Commons Sitting of 24 October 1979

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  VAN DIEMEN'S LAND COMPANY BILL [Lords]
  As amended, considered; to be read the Third time.
ORAL ANSWERS TO QUESTIONS
  SCOTLAND

    Herring Industry Board
    Mr. McQuarrieasked the Secretary of State for Scotland how much money will be made available to the Herring Industry Board for the year 1980.
    The Secretary of State for Scotland (Mr. George Younger): The board's levy on the sale of herring will provide it with a very modest revenue, probably less than £10,000. As regards the scheme of grants and loans for building and improving herring vessels which the board administers for the Government, it is our policy to provide a reasonable level of funds. In the financial year 1979–80 the expenditure is expected to be around £1·25 million. The provision for 1980–81 will clearly require to be considered carefully in the light of the structure of the industry.
    Mr. McQuarrie: As there is a total ban on herring fishing, is my right hon. Friend aware that fishermen who previously made application to the Herring Industry Board for grant and loan now find themselves forced to do so to the White Fish Authority? As that authority was granted only £1 million by my right hon. Friend's Department, is he aware that it is essential that the £1 million
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    should be greatly increased, bearing in mind that last year over 1,652 applications for improvement were made by the fishing industry?
    Mr. Younger: I share my hon. Friend's concern about the position in the industry. It is necessary for the preservation of stocks for the ban to continue until stocks have recovered. In considering provision for the coming year I shall take into account all that my hon. Friend has said.
    Mr. Grimond: Is the right hon. Gentleman in a position to give the House any information about the allegations that the French are illegally catching herring in considerable quantities in EEC water?
    Mr. Younger: I have seen the reports. Inquiries have been put in train through our usual departments to ascertain what truth there is in them.
    Mr. Robert Hughes: Has the right hon. Gentleman any further information about allegations that the Grimsby boat, "The Grimsby Lady", a purse seiner, has been landing herring in two Danish ports? If we are to obtain reasonable finance for the herring industry, we must ensure that the herring ban is not broken by anybody, including ourselves.
    Mr. Younger: I entirely agree with the hon. Gentleman. We have followed up every report that we have seen of unauthorised landings of herring whether in this country or abroad. I shall endeavour to obtain further information about the case referred to by the hon. Gentleman, and I shall write to him.
    Mr. Myles: Will my right hon. Friend keep himself constantly informed about herring stocks in the North Sea so that as soon as possible he may obtain an allocation of herring for our fishermen?
    Mr. Younger: I shall. However, as long as there is scientific advice to the effect that it is necessary to restrict fishing in this way we must heed that advice.
    Mr. George Robertson: If the right hon. Gentleman is to make inquiries into allegations that have appeared in The Daily Telegraph, will he undertake that once he has completed the inquiries he will make a statement to the House? The charges against the French Government are quite serious—namely, that their

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    trawlers are apparently breaking the clear EEC instruction that there shall be no herring fishing. Will the right hon. Gentleman assure the House that a statement will be made when the allegations have been denied or substantiated?
    Mr. Younger: I appreciate what the hon. Gentleman says. First, we must ascertain the facts as far as we can. I shall find the best way I can of informing the House of the results of my inquiries.

    Council House Sales
    Mr. Cookasked the Secretary of State for Scotland if he can now make a statement on the manner by which he proposes to finance the sale of council houses.
    The Under-Secretary of State for Scotland (Mr. Malcolm Rifkind): It is up to the prospective purchaser to arrange the funding of his purchase. If funds are not available from private sources, for example building societies, a local authority mortgage will be available to him.
    Mr. Cook: Whatever the Minister's deeply held views on the matter may be, will he concede that the majority of local authorities are appalled at the prospect of having to sell newly constructed council houses at half price? Is he aware that when the Orkney housing committee considered his circular it had before it an estimate for eight council houses at £30,000 each? Does he seriously propose that when constructed these houses should be made available for sale at a loss of £15,000 each?
    Mr. Rifkind: The hon. Gentleman will be aware that when a local authority decides what rent to charge for any individual house the building cost is not taken into account. I have yet to hear any intelligent argument why the principles which are relevant for rent purposes should not also be relevant for sale purposes.
    Mr. Ancram: As the incentive to purchase a council house depends largely upon the person wishing to buy in an area where he has respectably behaved neighbours, will my hon. Friend assure us that, in spite of anything else he does, especially in the tenants' charter, he will do nothing which will make it more difficult for local governments to deal with antisocial tenants?
    Mr. Rifkind: I am grateful to my hon. Friend for that important question. Last week we made it clear that local authority tenants in Scotland would for the first time receive security of tenure. We also indicated that there would be provision to enable the local authorities to deal reasonably with any special problem causing great concern to neighbours resulting from the conduct of one tenant living nearby.
    Dr. Bray: The Minister must be aware that over the lifetime of a council house the rent paid by council tenants vastly exceeds the price paid by the purchaser of a private house. Surely he is being absurd in suggesting that by giving away council houses the councils are acting economically.
    Mr. Rifkind: The hon. Gentleman misleads himself. He is looking at the capital burden on a house. He must not simply look at the original cost of constructing it. He must also take into account the cost of rehabilitation which, for example, in the case of Glasgow, is estimated to be £7,000 per house. The Opposition never take that important consideration into account.
    Mr. Sproat: Will my hon. Friend confirm that, in spite of the miserable approach by the Labour Party, there has been an extremely enthusiastic response from council house tenants in Scotland to his proposals and that it has come from the so-called bad areas just as much as the so-called good areas?
    Mr. Rifkind: My hon. Friend is correct. Not only have many thousands of ordinary Scottish tenants sought to exercise this right, but at least 29 Scottish local authorities are providing for the right to buy. Only nine have refused to do so. That indicates that it is the local authorities as well as the tenants who support the principle of what the Government are doing and reject the rather Neanderthal view of the Opposition.
    Mr. Millan: What does the Minister mean by saying that a local authority mortgage will be available? Is he saying that, apart from forcing local authorities to sell houses against their will, thereby making it impossible for them to carry

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    out a sensible housing or housing management policy, he will also force them to finance sales?
    Mr. Rifkind: If the right hon. Gentleman will consider the details of the question he asked he will realise that, if a local authority provides a mortgage for a house that is already owned by that local authority, there are no public expenditure implications. That is why no local authority sought to object to the proposal that local authorities would be required to provide a local authority mortgage if no other means of finance were available to the prospective tenant.
    Mr. Millan: If I may clarify that, is the Minister saying that local authorities will be forced to supply local authority mortgages even if they do not wish to do so?
    Mr. Rifkind: Yes.

    Scottish Development Agency
    Mr. Knoxasked the Secretary of State for Scotland if he is satisfied with the operations of the Scottish Development Agency.
    The Under-Secretary of State for Scotland (Mr. Alexander Fletcher): The relevant provisions of the Industry Bill, published yesterday, and the new industrial investment guidelines which we shall be issuing provide the basis for the Agency to operate more effectively.
    Mr. Knox: Does my hon. Friend agree that the small business counselling services are a particularly important part of the work of the Agency? How many firms have taken advantage of this provision so far? Are there any plans to expand it?
    Mr. Fletcher: Yes, Sir. The small businesses part of the Agency's functions is very important. We have plans to expand it. I cannot say off the cuff how many companies have sought help from this body, which has been in existence since before the formation of the Agency. I am sure that many hundreds of firms have taken advice from it.
    Mr. Gordon Wilson: Why did not the Minister publish the revised guidelines for the Agency when the Bill was published? As the Agency has been a paper tiger in relation to its investment in in-
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    dustry, will not the Minister encourage it to spend more money on the provision of employment in Scotland rather than make money available for environmental improvements, as it is the jobs aspect that is becoming desperate in many areas?
    Mr. Fletcher: The guidelines could not be published until the Bill had been published. The Bill gives the Agency powers to invest, but the guidelines lay down the principles under which the Government of the day wish those powers to be conducted. The Agency has our full support in investing in those cases where the jobs will be productive and viable and where no false hopes will be raised. People taking employment in companies that have these investments will know that they have a secure future.
    Mr. Dempsey: Will the Minister ensure that nothing will be done to impede the successful efforts of the Agency to contribute to employment prospects, especially in areas of high unemployment? I refer to the policy of building new factories, investing in others and clearing away areas of dereliction, thus making our neighbourhoods more attractive to incoming industrialists.
    Mr. Fletcher: I agree with the hon. Gentleman. The purposes of the exercise, the Industry Bill and the guidelines, are to make the Agency operate more effectively in these spheres.
    Mr. Allan Stewart: Will my hon. Friend confirm that one of the criticisms made of the present powers is that they may be used to assist one possibly inefficient firm and, as a result, undermine the competitive position of other efficient firms? Will he confirm that the new guidelines will take that point fully into account?
    Mr. Fletcher: Yes, Sir. The existing guidelines require the Agency to ensure that its subsidiaries compete fairly in the market. I have no evidence to suggest that this is being abused. However, if my hon. Friend has any cause to think that that is happening I shall be obliged if he will write to me.

    Peripheral Housing Schemes (Glasgow)
    Mr. Dewarasked the Secretary of State for Scotland if he will make a statement about the redevelopment of the

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    peripheral housing schemes in Glasgow; and if he will make available to Glasgow district council extra financial support to combat deprivation in these areas.
    Mr. Rifkind: Glasgow district council is working with Strathclyde regional council to develop the comprehensive framework of action identified as needed for the peripheral housing estates in the report "Glasgow—Implications of Population Changes to 1983". The district council's capital expenditure allocations already take account of the specific problems of the city as a whole, and it is for the council to determine its spending priorities within them.
    Mr. Dewar: Does the Minister accept that there will be widespread cynicism and dismay at the suggestion that the present allocation of capital spending takes account of the problems of Glasgow? Is he aware that even now, as a result of the dramatic and drastic cuts in capital spending programmes enforced by the Government, the Glasgow district council is being forced to scrap much-needed rehabilitation and modernisation programmes in the peripheral schemes? That would totally destroy the morale of people who were expecting early action and have worked for a long time to have that action organised. Will the Minister give us some hope about the peripheral schemes? Will he please ensure that the money is forthcoming?
    Mr. Rifkind: The hon. Gentleman should be aware, in representing a Glasgow constituency, that the needs of the city are, and have been for some time, recognised by successive Governments as deserving particular support. Glasgow receives, and will continue to receive, over a quarter of the total housing allocation to local authorities. Any hon. Member who is being reasonable about the matter will accept that that is a proper recognition of Glasgow's requirements.
    Mr. Henderson: Does my hon. Friend agree that the only cause for real dismay is the fact that the Labour Party once again has obtained control over Glasgow's affairs for the future?
    Mr. Rifkind: I agree with my hon. Friend. It was significant, and an honourable and acceptable matter, that when the Conservative administration of Glasgow finally had to resign it was on the basis
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    of trying to do the best deal for the public. The Labour Party will not be able to offer that.
    Mr. Maxton: Is the Minister aware that his statements today will not only dismay residents and tenants in the peripheral housing schemes but also anger them? There is considerable anger among the tenants of these schemes that environmental improvement schemes that have been on the ground for some time are now under threat of being axed by the Glasgow district council owing to the expenditure cuts being carried out and forced on them by the Government?
    Mr. Rifkind: I disagree. The problem was caused by the previous Government making commitments when they had not provided the resources to meet them.

    Scottish Development Agency (Investment Policy)
    Mr. Strangasked the Secretary of State for Scotland what discussions he has had with the Scottish Development Agency following his speech in the Scottish Grand Committee on 17 July; and if he will now make a statement on the Agency's policy towards direct investment in industry.
    Mr. Younger: I have had full and helpful discussions with the Agency, and we have reached a very large measure of agreement on the form of the Agency's activities in the future. I hope to make an announcement shortly, when remaining points of detail are settled.
    Mr. Strang: Is the Secretary of State aware that, bad as are the changes foreshadowed in the Industry Bill, much more damaging would be any attempt by the Government to curtail industrial investment in Scotland by the Agency? Surely he accepts that it would be doctrinaire madness to curtail investment at a time when there will be a massive slump in employment and investment in some of our major industries in Scotland.
    Mr. Younger: When the hon. Gentleman discovers what we announce about the new guidelines, he will find that there is no discouragement whatever to the agency from investing in viable projects which will be helpful and produce good, solid jobs for the future.
    Mr. Buchan: Surely the Secretary of State would agree that the biggest problem now facing investment in Scotland is the stupid and reactionary decision of the Chancellor of the Exchequer yesterday to permit a complete and unprohibited outflow of capital. This was precisely the malaise in the 1950s and 1960s. Given that kind of haemorrhage, how does he exonerate his own behaviour in crippling the investment prospects of the SDA?
    Mr. Younger: I have in no sense crippled the investment prospects of the SDA. As a matter of fact, it will have in the current year approximately 16 per cent. more to spend in real terms than it spent last year under the previous Government.
    Mr. Douglas: Following the question by my hon. Friend the Member for Renfrewshire, West (Mr. Buchan), would the Secretary of State care to indicate the value of the Agency's office in New York, in view of the Chancellor of the Exchequer's decision yesterday? How does the Secretary of State hope to induce direct investment into this country from the United States after such a decision? The transfer of funds will now be in the opposite direction. This is an insult to the Scottish people. What action did the Secretary of State take in the Cabinet on this matter?
    Mr. Younger: If the hon. Gentleman wishes to ask a question about the announcement made yesterday by my right hon. and learned Friend the Chancellor of the Exchequer, he will no doubt table a question to the Chancellor in the usual way. My hon. Friend the Member for Edinburgh, North (Mr. Fletcher) has recently visited New York and tells me that the SDA's operations there are going extremely successfully.
    Mr. Harry Ewing: Does not the Secretary of State's answer illustrate the sheer hypocrisy of the Secretary of State and his junior Minister in running around all over Scotland, seeking to spread hope where none now exists as a result of the actions of the Secretary of State on the Scottish Development Agency? How on earth can the Secretary of State justify reducing the investment capabilities of the SDA from £2 million to £1 million, and cutting its budget by £17 million?
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    If the Secretary of State is so interested in saving money, it would have been better had his Under-Secretary of State stayed at home answering the parliamentary questions that took him 13 weeks to answer, rather than going to America, to which the capital will flow from Scotland. We shall not get any inward investment as a result of the decisions made by the Secretary of State and the Chancellor of the Exchequer.
    Mr. Younger: If I had to choose between going round Scotland spreading hope and going round Scotland with the hon. Gentleman, spreading gloom, I am glad to say that I should choose the former of the two courses.
    Mr. Speaker: May I say in passing that it is unparliamentary to accuse anyone in this House of being a hypocrite. It is well known that there are no hypocrites here. We must find other words with which to express our emotions.

    South of Scotland Electricity Board
    Mr. Canavanasked the Secretary of State for Scotland when he expects next to meet the chairman of the South of Scotland Electricity Board.
    Mr. Younger: I have no immediate plans for a further meeting with the chairman of the board, whom I saw last month.
    Mr. Canavan: Does the Secretary of State remember his Minister telling me, in a written answer on 20 July, that he would ask the electricity board chairman to write to me about the burning of imported coal in Scottish power stations? I am still awaiting a reply. Instead of turning a blind eye to the import of 100,000 tons of coal from places such as China, will the Secretary of State give us an assurance that he will fight in the Cabinet to ensure that his Government will go ahead with public investment in the Scottish coal industry, in places such as Musselburgh and the Stirlingshire and Clackmannan coalfield, where there are more than 300 million tons of indigenous coal?
    Mr. Younger: The Government have a responsibility to ensure that the people in Scotland can be kept warm this winter. We have already told the National Coal Board that we will take in the power stations every lump of coal that it can mine this winter. If there is a shortfall

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    from that, as there is, we are responsible for trying to import coal from elsewhere. It would be very remiss of us if we did not.
    Mr. Eadie: Since the Secretary of State is aware that the electricity board has stated that it will burn all the Scottish coal it can get this year, and bearing in mind that some of the new finds in Scotland are among the best and most exciting in the whole of the United Kingdom, will he, if he decides to meet the chairman of the board, discuss with him the question of the refurbishing of existing coal-fired power stations, and even discuss the question of building new coal-fired power stations? Is the Secretary of State aware that the power plant industry in Scotland would be very pleased if that kind of policy were pursued?
    Mr. Younger: I am very grateful to the hon. Gentleman for confirming what I said a moment ago, that we are prepared to burn every bit of coal that can be mined in Scotland this winter. All the matters to which he has referred will be discussed between me and the electricity board chairman in planning our future provision of electricity.
    Mr. Russell Johnston: What is the stock position? There are rumours that in some cases it is down to two days. Will the Secretary of State take the opportunity of dispelling these rumours, if they are not true?
    Mr. Younger: Although the stock position could be better, there is no truth in rumours such as that, and we expect to be able to get through the winter, in normal conditions, reasonably satisfactory.
    Mr. Lang: Does not my right hon. Friend agree that there must be something seriously wrong with output and productivity in Scottish coal mines if it is possible to import coal from the other side of the world and still save money in doing so?
    Mr. Younger: I appreciate what my hon. Friend says. This is indeed something that the National Coal Board and the unions concerned are looking at very seriously.

    Ex-Police Sergeant Jamieson
    Mr. Dalyellasked the Secretary of State for Scotland when he expects to
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    reach a decision as to whether he will recommend the use of the Royal Prerogative in relation to the case of ex-Police Sergeant Jamieson of Bo'ness.
    Mr. Younger: I wrote to the hon. Gentleman on 28 September informing him that I had examined the case but found that there were no sufficient grounds to justify recommending the exercise of the Royal Prerogative in this case.
    Mr. Dalyell: Will the Scottish Office consider holding an inquiry as to how well-experienced and respected police officers at Falkirk police station allowed three boys, allegedly victims of a brutal assault, to leave at 6 o'clock on a Sabbath morning to walk from Falkirk to Bo'ness?
    Mr. Younger: I know the hon. Gentleman's very close concern with this question, which he has pursued very effectively, but I think that every possible inquiry about the background of the case has been thoroughly carried out. I do not think that there is much to be gained by any further inquiries at this stage.

    Industrial and Commercial Development
    Mr. James Hamiltonasked the Secretary of State for Scotland what is his estimate of the reduction in expenditure which will be effected as a result of his cuts in public support for industrial and commercial development in Scotland.
    Mr. Alexander Fletcher: In discussing public expenditure savings it is necessary to distinguish between planned expenditure and actual expenditure. In terms of planned expenditure, Scotland's share of the savings resulting from the announcement made by my right hon. Friend the Secretary of State for Industry on 17 July could amount to £45 million over the next three years. In terms of actual expenditure on programmes under the control of my Department, substantially more public support is available for industrial and commercial development in Scotland in real terms this year than was actually spent last year under the previous Administration.
    Mr. Hamilton: Does the Minister remember that in the past three months we have had an increase of 1,000 unemployed in Scotland? The figure now stands at 278,468. Will he bear in mind that the cuts in public expenditure will

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    have an adverse effect in the public sector, particularly the steel industry, quite apart from the increase in VAT? Will he also bear in mind that the gloom in Scotland is being spread not by Labour Members but by small industrialists, who now find that those who claimed to be the champions of the small industrialists have departed from them? Will the Minister take his finger out and do something about it?
    Mr. Fletcher: I have already told the hon. Gentleman that in real terms we shall be spending more this year on commercial and industrial development in Scotland than was spent last year. That should go some way towards satisfying his points.
    Mr. John Mackay: Would my hon. Friend like to tell the House what is the expenditure of the Highlands and Islands Development Board in this year, and whether it represents an increase or a decrease?
    Mr. Fletcher: I am happy to say that this year the Highlands and Islands Development Board will be able to spend £2½ million more than last year, because its budget has been increased to that extent.
    Mr. Harry Ewing: In relation to industrial development in Scotland, why has the Scottish Economic Planning Department decided to give up the agency work on behalf of the European Investment Bank? Why is it that the small companies, with which the Minister professes to be so concerned, are now finding, when they make application to the Scottish Economic Planning Department, that their applications will not be considered because the Department is not taking any more applications? They are also being told that the Scottish Economic Planning Department does not know who will be doing the agency work on behalf of the European Investment Bank. What is going on in the Scottish Office at the moment?
    Mr. Fletcher: The hon. Gentleman is raising a specific matter about which he should give the House notice, or certainly write to me, if he wants me to consider it.

    Girvan Employment Area
    Mr. Foulkesasked the Secretary of State for Scotland if he will estimate the effect on unemployment of the reduction in status of the Girvan employment office area from special development area to development area status.
    Mr. Alexander Fletcher: No, Sir. It is not practicable to isolate in this way the effect of regional policy changes for small local areas where employment prospects can be heavily influenced by individual industrial developments.
    Mr. Foulkes: Is the Minister aware that, at a meeting which representatives of the local district council and I had with the Department of Industry, it emerged that two mistakes had been made with regard to factors affecting this area? The Department had used a seasonal unemployment level which was unusually low, and it also had wrong information about the possibility of a mine being sunk in the area. In view of these factors, the Department agreed to review the position. Will the Minister indicate when the review is likely to be completed and when I may expect an announcement whether this area is to have a change in its status?
    Mr. Fletcher: The hon. Gentleman will be aware that in July, when the initial announcement was made about the changes in regional policy, it was said that all areas which had been downgraded would be reviewed at the end of three years before the final decisions were taken. In that context, I take it that he is referring to the representations that he has made to the Department of Industry, all of which will be taken into account before a final decision is taken at the end of three years.
    Mr. Robert Hughes: The Under-Secretary said that changes in status are to be reviewed. When will the special inquiry into the Aberdeen area begin work and how soon does he expect it to report?
    Mr. Fletcher: As I said, there is a constant review of the changes in regional policy. The position in Aberdeen will be included in that review. The authorities in Aberdeen, as in other parts of Scotland, have been assured that the matter

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    will be considered finally at the end of the period.
    Mr. Strang: Is the Minister aware that his Department might have difficulty in isolating the effects of the changes in Girvan, but what is certain is that the downgrading of Edinburgh will have a massive and disastrous effect on the level of primary and industrial investment in that city in the years ahead. Surely, after all the statements that he and his colleagues made in Edinburgh about the Labour Government discriminating against Edinburgh in favour of Glasgow, it is time that they did something to reverse this decision.
    Mr. Fletcher: The hon. Gentleman will know that the purpose of the exercise was to give maximum help to those areas of Scotland in greatest need. Scotland now has 37 per cent. of the population of special development areas in the United Kingdom compared with 30 per cent. previously, Comparing the position in Edinburgh with all its problems with Glasgow and the West of Scotland, we, and I as an Edinburgh Member, must accept that Glasgow needs the greater amount of aid, and that is what the policy is aimed at.

    European Community (Council of Ministers)
    Mr. Donald Stewartasked the Secretary of State for Scotland when he expects next to be present at a meeting of the EEC Council of Ministers.
    Mr. Younger: My noble Friend the Minister of State attended the last Council of Agriculture Ministers on 15 and 16 October and I intend to be present at the next Council of Fisheries Ministers which will take place on 29 October.
    Mr. Stewart: When the right hon. Gentleman meets the Council, will he draw its attention to the reports of landings of herring in Denmark and France, about which we heard in answer to an earlier question? Bearing in mind the permission for a 5 per cent. by-catch—even mackerel fishers can land 5 per cent. of herring—will he reconsider his decision to refuse permission for the one drift net fishing vessel still on the West coast of Scotland to proceed to catch a small quota by drift net fishing?
    Mr. Younger: I have no doubt that some of the matters to which the right hon. Gentleman has referred are bound to be covered in formal or informal discussions which we shall have at the Council meeting.
    As regards by-catches, we are watching the situation very carefully but there is no evidence of any excessive by-catches at present.
    Mr. David Steel: How soon will the Secretary of State be able to pursue the question of seeking a change in the rules of the EEC regional fund to enable assistance to be given to those areas of Scotland which have been down-graded from development area status and which are as a consequence losing the aid which at present they are able to receive?
    Mr. Younger: I appreciate the right hon. Gentleman's point. We are proceeding to discuss this matter with all concerned, but we have considerable time in which to do so. The changes in regional policy do not become fully effective for three years, and there will be a further review of the areas before that time. Therefore, there is time to get this matter straightened out.
    Mr. Lang: Before my right hon. Friend attends the meeting to which he referred, will he and his colleagues undertake to lodge the strongest possible protest about the behaviour of the French Government in defying the order of the European Court regarding the import of foreign lamb? Will he also comment on the behaviour of British Socialist Members of the European Parliament who yesterday prevented a motion by a Conservative Member criticising the French Government from proceeding?
    Mr. Younger: My right hon. Friend the Minister of Agriculture, Fisheries and Food and I have lost no opportunity of making clear our views on how the French have been dealing with sheepmeat, and we shall no doubt take another opportunity to do so next week.
    Mr. Maclennan: Will the Secretary of State seek to persuade the Commission to widen the ambit of its proposed £10 million special integrated development plan so that it is not purely for the benefit of the Western Isles but is of benefit to other parts of the mainland of Scotland which

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    suffer from similar problems of distance from markets and sparsity of population?
    Mr. Younger: This is one of a number of measures put forward by the Commission to improve agricultural structures. We are still considering the implications of the package as a whole for the United Kingdom, and that is one of the matters that we are bearing in mind.

    Mentally Handicapped Children (Residential Care)
    Mr. Gordon Wilsonasked the Secretary of State for Scotland if he is satisfied with the provision for residential care of mentally handicapped children in Scotland.
    The Under-Secretary of State for Scotland (Mr. Russell Fairgrieve): One can never be satisfied with the scale and nature of provision in this sector, but this is primarily a matter for decision by local authorities and health boards in the light of their assessment of need and of the resources available.
    Mr. Wilson: Does the Minister agree with the main conclusion of the Peters report on services for the mentally handicapped in Scotland that insufficient has been done to take care of those who are mentally handicapped in community care? Bearing in mind his passing of the buck to local authorities and health boards, will he assure the House today that, notwithstanding Government cuts, he will do his utmost to increase expenditure for the care of these vulnerable sections of the community who need help?
    Mr. Fairgrieve: I accept the conclusions of the Peters report, but, as I said, if the resources are not available to implement such reports, we cannot do it at this stage.
    The Government's policy is to treat unfortunate people, such as the mentally deprived, in the community. Only yesterday, prior to the BBC broadcast, my right hon. Friend made it clear in a statement that he expects economies in public spending to be made without adverse effects on priority groups such as the mentally handicapped.
    Mr. Henderson: Will be Minister confirm that, despite much talk about cuts in public expenditure, in terms of the Health
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    Service in Scotland there are no cuts in this current year?
    Mr. Fairgrieve: That is correct. We have said that the Health Service will be defended against expenditure economies. We have made it quite clear that that is our policy.
    Mr. Douglas: Does the Minister accept that when we refer to these sections of the community we all have a great responsibility because, in the main, they have no voice of their own? Therefore, will he assure the House that he will monitor the effects of the cuts in public expenditure to ensure that the resources are devoted to where he thinks they should be directed? Will he also indicate that the care of the mentally disadvantaged will be enhanced, not retarded?
    Mr. Fairgrieve: Of course. It is also to be hoped that, when local authorities consider their commitments and priorities, those in the groups mentioned by the hon. Gentleman will be defended against adverse effects on them.
    It is interesting to note that in 1976, when the Labour Government made bigger cuts, they were expenditure economies then. They are not cuts now.
    Mr. Costain: Does the Minister consider that we are at some disadvantage in being able to assess the problem because we do not have a register of the mentally handicapped similar to the register of the blind?
    Mr. Fairgrieve: I accept that and I will look into it.
    Mr. George Robertson: How can the Under-Secretary say that in some way he will defend the mentally handicapped in the community, when his colleague, the Minister for Social Security, has publicly told the disabled that they will have to bear their part of public expenditure cuts that are being used by this Government to redistribute social resources into the pockets of the rich and wealthy through the tax cuts?
    Mr. Fairgrieve: Might I remind the hon. Member of what his colleague the then Chancellor of the Exchequer in his Government, said in 1976 when he made his expenditure economies:
    "I am afraid that there is no way of reducing this gap without tightening our belts. It's

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    no good any party promising enormous in creases"
    —in wealth for everyone—
    "in Government expenditure. Our first job is to get the economy into some sort of balance again."
    What I am saying is that when local authorities consider their priorities for expenditure, we would expect that there would be areas where economies are available without prejudicing those who cannot look after themselves.

    Fishing Industry
    Mr. Sproatasked the Secretary of State for Scotland if he will make a statement on the latest situation in the fishing industry.
    Mr. Younger: Landings in Scotland so far this year are running at 20 per cent. below the corresponding level for last year. The total value of the fish taken is marginally below the value of last year while costs have risen, and I am very concerned about the difficulties currently faced by the fishing industry. The situation should improve as a result of the conservation and management measures we have taken, but the current uncertainties can be removed only by a satisfactory settlement of the common fisheries policy which we are urgently seeking.
    Mr. Sproat: I thank my right hon. Friend for that reply. Will he take this opportunity to give the House a categoric assurance that at the Dublin summit there will be no trade-off of British fishing interests against any other British interests? Will he also assure us that at the fisheries meeting there will be no piecemeal settlement? What we want is a package deal as a whole, not a settlement on conservation and the rest left in limbo.
    Mr. Younger: The Government's position on the Dublin summit is a matter for my right hon. Friend the Prime Minister. My right hon. Friend and I will be approaching the fisheries negotiations purely in the context of the good of our own fishing industry. With regard to the general conduct of negotiations, we shall certainly bear in mind that what is required is an agreement as a whole which will be acceptable to our own fishing industry. We shall stick firmly to those lines.
    Mr. Foulkes: Is the Secretary of State aware of an article which appeared in the Glasgow Herald last Friday to the effect that, because of the operation of the quota system, there is a scandalous waste, a dumping, of valuable herring? Will the Minister investigate these allegations and report to the House?
    Mr. Younger: I saw that report and I, too, was very disturbed by it. I am having it investigated. I would deplore any irresponsible dumping of fish which are not caught legally. I am sure that most of those in the fishing industry would do the same.

    Scottish TUC and CBI
    Mr. Ancramasked the Secretary of State for Scotland when he plans next to meet the Trades Union Congress and the Scottish Confederation of British Industry.
    Mr. Younger: As I have already indicated to the bodies concerned, I intend to have regular meetings with the Scottish Trades Union Congress and the CBI (Scotland).
    Mr. Ancram: When my right hon. Friend meets them, will he discuss with them the lessons to be learned for the whole of Scotland from the recent tragic closure of the Singer factory at Clydebank? In particular, will he discuss with them the advantages to the workforce of accepting inevitable closures of this kind quickly, so that joint action between the Government and trade unions can be started to produce replacement jobs as soon as possible? Would he also like to comment on the ill-conceived and unhelpful intervention of the right hon. Member for Glasgow, Craigton (Mr. Millan) in trying to persuade the workforce to resist the closure?
    Mr. Younger: I am grateful to my hon. Friend. I am very concerned about the situation at Clydebank and I have assured all concerned that I and my hon. Friend will do all that we can to help in that area. I am meeting representatives of the STUC and the Clydebank shop stewards tomorrow, and I look forward to an exchange of views with them.
    Mr. O'Neill: When the Minister sees the representatives of the STUC will he be able to give them an assurance that the

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    abandonment of exchange control regulations will not have a detrimental effect on the 116,000 workers who are employed by foreign companies in Scotland and who are likely to leave if any change in the industrial climate continues in this country?
    Mr. Younger: I do not think that the removal of exchange control regulations will have any effect on those employed in Scotland. Indeed, it will have a beneficial effect on the economy as a whole.

    Unemployment
    Mr. William Hamiltonasked the Secretary of State for Scotland if he will make a statement on the current unemployment situation.
    Mr. John Home Robertsonasked the Secretary of State for Scotland if he will make a statement on the latest Scottish unemployment figures.
    Mr. Younger: On 11 October 1979 unemployment in Scotland was 178,489–7·9 per cent. The grave deterioration in the unemployment situation since we were last in office continues to cause the Government serious concern and our prime objective is to create an economic climate in Scotland and in the rest of the United Kingdom in which investment is encouraged and lasting jobs can be created. This is the only way in which a longterm reduction in unemployment can be achieved.
    Mr. Hamilton: Does the right hon. Gentleman agree with the appalling fact that 9,000 youngsters who left school four months ago are still searching for a job? Has there been any new initiative by the Government designed to decrease unemployment rather than increase it? Does he further agree that the unemployment rate has accelerated since the accession of his Government?
    Mr. Younger: The hon. Member is wrong in that. I am sure he will agree that the only way to solve the unemployment problem is to remove a lot of the restrictions which have made it not worth while for people to start new businesses and create new jobs, unfortunately under the Government of which he was a most loyal supporter?
    Mr. Home Robertson: Is the Secretary of State aware that this House has given him power to intervene and to give new life to threatened industries, whether it be in Clydebank, Lemac in my constituency, or, indeed, the imperilled hill farming industry? Is the Minister aware that those who are threatened with unemployment in Scotland wish that he would use those powers instead of behaving like the Prime Minister's lap dog in Cabinet?
    Mr. Younger: As I have already said, I have a very wide range of powers in this matter and I intend to use every one of them in the most helpful way possible to create new jobs, and to encourage firms to expand and create new employment in every way they can. As has already been said, there is more money available this year than the previous Government gave last year for that purpose, and we shall use it as vigorously as we can.
    Mr. Sproat: Will my right hon. Friend lose no opportunity to point out to the people of Scotland the sickening hypocrisy of Labour Members? It was the Labour Government that presided over the doubling of unemployment in Scotland and left us with the situation with which we now have to cope.
    Mr. Younger: My hon. Friend is absolutely right. We have seen the results of five years of Socialist policy. The country voted for a change and it will get it.
    Mr. Gourlay: Everyone is sympathetic about the closure of the Singer factory, but is the right hon. Gentleman aware of the closure of British Shipbuilders' yard at Burntisland? Will he give the same degree of urgency to finding jobs for people who have been unemployed in that part of Scotland as he is giving to those at Singers?
    Mr. Younger: The question of degree of urgency is difficult to measure, but I can assure the hon. Member that, within the limits of the powers available to me, I shall give every possible assistance in his area as well as other areas. I hope that we shall manage to persuade new firms to come in and take up the jobs that have been lost.
    Mr. Speaker: Order. When the word "hypocrisy" is applied to a Party, it is

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    different from when it is applied to an individual. That has long been our understanding.
    Mr. Millan: As unemployment in Scotland is now rising, and as it is agreed by everyone, including some Ministers, that the present Government's monetary policies, along with expenditure cuts, are bound to increase unemployment, particularly in areas such as Scotland, is it the Government's policy that their monetary policies will continue regardless of the effect on unemployment?
    Mr. Younger: It is certainly the Government's intention that the expenditure which was embarked upon by the right hon. Member for Glasgow, Craigton (Mr. Millan) and his colleagues—expenditure which had no backing for it in funds—has to be brought under control. We are getting expenditure under control and, once we have done so, there may be a chance of some new jobs to help the unemployed.

    Islands (Ferry Charges)
    Mr. John Mackayasked the Secretary of State for Scotland if he will make a statement on the review of ferry charges to the islands.
    Mr. Rifkind: As my hon. Friend is aware we are currently examining in detail the whole question of Government assistance to ferry services. I hope to issue a consultation paper before the recess and take decisions on the future pattern of assistance early in the new year.
    Mr. Mackay: Does my hon. Friend realise that his timetable will be welcomed by many of my island constituents? Does he also realise that freight charges impose an increasing burden on my constituents and, further, that they all wish that, in his review, some element of competition will be injected into ferry services so that the islanders do not become the victims of a State monopoly?
    Mr. Rifkind: I can certainly assure my hon. Friend that we are very well aware of the feelings of the islanders. That is why, at a time of very severe restraint, the Government have indicated that it will be a priority to ensure the viability of Scotland's island communities.
    Mr. Donald Stewart: Is the Minister aware that his review of ferry charges has also been welcomed in my constituency? When the time comes to make a decision, will he bear in mind the fact that in Norway island communities in the far north are afforded an equal chance of a reasonable economic freight service by the Government in Oslo?
    Mr. Rifkind: I am aware of the right hon. Gentleman's point. We are approaching this matter without any rigid views. We are anxious to hear the views of the local authorities and the island communities before coming to firm decisions on the manner in which we shall move towards a road equivalent tariff.

  SCOTTISH LAW COMMISSION
  Mr. Canavanasked the Solicitor-General for Scotland when he expects next to meet representatives of the Scottish Law Commission.
  The Solicitor-General for Scotland (Mr. Nicholas Fairbairn): My noble Friend the Lord Advocate visited the Scottish Law Commission on 15 October. Further meetings will be held as and when necessary.
  Mr. Canavan: Will the Solicitor-General discuss with the Commission the grave public concern about the Crown Office circular to procurators fiscal instructing them to keep secret registers of people who have been warned about alleged offences which they have not admitted? As this seems to contradict the basic principle of Scottish law that a person should be innocent until proven guilty, will the Government withdraw that circular forthwith and also shelve their Criminal Justice Bill until such time as Parliament and, indeed, the general public have had the opportunity of discussing these important matters?
  The Solicitor-General for Scotland: That is a fairly wide-ranging question. First, the circular has nothing to do with the Scottish Law Commission, which the hon. Gentleman will appreciate was the last act of the dying Labour Government who were to be pronounced dead a few hours later. He will also appreciate that it is a long standing and humane tradition of the law that persons against whom there is prima facie evidence on minor

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  offences may be warned rather than prosecuted. There has been much uninformed criticism of this matter. To use the word "secret" is, I believe, to use an emotive word in an unfortunate situation. I should like to think, if the hon. Gentleman was warned for a criminal offence but the authorities, in their indulgence, had preferred not to prosecute, that that was a matter which he would not like, to be made public.
  Mr. Henderson: Will the Solicitor-General look again at the extent to which consultation takes place with legal bodies on matters that come before this House? Although it is believed that procurators fiscal were consulted about the Bail Etc. (Scotland) Bill, which we shall be considering in its final stages tomorrow, does my hon. and learned Friend agree that the sheriffs who will implement that law were not consulted about it?
  The Solicitor-General for Scotland: There were consultations with the sheriffs. There are extremely good relationships with all those who have an interest in reform of the law, and it is certainly the intention of my Department that consultations of that kind should be free and frequent so that the best agreement on reform of the law can be achieved.
  Mr. Donald Stewart: Does the hon. and learned Gentleman accept that there is wide agreement with regard to the old Scottish tradition of the procurator fiscal giving a warning? However, what is now at issue is the question of a permanent record being kept of persons who may not have admitted to any crime or offence. Will he ensure that this is not introduced into the law of Scotland?
  The Solicitor-General for Scotland: I want to make this matter absolutely clear, and to dispel a lot of fantasies that appear to have arisen as a result of articles in the press. If a person is reported on evidence by the police or other witnesses, those papers are kept on record in the Crown Office, whatever the disposal. If they are warned, as opposed to prosecuted, it is important that that fact should be known to the authorities in order that it is not an empty threat, because it would be unfair if one person was to benefit from a warning on several occasions as a result of no record being kept. It is not a record of guilt. It is
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  a record of the fact that prima facie evidence existed and that the person had the benefit of not being prosecuted but had the benefit of being warned.
  Mr. Harry Ewing: The exchanges that have taken place have served only to confuse the issue further. Does the Solicitor-General accept that this is a serious and important matter? Does he further accept that three areas are laid out in the circular? The one that is quite clear is where a person admits that he committed the offence and where the procurator fiscal decides not to prosecute but the warning is recorded. The first area of doubt—and this is where the problem arises—is where the accused person says that he or she did not commit the offence. The circular is quite clear that no warning should be given and that no record should be made of anything that took place. The other area of doubt is where the accused person makes a noncommittal reply. Here again the circular is quite clear. Does the Solicitor-General accept that the warning that should be given is merely an indication that the procurator fiscal considers that he would be able to go ahead with the prosecution but would give no indication as to whether he thought the accused person was guilty or not guilty?
  Finally, may I ask the SolicitorGeneral—[H0N. MEMBERS: "No."] This is a very important issue. Does the hon. and learned Gentleman accept the suggestion of his senior colleague the Lord Advocate about making arrangements through the Leader of the House to have a debate on this matter on the Floor of the House?
  The Solicitor-General for Scotland: That was not the suggestion of my right hon. and learned Friend the Lord Advocate. He said that the matter should be raised in Parliament, as it is now being raised. But let me make the situation absolutely clear. I am rather surprised at Opposition Members. This is a humanitarian act to prevent people from being prosecuted in minor cases, whereas otherwise they might be. Let me be quite clear about the matter. This was an instruction issued under the last Government, giving clearance and guidance to procurators fiscal so that the matter is uniform, as we would all want it to be. In fact, there is a provision that if a person totally denies the offence he may not be

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  warned. In that case, if the offence is available they are more likely to be prosecuted. But the fact should be understood that there is nothing secret about this. It is a humanitarian and sensible measure.
  I should like to raise one other point because it is a matter of importance. Here we have a document issued in confidence to people in the public service who are under an oath of confidence. This matter became public and there is no reason why not. It was the manner in which it became public—because the press protected the confidentiality of someone who was in breach of confidentiality—which I regard as very serious indeed.
  Mr. David Steel: Surely some of the doctrines that the Solicitor-General has propounded are at least open to parliamentary question and debate, to put it mildly. Will he arrange for the Scottish Grand Committee to debate this matter thoroughly because it cannot be pursued satisfactorily by question and answer?
  The Solicitor-General for Scotland: It is extraordinary that Opposition Members are so concerned about such a longstanding tradition and about the last act of the last Government. However, if the Liberal Party wishes to use one of its Supply days to debate the matter, nothing would give us more pleasure.

CONTEMPT OF COURT
Mr. Dewarasked the Solicitor-General for Scotland if he is prepared to implement the recommendations of the Phillimore committee report on contempt of court which are relevant to the law of Scotland.
The Solicitor-General for Scotland: As the hon. Gentleman will know, the previous Government did not implement the recommendations of the Phillimore committee but saw fit to present a discussion paper to Parliament in March 1978. Various comments were received and these have been studied carefully. This Government have declared their firm intention to bring forward during this Session a Bill to amend the law of contempt. It will be of United Kingdom application, with, of course, special reference to Scottish court procedure where
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it differs from that applying elsewhere in the United Kingdom.
Mr. Dewar: While I welcome the hon. and learned Gentleman's good intentions, I should like to know whether the Bill will be introduced early in the new year') It is important, with papers circulating throughout the United Kingdom, that the law in that respect should be the same north and south of the Border. The Scottish press is still suffering from the dead hand of Lord Clyde. Is it not time that the influence was removed?
The Solicitor-General for Scotland: I cannot give an assurance that the Bill will be introduced early in the Session, but attempts will be made to ensure that the law in both parts of the United Kingdom is, as far as possible, the same. As the hon. Member for Glasgow, Garscadden (Mr. Dewar) will appreciate, as regards what he calls the dead hand of Lord Clyde, pronouncements in Hall were confirmed this morning by the High Court of Justiciary when the Glasgow Herald was fined £20,000 for contempt of court and the editor £750.

