Commons Sitting of 13 November 1984

Preamble
The House met at half—past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRIVATE BUSINESS
  LOCHABER WATER POWER ORDER CONFIRMATION BILL
  Considered; to be read the Third time.

  CLOSURE OF DEBATE (STANDING ORDER No. 31)
  Return ordered,
  respecting applications of Standing Order No. 31 (Closure of debate) during Session 1983–84, (1) in the House and in Committee of the whole House, under the following heads:—

  1

  2

  3

  4

  5

  6

  Date when Closure claimed, and by whom

  Question before House or Committee when claimed

  Whether in House or Committee

  Whether assent given to Motion or withheld by the Chair

  Assent withheld because, in the opinion of the Chair, a decision would shortly be arrived at without that Motion

  Result of Motion and, if a Division, Numbers for and against

  —[The Chairman of Ways and Means.]

  DELEGATED LEGISLATION
  Return ordered,
  of the number of Instruments considered in Session 1983–84 by the Joint Committee and the Select Committee on Statutory Instruments respectively pursuant to their orders of reference, showing in each case the numbers of Instruments subject to the different forms of parliamentary procedure and of those within the Committees' orders of reference for which no parliamentary procedure is prescribed by statute, and the numbers drawn to the special attention of the House or of both Houses distinguishing the ground in the Committees' orders of reference upon which such attention was invited; and of the numbers of Instruments considered by a Standing Committee on Statutory Instruments, &c. and by the House respectively, in Session 1983–84, showing the number where the question on the proceedings relating thereto was put forthwith under Standing Order No. 79(5).—[The Chairman of Ways and Means.]

  PRIVATE BILLS AND PRIVATE BUSINESS
  Return ordered,
  516
  of the number of Private Bills, Hybrid Bills and Bills for confirming Provisional Orders introduced into this House and brought from the House of Lords, and of Acts passed in Session 1983–84:
  Of all Private Bills, Hybrid Bills and Bills for confirming Provisional Orders which in Session 1983–84 were reported on by Committees on Opposed Bills or by Committees nominated partly by the House and partly by the Committee of Selection, together with the names of the selected Members who served on each Committee; the first and also the last day of the sitting of each Committee; the number of days on which each Committee sat; the number of days on which each selected Member served; the number of days occupied by each Bill in Committee; the Bills of which the Preambles were reported to have been proved.; the Bills of which the Preambles were reported to have been not proved; and, in the case of Bills for confirming Provisional Orders, whether the Provisional Order ought or ought not to be confirmed;
  Of all Private Bills and Bills for confirming Provisional Orders which in Session 1983–84 were referred by the Committee of Selection to the Committee on Unopposed Bills, together with

  517
  the names of the Members who served on the Committee; the number of days on which the Committee sat; and the number of days on which each Member attended;
  And of the number of Private Bills, Hybrid Bills and Bills for confirming Provisional Orders withdrawn or not proceeded with by the parties, those Bills being specified which were referred to Committees and dropped during the sittings of the Committee.—[The Chairman of Ways and Means.]

  PUBLIC BILLS
  Return ordered,
  of the number of Public Bills, distinguishing Government from other Bills, introduced into this House, or brought from the House of Lords, during Session 1983–84 showing:

  (1)the number which received the Royal Assent, and

  (2)the number which did not receive the Royal Assent, indicating those which were introduced into but not passed by this House, those passed by this House but not by the House of Lords, those passed by the House of Lords but not by this House, those passed by both Houses but amendments not agreed to; and distinguishing the stages at which such Bills were dropped, postponed or rejected in either House of Parliament, or the stages which such Bills had reached by the time of Prorogation.—[The Chairman of Ways and Means.]

  SELECT COMMITTEES
  Return ordered,
  of Select Committees, except Business Committees, in Session 1983–84, with the Sub-Committees appointed by them; the number of the meetings of each and the number of meetings each Member attended; and the number of Members who served on Select Committees; together with the total cost (estimated where necessary) in respect of each Select Committee and Sub-Committee for the financial year 1983–84 of:—the attendance of witnesses; overseas visits; visits within the United Kingdom; specialist advisers' remuneration and expenses respectively, and other work commissioned; entertainment; the preparation for publication of the Minutes of Evidence; and printing and publishing; with so much of the same information as is relevant to the Chairmen's Panel and the Court of Referees.—[The Chairman of Ways and Means.]

  SITTINGS OF THE HOUSE
  Return ordered,
  of the days on which the House sat in Session 1983–84 stating for each day the day of the month and day of the week, the hour of the meeting, and the hour of the adjournment; and the total number of hours occupied in the sittings of the House, and the average time; and showing the number of hours on which the House sat each day, and the number of hours after the time appointed for the interruption of business.—[The Chairman of Ways and Means.]

  STANDING COMMITTEES
  Return ordered,
  for Session 1983–84, of (1) the total number and the names of all Members (including and distinguishing Chairmen) who have been appointed to serve on one or more of the Standing Committees showing, with regard to each of such Members, the number of sittings to which he was summoned and at which he was present; (2) the number of Bills, Estimates, Matters and other items referred to Standing Committees pursuant to Standing Order No. 79 (Standing Committees on Statutory Instruments, &c.) or Standing Order No. 80 (Standing Committees on European Community documents) considered by all and by each of the Standing Committees, the number of sittings of each Committee and the titles of all Bills, Estimates, Matters and other items as above considered by a Committee, distinguishing where a Bill was a Government Bill or was brought from the House of Lords, and showing in the case of each Bill, Estimate, Matter and other item, the particular Committee by whom it was considered, the number of sittings at which it was considered and the number of Members present at each of those sittings.—[The Chairman of Ways and Means.]

  SPECIAL PROCEDURE ORDERS
  Return ordered,
  of the number of Special Procedure Orders presented in Session 1983–84; the number withdrawn; the number against which Petitions or copies of Petitions were deposited; the number of Petitions of General Objection and for Amendment respectively considered by the Chairmen; the number of such Petitions certified by the Chairmen as proper to be received, and the number certified by them as being Petitions of General Objection and for Amendment respectively ; the number referred to a Joint Committee of both Houses; the number reported with Amendments by a Joint Committee, and the number in relation to which a Joint Committee reported that the Order be not approved; and the number of Bills introduced for the confirmation of Special Procedure Orders:
  Of Special Procedure Orders which, in Session 1983–84, were referred to a Joint Committee, together with the names of the Commons Members who served on each Committee; the number of days on which each Committee sat; and the number of days on which each such Member attended.—[The Chairman of Ways and Means.]

Oral Answers to Questions
  DEFENCE

    Trident Missiles
    Mr. Leighasked the Secretary of State for Defence what has been the effect of the dollar-sterling parity change on the estimated cost of Trident in the last 12 months.
    Mr. Heathcoat-Amoryasked the Secretary of State for Defence what is the latest estimate of the cost of the Trident programme.
    The Secretary of State for Defence (Mr. Michael Heseltine): The Trident estimate is currently being reviewed as part of the annual recosting of the defence programme. On completion, I will announce a revised estimate to Parliament and the exchange rate applicable to it.
    Mr. Leigh: Is my right hon. Friend aware that some Conservative Members, although fully committed to the maintenance of Britain's independent nuclear deterrent, are worried about the fact that because, according to some reports, £700 million has been added since last March to the cost of Trident due to the fall in the value of the pound, there is a need for a candid reassessment soon as to whether we can afford the Trident D5 system without damaging our conventional forces?
    Mr. Heseltine: I know of my hon. Friend's interest in this matter. I had noticed his name on the Order Paper in connection with this issue. The open government document which was published at the time of the initial decision shows that the alternatives and the arguments were fully set out. In the Government's view, nothing has changed to alter the basis of our judgment.
    Mr. Heathcoat-Amory: I thank my right hon. Friend for his reply. Does he agree that changing technology as well as changing costs make it important to review the Trident system constantly with a view to getting value for money? Will my right hon. Friend assure the House that other nuclear weapons systems are kept under examination to ascertain whether they would offer an adequate deterrent at a lower cost?
    Mr. Heseltine: I am grateful to my hon. Friend for asking that question. If we felt that there was an alternative because of changing technology, we would have to consider it, as would any Government. It is a sign of the Government's willingness to consider their position that we moved from the Trident C4 to the Trident D5 system. It would be misleading to pretend that we have knowledge of some of the new technological development that calls for a review of the sort that has been suggested.
    Mr. Douglas: Will the Secretary of State admit that since the open government document was published we have found that a higher proportion of expenditure will be incurred in the United States and that, therefore, the analysis of the dollar-sterling rate is of the utmost importance? When will the right hon. Gentleman come clean with the House and admit that an increase of 1 cent costs the country £25 million more and that the difference in the cost of this project is now about £700 million?
    Mr. Heseltine: The hon. Gentleman knows that, in common with others who have held this job, I have responsibility to update the defence programme on a regular annual basis. That updating is carried out along the lines of conventions which were established under the previous Government, and we have stuck to them. If anything, I have tended, if possible, to bring forward the updating announcements of the Trident system. In view of the interest of the Public Accounts Committee and the Select Committee on Defence, I am trying to ascertain whether I can bring forward the updating of the latest review, which we are in the last stage of completing.
    Mr. D. E. Thomas: Does the Secretary of State's total figure of public expenditure on Trident include the extra low frequency communications that are required? What is the specific cost of that part of the budget?
    Mr. Heseltine: I think that the hon. Gentleman will accept that the cost includes the whole capital cost of introducing the Trident system, but I shall look specifically at the individual component part to which he has drawn my attention.
    Mr. Boyes: Is the Secretary of State aware that the Opposition are committed to the defence of Britain, too, but find that Trident does not help in the slightest in that process? Is the right hon. Gentleman further aware that we find it impossible to explain to our constituents that, while the dollar-sterling parity rate has pushed up the price of the Trident submarine, council tenants will have to suffer because cuts are being made in repairs grants so that we can pay for that ludicrous weapon?
    Mr. Heseltine: I am sure that it is more for the hon. Gentleman than for me to explain to his constituents why he thought Polaris was necessary. It has to be modernised with the Chevaline process. However, he thinks that Britain can now abandon the policies that have kept the peace for so long.
    Sir Peter Blaker: Surely any alternative system would have to depend equally on American technology. Does my right hon. Friend know of an alternative system which is capable of penetrating the likely enemy defences by the mid-1990s and which comes anywhere near being less expensive than Trident?
    Mr. Heseltine: My right hon. Friend is correct. We looked carefully at the alternative systems, and we could
    520
    not find a system that gives Britain the absolute insurance which we believe to be necessary to maintain our independent nuclear deterrent. That is why we chose the Trident system and why we are determined to introduce it into service. However, I remind the House that at the time of the open government document a considerable analysis of alternatives to the Trident system was carried out, and in some cases the analysis showed that alternatives would be less effective and more expensive.
    Mr. Denzil Davies: Why is the Secretary of State so afraid to answer the question? Why does he not tell the House that, since we debated the Defence Estimates in the summer, the cost of Trident has gone up by £750 million? That is about five new frigates sunk on the foreign exchanges. Why does the right hon. Gentleman go through the charade of pretending that he can estimate the cost of Trident? Why does he not admit that he has no idea what the final cost will be?
    Mr. Heseltine: It is intriguing that the right hon. Gentleman suggests that we do not know what the cost is and then presses me to reveal it earlier than we normally would. However, he will be fully aware that any estimates that we make will be trying to anticipate the exchange rates for the rest of the decade. The change may have taken place on the scale that he mentioned, which I shall not yet confirm or deny because we have not finally concluded the review, but the mere fact that he could say that there has been such an incredible change as a result of exchange rates must cause him some moments of doubt as to whether the exchange rates will not move the other way.

    Shipbreaking (Asbestos Removal)
    Mr. Foulkesasked the Secretary of State for Defence if he will in future seek guarantees from the purchasers of naval vessels for purposes of shipbreaking, on the removal of asbestos from the vessels, before any sale is agreed.
    The Parliamentary Under-Secretary of State for Defence Procurement (Mr. John Lee): It has long been our practice to emphasise to purchasers of surplus naval vessels offered for scrap the statutory requirement to conform with the regulations in force at the time on the handling of asbestos. Firms tendering for the work are required to certify that they will so comply.
    Mr. Foulkes: In view of all the problems that the Health and Safety Executive has had with asbestos in the breaking up of the Ark Royal and the Bulwark at Cairnryan, and in view of the huge asbestos dump that has been discovered at Faslane, of all places, is it not grossly irresponsible of the Secretary of State to sell off those ships without getting a clear guarantee about the disposal of asbestos? Will the Minister consider the matter again? Will he also tell the people of Scotland what will happen to the dump at Faslane?
    Mr. Lee: I know of the hon. Gentleman's sincerity and genuineness in that area. We have dealt with several letters from him in that regard. However, I ask him to preserve some balance. The shipbreaking industry employs about 500 people. We work as closely as possible with the Health and Safety Executive. We recently recast our tendering documents to draw the attention of purchasers of the hulks to the existence of asbestos. We are as concerned as everyone to ensure that that work is handled

    521
    carefully and satisfactorily. Where individual shipbreakers contravene the law they are prosecuted, as is the case at present.
    The asbestos at Faslane was originally tipped well before regulations came into force and before the general concern about asbestos. We are carefully examining the whole site. It is fenced off, and no work is taking place at present.

    Soviet SS Missiles
    Mr. Chapmanasked the Secretary of State for Defence what is his estimate of the total number of SS missile warheads targeted on western Europe; and how this figure compares with one year and five years ago.
    The Minister of State for the Armed Forces (Mr. John Stanley): The number of warheads on SS20 missiles facing west is 729. No new bases facing western Europe have been completed in the past year, but further bases are currently under construction in both the eastern and western USSR which, when operational, could significantly increase the number of SS20s. The number of SS20s has trebled since 1979.
    Mr. Chapman: Do not those figures show conclusively that the Soviet Government have not negotiated seriously between 1979 and 1983 when, if they had reduced the number of their SS warheads, the West would not have needed to deploy cruise and Pershing? Has not the Soviet Union escalated the arms race and increased tension in Europe? Are not the figures a timely reminder to people in Europe that the British Government must pursue multilateral disarmament in the years ahead?
    Mr. Stanley: My hon. Friend is right. Regrettably, the INF negotiations in Geneva have not made progress, and responsibility for the lack of progress lies firmly on the Soviet side. My hon. Friend is also right to point out that the INF escalation has been on the Soviet side. The SS20 deployment started two years before NATO even decided on its own INF deployment and six years before any cruise or Pershing II deployment.
    Mr. James Lamond: Did the figures given by the Minister come from the same rather unreliable source which recently categorically stated that MiG fighters were being unloaded in Nicaragua?
    Mr. Stanley: Those figures have been published before, and we believe that they are absolutely reliable
    Mr. Cyril D. Townsend: Can my right hon. Friend confirm press reports that SS20s have been sited in Latvia, Lithuania or Estonia? Will he also confirm that it is still the West's plan to withdraw existing cruise missiles and not to position any more such missiles in this country if the Soviet Union is prepared to withdraw its SS20s?
    Mr. Stanley: I am sure that my hon. Friend will understand that I cannot comment on the detailed locations of SS20 sites. However, I assure him that the INF offer which the NATO countries have made remains on the table. The zero option remains on the table, together with the modification of an agreement with the Soviet Union on the basis of equal numbers at a lesser figure than those now deployed. Those offers remain firmly on the table, and it is our earnest hope that the Soviet Union will negotiate on that basis.
    Mr. Strang: Is the Minister aware that these deployments are to be deplored? Does he accept that the Soviet Union is doing exactly what it said it would do and that the deployment of these weapons is a direct consequence of the breakdown of the INF talks, which was caused by the decision of the West to press ahead with the deployment of cruise and, in particular, Pershing II?
    Mr. Stanley: The hon. Gentleman could not have listened to the chronology that I gave. Deployment of the SS20 missiles began six years before the start of cruise and Pershing II deployment.

    Nimrod Aircraft
    Mr. Favellasked the Secretary of State for Defence what representations he has received relating to the servicing of Nimrod aircraft.
    The Minister of State for Defence Procurement (Mr. Adam Butler): Various representations on this subject have been received, including those from my hon. Friend.
    Mr. Favell: Can my right hon. Friend tell us whether the major servicing of Nimrod aircraft is about to be put out to competitive tender? Does he know that the very survival of the Nimrod production and design team at Woodford depends on its being awarded that contract? Is my right hon. Friend aware of the value of that team to Britain's defence effort, both now and in the future, and will he beware of being penny wise and pound foolish?
    Mr. Butler: I am aware of the concern at BA Woodford, and I can confirm that the deep servicing of Nimrod will be put out to competition. The matter is being considered very carefully. We need to identify whether companies are likely to be able to undertake the work and obtain the necessary security clearance. Therefore, it is taking us some time to reach the point at which contracts will be put out.
    Mr. Dalyell: Have there been any representations on the malfunction of the Nimrod's AD470 high frequency Marconi transceiver equipment and its communications with Ascencion Island and with Cheltenham? The right hon. Gentleman will know why I ask
    Mr. Butler: I have not received representations on that subject.

    Trident Missiles
    Mr. Kirkwoodasked the Secretary of State for Defence whether he will reconsider Her Majesty's Government's decision to purchase the Trident II weapons system.
    Mr. Heseltine: No, Sir.
    Mr. Kirkwood: Does the Secretary of State agree that the acquisition of the independent Trident II system not only upsets the conventional-nuclear balance and ties us to the United States for both procurement and maitenance, but, even more importantly, flies in the face of recent moves within Europe and the Western European Union towards a more concerted European policy for defence and strategic purposes?
    Mr. Heseltine: I do not think that I would agree. Under all post-war Governments Britain has always taken the

    523
    view that it should maintain its own last-resort nuclear deterrent. That remains the position of the present Government.
    Mr. Bill Walker: Was not the decision on Trident II taken in the knowledge that, over the next 30 years, the revenue implications of the alternative systems for providing a credible deterrent were horrendous?
    Mr. Heseltine: That most important point was covered in the open government document of 1980, which showed that one of the alternatives—the cruise missile—would have been 30 per cent. more expensive to buy and twice as expensive to operate.
    Mr. Soames: Now that there is real hope of progress in East-West talks, particularly under the new umbrella concept, would it not be fatal to destabilise the present and future nuclear balance in Europe, pending multilateral disarmament? Accordingly, will my right hon. Friend press ahead with the programme?
    Mr. Heseltine: The Government are totally committed to multinational talks about arms and, I hope, agreements. Now that it seems that talks might start again, the House should remember that we were told that if we proceeded with the deployment of cruise missiles such a constructive dialogue would never take place. However, the Government took the view that a constructive dialogue would become much more likely, and it looks as though we may have been right.
    Mr. Denzil Davies: What effect, if any, will the sale of the warships division of British Shipbuilders have on the building of Trident at Barrow? Have not the merchant bankers who are advising the Government said that any prospectus must contain a guarantee to any purchaser that the Government will continue with the Trident programme?
    Mr. Heseltine: Our contractual agreements with the builders of the Trident submarine will be exactly what one would expect of an arm's-length relationship between a contractor and the Government.

    NATO (Military Committee)
    Mr. Barronasked the Secretary of State for Defence what were his latest discussions with the military committee of the North Atlantic Treaty Organisation.
    Mr. Stanley: My right hon. Friend does not have direct discussions with NATO's military committee. However, he and his Alliance ministerial colleagues were last briefed by the chairman of the military committee during a ministerial session of NATO's defence planning committee in May this year
    Mr. Barron: Has the Secretary of State had any involvement with our chief of staff and ambassador to NATO? Agreement has been reached in principle on the new policy of follow-on force attack, which is a policy of offensive attack and a rethinking of the treatment of the East in time of warfare. Many hon. Members believe that the policy of follow-on force attack should be debated in the House before it is agreed by the Secretary of State, because it has major implications for the likelihood of warfare in the world.
    Mr. Stanley: The hon. Gentleman misrepresents the NATO concept of follow-on force attack. We support the
    524
    concept, which is consistent with the long-standing NATO concern about the threat represented by Soviet and Warsaw pact second echelon forces. It would be wrong for us in our defensive posture not to take account of the threat represented by those forces.
    Mr. Wilkinson: If NATO were to forgo the possibility of interdicting the battlefield, would it not leave itself vulnerable to the huge masses of men and material that could be brought forward on the interior lines of communications enjoyed by the Warsaw pact? Is not that possibility essential for the defence of the West?
    Mr. Stanley: My hon. Friend has hit the nail on the head.
    Mr. Denzil Davies: Is it not a fact that at the next NATO meeting in December the airland battle, follow-on force attack, deep strike, or whatever phrase is used to describe it, will be confirmed? Does the Minister agree that many people are worried if that is the case, as it will mean that NATO will appear to be an aggressive rather than a defensive organisation? Would it not also mean that there could be rearmament in Europe and that nuclear weapons would be used even earlier under NATO strategy than is envisaged now?
    Mr. Stanley: The right hon. Gentleman is wrong in every respect. There is no change in NATO's defensive posture. The concept of follow-on force attack is purely defensive. It is concerned with how we would deal with the significant threat of the follow-on force of the Warsaw pact after it had committed an act of aggression against NATO countries.

    RAF Trainer
    Mr. Chopeasked the Secretary of State for Defence when he expects to announce a decision on the replacement of the Royal Air Force trainer.
    Mr. Gerald Howarthasked the Secretary of State for Defence when he expects to announce his decision on the new Royal Air Force basic trainer to replace the jet Provost.
    Mr. Butler: It is hoped to announce a decision around the turn of the year.
    Mr. Chope: What criteria will the Government use when deciding what trainer should replace the existing one?
    Mr. Butler: As my hon. Friend would expect, the usual criteria will apply, and they will include the operational performance of the aeroplane. It must meet the needs of the Royal Air Force. However, we shall take into account the issue of jobs in the United Kingdom, examine sales prospects and international relations and many other considerations.
    Mr. Howarth: I am grateful to my right hon. Friend for that answer. I am sure he is aware that there is an acrimonious battle going on between some of the contenders, especially about the United Kingdom content. Therefore, the sooner a decision can be made, the better. My right hon. Friend will know that hon. Members are being inundated with requests. Will he assure the House that, when weighing up all the factors, the preference of the Royal Air Force will be given top priority, following its extensive evaluation process?
    Mr. Butler: In regard to the second part of my hon. Friend's question, I cannot add to what I said in my second answer. I am glad to say that all four contenders have a high level of United Kingdom manufacturing content.
    Mr. Maginnis: Is the Minister aware that should Shorts' Tucano be selected that would produce more new jobs than would any of the other contestants? Is he also aware that it is a long time since the Ministry of Defence has supported Shorts by giving it an order for aircraft? As it has recently gained a most prestigious order from the United States Air Force, is it not time that the Ministry of Defence considered placing an order as well?
    Mr. Butler: As the hon. Gentleman knows, I am very sensitive to Shorts' position, but I shall remain completely objective in regard to this selection. The number of jobs involved in any order will be conditioned by the initial order from the RAF and by the prospect of overseas sales.
    Mr. Ashdown: Does the Minister agree that the only aircraft that is designed fully to meet the RAF's requirements is the AAC/Westland submission? Is he aware that choosing that aircraft could produce significant reciprocal Far Eastern orders for British industry? Does he agree that it is important that the RAF should have aircraft adequate to meet its requirements?
    Mr. Butler: This exchange is typical of the lobbying that has taken place, is taking place and will continue to take place for some months.

    Western European Union
    Sir Anthony Meyerasked the Secretary of State for Defence what plans he has for strengthening the military role of the Western European Union in the defence of Europe.
    Mr. Heseltine: We expect the reactivated Western European Union to give a valuable political impetus to improved European security co-operation. However, NATO remains the cornerstone of our security, and, as the modified Brussels treaty makes clear, WEU will not duplicate the military functions of NATO.
    Sir Anthony Meyer: In view of the renewed French interest in WEU, is it not now the ideal framework within which to secure a better balance within NATO and to strengthen the role of European industry to provide weapons for the Alliance?
    Mr. Heseltine: The provision of weapons systems is generally recognised to be a desirable objective for coordination, but it is more properly sought through the Independent European Programme Group, to which the Government are giving a great deal of attention. We certainly think that the recent discussions in Rome at the Western European Union were helpful and showed that there was a willingness and anxiety on the part of the Ministers participating to continue the momentum which that meeting began.
    Mr. Hardy: Does the Minister agree that there is justification for a little hesitation about this matter, as most of the Europeans with an overwhelming interest in the reactivation of WEU are primarily concerned with the central area of NATO? For them there may be far less interest or significance in the southern and, more
    526
    important for Britain, northern areas of NATO. Does the Secretary of State recognise the risk of a genuine strategic disadvantage for Britain?
    Mr. Heseltine: There is a great deal in what the hon. Gentleman says. That is why I made it clear in my initial answer that NATO remains the cornerstone of our defence-security policies.
    Mr. Hill: I am sure that my right hon. Friend, like me, welcomed the reactivation of WEU and the French initiative. Does he agree that it is absolutely essential that we do not lose sight of complete co-operation with the United States' Government and the Pentagon in this matter? Does he think that the United States' Government have welcomed the reactivation of WEU?
    Mr. Heseltine: My hon. Friend will recognise that his questions could easily trespass on the territory of my right hon. and learned Friend the Foreign Secretary. However, I believe that the initiatives are broadly welcomed by the United States' Government. The essence of what we are seeking to do regarding industrial co-operation is to ensure that European industry is equipped with the same degree of resource and rationalisation to enable it to compete more effectively with and to keep abreast of advancing United States' technology.
    Mr. Johnston: Regarding technical co-operation, does the Secretary of State think that the new French enthusiasm for WEU shows that France may be considering resuming her membership of NATO, and would he welcome that?
    Mr. Heseltine: The House will realise that if I hesitate to speak on behalf of my right hon. and learned Friend the Foreign Secretary, I shall hesitate even more profoundly to speak for France. France must decide what her motives are, and we must respond to initiatives. It seemed to us that there was an opportunity for profitable co-operation.
    Mr. Stokes: Will my right hon. Friend consider following the example of his colleagues, the other European Defence Ministers, and contemplate addressing the WEU Assembly, so that we can hear directly from him and be proud to have a British Minister present?
    Mr. Heseltine: I am most grateful for that kind thought, but it would seem appropriate for me to respond to invitations rather than to initiate them.
    Mr. Denzil Davies: Is the Secretary of State aware that many hon. Members are worried that the reactivation of WEU could lead eventually to the creation of another military bloc? No one wants that. Does he agree that if it is necessary, as it is, to have a greater European voice in the defence of the West, it should come through NATO and not through the creation of another body?
    Mr. Heseltine: The Government do not want to see the creation of another European bloc. That is why my initial answer was clearly designed to stress that NATO remains the cornerstone of our security. There is no profit for any of us, including WEU members, in fragmenting the defence efforts of Europe and our partnership with the North American people.

    USA (Discussions)
    Mr. Tony Lloydasked the Secretary of State for Defence if he has any plans to hold discussions with representatives of the United States of America Government.
    Mr. Heseltine: I have no plans to do so in advance of the NATO ministerial meeting in Brussels in December.
    Mr. Lloyd: Does the Secretary of State realise how unsatisfactory his right hon. Friend's answer was to the question of my right hon. Friend the Member for Llanelli (Mr. Davies) about the follow-on force attack? Would it not be appropriate for the Secretary of State to inform his American counterparts of the growing anxiety in this country and western Europe about the dangers, through follow-on force attack, of an early use of nuclear weapons? Will he advise the House whether there will be a debate on this important issue before 4 December, when the final decision will be made?
    Mr. Heseltine: I found the answer of my right hon. Friend the Minister of State for the Armed Forces wholly convincing. If the Opposition are suggesting that in the event of warfare we should not be allowed to attack the airfields in the Soviet Union or their tanks before they mass and attack us, it shows a degree of naivety towards defence policy which exceeds even that which inflicted such a severe defeat on the Labour party at the general election.
    Sir Nicholas Bonsor: When my right hon. Friend meets the United States Government, will he stress the comparative weakness of the northern flank of the NATO Alliance and ask them to commit a greater element of naval support to that area in the event of an attack?
    Mr. Heseltine: I am pleased to say that even in the past few days I have been able to have detailed discussions with my Norwegian and Danish colleagues who, of course, are aware of the concern of the whole Alliance to ensure that our defence spreads across the territory of NATO rather than any one specific part of it. Therefore, although we keep under constant review areas in which we think there may be a relative, though not an absolute weakness, they may be assured that we continue to do all that we can to maintain the credibility of our deterrence in all areas.
    Mr. Denzil Davies: Will the right hon. Gentleman confirm that, as he has already told the House, follow-on force attack is not part of NATO's strategy, but that in December NATO will be asked to approve that strategy, which is at present basically a US army strategy, as NATO strategy? If such a decision is taken, will the right hon. Gentleman make a statement to the House, as it is an important shift in NATO strategy?
    Mr. Heseltine: The right hon. Gentleman is far from keeping abreast of developments. On 9 November the NATO Alliance, through the Defence Planning Committee in permanent session, adopted the follow-on force attack policy, but the idea that there is something new in the concept that an alliance, if ever it found itself in hostile circumstances, should be allowed to strike deep in enemy territory is the most extraordinary abdication of defence capabilities.

    Nuclear Weapons (Transportation)
    Mr. Jannerasked the Secretary of State for Defence whether he will institute an inquiry into arrangements for the safe transport of nuclear weapons by road.
    Mr. Stanley: Like other aspects of nuclear safety, the arrangements for the safe transport of nuclear weapons remain constantly under review.
    Mr. Janner: Is part of that review the exercise now known as Broken Arrow, one phase of which was recently carried out on Salisbury plain? If so, what is the involvement of police arid fire authorities in such exercises, given that they would have to cope with the emergency caused by a disaster such as that which could have occurred when Chevaline nuclear warheads were carried through the city of Leicester in the rush hour?
    Mr. Stanley: We cannot breach the long-established policy followed by successive Governments for security reasons of not confirming or denying the presence of nuclear weapons in any particular location. As I have assured the hon. and learned Gentleman in parliamentary answers, however, nuclear safety, including the safe transport of nuclear weapons, is constantly under review and very close attention is paid to it
    Sir John Farr: When answering questions about the transport of nuclear materials and weapons around the city of Leicester, will my right hon. Friend bear in mind that Labour Members, including the hon. and learned Mernber for Leicester, West (Mr. Janner), would have us abandon entirely our own nuclear deterrent?
    Mr. Stanley: I am grateful to my hon. Friend. We are very much aware that the Labour party has embarked on a policy of one-sided strategic nuclear disarmament, which we have no intention of following.

    Tornado Aircraft
    Mr. Lathamasked the Secretary of State for Defence whether he will make a statement on progress regarding the introduction into operational deployment with the Royal Air Force of the air defence variant of the Tornado.
    Mr. Stanley: The first two Tornado F2s, the air defence variant, were delivered to RAF Coningsby last week and are being used for ground training and familiarisation. As planned, flying training for the operational conversion unit will start next year and the aircraft will enter squadron service in 1986.
    Mr. Latham: In view of recent critical comments in the United States about Tornado, will my right hon. Friend stress its importance to the Western defence effort and the importance of the existing strike version?
    Mr. Stanley: I am aware of the press reports to which my hon. Friend refers. I assure him that the RAE is extremely well satisfied with the capability and survivability of the Tornado. As for performance, it is significant that Tornado GR1s won two of the three major trophies in the recent Strategic Air Command bombing competiton staged by the United States air force.
    Mr. Robert Atkins: Why do we allow Turkey to be an ally within NATO when the Government are not prepared to sell Tornado to that country?
    Mr. Stanley: I do not think that my hon. Friend is entirely correct, but if my right hon. Friend the Minister of State for Defence Procurement can add further to the information about the sale, I am sure that he will do so.

    RAF Upper Heyford
    Mr. Baldryasked the Secretary of State for Defence when he anticipates that the noise level testings approximate to RAF Upper Heyford will be completed; and if he will make a statement
    Mr. Lee: We expect to have computer predictions of noise levels in the vicinity of RAF Upper Heyford available by the end of the year. Validating measurements in the area will then be taken to confirm these. If they show that noise levels are above a qualifying level, my Department will introduce its standard noise insulation grant scheme.
    Mr. Baldry: While those living near to Upper Heyford fully appreciate that one of the first duties of the Government must be the defence of the realm, is my hon. Friend aware that they are increasingly frustrated at the delay in knowing whether, and which, homes near to Upper Heyford will be eligible for a noise insulation grant? Will my hon. Friend and his Department make every endeavour to speed up these tests so that those who think they might be eligible for noise insulation grants can be informed as quickly as possible?
    Mr. Lee: I understand my hon. Friend's concern. The RAF Institute of Community Medicine will be visiting the area early in 1985 to validate measurements. We are in regular correspondence with the Cherwell district council. Noise insulation grant schemes are already operating at Brawdy, Honington, Yeovilton and Leuchars, and three helicopter sites in Northern Ireland, and are under consideration at Cottesmore, Kinloss, Lossiemouth, Stornoway and, of course, Upper Heyford.

    Chemical Weapons
    Mr. Greenwayasked the Secretary of State for Defence what measures he is taking to meet the threat from the chemical weapons manufactured and held by the Soviet Union; and if he will make a statement.
    Mr. Stanley: We are continually improving our defensive equipment and clothing against chemical attack.
    The Government are also doing their utmost to secure progress in achieving a comprehensive, verifiable and world-wide ban on the development, production, stockpiling and use of chemical weapons, together with the destruction of existing storks, at the conference on disarmament in Geneva. We tabled important new proposals on verification in February and July this year.
    Mr. Greenway: Will my right hon. Friend remind advocates on the Opposition Benches and in CND who are in favour of unilateral nuclear disarmament by us that our unilateral abandonment of chemical weapons in the 1950s did not evoke a similar response from the Soviet Union? Is it not an irony that we now have to depend on the nuclear deterrent against the massive armoury of chemical weapons held by the Soviet Union?
    Mr. Stanley: My hon. Friend is right. The massive Soviet procurement of chemical weapons is the most clear and eloquent illustration of the naivety of one-sided nuclear disarmament.
    Mr. Robert C. Brown: Will the Minister continue to resist the blandishments of those on his Back Benches on the issue of chemical weapons? Will he assure the House that he will continue to see that Her Majesty's armed forces receive the best possible equipment to withstand any possible chemical attack?
    Mr. Stanley: We are devoting many resources to improving our defensive equipment. There is no change in our policy, and we are working as constructively and earnestly as we can to achieve a world-wide ban on chemical weapons, which would be an enormous advance for mankind.

    Trident Missiles
    Mr. Canavanasked the Secretary of State for Defence what recent communications he has had about the proposal to base the Trident weapon in Scotland.
    Mr. Heseltine: I have received a few letters from organisations and private individuals.
    Mr. Canavan: Is the Secretary of State aware that, apart from a dwindling number of militant Tories, nobody in Scotland wants this terrorist weapon? In view of yesterday's announcement about increased prescription charges and cuts in overseas aid when people are starving to death in the Third world, why are the Government proposing to spend over £10,000 million on a weapon of death, instead of spending that amount of money on the preservation of human life?
    Mr. Heseltine: The Government are to modernise the Polaris system by the introduction of Trident for the same reasons as the previous Government modernised Polaris with Chevaline. If the hon. Gentleman believes that there is overwhelming evidence of opinion in Scotland, he will, perhaps, take into account the evidence of the letters that I have received about Scottish opinion on this matter—one from the president of Strathclyde university students association, one from Streatham CND and three from members of the public, two of whom live in England.

    Strategic Forces
    Mr. Home Robertsonasked the Secretary of State for Defence if he will report on the progress of his review of strategic forces.
    Mr. Heseltine: I take it that the hon. Gentleman is inquiring about our strategic nuclear forces; and I can assure him that no review of our policy is under way.
    Mr. Home Robertson: Are there any strategic circumstances under which Trident nuclear missiles in Britain could be used without the consent and approval of the United States Government?
    Mr. Heseltine: There is no question of any consent being necessary.

  PRIME MINISTER

    Engagements
    Ql. Mr. Fatchettasked the Prime Minister if she will list her official engagements for 13 November.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House I shall be having further meetings later today. This evening I shall preside at a dinner in honour of President Koivisto of Finland
    Mr. Fatchett: I am grateful to the Prime Minister for that answer.
    In her speech at the Guildhall last night the Prime Minister confessed that the rate of economic growth in the economy was not sufficient to cut the level of unemployment. Earlier in the day the Chancellor, in his autumn statement, offered no hope of any real cut in the level of unemployment. Are we to conclude from those statements that the Government have absolved themselves from responsibility for unemployment and for the plight of the unemployed?
    The Prime Minister: No. If the hon. Gentleman looks in detail at what I said last night he will see that I pointed out that growth in Britain this year has been of the order of 2·5 per cent. It would have been 3·5 per cent. but for the coal strike. The 2·5 per cent. has been enough to create a considerable number of new jobs. But, because of the demographic curve that we have to face, it is not enough substantially to reduce, as we wish, the level of unemployment.
    Mr. St. John-Stevas: Will my right hon. Friend take time in her busy day to have words with the Chancellor of the Exchequer, who is sitting not far away from her, and ask him whether he will have second thoughts about the proposed abolition of the £1 note? If she saves us from the imposition of the most unpopular coin in our history, she will have the support of virtually the entire country.
    The Prime Minister: I cannot offer my right hon. Friend very much hope. The £1 note will have lasted for two years longer than might otherwise have been the case. During that time the £1 coin has become much more widespread in its use and much more accepted. As my
    right hon. Friend is aware, the £1 note lasts for only about nine to 10 months. A re-issue would cost some £3 million and we could find better use for that money.
    Mr. Kinnock: The Government have cut overseas aid by £160 million in the past four years. Can the right hon. Lady tell us whether that cuts programme has now stopped, whether it is to continue, or whether, in the name of humanity, she will reverse that cuts policy, and reverse it now?
    The Prime Minister: I cannot give the right hon. Gentleman any more information than is contained in this year's Autumn Statement, which he will notice is in precisely the same form as the previous statement in 1983. In other words, the budget for the Foreign and Commonwealth Office, including the Overseas Development Administration, was given as a global sum. He will see that the two Departments have precisely the same budget as was anticipated in the White Paper. It has not been increased; it has not been decreased. The total
    532
    amount for the Foreign and Commonwealth Office was £1,800 million in 1984–85 and it will be £1,870 million in 1985–86.
    Mr. Kinnock: The hunger has not decreased at all. Is the Prime Minister not aware that this country feels that it has a moral responsibility and wants to discharge it? She is still dodging, just as the Chancellor of the Exchequer dodged yesterday and as the Minister for Overseas Development dodged last week. She is the Prime Minister. Cannot she tell us straight exactly what that budget is to be spent on? Are there any cuts, or is she just too ashamed to say?
    The Prime Minister: No, Sir. The global budget is done at this time of the year, and within that total budget separate provision is made by the Foreign Secretary. The right hon. Gentleman will recall that last year aid was up on the previous year. In 1983–84 the total Foreign Office budget was £1,683 million. I do not have the precise aid figures, but the figure for the total Foreign Office budget has increased from £1,683 million to £1,870 million this year. I should make it quite clear that that aid budget has allowed us to respond to Ethiopia. There is no question but that we shall be able to respond in the future with humanitarian aid in the same way as we have just responded to Ethiopia.
    Mr. Kinnock: That is a shameful answer from the Prime Minister and I do not think that the public or those engaged in trying to help the hungry will forgive her for it. Will she now reverse the cuts programme and discharge the responsibilities of a rich country to the poor of this earth?
    The Prime Minister: The right hon. Gentleman is trying to detract from this country's excellent record of humanitarian aid. As he knows, this country led the world in providing aid to Ethiopia. He does not like that lead and is trying to detract from it. The budget for the Foreign Office will be quite sufficient to permit humanitarian aid of that kind in future.
    Mr. Robert Atkinsasked the Prime Minister if she will list her official engagements for 13 November.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Atkins: Is my right hon. Friend aware that the great majority of people in ray constituency, in the rest of Lancashire, and probably in the country for that matter, support the retention of corporal punishment in our schools? Is she further aware that the old adage "Spare the rod and spoil the child" is as true now as it ever was? Will she do all in her power to ensure that that element of discipline is retained in our schools?
    The Prime Minister: I assure my hon. Friend that we do not intend to abolish corporal punishment in schools. As he knows, we have to respect the judgment of the European Court of Human Rights, which made it perfectly clear that where the convictions of parents were otherwise, those convictions must be respected. We shall introduce legislation to honour that judgment.
    Mr. Steel: Why should we trust in the Prime Minister's belief that her present policies will lead to a fall in unemployment when only last December she told us of her belief that the £1 note would be retained?
    The Prime Minister: If the right hon. Gentleman reads exactly what I said, he will find that the £1 note will be retained for about two years longer than it would otherwise have been. Indeed, if he reads the very long letter that I wrote, he will find that—as I said in the House—
    "there is no question of withdrawing the note for the time being. But equally, that may eventually be the right thing to do."
    I do not think it right to spend another £3 million on a special extra print of £1 notes to last only nine or 10 months when that money could be spent on several other things.
    Mr. Lester: I listened carefully to my right hon. Friend's answer about the Foreign Office budget. Will she take time today to inquire about what machinery would exist to deal with an adverse rate of exchange which affected that budget, as there is a commitment in the Gracious Speech to a substantial overseas aid programme and it is widely supported in all parts of the House?
    The Prime Minister: The Foreign Office budget, including that for aid, is substantial. Most aid expenditure is in sterling and does not therefore suffer from exchange rate movements. We determine our aid in sterling and it is denominated in sterling in those countries to which we give it. The only exception is aid given under the Lomd convention, when European currency is used. Payments to the World Bank are also denominated in sterling.
    Mr. Pikeasked the Prime Minister if she will list her official engagements for Tuesday 13 November.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Pike: Only 35 per cent. of electricity was generated from coal in August and the CEGB has considerable additional costs. Can the Prime Minister say what those additional costs are? Can she give an assurance that they will not be passed on to the consumer, recognising that the dispute was provoked by the NCB, which did not use recognised procedures before proposing to close Cortonwood? Does she accept that the Government have taken no positive steps to help resolve this long dispute?
    The Prime Minister: The hon. Gentleman is aware that the Government neither wanted nor sought the dispute and did everything possible to avoid it. Generous pay offers, generous investment, generous voluntary redundancy, a guarantee of future employment and very generous subsidies of taxpayers' money were involved. We are talking of far more generous terms for the coal industry than many people who have to find the taxes for the coal industry receive.
    If the CEGB is to go back to the amounts of electricity once generated from coal, it must be sure of security of supply. Failure to achieve security of supply loses customers more than anything else.
    Mr. Terlezki: The NUM has taken millions of pounds to America — perhaps it would have been more appropriate for the money to be taken to Cuba or the Soviet Union. Would it not be better if that money were used to help the families of striking miners or for Ethiopia, about which the Opposition shed crocodile tears?
    The Prime Minister: I can see my hon. Friend's point. I would take more notice of some right hon. and hon. Members of the Opposition if they did not support a strike to take an unlimited quantity from the taxpayer to support the coal industry.
    Mr. Parryasked the Prime Minister if she will list her official engagements for Tuesday 13 November.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Parry: Is the Prime Minister aware that further increases in gas, water and electricity prices will cause more hardship to pensioners and people on low incomes? Is she also aware that any further increase in prescription charges will deter people from seeking proper medical treatment, thereby causing more pain and suffering? Will the Prime Minister make it clear that she will totally oppose any cuts in overseas spending in the poorest countries, where millions are dying of starvation? If the so-called iron lady does not, she should be renamed the cruel lady.
    The Prime Minister: I have nothing further to add about the aid programme. Electricity charges have gone up by 2 per cent. in the last two years. Under the Labour Government they went up by 2 per cent. every six weeks. I remind the hon. Gentleman that 70 per cent. of prescriptions are free and that the prescription charge covers only about one third of the cost of the average prescription.
    Mr. Butterfill: Will my right hon. Friend comment on reports in The Standard tonight about the GLC granting employment contracts to temporary and part-time employees knowing that the posts will disappear, resulting in the payment of £90,000 in compensation — [HON. MEMBERS: "Reading."] Should people be granted compensation when they were appointed on a temporary basis only last July?
    The Prime Minister: The actions speak for themselves and are yet another reason for the abolition of the GLC.
    Mr. Pavitt: Does the the Prime Minister recall that during last year's less tragic Conservative party conference millions of television viewers heard her express concern about terminal cancer patients and the cost of prescriptions? How can she justify the rise in prescription charges last April to £1·60 each, or £26 a year for the long-term sick?
    Will the right hon. Lady do something about the young woman with breast cancer who has to undergo chemotherapy? If the prescription charge rises to £2 she will have to pay that sum every three weeks, or about £30 a year for a season ticket, for the remainder of her life. Cannot the right hon. Lady do something about that rather than simply express concern?
    The Prime Minister: The hon. Gentleman is aware of the answer to his question. There is no special arrangement for terminal cancer patients. An obvious reason is that it is difficult to tell the patient that the illness is terminal, and that in some cases it is difficult to know that it is terminal. If such patients come within the exempted group for other reasons, their prescriptions will be free of charge.

House of Commons Stationery (Use)
3.31 pm
Mr. James Couchman: On a point of order, Mr. Speaker. I wish to raise a point about the actions of a senior Opposition spokesman, the hon. Member for Oldham, West (Mr. Meacher), who circulated, on House of Commons stationery, health authority members whom he perceived to be Labour party supporters. I put a note in the hon. Gentleman's pigeonhole earlier this afternoon but regret to note that he is not in the House. The circular was sent on 13 August and was addressed to all Labour members of health authorities. I believe that it was sent in postage-paid envelopes—
Mr. Speaker: Order. What is the point of order for me?
Mr. Couchman: I believe that sending out such circulars on House of Commons stationery, in postage-paid envelopes, was an abuse of the rules relating to the use of stationery to which we are all subject.
Mr. Speaker: The hon. Gentleman gave me notice of his point of order. It is the practice of the House for questions relating to the appropriate use of House of Commons stationery to be considered by the Services Committee, which drew up the rules that govern that matter. I shall ensure that the attention of the appropriate Sub-Committee is drawn to the hon. Gentleman's remarks, and no doubt that Sub-Committee will look into the matter.

Questions to Ministers
3.33 pm
Mr. Stuart Bell: On a point of order, Mr. Speaker. During the last Session of Parliament you were kind enough to rule that questions to the Prime Minister should be directed towards her responsibilities. Today there have been two questions to the Prime Minister on matters outside her responsibilities. Would it be in order for you to repeat your edict?
Mr. Speaker: I shall gladly do so. Supplementary questions should always be related to the question on the Order Paper. There are 115 questions on the Order Paper today — the highest number ever — asking the Prime Minister to list her engagements. Some of the supplementary questions today were addressed to me rather than to the Prime Minister's engagements.
Mr. Rob Hayward: Further to that point of order, Mr. Speaker. It has been your stated intention since I have been a Member of Parliament to protect Back Benchers, especially during Prime Minister's Question Time. Are you aware that when my right hon. Friend was first elected as Leader of the Opposition she took 15 weeks to use 1,000 words to ask questions of the then Prime Minister? The current Leader of the Opposition has taken not 15 weeks, not 10 weeks, not eight weeks, but four weeks to use 1,000 words in questioning my right hon. Friend. Were it not for that verbosity factor of 375 per cent., two more Back Benchers could ask questions during each Prime Minister's Question Time.
Mr. Speaker: I am afraid that I have not carried out such detailed research. A dispensation has always been given to Front Bench spokesmen. I do my utmost to ensure that Back Benchers have an equal share of the time. When we begin a new Session, I start with a clean sheet for Prime Minister's questions. I hope that everyone will have his opportunity.
Mr. Douglas Hogg: Further to that point of order, Mr. Speaker. Are you aware that during defence questions the right hon. Member for Llanelli (Mr. Davies) rose on no fewer than four occasions and spoke at great length? Would it not be a good idea to suggest that the right hon. Gentleman does not model himself on the verbosity of his leader?
Mr. Speaker: I think that it was five times. The choice rests entirely with the right hon. Member for Llanelli (Mr. Davies), but I must remind the occupants of both Front Benches that every time a Front Bench spokesman rises a Back Bencher will fail to catch my eye.

