Lords Sitting of 18 December 1973

Preamble
The House met at half past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Bristol.

RHODESIA: ZEPHYR REPORT ON SANCTIONS BREACHES
LORD BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they have studied the Zephyr report published in Holland on the methods by which goods are supplied to Rhodesia in contravention of United Nations sanctions.
THE MINISTER OF STATE, FOREIGN AND COMMONWEALTH OFFICE (BARONESS TWEEDSMUIR OF BELHELVIE): My Lords, a copy has only recently been received. It is being studied.
LORD BROCKWAY: My Lords, I thank the noble Baroness for her reply. Was not this report published on November 2? Is it not a little extraordinary that it is only now being studied? Is it not the case that it revealed a conspiracy, centred in Rotterdam and involving Swiss banks, French air and shipping freightage companies, in transporting goods to Rhodesia from twenty countries, including eighteen British firms, so breaking the sanctions?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, if the noble Lord had seen the document I think he would realise why it takes time to study it. It is extremely bulky. Of course, we are primarily concerned not with what Dutch firms have done (which is the responsibility of the Dutch Government) but whether in fact any United Kingdom firms have breached sanctions.
LORD SHEPHERD: My Lords, would not the noble Baroness agree that the sanction breaking that emerges from this report clearly implicates a number of European countries? Would the noble
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Baroness undertake, once the Foreign Office have completed their studies, that a decision will be taken by Her Majesty's Government to refer this matter to the Council of Ministers of the European Economic Community, to see whether some concerted action can be taken in this matter?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, this is, of course, primarily the responsibility of the United Nations Sanctions Committee. It is well aware of this report, and is, I understand, considering a report of its own. So far as the E.E.C. is concerned, we have always found, in the past, that it is better to take up such matters bilaterally.
LORD BROCKWAY: My Lords, while apreciating the need for careful study because this report is documented so heavily, may I ask the Minister whether it would be desirable to communicate with the British firms who, I believe, are innocent in this matter and only sending their goods to this international conspiracy? Is it not desirable that there should be a United Nations investigation into this matter, since the noble Baroness has recognised that this is a United Nations responsibility, as well as our own?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I understand that the United Nations is examining this particular problem. So far as British firms are concerned, it is very important for us, first of all, to study this material in detail before finding out whether British firms were so involved, in effect, that they knew that there was a possibility of breaking sanctions.
LORD SHEPHERD: My Lords, may I come back to the answer the noble Baroness gave to my supplementary question? Would not the noble Baroness agree that if the Council of Ministers were to reach a decision, such a decision would be binding upon all the members of the E.E.C.; and since it would be to the interests of the E.E.C. to support the British Government in its sanctions against Rhodesia, would this not in itself be infinitely more effective than the bilateral approach the noble Baroness had in mind?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I understand that the E.E.C. as a whole is in fact tightening up its controls.

WASTE PAPER COLLECTION AND RECYCLING
2.39 p.m.
VISCOUNT HANWORTH: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government, in view of the world wide and national shortage of paper and the importance of preserving natural resources, what steps they are taking to promote increased recovery and recycling of waste paper.
LORD STRATHCONA AND MOUNT ROYAL: My Lords, the Government are in close and constant touch with the waste paper trade and are represented, with observer status, on the Joint Waste Paper Advisory Council. We are currently examining proposals to overcome the cyclical problems of the trade. We also offer a favourable rate of grant for research into waste paper recycling. Local authorities are encouraged to collect waste paper for recycling if they consider that this is commercially justifiable.
VISCOUNT HANWORTH: My Lords, I thank the noble Lord for that reply, which at least shows that something is being done. Would he agree that at present only 500 out of a total of 1,500 local authorities are taking active steps to collect paper waste? Furthermore, does he realise that the consumption of the average family is 10 lb. of paper a week, and that this represents something like four trees a year? Also, that there is a world shortage of raw material?
LORD STRATHCONA AND MOUNT ROYAL: My Lords, I was not aware of the figure of 10 lb. per family, but I am sure the noble Lord, with his usual accuracy, has got it right. The basic problem for the local authorities is finding a market for their products when they do go to the trouble to collect waste paper. This has proved difficult owing to the cyclical nature of the industry. There have been times when they collected
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paper at considerable expense and found that nobody wanted to take it off them.
LORD INGLEWOOD: My Lords, could the noble Lord say why this industry should have the cyclical nature which he has emphasised, because surely the consumption of paper is fairly constant throughout the year?
LORD STRATHCONA AND MOUNT ROYAL: My Lords, I regret to say that I am simply not a good enough economist, or whatever expertise one needs to answer that question. I am sure that the newspapers themselves would be delighted if I could answer it for him.
VISCOUNT HANWORTH: My Lords, is the noble Lord aware that my information is that for a very long time those who reprocess the paper have been crying out for more, and there has been for some time a grave shortage of paper for newspapers, particularly local papers? It seems that the problem simply is to get the raw paper and not the ability to recycle it. I may be wrong, but that is my information.
LORD STRATHCONA AND MOUNT ROYAL: My Lords, do I understand that the noble Lord was speaking about newsprint in particular?
VISCOUNT HANWORTH: My Lords, I was mentioning a shortage in newsprint and was also saying that there had been complaints for a long time, I thought, regarding firms dealing with recycling, that they were not getting as much paper back as they could recycle.
LORD STRATHCONA AND MOUNT ROYAL: My Lords, as regards newsprint itself, the problem there is the inking. The Department of Trade and Industry supports the research association called the P.I.R.A. in its effort to devise machinery for de-inking newsprint, which can then be re-used by the newspapers.
VISCOUNT HANWORTH: My Lords, once again my information, if the noble Lord will permit me to say it, is that there is a de-inking process already in use. Has the noble Lord heard of it?
LORD LEATHERLAND: My Lords, is the noble Lord aware that Reed International already have a de-inking plant and that they are very worried in case their oil supplies are cut down and they

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are not able to use that plant to the best advantage? Further, is he aware that, apart from the cyclical nature of this trade, the mills are at this moment appealing for 200,000 tons of waste paper and are having to import waste paper in order to keep the mills going? Furthermore and finally, can be make it obligatory on local authorities to collect this waste paper, not merely as a municipal bookkeeping operation but in order to do something to put right the balance-of-trade deficit?
LORD STRATHCONA AND MOUNT ROYAL: My Lords, I often find it easier to begin at the end because it is closer to what I remember. So far as the last point is concerned, there is a problem here, which is the fact that the local authorities are currently being reorganised and it is difficult for them to engage themselves in a completely new trade of this kind until they have settled down. However, the Department hopes very much to encourage them. Of course, your Lordships will be aware that in the Environment Bill which is currently being considered in this House this question has been a great interest expressed by noble Lords and by the Government. So far as recycling is concerned, I am informed that this country is ahead of almost every other country in its re-use of waste paper. The other point to hear in mind is that recycling of waste paper is virtually confined to the making of board only. It is used to a small extent in newspapers, which we have spoken about, and it can be re-used also in some of the lower grades of paper, but not to a great extent.
LORD SEGAL: My Lords, can the noble Lord state the particular steps the Government propose to take for the recovery and recycling of the large quantities of waste paper received by Members of your Lordships' House?
LORD STRATHCONA AND MOUNT ROYAL: My Lords, I was not aware that the Government had in mind any particular steps in that direction.
VISCOUNT MONCK: My Lords, could my noble friend inform us what happens to the very large quantity of waste paper which must be daily available from your Lordships' House and from another place? Would he bear in mind that if it is now being sold profitably, I
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should be delighted to receive it on behalf of my local church, for whom I make a collection?
LORD STRATHCONA AND MOUNT ROYAL: My Lords, the question is what my noble friend does with it when the church has got it.
LORD LEATHERLAND: My Lords, with regard to the final point which the noble Lord made before these supplementary questions were asked—namely, that waste paper was mainly used for the production of board—is he aware that if more waste paper were available for the production of board, less of the very valuable and vital pulp would be needed for the board industry, and more pulp, with the same expenditure of money, would therefore be available for the better grades of paper?
LORD STRATHCONA AND MOUNT ROYAL: My Lords, my information is that there is a limit to the amount of paper that the board manufacturers can use for recycling and that we are getting fairly close to that limit now. I am not saying that there is not some small increase they could make—I could give the figures—but I understand there is not a great deal of scope for further use in that particular direction.
LORD LEATHERLAND: My Lords, the figures which the noble Lord has may not be quite those that the paper industry itself has. It is at the present time receiving 350,000 tons a year. It wants—and it says it wants urgently—another 200,000 tons a year.

MIDDLE EAST: RUSSIAN ARMS SUPPLIES TO ARABS
2.48 p.m.
LORD SHINWELL: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government to state what protest was made to the Soviet Union by the Foreign Secretary during his visit to Russia on the provision of weapons to Arab countries.
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, none.
LORD SHINWELL: My Lords may I ask the noble Baroness this: when her

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right honourable friend the Foreign Secretary set the example some weeks ago of refusing to supply the State of Israel with some equipment which they had ordered, and presumably had paid for, would it not have been reasonable to have discussed the matter with the Soviet Union and asked them to follow his example? Would that not have been a rational thing to do?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, naturally my right honourable friend's discussions were confidential. I could tell the noble Lord that the whole Middle East situation, including arms, was on the agenda.
LORD SHINWELL: My Lords, is the noble Baroness aware that her answer fills me with apprehension? When she speaks about confidentiality I am really amazed. It is very important we should know what her right honourable friend said to his opposite number in the Soviet Union. It would be very interesting to Members of your Lordships' House, and particularly interesting to the State of Israel.
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, the question on the Order Paper in the noble Lord's name was whether a protest was made to the Soviet Union, and I said that no protest was made.
THE EARL OF ONSLOW: My Lords, was a protest made to the United States' Secretary of State over the supply of arms to Israel?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I think the whole House knows perfectly well that the Soviet Union is the major supplier of arms to the Arab States, and the United States is the major supplier to Israel.
LORD JANNER: My Lords, might I follow the supplementary question asked by my noble friend? Is the noble Baroness aware that practically all that was lost by the Arab States when they were fighting Israel, which they attacked, has been replaced; and that in so far as we are concerned, although we were under a contract to supply spare parts for the Centurion tanks to Israel, we have not done so; and that they cannot obtain certain
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of those spare parts from any other country except this, thus leaving them with practically useless Centurions.
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, as I think we discussed in an earlier debate, Israel is not entirely dependent upon Centurion tanks, whereas Jordan is, and the embargo is even-handed.
LORD JANNER: My Lords, surely the noble Baroness is not getting away with that. We have supplied Centurion tanks, and in the circumstances we are under an obligation to supply the spare parts. Some of those spare parts are not available anywhere else in the world.
SEVERAL NOBLE LORDS: Question !
LORD JANNER: My Lords, can the noble Baroness tell us where Israel will get them from, if not from us, and why were they not supplied?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I can well remember answering the noble Lord, Lord Janner, on this particular point some weeks ago, when I tried to make it quite clear that we had decided to have an even-handed embargo on arms, and that there is a contract in every export licence which can be repudiated at any time.
LORD WIGG: My Lords, would the noble Baroness not agree that if the principle of equality is to apply, as we have sold arms to Israel should we not supply a comparable amount on the same terms to the Arab States?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, the type of arms is different in each of these cases, but I am informed that in actual fire power they are almost the same.
LORD TREVELYAN: My Lords, with reference to the supplementary question put by the noble Lord, Lord Shinwell, would not the noble Baroness agree that if diplomatic conversations between Foreign Ministers were not to remain confidential diplomacy would be impossible?
BARONESS TWEEDSMUIR OF BELHELVIE: Yes, my Lords.
LORD FOOT: My Lords, would the noble Baroness agree that, whatever may be the merits or otherwise of this matter, no conceivable purpose would have been

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served by protesting to the Soviet Government about it?
BARONESS TWEEDSMUIR OF BELHELVIE: Exactly, my Lords, and I answered the Question to the effect that no protest was made.
LORD SHINWELL: My Lords, following the supplementary question put by the noble Lord, Lord Trevelyan, is the noble Baroness aware that confidentiality between diplomats is often the cause of war? Is the noble Baroness aware that if only we knew what the diplomats were talking about we might be able to prevent war?

LONDON BOMB EXPLOSION
EARL ST. ALDWYN: My Lords, with the leave of the House, at a convenient moment after 3.30 p.m. my noble friend Lord Colville of Culross will be making a statement on the recent explosions in London.

CONTROL OF ZOOLOGICAL GARDENS BILL [H.L.]
LORD JANNER: My Lords, I beg to introduce a Bill to provide for the control of zoological gardens, to make provision for the care of animals therein; and for connected purposes. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read 1a.—(Lord Janner.)
On Question, Bill read 1a, and to be printed.

SLAUGHTERHOUSES BILL [H.L.]
THE LORD CHANCELLOR (LORD HAILSHAM OF SAINT MARYLEBONE): My Lords, I beg to move that this Report be now received.
Moved, That the Report be now received.—(The Lord Chancellor.)
On Question, Motion agreed to, and Report received accordingly.
Then, Standing Order No. 44 having been suspended (pursuant to Resolution); Bill read 3a, and passed, and sent to the Commons.

LAND REGISTRY BILL [H.L.]
Read 3a; an Amendment (privilege) made, and Bill passed, and sent to the Commons.

ECONOMIC POLICY AND FUEL SUPPLIES
2.56 p.m.
THE LORD PRIVY SEAL (LORD WINDLESHAM)THE LORD PRIVY SEAL (LORD WINDLESHAM) rose to move, That this House takes note of the current economic situation with particular regard to the grave shortages of energy and the need to conserve supplies of fuel. The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper. At the beginning of this debate perhaps I might inform the House how it is proposed that the debate should proceed. As noble Lords will know, it was agreed yesterday through the usual channels that the occasion, and the interest shown by your Lordships, warranted a two-day debate, but with most of the speakers speaking to-day. As your Lordships will see, we have a long list of speakers for to-day, and my noble friend Lord Drumalbyn will wind up for the Government to-night. He will be able to answer points which have arisen during the debate this afternoon and this evening. To-morrow the noble Lord, Lord Beswick, will open the debate from the Opposition Benches, and my noble and learned friend the Lord Chancellor will wind up the debate for the Government. So far as the two further Motions on the Order Paper, are concerned, dealing with the State of Emergency, I hope your Lordships will agree that these should be taken formally when we reach them later to-night, since there will be an opportunity for raising any questions on them during the course of debate to-day or to-morrow, if your Lordships will be content with that arrangement.
My Lords, the wording of the Motion before the House to-day is deliberately neutral and is deliberately low key. In no way does it seek to diminish the importance and the urgency of the situation, or the importance and the urgency of our debate. The Motion aims to provide an opportunity for all noble Lords to contribute advice and comments on

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the basis of the wide range of experience and wisdom that exists in your Lordships' House. To employ the current jargon the Motion "leans over backwards" to avoid being divisive. In this House, in a situation such as this, surely our responsibility is to stand back, to analyse the causes of the present grave situation, and to think deeply and—I would suggest—as dispassionately as possible about what we consider should be done.
I believe there is little difference among those who have thought about it in regard to the seriousness and the dimensions of the energy problem. Oil is in short supply as a result of the recent war in the Middle East. Moreover, the price has been substantially increased by the producing countries. The international aspects of this were discussed by the Heads of Government and by the Heads of State of the Member countries of the European Economic Community when they met at Copenhagen a few days ago. The decisions taken at Copenhagen cover the whole field of the current energy crisis, from the immediate questions of supply to long-term energy policy. The Council of Ministers was instructed to work out ways to implement a concerted plan for saving energy, and the Commission was asked to submit to the Council as quickly as possible proposals to deal with the present problems in a collective way.
Another important decision taken at Copenhagen was to join with other oil-consuming countries, and the O.E.C.D. in seeking solutions for all these problems. Noble Lords will recall the proposal made by Dr. Kissinger in London a week ago, and the welcome which the Government then gave to it. There is an obvious need for the industrialised nations to take counsel together, and we are looking for ways which will enable us to follow Dr. Kisinger's approach, recognising the mutual needs of consumers and producers, and also recognising the need to cover the anxieties of the O.E.C.D. countries as a whole, including the members of the European Community. My Lords, behind all the discussions, behind all the proposals, lay a common awareness of the need to get to the roots of the problem; that is, the paramount necessity
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of achieving a more permanent peace settlement in the Middle East
It is too easy to say that this crisis has caught Britain unprepared. In fact, the Government put in hand in 1971 work on the development of a strategy for mineral resources. I believe we are all agreed on the need to maintain the coal industry; on the need to exploit, and exploit as rapidly as possible, oil on the Continental Shelf; and on the need to press on with the development of nuclear power. But in the modern world even localised wars can have a widespread economic effect. Like throwing a stone into a pool, the consequences ripple outwards, the waves growing in size as they cross the rocks protecting distant economies, until they break, reaching far up our shores. We have recently experienced massive increases in world prices of food and raw materials. Also, the cost of oil represents a most significant shift in the basic economic conditions in which we as a country have to operate. As a nation, we have no alternative but to recognise this change, unwelcome as it may be. We have no alternative but to understand its consequences. Above all, we have no alternative to ordering our society in such a way that we can best face up to the challenges and the difficulties which it brings.
No one should underestimate the gravity of the present short-term situation. The immediate consequences point towards a diminution of earnings, towards higher unemployment and towards substantial losses of production. Each of these is equally unwelcome. Together they combine to signal a postponement of many of our hopes for the future, including our hope for a continued rise in the standard of living. The measures that have been taken, in the Government's view, are the minimum necessary to secure electricity supply from major disruption, to protect essential services from dislocation and to ensure the continuation of industrial activity on the highest level consistant with the supply situation. As I have said in this House previously, there are several factors which have led to this situation. There is the shortage of oil, to which I have already referred; there is the onset of winter, and for this, at least, the Government cannot be held responsible; and there is the

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industrial action by the coalminers, the train drivers and the power engineers.
While I think it is as well to avoid singling out any one cause of the present crisis, I doubt whether there are any of your Lordships, or anyone in this country, who would deny that the action of these groups at this time, whatever the motives, whatever the accidents in timing, has been a contributory factor which has aggravated the situation in which we find ourselves. If it had been simply a question of oil supplies we could probably have got through the winter without a significant reduction in industrial output and without cuts in electricity supply.
My Lords, the measures taken by the Secretary of State for Trade and Industry on November 19 ensured that oil stocks remained at levels which should have been just adequate to meet reduced demand. There was some justification for believing that the 10 per cent. cut in deliveries imposed on industry and consumers generally would have held the position without cutting down on production, at any rate until further planned measures could be considered and introduced, if necessary, after due public notice. Yet the fact remains that electricity is an Achilles heel of our industrialised society. May be we use too much electricity; may be we use it too extravagantly, particularly in the home. But electricity is essential to our normal existence and not merely to our convenience. In practice, it is coal, and not oil, upon which we depend to a large extent for electricity supplies. Coal accounts for 70 per cent. of electricity generation, oil for about 20 per cent. Deliveries to power stations over the past four weeks have averaged less than two-thirds of the deliveries of coal they were expecting. As a result, the Central Electricity Generating Board stocks of coal, which stood at 16 million tons in October, are now running down at the rate of one million tons per week, three times the normal rate. Moreover, 800,000 tons of coal each week are normally moved to power stations by rail, and the ASLEF action is already beginning to affect these deliveries.
Next, I might remind your Lordships that it is coal, and not oil, upon which we depend for the production of steel. Without steel, the construction industry of this country cannot operate. About
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75 per cent. of total crude steel production relies upon the coking method, the rest on electric are furnaces. Deliveries of coking coal over the past four weeks have fallen by 35 per cent. I shall not trouble your Lordships with any more statistics, but I believe that those I have quoted contain the answer to those who say "But the miners are not on strike; it is only an overtime ban." It was meant to have an effect, and has had the effect that was intended.
Confronted with this situation no Government could have sat back without taking action. Without the measures announced by my right honourable friend the Prime Minister last Thursday, which I repeated in your Lordships' House, widespread and indiscriminate disconnections would have been inevitably followed by a real threat to the continuation of the central services. This short-tern situation is not, though, exclusively the product of shortages of oil, although that is an important factor. It is also internal; it is also domestic. We ourselves must solve it, but we must solve it in a way which leaves us as a country in a position where we can resume the expansion of our productive capacity with the minimum interruption, where British industry can seize all the opportunities that will exist in the export markets of the world and where we have the means to return to the path of growth, which is still the right path—in the long run the only path—to follow.
My Lords, this brings us back to the central problem which has faced successive Governments and which has been so elusive: how, in a free society, in a society which cherishes its traditions (free collective bargaining no less than other traditions), is it possible to counter the insidious spread of inflation?—for counter it we must. A year ago in this House, and in Parliament as a whole, it was decided that it was vital to our prospects for economic expansion to find some way to check the exceptionally rapid growth in wages. Nothing that has happened since has changed that imperative. Everyone knows in his heart that we have to find a way of settling wage increases which are within the bounds of what the nation can afford, which are fair to the groups involved, which are fair also to the rest of the community, including housewives, pensioners and those on fixed

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incomes. The Party opposite wrestled with the problem when they were in office; so have Governments throughout most of the developed world. So, while being realistic, we should not feel that this is an affliction which is in any way novel or to which others have found a satisfactory solution which has eluded us.
Let me come to Stage 3—the phase of the counter-inflation policy at which we had arrived before the present crisis. Of course this is not an end in itself. My right honourable friend the Prime Minister has never ruled out the possibility that if the situation made it necessary the Government would come back to Parliament and ask for a revision of the Code's provisions. But, to be frank, in the new circumstances, if any revision is justified the logical conclusion points towards there being greater, and not fewer, restrictions on the pay increases authorised in the Code. Each of the present industrial disputes, we might recall, are not about the Industrial Relations Act; they are all about pay.
LORD DIAMOND: My Lords, if I may interrupt the noble Lord on that one point, the impression is being continually spread by the Government that the Code is completely inflexible and that the Government have retained no power granted to them by Parliament in order to deal with exceptional circumstances or provisions. Is it not the case that Parliament gave the Government power to override any award by the Pay Board, and made it clear that final responsibility rested with the Government and therefore, in turn, with Parliament?
LORD WINDLESHAM: My Lords, the Government have made it clear on repeated occasions that, in our view, the only fair way to restrain growth in incomes to a level that we can afford is to do so within the provisions of a published set of rules which apply to everyone, and that remains the position.
I was saying that each of the present disputes is not about the Industrial Relations Act. We should be clear about this; these are disputes about pay. The Government's position is simple to state, and it is what I have just said in reply to the noble Lord, Lord Diamond; it is that all settlements should be contained within the provisions of the Pay Code. I do not
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think the debate will lack advice from those noble Lords who feel that this policy is too rigid and that what is needed is what is described as a more flexible approach, which, when interpreted into everyday language, normally means a settlement outside the terms of the Code. As a damaging dispute grinds on, often in my experience with increasing apprehension on both sides, it is so easy to say that the cost of settling on the terms demanded by those engaged in industrial action is less damaging than in continuing to live with the consequences of not doing so. Yet each time this argument is heeded it makes the task of countering inflation that much more difficult.
In fact I accept much of the argument about flexibility. It is already an integral part of the counter-inflation policy. Stage 1, the standstill, was of course rigid. That was its purpose, and that was why it could only last for a short time. Stage 2 was more flexible and Stage 3 is more flexible still. It makes provision for the lower paid. It makes provision for those who work inconvenient hours. It makes provision for those who were caught by anomalies in Stage 1 and Stage 2. It makes provision for those who can improve the efficiency of their work. Finally, it makes provision against the erosion of living standards by rises beyond a certain point in the cost of living. These are all features which are quite legitimately permitted under the Code and which have been taken advantage of by over 3 million workers now covered by settlements reported to the Pay Board under Stage 3. So let us not talk about lack of flexibility. Equally the Government are determined to be approachable, to consult, to listen, and to try to find solutions which are acceptable to all the interests involved. Anyone who knows my right honourable friend the Secretary of State for Employment will accept that that is his way of going about things, as it was and still is the way of my right honourable friends who fashioned each stage of the counter-inflation policy.
Yesterday, in his Statement, the Chancellor of the Exchequer showed his resolve to act in a manner that would seem as fair as possible to all sections of the community. In addition to the cuts in public expenditure amounting to

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£1,200 million, and the restrictions on hire-purchase and credit, there are new tax rates on substantial capital gains from land or buildings with development value and potential. This provision is accompanied by a 10 per cent. surtax levy which will hit about 400,000 people in the higher income brackets.
Of course it is easy to say that this is not enough. But the measures the Chancellor has taken represent a considered judgment of the action necessary to reduce demand for goods and services at home and to free resources for exports. Moreover, he had to keep in mind the importance of doing so in such a way as to avoid adding to the inflationary spiral by putting up the price of goods in the shops. Thus there is no increase in indirect taxation, even on so-called luxuries like cigarettes and drink. All experience has shown that measures of this nature are reflected immediately in higher retail prices with their effect on the cost of living and consequently upon wage claims. But the Chancellor acknowledged the uncertainties which are inherent in the present situation, and stated that he would have no hesitation in coming forward with further measures if developments should require them.
The impact of the extra cost of oil on the balance of payments is, of course, very significant indeed. As the Chancellor said in his Statement in another place yesterday, the deficit has been financed to a large degree by overseas borrowing by the public sector. He went on to point out that international borrowing will now take on an entirely new dimension for the world as a whole. My right honourable friend continued, and I quote his words:
"From some of the talks I have had, there is emerging, I believe, a general consensus that the industrial nations as a group must expect to some extent to borrow back the money to pay for this increase in the price of oil, rather than to join in a self-defeating deflationary or protectionist race to counteract the effect of the price rise on the current balance of each individual country. But in our case, given our substantial deficit without the oil problem, some corrective action now needs to be taken to keep the prospective total deficit within acceptable limits."
Those words are taken from the Commons Hansard for the December 18, 1973, at col. 954.
Thus the very large cuts in public expenditure, £1,200 million, a very substantial reduction indeed, in what was
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planned for next year, are intended to protect the balance of payments not only from the severe effects of oil, but also from the dislocation of the immediate energy crisis at home. In the longer term we must continue to give first priority to exports, in order to offset to the greatest extent possible the increased cost of imported oil.
LORD BALOGH: My Lords, I thank the noble Lord for his courtesy in giving way. I wish just to ask for information. He says that £1,200 million have been taken out of the economy, whim what has happened is that an increase in the financial year 1974–75 has been cut back. How can be reconcile these two statements?
LORD WINDLESHAM: My Lords, the noble Lord is going to speak later in the debate. What he says is technically correct. He is expert in these matters. It was proposed that there should be an increase (I am speaking from memory) of the order of 2 per cent. in public expenditure, and instead of that increase there will be a reduction of some 2 per cent. compared with the figure for last year. I hope that the noble Lord will develop his thoughts in his speech and we shall listen to it with great interest when he comes to make it.
LORD LEATHERLAND: My Lords, during this interruption, may I give the noble Lord an opportunity to correct something in Hansard. He said that we should find a certain figure in Hansard of December 18; I think that he should have said "December 17", which was yesterday. He was probably thinking of what the Tory manifesto called "A Better Tomorrow".
LORD WINDLESHAM: My Lords, I was looking ahead, as usual.
I have spoken for long enough in opening this debate. I am aware that I have gone very quickly over a great deal of ground in doing so, but I thought that it would be helpful to do so in order to mark out the Government's position on the main features of the present overall situation that noble Lords will be dealing with in their speeches. In what I have said I have tried to avoid two pitfalls. The first is complacency: a real danger now, as it has been so often in

