DEBATE ON THE ADDRESS

HC Deb 15 May 1979 vol 967 cc52-198

[FIRST DAY]

Mr. Speaker

Before I call those hon. Members who are to propose and second the motion on the Loyal Address, it may be for the convenience of the House if I indicate the subjects that I understand are suggested for the various days' debates: Wednesday 16 May—health, education and social services; Thursday 17 May—housing and local government Friday 18 May—foreign affairs; Monday 21 May—industrial policy and employment; Tuesday 22 May—the economy, pay and prices.

2.36 p.m.

Sir William Elliott (Newcastle upon Tyne, North)

I beg to move, That a humble Address be presented to Her Majesty, as follows: Most Gracious Sovereign, We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament. The Gracious Speech began this morning with a reference to the considerable programme for the next few months of Her Majesty's travels abroad. I know that hon. Members in all parts of the House will wish her well in her journeys. I know also that we continue to appreciate to the full her personal contribution to our Commonwealth and international relations.

In moving the motion I am deeply conscious of the great honour conferred not only upon me but upon the constituency and city that I represent in this House. Newcastle upon Tyne is the natural capital of the North-East of England. In due course I shall ask the indulgence of the House to express to the best of my ability the effect upon my region of some of the proposals embodied in the Gracious Speech.

Like other hon. Members, I have a number of distinct memories of the election campaign just ended, some of which will always stay with me, and to two of which I should like to refer. One is of a large and very enthusiastic meeting in Newcastle university, which must have been reminiscent of hustings of other days. At that meeting a section of the audience attempted to shout down my very distinguished supporting speaker. I am glad to report that my right hon. Friend the Home Secretary won the day.

My second memory—I am sure that it is in the memory of many others—is of the broadcast to the nation, from Transport House, of the right hon. Gentleman the Leader of the Opposition when it was all over and the result was known. The right hon. Gentleman was gracious in defeat. He wished my right hon. Friend the Prime Minister well in her high office for, as he put it, the country's sake. I would on this occasion, and for the same reason, express the hope that the right hon. Gentleman will remain as Leader of Her Majesty's Opposition for at least five years.

The right hon. Gentleman may well recall a historic moment in his premiership, when the new President of the United States of America entered our country through Newcastle upon Tyne. President Carter addressed the biggest meeting that I have ever seen in Newcastle, and received a great ovation. He was followed to the rostrum by the then Prime Minister, who received a somewhat mixed reception. There was a certain power plant problem at the time, and it was the morning after one of our more spectacular Conservative by-election victories. However, there was a splendid Geordie with a penetrating voice who shouted to the right hon. Gentleman "An' you're all reet an' all, Jim." To those unaccustomed to our rich Tyneside dialect I should say that those were words of approbation.

Thinking of the Tyneside dialect, I am reminded that it was with some pleasure that, in company with many other right hon. and hon. Members, I cheered Her Majesty away as I stood outside St. Stephen's entrance this morning. When the guard of honour, which had stood opposite the Victoria Tower, marched off, I realised that it was composed of Coldstream Guards, a regiment that traditionally recruits from my own North-East of England. The Coldstream Guards marched off to the tune of "Keep Your Feet Still, Geordie Hinney", and then broke into Tyneside's own national anthem, "The Blaydon Races". I should like very much to think that the choice of music had something to do with the honour that I know at this moment, but I rather suspect that it was coincidence. Nevertheless, the hon. Member for Wallsend (Mr. Garrett) and I, who were standing together at the time, would like the Coldstreamers to know that we were very appreciative.

The Gracious Speech has no more welcome passages for me and my region than those suggesting that Her Majesty's Government will do all in their power to engender economic expansion. We have too many unemployed people in the North-East of England. I say of those who, like me, have lived in the region all their lives that we are a proud people. We are proud of our industrial past. We are proud of our industrial pioneers and of our history of industrial initiation, and we are most anxious to play the fullest part in our country's economic recovery. As I see it, development area policy has always been designed to that end, or should have been, and I am certain that it will be in the future.

There is no question of there being two nations within the one. The North-East of England is very much part of one nation. I am proud of all that Conservative Governments have done in the past to regenerate such regions as mine, which know the enormous problem of declining major industries. I of course recognise also the considerable injection of financial aid in time of Labour Governments. But recent methods have failed. Our unemployment rate is double what it was four years ago.

We need a new approach. We do not want any more boards. We have enough, and they cost a great deal of money. We want new jobs that are real and permanent. We need a period of new industrial initiation in regions such as the North-East. So I am encouraged by the words of the Gracious Speech which suggest that small and medium-sized businesses, which can provide new jobs, shall have the maximum encouragement.

Let qualifications and skill be rewarded. Let enterprise be encouraged. Let new industrial pioneers be encouraged, not deterred. Let those willing to get up in the morning and get on with it know their just reward, and the North-East of England will do so much not only to help itself but to help the nation as a whole.

It may be of interest to the House to know that the constituency that I represent, and have now represented for some years, has become numerically small. In urban areas this happens. There is population movement and there is urban development. With a total of but 39,000 electors, I defended a majority of only 469. Because our university and polytechnic are situated in my constituency, no fewer than 6,000 of those 39,000 electors are students. Their obvious majority vote for the Conservative Party and me indicates that their best hopes for the future lie with the newly elected Government. I believe that their trust will not have been placed in vain.

I refer finally to that passage of the Gracious Speech that I believe to be more important than any other. Without the maintenance of peace, all else is of little avail. Without adequate defence, our free way of life is at this time in great danger. My only son, on completion of his education, will become a Regular soldier. That is a matter of great personal pride to me. Of great pride to the nation is the assurance given in the Gracious Speech that our treaty obligations shall be upheld, that the rundown in our defences shall cease, and that our country shall once again be seen by the world to be foremost in the maintenance of peace and the defence of freedom.

2.47 p.m.

Mr. Kenneth Baker (St. Marylebone)

I beg to second the motion.

It is customary in a speech such as this to refer to one's constituency. It will come as no surprise to you, Mr. Speaker, to hear me say that the general election result in St. Marylebone was magnificent. As St. Marylebone went, so did the country.

I should like to scotch the rumour that my majority in St. Marylebone owes anything to the fact that I have in my constituency both the London Zoo and Madame Tussauds. Nor does it owe anything to the fact that I represent several Members of Parliament, none of whom, as far as I could discover, voted for me, the reason being that virtually all of them sit on the Opposition Benches. Conservative Members cannot afford to live in my constituency.

It is a great honour for me to represent a seat as ancient as St. Marylebone, so close to the centre of our capital. Whether one represents a Conservative or a Labour area in the inner city—I used to represent Acton, and I know perfectly well that the problems are strikingly similar—we are all faced with an economic decline in the inner city and with a declining population. With my experience over the years, I am sure that life can be brought back to the inner cities only if we do two things. First, the planners should be sent on a long holiday. Secondly, we must create the conditions in which the small business will want to return to the inner city and in which it can flourish and thrive there.

My constituents will be very pleased to see the return of my predecessor, Lord Hailsham of St. Marylebone, to the Woolsack. One of the wittiest exchanges that I recall in this House involved him and the present Leader of the Opposition. I do not know whether the right hon. Gentleman recalls it. It was when he was Home Secretary, in 1969, and was bringing in a Bill to put party affiliations on ballot papers. My noble and learned Friend, then Quintin Hogg, bitterly opposed the Bill and interrupted the Home Secretary, asking whether he was aware that in 1966 in St. Marylebone he had been opposed by a man whose sole, entire and only programme was anti-Hogg. How was he to be described on the ballot paper? The now Leader of the Opposition, a man of ready wit, jumped up and said "It is quite easy—independent". "Independent?" said Quintin; "that man could not have existed without me."

As I have referred to the Leader of the Opposition, I should like to pay him a compliment. I want to do so before brotherly mayhem breaks out on the Benches opposite. He will know that during the last three years some of us have been tackling him at Prime Minister's Question Time. I should like to record that we always found this very difficult. However ingenious we were, down would come his bat and the ball would be returned down the middle of the wicket. He was a much more formidable opponent at Question Time when he was Prime Minister than was his predecessor, the right hon. Member for Huyton (Sir H. Wilson), whom I do not see in his place, though I believe that he has been re-elected in spite of the campaign that he ran for us during the election. I wanted to record that compliment to the former Prime Minister because it is truly felt. I shall miss those sessions on Tuesday and Thursday afternoons at Prime Minister's Question Time.

Mr. James Callaghan (Cardiff, South-East)

I shall not.

Mr. Baker

On the Government Back Benches, as many of my colleagues will discover, at Prime Minister's Question Time it is difficult to find that narrow strip of land that lies between rebellion and sycophancy.

I shall miss some old friends from the last Parliament, particularly Teddy Taylor. He was a great House of Commons man. I remember John Mackintosh calling him, in one of those endless debates on devolution—Teddy liked the nickname—an urban guerrilla. I shall also miss the four by-election victors in the last Parliament, Andrew MacKay, Tim Smith, Robin Hodgson and Richard Page. They had good names and good reputations in this House, and I hope that they will return.

This is a historic and important Queen's Speech. We on these Benches believe that it marks a new start and a fresh beginning for our country. I am pleased that the part of the Speech which refers to domestic matters says, first, that the Government will give priority to economic policy and to controlling inflation. I look upon inflation as the greatest problem facing the country and the Government. It is clear from the figures published last week that we have inherited not just a rising, but a rapidly rising, rate of inflation.

The Guardian on Saturday, and again this morning, was forecasting that even with the—[Interruption.] I am sorry that my oratory has already driven somebody from the Chamber. If I may revert to the central issue, which I think is important, and to which the Government are rightly giving top priority, I hope that my right hon. and learned Friend the Chancellor of the Exchequer, when he forms his Budget in the next few weeks, will have as his first object the abatement of that rate of inflation. It is a difficult problem. The inheritance from the previous Government is appalling. It is made worse by the fact that during their last few months in office the former Chancellor of the Exchequer and the former Prime Minister issued a whole series of postdated cheques which are now landing on Ministers' desks.

The second matter that I welcome in the Queen's Speech is the clear commitment to reform the procedures of this House. I congratulate my right hon. Friend the Leader of the House on ensuring that that pledge is in the Gracious Speech. New Members of this House will not have to be here for very long to appreciate that our methods of examining, scrutinising and controlling public expenditure are imperfect and inadequate. I hope that we shall have an early opportunity to change those methods and to set up departmentally related Select Committees that will be able to call Government Departments to account.

I am glad that my right hon. Friend has been given responsibility within the Cabinet for the arts. I believe that this is the first Cabinet in which a Minister with that responsibility has sat at the Cabinet table.

The third matter that I welcome in the Queen's Speech falls within the Home Secretary's area. I am glad that my right hon. Friend will be pressing ahead with a provision to repeal section 2 of the Official Secrets Act. I hope that we shall be able to go further. I believe that we should have on our statute book an Official Information Act.

When the press and the media look at this Queen's Speech overnight they will spend a great deal of time trying to decipher whether it leans slightly to the Right or slightly to the Left. I ask them to relax their researches. I wish that they would accept the simple fact that the Tory Party, like a bird, has a Right wing and a Left wing, but that, also like a bird, its brains are in the middle. When this Queen's Speech is examined, studied and read, it will be seen that it stands very much in the central land of Conservative thinking and philosophy.

In conclusion, I address my remarks to my right hon. Friend and her colleagues on the Front Bench. I hope very much that when they are formulating policies in all the areas of government during the next few months and years they will bear in the forefront of their minds the millions of poor, deprived and underprivileged people in our country. Many of these people are elderly, some are coloured and some are unemployed. For the most part, they do not live in the golden triangle of the South-East of England. Many are inarticulate. If my colleagues keep these people in the forefront of their minds, they will not betray the trust that they have been given by the people to govern in the interests of all our people in our one nation.

2.58 p.m.

Mr. James Callaghan (Cardiff, South-East)

It is my pleasant duty to congratulate the mover and seconder of the Loyal Address, the hon. Members for Newcastle upon Tyne. North (Sir W. Elliott) and for St. Marylebone (Mr. Baker). I am grateful to them for their remarks. There is no reason why personal courtesy to each other should allow us to depart from the normal controversial methods that will shortly be resumed, but I am grateful to them for what they had to say.

The hon. Member for Newcastle upon Tyne, North is a senior Member in terms of his service. As a Whip he is well remembered, perhaps more on his own side of the House than on this, although I understand that it was possible to get round him at times when he was doing that job. I was interested to hear what he had to say about the North-East. He has considerable knowledge as a senior Member of the House of its problems—the problems of shipbuilding and the problem of the new Drax B power station, which was accelerated by Government intervention and the public money which placed a firm foundation under the mining industry in Durham and Northumberland. He is, therefore, well equipped to speak of the effect of the Government's measures on the city and the constituency of Newcastle.

The hon. Gentleman says that we need a new approach and naturally he is backing his Government's policy. As my speech goes on, I shall find it a little difficult to know what is the Government's new approach which will particularly help areas such as Newcastle and the North-East, but no doubt we shall debate that matter in the coming days. At any rate, I am sure that the hon. Gentleman's constituents will be pleased about the honour accorded him of moving the motion on the Loyal Address in this first Session of Parliament.

As for the hon. Member for St. Marylebone, he has every advantage but one. He is humorous, articulate, intelligent and rational. Until this afternoon, I would have said that he had only one blemish—although I am not sure that he did not make that blemish a little worse today. His one blemish so far is that he has been the Parliamentary Private Secretary to the right hon. Member for Sidcup (Mr. Heath). However, he can recover from that. There is only one condition that he will have to satisfy: he must never mention his former leader again by name.

The hon. Gentleman has displayed a keen interest in our parliamentary procedures as chairman of the Hansard Society. I am interested in what he had to say about the reform of our procedures and in his proposals for an Official Information Act. I am not sure how far that will find favour generally on his Front Bench, but when people get on the Front Bench they find things a little more difficult than they thought when they sat on the Back Benches. [An HON. MEMBER: "We noticed."] The hon. Gentleman will notice it again, too.

The hon. Member's speech was a little more controversial than usual. It is rubbish to talk about the appalling rate of inflation. The rate of inflation today is lower than it was when Labour came into office. As for post-dated cheques, the only two that have been carried out so far are those on the police and the Armed Forces. They of course will create many difficulties, as I shall point out a little later. However, the hon. Gentleman has made a good speech. I hope that it will do him no harm.

This new Government have a big overall majority. The Front Bench are relieved of the ardous task every week of wondering whether they will get their measures through. It will be a great blessing and relief to them. They will have in parliamentary matters an easier time than has been the case so far. On the other hand, there will now be no parliamentary excuse when they fail. They will not be able to blame it on the Liberals or the Ulster Unionists or the Scottish nationalists.

It is all theirs now. The Government have the power, they have the responsibility, they have full control over the House and of the legislation that they require. There is nothing to stop them from putting it through. Whatever they wish to do, they will be able to get a majority. The only question one asks is whether they have the talent. This is a Government larded with peers—with eight Ministers of State in another place. When I look at the ranks of hopefuls sitting below the Gangway there, I begin to wonder why it is that the lot has not fallen upon so many of them.

The Government have even had to go to another place for a Foreign and Commonwealth Secretary, although I am glad to see that we shall have a member of the Cabinet here to answer on that subject. We shall expect him—as I am sure he will—to account for himself for all the matters relating to foreign affairs. However, it is extraordinary that in a party so bursting with talent there should be more Ministers in another place than I can recall—not to mention more old Etonians as well.

You, Mr. Speaker, have announced the subjects for debate. We shall be concerned on Friday with the policies on Southern Africa and on East-West relations. I hope that the Lord Privy Seal, if he speaks—as I am sure he will—will unfold the Government's policies to us on these matters. We shall pursue them hard on Monday and Tuesday on the questions of industrial policy, employment and the prospects for the economy and for pay and prices.

Although no day is set aside in this debate for Northern Ireland, I hope that there will be an early debate on that matter. There will be Supply days and other occasions. We should have the opportunity to discuss where we take the affairs of Northern Ireland, so far as we have control over them. Certainly it will not be our intention in this Parliament to turn the tragedy of Northern Ireland into a party issue. We are ready to continue full consultation with the Government on this matter which is so tragic for so many people.

I understand that many people in Northern Ireland and in the Republic are looking for a new initiative from this country. All of us would welcome any new initiative which was likely to bring peace to that country. We shall be ready and at the service of the Government to work out jointly, if possible, any new initiative which will enable them to carry out the task of bringing peace and justice to that island and that land and to end the murder which is now going on there.

As for Scotland and Wales, I notice the proposal in the Gracious Speech to repeal the Scotland Act and of course the Wales Act. The latter was defeated in the referendum, but not the former. I should prefer that the Government—I ask them to think about this—had discussions before bringing forward proposals for repeal. We took the view when in Government that that was the right way round, that those Bills went through with considerable majorities in the House.

Indeed, the Scotland Act was ratified by a majority of the people of Scotland. Before we take it off the statute book, I should have thought that it was preferable—I put this to the Government—to have discussions to see whether agreement can be reached on the problem of devolution, rather than rushing through—I do not know whether this is the Government's intention—the repeal of the Act and embarking upon discussions after that.

If I might say one word in advance of Friday on foreign and Commonwealth matters, I believe that the Foreign and Commonwealth Secretary will regret the impression that he has given of downgrading the Rhodesian problem. It will live with this Government and with this country. We have a moral, a constitutional and a legal responsibility for the affairs of Rhodesia. In practical terms. the Prime Minister will be visiting Lusaka in August. She will find there a great concern about the future of Rhodesia.

I would regard it as a fatal mistake if any attempt were made to give legal cover to the Muzorewa Government at present and to lift sanctions—a fatal mistake, if not in moral terms, certainly in practical terms.

I should not want the Prime Minister to go to Lusaka if she or the Foreign and Commonwealth Secretary has already taken that decision. I can conceive of nothing that would make for a worse first Commonwealth conference for the right hon. Lady than to go in those circumstances. I urge the Government strongly to take no steps in that direction until the right hon. Lady and the Foreign and Commonwealth Secretary have been to Lusaka and have listened to what the Commonwealth Prime Ministers will have to say there. Perhaps that may modify their attitude, or perhaps they will be able to convince the other Commonwealth Prime Ministers and Foreign Ministers of their views. Certainly, I would counsel caution on that matter.

After all, the Gracious Speech says that the Government are giving their "full support" to the United Nations. It is the United Nations that made sanctions mandatory and it is the United Nations that will have to be convinced of the rightness of lifting them. I urge the right hon. Lady not to let her own Right wing push her into courses which will be dangerous for this country and for our relationships with the Commonwealth. Whatever views are taken of Mr. Nkomo and Mr. Mugabe, it is vital that they be brought into the peacemaking process.

I regret, too—and this is another matter that will be raised at Lusaka—that there is no mention of overseas aid in the Gracious Speech. [HON. MEMBERS: "There is."] Where? Very well. This is the sentence: My Ministers will have regard to the need for trade with, and aid to the developing countries. So there is a reference to it. But perhaps I can ask for an explanation of that rather obscure sentence.

Mr. Hugh Fraser (Stafford and Stone)

It is not obscure.

Mr. Callaghan

I am glad that it is not obscure, because, if it is not obscure, it will answer my question. But I should like to hear the answer from the Prime Minister herself. Do I take it that there is to be no reduction in overseas aid? Is the increase of 6 per cent. per annum contained in the Estimates so far for future years to be maintained by the Government? If the sentence in the Gracious Speech is as clear as hon. Members claim, no doubt I shall get a clear answer on it from the Prime Minister.

The intentions of the Government towards overseas aid will undoubtedly be raised very strongly in Lusaka. The right hon. Lady will be pressed hard there for a statement, if she has not already given one—I hope that she will have done—that the Government intend to keep the overseas aid programme going at its present level, because world poverty and the interdependence of our own relationships require that there should be a continued high level of aid, and I ask the Government to keep it up. Perhaps the Prime Minister will be able to answer that question as her supporters apparently know the answer.

On the question of East-West relations. I ask the Government to make a clear declaration that they support the new treaty that has been finally agreed between President Carter and President Brezhnev. There will, of course, be difficulties and doubts about some aspects of the treaty—the number of launchers, the question of verification, and so on—but all these are technical matters. The main point about the treaty is that it sets a seal upon the level of nuclear armaments, and from that we should move to a lower level. In my judgment, it is politically vital that the Government should give support to the signature and ratification of the treaty, because without it we shall not be able to proceed to the strategic arms third round talks.

Sir Frederic Bennett (Torbay)

No one has seen it.

Mr. Callaghan

Perhaps the hon. Gentleman has not seen it, but I am quite sure that the Prime Minister has.

Sir F. Bennett

Has the right hon. Gentleman seen it?

Mr. Callaghan

The answer to that is that the United States and the Soviet Union kept all their allies fully informed about these matters and that the British Government are in a position to make a declaration on the subject. I hope that the hon. Gentleman is not going to start to quibble about it. I warn him and the House that it will be politically disastrous if the Government do not state clearly, when they have had time to study the treaty, that they support ratification. I cannot think of anything that would worsen our relations more, not only with the Soviet Union but with the United States, than if the Government were not to make a clear declaration of that sort.

President Giscard d'Estaing, Chancellor Schmidt and I as Prime Minister all declared our support for the ratification of the treaty, and I hope that the present Government will do the same. The alternative is a nuclear arms race.

I also wish to raise the question of the negotiations which have been taking place on a comprehenive test ban treaty between the Soviet Union, the United States and the United Kingdom. These negotiations have been going on for a long time and are very far advanced, although there are still some technical aspects to solve, mainly the question of inspection stations, and how many there should be, to verify that tests are not taking place, and what should be their positioning. The negotiations are a valuable addition to the disarmament process and it is vital to the creation of a feeling of greater security in Europe that we should try to secure an agreement with the Soviet Union and with the United States. It is possible—indeed, we are within a hair's breadth of doing so—and I ask that the Government should follow these negotiations up.

Sir F. Bennett

How does the right hon. Gentleman know?

Mr. Callaghan

I do not know why the hon. Government asks that. We have been part of the negotiations for the last 18 months.

Sir F. Bennett

I have not seen it.

Mr. Callaghan

The hon. Gentleman says that he has not seen it, but that is a matter for him and his leaders. What I am saying is that the Government, in continuation of what we were doing, are probably 90 per cent. of the way towards concluding such an agreement, and therefore I hope that none of the backwoodsmen who are Back Benchers will be able to put a spoke in the wheel.

In the EEC, there is no doubt that the situation today gives us the best opportunity so far of reforming the common agricultural policy and reducing our contributions. I was glad to see what the Prime Minister had to say—I made that speech myself many times. We have a very strong hand because the Community is reaching the maximum level of its revenue, and it will need more revenue if it is to purue these courses. When it needs that additional revenue, it will be up to us to play our hand in such a way that we get the reforms that are required.

I believe that the Foreign Secretary is right to emphasise the political value of the EEC. I subscribe to that view. But there is no doubt that there is a lot of economic nonsense, and, because of the juxtaposition that we are now in 1979–80 and that by 1981 the Community will have reached the limit of its revenues, we have a better chance than we have ever had to get the reforms that we want.

I turn now to domestic matters. As regards the trade unions, we adhere to our view that the proposals in the Gracious Speech on ballots, picketing and the closed shop will not deal with the fundamental questions of trade union actions and behaviour. Such problems are much more likely to be resolved through voluntary undertakings by the unions themselves. Indeed, the Government's proposals are largely cosmetic, and I imagine that that is why the Secretary of State for Employment is proposing to proceed slowly. I think that he is right to proceed slowly on this matter and to have the fullest discussions with the trade union movement. He should not be disturbed by the taunts of the Under-Secretary of State for Trade, who called him "Marshal Petain"—but that was before the Under-Secretary of State had joined the Government.

I do not regard the Secretary of State for Employment as a Petain. He has much more sense on these issues than most of his colleagues in the Government, and I hope that they will not press him into courses that would not deal with the fundamental problems here.

Despite the coldness with which its code of conduct was greeted by the Conservatives, I urge the TUC to stick to it. I hope that it will be adopted by the individual trade unions as common practice. I believe that that is the best way for us.

The Under-Secretary of State for Trade (Mr. Norman Tebbit)

I hesitate to intervene, but I think that the right hon. Gentleman owes it to the House to produce the quotation to which he referred.

Mr. Callaghan

Oh, yes, I shall be glad to do that. The hon. Gentleman has probably forgotten it. [HON. MEMBERS: "When?"] I shall produce it in due course. I shall send it to the hon. Gentleman. [HON. MEMBERS: "Now"] Does the hon. Gentleman deny that he called him Marshal Petain?

Mr. Tebbit

indicated assent.

Mr. Callaghan

All right. I shall produce the evidence, in which case, certainly, an apology is owed to someone. Certainly it was reproduced in a newspaper. But I shall turn up the date.

On the question of economic and industrial policy, the campaign rhetoric has now given way to a much more sober use of language—after only a week in office. Before the election, the electorate was given to understand, in a series of television commercials that were produced, directed, scripted and screened by Saatchi and Saatchi, against a misty background of deep blue, that a vote for the Conservatives and a change of Government would ensure that this country made a rapid return to some Utopian state of greatness and bliss. [HON. MEMBERS: "Oh."] Only muted cheers for that.

But now, after the election, we hear noises that utopia will have to be postponed for a day or two, or, in the prosaic language of the Prime Minister, who was speaking to the Scottish Conservatives: It will be some considerable time before our measures take effect. Oh! That is not the impression that the country formed when those Conservative party political broadcasts were being screened. I dare say that we can scrape up from the Conservative manifesto some qualifying phrases in the fine print. But the right hon. Lady and her advertising agents bear the full responsibility for the impression that they have created, aided, of course, by a sycophantic press—[HON. MEMBERS: "Oh."]—and the public are now expecting a lot from the Government.

Of course, the Government can do some of the popular things straight away, some of these post-dated cheques, such as increasing the pay of the Armed Forces and the police, and proposing the sale of council houses. But that does not chime with the post-election comments such as—I quote again from the Sunday Telegraph— There are no short cuts to success and prosperity and It will be the task of a decade", or even the right hon. Lady's own words: We should not underestimate the enormity of our task. I think that she meant "immensity" rather than "enormity". But no doubt the Leader of the House would be able to put us right on the meaning of the word. Certainly I did not think that the right hon. Lady was engaged on a task of monstrous wickedness, but, rather, on an immense task. However, they have aroused enormous expectations, and I am not surprised.

No wonder the Chancellor of the Exchequer is looking even more mournful than he usually does.

Mr. Neil Kinnock (Bedwellty)

That is because he knows who is Chancellor of the Exchequer.

Mr. Callaghan

But the right hon. and learned Gentleman played his full part in the campaign, a campaign which, as far as the Conservative Party was concerned, was based on a simple proposal—"What is in it for me?" That was the Conservative Party's approach during the general election.

The right hon. and learned Gentleman may be able to reduce the income tax by 3p on 12th June. If he does anything less, it will make a mockery of all those who voted for him; and anything less, let me add, will bring small benefit to most people, and certainly to people earning less than £150 a week. It will make a mockery of them. Certainly, what he does will not aid those who are either young or are drawing small salaries, or are elderly and do not have a second salary or wage apart from their pension. A reduction in income tax of 3p in the pound will not help them.

How will the right hon. and learned Gentleman finance it? If he finances it by a process of selling off part of the publicly owned industries, he will be only reverting to the form of asset stripping of which we have had another example today and which was such a characteristic of the previous Conservative Government. He will finance it by denying money to the National Enterprise Board, and by increasing other taxes such as VAT—and that, incidentally, if he is going to finance 3p in the pound, will probably add 2 per cent. to the retail price index, and then what will happen to inflation? Who benefits then?

But what is so utterly naive is the belief that a cut in income tax, the abolition of the Price Commission in a fit of spite, restricting the activities of the NEB, bringing back the 11-plus or something like it and reintroducing pay beds in hospitals will somehow result in a great upsurge in investment, productivity and employment and a united country. These delusions can only be the result of following the crackpot notions of that Dr. Strangelove of the economic world, the new Secretary of State for Industry. The country deserves a better analysis and more realistic remedies than these.

We need to strenghten the industrial strategy, not to weaken it. The National Enterprise Board could be a powerful arm in the process of regeneration, as it is now becoming. What is to be the policy on the sector working parties in industry? Are they to be encouraged, or are they to be allowed to die away? Are we to lose the situation in which management, unions and Government sit down together in each industry? What is to be the role of the National Economic Development Office in this?

We face a prospect of renewed recession in the world as a result of the latest price increases in oil, and yet there is no reference—not one, again—in the Gracious Speech to the problems of energy. More jobs will be at risk during the next 12 months than have been at risk so far. Will the Government wash their hands and contract out? Will they withdraw? There is a need for planning agreements in this situation between industry and Government and for the workers in industry to have greater access to their firms' proposals on investment and expansion, on closures and on modernisation.

