PUBLIC EXPENDITURE

HC Deb 09 March 1979 vol 963 cc1631-99

11.6 a.m.

Mr. Frank Allaun (Salford, East)

I beg to move, That this House believes that there is now the strongest possible case for stimulating growth in the economy by expanding housing, the health service, education, the other social services and war on want overseas, to cope with vital unmet needs, especially as this would provide more jobs for unemployed workers; seeks the development of new industries by the National Enterprise Board and the re-equipment of British industry accompanied by compulsory planning agreements; and asks the Government to proceed along these lines in framing the Budget, and by other means. I propose to cut my speech like an apple into two halves. Before coming to broad economic considerations, I wish to concentrate on the issue of damp, cold homes. I make no apology for that. The twin curses of damp and cold are afflicting the lives of millions of men, women and children today. I refer to new post-war homes, whether houses or flats, private or council dwellings.

What has happened to Coronation Street and the families who have lived there in the 21 years since the programme started? That programme attracted a colossal viewing audience, not only in our country but, surprisingly, in many others. I am qualified to speak, because Coronation Street is in my constituency of Salford, East, although there are similar terraces of two-up and two-down in almost every town in the North and Midlands and parts of London.

The opening shots of the street that for many years prefaced the programme were taken in Archie Street. It was nicknamed "Coronarchie Street" by the local inhabitants. Archie Street was demolished, but in recent years the opening shot has also been taken in my city. We have all watched Ken Barlow, Elsie Tanner, Ena Sharpies and Len Fairclough. In real life the characters are decent people trying properly to bring up their families in disheartening slum houses. Many of those houses are still there. The recent housing survey shows good progress. Since 1971, the number of people living without a bath, hot water and inside WC with all that that means has been halved. Nevertheless, in the United Kingdom there are still 7 million people going to bed tonight in houses that lack such facilities. Progress has been good, but not good enough, and we have a mighty long way to go.

What has happened to the Coronation Streets that have been demolished? There were farewell parties in the streets—and some were very good. The people were then rehoused in new council houses and flats. At last it seemed that their dreams had come true. Mothers were overjoyed, particularly with the bathrooms and the hot water for their children. No longer had they to put up with the single cold water tap or with having to go to the outside toilet in the back yard on a winter's night.

Then came bitter disappointment and disillusionment. They came in the form of one word—" damp ". The paper has peeled off the walls and hundreds of thousands of new homes have become infested with moulds—green, grey, black and many other colours. The mould attaches itself to ceilings, walls, clothes, furniture, carpets, clothing, shoes and even food. The parents cannot let their children sleep in the bedrooms. The rooms are so damp that mothers fear the little ones contracting chronic bronchitis. In some homes the children have to sleep in the living rooms.

These new dwellings become heartbreak houses when the residents see their decorations and furniture, on which they have spent "well maintained" and other compensation grants and all their savings, being completely ruined. Some have decorated and redecorated half a dozen times to try to cope with the damp. A sickening, disgusting smell pervades some of the new dwellings. Some of them have turned into new slums.

In an effort to counteract the wet and cold, the residents incur daunting bills. This month, as usual, numerous cases of this kind have been raised with me at my advice bureaux. One widow had a bill for £145 for the quarter. That is £11.10 a week to heat a small property. Many residents get into arrears. Worry about fuel bills is a common feature of working-class life today. The bills have been so high, especially with electric underfloor heating, that residents have to cut the heating off in all but one room. That, of course, further aggravates the dampness in the unheated part of the house.

The severe winter that we have just experienced—the severest for 17 years—has exacerbated the discontent. I congratulate my hon. Friend the Member for Woolwich, East (Mr. Cartwright), who has drawn attention to what is taking place. This evil is ruining lives in almost every town in the country. I am burned up about it, but I am not half as angry as people who have to live in this predicament. When householders complain to the experts, they are airily told that it is not damp but condensation. That is a great satisfaction. Yet, as Shakespeare might have said, "Damp by any other name remains as wet."

The the experts criticise the tenants. They complain that occupants come home from work at five o'clock and boil a kettle, which causes steam. They complain that tenants take baths in the bathroom, which has a similar effect. They say that people should live with the windows open—and that in our winters! The tenants' reaction is explosive, as can be imagined. Many of them would agree that some rooms are so wet that there are salmon jumping out of the skirting boards, as my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Brown) has said.

Conditions become so intolerable that many rehoused tenants from our Coronation Streets are pleading for transfers from their new houses and flats to other, drier accommodation. Even more horrifying is the fact that homes incorporating exactly the same defects are being constructed in their thousands at this moment. Something has to be done. We must get home and dry. Before we can put things right, we have to discover what went wrong. We are all partly responsible, but I lay the main blame on the architects and designers. Since the mid-1950s the Clean Air Acts, which have greatly improved life in our towns and cities, introduced smokeless zones. These led in many cases to the disappearance of fireplaces and chimneys, which provide ventilation. There was an enormous expansion of multi-storey flat construction, usually by prefabricated industrial methods, now, fortunately, discontinued.

But multi-storey flats without fireplaces have been built on the Continent for two generations without causing damp. It is a poor excuse to say that the climate is better there. The winters are worse in Scandinavia, Germany and Switzerland, yet this widespread trouble has been avoided there.

Architects and building firms, with some good exceptions, have a lot to answer for. They have made terrible mistakes. Walking down a street in a northern city, I came across building workers on scaffolding outside a block of new flats. When I asked the nature of their work, they told me that six months after the block had been completed tiny cracks had appeared in the pre-stressed concrete, and rain was penetrating to the interior. The whole outer surface of that block was having to be covered with thin sheets of steel. One can guess the cost of that operation.

The faults are endless. The most dramatic of them, of course, occurred after a gas cooker explosion. It led to the collapse of the multi-storey flats at Ronan Point. The block collapsed like a pack of cards, killing four residents. It might easily have killed many more. The fault in the building system has cost ratepayers well over £50 million at current prices, as tower blocks throughout the country, built on the same principle, have had to be emptied of their tenants while the structures have been strengthened.

What happened to Mr. Frank Taylor, the boss of Taylor Woodrow, the building contractors involved? Was he prosecuted, or sued for compensation? The answer is "No". Some time afterwards he was knighted, and the company's profits soared. Now Sir Frank has the impertinence to play a leading part in the £500,000 propaganda campaign by the directors of the big construction firms against local authority direct labour building.

The scale of the problem of defective modern housing is gradually being recognised. The recent survey of local authorities by the magazine Building Design estimated that £200 million of remedial work is needed on council houses less than 30 years old. That is this year's figure. Tenants throughout Britain are campaigning against dampness, unworkable heating systems, defective lifts and faulty building and design. Many councillors and Members are fed up with having to try to cope with complaints on these matters. Firms of architects are expected to take out insurance policies against serious losses resulting from their work, yet they and the guilty building firms are very seldom proceeded against. I cannot understand that. I would like to see councils taking action against flagrant offenders.

One excuse often put forward is that designers and construction firms have to keep within the cost yardstick—the officially permitted maximum—but many estates have been built under the cost ceiling and have still provided warm, dry houses. Salford metropolitan district council, which is Labour-controlled, was determined that this social tragedy must be stopped. It called in experts from Salford university department of civil engineering, and its own architects, to design a pair of semis, on an experimental basis, which would provide low-cost heating.

Within five months the new homes were built. My wife and I visited the houses on the two coldest days this winter. The thermometers in the living and dining rooms registered 70 degrees, and Dr. John Randall, the energy conservation researcher from the university, estimates the heating costs for each house to be only about £30 a year, or 60p a week, though there will be an additional cost of £30 a year to provide hot water in the bathroom and the kitchen.

When houses on this plan are put up—and we are immediately building four more because the scheme is going well—not on a two-off basis but in quantity, it is calculated that the additional cost will be approximately £400 for each house. The saving in fuel costs to the occupants, and in energy to the nation, will clearly be enormous.

There is nothing noble about the outside appearance of these houses, which are built to Parker Morris standards, but inside they embody several important heating and insulation features. In one of the prototypes the ceilings and floors enclose water piping made of strong PVC of the same diameter as a garden hose. The piping is embedded in the concrete and contains circulating warm—not hot—water heated by a special heat pump system, which is adequate because of ventilation. The water is raised to a maximum of 30 degrees Centigrade, which is little more than tepid. This is partly responsible for the saving in fuel costs.

In the adjoining house the air circulated by a fan is used to heat cavities in the internal wall. Three small heat pumps extract the heat from the water storage tanks mounted in the outhouse and other parts of the house. In one house the pumps are used to warm internal walls. Heat is transferred to the walls by the circulation of air through the cavities, and since the walls act as storage heaters the pumps can be operated by cheap, off-peak electricity. The heat in the moist air rising from the kitchen and bathroom is recovered by the pumps. An additional advantage of the system is that it does away with radiators, which can be inconvenient and unsightly and also dangerous to children.

The insulation is so complete that little heat escapes from the building fabric. A layer of material 8 in thick made of poly-urethane granules encloses the building within the enlarged cavities in the external walls and under the ground floors. The significant effectiveness of the insulation is such that even switching on a light or the television set is affected. The air does not grow stale, as it is changed every half hour by continual extraction.

The windows are double-glazed. They do not need to be opened in winter, and can be slid open in warm weather. It would be more difficult to apply the system to tower blocks, but that does not worry Salford council, since it has stopped building them. I am puzzled why the several national building and building research establishments, with their great resources, left this to a local authority.

The Salford designers and builders are delighted with the results so far. There will be continued monitoring during the first 12 months of occupation by the two families to ascertain which of the pair records the greater efficiency, and also to relate the energy consumption to conditions inside and outside the houses. My right hon. Friend the Secretary of State for the Environment is being asked to consider raising the cost yardstick by £400 for houses built to this design. I ask, is this tomorrow's style of construction and living?

What of the homes already built? The problem is so serious that whole estates will become difficult to let unless flats and houses are put right. That could mean their demolition or their being virtually given away, as one or two authorities—mistakenly, in my view—are doing. To put such dwellings right, Salford council will replace the electric underfloor heating with gas central heating, and since heating is no use alone, if it nearly all escapes, the council will provide additional walls inside existing rooms—not just chemical paint, but extra insulation. This, as one can imagine, is an extremely difficult and expensive operation, but it is better than leaving the dwellings as they are, or demolishing them. Salford council has decided to spend £7 million this year on the scheme.

We are grateful to the Department of the Environment, which has allowed the council to do this with the help of grants, thus breaking the rule that subsidy is not allowed for the rehabilitation of houses less than 30 years old. It is good news that the Secretary of State is now willing to consider relaxing that rule to allow this to happen elsewhere where need is proved. In Salford the sum has to be included within the housing improvement programme ceiling, but fortunately this can be done without cutting total housing activity this year.

The rehabilitation of flats on a big scale would employ many thousands of workers. There should be special training schemes for some of the skills involved, as many tenants have suffered great inconvenience as a result of shoddy work by "cowboy" firms. I believe that the trade unions would co-operate in such schemes. The Secretary of State has said: I attach particular importance to improving housing estates which have become run down in different ways."—[Official Report, 5 March 1979; Vol. 963, c. 927.] There are many ways in which that can and should be done—by better and cheaper heating systems; by better insulation; by having more caretakers, and good ones; by having more playgrounds outdoors and indoors; by having better lifts.

All that building and rehabilitation costs money, which brings me to the issue of public expenditure and the Budget. Without more public expenditure, a great mass of human misery will continue.

It is said that imminence of death concentrates one's thoughts on life wonderfully. Similarly, imminence of a Budget concentrates one's thoughts on public spending. In Britain today there are enormous unmet needs, such as those mentioned in the motion. It is possible to make £1 million in a single share deal, as the leader of the Conservative Back Benchers has just done. In that case, one does not need to worry over-much about public spending. If one cannot obtain a home help to relieve an elderly disabled man or woman, it is irrelevant. There is no housing problem if one has plenty of money. But for millions of working-class families these problems are crucial.

There are parents trying to bring up their children well in hopeless homes; doctors who spend hours a day trying to find hospital beds for their patients; long waiting queues for the hospitals, except for particularly urgent operations; requirements of the National Health Service which cannot be satisfied, because of shortage of money; far too few nursery schools for the toddlers; able children taken away from school because their parents cannot afford to keep them from work or the dole queue.

As for those in the hungry nations, they are mostly living in conditions that even our poorest could not tolerate, yet at the same time we have 1.3 million officially unemployed and many more not registered as such.

Surely, the commonsense solution is to provide the unemployed with work to satisfy those needs. That is what President Roosevelt did in the great slump in the 1930s, when 13 million unemployed walked the streets of America. His New Deal started vast schemes, such as the Tennessee Valley Authority; great public works—the building of hospitals, houses, schools and universities; the provision of better wages and social benefits. Millions obtained work and recovered their self-respect. He put America back on the road to recovery.

The Labour Party and the TUC are pressing for big expansions in our economy. A few days ago the Labour Party national executive committee carried a resolution strongly opposing the threat of a "tough Budget", whether by increased taxation on ordinary families or by public expenditure cuts.

What are the arguments against expansion? The first is that it would increase the public sector borrowing requirement. That is not so. The average male worker earns £90 a week, we are told by the Department of Employment. Last month I asked the excellent Labour Party research department at Transport House how much it would cost the Chancellor of the Exchequer if a man on average wage, with a wife and two children, lost his job, that cost to include loss of unemployment and related benefits, loss of income tax on his earnings, which would have come to the Treasury, and employer's and employee's national insurance contributions. The astonishing answer was that it would cost £86 a week. Therefore, that man could be kept fully employed for an extra £4 a week. At the same time, he would be giving the country more than £90 a week in the production of goods or services.

