Budget Resolutions and Economic Situation

HC Deb 10 March 1981 vol 1000 cc784-830

AMENDMENT OF THE LAW

Motion made, and Question proposed,

That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of—

1. (a) any amendment with respect to value added tax so as to provide—
1. (i) for zero-rating or exempting any supply;
2. (ii) for refunding any amount of tax;
3. (iii) for varying the rate of that tax otherwise than in relation to all supplies and importations; or
4. (iv) for any relief other than relief applying to goods of whatever description or services of whatever description; or
2. (b) any amendment relating to the surcharge imposed by the National Insurance Surcharge Act 1976 and applying to some only of the persons by or in respect of whom the surcharge in payable.—[Sir Geoffrey Howe.]

[Relevant European Community documents: No. 10444/80 and the annual report on the economic situation in the Community (1980) and the economic policy guidelines for 1981.]

5.3 pm

Mr. Michael Foot (Ebbw Vale)

It is the custom of the House for the first speaker after the Chancellor of the Exchequer has delivered his Budget speech to offer congratulations to him on the manner in which he has delivered his speech, whatever may be the criticisms which may follow on the matter and on kindred questions. I am glad to follow that tradition.

I have been a Member of the House for a considerable number of years, together with the right hon. and learned Gentleman. On a number of occasions, I have heard him introducing various measures. We all know that he has high professional skills. He has a full capacity to make his case clear to the House. I am sure that he is still capable of doing so when he wishes. Therefore, when the right hon. and learned Gentleman lapses into opacity, obliquity or even direct obscurity, I am sure that he always does so on purpose. There may have been some passages in his speech when I thought that he treated his listeners to the range of objectivity and somnolence which he hoped to achieve, but I believe that all Chancellors of the Exchequer have had to resort to such means. That was all the more necessary for the right hon. and learned Gentleman in view of some of his previous speeches.

I cordially welcome some features of the right hon. and learned Gentleman's statement. I offer no satirical aside in doing so. We shall examine the detail of the closing of the Vestey loophole. I congratulate the right hon. and learned Gentleman on doing so. I hope that he had the full co-operation of Lord Thorneycroft in carrying forward that proposal. We recall that Lord Thorneycroft, at the time of the exposure of the loophole, seemed to take a rather different view of the matter.

We welcome the right hon. and learned Gentleman's proposals for the disabled, particularly as this is the International Year of Disabled People. We shall closely examine his proposals, but from what he seems to indicate, it is an advance which we welcome.

We listened carefully to what the right hon. and learned Gentleman said about child benefit. He has properly improved the position this year, although he has not made up for his failure in the previous year. Therefore, although we welcome what he said on child benefit today, as far as it went, we still believe that the Government should have fully made up child benefit to the value it had when they assumed office.

With regard to the 2 per cent. reduction in the minimum lending rate, we welcome any reduction in it, but we would have preferred a larger reduction considerably earlier. Although we welcome it—I am sure that industry will welcome it—there was an anomaly in the way in which the right hon. and learned Gentleman introduced the matter, because he will be aware—and his new assistant at the Treasury will be aware—that I have always preferred the views of Mr. Samuel Brittan as expressed in the Financial Times. I admit that all matters are comparative, but occasionally I prefer his view. Mr. Brittan warned us about a Chancellor introducing a change in the MLR in his Budget. He said: We face a possible dangerous misuse of the Budget speech to announce a several-step fall in MLR by a Chancellor who once claimed to believe that such things should be set by market forces. But apart from bolstering his personal vanity, the attempt to use interest rates to manipulate the exchange rate is, if made, likely to backfire badly. On another occasion, Mr. Brittan said: There is a very special circle of hell reserved for those who take it upon themselves to decide the level of interest or exchange rates. By playing so obviously with the idea of announcing a 2, 3 or 4 per cent. cut in MLR in his Budget speech, the Chancellor of the Exchequer is volunteering as a candidate for that destination. I would not dream of using such language, but that is the sort of language which monetarists exchange among themselves. It is a pity that the right hon. and learned Gentleman did not take the advice to reduce the MLR before the Budget, because that would have been of benefit to those who have to pay their mortgages. It would have been a good way for the right hon. and learned Gentleman to proceed.

In the latter part of his speech, the right hon. and learned Gentleman referred to a general range of measures which supposedly would assist industry. We shall examine those measures most carefully. However, they add up to little compared with the massive and monstrous deflation of the economy which the Budget proposes. On top of the grievous injuries which the British economy has already suffered, what the right hon. and learned Gentleman proposes today is a catastrophe of the first order for the British economy and the British people. We shall do our best to fight it by every means in our power.

I should like to comment briefly on what the right hon. and learned Gentleman gave as the reason for the change that he is proposing—although he is not proposing the radical change that some of us would wish. All the figures and prognostications of the Government have been disproved, as the right hon. and learned Gentleman had the candour to acknowledge. He therefore had to advance reasons why that has occurred. He advanced the reason that has been popular in Government circles in recent days. He suggested that the change was due primarily to the scale of the international slump or recession. However, that does not explain the disasters that have been thrust upon this country and its people.

The latest EEC figures show that in the 12 months ending in January 1981 unemployment increased by 3.9 per cent. in Italy, by 13 per cent. in France, by 26 per cent. in Germany and by 64½ per cent. in the United Kingdom. In the fourth quarter of last year industrial production generally was only 2.3 per cent. lower than a year earlier. In Britain the fall was 11 per cent., which, as The Guardian showed yesterday, takes account of the output of North Sea oil.

The right hon. and learned Gentleman tried to conceal the scale of the comparison. The drop in production in the United Kingdom and all the other aspects of our well being associated with it are unique. Last year only the United States also registered a drop in GDP. Every country in Western Europe save the United Kingdom increased its GDP. We have fallen behind practically every other comparable country. That is the background against which the Chancellor takes his action.

I am sorry to see the departure of the right hon. Member for Taunton (Mr. du Cann). The Prime Minister paid him glowing compliments a little earlier. Several of those who strongly supported monetarist doctrines appear now to have abandoned their belief or at any rate their conviction that the policy was correct. Some have not. Some even say that the problem is that the monetarist doctrines have not been applied. G K Chesterton stated that Christianity had not been tried and found wanting; it had been found difficult and not tried. That is what some say about monetarism.

We are not sure what position the Chancellor takes. He apparently still holds to the monetarist doctrines that he preached earlier. In some respects that was the most scarifying part of his speech. He suggested that he would pursue the same course. He stated that it would be fatal to change course now. [HON. MEMBERS:"Hear, hear."] It appears that the Chancellor has at least a few supporters on the Government Benches. I presume that he is asserting that the Government will continue with the policy of massive deflation, which has been their policy ever since they came to power on 3 May 1979.

The Budget of two years ago had a slightly different tone and there was a different feeling abroad on the Government Benches, but they soon buckled down to the old Tory deflationary policy. As the monetarist policies did not seem to be working sufficiently well in the terms in which they had been introduced, last autumn the Government brought forward a fresh bout of deflation. It was reckoned that the inflection on the economy was £3,000 million. They have done the same in this Budget. We did not get from the Chancellor an exact account of what it was to be. Indeed, he gave no figure for his estimates for employment and unemployment. In a Budget of this nature he should have done. He is embarking once again on deflation on a massive scale. Not only the general budgetary estimate, but many of the individual measures that he has introduced—in particular the 20p tax on petrol—will inflict serious injury on the economy and make it infinitely more difficult to embark on any process of recovery.

Let us consider what the right hon. and learned Gentleman said about the burden of tax, and let us not forget that before today's announcements the Government's position was—although they rarely admitted it—that the burden of tax on individuals, direct and indirect, was higher than when they came to office in 1979. That is before today's Budget. What they have done today is sharp practice on a scale that no one expected.

I presume that the Financial Secretary to the Treasury has offered his resignation. If he has, there is no conceivable reason why it should not be accepted. The direct taxation figures are very important indeed to the vast majority of tax payers. The failure of the Government to include the implications of the Rooker-Wise-Lawson amendment means an extra tax burden of £99 a year for a married couple, £63 for a single person and £132 for an elderly married couple. That is the consequence of the Government's failure to carry out their obligations and manifesto commitments. Tax thresholds are now lower than when the Conservative Government came to office, despite the fact that at the general election the Tory Party gave a direct promise that by the raising of tax thresholds the low paid would be let out of the tax net altogether. The manifesto stated how a Tory Government would tackle the matter and gave the reasons why.

It is scandalous that the Chancellor has not proceeded with the measure today. Only a year ago in his Budget Statement he tried to explain why it was conceivably not necessary for him to go ahead with the full increases in personal allowances last year. He stated: At first sight that would suggest increases in the personal allowances which fall some way short of the rise in prices during 1979, but this would have a number of undesirable effects. These undesirable effects will follow from the right hon. and learned Gentleman's policy today. It would lower the starting point of income tax in real terms, compared with a year ago. It would increase the number of taxpayers. It would narrow the gap between tax thresholds and the main social security benefits, and it would impose particularly heavy burdens on those with the smallest incomes. All those effects would be most undesirable."—[Official Report, 26 March 1980; Vol. 980, c. 1474.] All those effects have been introduced or sustained by the Chancellor failing to take action today.

When we come to the Committee stage of the Bill, I trust that all those who voted for the Rooker-Wise-Lawson amendment will vote for the maintenance of its principle, and that there will be restoration for those who are having the extra tax burden imposed on them. It is a matter of grave importance to the House and to the relationship between the House and the country.

The Opposition and, I believe, the country as a whole, are primarily concerned about the Budget, not only because of the tax rates which will be imposed. I have barely touched upon the range of increased indirect taxation that will impose its burden upon people. Overwhelmingly, the greatest issue facing the country is what is to happen to the level of unemployment. Both the Government and the Chancellor propose that we continue along the same course on which we were embarked. That means that there will be a serious increase in the level of unemployment that our people will have to encounter and overcome in the coming months and, indeed, years.

The Chancellor of the Exchequer has said that he will continue on the same course. That means the continuance of the appalling production figures that this country has endured throughout this period. Last year, GDP fell by 6.8 per cent., the index of industrial production by 13.2 per cent., the index of manufacturing production by 17.2 per cent., capital investment in all industries by 2.6 per cent. and in manufacturing by 3.6 per cent., investment in manufacturing by 12.6 per cent, and construction industry output by 9.2 per cent. Those figures add up to the massive unemployment that the country has had thrust upon it throughout this period.

The CBI put forward proposals for the right hon. and learned Gentleman to consider which at any rate would have avoided a fresh bout of deflation. The House and indeed the country should take note of what the CBI said about unemployment. These are the prophecies, not of the Labour Party, but of the CBI itself. The CBI calculates that if all the proposals outlined in the CBI plan were carried through—and certainly the Government have not come near to accepting any more than a few trifles from among them—by 1984 it might be possible to get the unemployment figures down to what they are today. The unemployment figures today are already record figures for this century.

The right hon. and learned Gentleman had to point out in his speech that huge totals must be added to the figure of 2½ million unemployed. There are 700,000 people working short time, sustained by the various schemes that have been introduced. There are hosts of other figures to be added. I hate to make prophecies about unemployment rising above 3 million, and I believe that one should be careful about doing so, but that is what the CBI has said.

This Budget will produce a total of more than 3 million unemployed in this country. It is a Budget of no hope for the people of this country. All hope abandon, ye who enter here is the inscription to be written above the monetarist Inferno in which the Government still believe. There is no hope for the one million people who have joined the ranks of the unemployed in the past year. There is no hope for the further half million who will join the queue in the coming year, and in years to come. There is no hope for the vast majority of people coming out of the youth schemes. Certainly, they are good schemes, but the people in them still have to find jobs at the end. There is no hope for the overwhelming majority of people who will have to bear a much heavier burden as a result of this Budget.

It is a no-hope Budget, introduced by a no-hope Chancellor. It is a Budget which can only inflict the most serious injury on our country as a whole in years to come. It will inflict serious injury upon individuals and their families and on communities in the coming weeks and months, and longer-term injury on our country. It results from a combination of the primitive morals of the monetarists and the practical incompetence of the broken-backed Cabinet that we see arrayed before us today.

How long will this country have to endure the combination of injury and insult to which we have been subjected from the Treasury Bench? How long will this continue? That is the question which echoes up and down this country. The sooner the electorate has the chance to finish this Government, the better for all concerned.

5.26 pm

Mr. J. Grimond (Orkney and Shetland)

Fifteen or 20 years ago, the Budget was considered to be the main instrument of economic policy in the Government's hands. Those days have departed. We do not now hear of demand management or fine tuning. The Budget now is a desperate attempt by the Government to cover at least a part of their own annual expenditure.

If that is how the Budget is to be viewed, I wish to make one point. Great importance is now attached to the public sector borrowing requirement. But that includes not only borrowing by the Government for unproductive purposes but also borrowing by the nationalised industries. If borrowing by the nationalised industries is for genuine investment, there is no reason why it should not be treated as such and taken out of the public sector borrowing requirement. I am sure that the real fear in the Government's mind is that it is not genuine investment but that it is largely wasted. If that is so, the Government should turn their attention to the running of the nationalised industries. In so far as it is genuine investment for productive purposes which earns a profit, however, there is no conceivable reason for one to be ashamed of it.

It has been said that the Government are not changing course, but in one respect they are changing course very rapidly. They promised continuing reductions in taxation. Apart from anything else, they are raising income tax levels this year by about 3p. There is no further reduction in taxation, so they have certainly changed course on that. However, it is not my business to deploy the main Liberal case on the Budget. That will be for my right hon. Friend the Leader of the Liberal Party tomorrow.

I wish to concentrate upon two aspects. First, there is the question of oil and petrol. I believe that the Government's policy on North Sea oil is disastrous. There is a strong case for issuing shares to the public, as has been suggested by Mr. Samuel Brittan. There is also a strong case for putting this income to investment. But there is no case for treating it largely as revenue when it should be treated as capital and allowing it to increase the value of the pound and provide no benefit to the economy. Today, we have again heard that the price of petrol is to rise 20p per gallon. This will be killing for agriculture. Already, farmers all over the country are complaining bitterly that their costs have far outstripped the prices that they obtain. Agricultural prices are falling. It will also be a further grave handicap on industry. In areas such as Orkney and Shetland, which I represent, the Isle of Wight, and other islands off the coast, where petrol is already l0p per gallon dearer than it is in London, this will be a further blow to the whole rural community. This continual raising of the tax on oil or petrol, regardless of its effect on industry and agriculture, is quite disastrous. If any company were to treat the oil revenues from the North Sea as capital, I believe that it would land up in the Old Bailey.