Then there are the problems thrown up by the new technologies in the matter of jobs and employment. Another 170,000 people will be added to the labour market each year. The Queen's Speech has nothing to say about this. World unemployment will be as big a problem in the 1980s as inflation has been in the 1970s. It will not be sufficient for the Government to wash their hands of these matters and sit back and say "We have reduced income tax. We have set you free. Our fiscal and monetary policies will take care of these matters. We have strangulated the National Enterprise Board. We have got rid of the artificial jobs." The Government simply will not be able to do this. They will need positive measures, such things as encouraging early retirement of older people—[HON. MEMBERS: "Oh."]—and their replacement by young people as they come along. [HON. MEMBERS: "Oh."] They will need a reduction in working hours, new training, short-time working measures. All these things will have to be considered by the present Government, whatever the state of euporia of their Back Benchers at present. As the Session and as the years wear on, they will find that they will have to come to grips with these problems. They will not be able to contract out of them, as they have been doing or as they say they are doing.

What is so out of date about the Government's conception of their role is that it is so negative. I forecast that they will need to intervene much more than the Queen's Speech indicates. Indeed, at Perth only a week after the election, the Prime Minister was forced to give ground on the whole matter of the Scottish Development Agency. Then there is the question of inflation. Of course it must be reduced, but I doubt whether monetary and fiscal policies alone will be sufficient.

We know that the Government have no intention of influencing the level of settlements in the private sector. How could they do so after all that they have said in Opposition? But I wonder how long that attitude will persist if we get large pay settlements of 15 per cent., 20 per cent. or 25 per cent., thus weakening the competitive position of our overseas industries. The Government are faced with some big pay settlements, especially in the public sector. The risk is that these will be used as a reason for a new series of high wage claims in the private sector. Of course, the Government have added to their own difficulties by their pledges and actions on police and Service Pay.

There are two sets of consequences that the Government now have to face, because these actions will add to their difficulties, not only with the private sector but also with other public sector claimants who will ask that they should have the same treatment. What answer will the Government give to the teachers about the staging of their settlement, or to the local authority manual workers, with whom agreement had been reached, or to the nurses, or the ambulance men, or the hospital workers, or the Civil Service? Will they receive the same treatment as has now been given to Service men and the police? If not, on what logical grounds are they to be denied? How will the doctors and dentists fare? What is the Government's attitude to the independent Standing Commission on comparability? Despite their earlier hostility, I urge them not to disband it.

As to the private sector, the Government's main hope lies in an understanding with the trade unions if they are to avoid industrial unrest. I warn the Government that reductions in income tax, as we have seen from our own experience, are not likely to influence the level of wage claims, especially if the inflation rate is added to by the Government's actions of increasing VAT and other duties in the forthcoming Budget.

But it should be said, and I want to say it now, that some of these public sector claims and settlements, which will add to the Government's difficulties, represent what is called "catching up" with the private sector. This principle is deeply rooted in people's thinking and in the thinking of the trade unions and their members, for good or for ill. The conclusion that I draw from this, and I want to state it clearly, is that these cases, where they represent a "catching up", do not give grounds for basing further claims in the private sector on such public sector settlements. They ought not to be used in forthcoming pay negotiations as an argument, otherwise we shall have the circular inflation moving up and up the whole time like a spiral staircase. These are cases where in my view the public sector is catching up and, therefore, it should not be used in an attempt to build new private sector claims on top of it.

As to the comparability cases, do the Government accept the principle? Again, they will find this deeply embedded. If they do not accept it, they ought to tell us what principle they intend to substitute. If the right hon. Lady is wise, she will seek an accommodation with the TUC on these matters. Let me add that they are much more important than the largely irrelevant legislation on secret ballots and the like that the Government are proposing.

We made an agreement to work to reduce inflation to 5 per cent. in three years. This will need full co-operation. Will the Government try to achieve the same thing? It would be in the country's interest if they were to do so. They are following in our footsteps in preaching the importance of reducing inflation, but so far I can see little evidence of how they intend to achieve it.

Because of some of the issues that have been in front of us, I conclude by saying that there is no doubt that the country was on the right road to efficiency and industrial regeneration. Our exports were up by nearly 20 per cent. in volume from 1974. Imports were up by 5 per cent. in volume from 1974. We had arrested the decline in the United Kingdom's share of world trade after it had persisted for many years. So, whereas in 1974 our exports covered about 75 per cent. or 76 per cent. of our imports, today they are covering 96 per cent. of our imports. [HON. MEMBERS: "What about oil?"] One can make a calculation for the oil, but that does not affect the fact that we were moving fast in the right direction of covering our imports by our exports.

The balance of payments deficit, which was £3½ billion in 1974, has become a small surplus. Conservative Members should not say "No", because the Secretary of State for Industry knows that any increased revenue from oil has been more than offset by the payments to the EEC, and they come into the balance of payments too.

The Secretary of State for Industry (Sir Keith Joseph)

indicated dissent.

Mr. Callaghan

Yes, that is so. The gold and foreign currency reserves are three times what they were in 1974. We now have a strong exchange rate. The gross domestic product grew as fast last year as anywhere in Europe. The inflation rate has been much reduced. Unemployment is steadily going down, although it is rising in a number of European countries at the present time. There was a real increase of 20 per cent. in pensions during the lifetime of the last Government, as well as help for the disabled. There were half the number of days lost in strikes during the lifetime of the last Government as in the lifetime of our predecessors. The crime rate was down last year, and police numbers were substantially up—by more than 8,000. In the country as a whole, over 100 new hospitals were built. There were more than 5,000 more doctors and 45,000 more nurses. These are the things that were done by the Labour Government.

The society that we left was one in which we were making considerable progress on the economic front. Yet at the same time we were able to care for people as we did it. The society which the Conservatives now wish to create is "What is in it for me?" They say that they wish to unite the country, but their measures divide it. In health, pay beds will mean that those who can afford to pay will get treatment faster than those who cannot. Is that a way to unite the country? In education, they plan to separate off the brightest, and so perpetuate and accentuate the differences between them and the rest. To the age-old question "Am I my brother's keeper?" the answer is "No. What is in it for me?" That is the test of a divided country, and that is the way in which they are now proceeding.

Therefore, we have no confidence that the Government's measures will unite our people, nor will they make British industry more efficient. They are purely negative and sterile. This period of Tory rule will be a brief interruption, and then we shall resume the march forward. We shall press Ministers for their plans on these matters. We know that the tide of events will gradually bring a sense of realism and reality to the Conservative Benches when the post-election euphoria has disappeared. We shall use the opportunity in order to ensure that the country understands that this negative and divisive approach by this Government will not succeed.

3.38 p.m.

The Prime Minister (Mrs. Margaret Thatcher)

I join with the Leader of the Opposition in congratulating my hon. Friends who moved and seconded the humble Address. My hon. Friend the Member for Newcastle upon Tyne, North (Sir W. Elliott) has represented his constituency for 22 years, and it is a matter of great pride with him that he has always taken part in every debate on North-Eastern matters. The matters that he raised, particularly unemployment in his own region, are ones about which he has occasion to know the heritage left by the last Government. I share my hon. Friend's views that in this election campaign a very large number of young people came our way and supported the Conservative cause, believing that it was the only one that would give them the opportunity for the future.

I greatly enjoyed the speech of my hon. Friend the Member for St. Marylebone (Mr. Baker). If all his contributions are to be of such high quality, I am extremely glad that he has retired from the bowling at Prime Minister's Question Time. I listened carefully to his Right and Left and concluded from some of his remarks that he considers that I am in the extreme Centre. I shall watch with great interest the success with which he treads the straight and narrow path between rebellion and sycophancy. I am sure that he will be extremely successful.

The right hon. Gentleman the Leader of the Opposition, after one or two remarks at the expense of my right hon. and hon. Friends, returned to his customary hostilities. As he agreed, in our party there are a lot of outstanding Members on the Back Benches. I listened carefully to what he said on foreign affairs, as of course one listens to the advice of any previous Prime Minister. The right hon. Gentleman will, however, expect me to take a similar course as Prime Minister to that which he took, namely, to consider matters afresh and to bring one's own judgment to bear on them. I am sure that that is what he did, and that is exactly what we shall do on the serious matters that he raised.

The right hon. Gentleman particularly asked me about the continuance of the existing programme for overseas aid. He knows full well that when a new Government look at public expenditure commitments, few programmes are exempt from that search. As is my custom, I shall be absolutely candid. That programme is not exempt. I remind the right hon. Gentleman that his programmes led to the biggest borrowing that this country has ever known and left the biggest debt of any Government round the necks of our children. The amount spent on interest on public debts this year is more than the amount that will be spent on the education programme or the health programme. That is the right hon. Gentleman's legacy. He commented that perhaps my right hon. and learned Friend the Chancellor was looking a little mournful. If he is, it is because of the great problems that the right hon. Gentleman's Government have left us to solve, including the large numbers of post-dated cheques.

I expect the right hon. Gentleman to continue to put the case in which he believes, but I gently remind him that that case suffered a severe defeat at the hands of the electorate, who thought that it was a time for change and new policies. A number of right hon. and hon. Gentlemen opposite are dashing into print on the reasons for that defeat. The right hon. Member for Stockton (Mr. Rodgers) said in The Guardian yesterday—

Mr. Dennis Skinner (Bolsover)

Praising the Left.

The Prime Minister

I believe that he had every justification for flaying the Left. The right hon. Gentleman said this of his own party: The party in opposition must offer a more positive appeal, especially if it is to capture the middle ground of politics. It is a pity that he did not have a word about that with the Leader of the Opposition before the election. If he had, the Leader of the Opposition might not have fought his entire campaign on a negative attack on Conservative policies. In any case, I welcome and agree with the implication in what the right hon. Member for Stockton said. The Conservative Party has captured and now occupies the middle ground of politics. We do so because we are offering people what they want and the policies that they instinctively favour and desire. Well may the right hon. Member for Stockton ask: What is wrong with choice and diversity? Why should enterprise and opportunity be dirty words? I shall tell him. There is nothing whatever wrong with choice and diversity. They are central to Conservative policies and are precisely what Britain wants and needs. Enterprise and opportunity have become dirty words in the Labour Party because the Opposition have allowed Socialist ideology to blot out common sense and the economic realities of life. Far from stamping out enterprise and opportunity, we shall foster and increase them because we know that without them the economy will wither and die.

The right hon. Gentleman finally continued in his article: Above all the Labour Party has let the idea of freedom be filched. We agree with him, but was that not part of the strategy of so many of his hon. Friends, steadily to increase the power of the State and erode that of the individual and gradually to substitute the politicians' judgment about what the people should have for what the people themselves wanted? That resulted in higher taxes, higher public expenditure, at the expense of private expenditure, increasing State ownership, increasingly detailed controls through employment and prices legislation, and the determination to keep people renting council houses rather than owning them.

Suddenly the people rumbled what was happening. The conscientious citizen under the Labour Government was not getting a fair deal; people would not achieve their ambition of home ownership from a Government dedicated to extending their powers over citizens' lives; public ownership was a misnomer, because the public did not own any of the nationalised industries and could not get at those who ran them. People realised that they got a better deal from competition than from State monopoly; that Britain's economic decline had something to do with the fact that the skilled did not get fair differentials and the exceptionally talented were not allowed fair rewards; and that the full magnitude of our decline had been concealed by North Sea oil. They also knew that the unfortunate members of society cannot be sufficiently helped unless opportunities are given to the able.

The choice before the people was to take further strides in the direction of the corporatist all-powerful State or to restore the balance in favour of the individual. The Labour Party stood for the former. We offered the latter. The difference is clear-cut, and we steadily put it across during the campaign. It was indeed a watershed election. The result was decisive, with a difference of about 2 million votes between the two major parties, which was the largest difference since 1935.

The Gracious Speech sets out some of the policies designed to implement the views that we expounded in the election. I shall examine the proposals under five heads: first, to restore the economic balance of society; secondly, to restore choice; thirdly, the law and order provisions; fourthly constitutional matters; and, lastly, overseas and defence.

On restoring the economic balance we start from a poor base. For almost four years there have been well over 1 million and sometimes as many as 1½ million unemployed. Recent improvements offer no hope of long-term recovery, and many job creation schemes are temporary. The problem is not one of creating new artificial jobs but of creating genuine new jobs. Over the past five years the economy has hardly grown at all. Prices have more than doubled, and inflation is once again in double figures. The current inflation rate of 10 per cent. is 10 per cent. on double the prices that existed five years ago.

How is society to be improved? By millions of people resolving that they will give their own children a better life than they had themselves. That is the true driving force of society—the desire of the individual to do better for himself and his family. For too long individuals have been unable to benefit their families sufficiently from the fruits of their efforts. That truth pervades all too many areas of our national life. It affects management's willingness to take on responsibility. It reduces the readiness of business men to bear extra risk. Just as serious are the consequences for those at the bottom of the income scale, where an extra pound earned can be lost in tax and by the withdrawal of means-tested benefits.

During the election campaign the then Prime Minister tried to give the impression that our tax reliefs would benefit only those in high income groups. I wonder whether he knows how many people on very low incomes, wages and pensions bear quite a high burden of tax. He does not, and they do. I well remember coming across one person during one of my walk-abouts—[Interruption.] If some hon. Members kept more contact with real people they might know more about this sort of thing. This lady was a pensioner of 64, with an income of £25 a week, and she was paying £1.15 a week in income tax under a Labour Government. That is the kind of person who will benefit from the reductions in income tax that we propose. There is also a need to give an incentive all the way up the scale—to those on low incomes, those on differentials and those on management earnings. We shall hope to benefit all of those by a reduction in direct tax.

Our present system of taxation seems almost designed to discourage extra work, extra skill and extra responsibility. People have preferred to reduce their tax bills by working less hard than to increase their earnings by working harder. The first important step in restoring incentives is to reduce the excessive burden of direct taxation. The Chancellor will make a start on this when he introduces his Budget four weeks today on 12th June. In the meantime, I give a firm assurance that we regard the reduction of income tax as an objective of the highest priority.

Further, the Government will do everything possible to encourage free enterprise, particularly the small business sector, which is the source of genuine new jobs. Our policies will be founded on a firm belief in the need to promote profits and profitability, because profits are the main stimulus to enterprise and the key source of funds for new investment and new jobs. That is why we shall bring forward measures to amend those parts of the Employment Protection Act which discourage firms from creating new jobs. We shall bring forward measures to reduce the damaging consequences of the existing price controls and measures to increase competition.

We shall introduce proposals to increase the powers of the Director General of Fair Trading and the Monopolies and Mergers Commission so that they can deal with prices in conditions where competition is limited. We shall also introduce proposals—

Mr. John Fraser (Norwood)

It takes the Price Commission about three months to look at a monopoly. When the Monopolies and Mergers Commission looks at a monopoly, it takes about three years to do so. How does the Prime Minister square a policy of abolishing the Price Commission with her ideas for a greater degree of competition? Surely it will mean less.

The Prime Minister

The hon. Member makes a very good case for strengthening the Monopolies and Mergers Commission. I am surprised that he did not do it.

We shall introduce proposals designed to enable the Director General of Fair Trading to examine the abuse of monopoly power by nationalised industries.

We have carried out a review of the workings of the Price Commission and have decided that its impact on inflation has been negligible, as is shown by the doubling of prices under the previous Government. We believe that the Price Commission has destroyed jobs and new investment as well as imposing extra burdens on industry. The Bill that puts forward proposals for strengthening competition will also provide for the abolition of the Price Commission. The Secretary of State for Trade will give further details shortly.

We are concerned not only to see a healthy free enterprise sector but to increase its size. Too narrow a base for the wealth-creating part of the economy will restrict the growth of the economy as a whole. We shall therefore make a start in extending the role of free enterprise by reducing the size of the public sector—it needs reducing—and by making economies in public spending. We shall examine the role of the National Enterprise Board and require it to dispose of certain holdings in profitable companies. My right hon. Friend the Secretary of State for Industry will bring forward proposals to amend the Industry Act 1975 during this Session. We see no justification for extending public ownership through the NEB into profitable areas of manufacturing industry.

I turn to the second theme—that of restoring choice to the individual. That choice was progressively diminished during the lifetime of the last Government. Many, many people wish to see choice return, whether it is choice over how they spend their own money or more choice in housing and education, and some choice in health. During the election campaign many people said that at least the Conservative Party gave people choice and that this was quite different from the other party.

I turn first to the question of choice in housing. Thousands of people in council houses and new towns came out to support us for the first time because they wanted a chance to buy their own homes. We will give to every council tenant the right to purchase his own home at a substantial discount on the market price and with 100 per cent. mortgages for those who need them. This will be a giant stride towards making a reality of Anthony Eden's dream of a property-owning democracy. It will do something else—it will give to more of our people that freedom and mobility and that prospect of handing something on to their children and grandchildren which owner-occupation provides.

We will also give council tenants who do not wish to buy their own homes, and want to go on renting, additional rights and safeguards, and we shall take action to halt the decline of the privately rented sector. Our new concept of short-hold tenure will encourage new letting of empty property. We shall also take steps to tackle the land shortage for new building. We shall speed up and simplify the planning system and we shall repeal the Community Land Act. We shall substantially increase choice in housing.

Choice in education was another very important election issue, particularly in crowded urban areas, where the main worry of many parents was how to get a good education for their children. Many felt that they were not getting it. We shall end as quickly as possible all the measures taken by the last Administration to force local education authorities to reorganise their schools along comprehensive lines. Those authorities that still have grammar schools, technical schools and smaller secondary schools may choose to keep them. Those that wish to stay comprehensive will also be free to do so. They will have the choice and the freedom to do so, and the parents will also have the freedom. We shall ensure that parents' wishes are taken into account as far as possible in the choice of schools for their children. At least we shall enlarge that freedom. The Labour Government did nothing but reduce it.

Although the education service is often described as being free, it is hardly free at all because it is paid for out of all our taxpaying and ratepaying pockets. The cost is significant. The average yearly cost of educating a child in a primary school is now £324. In a secondary school for children below 16 it is £455, and in the sixth form, £800 per pupil. The education service must be truly accountable to parents' and taxpayers' wishes. We shall see that that is so.

We shall also extend the principle of choice in education by introducing a scheme to help talented children from less well-off homes to attend certain fee-paying schools. Their abilities entitle them to an education suited to their talents, and they should not be denied it because of dogma. We shall fight to improve education standards. We shall have to make better use of our resources and schools will need to have clear aims and pursue them with vigour. Greater choice and higher standards will be our aims in education.

We shall also work to improve the use of resources in the National Health Service and to simplify its administration. [HON. MEMBERS: "Oh"] I expected that. Labour Members have been complaining about this matter for five years, and have done nothing about it. Also, I have great sympathy with the cause of small local hospitals and hospitals with a special role, such as the Elizabeth Garrett Anderson hospital. There is no such thing as a free service in the Health Service. It must be made more responsive to the needs of patients. Therefore, in those ways we shall extend choice and diversity—matters that have been diminished during the lifetime of the Labour Government.

Mr. Dick Douglas (Dunfermline)

The right hon. Lady spoke earlier of real people. On Saturday one of my constituents spoke to me about the matter of choice in the Health Service. She told me that the provision of a wheelchair that had been prescribed for her husband had been frozen, awaiting the decision of the Government. Will she tell me how I should reply to that constituent in the matter of choice?

The Prime Minister

I am astonished that the hon. Gentleman did not obtain a wheelchair for his constituent before the election. It is amazing that he should complain just afterwards.

I turn to the third head, namely, freedom under the law. In recent years the Government have tried to do too much of what they should not do, and failed to do what they should do. The people must be able to look to the State for protection from crime, otherwise the whole basis of a free society is in danger. They should also be able to look to the Government to support the judges in their decisions. The battle against crime will be pursued with relentless vigour and total commitment. That is why the first action of the new Government was to implement immediately and in full the recommendations of the Edmund-Davies committee on police pay. That was an earnest of our intention to back the police in the war against crime. We must have a strong and experienced police force.

We shall also bring forward proposals to strengthen the powers of the courts in dealing with young offenders.

Mr. Clinton Davis (Hackney, Central)

Does the right hon. Lady intend to refer to an extraordinary omission from her party's manifesto and the Queen's Speech, namely, the problem of the inner cities? In particular, will she describe her proposals in regard to the existing partnership schemes? Are they to be enlarged, as I believe is necessary, or what?

The Prime Minister

Whatever the hon. Gentleman's policies on inner cities may be, they clearly have not been successful. I have been talking for several minutes about small business, which is vital to inner cities, about education, which is vital to inner cities, about the Health Service, which is vital to inner cities, and about housing, which is vital to inner cities. It is those policies that are far more likely to revivify our inner cities than the giving of subsidies without sufficient consultation with local people, which was the policy followed by the Labour Government.

Mr. Guy Barnett (Greenwich)

I wish to press the right hon. Lady on inner city policy. That policy was initiated only a year and a few months ago. Because we have not yet seen results, is it not wrong to sit in judgment on a whole range of policies initiated by the Labour Government?

The Prime Minister

The Labour Government have been in power for 11 out of the last 15 years. Those policies have had a long time in which to be tested, yet where one finds poverty in inner cities, there one finds that Socialist government has operated for many years. That may have happened because Labour policies did not give sufficient care and attention to the personal freedom and dignity of individuals. Labour tried to impose the will of the State on the people when the people wanted something totally different.

Under the heading of the rule of law, I wish to deal with the law as it relates to trade unions. We accept that a strong and responsible trade union movement must play a large part in our economic recovery. Government and public, management and unions, employers and employees, all have a common interest in raising productivity and profits and in improving real standards for everybody.

The crippling industrial disruption that hit Britain last winter in the period of office of the Labour Government had several causes. They were years with little growth in production, rigid pay controls, high marginal rates of taxation and the extension of trade union power and privileges through the Acts of 1974 and 1976 passed by the Labour Government.

We shall introduce a Bill to make three changes in the existing law. First, the right to picket will be limited to those in dispute picketing at their own place of work. Secondly, we shall amend the law on the closed shop so that those arbitrarily excluded or expelled from any union are given the right to appeal to a court of law—a right that the Labour Government took away from them.

Existing employees and those with personal convictions against joining a union will be protected. If they lose their jobs as a result of a closed shop, they will be entitled to full compensation—compensation that they did not obtain under the Labour Government.

Thirdly, we shall provide public funds for postal ballots for union elections and other important decisions. Every trade unionist should be free to record his decision without others being able to watch or take note. We believe that the great majority of trade unionists will overwhelmingly support these changes.

Mr. Denis Healey (Leeds, East)

In that case, will the Prime Minister say whether she has dropped the proposal to rob the families of people on strike of social security benefits—a proposal that was opposed by the Association of Conservative Trade Unionists and castigated some years ago by her right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) as conveying the image of Mr. Gradgrind and Mr. Bumble?

The Prime Minister

Nobody proposes to rob families, to use the language of the ex-Chancellor of the Exchequer. We are entitled to expect the union funds of those who go on strike to make a greater contribution while people are on strike, as they do in many other countries. That proposal is not specified in this Gracious Speech. This is the Gracious Speech for one year. There will be four other years, and in case the right hon. Gentleman should try to circumscribe us as to when we should go any further. I must tell him that anything that we do will be covered by the famous phrase: Other measures will be laid before you. Those I have given are specific undertakings that my right hon. Friend the Secretary of State for Employment is pursuing with the unions and hopes to introduce in a Bill before Christmas. In these ways we shall restore the balance between the power and responsibilities of trade unions.

Mr. Kevin McNamara (Kingston upon Hull, Central)

rose—

The Prime Minister

I will give way to the hon. Gentleman, but after that I must get on.

Mr. McNamara

Will the right hon. Lady define where is the "place of work" of a lorry driver?

The Prime Minister

I have given considerable thought to that. I believe that the legislation will define it. I know what the hon. Member for Kingston upon Hull, Central (Mr. McNamara) is suggesting—that the lorry is an extension of the premises. That would depend upon whether the legislation referred to premises and premises only. I doubt very much whether premises could be construed as a lorry. Doubtless the hon. Gentleman will take a considerable part in the legislation, but as the Bill has not come before us yet I doubt whether he can consider whether all matters have been defined.

Mr. McNamara

You said so.

The Prime Minister

No, no. I am a tax lawyer, and the nature of trade was never defined in tax law.

I turn to constitutional matters, upon which the right hon. Gentleman remarked. We shall ask Parliament to approve the orders repealing the Scotland and Wales Acts. We shall do nothing to jeopardise the unity of the kingdom. We shall initiate all-party discussions aimed at bringing government in Scotland closer to the people. We shall give Parliament an opportunity to consider ways of improving its scrutiny of Welsh affairs.

The Gracious Speech sets out the Government's objectives for Northern Ireland. We shall maintain the union between Great Britain and Northern Ireland for as long as that is the wish of the majority of the people in the Province. We shall give the strongest possible support to the security forces in combating terrorism and in bringing before the courts those responsible for criminal activities. There will be no amnesty for convicted terrorists.

Politically, the Government's most urgent task is to find a way to restore to democratically elected representatives of the people of Northern Ireland a substantial measure of control over their own affairs. As we all know, this will not be easy but it is an aim we must pursue.

I turn to defence and overseas matters. We give priority to defence because security is essential to our survival as a free nation. The quality of any system of defence depends, first, on the troops who man it. That is why we pay tribute to the men and women in our forces and the job that they do for us all. That is why, in our first days in office, we have fulfilled our promise to bring up their pay to the level recommended by the Armed Forces Pay Review Body. That will go a long way towards stopping the critical outflow of skilled manpower from the Services.

Despite the pressure on our resources and our determination to control Government expenditure, we shall affirm Britain's commitment to NATO. We shall ensure that the British nuclear forces, like their French and American counterparts, remain a factor that cannot be ignored in the calculations of a potential aggressor.

I am glad that the right hon. Gentleman noted what I said about Europe. I noted that he had been complaining a great deal about the terms that he had renegotiated and how he had handled them during the last five years. We believe that a strong Britain in a strong Europe can play a crucial part in the future of the West. As I explained recently to our German partners, we see no contradiction between a vigorous and effective membership of the European Community and vigorous and effective pursuit of Britain's interests within the Community. I am sure that other countries have the same approach.

There is nothing wrong in finding, after a certain number of years, that policies need to be changed to meet new circumstances, or that anomalies which flow from them need to be corrected. Such necessary changes must be made by agreement among the member Governments. In making those changes we shall not undermine the Community—we shall make it better able to serve the common interest and to be fair, just and reasonable to all its members.

The right hon. Gentleman referred to the problem of Rhodesia. I should like to address some remarks to that very serious problem. The Government welcome the major change that has taken place in Rhodesia as a result of the recent elections and the emergence of an African majority Government. It is our objective to build on that change to achieve a return to legality in conditions that secure wide international recognition. We have sent a senior Foreign and Commonwealth Office official to Salisbury this week to have discussions with Bishop Muzorewa.

We shall need to consult many people in the coming days and weeks, including our own partners in the Nine and in the Commonwealth. The United States Government should be one of the first to be consulted in view of their involvement in the Rhodesian question. Therefore, I am particularly glad that Mr. Vance will be here next week for talks with my noble friend the Foreign and Commonwealth Secretary.

I have seen my noble Friend Lord Boyd following his return from leading a group of observers at the Rhodesian elections. He and his colleagues are completing their report. I expect to receive it tomorrow and we shall hope to publish it. We must and will recognise the realities of the present situation in Rhodesia. We must and will take into account the wider international implications. I assure the House that we intend to proceed with vigour to resolve the issue.

The programme that I have outlined, of measures in both domestic and foreign policy, is a programme for action for a 17-month Session of Parliament. Our priorities are to restore the balance in our economy, to restore the balance between the individual and the State, to promote the freedom of the individual under the rule of law, and to defend our interests wherever they are challenged.

These are the policies that we submitted to the people. The path that we now take is the path that the people have chosen.

4.17 p.m.

Mr. David Steel (Roxburgh, Selkirk and Peebles)

It falls to me to be first to congratulate the Prime Minister on her first political address to the House since taking office. I do so very warmly. She will know that she has enormous personal good will from people throughout the country as she embarks upon her difficult and responsible task. It is enormous personal good will that she enjoys in this House, even from her opponents. We wish he well in her role.

During the election campaign there was a great deal of talk about the spirit of the family. I suggest to the Government that their success at the end of their period in office will be judged by the extent to which the spirit of the family has prevailed. The Prime Minister is, in a sense, the new housemother to the nation, and I believe that she will have to look at some of the election results to assess which path the Government should take.

Until now, nobody has mentioned the marked disparity between the political swings in the South and in the North of the country. No Government can ignore that phenomenon. I believe that the Government should also bear in mind their percentage share of the total vote. I remind the Prime Minister of her words on 23 March 1977 when she was castigating the previous Administration. She asked by what right they governed: The right of a minority Government; the right of a supposed mandate based on 38 per cent. of the votes cast or 29 per cent. of the electorate?"—[Official Report, 23 March 1977; Vol. 928, c. 1285.] The Government have obtained a convincing majority in the House, but the Prime Minister must be aware that her criticism remains: that the Government had 45 per cent. of the votes cast or only 33 per cent. of the electorate.

The Prime Minister referred to the gap between the Conservative Party and the Labour Party in the election results, but she must be aware that her Government enjoy the lowest share of the popular vote of any post-war Conservative Government. To ignore that fact and to go on blindly with some of the thinking done before the election by some of the backwoodsmen of the Conservative Party would be a great mistake.

