Commons Sitting of 9 March 1982

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
Oral Answers to Questions
  SOCIAL SERVICES

    Child Benefit
    Mr. Peter Bottomleyasked the Secretary of State for Social Services what level of child benefit would restore the value to its May 1979 level.
    The Under-Secretary of State for Health and Social Security (Mr. Tony Newton): At the last uprating, in November 1981, child benefit would have had to be increased to £5·70 in order to restore the value that it had in May 1979.
    Mr. Bottomley: First, I congratulate my hon. Friend on his well-deserved appointment. Is he aware that an increase this year would put the level back to that of May 1979, but that it would still leave it well behind what it was 27 years ago? Will he confirm that an increase in child benefit could reasonably be seen as equivalent to but better than any scheme to reduce taxation on families?
    Mr. Newton: I am grateful to my hon. Friend for his expression of good will and, indeed, for the murmurs of support from the Benches behind me. I feel that I need them all the more, since my hon. Friend the Member for Wallasey (Mrs. Chalker) is a particularly hard act to follow.
    My hon. Friend will recognise that comparisons going back before 1977 can be misleading, because child benefit in part replaced tax allowances which were of variable benefit according to a family's income. My right hon. Friend's commitments about child benefit are an earnest of our awareness of the problem.
    As regards any further possible change in the balance between tax allowances and benefits, my hon. Friend will recognise that those issues have arisen in the context of the Green Paper on the taxation of husband and wife and are for my right hon. and learned Friend the Chancellor of the Exchequer.
    Mr. Andrew F. Bennett: I add my congratulations to the hon. Gentleman and hope that his views on child benefit remain the same as they were when he was in Opposition. Will he further confirm that, on the Government's new sick pay arrangements, child benefit must increase to at least £7 to compensate in the first eight weeks when claimants will lose child dependence from the new sick pay scheme?
    Mr. Newton: I am grateful to the hon. Gentleman for his words of good will. I assure him that I remain committed to the views I expressed when in Opposition
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    about the importance of child benefit and the desirability of maintaining it at as high a level as possible for all claimants.
    Sir Brandon Rhys Williams: I congratulate my hon. Friend on his consistency. Does he agree that, with the increasing costs of raising a family, it places a far less burden on the economy to help to meet those costs selectively by raising child benefit than by blanket increases in wages?
    Mr. Newton: That view will attract some sympathy from both sides of the House. I am sure that it is a matter that my right hon. and learned Friend the Chancellor will have in mind in formulating his proposals.
    Mr. John: Does the hon. Gentleman agree that, so far as social security pensioners are concerned, child benefit must be added to child dependency allowance to get the fair figure? Is not the consequence of the Chancellor' s actions that the effect of the two combined has fallen by 17·8 per cent. for short-term beneficiaries, such as the long-term unemployed, and by 9·6 per cent. for long-term beneficiaries, such as widows? Does he agree that, for many millions, whether that is matched by the Chancellor this afternoon will be the real touchstone of whether his measures are adequate?
    Mr. Newton: I am sure that my right hon. and learned Friend will heed the hon. Gentleman's suggestions. The hon. Gentleman will appreciate that if I were to attempt to anticipate what may happen in about an hour's time, my first appearance at the Dispatch Box would be my last.

    Severe Weather (Accidents)
    Mr. Greville Jannerasked the Secretary of State for Social Services what is his estimate of the number of people treated in hospitals during the winter for injuries caused through falls on snow and ice.
    The Minister for Health (Mr. Kenneth Clarke): There is not sufficient information available on which such an estimate could be based.
    Mr. Janner: I commiserate with the Minister on his first appearance in his new capactity. Will he take steps to ensure that some information is made available? Meanwhile, does he recognise that thousands of people throughout the country suffered as a result of unnecessary falls on uncleared side roads? Will he see whether resources can be made available to make provision for the unseasonable weather that is a certainty in our climate?
    Mr. Clarke: I do not think that the information will be of much value to hospitals. I realise that a poblem is caused when there is a bad winter and that that puts an added strain on orthopaedic departments in hospitals. Questions about the clearing of roads are, of course, the responsibility of my right hon. Friend the Secretary of State for Transport.

    Nurses (Pay)
    Mr. Meacherasked the Secretary of State for Social Services what progress has been made in the negotiations on the current nurses' pay claim.
    Mr. William Hamiltonasked the Secretary of State for Social Services if he will make a statement on the progress of the negotiations on nurses' pay.
    Mr. Raceasked the Secretary of State for Social Services what progress is being made in reaching pay settlements for Health Service ancillary staff, nurses and midwives, ambulance staff, and administrative and clerical staff in the 1982–83 pay round.
    The Secretary of State for Social Services (Mr. Norman Fowler): All these groups have settlement dates of 1 April. All have submitted claims, and some of the Whitley councils have begun negotiations. In the case of the nurses, these are continuing at a meeting today, and I hope that they will be helped by the addition to the pay factor that I announced yesterday. All told, we are making available an extra £82 million for the pay bill of nurses and some other staff groups.
    Several Hon. Members rose—
    Mr. Speaker: Order. I propose to call first those hon. Members whose questions are being answered.
    Mr. Meacher: Is the Secretary of State aware that the new 6·3 per cent. pay offer in no way satisfies the nurses' rightful demands? In the period since July 1975 the police have had a pay increase of 243 per cent., whereas staff nurses have had an increase of much less than half that amount—110 per cent. Surely nurses are worth every bit as much as policemen. Is the right hon. Gentleman further aware that the 76 per cent. increase in the nurses' pay bill since 1979, which the right hon. Gentleman keeps trumpeting, reflects an increase in staffing of 21,000, not an increase in pay, and that it has still left nurses' pay increases substantially—
    Mr. Speaker: Order. The hon. Gentleman is arguing a case instead of asking a question.
    Mr. Fowler: The hon. Gentleman is typically overstating his case and he is typically wrong. We are entirely committed to seeking fair treatment for nurses. That is why we have already devoted an extra £1 billion to the nurses' pay bill, are finding extra money for this pay round and are also seeking a permanent and new way of settling nurses' pay. I believe that that will be recognised by both the nurses and the public.
    Mr. Hamilton: Does the Secretary of State seriously think that, with inflation at 12 per cent., a 6 per cent. offer to nurses is adequate? Does he realise that it represents a swingeing reduction in the standard of living of the most dedicated profession in the country, and that it comes ill from the Government to offer that kind of money to nurses at a time when they are offering 10 per cent. or more to Civil List annuitants and others?
    Mr. Fowler: At the last Social Services Question Time the hon. Gentleman urged me to do exactly what I have done—that is, to put more money on the table for nurses. We have made available an extra £63 million for nurses. In other words, we are giving money to the people who are most concerned with patient care.
    Mr. Race: Will the Secretary of State tell the House who is to pay for the offer to nurses and midwives? Will not one-third of the cost of the revised offer be paid for by local health authorities, not by the Government? Does that not mean cuts in nursing staffing standards? Does he realise that this morning the nurses and midwives management side refused to give an assurance to the staff
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    side that there would not be cuts in nursing staffing standards as a consequence of the Government's proposals? When will he do this for all NHS workers?
    Mr. Fowler: There is no reason why there should be a cut in services as a result of what is being proposed. We propose that two-thirds of the extra money should come from the Contingency Fund and that the other third should come from the health authorities. They will be asked to provide about £27 million out of a total annual budget of £11 billion. In my view, that is not asking too much.
    Mr. Paul Dean: In contrast to the carping comments from the Opposition Benches, I warmly congratulate my right hon. Friend on making available an additional £82 million, two-thirds of which is to come from the Contingency Fund, to meet the good case that nurses have made. Will my right hon. Friend now build on that and ensure that before next year there is a full review of the nurses' pay structure to avoid difficulties that have existed for so many years?
    Mr. Fowler: Our essential aim is to provide the best standard of service to patients. Therefore, we want to ensure that the National Health Service recruits and retains trained staff, such as nurses. I am sure that my hon. Friend is quite right about that. I shall be present next week at a meeting between the staff side and the management side and we shall seek to make progress on the long-term aim, which many nurses regard as the main aim and purpose.
    Mrs. Dunwoody: The Secretary of State now seems to have taken to negotiating in the papers instead of through the staff negotiating machinery. By taking one-third of the money out of the budgets of the hospital authorities, will not the right hon. Gentleman, in effect, be forcing them to make cuts in other sectors? If so, where does he expect those cuts to be made?
    Mr. Fowler: No, that is not so. Moreover, I am not negotiating. The Whitley council is negotiating on nurses' pay. As I told the hon. Member for Wood Green (Mr. Race), we are asking the health authorities to provide £27 million out of a budget of over £11 billion. There is no reason why that should affect services. A fair deal for nurses is surely the prerequisite of a good Health Service.
    Mr. Nicholas Winterton: I warmly welcome the additional funds that my right hon. Friend has made available for nurses' pay. Is he aware that there is still considerable concern among Conservative Members that the gap between the wages of nurses and other essential workers is widening, not narrowing? We hope that the nurses on the wards will be paid a really good wage for the dedicated service that they provide.
    Mr. Fowler: I entirely share my hon. Friend's view. The Government are making progress on the long-term arrangements for nurses' pay. That is vital for the nursing profession.
    Mr. William Hamilton: On a point of order, Mr. Speaker. In view of the grossly unsatisfactory nature of the Secretary of State's reply, I shall seek to raise the matter on the Adjournment at the earliest opportunity.

    Sickness (Self-certification)
    Mr. Cadburyasked the Secretary of State for Social Services whether he has received representations from industry about the Government's plan to introduce a seven-day self-certification of sickness scheme.
    The Minister for Social Security (Mr. Hugh Rossi): Yes, Sir. Since my right hon. Friend's announcement in December, about 100 letters and as many telephone calls have been received. Most of these have come from employers or organisations representing them.
    Mr. Cadbury: Is my hon. Friend aware that there is still concern among employers that the new self-certification scheme could lead to an increase in abuse of sick leave? What safeguards have been incorporated in the new scheme? When similar schemes were introduced in other European countries, were they followed by an increase in absenteeism?
    Mr. Rossi: Malingerers—I emphasise that they are a tiny minority of all claimants—have no difficulty in getting certificates now. Under self-certification, a person has to sign his own declaration and stand by it. He cannot hide behind what seems to be a professional opinion. I am sure that there will be teething troubles, but we intend to institute controls and monitoring to ensure that abuse does not take place.
    Mr. Rooker: Were those 100 letters and 100 telephone calls in favour of or against the scheme? The Minister merely said that he had received them. What evidence is there to suppose that there would be a greater incidence of abuse of the change in the scheme compared with the actions of hon. Members, who do not need to provide sick certificates?
    Mr. Rossi: I have already dealt with the possibility of malingerers and the way in which we intend to deal with them.
    In answer to the first part of the hon. Gentleman's question, I think that his assumptions are totally wrong.

    Sickness and Absenteeism
    Mr. Allen McKayasked the Secretary of State for Social Services what was the percentage figure of sickness and absenteeism of staff in his Department's offices for the years 1977, 1978, 1979, 1980 and 1981, respectively.
    Mr. Fowler: Figures are available only for absences through sickness in the local offices. In the period 1977 to 1981 the highest figure for absences through sickness was in 1978 when the figure was 4·52 per cent. Since 1979 the figure has steadily declined and in 1981 was 4·11 per cent.
    Mr. McKay: Does the Secretary of State accept that absenteeism will vary from area to area and that there will be a difference between areas in the content of the absenteeism? Does he agree that absenteeism reflects the problems in DHSS offices as they become overloaded because of the additional work that the Government have passed on to them because of their unemployment and social security benefit policies? Will he undertake to examine the work load of the staff before they break down under the strain?
    Mr. Fowler: Obviously the figures vary from one area to another. The hon. Gentleman cannot have been listening to my answer. The figures show that absenteeism through sickness is coming down, not increasing.
    Mr. Alfred Morris: Is it not disgraceful—some would say outrageous—that DHSS Ministers should have ceased to operate the job release scheme in respect of the Department's employees, including disabled employees? How can the Government, as an employer, possibly justify the suspension of a scheme that they recommend to other employers?
    Mr. Fowler: I shall consider that issue, but the right hon. Gentleman has raised a question that is entirely separate from the main question tabled by the hon. Member for Penistone (Mr. McKay).

    Dental Charges
    Mr. Robert C. Brownasked the Secretary of State for Social Services what recent representations he has received about the proposed increase in dental charges.
    Mr. Litherlandasked the Secretary of State for Social Services what recent representations he has received about the proposed increase in dental charges.
    The Under-Secretary of State for Social Services (Mr. Geoffrey Finsberg): The Department has received some 400 letters and my right hon. Friend and I met representatives of the British Dental Association on 8 February.
    Mr. Brown: How does the Minister reconcile the promise not to raise charges faster than the increase in costs when this rise will bring in £27 million more than the rise in costs? Is it a mark of Tory inefficiency that the Government have increased dental charges four times in 34 months compared with one increase in three and a half years when the Labour Government were in office?
    Mr. Finsberg: No, it is not a sign of inefficiency on the part of the Government. The hon. Gentleman is using information sent to him by the BDA, which is sadly inaccurate. It relates only to prescription charges. There is no reference to dental charges.
    Mr. Mike Thomas: Does the Minister accept that the increases in dental charges will mean that in many areas there will be no effective National Health Service dental arrangement? Will he carry out an examination and list in the Official Report the areas in which there are no dentists taking new NHS patients within, for example, a radius of three miles? I think that he will be horrified at the outcome of such research.
    Mr. Finsberg: The evidence does not substantiate the hon. Gentleman's assertion. The number of dental treatments has been increasing steadily from 28·3 million in 1978–79 to 30 million in 1980–81. In the first 11 months of this year there has been a continuing increase.
    Mrs. Faith: In the light of the proposed new charges, will my hon. Friend give an assurance that money is not being removed from dentistry to be allocated to other parts of the NHS?
    Mr. Finsberg: I can assure my hon. Friend that that is so. I remind her that the planned growth in the general dental service is 2½ per cent. in real terms.
    Mr. Terry Davis: Does the Minister agree that the increase in charges is greater than the increase in costs?
    Mr. Finsberg: After the increase in charges patients will, on average be paying only 30 per cent. of the cost.

    Queen Elizabeth Hospital, King's Lynn
    Mr. Brocklebank-Fowlerasked the Secretary of State for Social Services if he will take steps to ensure that the East Anglian area health authority has sufficient resources to provide the 160-bed unit for the elderly planned for the Queen Elizabeth hospital, King's Lynn.
    Mr. Kenneth Clarke: Capital funds are allocated to the 14 regional health authorities according to their relative need. It is the responsibility of regional health authorities themselves to determine the order of priority of individual building schemes within their capital programmes in the light of their detailed knowledge of local needs.
    Mr. Brocklebank-Fowler: Is the Minister aware that his reply will cause great concern in North-West Norfolk? The community health council has called for the provision of 160 beds. Unless it gets them, there is a racing certainty that there will be a shortage of more than 72 beds for geriatric provision in the district.
    Mr. Clarke: The region has made increased provision for geriatric services in King's Lynn. The higher design standards have reduced the number of beds that can be provided in the present allocation to 96. I know that the region accepts that there is a continuing problem. I hope that the new district health authority will be examining ways of overcoming it.

    Pensions
    Mr. Rookerasked the Secretary of State for Social Services what has been the effect on a single and a married couple's weekly pension of the Social Security Act 1980 changes at the latest date.
    Mr. Rossi: The hon. Gentleman is presumably referring to the break in the link between earnings and prices for the purposes of uprating pensions and other long-term benefits. If that break had not been made pensions might have been up to 4 per cent. higher, but this depends upon a number of hypothetical assumptions, as explained by my hon. Friend the Member for Wallasey (Mrs. Chalker), who is now the Under-Secretary of State for Transport, in her reply to the hon. Gentleman on 10 February. What is not hypothetical is the Government's pledge to protect pensions against inflation.
    Mr. Rooker: Why is the Minister being so coy? Why cannot he convert to weekly benefit the figures that he has given in percentage terms? Does he accept that the figures that have been recalculated by the Library, on the basis of a previous answer, show that the single person's pension would have been £1.40 a week higher and a married couple's pension would have been £2·30 a week higher? Does he recognise that those figures must be added to any figure that the Chancellor of the Exchequer announces today if the Government are to come anywhere near to providing what the pension would have been if the Labour Government's rules and laws had not been overturned?
    Mr. Rossi: That is subject only to certain assumptions. Subject to the hypothetical assumption that the uprating
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    shortfall against the movement of earnings in 1979 and 1980 would have been made good in full and that the 1981 uprating would have been by reference to the same forecast movement in prices as actually used, with the shortfall made good at the moment following the uprating, the pension level might have been about £31·45 for a single pensioner and £50·25 for a married couple, but not otherwise.
    Mr. Alton: In view of the Minister's hypothetical assumption, why is it that the extra but miserable 25p that is given to pensioners when they reach 80 years of age has not been increased since 1970? What will he do about it?
    Mr. Rossi: That is a matter for my right hon. and learned Friend the Chancellor of the Exchequer.

    Greenwich and Bexley Area Health Authority
    Mr. Guy Barnettasked the Secretary of State for Social Services whether he will set up a public inquiry in the light of the contents of his Department's audit report for 1980–81 on the Greenwich and Bexley area health authority.
    Mr. Kenneth Clarke: The Greenwich and Bexley area health authority will be dissolved on 31 March 1982 and no useful purpose would now be served by a public inquiry.
    Mr. Barnett: Is not the hon. and learned Gentleman concerned that this is the second occasion on which the auditor has been especially critical of this area health authority? Does he recognise that there is at least evidence that private patients have been treated without making proper payment, and also evidence of widespread examples of inadequate financial control, to which the right hon. Member for Sidcup (Mr. Heath) drew attention a year ago following the 1979–80 report and again this year? Will he reconsider the matter in view of these facts?
    Mr. Clarke: I am concerned about all these matters. Obviously there should be proper financial control, including the proper recovery of charges from private patients. It would appear that there has been an improvement. I trust that the new district authorities, which will take over on 1 April, will get matters back in order as rapidly as possible.
    Mr. Wellbeloved: Will the Minister seriously reconsider this issue? There has been a significant ground swell of public concern about the area health authority's affairs. It would be scandalous if the Minister allowed it to pass out of existence without an investigation into its conduct.
    Mr. Clarke: There is a further audit to come. I hope that local opinion is reassured by all the signs, which indicate that matters are now getting back under control, with improved financial control and performance in most of the areas that have concerned the district auditor in the past. Obviously that improvement must be maintained. I hope that the new Greenwich district authority will quickly tackle the problem of the proper provision of hospital services in the area.
    Mr. Peter Bottomley: Does my hon. and learned Friend agree that if control is restored more resources and money will be available within the new district authority

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    of Greenwich and that hospitals such as the Brook and its cardiac unit at Eltham and Mottingham may be protected or reopened?
    Mr. Clarke: My predecessor had asked the new Greenwich district authority to produce a comprehensive plan for hospital provision within that area. I look forward to receiving that plan. We shall then take such steps as we can to put matters in order.

    European Community (Reciprocal Health Services)
    Mr. Michael Morrisasked the Secretary of State for Social Services if he will review the present arrangements for reciprocal health services within the European Economic Community.
    Mr. Geoffrey Finsberg: The provision of health care to nationals of European Community countries moving within the Community is governed by the Community regulation on social security for migrant workers. Member States cannot revise the regulations unilaterally; the agreement of all countries is needed. Representatives of the member States meet regularly as a group to discuss the operation of the regulations and they have recently agreed arrangements to extend cover to eligible self-employed and non-employed persons, as previously decided in principle.
    Mr. Morris: As EEC nationals receive free treatment in Britain, why is a passport insufficient evidence to enable citizens of the United Kingdom to receive medical treatment on the Continent?
    Mr. Finsberg: My hon. Friend knows that regulations have been in force since the scheme started and since Britain joined the Community. I should be delighted to see whether, as my hon. Friend suggests, there is a simpler way of doing things.
    Mr. Nelson: Is my hon. Friend satisfied that the public are sufficiently aware that they need to take the appropriate form, signed by their doctor and with their national health number, when visiting other West European countries if they wish to obtain the benefit of discounted or free health services? What efforts is the Department making, before the main holiday season, to ensure that the public are made aware of those requirements?
    Mr. Finsberg: From time to time we ensure that organisations are aware of the problem. Judging from the cases that I have had to deal with, there is no particular problem. However, I shall reconsider the matter to see whether anything extra needs to be done.

    Pensions
    Mr. Michael Marshallasked the Secretary of State for Social Services whether he has any proposals for shortening the waiting period between the announcement of pension uprating and its actual payment to individual pensioners.
    Mr. Rossi: The period could be shortened only by delaying the announcement or by bringing forward its implementation. [Interruption.] The Government do not wish to do the former and it is not administratively practicable to do the latter.
    Mr. Marshall: Does my hon. Friend accept that the waiting period causes concern and that resentment arises
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    when pensioners receive amounts that may lead to clawback at a subsequent stage? In this International Year of Information Technology cannot the administrative difficulties be overcome as they are in other European countries?
    Mr. Rossi: In those other European countries payments are made on a monthly basis and the task is much easier. In Britain about 9 million payments are made by means of order books and they are payable weekly. The order books are issued 20 weeks in advance. Another complication is that we also deal with supplementary benefits that have to be calculated individually. That could not be done if we were to bring forward the date of implementation.
    Mr. John: Will the Minister give an assurance that it will be 52 weeks from the last uprating to the next uprating, and not 54 weeks as the Government managed on one shabby occasion?
    Mr. Rossi: The hon. Gentleman already knows the answer to that question.
    Mr. Dickens: Approximately two years ago the House was told that, as a result of advanced computerisation, the time lag between the announcement and receipt of pensions could be shortened. What has happened to that computerisation and why have we changed our tune?
    Mr. Rossi: We have not changed our tune. Computerisation is in progress and when it is completed it may be possible to overcome the practical problems.
    Mr. Skinner: Who did the Minister think he was kidding when he replied to the question asked by the hon. Member for Huddersfield, West (Mr. Dickens)? Is he aware that the Inland Revenue's computer allows it to deduct tax from old-age pensioners who receive additional pensions, such as those from the National Coal Board., and who have a total net income of £37 per week? That computer flashed into action within a couple of months of the first payment from the NCB. Why does not the Minister get hold of that computer so that he can pay out pensions a lot quicker? If he cannot wrest it from the Inland Revenue's grasp, why does he not do what we suggested last month during the debate on pensioners, and pay pensioners twice yearly?
    Mr. Rossi: For the reasons that I have given, the hon. Gentleman's suggestion is totally impracticable. [Interruption.] The hon. Gentleman is obviously not aware of the complexities surrounding the computer. The Inland Revenue would like to computerise PAYE, but has been unable to do so because of the number of people involved and because of all the variations in individual cases.

    Kidney Transplants (Private Treatment)
    Mr. Lofthouseasked the Secretary of State for Social Services what is the fee charged by the National Health Service for kidneys made available for transplants done in private clinics and hospitals.
    Mr. Fowler: No fee would be charged apart from a sum to cover costs of transport.
    Mr. Lofthouse: Is the Secretary of State aware that that answer will shock and concern the House and the country? Is it not a scandal that although in June last year about

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    20,000 people were waiting for kidney transplants those with the wealth could afford to buy life while those who could not afford to do so had to die? Will the right hon. Gentleman take any necessary action to stop the flow of kidneys to the private sector until the NHS has enough for its needs? Donors would never wish to provide kidneys so as to make profits for members of the medical profession.
    Mr. Fowler: I shall consider any evidence that the hon. Gentleman places before me, but I have no reports of such a supply. There is no question of queue jumping and private patients will be looked at in the same way as NHS patients.
    Mr. Pavitt: Will the right hon. Gentleman convey my apologies to the new Minister for Health concerning my early-day motion on just one aspect of his duties? I have now withdrawn the motion. Will he try to persuade the television authorities whose programmes dissuaded donors from giving kidneys to broadcast programmes giving the other side of the coin, as requested by the British Medical Association?
    Mr. Fowler: That is beyond the scope of the original question. However, we should like as many people as possible to carry kidney donor cards.

    Disabled Persons (Benefits)
    Mr. Newensasked the Secretary of State for Social Services if he will take steps to enable disabled persons whose allowances do not allow them to qualify for supplementary benefit to become eligible on similar terms to those in receipt of supplementary benefit for the long-term rate of benefit or its equivalent where this exceeds their benefits.
    Mr. Newton: We are well aware of the difficulty of the so called "invalidity trap" and have sympathy with the hon. Gentleman's desire to see it resolved. Because of the substantial benefit and staff costs, however, we cannot see our way to this as yet.
    Mr. Newens: Does the hon. Gentleman accept that disablement benefits have become the instrument whereby the disabled are put at a serious disadvantage compared with the able-bodied? Is that not a disgrace and is it not vital to take immediate steps to overcome the difficulties and to place the disabled at least on an equal basis with the able-bodied?
    Mr. Newton: I have pointed out that we understand and sympathise with the hon. Gentleman's concern. We have already taken one useful step, which has removed the trap for youngsters aged 16 and 17 on non-contributory invalidity. They can go straight on to the long-term supplementary benefit rate. I hope that the hon. Gentleman will accept that as an earnest of our good intentions.
    Mr. Alfred Morris: Is the Minister aware that many disabled people on supplementary benefit are being denied the higher rate of heating allowance simply because they have opted for an invalid vehicle instead of mobility allowance? Is that not grossly unjust and quite indefensible? When will that anomaly be removed?
    Mr. Newton: I hope that the right hon. Gentleman will understand when I say that I shall consider that point and may get in touch with him.

    Clinical Ecology
    Mr. Neubertasked the Secretary of State for Social Services what percentage of expenditure within the National Health Service he estimates is devoted to clinical ecology.
    Mr. Kenneth Clarke: I am unable to make such an estimate, as clinical ecology is not recognised as a separate specialty in this country.
    Mr. Neubert: Is my hon. and learned Friend aware that a large and increasing number of people suffer discomfort, inconvenience and disability as a result of food allergy? Is it not time that the problem was taken more seriously and given greater recognition within the National Health Service?
    Mr. Clarke: I am sure that it is a serious problem, but treatment is widely available for allergies of all sorts within the National Health Service at hospitals throughout Britain. Many consultants are members of the British Society for Allergy and Clinical Immunology, which has 400 members. There is nothing to stop the area health authorities from improving provision in their localities and I am sure that many more will continue to do so.

    Dental Charges
    Mr. Georgeasked the Secretary of State for Social Services if any estimates have been made of the effect of the past increases in dental charges on the number of people who seek dental treatment.
    Mr. Geoffrey Finsberg: I refer the hon. Gentleman to my reply to the hon. Members for Manchester, Central (Mr. Litherland), for Blaydon (Mr. McWilliam) and Newcastle upon Tyne, West (Mr. Brown).
    Mr. George: Does the Minister admit that since his party came to office routine charges have risen by 160 per cent. and maximum overall charges by 200 per cent.? Does he not agree that a further increase will have a disastrous effect on health care standards in the area of dental hygiene?
    Mr. Finsberg: There is no evidence of that from the figures that I quoted earlier of the increasing number of courses of dental treatment.
    Mr. Home Robertson: Is the Minister aware that parts of Britain, including Scotland, have the worst dental health record in the world? Is it not inevitable that the increased charges proposed by the Government will make that record even worse?
    Mr. Finsberg: I cannot answer for what goes on north of the border. I can say only that there is a definite improvement in the state of children's teeth.
    Mr. Terry Davis: Will the Minister now answer the question that I put to him before? Is he increasing the charges by more than the increase in costs?
    Mr. Finsberg: I have already told the hon. Gentleman very clearly that the actual amount of money paid by patients on average is 30 per cent. of the cost and about 45 per cent. of all treatments are exempt. [HON.MEMBERS: "Answer the Question".]

    Ancillary Services (Private Contractors)
    Mr. Anthony Grant: No. 22, Sir.
    Mr. Speaker: I rather fancy that I made a statement that I would not call hon. Members if there was room on the Floor of the House and I believe that there is.
    Mr. Anthony Grantasked the Secretary of State for Social Services what advice his Department is offering to health authorities on the use of private contractors for ancillary services in the National Health Service; and if he will make a statement.
    Mr. Geoffrey Finsberg: The responses to the letters that my hon. Friend sent to all health authority chairmen in August suggest there is considerable scope for savings from the use of private contractors. We propose to give guidance to the new district health authorities to assist them in looking at the option of using private contracts in the provision of support services, and to encourage them to take up the opportunities.
    Mr. Grant: Is my hon. Friend aware that millions of pounds a year could be saved and used for patient care and vital medical equipment if a great deal more ancillary services in hospitals were carried out by private enterprise? Will he urge health authorities to contract out wherever possible? Will he also accept my apologies for speaking from the Side Gallery? When I entered the Chamber the Benches were full.
    Mr. Finsberg: I sympathise with my hon. Friend, as I once asked a question from the Side Gallery. I cannot see why any intelligent person should allow a contract to go untested if a saving can be made in patient care, which I believe is what we all wish.
    Dr. Mawhinney: If district health authorities make savings by using private contractors, will they be allowed to retain the savings for use within their own authorities?
    Mr. Finsberg: Very firmly, yes.

    Kidney Transplants
    Mr. Douglasasked the Secretary of State for Social Services whether he will establish a national coordination scheme for the availability of kidneys for transplant operation.
    Mr. Kenneth Clarke: The supply of kidneys is already co-ordinated by the United Kingdom transplant service, which is centrally funded by the Health Departments.
    Mr. Douglas: Does the Minister accept that the rate of demand, which is 3:1 in current terms, means that allowing the demand for this commodity to be determined by ability to pay is an obscenity? Will he take steps to ensure that need is the criterion and not ability to pay?
    Mr. Clarke: Of course the Government wish to do everything possible to increase the supply of kidneys to patients awaiting such operations. The major inhibition has been the reluctance of the medical profession to begin the suitable procedures when it has a potential donor in its care. I am glad to say that the supply of kidneys is beginning to increase again and I hope that we can find ways of getting nearer to matching the demand.
    Mr. Pavitt: Will the Minister give more publicity to the international co-ordination of the availability of kidneys? Is he aware that, thanks to the computer at
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    Bristol, kidneys are being flown in from Stockholm, Bonn and all over the world? Is he further aware that the general public do not realise that the National Health Service initiative has done a marvellous job for those who suffer from renal failure?
    Mr. Clarke: The computer at Bristol belongs to he United Kingdom transplant service, to which I referred. The Government will do everything possible to respond to any reasonable suggestions that will make it easier to produce the kidneys needed by the many patients now on the waiting list.

    PRIME MINISTER
    The Prime Minister (Mrs. Margaret Thatcher): Just before I reply to questions, I know that many right hon. and hon. Members will wish me to express our deep sorrow at the death of Lord Butler of Saffron Walden—a great politician and statesman—and to extend our sympathy to his family. I understand that the whole House will be given an opportunity tomorrow to pay lull and formal tribute to the late Lord Butler.

    Economists
    Mr. Rentonasked the Prime Minister whether she is satisfied with the number of economists in Government service.
    The Prime Minister: No, Sir. In 1964 there were only 21 economists in Government service. The growth in numbers peaked in 1978 at 408 across the 20-odd Government Departments in which they serve. In recent years there has been a steady decline in numbers to 379 in October 1981. It is expected that by April 1984 the number will be about 350 to 360.
    Mr. Renton: While thanking my right hon. Friend for that answer, may I ask whether, as the number of Government economists has increased 18 times in 18 years, she would consider whether there is an analogy with the Spanish empire, whose downfall is attributed to the fact that one in six adult males was in the Catholic Church? Rather than employ more non-productive economists, will my right hon. Friend redouble her efforts to increase the number of job and wealth-creating industrialists in Britain?
    The Prime Minister: While not following my hon. Friend on his historical excursions, may I say that I wholly agree that we should concentrate on productive investment in industry and commerce and thereby create real and genuine jobs for the future. May I point out, in defence of some of the economists, that the good economists take the same view as I do.
    Mr. loan Evans: As the House prepares to hear the Budget speech, does the Prime Minister agree that it is not a question of the number of economists in Government service but rather that the economists are beginning to give her the wrong advice? Does the right hon. Lady agree now that, after nearly three years in office, the Government should abandon their monetarist policies and go hack to policies that have been pursued by previous Labour and Conservative Governments to try to restore full employment, to deal with inflation and to get growth in the economy again?
    The Prime Minister: Monetarism means honest money. It means that the money is backed properly by the production of goods and services. If I might return to the point made by my hon. Friend the Member for Mid-Sussex (Mr. Renton), one reason why Spain fell was that she got into great trouble with inflation.
    Mr. Cormack: Notwithstanding the remarks of my hon. Friend the Member for Mid-Sussex (Mr. Renton), does my right hon. Friend agree that the Pope is worth 379 economists?
    The Prime Minister: The Pope is a very distinguished and good Head of State and Head of Church. I hope that he will have a successful visit to our country.
    Mr. Foot: Will the right hon. Lady be good enough to name any of those economists who agree with her, or does she think that she would convict herself of slander if she did so?
    The Prime Minister: I could name many—perhaps rather more than the right hon. Gentleman thinks. Suppose we start with Alan Walters and go on with Professor Patrick Minford?

    Public Trustee
    Mr. Michael Morrisasked the Prime Minister whether she has any plans to meet the Public Trustee.
    The Prime Minister: I have no such plans.
    Mr. Morris: Is my right hon. Friend aware that the financial performance of the Public Trustee leaves much to be desired? Bearing in mind my right hon. Friend's great success in denationalisation, does she not think that it would be in the interests of the beneficiaries and the nation if the work of the Public Trustee were wound up and given over to the private sector?
    The Prime Minister: If the beneficiaries wish to transfer their trusts from the Public Trustee to the private sector, of course they are able to do so. Some take that course. My hon. Friend is right in thinking about the possibility of transfer to the private sector. An attempt was made to transfer the work to the banks in 1972, but, alas, that was not successful. In the meantime, the work of the Public Trustee is declining, but he is the trustee of last resort. Until we can make proper arrangements for other people to do his work he will have to remain the Public Trustee. If such arrangements are possible, we shall consider them.
    Mr. Bidwell: If the right hon. Lady finds time to meet the Public Trustee, will she meet the auditor of the London borough of Barnet—
    Mr. Speaker: Order. This is not an open question. It is about the Public Trustee.

