HL Deb 05 November 1969 vol 305 cc339-66

2.45 p.m.

Debate resumed on the Motion moved on Tuesday, October 28, by Baroness Gaitskell—namely, That an humble Address be presented to Her Majesty as follows:—

"Most Gracious Sovereign—We, Your Majesty's most dutiful and loyal subjects, the Lords Spiritual and Temporal in Parliament assembled, beg leave to thank Your Majesty for the most gracious Speech which Your Majesty has addressed to both Houses of Parliament."

THE EARL OF DUNDEE

My Lords, the number of your Lordships who have indicated your intention to speak to-day is greater than it was yesterday, and I do not want to take up much time. I should like first to make a short reference, for the sake of continuity, to yesterday's debate, and then to refer equally shortly to the question of industrial relations and also to the question of regional industrial development.

I greatly enjoyed the winding-up speech last night of the noble Lord, Lord Brown. I agree with him that in this House we can do more good if we discuss these matters in a non-Party spirit, and I sympathised with him when he said that if we always blame the Government for our economic difficulties, we shall only encourage the ordinary citizen to think that he has no responsibility at all. But, if I may say so, I have been in politics for longer than the noble Lord, and I feel I ought to warn him that, whatever we say here in this House, the ordinary citizen will always continue to blame the Government, not only for everything that goes wrong but for a great many things that go right, too; and all Governments will probably continue to claim the credit for what goes well, although it would probably have gone still better if only they had left it alone.

The noble Lord said that when the present Government took office in 1964 there was a high rate of industrial activity combined with a big trading deficit for that year, and he seemed to imply that this Government rather expected to go out of office in about a year's time, leaving a large balance-of-payments surplus together with inactivity, as he said had been the case in 1958. On the other hand, the noble Lord, Lord Beswick, was a little more sanguine. He thought it was likely that we were moving into circumstances in which a balance-of-payments surplus would be combined with greater industrial activity and growth. That is what the two noble Lords said. They did not make quite the same prediction, but I could not help feeling that it would have improved the Government's public image a little if only the Government could have predicted what was going to happen before now with a little less inaccuracy than in fact they did.

My noble friend Lord Jellicoe told a story yesterday about a French prince who was a very bad shot, but he had a loyal and faithful servant who always fired at the same time as his master and then said, as the quarry fell stone dead, "Monsieur tire à merveille". The speeches of the two noble Lords on the Front Bench opposite made me think of an even better and more loyal servant, the native batman of an Anglo-Indian colonel who was a very bad shot indeed but who was invited by a Maharajah to an enormous duck shoot. The batman loaded for his master, who fired 1,500 cartridges without visible result. When they got home the adjutant took the batman aside and anxiously whispered, "Tell me, did the commanding officer shoot as badly as he usually does?" But the batman drew himself up and replied, "Sir, the colonel sahib shot with impeccable accuracy, but God was merciful to the birds." I think that for the last five years God has been very merciful to all the birds at which Her Majesty's Government have aimed.

The rate of economic growth was the biggest and fattest duck which they have missed. Under the National Plan it was to be 3.8 per cent. a year for six years, which was rather an interesting figure because that six-year total was exactly one-quarter of 1 per cent. less than it had been in the previous six years without any National Plan at all. What actually happened was that the target was introduced one year after it was meant to begin and then abandoned four years before it was meant to end. There was, however, a second barrel in the Government's Election Manifesto of March, 1966, which predicted that the standard of living—not economic growth, but standard of living—would go up by 25 per cent. in five years. In fact, the only thing which has gone up in five years by nearly 25 per cent. is not the standard of living but the cost of living, and I really think that that is an unrivalled record of sustained progress.

On taxation, the noble Lord, Lord Beswick, told us yesterday, almost gleefully, that a Conservative Government could not abolish S.E.T. unless they put forward an alternative tax which would be equally, or even more, objectionable. I suppose that if we really tried hard enough we could work out a tax which might do even more harm than the selective employment tax, but there was a time when the late Chancellor of the Exchequer said he hoped to carry through the Government's programme without any increase in taxation at all; and if one goes a little further back in history there was a Government which even reduced taxation by £2,000 million in 13 years, in spite of carrying through a very large programme of social reform and economic progress.

As for high interest rates, which in my view may be even worse than high taxation, especially for small businessmen, I shall always remember the touching scene on the introduction of Mr. Callaghan's pre-Election March, 1966, Budget which I witnessed from your Lordships' Gallery in the other place, when he and George Brown publicly shook hands on the Treasury Bench after it was announced that there would at last be a reduced rate of interest for house-purchase loans to people of small incomes, who could opt, if they did not pay income tax, to get the loan at a reduced rate. It is a sad memory for me, because even now, I am told, the option scheme is being revised, and even after the revision the rate of interest which these smallest householders will have to pay on a house of average size will actually be £1 10s, a week more than it was in 1964. I think that the rise of the interest rate on house-purchase to 8½, per cent. has very seriousy retarded the expansion in home ownership which has been going on, but much too slowly, since the early 'fifties. Britain in general, and Scotland in particular, is still predominantly a rent-paying country, and I do not think we shall solve our housing problem until we have become a nation predominantly of house-owners, like Canada or the United States.