I turn to the organisation of industry. I am extremely doubtful about the effects of Budgets. I have now listened to about 30 Budget Statements. Indeed, one wonders why they are held annually in the spring, unless it is some hangover from long-ago days when we were an agricultural community. The Chancellor usually tells us that he has mapped out the course ahead, but in the autumn we are told that the whole thing must be washed out and something quite different done. What is certain is that this country's prosperity depends upon the efficiency of its industry, and that depends upon the structure of industry and the good will and productivity of those who work in it.

With regard to helping small businesses, the main new step in the Budget is the business start-up scheme. I welcome that. However, am I right in thinking that it is only tax relief on new businesses? For instance, it will not help those who wish to expand or take over existing business; nor will it provide any capital for new businesses. There is a great need in this country for a source by which people's savings can be channelled into productive industry.

At present, the great bulk of savings go into the savings banks or the building societies. The great bulk of those savings are taken out from the regions, where they are accumulated, and dealt with centrally in London. I believe that the whole banking system is becoming far too centralised. We need some form of development bank—I do not mind whether it is set up by private enterprise or by Government—which will have its roots in the regions and which will channel regional savings into industry in those regions.

The Prime Minister has emphasised that she is interested in seeing that the maximum amount of redundancy payment money is invested in new businesses. However, there is nothing in the Chancellor's proposals to encourage that. There is nothing to encourage those receiving redundancy payments to join together to form co-operatives. I have taken some interest in this matter and have visited Corby and other places. There is a considerable willingness among people to engage in that type of enterprise. However, they lack knowledge about it. They do not know what might be possible, and they are ignorant of the legal traps into which they may fall.

Dr. Alan Glyn (Windsor and Maidenhead)

I am not sure whether I heard the Chancellor aright, but surely the pilot loan scheme and the business starter scheme, combined with the ability to use redundancy money, will enable people who leave employment to start up businesses. Surely that is the whole object of what my right hon. and learned Friend said.

Mr. Grimond

I do not deny that something has been done, but I am talking about a particular type of business. I am referring to the setting up of new businesses by people who have been declared redundant, who have received redundancy pay and who want to work together. There is a great deal still to be done in that regard.

In the next year or so, when their redundancy pay begins to run down, those people will find that if they have invested in excess of £2,000 their level of social security will fall. It will take at least a year or more for any of those people to set up new businesses, but they will then be caught by a fall in their social security. The Government should make it possible for people who are investing to be able to draw on social security for a longer period so that together they may have some chance of setting up a co-operative or other forms of small business.

At present, there is a clear and unfair difference between those who set up a partnership and those who want to start up a small business of the sort that I have outlined. In effect, the former are allowed to pay interest on any shares they buy out of pre-tax income, but that does not apply to the latter.

I also draw the attention of the Government to the progress of the Companies Bill in another place. In particular, I should like them to look at the speech of Viscount Caldecote, the chairman of the ICFC. The Chancellor said that the Government had been in touch with the ICFC. I hope that they will pay attention to Lord Caldecote's remarks. He commended what he called"management buy-outs"—I am sure that he is quite right—and particularly approved of the Government's proposal to allow these businesses to buy back their own shares. He also coined a new phrase,"a company-owning democracy". That is something to which we should pay considerable attention.

I am anxious to encourage not only pure co-operatives but also the wider investment of redundancy payments and, indeed, people's ordinary savings in all types of industry and enterprise within their own regions and in their native places. I believe that Viscount Caldecote, supported by Lord Seebohm, his predecessor at the ICFC, intends to move certain amendments to the Companies Bill aimed at encouraging that type of enterprise. I very much hope that the Government will respond to that. I also hope that they will be receptive to parallel amendments to the Finance Bill in order to encourage this type of development and to lessen some of the tax burdens and other difficulties which in spite of their measures—I admit that they have introduced some measures to assist in that direction—gravely hamper those who want to strike out on their own. The position of many small businesses is gravely hampered, both by the legal complexities of company laws and also by the weight of taxation.

5.37 pm

Mr. John Loveridge (Upminster)

It is an honour to follow the right hon. Member for Orkney and Shetland (Mr. Grimond). I know that he will forgive me if I comment not on his observations but rather on those of the Chancellor of the Exchequer.

All of us appreciate the difficulties and constraints placed upon the Chancellor of the Exchequer by worldwide conditions. We cannot immediately form a full judgment about the measures that have been announced. That will take time. Some of us will be pleased, and others less so. That is inevitable with any Budget. However, it gave me particular pleasure to learn that three aspects on which the Conservative Party small businesses committee—of which I have the honour to be chairman—has been pressing the Government have been brought forward in this Budget: first, a new loan guarantee scheme to help small businesses to start up and to expand; secondly, new investment measures to encourage savers to put their savings into small firms rather than direct them into pension funds and insurance; and thirdly, improved measures for the relief of capital taxation, which has proved such a discouragement to expansion. I shall return to those three points later.

This is a tough Budget. It had to be. I have looked up one of my old speeches and I see that I then forecast: Our debts abroad could grow to much more than £10,000 million before the North Sea oil flows in."—[Official Report, 29 January 1974; Vol. 868, c. 302]. I see from an answer given by the Financial Secretary on 10 February 1981 that our official debts abroad increased between April 1974 and May 1979 by $17.2 million, plus interest at $6.4 million. Therefore, it will be seen that the estimate that I made in January 1974, as the chill of the first oil price increase broke upon us, was not far out.

That crisis and successive crises that resulted from increased oil prices have lain at the heart of the difficulty of every Chancellor of the Exchequer and, indeed, of the difficulties of the nation as a whole since then. In January 1974 I also noted that there had been an increase in world liquidity in the previous two years that amounted to 62 per cent., and that that presaged inflation in the Western world for a long time to come. The Government are to be congratulated on lowering the rate of inflation, after the bout of inflationary rises that resulted from the pre-election boom. Given the 2 per cent. reduction in the minimum lending rate, the pound will probably fall a little. However, the effect of that drop may have already been largely discounted on the markets. We should never forget that over a long period of time this country has shown a marginal propensity for importing more than it exports. Therefore, the Government should keep an eye on the pound.

Although our exporters would like a lower pound, we must ensure that we do not run into further constraints on expansion, which could arise from balance of payments difficulties. Given the benefit of our oil, however, that probably will not happen Some of us will be sorry that more help has not been given over energy prices. We all know that in America the use of oil is more than double that found per capita in this country. The United States of America benefits from cheaper prices. As long as that situation continues, there will be a strain on the economies of the Western world due to its imports. On 1978 figures, we use 3.78 tons of oil equivalent per capita. In the United States of America 8.5 tons per capita are used. Japan is an example of how much can be done to save energy. Despite its vast output, only 3.1 tons per capita are used.

I turn to the expansion of the money supply. I wonder whether the Government have not been unduly anxious about it. However, I am glad that in recent weeks—and, indeed, today—the Government seem to have taken an easier attitude towards the growth of M3. As stocks fall, it is natural that they should be turned into cash. M3 is a broad measure. The Chancellor of the Exchequer reminded us of the effects of removing the corset.

I should like the House to consider the figures for the growth of the gross national product from the end of 1969 to the end of 1979. At the end of 1969 the gross national product was £40.1 billion. At the end of 1979 the amount had grown to £162.1 billion, which is slightly more than a fourfold increase.

Let us now compare the growth of M3 over that same decade. At the end of 1969 the figure for M3 was £16,132 million. At the end of 1979 it was £58,645 million. That is substantially less than the fourfold increase in the gross national product. Although there is no need for an exact relationship between the two, common sense suggests that at the end of that decade there must have been room for a substantial catching up in M3 in comparison with the growth that had taken place during that decade. Indeed, I refer to thousands of millions of pounds of room for M3 to catch up.

I turn now to the figure for our debts. The Chancellor of the Exchequer forecast a target of about £10.5 billion for the public sector borrowing requirement for the coming year. Some of us may feel that that target will be hard to meet and that it should be eased. Some—including myself—find it strange that, when our defence needs are growing, when dockyards are idle, when steelworks are empty and when engineers are unemployed, we are not using more fully the productive capacity to create new arms for our services, such as a new Navy. Not only would the country become safer from aggression, but those industries would be lifted out of the doldrums and greater employment would be provided.

Unfortunately, many men have had to leave the steel industry. However, 15,000 new jobs will be created under the arrangements for the expansion of small businesses in the steel-producing areas. Governments should not forget that without micro-economic success there are no macroeconomics.

I was cheered to hear some of the measures that my right hon. and learned Friend proposed. I refer first to the loan guarantee scheme. Those of us who nagged away are cheered to find that our words have been effective and that the Chancellor of the Exchequer has brought such a scheme to fruition. However, I was concerned to note the limitations that have been placed on it. First, it is only a provisional measure for three years. Secondly, there is to be a limit of £50 million on lending. Thirdly, there is to be a limit of £75,000 in loans to any one firm.

The Government seem to have adopted our scheme in most respects, including the amount to be financed totally by the banks and the amount to be underwritten—on a self-financing basis—by the Government. The ratio of 80 to 20 per cent. seems reasonable. However, when we put forward our scheme we believed that rapidly expanding firms that were already off the ground and that did not have assets needed money to sustain their growth and cash flows. Banks would not lend to them because they did not have the assets to pledge to cover any rapid expansion.

The limit of £75,000 will restrict access to smaller units, many of which can already obtain satisfactory servicing from the banks. I was also concerned to hear that the scheme would be worked through the Department of Industry. We had hoped that the banks would carry out a major part of the work.

Mr. D. N. Campbell-Savours (Workington)

It is the banks.

The Under-Secretary of State for Industry (Mr. John MacGregor)

It is the banks.

Mr. Loveridge

I am glad to have that assurance from the Minister. The proposal represents a bold, new and good idea. It will succeed. However, we should have liked it to be on a much larger scale.

Secondly, on the question of private investment in industry, the relief of up to £10,000 invested will be a great encouragement for those in high salaried jobs who are making substantial savings to put those savings and back them with their judgment into small businesses. But for small businesses that need capital £10,000 is not a lot. They will have to develop a new market to find the people who are willing to invest in them. I hope that the Government will be able to help in setting up such arrangements so that those who have money to invest can be brought nearer to those who need the money.

Thirdly, there were the welcome provisions on capital taxation. They are good. They go a long way to relieve the difficulties, but again I fear that for many firms they do not go far enough.

On the whole question of investment, that being what industry badly needs at present, I was a little concerned to note that banks would be charged a tax on their excess profits to the tune of about £400 million. I should have preferred that amount to be turned towards the small and medium business sectors. None the less, it is right that banks should not make a windfall advantage out of national considerations that have increased interest rates. On the other hand, it would have been better if the money, instead of going into the Government's purse, had gone direct into the expansion of British output.

The Budget has hit drinkers, smokers and travellers. At the same time, it helps investors. That is surely the right balance and direction. I am glad to see that there will be a reform of stock relief, including consortium relief, and to note the help given for conversion from oil to coal, to the tune of £50 million a year.

The construction industry is helped, though it is not given a large handout. However, that is helpful and encouraging. Again, the initial allowances for new industrial buildings are on the right lines.

The measures to give relief to let land are only fair. They should help to bring managers into farming in a way that has been denied them in recent years because of the inflationary price of land.

The discounted price of council houses being the proper rate for stamp duty seems only fair, since that is the money that passes.

I do not wish to detain the House long, because I know that other right hon. and hon. Gentlemen wish to speak, but it would be wrong for me, as chairman of the small businesses committee, not to refer to the increase in line with inflation of VAT exemption from £13,500 to £15,000 a year. It is also to be welcomed that the 40 per cent. relief of corporation tax for small companies increases to £80,000, in line with inflation, and, more particularly, that the scale for marginal relief limit is to be changed. I and my colleagues have long argued that the marginal relief measures between small and large firms operated not as a relief but as a deterrent, because at part of the scale corporation tax shot up to 66 per cent. actually charged.

Mr. William Hamilton (Fife, Central)

On a point of order, Mr. Speaker. A document is being circulated in the press about the Civil List and is not available to hon. Members. It is causing a lot of concern in the Lobby outside. I hope that you will take steps to see that it is made available to hon. Members as well as to the press.

Mr. Speaker

If it is a parliamentary paper I shall, of course, make inquiries. At the request of the hon. Member for Fife, Central (Mr. Hamilton), I shall find out what has happened. Parliamentary papers should, of course, be available to hon. Members first. I know nothing about the matter, and I shall have to make inquiries.

Mr. Loveridge

It is not clear at the moment how much the new relief will reduce that 66 per cent. marginal cost, but it sounds as though it will relieve it substantially. It is, therefore, a greatly welcomed improvement.

Welcome, too, are the proposals that companies will be able to buy their own shares and that capital losses can be set off against investment in companies as well as in individual firms and partnerships, and that redundancy payments will be taxable only over £25,000, which will help many people who receive redundancy money to start up businesses of their own.

The new improvements to be made in the management of COSIRA are welcome, though many of us would have liked COSIRA to extend its services to business in country and rural districts to towns as well.

Our purpose has been to increase output per man, but as yet that has not been fully achieved. No doubt it will come, and certainly in the small business sector there is the will to achieve it. In Japan there are 5.4 million small businesses; here there are 1.3 million. Japan's rate per head of population is double ours. We hope that these measures, combined with those in the previous Budget, will be a start in doubling the small business sector in Britain, and thus providing an additional 1 million jobs.

Mr. Campbell-Savours

The hon. Gentleman has spent much of his time congratulating the Government on their small business package, but he has said nothing about the effect of the Budget in deflating the economy and reducing demand. Is not that expansion of demand a major contributor to any reflation of small businesses in the United Kingdom? Why does the hon. Gentleman not address himself to the real issue that is being discussed in the Lobby outside, in the Tea Room and all over Westminster, which is that small businesses nationally have taken a bang from the Government in the Budget?

Mr. Loveridge

No doubt the hon. Member will wish to make his own contribution to the debate shortly. We all want demand to grow. It is the long-term objective of every Government to see everyone in the kingdom better off. But we cannot print money without printing inflation. Not only in our time, but throughout the centuries, extensive inflation has always led to a loss of jobs in whatever country it has occurred.