    Liverpool
    Mr. Steenasked the Prime Minister when she plans next to visit Liverpool.
    The Prime Minister: I have at present no plans to do So.
    Mr. Steen: Will my right hon. Friend denounce the scurrilous remarks made yesterday by the Labour candidate for Liverpool, Wavertree, who advocated
    720
    revolution, social unrest, civil war and bloodshed on our streets? Does she agree that such statements by the Militant Left-wing in Liverpool and on Merseyside drive private investment and private enterprise out of Merseyside and sows the seeds for more social unrest and unease?
    The Prime Minister: I denounce and condemn any such remarks by whomsoever they are made. If they were made by the Communist and Fascist Left, that does not surprise me. Equally, I denounce it strongly. Such remarks are designed to bring to an end our parliamentary democracy and the age-old institutions that have served Britain so well. They also drive away productive investment from an area that needs it, which means that jobs do not go there. That may be the objective of such people, who are the great destroyers. Some of them prefer social unrest.
    Mr. Alton: I agree with the Prime Minister's comments about those who orchestrate violence on our streets, but does she agree that the fact that 45 per cent. of the people in my constituency and the neighbouring constituencies of Scotland Exchange and Toxteth are standing in dole queues, idle and unemployed, provides the breeding ground for the violence that we have seen?
    The Prime Minister: I refer the hon. Gentleman to Lord Scarman's report, which tried to identify some of the causes of riots. Riots and violence of any kind do not help to attract jobs. We are trying to do everything that we can on Merseyside. During the period under review the resources devoted to the urban programme grant went up considerably compared with those made available under Labour. The resources under the partnership scheme nearly doubled. The resources under Industry Act assistance—to get jobs—went up from £22 million to £32 million from the time of the Labour Government to our time.
    Mr. Thornton: Will my right hon. Friend accept from me that there is more to the problems of Liverpool than is evidenced by Toxteth? Does she accept that an over-concentration on those problems is allowing people from the Liverpool Eight Defence Committee, supported by Marxist tendencies in Liverpool, to distort the situation and so give rise to a feeling in Liverpool that the Government are paying far too much attention to Toxteth and less than is needed to the other parts of Liverpool?
    The Prime Minister: I fully take my hon. Friend's point. There are many successful firms and companies in Liverpool. Perhaps it would be a refreshing change if we tried to define the reasons for success and then tried to emulate them more widely in Liverpool and elsewhere.
    Mr. Parry: When the Prime Minister eventually plucks up courage to visit Liverpool, will she visit the inner city areas? Is she aware that four of the inner city wards, according to official Government surveys, are among the most deprived in the United Kingdom, possibly in Western Europe? Are not the Government's monetary policies responsible for those appalling facts and figures?
    The Prime Minister: As the hon. Gentleman knows, I visited Liverpool last year after the riots and appointed my right hon. Friend the Secretary of State for the Environment to attempt to tackle the deep-seated problems of that city. Those problems have endured for a long time. It is a question not only of money but of leadership at all

    721
    levels and throughout society. Without that we cannot pull anywhere together. I hope that my right hon. Friend will succeed in getting leadership in the voluntary services, the churches and the local authorities so that we may carry out the necessary reconstruction in attitudes and in discipline in Liverpool.

    Factory Closures
    Mr. Campbell-Savoursasked the Prime Minister how many hon. Members she has seen on matters relating to factory closures since she last answered oral questions.
    The Prime Minister: One, Sir.
    Mr. Campbell-Savours: Is the Prime Minister aware that the factory closures in the Northern region, in my constituency in Workington and throughout the county of Cumbria, have brought about despair, anger and deep resentment against the Government? Does she understand that the industrial horizon in my constituency is now cluttered with the relics of a former industrial age? Does she also understand that the Government's policy of destabilising the British economy and destabilising people's personal lives, aggravated by the grossly unfair rent increases introduced by the Government, is undermining family life, because many millions of people cannot afford to pay those increases?
    The Prime Minister: Jobs do not come from such rhetoric. They come from having competitive and efficient industries, producing well designed goods that the hon. Gentleman's constituents will buy. Unless and until we get that we shall not have increased genuine jobs in manufacturing industry.
    Mr. Porter: Will my right hon. Friend note that one of the most competitive industries on Merseyside, which is in some danger, is Associated Octel of Ellesmere Port, which manufactures petrol additive? Will she undertake that the Government will examine in detail the arguments advanced emotionally by the Campaign for Lead Free Air before the Government reach any decision about reducing the level of lead in petrol and making 2,000 of my constituents redundant?
    Mrs. Renée Short: What about lives?
    The Prime Minister: As my hon. Friend knows, the Government decided substantially to reduce lead in petrol. We decided to move to a low-lead, high octane petrol on the ground that we could get a better result from that rather than from having a different formula for petrol. That means that we shall have good results by 1985. I know the point that my hon. Friend is making. I shall certainly consider it.
    Mr. Edwin Wainwright: Does the Prime Minister realise that, no matter what statements she makes, over 3 million people are still unemployed, including 700,000 young people, who are losing hope? Whatever the right hon. Lady is doing, she does not seem to have any commonsense approach to bringing down unemployment and giving hope to young people.
    The Prime Minister: If, over the years, we had had less overmanning and pay that was more related to output, we should have far more jobs than we now have. Until we have efficient industry and increased pay related to increased output and good design we shall not have the jobs back, no matter how much the hon. Gentleman pleads. We have to earn our way in the world and not merely speak it.

NEW MEMBER
The following Member took and subscribed the Oath: William Martin Smyth, Esquire, for Belfast, South.

Wages Council Orders Enforcement
3.31 pm
Mr. Don Dixon: I beg to move,
That leave be given to bring in a Bill to provide for the automatic prosecution of and the publication of the identity of employers who pay their employees wages below wages councils' statutory minimum rates.
Little did I think, when I sat outside the Private Bill Office for many hours some weeks ago, that my Bill would cause so much interest. It is good to see so many hon. Members here to support it.
Most workers in the United Kingdom have a direct influence on their pay levels via negotiations and voluntary agreements between their employers and trade unions. But some 3 million workers have no such influence on their pay levels. They are working in industries where it is difficult to establish collective bargaining agreements. Therefore, they are covered by .the minimum wage rates and conditions laid down by the wages councils. [Interruption.] I know that there are many Conservative Members who are not interested in the 3 million unemployed or the plight of old-age pensioners or those on supplementary benefits, but if they kept quiet and listened people outside might think that they had some sympathy for the lower paid.
I declare an interest as a Member sponsored by the General and Municipal Workers Union, which has fought very hard for the lower paid workers. The wages councils have been in existence in various forms since 1910. They now cover 27 industries of which the largest are hairdressing, hotel and catering, retail—[Interruption.]
Mr. Speaker: Order.
Mr. Barry Sheerman: On a point of order, Mr. Speaker—[Interruption.]
Mr. Speaker: Order. There is as much noise coming from Labour Benches as there is from the Conservative Benches. The hon. Gentleman must realise that there is some excitement in the House. I think that hon. Members are waiting for a statement, which is why there is all this chattering.
Mr. Dixon: Thank you, Mr. Speaker. I thought that hon. Members were waiting to hear about the contents of my Bill.
The wages council system, despite many and sometimes justifiable critisisms made of it, is the minimum safety net for some 3 million low paid workers. When I say low paid, I mean low paid. We are talking about people who are earning between £35·50 and £57·70 for a 40-hour week, compared with the national average earnings of £120 a week. In many instances, the workers concerned would be better off drawing social security benefit.
The major critisism of the wages council system is that it does not protect the very people that it is designed to protect. By and large, the people working in areas covered by wages councils are working in small units subject to the mercy of employers and without the protection of the trade unions.
724
Many workers in wages council industries are women whose income is essential to sustain the family income. This makes it more important that the wages council system works on their behalf. It is bad enough that those who complain to the wages inspectorate because they are underpaid have no protection against unfair dismissal; what is wrong is that there is no sanction against the employers who are caught underpaying. Any underpaying employer can confidently expect to escape checks of any sort on his activities since the government have reduced the size of the wages inspectorate by one third.
It was already a major task for the 177 members of the wages council inspectorate to ensure that the ½ million employers subject to the legal requirements of paying a minimum wage did so. By reducing the size of the inspectorate to 117 the Government have increased the odds against the low paid even more substantially.
Those employers who receive their once-in-10-years inspection can always take comfort from the fact that even if they are caught underpaying it is extremely unlikely that anything will happen to them. Of the 37,000 firms visited in 1980, 12,000 were found to be paying below the minimum rate. Those 12,000 were found to owe their waiters about £2 million. In certain wages council ndustries it is even worse. For example, in hotels 4,000 waiters were owed £300,000, while in pubs 5,500 were owed nearly £1½ million. Another 1,000 workers in cafes were found to be owed £78,000.
In other words, of the £2 million stolen from the workers covered by the 27 wages councils, over £800,000 was stolen from the 10,500 workers. Besides this, 3,500 places of work do not even bother to inform their waiters that they are legally entitled to a minimum wage and approximately 6,000 hid possible evidence of their wrong doing by not keeping any record of wages. Because the inspectorate—[Interruption.]
Mr. Harry Cowans: On a point of order, Mr. Speaker. I realise that this is an exciting day for many hon. Membersembers. However, other hon. Members have come to the Chamber to listen not only to the Chancellor of the Exchequer but to what my hon. Friend the Member for Jarrow (Mr. Dixon) has to say, regardless of where the noise is coming from.
Mr. Speaker: Order. The hon. Member for Newcastle upon Tyne, Central (Mr. Cowans) is right. Everyone is entitled to be heard as he submits his argument to the House.
Mr. Dixon: Because the inspectorate inspects each establishment only once in 10 years, it has been estimated that the real amount of underpayment is £28 million. That is the sum that is stolen each year by 12,000 individuals. If I or any other hon. Member were robbed of £75 it would be uncomfortable and disturbing. For people on £35 a week it is a tragedy and a disgrace.
The Government bear a heavy responsibility. If the known extent of theft is anything like the amount that is covered up, the Government are deliberately encouraging theft by these employers. What happens to the employers? Most of the time they are simply rapped over the knuckles and told to be good boys and not to do it again. Of the 12,000 known employers who underpay—and we must remember that we are talking of underpayment on basic pay, not on complicated things such as premiums and

725
overtime payments—nine were prosecuted, eight were fined less than £175 and only one was fined more than £3,000.
The excuse given for non-prosecution is generally that the wage council orders are difficult to understand, but complicated though the legal documents orders are, and the many orders simplifying them, the one easy part of each document is what is the basic hourly rate.
If I were caught stealing from a supermarket, having put groceries on my trolley and then walked out into the street and been caught by a policeman, I doubt whether the policeman would be very sympathetic if I said that I did not understand the system and did not realise that I should have paid the girl near the door. Yet 11,991 employers were allowed to steal large sums from their workers and just plead ignorance.
Another argument is that the time taken to prepare a prosecution on this issue reduces the time available for inspection. I have some sympathy with that view, but the local chief constable would have short shrift if he argued that time spent prosecuting local burglars meant that there was no time to catch new ones breaking and entering.
One of the greatest deterrents against theft, especially to those not accustomed to being called thieves, is to have their names publicised in the local newspapers. Even where offenders are not prosecuted—the figures show that nearly 50 per cent. get away with this type of theft—there would be a deterrent if the people concerned were named. One wages inspector told the licensed residential establishments wages council that naming individuals could lead to libel actions, and therefore those who stole from their workers could remain anonymous.
The Bill provides for automatic prosecution in any case of infraction and for the automatic naming of the individual so prosecuted, I envisage that names of the individuals concerned would be posted in the local jobcentre so that waiters seeking work would know whether the employer had been caught with his fingers in the waiters' pay packets. Clearly, this would mean that the Government would have to reverse their penny-pinching, mean-minded policy of allowing those least able to cope with the recession to flounder even more. The Government would have not only to restore the fear of the inspectorate but to double its numbers. The combination of those three steps would put a speedy end to the scandal of the £28 million stolen each year.
I hope that what the Bill seeks to do for low paid workers at 3.30 pm will not be undone by the Chancellor of the Exchequer's Budget by 4.30 pm.
3.41 pm
Mr. Stan Thorne rose—
Mr. Speaker: Order. Is the hon. Gentleman seeking to catch my eye to oppose the Bill?
Mr. Thorne: Yes, Mr. Speaker.
Mr. Speaker: I shall, of course, call the hon. Gentleman, but I must make it clear to him that he must oppose the Bill in his speech.
Mr. Thorne: My purpose in opposing the Bill will become obvious from what I am about to say.
First, the House should congratulate my hon. Friend the Member for Jarrow (Mr. Dixon) on having moved the motion on this particular day. Low pay in Britain now—
Mr. Speaker: Order. It appears that the hon. Gentleman intends to speak in support of the Bill. I must say to him that it would be very unfair to waste the time of the House today on a gesture of that sort.
Mr. Thorne: It was certainly not my intention to waste the time of the House. In my view, it would be a salutary conclusion if the House overwhelmingly, by its vote, showed its complete support for the motives—
Mr. Speaker: Order. I request the hon. Gentleman to resume his seat.
Question put and agreed to.
Bill ordered to be brought in by Mr. Don Dixon, Dr. John Cunningham, Mr. Robert C. Brown, Mr. Jack Ashley, Miss Betty Boothroyd, Mr. Giles Radice, Mr. Frank R. White, Mr. Neil Carmichael, Mr. George Robertson, Mr. A. E. P. Duffy, Mr. James Johnson and Mr. Michael English.

Wages Council Orders Enforcement
  WAGES COUNCIL ORDERS ENFORCEMENT
  Mr. Don Dixon accordingly presented a Bill to provide for the automatic prosecution of and the publication of the identity of employers who pay their employees wages below wages councils' statutory minimum rates: And the same was read the First time; and ordered to be read a Second time upon Friday 2 April and to be printed. [Bill 82.]
  WAYS AND MEANS

    Budget Statement
    Mr. Deputy Speaker: Before I call the Chancellor of the Exchequer, it may be for the convenience of hon. Members if I remind them that at the end of the Chancellor's speech, as in past years, copies of the Budget resolutions will not be handed around in the Chamber but will be available to hon. Members in the Vote Office.
    3.46 pm

  INTRODUCTION
  The Chancellor of the Exchequer (Sir Geoffrey Howe): The House will tomorrow have the opportunity of paying its full tribute to Lord Butler, of whose death it has just learnt with such deep regret, but it would not be fitting for me to embark on my Budget proposals this afternoon without saying a word about one of my most gifted and distinguished predecessors.
  It is almost 30 years to the day since "Rab" introduced his first Budget, and there are now only a handful of hon. Members who were present on that occasion. They I would, I am sure, agree that it was an historic occasion, as it marked both the end of the transition of the economy from war to peace and the beginning of the prosperity which was a feature of the 1950s and 1960s. He went on to present four more Budgets and, with the exception of the right hon. Member for Leeds, East (Mr. Healey), was the longest-serving Chancellor of the Exchequer since the war. His achievements for the country and his humanity and breadth of vision will be long remembered.
  A tradition has emerged, I think, since "Rab" Butler's time that the Budget speech should be composed in some sense almost as though it were a detective story with many

  727
  lengthy passages of exposition before the denouement, the full picture being revealed only at the end. That was supposed to have something to do with waiting for the closure of the markets. Having listened to a good many of these annual rituals since first I entered the House, the thought has occurred to me, and no doubt to others, that perhaps there was an element of tantalising suspense that was thought desirable to retain the attention of hon. Members at fever pitch.
  This afternoon, I propose to break with that tradition , and to tell the House without more ado that in this Budget I shall be proposing substantial reductions in taxation while at the same time reducing the Government's borrowing requirement.
  This will be a Budget for industry—and so a Budget for jobs. But it will be a Budget for people as well. It is a Budget that will strengthen the foundations of economic recovery.
  To set my proposals in context, I must start with a word about the past. Within the memory of almost every Member of this House, almost everyone in this country took it for granted, for example, that our buses, cars, or motor cycles were made in Britain from British steel. Most of the world's finest ships were still being built in our yards.
  It is, after all, only 11 years since the Erskine bridge was built over the Clyde—to a design which would allow to pass below it a steady line of Cunarders from John Brown's world-beating yards at Clydebank.
  So, until quite recently, we took it for granted that we had one of the highest living standards in Europe, if not in the world.
  By 1979, all that had changed. Already, we had seen inflation go above 25 per cent. and already we had seen unemployment close to 1½ million. Fewer than half the new cars bought in Britain were being made here. Instead of building three out of every 10 merchant ships supplied to the markets of the world, as we had done just 25 years ago, we were building only three out of every hundred. Our share of world trade had been halved, and living standards in several European countries were at least half as high again as ours.
  We had been paying ourselves too much and producing, and selling, too little. During the 1970s, money incomes had gone up 20 times as much as real output. That was a sure recipe for inflation, for lost markets, and for lost jobs.
  Through all this, of course, many companies, many individuals, continued to record outstanding successes. But all too often they were swimming against the tide, because our overall economic performance had become one of the weakest and most inflation-prone of all the major industrial countries.
  At the last election we made all this very clear. We made it plain, too, that reversing this decline would require a major effort—an effort that would need to be sustained over the lifetime of more than one Parliament. And so it will be.
  But this country's problems are not ours alone. In the summer of 1979, the whole world was hit by the fresh surge of inflation and renewed recession that followed the second huge increase in the price of oil. The average price of a barrel of oil last year was $34. That was 26 times as much as in 1970, when it cost only $1·30.
  728
  The 1979 oil shock made the task of restoring our economy both more urgent and much more difficult. And it coincided with the surge in pay, and public spending, which the outgoing Government bequeathed to us.
  So, in spite of North Sea oil, Britain entered the recession in poor shape, and rather earlier than other major countries.
  Britain has, therefore, suffered worse than many. But we have not suffered alone. In the United States, in France, and in many smaller economies, unemployment has been rising sharply. In Germany last year, the number out of work rose by more than half a million, and there are now about 26 million people out of work in the industrial countries.
  Even so, most Governments have reacted by continuing to give priority to the fight against inflation, and they have been making progress in that fight. But the battle is by no means won, so the outlook for the growth of world trade remains subdued.
  It is in the light of this international environment that British policy has to be fashioned. All too often people still talk—and behave—as if British Government decisions alone were all that mattered for the British economy, and as if we could protect or subsidise ourselves against the impact of our competitors or the decisions of other Governments.
  Yet the House knows how important for the United Kingdom are the policies of the OPEC countries in the world's oil markets, of the United States in relation to economic activity, inflation and interest rates throughout the world, and of Japan for the balance of world trade.
  I shall have something to say later on about the impact of recent changes in the oil market. They are likely to have an encouraging effect on the international outlook for prices and output, and, in the medium term, on the stability of interest rates and exchange rates. But at present, it is interest rates and perhaps particularly interest rate volatility that are causing understandable concern, and I wish to say a word about that.
  At a time of growing international tension, the United States is shouldering burdens for the defence of freedom for which all of those on this exposed flank of Europe should be grateful. The United States Government are also showing admirable commitment to the maintenance of monetary disciplines. For that, too, we should be grateful, for American inflation affects us all, because of the importance of the United States and of the dollar in the world economy.
  We and our other friends have, therefore, a legitimate interest in the success of the United States Administration in reconciling their spending obligations with their own responsible pursuit of monetary discipline. If that success were only partial, there would be a risk of continuing high interest rates, which would be damaging to recovery—in the less developed world as well as in the industrial countries.
  As I have told the House on a previous occasion, there is no reason to suppose that we in this country could insulate ourselves from such pressures by the simple single step of participation in the European exchange rate mechanism, because that has not been the experience of the existing participants.
  Nor would concerted intervention in exchange markets be able, for any length of time, to contain the movement of funds that can be generated by the widening of interest rate differentials.

  729
  There is, therefore, all the more reason for the closest possible understanding between those responsible for managing the major economies, for, as I have said, their policies can all have a direct, and often speedy, impact upon each other. We in this country must do our best to exercise our influence on the policies of our allies and associates, both directly and through the European Community, the Commonwealth, OECD and the International Monetary Fund. And we do just that. That is why I attach so much importance to the regular meetings of Community Finance Ministers, and of the World Bank and the fund, and why I look forward to welcoming to London this summer my counterparts from throughout the Commonwealth.
  But let nobody pretend that we could expect to exert any influence at all if our own policies failed to command respect abroad. It is, however, widely recognised abroad—though not always by some at home—that in the last three years we have made substantial progress in tackling our long-term problems.
  Thanks to last year's Budget, public borrowing has gone down as a percentage of gross domestic product, giving us interest rates lower than they would otherwise have been. In the six months following the Budget, our rates were on average four points below American and French levels, and on a par with German rates, in spite of the difference between German and British levels of inflation. And output started rising from the middle of the year.
  Inflation has almost halved since the spring of 1980. It should be in single figures during this year, and lower still in 1983.
  Productivity has been rising sharply. In manufacturing industry last year, output per man rose by about 10 per cent.
  Lower pay increases, combined last year with fast productivity growth, meant that unit labour costs in manufacturing rose hardly at all. Our performance was comparable with that of Germany and Japan, and better than all our other major competitors.
  Exports were rising again by the end of 1981. In the last four months, their value and volume was well up on a year earlier. Business surveys, and most economic forecasts, point to a further rise over the next year.
  In the economy as a whole, we now expect output to grow in 1982 by 1½ per cent. and by rather more in 1983.
  This gives the lie to all those who argued, not least at the time of last year's Budget, that our policies were foredoomed, because the recovery that we foresaw, and worked for, is now taking place. My aim in this Budget is to nurture and help sustain that recovery.
  I shall discuss, first, the central issue of unemployment. Helping industry to become more competitieve competitive is the best way of creating future employment. But there is a clear case for direct action by Government as well, and I shall have a new proposal to bring before the House. I shall then have something to say about monetary policy, and the level of Government borrowing in the year ahead. Finally, I shall come to the tax and other measures which we intend to take, primarily for the benefit of industry and jobs.

  JOBS AND PAY
  I begin with unemployment. To have millions of people at a time without work, many of them for long periods, is a tragic loss to any community. To be unable to find work is an affront to personal self-respect. This waste of human resources is today the misfortune of many societies besides our own. It is naturally a cause of deep concern to every Member of this House.
  It is no service to the unemployed to suggest that there is some swift or simple remedy. For years, for example, it has been argued—it is still argued today—that we could get unemployment down if only we were less concerned to fight inflation. The right dose of reflation, more generous public spending, so the argument runs, would soon see unemployment tumbling down.
  Would that it were so easy! But successive Governments for 20 years have been tempted to act on that advice. And with what result? All the time the tide of unemployment has been rising insistently from one business cycle to the next.
  The truth is that "reflation" does not create jobs that last. In the longer run, it helps to destroy them. If more public spending was the proper engine for growth and jobs, Britain should now lead the world in both. Yet in fact unemployment today is almost eight times higher than it was 20 years ago.
  The unemployed deserve a more considered response than that—one that is based on analysis of the root causes of the social blight of unemployment.
  So this afternoon I want to remind the House once more of two figures that virtually tell it all. Since 1960 the real purchasing power of the average citizen in Britain has risen by over two-thirds, but the real rate of return on the capital employed in British industry has fallen by five-sixths. In other words, our present living standards have for years been plundered from the store of investment for the future.
  Nor have we put to good use the investment that has been made. Too often we have tried to mitigate the inescapable consequences of poor productivity and shrinking international competitiveness by clinging to manning levels that could not be sustained.
  We have only to recall, by way of example, the history of the British Steel Corporation. Had we not, throughout the middle 1970s, put off the painful choices, the corporation and those who work in it would have faced the current slump in world demand for steel in far better shape to weather it. Far fewer jobs would have been lost. Acquiescence in poor productive performance and overmanning may put off the evil day. But it only makes the inevitable adjustment all the harder when it comes, as come it must.
  And so today we face the huge task of helping to create the conditions in which the unemployed can obtain work, in jobs that will last; and, as a vital step in this, encouraging wages to be at a level which will enable these more secure jobs to be created. My principal Budget measures will help in that direction.
  Some of the obstacles to fuller employment have been created by successive Governments. Actions taken with exactly the opposite intention have often had the effect of keeping people out of jobs, actually adding to unemployment.
  The Government have taken action to remove a number of these obstacles. We are seeking, by our employment

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  legislation, to create a more reasonable balance of bargaining power between the partners in industry. But in truth we need much wider change than can be brought about by Government or Parliament alone. We need a clear-sighted change in our national understanding of the problem, and then a more practical, more flexible approach.
  The key point is this. Somewhere in the gap between the levels of income which we pay to those out of work and the earnings enjoyed by those who have a job are rates of pay which those now out of work would be glad to take if they had the chance. But convention and a narrowness of vision prevent those bargains being struck. When jobs are in abundance, any employer will make sure that he keeps up with the market, by offering high enough pay to recruit and retain the workers he needs. And trade unions will naturally enourage him. But when business is tight and jobs are scarce, the same employer owes it to the unemployed, as well as to his own employees, to react to the changed market, to pay at rates which leave room for him to earn enough for further business and further investment—and so for new jobs. In this situation too, trade unions have—or should have—exactly the same interest. That is the best service that any employer or union leader can offer to the unemployed.
  Attitudes are changing in that direction. And so prospects for employment are improving. But it will take time. That is why we have already committed substantial sums for special employment and training measures to help those hardest hit. Our plans for 1982–83 provide nearly £1½ billion for special employment and training measures. By 1984–85, its first full year, we plan to spend over £1 billion a year on the new youth training scheme alone—a major advance for school leavers who cannot find jobs.
  A number of these measures—for example, the young workers scheme—are intended to help the labour market work more flexibly, to help make wage levels more responsive to economic reality, and so lead to the creation of lasting jobs.
  We should all wish to do more, within what the economy can afford, to reduce the continuing personal burdens of unemployment. It is clearly right to do all we can for those obliged to spend a long time without a proper job.
  We can all see, in our local communities, tasks of environmental improvements, or of bringing help to those in need, that are crying out to be performed. Lord Scarman rightly drew attention to this in his recent report. He pointed out that there could be great advantage in schemes for socially useful activity, in place of current unemployment and social security arrangements. There are people needing work and work that needs to be done; the need is to match the two.
  Many people believe—certainly this Government do—that it should be possible to take further constructive action along these lines. Let me give the House some indication of what we now have in mind.
  The central idea would be to give those who have been on the unemployment register for some time the chance to work for the benefit of their own community, while still getting broadly the equivalent of their benefit entitlement plus an addition for expenses and the like. They would
  732
  remain free to take a regular job if it came along. And it would be for them to decide whether or not to participate in such a scheme.
  This concept may be unorthodox. Certainly it is no substitute for long-term jobs. But in today's world it makes a great deal of practical sense. The Government would like to see it tried, to see it carried through successfully, on a wide, indeed on a nationwide, scale, with people working on non-profit-making projects brought forward by local sponsors of all kinds, including voluntary organisations and the churches, and indeed local authorities.
  My right hon. Friend the Secretary of State for Employment is, therefore, asking the Manpower Services Commission to work up urgently a flexible and voluntary scheme on these lines, so that the Government can take firm decisions in the early summer on a new initiative for the commission to run alongside the present community enterprise programme.
  We shall look for the commission's advice on what is possible; but, for illustration, net additional expenditure of some £150 million a year excluding supervision costs ought to be able to support around 100,000 places. That would be excellent value for the taxpayers' money—value for the community and a constructive opportunity for those who choose to take part. We should indeed be ready to back this kind of development on an even larger scale if the demand is there.
  The Government therefore hope that all those in the community who could play a part in promoting this scheme will give it their early and careful consideration. And I hope that this new initiative will also be welcomed in all parts of the House.

  MONETARY POLICY
  I propose next to describe to the House how monetary policy will operate in the year ahead. I shall, nevertheless, do so as briefly as I can. The technically minded will find ample solace in the lapidary prose of the Red Book.
  Ever since the collapse of the Bretton Woods system of fixed exchange rates in 1971, the need to control the money supply has been accepted world-wide. In this country, published targets for monetary growth were initiated by my predecessor in 1976, the year in which he had to seek help from the IMF. Then, as now, monetary control was supported by progressively lower public borrowing. I am sure that my predecessor was right to be persuaded of the need for monetary and financial restraint, to persuade individuals and companies alike that inflation would come down.
  The medium term financial strategy which the Government launched two years ago is an extension of this approach. It has helped us to reduce inflation, and will continue to do so. We now have a real prospect of sustainable recovery. It is clearly right to maintain the strategy. Of course, it is right to adjust, in the light of experience, the way we pursue it. But maintain it we must. For it establishes the financial framework within which day-to-day policy decisions are taken.
  In last year's Budget speech, I emphasised that no single measures of money can fully describe monetary conditions—they must be assessed in the light of all the available evidence. And that remains the basis of our policy.
  As intended, the overall effect of policy in 1981–82 has been to maintain downward pressure on inflation. £M3 has

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  grown faster than the target set a year ago. This was due partly to the Civil Service strike. It has been affected, too, by structural changes in the market place—such as the rising market share of the banks—which could have long-term effects. The growth of the wider measures of money probably also reflects greater demand for liquid assets as a medium for saving. This, too, could last for some time. So, though the stock of broad money is higher than originally expected, our judgment is that this is consistent with maintaining the steady pressure needed to achieve a downward trend in inflation.
  Certainly the evidence as a whole does not suggest lax monetary conditions. As in several other countries, the narrow aggregates have grown more slowly than the wider ones. The effective exchange rate has been relatively steady since the autumn. Interest rates have been high—both in nominal and in real terms. The price of some important assets—for example, houses—has been constant or falling.
  I have taken account of these factors in setting somewhat higher ranges than were suggested for £M3 in last year's Red Book. The target range for 1982–83 will be 8 to 12 per cent. This adjustment in the monetary target does not imply any relaxation of purpose. On the contrary, it is a recognition of the pace of progress thus far, and, in the light of that, our judgment that the new ranges will be consistent with continued progress against inflation.
  The new target represents a realistic restatement of our determination to maintain a responsible monetary policy. It should be consistent with growth of money GDP at 10 per cent. a year, with continued progress against inflation, and with a strengthening recovery of the real economy.
  We shall continue to monitor a range of indicators. To make more explicit the way in which we do this, the ranges that I have just announced will apply to both the broad measures of money—£M3 together with PSL2—and the narrow measure, M1.
  The exchange rate also normally gives useful information on monetary conditions. For while the Government have no target for the exchange rate, its effect on the economy, and, therefore, its behaviour, cannot be ignored.
  Evidence on all these variables will continue to be taken into account. Policy dicisions will be aimed at maintaining a monetary environment conducive to the reduction of inflation.
  Targets for the years after 1982–83 will be set nearer the time. Slower monetary growth is central to the medium-term financial strategy. The path for further reductions in the rate of money growth from year to year is illustrated in the Budget Red Book. The ranges have been constructed on the assumption that there are no major changes in the exchange rate from year to year.
  What I have just described provides the framework for continuing the conquest of inflation. We are winning that battle and are determined to see it through.

  MONETARY CONTROL AND DEBT SALES
  I ought also to mention changes which have been made over the past year in the techniques of monetary control. From last August, minimum lending rate ceased to be posted. The main purpose of this change was to allow market forces a greater influence on the structure of interest rates, and to allow rates to be adjusted more promptly in response to changing economic conditions. These objectives have been met. The new arrangements have coped successfully with some severe swings both in the international markets and in the money markets here at home.
  We have also been working to even out the flow of revenue over the year in order to ease the problems for money market operations and monetary control generally. Let me give three examples. Over the past nine months, Customs and Excise has taken steps, with the agreement of the companies concerned, to secure a more even monthly flow of VAT into the Exchequer by adjusting the quarterly dates on which certain traders are required to account for VAT. Secondly, we are seeking a smoother payment of the building societies' composite rate tax. Finally, and most important, the proposals for oil taxation, which I shall describe later, will spread the payment of petroleum revenue tax more evenly over the year.
  A central element in the Government's financial policy is that the gap between public sector spending and revenue should be financed in a way that is consistent with our monetary target. We have therefore greatly improved the balance of Government funding.
  In 1979–80, when the PSBR was similar to this year's, sales of gilt-edged stock were more than eight times larger than the contribution from national savings. This year the ratio was down to about two to one. National savings have exceeded their target, which was raised to £3½ billion last autumn. I congratulate the department on achieving these higher inflows through increased efficiency, while making its contribution to Civil Service staff reductions.
  Interest rates have come down since the current national savings certificate was introduced. It will therefore be withdrawn from tomorrow and replaced as soon as possible by a new savings certificate offering a lower but still competitive rate of return.
  New sales of gilts to the public in the past year have not needed to be more than about £7½ billion, with less emphasis on conventional long-dated high-coupon stocks In our funding policy we have demonstrated our confidence in our policies for reducing inflation. Last year I announced, as one part of our policy of diversified funding, the introduction of indexed gilt-edged stock. Over the past year, sales of this indexed stock amounted to some £2½ billion.
  The right to buy this indexed gilt was restricted to pension funds and certain other institutions in respect of their United Kingdom pension business. I have now decided to remove this restriction. The Bank of England is announcing this afternoon a new issue of indexed stock on an unrestricted basis.
  The restrictions on the existing indexed gilts already in the market will also be removed today. The House may recall that the original prospectus for these stocks itself provided for the possibility of removing the restrictions. This broadening of the market should increase the usefulness of indexed gilts as a funding instrument.
  Our policy of diversified funding will continue next year, with contributions coming from indexed gifts, conventional gilts and national savings. In the case of national savings, the target for 1982–83 will be £3 billion, just a little below the figure for last year.

  PUBLIC SECTOR BORROWING
  As well as setting a proper framework for money supply growth, the medium-term financial strategy sets out the Government's views on the proper level of public borrowing in the years ahead. This cannot make excessive demands on the funds available without putting upward pressure on interest rates. That is what Governments in other countries have found out, to their cost. Recent experience throughout the world exposes the myth that big budget deficits are good for growth and employment. On the contrary, a responsible fiscal policy is essential for both.
  Last year I budgeted for a PSBR of £.10½ billion. Since then output has moved broadly as expected at the time of the last Budget, and the 1981–82 PSBR is still on track for the forecast outcome.
  Some argue that our fiscal policy is excessively tight, once account is taken of the effects of the recession. I do not accept this. The acid test for the PSBR is the level of interest rates at which it can be financed. My Budget decisions last year took account of the recession, and in assessing the impact of fiscal policy on the economy it is actual spending and tax payments that matter—not hypothetical estimates of what they might have been if the world were somehow different.
  I know that there are some who say that our interest rates are really determined in New York anyway, and hence that the amount that we decide to borrow is neither here nor there. Such reasoning is mistaken, and the conclusions drawn from it are dangerously wrong.
  Of course, it is true that international interest rate movements affect the price that we must pay for money borrowed here. But that in no way diminishes the responsibility upon us to choose policies likely to hold our interest rates in the lower part of the international range.
  Let us remember what happened last autumn. We could not resist the pressures of rates rising sharply all round the globe: we would not have been able to do so whatever the level of our own domestic borrowing. But, because of the firm line taken in my last Budget, our own interest rates, even after the increase in the autumn, did not soar to the levels reached in the financial markets of a number of our competitors.
  Had I last March thrown caution to the winds, our rates of interest would not have come down last spring, and would have had to go up far higher last autumn. Indeed the £10½ billion PSBR set for the year now ending, and the determined measures that we have taken to achieve it, have again been helping us in recent weeks to bring down the cost of borrowed money.
  The fact is that, while there are limits to the influence we can have on the world background, we can do something more directly about our own borrowing. The larger the PSBR we start with, the higher the interest rates we shall end up with, and the opposite is also true.
  In my coming to a judgment about what we can responsibly plan to borrow in the next financial year, there is one further international dimension which I cannot ignore the recent fall in oil prices around the world.
  I cannot stress too strongly that a lower level of oil prices, if it is sustained, is basically good news for Britain and for the world. It reduces industrial costs. It helps to lower inflationary expectations. It makes room for a faster growth in output, consistent with the proper monetary discipline which is now so widely applied. And, as the balance of earnings power between the advanced industrial countries and the oil producers undergoes some correction, the weight of highly mobile financial surpluses, which have been such a destabilising influence on world capital markets in recent years, is likely to be diminished. For this reason, the prospects for international inflation, for interest rates, for growth, and for exchange rate stability have all improved in recent weeks.
  But, for my Budget judgment, this does to some extent work both ways. In part, my task has already been done for me. A drop in oil prices affects our own economy in much the same way as a cut in indirect taxes, or Excise duties, or national insurance surcharge.
  Lower oil prices reduce costs and prices all round. They leave people in this country with more money in their pockets to spend on other things. They lower the costs of production and distribution. And, in addition—which a cut in our own tax rates cannot do—a fall in the world oil prices promises to increase activity worldwide, and with it the purchasing power of many of our traditional customers in the non-oil developing countries.
  But that is not the whole story. When the price of oil drops our tax take from the North Sea production is correspondingly reduced. Other things being equal, this would increase the borrowing requirement, though not by as much, since the beneficial effects of the oil price cut boost our revenues from other forms of activity.
  The prospect is bound to be uncertain. But in determining the size of the PSBR for the year that starts in April I can assure the House that I have made allowance for these factors as we know them today. Obviously, if there was to be a prolonged fall in the oil price, below the level we currently expect, then both the beneficial effect on activity and domestic prices, and the revenue-loss effect on the PSBR, would be increased. It would be wholly irresponsible for me to rule out the possibility of having to take action to correct the fiscal balance if that were to happen.
  The illustrative projections presented with last year's Budget envisaged a PSBR for 1982–83 equivalent to 3¼ per cent. of GDP. This would be around £9 billion at current prices. In the light of the latest assessment of the prospects, I have thought it right to provide for a PSBR of around £9½ billion in the coming year, equivalent to 3½ per cent. of GDP. This is about £1 billion below the expected outturn for the current year. But it is also about £1·3 billion above what the PSBR would have been next year on the conventional assumptions—that is to say, if the changes to income tax and specific duties which I am proposing today were only to take account of the past year's inflation. That £1·3 billion is the PSBR cost of my Budget proposals in 1982–83. Their net cost to the Exchequer in a full year is over £3 billion, compared with this year's tax and duty rates.
  The new revenue and borrowing projections published in the Red Book envisage a further decline in the PSBR

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  over the following two years to 2 per cent. of GDP on the assumptions about growth and inflation which are there set out. So the size of the Government's borrowing in real terms will continue to decline from year to year. This will further ease the pressures it imposes on financial markets, and it will assist progress towards lower interest rates and lower inflation.
  I turn now to expenditure.