Statutory Instruments, &c.
Mr. Speaker: With the leave of the House, I shall put together the six motions on statutory instruments.
Ordered,
That the Dairy Produce Quotas (Amendment) Regulations 1984 (S.I., 1984, No. 1538) be referred to a Standing Committee on Statutory Instruments, &c.
That the Industrial and Commercial Ratepayers (Consultation) Regulations 1984 (S.I., 1984, No. 1355) be referred to a Standing Committee on Statutory Instruments, &c.
That the National Health Service Functions (Directions to Authorities and Administration Arrangements) Amendment Regulations 1984 (S.I., 1984, No. 1577) be referred to a Standing Committee on Statutory Instruments, &c.

537
That the Bread and Flour Regulations 1984 (S.I., 1984, No. 1304) be referred to a Standing Committee on Statutory Instruments, &c.
That the Bread and Flour (Scotland) Regulations 1984 (S.I., 1984, No. 1518) be referred to a Standing Committee on Statutory Instruments, &c.
That the Rating of Caravan Sites (Scotland) Order 1984 be referred to a Standing Committee on Statutory Instruments, &c.— [Mr. Lang.]

Orders of the Day

  Debate on the Address
  [SIXTH DAY]
  Order read for resuming adjourned debate on Question [6 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 Paul Bryan.]

The Economy
Mr. Speaker: I have selected the amendment in the name of the Leader of the Opposition and his right hon. and hon. Friends. In addition, under the powers given to me by Standing Order No. 35, I have selected the amendment in the name of the right hon. Member for Plymouth, Devonport (Dr. Owen) and his right hon. and hon. Friends for a second Division at the end of the debate.
3.36 pm
Mr. Roy Hattersley: I beg to move, at the end of the Question, to add:
But humbly regret that the Gracious Speech reaffirms policies which have already done severe damage to the British economy and will, in the future, further hold back the prospects of economic recovery
At the end of the exchanges which yesterday followed the autumn statement on the economy the hon. Member for Suffolk, South (Mr. Yeo) complained about what he called a slur which I had cast on the Government's reputation. The assertion to which he took such histrionic exception was my conclusion that unemployment was now not so much a consequence of Government policy but an integral part of it, planned, intended and essential to the present economic strategy.
If we assume, as we must, that the passion of the hon. Member for Suffolk, South was genuine, it was the product of one of two possible errors. The first possibility is that he does not know the meaning of "slur". The second is that he fails to comprehend the workings and the intentions of the medium-term financial strategy, which is the centrepiece of the Government's economic policy. Anyone who adopts that policy or supports it is, at the very least, accepting a high level of unemployment as a price that is worth paying for the achievement of other economic objectives.
I ask the Chancellor of the Exchequer a question which I asked him three weeks ago and which he singularly failed to answer on that occasion. Does he or does he not accept on behalf of the Government any responsibility for the present level of unemployment? It is not me alone who believes that the Government are guilty in this particular. I quote from yesterday's edition of The Guardian in which these words appeared:
"there does seem to be some slight difficulty in constantly lamenting the high level of unemployment while at the same time pursuing policies which drive it even higher."

539
That is the judgment of the right hon. Member for Chesham and Amersham (Sir I. Gilmour) and not the opinion of a radical leader writer. I note that the Chancellor laughs at the very mention of the right hon. Gentleman's name, but he was happy to serve in a Cabinet with the right hon. Gentleman when things were going rather better for him.
The Opposition's first charge against the Government is that the concept of their economic strategy is that high levels of unemployment are inherent within the policy which they pursue. Our second charge is that that policy ignores the real economy and concentrates instead on artificial and arbitrary financial targets which in the end become an object in themselves. Hence the fact that yesterday the Chancellor had the effrontery to claim some kind of victory because he had almost met the public expenditure targets which last year he had set for himself. He claimed that victory while the real world, outside the theoretical model which he has created, is depressed and moving into slump, in no small part because of the deflation that he has created by pursuing his public expenditure and money supply targets.
Let me once more quote from the right hon. Member for Chesham and Amersham. It is a quotation which was mentioned in part yesterday by my right hon. and learned Friend the Member for Monklands, East (Mr. Smith). It describes the present economic condition so perfectly that the full paragraph deserves an airing. The right hon. Member for Chesham and Amersham said:
"there are nearly two million fewer people in employment than there were in 1979. Manufacturing production is still 12½ per cent. below its peak level in 1979. Though now rising, manufacturing investment is still 30 per cent. below 1979. Our non-oil trade has declined from a surplus of £500 millions in 1981 to a deficit of £7½ billion in 1983, and will probably be in deficit by over £10 billion this year."
That is a resume by the right hon. Member for Chesham and Amersham of the economic success which the Chancellor describes, and it ends with a reference to the deficit of £7½ billion.
It was upon that basis that yesterday the Chancellor commented upon the balance of payments prospects. He said:
"We expect it to be in surplus by about £2½ billion next year."
He added:
"If a Labour Government had achieved anything like that, they would not have been able to believe their good fortune." —[Official Report, 12 November 1984; Vol. 67, c. 420.]
"Good fortune" are exactly the right words to describe the position. Without North sea oil, a bonus which no other Government have enjoyed, our balance of payments would be in deep and chronic deficit, and yet the Chancellor brags of his balance of payments record which is wholly and completely dependent upon that gratuitous advantage.
I never cease to be amazed by the Chancellor's self-destructive willingness to say things on one day which are exposed as errors and distortions on the next. That typifies his comment upon his alleged balance of payments success. It typifies almost all he did yesterday. The BBC last night spoke of his "creative accounting". Today, the Financial Times, with magisterial understatement, observes that:
"Mr. Lawson's November utterances are hardly a reliable guide."
Mr. Tim Yeo (Suffolk, South): Does the right hon. Gentleman regard his general election utterances as a
540
reliable guide to the rate of inflation? It is of course one of the largest influences on the level of unemployment. Under his government and that of his colleagues. the rate of inflation was high and increasing; under the present Government the rate of inflation is low and decreasing; notwithstanding the right hon. Gentleman's predictions.
Mr. Hattersley: I suspected that one of the weaker-minded Back Benchers would return to the inflation prediction that I made during the general election. The Chancellor and I made seven economic predictions during the last general election. I was wrong about one and right about six; with the Chancellor the position is exactly the opposite.
The Chancellor of the Exchequer (Mr.NigelLawson): Give us them.
Mr. Hattersley: Let me give the right hon. Gentleman the obvious one—his promise that unemployment was about to fall. There is one problem with the Chancellor's unemployment forecasts — he makes them only at election time. When he makes them, they invariably turn out to be wrong.
It is highly undesirable for this country as a whole to possess a Chancellor of the Exchequer who is written about, as was the present Chancellor in this morning's newspapers, in terms of the managing and manipulation of statistics and the inability or unwillingness to tell the House of Commons the truth about his programmes. When the Government's economic policy is defended as it has been this week by the partnership of the Chancellor and the Secretary of State for Employment, the problems of believing the Chancellor are even greater. The Secretary of State for Employment always addresses us as though he were the head boy at morning assembly — and then, after Tom Brown, we get Flashman. That attitude is revealed, as it was yesterday, in the Chancellor's comments about North sea oil. Next year, North sea oil revenues will amount to £11 billion, yet, despite that massive amount, they will total less than the cost to the Exchequer of the 3 million unemployed. The money will be wasted on financing unemployment rather than spent on increasing jobs.
There are two central serious arguments about the alternative ways of using North sea oil that should be explored by the House. The Opposition believe that the abandonment of exchange control combined with the effect of the Government-induced recession have encouraged far too much of the North sea income to be exported and invested in other countries' economies, jobs and industries and, therefore, invested in our unemployment. We believe also that the oil income should have been specifically used for the reinvigoration of the industry against the time when the oil revenues began to diminish —a reduction that almost certainly begins next year. Those are serious questions, yet the Chancellor's response on this subject to a question from the hon. Member for East Lindsey (Mr. Tapsell) is recorded in Hansard. The Chancellor said:
"He need not worry too much about North sea oil … for it will certainly see out his active life."
Mr. Lawson: Tell the full story.
Mr. Hattersley: A full stop followed the sentence that I read. The Chancellor stated:
"He need not worry too much about North sea oil … for it will certainly see out his active life."—[Official Report, 12 November 1984; Vol. 67, c. 425.]
Mr. Lawson: Read on.
Mr. Hattersley: The Chancellor will not divert me from reminding him that, although that may be true in the case of the hon. Member for East Lindsey—although, after yesterday, we all certainly hope that it will not be —North sea oil will not last for the lives of this year's school leavers, 150,000 of whom are still unemployed.
Mr. Peter Tapsell: I point out to the right hon. Gentleman that if I reach the same age as my father and grandfather I shall be here for another 30 years.
Mr. Hattersley: I probably greet that news with more pleasure than the Chancellor of the Exchequer. I suspect that the Chancellor really meant yesterday that North sea oil revenues will easily see out the life of this Government. His real concern is that his policies should be cushioned by that unusual boon and unique benefit.
Yet even with £11 billion of North sea oil revenue the Government both anticipate and plan for a permanent reservoir of 3 million unemployed. They use that pool of unemployment as a sort of incomes policy to hold down the total wage bill. They hope to use it as part of their attempt to emasculate the trade unions. That, on the evidence of the Chancellor's performance on "Weekend World" three weeks ago, is a major object of present Government policy.
Yesterday I pressed the Chancellor on unemployment prospects. I asked him whether the Financial Times was right to say that the Government Actuary hypothesised an increase of 400,000 in unemployment this year. In fact, the Financial Times was wrong. The new assumption for this year is that unemployment is 150,000 higher than was originally estimated in last year's autumn statement. But the real significance of the Government Actuary's work lies in his next statement, his assumption for 1985–86. The Government Actuary assumes that unemployment will remain just as high in 1985–86 as this year. There is to be no fall, reduction or improvement, just a steady grind on of unemployment at—even on the Government's phoney figures—3 million or more.
It is no good the Chancellor saying that the Government Actuary does no more than make assumptions.[Interruption.] "Conventional assumptions", says the Chancellor. The Chancellor is wholly dependent on those conventional assumptions being right. If they are not right, the entire public expenditure forecast on which the Government hypothesise their tax cuts is wrong. Those assumptions have to be right for anything that the Chancellor said yesterday to work out in practice next March or the March after
The truth is — I think that the Chancellor would improve his reputation if he honestly admitted it—that the Government do not anticipate any reduction in unemployment in the foreseeable future. If I do the Chancellor or his colleagues less than justice by saying that, he can confound me at once by telling me when the fall in unemployment is anticipated. After all, he used to say that a reduction in unemployment would follow certainly, inevitably and automatically from a reduction in inflation and public borrowing. So I ask the right hon. Gentleman: How long do we have to wait? Did he and his colleagues make it clear five years ago when they first embarked on that policy that at the end of five years or more, far from the automatic and inevitable solution
542
coming about, unemployment would be 2 million or more higher and there would be no reasonable prospect of its being reduced? Of course, they did not.
The country has not been told the hard truth that, despite all the fancy talk about controlling monetary growth and of the relationship between interest rates and the public sector borrowing requirement, the Government have held down inflation by collapsing the economy. Yet, as the hon. Member for East Lindsey reminded us, Japan and America thrive on budget deficits. As Conservative Members recall — or should recall — even this Government began a small, temporary but genuine recovery in 1982 by relaxing credit control, increasing the PSBR and, above all, extending public capital spending.
Yesterday the hon. Member for Croydon, South (Sir W. Clark) insisted that unemployment is most likely to be reduced
"If that money is left in the hands of the taxpayers—[Official Report, 12 November 1984; Vol. 67, c. 421.]
I congratulate the hon. Gentleman on venturing far enough out of the backwoods to accept the need for a boost in demand. He joins those other notable progressive revolutionaries and Socialist theorists, the Confederation of British Industry and the Daily Mail, in demanding that more activity is injected into the economy as a direct result of Government policy. I ask the hon. Gentleman to take a further step and join the CBI and the Daily Mail in accepting that the best way to increase employment and reduce the unemployment about which the Government claim to be so concerned is for whatever funds that are available to be spent in the public sector, and particularly in capital programmes.
Sir William Clark: The logic of the right hon. Gentleman's argument is that he believes that, if the Government spend, spend, spend on public projects, unemployment will disappear. Will he explain why that did not happen in France under President Mitterrand and why the previous Labour Government did not spend, spend, spend to bring down unemployment?
Mr. Hattersley: That is not the logic of my argument; that is the illogic of the hon. Gentleman's conclusion. The Opposition have not suggested that we can spend, spend, spend indefinitely, down to zero unemployment. We have suggested that other countries have demonstrated that by prudent investment in capital works unemployment will certainly be reduced.
I do not expect or ask the hon. Gentleman to take my word for that. I simply ask him to read some of the published texts. This is the subject in which he is supposed to be interested and on which he is an alleged authority. Let him read the work of the Institute of Fiscal Studies. If he disregards the institute because it is objective, unprejudiced and unbiased, let him read the work of the London Business School, once the Valhalla of monetarism.
Both those institutions agree that £1 billion spent on public works will create six times more jobs than £1 billion used to reduce taxation. That is the result of their detailed studies of the British economy. I do not know any reputable economist who argues with that, though I know some disreputable politicians who say that they would rather give the money away in tax cuts than reduce unemployment. However, I do not know one authority that

543
disregards or contradicts the formula produced by the London Business School and the Institute of Fiscal Studies.
Mr. Lawson: I do not agree with it.
Mr. Hattersley: Perhaps not, but I was talking about reputable economists.
I insist that the use of any surplus for job creation by investment in the public sector is exactly how any funds that the Government have available ought to be employed. By doing it that way, rather than simply increasing private consumption, the Government would reduce whatever dangers there might be of a deterioration in the balance of payments as a result of the deflation—a danger which largely results from the damage done by the Government to manufacturing industry over the past five years.
I am aware that when the upturn comes, under one Government or another, the Government will have left manufacturing industry in the worst position to meet an upturn that it has been in for the past 50 years.
I repeat that whatever surplus might be created ought to be used directly to generate jobs. Yet the Chancellor is determined to use any surplus that he can contrive to cut direct taxation. As he knows the alternatives and is determined to choose tax cuts, how can he claim, here or anywhere else, that his prime object, or even his serious intention, is to reduce unemployment?
I understand, in part, the political reasons why the Chancellor is determined to make some cuts in taxation. After all, he and his party were twice elected on the false prospectus that that would be done, and done quickly. Today annual taxation is £22·5 billion higher than it was in 1979. If the Chancellor achieves his objective of cutting income tax by £1·5 billion, he will have to reduce the overall tax burden by only another £21 billion to get it back to the level that he inherited from the Labour Government
It is not surprising that the Prime Minister confines her comments on the subject to income tax alone; nor is it surprising that she always defines the tax bill according to her immediate convenience. When the national insurance surcharge is reduced, it is a tax cut. When the national insurance contribution is increased, national insurance has nothing whatsoever to do with tax. We know, and every reputable economist confirms, that national insurance contributions are in effect a tax and that including them in the overall bill means that an extra £22·5 billion is taken out of the economy every year by the Government.
Mr. Alistair Burt: If the right hon. Gentleman is so certain that national insurance is a tax, and a damaging tax, why was a surcharge imposed while his colleagues were in government, and why did he take no steps to remove it?
Mr. Hattersley: Not because it was not a tax. No Labour Minister would have made the feeble pretence that it was not a tax. The hon. Gentleman is entitled to argue that the surcharge was damaging to industry and undesirable. but that is not the point at issue. The surcharge was a tax when we imposed it and it is a tax when the Conservative Government abolish it; and so is every form of national insurance contribution.
Mr. Jerry Hayes: The right hon. Gentleman is confining his arguments to the volume of taxation. He does not refer to the rate of taxation, which is being reduced considerably. He ought to consider what
544
happened in the 1984 Budget, when the largest number of people since 1948 were released from liability to tax; and he should also reconsider his own record.
Mr. Hattersley: If the hon. Gentleman wishes me to comment on the distribution of taxes, I will say that, over the past five years, the richer the taxpayer, the bigger the volume of tax relief he has enjoyed. I am sure that my hon. Friends would be delighted for me to expand on that significant observation on the distribution of tax relief.
Last week the Prime Minister made selective claims about reducing income tax. She used to be the high priestess of monetarism and the personification of the cliché "There is no other way". Last week, after her temporary desertion of the Chancellor — and he only damages his reputation further by denying it—there was speculation about a U-turn.
Mr. Lawson: The right hon. Gentleman should have heard my right hon. Friend last night.
Mr. Hattersley: The Chancellor says that I should have heard the Prime Minister last night. Is he telling me that he did not want a bigger cut in the housing programme and that the Prime Minister did not fail to support him in that?
Mr. Lawson: I was concerned, as I always have been and as previous Chancellors have been, with achieving a particular total of public expenditure, and that total was achieved.
Mr. Hattersley: In other words, "I was right". There has been much speculation—since the event which the Chancellor has by implication confirmed — that the Prime Minister is undergoing a change of heart, that there is to be a U-turn and that she is about to distance herself from monetarism. The situation was likened by the right hon. Member for Chesham and Amersham in The Guardian yesterday to the Narvik debate, with the right hon. Lady playing the part not of Churchill but of Chamberlain.
I can reassure the Chancellor, however, that all the whispers about dumping him are premature. For the time being, the Prime Minister will continue to posture as a conviction politician, and the poor and the unemployed will pay the price of her convictions. However, the conscience of the country is beginning to stir at the thought of high, prolonged and intentional unemployment. Some Conservative Back Benchers have caught the mood already — for instance, the hon. Member for Staffordshire, Moorlands (Mr. Knox), who spoke on the first day of the debate on the Queen's Speech, and many others who have spoken in a similar vein during the past four days. Eventually, for electoral purposes, the Prime Minister will catch the same mood. Eventually she will lower her voice and say that unemployment is a scourge that, given a chance, she will eradicate. She has had the chance and has refused wholly to take it. She will riot be forgiven
4.5 pm
The Chancellor of the Exchequer (Mr.Nigelawson): Yesterday, I was able to outline in my autumn statement an outlook which is in many ways encouraging. We have the prospect of stable public expenditure in line with our long-term plans, inflation edging still lower, still lower interest rates, strongly rising investment and scope for reducing further the burden of taxation and leading to

545
[Mr. Nigel Lawson]
sustained economic growth and a rising level of employment for our people. I want to make it quite clear that the Government are doing and will be doing all that they can to create the conditions for a reduction in unemployment.
The prospect to which I have referred has been made possible because, among other things, we have stuck firmly to the promises that we made at the time of the general election. The planned total public expenditure of £132 billion in 1985–86 — which I was seeking and which my right hon. and learned Friend the Chief Secretary sought during the public expenditure round —is in line not just with last year's White Paper but with the figures set out in the White paper published before the 1983 general election. Indeed, when my right hon. Friend the Prime Minister declared that we stood on the plans published for all to read in the public expenditure White Paper, that is precisely what we did. The public expenditure figures for 1985–86 printed in the autumn statement yesterday are the very public expenditure totals on which we fought and won the general election.
In our first Parliament, we had the crucial priority of bringing down the unsustainable level of Government borrowing which we had inherited from the Labour Government of which the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) was a rather stout pillar. That excessive borrowing not only fuelled inflation but drove up interest rates and represented a burden of deferred taxation which, sooner or later, would have to be paid. We achieved our objective of bringing down the borrowing requirement. We repaid all the foreign debt which we inherited from the Labour Government and reduced the annual level of Government borrowing to a more reasonable proportion of our gross domestic product.
In this Parliament, our fiscal priority can shift to the reduction and reform of taxation. That process began in the 1984 Budget when I laid out a structure of company taxation to endure for the rest of this Parliament and beyond. In that Budget we also began the process of tax reduction. The process had been initiated in the 1983 Budget by my right hon. and learned Friend the present Foreign Secretary. Personal allowances were raised substantially in excess of the rate of inflation, and that took many hundreds of thousands of people out of the income tax system entirely and reduced the poverty trap and the "why work?" syndrome.
The main target for our first round of cuts was the final elimination of the national insurance surcharge. It has frequently been described as Labour's tax on jobs. We remember that it was strongly advocated by the Liberal party when it was a member of the Lib-Lab pact.
Mr. Richard Wainwright: Is the right hon. Gentleman unable to conceive that in the utterly different circumstances of full employment a beneficial tax can turn to a curse when unemployment reigns?
Mr. Lawson: Circumstances are always completely different in the hon. Gentleman's eyes. I must remind him that there was not full employment then.
The final abolition of the pernicious surcharge took effect only on 1 October this year. Thus, jobs have been free of tax for precisely 44 days—scarcely enough time to assess the benefits of abolition. The tax changes that I
546
announced in this year's Budget have their full effect in 1985–86. Thus, there is already built into the system a tax cut of some £1·75 billion next year. The fiscal adjustment that I described yesterday, with the necessary qualifications, gives the prospect of scope for net tax cuts in the next Budget of a further £1·5 billion.
The right hon. Member for Sparkbrook seemed to accuse me of being interested in statistical manipulation and inaccurate forecasts. His problem is that he always looks on the dismal side of the economy, in regard not merely to unemployment—which worries us all—but to all other aspects, even when things are going well. For example, I looked back at his reaction to last year's autumn statement, when he strove to cast doubt on my forecast for investment. I have the relevant copy of Hansard with me in case he would like me to read from it. He declared that all of the commentators agreed that I was far too optimistic. I was forecasting that investment would rise by 4 per cent. in the current year. With the bulk of the year now behind us, it is clear that investment is likely to be up, not by 4 per cent., but by 7½ per cent. I apologise to the House for my undue pessimism last year.
In regard to the manipulation of statistics, the right hon. Gentleman is something of a rascal as he is always striving to make comparisons between the record of the Government in which he served and that of the present Government by taking the growth of output during the Labour Government's years from the first quarter of 1974, which was unusually low as a result of the adverse effects of the three-day week, to the second quarter of 1979, when it was artificially high reflecting the recovery from the winter of discontent. Any reputable economist, to the use the right hon. Gentleman's phrase, knows full well that a correct comparison is between the calendar years 1973 and 1979, which avoids the strike complications and takes the period between the two peaks of the business cycle. We shall do that and take the equivalent six-year period from 1979 to the forecast in the autumn statement for 1985.
During the six years from 1973 to 1979, under the Labour Government, gross domestic product rose by 8 per cent. The forecast that was published yesterday shows a level of output in 1985 of nearly 8 per cent. higher than the 1979 level. In other words, taking broadly equivalent six-year periods, the growth of output is virtually the same. However, the right hon. Gentleman made it clear that we should take no notice of North sea oil in our calculations. Excluding North sea oil, growth in output between 1979 and 1985 goes down to 5½ per cent. If we exclude North sea oil from the Labour years 1973–79, GDP rose by only 3½ per cent.
I agree that the world has changed. There has been a world recession, as some hon. Members are aware. However, between 1973 and 1979, when British output rose by 8 per cent., output in France rose by 20 per cent. and output in Germany rose by 15 per cent. In other words, their output was growing at least twice as fast as ours. The comparison with other European countries is much better for 1979–85. On the basis of the latest OECD forecast for France and Germany and the autumn statement, output will have risen at roughly the same rate in the United Kingdom as in France and Germany. If anything, it has grown faster in Britain. Europe has experienced difficulties in the past few years, yet the United Kingdom's growth performance in relative terms has improved beyond all recognition.

547
The right hon. Gentleman is also worried about employment. Although I am glad to say that employment is rising strongly, it has fallen in the past five years. That must be seen against the background of performance in the years 1973–79. The only reason why employment did not fall sharply during that period was that productivity grew appallingly slowly. Excluding North sea output, it grew by only 2 per cent. in six years. By 1979, hidden unemployment and overmanning was massive. As many Opposition Members would now agree, that represented hidden unemployment which was bound to emerge sooner or later. Productivity growth since 1979 has had to make up the ground that was lost during the 1970s. Since 1979, manufacturing productivity growth in the United Kingdom has been faster than in either France or Germany. Recapturing the lost productivity has been a painful experience, but it has been absolutely necessary if a basis is to be laid for improved efficiency and jobs in the future.
Inflation has also improved dramatically. During the period 1973–79, inflation averaged almost 16 per cent. compared with an OECD average of 10 per cent. During the past five years, inflation has averaged less than 10 per cent. and has now stabilised below 5 per cent.—roughly in line with the OECD average.
Mr. Hattersley: If we are contending statistical veracity, the House will want to be reminded that the Chancellor has compared two six-year periods. The Labour period that he has chosen began before the Labour Government were elected, let alone had had any effect on the economy. The Conservative period that he has chosen ends up not with fact but with forecasts. The first lesson of statistics is not to compare fact with forecast unless one is trying to cook the books.
Mr. Lawson: As I reminded the right hon. Gentleman by quoting my investment forecasts — I could have quoted others — my record on forecasting has been modest. In the event, reality has been better.
The right hon. Gentleman argues that our only recovery was in the wake of measures to stimulate demand in anticipation of the general election. He is completely wrong. Growth has averaged 2¾ per cent. per annum since the trough of the recession in 1981. It would have been 3½per cent. this year, had it not been for the coal strike. That growth has been due in large measure to lower inflation and lower interest rates, not to a short-lived fiscal stimulus which would all too soon have been dissipated in higher inflation. The right hon. Gentleman wants just that sort of fiscal stimulus. Once again, he has offered the House a remedy that he acknowledges is incredible and discredited —a dose of reflation. It is true that, before the election, he was a professional reflationist. He believed that public spending was the cure for all ills. Accused by my right hon. Friend the Prime Minister of wishing to solve all problems by pouring public money over them, he said, "I plead guilty to that charge."
One month after the election the right hon. Gentleman made a sincere and praiseworthy effort to go straight. He admitted:
"Labour's economic policy — the promise to put Britain back to work—was a net vote loser. Nobody believed that Labour's theories could be put into practice. Labour's vague hopes of achieving growth through Government spending were barely understood and rarely believed."
The right hon. Gentleman continued:
548
people—not being stupid—realised that the whole strategy lacked two essential ingredients: a coherent plan for investment and a scheme to combat inflation."
Alas, the right hon. Gentleman could not go straight for long. He is a reflationary recidivist — a habitual offender. He was back at it again today, offering the old reflationary package.
Does the right hon. Gentleman imagine that the House will accept what the British people—not being stupid—have already firmly rejected? He is not content with insulting the House by offering us a policy in which he does not believe, at least for part of the time. He went on to denounce the approach in which he now believes.. He now denies that excessive wages price people out of work —I voiced that proposition in an earlier debate—and that wage moderation could price more of our jobless back into work. Yet he believes in an incomes policy. What is the point of an incomes policy if it is not to price people into work? The right hon. Gentleman accuses us of using high unemployment to curb wage inflation. As usual, he is totally wrong. We do not want high unemployment to curb wages, but we want to curb wages to reduce unemployment.
Mr. Hattersley: I have waited for some time for an opportunity to explain to the Chancellor two distinctions which sooner or later he must understand. I support the view that while a Labour Government reflate the econorny and create expansion, there must be an agreement with the trade unions that ensures that that expansion and reflation are used to create new jobs. The distinction between that agreement at a time of reflation and expansion, and the pretence, at a time of slump, that anything can be achieved by lower wages is total and absolute. It is astonishing that the Chancellor cannot tell the difference.
Mr. Lawson: It is astonishing that the right hon. Gentleman is unaware that this is a time not of slump but of economic recovery with high unemployment. That view is echoed by the CBI, which he cited in his remarks as a great authority. The right hon. Gentleman has his work cut out for him in convincing some of his hon. Friends of the virtues of his incomes policy. I should like to know when it becomes the official policy of a united Labour party.
The right hon. Gentleman knows that wage moderation can generate more jobs. Indeed, it is the right way to generate jobs. The recent CBI survey conducted by Gallup provided telling confirmation of that. It showed that the one factor that a sizeable proportion of all firms believed would lead them to take on more employees was moderation in pay.
The House will have noticed that the right hon. Gentleman was unusually reticent about one important development: the miners' strike. He must know that it was wholly unnecessary, pursued by evil means, in pursuit of impossible demands and for political ends. No Government of any political party could concede to the demands of Mr. Arthur Scargill. The right hon. Gentleman knows that the strike has wrought untold damage on the industry, riven communities asunder, destroyed jobs in the industry's suppliers and, through its effects on interest rates, damaged employment prospects throughout the economy. Yet throughout, the dispute has been backed and, therefore, unnecessarily prolonged by the Labour party. [Interruption.] I am referring to resisting the strike. The country can judge where its priorities lie.

549
The right hon. Gentleman spoke eloquently about the compassion that he and his party feel for the poor and the unemployed. I am certain that those feelings are sincere, although I regret that he is unlikely to acknowledge that all Conservative Members fully share the same feelings. I am certain that his compassion is genuine, although he offers the unemployed a remedy in which he does not believe, although he now denounces the one approach which he formerly proclaimed as vital, and although he feels compelled to back a strike which has grievously aggravated the problem. But I am also certain that the poor and the unemployed will not thank him or his party for a compassion which stops short of reasoned analysis and credible policies.
It is impossible to expect any consistency from the right hon. Gentleman. He publicly proclaimed:
"whatever policy the London Party stands on at the next election, I will support it."
The man of principle!
Today, the right hon. Gentleman proposed the very policies which were tried when his party was in government and found wanting. They were tested, and failed. They gave us high public spending and borrowing, high taxation, high inflation, high rates of interest and rising unemployment. Our policies, however, have been shown to lead to growth, as we said they would. We said that we would bring inflation down, and we have. We said that lower inflation would lead to growth, and it has. We said that with growth would come new jobs, and they have.
None of that would have been possible without first bringing down inflation. Nevertheless, we have always recognised that low inflation is not enough. We also need policies to reawaken the spirit of enterprise, to spread ownership and to fashion new attitudes about the creation of wealth. Much of our effort has concentrated on the small business sector of the economy, and for good reason. Britain is short, relatively speaking, of small companies compared with the United States and our major European competitors. The number of new businesses is a fair barometer of the vigour of enterprise in an economy. Today we suffer from a lack of new businesses which should have been created a decade ago. By now they would have been sizeable enterprises, which would continue to expand and create jobs. Their absence is a key feature of today's unemployment picture.
The recent CBI Gallup survey confirms that view. The results reveal a particularly optimistic attitude among small companies about the prospects for new employment. Those companies, above all, see themselves as needing to take on new employees in the year ahead.
Mr. Eric S. Heifer: In view of the fact that the Government are basically responsible for the wholesale destruction of large enterprise, is it not clear that the only chance of their making progress is through small businesses? The Government are not doing particularly well in that direction either.
Mr. Lawson: I am glad that the hon. Gentleman, who often has more sensible contributions to make than the Labour Front Bench, which he once adorned, agrees with me about the importance of small businesses.
The Government's economic policies are designed to facilitate the creation of wealth and jobs. We have not
550
hesitated to provide encouragement through the tax system where the circumstances demanded it. The business expansion scheme was introduced by my predecessor. It greatly extended and improved the earlier business start-up scheme, which was inaugurated in 1981. We have been monitoring the results of the business expansion scheme. Final figures are not yet available, but the picture that is emerging for the first year of the extended business expansion scheme—1983–84—is most encouraging.
The House will be glad to know that we estimate that at least £75 million, and probably more, was raised by small businesses under the scheme in 1983–84. More than 10,000 investors have put their money into more than 400 small companies. Inevitably, the sums raised have varied enormously. About 30 per cent. of companies each raised £50,000 or less. About 60 per cent. raised between £50,000 and £250,000. A few raised more than £1 million each. Particularly encouraging is the fact that well over half the total amount invested—at least £41 million—went to young, or very young, start-up companies. The rest went to more mature, but still relatively small, companies.
The purpose of the scheme is to encourage new and expanded activity in the small firms sector, which is so vital as a source of new jobs and prospects. The full results of the survey will be published fairly shortly. One of the most important features of the scheme is that the investor, even if he invests his money through a trust, becomes the direct owner of shares in the company in which his money is invested. That gives him a direct interest in the way in which the company is managed. It means that the company can benefit from an informed and active body of shareholders who can assist the management in the effort to expand and to create more jobs.
Throughout the Conservative Government's period of office the importance of direct ownership has been a constant theme. We have enabled an extra 1·75 million people to become owners of their own homes, so that the proportion of home ownership is now more than 60 per cent. The expansion of home ownership has aroused a much broader interest in the whole concept of owning, and the privatisation programme has helped to satisfy that new demand. Whenever we have moved a company from state control to the private sector, we have provided the employees with shares on special terms. The response has been enormous. The great majority of employees have accepted the offers and become shareholders in their own companies. Owning shares has given the workers a new sense of identity of interest with their companies and a new incentive, and companies that have moved back into the private sector have invariably performed better as a result.
Mr. Mark Fisher: Jaguar?
Mr. Lawson: Yes—Jaguar, too.
The result has been that the work force is now able to participate directly in the success of the company. The interest in sharing in the ownership of major companies goes far beyond the companies' employees. It is interesting to note, for example, that British Telecom has already handled 1 million or more telephone calls requesting information about or expressing interest in the sale.
Even outside the privatisation programme the Government have been willing to use the tax system to stimulate acquisition of shares. That, too, has been

551
remarkably successful. When we came to office there were fewer than 30 profit-sharing schemes in the whole of British industry. Today, there are 788—more than 25 times as many — and there are many more in the pipeline. Since 1979, more than half a million employees have benefited from approved schemes.
The result of all those changes has been to create in business managements and work forces a whole new set of attitudes far removed from the "them and us" confrontation that has bedevilled this country for far too long. Employees know that the success of their business is linked with their own efforts and that their efforts determine their rewards. That spirit has lain crushed for many years beneath Government economic planning, penal taxation and incomes policies of the type still advocated by the right hon. Member for Sparkbrook and the minority that he leads. Today that spirit is reawakened. Better motivation means higher profits, faster expansion and more jobs. It is, of course, a long-term policy.
Mr. Hattersley: How long?
Mr. Lawson: There is no short-cut. The Government's economic strategy is to create an enterprise economy that will produce prosperity and jobs for our people. The recovery is strong, the strategy is on course, and the policy will succeed.
4.33 pm
Mr. James Callaghan: Like others, I wish to speak about the gloomy prospect of higher unemployment and fewer jobs. Mass unemployment is a cancer, the long-term effects of which cannot be neasured. One thing, however, we know: the lost years for young men and women cannot be replaced or overtaken. Therefore, I do not share the satisfaction of the Chancellor and the Prime Minister that the economy is in good shape. Indeed, it was perhaps a measure of the Chancellor's own uncertainty that he spent so long abusing the Labour Government. Listening to the right hon. Gentleman, one would scarcely believe that the Conservative party has been responsible for our affairs for nearly 10 of the past more than 14 years. If responsibility is to be allocated, by far the greater part must fall to the extended period of office of the right hon. Gentleman and his predecessors.
The Chancellor's selection of statistics is so brazen that one watches with admiration to see to what dizzy height he will jump next. The figures that he selects and the way in which he puts them are not an insult to the House because we all see through him and we all like him and admire his agility in these matters, but they do nothing for the intellectual level of the debate that he is leading. I do not intend to bandy figures. I shall come to my conclusion straight away so that the argument can be put to rest.
In my view, the Conservative Government have done better than the Labour Government on inflation and productivity but the Labour Government did better than the Conservative Government on employment and growth. That seems to me to be about as fair an assessment as one can make. But that is not what the Chancellor came to power for. He came to power to reverse the long-term secular decline of Britain's economy and he has failed to do that. That is the measure not of the condemnation of the right hon. Gentleman—that can follow at any time —but of the problem that the country still faces. So long as the right hon. Gentleman goes on trying to shuffle
552
off responsibility for what was not done by the Labour Government 10 years ago he will fail to face the fact that the economy is still going backwards compared with our competitors. If we carry on as we are and North sea oil begins to fade we shall sink into a shabby genteel penury in the next 20 years. That is the measure of the task facing the Chancellor and he should address himself to it today rather than harking back to some misplaced balance sheet and comparing the present situation with what happened between 1974 and 1979.
I give one illustration of what I mean. The Prime Minister said last week—I believe that the Chancellor has said the same in the past—that private investment in manufacturing industries is improving and is now 15 per cent. higher than it was a year ago. That is welcome so far as it goes, but it does not go very far. I am delighted that private investment in manufacturing industry is 15 per cent. higher than it was a year ago, although none of us can say how much of that is due to the fact that there is to be a change in the capital allowance system, which must certainly be helping to accelerate some of the new investment. Rather than trying to delude the House with that statistic, however, the Prime Minister should look further back. I make the comparison with the Labour Government merely to show the continuing decline, which is a national problem.
New investment in manufacturing is not 15 per cent. higher than it was when I was in office. It is not even the same. It is 26 per cent. lower than it was in 1979. To put it another way, for every £100 spent on new, up-to-date plant and machinery in 1979 only £75 is being spent now,. I believe that that failure is beginning to be reflected in our capacity to export manufactured goods of the type and quality required if we are to maintain our place among the foremost industrial nations. I believe that it was partly for that reason that, as we all know only too well, in 1983 we made a loss on our trade with other countries, if not for the first time in our history, certainly for the first time since the end of the war. That is something on which the House must concentrate, because this is where our future lies. At the moment, we are depending on North sea oil to keep us afloat, but our manufacturing industry is moving backwards by comparison with others, and also absolutely.
Another factor, which is too lightly dismissed, illustrates our economic difficulties. Again, I must put it personally. When I left the office of Prime Minister, a traveller going to the United States could get $2·5 for his pound, while today he gets $1·26. We are told that this helps exports, but, although it helps the export of some of the traditional goods for which we have been famous, it does not help our imports because it increases their prices.
My major point is that the Government, after nearly six years, still have to convince us not whether they are better or worse than the Labour Government, but that they are able to reverse the long-term secular decline that, if it continues, will mean that in 20 years' time this country will be ranked among the developing countries instead of among the advanced industrial countries.
Mr. Hugh Dykes: Does the right hon. Gentleman agree that the ominous realisation is affecting more and more observers of the total scene that, in reality, this country needs billions of pounds to be invested in productive new assets, both in the public and private sectors, and this is still not taking place?
Mr. Callaghan: I agree. The hon. Gentleman has anticipated the point that I would have made, although perhaps not as elegantly as he has. What worries me about this—and it must concern us all—is that the country is now, and increasingly unless we break out of the vicious circle, trying to maintain first-class social services on the back of a second-class economy, and we shall fail to do it. We shall have a gradual and slow decline.
We need a sustained improvement in competitiveness. I see no reason to depart from the general line that I pursued when I had responsibility for these matters, and I say nothing now that is different from what I said then. As the hon. Member for Colne Valley (Mr. Wainwright), the spokesman for the Liberal party, said, when today we have a much larger, under-used volume of resources of manpower skills and under-used machinery than at any time since the 1930s, we should do more to help ourselves. That is the point that the hon. Member for Harrow, East (Mr. Dykes) was also making. Higher productivity must come about and will lower labour costs per unit, but so will higher production in many cases. The Government need to change their policies to achieve this domestically, so that we can get higher production through the measures that have been set out already, and they should use their influence internationally to achieve the same ends.
The world has not yet recognised that the debt of the developing countries is the result of a broader global disequilibrium. Several million jobs in the modern industrial western world are dependent on exports to the Third world. As many as one in six of the jobs in the United States are so dependent. Import reductions by these countries, which are taking place under the influence of the International Monetary Fund, to try to put their economies straight and offset their deficits create unemployment in our countries. We must follow policies in trade and aid that will enable debtor countries to increase their foreign exchange earnings. Last year, interest payments on old loans from the developing countries to the western world were $50 billion to $60 billion in total, with the result that there was a net transfer from the developing countries to the western industrialised countries of some $20 billion across the exchanges from the poorest to the richest countries.
We must—this is where the Government should use their influence internationally —recommit the world's economic system to growth to permit a net flow of resources to developing countries and not from them. In that way, we shall both help them to overcome their dreadful poverty and help ourselves with more jobs. I do not disguise the fact that the problem is immense, and every Government have so far failed to solve it.
We are now faced with the technological revolution that has come upon us fast. A few days ago I was in Japan. With typical thoroughness, the Japanese have set up an institute of strategic research, whose purpose is to investigate, and report on, the economic and social consequences to their society of the technological changes, and what will be involved in the new, high-density communication prospects and the processing of new materials and other methods. I suggest that the Government should begin to do the same and take a broad strategic look at this problem, not just in isolation but in conjunction with other European countries. I see no prospect at the moment of any large-scale reduction in unemployment. Indeed, I fear the reverse.
554
I come now to the mishandling of the miners' strike. The Chancellor referred to this, and said that the Opposition should have made more reference to it. It drags on week after week, with both sides intent on a complete victory by a knockout, irrespective of the damage and suffering that they inflict. There have been negotiations in the course of which the National Coal Board has given some ground, notably to the NUM at Edinburgh, while in the settlement with the National Association of Colliery Overmen, Deputies and Shotfirers, the board shifted its position favourably towards the miners. However, we are now told by both sides that negotiations are at an end.
I was taught that the essence of negotiation was to carry one's case to the point at which one could go no further, to recognise when one has got all that could be wrung out of one's opponents, and to leave oneself a way out so that at the end one could settle honourably and live to fight another day. I do not think that either side in the present dispute gets high marks on those tests. However, the miners are a special breed of men. Danger, loyalty and dogged determination are their lifeblood. Consider what happens when there is a pit disaster. Those of us who watched the rescue work at Aberfan will never forget the way in which the men flocked to undertake the most , dangerous and difficult tasks to rescue the children and others who were buried. During the last war they volunteered for the services in such numbers that Ernest Bevin had to hold them back.
I understand Mr. Scargill's pride in the miners, even when it leads him, wrongly, to fail to condemn acts of violence and intimidation, but whatever recent events may have done to influence public opinion, the country is fortunate to possess a breed of men, and their wives, with this stubborn determination and loyalty. We have needed them in the past and we shall need them in the future. They must never feel alienated or deserted, and I shall support their struggle to maintain the life of their villages and their pride in their communities.
Two steps are now necessary, one by the Government and the other by the miners' leaders. First, I beg the Prime Minister, the Home Secretary and other Ministers to change their tone and to acknowledge the value of the men who are on strike as much as they acknowledge the value of the men who are at work. Both are equally deserving of an appreciation of the kind of men they are. If the Conservative party can never understand that, it will never solve these industrial problems.
There is a value in all miners, whatever view they have taken. It is the same stubbornness and loyalty that demands that some of them stay at work while others will not go back. Whether they are at work or on strike, I value them all. The minority possess the same qualities as those who are on strike, and we should not separate one group from the other.
However, the Government should acknowledge, clearly and precisely, in a way that they have not done yet, that the offer of large redundancy payments is not enough to revive the communities where a pit closure could bring disaster. There should be cast-iron guarantees about the programme for replacing old pits with new pits in some of the areas that will be worst affected, when new pits have been talked about but are still largely in the air. For example, it is not yet believed finally in south Wales that the new pit that has been talked about for so long will be brought into action. There must be cast-iron guarantees.