I hope that my right hon. Friend the Financial Secretary to the Treasury will have something to say about the second argument, which is that it would be inflationary to expand employment. On the contrary, more jobs mean more money in purchasers' pockets, more sales in the shops and more use of unused capacity in the factories.

Everyone knows that if one raises the proportion of capacity employed in a factory from, say, 66 per cent. to 100 per cent., one markedly reduces the cost of the goods produced. That is because of the economies of long runs and because of spreading the unavoidable overhead expenses over a larger number of units produced. In fact, the Government should recognise this as a major way of reducing inflation, not increasing it.

The third argument is that we must divert workers from services into export industries. That sounds fine. But what happens in practice? If teachers, nurses or bricklayers are made redundant, do they rush into engineering or other export factories? No, they do not, because many of those factories are working at only two-thirds capacity, and I repeat that there are more than 1.3 million unemployed. Therefore, those workers do not join the export drive; they join the dole queue.

There is a fourth argument which alone has some justification. It is that if we increase the purchasing power of the British people it will largely go on importing consumer goods, which would undermine our balance of payments. I understand that 60 per cent. of increased buying power might go in that way. The answer is to prevent that happening. It can be done by imposing import restrictions, not all round but certainly on those countries that sell us more than we buy from them.

What we are discussing is really a class issue. Those who work for their living by hand and brain want more social provision. Those who live on their backs want less.

That brings me to the speech this week by the Shadow Chancellor. He is an amiable gentleman—a nice man with nasty ideas. He said that the Tories would cut public spending by £4,000 million. Economists, using Treasury figures, have calculated that for every £1,000 million of extra public spending, within 12 months we create an additional 235,000 jobs. That is what Labour wants to see. Conversely, if we cut spending by £4,000 million, we would increase unemployment by 940,000. To be fair, it would not quite mean as much as that, I hope. Nevertheless, it would undoubtedly add hundreds of thousands to the number of unemployed.

Hitler's No. 2, the Fascist Field Marshal Goering, once said "When I hear the word 'culture', I reach for my revolver." It seems to me that there are in Britain some gentlemen who would privately say "When I hear the words 'public expenditure', I reach for my axe."I am referring to the City, the bankers, the IMF, the CBI, the newspaper magnates, Conservative MPs and some Treasury officials.

The Labour Party is asking the Chancellor of the Exchequer and the Chief Secretary to the Treasury to resist this tremendous pressure—this demand by the enemies of the Labour Government to cut their own throat. The Cabinet should listen to the rank and file, to the delegates at our conference. They are usually right, as they were last October when they told the Cabinet that the 5 per cent. ceiling was not on, and when they demanded, year after year, that we should wind up our expensive bases east of Suez. If we had not done so, how many British and Asian lads would have lost their lives?

There is no need for panic. North Sea oil is flowing in increasing quantity. There is, as was announced yesterday, a surplus of £254 million on the balance of payments. That sum would have been far higher if we were not making a net contribution of £450 million a year to the Common Market. Because of the cash limits system, there is an admitted £2 billion underspending yearly in the public sector. I suspect that the actual underspending is far more. Yesterday the pound was at its highest level for a year. We must also remember the colossal arms spending, rising to over £7 billion this year—money which the Labour Party and TUC are urging should be devoted to non-military public expenditure.

There is some high-powered economic backing against the threatened cuts. I refer to the headline on the front page of the Financial Times on Wednesday 7 March: Chancellor warned against tough, deflationary Budget ". We are told that there is no merit whatsoever in a positively deflationary Budget since a further increase in unemployment induced by fiscal action would have no discernible effect on the level of pay settlements.

Who is saying that? It is not the Labour Party national executive committee, an almost Bolshevik body if one is to believe the Tory press, despite the array of respectable Labour Cabinet Ministers in its ranks. It is not even the wicked subversives in the Tribune group of Members of Parliament, the paid agents of Moscow, as some Tory Members seem to believe. That statement was made by the ultra-responsible National Institute of Economic and Social Research, Dean Trench Street, London, S.W.1. That institute wants a neutral Budget.

The Labour Party wants an expansionary Budget so that we can return to full employment. What do I understand by full employment—how many unemployed? I refer to the number that existed in 1966, namely, 260,000. That would satisfy me—and it is not an impossible task. With a Conservative Government the numbers would increase, partly because the Tories believe in deliberately cutting public expenditure. Our country cannot afford such deflation. It will help the Conservatives' election prospects if we hit working people in the Budget. Therefore, for political as well as economic, social and human reasons, I ask the Cabinet to carry out the wishes of the Labour and trade union movement.

11.44 a.m.

Mr. Ernest G. Perry (Battersea, South)

I listened with great care to the speech of my hon. Friend the Member for Salford, East (Mr. Allaun). I congratulate him on winning first place in the ballot. As we shall be facing a Budget in the near future, God willing, the items to which my hon. Friend drew attention were most important for consideration.

My hon. Friend moved a wide-ranging motion. It carries me back six years, when I had a motion that appeared as the second item on the Order Paper on 30 March 1973. That motion dealt with local government and called for an expansionary policy of local government expenditure. Mr. Dick Douglas was in first place. His motion related to North Sea oil, and the discussion continued until four o'clock. Therefore, we could not deal with the problems of Greater London. However, in this debate my hon. Friend has chosen an all-embracing subject, which contains many items on which we can all speak.

On Monday of this week the House debated housing. Many of the matters on which my hon. Friend touched in his speech were dealt with in that debate by hon. Members on both sides of the House. Many of us, because of the time factor, were restricted in our contributions to Monday's debate. My hon. Friend mentioned the role of architects and others connected with the building trade. Again, those points were dealt with in Monday's debate. We all know that since the war a great deal of money has been spent on housing in the public sector. However, some of the results of that expenditure have thrown up many faults in the construction of certain enormous dwellings.

These problems seem to arise suddenly. I was born on an estate in Battersea called the Shaftesbury estate, built primarily with the money and under the influence of the old Earl of Shaftesbury. That estate was built in 1873—106 years ago. All its dwellings are still intact, and of sound construction. They do not suffer from condensation problems, and some four- or five-roomed dwellings now go for sums over £25,000. They were built without bathrooms, but most of the dwellings in the estate have been given improvement grants for the installation of bathrooms and other amenities. The estate is a standing example of the better craftsmanship and building that existed a century ago compared with the present standards.

The architects' profession, with its high salaries and the brains at its disposal, has managed only to produce edifices that are full of discontented tenants. Furthermore, many councils face the expenditure of large sums to try to make many of these modern dwellings habitable. This argument applies not only to Tory but to Labour Governments. Both Governments pursued industrialised building in the late 1950s and early 1960s. We are now reaping the doubtful rewards of not having envisaged what inevitably happens when people live in such homes. Hundreds of thousands of tenants are itching to leave tower blocks, and this is just one facet of housing policy.

Nobody can claim that money has not been spent on such housing. Since the war such expenditure has been enormous. A great deal of money has been spent on improvements and new buildings, yet it appears that that money has been poured into a bottomless drain, because some authorities want to get rid of these assets.

One hundred years ago the standard of building in ordinary domestic dwellings was superior to the standard of dwellings erected during the past 20 years. What is the reason? To some extent, the reason is that the political parties—I have been a member of my party for over 50 years—have vied with one another to build more houses, irrespective of their quality. We are now suffering from the deterioration in the quality of housing since the mid-1950s, and we face problems which we have ourselves created.

I have had local government experience in both Battersea and Wandsworth, and I have always opposed tower blocks. I have always considered that we should build nothing above three, or at most four, storeys. In south London there are many examples of dwellings of three or four storeys which are still a pleasure to live in and a delight to the eye. But that policy was changed by successive Governments, both Labour and Conservative, with the consequence that we now have a problem, and it is that problem which I want to drive home. If we imagine that the people now living in the tall blocks will tolerate their conditions for much longer, we had better think again.

I refer now to a good article which was published in the Evening Standard on Wednesday of this week. It was written by a young lady journalist and headed Day Three—by Lynda Murdin. The article deals with Wandsworth. I have no wish to attack the present Wandsworth borough council because, after all, people knew what it said it would do. The policy was clearly stated, and when the council was put in power last May it started to carry out what it said it was elected to do. Nevertheless, because of its policy of selling council houses and cutting out this and that, people are today condemned to stay in tower blocks although there are in Wandsworth literally hundreds of empty council houses and dwellings where they could be adequately housed.

The article in the Evening Standard dealt with the case of a man and wife with three children aged 5, 3½ and 16 months. They live on the eleventh floor of a tower block in Sporle Court in Battersea. Incidentally, that brings back memories to one of my hon. Friends and to me. This man was promised a transfer over 18 months ago, but today, because of the change of policy on the part of Wandsworth borough council, he has been informed that there is no possibility of a transfer and he must tolerate being on the eleventh floor of a tower block, doing his best to put up with it.

That family and others like them suffer the problems to which my hon. Friend the Member for Salford, East referred. They suffer from condensation and the rest. But the main problem is that the wife is stuck in the flat virtually for 24 hours a day, seven days a week, with her three children, because, obviously, she cannot allow her children to go downstairs, because of the sort of thing that goes on in many parts of London today.

When my right hon. Friend the Secretary of State for the Environment announced on Monday that he would not allow certain sales of council houses, he announced a decision which will be welcomed with open arms by such people as Mr. Cunningham, the man whose case is described in the Evening Standard article. I assure my right hon. Friend the Financial Secretary to the Treasury, the Minister on the Front Bench this morning, that the measure which the Secretary of State announced is one which we have all been waiting for, and we congratulate the Department of the Environment on having introduced it.

Housing is, I suppose, the most potent influence on people's lives. I have already spoken of the estate where I was born. There could have been no more orderly place. The tenants comprised artisans, policemen, postmen—all sorts of people—and it was well ordered and well preserved. Today, after 106 years, it is a credit to Wandsworth. Most of it is privately owned now, and the people look after their houses. But what are the tenants in council properties to do? What can we say to those who are living in damp and overcrowded accommodation?

By coincidence, this morning I had sent to me by my hon. Friend the Member for Tooting (Mr. Cox) a letter which he had received from the hon. Member for Streatham (Mr. Shelton), my nearest constituency neighbour, whom I count as one of my friends in south London—a man who does his utmost to try to solve housing problems in our area.

This letter from the hon. Member for Streatham deals with the case of someone who came to see him, a Mr. Jack Kiltie, who had approached him for help in his housing. The hon. Gentleman says in his letter: I explained that I could not help him since he lives in your constituency, but I promised to write to you about it. He has a one-bedroom flat owned by Wandsworth council and lives there with his wife and 16-month old baby. Since he and his wife intend to have another child as soon as possible, they applied some six months ago for a transfer to a two-bedroom or three-bedroom flat. To date, he has received no offer of transfer and recently telephoned Wandsworth council and was told that he was not entitled to a transfer as he had only one child. As you can imagine, this creates rather a problem for him, and I assured him that you would be able to give him advice and explain the background. As I say, that letter was sent to my hon. Friend the Member for Tooting, who sent it on to me. I give credit here to the hon. Member for Streatham. He did that in order to try to help someone who approached him.

That case highlights the problem which we have in Wandsworth. Twelve months ago hundreds of tenants had a hope of transfer. Today they have no possibility of transfer in any circumstances. Both in London and elsewhere in the country the transfer system for housing associations and council tenants is deplorable. There are many people living in four-bedroom council flats who want smaller accommodation. One thinks of the widow who has applied many times for a one-bedroom flat or, at most, a two-bedroom flat but who is still occupying a four-bedroom flat after many years.

The transfer system in London needs a stick of dynamite under it to get local authorities to do something about people who want to move to smaller accommodation or who, because of the needs of a larger family, want more accommodation.

I ask my right hon. Friend at the Treasury to convey to the Secretary of State for the Environment the plain fact that the transfer system is, in such cases, breaking down. Where councils have said that they will sell council property, transfer to larger accommodation for a family who need it is now out of the question. I want that to be firmly noted.

I do not for a moment pretend that all the measures suggested this morning by my hon. Friend the Member for Salford, East can be carried out at the flick of a finger. That cannot be done. This country, probably since 1900—I have heard my hon. Friend say this himself—has been in a state of general decline, and what has happened since the war has only exacerbated it. Unless we get our priorities right for industry, there will not be any public expenditure for anybody. We must ensure that our industries, especially those such as the machine tool industry, have more investment and development in order to produce the things which we all clamour that people should have.

We cannot have an increased standard of living, or more of this and that, unless we increase production. I say to my hon. Friend the Member for Salford, East that this is one of the critical matters that Britain must face. My hon. Friend may disagree with me, but I believe that if we have more public expenditure without in-increased production we shall have increased inflation.

The first priority for Britain—I am very glad that my right hon. Friend the Prime Minister has stuck to his guns about this—in our fight to revive this country's prosperity is to try to check inflation. The only way to do that is by increasing production, so that people can enjoy the benefits of more goods being produced without the backdrop of inflation.