  PUBLIC EXPENDITURE
  On 2 December I announced the Government's public expenditure plans for 1982–83. Today we are publishing the annual public expenditure White Paper. This sets out the plans for next year in more detail and also contains our provisional proposals for the two following years. At the same time, the Supply Estimates for 1982–83 are being presented to the House. The House will note the new and greatly improved presentation in the White Paper which I certainly find much easier to follow.
  In the last two years these documents have been published on Budget day, so that all the information would be available at the same time. In this way the Budget debate can cover both sides of the account. The Select Committee on the Treasury and Civil Service is, I know, considering the handling of these matters, and I await its recommendations with interest.
  I explained to the House in December why we had decided to increase planned spending in 1982–83 by some £5 billion compared with the plans set out in last year's White Paper. The increases included some £1·3 billion of extra finance for the nationalised industries, £500 million more on defence, and another £800 million on special employment programmes. They were partly offset by a general reduction in most cash limited expenditure.
  Although most of the measures which I shall announce today involve reductions in taxation, I am also proposing some additions to public expenditure, totalling some £350 million in 1982–83. This includes an increase of £150 million in the Contingency Reserve to accommodate some of the expenditure measures. This brings the reserve in 1982–83 to £2,400 million. The planning total for 1982–83 given in the White Paper is £115·15 billion, in cash, compared with £110·2 billion, which is the cash equivalent of last year's projections for 1982–83. But the increase that I now propose will be more than offset by other changes in costs, and the total will therefore be £114·9 billion.
  Total public sector capital spending is next year planned to be about the same—£11½ billion—as expected this year. The plans allow for new investment by nationalised industries—including that financed from their own resources—of over £7½ billion in 1982–83, some 26 per cent. higher than the outturn now expected in 1981–82, and 40 per cent. higher than in 1980–81.
  Taking account of measures which I shall be announcing a little later, spending on construction is expected to rise by 14 per cent. to £10¼ billion in 1982–83. In particular, housing investment, and work done on water and sewerage projects, should be higher in real terms next year than this. In all these ways the Government are planning for the continued improvement of public sector services.
  For the first time we have published figures for the whole survey period in cash. Following the Budget changes, the planning totals for later years are £120 billion for 1983–84, and £128 billion for 1984–85, in cash. The
  738
  Contingency Reserve, of £4 billion and £6 billion respectively, which is included in the figures for each of these years, has been set to give realistic totals in a cash planning regime.
  The programme figures are provisional and will be reviewed in future surveys. The starting point will be the cash programmes resulting from this afternoon's announcements. The figures will not be automatically increased if inflation turns out to be higher than expected. Any alteration will be a matter of deliberate political decision. That is the essence of cash planning.
  I foreshadowed these developments in my Budget speech last year. I am confident that they will help us to keep expenditure under control.

  SOCIAL SECURITY AND CHARITIES
  By far the largest single element in public spending is social security. In 1982–83 it will account for £32 billion, over a quarter of the total. About half of this goes to the elderly, who deserve our special consideration. The Government have been determined to preserve the full purchasing power of the social security retirement pension. We shall accordingly raise the pension rates, to cover the expected increase in prices for the 12 months to next November.
  When I published the Industry Act forecast last December, I expected that increase to be 10 per cent. That was an appropriately cautious central forecast. But the outlook for inflation has clearly improved since December. My similar forecast now is that prices will go up by only 9 per cent. in the same 12-month period.
  But I do not propose to raise the pension rates by only 9 per cent. We intend also to compensate pensioners for the fact that last year's increase was based on a forecast of the rise in prices that was 2 per cent. below the actual rise. Retirement pensions will thus go up next November by a total of 11 per cent. The standard rate will be increased by £3·25 to £32·85 a week for a single person, and by £5·20 to £52·55 for a married couple.
  There is, of course, no Government commitment to full price protection except for the retirement pension and associated benefits. During the debate on the Government's public expenditure plans we said that a decision about the 2 per cent. shortfall in the value of other benefits would be announced at Budget time.
  The main ones are unemployment benefit and supplementary allowance, sickness and injury benefit, and maternity allowance. I have received many representations that the 2 per cent. shortfall should be restored on these benefits also. We have decided that it should be.
  This means that the rate of unemployment benefit will rise from £22·50 a week to £25 for a single person, and from £36·40 to £40·45for a married couple. Details of the other benefits will be announced tomorrow by my right hon. Friend the Secretary of State for Social Services. We have also decided on some changes in the rules governing payment of benefits. These are in response to representations we have received, and will be widely welcomed. My right hon. Friend will give details in his announcement tomorrow.
  There are, however, some further changes which I should announce today. First, child benefit, which is an important source of income for many—especially the lower paid with large families. From next November it

  739
  will go up by 60p a week, from £5·25 to £5·85. It will thus have been increased by 23 per cent. over two years, and so fully protected against inflation.
  The additional one-parent benefit will be increased by 35p to £3·65. In the case of the family income supplement, the prescribed amount for a one-child family will go up from £74 to £82·50.
  I shall have something to say a little later about the mobility allowance.
  The full year public expenditure cost of all the changes in the social security field which I have mentioned will be some £3,000 million. The extra cost in 1982–83 will all be accommodated within the public expenditure totals I have just announced.
  I turn now to help for charities.
  The Government are deeply conscious of the contribution to our national life that is made by many of our charitable organisations. Two years ago I introduced substantial new tax relief for covenanted donations to charities. I also doubled the exemption from capital transfer tax for charitable bequests or gifts made within one year of death.
  We have been urged to relieve charities from VAT on their purchases. The attractions of this are obvious, but it raises substantial difficulties. The more one studies how it might be done—we have looked into it exhaustively—the more insuperable appear the problems of definition, of administration, and of equity that stand in its way. So, reluctantly, I have had to be satisfied with other ways of helping charities instead.
  First, I propose to take the capital transfer tax exemption for qualifying gifts to charities a stage further, by increasing it, for gifts made within a year of death from £200,000 to £250,000.
  Secondly, I intend to abolish stamp duty completely on transfers of assets to charities.
  Thirdly, as the National Council for Voluntary Organisations has suggested, I propose to remove beyond all doubt any liability to development land tax where a charity disposes of property which has been subject to rollover relief.
  Taken together, these measures constitute worthwhile new assistance to charities and voluntary organisations. They build still further upon the significant benefits which charities have derived from earlier action by this Government. Our record continues to be one in which we can justifiably take pride.
  I now come to the particular problem of the disabled, which we have always had very much in mind. Last year, the International Year of the Disabled, I introduced a range of value added tax reliefs for charities concerned with the disabled. I am now able to announce three further measures of help.
  First, there will be some extension of the existing VAT reliefs for disabled people and the charities serving them.
  Secondly, the rate of mobility allowance will be increased—by more than the expected rise in prices—from £16·50 to £18·30 a week. This will mean that mobility allowance has risen by over 80 per cent. since the Government took office. This represents a considerable increase in real terms.
  In addition, I propose this year to respond to a particularly important request made on behalf of the disabled to successive Governments in recent years. I
  740
  propose that from 6 April the mobility allowance should be wholly exempt from income tax. This is a major step: it means an increase in net income of up to £5 a week for the working disabled. They deserve every encouragement, and the change will, I know, be widely welcomed.

  MANAGING THE PUBLIC SECTOR

    CIVIL SERVICE
    The provision and organisation of welfare benefits is only one of the many tasks of the Government.
    The whole cost of Government administration does indeed impose a formidable burden upon the taxpayer. Out of total spending of £105 billion in the current year, the Government's running costs amount to over £12 billion. The importance of keeping tight control of these costs is, therefore, manifest.
    This is why we set ourselves the task of reducing the size of the Civil Service, from 732,000 in 1979 to 630,000 by April 1984. We are on target. Numbers are down already by 57,000. We now have the smallest Civil Service for 15 years.
    Local authority manpower, on the other hand, has come down by only 3 per cent. since 1979, less than half as much as in the Civil Service. The importance of further progress there needs no underlining.
    Efficient cost control means getting pay rates right, as well as controlling staff numbers. Later in the year the committee of inquiry under Sir John Megaw will be making recommendations about Civil Service pay arrangements for the future. In considering its report we shall aim to be fair to public servants, and to the taxpayer.

    THE NATIONALISED INDUSTRIES
    But the Government are also responsible for the nationalised industries. In deciding how much public finance to make available to them, the Government must be influenced by their performance in controlling their own costs. Every 1 per cent. they save on labour costs is worth another £140 million that they could use for investment, or to reduce prices.
    Yet even now this lesson has not been fully learnt. Seven out of every 10 days lost because of strikes in the last two years were within the public sector. The continuing rail dispute, about productivity improvements and up-to-date labour practices that should have been introduced years ago, demonstrates how far there is still to go. In the absence of increased productivity, willingly accepted, it is not easy to justify increased investment.
    This is why we intend to widen the exposure of the public sector to the discipline of the market place. One way of doing this which has been commended on both sides of the House is by the introduction, under the right conditions, of private capital. Those conditions must ensure fair competition with the private sector for capital. they must also ensure that the consequent higher cost of borrowing is offset by greater efficiency.
    The Government have now decided to accept, in principle, the proposal for British Telecom to issue a bond to raise market capital in this way. The return to the investor would be based on the profits earned by the corporation.
    British Telecom will be expected, as a condition of access to market finance, to keep tariff increases at least two percentage points below the annual movement in the

    741
    RPI, and to reduce real unit costs in 1982–83, by a minimum of 5 per cent. , with further reductions to be agreed for later years.
    We shall have to satisfy ourselves, in the light of market conditions nearer the time, that the bond represents good value to the Government and British Telecom, as well as to the investor. Subject to that condition, the aim will be to go ahead with an initial sale in the autumn, of up to £150 million. This will be an important experiment in exposing the performance of a nationalised industry to the judgment of the market place.
    But above all it remains our purpose, wherever possible, to transfer to the private sector assets which can be better managed there. In the private sector, businesses have to respond to consumer needs. The pressure on enterprises formerly in the public sector to do the same at once becomes much greater if they are transferred.
    We have made considerable progress. There has been some controversy about the method of selling shares in Amersham International, but for those inclined to be wise after the event it is worth pointing out just how much greater public interest in the sale proved to be than commentators expected when the terms were first announced. It is, in any event, a cause for satisfaction that the great majority of Amersham employees are now shareholders in the enterprise for which they work. For the great majority of people, that is the right kind of public ownership.
    Legislation is on the statute book enabling us to transfer to the private sector the British Transport Docks Board, and British Airways, and to permit the sale of subsidiaries in British Telecom and British Rail. Within the last few weeks we have transferred the National Freight Company to a consortium led by its own management. And British Aerospace and Cable and Wireless are now firmly established in the private sector.
    Our plans assumed that asset sales of this kind would total about £500 million this year. We expect to achieve that target. The Government look forward to further disposals in the next two years. We are seeking powers to sell the offshore assets of British Gas and to permit the introduction of private capital into the National Bus Company. The most important transfer will be the sale of 51 per cent. of the BNOC's oil-producing business, for which a Bill is now before the House.
    I now turn to what can be done in this Budget directly to benefit business, industry, and so jobs.

  NATIONAL INSURANCE SURCHARGE
  Our prime purpose is to help private commerce and industry to help itself, by cutting its costs. And I have no doubt, from the representations I have received, that the single measure business would most welcome is a reduction in the national insurance surcharge.
  This surcharge was imposed and then increased by the previous Government. Indeed, in their last two and a half years in office the last Government increased the combined charge on employment, the employers' national insurance contribution and the national insurance surcharge, from 8½ to 13½ per cent.
  The surcharge is, of course, a tax on employment. It raises production costs. It is not rebatable on exports and it either puts up prices or cuts into profits. But it is an
  742
  extremely cost-effective tax. It raises large amounts of revenue at little administrative cost. It is much easier to put on a tax of this kind than to take it off.
  The Government have already protected businesses, and so employment, from any increase in employers' national insurance contribution rates for two consecutive years. Had we not done so, employers would have had to find nearly £1 billion more in the coming year than will actually be the case.
  It is now time to offer more positive relief. I accordingly propose to cut the rate of the national insurance surcharge from 3½ to 2½ per cent. This will help to reduce costs throughout the economy and will he of value to all businesses, whatever their tax position. The cut will operate from 2 August, which is the earliest practicable date.
  But I am anxious that industry should not suffer from this unavoidable delay. I shall, therefore, propose an extra ½ per cent. reduction between August 1982 and April 1983. The effect of this will be to ensure that business as a whole will enjoy in the last two-thirds of 1982–83 the equivalent of a whole year's reduction of 1 per cent. in the surcharge.
  This proposal is intended to reduce business costs in the private sector. However, public sector employers also pay the surcharge, and in order to leave them exactly where they would have been without the change appropriate reductions will be made in the relevant cash limits and the Votes of central Government and the NHS, in the rate support grant to local authorities, and in the external financing limits of the nationalised industries. The necessary changes will be announced as soon as possible. This will reduce the cost to a net figure of £640 million in 1982–83.
  The aim of the relief I have just announced is to help business costs and employment. If it were to find its way into higher pay, that would totally defeat the object of the exercise, and would obviously have to be taken into account in future.
  It is crucial that this should not happen. In proposing this reduction, we are offering business and industry, management and work force, an exceptional opportunity to improve their own performance and prospects. I believe that they will take it.

  INDIRECT TAXES
  I come now to the indirect taxes. I propose no change in the rate of VAT.
  For the Excise duties there has grown up in recent years a sensible presumption that they should be adjusted in line with the movement in prices from one year to the next. That, after all, is what happens automatically with VAT and the ad valorem duties; and also to the personal tax allowances, unless Parliament decides otherwise. And that is the basis of my approach to Excise duty changes this year.
  I start with the duty on tobacco. Last year the duty was increased twice—in March as part of the Budget measures and in July to help recoup the loss of revenue from the derv duty reduction. I have taken account of that in proposing this year an increase that is the equivalent of 5p, including VAT, on the price of a typical packet of 20 cigarettes. There will be consequential increases for other tobacco products. These changes will take effect from midnight on Thursday.
  Next, alcoholic drinks. I propose to increase the duties from midnight tonight by amounts which represent about 2p on the price of a typical pint of beer, lop on a bottle of table wine, and 13p on a bottle of sherry—all including VAT. The full increase in the price of a bottle of spirits necessary to take account of inflation would have been over 50p. However, in the light of the representations about the state of the Scotch whisky industry which I have received from hon. Friends representing Scottish constituencies and others, I have decided that it would be appropriate to limit the increase on spirits to 30p a bottle, again including VAT.
  In proposing a rather larger percentage increase in the duty on claret than on whisky, I have at no stage had in mind adding to the problems of the candidate for the Social Democratic Party in Glasgow, Hillhead—Mr. Roy Jenkins. I fancy that he may have enough troubles of his own already.
  Next, the oil duties. Last year, as the House will recall, I felt it right to go some way to meet the representations made to me by hon. Members in favour of a lower increase in the case of derv than of petrol, in view of the impact of derv duty on industrial and distribution costs. I have decided this year slightly to widen that differential.
  There is a strong case for a larger increase in the petrol duty than in the other duties, for our average pump prices are currently among the lowest in the European Community. They have, moreover, been favourably affected by recent changes in the price of oil. Pump prices have been falling rapidly.
  Against this it has been impressed upon me by a number of my hon. Friends from rural constituencies, in all parts of the kingdom, again including Scotland, that pump prices in remote areas are very much higher than those in more heavily populated areas. Yet dependence on cars for transport is greatest in the more scattered communities.
  On balance, I think it would be right, at least at this stage, not to impose any real increase in the oil duties. I propose, therefore, to limit the increases in the duties on both petrol and derv to amounts which no more than compensate for one year's inflation. The duty on petrol will accordingly increase by the equivalent, including VAT, of about 9p a gallon or 2p a litre. This will still leave most pump prices lower than they were at the end of last year. The duty on derv will increase by the equivalent including VAT, of about 7p a gallon or 1·5p a litre. As almost all derv is used by businesses, this smaller increase will help to hold down business costs.
  As last year, I propose no change in the rate of duty on heavy fuel oil. I am not able, as some would wish, to cut the duty rate; but leaving it unchanged will help industry as the duty burden continues to fall in real terms.
  Last year I undertook to review the rate of duty applied to aviation gasoline, or avgas. I have given very careful consideration to the representations which I have received on behalf of air taxis, flying schools, crop-spraying and other specialist services, and from those concerned with air travel in the Highlands and islands of Scotland. I cannot accept in full the arguments which have been put to me, but I have decided that it would be right to reduce the avgas duty rate to one-half of that on petrol. Including VAT, this amounts to a reduction of about 32p a gallon, or 7p a litre. All these changes take effect for oil delivered from refineries and warehouses from 6 pm tonight.
  I also propose to increase most rates of vehicle excise duty. For the motorist, the increase will be £10, from £70 to £80. Duty levels on most other groups of vehicles will be increased by about 12 pet cent.
  I propose to make two important changes in the VED on commercial vehicles. I have decided that it would offer a substantial, and justifiable, help to small and medium-sized businesses at this time to bring the duties on about half a million light commercial vans more closely into line with those on cars. On the other hand, it would be appropriate, in the light of the conclusions of the Armitage report, to impose on the heavier lorries—the 80,000 or so of more than 9 tons unladen weight—a licence duty which more closely reflects the actual cost which they impose on the road network. So the duty on this category will be increased by about a quarter. These changes have effect for licences taken out after today.
  The changes I propose for commercial vehicles reflect the Government's intention to get a fairer balance between the taxation burden on different groups of lorries and their road costs. I propose to take a further step in this direction by including in the Finance Bill provisions for restructuring the basis of VED on heavy lorries, to a gross weight method of assessment, and for taxing all light commercial vehicles in due course at the same rate as cars. The House will recall that the framework for this major reform of the VED system was set out in the Transport Act 1981. It will involve substantial changes in the pattern of commercial vehicle taxation and I think it right that the road transport industry should have time to adjust. I therefore propose that the rates of duty on the new gross-weight basis should take effect from 1 October.
  And, last of the Excise duties, taxes on betting and gaming. Many of my hon. Friends pressed last year for substantial increases here; and I made some changes in July. I now propose no further increase in the rates of duty on general betting and bingo, both of which were increased then. But I have decided that pool betting duty, which has been unchanged since 1974, should go up from 40 to 42½ per cent. from 1 April. I also propose increases from the same date in the rates of duty on casinos, where I believe the existing rates are too low. Full details of the new rates, and other changes which I shall be announcing today, will be given in press notices this afternoon.
  My right hon. and learned Friend the Chief Secretary announced last summer that Customs and Excise would undertake a comprehensive review of gaming machine taxation. A very large number of representations were received during the course of this review, from and on behalf of clubs, public houses, amusement arcades, and others. In the light of these representations I have decided that it would not be appropriate to introduce an ad valorem duty on gaming machines, or to impose an excise duty on amusement machines, such as "space invaders". I have also decided that duty should no longer be charged on 2p gaming machines, which are mostly to be found in the seaside arcades. However, I have decided that there should be significant increases from 1 October in most rates of the existing licence duty on 5p and 10p gaming machines.
  The total effect of all these changes in Excise duties will be to raise an additional £1,150 million in 1982–83, and £1,165 million in a full year. The impact effect on the RPI will be about three-quarters of 1 per cent. This has been fully taken into account in my forecast of falling inflation in the year ahead.

  OIL TAXATION
  I have spoken of the oil duties: I now turn to the oilfields. The development of the North Sea has been a story of success, which is almost entirely due to the skill and enterprise displayed, and risks accepted, by the private sector. As a nation, we must never forget the great debt that we owe to those on the oil rigs and elsewhere, who have been responsible for exploration and development. It is important for them as well as for the British people that the rewards should be fairly shared.
  Last year, in the light of the massive increase in oil prices which had occurred in earlier years, we changed the structure of North Sea tax, to make it more responsive to changes in price. At the same time tax revenue from the North Sea was brought forward, with an increase in the total level of taxation. I also invited the industry to suggest better ways of raising the revenue that we needed. I am grateful to it and others who have commented for their careful and considered response.
  As I have mentioned, the current fall in oil prices reduces the revenue that the Exchequer receives. I recognise that it reduces the revenues of the oil companies as well—but it also reduces the tax that they have to pay.
  Detailed study has convinced me that, subject to some marginal adjustment, the total tax burden is not such as to discourage exploration or development. Nor is it so high as to deprive the oil industry of a reasonable, and often attractive, yield. In these circumstances, I cannot reduce the overall tax burden to the extent that the industry would have wished. But I do agree with it on the need for some change of structure. I see, in particular, the advantage of profit-related taxes in relation to additional investment in existing fields. The supplementary petroleum duty will therefore be abolished with effect from the end of this calendar year.
  I propose at the same time that the rate of petroleum revenue tax should be increased from 70 to 75 per cent. and that arrangements should be introduced for advancing PRT payments. Advance payments of PRT, although computed in the same way as SPD, will not be a separate tax, but simply an acceleration of the existing tax. They will thus differ fundamentally from SPD in being fully set off without limit against ordinary PRT liabilities when these arise. This structural change is one which representatives of the industry have proposed. As from mid-1983 there will also be a monthly instalment system of payment of PRT in order to secure a smoother public sector cash flow.
  These changes will not affect the revenue yield of rather over £6 billion in the coming year. But in 1983–84 there will be a net cost, after allowing for the saving in interest due to the new system of instalment payments, of some £70 million.
  I have spoken earlier about current uncertainties in relation to oil prices and the future yield of tax from the North Sea. But I am aware of the concern felt by the industry about the number of changes in the regime there have been in recent years. For this reason, my hope is that the new tax structure that I have proposed will provide a more secure and stable regime for the future, permitting development to go ahead uninhibited by major fiscal uncertainties.
  I propose a number of other minor changes, partly in response to the views put forward by the industry. And I propose that regional development grants paid in respect
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  of expenditure incurred after Budget day should be taken into account for the purposes of PRT and ring fence corporation tax. We shall also need to legislate next year to deal with certain special problems affecting PRT expenditure reliefs, pipeline tariffs, and other non-oil receipts. These will be the subject of a consultation document which will be issued shortly.
  These fiscal measures, combined with the decisions that we have already announced on the abolition of the State's sole right to buy gas, and on the creation of the new private sector oil company, will provide a sound basis for another decade of successful enterprise in the North Sea.
  I turn now from the energy industry to its industrial customers, to whose problems we have given a great deal of attention in recent years.

  INDUSTRIAL ENERGY COSTS
  Last year I announced substantial help for industry on energy prices. The NEDC task force, which has made a valuable contribution to a wider understanding of these matters, reported in November that these changes had significantly improved the position of large energy users here compared with their Continental competitors. But we are very conscious of the problems which remain, at least for some industries.
  The Government have accordingly discussed with the electricity supply industry their pricing proposals for 1982–83. I am glad to be able to announce that these will include new special arrangements to benefit larger users—those heavy industrial users which face the greatest difficulties. A scheme will be introduced under which customers can gain significant reductions in their charges in return for a commitment to accept load reductions. The industry estimates that over 100 major companies should benefit.
  This will be in addition to the arrangements for electricity prices which I announced last year and which will continue this year. But both the number of customers able to benefit from the new scheme, and the extent of the benefits, on average, will be greater.
  To pay for these measures we are increasing the external financing limits for the electricity indutry, including Scotland, by some £100 million in 1982–83. These costs are additional to the EFLs shown in the public expenditure White Paper.
  Some large industrial users of gas face similar problems, and here, too, we propose significant relief. For contract customers the price of gas taken after the first 25,000 therms in the contract year will be frozen at the level charged on 1 April 1982. This freeze will apply until the end of 1982. The cost of this measure is forecast to be some £60 million.
  In addition, we have asked the National Coal Board to renew the measures first announced last year, so as to avoid further increases in the list prices for foundry coke until the winter. The board's deficit grant and EFL will be adjusted accordingly and the cost will be met from the Contingency Reserve.
  Last year I announced the introduction of grants towards the costs of converting from oil-fired boilers to coal. We have now decided to extend the scope of these grants to cover conversions of other industrial oil-fired equipment and conversions of gas-fired equipment to coal. The scheme will also now cover conversions in service industries as well as in manufacturing. At the same time

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  we are reducing the qualifying threshold for the total project cost from £25,000 to £15,000. This will help a large number of smaller firms, particularly in the horticulture industry. The cost of these changes will be met from within the £50 million already allocated for this scheme.
  Taken together with the measures announced in my last Budget, these three measures—special arrangements for large electricity users, the freeze on gas contract renewal prices and on list prices for foundry coke—should reduce the energy costs of British industry, compared with what they otherwise would have been, by over £250 million over the two years concerned. They represent a serious and significant response to industry's representations on energy prices.

  INDUSTRIAL INNOVATION
  I turn now to the continuing effort to encourage innovation in industry. If we are to win still more worthwhile orders both at home and abroad British industry must continue to improve its design and production techniques.
  There is no more important area to which this applies than microelectronics and information technology. The Government have already given a lead by designating 1982 as Information Technology Year. We have already authorised investment of well over £2 billion in the British Telecommunications network in the coming year—more in real terms than at any time since 1974–75. That investment will breed new services, new firms and new jobs. So, too, will the development of alternative and competing services for electronic communication, such as the new Mercury network for business.
  Because new technology is important on a wider front, I propose to make a further allocation for this purpose. My right hon. Friend the Secretary of State for Industry will shortly be announcing a series of new and expanded schemes. These will include additional assistance towards space technology, and production engineering—including the introduction of a special scheme of assistance to small engineering firms. And the 100 per cent. first year allowances for leased television sets, which were due to be phased out this June, will be extended for a further year for sets incorporating a teletext facility. This will encourage the wider use of a leading product of British information technology.
  These measures will be worth £130 million over three years.

  FISCAL JUSTICE
  I have now almost completed my review of proposals involving spending, and spending forgone. I have described my decisions on Excise duties, and the major cut in national insurance surcharge which we propose. In the remainder of my speech I shall be dealing primarily with fiscal issues.
  I wish to deal first, and briefly, with the key issue of fiscal justice. All Chancellors of the Exchequer come under pressure every year to remedy hardships and anomalies in the tax system. This year has been no exception; and by the end of this afternoon I shall have been able to meet a large number of such points.
  But there is another side to that medal. Justice is indivisible. Justice to the taxpayer must be matched by justice to the Exchequer. The revenue must be protected if the burden is not to fall more heavily on the general body of taxpayers.
  We must all be glad to see the courts adopting a new approach towards artificial avoidance schemes. As a direct result, we expect to collect a very large sum of tax, possibly as much as £400 million, which might otherwise have been avoided. The proper vigilance of the Revenue departments in these matters needs to be matched by the determination of Parliament to legislate where this is needed. Last year I asked Parliament to do so on a number of important matters. This year I propose further action.
  We must, however, tread a very careful path between safeguarding the interests of the taxpaying community on the one hand and avoiding economic damage on the other. This need for caution applies, for example, to the proposals affecting the tax liability of companies engaged in international business, on which the Inland Revenue put out consultative papers last year.

  FISCAL JUSTICE

    TAX HAVENS AND COMPANY RESIDENCE
    These papers and the draft clauses dealing with these matters have caused considerable anxiety. In the case of company residence the primary objective was simply to replace the present ill-defined rules with ones which were clearer and more certain. This was not an attempt to extend the coverage of the tax. But I accept that some people might be adversely affected. The matter therefore needs to be looked at again.
    The problem of tax havens was a different one. If one has an open world in which there is free movement of capital and of persons—something which in itself is a good thing—this offers increased opportunities for tax avoidance. We must be very careful not to prejudice legitimate business, particularly because of the importance of London as a financial centre. We need to find the right middle road, and one which is accepted as right. It is to this end we shall be directing our efforts. Clearly this precludes legislation this year on any of these topics.
    I now turn to the areas in which I propose to take action in this Finance Bill.
    First, international leasing. At present, assets leased abroad attract capital allowances at what is, in many cases, a favourable rate of 25 per cent. per annum. Leasing of this kind has grown sharply. Moreover, there is evidence of United Kingdom tax incentives being used to subsidise deals between other countries—deals by foreign businesses in foreign-made goods, competing with our own home producers. I therefore propose, for new commitments after today, to reduce from 25 to 10 per cent. the rate of writing down allowance for all assets leased abroad.
    Secondly, films. Investment in films qualifies for 100 per cent. first-year allowances. As with other capital allowance provisions, these investment incentives are available without regard to whether the film is made in this country or overseas. There is evidence that schemes for investment of this kind—primarily in foreign-produced films—are currently being marketed actively in this country. The potential loss to the revenue is very great.
    I propose, therefore, to withdraw the 100 per cent. first-year allowance for films and to introduce in its place a

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    provision which will, in broad terms, allow companies to write off expenditure over the income-producing life of the film.
    A change of this kind could have serious implications for the British film industry, if introduced immediately, at a time when there are signs that it is just beginning to establish a new and more competitive position. I intend therefore to introduce transitional relief for British-made films—broadly speaking, films registered for the purposes of the Eady levy arrangements—for a two-year period. I shall be consulting the industry about the form which this assistance might take.
    Thirdly, shipping. Here again arrangements are being made to exploit United Kingdom investment incentives for the benefit of foreign businesses. In this case a typical arrangement may involve a foreign shipping company chartering a vessel built abroad from a company specially set up in the United Kingdom to attract 100 per cent. capital allowances. I propose to reduce the rate of capital allowance in these cases to the 10 per cent. rate for international leasing generally. I am concerned to safeguard the position of British companies chartering their vessels abroad in the course of a genuine shipping business, and I shall be discussing with the shipping industry how best to do this.
    On each of these three subjects—international leasing, films and shipping—the changes will take effect from today. I shall bring forward the necessary detailed legislation in Committee.
    Fourthly, so-called section 233 loans. These are contrived arrangements under which interest paid on certain bank loans escapes liability to corporation tax in the hands of the banks. In future these payments will be taxed like any other interest payments. The new rules will apply from today. In the case of contracts entered into before today, the new rules will apply to payments due on or after 1 April 1983.
    Fifthly, by taking advantage of double tax relief banks can lend overseas at abnormally low interest rates at the expense of the United Kingdom taxpayer. I propose to include in the coming Finance Bill measures to stop this exploitation of our tax system. They will take effect from 1 April 1982 but in the case of existing loans will apply only to interest arising from 1 April 1983.
    While the measures I have announced will help, we shall need to give much further thought in the coming year to the problem of how best to ensure a sufficient contribution to tax revenues from the banking sector. The problem is not an easy one, as the benefit of some of the devices I have just described is shared between the banks and their domestic customers. There is a danger that measures directed to ensuring that the banks pay a more equitable amount of tax are all too simply bypassed by the banks shifting the burden on to their customers. For these reasons I have forborne from taking action earlier, but, as Burke said,
    "There is, however, a limit at which forebearance ceases to be a virtue."
    On a different note, a number of building societies have recently issued a new form of negotiable bond. I have no reason to believe that any improper use has been made of these new bonds. But, as an obvious precaution, I propose to extend to these bonds, from today, the existing provisions dealing with the "manufacture of dividends".
    I also propose some tightening up of the law relating to very large golden handshakes. The tax relief will be withdrawn on a sliding scale with the effect that the excess of sums over £75,000 will be fully charged to tax.
    We owe it to the ordinary taxpayer to take action in these fields. It is on him that the cost would fall if we did not do so.

  THE CONSTRUCTION INDUSTRY
  I now revert to my principal theme: help for business and industry, and hence for jobs and people. Last year's Budget contained a number of measures to help the construction industry, an industry which can make a particularly significant contribution to the creation of new jobs. It is, accordingly, right to give it further help this year.
  As I have already mentioned, our new public spending plans provide work for the construction industry in 1982–83 worth about £10¼ billion—an increase of 14 per cent.
  This year local authorities have greatly underestimated the success of our policy of selling council houses and land. The extra revenue which this is bringing in has not been spent. For 1982–83 they have been assured that they can spend up to a total of some £3 billion on housing. This will include about £1 billion of funds which they can expect to receive mainly as a result of the success of the right-to-buy legislation. This should allow an increase of nearly one-third in the scale of their capital spending, compared with what they seem likely to spend in 1981–82.
  In addition, I now propose a change for 1982–83, designed to help private home owners whose houses fall well short of today's standards.
  The value of grants given for major repairs, and for the provision of basic amenities in the home, under the home improvement grant system, will be increased for a limited period, to a maximum 90 per cent. of the eligible cost, instead of the 75 per cent. currently available.
  This increased rate of grant will apply only to applications received before the end of 1982. The purpose is not to add to longer term demands on the industry hut to encourage the early take-up of immediate spare capacity. We also intend both to enable more people to g et grants for home insulation and to increase the value of those grants.
  To pay for these changes and to encourage local authorities to make more general improvement grants available, their capital allocations in 1982–83 will be increased by £100 million over and above the expenditure provided for in the White Paper.
  My right hon. Friend the Secretary of State for the Environment has already announced measures for 1982–83 to give priority to inner city projects that offer the greatest degree of participation by the private sector. Building on this, up to £70 million of the provision for the urban programme and for derelict land reclamation in 1983–84 will be earmarked for projects that encourage participation by the private sector.
  We have also decided to offer further encouragement to the private sector and nationalised industries to bring derelict land into productive use; we shall increase the grants payable, from 50 per cent. of the cost of reclamation to 80 per cent. in assisted areas and derelict land clearance areas when legislation can be brought forward. The cost will be contained within the existing programme.
  In addition, we shall give further encouragement to new private investment in housing for rent. I now propose to introduce capital allowances, at the rate of 75 per cent. for the first year only, for expenditure on the construction of properties wholly for letting as assured tenancies by bodies approved by the Secretary of State. The scheme will run for an experimental period of five years. Allowances may be claimed for expenditure incurred as from today.
  In my Budget two years ago I introduced the small industrial workshop scheme, under which industrial building allowance can be claimed on the construction of small workshops at the rate of 100 per cent. The scheme has been a resounding success. Over 5,000 new workshops have been constructed for letting to small businesses, at an estimated Exchequer cost, spread over several years, of £125 million to £150 million.
  The scheme has succeeded in increasing the stock of industrial workshops at or near the upper size limit. But there has been relatively little investment at the very small end of the range. I therefore propose to extend the scheme for very small workshops, of not more than 1,250 sq ft for a further two years, until March 1985.
  I also propose to bring within the scope of the industrial building allowance certain kinds of servicing, repairing and warehousing activities. This, too, will improve the small workshop scheme.
  I wish to deal also with the liability to VAT of certain kinds of building alterations, where there has in the past been serious doubt about what was liable to charge. A recent judgment of the House of Lords would have led, if applied in its entirety, to VAT being charged at the standard rate on a range of non-structural building alterations which had previously been free of charge. Though clarifying the law, this judgment would have imposed an extra £80 million of tax on the industry, which it can ill afford at present.
  So I intend to re-establish the clarity needed, but in a way which will relieve the industry of all but £10 million of the extra tax burden. I shall, in due course, lay before the House an order, which will have the effect of continuing to zero-rate three important kinds of alteration which might otherwise be adversely affected by the House of Lords judgment. These are the most commonly recognised forms of double glazing, loft and cavity wall insulation and damp-proof coursing. This useful simplification of the law will cost the Revenue about £70 million a year. The other kinds of non-structural alteration covered by the judgment will become subject to VAT, but, pending the completion of discussions with the industry, no steps will be taken to apply the tax before about the beginning of September.
  My final proposal in this area concerns stamp duty on house purchase. I propose to raise the exemption by £5,000, to £25,000, and the other thresholds also by 5,000, at a total cost of £70 million in 1982–83.
  This change should be widely welcomed. It will help to improve job mobility and give some encouragement to house construction. Most of all it will help those who have been saving to buy their first homes. By the end of this Parliament nearly three out of every five families will own their own homes. This will represent a significant extension of the property-owning democracy. Taken
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  together, these proposals will mean more work for the construction industry, and more jobs for those who work in it.