I cannot let the occasion pass without referring to my party's role in the election campaign. One of the Prime Minister's great heroes is Winston Churchill, and she may remember that after the 1950 election Sir Winston referred, in one of his first speeches in the House, to the basic injustice done to a body of 2 million voters who found that they had elected only nine Members. I am entitled to recall that statement and to say that the injustice is surely all the greater when more than 4 million people have seen only 11 Members returned for their votes.

I do not propose to allow the issue to go by default. Other hon. Members who have obtained their majorities may mutter arrogantly about it, but I believe that the issue will not go away, and I hope that in the Government's dealings with the Liberal Party they will realise that we speak not for 11 individuals on this Bench but for that body of opinion totalling more than 4 million people.

One topic that is not stressed in the Queen's Speech is the whole question of the reform of government. I found much of what was written by leading Conservatives in Opposition quite exciting. For example, the Lord Chancellor wrote a great deal about the possibility of a Bill of Rights, a new constitutional settlement, reform of the House of Lords, and so on. Of course, the Prime Minister may say that this is a Queen's Speech for only one Session, but I hope that these issues will not be allowed to go away and that reform of government, starting with reform of the House's procedures, will be proceeded with. We shall certainly give that all the support and encouragement that we can.

We will participate in the talks on devolution, and we hope that the Government will bring into the ambit of the discussions on Scotland not only the Health Service structure, to which reference has been made in relation to England and Wales, but the local government structure.

On tax reforms and encouragement for small businesses, I think that we shall find ourselves supporting much of the Government's thinking, but my party is concerned about the vagueness of the Government's proposals—we await the details—on the role of the National Enterprise Board and the Scottish and Welsh Development Agencies. These latter have not been mentioned in the Queen's Speech, and I hope that that indicates that their work will be allowed to go ahead unfettered.

It is a pity that the Government are embarking at this early stage on the threat to sell profitable parts of our nationalised industries. Great damage has been done to our economy as a whole by the continued argument about where the boundary ought to be between the public and the private sector. That ought not to be a matter of political doctrine. It should be approached in a much more pragmatic spirit. The task of a Government is to ensure that nationalised industries are as profitable and efficient as possible on behalf of the people and that private industry flourishes. Conducting the argument around moving the boundary between the public and the private sector, as Governments of both parties have tended to do, has been deeply destructive to our economy for quite some time.

One of the greatest weaknesses in the Queen's Speech is the reference to responsible pay bargaining. The Government will live to regret, as have previous Governments, statements made during the election campaign about there being no need for a pay policy and the hope that responsible pay bargaining will somehow result in equity and satisfaction throughout the land. That has not proved to be the case in the past, and I say at the start of this Session that it will not prove to be the case in this Parliament.

The proposals for the Health Service and for education are potentially socially divisive. I can think of nothing worse than saying to bright pupils in the State education system that they have proved their ability and are bright and therefore deserve to get out of the "slums" of education and into the fee-paying sector. Surely the Government should be concentrating on improving standards in the State system rather than on dividing us still further.

The same is true of the health services. I do not want to live in a Britain where we have two standards of education and health services—a good one for those who can afford it and a rotten one for the rest. That must not be the course which the Government pursue.

There is no mention in the Queen's Speech of energy policy. I hope that, coming fresh to office, the Government will look with a completely open mind at the need for a more ecological perspective in the decisions that we are taking. There is growing unease in this country about the way we have taken decisions about future energy developments.

I refer in particular to the events of last weekend at Torness. Thousands of people, of all ages and classes, behaving very responsibly, demonstrated on the site at Torness. Decisions there were taken under local planning procedures. A similar inquiry is going on, or may just have finished, in Orkney about the mining of uranium for Torness. That is also being conducted under local planning procedures. We are not approaching these matters in the right way. The public want a more open debate about the alternatives for our energy needs and about conservation policy. If we must have further nuclear energy developments, let us have the arguments openly advanced as to why, for example, it is not preferable to give higher priority to the tidal barrage schemes which have been proposed. That issue is missing from the Queen's Speech, but it is one which the Government, coming fresh to office, ought to be willing to open to public debate.

We must look with some suspicion at the reference in the Queen's Speech to controls on immigration. I hope that the Government will nail the lie that this country has open and easy immigration to its shores. That is not the case, and we know that immigration regulations can be very harsh on families.

If we are to emphasise the virtues of family life, let us not get into the dangerous position of saying that family life is important if one has the right colour skin but that if a person's skin is the wrong colour all the bureaucracy and regulations should be tightened in such a way as to make things more difficult. We shall examine any proposals on that basis, and we shall view them with the greatest suspicion if they will result in greater splitting of the families of those who are already here.

In a sense, this is still a minority Government as far as the public are concerned, but they start, as I said at the beginning of my speech, with enormous good will. We look to them to start to heal the nation's wounds as well as to denounce what has happened in the past.

4.27 p.m.

Dr. Alan Glyn (Windsor and Maidenhead)

I listened with great interest to the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel). Most of us emphasised in our election addresses the importance of the restoration of family life in its widest sense, not only in the schools but at home and the youth services. I thoroughly agreed with what the right hon. Gentleman said on that subject.

In all the years that I have been an hon. Member, I have never heard a Prime Minister's speech that laid down more clearly the policies to be followed as a result of a substantial election victory than the speech of my right hon. Friend. I appreciate in particular that her first priority is defence. Under the last Government, defence was sadly neglected.

My right hon. Friend also emphasised law and order, freedom of choice and giving people what they want. The election was won by the Tory Party because we put to the electors exactly what they want—a change for the better and freedom of choice. People are already beginning to say that we have a new chance and a new approach towards the betterment of our country.

Many were sadly disillusioned by years of Socialism. They were deprived of freedom of choice and it was no longer worth while working. There were no incentives, there was no choice in education, and our people were denied the ability to hand on to their children what they had procured by years of hard work.

I do not wish to take too much time, because I know that many of my hon. Friends also prefer to speak on the first day of the debate on the Loyal Address because that gives us the chance to deal with all the subjects covered in the Speech rather than with only one or two. The defence of this country is vital. In the past 10 years, we have allowed the modernisation and replacement of our nuclear deterrents to fall to danger level. It will have to be one of our top priorities, and an expensive one, to ensure that this is developed in the right way so that we can make our defence contribution to NATO and thus world peace. I am glad to see that that fact is underlined in the Gracious Speech.

I believe that we bear a heavy responsibility, economically, for this weapon. I think that in the course of time we will perhaps get a better contribution from our allies in Europe. I understand that NATO has a different composition from the European Community but, let us face it, the EEC countries are being protected by the nuclear deterrent which we are providing for them.

I shall say little about Rhodesia except to endorse what my right hon. Friend said. Everybody must want an early and just settlement.

In this country we look not only for a decrease in taxation but a shift, as we said in our election address, from direct to indirect taxation, thus allowing people the chance to spend their money as they wish, the chance to save, to invest and to buy their house. I was particularly pleased to see that the emphasis on the purchase of council houses was put firmly and squarely in the Gracious Speech and was reinforced by my right hon. Friend. Emphasis was also laid on the importance of small businesses. Such businesses, as every hon. Member knows from his constituency experience, are being squeezed hard, not only by taxation but by forms, bureaucratic restrictions and State interference. Because of the Employment Protection Act, the small business man is too frightened to take on new labour. The small business develops into the large business. Those are the businesses which ensure that Britain is an economically powerful nation.

We shall ensure that waste is cut out whether in the Health Service or any other Government Department. Waste exists in these services. We can and shall ensure that once again the Health Service becomes efficient There should be no rivalry between private and public medicine. They should be working together for the benefit of the patients. The same applies in education. I was pleased that my right hon. Friend referred to the necessity not only of improving education but of ensuring that children whose parents are unable to provide them with private education are helped. Similarly, freedom will be accorded to local authorities to allow them to do what they like with their own education system. If their electorates do not like it, they can get rid of them. But for heaven's sake let us give them the freedom to have a comprehensive school and to have any other form of education if they want it.

This election, as I fought it, was about one thing and one thing only. It was about the restoration of this country, the freedom of the individual to do what is right within the law, and the restoration of law and order so that people can go about their business without the fear of being attacked. I am sure that under the leadership of my right hon. Friend this country can, and will, use its resources and talents. We shall gradually develop our country. It will not happen today or tomorrow, because it will take time. As my right hon. Friend has said, the blank cheques have still to be paid.

The Conservative Government have started with the police and the Army, which are the foundations of law and order, and I am certain that we shall, at the end of the five years, or however long it may be, be stronger and more respected. Greater opportunities will have been given to our citizens. We shall once again be regarded as one of the great nations in the world, looked up to and envied by the rest of the world.

4.37 p.m.

Mr. Tam Dalyell (West Lothian)

As one who in the last Parliament caused endless problems to the former right hon. Member for Poole, Mr. Murton, I wish the very best of good fortune to the hon. Member for Croydon, North-East (Mr. Weatherill) in his new and arduous task as Chairman of Ways and Means.

I rise to engage the attention of the Prime Minister, the Leader of the House and, indeed, the Secretary of State for Social Services and the Minister of State, who have courteously come here. I imagine, as a result of a telephone call to their office this morning, on one narrow issue which did not feature on the hustings. It is an important issue. nevertheless, to a large number of people in this country. I am referring to those who suffer from kidney disease and may continue to suffer, and to those who are on renal dialysis.

I raise for the eighth time, after six Ten-Minute Bills and a Friday debate on 3 March 1978, the need for what is called the "contracting out" scheme for those suffering from kidney problems. I acknowledge the presence of my parliamentary neighbour and friend the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) because when he was Under-Secretary of State for Scotland in the previous Parliament he took a real interest in this problem.

The basic issue is that when the right hon. Member for Leeds, North-East (Sir K. Joseph) was Secretary of State for Social Services he introduced the kidney donor card scheme. Successive Ministers on both sides of the House have said that if we were to increase the supply of matching tissue we should depend on volunteers who opt in. The trouble is that it is human nature that none of us thinks that an accident will happen to us today. Accidents happen to other people and not to us—at least, not today and not tomorrow. The truth is that however much publicity is given to this estimable scheme the hospitals will never get sufficient matching tissue to do the necessary operations.

The Secretary of State for Social Services will recollect that when this issue came up in the late 1960s my right hon. Friend the then Member for Coventry, East Mr. Crossman, who was Secretary of State, set up the Maclennan committee. That committee recommended the kidney donor card scheme. I am not saying that it was wrong to try it. At first sight it is better, I concede straight away, to have volunteering on a highly personal matter, but the truth is that year in and year out the number of organs donated falls tremendously below what is needed. When the Secretary of State makes his major speech tomorrow, will he tell us what is planned? I understand that we are to discuss health and social services tomorrow.

The Secretary of State for Social Services (Mr. Patrick Jenkin)

I understand that the Opposition are putting up an education spokesman and a spokesman on Scotland. The Secretary of State for Education and Science and the Secretary of State for Scotland will be replying to the debate. I shall not be speaking tomorrow.

Mr. Dalyell

I had hoped that the right hon. Gentleman would be speaking tomorrow. I am taking the slightly unusual course of speaking today to give proper warning that I believe that it would be useful to have the statistics of the shortfall in kidneys and, secondly, to have a statement on the results of the survey, initiated by my right hon. Friend the Member for Norwich, North (Mr. Ennals) when he was Secretary of State for Social Services. It is now in the hands of the Department and was not published during the general election period. Is it the intention of the Secretary of State to publish it at an early date?

Mr. Patrick Jenkin

The hon. Gentleman has caught me on a point which I cannot answer at this stage. We shall look into it, and if it is possible to give an answer during the debate tomorrow that will be done.

Mr. Dalyell

That will be useful.

I do not wish to detain the House unduly on this narrow topic, but there is another basic issue. Some people say that this is a matter for the doctor's discretion, but the Minister for Health will agree that it is asking a great deal of his colleagues, at a time of maximum grief, to ring up the parents of the victim of a motor smash. It is a lot to ask a distraught couple who have been hit by an unexpected tragedy, say a motor cycle crash, "May we have the organs of your loved one?"

After my experience of six Bills and endless interviews and correspondence with people such as Professor Sells and Professor Calne and others who have taken an interest in this subject, I cannot bring myself to criticise a doctor for saying that he cannot ask that terrible and emotive question of someone who is suffering maximum grief. This matter should be decided in cold blood, a long time before a crisis arises. The decision should not be taken at a time of maximum grief. That is why the donor card system, for all its good intentions, cannot provide the amount of matching tissue that is needed.

With her scientific background, the Prime Minister will know that part of the problem is that the organs deteriorate within an hour. Any organ which is older than half an hour is often no use. Time is of the essence. We are talking basically of helping young people who have a long working life before them. It is sad to see so many human organs being destroyed in an incinerator when they could be used to prolong the useful life of those who are faced with death or those who must undergo the agony of renal dialysis. Anything that can be done to allow the decision to be taken without emotion and to allow the matter to be discussed within a family is desirable. During my eight-year campaign I have received many letters from people who at the time of grief have said "No, do not touch the body" but who, later, in the cold light of day, have been sad that they were not able to help someone else out of his or her tragedy.

I do not claim that my suggestion involves a new idea. It operates in Israel and is being tried in France and the Federal Republic of Germany. The Department should ask about German, French and Israeli experience. Someone somewhere must make a decision. It must be taken out of the hands of those whom it is unfair to ask to make a decision, at a moment of high emotion, which they may later regret.

The Government may say that there is a real difficulty, involving public opinion. That was one of the responses to the long debate on 3 March. I know that the Secretary of State has other pressing matters to attend to, but I urge the Minister for Health to read that debate and the interesting contributions from both sides of the House, particularly those of my hon. Friends and Members for Stoke-on-Trent, South (Mr. Ashley), who is associated with my request, for Brent, South (Mr. Pavitt) and for Liverpool, West Derby (Mr. Ogden). Interesting speeches were also made by the hon. Members for Exeter (Mr. Hannam), for Ealing, Acton (Sir G. Young)—who is now a junior Minister—and for Altrincham and Sale (Mr. Montgomery). I recollect that my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris) was also sympathetic. It would be wrong to say that the hon. Member for Ealing. Acton committed his party to the scheme, but there was agreement that the matter should be discussed by the House and that a decision should be reached.

I am not criticising my right hon. Friends in the previous Government for failing to reach a decision. After 3 March they said that there should be a public opinion survey and that in the light of that survey a decision must be reached. Ten years ago I conducted a survey of 1,000 people in West Lothian. It took 42 days. A Member of Parliament can ask questions which others conducting a survey cannot ask. A total of 364 out of the 1,000 people questioned accepted the contracting-out scheme. Another 312 preferred the opting-in scheme, and 108 were against doing anything of the kind. That number included some State registered nurses who said that one must sort out hernias before undertaking sophisticated operations. I understand that sophisticated operations of this kind have a lower priority than some other needs of the Health Service. The balance of 216 were "Do not knows".

At that time there was much public discussion on the matter following the Maclennan committee report. The Government must not assume that an alteration to the Human Tissue Act is unacceptable to the public. There is much evidence, particularly from Mrs. Elizabeth Ward, who has done marvellous work with the BKPA, and from Mr. Margolis of the Yorkshire Post and other journalists who have delved into the issue, of changing public opinion. Public opinion in 1979 might accept that which it was thought not to accept in 1969. This is a non-political issue. It is of considerable importance to many suffering people. I hope that the Government will look at it in that light and introduce legislation to amend the Human Tissue Act.

4.46 p.m.

Mr. Alan Haselhurst (Saffron Walden)

I am delighted that the Government have affirmed a strong commitment to the European Community. This issue was raised often during the campaign. People are obviously troubled about Britain's relationship with the Community. I was able to answer questions satisfactorily by saying that I believed that it was important for Britain's prospects in the Community to have a Government who supported our membership. Such a Government are likely to achieve a better deal for Britain in negotiations than a Government who send to Brussels and Strasbourg representatives whose main ambition is to take Britain out of the Common Market rather than to achieve a good deal for Britain within the Market.

I am delighted that the Government are determined to place the highest priority on improving Britain's position within the Community and the successful development of the Community as a whole. Clearly that is of importance not only to consumers but to the farming community. It is distressing that certain sections of the farming community have been languishing at a considerable disadvantage compared with their European counterparts.

I realise that to put that right speedily involves increases in food prices which might seem unacceptable at first sight. But security of food supplies is of great importance, and since an improvement to the balance of payments is no less important I hope that within this Parliament, if not within one Session, we shall see improvements in the prospects of our farmers.

I am also delighted that the Government are giving top priority to reductions in direct taxation. If one issue prevailed on the doorstep in the election campaign, it was the question of incentives. I have no doubt that that issue played a decisive part in the victory of the Conservative Party.

The feelings of people were expressed in many forms. In factories I met people who said that they were fed up with the level of direct taxation and that they were not prepared to do overtime. They felt that there was no point in working. Employers complained about pressures from the Department of Employment to expand. They felt that there was no point in doing that because of the burdens of taxation.

A change of psychological attitude is needed more than anything else, and certainly more than counting the extra pence or pounds in the wage packet. A psychological difference can come about if we create a climate in which direct taxes are markedly reduced. The Government are absolutely right to put the greatest emphasis on this. It is not just a matter of cash benefits now; it is a question of expectation. If people feel that they are paying less tax on what they earn, they look forward to the future with a great deal more enthusiasm. That is one of the key things necessary if the economy of the country is to improve.

The Gracious Speech contains nothing about reform of the rating system. I fully appreciate the priority of the Government in determining that cuts in direct taxation must come first. I hope that I am right in saying that my right hon. Friend the Prime Minister is extremely exercised by this question and that it has not disappeared off the agenda altogether. Judging by conversations during the election campaign, this was a matter that ranked pretty closely after incentives.

People are really concerned about the level of rates and their uneven application at the present time. One hears this especially from the elderly who are living alone, perhaps in a house that is larger than they require. A certain amount of arrogance is shown by those who suggest that elderly people should move out of the larger houses in order to make room for families. When elderly people have been living in a house for many years, we ought to respect their feelings about staying there. But the operation of the rating system places a considerable burden upon them. I suspect that the burden of rates will increase, for various reasons, and that the problem will not simply go away.

I have always felt in the past that the argument put forward by local authorities, whichever party is in control, that the rating system is the simplest method of collecting their revenue has a certain amount of force behind it. The alternatives always have difficulties attaching to them, and it is easy, therefore, to settle for the stalemate. I counsel Her Majesty's Government to consider that public opinion is likely to get more hostile on this question as the years pass and that the public will be looking for action.

We should not forget that the question of rates is the concern of many people, and that it has been exacerbated by what has happened with water rates. Many letters are being received from people who are upset about the new system of separate billing and about the level of water rates. These are also linked to the basic system of general rates and bear no relation whatever to the amount of water consumed by a household. Perhaps some reform could be considered. It is obvious that metering is impracticable on cost grounds. Therefore we need to look for some other, simple system which might be fairer than the present system. It might be possible to find a system based upon the number of people in a household, albeit that that would change from year to year. Whether that would be a more accurate system than the present system, based upon rateable value, I do not know, but it is worth consideration. We should not forget that people are extremely concerned about this matter.

The Gracious Speech refers in two places to unemployment. It is said that if we create a healthier economy and provide a secure basis for investment and productivity it will bring increased employment in all parts of the United Kingdom". I hope that this will be the case. I am sure that if we encourage small businesses—another specific commitment in the Gracious Speech—it will do a great deal to help provide employment. It is easy to be cynical. One suspects that Opposition Members will soon find that the level of unemployment, which they have swallowed contentedly for many months, if not years, is intolerable to them. I am sure that we shall hear this after a few weeks or months of a Conservative Government. They will soon find an opportunity to lambast the new Government about the level of unemployment, for which the previous Administration bear a very great share of responsibility. But we are determined to try to do all that we can to help reduce unemployment, and I am sure that the opportunities provided for small businesses will have a good effect in this respect.

By talking to people it is easy to take an impressionistic view of what it may mean in global terms. I have met many small employers who will be prepared to take on more people if only they are able to feel that the circumstances are more propitious. It does not matter whether those more propitious circumstances are brought about by a reduction in taxation or a reduction in the administrative burden. The feeling is that they will need to sense a new atmosphere before they will be prepared to take on more employees. It they can do that, it will have a material effect. But timing and geography are very important here. It may be that they cannot create the jobs as quickly as there need to be reductions in manpower in certain other ailing industries. It may be also that the successful expanding small businesses will—inconveniently from a national point of view—be in places where the biggest reduction in employment in the older industries is not taking place, and that there will still be the old problems of mobility.

I hope that the Government will not be too hasty in terminating or restricting some of the schemes that have been brought into being to deal with any excess of people on the employment register over jobs currently available. This is a difficult matter. I am highly critical of some of the schemes that have been introduced, but I still feel that we shall need some residual arrangements to cope with the position while the economy is being brought back to what I would call a recovery course.

Some appalling statistics emerged at the end of the last Parliament. They were contained in a written answer to me concerning the educational and training content of the various schemes that exist, emanating originally from the Holland report and becoming known as the youth opportunities programme. The number of courses in which it was admitted by the previous Government that there was a genuine educational or training content, as defined in the original Holland report, has risen to the dizzy height of 10 per cent. That is an absolutely appalling figure. There is no point in spending many millions of pounds on these schemes in order to keep 90 per cent. of the beneficiaries in courses which are not providing any long-term benefit for the people concerned.

I hope, therefore, that we might look at the question of unemployment—while we have, regrettably, surplus numbers, particularly of young people, awaiting their first job opportunity—and that we shall provide courses of a genuine training and educational nature. This can be done, especially if we give more opportunities to the voluntary organisations to provide these courses. The evidence shows that the real training and educational content which has existed under the YOP has been in those schemes such as training workshops and project-based work experience schemes, rather than the short-term schemes for work experience on employers' premises. I hope especially that we shall take a selective view of the programmes for the unemployed and not just dismiss them altogether.

Finally, I should like to do a little special pleading, Mr. Deputy Speaker. One of the decisions that will have to be taken very early by Her Majesty's Government relates to the siting of the third London airport. I have to declare an immediate interest, in that in my constituency there is not only one potential site but at least two or three potential sites which have been identified by the Advisory Committee on Airports Policy which is presently sitting. To be realistic, I think that the final position will be a choice between Stansted and a coastal site, that site perhaps being Maplin. Until now Maplin has been the only identified coastal site.

It is obvious that expense will be a factor. A cheaper method will be to develop an existing military or civil airport. That will be cheaper than going for what might be considered an environmentally satisfactory airport. My wish is not merely to avoid having a massive two-runway airport in my constituency. The size of airport that is now being discussed should not be placed in rural Essex, rural Bedfordshire, rural Surrey or rural anywhere. The highest priority must be given to environmental considerations if we are to conceive an airport of the scale that is now being discussed. I hope that the Government will not say "In view of costs, to hell with the environment. We must go for the cheapest answer." I suspect that civil servants have been all too ready over the years to propose that point of view to Governments of the day.

The people of Stansted, and those living in my constituency around Stansted, are now in danger of triple jeopardy. The Chelmsford inquiry ruled out Stansted The Roskill Commission also ruled out Stansted, yet the people find that Stansted is still one of the leading contenders for the third London airport. That they find mysterious in what is meant to be a democratic society. I hope that the Government will approach these matters with an open mind and will not base their judgment only on cost factors.

I am grateful for having been called so early in the debate. I welcome the general tone and content of the Gracious Speech and I wish the Government well.

5.2 p.m.

Mr. R. B. Cant (Stoke-on-Trent, Central)

I wish to take as my text Proposals will be brought forward … to restrict the activities of the National Enterprise Board. As with so much that goes on in the House, I feel that what I intend to say will be something of a charade. I make that comment because we know that today the Secretary of State for Industry is meeting the chairman of the NEB, Sir Leslie Murphy. No doubt the right hon. Gentleman will be giving Sir Leslie his instructions about dismantling the board, which will be a great tragedy.

One of the difficulties is that the Government have taken office with, without doubt, some of their dominant spokesmen and heads of Department being theoreticians and academicians, albeit of the highest order. They are people who are dedicated to pursuing a particular line of action despite all practical experience. With all due respect to the Secretary of State for Industry, who is a man of massive intellect, I think that he falls into that category.

A consideration of the history of the right hon. Gentleman shows that he has had an important influence in the general area of monetary policy. He has been a great advocate of monetarism. He has done his best to resurrect the quantitative theory of money so popular in the nineteenth century. I support him in that. However, I find it extremely disturbing that his role as Secretary of State for Industry will be to try to go back perhaps further than the nineteenth century and to adopt an eighteenth century Adam Smith role.

As all hon. Members will recollect, Adam Smith had a great belief in the invisible hand. He thought that Britain's future greatness depended on the dismantling of all the mercantile barriers that stood in the way of trading between nations. During the nineteenth century some of those views were put into operation. Largely as a consequence of our undoubted decline as a great manufacturing nation, Governments have become much more involved in seeking to assist industries and to improve industrial efficiency.

I suspect that we are reaching a watershed in our affairs. It seems that the Government will indulge in a process of dismantling. For example, they propose to dismantle the NEB in the hope that the usual answers to business men's prayers—reduction of legislation, bureaucracy and taxation—will be enough to produce a rapid surge forward in our industrial life and will restore our nineteenth century position. Adam Smith's invisible hand may be one description.

It is my view that that part of the Government's policy is almost totally misguided. Any Secretary of State who believes that he can roll back the frontiers of Government intervention is asking for a considerable amount of trouble. All history is against such a policy. Sir Leslie Murphy said recently that every industrial country has something that is comparable with the NEB. It seems that we are to move backwards in time in the blind belief that Government intervention should be eliminated and that there should not be a dialogue between industry and Government. Other countries are moving in the opposite direction.

Japan is always paraded as the nation of free enterprise, of great trading, financial and industrial corporations that get the job done. No economic, industrial or financial decision is made in Japan—this has been the position since the end of the war—without the Government being intimately involved in the decision making. That system is to be found in lesser degree in other countries. It seems that we are to move against the tide of history if the Government are to adopt a much more arms-length approach to industry and reduce the scope of some pieces of legislation, reduce bureaucracy and diminish the burden of taxation on industry that pays hardly any mainstream corporation tax. It is thought that by adopting that approach we shall achieve a massive revival of industry and industrial efficiency.

As I said at the beginning of my remarks, this is something of a charade. The Secretary of State presumably has already told Sir Leslie what will happen. Whatever Sir Leslie says will not make any difference. When the right hon. Gentleman introduces his Bill to the House, the Opposition will speak against it, but that will not make any difference. However, we must place our views on the record.

If the right hon. Gentleman is to reduce the role of the NEB, that reduction should be sensible and limited. I do not know whether The Economist was right in saying that what he had in mind was that the NEB should be a hospice for geriatric factories. That is a change from the normal technical nomenclature about lame ducks. If the NEB is merely to look at firms such as British Leyland—there are one or two others waiting—what will the right hon. Gentleman do about Prestcold? As I said, the proposal will be a tragedy.

I sincerely believe that the NEB has an increasing part to play in our industrial strategy. It has had failures and successes. What about Fairey Aviation and Ferranti? Perhaps the Minister knows of ICL. That is the biggest non-United States computer operations firm in the world. If it had not been for the NEB, it is doubtful whether ICL would have survived. Such situations will constantly crop up if the NEB has no overall positive role vis-à-vis industrial development.

I wonder what the Minister will do about titanium granules? This is an interesting case. The newspapers have been full of it, presumably because it is interesting and because the Minister must make a decision on the matter. What interests me—apart from the technicalities, which I do not understand—is that Roils-Royce and other firms helped by the NEB require titanium granules. They are an essential part of their production. They are now being produced in the North-East. The only other sources in the world are Japan and the Soviet Union. That might raise problems. The plant is owned by the ICI and IMI. It needs replacing. Although the NEB consulted many industrial firms and many people in the City to obtain finance for a replacement operation, there were no takers. What do the Government intend to do about this?

There is an understanding that IMI and ICI—together with £12 million from the NEB—will replace the titanium granules plant by 1982. It is essential for the future of Rolls-Royce aviation. What will the Minister do about this? Will he turn his back on the problem and say "Let these essential items of strategic value come in from Japan or the Soviet Union," or will he make an exception? These cases will always crop up. I shall not comment in detail on Prestcold. No doubt an hon. Member representing a constituency north of the Border will wish to mention that later.

We must think of the future. We must think not only of difficult current situations and lame ducks. We must think of future strategic industrial development. If the NEB had not existed, I wonder whether Inmos, Insac or Nexos or any other developments that it has in mind would have come into being. No other firm developed an interest in the manufacture of microprocessors and silicon chips. One firm gave up their manufacture in 1962 as it was thought that they had no relevance to our future.

The NEB was not rescuing lame ducks in those circumstances. It was starting a new technology in conjunction with the Americans. Others, such as GEC and Fairchild, are now jumping on the bandwagon. Some people are sceptical. They say the project may lose money. Indeed it may. The present demand for microprocessors is far outreaching the supply. In the United States there is a crisis as there are not enough of them. The estimates were that the demand would double by 1985 and treble by 1990. Already the revised estimate is that it will quadruple by 1985. Surely a valuable lead has been given in this matter. The NEB can establish the most satisfactory case for its future when compared with other institutions.