But, my Lords, the most recent miss of all, in the present year, was the Industrial Relations Bill. Your Lordships may remember that it was talked about quite a lot before it was abandoned. According to The Times and the Financial Times —I forget whether this was an official hand-out or one of those leaks, but, anyhow, it was in The Times, the Financial Times and other papers—the Prime Minister told a Party meeting in April that this Bill was essential to our economic recovery, essential to our balance of payments and essential to full employment". That may have been, perhaps, only the art of hyperbole. Anyhow, we must all hope that it is not really true. He is then reported to have said that the passage of this Bill was essential to the Government's continuance in office". Some people might not mind very much if that was true. But I do not think anybody believes, and I am sure none of your Lordships believes, that when the Government dropped that Industrial Relations Bill they were truly satisfied with the general assurance from the Trades Union Congress that they would try a little harder to settle unofficial strikes than they had done before.

If I may try briefly to summarise the position as I see it, I think the Donovan Report gave a useful analysis of the problem, although most of us did not think much of their recommendations, on which members of the Commission did not seem to be very united. One thing which they stressed—rightly, I think—was that the number of working days lost in strikes, in which we had always thought we compared fairly well with other industrial countries, is not a true measure of the damage inflicted on our economy, and that the number of strikes, excluding those in the coal industry, has been increasing for a good many years.

My Lords, the gracious Speech tells us that Bills will be brought in to promote improved industrial relations and to provide for equal pay for men and women". I think we are aware what the proposals about equal pay for men and women are likely to consist of, but I do not know what other Bills there will be, and it may be too early at this moment to ask the noble Lord the Leader of the House to tell us what the nature of the Bill or Bills will be "to promote improved industrial relations". I certainly will not press him if he is not ready to tell us now.

On the other hand, the Government have the great advantage of being able to criticise, now or at any time, with all the strength of their departmental information and their official knowledge, the proposals of the Opposition. It is not often that an Opposition sticks out its neck, as the present Opposition has done, by publishing, more than eighteen months ago now, our full and detailed, though of course provisional, proposals, with the intention that the public should have every opportunity both of understanding and of criticising those proposals. They have already been discussed, attacked and defended many times in your Lordships' House as well as outside it. I think it was last week or the week before that the Prime Minister, according to Press reports, suggested that although we are the only industrial country where collective industrial agreements are not legally binding, yet other countries may have more to learn from us than we have from them. I am sure that we all have a great deal to learn from each other, but I doubt whether any of those other industrial countries would wish to follow the present example of the United Kingdom in this matter.

Almost exactly two years ago the ex-Minister of Labour in the present Government, Mr. Gunter, made what I think was a very true observation about this subject—and this is the only quotation from Hansard which I propose to inflict on your Lordships. It was actually in reply to a Question on November 13, 1967, about the dock strike. But he went beyond that. He said: The disturbing thing about the docks strike—and, indeed, about many elements of British industry—is that it is an unofficial stoppage. Perhaps I may give an example. When Mr. Walter Reuther brings his men out on strike in the American motor car industry, they have had at least three years' peace. No one has broken a contract. When he takes them back, there is another three years in which they can plan and wait. The dilemma of British industry is continuous interruption of production lines. No one knows when it will strike next."—[OFFICIAL REPORT, Commons, 13/11/67; col. 35.] I think that that is a very pregnant observation and I would say to your Lordships that this is an urgent matter of trade union reform which ought to be dealt with quickly. I wish that it could be dealt with in this Session. If it is not dealt with quickly, then this country will suffer grave disadvantage in its economic growth in comparison with other free countries of similar industrial capacity. Finally, my Lords, the gracious Speech says that the Government will continue to foster the fullest use of resources in all regions and will lay before you measures to provide for assistance to industry in intermediate areas. I should first like to say this. I agree with the Government diagnosis of our present unemployment problem. When I was a member of the last Government I remember that we had two very short but relatively acute periods of unemployment, one in the winter of 1958–59 and the other in March, 1963, which were mainly due to weather. We were strongly attacked—I thought rather unreasonably—on account of these figures. But as my noble friend Lord Jellicoe pointed out yesterday, for the last year or more the figures have been at a much higher average level. Nevertheless, I still think the Government are right in saying that the present problem of unemployment is regional and not national: there is no real unemployment problem in the London area, in the South-East or in the Midlands.

I should also like to say that I commend the Government's activity in pursuing their policy of attracting more industry to the development areas. I think that the policy of using industrial development certificates, to refuse them to industries in one area in order to persuade them to go to another, is a justifiable policy. I am certainly not speaking of this in any kind of Party spirit, because on one occasion in 1958 I criticised my own Party as I thought they were being less active in pursuing this policy than they might have been. I believe that our development area policy reached its best level from 1960, when my noble friend Lord Eccles brought in the Local Employment Act, to 1963, when Mr. Maudling's Budget gave a 100 per cent. depreciation allowance to industries in the development areas.

While I am glad that this Government are pursuing the same objectives, I think that there are one or two points on which their tactics may not be quite riqht. Your Lordships will forgive me if my examples are from Scotland, which is the place I know best, although of course the other development areas in North-East England, in Wales, and especially in Northern Ireland (which I had the great pleasure of visiting for some days the week before last) are equally important. There is one point on which I am doubtful of the Government's tactics in this matter. In Scotland there is the policy of a general spreading or dissemination of industry and development, in preference to one of growth points—but this is rather a technical matter which I will not pursue this afternoon. Moreover, I think it was a mistake to substitute the present investment grants for the depreciation allowances which had been given in 1963.

