leeds, North-East(Sir K. Joseph) which left me in a state of shuddering astonishment at the thought of what might happen were he ever en-trusted with the Department of Industry or an allied Department in a future Government. His caricature of British industry as the most controlled in any free society seems to me absurd when one recollects that for the past four years British industry, almost alone in the free world, has enjoyed the extraordinary benefit of scarcely having to pay any company tax whatever if it looked after its stock figures on only one day of the year.
  Any Front Bench politician who ignores the fantastic benefits of stock relief—I am sure not actually intended by the Government when it slipped through—benefits which have absolved British companies very largely from corporate taxation during recent years, must be deliberately caricaturing the position when he says that British industry is suffering from an excess of control.
  Mr. Hordern: Will the hon. Gentle-man name any other country in which industry has to contend with borrowing rates of not less than 15 per cent., with the possible exception of Italy?
  Mr. Wainwright: The hon. Gentleman cannot have it both ways. If he wants a strict monetary policy, and if he wants spending to be carefully organised, he cannot object to a certain amount of discipline being imposed.
  Mr. Budgen: Would the hon. Gentle-man agree that industry does not exist by itself—it is composed of people? What the Tory Party is complaining about most of all is high rates of tax on individuals, because it is by their motivation that they make industry and companies.
  Mr. Wainwright: I can see that there is something in that, but what I was objecting to was the wholly one-sided aspect of the zig-zag, in which all the admittedly distressing features are heavily underlined and no allowance is made for some of the brighter things on the horizon. It has not all been bad for British
  2094
  industry during the last few years, and some of the crashing mistakes—
  It being Ten o'clock, the debate stood adjourned.
  Debate to be resumed tomorrow.

  FLUORINE POLLUTION
  Motion made and Question proposed,That this House do now adjourn.—[Mr. Bates.]
  10 p.m.
  Mr. Peter Hardy: It is not my purpose to discuss the desirability of ensuring that drinking water contains a tiny proportion of fluoride for reasons of dental health. It may be that in that context it could have advantage. However, in more significant proportions fluoride can be very harmful indeed. It certainly has caused enormous problems for my constituent, Mr. Reg Ellis, of Warren House farm, Upper Haugh, in Rother Valley. As a result of my consideration of his experience and matters related to it, I shall be asking my hon. Friend to respond to a number of questions.
  Warren House farm is part of the Wentworth Estate, one of many farms in this part of my constituency which have been operated with general success since important agricultural reforms were carried out during the eighteenth century. The farm adjoins the site of the Warren House colliery, which closed many years ago. The seam from which it is named stretches to the Selby coalfield and beyond. Mr. Ellis succeeded his father as tenant of the farm and is now a veteran farmer.
  Over many years he built up a herd of Shorthorns, a herd which I had observed since my boyhood and which provided a pleasing balance to the much more common Friesian cattle. Reg Ellis was satisfied with both the meat and milk production his strain provided. Then came the tragedies which I raise tonight.
  First, in 1976 and within a month 17head of cattle were lost and all value sacrificed by the onset of what has proved to be fluorosis. As the months passed other cattle were lost. One of the later ones was Mr. Ellis's good bull which, with other animals, went lame and was lost last autumn.

  2095
  I am not an expert in animal health, but the cattle I saw at the farm last July were quite obviously badly and distressingly affected and a far cry from the animals I have seen on the Warren House fields over the years. Those cattle had deteriorated very badly and very swiftly. Altogether Reg Ellis has lost 34 head of cattle. He is not a big farmer and that loss represents the disappearance of a substantial part of his capital. I doubt if the total received for the whole 34, such was the effect of the disease, reached four figures.
  I hope my hon. Friend will take my word for it that this farm should hold a total of 60 or more animals, including the young stock. Mr. Ellis needs to buy re-placements, and I really do not think he can be expected to do so, given the modern costs of cattle. A good dairy cow will cost at least £400. His herd should be a dairy herd, but he has seen his milk production diminish from 60 or 70 to about two gallons a day. Commercial operation has been destroyed, and that means that income has gone as well as capital.
  Following my visit immediately after the local NFU contacted me, I wrote to my hon. Friend the Parliamentary Secretary at the Ministry of Agriculture. His initial response was, as we would expect, one of sympathy and interest. I was able to inform Mr. Ellis almost immediately that studies were in hand.
