Commons Sitting of 10 November 1982

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRIVATE BUSINESS
  WRITERS TO THE SIGNET DEPENDANTS' ANNUITY FUND ORDER CONFIRMATION
  Mr. Secretary Younger presented a Bill to confirm a Provisional Order under section 7 of the Private Legislation Procedure (Scotland) Act 1936, relating to the Writers to the Signet Dependants' Annuity Fund; And the same was read the First time; and ordered to be considered upon Tuesday 16 November and to be printed [Bill 8.]
Oral Answers to Questions
  ENVIRONMENT

    Grand National
    Mr. Fitchasked the Secretary of State for the Environment if he will make financial resources available to help to ensure that the Grand National horse race continues.
    Mr. Parryasked the Secretary of State for the Environment whether his Department has given any advice or assistance to ensure that the Grand National horse race continues to take place at Aintree racecourse.
    The Under-Secretary of State for the Environment (Mr. Neil Macfarlane): Under an agreement signed on 5 November between the trustees of the Jockey Club's Grand National campaign and the private owner of the Aintree racecourse, the former has been granted an option to acquire the freehold of the racecourse and the permanent rights to the race for £4 million at any time up to 1 May 1983. The holding of the 1983 Grand National has been guaranteed under separate arrangements.
    I sincerely hope that the long-term future of this great steeplechase can now be assured, although I fully appreciate that much depends upon the fund-raising ability of the Jockey Club to reach its target over the coming months.
    Mr. Fitch: If this assurance is not fulfilled, will the Government be prepared to give some financial support? Does the hon. Gentleman agree that this is not a parochial event, but a major event in world sport that is watched on television by 49 countries and therefore should not be allowed to die?
    Mr. Macfarlane: I echo the hon. Gentleman's final sentiments, but I can give the House no guarantees or
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    assurances that the Government will provide any money. It is very much the responsibility of the racehorse fraternity. I understand that much will depend upon how these funds can be raised over the next few months. I draw the hon. Gentleman's attention to the press statement by the Jockey Club, which he might read and thereby understand a few further matters.
    Mr. Parry: I congratulate the Jockey Club and the Merseyside county council on their efforts to ensure that next year's race will be run, and I hope that financial assistance will be raised to enable it to be run in future years. Will the Government consider providing financial assistance for a sports complex, which would be a tremendous boost to Merseyside and the North-West and would provide some urgently needed jobs?
    Mr. Macfarlane: It is difficult to hypothecate what might happen in future. Much depends on what happens between now and the middle of next year, but the future depends on the ability of the Jockey Club to raise funds. I am certain that many Government agencies are interested in the future of the steeplechase and will consider the observations and suggestions of local people.
    At some future stage the regional sports council may receive overtures from people in this area, which it might consider. However, I make it clear—
    Mr. Speaker: Order. The answer is becoming very long.
    Mr. Budgen: Will my hon. Friend be a great deal firmer and tell the House that there is no intention of giving taxpayers' money to maintain the Grand National? Will he state that when a Tory Government are necessarily cutting back on public spending in the Welfare State it is wrong to give money to activities that ought to be no part of the business of any Government?
    Mr. Macfarlane: I thought that I had made it clear that the Government have not made any contributions. This is naturally a matter for the Jockey Club and the racehorse fraternity.
    Mr. Denis Howell: I appreciate the initiative of the Jockey Club, but how does the price compare with the known price of the district valuer? How will the money be raised, and how much will be needed to replace the stands under the provisions of the Safety of Sports Grounds Act? As there is a desperate shortage of play space in Merseyside, is not the greatest priority to get Aintree opened up to the people in the area?
    Mr. Macfarlane: The whole concept of the continuation of this race, together with the facilities and acreage, depend on its viability. Everybody must understand that the Government are not in the business of giving subsidies for this type of activity. I shall happily find some of the answers to the detailed statistics, but I should point out that the Home Office also has a major interest in organisations involved in racing in this country.

    Local Authorities (Expenditure)
    Mr. Altonasked the Secretary of State for the Environment whether local authorities have taken up his invitation to increase capital spending.
    Mr. Campbell-Savoursasked the Secretary of State for the Environment if he will make a statement on the instructions he is giving to local authorities on capital spending limits for the year 1982–83.
    Mr. Jim Marshallasked the Secretary of State for the Environment what estimate he has made of capital spending plans by local authorities for the year 1982–83.
    The Secretary of State for the Environment (Mr. Michael Heseltine): Returns from local authorities suggest that there will be an underspend on capital investment by English authorities by over £1 billion in 1982–83. I have urged local authorities to bring forward worthwhile capital schemes and have offered additional expenditure allocations for that. I have also asked my regional offices to approach individual authorities, as has happened many times in the past, to establish what schemes they may have available suitable for acceleration. I hope that will lead to a reduction in the underspend, with consequent benefit for the construction industry, but applications from local authorities are still being received and it is too early to forecast the extent of the response. For 1983–84, allocations will be made shortly in the usual way.
    Mr. Alton: Has the Secretary of State had an opportunity to explain to the Prime Minister that, contrary to what she said in the House last week, money allocated for capital schemes cannot be transferred by local authorities to pay for wage demands? How are councils to deal with the revenue implications? Will they not face clawback if they spend money on capital projects and incur revenue implications? Does the right hon. Gentleman agree that taking decisions against the clock will result—
    Mr. Speaker: Order. I have twice this week appealed that when an hon. Member is called to ask a supplementary question he asks what is his right—one supplementary question—or he takes up the time of other hon. Members.
    Mr. Heseltine: I believe that the hon. Gentleman was asking me about the jerry-building that local authorities will propose as a result of the schemes that they put forward. We shall ensure that local authorities do not do that. There is not the slightest evidence that they will.
    My right hon. Friend the Prime Minister has expressed herself clearly. I see no reason for doubt.
    Mr. Campbell-Savours: Will the Secretary of State place on record that local authorities can use their capital receipts to pay interest charges on borrowings that arise from the use of the £1 billion that is being made available to them on a wider basis? Is he aware that my local authority is applying to him for £1,250,000 extra to pursue the programme that he has set as an objective, because it is worried about what will happen at the year-end on carryover? Will he introduce flexibility in that area?
    Mr. Heseltine: It is early days, but the hon. Gentleman's local authority is one of those that have responded with a number of schemes. That proves that it is possible for local authorities to do exactly what we requested. No Minister has expressed the view that the total underspend predicted for this year can be made up on any significant scale. It is too large and too late. That is the difficulty facing the Government. Local authorities have underspent on such an enormous scale for this year
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    that that capital resource is lost to the construction industry. The Government are doing their best to make up some of the shortfall that the local authorities have created.
    Mr. Marshall: If the Secretary of State's exhortations to local authorities are successful, will he give an assurance that any increased revenue expenditure arising from increased capital expenditure this year will be exempt from any future controls on local authority revenue expenditure?
    Mr. Heseltine: The hon. Gentleman knows that we cannot separate the accounts of 420 local authorities to find the revenue consequences arising from any decisions in the way that he suggests. Local authorities understand that fully, as they have always done. They will use their own judgment. The real world is made up of a large number of local authorities, many of them represented by Opposition Members, which are now trying to find schemes to create jobs in the construction industry. If the Opposition would concentrate on helping those local authorities, as opposed to raising difficulties, more jobs would be created.
    Mr. Chapman: Has my right hon. Friend seen the proposal by the House-Builders Federation that local authorities should use part of their capital underspend this year to buy houses already built and to offer them to people on their waiting lists on a shared equity basis? Will he encourage that proposal?
    Mr. Heseltine: That is a classic example of a constructive approach to what the Government are trying to do. I am looking at that idea.
    Mr. Frank Allaun: After halving housing expenditure in three years and bringing council house building to almost nothing, is there not something indecent in the Secretary of State now telling local authorities to increase capital expenditure? If he is aware of the misery that he is causing, he is a stinking hypocrite.
    Mr. Speaker: Order. The hon. Member knows that it is out of order to refer to another hon. Member in those terms. One cannot say "If' and add that a man is a hypocrite, or we shall be crawling on the floor, without standards.
    Mr. Allaun: I withdraw that remark, Mr. Speaker, and say that this is a stinking hypocrisy.
    Mr. Heseltine: I shall do my best to draw those interesting observations to the hon. Gentleman's local authority, which happens to be putting in one of the longest lists of bids.
    Mr. Squire: Will my right hon. Friend continue to review the need to make a commitment to local authorities on future capital expenditure and borrowing powers, because the main deterrent is against sudden capital expenditure on fairly minor schemes. Anything that has happened during the past few weeks cannot change the position on major schemes, unless they have a greater expectation of support in future years on capital spending.
    Mr. Heseltine: I understand the point made by my hon. Friend, but he will realise that as local authorities have £600 million of capital underused from last year, £1 billion capital underspent this year and substantial projected capital receipts next year, the level of allocation by the Government becomes less important in their forward capital planning.
    Mr. Kaufman: First, will the right hon. Gentleman answer the question put by my hon. Friend the Member for Wokington (Mr. Campbell-Savours)—a question that he dodged—on whether local authorities can use capital receipts to service loans? Secondly, will he summon up the honesty to admit that his and the Prime Minister's new spend, spend, spend stunt is nothing but a phoney and a sham? He is simply asking local authorities to bring forward by four months next year's capital spending projects. If they are incautious enough to obey him, the revenue consequences, plus the abolition of the GREA amnesty and the planned reduction in their spending ceilings, will make them liable to savage penalties for doing what the Secretary of State is telling them to do.
    Mr. Heseltine: The right hon. Gentleman is an expert in trying to frustrate any scheme that is to the benefit of the construction industry. It is fortunate that Labour-controlled local authorities take absolutely no notice of what he says. Significant numbers of local authorities are producing capital schemes to help the construction industry, and the right hon. Gentleman is deliberately trying to frustrate them.

    Council House Sales
    Mr. Timothy Smithasked the Secretary of State for the Environment what proposals he has further to encourage the sale of council houses.
    The Minister for Housing and Construction (Mr. John Stanley): The Housing and Building Control Bill, published last Friday, will extend the right to buy to council tenants whose dwellings are on leasehold land and to certain tenants of charitable housing associations.
    It will also further extend the right to buy by giving tenants who are not able to afford to buy outright the right to buy on a shared ownership basis instead. In addition, the Bill will remove certain obstacles which some councils have used to obstruct and dissuade tenants from exercising their legal right to buy their homes.
    Mr. Smith: That will be a welcome extension to the right-to-buy provisions. Does my hon. Friend agree that, bearing in mind the substantial reduction in mortgage interest rates that has taken place this year and the fact that there is more to come on Friday, this is a propitious moment to draw to the attention of council tenants their right to buy under the Housing Act 1980?
    Mr. Stanley: My hon. Friend is right to draw attention to the success of the Government's policy in reducing inflation, interest rates and mortgage rates. He is also right to say that the weekly cost to many council tenants of buying their homes on a mortgage will be no more, and in some cases will be even less, than the cost of continuing to pay rent.
    Mr. Allan Roberts: Will the Minister explain whether, under the shared ownership proposals for council houses, a tenant may join other members of his family resident in the dwelling to buy part of the house? If they can do that, in much the same way as they can buy the whole of the house jointly under the Housing Act 1980, what will happen if there is a dispute while half the house is owned and half is rented? Will the person who owns half of the house be able to ban a member of his family from that part of the house and make him live in the other half?
    Mr. Stanley: The rules on buying part of the equity on a shared ownership basis are the same as those on buying outright under the right-to-buy provisions. The provisions have applied satisfactorily in many voluntary sales under shared ownership arrangements.

    Footpaths
    Mr. Andrew F. Bennettasked the Secretary of State for the Environment when he expects the sections of the Wildlife and Countryside Act 1981 relating to footpaths to come into operation.
    Mr. Macfarlane: My right hon. Friend expects to bring the rights of way provisions into operation early in the new year.
    Mr. Bennett: Will the Minister give us an assurance that there will be sufficient staff, locally and nationally, to carry out the footpath provisions of the Wildlife and Countryside Act? In the past 10 years most local authorities and the Government have not had sufficient staff to carry out their responsibilities.
    Mr. Macfarlane: No, I cannot give that guarantee. The hon. Gentleman is aware of the guidelines and the requirements and he knows what our consultations with other organisations involve. I hope that we shall have the regulations before Parliament in January and that they will come into operation one month later.
    Dr. David Clark: Does the Minister appreciate that many local authorities have done much work on the preparation of their footpath review maps? Will he take the opportunity to clarify the Government's plans for the outstanding reviews?
    Mr. Macfarlane: No, I cannot do that now. I know what the hon. Gentleman is worried about. We have had a dialogue on the matter previously, both inside and outside the House. As soon as I have anything to report, I shall let him and the House know.

    British Waterways Board
    Mr. Ashtonasked the Secretary of State for the Environment whether he has received the latest report of the British Waterways Board; and if he will make a statement.
    The Under-Secretary of State for the Environment (Mr. Giles Shaw): The board's annual report and statement of accounts for 1981 were laid before this House on 23 June.
    Mr. Ashton: Is it not a fact that the Government had to send in their own auditors, because the financial affairs of the board were in a mess, and that the board is now bringing in its own auditors again to check on the Government auditors?
    Mr. Shaw: The general review by the Inbucon consultants into the affairs of the board includes an examination of the efficiency of management and the structure of the board. Publication of the report is expected shortly.
    Mr. John Wells: Is my hon. Friend aware of the importance of keeping the maximum mileage of waterways open at all times in this era of increased leisure?

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    It is essential, particularly in the Midlands areas, which are remote from the sea, that people should have waterways available for fishing and other recreation.
    Mr. Shaw: I agree with my hon. Friend. It is indeed important that we should optimise the benefits that waterways can offer, but I remind the House that it is also necessary to increase the income.
    Mr. Denis Howell: Is it not astonishing that the affairs of the board have got into such a serious state, administratively and in respect of the lack of repairs to waterways, that outside auditors have had to be brought in? Is it not even more astonishing that bureaucratic arguments are taking place between the Government's auditors and the board's auditors? Will the Minister accept the Government auditors' accounts, as we would do, and agree that that means that urgent action must be taken to open up the whole canal system and repair it properly, for the benefit of the nation and to ensure that it is run efficiently in the public interest?
    Mr. Shaw: I agree with the necessity of ensuring that the affairs of the board are run with maximum efficiency. I remind the right hon. Gentleman that the Government have increased substantially the grant-aid available to the board to make good some of the backlog of work.

    New Towns
    Mr. Newensasked the Secretary of State for the Environment what representations he has received on his proposals for responding to claims made by new town local authorities under section 51 of the New Towns Act 1981.
    The Under-Secretary of State for the Environment (Sir George Young): No representations have been received from the authorities concerned since the Department's letters of 13 October. I saw a group of hon. Members last Monday and had a most helpful discussion with them.
    Mr. Newens: Does the hon. Gentleman not recognise that his refusal to meet more than a fraction of the cost of design defects in houses transferred to new town local authorities represents a gross breach of faith by the Government, in view of undertakings given in the past? Would not a commercial firm which attempted to renege on its liabilities be guilty of a flagrant breach of contract? Is the hon. Gentleman not prepared to make a more reasonable offer to the authorities which took over new town houses?
    Sir George Young: The Government have made a generous and realistic offer to the new towns. The problem with Harlow is that 85 per cent. of its claim relates to maintenance items and, under the criteria for the assessment of claims, normal maintenance is not eligible for grant.
    Mr. Dover: Will my hon. Friend confirm that local authorities in second and third generation towns are unlikely to have to make such claims, because the design of houses in those towns is much more traditional?
    Sir George Young: I confirm that we do not expect the same problems on future transfers, for the reason that my hon. Friend has given. It is also worth saying that the new towns concerned have benefited financially from the transfer of the houses.
    Mr. Dormand: Will the hon. Gentleman confirm that the new town with the worst problems is Peterlee in my constituency? Does he agree that Easington district council has followed his guidelines on rent policy, and will he tell us where he thinks the money will come from to pay for the vast number of repairs that will be needed? Surely this is a national, not a local, matter.
    Sir George Young: The Government intend that expenditure that has to be incurred will be taken into account in the HIP allocations to the local authorities concerned. I think that the hon. Gentleman knows that I am meeting the Association of District Councils tomorrow, and I hope that the matter can be satisfactorily resolved.
    Mr. Michael Morris: Is my hon. Friend saying in relation to third generation new towns that where properties are not built in the traditional way there may be a case for a claim?
    Sir George Young: The Government hope that in many cases there will be management arrangements between the district council and the new town so that the council that takes over the properties will have experience of them before the transfer takes place. It will be able to assess the value of the properties and they can be repaired by the new town corporation before the transfer, thereby obviating the problems to which hon. Members have referred.
    Mr. Graham: When the hon. Gentleman meets new town representatives tomorrow, will he temper his present mean offer with the reflection that the causes of the financial problems and disasters that will fall on local ratepayers and rent payers are no fault of theirs, but are due to a breach of faith by, among others, the Secretary of State for the Environment?
    Sir George Young: That is not the case. The Government are under no legal obligation to make any offer in respect of these properties. We accept that there is a moral obligation and, in discharge of that, we have offered to pay 40 per cent. of admissible expenditure. In the light of the overall benefit to new town councils of the properties to be transferred, our offer is generous.

    Council House Rents
    Mr. Guy Barnettasked the Secretary of State for the Environment when he intends to give details of the level of council house rent increases devised by the Government in 1983–84.
    Mr. Winnickasked the Secretary of State for the Environment whether he expects local authorities to increase council house rents in 1983; and, if so, by what amount.
    Mr. Heseltine: I issued the statutory consultation paper to local authorities on Monday of this week, proposing that housing subsidy for 1983–84 should be calculated on the basis of an 85p increase in the local contribution. Actual rent increases are a matter for decision by individual authorities.
    Mr. Barnett: Is it not shameful that after three and a half years in office, during which time average council house rents have more than doubled, the Government

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    should even contemplate the possibility of further increases? Ought not the Secretary of State to be thinking in terms of a rent freeze?
    Mr. Heseltine: The hon. Gentleman will remember that the Labour Government believed that keeping rents broadly in line with the rate of inflation was a reasonable policy.
    Mr. Winnick: Is the Secretary of State aware that council tenants throughout the country are thoroughly fed up with being punished by the exorbitant rent increases of the past three years? Is it not a fact that council house rents have increased by more than double the increase in the retail prices index in the same period?
    Mr. Heseltine: I am sure that the hon. Member is aware that the standards of maintenance on council estates—arising from the fact that capital projects were cut in half by the Labour Government—presented real difficulties, which we have had to put right. Now that we are in a position to get a better balance, we can ensure that council tenants gain from the fall in inflation.
    Mr. Squire: Will my right hon. Friend join me in condemning the scaremongering tactics of the Labour Party, which, in the past two weeks, has circulated rumours about prospective excessive rent rises, which have caused unnatural and unfair concern to many people?
    Mr. Heseltine: I understand why my hon. Friend raises the matter. It is not for me to apologise to the House for the shameless behaviour of the right hon. Member for Manchester, Ardwick (Mr. Kaufman), who cynically trudged round the country telling people that there would be a £2 a week council house rent increase. That was mainly to help the Labour Party in the by-elections—and what disastrous results it achieved.
    Mr. Kaufman: Is the right hon. Gentleman aware that we are gratified to have scared him off the £2 increase that was proposed in his document? Is he further aware that even an 85p increase is twice as high as the Government's 3½ per cent. pay limit? As-no thanks to the Government—home-owners are at last to have mortgage interest payments reduced for the first time to below the level that the Government inherited from Labour, is it not unjust that council tenants are to have a 134 per cent. rent increase-five times as much as rents went up under Labour?
    Mr. Heseltine: I think that we now understand the difficulty into which the right hon. Gentleman has got himself. The document to which he refers is a local authority document, and the figures in it were chosen by the local authorities. As those figures were not endorsed in any way by my Department, will he now have the grace to admit that the information on which he based his whole scaring attitude was phoney and that he has misled every council tenant in the land?
    Mr. Kaufman: These were the right hon. Gentleman's proposals, and he knows it. If the Prime Minister had not got into a panic, preparing for the general election, it would have been a £2 increase.
    Mr. Heseltine: I must tell the right hon. Gentleman that the proposals are not mine. It was his failure to understand that fact that caused him to indulge in this scare technique.
    Mr. Greenway: Did my right hon. Friend hear the Labour Party talking about rent increases of 134 per cent. over three and a half years, when the Labour-controlled Greater London Council increased rates by 97 per cent. in less than a year? Does he think that it is moral for the Labour Party to advocate rent freezes at the expense of the ratepayers?
    Mr. Heseltine: I sympathise with my hon. Friend, but it is not just a matter of rent freezes at the expense of ratepayers; it is rent freezes at the expense of appalling housing conditions for people who live on council estates.
    Mr. Kaufman: On a point of order, Mr. Speaker. I am sure that the Secretary of State would not wish to mislead the House about the document to which I referred. It has on it the words "Department of the Environment 18 June".
    Mr. Heseltine: May I reply to that point, Mr. Speaker.
    The assumptions in that document were produced by the local authority associations as a set of hypothetical calculations. They were their assumptions, not ours.
    Mr. Freeson: Bearing in mind the additional burden that high rates have on rents for council tenants and, indeed, many other house occupants, will the Secretary of State advise local authorities to use significant proportions of their capital receipts—to which he referred this afternoon—to reduce the rates burden; and possibly rents, too?
    Mr. Heseltine: The right hon. Gentleman has a deep knowledge of these matters, but I am not sure how capital receipts could be used in that way. He was in the Department of the Environment long enough to know that the rules broadly divide the capital and current account programmes. I do not think that that has changed significantly in a way that would make his proposals possible.

    Housing Improvement Grants
    Mr. Cryerasked the Secretary of State for the Environment if he will introduce legislation to allow post-1919 houses to be subject to improvement grants; and if he will make a statement.
    Mr. Stanley: Of the four categories of grant, improvement and intermediate grants are already available for any dwelling provided before 2 October 1961. Special grants are already available to any house in multiple occupation, regardless of age. It is only repairs grants that are currently limited to dwellings built before 1919. I am however giving consideration, without any commitment at this stage, to making the cut-off date for repairs grants later than 1919.
    Mr. Cryer: Will the Minister bear in mind the position of householders and owner-occupiers in the Stockbridge area of Keighley, who have been blighted by motorway proposals since 1968 and have understandably delayed repairs for many years? In May 1982, when an alternative proposal was accepted, the blight was removed. Those people believe strongly that their properties have been blighted through no fault of their own and that their houses should be subject to grant-aid in some form, thus restoring them to the standard in which they would have been maintained had there been no blight. Will he consider the matter very carefully, because it is a just cause?
    Mr. Stanley: I am aware of the correspondence that the hon. Gentleman has had with my hon. Friend about the houses at Stockbridge, and I shall take it into account, with the representations that I have received from other hon. Members about the cut-off date for eligibility for repairs grants.
    Mr. Stephen Ross: I welcome the Minister's statement to extend the time limit. Will he consider making those repairs grants obligatory on local authorities, rather than discretionary? People looking for house roofing grants find that many local authorities either do not have the staff to deal with them or are not prepared to make grants available.
    Mr. Stanley: As the hon. Gentleman will be aware, there are limited categories of repairs grants which are mandatory, as opposed to being discretionary. One has to decide as a matter of policy how far to circumscribe the freedom of local authorities in allocating money between the various types of grant. So far, the Government have taken the view that concentration should be focused on the provision of basic amenities—baths and inside WCs. Intermediate grants are mandatory, and local authorities are free to exercise their discretion on the remainder. I note what the hon. Gentleman has said.
    Mr. Parris: Has my hon. Friend looked at the problem of those who commenced the purchase of Airey houses at high prices, at pre-Barnsley scare prices, but and where completion took place after the Barnsley scare, and who at present will be excluded from the help that he is offering?
    Mr. Stanley: The people who completed after the public statement was made about the defects in Airey houses should have had the valuation of their houses adjusted downwards to reflect the statement that was made. We have received representation from hon. Members—and, indeed, from individual owners of Airey houses—about people who bought at the inflated valuations after the date of the public announcement, and we are considering the matter further.
    Mr. Torney: Is the Minister aware that 270 council houses, and houses built by the council and since sold to occupiers, in my constituency of Bradford have to be demolished because they are unsafe? What kind of grant will the council give to build the 330 new houses that are going up? What advice has he given the local authority on how to deal with the claims of tenants and owner-occupiers?
    Mr. Stanley: If the hon. Gentleman is referring to Airey houses, current owners can invite the local authority to buy back such houses. If that happens, the Government will meet the full cost to the local authority. If the local authority, of its own volition, demolishes dwellings, it is for the local authority to include in its HIP bid to the Department the capital implications of replacing such dwellings. That factor will be taken into account in making individual allocations to individual authorities.
    Mr. Beaumont-Dark: My hon. Friend's comments on 1919 houses will be widely welcomed in the Midlands. When will he make a statement? That would be extraordinarily helpful to many householders in the Midlands.
    Mr. Stanley: I hope that we can shortly reach conclusions on that. However, as consultation with other Government Departments is involved, I cannot give a date today.

    Council House Sales
    Mr. Michael Morrisasked the Secretary of State for the Environment what is his latest estimate of the number of families who have become house owners under the right-to-buy legislation.
    Mr. Knoxasked the Secretary of State for the Environment if he is satisfied with the progress made so far with the sale of council houses to sitting tenants.
    Sir George Young: My right hon. Friend the Secretary of State is generally satisfied with progress. Between April 1979 and the end of June 1982 an estimated 370,000 public sector dwellings were sold in Great Britain, some 182,000 of which were sold under the right-to-buy provisions. There remain a minority of councils where progress with the right to buy gives cause for concern.
    Mr. Morris: Is my hon. Friend aware what good news the figure of 370,000 is? Will he perhaps consider setting a target of half a million sales within the lifetime of this Parliament? To achieve that end, will he ensure that the laggard authorities are forced to get on with such sales, which are the right of British citizens?
    Sir George Young: My hon. Friend the Minister for Housing and Construction keeps a close watch on those authorities about which my Department receives complaints and will continue to do so.
    The Government hope that the half million target will be achieved. The most welcome drop in mortgage rates, referred to a few minutes ago, will give a fresh impetus to the sale of council houses.
    Mr. Knox: How many local authorities are still dragging their feet over the sale of council houses? Are they all Labour-controlled?
    Sir George Young: I have in front of me a rather long list of local authorities about which my Department has received complaints. The vast majority of them are under Labour control. My hon. Friend the Minister for Housing and Construction has regular correspondence and meetings with them to bring home to them the importance of making swift progress in giving people their statutory right.
    Mr. Marks: In view of the Minister's claim to success in that regard, will he now extend the right to buy to tenants of privately owned houses?
    Sir George Young: That has already been dealt with at a previous Question Time. Those houses are already in private ownership and the Government's mandate extends only to those in public ownership.
    Mr. Hugh D. Brown: Has the Minister instructed his Department, or asked housing authorities, to commission research into the social consequences for people who are frustrated because they live in deprived areas with difficult to let housing, with low incomes, and whose chances of transferring to decent houses have been reduced?
    Sir George Young: The social consequences speak for themselves. Three hundred and seventy thousand people have exercised their right. What more evidence does the hon. Gentleman need?

    Rate Support Grant
    Dr. Edmund Marshallasked the Secretary of State for the Environment if he will introduce proposals simplifying the arrangements for rate support grant.
    The Minister for Local Government and Environmental Services (Mr. Tom King): I share the hon. Gentleman's concern to simplify grant arrangements as far as is possible, given the large sums involved and the importance of ensuring the fairest distribution for the more than 400 authorities involved. I am currently considering several options for simplification of the assessments of grant-related expenditure for the 1983–84 RSG settlement.
    Dr. Marshall: Are not the present rate support grant arrangements, which even the Minister has said are shrouded in complication and, I would say, excessive jargon, being used as a deliberate smokescreen to pass on to local authorities the blame for cuts in local services that are really being imposed by the Government?
    Mr. King: No, Sir. The hon. Gentleman will recognise that the rate support grant has never been a simple matter. Substantial sums of money are involved and the formulae have always been complex. However, there is now a better understanding of the way in which the needs assessments are made for individual authorities and we should continue to simplify the system in that area.
    Mr. Kenneth Lewis: Is my right hon. Friend aware that the increased imposition of rates upon industry year by year is becoming serious? It is creating financial and job losses. Will my right hon. Friend consider giving additional support to those local authorities that give special rate concessions to industry? That is important for jobs and for industry generally.
    Mr. King: I endorse my hon. Friend's opening remarks. At a time of recession we should reinforce the importance of all authorities not adding to the burdens of industry and commerce. There seems to be an illusion fostered by some political parties that rate levels do not matter to industry. However, they are a matter of the greatest concern. While I cannot go along the particular line that my hon. Friend suggests, I can tell him that we are most concerned about the general theme that he has put forward.
    Mr. Foster: Will the Minister confirm—or deny—press statements to the effect that the Secretary of State intends to claw back from local authorities any benefits that might accrue from the reduction in interest rates? If that is the case, will he advise local authorities such as Wear Valley and Sedgefield district councils, which would dearly like to spend capital on land reclamation, how to do that without having some flexibility on revenue expenditure?
    Mr. King: The matter that has been referred to in the press, over which there has been some confusion, deals with the supplementary report, which is presently under discussion. It has been the practice of successive Governments to deal with what are called "variable items" at the supplementary report stage. If interest rates rise local authorities are compensated, and if they go down there is some clawback. That is the standard practice, which the hon. Gentleman will find was followed by the Labour Government.
    Mrs. Rumbold: Will my hon. Friend assure the House that his simplified guidelines on the rate support grant will also provide some measure of equity to those authorities that have tried faithfully to follow the Government's guidelines but have so far seen little compensation for their efforts?
    Mr. King: If I were to answer that question fully I would incur your wrath, Mr. Speaker. It is my constant ambition to do what my hon. Friend suggests. When she fully analyses the proposals that we shall put before the House, I hope that she will see that justice has been done.

    Inner City Policy
    Mr. Tilleyasked the Secretary of State for the Environment whether he proposes to take steps to modify the inner city policy of his Department.
    Mr. Heseltine: We are continually seeking new ways, such as the urban development grant, of achieving urban regeneration. The urban programme is relatively new. It offers the opportunity for considerable flexibility. It is continually under review as a consequence.
    Mr. Tilley: Is the Minister aware of the reported remarks of his noble Friend and ministerial colleague, Lord Bellwin, on South Tyneside? Is he aware that Lord Bellwin is reported to have said that the Department is considering rejigging the inner city policy to take away the concentration of funds from the partnership areas? Partnership areas such as my constituency of Lambeth, and that of Liverpool, amongst others, while they are grateful for the concentration of funds in the past, still regard such funds as being sadly inadequate for their desperate needs. Is the right hon. Gentleman aware that they will regard such a switch in policy as a betrayal of past statements on the inner city areas?
    Mr. Heseltine: If the hon. Gentleman keeps in mind the fact that his authority's allocation has been increased by 30 per cent. this year compared with last year, he will see the seriousness with which we treat the matter. He will already have a flavour of the fact—it cannot be more than that—that the urban development grant initiative, which is now under consideration, means that significant increased funds should be flowing in his direction if the scheme stands up to examination. I hope to say something further about that shortly.
    Mr. Alton: Is the Secretary of State aware that over the past 12 months 10,000 trees have been planted in inner city Liverpool, that one job has been lost for every tree planted and that one crime is committed every four minutes? His remedies are wholly cosmetic and irrelevant to the basic problems of unemployment and crime.
    Mr. Heseltine: I was not aware that 10,000 trees had been planted in Liverpool over the past 12 months. I shall give the deepest consideration to the implications of that.
    Mr. Dover: Will my right hon. Friend ease planning restrictions in inner city areas, to try to encourage more private development?
    Mr. Heseltine: I am very sympathetic to that view. The Government have amended the general development order. One of the consequences of that will be to help in that way. However, local authorities are now adopting a very practical approach—particularly in some of the

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    industrially deprived areas and in some of our inner cities—to the need to attract industrial and commercial investment.

    Local Authorities (Housing Revenue)
    Mr. Wardellasked the Secretary of State for the Environment how many local housing authorities are currently showing a surplus on their housing revenue accounts; and how many are estimated for 1983–84.
    Mr. Stanley: Actual data on authorities' housing revenue accounts for the current financial year will not be available until the summer of next year. No estimates can yet be made for 1983–84.
    Mr. Wardell: Do not the Secretary of State's departmental calculations show that, as a result of the £1 a week rent increase from April next year, at least 305 out of 367 housing authorities will have a profit on their housing revenue account? Will he confirm that it is the Government's intention to make maximum profits out of council house tenants, as demonstrated by the 133 per cent. rise in rents since May 1979, compared with an average rise in earnings, by April 1983, of only 51·7 per cent?
    Mr. Stanley: The hon. Gentleman says that that is "the Government's intention", but I hope that he will look at the rent increases made by individual local authorities. In particular, I hope that he will consider the rent increases levied by several Labour-controlled authorities. If he bears in mind the details of what has happened on the ground, he will realise that a significant number of Labour-controlled authorities, in both the last financial year and this one, are voluntarily choosing to raise rents by an amount in excess of the assumption used by my right hon. Friend the Secretary of State.
    Mr. Squire: Did not the Labour Government resolve to increase the proportion of the revenue account that is met by rents? If so, have we not had an example of the Labour Party saying one thing in Government and something else in Opposition?
    Mr. Stanley: My hon. Friend is right. Since we came to office it has been necessary to increase rents in real terms because, contrary to the protestations of the Labour Party there was a substantial decrease, in real terms, when that party was in Government.
    Mrs. Ann Taylor: As the Minister has accepted that Labour councils have had to increase rents because of the Government's direction, will he now have words with the Secretary of State? As the Secretary of State has changed his mind on the policy of local government spending, will he suggest to him that he should also change his mind on the "no profits" rule and reinstate that rule on housing revenue accounts, to ensure that the profits that he is forcing local authorities to make are ploughed back into council housing and that tenants derive some benefit from them?
    Mr. Stanley: I do not think that the hon. Member listened to my reply to the original question. Contrary to what she says, a significant number of authorities—as I have already made clear—including many Labour-controlled councils, have voluntarily chosen to increase rents by an amount greater than the assumption used by the Secretary of State.

    Greater London Council
    Mr. Spearingasked the Secretary of State for the Environment if he will place in the Library a list of all the statutory functions of the Greater London Council which relate to his responsibilities.
    Mr. King: The Library already has, I understand, a copy of the comprehensive "Index of Statutes affecting Local Government in Greater London". This covers not only the London Government Act 1963 but the numerous local Acts in force in the GLC's area.
    Mr. Spearing: Does the right hon. Gentleman agree that the matters that are the responsibility of his Department and of his colleagues in Government have often, in the past 100 years or so, been the responsibility of London's local government, under the London County Council and its successor? Does he really believe that he can administer those matters without a uniform body covering the whole of London?
    Mr. King: The hon. Gentleman will be aware that our primary concern is with local authority expenditure and the overall level of expenditure. Against that background, the hon. Gentleman would be singularly ignorant—which I know he is not—if he did not know that the GLC's recent performance has hardly contributed to the collective effort by local authorities to meet the Government's public expenditure target.
    Mr. Durant: Will my right hon. Friend consider abolishing the GLC? Will he further consider letting that building as a multi-storey car park, as the corridors are wide enough?
    Mr. King: As I have said, our first concern is with expenditure, not structure. However, I well understand my hon. Friend's concern—it is shared by millions of Londoners—that the GLC's behaviour serves only to increase the totals given on the GLC's banner. The rate burdens imposed by the GLC have undoubtedly added directly to the number of London's unemployed.
    Mr. Graham: With reference to the disclosure about the Strongbridge housing association and certain Tory members of the GLC, the Minister will recall that I raised such matters with one of his colleagues in the House last July. May we have an assurance that the Minister will come to the House at the earliest opportunity and make a full statement, recognising that the effectiveness of the monitoring function of the Housing Corporation must now be in question?
    Mr. King: That point does not arise directly from this question. However, whether the issues affect Labour, Tory or other councillors, they must be properly investigated.

    Council House Sales
    Mr. Hillasked the Secretary of State for the Environment whether, following the success of such a scheme in Southampton, he will seek the assistance of building societies for funding council house sales to reduce local authorities' mortgage lending to house buyers and to release funds for new building projects.
    Sir George Young: I understand that the scheme under consideration would involve the re-financing of council mortgages by a leading building society, where the

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    mortgagor consents. This can offer benefits for all concerned. A number of building societies have arranged or expressed interest in such schemes, and I have urged local authorities to consider them.
    Mr. Hill: Does my hon. Friend agree that this is a gentler form of privatisation, which will result in a cheque in the council coffers of some £21 million? It also means a lower mortgage rate for the tenants and can do nothing but good. There will be a reduction in the number of staff needed to administer the council house scheme and there will be better administration of the houses by the building society concerned.
    Sir George Young: My hon. Friend has succinctly identified many benefits that would result from the proposal. I hope that the local authorities will read his remarks and take note of them.
    Mr. Allan Roberts: As the Minister has been discussing this issue with the building societies, can he let us know their attitude towards funding the purchase of part of a council house? How many building societies are interested in funding the purchase of council flats, a few of which are apparently being sold?
    Sir George Young: I am certainly aware of building societies financing properties under shared ownership schemes, and that has been a great success. I am sure that building societies will consider mortgages on council flats if such a proposition is put to them.

    Recreational and Sports Service
    Mr. Denis Howellasked the Secretary of State for the Environment why his Department has failed to provide adequate staff to complete and publish the findings of the Yates committee on the training of management for the recreational and sports service; and when he now expects to publish the report.
    Mr. Macfarlane: The secretariat of the Yates committee was reduced two years ago when it seemed likely that its work would soon be completed. This forecast proved optimistic, but I now expect to receive the report before Christmas.
    Mr. Howell: Given that a committee was set up seven years ago to consider the important subject of public management and that it completed its work five years ago, what justification can there be—other than inadequate provision in the Department—for the fact that we are still waiting for secretarial help to produce the first draft? Now that the matter has been drawn to the Minister's attention, will he deal with it speedily?
    Mr. Macfarlane: I shall try to assist the right hon. Gentleman. He set up the committee in late 1976 and it
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    had its first meeting in May 1977. I am informed that the final draft is with the chairman of the committee, awaiting approval. I hope that it will be cleared speedily so that the report can be presented.

    Construction Industry
    Mr. Andersonasked the Secretary of State for the Environment what is the current level of bankruptcies in the construction industry.
    Mr. Stanley: There were 1,124 bankruptcies in the construction industry in the first six months of this year including both individuals and partnerships going into receivership and companies going into liquidation.
    Mr. Anderson: Is there not a clear and tragic message for the Government in that answer in terms of the number of jobs lost? The industry has no confidence in the Government and cannot believe that the Prime Minister and the Secretary of State can think that local authorities can turn on their capital investment programmes like taps.
    Mr. Stanley: I agree with the hon. Gentleman in so far as I regret the level of bankruptcies in the construction industry and any other industry. However, to maintain perspective, the hon. Gentleman should take into account the fact that under the Government the level of bankruptcies in the construction industry has never approached the numbers achieved by the Labour Government in 1975 and 1976.
    Mr. Nicholas Winterton: Is my hon. Friend aware that the construction industry has considerable confidence in the Prime Minister? Will he give further and deeper consideration to the issue of construction bonds that will attract private resources into the construction industry? Will he also consider further projects that are advanced by private enterprise companies, such as Tarmac Ltd., for the funding of major roadways, which could be built initially with private resources to help public expenditure?
    Mr. Stanley: I assure my hon. Friend that we have considered those matters in detail and have produced some practical results. We have, for example, increased the proportion of construction activity that can be financed privately. We have achieved much wider building society lending on house purchases than previously and my right hon. Friend the Secretary of State has pioneered many other schemes in Merseyside and elsewhere using public expenditure to attract substantial private input. I endorse what my hon. Friend said about the construction industry's confidence. That is reflected by the net increase in construction companies in the past two years. Some 8,000 such companies have registered for VAT.