The trouble is that British business men do not like Government. I do not know whether they like Conservative Governments. Certainly they do not like Labour Governments. They believe that they have an intuitive genius that will lead them along investment paths to a rich future. That is untrue. Events since the war show how dismally incompetent is British management, with some notable exceptions, such as the potteries industry. That is one of the great success stories of the post-war era.

The last two "Neddy" reports on mining machinery and radio communications have drawn attention to the abysmal attitude of our business men to the concept of industrial strategy. I recommend hon. Members to read the reports. It is a question not only of apathy to the work of "Neddy" and the council but of open hostility. As long as British business men demonstrate open hostility to any helping hand held out by the Government or any other institution, the prospects for industry are poor.

If the Minister has not a totally closed mind—I suspect that he has—and if he will not listen to me or any other member of the Opposition, I ask him, before he brings an Industry Bill before this Chamber, to listen to the CBI. It is urging caution. But above all I ask him to read the pamphlet published today by the Bow Group which urges the Secretary of State to think very carefully about any changes that he wants to make to the NEB. I ask him to treat the NEB with care and caution. Will he please look at the interesting idea that, if finance is a problem, he should merge the NEB and the British National Oil Corporation so that the oil revenues can begin to do what we have all hoped and prayed they might—that is, finance the restructuring of British industry?

5.21 p.m.

Mr. Patrick McNair-Wilson (New Forest)

I begin by congratulating you, Mr. Deputy Speaker, on your new post and saying how pleased we are to see you there.

The hon. Member for Stoke-on-Trent, Central (Mr. Cant), who speaks with authority on industrial matters, said one or two things about the NEB and its activities which draw me away from my intended opening remarks. I cannot agree that combining Britain's one great source of revenue for the future with an organisation that spends money as though it were going out of fashion can possibly be in the best interests of anyone in this country.

The hon. Gentleman wisely pointed out that some of the projects in which the NEB is engaged may lose money. A shareholder in a private company can at least get his money out and cash in his shares. The wretched taxpayer is trapped. I know that the cynics talk about Government money being twopence a bucket, but that is one of the reasons why Labour Members are now occupying the Opposition Benches. When I heard the Leader of the Opposition this afternoon ploughing on with the platitudes about what had happened in the last five years, I could see only too clearly why he is now the Leader of the Opposition.

In seven parliamentary elections I do not think that I have met more people who said that they were committed Socialists but that they were voting Conservative. There is a total lack of contact between the Labour leadership and the party members, which will certainly have to be repaired if Labour ever hopes to form the Government again. There is a feeling of betrayal by people who in five years have seen their savings halved and prices doubled. The Leader of the Opposition should have learnt that lesson before coming to the House this afternoon.

The Gracious Speech is full of extremely interesting proposals. I wish to make two suggestions and one appeal in relation to it. The first point relates to the opening sentence, which refers to the fight against inflation. It must dominate Government thinking, just as it dominated the thinking of the last Administration. The problem with inflation is that we are not entirely masters in our own house. There are aspects of our economy that are beyond our control and that may, as a result of issues such as the oil price increase of 1973–74, lead to prices being driven up.

I hope that, bearing that in mind, and in view of what is happening on the world energy stage, particularly in Iran, and what could, as a result, happen in other oil-supplying countries, the Government will not use the taxation weapon against the motorist. I am particularly keen to see reductions in direct taxation wherever possible, but in certain cases we must be extremely selective in terms of where the increases in indirect tax fall.

There are suggestions that my right hon. and learned Friend the Chancellor intends to raise the duty on petrol when he presents his Budget. In a rural constituency such as mine, a car is not a luxury. My constituency covers 440 square miles. A car is essential in such an area, where unfortunately, rural transport services have been run down. A car is relied upon more and more, not merely for visiting the shops or relations but for going to the doctor, collecting a pension, and doing a great many other essential tasks.

I hope that the Government will not add to inflation by taxation of that sort, which would have a direct bearing on industrial costs and lead inevitably to higher prices. I make a special plea that in his first Budget my right hon. and learned Friend the Chancellor avoids going once again for the motorist, who has already carried a very heavy share of the burden. We are told that one day the road fund licence will be replaced by a tax on petrol. That would be wrong. We must share out the burden more fairly. Transportation is too important to carry the full weight of tax changes.

I come next to the proposal in the Gracious Speech for the sale of council properties, a proposition that fulfils for many of us a desire that has resulted from work in local government and elsewhere over the years. I utter, however, a word of caution, in the form of a suggestion. I have always wanted council houses to be sold to their tenants, for one simple and good reason. The average local authority turnover in houses is between 2 per cent. and 4 per cent. a year. For many people on local authority housing lists that means that that is where they will stay for the foreseeable future. My constituency has a long housing waiting list for precisely that reason.

People are given local authority accommodation because they can satisfy certain criteria. Alternatively, people in private accommodation can get an eviction order against them which will ensure them a local authority house. People go into local authority accommodation for various reasons, and local authorities, quite rightly, do not evict tenants for any reason other than they do not pay the rent or that they have a bad record in other respects. Inevitably that means for the vast majority, that once a council tenant always a council tenant if he is satisfied with his home—and why not?

If that is the attitude of people living in local authority houses, they should be allowed to carry that affection for their houses to the point of owning and looking after them, so as to make happy homes for themselves and their families. That, I hope, will provide additional revenues to enable more houses to be built for those on the waiting lists, while removing from the ratepayers the burden of maintaining houses which in many cases are becoming extremely costly to maintain. That policy should go a long way towards solving the housing problem in this country.

I have, however, a reservation to draw to the attention of my hon. Friend the Minister of State who is responsible for housing. In certain areas—there are a number of such areas in my constituency—council houses are dotted very thinly, because of planning restrictions. If all those houses are sold willy-nilly there will be no opportunity to replace them, because the planning restrictions will prevent that. I hope, therefore, that when this legislation is produced it will be sufficiently flexible to avoid local authorities with these problem areas being totally denuded of accommodation and unable to provide new houses because of green belt or other provisions. We require legislation that insists that local authorities prepare a scheme for the sale of their properties rather than specifies that they must sell all the properties that are under their control.

I turn now to the appeal that I wish to make to the Government. I have made my two suggestions about motorists and council house owners in my constituency. Inevitably, at a time like this, one looks at the Gracious Speech in terms of the way in which it affects one's constituents. One part of the Gracious Speech that I am delighted to see refers to a greater ability for parents to have a closer relationship with the schools in which their children are taught. In fact, it states that Legislation will be introduced to ensure that parents' wishes are taken into account in the choice of schools for their children". My constituency comes within the area of the Hampshire county council, which is the education authority. By and large, we have a happy system of education, but there has been an attempt to introduce new changes in the education system, particularly in middle schools. At the moment we are digesting the comprehensive system. I am not running it down. It is going perfectly well, but it is taking a certain amount of digesting. To produce a new scheme of conversion to middle schools in areas that already have enough on their plate with comprehensive reorganisation is far too much to swallow.

Just before the last Parliament was dissolved the Under-Secretary of State for Education and Science gave a ruling, despite appeals made by myself, parents, teachers and others, that middle school reorganisation at Hardley, Holbury and Blackfield, in what is called the Waterside area of my constituency, had to go ahead. That was decided in the teeth of opposition by parents, many teachers, county councillors and others who, as a result of the Minister's courtesy, had been to see her. She had quite rightly listened most courteously to their representations, but in the end, despite what parents and others wanted, she decided that the reorganisation must go ahead.

The point that I make to my hon. Friend, in the hope that he will pass it on to my right hon. and learned Friend the Secretary of State for Education and Science, to whom I have already written, is that, since that decision was taken on 28 March 1979, just before the Dissolution, it would be in the best interests of all in that part of my constituency if it could be reviewed and reversed. I have received a large number of appeals from parents who listened to me during the campaign, read Conservative policy and now see in the Gracious Speech that account is to be taken of parents' wishes. I hope that, through our new Minister, we shall see those words in the Gracious Speech translated into action and that parents in my constituency will see their views properly represented.

Others of my hon. Friends have pointed to the fact that this is a programme for five years. It is a programme with some of the most interesting policies that I have seen since I have been a Member of this House. They are interesting policies, because if they are successful they are likely to change the situation of the people of this nation from being merely the creatures of politicians and officials to having the opportunity to do things for themselves. If that is a success, everyone outside will be thoroughly grateful.

5.34 p.m.

Mr. Dennis Canavan (West Stirlingshire)

The more I read this Queen's Speech, the more I realise what a tragedy it is that Labour's victory in Scotland was not repeated elsewhere. This Queen's Speech represents, as the hon. Member for New Forest (Mr. McNair-Wilson) said, phase 1 of what the Government hope will be a five-year programme to bring about a concentration of wealth and power in favour of the privileged few. As the phases of this programme go on, people will begin to realise exactly what it is all about.

During the general election campaign the Tories bought victory. They went around bribing their rich friends with promises of huge tax handouts. They are now beginning to realise, as they did even before the end of the election campaign—as many of us pointed out—that they had not done their sums right. They now realise that they will have to pay for these massive tax handouts to their rich friends. Therefore, in phase 1 of this programme we have an exercise in public asset stripping the like of which we have never seen in British history.

The National Enterprise Board will be either emasculated or annihilated, as will the Scottish Development Agency and the British National Oil Corporation. The Tories will probably sell off the profitable bits and pieces. They will sell the profitable pieces of aerospace and shipbuilding. They will probably indulge in more selling off of the shares of partly owned corporations, such as BP, or fully owned corporations, such as British Airways. Many of us during the campaign predicted that that would happen.

For example, there were reports of Sir Frank McFadzean, the chairman of British Airways, collaborating with the Tories on the selling off of profitable public enterprises. It was a mistake for any Government, particularly a Labour Government, to give anyone such as Sir Frank McFadzean a job as the head of a publicly owned enterprise, because he and his kind do not believe in public enterprise, as can now be seen by their attempts to sell it off.

The business of asset stripping is not new; the Tories are well experienced in it. Yesterday a report came out from the Department of Trade showing that the Keyser Ullmann Bank, with which the right hon. Member for Taunton (Mr. du Cann) is connected, had been involved, either directly or indirectly, in asset stripping. But the asset stripping outlined in the Queen's Speech is even worse. The asset stripping in which Keyser Ullmann was involved was almost entirely within the private sector, but here we have a type of public asset stripping. That is particularly objectionable, because it means that the Tories will be stealing assets that belong to the public and that it is in the public interest to keep.

We shall see the selling off of public assets not only in industry and the economy but in the Government's housing policy. The Tory Party is bereft of any housing policy, so it struck on this one idea, which is nothing less than municipal asset stripping—the wide-scale selling off of council housing stock.

Perhaps I should declare an interest. I was born and brought up in a council house, and I still live in a council house. Lest Tory Members say that I have no right to stay in a council house, I should point out that I would get more State subsidy through tax allowances if I were to take out a mortgage of £20,000. I think that every MP has the right to live within the community of his choice within the constituency that he represents.

I have always maintained that council house tenants should not be categorised as second-class citizens, yet that is the philosophy underlying this policy. In effect, the Tories are saying that people who live in council houses are somehow inferior to those who own their own houses.

The Prime Minister, in Perth at the week-end, spoke about Sir Anthony Eden's ideal of a "property-owning democracy" and she repeated it today on the Floor of the House. What the devil does that mean? Does it mean that those of us who do not own property have no right to participate in democracy? Are we somehow less human and do we have fewer citizens' or democratic rights than those who own property? That is the kind of thinking that underlies this strategy of municipal asset stripping involving the wholesale selling of council houses.

I firmly believe, and the party for which I stood firmly believes, that people should have the choice either to buy or to rent a house. In our manifesto we had specific commitments. Indeed, even before the manifesto was published we introduced legislation to give extra help to first-time buyers to encourage them to buy a home of their own. It is right that we should give every encouragement to people who want to buy a home of their own, but it is absolutely irresponsible of any local authority to indulge in the selling off of council houses while there is one family, or even one person, on the waiting list. That is something that I hope Labour Members will bring out during the debates on the legislation that the Government intend to introduce.

Immediately one transfers a house from public to private ownership, it means that the future occupation of that house depends simply on free market forces and has nothing at all to do with a fair points system based on need, priorities or anything else. The other danger is that the selling off of council houses will inevitably lead to the deterioration in the standard of council houses, to the extent that it may even mean ghettos. Only the higher amenity council houses will be sold off. What will be left? The council housing stock will consist of second, third and fourth-rate houses.

The hon. Member for New Forest—I am sorry that he is not here—talked about the low rate of mobility or house transfer in the public sector. The selling of council houses would make it even worse. It would mean that young couples in a flat in a multi-storey block, who wanted, say, a semi-detached, villa-type council house would find it impossible to move into a better type of council house because all the best houses would be sold off. They would be chained there, incarcerated possibly for the rest of their lives in a social ghetto. I certainly do not want to see that, but I believe that the policies outlined in the Queen's Speech would lead to that kind of society.

There was not one ounce in the Prime Minister's speech—I do not see anything in the Queen's Speech either—about what is required in terms of a fair housing policy, namely, more investment not only in the private sector but in the public sector to bring about the building of more public sector housing, and, indeed, the improvement of those already in existence. In my own constituency, for example, I can think of the Orlit type of accommodation, in places such as Cowie and Bannockburn. In Kilsyth there are prefabs that require modernisation. There are the damp houses also, in places such as Lennoxtown and Milton-of-Campsie—places of which Government Members have probably never heard. Where are we to get the investment in order to bring about these much-needed construction and modernisation programmes? There is not one iota of investment mentioned in the Queen's Speech, and when the Prime Minister spoke from the Dispatch Box this afternoon she had nothing to say about it either.

The more I think about this matter, the more I feel that it is a tragedy that there is a commitment in the Queen's Speech to kill off the Scotland Act. If we had had a Scottish Assembly, at least we could have given some protection to the people of Scotland in matters such as housing, health and education, to ensure greater opportunity in these important fields. We could at least have had the makings of Socialist legislation and, indeed, more investment in these essential services. What are we left with instead? We are left being governed by this lot.

Early in the referendum campaign it was quite obvious to me that the Tories were deliberately using the campaign to try to bring about the defeat of the Labour Government. They realised that if they could get some over-centralised form of Tory Government it would mean an end of even the minimum amount of Socialist legislation for Scotland until such time as we had the return of a Labour Government. The Tories realised that. It is a pity that some of our own Members on the Labour Benches did not have the nose to recognise it as well. They allowed themselves to be used by the Tories in order to defeat us, not just on the Floor of the House but also by collaborating with the Tories during the referendum campaign. We could have had a much better result in the referendum campaign if it had not been for the fact that some of our people were collaborating with people on the other side of the House of Commons.

It is my opinion that the defeat of the last Labour Government was triggered off by two percentages. The first was the disastrous 5 per cent. incomes policy, which led to the winter of discontent, and the second was the disastrous 40 per cent. referendum rule, which led to the rigging of the referendum and helped to bring about the indecisive result—or, at least, what some people think of as an indecisive result, despite the fact that the majority of the people who went out to vote in the referendum voted in favour of a Scottish Assembly.

I have no sympathy for the SNP. It was warned when it voted against the Government on 28 March in the motion of confidence. It was warned by the Prime Minister, who told its members that they were turkeys voting for an early Christmas. I have no sympathy for them. They committed political suicide. I have no sympathy, either, for the Eric Moonmans of this world, who also lost their seats after voting with the Tories very often on this important issue of devolution.

The people with whom I do have sympathy are other Labour Members whose heads rolled. Oddly enough, it was not north of the border where this happened but in many of the Labour marginal seats south of the border. If the Labour Government had been able to hold on until 7 June or even October, possibly some of these seats would not have fallen. So we have English Labour heads falling as a result of collaboration that took place during the referendum campaign north of the border.

I am glad to see that my hon. Friend the Member for West Lothian (Mr. Dalyell) is present. During the last Session of Parliament he made much play about the famous West Lothian question, which got a great deal of publicity. Let me put a question to him. How is it that the people of West Stirlingshire voted Labour by a majority of over 10,000, the people of West Lothian voted Labour by a majority of over 20,000, the people of Scotland returned 44 Labour MPs out of 71, and yet we are completely governed by one of the most extreme Right-wing, reactionary Governments in history? That is what we are landed with. Downing Street is now inhabited by a fanatical extremist, and our only consolation is that we managed to get rid of that other fanatical extremist, namely, Teddy Taylor, from his seat at Cathcart.

I hear rumours that the right hon. Lady the Prime Minister may be looking for a job for Mr. Teddy Taylor—a quango—despite the fact that we had a great deal of criticism from Conservative Members in the last Session about appointments to such quangos. I brought forward a Bill—I am sorry that in this Queen's Speech a similar Bill is not being thought about—in order to democratise these appointments. I have heard rumours that Teddy Taylor, former MP for Cathcart, is to get a job in the Scottish Development Agency, or be appointed as public hangman or executioner, which is perhaps the same thing, because if he ever got his hands on the Scottish Development Agency it would lead to a public execution of the agency.

The more I think about it, the more I regret the fact that the rest of Britain did not follow the lead given by Scotland. This Queen's Speech is counter-productive to the construction of a fair society. It will lead to the concentration of more wealth and more privilege in the hands of a few people who happen to be friends of the Tories. I hope that we shall fight these policies tooth and nail in the weeks and months that lie ahead. It is a pity that we are in a minority situation. We should reflect on the reason why we are in a minority situation, because at national level there was only one radical fighting the campaign and she happens to be in Downing Street now. The tragedy is that she is a Right wing radical and Britain has taken a radical lunge to the extreme Right as a result of the general election. If we had had the same degree of radicalism at the top of our own party and had given people a vision of a better society, and a better future instead of just complacently stating what we had done over the past four or five years and more or less putting out some kind of conservative approach, I think that more of them would have voted for us.

Mr. Alan Clark (Plymouth, Sutton)

The hon. Gentleman's robust views are well known, and we observe that his majority was greatly increased. But while he is discussing radicalism will he turn his attention to the fortunes of some of his colleagues, particularly those who espouse very extreme Left-wing opinions? In particular, will he turn his attention to the city of Bristol, where two of his colleagues of that persuasion, one of them having an even larger majority than the one in the adjoining constituency, saw their majorities reduced by, I think, three-quarters, whereas a moderate colleague representing a division next door had his majority reduced by maybe 200?

Mr. Canavan

I did not happen to be in Bristol during the campaign. I was too busy working in my constituency. Perhaps the hon. Gentleman would think of my policies as being radical. But I think that I am the only Member of Parliament in Britain who multiplied his majority by almost 30 at the general election. Maybe there is a lesson to be learned there. It was enough to get me back here to fight for radical causes.

It is tragic that despite the good things that the last Labour Government did—they helped the country to endure the worst recession since the 1930s—and the tremendous sacrifices of the people themselves, particularly working people and their families and their trade unions, I fear, when I look at the policies in the Queen's Speech, that perhaps these sacrifices will prove to be in vain.

When I hear the Prime Minister talking about public expenditure eroding the freedom of the individual, it makes me sick. The truth of the matter is the very opposite for many of the people that we represent. If it were not for public ownership and public expenditure, more than half the people in Scotland would not have a roof over their heads. If it were not for public ownership and public expenditure, more than 97 per cent. of the children in Scotland would have no access to adequate educational opportunity. If it were not for public ownership and public expenditure, virtually 100 per cent of the people of Scotland would have no access to an adequate health service.

That is why we believe in public ownership and public expenditure—not for doctrinaire, textbook reasons but because we realise that they mean more freedom and more opportunity for the people we represent. They are their very lifeblood. I hope that in the weeks and months ahead we shall fight to preserve as much of it as possible.

5.53 p.m.

Sir Anthony Meyer (Flint, West)

It is my first and very pleasant duty, Mr. Deputy Speaker, to offer you my congratulations on your election to the Chair, in which I know you will be buoyed up by the admiration and affection of every hon. Member on both sides of the House

It is always instructive to follow the hon. Member for West Stirlingshire (Mr. Canavan). Any speaker on the Conservative Benches must welcome his contributions. They come from someone who, in his own quiet and moderate way did as much to promote the success of the Conservatives in the election as he did to ensure the failure of the Labour Government when they were in office.

I believe that the Government of my right hon. Friend the Prime Minister have made a very good start. The composition of the Government. their balance between the various sections of the party, the content of the Gracious Speech—I very much welcome the commitment to make a success of our membership of the European Community—and, perhaps most striking of all, the masterly assurance displayed by my right hon. Friend at the Dispatch Box today all go to encourage the people that this Government can succeed in their almost impossible task. I say "almost impossible task" partly because of the Government's inheritance of defeatism from the previous Administration but also, perhaps more. because of the rapidly worsening world economic situation, which could not merely worsen but turn into a catastrophe were the example of Iran to spread to other oil-producing countries.

At all events. I foresee no difficulty whatever for myself in giving the Government my total support during the next two years. which will be very difficult even in the unlikely event of things going right, as I see no possibility whatever of, for example, being able to reduce unemployment or even contain it at its present level. I shall feel all the more justified in giving my support to the Government in these difficult times because I consistently supported the previous Government in their opposition to inflationary wage claims, often at considerable cost of popularity in my own constituency and with my own party. Therefore, I feel entirely justified in supporting the present Government, even when they take decisions which may prove unpalatable to my constituents.

Not least among the difficult or unpopular decisions facing the Government is the decision on the future of certain major industries, in which many jobs are at stake, which face contraction, or certainly a failure to expand, because of fierce Third world competition and shrinking markets. Obvously, in this connection the industry that comes to my mind is the steel industry. I accept that the Government—any Government—are faced with the inevitability of having to trim the ambitious 10-year strategy for steel. I do not believe that this strategy is any longer viable.

The previous Government, far too slowly and far too late, had begun to take some of the difficult decisions required for the future of the steel industry, but one decision which they shirked was that on the future of steel making at Shotton. The assumption in North Wales was that the reason was that they were worried about the outcome of the election in the constituency of Flint, East. If so, their indecision paid off; they managed to hold on to that seat. But the decision must be taken.

I make a plea to my hon. Friend the Under-Secretary of State for Trade, sitting on the Front Bench, to press my right hon. Friend the Secretary of State for Industry to give an early decision about the future of steel making at Shotton. The previous Government strung the Shot-ton workers along with fine promises that they would continue steel making until 1982, but those promises were meaningless without the investment to modernise the antiquated open-hearth furnaces. When the Labour Government turned down the proposal to install tandem working in those furnaces, everyone in Shotton knew what that meant. It meant that, despite the pledge to keep steel making until 1982, the rundown would begin immediately after the election if Labour won.

Naturally, I very much hope that even at this thirteenth hours it will yet be possible to reverse that decision. If the principal argument for maintaining a British steel making capacity is the strategic one—with production costs in Third World producers being so much lower than in the West, I believe that the strategic argument is the only one that holds water—the risks of concentrating all steel production at five large plants seem to me unacceptable, especially in view of the poor industrial relations record of at least two of the favoured five.

The case for retaining steel making at Shotton on those grounds alone seems to me to be very strong. But, if, as I fear, it is now too late to deflect the British Steel Corporation's determination to shut down steel making at Shotton, I must warn my right hon. Friend the Secretary of State for Industry that I shall need to be satisfied that steel can be brought to Shotton's modern fininishing lines, which week after week break their production targets, at a cost no higher than that of the steel which has been made in Shotton's own plant up to now.

Under the original terms of the BSC's 10-year strategy, Port Talbot was to have supplied Shotton with hot-rolled coil, but the figures that the Corporation produced to show that coil from Port Talbot could be delivered to Shotton more cheaply than coil made at Shotton itself were totally discredited, so much so that BSC has now had to start again. It is now from Ravenscraig that it proposes to supply Shotton's finishing line. I want to know whether the calculations for Ravenscraig are any better based than those that were made for Port Talbot. I shall be keeping a close eye on this matter. The BSC must come clean with its calculations, which it signally failed to do over Port Talbot.

I cannot possibly give my vote in favour of any scheme which does not guarantee that Shotton's finishing lines will be assured of an uninterrupted supply of hot rolled coil at a cost which will enable those finishing lines to be fully competitive. If Ravenscraig cannot supply, and keep on supplying, coil at a competitive price, I shall press for Shotton to be able to import coil from abroad, if necessary from outside the EEC. The Corporation demands the right to import coking coal, and I believe that it should be allowed to do so. By the same token, the Corporation must itself permit the import of steel where this is essential to keep its own processes going.

The most rational basis for long-term optimism about the future of the British economy is the existence of huge reserves of coal which will be almost intact long after North Sea oil and gas have run out, but these reserves are mostly deep underground. It requires massive investment in sophisticated equipment and the slowly accumulated skills of miners to make sure that coming generations will be able to get at these vast underground reserves. In this connection, European energy policy, for which the Government will surely be working, can be of incalculable advantage in getting support for our deep-mining industry. With or without EEC support, conscious decisions will have to be taken to allocate resources of capital and manpower to the mining of deep coal.

It is far less likely that these decisions will be taken—they will be expensive decisions—if the apparently softer and cheaper option of getting opencast coal is too easily available. We should look far more critically than we have done at the superficial advantages of this method of getting coal. It is not just that it wrecks the environment over a large area. It is not just that it takes good land out of farming when agriculture is by far our most productive industry. The fact is that opencast mining is the enemy of deep mining. It excuses us, as a nation, from paying the high prices necessary to ensure the continued operation of some of our less accessible but immensely rich underground seams.

Thus, in my own constituency it would no doubt be more expensive in the short term to exploit the huge reserves which stretch out under the Dee from Point of Air than to ruin the fine country around Northop by opencast mining. In the long run, I am sure that the Point of Air operation would yield the bigger return. It is up to the Government to ensure that the National Coal Board takes a really long view.

I have always understood that one of the few arguments in favour of public enterprise was that it could take a longer view than commercial capital could afford to take and that it did not require so quick a return. If that is so, let us see the Coal Board taking the long view and resisting the cheap lure of opencast mining. In this, as in other matters, we now have a Government who can take a longer-term view because they have an overall majority and because they want to take a longer-term view. No one who has heard my right hon. Friend castigate the defects of the one generation society, as she so graphically calls it, can mistake her determination that we shall take a longer view of our problems. I believe that the evidence of this determination to take a long view is enough to raise our spirits.

6.4 p.m.

Mr. Stan Thorne (Preston, South)

It is possibly inevitable that in a debate on the Address, immediately following a general election, both the Prime Minister and the Leader of the Opposition should go wide in the subject matter they chose for their speeches. Other speakers have also illustrated that many factors arise when considering a new Address. I shall probably be forgiven if I stray somewhat far from what is contained within the Gracious Speech. I am very much concerned about what is omitted from it.

One can only reflect that the Speech certainly contains very much of what was advocated by the Conservative Party in the election There can be no criticism of that. Whether we should have expected the return of a Conservative Government is a matter for debate. I admit that I was one of those who forecast that it would happen for a number of reasons to which hon. Members have referred.

The Conservative Party fought the election aided by massive publicity and advertising campaign such as only its supporters can create. That does not mean that it was the only explanation for the Conservative victory. It must also be recognised that the activities—or lack of them, in certain spheres—of the outgoing Government contributed to the victory of the Conservative Party. No doubt in other places, not necessarily in this Chamber, there will be considerable scrutiny of the past policies pursued by the Labour Government in the hope that we will learn from our mistakes.

Within the Queen's Speech, reference is made to reducing the burden of direct taxation. That was very much the argument put forward by the Conservative candidate in my constituency and in many other constituencies. Reference is made in the speech to commerce and industry being allowed to flourish. The law on picketing, the activities of the NEB, and Northern Ireland are mentioned in the Queen's Speech. It also refers to housing and health. Time does not permit me to deal with all these points, but I would like to deal with what I consider the most important aspects.

As my hon. Friend the Member for West Stirlingshire (Mr. Canavan) indicated, when we talk about public expenditure we are necessarily talking about the social wage. It is writ large in the Queen's Speech that the Government are going to set about cutting the social wage. Public sector services are to be reduced or paid for directly by users whose direct net earnings are to be increased. In other words, the people will pay more for their local and national social services, whether in housing, health, education, local bus services or such like. If they do not pay more, those services will not exist—at any rate for them. There is nothing new about this. This is Tory philosophy writ large. It is the sort of philosophy that has emanated from the Tory Party for as long as I have been aware of the existence of that party.

An ability to pay means, in our society, that the poor will get poorer. That is a tendency to which the last Government to some degree addressed themselves with some success. But there are still far too many people in our society living in conditions of deprivation for one reason or another. What is meant by the phrase about creating a climate in which commerce and industry can flourish"? What remedies has the Conservative Party for the capitalist crisis that affects major sections of the Western world?

One suggestion is more effective competition—but where? Would it be in Europe, for example? Competition in Europe seems to be at the dictates of West German capitalism and to a lesser degree of French capitalism, with Britain a junior partner. Who has gained from British membership of the EEC? Have we, as the architects of our membership argued, increased our economic growth as a result? On the contrary, and for good reasons. Member States such as West Germany have seen to it that we have paid a greater price for membership than they. We have suffered from the common agricultural policy and other things.