555
I have read the 1974 "Plan for Coal" two or three times recently because so many references have been made to it. It is couched in such general terms that it is not possible to pin everything upon the precise interpretation of every word in it. There must be a revised "Plan for Coal" which gives coal a large place in our future energy programme, as the Government say they wish. But the Government should go even further. They should sponsor exceptional and imaginative measures to offer new jobs and new hope to pit areas faced with closures so that the communities can see a clear way ahead.
The second step is for the miners' leaders to take. They must not permit the miners' exceptional loyalty and dogged resistance to be dissipated and drained away by a ragged break in their ranks. If the leadership comes to the conclusion that no more can be gained than has been already won, they have the responsibility to say that to their members and then to put it to the test of their members' opinions. If the decision goes in favour of acceptance, they will all march back together, united, with their heads held high, in an orderly and disciplined manner. That is the way for our miners and for our Government to behave. It would then be the responsibility of everyone in the House to hold the Government and the National Coal Board to their pledges to ensure a future for all those wonderful and worthy communities.
I fear that on the economic side the Government have much more to do before they can say that they have changed Britain's attitude and that we are making our way forward rather than backward. I fear also that in trying to understand the psychology of many groups of our people the Government still have much to learn.
4.51 pm
Mr. Francis Pym: This afternoon we have had a characteristically robust performance from my right hon. Friend the Chancellor and an equally characteristic performance from the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley). However, the rerun of yesterday has not added a great deal to the knowledge that the House already has.
I do not intend to follow the right hon. Member for Cardiff, South and Penarth (Mr. Callaghan) in his comments on the miners' strike, but I shall seek to follow him in the longer view of events which he took at the beginning of his speech.
I want to put my remarks into the broad context of the Gracious Speech, which is the subject of this debate. As the House knows, that speech is never written as a good read. It is just a programme for a Session. There are some good measures in this one and some highly controversial measures, but it is only concerned with this Session. Yet this is the second Session of this Parliament and therefore a highly significant one in the Government's unfolding strategy over the five years.
The Gracious Speech tells us little about that strategy. The only sentence that relates to it that I can find says:
"my Government will continue their policies of exposing state-owned businesses to competition and, where appropriate, returning them to the private sector."
The process of privatisation is a continuing theme of the Government, which I fully support. But I cannot detect anything else in the speech that I would put in the strategic category. There is, of course, firm control of Government spending, but that is a sine qua non anyway.
556
The speeches of my right hon. Friends from the Front Bench—all admirable speeches—also told us little of the broad strategy, although that of my right hon. Friend the Chancellor was an exception. The other speeches from the Treasury Bench have dealt essentially with short-term issues, with reference in some cases to the medium term. This afternoon I want to urge upon the Government the necessity for thinking more positively and constructively about the long term. I want them to look further ahead with more imagination. I want to press them to anticipate future trends and developments more carefully and to prepare people for the changes that will come anyway. I want the Government to adjust their policies, including their economic policy, to take account of changing conditions and new opportunities, and to to stick too rigidly to their original decisions.
Let me give some recent examples of where I observe a failure to look ahead.
My party was committed to the abolition of rates and their replacement with a fairer system. About two years ago that commitment was abandoned when it was discovered that there were no alternatives that were not worse or impossible. What happened? No preparations were made for the consequences of that conclusion. No alternative plans were looked for. We got an ad hoc measure — rate capping. Yet we all know that the present system of local government finance was and is haywire. What should have happened was the immediate start of a process leading to a major reform of local government finance. That did not happen until last month. That suggests that the Government had not thought the matter through and had reacted much too late.
Debates in the House last Session revealed profound anxiety about the state of local government and the scale of Government interference. The Government seemed impervious to all those voices and tried to hold the line that all was well. It was not and it is not. Now, belatedly, my right hon. Friend the Secretary of State for the Environment has concluded that:
"we need a clear and dispassionate study not only of the abuses but of the underlying changes which those abuses reflect."—[Official Report, 6 November 1984; Vol. 67, c. 134.]
It would have been better to think all that through before embarking on highly controversial legislation.
Those are examples from the recent past. A current example is the welfare state and its future development. I want to say at once that I welcome the extra funding that my right hon. Friend the Chancellor was able to announce yesterday. For some time three things have been obvious about the welfare state. First, there have been enormous changes between the Beveridge period 40 years ago and the 1970s and 1980s. Those changes could not possibly have been foreseen and, as a result of them, the context in which the welfare state operates today is different from the circumstances in which it was created.
Secondly, the ever-growing demands on the welfare state will continue to increase, probably at an accelerating rate. Chancellors of the Exchequer will always have an anxiety here.
Thirdly, the Health Service, which is a vital part of the fabric of our society, is not as efficient or as cost-effective as we would like it to be. In that situation it would have been wise to undertake a review on at least as big a scale as the original Beveridge commission. My right hon. Friend the Secretary of State for Social Services has set several reviews in hand. He announced them during the

557
past year and they are nearing completion, but I doubt whether they are far-reaching or fundamental enough to be able to recommend the adjustments that may well be necessary.
In particular, we must look in a radical way at how the social services are provided. We are most unlikely to generate anything like enough economic growth to fund the scale of social services that people would like to have. There will be a continuing squeeze on resources in relation to demand. The task is to provide the best social services that we can afford in the most efficient way. Therefore, we should at least examine the feasibility of privatising some of the social services with the Government providing people in need with the resources to buy their own services. I do not say that that will necessarily provide the best answer in all cases, but I am urging a new, radical and imaginative approach that will deal effectively with the needs and problems of the future, and thus maintain the best possible welfare state. Such a review could follow on the six minor reviews that my right hon. Friend the Secretary of State for Social Services has set up. It might well take a couple of years, but that does not matter because the work should be done.
By far the most important issue both now and in the future for our people is employment. Indeed, it has been for some years. At last the Government are beginning to acknowledge the nature and depth of the problem. I applaud all the action that they have taken, especially for the young, and the new measures announced yesterday, but the Government have not yet measured up to the scale of the changes taking place, so they have not responded to them. They adhere with notable rigidity to the economic policies prepared in the 1970s—the policies that were going to create "real jobs". Indeed, my right hon. Friend the Chancellor confirmed that in his speech today. But it cannot be denied that those policies have not yielded the results claimed for them. Despite the encouragement that my right hon. Friend the Chancellor drew from the various favourable developments, they show no sign of producing those results yet. That is because those policies are being applied in circumstances that have completely changed.
As a result of the world recession and the other events, we have rising unemployment. From the outset—from the autumn of 1979, or wherever one cares to pitch it—the Government have consistently misjudged unemployment. I believe that under present policies it will continue to rise. I am sorry to have to say that to my right hon. Friend the Chancellor, who is a much greater economic expert than I am, but that is my view. However, I cannot find any business man who does not think that unemployment will continue to rise in present circumstances. The Government are reluctant to accept that and therefore, of course, their policies cannot deal with it. They expressed deep concern in the Gracious Speech but the Government's actions and response are not commensurate with that concern.
Mr. Hayes: Is not my right hon. Friend deeply depressed by the fact that in the next three years or so 550,000 jobs will have to be created to keep employment as it presently is? Does he not agree that the most responsible thing to do with the resources set aside for tax cuts would be to invest them in improving the infrastructure?
Mr. Pym: I am in much agreement with my hon. Friend but I do not want to depart from what I wanted to say to the House. My right hon. Friend the Lord Privy Seal laughs, but in the interests of the House—
The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): A direct answer to that question would be revealing for us all.
Mr. Pym: I believe that if there is money to spare when the outturn comes at the time of the Budget, it would be right to use it for the benefit of the unemployed in a job-creating role.
We need a strategy that encompasses not only the present high levels of unemployment but future developments and needs. That strategy should begin from a much better analysis than we have at present of likely future trends and, in particular, the development of the technological revolution. We know that new technology industries will create some new jobs, but they will be skilled jobs. I draw hon. Members' attention to the statement made last week by my right hon. Friend the Secretary of State for Employment. He said:
"I am keenly aware that, even at the present level of unemployment, it is an appalling fact that we still face serious skill shortages."—[Official Report, 30 October 1984; Vol. 65, c. 1244.]
That points to a lack of forethought and a lack of strategy in the years gone by. On that basis, I do not see how it can be thought possible that the new technological industries can provide the new jobs. It is a feature of ministerial speeches that they express the view that just as the industrial revolution generated a mass of new jobs, so the technological revolution will do the same. But I do not believe that that is so, and on the basis of that statement it seems unlikely to be able to do so.
The technological revolution will also make many unskilled workers redundant. That is at the heart of the challenge that we face on unemployment. A strategy for employment must include all aspects of the problem. There is the educational element, which in itself has two aspects. First, there is industrial training, where new efforts are now being made. Indeed, my right hon. Friend the Secretary of State for Employment spoke about that yesterday. I completely endorse all that. It may be late in the day to begin, but new efforts are being made and every drive must be made to encourage such training and to increase it as quickly as possible. Secondly, the education of our children should include an element that will enable them to appreciate and enjoy greater leisure than their fathers or grandfathers knew. Unless the education system takes that into account, people will not be able to take full advantage of the marvellous opportunities offered by technology.
The strategy must also face up to the regional problems. National statistics disguise the extreme unevenness of unemployment, ranging from single percentage figures to 30 or 40 per cent. Yesterday my hon. Friend the Member for Horsham (Mr. Hordern) made a very effective speech about Liverpool. The geographical pattern spells a major problem. National averages are not much guide. What are we going to do with the cities that were created during the industrial revolution and that are no longer wanted? Do we take work to the people in them, or help the people to go to the work? Many attempts have been made at the former, with a high failure rate, but few attempts have been made at the latter, although that policy was a feature of the

559
recovery in the 1930s. I believe that we want both and that we want a new policy to cope with the situation. Yesterday, my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) made an important intervention about encouraging activity in the inner cities.
We must also do much more work on job sharing, and find out more about people's wishes and views about dividing their working time. We must find out how they feel about the balance between time off and reduced income. It would also be helpful to know more about what is happening in other countries. The strategy must also take account of the public expenditure implications. Earlier retirement is likely to be a feature, although it is obviously very expensive. We have already spoken about more education and training. I should add that private industry is not doing enough. It is not putting enough resources into that and is not contributing in the way that it should be doing. There are also the demands for more social services, to which I have referred.
I acknowledge that that strategy will cost something, and make no secret of it. But it is worth it, because we must find a balance in the strategy between counter-inflation, measures to deal with unemployment and growth. The strategy that I have described is, as my right hon. Friend the Chancellor of the Exchequer would say, a "credible policy". I also believe that such a strategy would be much closer to what most people want. But all of it highlights the vital need for growth. Without it, our difficulties will be compounded, with social and political consequences. Thank goodness there is growth, but we should like it to be much more extensive.
The Government are right to stress the importance of a flexible and competitive economy, but by itself that is not enough. The Government have given a lot of new help to new businesses and technology, which I strongly support, but they should not be involved only with new or small businesses. Our future depends far more on the extension and development of existing businesses. It is no longer enough just to try to create the most favourable climate for them, although that remains a vital and fundamental function of Government. The world is now much more complex. The Governments of other countries are closely involved with their industries and often support them, creating distortions in the market that cannot just be wished away. Therefore, I want to see a more effective partnership between Government, management and the unions—an unfashionable view, but fashion is a poor guide here. I remind the House that my right hon. Friend the Prime Minister has spoken of establishing a new relationship with the unions after the miners' strike is over, and she is right.
I see the Government's role as strategic and supportive; positive rather than passive. Such a strategy would incorporate practical policies to reduce unemployment. That must surely include policies to remove the obstacles to employment. It will be a slow process, but it is important.
Such a strategy should have a European dimension, too. Theoretically, that should come first. Unemployment is a European problem. Indeed, it is a world problem. No vigorous attempt seems to be made to deal with it on a European basis. The same applies to new technology. Our performance compares unfavourably with that of our competitors. The United States and Japan are outstripping us easily. The only way to compete with them effectively is on a European scale. We should make a real attempt
560
—a far more enthusiastic attempt — to tackle on a Community basis some of the great challenges that we all face in Europe.
That leads me to the Foreign Office budget and the aid programme. The Chancellor said yesterday that it has not changed, that it is still £1,870 million. Of course, with respect to the Chancellor, it has changed because of factors such as exchange rates and inflation in other countries which cannot be quantified. The amount involved seems to be between £30 million and £100 million. That is the size of the effective cut. In my view it is a great mistake. With the world in its present unstable state the cut is unwise. It is a wrong assessment of public expenditure priorities.
The Chancellor said today that his interest was in the total figure, but it is more than that. The breakdown of that figure and the priorities are important. The Foreign Office has made its contribution to containing public expenditure over the past five years, but now that has gone too far. At the same time as reducing numbers there has been a big shift of emphasis from the political to the trade side. It was, indeed, necessary to build up the trade side, but the result is that the diplomatic service proper has been thinned down too much. In current circumstances I should like it strengthened. That is not expensive.
The same applies to the aid programme. With the present deprivations and political worries in the Third world this is a time to increase our investment in those countries. That is what aid really is. Many of the countries are Commonwealth countries which matter to us.
The recent appalling tragedy of Mrs. Ghandi's murder emphasises that. Effectively, she was the leader of the Third world and a key figure in maintaining calm and stability despite all the problems and tensions. She has no obvious successor in that role. We can expect the strains and tensions to increase. At least, it would be unwise to make any other assumption. Our reaction and response should be commensurate with that.
The Government's decision in that area of expenditure is short sighted. Some of my hon. Friends do not like even the concept of overseas aid, but I believe them to be profoundly misguided. Britain has a major and unique role in the world. Britain has an influence for stability and peace that must be used to the full.
We should increase the activities of the British Council and the BBC overseas service. Not only are they excellent ambassadors for Britain, but they are excellent ambassadors for greater understanding and harmony. They are national assets, unique to Britain, which for strategic reasons should be enhanced.
Again, I note a Government decision that neglects the long term. I urge them to think much harder about that in this and all areas of policy. If they do, the present probability of a Conservative Government continuing in office beyond the next election will become a certainty. What is more, they will deserve to continue.
5.14 pm
Mr. Roy Jenkins: I hope that the Chancellor of the Exchequer will not leave the Chamber yet, because I have some specific things to say to him.
The right hon. Member for Cambridgeshire, South-East (Mr. Pym) made a wide-ranging and far-seeing speech to which I listened with much interest. I agreed with much of it—in particular his concluding remarks, not about the return of a Conservative Government, but about the

561
Foreign Office, our representation abroad and overseas aid. I am sorry that the Chancellor could not stay to listen to two sentences about his right hon. Friend the Member for Cambridgeshire, South-East.
The Chancellor made an effective debating speech this afternoon. If tu quoque between him and the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) could solve our economic problems, Britain would be the most prosperous nation in the world.
I cannot recollect the reputation of a Chancellor declining as sharply as that of the present Chancellor in the past eight months. In some ways, he deserves sympathy, because his reputation has declined at least as fast as the pound against the dollar, but without the compensation of a little recent rallying which the pound has shown. One wonders why that has happened. The Chancellor has many of the qualities necessary for his difficult office. He certainly has nerve and at least as great an understanding of the technicalities of his difficult job as many, if not most, of his predecessors. However, that is all vitiated by a fatal combination of complacency and insensitivity, epitomised in a passage of his speech on 30 October, when he said:
"Our policies are already bearing fruit."
So they should, after five and a half years. It would have been a barren tree if no fruit were forthcoming after that time. What sort of fruit are the policies bearing? The Chancellor continued:
"We are now in the fourth year of a steady economic recovery, and I see no sign of it faltering—[Official Report, 30 October 1984; Vol. 65, c. 1180.]
I shivered for the future when I took in that misplaced self-congratulation. That description of the past and prophecy for the future would be pushing things even if our production were surging ahead, if the unemployed were being sucked back into jobs and if we had one of the strongest economies in the world. In view of recent facts and future prospects, those words are almost the equivalent of Mr. Ian MacGregor congratulating himself on his handling of public relations.
There has been some mild recovery since the deep trough of 1980–81, but, taken as a whole, the first five and a half years of this Government's policy have been barren. About 2 million fewer people are at work than in 1979. Manufacturing production is one eighth down. Manufacturing investment is still substantially lower than when the right hon. Member for Cardiff, South and Penarth (Mr. Callaghan) left office—and it was not all that magnificent then, by international standards. Above all, our balance of payments on everything except oil has gone into massive deficit in the last three years. Even in 1981, despite the damaging effect of an unnecessary and unjustifiably high sterling exchange rate, we had a surplus of £500 million on our manufacturing trade. What will the deficit on manufactured trade be this year? It looks like being between £10 billion and £11 billion.
The rational basic object of economic policy, as the hon. Member for East Lindsey (Mr. Tapsell) pointed out yesterday, should be to achieve results—primarily an increase in national wealth—and not to strike attitudes.
Judged by results, the Chancellor's attempt to portray the past four years as a golden economic age looks not only wrong, but ludicrous. It casts doubt not on his veracity— which he may regard as expendable — but on his
562
sense. The Chancellor's "set fair" view of the future is even more disturbing. What are the salient facts about the prospect that confronts us and the remainder of the world? There is the certainty of a slowdown in the rapid rate of American economic growth that has taken place until recently. Indeed, it has begun already. In annual terms, the growth rate was 10 per cent. in the first quarter of the year, 7·5 per cent. in the second and 2·7 per cent. in the third. In addition, there is likely to be a fairly determined postelection attempt to reduce the federal deficit. I accept that that is probably necessary. Super-Keynesianism by the back door, without acknowledgement in Washington, has produced a bonanza in the United States during the past few years. The size of the deficit, and its non-inflationary, non-cyclical character, makes it very different from our deficit or the deficits of the main industrialised countries, and would certainly shock Keynes.
Let us be in no doubt that the correction of the deficit will be unpleasant for Britain, for Europe and for the world. Last year, half of the growth in world trade came from the United States. The slowing down or halting of United States growth will have a far more depressing effect on Britain and Europe than can be counterbalanced by the possibility of lower interest rates. There is a real danger that without positive corrective action in Britain and Europe, the incipient recovery will force the European countries back into the recession before recovery has really begun and before it has affected unemployment totals.
Such a likely economic scenario will have still more devastating effects upon the developing world, whose countries are already suffering from a combination of very low commodity prices and a burden of debt that, on average, pre-empts about one third of their export earnings. If those earnings fell any further, the debt would become unsustainable and we could still have a major financial collapse that would lash back upon the trade and economic performances of the industrialised world.
We in Britain have our own peculiar problem of how, when the oil supply runs down, we can earn our living and achieve a tolerable balance of payments. I am not saying that the oil will run out during the lifetime of most hon. Members, but it will certainly run down, so we cannot continue to produce a massive surplus to counterbalance a massive deficit.
Dominating everything is that massive and slowly growing lump of intractable unemployment. The Chancellor's policy is to ignore that. Yet unemployment has grown by about 15,000 a month during the past year—almost 200,000 in a year. That has occurred during the steady and sustained recovery about which the Chancellor has been so lyrical. It has occurred while the world's strongest economy across the Atlantic has forged ahead at a rate that it cannot possibly sustain. When that rate is reversed, the rate of increase in our unemployment is likely to accelerate.
The hard fact is that with present policies, there is virtually no chance of unemployment falling below 3 million during this Parliament. Indeed, there is a considerable chance that if the American slowdown is not balanced by deliberate expansion in Europe, unemployment will go beyond 4 million. The outlook is far from being set fair. The outlook for unemployment is depressing. Even on the most favourable assumptions, there are additional hazards that could make the outlook not only depressing, but catastrophic. The Chancellor's complacency in those circumstances is a national menace.

563
What should be done to correct the position? I do not think that we can simply hope to muddle through the international debt crisis. Of course, there is a 70 per cent. chance that we might do that, but is a 30 per cent. risk acceptable? That depends not only on the statistical probabilities, but upon the consequences if things go wrong. If we were contemplating a picnic and were told that there was a 30 per cent. chance that it might rain, we might be prepared to take a risk because of the 70 per cent. chance that the weather might be fine. Even if it rained, that would not be catastrophic. But if we were about to board an aeroplane and were told that there was a 30 per cent. chance that the aeroplane would crash before reaching its destination, most of us would rapidly leave the boarding area. When assessing whether risks are acceptable, it is important to look not only at the probabilities, but at the consequences if things go wrong.
Mr. Peter Hordern: The right hon. Gentleman's analogy of the aircraft and the 30 per cent. chance of crashing was one that he used when the Social Democratic party was first launched. I do not know how he rates that now.
The right hon. Gentleman is asking the European Community — he mentioned this when speaking at a function last week—to expand to take up the growth that the Americans will no longer be able to provide. How does he envisage that happening when both France and West Germany are markedly reluctant to expand their economies?
Mr. Jenkins: I did not use the analogy of the aeroplane during the launch of the Social Democratic party. I used a quite different analogy which turned out to be a singularly happy choice as the SDP's angle of ascent exceeded my expectations. I shall mention expansion in Europe, but when the hon. Gentleman intervened I was dealing with international debt. I am sure that he wants me to deliver my speech in a logical rather than illogical order.
While there is a probability that we could muddle through the international debt crisis, there is a danger that things could go wrong and that there would be a financial catastrophe. The effects of that upon world investment, confidence and trade would be so great that we cannot afford to hope that things will come out right on the night. We should mount an advance international rescue operation, not unlike that mounted by the Americans for the Continental Illinois bank.
The responsibility for the present position lies partly with the banks that lent the money, partly with the Governments of the developed countries — ourselves, America and others — who encouraged the banks because it was the only way to deal with the position after the second oil price increase, and partly with the Governments of the developing countries who borrowed the money but did not always spend it wisely. There is a spread of responsibility. Therefore, some of the costs of mounting a rescue operation should be similarly spread.
The Governments of the lending countries should set up a consortium to buy risky debts — they could be identified by the bankers themselves—at a substantial discount. That would be the penalty that the banks would have to pay. The debts could then be rescheduled at a significantly lower rate of interest—for example, 6 per cent.—which the borrowing countries would be obliged to pay. It would be a costly operation, especially for the
564
United States, but it would be nothing like as costly as the burden that would fall on the United States and other countries if they had to mount massive rescue operations to prevent banks from becoming bankrupt. The benefits that would accrue from removing that threat or menace would be immense.
Mr. Allan Rogers: Will the right hon. Gentleman give way?
Mr. Jenkins: I think that I should continue.
The direct and central need—this brings me to the issue raised by the hon. Member for Horsham (Mr. Hordern) — is to co-ordinate European expansion to offset the American slowdown. The hon. Gentleman anticipated correctly what I would say. If this does not occur, world growth rates will decline and all the problems of both the poor and the rich countries will be exacerbated.
I stress the need for co-ordinated action. If one country makes a dash for expansion on its own, it is likely to get into balance of payments and exchange rate problems and hence inflation problems. That was to a considerable extent the experience of France in 1981–82.
The Community's trade is now sufficiently integrated within the Ten to make expansion reasonably safe and sustainable if it is co-ordinated. Could an agreement on co-ordinated expansion be achieved? I do not know for certain, but I know that it will not be achieved unless we try to achieve it, and Britain is certainly in a position to take a lead. Britain has the lowest percentage public sector borrowing requirement of any Community country—in those terms it has almost the lowest requirement of any country in the world — but it has the highest unemployment rate of any major country in the Community. Given the depression of the early 1980s, it may be that Britain has the highest growth potential, if it can be released, of any Community country. However, we shall not achieve expansion and we shall not encourage others to move with us in the absence of any agreement.
The House will recall that a conservative expansion plan was agreed at the Bonn western economic summit in 1978. That was aborted by the world oil price increase which came along immediately afterwards. That, at any rate, will not come again. If a plan for expansion were to be agreed, it would not be appropriate to seek agreement with the United States, which has been out of phase with us with its extremely rapid expansion during the past few years. I think that a plan can be agreed with the other European countries, but it will not be achieved so long as we adhere to the inappropriate aim of a further reduction in public sector borrowing.
Our public sector borrowing is low by international standards. Furthermore, the total weight of public debt in Britain is low by historic standards. It is barely half what it was 20 years ago, at the beginning of the 1960s, in a non-inflationary period.
I am not against some stringency in public finance. I am not against stringency, when necessary, in public sector borrowing. It is almost boringly well known that I was the only Chancellor since the war to have a negative public sector borrowing requirement, but that was in different circumstances. If the Chancellor were in his place, I would tell him that he and the Government have no chance of reducing unemployment significantly below 3 million so long as the Government adhere to their obsession with the public sector borrowing requirement,

565
which the Chancellor is not very successful in controlling in any event. In the right hon. Gentleman's absence, I give that message to the Leader of the House.
I believe that many Conservative Members are deeply uneasy about unemployment and its consequences. They know that as long as they support such a policy they, or their party, will be responsible for having spent the proceeds of the oil spate upon unemployment benefit and little else.
I am surprised that every Cabinet public expenditure engagement is now fought out almost entirely in public. We are told that the Chancellor has won or has lost. It might almost be more appropriate to introduce television cameras into Cabinet meetings. That would be more appropriate than leaving it to civil servants to leak documents. To what does the Chancellor attribute this extraordinary publicity? Does he think that it is primarily the amiability of his character or the loyalty of his colleagues? In any event, it has achieved remarkable proportions.
Even if the Prime Minister is distancing herself slightly from the Chancellor of the Exchequer, he should not try to distance himself from public expenditure decisions on overseas aid. The Foreign Secretary is no longer the Chancellor of the Exchequer. The right hon. Gentleman is in that position, not the right hon. and learned Member for Surrey, East (Sir G. Howe). Any cut in real terms in the meagre total of our overseas aid would be unacceptable lunacy when we are trying to deal in Ethiopia with an eruption which arose from a much more widespread, longer-term and underlying problem, which is the relentless advance of the desert across sub-Saharan Africa, the destruction of the topsoil and the increasing inability of a growing population to feed itself. In those circumstances, the medium-term need for water is as necessary as the short-term need for grain. To respond to a crisis and then to implement a policy of aid reduction would be to make the repetition of the disaster more likely. That would be typical of the tactical skill and strategic sterility of the Chancellor.
5.38 pm
Sir William Clark: The right hon. Member for Glasgow, Hillhead (Mr. Jenkins) devoted much of his speech to the international debt. Many of my right hon. and hon. Friends, and probably many on the Opposition Benches, agree that it is a world problem. One of the difficulties of the world debt is the tremendous interest burden. There has to be rescheduling from time to time, and so the debt increases without the country concerned receiving any cash. I agree with the right hon. Gentleman that some concerted effort should be made to sell whatever debts have been left by a bank. The best way would be to channel the debts through the IMF or the World Bank. The World Bank, for example, could then reschedule the interest.
If, for example, an American bank has a debt of 100 units at 12 per cent. with a particular country and it sells the debt for 50 units to the World Bank—the original bank has probably already discounted the value of the security—the World Bank will have the responsibility and authority to charge a lower rate of interest. The IMF will then be able to have some control over the economies
566
of the borrowing countries. One of the difficulties with overseas debts is, in some instances, the profligacy of the borrowing countries. That must cease.
The right hon. Member for Hillhead spoke about the topsoil structure of the starving countries. We must remember that in many instances their problems have been brought on by their Governments. Many of them have spent their economic resources on building up arms, not helping the population. I do not want to spend too much time on the overseas debt.
I am sorry that the right hon. Member for Cardiff, South and Penarth (Mr. Callaghan) is no longer in the Chamber. He rather blamed Governments for their policies of the past 10 or 15 years. It will be in your recollection, Mr. Deputy Speaker, that Conservative Administrations have never borrowed from the IMF, but Labour Administrations have. I mention that merely for the record. When the Conservative Government took over, there was $22 billion of overseas debt. Today, there is $11 billion. The Government have repaid half the debt.
My right hon. Friend should keep on the course that we have followed over the past four or five years. Many people, including some of my hon. Friends, would like more expenditure. That has been tried in many countries. We have tried it here in the past. We have tried to spend our way out of recession, and what has happened has been disastrous. One has only to look across the channel at the French economy. When President Mitterrand came to power two or three years ago, he did the same, and spent and spent. That eventually caught up with him.
One of the matters that has come out of the Gracious Speech very forcefully was the anxiety felt in all parts of the House about the scourge of unemployment. It is unfair and unreasonable of Opposition Members to say that the Conservative party has no compassion for the unemployed. It is not the prerogative of the Labour party, the Liberal party or the SDP to have compassion for the unemployed. If one considers the history of unemployment, the House will be aware that from the early 1950s the unemployment trend has been upwards.
Mr. Peter Shore: Nonsense.
Sir William Clark: The right hon. Gentleman can refute that when he replies to the debate, if he does.
This country may have suffered from poor management or the intransigence of trade unions and so on more than any other Western industrialised country. We have been industrially overmanned. That is why unemployment has increased and why, with the world recession, private enterprise particularly had to shed labour to stay in business. We keep talking about unemployment and what we can do to help it. The Government spend over £2 billion of taxpayers' money on the youth training scheme and other schemes. We all applaud that, but it is a deeper problem and throwing money at it will not solve it.
We should consider the position of the potential employer. I declare an interest because I am in business with various companies. We ask why an employer does not take on another man. We should study our employment legislation. Wages councils, for example, inhibit the taking on of an extra employee. Unfair dismissal procedures, the employment protection legislation and the Manpower Services Commission are supposed to be looking after employment, but I believe that they are interfering with the engaging of an individual.

567
The United States and Japan have been mentioned. Over the past 10 years 15 million new jobs have been created in America. Why is that? The Americans do not have any wages councils, employment protection, or unfair dismissal procedures. They allow the employer and the employee to make their own arrangements. I should have thought that we would want to do that. Over the years successive Governments have tried to regulate employment, and that just does not work. The proof of the pudding is in the number of unemployed that we have.
My second point relates to the cost of the welfare state. I support my right hon. Friend the Member for Cambridgeshire, South-East (Mr. Pym), who drew attention to the different circumstances at the time of the Beveridge report and today. The total budget for social services today approaches £40 billion. I accept that that includes unemployment pay and so on, but the magnitude of the figure and percentage of our GDP is very different from what Beveridge thought about. I agree with my right hon. Friend that we should have another Beveridge report.
I know that my right hon. Friend the Secretary of State for Social Services has set up various investigations, but I do not believe that they will be sufficiently comprehensive. I hope that I am proved wrong. We cannot nibble at this subject. There are many matters involved in the welfare state, and we hear about them daily. There are the people who go down to the south coast to live on holiday and who receive an allowance. There is something wrong with that. Foreign students come over here and take money, and then there is legal aid for foreigners. I know that such things probably do not add up to much, but they are symptomatic of the slackness within our welfare services. A proper investigation would be extremely helpful.
We seem somehow to have our priorities wrong when we deal with welfare benefits. I have never understood why a voluntary one-parent family receives better treatment than a married couple in similar domestic circumstances. Something should be done about that. It would do some of our leading clergymen good to pay a little more attention to the morality of the nation than to its politics.
The third point that I wish to make is about pensions. I must declare an interest because I am a consultant for the Life Insurance Association and Commercial Union Assurance Company. I wish to take the matter in its long term. Our occupational pensions are an adjunct to our welfare services. If we did not have occupational pension schemes, the social security and supplementary benefit burden on the taxpayer could be tremendous. The fact that people can obtain from their employer when they retire a pension to which they have contributed during their working life keeps them away from the supplementary benefit board, and consequently nothing should be done to harm occupational pensions.
There have been rumours about the "lump sum" part of pensions. The House will recollect that in many cases one can have a reduced pension by taking a lump sum which is roughly one and a half times one's earnings when one retires. That system has been in operation since 1909. It was enjoyed at first only by civil servants. It has grown ever since, and was considered by the Wilson committee when it was studying the City. The committee found that the lump sum was an anomaly but that it had been going on for so long that it would be extremely difficult to get rid of it.
568
There are other rumours that my right hon. Friend the Chancellor might take it upon himself to tax the income of pension funds. At the moment pensions funds enjoy a tax-free status. That means that those people who have been paying into pension funds over the years expect, when they reach the age of 60 or 65, to receive a certain sum each year based upon a formula of the number of years that they have worked, and so on. The actuary has worked out the pension on the basis of the pension fund remaining tax-free. If tax is charged, the expectations of all those who are working towards the date when they receive their pension will necessarily be reduced. It would be folly to upset the balance, because occupational pensions relieve the burden on the taxpayer.
I wholly share the Government's philosophy that people should own their own houses. We have had wonderful success in the sale of council houses because of discounts and mortgage interest relief. I hope that there is no talk of taking that relief away. I should have thought that pensions were in the same category as those measures. They are a form of saving, and we should not do anything to damage them.
The Chancellor's statement was generally well received. Although there have been some snide remarks and a few sneers, I congratulate my right hon. Friend on reaching a target of £132 billion. We can argue about the breakdown of that figure, but it was an extremely successful operation to keep to that target. I remind those hon. Members who say that our public sector borrowing requirement and overspending levels are low that next year it will cost the British taxpayer £16.5 billion to pay just the interest on the national debt. I accept the fact that that will be only 2 per cent. of our GDP, as the right hon. Member for Hillhead said, but that amount is in addition to the £132 billion. I should have thought that a cost of more than £45 million a day is one that we would not want to increase.
The abolition of unemployment must have the highest priority, and I know that the Government have taken that aim on board. Despite what some people have said, the Government are giving high priority to that aspect. We should be cautious about wage claims. It is extremely worrying that those involved in, for example, the car industry, which is just about on its feet, are to go on strike. Strikes mean only that jobs will be lost. Over the years, we have seen our car industry go downhill, simply because some trade unions have priced their men out of work.
I welcome the tax cuts. The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) has been. involved in an altercation about those cuts. I believe that the £1·5 billion tax cuts that are promised should go into the pockets of the taxpayer. I do not like talking logically with the right hon. Member for Sparkbrook, because he gets mixed up with illogicalities. When there is a £1·5 billion reduction in taxation, why complain that taxation is high? However, when the Government say that they will reduce taxation, the Opposition say that they must not. Does the Labour party, if, God forbid, it ever regained office, intend to increase taxes so that we will hake more money to spend in the public sector and create more jobs? I am sure that that would be a recipe for disaster.
Many claims will be made about the suggested £1·5 billion tax cuts. I am sure that the Chancellor's postbag will contain suggestions not only from Members of Parliament but from people all over on how to spend that £1·5 billion. We should concentrate on taking as many

569
people as possible in the lower income range out of the income tax bracket. In view of increasing privatisation—British Telecom, British Airways and the rest—my right hon. Friend the Chancellor should ascertain whether some of that £.1·5 billion can be used to help people to invest in that privatisation.
I believe that our economic base is firm and that we should not change course. We have a firm base, and we should build on it.
5.55 pm
Mr. Eric S. Heffer: The hon. Member for Croydon, South (Sir W. Clark) was right to say that we must look at the welfare state. Everyone who is serious about the future of the welfare state knows that certain things must be done. The hon. Gentleman suggested that the welfare state should be dismantled, that the wages councils should be abolished and that there should be certain arrangements for the system dealing with unfair dismissal.
Sir William Clark: I did not say that.
Mr. Heffer: I believe that the hon. Gentleman was clearly hinting in that direction. His speech added up to an expression of a Right-wing reactionary view which we often hear from Conservative Members—all the benefits that working people in particular have gained over the years should be taken from them as a way of dealing with our severe economic crisis.
Sir William Clark rose—
Mr. Heffer: I shall not give way too quickly or too early.
Sir William Clark: The hon. Gentleman should not misrepresent me.
Mr. Heffer: I do not think that I have misrepresented the hon. Gentleman. That is the only conclusion to which anyone could come after listening to the hon. Gentleman's speech.
One thing is clear: the economic crisis in this country exists in just about every western European country, the United States and Canada. The economic crisis is basically a product of a type of economic system. The problems in Britain are worsened because of the Government's policies. The Government have deliberately used unemployment as a weapon to deal with that crisis at the expense of the mass of ordinary people. For many years, hon. Members on both sides of the House were dedicated to Keynesian economics, but Keynesian economics are no longer sufficient to deal with the depth of the crisis.
I agree with my right hon. Friend the Member for Cardiff, South and Penarth (Mr. Callaghan) that we cannot have an expanding welfare state with a declining economy. I think that everyone recognises that that is an impossibility. If we try to have both, we end up with constant confrontation and, as has happened in some other countries, with such a severe economic and political crisis that the democratic structure is destroyed and one form or other of dictatorship is brought in. That is the reality of where we stand. We need new radical economic policies that move from either the Government's policies of confrontation or the old Keynesian economic policies. We have to move towards a Socialist solution to the economic problems of the day.
570
The Government have decided that the way to deal with the economic problems is through confrontational policies against the trade unions and by putting the burden of the crisis on to the shoulders of ordinary working people. They are not arguing for a redistribution of wealth.
Mr. Yeo: Will the hon. Gentleman give way?
Mr. Heffer: I know that I shall upset Tory Members, but I hope that they will stay in their places. That will then mean more time for everybody else to speak.
I should like to refer to what I think is the important issue overshadowing the debate in the House and the country at present. Clearly, I am referring to the miners' dispute, which is serious. I have never seen, in 20 years in the House of Commons, so much hatred displayed by hon. Members in the Tory party against any trade union leaders as I have seen recently in relation to the leadership of and the trade unionists in the National Union of Mineworkers.
Let me make it clear. In defending the mineworkers' leaders, I have disagreed not once but many times with Arthur Scargill, and I have no doubt that I shall disagree with him again. I am renowned for disagreeing with many people, so Arthur Scargill is not beyond the pale when it comes to arguing with people. For example, I do not agree with Arthur Scargill's view on worker control. I believe that we need forms of management by workers in big industry. Arthur does not believe in it. He accepts something that many hon. Members should take into their bosoms. He actually agrees with proportional representation. I think that he is wrong. I told him so. Arthur also does not support Solidarity in Poland or the development of free and independent trade unions in the Eastern European states in same way as I do. Therefore, I disagree with Arthur Scargill in many areas.
However, I support Scargill, the leaders of the NUM and the workers who are on strike. I particularly support the leaders because they are courageous fighters for their union, their members and working-class people who are suffering under the Government's policies. They deserve the unqualified support of each and every one in the trade union and Labour movement. They have received that support, despite what the press has tried to make out, from the Labour party. Since March the national executive committee of the Labour party has given its support to the mineworkers and urged the constituency Labour parties to raise money for the miners. That has been done on a tremendous scale, to such an extent that I heard some of the mineworkers' leaders saying that the Labour party had raised more funds for the miners in their struggle than any other body.
Last night the Prime Minister used the Lord Mayor's banquet at the Guildhall as an occasion to attack the NUM leaders. Undoubtedly it was an appropriate place for her to be. There they were, sitting there, well fed and having a nice evening. No doubt the occasion was lavish. Yet the working class is suffering poverty and misery in some areas of the country and miners are at the soup kitchens, being kept going only through the support of fellow workers who collect their pennies so that the miners can have a meal.
The Prime Minister implied that the miners' pickets were similar to the IRA. She knows that that is not true. However, if people constantly tell a lie over the years—we saw the Goebbels machine in Germany—in the end

571
people believe that lie. That is what is happening today, with what the Government are trying to do in relation to the miners. I found to my cost that the lies and innuendoes in the press are difficult to combat.
It does not seem to cross the Prime Minister's mind that the Government's policies are responsible for the atmosphere of violence in this country. My right hon. Friend the Member for Cardiff, South and Penarth (Mr. Callaghan) made an important speech. Pointing to the Government Benches, he said that it is time that the Government changed their basic attitudes towards the miners and understood that they were decent, loyal, honest people. That applies to those who are on strike, not just to those who are working. They must be understood. But the Prime Minister does not even begin to understand them. She does not try to understand them.
Many Tory Members went to public schools such as Eton and Harrow and then joined a Guards regiment. They are very proud of being in it. They are proud that they can be part and parcel of a great regiment, fighting together for what they believe. They say "Unity is strength." Miners and the trade unionists are their own Guards regiment. They have the same loyalty to their organisations as Tory Members had when they were gallant officers in a Guards regiment. One must understand and realise that. One must reach an accommodation in the end. The Government have not done so.
My right hon. Friend said that the National Coal Board had made certain concessions. I do not deny it. But it is not generally known that the NUM has also made concessions. It has issued statements to the press saying what it has done, but not one word has been printed. I wonder why. I wonder why the NCB's statements were printed, but not those of the NUM.
We must change the atmosphere of violence. The Prime Minister has heightened the fight against the miners and the trade unions by saying that she regards trade unionists as the enemies within. She talks about trade unionists as being subversive and being ruthless leaders. It is the Government's policy of unemployment, anti-trade union legislation, extra and new powers for the police and unqualified acceptance of judges' decisions that is causing workers and trade unionists, employed and unemployed, to feel frustrated and to feel fear. It is causing an atmosphere in this country that we have never known, certainly not since I was a young lad. That worries me. I do not know where this country is going, but I warn the Government that if they continue with their confrontational policies against workers and trade unions, only disaster can lie ahead.
Some Conservative Members know that the Government's policies are wrong. They must stand up and tell Ministers, "Change course before it is too late." They cannot remain silent. When a Labour Government were in power and Back Benchers thought that their policies were moving in the wrong direction they said so. I should like to see some courage and determination from Conservative Members. They make wishy-washy, wet speeches about the economy, but they ought also to concern themselves with civil liberties and the future of our country.
I do not agree with SDP policies and, after my hon. Friend the Member for Bolsover (Mr. Skinner) was thrown out of the Chamber yesterday, it is difficult for me to have to admit that the Leader of the SDP, the right hon. Member for Plymouth, Devonport (Dr. Owen) made some good
572
points in a radio interview this morning, along the lines of what I have been saying. Conservative Members ought to realise that the Government are increasingly in a minority position over the miners' dispute and the general drift of affairs in this country.
I have been involved with many strikes. People have to know when to strike and when to go back. They have to know how far they can go and how much they can achieve. They must not allow their forces to be so dispersed that the future of the organisation is put in jeopardy.
I once had to tell thousands of workers who had been on strike for six months over the dismissal of myself and five other senior shop stewards, "Go back, brothers. We will not win this one. March back onto that site as a group and elect your new stewards immediately." That was difficult for me, but I knew it had to be done.
I do not believe that the miners are in that situation, but we must remember that they must be supported by the Labour movement so that they can come out of the dispute with an honourable settlement, in the interests of themselves and their families and in the interests of the people of this country.
I ask Conservative Members not to be too keen on jumping into confrontation. Let us all seek a proper solution that will benefit the miners and their families, help the fight against unemployment and ensure that the trade union movement maintains its unity and strength in the face of future moves by this anti-trade union Government.
6.13 pm
Mr. Michael Marshall: If I do not take up the theme of the hon. Member for Liverpool, Walton (Mr. Heffer), it is not because I think that he has not raised important issues or because I do not respect many of his views. However, when he said that the NUM had made concessions, he did not mention the condition on which the union continues to insist—the maintenance of all pits, however uneconomic. I suggest that when the hon. Gentleman was a trade union leader he would never have imposed such a condition. That claim by the NUM differentiates the present dispute from any other industrial dispute that is likely to take place in this country.
However, I agree with the hon. Member for Walton that the review of the welfare state is important. I am glad that the issue was referred to by my hon. Friend the Member for Croydon, South (Sir W. Clark) and by my right hon. Friend the Member for Cambridgeshire, South-East (Mr. Pym), who also referred to new technology. I wish to concentrate on those matters and I shall, therefore, leave aside the mining dispute for today.
I remind the House that this Government is the first for 20 years to face the prospect of a second full term of office. I especially welcome the fact that my right hon. Friend the Member for Cambridgeshire, South-East took a positive and constructive approach and drew attention to the medium and longer term.
The fact that I have a pamphlet coming out tomorrow which attempts to show that 3 million jobs could be produced by the end of the century will not prevent me from advancing some of those ideas today, because I should like to attract the interest and support of hon. Members on both sides of the House.
The pamphlet sets out actions that could be taken by the Government and by industry. I shall concentrate on the

573
role of the Government, and I am glad to see my hon. Friend the Minister who is responsible for the Civil Service on the Front Bench, because I have some points to put to him. The ideas that I am putting forward are not only my own. My co-authors are a computer consultant and an industrial journalist, so our work over the past two years has been fairly widely tested.
In putting forward arguments about the wholesale embrace of new technology, I take head on the frequently-expressed worry that new technology will lead to net job losses. I do not believe that that will be the case, but there is a difficulty in quantifying where the continuing change in moving from old to new technology will occur. Our objective of 3 million new jobs by the end of the century is realistic and is spelt out in more detail in the pamphlet.
We have to accept what my right hon. Friend the Member for Cambridgeshire, South-East called certain inevitabilities. He was right to draw attention to the fact that shorter working lives, shorter working weeks, earlier retirement and a society in which people live longer will present challenges, but also opportunities. The United States and Japan have come to terms with the needs of the service industries, and this country could do much more in that regard.
For example, let us consider the role of the Government as an employer. They have shown little imaginative thinking in getting away from the nine-to-five mentality. Surely it is ridiculous that the majority of people who wish to get help and assistance from the DHSS, the Inland Revenue or electricity or gas offices have to find time during their working day to visit the offices where such help can be provided.
With the adoption of new technology, it should be possible to move to staggered working hours—which may involve debates on flexi-time, job splitting, part-time working and so on—and the Government ought to be able to take a lead and reassure those who might be worried about the introduction of new technology and more flexible working. New technology, leading to the provision of services out of hours and at weekends, would not only help the public and improve the relationship between the public and the instruments of government and the nationalised industries, but provide better job opportunities, because there is evidence that people are prepared to view sympathetically the opportunities that a more flexible working pattern would allow.
My next suggestion is directed towards the Department of Trade and Industry and particularly to the information technology interest in the Department. The question of cable television is still most important. It is worrying that much of the earlier enthusiasm has died away. There have been problems, but I believe that they could have been overcome. The question of establishing interactive television, which is the key element in building on many of the social service and service industry aspects of this development, is still important. I hope that the Government will rethink the question of pay-per-view, because that is the only way in which the process can be accelerated within the private sector. In the public sector, the use of interactive television should be considered as a cost-effective way of providing an additional service.
Secondly, there is the question of copyright. I believe that within two years we must extend to computer software and all forms of electronic publishing the copyright
574
protection already enjoyed by videos. If we do not, pirates may decimate a substantial proportion of that important industry, which offers important export opportunities and provides the background for British software skills.
Thirdly, the creation of small businesses is important. The time has come for a more imaginative look to be taken at the planning laws. The idea of working from one's own home should be fostered in the most direct way. I am thinking about planning laws which inhibit people from working at home at a time when the microcomputer society provides opportunities for many home-based, one-man businesses or partnerships. In such an area, the way ahead could be shown by Department of the Environment circulars. There may not even be any need for legislation.
There is also the wider question of industrial and commercial estates where the laws frequently forbid people from living in industrial premises. In the case of non-polluting businesses in residential and industrial areas, some flexibility would be of help.
There are enormous opportunities for helping pensioners and the disabled. The Department of Health and Social Security has done some work on the question of bulk purchasing, but a certain amount of money could usefully be spent on research in this field. More could be spent on considering the kind of equipment which could provide manufacturing jobs and export opportunities. It is time for further consideration of these matters. For instance, I think of the use of robotics in providing artificial limbs not just for those who are usually considered to be severely disabled but for those who, as they get older, could use such appliances in their own homes.
There have been developments in recent years in the provision of sheltered accommodation. We could assist the process by doing nothing — by not chopping and changing in terms of the impost of taxes and other legislative burdens on such developments within the private sector. The public sector also has an opportunity to develop purpose-built facilities in sheltered accommodation, including such equipment as I have mentioned, and using robotics and modern information technology to provide services for those who live in such accommodation and to create further industrial activity.
Turning my attention to what the Chancellor can do in such matters, I should like to reinforce his enthusiasm for the shift from direct to indirect taxation. We should be willing to face the more unpopular aspects of this shift when we consider the opportunities which the Chancellor will take to collect revenue through indirect taxation. But if my right hon. Friend were to accept that it is possible to exempt some areas from indirect taxation, he could make changes which would be positively helpful. I think, for example, of not applying value added tax to repairs and extensions to sheltered accommodation, because in that case VAT is a disincentive.
Governments rarely show a propensity to rethink policy once it has been announced, but my right hon. Friend should be flexible and when he pursues his shift from direct to indirect taxation he should be responsive to the benefits which that shift could bring with it.
One step which my right hon. Friend could take would be to raise the VAT threshold. The last uprating did no more than keep the figure below the recent increase in inflation. A VAT limitation of £30,000 would be helpful to small businesses in some of the areas which I have mentioned.

575
The Chancellor should look urgently at the question of the tax allowances which could be provided for the average user of a number of services. I am particularly interested in bringing the black economy back into the world of legitimate trading. My proposal on VAT would assist with that process. It is nonsense that enthusiastic —or unenthusiastic—amateurs such as myself should be left to tackle do-it-yourself jobs when we could revive and legitimise the work of craftsmen. There is a market for their skills, yet in many parts of the country it is difficult to find such help, particularly for the elderly. The figures show that there are substantial numbers of people who have sufficient means to seek such assistance and who are made increasingly anxious by their failure to get such work done through the welfare state.
I accept the fact that my proposals would involve a certain amount of rethinking and a certain ability to look ahead. My right hon. Friends will know the terrible sinking feeling which one suffers when the process of legislation, stretching into the months ahead, seems to block any opportunities for new thinking. However, because for the first time in 20 years we have a Government with a prospect of completing two full terms —this is an uncertain world, and I choose my words cautiously—we should be thinking now about new ideas and about the medium and the longer term. We have a reforming Chancellor, and a Prime Minister with an enthusiasm for harnessing science and technology. They should encourage their ministerial colleagues to move in these and other ways towards the reform of the welfare state and the wholesale embrace of the new technology.
6.27 pm
Mr. Robert Litherland: Nothing that I have read in the Queen's Speech and nothing that I have heard in the autumn statement, in yesterday's debate on industry and employment, in the Chancellor's speech today or in this debate will be of any consolation to my constituents. The Government's past, present and future economic policies have nothing to offer the major inner city areas such as Manchester except continued decay. The city and its neighbouring areas have felt the full impact of the long and bitter economic depression, and our manufacturing and industrial base has been laid to waste, never to be revived.
We have passed through depressions before, but this one is different. This is not a question of the peaks and troughs of the trade cycle. Workers used to be laid off because of temporary overcapacity in the production of goods, and the machinery and the factories lay idle until there was an upturn in the economy and labour was required again. Then the word would go along the grapevine that the firm was taking on labour again and that if one went down to the factory gates there would be the chance of a job. That happened in the 1930s. Factories that were closed because of over-production had laid men off. There were gangs of men at street corners with nothing better to do than kick an old football around. However, the factories remained. They were still at the end of the street. The skills remained in the hands of the workers and the machines were still in the factories. Then the whisper would go around, "They are taking men on." Engineers would go to the factory gates and be offered jobs.
Those days have gone for ever. When a firm closes now, it closes for good. There are no more whispers on the grapevine that jobs are available and that firms are
576
offering people their old jobs. Livelihoods are also lost for ever. The labour and the skills are no longer required. It is not that they are no longer needed. They could be put to good use, providing much-needed facilities and a higher standard of living for all. The powers-that-be, however, decree otherwise. The worker is humbled by the might of high finance and the money manipulators—that is where the real power lies. With a Government such as this who champion the few who control the system, what earthly chance is there for the unemployed, especially in my constituency?
There is no chance for workers while we have a Government who, without conscience, introduce monetarist policies and laws to crush organised labour and to shackle trade unions. Is it any wonder that millions are on the dole and that there are many others who live in daily fear for their jobs? In Manchester, unemployment has increased to record levels. Although there are no seasonal factors which make more adults and school leavers unemployed during September and October, the increase in unemployment has been higher than expected. Nothing that the Chancellor said yesterday or today will help to reduce unemployment.
Figures for the travel-to-work areas around Manchester are farcical as they do not show the true picture of high unemployment in the inner city. There is 51 per cent. unemployment at one office in Moss Side. The city planning department has shown that 34 per cent. of men in part of my constituency are out of work. What prospects do such loyal workers who have given their lives to their firms have? As they say, they are bleak. They know that the firms at which they spent a lifetime are shut permanently. Firms that once had international reputations have been demolished or stand like giant tombstones, symbols of a once industrious past. They include household names such as Richard Johnson and Nephew. From its title, it was clearly a family concern. It existed for more than 200 years. It provided jobs in the area and produced some of the finest wire in the world. It was bought out by a South African consortium and was closed within 18 months with the assistance of Government grants in a so-called rationalisation programme. Workers were put on a three-day week and one day, when they returned to work, the factory gates were locked in their faces. That firm is one of many in a catalogue of closures and disasters for workers in my constituency.
Lawrence Scott was an engineering firm of many years' standing. It is now a heap of rubble. That is where the workers wanted to work but could not force their way through the huge picket line of police. The police even assisted by allowing helicopters to lift machinery out of the factory over the heads of the workers, over the roofs of the houses and over the schoolchildren playing in the playground. That was the role of the police in those days —to stop workers going to work.
The closure of such firms is felt by the small businesses that used to supply them, by shops, pubs and clubs. It is also felt by the community. But none feels it more than the workers who have no hope. I shall relate an incident that might seem humorous. After the closure of Richard Johnson and Nephew, a man walked the street in blue overalls because he did not accept that the firm at which he had worked since he had been a boy of 14 would never reopen. He is now in his fifties and has no hope because the firm is closed for ever.