Our purpose is to create jobs. When the hon. Gentleman says that I am not creating jobs for small businesses he does me and my colleagues an injustice, because our purpose and belief is that we can create 1 million extra jobs over and above those that will come from reflation of the economy. If all the 50 measures that have been advocated by my colleagues and myself and outlined in my Small Finns Expansion (Inquiry) Bill recently put before the House were put into effect, more jobs would be created. Some of our proposals have been accepted by the Government, but not all of them. With good fortune, I hope to stay in the House long enough to see them all accepted and the 1 million extra jobs created.

On that happy note for the future I come to the end of my speech and ask the Government to implement in the next Budget all the remaining measures that my committee has advocated.

5.59 pm

Mr. Roy Hughes (Newport)

The hon. Member for Upminster (Mr. Loveridge) described the Budget as a tough one, and I agree with him. I also agree with his recognition of the unused capacity that exists in the economy at present. However, I dispute his suggestion that that unused capacity could be taken up by building new naval dockyards. I could suggest many better ways of spending the nation's resources.

In fairness to the Chancellor, I welcome the 2 per cent. cut in the minimum lending rate and the modest concessions on energy costs, though they are rather belated. Certainly, some of us have been advocating such measures for a long time. These propositions and the other assistance to small businesses, to which reference has been made, are welcome, but they are really a recognition of the damage that has been done in the past two years to the British economy and, more particularly, to manufacturing industry.

The Chancellor of the Exchequer referred to the 9 per cent. drop in output last year in the manufacturing sector. That was a very serious admission. Like myself, the Chancellor is a South Walean. I suggest to. him that open confession is good for the soul—as you would also readily recognise, Mr. Speaker. But during the Chancellor's speech there was no real mention of unemployment. As my right hon. Friend the Leader of the Opposition said, it was essentially a Budget of no hope.

There is a prime need for the Government to change course and to get away from their Right-wing dogmatic and Friedmanite policies, which they have pursued for almost two years. Tremendous damage has been done to the economy and it is very difficult now to put that right.

I want to refer briefly to a side issue in relation to the Budget and the taxation measures proposed by the Chancellor. It will not have escaped the notice of hon. Members that at the very time when the new measures are being proposed the Government are locked in dispute with their own Civil Service. I spoke to over 200 civil servants in my own area on Monday, and they seemed to be in a very determined mood, so the Government should ask themselves whether the additional revenue proposed in the Budget will be collected.

During the 15 years in which I have been in the House I have noticed that incomes policy has become a cornerstone of Government economic strategy. The Government, despite their economic policy, seemed to have held up the white Hag even before battle with the miners had commenced. But now they have decided to take on the Civil Service. It would seem to be a case of hammering the weak and giving in to the strong. That is not a very fair-minded attitude, and does not fit in with my concept of British justice. The Government are acting in a shameful way towards their own staff and they may yet come unstuck in this area.

As for transport and the measures included in the Budget Statement, I suggest that it is time for all Governments to recognise that cars are now almost literally public transport. People go to work in them. The days of leisure motoring have paled almost into insignificance.

I appreciate that oil is a very valuable commodity, but we must recognise that we are now self-sufficient, so it is a retrograde step to put up the cost of petrol by 20p a gallon and to increase vehicle excise duty to £70. These measures are inflationary in themselves. They will generate new wage claims and make our products, in the ultimate analysis, less competitive in the markets of the world.

The Chancellor said that there was to be no change in VAT. I have received from a firm in my constituency—a firm with an international reputation, the confectionery firm of Lovells—the view that the present level of VAT to the confectionery industry and the allied products industry is grossly unfair compared with that in other countries in the Common Market, such as Germany. One might have thought that the Chancellor would look at this aspect and ensure that firms got the justice they deserved.

The overall flashpoint of the economy at present is certainly unemployment. We hear many figures bandied about, but we know that there are 2½ million people out of work, many on short-time working and many more not bothering to register because they know that there is no chance of obtaining work. All the forecasts indicate that there may be 3 million people out of work by the end of the year. Indeed, some reputable forecasters indicate that the figure could increase to an even higher point in the years ahead. Nevertheless, the Chancellor did not have the courage to admit the error of his ways. The Government have watched with gay abandon as well managed and previously profitable enterprises have gone to the wall. It should have been the Chancellor's principal task in the Budget to try to get people back to work. That can be done only by increasing the spending power in the economy to enable people to buy the things that they require.

The Government should therefore have taken much less in taxation. They could have announced steps to spend more on social services, such as housing, education and health. They could have authorised projects that would benefit the economy in the long term—investment in roads, railways, power stations, and so on. With an expanding economy and with the construction and building industry working to full capacity, our factories would be able to improve their relative position. Machinery lying idle could once again be fully utilised, enabling unit costs to fall, so that when eventually expansion took place the efficiency deriving from such measures would in turn reduce the level of inflation in the economy.

The CBI, the Select Committee on the Treasury and Civil Service, and the chairman of the Conservative Party's 1922 Committee are all as one in telling the Government that their policies are wrong. In this Budget the Chancellor has failed to heed their warning, and in my view he has failed his test.

Several Hon. Members rose—

Mr. Speaker

Order. Before I call another hon. Member I want to refer to the point of order raised by the hon. Member for Fife, Central (Mr. Hamilton). I understand that the matter that he was probably concerned about was a written answer to the hon. Member for Halesowen and Stourbridge (Mr. Stokes), which will be in the Official Report tomorrow.

6.9 pm

Mr. Michael Spicer (Worcestershire, South)

This Administration came into office dedicated to the view that the basic problem of our economy was that there had been an excess of public spending as against private production and that there was an excess of spending on consumption as against production and measures to encourage production.

The Budget fits absolutely within the objectives that the Government came into office to achieve. I was especially interested in the brief intervention by the hon. Member for Workington (Mr. Campbell-Savours), who suggested to my hon. Friend that surely all would be solved if we could increase demand. I may be paraphrasing or caricaturing what he said.

The Budget clearly does not reflect that view. I want to dedicate my brief speech to this issue. My right hon. and learned Friend the Chancellor of the Exchequer—unless I misheard him—said that, far from spending having declined over the past three years, in money terms it had risen by 50 per cent. Let us contrast that with the real matter that he put his finger on—that unit costs have risen twice as fast as those of our competitors. If we are presuming that the problem is lack of demand, I throw in for good measure the fact that British exports in the past year have done better than ever.

Mr. Campbell-Savours

In volume.

Mr. Spicer

Yes, certainly, in volume, but that to some extent reflects the general level of exchange rates.

The thread running throughout the Budget Statement—and I agree with it—is that what is wrong with the British economy is declining competitiveness. The Budget and the Government's strategy are targeted to that problem. That is where the anti-inflation policy becomes so important. British industry must be able to rely on stable costs. Unit costs are of course partly a question of efficiency. It is the duty of Government to provide a stable currency within which business can manage its affairs. The strategy of providing our country with a sound currency has to be correct by any measure unless one believes—as one suspects must be the belief of some hon. Members on the Opposition Benches—that one can put a wall round the British economy, and unless one allows that the British economy can proceed at one pace while the rest of the competitive world moves at another. The logic of most of what is proposed as the alternative to the Government's strategy is that one can insulate the British economy from that of the rest of the world, create internal demand within that wall, and live with the effects.

The problem is that the British economy, like no other, depends on trade. No other economy imports or exports as much in relation to its gross domestic product or to its population. One has especially in mind a comparison with the Japanese, who are often quoted as living in a country similar to ours. As a proportion of the population and of GDP, Japan exports and imports a far smaller amount than does this country.

Mr. Campbell-Savours

Does the hon. Gentleman accept that the Japanese were able to insulate domestic production from the ravages of overseas competition by way of tariff barriers and other forms of protection? Is he not putting forward a black and white argument by suggesting that we are pursuing a siege economy argument, as against a grey argument, which incorporates the principles of protection, yet at the same time recognising that we have international obligations in our trading?

Mr. Spicer

I know that many of my hon. Friends want to speak in the debate and I shall not pursue that matter at great length, except to say that the Japanese economy was protected at a time when, historically, it was not as dependent on world trade for its continued existence as was this country. It also has a much bigger internal market than ours.

We ignore unit costs at our peril. In that context the Government's key priority to combat inflation is correct. To claim that by creating internal further demand one will somehow solve the British economic problem is either to be dishonest—which I suspect in many cases it is—or to apply principles that in the real world do not exist.

The Budget Statement should be more of a state-of-the-nation speech. It should be allowed to wander into paths that are perhaps more appropriate to other departments. I have especially in mind labour practices. If one takes a view about inflation and about unit costs, one should not avoid some kind of pronouncement about labour costs and practices. That is true particularly about monetary policy. I am bothered about an emphasis on monetary policy that ignores the inflexibility and lack of perfection—if I may put it that way—in the labour market. That is one of the basic problems that we have to tackle. The Government must get to grips with the suggestions in Green Paper on trade unions. It must come up with firm policies, in the context of the policies and strategies in the Budget Statement, to deal with the inflexibilities and monopolies in the labour market. Until we get those right, many of our policies will not have their full effect.

I want to make two comments on the Budget judgment. The first is that we must be wary of clamping down on the economy during depressed world conditions and, at the point when the world begins to come out of the recession in a year or two's time, suddenly expanding the economy. That would greatly delay the solution to inflation, which, I agree with the Government, is the prime objective.

The second point in my necessarily hurried speech is the question whether we are treating the public sector borrowing requirement in too global a sense; in particular, whether we are making sufficient of a distinction between capital and current spending. There should be an emphasis upon spending money on investment for the future and on providing an infrastructure within which our industry can flourish.

I agree with the measures that the Chancellor has proposed for trying to create new businesses, but we must have an infrastructure within which those businesses can flourish. It is vital that we distinguish between our attitude towards, for example, pay settlements in the public sector and our attitude towards spending on capital and investment projects.

I am convinced that the strategy on which the Government came to power has every possibility of achieving what is good for this country. If we can restore a sound currency, so much will flow, especially from the great resources in energy and the skills that we possess. In 10 years the country will be transformed. The whole nation will benefit. The Budget must be seen in that context. In that context I approve of it.

6.20 pm

Mr. John Maxton (Glasgow, Cathcart)

It is rare for me to agree with a Government Member, but I agree with the argument advanced by the hon. Member for Worcestershire, South (Mr. Spicer) about the Government's complete inability to distinguish between capital and current expenditure, in the public sector. I believe that both should be increased,. However, if the Government cannot increase current expenditure, they must increase capital expenditure. If it is not increased, the economy will never recover, because the fiscal structure of our country will not exist in order to form the basis on which it can recover.

Recently I spoke to some civil engineers. They did not vote for the Labour Party. Most of them voted for the Conservatives at the last election. They say that 95 per cent. of all expenditure in the civil engineering industry, which is entirely in private hands, comes from the public purse. They say that of the other 5 per cent. a fair proportion goes to private firms that are building large projects, such as petrochemical works, and receiving regional aid and other grants from the Government.

Large cuts have occurred in the capital programmes of local authorities and other public bodies. Civil engineers say that the sewerage system is on the verge of collapse, roads are not being maintained to sufficiently high standards, the water supply industry is on the verge of collapse, and the railways need massive capitalisation if they are not to cease to operate.

Civil engineers are not scaremongers. They are not trying to make political capital out of the Government's policies. They are in the private sector of industry and are having to lay off workers and create unemployment. Many thriving companies are becoming bankrupt as a result of the Government's inability to distinguish between capital and current expenditure in the public sector.

Chancellors of the Exchequer often deliberately try to confuse those of us who are not trained economists, and possibly even those who are, with many references to MLRs and PSBRs and other jargon, in the hope that we will not realise exactly what they are doing. When I listen to a Budget Statement, I try to understand how it affects my constituents and particularly the poorest among them.

There is no question but that this Budget will hit the poorest hardest. It will not hit the wealthy in our society anything like as hard. It is a class Budget, as we might expect from this Government. The Budget is aimed at the poorest in our society. The Government again seem determined to solve our economic problems at the expense of the poor rather than at the expense of the people who can afford to bear the burdens.

There is to be a 1 per cent. cut in benefits. I notice, Mr. Speaker, that you may be a beneficiary of the old-age pension in, I hope, the not-too-near future. You will, therefore, not obtain the full increase in the pension. The Government's argument is that the pension rose by more than 1 per cent. above the rate of inflation last year.

I emphasise that people receiving pensions, unemployment benefit and supplementary benefit are the poorest in our society. Their rate of inflation is higher than that of the rest of the community. Their housing is usually in the public sector. Their basics are heating, lighting and food. Rents in the public sector have risen by much more than the rate of inflation in the last 12 months. If the Government have their way, they are likely to increase even more.

Although I welcome the cut in interest rates, that means a decrease in the cost of housing in the private sector when people living in public housing have to pay massive increases. Electricity and gas charges have risen by more than the rate of inflation. People on low incomes have to purchase basic foodstuffs at the corner shop rather than at the supermarket. That is because they do not live near a supermarket and cannot afford to buy in bulk. They do not have freezers in which to store food, and sometimes they do not even have a refrigerator. Such people pay more for their food than average. To argue that they were paid 1 per cent. more than the rate of inflation last year and that therefore they should receive that much less this year is a disgrace.

A cut in income tax was probably the election promise which, in the better-off South-East and Midlands, had the largest impact and won the election for the Conservatives. Today the Government chose a back-door method to increase direct taxation. The non-implementation of the so-called Rooker-Wise amendment means that many people who were not paying income tax will go over the tax threshold and start paying tax. Even people earning higher wages will have to pay more as their income goes up and they move into higher tax brackets. The Government have not fulfilled their promise to cut direct taxes. They have increased taxes today. The people should be aware that they have increased direct taxation, despite the pledge that won them the election. At the next election, which I hope will be soon, the people should bear that in mind.

The incomes of the better-off will be safeguarded to some extent because mortgage interest rates will drop and they will have more realisable income in their pockets. The higher the income, the higher the mortgage, and therefore the better off the high income earners will be. To some extent that will relieve the effects of direct taxation being increased. Most of the poor who live in public housing will have no such advantage.