  BUSINESS, ENTERPRISE AND SMALL FIRMS
  Evident in the measures I have announced so far is the Government's consistent determination to help create the right conditions for the new investment needed to create new jobs. But this Budget, like its two predecessors, is designed also to provide a special tonic for small businesses.
  There can be no doubt that higher rates of interest and the consequent reluctance of companies to borrow longterm at high fixed rates have caused a distortion of balance sheets. Too much reliance is now placed on short-term bank finance. As a result there is additional pressure on monetary growth.
  A number of suggestions have been made for reducing the burden of interest rates on companies. We are all indebted to my hon. Friend the Member for Surrey, North-West (Mr. Grylls) and others for the way in which they have focused public attention on this problem. In many cases, the selectivity in the remedies proposed would favour lending by the banks, and lending to "tax-exhausted" companies. We have considered these ideas very carefully. But they raise difficult questions of principle, and we are not persuaded that they offer the best solutions to the problems they are designed to solve. Moreover consultations are still not complete on the corporation tax Green Paper, which raises major questions about incentives to investment, and we are still considering how best to ensure a proper contribution to tax revenue by the banking sector.
  However, we can all agree that the basic problem of financing profitable expansion and investment demands urgent and continuing attention. A particularly important aspect of this is the provision of equity capital, about which I have some new proposals to make.
  The business start-up scheme, which provides income tax relief for investments of up to £10,000 in the equity of companies starting new trades, has been widely welcomed. I propose for 1982–83 and 1983–84 to increase the annual limit from £10,000 to £20,000. As less than a full year has elapsed since it became law, some potential investors may have been unable to use up the full £10,000 limit in 1981–82. I propose, in addition, that any unused balance of this year's limit should be added to next year's entitlement. This means that, in some cases, the effective limit for 1982–83 will be as much as £30,000. These improvements should provide a further stimulus to investment in new enterprises.
  Where capital for small businesses generally is concerned, many people have emphasised the importance of the new provisions in the Companies Act 1981 for companies purchasing their own shares. Clearly it would be wrong to change the tax law in such a way that these provisions could be used to pay out what would amount to tax-free dividends. But there is scope for tax changes which will significantly increase the attractions of equity capital, both to the investor and to the entrepreneur.
  I now propose that certain purchases of their own shares by unquoted trading companies, mainly small and family businesses, should not be subject to ACT and income tax. They will be treated instead as sales of shares by the shareholder, and therefore, subject in most cases to capital

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  gains tax only. This measure will be of special benefit to small companies which have a limited market for their shares.
  Two years ago, I relaxed the conditions governing profit-sharing schemes and reintroduced legislation enabling employees to take up options to buy shares in their companies without incurring income tax liability. I did this because I have no doubt that employees who own shares in the company for which they work develop a greater sense of commitment to the success of the business. Since I made my first changes two years ago, the increase in the numbers of employee share schemes has been extremely encouraging. In 1979 there were only 30 such schemes. Now there are over 400. This is exactly as we should wish. Wider share ownership is good for the business, good for the worker and good for Britain.
  It is important to maintain and extend this progress. Accordingly, I now propose to increase the value of shares that can be allocated each year to any one employee from £1,000 to £1,250. I also propose to amend the detailed rules to simplify the administrative problems arising on rights issues. We should also give some help and incentive to those who acquire share options outside the ambit of approved schemes. I therefore propose to make it easier for them to pay the income tax chargeable on the exercise of such an option, by providing that it should be collected over three years rather than in a single sum.
  In the last two years we have substantially relaxed the rules for tax relief for interest on money borrowed to invest in small companies. This year I propose to move a stage further. If a shareholder works full-time in the management of a business he will in future be able to qualify for tax relief to invest in that business even though he does not have more than 5 per cent. of the shares.
  Now I turn to loan finance. In my last Budget I announced the establishment of a pilot loan guarantee scheme. The scheme started in June 1981. Since then the demand for loans has far exceeded expectations. Last October, in response to that demand, we increased the allocation for the first year from £50 million to £100 million, but with 2,700 loans worth almost £100 million already approved after only nine months, some further increase is desirable. Accordingly, I propose to increase the amount which the participating institutions may lend to £150 million for the first year. In addition, a further £150 million will be available for loans under the scheme during its second year, to June 1983.
  I also propose that the limits for the "small companies" rate of corporation tax should go up again from £80,000 to £90,000 and from £200,000 to £225,000. This will mean that this Government have increased the lower limit by 80 per cent. and the upper limit by more than 150 per cent. As a further help for new businesses, the period for income and corporation tax relief for pre-trading expenditure will be extended from one to three years.
  Many hon. Members, I know, have been impressed by the value of the work done by local enterprise agencies. These agencies depend in the main on businesses already established in the local community. They clearly play a valuable part in helping small local firms to start and to prosper. I therefore propose to allow businesses to deduct for tax purposes the contributions they make to certain enterprise agencies, which concentrate on helping small firms. I hope this measure will encourage more widespread support for such agencies. The relief will be available from 31 March and will run for 10 years.
  On value added tax, I have two principal changes to propose. The registration threshold will be increased from £15,000 to £17,000. And I propose to introduce VAT relief for services supplied before registration. This measure, and the extension of relief for pre-trading expenditure, will reduce the costs of starting a new business. The total revenue cost of these measures to help small firms is about £80 million in a full year.
  I also want to make it easier for those who have recently left school or college to start a business. Hitherto—[Interruption.] Hon. Members may laugh, but I shall propose a change in relation to a very practical obstacle to those young people securing employment opportunities. As the whole House should know and appreciate, hitherto people who have just left school or college have not been able to qualify for the so-called 714 certificates under the construction industry tax deduction scheme. The present system, designed to prevent tax evasion, may actually keep young people out of work as sub-contractors in the industry. The certificates are widely used in the industry but the existing rules require an individual to show that he already has years good record as a taxpayer before he can secure a certificate. By definition, someone who has just left school or college cannot qualify under this three year rule. I therefore propose—I hope the whole House will welcome it—to change it, so as to enable school and college leavers to obtain special certificates. I also propose a guarantee scheme which may help others to obtain these special certificates.
  I have one other measure to help the self-employed. A decade of inflation has eaten into the value of money which the self-employed had put aside to provide for their retirement. I therefore propose to increase the limits on retirement annuity relief for contributors who are now in their fifties and sixties to 20 per cent. for those born between 1916 and 1933; to 21 per cent. for those born in 1914 or 1915; and to 24 per cent. for those born in 1912 or 1913. I also propose to alter the present restrictions on the relief to allow more self-employed people to benefit from these higher levels. These changes will cost £12 million in 1982–83 and £25 million in a full year. They will provide a significant improvement in the position of the older contributor whose lifetime savings have suffered particularly from high rates of inflation in the 1970s.
  The self-employed play a key role in the economy. Their contribution to its vitality, its adaptability, is apparent to all. Along with small business men, they fully merit this special encouragement.

  CAPITAL TAXES
  I turn now to a part of our tax system which is impeding the efficient working of capital markets and doing injustice to individuals and businesses alike: the capital taxes. There is room for wide differences of view about the principle of taxing capital. But there is no case whatever for maintaining a system of capital taxes which, by holding back business success and penalising personal endeavour, does serious economic and social damage.
  In each of the last two Budgets we have taken significant steps to reduce such damage. I propose carrying this process a stage further today. The threshold for capital transfer tax will now be increased to £55,000. The rate bands which apply above the thresholds have remained virtually unaltered since the tax was introduced in 1975. It is time they were extended. Under the new

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  scale, details of which will appear in the Red Book, the top rate of tax will be reached at £2·5 million. In real terms, this is still not as high as the figure set by my predecessor when he introduced the tax in 1975. The lifetime scale will be improved to a similar extent. The cost this year will be £35 million and in a full year £85 million. I also propose that the indexation principles, already applied to income tax allowances, should in future apply as well to the CTT threshold and bands.
  I should add that it is my intention that the Finance Bill should deal with the new regime for settled property. Draft clauses were published in December. The comments we have received will help us to clarify and improve the provisions. They have more than justified this exercise in open Government. I am grateful to all those who have contributed. There will also be a number of technical provisions related to the heritage. I have decided, in the light particularly of the reductions in the lifetime rates of charge that I made last year, not to alter the rate at which the periodic charge is payable.
  I also propose that foreign currency accounts belonging to individuals who have no connection with the United Kingdom should not be caught by the CTT. It is important for London's position as the world's leading financial centre that this matter should be cleared up.
  I now come to the incidence of capital gains tax on inflationary gains. This is a matter which has rightly given rise to a great deal of discontent. No one has yet succeeded in finding a solution to this problem. Innumerable proposals for full indexation, for tapering and other ingenious devices have been put forward. None, unfortunately, overcame all the practical difficulties. I cannot, however, allow this injustice to continue. It is intolerable for people to be permanently condemned to pay tax on gains that are apparent but not real—gains that exist only on paper.
  I propose, therefore, that, as from this April, gains, including those of companies, will, in principle, be calculated after taking account of inflation which occurs after that date. No relief will, however, be given in respect of the first year of ownership. The problem that we seek to solve is one which relates essentially to assets held for a period of years and it would not be appropriate to extend relief to assets bought and sold within a comparatively short period of time.
  Because we have not found it possible to extend the new scheme to cover past gains, I propose also that the exempt slice should be increased to £5,000. That is the best solution to the problem of the past and will simplify administration both for the taxpayer and the Revenue. For the future, I intend that this threshold too should be statutorily indexed.
  There will be no revenue cost in the coming year. In 1983–84 the cost of these two measures will be £55 million. But this should not be looked at as a measure of the cost to the Exchequer. It is rather a measure of the tax which ought never to have been levied in the first place. This change is no more than simple justice, which should be welcomed on both sides of the House.
  The benefit of these measures will be of substantial help to business as well as to the individual. They will significantly increase the attraction of equities to United Kingdom taxpayers. One result should be that companies can raise more equity at lower cost than would previously
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  have been possible. An increase in the scale of equity issues by companies will help to reduce their dependence on bank borrowing.
  I also propose a number of other specific changes. In future, roll-over relief will be available on compulsory purchase and, completing our policy of avoiding a double charge to CGT and CTT on the one event, roll-over relief will also be available on assets coming out of trust. These proposals involve no cost this coming year and a cost of £11 million in 1983–84.
  I believe that these changes, taken together, will be widely welcomed as a further major reform of the capital tax system.

  INCOME TAX
  But for the vast majority of individuals what really matters is income tax. And income tax is far and away the biggest source of Government revenue. This year about 26 million income taxpayers will contribute, in round figures, about £30 billion to the Exchequer.
  Quite rightly people look for some reduction in their own tax burden. As I have explained at the outset, and demonstrated by my proposals, the paramount aim of this Budget is to help industry, to encourage business, and to create jobs. But I want also to help people directly. The one helps the other. People need industry; but industry also needs people—as workers, as customers, as investors. We remain firmly committed as ever, over the years, to reduce the burden of direct taxation. It is essential to do so to improve incentives, to remove disincentives and to reduce the poverty trap.
  There are always, of course, competing arguments as to whether one should reduce the rates of income tax or raise the thresholds at which people pay tax. Any Chancellor would like to be able to do both. But this year, given my principal aim, I have had to make a choice.
  We have already reduced the basic rate of tax from 33 per cent. to 30 per cent. and reduced the higher rates of tax as well. I propose, therefore, to concentrate the relief that is available this year on raising the tax thresholds.
  The single personal allowance will accordingly be increased by £190 to £1,565 and the married allowance by £300 to £2,445. The additional allowance for single parents will, as a consequence, rise by £110 to £880. So too will the widow's bereavement allowance. And there will be corresponding increases in the age allowances, the higher rate threshold and bands, and the threshold for the investment income surcharge. Effect will be given to changes under PAYE as from the first pay day after 26 April.
  These increases are up to two percentage points more than the 12 per cent. required to take account of inflation in 1981. They are worth £1·8 billion this year and almost £2½ billion in a full year. As a result some 1·2 million people who would have paid tax next year will not now have to do so. This news will be very welcome both to the House and to the country at large.

  CONCLUSION
  In framing this year's Budget, it has been my purpose to give as much encouragement as I believe we can afford to an economy which is now moving in the right direction. To hearken to the voices that urge us only to "borrow, borrow, borrow" would perform no service to British industry or to the unemployed. On the contrary, it would lead only to the dead end of a plummeting exchange rate or a rocketing rate of interest—more probably to both.
  Better by far to secure, as I have done, a prospective level of borrowing that is below that of the year now ending, and so to maintain our progress towards stable prices. And at the same time, as in each of my three earlier Budgets, to achieve substantial tax reforms, to promote the wider ownership of wealth, and to encourage the productive private sector, which in these past three years has made giant strides towards the restoration of our reputation as a trading nation.
  This is a Budget that will give confidence at home, that growing markets will be there, for those prepared to go out and win them, and, so, a better prospect of employment opportunities for those who look only for the chance to work.
  And confidence abroad, that Britain stays on course, to put a dismal record of performance behind us, once and for all.
  This Budget is designed to give that double boost to confidence. I commend it to the House and to the nation.
  Mr. Deputy Speaker (Mr. Bernard Weatherill): Under Standing Order No. 94, the first motion, entitled "Provisional Collection of Taxes", must be decided without debate.

  CONCLUSION

    PROVISIONAL COLLECTION OF TAXES
    Motion made, and Question,
    That pursuant to section 5 of the Provisional Collection of Taxes Act 1968 provisional statutory effect shall be given to the following motions—

    (a) Spirits (Motion No. 2)

    (b) Beer (Motion No. 3)

    (c) Wine (Motion No. 4)

    (d) Made-wine (Motion No. 5)

    (e) Cider (Motion No. 6)

    (f) Tobacco products (Motion No. 7)

    (g) Hydrocarbon oil etc. (Motion No. 12)

    (h) Vehicles excise duty (annual rates) (Motion No. 14)

    (i) Value added tax (registration) (Motion No. 16)—[Sir Geoffrey Howe.]

    put forthwith, pursuant to Standing Order No. 94 (Ways and Means Motions), and agreed to.
    Mr. Deputy Speaker: I shall now call on the Chancellor of the Exchequer to move the motion entitled "Amendment of the Law". It is on that motion that the Budget debate will take place today and on succeeding days. The remaining motions will not be put until the end of the Budget debate next week and they will then be decided without debate.

Budget Resolutions and Economic Situation

  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—

  (a) any amendment with respect to value added tax so at to provide—

  (i) for zero-rating or exempting any supply;

  (ii) for refunding any amount of tax;

  (iii) for varying the rate of that tax otherwise than in relation to all supplies and importations; or

  (iv) for any relief other than relief applying to goods of whatever description or services of whatever description; or

  (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 is payable.—[Sir Geoffrey Howe.]

  Relevant European Community documents: Document No. 10077/81 and the annual report on the economic situation in the Community (1981) and the economic policy guidelines for 1982.]
  5.35 pm
  Mr. Michael Foot: After the introduction of the Budget Statement, it is the custom for the speaker from the Opposition Front Bench, to offer congratulations to the Chancellor of the Exchequer on the manner in which he has delivered his speech, whatever may be thought of its content. As I said on a previous occasion, when I had the chance of performing that function, I have followed the career of the right hon. and learned Gentleman through many years. I know well that when he wishes to make himself clear, he is perfectly capable of doing so. When he wishes to make himself obscure, he is perfectly able to do so. In his speech he showed a nice discrimination in those matters because he hurried over the monetary and economic strategy of the Government. He was wise to so.
  I am happy to extend to the right hon. and learned Gentleman the customary and not exaggerated congratulations that are made on such an occasion. However, the right hon. and learned Gentleman skilfully managed to mislead some of his followers, who have now taken the precaution of leaving the Chamber. I understand their feelings. He achieved that because he managed to conceal the major assumptions on which he was acting under a series of minor excursions. That was the key to his success. However, he injured that position when he said that he was continuing the policies that he had introduced in previous Budgets. Those policies have so sorely contributed to our present situation.
  I shall give one or two hasty examples, referring to what the right hon. and learned Gentleman said in the latter part of his speech. For example, he said that he would continue to assist the construction industry. He outlined a number of measures that we hope will assist it. However, if he assists the construction industry in the same way as last year, there will be a further catastrophe. Last year he said that he would assist the construction industry, and there was approximately a 12 per cent. fall in construction.
  A whole series of measures was announced by the Chancellor of the Exchequer to try to close the loopholes

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  in the way in which international business is conducted and might be defrauding the Exchequer, or at least injuring the revenues of the Exchequer. However, if the right hon. and learned Gentleman had not abolished exchange controls, he would not have had such difficulties and would not have to carry out a whole series of operations.
  The right hon. and learned Gentleman said that what he wanted was justice for the Exchequer. The more we examine the Budget, as well as his previous Budgets, the more we shall discover and conclude that what is wanted is not justice for the Chancellor of the Exchequer, but mercy. That is what he does not deserve.
  We fully acknowledge that the right hon. and learned Gentleman has a difficulty. He must steer his way between the prejudices of the Prime Minister, and the prejudices of the Prime Minister. That is a difficult course to steer. Her mood changes too. Sometimes she is her gay, exhilarating, galvanising self and the next moment, she may be plunged into inspissated Pymism. If anyone wants to know what that means, they can take a look at the right hon. and learned Gentleman now. Inspissated Pymism means a general feeling that "we can't do much about it boys, we'll have to put up with her for another period, there's no chance of doing anything until after the general election, let us just grin and bear it even if we cannot understand what the Chancellor of the Exchequer has to say." I am glad to see that the right hon. and learned Gentleman has cheered up and joined in the proceedings. I welcome that.
  The right hon. and learned Gentleman has not by any means dealt with the major concerns that face the country. The first major defect of the Budget, despite the references of the right hon. and learned Gentleman to the question of unemployment at the beginning, is that it shows no proper understanding of the scale of the catastrophe that has befallen our country and people. At the beginning of his remarks on unemployment, the right hon. and learned Gentleman referred to the latest scheme that he has devised. I do not know what the scheme is called, but it seems to come from the Department of Employment. That does not recommend it to us, as the Department is under the auspices of the right hon. Member for Chingford (Mr. Tebbit).
  That scheme looks a pretty miserable, squalid affair, cooked up at the last moment. We shall, of course, examine it carefully, but it would have been much better had the right hon. and learned Gentleman accepted in full the proposals of the Manpower Services Commission. The MSC knows much more about these matters than the Secretary of State for Employment. The chairman of the MSC should have been left in his job to carry on his work. The right hon. and learned Gentleman should have been seeking the means whereby we could sustain the work of the MSC. The scheme outlined by the right hon. and learned Gentleman, like some of the other schemes outlined by the Secretary of State for Employment, so far from assisting us will only injure existing schemes.
  In the past three years the Government have done immense damage to the whole scheme for training in this country. The number of apprentices is lower than it has ever been in our history. That is a further example of the way in which the Government have sought schemes to present to the House, but at the same time undermined the real schemes that industry requires. I fear that the same
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  judgments will be applied to the right hon. Gentleman's proposals today.
  The major defect of the Government's proposals in the Budget—and the right hon. and learned Gentleman includes the condemnation that what he does in this Budget is a continuation of what he was doing before—is that it takes no account of the huge total of unemployment. In February of this year, there were 3,044,878 people registered as unemployed. That was an increase of almost 600,000 in a year. We now have one in eight of the labour force out of work.
  The right hon. and learned Gentleman said that output has turned out broadly as he expected. I dare say that the unemployment level turned out broadly as he expected. The Government calculated on the basis of an increase of unemployment on this scale, unprecedented at such a pace in the history of this country. That is what they calculated, and we shall come again in a minute to their calculations for the period ahead. If they were calculating on a fall in output on that scale, they were calculating also that it would be matched by unemployment on that scale.
  I shall give the House the comparison that arises from the position in my constituency. At the time of the last general election, in May 1979, unemployment there was at 12 per cent. That was a very serious figure, more serious than most other places in Wales or Britain. It was about 4 or 5 per cent. above the average figure in Wales and more than double the average figure in the rest of the country.
  That 12 per cent. figure is roughly the average for the whole country now. It is the national unemployment figure, while in places such as Ebbw Vale, that have already been heavily hit, the figure has gone up to 20, 22 or even 25 per cent.—huge figures. After one and a half years in which the country suffered by far the most serious decline of any major industrial country, we have suffered another year of almost unprecedented collapse of employment.
  It is true, and the right hon. and learned Gentleman made some comparisons in his speech, that one or two other countries have done as badly. The Germans, in recent months suffered almost the same rise in unemployment as we have over this period, and the Americans, driven by the same monetarist mania as our Government, have fared slightly worse. But, last year, the right hon. and learned Gentleman and his friends were saying that this year would be the year of our recovery. Instead, our position has been worse than that of nearly any other country.
  The latest figures prepared by the Organisation for European Economic Co-operation for Europe and North America were published in The Times last Friday. I give these figures to put in proper proportion what the right hon. and learned Gentleman said. The OECD figures show that Britain's unemployment rate now heads the list at 11·7 per cent. At standardised OECD unemployment rates, the Netherlands had unemployment of 11·2 per cent., Belgium had 10·9 per cent., Italy 9·1 per cent., the United States 8·5 per cent., Canada 8·3 per cent. and West Germany 8·2 per cent. These are the real figures about the Government's achievements.
  Last year, the Labour Party prophesied that we were heading for a figure of three million unemployed. We did not relish it and did our best to say that it could be avoided,

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  and, if the measures that we had proposed last year had been adopted, it would have been avoided. Yet our prophecy was denied by the Conservative Party.
  The Chief Secretary to the Treasury made a speech coming to the rescue of the Chancellor. He said that he did not accept our gloomy prospects and referred to the Red Book, to which he attached much importance, and whose cover will soon be changed. He said that the Government would not fall into the mistakes of 1972. What was the terrible crime and error, the folly committed in 1972? The mistake that the Chief Secretary was anxious to avoid was the 7·2 per cent. growth in GDP in 1973.
  The Government have avoided that error. Instead of achieving the largest recent recorded rise in GDP, in 1981 they achieved almost the largest recorded fall. That is quite a difference. One would not have thought that from the complacent speech of the right hon. and learned Gentleman.
  The Red Book, of which the right hon. and learned Gentleman is so proud, last year forecast a fall in output of 2 per cent. In the event, the fall, according to Government estimates, was 3 per cent. What is 1 per cent. here or there? It is merely British production that is affected.
  Perhaps the most disturbing aspect of last year was the rapid rise in the number of long-term unemployed. The number of people out of work for a year or more rose from just under half a million to just over a million, and 150,000 people have been out of work ever since the Conservatives came to office.
  In an increasing number of districts—Oakengates, Corby, Mexborough, Consett, Hartlepool, Bargoed, Ebbw Vale, Bathgate, Irvine, North Lanarkshire and many more—unemployment is more than one in five. In Northern Ireland it is only in exceptional areas that it is less than one in five—in Cookstown and Strabane, one person in three is on the unemployment register. Truly, those places have avoided the errors of 1972 under the policy for which the Government were responsible and which they still have the courage and determination to defend. Those areas did not have such agonies to endure then as they now have under the Government who are apparently so successful and have learnt all the lessons to be learnt from previous mistakes. [HON. MEMBERS: "Talk about this Budget."] I am talking about this Budget. I am talking about what should have been in it to deal with a problem on this scale.
  We have the largest fall in output for 50 years. In the two years since the Conservatives came to office the United Kingdom has been the only OECD country for which quarterly figures are available to experience an actual fall in output. In that period, our output fell by 6 per cent. That is indeed quite a distinction.
  That is the real test by which the Budget must be judged. Does this Budget deal with that situation? Does it go any way at all towards dealing with a problem on that scale? [HON. MEMBERS: "Yes."] I should have thought that only the driest of wets and the least seductive of sirens below the Gangway would take that view.
  Let us examine the fiscal position as the Chancellor himself stated it. When he introduced his autumn measures, he said that they must not be judged by themselves, but that they must be judged together with the measures that would come in the Budget. That is a perfectly proper course for us now to take. We shall work out the detailed estimates during the next few days of
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  discussion, but we certainly believe that to make good what the Chancellor took out of the economy last autumn would require an expansion of about £5 billion. The Chancellor has produced nothing like that today. We have the Rooker-Wise-Lawson proposal—I take it that the latter is prepared to acknowledge authorship now that there is some recompense for the previous policy—but it does not carry out the promise or make good the loss sustained by those on the lowest incomes last year. It goes only pan: of the way to dealing with that, but it makes some contribution to reflation.
  There are other items that we certainly welcome and that contribute to reflation. There is the reduction in national insurance contributions, which we certainly favour, although when we consider the detail we shall undoubtedly be critical of the refusal to extend it to the public sector, which helps to reduce the reflationary value of the package. On a hasty calculation, the proposal seems now to offer about £600 million, but it is nothing like the full amount that should have been available.
  Let us consider the effect of all the measures that the Chancellor introduced last autumn and today, including all the minor measures. There is a long list of proposals, giving £60 million here or £70 million there. We do not dispute that they are valuable in their own way, especially those that the Opposition have constantly proposed to assist industry with energy prices and so on, and of course we welcome them. Added to the package of last autumn, however, it is still on balance a deflationary package, as the House well understands.
  If the Treasury believes that our figures are wrong, it will have great difficulty proving that. The Chief Secretary got his figures wrong last year, so it will be a long time before we believe him this year. He was wrong about output, he was wrong about employment, and he was wrong about the Red Book. We shall therefore listen with all the more care to what he has to say tomorrow. Nevertheless, taking the autumn measures and today's Budget together, as the Government argue that we should, it is still a package which, instead of expanding the economy and tackling the massive unemployment that I have described, is more likely to add to unemployment than to reduce it.
  When we made our prophecy last year, the Government tried to dismiss it. We shall see who is right this year. The Government are still apparently persisting in the same economic policy that caused the disaster. In that, at least, the Chancellor may be consistent. That is what we fear, and we believe that the figures will bear it out.
  It is not just a question of how the economy is hit, but of how individual sections of the economy are hit. The Chancellor did his best today to pretend that he was making good all the deficiences and all the cuts that he had previously imposed through his policies in various spheres, but whether it be the unemployed, the old age pensioners or other sections of the community, very few of the cuts that the Government have introduced and sustained in the past years are fully restored. Some of them are, of course, and we are glad of that. The 2 per cent. cut in unemployment benefit has been restored, but millions of unemployed people will still be receiving less than they would have received if they had received the amounts to which they were entitled under the provisions made by the Labour Government. The Government should restore earnings-related benefit for the unemployed. No one would welcome that more than I. They should restore the

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  earnings-related system for pensioners, which they also took away. They should restore the proper value of the child benefit as the Labour Government introduced it. The increase in child benefit now proposed is in no way comparable to a full restoration of the value of child benefit as it was when we introduced it and which should, more than ever, be sustained at a time such as this.
  The Government have dealt with individuals in the same way as they have dealt with the community in general. The Budget cannot be defended on any grounds of justice.
  The Government claim that all these measures have been taken to deal with inflation and that they have been restrained from producing the real policy needed to tackle mass unemployment on the present scale because of their valiant fight against inflation. We are told that the objective of all their policies is to conquer inflation. They promised last year—I am sure that Chief Secretary joined in—that inflation would be reduced to 10 per cent. by the end of last year and to about 8 per cent. by now. That has not been achieved. We await the Chancellor's prophecies this year.
  It is perhaps sadistic to mention the tax and price index introduced by the Conservatives, under which inflation is now 15½ per cent. It is higher than the average inflation rate throughout the whole period of the previous Labour Government, including the period when we suffered from all the consequences of the oil price increase. The Government say that in all these measures, including the massive rise in unemployment on a scale not seen since the 1930s, and in some respects worse than the 1930s, their whole objective has been to deal with inflation. They have failed to do so. If they are to continue the same policy we shall see further increases in unemployment because that has been the only policy they have had for dealing with our economic problems.
  The judgment that the House and the country will make about this Budget will probably be no different from the judgment they made on previous ones. The judgment must be reached on what happens in regard to employment, in regard to output and in regard to restoring full-scale business activity. All the tuppenny ha'penny measures that the Government propose for dealing with these measures are doomed to failure unless they tackle the problem of demand and how they are going to restore it to the economy. That is the very policy that the right hon. Lady demands that no Chancellor of the Exchequer of hers shall pursue.
  Far from facing the mammoth task of dealing with the real problems of the nation—it is a mammoth task and none of us minimises it—this Budget is one of shreds and patches. After a while probably the only person who will be enthusiastic about it will be the wandering minstrel of a Chancellor that we have had for the past few years. It is a Budget that fails to tackle the reality of the problem and that fails to look at the mass of human misery that is involved in the unemployment figures. It is a Budget that does not measure in any sense the enormous task that faces the nation. We wish to set about that task as speedily as we can. The first necessity for the recovery of the country is that we should remove not merely the Chancellor but the Cabinet to which the Chancellor owes his allegiance.
  6.2 pm
  Mr. Robert Banks: I am most grateful to have the opportunity of being the first Conservative Member to be able to congratulate my right hon. and learned Friend on the masterful way in which he presented his Budget Statement and the brilliance with which the package he announced has been put together. It is an intricate and comprehensive package. I am delighted to be able to give him my whole-hearted support. Unlike the right hon. Member for Ebbw Vale (Mr. Foot), who spoke of misery and with mealy-mouthed words, I can give my whole-hearted support to the Budget Statement.
  Every Budget attaches to itself an importance which the press frequently gives it as a point of turning in the nation's fortunes and of great build-up. This Budget is no exception. It was of prime importance for the Chancellor to capture the mood for industrial expansion and to show that he was prepared to give help to small businesses to aid that expansion. This he has done. His task was not only to inspire confidence in our achievements so far and our abilities, but to give greater impetus to industry so that we can pull ourselves out of the recession and build a strong industrial base on which to reduce unemployment and to found fortunes for our country in the long term.
  I particularly welcome the reduction in the national insurance surcharge, which will be a major contributory factor to the psychological impact on industrialists. It shows that Government are behind the industrial expansion that we wish to see and are prepared to support our industry with hard cash.
  My right hon. and learned Friend has outlined the plus factors in the equation of our economic situation. My overriding concern, which was shared by my right hon. and learned Friend, is for the enormous problem of unemployment. All that we have heard this afternoon is aimed at reducing unemployment. The problem is how we deal with it. There are no quick solutions. This Budget will not result in a dramatic reduction in unemployment. It is a long-term business. In this respect, I must refer to the annual economic report of the European Community, which is the subject for this short debate and which has some interesting things to say about how, in the long term, we should deal with the problem of unemployment.
  The report lists three areas where greatest priority should be given. The first is to expand special employment measures, this the Chancellor has done. The second is to reduce the employer's national insurance surcharge. This the Chancellor has done. The third is to introduce worth while investment projects. This I believe the Chancellor has also done.
  The boost that the Chancellor has given to the construction industry, which, after all, is a central pillar for providing employment, has been of enormous help, particularly through the 14 per cent. increase in Goverment expenditure, the increase in housing improvement grants, the spur to building small workshops and the incentives to the building of houses for private letting. These are important measures and, as a whole, will be one of the prime movers in reducing our unemployment problem.
  The European and international picture presents a deep, built-in problem of an exceptional nature. For the Community as a whole, unemployment in 1979 was 5·5 per cent. It reached 8·3 per cent. by August 1981. Between the last half of 1980 and the first half of 1981

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  unemployment in the Community rose by 35 per cent. Therefore, I wish to stress the importance of us keeping our unemployment problem in perspective within the Community and as part of the international problem that surely exists.
  On top of this we are seeing the expansion of the population of working age. This expansion is faster than has been the case for many years. The rate of growth of people of working age in population terms is forecast to double—that is, 0·5 per cent. growth during the 1970s compared with a 1 per cent. growth factor by 1982. This period of growth in the numbers of people coming on the work market will run through to 1985.
  We are also seeing an increase in the female work activity role. This also contributes to the high unemployment of men. The low birth rate during the First World War means that the number of men retiring in 1982–83 is exceptionally low. This is another factor which inevitably contributes to our high unemployment rate.
  Raising productive efficiency has also contributed to the rate that we have to endure. The textile industry, which is by far the most labour-intensive, has, as we all know, suffered hugely from the recession. The labour content per thousand units of value added in 1979 was, for instance, in West Germany 100, in France 110, in Italy 150 and in the United Kingdom 187. The House will understand the scale of the problem that the textile industry has had to face in adapting to the introduction of modern techniques, technology and other methods to improve its competitiveness if it is to deal with Common Market, let alone international, competitiveness.
  The report identifies four areas of greatest future potential for a return to a more balanced employment situation. The success of the Community, and of Britain in particular, is dependent on us and our colleagues in Europe achieving leading positions in four identified areas. The first area is energy, which covers new sources of energy and conservation. I particularly welcomed the incentives to conservation which my right hon. and learned Friend gave. I should have preferred stronger measures to be adopted to add greater incentives to people to conserve heat in their own homes, but he has taken some measures—the zero rating on double glazing and the housing improvement grants—which will have an affect on conservation. Those are good measures.
  The advances in finding new sources are being researched, and many are being introduced. This is an area which I think will, through the private sector, have a large part to play.
  The second area is in microelectronics. I do not think that any hon. Member will doubt the importance of this industry to our future. I believe that my right hon. and learned Friend has also pinpointed this particular sector as being one of the key areas where the Government's incentive is important. The purchasing machine at the Government's disposal is a means by which incentives can be given to firms to develop new equipment. The incentive lies in the market that it presents.
  The third area is aerospace. I believe that this is important. I think that about 80 per cent. of the world's aircraft production was manufactured in this country in the 1950s. We are now down to about 5 per cent. It is a sorry tale. But we still have the technical ability in this country to expand through co-operation within the EEC,
  766
  particularly with France and Germany. It is in co-operation that we can best achieve greater employment opportunities in our aerospace industry.
  The fourth area is biotechnology. This is a new area—one in which the chemical and agriculture industries have a large part to play.
  It is worth referring to those four areas, because in this country we tend to think only in terms of our old and traditional industries. The shipbuilding industry is a case in point.
  Those new industries provide new areas for new businesses and for industry to see its most rapid expansion. It is, by necessity, important that research is channelled into these industries, where, if we leave it too long, the United States and Japan will snatch those markets from us. They already have a lead.
  I would add to that list one area of special concern to me—the tourist industry. That is the wrong term, because it should cover all those who come to this country for conferences, exhibitions, seminars and so on. But it is an industry. I am bound to tell my hon. Friend the Minister of State, Treasury that I regret very much that we have not been able to give the tourist industry—the hotel industry, in particular—the same classification as industry, through industrial building allowance—the tourist industry—has. It is important that we think in terms of our service industry as an industry and that we treat it as such. There is an area which is labour-intensive and which will provide many more jobs when the upturn comes and there will be a greater movement of people.
  The nation looks to the Government to set a pattern to deal with the long-term problems of unemployment—long-term, as indeed they are. If one looks at any graph, any projection, one will find that the present unemployment rate is projected to run right through into the twenty-first century. Those projections may not be right. Who knows at this stage what the final answer will be? Inevitably, with the advance of technology and all the problems that the Western world has to face, in the medium term and in the long term we shall have to live with a higher unemployment rate. Therefore, it is essential to stimulate job creation in whatever way we can.
  I believe that my right hon. and learned Friend has done an immense amount to stimulate job creation through the introduction of new businesses and the stimulus that he has given to new businesses to get off the ground and start up. Co-operation with our EEC partners is important to that.
  It is important that we look at a lower retirement age as a means of dealing with the particular problem that we have at present of more people staying in jobs longer, because of the birth rate to which I referred earlier, and at lengthening the period of education for the young. Those are long-term objectives.
  At the same time, we must make investment more worth while. I believe that in this Budget we have seen, for the first time, a real incentive to people to invest in the equity of companies and to put their money where it really should be—in savings. If we can get more money into savings, there will be less recourse to the money markets to borrow money to fund Government expenditure, which means that interest rates will tend to come down. The money in the market place is for businesses to borrow and not, in my view, for Governments to borrow. But we live