577
if I could select just one industry to which the Government should apply their initiative to provide jobs and to boost the economy, it would be the construction industry. We have all heard about the further horrific cuts that were contemplated for that industry. We also heard about the threatened resignations of Ministers if the original sum suggested by the Treasury was agreed. In spite of the Secretary of State for the Environment's so-called triumph, more cuts have been made and yet more are contemplated in public sector building.
What is the public's reaction? I have received correspondence from the Group of Eight which consists of representatives of the construction industry — builders, civil engineers, material producers, designers and unions. It believes that the construction industry could make a valuable contribution to our economic revival. It wrote:
"The point that the Construction Industry should not be used as an economic regulator has been made to Government many times. It can only be assumed, from the lack of notice taken of this point, that Members of Parliament and Civil Servants either do not understand or choose to disregard it. It is perhaps understandable that a major force, such as the Construction Industry, should be used as a counter in political bargaining but the consequences of such an action should be seen for the folly they are."
The group believes that, if money is spent on housing, highways and renewing sewers, there could be a spin-off in terms of jobs. It says that liquidations in the building industry continue. It also says that repair and maintenance are reaching critical levels, that existing building stock is deteriorating and that infrastructure such as sewers, highways and waterways are not being renewed as necessary.
Housing is needed. We have thousands of construction workers on the dole and millions of stockpiled housing bricks. It is sacrilege that millions of people should be waiting for decent housing. Th men who have left the construction industry during the past decade have probably been lost for ever. The Government should realise that all the palliatives in the shape of training courses and all the false talk about creating real jobs mean little to my constituents. They know from bitter experience that the Government's economic policies have brought only misery. People want work, and they want it now. They want their dignity back. Above all, they want a future—especially the young. Any Government who steal the future of so many young people stand condemned. They should cut the cackle, cut the pretence and give us action, not words.
6.39 pm
Mr. Terence Higgins: By tradition, the Leader of the House replies to the debate on the Queen's Speech. I shall begin by making some points about procedure before I turn to the broader issues which we have been discussing.
The debate is about the Queen's Speech. Although you, Mr. Speaker, suggested that we should talk about economic affairs, the debate is not on the Chancellor's autumn statement, although, inevitably hon. Members tended to refer to it both yesterday and today. It is extremely important to distinguish the debate on the Queen's Speech from that on the Chancellor's autumn statement.
I hope that we shall debate the autumn statement in the near future. If that debate is to be of high quality, and if
578
we are to be properly informed, it is important for the Treasury and Civil Service Select Committee to have an opportunity to take evidence and present a report to the House. Hon. Members can then be fully informed about some of the detail which is not apparent from a 24-hour examination of the statement.
Last year's report of the Select Committee concluded:
"We hope that in future the House will be permitted to receive its Committee's report before the debate takes place, which in normal circumstances would certainly be before the Christmas adjournment."
Our programme. for economic debates has become less than satisfactory, especially when, as on this occasion, the Queen's Speech and the autumn statement come together. The House must use the usual channels, and decide what the right approach to that programme should be and how to spread the major debates on the Budget, autumn statement and public expenditure White Paper so that we have opportunities at reasonable intervals and without too long gaps or too much crowding in any one period to debate major items affecting the economy and how the economy is being managed. I am worried by the large number of leaks to the press about public expenditure and possible changes in taxation. That seems to reinforce the case made in the Armstrong report for a green budget in the autumn. Hon. Members could then express their views on matters before final decisions were taken.
I wish not to make a speech about broad macroeconomic principles, but to take up some points already raised. I hope that the hon. Member for Manchester, Central (Mr. Litherland), who spoke with such conviction and compassion about the plight of the unemployed, will excuse me if I do not pursue that subject. I hope, however, to be able to speak about it on another occasion.
I shall concentrate on three matters. We must consider the question of priorities. Many hon. Members have spoken about priorities. My first point relates to the section of the Queen's Speech that states:
"Following the agreement at Fontainebleau on the fairer sharing of the Community's budget burden and on the overall control of Community spending, my Government look forward to the further development of the European Community. They will continue to press for improvements in the Common Agricultural Policy".
The Select Committee took evidence on that. The Economic Secretary to the Treasury and his officials were helpful in putting forward the Government's position during the negotiations. We have not yet reached a satisfactory agreement following Fontainebleau. I am a fundamental believer in the importance of the Common Market and the great benefits that can stem from it, but if we think that it is going in the wrong direction we should tell the Government in the hope of bringing them and the Common Market back on the right lines.
We have the best opportunity since we joined the Common Market of bringing under control excessive spending on the common agricultural policy. We have run up against the 1 per cent. VAT own resources limit, which puts us in a strong bargaining position. The Common Market has spent more money than it has, and it is running out of cash. Under the negotiations which are continuing, the Government propose, subject to limitations, to increase the funds available, not by increasing the own resources limit, which the House has not had an opportunity to debate, but through an intergovernmental agreement. That would provide additional money over and

579
above the amount which is covered by the limit which the treaty imposed and which the House by implication accepted. That is a worrying development.
In considering the Chancellor's statement, we must ask whether we wish to spend more money on support for agriculture, especially support for French farmers, rather than on other areas of public expenditure where there have been cuts. I am not convinced that adequate consideration has been given to that increase as against the cuts which have taken place. Therefore, I ask the House to pay attention to that matter, and the Government to take action on it.
We are told that the intergovernmental agreement will be subject to a guarantee of agreement on budgetary discipline. It is a question not merely of mechanics, though they are important, but of the allocation of resources. We are told that Common Market expenditure on agriculture is not to increase as fast as expenditure generally. I have yet to hear a convincing argument that we should spend more on agricultural support in the Common Market. The Common Market has accumulated vast surpluses of agricultural products. That is extremely wasteful. It is difficult to see how the guarantee of budgetary discipline will work when the system of agricultural support is open-ended. We must consider the proposals carefully. It is extremely important that the House should have an opportunity to express views on them before a final decision is taken.
I turn to the related question of the aid programme, which has been a matter of controversy during the past 24 hours and, indeed, for longer than that. I am worried that we are accumulating huge surpluses at considerable expense. I tried to get figures for the cost of storage. The annual cost for cereal items is about £35 a tonne—that is probably a minimum figure. It is doubtful what will happen to those surpluses. They may be sold to the Russians at a greatly reduced price. We must consider whether it would reduce public expenditure if, instead of storing those surpluses indefinitely, we shipped them overseas. We may save money that way, even allowing for the cost of transport. A charitable organisation quoted the price of transport at £40 a tonne in a 10,000-tonne cargo ship. That is not the cheapest way to transport goods. If the surpluses were transported in a cleaned-out super tanker, it would be cheaper. On an annual basis, the cost of shipping surpluses would be less than the cost of storage.
I am worried that there is not sufficient co-ordination between the Foreign Office, with its aid programme, and the Ministry of Agriculture. There is scope for savings in public expenditure while meeting the understandable anxiety expressed throughout the country about aid to developing countries.
Watching the television, it is easy for all of us to feel an upsurge of emotion. It is much more difficult to fight the battle for a more rational long-term policy on aid and agricultural surpluses. The problems of the Third world will not go away. It is often argued that shipments of grain will put local producers out of business, but there is no way in which people in many of those countries will ever be able to pay for grain on a commercial basis. The overall picture is very worrying. It requires careful analysis and co-ordination among Government Departments which, alas, does not seem to be happening at the moment.
The ambiguity of the Government's position on aid in the past few days has been unfortunate. It is very odd and
580
most worrying to be told that it all depends on the decisions of the Foreign Secretary and what other cuts he decides to make. As we all know, the Foreign Office has a very small budget. Unlike the Ministry of Defence or the Department of Health and Social Security, it cannot lose huge sums and barely notice. As soon as the Foreign Office is caught by the cuts, it is in a very difficult position. If it is to maintain its basic tasks of diplomatic representation and so on, it has to cut some other item. It may be the overseas aid programme or the BBC overseas service, on which the House has expressed clear views in the past.
I believe that there is a clear case for the Treasury and the Government in general to distinguish the main functions of the Foreign Office from overseas aid and other items. I strongly support the Chancellor's efforts to cut public expenditure, but unless such a distinction is made those efforts may lead to some very foolish decisions. I hope that progress can be made in co-ordination between Departments and the assessment of priorities.
On a quite different subject, the Government seem to be making greater efforts and assessing the priorities correctly. I refer to drug abuse, drug trafficking, and so on. I am glad to see that in this case the Government are not making cuts but spending money to tackle a problem which is a very great danger to this country. One has only to visit the United States to be aware of the constant fear of many parents that their children may become addicted to drugs even at school at the age of 10, 11 or 12. So far, we have managed to avoid that, but we must not underestimate the real danger to our society.
I therefore welcome the references to these matters in the Queen's Speech and the reasonable co-ordination that there seems to be between the many Departments involved, including Customs and Excise, the Home Office, the Foreign Office and the DHSS. There is now considerable activity in all those areas. I am glad that the Chancellor has confirmed as permanent the 60 additional staff checking the illegal import of drugs and has indeed provided for a further 100. That is a great advance. I had four years' experience in charge of Customs of Excise and I know that it does a magnificent job, but it needs the additional resources. At the Foreign Office, too, more is being done. There is now a Customs officer posted in Pakistan and the Foreign Office is spending £1 million over a period of years trying to persuade people in Pakistan not to produce the raw material that forms the basis of narcotic drugs. The Home Office, too, has taken action. The Home Secretary has said that in future he will not parole people sentenced to more than five years for drug offences and that he proposes to introduce a sentence of life imprisonment. That is absolutely right for people convicted of drug trafficking. More resources are also being made available in the DHSS.
All those developments are good and show that the Government are moving in the right direction in their increased preoccupation with the problem. Nevertheless, I do not believe that the scale of the operation is yet right. The value of recent Customs hauls is far in excess of the amount being spent to try to prevent the import of narcotic drugs. Since the beginning of this year catches have included cannabis with a street value of £20 million, cocaine with a street value of £3 million and heroin with a street value of £11 million. Those sums, which would go into the cash flow of the people involved in the traffic:, are vastly greater than the £1 million being spent to deter

581
people from growing the raw material and the other sums allocated to prevent drug abuse. A single haul may be worth £3 million. It is fine to have a further 160 Customs officers doing a magnificent job, but the cost of that is far below the value of a single haul seized at the east coast port near the constituency of my right hon. Friend the Member for Cambridgeshire, South-East (Mr. Pym). The Government are moving in the right direction, but I am not convinced that co-ordination and the assessment of public expenditure priorities are yet quite right.
In all three areas—the development of the common agricultural policy and financial discipline in the EEC, overseas aid, and the prevention of the import and abuse of narcotic drugs — more co-ordination and, in many cases, more finance are required. On the broader issue, I hope that once the Select Committee has reported we shall be able to discuss macro-economic policy, as we traditionally do. In this debate, however, I believe that it is right to bring those three issues to the attention of the House, to encourage the Government when they are going in the right direction, and to point out the error of their ways when they are going down the wrong path.
6.57 pm
Mr. Richard Wainwright: Liberal Members fully share the view of the right hon. Member for Worthing (Mr. Higgins) that the Chancellor's response on the vital question of overseas aid has not been good enough. I hope that the Leader of the House will be more responsive when he winds up the debate. In a series of written answers Secretaries of State have told the House how they intend to allocate the bulk of the sums allotted to their Departments in the autumn statement, but the Government have not told us their intentions about overseas aid. It is important that this issue should be taken up.
For a number of years I have also fully shared the view of the right hon. Member for Worthing that the form of the autumn statement is inadequate and that the House should request a green budget providing a more comprehensive picture of the state of the economy and Treasury thinking in advance of the Budget. All the matters that need not remain secret until Budget day could then be properly aired and discussed throughout the country, led by debates in this House.
I end this catalogue of agreement with the right hon. Member for Worthing by sharing his hope that, in considering the timing of the customary debate on the autumn statement, the Leader of the House will give the Select Committee on the Treasury and Civil Service the opportunity to assist the House by preparing with its usual promptitude a report on that very Complex and difficult document.
The complacency of the Chancellor's autumn statement, to which many Members on both sides have referred, has been widely attributed to a supposed desire to soothe and reassure investors before the flotation of British Telecom and to do nothing which might upset that enormous operation. There may be something in that, but I believe that two other important factors contribute to the pronounced smugness of the autumn statement.
First, this complacency reflects the fact that the Chancellor knows that he has nothing to fear from the Labour segment of the Opposition, and that was made
582
crystal clear this afternoon. He knows that he can get away with it, as the Conservative party did at the 1983 general election, very largely because of the lack of firm and convincing opposition from the Labour party. That smugness is also due to the fact that the tasks that the Chancellor chooses to set himself are substantially irrelevant to the plight of our economy. He is playing a game with targets that may give him satisfaction but do not belong to the real world. He fixes his eyes, at present with great satisfaction, on the state of the money supply and the prospects for the public sector borrowing requirement. Both of these are, from time to time, important indicators for a Chancellor of the Exchequer, but, as the supreme targets of economic policy, they are wholly unsuitable. In our view, the Chancellor should have as his targets the three main aspects of the economy, which are the growth of GDP in money terms, the rates of interest, and the sterling exchange rate. For a Chancellor to repeat continually the idea that he does not need to have a policy or targets for the sterling exchange rate is the depth of unreality. We need targets that, among other things, have a direct and manifest relation to the rate of unemployment.
As to policies aimed directly and specifically at relieving the unemployment problem, but with other benefits as well, I draw the attention of the House to some conclusions in the recent report of the EEC Commission to the Council of Ministers. It is an annual report, published only a fortnight ago, and traditionally it reports on the economic situation throughout the Community and suggests economic policy guidelines for member countries. As one would expect from its source, the report is prepared by people who are keenly aware of the dangers of reviving inflation, and who are in no sense madcap expansionists airing some dogma of their own. They believe, and make it clear, that the time has come for some expansion and selective reflation in the major economies of the Community.
For instance, referring to the growth rate — and incidentally without reference to the particular complications of the coal strike, which is affecting our growth rate —it says:
"when combined with measures to increase the trend of growth of potential output, an actual growth rate of 3½ per cent. to 4 per cent. might conceivably become possible for a period … With a more favourable pattern for economic growth, it should be possible to achieve a substantial annual growth of employment … Programmes of public investment should be strengthened, especially in countries whose public finances have been adequately consolidated and where the construction sector is underutilised."
That last point is clearly addressed to the United Kingdom, among other countries.
At the moment, a large number of important industries —industries that we cannot forgo—are in great danger of serious contraction because they have such slender order books. It is nonsense that industries that require teams of skilled workers accustomed to doing complicated work as teams and industries that require a high degree of technical management should be left in the doldrums, contemplating widespread redundancies because of an unnecessary shortage of orders from the public sector.
There is a danger that the House may share the Chancellor's complacency about housing, because so great were the fears that he might get away with an appallingly large cut in housing finance that there has been comparative relief at the announcement that the cut is to be just £65 million for next year. However, that in itself

583
is a shocking reduction in a crucial sphere of public investment. The National Home Improvement Council reports that 4·3 million dwellings in England are in a poor condition and need repairs costing on average £2,500 per house. That is 21·7 per cent. of the housing stock in England; and there are many more examples and further figures for Scotland and Wales. I quote that simply as an example of a crying need in the economy that can be met at a low import cost by skilled people who are available but who are in danger of being left idle.
What perpetually seems to pervade Government statements is the idea that in some way public investment should be sharply differentiated from investment in the private sector. I do not see why that should be so, because the overwhelming consequence of an increase in public investment is orders to the private sector. There are few parts of the public sector that construct their own capital works or attend to their major projects in-house. The overwhelming amount of public investment directly means orders for the private sector. Therefore, I do not see why there should be doctrinaire stigma attached to public investment, especially by the Chancellor, who seems to rejoice in private sector investment flourishing and public sector investment declining.
The aspect of the autumn statement that we criticise most is the repeated hammer blows at public sector spending. Implicit in the words of the statement is that in education, the housing stock and many other spheres of local government, there will be reduced capital expenditure. In paragraph 1.43 the statement says:
"The rapid growth of private investment is likely to be offset in part by lower public investment".
That is poor stewardship, as well as an unnecessary addition to the risks of even higher unemployment.
The assumed rate of unemployment for 1985–86 in the Government's publication must mean that, in addition to the high cost of unemployment benefit and of PAYE forgone, we are losing as a community at least £20 billion worth of goods and services that could have been produced by the unemployed. For the Government, with apparent equanimity, to instruct the Government Actuary that he must account for at least 3 million unemployed for the financial year 1985–86 is a dreadful admission of failure.
I despair most at the Government's unwillingness to accept any real responsibility for the unemployment position. It is against that background that my right hon. Friends and I, and our friends in the SDP, will vote for our amendment tonight.
7.9 pm
Mr. William Cash: The economy will be judged not by what we say about it but by its performance. The words "output" and "productivity" do not merely mean producing things, nor just a return on capital or labour. They contain elements of all those but require the added yardstick of efficiency and effectiveness. In addition, innovation, competition, marketing, advertising, production engineering, quality control and design, the practical application of new technology, including information technology, are all part of the general package of effective output and productivity. But human motivation and the enthusiastic interest of those at every level in British industry surely remains at the centre of gravity of wealth creation, even in the age of robotics.
Output and productivity of the highest quality of goods and services which people want and need and buy so that
584
profits can be made to finance new investment, pay justifiable wages and create more growth, combined with the remarkable and successful policy of the Government in containing inflation, must be a first priority in the economy today, accompanied by the incentive to achieve it.
Money to pay for reasonable public expenditure and wages and to help those in need cannot be conjured out of thin air, nor can companies, including those which have been privatised, survive and prosper unless we are competitive and successful in world markets with a firm domestic base. That means that we must sell more and better products and services than our rivals abroad, including the United States and Japan. That is a matter of great importance in my constituency of Stafford which includes important exporting companies such as the General Electric Company, British Reinforced Concrete, Universal Grinding and Evode.
What we lack in the availability of those natural resources which we have to import we must make up for in the quality of what we produce and in keeping to delivery dates, in reliability and design. We no longer dominate the routes and rules of international trade as we did in the days of empire. Pure free trade was then more of a possibility because we exercised control in so many parts of the globe. Today there is much more of a tightrope for British industry. We live by what we sell, but mere output or productivity, unrelated to quality and to what is needed or in high demand, will not enable us to pay our way in the world.
That brings me to the connection between incentives and motivation and the efficient production which must lie at the heart of our economy. We have a responsibility to future generations to develop our longer-term economic strategy on a basis which maximises the advantages of North sea oil but does not wholly rely upon it.
The skills, labour and inventiveness of British workers and management in businesses large and small are no less capable of being stimulated and revived today than ever before, but they need personal motivation and tax reductions throughout the work force from top to bottom, from the shop floor to the board room, so that there is an enthusiastic, real and personal interest in producing and selling high quality goods here and abroad. Therefore, I greatly welcome the Chancellor's determination to stay on course and to keep inflation down while allowing room for further tax reductions so long as they go across the board.
We often look across the world to Japan. We blame our management and exporters and the world recession but Japan too imports a vast amount of its manufacturing materials. Japan's level of advanced technology and use of the microchip put us to shame. The microchip, with which labour has to compete in the present day, can be a potent source of new, small and larger businesses unless we allow the Japanese to dominate the market entirely. We must encourage mobility in our work force with incentives to train and to acquire skills in that sphere.
Education for schoolchildren and for school leavers and retraining schemes in the new technologies are being provided by the Government. The problem is that too often the opportunities are not taken up, or we find that dreadful sense of pointlessness which characterises so many young people these days and which they seem to acquire at school.
Greater emphasis must be placed on communicating the practical value of those opportunities and schemes. We

585
need to be less on the defensive and to acknowledge that we live in difficult times with a significant change, as in the 1840s, in the nature of our economy and employment. Over and over again in past centuries we have as a nation faced up to that challenge and won through. I have complete confidence that we shall do so again, providing that we give those to whom the challenge is ever present the incentives and encouragement which they need to make the challenge a reality, and, in so doing, reduce not only taxation but the deadweight of over-regulation. I say "over-regulation" because some regulation is necessary, but our tax laws must be comprehensively reviewed to put emphasis on the making of profits rather than losses so that we can produce financial advisers rather than tax avoidance experts.
I am glad to note that the Chancellor has tax reform in hand. We can and must look across the Atlantic and learn some lessons from the United States in that area. The sheer volume and complexity of our statute book, compounded by subordinate and EEC legislation, is in itself a disincentive to enterprise and the creation of small businesses.
We need a radical review of our legislation to make it more responsive to people and simpler to understand and to apply. There is simply too much of it, and we underestimate the impact that it has on our economy and on the cost that is involved for public expenditure and for public administration. What people do not understand they may be inclined to disregard. That has dangerous implications for the rule of law. The black economy is not a healthy development; it is enterprise driven underground. Nor do I subscribe to Truck Act perks such as substitution for real pay with freedom to choose what to do with it.
The sum total of our economy is the efforts of the people. If productive effort is rewarded by lower taxation and the creation of new businesses, with lower interest rates, buttressed for the time being by North sea oil as we move from the older to the newer industries and services and invest in training and skills relevant to future employment, we could emerge by the end of the decade with lower unemployment.
With lower inflation and lower and simpler taxation, the pay packet will be larger and there will be a constant reminder of the relationship between pay and effective productivity and output. Of course, there is a real connection between wages and inflation, but lower taxation throughout every level of industry is the key incentive to containing wages reasonably and to increasing profitability and competitiveness. Lower taxation means higher real wages for more people in more businesses.
We need to relate wealth creation to what people do and think at work. The Third world indebtedness and the world recession make that problem more acute and the need for a practical response at home becomes more important. We need to encourage in our schools and elsewhere a new attitude of mind towards work. We can and must restore the confidence of those in the economy who produce the wealth, and we must provide every incentive to make that happen.
7.19 pm
Mr. Tony Lloyd: Perhaps I have one thing in common with the hon. Member for Stafford (Mr. Cash). I, too, have a GEC plant in my constituency.
Conservative Members' speeches have given the debate an air of unreality. Earlier, I listened to the Chancellor of the Exchequer's almost disgusting complacency about the state of the British economy. He seemed to be saying that, instead of our being in the midst of the most profound economic crisis to have occurred in the lifetime of almost every hon. Member, we were on the verge of the dawn of a new British economy. If the right hon. Gentleman is right, he is talking about an economy that exists only in very selective parts of the country or just in his own mind. If he came to the north-west or to the Manchester area, about which my hon. Friend the Member for Manchester, Central (Mr. Litherland) has spoken, he would find, for example, that one in three of my male constituents are out of work. Half of those men, or some 17 per cent. of the total, have been out of work for more than a year. In Moss Side, one out of every two adult males is out of work. They do not believe that this economy is on the mend and they show no sign of believing that there is a bright future for them.
The hon. Member for Stafford spoke about the disillusionment of youth, but if a generation of children is brought up with literally nothing to look forward to—not even the end of the day, because they go home to poverty and to a future without prospects—it is not surprising that they should show the signs of apathy and disenchantment that he saw in our schools. That is the reality for many children in our inner-city areas and it is not confined to the north of England.
But the tragedy for areas such as the north is that they have become increasingly marginalised within the economy. We are now treated as economic residuals. When Conservative Members say that Opposition Members have no monopoly on compassion for the unemployed, their words have a hollow ring. Whatever their views may be about the intellectual undesirability of unemployment, we at least recognise it as something that concerns people and as something that therefore conditions the policies that we are determined to put into practice. This Government's policies do not recognise in any way that unemployment is a problem. It is something to be regretted and that can be calculated by looking at the number who are out of work.
In my area we do not even mind so much about new jobs. Often we would like simply to hang on to the jobs that we have. My constituency once housed the biggest industrial estate in the world, Trafford Park. Even now, under this job-creating Government, 19 jobs a day are being lost from that estate. Indeed, many more jobs have gone during the past four or five years.
Since coming to power, this Government have been caught up in the economics of prejudice and lack of choice. They have pretended that there was only one way of governing an economy and that was a way that did not allow for any social choice. We were told in 1979 that inflation was the major problem and that it could be solved by public expenditure cuts. We were also told that tax cuts would revitalise the British economy. By cutting public expenditure and squeezing the economy into abysmal

587
poverty of opportunity, the Government crushed inflation but at the same time discovered that there was no room for those tax cuts.
Perhaps I should congratulate the Government on their learning facility, because we now hear that they can no longer justify talk of tax cuts as an automatic solution, albeit they are still part of the Chancellor's package on a much more modest scale. Instead, we hear exhortations about wage cuts for those who already bear the brunt of the economy.
At GEC in my constituency 200 people are on strike, many of them because they are paid about £80 a week. That is a disgrace, given the work that they do. Their wages do not bear comparison with those in similar industries in the area and they have not had any pay increase for two years. If the idea of wage cuts worked, that factory and factories throughout the north, where labour rates are lower than in the south, would be bristling with economic activity, but as my hon. Friends the Members for Liverpool, Walton (Mr. Heffer) and for Manchester, Central have said, that is not happening because wage cuts avoid the real question. It is interesting to note that the managing director of GEC, Lord Weinstock, had an income of more than £500,000 last year. Although his work force had no increase, he received an increase in excess of 15 per cent.
I would be the first to agree about the need for a new Beveridge report, but we also need to look at the real problem of the maldistribution of income and wealth in our society, in which the disgustingly rich exhort those on poverty wages to take even bigger cuts. That is the reality behind the Chancellor's exhortations to cut wages.
The Government do not recognise the real problems, or their total failure to provide demand within the economy. Even the Manchester chamber of commerce has come out with a report suggesting that about 44 per cent. of the firms sampled had a capacity utilisation of less than 90 per cent. Clearly, nearly half of the firms are waiting for the Government to put some demand back into the economy, as that would then produce jobs as well as goods and services for consumption by ordinary people.
Instead, the Secretary of State for Employment yesterday said that the level of demand was extremely enouraging. He said:
"The problem is the capacity of British industry to compete with overseas suppliers and to win back demand."—[Official Report,12 November 1984; Vol. 67 c. 400.]
Ironically, I might agree with him, because as the Government have destroyed many firms during the past few years and as there have been record bankruptcy levels, there will be real problems about supplying demand when demand increases. The would-be suppliers have been destroyed through the Government's deliberate actions.
The Government do not recognise the problems caused by the export of capital. In the first six months of this year, those great patriots in the City exported more than £7 billion. Not one penny of that will go directly towards creating jobs in the United Kingdom or towards producing plant, machinery or factories. Conservative Members talk about the need for investment, research and training. As I believe my right hon. Friend the Member for Cardiff, South and Penarth (Mr. Callaghan) said, manufacturing investment is about 26 per cent. below what it was when the Conservative party took power. Yet if we were to believe this Government and their glowing prospectus, the confidence of industrial investors should be sky-high.
588
However, that simply is not so. Often, investment in manufacturing industry is only made to enable it to tick over. We are seeing disinvestment and reinvestment overseas. That is disastrous for this country's manufacturing base.
There is an appalling level of investment in research and development, and the situation has been made worse by yesterday's announcement by the Minister for Information Technology. He has said that there is to be a cut in support for research and development projects. Indeed, he said:
"no further application will be accepted for:
research and development projects from individual firms on standard support for innovation terms
development and investment projects under the microelectronics industry support scheme and the fibre-optics and opto-electronics scheme and
application, development and installation projects for flexible manufacturing systems and robots."
That research and development is needed. Ironically, because the scheme was successful the Minister has said that applications
"will be processed within the limited funds still available."—[Official Report,12 November 1984; Vol. 67 c. 87.]
Thus a cost constraint is being imposed on those valuable schemes at a time when we should be guaranteeing more money for them.
There are skill shortages even in the Manchester area. Over half the firms sampled said that there was a shortage of skilled and other labour. That is happening even in depressed areas. In areas of demand the shortage is much worse.
Since 1980 under this Government the north-west, which once relied upon the engineering industry, has lost nearly 20,000 engineering jobs. A report by the four county councils in the area refers to a mass exodus of jobs from the area. They prophesy that between now and 1987 over 100,000 people will be forced to leave the region, not because of a desire to get on their bikes, but simply because they will be driven out of the area in which they were born by the policies, lack of compassion, lack of understanding and lack of integrity of this Government when representing the interests of those who want a job. I am talking of those who have given a lifetime of work and wish to continue to work and of young people who see no future under this Government.
7.32 pm
Mr. Julian Critchley: I enjoyed the robust speech of the hon. Member for Liverpool, Walton (Mr. Heffer), although I fear that he will find my speech to be both wet and windy. However, it will be made with all the authority, not of a former officer in the Guards but of a lance-corporal in the King's Shropshire light infantry.
At least all of us who have spoken this afternoon will have escaped the slings and arrows of the scene writers upstairs, all of whom have been scribbling in another place. Not for the first time have the heavyweights on the two Front Benches been upstaged by the Earl of Stockton, the last of the great men. I did not hear his maiden speech, but, from what I hear of it, it should be required reading, for my Front Bench at least.
If nothing is done to reverse the inexorable rise in unemployment, the United Kingdom will be heading either for apathy or for social disruption. Let me place that at its lowest for the benefit of some at least of my hon. Friends. Unemployment is a fertile ground for the

589
advancement of revolutionary Socialism. Unemployment is not simply a social or economic matter, but a political one of the utmost importance.
I have no wish to re-examine the Government's economic policy since 1979. I have no wish to go over all that awful dead ground, save to say that we have heard much less about monetarism than we used to hear. Monetarism was, of course, a policy which seemed insane when it was not hypocritical, and hypocritical when it was not insane.
I do not wish to minimise the difficulties ahead, but far too often the Government have given the impression—I use those words carefully—that they do not sufficiently care about the unemployed or about the plight of the less prosperous regions of the country. That impression has been strengthened in recent weeks by the Chancellor's washing of hands—for instance, on "Weekend World" a fortnight ago.
The Chancellor should look again towards the American example. He may still believe that the only role for Government is the removal of controls and allowing markets to work better, yet he knows that the Americans have done far better than us. This, he believes, is due to the greater flexibility of United States labour markets and greater mobility. There may be some truth in that. American workers are more mobile, possibly because one part of America looks much like another, but there is more to it than that. In America the money supply was squeezed between 1980 and 1981 and 1 million jobs were lost. Constraints were subsequently relaxed and unemployment began to fall swiftly without a return to inflation. Would that we had done half as well.
The Chancellor's assertion in the July debate that the Government's economic policy had been "vindicated by events" was the most remarkable statement since Hitler was accused of having missed the bus. The Chancellor rattled out a series of figures, but by sleight of hand he was careful to start from the second quarter of 1981 and not the second quarter of 1979. He left out the sad and sinister story of the radical decline in Britain's share of world trade. The balance of visible trade, excluding oil, has deteriorated by nearly £11 billion since 1981. The Times this morning describes the Chancellor as a "conjuror". From now on, let us have more hats and fewer rabbits.
What should be done? There is no easy way. A foot flat on the accelerator would bring about a financial and trade crisis and ensure a return to inflation. However, to do nothing more than is proposed would be to risk — I quote Lord Macaulay—
"The wreck of laws, the confusion of ranks"
and the
"dissolution of the social order."
I have two modest suggestions to make. We must have a modest further increase in Government spending. A restructuring of the national insurance contributions is needed so that they bear less heavily upon the lower paid, the elimination of national insurance contributions on new jobs, and a 1 per cent. overall cut. The cost of that would be £600 million over two years. Secondly, there should be additional Government spending on capital projects of about £900 million.
Speaking at the CBI conference, Mr. Roland Long, of International Harvester, said:
590
"The sad decline in manufacturing and rise in unemployment has been — linked and together they constitute the price which has to be paid for the Government's success in the reduction and control in inflation."
Yet some of those close to the Prime Minister still hanker after zero inflation. God preserve us from them. Mr. Long continued:
"and there will be no substantial fall in the number of the unemployed without the restoration and regeneration of manufacturing industry."
Amen to that.
Does the Prime Minister, after her many successes, wish to go down in history as the leader of the Conservative party who breathed new life into the old jibe that the Tories are the party of unemployment? I should not like to think so.
7.37 pm
Mr. Allan Rogers: I do not know whether I need say anything after the speech by the hon. Member for Aldershot (Mr. Critchley). The case that needs to be put against the Chancellor and this sterile Government has been ably made.
I listened with interest to the speeches by right hon. and hon. Members on the Government Benches. We agree on some issues at least. I agree in particular about the need for drug control. More money should be spent on that important fundamental problem. It is one of our gravest dangers. I recently visited Athens and discovered that the Greeks face the same problem. It is becoming out of control in western Europe and more resources should be devoted to it.
The Chancellor's statement yesterday is fundamental to today's debate. It demonstrates that the Government have no solutions to offer. In the limited time available, I want to discuss certain parts of the Chancellor's statement and the prospects for the future of the economy.
Like my hon. Friends the Members for Manchester, Central (Mr. Litherland) and for Stretford (Mr. Lloyd), I wish to emphasise that when all the esoteric arguments in the Chamber have come to an end, the issue of unemployment is about the people in our constituencies. For those hon. Members who represent the fringe and marginal areas of Britain, unemployment is a severe problem.
I held a surgery last Saturday morning at the Lewis Merthyr club, Porth. The club is famous in south Wales, because it was the liaison centre of the sit-down strike of miners from the Lewis Merthyr colliery. They tried to save their jobs by locking themselves underground. A man of about 55 or 56 came to see me at my surgery. He was an ordinary chap, with nothing pretentious or special about him. He had served his country for five or six years in the Army, had then taken a job and raised a family. While talking to me he began to cry, which I found embarrassing. I am sure that most hon. Members would be embarrassed if a man cried. His anguish was caused by the fact that his 25-year-old son had never worked and had no prospect of working. The domestic tensions in the family had become too much for him. He was an ex-soldier who had fought, and perhaps faced death, for his country, yet he found it difficult to deal with unemployment in his family, and he cried. I had to tell him that I could do nothing for him, and the tears were not far from my eyes.
The same problem is faced by almost 40 per cent. of my constituents. I can weep for them, but I cannot offer any solutions. If the Labour party were in power I would

591
want it to take action. I only hope that the Government can bring themselves to do something for the son of that 55-year-old man, who could only cry. The man showed me a bundle of envelopes that had contained answers to job applications by his son. There has been a spirit among some honourable, or perhaps less honourable, Conservative Members that if a fellow was on the dole, he was lazy. I remember one Conservative Member saying, "There is no problem. Get on your bike and get a job somewhere else."
My hon. Friend the Member for Stretford suggested that his constituency might lose 100,000 people. Where will they go? South Wales exported people in the 1920s and 1930s to Slough, Reading, Coventry and the other new areas. But those new areas are now facing 20 or 30 per cent. unemployment. Where will our gipsies go now? Where will my gipsies from the Rhondda go? They have nowhere to go.
People talk of the miners' strike, the problems in the mining industry, Scargill, the boot boys, and so on. I do not approve of the mindless violence on the picket lines. Some people react with tears while others react in another way. There is frustration and anger among the people, and the Government must address themselves to that problem. They are frustrated and angry because they have nowhere to go—they have no hole to run to, there is nowhere that they can hide. The miners will be out of work. There were once 53 pits in the Rhondda, but only one remains. The level of unemployment among males in my constituency is horrendous. If they are given jobs, they will work. They worked hard enough during the 1914–18 war and the last war, when they sweated to produce energy. They are prepared to work now if the jobs are available.
Never before have I known people to strike for nine months and subject themselves and their families to enormous hardship for nothing. They are certainly not striking for money. I know a chap of 54 or 55—Ron Windos from Tonypandy. I asked him last week why he did not take his redundancy money. I asked him how much he would receive. He said, "With my service in the pit, I would get about £27,000 or £28,000." I said, "Why not take it?" He said, "That would be giving my job away." That is how the miners see the strike. They are striking not for additional pay or bonuses, but because they are concerned about jobs.
If the miners could get out of the pits and work elsewhere, they would so so. My hon. Friend the Member for Ogmore (Mr. Powell) comes from my valley. We do not know of one miner who wants to go underground. Any of them who could find a decent job out of the pits would do so. There is nowhere for them to go, and that is the shame of the Government. Are they a Government for people or for profit? The Chancellor this afternoon spoke about interest rates, juggling with money and finance. He used City jargon. He did not once mention people. It is no wonder that the people of Britain are becoming angry.
It used to be said that the Tory party was happy only if there were two people chasing one job. I was brought up on that dictum. The hon. Member for Aldershot said that he hoped that the Tory party would not again be regarded as the party of unemployment. I hope for that also. I want the Government to succeed for the sake of those whom I represent.
There has been a commonality of interest on issues such as the control of drugs, because that affects everyone and
592
his children — my children, the Queen's children, anyone's children. When unemployment becomes the concern of the middle and upper middle classes, they might address themselves to that problem. I know that I am doing a disservice to many Conservative Members who are now attacking the Government because they view unemployment in the same light as I do—a scourge. I only hope that the Government will change their mind.
The Government's record in Wales is appalling. Since 1979 unemployment has risen from 80,000 to 180,000 —from 7 per cent. to 17 per cent. The number of jobs, has decreased from 1,030,000 to 912,000 and in the manufacturing sector from 308,000 to 212,000. The number of employees in Welsh manufacturing industry fell by about one third between June 1979 and June 1984. More than 114,000 redundancies have been confirmed.
If the Conservative Government are not concerned with people, they might be concerned about liquidations, and over the past five years there have been about 52,000. Unfortunately, it is not possible to give separate breakdowns for England and Wales. That is an abysmal, shameful and shabby record. It is one from which no Government could derive pride. This is a Government of corrupt farmers selling off the seedcorn of the nation. I am distressed that the Government are eroding and destroying the tax base of Britain and that we shall be reduced to a level from which we shall never be able to recover.
I am not especially concerned about revolutionary Socialism arising from the wasteland that the Government are creating; I am concerned about the Fascists who rise out of unemployment. History demonstrates that out of unemployment rise jackbooted Fascist thugs. Recent history in Germany and Italy bears that out. I am concerned about Fascists, not revolutionary Socialists.
7.51 pm
Mr. Stephen Dorrell: The speech of the hon. Member for Rhondda (Mr. Rogers) was one of great eloquence and passion. His passion has been aroused by genuine concern about the plight of his constituents, many of whom suffer from unemployment. I, too, shall concentrate my remarks on unemployment. The hon. Gentleman and I share a concern for unemployment that is shared also by many of those who have spoken in the debate on the Gracious Speech.
There is no doubt in the minds of the majority of hon. Members, or in those of the majority of our constituents, that the key issue on which the Government's record and our record as hon. Members in this Session will be judged, is the way in which we shall have tackled the problems of unemployment.
We have heard much about the problems of youth unemployment during the debate on the Gracious Speech. We have heard about school leavers who spend a year in the youth training scheme, feel that they are qualified to take a job—qualified for life—and find on leaving the scheme that there is no job for them. We have heard from the hon. Member for Rhondda about the 50-year-old who finds himself out of work, cannot find new work and discovers that, under the benefit system, he will be more or less destitute after one year of unemployment. He learns that the state will offer him no visible means of support after 12 months. My constituents often tell me that the benefit system is too generous. I tell them that if a person has been out of work for 12 months and has more than £3,000 in savings, he will be given no support by the state.