RHODESIA
The Lord Privy Seal (Sir Ian Gilmour): With your permission, Mr. Speaker, I shall make a statement on Rhodesia.
When the House rose, the Government were close to completing their consultations on the way to build on the progress made inside Rhodesia so as to bring the country into independence with wide international recognition.
My right hon. Friend the Prime Minister and my right hon. and noble Friend the Foreign Secretary went to the meeting of Commonwealth Heads of Government at Lusaka with the objective of securing their support for a renewed effort to find a settlement and end the war. The agreement reached there paved the way for the present constitutional conference at Lancaster House. It was agreed that, in the event of agreement on a new constitution, there should be fresh elections in which all the parties would be able to participate, properly supervised under the British Government's authority and with Commonwealth observers present. Such an election, if all agreed to stand by its

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result, would offer the prospect of an end to the war.
In the past six weeks we have achieved agreement on a constitution which, indisputably, provides for genuine majority rule, while including appropriate safeguards for minorities. Both Bishop Muzorewa's delegation and that of the Patriotic Front have made substantial concessions from their opening positions to reach agreement with us on the independence constitution, which we believe will provide a sound, just and democratic basis for the future of an independent Zimbabwe.
The task before us in the conference is to reach agreement on the arrangements for implementing that constitution. The key element in those arrangements will be, as agreed at Lusaka,
"free and fair elections, properly supervised under British Government authority, and with Commonwealth observers".
Bishop Muzorewa's delegation has already declared its willingness to participate in such elections in order to bring the new constitution into effect.
Her Majesty's Government are willing to discharge in full their constitutional responsibility to see that elections are held on a basis that will give every party a fair chance to state its case to the people of Rhodesia. We have made proposals to the conference about the arrangements to bring the independence constitution into effect, and we are engaged in discussing them with the delegations.
It is in the interests of all the people of Rhodesia and of the neighbouring countries that elections should take place as soon as possible to implement the constitution and allow Rhodesia to proceed to legal independence. Our proposals provide for the appointment of a British Governor, with executive and legislative authority during the brief interim. Under the Governor, an Election Commissioner will have the task of supervising the conduct of the elections. Commonwealth observers would be invited to witness them.
I would not underestimate the difficulties that lie ahead of us, but we have reached a wider measure of agreement on the constitution than has hitherto been possible and the British Government have accepted their responsibility to
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supervise the process of putting it into effect. What we have proposed is fully within the letter and spirit of the Lusaka declaration. We see no need for elaborate administrative and constitutional structures during the interim period or for a lengthy interim period with all the unrest and uncertainty that that would bring. Any restructuring that may be necessary will be for the elected Government to undertake within the constitutional framework.
If our proposals are accepted, as I hope they will be, and a ceasefire is agreed, the way will be open for an end to the war and for Zimbabwe to take its place in the international community as a free and independent nation in the very near future. I hope that the House will support the Government in their efforts to bring this about.
Mr. Shore: I thank the Lord Privy Seal for that statement, which, as he knows, I asked for as soon as the House reassembled.
This is the first exchange that we have had since the Lusaka conference and it is right that on behalf of the Opposition I should congratulate all the Commonwealth leaders—and I include the Prime Minister and the Foreign Secretary—on the outcome of the Lusaka conference. Lusaka made possible what my right hon. Friend the Leader of the Opposition and I urged in the debate on 25 July, namely, the abandonment of unilateral British support for the Salisbury settlement and the mounting of a new effort by all involved to achieve a settlement and peace in Zimbabwe.
The constitution has been substantially recast and agreed, thanks to compromises on all sides, but can the right hon. Gentleman confirm that the United States Government have indicated their willingness to assist in financing a land fund? Land was an important issue and it is not mentioned in the present statement. We should also be grateful for more information on this Government's contribution and thinking on that important proposal?
The most difficult part of the negotiations and the subject of the greater part of the statement is the creation of conditions in which generally free and fair elections can be held, and I have four questions on that. My first concerns the interim pre-election administration. We

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welcome the appointment of a Governor to assume executive and legislative powers during the transition and accompanying dissolution of the present Government and Parliament in Salisbury, but would it not be much more acceptable and workable if the Government were assisted by a council drawn from the principal parties attending the London conference?
Secondly, on the election arrangements and their preparation, while we certainly do not want an unnecessarily long period, we think that two months is an absurdly short period. Apart from the fact that a number of the main participants in the London conference have been in exile and their parties outlawed for several years past, surely a four-to six-month period is much more realistic? It would permit such important achievements as the registration of electors.
Thirdly, on the crucial question of the armed forces the statement is entirely silent. Have the Government ruled out any step towards integration of the armed forces? If so, and assuming a ceasefire, does the Minister agree that it is essential for the armed forces to be stood down and confined to barracks and camps and for these arrangements to be independently supervised? Are we to assume, as I think we must, that the police are to undertake the onerous task of maintaining law and order and preventing coercion? If so, has the Minister plans for augmenting and controlling the police to ensure that they behave in an impartial way?
My fourth question relates to the role of the Commonwealth. The statement said that members of the Commonwealth are to be invited to witness the election. I believe that the Commonwealth has played and could play a greater and more helpful role than suggested, in particular in helping to supervise the maintenance of the ceasefire and monitoring and perhaps augmenting the arrangements for policing Zimbabwe in that period.
We have had what is inevitably a very long interim report and we shall return to this matter. I earnestly hope that the Government will be flexible in discussions about the pre-election arrangement and will consider carefully and sympathetically all proposals that will help to build confidence in that. There is no doubt that the so-called "second-best solution" of a bilateral agreement with
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only one party to the London conference is no solution at all. This would be a failure of the most dangerous kind for Britain, Zimbabwe and Southern Africa as a whole.
Sir I. Gilmour: I am grateful to the right hon. Member for his congratulations to my right hon. Friend the Prime Minister and other Commonwealth Heads of Government. He asked about the important subject of land. We started off from the position that it made no sense at all to think of a wholesale buying-out of the white farmers, because they make an invaluable contribution to the economy at this time, particularly when there is a shortage of food elsewhere in the area.
The Foreign Secretary made clear in his statement to the conference on 11 October that we are prepared to provide technical assistance and capital aid for agricultural development schemes that are proposed and promoted by the new independent Government. The United States Government, as the right hon. Member correctly suggested, associated themselves with that statement.
On the question that the right hon. Gentleman raised about the interim period, we have already made it clear that we do not favour, and regard as impossible, the integration of the armed forces. I ask his indulgence on the other questions. We are only just embarking on the discussions about the interim period, and these will be most delicate and difficult negotiations. Of course we shall be flexible and shall consider sympathetically and carefully everything that is put forward. However, I hope that on reflection the right hon. Gentleman will agree that we must negotiate first in the conference and then report to the House, rather than the other way round.
Mr. David Steel: Whatever detailed reservations we may have about some aspects of the proposed constitution, will the Lord Privy Seal accept that we, too, believe that the Government, and particularly the Foreign Secretary, deserve congratulations for the remarkable progress that has been made so far in the conference?
Is it intended that the appointment of a British Governor signifies the return to legality and that in the interim period he will be in command of the security forces,

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whatever their composition? Secondly, I must agree with the official Opposition about the concern over the extreme brevity of the interim period proposed by the Government. In particular, how do they propose to deal with the voting rights of Rhodesian citizens who are out of the territory of Zimbabwe-Rhodesia? Will it not take more than two months to resolve that?
Sir I. Gilmour: I am grateful to the right hon. Gentleman for what he said at the beginning of his questions. Of course, the appointment of a British Governor and the taking-up of that appointment will signify a return to legality, and executive and legislative powers will be vested in him.
I take the point that both right hon. Gentlemen made about the shortness of the period, but I stress that it must be to everyone's advantage to press forward quickly in an electioneering atmosphere. As soon as the constitution and the interim arrangements have been agreed, Rhodesia will, in effect, be in au electioneering period. Whatever else can be said about elections, they are not very good at uniting a country. Therefore, we strongly believe that it is to the advantage of Rhodesia that the transitional period should be as short as possible.
Mr. Amery: The Government paper laid before the conference stated that there will be agreement between the opposing forces of the security forces and the Patriotic Front regarding disengagement of those respective forces. Does this mean that the Government contemplate the Patriotic Front forces returning their arms? Does it mean that there will be areas under their control? The Government paper states that the security forces will be responsible to the Government. To whom will the Patriotic Front forces be responsible?
Sir I. Gilmour: The answer that I gave the right hon. Member for Stepney and Poplar (Mr. Shore) applies to this question as well. These are matters that we shall be negotiating at Lancaster House in the next few days. I feel that they must be discussed there before they are debated in detail in this House.
Mr. J. Enoch Powell: Will the Government recognise, before it is too late, the potentially disastrous consequences of
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making this House responsible—even nominally responsible, through the Governor—for persons and things over which there cannot possibly be any effective control?
Sir I. Gilmour: At the Lusaka conference we accepted responsibility for bringing Rhodesia back to legality with the aim of bringing peace to that land and an end to war. As the former colonial Power—although I appreciate that Rhodesia was not an ordinary colony—that is our duty and we have every intention of discharging our obligations.
Mrs. Knight: Bearing in mind the extreme urgency of settling this matter, has my right hon. Friend or the Foreign Secretary any timescale in mind for this conference, or will these matters be permitted to be drawn out for a very long period?
Secondly, my right hon. Friend will be aware that the newspapers have made great play of the major points of disagreement as to who will pay the settlers when they leave. Can he tell the House of any steps that he may take to ensure that the settlers feel safe enough to remain in Rhodesia?
Sir I. Gilmour: That has been one of our main objectives from the word "go". What I said to the right hon. Member for Stepney and Poplar about land is relevant here. We appreciate the enormous contribution that the white community has made and is making to Rhodesia, and it is our objective that it should stay there. That is why, although the constitution provides for full and undisputed majority rule, there are good safeguards in it for the minority.
As to the length of the conference, I assure my hon. Friend that every delegation feels that the conference has already gone on for a long time—which it has—and speaking for myself and my right hon. and noble Friend, we very much hope that it will come to a speedy conclusion.
Mr. Faulds: As to the interim arrangements, does the right hon. Gentleman not understand that British authority is suspect among the great majority of people in Southern Rhodesia, because of the long history of pro-Smithism on the Conservative Back Benches, and, if I may

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say so, the somewhat partisan chairmanship of his right hon. and noble Friend? [Interruption.] It is seen in that light in Southern Rhodesia. Does the right hon. Gentleman not accept that a United Nations presence is much to be preferred and much safer than only a British and Commonwealth involvement? And that in place of a British Governor there is need for an independent overseer who is internationally acceptable?
Sir I. Gilmour: I do not think that the hon. Gentleman really added to his reputation by that intervention. The first part of his question goes entirely against what was decided at Lusaka. He had better take up the matter with the Heads of Government, who agree that the election will be supervised by us. Evidently, they did not believe that we are distrusted in Rhodesia—nor do I, and nor does the House. Secondly, it is quite untrue—the hon. Gentleman is totally misinformed, or uninformed, and should not make such allegations—to say that my right hon. and noble Friend has been in any way a partisan chairman.
Mr. Maurice Macmillan: I accept the need for a British Governor to take over in the interim period and, equally, the need for him to dissolve Parliament, but does not my right hon. Friend believe that sacking the present elected Government and giving full executive and legislative powers to the British Governor will encourage the Rhodesians to believe that the British Government are backing the Patriotic Front to the exclusion of existing settlements?
Sir I. Gilmour: I do not see how that inference could possibly be drawn from our appointment of a Governor. It is the only proper way to bring Rhodesia back to legality. The other interim arrangements will be discussed at the conference.
Mr. Jay: Presumably, before the new constitution is introduced there will have to be legislation in the House to ensure its full legality. Will the Minister tell the House what are the Government's plans about that, and at what stage he expects to introduce the legislation?
Sir I. Gilmour: The right hon. Gentleman is right. Legislation will have to be passed through the House, and I hope that it will come before the House fairly
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soon. I cannot give an exact undertaking of its timing, because that will depend on the progress of the conference.
Mr. Nicholas Winterton: Is my right hon. Friend aware that to expect a properly and duly elected Prime Minister to return to his country without status or power is quite intolerable? Need I remind my right hon. Friend that Bishop Abel Muzorewa was elected by 64·8 per cent. of the Rhodesian electorate and returned with an overall majority? How can my right hon. Friend expect him to return to his country without power or status? Is my right hon. Friend further aware that, if the multi-racial black majority Government of Zimbabwe-Rhodesia does not work, the prospects of good evolutionary developments in the rest of Southern Africa will be put back for a generation? The black people of Zimbabwe-Rhodesia are bitter at the British Government's failure to honour their manifesto commitments.
Sir I. Gilmour: The last part of my hon. Friend's question is as inaccurate as what was said by the hon. Member for Warley, East (Mr. Faulds). I assure my hon. Friend that I do not need reminding of what happened in the spring election. We are conscious of Bishop Muzorewa's achievement at that election and we have paid tribute constantly to that achievement. We hold him, as does the whole House, in the highest possible respect. The interim arrangements will be discussed at the Lancaster House conference.
Mr. Alexander W. Lyon: I do not wish to press the Lord Privy Seal for details before the negotiations, but does he not recognise that the establishment of a constitution will not be the successful outcome of the conference unless it stops the war? To stop the war would require, at least, the assent of the Patriotic Front. Some of the Foreign Secretary's tactics in relation to the Patriotic Front seem to be intended as excluding it from the negotiations.
Sir I. Gilmour: If the hon. Gentleman will forgive me for saying so, the first part of his question is a truism. It is obvious that if a war is going on and all sides do not agree to stop that war, it will continue. We are well aware of that point, and I accept it. The second

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part of the hon. Gentleman's question is totally wrong. My right hon. and noble Friend has chaired the conference in the most admirable way. I can testify to that fact, because I have been there the whole time. The House should realise that after a lengthy period of discussion the conference has to reach decisions, as we in the House reach a decision after a debate. That is what we have to do about the constitution, and I believe that most fair-minded people would agree that the conference arrangements were handled extremely well.
Mr. Hugh Fraser: Is my right hon. Friend aware of the difficulties that might arise in maintaining law and order when a British Governor has assumed powers in Rhodesia? What contingency plans do the Government have for ensuring that the rule is effective?
Sir I. Gilmour: Supervising an election under a ceasefire instead of at the end of a war will not be an easy task. We all accept that fact. We are trying to do something that is vitually unique—to start arrangements for an election while a civil war is going on. I agree that the difficulties are great. We have made considerable progress so far, and the real difficulties referred to by my right hon. Friend will be discussed and negotiated by the parties at the conference.
Mr. Robert Hughes: Does the right hon. Gentleman accept that because the Lusaka agreement was reached in advance of negotiations it is impossible to expect that agreement to be binding on a British Government in every respect? If the agreement that the supervision should be British is adhered to the Government are not showing the flexibility that is needed to end the war. Does the right hon. Gentleman accept that, with two parties in a war, to allow one party—the forces of the Smith regime in Southern Rhodesia—to remain in control of the affairs of the country, even under the British Government, renders settlement hopeless? Will he consider sending a Commonwealth force—not just observers—to break the deadlock between his insistence that there will be no integration and the Patriotic Front's insistence that there will be integration?
Sir I. Gilmour: As I said earlier, every Head of Government of the Common-
430
wealth agreed that there should be British supervision. Nothing has happened since Lusaka to lead us to believe that that was the wrong decision. We have every intention of sticking to that decision. I am firmly convinced that it is the only way to make things work. We welcome Commonwealth observers and we are committed to the proposal. Indeed, we hope that the observers will come from a wide spectrum of the Commonwealth. I believe that that will be the right way to proceed
Mr. Farr: I congratulate my right hon. Friend on the progress that he and our right hon. and noble Friend have made. Will he tell the House whether arrangements have been made to guarantee the continuity of the Rhodesian Civil Service and its pension rights by the new Government after the takeover?
Sir I. Gilmour: The agreed constitutional framework contains detailed provisions about pensions for Rhodesian civil servants and for continuity.
Mr. Hooley: Does the Lord Privy Seal agree that the proposed Governor's position could become impossible unless he is given either a Commonwealth or a United Nations force to maintain his authority during the interim period? Will there be full and proper registration of electors in the interim period, and will sanctions be maintained until such time as a fully and properly elected Government are in Rhodesia?
Sir I. Gilmour: I see the argument for registering voters but, as the recent experience of Botswana showed, that would take a long time. If we are to proceed quickly, registration will be impossible. However, the matter will be discussed and and there will be careful measures to ensure that there is no cheating or double voting. I have dealt with the question of a Commonwealth or a United Nations force. On the question of sanctions, those will be lifted as soon as possible, as my right hon. and noble Friend stated last week. I cannot go further than that at this stage.
Mr. Ian Lloyd: As there is no constitutional precedent of which I am aware, how does the Lord Privy Seal justify the progress of negotiations which, however worthy their objectives, can succeed at

431
best by diminishing and at worst by subverting the authority of an elected Government? If the price to be paid for success is accommodation with a group far better described as criminal rather than patriotic, how will a future democratically elected Government claim its legitimacy, provided there is one terrorist group that finds its position irreconcilable to that of the official elected Government?
Sir I. Gilmour: I do not quite see what the absence of a constitutional precedent has to do with the rest of my hon. Friend's question. The reason why we are here, and the whole point of the conference, is that there has been an extremely bloody war in Rhodesia. My hon. Friend seems to gloss over that. The whole purpose of the negotiations is to bring peace and an elected Government to Rhodesia. My hon. Friend and others may call the Patriotic Front whatever they like, but it is no good trying to ignore the fact that the Patriotic Front is there, and it is generally agreed by most people in Rhodesia that the country cannot prosper unless there is a return to peace.
Mr. Newens: Can the right hon. Gentleman confirm or deny reports that South African troops took part in a recent raid into Zambia organised by the Muzorewa regime? Does he agree that such participation would be an ominous development and would endanger the outcome of any talks? If that participation is proved, what action will the right hon. Gentleman take to deter further South African involvement in the affairs of Rhodesia?
Sir I. Gilmour: The hon. Gentleman is getting slightly muddled. President Kaunda said that there had been an attack on Zambia by Rhodesian forces and another attack elsewhere by South African forces, which was nothing to do with Bishop Muzorewa's Government or the Rhodesian situation. It was connected with Namibia, which, unfortunately, we are not discussing today.
Mr. Cyril D. Townsend: Bearing in mind the importance of the question of land, have the Government ruled out paying compensation to white farmers who may, for one reason or another, have to leave their farms after the next election? Bearing in mind, also, the need for international recognition, will the Government keep in mind the possibility
432
of inviting United Nations as well as Commonwealth observers for the elections?
Sir I. Gilmour: I have already answered the second part of my hon. Friend's question. We do not believe that United Nations observers are necessary. There will be many people there anyway—the press and the rest—and we believe that Commonwealth observers will be more than enough.
I do not think that it it for us to buy out the Rhodesian farmers. We want them to stay, and we have written into the constitution, and have agreed, safeguards that should protect their position. We regard that as vital for the future economy of Zimbabwe.
Mr. McNally: Is the right hon. Gentlemban aware that the House is a little disturbed about his vagueness concerning the future of sanctions? Is he aware that there is at least an element in the Muzorewa delegation, encouraged by Conservative Members below the Gangway, who hope for more from failure than from success? The right hon. Gentleman could disabuse them now by expressing his justified confidence that he has in the House a majority to continue sanctions if the negotiations fail.
Sir I. Gilmour: I cannot see why the hon. Gentleman should be so anxious for sanctions to continue. Our objective is to bring about a situation in which the reasons for sanctions disappear, and we are firmly on course for doing that.
Several Hon. Members rose—
Mr. Speaker: Order. I propose to call four of the hon. Members who have been seeking to catch my eye. We shall then have to move on.
Mr. Higgins: As the spring elections were conducted on the basis of a constitution that all parties to the negotiations now accept was not satisfactory, does it not follow that no Government can reasonably be regarded as legitimate in Rhodesia until fresh elections are held?
Sir I. Gilmour: That is true as far as the international position is concerned, but we must recognise that the election of a black Government in May, with 64 per cent. of the votes, was a considerable achievement. Just as we do not want to

433
exaggerate what happened, we certainly must not underrate Bishop Muzorewa's achievement.
Mr. Biggs-Davison: While I welcome my right hon. Friend's robust rejection of the grotesque idea that there can be an integration of the warring armed forces, may I ask him to give an assurance that in the further negotiations and in any instructions that may be given to a Governor who may be accepted, the confidence and efficiency of the armed forces of Rhodesia under their present command will be maintained?
Mr. Robert Hughes: That is precisely what could scupper the whole thing.
Sir I. Gilmour: We do not wish to undermine the confidence or efficiency of any part of the Rhodesia armed forces, or of anybody else. It will certainly not be any part of the Governor's duty to do so.
Mr. George Gardiner: Throughout the Lancaster House talks there have been repeated suggestions, at least credited to Foreign Office sources, that even if the main sanctions order is not presented to the House for renewal next month there are certain other sanctions, deriving their authority from other Acts, which would be proceeded with anyway. Does my right hon. Friend accept that such suggestions reflect gravely upon the good faith of the Government? Will he undertake that any decision will be made on sanctions in their totality and not on a piecemeal basis?
Sir I. Gilmour: The reports to which my hon. Friend has referred have nothing to do with good faith; they are merely a question of fact, and it is a fact that the sanctions would not completely fall as a result of action taken on section 2. My hon. Friend knows from what has been
434
said before and from what I have said today that our objective is to get rid of all sanctions as soon as possible.
Mr. Peter Bottomley: Is my right hon. Friend aware that the achievement of agreement on the constitution has made the Lancaster House conference worthwhile and that the other side of the fact that the Bishop will not be Prime Minister until new elections are held is that the Patriotic Front will have no justification for carrying on the war when it has agreed the new constitution?
Sir I. Gilmour: The agreement on the constitution has been a considerable step forward, but we are aiming higher than that ffi we are aiming at the end of the war and the setting up of a peaceful, independent Zimbabwe.

BILL PRESENTED
  ISLE OF MAN
  Mr. Secretary Whitelaw, supported by Mr. Secretary Nott, Mr. John Biffen, Mr. Peter Rees, Mr. Attorney-General and Mr. Leon Brittan presented a Bill to make such amendments of the law relating to customs and excise, value added tax, car tax and the importation and exportation of goods as are required for giving effect to an Agreement between the Government of the United Kingdom and the Government of the Isle of Man signed on 15 October 1979; to make other amendments as respects the Isle of Man in the law relating to those matters; to provide for the transfer of functions vested in the Lieutenant Governor of the Isle of Man or, as respects that Island, in the Commissioners of Customs and Excise; and for purposes connected with those matters: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 55.]

EDUCATION ACT 1944 (AMENDMENT)
4.8 p.m.
Mr. Hal Miller: I beg to move,
That leave be given to bring in a Bill to amend sections 39 and 55 of the Education Act 1944; and for connected purposes.
This is the third time that I have had the privilege of introducing a Bill of this kind and I pay tribute to the constancy of my sponsors, who have stayed with me in my necessary endeavour to bring up-to-date sense into the rules regarding the provision of school transport and to do away with the link between that provision and truancy prosecutions.
At present, there is a distance over which school transport is provided free. That limit was set under the Education Act 1944 at distances appropriate to that time. The heavy increase in the use of our roads since then means that we must take into account the serious safety factors affecting schoolchildren who are required to walk up to three miles—in the case of older children—to school. It is a particular problem on dark winter mornings or evenings and for those who often have to use roads without footpaths.
There are many areas in my constituency where this is a real fear in the minds of parents. It is also the case throughout the country. Support for this Bill has been drawn from all sides of the House and from all parts of the country, although I have to lament the absence of some of the original sponsors as a result of the recent election.
The safety factor is a real one in the minds of parents. There is also the question of the breakdown of law and order and the dangers to which young girls especially are exposed when required to walk home over such distances, particularly in hours of darkness. There are many parts of the country where this is unfortunately a very real consideration in the minds of parents.
Apart from the question of safety, there is the fact that local education authorities have relied on these arbitrary limits as a means of enforcing the truancy provisions on the ground that it is reasonable to attempt to prosecute parents for not sending their children to school if they are under the walking limit that is laid
436
down. I am sure that all parts of the House would agree that fresh thought has to be given to the truancy question and that distance of transport is no longer relevant to the issue.
The provisions of the Bill remain the same as those of the previous Bills, for the introduction of which I have successfully sought the leave of the House. They make provision for regulating powers to ensure that in cases where parents receive family income supplement there would be authority to allow for the free provision of transport, but subject to those powers the idea is that there should be provision of transport and provision to charge for it at a flat rate.
I do not think that I need detain the House for the full 10 minutes in view of the agreement expressed in all parts on previous occasions. I content myself by concluding that this is a necessary measure and that if the provisions in the forthcoming Government Bill render these provisions unnecessary I shall be grateful. But we would be well advised to insist on these provisions while we await the Government's proposals.
Miss Sheila Wright: In the West Midlands, the hon. Member for Bromsgrove and Red-ditch (Mr. Miller) has something of a reputation for being a maverick. I find it fascinating, all the same, that he is prepared to sponsor a Bill which, if it becomes law, will affect a far higher proportion of his constituents than mine, as I represent a largely urban area. It will affect a far larger proportion of constituents of Conservative Members than of Labour Members. It is a new one on me when an hon. Member turns round and kicks his own constituents smartly in the teeth.
I would like to examine briefly what I consider this essentially nasty, mean-minded little Bill will involve. It is so nasty and so mean-minded a proposal that, even with a Government as ungenerous and as benefit-snatching as the present one, the hon. Gentleman is not prepared to leave it to his own Front Bench to put forward the proposal.
Two main categories of children will be affected. Many children, mostly of secondary school age, in rural areas will be affected by having to pay, or their parents having to pay, whether they can

437
afford it or not. Do not talk to me about families on family income supplement level. People just above that level find great difficulty in managing. They experience even more difficulty managing under the increasing inflation rate at this time, and get very little benefit from tax rebates.
Secondly, there will be children attending special schools throughout the country, and not only in rural areas. There are two ways in which local education authorities can take advantage of what will become their freedom not to levy a charge. They can tell the parents to use public transport. This would apply mainly perhaps to the urban areas, if public transport is available there. So children will at least reach their schools at considerable cost, taking into account rising bus fares.
I cannot quote from the hon. Gentleman's constituency, but in the built-up urban areas that I represent it is quite common for children to attend a special school five or six miles away from where they live. I am keeping that figure fairly low. Some children can travel 12 miles. It is further in the rural areas. That would mean that a child under 14 who can travel alone at half rate would pay about 40p a day. With an older child, or a child who is blind, deaf or mentally or physically handicapped and has to be accompanied by his parents, it would mean a cost of 80p a day for the children and double that amount for the accompanying parent.
Alternatively, local education authorities can provide transport and charge for it. That is what I believe the hon. Gen-
tleman was talking about. That means a minimal saving. No one has suggested that charging for children will greatly decrease the money spent on the service. It will do a great deal to make the situation worse for the parents of poorer children who are trying to manage under the present situation, in many cases with great difficulty.
I congratuate the hon. Gentleman on managing to concoct and bravely putting his name to a Bill that will hit a wide range of constituents of Conservative Members of Parliament in country areas and the blind, the deaf and the physically and mentally handicapped throughout the country. From my contacts with them, I believe that even the majority of Conservative local education authorities will be concerned about the Bill. It will save very little money unless local education authorities are prepared to ignore the educational needs of many children who would not get to school at all if the spirit as well as the letter of the Bill were enacted. Some parents will not be able to afford the money. Some will not be able to undertake two wearisome and expensive journeys on top of all their other commitments, possibly to a young family.
I can only repeat that this is a nasty, mean-minded little Bill. I appeal to the House to reject it out of hand.
Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and Nomination of Select Committees at Commencement of Public Business):—
The House divided: Ayes, 88 Noes, 205.

Division No. 84]

AYES

[4.20 p.m.

Adley, Robert

Crouch, David

Knight, Mrs Jill

Alexander, Richard

Dickens, Geoffrey

Knox, David

Aspinwall, Jack

Dover, Denshore

Lang, Ian

Atkinson, David (B'mouth, East)

Dunlop, John

Langford-Holt, Sir John

Beaumont-Dark, Anthony

Faith, Mrs Sheila

Lennox-Boyd, Hon Mark

Bendall, Vivian

Farr, John

Lewis, Kenneth (Rutland)

Benyon, w. (Buckingham)

Fenner, Mrs Peggy

Lloyd, Peter (Fareham)

Bevan, David Gilroy

Fookes, Miss Janet

McAdden, Sir Stephen

Blackburn, John

Fry, Peter

MacKay, John (Argyll)

Bowden, Andrew

Garel-Jones, Tristan

McQuarrie, Albert

Bright, Graham

Gow, Ian

Major, John

Brotherton, Michael

Gower, Sir Raymond

Marland, Paul

Brown, Michael (Brigg & Sc'thorpe)

Grant, Anthony (Harrow C)

Mates, Michael

Bruce-Gardyne, John

Grylls, Michael

Maxwell-Hyslop, Robin

Burden, F. A.

Hawksley, Warren

Meyer, Sir Anthony

Butcher, John

Holland, Philip (Carlton)

Mills, Iain (Meriden)

Cadbury, Jocelyn

Howell, Ralph (North Norfolk)

Montgomery, Fergus

Carlisle, John (Luton West)

Irving, Charles (Cheltenham)

Mudd, David

Carlisle, Kenneth (Lincoln)

Jessel, Toby

Neale, Gerrard

Chapman, Sydney

Johnson Smith, Geoffrey

Needham, Richard

Clark, Hon Alan (Plymouth, Sutton)

Kaberry, Sir Donald

Nelson, Anthony

Corrie, John

Kitson, Sir Timothy

Neubert, Michael

Onslow, Cranley

Speller, Tony

Watson, John

Osborn, John

Spence, John

Wheeler, John

Page, Rt Hon R. Graham (Crosby)

Sproat, Iain

Williams, Delwyn (Montgomery)

Rathbone, Tim

Steen, Anthony

Winterton, Nicholas

Rees-Davies, W. R.

Thomas, Rt Hon Peter (Hendon S)

Rhodes James, Robert

Thorne, Neil (Ilford South)

TELLERS FOR THE AYES:

Rost, Peter

Viggers, Peter

Mr. Roger Moate and

Shepherd, Colin (Hereford)

Walters, Dennis

Mr. Hal Miller.

Smith, Dudley (War. and Leam'ton)

Ward, John

NOES

Abse, Leo

Foulkes, George

Oakes, Rt Hon Gordon

Allaun, Frank

Fraser, John (Lambeth, Norwood)

O'Halloran, Michael

Alton, David

Freud, Clement

O'Neill, Martin

Archer, Rt Hon Peter

Garrett, W. E. (Wallsend)

Orme, Rt Hon Stanley

Armstrong, Rt Hon Ernest

George, Bruce

Owen, Rt Hon Dr David

Ashley, Rt Hon Jack

Graham, Ted

Palmer, Arthur

Ashton, Joe

Grant, George (Morpeth)

Park, George

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

Grant, John (Islington C)

Parker, John

Barnett, Guy (Greenwich)

Hamilton, James (Bothwell)

Parry, Robert

Barnett, Rt Hon Joel (Heywood)

Hamilton, W. W. (Central Fife)

Pavitt, Laurie

Beith, A. J

Harrison, Rt Hon Walter

Penhaligon, David

Benn, Rt Hon Anthony Wedgwood

Hattersley, Rt Hon Roy

Powell, Raymond (Ogmore)

Bennett, Andrew (Stockport N)

Haynes, Frank

Prescott, John

Bidwell, Sydney

Healey, Rt Hon Denis

Price, Christopher (Lewisham West)

Booth, Rt Hon Albert

Heffer, Eric S.

Race, Reg

Boothroyd, Miss Betty

Hogg, Norman (E Dunbartonshire)

Radice, Giles

Bottomley, Rt Hon Arthur (M'brough)

Holland, Stuart (L'beth, Vauxhall)

Rees, Rt Hon Merlyn (Leeds South)

Bradley, Tom

Home Robertson, John

Richardson, Miss Jo

Brown, Hugh D. (Provan)

Homewood, William

Roberts, Albert (Normanton)

Brown, Ronald W. (Hackney S)

Hooley, Frank

Roberts, Allan (Bootle)

Brown, Ron (Edinburgh, Leith)

Howells, Geraint

Roberts, Ernest (Hackney North)

Buchan, Norman

Huckfield, Les

Robertson, George

Callaghan, Jim (Middleton & P)

Hughes, Robert (Aberdeen North)

Rooker, J. W.

Campbell-Savours, Dale

Hughes, Roy (Newport)

Roper, John

Canavan, Dennis

Jay, Rt Hon Douglas

Ross, Ernest (Dundee West)

Cant, R. B.

Johnson, Walter (Derby South)

Sandelson, Neville

Carmichael, Neil

Johnston, Russell (Inverness)

Sheerman, Barry

Carter-Jones, Lewis

Jones, Rt Hon Alec (Rhondda)

Sheldon, Rt Hon Robert (A'ton-u-L)

Clark, David (South Shields)

Jones, Barry (East Flint)

Shore, Rt Hon Peter (Step and Pop)

Cocks, Rt Hon Michael (Bristol S)

Jones, Dan (Burnley)

Silkin, Rt Hon John (Deptford)

Cohen, Stanley

Kaufman, Rt Hon Gerald

Silkin, Rt Hon S. C. (Dulwich)

Coleman, Donald

Kerr, Russell

Silverman, Julius

Concannon, Rt Hon J. D.

Kilroy-Silk, Robert

Skinner, Dennis

Conlan, Bernard

Kinnock, Neil

Smith, Cyril (Rochdale)

Cook, Robin F.

Lamborn, Harry

Smith, Rt Hon J. (North Lanarkshire)

Cowans, Harry

Lamond, James

Soley, Clive

Craigen, J. M. (Glasgow, Maryhill)

Leadbitter, Ted

Spearing, Nigel

Crowther, J. S.

Lewis, Arthur (Newham North West)

Spriggs, Leslie

Cryer, Bob

Lewis, Ron (Carlisle)

Stallard, A. W.

Cunliffe, Lawrence

Litherland, Robert

Stoddart, David

Cunningham, George (Islington S)

Lofthouse, Geoffrey

Stott, Roger

Cunningham, Dr John (Whitehaven)

Lyon, Alexander (York)

Strang, Gavin

Dalyell, Tam

Lyons, Edward (Bradford West)

Straw, Jack

Davies, Rt Hon Denzil (Lianelli)

McCartney, Hugh

Summerskill, Hon Dr Shirley

Davies, Ifor (Gower)

McCusker, H.

Taylor, Mrs Ann (Bolton West)

Davis, Clinton (Hackney Central)

McDonald, Dr Oonagh

Thomas, Dafydd (Merioneth)

Davis, Terry (B'rm'ham, Stechford)

McElhone, Frank

Thomas, Mike (Newcastle East)

Dean, Joseph (Leeds West)

McKay, Allen (Penistone)

Tilley, John

Dempsey, James

Maclennan, Robert

Tinn, James

Dewar, Donald

McMillan, Tom (Glasgow, Central)

Torney, Tom

Dixon, Donald

McNally, Thomas

Urwin, Rt Hon Tom

Dobson, Frank

McWilliam, John

Varley, Rt Hon Eric G.

Dormand, Jack

Magee, Bryan

Wainwright, Edwin (Dearne Valley)

Douglas, Dick

Marshall, Dr Edmund (Goole)

Wainwright, Richard (Colne Valley)

Douglas-Mann, Bruce

Marshall, Jim (Leicester South)

Walker, Rt Hon Harold (Doncaster)

Dubs, Alfred

Martin, Michael (Gl'gow, Springb'rn)

Watkins, David

Dunn, James A. (Liverpool, Kirkdale)

Mason, Rt Hon Roy

Weetch, Ken

Dunnett, Jack

Maynard, Miss Joan

Welsh, Michael

Dunwoody, Mrs Gwyneth

Mellish, Rt Hon Robert

White, Frank R. (Bury & Radcliffe)

Eadie, Alex

Mikardo, Ian

Whitehead, Phillip

Eastham, Ken

Millan, Rt Hon Bruce

Willey, Rt Hon Frederick

Edwards, Robert (Wolv SE)

Miller, Dr M. S. (East Kilbride)

Williams, Rt Hon Alan (Swansea W)

Ellis, Raymond (NE Derbyshire)

Mitchell, Austin (Grimsby)

Winnick, David

Ellis, Tom (Wrexham)

Mitchell, R. C. (Soton, Itchen)

Woodall, Alec

Evans, loan (Aberdare)

Molyneaux, James

Wright, Sheila

Ewing, Harry

Morris, Rt Hon Alfred (Wythenshawe)

Faulds, Andrew

Morris, Rt Hon Charles (Openshaw)

TELLERS FOR THE NOES:

Fletcher, Ted (Darlington)

Morton, George

Mr. Martin Flannery and

Forrester, John

Mulley, Rt Hon Frederick

Mr. Stan Thorne.

Foster, Derek

Newens, Stanley

Question accordingly negatived.

ORDERS OF THE DAY
  SUPPLY
  [3rd Allotted Day]—considered

  GOVERNMENT EXPENDITURE
  Mr. Deputy Speaker (Mr. Bernard Weatherill): I have to announce that Mr. Speaker has selected the amendment in the name of the Prime Minister.
  4.30 p.m.
  Mr. Roy Hattersley: I beg to move,
  That this House condemns Her Majesty's Government for their savage cuts in funds for the sick, the aged, the disabled, the young, the homeless, the badly housed and others dependent upon the support of the community; further condemns the Government's assault on the caring society which is compounded by their failure to assist local authorities in dealing with inflation and their obligations under pay awards, and deplores Her Majesty's Government's reduction of the rate support grant which will lead to substantial rate increases and reductions in essential services; and further calls on Her Majesty's Government to restore the drastic cuts they have made in the National Health Service.
  This debate has three purposes for the Opposition. The first is to demonstrate our total and unremitting opposition to a policy which has already damaged, and will increasingly damage, the public services, and to show our contempt for a Government who give greater priority to tax cuts for people at the top of the incomes scales than to school meals and old people's homes. Secondly, we want to put the cuts into perspective instead of in the confused and confusing percentages and millions of pounds about which Ministers talk. We want to give the real facts, from the real world, of services abandoned and charges increased. Thirdly, we want to give the Government a much needed chance to answer questions which they have either avoided or evaded. For instance, what is the purpose of the cuts? That is the most important question. Are the cuts reluctantly imposed by the Government as a sad necessity, or are they welcomed as a matter of principle?
  Principle appears to be what motivates the cuts, when one takes into account
  442
  the speeches at the Conservative Party conference. There was much talk there of driving back the frontiers of the State. There was talk of giving a boost to private initiative and creating a more self-reliant society. In the real world, that adds up to closing homes for the mentally handicapped, as has happened in Bristol, and ending old people's concessionary fares, as is happening in Harrogate. Those two examples of what is happening all over the country can be multiplied time after time.
  The Government insist on changing their mind from speech to speech and from occasion to occasion when describing why the cuts are necessary and their effects. At the local government conference in Scarborough, the Secretary of State for the Environment said of his policy:
  "To describe it as a cut you have to define cuts as the removal of something which never was."
  On the other hand, the Secretary of State for Education and Science, surprisingly, approached the problem using more robust language. He said that the Government had not shied away from their determination to secure essential public sector economies. He said that education would have to take its share.
  The Secretary of State for Social Services was not quite at his best on the radio this morning. Simultaneously he argued that there were no cuts and that, anyway, they were necessary in the national interest. In one passage the right hon. Gentleman tastefully described a process which he called "waving the shroud". I take that to mean that some people are suggesting that cuts are being carried out which are not happening in reality. No sooner had the Secretary of State made that point than his entire performance was rendered ridiculous by the next item on the programme which described how old people's homes were about to be closed and how pre-school education was threatened in three areas of the country.
  Other points need to be made about the Secretary of State's broadcast this morning. The first concerns pensions. He asserted that pensions were to be increased by the largest cash amount ever. I am surprised that the right hon. Gentleman values his reputation so lightly that

  443
  he is prepared to go in for cheap propaganda of that sort. He knows that what he described as the biggest cash increase ever is an indication not of the Government's concern but of the inflation level over the last 10 years. The Secretary of State is rendered ridiculous because Treasury Ministers have been touring the country telling trade unions to think of real wages rather than cash wages while he tries to fool pensioners into counting their paper money rather than their real money.
  After talking about waving the shroud, the Secretary of State went on to say that we could not afford the levels of public expenditure which some people now demanded. I hope that when the right hon. Gentleman replies to the debate he will say why we can afford more for defence but less for hospitals.
  In Luxembourg, the Prime Minister pleaded with our NATO allies to spend as much on defence as we spend. I hope that in reciprocation they pleaded with her for us to spend the same amount on pensions, housing and family benefits as our NATO allies spend.
  If we cannot afford to spend any more, as the Secretary of State implied in his broadcast this morning, how is it that we can afford £70 million to subsidise private places in public schools? School capitation allowances are being reduced all over the country—in Avon by 10 per cent., Birmingham by 7 per cent. and Gwent by 30 per cent. in primary schools and 10 per cent. in secondary schools. Some schools cannot afford essential textbooks and some are giving up science classes because of the expense of employing laboratory technicians. Many schools will remain closed during January because they cannot afford the fuel bills. Why is it that when Eton, Harrow and Winchester are exempt from the cuts they are being positively helped out of public funds in a way that they have never been helped before? [HON. MEMBERS: "Total distortion."] Hon. Members had better explain later why they believe that.
  I want to give the Government the opportunity to explain their policy. I shall give them a hand by describing what they intend in objective and exact terms.
  444
  The Secretary of State for the Environment said in his circular that he expected local authorities to make reductions of about 3 per cent., or £360 million, in the level of current expenditure envisaged in the rate support grant settlement. He said that he would require a further reduction next year to bring the total reductions up to 5 per cent. I am not accusing him of adding those two percentages together. I am accusing him of wanting an additional increase next year which will carry the total to that figure.
  In order to enforce his policy, the right hon. Gentleman proposes a reduction of £300 million in calculating the rate support grant increase order. He has made further threats about his actions and the level of grants in the future if the cuts for which he asks are not carried out by autonomous local authorities which should be allowed to observe their freedom under the law.
  Irrespective of the previous ambiguities, and putting aside earlier hedging, I hope that the Secretary of State will admit that what he proposes for this year and next year is not simply the removal of something which never was but that he proposes real cuts in the real world which will affect real people. If the cuts represent simply the removal of something which never was, perhaps the Secretary of State will explain why the Buckinghamshire county treasurer has told his finance committee that it must choose between rate increases of 23 per cent. and a massive reduction in services, why Hampshire prophesies a rate increase of 24 per cent., and how Newcastle comes to calculate that, thanks to the cuts next year, it must cut £4½ million from services to limit its rate increase to 25p in the pound or £7 million from services to limit its rate increase to 20p in the pound.
  These real cuts will hurt and even the Tories who are honest are prepared to admit that. I give five examples. The chairman of Wiltshire education committee has resigned rather than implement these cuts. Councillor Stephanie Jarrett has been expelled from the Rochester and Chatham Conservative Party because she opposed these cuts on Kent county council. Colonel Bill McLennan, leader of the Gloucester council, said on television, in my presence, that it was no use pretending that there was a painless way of making these cuts.