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our economic past—irrespective of which Party has been in power. This normally takes the form of a belief that if we "knock along" pretty much as we are things will somehow sort themselves out. The second danger lies at the opposite pole; that is, of talking ourselves into a state of deep gloom or of excitable panic. Neither of these is the way to respond in a crisis. What is needed is a calm appraisal of the reality of the situation; a judgment of the measures which are called for to meet it; and the courage and tenacity to see them through. This is the task which faces not just the Government but also Parliament, and indeed the whole nation. I believe that our debate in this House will be a true reflection of this spirit. My Lords, I beg to move.
Moved, That this House takes note of the current economic situation with particular regard to the grave shortages of energy and the need to conserve supplies of fuel.—(Lord Windlesham.)
LORD SHACKLETON: My Lords, before my noble friend Lord Diamond speaks may I say that I am not clear how much the noble Lord has reported of the meeting of Ministers in Copenhagen. If what he has said was a full report, it seems to have been a rather thin meeting. I realise that he may be in difficulty. In order to get us out of this difficulty, and in so far as this Statement is important to the debate, perhaps the noble Lord would agree that when we see what is in the Statement we can judge whether or not it would be convenient to read it to the House so that in the course of the debate to-day noble Lords may know whether to take it into account. It may be that the noble Lord knows there is nothing in it anyway; but we do not.
LORD WINDLESHAM: My Lords, I am sure that anything which is for the convenience of the House the Government would try to do. The position is rather difficult. The Prime Minister has not yet stood up to make his Statement. However, if in the course of the debate the noble Lord the Leader of the Opposition and I can get together on this point, I am sure we shall be able to find a satisfactory solution.
3.25 p.m.
LORD DIAMOND: My Lords, the noble Lord the Leader of the House, when introducing this debate, drew our attention to the deliberately neutral wording of the Motion and its low key. I think that he said that he intended to speak in a low key himself. If I may, with respect, say so, I think that that is not only appropriate but demanded of us on all sides of the House. The situation is far too critical, for example, for me to score the 101 bulls-eyes that would be just too easy. The situation is much too critical for that. The responsibility that rests on all of us can only be carried out in the case of one who has the privilege of speaking from this Box, by devoting the majority of one's comments to the way forward rather than to the reasons as to why we find ourselves in this position. The position, in my view, is at all events potentially highly critical. It is certainly not the case that we are in dire straights at this moment; it is clearly the case that we could be in very difficult circumstances indeed. We could be facing widespread disruption to industry; we could be facing discomfort for the comfortably off and hardship to the poor and elderly; we could, in the longer term, be suffering a lowering of our standard of living that would, at a minimum, take us a decade to recover from completely—that is to say, to get back to the position we would have been in had there been normal growth. Therefore, I will say but little of the situation in which we find ourselves and the reasons for it, but a little I must say.
I do not need to criticise the Government because the Government are their own most authoritative critic by their change of plan. By their use on numerous occasions of what has come to be called their "U-turns" they have satisfied everybody that the policies which they were originally following out, and which they have left on one side, were the wrong policies. It does not need any words of anybody on this side to add to that full and authoritative criticism. The last example of that was the one we heard yesterday—and I welcome it—of, at long last, some measure of additional taxation, some measure of recovering for the nation the unearned increment in property values deriving mainly from the contribution of the community for the benefit

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of the person or the company which happened to be in possession at that moment. We welcome that, inadequate though it is.
What I must refer to, because we are faced with the consequences of it now, is the policy, which largely the Government have left behind, of confrontation with the unions. Lest it be thought that I am in error in mentioning this, I would refer shortly to a debate which was held on February 16, 1972. I hope that the House will forgive me if I quote very shortly from my favourite author—a habit which all of us have from time to time. We were discussing the unemployment situation and economic policy, and I was referring to the cost of the error of the Government. I said at column 281:
"That is the cost of the Government's fatal error and determination to have a show-down with the miners which has been planned since last August or September. But that is not the end—there is another year next year. … What are the miners going to say next year when they recognise the power that they hold? What are they going to say when they see the weaknesses which the Government have disclosed in the set-up? What are the power workers going to say in a year's time?"
Of course that was not welcomed when I said it—the noble Lord, Lord Thorneycroft, the noble Viscount, Lord Watkinson, and the noble Earl the then Leader of the House all took me to task for making such an unwelcome comment. The reason I said it is that of course you cannot judge to-day's situation without having some regard to the causes of it and you cannot sow the wind without reaping the whirlwind.
My Lords, we have had a series of Government measures. The noble Lord the Leader of the House, said that we might regard them as inadequate. Indeed, we do. Public expenditure cuts, with which I am not wholly unfamiliar, are very slow acting; they are very difficult to achieve; they are extremely wasteful. The renegotiation of contracts, which is the euphemism the Chancellor used, means that you pay heavy damages for breaches of contract with those with whom you have entered into firm contracts for capital construction of one kind or another. The imposition of percentage cuts, by which the Government are proposing to arrive at these reductions over the whole board, is not government; it is not selective; it is not making choices; it is the denial of government. Those
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public expenditure cuts will result in a very high proposition of nugatory expenditure and are wholly inadequate for their purpose. The reduced subsidies on coal and electricity are wholly inadequate for the purposes of dealing with the energy crisis. In fact, to be fair, the Chancellor of the Exchequer made it quite clear in reply to a question during the course of yesterday's proceedings in the other place that there would be no difference whatsoever were our industrial trout les disposed of immediately. He said and I quote:
"If, as we all hope, the industrial troubles are settled soon, certainly there would be no immediate change in the proposals that I have made."—[OFFICIAL REPORT, Commons, 17/12/73; col. 976.]
The 10 per cent. surcharge on higher incomes is quite inadequate to deal with the redistribution of income which is needed to meet the hardships which will be suffered. The tax on property profits will be wholly inadequate to deal with the sense of unfairness which is so widespread, and the credit restrictions are quite inadequate to deal with the inflationary pressures which have been caused by the Government's monetary policy, their £4 billion deficit and their marked preference for printing notes rather than paying their way. That, my Lords, is all I would restrict myself to saying, and it is a far greater restriction on this side than on that side to keep the debate in a low key to-day. It is all I should want to say on the situation we have reached, because, as I said, I want to devote the greater part of my speech to what I think is a possible way forward. And for this purpose and to avoid being affected by the emotion of the occasion, I have made what I believe your Lordships call "very full notes".
We are surrounded by many difficulties and faced with huge potential dangers. Nevertheless, I must attempt to single out and define the main problem, and as I see it it is this: why are we as a nation achieving so much less than our capability? Why is it that we seem incapable of summoning up the necessary spirit of co-operative enterprise? Why do we have to suffer from so many self-inflicted wounds? And as we all desire to live as a community, why cannot we take pleasure in making the largest possible contribution rather than subject ourselves to the misery of making certain

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that whatever our needs we must get out of the common pool more than our neighbours? It is very easy to point to the faults in others—errors in Government, authoritarianism in management, the determination of some union officials to win battles for their own sake.
My starting point is none of those. It is with us here in Parliament. Are we acting as responsibly as is possible? Is our system such as to encourage us to do and to say whatever will assist most in fostering a sense of community and co-operation? The Chancellor makes certain proposals which he believes to be in the national interest. The Shadow Chancellor demonstrates, rightly in my view, that they are not. The Prime Minister appeals to the nation on radio and television to support the Government. The Leader of the Opposition, rightly in my view, puts forward different proposals. The Government of the day propose; the Opposition of the day, as is their duty, oppose. What is the man in the street to believe? How is he to get the leadership which alone will convince him that one paramount task lies ahead of him and that he must pursue it with all his energy in his own interest?
My Lords, consider for a moment the business that would have been taken to-day but is now going to be taken after this debate is over—tomorrow I believe—the business dealing with Northern Ireland. We all recognise the excellent progress that has been achieved there. I am suggesting that that has been achieved in part because Parliament made it possible. It enabled the world to see that the Government were acting with the united strength of Parliament and the people behind it. Nobody knows better than the noble Lord the Leader of the House, and indeed my noble friend the Leader of our Party, that there was never a time when there was a major difference of view between the Parties and an expression of that difference. What a shambles would have existed had there been such a major difference!
Before going on to make the suggestions which I now think are derived from the facts which I have described, can I make it absolutely clear that I
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speak entirely for myself, without any authority? I have consulted nobody; I thought it wiser and less embarrassing to all concerned that I should stick out my own neck and let what might happen happen. And can I make clear what I am not suggesting? I am not suggesting a coalition Government. That is appropriate, in my view, only where a Government are faced with a single task such as winning a war. Nor am I going to forget that it is of the essence of democracy that the people should be able to choose an alternative Government, which is the complete justification of the Party system. I am suggesting that there are, from time to time, issues of such gravity that Parliament must speak with a single voice—whatever the differences and whatever the difficulties—for only in this way will Parliament be able to give the necessary leadership which, if it is not forthcoming from Westminster, will be sought elsewhere.
I repeat that I do not refer to the whole held of Government, but to a single special issue of profound importance to the nation. It does not mean that the Government are relieved of their responsibility for ascertaining the facts and working out remedies. It does not mean that the Opposition must cease critical examination, or working out alternative solutions if these seem better. It does mean that, through some informal machinery, representatives of the three Parties should meet, and meet privately; should be provided on a Privy Counsellor basis with all the facts available; should endeavour, by compromise, by some sacrifice of Party philosophy and of Party advantage, to see whether agreement could be reached on what might be recommended to Parliament with the authority of all the Front Benches; and should then, subject to the views of Parliament, recommend it to the nation. It would not be easy, but it would not be impossible.
My Lords, there is such an issue facing the nation: the issue of maintaining production and so preventing massive unemployment and widespread hardship. It is essential in the interests of the nation that a solution be found, and soon. It is essential in the interests of democracy that Parliament should rise to its full stature.
3.41 p.m.
BARONESS SEEAR: My Lords, I was quite unaware of what the noble Lord, Lord Diamond, was going to say, but in regard to his suggestion that the three Parties should informally get together on this matter I assume that if the Government responded to this suggestion in the way in which the noble Lord, Lord Diamond, has put it forward then we on these Benches would be only too glad to collaborate. My Lords, we are, as your Lordships are all too well aware, faced with a problem in which there are four separate, though related, elements; and it is part of the nature of the problem that what is an appropriate policy to deal with one of those elements may not be right for dealing with one or other of the remainder. So the problem of finding solutions is the problem of finding a balanced solution to the various facets of the problem which confronts us. The four elements, as your Lordships are aware, are inflation, the balance of payments, the industrial relations troubles and the economic consequences which flow from them, and, as I see it, overwhelmingly the problem of energy and of the oil situation.
Now there are many speakers, and I will be brief. Of course it is right in the existing circumstances that the Government should have taken action, as they did yesterday, to attempt to restrict inflation. But I would agree with the suggestions which have already been made, that the cuts in Government expenditure will be too remote in their action to deal adequately with the immediate requirements for a curtailment of expenditure. It will be months before we begin to feel the effects of that change, and it may well be within weeks that we need to cut back on purchasing power. But, having said that we agree with the need to curtail purchasing power and therefore recognise the need for the cutback in public expenditure, may I also say that, dangerous though inflation is, a plunge into deflation and the creation of widespread unemployment would be a far greater peril, and that if we have to take a risk let the risk be on the side of continuing to live with too much inflation rather than on the side of the risk of excessive deflation. Because, if for no other reason, we are going to need all the growth that we can get in the
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circumstances that confront us, all the real creation of extra goods and services that we can provide; therefore the creation of unemployment, which is the creation of waste resources, the sacrifice of the goods and services that we need, should in every possible way be prevented.
One reason why I think we need not be too frightened of continuing inflation is that the particular balance-of-payments problem with which we shall undoubtedly be confronted is of a rather special and unusual kind. Before the coming of the increase in oil prices we were already faced with an excessively high balance-of-payments deficit, but that addition to our balance-of-payments problem which springs from the oil situation adds an unusual element to the situation. It is no ordinary balance-of-payments crisis which flows from the increased price of oil. This is in part because the oil-producing countries are no ordinary sellers. Apparently they do not want to spend their money. This is a curious situation with which we are so unfamiliar that it is rather difficult to adjust to it, but the fact remains that it seems very unlikely that the oil-producing countries are going to demand their money in order that they can spend it, and that (and I gathered from the speech of the noble Lord, Lord Windlesham, that this is it exactly) from this balance of payments increase there is not going to be the type of drain on our resources that has previously occuarred.
Above all, if we can work in collaboration with other Western countries—and running through all the present problems is the urgent need for the greatest possible collaboration with all the Western Powers, both in Europe and in America—then the run on the pound, the fall in the value of the pound and the threat of devaluation (which has always been the biggest problem to arise from an adverse balance of payments in this country) will be very much less in relation to the size of that balance-of-payments problem than in previous situations. It would be very undesirable to be so scared by the size of the balance-of-payments deficit that we rush headlong into a deflationary situation.
It is in my view unfortunate that in the discussion on the present situation the Government have been putting such great

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stress on the mining crisis. Of course the industrial relations situation is serious, but it is surely true that the real problem we are up against is not the industrial relations situation, bad though this is at the moment and important though it is to deal with it, but the problem arising from the increased price of oil. We have, none the less, to recover somehow from our industrial relations difficulties of the present moment. If the Government want to get out of this problem—and indeed they do—surely it would have been possible in the pronouncements made yesterday to show more understanding of the problems for ordinary people created by the crisis in which we find ourselves. I do not want to indulge in abstract talk about the need for greater equality—I do not think it is particularly relevant, as a matter of fact, at the present time. Two at least, if not three, of the major industrial disputes at the moment are not because people want greater equality but because they are angered by the extent to which those below them are catching up, which does not suggest that it is an increase in equality for which people are really crying out. But the ordinary men and women are going to be in a grievous plight, not in months but in weeks, if we go on to three-day working. And even if we do not, the oil situation will result in a considerable loss of jobs, a cut-back in purchasing power and a fall in the standard of living for a great many people.
Surely, my Lords, there are certain things which could have been done yesterday which would have shown that the Government understood fully what this means for the ordinary man in the street, and perhaps especially for his wife. More could have been done about the vast sums of money made by property dealers. I know that in terms of the actual amount of money that you would get, and the extent to which this could be redistributed, it would not make such a great amount of difference. But the knowledge that these vast sums are being made as the result of contributions made by society as a whole exacerbates the situation out of all proportion to the actual amount concerned. We cannot think that it is good enough that the tax on these excess profits should come only when sales take place or
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when a lease is undertaken. A site value tax could have been added.
Why have we heard nothing about a freeze on rent increases? It is going to be incredibly difficult for a great many people on short time to pay their existing rent and rates, let alone the increases that are coming in the next year. It is not suggested that such a freeze should go on indefinitely, but at least until we see our way to end extreme short-time working, and until we know what will be the size of the unemployment problem it would have been tremendously reassuring and a sign of their understanding of the problem if the Government had said that they would have a moratorium on rent increases. Thirdly, the quickest way to meet the most urgent need would be to do something about family allowances, which are far more important than food subsidies. We on these Benches have never supported food subsidies, but for months and years we have been urging the Government to increase the family allowance so that those who have to meet the basic needs of bringing up a family would know for certain that there was more money coming in to offset, at any rate to some extent, the rising prices with which they are confronted.
If, in order to do this, we had to impose a bigger surcharge than at present and to levy particularly, it may be, those people who do not have dependants, I think that all those of us who are in the higher income bracket and do not have dependants would have welcomed such an additional charge. Incidentally, although at the moment it does not affect me, I find it difficult to understand why we should have exempted people over 65. Is it because of some curious confusion with the needs of old-age pensioners? Because surely this applies to those already in the surtax bracket. I am not asking that the Government should go back on their promise to those over 65, but I find it difficult to follow why this should have been done. A transfer of money from this group to family allowances would have been extremely welcome and a well-seen gesture. It would have meant a great deal to families up and down the country. The opportunity was lost to give the kind of help—I will not call it a concession—which is urgently needed at the present time.

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We on these Benches have always supported the need for a statutory prices and incomes policy. We do not say that the miners' dispute should be settled by breaching Stage 3, but we understand that there are still clauses in the Stage 3 agreement which have not yet been fully exploited in relation to the mining dispute and which, through payments for additional production, would allow money to be used for even greater increases than have been granted already by the National Coal Board. We defend the stand of the Government over Stage 3, but only because we defend the need for a statutory policy and not because we think that Stage 3, in itself, is a good or an appropriate instrument at the present time. When Stage 3 came in we were critical of it. To-day it is even more inappropriate There are far too many loopholes. It is far too flexible to be a good instrument. It was devised before the oil crisis and it is high time that we started working on a fourth stage more appropriate to the situation in which we now find ourselves.
My Lords, may I say one word about that Stage 4, because it is urgently necessary that we should move towards it. The noble Lord, Lord Windlesham, said that if we do have a change it has to be a change towards greater severity rather than greater relaxation; but I suggest that it is no good having a kind of document, as in Stage 3, which tries to control the details of pay settlements from the centre. It is widely rumoured that Stage 3 was devised in order to make it easier to reach a satisfactory settlement with the miners. If this is really so, then surely the case against Stage 3 stands proved for all time. The kind of deal which is embodied in Stage 3 is not the kind which a central body should be handling. We need to get back to a settlement between employers and trade unions within a framework. May I suggest, my Lords, that what we need is for the Government to declare the global sum of money which they foresee as possible to be given in wage increases. I accept that for the next six months it may be a nil norm, but as soon as it ceases to be a nil norm the global sum which may be given out in wage increases should be declared. Then it should be the job of employers and trade unions, through something akin to the "Neddy" machinery though not necessarily identi-
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cal with it, to decide how that additional money is to be distributed.
The absolute limit to the amount to be distributed must be declared by the Government. The paying out process could be monitored without too much difficulty, and if it is exceeded the Government should take stringent action to surcharge and to claw back the additional money which had been paid our, either through the mechanism of the social insurance contributions or, if they cannot do that, through direct taxation. The more that directives to claw back could affect people who have exceeded the amount paid out and who are responsible for the excess amounts paid out, the better it would be. That would bring back to the people who are responsible for earning the money and paying it out the job of saying how it should be done. It would get the Government out of the day-to-day involvement—in which the Government have no business to be—of saying how much ought to be received by different recipients. Some move in that direction will have to be taken very quickly, for Stage 3 simply cannot stand up in the light of the oil situation with which we are now confronted.
My Lords, once we have solved the immediate strike problems, and can see our way through to a new and more appropriate form of income control, the real problem will be the oil situation. On the oil situation, undoubtedly we shall have to accept a lower standard of living and a shift of economic strength between ourselves and the oil-producing countries. What does this mean in terms of policy? It means that we must go all out, in every way we can, on all forms of substitution. We need, as we have said previously from these Benches, an Energy Commission, powered with the task of getting on with the substitution and all the changes in direction that are necessary if this is to take place.
There are many things that can be done. For instance, I am assured that in one year we could double the output from open-cast coal mines, and that that could be done with safeguards against environmental deterioration. I am told that it takes a very long time to get planning permission to erect the platforms that are necessary for the exploitation of oil and gas in the North Sea, and that

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every month that is lost on planning permission is oil and gas lost to the economy. I am also told that at the present time it takes no less than four years to open up a new pit. But if we direct our resources so that these things become a matter of an emergency campaign, with people so organised that attention is focused as a top priority on it then surely everything could be speeded up. We need a Commission—not too large—charged with power to get on with the job quickly, and with full co-operation from the construction and mining industries and the people who are charged with the task of producing the equipment for doing it, in order that it can be done as fast as is possible. Top priority surely must be given to this.
Therefore we must have a rapid shift in priorities of the economy as a whole, and a re-deployment of both capital and labour resources in order that we can move away from the new declining industries into the new expanding industries. We have a new Manpower Services Commission. Here is the opportunity for them to show what they are able to do. Is it too much to say that they ought to present us with a plan, and that they ought to do it within three months, in regard to where people are to become redundant because of the changes arising through oil, and where there is going to be an unsatisfied demand for labour in the new expanding industries. Standing here it is not difficult to think of some of them: coal, coal-cutting machinery, transport, houses in the areas to which we need to get the labour to move. These are all matters for which we need new people to be trained and ready, on a scale that we have not begun to do in the past. This is exactly why we have a Manpower Services Commission. Let us recognise that people will be coming out of some industries. The training places and the resources should be available to train them. There should be no timelag. There must be only a minimum number of people allowed to stay in a position of unemployment while we are preparing for the expansion of the areas into which we shall need to push people in order to meet the new demands.
My Lords, I have already spoken for too long. I will merely say that while we are confronted with an extremely dangerous situation we are, I think, also
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confronted with a situation in which there are real possibilities for hope: because it can be a forcing ground, clearing away a great deal of misapprehension and false thinking, with which we have lived for far too long. Far too many people believe that it is inevitable, that it is part of nature that we should have an increase in the standard of living every year. Far too many people think that because they are in a job they are entitled to stay in that job for the rest of their working lives. Far too many people believe that we can solve our problems on our own, and not in conjunction with our European and, indeed, our American colleagues. If out of the chaos and anxiety of the present time we can have a new awareness of the realities of economic and political life to-day, then the trouble with which we are confronted at the present time will not have been wasted.

LONDON CAR BOMB EXPLOSION
4.5 p.m.
THE MINISTER OF STATE, HOME OFFICE (VISCOUNT COLVILLE OF CULROSS): My Lords, with the permission of the House, I should like to repeat a Statement which has recently been made in another place by my right honourable friend the Home Secretary. The Statement is as follows:
"At about 8.50 this morning a bomb exploded in Thorney Street, which leads off Horseferry Road. The bomb was planted in a car which is known to have been stolen in London last night, and was parked outside Horseferry House (a building occupied by my Department) and opposite Thames House, which is mainly occupied by the Department of Trade and Industry. Both these buildings, and others nearby, were extensively damaged.
"I regret to say that a considerable number of people were injured, and about 40 received treatment in Westminster Hospital. Two of these were seriously injured and required operative treatment, although I am glad to say that I understand that their condition is now satisfactory. When I visited the hospital at midday a further seven were

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still detained for treatment for cuts, shock and other minor injuries.
"I am sure the whole House would wish to express our sympathy to those who have been injured. I would also like to pay tribute to the hospital staff who treated the injured with such speed and sympathy and to the police who coped so well and speedily with the whole situation.
"Two warnings were given of this morning's bomb. The first was by means of an anonymous telephone call to the offices of the Evening News at 8.22 a.m. The caller said that there was a bomb in Horseferry Road and Marshall Street and that these streets should be cleared immediately. It is presumed that the caller must have meant Marsham Street and not Marshall Street. The police were informed and started their search in these streets. While the search was in progress there the bomb exploded in Thorney Street.
"The second warning, also anonymous, was received by the telephone operator in Horseferry House at 8.45 a.m., saying that there was a car bomb outside, timed to explode in half an hour. Precautionary action was being taken when the bomb exploded only about five minutes later.
"I should also report to the House that two postal bombs were delivered in London yesterday. The first was received by British Home Stores, in Marylebone Road. A member of the staff was suspicious and called the police, who dealt with the bomb successfully. The second was received by the Chief of Staff, London District, at his home. It exploded and injured his hand. He is still in hospital, where his condition is described as 'comfortable'.
"The Metropolitan Police issued public warnings last night about the need for care in dealing with suspect mail and I should like to reinforce these warnings very strongly.
"The police are doing their utmost to apprehend those responsible for these outrages."
LORD SHEPHERD: My Lords, the House will be grateful to the noble Viscount for repeating this Statement. In the light of the nature of the debate now
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before your Lordships, I do not intend to detain the House by asking the noble Lord any questions. We should like to be associated with the expression of sympathy to those who have been injured, and to express our confidence in the Metropolitan Police in safeguarding the general public and in tracking down these people who have perpetrated this wicked crime.
LORD GLADWYN: My Lords, we, too, on these Benches, deplore this senseless outrage and extend our sympathies to the innocent victims. I imagine that the Provisional wing of the Irish Republic Army, if they have not already done so, will soon claim the proud responsibility for the massacre.
VISCOUNT COLVILLE OF CULROSS: My Lords, I am grateful for those two short interventions. All I can say is that at the moment nobody has claimed "proud responsibility" for these fine events, but we wait to see whether anybody does.