I know the Government's argument on this matter and I quite understand it. Their argument is that a depreciation allowance does not benefit the smaller owners of industry who cannot claim it because they may not be within any income tax bracket and, therefore, it is weighted in favour of the larger owners whose firms are paying income or corporation profits tax. I sympathise with that, for I am much in favour of more smaller industries. I will not trouble your Lordships with figures, but I believe that on balance the depreciation allowances were doing substantially more good in Scotland than the present investment grants, particularly since those grants do not apply to all the kinds of machinery which were covered by depreciation allowances. I would prefer it if this course were abandoned and if we went back to what was done in 1963.

My Lords, the final criticism that I have does not apply to Scotland because, since nearly the whole of Scotland is a development area, there are no intermediate areas in it. But so far as the other parts of Britain are concerned, I am rather doubtful whether the regional employment premium is producing the best results for value of money because I think it may sometimes be attracting industry not from the conurbations, but away from the "grey" areas; and that it may to some extent be discouraging industrial development in areas which might, in a year or two, fall behind the present development areas in economic growth.

I have spent a minute or two longer than I meant to do on this point, my Lords, because I think it right to make it clear that we on this side of the House believe that this kind of control through industrial development certificates makes common sense, since it is not the kind of control that is administratively top heavy, although in general we maintain that there is too much Government control over the whole field of industry and we believe that our economic growth would benefit if Government control in general were to be substantially reduced. May I conclude by offering my very genuine good wishes to the Government for a very successful Session—and I think that they will need all the good wishes they can get.

3.10 p.m.

THE LORD PRIVY SEAL (LORD SHACKLETON)

My Lords, the noble Earl, Lord Dundee, has made one of his admirable speeches, genial and short. The last is a special virtue of his, one which I always hope to emulate but which I confess I do not always succeed in doing. He raised some interesting points: for example, that fascinating argument which goes on sometimes even within Government on investment grants versus investment allowances; but I do not think that he will expect me to get drawn very far into that. I realise that there is a real area of discussion here; none the less, it is our view that investment grants are capable of doing, and have done, much for industry.

We are to have two very interesting maiden speakers to-day, the noble Lord, Lord Stokes, and the noble Lord, Lord Brougham and Vaux. I have known Lord Stokes for many years. I used to stand outside the factory gates at Leyland's many years ago, More the noble Lord rose to his present eminent position. I am sure that we shall have a very interesting speech from him; and indeed from the noble Lord, Lord Brougham and Vaux. I feel that the present Brougham and Vauxes have probably changed a little from their most distinguished ancester. We shall look forward to hearing from both noble Lords. It is unfortunate, and I must apologise for it to the noble Lord, Lord Stoke—I have indeed two apologies to make to the House—because it is likely that I shall have to rise again as soon as I sit down in order to make a Statement on partial contracting out. Such an interruption is always disturbing for a maiden speaker. I hope that many of your Lordships will be able to hear those two noble Lords, even though I suspect that they would very much prefer that there was no one in the Chamber when they made their speeches.

I must also apologise because I may have to disappear for half an hour or an hour immediately afterwards to attend a very urgent meeting. I do not feel too badly about this, since those who are to speak immediately after me (I except the noble Lord, Lord Crook), or some of them, were not present during the first day of the Economic debate. I make no special point about that beyond the general observation, and I am sure that the noble Lord, Lord Carrington, will be with me in it. Some noble Lords sit through debates and provide support for their colleagues, but there are others—and I can use a rather more direct form of language—who, just occasionally, or regularly, go off.

I should like to start by referring to the speech of the noble Lord, Lord Carrington. I do so because I thought it was a very courageous speech, although it did not arise in this particular part of the debate. I consider that it was very timely. I feel a certain obligation also to stand up and be counted, like the noble Lord, Lord Gladwyn, although I do not think I can go all the way on certain points in support of the enormous advantages there will be to us and to Europe if we are able to enter the Common Market. I must acknowledge that there are noble Lords on both sides of the House (I suspect that there are more on the side of the noble Lord, Lord Carrington, than on mine) who are against it. But we have some formidable characters—like the noble Lord, Lord Blyton—who put up very effective arguments on this subject. I would only say that no one at the moment would suggest any form of unconditional commitment. The very objections which opponents have drawn attention to are the matters on which we must negotiate. On the other hand, I believe that our entry, if it comes about, will bring strength to the whole European Community, of which I consider we are a natural member. We must not forget, and it is relevant in an economic debate, that in the E.E.C. living standards have been rising faster than our own, and it would be a brave man who would dare to predict that if we remain outside this trend will be reversed. I think it is not only Europe who may benefit from our entry; and I believe it is the duty of this country and other advanced countries to increase their production and raise their standards, not only for themselves but in order that they may also contribute to other parts of the world. I felt bound to say this because the noble Lord, Lord Carrington, made a wholly un-Party political speech although one which I fully acknowledge as being controversial; and I know there may be at least one noble Lord, the noble Lord, Lord Blyton, who will, I am sure, be putting the case against it in his usual forceful way.

LORD BLYTON

Hear, hear!

LORD SHACKLETON

Well, my Lords, I was giving my noble friend a bit of a preamble, a lead-in.

LORD BOWLES

We shall all wait for him.

LORD SHACKLETON

And also perhaps people will come and listen to the noble Lord, Lord Blyton. I hope so, because it is disheartening suddenly to find yourself, round about five or six o'clock, speaking in an empty Chamber.