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  in a situation in which that has got built into the equation of the economy. It is important that we look to every other means at our disposal to avoid recourse to those markets.
  The special employment measures, to which I referred earlier, have been greatly enhanced by what my right hon. and learned Friend said this afternoon.
  I believe that there is a period during which we may have lower interest rates although, with higher interest rates in the United States being forecast—the question is whether those forecasts are accurate—it is difficult for the Government to control interest rates.
  The Government have a buying machine at their disposal. I hope that they will use it to the fullest possible advantage to create jobs in those new industries which will secure the greater prosperity for the nation that we all want to see.
  6.16 pm
  Mr. J. Grimond: The Chancellor of the Exchequer said that this was a Budget for industry. Looked at from that point of view, it seems to have some good points but not to go far enough.
  The general tone of the Budget was well illustrated by two details. The first was the welcome cut in the national insurance surcharge. However, I think that the cut is half the amount that it should have been. The second was the 30p increase in the duty on whisky, in which I have a constituency interest. The distillers may be pleased that it is not 50p, but I strongly suspect that it is 30p only because consumption is falling and that the Chancellor has made a virtue out of necessity. Both items seem to me to be steps in the right direction not going far enough.
  The long-term aim must be to achieve expansion without inflation. The Government have done little so far to deal with the root causes of inflation and poor productivity. Any improvements that there have been—the fall in inflation and some increase in productivity—have been largely due to very high rates of unemployment. That seems to be a bad and, we hope, temporary reason.
  The key is increased productivity. I find it extraordinary that successive Governments have put serious obstacles in its way. Surely, two of the greatest benefits that a fairy godmother could confer on the British economy are an increase in private productive investment and an upsurge of entrepreneurs anxious to employ labour. Yet, to judge by recent legislation and tax policies, one might think that private savings investment and the employment of labour in trade or industry were antisocial practices to be positively discouraged. Sometimes I think that the only thing the British think is respectable is to work in the public service.
  It is true that the Government have poured large amounts of taxpayers' money into industry, but real productive investment has been falling, as in a sense the Chancellor said, and much of what now counts as investment is not really investment at all; it is either waste or it is put into nationalised industries and so on simply to make up deficits or to pay wages. Again, it is obvious that a great deal of our trouble stems not only from inadequate investment but from a failure to use the investment that we make. The Chancellor certainly appreciated that point. I am extremely glad to hear that he is encouraging private capital to go into the nationalised industries. I hope that
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  they will go into the market for more of their capital. I believe that private investors will be more effective in supporting industry than the Government.
  Private investors are still being exterminated. The FT index is still under 600. It would have to be at 2,600 to compare with 1969 prices. If the investor makes money, he pays capital gains tax and, furthermore, is surcharged on income. I do not believe that the Chancellor mentioned that matter. Industry had been squeezed out of the bond market and is falling more and more into the hands of pension funds. The number of people who own shares is one of the lowest in the free, highly industrialised countries. The Chancellor took note of that, and I welcome his measures to increase participation. Nevertheless, we have a long way to go.
  Any employer who takes on new workers today runs the risk of the Employment Protection Act 1975. If an employer pays £50 in net wages, the cost to him is more than £80. He also is responsible for redundancy payments. Those would seem to be crazy measures in a country where there are three million people crying out for employment.
  I maintain that the third mistake is the Government's energy policy. The Government have fallen into the habit of saying that something can bear more taxation because it is no dearer that it once was or that in some other country it is equally expensive.
  My constituents greatly resent the fact that petrol, which is essential to them, is lumped together with wine, spirits and tobacco as something which is fair game for increased taxation. I welcome the reduction on avgas, and I suppose that an increase of 9p a gallon could be worse. In my constituency, a gallon of petrol costs 20p or 30p more than in London, which is an extremely heavy impost.
  If Britain is to recover, we must take advantage of some of the things that we can offer cheaper than our competitors. The idea that we should make ourselves uncompetitive in every direction is false. Sometimes I wonder what twentieth century Governments would have done in the nineteenth century. Would there have been swingeing taxes on coal and horses? If so, the Industrial Revolution would have been stopped in its tracks. Perhaps that would have been their intention.
  The reason that taxation has to be so heavy is partly the public sector's enormous thirst for more and more money. In spite of what the Chancellor said, I believe that the Government's efforts to reduce the non-productive private sector have not been successful enough.
  I should like to make some suggestions. First, energy should not be regarded as an easy way of raising taxation. It should be regarded as one of the few advantages that British industry has. The North Sea should be regarded as a great benefit to be shared more widely, particularly by industry.
  Secondly, capital gains tax should fall only on real gains. The Chancellor went some way towards this, but I am not quite clear how far. If it is to be related entirely to the increase in the cost of living, he may have gone a long way. I believe he said that it was impossible to index.
  Thirdly, I believe that local development banks should be available to invest local savings in local industry. At present, the only way to deal with local savings, which are large, is to put them into Government stocks where they lose their value and do no good to their neighbourhood.
  Fourthly, I should like to see a moratorium on Government borrowing through the gilt-edged market. The Government have increased the national debt by 50

  769
  per cent. in three years—an appalling record. To some extent, inflation devalues that debt, but it is a frightful burden that we are leaving to our successors. The Government have destroyed the investment market for industry and will make it extremely difficult to operate a bond market.
  Fifthly, we should be simplifying the tax system and social security payments. They are an absolute cat's cradle and employ far too many people. The situation is getting worse. I should like to see the introduction of reverse income tax, and a much simpler system of social welfare.
  We must realise that important though machines are, the great unused capital asset is labour. I wholly agree with those who say that more emphasis should be put on getting labour to work than increasing static capital. Some capital is becoming very short-lived. Although all training is excellent, we are apt to overlook the importance of semiskilled training. There is an enornmous demand for anyone who can mend something or do a routine job.
  It is not only the highly sophisticated technologies that offer good employment. The Chancellor's scheme to involve the unemployed in the improvement of housing and the neighbourhood is most welcome. I am bound to say that that comes straight from Roy Jenkins, ex Layard. it is an ingenious piece of poaching. The Government have been poaching Liberal policies for the past 15 years. I am glad that it goes on, but I believe that a little recognition should be given to the originators of the scheme—Professor Layard and Liberal-SDP experts, of whom we have many.
  I believe that the Government should take another leaf out of Professor Layard's book. They should pay employers to take on those who have been unemployed for six months. It is a cheaper way of creating new jobs than a general across-the-board cut in the national insurance surcharge. Having begun that admirable theft of alliance policy, I recommend the Government to continue, but when they go to Hillhead they should make it quite clear whose policy it is.
  There is widespread agreement that two of the most serious difficulties facing the country are, first, restrictive practices enforced by trade unions in some industries and, secondly, the immense size of the public sector. It is becoming apparent that we have reached the limit of taxation; yet there are more and more demands for public money.
  I hear that the Health Service is in serious difficulties due to lack of funds. Yet it is expanding enormously in terms of personnel at the very time when it lacks funds. I hear pleas for more Government money for the arts, the environment and every sort of cause. People are willing to pay for a better service, as can be seen by the way that private education and health schemes have continued, in spite of the depression. The result is that national schemes, which are the mainstay of the bulk of the population, suffer.
  I think that those two things must be brought together. I do not believe that we can charge for everything. I disagree with some of the things in Arthur Seldon's book on the subject, but I recommend the Government to look into it more closely. I do not believe that services will be maintained by levying more and more taxation. The tax base is too narrow. It falls too much on productive industry and will break down. If we are to control inflation, we must increase productivity. If we are to increase productivity, we must look more radically at our taxation
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  methods, the structure of our financial and industrial inheritance and the resources that the Government can channel for public purposes.
  6.30 pm
  Mr. John Lee: I should like to pay tribute to what I consider to be a realistic, sensible and humane Budget. It is right that the vast majority of help and relief that is available should be directed to industry, particularly as we are now in the foothils of recovery. I praise the reduction in national insurance surcharge, as recommended by the CBI, the enterprise package and the help for the construction industry, which will encourage many small and medium-sized building firms to take on more labour. I also welcome the innovation package in this Information Technology Year and also the help that will be available towards meeting energy costs.
  I wish, however, to make a plea to the Chancellor. My right hon. and learned Friend should consider helping not only larger firms but many medium and smaller firms with their energy costs. I think especially of the many medium-sized textile manufacturing firms in my constituency. My hon. Friend the Member for Harrogate (Mr. Banks) has already referred to the problems of the textile industry. I know, too, that the hon. Member for Rochdale (Mr. Smith), who is also my friend, is concerned with the problems of the textile industry. Such assistance would be a considerable benefit and would be much appreciated.
  I should like to make three personal observations. First, the whole House I am sure, will be delighted that the obscenity of the excesses of the golden handshake are to be tackled. Secondly, it makes good sense—the right hon. Member for Orkney and Shetland (Mr. Grimond) has also referred to this matter—to bring inflation into the calculations of relief for capital gains tax purposes. Thirdly, we, on the Government Benches, should take pride in the fact that privatisation policies in respect of British Aerospace, Cable and Wireless, the National Freight Company and Amersham have resulted in 70,000 employees becoming shareholders in those four enterprises. This achievement is not proclaimed loudly enough.
  In regard to individuals, hon Members should welcome the improvement in pensions, child benefits, the fact that mobility allowance will be exempt from tax and relief for charities. These proposals demonstrate the humanity of the Chancellor and of the Government. No Budget satisfies everyone. I believe, however, that this Budget is on the right lines. To have increased substantially Government spending at this stage would have prejudiced our major counter-inflationary policies and would have raised a question-mark over the downward trend in interest rates that will be so vital to the economic recovery of the country.
  6.32 pm
  Mr. Roy Hughes: The right hon. and learned Member for Surrey, East (Sir G. Howe) has been Chancellor of the Exchequer for the past three years. It seems to me, having listened carefully to his speech today, that he has come to the end of the line. He does not seem to realise that the major problem facing the country is unemployment. He offered little hope today to the unemployed.
  One does not wish to be ungenerous to the Chancellor. One felt, however, that all he displayed was a ragbag of incidentals. At the risk of incurring the wrath of he

  771
  feminists, it is fair to point out that he is suffering from a rather overbearing petticoat Government. The Prime Minister believes in rule by fear and that 3 million unemployed are the best incentive to bring down wages and to reduce the level of social services. From the outset, doctrinaire, monetarist and fiscal policies have been pursued. They are continued in the Budget today.
  The result, over a period of nearly three years, has been to more than double unemployment despite the poster that appeared before the last election showing Saatchi and Saatchi employees lined up in a queue and the slogan "Labour isn't working". The period of Conservative Government has also produced a lower standard of living for many millions of people. The cynical approach of the Prime Minister to these problems was illustrated when she told people, during a visit to Swansea, that if they could not find work there, they should move, heaven alone knows where to. Heavy unemployment is now rampant throughout the country. There has also been the helpful advice of the Secretary of State for Employment telling people to get on their bikes.
  The expression has been heard from time to time that there is light at the end of the tunnel. I did not see much of that light today. From an unemployment standpoint, the prospect looks as black as night. I endorse the sentiments of my right hon. Friend the Member for Ebbw Vale (Mr. Foot) who forecasts that the dole queues will lengthen.
  With regard to output, an article in the business pages of The Times on 1 March—St. David's Day—pointed out that
  "The lost output in 1981 alone amounts to more than total government spending on health, housing and social services combined."
  That seems a pretty formidable indictment from a newspaper that is allegedly Britain's voice in the world.
  In his Budget, the Chancellor has tinkered with minor details—houses for rent, small workshops, and community work for the unemployed. What the unemployed want are real jobs. The Chancellor and the Government wholly fail to recognise that Britain today suffers from a lack of effective demand—in other words, lack of purchasing power. The mad monetarist policies, allegedly applied to squeeze out inflation, have reduced the purchasing power of large sections of the population. The minor concessions, particularly in taxation, given by the Chancellor today will not rectify the situation. Unless there is a major turn around of policy, which can only be brought about by a change of Government, economic recovery is well nigh impossible. Unemployment will continue to soar, as most economic forecasters say.
  This situation has been brought about in a country that has vast energy resources. We are the envy of the industrialised world. It is a terrible tragedy that the revenues from North Sea oil have to be used not to regenerate British industry but to meet the cost of keeping people on the dole and to pay other social security benefits. The top priority of any Chancellor and any Government now is to get people back to work and to produce wealth. The Chancellor, again today, has failed to meet the challenge.
  Unemployment in economic terms is waste. It is like a tap left running. It is right that the Opposition should be asked what is their alternative. I have ,every confidence,
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  when the major debate starts tomorrow, that my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) will put forward Labour's alternative economic strategy.
  The Opposition are agreed that a massive expansion is required in the public sector. That point of view now seems to be shared by many leading Conservatives. It was expressed by the right hon. Member for Chesham and Amersham (Sir I. Gilmour) and, of course, he was sacked for his heresy. Similar sentiments have come from time to time from the former Prime Minister the right hon. Member for Sidcup (Mr. Heath). Even the chairman of the 1922 Committee, the right hon. Member for Taunton (Mr. du Cann) spoke about the need for the Government to enter into major capital projects. Perhaps they will reiterate those sentiments during the Budget debate.
  Of course, the TUC has put forward an imaginative plan in its 1982 economic review. It calls for a reflationary package worth £8,300 million, public spending of £6,000 million and a 2½ per cent. cut in VAT. I and other hon. Members have been bombarded in recent days by literature from various sectors of the building and construction industry, stating, for example, that Britain's housing is falling behind. Yet men are in the dole queues and materials are more or less rotting in the builders' merchants' yards. There is also literature from the British Road Federation and the RAC calling for more money for roads. They say that bypasses are urgently needed and that more maintenance work is required on our roads because they are fast deteriorating.
  All that we have received on roads from the Chancellor is a fleabite. Being parochial for a moment, there is now an urgent need in South Wales for a second Severn bridge. For once, I agree with the Welsh CBI, which makes the same call. What an appropriate gesture it would have been today if a South Walean such as the Chancellor could have said, in his Budget Statement, that the money would be made available for the building of this second Severn bridge. All we have got now are lane restrictions on the bridge, which is so vital to the economy of South Wales. Indeed, it is as if the whole economy of that area is hanging by a gossamer thread.
  So many other schemes could be engaged in, such as rail electrification and the Severn barrage scheme, which is a real investment for the future in the vital field of energy supplies. People are simply crying out for a bit of hope to point a little light to the future.
  Despite all the ideas put forward, the Chancellor, aided and abetted by the Prime Minister, does not want to know. All the reliable forecasters are now predicting that, from an unemployment point of view, we shall have a slump for the rest of the decade. The Budget has merely tinkered with the situation today. With the inertia being shown by the Government over this problem, is there any wonder that outside there are calls for extra-parliamentary action? The Government engineered this recession. Market forces were to be released. Today's Budget is part of the same pattern, and the Government are failing to understand that their gamble is not coming off and that 3 to 4 million unemployed are the result. The figure seems to be forever increasing.
  Alongside public expenditure, there is also a need to control trade. Some form of import controls are vital. Otherwise, if we inflate the economy to the required degree, we shall suck in imports and add further damage to manufacturing industry, which will also undermine the balance of payments situation. However, with import

  773
  controls, as output picks up, trade will expand and overall imports in the long term will grow. Our competitors, particularly in Western Europe, have nothing to fear from such a policy. There is an urgent need to protect key sectors of manufacturing industry, particularly those where vast sums of public money have been invested.
  In conclusion, therefore, all we have really had today is a Budget of no hope for the unemployed. In three years, immense harm has been done to the economy. The Conservative Party has again become identified as the party of the unemployed. They deserve to be thrown out at the earliest possible opportunity.
  6.45 pm
  Mr. John Stokes: I heartily congratulate the Chancellor of the Exchequer, as did my hon. Friend the Member for Nelson and Colne (Mr. Lee), on a sound and carefully thought out Budget. I particularly like its theme: recovery does not depend so much on Government but on industry, commerce and on the efforts of all of us in Britain.
  I cannot remember a Budget in recent times about which there has been such a welter of speculation beforehand. The amount of influence that the Government have on affairs is only marginal and is much less than many people suppose. Our salvation as a people lies with all of us. We expect and hope for a lead and the Chancellor has given us one this afternoon. He has refused the blandishments of those who wanted a massive reflation, such as that advocated by the Opposition this afternoon. He has kept as his main object the defeat of inflation. Governments have always faltered in the end over that aspect. The Chancellor will be rewarded for his steadfastness from next year onwards.
  Recovery from the world slump because of lack of competitiveness in much of our industry has been, as we all know, painfully slow. However, I must judge the Budget on its effect on manufacturing industry and on the incentive which people have to work hard and give of their best. The Budget has given us great hope on both those counts. I marvel that people in my constituency, where firms have been hard hit, hardly ever complain. They deserve some encouragement for their stoicism, and the Budget will give it to them.
  I welcome the cut in the insurance surcharge on companies. I also welcome the improvements in personal taxation, although we are still as a country too highly taxed, and I should have preferred 1p or 2p off the standard rate.
  I am still disappointed in the spending economies that the Government have so far been able to make. However, I welcome the cutback in university spending which has been too rapid since the 1960s, too indiscriminate and lacking in any sort of rationalisation of the various departments. The staffs at these universities and colleges have in some cases become too complacent, having what they think is a ticket for a career for life without any requirement to justify their efforts.
  I wish that we could have reduced the Civil Service more effectively. The increase in numbers in sectors such as the National Health Service is most worrying. As we all know, local government costs central Government far too much. In spite of all the efforts of the Secretary of State for the Environment, local government staffs have been reduced by only 3 per cent.
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  Finally, we have the continuing problem of the nationalised industries, which still cost the taxpayer so much. The lushness and comfort of their employees is a standing affront to all the people, for instance in my constituency, who have suffered so much in the private manufacturing sector. I am certain that the only long-term solution is to sell those industries to the public and make them properly accountable to real shareholders. I am glad to hear that the Government are continuing with this good work.
  I am disappointed that there has been no mention of more quangos being abolished. I agree with the right hon. Member for Orkney and Shetland (Mr. Grimond) that we need more of a candle-end, Gladstonian mentality in the Treasury and every other Government Department. However, I congratulate my right hon. Friend the Secretary of State for Defence on his clever financial management of the Armed Forces, while at the same time fully maintaining their effectiveness.
  We are all glad about the fall in interest rates, and we hope that the trend will continue. Certainly that is 'the dearest wish of industry. It will continue if the Government can reduce their spending and thus their borrowing.
  I welcome the different amounts of help given to small businesses in the Budget. The Government should do all that they can to help entrepreneurs.
  I am glad, too, that help is being given to encourage as many firms as possible to adopt the new technologies. In this respect universities could pay for some of the expense that they cost the nation. The traditional West Midlands industries, which have been very hard hit, need a newer and higher technological base. Confidence is a tender plant. The Government must now try to instil it. They should try to make every entrepreneur and small businessman feel that their efforts are contributing directly to the national recovery. In the long term, that is the only way to get down unemployment. I do not believe that large companies will ever again employ the huge numbers that they used to employ. We must look to the start-up of many small businessess, which we hope one day will become larger companies.
  I hope that the whole ramshackle area of special development help and other subsidies will be re-examined. In this respect there has been an enormous waste of taxpayers' money. The effect of these policies on the once prosperous West Midlands has been nothing short of disastrous. Work was taken away from us by force, and with beguiling incentives given to other areas, where unfortunately the work force did not have either the same experience or dedication.
  I hope that in time all these payments will be phased out. They are enervating to the areas concerned, apart from all their other dangers. I would prefer a straight cut in income tax for every worker in every part of the country.
  Vast sums of money are still going to nationalised concerns. I hope that we shall have no more De Loreans. On the other hand, British Leyland and British Steel at last look more encouraging, and we hope that their good new management will succeed.
  I welcome the new scheme of voluntary community work. This is something that the country can do well. It will help national unity and cohesion, and it will bring 10,000 unemployed people back into the mainstream of national life.

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  I welcome the additional benefits to the unemployed, the sick, and especially the disabled. These give the lie to the belief that we are a hard, uncaring party. Our background of help and sympathy for those less fortunate than others goes back to the days of Lord Shaftesbury, or earlier.
  I very much welcome the special help to industry with energy prices. In particular, I welcome the help to foundries, of which I have many, in the reduction in the duties on coke. I am delighted to hear of the different kinds of extra work which will come to the construction industry. In fact, the more one looks at the details of the Budget, the more one realises how carefully it has been thought out, and how its benefits will be spread right across the country.
  We must not expect too much of a Budget or of a Government. Just as it is silly to blame the Government for our economic ills, so it is silly to expect the Government to put our economy right. As I have often said, our troubles in this country are not really economic but moral and spiritual. We should ask ourselves why we have failed so signally in recent years to compete with the management and the work force of the United States, France, Italy, Japan, and so on. It is a deep-seated problem that no Budget will cure. It requires a complete change of attitude. We have to alter our thoughts about work and effort, particularly work involving a profit at the end, out of which future work will come.
  I wish that manufacturing industry would enjoy the same prestige as the professions do. I wish that the best of our young people would go more into industry and commerce. Then I believe that we should surmount all our economic problems. Sometimes we forget the enormous brain power that we have in this country. People come from all over the world to make use of our brains. However, we need to direct some of those brains to profitable enterprise. Then we can have the better social and other services that we all want. The Prime Minister is
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  constantly and, in my view, rightly reminding us that it is the results of manufacturing industry which create the wealth on which so much of our life depends.
  Having got inflation down to single figures, which I believe that we shall do by the end of this year, or early next year, and with industry so much more efficient, so much less over-manned, with many fewer restrictive practices, and with, I believe, a much more confident and vigorous management, we as a country have the opportunity to forge ahead.
  The fall in the price of oil will transform industry's prospects. People must shake off the mentality that Britain always has a problem and we must go forward and grasp the opportunities with both hands.
  6.59 pm
  Mr. Tam Dalyell rose—
  Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Mr. Tam Dalyell.
  Mr. David Hunt: I beg to move, That the debate be now adjourned.
  Mr. Deputy Speaker: I have called Mr. Tam Dalyell.
  Mr. Dalyell: The Chancellor of the Exchequer mentioned in the Budget statement help to smaller engineering firms. If he means what he says, why is it that with the left hand—
  Mr. David Hunt: I beg to move, That the debate be now adjourned.
  Mr. Harry Ewing: Sit down and do not be so impertinent.
  Mr. Deputy Speaker: A speech cannot be interrupted to move to adjourn the debate. The clock is striking Seven o'clock.
  It being Seven o' clock, and there being private business set down by The CHAIRMAN OF WAYS AND MEANS, under standing Order No. 7 (Time for taking private business), further Proceeding stood postponed.

Lloyd's Bill
Order for Third Reading read.
7.1 pm
Mr. Anthony Grant: I beg to move, That the Bill be now read the Third time.
First, I express my pleasure at seeing on the Government Front Bench for the first time while the Bill has been under discussion my hon. Friend the Member for Reading, South (Dr. Vaughan), who is the new Minister for Consumer Affairs. We are delighted to have my hon. Friend on the Front Bench. If he is as agreeable and helpful in the Department of Trade as he was when he was Minister for Health, we have a happy future ahead of us.
I can debate the Bill's Third Reading briefly for two reasons. The first reason is that it is the wish of the overwhelming number of hon. Members and of members of Lloyd's outside the House that the Bill should now make progress. The second reason is that the Bill has been the subject of exhaustive debate both inside and outside the House. Second Reading took three hours of the time of the House. The two stages in Committee occupied no fewer than 52 hours over 13 days. Three hours were spent on Report and the further consideration of the Bill has occupied the House for six hours. That is a total of 64 hours of scrutiny over 16 days.
I pay tribute to the responsible way in which critics of some aspects of the Bill have conducted the debate. They have argued quite sensibly on principle and not on personality. I pay tribute to them for the way in which they have done so. However, the Bill was given a Second Reading by a majority of 164. The proceedings in Committee were conducted scrupulously and were praised by hon. Members on both sides. Tribute has been paid to the proceedings in Committee during previous stages. Consideration of the Bill was agreed to without a Division after three hours of debate. At the further consideration stage the suspension of the Ten o'clock rule was approved by a majority of 146, which enabled us to continue the debate. The closure was approved by a majority of 107.
New clause 2, which was introduced by my hon. Friend the Member for Nantwich (Sir N. Bonsor), led to one of the crucial debates. The clause was defeated by a majority of 53. My hon. Friend the Member for Faversham (Mr. Moate) did not press new clause 1 to a Division. There has been full discussion and the House has come to clear and decisive conclusions.
The Committee of Lloyd's has been scrupulous in consulting its membership at all stages at meetings and in writing. The Bill as it stands has been approved by the overwhelming majority of the members of Lloyd's. I appreciate that clause 14 has caused concern to some of my hon. Friends. I understand that clauses 10 and 11 have worried my hon. Friend the Member for Faversham. However, I do not believe that that concern and worry justifies further delaying in the Bill in its passage to another place. Delay would create great uncertainty in the markets at home and abroad, which would be very much to the detriment of our interests.
I remind the House that in 1980, the last year for which figures are available, Lloyd's contributed no less than £579 million to our invisible exports. I remind it also that Lloyd's gives employment to 72,000. It would be tragic, for Lloyd's itself and for British economic interests generally, if the Bill were to fall now. Lloyd's would, as
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a result, be stuck with the 1871 constitution, with which it has been struggling for so many years, and which in 1982 is like entering the Le Mans race with a horse arid cart. Therefore, I believe it right that the Bill should make progress. I urge the House to speed it on its way by giving it a Third Reading tonight.
7.6 pm
Mr. Bob Cryer: I should not let this occasion pass without a few comments about comparisons. My hon. Friends who served on the Opposed Private Bill Committee worked extensively to improve the Bill in order to allow Lloyd's to work.
Lloyd's is an ancient, anachronistic institution with a massive number of sole proprietors who have to work In some form of corporate organisation, and the Bill provides the legal framework to bring it up to date. My hon. Friends recognised that, and they have been praised by hon. Members on both sides of the House for the work that they have done—a classical reformist position.
Clause 14 is most important. It is claimed that it is vital to allow Lloyd's to work. It is the immunity clause, which speaker after speaker on the Government Benches said was necessary, although a tiny group viewed it critically. It has been claimed that immunity is necessary to allow the Committee of Lloyd's to work and to prevent frivolous and vexatious actions by rival organisations. Conservative Members supported immunity for their friends who are part of Lloyd's, which makes between £300 million and £400 million a year, but they trooped into the Aye Lobby to remove immunity from trade unionists. That is a double standard. Trade unionists want to know why ore institution can be dealt with by the House on the basis that, in some aspects, immunities are necessary while trade union institutions, which have been built up over the years and also need immunity to work, have had those immunities removed by the very people who claim that immunities are necessary for Lloyd's to work.
When the Employment Bill was debated, two of the first three speakers were members of Lloyd's and the other was a solicitor. They all complained about the closed shop. Surely that is the adoption of double standards. The trade union movement seeks only to organise itself to equal the power of the employer. Thus, it requires some immunity. Trade unions are not asking for total immunity—they have never had that—but they require some immunity so that, when they are contemplating the furtherance of a trade dispute, they may have some protection from tort.
That is the argument on behalf of Lloyd's. When Lloyd's is working, it is argued that it must have some immunity for negligent acts. That argument has been deployed by several Conservative Members, including the promoter of the Bill. Apparently they do not extend it to trade unions because those same hon. Members voted against immunity for trade unions.
I want to put down a marker. When I spoke at the National Union of Mineworkers' school recently about this discrepancy, those who attended were extremely interested in the double standards that prevailed.
Lloyd's is a somewhat quaint institution which could be radically reformed into a corporation to provide much the same sort of insurance facilities. It would not need the organisation, with its various members, that has been built

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up over the years. Nevertheless, ordinary insurance companies incorporated under the Companies Act often provide services that are as wide as Lloyd's.
Like my hon. Friend the Member for Oldham, East (Mr. Lamond), I accept that some reform is necessary, based on the level of immunities proposed in the Bill. However, I take exactly the same stand about the trade unions. I contend that trade unions should have the opportunity to work. The Government should stop hammering them at every possible opportunity and should recognise that they need some degree of immunity. They should abandon the double standards that have been exhibited during the passage of the Bill.
7.11 pm
Mr. Roger Moate: We have just heard a significant speech from the hon. Member for Keighley (Mr. Cryer)—
Mr. Nicholas Baker: It was wrong.
Mr. Moate: The hon. Member for Keighley nearly always is wrong, but I suspect that on this issue the House would do well to take note of what he has just said.
My hon. Friend the Member for Dorset, South (Viscount Cranbome) once reminded us of what the hon. Member for Keighley had said on this subject. If we need any reminding that the immunities clause is dangerous and that it will haunt us time and time again, we have only to look at the speech of the hon. Member for Keighley.
Of course, every institution is different. Trade unions are as different from Lloyd's as Lloyd's is from the Stock Exchange. However, the principle of legal immunities is a major political principle and the hon. Gentleman will never let us forget it. He has emphasised that today. That is one strong reason why—leaving aside all the fine legalistic arguments that can be advanced—I hope that the other place will look hard at this proposition. It is a dangerous precedent that such a wide-ranging legal immunity should be left in the Bill to protect the Committee of Lloyd's.
I join my hon. Friend the Member for Harrow, Central (Mr. Grant) in welcoming to the Front Bench my hon. Friend the Member for Reading, South (Dr. Vaughan). I am delighted, as others are, to see him in his new post of Minister for Consumer Affairs. He was the most superb Minister for Health. He was always immensely helpful and I have no doubt that he will perform exactly the same role in this important post. I am also delighted to see alongside him the Under-Secretary of State for Trade, my hon. Friend the Member for Birmingham, Hall Green (Mr. Eyre) who has had responsibility for keeping a Government eye on the Bill. I also congratulate my hon. Friend the Member for Harrow, Central and my hon. Friend the Member for Gainsborough (Sir M. Kimball) who, with remarkable skill have brought the Bill to Third Reading. My hon. Friend the Member for Harrow, Central has been so skilful in his unofficial whipping that he is in great danger of meeting a fate worse than death—he is liable to be invited to join the Whips Office at any time.
Mr. Anthony Grant: I have done that once, but never again.
Mr. Moate: My hon. Friend's success can be measured by the large number of my hon. Friends who have
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expressed their concern about tonight's proceedings. However, their concern was not so much about the principle of the Bill as about their dinner arrangements. I was very happy to reassure them that, as far as I am concerned, their dinner arrangements will not be in any danger. I am a great believer in brief speeches and longer dinners. I hope that my hon. Friends will enjoy both this evening.
I was grateful for the Whip that was sent to me, which concludes by asking me to let the area Whip know if I was able to help on this occasion. I am pleased to help on this occasion. No one has expressed any doubt about the need to ensure that the Bill succeeds. There might have been disagreement in principle about some of the clauses, but there has been no doubt about the general desirability of the Bill. If any have come to a different conclusion, they must have failed to follow the proceedings carefully. In some respects, the Whip was slightly in error. To provide the background to this debate, I shall refer to some of the errors. For example, it states:
"Even the opponents of certain sections of the Bill now believe it should proceed on its Parliamentary course."
There has never been any doubt that the opponents of certain sections wanted the Bill to proceed. It is unfortunate that the impression has been given that some hon. Members want the Bill to be defeated.
In a further error, the Whip states:
"Unfortunately there was one objection"—
that was mine—
"solely on the divestment issue."
According to the procedure of the House we do not state our reasons for objecting. The closure motion was moved on our earlier proceedings and as a result I was unable to express my view on immunity. Other issues—notably that of the electorate—should have an airing on Third Reading. The Whip also states:
"It would be tragic and gravely damaging to Lloyd's … if the Bill on which so much progress has been made were to fail for lack of the necessary support."
That presupposes that a vote is likely and that some hon. Member has expressed opposition to the Bill's Third Reading. However, as far as I know no hon. Member has expressed that sentiment. Therefore, there has been an over-reaction. Some feel strongly about the immunity provisions, just as I do about divestment—
Mr. Richard Needham: Has my hon. Friend declared an interest?
Mr. Moate: By now, I should have thought that hon. Members' interests were well known. However, as my hon. Friend wishes me to do so, I repeat my interest as a director of Alexander Howden insurance brokers, which petitioned against divestment. Having spoken, will my hon. Friend the Member for Chippenham (Mr. Needham) declare his interest—which is much more substantial than mine—as a member of Lloyd's? However, that has nothing to do with the situation.
The Whip was erroneous. Unfortunately the impression has been given that we wish to endanger the Bill's passage. That has never been so. Procedure is often used to try to secure changes in legislation and to persuade others to negotiate and, perhaps, to compromise. However, that should not be seen as trying to defeat legislation. The Bill has never been in danger from its critics. Indeed, it is endangered more by its defects which, in many ways, should alarm the House, some members of the Lloyd's community, the other place and the Government. If we