ECONOMIC POLICY AND FUEL SUPPLIES
4.10 p.m.
Debate resumed.
VISCOUNT AMORY: My Lords, I believe the tone and spirit cunning through the speeches of my noble friend the Leader of the House and of the noble Lord, Lord Diamond, are entirely in tune with the mood of your Lordships' House to-day. There is no question, as the Chancellor of the Exchequer sail, that this is by far the most serious crisis that has confronted us since the war. When the noble Lord, Lord Diamond mentioned the 105 points he could have made, it reminded me of having said so often to the noble Lord that on some matters his views and mine were incompatible. I always went on to say that his views seemed to be much more incompatible than mine. From that point, I should like to say that, so far as I am concerned—I speak only for myself—the spirit of the proposal made by the noble Lord is one that I could personally respond to with great enthusiasm. Whether it will prove to be acceptable, I do not know. Certainly I hope that something like it will prove acceptable, and I am sure that it is a proposal the noble Lord will never

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regret having made. It is in tune, if I may say so, with the note on which I should like to end the few observations I want to make.
This is not the time for a detailed apraisal of the whole economic situation: a layman simply has not the knowledge of all the factors to enable that to be attempted. But one cannot doubt the necessity for emergency measures, and some facts stand out only too starkly. Some problems are outside our outside our control—notably the availability and price of oil and of our other imported commodities and raw materials. Other problems—the industrial disputes—are wholly within our national control and it is these which, as my noble friend the Leader of the House said, have aggravated the deeply serious situation created for us by the oil situation. It has been the fashion during the past few years to push the balance of payments into the background and talk as if that was a factor which should not affect our economic decisions. We are going to learn how erroneous such a deduction has been. Now, once more, the balance of payments has come right into the foreground of our problems. Whatever the amount of oil we shall get, it is a safe assumption that we shall have to pay a substantially higher price for it. The future prices of other commodities are unpredictable. I suppose, had international trade continued on its former upward trend, those prices would probably have gone on rising. Now one may perhaps expect to see them fall, perhaps precipitately. If that were to happen it would help to lower our import bill; but I fear that may prove cold comfort when compared with the far harder task we shall face in maintaining, let alone increasing, the volume of our exports, with our sharply reduced production. This is likely to prove the toughest single problem of all.
The prospects of suffering cuts of something like two-fifths in our production far transcends in importance, it seems to me, all the other aspects of the situation. This is basic: indeed, one can hardly imagine that it will prove possible to continue the life of the nation for very long at that sort of level. Inevitably, it will involve, as my noble friend said, a rise in unemployment and therefore a
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waste of national resources on a prodigious scale, which one can only hope will not last for long. If it does continue for long, it will require adjustments to our standard of living which will go far beyond anything which the Government, or anybody else, have yet hinted at.
When one considers the varying impacts of this cut in production hours on incomes one sees, for instance, the adjustments which may become desirable if any semblance of fairness is to be attempted. The difference in impact between staffs paid hourly, weekly and monthly, and between those who have a guaranteed week and those who have not, affords an illustration of what I mean. An immediate Budget was clearly necessary; and here we must remember the background against which this Budget has to operate. This involves an economy which was fully stretched, suffering from a high current rate of inflation, with interest rates at an unprecedentedly high level, a massive deficit, a deteriorating balance of payments, and a prices and incomes policy in operation which is, one hopes, already being generally applied and accepted.
When I spoke a week or two ago in our debate on Phase 3, I ventured to criticise the Government for somewhat neglecting the fiscal and monetary instruments and putting perhaps an unfair share of the load on the Phase 3 Prices and Incomes Policy—and though I strongly supported the Policy, I did not agree with the unfair load.
Now what about this Budget, my Lords? Clearly, in the short term, production, as the Chancellor of the Exchequer has said, is likely to drop faster than money incomes. This being so, it must be right to choose quick-acting and short-term antidotes that can be stopped or reversed as necessary in the light of the future situation. It could be that in some month's time exactly the opposite action might be required to what is clearly necessary now. As regards hire-purchase controls and the more effective methods of credit control which are envisaged, these seem to me to be right in the present circumstances. The additional taxation on profits arising from the sale or development of buildings—profits due to inflation—will be regarded as fair

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and are, I think, overdue. The surcharge on surtax is reasonable as a burden-sharing exercise—though as a septuagenarian I have some doubts about the exemption for those over 65. I do not know whether I am in a confessional mood or not, but I would have been prepared myself not to have been excepted. I am afraid that may invite a very dangerous suggestion from your Lordships, and no doubt if there is somebody in the Box from the Inland Revenue he will have taken careful note of my comment.
The reduction of £1,200 million in public expenditure for 1974–75 is a bold figure. I suppose it is made more feasible by the delay in execution of contracts which will follow from the reduction in production. But I know I am slightly suspicious as to its actual realisation during the year, for the reason that the noble Lord, Lord Diamond, will recollect quite clearly. These changes of plan generally take longer to implement than planned. However, we must hope that this very substantial cut will be realised. It will not be painless: it will hurt a great deal. Even then, I have some doubts whether enough, in the aggregate, has been proposed.
The increase in actual taxation is mimimal. A short-term surcharge on income tax would have been justified, provided that it could be applied quickly and stopped or reversed if and when necessary. It is difficult there to put on a surcharge that will operate quickly. However, I should myself have been prepared for some further increases in taxation of a short-term nature, in the form of surcharges which can be reversed, selected so as to make the least possible impact on the cost of living and most on expenditure on which it would be most beneficial to economise. Increases of taxation like that, which could easily be taken off, could have been offset by increases in family allowances, or similar short-term measures. Inevitably, some of the changes that have been proposed will have little effect for nine months or a year, and one wonders what is going to happen in the meantime, because there is a great deal of money about at present, and as production begins to drop there may be dangers there.
What should be done in the meantime? I do not want to speak for more than
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another minute or two, but those self-inflicted wounds must stop. We are destroying ourselves. I believe that the principles of Phase 3 were right, and are right, and that they are more than ever necessary in the present circumstances. Indeed, recent events have made some of the provisions look almost too easy. I believe that any settlement which went beyond the rules of Phase 3 would, during the life of Phase 3, be absolutely disastrous. But we have to look beyond Phase 3 with its necessary rules: one that I agree with the noble Baroness, Lady Seear. I am not going to say any more about Phase 3 because I thought my noble friend Lord Windlesham, if I may say so with great respect, dealt with that matter with great fairness and objectivity.
Looking beyond Phase 3, we must be ready to make changes in the light of changing circumstances. I am personally convinced that with every year that goes by wage settlements are more and more centred on differentials rather than on the objective amount of cash. The noble Lord, Lord Brown, from the Benches opposite, has always put emphasis on that point. Our existing and traditional differentials are being more and more questioned by society at large. One of the changing circumstances, looking ahead as an illustration, will be the relative prices of oil and coal. The relative value of coal will rise with the oil price, and it may be that a new appraisal of the coal industry, of its size, its capitalisation and capacity to reward its manpower, may be sensible, and even essential. The results of such an inquiry could then be acted upon. I am looking now beyond Phase 3 to something still more important.
In conclusion, my Lords, whichever way one looks and from whatever standpoint one looks, some abatement of Party controversy is essential if the nation is to rise to the challenges that confront it. This will mean concessions from us all. Let the Party of the noble Lords opposite accept the present prices and incomes policy—after all, they themselves attempted something of the sort—which Parliament, of course, has approved. Let the Government, on their side, listen carefully to where, in the opinion of noble Lords opposite, the shoe pinches most. As an illustration of what I mean, if the

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Industrial Relations Act is psychologically (and I emphasise that word) an impediment to industrial unity, let it be re-examined and restructured.
This is the attitude that the country will expect from us at Westminster. Let us in Parliament—and here I echo what Lord Diamond said so well—rise to our responsibilities and collectively give the nation the kind of example and leadership for which it is yearning, and which it must have if we are to be equal to the challenges that lie ahead. If Parliament will give that lead, I have no doubt whatever that the nation will respond.
4.24 p.m.
LORD GORE-BOOTH: My Lords, it is a very great privilege indeed to take part in this special debate. I am very conscious that in speaking from these Benches I speak as what might be called an individual citizens' advice bureau rather than for the collective voice of any group of people. As the Leader of the House was so kind as to say that he would welcome suggestions from anybody, I am emboldened to make a few comments and to try to present a few ideas. May I mention two other matters, and first, the profound impression made on me by the speech of the noble Lord, Lord Diamond? This is essentially a political matter, not one for a Cross-Bencher. None the less, I found the spirit of it, and the inspiration behind it, dealing with the relationship between Parliament and the people, to be impressive, and indeed historic. I join with other noble Lords in expressing horror at the bomb outrage so near to Parliament. I should like to express the greatest sympathy with all those concerned. In the circumstances of the conjuncture of this outrage with the terrorist attack on the German aeroplane, may I also say that I hope all of us, including the media, will not hesitate to express continuing horror that people should so behave.
The Motion presented to us by the Leader of the House lays considerable emphasis on energy, and I shall deal with that shortly and then go on to make one or two general comments. Perhaps I might first refer to one event in the past. If one looks at the past few years, standing back from controversy, one can see one thing that has happened: the present Government, thinking back to
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1931, have no doubt attempted to deal with a 1931 situation without the cruelties of the years from 1931 to (shall we say?) 1935. That was a great risk to take in economic terms. One can only say that had the Government and the country had good fortune in the matter of world peace and commodity prices, it might have worked. Therefore it is not appropriate—particularly in the atmosphere we have promised ourselves to-day—to reproach the Government too strongly because the bet has not come off. There were some elements in the situation outside our country's control.
On the matter of energy, I have spoken in two debates and therefore have not much to contribute that is new. In terms of energy we have some five lean years to come. It is interesting to remember in symbolic fashion that the origin of the phrase "lean years" was of a period covered by co-operation between an Egyptian King and an Israeli Chancellor of the Exchequer. I hope we may remember that fact. Apart from that, I hope that we, as a nation, can take these lean years without hysteria, without panic and without too great worry—though I realise that the worry of industry in the initial phases will be very strong indeed. As citizens we can look to a certain change in the way of behaviour, in the way we go to places, in the way we do things, which will not really appropriately be called a drop in the standard of living but simply a more modest rearrangement of human behaviour.
On the energy side itself, I have pressed on the Government the suggestion—as I think have many others of your Lordships—that there be some kind of identifiable and effective Energy Board or Commission. I will not go over the arguments again. The Americans have indeed typically created an energy czar. We have an energy czar in the constitutional sense. But I press once again, since this Motion emphasises energy, the desirability of the public at least having the feel that there is an organisation comprising those experts in all forms of energy working together, if necessarily abrasively, to produce what I have called an Energy Plan.
My Lords, I come to the diplomacy of the situation, external and internal. Externally, I would simply say that in a

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very difficult situation our external policy has kept the balance just about right. I hope that in the future we shall continue to pursue this policy as closely as possible with our European partners. I should like to kill again, if it is still alive, any suggestion that we should regard our North Sea discoveries in any way as an "I'm all right Jack" proposition. I do not advocate any form of exact sharing between the European Econimic Community countries: that is probably very difficult. But do not let us try, having joined the Community, to make exceptions for ourselves in matters which so deeply concern all the members.
Home diplomacy, of course, includes what was said yesterday and the deductions to be drawn from it. I think there are many elements in yesterday's mini-budget which are totally non-controversial. Any discussion and debate on the matter of the restrictions on hire purchase and on credits can only be arguments of degree and not of principle.
Other points which were made by the noble Viscount, Lord Amory, whom it is always a privilege to follow, are also not controversial, particularly catching up with the taxation necessities in respect of property. Where I think an opportunity was missed by the Government—and I put this forward very diffidently—is that it would have been helpful to my mind, if only to assist people of moderate persuasion of any Party or no Party, if a little more could have been done on the taxation side. I agree with not touching general income tax. This is because, in countries I have visited which have difficult financial situations, there is a temptation to drive up income tax out of all proportion, with the result of eventually diminishing wealth and welfare. I would also deprecate anything which gave countenance to the idea that you cannot have differentials in favour of talent, energy, and the holding of responsibility. But there are clearly things which people buy in this country which are neither necessary nor convenient, and I feel sure—and I put this in the most general way—that people actually expected the Government to put some further tax on luxuries of that kind and are disappointed that nothing of the kind was done.
May I remind your Lordships of something that occurred in inter-war art which
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brings out a point of this kind, not only on the matter of taxation, but generally. The world-famous cartoonist, David Low, used to put in many of his cartoons in that rather disappointing period of the 1930s, two rather gloomy-looking birds. One of them was called "T'aint Necessary" and the other one was called "S'no Use". Nobody is going to ask the Government to do anything that "S'no Use", but I would diffidently offer the advice that in situations of morale, sometimes things that "T'Aint Necessary" can be very useful.
I now come to the nub of the home diplomacy, and that is the industrial situation. On this I have little to add to what was said by the noble Viscount, Lord Amory, except this. On these Benches one or two of us have, rot with great popularity, raised, if only just to mention it, the problem of disruption. I have said myself, and with some approval, that there are people in this country who do not want us to emerge out of this crisis. I am not going to quote myself. I am simply going to quote, probably not verbatim but am sure I have not got the sense wrong, something said in a television interview by that greatly respected trade unionist, Tom Jackson, leader of the Union of Post Office Workers. He was asked to comment on the situation, and what he said in substance was, "There are people who want first to smash Phase 3, then to get the Government out, and then to have a revolution, and I do not think that is what the British people want". I think we must simply be conscious that this exists and not pretend that it is not anywhere to be found. If anybody wishes to use on me that hackneyed phrase about "looking for Communists under the bed", may I report to your Lordships that I have looked under the bed and they are not there.
There is a passionate desire in this country for unity. It is not, as the noble Lord, Lord Diamond, said, the spontaneous unity which comes out of the whole nation's knowing that is must defeat a bad man in charge of a bad cause. It is not exactly Dunkirk unity. Yet the desire for unity is there, and only among a few class-warriors is the disharmony between parts of our community kept going. The younger generation do not understand some of the old animosities and wish they could go. We live in a

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generation which is quite remarkable for the practical display of compassion by people for other people. This is one of the great things which distinguishes our age from forty or fifty years ago. There were certain necessities which may divide some of us from some others of us. I am bound to support those who feel that there cannot be a departure at this stage from Phase 3. None the less, I am quite sure, as the noble Lord, Lord Diamond, has said, that Parliament must seek to set an example whereby the motivation of people is to get together rather than to get apart; and in this process of reconciliation I am sure that at this moment in this House your Lordships are playing a great and creditable part.
4.38 p.m.
LORD CHALFONT: My Lords, it has become a familiar cliché of the intensive debate about our current national crisis to say that it is compounded of a number of different crises, any one of which might not be disastrous on its own but which arriving together threaten the very survival of this country's economic and social structure. Most observers, I think, suggest that we have three different problems: an economic crisis; a progressive shortage of energy resources; and an intractable problem of industrial relations. I should like to suggest that there is a fourth element in the situation which is more critical and more dangerous than any of these three, although it might fairly be said to a great extent to arise from them.
Before describing this, I should like to take up a very few minutes of your Lordships' time on each of the three main areas of crisis which are usually put forward. It is difficult to say anything very new about these things. Quite apart from what has already been said in your Lordships' House and is now being said in another place, television, radio and the newspapers have subjected us over recent weeks, and especially in the last few days, to an endless flood of analysis, diagnosis and even prescription for solving our problems. There are however, I believe, one or two points which are of crucial importance. So far as our economic problems are concerned, I believe that much of the present concern with our trade deficit has been misplaced. There has been and still is a tendency, in some quarters, to
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ascribe it to the traditional pressures of demand sucking in imports and creating the potentially adverse balance. But, if we analyse the balance over recent months, we shall see, I think, that exports have in fact been going ahead at a healthy rate.
One of the basic reasons for the current trade deficit is, as has already been pointed out in your Lordships' House this afternoon, a spectacular rise in the price of imports, which has been due to a rise in commodity prices. I believe that Her Majesty's Government have failed to make this sufficiently clear in their attempts to explain to the people the roots of our present economic malaise. It is, I believe, vital to an understanding of the present problems to recognise that in recent months (and I have not seen any great play being made with these figures) the price of imports has been rising at an annual rate of 50 per cent. In the first quarter of this year there was a 21 per cent rise; in the second quarter a 29 per cent. rise; and in the third quarter a 49 per cent. rise. This compares with an average rise, over the period since 1946, of 3 per cent. This is a spectacular rise. There will be others in your Lordships' House who are more technically expert than I am in appreciating the implications of this and the lessons to be drawn from it, but the point I should like to make is that we are not in fact faced with the classic inflationary position created by pressures of demand, but by a very real rise in prices, a rise which, as the noble Viscount, Lord Amory, has said, might well now, in the very near future, level out.
It is for this reason, my Lords, that I am less critical than, perhaps, some of my colleagues might be about some of the measures introduced yesterday by the Chancellor of the Exchequer. It seems to me that in general he was right not to produce a rigidly deflationary Budget; that in making cuts in Government spending and resisting the temptation to increase direct and indirect taxation—which would have been long term in their effects and difficult to reverse, as the noble Viscount, Lord Amory, has said—he has, generally speaking, used the right economic instruments for the present purposes.
There are two points which I should like to make. The first is that however

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elegant the economic instrument may be, its edge is likely to be severely blunted if the social and political content is unpalatable. Here it seems to me that the Government have, as the noble Lord, Lord Gore-Booth, has said, missed an opportunity, in that they have done little or nothing to meet some of the very real pre-occupations and concerns of the trade unions and the people at large in this country. The attack on property speculators seems to me to be a half-hearted one. It is symptomatic, I believe, of the fact that so far the Government have done little or nothing to correct some of the more obvious anomalies in the distribution of the country's wealth.
The second point I would make concerns the cuts in Government spending. We do not know yet exactly where these economies will fall, if indeed the full effect of them will ever be felt. I hope Her Majesty's Government can give us some reassurance that they will get their priorities right and that the main weight of retrenchment will fall where it should fall. I would suggest as obvious targets some of the more prestige projects which are still, so far as one can tell, in the minds of the Government, rather than essential areas such as hospitals and schools. Might I also say, on the question of defence—and this is a very delicate subject in the present context- that while it is right that the Defence Department should bear its fair share of economies at this time of crisis, I hope that Her Majesty's Government will bear in mind the dangers of weakening our military defences at a time when the threat to our way of life, both from within and from without, is probably as acute as it has been at any time since 1939.
This leads me to the question of the energy crisis, the most spectacular aspect of which is obviously the new policy of the oil-producing countries in using their economic resources as a political weapon. I do not wish to take up time in this debate in arguing the morality or the wisdom of the action of the Arab countries. I should like merely to reinforce the point, which has been made elsewhere, that the Middle East crisis, and the action which followed it, was really no more than a catalyst. We shall not return—at any rate for many years—to a world of plentiful and cheap energy
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supplies. Furthermore, and perhaps more important than that, we must accept as a self-evident fact of international life, however unpalatable it may be to some of us, that political power and influence in the world is no longer and probably never will be again, the monopoly of the rich and industrialised countries of the world. A great part of it has passed to the primary producers who are, at last, beginning to recognise the weight and the power of the weapon they hold in their hands. Many of us have for many years been sounding the warning that unless the rich countries of the world pay more attention to the wishes, the interests and the aspirations of the developing countries, sooner or later those developing countries would take matters into their own hands. They haw now begun to do so. Whatever the solution to our present domestic problems, whatever may happen at Geneva in the Middle East Peace Conference, we must recognise that the shape of the international power structure has beer irreversibly changed. If we do not Change our attitudes with it, our future will indeed be bleak.
I think it is worth repeating however, that for this country, if we insist on looking at these matters from a narrowly national point of view, the energy problem is probably only a temporary one. In the 1980s, as we are told almost daily now, North Sea oil will supply a great proportion of this country's energy needs. It seems to me that whether we behave as "little Englanders" or as "good Europeans" is to a very great extent irrelevant in this argument. If we use all the oil ourselves, we can make ourselves virtually self-sufficient; if we sell it to our partners in Europe, the balance of payments advantage will be substantial. I hope, however, that this prospect of plenty will not blind Her Majesty's Government to the urgent need, referred to by the noble Baroness, Lady Seear, for a long-term energy plan, concerted internationally as well as nationally, which will bring oil, coal and, incidentally, nuclear energy—in which our record to date has not been altogether admirable—into the reckoning.
My Lords, on the industrial relations scene, it is obviously necessary, as the noble Lord the Leader of the House and my noble friend, Lord Diamond, have said, to tread very carefully indeed. There

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can be no doubt, I believe, in the mind of anyone in your Lordships' House, that many of those workers who are involved in disputes at the moment have a powerful, and, in some instances, an unanswerable case. Some of the impact, the impulse behind the claims for wage increases, is the natural claim of the worker to a fair share in the profits which he helps to create; but this is not, as the noble Viscount, Lord Amory, has pointed out, the only factor. The differential is an important factor, too.
The miners are an obvious example of this. No one, I believe, would deny that the work of a miner is dirty and it is dangerous. No one any longer denies that it is essential to the survival of the economic structure of this country. Yet thousands of miners leave the industry every year for the quite simple reason that they are not paid enough to persuade them to stay. In the long term this must obviously be put right. Yet it will be necessary, I believe, for workers as a whole to recognise that the miners can be paid more only at a cost to someone else.
Of course, part of this cost can be met by a redistribution of wealth within the community as a whole, but it would be foolish to think that this will solve the whole problem. Squeezing the rich is an attractive proposition; and of course there should be changes in the weight of our taxation, and there should be concerted and serious attacks upon those who are parasites on our community, and on people who make huge and unjustified profits while contributing nothing whatsoever to the common welfare. Of course all that should be done.
But we should be clear that, when all this has been done, it will still be necessary for organised labour to accept the simple truth that if certain groups of workers are paid a large share of what is available for wage increases, however strong their case may be, then other groups of workers will have to be paid proportionately less. Perhaps we shall have to consider institutionalising some system of job evaluation in our society.
We surely cannot consider ourselves to be an entirely civilised society when the chairman of a company can be given
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a pay rise of £16,000 a year; when empty properties can appreciate in value by £25 million, enabling its owners to borrow more money to build more property to make more profits, while the miners and other lower-paid workers struggle for what they believe to be a fair living wage. There is something to me quite extraordinary about a situation in which a company director's secretary in the City of London can receive £3,000 a year while the matron of a children's hospital in the same city has to get by on less than half as much. It is an Alice in Wonderland set of values in which show business personalities and the super-stars of sport are paid enormous and inflated sums of money while those who contribute to the real wealth and living standards of the community are living from hand to mouth.
This brings me, my Lords, to my final point, which is the fourth area of crisis to which I referred at the beginning of my speech—to my mind the most important one. We should recognise it for what it is: a political crisis, a crisis of national will, and a crisis of leadership. Although, as I have said, I believe that many of the workers now engaged in industrial disputes have genuine and unanswerable causes for complaint, we cannot ignore the fact that there are areas in which their problems are being exploited by men whose aim is not to raise wages or the living standards of the workers; it is not even limited to the use of economic power to smash the politicians of the present Government. Whether it is morally right to use the industrial weapon for political ends is a subtle and complicated argument which I do not propose to follow here. What I do wish to say, however, with the noble Lord, Lord Gore-Booth, is that there are men in powerful positions in this country whose aim is, quite openly, to destroy the existing political system, and to use any available weapon to do so. We should not, my Lords, any of us, lose sight of these facts over the coming months.
In case there may be some of my colleagues on this side of the House who feel uneasy that I should emphasise this point (the noble Lord, Lord Gore-Booth, has said it is not a popular point), I should like, with your Lordships' indulgence, to quote a short extract from a

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recent pamphlet called, Guerilla Warfare and the Working Class, It reads, in part:
"The Labour Movement is staffed by Social Democrats so that its aims are those of Social Democracy, not revolution. The Social Democrats are the prop of capitalism because they have permeated our class with the idea of 'gradualism' and 'reformism'. Labour politicians, 'leaders' and generals of the T.U.C., formerly almost to a man supporters of earlier Labour Party legislation, neither have the sincerity nor the capacity to meet this assault on the working class. Indeed, they are reduced to a strategy now, amongst other things, of calling for a General Strike which, it is wishfully hoped, will compel a Government to retreat or, better still, cause the defeat and collapse of the present Government, leading to a General Election; which would only replace one Capitalist Government by another Capitalist Government."
This quotation from a recently published pamphlet is not the words of some way-out Maoist student revolutionary; those words were written by a member of the national executive of one of our largest trade unions.
I believe it is a matter of great urgency that we should recognise that there is now the danger of a serious political confrontation in this country. If the present conflict between the Government and the trade unions is not resolved, we may, in my view, find ourselves facing political dangers of a kind which this country has rarely faced before. Those who say that if there were a General Election now the Party which gained power would be faced with exactly the same problems, and that nothing would have changed, should I believe think again.
If extremists in our political spectrum continue to exploit industrial unrest for political ends, there will sooner or later be an inevitable backlash. We shall not be lacking in extremists from the other end of the political spectrum who will be prepared to exploit that backlash, too. No one should believe, my Lords, that this country is in some magical way protected from the kind of political violence which that sort of confrontation can bring. It has happened in other countries, and it can happen here.
This is not to suggest that there is any easy path to consensus. I believe that those who talk of a national Government misunderstand the whole nature of the present political situation. They forget especially that this country invented the
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concept of the loyal Opposition. Anyone who watched the major "Current Affairs" programme on television last night would have been convinced that the road to consensus or to agreement is going to be a difficult one. We could see the usual parade of talking heads; we could listen to their familiar cadences as they deployed all the predictable arguments for their own sectional interests. This man talked for the Conservative Party, that man for the Labour Party; this man for the trade unions, that man for the employers; this man for the workers, that man for the steel industry. It was entirely in vain that one waited for somebody who would talk about the interests of the nation as a whole. Someone once wrote (perhaps it was Emerson; it certainly sounds like him) that great things are not achieved by small men.
Yet if we continue on our present course there will certainly be hardship; there will be bankruptcy, and there will be a complete abandonment of any growth in our economy. There may also be, as I have suggested, more dreadful and more lasting damage to the political fabric of this country. I suggest that those who have at heart the future of Parliamentary democracy should recognise—and this is no hyperbole, my Lords—that there is now a very real threat to its continued existence. Perhaps this, if nothing else, will persuade us to abandon narrow Party politics and the pursuit of sectional interests. I should like, as other; have done, to support wholeheartedly the imaginative proposal of my noble friend Lord Diamond for a concerted approach by Parliament to this problem.
Before I sit down, I should like to read your Lordships just one more quotation. It is from a column by an American journalist. He writes:
"Consider Britain. Here is an entire country about to be closed down like a dilapidated railroad station. It is a splendid country in many ways, but these days it takes a lot of upkeep to make it work properly, and the British are no longer interested in doing the job."
I do not believe that this is so; but, my Lords, it is going to require a concerted effort of national will and political courage to prove that that American journalist was wrong.
5.0 p.m.
VISCOUNT WATKINSON: My Lords. I would agree with the noble Lord, Lord Chalfont, who has just sat down, that our particular way of life is to some extent challenged at the moment.
I am not sure that we should do ourselves a service if we imagined, as he himself said, that the road to consensus is a very easy one. In fact I thought the noble Lord, Lord Diamond, for a moment was almost slipping back into somewhat controversial statements when he opened his very remarkable contribution, if I may venture to say so, with some remarks about an old chief of mine, the late Lord Monckton on Brenchley, although he did not refer to him by name. Lord Monckton was Minister of Labour at that time, and it is just worth saying that I think no man sought to contribute more at the expense of his own health and his career to bringing some sort of consensus and conciliation between industry, the trade unions and the Government.
He failed only narrowly, I think, in trying, as Sir Stafford Cripps tried and so many senior Ministers and leading figures have tried over the years since the war, to solve this vexed problem of getting the three sides of our country to work reasonably together. Although there have been some successes there have been too many failures. Now we begin to face a situation—and I think here again the noble Lords, Lord Gore-Booth and Lord Chalfont, are right—where time is running against us. There is an increasing voice which says: "Be done with all this; let us pull the roof down, wreck the building, and only decide what to put up in the ruins when all that has been achieved".
So perhaps I may confine my short remarks to what I believe is the crux of the present crisis, and I do not propose to follow noble Lords who have spoken so admirably on the broader aspects of what we should do to preserve our present political way of life. I think just for the moment—and I say this as an employer who has spent the last several days trying to see how you really do run a company on a three-day week with any sort of justice or reason or output—of what the Government and all sensible people should seek to do about our immediate situation, and because it is an internal
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situation it is under our own control. If we were all working together in this island in a spirit of reasonable national cooperation then the Arab action over oil, I believe, would be readily containable—painful, but totally containable. It is, as the noble Lord, Lord Diamond, said, because we are knocking ourselves about that the situation is so serious.
I must say, having recently been round the world on the business of my company, that you cannot explain to people outside Britain why the Coal Board and the National Union of Mineworkers, the Railways Board and ASLEF, the Electricity Authority and the power engineers, are all at loggerheads at a time like this. It is impossible to give a satisfactory explanation, and all our foreign customers feel that the British must be mad to the point of self-destruction. That is not exactly the right background in which to increase your exports. So what should we do about it? The noble Lord, Lord Diamond, and other noble Lords have suggested that perhaps there is a way of bringing senior members of all parties together. I am sure no member of the Privy Council would refuse such an invitation if he thought it was in the public interest, or no member of any Government at the moment.
But while all that is being thought about, I think the Government have to get on and take some action, and I hope that in doing so they will try—and all those others who have to act now—to sense the mood of the people. It is an over-worked and perhaps depreciated term to talk about the "silent majority", but there is a majority of people in this country who still believe in it and who still want to see it conquer its difficulties; and perhaps to-day we have dwelt rather too much on the people who do not. These people are to be found in all walks of life; their views perhaps do not count for much, as the noble Lord. Lord Chalfont, said, in the days of instant crisis followed by instant self-interested comment. But so long as we remain a democracy they still have the final say. They are the nation, and it is this kind of national solution that the Government should seek with, I hope, some help (even if critical) from the Opposition at this time.
If I now say one or two things, I hope that I shall not be regarded as saying