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  There are in the deep recesses of the House two Conservative Members of Parliament who accept the same point.
  The hon. Member for Faversham (Mr. Moate) described the closing of the Sittingbourne memorial hospital as a catastrophe because patients would suffer. The hon. Member for Cheltenham (Mr. Irving) spoke of Right-wing elements going too far in supporting the cuts. He said that if the threat of a 3 per cent. cut this year meant shutting down homes for the elderly in Cheltenham, Gloucester council would not do it. I say to both these hon. Members that the way to ensure that what they wish comes about is to vote with us tonight.
  Mr. Roger Moate: I reaffirm that I said that it would be a catastrophe. However, I believe that we will avert that happening. Does the right hon. Gentleman acknowledge that the major problems that face our hospitals arise from a strict adherence to the cash limits imposed by the Labour Government? Will he tell the House whether those cash limits would have been maintained, or was it his Government's intention to abandon them?
  Mr. Hattersley: I have given the hon. Gentleman the opportunity to work out his conscience and maintain his Division record. Cash limits were devised by us and were a proper way of maintaining financial control. It is one thing to use cash limits to maintain financial prudence, but it is another thing to use them as an exercise in cuts to reduce expenditure. As I hope to show, this is exactly what the Government are doing.
  Mr. Charles Irving: I am grateful to the right hon. Gentleman for referring to the point I made, but I must make it clear that my criticisms had nothing to do with the Government's cuts. Necessary cuts must be made. My criticism was of the diabolical way in which some local authorities, quite deliberately, are making cuts in places where they ought not to be made. There are ways of making cuts—of removing the fat from the town halls and shire halls—other than by closing old people's and children's homes.
  Mr. Hattersley: I express my gratitude to the hon. Gentleman and correct him in
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  one particular only. He has spoken about local authorities behaving improperly. In his speech, which I quoted, he spoke of "Right-wing elements". I think he was right the first time.
  I refer to another Right-wing element, the famous Councillor Tyler of West Yorkshire who, describing the nature of the cuts, made the memorable—I hope, immortal—aphorism:
  "Nothing concentrates the mind like a little poverty."
  When I first read that I assumed that Councillor Tyler was joining the Prime Minister amongst the supporters and admirers of St. Francis of Assisi. Then I realised the difference. St. Francis believed in poverty for himself. The Prime Minister and Councillor Tyler believe in poverty for someone else.
  There is no doubt that poverty will be the result of Government policy. That policy, in the short term, will have one immediate unavoidable and almost universal result—a massive increase in rates next April. That will not be the result of the activities of spendthrift local authorities. It will be the result of the Secretary of State's own policy. He must surely know that, because Oxfordshire—a county which he, in part, represents—has levied a supplementary rate this week. Not surprisingly, it has ignored, or regarded as wholly irrelevant, a letter which he sent on 19 March to all Conservative councils. That letter, written in the heady days of opposition, explained how to avoid a rate increase. The Secretary of State listed 10 ways. The truth is that in the real world, as he will now come to understand, none of these ways works. They cannot work. Rate increases are being avoided by the Tories in Preston by leaving empty six nursery classes, built and ready for use. The method being used in Kent is to close homes for children and old people.
  The hard fact facing most local authorities is that there is no way of avoiding rate increases other than by cutting services. In most local authorities both these things will happen: services will be reduced and rates will be increased. Some local authorities, of course, will refuse to make the cuts.
  I hope that the Secretary of State will give up his rather furtive huffing and puffing and tell us what he proposes to

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  do about authorities which refuse to make the cuts. Will he tell us specifically about the county of Oxfordshire, which again I remind him he in part represents, which told my office yesterday that it had no intention of making a 3 per cent cut this year?
  What will he do about the Tory-controlled Kirklees council, which stated yesterday that it would ignore the 3 per cent. cut? It may make a 1 per cent. cut in the immediate future and 1 per cent. the year after, but there is no question of its making the adjustment demanded by the Secretary of State. What does he propose to do about such councils? Has the idea of punitive powers been dropped since the headline appeared? If he is to take punitive powers, may we be assured that Oxfordshire, which has openly said that it will not abide by his policy, will be the first county to suffer?
  I am pleased that Oxfordshire has taken that view. I am glad it is able to say what it is saying. However, it will not be possible for every Labour council to follow suit and say "No cuts here." I give some examples. The Labour-controlled councils of Manchester, Coventry, Newcastle, Wakefield and Sheffield are facing demands on their services never dreamt of in rural Oxfordshire. The problems those cities face are being compounded and wilfully increased by the Secretary of State. I say that in view of the promise he gave to the Association of County Councils that he would tilt the needs element in the calculation of the rate support grant to the advantage of the counties and against the interests of the towns and cities. That means that less aid goes to the urban areas which need it and more goes to rural areas which do not want to spend it.
  Some Labour-controlled councils will be able to avoid making cuts in services. I press the Secretary of State to say whether it is his intention to abandon the law as it governs local autonomy. Is he prepared to destroy, by pushing a Bill through this House, local democracy in order that councils become his creatures—tools of the Government doing exactly what Government say? I remind the Secretary of State that those councils are also elected. They have their mandate and their right to support and look after the people they represent. Most of them were not elected on a fraudulent prospectus
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  such as the one which brought the Secretary of State to power.
  If the right hon. Gentleman doubts that, let me put this point to him. When he was Shadow spokesman for environment matters, making party political broadcasts and holding press conferences during the election, did he ever mention that his policy on cuts would bring about, in the city of Rotherham, for instance, a situation in which no further housing tenders could be accepted and no further provision for housing mortgages could be made and in which there could be no more improvements to council property? That is the result of what he has done. Had that been known six months ago he would not now be sitting on the Government Front Bench, and many of the councils that he now proposes to overrule have a much better record of telling the truth to the electorate than have he and his party.
  I have spoken of two Conservative councils which do not want to, and say they will not, make the cuts. I regret that that is not typical of Conservative councils throughout the United Kingdom. Most of them cannot wait to make the cuts. Most are demanding the right to make more cuts and to cut even deeper. Their demands were incorporated into that singular document circulated, I think, to us all, and certainly to the Secretary of State, by the Association of County Councils. It had the memorable title
  "Statutory Obligations in Local Authorities which might be abolished in favour of discretionary powers."
  The Secretary of State, who never pauses before he comments on such matters, described the document as a valuable starting point. He has gone slightly further than simply to start. As I understand it, school meals, school milk and school transport, which it was suggested should no longer be mandatory services, are already to be removed from that category.
  Will the Secretary of State tell us one thing—and I build on his speeches since I am an assiduous reader of most of the things he says? With how much of the starting point does he propose to proceed? Are we to see the end of pocket money in old people's homes, for instance? That is what the Tory councils want. Are we to see unlimited charges for the registration of births, marriages and

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  deaths? That is what the Tory councils want. Are we to see the end of motor vehicle licence indicators for disabled drivers? Unbelievably, that is what the Tory county councils want. Finally, will councils be able to charge for the recovery of injured persons from motor crashes within their boundaries? That is what the Tory county councils want. The Secretary of State ought to tell us whether that is what he wants, too.
  The right hon. Gentleman should also tell us what he proposes to do about those councils which are anticipating a change in the law and are acting according to a law that they hope will be passed rather than according to the law as it now exists. I can give the right hon. Gentleman many examples, and the Secretary of State for Education and Science can give him more, of education authorities which say that they are beginning to prepare to plan to abolish school meals in their areas, to act in a way which is inconsistent with the present law.
  The best example of this concerns the chairman of the Lincolnshire education committee, Councillor Peter Heledge, who says that he has cut next year's budget by 34 per cent. on the assumption that milk, meals and transport will soon be things of the past in Lincolnshire. However, to give him all credit for being a law-abiding man, he went on to say that there would be a lot of egg on his face if the law was not passed in time. Thinking of my hon. Friend the Member for Bedwellty (Mr. Kinnock), I believe that Councillor Heledge had better duck pretty quickly.
  More important, what will happen to those councils that start making cuts in the belief that the legislation will get an easy passage, subsequently discover that it has not and then find themselves next year preparing to abandon statutory obligations which are still imposed upon them? I hope that this law-abiding Government, with their high belief in legality, will make it absolutely clear that they will take action against councils which do not conform to their statutory obligations as those obligations are at the moment, not as the authorities and the Conservative Party would like them to be.
  There is no doubt that many Conservative authorities want the cuts, and that many of them are cutting manically.
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  However, I have to say in their defence that some of them are cutting manically out of fear of what the Secretary of State for the Environment will do with the rate support grant increase order. I must therefore invite him to answer two specific questions. First, what will he do about the acceleration in inflation? Second, what will he do about the local authority wage award? If he does nothing about either of those items, the reduction in rate support grant to local authorities will be massive and the damage to services will be appalling.
  Let me tell the right hon. Gentleman what he ought to do, what we ask, and what we would have done. First, we would have honoured the rate support grant supplement of 61 per cent. or £14 billion. Secondly—and here I refer him to Hansard of 19 March this year, c. 1116—we would have made the proper adjustment to those wage increases which were part of a national settlement underwritten by the Government. We would have followed the then Chief Secretary's view that a case-by-case approach was proper, and, of course, we had a clear obligation to pay our full contribution to those awards which we had underwritten.
  I say to the Minister of State for Local Government and Environmental Services that I shall be astonished if he and his colleagues can get away with anything else. In the dying days of the Labour Government I was concerned with public sector pay. Every local authority union told us categorically that it was not interested, and nor were the councils, in making a bargain which was not underwritten by the Government. I tell the Secretary of State that, in honour, that is what he is obliged to do, because that is the promise we made, not only to the unions but to the council associations, the cities, the counties and everyone else.
  Mr. Dan Jones: Including the Tories?
  Mr. Hattersley: I am reluctant to make promises on behalf of the Tory Party but I have no doubt that in honour the Government should pay the part of the award covered by those nationally endorsed agreements.
  That leaves us with the second item, the item which is even more essential in present circumstances—an adjustment of the rate support grant for the present

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  inflation level. In the same column of Hansard the then Chief Secretary was categoric about our rate support grant being related to, and only to, the 8·5 per cent. inflation forecast that we gave as a result of the Industry Act. It is one thing when a Government are straining every nerve and sinew to hold down inflation, and would have held it at or about 10 per cent.; it is quite another when a Government have accelerated the inflation rate of their own volition.
  If the Government do not make the adjustment for inflation, there is a formula of Euclidian simplicity which goes something like this. VAT was increased to allow income tax cuts at the top of the scale. VAT increases will affect local prices. Increased local prices will produce reduced services, ergo the income tax cuts will result in reduced local services. That is what will happen if the Secretary of State is not prepared to make the necessary and proper adjustments. He must tell us today whether he intends to do that. It is intolerable for him to hide behind the date of 20 November, saying that the precedent is never to breathe a word about his settlement until the date of his appointed announcement. That may normally be a reasonable procedure, but it is intolerable when local authorities are being asked to cut and to plan cuts without knowing what their extent is likely to have to be, and when they are being asked to plan cuts against a background of 17 per cent. or 20 per cent. inflation.
  The Secretary of State for the Environment (Mr. Michael Heseltine): Perhaps the right hon. Gentleman will tell the House why the decision to announce the rate support grant earlier was not taken in 1976 when the rate of inflation was higher and the level of cuts was greater.
  Mr. Hattersley: The reason is that quite a different situation applied then. The situation then was as I have described it. The Government at that time were doing all they could to contain inflation. The rate was reduced to one appreciably less than 50 per cent. of today's rate. I take my share of responsibility for saying to local authorities that they had to share some of the burdens of bringing down the rate of inflation.
  The situation is different today. Inflation is rising now not least because of the
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  VAT increases that have been introduced. That may not be accepted by some Conservative Members. For example, I expect that the hon. Member for Gillingham (Mr. Burden) is one of the weak-minded Members on the Government Benches who believe that no one can complain about increased cost and reductions in services because everything will be returned by means of income tax cuts. Indeed, those cuts have been about the only feature of Conservative policy to emerge over the past six months.
  Mr. F. A. Burden rose—
  Mr. Hattersley: I shall give way to the hon. Gentleman when I have finished my paragraph.
  The Strathclyde council has calculated the effect of the cuts, the increased cost of services and the increased cost of housing on the average Glasgow family. It has discovered that the cost is in excess of £8·40 a week. To recoup that sum from income tax cuts, the average Glasgow worker will need to earn £10,608 a year. Out of touch as the Government are, I suspect that they know that that is not happening, cannot happen and will not happen.
  The truth is that most people will be net losers from the bargain that the Government have struck on their behalf. The old and the sick will be especially badly affected. I shall give two examples. In Kent home help charges have doubled. Meals-on-wheels costs are increasing by 50 per cent. In East Sussex six residential homes for children and the elderly are being closed. If we are to be told that that is the penalty that must be paid for economic recovery, I shall tell the Government why I find that an unattrative argument. It is unattractive because the penalty for recovery is being paid by those least able to bear it. It is even more unattractive when it is being advanced by the Secretary of State for the Environment, who will not pay the penalty for recovery.
  Mr. Tim Rathbone rose—
  Mr. Hattersley: No; I shall give way to the hon. Member for Gillingham (Mr. Burden).
  Mr. Burden: What cuts would the Opposition have made if they had continued in government and were in office

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  now, bearing in mind the economic situation and the way in which the IMF had to come down on them?
  Mr. Hattersley: After 15 years I should avoid the hon. Gentleman's irrelevancies. However, I promise him that I shall say something about the Labour Government's record and what I believe we should do. Indeed, I have said it once. We should stick to the White Paper and the limited, modest growth of which the then Secretary of State spoke.
  Mr. Burden: Where is that policy now?
  Mr. Hattersley: It is nowhere, as the Government have imposed a policy of added deflation over the past six months. I am hypothesising a Government with a rather less archaic economic policy. In the absence of that Government, those who will be especially badly hit are the old, the sick and the poor. Those who will be hit hardest as a result of the Government's policy are the young, those who are at school who need and take advantage of our public education service.
  By examining what is happening to our public education service we can most easily understand the attitude of the Tory Party towards the cuts, its beliefs and its priorities. Before doing so, I shall say something about the Labour Government's record. I do so without any embarrassment or hesitation. No doubt, whatever the figures reveal, my right hon. and hon. Friends will be accused, first, of causing all the problems by spending too much, and, secondly, of starting it all by spending too little. Some Conservative Members will try to argue both cases at the same time, but neither is true.
  When the Labour Government were in office rate support grant fluctuated between £7·5 billion and £8·3 billion in real terms. There were cuts. There were cuts in 1977 and 1978. However, rate support grant was higher at the end of our five years in real terms than at the beginning and the cuts were made for a specific purpose—the promotion of the economy that we wished to see and in large part created.
  One of the main differences between the Labour Party and the Tory Party is that the Tory Party believes in cuts as a matter of principle. It may be that
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  some Conservative Members will disagree with that view. If they do, I suggest that they read the amendment that they will be supporting by trooping into the Government Lobby tonight.
  The Tory Party believes that the public sector should absorb a smaller proportion of the national income.
  Mr. John Bruce-Gardyne: Hear, hear.
  Mr. Hattersley: That is accepted by some Conservative Members below the Gangway. It is a policy that was most eloquently and admirably demonstrated by the Secretary of State for Education and Science on 11 October. I am assured that on that day the right hon. and learned Gentleman was not at the Conservative Party conference but in Preston. On that very day the local education authority at Preston was announcing the closure of certain nursery classes, two in Preston about which my hon. Friend the Member for Preston, South (Mr. Thorne) will give further details if he catches the eye of the Chair. The two nursery extensions in Preston were left unoccupied because the local authority did not want to pay for their upkeep and related services. I refer to Farringdon Park and Deepdale. That news was made public on the day that the right hon. and learned Gentleman was in Preston. What was he doing in Preston? He was performing the opening ceremony at a private fee-paying nursery school.
  The Secretary of State for Education and Science (Mr. Mark Carlisle): Not a nursery school.
  Mr. Hattersley: A private fee-paying school. If the right hon. and learned Gentleman thinks that I have done his position slightly less than justice, let me give him an opportunity to put the record straight by referring him to a county about which he knows a little, Cheshire, which he in part represents. The county authority is cutting the capitation grant for maintained places for 16- to 18-yearolds by over £24,000. At the same time, it is increasing the grant to private fee-paying schools by £30,000. Does the right hon. and learned Gentleman approve of that? Does he believe that it is a proper use of resources? Is it pushing back the boundaries of public enterprise and giving the

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  electors of Cheshire a proper opportunity to show their initiative? If he shares my view that it is a disgrace, he should say so. If he does not say so, all the things that I have suggested about the cuts being approved by the Tory Party in principle as an article of faith are absolutely and totally demonstrated.
  During the six months that the Government have been in office they have placed their whole emphasis on private medicine, private insurance and private education while nursery classes have closed, school dinners have been abolished or replaced by cheap snacks, school milk has been finally snatched away and glasses have become increasingly overcrowded because teachers have not been recruited. Those are the cuts in theory and practice. It is a victory for a party that believes in privilege for the few rather than in meeting the needs of the whole community. I believe that there is much evidence that it is a selfish philosophy that is repulsive to most British people. It is repulsive to us, and we shall continue to fight it.
  5.10 p.m.
  The Secretary of State for the Environment (Mr. Michael Heseltine): I beg to move to leave out from "House" to the end of the Question and to add instead thereof:
  "congratulates Her Majesty's Government on its determination to arrest and reverse the economic decline inherited from the last Labour Government and on its policies to stabilise and reduce the proportion of public expenditure and to secure a permanent reduction in the rate of inflation; and expresses its support for policies designed to reduce excessive claims by the public sector on resources which can be more efficiently and productively deployed in the creation of wealth".
  There are two inter-related themes for today's debate—first, the size of our public expenditure, and the balance of taxation policy. The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) rightly and fairly dealt at some length with most of the points. First, we must ask whether the country can afford the level of public expenditure that was set out in the Labour Government's White Paper. We must also ask what is the right balance to strike between the direct and indirect taxation systems and the relationship of those tax levels to public expenditure.
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  I should not expect the Labour Party to agree with our determination to cut income taxes, because characteristically, in virtually every Budget for which it was responsible, it found some way of increasing them. The Opposition cannot dispute that income tax reductions have been largely matched by increases in indirect taxation. They therefore cannot argue with honesty that we have cut public expenditure to finance our tax reductions, because they have been financed elsewhere.
  Mr. Guy Barnett: Is the Minister aware on whom VAT and similar taxes fall?
  Mr. Heseltine: That is a reasonable question. However, the question I am putting is that the amount of extra VAT and capital realisations that we have undertaken have actually raised money with which to finance tax reductions in income tax terms. That is a numerical fact. Therefore, the question whether we need to reduce public expenditure may be regarded as an issue in itself, as it is not brought about as a decision to find money for income tax reductions that are financed elsewhere.
  We are left with a critical question—whether we can sustain the levels of expenditure which were published in a pre-election burst of enthusiasm by the Labour Government in January this year. The plans were supported, helpfully, at that time by an economic analysis which purported to show that the growth of the GDP would be 2 per cent. to 3 per cent. per annum through the period. Therefore, two facts emerged. The first was that public expenditure growth was linked to economic growth. The second was that the growth of public expenditure was to be rather lower than the growth of the economy as a whole. As most of us knew at the time—and as everybody now knows—the economy was actually crumbling before the Labour Party had even published its expenditure plans.
  The inflationary wage settlements, the industrial decline and the bitterness of last winter overwhelmed Labour's statistics and destroyed the basis before it had even published the White Paper. With the destruction of those assumptions went the whole basis upon which it put forward its suggestions of increasing public expenditure.

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  At the time the then Prime Minister, at this Dispatch Box, said:
  "Excessive pay settlements to public servants will mean worse and poorer services for the public generally. The tragedy will be that, if pay settlements are excessive, there will be cuts in rail services, longer hospital waiting lists, poorer education and fewer jobs. Let us have some sense in this situation."—[Official Report, 16 January 1979; Vol. 960, c. 1555.]
  The excessive wage settlements of which the right hon. Gentleman was frightened rapidly became a reality. At the same time all the forecasts that he made as a consequence of them were bound to follow. The consequences of those settlements are as inescapable today as they were when the then Leader of the Opposition spelt them out so clearly and honestly when fighting the battle against inflation. Within a week of the former Prime Minister's words—the right hon. Gentleman left at the most convenient moment in the speech of the Leader of the Opposition when it became so embarrassing that he could not take any more—the former Chancellor of the Exchequer added his own quantification of the dangers of the wage increases that were then being discussed. The former Chancellor of the Exchequer knew that 15 per cent. wage settlements in local government would lead to 100,000 fewer jobs. He pointed that out. Local government settlements are running at over 15 per cent. Local government employs more people now than at the time when those remarks were made. It is now being encouraged to keep up the level of its employment to precipitate the rates explosion about which the right hon. Gentleman claims to be so concerned.
  The right hon. Member for Sparkbrook asked what was our approach. He was fair in asking that question. I want to give as clearly as I can four reasons why we adopted the approach that we did towards public expenditure.
  First, people must know that if they increase their real incomes they will have the incentive of keeping a higher proportion of those incomes. Secondly, we are determined to reduce the role of the State so that the freedom of choice for individuals and organisations is considerably widened and the individual's role is extended and enlarged. The third principle is to reduce the burden of financing in
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  the public sector, with its knock-on effects for all borrowing rates.
  That brings me to an interesting point in the right hon. Gentleman's speech. Listening to what he said, one would have imagined that public expenditure on services increased under the previous Labour Government. That was not the case. Public expenditure in 1974–75, in terms of local government, was £20·6 billion. By the time local government saw the last of the Labour Government the figure was down to £18·4 billion. The only reason why public expenditure increased in total under the Labour Government was no; that they spent more on services but that the interest charges borne by the economy at large had risen from £1·3 billion to £2·9 billion. That was the whole of the real increase in public expenditure under the previous Labour Government. That was the consequence of a low growth economy, which was not producing the genuine wealth to extend the services that the nation wanted.
  The fourth principle is the restoration of responsibility in wage negotiations.
  Mr. Dan Jones: Would it not have been wiser for the Government to establish experts in this area to eliminate waste without taking the decision themselves?
  Mr. Heseltine: The electorate, in its good judgment, had just got rid of the experts in public administration and public expenditure at the last election. We want more freedom in society for people in responsible positions to make their own judgments about the elimination of waste and to restore to local government a much greater range of discretion to play a meaningful role in that area.
  We have come inevitably to a situation where there must be a progressive reduction in the proportion of the national wealth demanded by public expenditure. I imagine that that is very much what the former Chancellor of the Exchequer had in mind when he told a meeting of the Parliamentary Labour Party in February 1976:
  "The steady contraction in our manufacturing industry is the main reason for our disappointing performance since the war. The contraction must be halted and reversed. But we cannot reverse the trend if we plan to take more resources into the public sector."
  That was the Chancellor of the Labour Government telling the Parliamentary

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  Labour Party the realities from which it now seeks to escape.
  I hope that when it votes tonight the House will set against the speech that we have just heard from the right hon. Member for Sparkbrook the words of the man who perhaps saw more of Labour's financial problems than any other. I refer to the former Chief Secretary. He was the man who actually borrowed the money and negotiated with the creditors. What did he say? On 25 September this year he told his party:
  "The fact is that we had to cut public expenditure in the last five years and … we will need to cut expenditure again … the laws of arithmetic don't change with a change of Government."
  He concluded:
  "For Labour's view to be credible the sooner we face up to the need for some cuts, the better."
  The right hon. Gentleman was correct. The laws of arithmetic do not change. It is just that memories conveniently fade. None fade faster than those freed from responsibility when people turn their attention to the power struggle within the Labour Party The fact is that if the Labour Government were in power today public expenditure would have been cut, and no one would have defended those cuts more eloquently than the right hon. Member for Sparkbrook did so convincingly from 1975 onwards.
  Mr. Eric S. Heffer: Has it by any chance crossed the right hon. Gentleman's mind that some of my colleagues on the Labour Benches may have been just as wrong as he is about cuts in public expenditure? Does he also realise that they were criticised for accepting Tory views on cuts in public expenditure? I am delighted that the Labour Party is fighting this issue unitedly on the basis of the need for more public expenditure to meet the needs of the people.
  Mr. Heseltine: I can imagine the relief with which the hon. Member finds the Labour Party united on anything.
  We all remember the hypocrisy of the last five years, when the Labour Party cut public expenditure time and again, and when Ministers did so, Labour Members whispering their objections in the
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  Lobbies and voting consistently for those cuts whenever they had to do so, in order to defend the record of their party.
  Against this background, let us look at the Government's decisions in respect of public expenditure in local government. In November last year the Labour Government agreed that the already published plans for local government expenditure could be increased by 1½ per cent. in 1979–80. I said clearly then from the Opposition Front Bench that this forecast was unrealistic.
  Within weeks of the election in May, I asked local authorities to cancel that 1½ per cent. increase which had been authorised a few months before. Indeed, I went further. I asked for a reduction on previous targets of another 1½ per cent. in the year ending next April. For the year starting next April, I have asked for one more percentage point reduction below the targets that I have set for this year. In other words, I am asking local government, over the course of this year and next, to reduce its total current expenditure by 2½ per cent. below the amount it spent last year. That is the factual background to the debate—2½ per cent. over two years as compared with 2 per cent. in one year that followed the panic measures of 1976, when the right hon. Member for Stepney and Poplar (Mr. Shore) forecast and achieved 30,000 job losses in local government.
  The experience of those years gives the lie to the hysterical claims and the highly selective examples put forward by the Opposition. Cuts were made in 1976–77 under a Labour Government but essential services were maintained. Staff numbers were reduced by natural wastage. I have been able to find no evidence in my Department that there were any compulsory redundancies. If the statistics are not there, it indicates only one thing—that if such examples existed they were of no significance.
  I recognise the achievement of the Labour Government in bringing about these changes, albeit at the compulsion of the International Monetary Fund, but all too soon they lost their nerve. They rapidly used the improvements secured by the IMF restraints to unleash another programme of the very public expenditure increases that had forced them to the

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  IMF in the first place. They have left us now to reintroduce that orderly reduction in public expenditure that the state of the economy demands and that their policies made inevitable.
  I believe that local government can cope because our proposals have been announced in good time, are phased, are part of an overall strategy, and have not been imposed as a last-minute panic when the cash runs out. For none is this more important than for those who have to take decisions about their jobs and careers and are entitled to a consistency of Government policy and purpose.
  Staff costs are about 70 per cent. of local authority current expenditure. About 125,000 people leave or retire every year from local government. In two years, therefore, 250,000 people will leave or retire. If I sought to double Labour's 1976 reduction of 30,000 people in local government employment, all I would be asking is that for every four people who leave local government in that time three are recruited in their place. The House will know that this is against a background of local authority staff numbers at their highest ever known figure. In June 1979, there were almost 35,000 more full-time equivalent staff than in June 1978, an increase of 2 per cent. Those figures must start to come down.
  The Joint Manpower Watch already obtains figures about manpower from each authority, but they are published only as aggregate total figures. I want these figures to be published for each authority and on a quarterly basis. Every ratepayer, every local voter and every local newspaper should know how the local authority is coping with the manpower levels. I am appalled by the stories in the press about compulsory redundancies. These stories are seized on by Labour spokesmen. They must know that that kind of talk is politically motivated and it is dangerous. The Labour Government proved in 1976–77 that staff could be reduced without large scale redundancies. The Greater London Council has reduced manpower by 7 per cent. over the last two years, with virtually no redundancies.
  In May, when I took over the Department of the Environment, the total staff was 52,100. By my introducing the most obvious and basic controls on recruit-
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  ment, the size of the Department was down by 3 per cent., to 50,650, by 1 September. That took three months. By 1 October, the figure showed a further reduction, so that we now employ 3·6 per cent. fewer staff than Labour needed to run the same Department. I am not asking local government to do anything that we have not shown ourselves able to do in our Administration.
  Mr. Allan Roberts: Liverpool, which already has a deficit on this year's current budget as a result of the under-budgeting of the Liberal-Tory administration last year, has had a 3 per cent. cut in rate support grant this year imposed upon it by the Tory Government. It also faces a cut of 5 per cent. in next year's rate support grant. That is as a result of a tremendous financial crisis, which can only be described as being one of New York proportions. In those circumstances, how can the local authority avoid either increasing the rate by about 50 per cent. or instituting compulsory redundancies?
  Mr. Heseltine: I do not think that the hon. Member can have been listening to my figures for the reductions in local authority manpower, otherwise he could not have made that statement. Secondly, he can have no idea how the rate support grant system works, because Liverpool, like every other authority in the country, has as yet no idea of the level of support that the Government will be announcing. He can therefore make none of the assumptions on which his question is based.
  It is curious that we have the Labour Party now parading stories about compulsory redundancies, as though that is to happen on a wide scale across the country. I could not help noticing that the Labour Party has drawn up plans to cut its own headquarters staff from 140 to 116—a drop of 24, or 17 per cent.—in order to cope with its financial deficit. If I were to ask local government for cuts on that scale, it would mean asking it to reduce local government manpower by 400,000 jobs. If I were to ask the public sector to reduce manpower on the scale at which the Labour Party is to reduce its own staff, I would be talking about the loss of nearly 1 million jobs. That figure, curiously enough, is very nearly the sort of extra unemployment that came about

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  as a result of five years of Labour administration.
  Mr. Hattersley: The right hon. Gentleman has now spent 12 minutes in dealing with a series of allegations that I did not make. Will he spend a little time in answering the questions that I asked?
  Mr. Heseltine: Public administration in this country is overweight, and any overweight organisation, with a little effort, can lose a few pounds.
  Mr. Heffer: On a point of order, Mr. Deputy Speaker. The Secretary of State has just made a statement that is totally untrue. On that basis, he should be prepared to give way to allow somebody to put the facts to him.
  Mr. Deputy Speaker: The hon. Member knows that that is not a point of order. What the Minister says in his speech in a matter for him.
  Mr. Heseltine: But the Labour Party—
  Mr. Heffer rose—
  Mr. Deputy Speaker: Order. The hon. Member for Liverpool, Walton (Mr. Heffer) is an experienced parliamentarian. He knows that, if the Secretary of State does not give way, he must resume his seat.
  Mr. Heffer: He should not make such statements.
  Mr. Heseltine: The right hon. Member for Sparkbrook is highly selective in the quotations that he produces from national newspapers to depict what is happening in certain areas of local government expenditure. I noticed that he did not refer to a newspaper article on 12 July about the Labour council at Brent:
  "A council planning drastic cutbacks is buying a £38,500 Daimler for its mayor—complete with cocktail cabinet, colour TV and writing desks.…
  Only last week the Labour-controlled council announced that libraries, a swimming pool and a leisure centre may face the axe because of the Government's cutback in local authority spending.
  Last night the Labour leader Mr. John Lebor claimed the car, destined for new Mayor, Mrs. Ivy Manders, was an investment.
  He said: 'With the mayoral car—a five-year-old Ford Grosvenor—due for replacement, Brent had to move quickly when the Daimler
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  came on the market as it was a cancelled order. Normally there is a one-two year waiting list.
  'It came with luxury extras, which include a cocktail cabinet, colour TV and writing desks. The borough would not have ordered these by choice.
  'And a prompt decision on the 48-hour option meant that VAT was paid at the lower rate of 8 per cent. instead of the present 15 per cent., saving £2,000. Now Brent is considering spending a further £350 to convert the new car to low pressure gas fuel to keep down running costs'."
  That is the Labour Party talking about the agonies of public expenditure cuts. The House will be relieved to know that the council later sold it to a Socialist sympathiser, who said that the council had made a fool of itself, and thereby enabled it to get out of it profitably.
  Mr. Ron Leighton: Is it not true that the Prime Minister has dispensed with three Rovers and purchased three Daimlers?
  Mr. Heseltine: I am not sure whether the conclusion that the hon. Gentleman wants me to draw is that my right hon. Friend should include cocktail cabinets as well.
  Perhaps I may take another example from within the area of local authority expenditure to show exactly how in practice the changes come through. In 1978 the Government published target figures for new council housing. The local authorities spent £410 million less than the Government's target. That happened again in 1979; the same under-spend took place.
  Mr. Heffer: Tory authorities.
  Mr. Heseltine: I knew that the hon. Gentleman would raise the question of Tory authorities rather than Labour authorities, so I took the trouble to check. He will find that within one percentage point Labour authorities reduced their new council house building programmes by the same amount as Conservative authorities because the financial regime imposed on them by the Labour Government of the last five years made it impossible to finance a continued programme of council house building on the same scale as the Government hoped would continue. Therefore, the Government's proposals and policies in respect of council house building in five years destroyed the council house building programme in

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  both Labour and Conservative authorities.
  The fact is that the same underspend of hundreds of millions of pounds was still not reckoned and taken into account in the Labour Government's White Paper. All I did was to recognise the paper provision for what it was. I did not reduce the number of houses. Therefore, to suggest that I have cut public expenditure is to indulge in an act of numerical illiteracy.
  Facts, not myths, are the basis of the policies for which this Government stand. The Opposition attack our plans on capital spending. The right hon. Member for Sparkbrook referred to, but did not tell the House about, the record of the Labour Government. He was a member of a Government that saw local authority capital expenditure reduced from £6 billion to about £3 billion in real terms. They succeeded in more than halving the capital expenditure programmes of local authorities in the five years during which the right hon. Gentleman was a member of the Cabinet. Capital expenditure on housing slumped from £2·4 billion in 1974–75 to £1·8 billion in 1978–79. Those are the facts of what happened under the Labour Government. As I said to the hon. Member for Liverpool, Walton (Mr. Heffer), they reflect the unwillingness of local authorities of all parties to invest at a time of low growth, high inflation and high interest rates. But in our Budget, when we looked at the facts, we provided more money for the improvement of local authority houses and we left intact the money for private sector improvement grants, local authority mortgages, lending and housing associations.
  The repeal of the Community Land Act—the right hon. Member for Spark-brook did not mention that—is part of our strategy to withdraw from the detail of local government work. We are determined to concern ourselves more with the overall framework of our relationship with local government and to cut out the expensive, time-wasting obsession with detailed scrutiny whereby Whitehall tries to do other people's work for them. In practice, the Community Land Act produced less land at higher prices. It has gone and its going has saved £50 million a year.
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  We have axed a considerable number of what are known as quangos, and more will be axed.
  We are streamlining the planning system. We are removing 300 statutory controls in the hands of central Government over local government. There are many other bureaucratic restrictions on local authorities' freedom of action.
  I was asked about the review of duties and what I meant by the description of the document of the Association of County Councils as a useful starting point. I meant exactly that. It provides a list of the duties. Therefore, we can go through the list and consider whether we want them to go on or not. That is what I meant: no more, no less. However, we intend to proceed with that exercise to see whether we want to give back more discretion to local government and, if so, in which areas of activity it should enjoy greater responsibility in order that there should be greater local flexibility.
  Mr. Leighton: Will the right hon. Gentleman give way?
  Mr. Heseltine: I am sorry, no. I have already given way several times. I must get on.
  In conformity with our decision to withdraw from interference in local government activity, I have already drawn the attention of the House to the fact that, in the year before the election, the Department of the Environment issued no fewer than 64 circulars to local authorities, whereas we have issued only 11 in five months.
  I want to see a clearer division of responsibility between central and local government, and I shall bring forward a number of proposals to clarify the situation.
  I intend to issue a consultative document on a new system of capital controls. We want, within clear ceilings, to give local government much more control over project management. Central Government must stop crawling over details which are best settled locally. That will save time, staff, money and resources, and will give greater freedom to local government.
  There will be many claims in the debate about the relative performance of individual local authorities. I do not believe that the information available to the House or to local electorates is of a

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  sufficient standard for the debate to be as real as it should be. We and many local authorities want to see local government improving its own performance and efficiency.
  As we transfer greater choice and discretion to local government, the public have a right to know how that freedom is being used. It is difficult for the public to make comparisons between authorities and to see whether one authority is doing well or badly. Therefore, I shall ask Parliament to improve this by requiring authorities to publish basic information about their services in a standard form which will enable ratepayers to make comparisons of one authority with another. A consultation paper is published today, and right hon. and hon. Members will find copies in the Library.
  These are some of the positive steps being taken by the Government to improve the efficiency and accountability of local government. I have set out the background of false assumptions on which the Labour Government based the plans that we are now discussing.
  The right hon. Member for Sparkbrook has put himself at the head of a campaign to provoke resistance. He seeks to polish his image as a caring, concerned tribune of the people. There is a great deal of polishing to be done. It is as though 1976 had never happened.
  The same right hon. Member, in 1976, voted for cuts in capital expenditure in the National Health Service. Here we have the right hon. Member who voted to increase the price of school meals, who voted for higher dental and ophthalmic charges, and who voted to reduce local authority mortgage lending going to those in the community at the very bottom end of the market.
  How things have changed since 1976! There were no heroic gestures then. But now the headlines follow the right hon. Gentleman wherever he goes. In the Daily Mail of 9 July 1979 the headline was:
  "Don't get mad, get even. Use the law at every turn to frustrate Tory plans."
  Is that a campaign to resist the cuts by every measure within the law—any cuts, anywhere, no matter how much inefficiency there is? Is the right hon. Gentleman seriously saying that we should expect no increases in productivity that
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  could lead to savings? Does he really believe that the £50 million saved by the scrapping of the Community Land Act has left a scar seared across this land? Is he saying that no matter how far the school population falls there is no room for reductions in the education programme?
  That, in practice, is just what the right hon. Gentleman is saying. Short of breaking the law, the right hon. Gentleman is giving his support and that of the Labour Party to anyone who resists any change, however desirable, with whatever consequences for the rest of the community.
  Does the right hon. Gentleman mind, or is he positively encouraging, strike action—for that is within the law—by any group of workers, no matter how well paid or how much overmanned, at the expense of any other group in society regardless of its need or handicap? He may claim, in the small print of his handouts, that he has covered himself. But he knows the effects of the headlines that he is provoking.
  Is the House seriously to believe that there are no savings to be achieved from the removal of restrictive practices by local government unions? I readily acknowledge that local government will, in some areas, have to make—just as in 1976—some difficult decisions about priorities. When the facts are known the Government must accept their responsibility for changes in policy, but before doing so we are entitled to ask the unions whether they are not, by their restrictive practices, denying to the elderly, the handicapped and the schoolchildren far more than our changes in expenditure could be held responsible for.
  Teachers will not move from one school to another when class size falls; improved refuse collection systems are blocked because fewer people would be required to operate them; cleaning methods are fixed and adhered to despite radically changed circumstances, and there is double manning on buses long after the need has gone. This is said to be about job protection. What it is actually about is too many people in the wrong jobs at too low a level of public pay, providing a service less good than it should be, at the expense of the least privileged section of the community. That is what the right hon. Member for Spark-brook is seeking to protect.

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  I find this humbug the harder to swallow, having refreshed my memory of the right hon. Member's utterances in 1976. Does the House remember who cut back food subsidies in 1976? Does the House remember the following statement made on 11 October 1976? In discussing the cutback in food subsidies, the right hon. Gentleman said:
  "An essential element in the programme for economic recovery is, and must be, a reduction in some element of public expenditure, and the announcement that my right hon. Friend the Chancellor of the Exchequer made in July about food subsidies is part of that. I am sure that the people whom my hon. Friend and I represent have much to gain from the progress of economic recovery, and this is all part of the plan for bringing that about."—[Official Report, 11 October 1976; Vol. 917 c. 5.]
  What has changed? The only thing that has changed is that the right hon. Gentleman and his colleagues are freed from the responsibility of office. Does the right hon. Gentleman stand by that analysis, which he so clearly put to the House in 1976? How would he relate his attack today to his defence, not three years ago, of the measures that he had taken to increase the price of food?
  There are also the inspired press reports about rate increases. The right hon. Member for Sparkbrook was at it again today, forecasting rate increases of 30 per cent. Yet in every speech he makes he encourages the expenditure that is the cause of rate increases. He was reported in the Daily Telegraph of 14 September as having said:
  "A massive rate increase is the unavoidable result of Government policy—the cut in rate support grant for 1980/81, the refusal to finance a proper share of local authority wage increases and the massive acceleration of the inflation rate".
  That is scaremongering.
  As the right hon. Gentleman knows, the percentage rate support grant and cash limit for 1980–81 will not be announced until 20 November, at the normal time. Until the rate support grant percentage and cash limits are announced, no one can predict the average rate increases for the subsequent year. The settlement will not underwrite inflationary wage claims; that would only put union members out of jobs. Our settlement this year will be fair; not like the previous Government's settlement in Novem-
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  ber 1978, for which local government will not readily forgive the Labour Party.
  Last autumn the previous Secretary of State advised local authorities to work on the assumption of 5 per cent. wage inflation in fixing their rates. That is why Oxfordshire county council got its sums wrong. It trusted the Labour Secretary of State and fixed its rates on his assumptions. Fortunately, there were not many who made the same mistake. We all know what happened. The assumption that the Secretary of State put to the House did not materialise. Wage settlements took off, inflation began to rise rapidly and the average rate increases were 20 per cent., and not in single figures as forecast by the right hon. Gentleman.
  The position of this Government is unambiguous. Cash limits are a basis for financial management. They cannot be adjusted every second day. The Chancellor of the Exchequer said in his Budget that we would take account of pay settlements in calculating the increased order for the rate support grant but that we would make a significant reduction—£300 million across the board—from the total, though the final figure would need to be determined in November. That remains the position. No other decision on the rate support grant has been announced, and I shall announce our decision on the whole package on 20 November in the normal way. The cash limits that I announce will be realistic, and local authorities can then plan sensibly.
  The right hon. Gentleman asked about authorities which planned levels of spending without regard to their economic circumstances; in other words, authorities which choose to listen to the Labour Party and not to the Government. I have made it clear that the Government cannot stand back and permit such authorities to pre-empt for themselves a larger proportion of the limited cash available. Not only would that be totally unfair to those authorities trying to achieve what the Government have asked, but it would be an incitement to an ever-increasing number of authorities to practice what is, in effect, the law of the jungle. I shall shortly announce how I intend to prevent this breakdown in the orderly relationship between central and local government as a consequence of the action of a handful of politically motivated authorities vying with each other to get the martyr's crown.