Britoil
3.30 pm
The Secretary of State for Energy (Mr. Nigel Lawson): With permission, Mr. Speaker, I should like to make a statement about the privatisation of Britoil.
The offer for sale of 51 per cent. of the shares in Britoil will be by tender, with special arrangements for small investors to apply for shares at the striking price without having to bid a specific price in advance.
The shares have today been underwritten at a minimum tender price of 215p per share. Payment for the shares will be in two instalments, a first instalment of £1 a share on application, with the balance due next April.
The prospectus and application form will be available in the Library from today and published in newspapers on Friday. Copies of the prospectus in book form will be widely available through main branches of the clearing banks, Trustee Savings Banks and main post offices from next Monday, 15 November. The application list for the shares now offered for sale will open at 10 am on Friday 19 November and may be closed at any time thereafter.
In order to encourage small investors to retain a long-term interest in the company, they will, subject to the conditions set out in the prospectus, receive one free share, known as the small shareholder bonus, for every 10 still held in three years time.
As I told the House a fortnight ago, the privatisation of Britoil will in no way effect the system of participation agreements, which will remain in place, under 100 per cent. Government control, as a means of safeguarding our national security of supply. But what it will do is enable the people of Britain to take a direct personal stake in the North Sea. It will create an independent British oil company free to seize the opportunities open to it; and it will substantially reduce the size of the public sector in an area where State ownership has no rational justification whatsoever.
Mr. Merlyn Rees: The right hon. Gentleman's statement represents the final stage in the splitting up of BNOC. It involves the biggest sell-out of our national interests because it involves the sale at half the value of the assets and the dismantling of the instrument through which the United Kingdom has been able to exercise control and influence over the development and use of North Sea oil, depletion policy and so on. It bears no comparison with British Petroleum. BNOC served a different and modern purpose compared with the shareholding in BP of 70 years ago. BP was never the chosen instrument of Government control.
I welcome the statement, following my representations yesterday, but we have been told very little. The Opposition have made it clear that we will one day take BNOC back into public ownership. Moreover, we will keep the House fully informed—unlike the Government.
I accept that we have not had a copy of the prospectus for legal reasons. Nevertheless, I was offered a copy by the media this morning. Hon. Members did not receive a copy. The prospectus is being discussed outside the House. So much for legality.
Is the decision to sell by tender the Secretary of State's own? We shall carefully examine the price. No doubt the Public Accounts Committee will do so too. I shall be surprised if the sale realises anything like the estimate of
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£1 billion quoted 18 months ago. Will the right hon. Gentleman confirm that the net proceeds of the 51 per cent. sale will be less than half of the £1 billion that they are worth?
On the information that has been given to us, we cannot make a value estimate even on the underwritten price because we do not know how many shares are on offer. What value does the minimum tender price put on the entire company? We should know that so that we can judge what value the Government have set on it.
What does "small shareholders" mean? How small must a shareholding be to be defined as small? What are they promised in three years' time when Britoil will come back on to the market for the reasons that everyone has been talking about?
Why has the Secretary of State ignored the PAC's advice about underwriting? It said:
"We are concerned that, in the course of this re-examination, the Treasury should look again at the practice of underwriting such sales…We therefore trust that the adoption for sale of publicly owned shares of this aspect of normal City practice will be very carefully re-examined."
There is no need for underwriting. It would not matter in the short run if all the shares were not sold. In any event, the issue could have been handled by the Bank of England. What costs are to be paid to the merchant banks and underwriters for the preparation and sale of this asset?
The Secretary of State has decided to go ahead with part-paid shares. That will be risky if the share value rises quickly in the first week. We shall wait and see.
The statement is incomplete. We must discuss the matter again, in Government time, having seen the prospectus. There is no point in hypothetical questions. Everyone else knows what is in the prospectus, but we do not. We shall discuss profits, overseas investments and window dressing soon. [Interruption.] The statement may have been short but it is right that our reply should be long.
Will the balance sheet of the company that has been agreed between the Secretary of State and BNOC and has been the subject of much speculation be published in the prospectus? It will be possible to demonstrate that what the right hon. Gentleman said about window dressing is correct only if the balance sheet is included. We have been far too dependent on information from outside.
The Government and the Secretary of State, fired by ideology, have let the nation down. Only the speculators will rejoice at this Government policy.
Mr. Lawson: I shall do my best to answer the many questions that the right hon. Member for Leeds, South (Mr. Rees) asked. I make no complaint about their number. I acknowledge that the matter is highly complex.
The right hon. Gentleman was right to point out that there have been several leaks today. I regret them deeply. I deplore the leaks that have occurred throughout. Nevertheless, the right hon. Gentleman has been only too happy to seize on those leaks on several occasions. I deplore all leaks. I certainly did not authorise any of them. Indeed, I have given strict instructions throughout that the House is to be informed first.
The right hon. Gentleman said that the sale was for half the value of the asset. That is nonsense. The right hon. Gentleman has no idea of the value of the asset. I challenge him to sustain that assertion. He said that we were losing control of depletion policy. That is untrue. Our powers over depletion policy remain intact and are not in any way affected by the privatisation.

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The right hon. Gentleman renewed the renationalisation threat. I am aware of the Labour Party's threat. It is referred to on page 4 of the prospectus. Potential shareholders will be free to make as much or as little of it as they wish.
The right hon. Gentleman asked whether the decision to go to tender was mine. Indeed, it was. I have long been a supporter of tenders. I was the Minister most closely responsible earlier in the Government's term of office for the innovation of selling gilt edged by tender. When the right hon. Gentleman examines the prospectus, he will see that we have sought to square the circle to achieve a method of sale by tender which does not deter the small shareholder. I believe that we have achieved that.
The right hon. Gentleman said that a year ago I estimated that the proceeds would be £1 billion. There is no truth in his suggestion. He can find no such assertion on the record. When asked a year ago, I said that the sum would be substantial but that it was impossible to say what it would be. The right hon. Gentleman said that the proceeds would be less than £½ billion. Again, he is wrong. [HON. MEMBERS: "What will they be?"] Given a chance, I shall explain. It is impossible to say what the proceeds will be because that depends on the striking price of the tender. The minimum proceeds, at the minimum tender price, will be £548 million gross for the equity, plus £88 million for a debenture, of which £55 million will be paid into the national oil account, giving total proceeds of over £600 million.
Mr. Edward Rowlands: That is bogus.
Mr. Lawson: It is not bogus; it is genuine. It is the hon. Member who is bogus through and through.
The right hon. Member for Leeds, South asked for a definition of a small shareholder. A small shareholder is defined in the prospectus as anybody who applies for not more than 2,000 shares.
The right hon. Gentleman asked about underwriting. Of course, following the PAC report, we reconsidered whether the issue should be underwritten. We are confirmed in our belief that it is right to underwrite the issue, for two reasons. The first is that it is essential to complete the privatisation. The second is that the knowledge that the issue is underwritten assists in obtaining a better price for the taxpayer, about whom the right hon. Gentleman purports to be concerned. The total commission for underwriters and sub-underwriters is 1·55 per cent. [HON. MEMBERS: "How much is that?"] The figure in the prospectus is £8½ million. It is a substantial issue and hon. Members should be able to work out their percentages without aid from me.
The right hon. Member for Leeds, South asked whether the balance sheet appears in the prospectus. Of course it does. I am astonished that he should suggest otherwise.
Several Hon. Members rose—
Mr. Speaker: Order. Many right hon. and hon. Members seek to take part in the main debate. I therefore propose, out of fairness to the House, to continue these questions only till 4 o'clock. I remind the House that we are asking questions, not debating the issue.
Mr. T. H. H. Skeet: I congratulate the Secretary of State on the transfer of Britoil to private enterprise. How is the mean price established? Is it
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established by the number of applications put in or by the number of shares applied for? When the company is established in full operation, will it be able to apply to purchase shares in the British Gas Corporation's offshore oilfields?
Mr. Lawson: The method of disposing of the British Gas Corporation's offshore oil interests has not yet been decided. The striking price for the tender will be determined in the normal way. The details are in the prospectus, but broadly it will be either the highest price at which applications totally cover the value of shares on offer, or such lower price as I may, in certain circumstances, decide. Anything that I say is qualified by what is in the prospectus.
Dr. J. Dickson Mabon: I deplore the substance of the matter and the way in which it has been handled. It borders on contempt of Parliament, in view of the Minister's earlier statements. To what extent are foreign companies, and through them foreign Governments, being freely invited to take part in the sale of these national assets? To what extent will the Minister try to ensure that the proportion of shares going to small investors is large rather than small?
Mr. Lawson: The prospectus is a large and bulky document, so the right hon. Gentleman will forgive me if I do not quote from it verbatim. The prospectus states clearly that it does not constitute an invitation to anyone outside the United Kingdom to apply for shares.
The right hon. Gentleman asked how we could ensure that small shareholders have a fair crack of the whip. Obviously that depends to some extent on the volume of applications from small shareholders, but the method of allocation is at my discretion. The Government's commitment to wider share ownership and the small shareholder is well known.
Mr. Geoffrey Lofthouse: Is it in the best interests of parliamentary democracy that some hon. Members who earlier this year voted for the Bill which paved the way for the bonanza may make a colossal profit or enjoy a rake-off at the taxpayers' expense?
Mr. Lawson: The taxpayer will receive a fair price for the asset. Of course, hon. Members will be able to apply for shares, just as any other member of the public will. Whether they will make a profit is not for me to say, because I do not possess a crystal ball.
Mr. Tim Eggar: I join my right hon. and hon. Friends in warmly welcoming the decision and, in particular, the bonus scheme, which has been cleverly devised to give incentives to small investors to buy and to retain the shares, which is extremely important. What measures are to be taken to restrict multiple applications?
Mr. Lawson: I am grateful to my hon. Friend for his welcome. The prospectus states clearly that all multiple applications may be declared invalid.
Mr. Douglas Jay: Mr. Speaker, would you buy a second-hand car from this Minister?
Mr. Gordon Wilson: Is the Minister satisfied with the way in which the Department has approached the sale in the past year? Does he agree that the public have been given the impression that he and his Department have displayed all the skill of players in a game of blind man's buff and that there has been a clear

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refusal to give the House any idea of what possible benefits the sale could bring and, in particular, what sum will go into the national Exchequer? In view of the vagueness about the proportion of the assets to go to small investors, what percentage would the Minister prefer it to be? If he cannot answer, we can only assume that this is a gift to the institutional investors and to no one else.
Mr. Lawson: As I have said, I am anxious to see a significant proportion of the issue go to the small investor. As the size of that proportion must depend upon the number of applications from small investors, I cannot say at this stage what it will be.
Mr. John Hannam: Will my right hon. Friend ignore the squeals of the Opposition, who will object just as strongly if the sale is successful as if it is not, and will he accept our congratulations on the method that he has devised to help small investors?
Mr. Lawson: I am grateful for my hon. Friend"s last remark. I entirely agree with his psychological analysis of the Opposition.
Mr. Dick Douglas: Does the Minister accept that to the extent that he has made a U-turn since 27 October, when he suggested that a tender issue was so difficult as to be virtually impossible, we welcome his conversion? As he is the sole shareholder in the firm, what value does he put on the nation's assets and what possible public benefit can be derived from flogging those assets in this way? What are his criteria with regard to the national interest? Does he accept that we see no case whatever for putting the nation's assets into the City at this time and that they should therefore be taken back forthwith?
Mr. Lawson: I said previously that there had never been a tender of this size, and that is true. I also said that a straightforward tender would deter the small shareholder, which I did not wish to do. That is why I and my professional advisers have spent months working out—I think that we have now reached the right conclusion—a variant of the tender that will not deter small investors. That is entirely new and very important.
As for the hon. Gentleman's comments about flogging national assets, I deeply resent the implication that only the public sector is British, and the whole of the private sector of industry will deplore it, too.
Mr. David Penhaligon: What special arrangements have been made for the employees, or are they to receive no consideration whatever as they are not mentioned once in the statement?
Mr. Lawson: The hon. Gentleman is right to stress the importance of the employees' share scheme. I said frequently in the debates on this that there would be an employee share scheme, and indeed there is. Employees will be entitled to up to £60 worth of shares entirely free and a further number free on a one-for-one basis—that is, for every share for which they apply they will receive a further share free. The offer contains a very generous employee shareholding scheme which I hope will commend itself to the hon. Gentleman and his party.
Mr. Peter Rost: I welcome my right hon. Friend's efforts to weed out the multiple
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applications so that the genuine small investor will have a better chance of an allocation, but will he give an assurance that if the issue is oversubscribed the allocations will be heavily weighted in favour of the small applicant, who will not be subjected to a ballot or a scaling down?
Mr. Lawson: If the issue is oversubscribed, preference will certainly be given to the small investor, as in all previous privatisation issues.
Mr. John Maxton: Will the Minister give a guarantee to the employees of Britoil in Glasgow that following this ludicrous sale the headquarters of the company will not be moved from Glasgow to the South-East of England?
Mr. Lawson: So far as I am aware, the company has no intention of moving its headquarters, but if the hon. Gentleman is concerned about the company's welfare it is strange that he should talk about it in those terms.
Mr. Richard Alexander: I accept my right hon. Friend's assurances about sales to multiple and foreign applicants, but what assurance can he give that there will not then be subsales by the smaller purchasers to multiple applicants and to foreign interests?
Mr. Lawson: In a free country and a free market, anyone is free to sell his share to anyone else. That is true in every company. My hon. Friend will be aware, however, as we debated this at some length in the House, that the articles of association provide for one special share to be held by the Government, which will ensure that control of the company or of its board cannot pass into unacceptable hands.
Mr. Tam Dalyell: What is the definition of "unacceptable hands"?
Mr. Lawson: That is a tempting question, but I think that the hon. Gentleman will have to leave that to the discretion of the Government. I am aware of the point that he makes. I should have thought that my reply was sufficient for his purposes if he understands anything about the subject.
Mr. Anthony Nelson: Although many of us wholeheartedly support and welcome my right hon. Friend's initial statement about the sale of the Government's interest in Britoil, is he aware that some of us believe that a far more desirable means of achieving widespread share ownership is not by having differential categories of share bonus schemes but by having an initial share offer as opposed to a tender, which would offer certainty and simplicity and thus attract far more widespread subscription?
Mr. Lawson: I am aware of my hon. Friend's views and I took them into account when deciding on the method of sale. He is, however, wrong to suggest that the only help given to small shareholders is the special category of bonuses. In fact, there are two other important elements.
First, the small shareholder does not have to bid a price. In a tender, it is often confusing for the small applicant to know what price he should bid. That is why a fixed price offer has often been considered preferable. In the Britoil flotation, however, in the space where he would otherwise have to state a price the small shareholder may simply write "striking price". He will then be deemed to have bid whatever the striking price turns out to be, so he need not worry about that.

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Secondly, payment will be in two instalments. The first will be a fixed sum of £1. The second, which will not be due until April, will be the difference between that and the striking price. This means that the payment on application will be a fixed price, and the small shareholder will know exactly what it is as in a fixed price offer.
Mr. Andrew Faulds: As the right hon. Gentleman talks about sales to the British people, would he care to forecast how many of my constituents in Smethwick are likely to take up shares?
Mr. Lawson: I regret that I am not sufficiently familiar with the hon. Gentleman's constituency to answer that.
Mr. Michael Morris: I congratulate my right hon. Friend and his team on actually making denationalisation work for once. May I reassure him that the British public behind him? As a member of the Public Accounts Committee, may I also welcome the method of sale? Finally, does my right hon. Friend agree that if anyone is responsible for trading down any price that we receive for Britoil it is the Labour Party, with its insistence on renationalisation of Britoil?
Mr. Lawson: I am grateful for my hon. Friend's remarks. He is right to say that during the past few months Labour Members have done their best to talk down the sale and to obtain the worst possible deal for the taxpayers. Despite their efforts, the Financial Times actuaries oil share index today stands 16 per cent. higher than when I made the original announcement in October 1981.
Mr. Bob Cryer: As the Minister is so concerned to spread ownership, will he make a special needs payment to the unemployed, the low paid and those who receive supplementary benefit to enable them to purchase shares? Will he recommend that the Health Service workers who take home £50 or £60 a week should have an extra wage settlement to enable them to buy shares? Is it not true that the vast majority of working men and women will not be able to buy shares? The sale is a bonanza for City slickers, with a £9 million commission immediately for the right hon. Gentleman's friends. Does the Secretary of State agree that there are no safeguards for the sale because foreign-owned United Kingdom based companies are not excluded?
Mr. Lawson: It is a great pity that the hon. Gentleman should have taken time that could have been given to those who wish to ask serious questions.
Mr. Kenneth Lewis: Is my right hon. Friend aware that there is everything to be said in Britain now for arranging that Government-controlled industries—this industry is still controlled by the Government—should have the widest possible shareholding among the people of Britain, including those who work in the industry?
Mr. Lawson: I agree entirely with my hon. Friend.
Mr. Cryer: On a point of order, Mr. Speaker. The Secretary of State is dealing with a serious matter. He does not have the right to shrug aside questions from hon. Members who have been duly elected, as he did with my question.
Mr. Speaker: That is not a point of order. It has long been the case that Ministers answer when they wish to answer. That has always been a Minister's right.
Mr. Dalyell: On a point of order, Mr. Speaker. During my many years in the House I have not seen a Minister with such deplorable parliamentary manners as the Secretary of State. When he is asked for a definition of a phrase that he used, it is not sufficient to say "If the hon. Gentleman understands"—
Mr. Speaker: Order. However strongly the hon. Gentleman may feel about the reply to his question, he knows that it does not raise a point of order for me.
Several Hon. Members rose—
Mr. Speaker: Order. I remind the House that yesterday evening there was some feeling among hon. Members who were not called. Many hon. Members will not be called in today's debate, especially if the points of order are not genuine points on which I can rule.
Mr. Dalyell: Further to that point of order, Mr. Speaker. Is it not parliamentary abuse to add gratuitously "if the hon. Gentleman knows anything about it"? I spent many hours with my colleagues in Committee and I have a constituency interest—
Mr. Speaker: Order. Honour is satisfied now.
Mr. John Morris: Further to that point of order, Mr. Speaker. Would you be good enough to allow the Secretary of State further time to answer my hon. Friend's question properly, decently and honourably?
Mr. David Winnick: On a point of order, Mr. Speaker. As many Conservative Members who asked questions clearly have an interest to declare, would it not have been appropriate and certainly honourable of them to declare that interest?
Mr. Speaker: Even though hon. Members may have an interest—I am unaware of any—at Question Time it is not obligatory for them to declare it.
Mr. Michael English: On a point of order, Mr. Speaker. In his answer to my hon. Friend the Member for Keighley (Mr. Cryer), the Minister implied that he should like another question of a serious nature. May I ask it?
Mr. Speaker: Yes, but not now.
Mr. D. N. Campbell-Savours: On a point of order, Mr. Speaker—
Mr. Speaker: Order. We shall move on now in the interests of the House. It is very unfair—
Mr. Campbell-Savours: This is another matter, Mr. Speaker—
Mr. Speaker: Order. I am standing, so the hon. Gentleman must sit down. It is unfair to hon. Members who are desperately anxious to take part in the debate. If the hon. Gentleman wishes to waste the House's time further, I shall hear his point of order and we shall see what sort of point it is.
Mr. Campbell-Savours: You said, Mr. Speaker, that you wished to protect the rights of Back-Bench Members in the subsequent debate. Do you intend to curtail the length of speeches in that debate?
Mr. Speaker: That is a matter for hon. Members, who I hope will exercise discipline. I shall ask them to do so.
Mr. Gary Waller rose—
Mr. Speaker: The hon. Gentleman's point of order is about something entirely different. We must finish this matter first.
Mr. Merlyn Rees: My hon. Friend the Member for West Lothian (Mr. Dalyell) has been treated discourteously. He served on the Committee. My hon. Friend has a reputation for being a nuisance, which may be a good thing in the House, but perhaps I could ask the same question. We discussed the word "unacceptable" in Committee and it has not been hidden. Is the Secretary of State's reticence about the word something to do with the EEC? The point of having the word discussed on the Floor of the House is to enable other hon. Members to have a chance to know what the problem is.
The Secretary of State gave only a partial answer to the second question. What are the total costs of presentation, not just underwriting? Is the figure £20 million, of which the Government will pay £14 million? The right hon. Gentleman referred to some parts of the prospectus and it may be valuable to clear up that matter. Although it is not an authorised leak, is it correct that the prospectus estimates a profit of £90 million for the first year, with a £45 million dividend?
Mr. Lawson: The right hon. Gentleman is approximately right, but he will find the precise figures in the prospectus that will be deposited in the Library within, I hope, half an hour. He will find in the full prospectus much that is of interest; it contains an invaluable amount of information. It is impossible to predict the full cost of the issue. Some costs will depend on the work to be done in processing the applications, which in turn depends upon the volume of applications. As soon as the figure is known, it will be made public in the usual way in the Department's estimates.
The right hon. Gentleman referred to the question raised by the hon. Member for West Lothian (Mr. Dalyell). We debated the matter at considerable length in Committee when both the right hon. Gentleman and the hon. Gentleman were present. We also debated it at some length in the House. The right hon. Gentleman and the hon. Gentleman can refresh their memories by reading the Official Report. It is for the Government to judge whether a potential change in control would be unacceptable. It is arrant nonsense for the right hon. Gentleman and hon. Gentleman to say that when they were in office they did not allow the Government any discretion. The right hon. Gentleman and the hon. Member for West Lothian—whose questions I always welcome—understand the position.
Mr. Waller rose—
Mr. Speaker: Order. Before I call the hon. Member for Brighouse and Spenborough (Mr. Waller), who has given me notice of a point of order although not its entire contents, I must apologise to the hon. Member for Workington (Mr. Campbell-Savours). He raised a valid point of order, and I am glad that he made it.

Parliamentary Proceedings (Broadcasts)
Mr. Gary Waller: On a point of order, Mr. Speaker. It relates to a point of order raised by the hon. Member for Jarrow (Mr. Dixon) late yesterday evening before the winding-up speeches during the debate on the Loyal Address. I do not criticise the hon. Gentleman's point of order. The hon. Gentleman had waited during the debate in the hope of catching the eye of the occupant of the Chair. I speak with some feeling because I also hoped to do so, but was unsuccessful.
Before the final speeches in the debate, the hon. Gentleman, on a point of order, drew attention to the fact that he had not been called and used somewhat extravagant language. Although the expletive has not been deleted from Hansard, it would be described as unparliamentary. You, however, Mr. Speaker, naturally showed considerable kindness to the hon. Gentleman because of his strong feelings and because a constituency interest was involved.
It is not what happened last night but what happened this morning that leads me to raise this point of order. As may be known, the BBC has altered the format of its programme "Yesterday in Parliament". Rather than being a programme which simply records what happens in the House of Commons, there is now a considerable element which reflects the view of the person presenting the programme. On the programme this morning, although most of the contributions during the debate were not included, the hon. Gentleman's point of order was, with the expletive which was not deleted from Hansard.
If the BBC, in exercising its responsibility to record what is said in Parliament, gives precedence, as it seems to do now, to sensational behaviour on the part of certain hon. Members, it will encourage other hon. Members to raise bogus points of order and to act similarly. It could be the thin end of the wedge. Although I realise that you, Mr. Speaker, are not responsible for what the BBC presents, I hope that some guidance will be given so that behaviour in Parliament does not deteriorate.
Mr. Michael English: Further to that point of order, Mr. Speaker. It is fair to say in support of the hon. Member for Brighouse and Spenborough (Mr. Waller) that the programme "Yesterday in Parliament" no longer exists. It is now subsumed in the programme "Today". The only programme of record that now provides for the BBC's charter requirements is "Today in Parliament" at 11.30 pm.
Mr. Don Dixon: Further to that point of order, Mr. Speaker. I did not raise my point of order last night in order to get publicity. I sat through the debate last night because my constituency will be devastated by the denationalisation of British Shipbuilders. I raised my point of order not for publicity but on behalf of people outside. When I referred to hon. Members waffling on, I was referring to hon. Members, most of whom spoke during the debates, who had never seen a pair of overalls, let alone worn a pair.
Mr. Speaker: Order. We have a Select Committee on Sound Broadcasting. The matters which the hon. Gentleman has raised should be examined by the appropriate Committee because of the feeling on both sides of the House.
Mr. Andrew Faulds: My hon. Friend the Member for Jarrow (Mr. Dixon) has made a totally valid defence of his position last night, but, as one who has consistently supported the BBC throughout my term in the House of Commons, I have to say that there has been a marked decline in the standard, responsibility and quality of both "Yesterday in Parliament" and "Today in Parliament" over the past 18 months or so.
Mr. Speaker: The House is still the master of its own affairs. It decides whether broadcasting should continue. The matter is in the hands of the House, and I hope that we shall all be reasonable about it and will count to ten. The Committee will examine the matter.

BALLOT FOR NOTICES OF MOTIONS FOR FRIDAY 26 NOVEMBER
Members successful in the ballot were:

Mr. Peter Temple-Morris

Mr. John Wells

Mr. Ivan Lawrence

BILLS PRESENTED
  CONWY TUNNEL (SUPPLEMENTARY POWERS)
  Mr. Secretary Edwards, supported by Mr. Secretary Howell, Mr. Nicholas Ridley and Mr. Michael Roberts, presented a Bill to authorise the Secretary of State to acquire certain land and construct and carry out certain works, and to confer on him certain other powers, for or in connection with the construction, maintenance and improvement of a tunnel which he is authorised under the Highways Act 1980 to construct across the Convey Estuary as part of a special road; and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 9.]
  CURRENCY
  Mr. Jock Bruce-Gardyne, supported by Mr. Secretary Jenkin, Mr. Secretary Lawson, Mr. Leon Brittan, Mr. Nicholas Ridley, Mr. Barney Hayhoe and Mr. John Wakeham, presented a Bill to amend the Coinage Act 1971 and the law relating to issuing and writing off bank notes: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 10.]
Orders of the Day

  Debate on the Address
  [Sixth Day]
  Order read for resuming adjourned debate on Question [3 November],
  That an humble Address be presented to Her Majesty, as follows:
  Most Gracious Sovereign,
  We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament—[Sir John Eden.]
  Question again proposed.

  Unemployment and the Economy
  Mr. Speaker: I have selected the amendment in the name of the Leader of the Opposition and also the amendment in the name of the right hon. Member for Glasgow, Hillhead (Mr. Jenkins). As the House knows, under Standing Order No. 33A, on the last day of the debate on the Address, I am empowered to select two amendments for Division purposes, and I do.
  4.15 pm
  Mr. Peter Shore: I beg to move, at the end of the Question, to add—
  But humbly regret the continued failure of Your Government's economic policies; its stubborn refusal to learn from its own grievous mistakes; and the absence from the Gracious Speech of effective measures to reduce Britain's mass unemployment, to restore the competitiveness of our industries and to secure the living standards of the British people.
  This was a remarkable Queen's Speech. Faced with the greatest economic crisis for 50 years, with a disastrous total of 3⅓ million registered unemployed, with a spreading industrial wasteland of silent factories and workshops, with record bankruptcies and liquidations, the Queen's Speech contained no proposals even remotely relevant to the clamant needs of the country, its industry and people. Instead we have statements, such as the one we have just heard, of Government proposals to sell off great national assets at knockdown prices—an act of wanton self-injury, of benefit only to those seeking capital gain.
  Those are short-term benefits, because we shall take back Britoil shares and we shall pay not a penny more than the Government receive. Let that message be registered by all those hoping to make a killing on Friday.
  Two days ago we heard the Chancellor's economic statement. I shall deal with the economic implications of that statement shortly. First, I want to register again the contempt and anger that we feel at the Chancellor's proposed treatment of pensioners, other social security recipients and, above all, the unemployed. Here is a Chancellor with at least £1 billion in hand for the 1983 budget—I suspect a good deal more—solemnly asserting that he intends to claw back—to adjust—the pensions uprating next year, because in his view and that of the Prime Minister the pensioners will be receiving an undeserved bonus of 95p a week in the 12 months ahead.
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  The Prime Minister and the Chancellor simply do not understand how people in the real and harsh world of social security and national insurance benefits have to struggle. Nor do they understand that a steady and differential improvement in their living standards is a major objective that every Government until their own have sought to pursue.
  Worse still is the Government's treatment of the unemployed—the extra 2 million who, as a result of the Government's policy, are now on the dole. Two years ago, the Chancellor cut their uprating by five points on the ground that they were outside the tax net, but on the clear understanding that it would be restored when they were brought within it. They are now within it, but no restoration has been made. If the Government have a scrap of concern for the victims of their economic policies they should announce forthwith that the lost benefit will be restored.
  The more one studies the content of the mid-year economic forecast that the Chancellor is obliged, under the Industry Act 1975, to present to the House, the more bleak and disastrous the outlook appears to be. This year will see a growth of our GDP of one half of 1 per cent.—almost too small to register—over 1981. The forecast made at this time last year, and again in the Red Book that accompanied the March Budget, spoke not of half of 1 per cent. but of a 1½ per cent. increase in GDP, in 1982 over 1981, rising to 2 per cent. in the first half of 1983.
  The original forecast of the rate of growth, modest enough in all conscience, provided the persistent theme of countless ministerial speeches. We all recall the Prime Minister's confident assertion in the debate on the Loyal Address a year ago that:
  "the Government have created the conditions in which out of the recession can come renewed confidence. It is in the coming year that our confidence will be rewarded."—[Official Report, 4 November 1981; Vol. 12, c. 29.]
  We also recall the Chancellor's summary description of his 1982 March Budget—a Budget for industry, jobs and people. Who can fail to forget the scream of babbling optimism that issued from the Chief Secretary in speech after speech throughout the winter and spring of this year, culminating in his famous assertion that he could see signs of recovery everywhere? The then CBI president, Sir Ray Pennock, in his customary role of Little Sir Echo to the Chancellor, also welcomed the March Budget in extravagant terms.
  The Opposition disagreed with the budget, for the simple reason that there was no evidence that any of the main components of demand would increase in the year ahead. Our view was shared, not by Sir Ray Pennock and his colleagues in Centre Point, but by the 1,700 CBI member firms in every region and industry in Britain that responded to the CBI questionnaire about economic prospects and economic activity. At the end of July, the CBI—as it was bound to do—published the result of its membership questionnaire and the judgment of its technical and expert sub-committee, as distinct from that of its obviously political leadership. The evidence was plain—there was no way in which the Chancellor's anticipated growth could be achieved this year.
  Following the proposals that I put forward before the Budget, I wrote to the Chancellor in early August—before his annual escape to the sun—urging him to set in hand measures for corrective action this autumn. I outlined a five-point package, including a deep cut in interest rates

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  designed to achieve a realistic exchange rate for the pound, the abolition of the national insurance surcharge, increased expenditure on construction and building, increased social benefits—with the unemployed at the top of the list—and a substantial easement of the restrictions on local government expenditure to help reduce the rates that fall so heavily on householders and industry alike, including a stop on the rating of empty business and industrial premises.
  The response from the Treasury was predictable and negative. A junior Minister was given the task of chastising the CBI for daring to publish an objective report on the state of industry and even for having had the impertinence to talk to me. In a letter dated 12 August from the Chief Secretary, we were told:
  "if there were any quick or easy solutions that would bring sustainable results we would obviously have adopted them"
  So nothing was done, and precious months were wasted.
  At the end of October, the CBI published yet another economic review, which strongly reinforced the findings of July review. The House now also has the Government's mid-year forecast. It is a bulky document, which in no way contradicts the two recent CBI surveys, but rather confirms and reinforces them. Worse still for the future of Britain, the Treasury forecast reveals an astonishing deterioration in our balance of payments account. As the forecast put it:
  "So far this year, exports in total have been running about 4 per cent. below the level forecast at budget time…Import volumes this year have continued at close to the high levels reached in the second half of 1981."
  It is the decline—and, at best, sluggishness—of exports, coupled with the remorseless rise of imports—by 4½ per cent. in 1982 above 1981, and by a further 5 per cent. next year—that will lead to the annihilation of our balance of payments surplus by the end of next year.
  I ask the House to reflect upon that development. This year, for the first time since records were kept, Britain has ceased to be a net exporter of manufactured goods. We must search the annals of Tudor history before we can find a year in which that has previously happened in Britain. Even in the middle of a deep recession, with net oil exports running at £3½ billion this year, we can look only for a bare balance in our current account at the end of next year. On existing policies, any serious increase in activity in Britain will inevitably lead to a balance of payments deficit.
  Faced with further deterioration this year, and with the truly daunting prospect ahead, what have the Government decided to do? Too late for an autumn Budget, they opted for a once-and-for-all three month reduction in the national insurance surcharge for the last quarter of the 1982–83 fiscal year. That is worth about £350 million. The Secretary of State for the Environment also made an amazing call to local government. After three years of urging them to cut, cut and cut again, under the threat of dire financial penalties, he urged them to spend, spend, spend during the remaining five months of the financial year. The Chancellor's response to the now confessed failure of his March Budget judgment is not only ineffective—it is pathetic.
  Next year there will be a much-trumpeted 1 per cent. reduction in the national insurance surcharge—a benefit to private industry of £700 million. At any rate, that is what the press, the public and most hon. Members assumed when they listened to the Chancellor's statement on Monday. He referred to a table in the Vote Office—which no one had then seen—which purported to show not only
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  by how much the national insurance surcharge was to be cut, but by how much it would be offset by increases in employers' contributions to the national insurance scheme. The table would have led any reasonably diligent reader to conclude that, after all offsetting factors had been taken into account, employers would gain by £686 million. However, under questioning in the House on Monday, the Chancellor said that the gain was not £700 million or £686 million, but £450 million after offsetting the additional ¼ per cent. employers' contribution and the increase in the earnings limit, also announced on Monday.
  Now £450 million is not exactly £700 million—but that is not the end of the story. What the Chancellor omitted to tell the House, and what a sharp-eyed reader could deduce from the table in the Vote Office, was that there were other offsets to the £700 million reduction to be taken into account in the next fiscal year. Another £217 million was due to be paid by employers who opted out of the national insurance graduated pension scheme. It is reasonable to estimate that half of that will be paid by private sector employers—£109 million. If we take £109 million away from £450 million, the boost to private industry falls to about £340 million. That is no doubt useful, but set against the total private sector employers' national insurance and national insurance surcharge contributions of some £8,000 million a year, it is a reduction of well under 4 per cent.
  I have not mentioned—because I am not sure that it is fair—that with increased earnings yet another £130 million in employers' national insurance contributions will have to be paid. If that is deducted from the national insurance surcharge concession, employers are left with a net sum of £210 million for the coming year. That is some boost to industry—is it not?
  The Chancellor could say that all of us, including Sir Terence Beckett—who had a positive frisson of delight last Monday afternoon—should have known that all those offsets to the £700 million national insurance surcharge reduction were in the pipeline and due to emerge at precisely the same moment as the cut. But the Chancellor of the Exchequer did not go out of his way to alert or remind us of that, so I say to the right hon. and learned Gentleman yet again—because there was a similar oversight in the presentation of last year's Budget and similar confusion over national insurance figures in November 1980—that he should be much more careful about what he puts to the House of Commons. A cheerful headline in the press the following morning—I do not blame the press for that—is not worth it if 48 hours later a substantial downward revision must be made.
  It is against the background of that paltry measure that one looks in vain to the Queen's Speech for any other sign of an effective policy to match the truly desperate needs of the British economy. There is the ritualistic reference to
  "the anxieties and distress caused by unemployment."
  Anyone who believes that the Government feel anxiety and distress at unemployment should have listened to the speech made last night by the Secretary of State for Employment—or rather unemployment—when he replied to the debate. It was one of the most brutal, vulgar, abusive, unworthy and irresponsible speeches that I have ever had the misfortune to hear. It was not improved by the happy and smiling patronage that the Prime Minister bestowed upon it from its nasty beginning to its still nastier end.