Increases have been made in the price of the basic pleasures of the poorer people. There is an increase in the price of a pint of beer. There is an increase of 14p in the price of a packet of cigarettes. When I telephoned my wife, she said that she hoped that that would make me give up smoking instead of just talking about it. I am sure that this will happen to many people. Smoking and drinking are not desirable pleasures, but for many working people and for many poor people the odd pint of beer and the odd packet of cigarettes are the only pleasure. They will now be able to afford fewer of these pleasures, if they can afford them at all.

There is, of course, the employment effect. In the constituency of my hon. Friend the Member for Glasgow, Springburn(Mr. Martin) there are tobacco factories. Some of my constituents work in those factories. They will be hard hit by the inevitable decline in the number of people who smoke cigarettes. That will create further unemployment in an area where the rate of unemployment is already far too high.

I am the first Scottish Member to speak in this Budget debate. The whisky industry pleaded with the Chancellor not to increase the price of whisky. It will be hard hit, and there will be consequent effects on unemployment in areas already hard hit by unemployment.

The rise in the price of petrol will inevitably have an inflationary effect throughout the whole economy. I accept that a small step has been taken in the Budget to deal with the anomaly of the company car, but those drivers are not the ones who are hit hardest by the increase in the price of petrol. It does not hit hard at the person who receives an allowance towards the cost of petrol from his company or from Parliament. It hits hardest at the person who tries to run his own car out of his own pocket and who drives his"banger" to and from work. I understand that 70 per cent. of people have a car and petrol provided by their companies. Those who are hit are the remaining 30 per cent. who try to run a car out of their own pocket.

The Budget is aimed at and hits the poor. It will not solve the problems of inflation. The Government should appreciate that inflation is not the only priority and the only target of economic management. Unemployment is now as great a problem as, if not a greater problem than, inflation. The Government should be tackling that problem. The Budget does nothing to solve the problem.

6.32 pm

Mr. John Stokes (Halesowen and Stourbridge)

Any fair minded person will sympathise with the Chancellor in his difficult task today. His speech was delivered with the usual urbanity, temperance and clarity that we have come to expect from him. The fact is that the United Kingdom has become a difficult nation to govern. Expectations have risen so much since the last war that some people seem never to be satisfied. This rise in material expectations does not always seem to have been accompanied by any increase in personal happiness or contentment. Indeed, judging by the strike of civil servants yesterday, which I and many other hon. Members deplore, some of those who seem to have the most comfortable and worry-free jobs in the land seem to be the most discontented. I know what the hard-pressed industrial workers in my constituency think about that strike: I agree with them.

The main failure of the Government, which they admit, has been their failure to cut public expenditure. Looking back with hindsight, the Government should have wielded the axe with extreme rigour from their first Budget in June 1979. The plain fact is that the productive effort from our factories is so low and yielding so little profit that we can barely afford, as a nation, to defend ourselves, which is vital, or to sustain the vast structure of the Welfare State which we have built over the years. The Government can claim success in cutting the rate of inflation, but they still seem to find difficulty in reducing the PSBR. It may give cause for anxiety that inflationary pressures could start again in due course.

I welcome, as, I think, do most hon. Members, the cut in MLR. I hope that some sectors of industry will now stop shouting about the high value of the pound. After all, the pound has fallen. In the end, a low pound is just as harmful as a pound that is too high. I believe that the reduction in MLR is the main help for industry in the Budget. It will help every sector of the nation's economic, commercial and industrial life, and particularly the construction industry.

I welcome the reduction in energy prices, small as they, seem. I feel, however, that the Government have got their sums wrong and that they should have another look at energy costs. I am sorry that there has been no cut in the insurance surcharge, which is another tax on industrial, manufacturing and exporting companies.

The increases in taxes on drinks and smoking were expected and do not displease me. The increase in car and lorry taxation and the increased tax on petrol will put further costs on industry and bear down still more on the hard-pressed motorist, particularly those living in country areas, who depend so much on their cars. I believe that these increases in taxation were inevitable and necessary if the Chancellor was to try to recover some revenue. The huge payments to British Steel, BL, and the National Coal Board and British Shipbuilders are a fearful loss of blood to the body politic and make the ordinary, prudent business man despair that we shall ever get the public sector right.

I believe that the only solution will be to sell off as much of these enterprises as possible to the private sector. I am disappointed that more progress has not been made in this direction.

I recognise that there probably had to be an increase in direct taxation, which is the result of no increase being made in the tax allowances. If we, as a Conservative Party, believe in incentives, as we do, I hope that, at least in the next Budget and in succeeding Budgets, we can turn once more to reducing the burden of direct taxation.

I welcome very much the various steps promised to help the small business man. What everyone awaits is the end to the world slump, which now looks as if it will come later this year than we were led to expect. What is also badly needed in this country is a mood of hope and optimism about our future as a great trading and manufacturing nation.

I welcome the increased pensions. I hope that pensioners will now realise that they are, on the whole, an exceptionally favoured class in the community.

The Government's attempt to widen their scope in borrowing is enterprising, if, perhaps, not always wholly dignified. I hope that the Government's fund-raising efforts will not come to look too much like a hire-purchase finance company that is desperate to attract deposits. Nor am I exactly delighted by the once-and-for-all tax on banks. This rather smacks of the efforts of Sir Stafford Cripps in the Labour Government after the last war. Industry, which I mainly represent, envies the banks and the life of the banks. I have, however, met very few industrialists who want this sort: of tax placed upon banks. They want the banks to do their main job—to lend to industry and to work to secure the recovery of this country.

I am not altogether happy about the additional tax that is to be placed on our great independent oil companies, on which we depend for so much.

Sometimes when we are depressed and worried we forget our virtues. We forget what a civilised country we are, what admirable institutions we have, how kind and tolerant our people are, in spite of occasional violence and picketing, what brains we have, what inventiveness, what achievements in trading and in financial services.

Our problem lies mainly in our manufacturing sector. There, still more emphasis must be placed on research and development, design, production, marketing and aftersales services. The greatest leadership is required from those in charge of our factories. An intense effort is required to pull together our nationalised industries.

Our troubles are not economic and industrial; they are spiritual. There is some strange malaise. We almost seem to doubt that we can match the products of France, Germany, the United States of America, or Japan. Yet in our heart of hearts we know that we have the skill and ability, if only we put our minds to it and are imbued, as the CBI said, with the will to win.

This change of attitude is essential if we are to succeed. There is increasing evidence of this on the shop floor and some evidence in management. It is to this task of rallying the productive capacity of the nation that the Government must turn in the coming months. This spirit must get right through from the Government and from all of us here to the family, the schools, the universities and technical colleges, to charge hands and foremen, managers and directors, schoolmasters and parsons, and all those who have influence on young people, if this country is once again to regain its industrial greatness, which, regrettably, has been in decline for more than a century.

6.41 pm

Mr. Michael McGuire (Ince)

It is a pleasure to speak after the hon. Member for Halesowen and Stourbridge (Mr. Stokes), because he always issues clarion cries. His clarion cry today was that he wants to see Britain great once again, and I think we are all in agreement with him there. Our arguments would be over the methods that are needed to bring that about.

The Chancellor of the Exchequer addressed the House for an hour and 40 minutes, and it is difficult within the short time that has elapsed for hon. Members to get a perspective of the proposals in the Budget Statement. My overall impression is that the Chancellor is just tinkering. The Minister of State Treasury, will appreciate the phrase, because in the past such phrases as"a touch on the tiller" have been used in speaking of the Budget. In this case there has been a bit of tinkering, which does nothing substantial.

I follow the line of thought expressed by my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton), who said that he judged these matters by his own experience. He asked whether the Budget would improve the lot of those who supported the Opposition—those who need help. Our policy is that the broadest backs should bear the biggest burden, and my impression is that the Budget does not go towards that desirable end.

When the present Government were in Opposition they railed against the then Labour Government about many aspects of our policy. They boasted that if they were in power they would galvanise industry, and small businesses in particular. They boasted that they would halve unemployment; all firms would be taking on a minimum of five people and possibly 10 or 20, and firms would be looking for workers. They derided our incomes policy and said that we conceded to the powerful and mighty because we had an incomes policy. They believed in free market forces. But they do not, as they have consistently proved. They have bowed to force. They have punished those who cannot offer force as an alternative. That is not good for the health of the nation, whether the Government in power are Labour or Conservative.

The Chancellor told us how badly our industrial performance compared with that of our industrial competitors. There is no doubt that we compare very unfavourably. We have suffered a 14 per cent. reduction in production. The Chancellor mentioned the textile industry. Sometimes, in short debates, we have difficulty in catching Mr. Speaker's eye. I sat all through the debate on the textile industry but I was not lucky enough to be called. Had I been called to speak, I would have referred to a topic that I hope will not be out of place in today's debate. The textile industry's wounds are not self-inflicted. The industry is suffering from the effects not of free trade but of unfair trade. It is a model industry from the point of view of capital investment and industrial relations.

The Budget will not do much, if anything, to redress the industrial decline that the nation has undergone. That decline is more severe than that which has occurred in any other country. If anyone had said in the House, 10 years ago, when the bonanza of North Sea oil was a hope rather than a certainty, that we would be self-sufficient in anything and yet have the greatest industrial decline in Western Europe, no one would have believed it.

I am not an economist, but my feeling is that we are not using wisely enough the tremendous financial resources that flow from North Sea oil revenues to resuscitate and modernise industry. Modernisation goes with a planned policy of wide training schemes for workers, who are inevitably thrown out of work by greater capital investment. We do not have that policy. The 2 per cent. cut in MLR is welcome. The Government's strategy, like that of the Labour Government, is to get down the rate of inflation.

The other week I was talking to some business men at the factory of a small, successful firm, which is still growing in spite of the difficult industrial climate, and they told me that if they were offered a 2 per cent. reduction in MLR or a 2 per cent. reduction in inflation, they would go for the reduction in inflation. They said that it would be far more beneficial to them. So I think that that will be very welcome.

I am glad that the Minister of State, to whom I referred earlier, is still here and is studying as keenly as ever the biographies of Members of Parliament who are present, perhaps hoping to be called, and I should like to draw his attention—I know that he is an expert on these things—to a letter that I have had from a local society that helps mentally handicapped children. It reads: In view of the present emphasis being given to the role of voluntary organisations, MENCA"— which is an acronym for the Society for Mentally Handicapped Children— is striving to increase income and reduce expenditure. This raises again the unfair burden which the larger, service charities incur each year through the operation of value added tax. Last year, our organisation's unrecovered VAT was £40,000. We feel that we should be treated for VAT purposes on a basis similar to local authorities, whose services in the relevant field are in many respects comparable to our own. There is little doubt that, if MENCAP is not given this financial concession, families in your constituency may suffer considerable inconvenience and even hardship. The letter urges me to recommend to the Government as strongly as I can that in the next Budget MENCAP is brought within the framework of section 15(3)(i) of the 1972 Finance Act. I hope that I have been able to convey to the hon. and learned Gentleman the need to have a look at problems of this kind.

I know that I said how difficult it was to absorb everything in the Budget Statement, but I realised that there were certain concessions in this field and for the handicapped. The purchasing of ambulances, and so on, was mentioned, and I welcome the mobility allowance increase. I have a son who is a recipient of that allowance. Indeed, I very much welcome anything that helps handicapped people in particular.

Like my hon. Friends, I cannot see that increasing the price of petrol by 20p per gallon and putting £10 on the road fund licence can be anything but inflationary and, like my hon. Friend the Member for Newport (Mr. Hughes), I agree that cars have now become a form of public transport. Punishing people like this will, I think, come back on the Government. Their non-governmental incomes policy will be under more stress and strain, and they will have bigger fights on their hands.

I look forward to the day when the vehicle licence fee is abolished. A much more sensible action would be to abolish it and increase the cost of petrol, because the bigger, more powerful cars and lorries would then appropriately bear the biggest burden and there would be no fiddling things like rating cars on their horse power, and so on. That is a dream which I hope will come true under a Labour Government—soon to come; it cannot be long delayed with the performance of hon. Gentlemen on the Government Benches.

As for income tax, like many other hon. Members I had written down a whole series of headings to help myself write down the assumed increases in—I had written down"personal; married couples' allowance; wife's allowance; age relief; and tax bands". Now I see that there is going to be no change—not even a touch on the tiller. The Government got into power, as my hon. Friend the Member for Cathcart said, on the proud but, we now know, vain boast that they were going to reduce taxation, both personal and indirect. The fact of the matter is that with the inflation that has taken place we are not even to be given a modest increase. So that was a false boast.

In the debate on the Queen's Speech I said that all the forecasts indicated that there was going to be pretty thin gruel for the people of this country in the next 12 months. I am sorry to say that that thin gruel has been watered down substantially. The Government seem hell-bent on proving the truth of the sick old joke about the operation being a marvellous success but the patient unfortunately dying. A Budget of this kind is going to help the patients to die much more quickly than they might otherwise have done.

6.55 pm

Mr. Peter Bottomley (Woolwich, West)

I thoroughly welcome the increase in child benefit. I should like to congratulate the Treasury Front Bench on its action in making sure that child benefit has gone up faster than tax allowances. Since the introduction of family allowances in the 1940s we have seen many hiccups in family incomes support. I think that hon. Members in on both sides of the House will welcome the fact that this Budget, like one or two others, has made sure that the level of income that people expect for their children has risen faster than have national average earnings during the past year.

During the past year we have seen earnings rise by between 10 and 25 per cent., depending upon the month for which the calculation is made. During the forthcoming year we can expect earnings to rise by less than 10 per cent.—they certainly need to—but to have what will be a 10 per cent. increase in child benefit is right. It helps to make a low level of earnings increase more acceptable to families who are caring for children. I think that it is important to emphasise that we need to get the average level of pay settlements down substantially more than we have so far. Child benefit is the only way to step in to help those families who have child dependants and who are at work.

During what is necessarily a short speech, I bow to the judgment of the Goverment on the question of reducing the PSBR. I happen to believe that it is fairly easy to finance a higher level of PSBR on the expectation of falling interest rates, but I think that the study that they have given us should perhaps take precedence over my own possible preference. I would say to the House and to the country that, given a target figure for the PSBR, it is possible during the year for the country as a whole to affect the outcome on earnings and the outcome on prices. Given a target level, especially in cash terms, which the Chancellor has introduced to us today, I believe that we ought to be able to get the rate of inflation down below the 10 per cent. that is expected for November—a 10 per cent. which, presumably, includes 2 per cent. provision for the indirect tax and Excise duty increases in the Budget—and to aim to have by this time next year a rate of inflation that is down below 5 per cent. That would be compatible with average pay increases of below 5 per cent. If we can get average pay increases at, say, 3 per cent. by this time next year, the demand effects of the Budget will be different from what they will appear to be if the average level of pay increases over the next 12 months is 7 or 10 per cent.