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other than what I believe. I do not believe that people want to see the present Government conciliate the miners or the railwaymen, if by conciliation is meant giving them more money over the heads of the Coal Board and the railways. The offers made are not insignificant. For example, I believe it is £44 million from the National Coal Board, and it is reported to mean face worker earnings of £50 a week. There may be arguments as to whether that is enough, but I think that ordinary people believe that at least it is enough to be going on with and a fair offer to mine workers who, I must say, have not even completed the contractual terms of their last agreement, arrived at only a year ago. These people take this view because they want, above all, to see inflation controlled. They know that foreign speculation to some extent and, more broadly, this wide escalation in the cost of raw materials has forced up prices to a fantastic extent. They want the Government to go on trying to keep it under control, so they want Phase 3 to succeed. I must say to my noble friend who opened the debate—he knows it very well, but perhaps I may say it again—that I do not think they would support a Government which, having introduced Phase 3 and made it law, then proceeded to over-throw it, because they want to see it succeed. I think it is equally right to say that they think that in present circumstances it offers the possibility of very generous pay settlements indeed. If there is a fault in it in present circumstances it may be that it is too generous rather than not generous enough. Having—
LORD SLATER: My Lords, would the noble Viscount allow me to intervene?
VISCOUNT WATKINSON: My Lords, perhaps I may just finish what I was about to say, because, if I sense correctly what the noble Lord has in mind, I think I am going to meet his point. May I see whether I can meet it before he intervenes? Having said what perhaps he feels is in some way in opposition to the trade union movement—a movement which I have always supported, all my political and working life—I want to say something else. Because most people in this country are far shrewder than some politicians think, they know very well that there is another side to the case that
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I have just been deploying, and that it is a very important side. They are quite clear that in the light of the oil situation any impartial value judgment no v made must rate coal and railways of considerably more value to the life of the nation than they were even six months ago, and ordinary people want the Govern Went to try to reconcile these conflicting positions. They want to see the present and future of coal and railways related, if possible, in a fair and sensible way, so that the nation can get on with overcoming its external difficulties instead of destroying itself by internal strife.
The one practical proposal that I want to make is this. I believe that the Government, with a little help from the C.B.I. and the T.U.C., could do this if they took the following action. First, they must get the agreement of both sides of industry that we must, in the national interest, bring fresh thinking to the development of coal and rail transport. I do not think any noble Lord, or indeed anyone else in the country, would challenge that.
There is a vast amount to be done. Take coal, for example. We have to switch back power generation more to coal; and similar action must be taken to switch some of the domestic heating load also back to coal. The large new coal reserves discovered in Yorkshire—far larger, I am told, than was believed only a few months ago—must be developed as a matter of top national priority. Coal mining, its future secure, must be upgraded and made a high technology as well as a high priority industry. We must consider the whole career structure of the mining industry afresh. It is now much more important than what are called the more glamorous industries, even those such as electronics or motor cars.
This "new look" must be ac sieved, not by some form of remote consultation between the Coal Board and the Government but by employing at the grass roots of the mining industry modern techniques of worker participation in the processes of decision-making. And if one is asked how are we to defeat those men who want to wreck our system, the answer is that that is the way to defeat them: to take the decision-making down to the grass roots and convince the ordinary sensible people who are in the majority that what is being done is in their interests as well as in the national

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interest. So I say, let the miners themselves participate in the task of reshaping and upgrading their industry. I would—
LORD SLATER: My Lords, I should be grateful if the noble Viscount would give way. He is an old Parliamentarian, and some of us remember when he was in office and when he was responsible for various Departments. Everything the noble Viscount has said in the last ten minutes has been directed against the miner; the miner has been right in the forefront—
SEVERAL NOBLE LORDS: No.
LORD SLATER: My Lords, it is a matter of opinion. I am expressing an opinion with regard to the statement that he has made. The door of conciliation is still open. We are hoping that the new Minister can enter into some form of arrangement or agreement whereby the impasse which has been brought about would end, and we could get over the obstacle that we face. But it must be reasonable as far as the miners are concerned; the noble Viscount should know that.
VISCOUNT WATKINSON: My Lords, of course I hope that my right honourable friend, who has done such a wonderful job for the whole nation in Ireland, may bring his talents to bear on the mine workers. But I am entitled to say, as my noble friend who opened the debate said, that I hope that a settlement will be reached within the terms of Phase 3 in an order that is fair to those other workers who have already settled under Phase 3. I am not attacking the mine workers, but trying to set out a proposal and a policy which I think might completely change the outlook of the industry, and provide a new and better career for every man who works in it. That is what I should like to see happen. Perhaps I may now be allowed to finish what I was saying.
My Lords, I think the C.B.I. and the T.U.C. should therefore be asked to agree with the Government on the immediate appointment of an independent chairman of wide experience to bring all concerned with the coal industry together in these talks about urgently reshaping its future. I have to go on from that and say that if these proposals were agreed, then the miners themselves
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must make some contribution to this. This is what I believe, whether the noble Lord likes it or not. They would have to accept, I hope in a willing and co-operative fashion, that the present National Coal Board offer could be accepted as a prerequisite to this rather longer-term action which would reshape and restructure the industry and lift it to the top of the industrial tree, instead of its being fairly far down as it is at the moment. The miners would have to understand that participation in decision-making, as we found in my own company, is not an easy thing to achieve. I do not know whether the noble Lord knows that one of our factories is run entirely by ex-miners, now members of the Transport and General Workers' Union, because that factory provided work in an area where pits were closing. I have never seen men who have worked better as a team or who have changed to such a technical job in a more brilliant way. If there are men like these, it is a national disaster if we do not uprate their industry, and I hope that this proposal will be seriously considered.
LORD POPPLEWELL: My Lords, I am grateful to the noble Viscount for giving way. I am interested in what he is saying and, quite frankly, I agree with a lot of it, especially with regard to both sides working together. But I am rather alarmed at the limitation that he is putting on this interpretation. He first of all advances the theory of both sides working together, but then lays down the diktat that what the Government have set out in Phase 3 must be done. This is one of the troubles all along the line. When there have been meetings between the Government and the T.U.C. representatives, the Government have always decided policy and then informed the representatives of the trade unions, instead of there being open consultations in which both sides get together. Would the noble Lord not agree that, instead of laying down particular limitations, it is better to have an open forum with a view to getting the best out of particular industries?
VISCOUNT WATKINSON: My Lords, the noble Lord, Lord Popplewell, has been long enough in industrial relations, far longer than I have, to know that we do

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not necessarily help what would be delicate and difficult negotiations by the new Secretary of State by debating the methods here. But I think I am entitled to say, and it is my personal view, that the general broad wish of the country is to see an immediate settlement within the terms of the existing Phase 3 proposals. I can assure the noble Lord that they are broadly drawn and, without trying to get into a negotiating stance, I can also assure him that they are, in my view, capable of more exploitation than they have yet received. May we leave it at that? None the less. I hope that it can be done that way, because I hope that with the emergency meeting of N.E.D.C. on Friday of next week, when all the interests will be represented—the Government, the T.U.C., the C.B.I.—perhaps some thoughts about this kind of co-operative phase could be started. Time is against us. I must tell the House that the warnings given by my noble friend about what will happen to industry if we do not solve this problem and get coal flowing back to the power stations, is very much at the moment underestimated in the public mind. There will be drastic shortages, high unemployment and great difficulties. That would be a very sad thing for the country as a whole. It will make the case for the men who want nothing but disruption.
My Lords, I will not discuss the railways. Here again, this is a matter of very difficult industrial relations, where two unions appear to wish to go along with an imaginative plan and one does not. I hope that good sense will prevail. It is presumptive of me to try to interpret the views of the nation at this moment, but in a way that is what our debate is trying to do. I think we should recognise that most of our fellow countrymen still want to see a fair and just solution, fair and just not only to the men or women involved but also to the nation as a whole. Speaking for industry, certainly we will do our best to support the proposals of the Government, because we believe that they are necessary in the crisis in which we find ourselves. But the shorter the term on which this sort of work and discipline has to be imposed, the less damage there will be to repair when it is all over. I hope that I have not disturbed the general symmetry of the desire of your Lordships' House to make progress on a
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united front. I have simply tried to face some of the difficult facts.
I will end by saying again that the difficulty we face is that there are two industries, the coal industry, in particular, which now have to be upgraded. Circumstances have made them of vital importance to the future of this nation. I only hope that, with skill and good will, and the help of the Secretary of State, and the good will of Mr. Gormley and the other leaders, we can get this present dispute out of the way o that we can concentrate on what matters; that is, providing the nation with a great deal more coal to substitute for oil which we are not going to receive. I hope that your Lordships will feel that the tenor of this debate is not only that we wish to encourage a kind of national unity; we really wish to say, particularly to the mine workers and to the Government, "Settle your differences, and let us get on with the main, important job."
5.18 p.m.
LORD SELSDON: My Lords, I find to-day, not for the first time in your Lordships' House, a great feeling at unity, inasmuch as if one were listening from outside one would find it difficult to decide from which side noble Lords were speaking. I speak from these. Benches to-day, but have some sympathy with the noble Lord, Lord Diamond, in that it would be quite easy to scare 101 bulls-eyes in attacking the economic policy of the Government. But it is probably not really the time to attack. We have been attacked enough within our own country and throughout the world. I think no Government could stand up to-day and say that the last six weeks have given any feeling of euphoria. Interest rates have been soaring to an unacceptable height, food prices rising through the roof, the pound getting soggier and soggier, weaker and weaker. We have had the fear of industrial dispute which has become very real and we have had an energy crisis. Suddenly we realised that there was a crisis and not just a situation. We have had the Stock Market collapsing at a rate no one ever thought was possible. Things cannot be described as good in this country, or in the outside world; yet the outside world has seen this coming to us.

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I have just come back from a period in the Gulf. When one talks to the oil people out there they will all tell you they foresaw a situation developing into a crisis. But there have been a number of situations during the past year which people have just called "something temporary". When the monthly trade figures come out, if they are good somebody says things are going well; if they are bad people do not mention them. It seems odd, when God declared there were 12 months in the year and that within those 12 months we must think month by month and week by week. Six weeks ago things were going well; we were moving forward to a 3½ per cent. growth rate, and even optimistic people such as myself found that acceptable for next year. And yet the role of Government surely is not to think about the present or talk about the past, or to say what we did and how well we did it, but to estimate and anticipate the future.
Governments to-day say, "We can no longer control the economy of the country because of international factors beyond our control." Most of us knew at the beginning of this year that we were likely to see a rise in commodity prices in accordance with the world boom and we were likely to see ourselves moving towards full production. And yet some of us forecast, even in the first few months of this year, that we might well see a visible deficit of £2,000 million. People then accused us of being scaremongers. Equally some of us thought that we should even move towards a rate of inflation which could well be 20 per cent. by the end of the year; and again people said, "What nonsense!" Probably this is almost the first year in our history when we have actually recognised what inflation is. People have never really understood it. It was always something they had in Latin America.
People in this country were brought up to believe that a pound was always a pound. They did not understand devaluations, which are relatively modern phenomena. The pound has fallen a third against most Continental currencies, but think of the sudden change of the balance of industrial power within Europe. We have always had the great British companies that have extended their influence across the world and we have looked down on those on the
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Continent. To some extent we have called them dishonest, badly organised, except perhaps the Germans. Situations change. One of our great strengths, which has also been one of our current economic weaknesses, has been the strength of our industry around the world. It has been estimated that if one were to take the contribution that British industry made directly to the British G.N.P., one would find that it was 66 to 70 per cent.—that it was contributing also to G.N.P.s abroad—whereas German industry, which is almost totally national, contributes wholeheartedly to the German economy.
Things are beginning to change, and changing gradually. We often fail to look far enough into the future. We automatically assume, when a nation is up, and people are talking about it, that things are going well. When we think, for example, of the United States a few years ago, few people would have foreseen the sudden relative fall of the industrial power of that country relative to the rest of the world. Ten years ago few people foresaw the rise of Japan, and few people would believe to-day that next year Japan will show nil growth and could well be facing as severe an economic crisis as we do ourselves. We look at German industry, modernised after the war, equipped with the latest plant and machinery, which in many cases is now hopelessly out of date. Suddenly we see, for the first time, probably a fall in the growth of Germany in 1974. Then we look further and we see that the guilder was strong and things were going well, and a few weeks or days ago the guilder was moving towards devaluation and Holland is in difficulty.
All these things happen, and when they happen we always try to find excuses, maybe industrial disputes. They are coming on the Continent now. The Germans are having go-slows, the French trains do not work. Every time I go to Italy, which is about once a week at the moment, I ring up in the morning and the hotel is open, and when I arrive in the evening the hotel is shut. The number of strikes is incredible. It is not just the British disease: it is a disease spreading across the Continent, and I believe that industrial relations on the Continent are becoming much more acute than they are in this country. Suddenly we seem to have come to terms with

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ourselves. In the last economic debate in which I took part in your Lordships' House I spoke about a wonderful animal, the atropus pulsatorius britannicus, the death watch beetle, nibbling away at the structure of our society; and yet only two months later we were all talking for the first time about unity.
I was fortunate enough the other day to go with the D.T.I. on a mission to Hanover, when we were seeking to encourage foreigners to come and set up business in this country. I went with a number of people from industry, commerce and the trade unions, who took one look at me, a young Peer, a capitalist from the City of London, and wrote me off in a few moments. But suddenly there was an attack made by the Germans upon our economy, upon the City of London, upon our industrial relations problems, and we found ourselves totally on the same side. It is quite interesting how problems suddenly unite us. We have been divided as far as the outside world is concerned, and I think many of us have not realised how divided we have been and how disastrous that division has been to confidence.
Whichever Government we have in power may produce good policies or bad policies, and it is usually only history which can tell whether they were good or bad. But a bad policy can succeed much better than a good policy if that bad policy has confidence. I do not think the present Government went far enough when seeking to communicate with industry and commerce and the people. I should like to say how pleased I am that it should be my noble friend Lord Windlesham who has been made responsible for Government communications, because it is communication which has caused most of the problems we find to-day. We talk of the balance of payments, and yet most people do not fully understand the balance-of-payments situation. We are not, and have never really been, a particularly good manufacturing nation. We have not been particularly good at exporting. Our exports are up 28-odd per cent. this year. Forget about the cost of imports, but the exports are relevant. I am working for companies who are producing so much that they cannot produce more in this country and are saying, "Can we set up abroad in
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a cheap labour area where we can reimport to England?"
We shall almost certainly have a £2,000 million deficit on visible trade this year. It is horrifying but understandable, if we look at what has actually happened. Next year, as we see Europe entering a recession and the world entering a form of recession because of the energy crisis, it may well be that we shall see commodity prices fall and therefore the position on our visible exports will improve. It may well be that if this recession continues and demand is cut throng out the overseas world our own exports may fall. But the position is not a black as many of us would believe, because the factors which were working against us could now start to work for us. What is important is that no step should taken here which will cut any potential for exports. In our motor industry now we find ourselves in a really strong position producing one of the best small cars in the world, and yet when you ring up and ask, "Can I have a Mini?", you are told, "In a year, or perhaps 18 months". It is one of the best motor cars in the world, a major earner abroad, and it has a great potential. If we cut back on our production in this country, things could go slightly sour. The advantages to our prices of continual devaluations could be eroded. I think it is true, or a point one would like to make, that many exporters do not realise that because of the devaluation they could substantially increase their export prices and still be competitive. Even this increase in prices could be very beneficial to the country.
I must—and I often do this in your Lordships' House—refer to the other sector which always gives cause for encouragement. This is the invisible sector. May I ask the Government, in the interests of communication, for the first time to remove their own expenditure, and hive it off separately from that of invisible earnings abroad. Last year there was a £685 million or £690 million deficit on Government expenditure; this year it may well be £800 million, compounded perhaps by these loans to nationalised industries from abroad where repayments have to take plane. I was not in favour of them at the time, but they are there and they will have an adverse effect on us. This year we shall see our invisible earnings (which are

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basically services contributed mainly by a small minority under permanent attack at the present time), rising to £1,600 million net—a fairly substantial amount—and probably continuing to increase. It is important that it should be recognised that although this is a minority sector of the community, in terms of the number of people who may be employed in these service industries, it is such a major earner that we cannot afford to lose out on our invisible earnings in any way.
The balance of payments is one factor; commodity prices, inflation, and interest rates are other factors. We complain about interest rates, but when we have inflation, interest rates must be related to inflation, and the rate of inflation must be deducted from the interest rates. We complain about rates of interest on mortgages. The French, before their current crisis began, were held up as one of the major economic Powers growing at a greater rate than anybody else, but they have been used to 13 per cent. mortgages for a very long time.
All these factors, however, are excuses and not the actual cause. The actual cause is that we ourselves do not have sufficient confidence in our own country and ability, and we cannot persuade the outside world to have that confidence. We have now reached a pretty low ebb. If, as has been pointed out, confidence continues to fall, we shall see the flight of capital from this country of which were were aware a long time ago. If we can somehow rebuild that confidence—and the key must be co-operation, and a feeling that our industrial relations problems are resolved—we can forget the question of our balance of payments. Because, once that happens, instead of exporting to the United Kingdom from abroad people will come over and set up their industries here, in what is at the present time one of the cheapest countries to set up, and one in which the availability and quality of labour are greater than in almost all the other countries.
There is that gap in communications. There is also one the other way round; we have considerable influence abroad. This is based upon our history, culture, and the relationships we have had with innumerable countries. That influence and respect is far greater than is shown
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by our true position. What I mean is that we do not have a strong economy, we are no longer a major military Power around the world, but we still have the respect of people for ourselves and for our country. The one area where that respect is lacking is for our ability to co-operate and work together. It needs so little to shift the balance in that direction, particularly at the present time, and all of us should be encouraged to feel that it looks at last as though all sectors of the community are beginning to work together.
5.34 p.m.
LORD ROBERTHALL: My Lords, when last week the noble Lord the Leader of the House read us the Message about the State of Emergency I made a point that other Members of your Lordships' House made: that it would be a great help if the Government would tell us how serious the situation was. The noble Lord replied that there was no intention on the part of the Government to underestimate it and that he would take these representations to heart. It is a good augury for the noble Lord's additional responsibilities in the public relations field that we can feel a good deal happier to-day than we did last week, because we have had a much fuller analysis of the seriousness of the situation. It is an extremely serious position. This is partly because of our own fault and partly because of outside influences. Basically it is clear that the situation is serious because we are a divided nation. If that were not so, it would be ridiculous to say that we were in a worse position than at any time since the war. As the Chancellor said yesterday, we are enormously better off now than we were soon after the war, and we could easily cope with our difficulties if we could reach any sort of national unity.
I am not going to make any suggestions about how to achieve this. I was interested in the speech of the noble Lord, Lord Diamond—a speech which a number of other noble Lords have welcomed—with his very limited approach to our most serious problems. His suggestion would be difficult to carry out and I shall confine myself to much more mundane matters. There are many subjects that we could discuss. The noble Baroness, Lady Seear, gave us a list of the important ones: inflation; the balance of payments;

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industrial relations; energy. All we can do in a situation so uncertain as that in which we are to-day, when so many factors are unknown, is to look at the broad strategy. Of the subjects that she mentioned I am going to try to confine myself to inflation and the balance of payments. This is not because industrial relations and energy, which are our immediate problems, are not important.
Many critics have pointed out that we entered the present crisis in rather bad shape. I think that the Government have to accept the main responsibility for this. First, they had too much deflation. They allowed unemployment to rise to unacceptable levels, and then they understandably became frightened and went too far in the other direction with immense reductions in taxation and increases in Government expenditure. The result is that we are now in an overstretched situation. We were all misled in the early part of this year by the unemployment figures. They were much higher than seemed to be consistent with a situation of "overstretch". By the middle of the year the signs were quite apparent; there were labour shortages in a great many industries, and in many others shortages of materials and components which traced back to labour shortages, and, most alarming of all, the balance of payments was getting into a serious deficit position. Our exports, which had become fully price competitive, were being held back not by price but by the lengthening delivery dates; our imports, especially of manufactured goods, were going up rapidly. All the signs pointed to an overloaded condition. The adverse effects of this, first on the balance of payments, was that exports were being held back and imports pulled in. In this situation, letting the exchange rate float was put forward by the Government as the reason why we need not expect another "stop". But when you are using too much of your home resources, letting the exchange rate float only worsens the position. Secondly, this overstrained condition made the operation of the incomes and prices policy, which I think is absolutely essential, very difficult indeed. It cannot work if labour is generally short.
Take the miners to-day. They say that a great many people are leaving the industry and that they must have a settlement outside the limits of Phase 3 in order to get the additional labour.
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London Transport workers and many others are using the same argument. It is an argument that has general appeal, but if they obtain more labour as it result of special wage settlements they just cannot spur the shortage of labour to some other part of the economy; they only shift the pressure, and in the end they are no better. That, I think, is the argument for keeping to Stage 3. I do not think that the relativities in industry are right at the moment. As Sir Frank Figgures has said, one of the criticisms of Stage 3 is that there is not enough room on relativities, but when there is overall excess demand for labour we do not know what the relativities are.
I agree with what the noble Viscount, Lord Watkinson, said about the need to look at the coal miners and the transport industry from a long-term point of view, and to look at the relativities. But we shall not be able to get them right in these conditions of excess demand. It follows from this I feel—and the noble Lord, Lord Diamond, and the noble Viscount, Lord Amory, both touched on it very delicately—that the measures announced yesterday do not really go far enough. As other noble Lords have already indicated, the cuts in public expenditure look large and effective, but they are very slow-acting; and anyone who has had any experience in this field knows that it is much easier to get Ministers to say that they will cut their expenditure than to get them to cut it. So, from two points of view, because of the delayed effect and doubts about whether we shall get it the package is not as good as it looks. I think the hire-purchase regulations are a good, quick-acting thing and the credit control measures are good, too, but it is unfortunate that the Chancellor was not able to do something more. We all recognise how hard it is at this stage in the financial year to do anything about direct taxation, and we can all sympathise with his feelings about indirect taxation adding to prices. Nevertheless, we have to face the fact that prices will go up, and there are other reasons why it would have been good to do something more.
The two that I would mention are that the country was expecting something to happen, and a presentation which does not appear to touch them up at all I think is psychologically unfortunate. I myself thought, for instance, that he might have

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put up the motor vehicle licence fee, or perhaps have kept the present £25 for the smallest horsepower cars but put it up substantially on the higher horsepower cars. That would seem to be a logical and reasonable thing to do. He could have put up taxes on alcohol and tobacco, which would generally have been considered fair in a situation like this. Dealing with inflation, I should like to mention one point referred to by the noble Baroness, Lady Seear. I think she said that although she thought the Budget might have been firmer, in the last resort she would prefer inflation to deflation if we had to have it—and I think she was referring to the danger of unemployment. However, I believe she was rather confused in her argument. If we have unemployment now it is not going to be because of deficiency of demand; it is going to be because we have not got the physical resources to produce; and since it is absolutely certain that output will go down more than incomes, to keep up incomes does not make things better but rather makes them worse than they were.
My Lords, I would mention two further points only, and the first concerns Stage 3. I agree with the speakers who have said that it needs to be reconsidered as soon as possible. The threshhold agreements which are included in the present Stage 3 should especially be looked at very quickly and something should be done about them. They hold out the hope, which is now completely illusory, that people are going to get wage increases to keep up with price increases and thus guarantee them improvement in their standard of living. We must recognise that that is impossible now; and the threshold agreements, if they are implemented, will, in my view, be like letting the exchange rate go—just a recipe for continuing and spiralling inflation.
My other point is on the balance of payments. Several noble Lords have called attention to the danger of a world recession. The danger arises because of the enormous adverse balance of payments that is very likely for the rest of the world against the Arab States. I do not think we have by any means seen the end of the price increases. The Arab States cannot spend what they get and therefore there is an inbuilt adverse balance for the rest of the world which
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it is impossible for them to meet collectively, because the people who are getting the surplus are not spending it. I agree that we need international collaboration to deal with this problem and I think it is perfectly possible to get that; but we must remember that we ourselves are running a very adverse balance of payments now and I do not think we ought to go into international discussions for maintaining the position collectively and expect others to underwrite our starting point. We are not all starting level; we are starting with a much more adverse position owing, in my opinion, to the over-heating of the economy. That is another reason why it is important to do what we can to improve the balance of payments, to stimulate exports where we can; and that, too, will require more severe measures than have so far been announced. My Lords, the Chancellor of the Exchequer constantly says that he is ready to take further action if it should be required. He took some further action yesterday, and I hope he will bear in mind that it is almost certain that he will have to do something more.
5.49 p.m.
LORD DAVIES OF LEEK: My Lords, the atmosphere of this debate has presented what the Americans call a "low profile". Perhaps that is a good thing. But some things have been forgotten. I was pleased to hear the noble Lord, Lord Selsdon, discuss knowledgeably the issue of the balance of payments. The truth is that never in 170 years have we balanced our payments. Those of your Lordships who are aware of the Stock Exchange study of invisible earnings which was published about 1968 or 1969—a massive investigation into the problem of invisible earnings over a hundred-odd years—will know that because of our exclusive position as banker and shipper and everything else we have been able to balance the physical movements of goods by the know-how of the City and our financial operations.
That is not one of the factors in the crisis. That know-how is still there, and despite the fact that we are no longer an empire there is no doubt that the know-how of the City of London and of our insurance and banking industries has been the tool that has helped us to