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  The Queen's Speech tells us that the Government's
  "economic and other policies will be determined by the need to secure a sustainable growth in output, and thus a lasting reduction in the numbers out of work".
  We can only rub our eyes at such an assertion. The forecast admits that unemployment will rise yet again—by another 300,000—during the coming year. Already in the three years from June 1979 to June 1982 2,850,000 jobs have been wiped out. Britain has now the lowest number of people at work since 1950.
  What are the Government's proposals? None whatever, except to sell Britoil and other nationalised industries such as British Shipbuilders, British Airways and British Telecommunications. What possible benefit can there be, except to those who hope to make a profit from the sales, and to the Treasury, which, because it is trapped into a definition of the borrowing requirement that includes, unlike those of all other industrial countries, the borrowings of public industry, hopes to reduce the PSBR by raising money on the capital market If that happens, it will no doubt crowd out the existing private sector as much, or rather as little, as public sector borrowing does today. However, I can leave the privatisation decisions until another time.
  The truth is that on present policies, reinforced by the attacks on the publicly-owned industries, there will not be
  "a sustainable growth in output",
  as the Queen's Speech proclaimed, and there will be no reduction, let alone a lasting reduction, in the numbers out of work. The rate of inflation has fallen a good deal faster than the Government anticipated. Why? Not just because the Government have been willing to sacrifice employment and output in the United Kingdom but because, as the world recession has deepened, inflation has fallen almost everywhere. The Government's forecast states:
  "Inflation in most industrial countries has fallen from 12 per cent. in 1980 to about 7 per cent in 1982. Interest rates have fallen very broadly in line with inflation but remain positive in most countries."
  If economic policy was simply about inflation, the Chancellor of the Exchequer would have earned some modest applause, but economic policy is not simply about inflation. It is about employment and industrial output. What must be clear by now, not only to the House and industry, but to the country, is the appalling exorbitant and shocking price that we have already paid in unemployment and lost output.
  Now we come to the real test. Inflation here, as elsewhere in the world, has fallen well into single figures. According to the Government's oft-stated philosophy, when inflation comes down, employment and real jobs begin to grow. Yet the Chancellor of the Exchequer confesses that he is now anticipating next year not a check on unemployment, let alone a fall, but growth of a further 300,000. The idea that a low rate of inflation will lead to spontaneous growth is a myth. In the lifetime of many hon. Members there have been protracted periods, in the 1920s and 1930s, when prices, far from rising, fell year on year, yet those years were disfigured by consistently high unemployment, culminating in the great slump and disaster of the early 1930s.
  The Government no longer believe in their own doctrine. We all know about the leaked Think Tank report that was put before the September Cabinet, containing
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  odious proposals for dismantling a large part of the Welfare State. Those proposals were in no way abandoned by the Government but have been shelved until the general election is out of the way.
  The most important thing about the Think Tank report is the Government's estimate, which underlies it, of growth between now and 1990 of just on 1 per cent. per annum in GDP. That is the prospect ahead as the Government see it. That is the prospect on their own assumptions of success in dealing with the problem of inflation.
  The problem that besets us in the 1980s, not only in Britain—although here the problem is in a still more aggravated form—but in the world, is an obvious and massive lack of effective demand. The capacity to produce goods is there. Human wants in the West and human needs in the vast impoverished areas of the world are as strong today as they ever were. However, purchasing power is lacking and order books are thin. In many firms and industries they are empty.
  The Government's answer to that is first to assert that as there is a world recession Britain is no worse off than anyone else and that in any event there is nothing that we can do about it. The Government's second answer, which contradicts the first, is that there is plenty of demand in the United Kingdom but it is just the uncompetitive state of British industry that makes it unable to take advantage of it. I shall address myself to both those points as they lie at the heart of our national economic debate.
  Last week, in introducing the Queen's Speech, the Prime Minister plundered international statistics in her attempt to show that unemployment had risen further in the countries that are our competitors than in Britain. However, one-year figures are misleading when we can and should consider Britain's performance since the right hon. Lady formed her Government three and a half years ago. Last night my right hon. Friend the Member for Chesterfield (Mr. Varley) dealt effectively with that when he showed that in the three-year period from midsummer 1979 to the summer of 1982, the increase in unemployment in the United Kingdom far outstripped that recorded in the other six countries that make up the big seven industrial countries in the world.
  The fact is that Britain now stands at the top of the unemployment league. There is no mystery about why that has happened. Britain has deflated harder than any other western economy. Taxes, the reduction of which was a principal objective and pledge of the Government, have not been cut, but raised from 35 per cent. to 39 per cent. of our GDP. The Government now need to hand back to the British taxpayer no less than £9 billion simply to restore the 1979 level of taxation. Further, interest rates have until recently been kept persistently higher in Britain than elsewhere. Public expenditure has been cut in spite of the massive increase in financing compulsory idleness through social security payments. The Government's borrowing requriement, on a comparable basis to that of other OECD countries, is now the lowest in the Western world.
  What makes our record so disgraceful and unacceptable is the fact that the principal reason why other OECD countries, particularly the other six of the big seven, have deflated in the past three years is the major and adverse effect upon their economies of the redoubling of oil prices in 1979. The extra burdens placed upon most countries have been staggering. Canada has had a minus figure of

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  $2 billion—the lowest figure—in terms of her oil balance. Japan has had a minus of $33 billion and the United States has had a minus of $35 billion because of the extra price of imported oil. In France it was a minus of $13 billion, in Germany $14 billion and in Italy $14 billion. Britain was not minus anything. Britain was plus $9 billion in net oil trade as a result of developing North Sea oil and the movement of oil prices.
  How has this great bonus for Britain been reflected, under the right hon. Lady's mismanagement, in terms of the GDP and industrial output? She and the Chancellor should know as well as I do. Every one of our major competitors, the other members of the seven, shows a positive growth in GDP. Only Britain's figure has decreased, and by no less than 4 per cent. during the period of the right hon. Lady's rule.
  The world recession makes economic progress more difficult for us. However, so did the earlier world recession following the first oil shock in 1974, when the Labour Government had not a drop of oil to help them see it through. The right hon. Lady ignored that crisis then. Now, it is her principal excuse. What she and the Chancellor have to explain is how it is that, in spite of this enormous North Sea advantage, Britain has suffered much more severely than any other country, including those that have had the burden of vastly increased import bills.
  Demand and competitiveness are linked. We need to increase demand in Britain. There are vast programmes of building and construction to be undertaken, and hundreds of thousands of people will find work when we do so. Why, if the Prime Minister and the Chancellor deny the job-creating capacity of public investment, did the Prime Minister write to the local authority associations last week asking them to spend more? Why did she scold the nationalised industries for not doing the same?
  Lack of competitiveness is a major obstacle to a more general increase in demand in the economy. In spite of the repeated efforts that I made on Monday to obtain confirmation from the Chancellor, I had no straight answers about the extent to which Britain had lost its competitiveness against other countries since the general election of May 1979. The Chancellor cannot contradict me when I say that competitiveness has fallen over this period by at least 36 per cent. Will he deny that he and I have not known in our political lifetimes of any such appalling collapse in British competitiveness? What is his answer? What does he propose to do about this?
  We have already examined the contribution to competitiveness that will be made by changes in the national insurance contribution. It is negligible. The right hon. and learned Gentleman may also point to the fall in interest rates and important increases in productivity. However, the fall in interest rates has taken place in the United States, Germany and other countries as well, and productivity is increasing sharply in other countries too, as the Prime Minister conceded when opening the debate last Wednesday. If we have gained any advantage from these developments, they are certainly not large.
  What about the future? In the Government's forecast, consumer prices in the big six are expected to rise by about 6 per cent. in 1983. In Britain, between November 1982 and November 1983, prices are expected to rise by 5 per cent. There will be, if the Government's estimates prove to be correct, a 1 per cent. gain this coming year. What does it all add up to? By the end of 1983, as we near the
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  end of a full five-year Parliament, Britain will be not 36 per cent. less competitive than it was in May 1979, but 35 per cent. less competitive.
  Mr. Raymond Whitney: The right hon. Gentleman speaks of the rise in prices, but when he presented his own package of measures to the House last year, the right hon. Member for Down, South (Mr. Powell) costed those measures at about £15,500 million to £20,000 million. The right hon. Member for Stepney and Poplar (Mr. Shore) was in the Chamber at the time, but took no opportunity to correct that figure. Will he now do so, and say, if that were the figure, what would be the effect on the rise in prices if the package were put into effect?
  Mr. Shore: Far from not giving the information, I went so far as to publish a document and circulated it to the press, and it was analysed by anyone who was interested. It gave precise figures for increases in public expenditure and the PSBR. If the hon. Gentleman took these matters seriously he would know that already.
  Mr. Tim Eggar rose—
  Mr. Shore: What the Government have done with national insurance cuts or through what is expected in productivity and lower interest rates, is no cure for the great problem of our loss of competitiveness.
  That brings me to what is at the core of the Government's policy, and to what the Chancellor keeps hinting at, but is afraid to state. As long as he maintains his present policies and insists upon no movement in the exchange rate, the only way to restore the lost competitiveness of three and a half years ago is not by achieving the wage moderation that he beseeches us to support, and the unions to accept. It is cutting wages and salaries, not by a margin but by the full amount, that is necessary—the full 35 per cent. that would restore the competitiveness that we have lost in the past three and a half years.
  It is time that the right hon. and learned Gentleman spelt out what he is about. He is not asking for a wage round of minus 35 per cent. However, he must have a target in mind, a minus sum, which, if pursued over another full Parliament, must be about minus 6 or 7 per cent. in wage and salary changes in each year. The right hon. and learned Gentleman knows that he will not be able to achieve this, or even anything approximating to it. However, he is prepared year after year, as we have seen already, to seek to obtain pay increases below whatever rate of inflation is current. To bring that about, he is prepared to use the weapon of unemployment as a means of beating down wage increases to the minus league. This is a recipe not only for increased unemployment but for ever-increasing industrial strife, and an ever-declining standard of living for the British people.
  The Chancellor says that there is no alternative, but there is, and a substantial part of it is to be found in achieving a realistic exchange rate for the pound. That has been the course suggested to him over the past three years by the CBI, the Labour Party and most responsible economists and commentators in this country. Now, those voices have been joined by one who has, I am told, some access to the Treasury. Mr. Sam Brittan writes in the Financial Times. On 28 October he said:

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  "To rely purely on pay restraint to restore competitiveness would require several wage rounds averaging zero or less. Would it not be more realistic to provide a little help on the exchange rate front too?"
  Mr. Frank Hooley: Without in any way disagreeing with my right hon. Friend's point about the exchange rate, is not the crucial factor in competitiveness in a modern industrial economy a sustained high level of investment in industrial plant and machinery and new processes? However, the record of this Government—far from being one of a sustained high level—is one of a catastrophic fall for 30 successive months, since they took office.
  Mr. Shore: I agree with my hon. Friend. I am not saying that a realistic exchange rate is the only answer. It is not. A whole series of reinforcing measures have to be taken as well.
  Mr. Sam Brittan has given the same message as that of Dr. Otto Emminger, the former president of the Deutsche Bank, in his recent evidence to the Select Committee on Treasury Affairs. My hon. Friend the Member for Motherwell and Wishaw (Dr. Bray) quoted it last night.
  Dr. Emminger said:
  "the pound sterling rose against a group of important currencies on a trade weighted basis between 1978 and the first quarter of 1981 by 25 per cent. in nominal and by 37 per cent. in real terms."
  He further stated:
  "at its peak in February 1981 the real sterling exchange rate was not only about 50 per cent. above its depreciated value of 1976 but about 30 per cent. higher than in 1972. This is by far the most excessive over valuation which any major currency has experienced in recent monetary history."
  I do not claim that a realistic exchange rate would be the solution to all our problems—far from it. Quality, innovation, design, delivery dates, hard work, motivation and investment and, yes, moderation in wage matters are of major importance also. It is not only the responsibility of the work force that matters. The Government must play their part by intelligent planning, leadership and management.
  As the Queen's Speech demonstrates, and ministerial speeches have confirmed, the Government have nothing to offer the people but endless deflation, increasing despair, deepening class antagonisms and the breakdown of that sense of community that a great and successful nation must have.
  All we have is the stubborn pursuit of folly and failure. A week ago the Prime Minister told us that one of her favourite poems was the Nun's Prayer. There is one sentence in it that she should read and read again:
  "Teach me the glorious lesson that occasionally it is possible that I may be mistaken."
  We are not just asking for new measures or even a change of policy. The country needs a new perspective, a new set of values, a new philosophy and, above all, new leadership. It is for that reason that we shall be voting for our amendment tonight.
  4.52 pm
  The Chancellor of the Exchequer (Sir Geoffrey Howe): Opposition Members are bound to take a fascinated delight in my sartorial equipment. If I were to allow myself to be seen fully, they would observe that I have been able to make a satisfactory adjustment to a recent unfortunate shortfall below the line.
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  The right hon. Member for Stepney and Poplar (Mr. Shore) comes to these debates confidently asserting a simple rostrum. I ask him to pay attention to the three key features that dominate the economic scene and emerge clearly from the autumn statement. The first is the extent to which and the pace at which inflation—the formidable enemy of economic stability—has been reduced during the past two years. At its peak it was 22 per cent. It was 12 per cent. a year ago and is 7 per cent. now, with the prospect of 5 per cent. next spring. It is a formidable achievement, but it is one with which the Government or country cannot be content. The House may not have realised fully its importance and value. It is a foundation for confidence and investment and, in the longer run, a foundation for growth in employment.
  Secondly, and equally formidably, there has been a reduction in the rate of interest. Short-term rates have fallen by seven full points during the past 12 months. That is significantly faster than elsewhere. Each point reduction is worth between £250 million and £300 million in a full year to British industry.
  The third feature is the reason for the success in achieving those reductions in inflation and interest rates. It is the sustained success in controlling Government borrowing and spending. The public sector borrowing requirement has fallen from a peak in 1975–76 of almost 10 per cent. to 5 per cent. in 1979–80, and to our current forecast of 3¼ per cent.—£9 billion—in the current year, which is a little below the objective that I set at the time of the Budget. The right hon. Member for Stepney and Poplar appeared to regard that as a subject for complaint. It is not only my judgment but that of many others that it is a firm foundation for our success against inflation, and the dramatic fall in interest rates. Without those two factors it is not possible to lay a secure foundation for sustainable growth and a sustainable rise in employment.
  The right hon. Member for Stepney and Poplar sought to brush aside the prospect for the year ahead. In the current year—in a world whose difficulties he did something to acknowledge—there has been some small growth in the United Kingdom economy. It is much less than we should wish. I shall return to that later. In the year ahead there is the prospect of growth of 1½ per cent.
  During the current year real domestic demand has been growing at 3 per cent. It is likely to continue to do so in 1983. However, as The Guardian pointed out yesterday, not enough of that real growth in demand is being met by British goods. Total investment will grow at 3 per cent. in the current year and 5 per cent. next year. Our plans allow for a growth in investment in housing, local authority capital investment and on the nationalised industries. Everyone in the House is deeply worried about the prospect for employment and certainly no one is more concerned than I am. It cannot be stated too often, but that is anything but a uniquely British phenomenon. To hear the right hon. Member for Stepney and Poplar speak one would think that he disregarded many of the essential components in the equation.
  First—the right hon. Member for Stepney and Poplar acknowledges this—even in other economies more competitive than ours unemployment has been rising. In West Germany—the case cited by the right hon. Member for Chesterfield (Mr. Varley) last night—over the past three years unemployment has risen by 100 per cent., which is close to the rise in this country. The rate of increase in the West German economy—starting from a

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  much lower level than ours—has been 100 per cent. The right hon. Member for Stepney and Poplar said that that placed us at the top of the unemployment league, but there are other countries that are close and others that have a higher rate than ours.
  Having taken account of our great good fortune in having North Sea oil, one can never overlook the extent to which we were so far behind all other economies in our industrial performance. The National Institute Economic Review in August this year pointed out that in 1980 manufacturing output per head in Germany and Japan was twice as high as it was in Britain. In the United States, it was 2½ times as high. Between 1973 and 1980 output per head in British manufacturing rose 6 per cent., in Canada and the United States 20 per cent., in France 30 per cent. and in Japan 40 per cent. The National Institute believed that a further 50 per cent. improvement is required to bring British up to European levels of productivity.
  Mr. Robin F. Cook: The Chancellor referred to The Guardian editorial. Two of the figures given in that editorial related to the increase in average unemployment for the OECD countries during the past three years, which was 59 per cent. The increase in Great Britain for the same period—the three years during which he has been in office—was 124 per cent. Does that not demonstrate that the increase in unemployment while he has been in charge of economic policy has been just over double the average of our competitors?
  Sir Geoffrey Howe: I have just been dealing with those figures and addressing myself to that argument. The German figure during the same period rose by 100 per cent.
  Mr. Cook: Less than ours.
  Sir Geoffrey Howe: Yes, less than ours, but at four fifths of our rate over the three-year period. It has been a formidable and substantial increase.
  When the right hon. Member for Stepney and Poplar ignores the enormous difference in our underlying competitiveness, productivity and performance, he is ignoring the underlying causes of our long-run economic decline. He understandably expresses disappointment about the prospects for our own growth, but the outlook for growth among our European partners next year is no better. The European Commission forecasts growth in the Community Ten next year of 1·1 per cent. and suggests that growth in Germany, France and Italy will be 1 per cent. The Germans themselves forecast no growth for next year.
  Those conditions, overriding all our national difficulties and applying to the world as a whole, represent, as my hon. Friend the Member for Chippenham (Mr. Needham) said earlier this week, the consequences of
  "the enormous burden of debt overhanging the developing countries, the appalling deficit in the United States, and the general state of the economies of the world" .—[Official Report, 8 November 1982; Vol. 31, c. 355.]
  What needs to be done? We agree with the right hon. Member for Stepney and Poplar that we must improve our economic performance. That can be summed up in the word "competitiveness". We must also seek to play as full a part as we can in restoring the balance and dynamic of the world economy.
  In the domestic economy it is essential to continue with a responsible monetary and fiscal strategy if we are to
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  continue to succeed against inflation. That is not inconsistent with the prospect of real tax reductions—on the contrary.
  The Government's monetary strategy is one of steady, but not excessive, downward pressure on the monetary variables over a period of years, making due allowance for what happens outside this country. Our policy has been neither set nor implemented rigidly. Its counter-inflationary purpose and direction are not in doubt, nor is the consistency of its various components. Some criticisms of our position have been based on a selective approach to the evidence. For example, one view that the policy is too restrictive rests on the assumption that the policy is solely directed to objectives that we have never set.
  It is true, for example, that money GDP is expected to grow more slowly than was assumed in the spring, but we have no targets for money GDP. It is merely one indicator, to be looked at alongside others. Those other indicators, particularly the performance of the monetary aggregates, do not support the view that conditions are unexpectedly or excessively tight.
  It is also true that our performance in controlling expenditure and bringing down the borrowing requirement has been particularly good, but the outside world sees that as a sign not of excessive tightness but of prudent financial management. It does not criticise us; it tries to copy us.
  Our success in keeping a firm rein on public borrowing has been one of the key reasons for our success in seeing interest rates come down safely and substantially. The two have to be put into the balance together in making judgments about the stance of policy.
  It is in that sense that I shall approach my judgment about the PSBR for 1983–84. While the revenue and expenditure forecasts in the autumn statement are the best central estimates that can be made at this stage, the 1983–84 PSBR figure is presented only as a conventional assumption. It does not imply that a decision has already been made. It has not been, because at this stage it cannot be.
  In judging the balance of policy, we need to consider recent performance, here and abroad. External demand is weaker than anyone expected, mainly because of problems elsewhere in the world, but also because our supply performance has been disappointing. However, the United Kingdom has not contributed to the slowdown in world trade this year. On the contrary, our domestic demand has strengthened and has been growing well in line with previous expectations. I do not need to tell the House, because the point was made by the right hon. Member for Stepney and Poplar, that imports into this country are running at a high level. It would not be sensible for us to try fully to replace missing external demand by still more domestic demand. That would be trying to pull the world out of recession. The right hon. Member for Stepney and Poplar seemed to be coming near to advocating that at one point. The Labour Party has tried that before and will remember how it came to grief.
  There is increasingly wide agreement that a simple reflation of demand is no answer to poor supply side performance. Expanding demand is not the same as expanding supply. Reflation on its own leads to inflation. I was interested to see the recent article in which the hon. Member 'for Oldham, West (Mr. Meacher) set out his understanding of that part of the problem. However, neither the hon. Gentleman nor the Labour Party has begun to produce a credible solution.

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  Anyone who thinks, as so many Labour Members appear to think, that poor supply performance can be remedied by raft after raft of new controls and planning agreements has learnt nothing from the experience of the past 25 years.
  Mr. David Winnick: When the Government came to power unemployment in the West Midlands, the heartland of our manufacturing industry, was 5·1 per cent. It is now 16·5 per cent. In the same period there has been an increase in the number of those who have been unemployed for more than a year of well over 300 per cent. Surely those figures illustrate the devastation that has occurred in what was once our most prosperous region. Does the Chancellor agree that if he continues with his policies there will be even worse devastation in the West Midlands?
  Sir Geoffrey Howe: I well understand the anxiety felt in the West Midlands. It is not long since I was there to witness it for myself. It is shared by each region of the country that has seen a rise in unemployment and particularly by those that have been dependent on long-prosperous industries such as the motor industry, which has been severely affected in many parts of the world, though particularly in the West Midlands. However, that does nothing to gainsay the general point that I am making.
  I stand by the stance of policy that I outlined in the Budget Statement. Indeed, in today's dangerous world I make no apologies, and feel no need to do so, for continuing with the policies that have brought us dramatically lower interest rates. I also make no apologies for supplementing that help with business costs by doing something to structure my fiscal proposals in the same direction.
  It is important for us to continue to maintain firm control of public spending. It cannot be said too often that the public sector is not the source of growth and jobs. If it were, there would be no problem.
  For the first time since 1977 a Government have been able to stick to their plans for the year ahead, without the help of the IMF. We have been able
  "to reduce the share of resources taken by public expenditure."—
  one of the objectives set out in the Labour Government's letter of intent to the IMF in 1976. They did it because they had to do it; we are doing it because we know that it is right.
  The autumn statement spells out changes in the composition of spending plans for next year. I shall not repeat them, but I will deal with the social security provision, to which the right hon. Member for Stepney and Poplar referred. We need no lecturing from the right hon. Gentleman or anyone else about the needs of the less fortunate. We are standing by our pledge to maintain the real value of pensions and associated benefits. I understand why Labour Members wish to conceal that behind a welter of false accusations, using the misleading and emotive expression "clawback".
  The simple fact is that pensions will go up later this month by 11 per cent.—much more than is necessary to maintain their real value, even allowing for the 2 per cent. that we are adding to make up for the underestimate at this time last year. Pensioners are getting a substantial real increase in their standards of living. It is nonsense for the right hon. Member for Stepney and Poplar to describe that
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  as undeserved, but it is happening at a time when many workers are accepting pay increases well below the rate of inflation and in some cases receiving no wage increase.
  That advance payment—the accelerated increase in the level of benefits—this year must be seen as something on account of next year's uprating. Taking the two years together, our pledge will be maintained, as it has been maintained over the Government's life. Those who talk about clawing back, as though pensioners were going to have the cash or the real value of their pensions reduced, are talking rubbish, and the only result can be to cause distress and worry to the pensioners who are being misled.
  I come back to the measures that we are taking to improve the competitiveness of British industry. I have already referred to the fall in interest rates. We have also achieved a substantial reduction in the inherited rate of national insurance surcharge of 3½ per cent. What we did in the last Budget and what I announced on Monday, taken together, will mean that the private sector employers will save £1 billion this year and about £1½ billion in 1983–84.
  The right hon. Gentleman sought to reduce the figure by pointing to the effect, taking place at the same time as the consequences of my announcement, of the increase in contributions that results from the cut in the contracting-out rebate announced in March. However, that formed no part of my announcement. [Laughter.] Hon. Members may laugh, but I disclosed the matter to the House both in the table that was placed in the Vote Office, and in a later answer to the right hon. Gentleman. I told the House then of the consequences of the decisions that we had taken and that I announced on that day. The cut in the contracting-out rebate was announced to the House in March, as a consequence of the Government Actuary's review of the provisons for contracted-out schemes. That review took place as a result of the Social Security Act 1975, passed by the Labour Government. Moreover, the Labour Party was critical when we proposed that reduction in the contracting-out rebate, complaining that the cut was not higher. So it is sheer hypocrisy for the right hon. Gentleman to seek to add that reduction, which has nothing to do with the announcements that I made on Monday, to the figures that I announced then.
  Mr. Shore: The right hon. and learned Gentleman misunderstood the purport of my remarks on the subject. I was trying to elucidate from him—it is the central question of this debate—how we would tackle the problem of loss of competitiveness. What I said about the national insurance surcharge was that if, substantially or more or less substantially, it is offset by increases in other forms of national insurance payment by employers, there can be no improvement in our competitiveness from that source. I merely wanted him to direct his mind to that aspect, so that he could then answer the central question about how he intends—apart, obviously, from cutting real wages—to restore the competitiveness of British industry.
  Sir Geoffrey Howe: I shall come to that matter shortly. The right hon. Gentleman suggested that the effect of the announcements that I made on Monday was not accurately represented by the statement that I made then.
  Mr. J. W. Rooker rose—
  Sir Geoffrey Howe: I shall not give way.
  I told the House on Monday:
  "For all employers, after taking account of the reduction in contracted-out rebate announced in March this year, the total

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  payments would have been about £12·8 billion. They will now be £12·1 billion. That represents a reduction of 5½ per cent. and therefore makes a significant contribution to the competitiveness of British industry".—[Official Report, 8 November 1982; Vol. 31, c. 325.]
  That observation still stands. Indeed, it is remarkable that the right hon. Gentleman—who formed part of the Government who, by increases in national insurance contributions and the introduction of and increases in the national insurance surcharge, added 5 per cent. to employers' costs—should make this case against me now, when the net effect of the changes that we have made is to reduce those costs by a net figure of 1½per cent. Indeed, for the right hon. Gentleman to say that is bare-faced effrontery.
  We have announced other measures this week to help to reduce the costs of industry—for example, ending the regional development grant deferment. The reduction in gas prices that will be achieved by the announcement made by the British Gas Corporation—
  Mr. Dan Jones rose—
  Sir Geoffery Howe: Much though I respect the hon. Member for Burnley (Mr. Jones), I would prefer not to interrupt my speech. As the right hon. Gentleman acknowledged, Governments cannot do everything.
  It is up to both sides of industry to play their part in improving our competitiveness. We therefore welcome the formidable increases in productivity which, although not yet enough, have taken place since the end of 1980. The drive for improvement must continue. Above all—it cannot be said too often—we need further pay moderation and lower pay settlements. The unit wage costs of our manufacturing industry are rising much more slowly than they were—at a rate that is comparable to those of Germany, and only a little faster than those of Japan—but in nearly all cases our competitors are making further progress towards still lower pay settlements. We cannot afford to fall further behind. Pay bargainers on both sides must take note of the performance and forecast inflation, and lower their sights accordingly. I am delighted to have the right hon. Gentleman's affirmation today of the importance of the need for moderation in pay claims. That cannot be stated too loudly or clearly for the benefit of those who take part in pay bargaining.
  The right hon. Gentleman pressed on me the alternative or supplementary course of devaluation, although it is seldom so crudely expressed. Labour Members often combine that plea, in a most extraordinary way, with passionate opposition to the abolition of exchange control, although they completely fail to acknowledge that that was the one certain item within the power of Government that could make the exchange rate lower than it otherwise would be.
  There is one other thing that no doubt would bring down the rate. When the former hon. Member for Southampton, Test, Dr. Bryan Gould, gave evidence to the Treasury and Civil Service Committee on 5 July he said, referring to the policies that his party now urges on the Government:
  "I think there would be an enormous loss of confidence if the Government announced it was going to pursue these policies …that would do the job for us; that is exactly we want."
  That is an honest and remarkable insight into the reaction of the outside world if the right hon. Gentleman were in a position to introduce his policies.
  However, there are more serious comments than that to make about a policy of deliberate devaluation. First, it is
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  a great deal more easily said than done. Labour Members should know. In 1977, during a nine-month period, they reduced nominal interest rates from 14½per cent. to 5 per cent. , with two results. The first was an explosion in the growth of money supply. In fact, M1 grew by 25 per cent. The second and more important result was failure in the end to resist upward pressure on the exchange rate.
  Secondly, even if the rate does come down, it is all too likely to be offset by further loss of competitiveness. That is what happened between 1972 and 1975, when the rate fell by over 20 per cent., but there was no improvement in competitiveness. By the end of the period, all the effects of the depreciation had been offset by the pay explosion.
  The truth is that devaluation can be relied on to improve competitiveness only if it is accompanied by even more severe pay restraint than would otherwise be desirable or attainable. It is a means—if it works, and if it can be sustained—of reducing workers'living standards without telling them so. We all remember the famous broadcast in 1967, when the people of this country were told that the pound in their pocket would not be devalued. That, nevertheless, was the object of the exercise.
  So it is not easy. If the right hon. Gentleman brought about devaluation in that way, he would find that inflationary pressures would grow, and the need for pay restraint would become greater, not less. That is why, when the policy was tried in the past—advertently or inadvertently—the consequence was no restoration of competitiveness. Perhaps I should ask the right hon. Gentleman what he has in mind when he talks about devaluation. The effective exchange rate is now at about the same level as it was about a year ago. Nevertheless, over that year, the pound weakened against the dollar by 5 per cent. to about the lowest level for six years, but it strengthened against the French franc by about 11 per cent., and against the yen by 8 per cent.
  At the CBI conference, some of its members called on the Government to take steps to devalue the pound against European currencies. I understand why they did so, because sterling's present level bears hard on many manufacturing industries. However, to call for devaluation of the pound against European currencies means devaluing the dollar against the deutschemark and the yen, and that is not in my power nor in the power of the right hon. Gentleman.
  The best verdict on the whole debate was that expressed by Mr. Ron Sansom at the CBI conference. He said:
  "If we can't put the underlying trends right, then the situation can only get worse with time and you will be back next year and the year after, asking for an even lower rate of exchange."
  Mr. Shore: I disagree with the right hon. and learned Gentleman's analysis of the effects of currency depreciation, both historically and prospectively. However, leaving that aside, the clear conclusion to be drawn from what the Chancellor has said is that he will not use currency depreciation as a means of restoring the lost competitiveness which has been so grievous to Britain over the past three and a half years. If that is so, will he now tell us what he will do in order to restore that competitiveness? It is no good asking people to be moderate and reasonable in free collective bargaining. Is it or is it not true that he is asking for major cuts in the read increases of wages and salaries against the cost of living during the coming year?
  Sir Geoffrey Howe: The right hon. Gentleman must acknowledge that, while the present pattern of cost competitiveness of British industry persists and while in many cases the present level of pay bargaining is taking place, many people are suffering substantial cuts in real living standards in the manner of which he complains. They are suffering that as a result of unemployment. If the Labour Party is to be taken seriously in its pressure to turn the rising tide of unemployment, it must put its shoulder behind the case for pay responsibility and mean it. The Labour Party must not make the intellectual case in the House at one moment and go up and down the country at the next giving tacit and often explicit support for industrial action wherever it takes place.
  Many working people—members of trade unions—are seeing for themselves that in order to secure the future of their jobs and firms they must accept the necessity for reduced living standards. They do that because they have greater wisdom than many of their trade union leaders and Members on the Opposition Front Bench. That is the reality. We are entitled to ask the right hon. Gentleman to give his meaningful support to the case for pay moderation.
  Dr. Jeremy Bray rose—
  Sir Geoffrey Howe: I wish to acknowledge what I know is felt by many hon. Members, that, quite apart from Britain, there is cause for concern about the turbulence of the international background against which we are having to restore the health of the British economy.
  Mr. Shore rose—
  Sir Geoffrey Howe: I am sorry, I shall not give way.
  Mr. Shore rose—
  Mr. Speaker: Order. It is clear that the Chancellor does not propose to give way and therefore he must be allowed to continue.
  Mr. Shore rose—
  Sir Geoffrey Howe: No, I shall not give way. I have given way a great many times.
  A point which formed the background of the right hon. Gentleman's speech was the concern that we must all feel about the turbulence of the international background against which we are having to restore the health of our economy.
  Not only Britain but the whole world economic community is experiencing real stresses of transition from a period of high inflation. For industrial countries that strain has, in most cases, taken the form of high unemployment. For developing countries the strain has increased their problems of servicing their debts and has often sharply reduced their living standards. In both cases the problems have been most acute where adjustment to changing conditions has been longest delayed in the past.
  Worldwide unemployment and low growth is the price being paid for past failure to tackle inflation and for mistaken decisions after the first oil shock to seek to float and print one's way out of trouble.
  The handling then of the OPEC surpluses, which have effectively disappeared this year, can now be seen to have contributed to delayed problems of indebtedness. That is not just my diagnosis but it is the generally agreed diagnosis and there is widespread agreement on the prescription.
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  The major achievement of the international community in recent years has been to establish and maintain a global strategy which can provide the prospect of sustainable growth and stability, attained through the reduction of public sector deficits and the adoption of firm but flexible monetary policies. That resolve is now sustained by real and major achievement in terms of success against inflation and the foretaste of recovery represented by lower interest rates.
  An attempt to boost the world economy by the indiscriminate creation of international credit would only add to the problems of servicing and repaying existing debts, and would risk the hard-won progress towards more stable prices, exchange rates and lower rates of interest. That would not be wise. As at home, so abroad, the need is to consolidate the gains so painfully made while cushioning the process of transition for those most dangerously exposed.
  My right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour) on Monday expressed the hope that we, in conjunction with other countries, are
  "planning to deal with the present impoverishment of the Third world"
  and also planning for all advanced economies to
  "correlate their fiscal policies."—[Official Report, 8 November 1982; Vol. 31, c. 347.]
  We are aware of those problems and working to deal with them.
  There is no overall magic solution. For developing countries which have run into difficulties adjustment is essential. It is important to maintain confidence in the banking system. In banking and bank lending, patience and prudence are both necessary to correct what I have already referred to as the "over-exuberance of the past".
  It is widely recognised that that adjustment cannot be achieved quickly. In many cases it calls for support from the international financial institutions. IMF lending cannot replace private banking flows. However, it can help with policy adjustment and by sustaining banking confidence it can give time to implement adjustments at a sensible pace. For that purpose it is essential that the IMF should have adequate resources.
  I am one of those who have strongly urged upon my colleagues at the fund the need to accelerate decisions to increase the quotas available to the IMF. I am glad that we were able to secure agreement at Toronto on acceleration of the timetable. It is important now to reach agreement on the substance. I believe that we shall, although there is a difficult job to be done in reconciling widely differing views about the appropriate size of the increase.
  During the weeks ahead I shall be acting to secure further progress in that area. I hope, too, for benefits from the studies set up following the Versailles summit on exchange rate issues. One such benefit might be the enhancement of the role of the managing director of the IMF in encouraging the adoption of national policies which will promote convergence—the very "correlation" of policies that my right hon. Friend the Member for Chesham and Amersham seeks.
  Nowhere is that more important than in relation to the United States where an adjustment to the balance of fiscal and monetary policies, coupled with success for the Administration in their battle to control the deficit, would have a beneficial impact worldwide. The current strength of the dollar and the high level of American interest rates exacerbate the problems of adjustment in many countries.

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  I make no apologies for placing the issues in a wider world setting. That is how they must be seen.
  Mr. Dan Jones: Has the Minister had a reply from the employers? I am particularly anxious to know because I have traded with them a damn sight more frequently than the Chancellor has. If he has, will he make that known to the House?
  Sir Geoffrey Howe: I regret that neither I nor my hon. Friends understand the purpose of the hon. Gentleman's question.
  It is no good pretending that the world does not exist. We must tackle world problems as well as those of Britain. The House may be invited—it has not been by the right hon. Member for Stepney and Poplar—to look at the cost of the Labour Party's policies. I shall not take up the time of the House by dwelling on that now because I know that many other right hon. and hon. Members wish to speak.
  If there ever was an opportunity for the Labour Party to put into effect its policies to tackle Britain's problems today, it would be too late already for the IMF to start work on the next British letter of intent to deal with the problems that would be created. By contrast, the decisions set out in the autumn statement—the economic policy sustained by the Queen's Speech—represent a continuation of the responsible programme that is necessary for the continued reduction in inflation and interest rates, and continued help in the industry's costs, so necessary to restore profitability, competitiveness and the prospects for output and jobs.
  It is clear that, unlike some other major countries, we can look forward to modest recovery in the year ahead. What I shall be able to do in my Budget will be done with a view to nurturing and sustaining that recovery. I invite the House to reject the amendment.
  5.31 pm
  Mr. Roy Jenkins: While hon. Members recover from the peroration of the Chancellor of the Exchequer's speech, which was greatly assisted by the brief and lucid intervention of the hon. Member for Burnley (Mr. Jones), may I say that the fault of the penultimate part of the Chancellor's argument was not that he did not become trapped into the meaningless question whether he intends to cut wages by enough to restore productivity—which is manifestly impossible—but that he failed to respond adequately to the question how otherwise he proposes to face up to this central question for the British economy.
  I thank you for selecting our amendment, Mr. Speaker, which I commend to the House. The right hon. Member for Stepney and Poplar (Mr. Shore) delivered the conventional Opposition economic attack on the Government.
  Dr. Bray rose—
  Mr. Jenkins: I shall give way three times in the course of my speech, but I have not yet reached the first time.
  The speech of the right hon. Member for Stepney and Poplar was delivered with great force and contained a considerable amount of truth. Unfortunately, much of its constructive thrust is vitiated by the Labour Party's unwanted and damaging proposals for further nationalisation.
  Mr. D. N. Campbell-Savours: Tell us about them.
  Mr. Jenkins: According to which wing of the party a member belongs, there is a desire to nationalise either 25 or 100 companies. The right hon. Member for Stepney and Poplar almost certainly does not believe in that. The strength of his argument was also vitiated by the disruptive effect on exports and investment that withdrawal from the EEC would have, although the right hon. Gentleman certainly believes in that.
  Mr. Bob Cryer: Why does not the right hon. Gentleman declare his interest?
  Mr. Jenkins: For many years, I have had an interest in Britain pursuing a policy that serves British interests in Europe. [Interruption.] That has led me to take various steps, such as resigning the deputy leadership of the Labour Party.
  Oppositions always blame Governments for almost all the sins that man is heir to. There is a danger that may have been developing for some time. The problem is that Oppositions have a vested interest in the failure of our country. This afternoon, I was struck by the fact that the Government are developing a vested interest in the failure of other countries. Our performance is so strikingly bad that the Government look for some buttress and for some approximately bad—although not as bad—performance on the part of someone else. However, our national interest lies in Britain being successful in a successful world, and not in believing that the downward turn in our country is justified by its being about half the size of the downward turns in some other countries.
  When I remember what the Prime Minister said about unemployment doubling under the previous Labour Government, I wonder what she would have said if she had remained in opposition and a Labour Government had been presiding over an unemployment rate that would probably have been even higher. At the moment, the Government's essential message is that we are being led through a long but necessary wilderness so that the country can be purged of the evils of a generation or more of Keynesian lushness. I wonder when it became apparent to the Government that such a purge was necessary. Was it before, or after, the 1979 general election? Was it before, or after, the Prime Minister authorised the poster showing a dole queue, which suggested that the Government would get those people back to work? Not many election posters stand up well in history, but that one has a quite peculiar place in the pantheon of dishonesty.
  No one should ignore the fact that the dips in our economy have become progressively worse. Even such a farsighted statesman as lain Macleod attacked me strongly—assisted by the right hon. Member for Worthing (Mr. Higgins) whom I see in his place—for allowing unemployment to increase by between 500,000 and 600,000 at the same time as we produced a massive shift of resources into the balance of payments. In fairness, I also remember making a tremendous fuss and tabling a vote of censure when unemployment passed the 1 million mark for the first time under the right hon. Member for Sidcup (Mr. Heath). He reduced it fairly sharply, but with some less than beneficial side effects. As we know, the previous Labour Government more than doubled unemployment. However, the orders of magnitude then in relation not only to statistics. but to waste and suffering were totally different from those of today. Nevertheless, there is a basis in that history of decline for saying that we

  579
  should take a long-term, rather than a series of short-term views, and that a series of deep-seated faults in the British economy has developed over the lives of several Governments.
  This Government's fault is that they hold the extraordinary belief that to diagnose the malady as in some way deep-seated justifies them in taking any perverse measures that they like to deal with it and immunises them from any rational criticism of their methods. Furthermore, although the Prime Minister exhorts long-term views for everyone else, she has become more addicted to the misleading use of short-term statistics than anyone else I can remember speaking from a position of comparable authority in the House. Last week she tried to pretend that we were doing as well as, if not better than, most other countries. She did so by citing one-year percentage increases in unemployment. She enumerated several countries and suggested that the increase in Britain was less. However, she knows perfectly well that they all started from a much lower base and that a one-year comparison—in view of what happened in the previous two years—is profoundly misleading.
  It did not suit the Prime Minister's book to mention Austria, although she did not confine herself to large countries and mentioned at least two small countries. Austria has a good Social Democratic Government and happens to be one of the few countries to have more or less full employment. [Interruption.] It has substantial State ownership, but it does not change the frontiers every four years and does not waste its energy in such futile frontier battles. [Interruption.] I do not believe in ridiculous shuttlecock policies. [Interruption.] We shall consider issues on their merits. If we are to prevent industry from being treated—to the nation's immense damage—as a political football, restraint must be shown on the part of the dogmatists of both Right and Left. If everyone says that they will reverse everything that everyone else has done, so it will go on and so the country will continue in decline.
  Mr. Nicholas Fairbairn rose—
  Mr. Jenkins: Not yet. I shall give way in a moment. All that stemmed from what I thought was a relatively innocent paving reference to—I shall not say "a faraway country of which we know nothing" although it is next door to the country of which that was said—Austria. I was not even able to develop the example. Austria enjoys more or less full employment but its unemployment—3·2 per cent.—increased last year much more than ours. On the Prime Minister's argument it would therefore be valid to say that Austrian unemployment last year was more serious than ours.
  Mr. Fairbairn: I am obliged to the right hon. Gentleman for giving way. In his analogy of kicking footballs in industry, can he tell us, apart from anything that was nationalised under my right hon. Friend the Member for Sidcup (Mr. Heath), whether he was not a member of the party that nationalised everything in Britain and thus kicked the football in one direction?
  Mr. Jenkins: Not everything has been nationalised. Many of the early nationalisation measures were right.
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  They have remained part of the social fabric. I favour measures of that type. [HON. MEMBERS: "Oh."] Certainly. One of the evils from which Britain has suffered is that in the past many great controversial measures were carried after great argument—even after great bitterness—and, because they stemmed from the nation's essential needs, once carried they were accepted and remained on the statute book. However, recent British politics has increasingly produced policies that do not stem from such needs and which have then been reversed by one party after the other. As long as we go on in that dogmatic way we shall continue with such self-inflicted wounds.
  Mr. Campbell-Savours rose—
  Mr. Jenkins: No, I shall not give way. There are at least seven minutes to go before the second intervention.
  Mr. Alexander W. Lyon: Front-Bench spokesmen only get 15 minutes.
  Mr. Campbell-Savours rose—
  Mr. Jenkins: I shall give way in approximately seven minutes. I may give way a little sooner if I get on more rapidly.
  Mr. Tim Eggar: On a point of order, Mr. Speaker. I was under the impression that you asked for brevity from the Back Benches.
  Mr. Jenkins: I am much in favour of brevity. If hon. Members want brief speeches, as do I, they should not interrupt me, or try to interrupt me, all the time. They take up almost as much time.
  After the Prime Minster's misrepresentations—they were a gross misuse of statistics on unemployment—one could almost accept as routine her equally extraordinary misrepresentation of the Social Democrats' position on reflation. Hon Members may recall that last Wednesday she said that the Social Democrats had retreated from advocating a reflation of £7 billion to £8 billion to advocating a reflation of £4 billion. She must know—Prime Ministers with all their resources do not speak without something to support them—that we have never mentioned such a figure. It turns out upon inquiry that she got the figure from examining a table in one of our documents that specifically stated illustrative budgetary measures over two to three years. She added the total and proceeded to present it to the House. That is equivalent to saying that the Chancellor, who, I believe, has borrowed about £40 billion during his Chancellorship, is running a deficit of £40 billion a year. [AN HON. MEMBER: "The right hon. Gentleman is not being consistent."] We have been completely consistent since our programme was advanced at the Warrington by-election where we did rather well. It was a six-point programme that has since been adopted by many people for a reflation of about £3 billion to £4 billion a year and the reduction of unemployment by 1 million over 18 months to two years. It is quite precise. There are no extravagant promises and it has not been challenged.
  Competitiveness, which has been debated much already, is of central importance. The Prime Minister makes a great deal of the improvement in productivity in 1981 as though it were a change of trend, the end of the long night and the beginning of a sunlit day. I wish it were, but there is absolutely no evidence of it. The presentation of that one year in that form is deeply misleading. The fact is that there was a gain of 9·3 points—from 100·9 to