My noble friend Lord Beswick, like my noble friend Lord Brown, made a notable speech. Lord Beswick referred to the "Decline and Fall Squad" and singled out the noble Earl, Lord Cromer. I am not sure whether the noble Earl is present to-day, although I told him I was going to speak about him. I do not think the noble Earl may be accused of being in the "Decline and Fall Squad", although I consider that his place has been taken by the noble Viscount, Lord Eccles—but I will leave him out too. Certainly I think that he joined the "Puzzle Squad", along with the noble Lord, Lord Erroll of Hale. Lord Erroll danced lightheartedly over the scene, and I think that he did not really understand what the noble Earl, Lord Cromer, was saying. I suddenly realised that there must be something about the air of Altrincham and Sale. Like his friend the present Member for Altrincham and Sale, the noble Lord, Lord Erroll (I have to be careful here), seemed—perhaps it is not too unkind to say this—to lose touch with reality a little; and we noted the job of "demolition" which was done by the Chancellor of the Exchequer in another place.

My Lords, I think that most of us are pretty bored with the allegations about trade figures being fiddled. I express my appreciation to noble Lords who, characteristically did not take part in what was described by my right honourable friend as one of the nastiest of little political stunts, but I am reluctantly bound to refer to it, not because of anything said by noble Lords opposite but because Mr. Chapman Pincher has returned to the attack. I suppose we could say that we should not bother about him, but it is really intolerable to have that sort of misrepresentation which is read by lots of people.

The figures that were published were understood by all the responsible newspapers—The Times, the Telegraph, the Financial Times. None of them got it wrong; and to make statements such as that it would not do a company no harm to claim that the correct figure was given in small print at the end—he does not say that the Government did it, he implies it—is wrong, because the Government did nothing of the sort. If noble Lords want to see the statement, they can. It is a full statement, and the full explanation under the visible trade balance explains the position; and the papers understood it. This point is important, because we have to get it right. The Government did not take a euphoric line on it. My right honourable friend the then President of the Board of Trade warned people against euphoria, and in particular in his statement said that if allowances are made for the combined effect of these factors, the improvement in the visible balance between the second and the third quarter remains very substantial; from an average deficit of £20 million a month in the second quarter to a surplus of £4 million a month in the third—which is an even smaller figure than Mr. Chapman Pincher and the Member for Altrincham and Sale used.

These figures are complicated, as the noble Earl, Lord Cromer, pointed out. I think that Lord Cromer took a simpliste or optimistic view. It is really rather surprising to find an ex-Governor of the Bank of England thinking that these figures about a complicated subject are capable of being deployed in a very simple manner. He said, for instance, that the trade figures did not give a useful indication of the balance of payments. I should have thought this was something we all knew. But they are of value, as my noble friend Lord Balogh pointed out, as indicating the trend of visible trade.

Then again, the noble Earl said that we had achieved almost complete obscurantism. I can only say that responsible newspaper editors, and I am sure noble Lords on both sides of the House, understand it. Finally, the noble Earl suggested that we should get rid of the monthly reserve figures, on the ground that they reveal nothing. I agree with him, but, of course, it is customary to publish them. One can now and again pick up some unconsidered trifle from them, and probably be misled by it. When he uses such trifles in the context of looking at the balance of payments, they are certainly misleading. In the long run the answer comes out, together with the balancing item only on the current and long-term balance of payments figures—and even they, as the noble Earl pointed out, are subject to amendment over a period of two or three years.

The truth of the matter, my Lords, is that, so far from making excessive claims, the Government have consistently underplayed the position—or at least have been scrupulous not to overplay it—for fear that people would take a too easy and optimistic view. None the less, I think it was apparent from the speech of my right honourable friend the Chancellor of the Exchequer, and from that of my noble friend Lord Brown, that the situation is such that we can take a reasonable degree of encouragement. It would be lunacy, of course, to think that we are out of the wood while there are all sorts of dangers to the progress of the economy.

It is a pity, I feel, that the noble Earl, Lord Jellicoe, and the noble Lord, Lord Erroll of Hale (and I think the noble Earl, Lord Dundee, recognised this) kept on emphasising one point, even though it is one with which I entirely agree. They said that the credit must go to those in management and on the shop floor, and that the Government should not seek to take all the credit. It is curious, however, that the converse is always argued when things go wrong. In my view it is a pity that we should have had this ridiculous red herring introduced. I am sure that we shall continue in this House to manage to discuss important issues of industry and the economy objectively.

I should like now to turn to consider the speech of the noble Earl, Lord Lauderdale. The noble Earl (I thought he was here, but I am unlucky in my audience to-day) must have been surprised by the warmth of the reception given to his speech. It could have been conceived in the spirit of a red-hot technological revolution. I am sure that if it had come from this side of the House, the noble Lord, Lord Erroll of Hale, would have mocked at it. The noble Earl really waxed lyrical as he described the possibilities and prospects of this country, provided that we seized our opportunities, particularly in the field of ports and sea communications. With all sincerity, I would commend noble Lords who did not hear the noble Earl speak to read his speech, beginning at col. 294 of yesterday's Hansard, which I am glad to say is in our hands to-day. There is a challenge here, and I do not think the noble Earl was embarrassed when my noble friend Lord Brown drew attention to the relevance of his speech to the Government's proposals for the reorganisation of the ports.

