Commons Sitting of 17 December 1981

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRAYERS
  MESSAGE FROM THE QUEEN

    ZIMBABWE (GIFT OF A SPEAKER'S CHAIR)
    The Vice-Chamberlain of the Household reported Her Majesty's Answer to the Address, as follows:
    I have received your Address praying that I will give directions that there be presented on behalf of your House a gift of a Speaker's Chair to the House of Assembly of Zimbabwe, and assuring me that your House will make good the expenses attending the same.
    It gave me great pleasure to learn that your House desires to make such a presentation and I will gladly give directions for carrying your proposal into effect.

  PRIVATE BUSINESS

    HUMBERSIDE BILL [Lords] (By Order)
    Order for Third Reading read.
    To be read the Third time upon Monday 21 December.

Oral Answers to Questions
  NATIONAL FINANCE

    Currency
    Mr. Greville Jannerasked the Chancellor of the Exchequer if he is yet in a position to announce the introduction of the new coins into the United Kingdom currency.
    The Economic Secretary to the Treasury (Mr. John Bruce-Gardyne): I refer the hon. Member to the answer given on 31 July to my hon. Friend the Member for Romford (Mr. Neubert) when it was announced that the 20p coin would be issued for general circulation in June 1982, and the £1 coin in April 1983.
    Mr. Janner: As the value of the pound is falling rapidly day by day, what does the Minister expect to be the value of the pound coin by the time that it is issued and by the Christmas after that?
    Mr. Bruce-Gardyne: I hope that I can draw from that question the conclusion that the hon. and learned Gentleman will support the Government in their determination to bring inflation under better control.
    Mr. Pawsey: Has my hon. Friend received any representations from the Automatic Vending Association of Britain, especially about the possibility of counterfeiting of the new coin?
    Mr. Bruce-Gardyne: I understand that the design of the new coin has been discussed with the manufacturers of vending machinery, who are satisfied with it at present. If my hon. Friend has any problems about that I hope that he will let me know.
    Mr. James Lamond: Would it not be better to bring forward the introduction of the £1 coin as members of the public will need several of them when they pay their new Underground fares following the House of Lords decision?
    Mr. Bruce-Gardyne: I regret to have to tell the hon. Gentleman that the Royal Mint cannot introduce the coins any more swiftly than at present planned. They will be a convenience to the public when they come into circulation.
    Mr. J. Enoch Powell: On a point of order, Mr. Speaker. Should not the custom of the House be preserved that Ministers answer questions from the Dispatch Box?
    Mr. Speaker: That is our custom, and no doubt it will be followed.

    National Insurance (Employers' Surcharge)
    Mr. Richard Wainwrightasked the Chancellor of the Exchequer what is his estimate of the present annual cost of reducing employers' national insurance surcharge by two percentage points.
    The Chancellor of the Exchequer (Sir Geoffrey Howe): On the basis of the economic assumptions recently published in the report of the Government Actuary on the Social Security (Contributions) Bill 1981, the full year cost of reducing the rate of national insurance surcharge by two percentage points would be about £2·3 billion.
    Mr. Wainwright: Is the Chancellor of the Exchequer aware that that reduction in revenue would be dwarfed by the increased buoyancy of the revenue following such a reduction, because the removal of that handicap to British industry has been estimated to produce, after two years, at least 200,000 more jobs, about a 1½ per cent. increase in the gross domestic product and a reduction of the retail price index by about 1 per cent.?
    Sir Geoffrey Howe: The arithmetic is by no means as easy or as encouraging as the hon. Gentleman suggests. I recognise why so many in business would like to see the surcharge reduced, but I must bear in mind the total revenue yield, which is now £3·8 billion. The case for any reduction would have to be weighed in the light of the circumstances in which I consider it.
    Mr. Eggar: Will my right hon. and learned Friend confirm that a reduction in the surcharge would be the single most effective way of assisting industry? Will he confirm also that industry is in need of assistance?
    Sir Geoffrey Howe: My hon. Friend will need no reminding of the extent to which we recognise the case for assisting industry by the reduction as far as is possible of the costs, burdens and charges that fall upon it. I have received many representations to that effect concerning the national insurance surcharge, but not all of them point in that direction. The representations will have to be considered in the light of the total revenue when the time comes to do that.
    Mr. Shore: I am not confirming the arithmetic of the hon. Member for Colne Valley (Mr. Wainwright), but the

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    Chancellor must be aware that British competitive costs have declined by about 40 per cent. since the national insurance surcharge was last increased. In the interests of the competitiveness of the economy and the increase in demand that would undoubtedly follow from a reduction of the order of magnitude that has been indicated, does not the right hon. and learned Gentleman agree that he should give further and more urgent consideration to such a modest proposal?
    Sir Geoffrey Howe: The right hon. Gentleman should be well aware that by far the largest cause of the reduction of the competitiveness of British industry since 1975 has been the doubling of unit labour costs.
    Mr. Shore indicated dissent.
    Sir Geoffrey Howe: The exchange rate of the pound, about which the right hon. Gentleman is gesticulating, stands close to the level at which it stood when the Government took office. Overwhelmingly the dominant cause was the substantial rise in unit labour costs. If the right hon. Gentleman feels so strongly about this issue, what a pity it was that his Government, who introduced the surcharge, increased it and increased national insurance contributions, adding to the burden of British industry by no less than 5 per cent.
    Mr. Marlow: Will my right hon. and learned Friend care to say, if the national insurance surcharge were reduced, how much of that would go into reducing industry's costs and how much of that would go into increasing wages?
    Sir Geoffrey Howe: That factor is one of the reasons why not all the representations that I receive are to the effect that tax relief should take the form of reductions in the surcharge. Whatever is done to the tax burden, it is crucial that those on both sides of industry should continue to reduce the costs that are imposed by rising unit labour costs.

    Investment Income
    Mr. Geoffrey Johnson Smithasked the Chancellor of the Exchequer what would be the cost to the Exchequer of allowing the first £5,000 of investment income of people over 65 years to be treated for taxation purposes as if it were a pension.
    The Chief Secretary to the Treasury (Mr. Len Brittan): The first £5,500 of anybody's investment income, regardless of age, is already treated in the same way as a pension or any other kind of earned income. The cost of adding an extra £5,000, for those over 65, to the existing investment income surcharge threshold of £5,500 would be about £110 million in a full year.
    Mr. Johnson Smith: I am grateful to my right hon. and learned Friend for that reply. Will he continue to bear in mind the needs of those whose income, when they are over 65, comes not from inheritance or from pensions, but from their savings? Will he acknowledge that there is a special need to index the rate of taxation?
    Mr. Brittan: The investment income surcharge requires consideration constantly. For that reason, for the reason given by my hon. Friend, and for many other reasons, the threshold for the elderly was doubled in 1979 from £2,500 to £5,000.

    Economic Policy (Incentives)
    Mr. Leightonasked the Chancellor of the Exchequer if he is satisfied with the level of incentives provided by his economic policy; and to what extent the incentives policies outlined in his Budget of June 1979 have been modified.
    Sir Geoffrey Howe: The Government remain committed to continue the improvement of incentives that began in the 1979 Budget. Further progress must depend upon the likely balance between tax revenue and public expenditure.
    Mr. Leighton: Does the right hon. and learned Gentleman recall that he assured us that his original incentive Budget would release the energies of what I believe were called entrepreneurs? I am indebted to the Library for the information that current output of British manufacturing industry is 16 per cent. less than it was in May 1979. Is that intentional? Does it mean that his policy is a success, or a failure?
    Sir Geoffrey Howe: Marginal rates of tax, especially for entrepreneurs, were reduced substantially in my first Budget. Had that not been so, people would have been contemplating a dispiriting prospect now. The hon. Gentleman might care to remember that industrial and manufacturing output have been rising for the past four months. The output of manufacturing industry in the third quarter was 2½ per cent. up on the second quarter. Industrial production in the past three months has been up by 1½ per cent. on the previous quarter. All those factors are pointing in the direction of the continued growth of national output.
    Mr. Archie Hamilton: Does my right hon. and learned Friend agree that the greatest incentive that could be given to British industry would be to bring down interest rates? Does he accept that that is the best way of controlling public expenditure and not running up large Government borrowing?
    Sir Geoffrey Howe: I am certain that my hon. Friend is right to draw attention to that fact. The reduction of interest rates is something to which industry attaches importance. In considering the size of the borrowing requirement that is likely to produce such a reduction, one has to take account of revenue and expenditure.
    Mr. Straw: The Chancellor is correct to say that the tax burden for the very rich has lessened. The man on £595 a week is now £25 a week better off because of the right hon. and learned Gentleman's tax changes. However, does he agree that for the majority of the British people on average or below average earnings the income tax burden has risen, and that for the lowest paid families on half average earnings the burden has almost doubled under this Government? Will the right hon. and learned Gentleman say where that increased burden was contained in his election manifesto?
    Sir Geoffrey Howe: Once again the hon. Gentleman overlooks, as his right hon. and hon. Friends so often do, the increase in earnings that has taken place alongside every other change. Earnings, on average, rose by 57½ per cent. over the past three years, while the rise in prices was just over 50 per cent. In most types of household disposable income after payment of income tax and national insurance contributions has kept ahead of prices.

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    Even for a household on 50 per cent. of average earnings, with two children, the fall has been only 0·3 per cent. in real disposable personal income after taking account of child benefit and family income supplement.
    Mr. Jay: Were the economic consequences of the 1979 Budget the ones that the Chancellor intended?
    Sir Geoffrey Howe: Had we not taken the action that was embodied in the 1979 Budget to reduce the massively accelerating growth of public expenditure and to reverse the heightening burden of income tax on the earnings of the British people, we would not have begun the recovery that is now taking place.

    Chancellor (Statement)
    Mr. Horamasked the Chancellor of the Exchequer what representations he has received on his statement of 2 December.
    Sir Geoffrey Howe: As is usual on these occasions, I have received comments and representations from a variety of sources.
    Mr. Horam: Has the Chancellor noted the CBI's view in its reaction to his mini-Budget, in which it points out that the result of it will be an extremely sluggish growth in output next year with no fall in the underlying trend of unemployment until the next general election? In these circumstances why does the right hon. and learned Gentleman continue to resist providing some help for industry, especially when capacity utilisation is still extremely low and when the PSBR, in real terms, is low for a recession?
    Sir Geoffrey Howe: As I have said on a number of occasions, there was no mini-Budget on which industry could pass such a judgment. The House received a presentation of the public expenditure plans for next year, and we shall have to come to a judgment when we consider the Budget as a whole.
    Mr. Archie Hamilton: Will my right hon. and learned Friend confirm that unemployment is likely to fall as a result of people being employed in small businesses that are not members of the CBI?
    Sir Geoffrey Howe: My hon. Friend is right to draw attention to the importance of small businesses as the generators of additional employment. That is why my right hon. Friends and I have introduced no fewer than 72 different measures for the encouragement of small businesses.
    Mr. Shore: In the light of continuing representations on public expenditure, will the right hon. and learned Gentleman give some new and special consideration to the effect on the elderly of this unusually severe winter weather, which will inevitably impose upon them extremely high fuel costs? He will know that the special heating allowance scheme is available only to pensioners over 70 years of age. Will he give urgent consideration to making a special increase in heating allowances for all categories of need during this winter? Will he consider again the Christmas bonus as one possibility—or a post-Christmas bonus—of assisting many who are being seriously affected by this appalling winter?
    Sir Geoffrey Howe: The whole House shares the right hon. Gentleman's concern for old people—
    Mr. William Hamilton: The Government have a funny way of showing it.
    Sir Geoffrey Howe: However, on the experience of only the first few weeks of the winter it is difficult to conclude, statistically or otherwise, that it is likely to be different from any other winter. The right hon. Gentleman should take account of the fact that the Government are maintaining the Christmas bonus and that the previous Government suspended it for two years.

    Corporate Taxation (Spare Capacity)
    Mr. Lathamasked the Chancellor of the Exchequer whether he will take into account in formulating proposals for corporate taxation the level of spare capacity at which British industry is currently operating.
    Mr. Bruce-Gardyne: In formulating the forthcoming Budget my right hon. and learned Friend the Chancellor of the Exchequer will take full account of the position of British industry.
    Mr. Latham: As, in view of the level of unemployment, industrial capacity and consumer demand are clearly not satisfactorily balanced, will my right hon. and learned Friend endeavour, in preparing his Budget, to make further progress towards honouring Conservative promises about lower taxation?
    Mr. Bruce-Gardyne: The Government would like to make further progress towards lowering taxation in next years's Budget, but it depends on progress in controlling expenditure and the problem of financing the borrowing requirement which will emerge from that Budget.
    Mr. Skinner: Is not the main reason why the Chancellor cannot fulfill Conservative pledges to cut taxation and give pensioners more simply that the Government's unemployment policy is costing them well over £12 billion, according to the Manpower Services Commission, which is a greater sum than the PSBR? Would it not make good business sense to cut the number on the scrap-heap and thus have more money to take the measures that we should like the Government to take for pensioners and so on?
    Mr. Bruce-Gardyne: The Government are as keen as anyone to see unemployment reduced, but it will come not from so-called reflation but only from the restoration of the competitiveness of British industry, with which we are making great progress.
    Mr. Heddle: When formulating the Budget proposals, will my hon. Friend consider that the service sector, at least as much as the manufacturing sector, is capable of playing its part to reduce unemployment? Therefore, will he consider extending the industrial buildings allowance facility not only to the manufacturing but to the service sector?
    Mr. Bruce-Gardyne: My right hon. and learned Friend would entirely agree that the service sector has a vital role to play in economic recovery, but I ask my hon. Friend to await his Budget Statement.
    Mr. Robert Sheldon: Does the Minister agree that one way in which our capacity is being reduced is by firms closing and selling machinery to others in more successful countries? Is he aware that in Tameside, an area of small manufacturing companies, in the past two years one in four

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    firms has closed, which shows that the Government have done more damage to industry than any other force, internal or external?
    Mr. Bruce-Gardyne: I am afraid that what did most damage to industry was the enormous growth in earnings that took place during the period when the right hon. Gentleman had a hand in our affairs and which was quite unconnected with improvements in output and had to be taken out of profits. That is what we are paying for today. I remind the right hon. Gentleman that we have provided small and start-up businesses with the most generous tax package available anywhere in the world.

    Inflation
    Mr. Knoxasked the Chancellor of the Exchequer what is the current rate of inflation.
    Mr. Parryasked the Chancellor of the Exchequer, further to his statement of 2 December, when he expects inflation to be reduced to single figures.
    Sir Geoffrey Howe: The latest figures for the annual rate of increase in the RPI are for the 12 months to October 1981, when the increase was 11·7 per cent. The figures will worsen slightly over the next couple of months, mainly because of the effect of the lower exchange rate on the price of imported raw materials and fuel, but we can expect further progress in reducing the rate of inflation during next year.
    Mr. Knox: As an advocate of monetarism, how does my right hon. and learned Friend square his forecast of an inflation rate of 10 per cent. over the next 12 months with the very much faster increase in sterling M3 over the past 16 months, especially as he does not envisage a substantial increase in output over the next 12 months?
    Sir Geoffrey Howe: As my hon. Friend knows, sterling M3 is not the only monetary aggregate to which we pay attention. If I guess rightly, my hon. Friend would be among those more likely to complain about the tightness than the laxity of monetary policy, which is likely itself to produce a continuing fall in inflation.
    Mr. Parry: In view of the Chancellor's disastrous record over the past two and a half years and his miserable reputation as a Scrooge, will he do us a favour by resigning before Christmas?
    Sir Geoffrey Howe: I have no intention of doing any such thing. I intend instead to remind the hon. Gentleman that, by comparison with the record of the previous Government, the rate of growth in prices in our first three years in office has in each year been significantly lower.
    Mr. Richard Wainwright: As the Chancellor always insists on the key importance of the public's inflationary expectations, why did he take measures in his recent public expenditure statement to aggravate the already disappointingly high rate of inflation?
    Sir Geoffrey Howe: I have taken the action necessary to ensure that the proper resources are available in the national insurance fund to meet the liabilities—largely the increase in pensions—that the fund will have to meet and to ensure that those who can are paying a reasonable contribution to the cost of their housing.
    Mr. Whitney: Can my right hon. and learned Friend estimate the effect on the rate of inflation of the economic panaceas being peddled by those who do not have the responsibility for dealing with the hard economic realities?
    Sir Geoffrey Howe: I believe that all those who peddle such panaceas acknowledge that they are likely to have an adverse effect on inflation, but in almost every case they seriously underestimate it.
    Mr. Robert Sheldon: Leaving aside monetarist claptrap, is not inflation being controlled by high unemployment, which results in low pay settlements? If unemployment falls, as sure as night follows day, pay settlements will increase. How will the Chancellor control inflation then?
    Sir Geoffrey Howe: In Opposition, as in office, I hope that the right hon. Gentleman will continue to insist on the importance of moderate and sensible pay settlements, instead of looking forward apparently to the development of the opposite. I pay little attention to the rest of his observations. He talks of monetarist claptrap, but throughout his time in office he stressed the importance of a monetary policy, so that indicates the extent to which he cast aside his reputation.

    Government Expenditure
    Mr. Marlowasked the Chancellor of the Exchequer whether he expects, in any future year, to reduce Government spending in real terms against the previous year's spending.
    Mr. Brittan: Our plans for public expenditure in 1982–83 are at approximately the same level in real terms as the 1981–82 plans. I must ask my hon. Friend to await the White Paper, which will show our plans for the whole of the survey period up to 1984–85.
    Mr. Marlow: Will my right hon. and learned Friend tell the House that, whatever the outcome of the pay negotiations in the coal industry, the real level of Government expenditure in the industry this year will not be increased? Will he confirm that that which is down for revenue expenditure will be for revenue expenditure, and that for capital for capital expenditure, and that there will be no mish-mash between the two? Will he assure the House that if wages are so increased the Government will not bring forward any more money, and if the price of coal increases they will facilitate the import of cheap coal?
    Mr. Brittan: The external financing limits for the NCB have been set, published and announced in every possible way to all concerned. If the developments that my hon. Friend fears occur the consequences will be serious, but I hope that moderation and good sense will prevail, as they so often do.
    Dr. Bray: How can the Chief Secretary do anything about public expenditure in real terms when his officials and the Chancellor have just been telling the Treasury Select Committee that public expenditure planning is now in cash terms? What are the implications of the unpredictability of prices for real spending for the employment of teachers and public sector workers generally?
    Mr. Brittan: I hear from behind me an hon. Friend saying that the hon. Gentleman is getting into a muddle.

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    I am inclined to agree. It is perfectly possible to plan in cash, as, indeed, we have done, which is an extremely salutory and important reform, but at the same time, if the hon. Gentlemen are concerned to know the level in real terms, it is a simple calculation to answer the question.
    Mr. Adley: Do my right hon. and learned Friend and the Treasury differentiate between public expenditure on the nation's infrastructure and public expenditure on, for instance, manufacturing industry, where on the one hand there is nobody else to pick up the money or the market, and on the other there would be people who could do so?
    Mr. Brittan: Clearly, there is a distinction. This shows that merely making the distinction between capital and current expenditure does not necessarily provide a uniquely useful tool for determining priorities.
    Mr. Shore: If the Chief Secretary cannot give the assurance sought by his hon. Friend that in any future year he expects to reduce public expenditure, does riot that mean that the whole medium-term financial strategy and the policy of cutting and reducing public spending and the public sector has been abandoned? If that is so, have not the Government been attacking main public expenditure programmes but constantly finding, as the recession increases, that any gains on that front are lost through the payment of unemployment and other slump benefits?
    Mr. Brittan: As the right hon. Gentleman's premise is false, it is not surprising that his conclusion is also false. With the renewal of growth in the economy, there is a real prospect that public expenditure will begin to fall again as a percentage of gross domestic product, and that may well happen next year.

    Open Heart Surgery Equipment (Import Duty)
    Mrs. Knightasked the Chancellor of the Exchequer what duty is payable on each heart valve used in open heart surgery imported into the United Kingdom; and under what circumstances this duty is paid.
    Mr. Bruce-Gardyne: The Customs duties chargeable in the United Kingdom are those established in the Customs tariff of the European Communities. Heart: valves are currently liable at either 8 per cent. or 9·1 per cent. according to their type, and this duty is payable on importation from most countries outside the European Community. An application for suspension of duty has recently been approved by the Council of Ministers and some heart valves will become free of duty from 1 January 1982.
    Mrs. Knight: Does my hon. Friend appreciate that his answer is only partially satisfactory? Will he confirm that the amount of duty payable is £50 per heart valve and that that is a tax on life itself? Does he accept that this is not a commodity in the normal sense of the word as it is useful only to surgeons and their patients? Will he confirm that the valves come from specially reared pigs in the United States and that if they could be produced in the EEC or in Britain no duty would be payable?
    Mr. Bruce-Gardyne: I understand that the suspension which has been announced will apply to bioprosthetic heart valves, which I believe have caused anxiety in my hon. Friend's area. Duty on those will be suspended from the beginning of next year.
    I remind my hon. Friend that Customs duties afford protection to Community producers, and it is right that
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    producers of heart valves or of any other medical supplies should have some protection, in common with most other industries. I should point out, however, that although tax is applied to medical supplies it is taken into account in the financing of the Health Service and compensated in that way.

    British Leyland (Asset Disposal)
    Mr. Dalyellasked the Chancellor of the Exchequer to what extent the disposal of assets by British Leyland will affect the public expenditure borrowing requirement.
    Mr. Brittan: That would depend on the circumstances of any particular case. The recently announced decision of the BL board to dispose of assets in Leyland Vehicles Ltd. was part of its plans to return the BL group to profitability. It results in no additional transfer of funds from the Government to BL or vice versa.
    Mr. Dalyell: What instructions has the Chancellor given to senior Treasury officials about co-operating with the Comptroller and Auditor General in his inquiries into the sale of the assets o the Leyland tractor lane at Bathgate?
    Mr. Brittan: The Comptroller and Auditor General has access to all the files relating to the Government's dealings with BL, and it is right that he should have it.
    Mr. Archie Hamilton: Does my right hon. and learned Friend agree that it is a great tragedy that there is not a far more widespread disposal of assets in BL and that it 'would be a good thing if the whole group were broken up into more manageable units? Does he further agree that it is a tragedy that such an idiotic conglomerate was stuck together in the first place?
    Mr. Brittan: It is difficut to jog back and say what might have happened if a different course had been followed in the first place.
    Mr. Stan Thorne: What proportion of the money paid for capital assets sold off reflected public investment by previous Governments in BL?
    Mr. Brittan: It is not possible to make such a calculation.

    Government Expenditure
    Mr. Adleyasked the Chancellor of the Exchequer whether, for planning purposes, he draws a distinction between public expenditure on infrastructure projects and on public holdings in manufacturing industry.
    Mr. Brittan: Yes, Sir.
    Mr. Adley: Does my right hon. and learned Friend accept that if taxpayers stopped funding BL it would stop building cars but somebody else would fill the market share, whereas if they stopped funding British Rail the railways could not be run and nobody else would pick up the tab? Does he recall using the phrase "a uniquely useful tool" in reply to me on question No. 9? Does he agree that British Rail fits precisely that description? Does he further agree that, for political and social reasons, we need a modern and efficient railway and that failure to invest therein is abject folly?
    Mr. Brittan: I seem to recall using the phrase "a uniquely useful tool", but, so far as I remember, I said that whatever we were then discussing was not such a tool.
    To answer the serious point raised by my hon. Friend, of course I agree that the consequences of ceasing to finance public services are different from those of ceasing to finance manufacturing industry in public ownership. Nevertheless, it would be foolish to deny that the consequences of ceasing to finance BL would be very serious for whole areas of this country.
    With regard to British Rail, of course I wish there to be the investment necessary to maintain an effective railway, but I want it to be financed by the increased productivity that the taxpayer may reasonably expect. That is the approach being made by the Government and I am absolutely sure that it is right.
    Mr. Woolmer: An increase in manufacturing investment would clearly be most welcome and would be given an enormous boost by an increase in demand for our products, but will the Chief Secretary consider the disastrously low level of public house building in this country? In view of the hundreds of thousands of unemployed construction workers, the millions of unsold bricks and growing council house waiting lists, how can he justify holding down public expenditure on housing?
    Mr. Brittan: One must consider housing as a whole, not just public housing. This year, private sector housing starts have increased by 40 per cent. compared with the second half of last year.
    Mr. Marlow: Will my right hon. and learned Friend confirm that infrastructure expenditure allocated to the coal industry this year and next year will not be spent on miners' pay?
    Mr. Brittan: I cannot give confirmation in quite that form. As my hon. Friend knows, the constraint operating on the National Coal Board is the external financing limit, which was recently announced for 1982–83.
    Mr. Park: Does the Chief Secretary agree that a proper activity for him and his colleagues and Treasury officials, and one which we should expect them to undertake, is to keep a close eye on assets being sold, for instance by BL, to ensure that the best possible deal is made so that public money can come back and be re-invested elsewhere?
    Mr. Brittan: I certainly agree that if public money is put into BL or any other concern, we, as custodians of that money, have a real and proper interest in what happens to it and whether it is used for re-invesment where there is a subsequent sale. We should certainly look carefully at what happens to the substantial proceeds of any such sale.

    Tax Havens and Company Residence
    Mr. Foulkesasked the Chancellor of the Exchequer when the draft legislation arising from his consultative document on tax havens and company residence will be published.
    Mr. Bruce-Gardyne: The draft legislation was published on 8 December. Copies have been placed in the Library of the House.
    Mr. Foulkes: Is the Minister aware that there is increasing concern and annoyance that money is lost to United Kingdom revenue as a result of increased tax
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    dodging by individuals and companies in both the Channel Islands and the Isle of Man? What action will the Government take to stop, or at least limit, such tax dodging?
    Mr. Bruce-Gardyne: We shall listen to the representations that we receive in the light of the draft legislation that has now been placed in the Library. If we proceed along the lines of that legislation, it will cover companies based in the Channel Islands and the Isle of Man which carry on their main operations for tax purposes in this country.

    Economic Growth
    Mr. Norman Atkinsonasked the Chancellor of the Exchequer if he has studied the precise mechanism necessary to bring about an upturn in the economy; and whether, in this connection, he now regards it as necessary to intervene deliberately in the economy to ensure that the process leading towards growth is both started and adequately funded, or whether he remains of the view that the mechanism will be self-starting.
    Sir Geoffrey Howe: The Government's policies are designed to produce a more competitive and flexible economy. There are now signs that they are beginning to succeed.
    Mr. Atkinson: May we assume from that answer that the Chancellor remains a free-market non-interventionist? Is he aware that the latest analysis of new orders being fed into manufacturing industries suggests that the total number of new orders and contracts in manufacturing for next year amounts to less than the total required to sustain even the low level of output for this year? Therefore, does the Chancellor accept that, contrary to all the optimistic predictions, it now appears that manufacturing output will drop during next year? If so, what does he intend to do about it?
    Sir Geoffrey Howe: That characteristically gloomy forecast is out of line with expectations. The hon. Gentleman should take account of and be content with the fact that manufacturing output in the third quarter of this year was up by 2½ per cent. on the second quarter; construction industry activity in the third quarter was up by 2½ per cent. on the second quarter; engineering orders this year are up by 20 per cent. on the second half of last year; and engineering export orders this year are up by 22 per cent. on last year. Those figures represent a prospect for increased growth, rather than the reverse.
    Mr. Latham: If the mechanism is self-starting, will it operate at a sufficiently fast rate to achieve the Government's objective of lower taxation? If not, will my right hon. and learned Friend give it a fiscal shove in the spring?
    Sir Geoffrey Howe: My hon. Friend knows that everyone in our party is anxious to secure reductions, rather than increases, in taxation. The precise decisions will depend upon the balance between expenditure and revenue.

    Tax and Price Index
    Mr. Dykesasked the Chancellor of the Exchequer what further use he intends to make of the tax and price index.
    Mr. Brittan: The Central Statistical Office will continue to publish the tax and price index each month. It provides a useful supplement to the information contained in the retail price index.
    Mr. Dykes: Would it not now be better either to change the inputs or to abolish the index altogether?
    Mr. Brittan: I do not think so.
    Mr. Straw: The Chief Secretary said that the TPI was a "useful supplement". Has he forgotten that the former Financial Secretary said that if we wanted a general guide to the changes in total costs facing taxpayers we should look at the TPI, not the RPI, because it is a truer guide? Since the TPI has increased by 15·2 per cent. in the last year, while the RPI has risen by only 11·7 per cent., do the Government still remain of the view that the TPI is the truer guide?
    Mr. Brittan: The hon. Gentleman has given a characteristically selective quotation from what my right hon. Friend the former Financial Secretary said. That selective quotation has been refuted at least half a dozen times. It is important for wage bargainers to concentrate not on cost of living increases, but on what employers have the ability to pay.
    Sir Anthony Meyer: What shall I tell the nurses in my constituency and other constituencies who ask why they should be held to a 4 per cent. increase when local authority manual workers have achieved an increase of double that amount and the miners appear to be going on strike to get more than three times that amount?
    Mr. Brittan: Some of those matters are still to be seen. As my right hon. Friend the Prime Minister pointed out, the consequence of any excessive increase in pay for local authority employees will be an increase in the rates, from which everyone will suffer. That cannot be sensible.
    Mr. Maclennan: Do the Government hope that the percentage increase in income next year will be below the percentage increase in prices?
    Mr. Brittan: It is not possible to give an answer to that question in that form now.
    Mr. William Hamilton: Is the Chief Secretary aware that, whatever index he uses, the irrefutable fact is that everyone earning more than £20,000 a year has been provided with incentives by the Government and everyone on average or below-average earnings has had a massive kick in the teeth?
    Mr. Brittan: That is a classic over-simplification, which fails to take account of the impact of current tax rates on the marginal rates of increase in earnings across the board at a perfectly normal level.