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  I believe that we are about to witness from the Labour Party as cynical a campaign as we have ever seen. Its inflammatory words will whet the appetites of two kinds of people in an unrealistic way. Genuine pressure groups will be encouraged to outbid each other in presenting their problems in the most sensational way possible, and the genuinely deprived will be led to believe that they can have levels of service financed by money that simply is not there.
  Memories are long enough for us to know that the lunatic fringe is longing for a lead to take us back into the tensions of last winter. Did anyone then care about the sick, the old, the homeless and the deprived, when some members of the Labour Party encouraged the strikes that were designed to hurt most those least able to protect themselves? The real blame for the queues and the damage to public services lies with five years of economic administration by the Opposition, with their top-heavy public expenditure plans, little increase in real earnings and little real improvement in services, because there was little real growth in the national economy. Now, having failed the people so signally when in office, the Labour Party reverts to deceiving the people when in Opposition. I urge the House to throw out this hypocritical motion.
  Several Hon. Members rose—
  Mr. Deputy Speaker: Order. Before I call the first Back-Bench speaker in this important debate I should point out that a large number of right hon. and hon. Members have intimated their wish to catch Mr. Speaker's eye. Brevity will enable many of them to be called.
  5.50 p.m.
  Mr. Robert Litherland: There are two reasons why I have the honour of making my maiden speech. The first is the deserved elevation to the House of Lords of the former hon. Member for Manchester, Central, the right hon. Harold Wilson—[Interruption]—I apologise, I meant Harold Lever. It was a Freudian slip. My speech gives me the opportunity of paying tribute to his work, covering a span of 34 years, during which time he served with distinction. Secondly, I have been returned by the
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  same party and the same voters of Manchester, Central to carry on the fight on their behalf. It is indeed an honour to represent the area in which I was born and bred. I also have the honour and distinction of being the first SOGAT member ever to come to Parliament.
  I was advised to get acclimatised and to condition myself to the rarefied atmosphere of the House of Commons before I made my first speech. But I felt impelled to speak in this debate because my by-election was fought on the very issues that are dealt with in the motion—the effect of the Budget and the proposed cuts in public expenditure. The people of Manchester, Central, will be hit the hardest, because they are the people who need the facilities and who cannot afford any more cuts in their standard of living. These are the people of the inner city areas. My constituency has a high percentage of lower paid, unskilled workers, elderly, disabled and single parent families.
  Many who are strong in wind and limb go out to the suburbs and new towns and leave within the inner city areas people who are reliant upon the public services of housing, social services, education and so on. The Tory Government want to make a shift of emphasis from public to private spending of about £4,000 million, which will have a disastrous effect on my area. Certainly, the money will not go into the pockets of my constituents.
  I turn to the effects of the proposed cuts—I use the word "proposed" because we have not yet had the rate support grant announcement—on new house building in my constituency. About 2,000 brand new homes are in the pipeline. This is new, exciting, low rise housing featuring sheltered accommodation for the elderly, replacing socially obsolescent walk-up flats and providing homes for families on the deck access. In Manchester there is a policy to take 3,500 families off the deck access. But what chance will there be if these proposed cuts go through? Those people will be denied the opportunity of new homes and their hopes will be dashed.
  We have cleared more than 90,000 slum dwellings in Manchester. We have now adopted a policy of general improvement, but the proposed Tory policy will mean

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  that we must go for long consent on every dwelling. This is a complex procedure that will mean delay and decay. It will mean a return to the bulldozer if such policies are adhered to. Manchester is now suffering from hundreds of years of landlord neglect which we are trying to obliterate.
  Cuts in school meals will deprive the most needy children of their only substantial meal of the day. The effect on single parent families, coupled with cuts in nursery provision, will place a tremendous burden on people who can ill afford any extra strain.
  These cuts will mean not only physical strain but mental strain. Among the propositions that have been put forward is the suggestion that we should charge children for the use of books in public libraries. That is an abomination. A book can be a new exciting adventure for a child. It is scraping the barrel of meanness if they are denied that opportunity. As with children's meals, so with the elderly. Higher charges for meals in luncheon clubs will deny the elderly a substantial meal. The cutting of payments to supplement heating charges will mean a winter of despair for the elderly.
  My area will also suffer from the effects of the removal of intermediate area status. Large firms in my constituency, employers of a great deal of labour, will not get the grant to modernise or refurbish. Older type factories will become extremely vulnerable, and decisions to move will bring about inevitable redundancies. It will not be like the time when my father was out of work. Jobs lost today are lost for ever. The dangling of the redundancy carrot, whereby a worker can take home over £7,000, means that we are selling out on the youth of tomorrow, because those jobs will have gone for ever.
  Every section of society will be affected, except one—the rich. There was nothing in the Budget for the lower paid, and certainly not for the people whom I represent. There was even less in the sop of a tax handout, because the disparity of the tax awards means that an average worker takes home less than £3, whereas someone who makes no contribution to society or to the creation of its wealth can take home thousands of pounds. That leads me to the view that there is something radically wrong with society.
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  I am a Mancunian born and bred. I have served on the city council, and I am proud of its record of achievements in housing, social services, education, direct works and so on. We in Manchester have always aimed at getting our priorities right in order to provide facilities for the needy. Above all, I am proud of the part that the Labour Party has played. Those achievements had to be worked and fought for over a long period, yet the present Right-wing, reactionary Government—the most reactionary in modern political history—aim to destroy those achievements.
  Manchester has a policy of fighting these cuts. I appeal to other local authorities to stand firm against the cuts. With a ground swell of public resentment against the Government, I believe that we shall see more U-turns. From canvassing in the shopping precincts and the market place, I know that the Government's policies are detested. They should have been enjoying a honeymoon period during the short time that they have been in office. But the voters of Manchester, Central have told the Tories what they think in no uncertain terms—a lost deposit.
  5.59 p.m.
  Mr. William Waldegrave: It seems to me to be bad luck for a maiden speaker to be followed by another maiden speaker, since in such circumstances he misses the opportunity of having paid to him those rounded tributes that years of experience in the House teach one to deploy. However, I am sure that other hon. Members will join with me in paying tribute to the hon. Member for Manchester, Central (Mr. Litherland), who has provided the Labour Party with a formidable new voice to succeed the attractive voice which preceded him, and which I always thought would have been more in order coming from the Conservative Front Bench than from the Labour Benches.
  My ancestor, Richard, had to be dragged to your Chair, Mr. Deputy Speaker, being the first so to be dragged, according to family tradition. My delay in finding the courage to speak to the House might have led you to believe that those nerves were inherited. I am particularly nervous about speaking to the House on one of those days of fierce and formidable debate, when although perhaps each

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  side does not terrify the other much, perhaps both terrify the outside world a good deal. I promise that the enforced truce of my maiden speech will be only a brief interruption of the dialectic, which can then continue between those who say the cuts are essential to the economy and that, what is more, there have not been any, and those who say that the cuts are quite unacceptable and, what is more, were never accepted by them when they were making them.
  Into this brief period of truce, I would like, first, to insert my tribute to my predecessor, now Sir Robert Cooke. Many of those whom he served in Bristol, West for so many years perhaps did not know of the work that he did here for the House, but I have been left in no doubt about the affection and gratitude in which he is held by many hon. Members, and by those who work in the precincts of the Palace of Westminster, because of the work on the fabric of the House with which he had so much to do. The ghost of Sir Christopher Wren will, I am sure, forgive me if I borrow from the walls of St. Paul's, and translate, his tribute to himself and apply it to Robin. Should any hon. Member be in the Library or the Committee Rooms, I suggest that he looks around him, and he will see Robin's monument there.
  Bristol is too ancient and proud a city to need my tributes. It was once the second county borough in the land, until the march of time alleged that we had become a district council within Avon. We are a city with a tremendous history of contribution to the culture of the English-speaking world. We have a great radical tradition going back beyond Sir Stafford Cripps and Augustine Birrell to our key part in the history of Methodism and of the Society of Friends.
  We also have a fine Tory tradition. If the conflict has at times become a little heated—we burnt down most of the city and pursued the bishop over the rooftops in order to make a point or two about the 1831 Reform Bill—we have, none the less, normally managed to reconcile our differences and to demonstrate in a practical and sensible way a continuity of policy in the city's administration. I am sure that the present exponent of our great radical tradition, the right hon. Member for Bristol, South-East (Mr. Benn), has no intention of treat-
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  ing my friend the present bishop in a similar way.
  Our Tory tradition has at its head Burke. Burke is perhaps over-quoted by hon. Members from Bristol, since his famous letter on the proper definition of the relationship between himself and Bristol was followed rather rapidly by his becoming the Member for Malton—a pocket borough in the gift of Lord Rockingham. More recently, in Oliver Stanley, we had a fine example of House of Commons skills. And in Walter Monckton we had a patient practitioner of the skills of negotiation and reconciliation in dealings between the Government and trade unions. Both those examples deserve study.
  Bristol, with its long history, shows in two particular respects how we can live with the future. First, Bristol is a successful multi-racial city. It has been multiracial successfully for many years, and has largely solved—or thinks it knows how to solve—the problems of being so. In achieving this, quietly and without fuss—although some problems remain—it perhaps has something to offer to others.
  Secondly, we can show from our origins as a commercial city how science and technology can serve the interests of the community. Bristol has unrivalled traditions in science and technology. It has a university whose chancellor, Dorothy Hodgkin, is Britain's greatest living woman scientist, a polytechnic of outstanding excellence and first-class colleges and schools.
  We know we can live with the future and we intend to play a decisive part in its shaping. Strangely enough, our tolerance of immigrants is not unconnected with our scientific and technical skills. We played patron to an immigrant French engineer called Brunel. We bred and educated Paul Dirac—probably Britain's greatest living theoretical scientist, whose father came from Switzerland.
  Mr. Deputy Speaker, this House is not perhaps at its best when it comes to limiting the growth of public expenditure. Disraeli, I think, said that everyone was more or less in favour of public spending cuts in the generality and no one was in favour of them in the particular. That is perhaps particularly true of hon. Members. I am already guilty myself, as I

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  welcome the hints in today's edition of The Daily Telegraph that the threat hanging over the BBC's external services may be lifted.
  There can seldom have been a time when—putting aside the protection of special interests and the promotion of admirable causes to which individual hon. Members are dedicated—there has been a wider agreement on the necessity of holding down the growth in public expenditure. The last Government knew that it had to be done and started the process with considerable courage and effect. This Government enjoy the advantage of having a mandate to do what the last Government found themselves compelled to do. Indeed, there can seldom have been a Government elected with a clearer mandate, or a mandate so unpleasant to carry out.
  The truth is inescapable. Government spending of £70 billion a year cannot be financed without taxes so heavy that they begin to destroy the economy that pays them, without interest rates so high that new investment is impossible, or without catastrophic inflation—or perhaps all three. The old Keynesian formula of public expenditure as a way out of recession is of little relevance to this situation. It derived from a time when prices were actually falling and when the money supply was decreasing.
  But our commitment to the unpleasant job for which we were elected should never be allowed to become tinged with fanaticism. There is an essential place for spending by the State in wide areas of modern national life. That area is wider than was necessary 100 or even 50 years ago. It is essential that the Government have a philosophy which includes solid justification for positive action by the State, as well as negative abstention from action.
  The allegiance of citizens to the State does not derive from mere proximity. It will grow only if the State effectively does the modern version of the primordial just ruler's proper job of protecting the weak and pulling down the over-mighty. Government is possible in a free society only if that allegiance between citizen and State is maintained. If that means spending on poverty, or on the mitigation of industrial failure or on anything else where a sensible judgment
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  might be that the State can helpfully act, we should not be frightened of exercising our common sense by economic theory grown too big for its boots.
  Nor should we fall into the equally-ridiculous error of increasing expenditure by the State for its own sake in order to satisfy an opposite economic theory of even less intellectual interest. It is possible to do things because they are the right things to do on a particular occasion without any grand theoretical structure of justification.
  The authority of Government in a free society depends on the success with which it makes respectable, and then voices, a concept of common national good. In terms of this debate and this subject, that means showing the many people who are genuinely upset by cuts and postponements that they should accept them—although they are not inclined to do so—for the benefit of the common good. That means winning and retaining people's trust. And that means saying, where it is true, that the present austerity means the loss or postponement of some good and valuable things. Not every saving can come from the elimination of waste or the cutting down of administration.
  There will, of course, be some exaggerated lobbying, and hon. Members on the Opposition Benches would be inhuman if they did not join in the uproar—and we know that they are by no means inhuman. But there will be some real losses, and if we deny that we will undermine the authority that we need to explain why the cuts are necessary in the first place. And more important even than that is the fact that to get people to accept unpleasant things now, in order that there will be benefits in the future, means reminding them of their membership of a common community—the nation—as well as of their rights as individuals, or as members of competing groups. That in turn entails occasionally talking in the now rather unfashionable language of national unity, as well as in more fashionable jargons.
  Having listened to many maiden speeches, I concluded that the House was so tolerant that it would put up with a good deal of teaching of right honourable grandmothers how to suck right honourable eggs. I have continued that tradition and I am grateful to the patience of the House for allowing me to do so.
  6.10 p.m.
  Mr. Jack Ashley: It is a rare privilege for the House to have two such fine maiden speeches on such an auspicious occasion as this. We thank the two hon. Members for their speeches, which we all enjoyed. I am sure that I speak on behalf of Members on both sides of the House when I offer them both my congratulations.
  My hon. Friend the Member for Manchester, Central (Mr. Litherland) made a strong and clear speech, and these are the kinds of qualities that we like. We hope to hear more from him in the future. Now that he has replaced Lord Lever, who had a very high reputation in this House, we look forward to hearing more fine speeches from him very shortly.
  The hon. Member for Bristol, West (Mr. Waldegrave) made a thoughtful and fluent speech. Just as my hon. Friend the Member for Manchester, Central came here with a high reputation in his field, the hon. Member for Bristol, West also had a similarly high reputation in his field. His thoughtful speech has convinced me that we shall hear many more from him. He follows Sir Robert Cooke, who was highly regarded on both sides of the House. I know that we shall enjoy many speeches from the hon. Member in the future.
  I do not propose to debate maiden speeches, except to say that the hon. Member for Bristol, West spoke of Burke and Disraeli. If I had to describe the Government's present policy in terms of the ancient philosophers I think I would speak not of Burke or Disraeli but of Hobbes or Machiavelli, because their philosophy is closer to that outlined by the Secretary of State a short while ago.
  The Secretary of State described my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) as "a scaremonger", and he had some hard words to say about politically-motivated councils. He does not know what he is talking about. He should come to Stoke-on-Trent, where I have never seen such fury, anger and indignation about the effects of public expenditure cuts. The Secretary of State should visit the city to see just how vehement the public reaction has been. There have been spontaneous demonstrations by the public. I believe that the Secretary of State and his ministerial colleagues have
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  opened a Pandora's box of angry public protest and there is no knowing where it will end.
  I had hoped that the Secretary of State's response would be different from that of Conservatives in Staffordshire, where people have protested. In Stoke-on-Trent we have had legitimate, law-abiding and democratic demonstrations by angry and frustrated people. The response that they received from the chairman of the Staffordshire county council was to condemn them as a "rent-a-mob" crowd. That is typical of the kind of ruthless Conservative distortion that we have come to recognise in our towns and cities. I am afraid that we are now getting the same kind of distortion from the Government Front Bench.
  In his facile speech the Secretary of State did not spell out the real effects of public expenditure cuts on the people who count. The Government's policy of wild and indiscriminate cuts is creating havoc in the lives of the more vulnerable sections of our community. The reports are flooding in from all parts of the country about the effects of these cuts on the old, the sick and the physically and mentally handicapped. These are astonishing and disturbing reports. Those who are affected are the very people who are vulnerable and cannot tight back. They have no powerful trade unions to fight for them. They have no wealthy pressure groups. These are the cuts of cowardice and the Government are doing nothing to defend the more vulnerable groups in our society.
  As the cuts bear very heavily on the old, sick and disabled, this policy is disgraceful and quite indefensible. Even if everybody was called upon to make great national sacrifices there would be no justification at all for hitting the old and the disabled. At a time when the Government are giving no less than £1,800 million to the 5 per cent. of wealthy people in our community, I cannot see how they can make out their case for cuts of this kind. How can they, when they are giving an extra £2,000 a year to someone who is earning £20,000 a year and simultaneously depriving young and disabled children, and the physically or mentally handicapped of some crucial welfare provision? The cuts being imposed and the policies being pursued are quite deplorable. This is a policy of feeding the fat cats and neglecting the kittens.

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  It is back to the law of the jungle, with the weakest going to the wall every time.
  All the evidence I have received from individuals and organisations confirms that that is so. It is inevitable that these cuts have caused great controversy, but this is one controversy which should make Ministers hang their heads in shame. The Association of Directors of the Social Services conducted a survey on the effect of the cuts. It received information from councillors and other directors and found a number of differences of opinion. Twenty-five councils said that the elderly would be worst hit by the cuts. Sixteen disagreed and thought that the physically handicapped would be most at risk. A further 17 said that children would be the most helpless group as a result of the cuts, and another seven claimed that families were most at risk. What a pathetic commentary on a Government policy to have this kind of debate among men who are in touch with the tragedy of underprivileged people, whether they are old, sick, poor or disabled. Ministers should really take those figures to heart.
  Labour Members are angered and saddened by this kind of evidence. The other sad thing is that, however much these groups will suffer as a consequence of the cuts, the fact is that they are suffering already. All these groups are underprivileged. Most old people are near the poverty line and some are below. When they depend on a service like meals on wheels, it is absolutely appalling that that service should be cut. The physically handicapped depend on crucial resources for services such as telephones and adaptions to their homes, but these, too, are being cut. The mentally handicapped depend on skilled nursing, social workers, and proper facilities. These things are also being cut.
  We have had some debating points in the discussion so far, and one of those was that the Labour Government also cut public expenditure. At least they did not impose cuts in the same ruthless way as this Government are doing. But if Tory ministers argue that Labour Ministers cut public services they cannot then claim that their cuts are cutting only the fat. There is no fat on the services for old and disabled persons—there never was any fat on those services. The cuts are
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  cutting the flesh to the bone. They can be carried out only by ministerial butchers who are damaging the old and disabled and who should be ashamed of themselves.
  If an old person is deprived in any way he or she is knocked from a position of relative poverty into total penury. There is no doubt about that. Tory Ministers claim that they hope to save costs by making the cuts but the reverse is true. If an old person is prevented from receiving necessary services, that person is forced into hospital at a cost of about £200 per week. Where is the saving there? The cuts add expense to a different part of the Health Service, as the Secretary of State for Social Services is undoubtedly aware. I am glad to see the right hon. Gentleman on the Government Front Bench.
  I have referred to the cost in cash terms But the real cost is to the quality of life. When old and disabled people are deprived, the quality of their lives falls significantly. I know a physically disabled woman who relies heavily upon her wheelchair. She wanted her home to be adapted but that has not taken place. That woman has to crawl around her house because the doors of her living room, kitchen and lavatory are not wide enough for a wheelchair. She showed me around her house and had to crawl around to do so. That woman does not simply lose her convenience when cuts are imposed and adaptations are prevented; she loses her dignity. That is the way in which disabled people will suffer. Cuts of this sort hit on the raw.
  My right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris), who was the first Minister with responsibility for the disabled, is upset about these cuts. He helped to bring about the system of giving hope to the disabled and he is now rightly disturbed because he is receiving many sad letters from these people. I am also receiving such letters. I beg the Secretary of State to take account of our remarks.
  The hon. Member for Bristol, West made a fine speech and referred to national unity. I applaud those sentiments. May he go on repeating them. However, the final cost of the cuts will be the creation of great and deep bitterness in our society. There will be no chance of national unity if the cuts are

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  pushed through. When the old, the sick and the disabled are diminished, we are all diminished. The Government are offending the British sense of fair play by hitting at those people. Let us not delude ourselves that there will be a sense of national unity. What we shall have is a bitterly divided society and that is a matter of real and deep regret.
  I hope that the Government will reconsider their policy. If they do not—I suspect that they will not—they must accept the consequence of a bitterly divided nation.
  6.25 p.m.
  Mr. Terence Higgins: I do not accept the charges that the right hon. Member for Stoke-on-Trent, South (Mr. Ashley) levelled against the Government. The criticisms that he made about the level of social services for the old and the disabled would be more aptly aimed at the failure of the previous Government to revive the resources that are necessary to improve the lot of those groups.
  However, I join the right hon. Gentleman in congratulating the hon. Member for Manchester, Central (Mr. Litherland) and my hon. Friend the Member for Bristol, West (Mr. Waldegrave) on their maiden speeches. The hon. Member for Manchester, Central paid fitting tribute to his predecessor. I forget how many all-night sittings I spent opposite Mr. Harold Lever, as he then was. However, I do recall that in recent times he held the record for the longest speech made in the House and I am glad that the hon. Gentleman did not emulate him in that respect. We welcome the hon. Member for Manchester, Central and look forward to hearing his specehes on future occasions.
  In an extremely witty and much less controversial speech my hon. Friend the Member for Bristol, West rightly paid tribute to his predecessor, now Sir Robert Cooke. We are all grateful for the work that he did on behalf of the House and of all hon. Members. He also had a fitting respect for saving public expenditure. He succeeded in raising the money from hon. Members rather than from the public purse to establish the fountain in the middle of New Palace Yard.
  I turn to the amendment put down in the name of the Prime Minister and others, which states that the House:
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  "congratulates Her Majesty's Government on its determination to arrest and reverse the economic decline inherited from the last Labour Government".
  We have reached only Wednesday of the first week of this Session, but already we have had a major economic change—the abolition of exchange controls. My right hon. Friend the Secretary of State for Trade has introduced the Competition Bill, which has had its Second Reading. My right hon. Friend has even managed to arrive at a drafting of the insider dealing clauses for a Companies Bill, a task which has eluded all others who sought to do so. I believe that the changes of this week will be of significant advantage in making our economy more competitive and efficient. They will enable us to increase the level of real resources, which is the only way to help those, such as the disabled, about whom the hon. Member for Stoke-on-Trent, South is particularly concerned.
  We should recognise that the Government have a presentational problem. I understand that the White Paper on public expenditure will be published much earlier than is customary, but it is not yet available. That means, necessarily, that the debate takes place in a vacuum unless one is prepared, as some Labour Members obviously are, to launch into generalities without knowing the details. Even my right hon. Friend the Secretary of State for the Environment, in his splendid speech, which set out the realities, had to accept that the rate support grant for the coming year is not yet known. Therefore, he was in no position to defend it.
  Labour Members may complain about cuts in public expenditure, yet the disgraceful way in which the rate support grant was fiddled by the previous Government resulted in a most dramatic effect on my constituents and those of other hon. Members. In that respect the previous Government had much to answer for. Whatever rate support grant arrangements are made for the coming year, I hope that that fact will be taken fully into account, so that those in local authorities who have rightly been efficient in the past about spending their resources are not penalised again. That is a matter which I hope my right hon. Friend will be able to tell us about when he announces his rate support grant arrangements.

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  The fundamental point is that the control of public expenditure is, and must be, central to the Government's strategy. We know that there are big differences between the two sides of the House on the extent to which resources should be allocated to the public sector. That is a major difference between us. However, I am convinced that we cannot have a sensible economic policy at the levels of public expenditure produced and projected by the previous Labour Government.
  First, it is essential that we should continue our programme of cutting direct taxation if we are to introduce incentives into the economy and to produce the resources that are needed to help all sections of our community. Secondly, and this is most important, unless we reduce the extent of public expenditure it will not be possible to bring down the rate of interest because it will not be possible to reduce the public sector borrowing requirement sufficiently. We must cut public expenditure in order to reduce the rate of interest so that companies can invest, increase output and produce the resources that are essential if we are to help those whom all of us are anxious to help.
  The third reason is perhaps a little more esoteric. It is essential to keep down the level of public expenditure if we are to achieve an exchange rate that makes our exports competitive in world markets. That will be difficult if we have high interest rates because of the high level of public expenditure.
  For all those reasons it is essential for us to control public expenditure. My right hon. Friend the Prime Minister pointed out yesterday that in real terms the level of public expenditure this year is much the same as it would have been under the previous Labour Government. It is also important to make real cuts in order to achieve the objectives that I have mentioned. When those cuts are known we can debate them on their merits.
  Mr. Alfred Morris: The House respects the right hon. Gentleman, but he has made an uncharacteristically shoddy point. Will he accept the fact, since it is a fact and not an opinion, that spending on the disabled increased in real terms during the
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  period of the Labour Government? For him to give any other impression is quite unworthy. I hope that he will put the record straight before he sits down.
  Mr. Higgins: One can rest on the figures, and the right hon. Gentleman knows them as well as I do. The crucial point is that a number of people suffered from the massive cuts in real terms made by the previous Labour Government two or three years ago. Those cuts across the board affected a large number of people, including the disabled.
  I should like to make one or two points that are not likely to be made otherwise. We are waiting for the White Paper. It is important that in public expenditure exercises one or two basic principles should be borne in mind. It is not the right approach to say that we must have cuts across the board. It is right that the Government should have a sense of priorities and I hope and trust that that is what my right hon. and hon. Friends will bear in mind when putting forward their proposals for cutting public expenditure. An across-the-board approach is not the right one.
  It is also right that while in any public expenditure-cutting exercise one necessarily has to achieve some economies by pruning certain areas of Government expenditure, it is important to achieve the cuts by changes in policy if possible. Instead of pruning a tree that will inevitably grow again, we shall cut down the tree. That will be the end of the matter. The change that the Chancellor of the Exchequer announced yesterday on exchange controls is something that will not grow again. The, decision was taken to eliminate that part of public expenditure once and for all. That sort of policy change, as against mere pruning, is important.
  The third point to be borne in mind is that there is some danger in public expenditure exercises in not fully considering the relationship between different Departments. For example, the relationship between the BBC's external broadcasts, overseas aid and grants to foreign students should be taken into account. There could be an accumulative effect which is not immediately apparent if one simply acts on a bilateral basis between the Treasury and another Government Department.

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  I wish to make a point that affects the procedure of the House. This is a Supply day, on which the debate is chosen by the Opposition. The way in which Supply days have become occasions for a partisan knockabout is an undesirable development. We do not now have occasions when we can debate the detail of public expenditure, as we used to on Supply days. We need days when we can look at the way in which public expenditure is being allocated. That would make a difference.
  We are tremendously inhibited. The Government put forward Estimates and we are not allowed to increase them. If an item is cut by the Government the House does not have the opportunity to express a view on what it thinks the priorities ought to be.
  My hon. Friend the Member for Bristol, West pointed out, in quoting Disraeli, that we are all in favour of cuts overall, but not in favour of cuts in particular. There is a real problem here. If the Government were to set an overall figure, it ought to be possible to devise procedural arrangements, perhaps by way of offsetting cuts, so that the House can express a view on the priorities that it would like to see, rather than its being a matter between Treasury officials and officials of other Departments and Treasury Ministers and Ministers of other Departments, with the House being presented with a situation in which it cannot influence that overall allocation.
  That is a radical suggestion. I put it forward only as a basis for discussion. It is at least a point which we ought to consider, not least in relation to the new Select Committees which are about to be set up.
  In the control of public expenditure, the cash limit system clearly has a major role to perform. It was a matter of great regret that the right hon. Member for Heywood and Royton (Mr. Barnett), having introduced the cash limit system, shot it to pieces by adjusting it to allow for inflationary wage settlements.
  That point is essential to the Government's economic policy. If inflationary pay claims are allowed to take place within the cash limits the resources devoted to purposes other than pay in that sector will be steadily diminished. That is an undesirable way of allocating resources within the cash limits. While
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  we get into terrible semantic controversy over the use of the expression "incomes policy", it is important that within the cash limits we should be clear what are the limits in relation to pay. It would be appropriate, if there were an excessive pay settlement, to offset that by reductions in the total labour force so that the total wage bill within the cash limit remained the same.
  If the cash limits are altered and determined by the level of pay settlements, only one thing can happen. Necessarily, the cash limits will fail to operate, the public sector borrowing requirement will go up, and the effect will be to increase the money supply which will finance the excessive wage settlements. That happened under the previous Labour Government.
  In the public sector, it is crucial that the Government should be clear as to what is the appropriate level of pay settlements within the cash limits in the various Estimates. That becomes all the more important if we are, as has been suggested, to integrate the cash limit system with the Estimates system. The House will have to consider in detail whether to validate an excessive pay settlement that occurs in the public sector.
  During Question Time yesterday my right hon. Friend the Prime Minister stressed strongly, using a shorthand expression, the importance of not printing money to finance inflationary settlements. It is crucial to understand the relationship that I have mentioned if we are not to print money, but are to restrain the effect of inflationary pay claims that would otherwise wreck the whole allocation of resources within our public sector, and would necessarily mean that if we were to reduce inflation and unemployment the cuts in public expenditure would be much worse than they need otherwise have been. That is why my right hon. Friend the Prime Minister and my right hon. and learned Friend the Chancellor of the Exchequer are right to stress that if inflationary pay settlements are made they will increase unemployment, increase inflation and mean that we have less out of the public sector to spend on the real resources that we all want to allocate to particular groups of people who we believe are deserving and ought to come within the public sector.
  6.40 p.m.
  Mr. Richard Wainwright: I agree wholeheartedly with the right hon. Member for Worthing (Mr. Higgins) about the need for more parliamentary opportunities of scrutiny of public expenditure, especially the nature of cash limits. I hope that the Leader of the House and, indeed, the Government Front Bench will take note of what one of their own experienced Members, now a Back Bencher, says on that matter.
  Because of the lack of economic growth, substantially governed by world conditions and not only by policies at home, the new Government inherited a severe public expenditure problem. I thought that the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) was well below his best form when he tried, by various conjuring tricks, to suggest that there was no very serious problem at all. The horrors of last winter, both economically and socially, the state of world trade and the general sickness of the British economy must add up to a severe public expenditure problem. What the new Government did not inherit but what they are trying to put about as their inheritance was an actual expenditure crisis. The burden of our criticism, from the Liberal Bench, is that the Government are adopting crisis measures, wholly inappropriately, for a very intractable problem which requires a more pofound approach—one that is bound to take longer to work out.
  The Government achieved a comfortable majority. On the evidence of most soothsayers, there is no election within sight and, thank goodness, there is no problem with the value of the pound at the present time, at least no problem of possible flight from the pound. The crisis situation with which this House has had to wrestle so often in the past did not exist when the Government took office and does not exist now. But they have been adopting, in our view, crisis measures which are proving highly inappropriate. Worst of all, these measures are losing them that degree of public consent without which this country nowadays cannot be satisfactorily governed.
  The Government had a great opportunity, if they had taken the difficult problem at a measured pace and had not attempted to answer Labour dogma with
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  Tory dogma in such haste. The start should have been a thorough cost-benefit audit. I am referring not simply to examples of waste, which, we know, are no thorough answer to this profound problem, but to a weighing-up of benefits in relation to costs throughout the suspect parts of the public service. There are many suspect parts of public expenditure. That audit should have been conducted with as much publicity as possible so that the public were prepared for possible painful measures to come. The Government would also have been entitled, as a result of the election, to take a robust attitude towards all those groups in our society which show an overweening vested interest in public expenditure and seem to think that there is a collectivist solution to almost every social problem. That is something which Liberals, among others, strenuously deny.
  All bodies responsible for over-manning, for unnecessary public expenditure and for resistance to reasonable change at a proper pace could have been challenged at the start with the authority of the election behind the new Government. These things together would have served to help to moderate public expectations about what the public sector can provide in life and to make public opinion more aware of the fact that there are strict limits to what can usefully be done through Government expenditure and Government agencies. I would have thought that this approach would be in the highest and best tradition of Tory management of carrying the public with them in a gentle change of attitude, both officially and in the population as a whole. That is not what has happened so far. We have had manifestly false economies. These are quite visible to the person in the street who therefore thinks more than ever that Government and officialdom is a great ass and does not know how to conduct its business.
  A ready-made excuse for practically all their failures has been given gratuitously to the more inefficient public services. It must be a common experience of many hon. Members, certainly it is mine, that when one dutifully grumbles to a local authority or some official agency about poor service, the cuts are almost invariably used as a ready-made excuse. When the streets are not swept and reach

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  a disgusting and wholly insanitary condition. I am told by two metropolitan boroughs, which happen to impinge on my constituency, that this is due to the cuts. I do not believe that. But it is the ready-made excuse. It is difficult for an ordinary Member of Parliament to disprove it, in view of Government policies.
  I am not suggesting that the Government are beyond redemption. We have not yet seen the public expenditure White Paper or heard about the rate support grant. I think, however, that it would be naive to suggest that no one has any clue about some of the horrors that may be involved. Many borough treasurers claim to have strong clues. We have not heard the last word from the Government. They are not beyond redemption, but they seem perilously near to the stage of giving, unnecessarily, a rallying cry to the very vested interests to which they should be taking a robust attitude.
  When those who are partly responsible for over-manning in the public service and those who resist a reasonable degree of change in methods and patterns of employment are able, with considerable accuracy, to accuse the Government of stupid and false economies and indulgence in dogma, like the proposed assistance to independent schools, these very forces of reaction which I, for one, would like to see put in their place, are given a first-class set of instruments with which to attack the Government with a good deal of plausibility.
  There is no evidence so far that the burdens and pains of public expenditure cuts are being shared fairly or equitably. I believe that some members of the Cabinet are still naive enough to suppose, or make themselves believe, that, in some ways, the penalties of poorer public services are visited upon those unsatisfactory citizens whose own shortcomings have created part of our national difficulties. It does not work out like that, as most people with their eyes open know. It is not members of over-powerful groups in our society or people with special privileges who suffer mainly from these cuts. It is those who are not organised, those who cannot whip up a protest by themselves. It is those who have not got the media at their control who tend to suffer most, together with the very young and the very old, who ought to be the last who are made to suffer.
  Mr. Cyril Smith: Is my hon. Friend aware that in my constituency yesterday the closure was announced of two hospitals, one of which is a children's orthopaedic hospital? Does he not agree that that type of cut substantiates his argument, and that it is not always those who seek high wage claims or even submit irresponsible wage claims who suffer when children's hospitals can be closed as a consequence of Government policy?
  Mr. Wainwright: I am grateful to my hon. Friend for that example, of which I was not previously aware. I agree: it is that type of alleged economy which puts the Government on the wrong foot with the very elements in public opinion who I believe want to be reasonable and are prepared to show some restraint; they are certainly not prepared to endorse that kind of callous economy.
  I revert to the point that I was making about fairness. I hope that the Minister will be able to say that those local authorities which in the past few years have conducted their affairs with conspicuous thrift and have taken to heart the many appeals by the previous Administration for genuine economies and a careful attitude will be properly treated under the rate support grant.
  There is a widespread fear that once again those authorities, whether Labour or Tory controlled—I can think of some in this category in both parties—will be the mugs once again, because those that have spent least in the past and spent it most carefully will come out worst from the RSG. If that happens—I pray that it will not—it will once again alienate what was otherwise potential public consent for a review of public expenditure.
  The type of thing which has brought the Government's present approach into such disrepute among perfectly ordinary people with no party political axe to grind is the case, for instance, of the diligent worker who is waiting to get his hernia repaired or some other disabling condition attended to but who finds that the waiting period gets longer and longer. Can such a man be blamed for saying to himself "Society does not seem to want me all that much if it cannot get me back to work in a reasonable time."? That is a false economy such as is occurring

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  more and more and has certainly occurred during the period of the present Government.
  Some people—I know a number in my constituency have made conspicuous efforts to get themselves work when there are considerable temptations in their circumstances to take it easy and accept unemployment as a fact of life because so many around them are also unemployed. Many of these people have been assisted by the special temporary employment programme—STEP—which has fostered some promising concerns, usually with the great bonus of being small concerns which have been working towards complete financial viability.
  However, there are distressing examples of STEP schemes being halted in midstream in the past few months. People who have made great efforts to jerk themselves out of the dole queue have been told that the scheme is abandoned, that their efforts go for nothing—and back they go into the dole queue.
  A much more domestic and simple example which must be within the experience of all hon. Members is that of the home help who, if she is the right sort—most of them are—plays a key role in keeping a large number of people out of our hospitals and other institutions. To enforce economies which result, directly or indirectly, in the withdrawal of home helps from people who are trying their very best to remain in their own homes and not become a total burden on the public purse is another glaringly false economy which is open for all the public to see and which makes people think that the Government are misguided.
  In education, the reversion to larger classes, the closing of some nursery schools and the failure to staff other nursery school premises which are ready for occupation is another manifestly false economy which condemns out of hand any Government or local authority that practises it.
  That is the record so far. There is time for the Government to pull themselves together and to make a much more coherent and well-thought-out approach to this problem. On their record so far, my right hon. and hon. Friends and I feel obliged to vote against them tonight.
  6.56 pm
  Mr. Guy Barnett: The House will have listened with interest to the two previous speeches, because they were constructive. Although I did not agree with all that the right hon. Member for Worthing (Mr. Higgins) said, I agree strongly with his advocacy of priorities in any cuts exercise. That is not to admit on my side at all the necessity for cuts.
  The hon. Member for Colne Valley (Mr. Wainwright) made precisely the same point. Many of the statements of Government spokesmen have given the impression that everybody, regardless of whether he is a priority case or not, should bear the cuts. Different Ministers have talked of an across-the-board approach rather than any attempt to adhere to a sense of priorities.
  Like my hon. Friend the Member for Manchester, Central (Mr. Litherland), whom I, too, congratulate on his maiden speech, I should like to talk about the inner cities. I had always understood that both sides of the House recognised the inner cities and their problems as top priorities. Indeed, the Secretary of State for the Environment, speaking at the joint local authorities' associations conference last month, said that he did not "underestimate the problems" of our inner cities. He used the word "problems", recognising that a wide range of issues had to be tackled if the problems of the inner cities were to be solved.
  Later the right hon. Gentleman said:
  "Last week I made it clear that this Government will continue to give priority to inner city policy."
  I want to examine those words in the light of some of the cuts which have already been made, some of the problems which have been met and some of the rumours which are going about.
  Of course this debate might have taken place in a few weeks when we had the full rate support grant settlement. Of course the public expenditure White Paper would have aided our consideration of this matter, but my right hon. Friends were absolutely correct to put down this motion, because many hon. Members are deeply concerned about local proposals which are to be announced, and which by that time it will be impossible to influence. That is why I wanted to draw attention to the problems of inner cities.

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  At least one member of the Cabinet has a real commitment to inner cities, as is clear from statements that he has made in the past. The present Minister of Agriculture, Fisheries and Food is well known in the House for this commitment. When the Labour Government published their White Paper on inner cities, the right hon. Gentleman described it at the time, in an article in The Times, in these words:
  "The only specific action is that the pathetic Urban Aid Programme will be increased by £125 million a year by 1980."
  He continued:
  "If we are to stop the deterioration of our inner cities effectively and transform them to areas of tolerable living conditions central Government have a responsibility to see that available resources are concentrated on these areas."
  In the same article the right hon. Gentleman said:
  "The Government should then agree a programme, varying in duration according to the size and nature of the problems, which it would substantially finance."
  That statement was made by a member of the present Cabinet. As a junior Minister in the Department of the Environment I welcomed it because it showed that there was a substantial body of opinion in the Conservative Party which recognised, as we did, the priorities that must be given to the inner cities.
  The mistake that many Conservative Members made about inner city policy was to assume that all we did was to increase the urban programme and concentrate its effect upon the inner cities. Important as that was, it was not the totality of the programme, by a long way.
  One of the things that the Labour Government deliberately did—and here I take issue with the right hon. Member for Worthing—was to ensure, through the needs element, that funds went to the areas where expenditure levels were high because of social problems. I fear that statements such as those emanating from the Department of the Environment indicate that it is the Government's intention, on 20 November, to switch those resources back from the areas where they are needed so desperately to the counties, which, we are told, are so badly treated.
  The Secretary of State, who represents Henley, and the right hon. Member for
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  Worthing perhaps do not understand the measure of the problems in the dock-lands and places such as Hackney, Islington and, indeed, the constituency of my hon. Friend the Member for Manchester, Central. The previous Government were right to establish that priority in the rate support grant. They established it in other areas as well.
  We managed to persuade the Manpower Services Commission, which has suffered a cut of over £100 million, to concentrate its resources and efforts on the inner city areas, where there was a serious employment problem. We tried to use the housing investment programme to concentrate help where it was most needed.
  This debate gives us an opportunity to express our anxieties about the Government's policies. The Minister of Agriculture, Fisheries and Food, in the article which I quoted earlier, said:
  "Improved educational services are perhaps the best long-term hope for the children born into these deprived areas."
  I agree with him. However, one of the immediate consequences of cuts that have taken place already is to make it inescapable that the Inner London Education Authority will stop the primary school at Morden Mount from setting up a nursery class.
  Mr. Bob Dunn: The hon. Gentleman referred to the problems caused to inner city areas by a change of priorities away from the inner cities to the counties. Does he not appreciate that the previous Government's policies caused enormous problems in my constituency, which has deprivation problems similar to those in inner city areas? Is he aware that the same problems exist in North-West Kent, because of the bias against the counties, as are to be found in the inner cities?
  Mr. Barnett: I recognise that Dartford, Gillingham and other places are experiencing problems. There is hardly a part of the country where there are no problems. When I was working in the Department of the Environment I spent much time considering rural poverty. However, the difference between the problems described by the hon. Member for Dartford (Mr. Dunn) and those that I am describing is one of scale and intensity which requires direct investment by central Government.