I do not believe that it is possible, with a TUC that is committed against an incomes policy, a Labour Party conference that is committed against an incomes policy and a Tory Government who are committed against an incomes policy, to achieve the kind of low level of average pay increases which we all know is necessary unless we all talk about it far more. So, my final point to the Treasury Front Bench is this: do not just come along at Budget time and say that because of the aggregate behaviour of people in the economy we cannot raise tax allowances or other things. Do say, a year in advance, that if we can get a certain level of price increases, or a certain level of pay increases, or a certain achievement on the PSBR, or whatever the targets may be, we will provide certain rewards; we shall be able to afford to do more for the elderly, or children, or various projects. I believe that only by doing that is it possible for the Government to get the co-operation of most of the people in the country, for most of the time, during the year that matters.

On those grounds I give my general support to what the Chancellor has announced and I repeat that child benefit is valuable and that what has happened on child benefit is good. Let us hope that we get some more next year.

Debate adjourned.—[Mr. Thompson.]

Debate to be resumed tomorrow.

British Railways (No. 2) Bill (By Order)

Order for Second Reading read.

7 pm

Mr. Patrick McNair-Wilson (New Forest)

I beg to move, That the Bill be now read a Second time.

The Bill is one of a long line of general powers Bills that have come before the House promoted by British Railways. On this occasion it is a somewhat smaller document than usual. A number of matters are in contention, and I shall refer to them in a moment.

I wish to follow precedent and say a word or two about the general position of the railways. The railway system in Britain is undergoing an important and encouraging transformation. It is interesting to note that we are once again hearing talk about building a Channel tunnel. I am delighted to welcome the Under-Secretary of State for Transport to our deliberations. The Government are considering British Rail's plan for electrification. The Budget suggests that personal transport by car will become more expensive, so surely rail travel will be an even better deal than in the past. The plan to electrify, as nearly completely as possible, the railway track in Britain should be given a fair wind. If 80 per cent. of passenger trains and 70 per cent. of freight-carrying trains were electrified, about 120 million gallons of oil would be saved each year. That is no mean feat for a country which, with the remainder of the Western world, must be careful about its energy resources. When the Government examine this plan, I hope that they will draw a distinction between investment in that project and money to prop up industries in financial trouble. This plan is investment for the future.

The Bill covers a number of aspects of the rail network. The contentious items are largely contained in clause 5, which provides the British Railways Board with powers to undertake certain works. A number of my hon. Friends expressed concern about some of them. I shall try now to satisfy their need for explanation. With your permission, Mr. Deputy Speaker, and that of the House, I shall ask to be allowed to speak again, if necessary, to reply to any further points that may be raised.

Work No. 1 relates to the establishment of a link railway between the Tilbury-Barking line and the Thames Nitrogen Company Limited. That company is a fertiliser manufacturer, and the feed stock for its operation is ammonia. Currently the ammonia is delivered to the company's premises by road, and about 150 tonnes are moved each week. Because of the rigorous and proper safety requirements for moving such a product, only about 17 tonnes can be moved on each journey. The whole process requires a substantial fleet of road vehicles. The company, quite reasonably, has asked to be linked to its suppliers by rail. The British Railways Board has always been anxious to encourage customers to have rail links wherever appropriate, as it is in this case. The proposal should be welcomed from a safety aspect and it has a good deal to commend it. From a cost-effectiveness aspect, for the reasons I gave about road transport and in the light of the proposals in the Chancellor's speech, such a link would make good business sense.

I recognise that there is a slight dilemma because the Department of Transport is considering a route for the A13. If the Under-Secretary intervenes in the debate, he may wish to comment on that position. It is the board's contention that its plan for a link railway should remain part of the Bill until a final commitment has been made about the route of the A13, because it appears that its plan enjoys the support of the House.

Work No. 2 relates to the deviation of the LutonDunstable branch freight line to provide land for the construction of a road for Bedfordshire county council. There is no argument about that new road being urgently required. The problem is that the land required is currently leased to the Luton Town Football and Athletic Company Limited, usually known as the Luton football club. It has leased that land from British Rail since 1973. The club itself has been in existence since 1885. Some of the land in question will be required for the project. The club is concerned about the effect that the removal of that land will have on its ability to remain a viable commercial enterprise. British Railways have indicated that they are anxious, whenever possible, to provide alternative land—for example, for car parking. They have made a clear proposition about the alteration to, and the movement of, the Kenilworth suite—a suite of directors' facilities and other facilities—so that it can remain, albeit in a slightly altered position.

My hon. Friend the Member for Luton, West (Mr. Carlisle) is concerned about that matter, and has tabled a blocking motion against the Bill. I assure him that, as he well knows, there is no question but that the relief road is required, that this is the preferred line of route and that the facilities that British Railways are anxious to discuss with the club should meet most of the objections. I realise that there is talk about the programme for the development of the road slipping back from 1983–84 to 1985. That might provide a temptation to omit this section from the Bill. The inclusion of that future work in the provisions of the Bill would provide greater time for the club and all interested parties to arrive at a more appropriate and sensible solution than if the works were carried out earlier. Therefore, I hope that that argument will not be used to have this provision removed from the Bill.

Mr. John Carlisle (Luton, West)

It seems that my hon. Friend feels that if the Bill goes into Committee in its present form there will be a time advantage. As I and the Luton Town football club understand it, there would be about two months between Second Reading and Committee. Much will depend on Mr. Speaker's programme. I fail to understand how that timing can be of any advantage to the various discussions that are bound to take place between the interested parties.

Mr. McNair-Wilson

I am grateful to my hon. Friend, because he has made the point to which I was about to turn. There will be ample opportunity to discuss these matters when the Bill goes to the Examiners. I accept that delay on the part of the county council in implementing this part of the programme could lead one to hope that British Rail would no longer want the branch line. I cannot give my hon. Friend any such assurance. British Rail is determined that the line should remain. It is an important freight link.

I accept my hon. Friend's argument that the postponement of the facility will not alter the need to make the changes to which I have referred. However, I hope that my hon. Friend will not feel that the postponement of implementing the plan could lead to British Rail dropping its requirement for the line. I hope that my hon. Friend will allow the Bill to go into Committee, when the issues that he and his friends have properly brought forward can be fully discussed. I hope that a happy solution will be found. I have no doubt that my hon. Friend, if he is fortunate enough to catch your eye, Mr. Deputy Speaker, will raise these issues.

The remainder of the Bill is largely non-contentious. However, there are two matters to which I shall refer, as I consider them to be of significance. Clause 8 deals with the stopping up or diversion of roads or footpaths at certain specific locations. There is one such stopping-up or diversion that has caused the Ramblers Association some concern, namely, that at Steventon. The proposal raises a wider issue of which I hope my hon. and learned Friend will take note.

British Rail is using much higher line speeds. Many of the existing footpaths that cross railway lines are very dangerous. Although the Ramblers Association would like to continue to use the footpath at Steventon, it is crossing a main line on which trains are travelling at 125 mph in one direction and at 85 mph in the other direction. It might be all right for an alert person to use the crossing. However, it is necessary to climb a bank to get on to the track. Bearing in mind the high line speeds, surely a much more general power is required to be taken by the Government on access to the track. At Steventon there is a perfectly normal crossing about 126 metres beyond the footpath.

As most of the crossings date back to when the railway system was rather different from what it is today, there is an argument for considering the possibility of more general powers being taken on a future occasion. Perhaps it is sad that such powers are not contained in the current Transport Bill. Nevertheless, powers should be taken to ensure that we put the safety of those on foot high on our list of priorities.

The proposals set out in Works Nos. 5,6,7 and 8 relate to Wales. I think that they will be accepted without argument. They deal with coal trains being able to use a line without modifications to the locomotives. In common with so many other parts of the railway system, modernisation has to be introduced. The cabs of the locomotives are having to be cut down. Gearboxes are failing. Some trains need three locomotives to climb a steep gradient. These works can be taken together. They will benefit the part of South Wales near the Barry estuary and Kidwelly where the works are to take place.

Part V relates to the Sealink train ferry and the need to establish a new terminal. New large ferries are being used on the Harwich-Zeebrugge route. There is no objection to the plans that are contained in part V for those works.

Clauses 51 and 52 are of significance and importance. Clause 51 is basically a tidying-up measure. It extends the powers of search and arrest for British Rail constables, who normally have their powers extended periodically and who have been given such extensions since 1949. The clause proposes an extension to 1985. I hope that the provisions in clause 52 will be welcomed. They raise to a much more realistic figure the fines that can be imposed upon those who contravene the bylaws, especially those that relate to the taking of alcohol on to trains. Many of our constituents are concerned about the vandalism that is committed on trains and about all the other problems with which hon. Members are familiar. It is at least sensible to provide that the fines should be increased to a realistic level. I hope that the clause will find the approval of the House.

As I have said, the Bill is a fairly modest document. I hope that the sections that are causing hon. Members concern can be dealt with in Committee if not on Second Reading. Each one of these Bills is a form of building brick in establishing a modern, effective and efficient railway system. I hope that the House will give the Bill a Second Reading.

7.17 pm

Mr. Robin Squire (Hornchurch)

I begin by congratulating my hon. Friend the Member for New Forest (Mr. McNair-Wilson) on the lucid and calm way in which he presented the Bill, which made it easy to understand. It may make it more strange to those listening to our proceedings if I now seek to suggest that at least one aspect of the Bill represents perhaps the most contentious and controversial constituency issue that I hope to face during the lifetime of this Parliament. I refer to the Rainham link and the proposal of the Thames Nitrogen Company Limited.

Several of my constituents are opposed to any extension of chemical works and all the predictable consequences. I do not share that view. The company is experienced. It has been handling ammonia and other similarly dangerous materials for a considerable time. I accept that it must make more sense for the loads to be shifted by rail by night on fewer journeys than for the journeys to take place not only by day but all the way from Avonmouth to the East End of London and beyond. Many more journeys take place than are envisaged should the link be constructed.

I am sure that my hon. and learned Friend the Undersecretary of State will be the first to confirm that the hottest issue in my constituency is the possible re-routeing of the A13 trunk road. So hot is the issue that in December 1979 I led a deputation from virtually every political party within the constituency. It made representations for the future line of the route to be across the marshes. That route would prevent Rainham village from being bisected by a large trunk road and would have the beneficial effect of opening up the marshes for industrial development. The area is well sited for such development. I shall not seek to go through all the arguments in favour of that in the context of the Bill, because I am sure that if I did so, Mr. Deputy Speaker, you would suggest that I was dangerously near to being out of order.

It must be obvious that the possible re-routeing of the road is a critical potential development. I venture to suggest that it has more effect on most of my constituents than will any item announced in the earlier business this afternoon. They have been waiting for that development for some time. In those circumstances, my constituents and the local authority, which is also petitioning against the Bill on those grounds, insist that the possible line of the A13 should be preserved unless and until there is an announcement from the Department of Transport about its decision on that road. My constituents will be bitterly disappointed if the announcement from my hon. and learned Friend is not in favour of re-routeing. They would be homicidal if that decision were taken away from them and they were advised at the end of the day that, because of a clause in the Bill the option for that re-routeing was no longer open. That is strongly felt in my constituency.

I shall not try to divide the House on the Bill, because I am sure that during the quasi-judicial stage that will follow this one—assuming that the Bill receives the assent of the House—wise counsel will prevail and that concern will be looked after. If it is not, I shall seek to oppose the Bill by whatever means are at my disposal when it returns. to the Chamber. As it is now drawn, without the safeguard being specifically stated, it will be injurious to my constituency. I should have to oppose it in this form.

7.23 pm

Mr. John Carlisle (Luton, West)

If I may seek to follow what my hon. Friend the Member for New Forest (Mr. McNair-Wilson) said, I wish to speak on work No. 2 of our statement, which is of direct consequence to my constituents and my constituency. It refers to the diversion of the present railway line that will be constructed because of the intended new construction of a road between Luton and Dunstable. I wish to speak with particular reference to the effect which that road will have upon the Luton Town football club.

Perhaps I may crave a small indulgence of the House to put right one or two objections which have been made to me by my constituents. One of the local minority political parties has been putting it about that I objected to the Bill by the mechanism of using the block. My reason for objecting was that I wished to obtain a Second Reading on the Floor of the House so that this important matter could be discussed.

Three major parties are interested in this section of the Bill—the Bedfordshire county council, which wishes to construct the road, British Rail, which is concerned with the deviation of the line, and the Luton Town football club. Other companies in my constituency are affected, such as Laporte industries, which is a fairly large chemical group. A shop, a cold store and some minor agricultural interests would be affected by the provision of that road.

Throughout the planning negotiations between the council and the various county halls and town halls, no objections have been made to the provision of that road, which, as my hon. Friend said, is of great importance to the constituency. I have had no individual constituency objection to the road, which is quite unusual when one bears in mind that the road is of considerable length and would affect residents on either side. It would mean the demolition of a small number of houses.

The joy of the route itself is that the road is an obvious road. It would be of great environmental advantage as well as being of advantage to the traffic in that part of the town. I am heartened to see that the county council proposals take full account of the landscaping of the road and of the trees and hedgerows around it.

There is no doubt that the road is needed for the town and for the county. At today's prices, it will cost about £8 million, which in today's stringent times is the yearly allocation of the county council on its road system. It is an integral part of the link roads of the inner road system which is nearly constructed, which will take much traffic away from the centre of the town and relieve the second busiest road in the county, bearing in mind that the busiest road in Bedfordshire is the Ml. Therefore, there is an obvious and ready need for the road. Most people in the county will welcome it.

The road will be a great link between Luton and Dunstable for various industries. It will be a link towards the Ml and to our flourishing airport in that part of the town. Our greatest industry and employer in Luton is Vauxhall Motors, which is probably licking its wounds at the increase by 20p of petrol tax. The road will be of great advantage to that company when it is completed, because it links two of its factories. Many local businesses have told me of the advantage that the road will be to them for the carrying of goods. There is no doubt that that road is high in the priority of budgets in the Bedfordshire county council, although it may have to be postponed for a couple of years.