  PRIME MINISTER

    Nurses (Pay)
    Mr. Skinnerasked the Prime Minister if she is prepared to meet a representative group of nurses in respect of their current wage claim; and if she will make a statement.
    The Prime Minister (Mrs. Margaret Thatcher): Current wage claims are not negotiated through my office.
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    I understand the nurses want to talk about the long-term machinery for settling their pay. At a meeting last week with my right hon. Friend the Secretary of State for Social Services the staff side of the Nurses and Midwives Whitley Council again asked if I would see it. I have therefore agreed to see it tomorrow.
    Mr. Skinner: When the Prime Minister meets the nurses, will she give them a clear unequivocal commitment that their pay increase for next year will be no less than 15·2 per cent., as measured by the Government's tax and price index? Is it not a scandal that, at a time when the Government are forcing up rents to the tune of £2·50 a week, when there are many other price increases in the pipeline and when there is now the apparent conspiracy of the Law Lords and a Tory council to push up fares, nurses and other workers should be treated in that fashion?
    The Prime Minister: I have already said that I do not negotiate current wage claims. The Government have made clear the high esteem in which they hold the nurses. In the last three years there has been a 76 per cent. increase in the nurses' pay bill.
    Mr. David Steel: Does the Prime Minister agree that there is a real danger that responsible groups in our society, such as the nurses, who do not resort to strike action, will find themselves increasingly penalised until we develop a fair and comprehensive incomes policy?
    The Prime Minister: I do not believe that there is any practicable possibility of achieving a comprehensive incomes policy. I do not believe that such a possibility exists in our society. It exists only in societies where there is the direction of labour and the extinction of freedom.
    Mr. Paul Dean: Does my right hon. Friend recollect that the nurses felt badly let down by the Labour Government and that they are now hoping for better things following their meeting with her tomorrow? Would it not be easier to get a good settlement for the nurses if everyone in the health services followed the good example of the Royal College of Nursing and outlawed strike action against patients?
    The Prime Minister: I wholly agree with my hon. Friend. It would also make it easier if there were more pay for certain groups of people whom we especially value in society, and if other people did not take it out for themselves.

    Engagements
    Mr. John MacKayasked the Prime Minister if she will list her official engagements for Thursday 17 December.
    The Prime Minister: This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.
    Mr. MacKay: Has my right hon. Friend had a chance today to check the reports that some people in Poland have been injured in clashes with the militia? Does not the Polish crisis demonstrate to people in this country and in the West the significant difference between Western democracies and the Eastern bloc countries? Should it not make those tempted by the Campaign for Nuclear

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    Disarmament argument realise that neutralism and unilateralism could lead us into the sort of pressures that we see in Poland?
    The Prime Minister: We have seen reports that two people have been killed. It is difficult to get accurate news out of Poland, especially outside Warsaw. Therefore, I cannot confirm those reports at the moment.
    As to what my hon. Friend said about the difference between a free society and a total Communist society, leading as it has done at the moment to the imposition of military law, we all understand the value of the freedom that we cherish. I hope that we shall heed the advice offered in the last part of my hon. Friend's question and always be prepared to allocate sufficient resources to defend that liberty.
    Mr. Foot: Has the Prime Minister today had a chance to study the House of Lords judgment on the GLC appeal on London fares? That judgment must now be carried out because the law must be observed, but does she agree that, if the law is observed in these terms, it will have serious consequences for travellers in London? Therefore, will the right hon. Lady take urgent steps to introduce legislation to restore the law to what many people thought it was previously—including herself as a Conservative spokes-man when the legislation passed through the House?
    The Prime Minister: I shall deal with the latter part of the right hon. Gentleman's question in a moment, because I think that he has either misunderstood the judgment or what I said, or both. I welcome the clear and unanimous judgment from the House of Lords and congratulate Bromley on having taken steps that have clarified the position for London's ratepayers. The judgment runs to about 100 pages. We shall need time carefully to consider what it says, but it is already clear that the GLC's action was a breach of the duty that it owed to ratepayers and wrong in law.
    In Opposition, I commented on the then Government's Act under which this judgment has been given. From what the right hon. Gentleman said, it sounded to me as though he thought that the judgment precluded the possibility of subsidies from the ratepayers. I do not believe that to be so. In that respect, I understand the main burden of the judgment to be that London Transport has a duty to budget and to make a reasonable effort to break even while recognising that in present circumstances it may well not do so. The London Transport budget for the previous year, set on the basis that there would be an £80 million subsidy from the GLC, constituted just such a reasonable effort, and that subsidy in itself is not unlawful.
    Mr. Foot: I appreciate that the right hon. Lady has not had time fully to study the debate in which she took part several years ago when the legislation was passing through the House. The whole question of what was economic and uneconomic was considered then, and she made no objection to the terms of the legislation that went through the House. I ask the Prime Minister urgently to consider the possibility of legislation to make this matter absolutely clear so that the House may again have the chance to pronounce on what it thinks should be a proper and fair fares policy for London.
    The Prime Minister: One must first look in detail at the House of Lords judgment before rushing into any instant solutions or action. On such an important matter a
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    period of reflection is clearly called for. This was a judgment on the law. As I understand it, the judgment does not preclude subsidies. That was the point that I was making. The judgment was concerned not with
    "the fairness of the GLC's decision to reduce by 25 per cent. the fares charged in Greater London by the London Transport Executive",
    but with
    "the legality of that decision"
    and whether it was
    "within the limited powers that Parliament has conferred by statute upon the GLC"
    —the very statute to which the right hon. Gentleman referred. Their Lordships came to the conclusion that it was not.
    Mr. Foot: It is right that we should have time to consider the matter, but will the Prime Minister undertake to give the House a chance to pronounce on legislation before chaos is caused to London fares?
    The Prime Minister: If one is considering the matter, it is as well for the consideration to precede the conclusion.
    Mr. Dobson: Then why congratulate Bromley?
    Mr. Squire: Has my right hon. Friend yet had formal notification of the change in the deputy leadership of the Labour Party?
    The Prime Minister: No, but I do not think that it makes much difference.
    Mr. Michael Morrisasked the Prime Minister if she will list her public engagements for Thursday 17 December.
    The Prime Minister: I refer my hon. Friend to, the reply which I gave some moments ago.
    Mr. Morris: Has my right hon. Friend had a chance to read the debate of 30 November on the first report of the Public Accounts Committee on the role of the Comptroller and Auditor General and to see early-day motion 132? If so, will she now rethink the Government's response to that important report of the PAC and reflect that it is right for hon. Members to have the final scrutiny of all public expenditure?
    The Prime Minister: I am aware of early-day motion 132 and of the point to which my hon. Friend has referred. My right hon. and learned Friend the Chancellor of the Exchequer is carefully considering the important issues raised in the debate. We shall let the House know our conclusions as soon as possible after the recess.
    Mr. Molyneaux: What conclusions has the Prime Minister drawn from the behaviour of Irish and other representatives at yesterday's sitting of the European Assembly?
    The Prime Minister: There was an attempt to make a speech in the Assembly that was not relevant to the matters at issue. I was there not as Head of a national Government but as President of the European Council. In any event, I wholly disagree with the comments made during that debate.
    Mr. Neubert: As a former leader of the council of the London borough of Bromley—[HON. MEMBERS: "Hear, hear".]—may I offer my right hon. Friend another opportunity to congratulate my former colleagues on the council who, by their successful court action against the

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    GLC, have brought relief to millions of hard-pressed ratepayers throughout London? Is she aware that if commitments allowed her to contribute to the debate on my Private Member's motion tomorrow on communications in London, when we shall have five hours to examine the implications of this historic decision, she would be very welcome?
    The Prime Minister: I congratulate my hon. Friend on having been a leader of Bromley council and on having the powers of prophecy to have secured a debate on communications in London tomorrow on a Private Member's motion. I am sure that it will be an interesting debate. My constituents will be just as interested in it as other London constituents, but I hope that my hon. Friend will understand if tomorrow I do not attempt to catch Mr. Speaker's eye.
    Mr. Bidwell: As a Londoner and a member of the Select Committee on Transport, may I tell the Prime Minister that her references to breaking even are out of line with the running of public transport in any major Western European city? Is she aware that this judgment will be greeted with widespread dismay by thousands of ordinary London folk?
    The Prime Minister: The House of Lords clear and unanimous decision was that the GLC had acted outside the rule of law that protects citizens against the arbitrary exercise of power.
    Sir William Clark: Will my right hon. Friend today take an opportunity to read the main article in the Daily Mail, which lists all the many encouraging signs that the economy is picking up? Does she not think it better that we should advertise our successes than continue to talk gloom and doom?
    The Prime Minister: Yes. I wholly agree with my hon. Friend. I note that improvements in the economy are not welcome to the Opposition. Clearly, they prefer the gloom and doom to continue. Things are improving considerably. I heard my right hon. and learned Friend the Chancellor of the Exchequer give some figures. More recent figures show that overtime working in manufacturing is considerably up; hours lost through short-time working are considerably down; industrial production is up; manufacturing production is up; and the latest cyclical indicators released today provide increasingly strong evidence that a turning point occurred in the economic cycle in the second quarter.[interruption.]Unemployment for the last two months has been slightly down. I should have thought that Opposition Members would welcome a reduction in the last two months. Hon. Members will also be aware that it has been usual, for all the last years of the decade, for there to be a sharp increase in unemployment between December and January, because of the weather.

Greater London Council (House of Lords Judgment)
Mr. Norman Atkinson: On a point of order, Mr. Speaker. You will be aware that there is widespread opinion, no doubt throughout London, that the recent House of Lords judgment will be considered by their Lordships to be an extra-parliamentary political instrument which they have used in order to further the politics of the Conservative Party—[Interruption.]
Mr. Speaker: Order. It is very difficult for me to hear what the hon. Gentleman is saying. Perhaps I may say to him that I have had notice of an application under Standing Order No. 9, and I have listened to the exchanges during Question Time, and I have looked at the Order Paper in regard to the debate tomorrow. Therefore, it does not sound to me as if the hon. Member has a point of order on which I can rule within our Standing Orders.
Mr. Neil Carmichael: Further to that point of order, Mr. Speaker—
Mr. Speaker: Order. It was not a point of order.
Mr. Carmichael rose—
Mr. Speaker: On a new point of order—Mr. Carmichael.
Mr. Carmichael: It is on the same point, Mr. Speaker, the point you made yourself—
Mr. Speaker: Order. There can be no point of order on that, as I understand it. If the hon. Gentleman thinks that our Standing Orders have been broken, perhaps he will draw my attention to the matter.
Mr. Carmichael: Perhaps I may seek your guidance, Mr. Speaker. I understand that tomorrow's debate is about London. Therefore, there will be opportunities to raise the question of the decision of their Lordships. But this decision affects many areas other than London. Would it be in order for hon. Members outwith London constituencies to contribute to the debate and still have—
Mr. Speaker: Order. I shall be making my position quite clear about tomorrow's debate later this afternoon, in a short while.
Mr. Ivan Lawrence: On a point of order, Mr. Speaker. Is it not completely out of order for an hon. Member to make the accusation that a judgment of the courts is politically motivated, as the hon. Member for Tottenham (Mr. Atkinson) has just done?
Mr. Speaker: Order. In this House we try to respect the judiciary, as we expect the judiciary to respect us. I think that we can leave the matter there.
Mr. Norman Atkinson: Further to that point of order, Mr. Speaker—
Mr. Speaker: Order. I hope that we shall not pursue the matter of the judiciary and this House this afternoon, because it is the judgment that we are interested in. To criticise the motives of people in the judiciary would be as much out of order as it would be to accuse hon. Members of dishonourable or unfair motives.
Mr. Laurie Pavitt: On a point of order, Mr. Speaker. I seek your guidance on the advice that you have given about the debate to take place tomorrow, in which many of us wish to participate. Obviously the point that has arisen today is bound to be of interest tomorrow. May we be guided as to whether the Government Front Bench will deal with not only transport and communications questions but also legal advice?
Mr. Speaker: Order. I must ask the House to await the correct time, which will be when the application under Standing Order No. 9 is made. The hon. Member will then have his opportunity.
Mr. Dennis Skinner: On a point of order, Mr. Speaker. This is a matter on which I think you ought to rule, as you seem to want the House not to refer to the question of the Law Lords and their decision. I understand that, and the point that I want to make—
Mr. Speaker: Order. To help the hon. Gentleman—and to save us having a clash—as long as he understands that he is not free to criticise the motives of the judges—
Mr. Skinner: I am not doing that, Mr. Speaker.
Mr. Speaker: Then it sounds as though we shall get on better than I thought.
Mr. Skinner: I think that the point that you should clarify, Mr. Speaker, is this. Whilst it seems that from the Opposition Benches a reference to the Law Lords' decision being politically connived is wrong, the Prime Minister, in an earlier contribution, laid great stress upon the way in which this matter was dealt with politically in the first instance by a Tory-controlled council and went out of her way to congratulate that council. I think that there should be even-handedness on both sides.
Mr. Speaker: Order. It is always very important in this House to be even-handed, and I have no doubt that, if and when a debate takes place, there will be both defence and criticism of both local authorities involved. That is entirely different from an attack on the motives of judges in reaching their decision.

Business of the House
3.37 pm
Mr. Michael Foot: Will the Leader of the House state the business for next week?
The Lord President of the Council and Leader of the House of Commons (Mr. Francis Pym): The business for next week will be as follows:
MONDAY 21 DECEMBER—Proceedings on the Consolidated Fund Bill.
TUESDAY 22 DECEMBER—Proceedings on the Hops Marketing Bill [Lords].
Remaining stages of the Currency Bill.
Until about seven o'clock, there will be a debate on the situation in Poland, followed by a debate on the situation in the Middle East, which will arise on a Motion for the Adjournment of the House.
WEDNESDAY 23 DECEMBER—It will be proposed that the House should meet at 9.30 am., take Questions until 10.30 am., and adjourn at 3.30 pm until Monday 18 January 1982.
Mr. Foot: Perhaps I may put three questions to the right hon. Gentleman. First, will he make sure that we have an early debate, when we return from the recess, on the youth training scheme, about which the Government made an announcement this week?
Secondly, on Tuesday we shall have the next set of unemployment figures. Since the Prime Minister was referring to the matter a few minutes ago, may we have an assurance that the "Secretary of State for Unemployment" will make a statement to the House on Tuesday about the figures so that he can be properly cross-examined about them?
Thirdly, on the question to which reference has already been made about the House of Lords' ruling in regard to the Greater London Council, the Opposition would like to make it clear that any discussion about this matter on Friday would be quite unsatisfactory as a proper way of dealing with this question, and that what we expect the right hon. Gentleman to do is to rearrange the business so that we can have a full debate next week on the serious implications of this matter in preparation for what we believe is the only proper way of dealing with it—for the Government to introduce legislation. If the Government are to introduce fresh legislation when we return soon after the Christmas recess, the House should give its guidance on this important matter in a debate next week. I ask the Government to give time for that.
Mr. Pym: I am sure that the House would welcome a debate on the youth training scheme. I will certainly keep the right hon. Gentleman's representations in mind. I should have thought that it was a suitable subject for a Supply day debate, but if a day can be found in Government time, so be it.
Last month's unemployment figures will be announced on Tuesday in the normal way. I shall not give an undertaking that my right hon. Friend the Secretary of State for Employment will make a statement in the House on that subject. It would be right for the announcement to be made in the usual way.
As regards the judgment that was made only this morning, it is clear from what my right hon. Friend the Prime Minister said that tomorrow's debate will certainly
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not be the end of the matter. The Government will give proper consideration to the judgment, as, no doubt, will the Opposition. After that process has been completed we can review the matter again, but I am not prepared to rearrange the business for next week. We cannot say how long the consideration will take, either on the Opposition side or on the Government side.
Mr. Foot: I thank the right hon. Gentleman, but I wish to press him on two of those matters. He says that the unemployment statement will be made in the usual way, but the unemployment figures facing the country are unusual. They are the worst since the end of the war and, therefore, I urge that the Secretary of State should come to the House to make a statement on the subject on Tuesday.
On the House of Lords judgment on GLC fares, tomorrow's debate will be irrelevant to the problem. We are asking for a proper, orderly debate on a major decision of great importance and we believe that the only proper course for the Government is to prepare legislation in one form or another and that the House should have the chance to give its views beforehand. Unless the right hon. Gentleman wants to be partly responsible for the chaos that will occur in London Transport if we do not get a chance of settling the matter properly beforehand, he should arrange for us to debate it.
Mr. Pym: The unemployment figures will be announced in the usual way. The Secretary of State for Employment has made a number of statements and has spoken in debates in the House recently. No doubt such debates will arise again. I think that the announcement will be made in the right way.
On the right hon. Gentleman's second point, I think that the right course is for the judgment to be properly considered on both sides of the House. Obviously that will not be done by tomorrow. No one suggested that it could be, and nor should it be. The Prime Minister and the Secretary of State for Transport and others will consider it, and when the process has been completed on both sides of the House we can consider how best to proceed.
Mr. Edward du Cann: Has my right hon. Friend seen early-day motion 132, which proposes an extension of the remit of the Comptroller and Auditor General and thereby greater parliamentary accountability?
[That this House approves the Report of the Committee of Public Accounts on the Rôle of the Comptroller and Auditor General (1980–81, H.C. 115); and, in view of the all-party criticism of the Treasury response in the Debate on 30th November 1981, urges the Government to reconsider the views expressed in its White Paper (Cmnd. 8323) and to introduce legislation to allow proper accountability to the House of Commons.]
The motion has been signed by the remarkable number of 252 Members and I do not doubt that many more names will be added, because the House feels strongly about the matter. Did my right hon. Friend hear the admirable reply of the Prime Minister to my hon. Friend the Member for Northampton, South (Mr. Morris) a few moments ago? Will he arrange for a statement to be made on the matter as soon as the House resumes its business after the Christmas Recess?
Mr. Pym: Yes, as soon as possible. My right hon. Friend the Prime Minister gave a forthcoming answer and

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my right hon. and learned Friend the Chancellor of the Exchequer is considering the important points raised in the recent important debate. As soon as possible after the recess there will be a full response to those points.
Mr. John Silkin: Is it not time that the right hon. Gentleman, as a practical Leader of the House, considered the farce of having Question Time on the day of the Adjournment debates before a recess? Few hon. Members are in the House on such occasions and they do not take Question Time as seriously as they might. Could not the arrangements be altered so that we do not have questions on Wednesday?
Mr. Pym: There might be a good deal of support for that. [HON. MEMBERS: "NO."] There would, of course, be others who would wish to continue the practice. Luckily for me, I do not have responsibility for taking that decision. It is a matter for the House, but the right hon. Gentleman's proposition could and, I should have thought, should be considered in the appropriate way—[HON. MEMBERS: "NO."]—at some moment in the future.
Mr. Sydney Chapman: With reference to the Green Paper on alternatives to the domestic rating system published yesterday, will my right hon. Friend give a commitment that there will be a debate in the House as soon as possible in the new year and certainly before the consultation period expires at the end of March? I am sure that he agrees that the House should be able to give its preliminary views on that important matter.
Mr. Pym: I shall wish to seek an occasion for such a debate, but not, I think, early in the new year. It would be helpful to have a wider public discussion first, but at some point I should like to arrange a debate on that important and big issue.
Mr. Christopher Price: Does the Leader of the House understand that the House of Lords judgment in the GLC case goes far beyond the issue of transport and the case of the GLC and Bromley? Judgments made about local authorities that incur surcharges can affect immediately every local authority in England and Wales. Is the right hon. Gentleman aware that such a judgment, which has the effect of virtually changing the law, must be debated in the House at the earliest possible moment? Tomorrow's debate will be inadequate for the purpose. May we have a debate on the subject before Christmas?
Mr. Pym: The judgment refers, I think, to London ratepayers, but in so far as it may have wider implications, and the hon. Gentleman's opinion may be right, that adds force to what I have said about proper consideration being given to the judgment in the first place.
Mr. Norman Atkinson: It is a political judgmentt.
Mr. George Cunningham: In considering whether we should have a debate on London Transport in Government time, will the right hon. Gentleman bear in mind who was the Conservative Party's representative when the Transport (London) Bill went through the House in 1969? Does he remember that it was the present Prime Minister and that the deputy spokesman for the Conservative Party was the present
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Secretary of State for the Environment? Does he know that both of them spoke in those debates in a sense that made it clear that they recognised that subsidies could be provided for London Transport? Is he aware that one of the present senior Government Whips explicitly said that a democratically elected local authority ought to be able to use its money in any way it pleased in that respect? Will the right hon. Gentleman bear that in mind when deciding whether there should be a debate in Government time?
Mr. Pym: I have not even looked at the judgment, but I heard my right hon. Friend the Prime Minister say that there was no question of its not being possible for a local authority to subsidise transport; but that was not the point at issue. However, it underlines the fact that the judgment must be studied carefully before any further steps are taken.
Mr. Peter Emery: My right hon. Friend will have seen that the Minister who replied to the private notice question yesterday said that he believed that nearly all those who had had their electricity supply disconnected would have it reconnected by today. It now appears that there may be 5,000 or more people whose supply will not be connected before the weekend. If that is the case, will my right hon. Friend consider drawing the matter to the attention of the Secretary of State for Energy and asking him to consider making another statement tomorrow?
Mr. Pym: I shall certainly draw those representations to the notice of my right hon. Friend the Secretary of State for Energy. I cannot promise a further statement, but I certainly share my hon. Friend's concern about the extraordinary inconvenience and hardship that a number of his constituents and others in the South-West must be suffering.
Mr. Joel Barnett: With reference to the early-day motion mentioned by the right hon. Member for Taunton (Mr. Du Cann), may I address a question to the Lord President in his role as Leader of the House rather than as a member of the Government? Does he accept that more than 250 signatures to the motion and the speeches made in the recent debate are a clear expression of the view of the whole House? Will the right hon. Gentleman, in his capacity as Leader of the House, ensure that the views of the House are not only brought to the attention of the Government but are brought back to the Floor of the House so that the Government may have the opportunity of introducing the appropriate legislation?
Mr. Pym: I thought that I had answered previous questions on this subject as Leader of the House. I certainly intended to do so. I note what the right hon. Gentleman says. It is right that views expressed on both sides of the House in that important debate should be considered carefully by the Chancellor of the Exchequer and the Treasury. That process is in hand and we shall report on the conclusions after the recess.
Mr. Kenneth Lewis: My right hon. Friend will be aware that certain of his colleagues on the Government Front Bench seem convinced that the economy is picking up. Is he also aware that some hon. Members believe that considerable encouragement could be given to this process if some capital projects were brought forward by the Government? Is he further aware that a project in which he could be inolved would be a start

457
in 1982 on the phased development of the Bridge Street site, to extend facilities for the House, which was stopped at the beginning of this Parliament?
Mr. Pym: Were there to be such a capital programme, some hon. Members, I believe, would support my hon. Friend's view that work should go ahead on the site. However, other hon. Members might feel that there were more important uses to which those resources could be put. I shall keep my hon. Friend's request in mind. What is most important is the help that can be given to our manufacturing and productive industries.
Mr. Donald Coleman: I may not have heard properly, but I wonder whether the Leader of the House, for the convenience of hon. Members, would say when we shall debate the motion for the Christmas Recess.
Mr. Pym: I expect that the motion will be debated on Monday.
Mr. Ivan Lawrence: Will my right hon. Friend, with his great influence in these matters, do something about he horrible smell of eggs and bacon that pervades the Chamber every day?
Mr. Pym: If the source can be traced, I am sure that we shall try to stop it.
Mr. James Wellbeloved: Will the Leader of the House think again about a debate on the GLC issue? It is vital to make clear that what is at issue is not the right of the GLC to provide a subsidy but the responsibility that it exercises in providing that subsidy. Will the right hon. Gentleman bear in mind that it is vital to have a debate so that Mr. Livingstone and his Marxist friends on the GLC—[Interruption.]—and some of them here—can be made aware that what is unacceptable to Londoners is his irresponsible attitude and that what he needs to do is to exercise responsible management of London's affairs?
Mr. Pym: I have nothing to add to the replies that I have already given.
Mr. Ivor Stanbrook: Apart from any debate on the House of Lords judgment, will my right hon. Friend bear in mind that one urgent legislative need to follow that judgment is a Bill of Indemnity to protect those persons who have acted apparently unlawfully in the belief that they were acting lawfully? Is he aware that this may be a matter of great urgency in individual cases? Will the Government give serious consideration to introducing early legislation to deal with this point?
Mr. Pym: I do not know about legislation. I am sure that the point that my hon. Friend raises will come into the consideration of the judgment.
Mr. Bruce George: Next week the House will debate the violation of human rights in the Middle East and in Poland. When will hon. Members debate an issue over which we have more control—the violation of human rights in Canada? When will there be debate on a Canada Bill? Will the Leader of the House give an assurance that those hon. Members who seek to oppose parts of the Bill will be given ample opportunities for debate and for the tabling of amendments?
Mr. Pym: In due course I shall present a Canada Bill to the House.
Mr. John Stokes: Will my right hon. Friend find time in the near future for a debate on an important publication, "Social Trends" issued the week before last by the Central Statistical Office, which shows that, while there has been a marked rise in living standards during the past 10 years, there has been a marked decline in moral standards?
Is it wise for the House to debate affairs in Poland? Is it not the case that, deeply as we feel about events in Poland, we have no power over that country and no responsibility for what goes on there?
Mr. Pym: It sounds to me as though the first subject raised by my hon. Friend would be appropriate for a private Member to raise.
Events in Poland are of the greatest importance and concern to the West. Although we do not have any direct control, we have a great interest in those events It is very much to meet the wishes and desires of hon. Members that a debate has been arranged to provide an opportunity for hon. Members to express views on the dramatic and important developments in Poland.
Mr. K. J. Woolmer: May I draw the right hon. Gentleman's attention yet again to the important multi-fibre arrangement negotiations in Geneva and remind him that the protocol governing the arrangement expires on 31 December? Is he aware that by next Wednesday either an agreement will have been reached or 600,000 workers in the industries affected will be left in complete uncertainty about what is to happen? Does he not agree that a statement should be made next week, or at the earliest opportunity after the House returns from the Christmas Recess?
Mr. Pym: A number of questions were raised on this matter last week when I said that negotiations were continuing. They are still continuing. The situation in relation to those negotiations is, shall I say, somewhat fluid, to the extent that I do not think that anything useful can be added to the two statements that have been made? I have discussed the matter with my right hon. Friend the Secretary of State for Trade. If events in Geneva between now and 23 December develop in a manner that warrant a statement, or if my right hon. Friend thinks that one would be helpful, he will make it.
Mr. John Wilkinson (Ruislip-Northwood): Will my right hon. Friend review the workings of the Select Committee system, as instituted at the beginning of this Parliament? Will he consider, in particular, the reappointment of a Select Committee on Nationalised Industries which would span departmental responsibilities, because these industries are immune from scrutiny by Back Benchers and their financial performance has been one of the most depressing features of the current economic situation?
Mr. Pym: Almost every hon. Member has an interest in these Committees and is following their work, which is comparatively new, with great interest. If the House so wished, in due course it would be possible to make some changes. I believe that the general wish is that they should continue more or less as they are for the moment.
I do not think it is true to say that the nationalised industries do not fall within the remit of Select Committees. They do. The only difference is that various nationalised industries come under the purview of different

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Departments instead of all being rolled together in one. The House may eventually wish to revert to the previous arrangement, but at the moment I do not detect any desire to do so.
Mr. Bob Cryer: Is the Leader of the House aware that he should understand the wide-ranging nature of the House of Lords decision? Is he aware that hon. Members need a statement at the earliest opportunity, because the Law Lords have changed the law? How will the decision, for example, affect the excellent transport scheme of South Yorkshire and the decision of the Labour-controlled West Yorkshire metropolitan county council to give increased support to the transport services in West Yorkshire so that people begin to make more use of public transport? These matters are still not clear. A statement and a debate are urgently needed.
Mr. Pym: The Law Lords have passed judgment upon the existing law. I think that the right hon. Gentleman the Leader of the Opposition was among those who acknowledged this at once. I do not believe that the hon. Member for Keighley (Mr. Cryer) is on to a good point.
Several Hon. Members rose—
Mr. Speaker: Order. I propose to call those hon. Members who have been rising to put questions from the start of these exchanges.
Mr. Tony Marlow: I wish to pursue a point raised by my hon. Friend the Member for Hornchurch (Mr. Squire) with the Prime Minister. As my right hon. Friend the Leader of the House will no doubt have come across an important statement by the right hon. Member for Bristol, South-East (Mr. Benn), and as, from time to time, the right hon. Gentleman the Leader of the Opposition will obviously not be in attendance—[Interruption.]
Mr. Speaker: Order. I do not need advice from either Front Bench when this sort of point is being put. I hope that the hon. Gentleman has a question relating to next week's business.
Mr. Marlow: In the event of the Deputy Leader of the Opposition not being her next week, would my right hon. Friend say—
Mr. Speaker: Order.
Mr. Greville Janner: Has the attention of the Leader of the House been drawn to another remarkable decision, this time by the Court of Appeal in the case of Westminster City council v Ray Allan Ltd., when the court held that one could hold a closing-down sale and stay open, and put goods at reduced prices in a shop without ever having had them at the higher price in that branch at any time? As the Trade Descriptions Act clearly needs urgent amendment, and as the season of sales has arrived, will the right hon. Gentleman undertake at least to speak to his right hon. Friend the Minister for Consumer Affairs and ask her to consider making a statement now for the protection of consumers in another sector that is threatened by a decision of the court?
Mr. Pym: I assume that the hon. and learned Gentleman has done so himself, but I am quite prepared to pass his representations to my right hon. Friend.
Mr. Peter Bottomley: If the debate on the repercussions of the House of Lords judgment is delayed until the new year, will my right hon. Friend say when there is likely to be a statement about what happens to ratepayers who have paid the supplementary rate, what should happen to those who have not paid, and at what stage ratepayers will know whether they will have to pay for the subsidy during the period when London Transport's action has been held to be illegal? I should welcome a debate on the judgment next week or in the new year, because there are many elderly people in my constituency who cannot get the advantage of reduced underground fares because there is no underground in the constituency and because old-age pensioners already travel free on the buses?
Mr. Pym: I fully accept what my hon. Friend says, but at the moment the answer is "No". Clearly the matter will be considered, and no doubt in due course my hon. Friend will receive an answer.
Mr. Dennis Skinner: Will the Leader of the House or the Secretary of State for Energy be making any statement about miners' pay, and on the fact that on the Robin Day "Question Time" programme the other night he sought to be somewhat helpful in getting further negotiations going with the intention, presumably, of providing further moneys which would naturally come from the Government? As the right hon. Gentleman made those relatively helpful statements, will he assure the House that what he said on the programme is Government policy, and make sure that his statement is brought to the attention of the rest of the Cabinet so that the matter may be resolved and miners may receive their justified wage award?
Mr. Pym: The negotiations must proceed, and I am sure that everyone hopes that they will reach a satisfactory conclusion.
Mr. Andrew Faulds: Speaking as a Member who represents a constituency in the West Midlands, and following the representations made by several of my colleagues, including my right hon. friend the leader of the Opposition, may I ask the Leader of the House to reconsider his earlier replies and accept that there is an urgent need for a debate before Christmas on the implications for local authorities throughout the country of the House of Lords judgment on transport policy.
Mr. Pym: I have nothing further to add to what I said in answer to a number of questions that have been put to me on that subject during the last half hour.
Mr. David Winnick: As the Government now support trade unionism, at least in Poland, will they show good faith and avoid accusations of double standards by not proceeding with the proposed Bill on trade union legislation which is aimed against trade unions in this country? Has the Leader of the House seen the comments of TUC leaders after meeting the Secretary of State for Employment?
Mr. Pym: The hon. Gentleman knows that he is misrepresenting our views about trade unions. The answer to his question is "No". We have seen the remarks made by the TUC. My right hon. Friend will bring forward a Bill in the new year to improve the arrangements relating to trade unions and industrial relations.
Mr. Ioan Evans: I accept that the Leader of the House has commented several times on the decision of the Law Lords on the GLC, but does he realise that it has wide repercussions and relates not only to London? For example, it has been said that as a consequence of the decision old-age pensioners may lose their travel concessions. Will he clear up that and other matters? If he cannot bring forward the amending legislation on Monday, will he at least make an interim statement and allow the House to debate the matter before the Consolidated Fund Bill?
Mr. Pym: If it is true that the judgment has immense ramifications, that is all the more reason to take time to consider it properly. The idea that conclusions should suddenly be reached and then presented to the House would be utterly wrong. I am sure that the hon. Gentleman will wish to consider the implications, as will all other hon. Members.
Mr. Peter Hardy: The Leader of the House will have observed, and may have quietly participated in, the Government's gyrations in connection with their arrangements for local government finance, which no doubt we shall debate when the legislation is brought before us. Does the right hon. Gentleman agree that we should also be given time in the House—and fairly soon—for debates, not only about the system referring to the document already mentioned in these exchanges, but about the fact that so far in this Session we have not had the usual debate on the rates for 1982–83? Hon. Members usually have ample opportunity before Christmas to consider that matter. When the arrangements are announced in the new year, will they be as calamitous as they were the last time that a Conservative Government deferred the announcement, in 1974?
Mr. Pym: There will be a debate on the rate support grant when we return after the Christmas Recess.
Mr. Alfred Dubs: May I press the Leader of the House on a point that I put to him last week? A few weeks ago the governors of two prisons wrote letters to the newspapers. In one of them the governor of Wormwood Scrubs said that he was the manager of a large penal dustbin. Since then—this is confirmed in today's
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newspapers—a letter has gone from the Home Office to prison governors warning them that if they complain publicly about prison conditions they will have to resign. Surely that is a major departure from the professed Home Office policy of more openness in prison administration. Is not the House entitled to a statement about that policy before we adjourn?
Mr. Pym: I understand that the reply I gave last week was correct—in other words, that what has occurred between the Home Office and the prison governors is normal practice. I shall convey the hon. Gentleman's remarks to my right hon. Friend the Home Secretary.
Mr. Stanley Cohen: In view of the rather critical comments about nationalised industries by the hon. Member for Ruislip-Northwood (Mr. Wilkinson), who regrettably has left the Chamber, will the Leader of the House be prepared to provide time so that some of us may discuss the accountability of nationalised industries, as opposed to the private sector, and defend some of the unjust criticisms that have been made against nationalised industries?
Mr. Pym: I do not know that I can provide time, but I know that there is a general interest in that subject and in the way in which nationalised industries are brought to account. I cannot undertake to provide time in the forseeable future for a debate.