Let us be quite clear about this matter. No one can deny that thousands of millions of pounds have been poured into private enterprise and public expenditure to try to get Britain on the right road. This has been taking place since the end of the war, and was done even before the war. I recall that before the war enormous amounts of money were poured into the railway system. That was under private enterprise at the time. I never objected to that money going into the system. It proved its value between 1939 and 1945. Even today, after all this money and wealth has been spent, we must be very careful how we carry on over the next few years. The advent of North Sea oil is one of our great advantages. But oil is like shoe leather. It gradually disappears. North Sea oil will peter out at some time. We must be prepared well in time for that so that other forms of energy are available and we can continue to maintain a population of nearly 60 million.

It has never been my intention on a Friday to detain the House for too long. I appreciate that great thought must have gone into the second motion on the Order Paper today. I should be the last person to want to curtail discussion of that motion. I should like the hon. Member in whose name it appears, the Member for Horncastle (Mr. Tapsell), to have an opportunity to talk about peace in the Middle East. But our problems are tied up with peace in the Middle East. Today the Middle East is in ferment. Anything that we as a country can do to try to stop this ferment worsening will be to our industrial advantage.

I should like to see a great drive by Britain's industrialists into the Middle East, to sell countries there not Chieftain tanks—although if they want them I would not object to that; it is up to them—but agricultural machinery and industrial products to increase the wealth of the world. I should like to see a real effort being made in that direction to enhance that wealth.

I suppose that we must all be pleased by the fact that Her Majesty the Queen has paid a visit to the Middle East and that she received great applause wherever she went. It has served to cement the ties of business between Britain and the Middle East. The more business we can do with the Middle East, and the more agricultural machinery, industrial goods and other things we can sell there, the more jobs there will be for British people.

12.3 p.m.

Mr. David Weitzman (Hackney, North and Stoke Newington)

I shall not be tempted to follow the course adopted by my hon. Friend the Member for Battersea, South (Mr. Perry) and try to talk of the problems of the Middle East. I want to deal with the motion moved by my hon. Friend the Member for Salford, East (Mr. Allaun). Although he devoted a considerable part of his speech to the terrible conditions of some of Britain's housing, he has been very comprehensive in his choice of a subject for debate.

No doubt all of the matters raised in the motion are matters calling for support, particularly by a Labour Government—expanding the provision of housing, the National Health Service, the social services, help for the unemployed and the development of new industries by the National Enterprise Board. My hon. Friend has set out many grievances and has made many suggestions about ways in which many of the difficulties can be tackled and about the many advantages to be obtained by doing so.

However, I want first to pay tribute to the fact that the Government have not faltered in their attitude towards public expenditure. Whilst they must, of course, have regard to the state of our economy and, as my hon. Friend emphasised, the primary need to overcome inflation, they have steadily pursued their course in their resolve to provide, as far as they possibly can, for the needs of our social services, our housing, hospitals, education, pensioners and the disabled.

By contrast—in the present climate it is important to emphasise this—the Opposition have continually cried out for a reduction of public expenditure, although nowhere, presumably because of the possibility of unpopularity, have they indicated where a saving in public expenditure would be effected in any of those directions—particularly on the matters referred to in the motion.

I listened with great attention to my hon. Friend's description of the terrible conditions of some of the housing in his constituency. As he well knows, such conditions are to be found not only in his constituency but in many others. Many of us will have listened to the speeches made in the debate on housing last Monday. I recognise how much the Government have done and how much they propose to do to satisfy the real need. I was not able to participate in that debate, but I know that the problem of housing continues to be acute. It is particularly so in my constituency, in North Hackney and Stoke Newington. There we have a housing waiting list of many thousands. That list continues despite the valiant efforts made by my council to deal with the need.

My hon. Friend the Member for Batter-sea, South referred to the transfer system. I have had many cases personally of people who have written to me about this matter and have approached the council, but because of the difficulties and the long waiting lists—whether it be as regards the local council or the Greater London Council—these poor people, who in many cases have been waiting for many years and living in very difficult conditions, are unable to obtain the transfer that they so much desire. Both of my hon. Friends have illustrated how very difficult this problem is.

My hon. Friends have referred to rehabilitation. This is a very necessary measure. I hope that in dealing with housing the Secretary of State for the Environment will deal particularly with that aspect. I am well aware of the enormous difficulties. I know how great is the need.

However, I desire today to make a few comments about the personal tax system. I think that it is a matter which is germane to the motion. I want to express the hope that something will be done in the coming Budget about the personal tax system. There is, first, the criticism that our overall level of tax is too high. I know that the growth of Government expenditure, if it is to meet the needs of the nation, must mean that the money must be found for those needs, be they in housing, education or pensions, or for the disabled or many other causes. This must inevitably mean that the level of tax cannot be drastically reduced. But there is the undoubted fact that the high level must discourage greater effort. After all, it is only natural that a person—or a company—who cannot see any benefit arising from such efforts is much less likely to make any such effort. Reference was made to the need to increase our efforts in production. Surely it is important that we consider the question of personal tax.

I draw special attention to one facet of the personal tax system. I must declare an interest. I am a pensioner. I shall retire at the end of this Parliament. After nearly 34 years I shall receive a pension for my service in the House. I shall have to be able to manage on this, with my savings such as they are, in the years to come. Many elderly persons must be in the same position, dependent on their pensions and, to a considerable extent, on the savings made by them during the active part of their lives, and on investments made from those savings, to provide for the future.

My attention was drawn to an article in the Sunday Telegraph of last Sunday by David Collins, which was headed Iniquitous tax on the elderly ". I emphasise those words. I have drawn largely from its contents.

The article alleged that the biggest anomaly in our tax system, and one which caused most resentment, was the investment income surcharge imposed on the elderly. The author suggested that this was an iniquitous tax, as it effectively penalised people for becoming old and retiring. The article suggested that this charge should be abolished for the over-65s, or at the very least should be reconsidered in its effects. I agree with that. I understand that representations on this matter have been made to the Chancellor of the Exchequer by the Building Societies Association.

The article pointed out that the investment income surcharge was a supplementary tax levied on top of the normal rate of income tax. It is true that the threshold for investment income for those over 65 is higher at £2,500, as against £1,700 for others, and that the surcharge from 10 per cent. to 15 per cent. is levied on amounts above that figure. It is a fallacy to think that anyone in receipt of investment income is rich and able to meet the surcharge without suffering any hardship. After all, it is the elderly who are dependent on investment income.

According to the family expenditure survey, households in the 30 to 50 age bracket had the highest average income but the lowest investment income. The elderly had the lowest income but the highest level of investment income. The investment income of the elderly was 10.4 per cent. of their total income. It was 1.3 per cent. of the income of the 30 to 50 age group, and 0.5 per cent. of the income of the under-30s. That clearly indicates that the elderly may well pay high rates of tax on fairly low levels of total income.

A married couple over 65 with an annual income of £4,622 may well pay 48 per cent., yet a married couple with such an income from employment pay the basic rate of 33 per cent. A widow or widower with £4,100 from a pension, augmented by investment income, pays 48 per cent. Yet it must be remembered that anyone with income from employment does not pay 48 per cent. unless his gross income exceeds £10,000.

Surely it must be recognised that the pensioner may have saved money from his earnings and invested it, relying on the income from investments to support him in his old age. The real value of such investment income has gone down considerably as a result of inflation. On top of that he must bear the burden of the investment income surcharge to which I referred.

I am told that the provision of relief to allow one to keep a reasonable amount of savings and enable one to subsist on them would cost about £150 million to £200 million to the Exchequer. I know that the Chancellor of the Exchequer will have many calls upon him in framing the Budget. I have declared an interest. I admit that I would personally benefit from such a change. However, I make this plea on behalf of the thousands of elderly people to whom the erosion of their life savings has caused, in many cases, considerable hardship.

I want to make a plea on another ground. Listening to complaints from pensioners in my constituency, I have found many cases where, owing to the cost of electricity, pensioners have had to cut down on or dispense with heat and light. I know of one ease in my constituency where an elderly couple were without heat for months, in view of the cost. They suffered grievously. Many more are suffering from poor health as a result. It is true that supplementary benefit may help in some cases, but I have heard of many cases where no relief is possible. I emphasise that plea in view of the remarks made by my hon. Friends. I hope that the Chancellor will see whether some help may be given in that direction.

The House is indebted to my hon. Friend the Member for Salford, East for providing this opportunity to air these grievances. I hope that the pleas that I put forward will not have been in vain and that the Chancellor will lend them a sympathetic ear. I hope that the Government, in spite of the heavy calls on them, will be able to assist to a considerable extent in promoting the causes so strongly put forward by my hon. Friend.

12.19 p.m.

Mr. John Sever (Birmingham, Ladywood)

I join my colleagues who paid compliments to my hon. Friend the Member for Salford, East (Mr. Allaun), who brought to the House today a topic for a discussion which, in some respects, is well overdue and about which he spoke so eloquently and clearly, from a depth of knowledge which is not given to many Members of Parliament.

Over the past few days the attention of the House has, quite correctly, been drawn to the problems facing so many families in the underprivileged areas of many large cities such as Salford and Birmingham, especially the problems of housing and social welfare.

In last Monday's debate hon. Members discussed in considerable depth and with a great degree of distilled knowledge the housing problems of so many families. Government supporters were able to convey from their distilled knowledge the view that much work needed to be done in the housing sphere to bring so many families into the general orbit of good housing and social welfare conditions. The House debated that matter very satisfactorily on Monday last and a great deal of value came from it, particularly the indication from the Secretary of State for the Environment about certain regulations concerning municipal house sales. Many of my hon. Friends have been demanding a movement in that direction for some time and we therefore welcome the Secretary of State's indication. It bore some relation to the opening remarks this morning of my hon. Friend the Member for Salford, East.

I should like to draw the attention of my right hon. Friend the Financial Secretary to the Treasury to some of what are now commonly called family problems. Some of us in this House have been anxious to promote a discussion across the nation on the family. Indeed, my right hon. Friend the Prime Minister has been in the vanguard in leading the discussion on the family in the United Kingdom, and I welcome that lead.

In an exchange which I had with my right hon. Friend the Prime Minister at Question Time a few months ago, I tried to draw him into making comments on how he thought the policy for the family should develop. I did not expect, and did not get, from him an undertaking to the effect that he would set up a special Department and a Minister who would be responsible for the family. He indicated that he thought that his ministerial colleagues in Departments dealing with various aspects of family policy were able to carry out those functions satisfactorily.

I would not necessarily wish to disagree with my right hon. Friend, but I think that the time has now arrived when we should have a more co-ordinated approach to the problems of the family. There seems to be a lack of a general definitive policy structure to knit together the various aspects of social, educational, housing and employment policies which are necessary to protect lower-income and one-parent families.

The House and the country generally will, I feel, be indebted to Woman's Own magazine, which recently commissioned a Gallup survey into the position of working mothers. The report of the survey is entitled Fair care for children and a fair deal for mum ", and it outlines the position quite graphically. In drawing attention to some of the findings, I express the hope that the Treasury will reflect upon them and consider how it might assess what help could be made available to low-income parents and particularly to one-parent families and all those who are at the bottom end of the employment scale.

The important findings of the survey showed, for example, that 900,000 children under the age of five have mothers who need to go to work. The report indicates that it is extremely difficult for such mothers to put together a family income, particularly when they are on their own or when they are married to an unemployed worker or a worker with a low income. I hope that the Treasury will give full consideration to these problems and provide assistance in combating them.

It is clear from the report that the families on low incomes necessarily have to spend a high proportion of their income on self-preservation and self-protection. There is very little left to be spent on items which many of us regard as the necessities of life but which are luxuries to many such families.

The report also indicates that lower-income families find it necessary to survive on the income brought in by women workers. Many mothers are able to take only those jobs which offer part-time hours, and in consequence they are in many cases very poorly paid. The income derived by working mothers in such jobs is far below that usually received by mothers who are able to work full-time, or by other working women. It is less than one-third of the amount paid to men in full-time employment.

My hon. Friend referred in considerable detail to the difficulties experienced today by working mothers. It is in this area of family life, strangely enough, that I think the Treasury could become a champion of the cause. It could make life a lot easier for those with low incomes, and for those in pressure circumstances, by easing the tax burden. They could also be helped by increasing the benefits available, which in turn the Treasury should not allow to be taxable. That would give protection to the low-income families.

The report by the Central Policy Review Staff entitled Services for Young Children with Working Mothers provides a catalogue of facts and figures showing that there is an overwhelming demand for the Government to assist in this connection. I urge my right hon. Friend to take back to the Treasury the argument that whatever can be done in an improving economic position should be done in order to give the maximum protection to the lowly paid groups to which I have referred.

Whatever help local authorities are able to give by way of nursery education, the provision of part-time child-minders and so on is being hampered by the fact that many Conservative local councils—the one in Birmingham is a good example—are not prepared to beef up the services they are able to offer to working mothers, to enable them to seek employment in order to support their families more adequately. Many local authorities are reticent about bringing forward schemes to provide for children in this age bracket. Indeed, in Birmingham there are proposals to increase the charges for the limited facilities already provided, thereby making the whole problem much more difficult.

In the inner city areas there are enormous pressures for nursery places, pre-school places and the like, as well as for child-minding services and day care centres. It is in those areas, paradoxically, that there is the greatest opportunity for working mothers to go out to work to supplement their family income. In these areas there are many small companies and businesses which can attract part-time labour, and very often skilled and semi-skilled labour.