  581
  110·2—in 1981. But that was a rebound from a loss of 8·9 points in 1980. Since the Government have been in office, the average gain in productivity has been less than that during the previous Labour Government. Moreover, as the Prime Minister said, competitive advantage is drifting away again this year.
  I should like competitiveness to improve. I support the Government's demands for responsible wage claims and wage restraint as strongly and with as little hesitation as the Government. People may disagree with me about incomes policy, but they cannot possibly believe that we want an incomes policy to support irresponsible wage claims. We want one to enable more sustained growth and higher levels of employment. The Government would be well advised to direct themselves to that objective.
  Apart from what is happening to the competitiveness of a particular factory, a particular industry or part of it, many factories, and nearly whole industries, have ceased to exist. One need only visit the West Midlands or many parts of the North and Scotland to realise the industrial deserts that have been created.
  It is not simply a matter of price, but of whether we can now fulfil demand. The Chancellor often talks about the importance of the supply side. That is crucial to our price competitiveness, but it ignores the fact that capacity itself has been and is being permanently destroyed.
  There has certainly been no growth in competitiveness to offset the 35 per cent. loss that we have incurred since 1978. The right hon. Member for Stepney and Poplar said that there has been a 36 per cent. loss and I do not quarrel with that figure. That has much, though not everything, to do with the exchange rate, which is too high. But it is not 35 per cent. too high, or anything like it.
  Mr. Nick Budgen: How would the right hon. Gentleman bring the exchange rate down?
  Mr. Jenkins: There is no difficulty in bringing down the exchange rate if one wants to. The most obvious and simple way is by having lower interest rates. There is a combination of ways but it is important that it should be brought down in a controlled way. I fear that it will come down in an uncontrolled way in the not too distant future when our balance of payments goes into the red, as it will do on present form.
  We should not think of solving the problem by devaluation to that extent, or anything like it. To imagine that one can solve the problem by devaluation is a recipe for general financial indiscipline to which I am as opposed as the Government. The Government are locked in. Their sole economic achievement, which I do not dismiss, is a decline in the inflation rate. That decline is fragile and the Chancellor already knows that. If there is a significant reduction in the exchange rate it will become not only fragile but crumbling. The Prime Minister's and Chancellor's only economic monument will disappear if there is a realistic exchange rate in relation to competiveness.
  Mr. Eggar: Will the right hon. Gentleman give way?
  Mr. Jenkins: No.
  To crown it all, last Wednesday the Prime Minister delivered an extraordinary lecture to local authorities and nationalised industries for not having spent enough money on capital account in the past year. She said what a
  582
  difference it would have made if capital expendiuture plans had been fulfilled. What a muddle is created when she suddenly says that after everything that has been said over the past three years.
  I thought that, apart from the Prime Minister's failure to understand local government finance—on which she was completely exposed by the right hon. Member for Manchester, Ardwick (Mr. Kaufman) last week—the Government's great doctrine was that public investment and spending crowd out private investment and that such a public stimulus can have no beneficial effect on the rest of the economy.
  The Prime Minister's overnight conversion to a muddled Keynsianism plus delivering a typical hectoring lecture to those who did not anticipate her sudden change of mind is nonsense. It is a recipe for wasteful rather than sensible plans.
  The Chancellor of the Exchequer, even in the limited and inadequate proposals that he made on Monday, shows every sign of proceeding down the wrong road. He should give greater help to industry now. He should have abolished the national insurance surcharge instead of waiting for the spring and possibly announcing personal tax concessions. Perhaps he thinks that they will catch more votes, but in the past he has not shown great enthusiasm for vote-catching, whatever else may he held against him.
  What is more important is that the right hon. and learned Gentleman is wrong. More benefit can be given to the people, both employed and unemployed, both business and labour, by a stimulus to the general level of activity, than can be given by limited personal lax concessions.
  Everybody knows how vulnerable we are to an unprecedented flood of imports. That makes a mockery of talk about improved competitiveness. The result could be a further increase in unemployment with no rise in output, a balance of payments going into deficit, leading to an involuntary, belated and possibly uncontrolled fall in the exchange rate. For other reasons too, there could also be a reversal of the downward inflation trend accompanied by a continuing long-term decline in industry. That is an appalling prospect.
  Our amendment refers to privatisation and nationalisation. I dealt with that to some extent when replying to the hon. Member for Workington (Mr. Campbell-Savours). We believe substantial stability is essential. That was dealt with fully by my right hon. Friend the Member for Stockton (Mr. Rodgers) yesterday.
  The country certainly needs a stimulus from the Government in a form which gives private industry the confidence to respond with the investment which alone can create jobs. We must also consider international aspects. The Government are keen to refer to the international scene whenever they feel that they need an excuse for their difficulties. They are far less keen to consider the international scene in any constructive context.
  The Prime Minister is now the senior among the Western or summit leaders, except perhaps for Mr. Trudeau who has broken service, as I have in this House. It is not enough to comfort oneself with the view that one can merely lecture others, trying, with spurious statistics, to make a virtue out of what other countries are suffering while ignoring menacing world conditions. We are in great danger of spiralling down both in the developed world, arid in the developing world which is suffering from an

  583
  appalling decline in commodity prices—one of the reasons for our falling inflation rate. That trend has a grave effect on poor countries' standards of living and their ability to buy goods.
  Last week the Leader of the Opposition quoted Sir Terence Beckett with approval when he called for a new Bretton Woods. I was surprised and interested because I thought I remembered that one of the Leader of the Opposition's first acts in the House was to vote against the first Bretton Woods agreement. He voted against the Bill implementing the agreement and setting up not only the International Monetary Fund, but the World Bank.
  I agree with Sir Terence Beckett in that respect. Our approach must show that we know that we cannot solve our problems alone. By sensible changes of policy it would be possible to reverse the unemployment trend and—over a period, not immediately—to reduce unemployment by 1 million and perhaps a little more. To go substantially further than that certainly depends partly on taking account of the international context and getting other countries to take responsibilities and move forward as well. That involves an act of leadership which so far has not been forthcoming from any Western leader. The British Government should try to think in that context and take the initiative. They should also change direction at home away from the message of hopelessness which they are offering to the unemployed and the country.
  5.57 pm
  Mr. Edward Heath: I agreed with the Chancellor of the Exchequer when he said at the conclusion of his speech that he made absolutely no apology for discussing the international scene. The right hon. Member for Glasgow, Hillhead (Mr. Jenkins) also dealt with that. I shall say a few words about it before commenting on the Chancellor's statement. If we are to find any solutions at all to our present difficulties we must appreciate that the international scene is still deteriorating economically. It is deteriorating fast. It is of prime importance to Britain that the United States' deterioration has come about at least a year, and possibly two years, after Europe's deterioration.
  The American people are suddenly shocked that unemployment has gone up into double figures and is now over 10 per cent. Large areas of the North are becoming de-industrialised and even in the South, which has taken industry on, steel plants are being closed and will never re-open.
  No signs in the United States' economy point to recovery. At first the authorities said that they thought that by the third or fourth quarter, during the election season, the recovery would not only have begun, but be obvious. That is now shown to have been a fallacy.
  The position in Canada is much worse than it is in the United States. Unemployment in Canada is now massive. Canadian interest rates are higher than those of the United States, production is falling rapidly, and in a whole province—Quebec—the situation is worsened by political problems. The Australians, who have always liked to think of themselves as cut off from the rest of the world, now suddenly find that they are in no way protected from the depression that is sweeping right across it. In Western Australia, the long-term contracts made by the Japanese, from which State revenues are to a large extent obtained,
  584
  are now being taken up only to the extent of 67 per cent., and nothing whatever can be done about it, as to reject them would mean no contracts at all.
  The situation in Europe has already been described by the Chancellor of the Exchequer. I do not want to go into comparisons of who is slightly better or slightly worse off, but the situation in Germany is undoubtedly deteriorating. According to German business opinion, there will be no progress until after the elections of 6 March. The situation will simply remain stagnant. This means that for all our major export customers—the United States and the Community countries, particularly Germany—the situation is bad and getting worse, and in none of those countries is there any sign of recovery or of any turn in the downward progression.
  More than two and a half years ago many of us warned in this House that the indebtedness of many of the developing countries was a threat not only to our trade but to the Western banking system. What we feared has now come to pass. Poland, which had been a good customer, is bankrupt to the tune of $23 billion. Mexico, $80 billion in debt, was saved suddenly by the United States, which had opposed any action to help other developing countries. The United States Administration, finding that a major developing country on its own doorstep was suddenly bankrupt, stepped in with a package to save it. I do not mind that, but I object to the United States blocking help to other countries which are in a similar position but are not on its doorstep.
  Banks are now moving in to try to help Brazil, which owes $60 to $70 billion. The state to which such countries have been brought by high interest rates, high oil prices and low commodity prices can be shown by the fact that in Mexico the percentage relationship of debt servicing to exports was 129 to 100, so Mexico could not possibly service its debts, let alone pay for imports. In Brazil, the figure is 122 per cent. Even in South Korea, whose economy is much more evenly balanced despite a lack of oil, debt servicing has a relationship of 59 per cent. to exports, and this limits the country's activities. Nigeria has already had to clamp down heavily on imports twice and is now publicly declared to be four months behind all payments of every kind, whether for debt, for interest or for purchase from the outside world. Mexico, Brazil and Nigeria are all major developing countries and two of them would formerly have been described as rich oil countries. Yet all are now in that position.
  The impact of this on the United States will be considerable as those countries will not be able to buy its exports. The impact on Europe will be the same, and the impact on both sides due to reduced trading and not being able to buy their commodities creates a vicious circle in which there is no sign of change. That is the present position for both the developed and the developing world.
  The Chancellor in his statement seemed to be keeping all his options open for use at a later stage. He may have done so deliberately for the Budget next spring. In some areas, I wish that he had not kept the options quite so open. I agree with the right hon. Member for Hillhead that it would have given confidence to industry and seemed a little less grudging if the Chancellor had been able to deal with the whole of the national insurance surcharge at one go. That would certainly have been beneficial.
  I, too, wish to say a word about old-age pensions. I offer just one thought on this. There is no doubt that the Chancellor is arithmetically correct, as was my right hon.

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  Friend the Prime Minister, but some of us have learnt from long experience that one can never convince the old-age pensioners of the correctness of the arithmetic and the amount that will be saved is simply not worth the effort of constantly trying to explain it.
  I appreciate the pressure to which the Chancellor is subject, but I recall the introduction of the £10 Christmas bonus, which was warmly received by pensioners but which was introduced despite obstruction from those who said that it was improper because those who paid income tax could not be taxed on the £10. Yet even today I still receive letters from pensioners recalling the introduction of that bonus. It was worth overruling the objections on that occasion, and I suggest to my right hon. and learned Friend the Chancellor that it is now worth overcoming the slight arithmetical difficulties and letting the pensioners see that they are getting something rather generous.
  Pensioners live from month to month and from year to year. When they receive a little extra, they do not save it to deal with the time when they will receive a little less. That is an important practical consideration. I hope, therefore, that having kept his options open, my right hon. and learned Friend will use them to good advantage when he takes his final decision.
  The main issue is unemployment. The Chancellor can rightly claim that in other matters he has been successful. Inflation is down to 7 per cent., with the prospect of 5 per cent. next year, although I think that he would be unwise to ignore the fact that a considerable part of that is due to the fall in commodity prices of the goods that we import. That may be one reason why my right hon. and learned Friend is keeping his options open. He has established a clear incomes policy for the public sector and a price freeze for nationalised industries, and he has started the process of re-creating review boards to achieve more amicable arrangements and more wages. I hope that he will not take offence if I say that to re-create all those three in just two and a half years is a remarkable achievement, for which I give him full credit.
  Some of those things will certainly be needed if we go into a period of expansion, but that is what I want to ask about. Will the Chancellor or the Leader of the House, who is to wind up the debate, answer the question that I have put previously? What intellectual explanation can he give as to how expansion will come about, not just here but elsewhere? What is the intellectual justification for saying that there will be a recovery? We have had no previous recession on a scale sufficient to compare with the present one, unless we go back to the 1930s depression. The present recession is deeper than that. What brought about an upturn? Manufacturers had run down their stocks so much that they said, "We must not be caught out; we must be prepared for wholesalers and retailers to start buying again by building up our stocks now." They could do that because interest rates were so low. The Chancellor described the recent fall in interest rates as beneficial, but by any recession standards, interest rates are still far too high. Interest levels have never been so high during a recession.
  I fully realise the influence on interest rates of the Federal Reserve and the United States of America. That is another subject, and I have discussed in the House how the European Community can avoid hanging on to the coat-tails of the Federal Reserve if it maintains its policy.
  The recession cannot be turned around, nor will business men be prepared to turn it around either by
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  undertaking capital investment or building up stocks, as long as the present conditions pertain. The most recent CBI report shows yet again that many businesses are still trying desperately to get rid of their stocks because they cannot afford the interest on the loans that they require to hold those stocks. We have not yet reached the botton of the business cycle, where people have got rid of their stocks and must start to think about rebuilding. I have outlined the major problems. Will the Chancellor of the Exchequer or the Leader of the House explain the intellectual justification for saying that we can get out of the recession? Will they, further, tell us how they intend to do it?
  The problem of recession and high interest rates is coupled with the problem of competitiveness, which was discussed by the right hon. Member for Stepney and Poplar (Mr. Shore). It is possible to over-simplify discussion about competitiveness. We can be competitive in many areas without being competitive in others and the net balance may still be against us, as it undoubtedly is at present. There are many markets today in which British business men can win contracts all over the world. However, it is worrying that the bottom has fallen out of the market in the developing world, where many contracts for heavy equipment arise. The slump has happened not through lack of competitiveness—we can get the contracts—but because of the state of the developing world, in which we have a major interest through the British Commonwealth. The developing countries cannot afford the goods that we wish to sell to them. There is bound to be a limit to the extent to which export credit guarantees can finance our exporters, given the present world slump.
  What is the intellectual justification behind the Government's policy? In 1980, because of beliefs that were held at the time, sterling was allowed to rise to a level that did immense and permanent damage to our capital industries. However, I do not wish to go over the past and we must accept what happened. No doubt the sterling exchange level could be brought down again. I understand the Chancellor's fear that that would help to feed inflation. We must strike a balance and it is an infinitely difficult one to strike. The Chancellor has the unenviable responsibility of doing so. He may decide that, in order to keep out imports and to give our exports a better opportunity, the sterling rate should come down. He could then adjust value added tax to prevent inflation from affecting the overall cost of living. Such a move would depend upon the sterling rate being controlled and the balance of payments being secured. If my right hon. and learned Friend is deliberately keeping open his options for the spring, we may be able to persuade him of some aspects in which he can adjust the balance and produce the answers.
  At the Toronto conference there was an agreement that there should be further study on international action and a meeting in the spring, but it went no further than that. If it did, I am glad, but we may have to face a difficult decision. If America is to maintain its position of not allowing the IMF or the World Bank to have substantially more resources with which to deal with the balance of payments and investment in the developing world, are the rest of us prepared to continue being blocked?
  We may have to take an even more important political and economic decision, but it will face us, if not in the spring, next autumn when the IMF and the World Bank meet again. The United States of America proposed an

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  individual fund, apart from the international institutions, of $12½ billion. That is not acceptable, because it means that the fund would be controlled by the United States of America and that country would use it for political purposes in the developing world. That will not produce a satisfactory answer for those countries or for us. The action must be taken by the existing international institutions.
  The right hon. Member for Stepney and Poplar and the CBI have proposed a new Bretton Woods conference. With the present world representation, we shall not obtain a new arrangement by having a new Bretton Woods conference. Our only chance is to build up institutions such as the European monetary system and, if possible, a yen and dollar system that can then come back under the IMF. To try to deal with a new Bretton Woods agreement in global negotiations such as we have been trying to obtain in the United Nations for other problems does not fill me with enthusiasm. Nor do I believe that we shall find a solution in the time that remains, which is comparatively limited.
  Another important aspect of the IMF's operations is the conditions under which it will help countries. In 1980–81, the IMF moved forward considerably in showing understanding of the problems of the developing world. To my regret, it has been pushed back again by the Administration in Washington. That is very damaging. Nigeria has been told that help will be provided only if it devalues its currency. No economist who considers Nigeria's economy would say that devaluation of the naira would be other than harmful. Nigeria's main, and almost only, export is oil, which is valued in dollars. If Nigeria devalues its currency, internal prices will increase, there will be more internal disruption—there is already some disruption in the North—and the pricing system will be upset. It shows a lack of understanding by the IMF and pressure from outside that countries should be forced to conform to procedures that are believed to be correct historically.
  The world bank requires money for development. Where is it to come from? It can only come from the surpluses that have accumulated in the OPEC countries and that have been drained off the Western world and, partly, off the developing countries. It is unlikely that the surpluses this year will be great. If we take OPEC as a whole, there may be no surplus. The Gulf States may have surpluses, but not the other countries. However, the accumulated surpluses that are on deposit and trying to attract the highest possible interest are available for investment in the developing world if the international institutions are prepared to attract them to the IMF and the World Bank.
  The British should give leadership and I urge the Chancellor to continue his efforts, not only in regard to securing more resources for the IMF and persuading the American Administration that that is justifiable, but also with regard to dealing with the problems of the World Bank, to give it the greater resources it needs to start further development in the developing countries. If the resources are given to the World Bank, they are under control, and corruption is reduced to a minimum. That is particularly required for the energy affiliate because new sources of energy are desperately required to meet the demands that would come if we had an expansion.
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  What will our own problems be if there is expansion? First, there are the problems of commodity prices. After such a depression the production of the commodities we require has fallen away in the developing world. Production cannot suddenly be expanded and we shall therefore be faced with a price rise. I have already mentioned the impact that that would have on inflation but that must be accepted.
  Second, what will happen to the price of oil if there is an expansion of the British and world economies? It will undoubtedly rise again. Countries have now learnt to live with limited production—except, perhaps, in the case of Nigeria—and they have no desire to increase their production. The result will be another rise in oil prices comparable to 1974 and 1979. When Iraq and Iran went to war production fell by 4 per cent. and prices increased by 140 per cent. That is an indication of the price rise on a marginal change in supply. The only possible ways of dealing with that are by conservation or by reaching an agreement with OPEC on its future pricing and supply policy. That, too, will require offering incentives to OPEC.
  It is deplorable that no attempt has been made either by the Community or by the Western world as a whole to reach agreement with the OPEC countries on the crucial questions of supply and pricing of oil if a world expansion begins. I urge the Chancellor and his colleagues to give that further consideration and to give leadership in trying to bring it about.
  Training is of great importance. At the end of each recession that I have seen, the number of our trained and skilled people has been fewer than before. Those were the type of problems that Government and industrialists faced. The problem was immediately tied up with the wages question. Once an industrialist was convinced that expansion was under way he would not wait until his competitor had seized a larger than fair share of the skilled manpower. He started acquiring manpower before he needed it. That will occur again unless we have the necessary skilled manpower. Such action had an immediate impact on wage demands and, as we have seen in the past, it has not even needed wage demands. The wages have come from the employers, in order to get the limited skilled men available or to buy them away from their rival employers.
  We have tried different systems of training in Britain. In the old days, large employers trained the men and small employers used them afterwards. Then we had the training boards, of which there are a few left. Now we have another training system. We do not have a comprehensive, educational training system, such as the Germans have had since Bismarck and which the French and Americans also have. I have come to the conclusion that we shall never have the trained manpower and womanpower required in Britain until we accept that training has to be an inherent part of the educational system. Obviously, that takes time. The new system will take time. It will not begin until autumn 1983 but, looking to the future, as we should be doing, it is essential to plan ahead and decide how to deal with that problem.
  In planning ahead I would emphasise to the Chancellor the importance of doing more to encourage the conservation of energy in Britain. A great deal of work has now been done by the public authorities, universities and

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  individuals. We are not taking anything like full advantage of that work. We could save ourselves from some part of the problem of OPEC increases at a time of expansion.
  The trade unions and their wage demands will once again come to the front of the picture. We should be thinking about what will happen then. If, as the right hon. Member for Stepney and Poplar suggested, wage demands are now low or reasonable because of mass unemployment, that implies, to my regret, that if we succeed in tackling unemployment the wage demands will become much higher.
  Mr. Maurice Macmillan: Of course they will.
  Mr. Heath: My right hon. Friend the Member for Farnham (Mr. Macmillan) says, "Of course they will". The position then will be no better than the one we faced in the past. If, on the other hand, my right hon. Friend had said, "No, unemployment is not having an effect on wage demands," what do the Opposition consider will happen when unemployment is reduced? Do they believe that wage demands will remain at the same level or lower than they are at present? I see no evidence of that. We ought, therefore, to be addressing ourselves seriously again to the longstanding question of how trade unions become involved in the whole economy, more productive, more competitive, and at the same time feel that they are receiving a reasonable deal.
  It cannot be done by standing aloof from the trade unions, much though some people would like to do that. It can only be done by what has already proved to be a long and difficult task of trying to incorporate them and the whole of the work force into the economy, and thereby to bring about an improvement.
  We have been discussing competition but it has not been mentioned that the competitive position can be greatly improved by an increased output. Increased output reduces overheads and once that is done we would become more competitive throughout the industrial world. That is one of the most powerful arguments for an expanding economy, which enables us to have a continuous process of increased competitiveness. I did not quite understand my right hon. and learned Friend's figures about becoming uncompetitive after devaluation in 1972 as a result of his policies of incomes freeze and prices freeze. In fact we did more than maintain our competitive position—
  Mr. Robert Kilroy-Silk: Is the right hon. Gentleman giving his right hon. and learned Friend a pat on the back?
  Mr. Heath: According to The Economist, we had the lowest inflation rate at that time in Western Europe. I gladly pat my right hon. and learned Friend on the back for that, but I think that he has been misled by the figures he quoted this afternoon. The competitive position can be greatly improved by an expansion of output. It is a matter of balance and the Chancellor has to judge. We return eventually to the fact that if we are to have a satisfactory employment position it can only be done, as the right hon. Member for Stepney and Poplar said, as part of a world recovery. That will not happen automatically in the present position. It has to be brought about by world leadership.
  It is sad that the United States, which did so much through Bretton Woods and the Marshall Plan, which saw the world as a whole and was responsible for the financial
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  recovery of a whole continent—Europe—should today be taking exactly the reverse view. I hope that we can persuade the United States that its previous position achieved far more in both its interests and those of the world. If there is anything that the Chancellor can do to give that leadership, the House and the country will be grateful.
  6.30 pm
  Mr. John Spellar: It is usual in maiden speeches to refer to one's predecessor. That is especially poignant for me because of the tragic circumstances that led to my election to the House. My predecessor, Mr. Jocelyn Cadbury, was highly regarded in his constituency and, as I have found since I came to the House, by all hon. Members. He was admired for his hard work and dedication, and for his lively interest in both industrial and social issues. As a member of the Cadbury family, he carried on the tradition of concern for the welfare of his constituents and those who work for his company. I know that the disastrous worsening of conditions for his constituents was of great concern to him, and that that concern was reciprocated by his constituents.
  My constituency in the south-west of Birmingham has grown substantially during the past few years in both private and municipal housing. Indeed, it is now the largest constituency in Birmingham and, until this year, one of its wards had more than 35,000 electors—a measure of its growth. It is not an area of the traditional thousand trades, although many of my constituents work in those industries, travelling to the city or the black country. It consists mainly of large-scale manufacturing plants. Cadbury's Bournville plant in the neighbouring constituency of Birmingham, Selly Oak employs a considerable number of my constituents. The Kalamazoo business system plant is moving into a new area of electronic manufacture.
  The constituency is best known for the British Leyland Longbridge plant. The position there during the past three years has, in many ways, highlighted what has happened to employment in Birmingham. When my predecessor made his maiden speech in the House, he said:
  "the largest employer in Northfield is the giant British Leyland works at Longbridge, which employs about 19,000 people."—[Official Report, 18 June 1979; Vol. 968, c. 986.]
  Today, the plant employs only 10,000 people and even their future is threatened.
  For many years that plant provided the basis for the prosperity of the area—it was part of what was once known as the "golden triangle". Even in the 1930s people flocked to Birmingham from depressed areas—indeed, from your area of Wales, Mr. Speaker—to find work in the Longbridge car plant and the industries dependent upon it. That area, and my constituency, are no longer part of the "golden triangle".
  Unemployment in Birmingham is 18 per cent. Statistics from the Northfield jobcentre in 1979 showed that unemployment was less than 4,000—it is now more than 10,000. The Northfield citizens advice bureau has shown the largest increase nationally in cases during the past year. Unemployment is higher than in Glasgow, Swansea, Port Talbot and many other traditional black spots. Youth unemployment stands at a horrific level. It is estimated that in September only one in 10 school leavers in Birmingham found work. Yet that area and the industries operating within it were once highly prosperous.

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  A month ago the West Midlands chamber of commerce conducted a survey of firms in the area. Only one in eight is working at full capacity, with all the obvious implications for productivity and competitiveness, the need for which has been stressed during the debate. About threequarters of the firms said that their trading position was worse this year than last year—yet it is the traditional industrial manufacturing heartland of Britain.
  Neither in the Queen's Speech, nor in any speech on the Address—especially last night's speech by the Secretary of State for Employment—have I seen any sign of any realisation of the disaster that is hitting British manufacturing industry. I may be a new Member, but I must say that the superficial nature of the speech of the Secretary of State for Employment was amazing in the light of the many difficulties being faced in Britain. We heard repeated references to the Morning Star and Tribune. Perhaps we would be better served if the right hon. Gentleman spent more time reading the Department of Employment Gazette and the Financial Times, rather than searching for cheap political points. I found no reassurance in his speech, nor in the more developed speech of the Chancellor of the Exchequer this afternoon. The manufacturing areas of Britain are concerned that the recent speech of the Minister of State, Treasury, the hon. Member for Maldon (Mr. Wakeham) proved that the Government want Britain to move out of manufacturing industries into service industries. That is the true feeling of the Government and the Civil Service. It is of great concern to the people of Birmingham, who are so dependent on manufacturing industry, especially the motor car industry.
  My predecessor, in his maiden speech, asked Ministers to remember that the British motor industry needed time to recover its strength. He said:
  "It is still the lifeblood of the Midlands. Its collapse would leave Birmingham an industrial desert and the effect on the nation's balance of payments would be catastrophic".—[Official Report, 18 June 1979; Vol. 968, c. 987.]
  I wish to reiterate that message today. The collapse of the motor and engineering industries would have a catastrophic effect on the economic, industrial and social life of Britain.
  When I spoke to my constituents both during my campaign and subsequently, I realised that the major fear hanging over the West Midlands was that there would be a collapse in manufacturing industry. They fear the breakup of British Leyland and the closure of Longbridge, with the consequential disappearance of the engineering industry. They fear that the Government have written off any interest in manufacturing industry. The speeches in this debate have not given the reassurance that my constituents need. I hope, therefore, that the message that I have brought from them to the House will receive attention. I thank the House for its courtesy in listening to me.
  6.38 pm
  Mr. Richard Luce: It is a great pleasure to follow the hon. Member for Birmingham, Northfield (Mr. Spellar). It is an unusual characteristic in the House to show such a generosity of spirit across party lines. When it happens, it is refreshing. The House warmed to the hon. Gentleman's tribute to his predecessor, Mr.
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  Jocelyn Cadbury, and the manner in which he paid it. Not only Mr. Cadbury's family, but his former constituents and all in the House should be grateful for the warm way in which he spoke. It would be beneficial to the House if that characteristic of generosity of spirit were to be more amply spread in the weeks and months to come. The nation can only suffer from a lack of such spirit.
  One aspect of the grave unemployment problem, to which the Gracious Speech and the hon. Member for Northfield referred, is structural unemployment. During the debates on the Queen's Speech and on previous occasions when unemployment has been debated, I have noticed that that subject has not featured much. We should put our minds to it and think more fully about its implications.
  I do not look gloomily at that subject. I am not a doom monger in that context, but we must face up to some of the implications. Even with a stable economy, for which we are working, and even when we manage to generate reasonable growth in the 1980s and 1990s, we shall have to face up to some other factors that may cause higher unemployment than we would otherwise expect.
  If we look at that problem at this stage and try to anticipate developments and assess how we can best deal with the problem, there will be less suffering in the last part of this century. We must take four extra factors into account. First we must take into account the birth bulge. Another half million people will come onto the market to join the work force during the rest of the 1980s.
  Secondly, we have to take into account the matter that was so fully dealt with today and on previous days in the debate on the Gracious Speech—the problem of the world recession. I do not think that anyone with any imagination can believe that we can make a dramatic turn around, even with the necessary international co-operation that is so urgently required and on which my right hon. Friend the Member for Sidcup (Mr. Heath) gave his interesting and constructive views. We must expect a low level of growth in the foreseeable and immediate future.
  The third factor is the dilemma that while we are becoming more competitive, which we should not underestimate, that involves overcoming the accumulated inefficiency of the past 20 years which has, to our pain and to the pain of those who have been made unemployed, meant the shedding of excessive labour. That process is painful and must involve unemployment.
  The fourth factor is the modernisation and new technology that are essential for our future. They are essential if we want to create wealth, but at the same time they are by no stretch of the imagination labour intensive. In 1965 in the manufacturing work force there were 8·4 million jobs but in 1982 there were 5·7 million jobs. As a proportion of the employment force the figure is declining. In the United States the forecast is that the proportion of the labour force required for the manufacturing of goods will continue to decline for the next few years.
  Mr. Macmillan recently said:
  "Soon civilisation can be based on leisure rather than work slavery."
  There is an important implication in that remark. We should give it serious thought.
  Not long ago agriculture took up a substantial proportion of the labour force. Today it does not, but it is highly efficient and helps to create wealth. Some people say that the service sector is expanding. Of course that is

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  true and the more it expands the better, but we should not underestimate the extent to which modernisation is taking place in the service sector, too. The use of microprocessors, word processors, computers and so on means that it, too, will not require the labour force that might have been required in the past.
  My hon. Friend the Minister for Industry and Information Technology, who is doing a tremendous job to encourage the growth of new technology, in his interesting recent Conservative Political Centre pamphlet entitled
  "New Jobs for New Technology",
  emphasises the increasing proportion of the work force that will work in information technology. That is right. The more we encourage it the better. He said that it would
  "create a great number of jobs."
  No doubt that, too, is true, but we face the dilemma that none of the jobs is likely to be labour intensive.
  We must ask ourselves, "Will even a high rate of growth in new technology be sufficient to replace the labour intensive industries that are declining rapidly, such as steel and shipbuilding?" That question is difficult to answer and there are serious implications.
  The dilemma is that the process of creating a climate for successful wealth creation also produces unemployment problems that may be, and one hopes will be, temporary. Against that background The Times in an editorial on 8 November entitled "Playing it long" stated:
  "But unemployment is not going to go away, either in the short or the medium term …
  Sir Geoffrey today cannot shrink from an admission that high unemployment is here to stay. Nor can the Opposition. No alternative political programme for the economy can offer a serious reduction in this chronic unemployment. The search therefore concentrates on creating economic conditions which will work first at the margin and then gradually force their way to the centre of the problem."
  Some may say that that view is too gloomy, but I believe that there is a considerable grain of truth in it and that we should take it seriously. The process of wealth creation, with the serious implications for unemployment, is not all bad. On the contrary, the prospects for a higher standard of living are good for the country. That in turn creates more jobs. We should welcome the prospects for less drudgery in work and more leisure. However, there will also be problems of major proportions of adjustment and changes in the pattern of employment.
  I wonder whether we have grasped both the pace and nature of the change that is taking place. Those who have read the books by Alvin Toffler do not have to agree with everything that he said in his books "Future Shock" and "The Third Wave" to accept the idea that, inevitably, there will be substantial changes in hours of work, methods of working, the way of life that we lead and the frequency of changes of job in the lifetime of any one person. The least that we can do is to prepare ourselves for those changes.
  The prospect of a structural unemployment problem will be graver unless we grasp the issue positively not only as a Government but as a people. The measures that are required to deal with the problem of structural unemployment must be flexible and infinitely adjustable because we cannot forecast precisely how serious the problem will be in the years ahead. Therefore, we need to encourage the development of measures that are as adjustable as possible.
  The Select Committee on Unemployment in the other place produced in its report in May 1982 two possible
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  courses of attack on the problem of how we overcome structural unemployment. To oversimplify it, the first category was to take whatever measures we can to delay entry to the labour force and to deal with the other end, by encouraging early voluntary retirement. In other words, we should deal with both ends of the labour force. The second category that the Committee looked at was the redistribution of jobs by reducing the time spent at work by each person to make room for others.
  The more I thought of this and the more that I read the report, looking at the second category—the reduction of weekly working hours, the reduction of overtime, the extension of annual holidays, more sabbaticals and the promotion of part-time work—the more I tended to come to the view that the encouragement of that is likely to promote greater inefficiency rather than greater efficiency. It is therefore not something to which any Government should lend too much support, save for one suggestion, that of work sharing and job splitting.
  We are looking for constructive measures that will, to the extent that they are required in the foreseeable future, help to alleviate the problems, provided that they do not reduce efficiency and competitiveness in our work force. I have in mind policies such as encouraging greater flexibility in retirement policies. The paper "Growing Older" which was published last year suggested that flexibility of retirement between the ages of 60 and 70 was something that we should encourage. I should like us to examine more fully the scope for early retirement for those who wish to take that course, and the encouragement of private pension schemes to this end.
  Equally, we should build on the excellent job release scheme that is being developed. At the other end, we should not underestimate the range of measures that my right hon. Friend the Secretary of State for Employment and others in the Government have taken to improve training facilities for young people. What they are doing is very encouraging and I hope that they will take it stage by stage much further than is already planned.
  There is a third development that needs examination, although I cannot at the moment form a conclusive view about it. There is already a greater natural voluntary move towards more part-time work, which means more women at work. However, we should see whether it is possible to adopt further fiscal inducements to married mothers so that they are encouraged to remain at home as long as they are mothers. It would contribute to the easing of the unemployment and to the enhancing of family life.
  The final development is that of job splitting and work sharing. Again, my right hon. Friend the Secretary of State for Employment deserves congratulations for the way in which he has taken the lead in announcing that he will introduce schemes and measures along these lines to encourage more of this next year. GEC and Barclay's Bank have already introduced their own schemes and are finding that they are working with reasonable success. This is a development from which we should learn the lessons of experience of voluntary schemes that have already been adopted.
  It is not just the people who are young or in their late fifties about whom we should worry. It is also those who are unemployed in their thirties and forties but who have families to look after when they are made redundant. Work sharing or job splitting schemes can do a great deal to help them.