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  Many local authorities, including the London borough of Greenwich, have responded already to the type of pleas made by the Secretary of State for the Environment to deal with economic decline. Economic decline is often the root of the problem.
  In contrast to the economic decline which my borough suffered in the early 1970s, there is now economic activity everywhere. Much development is taking place. The Community Land Act was helpful in encouraging that economic development, by the purchase of land which is being used for the construction of factories. Despite what has been said about the work of the Docklands partnership committee, progress has been made.
  There are few areas in Greenwich which are suitable for industrial development which are not being developed. The old AEI-GEC site in my constituency, which once employed about 5,000 people and was closed almost overnight by Arnold Weinstock, now employs as many people as were employed when he destroyed those jobs.
  The inner cities suffer serious social problems and stress. The Secretary of State has not addressed himself to that problem. These areas house many people with social needs who require help and support. We saw the rate support grant as the only real way to give local authorities the resources necessary to deal with the problem. There is a problem of collective deprivation. Even those with satisfactory homes and worthwhile jobs can suffer from the pervasive sense of decay and neglect, from the decline of the community spirit, from the low standard of neighbourhood facilities, from greater exposure to crime and vandalism and from the reputation of such areas. Some people who live in such areas experience extra difficulties in acquiring a job or a mortgage because of the area's reputation. Such problems require the total approach.
  I recognise that the Government have not yet explained their inner cities policy. I hope that they will take to heart many of the considerations which the Labour Government took into account. I hope that if cuts have to be made the Government will ensure that they do not affect the inner cities. The Government should
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  recognise that, far from needing fewer resources, places such as Hackney and Tower Hamlets need more if the problems are to be solved.
  Housing investment programmes are now being considered. The Under-Secretary of State who is responsible for this matter, the hon. Member for Hampstead (Mr. Finsberg), is on the Front Bench. I hope that the bid by my local authority will receive a sympathetic hearing. It has identified its priorities as being the needs of the elderly and the need to retain young people in the borough because their skills and abilities are required.
  Much has been said about the distress of the elderly. It was with grave disquiet that I listened to the announcement by the Secretary of State for Social Services yesterday about the heating scheme. I was particularly disturbed because the Greenwich Pensioners Action Association—Heating Action Group has undertaken a survey of a number of blocks in the borough.
  Commenting on the results of the survery, the association states:
  "The survey proved that worries about the high cost of these type of heating systems were well founded. The average winter quarter's bill was over £100 which is very high, particularly when the different circumstances of the tenants are taken into consideration."
  Some of these tenants are not over 75 years of age or members of families with children under 5. Nevertheless, some of them are elderly people who are liable to suffer from hypothermia because they cannot pay their fuel bills. The global sum which the Government have made available to assist them is an indication of the dangers that they are likely to face as a consequence of these cuts.
  Having read the speeches of the Secretary of State, and having listened to his quotations from his own speeches, I do not get the impression that he has listened or that he really understands the current situation. I noticed that in his speech to the joint local authorities' associations last month he said:
  "I simply do not believe that reductions of this order should give rise to the agonised allegations about the destruction of essential local government services."
  I do not believe that to be true.
  Inevitably, my borough council has had to make an assessment of what the cuts

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  are likely to mean. If those cuts, as we understand them, were £3 million this year, or if no cuts were made this year they were to be £3·3 million next year, the results—and this is an illustration from my borough—would be as follows; the halving of refuse collection and street sweeping; the closure of half the libraries; the closure of half the children's homes; the closure of five to six old people's homes; the closure of all lunch and day clubs and the cessation of meal-on-wheels. That is an illustration of the kind of thing that authorities in inner city areas will have to do if the Secretary of State insists on this level of cuts, while he fails to give priority to the needs for our inner cities.
  The consequences of a blind pursuit of those Government policies which we now see unfolding will be an enormous amount of social distress and anger in the areas where distress already exists.
  7.12 pm
  Mr. Tony Marlow: There is some common ground between both sides of the House since we all agree that we are faced with severe social and economic problems which must be overcome, whether we believe in a Socialist or a capitalist system. We all agree that people must once more have the incentive to work and that once again we must reward people for skills that are hard come by. I believe that we also agree—to a greater or lesser extent—in cutbacks in bureaucracy and taxes. Those are the things which are so destructive to those who want to create the wealth on which all our services are dependent.
  For years we have been going steadily and surely—and this applies to both Governments—in the wrong direction. We have now reached the stage where this is our last chance. We must reverse the preponderance of public expenditure as a proportion of our national budget. We must get the State out and the people in. I am delighted at the signs of mirth from the Labour Benches. I presume that the Labour Party is not the people's party any longer. The Government, however, are now the party of the people. On 3 May we had a general election. What happened to the traditional Socialist vote? Did the electors vote for the
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  Labour Party? No, they voted for us. We are now the people's party.
  We must reward the worker who produces the goods with the sweat of his body, with his hands and his skills. Only be reducing the numbers of those who, though they contribute, live on the wealth that the worker creates, can we motivate the worker to continue to produce more wealth. The working man carries on his shoulders a growing burden of service employees and bureaucrats—hardworked though many of them may be—who produce no tangible results but who are paid out of the taxes generated by the working man.
  For years the scope, and the cost of staffing, of the local authorities and of our National Health Service has grown. As the Secretary of State has said, the land is flowing with job protection and restrictive practices. The cost of our education services has doubled. Is that education service better? We are spending twice as much money but are we getting twice as much value for what we are spending? In nine years the cost of the Health Service has increased by 30 per cent. We all know that there are now more old people and that drugs and treatment are becoming more expensive. However, somewhere along the line concessions have been made in the pay and conditions of some of the people who work in those services. Somebody has been taken for a ride and I can see why.
  Is it easier to stand up against a militant union or is it easier to close down a hospital ward? Is it easier to point to a queue of dying cancer patients and pass the buck to the Government, demanding in banner headlines that we get more support and money from central Government? Think about it. Where is central Government to get the money? Is it from the taxpayer? Where is the money to come from? There is no more money. We cannot go on in this way. We must go in a different direction. In some areas of Government provision staff costs, combining rates of pay and productivity, are becoming too high to sustain the services that we rightly demand. Now there is much that we can no longer afford.
  I echo a proposal already publicised by the Daily Express. We have many other problems in our divided society. We are all butchers, bakers or candlestick

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  makers. We have lost our sense of nationhood. We have an increasing population of elderly and infirm people, and we have yet to devise the resources for the care of those people. We have decay and dereliction in our inner cities. Go to the rest of Europe and see how Britain compares. We have the growing fungus of intimidation which increasingly permeates our sick and uncertain society and which is fuelled by the spectre of inflation.
  Mr. Stanley Orme: The hon. Gentleman talked about increased inflation. That inflation has been fuelled and started by the Tory Government.
  Mr. Marlow: That was rather unworthy of the right hon. Gentleman, bearing in mind the rates of inflation which existed under the previous Labour Government.
  We now have the problem of the price of school meals. I am worried by the proposal to make people pay more for school meals. That will hit the man in the middle; the man who is not on supplementary benefit; the man whose wife feels that it is better to stay at home and look after the children because it is a socially responsible thing to do.
  It will hit those in households with only one wage, who must find the additional money if everyone must pay more for school meals. I am worried about this. I am not saying that it should not go ahead but I am worried about it. Why has this come about? One reason is that the cooks and the bottle washers and those who serve the school meals cost two or three times as much as the food that goes into the meals.
  Another of our problems is that there is a feeling that our schools produce factory fodder, with young people sentenced to work in such factories from the age of 16 to 65. If any of those young people are unable to find work they will become anonymous particles on a scrapheap of wasted talents. They will end up smashing telephone booths and waylaying old ladies. That is the potential problem which faces the young unemployed.
  Those who saw the film, a week last Sunday, of that spine-chilling parade in East Berlin, will recognise yet another problem. Our Armed Forces are the
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  best in the world but they are sadly not enough. Every country in Europe, apart from Britain, has some form of national service. Of course, 1980 is not 1960, and I am not suggesting for a moment that we should go back to getting people to paint the coal white. Instead I believe we should be seeking to provide a new challenge and a new opportunity for young people, and we might call it service to the nation. Various options would be open to our young men and women who would volunteer to take up military service, social work, hospital work, environmental work, outward bound training and home economics, among other subjects.
  The question arises of how we are to involve our young people in such activities. I think that when they have been educated by the State, when their health care has been conducted by the State, they will be looking for some way to help society, some way to contribute and get involved. I think that volunteers will come forward. I believe, too, that under normal circumstances the dole payment should no longer be made to those under the age of 21.
  Induction and training for these activities would be centrally controlled. The course would probably start with outward bound training in Scotland. Everyone would be brought together and trained to work as a team. The activity itself would be operated by the local authorities—except for military service. The volunteers would live together, eat together and would be given an element of pocket money. There would be disciplined group activity with the emphasis on team work, service and, to an extent, physical fitness.
  Mr. Allan Roberts: The hon. Member seems, with one voice to be advocating the kind of programmes set up under the last Government by the Manpower Services Commission, which his Government are cutting. Is he against those cuts? With another voice he seems to be describing a spartan kind of Hitler youth movement. If the people he thinks should undertake these spartan courses did not want to go, would he force them?
  Mr. Marlow: Clearly the hon. Member has not been listening to what I have been saying and there is little point therefore in replying to the questions he asks.

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  I believe that the youth of the country would want to be involved. It would provide the first opportunity for many of our more disadvantaged young people to travel from the mean environment in which they have been brought up. It would be their first opportunity to stretch themselves, to mix with people from a different background, class, race and so on. It would be their first opportunity to adjust to their fellow humans, to give service, to gain a sense of nationhood, and to feel a sense of responsibility for others and a sense of adventure.
  At the same time society could be helped. Work which we can no longer afford to have done could be carried out by these young people. Our environment would be improved and the lonely old could be assisted in their dignity. Our country could be more adequately defended.
  The scheme would have two great advantages. The first would be educational. It would give those who volunteered to join the course a more complete education. Second, the millstone of the cost of public service provision could cease to be a millstone and more public provision could be produced with more goodwill and greater energy more cheaply than is currently possible.
  7.25 pm
  Mr. J. D. Concannon: I shall be brief, since many of my hon. Friends wish to speak. The team on the Opposition Front Bench and the Shadow Cabinet have done a service to the House in enabling this subject to be debated. They have done a service also to those who live north of the River Trent and elsewhere in the inner cities in providing an opportunity to represent to Ministers the frustrations and anger that those people feel.
  I know the difficulties that Governments face on occasions such as this when they are carrying out unpopular measures, and it is in that context that I comment on the speech of the hon. Member for Northampton, North (Mr. Marlow). He was unfortunate in that he was the only one to rise on his side of the House to defend his Government and their actions. I know how people are wheeled in to make speeches in defence of Government action—although, of course, I do not suggest that that is what happened to
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  the hon. Member. However, when it happens his is the sort of speech that we hear. The only merit that I could detect in it was that he was purporting to give Britain the fittest dole queue in the world.
  I imagine that feelings in Conservative constituencies are much the same as those I have witnessed in Mansfield. No doubt all hon. Members were subjected to much the same sort of pressure during the recess. The Government's actions have left the people of North Nottinghamshire frustrated and angry. I have had many letters from members of the public who have never before written to a Member of Parliament or a councillor, and who have never before attended a meeting. Suddenly, however, their feelings have been whipped up, they have become angry and they are seeking some way of giving vent to their emotions.
  I have attended an unprecedented number of meetings, not of constituency groups, but of little groups of mothers worried about nursery education, of teachers, of nurses, and of others throughout my constituency. This feeling has sprung up from the grass roots.
  A week last Thursday I tested the strength of feeling on cuts by holding a meeting in Mansfield with a couple of advertisements in the local newspapers as the only prior publicity of the event. Also at the meeting was my hon. Friend the Member for Ashfield (Mr. Haynes). Such was the response that the hall we had booked was not big enough for the crowd and we had to provide an overflow room.
  My right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) dealt in detail with the activities of certain councils. How he missed out Nottingham county council I do not know. I shall have to have a chat with him about that. The council met a week ago last Tuesday to finalise those cuts. It seems to have gone out of its ways to impose them on the very young, the old and the women in the community. The largest percentage of jobs that will have to go in our county council area will be those held by women.
  We held a demonstration outside county hall on a Tuesday, and I went along to see the type of people who took part. To me they seemed the sort of people who had never before attended

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  such a demonstration—for example, young wives with their children. There were very few men there, because they would have been at work at that time. I was surprised at the sincerity of feeling of those demonstrating.
  With feelings running so high, the county council decided to broadcast the entire council meeting, which continued until 1 a.m. It was nauseating for me to hear Conservative councillors label the demonstrators as reds, Trots and fellow travellers. That county council is proposing about 166 cuts. Some of them border on the lunatic while others are downright dangerous. In Mansfield it is purported that consideration is being given to scrapping 62 crossing warden posts. I had a heck of a lot of trouble getting some of the posts recognised in the first place. There will be cuts affecting school meals, home helps and nursery education. These services will be slashed in and around Nottinghamshire. Instead, the local authority should have been working hard to extend these services.
  The swimming programme has been almost completely cut out. That applies throughout Nottinghamshire. That would not be so bad if the county council were to carry the burden, but the Mansfield district council has the swimming baths and it receives payment from the education authority for the lease of the baths to the schools. The county council has made its cuts at the expense of the district council, which has already budgeted for the money that it will receive from the education authority.
  Following the severe winter of 1978–79, it has been decided to cut road gritting and road cleaning services by two-thirds. In and around Mansfield there are possibly more employees working on shifts than in most other areas. Throughout each day of the week there is always somebody going to work or returning from work in the Mansfield area. To cut down on gritting and maintenance services by two-thirds, which means that it will not be possible to grit or keep open roads used by the main bus services, quite apart from roads leading to factories and coal mines, borders on lunacy.
  We do not know what share of cuts Mansfield district council will bear. I know that some councillors think that
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  they will have to cut some services to a great extent. The people of Mansfield are frustrated and angry because of the cuts that have already been made. Of course, I have not mentioned the National Health Service cuts, which started the upheaval in my constituency.
  The Mansfield district council has not yet announced any cuts. It has not begun to consider in detail where it can make cuts. I have the feeling that it will have to make cuts, for example, in road sweeping. It will have to consider the frequency of dustbin emptying and the services provided for elderly citizens. It will have to consider the cost of bus tokens for the elderly and various services for the infirm and the disabled.
  My area is already being hit on the NHS front. The area health authority openly admits that there will be a lowering of standards of care. I have been astonished by some of the closures that have been announced. I live in my consituency, my children work in it and my grandchildren attend nursery schools in it. The cuts that have been announced make me wonder what sort of person tells others to make cuts involving various percentages. The cuts are implemented by those at local level.
  The Government must have some priorities. Mansfield is short of geriatric beds, but it has been announced that the Pickard ward, in the hospital in the centre of Mansfield, is to be closed. Anyone who saw the ward in action would never want to close it. Langworth Lodge, the diabetic hospital, takes admissions from the whole country. I have received more letters about Langworth Lodge than any other topic. Letters have come from the entire country, not only from my constituency. The hospital is a short distance outside my constituency. Newstead hospital is another geriatric centre. Kings Mill is under threat. Local general practitioners can no longer use the maternity ward, but I shall not go into the details in this debate. We are facing a succession of closures. The backs of my constituents are up. The debate provides an opportunity for me on behalf of my constituents to tell the Government the feelings of ordinary people.
  I feel sorry for county councils. They will have to do more or less what the Government tell them. However, Nottinghamshire county council seems to

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  have taken the opportunity with both hands and is gleeful about the making of cuts. I repeat that it is lunacy to make cuts in some of the areas that I have mentioned. To do so will be to tread on extremely dangerous ground.
  My local council is Labour controlled. It was elected on its own mandate. That mandate was entirely different from the acts that will be forced on it by the Government. It is ironic that the Government purport to want to free the nation. If it is their wish to free the nation or the people, local councillors, including Labour Councillors in my area, should be free, once elected, to implement the mandates on which they were elected.
  I have no doubt where responsibility lies. Local councils and area health authorities will have to consider various aspects of policy in making cuts, but the fault lies fairly and squarely with the Government. Responsibility lies not with councillors and those in area health authorities but with the occupants of the Government Front Bench—indeed, with all Conservative Members.
  Mr. John Heddle: I ask the right hon. Gentleman to relate area health authority staffing in Nottinghamshire to that in Staffordshire, where there are 3·4 administrators to every member of the medical staff. Does the right hon. Gentleman agree that if there is a similar ratio in his authority there is room for savings and economies within that area?
  Mr. Concannon: I did not support reorganisation in the first place. It was the Conservative Government that introduced it. It has taken Conservative Members a long time to come round to my view, but I thank them for doing so. Of course, there are areas in which cuts could be made within area health authorities. I should more readily agree to such cuts than to hospital closures.
  I know what happens in government. I know that attempts are made to take the limelight off the home front by making speeches about foreign affairs. However, that sort of ploy will not kid my constituents. They know who are responsible for the cuts. They know who to blame. If there are some who do not. I shall make sure that they get to know.
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  I am torn between taking two courses. One course is to let the Government continue with what they are doing and to let their arrogance bring about their destruction. However, I have a duty to my constituents. Before the Government do irreparable damage to the health services in my area, as will as local government, I must do what I can to stop them in their tracks and persuade them to make a U-turn. I am sure that that is the best course. It is the right course for a Member of Parliament to take. I am sure that pressure will come from the people. There will be demonstrations. Already the pressure is mounting. There is talk in my area of sit-ins and marches. If the Government do not bide their time and if they do not alter their ways, they will go down as the Government who irreparably divided the nation.
  7.39 p.m.
  Mr Stan Thorne: I begin by welcoming my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley), my hon. Friend the Member for Greenwich (Mr. Barnett) and my right hon. Friend the Member for Mansfield (Mr. Concannon) to the group who oppose public expenditure cuts. It is a welcome shift in their position from what it was in previous years and in different circumstances.
  A number of members of the Opposition resisted, or attempted to resist, the public expenditure cuts that were put before the House by the previous Government. Therefore we feel that we have at least the elementary right to put before the Government points of view similar to those that we endeavoured to put to the previous one about the effects of their decisions to cut public expenditure. Clearly, the local authorities will be hard hit by the Government decisions.
  Some years ago I had high expectations that the high-rise flats in the Preston area would eventually not contain families with small children on the fourteenth floor. I hoped that it would be possible to expand the house building programme in the Preston area so as to permit their removal. Clearly, that will not happen as a result of the present situation.
  We shall face major problems in the county council areas. I have the report

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  of the finance sub-committee of the Lancashire county council. It says:
  "A reduction of the amount (£4,500,000) by which the County Council's estimated expenditure exceeds the notional budget figure derived from the Rate Support Grant … The other element is an amount of £8,629,000 representing 3 per cent. of estimated expenditure based on the level envisaged in the Rate Support Grant Settlement."
  The Lancashire county council intended to make cuts amounting to £7,299,000. Clearly, the education provision, the fire services, highways and transport, libraries and leisure, all suffered in consequence. The council saved £1 million by two endeavours—£500,000 on the capital fund and £500,000 on contributions to capital outlay. The net cut would be just over £6 million. The figure for education would be approximately £3 million; highways and transport, £1 million; social services, approximately £1¼ million; and the fire services, £¼ million. I do not want to go into each of those items in depth as time does not permit.
  Within the education budget a tremendous sum of £1,171,000 will be cut from the maintenance of premises item. I can only guess at what that will mean in terms of future costs incurred as a result of rundown buildings. The effect it will have on the building industry in my area in terms of jobs is probably of greater significance in the short term.
  My right hon. Friend the Member for Sparkbrook referred to the abondonment of the opening of six nursery classes, with six teachers and six assistants. I emphasise the abondonment of the opening of six nursery classes. From where did the money come with which to convert the primary schools into nursery schools? It was allocated by the previous Government so that the adaptations to provide nursery units could be undertaken. What miserable figures are involved? They are £30,000 in 1979–80 and £52,000 in 1980–81. Two of the nursery schools are in Preston. The other four are situated in Whitworth, Leyland, Fleetwood and Clayton-le-Moors.
  Additional factors in education cuts that are of great concern to the people in my area are the reductions in staffing special schools and physically handicapped schools, and in stationery and books. For instance, yesterday the Secretary of State for Education and Science
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  replies to questions. He made a specific observation about books in schools. The Lancashire county council is proceeding to make a cut of £25,000 in that area. However, the most important point about the provision of nursery education is this: the "head start" programme established that with nursery education provision there is a financial saving as the cost of remedial education is unlikely to be so high. It has been established that children who have had the benefit of nursery education make and maintain better progress in educational terms. There is already evidence to show that the number of so-called drop-outs later on in the education system which stem from nursery education compares favourably with those from the non-nursery sector—in other words, children who have not had that opportunity.
  The reduction in population about which we hear so much will be felt at infant-level education. The spectacle of the Secretary of State for Education opening a private school in the Preston area at the same time as the Lancashire county council is taking the decision to stop progress in the nursery sector illustrates, if illustration were needed—it was not, for me—that he is far more interested in the development of the private sector than in the development of State schools.
  Included in the Lancashire county council cuts is a reduction of £45,000 in the provision for health and safety at work in our schools. What effect will that have? Will it be necessary subsequently to incur higher costs in consequence of this so-called saving at this stage?
  One of the most miserable decisions being taken now is in the sphere of school meals. Lancashire county council decided to reduce the quality of school meals at the rate of 2p per meal with a saving in costs of £300,000—this in 1979. We are supposed to live in a Christian community. Yet we decide that we shall make savings at the expense of school meal standards. It is suggested that this is class legislation. The wealthy people have no problems in supplementing the diet and nutrition of their children. They may purchase all the additions that are appropriate or necessary. But what of the poor, the low-income groups, the large families in our society? They will be hardest hit by the public expenditure cuts.

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  The fire services in Lancashire county will face the removal of three pumps and engines at Blackburn, Burnley and Preston, with the resulting loss of the jobs of 44 men. The disposal of a rescue vehicle is involved in the cuts; fire prevention posts will be eliminated. The result will be that the fire protection service in the Lancashire area is hit. We know how we look to firemen in crises and how important were the firemen when there was a major fire at the Woolworths store in Manchester. We have just had a minor explosion—some might say a major explosion—in the factory of a firm called Attwater, adjacent to my constituency. The fire service, of course, was immediately called in to give asistance on that occasion. Will the firemen be there when we have the next major crisis of that sort in the Lancashire area? Not if we proceed with the cuts at present envisaged by the Lancashire county council.
  I do not think I need remind the House that in 1977 there were 818 deaths from fire in Great Britain. Indeed, the case has been made out for the provision of more firemen, not less. Public protection, and the safety of firemen and the adequate manning of appliances, necessitate job creation, not cuts. Firemen, like many other valuable workers in our society, unfortunately, are appreciated and applauded only when we face a major crisis of one sort or another.
  Lancashire county proposes to reduce expenditure on social services by £1¼ million. It proposes to reduce the usage of voluntary children's homes. The proposals for additional telephones for the housebound are to be cut at the direct behest of the Government of the day.
  Mr. Dennis Skinner: And that heartless woman.
  Mr. Thorne: There is also to be a reduction in the provision of bus passes. This will not hit the upper middle-class people of Lancashire. It will hit yet again those least able to cope with the problems that arise in this direction. It is also proposed to freeze home help services at the existing level. That is in the face of a known increased demand for home help facilities.
  The present cuts clearly illustrate the Government's priorities. No less a person than the Prime Minister, in her recent
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  swashbuckling speeches, has made clear that we can find the expenditure and the resources for war preparations. But for the care of the sick and the elderly, and for the education of our children, money is not available.
  A plague of locusts will eat anything in sight—except another plague of locusts. Only man treats his own kind in the way that is proposed at the present time.
  7.45 p.m.
  Mr. Malcolm Thornton: I apologise, Mr. Deputy Speaker, for the fact that I shall have to leave the Chamber shortly after I have finished speaking.
  Whenever we talk about public expenditure cuts, and particularly those affecting local authorities, there is an emotive parade of certain services operated by local authorities. I want to talk about my own practical experience with local authorities. As I have said on more than one occasion, when local government reorganisation came in, and we were faced with all the resulting problems, that was not the time to be the leader of a metropolitan district council.
  It was very refreshing to hear the hon. Member for Preston, South (Mr. Thorne), who, if nothing else, can claim consistency, as he indicated to some of his colleagues who were very eager to support the swingeing cuts imposed on local authorities by the last Government.
  When we look at the way in which the rate support grant operates, we have to acknowledge that it is a very crude instrument indeed, with little regard for variations throughout the country. Indeed, in the work I have done in the national local authority associations, I have argued on many occasions for some variation so that the needs of a particular area would be catered for in the rate support grant rather than having the usual blanket approach. The needs element varies considerably. The device used is a crude one indeed.
  It is even more unfortunate that the rate support grant as it exists actually penalises those authorities which have been prudent in the past. I refer to those authorities which have looked very seriously at their own prorities of expenditure. They have looked at services they operate and have asked themselves "Is

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  this something that local government should be doing?"
  We have to recognise—this applies particularly to the late 1960s and to the lifetime of the last Government—that increasing legislation put further burdens on local authorities at a time when Government were urging them to cut expenditure. This happened at a time when Government reduced the level of rate support grant at a stroke. It happened at a time when Government set cash limits. But the Government did not recognise the plea of local authorities for the right to determine their own priorities, commensurate with the needs of their own area. That is the most important point that we are discussing at the moment.
  People say that it is the Government's responsibility to provide these services. The Government are saying that it is not, and that it is up to the local authorities themselves to look at the services they operate and to decide two things—first, whether those services should be operated by the local authority, and, secondly, whether they can be afforded by the people in the area. Ratepayers have expectations, but they also have limits to their toleration of increasing rate demands.
  Should the priorities be fixed by Government or should they be decided by local authorities? What is being said clearly here is that it is up to the local authorities themselves. I have had to agonise over where the cuts should fall in the local authority that I have had the privilege of leading.
  Whenever I mention Wirral, people seem to think of a balmy place somewhere in the North-West, but Wirral includes Birkenhead and Wallasey. It includes areas of deprivation of the sort that are to be found in dockland areas and in downtown cities throughout the country. There is also the problem of high-rise accommodation. Recently we decided to knock down Oak and Eldon Gardens. That was felt by the local authority to be a priority. I fought with Ministers of the Labour Government in order to try to get permission to do this. The permission was denied us and we have subsequently done it ourselves out of our own resources, because we decided that it was a housing priority in our area. Decisions of this sort are being forced upon local authorities.
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  The cry for too long has been "Let us decide; it is not a matter for Government." Now the local authorities are being told that they have to make these unpalatable decisions. They are being told that, unless they scrutinise their education budget, inevitably some of the basic fabric of education will be hurt. It is bound to be. There are places in my own authority area where educational expenditure on what I call the frills has been profligate. Very often these are inherited commitments. Nevertheless, those are the things that will have to go. We cannot afford expensive umbrellas.
  Whenever public expenditure cuts have been mentioned in the debate, the school meals service has been paraded. The school meals service as we have known it in the past is an extremely expensive way of picking up those who have been mentioned by Opposition Members. We must ask ourselves whether the education service should act as a social service at the same time.
  I say not only to hon. Members but to all my former colleagues in local government that, just as a large tanker at sea at full speed cannot be stopped dead in the water when the engines stop turning, so local government and public expenditure has a run-on effect. It takes time to slow it down, to stop it and to put it in reverse.
  While these procedures are being followed, we must accept that some imbalances will inevitably occur. Local authorities must also accept that if those services which are the proper province of local authorities are to be provided in future and they are to continue to have the kind of role for which they have consistently asked the Government, they must look inward at themselves. They must accept that having freedom means responsibilities. They cannot hide behind the Government. They say "Let us make the decisions." In the public expenditure cuts that we are proposing for the local authorities, we are saying "All right. You have the freedom. Now use it responsibly."
  8.2 pm
  Mr. D. E. Thomas: We have had a gruelling and harrowing catalogue of specific cuts to be made from hon. Members, particularly on the Opposition Benches. I could add to them

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  the cuts in school transport in Gwynedd and their effect on children in rural areas and on pupils who choose to take up Welsh-medium education and have to be bussed to secondary schools.
  We could also look at community care and cutbacks in home help services. Indeed, we could go into the argument that we had some years ago whether institutional or community care was to be the option and where the resources were to be directed. That argument looks now to have been useless, because the community care which was funded to ensure that institutional care under the National Health Service would not be required, or would be required later, is now being underfunded and cut.
  In nursery education we see substantial cuts and threats of cuts, particularly in my area, where nursery education serves both as a social service and as part of education and language policy.
  I particularly highlight one cut in Merioneth—a cut which means the deferral of the opening of a hostel for the mentally handicapped at Aelybryn in Dyffryn Ardudwy. The building is there in the ownership of the local authority, but it is not to be opened and staffed.
  In the brief time available to me I do not want to talk about specific cuts. It is time for us to switch the argument to the whole issue of public expenditure as such. It is one thing to argue for specific instances; it is another to argue the general case for public expenditure. The view that we have heard from Conservative Members is that public expenditure is a constraint, a fetter, on the private sector of our economy. The Social Democrats on these Benches, as they call themselves, look at public expenditure as a crutch to the mixed economy. I prefer to argue for public expenditure as a means of ensuring a real social wage for all sections and classes of our population and as a way of promoting planned economic growth. There are some in this House who have opposed all public expenditure cuts when they have affected social and economic policies.
  In a sense, there was a greater degree of integrity and honesty in the Secretary of State's speech this afternoon than in that by the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley).
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  Public expenditure was not defended by the Labour Government. It is because of that that the present cuts have gone as far as they have and are likely to go further, no doubt, in next week's public expenditure White Paper. Conservative Ministers are certainly wielding the axe, but it was honed by their Labour predecessors.
  In 1974, when the Labour Government took office, the strategy that could have been adopted by a Labour Government was not adopted. The Labour Government faced the well-documented crisis of the British economy—the crisis of industrialisation, import penetration and so on—at a time when the traditional mechanism of devaluation would not work to correct unequal competition. The Government rejected the Socialist alternative. They rejected import controls in favour of the EEC and instead crudely controlled imports by cutting back on public expenditure and thereby creating unemployment. Because the Labour Government did not stand for the maintenance of public expenditure to fund our basic public services—health, education, housing, social services and the safeguarding of public sector jobs—we now see more savage and swingeing cuts being inflicted by a Conservative Government.
  It is more difficult than it should be for those of us who favour public expenditure to argue against these cuts, because the ground was undermined by the very conduct of the Labour Government—certainly by large sections of the Labour Party, but not of the labour and trade union movement. In 1975 the Labour Cabinet—I say this because I argued against those cuts then both in this House and in Wales—presented the first package of public expenditure cuts to reduce the trade deficit in order to bolster what is called confidence in sterling. The alternative strategy—a strategy which could have been based on import control, exchange controls and maintaining sterling without internal cutting of public expenditure—was rejected. Because of that conscious decision, because of the retreat by the Labour Government from a full employment strategy, we are now seeing a Tory Government taking these policies to their logical conclusion. They are attacking the public sector and rolling back the State, as we have heard ad nauseam today, as if the

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  State were not the guarantor of the rights of so many working people.
  In 1976–77 public expenditure under the Labour Government fell by 2½ per cent. In 1977–78 it fell by a further 7 per cent. Comparing the public expenditure White Papers of the Labour Government with what actually happened, we see a constant chronic underspending, as it is called. In other words, we not only have the indication of cuts in the White Papers, but in real terms the actual spending is even lower than the original projected reduced spending. While overspending is most carefully guarded by cash limits, underspending is tolerated.
  I look forward to seeing the Under-Secretary of State for Wales, the hon. Member for Conway (Mr. Roberts) continuing his campaign against the Labour Government's housing cuts. The hon. Gentleman vigorously attacked those cuts in a famous speech in this House which I have quoted throughout Wales. He rightly said—I agree with every word that he delivered—that it was wrong of the Labour Government to blame local authorities for underspending and for public sector starts plummeting and so on. I look forward to seeing an increase in the number of starts that will be made in Wales this year by his Government. I look forward to the contribution of his Government to public sector and local authority mortgages as a result of their present policy.
  Under the last Government we saw substantial reductions in public expenditure. The actual performance in 1978 was about £4 billion—about 7 per cent. —below the planned level of expenditure. If we look back at that period we can see that since the 1975 period of the previous Labour Government there were levels of public expenditure that were either unchanged or reduced in real terms. At the same time there was the beginning of an upturn in the levels of real output and expenditure in the rest of the economy.
  The previous Labour Government not only attempted to run a mixed economy; they successfully ran down the public sector of their mixed economy. In 1976–77 and 1977–78 the proportion of general Government expenditure on goods and services declined, while the rest of the economy, measured in terms of the GDP,
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  performed better and grew. Therefore, public expenditure and the last Government's conduct of it during their period of office was deflationary. Not only did they create or maintain unemployment but their performance in the public sector in terms of lowering public expenditure caused problems such as the problem of higher spending on unemployment benefit.
  Finally, I would argue in the kind of terms that have been argued most forcibly this week by the Supplementary Benefits Commission in its latest annual report. I address these remarks not only to the present Government but to the Opposition, now going through the necessarily agonising period of re-evaluating their performance. I say that as one facing the annual conference of my own party this week in Llandudno.
  This is what the chairman of the Supplementary Benefits Commission says in paragraph 120 of the annual report published this week. It is addressed to the present Government. It reads:
  "The Government is determined to reduce the numbers of civil servants and cut out unnecessary bureaucracy. The surest and safest way of doing both in the social security services"—
  and I would extend that to cover the whole of public expenditure—
  "is to ensure that unemployed people now relying on these services can instead support themselves. The Government is equally concerned lest people lose the will to work. A programme designed to improve incentives for work must start by ensuring that everyone has opportunities for work."
  Those of us who stand by, and believe in, public expenditure as the only way of planning our economy and ensuring an adequate standard of living for all our people will support the motion tonight.
  8.13 pm
  Mr. Ron Brown: Like other hon. Members, I shall be equally brief, because I understand that there are many who wish to speak in this debate. Having said that, I wish to be a little parochial.
  In Leith—my constituency—there is a saying. It is about the local football team "The Hibs". I do not known whether the House has heard it. The saying is this:
  "They might be bad, but at least they are consistent."

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  I think that that may be applied to the Government. They certainly are bad and they are certainly consistent. They are true to form, because they have continued with their class policies. They have attacked real wages through the Budget, and now they are continuing by attacking the social wage. That will mean real hardship for working-class families up and down the country—not only in Scotland, but in England, and, indeed, in Wales.
  We can see what is happening. We have heard repeatedly, tonight, from various hon. Members, exactly what is happening in their own constituencies. Certainly the elderly, the youngsters and the disabled will be under attack. There is no doubt about that. Professor Townsend spelt all this out in his recent book. Perhaps hon. Members have read the reviews of it in the press. But we do not need books to tell us that the working-class areas are suffering from poverty. It is discernible now. We just need to open our eyes and we can see it. Poverty is there. It is not just a statistic. But if we want statistics, we need only look at those provided by the EEC. What the EEC is saying is that living standards in the United Kingdom are now lower than those in Italy, which is a very poor country.
  I believe that we are seeing the investment strike extending from the private to the public sector. That is absolutely despicable. Many think that the Government have gone mad and that they are off their chump. This is not true. The Government are, of course, vindictive and reactionary, but they are doing their job. They are doing the job for their big business backers, and with a vengeance.
  The Government believe that they can solve the economic crisis of this country at the expense of working-class families. The Government will try to drive us back to the '30s if they can. They are determined to drive us back to want and hunger. They try to justify these cuts by saying that the Labour Government also did it. But two wrongs do not make a right, in my view. I am sure that many on the Labour Benches agree with that. If we extend that type of punishment, it is something that should be deplored even mote.
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  One of the reasons why the previous Labour Government lost the election—and we should reflect on this—is that they effected cutbacks of the public sector and also imposed the 5 per cent. wage norm. I hope that the Opposition Front Bench will appreciate that point.
  If there must be cuts, fair enough; let us cut out the luxuries and the inessentials. In my view we must tackle the profiteering and the interest payments, which are the heavy burdens which local government has to endure. Indeed, in the final analysis it is the working class that has to pay for this heavy burden. However, that kind of profiteering will not be dealt with, because interest and profits are the sacred cows of the capitalist system, and those on the Government Benches justify those sacred cows.
  When all is said and done, Labour did impose cuts, and I am not saying something that I did not say when I was a regional councillor in the Lothian region. I said all this then, and I repeat it again. and I say it because no Government have a right to destroy the country's living standards—even when the IMF says so. Nobody elected the IMF. The people of this country elected their Members of Parliament and councillors, not the IMF.
  But the Government are being selective. They are not against public expenditure in general. They are against the social services and say that they should be cut, as should the National Health Service. On the other hand, they say that they must increase armaments. Of course, they justify that through the Prime Minister, with all her bloodcurdling rhetoric against the Soviet Union. The motto of the Tory Government is "Guns before butter." That is ironic when one thinks of a certain German politician who also used that phrase.
  The Prime Minister thinks that she can conjure up a bogy man by using the Soviet Union as a threat. But if the Soviet Union did not exist, the right hon. Lady would have to invent it to justify her present policies. I am not here to justify the Soviet Union; I am merely pointing out an obvious fact. This is an old trick. If one conjures up a bogy man one can divert attention from things that go on in this country, such as the cutbacks and the attack on living standards. But this

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  trick will not work. The working class is already on the move.
  The trade union movement is no fool. It knows exactly what is happening. It realises that the conditions that exist today were won over many years of struggle, and that they did not drop out of the heavens like manna. The trade union movement had to fight for them. Therefore, it will not give them up. If the Government sow the wind they will certainly reap the whirlwind.
  The Parliamentary Labour Party must offer more than verbal opposition. It is certainly important to challenge the Government in the House, but we must rally support outside, because that is where our support lies. We must rally the trade union movement against the Government. If need be, Labour Members must again become street corner and factory gate agitators. Why not? That is how our movement developed. I agree with the slogan of Joe Hill" Don't lament, organise". We must organise. There are struggles ahead. By getting involved we can prove that we really are a fighting Labour Party that is worthy of the working class. We should get our sleeves rolled up and build up the pressure on the Government, and the sooner the better.
  8.20 pm
  Mr. John Browne: I listened with interest and a great deal of sympathy to some of the speeches from Opposition Members as the list of local government cuts was called out. Who would not have sympathy when services are cut? But it is absolutely wrong for Labour Members to give the impression that my right hon. Friend the Secretary of State is unsympathetic. I believe that he is. Indeed, we all are.
  The hon. Member for Greenwich (Mr. Barnett) gave a list of priorities in respect of one of his local borough councils. They were interesting priorities, but the hon. Gentleman failed to point out that these priorities were clearly given out by that local borough council. They were not given out by the Government. The right hon. Member for Mansfield (Mr. Concannon) said that one could not blame the local councils for creating these priorities, but that is just not true.
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  When I was a local councillor, for every £1 that we raised in rates only 4p was spent at the authority of the local council. That is wrong. That really is taxation without representation. The Conservative Government are dedicated to putting that right. So far as I can see, they are clearly putting authority and responsibility for local government in the hands of local councillors. Local councillors must, therefore, accept that when they make cuts they are the people who are responsible for ordering the priority of those cuts. It is utterly wrong to suggest that central Government have given that priority of cuts.
  The Government were faced with rapidly rising built-in inflation. In fact, the Rooker-Wise amendment built inflation into our system. That inflation had to be stopped, and the nation voted the Conservative Government into power to stop it. The Government have decided, as they were mandated to do, to carry out this difficult, often unsavoury but vital job. The Government's initial plan was to stabilise Government expenditure, not to cut it. Last year, total expenditure under the Labour Government was about £65,000 million. This year, Government expenditure will be about £75,000 million—an increase of £10,000 million. Therefore, it is a question of stabilisation rather than of cuts.
  Of course, local government is faced with rising costs, of which an overwhelmingly large element is the wages bill. If there is to be spending stabilisation, some services will obviously have to be cut. But it is the responsibility of local government to order the priorities. Therefore, it is utterly false to indicate to the country at large that central Government are ordering these priorities. That is just not true. It has been said in the debate that the Government are the sole guarantors of the long-term welfare of the work force. That is also untrue. The true guarantors of the long-term welfare of Britains work force are the satisfied customers of exporting companies.
  8.25 pm
  Mr. Allan Roberts: I shall deal briefly with one or two of the myths raised in the debate. When I informed the Secretary of State for the Environment that Liverpool faced a crisis of New York

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  proportions due to the 3 per cent. cut in the rate support grant increase order this year and the 5 per cent. cut next year, already announced by the Government, he said that obviously I did not know how the rate support grant worked. He had not yet announced the details and it was impossible for Liverpool to know in advance. If he means that the Government will alter the way that the rate support grant is distributed and favour areas such as Liverpool and inner city Merseyside and take money away from the shire counties, that is welcome, but if he does not do that Liverpool can guess the result. The situation will become worse if the Secretary of State organises the rate support grant as I suspect that he will—by shifting the burden on to cities. That will merely put more money into the pockets of areas such as that represented by the right hon. Member for Worthing (Mr. Higgins), who called for that shift to be made.
  How any hon. Member who has been a Conservative councillor in Liverpool can speak in a debate on public expenditure cuts and criticise the previous Labour Government is beyond me. The hon. Member for Liverpool, Gars-ton (Mr. Thornton), his colleagues in Merseyside and his Liberal friends have wreaked havoc in Merseyside by underrating, cutting public expenditure year after year, refusing to build council houses and being partly responsible for the underspending of moneys made available by the Labour Government to local authorities. They did not spend the money available on essential public services.
  A myth put forward by the hon. Member for Northampton, North (Mr. Marlow) is that those in the service industries do not make anything and are of no value. It is a myth that we do not need those people. They include the police, soldiers, judges, and hon. Members, all of whom have had large pay increases as a result of the present Government's actions. At the same time, the elderly and those in most need have been victimised by the Government cuts on local authorities and on area health authorities.
  We are entering upon a hard winter. People are frightened because they fear industrial unrest. I am also frightened about the possible consequences to the elderly when winter is combined with Government cuts. Many elderly people
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  will die during the winter who would not have died had it not been for the Government cuts in services.
  A massive attack is being mounted against the elderly by the Conservative Government. Those people least able to help themselves will suffer most. Let us look at the cuts already imposed upon the elderly in the community. Everybody should be concerned about those cuts—not only the trade unions, the Labour movement and Labour councils, but large organisations such as Help the Aged and Age Concern, which are being pushed into the political arena in a way that they find distasteful but necessary because of action by the Government and by many Conservative councils.
  Cuts are already made in domiciliary and community services for the elderly. I know because I am a social worker and I have worked with the elderly a great deal. The elderly want to maintain their independence for as long as possible, to live in their own homes and to have their own front door keys. In guaranteeing that, it is essential to maintain the domiciliary services of the local authorities. The elderly need home helps, meals-on-wheels, social work services and day centres. All these have been cut by local authorities as a result of the cuts in rate support grant. The policy of trying to maintain the elderly in their own homes is being abandoned because of this.
  Already the Conservative Government have abandoned the Labour Government's proposals to force councils to introduce free bus schemes. I represent a constituency in Tory Sefton which must be the meanest and most uncaring metropolitan district in the country. It does not give the elderly bus passes. It gives them a handful of tokens which run out after three months. After that, the elderly do not have any means of getting about. Had the Labour Government stayed in office they would have forced Sefton to introduce a bus pass scheme.
  Mr. Tristan Garel-Jones: Do I understand that, in supporting the alternative Opposition, as represented by the Bench below the Gangway, the hon. Gentleman is opposed to all cuts? If that is so, how would he propose to deal with the £4,000 million overspend which the official Opposition had planned? How would that be financed? Would it be

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  20 per cent. VAT, 40 per cent. on the basic rates, or a combination of both?
  Mr. Roberts: I am grateful for the opportunity to explain.
  I would not have cut taxes for the rich. It is a myth that if one cuts taxes for someone who is earning £20,000 he will work harder. I would have introduced a wealth tax, and certainly I would like to see a reduction in defence expenditure rather than an increase. There are a lot of other things I would have liked to see. However, I certainly would not like any Government to sacrifice the elderly for the sake of tax cuts for Conservative supporters who happen to be rich. I hope that the Government will change their mind and will implement the legislation proposed by the Labour Party to ensure that all elderly people, where-ever they live, are not insulted by the indignity of being given a few tokens instead of a bus pass.
  I turn to the consequences of the cuts for elderly people living in elderly persons' homes and in geriatric hospitals or geriatric wings of general hospitals. Many of these homes and hospitals are, now being closed or are under threat of closure. In the Sefton area health authority, the Southport geriatric hospital will be closed. In Liverpool Croxteth Lodge Home will shut and 30 elderly people are being "dispersed". I can only describe that as nothing short of administrative euthanasia. Imagine the situation in the Southport geriatric hospital. It will close in two years. As the elderly die, replacements will not be admitted. Those who are still alive will wake up each morning to see empty beds, knowing that if they are not dead within two years the home will close and they will be moved. Probably the move will kill many of them. That is the policy that is being pursued as a result of the cuts imposed on the Sefton AHA. How heartless can the Prime Minister and the Government get?
  There is another small problem of television licences. Had Labour remained in office the elderly throughout the country would have had a free television licence. We talk about the problems of loneliness. For the elderly something that can counteract loneliness is a television set. The promise to implement that policy
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  was not kept, but it would have been implemented if we still had a Labour Government. Therefore, there is the anomaly of some elderly people in my constituency, who live in sheltered housing or another form of communal living, receiving a television licence for 5p, and the vast majority, who live in their own homes and who wish to maintain their independence and not be a burden upon the public services, being denied a free television licence because the Labour Party lost the last general election.
  The Government score their bullseye as they hit at the old-age pension. They have announced that they will link future pension increases to average wages rather than to average price increases. The policy of the Labour Government was to link future pension increases to average prices or wage increases, whichever were the higher. If the previous Government had followed the policy now being pursued by the Tories, elderly married couples would be £5 worse off and the single elderly would be £3–30 worse off. The previous Government increased pensions and other social security benefits six times while they were in office. As a result, pensions were upped by 20 per cent. in real terms on the 1974 level when the Tory Government were defeated.
  The country will not tolerate the proposal being considered in the Department of Health and Social Security to raise the retirement age of women to 65. The fact that it is being considered and that no Government Front Bench spokesman has repudiated it is condemnation of the Government that they will introduce it. It comes at a time when we should be considering lowering the retirement age for men instead.
  There has been no mention today of the abandonment, which was announced earlier this week, of the electricity discount scheme. However, I am sure that, as a result of the cuts that have already taken place, many elderly people will die this winter. That will be as a direct result of Government action. The Government should be ashamed of themselves for what they are doing to the most vulnerable in our society. I predict that the cuts, alongside the cuts in income tax for the rich, are only the beginning. In his Budget speech, the Chancellor of the Exchequer promised that it was only the