Additional funds are now being made available to the inner city areas through the Department of the Environment. The promotion of enterprise and business within those areas is likely to grow because of the Government's stimulus. If the programmes within the inner city areas are found to be insufficient to promote job opportunities for women, however, there will be an aggravation of the problem because they will be unable to find the employment which is so necessary for them if they are to maintain family life.

I believe that it is important for us to air these problems in this House from time to time so that we can give proper consideration to them. My hon. Friend has provided a spendid opportunity for hon. Members to range over all the problems which are facing working-class communities in Britain today.

When we see a Budget looming up before us, we need every opportunity to punch across our points to the Treausry so that it may consider our views. The parliamentary occasions on which we are able to bring these points forward give us a chance to reflect the views of our constituents. The view that I am asked to reflect from Ladywood is that help and assistance are needed from all quarters, including the Treasury, to protect those who are least able to look after themselves. That includes some of the groups to whom I have referred today.

My hon. Friend the Member for Bury and Radcliffe (Mr. White) has been attempting during the past few months to draw the problems of working mothers and one-parent families to the attention of those Government Departments that are in the front line of the attack on poverty. I pay tribute to my hon. Friend for his work in this area. There are a growing number of hon. Members on both sides who are taking various opportunities to draw these problems to the attention of Ministers and ask for help. I hope that the Treasury will be in the forefront of the Labour Government's move to give protection to those least able to look after themselves.

12.32 p.m.

Mr. Max Madden (Sowerby)

I, too, wish to pay tribute to my hon. Friend the Member for Salford, East (Mr. Allaun) on being successful in the ballot and thus enabling us to discuss this wide-ranging motion. He does so wearing two hats, the second being that of chairman of the Labour Party. Today he has articulated on behalf of the Labour Party and the trade union movement a number of demands that we have been pressing on the Government consistently. I hope that the items listed in the motion will be considered urgently and sympathetically by the Treasury, and we all hope that in his Budget on 3 April the Chancellor will bring forward policies to advance these causes.

My hon. Friend the Member for Sal-ford, East concentrated on housing because he is an expert in this field. His contribution will be read with interest. I wish to confirm what some of my hon. Friends have said today about the extremely harmful effects of Tory policy in selling council houses. I received a letter this week from my own Tory-controlled authority telling me that its policy will inevitably delay tenants seeking transfers ". That pattern is being repeated throughout the country wherever Tory local authorities pursue this most unfair and silly policy of selling council houses. Often councils sell their houses at very large discounts, thereby losing very important assets for the community.

I commend to the House the remarks of my hon. Friend the Member for Birmingham, Ladywood (Mr. Sever), who has drawn attention to a very important area of public expenditure. I am sure he will agree with me that there are a number of Tory-controlled local authorities which are inflicting great anxiety and worry on many working mothers by refusing to make proper allocation for the rising-fives. In my local authority area the council is creating great difficulties for working mothers by reducing these provisions. We all know that a large number of Tory-controlled authorities are refusing to take up bids that are available for the provision of nursery school places.

I shall concentrate my remarks on the aspect of the motion dealing with industry, particularly the sentence which draws attention to the need to seek the development of new industries by the National Enterprise Board and the re-equipment of British industry accompanied by compulsory planning agreements; I also draw attention to the recent joint statement by the TUC and the Government entitled The Economy, the Government and Trade Union Responsibilities ". We all agree that this is an important document. It calls for action by the Government and the trade unions to press the Treasury to introduce in the Budget policies to underpin the objectives and commitments in the document. I make no apology for quoting from the document, because there are important paragraphs which should go on the record.

Paragraph 21 emphasises that Reliance on market forces alone cannot enable us to meet the challenge presented by the need for rapid industrial regeneration, or to take full advantage of North Sea oil and micro-electronic technology. I draw attention also to paragraph 16, which says: We recognise and share the anxieties about employment prospects in the next few years. It is far easier to identify areas where jobs will be lost than those where new job opportunities will be created. It goes on, in paragraph 18, to say: Industrial redevelopment and new technology reinforce the case for greater industrial democracy—for each enterprise to accept greater accountability to its workforce as well as to society as a whole.… We also recognise the importance of workers' representatives in the various national subsidiaries of a transnational corporation being able jointly to meet the corporation at global level to discuss its plans, and collectively to advance their views and protect their interests. Finally, the most important paragraph of all is No. 19, which says: One fundamental factor is the need to increase productivity—of both capital and labour. Our international trade performance depends on producing the right goods at the right price at the right time. We need to monitor progress against the target levels for containing import penetration and for productivity, set by the NEDC Sector Working Parties, and take remedial action where necessary. Planning Agreements must play a key role in ensuring that problems such as import substitution and the problem of re-equipment of British industry are tackled at the level of the individual firm. Those are the broad objectives agreed between the Government and the trade union movement.

We all know the problems from constituency experience and from meeting groups of workers who are threatened by closures. Time and time again they draw our attention to the fact that they are completely shut out from the decision-taking process. They are unable to make any contribution to solving the problems of individual enterprises, helping to make them viable or preventing closures or loss of jobs. In some rural and semi-urban areas such closures inflict enormous damage on small communities. I speak as one who has been associated with the textile industry during the last 10 to 15 years and who has seen the enormous increase in the number of closures and redundancies.

This is not just academic theory. It is not just the hopes and aspirations of those engaged in trying to improve our industrial performance or industrial relations. If one looks at today's edition of The Guardian one sees a remarkable report headlined Managers attack textile plant closure ". This concerns the Spennymoor plant which is owned by Courtaulds in County Durham. The factory is threatened with closure and there is the possibility that more than 1,500 workers will become redundant in the middle of next month.

Local management has issued a statement in which it complains of dictatorial management style, a refusal to bargain and a clear failure by management to communicate and motivate effectively. These managers include the managing director, the production director and the sales director.

The Guardian article continues: The managers say that their views have never been sought by Courtaulds and that they have never been involved as a managerial group in attempting to solve Spennymoor's problems. They all say that the plant can be made viable and are committed to ensuring its survival, but they claim that they are helpless. They have never been asked to examine alternative proposals put forward by the two manual workers' unions at the plant, the National Union of Dyers, Bleachers and Textile Workers, and the Amalgamated Union of Engineering Workers. The managers are calling for an independent inquiry. That demand is echoed by the workers at that plant, whom I have met. They are extremely concerned about the amount of public money which is being put into Courtaulds, a company which, as many right hon. and hon. Members know, has created several closures with large-scale redundancies over the past two or three years.

We know the pattern. Since 1974 more than £5,000 million of taxpayers' money has been put into private industry. In my view, much of that money has done a great deal to increase our industrial performance and to safeguard employment. But I am extremely critical and worried, as are many others, about the virtual lack of accountability for that enormous public investment, about the lack of opportunity for workers, trade union representatives and the public to be confident that that money is being used effectively and whether we are all getting value for our money.

This situation is not confined to Courtaulds. We all know that. Within the past few days I have met a deputation from Falmouth docks. Those workers are concerned about their future and complain that the alternative proposals which they have submitted in the hope of protecting employment are not being looked at as seriously or urgently as they wish.

We are also aware of the situation at Dunlop Ltd. This is an extremely worrying trend, because it is argued that Dunlop Ltd., in conjunction with Pirelli, is investing very heavily in Eastern Europe, utilising all the benefits of a low-wage economy and a total absence of effective trade union organisation, to manufacture cheaply and to export those cheaply produced goods to Western Europe, while at the same time throwing thousands of Dunlop workers employed in Western Europe into unemployment.

I am extremely glad there is now an international trade union response against the trend being followed by Dunlop Ltd., which undoubtedly will increasingly be taken up by other large companies which have an international basis and opportunities to develop in this way.

At Vickers, in the North-East, workers engaged on very well planned and carefully thought out alternative proposals for production which will safeguard their jobs and at the same time enable the country to maintain its manufacturing capacity argue that their views and aspirations are being ignored by management

Lastly, and perhaps most importantly, there is the famous example of Lucas Aerospace. A group of workers have carried out an extraordinary task in developing a complicated range of alternative products which, they argue, would give their company long-term viability and job security.

These companies are just the tip of a much larger iceberg of initiative, imagination and—dare I say it?—excitement. There is excitement and vision among many of the people who work with their hands for their living, who know their capabilities and the capabilities of the enterprise for which they work. They are often saddened and sickened by the incompetence of management, which fails to see the workers' contribution, and by the fact that because of orthodox organisation and views on how investment should be channelled and developed they are often left at the end of the day with no choice but to join the ever-lengthening dole queues.

I urge the Minister to take note of this debate. I know that he will not be divulging any Budget secrets today, but he should take note of this attempt to remind the Chancellor of the Exchequer of the strong views of the trade union and labour movement.

On 3 April we want to see a Budget which, if not neutral, is mildly expansionary. We do not want to see any open or concealed public expenditure cuts. All of us recognise the importance of public expenditure in terms of the social wage—that bit extra which comes from public expenditure which is of great help to working men, women and their families. To them it is important to have proper and adequate housing provision, health provision and amenities within their communities.

It has been said that such things are not very important to highly salaried people working in the City and other institutions. Of course they are not. They have the resources to buy privately the best in terms of housing, education, health and all the rest. But working men and women look to public provision Therefore, I ask the Minister to do absolutely nothing to reduce the level of public expenditure. In our view, that is extremely important in terms of the social wage. It is also undoubtedly extremely important in terms of maintaining employment.

We live in an extremely dynamic industrial era. Technological change of the kind that has not been dreamed of for a generation holds great possibilities and hopes for all of us, but at the same time it poses great dangers and anxieties. I urge my right hon. Friend the Chancellor of the Exchequer to consider that very carefully when announcing his Budget on 3 April. If we get it wrong, and if there is any possibility of another dose of deflation or a reduction in public expenditure, it will do a great deal to sour the whole climate enshrined in the TUC-Government document, which is a statement of joint action to tackle the deep and underlying problems of our society. If that response and the people who have offered a hand of friendship and cooperation to the Government in an attempt to overcome our problems and to build on the opportunities contained in this document are rejected, it will be a great tragedy and will do nothing to stimulate the economy or overcome our economic problems.

This debate should be seen by the Treasury as an olive branch from the trade union and Labour movement. I hope that it is taken note of and responded to on 3 April.

12.47 p.m.

Mr. Arthur Blenkinsop (South Shields)

I join in welcoming the opportunity we have been given by my hon. Friend the Member for Salford, East (Mr. Allaun) to raise the major issue of public expenditure, and its maintenance, at this critical time. I apologise for not being able to be here for the greater part of his opening speech. I do not intend to transgress by making a lengthy contribution. Nor do I want to follow the concentration of my hon. Friend the Member for Sowerby (Mr. Madden) on the National Enterprise Board and on industrial development. Many of the serious industrial problems and threats of closure to which he referred directly affect us in the North-East, on Tyneside and in the industrial area there.

My hon. Friend the Member for Newcastle upon Tyne, West (Mr. Brown) and my hon. Friend the Member for Durham, North-West (Mr. Armstrong) have both been very active, together with other North-East Members, in tackling the very serious problems that have arisen at Courtaulds and at Vickers, on Tyneside. We appreciate the problem there and are determined to secure a more satisfactory result.

I should like to say a few words about the problem of maintaining public expenditure. In doing so, I want to take up the argument of my hon. Friend the Member for Salford, East and refer particularly to the valuable part that can be played—particularly in the immediate period ahead—by the housing sector. I think in particular of the repair and improvement end of that sector. I believe that it can make an important contribution to employment—perhaps more than any other area—because generally throughout the country there is strong evidence of a rather serious development of bad standards of maintenance and repair in housing property. This is certainly true in areas of which I have particular knowledge, in my own constituency and areas of that sort.

It is noticeable that several professional bodies and others who are most directly concerned have joined together to stress the importance of this element in public expenditure. These include the local authority associations that are most directly affected. Indeed, the building societies themselves have joined in some of the representations, as have those who are most closely involved on a professional basis. They are our old friends the health inspectors, although they are now called environmental health officers. They are particularly concerned that there should be greater concentration upon the repair and maintenance of property to a good standard.

We have had advice from the Department of the Environment about the forthcoming housing Bill. We all hope that it will make some contribution towards this problem, and we look for support within it for the repair of property in conjunction with improvement. We hope that it will encourage the undertaking of major repair, not only by the local authorities that are responsible for a wide range of property but by private and small owners.

This is an area in which perhaps more than any other one can ensure a reasonably high level of employment. In the past other areas of public expenditure were thought of as employing large numbers of people, but because of the development of modern techniques and so on they now make very much less contribution. Therefore, I particularly welcome the views of my hon. Friend the Member for Salford, East and his support in this regard.

But we must all accept the corollary of that. I want to see public expenditure maintained at a high level, but I accept that we shall have to pay for that. I hold no mistaken belief that this money comes out of a great open tank or that it becomes automatically available. I realise that almost inevitably it will mean high levels of taxation and the raising of public funds through direct and indirect taxation. I know of the problems that arise in this regard.

My hon. and learned Friend the Member for Hackney, North and Stoke Newington (Mr. Weitzman) referred to the particular problems for the elderly that arise from high levels of taxation, especially on investment income. I have a lot of sympathy with what he said. I am about to enter that age category. I, too, declare the interest that he declared—that at the end of this Parliament I shall be retiring from this House. No doubt I share some of my hon. and learned Friend's interests. Equally, if one is eager, as I am, to maintain a high level of public expenditure—and, indeed, to increase it in certain areas—one must accept the fact that almost inevitably it will involve the maintenance of high levels of taxation.