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earn our living. That tool still exists, but I think we damaged it when we moved into the Common Market. There is a big struggle about that, which I will not go into in depth; but it is a factor that we have to look at in this crisis.
What are the factors which mask this crisis? Let us take the common people—not the Stock Exchange or the speculators, but the some 20-odd million people in work. This crisis, as compared with others I have seen in my lifetime, such as the one in 1931, is masked only by the fact that millions of women are earning money too. The fact is that if the majority of the wage-earners now were not receiving double earnings inasmuch as their wives are working, there really would be a crisis of major proportions. I will admit that this has created great demand. I have never been on the side of the economists—and I studied economics in a moderate way myself—who extolled growth. We have reached a point in the history of the industrial world where growth is cancerous. I have said before that this problem has not been faced. This is not a problem of capitalism; and it is silly to talk about Communism and other such things. This is not a problem of Communism, because both the capitalist countries and the Communists are suffering from the problems of industrialism. They are already meeting these problems in Europe, they are already meeting them in the Soviet Union, and they are certainly with us in our capitalist society.
What are those problems? They are problems created by the demand for esoteric raw materials from many of the underdeveloped and underprivileged parts of the world—copper, zinc, tin, platinum, oil. As somebody has said already in this debate, those under-privileged people are at last, through the impact of awakening expectation, demanding higher prices for these commodities. I cannot see how the Western World (I use that as a broad figure of speech) can force down the prices of these commodities, because these people, too, will want television sets and slick films, and better standards of living. The mythology of the Eastern man living on a handful of rice, as we liked to say in our schools years and years ago, is finished. The other point that I was
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delighted to hear the noble Lord, Lord Selsdon speak about is this. We go about crying, "Ichabod, Ichabod—the glory has departed!"; moaning as though this is the only country which experiences strikes. The other day we read of a strike in Japan where they attacked the railway workers; and anybody who went to France a week or two ago met a general strike. Let us get the relativity of strikes in proportion.
Now where does the blame lie? My noble friend on the Front Bench spoke for himself on truth of information. That has always been a Privy Council understanding. A Government that wants co-operation from the Opposition should be prepared to call in the leaders on the other side on the basis of a Privy Council relationship. I will have nothing to do with a coalition in this situation, but I do not object at all to a Privy Council basis because the price of co-operation to-day is that there shall be truth. When we are attacking the trade union movement we should remember that the price of co-operation with the trade union movement, too, is that there shall be truth.
I should like to see in the British trade union movement something that I saw in Detroit, and that has grown up in the American trade union movement. There, the trade union movement has its own accountants who are honour bound to deal with the accountants of the industries and the big firms by which their members are employed. All the cards are put on the table, and the books are opened as professional men to professional men, and the accountants put to the Detroit workers (in our case it would be the miners) the truth, saying, "That is the real position of the firm, so your demand for wage A, B, C or D will have to be modified", or, "You are quite justified in going forward". This needs investigation in the future.
I will try to avoid saying things which have been said before, but I should like to emphasise that all this belief in the "Bible" of Phase 3 is pathetic. Phase 3 is finished. The Government's Phase 3 proposals rejected every one of the main requests of the trade unions and the T.U.C.: the restoration of collective bargaining, food subsidies, an effective system of price control, no further rises in rents under the Housing Finance Act, pensions of £10 and £16 for the old, a

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substantial shift in the tax burden towards capital and high incomes, and measures to curb property speculators. Instead, what we have had is that the legally imposed limit for pay increases has been reduced under Phase 3 from 8 per cent. to 7 per cent. I do not want to go into it in depth, but that is the fact. It is a divisive policy, wages versus profits; and it is divisive policy on land and property, extolled and shown in yesterday's statement—it was not a budget, it was a non-event—and on taxation.
Now the orthodox economist talks about the economy being over-heated. We use these figures of speech as though we were pot boilers. Really, it is because we have the wrong standards of values; and the mini-budget has increased these divergencies. What has it attacked? I give these figures roughly. The Chancellor of the Exchequer chopped a massive £1,215 million off the spending money of the Government, local councils and the nationalised industries. The biggest cut in his crisis Budget will hit the nationalised industries, which will have £264 million less to spend in 1974–75. A £212 million cut will be made on roads, a £182 million cut on education, libraries and science, a £178 million cut on defence; and the cut in public spending will include £111 million on health and personal social services. As far as I am concerned, the cut on health services is wicked when we have saved only £178 million on defence. I would assert—and noble Lords can check this—that had we reduced our military expenditure in NATO by the same percentage as the average member of NATO, we could have saved £1,011 million in armaments expenditure during the transition period of this crisis. That is an area where we could have faced a cut that would have helped.
What are we pretending? We are pretending that we are still a great Power, and the fact that we are pretending to be a great Power has made us scoffed at as other people, notably newspapers, scoffed at Lord Rothschild when he told us a few weeks ago:
"Britain would be one of the poorest countries in Europe by 1985—unless it stopped acting as if it were still a wealthy and powerful country.
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"It seems to me that unless we take a very strong pull of ourselves and give up the idea that we are one of the wealthiest, most influential and important countries in the world—in other words that Queen Victoria is still reigning—we are likely to find ourselves in increasingly serious trouble.
"It is the knowledge that our difficulties and dangers are as severe and ominous as they were in World War 2, though of course of a different sort.
"We have to realise that we have neither the money nor the resources to do all those things we would like to do, and so often felt we had the right to do."
Quite a lot of people made fun of that. At the same time as things like that were being said, when we asked who was the cause we had foolish statements from Ministers who must have known the truth or been gullible fools. Let us take this statement:
"Make no mistake about it, these new measures are going to have the bonus effect of slowing down the rise in the cost of living quite noticeably over the next year. … Yes, it's sunshine time for the shopper."
That was the Conservative Weekly News, and someone should have checked it.
"We are now applying a strict and effective pattern for the control of prices."
That was Sir Geoffrey Howe, Minister of Trade and Consumer Affairs, speaking in the other place in October. Neither the country nor the world deserves statements like that from responsible people when the information of the trend was there long before the oil crisis.
In this crisis there has not been the courage, or the approach which was needed, to ask for a coalition. Our policy has been that we would give all the co-operation that we could, if we were told the truth, but the country has been misled. Nothing was done yesterday about Concorde, about Maplin, about the Channel Tunnel. Why had not we the courage to say, "Sorry, but these resources must now go into rehabilitating the country and not towards making a bonanza again for the speculator."? None of these projects is necessary to solve the crisis. They would only waste fuel. We could use the money for an emergency investment programme to improve our mines and to develop the new coalfield in Yorkshire which could produce coal for 500 years. The money for the Tunnel, and for Concorde, could be used for that purpose. Why are there not people talking in that way?

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We want miners, my Lords. Last year, 10,000 miners left the pits. Why did they do so? Because by working in the noble Lord's factory they could earn twice the money that they could get working in the pits. When we talk about a miner getting £53 a week that includes his overtime, and only 14 per cent. of a quarter of a million colliers get that amount. We should have the courage to say that the money devoted to Concorde, Maplin and the Channel Tunnel will be used to improve our railways which were destroyed by "Beechingitis," and to restore the mines which Governments of both Parties have been responsible for cutting down, even though some of us objected and warned about the danger of depending on oil. Oil exploration should be extended.
We should do something about the bureaucracy which is rampant. I am talking about the powerlessness of the common man. We meet this bureaucracy in the country, and all Governments have suffered from it. I shall remember all my life how I saw it working in this Chamber. This country—and nobody can deny the fact—was forced into the Common Market before the time was right. We were not strong enough. We were forced into the Common Market by the misuse of the Party Whip and by Party pressures, without one jot, one comma, one dot being altered. We allowed that, and Mr. Heath told the country—he avowed it; he did not just tell them—that he would not enter Europe without the full consent of Parliament and the people. That was a breach of faith unparalleled since Magna Charta and the Bill of Rights. There are dominant factors which have even greater significance than the crisis.
Time is going on, my Lords, but there is one other point I should like to make. I have been speaking for some 15 minutes, which is not so long as some noble Lords have spoken, and I hope that I have not bored the House. I should like to bring out this issue of flaunting advertisements. I saw an advertisement for a little brush with which to comb the moustache. It was priced at £60. A pencil was priced at £112. These were presents that could be given to someone, if one felt so inclined. Mr. Alfred Dunhill had a 'personalised' handmade 18-carat moustache comb which cost £60, so the Observer told me and Dema Glass
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Limited had lovely sherry glasses at £6 a throw. You can buy a beautiful mink coat from Harrods for £775. That may be quite cheap, but it was being flaunted at people; that is the point. And then you wonder why there is a division in society. You wonder why a railway worker, or a worker on the Tubes, or a postman, asks for more money.
I ask for a little of the spirit revealed in the speech of the noble Lord, Lord Selsdon, and some other speakers. With all the difficulties with which we are confronted, there should not be this flaunting by those who are lucky enough to have money. I hope that during the next few months we shall have the courage to say that money should be diverted from Concorde, Maplin and the Channel Tunnel and be used to improve our railways and for research into the production of oil from the North Sea. My Lords, I have been speaking for 17 minutes and I have trespassed on your time long enough, despite the fact that I should have enjoyed speaking for another 17 minutes.
6.6 p.m.
LORD ORR-EWING: My Lords, I had hoped that the usual channels would have made it possible for us to have this debate on Monday rather than making it coincide with the debate in another place. I hoped, and that hope has been fully realised, that we should take a more statesmanlike attitude to the problems besetting our country. The stanch rd set from the Front Bench and by so many other speakers has fully realised my hope. I hope, too, that we shall not lose all opportunity of having our debate reported because of the debate which is taking place in the House of Commons at the present moment. It is unfortunate that we so often chose the same day to have a debate on exactly the same subject. I understand, of course, that as the end of the Session approaches there is not much flexibility available.
Like the noble Lord, Lord Diamond, I am tempted to score 101 bullseyes as he said, although of course he will well understand that I should be firing in the opposition direction. In the amiable mood in which we found the noble Lord to-day, he referred to U-turns. I could not help reflecting that there was one U-turn which very much affected our fuel scarcity when, despite the appeals by the Arab would and

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the sheikhs of the Persian Gulf that our Forces should stay there and add some stability to the area, and despite the fact that then we had a junior Minister, Mr. Goronwy Roberts, there, assuring them that our Forces would stay, there was this U-turn and we got out. This action was taken despite the offer of the Arab sheikhs to pay for our Forces in that area, in answer to which they received a rather insulting reply.
Recently I was re-reading the White Paper on the future of coal, and here I would comment on the speech of the noble Lord, Lord Davies of Leek—it was the White Paper of November, 1967, Command 3438. I noted that it stated that we should lose not 10,000 workers from the mines every year, but it forecast that for many years to come 35,000 were required to leave the mining industry. It was one of the biggest planned run downs of the mining industry, and the situation was very different from what we all now hope for the future. Then, too, there was the U-turn over the Industrial Relations Act, but I will not go into that. My only feeling is that despite the views of the commentators and the militants in the trade unions, it was never the intention of this Government to have a confrontation with the unions. My longest period of service during my membership of the House of Commons was when I worked for five years as the Parliamentary Private Secretary to Lord Monckton when he was Minister of Labour. I followed his example of trying to create an understanding between the trade unions, the employers and the Government, because without such an understanding this country will never get anywhere. So I am sure that this was not an intentional confrontation. If it occurred it may have happened through misreporting, and because there are those who do not wish to see agreement between those three parties.
I thought that in his statesmanlike opening speech, my noble friend Lord Windlesham did well to point out that our production of electricity is dependent as to 70 per cent. on the coal from our mines and only 20 per cent. on oil. I have been looking at the figures for France. France is even more dependent than we are here on imported oil for her generation—though of course she has
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very big hydro-electric schemes, and nuclear power stations producing an almost comparable percentage of her energy as are ours. So it is interesting to reflect that France has not been forced into a three-day working week. Everything that we as a nation are going to suffer in disorganisation, lack of production and lack of delivery of our orders, is largely due at this moment—and I think this is acknowledged—to the industrial difficulties in our coalmines.
My Lords, as I said in an earlier debate, I believe Phase 3 has got considerable flexibility. I think it was right to have allowances for unsocial hours, to make it possible for miners to get more than twice the average of anybody else, because I think they are deserving. I personally should be happy to see the face workers getting not the 16é per cent., which I think is the present offer, with productivity, but even 25 per cent. or more. However, I do not think we are justified in paying that same percentage increase to unqualified, untrained clerks, who never go underground, who never work at the mine face and who never work night shifts. I do not think it is necessary that everyone in a union should get the same percentage increase. But I am all for people at the coalface being very well rewarded.
I want to turn for a moment to some of the problems that affect industry in the present crisis. Here I speak as the chairman of a small electronics company (and sometimes the House is very tolerant in allowing one to talk from personal experience) with three factories, all employing between 300 to 500 people, and therefore very typical of engineering factories. Two of these factories have to work Thursday, Friday and Saturday, and one of them has to work Monday, Tuesday and Wednesday. I do not need to tell the House that people do not now like working on Saturdays. This is not one week the second half of the week, and the next week the first half of the week. It is laid down that these set days will go on as long as the emergency continues. I would ask my noble friend whether this point cannot be looked at again, and whether it could not be worked in alternate weeks. Women do not like working on Saturday, as their children

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are home from school and need attention, and men do not like to work on Saturday because either they have set it aside for recreation or for watching others undertake recreation, for gardening, house repairs or whatever they may wish to do. In any case, the bus services and the train services are skeleton services for much of Saturday, and it is not easy to get to and from work. I would ask my noble friend seriously to look at this and to try to introduce a little flexibility in this area.
I would also point out that as a result of the Industrial Relations Act many small companies have now recognised trade unions. In my own instance, my company has had no union organisation over the last 50 years, but because of the Industrial Relations Act it now recognises trade unions and has become part of the Engineering Employers' Federation. We have therefore signed an agreement for a guaranteed week, so that even if people are working for only three days, according to present contracts we are obligated to pay them for a guaranteed week of five days. I wonder whether the Government intend that these agreements should be set aside—or are we to negotiate the setting aside of them?—because if they have to pay the full amount, firms of this size will quickly be forced into considerable liquidity difficulties, and in some cases even into bankruptcy.
Again, a number of small companies were wise enough to foresee this difficulty coming as a result of the mineworkers' strike two years ago and have installed stand-by generators. The Government have ordained that these are not to be used. A great number of stand-by generators are oil-fired and I cannot see, in the present small deficiency of oil—and we concede that this is not the major issue at present—why those who have been far-sighted, and are endeavouring to meet their export targets and contracts, should not be allowed to use their generators. In one or two instances, by the way, they are powered by North Sea gas and there is not a single argument why firms should not use such generators.
VISCOUNT AMORY: My Lords, perhaps I may interrupt my noble friend to ask him a question. I believe that the restrictions apply even where a com-
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pany has such a generator and is prepared, by cutting down the temperature or in some other way agreed with its workers to use oil available out of its normal allocation, to work the generator; and under those conditions it seems particularly questionable.
LORD BARNBY: My Lords, I wonder whether my noble friend Lord Drumalbyn could tell us what is the position of a factory such as that to which my noble friend Lord Orr-Ewing has referred, working entirely on gas?
LORD ORR-EWING: My Lords, if my noble friend will bear with me and with my noble friend Lord Drumalbyn, he is going to reply to the debate, and I doubt whether he will want to give an immediate answer. This regulation seems to be a rather blunt instrument, and I am appealing for flexibility. I would also appeal for flexibility on working overtime. Is it not possible to get in touch with one's local generating station and say: "Are we right on the top of the load, or can we continue to work for another hour?" Firms have certain contracts which they really do want to fulfil. If they are to earn our exports and our foreign exchange it is most important that they should deliver as rear as possible on time.
Now, my Lords, let me turn from my desire for flexibility in administration in these difficult conditions to the question of all-Party talks. I accept the spirit which the noble Lord, Lord Diamond, brought into his speech about the Council of Privy Councillors. I think every Party has a considerable interest in preserving the workings of democracy. I so much agree with the speech of the noble Lord, Lord Chalfont. Britain is in serious trouble with some of its major unions. These militants are not representative of the rank-and-file of the unions. I am sure that some people who have moved into responsible positions do not wish to see agreement come about; they do not wish to see these difficulties overcome; they are really trying to drag the temple down round our ears and are not concerned with what sort of government follows as a result of that calamity. I am the first to say, of course, that it is not always the Communists. Communists now are considered relatively mild. They are Trotskyists, Maoists,

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Nihilists and others who have somehow come together in a consortium to bring about this state of affairs. I would direct the attention of your Lordships to page 72 of the Economist of this week, which analyses the make up of the Executive in the National Union of Mineworkers. It shows that there are 13 dedicated Communists or other militants; there are 10 of that body who are described as "moderate", half of whom, by the way, are pro-ballot; and there are 4 described as "floaters". That means that you have a solid core of dedicated militants on that Executive. It cannot be an accident that they are the people who are causing so much strife in this country at the moment.
I wonder whether, with such a council as the noble Lord, Lord Diamond, has sought to bring about, it would not be in the interests of all political Parties to see whether the trade unions themselves might welcome a move by Parliament to try to restore democracy in their midst. I think it must be disturbing to many people that in several cases the men who now occupy positions of great power were elected on a vote of less than 10 per cent. This is not good for democracy in any movement. One wonders whether some consensus could be arrived at on this issue. As I say, all three political Parties might join together in asking the trade unions what action they feel Parliament ought to take, or might take, to restore effective democracy within their movement.
My Lords, I have appealed for some flexibility in Phase 3, but I still believe it to be the task of the Government to act as the rampart against rampant inflation. There is no one else who can do it. The Government have to stand firm and explain to the nation why we cannot, especially now, allow 16 or 17 per cent. wage increases, which might start in one sector of our economy, but which would quickly follow through many others. Secondly, I have also appealed to the Government to introduce some flexibility into our three-day week. I think many organisations would work out, within the broad outline of the amount of oil and power they are allowed, a modus vivendi which would enable them to work much more efficiently than now seems possible under the present inflexible arrangements. Thirdly,
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I appeal for inter-Party co-operation, not just on the grounds put forward by the noble Lord, Lord Diamond, and others, but on the ground of seeing whether we should allow this small number of evil men in very powerful places to hold our nation to ransom.
6.20 p.m.
LORD ROCHESTER: My Lords, as one whose experience has included nearly 20 years' of bargaining with trade unions in a large industrial organisation, I should like to approach my contribution to this debate from an industrial relations angle. My experience in industry has led me to believe that if you want to get concerted action it is a good idea to begin by trying to gain a commitment to objectives which, as far as possible, are agreed between the parties involved. In a situation where there is general acceptance of the fact—and this has been evidenced in the debate to-day—that we are involved in a grave economic and industrial crisis, it seems to be a good idea to establish (and I should like to do so, at least for myself) objectives to which as many people as possible subscribe. The next step is to consider what action could be taken in order to attain those objectives.
The conclusion I reached was that there were perhaps four such objectives. The first is that there is need for us to get as near as possible to a political consensus concerning what might be called the social contract, so that we may maintain a degree of national unity in the face of the dangers that surround us—dangers coming from within as well as outside the country. At this point, may I say how much I appreciate the unifying approach which has been made to this debate, notably by the noble Lord, Lord Diamond, but also by many other Members of your Lordships' House. The need for a political consensus means the adoption of fiscal measures which, although they may contribute relatively little to the Exchequer, nevertheless conform to widely-held views as to what nowadays constitutes social justice. Some of the measures announced by the Chancellor yesterday—for example, to increase the amount of surtax payable by those in the higher income range and to reduce substantially the profit to be made by investors and speculators in property—are an indication of the Government's

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desire to move at least some way in this direction. These measures are to be welcomed, so far as they go; but I share the view of several other noble Lords that perhaps more could have been done with this object in view. The Chancellor has said that, if necessary, he will not hesitate to take further action, and I hope that in considering such possible action he will have this point very much in mind.
The second objective, on which I think we should all agree, is that our country should continue to be governed in accordance with the policies determined by a democratically-elected Parliamentary majority and not by other institutions which do not have that authority. This view leads me to the conclusion that there should be no alteration in the Government's present counter-inflation policy which would favour broad groups of people who are in a position to exploit their monopoly power in an attempt to gain special advantages for themselves, at the expense of the community as a whole.
That leads me to the Industrial Relations Act, and I might say a few words about that. I remember that during the Second Reading debate in your Lordships' House I committed myself and my colleagues on these Benches to supporting the Bill in principle. I did so with the greatest reluctance, having earlier felt that the idea of the law entering into the delicate field of industrial relations was to be resisted. But I did support the Bill in principle then, because it seemed to me that events had shown that we had not been singularly effective in conducting our relationships in industry without recourse to the law, and that perhaps it would be wise to see whether we could operate within a legal framework. At that time I expressed a number of reservations about the Bill and made plain my own view that it could act as no more than a framework. The problems of communications and of relationships and trust between people would remain, and their solution would continue to depend on hard work, on long-term education and training and, perhaps above all, on leadership, as evidenced by the participation in management on the shop floor to which the noble Viscount, Lord Watkinson, has referred today.
I think it must be acknowledged that the Industrial Relations Act has largely
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failed in its purpose and that the hopes placed in it have not been altogether fulfilled. If, on this account, I have any personal "humble pie" to eat before your Lordships, I am perfectly willing to eat it; but it may be that we should all have the humility to admit that in recent years we—and I mean by that the Government, employers and trade unions—have not been notably successful in running our industrial relations with or without recourse to the law. The present crisis, as I see it, may have a healthy, catalytic effect if it brings us all to a realisation of our interdependence as citizens of this country.
Having said all this about the Industrial Relations Act, I personally do not think it would be a good idea at this time, in view of the industrial action which is being taken in the coal mines and on the railways, to remove that Act without trace from the Statute Book. For me, this would savour altogether too much of the sword being mightier than the pen, or at any rate of militancy counting for a lot more than Parliamentary debate and decision. It seems to me that the Government would be wise, as a contribution towards the political consensus of which I spoke just now, to take an early opportunity to make it clear that they are open to receive suggestions as to how the Act might be amended, to have the magnanimity to add that they share the view that amendments are desirable in the light of experience over the last 2½ years, and then to set a term in time in which they themselves will initiate amendment of the Act.
The third objective on which I think we shall all agree is that any future statutory prices and incomes policy should be capable of responding to the realities of the economic situation as they develop. Let me say at once that I continue to believe in the need, under present conditions, for a statutory policy for incomes. As I see it, it is through no fault of the Government that the present policy has been overtaken by a combination of events which, if not unforeseeable, at any rate were not foreseen by most of us: the current oil shortage, combined with the effect of the action now being taken in the mines and on the railways. The next instalment of the incomes policy may well have to be one which gives increments.

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in pay less generous than those now permitted under Stage 3. In the light of the altered oil supply situation, however, it should surely place more emphasis on the need to maintain an adequate labour force in the coal industry. In an absolute way, therefore, the miners may gain nothing from it; but relatively they will have to be paid even more in future than is contemplated under Stage 4.
This brings me to the last objectives on which there will also surely be wide agreement: that industrial peace should be speedily restored so that the production on which we all depend is impeded for as short a time as possible. On Friday there is to be a meeting, as has already been said, of the National Economic Development Council. I have already made it plain that in my view alterations to the present prices and incomes policy should not be negotiated at the behest of particular groups which are in a position to exploit their monopoly power. Indeed, it is my view that in the case of the coal miners, the present dispute could still be settled to their advantage within Stage 3 under the relevant sections relating to productivity. As I see it, any alterations to the present policy for incomes should be achieved by adjusting relativities at a subsequent stage right across the piece, and in a considered way. I suggest that there is need for such a revised incomes policy to be brought before Parliament as quickly as possible, and that it will not be too soon for consultation on the outlines of the new policy to begin at the meeting of the National Economic Development Council on Friday.
My Lords, may I, finally, revert for a moment to the second objective on which I was canvassing your Lordships' agreement, relating to the need in the last resort for the will of Parliament to prevail. I feel very keenly that this principle should remain inviolate, and in continuing to uphold that principle the Government have my full support. But for the sake of the political consensus, to which I referred earlier, and of the need for some initiative to be taken to break through the present industrial impasse, I hope that the Government will have very much in mind my specific suggestions regarding the Amendment of the Industrial Relations Act, and the
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need to begin consultations as soon as possible with the T.U.C. and the C.B.I. about the shape of a more up-to-date incomes policy to follow Stage 3. I recognise, of course, that the objectives to which I have referred are to some extent in conflict with each other; but I believe that by striking a balance between them, in ways such as I have tried to suggest, it is possible to find some reconciliation not only between these objectives but also between the conflicting claims which are in our society at the present time.
6.34 p.m.
LORD HEWLETT: My Lords, if I commence my speech in the unusual manner of endeavouring to reply to one or two of the speeches that have been made in this debate, I trust that I shall be excused. If the noble Lord, Lord Diamond, is critical of the taking of "U-turns" in politics, he must be careful that the suggestion is not implied that one should never change one's mind in politics—not even the slightest change in favour perhaps of what might be thought to be his policy. If we are going to get the atmosphere which the noble Lord, Lord Diamond, so properly and pleasantly put to this House, some of us have to change our attitudes at least a trifle, without any fear of the being-jeered-at approach, so that we can get more closely together and more unified. Regarding his suggestion of Privy Council powers, I would only ask: where is the power base for any decision which can be considered superior to the decision of Parliament? Parliament, I submit, must be paramount, and I should like to dwell further upon that aspect later on in my speech.
The noble Lord, Lord Diamond, promised a low key. He raised the temperature a little in his speech but then withdrew from his 101 targets. Perhaps I may say to him as a marksman that he will have a very difficult job shooting at 101 bullseyes. If the fire is spread across the whole target area something better than a marksman's rifle will be needed to achieve many of the objectives. If he thought he had pointed at one or two of them, I noticed an extraordinary statement that the 10 per cent. surcharge increase on surtax would help to redistribute income and pay for hardship

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and inconvenience. I am not at all sure that that is the real objective. If it is felt right to increase taxation in the interests of its being seen that a fair share of sacrifice and responsibility is taken by all sections of the community, then I strongly agree. But as for saying that a section of the population is implied to be responsible for the hardship and inconvenience at the present time, that would be a less than fair conclusion. His modest, intelligent and circumspect approach in an excellent tone was most welcome to this House.
If the noble Baroness, Lady Seear, will forgive me, I have to take her to task a little because she advanced an argument that the global sum should be agreed by Government and then some "Neddy" or some section of "Wise Men" shall then do the job which it is the job of Parliament to sort out. But again with no power base, what possible hope of success is there in present circumstances? The responsibilities of Parliament cannot be abrogated and I hope that, whatever form of a closer unity within the nation we decide upon, we shall always remember the total supremacy of the duly elected Parliament of this land.
Now if I may come to the noble Lord, Lord Davies of Leek, he must pardon me—and I am sorry that he is not in the Chamber at this moment—but I could not disagree more with what he said. The present situation is not the result of our joining the Common Market. It was not a Conservative Party Whip that got us into the Common Market. There was no Whip in the House of Commons upon that issue. He suggested the trade unions had made—I will not say conditions or demands, but suggestions, that there should be a restoration of collective bargaining. But we come back in full circle to point No. 1: why did we need Phase 1? It was because there was roaring inflation and excessive wage increases were being made just over a year ago. The best possible attempts were made to get a unified voluntary approach. But one of the three parties would not continue with those negotiations. I still feel not in a spirit of recrimination, a genuine disappointment that the Trades Union Congress found it impossible to carry on with those negotiations. As for the demands for a food subsidy, rent restriction, national pension and a shifted bur-
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den of taxation, the position is exactly as I said earlier; it is for Parliament to decide these matters. We confuse issues severely if we consider that one section of the population may say, "This is the policy, or else—".
Regarding the economic circumstances of our present time, the noble Lord, Lord Davies of Leek, suggested that things were not going well before the oil crisis. In fact, they were going extremely well. For the first time since the war we had a positive rate of growth and, in many instances, almost too booming conditions with which to cope. As for a rundown of £1,000 million in defence, and the withdrawal to a much lower level of our obligation in Western Europe, that would be suicide in terms of the present trend. We have already seen displayed in the Middle East what has happened between factions, when Russian conventional arms have been shown to be so immensely powerful and, if employed against a much weaker NATO force already in serious disequilibrium, could mean the total defeat of the recognised Free World on this side of the Atlantic. It was suggested that, frankly, much of the blame rested with ourselves.
I now come to what I had prepared for submission to your Lordships House. There are facts in the present situation which have to be faced. If this speech does not seem to be so much of an easy nature, and to be in a much more critical tone than any I have yet made in your Lordships' House, I am very sorry. But I feel it my duty to speak my own mind plainly, not to try to stir things up (to use one of those horrible phrases) but, on the other hand, not to burke the issue and pretend that certain things do not exist.
How much I welcomed the speeches of the noble Lord, Lord Chalfont, and the noble Lord, Lord Orr-Ewing, for referring to one of the matters to which I wish to make particularly keen reference! To me, the crisis of coal, rail and electricity is not just an energy crisis, greatly exacerbated by the oil embargo and the obviously much higher price that we shall have to pay for that vital fuel; it is also a crisis of a constitutional nature. In seconding the humble Address in reply to Her Majesty's Gracious Speech on October 30, I used these words:
"My Lords, I submit that the country is getting very impatient of those who deliberately disrupt and destroy, and there are some