  The Ministry seemed to suggest that atmospheric pollution was the cause. There may have been historic reasons for this, for fluoride contamination and fluorosis were once not rare in South Yorkshire. This is shown in the Burns and Allcroft report, which mapped the position fairly clearly 15 or 20 years ago. But, since then, there has been a vast change in our polluting activities. Indus-try has taken more care or dramatically changed its character. The British Steel Corporation is now able to tell me that it does not emit fluorides in the South Yorkshire area, yet 20 years ago the areas windward of the steel works at Stocks-bridge and Rotherham were very often terribly polluted by fluoride. That is not now the case.
  I maintained my open mind about the source as the months passed. I also kept up pressure until by chance I learned that Mr. Ellis's earlier suspicions were justified. The sewage sludge provided by the
  2096
  Yorkshire water authority was heavily contaminated.
  I regret, and I must stress, that the water authority has not yet replied to a letter that I sent to Leeds as soon as I felt sure that sewage sludge was the real cause of the havoc wreaked on my constituent's farm. That belief has been reinforced by the commendable and detailed care shown by the local authority, the Rotherham borough council.
  The environmental health department of the council commenced and maintained detailed monitoring of not only the farm but other sites. The monitoring suggested that fluoride pollution in the area has fallen substantially in recent years and that at Warren House farm it is now quite insignificant. The highest weekly average measurement at Warren House farm was a factor of 50 below the threshold limit value, an American measurement adopted in 1957. On occasions there was no trace of the substance.
  I gather from the grapevine, which sometimes serves us a little better than public bodies, that the sewage sludge used at Warren House contained 25,000 parts per million. It may be that fluoride content was high at the time when the disease struck. It may have been that the unaccustomed drought conditions, in association with the high level of pollution, was responsible for the rapid development of the disease. I hope that my hon. Friend will comment on that.
  I hope that my hon. Friend will agree that the Yorkshire water authority should accept responsibility without delay and ensure that Mr. Ellis is able to pursue his occupation with disadvantage re-stored. I should deplore any delay or any attempt to defer justice by complex procedures or litigation. I understand that an officer of the authority has visited Mr. Ellis recently. I hope that that is a good sign and that there will soon be a happy outcome.
  My hon. Friend will appreciate that when I saw the bad condition of Reg Ellis's cows last July I was deeply anxious about human health. A mile or two south of the farm there are thousands of my Rawmarsh constituents. Fortunately, the authorities proved swift in their response. I am especially grateful to Mr. Neil Morton, the director of environmental health at Rotherham, and to the present

  2097
  mayor, Councillor Charles Breet, who chaired the committee and who is the representative of the ward.
  The council has been able to provide me with detailed information. It has provided expert advice about fluorosis. It has provided details published by the Health and Safety Executive. That information allowed me to feel rather re-assured. At the same time, I was given reassurance by an experienced alkali inspector. Initial anxiety was relieved although it was not allayed entirely.
  I do not wish to sensationalise, but I hope that my hon. Friend has had an opportunity to read either Mr. Malcolm Stewart's report in The Guardian or the Journal of Occupational Medicine of America of January 1977. Those sources suggest that public bodies in this country may be offering reassurance that is not entirely justified.
  We have known about the disease for some time. It was recognised in the1930s when it was known that skeletal abnormalities, calcification of ligaments and certain non-skeletal conditions could result from exposure to fluoride pollution in significant quantities. I accept that we are less likely to incur disadvantage than cattle. We do not eat like cattle, which graze short and redigest. However, it seems fairly obvious that there can be extremely harmful effects upon man as well as upon farm beasts.
  Given what happened at Warren House farm before the sludge contamination was established, we could surely have seen amore alert and vigorous national response. I do not criticise our local alkali inspector, and certainly not the local authority. But I believe that the assurance that I was given about the lack of harm to human beings was not wholly justified. I say that as a result of consideration of experience in Bedfordshire, where substantial emissions from brick works occur.