I very much want to see relief for some of the lower income levels. I hope that we shall be able to do more to help widows and others. But I do not have much hope of being able to go very far in relation to the suggestion of my hon. and learned Friend. I am not sure that I would necessarily choose that investment income group as my first priority for assistance. I believe that, relatively, the pensioner today does a great deal better than we did years ago. Thank heaven for that. The basic national pension has been steadily improved, so that nowadays its purchasing power is very much higher than it was in the early days of the Beveridge plan. So it should be. In addition, a larger number of those who are retiring, including several hon. Members, now have a chance of an occupational pension provision that they never had before. That is a vast change and improvement, which I am sure we all welcome very much indeed.

I am not so sure that we can expect to escape from the taxation that is necessary to maintain a high level of public service, to which I am completely devoted. Indeed, the problems of the elderly and the low-paid are best met by maintaining and improving the level of the public services. Threats of attack upon them frighten me more than the problem in connection with direct or indirect taxation.

When we think of the National Health Service, and the problems of maintenance and repair of property—both local authority-owned and privately owned—there is no doubt in my mind that the most valuable help that can be given to many older people is an improvement in NHS and housing provision.

After all, it is the elderly who inevitably make the largest call upon these services. It is the elderly who are most at risk through bad housing, or housing that is not properly maintained. There are problems of insulation and the temperature of properties. We think of those in particular, since we have just experienced a bitterly cold winter. We know that it makes economic sense to concentrate as much effort as we can upon the development of better insulation and upon greater help in maintaining repair at a high standard.

These things make sense not only for the economy as a whole but in social terms, in relation to many old people who are most at risk. I know that complex and difficult choices will have to be faced in framing the Budget. My own anxiety and concern is that these pertinent public services are maintained at a high level, even at the cost—I accept this fact—of high taxation levels and even allowing for fringe assistance that may be offered at lower levels. Some of us recognise that problem, and for us the priority is the maintenance of public expenditure in the areas that I have described.

1 p.m.

Mr. John Cope (Gloucestershire, South)

I start, as others have done, by congratulating the hon. Member for Sal-ford, East (Mr. Allaun) on his good fortune in the ballot. I do not wish to speak at length, because the House will wish to get on to the next debate, on the Middle East. Unlike most of this debate, that important subject is one that we are unlikely to have another chance to discuss in the near futre. This debate, on the other hand, is, in a sense, the first of the Budget and Finance Bill debates that will occupy a great deal of our time over the coming weeks.

When I knew the subject of this debate I assumed that it would be primarily about housing and tax changes to improve this Government's disastrous housing record, but when the motion appeared on Wednesday evening I found that it had been widened to include the Budget and the economy. I do not complain about that. There were probably two reasons, the first being our important debate about housing on Monday, which must have taken some of the steam out of this debate.

Also, before that debate the Chancellor of the Duchy of Lancaster revealed, at Question Time, that he had not heard of any Labour Party proposals for large public expenditure increases in the Budget. I was surprised at that, because those proposals had been mentioned in that morning's newspapers. For instance, The Guardian referred to a document produced by the Labour co-ordinating committee, which has influential support on the other side of the House, and said that details had been circulated in the latest edition of a newspaper, with which I am not familiar, called Labour Activist. Evidently, the Chancellor of the Duchy of Lancaster is not on its circulation list, or perhaps he did not read his copy that morning. Thus, we are now discussing the Budget in advance.

The hon. Member for Salford, East is, I think, recognised as an idealist. That is intended as a factual comment and not as either admiration or criticism. But that means that his ideas are not always as practical as they might be.

Mr. Madden

What is the hon. Gentleman's judgment of the difference between a politician who is an idealist and a politician who describes herself as "a conviction politician"?

Mr. Cope

I think that an idealist lacks some of the practical flair that is necessary to put his ideas into practice. We are all idealists to some extent, just as we are all practical men to some extent. Otherwise, we should be no good as politicians. The art of politics is to combine the two. I believe—others must make their own judgment—that the hon. Member for Salford, East veered nearer to the idealistic than the practical today.

Dealing with housing, the hon. Member spoke about the basic lack of amenities in many houses; about Coronation Street, which I had not realised was in his constituency; and about problems of damp and condensation. I hope that he does not suppose that those problems—lack of inside lavatories, of baths, and even of electricity—are confined to urban areas, housing estates, and so on. My constituency includes a large urban area on the edge of Bristol and a large rural area. Some of the worst housing conditions are in the rural area rather than that part of Greater Bristol or the middle of other big cities.

I agree with what the hon. Gentleman said about damp and condensation, the causes of which often baffle the experts. He referred to a new group of experts in Salford who have produced wonderful houses. I hope that they will prove more expert than some of those who have operated in the past. I am sure that progress will be made. We wish the Salford scheme well, but however well new houses are constructed there hangs over this country the enormous problem of so much existing accommodation.

The hon. Member devoted much of his motion and his speech to his Budget proposals. I took those proposals to be, in a sense, the Labour Party's Budget, moved by the chairman of the Labour Party. It will be interesting for us and other commentators to see how it compares with the Chancellor's Budget on 3 April.

Whether or not the hon. Member likes it, his proposals would mean a massive increase in the Government's borrowing requirement. The present forecast is between £8 billion and £9 billion, or more The forecasts may be a little out of date; perhaps the Minister will be able to enlarge on that. The hon. Member for Salford, East did not speak of the consequences for interest rates or the tremendous effect on public and private housing, on sterling, on investment and on production. The consequences would be disastrous in all those areas.

Mr. Weitzman

Why is not one Opposition Member present to express his views on these matters? That would be of interest if by any stroke of bad luck the Conservative Party were to return to power.

Mr. Cope

I am here to speak for the Opposition and comment on the debate. In due course, in the appropriate debates, my right hon. Friends will spell out with greater authority their views, as doubtless will the Treasury Bench. I may be wrong, but I do not believe that we shall hear much of the Budget today, although we may have some clues.

The hon. Member for Salford, East seems to believe that it is only necessary for the Government or the Conservative Party to want to spend more on certain services for that to happen. We all desire to spend more on housing and other matters. But it does not happen in that way. It may be the way in which the hon. Gentleman operates his finances, but mine cannot function on that basis. One starts with the money available and usually one's wife spends it on the necessary household items. It is what we can afford and not what we want. Some people allow their heart to rule their head and are over-generous. They give away money that they do not have or cannot afford. Although that may be done for the best of motives, the consequences can be tragic.

We must pay close attention to the consequences of some of these proposals from the Labour Benches and tie them in to a complete economic policy. Mr. Wynne Godley, with the so-called Cambridge group, put forward elaborate proposals that involve reflation, particularly through indirect tax cuts. They also involve import controls, which have much support on the Labour Benches. The third and essential leg of that tripod is a statutory incomes policy with tax sanctions. I do not know whether Labour Members who support the first two legs would support the third, but I think not. For that matter, I do not know whether they support what is happening at present. I am especially conscious of that, because in my constituency the ambulance men are not answering even emergency calls, and that is so throughout Gloucestershire. Such calls are being answered by the police, the Army and volunteers, and at a time when the Army has plenty to do. The Gloucestershire Regiment returned only this week from 18 months in Northern Ireland.

The hon. Member for South Shields (Mr. Blenkinsop)—we shall be sorry when he leaves the House—was more realistic in understanding that increased public expenditure means increased taxation. To his credit, he was prepared to accept the consequences in his retirement, but he underestimated the consequences for the country. The hon. Member for Battersea, South (Mr. Perry) and the hon. and learned Member for Hackney, North and Stoke Newington (Mr. Weitzman) did not so much underestimate the consequences. The hon. and learned Member for Hackney, North and Stoke Newington called for reform of personal taxation. He said that the overall level of tax was too high and that such a level discouraged greater effort. That is most important, and I entirely agree. I am sorry that the hon. and learned Member is also leaving the House at the next election, but I welcome the fact that he was beginning to see that for the future he would be better under a Conservative than a Labour Government. I hope that I have not misrepresented his view.

The taxation of the elderly is important, not only to the elderly. Young people see that their grandparents' savings are worth little and that they are heavily taxed by the investment income surcharge. That must discourage the young from saving for their old age, and must consequently affect the country generally.

The hon. Member for Birmingham, Ladywood (Mr. Sever) mentioned working mothers and one-parent families. My wife and I both come from one-parent families and have been brought up with this problem. I strongly support much of what he had to say.

The hon. Member for Salford, East referred to comments made earlier this week by my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe). Although I was not present, I understand that my right hon. and learned Friend was pointing out that in 1977–78, after the Chancellor had on numerous occasions said that it was impossible to cut public expenditure, and that all the priorities were there, he cut public expenditure by £4 billion. As a result unemployment came down sharply, although it has risen a great deal since. We all know that the Chancellor was not an entirely free agent at that stage. The IMF, Dr. Witteveen and others were breathing down his neck. But that could happen again with beneficial consequences for the country.

Although the Minister may be reluctant to anticipate what his right hon. Friend will say in the Budget, I hope that he will mention public expenditure and tell us more about the Government's immediate proposals on cash limits. I hope that he will also refer to compulsory planning agreements. The phrase "compulsory planning agreements" is an interesting piece of "newspeak". It is a contradiction in terms. If they are compulsory they will not be agreements. In law, an agreement reached under duress is voidable and cannot be enforced. A more accurate phrase would be "planning directives".

I am sure that the Government want planning directives. My phrase is more accurate, but the concept is the same. There were no planning directives in the Labour Party manifesto in 1974, but perhaps there will be this time. I shall be interested to hear the Minister's comments on planning directives—and to know whether he is prepared to support the motion, including the aspect about planning directives—compulsory planning agreements.

The Opposition are totally opposed to planning directives. Any attempt to impose compulsorily some aspects of the Government's view of the future of the economy would be damaging, even if that view proved correct. The chances are, of course, that it would not. Forecasting, both within the Government and outside, has been incorrect. The best persons to decide whether to invest are those on the spot who stand or fall by the consequences of their actions. Ministers and their advisers are not best placed to make such decisions.

I agree very much with the phrase that caught my eye in the press earlier this week. We were told that Strong-arm measures now being demanded…are unnecessary. Those words were spoken by the chairman of the Labour Party—the hon. Member for Salford, East. On first reading them I thought that he was referring to planning directives. On closer examination, however, I found that the reference was to a neutral or non-expansionary Budget. The hon. Member's phrase was much more appropriate to planning directives.

My right hon. Friends have spelt out on a number of occasions, as they will spell out again, their suggestions for the economy. They agree very much with some of the remarks by certain Labour Members today but not, I am afraid, with most of what was said by the hon. Member for Salford, East.

1.22 p.m.

Mr. Ted Leadbitter (Hartlepool)

I apologise for my late arrival, but I had indicated to my hon. Friends that, for a number of reasons, I wished to speak on the motion. Not the least of those reasons is the condition of the region in which my constituency lies. I cannot go too far with the comments of the hon. Member for Gloucestershire, South (Mr. Cope).

My hon. Friend the Member for Salford, East (Mr. Allaun) has been most timely in producing the motion—some might even say a little late. For a considerable time growth in this country has been at a minimal rate, and the economic pundits have produced one excuse or another for that. Those of us who have at heart the welfare of the British economy are not too much amused by the pressures of the Common Market or the wasting process created by the protracted arguments on devolution. We are concerned with the major priorities behind our being here. The motion, I believe, would be regarded as commendable by people inside and outside the House who have the gut feeling that the lack of economic expansion and the level of unemployment have reached intolerable proportions.

Our shipbuilding industry has contracted and there seems to be little confidence that the market for ships will grow in the 1980s. If it does, and if in the meantime we have thrown our shipyard workers on the unemployment register, thus reducing our shipbuilding capacity, we shall regret our actions.

Our steel industry, too, has been contracting. For years I fought to retain the Hartlepool steel-making plant which employs 4,000 men. I produced my arguments to the Government, without having to resort to sloganising or being emotive, and my appeal was heeded. The Labour Government kept my constituents in work, and I was grateful for that. I was grateful, too, to Lord Beswick, who produced the mechanism which made it all possible. Then, however, late in the day, someone decided that there was no alternative to paying the men severance money and making them unemployed.

By one process or another, including fear, my men were persuaded to accept voluntary redundancy. That in its turn created uncertainty, which meant that more men wanted the same. The steelworks in Hartlepool closed. The tragedy is that Japanese steel now lies in Hartlepool docks. Devious instructions have been given that the Japanese tags are to be taken off the steel because, it is realised, the hon. Member for Hartlepool is too vigilant. Means have been found for getting the steel off the ships on to the shore and moving it by night to a place where it cannot be seen. So I have had long practice at being as devious as the devious, and I am able to follow the progress of that steel through my constituency.

The fundamental question is why, with one of the largest steel-making industries in Europe, we cannot satisfy some of the home market. The home market is for 15 million tons. Steel capacity in this country is 30 million tons. The policies have been to close down the medium-size plants and to concentrate on huge plants. I am not against huge plants, because I want a mix. We must retain the flexibility and capacity to deal with the substantial number of jobbing orders which are placed by the medium-size firms in this country. The problem is that the large steel-making units find it uneconomic to carry out small orders. That forces domestic customers to go abroad for their steel. Where is the logic of that?