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  beginning. If there are to be more tax cuts for the rich, how will they be paid for? Value added tax cannot continue to be increased.
  I believe that the Secretary of State for the Environment was wrong when he said that the tax cuts for the rich were not being paid for by the public expenditure cuts. I say that they are and that if there are to be more tax cuts for the rich, as the Chancellor has promised, the elderly, the sick, the disabled and others in need will suffer further.
  I believe in public expenditure. I believe that if public expenditure is increased the economy benefits and that the opposite is not true. I believe that most of the British people are in revolt against the cuts and that they realise that the cuts in public expenditure that were promised by the Tories at the election mean cuts not in waste or numbers of civil servants but in home helps, meals-on-wheels, children's education, essential social services, the Health Service and the services necessary to maintain a civilised society.
  8.38 p.m.
  Mr. John Meddle (Lichfield and Tam-worth): I am most grateful, Mr. Deputy Speaker, for catching your eye at this stage of the debate, and I shall be brief.
  Too much class warfare has been creeping into the debate. In the few minutes available to me I should like to find some areas of common ground between both sides of the Chamber. I believe that several ideals unite us. First, as a nation we believe in personal freedom, in public morality, in prudent finance and in a sound state of the nation and its defence. Therefore, it comes ill from Labour Members to criticise expenditure that has justifiably been made on the police and the Armed Forces.
  The state of the nation and its defence is the prime responsibility of a responsible Government. Another major responsibility of a responsible Government is to practise prudent finance. In our family lives, we cannot spend more than we earn. Our constituents cannot spend more than they earn. The Government cannot spend more than they earn and as a nation we cannot spend more than we earn. As a nation we have been spending more than we have been earn-
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  ing. It is for that reason, and because it has been so easy to run to the printing presses and the vaults of the Bank of England, that we find ourselves in a parlous, near bankrupt state.
  "Cuts" is an emotive word. Shall we talk rather more about the economies that we would practise in our everyday lives and the savings that we would have to make if the going were tough and if we were not earning as much as we were spending? The Government were elected to cut down waste. I ask Labour Members, before voting tonight, to look at their own local authority and ask "Is there no waste in our councils? Is there no room for savings? Is there no department, whether in central Government, county government, local authority or area health authority, where savings cannot be made? "Only if hon. Members opposite can honestly say "There is nowhere that economies and savings can be made" should they vote for the motion.
  The Government are dedicated to preserving the standard of life of those genuinely in need—the elderly, the infirm, the handicapped and those who are unable to look after themselves. Surely there should be opportunities for the rest of us to look after ourselves. Is it not time that each of us looked at his own local authority's direct works departments and asked them to compete with the private sector? If they are not capable of competing on equal and profitable terms they should be dismantled. That would produce savings and economies, not cuts. The building industry is crying out for skilled labour in the private sector. Those employed in the public sector could gainfully be employed in the private sector and so help generate real work in the construction industry.
  Mr. Bob Cryer: I am always amazed when Tories start talking about selling things off to private enterprise, as the hon. Gentleman is suggesting in relation to direct works departments. If that is such a magical cure, why do we not sell off defence to private enterprise? Why do we not sell off the Army and let a contractor, such as Securicor, run it? Why do we not arrange for a private enterprise firm to run the Royal Navy or the Royal Air Force? It is the same principle, yet the Government are spending more money on public enterprise in the defence sector,

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  where it is not necessary, while cutting down elsewhere and urging local authorities to shove out their direct works departments to private enterprise.
  Mr. Heddle: I am grateful to the hon. Member for Keighley (Mr. Cryer) for almost agreeing with my opening remarks that the state of the nation and its defence is the number one priority for a responsible Government practising prudent finance. It is most irresponsible of him at this late hour to suggest that our defence should be passed out to private enterprise.
  I simply said that we as a nation could not spend more than we earned. Direct works departments cannot spend more than they earn for the ratepayers whom they are supposed to serve. Unless the nation and the Government practise prudent finance, as the Government are doing, then, to use the words of the hon. Member for Bootle (Mr. Roberts), the nation will suffer self-inflicted euthanasia.
  8.45 p.m.
  Mr. Michael Meacher: Nobody who has listened to the debate and who has tried to understand the Government's plans can have any doubts about the seriousness of the preventable misery and hardship that will be caused by the Government's public expenditure cuts. The debate has tended to focus on how these can be imposed with least misery. What has not been discussed, and what I want briefly to discuss, is whether cutbacks of this degree of severity are necessary at all and what alternatives, if any, exist to meet the economic goals required. There has been far too little discussion of the merits of the Government's case in going for public expenditure cuts at all.
  Treasury Ministers have claimed that the purpose of these cuts is to stabilise public expenditure at its level last year. Until the public expenditure White Paper is published, it is difficult to know the Government's plans precisely. But the Government's plans for 1979–80 can, I think, be said to hold public expenditure at the level of 1978–79 in volume terms—in other words, the volume of services remains the same as in 1978–79, although about 3½ per cent. less than was originally planned by the Labour Government. In
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  answer to the hon. Member for Lichfield and Tamworth (Mr. Heddle), we are talking about a great deal more than simply cutting out waste. We are talking about huge public expenditure cuts which will damage the standard of living of the vast majority of families in this country.
  This is, first of all, a selective cutting of public expenditure. It is not that the Government believe in cutting public expenditure in general. At the same time as the Government are making cuts in housing, health services, education and other necessary srevices for the health and welfare of the elderly, children, the handicapped and other under-privileged groups, they are also contemplating a huge expansion of public expenditure, particularly in the replacement of Polaris by a new nuclear weapons system, perhaps the Trident system, at a cost estimated to be in the order of £3,000 million to £4,000 million, an expansion of the police and the security services, the Special Patrol Group and similar bodies, and huge salary increases for the Army, for police officers, for judges and for civil servants—for all the repressive apparatus of the Prime Minister's brave new authoritarian State.
  We are not seeing an across-the-board cut in public expenditure, but we are certainly seeing some huge cuts in certain sectors. The Chancellor's answer is that the growth of the money supply was getting out of hand and it was therefore necessary to rein in the public sector borrowing requirement to reduce the money supply and that the main method was through public expenditure cuts. That is not an unfair statement of the Government's case. I believe, however, that each of the three legs of the argument is wrong.
  The argument hinges on the view that monetary growth is the prime cause of inflation. This is extremely controversial, but there has been little discussion on this in the House. As a cause for political action of this kind, it is very much an unjustified case. The money supply offers very different relationships with inflation, according to one's definition of the money supply. If one takes a different definition from M3, one gets a very different result.
  Secondly, monetarism explains the connection between money supply and inflation rates only in terms of lags, which

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  cannot be predicted in advance. It is fair to say that this theory, much supported in Chicago and Whitehall at present, is little more than a rationalisation after the event.
  Thirdly, monetarism does not explain how money supply increases are converted into increases in inflation. I realise that the Government's new chief economic adviser is a believer in the international monetarism idea that this is through the medium of the exchange rates. But this is extemely controversial and very far from proved. Above all, I ask the Government to take account of international experience, which does not bear out the importance that the Prime Minister gives to containing the money supply. As experience in West Germany shows, a rapidly increasing money supply is perfectly compatible with a fairly stable inflation rate. That example deserves particular study. In other words, there are many other causes of inflation than increases in the money supply. So the first arm of the Government's case is highly dubious, to say the least.
  Secondly, there are clear reasons for questioning the second arm, even if one believes the first, of the Government's case—that the PSBR needs to be cut back as a means of reducing the money supply. The Government's case for this is that otherwise it would involve actronomic increases in interest rates to restrain private lending. I concede that the Government's guidelines for M3 growth of 7 per cent. to 11 per cent. have been breached by a rapid increase in the money supply in the first few months of this year. It dipped, rose again in April, was increasing by about 14 per cent. up to July and has subsided since.
  But the cause of this process—this is the chief point—is not increased lending to the public sector; it is massively increased lending to the private sector. In the first quarter of this year, bank lending to the public sector, which had been running at over £1 billion in the last quarter of last year, was actually eliminated and replaced by borrowing from the public sector in the first quarter of this year to the tune of almost £1 billion.
  On the other hand, bank lending to the private sector, which was already very high at £1·4 billion in the last quarter of last year, actually soared at the begin-
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  ning of this year to £2·7 billion in the first quarter—a rate which was maintained in June, although I recognise that it has somewhat subsided since, in July and later.
  Not only that, but the Chancellor had already budgeted for a reduction of the PSBR in the Budget. It was previously 5½ per cent. of GDP and he budgeted to reduce it to 4½ per cent. Why on earth cut the PSBR again when it has already been cut and when the money supply is being inflated by soaring lending to the private sector, not the public sector?
  The Government's argument, of course, is that they cannot restrain lending to the private sector because the minimum lending rate is already at the very high level of 14 per cent, and a higher rate would choke off borrowing for industrial investment and encourage much bigger inflows of money from abroad.
  The first argument against this is that there are other means for restricting private bank lending to the private sector. There is the regulator provided by the supplementary deposits to the Bank of England; there are the official guidelines on priority lending for the banks, which up to now the authorities have not exercised at all rigorously. Lending for private consumption is already roaring away at far too high a level if one is contemplating public expenditure cuts.
  Would it not, therefore, be far more relevant and sensible to use existing mechanisms to hold back the real culprit, which is the rapid expansion of lending to the private sector, and to apply the guidelines on bank lending very firmly?
  Nor is the argument about the inflow of funds from abroad a particularly serious obstacle. Perhaps the best solution for this, on the Swiss model, would be a two-tier interest rate structure differentiating between domestic and overseas operators and offering inflows from abroad perhaps even a negative interest rate. That would be a far better way of cutting back inflows from abroad. If the escalation of monetary growth can there fore be restricted in these alternative ways, the third arm of the Government's case—that the best way of cutting the PSBR is through public expenditure cuts—completely falls.
  There is nothing sacrosanct about a public sector borrowing requirement of

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  £8½ billion, nor about freezing public expenditure at 1977–78 levels in real terms, which the Government have said is their ultimate aim. Both of these are purely political artefacts which obviously can, and certainly in this case, should, be changed in the light of changed economic circumstances. I hope that the Government will note that not only Left-wing economists but City economists and the new Government economic adviser have said that the different economic circumstances do not justify the maintenance of the PSBR ceiling.
  The Economist, which is not a scary Left-wing magazine, has said that keeping the existing PSBR ceiling, and imposing swingeing public expenditure cuts, will lead to unemployment of 9½ per cent. by the end of 1981—that is, about 2¼ million—a 5 per cent. cut in output and a 15 per cent. cut in investment.
  The rigid maintenance of the PSBR ceiling in today's circumstances and the imposition of swingeing public expenditure cuts at the same time as a free-for-all in incomes is a recipe for pushing the country from its present recession into a full-blown slump. That will cause untold misery. The Government will largely be responsible for that.
  8.55 p.m.
  Dr. Oonagh McDonald: In the five minutes available to me, I shall try to outline what is going on in my area.
  The Secretary of State talked about waste in public spending. He challenged my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) to say whether there was any waste in public expenditure on education and social services which he thought should be cut. The Secretary of State is not in a position to ask that, because he has approved what local authority representatives have said about public spending cuts, and abolishing free school milk, free school transport, nursery education and so on.
  The Secretary of State referred to such cuts with approval and suggested that they should be the start of public expenditure cuts. He has not discussed ways in which bureaucracy can be cut. He has not talked about ways in which waste in local authorities can be eliminated.
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  The Secretary of State has said that Government policy will lead to an increase in rate support grant and public expenditure for some local authorities—namely, the shire counties—at the expense of the urban areas. I represent part of a shire county. Under the Labour Government last November, that local authority received an extra £6·4 million to enable it to deal with the problems created by a rapidly expanding population, including many young and elderly people. This year it will lose £6·3 million from its Government grant. No doubt next year further cuts will be imposed.
  Extra spending needed for the increased elderly and young population has been cut out completely this year. In its efforts to save money, Essex county council has indulged in petty and mean ways of raising extra revenue. The council will charge 20p per day for day care transport; it will increase the charges for day centre meals. Those people who are entitled to free telephones must pay for their calls and the county council has discovered that some people make too many calls. When an average bill exceeds £10 per quarter, a minimum of 50p a week will be charged towards the telephone rental.
  The county is to impose charges on the sale of aids to handicapped people, excluding those who are in receipt of supplementry benefit. It will impose handling charges on aids costing more than £10.
  Those are the types of meannesses and ways of raising small amounts of money to which such a county council is driven, partly because of its commitment as a long-standing Tory-controlled council and partly because of the cuts imposed by this Government.
  Many of the cuts imposed are not even sensible; they do not save money. The women's refuge centre in Thurrock is to be closed because the Manpower Services Commission money which supported two full-time members of staff is being withdrawn. Social Services cannot take on that commitment because they have to cut their spending by over £1 million this year. That means that those women will, no doubt, make greater use of the National Health Service. It also means that more children will be battered; they

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  will arrive in hospital and come under the care of the social services.
  Nothing said by the Secretary of State in his facile speech justifies those inhumane cuts in public spending. He could justify them neither in those terms nor in terms of the supposed benefits to the economy. No doubt we shall hear nothing further from him tonight to explain why the Government think that they should take it out of the poor, the needy, the elderly and the young and why they should divert resources away from those people into the pockets of the wealthy.
  9.1 pm
  Mr. Stanley Orme: We have had a major debate on the Government's public expenditure policy. It is the first of many such debates which will take place inside and outside the House. Concern has been reflected, in views from both sides of the House, about the effect of the proposed cuts.
  It is my pleasant duty, first of all, to congratulate the two maiden speakers we heard today. The hon. Member for Bristol, West (Mr. Waldegrave) made a witty and thoughtful speech. No doubt he will return to his vein of cynicism again and no doubt the Conservative Front Bench will, from time to time, feel the effect of his views.
  I also congratulate my hon. Friend the Member for Manchester, Central (Mr. Litherland). His speech was a breath of fresh Manchester air which swept through the House. It was interesting to hear two maiden speeches by hon. Members who have just returned from the hustings. Both were political speeches which I believe were appropriate in a debate of this kind.
  The Secretary of State offered some predictable and desperate defences of the Government's policies, even though the Tories are divided as to whether the cuts are necessary, whether they are simply a temporary evil, or whether they are even desirable in principle. The latter view mainly prevailed during this debate.
  The Secretary of State tried to prove that the poor would not be financing tax cuts to benefit the rich. But did not the rich get more from the tax cuts than the poor? Of course they did. Who is now bearing the brunt of the spending
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  cuts? Those in need. That point has emerged very clearly indeed from the debate, not least from many of my hon. Friends on the Labour Benches.
  Let me remind the Government of some of their broken promises—promises broken since 3 May. The Prime Minister said in an election speech at Beeston that the Tory Party had no intention of raising prescription charges. What has happened? Prescripton charges have risen to 45p. The Tories also said that it was not their intention to reduce spending on the National Health Service. Yet the VAT increases, for which the Government are directly responsible and in respect of which they refuse to compensate, mean an effective cut in the National Health Service budget.
  Of course, they have kept their promise to cut public expenditure, but they gave a clear impression to the electorate that it could be done by reducing top-heavy administration and waste, and that it would not hurt. However, the people at the sharp end—those in local government who have to implement the policy and take the decisions—know that this is nonsense.
  The Conservative chairman of the policy committee of the Association of County Councils, which was referred to earlier today, has said that county councils should be run efficiently, and he claims that all Tory county councils are. He said that bureaucracy had already been cut back and went on to say that of course he expects the cuts to hurt, adding that that was inevitable.
  Even the CBI, in conducting a survey of local government in Cheshire recently, said that it would be difficult to make cuts in residential services without causing real hardship to patients. Nevertheless, Cheshire is going ahead with the closure of four children's homes and a holiday home for the elderly. Through their association, the directors of social services have already made a devastating analysis of the cuts. They say that it is not possible to achieve these cuts by good housekeeping alone. They also say that real reductions in services to clients have proved to be necessary. For instance, 58 homes for children, the elderly and the handicapped are scheduled for closure or will not be opened this year in a total of 60 authorities. One director has

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  reported that cuts of 5 per cent. to 7·5 per cent. over this year and 1980–81 mean that his authority will be unable to fulfil even its statutory responsibilities. The Secretary of State is obliged to answer that point when he speaks tonight.
  It is not just where the cuts will fall that is damaging. The Personal Social Services Council has also commented on how the cuts have been made. It says:
  "There has been a tendency to look for quick savings and little evidence of any attempt to protect the most vulnerable groups."
  Conservative Members should take particular note of the next quotation:
  "Economies have been made which are likely to impede the long-term planning and abruptly decrease the efficiency with which scarce resources are used."
  This much is clear, therefore. The cuts will hurt, and the directors of social services and the Personal Social Services Council—both groups having undertaken nationwide surveys—have shown that the elderly, the handicapped and the preventive services are bearing the brunt. In other words, the cuts are hitting hardest at the weakest and most vulnerable sections of our society. The reports of these two groups are a damning indictment of Tory Government policy.
  It has been suggested that Labour cut back on the services to the disabled and elderly during its period of office. Let me quote figures which are all at 1978 survey prices. In 1973–74, we spent £6·5 billion on pensions for the elderly. In 1978–79, the figure was £8·3 billion. I turn next to the disabled and the long-term sick. We spent £1,190 million in 1973–74, and in 1978–79 we spent £1,750 million. Those figures demonstrate the amount of increase, and a similar story can be told in respect of help for families, particularly bearing in mind the Labour Government's introduction of child benefit.
  It is important that we give examples of the cuts, and many examples have already been given by my right hon. and hon. Friends. We do not have to search for the cuts. It is not as if we are scraping the barrel. Cuts are evident throughout the country, whether it is Merseyside, Preston or the shire counties.
  I shall give some specific examples. Kent county council will be closing seven
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  or eight children's and old persons' homes over the next 18 months. There are 1,300 vacancies already frozen, yet the council is still aiming for 5 per cent. more cuts next year. Hampshire is increasing its meals-on-wheels charges to 50p. There is to be a minimum charge of £1 a week levied on every elderly person having a home help. The opening of a mentally handicapped hospital is to be deferred.
  In Northumberland the home help service is being cut by 7½ per cent. Day care charges are more than doubling. Holidays and telephones for the handicapped are being reduced. East Sussex is to close six homes for the elderly and Essex is closing a home for the mentally ill.
  Lancashire is drastically pruning its nursery programme. We are told that £20,000 is being saved this year. Six nursery schools that are already built, created and ready to open, will now not be opened by the county council. I understand that 70 jobs are being lost by the fire service. My hon. Friend the Member for Preston, South (Mr. Thorne) has dealt with that. Many vehicles in perfect working order are being kept out of use. For example, a 70 ft. hydraulic vehicle used for emergencies in high flats and hotels in Blackpool has been withdrawn from service.
  I have given the House a selection of examples. As I continue I shall give more illustrations. These matters must be firmly put on the record. It may well be asked "Never mind about current cuts, what about 1980–81?" That period will be even worse. We have already been warned that what we are seeing now is merely the beginning. We have not seen half of it yet.
  We await with trepidation the announcement of the rate support grant settlement for 1980–81. No wonder the Secretary of State for the Environment said that we had not seen it and that we should not speculate. When we see it we shall understand the size of the cuts that the Government are proposing. Local authorities have already been asked to think in terms of an extra 3 per cent. reduction next year in front of the rate support grant, but it could be far worse.
  Social services directors are already predicting that a further 52 social service

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  establishments will close, or not open, next year. We must not forget that while resources are diminishing, the needs of the elderly, the handicapped and the disabled will continue to accelerate. We are not talking about bureaucratic waste. I hope that the Secretary of State for Social Services will listen. It is an important debate.
  The Secretary of State for Social Services (Mr. Patrick Jenkin): My right hon. Friend the Secretary of State for the Environment and I were agreeing that the right hon. Gentleman had misunderstood the reduction for next year. The facts are simple and he may as well get them right. My right hon. Friend asked for a reduction in local government spending this year compared with last year of l½ per cent. Next year we are looking for a further 1 per cent. That is all.
  Mr. Orme: We have the rate support grant settlement to come on top of that.
  When we talk about cuts we are talking not about bureaucratic waste but services provided for real people in need. We are talking about the support which is essential to many of them being stopped—for example, telephones, aids and adoptations for the disabled, the elderly facing fewer day centres, having fewer hot meals, less help in their homes and substantially increased charges. We are talking about the closing down of facilities for the mentally handicapped so that families have no break from the intense strains of caring for their own, handicapped children losing the opportunity to leave cold and impersonal institutions in favour of the warmth of community care—[HON. MEMBERS: "Come off it."] Hon. Members say "Come off it" but I am talking about the realities. This is what it is all about. Public expenditure cuts mean that those affected will suffer. The vulnerable in our society will suffer. I ask a question. Is this what the people voted Conservative for? Of course not. However, I have no doubt that the people will make their views known when the local government elections take place.
  Reference was made to the hon. Member for Cheltenham (Mr. Irving), who had the courage to say that only over his dead body would a home in his constituency close. Apparently he is still with us. That was an indication of a Conservative Member of Parliament who
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  could not face the realities of Government policy.
  We have suffered a great deal from the lectures of the Prime Minister on good housekeeping and other topics. I question the housekeeping practices behind the cut. I suggest that they are shortsighted, false economies. Many of them will lead to increased expenditure elsewhere, now and in the future. Far from constituting good housekeeping, they show an unwillingness to think through social and economic realities.
  I quote the example of community homes for children whose parents, for one reason or another, cannot cope. The county of Avon is closing two of its homes almost immediately. It is reducing the number of places in several others. It is by no means the only authority doing that. What are the likely consequences? Children who have been brought before the courts will be returned to their own homes. They will either get into trouble again, resulting in more expense to the legal services, or put further stress on families, resulting in family breakdown and increased demand on the National Health Service. What is the sense of that?
  Local authorities' social services departments are also responsible for running intermediate treatment programmes, which are often a successful alternative to custodial care. Many of those programmes are under threat, which can only result in more pressure on the probation and prison services. That is hardly a cost-effective measure. But what did we hear at the Tory conference? The Home Secretary advocated the establishment of detention centres, increasing public expenditure in that way, and the closure of intermediate centres at the same time. How nonsensical can one get?
  Much more costly in the long term is the inevitable reduction in services to the elderly, such as home helps, day centres, meals-on-wheels—the essential preventive services. Without them, believe me, some people must suffer. In their absence old people will no longer be able to stay in the community among family and friends. Nor will they necessarily be able to find a place in a residential home, as such homes are being closed all over the country. Where will those people end up? The answer is that they will end up in

  541
  already over-pressed hospitals, taking up beds which could be used to reduce waiting lists.
  Pensioners already take 50 per cent. of acute hospital beds, as the Minister is aware. Alternatively, once an elderly hospital patient has been cured of a medical problem he or she may not be discharged if the alternative arrangements are inadequate. Does that make financial sense? Of course not. It is saving with one hand and spending with the other, and often with less good results. The other effect is that it removes the freedom from the individual to choose whether to stay in his own home, obtain the support services or go into an institution. Is that Tory freedom?
  Let us look at the example of education. The Buckinghamshire county authority said that a 3 per cent. cut in the education budget would entail the ending of all swimming classes for all its children. How many authorities may be forced into making that kind of saving, if not this year then next, or the one after? Has the Secretary of State for Education thought about how many children may drown as a result of that, and the cost in human misery and financial terms?
  It is no good the Secretary of State for Social Services prating on about how the voluntary sector will step in and fill the gap. As the Association of Directors of Social Services said in its survey on the cuts, its members have not been able to prevent cuts in grants aimed at these voluntary bodies. Voluntary organisations, like everyone else, need money if they are to provide a reliable, responsible and comprehensive service. Families will not be able to step in with any enthusiasm, as the family support services are being seriously undermined.
  I now come to an aspect of the cuts—and of the Tory economy policy more generally—that needs to be discussed. I refer to the uneven and unequal way in which the burdens involved in the so-called economic recovery have been spread. In the name of incentives, of efficiency, of monetarism, the rich are to get richer, and to get more and more privileges, at the expense of the poor, the sick, the handicapped and the elderly—all those who are most vulnerable.
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  Let me offer some examples. The unfairness of the tax handouts in the last Budget is well known and I do not need to labour that point, although it has been forgotten that the abandonment of Labour's planned child benefit increase meant that families with children came off worst. The assisted places scheme provides another example. As my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) said this afternoon, £65 million is to be spent on sending bright children in State schools to private schools, thus extending privilege. At the same time the State sector, which educates over 90 per cent. of our children, is having to cut back on essential books, equipment and maintenance, as well as on in and out of school activities, while pupil-teacher ratios will also be adversely affected. This is how inequalities are developing.
  I make no apology for mentioning again the disastrous statement of the Secretary of State for Social Services on Monday about the virtual withdrawal of help for the poor with their fuel bills. A measly £16½ million is to be spent this winter, compared with £45 million under Labour last winter. The electricity discount scheme is to be scrapped. Families with older children will be ignored. Not surprisingly, as the Secretary of State will be aware, the organisations which speak for the poor are already up in arms—almost in a state of disbelief—at the full extent of the Tory meanness. The Government say that they cannot continue borrowing. But they have found the money for tax cuts for the better off. Once again the poor have had to suffer so that the better off can be made richer.
  In the Health Service the same sort of thing has happened. Consultants are being looked after. They have just had an increase of 26 per cent., without having to bat an eyelid. The Government are ensuring that private practice will thrive, but what about the National Health Service? The Tory cash limit squeeze is leading to real cuts in services. Four hospitals are to be closed by Merton. Sutton and Wandsworth area health authority. Wards are to be closed. In Medway, even a cancer ward is to be closed. Whole units are being closed all over the country. The Kent AHA estimates that the VAT increase alone will account for an additional £800,000 this year and £1 million

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  next year. Will the Secretary of State tell us by how much VAT will increase the National Health Service total expenditure? Forty beds are to be removed from the Hospital for Sick Children at Great Ormond Street. This is money that comes not from area or regional health authorities, but directly from the Minister's Department.
  I turn now to private medicine. Attempts to cope with the increasing demand for health care by turning to the private sector and voluntary contributions either will not work or will encourage the creation of a two-tier Health Service with, once again, the tables rigged against the poor in our society.
  For example, a general practitioner in Coventry has recently gone wholly private. He charges 60p per week per patient for registration, 50p for consultation and at least £1 per home visit, depending on the hour. But he is not prepared to cope with the chronic sick or with cases where expensive medicines are required. According to the medical magazine Pulse last week, he said that he would send such patients either to a sympathetic National Health Service GP or to a NHS hopsital. That is the morality of private practice.
  Similarly, BUPA and the like will not insure people approaching old age. A pensioner who tries to get insurance with BUPA will soon be told that BUPA is not interested.
  The Tories' double standards apply even to pensioners and the disabled. So much for the empty pious-sounding hopes of the Secretary of State and his team. "Let them alone", he implores the local authorities. Yet, as I said earlier, the Association of Directors of Social Services has stated that it is the handicapped and the elderly who will suffer most because of the method and extent of the cuts required. What has happened to the philosophy—which I believe is shared by the whole nation—that the broadest backs should bear the greatest burdens? If the Conservatives are abandoning this fundamental tenet of fairness, let them stay so.
  The difference between Labour and the Conservatives is now clear. It is a fundamental difference in philosophy. Labour believes in the Welfare State and is fully committed to public expenditure because it protects the weak in our society. The Tories are for dismantling our welfare ser-
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  vices. I hope that after this debate no one will still believe that the savings will come from eliminating waste. They will not. They are biting into the essential services which millions in need rely upon for a dignified life.
  The Secretary of State for Social Services recently commented that I waxed hysterical on this subject. I remind him of his own reported comments in The Guardian, which he has not denied even in a letter to me, on some of the proposals for cuts put frward by his Department. He is quoted as saying:
  "No Government which had not taken leave of its senses would implement these cuts in the short term."
  If they do not pose a threat to the Welfare State why will he not discuss the proposals for cuts put forward by his Depart-that question.
  I also remind the right hon. Gentleman of the social services director to whom I referred earlier, who said that he might not be able to meet his basic statutory responsibilities. That would be shameful.
  The Labour Party unashamedly supports public spending because it increases freedom. It releases people from fear of sickness, unemployment and old age. The Tories pretend to be the champions of freedom, but it is freedom only for the few, not the many.
  The moral to be learnt from this Tory Government is clear: "You are all right if you are well off. But do not be disabled, sick or unemployed and, above all, do not grow old."
  9.29 p.m.
  The Secretary of State for Social Services (Mr. Patrick Jenkin): The debate has been made more interesting by two excellent maiden speeches.
  I should like first to congratulate the hon. Member for Manchester, Central (Mr. Litherland), who made a very robust speech in which he paid generous tribute to his eminent predecessor whom we all remember and loved. I always looked upon Mr. Harold Lever as an ally. On more than one occasion I joined forces with him in trying to press financial sense upon a reluctant and obtuse Labour Government. I should like to think, however improbable it may seem, that I could enjoy the same relationship with his successor.

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  My hon. Friend the Member for Bristol, West (Mr. Waldegrave) made a speech which was at once graceful, witty and impressive. It was imbued with the authentic spirit of Tory democracy, in the tradition of Disraeli, Randolph Churchill and Iain Macleod.
  The speech, at the outset of the debate, of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) was characteristically bellicose. He reached a succession of crescendos only to find that each was punctured in turn by interventions from my right hon. and hon. Friends. It was the kind of speech which I am sure the right hon. Gentleman enjoys making in front of the mirror, because the mirror cannot answer back.
  The right hon. Gentleman chided me for making what he described as a misleading statement about pensions in a Radio 4 interview this morning. What I said was the simple truth—that next month pensioners would get the biggest ever cash increase, and it will include increase which was paid by the Labour making up the shortfall on last year's Government.
  If we are to discuss radio broadcasts—it was the right hon. Gentleman who introduced that one—I must point out that there was quite a serious inaccuracy in his reference to pensions during his interview. I have the transcript here, and he said:
  "Had there been a proper pension increase, it would have gone much further. The Tory Government has actually reduced the amount of the increase to which the pensioners are entitled."
  That is, quite flatly, inaccurate and untrue, and the right hon. Gentleman knows that it is untrue. There is no way in which the statutory obligation could be interpreted to have justified a bigger pension.
  But that was not all. In his speech this afternoon the right hon. Gentleman sought to argue that the increase in VAT for local authorities was leading directly to reduced services. He is totally wrong. He must have forgotten that local authorities are entitled to reclaim all the VAT that they have paid for goods and services. Therefore, they are effectively insulated from changes in the level of VAT.
  It is interesting that when the right hon. Gentleman seeks to illustrate his
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  argument with facts he gets them wrong. The right hon. Gentleman even got the reasons for the debate wrong. He gave us three high-sounding reasons why the Opposition had mounted this debate this evening. Of course, he omitted the fourth and real reason. It is only by confining their efforts to attacking the Government that the Opposition have any hope of concealing the divisions in their own party. The philosophic divide is a gulf on the Opposition Benches.
  The right hon. Member for Salford, West (Mr. Orme) referred to the National Health Service. I should like to say something about the squeeze on health authorities this year. In the debate on 17 July—also a Supply Day debate—I explained, with considerable frankness what was involved in adhering to our predecessor's policy of asking health authorities to live within the cash limits that had been set at the beginning of the year.
  The right hon. Gentleman asked for the figures. I estimated then that the squeeze would amount to about £90 million to £100 million, of which about £40 million was attributable to VAT, since health authorities are not insulated in the same way as local authorities are. But the balance of £60 million was directly attributable to decisions taken by the Labour Government. Higher inflation, and the £3·4 million offset that we made to the funding of the Clegg awards for ancillaries and ambulance men, has pushed the squeeze to about £120 million to £125 million.
  The right hon. Gentleman asked how this could be reconciled with our manifesto commitment not so cut NHS spending. The fact is—it is as well that the House should recognise it—that we have increased spending on the NHS by honouring the post-dated cheques for pay settlements, so far amounting in total to about £250 million. We have increased the cash limits for the Health Service by £250 million to fund those pay settlements. Our predecessors left us with commitments arising from the Clegg Commission, but they had failed to make any provision for financing them.
  We have had to pick up the tab, and there is more to come. We have not yet had the Clegg Commission's report on nurses' and midwives' pay, and this too can be expected to require substantial

  547
  additional funding which we shall have to find. It is a fact that by the time all this is done the total additional funds that we shall have made available to provide for pay increases will be well over twice as much as the squeeze on services which health authorities are having to make.
  Here I pick up the point made by my right hon. Friend the Member for Worthing (Mr. Higgins), because there is a very important lesson to be learnt from all this. If pay pre-empts too high a proportion of the money available, whether to fund the NHS or any other publicly funded service, the result must be either a reduction in services to patients or a loss of jobs to staff, or both. As we enter the next pay round, I very much hope that all those on both sides who are concerned with negotiations in the Whitley councils will bear that fact in mind. For me there is no sadder sight than that of a union striking for higher pay, and then when higher pay is won demonstrating against the economies needed to finance it.
  Mr. Norman Buchan: The right hon. Gentleman complained that the Government were compelled to honour the commitment under the Clegg report and other pay increases. Is he saying that the Government are not in favour of an increase in wages for health workers, including nurses? Is that what he is deploring?
  Mr. Jenkin: Of course we are in favour of people in the Health Service or anywhere else being paid a proper wage for their services, but we are making sure that the specific restrictive practices and other bad working practices which the Clegg Commission identified will be squeezed out, because we have asked for an offset against the funding that we made.
  The right hon. Member for Sparkbrook asked about the future. There have been some rather wild statements about what will happen in the Health Service next year. I can assure the House that we shall honour the undertaking that we gave in the election to provide for the planned growth of Health Service spending as set out in last year's public expenditure White Paper. That was the commitment we gave during the election, and it is a commitment that we shall honour. The Health Service can, therefore, look
  548
  forward to a modest growth in real spending next year, and health authorities should approach the economies that they are having to make this year in that knowledge.
  I have never concealed from the public or the House that I recognise that some of this year's cuts will be painful. In general, health authorities have responded very well to my request to achieve economies with the minimum impact on patient services. They have done so by cutting back on capital spending on new developments as well as by stringent housekeeping economies. I am sure that the House will applaud, as I have done, the staff in hospitals such as that at Beckenham who by their own efforts are aiming to cut out waste in order to achieve the savings for which they have been asked, and which would otherwise have meant the closure of wards. That is a sign that morale in the health services, so seriously damaged by last year's industrial dispute, is on the mend. Given the right leadership, the health services staff, clinical and non-clinical, managerial and ancillary, can and will work together to ensure the maintenance of services to patients.
  I have been asked about the Lambeth, Southwark and Lewisham health authority. It is two and a half months since that authority decided not to take the steps necessary to bring its spending within the limits of the money available. That forced me to take action under the National Health Service Acts and put in commissioners to carry out the authority's functions. I pay tribute to Sir Frank Hartley and his fellow commissioners for the firm, fair and resolute way that they set about bringing the affairs of that authority under control.
  If the problems of that authority had been tackled in earlier years, as they should have been—although the right hon. Member for Norwich, North (Mr. Ennals) encouraged such action, he did not press it home—the problems would have been less serious this year. The overspending was allowed to drag on year after year, to the serious detriment of other areas in the region that have substantial pockets of deprivation but cannot get the funds needed to bring their services up to the required level. Other area health authorities in London and elsewhere face difficult decisions, but I have been impressed by the way that they

  549
  have set about making the necessary economies, reorganising their services, and recognising the reality of the problems faced by the nation.
  The hon. Member for Colne Valley (Mr. Wainwright), as spokesman for the Liberal Party, said that as the cuts were being made every closure and every saving would be blamed on them. There is a risk of that and we cannot avoid it, but we know it is not true. Perhaps other hon. Members heard Mary Goldring's radio programme last night, in which one speaker made it clear that the closure of a large outdated old people's home had been scheduled to happen anyway and that the residents would move to smaller, more modern and more human surroundings to the great advantage of all. Yet that was paraded as a cut as a result of the economies.
  The right hon. Member for Sparkbrook and the right hon. Member for Salford, West attacked the Kent county council for the closure of homes. Those attacks are misplaced. Kent county council has over the years pioneered a substantial shift away from residential accommodation into various forms of community care, fostering and other schemes of that nature. Those closures, announced in the past few months by Kent county council, are fully in line with that policy. The right hon. Member for Salford, West complained in one breath that children from children's homes could not be transferred from the large, draughty, old-fashioned homes into community care and in the next he complained that those homes were closing. He must make up his mind what he wants. I read this morning that Bolton council is following that policy of making savings on residential care in order to improve community care as well.
  That leads me to the subject of personal social services, to which the right hon. Member for Sparkbrook devoted most of his speech. I accept that local authorities face difficult and sometimes painful decisions. Spending on personal social services is nearly double in real terms what it was in 1971–72. Against a background of continuous growth—and it was much higher in the earlier part of that period than the latter—even small economies are painful. The truth, difficult as it may be for the Opposition to understand, is that the
  550
  spending planned by our predecessors was not matched by the money to pay for it. One can state it simply. This country was spending beyond its means, and that could not be allowed to go on.
  The 1½ per cent. cut below last year's spending and the 1 per cent. further cut planned for next year represent the local authorities' share of the economies that are needed to stabilise public spending at a level that the country can afford.
  I come to the point made by the hon. Member for Colne Valley which had some merit. He said that the cuts were being made so swiftly in some cases that they were not necessarily the best answer. We recognise that. But the House must recognise the position in which we found ourselves when we came into office. The year was already half-way through. We found ourselves with a total spending burden which simply could not be sustained. We had to act and act quickly.
  The hon. Member for Colne Valley made his point with all his usual charm, but it was pretty naive. We found the economy heading for a huge increase in the public sector borrowing requirement and we simply had to act swiftly. Yet the hon. Member suggested that there should have been leisurely cost-benefit studies. He asked us to apply gentle pressures and to allow far a period of "rumination" on the steps that would be taken. That is all totally unrealistic. It would be more appropriate for some kind of Liberal weekend seminar somewhere in the hills.
  Mr. Richard Wainwright: On reflection, will the Minister not agree that he is rather underrating the credit of his new Government with the various lenders who are available?
  Mr. Jenkin: I do not think so. My right hon. Friend the Secretary of State made the point this afternoon that the overwhelming burden of the increase in the public spending of the labour Government was that of interest charges. We simply had to cut back on the public sector borrowing requirement so that the unfortunate taxpayers of this country would not have to pay still more interest. The credit may have been good enough, but the interest burden would have been overwhelming.
  Mr. David Price: Will my right hon. Friend point out to the Opposition that the cost of servicing Labour's debt this year is greater than the total expenditure of the National Health Service? If there had not been such an increase in borrowing, we need not have made any cuts in the National Health Service at all.
  Mr. Jenkin: Without being able to comment on the precise figures, I agree that it is certainly true that the growth in the interest burden in recent years has been absolutely fantastic. It could not go on.
  Local authorities have had to act fairly swiftly. Next year I hope things will be better. They know the targets that we have in mind for 1980–81 and this already provides the opportunity for a more careful assessment of priorities for the identification of savings which will do least harm to services.
  Of course, there will be protests in the area of personal social services. I understand the disappointment and frustration of some of the interested groups who represent people with particular disabilities. They have long campaigned in favour of the development of the services and they now see these developments being deferred. I do not complain about pressure groups exercising their proper function of bringing pressure to bear. However, pressure can be applied positively or negatively. Just as we look to the local authorities to approach their problems in a positive spirit, so may we look to the great voluntary organisations and the local voluntary bodies to recognise the constraints within which we must all operate, and to concentrate on the best ways of meeting needs.
  It is not for me or the Government to seek to dictate to local authorities how they should achieve their spending cuts. Authorities must take responsibility for their own decisions, and be prepared to account for them locally. However, the Government have made clear their hope that local authorities will aim to protect the most vulnerable in our community—the very frail elderly, the seriously disabled and children at risk.
  The point was made that we had asked authorities to try to make savings by cutting down administrative overheads. I draw the attention of the House to an
  552
  important article written by Des Wilson in an issue of Social Work Today. In this article, written last August, he made some points that are very relevant to tonight's debate. He said:
  "Weeping and gnashing of teeth can be highly satisfying, but it is rarely productive."
  We have had a good deal of weeping and gnashing of teeth here today. I hope that I will not bore the House if I continue to read some of his important statements—he was editor of Social Work Today:
  "Three points need to be made immediately: first, Mrs. Thatcher and her administration were elected with a clear majority and can claim a mandate to cut public expenditure. Second, just as some trade union leaders contributed to the defeat of the Callaghan administration, and thus have little credibility now they complain about the Tories, so do social workers, many of whom took part in a lengthy strike last year, have less credibility when they now talk, … of 'children in danger of being murdered'. Third, there is room for economy within the social services, and before social work representatives talk of 'murder' they should demonstrate their awareness of that … Where can cuts be made? … we can get by without the highly paid advisory and developmental officers. One such position was advertised … recently at over £8,000 a year. If you add onto that the other costs of employing … a minimum of £10,000 will be saved … there are the personal assistants to directors, the press officers. and the other hangers-on. Why can't we be frank about this—we can do without them, and we know we can, so we should say so.
  " … As Mike Bishop, a member of the RCA executive said with admirable force: 'We all know five or six posts in our authority which could disappear without anybody taking very much notice'."
  He goes on to refer to the endless stream of conferences and seminars, and demonstrates that it is nonsense to say that nothing can be cut off the administration of local authorities.
  Mr. Allan Roberts rose—
  Mr. Jenkin: I shall not give way as I have only a few minutes left. We are on strong ground when we ask authorities to cut out what the article calls "bureaucratic and institutional extravagances".
  I repeat my plea to local authorities that they should not cut back grants to the voluntary bodies and self-help groups which do such valuable work in the community. The mainstay for the help of the sick, the elderly and those in trouble must come from the family, from friends, from neighbours and from local caring groups

  553
  of one sort or another. The voluntary bodies stand behind those people, and the statutory bodies, which are the enabling bodies, should stand behind them.
  I turn to the Opposition's motion. Like the speech of the right hon. Member for Salford, West, it is long on invective but woefully short on realism. However lurid is the language of Labour Members, they will carry little conviction with those outside the House unless they recognise—as the motion palpably does not—that the nation has to live within its means.
  The public expenditure plans which we inherited provided for an average increase of 2 per cent. per year, in terms of volume, over the next four years. In their public expenditure White Paper the Labour Government explained that this was based on what could reasonably be assumed to be the growth of national income. The world knows that before the ink on that White Paper was dry the statement was nonsense. Whatever Government came into office last May there would have had to be substantial cuts in the inherited programmes unless there was to be a wholly unacceptable increase in taxation.
  That did not stop the Labour Party promising in its manifesto both to increase public spending and reduce taxation. In the light of what it and the whole world knew, those promises were part of its dream world of unreality. If we are to judge by the motion, Labour Members continue to live in that world. Last July I quoted an article written by the right hon. Member for Heywood and Royton (Mr. Barnett) in which he said that the Labour Party would have to face up to the fact that some of the Ark of the Covenant of Socialism would have to be sacrificed if it was to meet its priorities. At that time I challenged the Opposition to tell us which elements of the Ark of the Covenant of Socialism they had in mind. We never had an answer. The right hon. Gentleman repeated his unpalatable message in an article in The Guardian of 25 September:
  "we had to cut public expenditure in the last five years, and as I will argue here, we will need to cut public expenditure again".
  The right hon. Gentleman was Chief Secretary to the Treasury in the previous Government and he knows,
  554
  as the framers of the motion evidently do not know, that if there had been no reduction in spending the only result could have been higher income tax. We have asked in vain where a Labour Government would have got the higher income tax to pay for their public expenditure plans.
  It would not have been enough to stick to income tax at 33 per cent. If they had left their programmes unchanged, income tax would have been 38 per cent. Supposing they had not been prepared to go to 38 per cent., could they have done it by raising VAT to 15 per cent? No. They would have needed VAT at 20 per cent. to finance those programmes. They must come clean and tell the House which combination of taxation they would have used to pay for the programmes that we inherited.
  Although the former Chief Secretary said that he would have cut the programmes, that is not the answer that we got from the right hon. Member for Sparkbrook today. When my hon. Friend the Member for Gillingham (Mr. Burden) asked "What would you do?", the right hon. Member for Sparkbrook said that they would have stuck with the programmes in the White Paper. How would he have paid for them? Through income tax or VAT?
  Mr. Hattersley: There are two answers. First, on this side of the House we regard preservation of the social services as being more important than income tax handouts. As well as having a different view on helping the rich at the expense of the poor, we would have run the economy in a different way and would not be facing inflation at 17 per cent. and rising. We would have had it at rather less than half that rate.
  Mr. Jenkin: The Labour Party was not prepared to come clean with the public before the election and it is not prepared to come clean now.
  The right hon. Gentleman says that a Labour Government would have run the economy differently. We know that they were hoping for 3 per cent. growth, but hope does not pay the bills, and coming from a Government that failed throughout their five years in office to achieve an average of even 1 per cent. growth annually that hope was always doomed to failure.