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  I hope that when my right hon. Friend replies to the debate he will give me an assurance that the Government are looking at structural unemployment in a cohesive and comprehensive fashion, pulling all the strands together. It is an issue which, if we ignore it, will lead to far greater suffering and problems than otherwise need be the case. We need to face up to this issue and thus create greater confidence in our society.
  6.55 pm
  Mr. Douglas Jay: I pay warm tribute to the admirable speech of my hon. Friend the Member for Birmingham, Northfield (Mr. Spellar) who has brought to us an up-to-date and close knowledge of the disastrous state of industry in the West Midlands. I am afraid that I cannot say the same of the Chancellor's speech. I do not think that I have ever heard a more bleak, negative, depressing, unconstructive and gloomy speech by a Chancellor to the House.
  Mr. David Watkins: Since the wind-up speech by the Secretary of State for Employment last night.
  Mr. Jay: That may be so.
  To my mind, the Chancellor's policies stand condemned on this score if not on any other—he is budgeting for a still further rise in unemployment in the next year.
  The right hon. Member for Sidcup (Mr. Heath) referred to the wider Western world. There is at least one faint sign of hope in that world to which he did not refer. The United States Federal Reserve Board and the American Government a month ago went a long way to abandoning crude monetarism, money supply targets and the rest. I see some hope there for recovery from the American side. That hope would be very much stronger for us if the Chancellor would also cease treating his money supply targets and the PSBR as totem poles, which would give some chance of getting still lower interest rates here.
  The American authorities eventually changed course a month ago because the international deflation caused by extreme monetarism, not just here but in many countries, had reached the stage when even the banking system was at risk. We reached the point where the damage due to cutting down demand had hurt industry so much that many banking assets were turning into bad debts and so banking collapse was threatened. That actually occurred in the great depression in the United States of America in March 1933. Internationally we have been very near to the brink of that in recent months.
  The right hon. Member for Sidcup was not quite right about what caused the upswing in 1932·33. The deflation was stopped only by vigorous reflationary action by President Roosevelt and not by just sitting and waiting for something to happen. In the past 12 months we have learnt yet again that, as the right hon. Member for Sidcup rightly said, deflations do not usually stop until Governments or central banks take some action to stop them.
  The present Chancellor, to judge his powers of forecasting these things, told us in December 1980 that the Government looked forward to the recession coming to an end during the course of the next year. That does not encourage much confidence in the Chancellor's powers of
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  prediction. Here we are in November 1982, and both he and the CBI are telling us that unemployment will rise still further next year.
  The intellectual fallacies of crude monetarism have been so conclusively exposed in the past two years both in theory and in practice that one need not enumerate them again. However, it is worth briefly setting on record the enormous real damage done by deflation in the past two years, particularly to the United Kingdom.
  First, extreme deflation of this kind means a huge fall in real output, living standards and employment prospects. It is no compensation to claim that the value of money is now falling less quickly, which is the Chancellor's only claim to have achieved anything. Money is only one means to the end of higher production and living standards. If one sacrifices output, employment and living standards to money values, one simply sacrifices the end to the means and the substance to the shadow.
  Secondly, deflation is a staggering waste of resources. The United Kingdom is probably losing current income at the rate of about £40 billion or £50 billion a year by underusing our productive resources. That loss will never be recovered. In those circumstances, even the normal economic doctrine that we cannot have more of one thing without having less of something else, which we hear regularly from Treasury Ministers, becomes untrue. We can afford what we have the capacity to produce—houses, hospitals or more naval frigates. The United Kingdom has now reached the point—this is the most serious element—when the productive capacity that we shall sorely need in the future is still being destroyed.
  Thirdly, deflation and unemployment always bring restrictive practices internally and protectionism internationally. The unemployment of the 1930s brought many of the restrictive practices of the 1940s and, inevitably, a failure of demand internationally brings excessive protectionism. The international crisis in the steel industry is due to the artificial cut in general demand due to deflationary policies. No agreements between one country and another will solve that problem. Only a general reflation will check world protectionism.
  The final futility of a deflation policy pushed to those lengths is its short-sightedness. As the right hon. Member for Sidcup rightly said, if there is no policy to restrain the rise in money costs the whole process will start again as soon as demand picks up. The damage that has been caused both here and overseas is not due to something mysterious called a recession that nobody can explain, as the hon. Member for Shoreham (Mr. Luce) suggested; it is due to a failure in the task of keeping overall money demand and costs in balance, or, in this country, of trying to do so. That is why factories are closing and firms are collapsing almost every day.
  The Prime Minister showed her misunderstanding of the problem by the strange new argument that there cannot be a lack of demand because we are importing too much. We are importing too much, but nobody has ever suggested that in managing demand one should assume that there would be no imports. If excessive imports are threatening output, employment and the trade balance, the remedy is to let the exchange rate fall and not to cut demand further. That will only make the position worse.
  During the past year the Government could have learnt something from Mr. Neville Chamberlain and, although

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  I confess I did not support him at the time, there is something to be said for his internal policy when one compares it with that of this Government.
  In this country, as opposed to the United States of America, the great deflation of 1932 was ended partly by President Roosevelt's reflation but mainly by two decisions of the United Kingdom Government. First, interest rates were reduced to 3½ per cent. Secondly, a moderate import tariff was placed for the first time on all manufactured imports. That policy brought five years of considerable revival from 1932 to 1937.
  The Economic Secretary to the Treasury (Mr. Jock Bruce-Gardyne): Would the right hon. Gentleman remind the House of the rate of price increases when interest rates were reduced to 3½ per cent.? Is it not true that in real terms interest rates were no higher then than they are now?
  Mr. Jay: I knew that the hon. Gentleman would raise that point. I shall return to it.
  Those policies brought a considerable revival. The CBI is absolutely right to argue that interest rates should be reduced further and quicker. The real rate of interest in recent months has been rising to some extent. We should reduce the nominal rate to 4 or 5 per cent. within a few months. That would stimulate investment and construction, which is labour intensive and does not suck in imports on a large scale.
  The hon. Gentleman and other members of the Government have been arguing for some months that lowering interest rates is not as easy now as it was in 1932 because internationally prices have risen rather than fallen. That is no longer true. World prices are falling in free markets. If it were not for the common agricultural policy, food prices here would fall and give us the relief that they gave in 1932. Although it may not be as easy as it was then, it is not as difficult as the hon. Gentleman suggests.
  Lower interest rates would help industry by reducing the exchange rate. We are sometimes asked how the exchange rate can be lowered. One way is to allow lower interest rates to affect the exchange rate. Although I do not regard that as a permanent panacea, as some people do, it is unquestionably desirable now.
  I also believe that the United Kingdom needs some tariff or quota restraint on imported manufactured goods from all sources for a time. It is unfortunate that when free trade and protectionism are discussed—sometimes even in the House—it is suggested that one or the other is always right at all times for all countries. But it depends on the country, the commodity and the prevailing circumstances. The correct policy for the United Kingdom for the latter part of this century is one of free import of food and materials and some restraint on the import of manufactured goods from all sources. The supreme mistake that was made in the 1970s—the right hon. Member for Sidcup cannot escape some responsibility—was to do precisely the reverse: to raise the price of our food imports artificially and to admit manufactured imports from the Continent tariff-free which are causing devastation to the Midlands engineering industries.
  Both those blunders must be reversed if British industry is to be saved. The United Kingdom applies already a moderate tariff to imported manufactured goods from all parts of the world outside the EEC. The same tariff should now be imposed on manufactured imports from all sources.
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  Otherwise the effect of restraining imports from Japan or other parts of the world will be to replace them by increased imports from Germany, France and Italy. Faced with all that, the Government's antics over the privatisation of public industries are pathetically inadequate.
  In the short term, there is an urgent need to reduce interest rates quickly, to allow the exchange rate to fall naturally, to expand demand and investment through the Budget and not to have stop and go at the same time, which seems to be the policy of the Secretary of State for the Environment.
  In the medium term, we must impose some restraint on the import of manufactured goods, return to the free import of food at world prices and devise a rational system for restraining the rise in money costs which will recur as soon as demand picks up. If we do not do most of those things soon, we shall face a catastrophic trade balance and economic situation when our oil supplies begin to run out in 15 or 20 years.
  7.10 pm
  Mr. Terence Higgins: The debate is taking place against the background of the Chancellor's statement to the House on Monday and the autumn statement that he published at that time. As the Chairman of the Select Committee on Procedure (Finance) and a member of the Select Committee on the Treasury and Civil Service, I congratulate the Government on the way in which the document has been produced. It is a significant advance on previous such publications.
  The figures for public expenditure have been produced, at least in outline, in the autumn, which has happened only once before—when I was a Treasury Minister—and that is a great improvement on what happened this year, when the figures were not produced until the spring. In addition, some of the figures for the ready reckoners for tax changes are illuminating.
  However, in the light of the discussions that the Treasury and the Procedure (Finance) Committee have been having on the Armstrong report and the proposals for a "Green" Budget, bringing the taxation and expenditure sides of Government affairs together, the autumn statement is a long way short of a true "Green" Budget. Therefore, we look forward to further progress. Nevertheless, the statement is to be welcomed as a step in the right direction.
  It is always a pleasure to follow the right hon. Member for Battersea, North (Mr. Jay). There are frequently points on which we disagree. Indeed, he made again the usual points with which I always disagree, although I had not previously heard the comparison with Neville Chamberlain.
  I wish to take up the theme of the thoughtful and compassionate speech of my hon. Friend the Member for Shoreham (Mr. Luce). We must face the fact that the unemployment that we are experiencing is qualitatively different from that which we experienced in previous postwar cycles. The recession has been so deep that many firms have reduced overmanning and incurred the considerable expense of massive redundancy payments. They have found that they can produce as much as they did before, but with a much smaller labour force—in some cases as much as 30 per cent. smaller. It would be unrealistic to suppose that any foreseeable increase in demand, domestic or overseas, will persuade those firms

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  to take back their redundant workers. Tragic though the situation is for the individuals concerned, we do no good to anyone if we seek to conceal those facts.
  We must also face up to two other aspects. There is still substantial overmanning in many parts of the public sector and while we believe that technological advance will generate more jobs, rather than fewer, in the long term, the revolution in computers and so on will substantially reduce the number of white collar jobs.
  The battle that we face for at least the next decade, and probably far beyond that, is on a different scale and involves different problems from anything that we have faced before.
  Mr. Jay: The right hon. Gentleman will recall that that is what everybody said in 1932, and it was all proved wrong within a few years.
  Mr. Higgins: That may be the case, but we are in a new situation and we must analyse it correctly if we are to provide the right solutions. I do not agree with the right hon. Gentleman's analysis of the position in the 1930s, for the reasons outlined by my hon. Friend the Economic Secretary to the Treasury, who referred to the real rates of interest then and now.
  I attended the recent CBI conference as a delegate. As was agreed there, the crux of the issue is competitiveness. The fact that the Government are winning the battle against inflation is of the greatest importance, not least because it means, we hope, that there will be a corresponding reduction in the level of wage settlements. That is the main way in which we can claw back the massive reduction in competitiveness between 1979 and 1980 and enhance the prospects for more investment in existing firms and for the creation of new firms.
  We are right to give the battle against inflation the highest priority. It is a mistake to suppose that we could change at this stage from an inflation priority to an unemployment priority. The conquest of inflation is essential if we are to do anything to alleviate unemployment in the long term.
  I greatly welcome the reduction in interest rates. It should enable us to get more investment and to get the economy going again, not least because it will considerably reduce industrial costs and will help to restore our competitive position.
  The right hon. Member for Stepney and Poplar (Mr. Shore) was less frank than usual. He tried to say that we have had a 36 per cent. deterioration in our competitive position and that it is wrong for the Government to say that we must get that back in terms of real wages. The right hon. Gentleman advocated devaluation as a panacea for all our problems, but he knows that devaluation would succeed in restoring our competitiveness only if there were a corresponding effort to ensure that the effect of devaluation on higher import costs and inflation was not reflected in wages.
  Therefore, the right hon. Gentleman is also advocating a reduction in real wages. We all know that the reduction in our competitive position was due partly to a change in the exchange rate and partly to a massive increase in motley wages. If we are to restore our competitiveness, we must get a better adjustment of our wages in relation to those of our competitors. There is no way round that. We paid ourselves more than was justified.
  Mr. Robert Sheldon: Will the right hon. Gentleman give way?
  Mr. Higgins: I give way to the right hon. Gentleman, because he has interrupted me every time that I have spoken in the Queen's Speech debate over many years, and it would be a shame not to maintain that tradition.
  Mr. Sheldon: I am happy to maintain that tradition. The right hon. Gentleman fails to take into account a number of possibilities, not least that put forward by his right hon. Friend the Member for Sidcup (Mr. Heath). There could be an offset by reductions in VAT to take account of the increase in prices. There are many other ways of doing that. It would be tedious for me to go over them all, but at least one has been put forward in the debate so far.
  Mr. Higgins: But we all know about the implications for the deficit, the money supply and resurgence of inflation, which, in turn, would be reflected in higher wage claims and so on. That is not a legitimate viewpoint.
  Mr. Heath: If the Chancellor of the Exchequer takes the view, as we understand he does, that he has £1 billion, £2 billion or £3 billion to play with, why should he not play with it in this direction if he wants to reduce the value of sterling and thereby improve our competitive position and keep out imports? Why does my right hon. Friend dismiss that so casually? It deserves serious consideration.
  Mr. Higgins: Of course, but I was answering the point made by the right hon. Member for Ashton-under-Lyne (Mr. Sheldon). I do not dispute that, given the scope for a so-called fiscal adjustment, one could concentrate it in one form of tax relief or another that might have important implications for the cost of living. That is certainly one option, but it does not legitimise the argument of the right hon. Member for Ashton-under-Lyne. The point made by my right hon. Friend is separate and needs to be considered on its merits. I hope that there will be scope for a fiscal adjustment, and there are various ways in which it could be used.
  A fundamental point is that excessive wage claims in the parts of the public sector where the workers have great industrial muscle have serious implications for unemployment elsewhere. If the wage settlements in the water, electricity and gas industries are high and unjustified in the light of the present rate of inflation, the effect, reflected in prices and industrial costs, on other firms—for example in the West Midlands, to which the hon. Member for Birmingham, Northfield (Mr. Spellar) referred in his maiden speech—will be dangerous, and will inevitably increase overall unemployment in other industries. It is important for the Opposition Front Bench and the TUC to convey to people in the public sector industries the effect that excessive wage claims are likely to have on unemployment among other trade unionists in other parts of the industrial and manufacturing sector.
  I want to say a word about the national insurance surcharge. The Chancellor of the Exchequer has been ingenious in his attempt to backdate it as far as possible. We all know that it is a difficult technical matter. Many of us had hoped that it would be abolished. None the less, although we do not know the outcome of the present wage round, he was right to be prudent at this stage in the extent to which he reduced the surcharge. Otherwise there would be a danger of people saying, "There is an improvement

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  in the cash flow of companies, so let us put in a bigger wage claim." We must see how the wage round goes between now and the Budget. When it comes to the Budget, I hope that the Chancellor of the Exchequer will give the highest priority to the abolition of the national insurance surcharge.
  Of course, there will be other competing claims, not least the one mentioned by my right hon. Friend the member for Sidcup (Mr. Heath). My view is that we should concentrate our efforts in the spring on industrial costs and our competitive position, not on income tax—if there is any scope for fiscal adjustment, as I believe is likely—provided that the wage settlements in the meantime are reasonable.
  On inflation, we have been considerably successful so far. However, there are statistical dangers in quoting annual or other rates of inflation. We all recall the figure of 8·4 per cent. that was quoted some time ago by the right hon. Member for Leeds, East (Mr. Healey). Perhaps my right hon. Friend, in winding up, will say what the present rate of inflation is, calculated on the same basis as was used by the right hon. Member for Leeds, East on that occasion. I believe that it is close to zero. However, the corollary of having a number of good months is that it is difficult, unless we truly reduce the rate of inflation to zero, to go on doing that the following year. Inevitably, the tendency will be for the figures to rise again. We should not overlook that purely statistical—or arithmetical—fact. If we succeed in beating inflation, the total increase in prices and the effect on people's living standards are none the less beneficial.
  On pensions clawback, I do not believe that it is legitimate to use the expression "clawback" in the context of the proposals that have been made by my right hon. and learned Friend the Chancellor of the Exchequer. What is proposed is clear. The forecast for inflation went wrong, and it will still be covered to the full extent, as I understand, in the coming year. There is to be an adjustment for a subsequent period. In my opinion, that cannot legitimately be described as clawback. Clearly, there is a problem of presentation.
  However, we cannot win in politics. There is another aspect to be considered. During the past few days I have received many complaints from my constituents. They do not praise the reduction in the rate of inflation, but complain about the reduction in the rate of interest. Unfortunately, they have all put their money in building societies. They complain bitterly that the income that they had hoped to get for a long time to come has been significantly reduced by no less than about seven percentage points. Therefore, we should not underestimate the problems, despite the fall in inflation, in the adjustment that will have to be made by those who have saved over a lifetime and provided for their retirement, and who are now living on fixed incomes. They will have to make a genuine adjustment. I hope that that fact will be taken into account when the Chancellor of the Exchequer decides on the adjustment that he should make eventually to national insurance pensions.
  I should like to comment briefly on the policies that the Government have adopted. I have maintained consistently throughout the period of this Government that we have not had a true monetarist policy. Indeed, that view was supported by the Treasury and Civil Service Committee. Instead of seeking to control the money supply with a low
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  PSBR and low interest rates, we have had a high PSBR and high interest rates. The situation has begun to change. Public expenditure is now gradually coming under control.
  The PSBR is correspondingly low, and we can now look forward to further falls in interest rates. That I welcome. That is the right way to proceed, and I have said so consistently for some time.
  At the same time, however, we should take into account the overall state of the economy. We shall look forward in the Select Committee to considering the Chancellor's present proposals in greater depth. If we look at the history of the money supply, it is difficult for those who have taken a simple-minded view on the issue to argue that what is now happening to inflation is consistent with what happened to the money supply in earlier periods. Such people would argue, I think, that inflation should be going up, not down. We shall need to go into the matter in more detail in the Committee, and no doubt we shall report in due course to the House.
  My right hon. Friend the Member for Sidcup suggested in his intervention that there might be scope for more fiscal adjustment, and so on. If we get a satisfactory wage round, I hope that will be possible next spring. There has been a feeling for some time that any attempt at a pre-election Budget would be regarded with great cynicism by the electorate. It might even be counter-productive. We should beware of being too cautious in the spring, if the wage round has been satisfactory, for fear of being accused of an electioneering Budget, when in fact there are sound economic reasons for relaxation in a number of ways. However, it is right to concentrate on ways of reducing industrial costs and continuing the battle against inflation. Only in that way—even though it may take a long time—can we hope to cure the fundamental problem of unemployment which is having such tragic results for many of our people.
  7.27 pm
  Mr. Bernard Conlan: It would have been remarkable if the Government had not referred in the Gracious Speech to their sympathy with and understanding of the current unemployment. The words that the Government inserted in the Speech are remarkably similar to the words that they used in the first Queen's Speech on 15 May 1979, shortly after they came to office.
  What has happened since then? Unemployment has increased more than twofold. If the Government's pious words of May 1979 did not bear the fruit that they expected, why should we believe that their pious words of 1982 will fare any better?
  However, we should not be surprised that unemployment has increased since this Government came to office by an astonishing 123 per cent., because the central plank of their economic policy is to drive down the level of inflation. It has been said clearly time and time again by right hon. and hon. Members on the Treasury Bench that the principal Government strategy is to reduce the level of inflation. The weapons that they are using to achieve lower inflation rates are attacks upon the trade unions and the increasing level of unemployment, thereby weakening the bargaining power of the trade unions. There is no doubt that the trade unions today are unable to achieve higher levels of wage increases because unemployment has led to their weakening. That has been a central Government strategy.

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  I come from the North of England, which has suffered more than any other region in Britain from a high level of unemployment. With the exception of Northern Ireland, the Northern region has the highest level of unemployment. It is higher even than in Scotland and Wales, where unemployment is high. In the Northern region unemployment has traditionally been higher than even in those black spots.
  We have pressed successive Governments for equality of treatment with Scotland and Wales. Both those regions have development agencies which have been able to encourage the expansion of their economies. Governments have constantly resisted our overtures for a development agency for the North. That must be rectified.
  It is impossible for those who have not suffered the drudgery and misery of unemployment to begin to understand the suffering, the agony and the deprivation that unemployment brings to men who want to work. Unemployment affects not only the menfolk of a family but every member, including the children.
  One of this morning's papers carried a report of an extremely sad case in Strathclyde of a man who had been made redundant. As a consequence of that, the whole family were suffering and unable to pay their weekly rent, as a result of which they faced eviction. The poor wife's state of mind was so dreadful that she deprived her two young children of their lives and tried to take her own. That is the misery that is caused by unemployment. God forbid that such a story will be repeated. However, similar pressures are being felt by millions of families throughout the length and breadth of Britain.
  The Prime Minister has belatedly recognised the need to buy British in order to support British manufacturing industry. A late conversion is better than none at all but the Government's performance will have to be better than it has been. Only a few months ago I drew the attention of the House to the purchase by the Home Office of an antenna from an American company for the reception of radio signals in Britain. That antenna could have been satisfactorily built by a British company which specialised in such work.
  The Government argued that the American company's price had the edge. I dare say that it would not have had the edge if the people responsible for placing the contract at the Home Office had taken into account the redundancy payments to the 40 or 50 people who lost their jobs as a result of that decision, the unemployment benefits that had to be paid by the Government as a result of those people being thrown out of work, and the loss of income tax from those people.
  My point is that the net figure—the figure on the bottom line, as the Americans prefer to call it—would have been far higher, when all those matters are taken into account, than the price paid by the Home Office for that antenna. If the Prime Minister is now converted to a policy of buying British, well and good. We must have no repeats of such an experience.
  In recent weeks and months, the Americans have put up barriers against the importation of British steel. I do not complain about that. I do not blame the Americans for adopting that policy because the loss of a job in the Pittsburg steel industry is as severe and distressing to a family there as the loss of a steel job in the constituency of my hon. Friend the Member for Consett (Mr. Watkins).
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  The loss of a job in the motor car industry in Detroit is as tragic as the loss of a job in British Leyland or Dagenham. Therefore, I do not blame the Americans for resisting imports that damage their industrial competitiveness and the jobs of their people.
  What I do say is that the Government must tackle those problems in exactly the same way. We are the soft touch. Imports are coming into Britain and damaging our industrial capacity because we are allowing it. We must make a stand and ensure that such imports do not come in as readily as they are, damaging our most vulnerable sections of manufacturing industry.
  Unemployment can and must be reduced. First, we must adopt a policy of selective import controls to protect those areas of our manufacturing industry that are most vulnerable at present. Second, to reduce the high level of unemployment it is essential that we have a massive public investment policy. If the Government cannot take up those policies they should pack up and go.
  7.40 pm
  Mr. James Hill: We have had a series of speeches—some rather broad brush—but I was glad to listen to the speech made by the hon. Member for Gateshead, East (Mr. Conlan). He brought home to us the fact that when discussing the economy or unemployment we must ultimately think, in particular, of our constituencies.
  Southampton has unusual employment and economic problems. The city and port rely on each other. We have major warship building yards and many of my constituents provide a service to British ships and to seafarers. The three hang together. Seafarers are faced with a terrific reduction in the British merchant fleet. Indeed, it is being reduced so quickly that it is almost impossible to keep up with the percentages. The facts came out after the Falklands affair. During that crisis there were 54 chartered and requisitioned merchant ships and the British merchant fleet played a significant part in that conflict.
  Given the rapid deployment of those ships and the way in which the ports of Portsmouth and Southampton rallied, it is distressing to discover that between January 1981 and the last count possible, the number of British registered ships fell from 1,141 to 919. That is a decline in numbers of 19 per cent. in just over 18 months and a decline of 24 per cent. in the gross tonnage of the British merchant fleet. As we are a maritime nation one draws the conclusion that Governments past and present and even the British people have forgotten that, as a great exporting and trading nation, we must see to the health of the British merchant fleet. We must maintain our fleet in times of greatest stress, and it should be borne in mind that Admiral Sir John Fieldhouse said:
  "I cannot say too often and too clearly how important has been the Merchant Navy's contribution to our efforts. Without the ships taken up from trade, the operation could not have been undertaken, and I hope this message is clearly understood by the British nation."
  However, I do not think that that message is clearly understood. Many of my constituents who are seafarers find it more and more difficult to obtain employment on British ships.
  Some hon. Members are probably sick and tired of our debates on the fact that flags of convenience are gradually taking over the merchant fleets of the world. That means that other nationals will be hired as crews. The great

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  fear—as demonstrated by the "Torrey Canyon" disaster—is that the ships are sometimes not well officered or supervised and take far more safety risks than are allowed in British merchant ships. I plead with the Government at least to consider the reasons for that decline and to adopt some sensible national programme that will encourage shipowners to register ships under the "red duster". That would certainly give my constituents employment.
  Southampton is a seafaring town. The "Queen Mary" and the "Queen Elizabeth" have not been forgotten. We still have the "QE2" although it goes on long cruises and does not provide—except for seafarers—the necessary employment.
  The Gracious Speech tells us that British Shipbuilders is to be privatised. That is a very long shot. The British merchant fleet could use more ships, but will the orders go to British Shipbuilders? Once again, the Government must have a programme. They cannot privatise a company just by selling the warship yards and then expect some fairy godmother to take up the merchant shipbuilding side of British Shipbuilders. The company has done very well. In the past few years I think that it has gained 43 orders from Hong Kong. However, that cannot continue. I am not asking for a subsidy, but perhaps the Government could induce the powerful British shipowners—who own dozens of ships—in the General Council of British Shipping to use British Shipbuilders on the basis that it has the best possible yards for building new merchant ships.
  If British Shipbuilders is privatised, Vosper Thornycroft will become tremendously important. At one stage it seemed to be the money-making side of that industry. The money was put into one big coffer and used to pay for the loss leaders and other merchant shipbuilding yards that did not make good profits. Therefore, I am sure that Vosper Thornycroft will be pleased if British Shipbuilders is privatised. Of course, it must have been extremely pleased to hear the Chancellor of the Exchequer talk about the £622 million for the replacement of ships lost around the Falkland Islands. Many of them were built on the south coast and Vosper Thornycroft must hope that the Government will give this company a kind thought. Vosper Thornycroft is one of our major employers. My constituency and Southampton, Itchen will be affected if Vosper Thornycroft obtain several more orders for frigates.
  The brief from the research department of the Library included about 12 areas of privatisation. We know most of them. British Airways has not yet quite got off the ground. British Aerospace got off the ground quite well. There has been a statement on Britoil and so on. The British Transport Docks Board was at the end of the list. I was a member of the Committee discussing this issue. The Transport Act 1981 has been enacted for well over a year. The Secretary of State for Transport has not made any significant move towards privatising the British Transport Docks Board, which will be called Associated British Ports.
  Of course, the British Transport Docks Board had a serious managerial problem. There were problems in Southampton last year when the whole port was practically at a standstill. Last year, the figures did not read well, but this year a £14 million profit is on its way. We are getting to the point when the Secretary of State for Transport could move ahead with denationalisation. I say that because there is some unrest in the port because of the doubt about
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  whether we shall denationalise. As the matter was not mentioned in the Queen's Speech I have a nasty feeling that the 1981 Act will not be acted upon by any Secretary of State.
  In view of the problems that are associated with that group of nationalised ports it might be as well if the Leader of the House could make a mental note, not perhaps to mention this feature of my speech, but to let the Secretary of State for Transport know that someone is still interested in the privatisation of the British Transport Docks Board.
  The sum of what almost amounts to my resumé of Southampton's problems revolves around shipping. We are a fine port. We have many good sailors and the city has many good attributes. Please do not let the city or the port die through lack of interest. Lack of interest cart be the only cause.
  The Transport and General Workers Union is worried about possible planning consent for a container port in Falmouth. It would be complete madness to set up another container port that would compete with the one that the Government are hoping to privatise. There could be nothing more disastrous in the prospectus, when it is approved, than the prospect of the very Government who will privatise a port setting up an enormous rival. Moreover, the rival is not necessary. Both Southampton Members of Parliament will resist it as far as possible. I hope that the matter will be rethought. One cannot predict how much trade Southampton will enjoy in the future. Nevertheless, another major container port only a few miles away—that is all it is in shipping terms—would be disastrous for Associated British Ports.
  The economy and employment of Southampton is close to my heart. The problems there are different from those being suffered in the North and Scotland. We have never experienced much unemployment in the past and it is now about 8 per cent. I should not like neglect by a Conservative Government to allow it to climb higher.
  7.52 pm
  Mr. Richard Wainwright: I shall speak to the Liberal-SDP amendment on which the House will divide. But first I endorse one of the characteristically compelling points made by the right hon. Member for Worthing (Mr. Higgins). He rightly pointed out that clawback is not the right term for what the Government propose to do about pensions and that this is not the valid criticism of the Government's rather nefarious intention with regard to pensions. He demonstrated that clearly.
  The Government's declaration about their future treatment of pensions reveals the urgent need for a specific cost of living index or special retail price index for people of pension age. I shall take some topical examples. The substantial element of mortgage interest and the cost of sophisticated consumer durables in the national retail price index is inappropriate to the vast majority of people of pension age. Even in these times, they have probably finished paying off their mortgage by the time a married couple are both pensioners. In contrast to that, every hon. Member knows that pensioners have to make a conspicuous outlay on heating and lighting costs and comforts in the home. Moreover, when they are involved with families elsewhere and have grandchildren, they must often bear the cost of public transport. There is therefore a stronger case than ever before for a specific index for

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  pensioners. If one were applied, there would not be much room for the Government's intended adjustment to the pensions next November.
  We have listened to some illuminating speeches. The lengthier and deeper the British recession grows—lengthier and deeper than in any other major industrial country—so also grows the Chancellor's air of detachment. When he speaks, it is as if he were presiding over a laboratory rather than the flesh and blood of one of the great manufacturing nations. I do not blame the Chancellor as much as I blame his colleagues. I am, therefore, glad that the Leader of the House is present.
  The Chancellor has been allowed to adopt such a detached attitude because of his Cabinet colleagues' failure to influence him. It is almost as though he were a vivisectionist observing an experiment when he talks about the unhealthy state of the economy. It is truly awful that there is in Cabinet no voice of the Northern part of the kingdom with its manufacturing areas to bring home to the Chancellor the fact that he is not simply conducting a laboratory experiment but tampering with the British manufacturing base. The absence of a voice from the traditional manufacturing areas in the Cabinet is a tremendous lack. I am aware that the voice from Whitby is sometimes eloquent in fishing matters, but Britain's real substratum in the North is not represented in the Cabinet. I shall give just one example out of many of the results of that lack.
  Year by year, the Chancellor seems almost to pride himself on moving by small steps. That is the case with the autumn statement. There are modest adjustments to the national insurance surcharge. Does he fail to appreciate that if tax remissions and tax concesaions are to be of real value, especially to our great exporting industries, there must be plenty of notice of them so that those industries can include them in their costings? The alteration is welcome in cash terms. In January, February and March, employers will be able to deduct 3 per cent. of their wage bill from their NIS remittances. The alterations are fine with regard to cash but for getting orders the news comes far too late. To get into the costings for new contracts for next year, the news should have been made available in the summer. Modern industry requires ample notice of major changes, especially when those changes can make all the difference to winning or losing a contract in world competition.
  The Treasury Select Committee was insistent on the autumn statement being a green Budget because ample notice and an early unveiling of such matters is very important. The Committee wanted the autumn statement as a green Budget so that industry could be informed and have an opportunity to express its views carefully from all quarters rather than as a result of an esoteric conference in Eastbourne of all places. For the information of hon. Members who did not share my privilege of being there, there were division bells in all the bars and cafes on the complex at Eastbourne. I saw CBI members going in to vote on the exchange rate motion when they had not heard a word of the debate. To an MP, it was a familiar sight, but CBI members were asked to endure the tedium of Eastbourne for only one-and-a-half days, whereas we usually attend here about 220 days a year. It was unfortunate that the CBI should follow our tradition of distant warning bells.
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  For the benefit not of business men's excursions but of people who graft hard in their business and on the shop floor, a green Budget should be produced in the autumn revealing the options for the spring Budget. Teasing industry and commerce with newspaper discussion of possible options, such as
  "Will an October rabbit turn into a March hare?",
  as one headline put it, is not businesslike. That is not satisfactory when world conditions are so intensely keen. The Chancellor is to blame for keeping everyone in suspense.
  Partly because of the Government's unbusinesslike attitude, some of the main pillars of manufacturing and metal working industries are in dire straits as a result of low profitability. Gradually they are losing their capacity to compete because they do not make enough to keep abreast of modern developments. A cursory examination of the business press in the last few days reveals the plight of such firms. I refer to household names such as Brockhouse, Peter Brotherhood, Capper-Neill, GKN, Midland Industries, Neepsend, Renold, the 600 Group, United Springs, Armstrong Equipment, Lucas Industries and Jonas Woodhead. They are all in grave difficulties. Lack of profit has resulted from misguided and unbusinesslike national policies pursued not only by the present Government but by various Governments in recent years. This problem has been greatly aggravated in the last three years.
  Certain measures need to be introduced urgently. The Liberal-SDP amendment states:
  "overdue repair and modernisation of public assets and public services together with measures essential for increased industrial efficiency would be of far greater significance than the proposed changes in mere ownership."
  In saying that we are flatly denying the Chancellor's extraordinary statement today that orders do not emanate from the public sector. He has said that before and should not be allowed to get away with it. The only companies of any size in manufacturing that are thriving are those involved in armament orders, so the Chancellor's statement is hollow.
  In the present trough of recession, the time is ripe for the Government to introduce capital schemes which already exist in their pigeon holes. There is an enormous shortfall in the order books of firms making the heavy machinery needed for sewer works, digging industries, building equipment and construction equipment industries. I am talking about firms that produce bulldozers and mechanical diggers for programmes which are labour intensive and have a low import content.
  It will be no surprise to hon. Members that the Monopolies and Mergers Commission, in its report published earlier this week about two major water authorities, contained a long passage part of which stated:
  "The dilapidated state of the nineteenth century sewer system in the north-west, and the frequency of sewer collapses, represent a major challenge both to NWWA and to the statutory framework … There is also the scale of the problem, which would be daunting whatever the legal and institutional framework."
  In some of the industrial towns in the north-west not a week goes by without a fresh cavity appearing in a main street, with all the dislocation that that involves. It is flagrantly extravagant to have to make patchwork repairs with urgency instead of tackling the job in a businesslike way on a major scale.
  A house rehabilitation programme is also desperately needed. That would have the advantage of a low import

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  content and a special advantage of work beginning quickly. House rehabilitation does not have a long lead time. One can get cracking quickly. About 500,000 homes are officially designated as unfit. There is immense scope to save 500,000 national assets before they become derelict and beyond repair.
  The right hon. Member for Sidcup (Mr. Heath) rightly said that instead of messing around with the national insurance surcharge in his autumn statement the Chancellor should have abolished it. Employers would be given confidence if the legislation were repealed. Employers would then not fear that a misguided Government would slip the surcharge back by passing a late night order through this House.
  Interest rates must be brought down at greater speed. The real interest rate is still high. The continual need for companies to go further and further into debt wipes out any advantage that they might have experienced as a result of the recent drop in nominal interest rates.
  Any chance of such a move reducing the international exchange value of sterling should be welcomed rather than feared. By carefully contriving, we could establish a controlled devaluation of sterling instead of getting into a mess later with the balance of payments which looms in the autumn review, and therefore suffering an uncontrolled devaluation of sterling as a result of forces beyond our reach.
  Finally, in the view of the alliance, there is a pressing need not for more temporary job creation schemes—we have enough of those, some valuable and some rather dubious—but for the creation of a large number of permanent welfare and health jobs to help to deal with victims of the rapidly declining social climate. There is no doubt, especially perhaps among hon. Members who live in or represent urban areas, that the pressures of unemployment and the insecurity felt by those who are still clinging to jobs are greatly increasing the amount of mental and physical illness and the general results of stress.
  The local government welfare services and the National Health Service are desperately short of unskilled but well-disposed people who should be given the chance to help those more skilled in health and welfare with their tasks, especially in keeping people looked after and cared for in their own homes. The Government seem frequently to overlook the enormous economy of enabling the elderly, the frail, the disabled and the subnormal to carry on in their own home setting through the provision of some supportive care from day to day, rather than allowing them to be institutionalised, to their own disadvantage and at a greatly increased cost to the taxpayer. A substantial number of long-term jobs should be created to assist the health and welfare services.
  It is appalling that we should have to debate such tragic matters as the present rate of unemployment and its continued increase in a country which, almost uniquely in the industrial world, is self-sufficient in energy. If we cannot manage our affairs with the great privilege of energy supplies assured for many years ahead, one wonders whether we deserve to succeed.
  8.11 pm
  Mr. Anthony Beaumont-Dark: An important theme in the past few days' debate on the Gracious Speech has been the genuine and great concern that we all share about unemployment. I hope that
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  the Leader of the Opposition will not regard it as too much of a pun when I say that he put the boot in for me when he commented that in an article in The Financial Times I said that manufacturing industry had its back not against the wall but against a precipice. I went on to say that industry had been hammered by unions, by rates and taxes and by all those who did not understand that it is manufacturing industry that makes the profit that enables people to care rather than simply talking about caring, which is always so much easier.
  As a result of the Chancellor's firm action, which should have been taken by his predecessors in the past 20 years if they had been realistic about where we were going, we are now likely to have up to £2 billion to be used in one way or another. Many argue that that money should be used to reduce taxation on those in employment. In my view, however, whatever promises politicians may make about reducing taxation, the most important task facing any Government is to do all that they can to reduce unemployment and the pain and anguish that it brings. There is no doubt that the money should be used, as has so far been announced in the past week, for further moves to help industry to be more profitable, to preserve more jobs and to stop more businesses foundering.
  The Chancellor's proposals for the national insurance surcharge are absolutely right and will greatly help industry. Thank God, too, that there is now some realism about the fact that the great increases in energy costs have been an enormous burden on industry. That is now to be stopped, and I applaud that decision. Above all, my right hon. and learned Friend the Chancellor has succeeded in bringing back to the shop floor and into nationalised industries a sense of realism about wage bargaining. Who would have thought that the time would come when we should hear about a three-year wage agreement at Scottish and Newcastle Breweries or a two-year agreement at British Leyland that overturned what the unions wished to do? Industry will blossom, with the new realism.
  A tremendous problem still faces British industry. Successive Governments have let wages rip. Industry has been weak and unions have been too strong so that basic wage rates have increased by 387 per cent. since 1975 while output has increased by only 111 per cent. The squeeze is on industry and I appeal to the Government to recognise the causes. Industry has now done everything possible to reduce its costs and further help is needed. The Government must re-examine industrial rates charged on manufacturing industries. I know of a large company in the West Midlands whose rates bill has increased by 79 per cent. since 1978. The company is now paying more than £11 million a year in rates. Another smaller manufacturing company is paying more than £600,000 in rates this year and made a loss of £240,000.
  Of course firms will lay off more people. Much of the blame for job losses and the misfortunes of local authorities lies in their overspending. If we impose too many further penalties on local authorities now, we shall be punishing not them, but the ratepayers and those whose jobs will be put at risk. Of course local authorities should be introduced to the real world, but let us not penalise the industry that provides the jobs. Let us use some local authority funding partially to derate industry. That measure would save at least some firms and jobs. I hope that we shall take some risks by abolishing the national insurance surcharge as soon as possible. There is no justification for the immoral 10 per cent. surcharge on

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  cars. It was a rotten tax when it was introduced and it is even more so now. It is an insupportable burden on a vital industry that employs so many.
  The Economist defined protectionism as the delusion of painless remedies. It would be useless to adopt wholesale protectionism but, because of the pain that we have gone through in becoming competitive again, people now realise that, as Rab Butler said, this country must export or die. Let us at least ensure that competition is fair. Is it fair that we export 355 cars to Spain and import 59,318 cars from that country because we charge them only 41½ per cent. duty and they charge us 36 per cent.? Is it fair that we should import 30,000 cars from Eastern Europe, when the duty that Romania charges on our exports is 50 per cent. and when our import charge is nil? We must be realistic but we must not delude ourselves that restrictiveness will solve our problems. Such a policy would only compound our difficulties.
  Incomes will rise by about 7 to 8 per cent. this year. That may create problems in attracting more imports, so there is no case for personal taxation relief this year. The duty of all hon. Members is to bear it in mind that people expect us to create jobs. The Government, who have stuck firmly and properly to their policy of reducing inflation and returning people to realism, have a good chance of creating jobs. That is why the public consider that the Conservative Party has the only real policy. There is no alternative to realism. I hope that the country will realise that it must ask not "What tax concessions may we have?", but, "What can we do to help to reduce unemployment?" Many of the remarks made by hon. Members on both sides of the House have shown that realism. We can rebuild industry but only if we do it on the basis that we are here to create jobs. That is all that matters.
  8.20 pm
  Mr. David Watkins: The hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) was commendably brief, and I shall follow his example. He was also characteristically forthright and I shall follow his example, although I have a different view. However, I agreed with much of the gist of his remarks about the need to create employment.
  The most depressing feature of the Gracious Speech is that it simply restates philosophies and policies that have proved during three and a half years of practice to be dismally unworkable in creating employment. They have had the opposite effect. The result of the three and a half years is that a small minority of the manipulators of wealth are better off. That has been achieved at the expense of the large majority of the producers of wealth, who are called conventionally "both sides of manufacturing industry".
  An appalling indictment of what has happened is the intake of apprentices in the engineering industry. I worked in that industry until I entered the House and, more years ago than I care to remember, I served an apprenticeship. In 1979, 30,000 apprentices were employed, but we are now looking forward, after a continual decline, to an expected intake of 9,000 in 1983. That will present Britain with problems for many years, because it needs skilled labour.
  The real figure for unemployment is about 4 million—certainly more than the official estimate. Not only is there no sign of improvement, but we are told
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  officially that we can expect further substantial increases in unemployment. As a result, a policy of low wages and of fear and intimidation by more unscrupulous employers is being established as the national norm. I hasten to say that when I say "fear and intimidation … as the national norm", I am not making a personal reference to the Secretary of State for Employment.
  In the long term, the most serious result of the Government's failure will be the huge drop in national production and the systematic destruction of Britain's industrial base over which the Government have presided. The favourite ploy is to blame the world slump. The Chancellor of the Exchequer spent the greater part of his speech reiterating that ploy. We know that there is a world crisis of capitalism, although I recall that the Conservative Party denied that any such crisis existed when they were in Opposition and said that everything was the fault of the Labour Government.
  What is so worrying is that, even if and when that passes, and there is an upturn in the world economy, Britain may still be relatively worse off because we shall have no industrial base left on which to build to take advantage of an international upturn in trade. If there is an increase in spending power, there will be floods of imports and a further loss and erosion of British export markets. The Tory Party will then once again turn to blaming the miners or the Health Service workers or whoever or whatever happens to be the convenient scapegoat at that time. They will blame everyone but themselves.
  My hon. Friend the Member for Birmingham, Northfield (Mr. Spellar), in an able maiden speech, referred to the spread of unemployment from traditional blackspots to the once prosperous areas such as the West Midlands. I have the honour and privilege of being a Member of the House, but the task of representing what has been turned into one of the worst unemployment black spots in Britain. I shall refer to my constituency not because I wish to make a constituency speech but to cite it as a classic example of the failure of the Government's policy.
  Two years ago the profitable and viable steelworks at Consett was arbitrarily shut down in conformity with the monetarist straitjacket which had been imposed at that time by the Government on the British Steel Corporation. Three thousand seven hundred jobs vanished forever. One and a half years ago the Ransome Hoffman Pollard ball bearing factory at Stanley in my constituency was arbitrarily closed down by a company which then announced that it had doubled its profits, and another 1,250 jobs vanished forever. It is worth noting that Ransome Hoffman Pollard was created by an infusion of public money under a Labour Government but has been brought down in the cold climate of Tory monetarism.
  In my constituency, in the past three years, practically every other industrial plant, including many which were established in earlier and happier years with grants and public subsidies, has either been closed from a distance by headquarters or bankrupted completely or survived only as a shadow of its former self with massive redundancies. It is a significant pointer that the largest employer in my constituency today, which was once a major centre of industry, is the Shotley Bridge general hospital. That is a terrible indictment. We all know that the Government are already well forward in their long-term aim of dismantling the National Health Service.