Rev. Canon John Baker
Mr. Speaker: The House will be aware that the Rev. Canon John Baker, who has been Speaker's Chaplain since April 1978, is the bishop-elect of the diocese of Salisbury. Next week, when we rise for the Christmas Recess, Canon Baker will take our prayers for the last time.
On behalf of the House and on my own behalf, I wish to express to Canon Baker the deep gratitude that we feel for his devoted service to the House during his period as Chaplain. Canon Baker has not spared himself in strengthening Christian fellowship in this House. We extend to him our prayers and good wishes for the new responsibilities that he will undertake in the historic see at Salisbury.

Greater London Council (House of Lords Judgment)
4.8 pm
Mr. Albert Booth: I beg to ask leave to move the Adjournment of the House, under standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the judgment in the House of Lords in the case of the London borough of Bromley v the Greater London Council".
The issue is specific in so far as it requires the termination of a London fares policy put before the voters of London in a manifesto that elected members, on gaining office, have implemented. It is further specific in that the judgment will limit and qualify the meaning of section 3 of the Transport (London) Act, which provides grants for any purpose only in so far as those grants apply to fares policy.
The matter is important, because it will require the GLC to repay a precept that it has already collected and to levy a further precept to meet a deficit arising not only from its own fares policy, but from that of its elected predecessor. The matter is also important because it will probably bring about the most massive reductions in transport services in our capital city, which is already seriously congested.
The matter is urgent because consideration has already been delayed by an extensive legal process, which has rendered the issue sub judice in the House. It is also urgent because the issues raised need correction within the existing financial year. In addition, the matter is urgent because elected members of the GLC and officials who, until now, have acted in pursuance of the policy, believing it to be legal, are now held to have acted illegally. The House must redress that situation. Finally, the matter is urgent because the interpretation by the other place of the Transport (London) Act is now such as to deny the voters of London their democratic right to choose which fares policy they want their elected body to operate.
Mr. Speaker: The right hon. Member for Barrow-in-Furness (Mr. Booth) gave me notice before 12 o'clock this morning that he would seek leave to move the Adjournment of the House under Standing Order No. 9 for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"the judgment in the House of Lords in the case of the London borough of Bromley v. the Greater London Council".
There have been many exchanges in the House this afternoon on this question and hon. Members are aware that a debate will take place tomorrow on London Transport—[HON. MEMBERS: "Oh".] I know that the House is aware of that, because I have heard references to it. I am prepared for the debate to be wide enough to cover anything relating to the judgment. I shall ensure that the five-hour debate tomorrow will be wide enough to cover the whole spectrum of the issue raised this afternoon.
I listened with anxious concern to the right hon. Member for Barrow-in-Furness and to the remarks made by the Leader of the House, the Prime Minister, the Leader of the Opposition and other right hon. and hon. Members. As the House knows, under Standing Order No. 9 I am directed to take account of the several factors set out in the Order, but to give no reason for my decision. I am trying to be as helpful as possible to the House. However, after
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careful consideration I must rule that the right hon. Gentleman's submission does not fall within the provisions of the Standing Order and, therefore, I cannot submit his application to the House.
Mr. Michael Foot: On a point of order, Mr. Speaker. In your latter remarks, Mr. Speaker, you followed the precedent—which I fully respect—of telling us that you would not give the reasons for your judgment. Indeed, if you were to do so, we should become involved in considerable complications. However, in the earlier part of your remarks, you referred to tomorrow's debate and I understood the implication to be that that debate, in some respects, affects the issue. Indeed, I cannot understand why you referred to it unless it does affect the issue.
In those circumstances, it is right for us to say—in reference not to your final judgment, but to your earlier remarks—that a discussion of the matter in such terms is unsatisfactory to the Opposition. A debate under Standing Order No. 9 would give us the right to vote, if we so wish, on an effective matter. In addition, we all know that a fresh debate on a Friday, announced on a Thursday, would be a strange occurrence, particularly if it were to involve a vote.
We may have to raise an application to adjourn the House under Standing Order No. 9 again on Monday, because this matter is extremely important. It is in the interests of the House and of those affected by the judgment that the matter should be cleared up as speedily as possible. Therefore, I hope that the House will not interpret your words, Mr. Speaker, as meaning—in any way—that we subscribe to the view that tomorrow's debate is any substitute for the type of debate that we seek.
Mr. Speaker: I was trying to be helpful to the House, because the urgency of the matter had been stressed so much. I thought that tomorrow would be sooner than Monday. However, I understand and accept what the right hon. Gentleman has said. I shall try to be helpful to those who wish, tomorrow, to raise the matter. However, my ruling stands.
Mr. Foot: Further to that point of order, Mr. Speaker. I am not contesting your ruling. Of course, it is true that Friday comes before Monday. We all understand that, and I accept that part of your judgment without any qualification. However, we believe that we have the right to seek a debate on a matter of urgency and to seek that debate afresh on Monday, if we are denied it now. Tomorrow's debate is no substitute for the debate that we are asking for.
Several Hon. Members rose—
Mr. Speaker: Order. The House must take note that the Leader of the Opposition has given notice that he will renew the application for a debate under Standing Order No. 9 on Monday. Therefore, I hope that no other hon. Members will try to raise points of order on my ruling. Perhaps I was wrong to be as generous as I have been about tomorrow's debate. I was trying to help hon. Members.
Several Hon. Members rose—
Mr. Anthony Fell: On a point of order, Mr. Speaker. I hope that you will forgive me for raising this point with you, Mr. Speaker, but I had always understood that there was no question of arguing, in any respect, about a ruling that you had given on an application under Standing Order No. 9. For about three minutes, the

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Leader of the Opposition has not only argued, but has made the points that he will raise when he seeks leave to move the Adjournment of the House under Standing Order No. 9 on Monday. That is a most extraordinary way of arguing the case for raising a debate under Standing Order No. 9 and of getting round your ruling.
Mr. Speaker: I am much obliged to the hon. Gentleman. He is absolutely right. When I give a ruling under Standing Order No. 9 that ruling is not pursued. The House will be aware that I have always allowed extra latitude to the Leader of the Opposition. That is why I extended the courtesy. Otherwise, I should have intervened much earlier. However, the courtesy stands the House in good stead.
I should tell the House that I shall not take any more points of order that have anything to do with the ruling. I have given my ruling on today's application.
Several Hon. Members rose—
Mr. Speaker: I shall not take any other points of order on this.
Mr. J. Grimond: On a point of order, Mr. Speaker. While not in the least questioning your ruling—
Mr. Speaker: Order. May I tell the right hon. Member for Orkney and Shetland (Mr. Grimond) that I shall take a very poor view of things if he returns to the subject on which I have refused to take any further points of order.
Mr. Grimond: Further to that point of order, Mr. Speaker, I merely seek further elucidation about tomorrow's debate. I understand that that debate will be confined to London. However, the ruling of the other place has considerable implications, which go beyond London. For example, Scottish local authorities have constantly been told by the Government that if they wish to subsidise local transport, it is up to them. During tomorrow's debate, will it be in order to raise the wider question of local authority subsidisation of local transport?
Mr. Speaker: I have already told the House that I—or whoever is in the Chair—will be as tolerant as possible during tomorrow's debate and will allow wide references to be made within the ambit of the motion.
Mr. Christopher Price: On a point of order, Mr. Speaker. I am concerned about the possibility of a Bill of indemnity. After a previous High Court ruling my hon. Friend the Member for Nottingham, West (Mr. English) ultimately succeeded—after some difficulty—in pointing out that after such a judgment it might be necessary quickly to indemnify those who innocently stood in immediate danger.
Mr. Speaker: I did not interrupt the hon. Gentleman because he knows that that is a matter for the Government and not for me. It is for the Opposition to raise that matter at the proper time. I cannot rule that a Bill must be introduced; that is not within my powers, as well he knows. I hope that tomorrow, when I shall be in the Chair, every opportunity will be given to hon. Members. That is without prejudice to the application that the Leader of the Opposition has indicated he will make on Monday.

BILL PRESENTED

  OIL AND GAS (ENTERPRISE)
  Mr. Secretary Lawson, supported by Mr. Secretary Whitelaw, Mr. Chancellor of the Exchequer, Mr. Secretary Younger, Mr. Secretary Jenkin, Mr. Secretary Biffen, Mr. Secretary Howell, Mr. Hamish Gray, Mr. John Moore and Mr. David Mellor, presented a Bill to make further provision with respect to the British National Oil Corporation; to abolish the National Oil Account; to make further provision with respect to the British Gas Corporation; to make provision for and in connection with the supply of gas through pipes by persons other than the Corporation; to make further provision about licences to search for and get petroleum; to repeal and re-enact with amendments sections 2 and 3 of the Continental Shelf Act 1964; to extend the application of the Mineral Workings (Offshore Installations) Act 1971 and the Offshore Petroleum Development (Scotland) Act 1975; to amend the Miscellaneous Financial Provisions Act 1968, the Petroleum and Submarine Pipe-lines Act 1975 and the Participation Agreements Act 1978; and for connected purposes:
  And the same was read the First time; and ordered to be read a Second time upon Friday 18 December and to be printed [Bill 40.]

Orders of the Day

  Social Security (Contributions) Bill
  Considered in Committee.
  [MR. BERNARD WEATHERHILL in the Chair]

Clause 1

  INCREASE IN CONTRIBUTIONS
  Question proposed, That the clause stand part of the Bill.
  4.22 pm
  Mr. J. W. Rooker: I rise to oppose clause 1 standing part of the Bill. I hope that the Government are not too surprised to see the Order Paper not littered with the amendments that it had last year. We make no apology for that, and I trust that we shall not be subject to any accusation by Conservative Members that we are seeking to amend the Bill, or any part of it, because that is certainly not the reason.
  Last year we tried to rewrite the Bill so as to abolish certain parts of the contributions procedure for national insurance. However, we took the view this year that—having had extensive debates last year on what is a highly technical Bill on which we cannot discuss matters of great principle—the Committee would be better served if we simply had a debate basically on clauses 1 and 2 stand part and discussed one or two points of concern. I shall certainly refer to the parts of clause 1 with which we are unhappy, but we have proposed no amendment.
  The rise in the earnings limit that the Government have announced in clause 1, in so far as national insurance contributions are concerned and especially the lower earnings limit, causes considerable distress. The figure in the Bill is £29·50, rising from £27. It is well known—it is a matter of statutory requirement—that the lower earnings limit should reflect more or less the basic State retirement pension. If I remember correctly, it must be not much higher but not more than 49p less than the State retirement pension. An amendment that we would have wished to move—that is, not £29·50 but, say, £30—would technically have been out of order unless we had tabled a whole lot of amendments changing both the Social Security Act 1975 and the Social Security Pensions Act 1981.
  I should like to explain why we think the £29.50 figure is too low. It is true that it reflects within lop the new retirement pension of £29.60, but everyone knows—the Government have admitted it—that the new retirement pension is not at the correct figure required by statute—namely, the reflection of the previous year's inflation. The Government have admitted that it is about 2 per cent, less than what it would otherwise have been. Having agreed to that rise next year—we are not going to argue about it today—there seems no justification for basing the lower earnings limit on a false retirement pension figure. It is known in advance that it is 2 per cent. less. The Bill comes before the Committee this week but it will not take effect until the tax year starting in April 1982. Therefore, we think that the Government could make that small change in the lower earnings limit.
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  The reasons, in so far as the lower paid are concerned, are academic. It is probably not generally known outside the Committee that once one passes the threshold—the lower earnings limit for national insurance contributions—the national insurance contribution of 8¾ per cent., as it will be from next April, is paid on all earnings. I estimate that someone earning £30 a week next April will be about £2.60 a week worse off than if the Chancellor had raised the lower earnings limit to the correct amount of £30. In other words, someone receiving a £1 increase next April—from £29 to £30—and not paying national insurance contributions with the correct lower earnings limit in operation, will find himself with a net loss of about £1.60. A £1 rise—in fact, it can be less than £1—can cause a loss of about £2.60 in national insurance contributions at that amount of weekly wages.
  It may be thought that not many people in the country are on a wage of about £30 a week. It is the sort of figure that Conservative Members might spend on a lunch. It has to be appreciated that for part-timers—[Interruption.] If the Minister says he spends 76p, that is fine. I withdraw the charge against him, but it would be nice to know what his hon. Friend pays for his lunch.
  I make the point in jest to point out that a restaurant bill can be about £30 for many hon. Members, but it is also the wage of many people. They are in general part-timers who, by definition, are mainly women. The overwhelming majority are women. They are cleaners doing part-time evening shifts, twilight shifts in factories, early morning cleaning in offices—maybe four hours a day or something of that order—at about £1.50 an hour. That will bring in, over five days, about £28 to £30 in earnings.
  In the discussions on last year's Bill in Committee upstairs, Ministers quoted examples of low-paid people caught in the twilight zone for part of the year paying very heavy national insurance contributions but not being eligible for the benefits that flow from those contributions. It is the unfair change in the lower earnings limit to which we take exception. It is a hidden form of tax. No one will deny that. Under the present rules, there has to be a lower earnings limit. I shall come to the point about abolishing it, but under the present law there has to be a lower earnings limit. Given that it is tied to the pension, given that the pension figure is inaccurate by everyone's admission, and that it is going to be put right, we thought that the Government ought to take an early opportunity to deal with the lower earnings limit as well. Only the lower paid are affected by the lower earnings limit. Once a person is on two-thirds average earnings, he is caught in the trap of national insurance and social security contributions like everybody else.
  4.30 pm
  The so-called 1 per cent. in national insurance is spread unfairly over the working population. It is not as though everyone has to pay 1 per cent. extra in national insurance. That is not so. For a person on average earnings, or two-thirds of average earnings, the increase is 1p in the pound on those earnings. For a person in receipt of five times the average earnings, the increase in national insurance contribution—not taken together with tax—is only 0·7 per cent. For the fortunate person who is on 10 times average earnings—about £70,000 a year—the increase in the national insurance contribution is only 0·3 per cent. That is less than a third of the increase paid by someone who is on two-thirds of average earnings. That would seem to

  469
  be a little unfair, and it arises as a result of the operation of the upper earnings limit. There is a cut-off point, at present £200—from next April it will be £220—above which national insurance contributions are not payable.
  From next April, a person on five times average earnings—£35,000 a year—will pay only 2·9 per cent. of his income in national insurance, whereas someone on average earnings, £140 a weeek, or on two-thirds of average earnings, sometimes less than £100 a week, will pay 8·5 per cent. in national insurance contributions. That is grossly unfair, and it is a highly regressive part of our overall tax and social security system, bearing heavily on the average earner and those on less than average earnings.
  Why should someone on five times average earnings contribute, in proportional terms, towards pensions and other social security benefits—including the part that goes to the National Health Service—only a third of the amount paid by the person on average earnings? There is gross unfairness and, notwithstanding that there are now earnings-related pensions, we are convinced that there is a need to change the system that was introduced by the previous Labour Government. That is necessary to make the system less regressive than it has become over the last two or three years.
  When the Conservative Government came to office, the national insurance contribution was set at only 6·5 per cent. By next April, the increase over three years will be 8·75 per cent. Ministers will no doubt say that an increase is needed to pay for the increased benefits, but in real terms benefits have been cut, not increased. I do not intend to repeat the points that I made in that respect on Second Reading.
  The purpose of having a percentage figure to pay for national insurance was that, once a figure had been set and as earnings rose each year, it would automatically bring in extra national insurance contributions to pay for the benefits at a constant real rate. It is true that for two of the last three years, earnings have risen ahead of inflation, but there has now been a substantial increase in the rate of contribution. That is why the change proposed in clause 1 will bring about a substantial increase in income to the fund. According to appendix 1 of the Government Actuary's report, the figure will be about £850 million. that will arise because of the increase in earnings limit coupled with the increase in the standard rate. On top of that, one can build an estimate of the earnings increase for next year. The overall effect will be to produce substantial extra revenue to the Government.
  Mr. Mike Thomas: I support most of the hon. Gentleman's general argument, but a few moments ago he said that he and his hon. Friends now regard the system laid down in the Social Security Pensions Act 1975 as unsatisfactory. That would seem to be a Second Reading point. On Second Reading, when Social Democratic and Liberal Members were making exactly that point, why did the hon. Gentleman and his hon. Friends fail to mention it?
  Mr. Rooker: I do not think that I was making a Second Reading point. This time last year the hon. Member for Newcastle upon Tyne, East (Mr. Thomas) was a Labour Member. I have no doubt that he has looked at the proceedings on the Bill that was rushed through in a week last year. We attempted to put right what we saw as the greater regressiveness in the system that has arisen in the last two years.
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  There was some hit and miss about the measure as it started in 1975. The late Brian O'Malley made it clear that it was a brand new system and that it would take a few years to see how it worked in practice. Payments under the new earnings-related pension scheme have been made only in the last two years. In considering whether in 1975 the Government devised the right system in terms of the upper and lower earnings limits, one has only to look at how they were chosen. It was done in a very hit and miss way. It was almost by accident that the system was tied to the basic pension increase. Then the upper earnings limit became six-and-a-half or seven-and-a-half times the pension figure. That was not the original formula. It was chosen only because the original figure was about one-and-a-half times average earnings.
  Therefore, when the 1975 Act began to operate, it was to a considerable extent operating in uncharted waters. No one denied it at the time. Since, on behalf of the Opposition, I have had responsibility for social security matters, I have learnt that the 1975 measure was not as cut and dried as it appeared to be on the surface to those who did not take a detailed interest in it.
  In dealing with the similar measure last year, we tried to eliminate the regressiveness in terms of the upper earnings limit. We wanted to abolish it or to put it on a sliding scale. It was clear that some well-paid people could get large State retirement pensions if we abolished the upper earnings limit. That is one of the problems. It would bring in the extra revenue, but substantial changes would be required in the original Act. We also sought to abolish the lower earnings limit, so that national insurance contributions were collected only on earnings above the lower earnings limit. We wanted to make it work like a tax threshold. When a person crosses the tax threshold, he pays income tax on the earnings above the threshold, but the national insurance system does not work like that.
  Last year, when we dealt with the similar measure, it was about 5 am before our amendment was reached. I said that I had a rough idea what the amendment might cost, but that I would prefer the Government to produce an accurate figure. A few minutes later I was told that the figure would be about £4½ billion. In the circumstances, the amendment was withdrawn.
  A substantial amount of revenue is gained from earnings below the lower earnings limit. The figure for this year must be nearly £5 billion. At that end of the national insurance system, complex technical changes will be required in our social security legislation. Opposition Members have deliberately set out not to try to rewrite the Bill in the way that we did last year, because we have made good our points and they do not bear repetition today.
  Mr. Mike Thomas: Has not the hon. Gentleman, whose convolution exceeds only his fluency, been induced to put only one radical subclause into his speech—which is more appropriate for a Second Reading debate—because Social Democrat and Liberal Members put some radical thought into the matter on Second Reading?
  Mr. Rooker: The hon. Gentleman must appreciate that when I replied for the Opposition on Tuesday I said in the first paragraph—I did not realise that my statement was quite so bald—that I did not intend to refer to the Bill but that I would do so today in the same way as last year. My response on Tuesday was directed to one part of the Opposition's reasoned amendment—the real cuts in benefits.

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  It would be easy for Opposition Members to repeat verbatim their speeches and amendments on last year's Bill because, apart from one narrow point on which we have an amendment, it is almost word for word the same as last year. Only a few figures have been changed. I am dealing now in a general way with clause 1 to cover the detailed points that I made last year. The Opposition's stance is entirely consistent with what we said last year, when the hon. Member for Newcastle upon Tyne, East was a Member of the Labour Party. It cannot possibly be a reaction to what was said by Liberal and Social Democrat Members on Tuesday, because their arguments and advocacy of new forms of taxation were shot to pieces.
  The Secretary of State for Social Services (Mr. Norman Fowler): Does the hon. Gentleman agree that the alternative put forward by the SDP on Tuesday was very radical? The hon. Member for Newcastle upon Tyne, East (Mr. Thomas) said that there should be a radical increase in income tax. If the SDP wishes to campaign upon that issue, I suggest that it makes the matter public. It was also apparent that precisely the opposite point was being put forward by the Liberal Party spokesman in the debate.
  Mr. Rooker: That is correct. I have read the speech of the hon. Member for Truro (Mr. Penhaligon), which was in conflict with the speech of the hon. Member for Newcastle upon Tyne, East on that point. I speak for the official Opposition. The members of the Social Democratic Party can speak for themselves. We have made it clear during the past two years that, because of the changes made by the Government—some for technical reasons because of the way in which the new pension scheme operates, and others for cost-cutting public expenditure reasons—the system has become more regressive. We wish to have radical changes.
  Mr. Mike Thomas: Oh!
  Mr. Rooker: Yes. That is what I said last year, when the hon. Gentleman was still a member the Labour Party. The hon. Gentleman did not contribute to the debate last year. However, we made the point that instead of a penny in the pound increase in national insurance contributions to raise revenue it would be fairer to increase the standard rate of income tax by about 1·2p in the pound.
  Mr. Mike Thomas: That is exactly what we said.
  Mr. Rooker: That is what the Labour Party said last year. I agree in part with the hon. Member for Newcastle upon Tyne, East—who must stop interrupting from a sedentary position—because I have not disowned his conclusion about amalgamating the two systems. That was the point that I made last year on behalf of the Labour Party, which the hon. Gentleman then voted for and agreed with. He seems to be doing the same today.
  Mr. Mike Thomas: It is called consistency.
  Mr. Rooker: Yes, consistency by the official Opposition. As I said, it would be fairer if the money required were raised via income tax. In order to amalgamate the two systems, we must abolish the tax threshold system so that income tax is collected on all income and we no longer have personal allowances, or we must abolish the lower earnings limit. We must do one or the other if the systems are amalgamated.
  Mr. Mike Thomas: We do not have to do that.
  Mr. Rooker: We must do that and we must take account of the fact—
  Mr. Mike Thomas: The hon. Gentleman's attitude is that we should do nothing.
  4.45 pm
  Mr. Rooker: I am happy to give way to the hon. Member for Newcastle upon Tyne, East. We are in Committee so he knows that he can speak as often and for as long as he wishes. I have no doubt that he has a valid contribution to make. However, I wish to make my point. We must be wary and not sell the public something that we cannot deliver. We must take account of the vast amount of revenue raised by the national insurance contribution on earnings below the lower earnings limit, which is £5 billion. That is somewhat more than a penny in the pound on income tax. Therefore, we must be more careful about the method by which the systems are amalgamated than simply adding the two sums together, calling it all income tax, and collecting it in that much fairer way.
  Mr. David Ennals: On Second Reading the hon. Member for Newcastle upon Tyne, East (Mr. Thomas) on behalf of the Social Democratic Party, said:
  "We must do what successive Governments and the two old parties have ducked for so long, and that is to consider the questions of poverty, social security, pensions and taxation together."—[Official Report, 15 December 1981; Vol. 15, c. 198.]
  During my three years as Secretary of State for Social Services I do not recall the hon. Gentleman telling me that I was ducking the issue. The 1975 Bill was agreed by both sides of the House and by the right and left wings of the Labour Party. The hon. Gentleman voted for it then. I do not know what he is talking about now.
  Mr. Rooker: My right hon. Friend speaks with some experience in the matter. If representations were not made at the time, the hon. Member for Newcastle upon Tyne, East can now tell us in detail how the two systems would be amalgamated. However, this Bill is not the right vehicle for that, because one cannot table the necessary amendments to put a coherent case about income tax.
  Mr. Mike Thomas rose—
  Mr. Rooker: I shall give way to the hon. Gentleman once more. Then I intend to complete my speech without giving way to him, irrespective of the number of times that he interrupts.
  Mr. Mike Thomas: I am grateful to the hon. Gentleman. Does he wish to collect the £5 billion from the lower paid? If not, his argument is entirely specious.
  Mr. Rooker: Therein lies the problem. The sum of £5 billion is collcted not from the lower paid but from every wage earner because the contribution comes from the first slice of income up to £30. The average earner pays the national insurance contribution on his earnings between nought and £30, which is why such a large amount of money is collected. There is no easy answer to the problem. I could find £5 billion in many places, but I should be out of order if I started to itemise them. The Opposition are taking steps within their internal structure to discuss that issue. We shall in due course issue a set of