As the road is to follow the line of the railway, the railway was an obvious candidate for closure. It would have been convenient and easy to close the line if British Rail had agreed that the line was not viable and that it could be closed. I would not have made any objections and there would have been no objectors from the Luton Town football club. However, that is not to be. The constant representations made to the Minister and to the county council, and on my part to the various bodies and to the British Railways Board, have proved without any shadow of doubt the line is an essential link.

I have received a letter from the British Railways Board in which it says that the line carries a significant annual tonnage of cement as well as a small amount of oil. It is a freight-only line and is fairly regularly used, but, according to the answers given to me by the British Railways Board, with which I am satisfied, the line is carrying what it describes as some of the most profitable type of traffic. When forms of communication and transport are expensive and highly subsidised, it is good to see that one little line somewhere is making a profit. I was worried that the original contention of British Railways was that the line would be open, in their eyes, only for the foreseeable future. However, on 5 March I was given the assurance that they intend to: retain the line in the long term. If that is so, I do not see any point in making an objection to the line remaining open. In recommending to the House that there might be a delay on this section of the Bill, in no sense did I think that the line would be closed. It is of environmental advantage to keep a railway line open. It is an advantage to those who are employed on the line. A union representation has been made to me about that. I am satisfied that that line is a viable concern. I add one rider: if within the next few years the line is closed by British Rail, there will be a lot of egg on a lot of faces.

As the scheme put forward by the Befordshire county council came into being, the normal planning procedure was followed. I shall not detain the House with the exact dates. Suffice it to say that the county council gave itself planning permission to plan for the road. An exhibition was held in the surrounding areas to acquaint the public with what was happening. At the end of the day, the whole question of the road could be subject to a public inquiry. Meetings have been held with interested parties, not least the Luton Town football club, which started its meetings with the county council on 30 May. It had one or two preliminary discussions in May or June with officials and councillors. I am somewhat perplexed that some of the meetings seemed to be nothing more than discussions and not many concrete suggestions came out of them. That is possibly why at this rather late hour there is anxiety that the subject has not had a full airing between the principal parties. Architects have swapped notes: no more than that.

From the start, the football club showed its great anxiety about the issues and the whole viability of the club. That is apparent throughout the discussions between the football club and the county council. The objections have almost grown stronger as time has gone on.

The turn of the year was the first time that any real alteration of the club was recommended by the county council. It is sad that it took that long for alterations to be suggested. They are now in the hands of the club's lawyers. There are plans afoot for an alternative that at this stage seems worthy of discussion, but, unfortunately, there is no test with the plans. More time is needed for discussions between the interested parties. It would be unhealthy to rush the matter. We are talking of a large investment on both sides and a change that will radically alter the viability of the football club.

Mr. Robert Atkins (Preston, North)

I fought the Luton constituency with considerably less success than my hon. Friend. I have visited the football club on many occasions, with varying degrees of success, in the company of Preston North End. Is he satisfied that if the Bill is enacted it will not threaten the existence of the club? Am I right in thinking that the Kenilworth suite may be lost? What provisions are being made to replace it?

Mr. Carlisle

I shall deal with that. My hon. Friend is right to point out that the proposals will have serious consequences for the club. I support the club's contentions, although it has been accused of scaremongering. The objections should be thrashed out. It was good to see my hon. Friend at the club not many weeks ago. Needless to say, we beat his side out of sight.

As my hon. Friend the Member for New Forest said, the club was formed in 1885. It is one of the oldest in the land. It came into the Football League in 1920. It has been playing football at Kenilworth Road since 1905. It is a fairly typical Midlands football ground, surrounded by small terraced houses. It is crammed in, close to the centre of the town. It is a homely place, where fine football is played. [Interruption.] The hon. Member for Holborn and St. Pancras, South (Mr. Dobson) is welcome to visit the ground. It enjoys wide support from the surrounding areas. People come from many miles around, not only in Bedfordshire, but from Hertfordshire, Buckinghamshire and London. The club is affectionately known as the"Hatters". It can boast such personalities as Eric Morecambe, who was a director. He is still a regular supporter. Some hon. Members may remember Joe Payne, who scored 10 goals against Bristol Rovers just before the war, which put the town on the map. It is a dynamic club, with an enthusiastic board of directors, keen and willing to invest in the club. It is run by an enthusiastic chief executive, John Smith, who has done much for the club over the past few years.

It is important to emphasise to the House how much that prestigious club will be affected by the proposals. The club is not only used for football: it is used for other purposes during the week and at weekends. The club plays an active part in the life of the town. It encourages young supporters. Under a recent scheme, players are helping the unemployed. We are talking not only of a stadium of four walls, stands and terraces but of the life and soul of that part of Bedfordshire. It is the only league club in Bedfordshire, and its viability may be threatened by the Bill.

The club has a freehold on the stadium. As my hon. Friend the Member for New Forest mentioned, it also has property leased from British Rail, which will be directly affected. One tragedy is that the Kenilworth suite may be demolished. It is provided for the use of directors and the vice-president. It is a prestigious and money-raising part of the club People pay substantial sums annually to be members. It is imperative for the club to have such provision to entertain the many important guests who come to watch the game, such as my hon. Friend the Member for Preston, North (Mr. Atkins). The surroundings are particularly amenable. The suite brings a good financial return to the club. In the cramped accommodation of the club, nowhere else could be found for the purpose. I should be sorry to see that great asset to the club disappear.

The deviation of the line would also mean the loss of an all-weather pitch. Some years ago, through the initiative of the right hon. Member for Birmingham, Small Heath (Mr. Howell), the Sports Council put money into all-weather pitches and other facilities throughout the country. The pitch is well used. In a high density residential area it is used a great deal by the local youth. The borough council, too, takes an interest in the pitch. Its loss would also be a tragedy for schools and other parties that play on it. The club contends that there is no alternative site of comparable facility. No other site can compare with that large site.

To deprive that area of the town and the community of that facility would be a tragedy. It is a facility which enhances the standing of the club. It shows that the club itself is very interested not only in its professionals but in young amateur players. It is an essential part of the training and recruitment of young players in the area and its loss will be sadly felt by many of my constituents.

The Bill would create a major problem in that it would abolish, literally overnight, the coach parking facility which is so important nowadays at football clubs. It would not be right for me to expound on the horrors of the violence and vandalism which, regrettably, occur at football grounds all over the land, but the town club has done as much as it can to keep rival supporters apart. To do that a coach park near the ground is needed. The railway line would go virtually through the middle of the present coach park which is an essential part of the ground in these days of rising soccer violence.

However sad it may seem, it is imperative that visiting supporters be segregated from home supporters. On big match days, up to 60 coaches may need to be accommodated at the Luton ground. If the coach park disappeared, the effects would be horrifying. I am sure that there would be objections from the police and, not least, from my constituents. My constituents have to put up with a great deal of abuse and they suffer great inconvenience on Saturdays—possibly even on Sundays now—from visiting supporters and also, regrettably, from our own supporters. They are long-suffering and patient people. If coaches had to be parked some distance away, so that visiting supporters had to come to the ground through the small streets surrounding it, there would certainly be trouble, and we in Parliament would have a great deal to answer for.

The other section of parking space that would be lost is the VIPs' and supporters' car parking area. Due to considerations of space, there is no alternative to the line going through the middle of that car park. None of the alternatives recently proposed makes provision for car parking on the scale that the club at present has.

The club is extremely concerned about the safety aspect. This is one of the most serious effects of the Bill. If the Bill goes through as drafted, and if any alterations are made to the ground, the capacity of the ground would be reduced. Its present capacity is about 25,000. The House will be aware of the strictures now imposed upon clubs with regard to safety, and rightly so. Here I pay tribute once again to the right hon. Member for Small Heath who did a great deal of work on this matter some years ago when he was in office. With more than 20,000 people going into the ground, it is only right that we in Parliament, as legislators, and responsible bodies such as football clubs are as safety conscious as possible. One vital aspect of safety is that there be quick access should there be any problems and also at the end of the match when people are anxious to get home.

The provisions of the Bill would virtually seal off one side of the ground. The Home Office green code, as it is called, includes a whole list—I shall not read them out—of provisions which have to be made by clubs to ensure the safety of crowds entering and leaving the ground and to make certain that all entries and exits are smooth and uninterrupted.

This is an important aspect of the Bill. If the railway and the road went through as planned, they would virtually cut off one side of the ground and present enormous problems. Luton Town football club spent about £300,000 last summer on improving its ground and terraces by the provision of separate walkways or cages which, call them what one will and however sad one finds the sight, are an essential part of the ground these days.

The last feature that will be affected is the provision of a segregated walkway which was proposed by the club but for which permission was refused by the county council during the summer. That segregated walkway would have taken rival supporters straight out of the ground and into their coaches without their having to come into contact with any home supporters at all. That was an essential part of the town's legal obligation, of the smooth running of the club and the smooth withdrawal of supporters from the ground. Permission was rejected by the county council on the ground that as this new scheme was to be introduced it would clearly prejudice any decision. It therefore did not wish to let the club go ahead and build the walkway.

That was probably an understandable decision in the circumstances, but it emphasised the need that the club feels for such a walkway. It is essential that any alternative proposals put forward, whether by the county council or by any other body, should include such a segregated walkway. Even when it is built, there will be further problems with the provision of turnstiles, and so on. Anything that the club can do to ban any kind of hooliganism or violence on the terraces and to prevent any problems must certainly be taken into account in relation to the Bill.

Various alternatives have been put forward by various people to meet the changes that will inevitably be made because it is intended to move the railway line. There is a history to this matter in Luton. Various sites have been suggested—from Milton Keynes to Watford—to which the club might move, away from the centre of the town. None, however, has come to fruition, and I believe that the club itself is anxious to stay on the site that has been its home for so many years. At this moment, a small working party from Luton borough council, South Bedfordshire council and Bedfordshire county council is searching for and discussing the possibility of a new site. A new site today, however, would probably cost about £10 million and would depend very much on the prospects of the club. The club, of course, hopes to get into the First Division next year. It is a very go-ahead club. Nevertheless, the alternative of a new ground is probably too remote and too expensive to be envisaged.

The other alternative put forward, only very recently in real terms, by the county council was for certain building alterations and alternatives which give me some hope that a solution will be found to this terrible problem. The county council has put forward various proposals, but they still need discussion. They need to be thrashed out between the various architects and other persons concerned. I very much hope that whatever happens to the Bill fuller discussions will take place between the parties, because the alternatives that I have seen seem to offer some small relief for the club and I believe that they must be pursued.

Time is of the essence, and time is running out. Here I must take issue to some extent with my hon. Friend the Member for New Forest. If the Bill receives a Second Reading tonight, it will then pass into Committee. At that stage, as my hon. Friend knows, the arguments are put by the various members of the Committee. I suggest that a great deal of time and money could be saved if some delay were imposed upon this particular part of the Bill by British Rail, with the mutual consent of Bedfordshire county council and the football ground. I hesitate to suggest that there may possibly be some abuse of the House if the club has only two months to lay its plans and to undertake full discussions of the new alternatives, which appear reasonably encouraging, before the Bill goes into Committee. Nevertheless, it might be that, as a result of the representations made in Committee on behalf of the various parties, the Bill itself could be delayed even further. Throughout the whole of this rather sorry business there has been a certain lack of communication between the various parties. It is not for me to lay the blame at any particular door.

I am sorry that it has taken literally until tonight before plans have been laid. The two sides are now talking about getting together. But even at this stage we should not rush it. There is no need for this unhealthy hurry.

The Budget proposals have now pushed the building of the road back until 1985. I want it put on record that there is no way in which I would wish to delay the provision of that road because I appreciate its full importance. At the same time, the representations of the main objector—the Luton Town football club—must be heard. It needs time to consider the new proposals, and the county council needs time to make sure that nothing is rushed through.

If this section of the Bill were withdrawn, and if discussions were to take place between the various parties during the summer, we could possibly come back on 27 November with all the arrangements settled and even with the compensation agreed. I feel strongly about the fact that the matter has been rushed during the last few weeks. It would be a tragedy if a great institution such as the Luton Town football club were to suffer great financial hardship, not to mention the hardship to the town, if the Bill were to go forward. I plead with my hon. and learned Friend to make some recommendation so that a delay occurs in relation to this part of the Bill.

7.51 pm

Mr. Frank Dobson (Holborn and St. Pancras, South)

I want to speak on two aspects of the Bill—the whole of part V, which relates to works around and about Parkeston Quay, and clauses 51 and 52 of part VI, which relates to the strengthening and extending of powers to control various unwelcome activities on the railways.

I deal first with Parkeston Quay. I should point out its importance to existing railway and Sealink operations. I can do no better than"half-quote" what the Secretary of State for Transport said in Standing Committee E, which is considering the Transport Bill. The main shipping services using Parkeston Quay are Sealink's multi-purpose service to the Hook of Holland, which carries passenger cars and roll-on roll-off freight, and similar services run by Danish and German companies.

A container service to Zeebrugge is run by Sealink under contract to what in Hansard is called the"Bristol Railways Board", but I assume that that should be the British Railways Board. That service mainly carries rail-borne containers. There are plans to build a new train ferry berth at Parkeston Quay. At present Parkeston Quay handles 40,000 train ferry wagons a year, and it caters for an enormous number of passengers, both rail passengers and people going across on car ferries. It is an important land terminus of the railway system as well as an important connection with the Continent.

For that reason I have paid close attention to the provisions of the Bill, and also to the statement on behalf of the promoters in support of its Second Reading. Paragraph 11 of that statement reads: Part V would confer powers on the Board and on Sealink UK Limited, a wholly-owned subsidiary of the Board, to construct a new train ferry terminal at Parkeston Quay for the Board and an extension of a quay to provide improved facilities for general cargo handling by Sealink". That is the truth, but it is only part of the truth. It is true, as of now, that Sealink is a wholly owned subsidiary of the British Railways Board, but once the Transport Bill becomes law Sealink UK Limited will not be a wholly owned subsidiary of the British Railways Board. It will be sold to the private sector.

In selling Sealink to the private sector, it is a vital part of the Government's case that, although British Railways may retain a shareholding in Sealink, effective control of Sealink must pass to the private sector. That is a vital part of the Government's argument for that piece of denationalisation.