593
That comes as a surprise to many. Many of those who are aged 50 or more have no realistic prospect of work and there lies a concentration of the problem.
The hon. Member for Rhondda spoke about the concentration of unemployment in the regions, and he was right to do so. It is fitting that he should do so on the day when the Earl of Stockton made his maiden speech in another place. Unemployment in the regions was the issue that he made very much his own during the 1930s and many of his speeches of that period bear re-reading. All these issues come together in their most potent form when we consider the impact of unemployment on the coloured population. Some hon. Members may have seen a "Newsnight" programme that was shown a fortnight ago. It is staggering that 93 per cent. of coloured school leavers in Bradford this year have yet to find a job.
Mr. Terry Davis: What colour?
Mr. Dorrell: That is a reasonable question. I am talking about the Asian and West Indian communities, and especially the Asian community in Bradford. Hon. Members have addressed themselves to the issue during the debate and it is right that they have done so.
This session is critical if the Government are to be remembered as the Administration who did something about unemployment. If we allow the Session to pass and we arrive at this time next year without having taken real action to tackle unemployment, all the other measures in the Gracious Speech will have been long forgotten and, instead, the Session will be remembered as the opportunity that the Government failed to take to reduce the problem of high and dangerous rates of unemployment.
What sort of action can the Government take to tackle the problem? I can do no better than refer to the document that my right hon. Friend the Prime Minister has taken to referring to recently, the 1944 White Paper on employment policy.
Mr. Terry Davis: Has the hon. Gentleman read it?
Mr. Dorrell: I have indeed. My right hon. Friend the Prime Minister has referred to the passage in the White Paper that states that jobs are not created solely by Government action. Jobs are created by vigorous private sector entrepreneurs and there is no argument about that on Conservative Benches. But that is not the only statement in the White Paper. Its importance lies in the contents of the first paragraph, which explain that post-war Governments will regard themselves as committed to the maintenance of full employment. The historic importance of the document can be attributed to the fact that it sets out three preconditions for succeeding in maintaining full employment. Two of the preconditions will cause no stirring on the Treasury Bench. The White Paper observed that full employment would not come if we did not pursue policies consistent with sound money and efficient labour markets. There is no argument on the Conservative Benches about that.
If the White Paper is set in its historical context, its remarkable feature is not its emphasis on the importance of sound money and efficient labour markets. The Governments of the 1930s were not conspicuous for their disregard of those priorities. It is remarkable for drawing
594
attention to a third element which was regarded as an essential precondition to full employment, the commitment which was placed on Government to manage demand to maintain a level of full employment.
It seems that "reflation" has become a dirty word and I shall not quibble about that and whether it is the word that should be used. If demand is managed, that must mean that the Government accept an obligation in some circumstances to reduce demand if there is a danger of overheating—perhaps that is not the primary concern at present—and in other circumstances to increase demand to maintain the principal objective in the first paragraph of the 1944 White Paper, the maintenance of full employment.
Many have argued that conditions are now so different from those of 40 years ago that the strictures of the 1944 White Paper have become irrelevant. Those who advance that argument say that we need to find different remedies. Have the proponents of that argument thought through what they are saying? I cannot see any important difference which renders irrelevant the cures which were advocated in the White Paper. Some of my hon. Friends say that new technology destroys jobs and that its introduction means that it is impossible for us to use traditional techniques to create full employment. It is true that new technology, like the generations of machines that went before it, is justified because it saves labour.
No manufacturer ever put in a new generation of machinery if it did not hold out the prospect of producing goods more efficiently than before. That does not set the new technologies apart from the previous generation of technologies. Going back to the industrial revolution, the only thing that could set them apart would be if there were evidence that the new technologies increased productivity and therefore reduced job opportunities faster than the generations of machines that went before.
My right hon. Friend the Chancellor of the Exchequer yesterday published evidence which showed that productivity is improving not faster than in previous years but more slowly. If those machines are the threat to employment that they are sometimes held out to be, is it not passing strange that as they are introduced the rate at which we increase our productivity is below rather than above its historical trend? Furthermore, one does not have to look at theoretical arguments about productivity rates; there is clear evidence in the experience of the past two years, here and abroad, that adequate growth creates jobs.
The experience of the United States has been mentioned, but we do not even need to look that far afield; we can look at our experience with our modest growth rates, because even in Britain, the relatively modest growth rates that we have enjoyed since 1981 have created jobs.
Our slow rate of job creation in recent years has not been the result of the new machinery, the new technology that is supposed to put us in such a different world. It has been the result, in my view, of the slow rate of growth and not the result of any change of conditions that invalidates the prescriptions of the 1944 employment White Paper.
If it is not the new technology which renders the cures of the 1944 White Paper irrelevant, we move on to the argument which is even more improbable that the problem today is not one of lack of demand and, therefore, is not a problem of demand management.
If it is not a problem of lack of demand, that would be news to some of my constituents, many of whom are

595
employed in traditional manufacturing industries where output is 5 per cent. down on May 1979. It is said by some that that is not evidence of inadequate demand. If it is not that, what is it? Some say that it is evidence that wages are too high. Those people would do well to read the speeches of the Earl of Stockton in the 1930s, because right through the 1930s Neville Chamberlain said that wages were too high. Right through the 1930s, the experience surely was that action substantially to reduce wages led into precisely the deflationary cycle out of which so many of the speeches of that time were designed to push us. We all recognise that if wage increases get out of control and the result is inflation, that is damaging to economic progress and job creation, but that is different from saying that the solution to today's problem is wage cuts.
The question, surely, that my right hon. Friend the Chancellor and other Ministers must answer is not whether wage cuts would in some circumstances produce extra jobs, because we can argue for a long time about that. The more immediate question is whether additional demand introduced now in techniques espoused by the 1944 White Paper would produce extra output or extra inflation. That is the simple question that Ministers must answer.
Like many of my hon. Friends, my answer to the question is clear. I believe that my right hon. Friend can continue—as I argued in the Budget debate earlier this year and in debates before that—the process which his predecessor started before the last general election, not of radical expansion but of drip-feeding the economy into higher growth rates. As he decides whether he can do that, I ask him to consider the fact that as Chancellor he has the opportunity, whether by tax cuts Reagan-style or by spending increases Labour party-style—in his terms it is relatively immaterial whichever way he does it — to channel demand, but not into the odd sectors where there is evidence of bottlenecks. No one can surely argue that there is a bottleneck in the construction industry, and if there is none what then is the restriction on channelling some additional demand into that industry in the same way as my right hon. and learned Friend the Foreign Secretary did just before the last election?
As my right hon. Friend is considering his answer to those questions, I hope that he will be prepared at some time during the course of the next few months, as he develops his Budget strategy, to put away the textbooks and technical papers and ask himself, as a reasonable man, whether it is reasonable to argue that an economy with 3·25 million unemployed people and a low and stable rate of inflation is so hidebound by capacity restraints that it must retreat next year from the dizzy heights of an underlying 3·5 per cent. growth rate in the current year—disregarding the effect of the miners' strike—to the safe and familiar ground of a 2·5 per cent. underlying growth rate next year.
My right hon. Friend the Chancellor might like to heed the advice of Mr. Jack Kemp, a possible Republican candidate for the Presidential nomination in 1988, who is reported in yesterday's Daily Telegraph. Mr. Kemp is not famous in the United States as a Liberal, but when asked what he thought the new Reagan Administration would do about the economy he said:
"The mandate Reagan got was for Reaganomics—growth, not cutting the deficit. Cutting the deficit is what Mondale ran on."
596
That is, perhaps, an interesting comment on the scene that my right hon. Friend would like to consider.
My hon. Friend the Member for Aldershot (Mr. Critchley) averted to the fact that today has seen the maiden speech in another place of my noble Friend the Earl of Stockton. I should like to conclude by reminding the House of a speech about unemployment that he made in the 1930s. He referred to Disraeli who said in a famous phrase that the keys of India lay not in Kandahar or Herat, but in London. So it is with unemployment. The keys of unemployment lie not in Durham or south Wales but in Downing street and Threadneedle street.
8.7 pm
Mr. Bryan Gould: I am glad to have the opportunity of following the hon. Member for Loughborough (Mr. Dorrell) because among other reasons, he has the curious distinction—if that is the correct way to put it—of being a former pupil of mine. At least in his thoughtful speech, with which I substantially agreed, he spared us what we have become far too accustomed to in recent years, and that is the experience of hearing Ministers at the Dispatch Box trying to justify and explain what has happened and what has gone wrong by the selective use of statistics.
In view of the complexity of our economy and the great panoply of statistics, it is by no means impossible for the diligent researcher, winnowing through all the available material, to come up from time to time with statistics that support almost any view. By the careful selection of base dates and the use of percentages rather than absolutes, comparing like with unlike and so on, Ministers no doubt feel that for the purposes of any debate they can produce figures and arguments which satisfy the needs of the moment. I doubt whether anyone in the House of Commons is convinced by that type of argument. We heard an excellent example of it this afternoon from the Chancellor.
First, it is easy enough to set aside those little sweepings of statistics on the margins, and to invite Ministers to confront the central importance of the maze of statistics — those about our output, trade and investment, and most of all those about unemployment. That has been done so often that even Ministers must know the truth and importance of those terrible figures.
Another way of rebutting that statistical sleight of hand is open to any member of our society who looks around him in Britain today, particularly if he is able, by virtue of foreign travel, to compare the way in which other societies are confronting similar problems. Inevitably he will conclude that Britain is poorer, scruffier and shabbier. It has failed to arrest its economic decline and has started to run out of faith, hope and confidence in itself. It has a society that is turning in on itself, demanding sacrifices from those least able to make them. It has a lower level of public services and it does things worse than other countries. After looking around the world, I find that it is a society that is almost a byword for failure.
That is the reality that lies behind the Government's false claims, the Prime Minister's vainglorious posturings and the Chancellor's complacency. It is a reality that Conservative Members know as well as Labour Members. That is why we are increasingly hearing a chorus of demands from Conservatives for a change in policy.
The "ship of state" is a familiar metaphor, but our ship of state, under its present command, is like an aging

597
passenger liner whose paint is peeling and whose engines are belching smoke and on which we are heading for the rocks. On the bridge is the Prime Minister, the captain. She appears to be unaware of us. She is enjoying wearing the uniform. She is told by her mate, the Chancellor, not to worry about the impending disaster—the fact that we are heading inland instead of out to the open sea. He says, "Don't take any notice of the course that has been plotted or of the facts and figures that show that our speed and direction are leading to us running aground. We are, believe it or not, heading for the open sea, and the last thing we must do is change course, repair the engine or provide some more fuel."
The Chancellor says, "If we happen to run aground, there is an easy remedy. We have been using that remedy for five years now, and no one so far has been worried too much, at least on our side. The remedy is that, as we get into shallow waters and the disaster is impending, we merely jettison a few skilled crew and a few essential bits of equipment. We shall float off the sandbank—don't worry too much about it. The last thing you must do is listen to the creaks and groans from the shuddering ship, the cries of pain and the sounds of conflict from those on board." That is the reality of the Government's economic policy.
There is a growing realisation not just among Conservative Members but throughout the country—not least in industry—that the Chancellor is finally running out of options and excuses. I believe that the Chancellor senses that also, and that is why he is scraping the bottom of the barrel. He knows that his somewhat quixotic interpretation of success stories around the world, not just in America but in many diverse countries such as Australia, Sweden, Japan and Austria, will not convince many people. The Chancellor, however, persists in the unlikely argument that their success is due to real wages. He seems unaware of the fact that if he succeeded in convincing people that that is the course that we should follow, he would announce the final denial of hope and confession of failure.
The Chancellor's problem is that he continually says that any attempt to grapple with unemployment will be self-defeating. In his own terms, that is true, because he postulates a completely unchanged monetary polciy. As long as the Chancellor's monetary targets remain sacrosanct, there is no escape from increasing unemployment. What is true of the remedies that the Opposition would pursue is true also of the remedy to which the Chancellor points. No solution will be found by cutting real wages if the Chancellor does not insist on adhering to the other aspects of his policy.
Let us assume that the Chancellor could persuade people that cuts in real wages were necessary. I concede immediately that the right hon. Gentleman is right to say that we must improve our international cost competitiveness, which has declined substantially under this Government, despite ministerial rhetoric about the constant need to improve. Incidentally, it always strikes me as odd that Ministers continually disclaim responsibility for the shocking decline in our manufacturing trade performance, because they say that it is the inevitable consequence of North sea oil; yet, at the same time, they
598
argue that we must improve productivity and competitiveness, force down wage costs and so on. What would be the point of achieving those difficult changes if no improvement in our trade performance were possible?
Such failures and lapses of reason underlie much of the Chancellor's current policy. If the Chancellor were to try to resolve his difficulties by forcing down real wages, almost certainly he would not succeed. If 3 million-plus unemployed are not sufficient to force down wages, one shudders to think how many more jobless we need and how much more social bitterness we have to endure before wage rates fall. Even if the Chancellor could, by some miracle, force down wage rates, how many people would believe that he could do it sufficiently quickly and effectively to close the gap on our competitors, whose unit wage costs are falling because of expansion, not contraction? The Chancellor concedes that their wage unit costs are falling. It defies all credibility to believe that we could force down our wage costs by contraction and compulsion to a degree sufficient to match the effort made by our competitors and catch the train that is leaving the station.
Let us go further and assume that, despite all those difficulties, the Chancellor is able to cut real wages. The Chancellor says that, if only real wages had been 1 per cent. or 2 per cent. lower, many hundreds of thousands of jobs would have been created. From where would those jobs have come? There would have been no increase in effective domestic demand, no stimulus to output or additional resources to finance more jobs. Nothing would have happened in the domestic economy that would conceivably have provided the resources to provide a single extra job, simply on account of cuts in real wages.
The Chancellor might argue that the improvement in our cost competitiveness would create new export markets and that that is where the increase in output would come. The Chancellor must know that, with an unchanged monetary policy, any improvement in competitiveness to improve our balance of payments would be immediately counteracted by a rise in the exchange rate and negated by an appreciating rate for the pound. Any temporary benefit to investment, output and employment would be quickly stifled. That would be entirely in accordance with the Chancellor's stated policies. There would be no solution to the problem. Not a single extra job would be provided from domestic demand. There would be no solution from increased demand from abroad for our goods.
Where will the Chancellor find the increased resources to create the additional jobs? He certainly cannot look to a further fall in the savings ratio, because that is already at its lowest point since 1971. Even if the savings ratio fell further, the Chancellor would find that, by his policies, he had achieved no solution. He would still have had to fund the PSBR and pull in funds from abroad by raising interest rates, and that would mean dearer money and a higher exchange rate. So again the Chancellor would square the circle and box himself into a contractionary policy.
The Chancellor's predicament is increasingly recognised. That means that the days of the Chancellor and his policies could be numbered. It is significant that he lost his battle in the Cabinet a week ago and that he was able to sustain his position only by virtue of what all the commentators called creative accounting and relying on windfalls. It is significant that he did not, so one is led to believe, enjoy the full support of his own Prime Minister. The example of the American economy is simply too

599
overwhelming to be ignored, not just in economic but in political terms. Within a year, when we shall be halfway through this Parliament, literally dozens and scores, if not hundreds, of Conservative Members will start to say to themselves, "Can we win the next election? Can we hold our seats without a change in policy?", particularly when they have the glowing example of a Right-wing American President sweeping to a virtually unprecedented victory on the strength of policies which, so far, have been anathema to the Conservative Government.
The one glimmer of hope on the horizon that I see is that those pressures could induce the Prime Minister to consider a change in policy. For her, the fact that the Chancellor is so closely associated with the present policy could be a bonus because she could announce the change by replacing the Chancellor with someone more amenable and less committed to the existing disaster.
The tragedy for the Chancellor—perhaps I should not express any sympathy for him personally—is that we are constantly told that he is an intelligent man. If he is as intelligent as his admirers lead us to believe, he must know that his options have been closed and that he has nothing further to offer. He also has the experience of having engineered successfully a recovery on a previous occasion. He did it in 1982–83 as a pre-election manoeuvre. He did so in very clever ways — by overfunding so that the money supply looked to be unchanged and then funnelling back to the private sector through the sale of commercial bills the money that he had apparently taken out of the money supply. Therefore, he knows how to engineer a recovery. He knows that his present policies cannot work. I believe that that is why his recent performance has been so bad. If he really is as intelligent as we are told and knows that his policies have failed, that would explain why he has so little to offer. That is why he can only continue to mouth the same old unconvincing platitudes.
If the consequences of the long, sad and disastrous experiment in monetarist policies is that the Chancellor of the Exchequer is to be sacrificed, I shall feel sorry for him, but it would be a tiny price to pay for restoring hope to the vast majority of the British people.
8.23 pm
Mr. Tim Yeo: I am glad to follow the hon. Member for Dagenham (Mr. Gould), who made an eloquent contribution to the debate. However, like so many contributions from the Opposition Benches, it was long on criticism and short on solutions. Without wishing to follow the hon. Gentleman too far down the route of seafaring metaphors, I should like to say that it was not clear from what he said whether he would rather the Government succumbed to the temptations of the Scylla of everlastingly higher public spending than to the Charybdis of giving in to the trade unions on every issue.
Not for the first time since I have been in the House, some of the most constructive contributions to the debate on the economy have come from Government Back Benchers. Like my hon. Friend the Member for Aldershot (Mr. Critchley), who made a stylish contribution, I agree that the most urgent economic issue of the day is unemployment. I am sure that that view is shared on both sides of the House. Many hon. Members have stressed their personal experience in coming to that conclusion. I
600
also believe that if we fail to solve that economic problem quickly, unemployment will become the most urgent social problem of the day.
I should like to refer to the speech by the hon. Member for Liverpool, Walton (Mr. Heffer). I am sorry that he is not present, but I shall say what I tried to intervene to say while he was making his speech, but he did not give way. I admit that I cannot even match the military distinction of my hon. Friend the Member for Aldershot, who is a former lance-corporal. My only connection with the services is that I was a humble cadet pilot in my university air squadron. In a way I am relieved that the hon. Member for Walton is not present, because I would have to tell him that it was the Cambridge university air squadron.
The hon. Gentleman attacked the Government for confronting the workers. I should like to ask the hon. Gentleman who is confronting members of the NUM who wish to go to work. Are they not being confronted by their leader, Arthur Scargill? I do not want to be too unkind to the hon. Gentleman, as we in the Conservative party have much to thank him for, because he contributed more than anyone else to the growth in the Government's popularity by his chairmanship of the Labour party conference.
Contrary to what the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) said, I understand clearly the aims of the Government's medium term financial strategy. It is part of an overall policy designed to achieve a low and stable rate of inflation. That is an essential precondition for the creation of new jobs. Yesterday I rebutted the outrageous slur that the Government do not care about unemployment. They are certainly not using high unemployment as an instrument of policy, still less as an objective of their economic policy.
However, apart from inflation, there are two other essential preconditions for new jobs. The first is the proper control of public expenditure and the public sector borrowing requirement; the second is the achievement of a steady rate of economic expansion. The figure of 3·5 per cent. next year is modest, not excessive. I suppose that we can regard it as satisfactory, but only just. This year, we must not overlook the contribution of the miners' strike in cutting the rate of growth in 1984. That reduction in the growth rate has been a means of destroying other workers' jobs. I hope that the leader of the NUM is aware of the damage that he is causing to fellow workers.
I approach the subject of unemployment as an optimist. Like some hon. Members, I do not accept that technology means no return to full employment. Some 150 years ago, two thirds of the British work force worked on the land. Today less than 5 per cent. is on the land. If the pundits in the 1830s had foreseen that decimation of jobs in agriculture, undoubtedly they would have predicted vast unemployment. Yet during that space of 150 years, when there have been huge advances in technology, the work force and employment have increased manyfold. Therefore, as my hon. Friend the Member for Loughborough (Mr. Dorrell) said, technology can be the creator, not the destroyer, of jobs.
For that reason, and also because of the forthcoming demographic changes that mean that after the next 30 years the number of people of working age relative to the number of people of retirement age will go down sharply, I do not support fashionable schemes for encouraging early retirement and lowering the retirement age. In the first place, such schemes are not terribly effective because their

601
proponents acknowledge that for every two people who are forced to take early retirement, the best that one can hope for is one new job for someone coming off the unemployment register. Secondly, such schemes are expensive in terms of extra pension costs, and the resources needed for them would be better used elsewhere.
It is generally agreed that there are three causes of unemployment. The extent to which one believes that any one of them is dominant depends on one's political viewpoint. The first is the cost of labour; the second is macro-economic policy, particularly the level of public expenditure as it relates to the amount of demand in the economy; and the third comprises the non-financial obstacles to employment, some of which were referred to yesterday by my right hon. Friend the Secretary of State for Employment. I wish to concentrate on the first two causes, because the Government can act on both those fronts without abandoning their responsible fiscal and monetary policy.
My right hon. Friend the Chancellor of the Exchequer has often stressed the cost of labour as a principal cause of unemployment. In our debate on unemployment two weeks ago, he said that a 3 per cent. real increase in wages could have cost 500,000 jobs, and his analysis is supported by academic research at the London School of Economics into the inelasticity of employment relative to real wages.
The Government could reduce the cost of labour by cutting employers' national insurance contributions. It is becoming fashionable to advocate tinkering with the contributions, but I believe that it should be a priority for the available cash — we were told yesterday that it would be £1·5 billion, but let us hope that by the time of next year's Budget it proves to be more than that—to be used to cut employers' national insurance contributions. That is far more urgent than tax cuts, which are not in great demand now that we have got rid of the confiscatory rates that we inherited from the Labour Government. Tax cuts for individuals are not such a high priority, because they do not directly affect job creation.
Employers' national insurance contributions are 10·45 per cent. of wages up to £13,000 a year, and the contributions total £11·68 billion per annum. A 3 per cent. cut would cost about £3·3 billion, of which £1·2 billion is already borne by the public sector. The net impact on the public sector borrowing requirement would be only just over £2 billion — not much more than what the Chancellor hopes to have available next year.
If we assume no increase in public sector employment, the consequence of such a cut in the employers' national insurance contributions could be the creation of 300,000 private sector jobs. The cost of unemployment, in terms of benefits and lost revenue, is more than £5,000 a year for each unemployed person. Therefore, the creation of 300,000 more jobs could produce an eventual saving of £1·6 billion. Therefore, the net final cost to the PSBR would be little more than £500 million.
Of course, there would be a time lag of perhaps two or three years before the full effects were felt, but some impact should emerge in the first 12 months and, if the policy proved acceptable, the trick could be repeated in 1986 and 1987 and, with one final heave, the whole of the employers' national insurance contribution could be phased out before the end of this Parliament.
Mr. Gould: Why is the hon. Gentleman prepared to concentrate help on the employers' national insurance contribution? Why should it not be concentrated on the employees' contribution? That would have the great advantage of producing a substantial increase in take-home pay at no inflationary cost, which is one of the major factors in the American recovery.
Mr. Yeo: I accept the hon. Gentleman's analysis of what would happen if cuts were concentrated on employees' contributions. Our priorities reflect our differing views of the most effective agent of job creation. I believe that reducing the costs of employers will create jobs more quickly. The hon. Gentleman presumably believes that putting more money into the hands of the workers will produce the same result by increasing demand. There is room to split the cuts according to our individual viewpoints.
The abolition of employers' national insurance contributions would have the incidental advantage of allowing us to do away with the national insurance system —the contributory principle was abandoned many years ago — and employees' contributions could be merged into income tax without any change in take-home pay. Getting rid of the national insurance system would produce an administrative saving of £100 million a year.
As regards the second cause of unemployment, I do not advocate huge increases in public expenditure, but there will be continuing dismay at the restraints on expenditure on house building and home improvements. Those are particularly labour-intensive activities which have low import penetration and a far greater job-creating potential than many other public sector capital projects.
The Department of the Environment's spending on housing has been trimmed in the autumn statement to £2·3 billion, which, even after making the necessary adjustments for capital receipts from the sale of council houses, is quite a lot lower in real terms than the 1979 figure. I hope that the Government will soon reverse that decline. If resources are needed from elsewhere to finance a return to higher spending on housing, we need look no further than the suggestions made in yesterday's excellent speech by my hon. Friend the Member for Horsham (Mr. Hordern), who referred to the regional grants of £600 million, spending on agriculture, and so on. I cite those examples for illustrative purposes.
I support the Chancellor of the Exchequer's efforts to switch from taxes on income to taxes on spending. That is the right way to go, but I must point out that charities are the one category that is exempt from income tax but not from spending taxes. It is odd that a Government who are so committed to a partnership with the voluntary sector should continue to penalise charities by switching taxes without giving those charities any concession.
However, that switch is only one aspect of tax reform. Another equally urgent aspect is the need to integrate income tax and the social security system. Tinkering with either component in isolation will merely produce more anomalies and complications. I hope to see a commitment to that vital reform in next year's Queen's Speech, by which time the results of the social security reviews put in hand this year will be known.
I make a plea for one other small tax concession that would be completely self-financing. I suggest that individuals who wish to employ people in a personal capacity and take someone from the unemployment

603
register should be allowed to set the employment costs against their income tax. By definition, that would be a self-financing concession, and I believe that it would be a small but helpful move towards new job creation.
The Queen's Speech makes no mention of an important contribution to tackling unemployment that would carry no public sector cost. It involves the mobility of labour, which has been an important but often overlooked factor in the American success in job creation.
The new jobs in America are being created not in the old industrial heartlands; they are down in the sun belt. There has been a huge movement of the working population and that process has been facilitated by the availability of accommodation. We have been hampered for decades by the immobility of our labour force, which has been an obstacle to job creation. I believe that that immobility will continue.
Mr. Michael McGuire: Is the hon. Gentleman aware that the move from the industrial areas in the United States came about as a result of anti-trade union laws? The jobs have been created in what are known as the right-to-work states. The laws were a way of getting at the unions and making them weaker. Perhaps that is why that example appeals to the Tories.
Mr. Yeo: If it is true, which I doubt, that anti-trade union laws have created millions of new jobs in America—and Opposition Members have frequently cited the American experience as a good example for the Government — perhaps our Government have been derelict in their duty by not bringing in tougher anti-union laws.
We lack suitable accommodation for employees who seek jobs in different parts of the country. The council house system—
Mr. Eddie Loyden: There is a vast difference between the economic and geographical situation in the United States and that in Britain. In America one can travel thousands of miles in order to obtain employment, but in our tight little island people who have been advised to move away to other regions often find the same situation prevailing there as at home. The hon. Gentleman's parallel between the United States and Britain is erroneous with regard to the movement of labour.
Mr. Yeo: The parallel has been cited more frequently by the Opposition than by the Government. It is the Opposition who hold out the American example as a useful one. I think that the parallel about the movement of labour is fair. Indeed, with a smaller country, it should be easier to move from one region to another.
If there were a proper private rented accommodation sector, there would be places for people to move to in their search for jobs. It is not true, as the hon. Member for Liverpool, Garston (Mr. Loyden) suggests, that conditions are the same wherever one goes. I am surprised to hear an Opposition Member make that suggestion. One of the Opposition's criticisms—and it has some validity—is that conditions in the north are very different from those in my constituency and in many parts of the south-east, where jobs are available but there is no accommodation. The Government could repeal the Rent Acts at no cost to the private purse, and we could then start to recreate the supply of accommodation. Many property owners, who at
604
present are afraid to offer accommodation for rent, would be willing to let parts of their houses or flats. We would release to the economy a quantity of new resources not at present usefully employed. Greater mobility between regions is an essential precondition to reducing unemployment. I ask my right hon. Friends the Chancellor and the Secretary of State for Employment to urge my right hon. Friend the Secretary of State for the Environment to introduce the necessary legislation in the coming Session.
I have summarised the measures that I believe would reduce the level of unemployment. I commend them to the House and, in particular, to my right hon. Friend the Chancellor, especially as they would in total leave next year's public expenditure at £132 billion.
8.43 pm
Mr. Richard Caborn: Neither the Queen's Speech nor the Chancellor's autumn statement holds out anything for my constituency, which at pre sent is suffering an overall unemployment level of over 25 per cent. and where in large areas it exceeds 50 per cent.
It is evident from the speech of the hon. Member for Suffolk, South (Mr. Yeo) that he has no comprehension of the problems and the hardship faced in the northern inner cities. The solutions which he has just pronounced show that he has little or no understanding of the problems. In the Sheffield, Central constituency about 10,300 people are unemployed, and the deprivation has to be seen to be believed. The only actions that the Government are taking are compounding the problem. The unemployment figures that I have given are the official figures. They do not include all the unemployed. Many people, especially married women, are now being denied the opportunity to take part in community programmes, and old people are being deprived of an extra pound in connection with the heating allowance. The Government are continuing to attack people in the most deprived regions.
Hon. Members may remember that Sheffield was once famous for its steel industry. Two years ago, the Government decided to embark upon the denationalisation of that industry by means of the development of the Phoenix schemes — part private and part public. We were told that that was the way forward, the new formula for privatisation and the panacea for the ills of the industry. The Government brought in Mr. MacGregor—the man who has committed 100,000 steel workers to the dole queue in the past five years.
I draw attention to the role of Mr. MacGregor in the Phoenix schemes, and particularly Phoenix III. On Saturday, an exclusive report in the Morning Telegraph said that Sheffield Forgemasters—which is Phoenix III—was on the brink of disaster. According to the report, Mr. Scholey, the chief executive of the British Steel Corporation, had made an announcement to the Steel Industry Management Association. He had not told the workers at the factories concerned or indeed the management there. He announced to the association that the BSC would have to pick up the tab for paying the wages. That article exposed the situation, and on Saturday an article in the Financial Times entitled
"Forgemasters set to receive a major cash injection"
stated:
"A major cash injection at Sheffield Forgemasters, the engineering and special steels company formed jointly by the British Steel Corporation and Johnson & Firth Brown almost two years ago, is expected to be announced within two weeks."

605
That is the success story. Two years ago the employers — not the trade union side but the employers — were pleading not to be forced into a shotgun marriage between the private and the public sector. They believed that that was the wrong way to approach a major sector of the industry. Nevertheless, Big Mac came in. The industrialists — not the trade unions, though they had their point of view—said that the way in which he was insisting on the merger and on developing that part of the steel industry was doomed to failure. Mr. MacGregor persisted. Two years later, when he has gone on to be the butcher of our mining industry, 100,000 jobs have been lost in the steel industry. That situation should be compared with that of the steel-producing countries of the EEC. Mr. MacGregor forced a privatisation against all the advice. Two years later the banks have to go in with a rescue operation and the BSC announces that it will have to pick up the tab.
This sector of the British steel industry supplies the nuclear industry and aerospace, and provides the open die forgings which are an extremely important part of our industrial base. If we are to develop the high-technology industries and if we are to move into new markets in aerospace, this is the type and quality of steel that will be needed. The destruction wrought on the industry by Mr. MacGregor could set it back by two to three years.
The Morning Telegraph is not famous for supporting the trade union movement but it states:
"Hindsight is often patronising and arrogant, but there are many who often feared that Sheffield Forgemasters had been formed and was being operated on too tight a shoestring, given the huge problems of rationalisation and recession that it has faced from day one."
That has always been a problem of the steel industry, especially the private sector. The steel industry has also had to bear some of the highest energy costs in the EEC because of Government policy. It has also had to make substantial interest payments. In 1980, Aurora paid £6·7 million in interest, Hadfields paid £3·3 million and Johnson Firth Brown paid £9·7 million. That money could have produced a hell of a lot of jobs. If the money had been invested, especially in research and development, we should still have a fairly competitive edge.
I should now like to discuss Phoenix II. About two years ago Hadfields was the centre of attention. The Tories were crying out against pickets outside the gates saying, "Carry on working, lads: we will be right behind you." Hadfields is not only ,shut—there is hardly a brick of it left. That is the result bf the help of the Tory Government who condemned people who were fighting for their jobs in the steel industry. The Government dare not announce the carve-up of Phoenix II because of the problems with Phoenix III and financial difficulties which arise not out of market share, management or the labour force but out of the financial structure that the Government forced through. Although the Government dare not announce Phoenix II, they have sold Hadfields down. Working miners should compare the promises that the Prime Minister gave at the Tory party conference and again last night with the promises that she gave to workers who crossed picket lines at Hadfields when they were asked to stand and defend their jobs. The Government's record on defending those who scab against their fellow workers in defence of their industry is appalling.
606
In the past four years Sheffield has lost about 25,000 jobs in the steel industry. The local authority's employment department has attempted, through innovation and consultation, to develop the local economy. It has developed about 20 co-operatives and created 1,000 new jobs. But what have we got from the Government who are crying crocodile tears about unemployment? They have condemned such initiatives that are now to be suppressed by rate-capping. The metropolitan counties, which have also tried to develop such schemes, are to be abolished. Successive hon. Members have talked about putting money into the economy — it is difficult to establish whether the Government are acting in concert with their Back Benchers. We have tried and trusted mechanisms which understand local needs, but when they try to generate local economies the Government, through legislation, by destroying the metropolitan counties and by rate-capping, destroy their initiatives.
It is time that the Government took basic manufacturing industries on board. Nobody denies that new technology must be accepted by trade unions and others, but industries such as the steel industry and basic manufacturing should not be written off as the Government are trying to write off many. Their performance in regard to the steel industry under the leadership of Mr. MacGregor has been appalling.
8.53 pm
Mr. Alistair Burt: Although I lack the advantage of being a member of the General Synod of the Church of England or a spiritual Member of another place, I should like to say something about the north-south debate in relation to the current state of the economy and its development as envisaged by the Queen's Speech.
Conventional wisdom is directed to increasing the divide between north and south. There is more than a grain of truth behind some recent expressions of concern. I was unable to hear the speech of the hon. Member for Manchester, Central (Mr. Litherland), but the hon. Member for Stretford (Mr. Lloyd) made some telling points. I should like to remind him and others, however, that there is another side to the coin. It is not correct to allow people to believe that sitting at the northern tip of a prosperous south is an economic desert. I do not wish to deny that there are problems in the north of England, but it is after investment like everyone else and if we continue to beat our chests and to tell people all over the world how dreadful it is, who on earth will want to invest capital there and provide jobs for us? It is important to give the other side of the story.
The north-west has seen some of its traditional manufacturing industry decline, but it has done its best not to stand still. Any new industrial survey of the area would show our successful aerospace industry, new technology industries, important work being done in regard to the offshore oil and gas industries and heavy investment in the nuclear power industry. We have the new freeport at Liverpool docks and the finest airport outside London—Manchester international airport, which should also be a freeport. They are success stories for the north-west and they join the best of our older industries which continue to change with the times and are working hard and successfully.
The hon. Member for Stretford referred to a recent economic survey produced by the Manchester chamber of commerce and industry. In that connection I am reminded

607
of the old joke in which the optimist looks at a bottle and says, "It is half full," and the pessimist says, "It is half empty." There are two sides to the survey. Welcome improvements in deliveries and orders are shown in the report, as are booming home and export markets. There are better figures for manufacturing production. Some 56 per cent. of firms now work at or above 90 per cent. capacity compared with only 43 per cent. in June. General business confidence in the region has also shown a change for the better.
For the first time, the survey recorded a significant difficulty in recruiting skilled workers. The shortage of skills is noticeable throughout the country. It is surely at that that the Government are directing some of their youth and adult training measures. I refer right hon. and hon. Members who are worried about the expansion of public sector borrowing to the comments of my right hon. Friend the Member for Cambridgeshire, South-East (Mr. Pym) who said where public expenditure could be used to good purpose. It is not enough for Conservative Members to say that all public expenditure is bad and for Opposition Members to say that all public expenditure is good. We should be able to distinguish between good and bad investment. Investment by the Government in the training of young people to meet skill shortages is good and we should not he afraid to say so.
I recently toured the youth training service in my constituency. I can only praise the work of the local authority and the sponsors who have produced more than a 60 per cent. success rate from the first 12 months' work. It is wrong to characterise the north of England as entirely derelict. If people there are doing their best to survive in difficult times, how much better they could do if they received a little more help from their friends in government. Although I appreciate the success of the north-west, it is impossible to disguise the appallingly low base from which that success is springing. Inevitable industrial changes in trade and technology have affected the traditional industries of the north-west, and given a boost to higher unemployment.
There is a perceived trend in the Government's economic policy, which is deeply worrying to people in the north. They wonder whether, while they fulfil their side of the bargain, the Government are fulfilling theirs. I refer to the continuing change between the manufacturing and service industries. The shift from manufacturing to service industries has not been kind to the north-west. Those setting up in the new service industries are not settling in as quickly as we would wish. It is proper that the economy changes with time and that market forces direct the Government to support what is best for the country as a whole, but it is not proper for Governments to consider that manufacturing industry has reached its timely end and must wither and die with their blessing. Although the manufacturing sector provides only 30 per cent. of jobs, it contributes nearly 70 per cent. of foreign currency earnings.
Some sectors of manufacturing industry can outstrip anything offered in terms of world competition, but they cannot defeat manufacturing industry subsidised by foreign Governments. The Government must make it clear to those in manufacturing industry that strong support is there not merely in word but in deed. I see nothing in the Queen's Speech to reassure me of that.
Britain cannot afford an economy entirely of services or entirely of manufacturing industries. There must, of
608
necessity, be a balance between the two. The Government should be capable of discernment and of supporting the best of manufacturing industry without committing themselves necessarily to an industry which could never be competitive in any environment. The Government can do two things in particular.
First, in a review of areas of high unemployment and difficulty, the Government should examine industries in decline and those which are doing well. They should then consider what assistance they can give to allow those industries to do even better, because that is where jobs will be created. Perhaps the Government could think about collective reductions in national insurance in regional areas of high unemployment.
Secondly, the Government could take a wider view of their supportive role in industry. For example, for many years our heavy manufacturing industry has been at a disadvantage regarding energy costs. We know that the French have done well because of the nuclear element in their fuel supply. Surely we can produce a better deal for our intensive energy users. In France, energy policy is directed to producing the cheapest energy for the benefit of French industry. Our energy prices should not he directed towards providing the Treasury with a back door way to cover up its inadequacies.
The Government are right to look at some of their successes, notably the real reduction in inflation, as a stepping stone to future recovery, but they must beware of the language in which they couch the description of the recovery. To be told that we are in the fourth year of recovery with unemployment at 3·5 million, is a definition of an economic boom unknown to me. It is all very well to talk about it, but, as unemployment climbs in a constituency such as mine, optimism must be tempered with realism if the Government are to retain credibility.
Unemployment in the Bury-Bolton travel-to-work area is touching 17 per cent., which is the seventh worst in the north-west of England. To my sorrow and concern, I see my home town of Bury comparing itself with industrial wastelands with which it never before had anything in common. That is the basis of the anger in the debate between north and south and of the obvious anxiety expressed by the hon. Members for Stretford and for Manchester, Central. Unemployment is abysmal, and it is time the Government recognised the pain that hon. Members must endure in their constituencies when they deal with the problem. Whether the Government deny it or not, it is time they realised that many people are saying that some of the unemployment problem is their fault.
My constituents understand the kernel of good sense at the heart of the Government's message and know, because they are sensible, that a number of factors contributing to unemployment cannot be laid at the Government's door. However, they will look hard at those who continue to propound the wearing of the hair shirt of unemployment because somehow it is good for them. The Government must explain how wage cuts can be the next answer, when those industries in which there is competition for jobs are the unskilled low-wage industries. In industries where labour is not plentiful, the inevitable market forces work in the opposite direction. My constituents will be anxious to see what lessons the Government learn from the United States' experience. They will be anxious that the right lessons, not the wrong ones, are learnt.
My constituents will continue to try to understand the benefits of industrial policies based on sound money, but

609
in their heart of hearts they will want to see the Government wide open to every option available to reduce unemployment. Many of them were rehearsed in a thoughtful debate recently, and a number were spelt out in more detail in a recent book, "Jobs Ahead", written by my hon. Friend the Member for Beckenham (Sir P. Goodhart), which is based on the work of the One Nation group.
My constituents will not demand to see the Chancellor perform miracles in the desert, but they expect him to be out there with his stick tapping at the rocks with a shrewd idea where the water might spring from. Above all, they echo the sentiment expressed so well yesterday by my hon. Friend the Member for Devizes (Mr. Morrison)—they share the desire for taxation to be reduced as a result of efficiency but they are not at all sure that cuts in direct personal taxation should be a priority to the exclusion of all else. The clamour for reductions in taxation is declining as the number of unemployed rises and those fortunate enough to be paying tax look over their shoulders, fearing the day when for them, too, taxes will no longer be a problem. If the Chancellor can find £1·5 billion to be sensibly used before the next Budget, he would do well to consider all the options open to him to direct that money to the nation's most pressing problem. It is no longer sufficient for him to say that there is no alternative. There are plenty of alternatives.
My constituency and the north-west in general are composed of brave, hard-working people who have not stood still as times have changed. The industrial relations records of Bury, Tottington and Ramsbottom are second to none. People there have played their part and accepted the need to change their old industries. They are living up to their side of the bargain and they are looking for a sign that the Government have confidence in them. A wider perception of the Government's interventionist role and investment by the Government in the kind of industry and infrastructure that will truly boost the recover of the northwest will show my constituents that their sacrifices have not been in vain. Above all, they look for a display of open-mindedness by those in charge of Government economic policy and a willingness to seek all the options available to defeat unemployment, a fresh look at the PSBR and an understanding that, as times and conditions change, so, too, can economic policies and aims. All those things would be welcome and would reassure my constituents and others in the north-west that their problems are not just recognised but on their way to being solved.
In essence, it comes down to this. The Government must never lose sight of the fact that economic policy is only a means to an end, not an end in itself. If the Conservative party and the Conservative Government do not exist to improve the condition of the people in a variety of ways, through their handling of the economy and their all-round policy, they are out to achieve nothing at all. Conservative Governments — and this one is no exception — have a fine record of social reform, of following a variety of economic theories and of showing a pragmatic grasp of the aspirations of the people which has enabled them to retain the trust of the people. In the cause of material and spiritual advancement, economic theory is a fine servant of Governments, but it is a dreadful master.
9.7 pm
Mr. Austin Mitchell: It is interesting to note the cool reception of both the Queen's Speech and the autumn statement by those who have hitherto acquiesced in every folly of the Government's economic policy. In so far as there was any economic message in the Queen's Speech, it received a very cool reception from Conservative Back Benchers who are at last beginning to realise that something is disastrously wrong. It also received a cool reception from that sycophantic body, the CBI, and the leaders of British industry, whose main economic preoccupation so far has been to clamour for more of the rod for their own backs and more of the machinery for the destruction of their own industries. Bought off with knighthoods and tax cuts, they acquiesced in all the Government's previous follies. Both those groups are now beginning to turn against what the Government are doing.
The worms are truly beginning to turn — a generic description from which I exclude the hon. Member for Bury, North (Mr. Burt), although he was certainly turning quite dramatically. The worms are turning because they see that the Chancellor is trapped. The Government's whole economic strategy has led them into a trap from which it is virtually impossible to escape—the trap of trying to talk up, by sheer pressure of exhortation, an economic revival which obstinately refuses to flicker into life while at the same time implementing policies directly harmful to any possible revival and to the productive manufacturing sector of the economy. The pound is still substantially overvalued against the currencies of our principal competitors, especially West Germany but also Japan. Our export prices as against those of West Germany are 45 per cent. higher than they were in the last quarter of 1976. It is almost impossible for British industry to overleap that competitive barrier in any circumstances.
Competitiveness is eroded still further as a direct result of Government policies, and the increase in the cost of power and fuel has become another burden on British industry — a burden amplified by labour costs. The Government have made a fetish of labour costs, but have not told us that, even under their policies, unit labour costs have increased by about 7 to 8 per cent. as against the last quarter of 1982. In the same period, in the United States, thanks to the expansion that has gone on there, unit labour costs have come down about 6 per cent. Unit labour costs have fallen in West Germany. In this country they have gone up, and that is a competitive gap that puts the Government in a trap. Either they allow the pound to come down, to erode that competitive gap, or they continue the long-term comparative decline that has gone on for so long.
The Government are also imposing the burden of high interest rates. Unusually, interest rates failed to come down, in their annual ritual, in time for the Tory party conference to allow the Government to give a little good news to their supporters. They could not praise themselves then because interest rates had not come down from the insane levels to which they were misguidedly increased in July. It is no good the Government claiming that the recent news on interest rates is good, because the real level of interest rates is still at an unprecedented level, and interest rates are a crippling burden on investment, industry and the whole economy. That burden will make it difficult for expansion to be resumed.

611
The Chancellor is trapped in the same cupboard in which too many Chancellors have been trapped—I do not mention their names because a number of them have been Labour Chancellors. Perhaps it is not a cupboard but a coalhole, because the Chancellor will almost certainly blame the miners for his problems, but the fact that he is trapped is inescapable. The tragedy is that the country is trapped at a far lower level of economic health and vigour than at any previous time, because of the enormous harm and destruction that have been inflicted on the economy by policies that have been directly harmful to its core—manufacturing industry. Manufacturing industry provides so much of our ability to survive, and it used to provide many of the jobs.
The harm that has been done makes it difficult for us to survive in the position to which the Chancellor has reduced us. He has taken us into his trap with a real level of unemployment of about 4 million. We are a net manufacturing importer, instead of the workshop of the world and the exporter that we used to be. He has taken us there as the balance of payments benefit of North sea oil has been frittered away into the predictable deficit position.
We are in that trap despite the examples of how to deal with economic difficulties that have been proffered to us by all too many countries overseas, which are either ignored by the Chancellor or described as manifestations of original sin. I give as instances Sweden, where a 16 per cent. devaluation has led to a substantial rate of growth and a fall in unemployment, Australia, where a 10 per cent. devaluation has produced both those results, and, more importantly, the United States, which is often quoted.
After two years of trying to implement similar fiscal policies to those of our Government, President Reagan reversed those policies. President Reagan is the only Keynesian economist left in the world who does not have grey hair because he has been following the policy of Keynesian expansion by deficit financing that many of us would wish to be followed here. The result has been the generation of 6 million real jobs which are paying real money to people to participate in the economic advance of their country by policies which the Chancellor tells us are impossible and directly harmful in Britain.
It is clear from that failure to learn from examples overseas that the Government's economic policy is now a busted flush. It is exhausted. Unless the policies are reversed — the Chancellor is not the most adept and flexible person at learning lessons and is not the most willing person to admit when he is wrong — all that faces the country and the Government is a prolonged downhill slide while other countries advance, prosper and grow.
The Government have given us the exact reverse of the policies that are necessary to deal with an economy in comparative decline, turning to absolute decline, as it was, as world trade faltered. They have given us confrontation where we needed corporatism; cuts where we needed Keynes; an export of capital on an enormous scale when we needed investment in the productive strength of Britain; high interest rates when we needed cheap money; over-valuation when we needed a competitive pound; and free market economics when we needed management, planning and growth. The only way out of that trap is to reverse the policies; otherwise, there will be a long three-year slide downhill for the Government.
9.15 pm
Mr. Peter Shore: We have come a long way verbally since, with customary glitter and glamour, the Queen's Speech was first read from the Throne in the other place a week ago. The debate that has followed has been wide-ranging. I would not wish for a moment to understate the importance of the debates on health and social security, local government and transport, nor on disarmament and foreign affairs, but it is only right to say that the main focus of the debate has been the state of the economy, both domestic and international, and, above all, the levels of unemployment in the United Kingdom.
We have had during the day a number of notable contributions to our debate. We heard the wise words of my right hon. Friend the Member for Cardiff, South and Penarth (Mr. Callaghan) on how to settle the long-standing mining dispute, or at least what attitudes of mind to bring to that solution—sentiments rightly echoed by my hon. Friend the Member for Liverpool, Walton (Mr. Heifer). It will be well worthwhile for Ministers to study those words in Hansard tomorrow.
We have also had a timely reminder of the crucial importance of the international debt problem and what we all owe to the American economic expansion from the right hon. Member for Glasgow, Hillhead (Mr. Jenkins). We too easily fail to recognise just how much of the expansion in world output, including British output, which has taken place this year, we all owe to the American expansion. The right hon. Gentleman was right to say that that hectic pace of expansion cannot be sustained, that it would be wrong if it were sustained, and that, therefore, unless we in Britain and other countries of similar weight in the EEC are prepared to rake up the baton of expansion, the world economy is likely once again to fall into a no-growth position, at any rate in 1985–86.
There is no prospect of Third world countries being able to carry the weight of the international debt which weighs so heavily on so many of them unless the markets of the western world are expanded. Otherwise, those countries simply cannot earn the exports and the revenues from exports which they need to service the ever-growing mountain of debt. The right hon. Member for Cambridgeshire, South-East (Mr. Pym) made a striking contribution. He spoke for most Opposition Members and for many Conservative Members when he deplored the clipping and paring of overseas aid moneys and of other external services at a time when not only Ethiopia hut much of sub-Saharan Africa face an historic catastrophe. He also hit a responsive chord when he rightly said in relation to Ministers' frequently expressed concern about unemployment that their action was not commensurate with their concern. The hon. Member for Aldershot (Mr. Critchley) made the same point succinctly, when he said that the Government give the impression that they do not sufficiently care.
On Thursday evening we tabled our amendment regretting that
"the Gracious Speech reaffirms policies which have already done severe damage to the British economy and will, in the future, further hold back the prospects of economic recovery."
Nothing that I have heard today from the Chancellor and certainly nothing that I have read in the autumn statement has given me any reason to change my mind about the relevance and accuracy of our amendment.