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had chosen to be obstructive about divestment we could have endangered the legislation in other ways. However, it was deliberately decided not to do so. My hon. Friends and I could have argued when time was short and thus endangered the Bill. I thought that that was wrong, because it would have endangered the legislation.
As my hon. Friend the Member for Harrow, Central knows from his knowledge of Private Bill procedure, the petitioners could have taken other opportunities to endanger the Bill's passage. However, they were deliberately avoided. The petitioners could have presented a memorial, complaining of failure to comply with the Standing Order in relation to the additional provision on divestment. The petitioners could have opposed the application to the Standing Orders Committee for dispensation of the Standing Orders that had not been complied with. However, as such procedural moves might have unintentionally secured the Bill's rejection, that action was not taken. I emphasise that because I wish the House to understand that most of us believe that the Bill is needed and we wish it to go through. That is an important background to this Third Reading. The Bill should now pass, but I hope and believe that it will receive thorough scrutiny and be subject to major amendments in another place.
I wish to express general concern about the scope of the Bill and cast some doubts upon whether the House should approve such major changes being carried into effect through private legislation. It worries me that major principles are being carried through into law by way of a Private Bill. I do not suggest that it is in any way out of order. Clearly it is not, or the Bill would not have proceeded as far as it has.
However, in "Erskine May", we are told that four principles must be followed in determining that a Private Bill should not be introduced as such but should be introduced as a Public Bill. The first criterion is "that public policy is affected". Anyone who listened to the speech of the hon. Member for Keighley about legal immunities will have understood that public policy is affected. I would have thought immediately that that major principle should not readily be accepted in a Private Bill.
Another criterion for judging whether the Bill is public or private is
"the magnitude of the area and the multiplicity of the interests involved."
The area and the sheer magnitude of the proposition affects so many people that we should have been wary of allowing such a matter to proceed by way of private legislation. I made private representations about the matter. The judgment was that there were borderline areas where the House should decide whether matters come under private legislation. I accept that judgment. However, when the House considers such legislation, it should examine the magnitude of the interests affected and decide whether the Bill should be private.
To talk about magnitude, about 40,000 shareholders of the public companies concerned are to be subjected to the forcible sale of some of their assets. That is a substantial area of interest, which is inappropriate for a Private Bill. For example, the immunities extend right down to management and I have seen a figure of about 20,000 people who would lose the right to sue the Committee of Lloyd's for damages. There too, many people have not been consulted. That is also not a matter that is suitable for a Private Bill.
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I see the hon. Member for Norwood (Mr. Fraser) laughing, but he never seems to take any of these points seriously. As long as he feels satisfied with the general legislation, he does not bother with the details.
Mr. John Fraser: I take the matter just as seriously as the hon. Gentleman, especially as I also take an impartial view of it.
Mr. Moate: That is a typical remark from the hon. Gentleman, to which I need not respond. I hope that the House understands that I am talking about the principles, about which I feel strongly. I hope that my arguments are impartial.
The other point is the forced sale of assets. Is it right that private legislation should be used, as it is being used now, to force upon a large range of companies—some public and some private—the sale of assets? It is an extreme sanction to be imposed upon rather flimsy evidence. I again question whether Parliament should accept legislation that takes such extreme steps in the form of a Private Bill.
Sir Anthony Royle: I am rather puzzled about my hon. Friend's last remark. Is it not tree that the underwriter of his firm—in which he has naturally declared an interest—pressed the Committee to make changes in the Bill to do just that? It was only because a e underwriter of his firm did that that changes were made in the original Bill that was tabled in the House.
Mr. Moate: My hon. Friend raises an important point, although I am not sure how it relates to my point. However, it allows me to emphasise the independence of the broker-underwriter relationship. The hon. Member for Norwood accused me of being partial in the matter. I suggest that in many Lloyd's organisations people take stands and do their own thing because they believe in what they are saying. My hon. Friend is right that the case for divestment was made by a board member of the Alexander Howden holding company. He made the case contrary to the views currently held by the petitioners—the same company. There is no clearer evidence of the fact that people are not creatures of one another in the Lloyd's community. I rather resented it when the Committee said that Mr. Peter Green, the chairman of Lloyd's, because he is a member of the Hogg Robinson board, is a broker and not an underwriter. People are independent-minded both within one group and in the community. However, I take my hon. Friend's point. I am not sure that it contributes anything to what I have said.
My hon. Friend the Member for Harrow, Central is right to say that we have dealt with the Bill fairly extensively in Committee and in the proceedings so far and there is no need to cover again the many issues that have been thoroughly aired and which I hope will be more thoroughly aired in another place. However, we did not deal with the electorate in Committee. I have read some of the material about that and I feel that the Bill is not satisfactory in its present form. Or, at the very least, it should be thoroughly examined in another place. We know that with 16,000 external names and 4,000 working names, the vast majority of the representations will be held by the working names. There will be 16 working names on the council, eight external names and three nominated members. It was described as dividing the membership between the sheep and the goats, which is an unfortunate

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phrase. However, the working members of the council will have the lion's share of the representation. They will elect the chairman of the council and the chairman of the committee. Hitherto, there has been no distinction in practice, although I recognise that there has been a great distinction in theory.
We are talking about the substantial disenfranchisement of the external members. My hon. Friend the Member for Harrow is right to point out that it was accepted without much dissension by those members. His legitimate point was that if they do not complain, why should we? Do we not talk about the same thing when we discuss voting and non-voting shares and rights in public companies? I suspect that the vast majority of people who buy shares without voting rights do so voluntarily and willingly in the full knowledge that they are disadvantaged in that way. However, that has not stopped us deploring that feature of commercial life. It has not stopped us saying that the practice of having non-voting shares is rather regrettable. I am sure that it will come to an end.
It may be that members of Lloyd's have accepted at the moment that they will be disadvantaged in that way, but I wonder whether it will persist. As we enter areas of controversy—as we seem increasingly to do in Lloyd's—more and more outside names will be more conscious of the way in which Lloyd's is operated, more concerned about having a full say in the workings of the council and might ultimately regret having given up their full voting rights so easily. One has only to look at a recent fairly close-run and dramatic by-election to the Committee of Lloyd's to see that the external names were exercising considerable influence over the outcome of that election. In future, they might not have such powers. That is a matter that should be looked at carefully, and I am surprised that Fisher was able to recommend without doubt that there should be a division between the sheep and the goats, and that that should be accepted.
Mr. Anthony Grant: I am a little puzzled and require clarification. It would be a mistake if the impression were to be left that this issue was in any way a parallel with Companies Act non-voting shares. Members, whether they are external or internal, have a vote. The question concerns the number of people represented on the council. It is not the same as non-voting shares in companies.
Mr. Moate: I accept the correction. I was trying to make a point of principle. It is true, of course, that external members have a vote but their vote is worth far less. My hon. Friend will concede that there is a clear majority for the working names. There is a strong argument for that. I do not dispute it. There is a strong case, or it would not have been recommended by Fisher or accepted by the members. I feel that it is a matter that in time to come will be a cause of regret and future dissention. I make no more of it than that.
I turn to the subject of divestment, without rehearsing many of the arguments with which hon. Members will be familiar if they have bothered to listen to earlier speeches, although I suspect that many of them sensibly have not done so. I wish to repeat my arguments against divestment. When the Bill was debated on Second Reading, it did not contain provision for mandatory divestment. When this matter was first raised in
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Committee, the sponsors defended the original proposals and opposed mandatory divestment, and did so with considerable eloquence and skill.
My view is the same as that originally expressed by the sponsors, the chairman of Lloyd's and others. To those who say that mine is a lone voice, I say that it may be so in the House at the moment but it is a voice expressing the views that were arrived at after a great deal of discussion in the Lloyd's community, before the Bill reached the House. They were the right conclusions then and they are the right conclusions now. The Committee made an error in forcing mandatory divestment into the Bill.
I have listened to a large number of views, and my experience is that a vast majority of Members of the Lloyd's community still believe that mandatory divestment is undesirable and unnecessary. There are some who think that it is positively damaging. However, that is a matter that will be dealt with by their Lordships.
Under the Insurance Companies Act 1974 there is no stipulation that insurance brokers should not own insurance companies. It was never in doubt at that time that it was proper and reasonable for brokers to own insurance companies and underwriting interests. Some explanation was given by my hon. Friend the Under-Secretary of State for Trade but there was no satisfactory explanation of how we could require the sale of underwriting interests while brokers could still properly under the law retain control of insurance companies. That is a contradiction that we have not yet resolved.
I emphasise again that I thought we were talking about self-regulation. That was the great theme running through the Bill—let Lloyd's regulate its own affairs. The original proposals allowed Lloyd's the powers of self-regulation on divestment. They said that Lloyd's could achieve the desired objectives by management separation and that it should be left to the committee to make decisions. That was right. That is self-regulation. We are saying that Lloyd's is not capable of making that judgment about mandatory separation and that the House must make it. If we believe in self-regulation, we have made a mistake in forcing the mandatory sale of underwriting or broking assets.
I emphasise that the growth of Lloyd's in recent years has been helped and encouraged by and been largely dependent on the strength of the large groups that have developed. They are sophisticated insurance conglomerates. They are called insurance brokers, but basically they are a sophisticated group of insurance interests that provide a world-wide service and have all the skills necessary to compete in a tough world. It is strange that we are forcing the break-up of the groups that have done so much to strengthen Lloyd's to attract new underwriting capacity to Lloyd's, to provide a service to the world and to keep the premiums flowing to London.
What we are doing is damaging. Those past relationships have been beneficial, not detrimental, to many interests. We are pandering to a naive and phoney consumerism, particularly that espoused by the hon. Member for Norwood, who has done so much damage in the legislation that he has introduced.
Mr. John Fraser: With no help from the hon. Gentleman.
Mr. Moate: I am glad to hear the hon. Gentleman say that, because I have done everything possible to stop some of the nonsensical and interfering legislation that he has introduced.
An important answer was given by Mr. Boydell, QC, on the first day of the Committee's proceedings. Speaking for Lloyd's, he said:
"I think all we would add to that is and indeed for the protection of policy holders who are in the end most important of all, and the Committee will, I know, attach importance to the historical fact that although inevitably things may have gone wrong occasionally in the past in the organisation, there has never been any single occasion where a policy holder has suffered and it must be in the end the interest of the policy holder which is paramount."
When we consider the problem that Lloyd's has had in recent years, we realise that the policy holder—the consumer—has not suffered. That is recorded clearly in Committee.
It is strange that, at a time when the United States is building up insurance exchanges in emulation of Lloyd's, it does not require separation of underwriting and broking interests and is encouraging brokers to come in as underwriters, we should say that that is wrong in Britain and that we will force the break-up of vital and valuable insurance conglomerates.
I repeat that we are pandering to a conflict of interests—a conflict of interests that does not exist, because it is more a community of interests. The extreme sanctions that we are talking about are unwarranted on the basis of the evidence that we have received so far. Parliament is inflicting an injustice on the Lloyd's community. Later we shall come to regret it. In the long term, we are severely damaging the commercial prospects of Lloyd's, the interests of the names and the insurance interests of the United Kingdom.
I sincerely hope that when the Bill goes to the other place, those in the other place will re-examine and put the Bill back into the original state in which it was approved by the House on Second Reading. I hope and believe that if that happens, the House will readily accept the logic of the position and ensure that the Bill is passed rapidly.
There is one more matter on which I wish to comment briefly. As so many eminent lawyers are present, it would be foolish to trespass too far on the question of legal immunities, but I wish to record my views and to refer to the significant speech of the hon. Member for Keighley. Before doing so, I point out that we do not use the word "immunity", which is what the hon. Gentleman talked about, in relation to trade unions. We have the splendid euphemism "restraint on suit". We do not use that euphemism when we talk about the trade unions. We talk about legal immunities. However, there is no distinction.
There is no doubt that clause 14 gives wide ranging immunity to the Committee of Lloyd's against any suit for damages brought by a member of Lloyd's community. That includes—and I hope it will change—libel and slander, negligence and other wrongful acts. I again emphasise that this immunity is not accepted by members of Lloyd's after consultation. What about the other members of staff—the senior management, for example—who are being deprived of their legal rights without being consulted? I should have thought that that, too, would be a matter of concern to the House and, I hope, to the other place.
There should be no dispute that we are giving a unique privilege to Lloyd's. No-one has yet quoted a comparable
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institution—apart from the trade unions, to which a different argument applies—that enjoys this legal immunity. The argument put forward by Sir Peter Vanneck, who has been a member of the Stock Exchange Council, was supposed to help the argument for immunities. He expressed the wish that on certain occasions the Stock Exchange Council had such powers. If that is the argument, there is no doubt that many other institutions will deploy that same argument.
I feel sure that, year after year, we shall have representations from other organisations, all of which will be different, which have to exercise disciplinary powers over their members—the Law Society, the Bar Council or the Pharmaceutical Society of Great Britain. Many organisations will ask for limited immunities. There is no doubt that we shall hear that cry, and they will refer back to this proposal.
I recognise that if one wants a council that will exercise powers quickly and effectively, it must feel that it has the strength that comes from legal immunity. There are ways of limiting it in the manner suggested by my hon. Friend the Member for Nantwich (Sir N. Bonsor). I feel that the promoter and sponsors ought to examine carefully proposals of that kind when the Bill goes to another place.
There is an element of inconsistency in what we are doing. If powers are undefined or ill-defined, one can well understand the need for a committee to have some sort of legal immunity. However, we are passing a Bill that carefully and clearly defines the powers of the new stronger committee. It will have byelaw-making powers. In other words, we can clearly lay down in statute the duties, tasks and purposes of that committee. In the circumstances, that committee ought to be able to exercise those disciplinary powers without any doubts about it; legal status. It ought to be able to take action fully confident in the knowledge that it is doing its job properly.
In the circumstances, it is even more unnecessary for the Lloyd's Committee to have legal immunity. If the committee does its job properly, why does it need immunity? If it does not do its job properly, I cannot see the argument for preventing those who would be harmed, perhaps by the negligence of that committee, from taking action and suing for damages.
I hope that their Lordships will look at this matter carefully. It will make life easier for all of us in future if the immunity provision is severely limited. We are doing something that is contrary to the true interests of Lloyd's By keeping the immunity clause, we are ensuring that Lloyd's is propelled—almost permanently—into the cockpit of political controversy. It will stay there. The hon. Member for Keighley will ensure that it does. We would be doing a favour to the Lloyd's community if we. took out this provision at some later stage. It is undesirable and possibly in the long run, damaging for this provision to remain. Conservative Members should regret—and will regret even more later—the existence of the immunity clause. That is why I hope that their Lordships will change it.
I hope that their Lordships will re-examine the proposition on divestment and will dispense with the amendment put forward by the Committee. I hope, too, that they will re-examine the electoral issue.
In the belief that the Bill will receive a thorough and rigorous examination in the other place and, I hope, substantial amendment, I agree that the Bill should have a Third Reading.
7.36 pm
Mr. Richard Needham: I start by declaring an interest as a new underwriting member of Lloyd's. It is a negative interest as I have yet to receive any money and Lloyd's tells me that it is more likely that I shall be paying it rather than it paying me. It is because I am a member of Lloyd's that I became more interested in the Bill than I might otherwise have been.
It is clear to the House, and everyone involved in the market at Lloyd's, that the Committee and the Council could not continue to operate under the rules laid down in 1871. Something had to be done in a market that had grown from 500 to 20,000, to make the market operate in a more effective and up-to-date way than it had done in the past. No one could argue that a new Bill was not needed.
The question is what form the new Bill should take. For example, would it have been advisable to have had a statutory framework to the Bill rather than to reply on the concept of self-regulation? In a complex market such as Lloyds, which has enormous variety in it, it is much more sensible to ensure that the market controls itself rather than having a statutory blanket which might not always be applicable. It is usually better to have a gamekeeper to catch the poachers rather than to rely on the local council to do it for us. I accept that as originally presented to the House there were things excluded from the Bill that I wanted included. The Bill is now better than it was when it originally come before the House.
One of the fundamental principles of self-regulation is that one cannot have a conflict of interest. If there is conflict of interest within self-regulation, it will lead to quarrels, arguments and doubts, and in any council or committee where a conflict of interest is embedded people will feel that they have been unfairly treated. For this reason, it seems that the need for divestment, although it may be argued that there are other ways of doing it, is crucial to the concept of self-regulation.
Another point about self-regulation is that the elections must be fair and the various bodies in the market place must be properly represented. This is now the case. The increase from six to eight for the non-working members is right. That Lloyd's has now written into the schedule the method of election, and that people standing for election can put forward their election manifesto is also right. Therefore, I believe that the Committee will be much more representative of the community than it has been in the past. My hon. Friend the Member for Faversham (Mr. Moate) must accept that 11 of the 16 are currently controlled by brokers or broker associated organisations and that the whole basis, therefore, is to have a properly and fairly elected Council which does not have a conflict of interest.
The final area in which the Bill has been amended significantly and importantly is that of fraud.
The Bill is now better on all those key issues.
I come to the vexed question of immunity. Does the new Council of Lloyd's really require it? The opponents
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of the Bill, when speaking on Report, were examining the Council of Lloyd's not as it will become, but as it then was. They constantly referred to the fact that, in their view, because of the Sasse affair, Lloyd's could not be entrusted with the immunity that is proposed. If it cannot be entrusted with that immunity and trusted to get it right without being negligent, the whole argument for self-regulation disappears. If the Council of Lloyd's, even when elected on the new basis and even when divestment has been put into effect and fraud has been covered in the Bill, still cannot be trusted to discipline fairly and without the likelihood of negligence, the whole argument for self-regulation falls.
For that reason, the immunity that Lloyd's now seeks, at a time when it needs to strengthen the Council and to discipline the market fairly and when it wishes to introduce byelaws, is one with which it should, for the time being, be trusted.
I shall now deal with some of the points made by the hon. Member for Keighley (Mr. Cryer). This type of immunity is not the same as the immunity enjoyed by trade unions. That immunity does not affect just trade union members, or the society of Lloyd's as in this case, but a far broader cross-section of the public. In this case, the immunity has been granted by the members at Lloyd's on two, if not three, occasions. They have decided voluntarily to pursue self-regulation to ensure that their Council has powers to discipline and control the market fairly and honourably, but they have voted that immunity away. That does not affect anyone outside. To suggest that this is a great new right that will be demanded by others and that it is in line with the trade union immunity is a gross exaggeration. If the trade union immunity were replaced, it would be replaced by a positive right—a right to strike. That has nothing to do with this Bill.
The immunity is part of the Bill's package which includes the proper free elections of the Council as laid down in the statute. That cannot be argued in the case of the trade unions. Unfortunately, much of the argument about trade union immunities revolves around the fact that it affects the public at large through bodies which are not so democratic as, for example, the Council of Lloyd's in the way that it looks after its members.
Of course, self-regulation is not necessarily the ideal way of proceeding. Of course, the Bill can be criticised, but Sir Henry Fisher went through these matters in great detail and in all the hours of debate opponents of the Fisher working party have advanced nothing that vitiates the Bill as it is now amended and approved. Although I accept that there may be small cavils, I believe that the Bill is good for Lloyd's. It will stand the test of time, which is important for Lloyd's, and it will protect one of our great institutions. I hope that it will be passed with our blessing and support and that it will soon be on the statute book to the benefit of the economy.
Question put and agreed to.
Bill accordingly read the Third time and passed.

WAYS AND MEANS

  AMENDMENT OF THE LAW
  Postponed proceeding resumed on the Question,
  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—

  (a) any amendment with respect to value added tax so as to provide?—

  (i) for zero-rating or exempting any supply;

  (ii) for refunding any amount of tax;

  (iii) for varying the rate of that tax otherwise than in relation to all supplies and importations; or

  (iv) for any relief other than relief applying to goods of whatever description or services of whatever description; or

  (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 is payable.

  Debate adjourned.—[Mr. Lang.]
  Debate to be resumed tomorrow.

Inner City Areas
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lang.]
7.54 pm
Mr. Anthony Steen: This is a very great opportunity which has never befallen me before. It allows me to address the House on the problems of the cities—a matter in which, as the House may know, I have a special interest. I have the privilege to represent a city seat which is rather like a segment, the narrow part being in the inner city ward and the broad part in the outer city ward. It is a rare opportunity for any hon. Member to have the attention of the House, or of those hon. Members who remain, on a matter of increasing importance to the country.
In former days it was believed that what happened in the major industrial conurbations was of little importance to people in the rest of the country, and that what happened in the inner city areas was of no consequence to those living in the middle and outer city areas. It is clear from the happenings of the past 18 months, however, that what goes on in the inner city areas is of direct consequence to people living in the middle and outer city areas and indeed to the population of the country as a whole.
That was clearly reflected in the Chancellor's Budget speech, which recognised that more money must come to the city areas and more money must be made available to improve the housing in our community. It is therefore especially appropriate that, after a Budget which seeks to make the best of things and to utilise to the full all the latent assets of this country, the opportunity should arise to raise in the House a matter which should concern us all and especially those of us who represent the principal conurbations.
My subject today is the wasting away of abandoned houses. Abandoned houses in the middle, inner and outer city areas have tended simply to be ignored. The scale of the problem is not fully realised or understood. It probably runs into millions of pounds being left to rot away in the fabric of abandoned and decaying houses. It is not a new phenomenon. It has simply not been fully comprehended in the past. It has not been grasped either by local authorities or by central Government, and it has not been identified as a matter about which something must be done.
The scale of the problem and the number of houses involved has also not been realised. Nor are the abandoned houses only in public ownership. Nobody knows just how many abandoned older houses there are in our principal conurbations. Liverpool city council cannot say categorically how many such houses it possesses or which streets they are in, nor how many there are in the private sector and which streets they are in. It does not know how many have been declared unfit. It can only say that a large number of houses in the inner, middle and outer city areas are not lived in but are abandoned and derelict.
It is not just in the public and private sectors that abandoned houses are found. Housing associations also own some, but it is fair to say that those houses will be improved because the associations have sufficient public funds to put them right. That is not the case for those in local authority or private ownership.
The purpose of this debate is to bring the situation to the attention of the country. These houses, albeit

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abandoned, could house thousands of homeless people. The property was abandoned simply because of a vicious spiral of public bureaucracy and legislation which have locked the houses into a state of constant decay.
It is worth considering the situation in our cities. The pattern is similar. The problem goes back to the period when the planners were in control. A splendid publication, "New Life for Old Cities", has been well reviewed by the hon. Member for Liverpool, Edge Hill (Mr. Alton), whom I am glad to see in the House. I am also glad to see the hon. Member for Liverpool, Scotland Exchange (Mr. Parry). It is said:
"The initial culprits appear to have been the city planners whose sheer folly it was to have believed that wholesale clearance of inner city neighbourhoods could bulldoze away the city's s problems.
Could they really have thought that they could just superimpose Comprehensive Redevelopment Plans on to close-knit communities built up over generations under the flag of private enterprise?
Take, too, the extensive financial and social consequences inflicted by 'Blight'. Was it not possible for City Councils to have foreseen that 'Planning Blight' would have adverse effects on the value of private property once redevelopment areas had been designated, and would also sharply affect the prosperity of small businesses situated nearby?
Or, take the planning process itself and the continued updating and revision of Structure Plans. On what basis were these expected to benefit the cities, committed as they were to doctrines of rigid planning zones and restrictive uses?"
Hard on the planners' heels came the bulldozers. I think hon. Members know that my bete noire, if I have a bete noire, is the bulldozer.
Mr. Christopher Murphy: Hear, hear.
Mr. Steen: I am glad that my hon. Friend supports that statement because he, representing a new town, knows that but for the bulldozer he would probably not have these people in his constituency.
Hard on the planners' heels came the bulldozers, hundreds of them. They razed neighbourhoods completely to the ground as part of an imaginative—so the planners thought—large scale clearance. It is probably worth quoting for the record the statistics between 1966 and 1976. Liverpool demolished 21,489 houses; Birmingham demolished 19,715; Manchester demolished 29,265; Glasgow demolished 53,396; Sheffield, which may not be thought of as a major conurbation in the same terms as Liverpool, Birmingham and Manchester, demolished 21,776; Leeds demolished 24,055.
Mr. Murphy: My hon. Friend rightly draws attention to the problems of destroying many homes in city areas. Would he not agree that often it has been a case of destroying homes that had a considerable architectural value which was appreciated by the families? If better bathrooms and kitchens had been provided they might have continued to be adequate homes for many families who would have enjoyed staying in them rather than being transferred to tower blocks.
Mr. Steen: I am most grateful for that intervention because, as always, my hon. Friend has hit the nut on the head.
The planners are constantly in sack cloth and ashes for being party to the pulling down of these older houses. In fact, it was not just the planners; local political figures had
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as much responsibility to bear. They were impressed by the beautiful designs which the planners dreamt up. To give them all their due, many of the houses were substandard. They were thinking of a land fit for heroes after the war. The idea was that they would demolish the central core of the inner areas and rebuild homes fit for heroes. As I shall outline later, this did not take place. The intention was the best possible, but it did not work out.
It is not just the houses that have been pulled down that I am concerned about but the houses that will be pulled down because they are being abandoned by the public sector and by the private sector. Perhaps it will be news to the House and to the country that there are tens of thousands of houses rotting away unoccupied in inner, middle and outer areas of our great urban conurbations. These houses could be occupied.
Mr. Murphy: Before my hon. Friend leaves the point about tower blocks, would he agree with the comment made by my right hon. Friend the Prime Minister some time ago that people preferred to have streets that are horizontal rather than streets that are vertical? I think that my hon. Friend would agree with me that that is a good way of describing the problems of the tower blocks. Despite all the good intentions of the planners, people did not wish to live in tower blocks and have always regretted being moved into them. They would have been much happier being left on the ground in many of the homes which have been destroyed.
Mr. Steen: As always, my hon. Friend has scored another bulls-eye. He is right. I always agree with the wisdom of the Prime Minister. On this occasion she illustrated that she understands the problem. I think I should let hon. Members into a secret; my right hon. Friend the Prime Minister must have been reading the book "The Life and Death of the Great American City" by Jane Jacobs. That was the very phrase which Jane Jacobs used when describing tower blocks. I am glad that my right hon. Friend has read that book. It is a marker which all planners should read. Unfortunately, they may have read it too late because it was produced too late. It would have prevented the wholesale demolition of good housing stock which could have been improved. It was not improved because at that time, between 1966 and 1976, the planners took the view that they had to demolish lock, stock and barrel.
Mr. Robert Parry: I agree completely with the hon. Gentleman's criticism of the planners and the bulldozers. Does he accept that during the construction of the second Mersey tunnel hundreds of good council houses were demolished to make way for that tunnel and that in the inner areas of Liverpool, including Everton and Scotland Road, there are hundreds of acres of green fields which could have had housing stock on them?
Mr. Steen: I am glad that the hon. Member has raised that important point, which is continually being raised in the House. It is well to remember it.
It is not realised how many vacant, dormant and derelict acres there are in Liverpool. The estimates range from 1,200 acres to 1,800 acres. The register suggests about 1,200 acres, but it excludes sites of one acre or less. Many of the vacant sites are on the outskirts and I do not know whether they have been included in the register.

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There is no doubt that there is a great deal of dormant, vacant and derelict land. The tragedy is that about two-thirds of it is owned by the local authority or the public undertakings—gas, water and the railways. They always have good reason for not building on it or not otherwise developing it.
If there is time tonight, I shall be happy to extend this discussion, because it is a broad debate, to discuss the whole question of vacant land, which is one of our problems. Successive Governments have tried to tackle it. The present Government have tried to tackle it .in a new way, but I believe that there will be no great improvement until that land is auctioned off. It is all very well to make lists of the land. In fact, one does not need to make lists, because one can see it. What we must do is to market it, bring it into the market place, whether it be used by the public sector or by the private sector.
I have proposed that the private sector should be able to serve a compulsory purchase order—that the private citizen could serve an auction purchase notice on a statutory undertaking which owned vacant land, asking it either to develop the land within, say, six months or a year or to put it on the market by way of auction. I want to start mobilising market forces in these areas.
The problem is that much of the land has a negative land value. It is easier and cheaper to develop a green field site on the outskirts of the city than to develop an inner city site. Unless the Government or the public sector prepare the land so that it is ripe for the private sector to develop, no private developer, no bank or insurance company will wish to invest in the inner city area if there is a green field site that can be bought much cheaper and where it is cheaper to install services. The real problem is one of negative land value and auctioning off the land, a matter which successive Governments and city councils have not directed their minds to.
Mr. David Alton: I entirely agree that there is a great need to bring in private developers and for them to work in partnership with city councils, but in Liverpool land has been made available to private developers who are not now developing it for homes because they legitimately point out that in the present economic climate, and in a city with 55,000 out of work, it is not that easy to extend home ownership. That is a major problem that will have to be overcome.
My second point concerns the derelict homes—the ugly, horrible eyesores, the tinder boxes, the breeding grounds for vermin, which we are all concerned about. The Government are reducing the money available for housing and rate support; £23½ million has gone in the past two years. How can the hon. Gentleman justifiably put forward his argument until that money is reinstated, because the local authority needs the tools to do the job which the hon. Gentleman is legitimately asking about?
Mr. Steen: I always enjoy listening to the hon. Gentleman, even if he gets his views a little twisted. I should like to explain why they are twisted. First, there is a further reason why private investors will not invest and private developers will not develop. It is part of a vicious spiral: "Liverpool is a dangerous place to invest in. It has riots. It is unsafe. Our premises will not be safe there and our employees will not wish to live there, or they will come in from some distance. We think that we can get a better return for our capital and development if we go
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south." There is a natural instinct of the private sector not to want to invest in the prime urban areas the further north they go. Liverpool is a special case.
The problem is that, unless the private sector is given a financial incentive to invest in derelict, rundown inner areas, there is no reason why it should go there. Therefore, I have often proposed the issue of industrial bonds or municipal revenue bonds, which would allow the private sector to invest in ailing urban areas and obtain interest on its money at perhaps 3 or 4 per cent. below bank rate, but tax free. Bearing in mind that the Government give enormous sums to ailing conurbations, I want to find a way in which there can be a real partnership between the public sector and the private sector, which means private money partnered by public money. The only way in which to get the big financial institutions to invest in areas of decay and inner city problems, areas such as Liverpool, is to give them a financial incentive. Lack of it is the principal cause of the problem.
A building society—I think the Abbey National—has announced that it will lend more in the decayed, rundown areas. I was glad to learn that. The society wishes to see not only white ownership but black ownership. I have no doubt that part of the problem of the inner city in Liverpool, and of Toxteth in particular, is the lack of ownership by the black community. It does not own things. The more public buildings and public housing are erected, the worse the situation will become. That is why I am uneasy about the amount of public money going to such places as Toxteth. Rather than make the situation better, it may make it worse.
Mr. Alton: I disagree with the hon. Gentleman about ownership by the black or white community. I want to see an extension of ownership. Many of the Asians who live in inner city Liverpool are owner-occupiers. They own their own homes and their own small businesses. Therefore, the hon. Gentleman's argument does not necessarily apply.
I accept what the hon. Gentleman says about the question of security and people coming into the city from outside. Does he think it helps that this year, when one crime is committed in the city every four minutes, one home is burgled every 20 minutes, and one car is stolen every 26 minutes, there should be a reduction of £½ million in the police budget? At the same time a major disincentive to small businesses in the inner city is introduced with an enormous increase in the precept of the Merseyside county council.
Mr. Steen: The hon. Gentleman sees the facts in a slightly jaundiced way. I understand his view, but I do not agree with it. I always question crime statistics such as the hon. Gentleman has just given us. I do not know whether there is someone using a stop watch every time someone does something. The problem of violence and other crime on Merseyside is serious, but it is exploited and constantly brought into the news headlines. I think that it is exploited to the point where we are creating bad news which generates more bad news. It is unfortunate, even if understandable, that the media give such attention to, for example, difficulties in a school in Toxteth. The exposure of the difficulties on Merseyside, which are also experienced by many other urban areas, does us no good.
The private sector will not return to the inner city not only because of the violence but because of the kind of

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statements that were made yesterday by the Labour candidate for my constituency, comparing the present Government with the Fascists in Spain in the 1930s who supported the concept of civil war and riot. That kind of statement, which was widely reported, can do nothing to bring confidence to private enterprise, private wealth and private investment. On the contrary, it undermines the social fabric and leads to further social unrest.
Therefore, I believe that the media should ignore such statements, because they are calculated to attract attention. They succeed in that, and that in turn tends to drive away the very sectors that are needed to bring life back into the ailing urban areas.
Mr. Parry: I agree with the hon. Gentleman completely about the rise in crime, particularly in inner Liverpool. I was born in inner Liverpool, and over the past 12 months I have been constantly approached by constituents complaining about muggings and people being beaten up. Can the hon. Gentleman equate his arguments with the heavy cuts imposed by the Government on the police budget? It is impossible for the police to deal with the problems of law and order in inner Liverpool when the budget has been so massively cut.
Mr. Steen: I am glad of the opportunity to come to the second part of my answer to the hon. Member for Liverpool, Edge Hill (Mr. Alton). The first point I was making was that there were other aspects as well as crime and vandalism and that militants, who were too well reported, were causing an artificial reaction. It is easy to say that the Chancellor has cut this and that. In fact, without going into the arithmetic, it is not difficult to see—the hon. Member for Scotland Exchange may not like what he sees—that the Government have taken a much more robust economic approach to the inner city areas than any previous Government.
We were talking about derelict land and the need to bring back firms into the inner area. One of the problems is to correct negative land value and persuade the private investor to return. That is exactly what is being done by the urban development corporation. The Secretary of State for the Environment took what I believe to be an enlightened view, that the Liverpool dockside area would never be revitalised unless sizeable sums of public money were spent preparing the land and putting in the infrastructure. The hon. Members for Edge Hill and Scotland Exchange may say that they would not do it that way, but, whether they would or not, public funds have been made available.
There is the interesting experiment of the enterprise zone, which has about 68 units built by English Industrial Estates. I have been there with the Secretary of State and it is amazing to see those new units. The Dunlop factory is being demolished and we hope that there will be a new project there. The British Leyland plant of 1·2 million sq ft is lying empty, which is a disgrace. It will be given a chance. I have remonstrated with the Secretary of State and said that the most useful thing that could be done would be to divide it into a number of small units at a very low rent so that some of those small entrepreneurial companies that can afford a rent of only £1 or £1·50p can move in. I should like to see the whole of that Leyland plant as a massive manufacturing market with a number of small firms given an chance—there are no rates to pay
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of course—to get going. We have seen at the south docks how 200 firms can start up under the arches. The rent is about £1 a sq ft and they can really make a go of things.
I do not think it is true to say that there have been cuts. One can say that a particular item has been reduced but if one looks at the whole of Merseyside there is no doubt that the amount of cash that is going there has been vastly increased. One may not like what it is being spent on. That is an entirely different matter.
Mr. Murphy: My hon. Friend is very generous in giving way. Would he not agree, when talking about the importance of developing jobs and industrial opportunities, that the measures announced today in the Budget will be of great importance to urban areas and new towns? Would he also agree that the enterprise package with its measures—the more generous business start-up and loan guarantee scheme, the extension of the small workshops scheme, which may be of particular significance to what he has been saying, the tax relief on contributions to enterprise agencies, the high profit limits of small companies, corporation tax and VAT relaxation—are part of the Government's policy to help small businesses develop, which will help to regenerate inner city areas? Would he agree that that is of vital importance?
Mr. Steen: I feel like a cricketer at the stumps receiving balls from different directions, but I am glad to have the opportunity to deal with these points, because hon. Members will see that the ammunition, the flexibility and the versatility are there. I am happy to hit the ball back in a way that I hope is helpful. My hon. Friend is quite right. I believe that it is sour grapes, which I can understand, on the part of Opposition Members. The Budget is really quite a remarkable achievement.
Mr. Parry: The point I was making before was not about the Chancellor's Budget—
Mr. Deputy Speaker (Mr. Bryant Godman Irvine): It was not a point of order.
Mr. Parry: It was about the police budget.
Mr. Steen: I was explaining that it is understandable that Opposition Members should want to complain about the Budget. I think one can say that the whole spirit of the Budget will help Merseyside. It does not help when Opposition Members try to ground it before it has even started. If they are concerned about their constituencies they should support the measures in the Budget and say that it is a marvellous opportunity and one should make the most of it. One can guess that, whatever the Budget proposals for Merseyside, Opposition Members—whichever party they represent, and it is difficult to know sometimes—would find a reason to object. I do not think that it would be right in such an important debate to be drawn by some of these issues. The important thing is to return to the main thrust of the argument.
Mr. Murphy: My hon. Friend has been outlining the successes, as he sees them, of the Budget proposals with regard to inner city policy. I believe that he is right. Would I also be right in thinking that the construction package that the Chancellor has put forward, which includes higher home improvement grants, which will achieve an early increase in demand, more home insulation, 75 per cent. capital allowances for new buildings, will help with the regeneration of the inner city areas?
Mr. Steen: There is no question but that this is the purpose for which they are designed. They are to help revitalise ailing urban areas. It is sour grapes on the part of Opposition Members to complain that it is not enough, that the matter has been approached in the wrong way, or that something else as been cut. We have to grasp what we have got and make the most of it. My criticism might be that one of the problems of the principal urban areas is that the level of public finance and public intervention tends to drive out private enterprise and also tends to make people living in these areas too dependent on the public sector to get things put right. A balance is needed. It is perhaps the case on Merseyside that a balance has not been struck.
Forty per cent. of housing in Liverpool is in public ownership and 5 per cent is in the ownership of housing associations. The fact that 45 per cent. of the housing stock is financed by the public sector may have affected the attitudes of people. In the inner areas of Liverpool, a sizeable proportion of the population, often through no fault of its own, is dependent on the public sector. I am not sure it is healthy that a society should have such heavy concentrations of people sustained and supported wholly by public intervention.
I welcome all the approaches made by the Chancellor. The test of their value is whether they will attract private enterprise and whether they will provide the incentive for people in Liverpool to get off their back sides to take the opportunity when it comes.
Mr. Barry Porter: I am trying to clear my mind. I am not from the opposite side of the House but I am from the opposite side of the Mersey to my hon. Friend. Sometimes, one obtains a strange view of what happens in Liverpool. On the one hand, my hon. Friend appears to argue that there is a need for great public investment in Liverpool. Following 30 or 40 years of great public investment, my hon. Friend abuses the planners and thinkers of all parties who have destroyed the inner city. My hon. Friend still asks for more money but now appears to be saying that this in itself is not a good idea unless there is a partnership with the private sector.
My hon. Friend may care to consider the proposition that the difficulties of Liverpool are not concerned with planners or public investment. The difficulties may have something to do with the fact that the basic industries of Liverpool, which have been in decline over a number of years, have always used semi-skilled or unskilled labour. Is not the major problem of Liverpool, as opposed to the Wirral, one of training for skilled occupations? When one talks of Liverpool as an attraction for industrialists, it has not a great deal to offer in terms of skilled labour.
My hon. Friend has cited the example of the British Leyland site at Speke. One might gather, following the great public investment in that site, that this is a clear example of the fact that Liverpudlians are not especially keen to work in rather dull industries of that nature. My hon. Friend will presumably address his mind to that failure and will perhaps agree that training in the Liverpool dimension is more important than merely supplying more money when so much money has already been wasted.
Mr. Steen: My hon. Friend, from the other side of the water, has made some interesting remarks. If time were available, there might be a case for pursuing them. The problem in Liverpool, as in Manchester, Birmingham,
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Newcastle and Sheffield, is that when the bulldozer demolished houses it also demolished single-plant firms that operated in one place and had a proprietor who worked on the site or near the site. The demolition of small, single-plant family-owned firms destroyed not only the firm and the rate base that came from the firm, but also the opportunity for skilled and semi-skilled labour. Between 1966 and 1976, 21,489 houses were demolished in Liverpool together with many small firms. This resulted in the destruction of the rate base, the decline of opportunities for skilled and semi-skilled labour and the evacuation of those groups to new towns being built beyond the city boundary.
Much of the problem arises from the demolition of the older housing in the inner area coupled with the building of new housing in the new towns, the destruction of the small firm and the building of new units on green field sites. Of course, there was not the same massive demolition programme elsewhere and the rebuilding of small firms' premises was in a small compass compared to the Liverpool area, where small firms had to move 10, 15 or 20 miles, and some of them never restarted.
My hon. Friend the Member for Bebington and Ellesmere Port (Mr. Porter) made a point about public finance. There is no doubt that the public sector causes distortion of market forces. There is always a fine balance as to which way it goes. However, between the 1960s and the late 1970s, the distortion was too great and the forces with which the public sector was involved distorted the market force to the point where the private sector could not get it right. Consider, for example, the abandonment of small firms and the destruction of their buildings in the inner cities.
The new industrial estates were not in inner areas but on green field sites, beyond the boundaries. That aspect was financed by regional aid. Therefore, whereas the Department of Industry could have agreed to lend only public funds to rebuild factories or sites in the inner areas to reinforce the rate base, which had been destroyed, instead it abandoned that concept and, with regional aid, pushed these factories out artificially to the green field sites and provided rating income for other areas. Taking that a stage further, the regional aid, of course, persuaded large industrialists, such as motor car manufacturers, to move to regions that they would not mormally frequent.
Therefore, if one considers the regional aid programme in the 1950s and 1960s, one observes that Ford and British Leyland, which would not normally have moved to Speke in Liverpool, provided artificially created jobs in that area. That was the effect of too much public intervention over too short a period in a particular area.
The impact of public intervention can distort for the worse, unless the private sector partners what is happening. I do not know whether that answers my hon. Friend, but that is the distinction between what happened on each side of the water. Perhaps, at this stage, it would be useful to try and return to the main theme of the argument. Some interesting interventions were made and I hope, in the course of my speech, to pick up some of those points and, no doubt, my hon. Friends and hon. Gentlemen, if they think it useful, will pick up some of my points.
Between 1966 and 1976, there was an enormous comprehensive demolition of inner areas. I do not mean only in Liverpool, but in many other areas. It is curious