When they talk about commerce being "encouraged to flourish", do the Government mean that they will seek a major increase in investment, even in the private sector? There is nothing new about that. The Prime Minister's predecessor, the right hon. Member for Sidcup (Mr. Heath), did his level best while in office to persuade private investors, and we all know the outcome.

The real solution does not lie in capitalist competition, whoever has the upper hand—whether in London, Brussels, Berlin, New York, Japan or elsewhere. What is needed is a radical change of values, leading to a change in society. Obviously that is not mirrored in the Queen's Speech, and I would not expect it to be, coming as it does from a party that serves a class interest, based upon the perpetuation of privilege and the retention of the ownership of the means of production. I did not expect it, and I am not disappointed.

However, we on the Opposition Benches should readdress ourselves to the alternatives presented in the Queen's Speech. It is not possible to assess that speech without considering the alternatives that exist in our economic and social conditions and other questions. Therefore, for me and for many others on these Benches the relevant question is how we are to achieve an extension of common ownership. How are we to create the planned economy that has been the dream of the Labour movement for the best part of this century? A radical reappraisal of the use of economic resources, particularly for defence, is required. I take the view that withdrawal from NATO is fundamental to any radical change of our values in Britain.

A greater participation in UNCTAD is also long overdue, with assistance, without strings, to the Third world, where poverty still brings enormous death rolls.

Mr. Alan Clark

Why without strings?

Mr. Thorne

For the obvious reason, which I should have thought the hon. Gentleman would understand—

Mr. Canavan

He understands nothing.

Mr. Thorne

That may be true. I am given to understand that this is a Christian nation. The last words of the Queen's Speech are: I pray that the blessing of Almighty God may rest upon your counsels. A Christian nation is one concerned about poverty in other lands, one which assists without saying "In return for our help, you will make available to us this military base, or that decision about productivity," or anything else. That is the point that I am making. If the hon. Gentleman does not understand it, I can only assume that my hon. Friend the Member for West Stirlingshire is right and that he cannot understand anything.

How can we talk, as the Queen's Speech does, of a Christian approach to society while accepting glaring inequalities in it and fostering and extending those inequalities by the sort of policies that it outlines? The social problems of crime and vandalism, according to my Conservative opponent in the recent election, could easily be overcome. For him, the introduction of hanging is a solution. I know that there are Conservative Members who would welcome its restoration as early as possible—

Mr. Alan Clark

You bet.

Mr. Thorne

—even though evidence throughout the world shows that hanging makes no difference to the incidence of murder.

Not an iota of evidence can be produced in America, where some states have a death penalty and others do not, that it reduces such crimes as murder. Most thinking people recognise that a sick society such as ours inevitably creates the sort of social disorders and anti-social behaviour that characterise many of our urban areas. The only way to change that is to eradicate some of the gross inequalities and exploitation in our society.

In constructing a new social order—unhappily, we are not involved in that today—new structures not contained in the Queen's Speech would be necessary to enable all people to take decisions about the use of resources. Much lip service is paid to industrial democracy, but we are not prepared, in the House or elsewhere, to face the question, who gets what, when, how and where?

Whose needs should have priority? In what way will we positively discriminate? In a Christian society, as ours is said to be, we would want to discriminate in favour of the weaker members. The Government would suggest that the trade union and labour movement is an organisation or a set of organisations that has become too powerful. That is one of the biggest myths of recent years. By comparison with the wages, superannuation and holidays enjoyed at all levels of German industry, the British trade union movement has failed to exercise its power to improve the conditions of the British people. Far from using their power irresponsibly or to the detriment of the British people, the unions have failed to measure up to the responsibilities placed on them by their members.

This is unpalatable to the present Government, and they will seek to ensure that the trade union movement is never powerful enough to create such improvements in our standard of living. At workshop level, there will be increasing demands by union members for that sort of return from their leaders.

That brings me to picketing. It does not matter what law this House seeks to pass about picketing; if a mass of workers are disenchanted—nay, angered—by the injustices, inequailties and exploitations that they suffer in capitalist society and decide to organise effecitve opposition, law will not stop them. We had evidence of that during the period from 1970 to 1974. One would have thought that the Conservative Party would have learned the lesson.

No doubt, in the discussions that the Secretary of State for Employment—or unemployment, whatever it may be—will have with the TUC, some new thoughts will be produced about picketing, but I hope that he will not be foolish enough to seek to use legislation in order to attempt to control a long-standing practice within British society. If he does, far from reducing the prospects of confrontation and conflict, he will contribute to greater conflict on the shop floor.

Will there be improved relations with the trade unions following the Government's legislation? Will there be greater industrial democracy? In the light of the experience in British Aerospace, which became a public corporation under Labour not long ago, the answer must be "No". I mention British Aerospace because of comments earlier about some of our comrades, like Audrey Wise and Ron Thomas, who failed to get reelected. I was one of those who did not fail, yet I failed to support the Labour Government's public expenditure cuts. I took a stand on a number of occasions against their economic policies, and I am still here.

In the Preston area there are between 12,000 and 14,000 aerospace workers. Some of them were influenced by a visit from the hon. Member for Stretford (Mr. Churchill). He told them, "You know Stan Thorne. What has he done before? What is he likely to do if he is re-elected? He has never supported defence expenditure at £8,500 million a year, and what can you expect if you vote Labour?"

Unhappily, the hon. Gentleman had not taken note of the statement by his Leader about the prospects of selling British Aerospace to private enterprise. Thus, the workers in British Aerospace became less concerned about Stan Thorne's failure to support more expenditure on armaments than about what would happen to them under a Tory Government trying to scuttle an industry which, following public ownership, had shown within a matter of a year or 18 months that it could be effectively established as a public enterprise worthy of note. That, I think, answers the point made about some of our comrades who lost their seats.

I turn now to local matters. We now have a new Secretary of State for the Environment and a new Minister of Transport. I have a number of very urgent local matters to raise, and I hope that those two right hon. Gentlemen will address themselves to them with alacrity.

My hon. Friend the Member for West Stirlingshire is right about housing. The Government clearly will not be able to sell the 14-storey blocks of flats in Preston to their occupants, for a very good reason—they will not buy them. Many of them are families with children; many of them have been on a waiting list which still contains about 2,500 names; many of them have little or no prospect of a decent house.

If the Government proceed to sell council houses, they will sell the better class of council house on the well-ordered estates. But where, then, will people who have been promised houses but who at present live in multi-storey blocks go? Preston is under a Conservative-controlled council, which is already talking about reducing its present house-building programme of 100 houses a year, so, clearly, the expectations of people living in Lancaster House, or York House, or Cumberland House, are virtually non-existent.

I do not know whether the Under-Secretary of State, sitting alone on the Government Front Bench, is taking notes or is merely sitting there admiring the scenery, but I will tell him about Plungington. It faces urban renewal by the Central Lancashire Development Corporation and it is an area where a little more democracy and a little less authoritarian bureaucracy on the part of that corporation would be welcome. Many old people who have been living there for 50 years have been plunged into a terrible crisis because, having just modernised their houses, having had to scratch for the money with which to do it, they are now to be turfed out by a corporation according them no consideration for their needs.

With these few remarks, to which you, at least, Mr. Deputy Speaker, have listened patiently, I think we can accept that the new Government will take heed that their life will not be an easy one during the next few months.

6.27 p.m.

Mr. Nicholas Winterton (Macclesfield)

I join hon. Members on both sides of the House in welcoming you to the Chair, Mr. Deputy Speaker. We are delighted by your appointment, and I am sure that you will preside over the business of the House with great care and great interest. I look forward to catching your eye on future occasions.

Having listened to the last two speeches by Labour Members, it is interesting to record that the Socialist Party was in Government for the last five and a half years. From what we heard from the hon. Members for Preston, South (Mr. Thorne) and for West Stirlingshire (Mr. Canavan), one would have thought that the Conservatives had been in office during those years and that all the problems which now face the country had been created by them. In fact, those problems were directly created by a miserable and incompetent Socialist Administration which had the power in Whitehall for the last five and a half years.

We hear a great deal about unemployment. In one area in which I went to speak during the election campaign, the Socialist candidate had put out a document saying that a vote for Maggie Thatcher was a vote for 1 million unemployed. But who were the Government who created an additional million unemployed? It was, of course, the previous Socialist Government. During the period of that Administration prices doubled, taxation doubled and unemployment more than doubled. That is the history of that Administration, and that is why the Socialist Party finds itself on the Opposition Benches and not back in Government.

It is diabolical for Labour Members to be so highly critical of the Conservative Government's policies so early in the new Parliament. A fresh wind has blown across the country. A new environment and a new atmosphere have been created. We have an environment of hope and optimism. Representations made to me since the election clearly indicate that employer and employee alike believe that we shall create an environment which will allow wealth to be created and enable the Government to provide the facilities and benefits which they want to make available for our people. There will be incentive for people to get back to work, and additional profits for industry will create the jobs that we need so desperately.

I always listen with interest to the hon. Member for Stoke-on-Trent, Central (Mr. Cant) because he has a deep knowledge of industry, commerce and industrial relations. I have fundamental disagreements with him, but much of what he says is well considered and well thought out.

However, I must say to the hon. Gentleman that it is not big business but small business which does not like Government interference. Big business, for example, sometimes likes the closed shop because it makes wage negotiations simpler. Big business has the knowledge and personnel to take advantage of the massive funds that are often made available to industry. It is our smaller businesses which do not like the burden of Government and the interference of Government.

It is in the area of smaller business that we shall get the dynamic progress which will create the new jobs which will be so important to the 1½ million who are out of work and, particularly, to the young people leaving school this year whose ambitions may be blunted if they immediately have to go on the dole.

The Prime Minister made a brilliant speech. Every intervention from the Opposition made her a bigger and better Prime Minister because she dealt with and knocked on the head every point raised by Labour Members. I said during her speech that every time she answered the Opposition she was scoring another boundary. I congratulate my right hon. Friend not only on the excellent Queen's Speech but on her introduction of the Government's programme for our first Session.

The hon. Member for Stoke-on-Trent, Central also referred to International Computers Limited, Ferranti and Fairey Engineering. I understand that the National Enterprise Board's involvement with ICL is fairly limited. It would have been useful if the previous Government had encouraged more of their Departments to buy from ICL instead of buying foreign computers. The Government should not only have considered channelling money through the NEB into what could be an extremely profitable company in new technology but should have practised a "Buy British" policy, which would have been much more constructive than pouring money into some of the companies in which they invested public funds.

I need hardly remind the House that some years ago Ferranti paid back huge sums to the Government because it made what some considered to be a large profit on a defence project, but when the company got into trouble it had to go to the Government for help. There was in my view a certain amount of mismanagement in Ferranti. Its transformer section should have been rationalised and made much smaller much earlier. Its cash flow problems and financial difficulties would not then have occurred.

As regards Fairey Engineering, why was the bid from a private company not accepted? Why was the NEB determined to proceed with public investment when private funds were available? I hope that those few remarks have dealt with some of the matters raised capably, honestly and openly by the hon. Member for Stoke-on-Trent, Central.

I move on to council housing and the Government's proposal to sell local authority and new town corporation houses. I was interested in the extreme Left-wing diatribe of the hon. Member for West Stirlingshire. When one hears that sort of offering, it is obvious why the Labour Party lost the election. There is no doubt that the hon. Member made a direct contribution to the previous Government's loss of office.

Is it not logical that if we give tenants the opportunity to buy their houses we shall generate funds which can be used by local authorities to build the specialist housing required by the elderly, single people and the disabled? Is it not likely that elderly people will then wish to move from their two or three-bedroomed council houses to the specialist accommodation, thereby releasing the houses for the needy families about whom we are all concerned? The funds and resources provided by the sale of houses would remove the necessity for many councils to borrow large sums at high rates of interest, which is a burden not only on the housing account but on the ratepayers in general. I fully support the Government's proposal.

The first priority of any Government must be to guarantee the security of the State against external aggression. I was delighted that one of the first actions of the new Government was to implement, in full and immediately, the recommendations of the Armed Forces Pay Review Body. That was the right decision and it has been warmly welcomed by my constituents.

The second priority of any Government must be to guarantee law and order within the country for our law-abiding citizens. I therefore warmly welcome the decision to implement, in full and immediately, the recommendations of the Edmund-Davies committee on police pay. That was done quickly and courageously.

Some hon. Members have rightly raised constituency issues. I welcome to the Government Front Bench my hon. Friend the Member for Chertsey and Walton (Mr. Pattie), whom I know very well and whose experience of the aircraft industry is well known to the House. I wish to put to him a question of importance to my constituency.

During the election campaign the Socialists indulged in smears and scare-mongering. They put round a rumour at Woodford, where British Aerospace's Hawker Siddeley aviation factory is situated on the edge of my constituency employing several hundred of my constituents, that a Conservative Government were likely to ensure that that factory was closed. They said that there would be a total cut in the money available for research and development. I ask the Minister for a denial of those accusations.

I believe that the HS-146 is an extremely good project. It was supported by the previous Government and I believe that it should go ahead. It will bring in much-needed funds for this country by way of exports. Likewise, the Airbus project, which we share with several European countries, is of tremendous benefit to us. British Aerospace, through its Hawker Siddeley division, is closely involved with the Airbus project.

It is wrong that people's jobs should be used for electioneering purposes. The baseless rumours put about that a Conservative Government planned to cut money for research and development in aerospace fell below the standards expected of responsible candidates during an election campaign.

The Under-Secretary of State for Defence (Mr. Geoffrey Pattie)

As there may not be a winding-up speech today, I must say to my hon. Friend that there is no question of research and development money being cut back. As far as British Aerospace is concerned, what we need is an acceleration of research and development. Only if that happens will we develop leading edge technology in the mineral, the military and the civil spheres. I am glad to give my hon. Friend that reassurance.

Mr. Winterton

I am grateful to my hon. Friend. I am sure that my constituents will be delighted to hear that news. Perhaps I may also lay a myth. We have already heard from the Opposition Benches below the Gangway about the Tory Government selling off profitable bits of British Aerospace. If my understanding of the intentions of the Tory manifesto is correct—and we committed ourselves to this action when the industry was nationalised—we shall offer back the companies which comprise the aircraft and shipbuilding industries to their original owners. We shall merely offer back those companies. There is to be no obligation to accept, and all the up-to-date circumstances and public money invested in these companies will be taken into consideration. I believe that the people of this country expect us to honour that commitment.

I move quickly to the textile industry, which is important in my part of the North-West. It is also a vital industry to the North-West as a whole, and it employs approximately 800,000 people nationally. I hope that the Conservative Government will honour the multi-fibre arrangments and when the current arrangements run out will ensure that they are replaced by a further scheme which accomplishes orderly marketing in textiles.

I very much regret that against the interests of the textile and paper and board industries—both important in my constituency—the Labour Government were prepared to make what I would describe as over-generous concessions in the Tokyo round, under the general agreement of tariffs and trade, to the United States. It seems ridiculuous that when our tariffs and those of other EEC countries are lower for goods coming from the United States than vice versa we should give more generous concessions than those granted to us. The decisions taken, and the extra concessions granted, could prove very damaging to employment in these two vitally strategic industries.

I am delighted that the hon. Member for Greenwich (Mr. Barnett) is on the Opposition Front Bench because I hope that he will substantiate the point that I make and which I hope will be taken by my colleagues on the Government Front Bench. My area has considerable road communication problems and Macclesfield borouoch council has sought to mount a public participation exercise for the proposed road projects in Macclesfield. The Department of the Environment took almost nine months to reply to a letter which I sent asking it to look into this matter so that my local authority could stage this exercise. The hon. Gentleman was kind enough to apologise in a very fulsome way for the oversight and for the lack of courtesy and action on the part of his Department. I hope that my colleagues in Government will ensure that the road problems in my area are not overlooked.

From what we have heard in speeches by Opposition Members so far, one would have thought that the Tory Party is a hard-faced party concerned only with profits and not concerned with people. [SEVERAL HON. MEMBERS: "Hear, hear."] My worst thoughts are confirmed by what we have just heard from below the Gangway opposite. Now I shall confound those Members below the Gangway. I ask a number of rhetorical questions and say to them "Does not the Tory Party put compassion and caring into practice? Is it not the Socialists who merely talk about caring and fail to put it into practice?" I ask hon. Members "Which party was it that instituted an annual review of pensions for the first time?" It was a Conservative Government. Which Government introduced a Christmas bonus for pensioners? It was a Conservative and not a Socialist Government. Which Government provided an attendance allowance for the first time for the severely disabled? It was a Conservative Government. Which Government provided special benefits for the first time for the chronic sick? Was it a Socialist Government? No, it was a Conservative Government. Who provided pensions for the over-80s? It was a Conservative Government. Who provided pensions for women widowed between the ages of 40 and 50? It was a Conservative Government and not a Socialist one.

I say to those below the Gangway, some of whom have recently come to this House, "Get your facts right".

Mr. Robert Hughes (Aberdeen, North)

Is the hon. Gentleman including me?

Mr. Winterton

No, the hon. Member has been around for too long, I fear. All the same, we welcome him back in this new House of Commons. I say to other hon. Gentlemen that the record of the Conservative Party is a good one. We intend in this Parliament to ensure that pensions are not only improved but are increased to keep pace with inflation, and that the elderly and those requiring the assistance of society maintain a standard of living which is acceptable.

I am delighted to welcome the commitment that we gave in our manifesto to exempt from taxation the pensions of war widows. I regret that this decision was not taken many years ago by a previous Conservative Government.

The election which we have fought was a very important one. As my right hon. Friend the Prime Minister said, a great deal was at stake. The genuine freedom of this country was at stake. I do not ask hon. Members below the Gangway to take my word for it. Maybe they should take the word of Lord George-Brown in another place, or Mr. Woodrow Wyatt, or Mr. Eddie Griffiths or, indeed, that of my right hon. Friend the Member for Daventry (Mr. Prentice).

Mr. Robert Hughes

The words should stick in the right hon. Gentleman's throat.

Mr. Winterton

My right hon. Friend uniquely crossed the Floor of the House during the previous Parliament, having been elected as a Labour Member, and sat on the Conservative Benches. He now holds a very important office in the new Conservative Government. I, and I am sure many of my hon. Friends, wish him well in this high office. He has a great deal to give to the House and to the country, and I am sure that we shall see him perform extremely well during the coming months.

Responsible freedom was indeed at stake during the general election. Why was it that Paul Johnson, a leading Socialist journalist and former editor of the New Statesman, used these words, which I believe are of considerable importance: The Conservative Party is now the great, the only repository of freedom in this country. It is the democratic party, the party of individual freedom, the party of the rule of law. It is the last line of defence we possess.

Mr. Robert Hughes

The mind boggles.

Mr. Winterton

The mind might boggle, but we are speaking of a life-long Socialist who, with many others, broke a life-long voting pattern, urged people to vote Conservative and voted Conservative himself. Because of those thoughts and what people saw happening in the Labour Party, they voted Conservative. It is not yet time for the Opposition to criticise the policies of the Conservative Party. The people of the country wanted change. They chose change at the ballot box. They were right to do so.

The people were also right because they saw in the Conservatives a party that would take law and order by the scruff of the neck. People have said to me that for too long more concern has been shown for the criminal than for those against whom crimes have been committed. People will realise that law and order are priorities for this Government.

I do not want elderly people to tell me that they cannot go out at night because they fear being mugged. Within a short time our actions will ensure that offenders are dealt with properly and that it no longer pays to commit crime, particularly crimes of violence.

Mr. Paul Johnson was right. The advice that he tendered was taken. We now have a new Government offering a fresh approach. They have my full support.

6.52 p.m.

Mr. Tom Ellis (Wrexham)

At one time it was said that the Labour Party was the doctrinaire party. It was once said that the Labour Party followed slavishly its ideology, which was carved on tablets of stone, and that the Conservative Party was pragmatic and empirical. It was once said that the Conservatives judged every issue on its merits and applied common sense. Increasingly it has been made clear that the opposite is true.

I was struck by what the Prime Minister was reported to have said in the North-East during the campaign. Apparently, she said that George Stephenson would not have wanted Government help to produce his locomotive. Of course he would not. He lived 150 years ago. The Prime Minister's remarks spoke volumes.

I am not so much worried by the Prime Minister as by the right hon. Member for Leeds, North-East (Sir K. Joseph), the Secretary of State for Industry. He appears to be consumed with a doctrinaire ideology. He seems to be possessed by the very devil. For example, he is determined to do something about the National Enterprise Board.

The Government say that the NEB's activities will be restricted. I assume that the Scottish and Welsh Development Agencies are included. My hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) spoke about the NEB. I wish to discuss whether the NEB should be regarded in a doctrinaire fashion and to spell out some of the dangers that will accrue if the NEB is regarded in such a way.

I do not believe in slogans. The hon. Member for Macclesfield (Mr. Winterton) used a slogan. He said that small companies do not like the Government. I can name several small companies in my constituency which do like the Government and, in particular, the Welsh Development Agency.

I do not believe that it is right to say "Let us nationalise another 100 companies". Why not say that we should nationalise 142 companies, or 77 companies? Such phrases are meaningless. That does not mean that I am either for or against naitonalisation. I hope that I can apply objective intelligence to these serious problems. The destiny of our country should not be decided by sloganising the doctrine and ideology of a political party.

Whatever action the Government take, the effects continue for a while after they have left office. This year investment in British manufacturing industry will peak over the previous peak in 1970, when the 1966–70 Labour Government left office.

I turn to the question of Government intervention in manufacturnig industry. Britain, more than other countries, concentrates on service industries. Our investment in service industries is greater than that in more powerful economies than ours.

In his book "The New Industrial Estate", Professor Galbraith said that the sheer demands of technology meant that there must be considerable central planning. He said that there was more Socialism in the United States, the home of free enterprise, than in India, an avowedly Socialist State, because of the planning requirements of advanced technology. He also said that in the United States free enterprise is a minor branch of theology. He concluded that technology is a greater force politically than political ideology. That is the first message that the right hon. Member for Leeds, North-East should get into his head. Realism is the first requirement of any politician in office, particularly when he is involved in manufacturing industry.

Government intervention in Britain is essential. In America, for many reasons, including the size of the home economy, it is possible for individual private companies to scale up. That is not so in Britain. It is now clear that the Government must intervene in our economy.

I shall give one or two illustrations of how different parts of the country look at the problem. In my constituency, until recently the unemployment rate was about 14 per cent. It is now down to 12½ per cent. That is a high rate. During the election campaign people were interested when I talked about jobs and the dangers to them. They were interested in creating jobs.

I believe that creating jobs is rather reactionary. Simply creating a job can be compared to digging a hole in the road in order to fill it up again. That does little for anyone in the long term. When I talk of creating or preserving jobs, I do not talk of the Government creating jobs for the sake of doing so. The Government must apply horse sense and consider those industries which are in decline and in need of breathing space. When the Government can give an industry breathing space to allow it to adapt, they should act.

I shall give one other illustration and try to link it with the voting in the general election, which seemed to indicate that we have two nations—the South-East and the rest. There is a serious danger of our becoming two nations. A White Paper published in 1975 dealt with regional employment incentives and with jobs in the decade from 1960 to 1970. It pointed out that in 1960 three regions—Scotland, the North of England and Wales—had 42 per cent. of all the jobs in the United Kingdom. It was noted that had this percentage of jobs been retained in those three regions during that decade they would in 1970 have had 320,000 more jobs. In fact, the 320,000 jobs lost in those regions were matched by an increase of almost exactly the same amount in the South-East and the Midlands.

Something happened in those regions because there was a lack of economic steering, a lack of effective governmental intervention. I know that Governments have had regional policies for over 40 years, but when I talked to the people in my constituency about creating jobs they were very interested indeed. They sensed that there was something sadly wrong in the United Kingdom when a shift of population of the magnitude referred to in that White Paper could occur in a decade, whichever Government were in power. We ought not to be doctrinaire about this. It is a question that ought to be looked at objectively and on its merits. The solution will be found only on that basis.

When I spoke in my constituency about some of the things that the Welsh Development Agency had done, I found a very warm response. It is not just a question of lame ducks. This, again, is something of a slogan. For example, there is a big difference between British Leyland and Rolls-Royce. One is much more theoretically viable and, indeed, practically viable at the moment than the other. It would be wrong of anyone to argue that Rolls-Royce was a lame duck in the accepted sense, even when it was in serious trouble. What happened there illustrates something very profound, and it is related to what I said earlier about America being a large country. No one can argue about the quality and the skill of the engineers at Rolls-Royce. Indeed, the very name meant something superlative. It was perhaps the psychological and emotional connotation of the very name that caused the previous Conservative Administration to do one of its U-turns and to rescue Rolls-Royce. To say that Rolls-Royce was bankrupt was almost like saying that Britain was bankrupt.

The point was that Rolls-Royce had to develop an aero-engine. It could not opt out. If it wanted to stay in business, it had to develop the engine. The risks were not the traditional commercial or entrepreneurial ones. It was essentially a technological risk. When the engine had been developed, the fairly limited capital resources of Rolls-Royce, in relative terms, had been used up. Unfortunately, when the engine was put in the aeroplane and a bird hit the leading edge—in the manufacture of which carbon fibres had been used—causing it to snap, no more money was available for the next 12 months' development.

I was interested to hear my hon. Friend the Member for Stoke-on-Trent, Central talk about titanium. The problem at Rolls-Royce arose in using titanium together with carbon fibres in the manufacture of the leading edge. There was no money left for that further development. Rolls-Royce had not been able to underwrite the technological risk of a completely new venture. Big though it was, it was not big enough in scale to do that and was obliged to go to the Government for assistance. The Government, if they wanted Britain to have any aero-engine capacity at all, were bound to retain Rolls-Royce. It was really a bit of bad luck rather than Rolls-Royce being a lame duck.

We need to be very careful when talking about lame ducks, because giving the right sort of assistance is the one thing that the NEB and the two sister agencies can do better than almost any other body, not only on a big scale but often on a small scale. I have in mind a small company in my constituency. The chairman, a middle-aged man, employs 16 young graduates, all in their twenties. They are all qualified in electronics. They are really a sort of "think tank". They are continually inventing new electronic gadgets. In one respect they are now two years ahead of the rest of the world. It thrills me to think that this factory exists in my constituency. I am sorry to say that in Wales we have always been noted for not having our share of the professional and scientific jobs. We have our share of labourers and we have our lower socio-economic grades. Yet I am happy to say that this factory in my constituency is now two years ahead of the rest of the world, and the potential market for its product runs into hundreds of millions of pounds. My point is that that company would not exist were it not for what the Welsh Development Agency has done in the last two years, and I could give other examples of that kind.

When I see signs from the Secretary of State for Industry of an obsessive concern with the doctrine of free enterprise, I am enormously frightened. We have this black and white concept, in which the private enterprise people are depicted as saints with halos, and the governmental interventionists are shown as devils with horns. I am frightened because what is at stake is very important indeed, namely, the nation's manufacturing capacity across a number of sectors, ranging from the genuine lame duck, and the less than genuine lame duck, to the completely new entrepreneurial venture. Their existence and future viability are at stake. Examples were given by my hon. Friend the Member for Stoke-on-Trent, Central of how, in certain circumstances, money was not available from the conventional banking world.

It may well be that the whole question is academic and that Sir Leslie Murphy has already had his marching orders, but I want to emphasise that we do not regard the NEB and the sister bodies in any doctrinaire sense at all. Simply to nationalise something is now, to me, a little bit old hat. I worked for 23 years in a nationalised industry, and it was important that it has been nationalised No equity capital was available in the coal industry before nationalisation, and the money had to be made available. I have always felt worried that we have not developed the concept of nationalisation further.

If I may be a little philosophical for a moment, it seems to me that because of the technological demand and the planning requisite, somehow the free enterprise end of things is getting towards the same moot point as the concept of governmental shareholdings, as exemplified by the NEB. It will be a disaster if the Secretary of State for Industry decides to clip the wings of the NEB.

I should like, before I conclude, to mention the European Economic Community. My remarks here will tie in very much with what I have just said. Precisely because of the scaling up in advanced technology, the need for markets, and so on, there are several sectors in our manufacturing industry which are not genuinely viable, no matter what the British Government may do. The Government have not the money to sustain all the sectors that will increasingly be at risk. The aircraft industry is a good example, and there have been references to it. There have been examples of collaboration between countries, as in the case of Concorde.

One simple fact is writ large on the wall, and there is no need to be a great economist in order to see it. If we go to London airport, to Frankfurt, to Paris, or to any of the great European airports, and count the number of aeroplanes, civil and military, we find that 80 per cent. have been made in America. If I were working in an aircraft factory today in Britain, France or Germany and I saw that 80 per cent. of the aeroplanes had been made in America, I would be a little worried. Some of the more successful Continental aircraft produced by British, French and German manufacturers number about 300 or 400, but hardly one Boeing model is produced that does not achieve sales of about 1,500.

I see the need for something much more fundamental than European collaboration on a nation State basis. It is obviously important that in accountancy terms we receive our fair share. Clearly, it is not desirable to pay in and not to receive.