613
What those damaging policies are is now all too familiar to hon. Members. They are policies to deflate the economy, and thus to run it at a far lower rate of growth of output and a far higher rate of unemployment than would otherwise be necessary. These policy aims have been achieved first by the imposition of money supply targets which have necessitated high interest rates. Secondly, those high interest rates have in turn encouraged a high exchange rate, thus making exports—except to the United States—more expensive and imports cheaper than they would otherwise be. Thirdly, deflation has been promoted by the continued cuts in public expenditure, cuts that have damaged the quality of community services and radically reduced capital investment in the infrastructure of our community. Fourthly, deflation has been pursued by a massive increase over the five years as a whole in total taxation — direct and indirect combined — with the greatest increases falling upon those with the smallest incomes, and the only reliefs being enjoyed by the very rich.
No country in the Western world had deflated more fiercely or, to use the technical term, tightened its fiscal stance more seriously, than Britain. Not surprisingly, Britain has suffered both the highest increases in unemployment and the lowest increases in output as a consequence. Those deflationary policies are restated in stark terms in the Gracious Speech in the following words:
"My Government will continue to pursue policies founded on sound money and lower public borrowing and aimed at securing a further reduction in inflation."
When those policies were first embarked upon, in 1979, it was the Government's contention that once inflation had been reduced, the economy would spontaneously resume growth and job creation. Prosperity and real jobs were, and according to the Government have always been, "just around the corner."
In November 1980, when unemployment stood at 1,600,000, the Prime Minister told us:
"We are reaching the trough of the recession and it will start to turn up towards the end of next year."
In the following year, in June 1981, the Prime Minister told the House:
"There are now clear signs that the worst of the recession is over."—[Official Report, 24 June 1981; Vol. 7, c. 332.]
Unemployment then stood at 2·5 million. In the Government's third year of office, in March 1982, the Prime Minister assured us, and an audience in Harrogate, that
"after three years of battling, we are beginning to see the regeneration of our economy".
Unemployment then stood at 2,900,000. In their fourth year of office, in May 1983, the Chancellor of the Exchequer was telling us:
"There is every prospect that by next year we will see the start of the fall in the level of unemployment."
Unemployment then stood at 3,100,000. Now, in the Government's fifth year of office, in September 1984, unemployment has reached 3,284,000, which is the highest figure ever reached in our history. It is higher even than in the very depths of the world recession in the early 1930s.
We are dealing not with one or two years but with five years of continued failure; of policies stubbornly and stupidly adhered to long after the damage and folly has been demonstrated to all. How fitting it is, therefore, that the Chancellor should end his speech today with the
614
resounding affirmation that his was a "long-term" policy. How fitting it is that the Leader of the House, in a BBC interview about the Queen's Speech last week should conclude his remarks with the assertion
"patience is a great virtue in politics"
and
"in the long run we are all dead."
Against that background of unchanged deflationary policies, proudly reaffirmed in the Queen's Speech, and the scandalous level of unemployment, we must judge the sincerity of what the Government have to say about the plight of the jobless.
The Queen's Speech states:
"my Government remains deeply concerned about unemployment".
The right hon. Member for Cambridgeshire, South-East will agree that concern is nothing if it does not lead to, or express itself in, action. The truth is that the actions required to increase jobs in Britain are directly contrary to the Government's main economic policies.
The Prime Minister, as evidence of her good intentions, has recently taken to quoting selectively from the 1944 White Paper on employment policy in Britain by the late Lord Keynes. At her conference in Brighton she had the impertinence to claim that the 1944 White Paper policies were basically the same as hers. When she opened the debate on the Queen's Speech a week ago the right hon. Lady tried again and quoted from the first and central paragraph of that White Paper to which she had previously not referred. She quoted from that paragraph in reply to a question by the right hon. Member for Plymouth, Devonport (Dr. Owen) who asked her whether she accepted
"the primary aim of maintaining a high and stable level of employment."
In her reply the Prime Minister said:
"The first paragraph of that White Paper says that the Government should 'accept as one of their primary aims … the maintenance of a high and stable level of employment after the war'."
The Prime Minister went on to say:
"As I said at my own party conference, I accept most parts of this Paper—pretty nearly all of it except those aspects which over time have changed.
We would all like to return to a low level of unemployment." —[Official Report, 6 November 1984; Vol. 67, c. 24.]
The Prime Minister failed to quote the whole of the first paragraph of that White Paper. It does not say:
"The Government accept as one of their primary aims the maintenance of a high and stable level of employment after the war."
It reads:
"The Government accept as one of their primary aims and responsibilities the maintenance of a high and stable level of employment after the war."
The right hon. Lady has sent me a note telling me that she cannot be here because she is entertaining the President of Finland. I regret that she is not here, because it is important that she should be aware of what she omitted to say and of my comments.
It is unbelievable that the Prime Minister should inadvertently delete that crucial word "responsibilities" when purporting to quote from the White Paper, because responsibility is the heart of the matter. It is at the heart of the White Paper. No Government before 1944 had accepted that responsibility. The dictionary definition of "responsibility" according to Chambers is
"a trust or charge for which one is responsible."
The same problem afflicted the Secretary of State for Employment when he tried to intervene in the speech by

615
my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) yesterday. In the debate on unemployment the Secretary of State said:
"I was asked by the right hon. Member for Plymouth, Devonport (Dr. Owen) whether we had noted the first sentence in the 1944 White Paper. We have noted it, and I assure the House that we certainly want to see the highest possible employment level in this country".— [Official Report, 30 October 1984; Vol. 65. c. 1246.]
But to note is, once again, not to accept responsibility. We should ask the Leader of the House, who is to reply to the debate, the Chancellor and the Prime Minister, when she returns to the House on Thursday, whether the Government accept not only the aim but the crucial responsibility for the maintenance of a high level of employment, which was central to the 1944 White Paper and crucial to the whole economic policy of successive Governments from 1944 to 1979.
Let us consider what the Chancellor has said about responsibility for employment. Three weeks ago he was interviewed on television by Brian Walden. He was asked, as Mr. Walden put it, about carrying the can. The Chancellor replied:
"We have always made this clear what the Government can do to create jobs is very, very little indeed. It is largely a matter of how the economy works, which…in a free society depends on a whole myriad of decisions taken by the millions of workers, employers and managers up and down the country, that's what will determine how the jobs are. There is a little bit the Government can do to help them. What we can do we will do. But to fall into the error of thinking that the Government can determine the level of employment, that is totally false."
That is something that not only the Chancellor but the Prime Minister and the whole of the Treasury Bench believe. It is a convenient belief because, undoubtedly, a high level of unemployment assists the Government in keeping down inflation, in weakening the power of trade unions, in reducing pay claims and in redistributing income and wealth in favour of the well-to-do. Above all, that convenient doctrine exonerates the Government from blame and relieves them of their proper responsibility. But to describe these policies as stemming from the 1944 White Paper is a falsehood and a deception of the grossest sort.
There is a great hole in the middle of the Queen's Speech. The clamant problem of 1984 is the return of mass unemployment to our land. It has brought with it great suffering to individuals and communities, it has sharpened and increased industrial conflicts, it has actively destabilised our democratic system and it is alienating a whole generation of youngsters upon whom the brunt of the burden of unemployment has fallen. Yet the Queen's Speech has nothing to say that has the least relevance to their predicament. The autumn statement is, basically, a no-change document. As the document itself concedes, the present record level of unemployment will be sustained in 1985–86—the same appalling level as it has reached in 1984.
Since the productive potential of the economy is certainly not less than 2·5 per cent. per annum—that is the national increase in productivity per man at work—and as the predicted underlying growth rate in the autumn statement is 2·5 per cent., unemployment levels are bound to remain the same. If we are to bring down unemployment, and if the Government accept responsibility for a high and stable level of employment, we need a period of years during which the rate of growth is deliberately set at well above the productive potential, so
616
that the unemployed total can be reduced. That is what has happened in the United States—a level of growth well above productive potential, well above the national increase in the labour force, and successful in bringing down the unemployment rate from well above 10 per cent. to just over 7 per cent. in less than two years.
There is plenty of room to discuss the pace and the pathway for the reduction of unemployment in the United Kingdom. However, that discussion will begin only when we have a Government who have the will and the wish to reduce unemployment and accept that they have a responsibility for maintaining a high and stable level of employment, and that will not be until we have got rid of the present occupants of the Treasury Bench.
9.35 pm
The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): It is a week ago that the debate on the Gracious Speech and the Loyal Address was initiated with contributions of wit and perception by my hon. Friends the Members for Boothferry (Sir P. Bryan) and for Wiltshire, North (Mr. Needham). Since then the debate has been continued over a wide range of topics and today it has been set upon its concluding stages with a debate upon the economy that was initiated by my right hon. Friend the Chancellor of the Exchequer.
I have had the advantage of listening to the most formidable troika of contributions from the right hon. Members for Cardiff, South and Penarth (Mr. Callaghan) and for Glasgow, Hillhead (Mr. Jenkins) and my right hon. Friend the Member for Cambridgeshire, South-East (Mr. Pym). I pay heartfelt thanks to them all for their collective efforts to prevent our occasion being entirely upstaged by the Earl of Stockton in another place. His performance must but be watched with envy and concern by the National Coal Board.
The contribution of my right hon. Friend the Member for Cambridgeshire, South-East so excited me that I made a momentary intervention, which I hope he will not think in bad taste. I must tell my right hon. Friend that a year ago it was my privilege, in undertaking the same task that I now perform, to offer a message of personal congratulation, though from the Treasury Bench, on his speech on that occasion. That message was genuine. I hope that it will not lead to complications for him, at any rate, if I repeat my good wishes and congratulations. His speech elevated the level of debate in the Chamber and it will be remembered long after this day.
That said, I must say to my right hon. Friend the Member for Cambridgeshire, South-East that I felt as though he had taken me by the elbow and propelled me to one of those better eating houses in the area of St. James. As I sat down I was passed the menu, and with the delicateness of those circumstances I found that it was rich in suggestion but devoid of prices.
Mr. Patrick Cormack: Why did my right hon. Friend not go a la carte?
Mr. Biffen: I do not do that when I am a guest of my right hon. Friend. Confronted by a menu which was the pinnacle of social discretion, I had this fascinating vacuity where in grubbier minds details should have been evident. When it came to the wine, I needed no memory. The bouquet rushed to meet me; it was vintage 1970–74. I say to my right hon. Friend—
Mr. Rogers: When will the right hon. Gentleman address himself to unemployment?
Mr. Biffen: This is a friendly discourse. It is a good-natured reflection between friends, a characteristic that is unknown on the Opposition Benches. I say to my right hon. Friend that perhaps our next assignment will be at a Wimpy bar. However, I am certain that the areas he outlined for policy debate are the most legitimate of all and that they will persist throughout the Session.
The three main elements that I shall touch upon in the substance of my speech concern procedure, which is customary for the Leader of the House in replying to this debate. It will include also certain aspects of the Queen's Speech and the legislative tone of it, which is the heart of the debate and, finally, the general economic background against which we shall be transacting our business and which comprised the majority of the speech of the right hon. Member for Bethnal Green and Stepney (Mr. Shore).
I shall take account of procedural points raised by my right hon. Friend the Member for Worthing (Mr. Higgins), and will be in touch with him in due course.
The point on which I should like to detain the House for a moment is that about Opposition time. During the debate on the Queen's Speech it has become clear that there is continuing unease among Liberal and SDP Members over the present Standing Order governing the allocation of Opposition days.
That Standing Order, approved by the House in 1982, lays down that the use of the 19 Opposition days provided for should be at the disposal of the Official Opposition. Hitherto, there had been informal consultation between the Official Opposition and the other Opposition parties through the usual channels about the use of Supply days but the House declined to formalise these practices as in an amendment proposed by the hon. Member for Berwick-upon-Tweed (Mr. Beith). The events of the past few days have made it clear that these informal arrangements give rise to dissatisfaction on the Liberal-SDP Bench.
I am anxious to see whether progress can be made on this matter. I must, however, stress that the procedures of the House are determined by a majority of the House itself. It cannot be otherwise, and whatever new arrangements might require, an amendment of Standing Orders can only be put into effect by the consent of the House. In the first instance, there is merit in seeing whether the existing conventions over Opposition days can be reconsidered in the light of recent complaints. I hope, therefore, that an attempt might be made through the usual channels. I believe that such an attempt will be made in good faith.
If, however, no progress could be made that way, then I realise at once that there would be the need to involve the Procedure Committee again to consider this matter.
The House will realise that the Procedure Committee has already decided to undertake a major review of public Bill procedure. This work was set in hand at the request of the House. The Committee has decided that its energies should be first directed to this work.
However, the Procedure Committee may well feel that it can accommodate the feelings that have been expressed in this debate. The right hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel) has argued that I should
"ask the Select Committee to put the issue at the top of its agenda
for this Session".—[Official Report, 7 November 1984; Vol. 67, c. 120.]
I am sure that the House could not properly consider this matter without a report from the Select Committee.
618
Meanwhile the right hon. Gentleman knows that the Select Committee is instructed by the House, and any approaches on my part should take account of that.
At this point, I should mention that I have been in touch with my hon. Friend the Member for Honiton, (Sir P. Emery) the Chairman of the Select Committee on Procedure. I know that he cannot be in his place today: parliamentary duties require him to be abroad. I have, however, been able to discuss the issue tentatively with him over the telephone. I shall be discussing the matter with him again when he has returned to this country next week.
Should circumstances so necessitate, I believe that the House should have the option of empowering the Committee to set up a Sub-Committee for the particular purpose of studying the allocation of Opposition days.
That said, I am sure that the whole House would agree with me that if at all possible this is a problem to be resolved through the usual channels. To my mind, that would be the more expeditious way of proceeding, but if that fails, then it is on this kind of problem that the House would rightly wish to look to the Procedure Committee for advice.
Mr. David Steel rose—
Mr. Biffen: I apologise to the House for having detained it, and I hope that the right hon. Gentleman will not press me. What I have just said is testimony of my good faith on this topic, and of the importance that I realise is attached to it on that Bench. I hope that it will be accepted as such.
The legislative load outlined in the Queen's Speech is broadly similar to last Session's load. Clearly, every Session leaves an imprint, and I have no doubt that the connoisseurs of multilateral political warfare will find that the legislation proposing the abolition of the GLC and the metropolitan counties will reward them for all their interest. I have been reminded of that not merely by the Opposition.
Important though that legislation is, I remind the House of three other proposals contained in the Queen's Speech which deserve to be put in the balance and recorded in this debate. First, by any judgment, the Representation of the People Act is a major measure. It will significantly extend the franchise by providing for postal voting for holidaymakers and by extending the franchise to certain British citizens resident abroad. I am delighted that the legislation gives a handsome response to the recommendations of the Home Affairs departmental Select Committee for 1982–83. As Parliament is rooted in popular representation, I believe that there will be strong support for this measure, implying as it does a commitment to the ballot box.
Secondly, the Pensions Bill will be designed to improve the occupational pension rights of those who leave schemes before pensionable age. This is an increasing problem with greater labour mobility. This legislation is an advantageous social measure, and I am certain that the whole House will extend good will to my right hon. Friend the Secretary of State for Social Services in securing the passage of this measure.
The third item that I choose to demonstrate the utility of the Queen's Speech is the legislation that will be necessary for Hong Kong. That legislation is of great

619
significance—I doubt that that point will be challenged in any quarter of the House—not only because of what it portends for Hong Kong but because of what it means for us. The legislation deals with an area of growing political and economic importance and of great consideration to our overseas interests. The manner in which and the dignity with which we are adjusting our status in Hong Kong betokens greater possibilities for enhancing our future influence in not only that area but the wider Asian area that it serves. Since so much of our foreign policy in a post-imperial age derives from influence rather than the normal exercise of power, the legislation is in every sense a testimony to the negotiating skills of my right hon. and learned Friend the Secretary of State for Foreign and Commonwealth Affairs.
If I hear murmurs of discontent from the Opposition —I do not include the alliance Benches, but refer to the Labour Benches—I make this point: it is difficult for many hon. Members to believe that this country finds itself as well beyond its boundaries as within. Perhaps a country of this maritime tradition finds itself never so well far beyond its boundaries as within. That is a message to be taken to heart.
Mr. Shore: It is a great pity that the right hon. Gentleman is left to quarrel with himself and to imagine that he is engaging the Opposition in some great controversy. He is not. The only matter causing restlessness among the Opposition is his failure so far to address himself to the major issues of the economy, including our high and growing unemployment.
Mr. Biffen: I thank the right hon. Gentleman for his reassurance. I shall not disappoint him on the question of debate on the economy. I realise that it is much easier for the right hon. Gentleman to stand at the Dispatch Box to agree with me than it is for him to agree with most of those behind him.
The three Bills, serving as they do social issues, issues of parliamentary democracy and a wider national interest, are characteristic of this wise Queen's Speech. But, of course, in response to the invitation of the right hon. Member for Bethnal Green and Stepney, I say at once that I refer to the economic background against which the politics of this Session will be conducted.
In the debate, we have heard frequent mention of unemployment. That is natural enough, with the jobless levels that we have experienced in recent years and that still persist. I shall, therefore, naturally comment upon that part of the debate. However, I shall make an initial reference to inflation. I appreciate that the right hon. Member for Glasgow, Govan (Mr. Millan), who is the erstwhile shadow spokesman for Scotland, seemed to be worried that I would not discuss the issue of unemployment. I say this to the right hon. Gentleman. Any consideration of the Queen's Speech must have reference to the points that I have already made, and any reference to the economy must also have reference to the level of inflation. If Opposition Members have become unbalanced in their consideration of the matter, they cannot see it in that wider perspective.
Therefore, I make an initial reference to inflation. The success of my right hon. Friend the Chancellor of the Exchequer in securing an inflation rate of 4·7 per cent. is central to the Government's economic strategy. It represents a valuable step forward in securing a sense of
620
realism in economic affairs, pay claims and settlements and generally in industrial relations. Indeed, it is the relative stability that comes with lower inflation that has enabled us to live with such high unemployment without a greater disruption of our social structure.
Meanwhile, my right hon. Friend is determined to build upon the success of lower inflation. He does so with the prospects of increasing national output, a prudent balance between spending and taxation and a promising outlook for British overseas trade.
Mr. Jack Straw: Did the right hon. Gentleman write this?
Mr. Biffen: Every word that I say is well considered and well measured. It may be trite—that I do not deny—but it is the obvious nature of it that Opposition Members cannot accept—(Interruption.] Even so, there remains the issue of unemployment.
Mr. Rogers: This speech is like the Chancellor's tie —awful.
Mr. Speaker: Order. The hon. Gentleman's speech was heard in silence. I ask him to give the Leader of the House a fair hearing.
Mr. Biffen: Even so, there remains the issue of unemployment. The fact that it is also a major problem with our trading partners and rivals offers no consolation. The social and economic challenge remains daunting. However, the problem is trivialised by the rhetoric so freely used from Opposition Benches. I invite the House to share with me both an analysis and a prescription for the present employment situation. First I refer to the analysis—of how the unemployment toll has climbed upwards of 3 million. Some have suggested that unemployment has been the instrument of Government policy. [HON. MEMBERS: "Hear, hear."] The very cheers from Opposition Benches that greet that remark show at what level Opposition Members are prepard to discuss such serious subjects.
There has been a crude slander that the Government created the present levels of workless to weaken trade unions. That argument is fantasy. Indeed, the reality, and not the fantasy, is that there are two major factors in our present unemployment situation. First, there is the demographic factor.
Mr. Straw: Ah.
Mr. Biffen: Is it denied that there is a demographic factor in unemployment?
Mr. Straw: Of course there are demographic factors in unemployment—though the right hon. Gentleman and his colleagues always denied that when the Labour Government were in power.
Will the right hon. Gentleman explain why, while our inflation record is no better in relative terms than the records of our partners, our unemployment record is the worst of all the industrial nations? What is the answer to that?
Mr. Biffen: If the hon. Gentleman bad had the pleasure of listening to my right hon. Friend the Chancellor of the Exchequer making his autumn statement, he would know that my right hon. Friend rebutted that proposition in respect of our partners in the European Community. However, I am glad that we have elicited—not without difficulty — an acknowledgement of demographic

621
factors. At least we have taken the debate a stage beyond the abuse that unemployment is a deliberate action of the Government and is designed to be a central part of their economic policy to harass working people.
The demographic factor of current relevance is the fact that the national work force has expanded by 400,000 since 1979, as those leaving schools and further education exceed those who are aging into retirement.
Firstly, there has been a massive transformation in the relationship between the work force and output. In 1983, the national output was almost identical to the figure for 1979, yet that identical output was being secured by a work force reduced by 1·7 million. Of course oil is a factor, but there has also been a productivity revolution, and the right hon. Member for Cardiff, South and Penarth was generous enough to refer to that.
These are real considerations which help to explain a significant part of our current levels of unemployment. They also suggest that the new patterns of activity are more likely to come about if we abandon high-cost methods of production and follow the guides of competitive price and profit. That is the mainspring of the Government's policy.
Meanwhile, the Government have never denied the importance of public action and public funds in policies for employment. That has been particularly true in the ambitious training schemes we how have for young people. These are estimated to cost about £1,100 million in the current year.
Secondly, we have sought to change our fiscal structure to encourage the expansion of wealth-creating small businesses. We have also tried to shift the burden of corporate taxation so that it weighs less heavily on employment. The abolition of the national insurance surcharge was welcome and wise. It will do more to encourage, rather than penalise, employment.
Finally, we acknowledge that employment in Britain can best be secured within an open trading system and—no less important—with the political and economic alliances of the West. Indeed, it could hardly be otherwise for a nation exporting over 30 per cent. of its gross domestic product.
Yet we frequently hear cries from the Opposition Benches demanding protectionism and neutralism. Those cries can only harm our security, our trade and our employment. Therefore, I say to Labour Members that we will debate the issue of unemployment and the personal tragedies that it implies. But we will debate it by analysis and on policy, and not by generalised and extreme rhetoric.
The return of this country to greater employment will not be by some mechanical process. It cannot be gauged by some interlocking relationship with public spending or movements in inflation. As much as anything, it will be the product of social attitudes and business confidence.
It is a reality and not an abdication to assert that in these matters the authority of the Government is conditional and not absolute. That said, I have no doubt that the policies that I have outlined are well founded and will play their role in bringing about the return to work. In the debate on employment, as in so much else, the future belongs to us, and that is what this parliamentary Session will show.
Question put, That the amendment be made:—
The House divided: Ayes 205, Noes 364.
622

Division No. 4]

[10 pm

AYES

Adams, Allen (Paisley N)

Godman, Dr Norman

Alton, David

Golding, John

Anderson, Donald

Gould, Bryan

Archer, Rt Hon Peter

Gourlay, Harry

Ashdown, Paddy

Hamilton, W. W. (Central Fife)

Ashley, Rt Hon Jack

Hancock, Mr. Michael

Ashton, Joe

Hardy, Peter

Atkinson, N. (Tottenham)

Harman, Ms Harriet

Bagier, Gordon A. T.

Harrison, Rt Hon Walter

Banks, Tony (Newham NW)

Hart, Rt Hon Dame Judith

Barnett, Guy

Hattersley, Rt Hon Roy

Barron, Kevin

Haynes, Frank

Beckett, Mrs Margaret

Heffer, Eric S.

Beith, A. J.

Hogg, N. (C'nauld & Kilsyth)

Bell, Stuart

Home Robertson, John

Bennett, A. (Dent'n & Red'sh)

Howell, Rt Hon D. (S'heath)

Bermingham, Gerald

Howells, Geraint

Bidwell, Sydney

Hughes, Dr. Mark (Durham)

Blair, Anthony

Hughes, Robert (Aberdeen N)

Boothroyd, Miss Betty

Hughes, Roy (Newport East)

Boyes, Roland

Hughes, Sean (Knowsley S)

Bray, Dr Jeremy

Hughes, Simon (Southwark)

Brown, Gordon (D'f'mline E)

Janner, Hon Greville

Brown, Hugh D. (Provan)

Jenkins, Rt Hon Roy (Hillh'd)

Brown, N. (N'c'tle-u-Tyne E)

John, Brynmor

Brown, R. (N'c'tle-u-Tyne N)

Johnston, Russell

Brown, Ron (E'burgh, Leith)

Kaufman, Rt Hon Gerald

Bruce, Malcolm

Kennedy, Charles

Buchan, Norman

Kilroy-Silk, Robert

Caborn, Richard

Kinnock, Rt Hon Neil

Callaghan, Rt Hon J.

Kirkwood, Archy

Callaghan, Jim (Heyw'd & M)

Lamond, James

Campbell, Ian

Leadbitter, Ted

Canavan, Dennis

Leighton, Ronald

Carlile, Alexander (Montg'y)

Lewis, Ron (Carlisle)

Clarke, Thomas

Lewis, Terence (Worsley)

Clay, Robert

Litherland, Robert

Clwyd, Mrs Ann

Lloyd, Tony (Stretford)

Cocks, Rt Hon M. (Bristol S.)

Lofthouse, Geoffrey

Cohen, Harry

Loyden, Edward

Coleman, Donald

McCartney, Hugh

Concannon, Rt Hon J. D.

McDonald, Dr Oonagh

Conlan, Bernard

McGuire, Michael

Cook, Frank (Stockton North)

McKay, Allen (Penistone)

Cook, Robin F. (Livingston)

McKelvey, William

Corbett, Robin

Maclennan, Robert

Corbyn, Jeremy

McTaggart, Robert

Cowans, Harry

McWilliam, John

Cox, Thomas (Tooting)

Madden, Max

Craigen, J. M.

Marek, Dr John

Crowther, Stan

Martin, Michael

Cunliffe, Lawrence

Mason, Rt Hon Roy

Cunningham, Dr John

Maxton, John

Davies, Ronald (Caerphilly)

Maynard, Miss Joan

Davis, Terry (B'ham, H'ge H'l)

Meacher, Michael

Deakins, Eric

Meadowcroft, Michael

Dewar, Donald

Michie, William

Dixon, Donald

Mikardo, Ian

Dobson, Frank

Millan, Rt Hon Bruce

Dormand, Jack

Morris, Rt Hon A. (W'shawe)

Douglas, Dick

Morris, Rt Hon J. (Aberavon)

Dubs, Alfred

Nellist, David

Dunwoody, Hon Mrs G.

Oakes, Rt Hon Gordon

Eadie, Alex

O'Brien, William

Eastham, Ken

O'Neill, Martin

Edwards, Bob (W'h'mpfn SE)

Orme, Rt Hon Stanley

Ellis, Raymond

Owen, Rt Hon Dr David

Evans, John (St. Helens N)

Park, George

Ewing, Harry

Parry, Robert

Faulds, Andrew

Patchett, Terry

Fisher, Mark

Pavitt, Laurie

Foot, Rt Hon Michael

Pendry, Tom

Foster, Derek

Penhaligon, David

Foulkes, George

Pike, Peter

Fraser, J. (Norwood)

Powell, Raymond (Ogmore)

Freeson, Rt Hon Reginald

Prescott, John

Garrett, W. E.

Radice, Giles

Gilbert, Rt Hon Dr John

Randall, Stuart

623

Redmond, M.

Stewart, Rt Hon D. (W Isles)

Rees, Rt Hon M. (Leeds S)

Stott, Roger

Richardson, Ms Jo

Strang, Gavin

Roberts, Ernest (Hackney N)

Straw, Jack

Robertson, George

Thomas, Dr R. (Carmarthen)

Robinson, G. (Coventry NW)

Thompson, J. (Wansbeck)

Rogers, Allan

Thome, Stan (Preston)

Rooker, J. W.

Tinn, James

Ross, Ernest (Dundee W)

Torney, Tom

Ross, Stephen (Isle of Wight)

Wainwright, R.

Rowlands, Ted

Wallace, James

Ryman, John

Warden, Gareth (Gower)

Sedgemore, Brian

Wareing, Robert

Sheerman, Barry

Weetch, Ken

Sheldon, Rt Hon R.

Welsh, Michael

Shore, Rt Hon Peter

White, James

Short, Ms Clare (Ladywood)

Wigley, Dafydd

Short, Mrs B.(W'hampt'n NE)

Williams, Rt Hon A.

Silkin, Rt Hon J.

Wilson, Gordon

Skinner, Dennis

Winnick, David

Smith, C.(Isl'ton S & F'bury)

Wrigglesworth, Ian

Smith, Rt Hon J. (M'kl'ds E)

Young, David (Bolton SE)

Snape, Peter

Soley, Clive

Tellers for the Ayes:

Spearing, Nigel

Mr. James Hamilton and

Steel, Rt Hon David

Mr. Austin Mitchell.

NOES

Adley, Robert

Butterfill, John

Aitken, Jonathan

Carlisle, John (N Luton)

Alexander, Richard

Carlisle, Kenneth (Lincoln)

Alison, Rt Hon Michael

Carlisle, Rt Hon M. (W'ton S)

Amery, Rt Hon Julian

Carttiss, Michael

Amess, David

Cash, William

Ancram, Michael

Chalker, Mrs Lynda

Arnold, Tom

Chapman, Sydney

Ashby, David

Chope, Christopher

Aspinwall, Jack

Churchill, W. S.

Atkins, Rt Hon Sir H.

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

Atkins, Robert (South Ribble)

Clark, Dr Michael (Rochford)

Atkinson, David (B'm'th E)

Clark, Sir W. (Croydon S)

Baker, Rt Hon K. (Mole Vall'y)

Clarke, Rt Hon K. (Rushcliffe)

Baker, Nicholas (N Dorset)

Clegg, Sir Walter

Baldry, Tony

Cockeram, Eric

Batiste, Spencer

Colvin, Michael

Beaumont-Dark, Anthony

Con way, Derek

Beggs, Roy

Coombs, Simon

Bellingham, Henry

Cope, John

Bendall, Vivian

Cormack, Patrick

Bennett, Sir Frederic (T'bay)

Couchman, James

Benyon, William

Cranborne, Viscount

Best, Keith

Crouch, David

Bevan, David Gilroy

Currie, Mrs Edwina

Biffen, Rt Hon John

Dickens, Geoffrey

Biggs-Davison, Sir John

Dicks, Terry

Blackburn, John

Dorrell, Stephen

Blaker, Rt Hon Sir Peter

Douglas-Hamilton, Lord J.

Body, Richard

Dover, Den

Bonsor, Sir Nicholas

du Cann, Rt Hon Edward

Bottomley, Peter

Dunn, Robert

Bottomley, Mrs Virginia

Durant, Tony

Bowden, A. (Brighton K'to'n)

Dykes, Hugh

Bowden, Gerald (Dulwich)

Edwards, Rt Hon N. (P'broke)

Boyson, Dr Rhodes

Eggar, Tim

Braine, Sir Bernard

Evennett, David

Brandon-Bravo, Martin

Eyre, Sir Reginald

Bright, Graham

Fairbairn, Nicholas

Brinton, Tim

Fallon, Michael

Brittan, Rt Hon Leon

Farr, Sir John

Brooke, Hon Peter

Favell, Anthony

Brown, M. (Brigg & Cl'thpes)

Fenner, Mrs Peggy

Browne, John

Finsberg, Sir Geoffrey

Bruinvels, Peter

Fletcher, Alexander

Bryan, Sir Paul

Fookes, Miss Janet

Buchanan-Smith, Rt Hon A.

Forman, Nigel

Budgen, Nick

Forsyth, Michael (Stirling)

Bulmer, Esmond

Forsythe, Clifford (S Antrim)

Burl, Alistair

Forth, Eric

Butcher, John

Fowler, Rt Hon Norman

Butler, Hon Adam

Fox, Marcus

624

Franks, Cecil

Lang, Ian

Fraser, Peter (Angus East)

Latham, Michael

Freeman, Roger

Lawler, Geoffrey

Fry, Peter

Lawrence, Ivan

Gale, Roger

Lawson, Rt Hon Nigel

Galley, Roy

Leigh, Edward (Gainsbor'gh)

Gardiner, George (Reigate)

Lennox-Boyd, Hon Mark

Gardner, Sir Edward (Fylde)

Lester, Jim

Garel-Jones, Tristan

Lewis, Sir Kenneth (Stamf'd)

Glyn, Dr Alan

Lightbown, David

Goodlad, Alastair

Lilley, Peter

Gorst, John

Lloyd, Ian (Havant)

Gow, Ian

Lloyd, Peter, (Fareham)

Gower, Sir Raymond

Lord, Michael

Grant, Sir Anthony

Luce, Richard

Greenway, Harry

Lyell, Nicholas

Gregory, Conal

McCurley, Mrs Anna

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

McCusker, Harold

Griffiths, Peter (Portsm'th N)

Macfarlane, Neil

Grist, Ian

MacKay, Andrew (Berkshire)

Ground, Patrick

MacKay, John (Argyll & Bute)

Grylls, Michael

Maclean, David John

Gummer, John Selwyn

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

Hamilton, Hon A. (Epsom)

Madel, David

Hamilton, Neil (Tatton)

Maginnis, Ken

Hampson, Dr Keith

Major, John

Hanley, Jeremy

Malins, Humfrey

Hannam,John

Malone, Gerald

Hargreaves, Kenneth

Maples, John

Harris, David

Marlow, Antony

Harvey, Robert

Marshall, Michael (Arundel)

Haselhurst, Alan

Mates, Michael

Havers, Rt Hon Sir Michael

Mather, Carol

Hawkins, C. (High Peak)

Maude, Hon Francis

Hawkins, Sir Paul (SW N'folk)

Mawhinney, Dr Brian

Hawksley, Warren

Maxwell-Hyslop, Robin

Hayes, J.

Mayhew, Sir Patrick

Hayhoe, Barney

Mellor, David

Hayward, Robert

Merchant, Piers

Heathcoat-Amory, David

Meyer, Sir Anthony

Heddle, John

Mills, Iain (Meriden)

Henderson, Barry

Mills, Sir Peter (West Devon)

Heseltine, Rt Hon Michael

Miscampbell, Norman

Hickmet, Richard

Mitchell, David (NW Hants)

Hicks, Robert

Moate, Roger

Higgins, Rt Hon Terence L.

Molyneaux, Rt Hon James

Hill, James

Monro, Sir Hector

Hind, Kenneth

Montgomery, Fergus

Hirst, Michael

Moore, John

Hogg, Hon Douglas (Gr'th'm)

Morrison, Hon C. (Devizes)

Holland, Sir Philip (Gedling)

Morrison, Hon P. (Chester)

Holt, Richard

Moynihan, Hon C.

Hooson, Tom

Mudd, David

Hordern, Peter

Murphy, Christopher

Howard, Michael

Neale, Gerrard

Howarth, Alan (Stratf'd-on-A)

Needham, Richard

Howarth, Gerald (Cannock)

Nelson, Anthony

Howe, Rt Hon Sir Geoffrey

Neubert, Michael

Howell, Rt Hon D. (G'ldford)

Newton, Tony

Howell, Ralph (N Norfolk)

Nicholls, Patrick

Hubbard-Miles, Peter

Nicholson, J.

Hunt, David (Wirral)

Norris, Steven

Hunt, John (Ravensbourne)

Onslow, Cranley

Hunter, Andrew

Oppenheim, Phillip

Hurd, Rt Hon Douglas

Oppenheim, Rt Hon Mrs S.

Jackson, Robert

Ottaway, Richard

Jenkin, Rt Hon Patrick

Page, Richard (Herts SW)

Jessel, Toby

Parkinson, Rt Hon Cecil

Jones, Gwilym (Cardiff N)

Parris, Matthew

Jones, Robert (W Herts)

Patten, John (Oxford)

Joseph, Rt Hon Sir Keith

Pattie, Geoffrey

Kellett-Bowman, Mrs Elaine

Pawsey, James

Key, Robert

Peacock, Mrs Elizabeth

King, Roger (B'ham N'field)

Pollock, Alexander

King, Rt Hon Tom

Powell, Rt Hon J. E. (S Down)

Knight, Gregory (Derby N)

Powell, William (Corby)

Knight, Mrs Jill (Edgbaston)

Powley, John

Knowles, Michael

Prentice, Rt Hon Reg

Knox, David

Price, Sir David

Lamont, Norman

Prior, Rt Hon James

625

Pym, Rt Hon Francis

Stradling Thomas, J.

Raffan, Keith

Sumberg, David

Raison, Rt Hon Timothy

Tapsell, Peter

Rathbone, Tim

Taylor, John (Solihull)

Rees, Rt Hon Peter (Dover)

Taylor, Teddy (S'end E)

Renton, Tim

Temple-Morris, Peter

Rhodes James, Robert

Terlezki, Stefan

Rhys Williams, Sir Brandon

Thatcher, Rt Hon Mrs M.

Ridley, Rt Hon Nicholas

Thomas, Rt Hon Peter

Rippon, Rt Hon Geoffrey

Thorne, Neil (Ilford S)

Roberts, Wyn (Conwy)

Thornton, Malcolm

Robinson, Mark (N'port W)

Thurnham, Peter

Roe, Mrs Marion

Townend, John (Bridlington)

Ross, Wm. (Londonderry)

Townsend, Cyril D. (B'heath)

Rossi, Sir Hugh

Tracey, Richard

Rost, Peter

Trippier, David

Rowe, Andrew

Trotter, Neville

Rumbold, Mrs Angela

Twinn, Dr Ian

Ryder, Richard

van Straubenzee, Sir W.

Sackville, Hon Thomas

Vaughan, Sir Gerard

Sainsbury, Hon Timothy

Waddington, David

St. John-Stevas, Rt Hon N.

Waldegrave, Hon William

Sayeed, Jonathan

Walden, George

Scott, Nicholas

Walker, Cecil (Belfast N)

Shaw, Giles (Pudsey)

Walker, Bill (T'side N)

Shaw, Sir Michael (Scarb')

Walker, Rt Hon P. (W'cester)

Shelton, William (Streatham)

Waller, Gary

Shepherd, Colin (Hereford)

Walters, Dennis

Shepherd, Richard (Aldridge)

Ward, John

Shersby, Michael

Wardle, C. (Bexhill)

Silvester, Fred

Warren, Kenneth

Sims, Roger

Watson, John

Skeet, T. H. H.

Watts, John

Smith, Sir Dudley (Warwick)

Wells, Bowen (Hertford)

Smith, Tim (Beaconsfield)

Wells, Sir John (Maidstone)

Soames, Hon Nicholas

Wheeler, John

Speed, Keith

Whitney, Raymond

Speller, Tony

Wiggin, Jerry

Spence, John

Wilkinson, John

Spencer, Derek

Winterton, Mrs Ann

Spicer, Jim (W Dorset)

Winterton, Nicholas

Spicer, Michael (S Worcs)

Wolfson, Mark

Squire, Robin

Wood, Timothy

Stanley, John

Woodcock, Michael

Steen, Anthony

Yeo, Tim

Stern, Michael

Young, Sir George (Acton)

Stevens, Lewis (Nuneaton)

Younger, Rt Hon George

Stevens, Martin (Fulham)

Stewart, Allan (Eastwood)

Tellers for the Noes:

Stewart, Andrew (Sherwood)

Mr. Robert Boscawen and

Stewart, Ian (N Hertf'dshire)

Mr. Donald Thompson.

Stokes, John

Question accordingly negatived.
Amendment proposed, pursuant to Standing Order No. 35, at the end of the Question to add:
But humbly regret that the Gracious Speech offers no policies for reducing the level of unemployment.—[Mr. Beith.]
Question put forthwith pursuant to Standing Order No. 35 (Calling of amendments at end of a debate), That the amendment be made:—
The House divided: Ayes 200, Noes, 364.

Division No. 5]

[10.15 pm

AYES

Adams, Allen (Paisley N)

Beith, A. J.

Alton, David

Bell, Stuart

Anderson, Donald

Bennett, A. (Dent'n & Red'sh)

Archer, Rt Hon Peter

Bermingham, Gerald

Ashdown, Paddy

Bidwell, Sydney

Ashley, Rt Hon Jack

Blair, Anthony

Ashton, Joe

Boothroyd, Miss Betty

Atkinson, N. (Tottenham)

Boyes, Roland

Bagier, Gordon A. T.

Bray, Dr Jeremy

Banks, Tony (Newham NW)

Brown, Gordon (D'f'mline E)

Barnett, Guy

Brown, Hugh D. (Provan)

Barron, Kevin

Brown, N. (N'c'tle-u-Tyne E)

Beckett, Mrs Margaret

Brown, R. (N'c'tle-u-Tyne N)

626

Brown, Ron (E'burgh, Leith)

Kilroy-Silk, Robert

Buchan, Norman

Kinnock, Rt Hon Neil

Caborn, Richard

Kirkwood, Archy

Callaghan, Rt Hon J.

Lamond, James

Callaghan, Jim (Heyw'd & M)

Leadbitter, Ted

Campbell, Ian

Leighton, Ronald

Canavan, Dennis

Lewis, Ron (Carlisle)

Carlile, Alexander (Montg'y)

Lewis, Terence (Worsley)

Clarke, Thomas

Litherland, Robert

Clay, Robert

Lloyd, Tony (Stretford)

Clwyd, Mrs Ann

Lofthouse, Geoffrey

Cocks, Rt Hon M. (Bristol S.)

Loyden, Edward

Cohen, Harry

McCartney, Hugh

Coleman, Donald

McDonald, Dr Oonagh

Concannon, Rt Hon J. D.

McGuire, Michael

Conlan, Bernard

McKay, Allen (Penistone)

Cook, Frank (Stockton North)

McKelvey, William

Cook, Robin F. (Livingston)

Maclennan, Robert

Corbett, Robin

McTaggart, Robert

Corbyn, Jeremy

McWilliam, John

Cowans, Harry

Madden, Max

Cox, Thomas (Tooting)

Marek, Dr John

Craigen, J. M.

Martin, Michael

Crowther, Stan

Mason, Rt Hon Roy

Cunliffe, Lawrence

Maxton, John

Cunningham, Dr John

Maynard, Miss Joan

Davies, Ronald (Caerphilly)

Meacher, Michael

Davis, Terry (B'ham, H'ge H'l)

Michie, William

Deakins, Eric

Mikardo, Ian

Dewar, Donald

Millan, Rt Hon Bruce

Dixon, Donald

Mitchell, Austin (G't Grimsby)

Dobson, Frank

Morris, Rt Hon A. (W'shawe)

Dormand, Jack

Morris, Rt Hon J. (Aberavon)

Douglas, Dick

Nellist, David

Dubs, Alfred

Oakes, Rt Hon Gordon

Dunwoody, Hon Mrs G.

O'Brien, William

Eadie, Alex

O'Neill, Martin

Eastham, Ken

Orme, Rt Hon Stanley

Edwards, Bob (W'h'mpt'n SE)

Owen, Rt Hon Dr David

Ellis, Raymond

Park, George

Evans, John (St. Helens N)

Parry, Robert

Ewing, Harry

Patchett, Terry

Faulds, Andrew

Pavitt, Laurie

Fisher, Mark

Pendry, Tom

Foot, Rt Hon Michael

Penhaligon, David

Foster, Derek

Pike, Peter

Foulkes, George

Powell, Raymond (Ogmore)

Fraser, J. (Norwood)

Prescott, John

Freeson, Rt Hon Reginald

Radice, Giles

Garrett, W. E.

Randall, Stuart

Gilbert, Rt Hon Dr John

Rees, Rt Hon M. (Leeds S)

Godman, Dr Norman

Richardson, Ms Jo

Golding, John

Roberts, Ernest (Hackney N)

Gould, Bryan

Robertson, George

Gourlay, Harry

Robinson, G. (Coventry NW)

Hamilton, James (M'well N)

Rogers, Allan

Hamilton, W. W. (Central Fife)

Rooker, J. W.

Hancock, Mr. Michael

Ross, Ernest (Dundee W)

Hardy, Peter

Ross, Stephen (Isle of Wight)

Harman, Ms Harriet

Rowlands, Ted

Harrison, Rt Hon Walter

Ryman, John

Hart, Rt Hon Dame Judith

Sedgemore, Brian

Hattersley, Rt Hon Roy

Sheerman, Barry

Haynes, Frank

Sheldon, Rt Hon R.

Heffer, Eric S.

Shore, Rt Hon Peter

Hogg, N. (C'nauld & Kilsyth)

Short, Ms Clare (Ladywood)

Home Robertson, John

Short, Mrs R,(W'hampt'n NE)

Howell, Rt Hon D. (S'heath)

Silkin, Rt Hon J.

Howells, Geraint

Skinner, Dennis

Hughes, Dr. Mark (Durham)

Smith, C.(Isl'ton S & F'bury)

Hughes, Robert (Aberdeen N)

Smith, Rt Hon J. (M'kl'ds E)

Hughes, Roy (Newport East)

Snape, Peter

Hughes, Sean (Knowsley S)

Soley, Clive

Hughes, Simon (Southwark)

Spearing, Nigel

Janner, Hon Greville

Steel, Rt Hon David

Jenkins, Rt Hon Roy (Hillh'd)

Stott, Roger

John, Brynmor

Strang, Gavin

Johnston, Russell

Straw, Jack

Kaufman, Rt Hon Gerald

Thomas, Dr R. (Carmarthen)

Kennedy, Charles

Thompson, J. (Wansbeck)

627

Thorne, Stan (Preston)

White, James

Tinn, James

Wigley, Dafydd

Torney, Tom

Williams, Rt Hon A.

Wainwright, R.

Winnick, David

Wallace, James

Young, David (Bolton SE)

Warded, Gareth (Gower)

Wareing, Robert

Tellers for the Ayes:

Weetch, Ken

Mr. Ian Wrigglesworth and

Welsh, Michael

Mr. Michael Meadowcroft.

NOES

Adley, Robert

Conway, Derek

Aitken, Jonathan

Coombs, Simon

Alexander, Richard

Cope, John

Alison, Rt Hon Michael

Couchman, James

Amery, Rt Hon Julian

Cranborne, Viscount

Amess, David

Crouch, David

Ancram, Michael

Currie, Mrs Edwina

Arnold, Tom

Dickens, Geoffrey

Ashby, David

Dicks, Terry

Aspinwall, Jack

Dorrell, Stephen

Atkins, Rt Hon Sir H.

Douglas-Hamilton, Lord J.

Atkins, Robert (South Ribble)

Dover, Den

Atkinson, David (B'm'th E)

du Cann, Rt Hon Edward

Baker, Rt Hon K. (Mole Vall'y)

Dunn, Robert

Baker, Nicholas (N Dorset)

Durant, Tony

Baldry, Tony

Dykes, Hugh

Batiste, Spencer

Edwards, Rt Hon N. (P'broke)

Beaumont-Dark, Anthony

Eggar, Tim

Beggs, Roy

Evennett, David

Bellingham, Henry

Eyre, Sir Reginald

Bendall, Vivian

Fairbairn, Nicholas

Bennett, Sir Frederic (T'bay)

Fallon, Michael

Benyon, William

Farr, Sir John

Best, Keith

Favell, Anthony

Bevan, David Gilroy

Fenner, Mrs Peggy

Biffen, Rt Hon John

Finsberg, Sir Geoffrey

Biggs-Davison, Sir John

Fletcher, Alexander

Blackburn, John

Fookes, Miss Janet

Blaker, Rt Hon Sir Peter

Forman, Nigel

Body, Richard

Forsyth, Michael (Stirling)

Bonsor, Sir Nicholas

Forsythe, Clifford (S Antrim)

Bottomley, Peter

Forth, Eric

Bottomley, Mrs Virginia

Fowler, Rt Hon Norman

Bowden, A. (Brighton K'to'n)

Fox, Marcus

Bowden, Gerald (Dulwich)

Franks, Cecil

Boyson, Dr Rhodes

Fraser, Peter (Angus East)

Braine, Sir Bernard

Freeman, Roger

Brandon-Bravo, Martin

Fry, Peter

Bright, Graham

Gale, Roger

Brinton, Tim

Galley, Roy

Brittan, Rt Hon Leon

Gardiner, George (Reigate)

Brooke, Hon Peter

Gardner, Sir Edward (Fylde)

Brown, M. (Brigg & Cl'thpes)

Garel-Jones, Tristan

Browne, John

Glyn, Dr Alan

Bruinvels, Peter

Goodlad, Alastair

Bryan, Sir Paul

Gorst, John

Buchanan-Smith, Rt Hon A.

Gow, Ian

Budgen, Nick

Gower, Sir Raymond

Bulmer, Esmond

Grant, Sir Anthony

Burt, Alistair

Greenway, Harry

Butcher, John

Gregory, Conal

Butler, Hon Adam

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

Butterfill, John

Griffiths, Peter (Portsm'th N)

Carlisle, John (N Luton)

Grist, Ian

Carlisle, Kenneth (Lincoln)

Ground, Patrick

Carlisle, Rt Hon M. (W'ton S)

Grylls, Michael

Carttiss, Michael

Gummer, John Selwyn

Cash, William

Hamilton, Hon A. (Epsom)

Chalker, Mrs Lynda

Hamilton, Neil (Tatton)

Chapman, Sydney

Hampson, Dr Keith

Chope, Christopher

Hanley, Jeremy

Churchill, W. S.

Hannam, John

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

Hargreaves, Kenneth

Clark, Dr Michael (Rochford)

Harris, David

Clark, Sir W. (Croydon S)

Harvey, Robert

Clarke, Rt Hon K. (Rushcliffe)

Haselhurst, Alan

Clegg, Sir Walter

Havers, Rt Hon Sir Michael

Cockeram, Eric

Hawkins, C. (High Peak)

Colvin, Michael

Hawkins, Sir Paul (SW N'folk)

628

Hawksley, Warren

Maxwell-Hyslop, Robin

Hayes, J.

Mayhew, Sir Patrick

Hayhoe, Barney

Mellor, David

Hayward, Robert

Merchant, Piers

Heathcoat-Amory, David

Meyer, Sir Anthony

Heddle, John

Mills, Iain (Meriden)

Henderson, Barry

Mills, Sir Peter (West Devon)

Heseltine, Rt Hon Michael

Miscampbell, Norman

Hickmet, Richard

Mitchell, David (NW Hants)

Hicks, Robert

Moate, Roger

Higgins, Rt Hon Terence L.

Molyneaux, Rt Hon James

Hill, James

Monro, Sir Hector

Hind, Kenneth

Montgomery, Fergus

Hirst, Michael

Moore, John

Hogg, Hon Douglas (Gr'th'm)

Morrison, Hon C. (Devizes)

Holland, Sir Philip (Gedling)

Morrison, Hon P. (Chester)

Holt, Richard

Moynihan, Hon C.

Hooson, Tom

Mudd, David

Hordern, Peter

Murphy, Christopher

Howard, Michael

Neale, Gerrard

Howarth, Alan (Stratf'd-on-A)

Needham, Richard

Howarth, Gerald (Cannock)

Nelson, Anthony

Howe, Rt Hon Sir Geoffrey

Neubert, Michael

Howell, Rt Hon D. (G'ldford)

Newton, Tony

Howell, Ralph (N Norfolk)

Nicholls, Patrick

Hubbard-Miles, Peter

Nicholson, J.

Hunt, David (Wirral)

Norris, Steven

Hunt, John (Ravensbourne)

Onslow, Cranley

Hunter, Andrew

Oppenheim, Phillip

Hurd, Rt Hon Douglas

Oppenheim, Rt Hon Mrs S.

Jackson, Robert

Ottaway, Richard

Jenkin, Rt Hon Patrick

Page, Richard (Herts SW)

Jessel, Toby

Parkinson, Rt Hon Cecil

Jones, Gwilym (Cardiff N)

Parris, Matthew

Jones, Robert (W Herts)

Patten, John (Oxford)

Joseph, Rt Hon Sir Keith

Pattie, Geoffrey

Kellett-Bowman, Mrs Elaine

Pawsey, James

Key, Robert

Peacock, Mrs Elizabeth

King, Roger (B'ham N'field)

Pollock, Alexander

King, Rt Hon Tom

Powell, William (Corby)

Knight, Gregory (Derby N)

Powley, John

Knight, Mrs Jill (Edgbaston)

Prentice, Rt Hon Reg

Knowles, Michael

Price, Sir David

Knox, David

Prior, Rt Hon James

Lamont, Norman

Pym, Rt Hon Francis

Latham, Michael

Raffan, Keith

Lawler, Geoffrey

Raison, Rt Hon Timothy

Lawrence, Ivan

Rathbone, Tim

Lawson, Rt Hon Nigel

Rees, Rt Hon Peter (Dover)

Leigh, Edward (Gainsbor'gh)

Renton, Tim

Lennox-Boyd, Hon Mark

Rhodes James, Robert

Lester, Jim

Rhys Williams, Sir Brandon

Lewis, Sir Kenneth (Stamf'd)

Ridley, Rt Hon Nicholas

Lightbown, David

Rifkind, Malcolm

Lilley, Peter

Rippon, Rt Hon Geoffrey

Lloyd, Ian (Havant)

Roberts, Wyn (Conwy)

Lloyd, Peter, (Fareham)

Robinson, Mark (N'port W)

Lord, Michael

Roe, Mrs Marion

Luce, Richard

Ross, Wm. (Londonderry)

Lyell, Nicholas

Rossi, Sir Hugh

McCurley, Mrs Anna

Rost, Peter

McCusker, Harold

Rowe, Andrew

Macfarlane, Neil

Rumbold, Mrs Angela

MacKay, Andrew (Berkshire)

Ryder, Richard

MacKay, John (Argyll & Bute)

Sackville, Hon Thomas

Maclean, David John

Sainsbury, Hon Timothy

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

St. John-Stevas, Rt Hon N.