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—but a few—hell-bent on wrecking the institutions which enshrine the very freedom without which their activities would carry the direst penalties. How right that the gracious Speech should have a keynote a respect for the law! Freedom within the law and the rights of the individual are the pillars of democracy."—[OFFICIAL REPORT, 30/10/73, col. 15]
My Lords, I do not want to withdraw one word of that. I want to add to it and say that the present situation has deteriorated vastly and much more quickly than anyone could possibly have imagined, to a point at which the vast majority of the population is heartily sick of these extremist leaders, be they Communist, Maoist, nihilist; be they fellow-travellers or their henchmen. There are these very few people who are attempting quite deliberately, to wreck Britain in the vain hope that by their actions they will bring down the duly elected Government of this country. What would they then expect—a much weaker Government in its place, one which would allow them to do anything they demanded; and when that failed the utter chaos that would lead to the destruction of Parliamentary democracy?
I am sorry to say this but I feel I must. I regarded it as a tragedy that the Leader of Her Majesty's loyal Opposition in another place sided with the miners in encouraging them, in defiance of the expressed will of Parliament, on Stage 3. Stage 3, whether one likes it or not, is an enactment of the Parliament of this Realm, and it ill behoves anyone—and least of all a former Prime Minister—to encourage defiance of Parliament's will. Oh yes, my Lords, I know that more recently he has been converted. Many of us saw him on television last Friday night; but the damage had already been done. It was earlier done by the Deputy Leader of the Labour Party at their Conference in 1973 when that Deputy Leader said that the councillors at Clay Cross who had defied the law of the land would be indemnified by a future Labour Government (or was it the Labour Party?) against the fines imposed by a court of law. I hope that, no matter how serious a disagreement there may be between any sides or factions or individuals in this country, there will be a general agreement that from now on no responsible person will
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ever again encourage or condone deliberate law breaking. Even if such a course seems to be to the Party's temporary political advantage, in the country's interests it can have nothing but disastrous results.
The promises made on nationalization in 1945, 1946 and 1948 were that industrial relations were bound to be very much better in nationalised industry than in free enterprise. I argued then, and I still argue now, that the creation and maintenance of a monopoly power in any form in industry has the most severe disadvantages, perhaps the greatest of them being the increased facilities for a tiny minority to hold the nation to ransom. The moderates need to defy intimidation. I use that word deliberately, and this is the first time it has been used in this debate. There is intimidation afoot, and we know full well how frightful this is to families and to those put under pressure to join something which, in their heart of hearts, they do not wish to join.
Last Thursday I listened from the Peers' Gallery in the other place to the Statement made by the Prime Minister and to the reply by the Leader of the Opposition. The blandishment of the policy of, "Settle, because it will cost you less if you settle now than all the disruption to industry and commerce and its dislocation" is not a settlement; it is an abrogation of what had been passed by this Parliament. Some people may dislike the provisions, but unless the provisions are altered by Parliament I most seriously suggest that we cannot condone the breaking of what has been established as law. The maximum uses of the facilities given by it in the case of the miners' dispute mean 16½ per cent. benefit—almost twice what is available to others. That would restore the miners' differential to where they were immediately after Wilberforce. I simply cannot accept the idea that because something is inconvenient it should be swept away, when it has been established by the Parliament of this land.
While there are still Communist, Left Wing-dominated executives of certain unions, to which the noble Lord, Lord Orr-Ewing referred, whose real aim it—and they have said it openly, so that there can be no misunderstanding—is to

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destroy the elected Government of this country, there is no demand, no matter how inflated, that they will not try to make to achieve that objective. By far the vast majority of trade unionists—an enormously high percentage—are good, hard-working, loyal individuals. But they have been led to support leaders whose true aims are not for the benefit of the unionists but their own advancement in some new order of society. Alas! the trade unionists are led like sheep and do not realise the damage which is being done in this situation. I should have thought that the job of Government of any Party is to try to prevent a further stirring up of the difficulty, and particularly that that should not be allowed to be effective so far as these most militant leaders are concerned. The only way of preventing that is not to limit their liberty, but to argue effectively, clearly, plainly and openly, so that by far the majority of the people understand the true facts of the case.
I do not say that this is a fact, but I have a suspicion that the answer to the question, "Why was an early ballot not held on the miners' restricted overtime?" is that at the early stage of the apparent disagreement a friendly and amicable solution could have been reached. But some of those extremists, of whom the noble Lord, Lord Orr-Ewing spoke, were determined to hold back the officers from having a ballot until enough trouble had been stirred up to ensure that an easy agreement could not be reached and therefore we would go headlong into further trouble.
Some Members of this House may feel that I am anti-trade unions. Let me make it quite clear that I could not be more strongly in favour of a trade union movement which is doing the original job for which trade unions were established, and enhanced in their legal status through all the Acts, and particularly the Disraeli Act of 1875. I want to see a strong and effective trade union movement for the benefit of the improved working conditions and pay of the members. But in times of great national crisis, when there has to be a standstill or restriction upon collective bargaining, I should hope that the Trades Union Congress would feel it possible to exert a greater degree of leadership upon some of the militants in those unions, so that the whole of the
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national interest can be felt to be as one. How right was Lord Watkinson in the speech he made! The attitude he expounded for his own company, which employs former miners in a subsidiary of the group, was the same as I have tried to enunciate to this House from experience of a company which has been running for 81 years and has never had a strike or a lock-out, or dispute of any serious nature, except, ironically enough, on May 1 this year, when the strike was alleged to be against Her Majesty's present Government, and was in fact called by certain of the T.U.C.
I wholeheartedly support the view that the miners deserve very good payment for very difficult, dangerous and disagreeable work, like trawlermen and others who are subjected to danger and great privation. We have to consider every claim surely, particularly at such a time as this, in the context of the economic circumstances, in the context that sacrifice shall be all-round, and not with one person or one section of society saying, "I am the exception, I demand this" for we know what will happen: exactly the same approach will be taken by everyone else concerned. I find it ironic that the dispute, post-Wilberforce, should be occurring before the Wilberforce agreement has run out. It has yet a further three months to go. But, no, already that has been pre-empted in the situation of militant leadership being accepted.
My Lords, let us face the facts. The aim of these certain individuals to whom I made reference, and other noble Lords have made reference earlier in this debate, is to break this Government; and it would not matter which Party formed the Government, to break the Parliamentary system as it is in this country. They do not care how they do it. My Lords, if you do not believe me, read and listen to their speeches, for at least they have the candoun to say what their intention is. If we do not heed these warnings and draw ourselves together in a form and sense of unity that this country has seldom known before, we are going to pay a most appalling price.
I would say to some of those of extreme Left wing persuasion that they should go to the Communist countries that I visited in the interest of exporting

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for Britain. I suppose I have been 10 or 12 times behind the Iron Curtain. If they want Communism, let them emigrate and get it for themselves, and they will find that they are not allowed to behave in those countries in anything like the manner they do in this country. Go and leave Britain, and let Parliamentary democracy in Britain continue its ordered progress, and by peaceful means, to a far better and far fairer society. If hundreds of thousands, if not millions, lack Christmas warmth and cheer, and as the New Year promises lower earnings, short-term working, and even very high unemployment, I hope they will remember what a certain leader said on television the other night. We know who it was. "Well, why the Hell should I care? I am going to go home and have a good Christmas." Are those the words of a responsible trade union leader, my Lords? In circumstances of great national crisis like this, I would think not.
The noble Lord, Lord George-Brown, who told your Lordships' House some months ago that, if the London nursing staffs were to receive more money, the Ford workers at Dagenham would therefore have to forgo some of their heavy wage demands, struck the nail right on the head. So did Her Majesty's Leader of the Opposition when he said, as Prime Minister, that one man's wage demand was putting at risk another man's job. My Lords, the philosophy at the present time, I think, is best summed up by the noble Viscount, Lord Watkinson, and the great contribution he has made to our debate to-day. Please do not think I am being dusty, but just recall if you will one of the things that are solemnly being put forward by other gentlemen. How about the so-called national day of strike in support of the old age pensioners? Mr. Jones knows as well as I do that there is many a pensioner who is cold and unhappy for having no coal, no light, no Christmas parcels because of those who claim—claim—that they are genuinely withdrawing their labour for one day in future to benefit the old age pensioner. Frankly, that is hypocrisy, my Lords, and we had better face that issue squarely.
LORD BESWICK: Before the noble Lord finishes, would he make it quite
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clear that the miners have not withdrawn their labour?
LORD HEWLETT: I would most certainly, my Lords. I was referring, if I may reply, to the threatened one-day strike called, if you will recall, by Mr. Jack Jones in support of the increased standard of payment for old age pensions.
LORD BESWICK: Would the noble Lord make it clear that all this misery that he is talking about does not result from the fact that the miners have withdrawn their labour?
LORD HEWLETT: No, my Lords, I have not said that this is a miners' strike, at no point in my speech. I have spoken about the restricted overtime working. If the noble Lord, Lord Shepherd, wishes me to allude to it, let me say much more seriously that in terms of ASLEF it virtually is a strike, and it should not be. People should run the trains properly, even though in the present circumstances they claim that the cabins are draughty, and there are no speedometers, and the windscreen wipers are not exactly the right fit and there is a little mud on the windscreens. My Lords, do not let us kid ourselves. The ordinary man who is not in the Clapham train because there is not one is getting heartily sick of this nit-picking approach towards Britain. We, as a country, do not wish—do not wish—to have any degree of disunity, or as I have put it many times before your Lordships' House, the "us-and-them syndrome" in industry. I hope the noble Lord, Lord Shepherd, will understand my deep feelings—
SEVERAL NOBLE LORDS: Lord Beswick.
LORD HEWLETT: I do beg his pardon. I have spoken of the Beswick complex in Manchester. I do apologise to the noble Lord, Lord Beswick. I am sorry, my Lords, one is capable of making more than one error. Could I say—I am afraid I have thought. It does not matter.
The vast majority in this country, I submit, do feel that it is not fair for a comparatively few individuals—and extraordinarily few—to hold this country to ransom, and least of all at a time when the oil crisis obviously spells enormous danger and difficulty for this land. I

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would hope that the comparatively few to whom I refer will be prepared to be prevailed upon by the majority of their own membership to come into line with the quiet majority and establish that sort of friendship to which I earlier made reference in debate in this House. The "us-and-them syndrome" to which I was earlier referring is to me an utter anathema. I could not possibly have experienced, with my forebears, a company which has continued for 82 years in January without a single dispute, had we had any other philosophy or practice.
My Lords, one thing is certain, and again I refer to the Speech from the Throne: inflation, in the national interest, simply must be checked, no matter how much inconvenience or disappointment is caused to individuals or sections of society. Surely, at long last, we can recognise the need for unity in our approach. If we all co-operate, as I am sure we are capable of doing, we can bring about a fresh unanimity which was alluded to so ably by the noble Lord, Lord Diamond.
My Lords, in industry the medium sized enterprises, which with the small ones still aggregate to form the greatest wholesale, manufacture, and trading activities in this land, will be the first ones to suffer in the present very difficult times. Big companies can manage to afford, over a short run, part-time working. They have more substantial reserves by far, and so they should have. But, my Lords, the smaller enterprise must keep its skilled labour force to continue after this period of national crisis. If they fail to keep their force together, and in terms of harmony and fairness—the noble Lord, Lord Orr-Ewing referred to continued agreements for regular payment irrespective of the hours worked—then catastrophe can follow on a wide scale. In the chemical industry, where feedstock is already interrupted in terms of such chemicals as butadaine by the Baglan Bay strike, where feedstock itself is not available because of the Middle Eastern turmoils—and the energy crisis equally applies as to other industries—there is a raw material shortage on a very wide front.
I would only offer to remind the Government that, in the main, raw material suppliers should not be able to see producers abroad receiving our material at
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much better prices. An even greater additional distortion will be caused to the economy if, as has already occurred in one or two instances, the British chemical industry has to buy British chemical intermediates that have already been exported in order to remain in business here. God knows!, I want no inflation—that is clear from my speech, if nothing else is—but if we are going to allow such an enormous distortion between British domestic price and overseas price, it stands to reason that companies, to try to preserve their position financially, will export an even greater amount, and the British industry later on in the chemical line will be even shorter of raw materials. This is a very serious problem which I hope is fully appreciated by Her Majesty's Government. I hope that we shall not further inflate costs by forcing industry to buy raw materials abroad when in fact they should be available here at home.
My Lords, I exhort the Government to recall that all too often in tie past under successive Governments those who have done what Governments haves asked have finished up much the worse at the bottom of the heap. Those who, as in the time of the Socialist Government after the war, were the equivalent of "spivs" and drones and parasites on the community in fact finished up the best. They could be reincarnated so easily to-day, when it is loyal industry and loyal companies and loyal individuals who should receive reward. Those who respond to the exhortation of Government on investment—and the Opposition joined in this, and so did the Trades Union Congress—those companies that have gone to the extreme degree to try to modernise and increase capital equipment in this country, must be remembered for the sacrifice they have already made and be sustained.
In closing, let me tell your Lordships of a telephone call I have just had from two of our plants here in England. We have been to the D.T.I. office in Manchester for information. We cannot be given any. We are told—and remember that this is effective from Friday night—that no one can say what days we are working; no one can say what hours we are working. About 200 people besiege the office and a clerk merely asks that names, addresses and telephone

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numbers should be taken. In one plant we have been told that the hours of working are midnight to midnight. There is not even a skeleton bus service, not even a ghost service, at that hour. How can one possibly run any factory on the basis of the hours midnight to midnight, when many have to travel there to undertake whatever their responsibilities may be in that enterprise? We do not know, frankly, whether 8 o'clock, 10 o'clock or what hour will eventually be selected for the other plant. As the noble Lord, Lord Orr-Ewing, said, we do not know whether Saturday will be alternated as a second-half week—alternated to the first half of the week. On as simple a thing as New Year's Day, which is stated to be a bank holiday, we do not know whether that is going to be maintained as one or whether an alternative day will be given for those who are meant to be working in the first part of that week. Most urgent attention is required by Her Majesty's Government to the actual detailed application of what are the force majeure circumstances in which we meet.
I would say, finally, that I am grateful for your Lordships' indulgence in listening, but, having left home this morning at 6 o'clock in order to be here, I shall not be able to stay very late in the debate because I must get back somehow to attend to one or two of the problems I have just outlined and many others. I hope I may be forgiven by your Lordships. I thank your Lordships for your customary kind courtesy towards my comments.
LORD BARNBY: My Lords, after the lucid and highly reasoned speech of the noble Lord my Leader; the helpful, analytical speech we had from my noble friend Lord Amory (to whose remarks, as he is an ex-Chancellor of the Exchequer, we always attribute high respect); the humanely motivated speech of the noble Lord, Lord Gore-Booth, and the several other speeches we have listened to with such interest, I was inclined to withdraw from speaking. But I could not suppress the inclination to make two points that I had intended to make before I came into the Chamber. That is more particularly so because one or two of the remarks I intended to make have already been referred
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to in the powerful, fluent and constructive speech we have just listened to from my noble friend Lord Hewlett.
Yesterday the Chancellor of the Exchequer, in his later pronouncements, made a good attempt to reason in a balanced way the exact position which he had chosen to take in the various measures which were included in his Statement. I believe there were many in both Houses who felt that his measures were insufficient—not that there was insufficiency in the reduction of Government expenditure, which certainly was a minimum of what should have been done, but in other spheres. I was impressed by his deduction that it might be not a short time during which these reductions in working hours would be necessary. Without being pontifically reminiscent, one must call to mind that other nations, particularly Japan, are facing the same problems as we have, in trying to adjust their economy. I have a very vivid recollection that both in 1920 and in 1929 the world recession started in Japan and proceeded all over the world. One does not want to be pessimistic, but one is uneasy about the possibility that a world-wide effect such as we are discussing here may well find us, with a high adverse balance of payments, in an unhappy position to face this situation. That is why some of us feel that other actions, which would be shorter-term than the effect of reduction of Government expenditure, were necessary—perhaps some more taxation; perhaps some means, by a surcharge, of modifying the inflow of imports, certainly of unnecessary imports. We read of a very large sum spent on colour television and a great number of automobiles; and I think that the figure for the increase in foreign wines was 67 per cent. Surely the countries concerned would not start world retaliation against us if we took the precaution of protecting ourselves against some of that inflow.
The position of sterling must depend upon the fluid funds which are left here. They can be left here only by the lure of very high interest, and in a long business career I have never been able to understand how there could be high business prosperity and high business investment in a period of very high money. That also is made worse by the policy that has been followed of encouraging

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borrowing abroad by the public authorities instead of from the Consolidated Fund. I hope that the noble Lord, Lord Drumalbyn, may make some comments on that, but if not I hope he will be good enough to write and tell me what is the increased cost of the guarantees which have just been given, additional to those which existed before, to those foreign depositors who continue to leave their funds with us.
My dominant wish, in the few remarks that I have made, was to express the hope that the Government as a whole will become more seized with a recognition of the danger that exists in our midst from the spread of Communism in every sphere of our national life, whether it is in the media, in the Press, in the academic faculties or even in Government Departments. There is a distinct tendency to Leftist influences—there can be no doubt about it. In saying that I am not making any criticism of trade unionism, because many former trade union Members of this House would be the first to admit it. There are militant people with subversive intentions, as the noble Lord, Lord Orr-Ewing said, taking an active part in the very unions which are affecting our position at the moment.
My last remark will be that those who listened to Dr. Kissinger last week will not have overlooked that in official circles in the United States of America there is a strong feeling of disappointment that Britain's co-operation over Israel was not such as they expected; and for that reason it is right that we should feel that the elimination of Israel would remove the sole strength in the Middle East against the Russian influence, if not dominance, of the whole oil from the near East and its supply to the Western Nations. It is that danger, together with the thought that quite likely the world as a whole, apart from ourselves, has had expectations during these past years higher than performance by productivity has justified, that has threatened our society as a whole; and the misgivings that have been expressed by some speakers to-day as to what may be required of our society to correct the present position is not a little affected and caused by this very proper ambition, but one that is not in fact justified.
7.15 p.m.
LORD RHODES: My Lords, this is the first day on which I have been very cold in your Lordships' House and the first time that I have realised the implication behind the Bishop's prayer about "Without prejudice and partial affections". Prejudice and partial affections were probably given their place when the noble Lord, Lord Hewlett, spoke. As I have been sitting here and ruminating about all the things that have been said my mind went back to an episode which occurred when I was sent by the then Board of Trade to get on good terms with the Saudi Arabians. I was for a fortnight in Jeddha and in Riad and I had the great distinction of being received by King Feisal and his Court, and afterwards I had a long private conversation with the King. That was during the week when the President of Egypt had insulted the Saudia Arabians by calling them "black-bearded Bedouins". What the King then told me about the disunity in the Arab world and what it was likely to be in 10 years has now been borne out by events. I am wondering at this juncture what has been done diplomatically by this Government to approach the Saudia Arabians direct or whether we are tethered to the European millstones.
This afternoon we have received quite a lot of advice, and at times I felt that we were present at the interment of a very decent old gentleman. But there is going to be a lot more to the matter than that. The broader aspects have been thoroughly explored this afternoon I believe that the type of society that we have built up since the war has been underpinned by America. Not only are we suffering from shortages and from actions on the part of nations like Saudi Arabia but we are also now missing that great, vigorous and powerful influence that has kept the capitalist world on its feet for so long. It has been said, too, that it is deprecated that there are forces at work undermining the British constitution.
I have always had as a motto—and it is a motto that comes, I suppose, from both Yorkshire and Lancashire—"Never pull anything down until you know what you are going to put up in its place". It is not a bad sort of principle to work on. I suppose it is not surprising if one side throws stones at the other and both

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sides work each other up into a frenzy. We are all capable of doing this, and capable of some of the faults that provoke it. We have the noble Lord, Lord Peddie, with us this evening. He was one of the principal actors in the drama of prices and incomes (and he worked very ably) leading up to the General Election of 1970. But it is true to say that the Labour Government, in many months before that General Election, made no references whatever to that Board. I ask the noble Lord, am I right or wrong?
LORD PEDDIE: My Lords, I can assure my noble friend that he is absolutely right, that in the run-up to the Election the last Government did little to support the prices and incomes policy at that time. That should be on the Record.
LORD RHODES: My Lords, there has been so much for which this present Government is culpable. They have tried to do two things at once. They have tried to control prices and incomes and to make easy credit, feeding inflation as they go. Now we have the highest trade deficits that I have ever known; the price of British imports is at its highest ever, British food prices are at their highest ever, and inflation is at an all-time high. The Government have tried to control prices and incomes but have inflated the currency at one and the same time, so there has been plenty of money in people's pockets, plenty to buy, and goods pumped into the country from many overseas sources. There is no doubt that the most important single factor has been the initial decision by this Government to prime the pump of growth by depreciating the currency. The growth in the money supply has been excessive. There has been an excessive easing of credit and an excessive increase in Government spending. There has been an excessive cut in taxation. Yesterday the Government went some way to amend this state of affairs, but not far enough.
My Lords, I agree with what my noble friend Lord Diamond and the noble Viscount, Lord Amory, have said. I usually agree with everything that the noble Viscount has to say, but I would go a little further than he does. I do
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not think the Government have shown the country that they have the authority or the credibility to govern. That is an unfortunate situation, and I will explain in a minute what I think should be done about it. What has happened has undermined confidence. All who have anything to do with Parliament should be making their voices heard in a crystal clear way, to the effect that they roundly denounce any action by any section of the community which openly flounces the law, if that action is designed to break a Government by power. It should be made clear by the Leaders of all Parties that this is not going to be tolerated. But it is still going on.
We have to make amends. The Government must put their own house in order. For instance, Kensington borough is selling flats to tenants at £10,000 a unit below market price. This is happening this week. Noble Lords should think about the influence of such things. The sale is almost completed by the National Coal Board of three profitable brick companies. These brick companies were bought by the National Coal Board in 1966 for £1,960,000. They were sold a "pup"; the N.C.B. wrote the assets down to £600,000. Taxpayers' money, miners' money, everybody's money has gone into the rehabilitation of these companies. In all this time they have been struggling to make these brick companies profitable. Now that they are profitable the Government are influencing the National Coal Board to sell them. And which company is one of the recipients?—the London Brick Company. The affairs of the London Brick Company are already before the Monopolies Commission for examination, yet the Government are persuading the National Coal Board to part with these assets. We are not daft, neither are the miners. We see through this kind of transaction and know what it means.
My Lords, I think the Government should look through the whole gamut of this type of racket. They should tell the country that they have made errors and be frank about it. The noble Lord who opened this debate this afternoon would have us think that had it not been for oil, had it not been for the miners and the railway men, everything was set fair;

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but it was not. There were underlying weaknesses riddling the economy.
My Lords, I have been speaking for fourteen minutes; I was hoping to sit down after only fifteen. Finally, let me say that if this is the most serious crisis since the war, let us behave as though it were. If Stafford Cripps had been on the job at the present time, yesterday he would have instituted a maximum price for meals in restaurants. He would have imposed a maximum price of 150p. Noble Lords will not convince ordinary people that there is a crisis if the restaurants in London are supplying meals at a charge of £7 and £10. We shall also need to subsidise food. I said it two years ago, and I say it again. We shall have to come to it, and to finance it by direct taxation. Make everybody pay; it is necessary to show everybody that there is something that can be held stable. We shall also have to have import controls before this crisis is over. Unless we do introduce them we are going to have massive unemployment. I think there is no doubt that countries which have stepped up their exports to us by 20 per cent. over the last six months know full well what to expect. Import controls I do not like, but on the other hand I do not see how we can possibly get by without introducing them.
There is no question, if the people in our country are properly led and have the will to work together, that we could be though our worst trouble within 2 years. The value of the suggestion made this afternoon by Lord Diamond is that it could very well be the basis for something important. It cannot take the place of Government authority, but at any rate there should be possible a common denominator of policies which could serve us in good stead in the future.
7.33 p.m.
LORD KAHN: My Lords, as I was unfortunately prevented from attending the opening of this debate, I owe an apology to your Lordships' House and especially to those Members who delivered the first four speeches of this debate. I begin with a preamble. An interpolation at each relevant stage of my speech of the remark that "as my noble friend Lord Roberthall has so rightly pointed out" would both become monotonous and un-
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necessarily prolong my speech to an appreciable extent. I wish, therefore, to say once and for all that I do agree very much with most of my noble friend's speech. I trust that he will excuse me, and I trust that your Lordships will excuse me, if to some extent I cover the same ground as my noble friend, a duplication which, after all, cannot be regarded as in any way remarkable.
Much of the debate has been rightly concerned with the Government's unwillingness to give way to the claims advanced on behalf of the coal miners. It has been argued that the cost of giving way to their claims would be far less than the loss of national product which results from the ban on overtime in the coal mining industry and the resulting consequences for the rest of this county's industry. The argument cannot be taken literally, because the two factors operate over entirely different time spans. The cost of giving way would continue to be borne for an almost indefinite period into the future, whereas the loss of national product goes on only so long as the ban on overtime in coal mining is retained. Furthermore, the cost of giving way to the miners' claims is far greater in magnitude than, and in some ways quite different in character from, the actual increase in the coal miners' wages bill which would result from giving way. As has been pointed out so often, the immediate results would be additional claims from the wage earners on the railways, in the electric power industry, and the engineering industries, and so the leap-frogging would go on. Before long the coal miners' attempt to raise their position in the league table would have failed, and their attempt to secure a larger increase in real earnings than is offered to them would be to a large extent frustrated by the extra rise in the cost of living caused by the acceleration of the rate of increase in money wages in other industries to which surrender to the miners would lead.
The miners have an enormously strong interest in the maintenance of the fabric of Stage 3. The provision in Stage 3 for the correction of anomalies has already resulted in an offer which in relative terms is exceptionally favourable. The Pay Board's report on anomalies, which is due to be published soon, will provide an opportunity for discussing the miners' case for further