In those circumstances, all the powers and duties granted either to the British Railways Board or its present publicly owned subsidiary, Sealink UK Limited, will pass out of the public sector into the private sector. It is important that the House should consider that change.

Among other things, clause 34 provides compulsory purchase powers for Britih Railways or Sealink UK Limited. In addition, unless the Under-Secretary tells us differently—I do not think that he will—it also means that those compulsory purchase powers will pass to the private owners of Sealink, or, more particularly, to its subsidiary harbour company, once Sealink is denationalised.

I know that hon. Members are not present in their legions this evening, but, generally speaking, hon. Members on both sides of the House have considerable doubts about the exercise of compulsory purchase powers, even by public bodies that are subject to forms of parliamentary restraint and to public pressure by Members of Parliament and others. Even greater doubts exist among Conservative Members about compulsory purchase powers being exercised by private companies that are responsible to no one other than their private shareholders. It is one thing for the House to say"We agree to British Railways, owned by the public and to some extent subject to parliamentary jurisdiction, having the powers of compulsory purchase"; it is an altogether different kettle of fish for it to say that a private company should exercise those self-same powers.

If the Bill gets its Second Reading tonight there will be an obligation on those hon. Members who serve on the Committee to scrutinise closely any compulsory purchase powers which, as a result of the Bill in combination with the Transport Bill, may be transferred to private companies.

I do not want to mislead the House on this matter. I am not at all clear about what happened in the Committee that considered the Felixstowe Dock and Railway (No. 2) Bill. I understand that when the Committee considered the desire of the privately owned Felixstowe Dock and Railway Company to be given compulsory powers under that measure it decided to abate and reduce the compulsory purchase powers that the company sought. Therefore, it is wholly appropriate that the Committee should consider the reasoning and logic behind the decision that was made last year before it considers the proposals that will affect Parkeston Quay.

I am forced to conclude that still greater scrutiny will be required if the House is to do its job properly. Clause 32(b) sets out the interpretation of part V. It states: 'the company' means Sealink UK Limited". If those who can be bothered to do so will turn to clause 39 they will see that it is in a sense another interpretation clause. It states: 'the Board' includes any subsidiary of the Board". That is a reference to the British Rail Board. It also states: 'the company' includes any subsidiary of the company". I understand that it would be possible not only for the privately owned Sealink UK Limited to exercise compulsory purchase powers in the coming year, but for it to allow a subsidiary to exercise such powers. The Under-Secretary seems to be shaking his head. I hope that he is better advised than I am. However, it seems possible that that might be so. A subsidiary of Sealink UK Limited could exercise the powers of the main company.

If any hon. Members are doubtful about a named private company exercising compulsory purchase powers, they will be even more perturbed by the possibility—I put it no higher than that—of an unnamed and as yet unformed subsidiary of that private company exercising such powers.

The Under-Secretary of State for Transport (Mr. Kenneth Clarke)

This is not my Bill, and therefore I intervene as a helpful bystander. I understand that the provisions in clause 39 to which the hon. Gentleman objects refer only to"this section", which means clause 39. Therefore,"the company" includes subsidiaries only for the purpose of any agreements entered into between the British Rail Board and the company. The compulsory purchase powers and the powers to construct any works seem to me—I have been reading the Bill as the hon. Gentleman has taken us through it—to be confined to Sealink UK Limited by clause 32.

Mr. Dobson

The hon. and learned Gentleman used to earn his living as a lawyer before he sat on the Government Front Bench. I am always loth to dispute matters with lawyers. I shall get no fee for quoting from clause 39(4), which states: As from the vesting in the Board or the company, —that is Sealink UK Limited— as the case may be, of the works transferred under an agreement made … all the rights and liabilities of the transferor in respect of the works or any part thereof so transferred and vested as aforesaid shall be transferred to, and become the rights and liabilities of, the transferee. When members of the Committee consider the Bill in detail, they will probably discover that the rights that will be given to the board or to Sealink UK Limited can be transferred to an unnamed and as yet unestablished subsidiary of the company. Again, clause 39 states: 'the company' includes any subsidiary of the company". I am not asserting that that is definitely so. However, there is good reason to consider carefully that aspect of the Bill.

Having raised such doubts, I hope that, at worst, the Committee will see fit to scrutinise closely part V. At best, I hope that it will limit any compulsory purchase powers as long as those bodies remain in the public sector. Modern, compulsory purchase law was basically established in the nineteenth century. Parliament gave compulsory purchase powers to private railway companies so that they could buy land all over the country, but it did so knowing that those companies were privately owned. Therefore, it did so knowingly and deliberately.

In addition, Parliament knew what it was talking about and it knew the sorts of works that were envisaged. In many cases it placed severe limitations on the powers of compulsory purchase and laid down the periods of time in which they had to be exercised. If those powers were not exercised within a limited period, they were lost. Those elements were deliberately built into the law of compulsory purchase in order to protect the rights of both individuals and companies whose property was close to, or in the way of, a railway company's proposed lines.

Proper restraints were applied. The Bill does not impose proper restraints. Until now Parliament had not realised that it was conferring compulsory purchase powers on a body that was likely to become a private, rather than a public, sector undertaking. Once the company becomes a private undertaking, it becomes a different outfit. It is not subject to the restraints that apply to the public sector. Therefore, in Committee the Bill should be considered carefully. Perhaps it should be amended to ensure that it will look after the interests of those in the Parkeston Quay area who might, at a later stage, be affected by the exercise of compulsory purchase powers by a private company that is acting in the interests of its shareholders. We are constantly told that the object of private companies is to further the interests of their shareholders. The interests of that private company's shareholders may be wildly at variance with the interests of individuals. Therefore, we should look at this subject carefully.

Clause 51 refers to extending the powers of search and arrest of the British Transport police. It is not the powers that are being extended, but the period of time. I was surprised to discover that British Rail's ability to empower some of its staff to carry out search and arrest operations on its premises and vehicles needed to be extended. Before I read the Bill I had assumed that that was a permanent part of railway legislation. However, we need such an extension, and I am sure that all hon. Members will welcome it.

Similarly, we shall all welcome an increase in the maximum penalty, from £50 to £200, for offences against the bylaws. The prospect of being fined £50 acts as only a slight deterrent to many of those who cause damage or who act violently both on railway stations and on trains. As a Member who is sponsored by the NUR, I reiterate my union's concern aboout the amount of violence that has taken place on the public transport system. It is not as bad, generally speaking, on the rest of the public transport railway system as it is on London Transport. Nevertheless, far too many men and women who work for the railways are getting abused, kicked and beaten up while going about their ordinary business of trying to provide a decent service for the rest of us. Anything that can be done to protect them is welcome.

Even in that respect I have to refer back to Parkeston Quay, because it is intended in the Transport Bill to extend the powers of the British Transport police to the policing by this public body of the holdings of the privately owned Sealink company. Again I am forced to draw attention to what I regard as a shortcoming in the statement that was submitted on behalf of the promoters. In paragraph 11 it says: Other clauses commonly found in such provisions … are included in the Bill. But it is not common for the House to be expected to extend the powers of a public sector police force and increase the fines that may be imposed as a result of the activities of that public sector police force if that force is policing, as there is every prospect that it will, the property of a private company.

The promoters of the Bill should have drawn to the attention of the House, and should draw to the attention of the Committee, the fact that the extensions of policing powers that exist in parallel legislation—for which, admittedly, the promoters are not responsible, but of which they are well aware—will apply to the private sector Sealink company if that is what Sealink and the board wish. There is that shortcoming in the promoters' statement.

I welcome clauses 51 and 52. I hope that the Committee will carefully consider the provisions that relate to Parkeston Quay, and possibly seek to limit the exercise of compulsory purchase powers by the Sealink company once it is privately owned.

8.12 pm

Mr. D. N. Campbell-Savours (Workington)

My hon. Friend the Member for Holborn and St. Pancras, South (Mr. Dobson) raised an interesting topic. When he drew it to my attention, I did some homework to discover what happened about the compulsory purchase provisions in the Bill. I went to the Private Bill Office to obtain the report of the evidence-taking stage of the Felixstowe Dock and Railway Bill (No. 2), a Private Bill that was considered in Committee last year. It concerned the application by the Felixstowe Dock and Railway Company to introduce changes in the area of Felixstowe to its asset, namely, the Felixstowe dock. The Committee was required to take evidence from local petitioners who objected to the development and the considerable powers that were being given to the company.

During my investigation in the Private Bill Office, I found the statement made by Mr. Drinkwater, the barrister representing the company when the evidence was taken. I shall read the short evidence that he gave in seeking to convince the Committee, on which five hon. Members sat, that the Felixstowe Dock and Railway Company should be given the considerable compulsory purchase powers that now are being sought by the Sealink company and any successor company that may be set up following the distribution of that company when it is denationalised.

In his address to the Committee, Mr. Drinkwater said: There is a further point in amplification that I would take. If this Committee feels that these powers"— these are powers similar to the ones that we are discussing today— should not be granted in this case, you set, do you not, a possibly dangerous precedent for the future where other companies that have statutory obligations come before Parliament asking for powers which they may need in the public interest… in order to implement the undertaking. It may be said against them that they did not get them at Felixstowe in 1980"— that refers to the Committee on which I and a number of other hon. Members sat— Why should you have them now? That is the question that we put to the House, and I believe that that is the substance of what my hon. Friend the Member for Holborn and St. Pancras, South said. That is a very dangerous precedent, if I may say so. I am measuring my words as cautiously as I can but I suggest that that is a very dangerous precedent. We are not omniscient, and you, Sir, with great respect are not omniscient either. You cannot know what circumstances may arise in the future that might be deleteriously affected in other cases by withholding the very well precedented grant of these powers that we now seek. So many cases where obligations are imposed upon promoters in the public interest require the use of these power… and are granted by Parliament, in case after case. In my submission, it would be undesirable in the public interest—I think I would go that far—that these powers should not be granted in this particular instance, bearing in mind the statutory obligations that we have". He was trying to convince us in that evidence that we should grant the considerable compulsory purchase powers that that company was seeking so that it would be able to carry out its duties.

I notice that there is a similarity between the words used in this Bill, in the clause that deals with compulsory powers. I quote from clause 34: and may purchase compulsorily and use such of the lands delineated on the deposited plans relating to the said work and described in the deposited book of reference as they may require for the purposes of the said work". Those words differ only marginally from the words in the Felixstowe (No. 2) Bill that came before us last year, section 7 of which said: Subject to the provisions of this Act the Company may enter upon … and use such of the lands on the deposited plan and described in the deposited book of reference as may be required for the purpose of the works or for the purposes of obtaining access thereto. (2) The power of the Company for compulsory purchase of land under this section shall cease after 31 December 1983." In many ways, the powers seem to be similar. Inasmuch as on that occasion we were unwilling to allocate those powers to the Felixstowe Dock and Railway Company, I do not see why on this occasion we should be required to allocate the powers that we rejected then.

It was the hon. Member for Holland with Boston (Mr. Body) who, as Chairman of that Committee, said to Mr. Drinkwater—he having put his very persuasive evidence before us, arguing that the compulsory powers should be granted— If I may say so, nobody could have been more persuasive, but even your powers of persuasion cannot convince us. We do not feel that these powers are necessary. We having sat on that Committee, recognising the considerable powers that were being sought, and then rejecting the application, why should we now in some way be undermined by a Bill that does the very reverse and allocates those same powers to Sealink—and, more dangerously, to the successors of Sealink, recognising that Sealink will be sold off under other legislation that is before the House?

I am one of those hon. Members who feel that there is a danger in allocating to nationalised industries and publicly owned companies considerable powers of compulsory purchase. I am told that this is a procedure that is brought before the House for ratification, has been brought on a number of occasions in the past, and will be brought on a number of occasions in the future.

I am particularly appalled, as my hon. Friends must be, by the prospect of a private enterprise company—despite there being some shareholding in that company by the State, albeit a minor one—being given extensive powers, real powers, and the kinds of powers that should not be allocated to a private institution in a democracy.

8.22 pm

The Under-Secretary of State for Transport (Mr. Kenneth Clarke)

I intervene in a debate on what is a Private Bill in order to give a brief indication of the Government's reaction—and no more than that—to the various parts of the Bill.

The Bill is, of course, in the hands of my hon. Friend the Member for New Forest (Mr. McNair-Wilson), who is acting as its sponsor, and who will no doubt help to steer it through the House in his usual capable way. I join in the congratulations to him on the usual lucid and persuasive explanation that he gave of the various provisions in the Bill.

My hon. Friend began with a few words setting out his general views on the present position of the railways, and endorsing the request made to us by the British Railways Board for investment in electrification of an extensive part of its system. My hon. Friend and I both know that we cannot go too far into that this evening, but I am sure that he welcomes the fact that matters have advanced on this front. The Government and British Rail have now published the results of the joint study that we carried out into the prospect of electrification of a large part of the network. As my hon. Friend knows, the Government are now to consider the case for electrification, and we hope to announce our conclusions in a few months.

My hon. Friend will know that the Government share his desire to see a modern and efficient railway network in this country. We believe that that involves taking a view on the future investment needs of the railway. Indeed, we have protected the investment of the railway throughout the recent difficult financial period.

The future of the railways depends in part on a correct assessment of their investment needs, and in part on the railways themselves in improving their productivity, reducing over-manning and improving their own business performance:, so as to make a proper contribution to their own investment needs.

I should like now to touch briefly on some of the items that have been raised this evening and which will obviously be of concern to those who examine the Bill at later stages.

Work No. 1 is the proposed sidings for Thames Nitrogen, and I was not surprised that my hon. Friend the Member for Hornchurch (Mr. Squire) intervened and gave his views. He has apologised to me, Mr. Deputy Speaker because, like me, he was surprised by the length of time that the debate has taken, and was not able to stay. I know of his very considerable concern about the prospects that the new railway might pose for a road diversion that he would like to see built across the A13.

At this stage, I want only to say, on behalf of the Government, that obviously the transport of ammonia by rail wherever possible must have considerable attractions to us all, and in principle the transfer of this sort of traffic from road to rail appears to be very desirable. No application has yet been received for a section 8 grant for this traffic, but obviously this is the kind of thing that would be eligible for a section 8 grant if the customer could make out a case for it. But there is the particular problem of the routeing of the road improvements which need to be made to the A13 through the village of Rainham.