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  The Government's policies are based on the theory that if an economy, supported publicly for the common good, is destroyed in this way, commerce and industry, left to their own devices, will prosper. We are told that new private industries will rise to stand proudly on their own feet and save us all. The events of the past three years show that that is nonsense, and, again, I turn to experience in my constituency as an illustration.
  At the time of the closure of the Consett steelworks, the Prime Minister, in answer to a Question from me, conveyed the impression that a so-called private consortium was likely to take over and continue running the Consett steelworks. The Prime Minister's sycophants in Fleet Street rushed to publicise that assertion with their usual cavalier carelessness for the truth. The truth was, as everyone in the North-East knew, that the so-called consortium lacked credibility. Today, the steelworks, which the consortium was to take over and run, is in an advanced stage of demolition.
  Over the past two years, as a result of various efforts, there have been many inquiries from the private sector to establish new plants in the Consett and Stanley areas but a common theme runs through every one of those inquiries. The theme of every inquiry is, "How much Government grant and how much public money can we get if we go there?" The private capital market simply is not capable of funding new industry.
  My area has made prodigious efforts to create jobs, and with some success. However, it is only a fraction of what is needed. I have worked with those responsible for seeking to attract industry and jobs into the area, and I pay tribute to them for their work. It is a further irony that those efforts have come from the public sector—in spite of, not because of, Government policy.
  Affairs in my constituency are always uppermost in my mind. I am trying to relate them to the national climate, as did the hon. Member for Southampton, Test (Mr. Hill). We are seeing a classic example of the failure of laissez-faire capitalism. What is called monetarism today is simply old-fashioned laissez-faire capitalism dressed up in twentieth century garments. The Opposition advocate an economy planned and financed in the public interest.
  The official figure for unemployment in my constituency, after three and a half years of the disastrous monetarist experiment, is about 28 per cent. The official figure for male unemployment is more than 33 per cent. We all know that actual figures are substantially higher than official figures. Official figures do not show the true unemployment among school leavers, which, in the Consett area, is no less than 80 per cent. Eight in every 10 school leavers cannot find work, and there is no prospect of their doing so. A generation is growing up—and not only in the North-East—whose lives are blasted and wasted from the day that they begin to experience the grim reality of life under this Government.
  The philosophy being applied is essentially nineteenth century, and it does not work any better now than when it failed 100 years ago. The Government must be replaced with one in touch with late twentieth century reality, who look ahead to the twenty-first century rather than back to the nineteenth. Then a start can be made on what is undoubtedly the immense and enormously difficult task of seeking to bring about a new Britain to rise from the ruin that has been created.
  Mr. Deputy Speaker (Mr. Bernard Weatherill): I remind the House that Front Bench spokesmen wish to begin their speeches at 9.20 pm. A considerable number of hon. Members have been waiting all day to take part in the debate. Therefore, short contributions will ensure that fewer are disappointed.
  8.34 pm
  Mr. Raymond Whitney: I cannot comment on affairs in the constituency of the hon. Member for Consett (Mr. Watkins), but if he believes that we are indulging in laissez-faire capitalism he surprises me—and I think that Adam Smith will be spinning in his Scottish grave.
  One common theme across the House has been the great problem of competitiveness. We are no longer in the debate about the horrors of unemployment. The question is how to solve it, and that involves competitiveness. I do not believe that the idea of some massive devaluation can possibly be the answer, even if it were attainable. Experience has shown that that is not an answer.
  I remind my right hon. Friend the Member for Sidcup (Mr. Heath), who mentioned 1972, that in the four years after that there was a devaluation of the currency of over 25 per cent. but no improvement in competitiveness. Therefore, although there may be some adjustment, as a way out and a way forward to competitiveness, that cannot be the answer. The answer has to be basically to maintain the Government's course, which is to follow the Keynesian injunction not to debauch the currency and so not to follow the beguiling methods offered by the Labour Party and the alliance, that involve spending several thousand billion pounds more. That would lead to inflation and would destroy any hope of competitiveness.
  One point that has not been mentioned enough is the need to continue to remove the restrictive practices that have grown up in British industry. Sadly, that was because of the unique power of trade union leaders. They have uniquely abused that power. Professor Minford estimates that trade union restrictive practices have cost 1 million jobs. The CBI suggests that if we could have maintained the share of international and domestic markets that we had 10 years ago, 1½ million more people would be employed. Therefore, the Government must continue to consider restoring to workers their powers of decision. I hope that the Government will press ahead with the consideration of secret ballots, which will improve the prospects of the competitiveness of British industry and will bring back jobs.
  We must achieve a different balance between the public and private sectors. We have moved from 45 per cent. of the GDP to 44 per cent. of the GDP being spent in the public sector. That is progress, but we have a long way to go.
  Those are the general areas of domestic activity on which the Government should concentrate. I have one final international point to make, which has not been made in the debate. We have heard a great deal of gloom—rightly so—about the state of the world economy. Contrary to what the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) said, we know, certainly on the Conservative Benches, that the fate of this country and that of other industrialised countries are linked. We do not rejoice in other people's problems. We make no invidious comparisons. We are linked. That linkage comes through the GATT trading system. We should therefore recognise

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  the vital importance of the GATT ministerial meeting that is to take place in Geneva on 24 November. GATT has been the engine of world progress since the war. I am amazed that no one has emphasised that.
  My right hon. Friend the Member for Sidcup talked a good deal about the importance of the International Monetary Fund and the World Bank. However, whatever their state of development, trade is far more important to all countries than aid and development assistance by a factor of 15 or 20, however low the state of development of those countries. Therefore, it is the trade of the world economy that we must restore.
  What was going to be a meeting of hope in Geneva this month is turning out to look like a meeting of menace, where the countries assembling there will threaten to put up more protectionist barriers. Therefore, in their international effort to create more jobs I urge the Government not only to go to the GATT ministerial meeting in a positive frame of mind, which I am convinced that they will do, but to try to convince all our trading partners, developed or developing, that over 25 years the open market system was a great success and that the agreements and accords reached in the Tokyo round have not been properly implemented. There is great hope and there are great prospects. We reject them at our peril. If we all retreat into protectionism, whatever sensible policies are followed here or in other countries, we shall all be lost and our economies will be destroyed.
  8.40 pm
  Mr. Robert Kilroy-Silk: Representing as I do a Merseyside constituency and an area with harrowing and persistently high levels of unemployment, I cannot but judge the Gracious Speech and the Ministerial statements made on it by the criterion of whether or not the speech, the proposals in it and the statements made during the debates will contribute to the lowering of unemployment on Merseyside. The sad, unpalatable but clear fact is that it will in no way alleviate the serious and unacceptably high level of unemployment on Merseyside. The Government, unfortunately, seem to have little if anything to offer to deal with this problem.
  I have now represented my Merseyside constituency for the best part of a decade. One of the most dispiriting features of being a Member of Parliament for that area is having to watch the almost daily decline in its manufacturing industry, the apparently almost irreversible erosion of its industrial base. I do not say that that is the responsibility of this Government, the previous, Government or any Governments of any political complexion. On Merseyside we were losing manufacturing jobs at a rate of about 11,000 a year well before the onset of the recession. It is a demonstration of the scale of the erosion of the manufacturing base on Merseyside that we lost 32,000 jobs from closures in the period 1972–79. That accelerated to a further 25,000 jobs lost in the two years from 1980. That is on top of the 64,400 redundancies since the Government came into office.
  The demise of the area and the steady drip, by drip, apparently almost irreversible erosion of industrial opportunities and employment is illustrated not only by the figures but by the large number of household name companies that have not just had redundancies but have closed down, shut up shop and left the area for ever. They
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  include companies such as Dunlop, Tate and Lyle, Mecaw, British Leyland and in my constituency Hygena, Courtaulds, British Oxygen, Albright and Wilson and many other companies.
  It is interesting that my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) in opening the debate, and every hon. Member who has spoken since, have talked about making British industry more competitive, leaner, sparer, perhaps better able to take advantage of the opportunities that an upswing in the world economy may present. That may be the case in some constituencies, but it is clearly not the case for an Albright and Wilson factory that is no longer in business, or a Dunlop factory that is no longer in Speke or a British Leyland factory that has gone from Merseyside for ever. We shall never have those companies and factories back, however competitive British industry becomes.
  In that sense the debate about competitiveness—although it is supposed to be an important issue—is academic if not irrelevant to the real problems and needs of Merseyside. We do not have left the industry that will be able to make it competitive and to take advantage of whatever wonderful opportunities are supposed to exist in the future. It is a terrifying, almost harrowing, sight to go round the inner-city industrial estates or those on the periphery of Merseyside in Kirkby in my constituency or Skelmersdale on its edge and see brand new, purpose-built industrial factories and estates all with "To let" notices, closed down or derelict. It is not a metaphysical or metaphorical waste land, but an actual ghost of an industrial town.
  A creeping industrial paralysis is overcoming the whole of Merseyside. Those features have a profound impact on the will, motivation and commitment of the population. There is no doubt, certainly in my constituency, which has a high level of unemployment, of the complete demoralisation of the work force and those who have been unemployed since the Government came to office, and before, to be fair. They see no prospect of obtaining worthwhile full-time occupation.
  While I have to accept that Merseyside's peculiar industrial problems are not exclusively the responsibility of this or previous Governments, there can also be no doubt that its problems have been seriously exacerbated by the dogmatic pursuit of rigid monetary policies by this Government. The Government's policies killed the Courtauld factory and 1,000 jobs in my constituency. High interest rates, high fuel charges, a high exchange rate and the severe cuts in public expenditure have sent Merseyside into a further cumulative and vicious decline.
  The result is that an unemployment level of 12·9 per cent., which was unacceptable and intolerable in 1979, is now 20·5 per cent. There has been an 83 per cent. increase during the three and a half years that the Government have been in office. There is an increase of 191 per cent. in the Ormskirk travel-to-work area. There are 141,500 people unemployed in Merseyside. There are a further 22,000 people on temporary and cosmetic employment schemes.
  I remember—I believe that some Conservative Members will remember also—when I and my hon. Friends berated my Government in 1976 and 1978 about the high unemployment levels on Merseyside. I remember causing one hell of a stink and fuss in the House when the level of unemployment in Merseyside was no higher than 87,000. It is now double that figure. That brings all the serious not just industrial but social consequences that we

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  have witnessed—it has not been mentioned previously today—in Toxteth and Moss Side, which are now an ordinary everyday experience on Merseyside.
  The riots that occurred—disturbances as they are called—in Toxteth did not end last year. They have been continuing ever since. Hardly a week goes by without a major conflict between the police and the population of that area. While there may be many other factors that contribute to that social disturbance, a growing sense of bitterness, resentment and frustration at what they see as the Government's callous indifference to their plight is largely contributory to the sense of desolation felt by young people. They take their feelings out on a society that does not seem to care.
  The figures speak for themselves. There are 50 unemployed adults for each vacancy on Merseyside. There have been 62,000 people unemployed for over a year. There are 197 adults chasing one vacancy in Kirkby. The most distressing feature is the effect on young people. There are 16,500 unemployed young people aged 19 and under in the North-West who left school in the year that the Government came into office. Those young people have never had a full-time job or the opportunity of such a job. They have been looking forward to jobs, careers and futures. That is a terrible responsibility that the Government have to bear.
  On Merseyside there are 5,500 young people aged 19 and under who are in the same position. They have no prospect of ever obtaining worthwhile employment. There are just under 8,000 unemployed 18-year olds on Merseyside, and there are 25 vacancies for those 8,000 young people. In Kirkby, there are 1,024 young people who have never had a full-time job and there are no vacancies. There were none yesterday, last week or last month and there will be none next month.
  Hon. Members have to see the people who are affected, and talk to them day in and day out, to realise the reality that lies behind the figures. That applies to a worse degree to black people, the disabled and women for whom the prospect of employment are far more horrendous. Inner city estates in Liverpool and in my constituency have male unemployment rates of well over 40 per cent.
  It is in that context that we have to judge the statements in the Queen's Speech and today's speech by the Chancellor of the Exchequer. He will not help and he has not helped. Nothing that he has done or proposes to do will beneficially affect long-term employment prospects on Merseyside.
  In effect, all that we have had so far is the Speke enterprise zone, but not one of the 200 new jobs in that zone was created. Every one was pinched from other areas in Merseyside. The much-vaunted enterprise zone has brought not a single new job to Merseyside. The Secretary of State for the Environment admitted in a parliamentary answer last week that every one of the 200 jobs has been brought from another Merseyside area.
  The Chancellor of the Exchequer was extremely reluctant to admit to my right hon. Friend the Member for Stepney and Poplar that he expects to increase competitiveness by reducing real wage levels. That is the Government's strategy. Not content with having increased unemployment dramatically and having demoralised the work force on Merseyside and nationally, the Government will introduce next year the second leg of their economic strategy, which is to increase something called the competitiveness of British industry, at the cost of the real
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  standard of living of working people. That was the clear implication in the Chancellor's refusal to disavow that intent when my right hon. Friend gave him several opportunities to do so.
  Your predecessor in the Chair, Mr. Speaker, asked for brief speeches, which seems always to happen at this stage of our proceedings and not when Front Bench speakers are making their 40-minute speeches. However, I know that a number of my hon. Friends still wish to speak.
  We shall not be able to deal with the problems of Merseyside through an upturn in the international or the domestic economy. We shall never benefit substantially from pickings at the rich man's table. The West Midlands might be revitalised, but Merseyside will not be revitalised until we have a Government whose overriding priority is the pursuit of full employment and who garner all the resources of society and the economy in pursuit of that overriding objective.
  We need a Government who are prepared to plan the economy rationally, coherently and determinedly and to allocate resources and investment to the unemployment black spots and other areas where they are needed most. Unless we do that we will not get a voluntary and spontaneous upturn in the domestic Merseyside economy or the increase in employment that we need.
  If Conservative Members do not like the implications of such a policy, they are saying that Merseyside must die. The stark alternative to planned growth of investment and jobs on Merseyside is to sit back and let it die and let its jobs and opportunities disappear.
  Not only do the Government have no answer to the deep-seated problems of Merseyside, but they have accelerated the area's decline. The people of Merseyside have looked to the Government for a lead, but it has not been given. We need a Labour Government with a clear commitment to an alternative economic strategy. By that means, and no other, will the people of Merseyside be given the opportunity of jobs and the decent civilised life that seems so easily obtainable in other parts of the United Kingdom.
  8.54 pm
  Mr. Jim Lester: Until the hon. Member for Ormskirk (Mr. Kilroy-Silk) reached his solutions, I had considerable sympathy with his analysis and particularly with the fair point that he made about the structural change under successive Governments which has damaged his part of the world.
  My comments will support the contributions made by my right hon. Friend the Member for Worthing (Mr. Higgins) and my hon. Friend the Member for Shoreham (Mr. Luce), but I also wish to pay tribute to the able maiden speech of the hon. Member for Birmingham, Northfield (Mr. Spellar). We who were friends of Jocelyn Cadbury particularly appreciated what the hon. Gentleman said about him. It is good to know that the concern that Jocelyn showed for his constituents will be carried on by his successor.
  On Monday, my hon. Friend the Member for Chippenham (Mr. Needham) gave a fair and factual analysis of the structural problems that have faced this country. He said that political changes, in terms of Governments, had done little to lessen the impact of those remorseless lessons. When we hear some of the wanton promises now made by the Opposition, speaking as though

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  they could suddenly change this inherent structural problem, we realise how our political integrity is undermined, as is the people's faith in this House.
  Nor do I dissent from what my hon. Friend the Member for Bath (Mr. Patten), said about the balance of demand in the domestic economy, and what the House of Commons is likely to do if the Government do not recognise the justice of restoring the 5 per cent. abatement on unemployment benefit. Earlier today, we heard a major and graphic speech from my right hon. Friend the member for Sidcup (Mr. Heath) on the need for international co-operation, whether through the IMF or through GATT, and the part that my right hon. and learned Friend the Chancellor of the Exchequer could play in that respect.
  I welcome the measures that my right hon. and learned Friend the Chancellor introduced on Monday. It must be right to put an extra £3 million into the economy before Christmas. That will help our manufacturing industry to retain its labour force through a most critical time. Some of the earlier schemes that were announced—taking the lid off the housing improvement system, the bypass programme, and so on—are moving in the right direction.
  The matter on which I wish to press the Government tonight is long-term unemployment, particularly as the Chancellor of the Exchequer gave us the gloomy news in his statement that the Government expect unemployment to continue to rise over the next 12 months to 3·2 million. We now have a meaningful second statistic for long-term unemployment. The figures for the third quarter, from 1979 onwards, show why this House should be concerned. In 1979, the figure was 339,000, in 1980 it was 342,000, in 1981 it was 586,000, and in 1982 it was 1,023,000. Those of us who study these matters know that if one is unemployed for short periods of less than a year, there are flows on and off the register, but when one is unemployed for a year or longer, the situation changes dramatically.
  I shall not dwell on the reasons for or problems of unemployment. All of us know the problems it brings to individuals, families and communities. I am concerned about the response to the problem. Those of us who went to Eastbourne saw the CBI film presentation on unemployment "A challenge to us all". Its assessment was realistic. It was that given certain conditions, British industry thought that it could create perhaps 1 million jobs over five years. Assuming that the conditions for which the CBI asked were fulfilled, it means that, if we take a broad outlook, there has been a fundamental change in the employment pattern in this country, which is likely to remain for a significant time.
  In my view, there is no inherent reason why jobs should not be created over time, but it is the length of time, the amount of change in world conditions and the time that that will take, and the amount of change in our domestic conditions that concern me. In addition, there is the question of what we do in the meantime. If we are to maintain our social cohesion, we should have an urgent study of the concept, not of a fully-employed society in the old sense, but of a fully-occupied society with an efficient and effective industrial base.
  We need to take a fundamental look at our present institutions—the way we use education establishments such as the Open University, the new "Open Tech", and information transfer. We need to take a fundamental look at benefits, how they are paid, how people are entitled to
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  them and what they are entitled to do with them. We need to take a fundamental look at regional grants, why we pay them and why they go to certain areas, taking capital intensive industry into areas of high unemployment. We need to look at work sharing, particularly in stressful jobs where people can do a better job for three days than for five. We need to look at overtime, and so on. That should be set in train as a matter of urgency. It would be a good subject for the Prime Minister's Think Tank.
  What could the Government do in the short term? Here again, following the comments of my hon. Friend the Member for Shoreham, we must look at the beginning and end of the employment pattern. The Government have made major moves in the introduction of the youth training scheme, which I sincerely hope will provide a long-term answer to how we introduce young people into the world of work, deal with skill shortages, and train and keep a securely trained work force. We have now a common objective among the trade unions, the CBI and the Government. However, the Government must ensure that they play their full part in the introduction of the scheme and that their commitment to it is beyond doubt. I see no reason why the requirement for the job release scheme should not be lowered to 60 and the terms and conditions looked at to see whether they cannot be made more attractive.
  We need a new approach to the benefit-plus scheme, for which the Chancellor has announced additional resources in his statement. The new community programme is an important way of introducing a fully occupied society. To expand that scheme from the present 30,000 places to a quarter of a million places—which, I submit, is required—requires incredible ingenuity and support from all areas. It is not particularly encouraging at this time that the introduction of the new community programme does not seem to have welcome and support from the voluntary sector and those sponsors who might well be able to provide the places.
  We should develop the concept of the young worker scheme, where employers receive £15 a week for taking on a young person in his first job. I see no reason why somebody who has been unemployed for a year or more should not have his benefit transferred to an employer to compensate him for retraining a person and thereby putting him back into profitable and worthwhile employment. I recognise that that does not create extra jobs in the economy, but it takes people off the one and two year registers. They are the people about whom we should be concerned and who should be brought back into the employment market.
  A Select Committee is considering the subject of retirement. There is a great deal to be said for considering a more flexible approach to retirement, particularly through the job release scheme. However, my plea is for a group of people who have made a belated demand for justice. They are the people who are now between 60 and 65 years of age, who have been unemployed for over a year and who have more than £2,500 of savings. Many of them served in the last war. Many of them, according to the letters that I have received, have worked for between 30 and 40 years, yet they are currently in limbo. They are jobless, with no prospect of a job, no benefit and no place in society. They wash around like flotsam and jetsam. They write and ask whether they have done all that they have done in their lives, saving as they have done, to end up as they have. The House and the Government should

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  consider early retirement for people who have been unemployed for a year or longer. There should be some scaled-down pension benefit based on their contribution.
  I have long argued for an even-handed approach to the problem of unemployment, particularly long-term unemployment. We can all agonise over the problem but the real question is how we should act. Where the Government can act, they should act. I can think of no reason, either of finance or principle, why the suggestions that I have made—in what I hope has been a short speech—should not be acted on, and acted on now.
  9.5 pm
  Mr. Stan Crowther: At one stage, the hon. Member for Beeston (Mr. Lester) appeared to suggest that the factors underlying our present problems are so longstanding and deep-seated that no one can do much about them. He offered some cosmetic measures that would do little more than scratch the surface.
  I am convinced that the dramatic changes and radical measures proposed in the document "The Alternative Strategy", which was agreed between the TUC and the Labour Party will put industry—provided there is any left—back on its feet when the next Labour Government are elected. The debate has been rather dispiriting because there was nothing in the Chancellor of the Exchequer's speech and little in the speeches made by his hon. Friends to suggest that they have any grasp of the appalling crisis of British industry.
  Many of those who have contributed to the debate are economic experts. I am not, and I am pleased that I am not. This is one area in which the experts are nearly always wrong. However, in due course I hope—although I do not expect—to receive some answers, simple or otherwise, to my simple questions. A few months ago the Prime Minister went to Japan to plead with the Japanese to spend their money on building factories in Britain and on creating jobs and producing goods in Britain. That would be a very good thing. For years, the Department of Industry has had a section called the Invest in Britain Bureau, which does that same job all over the world. I applaud its activities. However, at the same time, the Government allow the financial institutions that control most of the money available for capital investment in Britain to send it abroad, thus creating jobs in other countries so that others can produce goods to send to Britain.
  To my simple mind, that is straight out of "Alice in Wonderland". Where is the logic in such an arrangement? Some time ago The Observer claimed—it has not been disputed—that the staggering sum of £27 billion was exported last year from Britain. That represents many jobs, a lot of production and a lot of demand for steel. All industries use steel, whether as a raw material, in the form of machinery, or both.
  I apologise for returning to the problems of the steel industry. However, thousands of people in my constituency are out of work who not long ago were doing a very dood job for Britain in that industry. They are skilled, experienced people and, like thousands of others in Britain, they are well aware of the technique of wealth creation through manufacturing industry. They have now been told that they are no longer needed. Their skill and experience are no longer of any consequence. Why do we no longer need that vast wealth of skill that has been built up over the years and why are factories, mills, plant and
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  machinery standing idle, surplus to requirements, when Britain is being flooded by imported manufactured goods? How can that be right? I should like an answer.
  The collapse of manufacturing industry is at the heart of the problems of both public and private sectors of the steel industry. As my hon. Friend the Member for Rother Valley (Mr. Hardy) pointed out in an Adjournment debate a fortnight ago, steel imports are now dangerously high and the case for limiting them has been made. However, import control would be a crisis measure to adjust the share of the market available to the British steel industry.
  The state of the market is a far more fundamental problem. Imports of steel goods—motor cars, refrigerators, cookers, machine tools and the rest—represent a far more fundamental problem in the long term. Nearly 60 per cent. of motor cars sold in Britain are imported. One car represents one liquid tonne of steel. How can the steel industry live with that?
  At the other end of the cycle, the scrap industry is now exporting more than 3 million tonnes of ferrous scrap each year. I remember 20 or 30 years ago when the steel works in my constituency, the old Steel, Peech and Tozer works of the United Steel Companies, were on short time, not because of the lack of orders as they are now but because the scrap industry was unable to provide sufficient ferrous scrap for those great furnaces. The problem has now reversed itself. That exported ferrous scrap will make foreign steel to be turned into foreign motor cars that will be sent back to Britain to put more British car and steel workers on the dole. That is too bizarre for even Lewis Carroll to have thought it up.
  Britain used to be proud to be called the workshop of the world. For three and a half years, the Government have been rigidly and unswervingly imposing policies that, in their own words, were supposed to make British industry leaner and fitter, more productive and competitive. Unemployment was the price to be paid for it. We have paid the price all right, but where are the benefits? Where is the improvement in competitiveness?
  My right hon. Friend the Member for Stepney and Poplar (Mr. Shore) pointed out that it is not simply productivity that leads to competitiveness. There are many other factors such as energy prices. The Government have done hardly anything about them. Exchange rates are another factor. We are not getting more competitive. I shall mention just one example. The director of the Society of Motor Manufacturers and Traders wrote a letter to the Financial Times recently. He said:
  "It is interesting that identical Ford cars were continuously cheaper in the United Kingdom than in West Germany from 1971 to 1979."
  Having given several prices to make his point, he continues:
  "The changeover did not occur until 1979."
  That year is significant. That was when our fortunes changed. It also happens to be the year that the Government were elected. I shall not quote the many other available examples to show how our competitiveness has decreased while unemployment has increased. We are not getting anywhere. We do not now hear the long-playing record that we used to hear—the one about overmanning in industry. The only overmanning now is in the dole queues.
  I listened with great interest to my hon. Friend the Member for Ormskirk (Mr. Kilroy-Silk). He described the industrial wastelands of Merseyside. I sometimes wonder

  623
  whether right hon. and hon. Members who do not represent heavy industrial areas appreciate the tragedy of areas such as mine. When I travel between Rotherham and Sheffield, through the area that once contained the heaviest concentration of steel making and heavy engineering in Britain and probably the world, I pass empty mills and factories that once throbbed with activity. It is a heartbreaking experience. That is the level to which the Government have reduced a once great industrial nation. I hope that Ministers are proud of their achievements.
  9.13 pm
  Mr. Mark Wolfson: Of necessity, my speech will be brief. I welcome the Queen's Speech, not least for the prominence that it gives to the personal anxiety and distress that is caused by unemployment.
  It is high time that the Government gave the same priority to overcoming the problems of unemployment they have given to the problem of inflation. In saying that I am, of course, clear about the essential link between the two. What I have to say concerns the sins of omission rather than the sins of commission by my right hon. Friends on the Front Bench. Their economic strategy, pursued with extraordinary steadfastness and considerable political courage, has resulted in remarkable and necessary changes both in attitude and action within British industry. For the first time in many years there is a real understanding of the link between company profits and individual jobs, between company losses and redundancies, between markets held and job security enhanced, between customers lost and workers on the dole.
  People no longer expect the Government to pay for bogus job security. They understand that, like their own households, Governments have no bottomless pit from which to raise revenue. They understnad that uncontrolled borrowing to pay current bills in the end leads to national, as well as individual, disaster.
  The Government's economic strategy was and is necessary. It continues to have my broad support. However, I dispute with my right hon. Friends on two issues. The first is that since our election in May 1979 I have never been satisfied that we have developed, let alone articulated for the nation at large, an adequate industrial strategy. We have argued the economic case for the free market. We have constrained nationalised industries to put their house in order. We have given considerable assistance to small business. I do not decry or underestimate such positive steps. However, precious time has been lost by our reluctance publicly to identify the type of industries for which we believed growth was possible and to which we looked for job creation to fill the gaps left by the decline in heavy industry and in manufacturing, and by our reluctance to give such industries particular and special stimulus.
  Japan has had her sunrise industries for many years. Our own, or some of them, are only now being given proper political visibility through the positive approach of my hon. Friend the Minister for Industry and Information Technology. We require more of that approach.
  A record of bad Socialist planning should be no bar to a good Conservative industrial strategy, properly articulated and clearly put over to the electorate which, make no mistake, will want it demonstrated.
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  My second argument leads straight from the first. I ask for a clear strategy on unemployment. We must have a strategy that involves more than a monetary argument and more than social concern. We face long-term unemployment as part of the nation's life over a decade and possibly beyond. Many other hon. Members have made that clear. It is no passing phenomenon that will end with the end of recession.
  New technology and the growth of manufacturing in the developing world are two major and crucial factors that will make the second industrial revolution in the United Kingdom of long duration and difficult solution. That is clearly understood by the CBI. I congratulate that organisation on its initiative in establishing a working party and publishing its interim report
  "Unemployment: A challenge to us all."
  I strongly commend to the Government the practical approach and sensible balance of that first report of the CBI's steering group on unemployment, but it is a matter of concern to me that the CBI leadership and not the Government should be the first to establish a top level working party on unemployment and to produce sensible proposals and a total strategy directed towards long-term solutions. The CBI has shown a practical social concern that is properly expected of the Government as well. The unemployed expect it of our party and our Government, those in work expect it, and so will the whole electorate when the time comes for it to make its choice.
  Realism and restraint alone are not enough. Our people rightly demand hope and opportunity as well. Therefore, I for one hope to hear a constructive and sensible solution to the long-term problems of unemployment, which I felt was lacking in the reply of my right hon. Friend the Secretary of State for Employment yesterday.
  9.20 pm
  Mr. John Silkin (Deptford): The debates on this year's Gracious Speech have been distinguished by three impressive maiden speeches. I had the good luck today to hear that of my hon. Friend the Member for Birmingham, Northfield (Mr. Spellar) and I have read the Official Report of those made by my hon. Friends the Members for Gower (Mr. Wardell) and Peckham (Ms. Harman) last week. Those three areas differ greatly in character, in history and in geography, and they are hundreds of miles apart. Yet the common theme that dominated all three maiden speeches was that of unemployment and economic disaster in three completely different parts of the country, at least two of which were always assumed to be prosperous in years gone by.
  The Government have offered no positive remedies, either in the Gracious Speech or in the debate, but that is what we are all looking for. Not unusually, the Gracious Speech began with a commitment and proposals on foreign affairs and defence and our first major debate, last Thursday, was on that subject. We may discuss and argue about what is a proper foreign policy and a proper defence policy—that is, when the Prime Minister appoints a Secretary of State for Defence who can give us some replies—but questions of foreign policy and the weapons systems that one should operate pale into insignificance compared with one vital ingredient of a credible foreign policy and a credible defence policy.
  A strong industrial base is essential to a credible foreign policy and defence policy. That is why the United States and the Soviet Union are the strongest powers today. It is

  625
  because they are the strongest industrial powers. Indeed, it was with that thought that Ernest Bevin said many years ago:
  "Give me coal and I will give you a foreign policy."
  What kind of defence can there be in a country that is selling off its oil and its energy assets and, as my hon. Friend the Member for Sheffield, Attercliffe (Mr. Duffy) said yesterday, allowing its steel industry to run into the ground? One cannot possibly operate a defence policy on that basis. Nor can one have a prosperous country in the kind of society that the Government are busy creating.
  What an opportunity they had. On 8 May 1979, five days after the election, the Financial Times headed a front page article with the words "signs of recovery in economy". The article began:
  "Sir Geoffrey Howe, the new Chancellor of the Exchequer, will start his first full day at the Treasury today faced with growing evidence of an upturn in the level of economic activity. An improvement in orders for industry is indicated by the Financial Times survey of business opinion published this morning."
  It did not take the Chancellor long to dispose of that. We did not get action; we got many words, and much complacency and self-deception. A list of quotations originating from the Government Front Bench promised us light at the end of the tunnel and economic recovery.
  The promises have been going on and on. The quotation that I like best was that from the Prime Minister, in Scotland of all places, on 3 September 1981. The Financial Times reported:
  "Mrs. Thatcher said yesterday she thought Britain was through the worst of the recession … Her visit was apparently designed to bring an optimistic message to the regions."
  That report was in September 1981, more than a year ago.
  If the Prime Minister has recently been more hesitant in giving us signs of recovery, others on the Front Bench have been only too glad to keep us up to date. The Chief Secretary always keeps us informed. He has promised us more new dawns than most of us have had hot dinners, but the recovery seems strangely delayed. The quotations are so reminiscent of the past that they become almost uncanny. They remind me of a quotation from the United States of America:
  "We have now passed the worst and with continued unity of effort shall rapidly recover".
  President Hoover said those words a couple of months after the great crash of 1929.
  What has really happened? We have seen the ruin of public utilities and the public sector. The right hon. Member for Sidcup (Mr. Heath) talked about the 1930s. He spoke partially correctly about low interest rates—[Interruption.]—He was partially correct. Low interest rates did not tell the whole story—and the recovery from the crash was not entirely attributable to them. I remind the right hon. Gentleman that the other factor in recovery in the 1930s was the growth in building and construction.
  What society can one have where 400,000 building workers are out of work and there are too few houses for those on the waiting lists? The 1930s recovery in Britain began with the return of the construction industry. It started with investment in public utilities. Enormous capital projects should be undertaken that would provide work for the unemployed—roads, sewers and water works, including the pipe system, which has been neglected. The terrible thing is that net investment in public utilities is now below capital replacement costs. We are getting more and more into decay. The other day the Prime Minister said, "By all means spend money on
  626
  capital projects," but it is not as simple as that. My right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) pointed that out when he made an especially successful attack on the Prime Minister. She did not answer, presumably because she did not have the answer at the time. My right hon. Friend said that current expenditure is incurred at the same time as capital expenditure. He was right—[Interruption.] I do not know whether the Secretary of State for Employment is trying to muscle in during this part of the debate. He did not have a great success yesterday and, if I were him, I should wait a little before coming back.
  Public works should be our key and the Government partially recognise that fact. I understand the political motive behind saying that a road tunnel will be constructed across the Conwy estuary. The Government are clearly proud of that commitment. The Thames barrier has just been finished. I played a part in its planning, as did Ministers of Agriculture of both political parties, and we are proud of it. It is one of the greatest technological constructions of our generation and has a great future as an export. However, the State alone can carry out those projects, which are of benefit to all industry. When one spends money on public works one assists both the public and the private sector. The Government do not understand that and have neglected public works.
  The Government are busy not only not creating necessary public works and utilities but destroying our publicly owned assets. Curiously, they are destroying the best. The Secretary of State for Energy calls it "privatisation", but it is public asset stripping. That is why British Telecommunications must be handed over, despite the fact that in private hands it will be destroyed as a catalyst for industry and employment and it may well lose to foreign competition.
  Under State ownership, British Shipbuilders is in better shape than it has been for years. If we compare it with world shipbuilding, we see an enormous improvement. Losses have been reduced from £110 million two years ago to only £19 million this year, at a time when world shipbuilding is in the doldrums. That is a tribute to nationalisation and to the work done by the Labour Government. But it is also a tribute to the co-operation, hard work and self-sacrifice of the trade unions. Two years ago, shipbuilding workers were third in the wages table, but they have gone down to nineteenth. The unions accepted the loss of many jobs in order to make the industry efficient. Does anyone believe that if the industry is sold, the co-operation, hard work and self-sacrifice of the unions will still be available? Will they not regard the self-sacrifice as having been in vain, which of course it will have been? [HON. MEMBERS: "Why"?] They did it to make a prosperous shipbuilding industry, but now they see that the cream goes not to them but to people who are not interested.
  Mr. Eric G. Varley: We shall have no industry.
  Mr. Silkin: My right hon. Friend is correct. The Government do not care. They have their own dogma and they are prepared to see those industries fall.
  My right hon. and hon. Friends have been forthcoming today about problems in their constituencies, but there is a common theme. The prosperous Midlands, the prosperous South-East, Wales, not-so-prosperous