  473
  coherent proposals to clear up the problem of the interaction between the income tax and social security systems.
  The increases that I have detailed as they affect average earners, five times average earners and two-thirds average earners, must be set against the fact that they will pay for contributory benefits. That is one of the other problems. It has always been a part of our system that contributions have been separated from the income tax system and that it should not be possible for a Government to cut or abolish benefits. However, the Government are trying to abolish the contribution principle. That will provide the Opposition with the welcome opportunity to return to square one and to reconsider the entire system.
  The increases in contributions must be set against reductions in benefits. There are some who argue that the Government are perpetrating a social security fraud, but I suspect that those who report our proceedings will not take that on board.
  What will be the effect of the changes in clause 1 on employees? I shall not read out a long list of statistics, because the Committee would find that boring and because those who report our proceedings do not find it easy to take down a mass of statistics. In putting some comparisons before the Committee, I shall assume that the basic 30p flat rate will remain in the next financial year. Under the Government's proposals, someone on half average earnings will pay 38·75p in the pound on each extra pound that he receives. I refer to combined income tax and national insurance contributions. The rate for someone in receipt of twice average earnings will be 30p in the pound. Those will be the rates from next April.
  It is crazy that someone in receipt of half average earnings—perhaps £80 by next April—will have 38·75p taken from every extra pound that he receives in the form of overtime payments or bonuses, while the higher paid will lose less. Someone in the same factory or company on twice average earnings—perhaps £250 a week—will lose only 30p in every extra pound. I suspect that that person's payments will not be in the form of overtime. He or she will pay a smaller amount in the pound because there will be no loss in the form of extra national insurance contributions.
  It is relevant to compare the respective positions in 1978. Those on half average earnings were then paying 31·5p in the pound on every extra pound, while those on twice average earnings were paying 33p. The result of the 1978 Budget, which was the last effective Budget that the Labour Government introduced, was that those on half average earnings paid less in the pound in the marginal rate of tax and in national insurance contributions than those on twice average earnings. This Government have reversed the respective positions. I do not think that any other comparison can show more effectively the unfairness of the extra tax burden that has been imposed by the Government. It has been shifted from those who earn more than average earnings to those who earn only half average earnings. The effect of the Government's changes from April 1982 will stem entirely from the large increase in the national insurance contribution rate that is contained in clause 1 and the extra 1 per cent. this year.
  It is my understanding that these increases will wipe out the benefit that many wage earners enjoyed following the reduction in the standard rate of income tax from 33p in the pound to 30p. The Government are not trying to keep the increased national insurance contributions a secret, but
  474
  the measures that contain such changes are usually carried through the House of Commons by order at about this time of the year, and often fairly late at night. The Government have had to introduce a Bill this year—they had to do so last year—largely for arithmetical reasons, except for the current redundancy payments change. I hope that they will learn their lesson and recognise that in future they should keep increases within the limit provided in the original Act. That would avoid taking up the time of the House of Commons with primary legislation.
  It is generally true that we introduce the changes that we are discussing during December and that they come into operation in the following April. The Budget judgment is presented in March, when the Chancellor of the Exchequer makes great pronouncements, on income tax and tax thresholds, that appear in headlines. Increases in income tax are never highlighted at that time but the changes are already coming into effect and they will hit people's pay packets in the form of national insurance contribution increases, which can have a greater effect on pay packets than almost any other announcement that the Chancellor might make in his Budget judgment.
  When the increased contributions take effect many of our constituents say "This was never discussed in Parliament at the time of the Budget. Why do Members of Parliament let these things through without debate or scrutiny?" We, the Opposition—I am sure that this applies to previous Oppositions—can point to late night debates shortly before Christmas when no one pays a great deal of attention to the minutae of what is passing through the House of Commons. The effect of what we are doing now on the pay packets of more than 20 million wage earners will be catastrophic, especially for the low-paid. It will have the effect of shifting the balance of tax contributions from the higher paid to the lower paid.
  The attendance in the Chamber is not very great. Although we are not allowed to refer to it, the attendance of the press representatives who report our proceedings is even less great. The national insurance system has become so complicated that hon. Members and members of the press are almost frightened to consider and discuss it. That has happened because of the scale of the complexity and the magnitude of the Budget, which involves £30 billion. That being so, we tend to lose sight of the effect on the individual.
  We must find a way of organising our debates and enacting social security legislation, especially that which bears on contributions and benefits, so that hon. Members may play a greater part in our debates. We shall be able to do that only if the consequences of legislation are made more clear to hon. Members. I do not criticise the notes on clauses that have been provided by the Government on this or on any other Bill, but the briefings that we receive from groups outside the House, such as the Low Pay Unit and the Child Poverty Action Group, are couched in much more humane terms than anything that we receive from the Government. The briefing from outside groups tell us in clear terms what the effect of proposed legislation will be on ordinary families. Of course, we are aware of the effect of Government action when we attend our surgeries and undertake constituency work. I urge the Government to take steps to provide clearer information.
  It may be upsetting even for Ministers to note that not one Conservative Back Bencher is in the Chamber. They must be worried when they find that none of their supporters is seeking to participate in the debates. Many

  475
  more hon. Members should be seeking to catch the eye of the Chair. The Bill is fundamental to the British people. We shall oppose the clause for the reasons that I have detailed. The clause is grossly unfair. Our reasons for opposing it are the same as those that were advanced when we considered last year's Bill.
  I hope that we do not have another such Bill. The Government must find a better way to order the tax and social security system. They must not make further impositions and further cut benefits.
  5 pm
  Mr. Ennals: I entirely support what my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) said, but I do not agree that the Government are concerned about the fact that the Benches behind them are empty. They wish to get the measure through and get the extra money for the Treasury. The quicker that they can do that and the fewer people who notice it, especially among the press, the happier they will be.
  This is just a Treasury Bill. As I said on Second Reading, it places a heavy impost on working people when their cost of living is rising. Rents and prescription charges are increasing and inflation is not coming down in the way that the Government promised. Burdens are being piled on working people, yet they are told that they must accept low wages.
  Under the Government the national insurance burden is getting higher and higher. When Parliament introduced earnings-related contributions, it was not the intention constantly to have Bills to raise the percentage of earnings. As earnings rise, earnings-related contributions rise. In a well-ordered system, with a Government who knew what they were doing, Parliament would not have to be asked year after year to increase the percentage.
  The system was introduced because it was fairer and because it would prevent the nonsense year after year of increasing the amount that people had to pay. The 1974 White Paper announcing the new scheme, Cmnd. 5713, stated at paragraphs 33 to 35:
  "The Government Actuary estimates … that a combined contribution from employers and employees of not more than 16½ per cent. of employees' earnings up to the scheme's ceiling would be required to finance the scheme in its early years if 8 million employees were contracted out. This contribution would compare with the 14 per cent. combined contribution proposed for April 1975 under the Social Security Amendment Bill now before Parliament. It covers all national insurance benefits, industrial injuries benefits, a contribution to the national health service and the employer's contribution to the Redundancy Fund",
  which this Bill does too.
  "The balance between the scheme's income and expenditure will be affected by the number of occupational scheme members who are contracted out. For example, a contribution of not more than 16 per cent. would be needed in the early years if the number contracted out turned out to be 6 million, rather than 8 million."
  The Government have not yet mentioned the numbers contracted out of the State scheme and I hope that the Minister will deal intelligently with the matter in his reply.
  Paragraph 35 states
  "It is not necessary to decide the initial contribution rate firmly at this point … it is thought right to illustrate the effects of the scheme by assuming an initial contribution of 16½ per cent. and the figures shown in the text of this White Paper are on that basis. Of a 16½ per cent. contribution, if that proved appropriate, the employee would pay 6½ per cent. and the employer 10 per cent."
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  In 1977 those were the percentages. The employee was asked to pay 6½ per cent. However, last year the employer's contribution was increased to 7·75 per cent. and a further 1 per cent. increase is proposed. With the employee's contribution at 13·7 per cent., the total is 21·45 per cent.
  The original proposals were made by the Labour Government and accepted by the Conservative Opposition. However, the Government have now got themselves in a mess, not only over the insurance system but over increased unemployment. On Second Reading the Secretary of State said that a high proportion of the money went to the large number of elderly people and it has not changed.
  People asked to pay the extra 1 per cent. will wonder what they will get for it. They will get nothing. There will be no improvement in benefits. Last year unemployment benefit was increased by 5 per cent. under the rate of inflation, which was an effective cut, and the earnings related supplement has been stopped. The Government have completely undermined the contributory system.
  Does the Secretary of State believe in the contributory principle or does he see the Bill simply as a system of taxation? If the latter, it has grave weaknesses. It is extremely regressive to use national insurance contributions as a tax system. It does not take a higher percentage from people with incomes above a certain level, who, in any case, get special tax concessions from the Government. If contributions are increased but contributory benefits reduced, it is bound to undermine confidence in the contributory principle.
  The Social Security (No. 2) Act 1980 abolishes the earnings-related supplement from next January. It increased certain contributory benefits by 5 per cent. less than the rate of inflation, although it retained price protection for non-contributory benefits such as supplementary benefit. The Act took away the right which people believed that they had through paying their national insurance contributions.
  If the Government believe that the contributory principle is a load of old codswallop and wish to throw it out of the window, we must think again. The basis of the new pension scheme and the whole basis of earnings-related pensions was that people would better understand and, therefore pay their contribution because they knew what they were getting from it.
  Mr. Mike Thomas: I have sympathy with what the right hon. Gentleman says, but do people really understand the contributory principle? The level of contributions and the tax-gathering aspect have so undermined the principle that people can conceive of it no longer.
  Mr. Ennals: The hon. Gentleman is making the same point as I am. Successive actions by the present Government, during the period when he was a member of the Labour Party, have steadily eroded the contributory principle. That principle has been accepted by the House ever since the Beveridge report was implemented and strong arguments have been made for it. I remember Richard Crossman delivering the Herbert Morrison memorial lecture and arguing that people are prepared to pay when they can see that they are buying a worthwhile benefit. Earlier still—in 1942—the Beveridge report stated:

  477
  "It is, first and foremost, a plan of insurance—of giving in return for contributions benefits up to subsistence level, as of right and without means test, so that individuals may build freely upon it."
  It was the contributory principle which the Social Security Pensions Act 1975, approved by both parties, sought to strengthen. Moreover, it is the essential element in the new pensions scheme which, thank goodness, up to this moment has not divided the two parties but has been accepted, and is now three years into its 20-year maturity period.
  It would be disastrous if the principle written into that Act, and accepted by Parliament and by the people, of paying contributions in order eventually to receive benefits were ignored. It is a pay-as-you-go scheme. Today's earners are paying for benefits received by those who are retired or unemployed. There is an honesty about that, but that honesty is now being undermined as year after year the Government change the percentage of contributions, using it simply as a taxation measure.
  We shall discuss the reduction of the Treasury supplement later and I shall not go into it now. However, it is another example of the Treasury obliging the DHSS to turn national insurance into a system of tax collection in an anti-social and unsatisfactory way which hits the poorest hardest and the richest least.
  For those reasons, I shall happily and willingly support my hon. Friend the Member for Perry Barr in voting for the amendment.
  5.15 pm
  Mr. Andrew F. Bennett: Clause 1 should be deleted. We are involved in an utterly ridiculous procedure. If the proceedings on the Bill were submitted as a script for "Yes, Minister" I suspect that they would be rejected as a subject for humour because they are so ridiculous as to lack any credibility whatever.
  We are discussing one-third—the contributions—of a three-part equation. We cannot discuss the benefits to be paid, or the level of income tax which in part makes up the contribution side. We cannot discuss all three together because, traditionally, income tax contributions and benefit levels are set in the Budget while national insurance contributions are set several months earlier.
  Most people would be more sympathetic to being asked to pay an extra 1 per cent. if they knew that extra benefits were to be paid. They might also take a different view if they knew the level of tax to be imposed on them by the Budget, and particularly whether the tax thresholds would be raised. Yet here we are asked to consider one part of a three-part equation while remaining blindfolded with regard to the other two. We should be able to debate all three at the same time. Income tax, national insurance contributions and benefit levels should be set at the same time, either now or at the time of the Budget. To decide one part of the equation now and the other two later is absurd. The situation seems to have come about because national insurance is based on a weekly contribution while income tax is based on an annual contribution. That is one major contradiction to be considered in seeking to amalgamate the two.
  A number of absurdities result from national insurance contributions being on a weekly basis. For instance, a person who earns £50 per week for half the year and does not work for the other half pays considerably more in contributions than a person who earns £25 per week for the
  478
  whole year. On the other hand, a person perhaps working on a North Sea oil rig who manages to earn £300 per week for half the year and does not work for the other half pays considerably less in national insurance contributions than the person who earns £150 per week throughout the year. That is another absurdity to be taken into account when considering whether national insurance contributions should continue to be on a weekly basis.
  If the contributions were based not on weekly but on annual earnings, the national insurance contribution could be adjusted at the same time as the tax contribution. That would make far more sense.
  Such a change would also solve some of the problems of those in the lowest income groups who are in and out of the system as a result of increases in the lower earnings limit and who, sadly, end up with only half a year's contributions and therefore no entitlement to benefit because the lower earnings limit has changed or because they have received a small rise which, if it is less than £2, usually results in a cut in income so that they have to plead with their employer not to give them a rise which would take them just over the lower earnings limit. Again, that is absurd.
  When the Minister attempts to justify the clause, will he give some answers to people who are in and out of the system as a result of yo-yo-ing around the lower earnings limit? Would not it be fairer to make refunds to those who cannot make sufficient contributions to qualify for benefit? If he is not prepared to do that, will he consider crediting in those people who are unable to make a complete set of contributions because for part of the time their earnings are too low?
  I turn to the question of those who are already credited in for benefits, particularly those in youth opportunities schemes. I understand that those at present participating in such schemes are credited in for some but not for all benefits. Will the Minister explain what happens in these cases, particularly for those young people who are out of work for a considerable period and are in and out of a youth opportunities scheme or some other scheme of that kind and thus cannot contribute for a lengthy period? This has an impact on their pension rights, and, although their pensions may still be far in the future, they are entitled to our concern on that point. The Government must also consider carefully the problem facing those aged 60 to 65 who are unemployed but receiving no benefit and can no longer contribute to their pension entitlement, particularly the earnings-related element.
  Finally, what will be the position with regard to the new training schemes? The Department of Employment seems to have decided that the participants will receive only pocket money rather than any real income. Will they receive full credits in relation to national insurance contributions?
  The national insurance system has reached such a farcical position that it is logical now to reject the clause and force the Government to bring back a unified system in their Budget proposals. National insurance contributions and income tax rates can then be considered at the same time and we may begin to iron out the major anomalies between the two systems.
  Mr. Fowler: This has been a wide-ranging debate, although only relatively few hon. Members have taken part in it. I agree with the right hon. Member for Norwich, North (Mr. Ennals) that we should aim to seek as much

  479
  agreement as possible on issues such as pensions. The first speech that I ever made on social services was as Opposition spokesman on Brian O'Malley's Bill. I call it Brian O'Malley's Bill because I am sure that Mrs. Barbara Castle would not seek to say other than that he was the major author of that Bill.
  There was general agreement, which I hope will continue, on the contributory principle. The hon. Member for Newcastle upon Tyne, East (Mr. Thomas) said that the contributory principle is very different from a funded scheme. That is correct. It is a pay-as-you-go system, with today's contributors funding today's benefits. Therefore, it makes no sense to criticise the extra 1 per cent. as not earning extra benefits.
  Mr. Mike Thomas: Will the right hon. Gentleman define the difference between the contributions as now made and a tax?
  Mr. Fowler: My point is that the pay-as-you-go contribution system is a system whereby people who are contributing now are paying for the benefits to today's pensioners. If the hon. Gentleman wishes to call that a tax, it is a matter for him.
  Mr. Ennals: The Secretary of State cannot get away with what he has just said. The whole basis of the contributory principle that he is now justifying does not apply. We are telling people that they must now pay, not just more money, but a higher percentage of their income, and we have already taken away some of the benefits that they thought they would get for the money they paid. Surely the contributory principle has gone.
  Mr. Fowler: I was talking about pensions. The right hon. Gentleman's remarks show the unwisdom of my making generous comments and going wider than necessary on clause stand part. I should have thought that there was still a consensus on pensions, whatever other differences there might be between the two sides of the House.
  Mr. Clement Freud: Does not the Secretary of State agree that this is not so much a pay-as-you-go system but a we-pay-as-they-go system?
  Mr. Fowler: Yes; that is the definition of pay-as-you-go.
  Mr. Andrew F. Bennett: Does not the Secretary of State accept that even on pensions the Government have torn up the agreement because people made contributions on the basis that pensions would rise in line with earnings and prices? The Government changed the rules and pensioners are now about £5 a week worse off.
  Mr. Fowler: We are now going back to fighting every battle that we have fought on social security over the past two and a half years.
  I sympathise with the hon. Member for Birmingham, Perry Barr (Mr. Rooker), in believing that it is difficult in a debate such as this to try to get a human assessment of the effects of the legislation. The House should remember what the Bill—and particularly clause 1—seeks to do. Next year we shall be spending almost £30 billion on social security benefits—an increase of £2½ billion. Of that, about £19 billion will come from the national insurance fund. Of that £19 billion, £13½ billion will be spent on the
  480
  retirement pension—about £1½ billion more than this year. That is one of the essential justifications of the Bill and, indeed, the clause.
  In clause 1, in raising those contributions, we are seeking as far as possible to try to protect the employer and the self-employed on the grounds that, although we are talking essentially about benefits, the major aim of any political party and any Government must be to secure the recovery of industry and a reduction of unemployment. That is why we have so weighted the clause.
  Clause 1 raises the lower and upper earnings limits for class 1 contribution liability from £27 and £200 a week to £29·50 and £220 a week respectively. That forms part of the annual exercise for reviewing national insurance contributions. Clause 1(2) raises the employee's contribution from 7·75 per cent. of liable earnings to 8·75 per cent. Of that extra 1 per cent., 0·3 per cent. is to keep the national insurance fund balanced; a further 0·25 per cent. is to compensate for the reduction in the Treasury supplement; 0·35 per cent. is the additional employment protection allocation; and 0·1 per cent. is an allocation to the National Health Service, which has so far been unquestioned, or has not been raised seriously either today or on Second Reading.
  Mr. Ennals: I should hate the Secretary of State to believe that that will not be challenged. I challenge it, not because I do not want more money to be spent on the National Health Service—all present and past Secretaries of State for Social Services want that—but because the Secretary of State is making up for the fact that the Treasury does not give him the money that he needs for the NHS and therefore he has to put a higher load on the contributor through the national insurance system. It is another way of saving the money that the Treasury might otherwise have contributed, if it had been wiser or more generous, to the National Health Service.
  Mr. Fowler: We have sustained spending on the National Health Service. We have increased spending on the NHS by 5 per cent. in real terms since 1979, and this is a further contribution to the increase in spending. I should have thought that the right hon. Gentleman would have welcomed the fact that we are spending more on the NHS and employing more doctors and nurses. We then come to the question of how it will be paid for. The vast bulk comes from general taxation—87 per cent. There is nothing particularly sacrosanct or special about the exact percentage that comes from the NHS contribution, but the right hon. Gentleman should know that compared with the early 1960s we are now spending less as a percentage of the NHS contribution than we were then.
  The Opposition always omit the fact that six out of 10 people are exempt from prescription charges, and accordingly I believe that this is a fair and reasonable way of financing the NHS and achieving growth in it during a period of recession. That is what we are talking about—the growth of the Health Service during a difficult period of economic recession.
  5.30 pm
  Mr. Mike Thomas: I wonder how stupid the right hon. Gentleman thinks the public are. If he puts up the charges on every employed person, that will affect their pay packets at the end of the week. How can he believe that they will be conned with the idea that at the same time the

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  Government are keeping the income tax level down to 30 per cent. or, depending on the next Budget, to 25 per cent.? Does he really believe that the public distinguish between NHS charges raised in this way and those raised through income tax? The only distinction they make is the way in which this bears grotesquely unfairly on the low paid.
  Mr. Fowler: I would have considerably more respect for the hon. Gentleman if during his period—
  Mr. Thomas: Cheap abuse.
  Mr. Fowler: I do not want to get involved in cheap abuse, but I intend to offer the hon. Gentleman a few hints. It is easy for Members on both Front Benches to tall about radical solutions, and the hon. Gentleman has not asked us to come forward with a radical solution. All he has said is that we should be thinking about one. The only radical solution that he has proposed is a vast increase in income tax. That is certainly radical, and I hope that he campaigns on it. If he is asking whether I think that there is a difference between income tax and the amount that goes to the NHS through this contribution, my answer is "Yes". By definition, this money is earmarked for the NHS, and that is an important part of the contributory principle that some of us hold to be important.
  Mr. Andrew F.Bennett rose—
  Mr. Fowler: I shall not give way, not even to the hon. Gentleman.
  If clause 1 was deleted, there would be a loss to the national insurance fund as a result of not raising contribution rates. That must be clear. Secondly, it would mean holding the lower and upper earnings limits at their present levels.
  Such a move should, therefore, be resisted for three major reasons. First, it would result in a deficit in the working balance in 1982–83 of about £1½ billion in the national insurance fund. That would reduce the balance in the fund to about £3·3 billion, which represents only nine weeks of benefit expenditure. As the House knows, the fund has no borrowing powers, and a working contingency reserve is a necessary part of the scheme about which we are talking.
  Secondly, it would be regressive—that word has been used time and again—to hold the upper earnings limit at its present level, as this would place a disproportionately greater burden on the lower paid. It would bring into contribution liability low earners, especially part-timers, who have hitherto escaped because of the fact that the earnings limit has kept ahead of their earnings. In addition, to compensate for the loss of the £225 million income to the national insurance fund in 1982–83 by not raising the earnings limit, the contribution rates would have to go up by a further 0·2 per cent. That is the effect of the proposals, and that would hit hardest the lowest paid. Keeping the upper earnings limit down would mean that people at the upper end of the earnings scale would pay less in contributions than their proper share.
  Additional pension rights are earned on the band of earnings between the lower and upper earnings limits. By compressing that band by artificially keeping the earnings limits down would disappoint the legitimate expectations of people on higher earnings about the amount of additional pension to which they would be entitled as well as have the effect on low earners that I have described.
  482
  Thirdly, as was fairly mentioned by the hon. Member for Perry Barr, the lower earnings limit must by law be kept broadly in line with the basic pension rate of £29·60. It must, therefore, be increased as the Bill proposes.
  Even if no changes were made in the rate of the Treasury supplement or the NHS allocation, an increase in contributions would be needed to avoid a deficit in the fund. It has been the policy of successive Governments to keep the income and the expenditure from the fund broadly in balance. The Opposition must, therefore, accept that some increase in contributions was inevitable.
  I have already indicated why the earnings limits should be raised. I find it hard to believe that the Opposition do not accept the need for contributions to be levied on a higher band of earnings to reflect the increase in inflation. To leave them as they stand would benefit higher wage earners and penalise the lower paid—precisely the opposite to what the Opposition have argued.
  The upper earnings limit must be between six and a half and seven and a half times the basic pension rate. The present limit of £200 was 7·37 times the pension rate in 1981–82. To leave it at that level in 1982–83 would reduce the multiple to 6·76 at a time when income to the national insurance fund needs to be bolstered to match expenditure on benefits.
  Many other points could be made about the Bill and the clause, but I strongly urge the House to resist the arguments advanced for leaving out the clause.
  Mr. Rooker: I do not accept what the Secretary of State has said would be the consequences for the upper and lower earnings limits as a result of removing clause 1. As I have already said, we should like to see other changes. Our basic contention is that, if the Government put people back to work, by definition more earners would pay contributions at existing rates and less unemployment benefit would have to be paid. That is the main reason why we shall register a protest, and we shall do so in the only reasonable and logical way possible, which is to vote against clause 1.
  Question put, That the clause stand part of the Bill:
  The Committee divided: Ayes 271, Noes 218.

  Division No. 34]

  [5.40 pm

  AYES

  Adley, Robert

  Brown, Michael(Brigg&Sc'n)

  Aitken, Jonathan

  Brovme, John(Winchester)

  Alexander, Richard

  Bruce-Gardyne, John

  Alison, Rt Hon Michael

  Bryan, Sir Paul

  Amery, Rt Hon Julian

  Buchanan-Smith, Rt. Hon. A.

  Ancram, Michael

  Buck, Antony

  Arnold, Tom

  Budgen, Nick

  Atkins, Rt Hon H.(S'thorne)

  Bulmer, Esmond

  Atkins, Robert(PrestonN)

  Burden, SirFrederick

  Baker, Nicholas (N Dorset)

  Butcher, John

  Banks, Robert

  Butler, Hon Adam

  Bell, Sir Ronald

  Carlisle, John(Luton West)

  Bendall, Vivian

  Carlisle, Kenneth(Lincoln)

  Benyon, W. (Buckingham)

  Carlisle, Rt Hon M. (R'c'n)

  Bevan, David Gilroy

  Chalker, Mrs. Lynda

  Biffen, RtHon John

  Chapman, Sydney

  Biggs-Davison, Sir John

  Churchill, W.S.

  Blackburn, John

  Clark, Hon A. (Plym'th, S'n)

  Blaker, Peter

  Clark, Sir W. (Croydon S)

  Body, Richard

  Clarke, Kenneth(Rushcliffe)

  Bonsor, SirNicholas

  Clegg, Sir Walter

  Bottomley, Peter(W'wich W)

  Cockeram, Eric

  Bowden, Andrew

  Colvin, Michael

  Boyson, Dr Rhodes

  Cope, John

  Bright, Graham

  Corrie, John

  Brinton, Tim

  Costain, SirAlbert

  Brittan, Rt. Hon. Leon

  Cranborne, Viscount

  483

  Critchley, Julian

  Knight, MrsJill

  Crouch, David

  Knox, David

  Dean, Paul (North Somerset)

  Lang, Ian

  Dickens, Geoffrey

  Langford-Holt, SirJohn

  Dorrell, Stephen

  Latham, Michael

  Douglas-Hamilton, LordJ.

  Lawrence, Ivan

  Dover, Denshore

  Lawson, Rt Hon Nigel

  du Cann, Rt Hon Edward

  LeMarchant, Spencer

  Durant, Tony

  Lennox-Boyd, HonMark

  Dykes, Hugh

  Lester, Jim (Beeston)

  Eden, Rt Hon Sir John

  Lewis, Kenneth (Rutland)

  Edwards, Rt Hon N. (P'broke)

  Lloyd, Ian (Havant & W'loo)

  Elliott, Sir William

  Lloyd, Peter (Fareham)

  Eyre, Reginald

  Luce, Richard

  Fairbairn, Nicholas

  Lyell, Nicholas

  Fairgrieve, SirRussell

  Macfarlane, Neil

  Faith, MrsSheila

  MacKay, John (Argyll)

  Farr, John

  Macmillan, Rt Hon M.

  Fell, Anthony

  McNair-Wilson.(N'bury)

  Fenner, Mrs Peggy

  McNair-Wilson, P. (NewF'st)

  Finsberg, Geoffrey

  McQuarrie, Albert

  Fisher, Sir Nigel

  Madel, David

  Fletcher, A.(Ed'nb'gh N)

  Major, John

  Fletcher-Cooke, SirCharles

  Marlow, Antony

  Fookes, Miss Janet

  Marshall, Michael(Arundel)

  Forman, Nigel

  Marten, Rt Hon Neil

  Fowler, Rt Hon Norman

  Mather, Carol

  Fox, Marcus

  Maude, Rt Hon Sir Angus

  Fraser, Peter (South Angus)

  Mawby, Ray

  Fry, Peter

  Mawhinney, DrBrian

  Gardiner, George (Reigate)

  Mayhew, Patrick

  Gardner, Edward (SFylde)

  Meyer, Sir Anthony

  Garel-Jones, Tristan

  Miller, Hal(B'grove)

  Gilmour, Rt Hon Sir Ian

  Mills, Iain (Meriden)

  Glyn, Dr Alan

  Mills, Peter (West Devon)

  Goodlad, Alastair

  Mitchell, David(Basingstoke)

  Gorst, John

  Moate, Roger

  Gow, Ian

  Montgomery, Fergus

  Gower, Sir Raymond

  Morgan, Geraint

  Grant, Anthony (Harrow C)

  Morris, M. (N'hamptonS)

  Green way, Harry

  Morrison, Hon C. (Devizes)

  Griffiths, E. (B'y St. Edm'ds)

  Mudd, David

  Griffiths, Peter Portsm'thN)

  Murphy, Christopher

  Grist, Ian

  Myles, David

  Grylls, Michael

  Neale, Gerrard

  Gummer, John Selwyn

  Needham, Richard

  Hamilton, Hon A.

  Nelson, Anthony

  Hamilton, Michael (Salisbury)

  Neubert, Michael

  Hampson, Dr Keith

  Newton, Tony

  Hannam, John

  Nott, Rt Hon John

  Haselhurst, Alan

  Onslow, Cranley

  Hastings, Stephen

  Osborn, John

  Havers, Rt Hon Sir Michael

  Page, John (Harrow, West)

  Hawkins, Paul

  Page, Richard (SWHerts)

  Hawksley, Warren

  Parkinson, Rt Hon Cecil

  Hayhoe, Barney

  Parris, Matthew

  Heddle, John

  Patten, Christopher(Bath)

  Henderson, Barry

  Patten, John (Oxford)

  Heseltine, Rt Hon Michael

  Pattie, Geoffrey

  Hicks, Robert

  Pawsey, James

  Higgins, Rt Hon Terence L.

  Percival, Sir Ian

  Hill, James

  Peyton, Rt Hon John

  Hogg, Hon Douglas(Gr'th'm)

  Pink, R. Bonner

  Holland, Philip(Carlton)

  Pollock, Alexander

  Hooson, Tom

  Porter, Barry

  Hordern, Peter

  Prentice, Rt Hon Reg

  Howe, Rt Hon Sir Geoffrey

  Price, Sir David (Eastleigh)

  Howell, Rt Hon D(G'ldf'd)

  Prior, Rt Hon James

  Howell, Ralph (N Norfolk)

  Proctor, K. Harvey

  Hunt, David (Wirral)

  Pym, Rt Hon Francis

  Hunt, John(Ravensbourne)

  Raison, Timothy

  Hurd, Hon Douglas

  Rathbone, Tim

  Irving, Charles(Cheltenham)

  Rees-Davies, W. R.

  Jenkin, RtHon Patrick

  Ridsdale, SirJulian

  JohnsonSmith, Geoffrey

  Rifkind, Malcolm

  Jopling, Rt Hon Michael

  Roberts, M. (Cardiff NW)

  Joseph, Rt Hon Sir Keith

  Roberts, Wyn (Conway)

  Kaberry, Sir Donald

  Rossi, Hugh

  Kershaw, Sir Anthony

  Rost, Peter

  Kitson, Sir Timothy

  Sainsbury, Hon Timothy

  484

  St. John-Stevas, Rt Hon N.

  Townsend, CyrilD, (B 'heath)

  Scott, Nicholas

  Trotter, Neville

  Shaw, Giles (Pudsey)

  van Straubenzee, Sir W.

  Shaw, Michael(Scarborough)

  Vaughan, Dr Gerard

  Shelton, William(Srreatham)

  Viggers, Peter

  Shepherd, Colin(Hereford)

  Waddington, David

  Shepherd, Richard

  Wakeham, John

  Shersby, Michael

  Waldegrave, HonWilliam

  Silvester, Fred

  Walker, B. (Perth)

  Sims, Roger

  Walker-Smith, Rt Hon Sir D.