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that most local authorities, while now readily acknowledging that demolition on that scale was a fundamental mistake, still carry out small-scale demolition with remarkable energy and zeal. They are pulling down the remaining older houses. Between 1975 and 1980—only a few years ago—on the most recent statistics, Liverpool demolished 6,446 houses, Birmingham 2,735, Manchester 9,854, Glasgow 17,497, Sheffield 11,130 and Leeds 8,403.
When the Secretary of State for the Environment in the last Administration told the world habitat conference in Vancouver that Britain had pensioned off the bulldozer, we were going hell for leather demolishing ever more houses. Paradoxically, the right hon. Gentleman was telling the House that Britain no longer bulldozed old houses, that the bulldozer was pensioned off, yet one received a nast shock when one considered the statistics and discovered that the bulldozer was still hard at work. When one inquires today of the Liverpool city council whether the, bulldozers have been pensioned off, the answer is "No. There are another 1,900 houses to demolish." I do not know where it finds all these houses to pull down. It intends to pull down those 1,900 houses under a stage 2 clearance. If one asks "Can we not save these houses?", the answer is "They are past redemption". That is just what the council said five, 10 and 15 years ago.
I prevented the premises of a small firm from being pulled down by saying that if the building was to be demolished I would stand in the way of the bulldozer. I actually stopped that retailing outlet being pulled down. I said that the council had no right to pull it down. I pointed out that the man had been there for many years and that there was no reason why the council should demolish a retailing outlet if the owner, who was making a meagre living, had nowhere else to go. That is the paradox and sadness of the story. When the shop was ultimately demolished, the man had nowhere to go. He is now in a council flat, deteriorating physically and mentally because he lost his source of income. That happened solely because the small firm was demolished.
Mr. Porter: I thank my hon. Friend for giving way. Indeed, I was emotionally disturbed by the tale that he told. Does he agree that, while the desire of local authorities in the 1950s and 1960s to demolish was undue and perhaps over-emphasised, the shift in emphasis has been towards rehabilitation? Now when local authorities want to demolish property they are subject to strict criteria, and the houses that they demolish really deserve to be demolished. I speak as an ex-chairman of housing who was committed to rehabilitation. It is no good saying that local authorities want to demolish in a wholesale manner or that houses are not saved where it is possible to save them. From my experience on Merseyside, I know that houses are being saved, and rightly so. We are now down to the filth, the slums, which must go. We should not say that, because a building is old, it should be saved, but if the building is old, filthy and incapable of being lived in, it should be demolished.
Mr. Steen: I hate to disagree with my hon. Friend the Member for Bebington and Ellesmere Port, who has enormous experience in this connection. We know of his love of old housing and his knowledge of the practical problems in trying to save houses that are beyond repair.
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However, he tends to speak as though this were a thing of the past. In fact, the figures that I gave show the enormous amount of work that was done by bulldozers between 1975 and 1980. The tale that I told about how I delayed the bulldozers in the case of the small retailer's shop happened only last July. It is not something that happened in the past; it is happening now.
Of course, we cannot save every old building, but we must realise that old buildings form part of a neighbourhood. They form the landmarks and are part of the security of the local community. I am sure that some of the problems of an area, such as Liverpool, relate to the speed with which the geography and environment are changing and the way in which the neighbourhood buildings are constantly changing. People can no longer associate themselves with a building or neighbourhood.
Not only is the environment changing physically but the names of the neighbourhoods are changing. The ward names, parliamentary boundaries and health authority areas are changing. As soon as people adjust to the neighbourhoods in which they live, the names of the places are changed. Moreover, the speed of change is affecting the stability of the Liverpool inner area communities. The effect may not be so severe over the water. The environment in the Wirral and in the constituency of my hon. Friend the Member for Bebington and Ellesmere Port is far more salubrious and comfortable, and change has not been so fast.
Mr. Parry: The hon. Gentleman is correct. The bulldozer is far from dead in Liverpool. Is he aware of the proposed massive development in Clayton Square in the centre of Liverpool—the heart of my constituency? Wimpey has put forward development plans which involve the demolition of many small businesses. Many old pubs with long histories and ancient buildings in the centre of Liverpool are affected, including the Blessed Sacrament church. Development in Liverpool is demolishing part of our heritage, but we are continuing to build concrete jungles.
Mr. Steen: I am glad that the hon. Gentleman said that. His constituency is in the inner city—the core. I agree with him wholeheartedly—even if that means having to stand with him in front of the bulldozer in Clayton Square.
Mr. Frank Field: I shall be driving.
Mr. Steen: I am glad that the hon. Member for Birkenhead (Mr. Field) said that he will be driving, because I understand that he cannot drive very well. Therefore, he might miss us.
There is little to stop the inner city neighbourhoods being picked off. The older houses can be picked off one by one without anyone in the area noticing. Things go wrong when authorities try to bulldoze an area such as Clayton Square, or parts of Birkenhead, which can be clearly seen. That is when the protests arise.
I join the hon. Member for Scotland Exchange in defying the city council and all the local political leaders who believe that they should destroy more of inner Liverpool. I am delighted that the Secretary of State wants a competition to be held to design the best development in front of the cathedral. Once again, however, the problem is change. Although the site may be derelict now, there will be more change and more distortion. I am anxious that some of the old buildings should not be destroyed as rebuilding and further changes take place.
Mr. Murphy: My hon. Friend is referring to what can best be described as urban renaissance. Does he agree that the Government, by making £100,000 available—to be matched from other sources on a pound for pound basis—are assisting the provision of specialist advice on building rehabilitation and site clearance projects in urban areas? Surely this is a great step forward in redressing the balance so that we may appreciate the buildings that are there rather than knock them down and start again. Does he agree that urban renaissance is a fundamental part of the policy that we need to pursue?
Mr. Steen: I am never sure what all these weasel-worded names mean. We are so good at using them. Urban renaissance sounds like something from the seventeenth or eighteenth century. It is a flowery expression. My hon. Friend has made the telling point—it is not quite the bull's-eye but it is close—that the Government have realised that they cannot change the urban areas. However, they can provide resources to enable others to change them. I like some of the initiatives that have emerged from the Department of the Environment because they are not global or total. The are enabling measures. In this instance, the renaissance funds will provide small grants to voluntary and community groups which need help from professional designers, architects and planners to enable them to set up an environmental improvement scheme. That is an attractive concept.
It is said that the provision of funds must be matched pound for pound by the private sector. I understand that my right hon. Friend the Secretary of State has said that he is providing a fund of £100,000 that must be matched by a further £100,000 from the private sector. If a voluntary or community group wants to improve the environment in a certain neighbourhood, it must find 50 per cent. of the money that is needed to employ professionals to help it with the design of the environment from the private sector. That is the right approach. It is the real partnership to which I was referring.
It is no good the Government providing 100 per cent. funding from public money. The community groups must help themselves. The concept of getting small groups to help themselves and getting the public and private sectors to match funding pound for pound is one that I wish to see deployed more often. That is why I say that unless private investment is brought back into inner areas to partner the vast sums that are being made available by the public sector, there will not be the sense of corporate community commitment that we shall need if areas such as Liverpool are to revive.
Mr. Murphy: My hon. Friend rightly says that words, such as "renaissance", are capable of meaning many things to many people. My right hon. Friend the Minister for Local Government and Environmental Services told the European Campaign for Urban Renaissance that there are two objectives
"which are often overlooked. The first is that economic regeneration is not an end but a means—an objective on the road to the universal goal of improvement in the quality of human life. The second is that improving the urban environment is not to be regarded as a long term spin-off from economic growth, but a necessary parallel and related economic objective en route to that goal."
Does my hon. Friend agree that that sums up what urban renaissance should be all about?
Mr. Steen: Yes. My hon. Friend has quoted a pertinent purple passage. I am glad that he selected it, because it is
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especially pertinent to the debate. However, this is a wide subject and I hope that he will forgive me if I return to the main thrust of the argument.
I look forward to joining the hon. Member for Scotland Exchange in a joint approach to prevent the bulldozer continuing its work where it should not be operating. I shall gladly join the hon. Member for Birkenhead, if he would like me to cross the water, to do whatever I can to stop the bulldozer from demolishing the area.
Mr. Field: I may take up the hon. Gentleman's kind offer at some stage. However, before he finishes his interesting discourse, will he turn his mind to a problem that has arisen in my constituency? It is not always a clear-cut issue of preventing the bulldozer from coming into operation. I often find that local authorities and public bodies, such as the churches, deliberately allow their property to be vandalised so that they can present a case for demolition. How does one prevent that from happening? I have great respect for the hon. Gentleman, but I fear that his arrival at that stage of the proceedings may be a little late.
Mr. Steen: The hon. Gentleman raises an important issue. I shall think it through as I am talking. I can present a similar analogy. In a street in north London a friend of mine kept a car that he never washed. The neighbours asked him whether it was his car and he agreed that it was. They said "It is lowering the tone of the street. Would you mind washing it?" I am told that in the streets of Moscow dirty cars are not appreciated and people feel compelled by their neighbours to wash them. That is happening in north London as well. The analogy may be right. It is up to the community round a church or a public building not to allow that building to get into a state of disrepair.
I have not been allowed to develop my argument, but if the hon. Member for Birkenhead remains in the Chamber a little longer I shall try to explain how to deal with the problem of the older decaying housing stock and the steps that the Government could take, without much cost, to save that housing. My solution for housing may also be a solution for some of the older churches.
Mr. Field: I was trying to suggest that the problem was even more deep seated than that of dealing with the bulldozer. If those in public positions wish to clear sites, they can do so in a number of ways without going through the normal procedure. For example, we in Birkenhead lost two of our finest churches by a very simple device. The authorities did not seal them properly. When that happens, there are vandals in them in no time, the buildings become unsafe and in no time a certificate is issued for their demolition. If the attitude of public officials cannot be changed, the hon. Gentleman's kind offer to come across the river to prevent the bulldozer from moving in will not help, because by then many of the surrounding community will want the bulldozer to operate.
Mr. Steen: That is a serious point. I have come across officials in the city councils of Liverpool and elsewhere who are not concerned about saving the fabric of their buildings. Many of them do not appreciate or care about it. They care about a clear site. They believe that once the site is cleared it can be used for rebuilding. However, they do not understand that to destroy landmarks, the neighbourhood and the community, is to destroy something irreplaceable. They live miles away and they

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do not have any close connections with the area. That is perhaps the biggest problem. Because bank staff, insurance staff and the staff of local councils have no emotional or financial attachment to the areas that they supervise they go by the book, which is often against the interests of the neighbourhood or the community.
Mr. Field: May I take the hon. Gentleman to the next stage of the argument, as it probably affects both sides of the river? As a result of Government policy the Wirral does not now have the funds to carry out the rehabilitation that most people in the Wirral agree is needed. It is not so much a question of trying to build a renaissance on the basis of matching pound for pound with the private sector, as of not having the resources for basic repairs. We are adding to the bulldozer's work in 10 years. If the hon. Gentleman wishes to keep me in the Chamber until the end of his interesting discourse, I hope that he will say something about how crucial it is to have adequate Government funding to preserve our housing and public utility stock.
Mr. Steen: Of course I shall say something about that. No doubt the hon. Gentleman was in the House when the Chancellor made his splendid Budget Statement a little while ago. He may have heard that a sizeable sum of money will be made available. I am sure that the Under-Secretary of State will deal with that matter. However, the hon. Gentleman has made a relevant point. I think that more public funds will be made available, but I wonder whether the hon. Gentleman is really talking about the attitude of those in the public sector and of those in local councils, who were human when they began, but who, for some reason, now tend to behave contrary to the interests of the local neighbourhood. For example, for some weeks I prevented a shop from being bulldozed. The man working there earned a meagre living. The council's view was that the shop was a fire hazard. I looked round the house but could see nothing wrong. I was told "It's a fire hazard if someone sets fire to it". I suppose that that was a fair comment. However, there was no desire to save the man's business or to allow the shop to remain because, in the council's view, it marred the landscape.
The problem is not a lack of Government finance. There are plenty of opportunities to find funds. Indeed, churches do a wonderful job and are marvellous at raising funds. The problem arises from the attitude of local councillors and local authorities. Often local councillors are not sufficiently enlightened, robust or concerned to save the very areas that they represent from the bulldozer.
Mr. Field: Why does the hon. Gentleman think that it is an "either or" situation? Surely both situations are relevant. Although it is right to consider the attitude of public officials, it is also right to consider the lack of resources. Birkenhead has several post First World War council estates that do not have adequate damp-proofing. The sky is visible from the lofts of those houses. Therefore, it is not surprising that many tenants say that their houses are extremely damp. Clothes hanging in the wardrobe have green fungus growing on them. That has resulted not from the attitude of some housing official, but from the lack of resources in the Wirral to maintain homes in a decent state of repair.
In addition, some public officials want to demolish buildings that should not be demolished. The hon.
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Gentleman makes an error in thinking that it is an "either or" situation. Surely both situations are relevant to Merseyside.
Mr. Steen: That is a profound point. This is a question of balance and of how much, where. I have drifted away from my main theme, but I have been tempted to speak about council housing and will respond.
In my constituency there is a council estate called Belle Vale, which is a contradiction in terms. It won an architectural award in, I believe, 1971 for being one of the best designed estates in the country. However, a healthy crop of mushrooms can be grown in the little downstairs bedrooms because of the damp. In its wisdom, the council recognised that the design was faulty, that the estate was inadequately built, that the cost yardstick might have been wrongly applied and that those rooms were virtually useless. Thanks to the Conservative group on the Liverpool city council, rents on those rooms have been abated. I drew the group's attention to the situation and it persuaded the city council—with I believe, the help of some other parties—that, because of the damp, the accommodation was useless and that, therefore, the rates and rent for those rooms should be abated.
Mr. Alton rose—
Mr. Steen: I shall give way shortly, as I know that there is an interest in mushroom growing in those damp estates. Those of us who represent Merseyside have similar problems.
Should we provide more public funds to correct an error already made by public funds? If so, what guarantee is there that more public funds will solve the problem? Alternatively, should such buildings be pulled down? The demolition programmes will soon run out of private housing and the evidence shows that attention is being turned to the public sector. The council is planning to pull down high-rise blocks both on the Belle Vale estate and the nearby Netherby estate. The bulldozer seems to have turned the full circle and, far from pulling down private housing, it has moved to public housing.
I believe that local councils should be banned from pulling down more private housing unless they can show specific cause. However, while we are debating whether they should demolish the private sector, they are moving towards the public sector and demolishing those houses. It may be that the damp flats and houses that the hon. Member for Birkenhead has in his constituency, and I have in the Belle Vale and Netherby estates, will be pulled down. That will start the cycle again. There will be a loss of rate income and the population must move outwards beyond the city boundary which will cause a further loss of population.
Mr. Alton: I am especially interested in the Belle Vale and Netherby estates because in 1972, when I was first elected to Liverpool city council, one of the first debates in which I took part was about the construction of those estates. I recall voting against the proposals of the then Conservative-controlled city council for the construction of those two estates.
When I was chairman of the housing committee in Liverpool, I established a working party to consider the problems of those estates. We came to the conclusion, partially because of the representations of local people, including the hon. Member for Liverpool, Wavertree (Mr.

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Steen), that the best thing would be for the blocks to be demolished. Therefore, I find it curious to hear the hon. Member for Wavertree now complaining that Liverpool city council did what he suggested it should do—to pull down properties that should never have been built and which were built because of his party's proposals.
Mr. Steen: I was not complaining that those blocks of flats were being demolished. I said that the situation concerning the bulldozer had turned the full circle. It is no longer pulling down private housing but has now spotted the bad building of public sector houses and has moved there. I was pointing out the consequences of that, which is a much more important task in some cases.
However, I counsel the hon. Member for Edge Hill to remember that many blocks are decent and reasonable, but, for some reason, they have been destroyed by the people who live in them. Whatever we had built would have experienced the same problems. That is why I believe that tenants should own their council blocks. One could have a condominium. If the tenants of high-rise flats were given the opportunity to own and manage their own flats, there should be a totally different attitude and many of the high-rise blocks that are being pulled down could be saved if they were handed over for perhaps £1 to the sitting tenants, giving them the responsibility for managing the blocks. I have seen that happen in the United States of America and in Canada, where condominiums run by those who live in them are a great success.
Mr. Alton rose—
Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. Long interventions tend to make long speeches even longer. I understand that some hon. Members wish to catch my eye. The hon. Member for Liverpool, Wavertree (Mr. Steen) has been very generous in giving way.
Mr. Alton: I wish to try to catch your eye, Mr. Deputy Speaker, but it would seem that the hon. Member for Wavertree will continue to the end of his allotted time. That is why I crave your indulgence to intervene again.
In the Netherby and Belle Vale areas there are houses built for rent which are very successful. Those houses were built at ground level with small gardens at the back and the front. They are precisely what people were asking for, but those who were put into spine blocks, high-rise blocks and cluster blocks—the virility symbols that were erected all over the cities in the 1960s and the 1970s—rejected them. When asked what they wanted, people said that they did not wish to live in high-rise blocks, but the planners and the politicians went ahead and built them.
Mr. Parry rose—
Mr. Steen: I have been giving way to hon. Members, Mr. Deputy Speaker, because it is clear that some of them will not catch your eye.
Mr. Parry: The hon. Member for Liverpool, Wavertree (Mr. Steen) said that he would be completely opposed to any further demolition of private and public sector housing unless there was just cause for it. Would he not agree that the blocks of pre-war tenement flats which are mainly in my constituency in Liverpool and, which were built in the early 1930s and have not been maintained or sufficiently repaired should be demolished?
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Some years ago the Labour-controlled city council agreed on a programme of demolition, but the coalition of Liberals and Tories has stopped it.
Mr. Steen: Is the hon. Member for or against that? Mr. Parry: I am for it.
Mr. Steen: There is a problem, because there are vested interests, but that aspect cannot be developed in the debate.
However, it might be worth taking up the point about high-rise blocks. What is odd is that some of the most luxurious blocks in London are high-rise. Perhaps, if one put in carpets, a good lift and a porter, some of those blocks would start to take off. I am sceptical about those who want to destroy all high-rise blocks because some of the best high-rise hotels and blocks are in London, and are successful.
I have a slight love-hate relationship with high-rise building, because I do not know whether the problems are caused by the unsympathetic ear of the council which has put the wrong people in the wrong place at the wrong time, by the types of people in the blocks or by the lack of efficient services. It could be a mixture of all three. If only the flats could be given to those who live in them for £1 , and if they were told "You are in charge of the block now, you can repair it and you can do what you like with it", here would be a different approach, although it is true to say that some of the blocks are so badly built and the environment is so oppressive and soul-destroying that people want to leave at any cost, Therefore, each block must be looked at separately.
It is an appalling waste of public money to build blocks in which nobody wants to live and then to pull them down. That is wrong. Something must be built to fill the space.
The demolition programme has sparked off controversy and discussion and some important points have been made. I am sorry that the hon. Member for Birkenhead has had to leave the Chamber. He made the important point that some of the authorities, private and public, had abandoned their property and had allowed the vandals in, which has led to the demolition of the property. With the bulldozer came the exodus. Those living and working in the inner city areas left, not because they wished to or chose to, but because of the compulsory purchase powers that forced them out.
Between 1966 and 1976 Glasgow lost 205,000 people—21 per cent. of its population. Liverpool, because of the bulldozer and demolition, lost 150,000 people—22 per cent. of its population. Manchester lost 110,000 people—18 per cent. of its population. Inner London lost 500,000 people—16 per cent. of its population. Those are enormous displacements, and the social unrest that we are witnessing today has to some extent been caused by the displacement of large numbers of people from inner city areas. There is an imbalance between the people who remain—Toxteth is a good example. There are too many unemployed people, too many elderly, too many poor and too many who come from a different ethnic background, The result is that the problem has been made worse by the evacuation of the population which created a balance.
In many ways the Toxteth problems will not be solved by greater Government intervention, more cash or more improvement money because the real issues at Toxteth are about ownership and the wrong mix of the community. The only way that that can be put right is by bringing back

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to the inner areas the middle income group, the owner-occupiers and those who have a different approach. That is not a better group of people, but a different group of people. What is essentially lacking in the inner city communities is the mix that creates a happy and prosperous community.
Mr. Alton: The hon. Gentleman makes an interesting point about the mix and ownership patterns in the inner city. Will he explain how the initiatives announced by the Secretary of State for the Environment last year after the riots will change that? How can he justify a reduction of £231½2 million in rate support grant and housing revenue money to the city of Liverpool over the last two years, while at the same time Government funds are being provided to the tune of £22 million for a garden centre in Toxteth which will be ornamental and will not be used by anyone living there? It is irrelevant and will not solve the area's problems. How can the hon. Gentleman justify a Mersey festival or the Secretary of State's latest suggestion, that we should move some of the Tate gallery to Liverpool? All those suggestions are cosmetic and irrelevant to the problems of the neighbourhood.
Mr. Steen: Not all the points that the hon. Gentleman has made can be easily explained. The Secretary of State has a package. He has adopted an approach that means that, if one picks up one or two of those items and asks what sense they make, they cannot be said to be attractive on their own. The Secretary of State's approach is best understood when taken in the round.
The Secretary of State is taking away funds that he believes can be better spent in different ways. If those different ways are to provide opportunities for people living in those areas to help themselves and to provide help by which the banks, insurance companies and building societies start to pump in funds to the ailing urban areas and if my right hon. Friend recognises that people in the downtown decaying areas of the inner city must be helped by being enabled to use public money to partner private money, as well as helping themselves, he has got it right. If all that the money does is to pump sums to areas in the hope that in some way other money will come in, he may be mistaken. I hope that his principal approach is to tackle the problems of the city as a whole and to approach them in a new way.
Mr. Alton: The fundamental problem in the inner city of Liverpool is that 55,000 people are out of work and that there are serious law and order problems—a crime is committed every four minutes. Those two factors are related. Council tenants are faced with a rent increase of £2.50 a week. Those are the fundamental, bread-and-butter issues in inner city Liverpool. These issues are being preyed upon by extremists from the far Left and far Right. In that context, how can the hon. Gentleman and others justify £22 million being spent on a garden city in the Herculaneum dock in Toxteth?
Mr. Steen: I understand the strength of the hon. Gentleman's feelings. I feel the same way about the problems. However, I take a more magnanimous view.
I hope that the approach of my right hon. Friend the Secretary of State is that the problems of Toxteth are the problems of an intense community deprived of its balance.
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It is an intense and distorted community because the balance—one could say the flora and fauna—is lacking from that neighbourhood and that community. The Secretary of State wants to bring back the groups of people of which that inner area is deprived. Therefore, one of the things that he is doing is bringing a garden centre to the Herculaneum dock in the hope that people will start to return to live in Toxteth and that the building societies—and the Abbey National announced today that it would do so—will start lending to the middle income groups who will want to return to live in Toxteth. I understand about the problems of crime and unemployment. The Secretary of State is trying to tackle them in a way that is different from the way that the hon. Member for Edge Hill would tackle them, but it is a way. He and I may not agree with all the facets of it, but it is an approach.
Mr. Murphy: Does my hon. Friend agree that what he is saying is best described as the doughnut principle? The cities are increasingly representing a doughnut with an empty hole in the middle where the downtown area used to be.
Mr. Alton: Jam tomorrow.
Mr. Steen: What my hon. Friend says is right. We are trying to bring back the jam to fill the empty hole.
I understand the approach of the hon. Member for Edge Hill, and his criticism, but he has not said what he would do about the problem. This is something that the Opposition parties are good at. They constantly complain about what is wrong, but they do not say what should be done.
Mr. Alton: I hope that the hon. Member for Wavertree will say whether he will leave time for the hon. Member for Liverpool, Scotland Exchange (Mr. Parry) and myself to contribute to the debate. We should like to put some constructive points about what can be done in the city to improve what is wrong there.
However, may I draw the hon. Member on the question of the lack of investment by private enterprise in the inner city of Liverpool? I would like to see major investments by private enterprise. Last year the Secretary of State had a Cook's tour round the city of Liverpool and showed business men around. Perhaps the hon. Member for Wavertree would name some companies that have invested in Liverpool as a result of that initiative.
Perhaps the hon. Gentleman will also say why it is that the Barratt development company, which was to have developed the site on the corner of Lodge Lane and Smithdown Road in the centre of the area, has now pulled out. It does not think that it could sell its houses there if it were to build them. Are these not indicators that what is required is something more radical, and not just a reliance on private enterprise, which does not believe that the answer is to pump money into inner city Liverpool? What is needed is a much more fundamental review of what is wrong and, unfortunately, we are now being beguiled by the same formulae that we have had in the past.
Mr. Deputy Speaker: The hon. Member for Liverpool, Wavertree (Mr. Steen) has addressed the House for almost an hour and a half. I suggest that he takes no more interventions. There are hon. Members waiting to catch my eye, and I hope that the Minister will have an opportunity to reply.
Mr. Steen: I shall take that guidance from you, Mr. Deputy Speaker. I was being drawn, perhaps wrongly, by hon. Members sitting on the Opposition Benches.
With your permission, Mr. Deputy Speaker, I shall deal with the significant point raised by the hon. Member for Edge Hill. I probably agree with him that radical solutions are needed and that the Secretary of State to date has been understandably cautious in his approach. I am sure that a more radical approach is needed to the inner city areas. It may not be the approach that the hon. Member for Edge Hill would agree with, but it must result in more private homes for sale, with private mortgages being made available and the middle income group returning from the outer to the inner city to live and work. One must reduce the problems of crime and violence on the streets and of unemployment that are concentrated in the inner cities.
The problems have been compounded by the loss of population and that loss was of those people in the community who were the most flexible, the most able to move and most able to get jobs elsewhere. The problem in Toxteth—this applies not only to Liverpool but to Glasgow, Manchester and inner London—is the concentration of the poor, the unemployed, the unskilled, the elderly and the immigrant population in a concise and tight area.
I am grateful for your intervention, Mr. Deputy Speaker, and I shall now get on with the main thrust of my argument. Vast tracts of inner city land were laid waste. Where were the people who lived there supposed to go? They were sent to the vast council estates that were built, with huge sums of money borrowed from the public purse, on former agricultural land on the periphery. That outward thrust of people and homes eroded the green belts and huge areas of agricultural land were consumed by urban sprawl. That explains why 60,000 acres of food-producing land have disappeared in each of the past 30 years. It is perhaps not appropriate now to explain that that may even be an underestimate. According to the Department of the Environment, as shown by the answer to a parliamentary question, in the five years to 1979 the average annual loss of agricultural land was about 100,000 acres. There is some dispute about whether the figure is 60,000 or 100,000, but the problem plainly is large.
While agricultural land beyond the city boundaries was being swallowed up, large tracts of clear land in the inner cities remained vacant. By the time local authorities were ready to do something about that vacant land, borrowing and rebuilding costs had escalated so far that they decided to wait and did nothing. Nor were local authorities minded to sell such sites at market rates—in other words, the price that people were prepared to pay—preferring to ask for the historic price, which bore little relation to what the land was worth. As the proceeds of the sale of public land are used by local authorities to offset Government grants for the following year, there is little incentive for them to part with surplus land. Among the nationalised industries, British Rail argues that it needs to retain surplus land in view of changing travel patterns, which certainly exist, although not necessarily in favour of rail. Similarly, the Gas Corporation demands adequate space for the manufacture of new energy sources if this is needed in the future.
I am giving the preamble to the major problems of dormant, derelict and older houses in inner city areas. Before I move on to that specific point, perhaps the House will allow me to explain that the bulldozing to which I
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have referred is not confined to houses. The debate embraces industrial problems. The amount of dormant, vacant and derelict land in the inner city and the development of green field sites on the outskirts has shrunk the rate base, thus driving up commercial rates.
The scarcity of suitable office and business premises has forced rents to spiral upwards and small and family businesses have been caught by escalating costs and the absence of skilled labour in the reduced inner city work force. Many firms have shut up shop altogether, while others have found it expedient to move outside the city boundaries, thus adding to the growth of urban sprawl. Countless small business enterprises, retail and service industries and artisans' workshops were driven away. Many have been totally extinguished because they cannot find suitable low-cost alternative premises close to the traditional markets and staffed by what was a close-knit local work force with specialist skills. It was like scooping up a handful of intricate mosaics, throwing them into the air and expecting them to fall down together as an intricate original whole in a predetermied and approved location.
It is not surprising that 6,000 small firms left the centre of Birmingham between 1975 and 1970 and 436 firms in Liverpool were displaced between 1975 and 1980. The last statistic is worth repeating, because the destruction or demolition of 436 small firms in the inner area of Liverpool contributes to the problem that hon. Members on both sides of the House have raised in this debate.
The approach of the planners, who insisted upon rigid separation of residential and business use, merely aggravated matters, as did a whole generation of supporting legislation which meant that those moving 10 new premises had to comply with what many of them regarded as unnecessarily expensive standards.
Having given a wide picture of the problems of the city areas, I bring together the main points that I wish to emphasise. It is important that they be made as they form the main thrust of the debate.
For all the reasons that I have given, Liverpool has accumulated 2,000 acres of dormant and derelict land. There are 78,453 units of accommodation in public ownership, but many are so badly designed—high rise, and so on—that it is not surprising that 18,000 of them are now hard to let or are empty. Having demolished private housing in the inner city areas and destroyed close-knit communities in the 1960s, the bulldozers have turned their attention to other property.
Mr. Parry: On a point of order, Mr. Deputy Speaker. I and the hon. Member for Edge Hill have now been waiting for an hour and a half. Will it be possible for us to speak in the debate before the Under-Secretary of State winds up?
Mr. Deputy Speaker: That is not a matter for me. I have already appealed to the hon. Member for Liverpool., Wavertree (Mr. Steen), and referred to the interventions. He knows when the debate must finish. We can only leave it to him.
Mr. Steen: Perhaps I may help the hon. Member for Scotland Exchange by saying that I do not propose to continue until 10 o'clock. I hope that he will have the opportunity to say a few words, but I wish to complete the argument that I have been given the opportunity to