There is talk about butter mountains. I was rather worried about one phrase in the Labour Party manifesto about the scandal of the food mountain. When I was a boy in a mining village before the war, there was a depression. There were no coal mountains. We had a breed of people straight out of the nineteenth century called coal owners. They solved any coal mountain problem by putting the pits on a one-day or two-day working week. That was an easy but non-Socialist solution. That is why I am hesitant about ridding ourselves of a butter mountain. After all, the mountain represents three weeks' consumption. The present coal mountain represents four months' consumption. Nobody ever says a word about that. I do not want to put the pits on a one-day working week. I am reluctant to think of putting German peasant farmers on the dole. I speak as as international Socialist.

I am glad that a promise has been made from the Government Front Bench that the politics of Europe will be regarded as more important than accountancy. By all means let us get the accountancy right and improve the CAP, but there are many major political issues that have to be tackled. I mention one that will be non-controversial, the energy problem. We can look back to the Suez war. We survived that in energy terms. The Yom Kippur war and the problems that ensued were solved in the end. The oil companies managed to overcome the problems. We now have the Iranian revolution. It is to be hoped that we shall get over that. Previous experience may have bred a sense of complacency. However, it is as inevitable as night follows day that in energy terms the Western world will see its nemesis. We must have a European policy. The policy must be European if it is to be meaningful.

A few months ago Commissioner Brunner laid claim to having a European energy policy. However, he was able to cite only some platitudes about agreeing on conservation policies and on limiting our oil consumption to about 50 per cent. Real practical achievements were thin on the ground. However, Dr. Brunner made the important statement that the first requirement is mutual solidarity, expressed in joint programmes, if we are to get anywhere near energy security. That is an important phrase. It means that the French and the Italians have to appreciate that the Germans and the British produce coal. We have to appreciate that the Italians have an excess refinery capacity problem.

I fear very much what the Government will do, but I hope that they will bring forward a historic perspective that has been sadly lacking in all European issues. We must remember that 40 years ago the nine countries of the EEC were all preparing to go to war with one another. The nine countries are now preparing to elect a Parliament to represent their joint peoples. That is enormous progress that must be weighed in the accountancy textbooks.

7.14 p.m.

Mr. David Knox (Leek)

It is always a pleasure to take up the remarks of the hon. Member for Wrexham (Mr. Ellis), whom but for the conventions of the House I would call my hon. Friend. I endorse the hon. Gentleman's appeal for a non-doctrinaire approach to the NEB. I, too, believe that a non-doctrinaire approach to all political problems is much better than a doctrinaire one. Over the past 20 years Governments formed by both parties have tended on occasions to be too doctrinaire. That has operated to the great disadvantage of the British people. I hope that my right hon. and hon. Friends on the Front Bench will remember the lessons of the past 20 years and will take a non-doctrinaire approach to political problems over the next five years.

I welcome the contents of the Gracious Speech. I am pleased that it is not over-laden with legislative proposals. I hope that a light legislative programme will be a feature of the Government's tenure of office. Britain has had far too much legislation in recent years. Much of that legislation has not been properly digested. Much of it has caused a great deal of confusion and an excessive amount of work to people outside. Much of it has had little effect on Britain's well-being. I hope that we shall not have too much legislation during this Parliament. I shall not shed many tears if one or two of the proposals included in the Gracious Speech are postponed to later Sessions.

I welcome the Government's intention to legislate to give council tenants the right to buy their council houses. That matter was debated at great length during the general election. There seems no doubt that it is a popular proposal. Mrs. Shirley Williams confirmed that only the other day when giving reasons for her election defeat. That is a defeat that I greatly regret, but that does not mean that I do not welcome my hon. Friend the Member for Hertford and Stevenage (Mr. Wells) to the House.

It is right that the Government should act quickly on council house sales. I know that many of my constituents wish to take advantage of the scheme that the Government will bring forward. The scheme will make an important contribution to the creation of a property-owning democracy. We must remember that the proportion of those owning their own homes in this country is small compared with proportions in some other Western countries. Anything that will increase the number of those owning their own homes will be of great advantage.

I welcome, too, in the Gracious Speech the Government's intention to achieve a fair balance between the rights and duties of the trade union movement. I hope that the Government will move cautiously As my right hon. Friend the Member for Lowestoft (Mr. Prior) is the Secretary of State for Employment, I know that they will do so. Before any legislation is introduced there must be widespread consultation. It may be that some, such as my hon. Friend the Member for Plymouth, Sutton (Mr. Clark), take exception to that, but that is the policy of the Conservative Party. I hope that there will be widespread consultation and that every effort will be made by the Government to take the trade union movement with them as far as is humanly possible.

However important the legislative proposals outlined in the Gracious Speech, the Session, this Parliament and the Government will be judged by the success or failure of Britain's economic performance. If the Government get their economic policies right, if they can reduce unemployment and inflation and if they can increase industrial output and living standards, everything else will fall into place. If the Government get their economic policies wrong, if unemployment and inflation rise and if industrial output and living standards stagnate further, nothing will fall into place. Matters will become worse and our national decline will continue.

Perhaps I may illustrate what I mean in the sphere of industrial relations. If the economy goes well over the next few years, if we achieve economic growth and if living standards increase year by year once again, the feeling of national wellbeing will do far more to improve industrial relations than any Bills that are enacted in the House about secondary picketing, secret ballots or the closed shop. If the economy goes badly in the next few years, these industrial relations Bills will not stop the deterioration of industrial relations that we have witnessed during the past 16 years, even if the wildest and most extravagant claims of the Bills' proponents are realised.

An enormous responsibility rests on my right hon. and learned Friend the Chancellor of the Exchequer, not only from a party point of view but from the point of view of the country. My right hon. and learned Friend has to get his economic policy right over the next four to five years and that is difficult enough. But above all he must get it right from the start. There is no time to remedy errors later in the life of the Government. That means that he has to get his policy right from the time that he introduces his Budget four weeks from today.

My right hon. and learned Friend's Budget will be of far greater importance than the legislative proposals in the Gracious Speech or in any of the other Gracious Speeches in this Parliament. What should my right hon. and learned Friend do? The central plank of our election appeal was the reduction of direct taxation. I believe that my right hon. and learned Friend should adhere rigidly to that. It is the key to economic success, for two main reasons. First, tax reductions will encourage enterprise, initiative and hard work. Secondly, they will encourage faster economic growth. There is no doubt that the present levels of direct taxation are felt to be a constraint on enterprise, initiative and hard work. They are felt to be a constraint on people at every level of income, the poor, the middle-income people, and the rich. If it is felt that the present tax rates have those effects, they must do so.

Mr. Frank Hooley (Sheffield, Heeley)

What guarantee is there that the additional purchasing power will not simply be spent on Italian, French, German and Japanese cars and a mass of imported consumer goods, which will do nothing for our economy?

Mr. Knox

The hon. Gentleman interrupted my argument before I had reached that point. Why was it that the Labour Party said in the election campaign said that it would reduce taxation? The Labour Party cannot have it both ways in this respect.

When the Chancellor, in his Budget, reduces income tax by 1p, 2p or 3p in the pound, some clever people will no doubt produce tax tables to show that the reductions will make little difference to some taxpayers. But that is not—and never has been—the point. The disincentive effect of direct taxes is not what people actually pay but rather what they think they pay. If we are to remove the disincentive effect of direct taxation, it must be reduced to such a level that people no longer regard it as a disincentive. Until that happens we shall not get much else right.

The second main reason for the reduction of direct taxation—it is connected with the first reason—is the encouragement of faster economic growth. If we cut direct taxation, we shall leave more money in people's pockets at the current level of incomes. If people have more money in their pockets, they can spend it or save it. If they spend it there will be a higher demand for goods and services.

I accept what was said about risks in such a policy. I do not believe that British industry is all that uncompetitive when compared with that in other countries. The higher demand would involve the production of more goods and services in the United Kingdom. If people save the extra money they have, there will be more money available for investment in industry. Either way, there will be greater demand. That means a greater demand for labour, a reduction in unemployment, faster economic growth and a larger private sector relative to the public sector.

Higher employment and faster growth have been features of periods of Tory Governments since the end of the war. Tory Governments have always cut direct taxation. Higher unemployment and economic stagnation have been features of Labour Governments since the end of the war. Labour Governments have always increased direct taxation. The relationship between employment and growth on the one hand and tax cuts on the other cannot just be a coincidence. It is a matter of cause and effect.

Provided that the Government fulfil their election pledge to cut direct taxation, I have no doubt that we may look forward to a period of higher employment, lower unemployment and faster economic growth. But it will not happen quickly. It will take time. I would never pretend otherwise. I do not believe that the actions of the Government will create a Utopia straight away. However, we can achieve those benefits over a period.

I mentioned the importance of righting the balance between the private and public sectors. Tax cuts can play a part in that. It is important, but not because I want to see the public sector cut in absolute terms. On the contrary, in many respects, such as expenditure on defence, the Health Service and roads, the public sector is far too small. If we are to have a bigger public sector in absolute terms we need an even bigger private sector to pay for the larger public sector. it is no coincidence that the public sector has always expanded more quickly under Conservative Governments. That has happened simply because Conservative Governments have always expanded the private sector so much faster than have Labour Governments. Conservative Governments have created the wealth to pay for bigger improvements in the social and public services.

I hope that the Government will not be dogmatic about an incomes policy. The previous three Governments came to power pledged not to introduce an incomes policy. Events forced all of them to do so. I see no change in the circumstances in this country that gives me cause to believe that the Government will not have to introduce an incomes policy sooner or later. There are disadvantages in incomes policies, but there are disadvantages also in not having one. On balance, the disadvantages are fewer if we have an incomes policy than if we do not.

Constraints on incomes increases enable us to run the economy at a higher level of activity than if we do not have an incomes policy. If we have one, people can enjoy higher real standards of living. I accept all the arguments against incomes policies. I used to use them myself. I rejected them eight years ago on balance. I see no reason to do another U-turn now. The hon. Member for Gateshead, West (Mr. Horam) has been through this process himself, if I am not mistaken.

May I conclude my remarks about the economy by saying that I hope that my right hon. and learned Friend will be an adventurous Chancellor, that he will be expansionist rather than restrictionist, a Cavalier rather than Roundhead.

I was pleased to hear what the hon. Member for Wrexham said about the EEC. I welcome the Government's commitment to the European Community. The proudest moments during my nine years as Member of Parliament were when I voted in favour of British membership of the EEC in the great debate on the issue of principle in the autumn of 1971 and when I voted for the Second and Third Readings of the European Communities Bill in 1972. I have no regrets about any of those votes. I would do the same again if the issue came up tomorrow.

I bitterly regret the way in which this country has thrown and continues to throw away the opportunities which membership of the European Community gives us. We joined the Community on 1 January 1973. Fifteen months later we were engaged on the so-called renegotiation of the terms of entry. In the summer of 1975 we had a national referendum about our continued membership. Two-thirds voted to stay in, one-third voted to come out. Since then the attitude of British Ministers seems to have been to obstruct the Community in every way. Direct elections to the European Parliament will take place on 7 June this year. But for the obstruction of Britain, they could have taken place last year, even though this country claims to be the great home of democracy in Western Europe.

All that we tend to hear in public discussion about the Community relates to butter mountains, wine lakes, Britain's financial contribution and imagined terrors that the Commission has in store for us. The time has come to remind ourselves of the dream of a united Europe held by the founders of the Community and to remind ourselves of the potential of the Community of Nine—soon, I am pleased to say, to be further enlarged.

The cultural, political and economic unity of Europe could enrich all our lives in a way that can never happen if we continue to obstruct the path to unity. Butter mountains, wine lakes and Britain's financial contribution to the Community are problems that must be dealt with, but they are much more likely to be resolved in a manner acceptable to Britain if we play a constructive part in the building of the new Europe and in the development of the Community, its institutions and its policy making.

In this world we only ever receive anything as a result of what we put in. If this country could forget for a short time the great chip on its national shoulder and show itself willing to work with the Community and for the Community, I have no doubt that we should gain greater advantages from our membership than we have to date. I hope that the new Government's attitude to Europe will be much more positive than that of their predecessors. I hope, too, that they will begin to play a real part in the development of the Community, for Britain's future is in the EEC and nowhere else. A strong EEC means a strong Britain, and a weak EEC means a weak Britain. I hope that the Government will never forget that.

7.30 p.m.

Mr. Robert Hughes (Aberdeen, North)

The election is over and the rhetoric has long since passed by. Perhaps we should now be addressing ourselves to the future of our country in a more sober manner than sometimes appeared to be displayed during the election. I found the speech of the hon. Member for Leek (Mr. Knox) in marked contrast to that of the hon. Member for Macclesfield (Mr. Winterton). The hon. Member for Macclesfield and I have crossed swords on many occasions, and no doubt we shall do so in the future. I shall reserve until that further occasion my more barbed comments about the hon. Member's performance.

The hon. Member for Leek began his speech by following the theme, current during the election campaign, of "Set the people free". That theme seeks to free people from restriction and from the disincentives, real and apparent, of the level of taxation. The theme is that if the people are set free all else will flow—the economy will pick up, industry will reap the benefit, and so on. Then, towards the end of his speech the hon. Member for Leek was saying "Set the people free—but not in respect of incomes." He believes that an incomes policy is necessary. That was in marked contrast to the previous part of his speech. He believes in the free market economy. But if there is to be a free market economy I do not see why ordinary people should be so restricted in selling in that market the only commodity they have—their labour.

I believe, contrary to many of my right hon. and hon. Friends, that there is a case for Government intervention to ensure that the crude economics of bargaining strength do not act to the disadvantage of the lower paid. I have argued since long before I became a Member of Parliament for the need for Socialism in this area. We need a real incomes policy to ensure that those who lack industrial muscle because of their jobs do not suffer as a result of the crude market economy. If the Prime Minister and her Ministers operate the crude market economy in incomes policy and in the public service sector, they will destroy many of the great traditions that have been built up in our health and education services. This issue will be resolved only with the co-operation of the trade union movement, and with a view to the way in which people are dependent upon one another.

As I said during the election campaign, I do not believe that the country generally has yet awoken to the seriousness of the problems of unemployment that face it. When Labour came to office in 1974 unemployment stood at 600,000. In the past four and a half years 750,000 more people have come on to the labour market, and between now and 1986 a further 1.5 million will be looking for work for the first time. If one adds that number to the current number of unemployed, it means that before one considers job losses through changes in production methods or in the needs of manufacturing industry, if we are to aim for full employment we must find by job creation, or whatever method, 3 million new jobs. I cannot imagine that the market economy will face up to that challenge.

We must seriously address ourselves to the problem of giving our people full and meaningful employment. As my hon. Friend the Member for Wrexham (Mr. Ellis) said, there can be no future in digging holes for someone else to fill in by digging other holes.

We must give people the feeling that they are part of society. We fail to realise the sense of alienation that exists within society—the feeling that people no longer count, that they are simply digits to be argued about in terms of unemployment, subsidy, or whether unemployment benefits and social security benefits are too high. Unless we begin to make people feel that they have a part to play in society as well as being used by society, as all of us are used to promote the cause of society, the future will be very grim.

I wish to raise one or two constituency issues. The Gracious Speech states: My Ministers will seek to secure that United Kingdom agriculture and the food-processing and distributive industries have an opportunity to compete on fair terms and to make their full contribution to the economy. No one can quarrel with that, but before they can compete on equal terms or make their full contribution to the economy they have to exist. Yesterday a factory just outside my constituency which employs a large number of my constituents announced that unless something is done very soon 600 jobs will be at risk, mainly because of Common Market policy. I make no ideological argument about that. Anyone who has an interest in agriculture or in consumers knows that the pigmeat industry has gone through a difficult time because of the immense subsidies that are paid to Continental producers.

People think of my constituency and the area around it as the oil-rich Texas of Europe. That is all very well for those in property or in the oil industry, but for processors working in agriculture there is no alternative employment. If the processing factory closes, agriculture in the hinterland of the city of Aberdeen will suffer seriously.

A sense of realism has perhaps already begun to creep into Government thinking. The problems are there and the rhetoric of Opposition is no use to those who occupy the Government Benches. The Secretary of State for Scotland has said that he wants to do everything possible to keep this factory going. His Ministers are prepared to meet the trade unions to discuss the matter, and the date of that meeting will have to be confirmed. But the Government must realise that it is no use making such statements unless they are prepared to do something to keep industries in being whilst the nuts and bolts of the problem are sorted out.

If there is to be a free market and if factories are to be allowed to close, the people who are unemployed cannot expect any help. The Government will have to live up to their promises during the election and just after it. The Secretary of State for Scotland said then that he wanted the needs of the North and North-East of Scotland to be taken fully into account in Government thinking. Within days of his taking office he faces the first test of his integrity and his intentions. We shall mark very carefully how things develop. This will be a bench-mark for the Government's intentions.

The same is true about shipbuilding. The Gracious Speech says that Other proposals will reduce the extent of nationalised and state ownership and increase competition by providing offers of sale, including opportunities for employees to participate where appropriate. I have seen no great demand from the former yard owners to know how quickly they can have the shipbuilding industry back. They are not saying that they want it back in a hurry and that they will even agree to take it back on the same terms as those on which the Government were prepared to take it over. There has been a deathly silence from the former owners because they, more than anyone else, know precisely the problems facing the shipbuilding industry—the problem of massive world over-capacity in relation to the number of orders being placed. If we are serious about providing people with meaningful employment and about the British and world economies picking up, it is no use, once these great industries have been shut down, thinking that they will be quickly reopened. There is no great entrepreneurial spirit to start new shipyards or car factories these days.

Contrary to the view expressed by the hon. Member for Leek, during the period 1970–1974 the money that was released by way of tax reductions went not into manufacturing industry but into property speculation, where the fastest buck could be made. If we make the same mistake and allow our shipyards to close, when shipping orders are available there will be no rush of people coming forward to invest in and to build shipyards here.

Mr. Hooley

In so far as there is any entrepreneurial anxiety in shipbuilding, cars and similar activities in this country, it is an anxiety to get out of this country and to go to South Africa and such places to exploit cheap labour.

Mr. Hughes

My hon. Friend anticipates the last point in my speech.

It is necessary for the general health of the shipbuilding industry and the interests of our mercantile marine and ship owners to ensure that we maintain a viable shipbuilding industry. I believe, and have publicly stated, that the shipyard in my constituency is of such quality and efficiency, and has such good industrial relations, that whatever happens it will survive even the ministrations of a Tory Government, provided that the Government are willing to give some help to the country at large and to shipbuilding in particular. We need a back-up from the Government. They must consult ship owners and discuss ways of replacing out-of-date ships so as to provide a fast, safe, mercantile fleet for the future. That means looking again at some of their beliefs about subsidies. All countries subsidise their ship-owning and shipbuilding industries to a far greater extent than we do and have done so far. If the Government want this industry to survive, they will have to look at their scrap-and-build policy for merchant shipping.

There is one matter in the Gracious Speech with which I agree, though I have my reservations on the firmness of the policy. I refer to the part of the Gracious Speech which states that the Government will work for an agreement on a common fisheries policy which takes account of the need to conserve stocks and the interests of our fishermen. I should have taken this more on its face value had it not been for the unedifying spectacle of six Tory candidates in the North-East of Scotland panicking at the last minute about the possibility of either winning seats or holding their own and sending a telegram about 48 hours before polling day to the then Leader of the Opposition saying "Please adopt a sensible fishing policy." That was after we had argued fishing on innumerable occasions in the House over four and a half years. What can be cobbled together within 24 hours of receipt of a telegram can be uncobbled just as rapidly.

The Tory Party in opposition, by and large, gave considerable support to my right hon. Friend the Member for Deptford (Mr. Silkin) when, as Minister of Agriculture, Fisheries and Food, he was engaged in negotiations on behalf of our fishing industry. As I said, by and large the Opposition parties gave him a great deal of support. It was not an ideal situation. However, when we were in Government, they always said that if we stood by the fishing industry they would give us their full support. If this Government go along with the general policy that we pursued when in Government, they will get my support. This issue transcends party politics. If they continue to work for a reasonable and sensible fishing policy, they will have my support.

I dare say that the repeal of the Scotland Act is coming. I do not object to that. Probably the only thing that has given me any pleasure from the election has been the fact that we have cut the Scottish National Party down to size. I believe the SNP to be one of the most destructive forces in British politics. We are not on television, and I do not like using props, but I should tell the House that last week I met some shop stewards in my constituency. One of them said "Let me see your braces." When I showed him, he said "There you are, lads. I told you that he would have their guts for garters." He was referring to the SNP. In a sense, we have got their guts for garters. I believe that this is a tremendous responsibility and that it rests more on the Opposition side of the House than anywhere else.

We must not give the SNP the opportunity to grow by feeeding on the statements that we make in Opposition. We must break this axis or artificial barrier of the border between Scotland and England. People in the North, North-West and North-East and as far down as the South-East of England share the same problems as the Scottish working class—problems arising in connection with unemployment, housing, inner urban city decay, education and health. I am pleased to see the hon. Member for Edinburgh, Pent-lands (Mr. Rifkind). If we make the mistake of telling him and others that the Government have no mandate to govern Scotland, we shall begin to boost the SNP again.

I regret that the election result, in terms of Labour versus Conservative, in Scotland was not repeated throughout the rest of the country. However, we must not make the mistake of saying that Scotland is isolated from the problems or the successes of the rest of the United Kingdom. I shall certainly hit the Tory Party hard where I believe it has failed people in my constituency and elsewhere. But unless we build on this unity of purpose to see our country grow in strength, we shall again feed the SNP, just as in many respects the Labour Party sired the SNP by pointing out the problems in Scotland. We did not make the connection. It was not because it was Scotland; it was because of the pull of the free market economy on London and the South-East.

We must resolve the problem of spreading prosperity throughout the country. I see the problems of ordinary working people in the southern half of England as I go about London. Their problems are much the same as Scotland's regarding education, housing and so on. Unless we realise that we must all work together towards a common future, the defeat and rout of the SNP will be of a temporary nature only. I believe that it must be made permanent.

No hon. Member will be surprised that I believe that the return of a Tory Government is bad for this country. Bad though it may be for this country, I believe that unless we are extremely careful it will be disastrous for a part of the world about which I care deeply—Southern Africa.

We often hear the rhetorical question—no one ever asks this question except in rhetorical terms—"What is freedom?" We take for granted the ordinary freedoms of this country. We take for granted the right to vote, to say what we like, to move about the country as we like, to have a good future for our kids, to be members of trade unions and to have political parties. Those rights are almost totally denied to the people of Southern Africa.

If we recognise the result of the internal election in Rhodesia—Zimbabwe as we prefer to call it—I believe that we shall be setting the seal on a decade, if not more, of utter tragedy for the people of Southern Africa. By "the people of Southern Africa" I mean all those who inhabit that part of the world.

During the election campaign the right hon. Member for Cambridgeshire (Mr. Pym)—now Secretary of State for Defence—sent a message to Southern Africa. He said that the Tories were the friends of South Africa and he asked South Africa to help the Tory Party to help it.

Freedom for the people of Southern Africa is non-existent. The only way in which they can get their freedom is by fighting for it, and increasingly they are doing just that. I regret that their only alternative is to fight for their freedom. I shall support them in that fight, recognising that things will happen which I do not like and of which I disapprove.

We should realise the tremendous influence that we have over the future of South Africa. We would be making the biggest mistake that we have ever made by recognising the so-called internal settlement and the puppet Government that the South Africans are trying to establish in South-West Africa—Namibia—and believing that the South Africans really are moving towards a fairer and freer society.

The real test of Britain's intentions is how we approach this great issue, whether we think that freedom is something to be bargained with in terms of East-West dogma, and that the right of people to be free is based on whether the leaders of a country are thought to be pro-West or pro-East. We cannot bargain with the right of people to be free.

I hope that the Government will think very seriously about their previous decision not to support a further full-scale inquiry into how the major oil companies breached United Nations sanctions regarding oil delivered to Rhodesia. That will be one of the touchstones which the Prime Minister and the noble Lord from the other place will have to face when they go to Lusaka.

Are we serious about our integrity and honesty? If we are serious, I believe that we shall appreciate that we cannot achieve freedom in Rhodesia until we recognise the importance of the Patriotic Front. Unless the Patriotic Front is involved in properly superised elections, there can be no future for a peaceful solution. I desperately want a peaceful solution in South Africa, but the Tory Government saying that they are the friends of South Africa is quite the wrong way to go about it.

I hope that the Government will maintain the arms embargo on South Africa, and that there will be no attempt in the United Nations to veto an effort to impose economic sanctions. It is only by showing that we are resolute, and in favour of the people of South Africa fighting for their freedom and giving up their lives for their freedom, that we can avoid the greatest tragedy of all time.

I finish by asking a rhetorical question—"What is freedom?" It is not simply a question of how much money a person has in his pocket, which is the simple test, the litmus test, that Government Members apply. After all, the freedom of us all is limited. We cannot go outside and decide that we shall drive up the right-hand side of the road. Is that not a limitation of freedom? People are not free to sell heroin in the streets—that is also a limitation of freedom. The question of limitations on freedom, and freedom itself, is a matter of where one draws the boundary and how one sees freedom. Freedom is a theoretical concept, a philosophical concept; however, it is much more than that. It is about peoples lives—the rights of people to grow up in a decent society, to participate in society, and to be free from the fear of unemployment and hunger. In many cases that fear has not totally disappeared.

The only way that this country can grow and prosper is by the participation of the people and their involvement in society. I cannot see how we can grow and prosper as a nation and a people unless we establish a democratic Socialist Government in this country. Whatever arguments we have for short-term or long-term aims, the main philosophical divide will remain between us, which is, how do we recognise a person's value in society? I value people as individuals and I value their freedom and their integrity. We cannot have that without Socialism. In my view, freedom and Socialism go together; we cannot have one without the other.

I shall certainly fight for those whom I represent, who returned me with a very big majority. I believe that we must carry on the fight—yes, the ideological fight—about philosophy and where we are to go. That really is the question that people have asked us to resolve.

7.54 p.m.

Mr. John Wakeham (Maldon)

First, I congratulate my right hon. Friend the Prime Minister not only on the content of the Gracious Speech but on her speech in the Chamber this afternoon. I thought that it was an absolutely first-class start to the career of this Government.

We have had a number of interesting speeches this afternoon. Some of them have had a little of the flavour of the hustings, though they were probably none the worse for that. I exclude the hon. Member for Aberdeen, North (Mr. Hughes) who, I thought, made the sort of thoughtful speech that we have come to expect from him. My comment on his experiences with the SNP and his braces is that I hope his trousers will stay up for many years to come. I agree with him when he says that the nation has not really started to come to grips with the real long-term problem of dealing with unemployment and the changes that are necessary in our society over the coming years. If we do not get some of our fundamental industrial problems right there will be, as he pointed out, a massive increase in unemployment. We differ substantially as to the solutions, but the gravity and extreme seriousness of the problems before us have not been fully recognised. However, I do not want to pursue that matter today.

First, I refer to some of the remarks of my hon. Friend the Member for Saffron Walden (Mr. Haselhurst), who raised the question of the third London airport and the problem that the Government will have deciding what to do about airport policy. Naturally, my hon. Friend was very concerned about Stansted, because it is in his constituency. I must immediately declare an interest myself, because Maplin is in my constituency Though not in the most populated part, it is not very far from where most of my constituents live. Not surprisingly, however, I disagree strongly with a number of my hon. Friend's remarks.

As a nation, we must look very carefully at our real needs regarding airports. We should bear in mind that about 50 per cent. of the journeys from London airport are less than 500 miles. The feasibility of a Channel tunnel must be borne in mind when considering the final outcome of a third London airport and where it ought to be.

Secondly, we must be more careful in our calculations of the real cost of an airport and the infrastructure to go with it. Some of the recent estimates have, in my judgment, lacked the thought and care necessary to ascertain exactly what are the right alternatives for the nation.

Thirdly, we must decide whether airlines would readily go to Maplin or a coastal site without compulsion, or without the closure of Heathrow or Gatwick, which I believe would be an unthinkable solution.

Fourthly, we must look at the whole of our ground handling procedures to see whether they come up to the best international standards and, if not, whether any improvements can be made.

Fifthly, we must look much more carefully at the utilisation of our existing airports, particularly some of the regional airports, before reaching a decision.

Sixthly, I agree with my hon. Friend the Member for Saffron Walden that many environmental considerations need to be taken into account before a decision is made. Not all of them relate to inland sites. There are some substantial environmental considerations when dealing with coastal sites. One cannot argue all the points now. I merely say that I am doubtful whether a case can be made for a green field site anywhere, whether on the coast or inland.

A prominent and central part of the Gracious Speech concerns the reduction in direct taxation. That is not surprising, as it was a central feature of our manifesto and of the election campaign. The then Prime Minister took us very seriously in the campaign, and I do not think that anyone has serious doubts that over the next five years this Government will achieve a substantial reduction in the level of direct taxation.

The right hon. Member for Cardiff, South-East (Mr. Callaghan) tried hard to destroy that part of our election strategy, but he failed. He was bound to fail, because he was arguing in the face of movements which are evident not only in this country but in many other parts of the world where people are demanding lower direct taxation. Direct taxation has reached levels at which it is unacceptable not only to high-rate taxpayers but to people on average earnings. Therefore, we are bound to see a reduction, which is desirable for many reasons advanced by my hon. Friends.