  Skeet, T. H. H.

  Wall, SirPatrick

  Speed, Keith

  Waller, Gary

  Speller, Tony

  Walters, Dennis

  Spence, John

  Ward, John

  Squire, Robin

  Watson, John

  Stainton, Keith

  Wells, Bowen

  Stanbrook, Ivor

  Wheeler, John

  Stevens, Martin

  Whitelaw, RtHon William

  Stewart, A(ERenfrewshire)

  Whitney, Raymond

  Stewart, Ian (Hitchin)

  Wickenden, Keith

  Stokes, John

  Wiggin, Jerry

  Stradling Thomas, J.

  Wilkinson, John

  Tapsell, Peter

  Williams, D.(Montgomery)

  Taylor, Teddy (S'end E)

  Wolfson, Mark

  Tebbit, Rt Hon Norman

  Young, SirGeorge(Acton)

  Temple-Morris, Peter

  Younger, Rt Hon George

  Thomas, Rt Hon Peter

  Thompson, Donald

  Tellers for the Ayes:

  Thorne, Neil(IlfordSouth)

  Mr. Robert Boscawen and

  Thornton, Malcolm

  Mr. Anthony Berry.

  Townend, John (Bridlington)

  NOES

  Abse, Leo

  Dixon, Donald

  Adams, Allen

  Dobson, Frank

  Alton, David

  Dormand, Jack

  Anderson, Donald

  Douglas, Dick

  Archer, Rt Hon Peter

  Dubs, Alfred

  Ashton, Joe

  Duffy, A. E. P.

  Atkinson, N.(H'gey,)

  Dunnett, Jack

  Barnett, Guy(Greenwich)

  Dunwoody, Hon Mrs G.

  Barnett, Rt Hon Joel (H'wd)

  Eadie, Alex

  Beith, A.J.

  Ellis, R.(NED'bysh're)

  Benn, Rt Hon Tony

  Ellis, Tom(Wrexham)

  Bennett, Andrew(St'kp'tN)

  Ennals, Rt Hon David

  Bidwell, Sydney

  Evans, Ioan (Aberdare)

  Booth, RtHonAlbert

  Evans, John (Newton)

  Boothroyd, MissBetty

  Ewing, Harry

  Bottomley, RtHonA.(M'b'ro)

  Faulds, Andrew

  Bradley, Tom

  Fitch, Alan

  Bray, Dr Jeremy

  Fletcher, Ted(Darlington)

  Brocklebank-Fowler, C.

  Foot, Rt Hon Michael

  Brown, Hugh D. (Provan)

  Ford, Ben

  Brown, R. C. (N'castle W)

  Foster, Derek

  Brown, Ron(E'burgh, Leith)

  Foulkes, George

  Buchan, Norman

  Fraser, J.(Lamb'th, N'w'd)

  Callaghan, RtHonJ.

  Freeson, Rt Hon Reginald

  Canavan, Dennis

  Freud, Clement

  Carmichael, Neil

  Garrett, John (Norwich S)

  Clark, Dr David (S Shields)

  George, Bruce

  Cocks, Rt Hon M. (B'stolS)

  Gilbert, Rt Hon Dr John

  Cohen, Stanley

  Golding, John

  Coleman, Donald

  Graham, Ted

  Concannon, Rt Hon J. D.

  Grant, George(Morpeth)

  Cowans, Harry

  Grant, John (Islington C)

  Craigen, J. M. (G'gow, M'hill)

  Grimond, RtHonJ.

  Crawshaw, Richard

  Hamilton, James(Bothwell)

  Crowther, Stan

  Hamilton, W. W. (C'tral Fife)

  Cryer, Bob

  Hardy, Peter

  Cunningham, G. (IslingtonS)

  Harrison, Rt Hon Walter

  Cunningham, Dr J. (W'h'n)

  Hart, Rt Hon Dame Judith

  Dalyell, Tam

  Hattersley, Rt Hon Roy

  Davidson, Arthur

  Haynes, Frank

  Davies, Rt Hon Denzil (L'lli)

  Heffer, EricS.

  Davies, Ifor (Gower)

  Hogg, N. (EDunb't'nshire)

  Davis, Clinton (HackneyC)

  Home Robertson, John

  Davis, T. (B'ham, Stechf'd)

  Homewood, William

  Deakins, Eric

  Hooley, Frank

  Dempsey, James

  Horam, John

  Dewar, Donald

  Hoyle, Douglas

  485

  Huckfield, Les

  Race, Reg

  Hudson Davies, Gwilym E.

  Radice, Giles

  Hughes, Mark(Durham)

  Rees, Rt Hon M (Leeds S)

  Hughes, Robert (Aberdeen N)

  Richardson, Jo

  Hughes, Roy (Newport)

  Roberts, Albert (Normanton)

  John, Brynmor

  Roberts, Allan(Bootle)

  Johnson, James (Hull West)

  Roberts, Ernest (Hackney N)

  Johnson, Walter (Derby S)

  Roberls, Gwilym(Cannock)

  Johnston, Russell (Inverness)

  Robinson, G. (Coventry NW)

  Jones, Barry (East Flint)

  Rooker, J. W.

  Jones, Dan (Burnley)

  Roper, John

  Kaufman, RtHon Gerald

  Ross, Ernest (Dundee West)

  Kerr, Russell

  Rowlands, Ted

  Kinnock, Neil

  Ryman, John

  Lamborn, Harry

  Sandelson, Neville

  Lamond, James

  Sever, John

  Leighton, Ronald

  Sheldon, Rt Hon R.

  Lestor, Miss Joan

  Shore, Rt Hon Peter

  Lewis, Ron (Carlisle)

  Silkin, RtHonJ.(Deptford)

  Litherland, Robert

  Silkin, Rt Hon S. C. (Dulwich)

  Lofthouse, Geoffrey

  Silverman, Julius

  Lyons, Edward (Bradf'dW)

  Skinner, Dennis

  McCartney, Hugh

  Smith, Rt Hon J. (NLanark)

  McDonald, DrOonagh

  Snape, Peter

  McElhone, Frank

  Soley, Clive

  McKay, Allen (Penistone)

  Spearing, Nigel

  McKelvey, William

  Spriggs, Leslie

  Maclennan, Robert

  Stallard, A.W.

  McMahon, Andrew

  Steel, RtHon David

  McNally, Thomas

  Stewart, Rt Hon D. (W Isles)

  McNamara, Kevin

  Stoddart, David

  McTaggart, Robert

  Stott, Roger

  McWilliam, John

  Straw, Jack

  Magee, Bryan

  Summerskill, HonDrShirley

  Marshall, D(G'gowS'ton)

  Thomas, Dafydd (Merioneth)

  Marshall, Jim (LeicesterS)

  Thomas, Mike (NewcastleE)

  Martin, M(G'gowS'burn)

  Thorne, Stan (PrestonSouth)

  Maxton, John

  Tinn, James

  Maynard, Miss Joan

  Torney, Tom

  Meacher, Michael

  Varley, RtHon EricG.

  Mikardo.lan

  Wainwright, E. (Dearne V)

  Millan, RtHon Bruce

  Walker, Rt Hon P.(W'cester)

  Miller, DrM.S. (EKilbride)

  Watkins, David

  Mitchell, Austin(Grimsby)

  Weetch, Ken

  Mitchell, R. C. (Soton Itchen)

  Wellbeloved, James

  Molyneaux, James

  Welsh, Michael

  Morris, Rt Hon A. (W'shawe)

  White, Frank R.

  Morris, Rt Hon C. (O'shaw)

  White, J. (G'gowPollok)

  Morton, George

  Whitehead, Phillip

  Mulley, RtHon Frederick

  Whitlock, William

  Newens, Stanley

  Wigley, Dafydd

  O'Halloran, Michael

  Williams, Rt Hon A. (S'sea W)

  O'Neill.Martin

  Williams, Rt Hon Mrs (Crosby)

  Orme, Rt Hon Stanley

  Wilson, Gordon (DundeeE)

  Owen, Rt Hon Dr David

  Wilson, RtHonSirH.(H'ton)

  Palmer, Arthur

  Wilson, William (C'trySE)

  Park, George

  Winnick, David

  Parker, John

  Woodall, Alec

  Parry, Robert

  Woolmer, Kenneth

  Pavitt, Laurie

  Wright, Sheila

  Penhaligon, David

  Pitt, WilliamHenry

  Tellers for the Noes:

  Powell, Raymond (Ogmore)

  Mi. Joseph Dean and

  Price, C. (Lewisham W)

  Mr. Lawrence Cunliffe

  Question accordingly agreed to.
  Clause 1 ordered to stand part of the Bill.

Clause 2

  ALTERATION OF TREASURY SUPPLEMENT TO CONTRIBUTIONS
  Question proposed, That the clause stand part of the Bill.
  Mr. Brynmor John: We are opposed to the clause standing part of the Bill. We had all sorts of dire
  486
  forecasts from the Secretary of State about what would happen if clause 1 did not stand part of the Bill. The Economic Secretary to the Treasury will correct me if am wrong, but I understand that the only effect of deleting clause 2 would be to keep the Treasury contribution at 14½ per cent.
  When we debated the matter on Tuesday, in opening the debate the Secretary of State said that there were no hard and fast rules about the amount of the supplement. We tried to make it as hard and fast as possible with sovereign legislature, and in 1975 we enshrined it at 18 per cent., where it remained until the present Government took office. During the past three years the Treasury supplement has moved down from 18 to 14½ per cent. and it is now proposed to move it down to 13 per cent.
  The Secretary of State for Social Services was wrong when he said that there was no hard and fast rule. In the Government's view there is, and it is that the supplement should always go down and that employed persons' contributions should always go up. We object to clause 1, which states that whereas an employed person must pay a higher contribution, every other contribution is either frozen or, as in the case of the Treasury supplement, diminished.
  In opening the debate on Tuesday the Secretary of State said that the cost of benefits to the taxpayer had increased. That is true for two reasons—the new non-contributory pension concept, and because many more people are receiving benefits because of the Government's failure to ensure that they are gainfully employed. However, the Secretary of State rather spoilt his case, because he entered into an argument, which I hope the Economic Secretary to the Treasury will make clearer, about how much extra it is reasonable to expect the general taxpayer to find.
  It ought to be made clear to the House that the employed person and taxpayer are often the same person. 'When saying that the amount that the general taxpayer has to find must be reasonable, we predicate the case of a taxpayer who is not employed, within the meaning of the National Insurance Act, and not contributing to the fund.
  There is a case argued about contributory benefits, particularly among the self-employed—although I do not argue it—that there could be an element of unfairness in paying for extra contributory benefits, because the contributor does not always get benefit from that class of payments. There can be no such argument about non-contributory benefits, because the taxpayer is entitled to non-contributory benefits in the same way as every member of the community. Therefore, we must consider whether the regressive nature of the national insurance contribution is any fairer than expecting the general taxpayer to meet the burden of the fund.
  If it is argued that the burden is being placed on the taxpayer because of the non-contributory pension—as the Chief Secretary to the 'Treasury said in Tuesday's debate—that is not unreasonable. The cost of non-contributory pensions is increasing and, therefore, the Treasury supplement ought to remain the same. Fairness is an elastic concept, and I doubt whether the Economic Secretary and I would often agree about what is fair arid what is not. However, it might be possible to move towards resolving whether the Government's proposals in the Bill are fairer or less fair than maintaining the Treasury contribution.
  The Chief Secretary to the Treasury repeated on Tuesday figures that the Secretary of State gave, and hon.

  487
  Members who attended the debate will remember that they both made considerable play of them. They repeated the figure that from 1975–76 to 1981–82 the burden on the general taxpayer in respect of social security benefits had risen by 8 per cent., from 37 per cent. to 45 per cent. When rounded up, that rise of 8 per cent. over five years is a small proportion—it has increased relatively slowly at less than 2 per cent. a year—of the total fund.
  On the other hand, one must take the two concepts as being equally open to examination if one is fairer than the other. I said on Tuesday that an employed person's contribution had increased in the three years that the Government had been in office by ¼ per cent., 1 per cent. and now a further 1 per cent. Therefore, we are talking about a 2¼ per cent. rise. According to my admittedly shaky mathematics—no doubt the Economic Secretary to the Treasury will correct me if I am wrong—that is a rise of 34½ per cent. in three years—an annual rate of 11½ per cent.
  6 pm
  Whereas the taxpayer's burden has risen by about 1·6 per cent. a year over the past five years, the employed person's contribution has risen by 11½ per cent. a year over the past three years. Coupled with the regressive nature of that tax—once a person goes over the threshold of liability for national insurance contributions they are paid not merely on the balance of income over the threshold, but on the whole income—the way that the burden of the employed person has increased, with a 2¼ per cent. rise in his weekly contribution, has made the unfairness comparison bear more heavily on employed persons.
  The results of the Government's action and way that they contemplate acting in future will bear ever harder on the employed person. The Government will try inexorably to cut the Treasury contribution. We know that if the clause remains in the Bill the Treasury contribution will be the lowest percentage in the history of the scheme. Of course, there was no contribution bank when the scheme started in 1949 and the initial contributions from the Treasury were high—36 per cent. in 1949, 37·6 per cent. in 1950, 38·7 per cent. in 1951 and 27·7 per cent. in 1952.
  Thereafter, in the 1950s, the balance between claims on the fund and contributions meant that the contributions could be maintained at a steady rate because they brought in an income that did not need a big supplement, but in none of those years did the supplement fall as low as 13 per cent. The previous lowest supplement that I can find was that in 1955, when the Treasury contribution was 15·8 per cent. After that it varied between 17 per cent. and over 20 per cent. and has settled since 1975 at a steady 18 per cent.
  At a time of economic depression the Treasury is cutting its contribution and forcing those in employment to pay up to an extra £3·75 a week. The result will be a lowering of people's net incomes, whether they earn the average weekly wage or more. I know that it is an unfashionable doctrine in the Treasury, but that will surely reduce people's spending power and increase the viciousness of the spiral into which the economy has been plunged.
  I should like the Economic Secretary to dismiss the half-hearted attempt by the Secretary of State for Social Services—
  Mr. Ennals: Why not just dismiss the Secretary of State?
  Mr. John: That is probably beyond the Economic Secretary's competence. He has been known to move mountains, but I do not think that he could move a Cabinet Minister so easily.
  I ask the Economic Secretary at least to clarify the situation. The Secretary of State tried to blind us on Second Reading by throwing out figures by the gross. He pretended that the new contribution would result in only £9 million less going into the fund next year, but he said earlier that about £260 million was being taken off the Treasury contribution. I think that that is the agreed figure.
  The theme of Government statements in our debates—the Chief Secretary, no doubt because of a shortage of material, seemed to speak of little else—is that the increases are necessary to pay for extra benefits. We are told that the ratio of pensioners to employed persons will rise. That is correct, and the number of claims on the fund will, therefore, also rise.
  However, as the ratio worsens and there are more retired people living longer and receiving pensions, the logic of the Government's position is that every time claims go up the whole burden will fall on the employed person's contribution. No other way has been suggested.
  Employers are not being touched, except in relation to wage drift, taxpayers are not being clobbered—heaven forbid that the Government should do that—and the whole burden is being heaped on employed persons, many of whom are also taxpayers. They are not particularly happy about the situation.
  We do not dispute the fairness of extra benefits. Indeed, we resent the trickery of the rest of the Chancellor's statement in which cuts were made in the real value of benefits. We also resent the fact that the Government expect employed persons alone to be able to bail the Government and the national insurance fund out of the present difficulties. That is hard on employed persons, unreasonable and counter-productive. Therefore, the clause should be struck from the Bill.
  The Government are cutting out earnings-related benefit from January. It will pass from our lives, though not, I hope, for ever. I hope that it will soon return. The figures from the DHSS are imprecise, as the Under-Secretary of State for Health and Social Security will admit, but the supposed saving for the Treasury from the ending of that benefit is £385 million. That was stated in an answer to my hon. Friend the Member for Barking (Miss Richardson) on 29 October 1981.
  It is true that that figure was an estimate, but I cannot be blamed for quoting an estimate, because the Minister told my hon. Friend the Member for Barking that he would write to her when the latest estimate of the saving was available. To the best of my knowledge, no such estimate has been given and we are, therefore, left with the best guesstimate of the DHSS, which is a likely saving of £385 million.
  We are entitled to know the latest position. How much will be saved by not paying earnings-related benefit? The Secretary of State spoke today almost as if a contract was being entered into between the national insurance payer and the Government. The fact is that many of those who will find themselves without earnings-related benefit next January paid their contributions in the expectation that the benefit will be available if misfortune arose.

  489
  It does not lie in the mouth of the Secretary of State to talk about the contractual, semi-sacred and mystical nature of the bond between the Government and national insurance contributors. As shown when the 12 per cent. uprating was cynically cut to 10 per cent., the Government act arbitrarily. They cut whenever they want to. They cut whenever it suits the economy's need to do so.
  There is no link between the contributions paid by the insured person and what he will receive. At the rate things are going, many of those who wish to call upon the fund will find that the benefits they expected have disappeared. It is imperative that the Treasury contribution is maintained at its present rate. Indeed, I regret the fact that the contribution is only at its present rate. I regret, too, the fact that the original contribution was not maintained at the full 18 per cent. inherited in 1979. I believe, nevertheless, that the 1½ per cent. that is supposed to be cut by the exercise that we are discussing should be restored. It should be maintained. That is why the Opposition believe that clause 2 should not stand part of the Bill.
  Mr. Ennals: I support this amendment, just as I supported the previous one. The main argument that I used—
  The First Deputy Chairman of Ways and Means (Mr. Bryant Godman Irvine): Order. I remind the right hon. Gentleman that no amendment has been before the House on either clause.
  Mr. Ennals: I beg your pardon, Mr. Godman Irvine. I should be referring to the clause standing part of the Bill.
  The argument that I used on the previous occasion was that the Government were taking further steps to undermine the contributory principle of the national insurance system, which Governments of successive parties had sought to operate over the last 30 years. I almost stated that both parties had tried to make improvements. In fact, there have been improvements only when the Labour Party has been in power.
  It was envisaged at the time of Beveridge that there would be a significant Treasury contribution to the national insurance fund. Beveridge envisaged
  "a tripartite scheme of contribution"
  under which the Exchequer would provide one-third of the cost of unemployment benefit, and one-sixth of the cost of pensions, disability and maternity benefits.
  In practice, the Treasury supplement has fluctuated considerably over the years since the scheme came into operation in 1948. In the first few years it went as high as 38·7 per cent. There was a period when it was 23 per cent., but since 1963 it has averaged 18 per cent. A statutory obligation that it should be 18 per cent. was established, not through any Act passed by a Labour Government, but through the 1973 Social Security Act. The supplement was fixed at 18 per cent. from 1975. It became law—this had never previously been the case—as a result of actions taken by a previous Conservative Government.
  My main case against the clause is that it undermines further the principles of the Welfare State that were established following the Beveridge report. Once again the national insurance fund is being used as a means either of raising money for the Treasury or of saving money that would otherwise have been spent by the Treasury. It is difficult to understand why the Government have decided upon this course, other than that the Treasury requires it of the Department of Health and Social Security.
  490
  6.15 pm
  On Second Reading I sought to discover from the Secretary of State what his argument was. The right hon. Gentleman linked non-contributory benefits and contributory benefits and said:
  "over the years, the proportion of benefit expenditure"—
  both national insurance and non-contributory—
  "met from general taxation has tended to rise. It was about 37 per cent. in 1975–76. It is 45 per cent. in the current year and, even with the 1·5 per cent. cut in the Treasury supplement it will still be about 45 per cent. in 1982–83".—[Official Report, 15 December 1981; Vol. 15, c. 176.]
  There is no logic in that. We are talking about the national insurance system. We are not talking about supplementary benefit. We are not talking about other types of means-tested benefit. Of course, it is true that, as a result of action taken by the Government, an increasing proportion of people are dependent not upon their national insurance contributions but upon the topping-up that supplementary benefit and supplementary pensions provide for them. The Government have made such a mess of things that there is now an increasing proportion of people dependent on supplementary benefit, yet their answer is to place a heavier burden on the working population to pay for national insurance benefits. The Government have blurred the issue and made no distinction between the national insurance system and the system of supplementary benefit, which is a safety net and a topping-up provision for people in great difficulty.
  I asked the Secretary of State in an intervention on Second Reading why he argued that it was more unfair to put the burden on the taxpayer than on a limited number of workers. The national insurance system has its weaknesses. For this reason the Opposition will urge at a later stage that the upper limit should be increased. It is not as fair a system as taxation, which does not have an upper limit. The right hon. Gentleman gave no answer to my question. He said that
  "we must consider two aspects. The first is the Treasury supplement. The second is the amount that the taxpayer pays for benefits in general."—[Official Report, 15 December 1981; Vol, 15, c. 176.]
  What answer is that? It is no answer at all. I hope that the Minister will be frank in replying to the debate. He can repeat the Secretary of State's argument that because an increasing proportion of the sad British public are dependent upon supplementary benefit, the increasingly lucky people still allowed to have a job will, as unemployment increases, have to pay more as the Treasury pays less. I am really asking the Minister to justify the cut from 18 per cent., which was the statutory requirement, to the present 13 per cent.
  I wish to put a specific question, which I hope will be answered. If the Government had not sought to change what has been happening for almost 20 years, and had not moved from the 18 per cent., how much money would the national insurance fund have saved? My hon. Friend the Member for Pontypridd (Mr. John) has done his arithmetic more carefully than I have done mine. I am certain that the Treasury Minister has done his. Would it have been necessary to raise the level of workers' contributions if the Treasury had fulfilled the statutory obligation placed on it by a previous Conservative Government?
  Mr. Andrew F. Bennett: I hesitate to rise at this stage because I have just noticed that the hon. Member for Rugby (Mr. Pawsey) has entered the Chamber. He is one of the few Government Back Benchers present so perhaps

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  at long last we shall hear from a Conservative Member, other than a Minister, why the Bill should be passed. So far, on Second Reading and in Committee, no Conservative Member has pointed to any virtue in the Bill. Even the Ministers seem a little half-hearted. Perhaps we shall now have some enthusiasm, but I doubt it.
  This is a bad Bill, and each clause is bad and vicious in its own way. My constituents will be disappointed that clause 1 was passed, because they will be asked to make larger contributions. Most of them feel that they already make large national insurance contributions and that they should not be asked to pay more. Some of them would perhaps be prepared to put up with the extra contributions if the level of benefit were improved, and particularly if some of the extra money were used to expand and improve the National Health Service. If they believed that, as a result of the extra contributions, the queue of people waiting for kidney transplants were to be shortened, or that doctors should be more willing to treat people over 45 who need kidney transplants or other major surgery, they would perhaps go along with the proposal. If my constituents believed that the waiting lists for hernia operations and treatment for people with bad backs would be improved, again they might go along with it. However, they find that their extra contributions to the National Health Sevice will not improve the service, but will merely allow the Treasury to make a smaller contribution.
  We do not know how the Treasury intends to use the money that is to be saved. If the Treasury said how it intended to use the money, my constituents might have some sympathy with this proposal. As this is one-third of the package and the other two bits—the tax changes and the benefit changes—are firmly wrapped up, we shall not know the answer until the Budget. At present, people are being asked to pay increased contributions for an unknown reason. We have been given no clear statement how the Treasury intends to use the extra money that will come in in this way, enabling the Treasury to make a smaller contribution.
  Is the Minister prepared to give us some enlightenment? Will the extra money help to reduce income tax? If so, my constituents would then know where they stood. Of course, most of them would be disgusted, because they feel that income tax is little more progressive than national insurance contributions as a form of taxation. Nevertheless, they would know where they stood. If it meant a change in VAT, again my constituents would know what was involved. As it is, we have had no statement from the Government on how the money saved is to be used.
  If child benefit or supplementary benefit were to be increased as a result of the saving, my constituents might be sympathetic. If the Treasury were expecting a loss of revenue from the tax on cigarettes, again my constituents might feel a little sympathy for the increase. But if they have no idea how the Treasury intends to use the money that it saves, they will be firmly against the increase.
  The Government are again placing burdens on those who are making contributions and giving benefits, to those who have unearned incomes or earnings of more than £220 a week. My constituents will be bitter if they are asked to make extra contributions so that people with unearned
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  incomes and high earnings can benefit. I therefore challenge the Economic Secretary to tell us what the 1·5 per cent. that is being saved here will be used or.
  The Economic Secretary to the Treasury (Mr. John Bruce-Gardyne): I approach my reply to this debate with some trepidation. I admit that this is the first time that I have participated in a debate on social security legislation. I realise that for the unwary and for the neophyte, the subject is beset with pitfalls.
  We have had an interesting debate. The hon. Member for Pontypridd (Mr. John) put his arguments with lucidity and reasonableness, and I shall attempt to answer one or two of the matters that he and his hon. Friends raised.
  First, however, I am bound to draw attention to the implications of the defeat of this clause, if the Opposition take it to a Division. If the amendment were accepted, the Treasury supplement would remain at 14·5 per cent., as this year. The House has already agreed to clause 1, which increases the rates of national insurance contributions and earnings limit to the levels that are proposed by the Government. Thus, we have already secured sufficient income under clause 1 for the fund to meet the Government's objectives. If we were to leave the Treasury supplement as it stands in 1981–82, there would be a surplus of income to the national insurance fund of some £261 million more than is required. The hon. Gentleman queried that figure earlier, and he was right when he said that it was £261 million. That addition, as I understand it, would simply increase the surpluses in the national insurance fund. They would have to be invested in gilt-edged securities, and thus help the financing of the public sector borrowing requirement.
  If the House were to reject the clause, the effect would be to take from the taxpayer or raise money by borrowing beyond the moneys required for the purpose of the national insurance fund expenditure simply to have the proceeds reinvested in gilts or handed back to the taxpayer in another form. In other words, as the Bill is drafted, clause 2 is consequential on clause 1. Now that clause 1 has guaranteed the income to the fund, the deletion of clause 2 would have no effect beyond an unnecessary recycling of money. I want that to be absolutely clear.
  However, I fully understand hon. Gentlemen's anxiety to discuss the rationale of our decision to reduce the Treasury supplement from 14·5 per cent. of contributions to 13 per cent., and it is to that subject that I shall now address my remarks.
  6.30 pm
  The hon. Member for Pontypridd said that fairness was an elastic concept. I confess that when my children upbraid me with the allegation that something is not fair I tell them that the world is not a fair place and that the sooner they realise that, the better. In my experience, fairness tends to be a concept which is in the eye of the beholder. It is a highly subjective judgment. The hon. Gentleman was fair enough to acknowledge that there is no golden figure for the size of the Treasury supplement. It has fluctuated widely for many years.
  We heard much on Second Reading—and there have been references this evening to the speeches made by my right hon. Friend the Secretary of State for Social Services and by my right hon. and learned Friend the Chief Secretary—about the balance between the taxpayer's contribution and the contribution made by the national insurance contributor. The hon. Gentleman and his hon.

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  Friends pointed out that they are often the same person. That is so. But the balance between the two parts of the equation is a matter of judgment, not of absolute principle.
  The financing of national insurance benefits inevitably involves a partnership between the national insurance contributor and the taxpayer who contributes through the Treasury supplement. In examining the financing burden and the balance between the two classes of contributor, I must tell the House—I know that this is disputed by the right hon. Member for Norwich, North (Mr. Ennals) and by all Labour Members—that it is argued that it is perfectly legitimate to take account not only of contributory but also of non-contributory benefits in striking a balance.
  When the national insurance scheme started, the bulk of social security expenditure was on national insurance benefits. I understand that the only non-contributory benefits were supplementary benefits—the old national assistance—family allowances and war pensions. The bulk of expenditure was on contributory retirement pensions. Even as late as 1970 the majority of social security benefits were still contributory. In 1970, national assistance, family allowances and war pensions still amounted to only just under £1,000 million out of a total national insurance bill of £3,700 million. Since 1970 there has been a veritable explosion in expenditure on non-contributory benefits. A large part of this has been increased expenditure on supplementary benefits—a point made by the right hon. Member for Norwich, North. I accept that.
  That is by no means the whole story. Child benefit replaced the old child tax allowances and family allowances, and a whole raft of new benefits was created to meet different circumstances—attendance allowances, invalid care allowances, non-contributory invalidity pensions, mobility allowances, old persons' pensions, and family income supplements. All have added to the non-contributory total expenditure.
  In 1978–79—the year that the Conservative Party took office—total expenditure on non-contributory benefits was £4,600 million out of a total of £15,200 million—about 30 per cent. In the current year, expenditure on non-contributory benefits is expected to be £9,300 million out of a total of £26,600 million, or 35 per cent. Next year, expenditure will be nearly £11,000 million out of a total of nearly £30,000 million. Compared with the year in which the Conservative Party came to office, total expenditure in 1982–83 will approximately double and expenditure on non-contributory benefits will more than double.
  Mr. Andrew F. Bennett: Surely it is unfair to include child benefit in that category. It has replaced the tax allowance and should be considered in the same light as that. It should not be used to justify the argument that the balance of non-contributory benefits has greatly increased.
  Mr. Bruce-Gardyne: That does not alter the fact that that benefit adds to the totality of non-contributory benefits and hence to the burden that falls directly on taxpayers.
  Mr. Bennett rose—
  Mr. Bruce-Gardyne: I listened carefully to the hon. Gentleman's earlier remarks, but I shall now concentrate on bringing my remarks to a close.
  The House can see that the burden has shifted over the years in the direction of expenditure on benefits financed
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  entirely by the taxpayer. That is not a temporary phenomenon that has resulted entirely from the tragic increase in unemployment, but a long-term trend. Against that background, it is only right that those who stand to benefit directly from their contributions should shoulder a greater proportion of the burden on the taxpayer.
  We are not arguing that there is anything god-given about one figure, whether that figure is 14·5 per cent. or 13 per cent. Given the shift in the burden between the contributor and the taxpayer, it is legitimate to make some modest reduction in the Treasury supplement, which will assist in striking the balance that must be struck at Budget time. If I were to try to speculate about the appropriate answers to the questions asked by the hon. Member for Stockport, North (Mr. Bennett) concerning the equations that will be struck at that time, I have a nasty suspicion that my brief tenure of office in the Treasury would come to an abrupt conclusion. To avoid that disastrous eventuality—for me, if not for other hon. Members—I shall not take up those points.
  Mr. John: I asked a specific question about how much the Treasury would save when earnings-related benefit no longer became payable from the end of the month. Will the Minister confirm the figure of £380 million?
  Mr. Bruce-Gardyne: I apologise to the hon. Gentleman for not having answered that question. I stress that I am a complete innocent abroad in these matters—
  Mr. Mike Thomas: The Minister must know this figure.
  Mr. Bruce-Gardyne: It is probably just as well that I did not hear that intervention. I understand that the latest estimate of the gross saving from the abolition of earnings-related supplement in 1982–83 is £445 million, which represents a revision of the figure that has been given.
  That does not alter the basis of my argument, which is basically that, given the circumstances of this year and the steady drift in the burden from the contributor to the taxpayer, this adjustment in the level of the Treasury supplement is justifiable at this time.
  I ask the House to support the clause.
  Mr. John: I am bound to say to the hon. Member for Knutsford (Mr. Bruce-Gardyne) that I realise that this is an arcane subject, as the attendance at these debates seems to show.
  The Minister started with his best point and worked his way steadily down throughout his speech, and I shall deal with his points in reverse order and hope that my speech does not fade away in quite the same way as his did.
  The hon. Gentleman spoke about earnings-related benefits. He described with charming candour his future as being well behind him if he went down this road, but stated that in view of the steady drift of our economic affairs throughout the last year we needed to save £261 million by decreasing the contribution of the Treasury to the national insurance fund. He said that £450 million would be saved as a gross figure anyway. The net figure might be somewhat less, because some people might then qualify for supplementary benefit. That is part of the logic chopping that has gone into the Government exercise on social security benefits.
  Mr. Bruce-Gardyne rose—
  Mr. John: Let me finish my point, and then, I shall give way.