  555
  The former Prime Minister is interrupting from a sedentary position. We know what he said about public expenditure. In a debate almost three years ago to the day, the right hon. Gentleman said:
  "With regard to cutting public expenditure, it ought to be reduced over a period, as a proportion of GDP".—[Official Report, 21 October 1976; Vol. 917, c. 1654.]
  When we took office two and a half years later we found that public expenditure programmes were planned to take a larger and larger share of the gross domestic product. That fact lies at the heart of the debate and the Opposition motion fails to acknowledge it.
  Mr. James Callaghan: Will the right hon. Gentleman give way?
  Mr. Jenkin: No. Look at the time.
  Mr. Callaghan: We got 3 per cent. growth and the present Government have abandoned growth.
  Mr. Jenkin: I have not given way.
  Mr. Speaker: Order. It is clear that the Secretary of State is not giving way.
  Mr. Callaghan: We got 3 per cent. growth and the present Government have
  abandoned growth. Will the right hon. Gentleman give way?
  Mr. Jenkin: No.
  Mr. Speaker: Order. The Secretary of State is not giving way. He must be allowed to make his speech.
  Mr. Callaghan: Will the right hon. Gentleman give way?
  Mr. Jenkin: No. I want to finish my speech.
  Mr. Callaghan: We got 3 per cent. growth and the present Government have abandoned growth.
  Mr. Speaker: Order. Both right hon. Members know that we are in the last few seconds of the debate. We ought to complete it in an orderly fashion.
  Mr. Jenkin: I ask the House to throw out the Opposition's motion.
  Mr. John Evans rose in his place and claimed to move, That the Question be now put.
  Question, That the Question be now put, put and agreed to.
  Question put accordingly, That the amendment be made:—
  The House divided: Ayes 303, Noes 252.

  Division No. 85

  AYES

  [10.00 p.m.

  Adley, Robert

  Brown, Michael (Brigg & Sc'thorpe)

  Edwards, Rt Hon N. (Pembroke)

  Aitken, Jonathan

  Browne, John (Winchester)

  Eggar, Timothy

  Alexander, Richard

  Bruce-Gardyne, John

  Elliott, Sir William

  Alison, Michael

  Buchanan-Smith, Hon Alick

  Emery, Peter

  Amery, Rt Hon Julian

  Buck, Antony

  Eyre, Reginald

  Ancram, Michael

  Budgen, Nick

  Fairbalrn, Nicholas

  Arnold, Tom

  Bulmer, Esmond

  Fairgrieve, Russell

  Aspinwall, Jack

  Burden, F. A.

  Faith, Mrs Sheila

  Atkins, Rt Hon H. (Spelthorne)

  Butcher, John

  Farr, John

  Atkins, Robert (Preston North)

  Butler, Hon Adam

  Fell, Anthony

  Atkinson, David (B'mouth, East)

  Cadbury, Jocelyn

  Fenner, Mrs Peggy

  Baker, Kenneth (St. Marylebone)

  Carlisle, John (Luton West)

  Finsberg, Geoffrey

  Baker, Nicholas (North Dorset)

  Carlisle, Kenneth (Lincoln)

  Fisher, Sir Nigel

  Banks, Robert

  Carlisle, Rt Hon Mark (Runcorn)

  Fletcher, Alexander (Edinburgh N)

  Beaumont-Dark, Anthony

  Chalker, Mrs Lynda

  Fletcher-Cooke, Charles

  Bell, Ronald

  Channon, Paul

  Fookes, Miss Janet

  Bendall, Vivian

  Chapman, Sydney

  Forman, Nigel

  Bennett, Sir Frederic (Torbay)

  Churchill, W. S.

  Fowler, Rt Hon Norman

  Benyon, Thomas (Abingdon)

  Clark, Hon Alan (Plymouth, Sutton)

  Fox, Marcus

  Benyon, W. (Buckingham)

  Clark, Dr William (Croydon South)

  Fraser, Rt Hon H. (Stafford & St)

  Best, Keith

  Clarke, Kenneth (Rushcliffe)

  Fraser, Peter (South Angus)

  Bevan, David Gllroy

  Clegg, Walter

  Fry, Peter

  Biffen, Rt Hon John

  Cockeram, Eric

  Gardiner, George (Reigate)

  Biggs-Davison, John

  Colvin, Michael

  Gardner, Edward (South Fylde)

  Blackburn, John

  Cope, John

  Garel-Jones, Tristan

  Blaker, Peter

  Cormack, Patrick

  Gilmour, Rt Hon Sir Ian

  Body, Richard

  Corrie, John

  Goodhart, Philip

  Bonsor, Sir Nicholas

  Costain, A. P.

  Gorst, John

  Boscawen, Hon Robert

  Cranborne, Viscount

  Gow, Ian

  Bottomley, Peter (Woolwich West)

  Crouch, David

  Gower, Sir Raymond

  Bowden, Andrew

  Dean, Paul (North Somerset)

  Grant, Anthony (Harrow C)

  Boyson, Dr Rhodes

  Dickens, Geoffrey

  Gray, Hamish

  Braine, Sir Bernard

  Dorrell, Stephen

  Grieve, Percy

  Bright, Graham

  Douglas-Hamilton, Lord James

  Griffiths, Eldon (Bury St Edmunds)

  Brinton, Tim

  Dover, Denshore

  Griffiths, Peter (Portsmouth N)

  Brittan, Leon

  du Cann, Rt Hon Edward

  Grist, Ian

  Brocklebank-Fowler, Christopher

  Dunn, Robert (Dartford)

  Grylls, Michael

  Brooke, Hon Peter

  Durant, Tony

  Gummer, John Selwyn

  Brotherton, Michael

  Eden, Rt Hon Sir John

  Hamilton, Hon Archie (Ep s'm&Ew'll)

  Hamilton, Michael (Salisbury)

  Maude, Rt Hon Angus

  Shelton, William (Streatham)

  Hampson, Dr Keith

  Mawby, Ray

  Shepherd, Colin (Hereford)

  Haselhurst, Alan

  Mawhinney, Dr Brian

  Shepherd, Richard (Aldridge-Br'hills)

  Hastings, Stephen

  Maxwell-Hyslop, Robin

  Shersby, Michael

  Havers, Rt Hon Sir Michael

  Mayhew, Patrick

  Silvester, Fred

  Hawksley, Warren

  Mellor, David

  Sims, Roger

  Heath, Rt Hon Edward

  Meyer, Sir Anthony

  Skeet, T. H. H.

  Heddle, John

  Miller, Hal (Bromsgrove & Redditch)

  Smith, Dudley (War. and Leam'ton)

  Henderson, Barry

  Mills, Iain (Meriden)

  Speed, Keith

  Heseltine, Rt Hon Michael

  Mills, Peter (West Devon)

  Speller, Tony

  Hicks, Robert

  Miscampbell, Norman

  Spence, John

  Higgins, Rt Hon Terence L.

  Mitchell, David (Basingstoke)

  Spicer, Michael (S Worcestershire)

  Hill, James

  Moate, Roger

  Sproat, Ian

  Hogg, Hon Douglas (Grantham)

  Monro, Hector

  Squire, Robin

  Holland, Philip (Carlton)

  Montgomery, Fergus

  Stanbrook, Ivor

  Hooson, Tom

  Moore, John

  Stanley, John

  Hordern, Peter

  Morgan, Geraint

  Steen, Anthony

  Howe, Rt Hon Sir Geoffrey

  Morris, Michael (Northampton, Sth)

  Stevens, Martin

  Howell, Rt Hon David (Guildford)

  Morrison, Hon Peter (City of Chester)

  Stewart, Ian (Hitchin)

  Howell, Ralph (North Norfolk)

  Mudd, David

  Stewart, John (East Renfrewshire)

  Hunt, David (Wirral)

  Murphy, Christopher

  Stokes, John

  Hunt, John (Ravensbourne)

  Myles, David

  Stradling Thomas, J.

  Hurd, Hon Douglas

  Neale, Gerrard

  Tapsell, Peter

  Irving, Charles (Cheltenham)

  Needham, Richard

  Taylor, Robert (Croydon NW)

  Jenkin, Rt Hon Patrick

  Nelson, Anthony

  Temple-Morris, Peter

  Jessel, Toby

  Neubert, Michael

  Thatcher, Rt Hon Mrs Margaret

  Johnson Smith, Geoffrey

  Newton, Tony

  Thomas, Rt Hon Peter (Hendon S)

  Jopling, Rt Hon Michael

  Nott, Rt Hon John

  Thompson, Donald

  Joseph, Rt Hon Sir Keith

  Onslow, Cranley

  Thorne, Neil (Ilford South)

  Kaberry, Sir Donald

  Oppenheim, Rt Hon Mrs Sally

  Thornton, Malcolm

  Kimball, Marcus

  Osborn, John

  Townend, John (Bridlington)

  King, Rt Hon Tom

  Page, Rt Hon R. Graham (Crosby)

  Townsend, Cyril D. (Bexleyheath)

  Kitson, Sir Timothy

  Parris, Matthew

  Trippler, David

  Knight, Mrs Jill

  Patten, John (Oxford)

  Trotter, Neville

  Knox, David

  Pattie, Geoffrey

  van Straubenzee, W. R.

  Lang, Ian

  Pawsey, James

  Vaughan, Dr Gerard

  Langford-Holt, Sir John

  Percival, Sir Ian

  Viggers, Peter

  Latham, Michael

  Peyton, Rt Hon John

  Wakeham, John

  Lawrence, Ivan

  Pink, R. Bonner

  Waldegrave, Hon William

  Lawson, Nigel

  Pollock, Alexander

  Walker, Rt Hon Peter (Worcester)

  Lee, John

  Porter, George

  Walker, Bill (Perth & E Perthshire)

  Lennox-Boyd, Hon Mark

  Prentice, Rt Hon Reg

  Walker-Smith, Rt Hon Sir Derek

  Lester, Jim (Beeston)

  Price, David (Eastleigh)

  Waller, Gary

  Lewis, Kenneth (Rutland)

  Prior, Rt Hon James

  Walters, Dennis

  Lloyd, Ian (Havant & Waterloo)

  Proctor, K. Harvey

  Ward, John

  Lloyd, Peter (Fareham)

  Pym, Rt Hon Francis

  Warren, Kenneth

  Loveridge, John

  Rathbone, Tim

  Watson, John

  Lyell, Nicholas

  Rees, Peter (Dover and Deal)

  Wells, John (Maidstone)

  McAdden, Sir Stephen

  Rees-Davies, W. R.

  Wells, Bowen (Hert'rd & Stev'nage)

  Macfarlane, Nell

  Renton, Tim

  Wheeler, John

  MacGregor, John

  Rhodes James, Robert

  Whitelaw, Rt Hon William

  MacKay, John (Argyll)

  Ridley, Hon Nicholas

  Whitney, Raymond

  Macmillan, Rt Hon M. (Farnham)

  Rifkind, Malcolm

  Wickenden, Keith

  McNair-Wilson, Michael (Newbury)

  Rippon, Rt Hon Geoffrey

  Wiggin, Jerry

  McNair-Wilson, Patrick (New Forest)

  Roberts, Michael (Cardiff NW)

  Williams, Delwyn (Montgomery)

  McQuarrie, Albert

  Roberts, Wyn (Conway)

  Winterton, Nicholas

  Madel, David

  Rossi, Hugh

  Wolfson, Mark

  Major, John

  Rost, Peter

  Young, Sir George (Acton)

  Marland, Paul

  Younger, Rt Hon George

  Marlow, Tony

  Royle, Sir Anthony

  Marten, Neil (Banbury)

  Sainsbury, Hon Timothy

  TELLERS FOR THE AYES:

  Mates, Michael

  St. John-Stevas, Rt Hon Norman

  Mr. Spencer Le Marchant and

  Mather, Carol

  Scott, Nicholas

  Mr. Anthony Berry.

  NOES

  Abse, Leo

  Bradley, Tom

  Concannon, Rt Hon J. D.

  Adams, Allen

  Bray, Dr Jeremy

  Conlan, Bernard

  Allaun, Frank

  Brown, Hugh D. (Provan)

  Cook, Robin F.

  Alton, David

  Brown, Robert C. (Newcastle W)

  Cowans, Harry

  Anderson, Donald

  Brown, Ronald W. (Hackney S)

  Cox, Tom (Wandsworth, Tooting)

  Archer, Rt Hon Peter

  Brown, Ron (Edinburgh, Leith)

  Craigen, J. M. (Glasgow, Maryhill)

  Armstrong, Rt Hon Ernest

  Buchan, Norman

  Crowther, J. S.

  Ashley, Rt Hon Jack

  Callaghan, Rt Hon J. (Cardiff SE)

  Cryer, Bob

  Ashton, Joe

  Callaghan, Jim (Middleton & P)

  Cunliffe, Lawrence

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

  Campbell, Ian

  Cunningham, George (Islington S)

  Barnett, Guy (Greenwich)

  Campbell-Savours, Dale

  Cunningham, Dr John (Whitehaven)

  Barnett, Rt Hon Joel (Heywood)

  Canavan, Dennis

  Dalyell, Tam

  Beith, A. J

  Cant, R. B.

  Davies, Rt Hon Denzil (Llanelli)

  Benn, Rt Hon Anthony Wedgwood

  Carmichael, Neil

  Davies, Ifor (Gower)

  Bennett, Andrew (Stockport N)

  Carter-Jones, Lewis

  Davis, Clinton (Hackney Central)

  Bidwell, Sydney

  Clark, Dr David (South Shields)

  Davis, Terry (B'rm'ham, Stechford)

  Booth, Rt Hon Albert

  Cocks, Rt Hon Michael (Bristol S)

  Dean, Joseph (Leeds West)

  Boothroyd, Miss Betty

  Cohen, Stanley

  Dempsey, James

  Bottomley, Rt Hon Arthur (M'brough)

  Coleman, Donald

  Dewar, Donald

  Dixon, Donald

  Kaufman, Rt Hon Gerald

  Richardson, Miss Jo

  Dobson, Frank

  Kerr, Russell

  Roberts, Albert (Normanton)

  Dormand, Jack

  Kilroy-Silk, Robert

  Roberts, Allan (Bootle)

  Douglas, Dick

  Kinnock, Neil

  Roberts, Ernest (Hackney North)

  Douglas-Mann, Bruce

  Lambie, David

  Roberts, Gwilym (Cannock)

  Dubs, Alfred

  Lamborn, Harry

  Robertson, George

  Dunn, James A. (Liverpool, Kirkdale)

  Lamond, James

  Robinson, Geoffrey (Coventry NW)

  Dunnett, Jack

  Leadbitter, Ted

  Robinson, Peter (Belfast East)

  Dunwoody, Mrs Gwyneth

  Leighton, Ronald

  Rooker, J. W.

  Eadie, Alex

  Lestor, Miss Joan (Eton & Slough)

  Roper, John

  Eastham, Ken

  Lewis, Arthur (Newham North West)

  Ross, Ernest (Dundee West)

  Edwards, Robert (Wolv SE)

  Lewis, Ron (Carlisle)

  Ryman, John

  Ellis, Raymond (NE Derbyshire)

  Litherland, Robert

  Sandelson, Neville

  Ellis, Tom (Wrexham)

  Lofthouse, Geoffrey

  Sheerman, Barry

  English, Michael

  Lyon, Alexander (York)

  Sheldon, Rt Hon Robert (A'ton-u-L)

  Evans, Ioan (Aberdare)

  Lyons, Edward (Bradford West)

  Shore, Rt Hon Peter (Step and Pop)

  Evans, John (Newton)

  Mabon, Rt Hon Dr J Dickson

  Silkin, Rt Hon John (Deptford)

  Ewing, Harry

  McCartney, Hugh

  Silkin, Rt Hon S. C. (Dulwich)

  Faulds, Andrew

  McDonald, Dr Oonagh

  Silverman, Jullus

  Field, Frank

  McElhone, Frank

  Skinner, Dennis

  Fitch, Alan

  McKay, Allen (Penistone)

  Smith, Cyril (Rochdale)

  Fitt, Gerard

  McKelvey, William

  Smith, Rt Hon J. (North Lanarkshire

  Flannery, Martin

  Maclennan, Robert

  Soley, Clive

  Fletcher, L. R. (Ilkeston)

  McMahon, Andrew

  Spearing, Nigel

  Fletcher, Ted (Darlington)

  McMillan, Tom (Glasgow, Central)

  Spriggs, Leslie

  Ford, Ben

  McNally, Thomas

  Stallard, A. W.

  Forrester, John

  McWilliam, John

  Steel, Rt Hon David

  Foster, Derek

  Magee, Bryan

  Stewart, Rt Hon Donald (W Isles)

  Foulkes, George

  Marshall, David (Gl'sgow, Shettles'n)

  Stoddart, David

  Fraser, John (Lambeth, Norwood)

  Marshall, Dr Edmund (Goole)

  Stott, Roger

  Freeson, Rt Hon Reginald

  Marshall, Jim (Leicester South)

  Strang, Gavin

  Freud, Clement

  Martin, Michael (Gl'gow, Springb'rn)

  Straw, Jack

  Garrett, John (Norwich S)

  Mason, Rt Hon Roy

  Summerskill, Hon Dr Shirley

  Garrett, W. E. (Wallsend)

  Maynard, Miss Joan

  Taylor, Mrs Ann (Bolton West)

  George, Bruce

  Meacher, Michael

  Thomas, Dafydd (Merioneth)

  Ginsburg, David

  Mellish, Rt Hon Robert

  Thomas, Jeffrey (Abertillery)

  Grant, George (Morpeth)

  Mikardo, Ian

  Thomas, Mike (Newcastle East)

  Grant, John (Islington C)

  Millan, Rt Hon Bruce

  Thomas, Dr Roger (Carmarthen)

  Hamilton, James (Bothwell)

  Miller, Dr M. S. (East Kilbride)

  Thorne, Stan (Preston South)

  Hamilton, W. W. (Central Fife)

  Tilley, John

  Harrison, Rt Hon Walter

  Mitchell, Austin (Grimsby)

  Torney, Tom

  Hart, Rt Hon Dame Judith

  Mitchell, R. C. (Soton, Itchen)

  Urwin, Rt Hon Tom

  Hattersley, Rt Hon Roy

  Morris, Rt Hon Alfred (Wythenshawe)

  Haynes, Frank

  Morris, Rt Hon Charles (Openshaw)

  Varley, Rt Hon Eric G.

  Healey, Rt Hon Denis

  Morris, Rt Hon John (Aberavon)

  Wainwright, Edwin (Dearne Valley)

  Heffer, Eric S.

  Morton, George

  Wainwright, Richard (Colne Valley)

  Hogg, Norman (E Dunbartonshire)

  Moyle, Rt Hon Roland

  Walker, Rt Hon Harold (Doncaster)

  Holland, Stuart (L'beth, Vauxhall)

  Mulley, Rt Hon Frederick

  Watkins, David

  Home Robertson, John

  Newens, Stanley

  Weetch, Ken

  Homewood, William

  Oakes, Rt Hon Gordon

  Welsh, Michael

  Hooley, Frank

  Ogden, Eric

  White, Frank R. (Bury & Radcliffe)

  Horam, John

  O'Halloran, Michael

  White, James (Glasgow, Pollok)

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

  O'Neill, Martin

  Whitehead, Phillip

  Howells, Geraint

  Orme, Rt Hon Stanley

  Willey, Rt Hon Frederick

  Huckfield, Les

  Owen, Rt Hon Dr David

  Williams, Rt Hon Alan (Swansea W)

  Hughes, Mark (Durham)

  Palmer, Arthur

  Williams, Sir Thomas (Warrington)

  Hughes, Robert (Aberdeen North)

  Park, George

  Wilson, Gordon (Dundee East)

  Hughes, Roy (Newport)

  Parker, John

  Wilson, Rt Hon Sir Harold (Huyton)

  Janner, Hon Greville

  Parry, Robert

  Wilson, William (Coventry SE)

  Jay, Rt Hon Douglas

  Pavitt, Laurie

  Winnick, David

  John, Brynmor

  Pendry, Tom

  Woodall, Alec

  Johnson, James (Hull West)

  Penhaligon, David

  Woolmer, Kenneth

  Johnson, Walter (Derby South)

  Powell, Raymond (Ogmore)

  Wright, Sheila

  Johnston, Russell (Inverness)

  Prescott, John

  Jones, Rt Hon Alec (Rhondda)

  Price, Christopher (Lewisham West)

  TELLERS FOR THE NOES:

  Race, Reg

  Mr. James Tinn and

  Jones, Barry (East Flint)

  Radice, Giles

  Mr. Ted Graham.

  Jones, Dan (Burnley)

  Rees, Rt Hon Merlyn (Leeds South)

  Question accordingly agreed to.
  Main Question, as amended, put and agreed to.
  Resolved,
  That this House congratulates Her Majesty's Government on its determination to arrest
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  and reverse the economic decline inherited from the last Labour Government and on its policies to stabilise and reduce the proportion of public expenditure and to secure a permanent reduction in the rate of inflation; and expresses its support for policies designed to reduce excessive claims by the public sector on resources which can be more efficiently and productively deployed in the creation of wealth.

  PARAFFIN
  10.16 p.m.
  Mr. Joseph Ashton: I beg to move,
  That an humble Address be presented to Her Majesty, praying that the Paraffin (Maximum Retail Prices) (Revocation) Order 1979 (S.I. 1979, No. 797), dated 10th July 1979, a copy of which was laid before this House on 11th July, be annulled.
  At first glance, it would seem that this order was a legacy of the Labour Government, who controlled the price of paraffin. Curiously, the first paraffin price control was brought in by the Conservative Government in December 1973. Perhaps that Conservative Government had more compassion than the current one. The control was very well received throughout the country at that time, when the price of paraffin was fixed at 21p per gallon.
  Let us not imagine that the Labour Government froze the price of paraffin, that we were unfair to retailers or that we refused to allow them a fair profit. By last July the price had risen to 53p a gallon, over a period of five years. That was well over double the fixed price of 21p. Since controls have been removed the retail price has shot up to near 75p. That is a massive increase for the poorest section of the population.
  We are talking about a very small part of the oil market—about 0·6 per cent. That is peanuts in oil terms. However, in poverty terms it is a very important factor, which affects the 1 million poorest households in the country. We will hear from the Tories tonight, in defence of that increase, the usual free market economy argument that prices must be left to find their own level, that the poor must pay and that oil economies must be effected by making people do without it. That will be the first argument.
  The second argument will be that supplies were drying up, that the big oil companies were refusing to produce the oil and that retailers were refusing to stock it unless there were higher profit margins. That inadequate defence is not good enough. The big oil companies are now making massive profits. Everyone accepts that. To say that those companies
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  could not be leaned on to keep down the price of paraffin—0·6 per cent. of their output—means that the Government are running away from their responsibilities in refusing to stand up to the oil companies and in not demanding that supplies be kept up, as they were for 5½ years during price controls.
  The two giants in the market, Esso and BP, managed, during a very severe winter which somewhat distorted the picture, to keep up supplies while controls were in operation.
  The second argument advanced by the Conservatives for removing the controls was that the retailer in the corner shop could not make a decent profit and that consequently fewer of them were stocking the fuel. However, there were other reasons for the decline. I telephoned one of the biggest London distributors of paraffin yesterday to talk about the problem of retailers ceasing to stock the fuel. Curiously, since controls were removed in July there has been no increase in the number of retailers stocking paraffin, even though there is now more profit in it, with the retail price having shot up by about 40 per cent.
  One of the reasons has been that the insurance companies have been demanding higher premiums from greengrocers and grocers in the corner shops because of the fire risk. Many were deterred from stocking the fuel when they found they had to install proper tanks and take proper safeguards in respect of fire.
  Another reason has been the increased sale of portable gas appliances. At one time poor people used paraffin to provide background heat in their bedrooms, their halls and their living rooms. There is, however, a fire hazard with paraffin and that received a great deal of publicity—quite rightly so—which caused people to switch to portable gas heaters. With such heaters a bottle of gas is clipped to the back of a gas fire and the whole appliance can be moved around the house. It is much safer than paraffin. If it tips over it extinguishes itself, and the fuel cannot be spilt.
  Paraffin therefore commanded a shrinking market for reasons related to factors other than profit. The tonnage sold has fallen from about 700,000 tons to about 500,000 over the last few years. It is not therefore the case that less paraffin is

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  being sold because the profit margin is inadequate or non-existent. There is a profit margin.
  Many of the people who bought gas appliances, however, are finding that local authorities are banning them in council flats. The authorities are afraid of a repetition of the Ronan Point disaster where a gas explosion blew out a section of a multi-storey tower block, causing a collapse. I do not say that these gas heaters are dangerous or that they could cause a similar type of explosion. The authorities are afraid that such a thing might happen, however, in multi-storey, all-electric flats. This means that tenants will probably switch back to paraffin.
  We are concerned here with the poorest section of the population—pensioners who live in all-electric flats with underfloor or warm-air heating and who cannot afford to switch it on. It is cheaper for them to pay 50p or 70p for a gallon of paraffin to provide background heat for a week than to turn on the underfloor or warm-air heating. This option is being taken from them by this week's price increase.
  In addition, many people will cease to use the electricity this winter because of the abolition of the discount scheme. I believe that 3,108,000 people claimed the discount last year. On the Minister's figures, that is now down to a couple of hundred thousand, which means that some 3 million households are not now getting the discount scheme and may be returning to using the old paraffin stove. However, the price has rocketed from 53p a gallon to 70p, which may not be a fortune by the standards of any hon. Member but which matters a great deal to pensioners.
  Let us now consider the question of scarcity of supply. There was a bad period last February when it was difficult to get paraffin. There were several reasons. One was that the snow created a much greater demand. In fact, demand increased by 23 per cent. That was because February was a cold month. It was much more difficult to distribute supplies because of the snow. The lorry drivers' strike took place during the previous month.
  It was difficult to obtain paraffin in February. The difficulty arose not because
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  there was an insufficient profit margin. During the time that paraffin was controlled we, the Labour Government, increased the price by 15 per cent. at a time when inflation was only 8 per cent. to build in a better profit margin for retailers. In our opinion, it was totally unnecessary entirely to remove the controls and to go for a market economy in a tiny sector that would make no difference to the economy.
  The inconsistency of Government policy is clear. We now have a free economy for oil supplies plus the 10p that the Chancellor added to the price of every gallon. We have a free market price for paraffin and electricity. However, gas, which is sold at a free market price and is making a large profit, is the subject of continual leaks to the effect that the Government will create an artificial price.
  The Government want it both ways. They want a free market economy for certain fuels but not for others. There is a total inconsistency. A few months ago the Government took the callous action of removing price controls on paraffin. That action was immediately denounced by all 26 welfare organisations that constitute the National Fuel Poverty Forum, ranging from Help the Aged to the Child Poverty Action Group. It was denounced despite the fact that all those organisations accept that paraffin is a health hazard. They would like to see no one using it and every pensioner getting some other form of heating. It causes condensation and fungus. It is dangerous if children are in the house. It is not good for one's chest. That is accepted by the organisations, but they are adamant that it is a form of warmth that should be given to the very poor families at the bottom of the list.
  There is no real fuel rebate system. The Government do not have one. We believe that keeping warm in winter is as essential as having food or accommodation. It is just as essential as having a rent rebate system to provide a roof over people's heads.
  Mr. David Knox: Does the hon. Gentleman agree that many more people in need would be keeping warm this winter if the Labour Government had not been so dilatory and miserly in introducing an insulation scheme that is now totally inadequate and has been applied

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  to only a small proportion of the houses that need it?
  Mr. Ashton: I accept that we should be spending more on conservation. We should be spending much more on it from the profits of North Sea oil. However, we are talking about paraffin and about the Government's wish to have a free market economy with no subsidies and to let the market find its own level.
  We read more and more that the Chancellor of the Exchequer can find the cash not to tax the cars of executives. If a man who earns less than £8,000 a year is given a car by his company and that costs less than £8,000 a year, and it is given as a free perk, he does not pay the income tax on that form of cash or wages that it should attract. The subsidies that executives receive by being given a car are costing the Chancellor about £200 million a year in uncollected tax. However, at the same time the right hon. and learned Gentleman is cutting back drastically the subsidies given to poor people to keep warm in winter and is introducing a free market economy to let the devil take the hindmost. The hindmost will really suffer.
  I believe that this winter the public will demand a planned economy on fuel pricing. They will demand that planning is brought into the cost of fuel so that everybody has the right to keep warm. Alternatively, some form of subsidy must be introduced into the market economy to help those at the bottom. That is why the Opposition move the motion. I hope that it will have the support of the House.
  10.29 p.m.
  The Minister of State, Department of Energy (Mr. Hamish Gray): The hon. Member for Bassetlaw (Mr. Ashton) has moved the prayer in a reasonable fashion. I am grateful to the hon. Gentleman for giving the House the opportunity of discussing the matter at some length.
  The hon. Gentleman began by giving us some correct statistics. For example, he said that an order controlling the maximum retail price of premium paraffin was first introduced on 23 December 1973 by the Conservative Administration. The powers were contained in the Fuel and Electricity (Control) Act 1973. Price controls on petrol were taken
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  at the same time, but when the latter control was dropped in December 1974 the control over paraffin was kept. Paraffin remained in the anomalous position of being the only oil product subject to price control until this Government took office in May this year.
  As the House is aware, the order decontrolling paraffin prices, which we are debating this evening, was made on 11 July and came into effect the next day.
  The Opposition may ask why paraffin price control cannot remain. After more than five years, why should paraffin prices be suddenly set free to reflect market conditions? The hon. Gentleman dealt with this point at some length. The Government's belief is that this control has long since outlived its original and quite legitimate purpose, that its retention over the past five years has been damaging to the paraffin market, and that supplies have thereby been threatened. Indeed, the hon. Gentleman confirmed this when he referred to the situation earlier this year. We were, in other words, at risk of denying paraffin supplies to the very people whom price controls were intended to help.
  Let me now briefly review the situation when the Government took office in May. Demand for premium paraffin had been dropping steadily for many years. As the hon. Gentleman rightly said, it now accounts for only 0·6 per cent. of the oil market. Nevertheless, paraffin is of great importance to old people and low-income households. In view of this, the Government have a particular obligation to ensure, as far as possible, that their policies do not threaten supplies to those consumers. But the danger was that the price control policy, and the inevitable market distortions that it implied, was threatening to do just that.
  The United Kingdom paraffin market is supplied by two main United Kingdom manufacturers. These oil companies supply mainly through authorised distributors, who in turn distribute to three different types of outlet—to the hardware shops, filling stations and mobile distributors. I should like to describe the effects of price control on those sections of the supply and distribution network.
  Premium paraffin is manufactured from regular kerosene. The process of upgrading kerosene, and subsequently

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  storing and distributing the produced premium paraffin, costs money. However, during the years of price control the price differential of premium paraffin steadily decreased. In December 1973 this differential was about 8 per cent.; in December 1975 it was 3 per cent.; in December 1978 it was zero; and it subsequently fell to -8 per cent. in June, just before the price control was lifted. That negative differential posed a serious threat to the long-term future of premium paraffin manufactured in this country.
  It is not reasonable to believe that a company, no matter how socially responsible, could commit itself to maintaining the capital investment necessary to upgrade kerosene against the background of the substanital negative price differential of premium paraffin over regular kerosene. We were very lucky that price control did not in fact have that effect. One major refiner, Shell, did pull out of the market, but for reasons unconnected with price control. The other refiners, notably BP and Esso, are still in the market. It is most important that they so remain.
  It is symptomatic of the effects of price control that advertising and promotion by the oil companies steadily dwindled over the years to only about 10 per cent. of the levels in 1973. Price control took the form of control over retail prices, and as such it naturally bit severely on the retailers. These are of three types. Typically, an oil company supplies paraffin to an authorised distributor, who, in turn, supplies it to a garage, a mobile distributor, or a hardware shop. Price control affected those three types of outlet in varying degrees. Since 1976 the price control orders have not specified a maximum delivery charge. Since then, the mobile distributors have accordingly been free to charge a reasonable amount for their delivery service on top of the controlled maximum retail price. While garages have been relatively little affected by price control, there has been strong evidence that price control has bitten disproportionately severely on the hardware shop, where overheads tend to be higher than for garages.
  The British Hardware Federation, which represents some 5,000 retailers, has made strong representations to my Department concerning the effect of price control. It has pointed to the reduction in
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  members' gross margins in recent years. Before the introduction of price control in December 1973, these were typically about 30 per cent., whereas just before the end of price control, earlier this year, gross margins were below 20 per cent., while against gross margins we must set operating costs.
  The hon. Member should bear in mind that in March 1977 the British Hardware Federation estimated that costs had risen by 121 per cent. since 1973—a much sharper increase than the retailers had seen in their cash margins for paraffin. Since then, costs have risen even further, and in some cases fire insurance premiums, which the hon. Gentleman mentioned, have virtually doubled to those ironmongers who stock paraffin. This year, before price control was ended, the British Hardware Federation told the Department of Energy that it had no option in its function as a management consultant but to advise members to invest any capital involved in paraffin distribution in some other section of their business.
  Mr. Ashton: We are not saying that retailers should not have had a sufficient profit margin or that the price should not have gone up. We are saying that the poorest part of the community should not be left to the free market or to the vagaries of OPEC.
  Mr. Gray: If the hon. Gentleman will bear with me, I shall deal with these points in due course.
  Against this background, it is hardly surprising that the number of retailers of premium paraffin has fallen steadily during the period of price control. A 1977 survey of the British Hardware Federation members revealed that no fewer than 19·3 per cent. of them had stopped selling paraffin over the previous five years. A further 23 per cent. indicated their intention to stop selling paraffin. There is evidence that the number of retail outlets continued to fall after the survey.
  In the period 1973–79, overall demand for premium paraffin fell by almost 30 per cent., yet the fall in the number of hardware shops stocking it in the same period was approximately 40 per cent. That is a very alarming figure. Many such retailers are in rural and inner city

  569
  areas, where the number of garages—which are an alternative source of premium paraffin supply—has also been declining. No Government who genuinely have at heart the needs of those who rely on premium paraffin could allow this position to continue.
  It is significant that the Paraffin Heaters Advisory Council, which represents the manufacturers of paraffin appliances, has also expressed concern at the decline in the number of hardware shops willing to sell paraffin. Retailers who give up paraffin also tend to stop selling paraffin heaters. Heater sales have experienced a sharp drop over the last five years.
  Mr. Gwilym Roberts: The Minister said that over a five-year period there had been a 19·3 per cent. decline in the number of hardware shops dealing in paraffin. Is it not the fact that the number of hardware shops had declined, for other reasons, by approximately the same extent during the same period?
  Mr. Gray: I have not the exact figure for the number of hardware shops which vanished altogether. I am quite sure that, in relation to the term of the last Government, the hon. Gentleman's point is correct. But I am saying that a further 23 per cent. had said that they intended to stop selling paraffin.
  I have dwelt so far on the distortions which price control introduced into the supply side of the supply-demand equation for premium paraffin. Yet it would be wrong to suppose that the distortions have been limited to the supply side. Premium paraffin is upgraded kerosene. As such, it can be used in all those applications where regular kerosene is used. A recent danger, resulting from the artificially depressed price of premium paraffin, has been that users of regular kerosene for central heating might have switched to premium because it was cheaper. In a harsh winter bulk purchases of this type might have led to deficiencies in premium supply which the oil companies would have found it difficult to make good because of their limited production capacity. So small retailers especially might have been unable to obtain premium paraffin supplies for those who really needed it. Health also would have been at stake. Users of premium paraffin, unable to obtain it, might have attempted to substi-
  570
  tute regular kerosene which is harmful to health because it produces sulphur fumes.
  It would have been ironic indeed if a policy intended to enable those who rely on premium paraffin to buy it cheaply had resulted in their being unable to buy it at all at whatever price. We were certainly heading very fast in that direction.
  The controlled price of premium paraffin was last increased in February. Since then crude oil prices have risen sharply. The increase this year is in fact about 60 per cent. A further increase in the price of premium paraffin was therefore inevitable. Opposition Members may ask: could the Government not have ensured supplies by further increasing the controlled price rather than by removing price controls altogether? My reply is that price control had outlived its purpose; that it is inflexible and administratively cumbersome; and that, as I have demonstrated, it introduces market distortions which threaten the very consumers it is intended to help. Price control is, furthermore, an inefficient way of helping the poor and the old, for many paraffin users who have benefited from low prices are neither poor nor old.
  Dr. David Owen (Plymouth, Devon-port): Does the Minister recognise that one of our concerns is that allowing free market forces to operate has already resulted in the price of petrol in this country being higher than in any other EEC country by a very large factor? A gallon of regular grade petrol in this country can cost 63·5p compared with 55p in Germany and 53p in France. We are afraid that the same free market forces will have a similar effect on paraffin.
  Mr. Gray: If in July we had listened to representations by right hon. and hon. Members opposite, we might well have had petrol rationing at this stage. But my right hon. Friend refused to panic—he kept his head when others around him were losing theirs—and overcame the situation. We were being warned of the terrors of a shortage of petrol throughout the holiday season. Yet, because of the action and firm stand that we took, the harvest was gathered without any trouble and we had not problems with the farmers. [HON. MEMBERS: "Tourism."] The early part of the tourist season was disastrous, because Opposition Members

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  built it up to a situation which did not exist. That is why the tourist areas suffered.
  The Government therefore decided that the proper course was to abolish price control, not merely to raise the controlled price. We did not take this decision lightly. Before doing so we sought and obtained assurances from the refining companies that they would continue to supply premium paraffin for as long as it was economic to do so and that future wholesale prices of premium paraffin would reflect no more than the additional cost of supplying the regular grade. That is the background to the Government's decision to abolish price control as from 12 July.
  Mr. Robert Maclennan: The Minister has spoken about difficulties on the supply side. Can he say anything about reported difficulties on the consumer side? Is there any evidence of the sort of shortages that he has been adumbrating flowing from the continuance of price control? He has twitted my right hon. and hon. Friends for stirring up anxieties about petrol. Is he not doing precisely the same thing himself in respect of paraffin? What evidence is there in his Department that there has been a shortage of supply? The mere contraction of the number of outlets does not necessarily support the view that there will be any shortage at all.
  Mr. Gray: That is a perfectly fair point. However, the question of the shortage of paraffin was pointed out by the hon. Member for Bassetlaw. Of course, it is common knowledge that there was a genuine shortage of paraffin in the early part of this year. If the hon. Gentleman is asking whether I have any evidence of a shortage of paraffin at this time, the answer is that of course I have not. There is no evidence at present. But I imagine that the amount of paraffin now being used is relatively small. Certainly there was a shortage at the time when it was needed most.
  Although the industry has given my Department assurances about the overall adequacy of supplies, this does not mean that local supply difficulties cannot or will not arise. But this will not be due to any general shortage of supplies. If in-
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  stances of real difficulty arise, my Department stands ready to do what it can to help, just as it did during the summer when instances of petrol shortage were reported to it.
  The price of paraffin has naturally increased substantially as a result of the removal of price control—typically, to between 65p and 70p per gallon, although there will naturally be some variation in the price from place to place. For example, a consumer who uses two gallons per week will, therefore, be paying around an extra 35p. While regrettable, this price increase is, as I have argued, absolutely necessary if supplies are to be safeguarded, and even at 70p per gallon, premium paraffin remains a cheap and efficient fuel. Incidentally, the duty on it is a mere 1p per gallon, and it was kept at that level in the Budget in June.
  On Monday, the House heard from my right hon. Friend the Secretary of State for Social Services of the Government's proposals for helping poor families with their fuel bills this winter, and our determination to ensure that such help is directed to those in greatest need.
  In conclusion, may I remind the House of what my right hon. Friend the Secretary of State for Energy said in July when he announced the end of price control? He said that price control was being lifted in order to ensure continuity of supply. This is the essential point, and the Government's firm view is that it is better that supplies should be available, even at a higher price, than not at all. I commend to the House the Paraffin (Maximum Retail Prices) (Revocation) Order, and I beg leave to oppose the Prayer in the name of Labour Members.
  10.48 p.m.
  Mr. Robin F. Cook: During his speech, the Minister twice used the phrase that price controls on paraffin had "outlived their original purpose". He said that at the beginning of his address and also towards the end. It would help the House if he would indicate what he understands to have been the original purpose of the price controls on paraffin. The fact is that they were introduced in December 1973 in the wake of the then hike in OPEC prices, which was feeding its way