  627
  Scotland, the North and the North-West are all suffering. The Chancellor of the Exchequer boasts about a 1·5 per cent. increase, he hopes, in general output next year. Of course, he does not boast about the fact that manufacturing output has fallen by nearly 20 per cent. since 1979.
  The Chancellor is boasting about under 10 per cent. recovery—if he gets it—of the loss his Government have inflicted. In addition, we have what may be termed the Government's treble chance, which is those statistics that have increased three times since Labour left Government in 1979. Three and a half years has meant a three times increase. First, there are three times as many empty factories and warehouses as there were in May 1979. Secondly, there are more than three times the number of business failures now than in May 1979—now more than 1,000 a month. The greatest obscenity of all is that unemployment is three times as high as it was in May 1979.
  It was justly pointed out by the right hon. Member for Glasgow, Hillhead (Mr. Jenkins)—a rather surprising quarter because I did not expect his approbation on this issue—that the Conservative Party in the 1979 election won on a particularly vicious poster which showed people in an unemployment queue with the words "Labour isn't working". They were blaming unemployment on the Labour Government, but now the Prime Minister comes to the House and whimpers that it is not her fault, but the fault of the world recession. We know whose fault it is and the people of Britain know whose fault it is.
  Some of my hon. Friends referred to school leavers who left school in the year the Prime Minister came to office, who have not found work since, and will not perhaps for years if the Government are re-elected. Those people are suffering because of the Government's policies and not because of world recession. If we examine other countries such as Norway, which also possesses oil, and Austria which does not, we find that Governments which were able to carry out a proper, planned economic policy were able to give full employment, or near full employment, to their people.
  I can understand why the Queen's Speech was thin because, as we all know, it will probably be the last Queen's Speech of this Parliament. That gives the Prime Minister the political manoeuvre and the devious option of choosing the time of the election—
  Several Hon. Members rose—
  Mr. Silkin: —the devious option of an election, probably next year. The Secretary of State for Employment is laughing, and he is entitled to have his little laugh now, but he will be laughing on the other side of his face when that election comes. The Opposition are not afraid of an election. We have something much better to offer. We have to offer full-scale new planning, large-scale investment in industry, the extension and the maintenance of public-sector working so that people may return to work and the protection of our industry.
  The right hon. Member for Sidcup, in his references to the 1930s, omitted to mention import controls which also had an effect on bringing back some stability from the depths of the depression. We are prepared to introduce import controls. We heard a great deal of noise from the Conservative Benches recently about import controls but
  628
  I do not know what has happened to that. It appeared that the Government were going to introduce them but they have not done so.
  Above all, we stand not only for an economic society in which the country is able to get back to work—if Conservative Members do not like that, they have the society they wanted—but for a fair society in which values, such as the National Health Service and education, shall be paramount. We stand for a fair society in place of a clawback society. That is what we shall be voting about tonight.
  9.40 pm
  The Lord President of the Council and Leader of the House of Commons (Mr. John Biffen): The House will shortly by voting to conclude the debate on the Loyal Address, which was initiated with elegant contributions by my right hon. Friend the Member for Bournemouth, West (Sir J. Eden) and my hon. Friend the Member for Edinburgh, South (Mr. Ancram). There has been a wide-ranging canvass of all the issues that properly concern national debates in the Chamber.
  I join with the right hon. Member for Deptford (Mr. Silkin) in picking out for commendation the three excellent maiden speeches. I was privileged to hear them all. The hon. Member for Peckham (Ms. Harman) is a formidable and fluent acquisition for the Left wing of the parliamentary Labour Party. Her arguments were formidably displayed, and as I listened to her I felt that whatever her views on the virtues of a dirigiste society, she has already learnt in this institution about the relentless and inexorable forces of supply and demand for parliamentary pairing.
  I listened with great delight to the hon. Member for Gower (Mr. Wardell). I am sure that all hon. Members who were in the Chamber when he spoke would agree that he displayed an intense affection for language—itself a major attribute and commendation in this Chamber. There could be no better tribute to his predecessor, Ifor Davies.
  We very much appreciated the references made by the hon. Member for Birmingham, Northfield (Mr. Spellar) about Jocelyn Cadbury, who was so widely respected throughout the Chamber. The hon. Gentleman comes here, as I am sure he would acknowledge, in the tradition of Ray Carter and Lord Northfield, who did much for the Labour cause. I enjoyed the controversial character of his maiden speech and, above all, his suggestion that the Treasury Benches should take to the habit of reading the Financial Times. If ever I wanted evidence that he belonged to the revisionist wing of the Labour Party, that was it.
  The right hon. Member for Deptford kindly agreed with me that the replies to the debate would break dangerous and daring innovative ground, in that we would each speak for 20 minutes. I proceed with the innocence that always attends one early in the parliamentary Session of believing that a certain amount of Front Bench practice is so much more powerful than all the precept and preaching. I hope that our example will encourage the concept of shorter speeches, which will do much to contribute to a debate that remains spontaneous, because it is not contained within a rigid formula, but allows a greater number of voices and, I hope, a wider range of opinion.
  It is customary on these occasions for the Leader of the House to say a few words about business arrangements. That is quite proper because the national debate is mirrored

  629
  in the Chamber and cannot helpfully proceed without the voice of the Commons—[Interruption.] In the act of self-restraint undertaken by the Front Benches, we were not taking account of the stage props. I shall say a few words about procedure and then deal with the topics of controversy that have featured in the six days of debate.
  My predecessor, now the Secretary of State for Foreign and Commonwealth Affairs, my right hon. Friend the Member for Cambridgeshire (Mr. Pym) said, in winding up this debate last year, that we are pledged to uphold the central role of Parliament and to enable the House of Commons to be effective in relation to the Executive. There have been some valuable developments during this Parliament in carrying out that pledge. The most significant development has concerned the work of the comprehensive structure of departmental Select Committees established in 1979. I hope that the growing expertise of those Committees will enable them to make a still greater contribution in future to the work of the House as a whole. Building upon that foundation, the House agreed just before the Summer Recess to a series of important reforms in our financial procedures and the control over Government expenditure.
  Those are valuable developments. I realise that much will now turn upon the work of the Committee, ably chaired by my right hon. Friend the Member for Worthing (Mr. Higgins), which is now considering other matters and which has been established for the remainder of this Parliament. It is considering a wide range of other aspects of financial scrutiny. Those are valuable procedures, but I realise that they are subsidiary to the great political topics that will dominate the coming Session as we approach a general election.
  Trade policy was mentioned by many speakers and is referred to in the Queen's Speech. There is a link between trade and employment. I remind the House that my right hon. Friend the Prime Minister made it clear last week that the Government continue to support the open trading system. That is a judgment of self-interest.
  The United Kingdom is still more heavily dependent on overseas trade than any other major industrialised nation. Some 30 per cent. of our GDP comes from exports. That point was well made by my hon. Friend the Member for Flint, West (Sir A. Meyer). Moreover, an open trading system is good for the general competitive climate in the United Kingdom. It benefits not only the high street consumers, but manufacturers who benefit from access to competitive, well-designed industrial components and supplies.
  Furthermore, we should not ignore the wider aspects of this issue. The alternative to open trade is the crippling regionalism of the 1930s, with its fortresses of tariffs and quotas and its downward spiral of trade. The world of the 1980s, with newly emerging economies and transferable technology, cannot afford trade-exacerbated divisions between North and South; the oil-rich and those without; the newly industrialised countries and the developed world.
  That is our guiding principle. But the recession has highlighted current problems in international trade. We have to make it clear that the open trading system has to be supported on a general and not a highly selective basis.
  My noble Friend the Secretary of State for Trade has made it quite clear that he attaches great importance to changes in trading partners' practices that lead to more open markets. I believe that there will be widespread
  630
  support for the view that we cannot ignore other nations' derogations from the open trading system. The Government will be taking every opportunity to bring about a change towards greater equity in market access.
  That policy can be tested at the forthcoming meeting of GATT Ministers. There are two areas of immediate concern. The first concerns how trading barriers have developed under the GATT. That problem is confined not just to newly industrialising countries, although it is normally argued in that context. Second, we shall support work in GATT on the liberalisation of trade in the service sector. That is a valuable part of United Kingdom trade, and we are anxious that it should not be handicapped by barriers.
  Of course, running throughout the debate and flowing inexorably from the consideration of trade is concern about protectionism and anxiety about the recession in which we are now living, a recession of such intensity that it outstrips the experiences of the 1930s. Central to that—this has been reflected not only in today's debate but in the other debates on the Gracious Speech—has been the level of unemployment. No one doubts that this is a major and miserably unhappy factor. There are arguments as to whether this is part of an international pattern. However, anybody who makes a dispassionate assessment of what is going on cannot deny that it has an international character. Other broadly comparable economies show the same unemployment trends. For example, the United States has a 10 per cent. rate and France has one just under 11 per cent. These rates are not much different from, although lower than, the rate in the United Kingdom.
  It is true that, although our unemployment level is higher than those of the countries to which I have just referred, the rate of increase has accelerated in those countries relative to our own. No one takes any satisfaction from that, but it establishes that this is an issue that its international in character and ultimately, as was observed by my right hon. Friend the Member for Sidcup (Mr. Heath), one which will be resolved in an international context.
  Mr. Winnick: Without accepting any of the points that the right hon. Gentleman has made for justifying mass unemployment, what possible justification is there for victimising those on the dole queue? I refer to the 5 per cent. that was taken away from them in lieu of taxation. Benefits are now being taxed but the unemployed have had that 5 per cent. stolen from them. Is the right hon. Gentleman justifying such a policy?
  Mr. Biffen: The hon. Gentleman will doubtless attend to my speech and draw his own conclusions, but the House might like to know what the hon. Gentleman had to contribute to the debate on 3 November. He said:
  "Unemployment was the deliberate policy of the Government."—[Official Report, 3 November 1982; vol. 31, c. 79.]
  If people believe that, we are inhibited in debate.
  The three factors that will have a bearing on the future course of unemployment are inflation, interest rates and pay bargaining. Unemployment cannot be considered as one isolated component in our economic position.
  My right hon. and learned Friend the Chancellor of the Exchequer has referred to these issues today and in the autumn statement. None the less, the House should reflect that there has been a quite remarkable success in getting a reduction in the rate of inflation from a peak of 22 per

  631
  cent. to a current rate of just over 7 per cent. and to a prospective rate of 5 per cent. That is the achievement that is central to the Government's strategy, and around which our policies shall proceed between now and the general election when the public can make their decision as to which policies have both the achievement and the prospects that merit confidence.
  Interest rates are related to our success against inflation, although international factors can play a significant part in determining levels of interest. However, the fact that a year ago the clearing banks' base rate was 15 per cent. and today is down to 9 per cent. is something that should give us great encouragement. That is not least the case because, when hon. Members have been talking about what factors resolved the slump of the 1930s, low interest rates were prayed in aid. Now that we have falling interest rates many Labour Members show a marked disinclination to take some encouragement from this and give the Government some credit.
  The third factor is that of pay bargaining. Over the past two years there has been a difficult and no doubt painful adjustment to a far greater realism in pay bargaining. The significance of this can be assessed when one realises that pay accounts for about 30 per cent. of central and local government expenditure. No policy on public expenditure can be independent of that factor. What is more, pay accounts for between 50 to 60 per cent. of business costs.
  Evidence proffered by the CBI shows that about two-thirds of the settlements concluded at the moment are between 5 and 8 per cent. That view is validated by Income Data Services Ltd. That is another success for the Government that many hon. Members, particularly Labour Members, would not have supposed at the time of the Queen's Speech 12 months ago.
  It is not just the downward pressure on the level of pay settlements but the general atmosphere in pay bargaining that is important. I shall not comment upon the mineworkers' ballot except to say that I believe that it displayed a position that was different from the one that would have been thought likely two or three years ago. Scottish and Newcastle Breweries has concluded a three-year pay settlement with its employees.
  Mr. George Foulkes: How much id it contribute to the Tory Party?
  Mr. Biffen: Caterpillar has concluded a three-year deal with its employees. When someone asks what will be done about the price of its products, its ability to keep the price of its products down will be enhanced as pay is a large part of the organisation's costs.
  Mr. James Hamilton (Bothwell)rose—
  Mr. Biffen: I shall not give way, as I am approaching the end of my speech. The House will shortly vote upon the Queen's Speech. For six days we have had the wide-ranging and exhausting debate with which a parliamentary Session begins. However, tonight's vote will not conclude a debate. It will mark the beginning of another. That other debate is the wider national discourse that will precede a general election.
  The measures outlined in the Queen's Speech are an integral part of that wider argument. The Government believe that there is clear evidence of a fall in the rate of
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  inflation and in the level of interest rates; and of greater realism in pay bargaining. Those are not factors that have been brought about by the creation of unemployment. It would be a facile reading of that unemployment problem so to suggest. It is the belief of those on the Government Benches that the improvements I have noted are the preconditions for a successful employment policy.
  My right hon. Friend the Member for Sidcup asked for the rationale of the Government's policies in those matters. I offer such a rationale as I can. There is no simple linkage between, on the one hand, the factors of falling interest rates, falling inflation and greater pay realism and, on the other, rising levels of output and falling unemployment. One major unknown factor will be the climate of business confidence. However, the factors that I have mentioned are the best ingredients to nourish business confidence.
  Even so, we do not live in the easy world of optimistic expectations. Any initial rise in output will almost certainly be met by our existing industrial and commercial work force. Ultimately, the economic and social challenge of high unemployment can only be met by the creation of jobs that derive from a genuine and not contrived demand. The fiscal and monetary policies that are now reducing the turbulence of inflation are those that will provide a sound basis for future employment. It is a policy that is sustained by the programme for this Session. That programme strikes a balance. There are measures designed to improve the economy, such as the Telecommunications Bill, and proposals for other public utilities. The Queen's Speech also promises that
  "legislation will be introduced to enable improvements to be made to the health and social services."
  The Opposition challenge that policy. They challenge the relationship between success over inflation and pay bargaining and the likelihood of eventual success with unemployment. Tonight's vote will be but an opening shot in a wider campaign for the nation's endorsement. It is a campaign which my right hon. and hon. Friends will contest with conviction and enthusiasm.
  Question put, That the amendment be made:—
  The House divided: Ayes 272, Noes 313.

  Division No. 2]

  [10 pm

  AYES

  Abse, Leo

  Campbell, Ian

  Adams, Allen

  Campbell-Savours, Dale

  Allaun, Frank

  Canavan, Dennis

  Anderson, Donald

  Cant, R. B.

  Archer, Rt Hon Peter

  Carmichael, Neil

  Ashley, Rt Hon Jack

  Carter-Jones, Lewis

  Ashton, Joe

  Cartwright, John

  Atkinson, N. (H'gey,)

  Clark, Dr David (S Shields)

  Bagier, Gordon A.T.

  Clarke, Thomas (C'b'dge, A'rie)

  Barnett, Guy (Greenwich)

  Cocks, Rt Hon M. (B'stol S)

  Barnett, Rt Hon Joel (H'wd)

  Cohen, Stanley

  Beith, A. J.

  Coleman, Donald

  Benn, Rt Hon Tony

  Concannon, Rt Hon J. D.

  Bennett, Andrew (St'kp't N)

  Conlan, Bernard

  Bidwell, Sydney

  Cook, Robin F.

  Booth, Rt Hon Albert

  Cowans, Harry

  Bottomley, Rt Hon A. (M'b'ro)

  Cox, T. (W'dsw'th, Toot'g)

  Bradley, Tom

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

  Bray, Dr Jeremy

  Crawshaw, Richard

  Brocklebank-Fowler, C.

  Crowther, Stan

  Brown, Hugh D. (Provan)

  Cryer, Bob

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

  Cunliffe, Lawrence

  Brown, Ronald W. (H'ckn'y S)

  Cunningham, G. (Islington S)

  Brown, Ron (E'burgh, Leith)

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

  Buchan, Norman

  Dalyell, Tam

  Callaghan, Rt Hon J.

  Davidson, Arthur

  Callaghan, Jim (Midd't'n & P)

  Davies, Rt Hon Denzil (L'lli)

  633

  Davis, Clinton (Hackney C)

  Lamond, James

  Davis, Terry (B'ham, Stechf'd)

  Leadbitter, Ted

  Deakins, Eric

  Leighton, Ronald

  Dean, Joseph (Leeds West)

  Lestor, Miss Joan

  Dewar, Donald

  Lewis, Arthur (N'ham NW)

  Dixon, Donald

  Lewis, Ron (Carlisle)

  Dobson, Frank

  Litherland, Robert

  Dormand, Jack

  Lofthouse, Geoffrey

  Douglas, Dick

  Lyon, Alexander (York)

  Dubs, Alfred

  Lyons, Edward (Bradf'd W)

  Duffy, A. E. P.

  Mabon, Rt Hon Dr J. Dickson

  Dunnett, Jack

  McCartney, Hugh

  Dunwoody, Hon Mrs G.

  McDonald, Dr Oonagh

  Eadie, Alex

  McGuire, Michael (Ince)

  Eastham, Ken

  McKay, Allen (Penistone)

  Edwards, R. (W'hampt'n S E)

  McKelvey, William

  Ellis, R. (NE D'bysh're)

  MacKenzie, Rt Hon Gregor

  Ellis, Tom (Wrexham)

  Maclennan, Robert

  English, Michael

  McMahon, Andrew

  Ennals, Rt Hon David

  McNally, Thomas

  Evans, Ioan (Aberdare)

  McNamara, Kevin

  Evans, John (Newton)

  McTaggart, Robert

  Ewing, Harry

  McWilliam, John

  Faulds, Andrew

  Magee, Bryan

  Field, Frank

  Marks, Kenneth

  Fitch, Alan

  Marshall, D (G'gow S'ton)

  Flannery, Martin

  Marshall, Dr Edmund (Goole)

  Foot, Rt Hon Michael

  Marshall, Jim (Leicester S)

  Ford, Ben

  Martin, M (G'gow S'burn)

  Forrester, John

  Mason, Rt Hon Roy

  Foster, Derek

  Maxton, John

  Foulkes, George

  Maynard, Miss Joan

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

  Meacher, Michael

  Freeson, Rt Hon Reginald

  Milkardo, Ian

  Garrett, John (Norwich S)

  Millan, Rt Hon Bruce

  Garrett, W. E. (Wallsend)

  Miller, Dr M. S. (E Kilbride)

  George, Bruce

  Mitchell, Austin (Grimsby)

  Gilbert, Rt Hon Dr John

  Mitchell, R. C. (Soton Itchen)

  Ginsburg, David

  Morris, Rt Hon A. (W'shawe)

  Golding, John

  Morris, Rt Hon C. (O'shaw)

  Graham, Ted

  Morris, Rt Hon J. (Aberavon)

  Grant, George (Morpeth)

  Moyle, Rt Hon Roland

  Grant, John (Islington C)

  Mulley, Rt Hon Frederick

  Grimond, Rt Hon J.

  Newens, Stanley

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

  Oakes, Rt Hon Gordon

  Hardy, Peter

  Ogden, Eric

  Harman, Harriet (Peckham)

  O'Halloran, Michael

  Harrison, Rt Hon Walter

  O'Neill, Martin

  Hattersley, Rt Hon Roy

  Orme, Rt Hon Stanley

  Healey, Rt Hon Denis

  Owen, Rt Hon Dr David

  Heffer, Eric S.

  Paisley, Rev Ian

  Hogg, N. (E Dunb't'nshire)

  Palmer, Arthur

  Holland, S. (L'b'th, Vauxh'll)

  Park, George

  Home Robertson, John

  Parker, John

  Homewood, William

  Parry, Robert

  Hooley, Frank

  Pendry, Tom

  Horam, John

  Penhaligon, David

  Howell, Rt Hon D.

  Pitt, William Henry

  Howells, Geraint

  Powell, Raymond (Ogmore)

  Hoyle, Douglas

  Prescott, John

  Huckfield, Les

  Price, C. (Lewisham W)

  Hudson Davies, Gwilym E.

  Race, Reg

  Hughes, Mark (Durham)

  Radice, Giles

  Hughes, Robert (Aberdeen N)

  Rees, Rt Hon M (Leeds S)

  Hughes, Roy (Newport)

  Richardson, Jo

  Janner, Hon Greville

  Roberts, Albert (Normanton)

  Jay, Rt Hon Douglas

  Roberts, Allan (Bootle)

  Jenkins, Rt Hon Roy (Hillh'd)

  Roberts, Ernest (Hackney N)

  John, Brynmor

  Roberts, Gwilym (Cannock)

  Johnson, James (Hull West)

  Robertson, George

  Johnson, Walter (Derby S)

  Robinson, G. (Coventry NW)

  Johnston, Russell (Inverness)

  Robinson, P. (Belfast E)

  Jones, Rt Hon Alec (Rh'dda)

  Rodgers, Rt Hon William

  Jones, Barry (East Flint)

  Rooker, J. W.

  Jones, Dan (Burnley)

  Roper, John

  Kaufman, Rt Hon Gerald

  Ross, Ernest (Dundee West)

  Kerr, Russell

  Ross, Stephen (Isle of Wight)

  Kilroy-Silk, Robert

  Rowlands, Ted

  Kinnock, Neil

  Ryman, John

  Lambie, David

  Sandelson, Neville

  634

  Sever, John

  Varley, Rt Hon Eric G.

  Sheerman, Barry

  Wainwright, E. (Dearne V)

  Sheldon, Rt Hon R.

  Wainwright, R. (Colne V)

  Shore, Rt Hon Peter

  Walker, Rt Hon H. (D'caster)

  Short, Mrs Renée

  Wardell, Gareth

  Silkin, Rt Hon J. (Deptford)

  Watkins, David

  Silkin, Rt Hon S. C. (Dulwich)

  Weetch, Ken

  Silverman, Julius

  Wellbeloved, James

  Skinner, Dennis

  Welsh, Michael

  Smith, Cyril (Rochdale)

  White, Frank R.

  Smith, Rt Hon J. (N Lanark)

  White, J. (G'gow Pollok)

  Snape, Peter

  Whitehead, Phillip

  Soley, Clive

  Whitlock, William

  Spearing, Nigel

  Wigley, Dafydd

  Speller, John Francis (B'ham)

  Willey, Rt Hon Frederick

  Spriggs, Leslie

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

  Stallard, A. W.

  Williams, Rt Hon Mrs (Crosby)

  Steel, Rt Hon David

  Wilson, Gordon (Dundee E)

  Stewart, Rt Hon D. (W Isles)

  Wilson, Rt Hon Sir H. (H'ton)

  Stoddart, David

  Wilson, William (C'try SE)

  Stott, Roger

  Winnick, David

  Strang, Gavin

  Woodall, Alec

  Summerskill, Hon Dr Shirley

  Woolmer, Kenneth

  Taylor, Mrs Ann (Bolton W)

  Wrigglesworth, Ian

  Thomas, Dafydd (Merioneth)

  Wright, Sheila

  Thomas, Jeffrey (Abertillery)

  Young, David (Bolton E)

  Thomas, Mike (Newcastle E)

  Thorne, Stan (Preston South)

  Tellers for the Ayes:

  Tilley, John

  Mr. James Hamilton and

  Tinn, James

  Mr. Frank Haynes.

  Torney, Tom

  NOES

  Adley, Robert

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

  Aitken, Jonathan

  Chalker, Mrs. Lynda

  Alexander, Richard

  Channon, Rt. Hon. Paul

  Alison, Rt Hon Michael

  Chapman, Sydney

  Ancram, Michael

  Churchill, W. S.

  Arnold, Tom

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

  Aspinwall, Jack

  Clark, Sir W. (Croydon S)

  Atkins, Rt Hon H. (S'thorne)

  Clarke, Kenneth (Rushcliffe)

  Atkins, Robert (Preston N)

  Clegg, Sir Walter

  Atkinson, David (B'm'th,E)

  Cockeram, Eric

  Baker, Kenneth (St.M'bone)

  Colvin, Michael

  Baker, Nicholas (N Dorset)

  Cope, John

  Banks, Robert

  Cormack, Patrick

  Beaumont-Dark, Anthony

  Corrie, John

  Bendall, Vivian

  Costain, Sir Albert

  Benyon, W. (Buckingham)

  Cranborne, Viscount

  Best, Keith

  Critchley, Julian

  Bevan, David Gilroy

  Crouch, David

  Biffen, Rt Hon John

  Dickens, Geoffrey

  Biggs-Davison, Sir John

  Dorrell, Stephen

  Blackburn, John

  Douglas-Hamilton, Lord J.

  Blaker, Peter

  Dover, Denshore

  Body, Richard

  du Cann, Rt Hon Edward

  Bonsor, Sir Nicholas

  Dunn, Robert (Dartford)

  Boscawen, Hon Robert

  Durant, Tony

  Bottomley, Peter (W'wich W)

  Dykes, Hugh

  Bowden, Andrew

  Eden, Rt Hon Sir John

  Boyson, Dr Rhodes

  Edwards, Rt Hon N. (P'broke)

  Braine, Sir Bernard

  Eggar, Tim

  Bright, Graham

  Elliott, Sir William

  Brinton, Tim

  Eyre, Reginald

  Brittan, Rt. Hon. Leon

  Fairbairn, Nicholas

  Brooke, Hon Peter

  Fairgrieve, Sir Russell

  Brotherton, Michael

  Faith, Mrs Sheila

  Brown, Michael (Brigg & Sc'n)

  Farr, John

  Browne, John (Winchester)

  Fell, Sir Anthony

  Bruce-Gardyne, John

  Fenner, Mrs Peggy

  Bryan, Sir Paul

  Finsberg, Geoffrey

  Buchanan-Smith, Rt. Hon. A.

  Fisher, Sir Nigel

  Buck, Antony

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

  Budgen, Nick

  Fletcher-Cooke, Sir Charles

  Bulmer, Esmond

  Fookes, Miss Janet

  Burden, Sir Frederick

  Forman, Nigel

  Butcher, John

  Fowler, Rt Hon Norman

  Butler, Hon Adam

  Fox, Marcus

  Carlisle, John (Luton West)

  Fraser, Rt Hon Sir Hugh

  Carlisle, Kenneth (Lincoln)

  Fraser, Peter (South Angus)

  635

  Fry, Peter

  McNair-Wilson, P. (New F'st)

  Gardiner, George (Reigate)

  McQuarrie, Albert

  Gardner, Edward (S Fylde)

  Madel, David

  Garel-Jones, Tristan

  Major, John

  Gilmour, Rt Hon Sir Ian

  Marland, Paul

  Glyn, Dr Alan

  Marlow, Antony

  Goodhart, Sir Philip

  Marshall, Michael (Arundel)

  Goodhew, Sir Victor

  Marten, Rt Hon Neil

  Goodlad, Alastair

  Mates, Michael

  Gorst, John

  Maude, Rt Hon Sir Angus

  Gow, Ian

  Mawby, Ray

  Gower, Sir Raymond

  Mawhinney, Dr Brian

  Gray, Hamish

  Maxwell-Hyslop, Robin

  Greenway, Harry

  Mayhew, Patrick

  Grieve, Percy

  Mellor, David

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

  Meyer, Sir Anthony

  Griffiths, Peter Portsm'th N)

  Miller, Hal (B'grove)

  Grist, Ian

  Mills, Iain (Meriden)

  Grylls, Michael

  Millis, Sir Peter (West Devon)

  Gummer, John Selwyn

  Miscampbell, Norman

  Hamilton, Hon A.

  Moate, Roger

  Hamilton, Michael (Salisbury)

  Monro, Sir Hector

  Hampson, Dr Keith

  Montogomery, Fergus

  Hannam, John

  Moore, John

  Haselhurst, Alan

  Morgan, Geraint

  Hastings, Stephen

  Morris, M. (N'hampton S)

  Havers, Rt Hon Sir Michael

  Morrison, Hon C. (Devizes)

  Hawkins, Sir Paul

  Morrison, Hon P. (Chester)

  Hawksley, Warren

  Mudd, David

  Hayhoe, Barney

  Murphy, Christopher

  Heath, Rt Hon Edward

  Myles, David

  Heddle, John

  Neale, Gerrard

  Henderson, Barry

  Needham, Richard

  Heseltine, Rt Hon Michael

  Nelson, Anthony

  Hicks, Robert

  Neubert, Michael

  Higgins, Rt Hon Terence L.

  Newton, Tony

  Hill, James

  Normanton, Tom

  Hogg, Hon Douglas (Gr'th'm)

  Nott, Rt Hon John

  Holland, Philip (Carlton)

  Onslow, Cranley

  Hooson, Tom

  Oppenheim, Rt Hon Mrs S.

  Hordern, Peter

  Osborn, John

  Howe, Rt Hon Sir Geoffrey

  Page, John (Harrow, West)

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

  Page, Richard (SW Herts)

  Howell, Ralph (N Norfolk)

  Parkinson, Rt Hon Cecil

  Hunt, David (Wirral)

  Parris, Matthew

  Hunt, John (Ravensbourne)

  Patten, Christopher (Bath)

  Irvine, Rt Hon Bryant Godman

  Pattie, Geoffrey

  Irving, Charles (Cheltenham)

  Pawsey, James

  Jenkin, Rt Hon Patrick

  Percival, Sir Ian

  Johnson Smith, Sir Geoffrey

  Peyton, Rt Hon John

  Jopling, Rt Hon Michael

  Pink, R. Bonner

  Joseph, Rt Hon Sir Keith

  Porter, Barry

  Kaberry, Sir Donald

  Prentice, Rt Hon Reg

  Kellett-Bowman, Mrs Elaine

  Price, Sri David (Eastleigh)

  Kimball, Sir Marcus

  Prior, Rt Hon James

  King, Rt Hon Tom

  Proctor, K. Harvey

  Kitson, Sir Timothy

  Raison, Rt Hon Timothy

  Knight, Mrs Jill

  Rathbone, Tim

  Knox, David

  Rees, Peter (Dover and Deal)

  Lamont, Norman

  Rees-Davies, W. R.

  Lang, Ian

  Renton, Tim

  Latham, Michael

  Rhodes James, Robert

  Lawrence, Ivan

  Rhys Williams, Sir Brandon

  Lawson, Rt Hon Nigel

  Ridley, Hon Nicholas

  Lee, John

  Ridsdale, Sir Julian

  Le Marchant, Spencer

  Rifkind, Malcolm

  Lennox-Boyd, Hon Mark

  Rippon, Rt Hon Geoffrey

  Lester, Jim (Beeston)

  Roberts, M. (Cardiff NW)

  Lewis, Kenneth (Rutland)

  Roberts, Wyn (Conway)

  Lloyd, Ian (Havant & W'loo)

  Rossi, Hugh

  Lloyd, Peter (Fareham)

  Rost, Peter

  Loveridge, John

  Rumbold, Mrs A. C. R.

  Luce, Richard

  Sainsbury, Hon Timothy

  Lyell, Nicholas

  St. John-Stevas, Rt Hon N.

  McCrindle, Robert

  Scott, Nicholas

  Macfarlane, Neil

  Shaw, Giles (Pudsey)

  MacGregor, John

  Shaw, Sir Michael (Scarb')

  MacKay, John (Argyll)

  Shelton, William (Streatham)

  Macmillan, Rt Hon M.

  Shepherd, Colin (Hereford)

  McNair-Wilson, M. (N'bury)

  Shepherd, Richard

  636

  Shersby, Michael

  Trippier, David

  Silvester, Fred

  Trotter, Neville

  Sims, Roger

  Van Straubenzee, Sir W.

  Skeet, T. H. H.

  Viggers, Peter

  Smith, Dudley

  Waddington, David

  Smith, Tim (Beaconsfield)

  Wakeham, John

  Speed, Keith

  Waldegrave, Hon William

  Speller, Tony

  Walker, Rt Hon P. (W'cester)

  Spence, John

  Walker, B. (Perth)

  Spicer, Jim (West Dorset)

  Walker-Smith, Rt Hon Sir D.

  Spicer, Michael (S Worcs)

  Wall, Sir Patrick

  Sproat, Iain

  Waller, Gary

  Squire, Robin

  Walters, Dennis

  Stainton, Keith

  Ward, John

  Stanbrook, Ivor

  Warren, Kenneth

  Stanley, John

  Watson, John

  Steen, Anthony

  Wells, Bowen

  Stevens, Martin

  Wells, John (Maidstone)

  Stewart, A. (E Renfrewshire)

  Wheeler, John

  Stewart, Ian (Hitchin)

  Whitelaw, Rt Hon William

  Stokes, John

  Whitney, Raymond

  Stradling Thomas, J.

  Wiggin, Jerry

  Tapsell, Peter

  Wilkinson, John

  Taylor, Teddy (S'end E)

  Winterton, Nicholas

  Tebbit, Rt Hon Norman

  Wolfson, Mark

  Temple-Morris, Peter

  Young, Sir George (Acton)

  Thatcher, Rt Hon Mrs M.

  Younger, Rt Hon George

  Thomas, Rt Hon Peter

  Thompson, Donald

  Tellers for the Noes:

  Thornton, Malcolm

  Mr. Anthony Berry and

  Townend, John (Bridlington)

  Mr. Carol Mather.

  Townsend, Cyril D, (B'heath)

  Question accordingly negatived.
  Amendment proposed, at the end of the Question, to add:
  But humbly regret that the Gracious Speech contains no plans for a sustained reduction of unemployment accompanied by industrial recovery; consider the Government's dogmatic commitment to privatisation to be as irrelevant to the nation's needs as that of the Official Opposition to further nationalisation; and believe that the overdue repair and modernisation of public assets and public services together with measures essential for increased industrial efficiency would be of far greater significance than the proposed changes in mere ownership.—[Mr. Roper.]
  Question put, That the amendment be made:—
  The House divided: Ayes 43, Noes 311.

  Division No. 3]

  [10.16 pm

  AYES

  Alton, David

  Owen, Rt Hon Dr David

  Bradley, Tom

  Paisley, Rev Ian

  Brocklebank-Fowler, C.

  Penhaligon, David

  Brown, Ronald W. (H'ckn'y S)

  Pitt, William Henry

  Cartwright, John

  Robinson, P. (Belfast E)

  Crawshaw, Richard

  Rodgers, Rt Hon William

  Cunningham, G. (Islington S)

  Ross, Stephen (Isle of Wight)

  Ellis, Tom (Wrexham)

  Sandelson, Neville

  Ginsburg, David

  Smith, Cyril (Rochdale)

  Grant, John (Islington C)

  Steel, Rt Hon David

  Grimond, Rt Hon J.

  Stewart, Rt Hon D. (W Isles)

  Horam, John

  Thomas, Dafydd (Merioneth)

  Howells, Geraint

  Thomas, Mike (Newcastle E)

  Hudson Davies, Gwilym E.

  Wainwright, R. (Colne V)

  Jenkins, Rt Hon Roy (Hillh'd)

  Wellbeloved, James

  Johnston, Russell (Inverness)

  Wigley, Dafydd

  Lyons, Edward (Bradf'd W)

  Williams, Rt Hon Mrs

  Mabon, Rt Hon Dr J. Dickson

  (Crosby)

  Maclennan, Robert

  Wilson, Gordon (Dundee E)

  McNally, Thomas

  Wrigglesworth, Ian

  Magee, Bryan

  Mitchell, R. C. (Soton Itchen)

  Tellers for the Ayes:

  Ogden, Eric

  Mr. John Roper and

  O'Halloran, Michael

  Mr. A. J. Beith.

  NOES

  Adley, Robert

  Alexander, Richard

  Aitken, Jonathan

  Alison, Rt Hon Michael

  637

  Ancram, Michael

  Fisher, Sir Nigel

  Arnold, Tom

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

  Aspinwall, Jack

  Fletcher-Cooke, Sir Charles

  Atkins, Rt Hon H. (S'thorne)

  Fookes, Miss Janet

  Atkins, Robert (Preston N)

  Forman, Nigel

  Atkinson, David (B'm'th, E)

  Fowler, Rt Hon Norman

  Baker, Kenneth (St. M'bone)

  Fox, Marcus

  Baker, Nicholas (N Dorset)

  Fraser, Rt Hon Sir Hugh

  Banks, Robert

  Fraser, Peter (South Angus)

  Beaumont-Dark, Anthony

  Fry, peter

  Bendall, Vivian

  Gardiner, George (Reigate)

  Benyon, W. (Buckingham)

  Gardner, Edward (S Fylde)

  Best, Keith

  Garel-Jones, Tristan

  Bevan, David Gilroy

  Gilmour, Rt Hon Sir Ian

  Biffen, Rt Hon John

  Glyn, Dr Alan

  Biggs-Davison, Sir John

  Goodhart, Sir Philip

  Blackburn, John

  Goodhew, Sir Victor

  Blaker, Peter

  Goodlad, Alastair

  Body, Richard

  Gorst, John

  Bonsor, Sir Nicholas

  Gow, Ian

  Boscawen, Hon Robert

  Gower, Sir Raymond

  Bottomley, Peter (W'wich W)

  Gray, Hamish

  Bowden, Andrew

  Greenway, Harry

  Boyson, Dr Rhodes

  Grieve, Percy

  Braine, Sir Bernard

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

  Bright, Graham

  Griffiths, Peter Portsm'th N)

  Brinton, Tim

  Grist, Ian

  Brittan, Rt. Hon. Leon

  Grylls, Michael

  Brooke, Hon Peter

  Gummer, John Selwyn

  Brotherton, Michael

  Hamilton, Hon A.

  Brown, Michael (Brigg & Sc'n)

  Hamilton, Michael (Salisbury)

  Browne, John (Winchester)

  Hampson, Dr Keith

  Bruce-Gardyne, John

  Hannam, John

  Bryan, Sir Paul

  Haselhurst, Alan

  Buchanan-Smith, Rt. Hon. A.

  Hastings, Stephen

  Buck, Antony

  Havers, Rt Hon Sir Michael

  Budgen, Nick

  Hawkins, Sir Paul

  Bulmer, Esmond

  Hawksley, Warren

  Burden, Sir Frederick

  Hayhoe, Barney

  Butcher, John

  Heath, Rt Hon Edward

  Butler, Hon Adam

  Heddle, John

  Carlisle, John (Luton West)

  Henderson, Barry

  Carlisle, Kenneth (Lincoln)

  Heseltine, Rt Hon Michael

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

  Hicks, Robert

  Chalker, Mrs. Lynda

  Higgins, Rt Hon Terence L.

  Channon, Rt. Hon. Paul

  Hill, James

  Chapman, Sydney

  Hogg, Hon Douglas (Gr'th'm)

  Churchill, W. S.

  Holland, Philip (Carlton)

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

  Hooson, Tom

  Clark, Sir W. (Croydon S)

  Hordern, Peter

  Clarke, Kenneth (Rushcliffe)

  Howe, Rt Hon Sir Geoffrey

  Clegg, Sir Walter

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

  Cockeram, Eric

  Howell, Ralph (N Norfolk)

  Colvin, Michael

  Hunt, David (Wirral)

  Cope, John

  Hunt, John (Ravensbourne)

  Cormack, Patrick

  Irvine, Rt Hon Bryant Godman

  Corrie, John

  Irving, Charles (Cheltenham)

  Costain, Sir Albert

  Jenkin, Rt Hon Patrick

  Cranborne, Viscount

  Johnson Smith, Sir Geoffrey

  Crouch, David

  Jopling, Rt Hon Michael

  Dickens, Geoffrey

  Joseph, Rt Hon Sir Keith

  Dorrell, Stephen

  Kaberry, Sir Donald

  Douglas-Hamilton, Lord J.

  Kellett-Bowman, Mrs Elaine

  Dover, Denshore

  Kimball, Sir Marcus

  du Cann, Rt Hon Edward

  King, Rt Hon Tom

  Dunn, Robert (Dartford)

  Kitson, Sir Timothy

  Durant, Tony

  Knight, Mrs Jill

  Dykes, Hugh

  Knox, David

  Eden, Rt Hon Sir John

  Lamont, Norman

  Edwards, Rt Hon N. (P'broke)

  Lang, Ian

  Eggar, Tim

  Latham, Michael

  Elliott, Sir William

  Lawrence, Ivan

  Eyre, Reginald

  Lawson, Rt Hon Nigel

  Fairbairn, Nicholas

  Lee, John

  Fairgrieve, Sir Russell

  Le Marchant, Spencer

  Faith, Mrs Sheila

  Lennox-Boyd, Hon Mark

  Farr, John

  Lester, Jim (Beeston)

  Fell, Sir Anthony

  Lewis, Kenneth (Rutland)

  Fenner, Mrs Peggy

  Lloyd, Ian (Havant & W'loo)

  Finsberg, Geoffrey

  Lloyd, Peter (Fareham)

  638

  Loveridge, John

  Roberts, Wyn (Conway)

  Luce, Richard

  Rossi, Hugh

  Lyell, Nicholas

  Rost, Peter

  McCrindle, Robert

  Rumbold, Mrs A. C. R.

  Macfarlane, Neil

  Sainsbury, Hon Timothy

  MacGregor, John

  St. John-Stevas, Rt Hon N.

  MacKay, John (Argyll)

  Scott, Nicholas

  Macmillan, Rt Hon M.

  Shaw, Giles (Pudsey)

  McNair-Wilson, M. (N'bury)

  Shaw, Sir Michael (Scarb')

  McNair-Wilson, P. (New F'st)

  Shelton, William (Streatham)

  McQuarrie, Albert

  Shepherd, Colin (Hereford)

  Madel, David

  Shepherd, Richard

  Major, John

  Shersby, Michael

  Marland, Paul

  Silvester, Fred

  Marlow, Antony

  Sims, Roger

  Marshall, Michael (Arundel)

  Skeet, T. H. H.

  Marten, Rt Hon Neil

  Smith, Dudley

  Maude, Rt Hon Sir Angus

  Smith, Tim (Beaconsfield)

  Mawby, Ray

  Speed, Keith

  Mawhinney, Dr Brian

  Speller, Tony

  Maxwell-Hyslop, Robin

  Spence, John

  Mayhew, Patrick

  Spicer, Jim (West Dorset)

  Mellor, David

  Spicer, Michael (S Worcs)

  Meyer, Sir Anthony

  Sproat, Iain

  Miller, Hal (B'grove)

  Squire, Robin

  Mills, Iain (Meriden)

  Stainton, Keith

  Mills, Sir Peter (West Devon)

  Stanbrook, Ivor

  Miscampbell, Norman

  Stanley, John

  Moate, Roger

  Steen, Anthony

  Monro, Sir Hector

  Stevens, Martin

  Montgomery, Fergus

  Stewart, A. (E Renfrewshire)

  Moore, John

  Stewart, Ian (Hitchin)

  Morgan, Geraint

  Stokes, John

  Morris, M. (N'hampton S)

  Stradling Thomas, J.