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  By reducing the amount of benefit £450 million will be saved. People expected, and had every right to expect, that in certain circumstances they would be paid earnings-related benefit. The hon. Gentleman will know—and if he does not the Secretary of State and other Ministers know—that the two greatest sources of earnings-related benefit are unemployment and sickness, when people have every right to expect that benefit. It does not add to their sense of fairness if it is taken away. However we define that difficult word, if they see that benefit suddenly taken away and the Treasury contribution suddenly reduced by £261 million, and they are left with the supreme delight of paying 1 per cent. more for national insurance contributions, that does not add to their sense of fairness.
  Mr. Bruce-Gardyne: I ought to set the record straight. I did not say anything about the £261 million being required because of the steady drift of our affairs, or something like that. All I said was that if the clause was rejected that sum of £261 million would be added to the fund and it would then have to be recycled through the Government's gilt-edged market.
  6.45 pm
  Mr. John: I understand that point. As that was the Minister's first and best point—and possibly his only point—I intend to deal with it last.
  The hon. Member used the words "steady drift". Perhaps it was a Freudian slip. Or perhaps it was what he ought to have said had he really applied his mind to it.
  Let me deal with the question of fairness. We are talking about people who are in employment, who are paying national insurance contributions. We think it right and proper—I hope that this applies to us all—that they should provide for other people's misfortunes. We are in agreement about that. But that depends upon what they are doing being seen to be fair.
  The Beveridge concept, to, which my right hon. Friend the Member for Norwich, North (Mr. Ennals) referred, envisaged a tripartite funding of the national insurance fund—by employed persons, by employers, and in part by the Government. That is the origin of the Treasury contribution. Indeed, had the Treasury not contributed in the early years the scheme could not have got off the ground, because there was no money in the fund.
  It will not add to any feeling of fairness if those who pay the insured person's contribution see that they alone have been singled out to carry this extra burden. The rest are either being left neutral or, in the Treasury's case being given the opportunity—rather like some speculator on the Stock Exchange—to take a quick profit and claw back £261 million.
  If people see that happening and see the undermining of the tripartite system on which the fund has always been understood to be based they will feel a sense of unfairness. The figures that I gave were not disputed by the Minister, so I cannot be quite as bad a arithmetician as I had thought. If the taxpayer's contribution to the national insurance fund goes up to 45 per cent. bearing in mind that over the last three years their contribution has gone up by 11½ per cent. per annum, that will greatly increase the sense of unfairness.
  Mr. Mike Thomas: I agree with the point that the hon. Gentleman is making. Is not the argument here that the
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  Government have decided how they will treat benefit recipients? I agree that they are treating them meanly, especially in relation to making up the shortfall, and then considering whether to get the money back through this provision or through income tax. This is an artificial discussion, related to whether the Chancellor can pretend in his Budget next year that he has reduced income tax to 25 per cent. whereas he is taking it all back in these increased contributions.
  Mr. John: Marginal taxation has risen quite sharply.
  For the reason that I shall give in a moment I agree that there is an element of artificiality about this debate, in view of what happened on the last clause. The point that I am making is that if people believe that it is right to make provision for others, they must have a sense of fairness. That sense of fairness is absent, and the danger is that people will say that they are not willing to believe in the concept of the welfare state.
  That would be a great sadness to many people, but it would be the result of the temptations to which the Treasury has succumbed with monotonous regularity. Like Oscar Wilde, the Treasury has not been able to resist anything, not even the temptation to claw back money. The Treasury contribution has decreased from the 18 per cent. that it was when the Government took over, down to 13 per cent. under the Bill. That is a decrease of 5 per cent. If the Government were to maintain their contribution at 18 per cent., that would be equivalent to 0·75 per cent. weekly on the national insurance contribution which is almost all of this increase.
  What we are really talking about, therefore, is a shift from that mythical creature the general taxpayer to the insured person. What I object to most in the whole of this exercise is putting the burden of the increased benefits on insured persons, who are a small fraction of the community and are getting smaller. We believe that the whole community should shoulder the burden of financing extra benefits, and that means involving the general taxpayer.
  It is no good the Minister saying that the general taxpayer has to pay for his non-contributory pension. Of course he has. He is entitled to it, even if he is not an employed person. He, too, can benefit from it. Many people in employment go through their lives without ever claiming benefit; many others who are entitled to benefit are unaware of the fact that they are entitled.
  The debate has been worth while, if only to enable us to air the sense of frustration that must be felt by employed people when they see whole burden put unfairly upon them. For that reason, if for no other, it has been a valuable debate.
  I come now to the Minister's main point. He said that, clause 1 having been passed, the effect of not passing clause 2 would be to produce a surplus of £261 million, which would then be invested in gilts and produce a surplus to the community or to the Government. I do not think that the community and the Government are identical at the moment. I accept the logic of what the Minister said. Having failed to dislodge clause 1, if we were to dislodge clause 2 it would be a Pyrrhic victory. It would benefit the victor rather less than the vanquished. Therefore, I do not intend to press the matter to a Division.
  The Treasury will, however, have to face the mounting sense of inequity and act accordingly; otherwise the whole

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  concept of the Welfare State, in which I understand all parties in the House believe, will be muddied and dirtied beyond recall.
  Question put and agreed to.
  Clause 2 ordered to stand part of the Bill.

Clause 3

  ALLOCATION OF CONTRIBUTIONS
  Mr. John: I beg to move amendment No. 3, in page 2, line 34, leave out subsection (3).
  The Second Deputy Chairman of Ways and Means (Mr. Ernest Armstrong): With this it will be convenient to take the following amendments: No. 4, in page 3, line 12 leave out subsection (3).
  No. 6, in page 4, line 2, leave out schedule 1.
  Mr. John: In a sense, the amendment bears upon the matter that we have already been discussing, because—
  Mr. Andrew F. Bennett: On a point of order, Mr. Armstrong. Although the amendment relates to redundancy payments, it is very much a Treasury matter so a Treasury Minister should be present.
  The Second Deputy Chairman: The hon. Gentleman knows that that is not a matter for the Chair.
  Mr. John: My favourite song was never "Let my people go". However, I agree with my hon. Friend that on this occasion a Treasury Minister should be with us.
  The clause seems to enshrine a dangerous novelty compared with previous Bills of this kind. It makes the employed person responsible to the extent of 0·35 per cent. of the 1 per cent. increase in contribution. For the first time, the employee is to be responsible for the redundancy payments fund. That type of benefit was first introduced in the Redundancy Payments Act 1965.
  On the Second Reading of that measure, the right hon. Member for Wanstead and Woodford (Mr. Jenkin) made an extremely interesting speech. Some of it proves his consistency; some of it ought to make the Government squirm with embarrassment. The only truly good taste that the right hon. Gentleman showed in his speech was when he mentioned my constituency. In explaining his opposition to the Bill, he said:
  "I should much prefer to have seen a wage-related unemployment benefit scheme. That would seem to combine all the advantages of redundancy payment in a form which would achieve the aims of the present scheme."
  That rings hollowly today when the Conservative Government are intent upon destroying the sort of scheme that the right hon. Gentleman was then espousing.
  Later in his speech, the right hon. Gentleman argued that
  "it would be possible to make sure that a larger proportion of redundancy payment was borne by the fund and a smaller proportion by the employer".
  Then he added:
  "this is a measure of social benefit for employees generally and some part of the additional contribution might come from an additional 2d. per week from the employee."
  I hasten to add that that was in old—or what I would call real—money. The right hon. Gentleman continued:
  "I should not regard that as an improper or unusual suggestion."—[Official Report, 26 April 1965; Vol. 711, c. 103–4.]
  In Conservative Party philosophy there has been some vague and lingering suggestion that the employee should
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  somehow bear the cost of his own potential redundancy, but we were then, in 1965, talking about tuppence a week. Now we are talking about 0·35 per cent. of the 1 per cent. increase in contribution. For a man on average earnings of £150 a week, it means more than £1 a week.
  I suspect that for some time during the debate today—and certainly during the debate on Tuesday—we have been thrown by the fact that the Bill refers to the principal Act as being the Social Security Act 1975, but that was an Act to consolidate the 1973 Act and other Acts. I am not sure whether it is now proper to mention the right hon. Member for Sidcup (Mr. Heath) in the presence of Ministers, but certainly the debates took place when his Government were in office. No objection was expressed by any Conservative Back Bencher that the Government were trying to enshrine a provision that only the employer and the State should contribute towards the redundancy payments fund. No one suggested that the cost should be partly borne by the employee. Not a word to that effect was said. The measure went through on the nod. That was satisfactory from our point of view, because we believed it to be right. No Conservative Back Bencher could be found in 1973 to espouse the cause that an employee should pay a contribution towards his own prospective redundancy.
  Now we find that the wheel has turned full circle. In the debate on Tuesday the Secretary of State said that it was
  "a perfectly logical extension of the principle of social insurance"
  to make those in work pay towards their own redundancy.
  It was clear from the debate on Tuesday that the 0·35 per cent. which employed persons are asked to pay in respect of their liable earnings will bring in £353 million in 1982–83. Such is the record of the Government and such is the avalanche of redundancies created by their policies that the Minister had to go on to admit that the extra income
  "should be sufficient to keep the borrowing of the redundancy fund within the £300 million limit agreed by the House for the year."—[Official Report, 15 December 1981; Vol. 15, c. 175.]
  7 pm
  We are again talking about the Government's fig leaf of cash limits as though they are sacrosanct and that every other imperative must be made subordinate to maintain them. We ignore the fact that the Chancellor of the Exchequer has consistently missed his targets and exceeded his borrowing requirements. He has failed to impose those cash limits to which he alleges he is sticking.
  Therefore, those who have lost their jobs, through no fault of their own, are required to pay towards the redundancy fund. I have described it as the "Pay now, be redundant later" clause, which is a fair description. However, the people who contribute to the fund and who voted for the Government did not vote for redundancies, and certainly did not vote to finance their own redundancies. They voted for the synthetic concern of Saatchi and Saatchi's wall posters. In the Bill they face the increased prospect of redundancy and of paying towards it in the interim.
  We do not believe that employed persons must contribute to keep the redundancy payments fund afloat. That is genuinely and properly the responsibility of the employer and of the State, and that is where it has rested since 1965. If it must be kept up by additional public expenditure, I for one would differ from the Economic

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  Secretary, the hon. Member for Knutsford (Mr. Bruce-Gardyne), because I would not feel faint and retire to bed for a fortnight to recover from the shock. If it must be done in that way, so be it. It is time that the Government learnt that the proper use of public expenditure is to guard people against misfortune. The misfortune that is all too common in Britain today is that of people becoming redundant. To ask them to pay in preparation for their own redundancy is obscene. Therefore, the subsection should be struck out of the Bill.
  Mr. Andrew F. Bennett: I support the amendment.
  I raised a point of order earlier to impress upon the Government the fact that we should have some Treasury Ministers here because the clause is not a social security measure. It is fundamental to the management of the economy. It is sad that the Government have hinted in the Bill that they do not believe their statement that we are turning the corner. If they really believed that and also that the number of redundancies would decline during the next few months, the need to boost the redundancy fund would disappear. The Government do not have that confidence in their policy, so they must boost the fund in this way.
  If the fund will be called upon less than has been the case in recent months, the need to boost it would be greatly reduced. If there is an improvement in the economy, such as the Government have claimed, the likelihood of redundancies will be less and the Government should be talking about the redundancy fund being better off than it is. The worrying feature of the Bill is the Government's lack of confidence in the future of British industry.
  If the Government are not confident that they have turned the corner, they should take other measures than simply putting their efforts into ensuring that there is enough money in the fund for future redundancies. It will not give my constituents much Christmas cheer to learn that the Government are saying that we have not seen the worst of the redundancies and that there are more to come. A town such as Stockport has already seen far too many redundancies, although it is still an area that is more fortunate in that respect than many. The Government should have confidence in their economic policies or do something about them. They should not put the emphasis on increasing the redundancy fund.
  If there must be more money in the redundancy fund, where should it come from? It is inappropriate to say that it must come from the employees and that they must pay for their own redundancies. They have little control over the matter. They are rarely consulted about whether there should be redundancies at any time. It is a blow that strikes suddenly. A notice goes up, there is a meeting with the shop stewards, and the workers are informed. There is no way in which they can influence the decisions that make them redundant. The employers have much influence about whether people are made redundant. It is also an area of Government policy. Time after time firms must make people redundant because of Government policy, not because of the behaviour of the employees.
  High interest rates have operated this year. If the Government could get interest rates down, the likelihood of a large number of redundancies next year, thereby creating an imbalance in the fund, would be greatly reduced. The Government should direct their attention
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  towards bringing down interest rates rather than ensuring that there is sufficient money in the fund to pick up the disasters that occur because of their policy.
  If we consider again the question of who should pay, it is suggested that the slimming down of British industry would be to the benefit of the whole community. It is certainly not for the benefit of those groups that are made redundant. Redundancy payments should be made out of the tax that is paid by everyone and not merely those who are in work. This is one of the more mean measures being brought forward by the Government. It will also boost inflation, because as contributions are increased people receive less in their wage packets, which encourages them to ask for more. That undermines the Government's strategy.
  The measure of putting up employees' contributions to the redundancy fund shows the Government's lack of confidence in their economic management. It is a mean measure, because it asks those who are about to suffer to contribute to a minor relief of that suffering. The Government should consider ways in which we can ensure that there will not be a drain on the redundancy fund during the next 12 months.
  The Under-Secretary of State for Health and Social Security (Mrs. Lynda Chalker): This has been a short debate, but I shall try to put into context some of the claims that have been made by the hon. Members for Pontypridd (Mr. John) and for Stockport, North (Mr. Bennett). The effect of the amendment and those linked with it, Nos. 4 and 6, would be to remove from the Bill the provision that introduces into the primary class 1 contribution—the employee's contribution—an element for the employment protection allocation.
  The hon. Member for Pontypridd said that he did not believe that employees should make a contribution. That already happens in a roundabout way. Subsection (3) of clause 3 earmarks 0·35 per cent. for the employment protection allocation. I question the hon. Gentleman's statement that employees should not make a direct contribution, because it has become a long established principle in Britain that we make contributions towards our pensions and towards those days when we must have recourse to the national insurance fund. I should have thought that this measure, which is to provide resources for times ahead when one may not, for one reason or another, be in paid work, is a sensible and logical extension.
  Mr. John: I think that the hon. Lady will accept that we all hope that retirement is within our control. If it is not, natural causes have intervened. Redundancy is caused by others and not by the employee. Secondly, I take up the remarks of the Secretary of State on Second Reading, especially in column 175 of Hansard of 15 December. The right hon. Gentleman is not setting his principles on an elevated plane. He is acting to keep the redundancy payments fund solvent. We know that, and it is no good dressing this up as a moral issue.
  Mrs. Chalker: We all hope that we may choose retirement, but equally we all know that many reach retirement age and are not ready to retire. We know also that others must have recourse to the fund through no wish of their own. That can happen, for example, if a person has an accident and becomes ill.

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  I endorse what my right hon. Friend the Secretary of State said in column 175 of the Official Report. The increase in employees' contributions for the employment protection allocation will mean that the fund will keep within the statutory borrowing limits which the House of Commons agreed on 18 November.
  We seek to ensure that if redundancies occur there is adequate provision in the fund to make the necessary payments. The manner of doing so by contributions from those who are in employment seems to be the most sensible course. I note that there have been no suggestions for alternative funding. If we are to criticise what is proposed in clause 3(3) it behoves us to think about alternative means. It is true that there are rarely any except to provide the necessary funding by general taxation.
  Mr. Andrew F. Bennett: Will the hon. Lady accept that it is difficult for us to table amendments that represent an alternative economic strategy, and that it is the need for such an alternative that is basically the argument? If we had a better economic strategy, there would not be a need for the Bill.
  Mrs. Chalker: I look forward to hearing the hon. Gentleman's economic strategy. I shall enjoy debating it with him.
  The financial effect of the three amendments would be to deprive the redundancy payments fund of £353 million in 1982–83 and to increase the income of the national insurance fund by £438 million, including £47 million of Treasury supplement. I do not think that anyone has suggested that that is what should be done.
  There has been a far higher level of redundancies than anyone would wish. The Government wish that there could be no redundancies. However, I am confident that we shall see a steady fall in the number of redundancies in future. Having agreed that clause 1 should remain part of the Bill and that we should make a 1 per cent. increase in national insurance contributions, we would not be very sensible or logical if we were to amend clause 3(3) by amendment No. 3. That would not cause a reduction in national insurance contributions, but it would mean extra resources for the national insurance fund. That is clear to all those who have delved into these matters.
  However we go about ensuring that there are sufficient resources in the redundancy fund for those who suddenly become redundant, we must apply economic sense, and that is exactly what clause 3(3) does.
  7.15 pm
  Mr. John: The hon. Lady rightly addressed her remarks to the effect of the clause. Unfortunately, she seemed to come up against several mental barriers which prevented her from contemplating a different approach. She said, for example, that the effect of the amendment would be to provide extra income for the national insurance fund, as if the fund is currently embarrassed by the money that it has available and that it cannot find useful ways in which to use it. It could use extra income to uprate benefits by the full amount of inflation instead of a 2 per cent. shortfall. It could retain an element of earnings relation.
  Mr. Andrew F. Bennett: Does my hon. Friend agree that if we managed to carry these amendments we would be happy to table a series of amendments that set out ways of spending the money?
  Mr. John: We can spend any money that the Government can provide.
  Mrs. Chalker: So can I.
  Mr. John: I understand that. That is almost the reverse of my domestic function.
  Another central theme of the hon. Lady's reply was that the Government would overshoot the borrowing requirement of the redundancy fund if they accepted our amendments. Again, the hon. Lady was running up against mental buffers—horror of horrors, we might have to borrow more to keep the fund alive. We have said consistently that the Government have a mental block. The Economic Secretary has a mental blockage on the Government's borrowing requirement, but with our reserves of oil and natural wealth there would be no great obstacle to increasing the requirement. I doubt whether even a Treasury mandarin would be forced out through ill health if we were to put before the House of Commons a measure to increase the borrowing requirement for the redundancy fund by another £300 million to keep it in balance. I consider the hon. Lady's reply to be spurious.
  The Minister said that the Government expect the number of redundancies to lessen. She did not devote the rest of her speech to inspiring us with confidence. It is notable how striking proclamations are made in tremulous tones. The Government Actuary's assessment and assumptions suggest that another 300,000 adult employees will be made redundant. When the Bill is enacted, those who are now in employment will be called upon to pay to keep the the redundancy fund alive. They will not want to lose their jobs. If the 300,000 could be polled, it would be the one opinion poll that I would believe. I am sure that they would be 100 per cent. in favour of retaining their jobs, yet the forced loan that the Government are presenting will cause them to pay towards their own inevitable doom.
  The hon. Lady argued that the subsection is necessary, that the system that we propose is not necessary and that in any event our suggestion is being followed in a roundabout way already. If that is so, there is no reason to reject the amendment. If she resists it, that more than ever will convince me that we are right. To show that we believe that the way in which redundancy payments have heretofore been dealt with is the right way, we intend to divide the Committee on this amendment.
  Question put, That the amendment be made:—
  The Committee divided: Ayes 202, Noes 272.

  Division No. 35]

  [7.18 pm

  AYES

  Abse, Leo

  Brown, Ronald W. (H'ckn'yS)

  Adams, Allen

  Brown, Ron(E'burgh, Leith)

  Alton, David

  Buchan, Norman

  Anderson, Donald

  Callaghan, RtHon J.

  Archer, RtHon Peter

  Campbell-Savours, Dale

  Ashton, Joe

  Canavan, Dennis

  Atkinson, N. (H'gey,)

  Carmichael, Neil

  Barnett, Guy(Greenwich)

  Clark, Dr David (S Shields)

  Beith, A. J.

  Cocks, Rt Hon M. (B'stolS)

  Benn, RtHon Tony

  Cohen, Stanley

  Bennett, Andrew(St'kp'tN)

  Coleman, Donald

  Bidwell, Sydney

  Concannon, Rt Hon J. D.

  Booth, RtHon Albert

  Cowans, Harry

  Boothroyd, MissBetty

  Craigen, J. M. (G'gow, M'hill)

  Bottomley, Rt HonA.(M'b'ro)

  Crawshaw, Richard

  Bradley, Tom

  Crowther, Stan

  Brocklebank-Fowler, C.

  Cryer, Bob

  Brown, Hugh D. (Provan)

  Cunningham, G, (IslingtonS)

  Brown, R. C. (N'castle W)

  Cunningham, DrJ, (W'h'n)

  503

  Davidson, Arthur

  McKay, Allen (Penistone)

  Davies, Rt Hon Denzil (L'lli)

  McKelvey, William

  Davies, Ifor (Gower)

  McMahon, Andrew

  Davis, T. (B'ham, Stechf'd)

  McTaggart, Robert

  Deakins, Eric

  McWilliam, John

  Dean, Joseph (Leeds West)

  Magee, Bryan

  Dempsey, James

  Marshall, D(G'gowS'ton)

  Dewar, Donald

  Martin, M(G'gowS'burn)

  Dixon, Donald

  Maxton, John

  Dobson, Frank

  Maynard, MissJoan

  Dormand, Jack

  Meacher, Michael

  Douglas, Dick

  Millan, Rt Hon Bruce

  Dubs, Alfred

  Miller, Dr M.S. (EKilbride)

  Duffy, A. E. P.

  Mitchell, Austin(Grimsby)

  Dunnett, Jack

  Mitchell, R. C. (Soton Itchen)

  Dunwoody, Hon Mrs G.

  Molyneaux, James

  Eadie, Alex

  Morton, George

  Ellis, R.(NED'bysh're)

  Newens, Stanley

  Ellis, Tom (Wrexham)

  O'Halloran, Michael

  English, Michael

  O'Neill, Martin

  Ennals, Rt Hon David

  Orme, Rt Hon Stanley

  Evans, Ioan (Aberdare)

  Owen, Rt Hon Dr David

  Evans, John (Newton)

  Palmer, Arthur

  Ewing, Harry

  Park, George

  Faulds, Andrew

  Parker, John

  Fitch, Alan

  Parry, Robert

  Fletcher, Ted (Darlington)

  Pavitt, Laurie

  Foot, Rt Hon Michael

  Penhaligon, David

  Ford, Ben

  Pitt, WilliamHenry

  Foster, Derek

  Powell, Raymond (Ogmore)

  Foulkes, George

  Prescott, John

  Fraser, J. (Lamb'th.N'w'd)

  Price, C. (Lewisham W)

  Freeson, Rt Hon Reginald

  Race, Reg

  Freud, Clement

  Radice, Giles

  Garrett, John (NorwichS)

  Rees, Rt Hon M (Leeds S)

  George, Bruce

  Roberts, Albertf(Normanton)

  Gilbert, Rt Hon Dr John

  Roberts, Allan(Bootle)

  Golding, John

  Roberts, Gw'iiym(Cannock)

  Graham, Ted

  Robinson, G. (Coventry NW)

  Grant, George(Morpeth)

  Rooker, J. W.

  Grant, John (IslingtonC)

  Ross, Ernest (Dundee West)

  Hamilton, James (Bothwell)

  Ross, Stephen (Isle of Wight)

  Hamilton, W. W. (C'tral Fife)

  Rowlands, Ted

  Hardy, Peter

  Ryman, John

  Harrison, Rt Hon Walter

  Sever, John

  Hart, Rt Hon Dame Judith

  Sheerman, Barry

  Hattersley, Rt Hon Roy

  Sheldon, Rt Hon R.

  Haynes, Frank

  Silkin, RtHonJ. (Deptford)

  Healey, Rt Hon Denis

  Silkin, Rt Hon S. C. (Dulwlch)

  Heffer, EricS.

  Silverman, Julius

  Hogg, N. (EDunb't'nshire)

  Skinner, Dennis

  HomeRobertson, John

  Smith, Rt Hon J. (N Lanark)

  Homewood, William

  Snape, Peter

  Hooley, Frank

  Soley, Clive

  Howell, RtHonD.

  Spearing, Nigel

  Hoyle, Douglas

  Spriggs, Leslie

  Huckfield, Les

  Steel, Rt Hon David

  Hughes, Mark (Durham)

  Stewart, Rt Hon D. (W Isles)

  Hughes, Robert (Aberdeen N)

  Stoddart, David

  Hughes, Hoy (Newport)

  Stott, Roger

  Jay, Rt Hon Douglas

  Straw, Jack

  John, Brynmor

  Summerskill, HonDrShirley

  Johnson, James (Hull West)

  Thomas, Dafydd(Merioneth)

  Johnson, Walter (Derby S)

  Thomas, Mike (NewcastleE)

  Johnston, Russell (Inverness)

  Thomas, DrR.(Carmarthen)

  Jones, Barry (East Flint)

  Torney, Tom

  Jones, Dan (Burnley)

  Varley, Rt Hon Eric G.

  Kaufman, Rt Hon Gerald

  Walker, Rt Hon H.(D'caster)

  Kerr, Russell

  Watkins, David

  Kilroy-Silk, Robert

  Weetch, Ken

  Kinnock, Neil

  Wellbeloved, James

  Lamborn, Harry

  Welsh, Michael

  Lamond, James

  White, J. (G'gowPollok)

  Leighton, Ronald

  Whitehead, Phillip

  Lestor, MissJoan

  Whitlock, William

  Lofthouse, Geoffrey

  Wigley, Dafydd

  Lyons, Edward (Bradf'dW)

  Williams, Rt Hon A.(S'sea W)

  McCartney, Hugh

  Williams, Rt Hon Mrs (Crosby)

  McDonald, DrOonagh

  Wilson, Gordon (DundeeE)

  McElhone, Frank

  Wilson, RtHonSirH.(H'ton)

  504

  Wilson, William (C'trySE)

  Winnick, David

  Tellers for the Ayes:

  Woolmer, Kenneth

  Mr. James Tinn and

  Wright, Sheila

  Mr. Lawrence Cunliffe.

  NOES

  Adley, Robert

  Fairgrieve, SirRussell

  Aitken, Jonathan

  Faith, MrsSheila

  Alexander, Richard

  Farr, John

  Alison, Rt Hon Michael

  Fell, Anthony

  Amery, Rt Hon Julian

  Fenner, Mrs Peggy

  Ancram, Michael

  Finsberg, Geoffrey

  Arnold, Tom

  Fisher, Sir Nigel

  Atkins, RtHonH.(S'thorne)

  Fletcher.A.(Ed'nb'ghN)

  Atkins.Robert(PrestonN)

  Fletcher-Cooke, SirCharles

  Baker, Kenneth(St.M'bone)

  Fookes, Miss Janet

  Baker, Nicholas (N Dorset)

  Forman, Nigel

  Banks, Robert

  Fowler, Rt Hon Norman

  Bell, SirRonald

  Fox, Marcus

  Bendall, Vivian

  Fraser, Peter (South Angus)

  Benyon, Thomas(A'don)

  Fry, Peter

  Benyon, W. (Buckingham)

  Gardiner, George(Reigate)

  Berry, Hon Anthony

  Gardner, Edward (SFylde)

  Bevan, David Gilroy

  Garel-Jones, Tristan

  Biffen, RtHonJohn

  Gilmour, Rt Hon Sir Ian

  Biggs-Davison.SirJohn

  Glyn, DrAlan

  Blackburn, John

  Goodlad, Alastair

  Blaker, Peter

  Gorst, John

  Body, Richard

  Gower, SirRaymond

  Bonsor, SirNicholas

  Grant, Anthony (HarrowC)

  Bottomley, Peter (W'wich W)

  Green way, Harry

  Bowden, Andrew

  G riff iths, E. (B 'ySt. Edm 'ds)

  Boyson, Dr Rhodes

  Griffiths, PeterPortsm'thN)

  Bright, Graham

  Grist, Ian

  Brinton, Tim

  Grylls, Michael

  Brittan, Rt. Hon. Leon

  Hamilton, Hon A.