The contradiction of our steel industry is that by creating the huge plants we are out of work, and we do so at great social cost. The hon. Member for Gloucestershire, South says that we can buy only what we can afford. We are saying to industry that its books are not in balance, but we are putting the national books in a state of imbalance by paying men for doing no work. That is the nature of the problem. In the shipbuilding and the steel industries that kind of contraction is not good for the economy.

Look at the other figures. The chairman of British Shipbuilders and his chief executive made it known at a recent meeting that whereas world demand for shipbuilding in 1973 was 70 million tons it was now down to 17 million tons, but that in their judgment the upturn by 1981–82 would be 70 million tons. In the light of that forecast of an upturn in the shipbuilding market, it was sad to learn this week of the closure of Haverton Hill shipyard, where 500 of my constituents work, and of the closure of Falmouth Shiprepair Ltd., which is likely, if I am informed correctly, to result in 38 per cent. unemployment.

Looking at the two examples I have given, the House must ask itself where is the sense, in the interests of the national economy, in the closure of fundamental parts of our industry. Where is the sense of ignoring world demand in such a way that we get the worst of all possible worlds? It means keeping men, who are our most valuable resource, out of work and the possibility of not having the capacity to meet an upturn in world demand. I have not spoken of the tragic loss of skills and apprenticeship opportunities or of the effect on the entire infrastructure, including our educational institutions, caused by such closures. The result is an imbalance which takes years to overcome.

Mr. Cope

I am not quite clear what the hon. Gentleman is proposing for Falmouth Shiprepair Ltd. He will recall that those docks were voluntarily acquired by the nationalised shipbuilding concern because it was thought at the time that they could be revived and made profitable. Now British Shipbuilders say that the docks cannot be made profitable, which is why they are to be closed, though a certain amount of care and maintenance is being continued there. Which aspect of the Falmouth closure does the hon. Gentleman disagree with, and what are his proposals for Falmouth?

Mr. Leadbitter

My point is that we should have a new look at the manner in which we make decisions about the economy, taking into account the national interest and the cost of putting people out of work. The House will have to learn not to pay too much regard to the prognostications of trained economists, firstly, because they do not agree with each other and, secondly, because the broader backcloth of lay opinion takes into account the character of the people of this country.

The 4,000 men at Haverton Hill and the 1,200 men at Falmouth who are now out of work have to be kept. It is common sense to me that their unemployment is a serious waste of a national resource. Therefore, the decisions of British Shipbuilders and British Steel are not valid if the totality of the national interest is not taken into account.

More than that, does it not seem odd, against the background of world depression and the lack of orders for steel, that I read the other day that British Steel—I stand to be corrected on this—is advising on improving steel productivity in China? Where is the sense in allowing a contraction in the British steel industry and sending our technicians abroad to build steel plants? While we do not want a protectionist society which would mean looking selfishly at our own parochial position—because we need to develop economic relationships with other countries—the national interest must take priority.

The decision of British Shipbuilders at Falmouth was not taken in quite the way that the hon. Member for Gloucestershire, South described. British Shipbuilders did not want the Falmouth firm. It was a dead duck when it was taken over. It is not without some significance—I shall not develop this theme, because of the importance of future negotiations—that a certain gentleman, very active in the House of Commons during the proceedings leading up to the Bill's becoming an Act, still has a canny eye on the equipment at Falmouth. Perhaps he hopes to have some use for it, perhaps on a lease and job-to-job basis. There is need to examine the behaviour of certain people over the future of that Falmouth firm. I shall say the same sort of thing whenever there are other closures.

Those were my examples, but the motion raises other matters of public importance. Apart from the fact that my hon. Friend the Member for Salford, East is urging the House to go for an expansionist policy, there are other fundamental matters which are causing alarm in other parts of the country, and perhaps generally. I refer to the construction

industry. That industry has suffered for years from an unclear policy which has chopped and changed. Local authorities have also suffered, since the war, from changing specifications and changing expenditure restrictions, to the extent that they have never had the opportunity to make judgments about relating housing needs to housing demands.

It is odd that so many years after the war, when promises were made and expectations raised, we still have thoroughly disgraceful housing conditions in our towns and cites. The problem is sharpened because we have been building up an infrastructure of welfare provision. The party to which I belong has been doing that constantly, in the form of old people's homes, welfare centres, clinics and hospitals. Our success has brought into relief our poverty areas, which need immediate attention.

Therefore, I support my hon. Friend in asking for a special expansionist policy so that we can do two things. The first is to create employment in the construction industry to provide confidence and certainty, and the second is to remove those scars that still mark our cities and towns as areas where we are coming dangerously near the establishment of ghettos, especially in the conurbations. My hon. Friend, who has more experience of housing matters than I have, was right to include the problem of housing in his motion making a plea for economic expansion.

The National Enterprise Board has been mentioned. My right hon. Friend the Secretary of State for Industry recently sought considerably to increase its borrowing powers and those of the Scottish Development Agency and the Welsh Development Agency. When he announced the successes of those bodies, I noticed a great deal of reticence on the Opposition Benches. The right hon. Member for Leeds, North-East (Sir K. Joseph) said that he was not enamoured of the Board, and he said little to give confidence to those who have to manage the Development Agencies.

Therefore, it is important to underline how special areas have had a better deal under the Labour Government's policy than they would have had if the Board and the Agencies had not been created. The chairman of the NEB and all his colleagues are to be congratulated on raising the equity to invest in companies which, although efficient and having good reputations, were finding great difficulty in keeping going in the present world economic climate. About 50 companies—not least Rolls-Royce, a national institution—have been kept going by Labour's policies. I am sorry that for short-term party political gain, an object that I never pursue, the Opposition's chief spokesman on economic and industrial matters had little to say about the enterprising Board.

I must give some facts that I hope the Board's chairman and my right hon. Friends will take into account. Because of its enterprise and care, the Board now has equity holdings in companies employing about 300,000 people, who have benefited from the confidence created by the Board's impact. However, in the North-West region, where there are serious economic problems, only 35,000 people come under the Board's activities.

There are 16 per cent. of men out of work in my region. We have a declining steel plant, which was helped recently by political pressure and the BSC's initiative in obtaining orders for steel tube for the rolling mills. With 16 per cent. of men out of work in a region with a population as large as Scotland's, we have only 1,700 jobs taken care of through NEB intervention. That shows the imbalance to be set against the Board's success story.

Scotland and Wales each have an active Development Agency, with powers to deal with the environment. Long may those Agencies stay, for there is much work still to be done in those countries. The Northern region has not had the benefits of the English equivalent in the form of the NEB. Moreover, the Board has no powers to deal with the environment.

Many people could well argue, and I would take the point, that the Labour Government have given my region hundreds of millions of pounds over the past four years for industrial development. But the region suffers from a particular difficulty. The large majority of companies that have settled in the region have their headquarters outside it. Therefore, as soon as there is a little economic draught, they close down the factories there. I have asked my colleagues to investigate this serious matter.

Although we have the advantages of public expenditure in the area, some private firms in particular are taking the grants and loans and before four years are out are announcing closures. A firm will issue 90-day notification of closure orders and talk about severance pay. The men begin to leave, and then the equipment is taken down country to the parent company. The factory is put on the market for sale with an enhanced value. To my knowledge, one company of international importance made £3 million last year in that kind of deal, although not all of it was made in the Northern region.

While we are talking about expansion of the economy along the lines proposed in the motion, we must also talk about how our resources are used. Expansion does not necessarily mean the spending of more money. It means a more vigilant approach to the utilisation of our resources. If large amounts of money are being spent in a region but are being creamed off by industrial bandits, that matter should be examined.

I can give a perfect example. There is a factory in my constituency which received such grants some years ago and is now making a profit. It had a turnover of more than £1 million and profits of £91,037 last year. It is part of a company that has another two factories, one in Mansfield and the other in Ilkeston. The latter has been in the process of being built for the past two years and is therefore making no profits. The former is also making no profits. Only the Hartlepool factory is making a profit. Therefore, it seems absurd that the company is closing it.

Where will the equipment from that company end up? I understand that it will go to Mansfield or Ilkeston. I was told by the managing director that he had jobs in Ilkeston for the workers in my constituency. He also said that the housing authorities in that area would re-house those workers. However, when I checked the position I discovered that that was a cock-and-bull story.

The motion before the House has great significance. Although there may be an interplay of ideas for party political purposes, the result is nowhere approaching the priority that is needed to take advantage of the commanding heights of the economy. We must ask whether we have not gone too far in contracting various industries and closing down firms. It is far better to keep men in work than to throw further burdens on our social and welfare services.

How are we able to meet the present position? In shipbuilding, the answer appears to be simple. Why not adopt a scrap-and-build policy? Other countries in their steel industries have pursued that policy with great success. Let us heed the lessons of the last few years. Instead of building inflexible large plants, let us plan for new capacity in small and medium-sized plants to take advantage of our home market.

We all remember what happened many years ago when we allowed coal mines to close, almost without restraint. We were eventually left with good coalfields and a shortage of miners to work them. We created a crisis of confidence in the industry to such an extent that young people were not prepared to enter the industry as a career. It took years for the National Coal Board to overcome that problem.

Let me turn to the creation of expansion in our economy. The first question is how to control inflation. The second is how to control that process without increasing taxation. I once remember a leading politician, the night before the poll, suggesting that he could put forward a programme for the United Kingdom. When he was asked whether he could pursue such a programme without raising taxation, he replied in the affirmative. That was a most crippling answer by a member of a political party—and I refer to the Labour Party. We must not overlook the fact that outside this House we have an intelligent electorate which is imbued with wisdom. We should not ask the electorate to use that wisdom only once in five years and ignore it for the rest of the time. We should let the public know our intentions so that we may judge their reactions and modify our views.

We need to examine the impact of an expansionist policy in respect of taxation. However, the Tory Party takes the opposite view. It seeks to control inflation by reducing public expenditure. Let us not forget that the Labour Government have increased expenditure. We know that in regard to hospitals, the ambulance service and the schools much more money needs to be spent. Who will dare to say that health education and social provision should be minimised to satisfy worn-out arguments about inflation? We have the ingenuity, ability, expertise and many facilities available to harmonise our objectives for defeating inflation with an expansionist policy.

We must give the people a sense of confidence that a long-term policy is being pursued. We must not become bogged down in the detail of arguments about inflation. The history of the past four or five years proves that that was the wrong way to deal with the position. It was wrong in 1972–73 to create confetti money. That set this country on the road to an inflation race the like of which we had never seen. It has taken the past four or five years, including the process of hard negotiation with the trade union movement and the CBI, to reduce inflation from 30 per cent. to a figure of 8.7 per cent.

Common sense in these matters must prevail. Public confidence must be restored and people must feel that we are overcoming our problems. The nation knows that the Government have been painstaking in their negotiations with the unions to defeat inflation. Eventually great credit will be accorded to the trade union movement in responding to the Government's call. The members of that movement responded to the appeal of the Labour Government in 1974 asking for inflation to be brought down. Our supporters suffered pressure on their wages to such an extent that they reached the stage when they required an improvement in their wages.

A great deal of good has resulted from those hard negotiations. A pay body has been set up and we are now pursuing our policies in a new era of harmonisation. Therefore, it is most timely that this motion is before the House today. The terms of my hon. Friend's motion comprise the next step in our thinking. If the confidence of the people is restored, and if it can be seen that we have come out of the storms of our economy and are about to enter a more heartening era, the future that lies before us is bright.

2 p.m.

Mr. Geoffrey Robinson () Coventry, North-West

I am grateful for the opportunity to take part in this debate on the motion moved by my hon. Friend the Member for Salford, East, and I am glad also to be able to speak after my hon. Friend the Member for Hartlepool (Mr. Leadbitter), who, indeed, covered so comprehensively many of the matters to which I wish to draw attention that I can be the more brief myself.

I felt that my hon. Friend the Member for Hartlepool got the emphasis exactly right when he spoke of the regeneration of our industry, stressing that only through an increase in industrial output, an increase in industrial investment and an increase in the production of real wealth shall we be able to pay for the many desirable objectives listed in the motion.

If there is one criticism which I make of the motion—I have told my hon. Friend the Member for Salford, East that I intended to mention this—it is that it draws no direct link between the absolute necessity that we produce real wealth in our economy before we can invest in the social objectives of housing, to which my hon. Friend has dedicated a lifetime of political work and experience, of education, the Health Service and the rest. We all know that the Health Service, for example, is desperately short of real resources. Therefore, as I said, my hon. Friend the Member for Hartlepool was right to draw attention to the paramount need for industrial regeneration.

First, I say to the Government that it is essential that in the framing of their Budget—no doubt, they are well advanced with it now—they reject the deflationary monetarist policies that are being pressed upon them and that they recognise that only through a growing economy can we command the resources that we need for our social objectives. Moreover, only through a growing economy can we avoid a national mood of bitterness, conflict and disillusion, through the past three months of which we have, in my opinion, witnessed nothing wrong in the British people but simply the fact that for too long our economy has stagnated while others have grown, and real income in this country over a long period has not increased at anything like the rate of increase in the economies of our competitors.

First, therefore, let the Government go not for monetarism, which is only a euphemism for straightforward old deflation, but for expansion. But the key element here—again, perhaps, this should have figured in the motion—is how we are to achieve the industrial growth with greater output and investment which has eluded all Governments at least for the past two decades.