I am sure that noble Lords will not dismiss this particular set of proposals just in terms of a conflict between private and public enterprise. I think that talk of doctrinaire nationalisation rather tends to fade away, especially as we see the growing success of some of the nationalised industries. The greater part of the major ports of this country are already in public hands. There is, in fact, only one run by a company, half of whose capital is provided by Manchester Corporation. It is apparent from the noble Earl's speech, and indeed from the White Paper, that the logic of the new development in transport methods and technologies—containerisation, unit loads and all that the noble Earl was talking about—demands that we shall have a co-ordinated strategy which, despite the efforts of the British Transport and Docks Board and other bodies, is not possible until there is a unified control. This does not of course mean that the National Ports Authority will operate ports from the centre, though it will be establishing policies and strategies. I believe that it will be possible to combine in a proper mixture local interests and matters which will be decided locally with the national need.

One important aspect of our proposals is that we believe they will give an opportunity for bringing about better industrial relations in the ports. Nobody knows this problem better than my noble friend Lord Crook. I should have liked to let the noble Earl, Lord Lauderdale, know something of other points he raised, but I will save time by leaving them now.

I should like to turn to some of the institutional measures which the Government have taken. Here again the noble Lord, Lord Erroll of Hale, made fun of the various proposals—and admittedly his speech was funny, with his MAXTECH and MINPROD. Even though he was not responsible for thinking up MAXTECH, I think he may have invented MINPROD. Though I agree that we must not just tinker around with Government and there is a danger of it having a disrupting effect, I am absolutely satisfied—and so are those concerned with these changes—that the new institutions both in Government and in some of the public bodies are calculated to produce more satisfactory results, both for the citizen and for industry. I think we must recognise that change is a bit uncomfortable. But the logic of bringing together the Prices and Incomes Board and the Monopolies Commission, which sometimes escapes people, becomes only too apparent when one sees certain areas which might be subject to investigation by either body and some co-ordination is necessary here. The noble Viscount, Lord Amory, drew attention to the vital nature of a prices and incomes policy, and the Government are giving it urgent and detailed consideration. We hope to be issuing a White Paper before the end of the year.

The intention in merging these two bodies is that they may carry out more tidily and effectively a range of functions at present divided between the two. The Monopolies Commission, for example, examines mergers and whether they are likely to be contrary to the public interest. The Prices and Incomes Board has been concerned with private companies and with the public sector of industry. It is also concerned, as the Monopolies Commission is, with problems affecting pay and its relation to the efficient use of labour. There is a large area of potential overlapping, and the merging of these two bodies, I think, will produce a stronger and more effective body as a single unit. The role of the body will be constructive as well as regulatory. I think this will be helpful to industry. We are well aware that industry does not like being investigated unnecessarily, and any references made to the Board will have to be made with the agreement of the Minister who is particularly concerned with the sponsorship of a particular industry. But I believe that, properly handled, as it will be, this again will provide the sort of flexible machinery which allows private enterprise, and for that matter public enterprise, to continue freely and independently to do its job, but to be subjected to the type of influence which occasionally is necessary, and which has operated through other types of institutions in industry.

There are other important reforms, both of a social and of an industrial character. One, again affecting the industrial area, is equal pay. The Secretary of State for Employment and Productivity will be introducing a Bill to provide for equal pay as between men and women. This is an important measure of social reform, and I am sure that the principle will be supported. The Bill will provide that equal pay should be fully implemented by December 31, 1975. The Government's view is that this is a reasonable period for industry to adjust to the change. But it gives rise to a number of detailed problems, although, happily, not in the non-industrial Civil Service, for which I am responsible, because we have had equal pay there for a number of years. There are to be discussions—and they have already started—between the Secretary of State, the C.B.I., the T.U.C. and others, and I believe that following those discussions we shall be able to produce satisfactory measures which will be valuable socially and also play their part within the industrial scene.

I have already mentioned that I shall be making a Statement shortly on partial contracting out. There has been curiously little discussion during this debate on the national superannuation scheme. It is, I admit, a very complicated subject. I fear that it is one of the matters which, again with the best will in the world, it is not easy to produce with simplicity. But not the least important aspect of this will be the guarantee of a pension in a country where half the population have no occupational pension. Many who lose their rights if they lose their jobs will in future be able to qualify for a pension; and even if they leave their jobs it will be transferable or frozen. Apart from the social advantage, this will be of value to industry, whether at managerial or shop floor level.

Another piece of legislation which falls in the same category is that which relates to industrial health and safety. A number of my noble friends—Lord Crook, Lord Collison, Lord Taylor and Lord Blyton —have been active and interested in this field. We are rightly concerned about suffering animals, and we quite rightly get very concerned in our debates at proposals for factory farming and so on. But we seem to be curiously inured to the ill-health and suffering that still arises in our workshops in this modern age. It is a long haul, but we simply cannot wait. Year after year noble Lords and Members of another place raise this matter, and although a great part of our factories legislation is pretty good, it needs amending, developing and bringing up to date in a number of respects. I must say frankly that we shall not be able to complete the job in this Parliament; but we are going to bring certain measures which bear directly on the subject of safety. It is worth reminding the House that we pay an infinitely higher price for ill-health and injury in a week than we do in a whole year from industrial disputes.

In the field of organisation. I should like to give a plug to my own Department, the Civil Service Department. It is not, admittedly, a Department with the most glamorous title; and is not one whose work will naturally attract the attention of Mr. Chapman Pincher and others. But we are engaged in implementing a number of important reforms from which this Government and successive Governments will benefit. I have paid tribute to the Civil Service. No one, I find, is more enthusiastic in carrying out this work than those officials in my Department who are charged with the responsibility. The efficiency of our central Government machine is crucial to our national efficiency, and improvements here will contribute greatly.