My hon. Friend the Member for Hornchurch expressed in very strong terms his belief that that road should be improved, and that a route should be followed across Rainham marshes. He reminded me of a deputation that he brought to me on the subject in December 1979, and he described it as the most important issue in his constituency. Not only has he brought a deputation to see me but he has pursued me in and out of formal and informal meetings on every occasion that has presented itself to him. on the subject of the A13 improvement, ever since he has been in the House. I am only too well aware of his strong concern. He has presented to me the case for the diversion of the road across Rainham marshes, which he believes would be an improvement from the traffic point of view, taking traffic: out of the village of Rainham and also enabling a very considerable acreage of derelict land to be opened up for industrial development in the most efficacious way.

I have been promising my hon. Friend for a considerable time a final and definitive decision about the routeing of the road improvements that are undoubtedly needed to this stretch of the A13. I was impressed by and sympathetic to the case that he put to me, but in the end the Government as a whole will have to decide it. We are taking some time to study the matter because the route that my hon. Friend and his constituents would prefer has considerable cost implications and is more expensive than the on-line alternative that the previous Labour Government appeared to prefer.

Meanwhile, I share my hon. Friend's anxiety that no decision about the building of a railway line on the marshes should at this stage prejudice the possible choice of the right route for the road improvement on the A13. It would be most unfortunate if my hon. Friend were to be left waiting for a decision about the road improvement and meanwhile the whole matter were to be taken out of our hands because British Rail was putting a new private siding along a line which prejudiced potential improvements to the line. My hon. Friends the Members for New Forest and for Hornchurch discussed the matter this evening, and obviously they will discuss it further at later stages of the Bill.

It is also clear that the Bill will take some time to get through the House, so perhaps the best contribution that I can make is to try to ensure that a final decision on the improvement to the A13 should be taken by the Government before the Bill has completed its passage through Parliament. I assure my hon. Friends that I shall make every effort to ensure that the final decision is reached before the Bill has left Parliament. I shall do everything possible to ensure that such a decision is made. If the decision were to proceed with the Rainham marshes route of the various alternatives suggested for improvements to the A13, it would be necessary to reconsider the whole subject of the building of the railway sidings and the route that it might follow.

The Government are in a completely neutral position, fortunately, on Work No. 2, which concerns my hon. Friend the Member for Luton, West (Mr. Carlisle). I am familiar with Luton town though I have never been to Kenilworth Road. I saw the club's one and only cup final match, when, I am glad to say, it lost to Nottingham Forest. I suppose that I should now be slightly prejudiced against Luton Town because it recently beat Notts County in a key promotion game at Meadow Lane. I shall leave that light-hearted side. Our role is to consider the road proposals if the county council brings the proposal forward and applies for grant or if there is a public inquiry into the compulsory purchase orders needed.

It is a county council proposal. At this stage the Government may be involved in making decisions about public inquiries at later stages, though I cannot give a definitive opinion at present. I take my hon. Friend's speech to be support for the road which I understand is desired by his constituents. It seems to me that it will be eligible for transport supplementary grant and I shall bear his views in mind if anything comes to my Department in connection with it.

I hope that a solution will be found as the Bill passes through the House. I am encouraged to hear that my hon. Friends the Members for New Forest and for Luton, West believe that they will be able to reach an understanding. I listened to the comments of my hon. Friend the Member for New Forest arising from the provisions for the Steventon level crossing, which is again a matter on which the Government can take no view. The previous Secretary of State took a decision in 1977 that a revocation order was not justified. The Ramblers Association is petitioning against the closure, but I have taken note of my hon. Friend's views about the safety of crossings on high speed lines. He believes that we should take a general power to close footpaths in those circumstances. I shall consider that. He suggests that it might be put into the Transport Bill this year. I am sure that the hon. Member for Holborn and St. Pancras, South (Mr. Dobson) and myself feel that the Bill has quite enough in it already. As we passed the guillotine motion on the Transport Bill yesterday, I do not believe that the Government will be making new proposals this year on footpaths across railway lines.

The proposals for a train ferry terminal at Parkeston Quay is the most important part of the Bill. The Bill gives extensive powers to the board and to Sealink to carry out certain improvements in and around Parkeston Quay. The most important part of those works is connected with British Rail's desire to construct a new train ferry terminal at the western end of Parkeston Quay which is linked with its desire to use a new generation of jumbo train ferries to carry freight across to Zeebrugge. I am sure that in principle everyone wants to see British Rail develop its freight business and more of our international freight carried by rail. The West German Government shares our desire to see more international traffic between Britain and West Germany, by train whenever possible.

My right hon. Friend has been considering an application by the board for consent to invest in jumbo ferries. He has already approved the board's proposals in principle. The final go-ahead will be subject to a review that the board is carrying out at his request into the whole project because, among other things, the freight business is in such a sorry state that there is doubt about its ability to sustain investment. Nevertheless, we are sympathetic to the whole idea of the new jumbo ferry provision.

My right hon. Friend's consent will also be required even if Parliament grants the powers that are sought in the Bill. He will have to give consent under section 9 of the Harbours Act 1964 before all the work can be carried out. It would be sensible for my right hon. Friend to consider the section 9 application for the terminal in conjunction with his decision on investment in the train ferry. We hope that in the end a full examination of the project will enable my right hon. Friend to come to a favourable conclusion and give the go-ahead to the improvement in rail freight links between Britain and the Continent.

The hon. Member for Holborn and St. Pancras, South tempted me to stray to debates that we had until this morning at interminable length in Standing Committee on the Transport Bill. He re-opens the question of whether it is right to give limited powers to Sealink UK Ltd. if and when it becomes a private sector company. The major powers are given to the British Railways Board. The only part of the Bill which gives powers to Sealink is a comparatively small work involving an extension at Parkeston Quay. I suggest to the hon. Gentleman that whether it is a good idea to have an extension of Parkeston Quay should be a judgment about its commercial desirability, the needs of the travelling public and the needs of Sealink's business. The argument that the extension to Parkeston Quay is good if a nationalised industry is doing it but bad if a private company is carrying out the same extension is difficult to follow. The hon. Gentleman is guilty on this occasion of being dogmatic and, perhaps, of being carried away by opposition upstairs to the provisions of the Transport Bill.

Our clear policy under the Bill is that, once the necessary powers have been taken, Sealink UK Ltd. will become a private sector company because the British Railways Board will be enabled to dispose of a substantial and controlling interest in that business. But it is precedented for private companies to have powers of that kind. I hope that those who consider this part of the Bill will form a judgment about the wisdom of extending Parkeston Quay and not get bogged down in the obsession of the Labour Party that investment of that kind is good only if a nationalised industry carries it out.

Mr. Dobson

Generally the Under-Secretary of State is courteous when replying to a debate because he responds to points made instead of to points which have not been made. However, on this occasion he has strayed in the direction frequently taken by the Secretary of State.

The argument is not that the circumstances are different but that we believe that, if the House is to approve the giving of compulsory purchase powers to a public sector body which is ultimately responsible to the House, that should be explicitly set out in the Bill. The promoters of the Bill should be explicit and spell out that the power might be transferred to a private company. There is a significant difference between the House giving powers to a public sector body and giving them to a private sector company.

Mr. Clarke

The significance is not as great to me as it is to the hon. Gentleman. I accept the statement of the promoters, for which I am not responsible. It might be taken over by events since it describes Sealink UK Ltd. as a wholly owned subsidiary. The Government had no part in drafting that statement. The Government policy is that Sealink will, in the near future, become a private sector company and be no longer a wholly owned subsidiary of British Rail.

I accept that that must be borne in mind when considering the Bill and whether it is right to give such powers. However, I hope that a decision will be made about whether it is a good idea to have the extra transport facilities that will arise if powers are given to construct a quay extension. I do not believe, as the hon. Member for Workington (Mr. Campbell-Savours) implied, that it is always wrong to give such powers to private sector companies. I shall not dwell on the Felixstowe matter, which hon. Members have already decided upon as is their right and duty. We should not have built the railway system, nor half the docks in the country, if we had denied the right to use compulsory purchase powers for such major public works. The fact that the situation has been overtaken by events will not make much difference when deciding whether that is desirable.

In Committee on the Transport Bill I have undertaken to re-examine police powers to ensure that there are no general dangers. British Transport police are employed by British Rail. They are kept apart from local authority and the Metropolitan police because of the nature of railways and ports undertakings. It appears that the British Transport police will continue to police all the docks owned by Associated British Ports, the new statutory corporation that soon will be wholly owned by a private sector company once the Transport Bill policy is put into effect.

The same policemen with the same powers will patrol the same docks and carry out the same duties. I am not convinced that the public interest is threatened if the ownership of the equity changes. However, I appreciate that it is a view. Perhaps it is best pursued in discussions on the Transport Bill.

Mr. Don Dixon (Jarrow)

If the British Transport police are transferred to a private company with powers of arrest, other companies which employ Securicor and other security organisations will want the same powers for their men who patrol their premises. That is the danger of transferring such public assets. What will happen if there is a strike and picketing takes place? Any power that British Transport police has in that connection will be transferred to private hands. That is what worries us.

Mr. Clarke

I can well understand that many hon. Members would be anxious if it were thought that we were paving the way for private companies to acquire police powers for their own security operations. My right hon. and hon. Friends who are Ministers in the Home Office would have to answer for that. I can only say that, so far as this part of the Government is concerned, that thought never crossed its mind when drafting the Transport Bill. I hope that I shall be able to assure hon. Members serving on the Standing Committee on the Transport Bill that we are not paving the way for private police forces, that we are merely preserving the existing transport police in docks and that we shall look at the implications of denationalisation for them.

There has been a general welcome for the proposal that penalties should be increased for certain offences on the railway and particularly for carrying alcohol on trains. It would be welcomed by the Government. Certain of my hon. Friends have tabled such an amendment to the Transport Bill. I believe, however, that it has been ruled to be outside the scope of the Bill and that it has not been selected by the House authorities. Perhaps someone will have a go in the House of Lords, which is not so restricted by the scope of the Bill. If such an amendment were to be pressed on the Transport Bill in the House of Lords, it would be favourably received by the Government.

A race may develop between those endeavouring to put such a provision into the Government's Transport Bill, on the one hand, and the promoters of this Private Bill, on the other. On that point, I abandon my neutrality and say that the Government hope that, in one piece of legislation or another, these increased penalties will be provided. All too often, unfortunately, unpleasant experiences are suffered by passengers when people having drink problems get on to trains. The penalties have been overtaken by inflation. It is time that they were brought up to a more realistic level.

I hope that I have given adequate indication of the Government's views. We shall follow the progress of the Bill in its later stages with interest.

8.42 pm

Mr. Patrick McNair-Wilson

With the leave of the House. Mr. Deputy Speaker, I should like to respond to some of the points that have been made. I welcome the remarks of my hon. and learned Friend the Under-secretary of State for Transport. To some extent, I am faced by a dilemma. The promotion of the Bill and its juxtaposition with the Transport Bill have created problems that have been aired by the hon. Members for Holborn and St. Pancras, South (Mr. Dobson) and for Workington (Mr. Campbell-Savours). My hon. and learned Friend has helped to clear up this dilemma.

The hon. Member for Workington and I find ourselves more often involved in discussions on the steel industry. I assure him that in this situation there will be no intention for British Rail to give free services to a competitor. I undertake that the matters to which reference has been made will be examined thoroughly. We should be honest. The Transport Bill is not yet law, and British Rail has to get ahead with this type of legislation because it affects so many aspects of its activities. I hope that with the assurances given by my hon. and learned Friend we can leave the matter there and try to separate the promotion of legislation for one statutory body from the wider political context of the Transport Bill.

My hon. and learned Friend referred to the routeing of the A13. I can only ask him to be as swift as he has promised. This has been a very long playing record. Many people have been waiting for a long time for the Department to give its determination. I am glad that my hon. and learned Friend has not asked the board to take this clause out of the Bill. The work is important. The welcome given by my hon. Friend the Member for Hornchurch (Mr. Squire) on safety grounds should be enough for us to try to press ahead as quickly as possible to get goods off the road and on to rail. I would have thought that this was a good example.

My hon. Friend the Member for Luton, West (Mr. Carlisle) has given a detailed account of some of the worries and anxiety expressed by the Luton football club. I recognise that he has no wish that the road project should be delayed or dropped from the programme. That would be the worst thing that could happen. I should like to deal with some of the comments that my hon. Friend made. They clearly reflect the views of the football club. The other individual groupings to which he referred, like the cold store, have not made objections. If the line of route were to be moved substantially to the south, we would be talking about the demolition of factory buildings. It is therefore common ground that the alignment that has been selected is the preferred.

My hon. Friend said, perhaps inadvertently, that the intention was to demolish the Kenilworth suite. That is in no sense the intention of the British Railways Board. Plans exist to raise the suite in such a way that trains can pass under it, and the important facilities that it provides will continue to exist.

Mr. John Carlisle

Technically, the Kenilworth suite as it is today would have to be demolished. My hon. Friend is right in saying that proposals have been put forward for the building of a new suite but, by the very nature of the architecture of the suite, it would have to be demolished and raised again, with a cantilever type of erection. I think that I was technically correct in what I said.

Mr. McNair-Wilson

I am advised that it can be relocated. I note what my hon. Friend says and I am sure that those who are concerned in these matters will also note his comments. This matter can be discussed later, and I assure my hon. Friend that it will be.

The training and parking facilities about which the club is concerned can also be accommodated. I do not want to strike a sour note. The club has facilities for accommodating 22,600 people, but I am advised that it is very seldom that more than 10,000 are present at any one time, even for a home match. There are seldom more than between 12 and 14 coaches to be parked. It is therefore the belief of those concerned that facilities can be made available to take account of that level of parking.

Anxiety has been expressed lest the club's safety certificate is endangered. I am advised by the county council that this is unlikely and that there is no need to regard that as a worry.

In reply to my hon. Friend's detailed speech, I assure him that it is the board's desire to find a happy accommodation with the club to make sure that, as far as possible, it is satisfied with the facilities that are given. With that assurance and the other assurances given by my hon. and learned Friend the Under-Secretary of State, I hope that we can allow the Bill to go forward to its next stage.

Question put and agreed to.

Bill accordingly read a Second time and committed.