  It seems that in the Bedfordshire area also reassurance is offered. The liaison committee sponsored by the county authority suggested in a press release last November that there was no cause for concern. However, one resident in the area, a Mr. P. Goode, who farms in Ridgmont, near Bedford, who has been extremely helpful and supplied me with a great deal of information, was told by
  2098
  the deputy chief alkali inspector that there has been no organised monitoring. Clearly, present arrangements do not allow adequate supervision of fluoride emission. How anyone can say that there is no evidence of a public health hazard is somewhat suspect.
  It has been stated that if harmful effect is shown the appropriate Government Departments will investigate. However, anxiety is not relieved by the knowledge that the DHSS may not keep adequate records on relevant matters and that there is an absence of organised monitoring. This absence of monitoring and of relevant records might make investigation rather abortive in any case. Mr. Goode was right to remind the authorities in his area that since evidence is lacking they should not have offered such categoric assurances.
  The experience in Bedfordshire, and my own doubts about the swift reassurance that I was given, suggest that we do not know enough. Nor do we monitor enough or keep sufficient relevant records to be absolutely confident. There should be more research on a sustained basis to ascertain whether, for example, there is a long-term link between this contamination and arthritis. Certainly, we should take much more care about levels of fluoride in the atmosphere.
  I have asked my area health authority to consider the incidence of limb fractures among the elderly in my area which once suffered severe pollution. I want it to compare that with a similar group of people from an area where there has been no pollution. Perhaps my hon. Friend will indicate whether the Department will pursue the matter. I cannot see how existing arrangements are adequate. Possibly the Open university will make a helpful contribution, because I gather from The Guardian that it is to be involved. I welcome the concern which has developed.
  Also there is cause for relief in that those responsible for the aluminium smelter at Invergordon have established an arrangement whereby, if a local farmer loses cattle as a result of fluorosis, a veterinary surgeon gives certification and compensation is paid without delay. Whether the long-term interest is sufficient to ascertain whether the farmer

  2099
  involved is affected is rather more doubtful. The United States Department of Agriculture regards airborne fluorides as the most damaging of pollutants.
  The Ministry of Agriculture published advice last year—AF 51—a document concerned with the use of sewage sludge as a fertiliser. I stress that we should not waste this valuable substance. We need fertiliser and that is a very good source. However, I regret that in the report there is no reference to fluoride, although there is to other dangers. Could additional advice be given if there is any use of contaminated sludge or sludge which has not been analysed which might be contaminated? In such cases it should not be used, particularly on grazing land. If there is any risk of a combination of moderately contaminated sludge with the use of compound rations with a high phosphorous content, great caution should be exercised.
  I welcome the much safer air of South Yorkshire today. It may be that what we had in our air is now being increasingly concentrated in our sewage effluent. This would imperil wise use of material for fertilising our fields. At least our air is cleaner. It would be rather nice to make sure that we used our waste wisely as well.
  On the other hand, we do not face the same problems of areas such as Bedford-shire, where pollution continues. Obviously my concern must be about the Rother Valley, and I ask my hon. Firend whether he will ensure that there is adequate analysis of sewage and whether there is any possibility of an arrangement to filter the noxious substances out. Can we be absolutely sure that no more contaminated sludge will be deposited on curpastures?
  I emphasise that the official view is that fluoro-emissions in Britain today are not a danger to human health. I believe that that reassurance should be re-examined and, if there is any doubt at all, adequate research should begin. I hope that we can have that assurance without delay.
  I repeat that my constituent's dreadful experience should not be ignored. It illustrates the need for adequate safe-guards and secure arrangements. It also demonstrates how tragic damage has been caused to an individual without any fault
  2100
  on his part. He should be compensated and I hope that the Minister will encourage the water authority to ensure that this is swiftly provided. Then that farm can soon resume its long history of good quality and palatable food production.
  10.15 p.m.
  Mr. Peter Doig: May I make a short point? There is a brain-washing campaign going on concerning toothpaste which contains fluoride. One may buy toothpaste but it is very difficult to know whether it contains fluoride. Can the Government do something, first, to stop this brainwashing campaign? Secondly, could they make it compulsory for those who sell toothpaste to say which toothpastes do not contain fluoride, because many people are looking for such toothpaste?
  10.16 p.m.
  The Under-Secretary of State, Department for the Environment (Mr. Kenneth Marks): I shall ask my right hon. Friend the Secretary of State for Social Services to take note of what my hon. Friend the Member for Dundee, West (Mr. Doig) has said.