  Morrison, Hon C. (Devizes)

  Tapsell, Peter

  Morrison, Hon P. (Chester)

  Taylor, Teddy (S'end E)

  Mudd, David

  Tebbit, Rt Hon Norman

  Murphy, Christopher

  Temple-Morris, Peter

  Myles, David

  Thatcher, Rt Hon Mrs M.

  Neale, Gerrard

  Thomas, Rt Hon Peter

  Needham, Richard

  Thompson, Donald

  Nelson, Anthony

  Thornton, Malcolm

  Neubert, Michael

  Townend, John (Bridlington)

  Newton, Tony

  Townsend, Cyril D, (B'heath)

  Normanton, Tom

  Trippier, David

  Nott, Rt Hon John

  Trotter, Neville

  Onslow, Cranley

  van Straubenzee, Sir W.

  Oppenheim, Rt Hon Mrs S.

  Viggers, Peter

  Osborn, John

  Waddington, David

  Page, John (Harrow, West)

  Wakeham, John

  Page, Richard (SW Herts)

  Waldegrave, Hon William

  Parkinson, Rt Hon Cecil

  Walker, Rt Hon P. (W'cester)

  Parris, Matthew

  Walker, B. (Perth)

  Patten, Christopher (Bath)

  Walker-Smith, Rt Hon Sir D.

  Pattie, Geoffrey

  Wall, Sir Patrick

  Pawsey, James

  Waller, Gary

  Percival, Sir Ian

  Walters, Dennis

  Peyton, Rt Hon John

  Ward, John

  Pink, R. Bonner

  Warren, Kenneth

  Porter, Barry

  Watson, John

  Prentice, Rt Hon Reg

  Wells, Bowen

  Price, Sir David (Eastleigh)

  Wells, John (Maidstone)

  Prior, Rt Hon James

  Wheeler, John

  Proctor, K. Harvey

  Whitelaw, Rt Hon William

  Raison, Rt Hon Timothy

  Whitney, Raymond

  Rathbone, Tim

  Wiggin, Jerry

  Rees, Peter (Dover and Deal)

  Wilkinson, John

  Rees-Davies, W. R.

  Winterton, Nicholas

  Renton, Tim

  Wolfson, Mark

  Rhodes James, Robert

  Young, Sir George (Acton)

  Rhys Williams, Sir Brandon

  Younger, Rt Hon George

  Ridley, Hon Nicholas

  Ridsdale, Sir Julian

  Tellers for the Noes

  Rifkind, Malcolm

  Mr. Anthony Berry and

  Rippon, Rt Hon Geoffrey

  Mr. Carol Mather.

  Roberts, M. (Cardiff NW)

  Question accordingly negatived.
  Main Question put:—
  The House divided: Ayes 310, Noes 268.

  Division No.4]

  [10.29 pm

  AYES

  Adley, Robert

  Eyre, Reginald

  Aitken, Jonathan

  Fairbairn, Nicholas

  Alexander, Richard

  Fairgrieve, Sir Russell

  Alison, Rt Hon Michael

  Faith, Mrs Sheila

  Ancram, Michael

  Farr, John

  Arnold, Tom

  Fell, Sir Anthony

  Aspinwall, Jack

  Fenner, Mrs Peggy

  Atkins, Rt Hon H. (S'thorne)

  Finsberg, Geoffrey

  Atkins, Robert (Preston N)

  Fisher, Sir Nigel

  Atkinson, David (B'm'th,E)

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

  Baker, Kenneth (St. M'bone)

  Fletcher-Cooke, Sir Charles

  Baker, Nicholas (N Dorset)

  Fookes, Miss Janet

  Banks, Robert

  Forman, Nigel

  Beaumont-Dark, Anthony

  Fowler, Rt Hon Norman

  Bendall, Vivian

  Fox, Marcus

  Benyon, W. (Buckingham)

  Fraser, Rt Hon Sir Hugh

  Best, Keith

  Fraser, Rt Hon Sir Hugh

  Bevan, David Gilroy

  Fry, Peter

  Biffen, Rt Hon John

  Gardiner, George (Reigate)

  Biggs-Davison, Sir John

  Gardner, Edward (S Fylde)

  Blackburn, John

  Garel-Jones, Tristan

  Blaker, Peter

  Gilmour, Rt Hon Sir Ian

  Body, Richard

  Glyn, Dr Alan

  Bonsor, Sir Nicholas

  Goodhart, Sir Philip

  Boscawen, Hon Robert

  Goodhew, Sir Victor

  Bottomley, Peter (W'wich W)

  Goodlad, Alastair

  Bowden, Andrew

  Gorst, John

  Boyson, Dr Rhodes

  Gow, Ian

  Braine, Sir Bernard

  Gower, Sir Raymond

  Bright, Graham

  Gray, Hamish

  Brinton, Tim

  Greenway, Harry

  Brittan, Rt. Hon. Leon

  Grieve, Percy

  Brooke, Hon Peter

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

  Brotherton, Michael

  Griffiths, Peter Portsm'th N)

  Brown, Michael (Brigg & Sc'n)

  Grist, Ian

  Browne, John (Winchester)

  Grylls, Michael

  Bruce-Gardyne, John

  Gummer, John Selwyn

  Bryan, Sir Paul

  Hamilton, Hon A.

  Buchanan-Smith, Rt. Hon. A.

  Hamilton, Michael (Salisbury)

  Buck, Antony

  Hampson, Dr Keith

  Budgen, Nick

  Hannam, John

  Bulmer, Esmond

  Haselhurst, Alan

  Burden, Sir Frederick

  Hastings, Stephen

  Butcher, John

  Havers, Rt Hon Sir Michael

  Butler, Hon Adam

  Hawkins, Sir Paul

  Carlisle, John (Luton West)

  Hawksley, Warren

  Carlisle, Kenneth (Lincoln)

  Hayhoe, Barney

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

  Heath, Rt Hon Edward

  Chalker, Mrs. Lynda

  Heddle, John

  Channon, Rt. Hon. Paul

  Henderson, Barry

  Chapman, Sydney

  Heseltine, Rt Hon Michael

  Churchill, W. S.

  Hicks, Robert

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

  Higgins, Rt Hon Terence L.

  Clark, Sir W. (Croydon S)

  Hill, James

  Clarke, Kenneth (Rushcliffe)

  Hogg, Hon Douglas (Gr'th'm)

  Clegg, Sir Walter

  Holland, Philip (Carlton)

  Cockeram, Eric

  Hooson, Tom

  Colvin, Michael

  Hordern, Peter

  Cope, John

  Howe, Rt Hon Sir Geoffrey

  Cormack, Patrick

  Howell, Rt Hon Sir Geoffrey

  Corrie, John

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

  Costain, Sir Albert

  Hunt, David (Wirral)

  Cranborne, Viscount

  Hunt, John (Ravensbourne)

  Crouch, David

  Irvine, Rt Hon Bryant Godman

  Dickens, Geoffrey

  Irving, Charles (Cheltenham)

  Dorrell, Stephen

  Jenkin, Rt Hon Patrick

  Douglas-Hamilton, Lord J.

  Johnson Smith, Sir Geoffrey

  Dover, Denshore

  Jopling, Rt Hon Michael

  du Cann, Rt Hon Edward

  Joseph, Rt Hon Sir Keith

  Dunn, Robert (Dartford)

  Kaberry, Sir Donald

  Durant, Tony

  Kellett-Bowman, Mrs Elaine

  Dykes, Hugh

  Kimball, Sir Marcus

  Eden, Rt Hon Sir John

  King, Rt Hon Tom

  Edwards, Rt Hon N. (P'broke)

  Kitson, Sir Timothy

  Eggar, Tim

  Knight, Mrs Jill

  Elliott, Sir William

  Knox, David

  640

  Lamont, Norman

  Rees-Davies, W. R.

  Lang, Ian

  Renton, Tim

  Latham, Michael

  Rhodes James, Robert

  Lawrence, Ivan

  Rhys Williams, Sir Brandon

  Lawson, Rt Hon Nigel

  Ridley, Hon Nicholas

  Lee, John

  Ridsdale, Sir Julian

  Le Marchant, Spencer

  Rifkind, Malcolm

  Lennox-Boyd, Hon Mark

  Rippon, Rt Hon Geoffrey

  Lester, Jim (Beeston)

  Roberts, M. (Cardiff NW)

  Lewis, Kenneth (Rutland)

  Roberts, Wyn (Conway)

  Lloyd, Ian (Havant & W'loo)

  Rossi, Hugh

  Lloyd, Peter (Fareham)

  Rost, Peter

  Loveridge, John

  Rumbold, Mrs A. C. R.

  Luce, Richard

  Sainsbury, Hon Timothy

  Lyell, Nicholas

  St. John-Stevas, Rt Hon N.

  McCrindle, Robert

  Scott, Nicholas

  Macfarlane, Neil

  Shaw, Giles (Pudsey)

  MacGregor, John

  Shaw, Sir Michael (Scarb')

  MacKay, John (Argyll)

  Shelton, William (Streatham)

  Macmillan, Rt Hon M.

  Shepherd, Colin (Hereford)

  McNair-Wilson, M. (N'bury)

  Shepherd, Richard

  McNair-Wilson, P. (New F'st)

  Shersby, Michael

  McQuarrie, Albert

  Silvester, Fred

  Madel, David

  Sims, Roger

  Major, John

  Skeet, T. H. H.

  Marland, Paul

  Smith, Dudley

  Marlow, Antony

  Smith, Tim (Beaconsfield)

  Marshall, Michael (Arundel)

  Speed, Keith

  Marten, Rt Hon Neil

  Speller, Tony

  Maude, Rt Hon Sir Angus

  Spence, John

  Mawby, Ray

  Spicer, Jim (West Dorset)

  Mawhinney, Dr Brian

  Spicer, Michael (S Worcs)

  Maxwell-Hyslop, Robin

  Sproat, Iain

  Mayhew, Patrick

  Squire, Robin

  Mellor, David

  Stainton, Keith

  Meyer, Sir Anthony

  Stanbrook, Ivor

  Miller, Hal (B'grove)

  Stanley, John

  Mills, Iain (Meriden)

  Steen, Anthony

  Mills, Sir Peter (West Devon)

  Stevens, Martin

  Miscampbell, Norman

  Stewart, A. (E Renfrewshire)

  Moate, Roger

  Stewart, Ian (Hitchin)

  Monro, Sir Hector

  Stokes, John

  Montgomery, Fergus

  Stradling Thomas, J.

  Moore, John

  Tapsell, Peter

  Morgan, Geraint

  Taylor, Teddy (S'end E)

  Morris, M. (N'hampton S)

  Tebbit, Rt Hon Noman

  Morrison, Hon C. (Devizes)

  Temple-Morris, Peter

  Morrison, Hon P. (Chester)

  Thatcher, Rt Hon Mrs M.

  Mudd, David

  Thomas, Rt Hon Peter

  Murphy, Christopher

  Thompson, Donald

  Myles, David

  Thornton, Malcolm

  Neale, Gerrard

  Townend, John (Bridlington)

  Needham, Richard

  Townsend, Cyril D, (B'heath)

  Nelson, Anthony

  Trippier, David

  Neubert, Michael

  Trotter, Neville

  Newton, Tony

  van Straubenzee, Sir W.

  Normanton, Tom

  Viggers, Peter

  Nott, Rt Hon John

  Waddington, David

  Onslow, Cranley

  Wakeham, John

  Oppenheim, Rt Hon Mrs S.

  Waldegrave, Hon William

  Osborn, John

  Walker, Rt Hon P. (W'cester)

  Page, John (Harrow, West)

  Walker, B. (Perth)

  Page, Richard (SW Herts)

  Walker-Smith, Rt Hon Sir D.

  Parris, Matthew

  Wall, Sir Patrick

  Patten, Christopher (Bath)

  Waller, Gary

  Pattie, Geoffrey

  Walters, Dennis

  Pawsey, James

  Ward, John

  Percival, Sir Ian

  Warren, Kenneth

  Peyton, Rt Hon John

  Watson, John

  Pink, R. Bonner

  Wells, Bowen

  Porter, Barry

  Wells, John (Maidstone)

  Prentice, Rt Hon Reg

  Wheeler, John

  Price, Sir David (Eastleigh)

  Whitelaw, Rt Hon William

  Prior, Rt Hon James

  Whitney, Raymond

  Proctor, K. Harvey

  Wiggin, Jerry

  Raison, Rt Hon Timothy

  Wilkinson, John

  Rathbone, Tim

  Winterton, Nicholas

  Rees, Peter (Dover and Deal)

  Wolfson, Mark

  641

  Young, Sir George (Acton)

  Tellers for the Ayes:

  Younger, Rt Hon George

  Mr. Anthony Berry and

  Mr. Carol Mather.

  NOES

  Abse, Leo

  Evans, John (Newton)

  Adams, Allen

  Ewing, Harry

  Allaun, Frank

  Faulds, Andrew

  Alton, David

  Field, Frank

  Archer, Rt Hon Peter

  Fitch, Alan

  Ashley, Rt Hon Jack

  Flannery, Martin

  Ashton, Joe

  Foot, Rt Hon Michael

  Atkinson, N. (H'gey,)

  Ford, Ben

  Bagier, Gordon A.T.

  Forrester, John

  Barnett, Guy (Greenwich)

  Foster, Derek

  Barnett, Rt Hon Joel (H'wd)

  Foulkes, George

  Beith, A. J.

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

  Benn, Rt Hon Tony

  Freeson, Rt Hon Reginald

  Bennett, Andrew (St'kp't N)

  Garrett, John (Norwich S)

  Bidwell, Sydney

  Garrett, W. E. (Wallsend)

  Booth, Rt Hon Albert

  George, Bruce

  Bottomley, Rt Hon A. (M'b'ro)

  Gilbert, Rt Hon Dr John

  Bradley, Tom

  Ginsburg, David

  Bray, Dr Jeremy

  Golding, John

  Brocklebank-Fowler, C.

  Graham, Ted

  Brown, Hugh D. (Proven)

  Grant, George (Morpeth)

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

  Grant, John (Islington C)

  Brown, Ronald W. (H'ckn'y S)

  Grimond, Rt Hon J.

  Brown, Ron (E'burgh, Leith)

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

  Buchan, Norman

  Hardy, Peter

  Callaghan, Rt Hon J.

  Harman, Harriet (Peckham)

  Callaghan, Jim (Midd't'n & P)

  Harrison, Rt Hon Walter

  Campbell-Savours, Dale

  Hattersley, Rt Hon Roy

  Canavan, Dennis

  Healey, Rt Hon Denis

  Cant, R. B.

  Heffer, Eric S.

  Carmichael, Neil

  Hogg, N. (E Dunb't'nshire)

  Carter-Jones, Lewis

  Holland, S. (L'b'th, Vauxh'll)

  Cartwright, John

  Home Robertson, John

  Clark, Dr David (S Shields)

  Homewood, William

  Clarke, Thomas (C'b'dge, A'rie)

  Hooley, Frank

  Cocks, Rt Hon M. (B'stol S)

  Horam, John

  Cohen, Stanley

  Howell, Rt Hon D.

  Coleman, Donald

  Howells, Geraint

  Concannon, Rt Hon J. D.

  Hoyle, Douglas

  Conlan, Bernard

  Huckfield, Les

  Cook, Robin F.

  Hudson Davies, Gwilym E.

  Cowans, Harry

  Hughes, Mark (Durham)

  Cox, T. (W'dsw'th, Toot'g)

  Hughes, Robert (Aberdeen N)

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

  Hughes, Roy (Newport)

  Crawshaw, Richard

  Janner, Hon Greville

  Crowther, Stan

  Jay, Rt Hon Douglas

  Cryer, Bob

  Jenkins, Rt Hon Roy (Hillh'd)

  Cunliffe, Lawrence

  John, Brynmor

  Cunningham, G. (Islington S)

  Johnson, James (Hull West)

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

  Johnson, Walter (Derby S)

  Dalyell, Tam

  Johnston, Russell (Inverness)

  Davidson, Arthur

  Jones, Rt Hon Alec (Rh'dda)

  Davies, Rt Hon Denzil (L'lli)

  Jones, Barry (East Flint)

  Davis, Clinton (Hackney C)

  Jones, Dan (Burnley)

  Davis, Terry (B'ham, Stechf'd)

  Kaufman, Rt Hon Gerald

  Deakins, Eric

  Kerr, Russell

  Dean, Joseph (Leeds West)

  Kilroy-Silk, Robert

  Dewar, Donald

  Kinnock, Neil

  Dixon, Donald

  Lambie, David

  Dobson, Frank

  Lamond, James

  Dormand, Jack

  Leadbitter, Ted

  Douglas, Dick

  Leighton, Ronald

  Dubs, Alfred

  Lestor, Miss Joan

  Duffy, A. E. P.

  Lewis, Arthur (N'ham NW)

  Dunnett, Jack

  Lewis, Ron (Carlisle)

  Dunwoody, Hon Mrs G.

  Litherland, Robert

  Eadie, Alex

  Lofthouse, Geoffrey

  Eastham, Ken

  Lyon, Alexander (York)

  Ellis, R. (NE D'bysh're)

  Lyons, Edward (Bradf'd W)

  Ellis, Tom (Wrexham)

  Mabon, Rt Hon Dr J. Dickson

  English, Michael

  McCartney, Hugh

  Ennals, Rt Hon David

  McDonald, Dr Oonagh

  Evans, Ioan (Aberdare)

  McGuire, Michael (Ince)

  642

  McKay, Allen (Penistone)

  Rowlands, Ted

  McKelvey, William

  Ryman, John

  MacKenzie, Rt Hon Gregor

  Sandelson, Neville

  Maclennan, Robert

  Sever, John

  McMahon, Andrew

  Sheerman, Barry

  McNally, Thomas

  Sheldon, Rt Hon R.

  McNamara, Kevin

  Shore, Rt Hon Peter

  McTaggart, Robert

  Short, Mrs Renée

  McWilliam, John

  Silkin, Rt Hon J. (Deptford)

  Magee, Bryan

  Silkin, Rt Hon S. C. (Dulwich)

  Marks, Kenneth

  Silverman, Julius

  Marshall, D (G'gow S'ton)

  Skinner, Dennis

  Marshall, Dr Edmund (Goole)

  Smith, Cyril (Rochdale)

  Marshall, Jim (Leicester S)

  Smith, Rt Hon J. (N Lanark)

  Martin, M (G'gow S'burn)

  Snape, Peter

  Mason, Rt Hon Roy

  Soley, Clive

  Maxton, John

  Spearing, Nigel

  Maynard, Miss Joan

  Spellar, John Francis (B'ham)

  Meacher, Michael

  Spriggs, Leslie

  Mikardo, Ian

  Stallard, A. W.

  Millan, Rt Hon Bruce

  Steel, Rt Hon David

  Miller, Dr M. S. (E Kilbride)

  Stewart, Rt Hon D. (W Isles)

  Mitchell, Austin (Grimsby)

  Stoddart, David

  Mitchell, R. C. (Soton Itchen)

  Stott, Roger

  Morris, Rt Hon A. (W'shawe)

  Strang, Gavin

  Morris, Rt Hon C. (O'shaw)

  Summerskill, Hon Dr Shirley

  Morris, Rt Hon J. (Aberavon)

  Taylor, Mrs Ann (Bolton W)

  Moyle, Rt Hon Roland

  Thomas, Dafydd (Merioneth)

  Mulley, Rt Hon Frederick

  Thomas, Jeffrey (Abertillery)

  Newens, Stanley

  Thomas, Mike (Newcastle E)

  Oakes, Rt Hon Gordon

  Thorne, Stan (Preston South)

  Ogden, Eric

  Tilley, John

  O'Halloran, Michael

  Tinn, James

  O'Neill, Martin

  Torney, Tom

  Orme, Rt Hon Stanley

  Varley, Rt Hon Eric G.

  Owen, Rt Hon Dr David

  Wainwright, E. (Dearne V)

  Paisley, Rev Ian

  Wainwright, R. (Colne V)

  Palmer, Arthur

  Walker, Rt Hon H. (D'caster)

  Park, George

  Wardell, Gareth

  Parker, John

  Watkins, David

  Parry, Robert

  Weetch, Ken

  Pendry, Tom

  Wellbeloved, James

  Penhaligon, David

  Welsh, Michael

  Pitt, William Henry

  White, Frank R.

  Powell, Raymond (Ogmore)

  Whitehead, Phillip

  Prescott, John

  Whitlock, William

  Price, C. (Lewisham W)

  Wigley, Dafydd

  Race, Reg

  Willey, Rt Hon Frederick

  Radice, Giles

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

  Rees, Rt Hon M (Leeds S)

  Williams, Rt Hon Mrs (Crosby)

  Richardson, Jo

  Wilson, Gordon (Dundee E)

  Roberts, Albert (Normanton)

  Wilson, Rt Hon Sir H. (H'ton)

  Roberts, Allan (Bootle)

  Wilson, William (C'try SE)

  Roberts, Ernest (Hackney N)

  Winnick, David

  Roberts, Gwilym (Cannock)

  Woodall, Alec

  Robertson, George

  Woolmer, Kenneth

  Robinson, G. (Coventry NW)

  Wrigglesworth, Ian

  Robinson, P. (Belfast E)

  Wright, Sheila

  Rodgers, Rt Hon William

  Young, David (Bolton E)

  Rooker, J. W.

  Roper, John

  Tellers for the Noes:

  Ross, Ernest (Dundee West)

  Mr. James Hamilton and

  Ross, Stephen (Isle of Wight)

  Mr. Frank Haynes.

  Question accordingly agreed to.
  Resolved,
  That an humble Address be presented to Her Majesty, as follows:—
  Most Gracious Sovereign,
  We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.
  To be present by Privy Councillors or Members of Her Majesty's Household.

  Royal Naval College, Greenwich
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lang.]
  10.41 pm
  Mr. Guy Barnett: I am grateful for the opportunity to raise the issue of contract catering at the Royal Naval College, at Greenwich in my constituency.
  The proposal to move to contract catering became public shortly after the Ministry of Defence began consultations on 23 July. It has caused a good deal of concern and even alarm in my constituency. There has been comment in the local press. The present catering staff, who are likely to be affected, are deeply worried by the proposal. Doubts have even been expressed by the management of the college.
  I wish to emphasise that I have deliberately not asked the management officially for its views for fear of placing it in a difficult position, but the Minister should tell the House what reaction his proposal has met among the naval staff and the management of the college. Understandably, it is the industrial staff whose jobs are directly threatened who are most alarmed and dismayed by the proposal. There can be no valid criticism of the performance of the staff. Every time I have been a guest of the Royal Naval College or enjoyed the hospitality of the Admiral President I have been struck by the efficiency, thoughtfulness and courtesy of the catering staff with whom I have come into contact, and I have been highly impressed by their culinary skills.
  Let no one be in any doubt about the considerable demands that are made upon them. In addition to the considerable requirements of the officers' mess, which start daily with early morning tea for every accommodated individual and end with dinner in the Painted Hall, there are varied requirements which arise from Royal, State, diplomatic and Admiralty Board banquets. There are formal dinners for external organisations, buffet lunches, parties and receptions. That is just to name a few of the varied requirements that fall upon the present catering staff who serve the college so supremely well.
  They do so because the people who make up that staff share a tradition of loyalty derived from the fact that many of them have previously served Her Majesty in the Armed Services and have then served the Government for many years in anticipation that their jobs would be safe, even if the weekly wage was small.
  What is the argument for the proposal to replace the present staff of about 100 by a contract firm? I wrote to the Under-Secretary of State for Defence Procurement, and his reply, in a letter dated 1 October, was that it would be cheaper. He thought—I hope that I interpret his words fairly—that a contract firm would be at least as efficient as the present work force.
  I shall deal first with the cheapness argument. The Minister cannot quote the nature of the putative contractor's bid without disclosing commercial information. I understand that. But if cheapness is his objective, he must answer a number of questions. First, what initiatives have been taken by the management of the college, on his instructions, to cut costs in the present service? My information is that no such initiatives have been taken. It would be making quixotic demands on the trade unions to suggest that they should come forward with such proposals.
  644
  Secondly, as the Minister knows, there has been an almost universal ban on recruitment, with the result that the present work force is about 30 below strength. So why does the Minister insist on making cost comparisons that count the establishment level and not the numbers actually in post? Does he not accept that the only legitimate comparison is on the basis of those now in post, plus an efficiency exercise initiated by the management in cooperation with trade union representatives? Thirdly, in his letter to me the Minister states:
  "in line with Treasury guidance, 5 per cent. of total redundancy compensation is included in the comparison of the annual costs of contract and in-house catering."
  That may be the Treasury's idea of a fair comparison, but no accountant would agree that so small a percentage represents a realistic figure for redundancy costs that will arise as a result of implementing the proposal to go out to contract.
  The Minister used the argument of efficiency. That is even less soundly based. In his letter to me he said that he is well satisfied with his many cleaning contractors. Even were that to be true, it is hardly relevant to this proposal. He admits in his letter:
  "Our experience in the catering field is as yet somewhat limited."
  Yet he is prepared to consider a proposal to hand over to a contractor a very wide-ranging function. It is a varied responsibility of which few contractors can have had experience—anything from a full dress State banquet to the routine and varied needs of the college, as well as the private functions.
  It would not surprise me if the contractor who had been awarded the contract, and possibly even moved in, would find it necessary to withdraw because he was unable to fulfil his obligations. He might even default on them. What would the Minister do then? He may think that the best hope is for the contractor to re-engage the staff who are being made redundant to take advantage of their expertise and experience. If so, what is he saying? It is that the work force of the college is highly competent, but the management of the college is not. If that were the case, logic should then decide him to sack the management, appoint new managers and keep the present staff.
  I am driven to the unwelcome conclusion that the Government think that it would be advantageous to divest themselves of their responsibilities as employer, and that the major saving that they hope to make will be made at the expense of the employees who, if they are re-engaged by the contractor, will be paid even lower wages than they are now receiving and suffer worse conditions of employment than those which are currently the subject of trade union negotiation.
  Mr. Roland Moyle: Does not my hon. Friend agree that both he and I have enjoyed the catering arrangements at the college from time to time, and found them of first-class efficiency? Is it not crystal clear to any impartial person that the interests of his constituents and mine are being sacrificed for a managerial scheme of dubious efficiency, purely on doctrinaire grounds?
  Mr. Barnett: I agree entirely with my right hon. Friend. He represents a constituency near to mine and will recognise, as I do, the vital importance of the role of the Royal Naval College in our area. However, I would go further. I am sure that my right hon. Friend will agree that the Royal Naval College has a national, if not international, reputation, which needs to be preserved.

  645
  My final point, which is perhaps the most important, concerns security. We are told that the Government are security conscious. If they are not, they should be when there is a constant threat to the realm, to important individuals and to members of the Armed Services. Recent lapses in security affecting the Royal Family have caused considerable public disquiet. I raised those issues in my letter to the Minister, but his view is that there is no cause for concern on security grounds with regard to the proposal for the college.
  Would that also be his view about the Palace of Westminster? I understand that the House of Commons (Services) Committee would not accept it. If anything, the risks to be run at the Royal Naval College are greater than those that might affect this building. One reason is the fluctuating demands for catering and waiting staff in the college, which dictate the need for casual staff on precisely those occasions when the college hosts royalty, foreign statesmen, diplomats and other important individuals.
  The Minister suggests that there will be a pool of supplementary labour from which the contractor can draw for special occasions and that the Ministry will ensure that that pool contains only the people who are security vetted. However, I am told that there are a number of instances in which that system does not work. The substitution of a security-cleared worker for someone who has not been so cleared is a strong possibility, and is one that I understand has arisen in other areas where contractors have been employed.
  I ask the Minister to consider that matter of security more seriously than he seems so far to have done or to give a fuller answer than the one contained in the letter that he wrote to me.
  There are, of course, differences between the Government and myself on political grounds, but I am deliberately not dilating on them in this Adjournment debate. However, the Government owe the House, and those who work in my constituency and who are involved, much more explanation on three points: how the Minister arrives at the cost comparisons that he says that he has made; whether he thinks that the figure that he has included to cover redundancy costs is fair; and explanation on the security aspect on which the House is entitled to greater reassurance than hon. Members who have written to the Minister have so far received.
  10.52 pm
  The Under-Secretary of State for Defence Procurement (Mr. Geoffrey Pattie): I am grateful to the hon. Member for Greenwich (Mr. Barnett) for raising this subject tonight, as it gives me the opportunity to set out some of the background both to the specific proposal to introduce contract catering at the Royal Naval College, Greenwich and to the general exercise of which this is a part. Since 1979 we have been examining the scope fpr contracting out cleaning and catering services at defence establishments in Great Britain, and I know from the letters that I have received that this subject is of interest to a considerable number of hon. Members.
  I should say at the outset that we have not yet taken a final decision on whether to introduce contract catering at the Royal Naval College, Greenwich. We are at present consulting the departmental trade union side on the proposal, and we shall take its views into account before reaching a final decision. We shall also, of course, take into account the points in the debate tonight. We do,
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  however, hope to be able to make the decision in the near future, because if we are to go ahead, the timing of the changeover to contract is an important consideration to which I shall return later.
  Before I deal with the merits of this proposal, I should like to set it in the context of our general study of contract cleaning and catering. The Government came into office committed to bringing about a reduction in the size and cost of the Civil Service. Contracting out cleaning, and catering services is one of the "good housekeeping" measures undertaken in my Department as a contribution to this goal. It enables us to save money and to help to meet our reduced manpower targets, without detriment to the defence effort. From the beginning, it was clear that contract cleaning offered the prospect of significant financial savings at a large number of Defence establishments. It was also clear that, while the case for contract catering was in general more finely balanced, there was the possibility of savings at certain establishments such as the Royal Naval College, Greenwich.
  It is sometimes said that the aim of this exercise is to contract work out to the private sector whatever the cost. This is not so. We decide to contract out cleaning and catering only after a careful and detailed cost comparison between the costs of doing the task in-house and the costs of contract, and only when we are satisfied that contract would be no more expensive. In all the large number of cleaning contracts and the small number of catering contracts so far approved, contract has proved to be not just no more expensive but clearly cheaper—in many cases substantially so.
  Cleaning contracts have so far been authorised for over 200 defence establishments, which will save over 4,800 complemented Civil Service posts, and an estimated sum of around £8 million a year. Only a few catering contracts have so far been authorised, mainly because a much smaller number of establishments are suitable for contract catering, and, because in some cases contract would have been more expensive than continuing the present in-house arrangements, we do not proceed with them. The Royal Naval College, Greenwich, is, however, one establishment where we could save money by changing to contract.
  I regret to say, as the hon. Member for Greenwich predicted I would say, that I am unable to disclose details of the cost comparison which leads to that conclusion. I recognise that the hon. Member would like to have these full details, as indeed would our trade unions. There is unfortunately a genuine difficulty here to which we have been unable to find a solution. The fact is that the tenders we receive are submitted on a "commercial in confidence" basis. Tenderers have a right to expect that the privacy of the details they provide to us will be respected. This point was considered by the central arbitration committee in 1980, when the Civil Service union sought a ruling that the Ministry of Defence should disclose information from some cleaning tenders. the central arbitration committee concluded that because the information was submitted by tenderers "in confidence", the Department could not be required to disclose it. I can, however, give the hon. Member my assurance that the cost comparison for catering at Royal Naval College, Greenwich shows that that contract would be significantly cheaper.
  The cost comparison is, as I have said, based on a detailed assessment of the relative costs of in-house and contract catering. It includes, on the in-house side, the

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  costs of food, wages, employer's national insurance contributions, superannuation, administration and other costs. On the contract side, it includes the contract price, the costs of those directly employed staff who would be retained, administration and other costs and a proportion of the likely cost of redundancy payments to staff who would no longer be required.
  The total in-house costs of catering at the college come to £1,028,000 a year at 1981 prices, based on the full complement of staff. Because of under-manning, to which the hon. Member for Greenwich referred, the staff strength is below the complement, and on the basis of staff in post, the in-house cost is about £200,000 less, or £837,000 a year. For the purposes of the cost comparison, we normally use the in-house costs based on the full complement of staff, to ensure that we are comparing like with like. The full complement is the number of staff required to carry out the full task, and this is also the basis on which tenders are invited. A true comparison of the costs of the two options must therefore be based on the in-house costs of carrying out the full task—in other words, the cost of the full in-house complement. In fact, in this case, contract catering would be cheaper even than the lower in-house costs that I have quoted, based on the actual number of staff employed at present.
  I know that the trade unions have questioned the fact that the allowance for redundancy costs in the comparison is 5 per cent. of the total estimated payments, and have argued that that percentage is too low. The figure of 5 per cent. has been laid down by central Departments as the correct one to use when making such cost comparisons. It is based on the fact that redundancy payments are, of course, a one-off cost in the changeover to contract, and to add the total cost on to the first year of the changeover would give a false picture of the long-term balance of advantage between in-house and contract catering. We must take a long-term view of the relative costs, and while clearly some account must be taken of the once-for-all costs of a change, spreading such costs out over a reasonable period is considered the best way of doing so.
  Mr. Moyle: The Minister is basing his case entirely on costs. There are other factors, as my hon. Friend the Member for Greenwich (Mr. Barnett) has said. Many prominent people from abroad take advantage of the catering services at the Royal Naval College. Will he assure the House that standards of service and efficiency will be at least as good as they are now under any future arrangements?
  Mr. Pattie: As the right hon. Gentleman will appreciate, I am dealing with a series of points and I shall be coming to standards. I assure him that a change of this sort would not be contemplated if we were not satisfied on two fundamental points—first, that we would get genuine and significant savings, and, second, that standards would be as high as they had been in the past. There is no point in changing to lower standards.
  The hon. Member for Greenwich also raised the point whether it would still be cost-effective to change to contract catering when that would also involve giving staff pay in lieu of some of the u period of notice to which they would be entitled. That raises the question of the timing of the changeover, to which I referred at the beginning of my speech. For practical reasons, the
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  changeover would be best made during one of the holiday periods at the college—Easter, summer or Christmas. The defence studies wing of the National Defence College, Latimer, will be moving to Greenwich during next summer, and it would not be practical to introduce catering contractors at the same time as this other change is taking place. That means that if the changeover to contract did not take place in Easter 1983, it would not be possible until the end of the year. Making the change at Easter would involve giving some pay in lieu of the full period of notice, but the cost of that is assessed as being less than the savings achievable by changing to contract at the earlier date.
  I am aware that the local work force has now expressed an interest in submitting its own proposals for cutting the costs of in-house catering as an alternative to contract. It has been made clear to our trade unions that while we are ready to consider counter proposals from them, these must be submitted no later than the tendering stage. That is to allow us time to evaluate them and, if they are considered acceptable, to cost them and compare them with the tenders. That stage has now passed, and so it is too late to consider such proposals.
  I fully understand the anxieties of the work force about job losses and its future employment prospects. The proposal to bring in catering contractors at the college would involve the disappearance of the equivalent of 118 full-time complemented posts. Because a number of those are unfilled at present, the actual number of jobs lost would be the equivalent of 85½ full-time posts. The number of individual staff members affected would depend on how many part-time and full-time employees in the expected field of redundancy actually leave, but the maximum number would be just under 100. Every effort would be made to find alternative Government employment for those displaced, but it is likely that some at least would have to be declared redundant.
  However, the incoming contractor would of course need to employ staff to enable him to carry out the contract, and we encourage both cleaning and catering contractors to recruit the extra staff they will need from among the existing work force.
  It is in both his and our interests that he should have a work force experienced in the requirements of the establishment concerned, and we have found from experience that contractors co-operate well on that point. For example, we have analysed what became of the directly employed staff at the first 95 establishments where contract cleaning has been introduced during the current exercise. Of the staff in post when the decision was taken, 53 per cent. either transferred to other Ministry of Defence employment or opted for retirement or voluntary redundancy terms. Four-fifths of the remaining 47 per cent. were offered employment by the incoming contractor. Of those, just under half accepted the offer of employment and just over half, for whatever reason, declined. The final result was that 71 per cent. of the existing staff were either employed elsewhere in the Ministry of Defence or by the contractors, or had opted for retirement or voluntary redundancy, and most of the remaining 29 per cent. had had the opportunity of employment with the contractor. Our experience with the small number of catering contracts let so far has been similar, and while, of course, no guarantees can be given

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  that the pattern would be repeated exactly at the RNC Greenwich, there is no reason to expect that that would not be so.
  As to the terms of employment offered by commercial firms, they are obliged under the contract to observe the terms of the fair wages resolution, and we take care to verify that the contractors' proposed wage rates are in line with local market rates.
  On the question of the standards of service provided by contractors, we are satisfied that the firm to which we propose to award the RNC Greenwich contract is highly reputable and is fully capable of meeting our requirements. Firms are asked to tender only if we consider them to be able to carry out the task to our satisfaction and tenders are carefully scrutinised to see that they are realistic and provide acceptable standards.
  As the right hon. Member for Lewisham, East (Mr. Moyle) reminded us, particularly high standards are required at the RNC Greenwich, because of the nature of some of the catering functions held there, but the use of contractors for such prestige functions is not a complete novelty. The Government hospitality fund makes considerable use of commercial caterers for its functions, and we are confident that a commercial firm at RNC Greenwich would be able to maintain the high standards expected of it.
  Some concern has been expressed about the security aspect of using a commercial caterer in an establishment such as the college, particularly since the contractor would need to bring in extra staff to supplement his regular employees on special occasions. As I said a moment ago, contractors are already used in similar circumstances by the Government hospitality fund, and the Department would take whatever steps were considered necessary to satisfy itself as to the acceptability of the staff employed. That would naturally be made easier if, as we hope, the contractor at Greenwich recruited his extra staff from the existing work force. Arrangements would also be made to establish a pool of reserve labour for special functions
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  when more staff were needed. I assure the House that we attach great importance to security and we are satisfied that the arrangements will be adequate.
  I do not share the suspicion in some quarters that commercial contractors are somehow less reliable and less able to meet the standards required than directly employed staff. That is not borne out by our experience. Our many cleaning contractors and their staff have, in general, shown themselves to be as reliable, adaptable and dedicated as our own employees. For example, in a number of establishments where special demands were placed on them during the Falklands operation, they responded well. In many cases, despite some initial apprehensions about the standards provided by contract cleaners, we have seen positive improvements in standards as a result of their introduction. Although we have, so far, less experience of contract catering, I am confident that it can be just as successful.
  I fully sympathise with the present catering staff at RNC Greenwich whose jobs would be affected by the proposal. Many have given long and dedicated service, but, at a time when we are looking for economies, we cannot afford to ignore the significant savings which we are satisfied would come from a change to contract. I hope that many of the existing work force will find employment with the contractors so that their services will not be lost to the college.
  In conclusion, let me repeat what I said at the outset. We have not reached a final decision on the proposal, although we hope to do so soon. All the views expressed tonight will be taken into account in reaching that decision, but I must say that I believe that there remain good reasons why the proposal should go ahead, and that the apprehensions about the implications of the change to contract are not well-founded. If the final decision is that we should go ahead, I am sure that we can maintain the high standards of catering required at the college while making worthwhile savings.
  Question put and agreed to.
  Adjourned accordingly at seven minutes past Eleven o' clock.