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advance. I am sure that he will be kind enough to agree that I have given him every opportunity to raise a number of points in interventions.
Perhaps I may come to the main thrust of my argument. It is difficult to do so when there are interventions.
Mr. Deputy Speaker: Order. The hon. Gentleman has mentioned his main thrust at least six times. Other hon. Members have sat through the entire debate and are anxious to take part. I ask the hon. Gentleman to use his judgment in these matters.
Mr. Steen: I think that at least half an hour has been taken up with interventions. Nevertheless, I shall come to a speedy close once I have completed this point.
There is now a list of 2,000 houses in Liverpool—old Victorian houses which can be improved, and which need not be demolished—and some developers believe that there are nearer 8,000 abandoned houses in the inner area. This may be a familiar problem in North American cities where abandoned houses are all too common, but to acknowledge that the same problem exists in our cities is perhaps a revelation to the House.
The houses in Liverpool are mostly of the two-bedroomed, four-roomed—two up, two down—terraced variety. Many of the larger Victorian houses were occupied by single families when Liverpool was prosperous. After the Second World War, many were converted into flats and bedsits, but the Rent Acts hit the private landlords, who did not maintain the houses and could not obtain the rent that they needed. The houses fell into disrepair and the council moved in.
Some of the houses compulsorily purchased were handed over to housing associations which, with 100 per cent. public money, have done a first-rate job of refurbishing them. However enthusiastic they may be, they cannot tackle the scale of the problem. Of the 9,732 people on the Liverpool council waiting list, nearly 6,000 are living with relatives. Those people could be accommodated if the existing Victorian houses which are vacant and derelict were rehabilitated and transformed. This does not necessarily mean more public money, although what the Chancellor said about increasing the availability of public money is greatly appreciated.
A searchlight should be put on the wasting assets which, by default, are eroding and destroying many city neighbourhoods. In turn, this is affecting rate income and having an adverse effect on the services that local authorities can provide.
To wind up my lengthy contribution, I want to suggest one or two things that the Government could do to release and provide about 2,000 new homes in Liverpool. The case has been made from both sides of the House that something more needs to be done. The city council could embark on a homesteading programme, with the Government's persuasion, and sell off for a nominal sum of, say, £1 the older houses which have been acquired by compulsory purchase. People who were willing to repair and rehabilitate them and then live in them could covenant not to sell for five years, with half the proceeds going back to the local authority. That would relieve the local authority of responsibility for these houses.
Homesteading is hardly heard of in Britain. Cities outside London have rarely done it properly. Yet, in most American cities homesteading is big business for banks,
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building societies and individuals. Tens of thousands of decaying older properties are saved from demolition and people are brought back to live and work in downtown neighbourhoods. People would jump at the opportunity of buying a home of their own for £1. That is the first approach that we could make towards refurbishing the older Victorian houses which are lying idle in the centre of Liverpool.
The Minister may say that he does not have power to do anything because it is for the local authority to decide. Surely this is something on which the Government could give a lead. There is a great deal of public money going into Merseyside. An affirmative action programme could be embarked upon to persuade Liverpool city council that it would make better sense to homestead many of the older houses than to spend £180,000 building and maintaining a council house over a 60-year repayment period. Surely it would be much better value to sell off vacant and derelict houses for £1 each.
Another solution to the problem would be for the Minister to authorise the city council to auction many of the houses. Why should they not be put on the market and auctioned to the highest bidder?
Improvement grants of 75 per cent. should be extended beyond housing action areas. Housing associations can borrow all the money that they want from the public purse, but if the Government extended the 75 per cent. grant beyond housing action areas to include older Victorian houses which are being abandoned, they would find an enormously fast take-up from private developers.
I have covered a wide range of subjects on the inner area. I am concerned that the Government should make the best possible use of a wasting asset. Bearing in mind the experience we have had, there can be no argument for allowing any more of these older houses to be so vandalised that they have to be demolished. It must be better sense to find a device for putting them on the market and allowing market forces to decide how they can best be used, provided there is no chance of undue speculation.
The subject of older houses concerns hon. Member on both sides of the House. It is perhaps not surprising that a Conservative Back-Bench committee, being concerned about the enormous number of older private houses which lie abandoned, as a canker in the streets of our older areas, and about the decay of the inner, middle and outer city streets, not only in Liverpool but elsewhere, has decided to promote an exhibition in the House to illustrate the problems and to suggest practical solutions. I know that it will have the support of the whole House. We plan to mount it towards the end of April. I am sure that my hon. Friend the Minister and his Department will wish to be associated with it, as it will illustrate how many abandoned private and public dwellings there are all over Liverpool—dwellings which could be put to good use if they were homesteaded or auctioned off.
I hope that the message is clear tonight. We want to save a wasting asset. I hope that my hon. Friend will support the concept of saving that which is good and provides a focal point for neighbourhoods, and which could, with imagination and radical solutions, as the hon. Member for Edge Hill said, be put to good use, and provide homes for some of the 6,000 homeless people in Liverpool who are now living with relatives but who could be moving into those dwellings as proud house-owners or flat-owners.
9.41 pm
Mr. Robert Parry: I had not intended to speak in this debate, because, like other hon. Members I had expected it to begin at 10 o'clock. Therefore, I do not have available the facts and figures that the hon. Member for Liverpool, Wavertree (Mr. Steen) produced. I shall speak for only about 10 minutes, so that the hon. Member for Liverpool, Edge Hill (Mr. Alton), who has also been waiting nearly two hours to speak, has an opportunity to do so.
I wish to deal with two main issues of the problems of inner Liverpool—unemployment and the environment. First, I congratulate the hon. Member for Wavertree on choosing this subject for debate. It is about time that we had the opportunity to debate the massive problems of our inner city areas, and particularly of Liverpool. When the Labour Government were in power the hon. Gentleman and I served on the Committee considering what became the Inner Urban Areas Act 1978. We have shared concern for the inner areas for some years.
In November 1980 I asked the Secretary of State for Employment to give the total unemployment figure for my constituency. I thought that he would not give me the answer, but I was surprised to receive a reply from the Under-Secretary. It showed that 60 per cent. were unemployed—a staggering figure, provided by the Government themselves. That was before the shocking closure of the Tate and Lyle refinery in the Vauxhall part of my constituency, which resulted in the laying off of another 2,000 people and possibly 1,000 in related industries.
I believe that one of the reasons—not the only reason—for the riots not only in Toxteth but in the inner areas of Manchester, Bristol and London was massive unemployment. I should like the Under-Secretary of State to deal with the question of unemployment in inner city areas, not purely with environment and housing issues. When the Secretary of State for the Environment came to Liverpool immediately following the riots he came with the image of "Mr. Wonderful" or superman. He brought all kinds of promises and I believe that all Opposition Members representing Liverpool constituencies will say that we have seen little of the Government's initiative in solving the problems of inner Liverpool. I am convinced that the recent trouble we had in St. Saviour's school is the tip of the iceberg and that there are still problems simmering under the surface not only in Toxteth but in Everton, and Vauxhall, Sandhills.
The Office of Population Censuses and Surveys recently issued papers on the inner areas of Liverpool. They show that four of the wards, Granby, Abercrombie, Everton and Vauxhall, and Sandhills were deprived. There was massive unemployment, bad housing stock, bad schools and bad environment. I raised the issue with the Prime Minister this afternoon, when I said that those four wards were probably four of the most deprived wards in the United Kingdom and possibly Western Europe. We asked the Prime Minister whether she would visit Liverpool and the answer of course, was "No". It is significant that the Prime Minister has been to Liverpool only once, immediately after the Toxteth riots, when she flew in, was there for a few hours and then left. She showed no real interest in returning to see what has happened since the riots.
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I thank the hon. Member for Wavertree for giving way to so many interventions. When I raised the matter of the Clayton Square development I said that that is part of the old area of Liverpool, which will be smashed by the developers and the bulldozers. I would argue that it is another case of municipal vandalism and I am glad that the hon. Gentleman said that he would support me in any opposition to the scheme. We have seen too much in the past.
We saw the demolition some years ago of the Cavern, where the Beatles made their name. We feel that Liverpool could be a tourist area, but we have seen so much destroyed by the bulldozers and the planners that I believe it is virtually impossible to resurrect it as a tourist area.
I deal next with the rate support grant and the massive cuts that have been imposed on the city of Liverpool and the county of Merseyside. I am delighted to have read .in the press that the new chairman of the county council, who is in fact a councillor in my constituency, has said that he would be prepared to take on the Government, and that he will not support any policy that will reduce services or result in job losses. I shall support the chairman in fighting the vicious cuts that have been imposed on local authorities. I will end now because I have made my main points in the earlier interventions.
9.50 pm
Mr. David Alton: I am pleased that the hon. Member for Liverpool, Wavertree (Mr. Steen) has raised these matters and given us the opportunity for this debate. The hon. Member for Liverpool, Scotland Exchange (Mr. Parry) also tried last week to obtain such a debate. I wish that we had known in advance—although this was not, of course, possible—that this amount of time would have been available. If we had known I am sure that more hon. Members representing Liverpool would have participated. The debate is long overdue and much needed.
There are many issues on which I should like to touch. The first concerns the initiative begun last year by the Secretary of State for the Environment in the wake of the Liverpool riots. The hon. Member for Scotland Exchange has talked about the Prime Minister's visit. Some people in Liverpool say that it took a riot to bring the Prime Minister to the city. It is a tragedy that people should take such a view. I hope that the Prime Minister, if she reads this debate in Hansard, will be prepared to come to Liverpool again. Last year, before the riots, other Liverpool Members and myself appealed to her to come to the city. She said "No". I then asked her if she would be prepared to meet Church leaders, political leaders and trade union leaders here in London. Again she said "No". Her reply was to the effect that she did not see such delegations herself.
Then there was a riot and she came. But she has not been back since. The Secretary of State, when he comes to Liverpool, stays at the Atlantic Tower Hotel in the centre of the city. From those Olympian heights he said that he did not know that conditions such as those in Liverpool existed anywhere in the United Kingdom. It is my view that he should have done, but I welcome his conversion. It was tragic that the Conservative Party conference later that year turned down his proposals, as did the Cabinet, when he called for limited reflation and talked of the need for a job creation programme in

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Liverpool and the reform of local government and particularly the abolition of the profligate Merseyside county council.
When the right hon. Gentleman came to Liverpool and saw what was wrong he encouraged private business men to come into the city. He gave them a Cooks' tour of the city. Since then, there has been no evidence of any major investment by private enterprise. That forces me to believe that we should beware Greeks bearing gifts. The Secretary of State may have come with good will. However, since his visit all that we have received is £22 million for a garden centre in Toxteth. That is totally irrelevant. He has completely missed the point. We have been told that part of the Tate Gallery will be moved to Liverpool. The sum of £50,000 was spent on sending 25 business men to the United States. Any local authority that had taken such action would have been blacklisted and would no doubt have had its rate support grant reduced for frittering away ratepayers' money. Other than that, the Secretary of State seems to have done little.
It was particularly significant that, at the end of his first week in Liverpool, the right hon. Gentleman returned home for a birthday party for his daughter. I do not object to that, but I read in the newspaper that it cost over £20,000. That indicates the difference between the lifestyle of the Secretary of State and that of the people of Liverpool. It would have been far better if the right hon. Gentleman had stayed in the city and lived in the heart of one of the inner city constituencies to see for himself the problems on the ground. The right hon. Gentleman would have found that one of the biggest problems on people's minds is unemployment—the fear that one will lose one's job and join the 55,000 already out of work and the fear that in constituencies where 45 per cent. or more of people are already out of work there will be no possibility of getting a job.
The fact has to be faced that Liverpool is becoming almost a Carthage, a city that is dying through lack of investment and the closure of major companies on Merseyside. There is no point in talking about projects such as homesteading and building on derelict land while such major inner city problems as hard core unemployment continue to exist. Sometimes, it is true, Merseyside can be its own worst enemy. Militancy is one of the problems in industry. I welcome therefore one part of the Budget—the Chancellor's agreement to extend profit-sharing schemes, initiated over the last two years. I hope that more profit-sharing and a greater degree of workers having a say in the running of their firms will bring more harmony to the work place on Merseyside. One thing is certain. There is no better work force anywhere in the country than Merseyside people when motivated properly.
Workers and industrialists in Liverpool seek a secure place in which to operate their businesses and to live. One crime is now committed every four minutes. In January alone, there was a 56 per cent. increase in burglaries. A home is broken into and a car is stolen every 20 minutes. Everybody knows that it is dangerous to go out on the streets in broad daylight, let alone at night. I should like to see 1,000 more community policemen on the Merseyside beat and the reopening of neighbourhood police stations. It was crazy that a new headquarters was built in Canning Place, where no one lives, while small police stations were closed down all over Liverpool. Have
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we not learnt the lesson that bigger is not necessarily better? Have we not learnt that small neighbourhood police stations and policemen on the beat—men who are not alienated from the public—is the way to go about maintaining law and order?
Equally, it must be said that it does not help Merseyside when groups take to the streets trying to undermine good law and order. It was a matter of some sadness that the hon. Member for Warrington (Mr. Hoyle) and other members of Labour's national executive visited Liverpool and led a procession through the streets, after 700 policemen had ended up in my local hospital following the Toxteth disturbances. It did nothing for good police-public relations to have a coffin carried through the streets of Liverpool with a severed pig's head on top of it. It brought great discredit to the people who organised that procession and it was against the interests of the good running and administration of the city of Liverpool.
Liverpool is also a city in which people want to be able to bring up their children. Considering the appalling record of many of the schools, which do not produce a single O or A-level pass and have no chance of sending youngsters into higher or further education, it is about time that the Department of Education and Science got down to working out with the local authority an acceptable reorganisation plan. Two have been turned down so far—one by the last Labour Government and the other by this Conservative Government. The sword of Damocles hanging over local schools is one of the worst possible things for morale and is a reason why our education system is in a state of crisis. We must resolve the problems of depopulation in schools and the crisis of confidence in our education system.
We must also reconsider the so-called "comprehensive" system in Liverpool. We have replaced the system of passing an exam through ability by something even worse—the ability to pay. These days, if one can afford to buy a house in the leafy suburbs, one can send one's child to the neighbourhood school. However, if one lives in downtown Liverpool, one's child is often relegated to a third-division status school which has no chance of producing O and A-level passes. The sooner we get rid of the clapped out dogma, when referring to educational standards, the better.
It is a scandal that council tenants in Liverpool pay up to £30 a week for two and three-bedroom houses. Many face rent increases above the Chancellor's recommended £2·50 a week. They simply cannot afford to meet continued rent increases for lower and lower levels of repair and maintenance. They live sometimes in the most rotten and ugly surroundings. If one places people in such surroundings, one should not be surprised when they end up doing ugly things.
I turn now to housing action areas and the rundown of derelict houses. There are 1 million homes in Britain without inside toilets, running hot water or bathrooms. The renovation of such homes is not helped when housing funds are reduced. Nor does it help local authorities to tackle those problems when their funds are cut. Surely we require a major injection of funds.
We shall be building fewer homes this year than at any time since the First World War. That is a scandal, especially when there are 350,000 building workers in the dole queue. What economic sense does it make to have to pay unemployed people £4,500 each per year? That is the cost in unemployment benefit, social security and the loss

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of tax that they would otherwise be paying. While there are all those homes that need inside sanitation, running hot water and bathrooms it makes no economic or social sense to leave them unimproved.
On homelessness, the Crypt night shelter in Liverpool is well-known to the hon. Member for Scotland Exchange. It is a place where many vagrants and homeless people arrive each night, because they cannot get a roof over their heads. The Under-Secretary has a special interest in homelessness, and he will be aware of the report that was issued yesterday by his Department. It showed that the position of homeless people was getting worse, nowhere more so than in Liverpool. People are being turned away from the night shelter in the Crypt because it does not have enough spaces and because there is not sufficient accommodation in hostels in Liverpool for dealing with homeless people. It is a matter to which the Government will have to pay attention.
It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.
Motion made and Question proposed, That this House do now adjourn.—[Mr. Thompson.]
Mr. Alton: I too listened to what the hon. Member for Wavertree said about homesteading. Naturally, I agree with him, but let us not pretend that Liverpool city council has not tried. The hon. Member for Scotland, Exchange will know that three blocks of flats in his constituency—Canterbury, Crosby and Haigh Heights, known locally in Liverpool parlance as "The Piggeries"—were offered, as the hon. Member for Wavertree said, for £1. That was the expression that I used when I was chairman of the housing committee at the time. I said that if anyone wanted those blocks they could have them. A developer came in, Michael Hayes, and has recently submitted proposals for renovating and improving those properties and putting them back into use for people in housing need in Liverpool. I am delighted that that has happened. There is certainly a place for such activities, but we must not pretend that homesteading is a universal remedy for the problems of inner city Liverpool.
In local government on Merseyside there are many conflicting agencies. There is the Merseyside county council, the Liverpool city council, an urban development corporation, and we have enterprise zones as well. It would be much better if these were all under one umbrella, and one group of people were to tackle the problems of Liverpool. The worst element of the present situation is the impasse, the conflict between these elements of local and central government.
I am concerned about organisations such as the urban development corporation. It has well-intentioned and well-motivated people but people who are unelected and unaccountable. They have prescribed remedies such as £22 million for a garden centre in Liverpool. Anyone who read The Sunday Times a few weeks ago will have been concerned to see in the gardening section that horticulture experts wonder whether it is feasible or possible for the garden centre to be completed in time for the exhibition that is planned. There is a danger that this type of centre will be seen as a universal remedy—a panacea—which it is not.
There is also a danger that people living outside Toxteth will say that the only area of Liverpool that is getting anything is Toxteth. That simply is not true. However, it is the popular view outside Toxteth. One of the most
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worrying comments that I hear in the streets of Liverpool today, is "What do we have to do? Do we have to riot to get anything for our areas?" If I have heard that once I have heard it a hundred times. It is one of the most disturbing and dangerous things that I hear. I hope that the Minister will take that to heart and ensure that other parts of Liverpool are given the attention that they require—not garden centres, not bits of the Tate Gallery, not Mersey festivals, but a restoration of the grants that are being cut, provision of security, a tackling of the housing problems, and the reform of local government.
I want to say a word about extremists and those who prey on the disadvantaged people in Liverpool. On the far Left there is the Workers' Revolutionary Party. On 7 April last year, I brought to the attention of the House the activities of the WRP in the Gloucester Place youth training centre. It was established by Vanessa Redgrave. She contacted local politicians and local personalities and asked them to support the establishment of the centre. Last week, she announced an appeal for £100,000 for the establishment of more of these centres, both in Liverpool and elsewhere. She has just opened another centre in Nottingham.
I warned the House last year that people like the Workers' Revolutionary Party were preying on the disadvantaged. I said last April, that it was like a time bomb ticking away in the centre of Liverpool, and that it would explode. I did not want to be a self-fulfilling prophet, but it was clear to me—I saw what went on in the streets of Liverpool—sthat throughout the riots the extremes of politics were deliberately orchestrating events and fermenting much of the trouble. The House should be aware that their activities are far from over. Mr. Tony Cliff of the Socialist Workers Party, speaking in Liverpool, said that last time he and his supporters got the bread and that next time they would get the bakery.
There is no question about the nature of Mr. Cliff's intentions and those of the Workers Revolutionary Party. Youngsters were beguiled into attending youth training centres in the belief that they were going to drama courses, hairdressing courses or to learn about cookery, for example. That is what they thought when they received a leaflet from an organisation called Youth Training that was signed by Vanessa Redgrave. They went to the centres to learn a skill, but when they attended the courses, as ,The Times reported two weeks ago, they were shown how to beat up a policeman and how to organise in a riot. They were shown how to use citizens band radio to outmanoeuvre the police. The Government had better be well aware that these groups are still at work in Liverpool.
If we move slightly to the Left from there, we find other groups, such as Militant Tendency. The Minister will be aware that four of the prospective parliamentary candidates in Liverpool are members of Militant Tendency. I hope that those on the Opposition Front Bench will do what they have already done in the case of Mr. Wall, who has attempted to become a Member of Parliament for Bradford. I hope that they will disown those who are using the name of a party that was once respected in Liverpool. The Labour Party has been a respectable party, but some are using it to ferment their own brand of political extremism.
Labour Members, such as the hon. Member for Scotland Exchange, are not to be included with the extremists. I know that the hon. Gentleman is not of that ilk. However, there are those in Militant Tendency who

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do not have the same parliamentary and democratic objectives as the hon. Gentleman and other Labour Members. It is important that the Government Front Bench is aware of that.
On the Right of politics, groups such as the National Front and the British Movement are at work. They have established organisations such as the Viking Youth. They are out to prey on the anguish and suffering of so many of our young people who are frustrated, bitter and angry at what is happening in our city. The Government must accept that they are creating a breeding ground in which these groups can operate.
Mr. Parry: The hon. Gentleman and I oppose the continuance of the Liverpool inner ring road. He knows that the county council has stopped the ring road going any further. When the hon. Gentleman was chairman of the housing committee I recall him making a pledge that he would support some municipal housing on the land that was left. I understand that the Liberal-controlled council intend to allow the land to be used for private development. Does the hon. Gentleman agree that a mix of private and municipal housing should be developed in the area?
Mr. Alton: My answer is an unequivocal "Yes". I spoke to the tenants in the area at the time and I gave them my word, which I stand by, that there would be mixed development on the site. The tenement programme that I initiated when I was chairman of the housing committee should go ahead. People are entitled to local rehousing and I should like to see a mixed development on the site.
Mr. Steen: Although this is an opportunity for the hon. Gentleman to voice his views, I remind him that we want to hear what my hon. Friend the Under-Secretary for State has to say.
Mr. Alton: I am amazed, Mr. Deputy Speaker. I have been speaking for less than 20 minutes so far. As the hon. Member for Liverpool, Wavertree (Mr. Steen) spoke for nearly two hours, it comes somewhat amiss for him to lecture me on brevity. However, I shall conclude, because I know that the Minister must reply to this important debate.
I shall make my final contribution in the context of the Budget. Liverpool's problems cannot be isolated from the nation's problems. I very much wish that the Chancellor of the Exchequer had today taken the opportunity to abolish the national insurance surcharge. That would have been the best contribution that he could have made to stimulate employment on Merseyside. I understand from the hon. Member for Blackburn (Mr. Straw), to whom I spoke earlier, that it is possible that a further 300,000 may join the dole queues as a result of the Budget proposals. If that happens, many of the additional unemployed will be in Liverpool.
I regret that the Budget was deflationary. It is regrettable that 2p is being put on the price of a pint of beer. It is equally regrettable that the price of tobacco and petrol is to increase. These increases will hurt ordinary folk in Liverpool. The central Government money that is being taken from Liverpool should be restored. I plead with the Minister to ensure that the policies that are pursued are not ephemeral or superficial. We should go to
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the heart of the problems in the city. We must turn our attention to the extremists who are preying on the problems. There is a need to reform local government, to tackle the housing problem, to examine the education system and to ensure greater security and law and order in the city. Most important of all, we must tackle the unemployment crisis in the city.
10.10 pm
The Under-Secretary of State for the Environment (Sir George Young): May I intrude in this private Merseyside debate to respond to the many points that have been raised during the past two hours? Like my hon. Friend the Member for Liverpool, Wavertree (Mr. Steen), I represent a segment of a city with part of my constituency way into the inner city and part of it in the suburbs. I well understand the problems that he described. He spoke with logic and with eloquence. I recall the first Adjournment debate that I initiated on the problems of people living in tower blocks. My hon. Friend enunciated some of those problems earlier this evening. I know how easy it is to extinguish the fire of community life by wheeling in the bulldozer and how difficult it is to reignite the spirit later. As a result, one is left with cold, lifeless council estates.
My hon. Friend referred to my hon. Friend the Member for Welwyn and Hatfield (Mr. Murphy) hitting a nut on the head. I hope that if my hon. Friend is confronted with a nut he will pick up a spanner rather than a hammer, because he will make more progress that way.
A number of hon. Members have raised the question of resources available to Liverpool, in particular the housing resources that enable them to tackle the problems that have been spoken about. The housing investment programme allocation for Liverpool city council for 1982–83 is £46.1 million. That is an increase in real terms. Together with the normal tolerances and capital receipts, the permitted spend is well over £50 million. One must tell the representatives of the city of Liverpool that there is a significant underspend this year in their housing programme, partly because of the council strike. The government have tried to make available to the city council the resources that they need to tackle the housing problems.
In the debate we have been on a conducted tour of Merseyside, around the various estates in Liverpool with the odd foray across the water to Bebington, the Wirral and Birkenhead. The debate has been wide-ranging. We have had excerpts from "Gardeners' Question Time", "The Money Programme", and some do-it-yourself programmes. When my hon. Friend sat down after an hour and 47 minutes, I asked myself how on earth he would have coped if he had been given the normal allocation that hon. Members have on the Adjournment debate and had been obliged to compress his thesis into the usual 15 minutes.
Hon. Members have raised unemployment issues. I do not have responsibility for employment, but I will pass on the remarks that have been made on that subject. However, my Department is responsible for the urban programme. We try to use the projects in the urban programme to create jobs in the inner cities and to try to rebuild the economy in Liverpool and in other areas where we have urban programmes.
I shall address myself to the main thrust of my hon. Friend's remarks on the problem of derelict property in the inner cities. I have outlined the Government's strategy to

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deal with this. The views of the Government and of my hon. Friends about the strategy to deal with those problems do not differ significantly. My hon. Friend's opposition to clearance policies, his support for the rehabilitation of older dwellings and industrial properties, particularly as they affect Liverpool, are well known. The Government support the initiatives that he has been promoting for some time.
Like my hon. Friend and hon. Members opposite, I am appalled by the waste of the housing stock through the decay and demolition of properties which could be rehabilitated. It is because of my right hon. Friend's abhorrence of unnecessary demolition that he has set his face against claims by local authorities for continued subsidy on dwellings which they demolish, and only in limited circumstances will he allow the subsidy to continue.
It is tragic to see any buildng destroyed, but particularly when that building is relatively new and has been destroyed because of structural imperfections or because it has for some reason become difficult to let. We have seen that happen all too often with local authority properties. We have, however, taken steps to try to ensure that such waste is reduced in future. We are conscious of the contribution that the private sector can make in rehabilitating some of those blocks.
The general consent to the sale of council houses and flats and disposal of housing land now permits the sale of such properties to private developers for them to rehabilitate and pass on into owner-occupation. My right hon. Friend is also prepared to look sympathetically at proposals to sell such properties at less than best price in order to ensure them of a future and a place in the stock of usable dwellings.
The hon. Member for Liverpool, Edge Hill (Mr. Alton) mentioned the vandalised tower blocks in Liverpool known collectively and appropriately as "The Piggeries". As he said, instead of being demolished they are being sold to a developer who plans to refurbish them for owner-occupation. I understand that there are now similar proposals to sell another tenement block, Myrtle Gardens.
I turn to the estates that are difficult to let. Involving the private sector is one way of revitalising derelict or potentially unlettable property. But many difficult-to-let properties remain in council ownership. Our aim has been to see what can be done to restore those properties to an acceptable condition, in particular by involving the tenants in plans for their future. The Department's priority estates project has been testing possible solutions to the problems of difficult-to-let estates—though the lessons learnt are often applicable over the full range and condition of council property. The project has not specifically sought cheap options, but one important lesson has shown that a little money well spent on things which reflect the tenants' needs often achieves more that the grandioise improvements schemes that may appeal more to those who are remote from the estates.
I turn briefly to the question of properties in local authority ownership that are vulnerable to slum clearance. My hon. Friend has drawn attention to the large-scale clearance still taking place in Liverpool. The wholesale clearance to which he refers is, I hope, a thing of the past. We have seen right across the country a turning away from clearance and a very significant decline in properties cleared from the peak of 72,000 in England in 1971 to below 30,000 in 1980–81. In Liverpool, I understand that
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the clearance programme is running down rapidly from 1,000 properties in 1980–81 to 450 in 1981–82 and with much lower levels projected for 1982–83—97 properties—and for 1983–84—20 properties. We have all learnt from the mistake of the 1960s and early 1970s and no one could welcome back large-scale clearance programmes. Clearance must be the policy of last resort.
My hon. Friend was keen to promote rehabilitation. The general improvement and housing action areas were conceived out of a reaction against those clearance policies and since the powers to declare areas for improvement action were introduced there has in most authorities been a reversal of policies, turning away from clearance positively towards rehabilitation.
We have taken significant steps to foster the course of rehabilitation by the promotion of, for example, certain low-cost home ownership initiatives. The improvement for sale scheme was introduced in the Housing Act 1980. It enables local authorities to improve properties which are in a poor condition and subsequently to sell them to the private sector. The Act introduced a central Government contribution towards the net cost of improvement for sale so that local authorities would not suffer as a result of pursuing that policy.
My hon. Friend also developed the theme of homesteading. This is a method, promoted by the Government, to salvage derelict properties, which might in the past have been considered suitable only for demolition. The policy tries to ensure that they are put to good use in future by offering very low-cost homes to first-time buyers. Local authorities are, under the general consent for the sale of council houses and flats and the disposal of housing land—which was issued in June 1981—able to sell suitable properties to priority categories at a discount of up to 30 per cent.
We usually impose the condition that the properties be improved within a certain period by the purchaser and the purchaser usually receives an improvement grant from the local authority and sometimes also a loan to cover the cost of the works. Where local authorities provide mortgages for these properties they may, with my right hon. Friend's consent waive, for a period of up to five years, part or all of the interest payments. There can be financial advantages for both the authority and the purchaser in such schemes and we are seeing a welcome increase in the numbers of authorities embarking on them.
Mr. John Page: I apologise for not having been here earlier to hear my hon. Friend's speech. Does my hon. Friend agree that the homesteading that has taken place in Greater London has been successful? Is it a model that could be followed?
Sir George Young: Any Member who represents a London constituency is well aware of the valuable initiative taken by Sir Horace Cutler, when he was leader of the GLC, in pioneering homesteading in London. In my constituency it has been enormously successful. We owe much to Sir Horace Cutler, who shares a seat with my hon. Friend the Member for Harrow, West (Mr. Page), for developing the initiative.
My hon. Friend will welcome the fact that in the current financial year 80 authorities are improving houses for sale and 85 are selling houses which the purchasers undertake to improve. That is a significant increase upon the figures for 1980—81 when only 37 and 55 authorities, respectively, undertook those activities.

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Whether or not they take advantage of the schemes, local authorities may encourage the sale of vacant houses for owner-occupation by offering shared ownership as the basis of sale. This is a scheme which enables a person who is unable to commit himself to outright purchase at the start to secure a first foot on the bottom rung of the home ownership ladder. At first, his outgoings will be made up partly of mortgage repayments and partly rent. As his circumstances improve, he can increase his share until full ownership is reached.
Another valuable weapon in the battle against derelict properties is local authority expenditure on improvements. I hope that my hon. Friend will accept from all that I have said so far that Government housing policy is aimed very much at rehabilitation rather than at wasteful neglect and demolition. It is interesting to note how, in general, those policies are reflected in the pattern of local authority expenditure. Local authorities are now spending an increasing proportion of their HIP allocation on improvement. Provisional figures for 1980–81 showed that 31 per cent. of the allocation is being spent on improvement as opposed to 12 per cent. in 1975—76, and it appears likely that there will be a further increase to 35 per cent. in 1981—82.
My hon. Friend mentioned some properties that were relevant to Liverpool. No one who has been to Liverpool would deny the real housing problems that exist there, which have been underlined by all hon. Members who have taken part in the debate. I realise that the city has particular problems with its housing stock, with many substandard and unsatisfactory dwellings in both the private and the public sectors and an especially high proportion of pre-war dwellings among its stock.
Liverpool is taking some positive steps against this difficult background—the decline in slum clearance, the promotion of conservation and the proposals to sell some of its vandalised blocks of flats to the private sector. Liverpool has also been very active in promoting area improvement. It has a vigorous action area programme, and its aim has been to give priority attention to 33,000 dwellings built before 1919 with a target completion date of 1986. Some 55 housing action areas have so far been declared. The first phase covered 4,600 dwellings of which some 80 per cent. have so far been improved to a high standard. The second phase of housing action areas was declared in 1979, comprising some 9,000 dwellings and about 30 per cent. have so far been improved. The council aims to declare a third phase in 1982 and a fourth in 1983. That is testimony to the city's intention to promote improvement and make good use of the tools that the statute has made available.
Mr. John Maxton: So far the Minister has spoken only about housing development and renewals. Does he accept that there is a need to renew whole areas in terms of environmental improvement, industrial investment and housing combined? Would he commend to Liverpool—perhaps the Government should consider it in more detail—the GEAR project in Glasgow, where all three factors are combined? Perhaps that is an example of the way forward for Liverpool.
Sir George Young: I am grateful for that intervention by the hon. Member for Glasgow, Cathcart (Mr. Maxton). A wide range of geographical interests has been
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represented in the debate. I shall pass on to the authorities in Liverpool the details of successful policies in Glasgow where, 10 days ago, I saw how some of the problems were tackled.
Renovation grants are another valuable weapon in tackling derelict housing. Our first major step was the Housing Act 1980. For improvement grants it imported the maximum opportunity and flexibility that is possible under the present system. The highest rate of grant—75 per cent.—was previously available only in housing action areas. It is now firmly related to the condition of the dwelling and is available anywhere. In addition, when the applicant is in financial hardship, a further 15 per cent. grant can be paid, making a possible maximum grant of 90 per cent.
Now 75 per cent. improvement grants may be paid, at the local authority's discretion, wherever a house is unfit, lacks one or more standard amenities, needs substantial or structural repairs or is a house in multiple occupation that lacks adequate means of escape from fire. In other words, the rate of grant is determined now by the condition of the dwelling. In addition, authorities may pay a further 15 per cent. when the applicant is in financial hardship. This raises the maximum grant to 90 per cent.
Besides raising the rate of grant and giving authorities the power to make it more widely available, we have also raised substantially the limit on costs towards which grants may be made.
The effect of those changes is to increase substantially the sums that authorities can make available. For example, an applicant in financial hardship wishing to convert a three-storey building into three flats is now able to apply for a grant of up to £26,460 towards a cost of £29,400.
Not all authorities have used those opportunities to the full. I hope that the measures announced earlier today by my right hon. and learned Friend the Chancellor will lead them to do so. The sum of £74·5 million in additional resources is being made available in England. At the same time, the maximum rate at which repairs grant may be paid and the rate at which intermediate grants are paid are to be increased. In each case, the rise will be from 75 per cent. to 90 per cent.
The additional resources are to cover the increased demand that may be expected for grants. In the case of intermediate grants, for basic amenities—hot and cold water, a toilet, bath, basin and sink—that is a demand that the authority is required by statute to meet. The grants are mandatory. But the availability of those resources will also help authorities to give more repair and improvement grants.
In allocating those resources, which an authority will not be able to use for other housing purposes, we shall be looking at authorities' estimates of demand for intermediate and repairs grants and the action that they are taking to stimulate the level of improvement activity in the private sector.
Renovation by the private sector is cheaper in public expenditure terms, provided that the standard of work is equally satisfactory and appropriate. It can also be doubly attractive to a local authority because of the comparatively small demand that it places on an authority's own resources.
It is not always understood that 75 or 90 per cent. of the total cost of house renovation grants is met by the Exchequer. As more authorities go out of subsidy, I hope that they will examine carefully the opportunities for

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maximising expenditure on improvement grants. As a further incentive, for a limited period, the Exchequer contribution on repairs grants is to be raised to 95 per cent. That means that local authorities will be able to make twice as many repairs grants for the same cost in terms of their own resources.
The necessary orders to implement all the changes to home improvement grants announced by the Chancellor will be laid next week before the House for approval. I hope that they can come into effect as soon as possible in the new financial year. Meanwhile, each authority has been invited to submit a bid to the Department for a share of the additional resources being made available.
Before rounding off, I must, I think, having so far emphasised the move towards conservation and rehabilitation, remind my hon. Friend that there is another side to the coin that we cannot ignore. The main thrust of our urban policy is directed at stimulating inner city economies, which form the foundation stone of the prosperity of the people who live there. Our determination to foster economic development is most recently shown by the Chancellor's statement today that up to £70 million
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would be available in 1983—84 under the urban and derelict land programmes for joining public and private sector development schemes.
We already willingly fund through the urban programme a wide range of rehabilitation projects, which contribute to the general objectives of economic regeneration—for example, the rehabilitation of factories, grants to restore shop fronts in return for internal work, and environmental improvements.
However, it would be quite wrong for us to forestall economic development in the inner cities by, for example, insisting that firms use only old buildings, which may be inappropriate, and costly for new industrial processes. As my hon. Friend the Member for Bebington and Ellesmere Port (Mr. Porter) said, we ought not to prevent the demolition of any old building, no matter how poor its condition, how outmoded its design, or how closely it resembles a slum. We have to adapt the—
The Question having been proposed after Ten o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at half past Ten o'clock.