  I am grateful to my hon. Friend the Member for Rother Valley (Mr. Hardy)for raising this matter on the Adjournment because it provides a valuable opportunity for me to deal, so far as I can, with the specific problem of my hon. Friend's constituent, Mr. Ellis, as well as to answer other questions which this subject may raise generally in the minds of hon. Members.
  The subject spans several Departments' interests and I have been in close touch this week with the Ministry of Agriculture,Fisheries and Food and the Department of Health and Social Security, as well as with the Yorkshire water authority and other local bodies. I endorse what my hon. Friend said about Rotherham metropolitan district and its environmental health officers because of the work that they had done.
  I have read both articles in The Guardian on the case to which my hon. Friend referred, as well as the Bedford-shire case, and I propose to have further meetings with the various Departments and to include the Alkali Inspectorate in future meetings.

  2101
  The Yorkshire water authority has invited Mr. Ellis to approach it with a representative of the National Farmers' Union to discuss ways of assisting him with his problem. I understand that the authority enjoys good relations with Mr. Ellis and that it took the initiative before this debate was requested. My hon. Friend will, however, be aware that there has been some speculation and, as I have realised this week, some controversy, about the source of the fluoride contamination which caused the illness in these animals, although I know my hon. Friend has his own opinions about the cause. Results of investigations are still inconclusive and incomplete. I believe that my hon. Friend the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food has explained that point, and I know my hon. Friend will appreciate that, with the sensitive question of compensation in mind, the Ministry has been concerned to avoid premature comment and conjecture.
  I am sure my hon. Friend will appreciate that I cannot comment to night on the question of compensation. Never the less, I know that the water authority is sympathetic to Mr. Ellis's problem of financial loss and appreciates that he does not want to await the results of the various investigations being carried out and it has, without prejudice to the out-come of the investigations, offered to help where it can.
  However, I am sure the water authority would like to stress that, whatever the cause, the situation that has arisen is extremely rare and that the combination of circumstances involved is quite unusual. As my hon. Friend said, the contamination caused by atmospheric pollution is one possibility and has been a certain factor in the past. The spreading of digested sludge on the land is another. We have to ask our selves whether there has been a combination of these factors.
  In the past, fluorosis in cattle was generally associated with certain industrial areas producing high emissions of fluorides into the atmosphere. Rotherham was one such area, with a history of fluorosis going back to the 1940s. In fact Rotherham is, I believe, one of the few areas, if not the only one, manufacturing fluorine compounds as the main
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  product, as distinct from those produced as by-products of other processes. Tighter emission standards required by the Alkali Inspectorate have, in the past decade or so, brought about considerable improvement in airborne pollution although evidence exists to show that intermittent atmospheric contamination has affected some farms in the area up to 1975.
  The case is the first brought to my attention where it has been suggested that contamination stems from a high concentration of fluorides in sewage sludge. The argument, of course, is that the reduction of fluorides in the atmosphere has transferred the problem from atmospheric pollution to the liquid trade effluent received at Aldwarke sewage works and applied to Mr. Ellis's land. However, from investigations conducted so far, a number of factors cannot be reconciled to show that the sewage sludge is necessarily the cause of the contamination which started in 1976. One factor concerns the timing of the application of sludge to the land in relation to the normal course and manifestation of the disease. Sludge was first applied in May1976 and in the same year well established clinical symptoms are known to have appeared. I am advised by the Ministry of Agriculture's veterinary service that the symptoms take at least a year to manifest themselves, which means that if sludge was the cause it would have to have been spread in 1975or earlier. My hon. Friend has pointed out that 1975 and 1976 were drought years and that that may have had an effect. I shall follow up that idea.
  Other factors concern the fluctuations of fluorine in the soil. Though tests have shown that some levels have been un-deniably high—the implications of different patterns of farming in the area—Iunderstand that Mr. Ellis's cattle are in pasture all year round, whereas other cattle are taken in for winter feeding. There is a lack of similar evidence from any of the other 35 farms in the area which have received Aldwarke sludge,18 of which have cattle.
  Take-up of fluorine by vegetation and herbage is minimal as only the soluble fluorine is available, but it is arguable whether the insoluble portion remaining in the soil could be ingested continually by cattle. All these aspects need further

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  investigation and I hope that my hon. Friend will accept that position.