  Brotherton, Michael

  Hamilton, Michael(Salisbury)

  Brown, Michael(Brigg&Sc'n)

  Hampson, DrKeith

  Bruce-Gardyne, John

  Hannam, John

  Bryan, Sir Paul

  Haselhurst, Alan

  Buchanan-Smith, Rt. Hon.A.

  Hastings, Stephen

  Buck, Antony

  Havers, Rt Hon Sir Michael

  Budgen, Nick

  Hawkins, Paul

  Bulmer, Esmond

  Hawksley, Warren

  Burden, SirFrederick

  Hayhoe, Barney

  Butcher, John

  Heddle, John

  Butler, Hon Adam

  Henderson, Barry

  Carlisle, John (Luton West)

  Heseltine, Rt Hon Michael

  Carlisle, Kenneth(Lincoln)

  Hicks, Robert

  Carlisle, Rt Hon M.(R'c'n)

  Higgins, Rt Hon Terence L.

  Chalker, Mrs. Lynda

  Hill, James

  Channon, Rt. Hon. Paul

  Hogg, Hon Douglas(Gr'th'm)

  Chapman, Sydney

  Holland, Philip(Carlton)

  Churchill, W.S.

  Hooson, Tom

  Clark, Hon A. (Plym'th, S'n)

  Hordern, Peter

  Clark, Sir W (Croydon S)

  Howell, RtHonD.(G'ldf'd)

  Clarke, Ken neth (Rushcliffe)

  Howell, Ralph (NNorfolk)

  Clegg, Sir Walter

  Hunt, David (Wirral)

  Cockeram.Eric

  Hunt, john(Ravensbourne)

  Colvin, Michael

  Hurd, Hon Douglas

  Cope, John

  Irving, Charles (Cheltenham)

  Cormack, Patrick

  Jenkin, RtHon Patrick

  Corrie, John

  Johnson Smith, Geoffrey

  Cranborne, Viscount

  Jopling, RtHon Michael

  Critchley, Julian

  Joseph, Rt Hon Sir Keith

  Crouch, David

  Kaberry, SirDonald

  Dean, Paul (North Somerset)

  Kitson, SirTimothy

  Dickens, Geoffrey

  Knight, MrsJill

  Dorrell, Stephen

  Knox, David

  Douglas-Hamilton, LordJ.

  Lamont, Norman

  Dover, Denshore

  Lang, Ian

  Dunn, Robert(Dartford)

  Langford-Holt, SirJohn

  Durant, Tony

  Latham, Michael

  Dykes, Hugh

  Lawrence, Ivan

  Eden, Rt Hon Sir John

  Lawson, Rt Hon Nigel

  Edwards, Rt Hon N. (P'broke)

  Lennox-Boyd, Hon Mark

  Eggar, Tim

  Lester, Jim (Beeston)

  Elliott, SirWilliam

  Lewis, Kenneth(Rutland)

  Eyre, Reginald

  Lloyd, Ian (Havant& W'loo)

  Fairbairn, Nicholas

  Lloyd, Peter (Fareham)

  505

  Luce, Richard

  Sainsbury, HonTimothy

  Lyell, Nicholas

  Scott, Nicholas

  Macfarlane, Neil

  Shaw, Giles (Pudsey)

  MacKay, John (Argyll)

  Shaw, Michael(Scarborough)

  Macmillan, RtHonM.

  Shelton, William(Streatham)

  McNair-Wilson, M.(N'bury)

  Shepherd, Colin(Wereford)

  McNair-Wilson, P. (NewF'st)

  Shepherd, Richard

  McQuarrie, Albert

  Shersby, Michael

  Madel, David

  Silvester, Fred

  Major, John

  Sims, Roger

  Marland, Paul

  Skeet, T. H. H.

  Marlow, Antony

  Speed, Keith

  Marshall, Michael(Arundel)

  Speller, Tony

  Marten, RtHon Neil

  Spence, John

  Mather, Carol

  Sproat, Iain

  Maude, Rt Hon Sir Angus

  Squire, Robin

  Mawby, Ray

  Stainton, Keith

  Mawhinney, DrBrian

  Stanbrook, Ivor

  May hew, Patrick

  Stanley, John

  Mellor, David

  Stevens, Martin

  Meyer, SirAnthony

  Stewart, A(ERenfrewshire)

  Miller, Hal(B'grove)

  Stewart, Ian (Hitchin)

  Mills, lain (Meriden)

  Stokes, John

  Miscampbell, Norman

  StradlingThomas, J.

  Mitchell, David(Basingstoke)

  Tapsell, Peter

  Moate, Roger

  Taylor, Teddy (S'end E)

  Morgan, Geraint

  Tebbit, Rt Hon Norman

  Morris, M. (N'hamptonS)

  Temple-Morris, Peter

  Morrison, Hon C. (Devizes)

  Thompson, Donald

  Mudd, David

  Thome, Neil (IlfordSouth)

  Murphy, Christopher

  Thornton, Malcolm

  Myles, David

  Townend, John(Bridlington)

  Neale, Gerrard

  Townsend, CyrilD, (B'heath)

  Needham, Richard

  Trippier, David

  Nelson, Anthony

  Trotter, Neville

  Neubert, Michael

  van Straubenzee, Sir W.

  Newton, Tony

  Vaughan, DrGerard

  Onslow, Cranley

  Viggers, Peter

  Osborn, John

  Waddington, David

  Page, John (Harrow, West)

  Wakeham, John

  Page, Richard (SW Herts)

  Waldegrave, HonWilliam

  Parris, Matthew

  Walker, Rt HonP. (W'cester)

  Patten, Christopher(Bath)

  Walker, B. (Perth)

  Patten, John (Oxford)

  Walker-Smith, RtHon Sir D.

  Pattie, Geoffrey

  Wall, SirPatrick

  Pawsey, James

  Waller, Gary

  Percival, SirIan

  Walters, Dennis

  Pink, R.Bonner

  Ward, John

  Pollock, Alexander

  Wells, Bowen

  Porter, Barry

  Wells, John(Maidstone)

  Prentice, RtHon Reg

  Wheeler, John

  Price, SirDavid (Eastleigh)

  Whitelaw, RtHonWilliam

  Proctor, K, Harvey

  Whitney, Raymond

  Pym, RtHon Francis

  Wiggin, jerry

  Raison, Timothy

  Wilkinson, John

  Rathbone, Tim

  Williams, D. (Montgomery)

  Rees-Davies, W. R.

  Winterton, Nicholas

  RhodesJames, Robert

  Wolfson, Mark

  RhysWilliams, SirBrandon

  Young, SirGeorge (Acton)

  Ridsdale, SirJulian

  Younger, RtHon George

  Rippon, RtHonGeoffrey

  Roberts, M. (CardiffNW)

  Tellers for the Noes:

  Roberts, Wyn (Conway)

  Mr. Robert Boscawen and

  Rossi, Hugh

  Mr. John Selwyn Gummer.

  Question accordingly negatived.
  Clause 3 ordered to stand part of the Bill.
  Clauses 4 and 5 ordered to stand part of the Bill.

Schedule 1

  CONSEQUENTIAL AMENDMENTS
  7.30 pm
  Mrs. Chalker: I beg to move amendment No. 5, in page 5, line 22, after "Act", insert
  "and of the reduced primary class 1 contribution specified in regulation 104 of these regulations".
  506
  This is a purely formal amendment. Once upon a time there were very few opted-out women mariners, but times have changed. Stewardesses are now likely to be opted-out women mariners. The mariners have their own redundancy scheme, and their employers are exempted from the employment protection allocation and pay an abated rate of contribution.
  Clearly it is similarly fair to exempt mariner employees from the employment protection allocation in their contribution. That is achieved by paragraph 3(2)(b). Unfortunately, it did not cover mariners who were opted-out women and widows. I hope that the Committee will therefore see fit to accept the amendment, which will repair that omission and put opted-out women mariners on the same footing as their male and opted-in women counterparts.
  Mr. John: As this affects women mariners. I should not dream of making waves.
  Amendment agreed to.
  Schedule 1, as amended, agreed to.
  Schedule 2 agreed to.
  Bill reported, with an amendment.
  7.34 pm
  Mr. Fowler: I beg to move, That the Bill be now read the Third time.
  On Second Reading, I set out the five main aims of the Bill. They were, first, to fund the increase of £2½billion extra spending next year on social security benefits; secondly, to make a contribution to the growth in spending on the National Health Service; thirdly, to broaden the financing arrangements of the redundancy fund by asking employees to contribute to it; fourthly, to reduce the size of the Treasury supplement; and, fifthly, to protect as far as possible employers and the self-employed from the changes necessary to increase the national insurance and redundancy funds. I emphasised also that these changes were entirely consistent with the principles of social insurance. I think that increasing contributions to pay for increased benefits, or the aim of minimising the cost borne by employers, are objects of policy that many hon. Members would welcome. In the same way, as I said at an earlier stage, I believe that the contribution towards the National health Service is worthy of the House's support. it must be emphasised once more that the Government have not cut health spending. We are increasing health spending and paving the way for a further increase in spending in 1982–83.
  On the level of benefits, I re-emphasise the fundamental point that benefits to one group in society can be made only through the contribution of the rest of society. There is no other source. That is why we have repeatedly said that the improvement of the living standards of those most in need ultimately rests on the capacity of the nation to create wealth and to compete in the world market. It is also the reason why we have asked for a greater contribution from those in work for those who are retired, without employment, sick or disabled.
  With regard to the changes in the financing of the redundancy fund, I do not accept the argument that this is an unfair additional charge on the employee, nor that it in any way departs from the main principles of social insurance. Similarly, I do not think that an objective

  507
  appraisal of the limited reduction to the Treasury supplement could conclude that this is unfair or a fundamental change in the funding arrangements.
  Mr. James Dempsey: Perhaps the Minister will clarify one point. I understood that the redundancy fund was funded on the basis of 41 per cent. from Treasury and 59 per cent. from the employers. Is that not being altered by asking for a contribution from the insured person?
  Mr. Fowler: That is indeed the purpose and that is what we have debated, but I think that would take us back not just to the Committee stage but to Second Reading.
  The first point to make clear about the Treasury supplement—this has been emphasised from the Dispatch Box—is that the proportion of benefit expenditure met from general taxation is not being reduced. The proportion is estimated in 1982–83 as 45 per cent.—the same proportion as this year—compared with 37 per cent. in 1975–76. Every Government must decide the right balance, giving due weight to the economic circumstances of the time, the planned level of public expenditure, the position of employers and the cost borne by employees.
  I believe that we have achieved a balance that will be seen by the public to be fair. I also believe that we have adhered fairly to the principles of the "pay-as-you-go" system of financing benefits. I commend the Bill to the House.
  7.39 pm
  Mr. John: I suspect that if we were to debate for an hour longer we should not find many new points to raise. I shall therefore do as the Secretary of State has done and briefly reiterate the old points.
  We do not intend to divide the House on Third Reading. Lest that be misunderstood, I place it on record that we have voted against two of the three main props of the Bill. We have made our opposition clear. I briefly put on record once again why we oppose the Bill.
  First, despite the honeyed words of the Secretary of State, I do not believe that the Bill is within the Beveridge concept. It undermines the tripartite concept of funding insurance because it makes employed persons solely responsible for bailing the Government out of their present difficulties. Instead of looking to the whole of society to pay for the additional benefits, they are placing the burden on one segment of society—the employed person.
  I warn the Government that this is fundamentally an unsound principle because employed persons will be a declining percentage of the population and the number of retired people and other people out of work will increase. The Government will have to place more and more burdens on fewer and fewer people in employment unless a radical—I hate to use the word that the hon. Member for Newcastle upon Tyne, East (Mr. Thomas) used, but it has been used so often from a sedentary position that I thought it would be a novelty to use it from an upright position—change is made. The Government will have to take a fundamental look at the national insurance principle in order to make sure that the strain upon the scheme is not too great for the country to bear.
  The 1 per cent. increase in national insurance contributions will be an increased burden. It has risen from 6½ per cent. to 8¾ per cent. under this Government, and
  508
  it will rise further. At the same time, the Treasury contribution has fallen. If we have established anything, it is the completely arbitrary nature of the Treasury contribution and the completely Pavlovian desire of the Treasury to claw back money every time that it can do so, whether or not it is right in the prevailing economic circumstances. We do not believe that it is right.
  I come back to the point that was made by my hon. Friend the Member for Coatbridge and Airdrie (Mr. Dempsey) about the redundancy payment. We believe that the scheme that has proceeded well for the last 16 years should continue and that if there is a shortfall or if the borrowing requirement of the redundancy fund needs to be changed no economic harm will come to the country. More economic harm has come from the Government's belief that if they increase this country's borrowing at a time of depression it will bring the house down around our ears. It will not. The failure to recognise that will itself gravely weaken the fabric of our country.
  People should know that this is a fundamentally unfair Bill which places the burden on employed persons alone. For that reason, we shall continue our opposition to it.
  7.43 pm
  Mr. Dempsey: The present system is unfair to the employed person. I hear in the business reports on the radio of the grand profits being made by employers in different aspects of business—manufacturing, distribution, and so on. It is extremely unfair, if we are to relieve the employers of a part of their national insurance contribution, to pass the burden to the insured employee who works hard to earn his wages every week. This is another form of income tax.
  Because of the Government's policies, more and more of the burden of financing public investment and expenditure is put on working people. That is most unfair, especially from a Government who, in redistributing our national income, wickedly reduced taxation on the wealthy from 83p to 60p in the pound. In money value, that means a creaming-off by the wealthy of about £1,500 million per annum. To give those people such a handout and then to ask the insured employee to pay more in order to protect himself against redundancy is an unfair and inequitable way of distributing the wealth of the country.
  I come from an area that has one of the highest rates of unemployment on the mainland of Scotland. This is the festive season in bonnie Scotland. We are coming up to new year's day—called Ne'erday in Scotland—and 200 workers are being laid off. That is their new year's present. They were not consulted. The mandate was posted up in their workplace, and that was it. Why should people who are subject to that sort of merciless treatment be asked to make a contribution towards their redundancies? They are first sacked, and then they are asked to pay for being sacked. That is immoral. I am glad that my hon. Friend the Member for Pontypridd (Mr. John) said that we shall continue to oppose this mean Bill.
  7.46 pm
  Mr. Andrew F. Bennett: All hon. Members who have spoken, except Ministers, believe that this is a mean and squalid Bill. The Secretary of State gave five misleading reasons for supporting the Bill. He emphasised that the extra £2½ billion in contributions is required to pay for increased benefits. He, more than anyone else in the House, should know that we do not have any increased

  509
  benefits. In almost every area benefits have been cut. He should use the English language to make it clear that we are paying £2½ million not for extra benefits, but because increased numbers of people, particularly pensioners, are eligible for the benefits.
  The Secretary of State said that the extra contribution to the National Health Service is to pay for an expansion of the Service. Most people are not aware that the service is improving. In fact, they are worried that it is not improving sufficiently to keep pace with the demand from the growing number of people of pensionable age who need to use the Health Service. Instead of proudly claiming that the Government are spending more money on the National Health Service, the Secretary of State should concentrate his attention on whether the Service is improving. Most of the evidence suggests that it is not.
  The Secretary of State stressed that it was a useful principle that employees should pay for their redundancies. The Government are admitting their own failures by saying that we shall need more money for the redundancy fund. They are saying that there will be more redundancies. They say that employees must make a contribution, but that involves all employees. Many, who are in the lowest-paid jobs, will never benefit from the redundancy fund. If they work for one employer for less than two years, they will not qualify. They are continually asked to make contributions but, because of the nature of their work, the areas in which they work, and the fact that they have to change jobs frequently, they receive no benefit. We are therefore asking the least well paid to make contributions to a fund that tends to benefit workers who have secure jobs—at least for a period of more than two years. That does not seem equitable.
  The right hon. Gentleman justified the Bill by saying that it was a good idea to require a smaller contribution
  510
  from the Treasury. As we have already said, it depends how the Treasury plans to spend the money. If it were to use it to increase child or, supplementary benefit, we could possibly reach a deal, but I can think of many other areas in which it is more likely that the Treasury will spend the money. Even if the right hon. Gentleman were merely fighting for his own Department, I doubt whether he would really believe that it was a good idea to reduce the Treasury's contribution.
  The Secretary of State also argued that the Bill was necessary to protect employers and the self-employed. I wonder whether that is true. Someone on average earnings will find an extra £1·50 stopped from his earnings. The natural reaction is to get that money back, and that encourages people to ask for more in their pay packets. Of course, they will ask not for £1·50, but for £2, because, by the time income tax and other stoppages have been deducted, they know that they will need £2 to compensate for the £1·50. Human nature being what it is, if people need £2 to stand still, they are likely to ask for £2·50. Therefore, the pressure on the employer may be greater than if the £1·50 had been taken off him in the first place. Instead of asking for £1·50, workers are likely to ask for £2·50, and the employer will be under pressure to pay it.
  It may be that over 12 months many employers will find that, in addition to making a contribution towards the money that the Government are demanding, they will have to pay out even more. That may help the Government to get extra in taxation, but it will not help the employer.
  This is a disastrous Bill. That view is summed up by the fact that not one Conservative Back Bencher had a good word for it.
  Question put and agreed to.
  Bill accordingly read the Third time and passed.

House of Commons Members' Fund
7.53 pm
Mr. Alfred Morris: I beg to move,
That, in pursuance of the provisions of section 3 of the House of Commons Members' Fund Act 1948 and of section 2 of the House of Commons Members' Fund and Parliamentary Pensions Act 1981 the maximum annual amounts of the periodical payments which may be made out of the House of Commons Members' Fund under the House of Commons Members' Fund Act 1939, as amended and the annual rate of any payments made under section 1 of the said Act of 1981 shall be varied as from 1st December 1981 as follows:
(a) for paragraph 1 of schedule 1 to the said Act of 1939, as amended, there shall be substituted the following paragraph:—
1. The annual amount of any periodical payment made to any person by virtue of his past membership of the House of Commons shall not exceed £1,820 or such sum as, in the opinion of the trustees, will bring his income up to £3,365 per annum, whichever is the less:
Provided that if, having regard to length of service and need, the trustees think fit, they may make a larger payment not exceeding £3,510 or such sum as, in their opinion, will bring his income up to £5,055 per annum, whichever is the less;
(b) for paragraph 2 of that Schedule there shall be substituted the following paragraph:—
2. The annual amount of any periodical payment to any person by virtue of her being a widow of a past Member of the House of Commons shall not exceed £910 or such sum as, in the opinion of the trustees, will bring her income up to £2,455 per annum, whichever is the less;
Provided that if, having regard to her husband's length of service or to her need, the trustees think fit, they may make a larger payment not exceeding £1,755 or such sum as, in the opinion of the trustees, will bring her income up to £3,300 per annum, whichever is the less;
(c) in paragraph 2A of that Schedule for the words 'the annual amount of any periodical payment' to the end of the paragraph, there shall be substituted the words:—
'the annual amount of any periodical payment made to any such widower shall not exceed £910 or such sums as, in the opinion of the trustees, will bring his income up to £2,455 per annum, whichever is the less:
Provided that if, having regard to his wife's length of service or to his needs, the trustees think fit, they may make a larger payment not exceeding £1,755
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or such sum as, in the opinion of the trustees, will bring his income up to £3,300 per annum, whichever is the less;'
(d) in section 2(1) of the said Act of 1981, for the words from the beginning to the end of paragraph (b) there shall be substituted the words:—
'the annual rate of any payments made under section 1 shall be —

(a) £1,060 if the payments are made to a past Member; and

(b) £530 if the payments are made to the widow or widower of a past Member.'

It may be for the convenience of the House if we discuss at the same time the second motion. Both motions stand in my name and the names of the Father of the House, my hon. Friend the Member for Dagenham (Mr. Parker), and the hon. Member for Shrewsbury (Sir J. Langford-Holt). their purpose is clear from their wording, and I warmly commend them to the House.
Question put and agreed to.
Resolved,
That one-tenth of the sums deducted or set aside in the current year from the salaries of Members of Parliament under section 1 of the House of Commons Members' Fund Act 1939, and one-tenth of the contribution determined by the Treasury for the current year under section 1 of the House of Commons Members' Fund Act 1957, as amended by the House of Commons Members' Fund and Parliamentary Pensions Act 1981, be appropriated for the purposes of section 4 of the House of Commons Members' Fund Act 1948.—[Mr. Alfred Morris.]

STATUTORY INSTRUMENTS, &c.
Mr. Deputy Speaker (Mr. Ernest Armstrong): In order to save the time of the House, I will put together the Questions on the two motions to approve statutory instruments.
Motion made, and Questions put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments, &c.)

STATUTORY INSTRUMENTS, &c.
  COMPANIES
  That the Company and Business Names Regulations 1981 (S.I., 1981, No. 1685), a copy of which was laid before this House on 25th November, be approved.
  AGRICULTURE
  That the draft Hill Livestock (Compensatory Allowances) (Amendment) Regulations 1981, which were laid before this House on 1st December, be approved.—[Mr. Lang.]

  Lee James Whitmore
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lang.]
  7.54 pm
  Mr. Fred Silvester: The debate takes place a little earlier than I anticipated. Normally I can say that I am pleased to bring before the House the case of a constituent. On this occasion, I can say that I am pleased that it is possible to bring be fore the House the case of my constituent, Lee James Whitmore, but I would rather that it was not necessary.
  I am grateful to my hon. Friends in the Department for the care that they have taken over this case. I know that they have given personal attention to the papers and that they would like to say "Yes" if they could, but they are bound by the law.
  I should begin by stating what the law is and to state those parts of the law that I should like the Minister to use. The law gives the Secretary of State power to make an award to a child who has been vaccinated and has suffered harm as a result. The Minister is not obliged to accept the recommendation of any medical adviser, although he usually does. His is the first decision. If the decision is "No", the parent has a right to appeal. That appeal is taken to a medical tribunal and that decision is binding on both the Secretary of State and the parent. That is the stage that we have reached in the case of Lee James Whitmore.
  The Secretary of State may on his own initiative, without consulting anyone, reopen a case if he is satisfied that the decision was made in ignorance of, or based on a mistake as to, some material fact. Once he has decided officially to reopen the case, and if, after consulting the new facts he still decides against the claimant, the decision to reopen is crucial because it again gives the parent a right to appeal to an independent tribunal. I should make it absolutely clear that the mere reopening of the case, even if the Minister subsequently decides against the claimant, opens the way to a further appeal. That is important.
  The Minister may believe that it would be extremely unkind to follow this route. It would be typical of his considerate approach to these matters if he felt that reopening the case without any guarantee of success would be to raise the parents' hopes, only to have them dashed again. I urge him not to take that view.
  Obviously I want him to come to a decision today—or soon—clearly and unequivocally in favour of making an award. If—and I have today checked this with the parents—he is willing to reopen the case and decides against it, they would rather take their chance with the tribunal, despite the pain and difficulty that may cause, than not have the chance at all. I hope that my hon. Friend will come to a favourable decision without further reference to any tribunal.
  Lee Whitmore was born a perfectly healthy baby with a normal birth weight on 14 June 1967. He received his first triple vaccination, including vaccination against whooping cough, on 25 August. Just under two months later, on 2 October, he received a second dose. That date of 2 October has turned out to be crucial.
  Mrs. Whitmore noticed that the child was going stiff, screaming and rolling his eyes on 21 October—19 days after the vaccination. The GP could not diagnose the child's complaint, and referred him to the Duchess of York hospital on 23 October. The hospital was unable to identify
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  the trouble, and the mother eventually sat by the cot to indicate to the ward sister the symptoms about which she was worried. Despite that, the child was sent home on 26 October without the spasms having been identified. The mother records that she was told that she was "an over-anxious mother".
  That might have been an adequate and understandable reaction had the future not proved the mother right and the hospital wrong. By December 1967, three months after the inoculation, it was clear that convulsions were taking place regularly, even though their cause was not known. Today, Lee, a boy of 14, is unable to speak and is severely mentally damaged.
  The sequence of events cannot be disputed. It is known that Lee was healthy before the vaccination. It is known that the first electroencephalograph report on 12 December 1967 identified abnormalities, and it is known that from that day to this there has been a continuous deterioration.
  The question therefore is: can what occurred between 2 October and 12 December be regarded on the balance of probability—that is the phrase in the Act—as an unbroken link in a sequence of events?
  It is worth emphasising, before we analyse that in greater detail, that, if we decide that there was no sequence of events, we are faced with the singularly unattractive alternative of having to believe that the cause of Lee's malady—not to this day identified—arose independently but within a few days of the administration of the vaccine. I doubt whether that would stand for long on the same test of the balance of probability.
  Three reasons have been advanced for refusing compensation, and new evidence has been presented to my hon. Friend and his predecessor on each of these three reasons. The Minister's first and, so far, only decision was based on the report of someone known only as a consultant with particular experience of vaccine damage. That report, dated 30 January 1979, contained a serious error of fact. It stated that the onset of spasms occurred three weeks after the second injection and that that period was too long for a cause to be established. It went on:
  "Moreover, there is no evidence from these notes that spasms were influenced by the administration of the third dose of triple vaccine on 4 or 6 December."
  There is only one natural meaning to that sentence—that the consultant was in part influenced by the lack of reaction to a third vaccination. As my hon. Friend knows, we have now proved that, contrary to all the evidence of the records submitted to the tribunal, the third whooping cough vaccine was not administered. This is the first new evidence presented to the Department, and it is relevant not to the whole but to a significant part of the consultant's opinion.
  My hon. Friend wrote to me on 2 December 1981 that he was
  "advised that the possibility that the pertussis element"—
  that is, the whooping cough vaccine—
  "was omitted from the third immunisation was known and taken into account but not considered material when the Secretary of State's determination on this case was made."
  That is not shown by the record, which reveals that the third vaccination was a significant part of the consultant's opinion and, therefore, of the Secretary of State's consideration.
  The parents then secured a review by an independent tribunal, whose decision, by Act of Parliament, is conclusive. The tribunal, unlike the Minister, does not mention the third vaccination, but, as it was included in

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  the documents, it may well have affected its judgment. The tribunal's decision turned on the view that there was not a slow, progressive decline, but a marked deterioration in the second year. Frankly, it is difficult to see how the tribunal came to that conclusion, because the medical record clearly shows otherwise.
  As I said, the first EEG, which took place when the child was six months old, revealed—all of these quotations are taken from the child's medical records—
  "marked generalised abnormalities including epileptic discharges."
  That was at six months. At 6½ months, Lee was unable to sit up. At seven months it was thought that he was improving, but by nine months the spasms had returned and were recorded as numbering up to 20 or more a day.
  For a while, Lee again responded to treatment, and at 12 months he was making
  "rather slow but steady progress."
  But he was still having about six attacks a day. During the second year, according to the tribunal, the deterioration was more marked, but the records show otherwise. At 15 months they report "minor attacks" and "improving in many ways." At 18 months, the reports refer to "attacks almost every day", and at two years to "attacks quite frequently" and that they tended to be "more severe."
  Looking at those quotations, one sees clearly, even if one judges by the number of attacks per day, that the number of attacks per day in the first year was greater than in the second year. Whichever way one cuts that cake, there is no sign that the condition was more marked in the second year than in the first.
  On the basis of this evidence, it seems to me that it is perverse to suppose that nothing much happened in the first year but that a lot happened in the second year. Where is the evidence to support such a conclusion? Yet it was clearly the determining factor in the tribunal's decision. The tribunal reported:
  "It also seems unlikely that there was a disabling illness following discharge from hospital on the grounds that both the mother and her health visitor regarded the baby as normal at 10 months."
  In a way, that is the cruellest part of the affair. That the baby looked perfectly normal is understandable, but to rely upon the mother's evidence of normality in the face of other evidence to the contrary is a doubtful practice. Mrs. Whitmore had continually reported spasms throughout this period. The child was on drugs and in danger of appearing cushingoid. He was behind in his development. All this is clearly reported from contemporary records.
  However, one has to satisfy my hon. Friend's requirement for further evidence. I sent to my hon. Friend's predecessor letters from people who did not present evidence to the tribunal. Those letters, from Mrs. Beaton, Mrs. Bainbridge, Mrs. Campion and Mrs. Grant—women who knew the child intimately during the crucial early period—prove beyond peradventure that Lee was not normal and was often convulsed within the first 10 months. I hope that my hon. Friend will recognise the force with which this evidence questions the tribunal's conclusion.
  When my hon. Friend's predecessor wrote to me on 30 January he said that those letters
  "do not seem to throw any further light on the events of the period 2 October to 23 October"—
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  the three-week period. They were not meant to do so, but that is not the only consideration. The tribunal was unquestionably affected in its assessment of the balance of probability by its view of the whole of the first year. Otherwise, the comments that I have quoted were meaningless and the letters are new evidence which must be taken into account.
  There remains what has become the final bolthole of the argument for upholding the original decision—that the period between 2 and 21 October, between vaccination and the recorded spasms, is too long. New evidence has also been presented on that point. My hon. Friend has received the analysis of Lee's case undertaken by Professor Ehrengut of Hamburg, who is regarded as a leading authority on vaccine damage in Germany. He reviews two or three cases a week and submits conclusions, which are accepted by the Social Court, which adjudicates on such matters in Germany. His standing is not in question.
  The opinion of Professor Ehrengut is apparently regarded by the DHSS as "highly committed and partial". That will not do. Apart from the professor's eminence in Germany, his attitude towards British cases submitted to him by The Sunday Times does not reveal any lack of detachment. Five cases relating to whooping cough vaccine have been submitted to him, and Lee's is the only one that he has supported. The professor's opinion is based on much research, not only by himself, but by people in this country.
  The professor's opinion is that, while a link could not generally be assumed after a three to four-week period when the child suffered from convulsions, the same is not true if the child suffered from infantile spasms. In that case, the inoculation is not the actual cause, but the precipitating factor, and there can therefore be a delay of several weeks. He underlines further the unsafeness of the tribunal's decision because
  "of the difficulty in diagnosing this convulsive disease. The decisive EEG diagnosis was neglected and this omission cannot be laid at the door of Lee's parents."
  The first time the test was applied in December the evidence became available that the child was suffering from convulsions and had been seriously affected. That judgment, taken from the first EEG, has not been disputed.
  The least that can be said of that third piece of new evidence is that it opens an area of doubt where reputable medical opinion treads uncertainly. It is unthinkable that Lee should be caught in that crossfire. His is the only case of which I am aware which is so close to the date of vaccination. There are others, but they involve delays of some months. If there is doubt among the medics, it is the Minister's duty to see that Lee is not harmed by it.
  Let me summarise the story. A healthy baby was born of a healthy mother who had an untroubled pregnancy and delivery. Lee was known to be healthy and progressing well until his second vaccination. He then entered a period of convulsions and decline, documented and attested and continuing from within two or three weeks of the vaccination to the present day.
  We are asked to believe that some unknown cause intervened in those two or three weeks, unconnected with the administration of the vaccine, and that that explanation is somehow more probable. I believe it it much more probable that the two events were causally connected, but that the early stages of the convulsions were inadequately recorded.