Some of your Lordships may have seen the document, Progress on Fulton, which has been placed in the Library. Since that Report was published in the spring the momentum has increased. The planning of the Civil Service College is now well advanced, with a branch in Edinburgh, a branch in the country near London and the Centre for Administrative Studies actually in London. We are deeply involved in the question of examining the grading structure, which will mean major job evaluation exercises across an enormous field; personnel management (my own particular interest and experience) and recruitment, to which again the Fulton Committee devoted a great part of their Report. We are bringing in a great deal of industrial advice, not because I believe that industry necessarily has a great deal to teach the Civil Service, but because in certain areas it has something, as we have something to teach it. We have a number of industrialists and consultants, as individuals, working closely with us, and we find that there is a mutual exchange and a great degree of common understanding because many of the problems are similar whether in Government or in industry.

Some of the results have already appeared. We have already proposed the carrying out of an interim merger of classes at lower levels as well as a statement of intent to form a common grading structure at the top of the Civil Service. There are to be major decisions taken in the next few months—they are too many for me to list.

No less important is the attention that is being paid to those recommendations on the organisation of work. We have just completed (and I hope that it may be possible to publish it, though I cannot give a promise on this) a major study of the need by Government for computers over the next year. It occurs to me that I should like to send the glossary associated with this Report, almost a dictionary of all the words that are coming into our language, to the noble Lord, Lord Conesford, because in order to understand the definitions, you have to look up other words in the same glossary! There is to be a thorough review of the future of our management services, a programme of experiments and studies in accountable management, management by objectives and output budgeting—or the Planning, Programming and Budgeting System. All these have been started and have gained considerable momentum. We have a long way to go in these fields, but I can assure your Lordships that the groundwork is being thoroughly prepared. I am confident (and I hope that anybody who is working in any activity regards his own work as important) that this will be of significance. What has particularly struck me has been the enthusiasm of the Civil Service staff, and the co-operation between staff and management through the staff side of the National Whitley Council, which in industrial relations is unequalled anywhere in this country or, I would say, in the world.

My Lords, I had an interesting passage to deliver, but I do not propose to do so, on the new developments on the presentation of public expenditure. This is an area where the Government have made considerable progress, which has been welcomed by the Committee on Procedure in another place.

I should like to say a few words on certain other points: first of all, unemployment. Reference has been made to the level of employment in October, and I do not wish to minimise the importance of this figure. Nevertheless, it is necessary to probe it a little further. There is still a relatively high level of vacancies, one which would normally be associated with a much lower level of unemployment. In most areas there has been good absorption of summer school-leavers. The development areas are in a relatively better position than in the past, and there is a large flow of people on and off the register. I am sure that noble Lords—if they have not thought of it already—must agree that the development of earnings-related unemployment benefits and, in some cases, redundancy payments—both of which this Government introduced—has meant that some of those who have become unemployed are being more selective in seeking fresh work. They do not have to take the first job offered to them. This of course has advantage economically as well as socially, because if they go into jobs for which they are better suited they are more likely to be productive.

Because of the shortage of time I will not go into the problem of the development areas. We know that much of the loss of employment has been due to the decline of traditional industries in those areas. This is the principal reason for their designation as development areas. Government preferential expenditure on the development areas in the year 1968–69 was £270 million. Although much of the assistance to industry is not specifically linked to the creation of new jobs, none the less there is special assistance, and 380,000 new jobs have been created since 1965. I sometimes wonder what would have happened if we had not had the system of regional support that this Government have so fully developed.

My Lords, I do not propose to go on any longer because we look forward to hearing a number of valuable contributions from noble Lords; nor shall I follow the noble Lord, Lord Erroll of Hale (who has somewhat handicapped me by not being present at this moment) in producing any innuendoes. Although we live in an uncomfortable age, it is certainly nothing like so uncomfortable, in terms of living standards, as in those drab years in the past. I must emphasise that in the past few years, during the lifetime of this Government, living standards have been steadily rising; and this is shown by countless indicators, whether it has been an increase in the number of motor-cars, television sets or even central heating systems. One may laugh and say that these are not very pleasing indicators. But they are. And they are important to the comfort of life, and should improve its quality.

Industrial production has risen strongly —by about 8½ per cent. in two years—and we are in a unique position, for this country, in now seeing a favourable trend in the balance of payments while production still continues to rise. Our total debit and credit position—on which there has been some discussion—is probably slightly better than it was a few years ago; and despite our external difficulties Britain has remained a net external creditor nation. At the end of last year our net external assets exceeded liabilities by almost £2,000 million, due to the steady increase in the value of net long-term assets. I do not think that this figure is as vital in the short term: the really vital question, from the point of view of the balance-of-payments position, is not our net credit or debit position, but the capital flows and the interest receipts or payments associated with them. It is in this area that so many of our problems have confronted us.

We shall need to sustain our improvement over a long period. We now have a chance to free ourselves from some of these agonising difficulties imposed by the balance-of-payments problems that have bedevilled us ever since the war—and I would remind noble Lords that they would have bedevilled us before the war, too, if there had not at that time been mass unemployment. At least we are moving in the right direction, and this is where we are perhaps coming to a clearer understanding in this House. I hope we shall not fall into the error of being too confident and relaxing our efforts, but let us also show some real pride, whether it is by the Government or the people, in our achievements, in which there is quite a lot to be proud.