My hon. Friend the Member for Salford, East referred to the National Enterprise Board. I have a high regard for many who work there, and I had professional contact in the past with some of them. The NEB certainly has far greater funds at its disposal than we had in the old days of the Industrial Reorganisation Corporation. Nevertheless, I feel that we must view the role of the NEB quite realistically and see the size of its total resources and the rate at which it is able to commit them in relation to the totality of our present economy, which is depressed. In addition, and perhaps more important, we should view them in relation to the size of the increased industrial investment which we should like to see to restore outdated productive units and to expand the number of productive units.

Considering the National Enterprise Board in that light, we have to admit that, important tool though it is in the planning of the economy and being able sharply to direct Government moneys into areas where we know that potential for profitable and nationally important investment exists, in the totality of the economy it is not the NEB in itself which will provide what we urgently need, namely, a major element of reflation produced by and based upon industrial investment, increased output and increased net exports.

That brings me to my most important point. We must ensure that we supply more of our home market from our home-based productive units, and we must ensure also that we at least maintain, if we cannot increase, our share of world trade, a share which has dramatically and disastrously declined in almost every year since 1945. It seems to me, therefore, that the NEB, important though it is and selective though it can be if its work is professionally done—no doubt, that is how the staff will do it—is of more or less marginal significance in the totality of the economy.

I turn now to the question of planning agreements. In my view, these need not be compulsory if the Government have the will and are really serious about coming to terms with the major companies in our economy. We all know how much the top 20 or top 100 companies contribute towards employment and towards exports. These are significant factors in the economy. It follows inevitably, therefore, that if a Government are to have a successful industrial policy, which in itself is essential to a successful economic policy and the fulfilment of all our social objectives, they must be in agreement with and have a broad commonalty of approach with the major industrial concerns in our country.

I believe that a Government prepared to talk turkey with the major industrialists, prepared to see their difficulties as well as to explain to them the imperative national objectives to which their organisations can and must make an essential contribution, would find no need for planning agreements to be compulsory.

However, although I believe that that effort ought to be made, I am not sure that we have a Government who believe in the necessity for it, and it may well be that my hon. Friend the Member for Sal-ford, East, fearing a lack of will on the part of the Government to do that, has insisted on planning agreements being compulsory. As I say, my belief is that they need not be if the will were there and if the Government would sit down and negotiate the terms upon which the nationally imperative requirements of increased output and investment could be achieved. In that way, I believe, they could reach with the major companies agreements which would fulfil the national requirements. Only after such an attempt had been seriously made and had failed would one have to resort to compulsory planning agreements.

Having briefly indicated the limitations which I see reflected in the motion with reference to the National Enterprise Board, with its important though only marginally significant role in the totality of the economy, and with reference to the way in which I believe that planning agreements could be secured on a meaningful basis with the major industrial concerns, I emphasise now that if we are serious about getting a Government policy which is comprehensive and coherent in relation to industry and the economy, at least one further important factor must be considered, namely, the rate at which imports financed by North Sea oil are continuing to take a greater share of our domestic market.

It seems to me that so long as we talk merely about compulsory planning agreements, the National Enterprise Board and matters of that kind but do not face up to the crucial problem that every time we expand our economy—this objective lies at the heart of my hon. Friend's motion—imports are sucked in at a rate far greater than our national industrial output increases, sooner or later we shall be in further trouble.

When the oil runs out, or even before if we have some sense, we shall have to tackle the question of imports. Let us remember that the problem of growing unemployment is one consequence of growing imports. When we import goods from abroad, we export jobs. Therefore, the problems of growing unemployment and of our balance of payments must force us to come to terms with our partners in the EEC.

Arrangements for limiting the growth of imports are not prevented under the GATT. Indeed, for certain purposes they are even foreseen under the GATT. We shall have to come to terms with our partners in the Common Market, explaining our particular and quite distinct problems in this respect, problems which are not experienced by the other members of the EEC to anything like the same extent. I suppose that the one exception may be Italy, but it seems to me that the problems there are more political and social, and with that one exception the others have ridden out the storm. They are continuing to expand their economies. They are able to invest far more in their health services and are able to spend far more on their roads and on their construction equipment industry and all the rest than are we ourselves.

We must come to terms and put it to them quite straightforwardly that the regeneration of British industry—which is at the heart of everything; it is such an easy thing to say, but so difficult to achieve—can be achieved only within a growing home economy, which in turn involves us in limiting the growth of imports, from the EEC as from anywhere else.

Mr. Frank Allaun

Particularly.

Mr. Robinson

Particularly from the EEC, where a huge growth is taking place. I think that it is £2,000 million in total, with £1,000 million of capital goods coming from the Federal Republic of Germany alone every year. My hon. Friend will correct me if I am wrong.

Unless we put it to the other members of the EEC that to achieve growth we need to achieve increasing investment in our industries and increasing output from them, and that we need that growth and cannot have it unless we limit the rate at which their exports come into our country, I believe that we are dodging and evading the central problem that we face. I believe that if we faced that problem we would get a reasonable response from them.

What would the real effect be if this country could, under a Labour Government, of course, achieve for five years 5 per cent. or 4 per cent. growth per year, with steadily expanding output based on industrial investment and production? It would transform the mood in the country. At the end of the period, we would be able to import more from our competitors than we can when in a position of continuing stagnation. All the indicators are again pointing in that direction.

Therefore, it seems that we must look again at the use that we are making of North Sea oil. We must look at the case for an investment pool of North Sea oil revenues, or a portion of them, to be directed, on special discriminatory terms—again, we would have to reach agreement with our EEC colleagues on this—to manufacturing enterprises and new industries, but also to the regeneration of our traditional industries. We should do that with the North Sea oil money instead of sucking in imports. We would need an agreement with our EEC colleagues, not on the total restriction of imports, and not with all the nonsense of a siege economy, but simply on a flexible system of flexible ceilings on imports.

If we could combine those two things with the other valuable points made in the motion, we should be a long way further along the road, perhaps much further than we have been in any period since the war, towards a coherent package of self-reinforcing policies that would then enable us to generate the wealth to devote to housing and the other social issues, including overseas aid, to which my hon. Friend has devoted a lifetime of political activity.

2.12 p.m.

The Financial Secretary to the Treasury (Mr. Robert Sheldon)

When my hon. Friend the Member for Salford, East (Mr. Allaun) put down his motion I saw that the early part of it dealt with the Budget and the second part dealt with public expenditure, and it was no surprise to any of us that the third part had to do with housing. This has been a major concern of his for more than 20 years. This has been shown both in his constituency and in the effect that he has had on many Governments over this period.

My hon. Friend set out the problems of dampness in houses in his constituency. As his constituency is not very far from mine, and although I pretend to nothing like his expertise on this subject, he will know that I have at least a passing acquaintance, to put it no higher, with some of the problems to which he referred. It will not surprise my hon. Friend or the House that I learnt, as I am sure the whole House did, a great deal about these problems and what needs to be done about them, from his speech.

My hon. Friend dealt at considerable length with the problems of condensation. Those of us who found that our hopes for the post-war housing boom were belied by the results will realise that much of that disappointment was due to failure to understand the nature of the problems and the way in which people lived in and used their homes.

My hon. Friend will know that the Department of the Environment and the Building Research Establishment have been engaged in extensive research on the problem of condensation. The Department of the Environment is sponsoring through the joint working party on heating and energy conservation in public sector housing, a further survey of dampness and mould growth to establish the extent of the problem. The results are expected in the autumn. While the general causes of condensation are well understood, the precise measures needed to deal with it largely depend upon getting the right balance between fuel costs, to which my hon. Friend referred, methods of heating, insulation and ventilation. A great deal of inadequate advice has been given in the past. But the survey which is now being set up is intended to keep our knowledge up to date. It will involve initially about a dozen local authorities, but, depending on how the survey develops, a further and more detailed investigation into different aspects of the problems of dampness in buildings might be required.

My hon. Friend also referred, in glowing terms, to the Salford low-energy houses. Those of us who have had a look at the schemes are very impressed and hope that the research work and the practical experience of using these new methods will be of use. I am sure that our overall energy strategy will benefit too, because what we aim to achieve is that by 1988 all dwellings will have basic insulation that is, loft insulation and tank and pipe lagging. Those of us who have seen council houses in which there have been burst pipes and floods, which have caused major problems for those living in them, will appreciate the value of that.

My hon. Friend moved from these detailed matters—which were taken up by a number of my hon. Friends—to talking about the need for more public expenditure. I appreciate what he has in mind. He wants to see public expenditure increases in housing particularly, because of his special interest there, but also in the other important areas—the national Health Service, schools and overseas aid. He also hopes that spending in these areas will cause a reduction of unemployment. He instanced the situation in the United States, where the New Deal under President Roosevelt caused a dramatic change in that country. Those of us who have read of and admired Roosevelt's outstanding work in this area know full well the impact that it had not only in the United States but on the whole of the Western world. There are many of us who would have liked such a solution in the present case. But, unfortunately, it is not quite as simple as that today.

My hon. Friend the Member for Coventry, North-West (Mr. Robinson) referred to this matter briefly. The expansion of public expenditure has to be paid for either by increasing taxation or, essentially, by increasing production. It is in that second way that I and, I am sure, the whole House, would prefer to see it organised. The two must go hand in hand—the increase in public expenditure, to which I am devoted, and the increase in our industrial strength, which will provide not only jobs but the surpluses which enable us to expand public services, not least housing.

My hon. Friend referred to the squeeze in the public sector which he said was expected by some to lead to job creation in manufacturing industry. He decried that view. I do not think that it works like that. If we transfer workers from industry into the public service by expanding the public service we cannot be sure that we shall create or retain the stable industrial climate that we require. Over this period we have seen a transfer from manufacturing industry into service industry—largely Government service industry. We have seen an increase in local authority staff and, at the same time, decline in our industrial strength. That is a matter of regret to us all. We had hoped to see greater efficiency in the public service and in industry.

My hon. Friend the Member for Sal-ford, East looked to each £1,000 million of public expenditure creating 235,000 extra jobs. That was possible some years ago. The difficulty today is that if we increase the number of jobs in the pub-lice service all we do is to increase the pay bill. That would increase the present rate of inflation. It did not use to be so. In the early post-war years Keynes recognised that we could expand the public service and provide jobs only on the basis that pay increases did not occur. He realised that that would be a denial of the approach that he wished to make. That is our problem today.

The idea of people pricing themselves out of jobs is, unfortunately, valid. I wish it were not, because then the solution to our problems would be so much easier. I should be able to embrace the ideas of my hon. Friend with acclamation, delight and joy. Unfortunately, the realities tell against us. We have looked at the theoretical structure, which I grant is far from perfect. We have enough evidence to show that the expansion of the public service acts in the way I described.

My hon. Friend and a number of others, including my hon. Friends the Members for Sowerby (Mr. Madden), for Coventry, North-West and for Hartlepool (Mr. Leadbitter), argued for import restrictions. My hon. Friend the Member for Salford, East asked about import restrictions on goods coming from certain countries, those which export to us a great deal more than they import from us, especially in manufactured goods. Although he did not say so, I am sure he had that in mind. We have made a number of voluntary agreements with Japan, which is one such country. I am sure that that may not go as far as my hon. Friend has in mind. However, it shows that in general, as opposed to the precise way in which we tackle this problem, there is a measure of agreement here.

Let me discuss the general case for import controls, which was put strongly by my hon. Friend the Member for Coventry, North-West. I speak as one who advocated this course in the 1960s. Over a number of years I advocated the devaluation of the pound and the use of import controls to provide protection for industrial expansion and investment. I do not think that that course would lead to that result today. Times have changed. Our reactions must change with them. The danger today is that we would not achieve the expansion and investment that my hon. Friend and I wish to see. Today that would not be credible.

There is an enormous time lag in industrial production. Government incentives and persuasion do not have the same force in the 1970s as they had in the 1960s, let alone in the 1950s. As long as there was the possibility, to put it no higher, of a return to power of a Conservative Administration pledged to overturn such arrangements, or even without that, there would be the uncertainties of planning investment, assessing the types of investment required, the purchase and installation of that capacity—there are long lead times in these matters—the production of the goods coming from this capacity and the pay-off of investment to make it all worth while.

What are these lead times? Four years? Eight years? That depends on the goods, the machinery and the kind of investment that we would be asking industry to make. I should be astonished if industry responded to that request in any great degree, given the uncertainties that arise in these matters. In addition, that does not take into account the problems of retaliation.

Due to North Sea oil our balance of payments is not in the difficulty that it used to be. In the 1960s our balance of payments was the most difficult problem that we had to face. It is not now. In the 1960s it would have been difficult to retaliate against import quotas introduced by a country with such an appallingly weak balance of payments. Today it would be considered justifiable to retaliate against a country with a basically strong balance of payments.

The situation in industry has also altered. Up to the 1960s industry produced nearly all the ranges of goods that were purchased in this country. Nearly everything that we normally required in the way of consumer and other goods was manufactured here in one form or another. Such has been the international specialisation of production that entire ranges of articles are no longer manufactured in this country, or, if manufactured, do not cover the whole range. Therefore, within an import control structure there would have to be a vast number of exceptions for those goods that we no longer manufactured. Those are the basic problems.

My hon. Friend the Member for Coventry, North-West mentioned flexible ceilings, and my hon. Friend the Member for Sowerby referred to the elective restrictions that are now in force. This is the right way to deal with the matter. The Government accept—the Opposition also accept it in some instances—that there are certain types of industry which have short-term problems which could and should be dealt with by the use of selective import controls. In the textile industry it is essential. My hon. Friend will accept that. There may be one or two other cases as well. However, that is different from the generalised argument with which I have dealt.