We know of the effects of high taxation on incentives and the will to work, of the problems of the poverty trap, the problems of small businesses, and so on. However, if the nation is to prepare itself properly for lower direct taxation it must not look at the matter as merely a one-sided bargain. It must not consider only the advantages and think that there are no additional responsibilities flowing from them.

Many problems have arisen in our society from high direct taxation. All of them are bad. First, high direct taxation has produced enormous pressures, many of which have been accepted by Governments of all persuasions over the years, to produce exceptions to the general rule about paying taxation on the level of one's income. The first that comes to mind is mortgage interest. There are also reliefs for dependent relatives and housekeepers and exemptions for war pensions, and there is favourable tax treatment for contractual savings.

A good case can be made for all those reliefs. I am not arguing that they should not be continued, but they have distorting effects, some of which are not good. For example, it is not easy to sustain the argument that a contractual life assurance savings scheme should attract special tax relief whereas money invested in a small business does not attract the same sort of relief. The argument is sustainable only on the basis of historical precedent by a Government committed to supporting small business.

My argument is not that we must remove those tax advantages. What we must do, and what my right hon. and learned Friend the Chancellor of the Exchequer would be well advised to do when he is considering where best to give additional relief in his forthcoming Budget, is to concentrate relief on a general reduction in the standard rate of tax. That should be his first priority, rather than increasing the special reliefs. Clearly, reductions in direct taxation are desirable wherever they come, but his priority should be to reduce the tax generally across the board.

Secondly, high direct taxation has produced enormous pressure for fringe benefits, some of which have been conceded and some of which have not. There are pressures to increase the value of luncheon vouchers and to give tax relief for commuters. Cars are a fairly frequent perk of management, and there is pressure to extend that perk further. There are also the more fanciful ideas of free suits and similar items.

I know that good cases can be made for those benefits. Many of them concern essential items of expenditure, but some are not quite so essenial. There is nothing particularly worthy or desirable about a society in which there is a large amount of fringe benefits and people's tax affairs are complicated in that way. A Chancellor who manages to reduce direct taxation to acceptable levels has a good case for tidying up at the same time some of the less desirable features of our fringe benefit system.

The third thing that direct taxation does is to produce substantial pressure for what I think are correctly called legal tax avoidance schemes. It has always been a principle that the Inland Revenue, quite rightly, blocks them as soon as it has recognised them for what they are, but it has never done so retrospectively. The previous Government introduced legislation to tax retrospectively some arrangements which were perfectly legal. I hope that the new Government will firmly abide by what they said in opposition at the time, which can be summarised as the Rees rules, as they were known in those debates. While we must, of course, take measures to stop schemes of tax avoidance, I hope that the precedent of doing so retrospectively will not be followed.

A reduction in the level of direct taxation will reduce the pressures for such tax avoidance schemes, because they are not all simple. They are pretty expensive to set up and there is always substantial doubt about whether they will work. There is no question of anyone's receiving his fees and high costs if a scheme fails. While spectacular tax savings have been made by a number of schemes, savings which perhaps should not have been made, in many other cases people have ended up paying high costs and the tax that they sought to avoid. Nobody sheds any tears for them. I believe that a general reduction in direct taxation will have a major beneficial effect in removing that aspect of our society.

The budgetary cost is a matter of some dispute. The Chief Secretary to the Treasury in the previous Government estimated it to be about £200 million a year. The industry reckoned that it was much less—about 10 per cent. of that figure. Whichever figure is correct, it is insignificant compared with the other bad feature of our present high direct taxation—the black economy, or the cash economy. That is a major area which I think will be affected by a reduction in direct taxation. It is now a massive business. Sir William Pile, chairman of the Board of Inland Revenue, reckons that the black economy, or the cash economy, is now running at about £11 billion a year, or 7½ per cent. of our gross domestic product. In revenue terms, that is £2 billion to £3 billion per year of revenue that is not collected because transactions are done in cash in all sorts of forms.

All of us with any experience of life have seen examples of this. In my view, it is a direct result of high, direct personal taxation, but if we get direct taxation down we shall not eliminate all of it. Whatever the level of taxation, there are some people who seek to avoid it. I believe, however, that a reduction in the level of direct taxation will reduce the number of people who are inclined to be dishonest. The temptation will be reduced. The weak will perhaps still succumb, but many more people will pay their tax honestly and not indulge in this cash economy. No one wants to pay any more tax than is necessary. No one likes to do that, and if we can reduce the levels of direct taxation we can start to tackle some of the problems of tax evasion.

The Inland Revenue still has a substantial area in which it can help itself. If it can get itself more up to date, which could flow from a simplification of our tax system, it would be better able to chase those who are behind with their tax affairs. Those who are behind are usually the ones who have something to hide. I believe that the Government should press the Revenue very hard to get up to date with its computer programme, which has got substantially behind. This will be a serious problem.

If the Revenue can be brought up to date it will have a better chance of dealing with other problems. It should look again at the problem of self-assessment for personal taxation. In a strange way, a self-assessment system, with proper auditing procedures, will produce a higher tax morality than the present system, under which the attitude seems to be that it is fair game if one can get away with it and that if the Inland Revenue does not notice, that is bad luck. I believe that the responsibility thrust upon people to make their own returns, according to a clear timetable, using their own assessment to claim tax back or to pay over the additional tax, would produce a substantial improvement in morality.

I therefore see other factors flowing from the Government's welcome commitment to reduce direct taxation. It will present an additional and welcome challenge to our nation. We shall be more free, I hope, to earn a little more and to keep a little more of what we earn. We shall have to recognise in that new society that we have additional responsibilities. One of the additional responsibilities will be to see that, even though taxes are lower, we all pay our proper share.

8.13 p.m.

Mr. Thomas Cox (Tooting)

I read parts of the Gracious Speech with some interest but other parts with deep concern about the possible effects on the type of area I represent in this House. I represent the inner city area of Tooting, in South London, where one finds many of the problems that exist in the large city areas of this country. I do not believe either major party in this House disputes that there are some major problems in our large city areas which the Government have to face and try to help to overcome. The only way those problems will be resolved is through a partnership of local authorities and national Government to see that financial help is available to make the improvements we seek. I hope that before the Government embark on major public expenditure cuts they will look closely at the possible effects on the large city areas.

On housing, I do not dispute that the policy outlined by the Conservative Party during the election on the right of people to buy their own council houses was popular. It is not opposed by the Labour Party. We have never opposed the right of people living in council property to buy their houses. What we oppose is the indiscriminate selling of council property, irrespective of how long a person may have lived there. If that policy is followed by the Government in the sense that we are led to believe and there is to be no residential qualification about how long a person will need to have lived in the house before he has a right to buy it, it will only worsen the housing problems, certainly in areas such as mine.

I cannot believe that any London Member, irrespective of what party he represents in this House, would dispute that the overriding issue about which we are contacted through the post or at our advice services is the question of housing. A person comes along and says "Look, I have nowhere to live. How can I possibly find somewhere in this locality?" People may be living in accommodation that is no longer suitable either for themselves or their families and therefore seek a transfer. In large city areas, the scope for building property is now fast declining. In the borough of Wandsworth very few sites are available where the local authority, if it so wished, could start to building council properties.

The point I must make is that as more council properties are sold, so the opportunity for people to get out of bad housing accommodation will be reduced. In the borough of Wandsworth—not in my constituency but in the constituency of my right hon. Friend the Member for Battersea, North (Mr. Jay)—there are several high-rise tower blocks. For a considerable time there has been a campaign in the borough by people seeking to transfer out of that accommodation. I am sure that hon. Members can readily understand the problem of young mothers with children as they lug prams up and down in lifts or the problem of elderly people who find they have to walk up several floors because the lift is not working. What hope will there be for those people of moving out of very unsatisfactory accommodation into more suitable accommodation if we are to see from the Government a virtual free-for-all for anyone who has the money or is able to raise the necessary deposit to buy council property?

Elderly people come to me to explain that they must live on the ground floor. There is also the problem of disabled people who are unable to climb stairs. What will be the opportunity for those people to move into the kind of accommodation that they are not only seeking but have a right to live in? I hope that this matter will not be quickly dealt with under the guise of another election promise. I hope that some thought will be given to this important issue in the inner cities. I am sure that many hon. Members on both sides of the House find that this is a real problem, whether they represent the large city areas or the small towns of this country.

I turn to the question of education, London has many old schools, some built well over 100 years ago. Although they are structurally sound, their facilities leave much to be desired. In inner London—I am sure that the same applies to education authorities throughout London—school rolls are falling. In Wandsworth there is a lively campaign, actively supported by parents and teachers—I am sure that we welcome the development of parent-teacher associations—to ensure that education authorities do not take teachers away from schools when rolls fall.

In my area, people know that some children have learning problems and that standards need to be raised; they say "We now have the opportunity. Teachers are already teaching in the school and as rolls fall we hope that they will remain and help to overcome some of the problems, devoting far more time to children, in the classroom and outside."

The Government talk about public expenditure cuts. The education budget was identified during the election as one of the areas in which cuts could be made. I hope that this will be reconsidered. No matter what schools their youngsters attend, all parents want their children to have the best possible opportunities. Nothing will make them more bitter than public expenditure cuts that fall on something they want maintained, while at the same time the Government allocate money for what many people, certainly in the Labour Party, believe are the privileged few in education.

One point in the Gracious Speech particularly interested me. I see a new Home Office Minister on the Front Bench. I do not know whether this matter is his responsibility, but, if not, I am sure that he will convey it to his right hon. Friends. I read with interest the statement that the Government want to improve the prison system.

I regret the fact that prisons are rarely discussed. In my nine years as a Member there have been, I think, only two debates. The general public have no interest in the prisons or in those who run them. They are obviously interested in policemen, and I do not criticise that. They can readily identify with policemen but cannot do the same with prison officers.

Our prisons are an utter disgrace. Anyone who has visited a prison cannot but be thoroughly ashamed of their conditions. The vast majority were built well over 100 years ago. They lack modem facilities. Many are grossly overcrowded, with little opportunity for constructive work or education. In many prisons, men—I am referring predominantly to men—are locked up for well over 20 hours a day.

I used to represent the constituency which includes Wandsworth prison. Although I no longer do so, many prison officers live in my present constituency.

They feel great bitterness about their treatment, and have done for a number of years. They have a job to do, but they feel that no one is concerned about the way in which they do it, or in what conditions.

I do not know the figures—I have tabled a question to find out—but without doubt there are several hundred vacancies for prison officers. They work a vast amount of overtime to cover the key roles of prison supervision. I therefore welcome the present inquiry into conditions in our prisons. It is the Government's last hope for restoring confidence to those who run our prisons. But that is only one aspect of what I hope will be considered over the next two or three years.

At least 60 per cent. of the men and women now in prison should not be there. I do not dispute that many need care. In every major prison in the United Kingdom are men and women who are mentally ill. They will find little treatment in the prison system to help them over their problems. How can we justify the fact that we have nowhere to send our alcoholics but to prison? They may go to prison for a month, which does them no good, and their first port of call on release is to get a drink.

I hope that one of the first priorities of the Home Office will be an urgent meeting with prison governors—not, I stress, with Home Office officials. I have great respect for those officials, but they are often out of touch with what is happening behind the walls of our prisons. It is of the greatest urgency that prison governors should be consulted about how they see the problems in their prisons and the kind of help that they want from this Government to overcome them.

There has been a great deal of disturbance in prisons in recent months, much of which, thankfully, has been contained.

The Minister of State, Home Office (Mr. Leon Brittan)

indicated assent.

Mr. Cox

I see the Minister nodding. This disturbance shows the simmering problem in our prisons. All the signs are there to be seen. If we neglect this problem, all hell will break loose before very long. That is why Mr. Justice May's inquiry into prison conditions is to be welcomed. One hopes that its report will be published in the next few months. Whatever other commitments the Government may honour, I hope that they will decide to act in this area, although they made no commitment to do so. Time is on no one's side.

The next few years will be of great interest to hon. Members on the Opposition Benches and of even greater interest to the people of this country. Any incoming Government are entitled to say "These are the issues on which we campaigned, and we shall seek to act accordingly." They have a right to do that, however much we may dislike it or seek to oppose it.

I hope that whatever legislation the Government seek to introduce, they will do so for the benefit of all sections of the community and not just of one, because that is the fear of many of us who represent areas with enormous problems. If we cannot look to the Government to work with the authorities that we represent, there will be a very difficult future for the country.

8.30 p.m.

Mr. Hal Miller (Bromsgrove and Redditch)

I agree with the hon. Member for Tooting (Mr. Cox) about the prison service, and, like him, welcome the commitment in the Gracious Speech to support and improve it, particularly in terms of the state of morale of prison officers. I also welcome the commitment made today by my right hon. Friend the Prime Minister. I disagree with the hon. Gentleman's fear that the Government will legislate and act in the interests of only part of the community.

That accusation has been made by several other Opposition speakers, and I want to deal with it because it was made clear to me, from previous experience and during the election campaign, that the people suffering most from the levels of taxation are the poorest. They are the ones who are not willing to work overtime because the tax rate is so high; they are the ones who give up jobs in hospitals because the money is not worth it after taxation. How does the hon. Gentleman explain away the pages in my local newspaper listing unfilled vacancies, despite unemployment? I talked to someone who said that he was not bothered to work. I shall not go into the moral aspect, but I suggest that the disincentive of taxation is hitting right across society, not just among the managers, the professional people or the entrepreneurs but right down to the shop floor and the widow who wants to go out to work. I hope that we shall hear no more accusations of one-sidedness on our part.

In this debate I am the first Tory voice from the West Midlands. I am happy to say that the Conservative Party would not have formed the new Government without the performance of Conservative candidates in the West Midlands, and I congratulate my hon. Friends who have joined us from there on their great victories. But there are lessons which need to be learned by all of us from those outstanding results.

The first lesson is for the Socialist Party, in trying to work out how it lost contact with its erstwhile supporters. The more important lesson is for us to make certain that we keep the allegiance of those former Socialist supporters. It is noteworthy that it was the car workers, whose cause I have so consistently championed in this House, who provided the largest proportion of our success. If one examines the results in constituencies with car plants—constituencies such as Bebington, Luton, Southampton and Basildon—one sees that they all returned Conservative Members, and that was quite apart from the results in Birmingham and Coventry.

We have a responsibility to look after these people, who have given us their trust for this Parliament. I stress "for this Parliament", because we shall have to earn that confidence. That is why, during the election campaign, I was so relieved to have the speech by my right hon. Friend the new Secretary of State for Employment, pointing out the Conservative Party's commitment to the future of British Leyland and Mr. Michael Edwardes, and to see in the Gracious Speech that the National Enterprise Board was not to be abolished but only to be restricted in its activities.

I shall be seeking clarification on that point, but I take it that the restriction relates to the large sums of money unnecessarily voted at the end of the last Session to finance further entrepreneurial activity by the NEB rather than to the continuing support for British Leyland and Rolls-Royce.

I wish to touch on the situation in the West Midlands. Out of modesty, I shall refrain from drawing attention to the "Midlands Manifesto" published by myself and my right hon. Friend the Member for Worcester (Mr. Walker), and will take my text from a, recent speech by the chairman of the West Midlands Economic Planning Council, who was a Socialist appointee and not thought necessarily to favour the Conservative point of view. I am trying to give a balanced view. He said that the situation in the West Midlands was "indeed serious".

The loss of jobs is such that we have the highest regional percentage of unemployment in manufacturing industry. There is much talk about the problems of the North-West and the North-East, but the industrial heart of our country has been allowed to decay, and that process was hastened by the policies of the last Government. That is why we see, for instance, that the GDP of our region has dropped from being the highest in the country to the lowest. We have the lowest net output per worker and we are faced with a serious situation in our manufacturing industry. Our decline there has been matched, as might be expected, by declines in the rule of law and the maintenance of public order.

Crime has risen throughout the country, but it has risen three times as fast in the West Midlands. That is why I welcome the Prime Minister's determination to restore peace to our streets and homes. I assuure her of our solid support in that endeavour.

The West Midlands has also been an underprivileged region in terms of health services. The new town in my constituency still has no casualty service after normal working hours. That situation has endured for two years because of a dispute between the bureaucracies of the area health authority and the DHSS about who is eligible for what sort of payments and in what amounts. All the while, the people have suffered.

I admit that the DHSS has made an attempt, through the resource allocation working party, to devote additional resources to underprivileged health districts such as my constituency. The serious difficulty is that in order to remedy the imbalances, it is necessary to spend more money before one can start saving money.

For example, because of the attempts in the Birmingham district to save money, cancer chemotherapy treatments were sent back to my district, with the result that the increase in our drugs bill has been so huge that our health district is now seriously overspent and there is great concern about how even the present minimal services can be maintained, let alone how we can staff the new health centres for a constantly increasing population.

The House will have some idea of that rate of increase if I point out that the size of the electoral register increases by about 5,000 voters a year. In parenthesis, I can tell hon. Members that we have nearly 18,000 new voters in my constituency since October 1974, and my majority went up by 14,000 at the last election. There are real problems and I have no hesitation in drawing them to the attention of my right hon. and hon. Friends.

I come back to the question of our manufacturing capacity. As so many of my hon. Friends have rightly said, we shall never get the resources that we need for health, housing or education services unless we create the wealth. We must really use every weapon in our power. That is why I was so relieved that the National Enterprise Board was not to be abolished. It is one of those weapons.

We need to find additional resource for the NEB, but not by taking it from the taxpayer, as proposed by the last Government in the last weeks of their life. That was to be £4.5 billion—an extra £3.5 billion over that needed for BL, Rolls-Royce and the real commitments. That extra £3.5 billion represents 7p income tax.

We need to find additional sources of finance. That is why I was so interested in a recent article in the Financial Times which put forward the idea that fund managers should be encouraged, along with the NEB, to place funds where they are needed. We need to improve the use of our resources everywhere, but particularly in our manufacturing industry. We need to generate resources and improve their use. There is a role there for the NEB. It would have had to be re-invented—as it was re-invented from the IRC—if it were abolished. Perhaps it would come back in a slightly different form, but let us not be too theoretical about these things. Please let us be practical.

I am not asking for extra handouts. I have made that plain. We need to find additional ways of generating resources and putting them to use. The NEB certainly needs to be much more accountable to this House. When he appeared before the Public Accounts Committee, the chairman of the NEB did himself a grave disservice by his extremely truculent attitude. He had no right to pretend that he could operate as the completely independent merchant banker that he once was. If he is dealing with public money—and public money as well as private money is channelled through the NEB—he has to be accountable for that money according to the conventions in force for handling public money. Indeed, those conventions must be strongly reinforced. That point was made during debates on our procedure.

Mr. Hooley

I can understand the hon. Gentleman's nervousness about his party's policy on the NEB. He is trying to back his horses both ways. The record of private enterprise in the investment of private money in the car industry was absolutely disastrous for three decades. That is the basic reason for the problems of British Leyland. The hon. Member knows that better than anybody.

Mr. Miller

The hon. Member for Sheffield, Heeley (Mr. Hooley) is, as usual, mistaken. The intervention in Chrysler was, necessarily, only temporary. Chrysler had subsequently to be re-rescued by Peugeot, a private enterprise firm, despite the only planning agreement concluded in British industry. That showed the worth of planning agreements. Let us get the record straight.

I move from the problems of the West Midlands, which I am sure will be mentioned in other speeches, to two further questions. The first is pensions. It is impossible to explain to a pensioner why his pension increase should not be backdated to April. We know that it is calculated on the basis of an increase in prices from April to November. There is a further estimate from the November to the following April. The recent uprating was a result of that estimate being inadequate, because of the increase in inflation under the last Government.

It is impossible to explain the two elements to the pensioners. Their scepticism will be reinforced because of the way in which it has been found to be possible to backdate Armed Services and police pay. They will not receive any more at the end of the day, but the pensioners cannot accept that they have been fairly treated. I urge my right hon. Friend to consider that matter at the first opportunity.

I turn to an issue that was omitted from the Queen's Speech—Hong Kong, which is still a British responsibility. The people of Hong Kong look to the new Government for an assurance that Britain will continue to be responsible for their interests and to care for them. That is of particular importance in the context of trade negotiations in the EEC and in such agreements as the multi-fibre arrangement. Hong Kong's experience under that arrangement was as predicted. The restrictions imposed on Hong Kong did not benefit the importing countries but allowed for increased imports from new suppliers and developed countries, thus impeding progress in Hong Kong without any benefit to the manufacturing industries in the importing countries.

Facts and figures can be provided. We must be careful when considering further modifications to the preferences system and to renegotiation of the MFA. My hon. Friend the Member for Howden (Sir P. Bryan) will refer to refugees in an Adjournment debate later in the week, so I shall not discuss that issue. The people of Hong Kong look to the Government for an early statement of intent.

My view of the Queen's Speech is based on two phrases—"a fair balance" and "improve the use of resources". A fair balance has been struck, despite the rhetoric, which smacked of the hustings, that we heard this afternoon. Liberal proposals are made in the Speech, particularly on official secrets and the law of contempt, which reflect great credit. That is apart from the willingness of a Government—which is surely unique—to contemplate reforming our own procedures to improve our control of the Executive.

The Queen's Speech echoes my concern to strike a fair balance and to achieve an improved use of resources.

8.49 p.m.

Mr. Frank Hooley (Sheffield, Heeley)

The Gracious Speech is a wrecker's charter. Destroy, destroy, destroy is the theme that runs through it. The Prime Minister said that the Government would repeal, repeal, repeal. She said that the Government would repeal the Community Land Act. It is ironic that today we have seen headlines describing the last echo—perhaps not the last—of the fringe banking crisis and crash of 1972–73. That arose as a result of the green light given by the Conservative Party to every type of reckless speculation in land and property. Now the Conservatives are back again, calling for the repeal of the Community Land Act 1975. The landowners and property speculators are to be allowed to carry on with no check or control over their activities. The one possible barrier to speculation in land is being swept away. That is a central feature of Conservative policy.

The Conservatives are calling for the repeal of the Community Land Act, of the Scotland Act 1978, of the Wales Act 1978, of the Education Act 1976 and of the measures dealing with shipbuilding and aerospace. They want to go for a stripping of public assets and public wealth which, I suspect, will make the asset strippers of the 1970s look like simpletons. The Conservatives want to wreck the Industry Act 1975, to emasculate the National Enterprise Board, to destroy the Price Commission and to destroy the central principle of the National Health Service, which is that treatment shall depend on need and not on capacity to pay. Those are the main legislative proposals in the Gracious Speech—destroy, destroy, repeal, repeal. That is the message that the Conservative Government are putting to the House and the country now that they are in office.

Oddly enough, the Conservative Government are silent on the British National Oil Corporation, and I am curious to know the reason for that. Perhaps even those on the Conservative Front Bench are ashamed of the notion that they should seriously contemplate selling off the expertise and assets of this great public corporation to American oil companies or to some other transnational oil companies. What is it that the Conservatives have in mind for BNOC? Perhaps they would like to tell us. The Gracious Speech is silent generally about energy policy. The Government may come to regret this, because energy policy, even though we are well endowed with energy resources as a country, will be an important arguing point in our dealings with the EEC over the next few years.

The sentence that I want to take up in the Gracious Speech is the one which says: My Ministers will have regard to the need for trade with, and aid to the developing countries. What that rather vague phrase "have regard to" means I do not know. It needs some spelling out in the course of the debate. There is a sense, of course, in which the Government could hardly do other than have regard to the need for trade with developing countries, since many of those countries supply the crucial raw materials on which the industry of this country depends. Our steel industry, for example, has to get its cobalt, manganese, chrome, molybdenum, titanium and other raw materials, which are essential for the high-quality alloy steel produced in Sheffield, and which subsequently goes into the engines of Concorde and other high technology products of this country—

Mr. Alan Clark

Some of them come from South Africa.

Mr. Hooley

Some of them come from South Africa and some do not. Cobalt came from Zaire, and is now to come from Zambia. It does not come from South Africa. I agree that there are supplies of these materials which come from South Africa, and that is another aspect of the problem to which the Government will have to have regard.

Apart from being a source of raw materials, developing countries are also nowadays important markets. Countries such as Brazil, Mexico, Venezuela, Nigeria and Korea—apart from the oil-rich countries and apart also from the important markets in the Far East such as the ASEAN countries and China—will provide important markets for this country if we take advantage of the opportunities which they offer and if we show some concern for and understanding of the problems of developing countries. Apart from that rather vague reference in the Gracious Speech to the Third world, it might as well not exist for the Conservative Party.

There is no hint of how seriously relations with the Third world will be taken by the Government or of what their policies will be on the crucial issues of aid and trade. That is surprising, because there is an extremely important international conference in Manila—UNCTAD V—at which the Third world countries are putting forward serious demands in their quest for a new international economic order. So far as I know—I may be wrong—the Government have not even seen fit to send a Minister to that conference. I shall withdraw that remark if I am wrong. It is my understanding that Britain is represented at that enormously important conference only by a civil servant and that no attempt has been made to send even a junior Minister to represent us at Manila. Surely no less a person than the Secretary of State for Trade should be at the conference. The right hon. Gentleman should be fully aware, on the spot, of what is going on at the negotiations.

A number of matters will be covered at the conference, the first of which probably will be the common fund, which has been agreed in principle although there are many details to be worked out between the Third world and the industrial world. It is worth emphasising that Britain has an interest in the success of the common fund concept. As I have already said, we depend for all our industrial raw materials, apart from energy, on imports from abroad, and many of them come from Third world countries.

As a country, we would benefit from security of supply. Our industries would benefit if they could escape, at least in part, from the disadvantage of the wild fluctuations which have occurred in the price of raw materials—for example, cobalt—over the past few years and caused serious difficulties to certain firms in Sheffield and elsewhere. If it is possible to bring some stability into raw material prices, that will help our counter-inflationary policies and provide more stable markets, and probably more lucrative markets, for our exports to the developing countries, which depend heavily on the export of important industrial and agricultural raw materials.

It seems that Britain would have a strong interest in securing at least some advance towards a more stable system in the commodity markets and would have much to gain from the success of a common fund arrangement linked with a series of international commodity agreements. The poorer countries have a right to a greater say in the international management of raw materials. They have a right to move along the line of a greater degree of processing of these materials, and possibly even some manufacture from them, to increase their living standards. which would be of benefit to the world at large.

I suggest that the Government should pursue three lines of action on the common fund apart from taking a more immediate and vigorous political interest in the whole argument. First, I believe that Britain should pledge a contribution to the proposed second window of the common fund of not less than £30 million, which would be of assistance to the developing countries. Secondly, I hope that the Government will use their influence to ensure progress in the negotiations of individual commodity agreements. I accept that that is not a matter within the hands of the United Kingdom alone. We have to negotiate with other partners and with the producers, but we can have some influence. Our attitude might be important. Thirdly, we might assist in the funding of research into the Marketing and distribution of certain commodities. Fourthly, we should press for the reform of the common agricultural policy so as to improve access to EEC markets for agricultural commodities from poorer countries.

Those are all important aspects of the Manila negotiations. I hope that in the debate we shall be assured that preferably a senior Minister—but at least a junior Minister—will take charge of the Manila negotiations on behalf of the United Kingdom, will press for these points to be brought home, and will co-operate with our EEC and other partners in making a success of the general negotiations.

The second matter of great concern to Third world countries is trade in manufactures. This will be a debating point and a matter of considerable international political contention over the next few years as a result of problems in the richer countries. I refer to the problems of unemployment and the decline of some industries, which will make those countries reluctant to show sympathy for or interest in imports from Third world countries.

There are some principles to which this country might commit itself in relation to developing world manufactures. First, we should be prepared to extend the general system of preferences for a further period and to commit ourselves to a substantial improvement in the system, its coverage, preferences and ceilings within the quotas laid down, especially for processed and manufactured goods which the poorer countries may supply. This will be a matter of considerable political sensitivity and argument.

We must accept that the countries of the world are interdependent. There is no prospect of the Western world getting out of its economic recession on any successful long-term basis unless Third world countries participate to a greater extent than at present in a general expansion of world trade. We should also affirm that import restrictions on developing countries' products are exceptional and that a special case must be made for them if they are to be adopted at all.

I do not disguise the fact that this is a difficult area of public policy. Arguments will be advanced by British industries against allowing any more manufactured goods in from any of the developing countries. If we are to expand trade, it cannot be done only through GATT and the Tokyo round agreements. Special consideration must be given to and special arrangements must be made for the manufactured and processed goods of the countries of the developing world if world trade is to expand, not merely to their benefit but to ours.

Another matter that concerns the Third world countries at Manila is the behaviour of the multinational companies or, in United Nations jargon, the transnational companies, whose wages, working conditions, transfer pricing and marketing of products may be positively dangerous to the health and welfare of peoples in the poorer countries.

On all those matters it is necessary that an international code of conduct should be worked out, and possibly that some form of legal sanction should be adopted if the multinational companies do not observe the code of conduct. Otherwise, there will simply be increasing resentment and suspicion by the Third world countries against the multinational companies. To be fair, those companies could provide many Third world countries with important bases for developing technology and the transfer of technology.