3.46 p.m.

LORD STOKES

My Lords, I am well aware of the custom of your Lordships' House whereby maiden speeches crave the indulgence of the House. This I am more than happy to do. I am, moreover, aware of two other customs; namely, the desirability of being both brief and noncontroversial. Here, however, I must ask even more strongly for your indulgence again, since I have a difficult theme and I am more accustomed to speaking to the shop floor rather than the Floor of the House. I must also declare a personal interest in industry in general, including the Industrial Reorganisation Corporation, and the motor industry in particular.

As an industrialist, I welcome the Government's successful efforts to improve our balance of payments, and I must applaud their determination in not faltering after a few months' initial success. There is no doubt that if any economic policy is going to be successful it has to be consistent, and one of our big difficulties as manufacturers in the past has been having to cope with the vacillating policies of successive Governments. Whatever one's views on how the nation's resources are distributed, the fact re- mains that most of our balance of payments success is due to industry taking up the export challenge and, in particular, to a relatively small number of companies who are carrying most of the burden in competing in fiercely competitive overseas markets. In fact over half our direct exports are accounted for by a little over one hundred companies, although I am not underrating the part played by our many suppliers.

I have always accepted that industry must regard the whole world as its market, not just this country, and until we do we shall never be successful either profit-wise or in developing an aggressive industrial mentality. At the same time, we must not neglect the fact that to export successfully most industries must have a readily available domestic market to absorb some of the overheads of aggressive exporting. This may not necessarily be logical, but in many cases is due to the restrictive measures of many of the countries with whom we either trade or compete.

If I may quote an example: much play has been made of the success of the Japanese motor industry in obtaining export markets, but it should always be remembered that they have a virtually restricted home market from which meaningful foreign competition is excluded, and from that protected base they export substantially, but in total it amounts only to 18 per cent. of their output. Our British motor industry, on the other hand, has succeeded in exporting nearly 50 per cent. of its output with a home market depressed by credit squeezes and yet, at the same time, open to international competitors throughout the world whose mere presence here effectively controls our home selling prices. The Japanese market is also protected by import quotas on 120 items, by high tariffs and tight controls on investment by foreigners. If we operated under similar conditions to the Japanese—which I do not advocate—we too could make even greater inroads into almost any market. As it is, Britain as a country exports more than twice as much per head of the population as Japan, and in this respect is second only to Germany.

Independence, individualism and free enterprise have always been cherished words in the industrial sense in this country. If, however, we are going to succeed in the world trading stakes we cannot afford the luxury of small, individualistic firms, or of sleepy giants, who are not prepared to expand and to meet the challenge. Industrial concentration of our meagre resources in this small country is vital if we are going to compete, and this is particularly so in the capital intensive industries. In this connection, I believe that the Industrial Reorganisation Corporation as an industrial catalyst has been most worth while; it has been the most worth while of almost all the institutions set up by the present Government. It is vital that it is continued with the same independence under which it currently operates.

Size for the sheer sake of it is no argument. There are, however, obvious and real advantages of economies of scale in purchasing, research, product rationalisation, large-scale marketing projects, and the combined financial strength to enable one to ride out fluctuations caused by market changes or by individual project failures. Most important of all is the ability to attract and to use to the full the best management and specialist talent that will be available to large companies. In the end it is always people who matter.

Mergers or takeovers, issued sensibly, can unite skills or techniques into one composite, competitive whole. They enable scarce managerial talents and expertise—probably the scarcest resource in this or any other country—to be more effectively used, and thus enable us to stand up to the sheer size of some of our major overseas competitors. It must be admitted that size brings its own problems. Critics of what is sometimes called "giantism" talk as if the problems of large size were parallel with those of small size. Several of the problems of smaller companies are incurable except by growing bigger. It is, however, axiomatic that successful small firms grow big unless their owners take positive steps to keep them small, either by denying them capital for expansion or merely by being reluctant to take on additional responsibilities in these days of high taxation. To my mind, the problems of large size are basically organisational and they are therefore curable, provided that we can find and attract and reward inspired management, who in the end must be the key to all business success.

It is of course worth remembering in this context that firms which may appear giants to us in this country are in reality quite small on the world scene; and it is only in the global sense that industry must think to-day, including the possibilities of many more trans-national associations. While I think it can be proved that industrially large groups are vital for our international competitiveness, they contain the seeds of their own destruction. I refer, of course, to the tremendous problems imposed by the sheer numbers of the work force of any large organisation. Large corporations to-day tend to pay their employees better, provide better working conditions, and act in the most responsible way possible; yet at the same time, merely because of their size, they often become bedevilled by more industrial disputes and problems than are smaller organisations.

At the present time we are getting into a most dangerous situation in this country, with the future livelihoods of all of us at stake, because of the action of a number of people pressing pay claims, mostly unofficial, which do not go through the normal procedural channels and in many cases are completely unrelated to any increase in productivity or efficiency. It is becoming common practice for groups of people to withdraw their labour in breach of normal agreements and to hold to ransom whole industries on which the country's survival depends for the sake of piratical pay claims which, if granted, merely spark off a whole series of similar leapfrogging demands. The end result is that the cost of products and servicing goes up, to the detriment of all, and is rapidly exhausting the gains and sacrifices made by the last devaluation. We should all like perpetual increases, but it must be becoming obvious even to the most obtuse of us, that, if continually applied across the board as attempted at the present moment, they are self-defeating. All we shall achieve is a rapid rate of inflation and a loss of competitiveness.