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exceptionally favourable treatment. Provided that the Government's counter-inflation policy, with its provision for the correction of anomalies, is not torpedoed, the miners can look forward to the anomalies of which they justifiably complain being put right in the course of the coming two or three years. Their industry is going to be one of the most secure and one of the most rapidly expanding industries in the country.
I am very sorry to learn that the noble Lord, Lord Balogh, is not, after all, going to take part in this debate, for I wish to make some reference to his recent letter to The Times, with much of which I agree, with part of which I disagree. The rise in the price of oil has a serious adverse effects on the balance of trade of the oil importing countries, most of which would now be running adverse balances on current account, at any rate if they were allowed to import as much oil as they want. There is a danger of precipitating a beggar-your-neighbour struggle between oil importing countries, each trying to improve its balance of payments at the expense of the others. That is, if I remember rightly, part of the argument of the noble Lord, Lord Balogh, in his letter to The Times. Members of the Government have indicated on several occasions that they are apprehensive of this danger. The noble Lord went on to argue in his letter that the adverse effect on the balance of trade of the oil importing countries taken as a whole is matched and financed by the effect of the rise in the price of oil on the rate of increase of the money balances of the oil producing countries held in the oil importing countries.
So far I agree with the noble Lord, Lord Balogh. With respect, I differ from him on three separate counts, First, the balance of payments position of this country is not typical of the oil importing countries. This is shown by the fact that it was already seriously adverse before the price of oil was raised. Furthermore, our oil imports constitute an exceptionally high proportion of our energy requirements. From this I deduce that it is a matter of importance and urgency that our balance of trade be improved, even though such improvement has to be at the expense of the trade balances of other
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oil importing countries. That is why I believe that the Government are right to take measures calculated to release productive potential for the production of more exports and more import substitutes.
Secondly, the oil producers will—very gradually, it is true—use part of their enormously increased earnings to buy more goods from oil importing countries. It is of the greatest importance that this country should secure more than her fair share of such additional exports. Thirdly, it is conceivable that some of the oil producing countries will shift part of their balances from banks in those countries to banks in the Soviet Union. This would enable the Soviet Union to increase her imports from the Western industrial world. It would be of the greatest importance that this country should secure more than her fair share of such additional exports.
But for one important factor, I would agree that the Government's measures are inadequate. So long as a considerable part of the labour force is being paid for only three days work a week—even though their earnings, to a modest extent, are supplemented by unemployment insurance benefit—I can see that there is a strong case for postponing further measures. The case against additional indirect taxation is that, even if it is heavily concentrated on the less essential goods and services, it is almost bound to have some adverse effect on the behaviour of the cost of living. This is where the Government have so seriously tied their own hands by the threshold provisions of Stage 3. Nevertheless, if it is possible fairly soon to abandon, as everyone must hope, the restriction to a three day week (which, under present conditions, I applaud), I have little doubt that it will be found that further measures will be needed to secure an adequate availability of productive potential for the production of additional exports and import substitutes.
7.44 p.m.
THE EARL OF DUDLEY: My Lords, I must declare an interest in being very brief, and in view of the lateness of the hour I hope that if I make some substantial cuts in the flow of my thoughts to your Lordships' House you will also be indulgent if I find some difficulty, due to a previous engagement, in returning for

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the final speeches. I shall, of course, try to do so.
I have attended this debate to-day, as have other noble Lords, principally to hear the Government's objectives outlined by the noble Lord, Lord Windlesham, and to hear noble Lords discuss and debate the means the Government have decided upon to obtain their objectives, and also to say a few words based on my own personal experience about the effects of those measures. There is general agreement among noble Lords, with very few exceptions, about the desirability of the objectives. Coal stocks must be preserved; oil must be purchased, even if in reduced quantities and at higher prices; electricity must continue to flow; inflation must be countered, and the standard of life of the British people preserved, so far as is possible in the present circumstances, and especially by defending the currency.
The means have proved to be rather more controversial, although your Lordships this afternoon have kept controversy to a minimum, and I do not propose to transgress the frontiers of the debate which have been set by other noble Lords. However, I feel that a few more words are needed about the measures outlined by the Prime Minister last Thursday, to which, to my surprise, in his most statesmanlike speech, very little reference was made by the noble Lord the Leader of the House. I assume that his silence does not imply that these measures are no longer in force, or are not to be enforced. It has been implicit in the tone of the debate that there are high hopes that the area of dispute will be narrowed, and that agreement can be reached. If agreement is not reached certain very dangerous consequences will flow, and as the House rises so soon and the measures will begin to bite early in January, I feel it important that some of the consequences should be faced by noble Lords now.
First of all, I must disagree with those speakers who feel that in those circumstances there is some hope for Phase 3. Frankly, I must take the view that if settlement is not reached in early January, Stage 3 will be annihilated. I must agree with the noble Baroness, Lady Seear, that in those circumstances a Stage 4 will be needed, and that it is urgent and
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vital that my noble friends on the Front Bench and their colleagues lend their minds immediately and urgently to preparing a suitable Stage 4 to co-ordinate the effects of the electricity cuts upon the nation.
At a meeting which I attended with my business colleagues yesterday we considered the implications of the electricity cuts. We came to the following conclusions, which I tried out on a leading city economist this morning, and which he, in the short space of time I gave him, was unable to fault. First of all, I estimate that on a three-day week at 60 per cent. of capacity, a very large proportion of manufacturing industry will be operating below the break-even point. It may well be that certain companies (and I am a director of one of them), which are continuous-process industries operating at a good rate of profitability on a double shift, may be able to maintain full rates of pay for a substantial period even though a reduced working week has been worked When I say "full rates of pay" I mean those applicable to a 40-hour week.
LORD PEDDIE: My Lords, would not the noble Earl agree that in the circumstances he has described, where there is a cutback in production and the same nominal pay is maintained, that in itself is inflationary and runs counter to the assumed objectives of the Government?
THE EARL OF DUDLEY: My Lords, I am not advocating a policy; I am merely explaining at the moment the consequences which may flow from that policy. I agree with the noble Lord that this would be inflationary, and this is one more reason why I think that my noble friends must apply their minds to the consequences which will flow, if this short working week is applied, and must take all these various factors into account.
I think that those companies—and I am chairman of one—which cannot keep going, will be the larger number, because I calculate (and again my economist friend found no fault in this), that the cash available on average to industry to maintain wages and salaries on the basis of a 40-hour week when a reduced week is being worked, amounts to one week's wages and salaries.

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This calculation has been taken from the Blue Book, and I think it is unanswerable. That being so I see no alternative but for wages and salaries to be cut, by a large number of firms, by as much as 40 per cent.; and my own company, and no doubt many others, will still be losing money even after that has happened unless other overhead charges such as rent, rates, interest rates, telephone charges, postal services, are also cut across the board by Government decree.
The other options open to the Government in these circumstances are no more than two, as I see it. One is that prices should be raised by 40 per cent. by all the companies affected by the cuts; or alternatively, that the shortfall in pay should be met from taxation, by increased unemployment benefits and family allowances, although of course in the long run this will mean taking from the right pocket and putting it back into the left.
My Lords, apart from these factors there is one other hardship which my own company will have to bear which was also referred to by the noble Lord, Lord Orr-Ewing. My company has been zoned for Thursday, Friday and Saturday working, and I would very much like to support the noble Lord in his request that zoning should be placed on a rota basis so that workpeople could at least obtain the benefit of one Saturday off in three. There is a danger additional to the consequences mentioned by the noble Lord, Lord Orr-Ewing. It is that, if they can find jobs, employees who do not like working on a Saturday may well leave one's employment. Perhaps, my Lords, faced with these difficulties, I ought to try and find a powerful financial partner, but I think I must make the point that with I.C.I. shares, after an unprecedented fall, yielding 7 per cent.—
A NOBLE LORD: Seven and half per cent.
THE EARL OF DUDLEY: Seven and a half per cent. to-day? I did not know—and when institutions and individuals can lend money to local authorities with no risk at all, or to property developers with very little risk, and at rates which fully remunerate them for the inflationary situation, what chance have I got to attract investment?
A NOBLE LORD: None.
THE EARL OF DUDLEY: My Lords, what chance has the manufacturing industry, the biceps of Britain, with a base rate of 13 per cent.? Are the Government going to let it atrophy and continue to give transfusions of Britain's life blood to the local authorities? Perhaps that is right—I do not know—but certainly not to property speculators. I doubt if the measures announced by the Chancellor yesterday will do enough to staunch the flow of our lifeblood to the wrong place. For all these reasons, my Lords, I believe that unless stage 4 is introduced early in January, and takes account of all these factors, there will be unprecedented industrial chaos. There are many others in industry who share my views, and if noble Lords think that that would be a suitable and timely backdrop for a General Election I do not.
I should like to make two further points, one particular and the other general. Reference has already been made in this debate to the 10 per cent. surcharge, or the 10 per cent. increase in surtax which would be the correct description. I do not object to the principle of this, but I know that there are many noble Lords in this House who have spent much of their lives fighting against retrospective legislation, and if I interpret this tax correctly it applies to the year 1972–73 and is therefore retrospective. I think this is a dangerous precedent. I would far rather that 10 per cent. was added to the investment surcharge, which would mean that there would be 100 per cent. tax on the excess of the highest rate of tax. I would far rather that than the retrospective legislation.
The general point that I would like to make concerns the level of financial education of the country generally. The noble Lord, Lord Windlesham, is not here, but I understand that he has special responsibilities placed upon him by the Prime Minister in respect of the media and the public generally, and the issue of information to them. I know this point has been made before but it cannot be made too often: the level of financial education in this country is not high. For instance, how many people are there throughout Britain who are content to think that they are paying 18 per cent. interest on a hire-purchase loan when in

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reality they are paying 30 per cent. because they are paying on a flat and not a reducing rate. And yet the same people will complain like billyho if they are asked to pay a penny more in tax. That, my Lords, is lack of financial education. I do urge upon my noble friend to use his special responsibilities to help in this direction. If we are all to be sacrificial lambs let us at least feel the edge and know the weight of the knife.
7.56 p.m.
THE EARL OF ONSLOW: My Lords. Von Hoestendorf, who was the Hapsburg Chief of General Staff in October, 1918, said, " The situation is desperate, but not serious ". My Lords, in England now the situation is serious, but not desperate. We are not in the position of Bangladesh two years ago; we are not in the position of Ethiopia now where 50,000 people died of starvation; we are not in the state of Greece where political liberties have been brutally extinguished; we are not even in the state of Northern Ireland with bombs going off all the time. I say this with the greatest respect to my noble friend Lord Amory and my right honourable friend the Chancellor of the Exchequer. We are not even in the state of England in 1947. Then there were five-hour power cuts, twice a day. We are not in that state yet. There has, however, been an escapist yearning in the Press and, to a certain extent, in Parliament for strong 1940-style austerity measures. That was all very well in a simple 1940 situation, but the situation now is very dissimilar and far more complicated. Then we had one very simple, very easy problem—there were a lot of Germans who wanted to attack us. Now we have two rather complicated separate economic problems. We have a twofold problem, one short term, one long term. In some ways they are opposites. The short term, as some or all your Lordships have said to-day, is an energy crisis, caused, as your Lordships know full well, by part-time working in three of our interrelated industries and, to a much lesser extent, by outside energy shortage, which I will, if I may, come back to later.
The second and longer-term problem is the possibility of an industrial recession in the Western world. We cannot hope to solve these recessions, as the noble Lord, Lord Kahn, said, if we carry out self-defeating devaluations and cut-backs in production. The Arab oil
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money has to go somewhere and do something. They just cannot put it on their heads or tuck it under their beds. Those days are over. The world itself must be in economic balance. Therefore we should take advantage of the balance of payments of others as we took advantage of our own balance-of-payments surplus in previous times. We must use others' surplus money to invest for growth here. I think, my Lords, that the growth argument has to be put amid the general gloom. The argument for growth has in no way been lessened by recent events. Growth is the only thing that provides roads, schools, hospitals, higher pensions, higher social security, tanks, battleships and all those sort of things. Those are things which everybody is after. Our cost-push inflation can be controlled only by controlling costs. It sounds very simple but I think it has be said again as it cuts through waffle The costs we can attempt to control are wages and, to a certain extent, energy, as we produce 50 per cent. of our own and should be nearing self-sufficiency in ten years. In this way, if I have done my sums right (which is almost certainly not so) we shall get a £6,000 million turnround in our balance of payments situation. This is a staggering figure.
Therefore we come irresistibly—we must—to an incomes policy. All Governments have come to this conclusion and all Oppositions have made difficult noises about it—Mr. Wilson (or Mr. Gaitskell, as I think it was then) to the pay pause and Mr. Heath and Sir Alec Douglas-Home to Mr. Wilson's incomes policy. And it is marvellous to watch the contortions of the present Opposition to our pay policy. There has been—and I think we had better admit it here and now—an element of hypocrisy on both sides, when they have been in Opposition, on this score of an incomes policy. We must " sell " the miners, the loco drivers and the electrical workers on this necessity, especially as they are some of the higher-paid members of the working class; they have the greatest industrial muscle and therefore can, if they so wish, wreck the economy and turn society upside down. Some of their leaders may want to do this, but as both the noble Viscount, Lord Watkinson, and the noble Lord, Lord Orr-Ewing, and several other noble Lords,

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including the noble Lord, Lord Chalfont, have said, the vast majority do not. I am sure that an incomes policy was much more unsaleable until the obscene profits on land were taxed—and I say that as somebody who possibly stood to gain quite large sums from it.
While I am on indecent monies, perhaps the Pay Board or the Government, or even the media, might like to look at the following case, which was told me yesterday by one of the beneficiaries. A Sunday newspaper wanted to send its newspapers to Torquay. Owing to the railway go-slow " they had to send them by lorry; but there was a petrol shortage, so several papers pooled their resources and sent them by container lorry. The men said, " We need two drivers and two mates to go to Torquay because of the long distance, but though we are not going to Torquay we must have the same wage as we should have got in the event of our having to because of the rail go-slow '." Four men per lorry were paid between £50 and £60 each for a trip from the environs of the Press in Central London to the Surrey Docks. That sort of money, my Lords, is as obscene as the office and property profits. Perhaps it is not on the same scale, but it is still, to my view, an obscenity when we are trying to ask coal miners, who do an extremely hard day's work, to accept a pay pause. There are others who are breaching the spirit of it in the same way as some of the unattractive characters in the City who make money go round and round in circles, much of it touching their fingers on the way. These people are just as obscene, and they should be persuaded to stop.
Part of the terrible difficulty, as the noble Lord, Lord Chalfont, has said, is differentials. It is almost contradictory to call for a rise in the standards of the lower paid and the maintenance of differentials. Personally, I find the technical details of Phase 3 difficult to grasp, but I am emotionally and I think logically in favour of an incomes policy. I think that without it we shall fall into recession, hyper-inflation and pornographic levels of unemployment. This is the lesson which has to be hammered home, because if it is not the disastrous loss of liberty and dissolution of freedom, as prophesied by the noble Lord, Lord
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Chalfont, and the noble Lord, Lord Orr-Ewing, will follow—not, I suggest, from the Left, but from the grubbier elements of the Right.
The second point in the energy problem to which I referred earlier—oil—has flowed through this debate in a way which it seems not to be flowing from the Gulf—or is it? According to an article in the Economist last week, the oil deadweight tonnage which left Ras Tanura in the period December 1 to 4—admittedly a very short period but not, it appears, abnormal—was 39 per cent. up on the same period last year. That leaving Mena al Ahmadi was up during the period November 27 to December 9 by, again, 39 per cent. on the same period last year. During the period from November 25 to December 8, that leaving Khor al Amaya was up 43 per cent. on the same period last year; that from the Trucial States between December 1 and 9 was up 28 per cent.; and from Kharg Island, which is the Persian one, it was up 23 per cent. during an admittedly short period in early December.
It is interesting to see that the two countries which are applying the oil boycott or cut-back most harshly are Saudi Arabia and Kuwait. These are the people who have increased their exports, or so it appears, by 39 per cent. over a similar period last year. There are queues of tankers outside Milford Haven, and it appears that there are large unloadings at Rotterdam. I know there has been a big fire in Shellhaven, and I know that one of the Esso refineries is out of order. Also, of course, the pipelines into the Mediterranean are not working properly. All of these are of course mitigating factors.
There have been rumours of diesel tankers being turned away from garages because they have no more space to put the diesel fuel in the garage storage tanks. There has been a case, told to me today at lunch by a reliable source, of an American tanker company which was running short of bunkering fuel. The major oil company could not deliver it, but a man rang up the tanker owner and said, " You have not heard of me before, but I can give you bunkering oil on a contract for five years at a large sum over the present going rate." So there is prima facie evidence that I have heard—I should be delighted, in a

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way, to be proved wrong, but even happier to be proved right—that there are sources of oil available. The oil companies are saying that there is less oil. Could this possibly be because the oil companies may now be paying their oil royalties in oil and not in cash? But that oil is still there; the Arabs have got to sell it. These are questions that I am asking, and I do not know the answers. I wish I did. I should just like to bring this particular point to the notice of Her Majesty's Ministers, because this matter has appeared in a very well-informed journal and I thought that perhaps somebody ought to bring it up.
If we follow the siren voices of Professor Kaldor and Professor Cripps in The Times yesterday, they said that the three-day week would cost £400 million a week in production and that giving the miners basically what they want would cost £500,000 a week. Surely that is the policy of Ethelred. He thought it was cheaper to buy off the Danes. It was not. As I said earlier, we must persuade the miners, we must persuade the loco men and we must persuade the electrical workers to go back to work within the context of an incomes policy. This is not said in a " bashing the miners " or " bashing the loco men " or " bashing the electrical workers " frame of mind. I honestly believe that it is in their interests as much as it is in our interests and in the interests of the underpaid and under-privileged. I am sure that England can save herself by her own exertions. Let us pray that she does not have to ruin Europe by her own example.
8.10 p.m.
LORD HANKEY: My Lords, we have had a remarkable debate to-day and a great many ideas of great interest and portent have been produced. I should like to say a word about the immediate proposals for dealing with the present situation. I agree generally with the Government measures. I disagree with The Times leader this morning, which I thought very unfair. It may be true that the Government have taken half measures compared with the measures which could have been thought of. But thank God the Chancellor of the Exchequer had the nerve to take half measures, because if one makes an assessment of the economic outlook and looks
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at the whole of O.E.C.D.—that is, the whole of free Europe, plus North America (North of Mexico), Japan, Australia and New Zealand—one feels reasonably sure that the real present danger is tine possibility of a serious recession, in spite of the measure of inflation which almost everyone has.
I think, my Lords, that the general danger of recession is vastly compounded by our problems in this country over oil, coal and electricity. But it is no good devising measures to fight the battles of the last two years, which is what I think The Times still wants to do; we have to look forward. It would be entirely wrong to face the High Street will taxation and price rises which world give rise to another round of cost inflation. The oil sheikhs have done this for us. They have done quite enough, too. The shortage of oil is tremendously hampering to our industry; and the rise in the price of oil will work through the economy and affect the price of everything. Why anyone should want to raise prices more than that I cannot imagine.
I think that the Government have been right to moderate the deficit of the Budget. I expressed alarm about this early last spring, and I think I have done so again since. In any case, it is high time to moderate it. Similarly, I think it is very high time to control the increase in the money supply. I was rather concerned to read in the paper this morning that the expected increase of M3 will still be 12 per cent., even if the new measures are effective. We have to face the fact that it is extremely hard to control the money supply, and the arrangements introduced under the famous paper on Competition and Credit have not worked out quite as was expected.
I hope against hope that eventually there will be lower rates of interest, though I am afraid that the Government's continued need to borrow will probably defeat that hope for the present. We need lower rates of interest very much. I do not see how the building industry can go on, with rates of interest as they are. My Lords, I must declare: somewhat of an interest in this, as I am a director of the Alliance Building Society, but I am bound to sly that building societies cannot separate themselves from the governing rate of interest in other fields; it is technically

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and physically quite impossible. The effect of the high interest rates that we have is to damp down the building industry. If you take the construction industry, the motor-car industry, and the effect of oil shortage and higher oil prices over the whole field, I think they are going to have an extremely deflationary effect on our economy. That is why I say that the real danger is not continued inflation, even if that does continue, but a recession which would lead to widespread unemployment. That would be very much more disastrous.
My Lords, I think that a new era has begun. The oil sheikhs are, in my view, very unlikely to stop at the point they have got to. They have discovered their enormous power over the developed world. The tradition of the Middle East is that when a man gets rich he looks round to see what necessities of life he is able to lay his hands on. He then gets the biggest storehouse he can and buys the largest quantity he can; and if he is able to buy so much that the price of wheat, or barley or what-have-you goes up and the commodity becomes very expensive, he makes a huge fortune and rubs his hands and thinks that he has done a very fine job. Of course, we would say that this was anti-social and that he had done it at the expense of his neighbours.
I believe that the lesson of this oil restriction episode will not be lost on the oil-producing countries. They will think they can insist on other terms and conditions, and I do not think they will necessarily stop here. What is the answer? We have to recognise that we all have to stand in together to defend ourselves and to ensure that the measures which one country takes to look after its balance of payments, to rectify its inflationary trends and to keep its people in business do not harm other countries. I am extremely glad that nobody of any importance has suggested import controls in the present situation, because they would damage other people's trade and would be extremely harmful to Europe and to the developed world.
Do not let us forget what happened from 1929 to 1933. In recent years we have been living through an embarrassing
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spiral where costs, wages and so on have chased each other upwards and given us an inflation. But, in those years forty years ago prices continued to fall and unemployment continued to rise. It was a downward spiral and we have to be careful, in my opinion, not to get into another downward spiral. The miners should be the first to remember this danger because those poor devils suffered more than almost anyone else in those years. I shall never forget the visits I used to pay to South Wales at that time; it was really a human tragedy. So I hope that O.E.C.D. will co-ordinate the measures which we all have to take, as they have done so well in the past. It is essential that the members of the new Europe should come to the O.E.C.D. meetings, not having previously squeezed all the water out of the sponge in ardent negotiations with each other, but with a little leeway left, so that they may talk sensibly to the Americans and others. I do not wonder that America is fed up with Europe. The Common Market have been very difficult to negotiate with.
Similarly, we have to consider how the United States, Canada, Japan and the other members of O.E.C.D. are going to face their new situation. The situation can certainly be controlled; there is not the smallest question that in O.E.C.D. we have the knowledge and the power to do it. But it cannot be controlled if powerful pressure groups, between the nations or inside the nations, " clobber " each other. I am thinking of other resources besides oil. There is cocoa, for example. The cocoa producers have already tried to stand out for an exorbitant rise in price. The coffee producers and the producers of essential industrial raw materials like copper, tin, nickel or rubber could conceivably be involved in similar attempts. I like to think that we are not going to move into an era of economic struggle of those dimensions because it would be immensely harmful to the wellbeing of the world. The rule should be a fair price but not an extorted price. The same applies to labour. I suggest, my Lords, that O.E.C.D. should set up any necessary studies to look into this. But what we need is co-operation and not confrontation—I repeat, co-operation, not confrontation.

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That goes for our own country, too. I am particularly impressed with the suggestions made in this debate by the noble Lords, Lord Diamond, Lord Watkinson, Lord Chalfont and others. Would it be impossible to have a new all-Party approach to try to reach agreement on some sort of programme of national rehabilitation and redevelopment? I believe that we are virtually all agreed on the need for some such measure. I suggest that it would have to start, for preference, in the National Economic Development Organisation, with the co-operation of the Government, and adding statesmen of the other Parties, together with the C.B.I. and T.U.C.
My Lords, we have to recognise that we must have the power to keep our industries running and to keep them supplied. This affects various parts of the economy: there is coal, natural gas, oil, nuclear power and hydro-electric power (small, but perhaps not insignificant). As a first approach, we all ought to agree to press forward together and produce some sort of plan for facing the new situation—because it is a new situation. As several noble Lords have said, coal obviously is the most important source of power in this country, and we have to develop the new coalfields which have been found. We shall have to train more miners, and pay miners enough to get them anxious to work. It has been said that miners are born and not trained. I am not sure that that is right, but it is a good reason for keeping them in the industry. I am not suggesting when I say this that we should breach Phase 3. We should have learned from the last time, when we breached the incomes policy to oblige the miners and everybody else jumped on the bandwagon. I do not think the T.U.C. has the power to stop them doing this. Therefore, to make the miners content, some formula must be found within, or virtually within, Phase 3, and on the basis that their industry is going to be developed and become the headstone of the corner.
But, my Lords, the national programme should go much further than that. There should be a programmed use of capital and manpower. We have to figure out what manpower is going to be needed in the new circumstances: because circumstances are going to change considerably. If we wait until
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the manpower has run short before we train the men, then some area like the North-East of Scotland, where they may be offering absolutely fancy wages to get people will claim them. It is like dropping a stone in a pond: the ripples of inflation go out from wherever it is—and until now it has been Coventry—until they reach the furthest corners of our land, bringing cost inflation with them. Let us now programme what is required, and get an idea of how we are going to produce the people who are needed in time for when the need arises. This is a difficult thing to do; I am not suggesting anything easy.
My Lords, another thing we must remember is that when we develop industries in a certain place we probably have to shift people from one trade union to another. This, I know, is difficult. It happens in Sweden; it happens in Germany; and it could well happen in this country if individual unions ware not so jealous of each other. If the T.U.C. could do something about that, which I think they could, it would be a great help in avoiding internecine warfare in the labour world and, for that matter, in avoiding more cost inflation
I have spoken about programmed development. I should like to think that there was a programmed development of industries which would be particularly good for exports. I am going to be highly indiscreet now. Years ago I came back from O.E.C.D. because I was worried about the British export performance. I went to see a Minister who really counted in that field, and I said: "I am interested to know what an active part you are playing in all this. Would you kindly tell me which industries are going to make the grade, and what help, encouragement and pressure you are providing. "The Minister's jaw dropped, and he said:" I should like you to repeat that to my private secretary." He rang the bell, his private secretary came in, and he said to me: "Please repeat your question to Robert." So I repeated my question, and Robert looked very bright, and said: " Oh, sir, we leave that to industry." "Oh," said the Minister "so we do. We leave that to industry." This is ridiculous. We must have an idea which industries are going to be most interested in exports, particularly now that the pound has fallen so far to make us competitive. It should be the duty of