McQuarrie, Albert

Sayeed, Jonathan

Madel, David

Scott, Nicholas

Maginnis, Ken

Shaw, Giles (Pudsey)

Major, John

Shaw, Sir Michael (Scarb')

Malins, Humfrey

Shelton, William (Streatham)

Malone, Gerald

Shepherd, Colin (Hereford)

Maples, John

Shepherd, Richard (Aldridge)

Marlow, Antony

Shersby, Michael

Marshall, Michael (Arundel)

Silvester, Fred

Mates, Michael

Sims, Roger

Mather, Carol

Skeet, T. H. H.

Maude, Hon Francis

Smith, Sir Dudley (Warwick)

Mawhinney, Dr Brian

Smith, Tim (Beaconsfield)

629

Soames, Hon Nicholas

Twinn, Dr Ian

Speed, Keith

van Straubenzee, Sir W.

Speller, Tony

Vaughan, Sir Gerard

Spence, John

Waddington, David

Spencer, Derek

Waldegrave, Hon William

Spicer, Jim (W Dorset)

Walden, George

Spicer, Michael (S Worcs)

Walker, Cecil (Belfast N)

Squire, Robin

Walker, Bill (T'side N)

Stanley, John

Walker, Rt Hon P. (W'cester)

Steen, Anthony

Waller, Gary

Stern, Michael

Walters, Dennis

Stevens, Lewis (Nuneaton)

Ward, John

Stevens, Martin (Fulham)

Wardle, C. (Bexhill)

Stewart, Allan (Eastwood)

Warren, Kenneth

Stewart, Andrew (Sherwood)

Watson, John

Stewart, Ian (N Hertf'dshire)

Watts, John

Stokes, John

Wells, Bowen (Hertford)

Stradling Thomas, J.

Wells, Sir John (Maidstone)

Sumberg, David

Wheeler, John

Tapsell, Peter

Whitney, Raymond

Taylor, John (Solihull)

Wiggin, Jerry

Taylor, Teddy (S'end E)

Wilkinson, John

Temple-Morris, Peter

Winterton, Mrs Ann

Terlezki, Stefan

Winterton, Nicholas

Thatcher, Rt Hon Mrs M.

Wolfson, Mark

Thomas, Rt Hon Peter

Wood, Timothy

Thompson, Donald (Calder V)

Woodcock, Michael

Thorne, Neil (Ilford S)

Yeo, Tim

Thornton, Malcolm

Young, Sir George (Acton)

Thurnham, Peter

Younger, Rt Hon George

Townend, John (Bridlington)

Townsend, Cyril D. (B'heath)

Tellers for the Noes:

Tracey, Richard

Mr. Robert Boscawen and

Trippier, David

Mr. Ian Lang

Trotter, Neville

Question accordingly negatived.
Main Question put:—
The House divided: Ayes 352, Noes 202.

Division No.6]

[10.30 pm

AYES

Adley, Robert

Bright, Graham

Aitken, Jonathan

Brinton, Tim

Alexander, Richard

Brittan, Rt Hon Leon

Alison, Rt Hon Michael

Brooke, Hon Peter

Amery, Rt Hon Julian

Brown, M. (Brigg & Cl'thpes)

Amess, David

Browne, John

Ancram, Michael

Bruinvels, Peter

Arnold, Tom

Bryan, Sir Paul

Ashby, David

Buchanan-Smith, Rt Hon A.

Aspinwall, Jack

Budgen, Nick

Atkins, Rt Hon Sir H.

Bulmer, Esmond

Atkins, Robert (South Ribble)

Burt, Alistair

Atkinson, David (B'm'th E)

Butcher, John

Baker, Rt Hon K. (Mole Vall'y)

Butler, Hon Adam

Baker, Nicholas (N Dorset)

Butterfill, John

Baldry, Tony

Carlisle, John (N Luton)

Batiste, Spencer

Carlisle, Kenneth (Lincoln)

Beaumont-Dark, Anthony

Carlisle, Rt Hon M. (W'ton S)

Bellingham, Henry

Carttiss, Michael

Bendall, Vivian

Cash, William

Bennett, Sir Frederic (T'bay)

Chalker, Mrs Lynda

Benyon, William

Chapman, Sydney

Best, Keith

Chope, Christopher

Bevan, David Gilroy

Churchill, W. S.

Biffen, Rt Hon John

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

Biggs-Davison, Sir John

Clark, Dr Michael (Rochford)

Blackburn, John

Clark, Sir W. (Croydon S)

Blaker, Rt Hon Sir Peter

Clarke, Rt Hon K. (Rushcliffe)

Body, Richard

Clegg, Sir Walter

Bonsor, Sir Nicholas

Cockeram, Eric

Bottomley, Peter

Colvin, Michael

Bottomley, Mrs Virginia

Conway, Derek

Bowden, A. (Brighton K'to'n)

Coombs, Simon

Bowden, Gerald (Dulwich)

Cope, John

Boyson, Dr Rhodes

Cormack, Patrick

Braine, Sir Bernard

Couchman, James

Brandon-Bravo, Martin

Cranborne, Viscount

630

Crouch, David

Howard, Michael

Currie, Mrs Edwina

Howarth, Alan (Stratf'd-on-A)

Dickens, Geoffrey

Howarth, Gerald (Cannock)

Dicks, Terry

Howe, Rt Hon Sir Geoffrey

Dorrell, Stephen

Howell, Rt Hon D. (G'ldford)

Douglas-Hamilton, Lord J.

Howell, Ralph (N Norfolk)

Dover, Den

Hubbard-Miles, Peter

du Cann, Rt Hon Edward

Hunt, David (Wirral)

Dunn, Robert

Hunt, John (Ravensbourne)

Durant, Tony

Hunter, Andrew

Dykes, Hugh

Jackson, Robert

Edwards, Rt Hon N. (P'broke)

Jenkin, Rt Hon Patrick

Eggar, Tim

Jessel, Toby

Evennett, David

Jones, Gwilym (Cardiff N)

Eyre, Sir Reginald

Jones, Robert (W Herts)

Fairbairn, Nicholas

Joseph, Rt Hon Sir Keith

Fallon, Michael

Kellett-Bowman, Mrs Elaine

Farr, Sir John

Key, Robert

Favell, Anthony

King, Roger (B'ham N'field)

Fenner, Mrs Peggy

King, Rt Hon Tom

Finsberg, Sir Geoffrey

Knight, Gregory (Derby N)

Fletcher, Alexander

Knight, Mrs Jill (Edgbaston)

Fookes, Miss Janet

Knowles, Michael

Forman, Nigel

Knox, David

Forsyth, Michael (Stirling)

Lamont, Norman

Forth, Eric

Lang, Ian

Fowler, Rt Hon Norman

Latham, Michael

Franks, Cecil

Lawler, Geoffrey

Fraser, Peter (Angus East)

Lawrence, Ivan

Freeman, Roger

Lawson, Rt Hon Nigel

Fry, Peter

Leigh, Edward (Gainsbor'gh)

Gale, Roger

Lennox-Boyd, Hon Mark

Galley, Roy

Lester, Jim

Gardiner, George (Reigate)

Lewis, Sir Kenneth (Stamf'd)

Gardner, Sir Edward (Fylde)

Lightbown, David

Glyn, Dr Alan

Lilley, Peter

Goodlad, Alastair

Lloyd, Ian (Havant)

Gorst, John

Lloyd, Peter, (Fareham)

Gow, Ian

Lord, Michael

Gower, Sir Raymond

Luce, Richard

Grant, Sir Anthony

Lyell, Nicholas

Greenway, Harry

McCurley, Mrs Anna

Gregory, Conal

Macfarlane, Neil

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

MacKay, Andrew (Berkshire)

Griffiths, Peter (Portsm'th N)

MacKay, John (Argyll & Bute)

Grist, Ian

Maclean, David John

Ground, Patrick

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

Grylls, Michael

McQuarrie, Albert

Gummer, John Selwyn

Madel, David

Hamilton, Hon A. (Epsom)

Major, John

Hamilton, Neil (Tatton)

Malins, Humfrey

Hampson, Dr Keith

Malone, Gerald

Hanley, Jeremy

Maples, John

Hannam, John

Marlow, Antony

Hargreaves, Kenneth

Marshall, Michael (Arundel)

Harris, David

Mates, Michael

Harvey, Robert

Mather, Carol

Haselhurst, Alan

Maude, Hon Francis

Havers, Rt Hon Sir Michael

Mawhinney, Dr Brian

Hawkins, C. (High Peak)

Maxwell-Hyslop, Robin

Hawkins, Sir Paul (SW N'folk)

Mayhew, Sir Patrick

Hawksley, Warren

Mellor, David

Hayes, J.

Merchant, Piers

Hayhoe, Barney

Meyer, Sir Anthony

Hayward, Robert

Mills, Iain (Meriden)

Heathcoat-Amory, David

Mills, Sir Peter (West Devon)

Heddle, John

Miscampbell, Norman

Henderson, Barry

Mitchell, David (NW Hants)

Heseltine, Rt Hon Michael

Moate, Roger

Hickmet, Richard

Monro, Sir Hector

Hicks, Robert

Montgomery, Fergus

Higgins, Rt Hon Terence L.

Moore, John

Hill, James

Morrison, Hon C. (Devizes)

Hind, Kenneth

Morrison, Hon P. (Chester)

Hirst, Michael

Moynihan, Hon C.

Hogg, Hon Douglas (Gr'th'm)

Mudd, David

Holland, Sir Philip (Gedling)

Murphy, Christopher

Holt, Richard

Neale, Gerrard

Hooson, Tom

Needham, Richard

Hordern, Peter

Nelson, Anthony

631

Neubert, Michael

Squire, Robin

Newton, Tony

Stanley, John

Nicholls, Patrick

Steen, Anthony

Norris, Steven

Stern, Michael

Onslow, Cranley

Stevens, Lewis (Nuneaton)

Oppenheim, Phillip

Stevens, Martin (Fulham)

Oppenheim, Rt Hon Mrs S.

Stewart, Allan (Eastwood)

Ottaway, Richard

Stewart, Andrew (Sherwood)

Page, Richard (Herts SW)

Stewart, Ian (N Hertf'dshire)

Parkinson, Rt Hon Cecil

Stokes, John

Parris, Matthew

Stradling Thomas, J.

Patten, John (Oxford)

Sumberg, David

Pattie, Geoffrey

Tapsell, Peter

Pawsey, James

Taylor, John (Solihull)

Peacock, Mrs Elizabeth

Taylor, Teddy (S'end E)

Pollock, Alexander

Temple-Morris, Peter

Powell, William (Corby)

Terlezki, Stefan

Powley, John

Thatcher, Rt Hon Mrs M.

Prentice, Rt Hon Reg

Thomas, Rt Hon Peter

Price, Sir David

Thompson, Donald (Calder V)

Prior, Rt Hon James

Thorne, Neil (Ilford S)

Raffan, Keith

Thornton, Malcolm

Raison, Rt Hon Timothy

Thurnham, Peter

Rathbone, Tim

Townend, John (Bridlington)

Rees, Rt Hon Peter (Dover)

Townsend, Cyril D. (B'heath)

Renton, Tim

Tracey, Richard

Rhodes James, Robert

Trippier, David

Rhys Williams, Sir Brandon

Trotter, Neville

Ridley, Rt Hon Nicholas

Twinn, Dr Ian

Rifkind, Malcolm

van Straubenzee, Sir W.

Rippon, Rt Hon Geoffrey

Vaughan, Sir Gerard

Roberts, Wyn (Conwy)

Waddington, David

Robinson, Mark (N'port W)

Waldegrave, Hon William

Roe, Mrs Marion

Walden, George

Rossi, Sir Hugh

Walker, Bill (T'side N)

Rost, Peter

Walker, Rt Hon P. (W'cester)

Rowe, Andrew

Waller, Gary

Rumbold, Mrs Angela

Walters, Dennis

Ryder, Richard

Ward, John

Sackville, Hon Thomas

Wardle, C. (Bexhill)

Sainsbury, Hon Timothy

Warren, Kenneth

St. John-Stevas, Rt Hon N.

Watson, John

Sayeed, Jonathan

Watts, John

Scott, Nicholas

Wells, Bowen (Hertford)

Shaw, Giles (Pudsey)

Wells, Sir John (Maidstone)

Shaw, Sir Michael (Scarb')

Wheeler, John

Shepherd, Colin (Hereford)

Whitney, Raymond

Shepherd, Richard (Aldridge)

Wiggin, Jerry

Shersby, Michael

Wilkinson, John

Silvester, Fred

Winterton, Mrs Ann

Sims, Roger

Winterton, Nicholas

Skeet, T. H. H.

Wolfson, Mark

Smith, Sir Dudley (Warwick)

Wood, Timothy

Smith, Tim (Beaconsfield)

Woodcock, Michael

Soames, Hon Nicholas

Yeo, Tim

Speed, Keith

Young, Sir George (Acton)

Speller, Tony

Younger, Rt Hon George

Spence, John

Spencer, Derek

Tellers for the Ayes:

Spicer, Jim (W Dorset)

Mr. Robert Boscawen and

Spicer, Michael (S Worcs)

Mr. Tristan Garel-Jones.

NOES

Adams, Allen (Paisley N)

Bidwell, Sydney

Alton, David

Blair, Anthony

Anderson, Donald

Boothroyd, Miss Betty

Archer, Rt Hon Peter

Boyes, Roland

Ashdown, Paddy

Bray, Dr Jeremy

Ashley, Rt Hon Jack

Brown, Gordon (D'f'mline E)

Ashton, Joe

Brown, Hugh D. (Provan)

Atkinson, N. (Tottenham)

Brown, N. (N'c'tle-u-Tyne E)

Bagier, Gordon A. T.

Brown, R. (N'c'tle-u-Tyne N)

Banks, Tony (Newham NW)

Brown, Ron (E'burgh, Leith)

Barnett, Guy

Buchan, Norman

Barron, Kevin

Caborn, Richard

Beckett, Mrs Margaret

Callaghan, Rt Hon J.

Beith, A. J.

Callaghan, Jim (Heyw'd & M)

Bell, Stuart

Campbell, Ian

Bennett, A. (Dent'n & Red'sh)

Canavan, Dennis

Bermingham, Gerald

Carlile, Alexander (Montg'y)

632

Clarke, Thomas

Loyden, Edward

Clay, Robert

McCartney, Hugh

Clwyd, Mrs Ann

McDonald, Dr Oonagh

Cocks, Rt Hon M. (Bristol S.)

McGuire, Michael

Cohen, Harry

McKay, Allen (Penistone)

Coleman, Donald

McKelvey, William

Concannon, Rt Hon J. D.

Maclennan, Robert

Conlan, Bernard

McTaggart, Robert

Cook, Frank (Stockton North)

McWilliam, John

Cook, Robin F. (Livingston)

Madden, Max

Corbyn, Jeremy

Marek, Dr John

Cowans, Harry

Martin, Michael

Cox, Thomas (Tooting)

Mason, Rt Hon Roy

Craigen, J. M.

Maxton, John

Crowther, Stan

Maynard, Miss Joan

Cunliffe, Lawrence

Meacher, Michael

Cunningham, Dr John

Meadowcroft, Michael

Davies, Ronald (Caerphilly)

Michie, William

Davis, Terry (B'ham, H'ge H'l)

Mikardo, Ian

Deakins, Eric

Millan, Rt Hon Bruce

Dewar, Donald

Mitchell, Austin (G't Grimsby)

Dixon, Donald

Morris, Rt Hon A. (W'shawe)

Dobson, Frank

Morris, Rt Hon J. (Aberavon)

Dormand, Jack

Nellist, David

Douglas, Dick

Oakes, Rt Hon Gordon

Dubs, Alfred

O'Brien, William

Dunwoody, Hon Mrs G.

O'Neill, Martin

Eadie, Alex

Orme, Rt Hon Stanley

Eastham, Ken

Owen, Rt Hon Dr David

Ellis, Raymond

Park, George

Evans, John (St. Helens N)

Parry, Robert

Ewing, Harry

Patchett, Terry

Faulds, Andrew

Pavitt, Laurie

Fisher, Mark

Pendry, Tom

Foot, Rt Hon Michael

Penhaligon, David

Foster, Derek

Pike, Peter

Foulkes, George

Powell, Raymond (Ogmore)

Fraser, J. (Norwood)

Prescott, John

Freeson, Rt Hon Reginald

Radice, Giles

Garrett, W. E.

Randall, Stuart

Gilbert, Rt Hon Dr John

Redmond, M.

Godman, Dr Norman

Rees, Rt Hon M. (Leeds S)

Golding, John

Richardson, Ms Jo

Gould, Bryan

Roberts, Ernest (Hackney N)

Gourlay, Harry

Robertson, George

Hamilton, James (M'well N)

Robinson, G. (Coventry NW)

Hamilton, W. W. (Central Fife)

Rogers, Allan

Hancock, Mr. Michael

Rooker, J. W.

Hardy, Peter

Ross, Ernest (Dundee W)

Harman, Ms Harriet

Ross, Stephen (Isle of Wight)

Harrison, Rt Hon Walter

Rowlands, Ted

Hart, Rt Hon Dame Judith

Ryman, John

Hattersley, Rt Hon Roy

Sedgemore, Brian

Haynes, Frank

Sheerman, Barry

Heffer, Eric S.

Sheldon, Rt Hon R.

Hogg, N. (C'nauld & Kilsyth)

Shore, Rt Hon Peter

Home Robertson, John

Short, Ms Clare (Ladywood)

Howell, Rt Hon D. (S'heath)

Short, Mrs R.(W'hampt'n NE)

Howells, Geraint

Silkin, Rt Hon J.

Hughes, Dr. Mark (Durham)

Skinner, Dennis

Hughes, Robert (Aberdeen N)

Smith, C.(Isl'ton S & F'bury)

Hughes, Roy (Newport East)

Smith, Rt Hon J. (M'kl'ds E)

Hughes, Simon (Southward)

Snape, Peter

Janner, Hon Greville

Soley, Clive

Jenkins, Rt Hon Roy (Hillh'd)

Spearing, Nigel

John, Brynmor

Steel, Rt Hon David

Johnston, Russell

Stewart, Rt Hon D. (W Isles)

Kaufman, Rt Hon Gerald

Stott, Roger

Kennedy, Charles

Strang, Gavin

Kilroy-Silk, Robert

Straw, Jack

Kinnock, Rt Hon Neil

Thomas, Dr R. (Carmarthen)

Kirkwood, Archy

Thompson, J. (Wansbeck)

Lamond, James

Thorne, Stan (Preston)

Leadbitter, Ted

Tinn, James

Leighton, Ronald

Torney, Tom

Lewis, Ron (Carlisle)

Wainwright, R.

Lewis, Terence (Worsley)

Wallace, James

Litherland, Robert

Wardell, Gareth (Gower)

Lloyd, Tony (Stretford)

Wareing, Robert

Lofthouse, Geoffrey

Weetch, Ken

633

Welsh, Michael

Wrigglesworth, Ian

White, James

Young, David (Bolton SE)

Wigley, Dafydd

Williams, Rt Hon A.

Tellers for the Noes:

Wilson, Gordon

Mr. Robin Corbett and

Winnick, David

Mr. Sean Hughes.

Question accordingly agreed to.
Resolved,
634
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 presented by Privy Councillors or Members of Her Majesty's Household.

Transport (Supplementary Grants)
10.43 pm
The Minister of State, Department of Transport (Mrs. Lynda Chalker): I beg to move,
That the Local Government (Supplementary Grants for Transport Purposes Specified Descriptions) Order 1984, dated 18th October 1984, a copy of which was laid before this House on 22nd October, in the last Session of Parliament, be approved.
This is a joint order by my right hon. Friend the Secretary of State for Transport and my right hon. Friend the Secretary of State for Wales. It is made under section 51 of the Local Government, Planning and Land Act 1980. I shall concentrate my remarks tonight mainly on the points concerning England. The changes proposed for Wales are minimal, but my hon. Friend the Minister of State is here to deal with any questions on the Welsh aspects of the order.
The order will bring into effect the proposals announced by my right hon. Friend last month to confine transport supplementary grant to capital expenditure on roads. First, a few remarks about TSG. It has been in existence for 10 years. The aim of the system devised then was to encourage county councils and the Greater London council to pursue suitable transport policies for their areas and to compensate them for costs that were high in relation to their populations.
TSG was intended also to enable central Government to provide support for large, local capital transport schemes without the drawbacks of the system of specified grants which it replaced. In other words, it helped to smooth out the uneven expenditure patterns that most road building has. TSG also enabled support to be given to public transport at a time when no adequate means existed to bring expenditure on public transport subsidies within the rate support grant system.
However, in recent years the TSG system has not been able to reconcile the need to constrain local authority expenditure with some authorities' policies for extravagant public transport subsidies. Nor has this form of TSG met the vital need for a sustained level of investment in major roads.
In 1983–84, in the expenditure which the Secretary of State accepted for TSG, excluding London, 28 per cent. was for capital investment, but less than 10 per cent. of the grant was spent in this way. The tendency for councils to use TSG to support current spending rather than capital investment has been increasing. In 1980–81 councils used about 63 per cent. of TSG to support current spending. In 1984–85 they budget to use 71·6 per cent. while 25 councils propose to use 100 per cent. of their grant to support current spending and use none of it on capital investment.
The planned level of road construction has often not been achieved. For example, local capital spending on roads fell short of the Government's plans by almost £32 million in 1981–82 and by £11 million in 1982–83. This fall in spending has had most noticeable effects on the larger schemes needed to further the main objectives for local roads set out in the White Paper "Policy for Roads in England: 1983". Cmnd. 9059, the primary route network, bypasses and urban roads. The extra support from the taxpayer nationally represented by TSG should be used to benefit the population at large who produce the money and not only those who live in a single local authority's area.
636
Although the system was intended to favour authorities with high expenditure needs in relation to their resources, it has been criticised for producing an unfair distribution between different parts of the country. For example. in 1984–85 London and the metropolitan county councils received 62 per cent. of the grant available, when they account for only 38 per cent. of the country's population. The present system has also been criticised for being unpredictable in its outcome from year to year.
The possibilities of a change to the system have been around for a couple of years. TSG was increasingly difficult to reconcile with the developing system of expenditure targets and rate support grant penalties. The establishment of London Regional Transport earlier this year meant that it would not be possible to make a sensible settlement for London under the present system. It became apparent that the changes would be needed for 1985–86.
We consider that the first priority for TSG is to focus grants more closely on roads-capital expenditure, so we encourage investment in road building; to give a greater incentive than under the threshold system which has been extremely complicated, and to give some guarantee of continued support for schemes as well as to achieve a fairer distribution of the money available; and to give priority to our objectives for local roads as set out in the White Paper. We also have to try to stop the leakage of grant given for capital expenditure going into current expenditure as I described.
My right hon. Friend outlined his ideas formally to the local authority associations in May this year. In July we wrote consulting them on a capital-only TSG limited to expenditure on highways and traffic regulation. The proposed grant will be paid at a flat rate of about 50 per cent. We propose to consider to what extent the roads and routes affected would be of more than local importance. We propose also to take into account whether people living or working in an authority's area would be relieved of the effects of heavy through traffic. We also said that we would specify the schemes in the programme. Provided progress is satisfactorily maintained we shall continue to support them in future years.
Current expenditure on roads and public transport will continue to be supported through the RSG block grant. It already is to a large extent. We shall devise new formalae for grant-related expenditure s for public transport revenue support and for road maintenance with the local authority associations.
We have been concerned that the shift from TSG to RSG should produce a grant distribution which will, as far as possible, reflect councils' spending needs for public transport and road maintenance. The proposals will not result in changes in the resources available to local authorities nor any reduction in the total amount of exchequer grant available to them.
Investment in facilities for local public transport such as bus stations, bus depots and rail electrification schemes will no longer under this order be eligible for TSG but we will pay specific grants under section 56 of the Transport Act 1968, towards large worthwhile projects to provide new facilities. Some hon. Members may recall that we have used section 56 to support the Tyne and Wear metro. That is the type of scheme for which it should be used.
My right hon. Friend and I have discussed these proposals with elected representatives, and officials have discussed the financial implications at a number of meetings with the associations. Having considered the

637
outcome of the consultation, my right hon. Friend decided to seek the approval of Parliament to the necessary legislative changes.
The purpose of the order is to restrict payment of supplementary grant for transport in England to capital expenditure on highways and the regulation of traffic. In Wales, TSG will no longer be payable on parking. Financial support for parking will be provided from the RSG.
The Local Government, Planning and Land Act 1980 provides for different TSG systems in England and Wales. In 1981 the threshold system for Wales was ended and the eligibility for grant was restricted to capital expenditure on public transport, highways, the regulation of traffic, the provision of freight handling facilities and parking. This has been granted only for projects of high value. The order merely removes parking from eligibility. Thus, it makes no fundamental change to the arrangements already operating for Wales.
The legislative changes sought in the order will enable my right hon. Friend to operate the TSG system in the way that I have outlined. Article 4 confines TSG to expenditure in England in connection with highways and the regulation of traffic. Article 6 provides for the consequential amendments of section 6 of the Local Government Act 1974. It describes highways and the regulation of traffic as the transport matters qualifying for grant in England and changes the method of apportioning the grant from the threshold system.
The acceptance of expenditure for TSG has always been a matter for the Secretary of State's discretion. It is customary for him to say in circulars how he intends to use it in relation to authorities' transport programmes. The consultation paper and the circular issued on 22 October explained the criterion of more than local significance and how consideration would be given to such areas as the primary route network, urban roads and bypasses. These aspects can be dealt with under the discretion already available to my right hon. Friend. They do not, therefore, form part of the order.
The present TSG system has proved inadequate in a number of ways. It has not been able to prevent the use of the grant for extravagant public transport subsidies. It has not met the overriding need for investment in major road schemes. It has produced settlements which have been increasingly criticised as unfair and unpredictable.
The Government's proposals for changing the system which I have outlined will put an end to these inadequacies. They will enable Government support provided through TSG to be concentrated on roads which are of more than local significance. Day-to-day current expenditure on local roads or for general public transport subsidies are essentially local matters. Local authorities can best decide their own priorities for spending on these within the Government's targets for their overall expenditure and from the resources available to them, through the rates and RSG. Overall, local authorities will not be worse off as a result of these changes. Approval of this order will enable us to prepare a TSG settlement for 1985–86 on the new basis, which will enhance investment in new roads by local authorities. I commend the order to the House.
10.55 pm
Mrs. Gwyneth Dunwoody: We should be clear about the background to the order. It is not only an important order but a mean little order. It was spawned in spite and nurtured in complete ignorance of the wishes and interests of the truly elected members of the local authorities, and it has been brought before the House with indecent haste. The motion to approve the order should have been moved by the Secretary of State, because its effects will be felt well beyond any of the extraordinarily unimaginative phrases that have been used by the Minister of State to give the impression that the measure was demanded by all and welcomed throughout the country.
Let us be clear about what is happening in this order. By changing from the transport supplementary grant to the rate support grant system, the Government have in effect said, "In future, we shall be singularly uninterested in the views of anyone in any particular locality about his transport system. We believe that we should have control from the centre exercised so that local authorities find it extremely difficult to set priorities that are acceptable to their electorate." Let us understand that in future parking, rail freight and public transport revenue support will go into the rate support grant system. The percentage of spending to be paid centrally will fall from 55 per cent. in 1984–85 to 50 per cent. from April next year.
How do the Government justify that spurious argument? They say that there are two reasons for the change. They say that local authorities have been underspending their allocation for capital road projects, and that they intend to change that. Their claim is based on an estimate for 1982–83 that only £330 million of the allocated £469 million was spent. Those figures were later discovered to be inaccurate. In fact, the council spent £442 million, which is only a 6 per cent. underspend. Central Government have already allowed trunk road underspending of 5 per cent. to be carried over. That 1 per cent. extra is so important that we have to carry through a major change.
The Select Committee on Transport expressed its surprise at the Government's inaccuracy. The Committee called for more encouragement to use capital money, but said:
"we would not wish to endorse such a change until we were satisfied that adequate provision could be made through Rate Support Grant for the support of current transport expenditures".
We are told by the Minister of State that the order is intended to curb extravagant public transport schemes. In future, large worthwhile projects — presumably those decided upon by the Secretary of State — will be supported and others will not. We are told that the Secretary of State consulted the local authorities, although the speed with which this statutory instrument has been brought forward makes one wonder how much consultation has taken place. On top of that, the Secretary of State has obviously ignored the views of the local authorities themselves because they understand only too well that in future they will find it virtually impossible to provide from the rate support grant system for the absolutely necessary items of expenditure outside road spending.
Let us return to spending on roads. Apart from the fact that the Government's fears of low expenditure on road capital are entirely false, one will not encourage road capital if the percentage support is cut even further to 50

639
per cent. instead of 55 per cent. this year. There has been a 70 per cent. cut since the Government took power. The Government have already undermined all sections of transport through TSG cuts. The TSG for England was £499·1 million at today's prices in 1979–80, but this year it is £400 million. For Wales the capital-only scheme first appeared in 1982–83. Then TSG on roads capital alone was £30 million. In the next two financial years it rose to £31 million. That is a 5·5 per cent. cut in the allocation for roads capital, despite implementing a new system.
However, the real damage of this nasty little change can be seen only too clearly when one considers the effect that it will have on public transport, particularly British Rail. The passenger transport executives of the metropolitan counties have expressed strong concern that moving their grant into RSG can cause only direct cuts. Manchester passenger transport executive says that British Rail cuts will cause 25 per cent. reductions in train services. West midlands has predicted serious consequences.
While the PTEs are directly affected, British Rail is hit because section 20 of the Transport Act 1968 gives local authorities a duty to subsidise non-profitable services of British Rail. Without TSG, virtually all the rail lines within the metropolitan counties, excluding the inter-city services, will close if the cash cannot be found from elsewhere. British Rail stands to lose £80 million, or 10 per cent. of all its subsidies.
However, the Government say that they intend to reconsider any capital projects, even if they are allowed and accepted, that have not been scheduled for commencement before 1 April 1985. Therefore, many plans for capital road building are under threat from the measures, and all to try to solve a capital road building problem.
The extent of the chaos of the Government's thinking on transport is demonstrated only too clearly by a little incident that we witnessed today. The Prime Minister, standing at the Dispatch Box earlier on, was exceedingly scathing about a headline in a certain evening newspaper — which will get no extra publicity from me. The headline is:
"90,000 golden handshake for Left-wingers sacked by LT"—
that is, London Transport. The Prime Minister said that she found that totally unacceptable. But what do we find when we study the article closely? It says:
"News of the pay-off with taxpayers' money will raise a storm of protest."
Notice that it is not local authority money, but taxpayers' money. What is the reason for that? It is made clear by the reporter. He states that the Left-wingers concerned
"were removed from office by Transport Secretary Nicholas Ridley almost before the ink was dry on the White Paper creating the new London Regional Transport Authority and separating it from GLC control."
The Secretary of State is responsible for that bizarre golden handshake. His deep contempt for locally elected people is such that he will not allow them to appoint to their own London Transport executive those who represent their views. The right hon. Gentleman is prepared to carry it so such lengths that he would rather that they went away with large golden handshakes than that they be allowed to play a part in deciding the future of London's transport system.
Mr. Roger King: Did not the bandits at county hall appoint members of the Labour
640
party to the London Transport executive only weeks before it was due to be abolished? Was not that an affront to common sense?
Mrs. Dunwoody: The hon. Gentleman does not seem to understand that, even with this Government, measures must be brought before the House before major changes can be introduced. The Secretary of State may ignore the views of the London electorate, but the Labour party is aware of its responsibility to the electorate at every level.
Let us be clear what this is all about. We are not talking about a more efficient system or saving money for the taxpayer. Roads are virtually the only part of the Department of Transport's work that has not been but by the Government since 1979. Motorway spending is up by £400 million—37·8 per cent. faster than prices. Even local authority road-related spending has risen 7 per cent. in real terms or £387 million in cash terms. Yet the Government's justification for this tatty little measure and for taking away local authorities' rights to spend money on revenue support is based on the claim of underspending, on roads by local authorities.
At the same time, central funding for local bus, underground and ferry services has fallen by 37 per cent., which is the equivalent of £143 million being taken away from those services since April 1984. The Minister of State ought not to present us with wholly spurious arguments. She does not believe them and we do not believe them. We shall vote against the order to show the electorate the mean and petty attitude of the Government towards local transport.
11.7 pm
Mr. Peter Fry: As one who has advocated for several years the change that we are discussing, I naturally welcome the order.
I should have thought that Opposition Members who represent Welsh constituencies would reflect on the excellent road building programme that has been started in many parts of Wales since the changes introduced by the Welsh Office. I have been to the Principality to see the excellent schemes underway there, particularly in Cardiff where there is a scheme to help with the new port facility and industrial development in the city. Much money that would otherwise not have been available has been spent in Wales.
Mr. Dafydd Wigley: Will the hon. Gentleman accept that the new schemes in Wales have been implemented at the expense of schemes that have been in the plans for years? Areas have been blighted because of uncertainty about whether schemes would go ahead and many towns and villages that needed bypasses have lost them. It has been an absolute mess and it needs to be sorted out.
Mr. Fry: The hon. Member is merely saying that more money should be spent on roads in Wales. I agree, but expenditure is a matter of priorities and we all wish that we had more money for our own constituencies.
Contrary to the impression given by the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), whom I welcome to her new responsibilities, the Select Committee on Transport made it clear that it was sympathetic to the proposed changes. I am a member of the Select Committee, and I think that the hon. Lady's quotations from our report were selective and gave a wrong flavour to the report.

641
Surely the Opposition cannot accept that local authorities should be allowed to put in bids for TSG based on fictitious figures. They often put in amounts for road building and maintenance without having any intention of spending the money for that purpose. They wished to divert it to other purposes. Before hon. Members descend upon me with rods, they should recall that when there was a Labour Secretary of State for Transport, he complained bitterly about the activities of some Labour-controlled authorities, such as South Yorkshire, which pursued policies which were at variance with the bids that they put in. It is unacceptable for bids to be put in on a spurious basis, and it therefore makes sense that the suggested change should take place.
However, I wish to make two reservations. When the Select Committee made its report upon road maintenance, we were somewhat concerned about the amount of money being spent, particularly on urban local roads. It seemed to us that there was a danger that insufficient moneys would be forthcoming for the renewal and repair of those roads which in many towns were falling into a serious state. I want therefore to utter a word of caution. Enough money must be put into the rate support grant to ensure that there is no danger of continued deterioration.
Secondly, I feel that this measure may be the first of a number of measures which may affect local transport during this Parliament. My views on the matter are well known. My hon. Friend the Minister of State and my right hon. Friend the Secretary of State must be aware of the charge that is likely to be made that the changes that they are trying to effect—the sum total of changes this year—are likely to mean that many local authorities will be forced to make difficult decisions, particularly about the level of revenue support. If the Government are determined that there shall be no deterioration in public transport, the support that will be offered to local authorities, once all the legislation has been passed, must be spelt out more clearly.
It is because I believe that the present measure cannot be considered purely on its own that I have those reservations. When we discuss legislation on buses, Opposition Members may be surprised by the way in which I shall vote; but we are not doing so now. We should give the Government the benefit of the doubt, and support the measure. If, later on, it appears that the measure has been used simply to make it more difficult for local authorities to support public transport, I may find myself casting my vote differently when we vote on some larger measure. I have not been afraid to do so in the past and I shall not be afraid to do so again.
I hope that the House will approve the order, but I also hope that my right hon. and hon. Friends have taken note of my words of caution.
11.12 pm
Mr. Stephen Ross: I apologise for not having been present when the Minister of State began her speech. I must say that I have grave doubts about the order. While on the whole I accept that it makes sense, when one changes the rate support grant to a block system, to do away with transport supplementary grant, the uncertainty about what is to happen will mean that local authorities will feel worried about what is in store for them.
The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) drew our attention to the problem of the
642
passenger transport executives. They do not know what the situation will be in the west midlands or the north-east or on Merseyside. Will enough money be forthcoming to enable them to support British Rail under Section 20 of the 1968 Transport Act? We do not know. The measure has been introduced far too early. It should have been introduced after some definite statement from the Secretary of State for the Environment.
The Minister of State visited my constituency earlier this year. She must already know that doing away with transport supplementary grant will place us in considerable difficulty.
One of the criteria laid down in the order is whether expenditure is on a primary route network. We have no such network, as the Minister well knows. The second is whether the road is a major urban road of more than local significance. It could be argued that all capital highway expenditure on the island is of local significance only. The third is whether the expenditure is for a bypass which would relieve local communities of the effects of heavy lorries. I openly admit that that is not as great a problem in my constituency as elsewhere. We are therefore worried whether, after abolition of TSG, we shall be treated as fairly as when it was in operation.
During the past few years our transport policy plan has met with a fair response from the Government. We have had a good allocation, but can the Minister say in all sincerity that having done away with TSG she can guarantee that, under the block grant system, we shall do so well? I gravely doubt whether she can. Therefore, with reluctance, I cannot support the order. I say that although I supported the change in the grant system introduced by the former Secretary of State for the Environment. It was right to change the block grant system and it is only sensible to do away with TSG now and to put it in the block grant. However, the change is premature and the Government should have given us some guarantee before introducing the order. We and passenger transport executives have great difficulties accepting that we shall be as well served by the new system as by the old one.
11.16 pm
Sir Paul Hawkins: I greatly welcome the change because I lost a bypass around my home town. It badly needs that bypass but lost it because the county council spent the money on other things. This order is a move in the right direction for my constituency and other parts of Norfolk, if not for the Isle of Wight. Many other hon. Members lost grant to build bypasses and to carry out major improvements on major roads between the midlands and the north and the East Anglian ports. We badly need more trunk and county council roads and I am convinced that many schemes have been lost because county councils have used transport supplementary grant intended for bypasses around small market towns that are almost shattered by huge vehicles for other purposes. For that reason, I wholly support the order.
11.17 pm
Dr. John Marek: I agreed with much of what the hon. Member for Wellingborough (Mr. Fry) said, except towards the end of his speech when he said that he would support the order. I shall certainly not do that. Transport supplementary grant has been hijacked and bids for capital have not been spent on capital. Policies that have been bid for should be carried out. However, keeping

643
capital spending on its own and shoving revenue spending in with the rest of the block grant would be all right if we had a real democracy. Unfortunately, we do not. Local government has no chance of acting independently. It is constrained by holdback and the rest. It is shackled hand and foot by the Government. If that were not so I should have every confidence in revenue spending being left in with block grant as councils could then make their own choices about priorities. Under present conditions we shall have little revenue spending.
In regard to the railways, local authorities are likely not to take a strategic view of rail implications. The chances are that revenue spending under section 20 of the Transport Act 1968 will decline. The same will be true for passenger transport executives. My hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) made that point. It is likely that the type of integrated transport system which we have in the metropolitan councils will disappear because of the limitations and restrictions placed on local authorities.
British Rail will be worried about the order. According to my figures, section 20 grants amount to about 5 per cent. of its revenue income. That will decrease. It will have more difficulty in meeting the objectives which the Secretary of State set last year.
I am worried about the implications of the order for the maintenance of roads. If a council is pressed for cash, it will not resurface roads, but postpone the work for a year. Hon. Members must understand that that is what will happen. If restrictions on a local authority are not lifted, it will postpone the work for a further year. That will increase the dangerous state of the roads, and make it difficult for us to move goods. Most of our goods are moved by road. It will make life difficult for motorists and especially for motor cyclists.
What assurances can the Minister give the House about maintenance programmes for roads? Even if she can assure us, I shall vote against the order because it is wrong for the railways, because strategic decisions will not be taken in district areas and because there will not be an integrated transport policy in metropolitan areas. Can the Minister assure the House that road maintenance programmes will be maintained?
11.22 pm
Mr. Matthew Parris: I also welcome the hon. Lady the Member for Crewe and Nantwich (Mrs. Dunwoody) to her new responsibilities. She launched into her first speech with the bland understatement now characteristic of her style. I look forward to a continuation of that moderation which is her hallmark.
If the Secretary of State for Social Services had come to the House this evening with a proposal that a social services supplementary grant should be set up and the Government should earmark moneys for social services and restrict local authorities to spending those funds, Opposition Members would, quite rightly, have said that it represented an infringement of local democracy and that the ideal for local government spending was to give local government an overall sum to spend as it determined.
There is an argument for abolishing transport supplementary grant altogether, but my hon. Friend the Minister has not gone as far as that. She simply seeks to restrict the area controlled by the Government to capital spending. Has the case for maintaining Government
644
purchase over capital spending been well made? I believe that it has. In too many areas transport spending has been twisted into social policy, and funds allocated for transport purposes have been used to redistribute wealth.
I am not against the redistribution of wealth—both parties spend most of their time redistributing wealth in one way or another—but I do not believe that taking money away from people and giving them free or cheap bus tickets in return is a sensible way of redistributing wealth. For that reason, I do not believe that moneys allocated for transport purposes are being properly used when they are used simply to subsidise public transport.
I was specially encouraged by my hon. Friend the Minister's comments about section 56 grant. Not all capital spending on transport will be spending on public works. All kinds of useful investments can be made in our public transport system—in roads, in railways and in buses—which do not involve public works. We should remember that there is capital investment in public transport just as much as in roads and that in both cases it is not the same as subsidising fares.
For all those reasons, I believe that the proposed changes are sensible and I shall certainly support them.
11.26 pm
Mr. Peter Pike: Many local authorities are worried about passenger revenue support in view of the problems involved in the present system of grant-related expenditure assessment. For instance, there is the anomaly that the grant for museums and art galleries is based on the square footage of the area's central shopping facility. The transfer to the grant system of revenue support for public transport, a bigger and more important aspect of local government, therefore worries many authorities a great deal. A large number of authorities run systems beyond their own areas, providing services for neighbouring authorities which do not have undertakings of their own, while others rely on the National Bus Company and other undertakings.
I believe that the proposed system is ill thought out and has been too hastily introduced. If it has to go through, local authorities and others responsible for running public transport will need to be assured that the same level of revenue support will be available so that services can be maintained, especially in rural areas and other areas of difficulty. If the level of support is not maintained, the public transport system will be endangered throughout the country.
11.27 pm
Mr. Edward Leigh: I am surprised at the Opposition's strong resistance to these proposals. I thought that there was a consensus in the House on the need for more capital spending on roads—for environmental reasons, especially spending on bypasses for heavy lorries, for reasons of investment for industry and, above all, for employment reasons. The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) disagreed with the figures produced by my hon. Friend the Minister, but I think that both sides agree that local authorities have underspent in terms of capital spending.
Areas such as my constituency in rural Lincolnshire have suffered from the emphasis that larger authorities, especially in south Yorkshire, have placed on what my hon. Friend the Member for Derbyshire, West (Mr. Parris) described as using transport policy as a means of social

645
policy and thus misusing the transport supplementary grant. When I was a member of the GLC, the Conservative administration were thinking in terms of using the grant for the Jubilee line, capital investment in the east end, and so on, but the grant has been misused by the current GLC administration.
My area has suffered from the lack of capital investment. Although Lincolnshire has more miles of road per head of population than any other county, we still have severe environmental problems in the Trentside villages and with the A46. The village of Dunholme has waited 40 years for a bypass. As my hon. Friend the Minister said, although London has 38 per cent. of the population, it gets 62 per cent. of the grant. Rural areas such as the one that I represent will welcome this order, and for that reason I shall vote for it tonight.
11.30 pm
Mr. Ted Leadbitter: The problem with a measure such as this is that it comes in the context of proposals affecting local government. In rapid succession, there have been increasing penalties and restrictions on local government expenditure. The Government have had many objections to local government expenditure proposals in the past few months. There have been problems in the negotiations on the formula for grant related expenditure, and penalties have been applied there. The Government have become increasingly persistent in interfering with local government, which is an elected part of our constitution, and which has the right to a say in the determination of its own affairs.
For Wales, there is a modification of the transport-related grant. For England, there is a wholesale transfer from transport-related grant to rate support grant, leaving, for the determination next year and each succeeding year, only the highways and the regulation of transport operations in the local authority areas.
The amount of money involved nationally is relatively small, but at local level it is of increasing importance. There is not sufficient evidence—although I have read some of the Select Committee reports, and have gone into the matter carefully—to suggest that local authorities are misusing their bids for transport supplementary grant. There may be some cases of this, but there is no perfection, either here or in any part of local government. We have to deal with our responsibilities by making shrewd judgments. A local authority should be allowed some flexibility of judgment in the overall finances available to it.
In this order, the Government are being rather petulant. A local authority may decide, after making a bid, and succeeding in getting it, that there is a need in that period for some other priority — a practice that has been acceptable hitherto. Why the sudden discovery that it is wrong? Here is another instance of promises made in the 1979 and 1983 election manifestos of non-intervention going out of the window. The Government have become the biggest interferers that I have known since I entered political life. They are here making a dishonest prospectus for the country.
The issue of transport in London has to be related to the future of the GLC. All that the Government wanted to do from the outset was to get rid of the GLC. They knew that if they did that alone, they would be charged with political
646
nepotism and so they decided to include the metropolitan counties in their abolition plans. They are interfering with the PTAs, and are forcing through this order.
It is not fair to either side of the House to have an order such as this, which is incomprehensible on first reading. The short explanatory note does not deal with the whole problem that we are facing. We shall have a vote tonight, yet hon. Members cannot honestly say that we have had an in-depth debate on matters of great importance to local authorities.
With approximately 20 Bills to come before the House this Session we are becoming so legislatively constipated that' we shall not make much sense of the real affairs of Britain. I hope that the Government will understand that some people are saying that enough is enough and that, when elected, local authorities have a right to determine their own affairs without forever going cap in hand to a Secretary of State, and this Secretary of State in particular, because his only hallmark is his persistence to outdo his own Prime Minister.
11.35 pm
Mr. Robin Maxwell-Hyslop: In the short time available to me, I want to say that if the Department of Transport intends to take out of the hands of local authorities decisions about priorities, for heaven's sake let us make sensible decisions in each individual case rather than laying down grandiose rules.
My hon. Friend the Minister of State, whose attention I hope to attract for just two minutes, will know that for some time I have taken the view that, instead of building a trunk road from Fairmile to Exeter, that bypasses nothing, the same amount of money in the same constituency could be spent on bypassing Crediton. No danger points are removed by spending a huge amount of money on a trunk road diversion which does nothing except go through good land and ruin a number of businesses. On my hon. Friend's criteria the same money would be much better spent — if my hon. Friend is taking away the power to make decisions on those criteria from local authorities—on bypassing a town which, for a mile and a quarter, is utterly ruined by through traffic.
I know that it is difficult for the Minister to sort through her papers before she replies, but if she is taking away from local authorities the choice of priorities, she really must listen to her colleagues if decisions are to be made by Government instead. That is my message to her which I hope that she has time to hear.
11.37 pm
Mr. Tony Banks: It is a great pity that the Secretary of State cannot find the time to stay with us for an hour and a half. Perhaps he has nipped off to plug himself into his life support machine for a while.
Conservative Members seem to think that the order will somehow be good for transport in Britain. It has nothing to do with the efficient ordering of the transport system in Britain. We saw that in the London Regional Transport Bill. It is all to do with the further centralisation of Government powers and with assisting the roads lobby.
The Labour party's criticisms of the order can be put simply and straightforwardly. First, it undermines the original intention and purpose of the transport supplementary grant system. Secondly, it has been rushed through in undue haste.