  But I should like to make a number of points generally by way of assurance for the future. First, my Department's guidelines on sludge disposal do not refer to a limit or analysis for fluorine be-cause it has not been regarded as a problem in the past. However, I am considering suitable modifications to the guide-lines for the future for all water authorities, although I see no reason to depart from the views expressed in 1970 by the working party on sewage disposal which advocated the application of sewage sludge to land as good agricultural practice. My hon. Friend has confirmed that view. The South Yorkshire code has already been adopted for analysis of fluorine. I shall draw the attention of the DHSS and the Minister of Agriculture to what my hon. Friend said about the need for analysis of certain cases.
  Secondly, although the water authority's current agreement with industrialists for the reception and treatment of trade waste containing fluoride cannot be altered until1980, it is the authority's intention to reduce the fluoride content in the waste as soon as it can legally do so.
  Thirdly, disposal on pasture land was discontinued as soon as the fluorosis was confirmed. The water authority does not propose to resume this practice until the levels of fluoride in the industrial effluent have been reduced. Disposal on arable land was discontinued because of weather conditions and, when resumed, will continue to be applied strictly within accept-able limits.
  My hon. Friend also expressed concern about the wider aspects of human health. These matters are more for my right hon. Friend the Secretary of State for Social Services. I refer him to a written reply on 11th April last year when it was said that no human hazard had been shown by inhalation of fluoride. I also refer him to the Adjournment debate on 10thNovember 1978.
  Other reports and investigations have shown that man's fluoride intake from vegetables in contaminated areas is insignificant that the fluoride content of milk from cows suffering from fluorosis is negligible and that there is no specific accumulation of fluoride in the meat.
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  and prolonged boiling of bones from cattle bred in contaminataed areas has shown that there is no hazard to man in the making of soups and stews. The negligible intake of fluorides from the meat or milk of affected cattle would not affect the safety of the consumption by humans of fluoridated water containing one part per million of fluoride—a concentration which takes account of dietary intake.
  I am aware of the emissions from the London Brick Company's works in Bedfordshire and the case of Peter Goode to which my hon. Friend referred. The company has been farming dairy herds local to the Stewart by works in Bedford-shire for many years, and appears to have demonstrated that good husbandry methods make it possible for farming to be successfully carried out in the area despite the presence of fluorides. How-ever, this matter is currently under discussion with the Ministry of Agriculture central veterinary laboratory at Weybridge, and a further investigation is being considered.
  I am assured that the Alkali Inspector-ate is concerned about the problems associated with these brickworks. I understand that a liaison committee, including the relevant local authorities, was established in 1974. The inspectorate considers that continued external monitoring might pro-vide additional information and is accordingly co-operating fully with the company, the local authorities and other organisations.
  The case of the Invergordon smelting plant is not directly comparable with this case. Invergordon involved planning per-mission with a condition relating to monitoring procedures. Although the power under English law to impose planning conditions is wide, case law has limited the discretion of planning authorities and it is accepted that conditions must serve a genuine planning purpose. Monitoring might be included as a planning condition but anything wider than that would not be acceptable under planning law.
  Finally, I return to the subject of compensation. We are, of course, always ready to consider measures to deal with hardships, where no other remedy is avail-able. But a formalised compensation system is not the answer. Where responsibility for damage can be allocated with-out difficulty, the court or other tribunal will be able to assess the compensation

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  under the law as it stands—usually on the basis of restoring the injured party to the position that he was in before the damage. But where, as in this case, responsibility cannot easily be ascertained, and there may be no breach of a statutory function, formal rules clearly have no part to play. But the water authority is meeting my hon. Friend's constituent informally on that matter.
  Mr. Hardy: Will my hon. Friend en-sure that the water authority writes to me and that consideration is given to the possibility of another national survey?
  Mr. Marks: I give my hon. Friend that assurance. I shall keep in close touch with the Yorkshire water authority. My right hon. Friends the Minister of Agriculture, Fisheries and Food and the Secretary of State for Social Services will maintain a watch on the considerable re-search that is being carried out into atmospheric and possible soil pollution from the disposal of sewage sludge in this way.
  Question put and agreed to.
  Adjourned accordingly at twenty-eight minutes past Ten o'clock.