Because of the complicated and interdependent production processes of the mass producer, the automobile industry is perhaps more vulnerable than most; but as the largest exporter, the loss so caused to the country by this industry alone is incalculable in real terms. British Leyland, which is my own company, alone during the last year, but for strikes, could have manufactured an extra 100,000 motor cars, of which at least 50,000 would have been exported, representing some £26 million sterling extra to our balance of payments over and above our existing record export financial contribution. The extra cash flow generated by this lost continuity of production would have been applied to purchasing more modern plant and equipment to keep ourselves competitive, and it would also have been applied to paying wages which, in their absence, have been made up by strike pay or by social security benefits or in some cases, I regret to say, one suspects, even by unprecedented sickness benefits, which indirectly are all added to the country's overhead costs.

This drain on our investment fund availability is reflected in the fact that 59 per cent. of the machine tools in the motor industry in the United Kingdom are over ten years old. This compares with only 42 per cent. in Germany and only 36 per cent. in Japan. As a country we are devoting a lower proportion of our gross national product to investment than are all our European competitors. Investment is particularly important at the present time in order to ensure that the export-led boom is sustained by an investment-led recovery in the home market. We suffer, I suggest, in this country from a legacy of "we" and "they", which is a hangover of Victorian paternalism and prejudice. Memories are sometimes too long, and the minds of too many of us stretch backwards rather than look forwards. The next few years must see great changes in the relationships between the work force of this country, their unions and managements, all of whom have an equal share in the task of running companies at all levels. All who share in this task must receive proportionate rewards; but rewards carry responsibilities, which also must be fully shared. This means a positive approach from management, unions and Government.

Management itself must work much harder at communication, particularly in the large companies. "Communication" is a much abused word to-day and I do not think there is anyone in industry who is unaware of the necessity to communicate. But what do we communicate and how do we do it? In a small organisation this is no problem. The manager, by his physical presence in walking round the works, can know everybody and give a full sense of participation. As the organisation becomes larger, so the management tends to become remote, and therefore much has been, and is being, done by joint works councils, productivity committees, works newspapers and so on, to reach directly the men on the shop floor and to prevent, as in the old parlour game, the message getting distorted down the line as the number of ears increases. These are areas in which management must take the initiative.

In the age of big business and big Government there must also be big and strong trade unions. We cannot run factories without strong and efficient trade union organisations, and in the same way as industrial concerns must merge and reorganise themselves to meet the changing times, so too must the unions review their structures and their own multiplicity in order to enable them to maintain reasonable disciplines over their members, and adherence to bargains which have been freely entered into by them on behalf of all their members, taking into account the varying conditions of the individual plants concerned.

The shop steward to-day has one of the most responsible and difficult tasks in industry. If he confines his activities to the plant in which he is accredited, supports his union and is given full support by management, he has a tremendously potential power for good in so far as the company, its workpeople and the country's prosperity in general are concerned.

We live in a permissive society where, perhaps, people are once again seeking to reassert their individuality beyond the restrictions induced by repetitive tasks. If we want high remuneration, shorter working hours and a greater affluence then reasonable disciplines must be accepted, preferably voluntarily, and elected representatives must be able to negotiate on the basis that their agreements, once entered into, will be maintained for an agreed sufficient period of time to enable the productive machinery to fulfil its purpose. One of the main aims of the Government's document, In Place of Strife, was to ensure that agreements, once made, were kept and that proper procedures were adhered to. I am doubtful whether legislation is the sole answer to our problems, nor do I consider it realistic to think in terms of attaching fines to particular individuals, although it may well be that employers and unions should be made more responsible for their collective actions. Industrial relations have fundamentally to do with attitudes of mind, and the purpose of any legislation should be to create an environment in which attitudes can more easily be changed. I think this has largely been the success, for instance, of the Race Relations Act, and any such legislation is best kept to the minimum necessary. In industrial relations I suggest that a start could probably best be made by insisting on a secret ballot prior to any major strike. A further considerable improvement would be a move to three-years contracts on pay and conditions, as they are negotiated in the United States of America. Unions must be responsible for their members, and poaching from one union to another must be discouraged, otherwise the whole structure of responsibility is damaged. A concerted effort on these fronts by management, unions and Government working together could pull us through these difficult times.

We are, of course, not the only country to suffer from strikes and labour indiscipline. In France, Italy, the United States of America and Japan, for example, industry has been suffering from problems which are in many ways as bad as or even worse than ours, and the number of days lost through industrial disputes is even greater than our own.

My Lords, it would be quite wrong to leave you with the impression that we in British industry are masochistically obsessed with our difficulties. On the contrary, we are only too conscious of the challenge and the opportunity facing us, and impatient of anything which hinders us from responding to them. Our export record shows that we are rising to the challenge. Our exports this year are up 15 per cent. over last year, and for the first time since the war we are holding our share of world trade as a nation.

Our need now is to build on the success we have already achieved. To do this we must learn—all of us, whether in Government or in industry or whatever—to cope with change which is occurring at a faster rate than ever before in history. I believe we can do this, probably better than any other people on earth, but we must be aware of the difficulties of trying to solve this urgent and vital problem in the relatively remote atmosphere of Westminster. In the industrial areas of our land feelings run high and it will require political acumen and persuasion of the highest order to make a change back from militancy to reasoned negotiations. I thank you, my Lords.