GOVERNMENT EXPENDITURE

HC Deb 24 October 1979 vol 972 cc441-560

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 (Birmingham, Sparkbrook)

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 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 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.

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. 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 (Faversham)

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 (Cheltenham)

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 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 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 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 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. 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 (Burnley)

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 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 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 (Gillingham)

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 (Lewes)

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 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 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 (Knutsford)

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 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.

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 (Greenwich)

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.

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 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 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 (Liverpool, Walton)

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 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 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- 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 (Bootle)

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 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 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 (Newham, North-East)

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 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.

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 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 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.

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- 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.

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 (Manchester, Central)

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 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 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.

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 (Bristol, West)

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 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- 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 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 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 (Stoke-on-Trent, South)

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 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. 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 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 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 (Worthing)

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: 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.

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 (Manchester, Wythenshawe)

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 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.

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 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 (Colne Valley)

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 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 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 (Rochdale)

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 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 (Greenwich)

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.

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 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 (Dartford)

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.

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 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 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 (Northampton, North)

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 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 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 (Salford, West)

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 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.

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 (Mansfield)

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 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 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 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 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 (Lichfield and Tamworth)

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.

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 (Preston, South)

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 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 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.

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 (Bolsover)

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 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 (Liverpool, Garston)

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 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.

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 (Merioneth)

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 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). 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 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, 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 (Edinburgh, Leith)

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. 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.

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 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 (Winchester)

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.

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 (Bootle)

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 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 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 (Watford)

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 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 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 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- 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 (Keighley)

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, 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 (Oldham, West)

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 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 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- 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 £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 (Thurrock)

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.

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 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 (Salford, West)

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 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 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 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 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 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 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.

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 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- 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.

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 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 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 (Renfrewshire, West)

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 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 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 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 (Eastleigh)

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 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 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, 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.

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 (Cardiff, South-East)

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 (Newton)

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 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.