My hon. Friend the Member for Batter-sea, South (Mr. Perry) dealt with housing problems in the context of tower blocks. He was right to say that the enthusiasm with which so many of us embraced the concept of tower blocks was one of the major planning errors of the post-war years. He had the wisdom to see this, perhaps in advance of many. He also referred to the problems of damp as well as the difficulties of obtaining housing transfers. I speak with no special expertise in this matter. However, speaking from an understanding of my constituents' needs, the housing transfer system is less than perfect. It has always struck me that this is capable of considerable improvement.

My hon. Friend was right when he talked about industrial growth leading to increases in public expenditure. When he said that we cannot have more public expenditure without more production, he was absolutely right, because increased public expenditure with no such base would lead, as he rightly pointed out, just to inflation. It can be done if one is prepared to accept the inflation, but we have had too recent and too salutary a reminder of the constraints, and what the people of this country believe we can withstand, to follow that path. Those who look, as I do, for an increase in public expenditure have to find ways of improving the performance of industry.

My hon. and learned Friend the Member for Hackney, North and Stoke Newington (Mr. Weitzman) mentioned the tax problems of people over 65 who have to rely rather more on investment income than ordinary wage earners have to do. We recognise the great distinction between the need of a person for investment income when he has retired compared with the needs of a person who is at work. The tax system, as my hon. and learned Friend knows, takes account of this distinction. There is an increased threshold for the investment income surcharge for those over 65. Under 65, the surcharge starts at £1,700 a year, and over 65 it starts at £2,500 a year. That is a measure of recognition of the reduced ability of those over 65 to pay tax on their investment income.

We must always be careful when comparing persons in work with those not in work, because those in work have costs associated with working. This is not always taken into account. We are aware of the costs of travelling, which are increasing rapidly. There are also the costs of meals, of clothing, and so on. We do not provide tax allowances for the expenses associated with work. Persons who are not in work, whether they are retired or otherwise, do not have to meet those expenses. It is recognised, on the other hand, that persons over 65 face other difficulties. Often they cannot get about as well as younger people and have to have their shopping done for them. Their expenses may be higher in the sense that the quantities they purchase are smaller and they may be charged rather more for them. We take all these factors into account, and there are various provisions designed to meet them as far as possible.

My hon. Friend the Member for Birmingham, Ladywood (Mr. Sever) mentioned the particular problems of the low-income family. There can be no doubt that this has been a very important matter in the past year and several groups have drawn attention to it. There are the problems of the single parent, of the lower income groups, and the special problems of working mothers. The additional personal allowance was increased to help alleviate poverty in this area.

My hon. Friend mentioned the cost associated with looking after a child when the single parent goes to work. He may be aware that I met a deputation of my hon. Friends on this matter—my hon. Friends the Members for Lambeth, Central (Mr. Tilley), Welwyn and Hatfield (Mrs. Hayman) and for Barking (Miss Richardson). We had a very valuable discussion.

My hon. Friend the Member for Sowerby talked about the development of industry and the work of the National Enterprise Board. He argued strongly for compulsory planning agreements. I understand my hon. Friend's argument in that respect. I thought that my hon. Friend the Member for Coventry, North-West put it very well when he said that he saw the National Enterprise Board as having only a marginal significance. I think that he underplayed its role, but I shall not quibble with him. It has a valuable role in selecting industries in which investments can be made, as also in the case of certain expansions. I believe that we are as yet far from seeing the ultimate role that the NEB will have. I believe that its role has been rather more than one of marginal significance, although I would agree that it has not achieved major changes so far.

There is, of course, a need for industry to co-operate with Government in the matter of planning agreements. It should be remembered that in Britain those in industry have historically been suspicious and doubtful of the intentions of Government. This sort of hostility was apparent throughout the nineteenth century, and it spread also into this century. The industrialists, after all, were the men who created the factories and the wealth that went with them. Then Government came along, regulating them and telling them that they could not do this and that. Other countries learned from our experience, and there the Governments encouraged industry, so that the partnership between Government and industry was forged right from the outset. We have to try to forge a relationship between industry and Government, so that the Government can understand industry and know what to do, taking the national view, and so that industry in turn can understand the problems of the Government and avoid the suspicion with which it has often responded to overtures in the past.

This is of enormous importance, and compulsory planning agreements would, in my view, be just the way in which those suspicions could be increased. I would dearly wish to see more planning agreements between Government and industry. Co-operation has to be established, so that distrust can be removed and reluctance overcome. I do not, therefore, believe that compulsion is the way in which to operate in this area. The use of planning agreements needs to be strengthened. We have to find some way of bringing them into being much more readily than has been the case so far.

Mr. Madden

None of us would dispute the willingness of private industry to take taxpayers' money in the form of financial assistance to industry. Indeed, private industry has been taking larger and larger amounts of money as each year has passed. But there is a distinct unwillingness on the part of the self-same companies to have their employees participate in the process whereby financial assistance is provided. In the four or five years since the Labour Government came to power we have secured only one planning agreement. In what way does my right hon. Friend envisage the employees of these companies being brought into the decision-making process in regard to the expenditure of taxpayers' money? That is the crux of our complaint. What framework has he in mind for taking account of employees' views?

Mr. Sheldon

I appreciate this complaint. It is a pity that the doubts and suspicions have been such that practically no planning agreements have been reached so far. I hope to achieve them by the diminution of distrust, and I believe that the Department of Industry is also aware of the problem. Imposing them on unwilling people—inducing companies to have planning agreements—would bring great difficulties. I have doubts about how this could achieve any advantage to industry or industrial performance.

My hon. Friend the Member for South Shields (Mr. Blenkinsop) talked about housing repairs and problems of maintenance. I, too, find this disturbing. The poor performance of maintenance can represent a diminution of the wealth of the country in an important form. When window frames are allowed to rot, doors fall into disrepair and the fabric of buildings allowed to decay, this diminishes our capital assets. None of us can be sure that we have achieved true maintenance of the standards.

Mr. Leadbitter

When one is dealing with repairs, there is a corollary, and that is the need for improvements to be made. Government grants and local authority supports should be used generously. There is a need to impress on local authorities that there are many cowboys in the business of improvement work. I believe that an advisory circular should be sent to local authorities setting out the high standards that are expected of companies doing work with public money. This would eliminate people about whom there are often complaints and who are no more than cowboys in the business.

Mr. Sheldon

That is up to the local authorities concerned. They must see to their own housing repairs. Experience varies widely on these matters. In my constituency we have had enormous problems, for the reasons that my hon. Friend has just mentioned. One learns one's lesson, but one must pay expensively for that lesson. I hope that at this late stage in the development of housing policy it is not necessary to undertake to any marked extent the kind of instruction that my hon. Friend has suggested.

My hon. Friend the Member for South Shields pointed out that if one has a high level of public expenditure one must pay for it through industrial growth. That was the theme of a number of speeches. My hon. Friend the Member for Hartlepool put it another way. He said that public expenditure means taxation. We must all understand that there is an inescapable connection. This is not an easy way, in fact it is difficult. The only way that we can reach the kind of level of public expenditure that we want to see is through industrial performance being increased. That is the purpose of the industrial strategy—to create self-generating growth in industry from which the true wealth of this country can increase.

We have had a valuable debate on all these matters. My hon. Friend the Member for Sowerby got it just about right when he said that he did not expect any Budget secrets to be announced in a debate of this kind. I shall not deny him the fulfilment of his expectations. However, he said he did expect us to take note of the points that have been made and I assure him that I have done so.

2.46 p.m.

Mr. Frank Allaun

I shall wind up today's discussion very briefly by congratulating all my hon. Friends who have made valuable suggestions in the course of the debate. I refer particularly to my hon. Friends the Members for Sowerby (Mr. Madden), for South Shields (Mr. Blenkinsop), for Birmingham, Ladywood (Mr. Sever), for Battersea, South (Mr. Perry), for Hartlepool (Mr. Leadbitter) and for Coventry, North-West (Mr. Robinson), and my hon. and learned Friend the Member for Hackney, North and Stoke Newington (Mr. Weitzman).

Only one hon. Member—the hon. Member for Gloucestershire. South (Mr. Cope) —spoke from the Conservative Benches. I thank him for attending, but I would have thought more Conservative Members would attend a discussion involving the Budget, public expenditure, housing and a number of other issues. The hon. Member said that an increase in the public sector borrowing requirement would be disastrous, but I had already pointed out that there would be great savings in unemployment and other benefits if unemployed workers were engaged in vital social services. He did not deal with that point.

The hon. Member referred to me as an idealist and claimed that my heart was bigger than my head. If that is the worst that can be said about me, I shall manage. In the first half of the last century, the same thing was said about those who wanted to give an education to working-class children for the first time. It turned out that not only was it right to give those children an education; it was necessary for the growth of capitalism. The Industrial Revolution could not have taken place without literate workers. Unless men could count and read micrometers, the Industrial Revolution would never have occurred. This was another case in which the heart and the head went together and in which the heart proved not a bad instinct to follow.

The PESC—these initials are a pain in the neck—said that this year we would increase our social spending by 2 per cent. and our military spending by 3 per cent. I think that the priorities are wrong. I would reverse those figures. In fact, I doubt whether even the 2 per cent. figure will be kept, and that is what has been at stake in today's debate. That 2 per cent., at the least, is absolutely vital. Of course, Conservative Members want to cut practically all public expenditure except that for defence, which they would increase.

Several references have been made about the sale of council houses, particularly by my hon. Friend the Member for Battersea, South. It is true that the sale of council houses will tie a mother with young children to the eighteenth floor of a block of flats, almost for ever, when she is longing to occupy the better type of council house—the semi with a little bit of garden in which her children can play. Conservative Members must take that into consideration in the willy-nilly, almost forced, sale of council houses that they are advocating.

My hon. Friend the Member for South Shields referred to taxation. He said that public expenditure must go ahead, even at the cost of taxation, and I agree with him. But in his recent speech, to which I referred earlier, when he advocated that public expenditure should be cut by £4 billion a year, the Shadow Chancellor said that he wanted to reduce the top rate of income tax to 60 per cent.

I am in favour of reducing taxation at the lower end but not at the top. I am in favour of high taxation on high incomes, because I believe that it is the fairest possible tax. I welcome the fact that in last year's Budget debate two of my hon. Friends succeeded in increasing the ceiling for the payment of income tax. I presume that that will be done this year. I am quite sure that my hon. Friend the Member for South Shields did not want any increase in taxation at the lower end of the scale.

My hon. Friend the Member for Coventry, North-West was absolutely right when he said that if we increase public expenditure and the purchasing power of the British people it will increase the importation of manufactured goods from abroad. He is an authority on industry, and I am glad that he agrees with me that we could and should impose import restrictions—particularly from countries which have a favourable balance of trade with us.

My right hon. Friend the Financial Secretary to the Treasury dealt with the debate with his usual courtesy and care. I thank him for his tribute to Salford and to myself. I welcome his announcement that in the autumn there will be a report on the evil of damp, to which much of the debate has referred. I hope that the report will be early in the autumn and that quick action will follow. This evil is now rapidly beginning to emerge, although it has been there for some time. I hope that the Government—which I hope will be a Labour Government—will deal with this problem in a bold, energetic and quick way.

My right hon. Friend said that an increase in public expenditure must go hand in hand with increased production. Of course it must, but what I and the Labour Party maintain is that there is plenty of room for both. If there were no unemployment I could see the point of my right hon. Friend's argument, but we do not have full employment. Officially, we have 1.3 million unemployed, and it is possible, therefore, to expand both without injuring either. My right hon. Friend continued by saying "You must not transfer workers from industry into the services." I am certainly not suggesting that. I was complaining that making nurses, building workers, home helps and teachers unemployed does not help manufacturing industry one bit.

As our productive power increases through microelectronics and other means, and through the normal development of productive power that has been taking place for 200 years, relatively fewer people will be engaged in direct production. More and more people will be engaged in education, health, culture, leisure activities and other services.

My right hon. Friend also said—as I understood it, this was his great complaint—that the expansion of public services unfortunately increases the wages of those employed in the public services. Dear me! I hope that it does increase their wages, because their average wage is below that of others. If it has that effect, well and good.

Let me give one specific example. This week I received a letter from the vice-chancellor of Salford university, Professor Horlock. He drew attention to the salaries of technicians working in the science departments of the university. I have sent that letter to the Secretary of State for Education and Science. The men and women who do mechanical work in these departments do a terrific job. I think of men such as my hon. Friend the Member for Tottenham (Mr. Atkinson), who was a working engineer, served his time and went to an engineering department of a university. I also think of a relation of mine. He was a brilliant young lad. He went to Manchester university, worked as a technician in the physics department, for Professor Blackett, and when Professor Blackett went to the Imperial College of Science he helped to get that young man transferred to a huge nuclear development for peaceful purposes, where he was in charge of 500 men.

The point that I am trying to make is that men such as that must so develop their theoretical understanding that they can actually devise the equipment for the professors and researchers. Their job is not merely to say "I shall put this nut and bolt together" but to devise equipment that will put the theoretical ideas of the professors into practice.

That is a tremendous job. Yet in many cases they receive wages that are not much more than those of typists. This is public expenditure, and this is what needs assistance from the Government. Even with the best of friendship and intentions towards my right hon. Friend, I remain unconvinced by the Government's arguments, and I stand by the policy that I have outlined. However, I beg to ask leave to withdraw the motion.

Motion, by leave, withdrawn.