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  I do not doubt that my hon. Friend should reverse his decision. He can do so in the knowledge that the case would not establish a wider precedent. It is a simple case of individual justice.
  My hon. Friend might argue that any one of the three additional pieces of evidence is insufficient, but I cannot see how he could argue that, taken together, they do not disturb the original decision. Put in the scales, they must upset the balance of probability test in the Act. If he cannot bring himself to reverse the decision, let him reopen the case and reject the decision so that we may again try our hand with the tribunal. However, I urge him to take the direct and, in my view, just course of awarding Lee his compensation.
  8.15 pm
  The Under-Secretary of State for Health and Social Security (Mr. Geoffrey Finsberg): I start by making it plain that I have every sympathy both with those who are themselves severely disabled and with the families who have to care for disabled children. The Government have repeatedly made clear their intention to improve the provision for the disabled generally when resources permit.
  In the meantime, the Vaccine Damage Payments Act 1979, provides for a lump sum payment of £10,000 in cases where, on the balance of probability, severe disablement has resulted from vaccination against any of the diseases specified in the Act.
  Of course, that is a very substantial preference for the vaccine damaged over other groups of the disabled, and although there has been considerable pressure on us to extend or amend the scheme, we have not felt it right to do so in view of our preference for improvements for disabled people generally when the state of the economy permits.
  It is a sad truth that a number of parents have been disappointed that their claim for a payment under the scheme has been turned down. The circumstances in which vaccine damage payments can be made are clearly laid down in the Act and, as my hon. Friend will no doubt recall, the provisions were fully debated during the passage of the Bill.
  Apart from the conditions of residence and the like, the main provisions are that the person should have been severely disabled as a result of a type of vaccination specified in the Act or by the Secretary of State in an order made by statutory instrument, the disablement is to the extent of 80 per cent. or more and, on the balance of probability, the disablement resulted from the vaccination.
  The onset of spasms in a baby and subsequent mental or physical handicap, despite a normal healthy birth, is a known medical condition, which may coincidentally be present after vaccination, but without vaccination being the cause.
  It may be helpful if I explain the steps that are taken when a claim is made. On receipt, an application is examined to ensure that the basic qualifications are met. My Department then contacts the medical sources quoted in the application form and obtains all existing relevant medical records in connection with the claim.
  In addition, where doubt exists a consultant opinion is obtained. All the medical evidence forms a basis for the
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  Secretary of State's determination. When the determination is that the conditions required for an award are not met, the claimant is informed that he may apply for a review by an independent appeal tribunal.
  When a request for a review is received, all the evidence used in the initial stages is submitted to the tribunal and a copy of the submission is sent to the claimant. Any new information which may have come to light is, of course, included in the submission. A date for the hearing is set with the claimant's agreement and claimants are encouraged to attend the hearing. After the hearing the tribunal makes its determination which is conveyed to the claimant.
  The decisions of the vaccine damage tribunals are conclusive, except that there may be a reconsideration of the case if there has been a material change in circumstances since the determination was made or if it was made in ignorance of, or was based on a mistake as to, some material fact.
  I come to the case that my hon. Friend the Member for Manchester, Withington (Mr. Silvester) has brought to our notice. In the sad case of Lee James Whitmore, the claim was received in September 1978 and turned down by the Secretary of State in March 1979 on the basis that although Lee's disablement amounted to at least 80 per cent. it was not caused by vaccination. Mrs. Whitmore then sought a review of the case and it was heard by an independent medical tribunal in March 1980. This upheld the Secretary of State's determination that on the balance of probability the disablement was not due to the vaccination.
  In April 1980, Mrs. Whitmore requested that the case be reopened under the appropriate section of the Act which, as I previously mentioned, enables the Secretary of State to reconsider a case where the determination was made in ignorance of, or was based on a mistake as to, some material fact and she has made considerable efforts to produce new evidence as my hon. Friend has said.
  My hon. Friend too has been extremely diligent in pursuing the case and has written to us several times during 1980 and 1981. He has received three letters from my predecessor and one from me and he also had a meeting with my predecessor in May of this year. Following that meeting he wrote again with what was felt to be new evidence about the constituents of the third vaccination, which was given to Lee after the spasms had occurred.
  I replied recently, after looking again in very close detail at this case, explaining that the components of that vaccination were in fact known by the Secretary of State when he made his original determination and that the tribunal knew that it was a possibility that the pertussis element had been excluded but did not consider it a material fact. I reiterated the view expressed by my predecessor that there are at present no grounds on which a reconsideration by the Secretary of State would be justified. However, my hon. Friend has made a number of points tonight that require, and indeed demand, examination. I shall ensure that they are considered carefully and the papers re-examined yet again to see whether there is any basis whatever for a reconsideration by my right hon. Friend the Secretary of State.
  My hon. Friend said that the parents realise that if there were a reconsideration and the case was able to go yet again to a tribunal, there could be no guarantee what the outcome might be. I am undertaking, however, to have the

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  papers re-examined and I will look at them myself again. I shall write to my hon. Friend with the results as soon as possible.
  I hope that my hon. Friend will feel that this is a satisfactory outcome to the very distressing case that he has raised and that the assurance I have given him means at least that the new points that he has produced tonight, together with any light that they may shed on the facts already in our possession, will enable me to ask my right hon. Friend to consider this case and to take whatever final decision he needs to take.

  Uxbridge Cottage Hospital
  8.23 pm
  Mr. Michael Shersby: I am grateful for this opportunity, at extremely short notice, to raise the question of the proposed closure of Uxbridge cottage hospital. I realise that the Minister will be in some difficulty in replying in detail to some of the points in view of the fact that I was able to give notice of this Adjournment debate only half an hour ago. Nevertheless, this is an invaluable opportunity to deploy the arguments that are being discussed in great detail in my constituency and which are causing a great deal of alarm and distress to my constituents.
  Uxbridge cottage hospital, situated in Harefield Road Uxbridge, has been in existence for many years. It is a pleasant 24-bedded cottage hospital which, throughout my lifetime, has provided excellent care for the sick in the community. I was a patient of the hospital as a child when I had my tonsils removed. I can claim an intimate knowledge of the hospital. The fact that I am still standing today and that I am in good voice demonstrates that the expertise of the surgeons in those days was of a high order.
  The reason I am raising the proposed closure of the hospital is that the Hillingdon area health authority submitted proposals a year or two ago to close the hospital and to relocate the patients who would normally be treated there in what is known as the Uxbridge cottage hospital ward at Hillingdon district hospital. The main reason for the proposal was financial.
  It cost at the time of the proposal—I speak from memory—about £103,000 a year to run the cottage hospital but only £40,000 a year to run the same number of beds in the Uxbridge cottage hospital ward at Hillingdon district hospital. One has to realise the difficulties of Hillingdon area health authority and the fact that we live in times when there are severe financial constraints. Nevertheless, the proposal aroused considerable opposition locally. Many people felt that the Hillingdon area health authority, if it had tried hard enough, could have found the money to keep the cottage hospital open as a separate entity.
  The proposal went ahead. The Hillingdon area health authority submitted proposals that would have resulted in Uxbridge cottage hospital being used as the headquarters of the Hillingdon area health authority. In other words, it proposed to turn the 24-bedded hospital into an office block to accommodate the administrators who run that fine health authority. However, this proposal also fell on stony ground because many people in the community could not reconcile themselves to the possibility of their cottage hospital being lost in this way and the fact that the 24 beds that were in existence for the care of the sick and the elderly would disappear.
  The Hillingdon borough council, for its part, indicated that in no circumstances would it be prepared to grant planning permission for the proposed change of use and the proposal was dropped. Time went by. Other proposals were submitted to the Hillingdon area health authority that would have enabled the 24 beds to have remained in use for the benefit of the community. I shall return to that point later.
  The Hillingdon area health authority decided that, in view of the fact that its earlier proposal to turn the cottage hospital into an office block had been refused, it would

  521
  submit new proposals, contained in a consultation paper, whereby the cottage hospital would be used as residential accommodation for the nursing staff, serving the other hospitals in the Hillingdon area.
  I fully recognise the difficulties which all area health authorities experience, including my own health authority in Hillingdon, in finding suitable accommodation for nursing staff. However, it is a very serious matter to propose the closure of a cottage hospital and to contemplate the loss of 24 beds which could otherwise be used for the care of the sick and the elderly. Nevertheless, the Hillingdon area health authority has proceeded with the proposal, which has been considered also by the Hillingdon community health council. Both the Hillingdon area health authority and the Hillingdon community health council approved the proposal that the hospital should be used as residential accommodation for nursing staff.
  Last week, the North West Thames regional health authority considered the proposal, and it, too, approved it. It is now on its way to the desk of my hon. Friend the Minister for Health. This evening, therefore, I shall point to some other aspects of the matter which may not have appeared as fully as I—and perhaps my constituents—would wish in the papers that have been prepared by the Hillingdon area health authority and by the Hillingdon community health council, and which my hon. Friend will consider in due course.
  There has been a long tradition of public support for Uxbridge cottage hospital. That can be demonstrated by the fact that for many years there has been in existence an organisation known as the League of Friends of the Cottage. In fact, it has been in existence for 25 years. That organisation has done a great deal to support the hospital. It contains many local people who live in Uxbridge and who believe that the hospital should continue to be used for the care of the sick and elderly.
  To get the matter into perspective, I shall quote briefly from an article which appeared in the Uxbridge Gazette recently. It stated:
  "Hillingdon Community Health Council has appealed to the Minister of Health, Dr. Gerard Vaughan, to come to a quick decsion over the future of Uxbridge Cottage Hospital.
  Mrs. Shirley Court, chairman, told a meeting of the CHC last week that she had written to Dr. Vaughan immediately after the area health authority meeting at which it was decided to continue to house Uxbridge Cottage Hospital in Uxbridge Ward at Hillingdon Hospital.
  She referred to the letter from the Minister to Uxbridge MP Michael Shersby promising that he would look into the future of the hospital before a firm decision was made.
  'We are desperately concerned that the former Uxbridge Cottage Hospital patients should not have to wait any longer for their present accommodation in Uxbridge Ward at Hillingdon Hospital to be upgraded,' Mrs. Court told Dr. Vaughan."
  In response to the report of Mrs. Court's letter to my hon. Friend, a letter was written this week to the Uxbridge Gazette by Mr.H. J. Ingle, who for many years has been honorary treasurer of the league of friends. I shall read the letter, because it is relevant to the matter:
  "I was surprised to see in your issue today, that Mrs. Shirley Court, Chairman of the CHC, stated that the opposition to the closure of our hospital, came from a small group only, 'the same four who attended today's meeting'. May I suggest this is only due to the long wearying time in which I, for one, have been involved in this campaign. The interest is still intense.
  May I, as honorary treasurer of the League of Friends of the Cottage, for twenty five years claim to have considerable knowledge of the whole problem, and continuing evidence of the
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  overwhelming opinion of Uxbridge people, in favour of reopening the Cottage hospital for full nursing services and minor operations. My reasons are as follows:

  1. In October 1976, a formal consultation paper was issued calling for comments on the subject of the proposed closure of Uxbridge Cottage hospital. This resulted from many meetings on the matter. Our members compiled a paper, of which I have a copy, detailing thirteen good reasons why the hospital should remain open, and sent it to the HAHA.

  2. Following a large Public meeting, held about the same time, attended by Mr. Michael Shersby, our Member for Parliament; the prospective candidates of the other two parties; the Chairman of the Cottage Hospital Medical staff committee; myself, and about one hundred citizens, a campaign was slatted to bring our views in favour of the retention of the hospital to the attention of the Health Authority.

  3. In furtherance of this meeting, I organised a petition, in which I was assisted by many local citizens, who took turns sitting in the local Public Library, for two weeks, taking signatures. The result was that I presented lists containing 6,264 names, to the Minister, Mr. David Ennals, MP. As no further action followed, we presumed and hoped that we had been successful.

  4. All was quiet for two years, until October 1978, when the hospital was closed for installation of a new lift and re-decoration. I was then given to understand that it would re-open in the New Year for all nursing services and minor operations. Since then the bureaucratic machine has been grinding away, and the position has become so confused, it has been difficult to keep in touch, but not due to lack of interest. I feel guilty for fading into the background, recently, but I am an old man. I hope it is not too late for some young energetic people to take up the torch, and save the dear old `Cottage'".

  I quote that letter because Mr. Ingle has been associated with the hospital for 25 years. The fact that 6,264 people were involved in petitioning the former Minister, the right hon. Member for Norwich, North (Mr. Ennals), shows the substantial public opposition that exists in Uxbridge to the closure of such an excellent hospital.
  With great respect to the dedicated and excellent people who form the Hillingdon area health authority and the community health council, they are not elected by the people. Consequently they have no mandate from the people of Uxbridge to recommend the hospital's closure. I mention that because, in sharp distinction to their views, Hillingdon borough council, which, after all, consists of the elected representatives of the people, has resolved that it does not agree with the hospital's closure. Therefore, the unelected representatives of the Minister and of the other organisations that nominate people to serve on area health authorities and on community health councils take one view and the elected representatives of the people—Hillingdon borough councilors—take another.
  As a result of that sharp difference of opinion, Hillingdon borough council will hold a public meeting on the evening of 14 January to discuss the matter in detail and to submit its views to my hon. Friend the Minister. Whatever view my hon. Friend may take when he considers the issue in detail, I hope that he will give: me an assurance tonight that he will not take any decision until he has received and considered the views of Hillingdon borough council, which represents the people of Hillingdon.
  I must declare an interest, because I am president of the Abbeyfield West London Society Ltd. and of the Abbeyfield Uxbridge Society. Throughout the period that the Hillingdon area health authority and the Hillingdon community health council have considered the hospital's closure, issued consultation papers and eventually made recommendations to the North-West Thames regional health authority and to my hon. Friend the Minister, the Abbeyfield West London Society has put forward a

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  proposal to acquire Uxbridge cottage hospital from Hillingdon area health authority at an agreed figure and to set up Uxbridge cottage hospital as an extra care society. It would provide the extra care that people need when they can no longer care for themselves in an ordinary Abbeyfield house. One possibility was that the West London society would act as an umbrella society so that those from other Abbeyfield homes in the Hillingdon area could go there when they were no longer able to care for themselves.
  Another idea which has been canvassed recently but which has not been specifically put to the Hillingdon area health authority is that we should form an Uxbridge Abbeyfield cottage hospital extra care society. In other words, we should form an extra care society which would operate for the benefit of Uxbridge people exclusively, at no cost to the Hillingdon area health authority, and which would operate with Government grant and public support to keep those 24 beds in operation for the care of the sick and the elderly.
  It has been suggested in the local press that the Abbeyfield project is no more and no less than a nursing home, but of course Abbeyfield, as my hon. Friend well knows, is not an organisation which operates in such a way that its activities can be described so narrowly as that of a nursing home. Abbeyfield societies are run by local societies which operate throughout the country. The concept of the Abbeyfield extra care house arose from the increasing need to provide care for the residents of ordinary Abbeyfield houses who, whilst not hospital cases, had become so frail that they required more constant attention than the busy housekeeper could be expected to provide.
  It was felt that the local Abbeyfield society could contrive to provide such care if their frail, elderly residents could be grouped together, on an area basis, in suitably designed houses with special equipment and kind and experienced staff. This purpose has been well explained by the national Abbeyfield Society, and it should be well known to the Hillingdon area health authority and to the Hillingdon community health council, and I am quite certain that it is well known to my hon. Friend the Minister.
  The Abbeyfield West London Society is very interested in acquiring Uxbridge cottage hospital, and it would be willing to raise the necessary funds by public subscription, not just in Hillingdon but elsewhere, and it would seek grant aid in the normal way. I mention that as only one possibility for the alternative use of Uxbridge cottage hospital if it proves impossible for it to continue in use as a cottage hospital because of financial stringency.
  I must make it absolutely clear that not everybody in Uxbridge agrees with the idea that the cottage hospital should be used as an Abbeyfield extra care house. There is a body of opinion among local general practitioners that in some way the cottage hospital should be kept open for its traditional use. On the other hand, there are general practitioners and members of the Hillingdon area health authority who feel that it should be closed. Whatever may be the variation of opinion, it seems to me that one thing is clear. It surely must be a very serious matter for any area health authority, or any regional health authority, or any Minister of Health, to contemplate snuffing out 24 beds in
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  a splendid hospital on which a great deal of money has been spent only recently, and instead using those premises for residential care for nursing staff.
  8.43 pm
  The Minister for Health (Dr. Gerard Vaughan): I am very glad indeed to have been able to listen to this debate and to reply to it. My hon. Friend the Member for Uxbridge (Mr. Shersby) is right to have brought this matter before the House. It is of great importance to his local community. He has put the situation clearly and persuasively, and it has been helpful to me to have his further views.
  My hon. Friend declared his possible interest in an alternative proposal that he has put to the House, and rightly so. I hope that his constituents will hear of the debate and will appreciate not only the way in which he has brought the subject to my notice previously, but his sense of timing in bringing the debate to the House tonight. The papers arrived at my Department only this morning—indeed, I have not yet had an opportunity to go through them—but on the same day my hon. Friend is pressing his views in an Adjournment debate.
  As my hon. Friend rightly reminded us, we are discussing a small general practitioner hospital of 24 beds. The Government are very keen to support the continuation of small general practitioner hospitals of this kind whenever possible. We think that they perform a very important local function in the community. When we discuss possible closures with the various authorities, we always suggest that they should look not only at the medical reasons and, if necessary, the financial reasons, but at the community implications of any closure.
  My right hon. Friend is right in saying that the hospital was temorarily closed on financial grounds. At that time the patients were moved into beds in a separate, identifiable ward in the Hillingdon district general hospital. The health authority has every right, under the Health Acts, to close down some parts of the service temporarily if there is a major financial problem, but it is not intended that any facility closed in this way should remain closed indefinitely.
  A proposal was brought forward fairly quickly that the hospital should be turned into offices for the area health authority. That is not the sort of step that I could welcome, and we have made clear our view that buildings that are for services to patients are not to be converted, unless there are very strong grounds for it, into administrative accommodation. So that proposal was abandoned, the hospital remained temporarily closed, and now there is a fresh proposal to confirm the closure and to use the building for staff accommodation—particularly accommodation for nurses.
  I understand that there are possible plans that the hospital might later be reopened as a community or psychiatric hospital, but we all know that once a hospital has been closed for clinical purposes and is then put to some other quite different use—even though it is within the National Health Service—it is very difficult to reestablish it as any kind of working hospital. My hon. Friend spoke to me about it a little while ago. At that time he put the local views very strongly. I was persuaded not only by his argument but by the understanding that perhaps the community health council might not have been able to take all the factors into account when it came to its conclusions.

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  Therefore, I thought it right to take a rather unusual step, which was to call in the whole proposal and look at it myself. I was very reluctant to do that. We do not do it very often. We are reluctant to do so. We feel that decisions of this kind ought to be made locally, because the various needs of the service are best understood locally. We feel that it is not right for the Government to keep interfering in local matters. However, I felt that in this instance it would be right to do so, and the papers, as I have already mentioned, arrived today.
  It is also wrong for a health authority that will be replaced in April next year by a new district health authority to make decisions that might pre-empt the new authority, which may have a different view. When such decisions arise they should be put off if possible until the new district health authority is fully established and can reconsider the matter.
  Those were our general reactions to the matter, as a result of which I believed it right to call the matter in. The matter is now with me, but it would be wrong to raise local hopes because I am considering it. It may well be that it is in the interest of the local community that the hospital should remain permanently closed, although not for financial reasons. It would not be satisfactory if short-term financial problems led to the closure of a hospital which, in the longer term, may be required. However, by closing the hospital a better local service can be provided by Hillingdon district general hospital.
  My hon. Friend has put forward an interesting alternative proposal, which I shall be glad to consider and to take into account before coming to a decision. I assure him that no decision will be taken before the meeting to which he has referred.

  National Health Service (Private Enterprise)
  8.51 pm
  Mr. Michael Brown: I am grateful for the opportunity to raise the subject of the greater involvement of private enterprise in the National Health Service, especially in hospitals. On my last Adjournment debate about the complex Boothferry bridge proposals, I had to detain the House for nearly an hour. I am pleased to say that I have a simple argument to advance this evening, one that I am sure will find favour with my hon. Friend the Under-Secretary of State for Health and Social Security.
  I am grateful to my hon. Friend for being prepared to respond to the subject at such short notice. I know that it is dear to his heart, as it is to his colleagues at the Department of Health and Social Security. They have tried to tell the health authorities that it is possible for them to involve private enterprise in the provision of many ancillary services. I am glad that the Government have decided to issue general directives and general encouragement in support of my contention that this proposal will ensure that hospital ancillary services are provided much more efficiently than at present.
  I am aware, as are all hon. Members and the general public, that there is a great shortage of funds available to the National Health Service. No one wishes to see the NHS starved of funds. Every hon. Member must try to ensure that the NHS can provide the sort of medical care, aftercare and trained doctors that are needed. However, at present there is a shortage of money for every aspect of the services provided by the Government. We must recognise the situation, not as we would wish it, but as it is. The Health Service is in the same position as every other Government-provided service—it is short of money. That is the base from which I start.
  I feel that we are not getting the value for money from the National Health Service system that we could get if we contracted out to private enterprise some of the cleansing and laundry services that are now done in house. We all remember the winter of discontent about three years ago, when NUPE stopped a number of hospitals from doing their normal work because its members refused to clean hospitals. It is terrible that that monopoly union and COHSE should be able to hold a hospital to ransom and compel it to close its doors to new patients, or impose demands upon nursing and medical staff that are unreasonable.
  I know from the experience of the United States that there are companies in Britain that can provide a better standard of cleansing service at a lower price than the service that is now provided. What does that mean? I am not suggesting that the savings that could be achieved by using private enterprise should lead to the Health Service being deprived of the funds that are now made available to it. I am saying that the savings made could be released for other purposes.
  We constantly read stories in the newspapers about local health authorities that have to close down wards and to close kidney units, for example, because of a shortage of money. A classic example was brought to our notice last week when the attention of the Prime Minister and of the House was drawn to the lack of funds for the bone marrow unit at Westminster hospital.

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  We should encourage local authorities to take to heart and implement the guidance of Ministers at the Department of Health and Social Security. I know that the Government are anxious that they should do so. If that is done, we can release funds from the cleansing services, which is work that private enterprise could probably do more efficiently at a cheaper price. The money that would be saved could be redirected, for example, to kidney units and to the Westminster bone marrow unit. I should like to know from Westminster hospital what steps it might take in the near future to involve private enterprise in the provision of some of its ancillary services.
  At present there is a monopoly that is not giving value for money. It is run by two or three trade unions and it is powerful enough to cause hospitals to close. There is no moment when a hospital cannot be closed, but invariably closures are caused to take place in the winter when hospitals have more patients than at any other time. Recently a hospital in North Humberside was threatened with closure because a trade union that is involved in providing ancillary services decided that it would call a strike.
  I am not suggesting that the involvement of private enterprise in the provision of ancillary services necessarily means that there will be no industrial disputes, but it means that in future a local health authority will be able to invite tenders from a number of cleansing firms which I know are experienced in the work that is involved. Firms in Britain that are performing this work are ready and waiting for local authorities to interpret the guidance that has been given by my right hon. and hon. Friends.
  It is possible to involve the private sector to the long-term benefit of patients. There should not be a monopoly. A system that enables a number of firms to tender for a hospital contract gives the hospital the security of knowing that if the firm does not meet the contract it can be dismissed and another employed instead. No firm wants to lose a contract. It will be only too anxious to provide an efficient service, as it will want the contract renewed at the end of the period. There is a sanction that can be applied to answer that the firm provides a standard of care and cleansing. That does not apply to local authorities.
  We have a unique opportunity. Next year we shall have the new DHAs running our hospitals. New chairmen have already been appointed, as have the members of the authorities. Some members have great experience of health authorities as they will have been members of the old authorities, but, whatever their experience, they will bring a breath of fresh air to the new authorities, which will enable them to reconsider how to run their hospitals.
  With the new opportunity, and with guidance from the DHSS, the new DHAs have a chance of providing a new beginning for our NHS hospitals. It has nothing to do with private health care. The patient is still a NHS patient in a NHS hospital. I, like my right hon. and hon. Friends in the Department, an anxious to get better value for money. I do not have the figures, and I do not expect my hon. Friend to have them, as the debate has been called at short notice, but a massive amount of money in the NHS is not being used to pay and train doctors and nurses and for the units which we believe are essential, such as kidney and marrow transfer units. That is the sharp end of the service, where we should concentrate the money.
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  When there is an industrial dispute, it grieves me to know that nurses who are badly paid have to do duties which they should not have to do. If a private firm cannot deliver the goods, the health authority can dismiss it and re-employ another. I hope that my right hon. Friend will translate the statements that he and his colleagues have made into action when the new DHAs come into being next year.
  Finally, I point out that the NHS is sitting on a great deal of land surplus to its requirements. If it could sell it, more money could go to the sharp end of the service to pay doctors and nurses what they justly deserve.
  9.4 pm
  The Under-Secretary of State for Health and Social Security (Mr. Geofrey Finsberg): I am grateful to my hon. Friend the Member for Brigg and Scunthorpe (Mr. Brown) and indeed to my hon. Friend the Member for Uxbridge (Mr. Shersby). It seems that only Conservative Members are sufficiently interested in their constituents' problems to stay and take the opportunity available to raise these important matters. It is also pleasant to have the chance to answer a debate without warning, without preparation and without briefing. One has the opportunity to respond in a way that is perhaps unusual for a Minister and which I frankly welcome.
  What my hon. Friend has said is basically correct. We wish to make the maximum amount of money available for the benefit of the patient. That is what hospitals are for—medical care.
  It is common sense to look to private enterprise in matters of the kind to which my hon. Friend referred, such as catering and cleaning. There is the example of the substantial amount of money that private enterprise is saving ratepayers in Southend on refuse collection.
  In the meetings that I have already had with the private sector on this, it has been made clear that private firms are not seeking any advantage. They are merely asking for the opportunity to quote on a fair basis. If the health authorities' costings for work currently carried out on an in-house basis include all the items that a private contractor must bear as overheads and are still cheaper, private contractors can have no objection to that. They are worried that in many cases they do not have the opportunity to quote and sometimes wonder whether all the overheads have been included to make a fair comparison. There should be little argument among people of common sense but that my hon. Friend's suggestion has much merit. I certainly assure him that the Department is well aware of the potential benefits available to the National Health Service in considering these matters for privatisation.
  My hon. Friend was perfectly right in saying that much needs to be done, but one thing is too often overlooked, perhaps because, being good news, it is no news and whereas sensational stories hit the headlines, good news seldom does. Nevertheless, it is a fact which I shall continue to repeat that spending on the National Health Service is now 5 per cent. greater in real terms than it was when the Government came to power in 1979. I am sick and tired of hearing Opposition Members talk about cuts being made in the National Health Service. There are now more nurses, more doctors and more midwives in the Health Service than when we came to office. I hope that

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  there will now be an end to the scare stories put around by the Opposition that we are cutting the National Health Service.
  My hon. Friend is right to point out that the National Health Service has a substantial amount of unused and underused land. We have asked area health authorities and regional health authorities to examine their land holdings to see what can be done to release any land not required for National Health Service purposes. We do not want them to sit on land like broody hens. That does no good. Moreover, it is worth recalling that if land is sold the capital receipt does not go back to the Treasury but is available as extra capital expenditure for the National Health Service. That, again, is often overlooked by the Opposition and is perhaps not always at the forefront of the minds of some people in the National Health Service in deciding whether to hold on to land.
  I hope that when the new district health authorities take over in April they will address themselves to two specific tasks, in addition to all the other equally important things that they have to do. I hope that they will accept that the basis of what my hon. Friend has said, and what my hon. Friend the Minister for Health has been saying for a long time, is that it is incumbent upon health authorities to put their limited resources to the best possible use. The best possible way of making certain that they are getting value for money is to see whether jobs such as catering and cleaning are being done efficiently, effectively and as
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  cheaply as possible. It is unreasonable to expect the public to believe that those jobs are best done in house unless they can see it. I think that it was the late President Truman who said
  "I am from Missouri. Prove it".
  That is what my hon. Friend is saying. Prove that doing the jobs in house is better and then no one will argue.
  I hope that the health authorities will also consider what land they can release, so that it can be put to productive use in other ways and so that the capital receipts can be added to their expenditure in whatever way they may choose in their region or district. We have said that if the land is made available by, at present, areas, and in future by the districts, the bulk of the money should be capable of being spent in the district or the area and should not necessarily be swallowed up by the region. The important consideration is that it is extra money for the National Health Service.
  I appreciate the interest that my hon. Friend has shown in the subject by raising it tonight. I hope that he will feel that I have given him some encouragement. "Some' is a modest word. I assure him firmly that this is an issue that will not be forgotten at 9.12 tonight. We shall continue to bring it to the attention of those who are at the sharp end of the National Health Service—those who run the districts and regions.
  Question put and agreed to.
  Adjourned accordingly at eleven minutes past Nine o'clock.