There is the question of the flow of resources from the richer to the poorer world The Prime Minister said that the aid budget would not be exempt from any general cuts or general review. To be fair, I think that the right hon. Lady referred to a general review of public expenditure. I hope that the Conservative Party will at least honour the arrangement which the previous Government made, under which the aid budget is planned to grow at 6 per cent. a year over the next few years; that there will be no reneging on the arrangement to write off the debts of many developing countries; and that we shall use our influence in the IMF and through the Lome agreement to promote arrangements such as the compensatory financing facility of the IMF and the STABEX scheme within Lome to help the poorer countries which run into balance of payments difficulties on account of falls in commodity prices or for other reasons.

Finance for development is still extremely important. I stress again that there is a mutuality of interest in this matter; that it is not just a question of the richer countries handing out money to the poorer countries as though it were some sort of charity. It is a matter of stimulating and developing world trade to the mutual benefit of the Third world countries and ourselves.

UNCTAD V will not, of course, be the end of the debate. It is just one of a long series of conferences which have discussed this matter of the economic and trading relations between the richer world and the poorer. The debate will go on. There are many aspects to it, many technical considerations, many difficulties and many problems. It is essential that this country should recognise that there is a mutual interest in solving these problems, that it is not a question of suppliants asking for charity, begging for crumbs that fall from our table. The Third world possesses resources which are essential to us and without which the car industry in the constituency of the hon. Member for Bromsgrove and Redditch (Mr. Miller) or the steel industry in Sheffield would come to a halt. In return for these resources the Third world is entitled to a fair and improved share in world trade and, above all, to a fairer say in those international bodies and institutions which regulate and govern the trading and economic relationships of all countries.

9.8 p.m.

Mr. Alan Clark (Plymouth, Sutton)

I first join the other right hon. and hon. Members who have congratulated you on your appointment to office, Mr. Deputy Speaker. We on the Conservative side have long had cause to appreciate the special wisdom, percipience and finesse that you have exercised in political matters, and we welcome the wider scope that these gifts will now enjoy.

I wish to deal with three points arising out of the Gracious Speech, all of them relating to home affairs. There is, first, the reference to prisons. I am sorry that I did not have the opportunity of speaking after the hon. Member for Tooting (Mr. Cox). I agreed with much of his speech. We have made a pledge that we shall support and improve the prison system, and that is plainly capable of somewhat subjective interpretation. If to improve the prison system means to see that those who are charged with administering it see their task better rewarded, we would certainly support that. Or does improving the system mean that we shall look very carefully at the question of reducing the prison population? It is common knowledge, as the hon. Member for Tooting said, that there are many people in prison who should not be there.

We know that the public regard prison as a necessary, desirable and essential sanction against those who commit crimes of violence. There is no suggestion that sentences imposed on those who commit crimes of violence should be reduced. However, there is an argument for reducing the prison population overall. Improving the prison system does not mean ameliorating the conditions of the inmates. Those charged with restraining prisoners and administering the prisons should have their conditions looked at first.

Only yesterday there was a recommendation by the Prison Officers' Association that the system of control units should be revived. I hope that we shall pay regard to that recommendation. There is an almost unanimous feeling among prison governors and officers that the control unit system is desirable and should be revived.

Secondly, there is a curious omission from the Gracious Speech. No reference is made to the pledge that we made during the election campaign that the question of capital punishment would be brought before the House. I hope that it will come soon, and that it will not come in some vague and amorphous motion that can be talked round indefinitely. What we would like, and what the public expect, is a Bill—and certainly a free vote—which will give us the opportunity to discuss a specific recommendation.

I have heard rumours that this response to a heart-felt public desire will take a reduced form—that the death penalty should be brought back only for crimes of terrorism. I doubt whether the death penalty is appropriate for crimes of terrorism. However, there is a real public demand that it should return to the statute book and that it should be at the discretion of juries or of judges, subject to the appeal procedures, which have time-honoured status in our legal system. I think that the public would take it amiss if we tried to restrict its scope before we laid it before the House and properly debated it. I hope that it will come before us not in a vague form but in the form of a Bill that will allow us to respond to the wishes of our constituents, because it was one of the matters raised most frequently in the election campaign.

There is a third subject, also relating to home affairs, which is somewhat complex. I hope that the House will be patient with me. I shall deal with this matter briefly at this stage. I gave a pledge to my constituents, many of whom raised this matter with me both before and during the election campaign, that I would draw it to the attention of the House at the earliest possible opportunity. I refer to the arrangements made for allowing Service voters—in particular, the families of Service men—to exercise their right to vote in a general election. This privilege, this essential right, is the I hope that Opposition Members will appreciate the importance of this matter.

This right has been obstructed—doubtless unintentionally—and made very complicated. We have had a whole range of difficulties imposed on what should be a perfectly normal procedure. Indeed, it has had added to it a special provision, which many Service families find curiously humiliating and in some cases believe to be dangerous.

The original arrangements for Service voting were dealt with under the Representation of the People Act, which governs our conduct during an election. They were then changed by an Act that we passed in 1976, which started as a Private Member's Bill, received support, and went through. Frankly, at the time, many of us who represent Service constituencies did not fully appreciate exactly what the consequences would be. I should like to pay tribute to the former Member for one of the Plymouth constituencies, Baroness Vickers, who saw exactly what the objections were likely to be and raised the matter very strongly in another place. Those of us who got in on the act perhaps rather later than we should, when the full scope of the difficulties that had arisen was made clear to us by our constituents, then tried to have changes made but were unsuccessful.

The result was that at the time of the general election, and in the months immediately preceding it, there was considerable disquiet and concern about the original arrangements applied to Service men, which were extended to their families. In particular, the requirement for attestation was extended from members of the Armed Forces to their wives. In other words, the wives had to subject themselves to a process whereby their declaration had to be attested by a commissioned, warrant or senior non-commissioned officer, who was quite often someone they did not know, and someone whose presence and scrutiny they might find objectionable for various reasons. Until this had been done, they were simply disfranchised.

After attestation, considerable exchange of correspondence had to take place. The wives had to write to their returning officer, receive the form back and contact him again if there was some defect—which there might well be—in the filling out of the form. Even if they went through all that procedure, they then found themselves included on the register as other members of the electorate but with the suffix "S" beside their names. Naturally, this caused them considerable anxiety. They asked why they should be singled out and identified. No other category of the electorate is identified in such a way. The wives questioned whether this might not lead to undesirable consequences for them and their families. Some of them told me that they were frightened of being the subject of terrorist activity.

As we know, atrocities have been committed by terrorist organisations at some of the barracks and against some of the families of our Service men over the past two or three years. The Service wives were concerned that, should there be a revival of that type of activity, they might be put in danger, because they could be so easily identified.

There were more practical anxieties. It is very easy for someone to obtain the electoral roll and identify Service wives by the suffix letter "S" There would also be a reasonable likelihood that such people would be living alone or might be alone for long periods, and they could be subjected to all kinds of pressures, whether from salesmen, people telling hard-luck stories, or even from persons making obscene telephone calls. There is a whole variety of perils to which people who live alone, and who can be easily identified as belonging to a particular category, are open.

A large number refused to go through this procedure, or avoided doing so, because of the complications of achieving the status that any ordinary citizen has automatically, by filling in one form and sending it to the local authority, and partly because even if they were to comply with this procedure they would find themselves identified and singled out and placed in a category where they might well receive undesirable attention of one kind or another. For that reason, they found themselves effectively disfranchised.

In my constituency there were at least 2,000 people who would have been on the electoral roll if the procedures prior to the 1976 Act had been left in existence and whose names, whether from anxiety, because they wished to protest, or because they were simply worn down by the sheer complications, did not go on to the roll.

I am sure that the whole House will agree that it is highly undesirable that a particular category of the electorate should be compelled—there is no ill will in my saying this—by bureaucratic complications, possibly well-intentioned at the start but ending with these consequences, to disfranchise themselves and to stand back from the electoral process. I very much hope that we shall find time at an early stage to correct this undesirable state of affairs.

The matter was raised with me many times. At the last minute, many of those concerned naturally had second thoughts and wished that they had gone through the procedures. They felt indignant about the issues and wished to vote, but it was then too late. I am sure that both sides of the House will agree that the matter should be corrected in the very near future.

9.21 p.m.

Mr. Nigel Forman (Carshalton)

Like so many of my right hon. and hon. Friends, Mr. Deputy Speaker, I am delighted to have this opportunity to extend to you my personal congratulations on your appointment to your most important position. I wish you many years of successful occupation of it, prior to, I hope, even more dramatic and glittering things later on.

I find the contents of the Queen's Speech most agreeable. I want to focus in particular on one or two aspects about which I believe the Government, for one reason or another, did not feel able to go into great detail.

First, the Gracious Speech says that the Government welcome the fact that progress is being made towards real measures of arms control and intend to play their part in this work I very much hope that Ministers at the Foregin Office, the Ministry of Defence and elsewhere who will be concerned with these issues will go fully into the implications of SALT II, which has still to be properly ratified and agreed by all the parties. I hope also that the right sort of preparations will be made for SALT III, which is bound to come afterwards. Western European interests will be very much involved, and it is vital that the right mechanism should be established in good time within the Western Alliance to see that British and other European interests are safeguarded in those important negotiations.

Equally, I echo the point made in a non-partisan spirit by the Leader of the Opposition when he urged the Government to do everything possible to round off the negotiations for the so-called comprehensive test ban treaty. It does not mean that all the problems will be solved if that treaty comes into force, but it is very much part and parcel of measures of arms control that they should be achieved on a mutually agreeable and multilateral basis so that there can be increasing confidence between the two sides.

Whilst it is vital that this country should restore its defence strength—that is one aspect of the Gracious Speech to which I am strongly attracted—it is equally important to do what we can to manage and control the arms race. These are two important areas in which achievements are possible.

The hon. Member for Sheffield, Heeley (Mr. Hooley) devoted many of his remarks to the subject of aid and trade. I, too, very much endorse the idea that we should do everything possible to help the countries of the developing world to help themselves. In the long run that is in our interests just as much as it is in theirs.

I hope that in looking at the obvious need for public expenditure restraint, which, as my right hon. Friend the Prime Minister said, is bound to affect all aspects of expenditure, we will not hesitate to do everything possible to maintain our aid effort, our technical co-operation and the whole principle of helping those countries to help themselves. The idea behind the aid programme, as I understand it, is not that it should last into perpetuity. It is simply to get these peoples and these countries in less fortunate positions than ourselves into a position from which they can go forward on their own, without having to depend on international support.

A passage in the Gracious Speech deals with the whole area of industry. A number of hon. Gentlemen on the Opposition Benches have spoken in disparaging terms about asset stripping, and such emotive phrases. I hope that the Government will be involved in an exercise in wider share ownership and wider employee participation, in the broad sense, so that we can make a reality of the capital and property-owning democracy to which many of my right hon. and hon. Friends have been committed for 20 or 30 years. That is what lies behind our desire to reduce the burden and scale of the public sector. I hope very much that the interests of genuine employee participation will not be lost during what I hope will be a five-year Parliament.

The Gracious Speech also contains an encouraging reference to the reform of the procedures of this House of Commons. I very much welcome that. A system of Select Committees which effectively scrutinises all aspects of Government conduct is long overdue. It is all the more important at a time when it is so easy for sums of money or for administrative measures to slip through almost on the nod, without Parliament having proper control over what is going on.

I would utter one word of warning. There are cases where the departmental structure is not always the ideal structure for Select Committees. There are a number of issues which Select Committees are well placed to pick up which cross departmental boundaries. I hope that that prospect will not be ruled out by any new procedures that are introduced.

If MPs on Select Committees or any other kind of procedural forum are to do a good job in this House of Commons, we must see that they are better paid. I saw a figure in the press recently to the effect that our earnings in this House are 1.9 times the industrial average. In all our partner countries in the Common Market and elsewhere, the figure ranges from three times the industrial average to four and five times that average. I am not saying that we should turn ourselves into plutocrats. Far from it. But for as long as status and respect in this country are closely related to what a man or a woman earns, we should see that the proper status and respect of this House of Commons are reflected in an adequate salary. I do not regard the present figure as adequate.

The Queen's Speech also contains encouraging references to the quality of education. I find that exactly the right phrase to be used on this occasion. The old debate about structure or content, and which to put emphasis on, is secondary to the vital issue of the quality of the education in our schools. I welcomed the emphasis in the Prime Minister's speech that we want to give back to local authorities the freedom to organise education along their own lines, in their own way, within their own area. That must be right. It will be a welcome dose of common sense to the people of my part of South London, particularly the London borough of Sutton, which very much wants to organise education on its own lines.

I welcome also the reference to the Official Secrets Act. I hope that the Government will not find ways of soft-pedalling on that commitment, because it is important to the quality of government that it should be as open as possible, consistent with the needs of national security. Some will say that this is an expensive superstructure to put on Government, but studies from Sweden and the United States show that the overall savings on public expenditure from timely prevention of ill-judged public decisions which are not open to public scrutiny greatly outweigh any extra administrative cost.

In my random set of remarks I want, finally, to talk about energy. It is notable that energy does not figure in a major way in the Gracious Speech. We are now entering the 1980s, when Britain will be peculiarly well placed with energy resources. We must see that we get a fair return for the nation from North sea oil and gas. We must insist on a cautious depletion policy for our precious reserves, which we should regard as capital rather than income. We must encourage continuing investment, largely by the private sector, in the North Sea. It is significant that about 97 per cent. of the oil so far brought on shore has been brought on shore as a result of private investment. We must, above all, support and understand the problems of our coal industry and make sure that that policy is carried ahead with an economic future consistent with environmental concerns.

The phrase "environmental concerns" must bring nuclear power to mind. I shall not go into that tonight except to say that the Government must be careful, in pressing ahead with nuclear power, to see that they carry public understanding and support with them. I hope that that will play a major part in our nuclear policy.

We must also see that alternative sources of energy are developed as fast as possible. This is a matter of deciding not so much which one is the best bet as of keeping options open so that we know more about the various technologies and we can one day intelligently decide behind which one to put the heavy investment.

Not least, we must put the greatest political effort behind energy conservation, which is the best investment of all. A pound spent today on intelligent energy conservation will save £5 on an equivalent energy production investment and will repay itself in a short time.

This Gracious Speech is full of the commonsense proposals for the first 18-month Session of Parliament which I would expect—extreme, as the Prime Minister said, only in their moderation. I agree with my right hon. Friend that if we continue on the basis of the extreme moderation and common sense set out in the Gracious Speech we shall have, and shall deserve, a good chance of serving all the people of this country for a decade or more.

9.34 p.m.

Mr. Peter Bottomley (Woolwich, West)

It gives me as much pleasure to see you in your place, Mr. Deputy Speaker, as it gives me to be back in the House of Commons. The by-election victors of the last Parliament are slightly depleted in number. I hope that those absent Tory colleagues will come back in good time to continue the service they gave not only in their speeches but in the fact that they were elected in previously Labour seats and thus helped to prevent some of the previous Government's worst excesses.

As my hon. Friend the Member for Carshalton (Mr. Forman) said, the Conservative Party's intake in this Parliament shows how much of the talent, energy and enthusiasm of people entering politics is predominantly loaded on the Conservative Benches. This is not just because the Conservative approach is always right. If good people are attracted into a political party, it is more likely to reflect the mood, aspirations and ambitions, and provide a way of tapping the energy, of the people of this country.

In its post mortem, the Labour Party might try to discover what it can do to get better people to join its ranks—although no doubt many of the Labour Members elected two weeks ago will make a good contribution to our debates.

I do not want to spend too much time on subjects on which I hope to speak in the months to come, such as trade unions, but perhaps a high spot of the campaign, which led to the present contents of the Gracious Speech, was the Conservative trade union conference at Wembley on the last Sunday of the campaign. It was the largest political meeting of the campaign. It showed that those who claimed that it was only the Labour Party which could speak for trade union members were totally wrong.

In the 1974 general elections it was commonly estimated that over 4 million trade union members voted Conservative. At this election, with the Conservative vote going up the way it did, many more trade union members must have voted Conservative. Probably one person in three who votes for the Conservative Party is a trade union member, or married to a trade union member. The Conservatives therefore have as much right to speak for trade unions as have Labour Members.

I shall not follow the remarks of the hon. Member for Sheffield, Heeley (Mr. Hooley) about overseas development, although I have strong views on many of the topics that he raised. Nor do I want to concentrate now on another area of policy which started off as very much my own but from which the right hon. Member for Cardiff, South-East (Mr. Callaghan) took parts of the rhetoric if not always the action—that is, family policy. If we could get as much representation of people's family or domestic interests as we get for their interests at work, we would have far better politics and probably far better policies for the country.

For the sake of those who are considering new initiatives, I suggest that the Government should consider having a family policy review every year, or every two or three years, which will set out the long-term aims of the Government, perhaps over 10, 15 or 20 years, and then say which parts they are willing to attempt in the next 18 months or so. It is a policy that works well in defence matters, and it could just as well be applied to family policy.

I want to refer to three constituency issues which came out during the election campaign, although they were not strictly party political. I do so because the references in the Gracious Speech to subjects such as health mean a great deal to my constituents.

We had threats in the last Parliament against two local hospitals. One threatened the closure of the Memorial hospital, which was built as a tribute to those who lost their lives in the First World War. It is now a fine hospital for the elderly and for out-patients. Its name made it possible for me to ask the Secretary of State in the last Parliament when was the last time his Department had closed down a war memorial. Fortunately the Department of Health and Social Security made it unnecessary for that question to be answered in any great detail, because the Memorial hospital has been saved.

The other hospital, the Eltham and Mottingham hospital, which was the subject of a 16,000-signature petition in the previous Parliament, was recommended by the area health authority to remain open, but unfortunately the right hon. Member for Norwich, North (Mr. Ennals) confirmed that it should close, although he was apparently reluctant to announce publicly the date of closure, which is supposed to come some time this year. The closure was probably held off because my seat was a marginal one, and to have been too open about such a political decision might have made it possible for my seat to remain in hands other than those of the Labour Party.

I put a plea to my right hon. Friend the new Secretary of State to review the decision to close the Eltham and Mottingham hospital and to issue a stay of execution for at least two or three months, so that there can be a proper examination of the use of the beds and out-patient facilities, of the question of convenience to local people, of whether convalescent beds should be counted as acute beds or as a separate category and of whether what is seen as an old cottage hospital should now be renamed a community hospital—a growing trend in the National Health Service. The holding of such a review would be right, and I hope that the Department will also get a stay of execution so that we can have the argument without pressure of time.

Of course, it may be said that keeping the Eltham and Mottingham hospital open involves public expenditure. In my constituency the largest employer on one site is the Defence Codification Authority at Mottingham, where about 300 people work and where the Ministry of Defence has been, and probably still is, planning to move the jobs—not the people, since most of them will not goߞto Harrogate or Glasgow. I was told towards the end of the last Parliament that the cost of the proposed move was estimated at that time to be £1,750,000. It is intended to spend nearly £2 million to destroy nearly 300 jobs in my constituency and to move them to another constituency, with the consequent dislocation and disruption of important Ministry of Defence work.

It is important that those jobs and that work should remain in my constituency, or at least in the borough of Greenwich, which has fine, historic Service connections. If one could hypothecate revenues, the money saved by leaving the jobs in Greenwich could be used to keep open the Eltham and Mottingham hospital. There would be a net saving in public expenditure.

Another constituency point on which the local Labour Party now agrees with the campaign that I have been running for five years is the need to build the Rochester Way relief road, which I believe should be renamed the Eltham relief road. It is the missing link between the motorway through the Blackwall tunnel and the motorway-standard road down into Kent. There is a missing three-mile stretch. Many people live by that road, and some have lived there for 40 years—ever since it was little more than a country lane. It now carries as much traffic as any road crossing the London boundary. The traffic has increased because of our membership of the EEC and it is important that the relief road should be built as soon as possible.

There will probably be a public inquiry, and I put a plea to my right hon. Friend the Secretary of State for the Environment to ensure that when the inspector reports we do not repeat the failure that followed the public inquiry of 1970, when the inspector's report was not issued to the public until six years later, when we discovered that he recommended that the road should not be regarded as part of the "motorway box", was urgently needed and should be built at once. That report stayed hidden from the public for six years.

I support what my hon. Friend the Member for Carshalton said about the need for additional information. This is necessary not just to prevent the Government wasting money on projects that should not be built but to ensure that necessary projects are built when they would he cheaper.

There are a number of other topics that were important in the campaign. I do not intend to refight the campaign, because there is probably agreement on these matters among the voters for all parties, if not always among the parties themselves.

The importance of allowing people to buy their own homes is not just to ensure owner-occupation for its own sake. Owner-occupation has roughly doubled in this country over a certain number of years and it ought to be possible for it to double in my constituency, but if 30 per cent. or 40 per cent. of the homes are owned by local councils and are not sold, it will not be possible for owner-occupation to grow in my constituency.

It is clearly unfair that owner-occupation should be able to grow in new and developing areas but not in old, established areas. The growth of owner-occupation also makes it possible for people to move when they wish and to share in the ownership of wealth. Any party that says that the ownership of wealth is unfairly distributed yet believes that we should not allow 40 per cent. of my constituents to have any wealth of their own through owner-occupation should think again about the logic of its position.

The education division in which my constituency is situated has probably the highest proportion of what are called "1-1-1s"—the bright, able children—in inner London, but the allocation system for secondary schools does not take that fact into account. The last children who were withheld from school because their parents strongly disagreed with last year's allocation have now been accepted, and I hope that the education authority, with the encouragement of the Department of Education and Science, will make sure that that sort of problem does not arise again and that parental choice is as widespread as possible at the time the children transfer. I hope also that education authorities will be encouraged to ask parents two or three years in advance which schools they are thinking of and why. Obviously parents' views change and families move, but the reasons for parental preferences are important for education administrators and councillors.

Instead of concentrating a large number of resources on merging the full CSE and O-level examinations, I hope that the Secretary of State for Education and Science will do two important things. The first is simple—to persuade the CSE and O-level boards to agree that a CSE grade 1 is equivalent to an O-level. This would get rid of the problem—half the case for merging the examinations—that employers and people outside do not know about this equivalence. To be able to state that on the certificate would deal with that part of the problem.

The second issue is to deal with those children for whom O-levels are not a realistic target, where perhaps a few CSEs only would be the limit of their capacity. We need to bring in proficiency standards and targets which are relevant to all children in all schools. We have seen them in such organisations as the Scouts and the Boys' Brigade. A child goes for a particular badge, achieves that and wants to know what the next target is and whether it can be achieved in six weeks or six months. The different times do not matter. Such a system would mean that we would not be saying to a 12-year-old "Wait until you are 16, four or five years on. and you can take a test which we know 40 per cent. of you will fail" Building up confidence and going through education by stages seems to me to be far more important than great effort spent in merging CSEs and O-levels.

Crime is an important issue. In addition to taking note of the measures announced in the Gracious Speech, I hope that politicians will talk to parents. Half the crime in this country is committed by juveniles. They should be under the control of their parents, and those parents should be encouraged to provide the kind of chaperoning, control or care which makes such a difference to how a child behaves. If a child is exhausted by music, singing, sport or being a member of the Brownies, he or she will spend less time wandering round the streets at night.

The last point that I make—besides saying in parenthesis that I agree about Members' pay—is that our voting system should be changed. I leave the question of proportional representation to another time, but we must allow people to register votes when they are going on holiday. Holidays are not for one party or another. There is a 5 per cent. postal vote for people who are ill or who have jobs which might take them away. Why not have postal votes for those who by chance are going to be on holiday? We should change the registration of voters so that people can more easily re-register in a new constituency or a new address during the year. To have an election on 16 February based on a register of where people lived on 10 October is surely out of date.

9.48 p.m.

Sir Brandon Rhys Williams (Kensington)

I am delighted to be able to join the other Members in congratulating you, Mr. Deputy Speaker, on your taking the Chair on this most auspicious day. It would be impossible to find a person more qualified for it or more likely to succeed in this very difficult undertaking. I am absolutely confident that the many new Members in all parts of the House who will soon be sitting under your presiding eye will learn why the older Members, who know you, appreciate the sense of responsibility and the maturity of judgment that you bring to this difficult office and that will certainly ensure your success in it.

I welcome the Gracious Speech, which, all in all, is a splendid manifesto for the start of this Government. I want to touch on one aspect only and that is the intention to introduce a new form of short lease known perhaps as "the shorthold tenancy". I did not invent the name "shorthold", but I was the first person to mention it in the House of Commons when I opened the campaign some years ago for a reform of the Rent Act which would allow short leases to be entered into under appropriate rules to protect the parties. I deliberately adopted this newfangled expression because I wanted to differentiate the shorthold lease from any other lease of short duration. I wanted to attach to it a specific meaning which could be identified and would have statutory force.

Some of my recommendations for the rules governing shortholds can be found in the Bills that I have introduced in recent years. Tonight I shall touch only on those matters which I wish to emphasise particularly to my right hon. Friend and hon. Friends who will now be preparing legislation to bring to the House.

It is tempting to rush the fences and to introduce legislation which would simply permit short leases to be entered into and terminated by landlords without complicating the issue too much. But I have many reasons for believing that that would be a mistake. My reasons are based upon close experience of the problems in my own constituency.

I recommend that a property should not be allowed to be offered on shorthold terms unless an appropriate person such as the rent officer has inspected the property and entered it in a public register of properties approved for letting on shorthold terms. Throughout the country, and particularly in the inner cities, there are properties which have decayed, which have never been modernised or which are unsuitable to be let as they stand because they fall below health and amenity standards, or because they are damp, disagreeable, ill lit or lacking in basic facilities which tenants are entitled to expect.

The rent officer should ensure that properties approved for shorthold letting are at least as good as those which would qualify for a discretionary improvement grant. I tried to specify that in my Bill. Such properties should also be self-contained. It would not be sensible to extend the shorthold concept to rooms let under the eyes of landladies, whether or not they are strictly in owner-occupation.

I recommend that the shorthold lease should accord with a statutory form appended to the legislation in a schedule which would lay down as precisely as possible such matters as who is responsible for repairs. I suggest that exterior repairs should be the responsibility of the landlord and internal repairs the responsibility of the shortholder. That is the type of matter which would need study in Committee.

The question of the procedure to be followed on the expiry of a shorthold lease will require special attention. I suggest that the lease should be terminated only after the landlord has given not less than 90 days' notice to the tenant of his intention to exercise his right to secure vacant possession on the expiry of the lease.

If the landlord intends to offer the property on shorthold again he should offer first refusal to the sitting tenant. If the landlord wishes to withdraw the property from the sitting tenant and is not willing to let it to him, again I suggest that it should be taken off the list of available properties for letting on shorthold for a few months. That would ensure that landlords do not simply act spitefully in turning tenants out when a shorthold comes to an end.

In my Bill I suggested that the terms of the lease should specify what the landlord is entitled to ask by way of advance payments at the start of the lease. There must be no demand for key money or a premium on entry. A payment of a deposit is reasonable but it should be limited to a maximum of two months' rent. It would not be unreasonable for a landlord to ask for payment in advance and, again, a maximum of two months' rent would be reasonable.

Obviously, the level of the rent for a shorthold lease is a matter for further discussion. Should it be just the open market level, or should it be restricted in some way? Speaking from experience in Kensington, I know that a certain number of people—particularly people who are here representing foreign embassies or foreign companies—do not mind what they pay in order to secure the accommodation which has caught their fancy. I suggest, therefore, that shortholds should be offered at the fair rent as defined in the existing legislation. This is possibly not necessary in parts of the country where there is not the exceptional pressure that there is in central London, and it would not be strictly necessary to apply the same rule in all parts of the country; but certainly in inner London the rents for shortholds should be restricted to the fair rent, and I believe that is indeed a reasonable stipulation.

The House ought to consider what incentive there is for landlords to let on shorthold terms. There is a surplus of people in inner London and, I believe, in many other parts of the country, who would like to take shorthold properties when they are offered, but will the landlords be willing to let the properties on these terms? I am sure that they will want to keep up their properties, which otherwise are empty and rapidly decaying. There is a natural incentive to have properties occupied so that they are kept clean and dry, and also not liable to be broken into by squatters or in other ways.

It is important that landlords should be able to qualify for improvement grants if they are letting on shorthold terms. I regret that in 1973 we modified the rules for the payment of improvement grants. That modification resulted in a very rapid drop in the number of properties which were improved with the benefit of these payments. The rules for improvement grants need revision, and the levels should be re-examined in the light of the costs of work now prevailing. Here again, it would be possible to make a case for the inner cities having different levels of grants from those which would apply in places where costs are not so high.

I think that landlords will be glad to offer their properties so as to secure a modest but reasonable rent. I am not too anxious about the landlords being willing to play their part, but there is one important question to consider. Will the scheme succeed if it is treated by Opposition Members as highly controversial, and if they seek to damage it from the start by threatening to reverse it or to change the rights of shareholders retrospectively? That is the great danger to it, and I hope that the Opposition, in spite of their rather doctrinaire antipathy to the whole private sector, will be reasonable and give the scheme a chance.

Twice in the last Parliament, under the Labour Administration, I moved the adoption of a Bill introducing shortholds under the Ten-Minute Rule, and twice the House supported me. I hope that that is sufficient precedent and that on this occasion the Labour Party will not seek to destroy the scheme from the start.

Debate adjourned.—[Mr. Le Merchant.]

Debate to be resumed tomorrow.