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  through into paraffin as into all other oil products.
  We now have a situation in which there has been another hike in OPEC prices, and the Government are responding by abolishing those same price controls that were introduced by the previous Conservative Government to deal with exactly this type of situation five years ago. The Minister cannot escape that contrast between the action of the previous Conservative Government, who brought in these price controls, and the action of the present Government, whose response has been to abolish them. That is the measure of how much more reactionary they are now than they were in 1973, and God knows, some of us thought that they were bad enough then.
  My hon. Friend the Member for Bassetlaw (Mr. Ashton) made an excellent speech. If I may fault him on one point, I believe that he rather underestimated the extent of the price increase. He referred to a figure last winter of 53p per gallon, but that was the price in February. This time last year the price per gallon was 47p. The Minister referred to a price of 65p to 70p per gallon being common, but today I spoke on the telephone to distributors in Edinburgh, and the average price there is somewhere between 70p and 78p a gallon. A rise within 12 months from 47p to between 70p and 78p is an increase of 60 per cent. For those who use two gallons of paraffin a week that increase is not 35p but 46p. It is four times the general rate of inflation and more than three times the rate of increase in welfare benefits, which we shall be asked to debate next month.
  That contrast is relevant. Many of those who depend on paraffin also depend on welfare benefits. They are the elderly, sick and disabled. These are people who require heating for health purposes and who for reasons of economy use paraffin because they cannot afford other forms of heating. They cannot cope with an increase of 60 per cent.
  My constituency is in an inner city area and like other such areas has a high proportion of elderly residents. It is a staggering fact that 25 per cent. of my electors are over 65, and I know the hardship that will result from these price increases for many of my constituents.
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  I do not consider the Minister to be hard-hearted but rather do I consider him to be one of the more reasonable members of the Government, if I may say so without damaging his prospects in that Government. If, however, he is in any doubt about that hardship, I invite him to come with me to any of the pensioners' clubs in my constituency. He will there meet people who are frankly appalled when considering how to meet their heating bills in the coming winter.
  In case he cannot come, I shall give the figures that I obtained only this afternoon from the largest distributor in my constituency. He tells me that last October he sold over 2,000 gallons of paraffin. So far this October he has not sold 1,000 gallons.
  Mr. Gray: It has been warmer.
  Mr. Cook: With respect to the Minister, it is at this time of the year that typically most paraffin users are topping up their stocks. One has only to compare the sales over the years to demonstrate that. I do not know where the Minister has been in the past two weeks, but if he had been in Edinburgh he will know that it has not been warm during the past fortnight.
  The distributor to whom I refer has 85 old-age pensioners to whom last winter he supplied paraffin on delivery. These people are housebound and most likely to be affected by hypothermia. This month not one of them has placed an order for paraffin to be delivered.
  I frankly concede that last winter the price of paraffin was unrealistic. I have spoken to the British Hardware Federation and to the distributors, and no one who has done that would be prepared to defend the price obtaining last winter. But the House must live with the consequences of that low price. The major consequence is that a large number of low-income households came to depend on paraffin for their heating because they could not afford electricity. If we kick the price controls away at one blow, without a transitional period and without offering help to meet that increase or cope with alternative forms of heating, undoubtedly they will face real hardship. The irony is that we are debating the issue only 48 hours after we learnt in this Chamber that the electricity discount scheme, which could be the only possible

  575
  alternative hope for these people, has come to an end.
  I have no great pleasure or enthusiasm in demanding that we have a subsidy for energy. It would be preferable to put our money towards providing insulation. We should be channelling money into the conservation of energy rather than subsidising its consumption. That will happen between now and January. We have a short-term crisis to which the Government have a duty to respond, in which low-income households have been hit by inflation and will not be able to buy the fuel they will need to see them through the winter. It is beyond belief that the Government should respond to that crisis on Monday by announcing the removal of subsidy of electricity and on Wednesday by asking us to approve the removal of price controls on paraffin.
  The House was not asked its opinion on the ending of the electricity discount scheme—indeed, it was not even given a statement about it. We do at least have an opportunity now to voice our opinion on the ending of price control on paraffin, and I believe that we should take that opportunity in the Division Lobby.
  10.55 p.m.
  Mr. Peter Mills: I welcome the opportunity to say a few words on this important matter, because it highlights a genuine problem in the towns and particularly the rural areas. Oil heating is of particular importance to many people in the rural areas. I find it amazing, especially when I travel round the South-West, to see the number of people still using these heaters. Elderly people get very fond of, even affectionate towards, this type of heating, although it is probably unhealthly and probably not very safe. But they prefer it, they have got used to it.
  Frankly, I only just accept what the Minister has said, because there is here a genuine problem, and unless one has actually seen it for oneself one does not realise how difficult this situation will be for many elderly people. I am concerned about it, and I want my hon. Friend to know that, because a very large number of people still depend upon this form of heating.
  There have also been problems of delivery—there is no question about that. In the old days, the travelling salesman
  576
  would go round the rural areas selling all sorts of things, including paraffin, which he delivered in small quantities to elderly people. That is all finished because of the cost of motor transportation. As I say, I only just accept what my hon. Friend has said. I hope that it works, but it means that a big responsibility rests on the companies that supply this heating fuel. Freedom means responsibility, and I hope that the companies will realise their responsibilities as regards both price and supply. After all, they have been supplying these people for many years.
  It is not only in the supply of paraffin that the companies have to act responsibly. The closure of many small garages by the same companies because of the failure to deliver petrol is a very serious matter in rural areas and will contribute to further depopulation. These big companies with monopolies have a great responsibility in this matter, and I hope that my hon. Friend will mention that fact to them. It is a responsibility that they must bear.
  There is also the problem of storage. Fire prevention officers have been checking up on storage of fuel in ironmongers' shops. Admittedly, such places are probably not very safe. This aspect also has created problems, resulting in a dwindling number of places where people can purchase oil supplies.
  I hope that the Minister will watch the situation carefully. I believe that the problem is dwindling—and I do not mean to be funny—as more and more of these elderly people, particularly in the remoter rural areas, die and other people change to Calor gas or other more modern heating appliances. In the meantime, however, while so many elderly people continue to rely on this type of heating for their homes, I hope that the Minister will keep the situation under review very carefully and try to point out to these big companies their social responsibilities in this matter. I repeat that freedom means responsibility.
  10.59 p.m.
  Mr. David Penhaligon: It is a pleasure, as always, to follow the hon. Member for Devon, West (Mr. Mills). We both realise the importance of paraffin supplies in rural parts of Britain and, in the case of the hon. Member for Devon, West, the very rural parts of Britain. I

  577
  have constituents living in isolated conditions whose sole form of heating is paraffin. They did not reject electricity as being too expensive. Their only alternative is a rather antiquated and worn-out Cornish range in the corner of the room. I am amazed that a number of these cases still exist.
  The Minister made out a better case than I had thought existed for a substantial price increase in paraffin, but not a good enough case to justify the sort of price increases that have taken place. Neither do I believe that he made out a case for arguing that all controls over the price should be ended. I regard the control of paraffin prices—a minority supply situation—as a long-stop measure to prevent a company or a supplier from exploiting the sort of monopoly that exists in some communities. Paraffin is supplied for areas that are far bigger than most of the constituencies represented by Opposition Members.
  As the Minister knows, I believe that it is time that we put a statutory obligation on the fuel companies to supply petrol and, indeed, paraffin to those outlets that want to buy it. There is a case for charging more where long distances are involved, but I do not believe that the petrol companies have any moral case for arguing that, in their judgment, another man's business or garage is not viable. That is not and never has been their concern. If someone is prepared to sell paraffin or petrol in Cornwall or Devon at a ludicrous rate of return, that is his privilege and not the business, of Esso, Shell or the others.
  Even at this late moment, I ask the Minister to pledge that he will bear the reintroduction of price control in mind if clear evidence can be produced by hon. Members of persons exploiting the market. I shall vote against the Minister tonight but, knowing the arithmetic of the House, I suspect that he will win the Division. However, if evidence of exploitation of this minor market can be produced I ask him to pledge to bring back price control as a long-stop safeguard against the exploitation of the monopoly.
  11.3 p.m.
  Mr. Peter Viggers: This short debate gives us the world of politics in microcosm. It is all very well for
  578
  Labour and Liberal Members to demand freedom of supply for paraffin. I was here when the Secretary of State for Energy faced a barrage of demands from Devon, Edinburgh and other parts of the country to do something about the fuel supply. He has done just that and actions speak louder than words. Through the Secretary of State for Energy, the Conservative Party has provided the energy that people were demanding. There is no via media, no compromise, between controls on the one hand and free market forces on the other.
  Energy is the most international of resources. Supply and demand will always match, given a free market. The other side of the coin is that fuel will flow to the area where it receives the best price and it will not be made available unless a market price is paid for it. Customers will switch to cheaper fuels but those fuels will not be available unless the price is right for the supplier. Between oil, gas, coal, electricity and, indeed, paraffin there is a great deal of interchangeability. Paraffin is one of the most easy fuels to switch to because of the small capital cost of the equipment for burning it. Paraffin can easily be switched into and out of.
  If the price is right, paraffin will be available. If the price is not right, paraffin will not be available. If it is not available, how can we try to make it available? We can have controls, which make sense for a short period. The Conservative Government instituted controls in December 1973 and such controls can have validity for a short period to show a Government's determination to control prices and supplies. However, on a long-term basis, controls do not make sense.
  The hon. Member for Bassetlaw (Mr. Ashton) talked about "leaning on" the oil companies. I do not know, and I am not sure that the hon. Gentleman knows, what that means. If we use Government pressure to control supply we must have a rigid system of inspection, search powers and the risk of rationing, black market operations, and the sort of shortage of supply that we saw earlier this year and averted only by allowing prices to go up.
  It is even worse than that. The whole panopoly of State inspection and control would not be enough. The price of paraffin would be so unattractive that it would

  579
  not be worth turning kerosene into paraffin. It would be necessary for the Government to use powers to force companies to make paraffin.
  What should we be doing to make sure that people have the fuel that they need? We care about that and we want them to have the fuel. First, we should free paraffin to find its market price. Freeing the price of paraffin has meant that it has increased from about 52·5p a gallon to about 73p a gallon. That is a massive increase, but it is the fault of the previous Government for holding down the price. It is not the fault of those who have allowed the price to equate with the market.
  Mr. Allen McKay: It is evident that there is an oil interest somewhere here. In the past two weeks I have spoken to officials of oil companies in America and they have admitted that the petrol and oil price increases have been the biggest rip-off that they have ever had. They are looking forward to the next price increase because it all goes in their back pockets.
  Mr. Viggers: The hon. Gentleman may seek to join any group that he wishes. There are many in the United States who feel that the international oil crisis is a figment of the imagination of the oil companies which have created it to make large profits. That is a by-product of the increase and diminution of prices. There may be benefits for companies in the increases in oil prices, in the same way as there will be a loss for them if prices go down. However, that is incidental and should not distract us from the main issue.
  Mr. Bob Cryer: Will the hon. Gentleman remind the House whether he has a financial interest in any oil companies so that pensioners and others who read the debate may decide for themselves—on information provided in the debate and not on an interest declared months ago—what his position is?
  Mr. Viggers: I am always delighted to see the hon. Member for Keighley (Mr. Cryer), who jumps up and always reminds me—I do not know whether this is a parliamentary expression—of a sewer rat jumping up to try to—
  Mr. Cryer: On a point of order, Mr. Deputy Speaker.
  Mr. Russell Kerr: The hon. Member for Gosport (Mr. Viggers) reminds me of a skunk.
  Mr. Cryer: I raised a perfectly legitimate point. Hon. Members who have a financial interest in the subject under discussion should declare that interest. That is a well-known rule and it is a resolution of the House that such an interest should be declared.
  In response to that, the hon. Member for Gosport (Mr. Viggers) declared my request to be that of a sewer rat. I believe that to be an unparliamentary expression and I shall be grateful for your comments, Mr. Deputy Speaker. I ask that the remark be withdrawn. I was merely pursuing my duty as an hon. Member and I intend to see that all hon. Members declare their financial interests so that people outside know whether those hon. Members are trying to further their own position or the position of the nation at large.
  Mr. Deputy Speaker (Mr. Bryant Godman Irvine): It is certainly clear that an hon. Member should declare his own interest. The expression would appear to be unparliamentary.
  Mr. Viggers: I stated, Mr. Deputy Speaker, what the hon. Gentleman reminded me of. I did not call him anything in particular. I certainly apologise if the hon. Gentleman is upset by the impression that he makes upon me during a debate. I apologise for that, and withdraw it unhesitatingly.
  I also declare, in response to the hon. Gentleman's request, that I have an interest in this debate. I want people in my constituency and in the country to have proper fuel supplies made available to them. I have absolutely no financial interest in the subject of this debate.
  The Government should help those in real need, and this is what the Government are doing. Benefits will rise by between 17 and 19½ per cent. this year. This will more than keep pace with fuel prices. The discretionary heating addition paid by the Supplementary Benefits Commission will go up from 85p, £1·70 and £2·55 to 95p, £1·90 and £2·85. Most importantly, as the Secretary of State for Social Services announced recently, householders with children under 5 and pensioner householders over 75 will have

  581
  a heating addition which, in some cases, will be as high as £50 per year. This kind of benefit will be of use to those in real need.
  We believe that the consumer should have freedom to choose. I do not see any justification for subsidising the use of paraffin which, as stated from the Labour side, is smelly, unhealthy and, in some cases, dangerous. There is no justification for subsidising that fuel. I can understand those who wish to safeguard the supplies of their own constituents but hon. Members on the Opposition Benches should know better than to promise unrealisable dreams of cheap fuel and to trade in delusions.
  11.13 p.m.
  Mr. Gwilym Roberts: I am glad that the Minister dealt with the British Hardware Federation and some of the difficulties, as he saw them, for small hardware retailers. One of my main reasons for intervening in the debate is to put forward some representations made to me by a small hardware retailer in my constituency who deals in paraffin.
  As my hon. Friend the Member for Bassetlaw (Mr. Ashton) has pointed out, we are all theorists. This is not a fuel the price of which will affect hon. Members. The dealer to whom I refer knows the problems of the people who buy paraffin. His experience is fully in line with the remarks made by my hon. Friend. The people he supplies with paraffin are almost invariably very low-paid families, the old and the disabled. Other people have been able to convert to another fuel. Those left are the residue of the unprotected in our society.
  This hardware retailer approached me in late February this year over difficulties of supplies. I contacted both distributors and wholesalers. None of them suggested to me that the problem was associated with price. They suggested that the problem was simply due to the difficulties of the winter and the complexities that arose at that time.
  This retailer delivers in a wide area. But he still believes, with the price increases that have been granted, that there is an adequate margin attached to the job.
  I am sure that it is not suggested that, because this retailer is a staunch member of the Labour Party, compassion lies only
  582
  with retailers who are members of the Labour Party. That retailer believes that the margin is adequate. He is worried about what will happen if prices are allowed to explode. He does not believe assurances such as those which have been given today. He fears the worst.
  Even if the Government want to apply market forces generally, if there is an area to which those forces should not apply, it is this area. Those affected have already been battered by the present Government proposals. They face the prospect of the disappearance of the electricity discount scheme. Allowing paraffin prices to explode will be the final blow to many people. I urge the House to express its opposition to the proposal.
  11.16 p.m.
  Mr. Gray: With the leave of the House, I shall try to answer some of the matters raised in this short debate. I congratulate hon. Members for their constructive contributions. Debates such as this are of great value since they take place in a more relaxed atmosphere than that which prevails during the day.
  The hon. Member for Edinburgh, Central (Mr. Cook) and some of my hon. Friends expressed their anxiety about the elderly and most needy families. Perhaps the hon. Member for Edinburgh, Central did not appreciate that the 1977 family expenditure survey showed that the poorest 33 per cent. of total households accounted for 40 per cent. of paraffin use. Paraffin is certainly important, but we should not forget that 60 per cent. of paraffin is used by households which are not poor.
  The Government have decided to provide more help for those who are in most need—the very old and families with young children. Under the last Government's scheme the average payment was less than £8 per beneficiary. We shall be providing up to £50 for those who are really vulnerable.
  Mr. Cook: The hon. Gentleman must concede that the £50 is not an increase. It is simply an extension of a benefit which has always been available at the discretion of supplementary benefit officers. I am prepared to bet the Minister a fiver that the code advises officers to use their discretion when dealing with people over 75 and mothers of children under five.
  Mr. Gray: I shall not enter into rash bets with the hon. Gentleman. The Government's purpose is to direct the greatest help to those most in need. Many of the hon. Gentleman's constituents will benefit.
  My hon. Friend the Member for Devon, West (Mr. Mills) expressed his anxiety. He suggested that companies should take the responsibility for ensuring supplies. I said earlier that we have had talks with the companies to ensure that there is no scarcity of supply. I said that if genuine difficulties arise my Department will try to help as it did with the petrol shortages.
  My hon. Friend the Member for Devon, West also touched on the point about small garages. I am greatly concerned about this aspect. As he knows, I represent a rural constituency, and therefore the point has been emphasised to me. We have had considerable consultation with the companies on this point and I hope on another occasion to explain it to my hon. Friend in greater detail.
  The hon. Member for Truro (Mr. Penhaligon) also drew attention to small garages. I refer him to the remarks I have addressed to my hon. Friend. I have written to him on the subject. He also said that he hoped that the Government might consider the reintroduction of price control if genuine cases of hardship could be shown. I cannot give him that assurance, but I can assure him that if there are any cases where supply is affected my Department will certainly do its utmost to help.
  Mr. Penhaligon: Is the Minister saying that if I can produce for him evidence of paraffin being sold in my constituency for £1 a gallon he will do nothing about it?
  Mr. Gray: No, that is not what I said. I must ask the hon. Gentleman to be reasonable. Price control has been removed. I said that if there was evidence of anyone having difficulty in obtaining supplies my Department would do anything it could to help. But we believe that if someone is selling at £1 a gallon in the competitive market it is highly likely that he will not sell very much paraffin.
  My hon. Friend the Member for Gosport (Mr. Viggers) made a very helpful contribution to the debate. He took a realistic view. He pointed out the difficulties that exist for the oil companies
  584
  from time to time. He highlighted the problem of having price control in any petroleum products.
  The hon. Member for Penistone (Mr. McKay) who interrupted my hon. Friend the Member for Gosport with the point about a rip-off by the oil companies has overlooked one point which I have made before. When we talk about oil company profits we should not forget that in the North Sea there is, in a stable political climate, a situation that makes exploration most attractive to oil companies. We should encourage the oil companies to reinvest large amounts of the profits they make in the North Sea for the benefit of the country.
  Mr. Ashton: Why, then, are the Government seeking to chop the British National Oil Corportion?
  Mr. Gray: We are not chopping it.
  Mr. Ashton: No, they had to drop that one.
  Mr. Gray: The hon. Gentleman must be fair about this. If I commented on the progress which the Corporation is now making I should be ruled out of order by Mr. Deputy Speaker. But the opportunity will shortly arise when we shall be able to describe our future plans and just how we see the Corporation as a flourishing concern in its new direction.
  Let me deal now with the comments of the hon. Member for Cannock (Mr. Roberts) and this solitary member of the Labour Party who also happens to be a small business man. It is interesting to hear that there are some small business men who are sufficiently public spirited to subsidise the community by accepting that the price they were charging for paraffin earlier this year was sufficient. Even Labour Members accepted that the differential was unacceptable at that time. Nevertheless, the hon. Gentleman fairly said that the retailer was satisfied. He also said that he was worried about the unprotected in our society. When I referred to the remarks of the hon. Member for Edinburgh, Central I highlighted the Government's same concern. I firmly believe that the measures introduced by my right hon. Friend the Secretary of State for Social Services meets the point.
  Mr. Gwilym Roberts: Surely the hon. Gentleman accepts that although the measures introduced by his right hon. Friend may be helpful to a small proportion of the unprotected, the great majority of them will be completely unprotected, whereas previously they had some protection. That is the direct result of his right hon. Friend's measures.
  Mr. Gray: I do not accept that. That is a view that obviously will be expressed by Opposition Members. It is right and proper that they should examine the proposals carefully. However, I take a different view. The proposals outlined by my right hon. Friend will be of considerable benefit to those who are most in need. There will be some who take the view that they are not protected, but that applies to any measure. That applied to the measures taken by the previous Administration. There are always those who feel that they are not adequately protected. In this instance I believe that my right hon. Friend has taken the right action.
  I have tried to deal with the arguments advanced by Opposition Members. I realise that the Prayer was tabled in July and that perhaps some of the heat has gone out of the subject since then. We are grateful to the Opposition for the constructive attitude that they have adopted.
  Mr. Cryer: On a point of order, Mr. Deputy Speaker. I raised earlier the fact that an hon. Member who contributed to the debate has an interest. The hon. Gentleman has declared previously an interest as a director of an oil company. He said tonight that he did not have a direct interest in the debate. Presumably that is because the oil company of which he is a director, according to the most recent published list—Premier Consolidated Oil Fields Limited—does not have an involvement in the supply of paraffin. I ask you, Mr. Deputy Speaker, to make it clear that where hon. Members have a general interest, not a specific interest—surely the Prayer is much involved with the position of oil companies in general and not specifically with paraffin—they should declare that general interest.
  Mr. Deputy Speaker: The hon. Member for Gosport (Mr. Viggers) made a
  586
  clear declaration of his position. This is not the moment when we can pursue the matter as there are only two minutes of time allotted to the debate remaining.
  The Question is as on the Order Paper. As many as are of that opinion say "Aye".
  Hon. Members: Aye.
  Mr. Viggers: On a point of order, Mr. Deputy Speaker. The oil company of which I am a director does not buy or sell petroleum or petroleum products in the United Kingdom.
  Mr. Deputy Speaker: The Question is as on the Order Paper. As many as are of that opinion say "Aye".
  Hon. Members: Aye.
  Hon. Members: No.
  Mr. Deputy Speaker: To the contrary "No". I think the Ayes have it. The Ayes have it.
  Resolved,
  That an humble Address be presented to Her Majesty, praying that the Paraffin (Maximum Retail Prices) (Revocation) Order 1979 (S.I., 1979, No. 797), dated 10th July 1979, a copy of which was laid before this House on 11th July, be annulled.
  To be presented by Privy Councillors or Members of Her Majesty's Household.
  Mr. Deputy Speaker: The Noes—The Question is—[Interruption.] Order.
  Dr. Owen: On a point of order, Mr. Deputy Speaker. The motion was quite clearly put by the Chair. The opportunity was given for the Government to oppose it. Surely the motion has been carried and the Government must face the consequences.
  Mr. Gray: Further to that point of order, Mr. Deputy Speaker. Voices on the Government side of the House clearly registered "No".
  Mr. Deputy Speaker: We were on a point of order at the time I put the Question. I came to the conclusion that the time had come to put the Question. There was a certain amount of confusion at the end of that time and I am therefore putting the Question again so that there can be no confusion whatever.
  Dr. Owen: Further to that point of order, Mr. Deputy Speaker. It was in the hearing of the whole House that the Question was put in the normal way and you said that the Ayes had it. The decision was taken. I realise that an error may have been made. The Government will have to lay another order and another debate will take place. I do ask you to consult your advisers. The motion was put, the voices were heard, and you said that the Ayes had it. That is the issue and that was said in this House. That must stand.
  Mr. Ashton: I moved it. We shouted "Aye". They said nothing.
  Mr. Deputy Speaker: In view of what the right hon. Gentleman has said I must agree that that is the position.
  Mr. Michael Neubert: Further to that point of order, Mr. Deputy Speaker. It was in my hearing, and I am sure in yours, that there was a cry of "No" from the Labour Benches which creates, to say the least, a certain doubt in most people's minds as to what the view of the House is. I put it to you that it would be entirely within the spirit of the House if a Division were to be called and the confusion reconciled by the results of that Division.
  Mr. Gray: Further to that point of order, Mr. Deputy Speaker. It was clearly the case on the Government Benches that cries of "No" were heard. It is not unusual for Mr. Speaker to say "The Ayes have it" and, when the Noes are vehement in their calls, for him to call a Division. I put it to you that the will of the House is that a Division should take place on this matter.
  Mr. Deputy Speaker: I had announced that the Ayes had it and if there were any cries of "No" that reached my ears it was after I had come to that decision. I am afraid that I cannot change that decision.
  Mr. Gray: Further to that point of order, Mr. Deputy Speaker. In the event of a dispute of this sort, where Mr. Speaker or Mr. Deputy Speaker has not heard the Noes, surely, in the interests of the House, it is only right that the Question should be put again. There undoubtedly will be precedent on this matter.
  Mr. Roger Moate: Further to that point of order, Mr. Deputy Speaker. May I confirm that I, too, distinctly heard Noes expressed from both sides of the House? You then clearly made a ruling from the Chair that, to clarify the situation, you were putting the Question again. That ruling was then challenged by the Opposition Front Bench. May I suggest that the challenge to your ruling was quite improper and that your earlier ruling should stand and that the Question should be put once more to clarify the situation?
  Mr. James Hill: Further to that point of order, Mr. Deputy Speaker. I have been here throughout the debate, I have clearly said "No" several times and I like my "No" recognised by the Chair.
  Mr. Deputy Speaker: I had called for the voices and at that time I was of the opinion that the Ayes had it. After that time, when I had declared that the Ayes had it, I did hear sonic further noise. But that was too late.
  Mr. Gerald Kaufman: On a point of order, Mr. Deputy Speaker. The Government are seeking to overturn your ruling by indulging in this synthetic indignation. May I have an assurance that the Adjournment of the House has not been moved and that this synthetic indignation will not disadvantage the children of Manchester?
  Mr. Deputy Speaker: I was about to say that the time had come for somebody to move the Adjournment of the House.

  DUCHESS OF YORK HOSPITAL, MANCHESTER
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Brooke.]
  11.35 p.m.
  Mr. Gerald Kaufman: I am grateful for the opportunity to raise the important matter of the Duchess of York hospital for babies. I hope that the House will give a hearing to the problems facing this hospital. The behaviour of Conservative Members at this moment does not indicate that they wish the House to hear about them.

  589
  The Duchess of York hospital has been serving Manchester for more than a century. The troubles afflicting it have been causing local parents profound concern for about two years, that is, ever since word got around as a rumour that the area health authority planned to discontinue the surgical facilities at that hospital, with, as was proposed at one time, the surgical services transferred to Manchester Royal Infirmary.
  The area health authority met on 19 December, and as a result it issued a proposal which was eventually approved by the North-West regional health authority on 27 February of this year. That proposal was stated in a letter dated 12 March to me from the regional administrator. He said that the proposal was to
  "discontinue the surgical services at the Duchess of York hospital in favour of providing a service for mentally handicapped children."
  I am totally in favour of providing the best possible facilities for mentally handicapped children, and I should not be seeking to raise this matter in the House, as I have elsewhere, if I thought that doing so would in any way disadvantage mentally handicapped children. I am the president of the South Manchester Society for Mentally Handicapped Children and I contend—and in this I am supported by large numbers of people—that the closing of a unique and valuable surgical unit is not the way to help handicapped children.
  We have reached the situation that the proposal has gone through the area health authority and the regional health authority and is now before the Secretary of State, and only the Secretary of State can save the Duchess of York hospital as a surgical hospital for children. This is a small, local, specialist hospital. It has 115 beds and is the only exclusive children's hospital in South Manchester and the surrounding districts. It has the only paediatric operating unit in the area, and it is regarded as vital to paediatric services in South Manchester. Within the past few years the operating department has been rebuilt and upgraded at a cost of £33,753, and another £53,174 has been spent on building a unit to extend the surgical accommodation for older children.
  The hospital has one of the only two paediatric nurse training centres in Manchester.
  590
  It has been argued—this is one of the cases put forward by the area health authority—that the facilities at this hospital are not full utilised. There are arguments whether the calculations by the area health authority have been arrived at validly and on a fair basis. But in any case, there are reasons for any under-use that may have taken place. First, the surgeons had to take the work elsewhere when the operating theatre was being modernised. Second, there was the problem, in addition, that no surgical registrar had been accredited to the hospital. Even so, in the year 1977, 1,026 children received in-patient surgical treatment at the hospital. Later quarterly figures that have been made available have shown an increase in the use of the operating theatre of, in at least one quarter, up to 91 per cent.
  The case put forward by those who wish to save this hospital is that the most serious consequences could follow the closure of surgical facilities. If the House would allow me I should like to quote at a little length from the most authoritative letter that I have received, from a highly qualified member of the department of anaesthetics at Withington hospital. It is a lengthy quotation but it is from an expert person who can put the case far more expertly than I. He writes:
  "The AHA proposals recommend that:'…in the short term all surgical work should cease' at the Duchess of York. The surgical cases will have to be transferred elsewhere. If transferred to North Manchester, where the paediatric surgeons will continue to operate, the children and children's parents on the south side of Manchester will suffer unnecessary serious inconvenience and even hardship"—
  and, I would add, expense—
  "by the very difficult additional cross-city travelling imposed when visiting hospital. As there are no paediatric surgeons who will continue to operate in South Manchester, surgical cases remaining in general hospitals in South Manchester will be operated on by surgeons without training or experience in paediatric surgery. This could have serious consequences in the case of surgery on infants and small children, and particularly when surgery may be performed by inexperienced junior surgical staff.
  The Duchess of York is the main centre in South Manchester for the training of anaesthetists in paediatric anaesthesia and for the continuing experience of anaesthetists practising paediatric anaesthesia. It is also the only centre with proper paediatric anaesthetic facilities. Discontinuation of surgery (and anaesthesia) at the Duchess of York will mean a serious lack of training facilities and experience in paediatric anaesthesia in South Manchester and in future, therefore, an ever increasing risk of children

  591
  requiring anaesthetics being attended by anaesthetists without paediatric experience. This could have very serious consequences and it is not improbable that this could result in an increase in anaesthetic mortality amongst children. This, of course, would be intolerable."
  This gentleman goes on:
  "The loss of acute medical and surgical beds at the Duchess of York will mean an inevitable increase in the number of children who have to be accommodated in adult beds on adult wards in general hospitals in the Area. It is generally agreed by those concerned with the hospitalisation of children that this is a most undesirable practice. However, it is a practice which unfortunately is already too prevalent in South Manchester, particularly at Withington Hospital. In January 1978, 43 children were admitted to adult wards in Withington. This figure is quite atrocious.
  The loss of beds at the Duchess of York, particularly for surgical cases, will inevitably mean an increase in this undesirable practice. The AHA report states: 'The implications of these proposals will ensure that, in accordance with the policy of the Area, children are not accommodated in adult beds'. This assurance is inconsistent with the proposed recommendations.
  The standards of accommodation must also be considered."
  He goes on to compare the standards of accommodation at this hospital with those elsewhere, greatly to the advantage of this hospital.
  These grave possibilities, which have been stated with such authority, have aroused unprecedented reaction among local parents. They have formed an action committee. That is a remarkable thing to have taken place among people who previously had been completely inexperienced in any kind of public action. A petition has been circulated and has obtained more than 45,000 signatures. Exactly a year ago this weekend, a protest march took place. People who had never taken part in any kind of overt or public protest activity joined in. We have been bombarded with letters from constituents and from local organisations. I should like to quote from two of them, both from parents who have had children in this hospital.
  One lady, living in Levenshulme in my constituency, has written to me:
  "While my child was in hospital, I was able to visit him any time I so wished, and was encouraged to do so by all the dedicated staff, which is vital to both parents and children. Mothers who live some distance away are offered sleeping accommodation in the mother and child unit, again so necessary for the child who needs reassurance".
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  Another parent wrote thus:
  "Recently my daughter, who is 19 months old, had to go into the Duchess of York for the third time, this being for her second operation, and therefore I do have personal experience of the excellent staff and treatment which is given to babies of this establishment…I would have thought that at the present time, when the Health Service is acutely short of money, it is very wasteful to close down an existing and extremely good babies' hospital and spend a considerable amount of finance on changing its use".
  Concern about this matter has continued right up to the present day. It was discussed with me in my constituency at the weekend and has been raised again with me by correspondence in a letter I received only yesterday. I repeat that under the statute only the Secretary of State can now save the Duchess of York hospital for babies and its surgical facilities.
  The Minister of State told the Conservative Party conference two weeks ago that the Government believed that small hospitals which were efficient and vital to local communities must not be closed, and I quote his words at that conference. He said:
  "No closure of a small unit or hospital will be agreed by us"—
  that is the Government—
  "unless we are certain it is unavoidable and in the best interests of patients in that part of the country".
  The Prime Minister herself said, in the debate on the Address:
  "I have great sympathy with the cause of small local hospitals and hospitals with a special role."—[Official Report, 15 May 1979; Vol. 967, c. 81.]
  Speaking again a little later in this House, the right hon. Lady said of her Government that
  "we approach the question of small hospitals with considerable sympathy."—[Official Report, 24 May 1979; Vol. 967, c. 1226.]
  It is four months since the Minister saw the action committee in a delegation and promised an early decision. Obviously, we do not wish to push him to any particular date and we shall certainly not say that, because it was four months ago, some decision must be announced immediately. But the Secretary of State wrote to me recently and assured me that a team from his Department visited the hospitals in the area on 25 June, so his Department has had four

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  months in which to consider the outcome of that visit.
  I welcome the Under-Secretary of State to his role in replying to the debate. I remember an earlier Adjournment debate, when he first entered the House, and I had the good fortune to be sitting in his present position and to reply to a case that he raised with me. I say to him that we now look to the Government to be as good as their word, in view of what the Minister of State and the Prime Minister have said about the Government's regard for small hospitals. We look to the Government in that light to save the Duchess of York hospital as a surgical hospital. In that spirit I look forward confidently to the Minister's reply.
  11.50 p.m.
  The Under-Secretary of State for Health and Social Security (Sir George Young): The right hon. Member for Manchester, Ardwick (Mr. Kaufman) has made a powerful speech on behalf of what is clearly a popular local institution.
  Proposals by health authorities to close or change the use of hospitals are about the most controversial and hotly felt of the issues which come before us as Ministers. The history of the proposals about the Duchess of York hospital in Manchester, which we are considering this evening, is particularly confused, and it may help the House if I spend a few minutes explaining something of this history and the exact situation that has now been reached.
  Manchester, as the right hon. Member well knows, is and has been from time immemorial the major hospital centre for the conurbation which surrounds it. With its university and medical school it has a concentration of skills and expertise which makes it one of the country's main centres of excellence, and the present-day Manchester area health authority (teaching) serves patients from far beyond its own boundaries. With this concentration of excellence there goes a concentration of beds, and this is true of paediatrics as it is of other specialties. At present there are over 600 children's hospital beds in the Manchester area. These days—and it is something for which we must all feel profoundly thankful—many fewer children than in earlier years get illnesses for which they need hospital treatment, and
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  those who do need not stay in hospital for nearly as long as they used to. The health authority takes the view that the present 600-plus children's beds are a great many more than are justified by the needs of the area they serve, and to support this view it has cited the fact that on average the beds are only 60 per cent. occupied.
  Mr. Andrew F. Bennett: It seems to ignore the fact that a substantial number of children from the Stockport area use the Duchess of York hospital.
  Sir G. Young: The occupancy rate of the Duchess of York hospital is lower than the average. The 60 per cent. occupancy figure for these beds includes children from outside Manchester.
  That generally is the background against which the area health authority decided on a fundamental review of the whole organisation of its hospital services for children. It has now published two sets of proposals on the future shape of these services—the first in a consultative document issued in December 1977 and the second, which took account of reactions to the original proposals, in a revised document published in July 1978. It may be that some confusion has arisen over the differences between the two documents, so I shall mention them briefly.
  Although it is the future of the Duchess of York hospital which concerns us this evening, the area health authority's proposals cover a much wider canvas involving six of the area's hospitals in all. However, it is only that element of the proposals which relates to the Duchess of York which my right hon. Friend has been asked to approve. The reason is that it is the only one of the six for which the proposals involve a substantial change of use. As the right hon. Gentleman said, where a health authority proposes to close or change the use of a hospital, and the local community health council objects, the change cannot be implemented without my right hon. Friend's approval. That is the position in this case.
  Now I come to the area health authority's specific proposals as they would affect the Duchess of York, drawing the distinction between the two successive versions of its plan. The December 1977

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  document proposed a two-stage operation in which, first, the surgical beds would be phased out, to be followed at a later date by the medical beds, though there was a caveat that some medical beds might be retained if experience showed them to be needed. The surgical wards would be taken over mainly by a new paediatric surgery unit to be built at St. Mary's hospital in the central district, while the medical work would be divided between a number of the existing hospitals in the area. The accommodation at the Duchess of York would be adapted to provide residential, assessment and day facilities for physically and mentally handicapped children.
  The North and South Manchester community health councils, as well as a number of the other interests consulted, expressed strong opposition to the proposals in their original form as they affected the Duchess of York, and the area health authority responded by making significant modifications to its revised document published in July last year. Briefly, the new proposal was that the medical beds at the Duchess of York should continue in use but that the 44 surgical beds—just under half the hospital's total complement of 115 beds—should be phased out, the space vacated being used to provide 25 beds for mentally handicapped children together with assessment services. That again is somewhat different from the original plan under which the new unit would have served physically as well as mentally handicapped children. As part of its case for the change now proposed the health authority adduced the fact that the occupancy of the surgical beds was as low as 25 per cent.—much less than that of the medical beds which has remained at 50 per cent. or more.
  Notwithstanding that the authority had now conceded the case for retaining the medical beds, the two community health councils—as is their prerogative—sustained their opposition to the phasing out of surgery from the Duchess of York. In accordance with the procedure laid down by the Department, the area health authority referred the issue to the regional health authority. The regional health authority decided to support the area health authority's proposals, and it is at this point, in March of this year, that it
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  referred the question to my right hon. Friend's predecessor for a decision. I can understand the right hon. Member's feeling that events since then have moved a little slowly, so I shall explain to him exactly where our consideration of the proposals now stands.
  The submission by the regional health authority was overtaken fairly swiftly by the announcement of the May general election, with the result that this was one of the problems waiting for us when we came into office. As the right hon. Gentleman said, he joined in a deputation of members of the Duchess of York action group, led by my hon. Friend the Member for Manchester, Withington (Mr. Silvester), whom I am pleased to see present, which my hon. Friend the Minister of State met in June. I have seen the record of that meeting and am aware of the main points which the group put forward in support of its view that surgery should remain at the hospital. The delegation presented a petition to my hon. Friend which contained some 45,000 signatures, so there can be no doubting the strength of the local support for the hospital and the affection in which it is held. My hon. Friend has told me how impressed he was by the way in which the delegation presented its case, and he promised it at the time that he would pay careful attention to what it had said in coming to his decision on the proposals.
  There are two other things which happened at about the same time. First, arrangements had already been made for a team of my Department's officials to visit Manchester at the end of June and to see at first hand the Duchess of York and the other hospitals affected by the proposals. The impressions which they have reported from the visit are a further piece of the jigsaw which my hon. Friend will take into account when he makes his decision. Second, we were asked in a letter from the chairman of the authority that he and some of his senior officers should have the chance of meeting my hon. Friend and explaining to him their view of the matter before the decision was finally taken. In common fairness, this was something to which my hon. Friend was bound to agree, but unfortunately it has, for various reasons, taken a long time to arrange the meeting. It will, however, be taking place on 5 November, and my hon. Friend intends to announce

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  his decision just as soon as possible after that.
  The right hon. Gentleman will understand why at this juncture I cannot really be forthcoming about the direction of our thinking. There are, however, two points I should like to make about our general view of the matter. I am conscious in the first place of having so far described the history rather from the health authorities' viewpoint. I am partly obliged to do so by the eloquence with which the right hon. Gentleman argued the case of those who object to their proposals. Let me now redress the balance by saying that we fully respect the strength of the local feeling which has been expressed in support of the Duchess of York continuing in its present form.
  I mentioned the petition signed by 45,000 people, but in a way it is all summed up in a letter—charmingly illustrated—sent to my right hon Friend by a 9—year—old girl who has been having treatment there for the past five years. She told us quite simply what she felt about the hospital—
  "it's a great hospital"
  and
  "it's like home from home".
  Views like that which have been expressed by many children and their parents are certainly not the least of the factors that we have to consider. As a Government we have made it very clear that we do not favour excessive centralisation of hospitals and that we see the continuation of small hospitals, complementing and strengthening the services provided in the district general hospitals, as an important means of restoring a local approach to patient care. Indeed, the right hon. Gentleman emphasised that in his speech.
  However, I should like to make one thing absolutely clear, because there still seems to be some misunderstanding. No one is talking about closing the Duchess of York. When the right hon. Gentleman spoke of those who wish to save the hospital, I felt that there was some confusion creeping into the debate. What we are considering is a partial change of use, and the question of how best to provide children's surgical services in an area such as Manchester involves a whole range of issues—finance, the physical ade-
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  quacy of facilities, patients' travelling times, which the right hon. Gentleman mentioned, staffing and the availability of supporting services—to which there is no simple or automatic answer.
  My second and final general point concerns the alternative use which the area health authority has proposed for the present surgical wards at the Duchess of York. At present there is no in-patient accommodation for mentally handicapped children anywhere in Manchester, and they are mainly cared for at Calderstones hospital which is 25 miles away at Burnley.
  There is an undoubted need, as the right hon. Gentleman conceded, to develop services for these children in Manchester, and it does credit to the opponents of the area health authority's proposals that they have been at pains to say that they are not opposing such a development, so long as the Duchess of York can continue as it is now. There are in fact aspects of the health authorities' proposals for mentally handicapped children that my Department would want to discuss with them further if the proposed phasing out of surgery were agreed.
  At this point I simply want to make it clear that the case for doing more for the mentally handicapped will not of itself determine our handling of the immediate issue before us. What we have to decide is whether the continuance of surgery at the Duchess of York is justified by the needs of this service. The question of an alternative use, however desirable in itself, arises only if we are satisfied that it is not.
  The right hon. Gentleman will, I hope, understand that I cannot give him this evening the kind of assurance that he and my hon. Friend the Member for Withington and those for whom they speak would most like to hear. What I can assure him is that, when proposals like these are before us, we examine them as fully and impartially as we can. Certtainly, we do not accept the arguments put forward by health authorities without subjecting them to the most careful scrutiny and satisfying ourselves that they are absolutely sound. In the process we give equal weight to what is said on the other side of the question, and certainly what the right hon. Gentleman said tonight will be fed into the machine.

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  The area health authority's estimate of the savings from the proposed change is one thing that has been challenged, particularly on the question of capital investment at other hospitals. Whatever our decision, we shall do our best to ensure that it rests on an absolutely sound financial assessment. But the most important consideration is that relating to the patients—the children. We must be satisfied that the deployment of the surgery service now provided at the Duchess
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  of York is that which will, within the available resources, best serve their interests in the largest sense. That is the real yardstick against which these proposals have to be judged, and I can assure the right hon. Member that it is that consideration which will be uppermost in our minds when my hon. Friend's decision is made.
  Question put and agreed to.
  Adjourned accordingly at one minute past Twelve o'clock.