647
The Minister said that the Secretary of State consulted local authorities. Yes, indeed he did. But the local authorities were not consulted until July. What was their reaction? Of course, we all know the answer. They were very much opposed.
Thirdly, there is the financial impact on the local authorities. Before the Secretary of State left to go elsewhere, he accused my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) of not doing her homework. The Minister might like to comment when she replies on some figures that I have. The allocation of transport supplementary grant under the new system looks as though it will take about £45 million away from the shire counties, which is a 30 per cent. reduction. There will be £29 million taken away from the metropolitan counties and £23·7 million taken away from the GLC—a 50 per cent. reduction overall. It is impossible to see how that is geared to assisting those authorities to meet their transport needs. Of course, the Minister is really saying —and will no doubt claim further—that overall the councils will not be worse off, because the aggregate Exchequer grant is determined independently of the total of TSG. Although the TSG will be reduced, the amount of RSG block grant will be correspondingly greater But we know just how easy it is for the Secretary of State to manipulate the block grant system.
Dr. Marek: There is possibly one good point about the changes being made, and that is that as capital will remain under the TSG the Government could put money in, and then increase construction thus reducing unemployment. However, that is sadly probably not the Government's intention.
Mr. Douglas Hogg: Wait and see.
Mr. Banks: There is too much of a wait-and-see attitude towards capital allocations for local authorities. One difficulty about underspends on capital outlays, which has been mentioned by the hon. Member for Gainsborough and Horncastle (Mr. Leigh), lies in the one year basis of the programme. It is difficult for local authorities to know exactly what to do when dealing with a one-year programme that can be changed at will by Ministers. That is what is making local government so difficult to run. There is an increasing amount of intervention by central Government.
Perhaps the Minister will tell us how local authorities can be sure that they will get additional moneys through the block grant system. We should all be extremely grateful for that knowledge. We know how that block grant system has been, and is being, manipulated by Ministers. Indeed, it will continue to be manipulated by them. In effect, on the revenue side, the TSG system is being replaced by the block grant system. We do not believe that that will be good for transport, because the Government are manipulating the block grant system to suit their short and long-term political objectives.
Whilst on the subject of political objectives, I should add that I saw the story in The Standard tonight about the golden handshakes being given to the so-called Left-wingers sacked from the London Transport board. The article makes no mention of the fact that the Secretary of State then packed the London Regional Transport board with his own appointees who are no doubt totally non-political and not in any way interested in the right hon. Gentleman's policies.
648
Perhaps the Minister will tell us the difference between the salaries of Mr. John Telford Beasley, who has just been appointed as the new managing director of buses, and his predecessor. I notice that he is to receive a £41,000 salary. I also notice that he has many transport connections. He was an international business man with an American pharmaceutical company based in the Mediterranean before he joined London Transport. I do not quite see how that is relevant to running London Transport.
I also notice that Mr. Telford Beasley is coming up to Waterloo by train. He says that he will take a bus from Waterloo to Victoria. What a breadth of experience of LT he will gain from that trip. He says:
"I don't see any point in having a limousine waiting for me every day at the station, when there is a very efficient bus service. I will use it every day, and I can get talking to the passengers and find out what they think of the service at first hand."
Mr. Telford Beasley will not have much chance of doing that while riding from Waterloo to Victoria—a distance that any other person would try to walk. No doubt we shall all be hearing a lot more of Mr. John Telford Beasley. How much bigger is his salary than his predecessor's? Is it true that he is a personal friend of Dr. Bright, the chairman of London Regional Transport and that that was why he was appointed? I believe that Dr. Bright was very knowledgeable about making Dad's Cookies before he was translated into the chairman of LRT. Where are all these people coming from? From where did they gain their knowledge and experience of the transport needs of London?
11.45 pm
Mr. Peter Snape: My hon. Friend the Member for Newham, North-West (Mr. Banks) was rather scathing about the appointment of the new manager for London Transport bus services, Mr. John Telford Beasley. My hon. Friend referred to him as an American business man with no experience of London Transport. My hon. Friend was being a little unfair, because the Tory party has a weakness for American business men and appoints them to its nationalised industries with no great record of success. I hope that the new appointment will be more successful than that other well-known and well-paid American business man that they appointed to run the mining industry.
The hon. Member for Norfolk, South-West (Sir P. Hawkins) expressed concern about the number of bypasses that have been cancelled because of the subsidy to public transport in Norfolk. He sat down before we had a chance to intervene, but I should be delighted to give way to the hon. Gentleman if he could tell me one bypass that has been cancelled in his county because of the concentration by the Norfolk county council on public transport, bearing in mind that Norfolk is one of the much—heralded trial areas for the proposed bus legislation.
Sir Paul Hawkins: Bypasses were not built in Downham Market where I live. Fakenham was mentioned in the list of places which could have had money spent on it by the Ministry of Transport. I never mentioned anything about expenditure on public transport. I said that the money which should have been spent on capital grants was spent elsewhere, not necessarily on public transport
Mr. Snape: That will not do. It is all very well for the hon. Gentleman to say that money could have been spent

649
in a particular way, but did the county council pay for support for the Downham Market bypass — a place which I know, but not as well as the hon. Gentleman? Is there a reason why a much-needed bypass has not been built and why money is being spent on bus services? The hon. Gentleman fails to prove his case. If that is the reason for the way in which he casts his vote tonight, I hope that in future he will consider proposed legislation more carefully.
I hope that the Minister will concentrate on the point made by my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody). What on earth will happen to rail services protected by section 20 grants? The House deserves a reply. I hope that the hon. Lady will not accuse local authorities of scaremongering. I hope that she will accept that they are genuinely worried about their future. I hope that she will allay our anxieties.
I listened intently to the contributions by the hon. Member for Gainsborough and Horncastle (Mr. Leigh) during the passage of the London Regional Transport Bill. I tried to like him a little more in Committee, but I had some difficulty doing so. I do not wish to be personal, but I liked him slightly less after hearing his contribution tonight, because he appears to understand less and less about public transport the more he speaks about it.
The Secretary of State for Transport (Mr. Nicholas Ridley): That makes two of you.
Mr. Snape: I am delighted to welcome the Secretary of State to his place. What he says might be true, but I should not be so rude about him because he well knows the affection with which I hold his performance at the Dispatch Box. I notice that he sent his Minister of State to do the dirty work this evening. It will probably embarrass her if I say that she did the job better than he could have done it. Her role in the Department of Transport is to go round the country tapping her head significantly when asked about the Secretary of State's plans.
The hon. Member for Gainsborough talked about how essential expenditure on road works was. He talked about its value in terms of employment. He was right. Substantial employment is involved in road works. He obviously fails to understand what the Conservative party fails to understand — that there is a great deal of employment involved not only in the operation of public transport but in the production of public transport vehicles, such as the building of new buses.
I have to tell the hon. Lady, in her role of purveyor of excuses for the Secretary of State, that the bus industry is not exactly—to use a footballing phrase—over the moon about the Government's proposals—
Mrs. Chalker: That is a romantic phrase.
Mr. Snape: It is a bit late for romance for me. However, if the hon. Lady can tear herself away from the Adjournment debate, she never knows.
It is not good enough for the hon. Member for Gainsborough and Horncastle and others to ignore the fact that many private firms despair because of the Government's attitude towards the public transport industry. Does not the hon. Gentleman stop to consider that firms such as Leyland and Metro Cammell have
650
enormous concern about the employment prejudiced by the barmy proposals of the Government? The public transport industry is surely not only about building roads.
The key to the legislation before us is that the Government are determined to prevent local authorities from making decisions about how money should be spent. They believe that Whitehall knows best. I understand that sort of attitude from the Secretary of State—he had a deprived upbringing. He went to a school where pupils were told from an early age that they knew best. The hon. Lady was not exactly a product of the state system either. The right hon. Gentleman believes that he is entitled to make decisions that will apply throughout the country. It is not only Labour members of local authorities who express concern about the Government's direction on transport policy. A great many members of the Tory party disagree with the legislation. Not too many of them are behind the right hon. Gentleman, which I understand, as many of the young Turks of the Conservative party found themselves, to their amazement, in the House in 1983. At least they can honestly claim that ignorance is bliss. The right hon. Gentleman and the hon. Lady have no such excuse.
I wish to refer—
Mr. Robin Corbett: Where are the SDP members?
Mr. Snape: We must not expect the SDP members to be around at this time of night—it is far to late for them to be out and about. They have all caught the bus home, presuming that the buses still exist.
I refer to the newspaper report—
Mr. Christopher Chope: What is the beef?
Mr. Snape: Does the hon. Gentleman really want to provoke me into that sort of argument?
I refer to the report in The Standard today. My hon. Friend the Member for Crewe and Nantwich said that she would not name the newspaper. I do not understand that. I make no bones about my attitude towards it—it is the worst newspaper in this country. It dropped below its usual depths today. Under the headline "Thank you Comrades!" it attempts to mislead — perhaps this was done inadvertently—many Londoners. It refers to "Left-wing Labour politicians" having been sacked from the London 'Transport Board and says that London ratepayers will be faced with a heavy bill.
The Prime Minister referred to the report and a later edition of the same dreadful newspaper reported that "Maggie"—of course, I would not refer to the Prime Minister in that way, I merely quote from The Standard—considered that the payments to the three who have been sacked were another reason to scrap the GLC. We all know that the Conservative party and Conservative Members hang on every word that the Prime Minister says—well, some of them do so with more enthusiasm than others. The blame for £90,000 being paid out in what are described as "golden handshakes" rests with the right hon. Gentleman the Secretary of State for Transport.
Mr. Leigh: No—with Ken Livingstone.
Mr. Snape: That shows how much attention the hon. Gentleman was paying to the debate that took place when the London Regional Transport Bill, as it then was, was being considered in Committee. He should be aware that

651
the Bill as drafted originally provided that compensation for such sackings or redundancies, call them what we will, should be met by the Greater London council.
Mr. Ridley: The hon. Gentleman knows that he is wrong.
Mr. Snape: No, I am not wrong. If the right hon. Gentleman wishes to intervene, I shall gladly allow him to do so. Apparently he does not wish to intervene. The story about the sackings appears in The Standard in a slanted form because the right hon. Gentleman, with his customary incompetence—well, perhaps he was swayed by the persuasive powers of my hon. Friends and myself—accepted an Opposition amendment in Committee that made the Department of Transport responsible for agreeing the terms of compensation if any members of the then board were fired by the Secretary of State. That is what happened, and if the right hon. Gentleman wishes to disagree with my version of events, I shall gladly allow him to intervene.
Mr. Ridley: The hon. Gentleman is not talking about the order, but he should get other matters straight. The original draft of the then Bill provided that the GLC, among others, could be asked to pay compensatory payments. The Government responded to the hon. Gentleman's amendment by removing that provision. That left the possibility — it was always there — that LRT should pay. The hon. Gentleman is exuberant tonight, but he should get these matters straight.
Mr. Snape: I have never been one to rub it in, and I shall not rub anything into the right hon. Gentleman's intervention. I think that he has conceded my argument, despite his initial indignation. He has accepted, in effect, that it is entirely his fault—this is the effect of his arbitrary decision to remove three members from the board — that taxpayers, and eventually London ratepayers, will have to foot the bill. As I understand the legislation, LRT will have to compensate the Department of Transport.
Mr. Ridley: Wrong again.
Mr. Snape: It is reported in The Standard that ultimately LRT will have to pay the compensation from its own funds, and that the amount will be decided by the Secretary of State for Transport. The right hon. Gentleman's incompetence is there for all to see.
Mr. John Butterfill rose—
Mr. Snape: No, I shall not give way. If the hon. Gentleman turned up more regularly to transport debates I might consider allowing him to intervene. The right hon. Gentleman has condemned himself from his own mouth. He has arranged for the compensation to be paid, and if it is another reason to scrap the GLC, as "Maggie" says, it is an even better reason to scrap the right hon. Gentleman, who is obviously unaware of the effects of his legislation, including the amendment that he accepted.
Once more we are seeing an attempt to undermine the principles of local government democracy. We are told that these decisions are rightly to be taken by central Government. What sort of Conservative party do we have these days when it believes that the bowler hats in Whitehall know the best way to spend local government funds?
652
I said earlier that I felt that some Conservative Members were motivated only by ignorance. The Government have no such excuse. They are motivated by malice. That is why we shall vote against the order.
12 midnight
Mrs. Chalker: With the leave of the House, I seek to reply to the debate.
The hon. Member for West Bromwich, East (Mr. Snape) is his highly amusing self. Not much of what he said had the least bit to do with the order, but we have come to expect that from him. He said that he was over the moon, or something. I should rather say that he was still in orbit and has not yet been rescued by the new transport satellite, the hon. Member for Crewe and Nantwich (Mrs. Dunwoody). I can only conclude that he had little to say about the order. I think that I know why, because I have, as is customary at this stage of the year, been around many of the roads annual consultative councils. I know that the shire and metropolitan county councils wish to get their bypasses and roads built. The TSG settlement will be roads capital only to assist them to do that, subject to the agreement of the House tonight and the agreement of another place.
I assure my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) that the settlement will be based on the transport policies and programmes submitted by the county councils this summer. They decide their priorities, what they put forward in their programme and when they are ready to proceed. Provided that the programme meets with the criteria that we have laid down, which go far wider than the primary road network, they will receive the settlement. I assure the hon. Member for Isle of Wight (Mr. Ross) that if they are suitable for roads capital only TSG, within sensible limits his bypasses will get it just as much as those of anyone else.
Mr. Snape: Will get what?
Mrs. Chalker: Transport supplementary grant. I realise that the hon. Gentleman does not understand the system and I was trying to help him.
The capital allocations will also provide for additional expenditure over and above that supported by grant. Despite the comments and questions of some hon. Members, I cannot anticipate the settlement that will be announced in December by my right hon. Friend the Secretary of State for the Environment, but provided that the order is given the support of the House tonight we shall be able to proceed to a much more sensible and less variable TSG than has been possible in previous years.
Mr. Tony Banks: Much smaller as well.
Mrs. Chalker: The hon. Gentleman is not right, but I shall come to him in a few moments if I have the time.
A couple of hon. Members have said that the change has been rushed through. Although formal consultation began at the beginning of July, local authority associations have been aware of the likely changes for some time. Capital only TSG has been around for some two years, and my right hon. Friend the Secretary of State for Transport had a good discussion at the national advisory council meeting with local authority representatives in May this year.

653
As I said a few moments ago, in that discussion the shire and metropolitan county councils said that they wished to get on with their road building, and they want a sensible scheme.
I am well aware that the metropolitan county councils do not wish to lose the excessive revenue support that they have been spending on public transport, but this TSG designed to promote the proper provision of local roads by county councils must be brought forward in this way now if we are to avoid what would otherwise be an unreal settlement in the future.
I accept that the mechanics of the TSG system have been difficult to understand. That is why when the hon. Member for Crewe and Nantwich commented about the change in the grant rate she ignored the difficulty of the threshold system based on population which has often made it difficult for hon. Members to understand why their bypasses in a sparsely populated county did not receive grant in the same way as they saw bypasses in more heavily populated areas receiving TSG. Those mechanics are simplified considerably by the proposal in the order. This is not a move to curb spending. We are removing the distortions that exist in current spending by using grant for the taxpayers' share of the costs of roads—those roads with more than local benefit. The amount of transport supplementary grant will differ from the previous amount, but the RSG block grant will be larger than it otherwise would have been to take account of road maintenance and other responsibilities.
The hon. Members for Wrexham (Dr. Marek) and for Hartlepool (Mr. Leadbitter) mentioned parking and other schemes. Since the system in Wales changed, only capital schemes in excess of £5 million have attracted grant. There is, therefore, effectively no change in Wales because of the order.
A number of hon. Members commented on the support for public transport. I have been surprised by the volume of support from the Opposition for the present system and their dire warnings about the new system. That only confirms my view that the current form of TSG is seen by Labour authorities as a means of financing excessive public transport subsidies. Unlike the Opposition, I do not believe that excessive subsidies mean healthy public transport or that they should be underwritten by the taxpayer. The discipline of financing public transport subsidies on an equal footing with other claims on the general resources available to councils will be beneficial to them. The councils may compare the value of the money provided by subsidies with the other means of keeping fares down, such as improvements in efficiency, competitive tendering to the private sector and the like. The Government are no longer prepared to support excessive subsidy for local public transport from central funds. The Government can no longer justify the payment of special central government grant to what are essentially local trading services.
I was asked about revenue for buses and rail services. In removing revenue support from TSG, we are not cutting the resources available to local authorities, as the Opposition have been suggesting. We shall maintain in real terms the provision for local authority current expenditure on transport at the planned 1984–85 level. This provides a sensible level of revenue support for bus
654
services, which we shall continue to support through block grant. We shall be introducing a new GRE formula to reflect the need of authorities to spend on bus subsidies.
We already have a separate GRE indicator for revenue subsidies for local rail services in the passenger transport executive areas. Councils will be able to decide whether to maintain that support for local services within the resources available to them. It is up to them to decide their priorities in the provision of local services. The TSG will not be paid for them, but they will be receiving block grant. [Interruption.] As is to be expected, the Opposition are making a lot of noise in this debate.
An examination of what has happened in recent years — shire counties had just 38 per cent. of the grant available with more than 61 per cent. of the population while London and the metropolitan counties had 62 per cent. of the grant—shows why there has been so much disquiet about TSG and why demand has arisen for a more equitable system. We shall ensure that road maintenance will not suffer. The provision will continue to be steadily increased in real terms, and RSG will reflect that in full, according to the GRE formula contained in RSG for it.
I was also asked about why the changes are coming forward now. They would have come forward even if the abolition of the metropolitan counties and the Greater London council had not been envisaged. They facilitate the payment of the transport supplementary grant to metropolitan districts and London boroughs, as set out in the consultation papers. The metropolitan districts and the London boroughs will get the TSG. They will also receive the block grant for the financing costs of the capital. With the support from RSG and TSG, they will be able to continue contracts inherited and carry out necessary programmes. If anything is different, the proposed changes mean a fairer deal for the metropolitan areas over the abolition period with regard to their road programmes.
I promised to return to the matter raised by the hon. Member for Isle of Wight. I understand it, having toured round the island on a delightful weekend in the summer, when I met him and discussed with his county councillors the problems that they face. He and his county council may rely on the assurance that we have given that we shall continue to support schemes to which we are already committed, for example the new Yar bridge. For the future, I can tell the hon. Gentleman that I am well aware of the special circumstances of several of the roads on the island. The terms of the order are sufficiently widely drawn to allow us to take the circumstances particular to the island into account when drawing up TSG for the future.
The local authorities will still continue to put their transport policies and programmes to the Department. They will decide the priority of their road spending. They will decide the way in which they wish to order their different schemes. That is certainly in no way a central decision about their programmes. They will also be able, as the new system develops, to consider schemes such as the regeneration of certain areas, which will have a national benefit. They can put forward many ideas, which I am sure we shall be able to accept in future.
It being one and a half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted business).
The House divided: Ayes 253, Noes 169.

Division No. 7]

[12.12 am

AYES

Adley, Robert

Forsyth, Michael (Stirling)

Alexander, Richard

Forth, Eric

Amess, David

Fowler, Rt Hon Norman

Ancram, Michael

Franks, Cecil

Arnold, Tom

Fraser, Peter (Angus East)

Ashby, David

Freeman, Roger

Aspinwall, Jack

Fry, Peter

Atkins, Robert (South Ribble)

Gale, Roger

Atkinson, David (B'm'th E)

Galley, Roy

Baker, Nicholas (N Dorset)

Gardiner, George (Reigate)

Baldry, Tony

Gardner, Sir Edward (Fylde)

Batiste, Spencer

Garel-Jones, Tristan

Beaumont-Dark, Anthony

Goodlad, Alastair

Bellingham, Henry

Gorst, John

Best, Keith

Gow, Ian

Bevan, David Gilroy

Grant, Sir Anthony

Biffen, Rt Hon John

Greenway, Harry

Biggs-Davison, Sir John

Gregory, Conal

Bonsor, Sir Nicholas

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

Boscawen, Hon Robert

Griffiths, Peter (Portsm'th N)

Bottomley, Peter

Grist, Ian

Bottomley, Mrs Virginia

Ground, Patrick

Bowden, A. (Brighton K'to'n)

Gummer, John Selwyn

Bowden, Gerald (Dulwich)

Hamilton, Hon A. (Epsom)

Boyson, Dr Rhodes

Hamilton, Neil (Tatton)

Braine, Sir Bernard

Hampson, Dr Keith

Brandon-Bravo, Martin

Hanley, Jeremy

Bright, Graham

Hannam, John

Brinton, Tim

Hargreaves, Kenneth

Brittan, Rt Hon Leon

Harris, David

Brooke, Hon Peter

Harvey, Robert

Brown, M. (Brigg & Cl'thpes)

Haselhurst, Alan

Browne, John

Hawkins, C. (High Peak)

Bruinvels, Peter

Hawkins, Sir Paul (SW N'folk)

Bryan, Sir Paul

Hawksley, Warren

Budgen, Nick

Hayes, J.

Bulmer, Esmond

Hayhoe, Barney

Burt, Alistair

Heathcoat-Amory, David

Butcher, John

Henderson, Barry

Butterfill, John

Hickmet, Richard

Carlisle, John (N Luton)

Higgins, Rt Hon Terence L.

Carlisle, Kenneth (Lincoln)

Hirst, Michael

Carttiss, Michael

Hogg, Hon Douglas (Gr'th'm)

Cash, William

Holland, Sir Philip (Gedling)

Chalker, Mrs Lynda

Holt, Richard

Chapman, Sydney

Hooson, Tom

Chope, Christopher

Hordern, Peter

Churchill, W. S.

Howard, Michael

Clark, Dr Michael (Rochford)

Howarth, Alan (Stratf'd-on-A)

Clark, Sir W. (Croydon S)

Howarth, Gerald (Cannock)

Clarke, Rt Hon K. (Rushcliffe)

Howell, Rt Hon D. (G'ldford)

Colvin, Michael

Howell, Ralph (N Norfolk)

Conway, Derek

Hubbard-Miles, Peter

Coombs, Simon

Hunt, David (Wirral)

Cope, John

Hunt, John (Ravensbourne)

Couchman, James

Hunter, Andrew

Crouch, David

Jackson, Robert

Currie, Mrs Edwina

Jessel, Toby

Dickens, Geoffrey

Jones, Gwilym (Cardiff N)

Dicks, Terry

Jones, Robert (W Herts)

Dorrell, Stephen

Key, Robert

Douglas-Hamilton, Lord J.

King, Roger (B'ham N'field)

Dover, Den

Knight, Gregory (Derby N)

du Cann, Rt Hon Edward

Knight, Mrs Jill (Edgbaston)

Dunn, Robert

Knowles, Michael

Durant, Tony

Knox, David

Dykes, Hugh

Lamont, Norman

Edwards, Rt Hon N. (P'broke)

Lang, Ian

Eggar, Tim

Latham, Michael

Evennett, David

Lawler, Geoffrey

Fairbairn, Nicholas

Lawrence, Ivan

Fallon, Michael

Leigh, Edward (Gainsbor'gh)

Farr, Sir John

Lester, Jim

Favell, Anthony

Lewis, Sir Kenneth (Stamf'd)

Fenner, Mrs Peggy

Lightbown, David

Fletcher, Alexander

Lilley, Peter

Fookes, Miss Janet

Lloyd, Ian (Havant)

Forman, Nigel

Lloyd, Peter, (Fareham)

656

Lord, Michael

Powell, William (Corby)

Lyell, Nicholas

Powley, John

McCurley, Mrs Anna

Prentice, Rt Hon Reg

McCusker, Harold

Price, Sir David

Macfarlane, Neil

Raffan, Keith

MacKay, Andrew (Berkshire)

Raison, Rt Hon Timothy

MacKay, John (Argyll & Bute)

Rathbone, Tim

Maclean, David John

Renton, Tim

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

Rhodes James, Robert

Madel, David

Rhys Williams, Sir Brandon

Major, John

Ridley, Rt Hon Nicholas

Malins, Humfrey

Rossi, Sir Hugh

Malone, Gerald

Sackville, Hon Thomas

Maples, John

Sainsbury, Hon Timothy

Marlow, Antony

St. John-Stevas, Rt Hon N.

Marshall, Michael (Arundel)

Scott, Nicholas

Mates, Michael

Shaw, Sir Michael (Scarb')

Mather, Carol

Shepherd, Colin (Hereford)

Maude, Hon Francis

Shersby, Michael

Mawhinney, Dr Brian

Silvester, Fred

Maxwell-Hyslop, Robin

Skeet, T. H. H.

Mayhew, Sir Patrick

Smith, Sir Dudley (Warwick)

Mellor, David

Speller, Tony

Merchant, Piers

Spicer, Jim (W Dorset)

Meyer, Sir Anthony

Squire, Robin

Mills, Iain (Meriden)

Stanbrook, Ivor

Miscampbell, Norman

Stevens, Lewis (Nuneaton)

Mitchell, David (NW Hants)

Stewart, Allan (Eastwood)

Moate, Roger

Stokes, John

Monro, Sir Hector

Stradling Thomas, J.

Montgomery, Fergus

Sumberg, David

Morrison, Hon C. (Devizes)

Taylor, John (Solihull)

Moynihan, Hon C.

Terlezki, Stefan

Murphy, Christopher

Thompson, Donald (Calder V)

Neale, Gerrard

Townend, John (Bridlington)

Needham, Richard

Trippier, David

Nelson, Anthony

van Straubenzee, Sir W.

Newton, Tony

Walker, Bill (T'side N)

Nicholls, Patrick

Ward, John

Nicholson, J.

Wardle, C. (Bexhill)

Norris, Steven

Warren, Kenneth

Onslow, Cranley

Watson, John

Oppenheim, Phillip

Wilkinson, John

Ottaway, Richard

Wolfson, Mark

Page, Richard (Herts SW)

Wood, Timothy

Parkinson, Rt Hon Cecil

Yeo, Tim

Parris, Matthew

Patten, John (Oxford)

Tellers for the Ayes:

Pawsey, James

Mr. Michael Neubert and

Peacock, Mrs Elizabeth

Mr. Mark Lennox-Boyd.

Pollock, Alexander

NOES

Adams, Allen (Paisley N)

Campbell, Ian

Anderson, Donald

Canavan, Dennis

Archer, Rt Hon Peter

Carlile, Alexander (Montg'y)

Ashdown, Paddy

Clarke, Thomas

Ashton, Joe

Clay, Robert

Atkinson, N. (Tottenham)

Clwyd, Mrs Ann

Bagier, Gordon A. T.

Cocks, Rt Hon M. (Bristol S.)

Banks, Tony (Newham NW)

Cohen, Harry

Barnett, Guy

Coleman, Donald

Barron, Kevin

Concannon, Rt Hon J. D.

Beckett, Mrs Margaret

Conlan, Bernard

Beith, A. J.

Cook, Frank (Stockton North)

Bell, Stuart

Cook, Robin F. (Livingston)

Bennett, A. (Dent'n & Red'sh)

Corbett, Robin

Bermingham, Gerald

Corbyn, Jeremy

Bidwell, Sydney

Cowans, Harry

Blair, Anthony

Craigen, J. M.

Boothroyd, Miss Betty

Crowther, Stan

Boyes, Roland

Cunliffe, Lawrence

Bray, Dr Jeremy

Davies, Ronald (Caerphilly)

Brown, Gordon (D'f'mline E)

Davis, Terry (B'ham, H'ge H'l)

Brown, Hugh D. (Provan)

Deakins, Eric

Brown, N. (N'c'tle-u-Tyne E)

Dewar, Donald

Brown, R. (N'c'tle-u-Tyne N)

Dormand, Jack

Brown, Ron (E'burgh, Leith)

Dubs, Alfred

Caborn, Richard

Dunwoody, Hon Mrs G.

Callaghan, Jim (Heyw'd & M)

Eadie, Alex

657

Eastham, Ken

Oakes, Rt Hon Gordon

Ellis, Raymond

O'Brien, William

Evans, John (St. Helens N)

O'Neill, Martin

Ewing, Harry

Park, George

Faulds, Andrew

Parry, Robert

Fisher, Mark

Patchett, Terry

Foster, Derek

Pavitt, Laurie

Foulkes, George

Pendry, Tom

Fraser, J. (Norwood)

Penhaligon, David

Freeson, Rt Hon Reginald

Pike, Peter

Garrett, W. E.

Powell, Raymond (Ogmore)

Gilbert, Rt Hon Dr John

Prescott, John

Godman, Dr Norman

Radice, Giles

Golding, John

Randall, Stuart

Gould, Bryan

Redmond, M.

Hamilton, James (M'well N)

Rees, Rt Hon M. (Leeds S)

Hardy, Peter

Richardson, Ms Jo

Harrison, Rt Hon Walter

Roberts, Ernest (Hackney N)

Hart, Rt Hon Dame Judith

Robertson, George

Haynes, Frank

Robinson, G. (Coventry NW)

Hogg, N. (C'nauld & Kilsyth)

Rogers, Allan

Home Robertson, John

Rooker, J. W.

Howell, Rt Hon D. (S'heath)

Ross, Ernest (Dundee W)

Howells, Geraint

Ross, Stephen (Isle of Wight)

Hughes, Robert (Aberdeen N)

Rowlands, Ted

Hughes, Roy (Newport East)

Sedgemore, Brian

Hughes, Sean (Knowsley S)

Sheerman, Barry

John, Brynmor

Sheldon, Rt Hon R.

Kaufman, Rt Hon Gerald

Shore, Rt Hon Peter

Kilroy-Silk, Robert

Short, Ms Clare (Ladywood)

Kirkwood, Archy

Short, Mrs R.(W'hampt'n NE)

Lamond, James

Silkin, Rt Hon J.

Leadbitter, Ted

Skinner, Dennis

Leighton, Ronald

Smith, C.(Isl'ton S & F'bury)

Lewis, Ron (Carlisle)

Smith, Rt Hon J. (M'kl'ds E)

Lewis, Terence (Worsley)

Snape, Peter

Litherland, Robert

Soley, Clive

Lloyd, Tony (Stretford)

Spearing, Nigel

Lofthouse, Geoffrey

Stott, Roger

Loyden, Edward

Strang, Gavin

McCartney, Hugh

Straw, Jack

McDonald, Dr Oonagh

Thompson, J. (Wansbeck)

McGuire, Michael

Thorne, Stan (Preston)

McKay, Allen (Penistone)

Tinn, James

McKelvey, William

Wallace, James

McTaggart, Robert

Wardell, Gareth (Gower)

McWilliam, John

Wareing, Robert

Madden, Max

Weetch, Ken

Marek, Dr John

Welsh, Michael

Martin, Michael

White, James

Maxton, John

Wigley, Dafydd

Maynard, Miss Joan

Williams, Rt Hon A.

Meadowcroft, Michael

Winnick, David

Michie, William

Wrigglesworth, Ian

Mikardo, Ian

Young, David (Bolton SE)

Millan, Rt Hon Bruce

Mitchell, Austin (G't Grimsby)

Tellers for the Noes:

Morris, Rt Hon A. (W'shawe)

Mr. Don Dixon and

Morris, Rt Hon J. (Aberavon)

Dr. Roger Thomas.

Nellist, David

Question accordingly agreed to.
Resolved,
That the Local Government (Supplementary Grants for Transport Purposes Specified Descriptions) Order 1984, dated 18th October 1984, a copy of which was laid before this House on 22nd October, in the last Session of Parliament, be approved.

Blind Persons (Benefits)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Boscawen.]
12.24 am
Mr. Laurie Pavitt: At the outset of this important debate, may I say how pleased I am that the Minister for Social Security is to reply. I have known him for some years and know that he shares some of the concern that is felt in all parts of the House about the arrangements for the disabled. Tonight we are discussing those who are disabled by blindness. I have some sympathy for the hon. Gentleman, as I believe that his heart would like to make appointments that the Chancellor will not permit him to keep.
I must make some comparisons. Comparisons are always odious, but I should make it clear that, when they compare what happens to people with other forms of disability, the blind are not trying to make divisions between themselves, paraplegics, the mentally handicapped or those who are handicapped by deafness. There is unity and solidarity among the disabled. Although the blind would like their needs to be given special consideration, they do not want that to be at the expense of other sections of the community. Those other sections of the community have been fortunate in regard to mobility and attendance allowances, and the blind are most grateful for that.
I am pleased to see that my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris) is present. Everyone knows that, although all Governments have been able to contribute, no Back Bencher has made a greater contribution than did my right hon. Friend by introducing and getting onto the statute book the Chronically Sick and Disabled Persons Act 1970, which started a series of measures providing care and attention. The House is most grateful to him.
I intend to conclude my speech earlier than usual, as the hon. Member for Bournemouth, West (Mr. Butterfill) is present. As this is an all-party concern, I hope that he might catch your eye, Mr. Deputy Speaker, before the Minister replies. Blind people miss out in two ways—first, because most benefits are not geared to help with extra costs. For example, invalidity benefit helps people who have lost their income because they cannot work. It is not designed to meet the extra price of being blind. Secondly, blind people do not qualify for important benefits which would help with extra costs. For example, they do not qualify in their own right for mobility or attendance allowances. Blindness does not qualify people for mobility allowance, which is based on physical ability to move and not on sensory difficulties which make it hard or unsafe to get about and which impose extra costs in assistance and fares. Indeed, many blind people are barred automatically from mobility allowance because they cannot claim it for the first time if they are over 65—and more than half of the 130,000 blind people in the United Kingdom are over 75 and most lost their sight as they grew older. Blindness does not therefore qualify people for attendance and other allowances. In that context, I hope that the Minister will cast his eye over the possibility of making some improvements.
Blind people do not find it easy to do their own decorating, to clean their own windows, to cut their own hedge, to make their own clothes, to mend a fuse or rewire

659
a plug or to shop around for the best value. Blind people find that their clothes get extra wear and tear from bumping into things, rubbing against walls, catching on projections, scorching, cigarette burns and tears. Their crockery and glass is more readily broken and chipped. They often need to pay for a companion and to take taxis when they travel. If one is blind, one often needs tape recorders and tapes to keep telephone numbers, recipes and notes, and to keep up with the printed word. One cannot get by with a ballpoint pen and a pad of paper. One needs a typewriter or a braille typewriting machine. A blind person uses the telephone more and at more expensive times. One needs extra space to store bulky braille books. Braille takes eight times the space of print.
Blind people receive special help, and the Minister will take that into consideration. Forty thousand blind people get supplementary benefit and an extra £1·25 a week. That was fixed in 1962, and I hope that it will be revised. Thirty thousand blind workers receive extra tax relief that amounts to only £2 a week. But 60,000 blind people receive neither. There is, quite rightly, an allowance for those who cannot walk, but there is no allowance for those who cannot see.
Last session an early-day motion sought to persuade the Government to accept International Labour Organisation convention 159, which affects all disabled people, including blind people. It was approved by the ILO, but the Government have still to ratify it.
Blind people face problems at work. I mentioned their difficulty of remaining in the community. For the past 30 years the general principle has been not to put the disabled into institutions, but to make them a living part of the community. That means working. Blind people are at a disadvantage compared with other disabled people regarding sheltered work shops. Because blind people are provided for in an earlier Act than other disabled people, they cannot return to a sheltered work shop after leaving it
In a period of prosperity blind people leave sheltered work shops and find jobs in the community. When there is a recession, however, they find themselves out of work—at present more than two and a half times as many blind people are unemployed as non-disabled people—and are not permitted to return to sheltered work shops. An attempt should be made to provide such a facility for the blind to bring them into line with other disabled people.
We are a civilised society. A civilised society is judged by the way it treats the very young, the very old and those who are not fortunate enough to have all their faculties and to be able to face the physical and mental problems of our modern world. A civilised society should pay more attention to the fact that for about 25 years the blind have been missing out on provisions. Something should be done to bring provisions for them into line with others who unfortunately suffer from disablement.
Mr. John Butterfill rose—
Mr. Deputy Speaker (Mr. Paul Dean): I understand that the hon. Member for Bournemouth, West (Mr. Butterfill) has the agreement of the hon. Member for Brent, South (Mr. Pavitt) and the Minister for Social Security to intervene.
Mr. John Butterfill: I am greatful to the hon. Member for Brent, South (Mr. Pavitt) for his characteristic courtesy in allowing me to intervene
660
in the debate. He made an eloquent case for the plight of the blind. I shall confine my contribution to some questions which may enable us to judge more clearly the present position of the blind.
My hon. Friend the Minister for Social Security was good enough to reply to a written question today in which I asked what the present day value was of the original blindness allowance set in 1948 at 15s, or 75p, a week. My hon. Friend replied that its value today would be £7.06. How does he reconcile that with Lord Glenarthur's reply on 21 March this year in another place that
"If the extra allowance of 1948 had been increased in line with the movement in the retail price index it would have been £8.21 in November 1983."—[Official Report, House of Lords, 21 March 1984; Vol. 449, c. 1359.]
I appreciate that the Government have made great strides in reducing inflation, but the disparity still seems rather odd. My hon. Friend may say that his answer allowed for the deduction of the housing cost component. If so, perhaps he will assist in restoring comparability as between the two answers.
The hon. Member for Brent, South gave a detailed catalogue of the extra costs incurred by the blind. I believe that the £1.25 currently paid barely meets the cost of maintaining a guide dog. The payment is thus in urgent need of review, especially as it has come nowhere near keeping pace with inflation. Although we applaud the increase in tax allowance given to the blind by the Government some time ago, does not my hon. Friend feel in retrospect that we might have done better to use that money to increase the allowances of the less well off rather than to help the small and relatively more affluent percentage of blind people in a position to pay tax?
I hope that my hon. Friend will also explain one or two anomalies relating to supplementary benefit. It seems that the non-householder addition will make single non-householders better off than single householders. The ordinary rate for single householders is £28.05 per week whereas single non-householders receive £31.15 per week when the supplementary benefit and the blindness addition are added together. Similarly, the long-term rate for single householders is £35.35 per week whereas for single non-householders it is £38.45. That appears to discriminate against the non-householder when it seems clear that the needs of the householder are likely to be greater.
In conclusion, I draw attention to my early-day motion 36 and hope that my hon. Friend the Minister has had the opportunity to study it.
12.38 am
The Minister for Social Security (Mr. Tony Newton): This debate is of considerable interest to many thousands of people outside the House, some hundreds of whom lobbied Members on the subject earlier today.
I congratulate the hon. Member for Brent, South (Mr. Pavitt) and my hon. Friend the Member for Bournemouth, West (Mr. Butterfill) on raising the subject and on the serious and responsible way in which they have put the case, which was very much in line with the impressive way in which the arguments were put to me this afternoon by representatives of the Royal National Institute for the Blind, the National League of the Blind and Disabled and the National Federation of the Blind of the United Kingdom in connection with their lobby. It was put to me fairly firmly this afternoon by one of the people who was in the delegation that what was wanted was not expressions of sympathy but action. I understand that.

661
I must make it clear that I cannot tell hon. Members tonight what they want to hear. However, I am sure that there is nothing between us in recognising the problems that blind people face, in our sympathy—I use the word advisedly—with their difficulties, and in our concern to secure that their needs are reflected in the formation of social security policy.
The existing major provisions in supplementary benefit and tax have already been referred to. My hon. Friend the Member for Bournemouth, West is right in his assumption about the difference between the figure that I gave him in a recent answer about the real value of supplementary benefit addition compared with 1948 and the answer given earlier in the year in another place. It is because, as in all our answers on supplementary benefit rates, of which the blindness addition is one, we use the same price index as that used for uprating supplementary benefit, that is the retail price index less the housing component of that index. The comparable figure to the answer in the other place, had the recent answer been on that basis, would have been of the order of £8·50.
I hope that I made it clear in the answer that I was answering on the basis that I did. That seems sensible, given that for supplementary benefit claimants housing benefit costs are met separately, and that is as true for blind claimants for supplementary benefit as it is for any other. Therefore, it is sensible to use this index convention in talking about supplementary benefit rates or additions. I should not want to mislead my hon. Friend.
There has been reference to the supplementary benefit blind addition and to the tax allowance, which, as my hon. Friend said, has been increased by the Government to £360. However, it may be sensible if I set out in a little more detail some of the other existing provisions, because they amount to somewhat more than is recognised, and it is important that the possible entitlement of blind people should be understood. We have been taking various steps to try to ensure that it is more widely understood.
In addition to the supplementary benefit blind addition of £1·25, as my hon. Friend recognised, single householders aged 18 or over and those aged 16 to 17 who have a dependent child are entitled to a further addition to that benefit to bring the scale rate up to the higher level of a householder. That will be worth, from 26 November, £5·60 additional to those in receipt of the ordinary rate of supplementary benefit and £7·15 extra a week for those on the long-term rate, which includes pensioners. My hon. Friend seems to have misunderstood the position as between householders and non-householders. He will have gathered from what I have just said that the benefit of non-householders is brought up to that for householders in these circumstances.
Equally, where householders are in receipt of both supplementary benefit and housing benefit, where there is a dependant in the household—this is another advantage of the present system for the blind — no assumed contribution towards housing cost is deducted from the claimants' housing or supplementary benefit entitlement. In the case of housing benefit entitlement, where the claimant is in receipt of housing benefit only, the needs allowance is increased by £4·95 a week where the claimant or his partner is blind, and by £7·30 a week if both are blind. That does not mean an equivalent amount of benefit, because that will depend on various other
662
circumstances, including the rent and rates paid, but it brings an additional advantage to blind people. The claimant's benefit is not reduced to take account of an assumed contribution towards housing costs from any non-dependent member of the household.
In the context of the debate, it is perhaps ironic that the provisions mean that, far from being ignored in the present system, blind people are, I think that I am right in saying, the only group of people who command special treatment of this kind as a result of a specific disability. In making that point, I am conscious that it can be turned round to say that the special case for the treatment of blindness in that way has already been recognised. Before hon. Members jump in to make too much of that point, let me say that for the most part those provisions are an inheritance from a time when blindness was virtually the only disability to be recognised. For a long time now—I recognise that the right hon. Member for Manchester, Wythenshawe (Mr. Morris) played an important part in this—the approach of successive Governments of both parties has been to seek to recognise and to try to meet the needs of disabled people as a whole.
The principal reason why the supplementary benefit addition has not been systematically uprated, despite the introduction of new benefits and a massive increase in social security spending on the long-term sick and disabled, is precisely because Governments have sought to concentrate resources on provisions that help disabled people across the board.
Mr. Alfred Morris: We cannot argue the case for legislation in an Adjournment debate, but the Minister is well aware that the RNIB, the National League of Blind and Disabled and the National Federation of the Blind are concerned to see the introduction of a blindness allowance. Will he be making representations to the Chancellor about the strength of the case for such an allowance? At the same time, can he say anything about the importance of the claim on behalf of people who are both deaf and blind for some help with their mobility? He knows that the Deaf-Blind Helpers League is concerned on that matter. I hope that he will be able to say a brief word about its case.
Mr. Newton: Indeed, I was about to make the point, in the context of what I have just said, about the development of benefits in recent years alongside the long-standing national insurance benefit, sickness benefit, invalidity benefit—sickness benefit partly replaced by statutory sick pay — for those who are incapable of work. We have seen from the right hon. Gentleman's work, and more recently from changes that we have made, the development on non-contributory invalidity benefits, now turning into the severe disablement allowance in which the position of the blind is particularly recognised by automatically passporting them over the 80 per cent. test. There is a range of non-contributory invalidity benefits from which many blind people have benefited. The introduction of attendance allowance has been another major development, and there has been the introduction of mobility allowance.
All those benefits are available to blind people on the same basis as to everybody else. Those are not idle words. I accept that there have been—this is directly relevant to the right hon. Gentleman's point — a number of

663
difficulties about mobility allowance, particularly involving blind and deaf-blind people, and to some extent mentally handicapped people as well, which remain in a state of some uncertainty because of a case which is now going on appeal to the House of Lords. The right hon. Gentleman will understand that, because the matter is subject to appeal, there is little that I can add tonight except to say that we shall review the need to look at the guidance, and, indeed, if necessary, the regulations in the light of the outcome of that case. Clearly I cannot say more than that tonight.
On our latest information, some 13,600 people with visual impairment are in receipt of attendance allowance. It must be bringing them considerable assistance.
Mr. Butterfill: Does my hon. Friend agree that it is probable that the vast majority of those are elderly blind people who might well receive attendance allowance in any case?
Mr. Newton: It is possible, although we cannot be sure, because we do not have sufficient analyses. However, I shall come to that point in a moment. As time is short, I simply want to emphasise that as a Government we have sought to build on the approach of developing benefits that spread across the range of disabled people and are directed primarily to the needs that arise from disability, rather than to classify people according to their disabilities.
To that end, we have commissioned the most substantial survey of disabled people and their needs to have been undertaken in this country for many years, with a view to giving us better information for future planning and policy making. It would, of course, be open to hon. Members to say that they wished to change the approach that has informed the development of disability benefits in recent years under Governments of both parties, but I hope that they will ask themselves a few questions before deciding that that is what they wish to do. For example, is such an approach really consistent with the more coherent system of benefits for disabled people which is, I think, our common aim, given that the effects of so many disabilities and disabling diseases vary so much from case to case? Is it established that the undoubted problems that blind people face can be so clearly distinguished from those caused by other disabilities that the case of a blindness allowance can be taken in isolation?
The hon. Member for Brent, South has always, to his great credit, taken a close interest in the problems of deaf people and he will be as well aware as I am of the case put
664
forward by them and on their behalf in respect of the extra costs of their special problems. Indeed, that case is being advanced at the moment. I do not think that the hon. Gentleman would wish any more than I do to arbitrate between the claims of the blind and the deaf, but I am sure that I will carry him with me in saying that the organisations representing the deaf feel that they too have a powerful case which should command our attention.
Given that three quarters of those who are blind are over 65 and that well over half are over 75—in other words, that blindness is predominantly a problem of old age—are hon. Members really sure that it would be right to single out blindness for unique provision alongside the many other disadvantages and disabilities of advancing years?
In asking those questions, I have deliberately refrained from referring to the question of cost, but clearly that too has to be faced. To extend the blindness allowance to all blind people at mobility allowance rates would cost about £125 million. Even more modest proposals, such as the maintenance of age restrictions for mobility allowance and their application to a blindness allowance, would probably leave us with a bill of about £40 million. Inescapably, those figures must be looked at alongside many other claims including an extension of invalid care allowance to married women, a reduction of the 80 per cent. disability test for the severe disablement allowance, the possible introduction of a partial incapacity benefit, and abolition of the mobility allowance age limit. They are all powerful claims. There are also demands for an improvement in services, such as the employment services to which the hon. Member for Brent, South referred, if resources are available.
I do not know, and I do not pretend to know, the answers to all the questions that I have put before the House. I have tried to approach the debate in a spirit of listening constructively to the arguments at a time when we are looking at much of our existing provision for social security and mounting a major survey of needs, including the information necessary for future planning.
I am sorry that I have been unable to say what hon. Members would like me to say, but they can be assured that in our work we shall be determined to ensure that we take account—as we should—of the case that has been made here tonight on behalf of blind people.
Question put and agreed to.
Adjourned accordingly at seven minutes to One o' clock.