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"Neddy" or the C.B.I. or anybody specific, to get the industries together and invite them to say what the export projects are, and to see that they get the necessary help so that we get right out balance of payments. I think this is an essential part of any programme which we are going to have.
Then, my Lords, looking forward, I think the time has come when we have to recognise that we in this country are not going to make the grade unless we get greater co-operation from labour. The countries which work are rich; the countries which do not work are not rich; and that goes for us. I think, in order that this should be done, it is important to study what has been done in other countries. The Germans have a system of works councils which seems to work quite well. The Swedes are now inventing systems of structure in the workshops, and these seem to be working well. The Japanese have an extraordinary system whereby everybody is consulted before a new motor car or other product is produced. Even if they have not actually been consulted, they think they have been, and that is most important. I am waiting with great interest for the Government's proposals on participation, which were promised in the gracious Speech. All sorts of people are thinking about this matter. The noble Viscount, Lord Watkinson, made some interesting points; and the noble Lord, Lord Brown (I am sorry he is not taking part in the debate today) has written a book about this which is of great interest.
My Lords, to sum up, I should like to see a really broad-based bipartisan or tripartisan initiative at the emergency meeting of " Neddy ", or, at any rate, at an early meeting thereafter. Perhaps the emergency meeting of " Neddy " could be used to prepare for the second meeting. Let Mr. Wilson come in on this, as he has with such weight and statesmanship over Northern Ireland. I believe that our present industrial crisis is not less severe and not less demanding than that one. And let there be an agreed approach to a new broad programme of national rehabilitation. We cannot go on as we are. We are a by-word abroad for our failure to fulfil contracts on time because of absurd industrial disputes originating not necessarily in the industry concerned,
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but affecting power, transport, docks, component parts, or something of that sort. We are a by-word for missed economic opportunities and for futile strife among ourselves. It is known contemptuously everywhere abroad as " the English disease ". We are falling very low.
We are living in a sort of economic Wars of the Roses. I want to press the comparison of the Wars of the Roses on your Lordships. In those wars England was ruined. The nobles trampled the fields down, took away the horses, killed the cattle, and we lost all our huge continental territories, except for Calais. Similarly, in the Civil War of the 17th century our country was ruined. I am not taking sides but merely stating a fact. The Dutch swept up the Thames afterwards with a broom at the masthead to show, contemptuously, that they had swept us off the seas—as indeed they had. We are being ruined now. This cannot go on. We must have the reign of law in economic and industrial affairs as other countries have. I believe that something like the Industrial Relations Act is necessary, even if the militants do not like it—they do not like the system in Sweden either—and even if the Act has to be amended.
Either we must end this tragic period with co-operation, which is what I would earnestly urge on statesmen of all Parties, or else I foresee that Parliament will have to impose and enforce much stronger laws than we have now in the Industrial Relations Act and other Acts of Parliament. If we cannot have the agreed co-operation which I most strongly urge, then I fear that there will have to be, at the legislative level, a new sort of Henry VII, as at the end of our " Wars of the Roses ", to restore the reign of law and to " take the mickey " out of over-weening citizens and would-be " clobberers " of any and every class. Our citizens have the right to work; they have the right to the power required at every level for higher productivity and high earnings, for peaceful progress, for happy families and for the amenities of cultured living.
Stalin said that revolutions occur only when the rulers are unable to rule in the old way and when the governed are unwilling to be ruled in the old way. Are we getting to that point, or can the Parliamentary system evolve a new

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structure and a new broadly agreed all-Party approach, based on co-operation and not confrontation? I firmly believe this crisis is one of that dimension, and personally I have every confidence that together we can meet it.
8.32 p.m.
LORD TAYLOR OF GRYFE: My Lords, I am sure that noble Lords will sympathise with me in rising at this hour and trying to say something original and constructive in this debate. I am tempted to join with other noble Lords in offering advice on the state of the economy and its problems, but I feel that sufficient advice has already been offered. I am also tempted to make a comment on industrial relations, involved as I am in the immediate problems of British Railways. But I feel it would be improper to discuss at the moment some of the issues in that particular case. Perhaps my only justification for speaking tonight is to respond to a challenge made by a Member of the other House, Mr. Reginald Prentice, when he said to members of the Labour Party: "Now is the time to stand up and be counted". He was referring in fact to the belief in and the commitment of the Labour Party to democratic processes as the instruments of change. It is important that members of this Party should occasionally emphasise their commitment to the democratic processes and to the respect for law, because the respect for law is being challenged on the industrial front and also on the political front and by local authorities. I would suggest that it we are going to encourage respect for law we should take a strong line in relation to some of the elements within the trade unions and other areas where there is not the same acceptance of democratic processes and where people are committed to the use of power in industry or to securing change by other forms of extra-Parliamentary pressure.
I was reminded of the importance of this recently while reading the important book written on the life of Les Cannon called The Road from Wigan Pier. It is important that we should not underestimate the difficulties of dealing with this particular situation. Les Cannon was committed to making his trade union a responsible and democratic trade union. In order to achieve that end he had to mortgage, his house, disrupt his family life and make a total commitment to these
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objectives. I believe the example of Les Cannon is one that should inspire those of us who have an involvement in the Labour movement in achieving a similar objective.
As has already been mentioned during this debate, speeches have been made by certain leaders in the present industrial troubles. I read in my own native city the speech of Mr. McGahey at the weekend. He said that new mass forces were about to be released on society which would sweep away the Government and change society. This is, of course, the inevitable commitment of a Communist. The only satisfaction I derived from reading about that particular declaration was that it had been made to an audience of 300 people, which seemed to me rather a small demonstration of support for the views of Mr. McGahey. But if we are to save the democratic movement, there is a responsibility not only on those of us who are part of the Labour movement but also on the Government. The Government must make it possible for the democratic voices to be effective. The Government must do nothing that will undermine responsible trade union leadership in this country.
In that regard I could not help feeling that the comment which was made by the noble Lord, Lord Kearton, on television the other evening was somewhat mischievous—when some 2 million or 3 million workers have accepted Phase 3 and many of them have said that the agreements are reasonable. For the noble Lord to suggest that Phase 3 might be breached in certain cases where militancy had been expressed would undermine the authority of those responsible trade union leaders who have already negotiated and made agreements under Phase 3. Therefore, whatever the Government may do, they should keep in mind that in any of their actions they should not undermine the authority of the responsible trade union leaders of this country. Indeed, everything possible should be done to encourage them, by greater involvement of the trade unions in advising on economic matters. Trade unionists themselves should accept the responsibilities which they are demanding for a greater place and a greater voice in industry, aid they should be equipping themselves to exercise the authority which they are now demanding.

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I look forward to the development of a responsible trade union movement which would be respected by the employers and the Government as having an important voice in the economic affairs of the country. We should encourage this in every way; otherwise the trade union movement may well be destroyed, or at least substantially damaged by the militants. I must confess that like many of the speakers who have contributed to this debate, I have sensed a feeling of crisis during these last two weeks, and I have been reminded of a personal experience which I shall never forget. I lived in Germany during 1931/2 and at that time I was a young man actively involved in politics, as everyone was then. I observed during that period that the " middle " in politics disappeared and people allied themselves to extremes of one kind or another. There were certain elements on the extreme Left who felt that if they used mass power by strikes, daily demonstrations and all sorts of extra-Parliamentary activity, they would sweep away the system and sweep away capitalism and initiate a social revolution. It did not happen that way. If I may say this to my friends on the Left who have similar views in this country: to encourage a similar action is more likely to destroy democracy without achieving any kind of social justice or revolution.
In Germany the whole power of Parliament had been destroyed. Parliament had become an irrelevancy in this situation because democracy had become incapable of solving the problems that were on its agenda. We are not living through an exactly similar experience today, but we are living through a situation in which there is a great danger of the middle disappearing from politics, and that is why I very much welcomed the statement made by the noble Lord, Lord Diamond, to-day, and the response which it had in this House, that there should be a development of some consensus on some important issues. It is important that we should not repeat the tragic experience which happened in Germany in the 1930s, in which people fled to extremes. Parliament was discredited because Parliament and the democratic processes had become irrevelant to the isues that were before them.
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It has been said that evil succeeds when good men do nothing, and in the kind of crisis with which we are confronted to-day we have to realise that what is at stake is not simply growth in our economy—the pursuit of growth in itself may even be worshipping false gods; what is at stake is the democratic process, and what is challenged to-day is whether the complex problems which face society can be solved within the democratic system. It is a grave responsibility for every one of us to ensure that democracy which gives us so much should survive that challenge.
8.42 p.m.
VISCOUNT MASSEREENE AND FERRARD: My Lords, it gave me great pleasure to hear the noble Lord who has just sat down. I heartily agree with everything he said regarding his respect for law, his respect for democratic processes and his assertion that responsible trade unionism must not be undermined in this country. But while on that subject, would not the noble Lord agree with me that it would be a great help to responsible trade unionism if they could so amend their rules that when they were holding elections for members of their executive a certain percentage of the membership would have to poll, otherwise the elections would be null and void? We have heard this afternoon—and many of us of course know it—that some militant Communists have been elected to the executives of unions on a minority vote of only 10 per cent. of the membership. If the trade unions could alter their rules to provide that at least, say, 40 per cent. must turn out for voting, that would do them a great deal of good in the public eye.
Before continuing, I must apologise that I was unable to be here for the first three speeches, which were of course most important, especially the speech of my noble friend Lord Windlesham. It was not my fault that I was late. Owing to the crisis, the train in which I was travelling did not arrive until a long time after it was scheduled to arrive in the timetable. I was a victim of the crisis and I apologise. It interested me to hear the speech of my noble friend Lord Hewlett. He made the type of speech that I used to make in this House a few years ago and it brought me a lot of cheer. I have now sobered down. I am not quite such a firebrand as I was

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but nevertheless I enjoyed certain aspects of his speech.
My Lords, the chickens have come home to roost. They have been quite a long time coming home, but I regard the 10 per cent. cut back in the Arab oil embargo as the spark that has caused the explosion, the crisis in which we now find ourselves. It is not a good parallel, but if I may take your Lordships' memories back to the First World War, which of course I cannot remember, it could be likened to the assassination of the Archduke Franz Ferdinand in Serbia. That was the spark that started the First World War. Of course we cannot compare the present crisis with the First World War. The noble Lord, Lord Gore-Booth, informed us that he could not see any Reds under his bed—I do not think he said " his bed ", but " the bed ". But of course it depends in whose bed the noble Lord has been sleeping. For many years I have seen Reds under the bed. In my early years I knocked about a lot in the world of business and in other spheres and I came across Reds at quite an early age. I cannot therefore agree with the noble Lord on that point.
The present Government have had very bad luck. All post-war Governments must share some of the blame for this crisis. I have often said that we have been giving ourselves much too much without the necessary extra effort; so we are all to blame. But it is a very barren policy to say, " I told you so." However, the present crisis may be our saviour morally because it will bring home to a great number of people in this country the fact that they cannot always hold out their hand and expect to receive. In the past few years people have been taught to expect to receive automatically, without any extra effort on their part. There are many people in this country who think that the world owes them a living. Governments are very adept at laying paper eggs but they are not so efficient at laying golden eggs. I am sorry to say the present Government have been laying quite a lot of paper eggs: they were laying golden ones, but they have turned to paper. I thoroughly agree with the proposals of the Chancellor of the Exchequer, and I have heard them called "fair". But "fair" is a danger-
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ous word. I do not object to the surcharge on surtax, on earned incomes of £7,000 or, I think, unearned incomes of £4,000. After all, if you are going to call it fair you should take the: Communist militants who have caused such a lot of this trouble and tax them out of existence. The surtax payers who are earning £7,000 a year are not really responsible for this crisis. They number among them some of the best brains in this country. We all (not, naturally, that I include myself in that number) have to make sacrifices. But you cannot really call it fair.
The Chancellor's announcement that he is to cut public expenditure by £1,200 million is very cheering. I have been asking for a long time for cuts in public expenditure. My noble friend Lord Amory, rather doubted whether the Government will actually be able to do this. I sincerely hope that my noble friend is wrong in his prognostication. Her Majesty's Government are to cut down on school and university buildings by £119 million. That will probably cause an outcry, but young people do not have to be educated in a new building. It would be a tragedy if we had to cut down on actual education, but I understand that the Government are not cutting down on the actual building of extra space for schools. I was educated in the most uncomfortable surroundings, in very old buildings, and I feel sire that had those buildings been more comfortable I would have suffered in my education because I would have been even lazier.
The crisis, as we all know, cannot be cured entirely by fiscal or even financial methods. It will in the end only be cured by human relationships, and that is the most difficult thing of all. The noble Lord, Lord Chalfont, was rather worried about the redistribution of wealth. Bearing in mind our present tax system, the noble Lord never said how he would actually increase redistribution. I do not see how it is possible to tax higher incomes any more. Perhaps the Chancellor could put an extra tax on luxuries, but my experience is, especially with women, that it does not matter how much luxuries are taxed, if women want them they will buy them. The only way to keep luxuries out of this country—it would be a very had way, and I do not

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think it could be done now with our membership of the European Community—is through import controls. That is of course the last resort.
I must not be too long, but I would like to say something about the three-day week. I hope that Her Majesty's Government will take note of the speech of my noble friend Lord Dudley. It will be extremely hard for all firms, and especially small firms, as there are in this country 10 million workers with guaranteed wages. How is a small company to pay them for five days' work for a three-day week? I do not know. Probably quite a few will go "broke". There is one aspect of this three-day week which is very worrying as regards some foods. How about for instance tea and various processed foods? If one is to have a three-day week the supply of these foods will surely dry up. Imagine a British housewife running short of tea. On second thoughts, that might be a good thing, because then she would drive the men back to work. There would then he no "go-slow". Seriously, if we are to have a three-day week, I do not understand how some essentials will be kept in regular supply.
There is one thing which does not seem right to me. Why should bingo halls, betting shops and similar institutions be completely free of any restrictions on lighting? It seems wrong. It is rather like the Russian idea of providing plenty of vodka to keep the people happy. I do not think it is quite right. There ought to be some restriction on places of amusement, because there is already a restriction on television.
May I ask the Government whether we should not import coal? I agree that that would take foreign currency, but it would probably be cheaper for the balance of payments than cutting industry down to a three-day week. If we import coal, there may be trouble in the docks, but the time has now come for the survival of the nation to transcend any sectional interest. That reminds me of a story told to me by a friend the other day—I suppose I am permitted to tell one very short story. A small firm had an urgent order from America for electronic equipment. About 500 people in the factory all worked extremely hard and got this order
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out. The lorries went down to the docks. Two drivers had not got union cards so they were not allowed in. The ship sailed and the order was lost. That is what I call a sectional interest, and we really must stop that. The survival of the nation comes first. That sort of thing is wicked nonsense. It can only be called blackmail.
For some of these militant Communists on the executives of unions the bonhomie, the drinks and the patting on the back do not cut any ice at all. I quite agree that Mr. Whitelaw is an excellent person to negotiate with responsible trade union leaders, but when it comes to the actually militant Communist it is necessary to be tough. Toughness is the only thing he respects.
Having said that, may I refer your Lordships to a television broadcast I saw the other evening when Lord Kearton, the Chairman of Courtaulds, appeared. He said—I thought wrongly—that the miners, the power workers and the train drivers ought to be allowed to break through Phase 3 because they represented special sections of extra-skilled workers.
My Lords, I do have sympathy with the miners at the coalface. As I have said in this House before, a long time ago I went down a mine—though I did not of course work there. But they are now greatly improved, I imagine. Having been down, I have always had sympathy with the men who had to work there. Nevertheless, I do not think it is possible to break Phase 3. Perhaps in the future the miners at the coalface might be considered the crême de la crême of industry, but why Lord Kearton thought that train drivers and power workers should be so regarded I cannot imagine. To drive an electric train is incredibly easy; the signalling is automatic; you have very little to do. To drive a steam train requires considerable skill. But power workers do not require great skill. I believe that, lower down the scale, they have only to turn the knobs they are told to turn on or off. But certainly driving an electric or diesel train requires little skill.
My Lords, having said that I will end, but I would just mention the housewives of the country. Now that we are such an urbanised technological society, I can hardly see the housewives for long standing there cooking their evening meal with the power cut off, or not being able to

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see their favourite television programme. I feel sure that in two or three weeks they will make their husbands, and their sons, and their brothers see sense: because, after all, women are, on the whole, more practical. So I appeal to them to put the nation first, and to get their men back to work.
9.3 p.m.
LORD PLATT: My Lords, nearly a year and a half ago, namely on July 5, 1972, when we discussed the economic situation, I had the temerity to say, in front of all kinds of experts who knew far more about it than I did, that perhaps we were seeing the last stages of the capitalist system and that unless we realised this possibility—because I felt the capitalist system had demonstrably failed—and people of good will of both Parties got together and considered what would take its place, the communists would make full use of the opportunity for coming into power. I put my name down to speak to-day only because I thought that perhaps it might be worth saying again. Although I think I was the only person in that debate who put that question. I am very interested to find that it has been put in a different sense by quite a large number of people to-day. I do not take any credit for that. I do not think that many people heard that speech, and still fewer ever read it, and of course, we are not much reported in the Press. I was therefore extremely interested in the suggestion, first of all put forward by the noble Lord, Lord Diamond, to-day which has been commented upon and approved by many subsequent speakers, that there should be such a get-together of people—which does not mean a coalition. In my view, they should start not from any preconceived ideas of either capitalism or socialism or any other "ism", but from the kind of ideas of what really the country needs in the way of transport, in the way of coal, without reference to whether coal is going to be cheaper than oil or oil is going to be cheaper than coal, but to get down to real necessities. But it is now quite unnecessary for me to stress that any longer.
The only other points that I have to make concern what I call the people in the middle, referred to just now in a most interesting and distinguished speech by the noble Lord, Lord Taylor of Gryfe, who told us that the future of democratic
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government really rested with the people in the middle. If I may again criticise the Government, not on the grounds of Party because I probably would have criticised the Labour Government had they been in power during this time, I would say that they have conspicuously ignored the middle person. They have made it, on the whole, easier for the rich; they have thrown crumbs and the final insult of £10 at Christmas, to the poor but for the middle man they have done almost nothing. They have just yesterday declared it to be their intention to keep the level of pensions up with the cost of living. That is a most excellent desire on their part, and I am the last to object to it.
I object to their thinking, if they do so think, that thereby they are making the lot of the middle man appreciably easier. Quite the contrary. Take the man who has worked all his life and has a little investment income—little on present-day standards: shall we say £2,000 a year?—to which he is grateful to add a retirement pension of perhaps £9 a week—call it £450 a year. The cost of living increases by 20 per cent. His investment income is worth about £400 less than it used to be. The Government increase his pension by 20 per cent., which gives him another £90 a year. The total net loss is £310, on an income which by no standards to-day is affluent. If he has the audacity to run a small motor-car the price of his petrol goes up. The price of his food goes up. The price of living goes up, and nothing protects him from these things. These are the people worst hit, as well as the young people at the other end of the age scale, who note, if their memories go back long enough, that the price of ordinary semi-detached houses in a not especially desirable sub urban area is about twice the figure of three years ago. These are the things, my Lords, which this Government have most to be criticised about.
The third and last factor was brought to our notice particularly by the speech of the noble Lord, Lord Selsdon—and his speech also was very notable—in which he referred to the question of communication. This has been notably lacking in the last few years. I am sorry to say this, and I repeat that I might have, been making the same kind of speech even if a different Government had been in

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power. But I think communication has been notably lacking. My final word is that it has always been my experience that good communications start from the top.
9.10 p.m.
LORD GRIDLEY: My Lords, in the very short speech I wish to make this evening I do not wish to refer at any great length to the economic situation. I feel that what really affects us to-night is the perpetration of certain acts and that the economic situation facing our country cannot be properly overcome unless we face the real situation which results from those acts. My purpose is to refer to those acts as I understand them, because I have become disturbed by them, as I believe are a vast number of people in the country.
A few weeks ago a nation from overseas threatened our country by cutting our oil supplies. Oil is our life-blood; it is the sinews of our industry. At that very moment when our oil supplies were cut from outside, which in all conscience was a serious business in itself, the miners' union, by industrial action, cut overtime at the mines and threatened supplies of coal to our power stations. They were followed by the railway drivers of ASLEF causing chaotic transport conditions—a further threat to our energy supplies. I consider that all this was particularly sinister, because by this action from outside, which coincided with action by the miners' union inside our country, we faced a threat to our very existence. It was sinister. It was a threat. And the Government acted by the inauguration of the Emergency Regulations to meet the position.
To turn to the other side of the picture, I would hazard a guess to-night, in which I do not think I should be far wrong, in saying that there are to-night many miners, railwaymen and power engineers as upset as I am at the threat to our nation. I do not believe that the majority of drivers wish to go slow on the railways to avoid the movement of coal. I say this from some practical experience. I do not believe that miners, or dockers, who shared some of my own experiences in the last war, are any less loyal to this country than their fathers were. As I know when in adversity, they are the finest of men to be associated
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with. Some had been stokers on the "Empress of Asia" when she was sunk off Singapore in 1941. Quite a number of them were interned in Singapore with me in Changi Gaol, of unspeakable torture, of horror, hunger and starvation. They were loyal. Their hearts were in the right place. They were men with whom one could be absolutely proud to be associated.
That is one situation affecting the people I have described, but what do I find from people in the country to-day? I find a spirit emanating from the people generally where I live in Somerset that they genuinely want to help. I live on high ground and have an uninterrupted view over 25 miles into the distance. Last night I looked out into the distance over the villages and small towns over a wide area, and it was like the blackout in 1941, only one light appearing in the distance in one of many rooms. Where I am, at any rate—and it is probably the same in other areas—I am quite sure that the mass of the people want to help the country in this extremity and a spirit of comradeship is coming to the fore.
So what do we do? There may be some who wish to perpetuate industrial strife in our country for their own ends, but if this is so I feel that some method must be found to deal with the situation. Some method should also be found to enable the moderate element in industry to become articulate. We suffer from the lack of the moderate element throughout the spectrum of our democracy. As I, and indeed other noble Lords, have said in the debate to-night, the Government must stand firm in the situation facing us. My noble friend Lord Orr-Ewing analysed the constitution of the miners' union and gave it as his opinion that men with ulterior motives must not be allowed to hold the country to ransom. At the same time let it be remembered that the miners, the railwaymen and the power engineers are, in the majority, as interested in the success of this country and are as loyal to it as many of us are. But I beg the Government to continue to stand firm against any evil element. They would never be forgiven by their fellow countrymen if they capitulated to evil men. At the moment I feel that the Government have one inestimable asset: I believe that the people everywhere want to help, and the

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Government have an opportunity to capitalise on that situation.
9.17 p.m.
THE MINISTER WITHOUT PORTFOLIO (LORD DRUMALIBYN): My Lords, we are coming to the end of the first day of what has been a memorable debate and one of very high quality. The impression I have got from listening to the debate to-day—and I have listened to almost all the speakers, although I am sorry that I missed the lighter vein with which I am told that my noble friend Lord Massereene and Ferrard enlivened the debate considerably—and the general impression that I have gained is, in the main, one of consensus; an unusual degree of consensus in your Lordships' House. There is a general agreement on the measures announced yesterday, even although there is some feeling that they have not gone far enough, and I will come back to that point again.
The situation with which the country is faced at the present time is, as my noble friend Lord Onslow and others have said, a double challenge. One challenge is long term, arising out of the increase in the price of oil which far exceeds anything that could have been expected or could have been justified in terms of the present availability of oil in the world—an increase coupled with, and associated with, an artificially created shortage of oil. The other problem is the short-term one—and we should all hope very short term—where supplies of coal and electricity are reduced by industrial action. When the country is faced with such a double challenge, the Government have no option but to take measures to alleviate and then to retrieve the situation. In the short term, the first priority for the Government is to ensure that the life of the nation goes on with the minimum of hardship through the winter and in the meantime to do all we can to secure a return to normal working at the earliest possible moment.
My right honourable friend the Prime Minister announced measures on Thursday without which widespread and unpredictable disconnections could have occurred by mid-January and, within two to three weeks, capacity could have been reduced to a point where some essential services would have been in difficulty, particularly if the electrical power engin-
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eers were still in their present Posture. This is the situation with which we are faced. What I am anxious to do in the short time I have available, because I do not want to keep your Lordships too long, is to comment on a number of points that have been made by your Lordships. I start by dealing with the energy problems to which the noble Lords. Lord Chalfont and Lord Gore-Booth, referred.
My Lords, a Statement was made by my right honourable friend the Prime Minister to-day. I think it would be useful if I said just a word about energy in the European Economic Community following the Summit. There was agreement with our European Economic Community partners at the Copenhagen Summit that progress towards a general energy operation should be accelerated. Specifically, there was agreement that a comprehensive programme of alternative sources of energy should be worked out, and in the shorter term, proposals will be considered for limiting energy consumption generally by solving on a Community basis the problems created by the energy crisis. We welcome particularly the endorsement of the need to discuss both with other oil consumers and with oil producers comprehensive arrangements for securing stable oil supplies at a reasonable price. Such arrangements are of equal importance to the consuming and producing countries. These are difficult problems. It is encouraging that there should have been such a measure of agreement with our Community partners in what needs to be done.
We have had in recent days the speech from Dr. Kissinger. The proposals made by the American Secretary of State last Wednesday showed characteristic imagination. We welcome his proposals as a real contribution towards the solution of present difficulties. The emphasis he placed on the mutual need of both consumers and producers to discuss current problems accords well with the agreement reached by the heads of government in Copenhagen.
I should like now to say a word about oil supplies, which is a point my noble friend Lord Onslow raised. He said it appeared that oil supplies were coming out of the Gulf in considerable

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quantities. He referred to an article in the Economist, but it is dangerous to read too much into figures covering a period of only a few days. My understanding is that total oil production is currently running at more than 25 per cent. below the level previously expected, giving a shortfall in internationally traded oil supplies of some 17 per cent. As I have said in the House before, the United Kingdom has received valuable assurances on supplies from certain of the oil producers, but we are inevitably affected by a shortfall of this dimension.
My Lords, the reduction in the availability of coal is making itself particularly severely felt in the iron and steel industry. This is mainly because the plant cannot be allowed to go out of commission, because once it cools down very serious damage results. In consequence, the British Steel Corporation held substantial stocks of coking coal when the miners' action started. They cannot risk running out of stocks, or running the stocks down to the point when they may not be able to keep all their plant operating at the minimum level necessary to prevent damage and complete loss of production. The effect is an enforced and large reduction in steel production, running down to about half the normal levels of coke-based output. The reduced availability of steel is yet another burden for industry on top of energy shortages. The British Steel Corporation is considering carefully how it can deal with its customers most fairly and in the best interests of the national economy.
The measures which the Prime Minister announced on December 13 are the very least that are necessary if the electricity industry is not to suffer severe disruption. We must safeguard essential services and allow industrial activity to continue as far as is practicable, given the restricted coal supplies available. With the measures announced we should be able to achieve a 20 per cent. reduction in electricity consumption and so save 400,000 tons of coal a week. This will enable us to maintain essential services and to get us through the winter without widespread electricity disconnections. The high proportion of electricity which is consumed for domestic purposes means that it is particularly important that the utmost economy
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should be observed on the domestic side. This is being achieved voluntarily at the present time, and we believe that a very large measure of co-operation is being given. It is important that we should obtain the maximum co-operation in the economies for which we are asking so that we may keep down consumption to the level sufficient to keep industry going.
My noble friends Lord Orr-Ewing and Lord Dudley asked questions about the arrangements that are being made for the three-day week. These are extremely important. My noble friend Lord Orr-Ewing asked whether he would be able to be relieved of his guaranteed five-day-week agreements. My right honourable friend the Secretary of State for Employment is considering this problem. It is one that goes very far, for the reasons the noble Earl, Lord Dudley, referred to. He also asked why he could not use stand-by generators, as the main problem is oil. We appreciate this difficulty and we are giving it very careful consideration.
LORD ORR-EWING: My Lords, if I may intervene I did also make the point that where generators were operated from the North Sea gas there would seem to be no case at all for them not being allowed to operate.
LORD DRUMALBYN: My Lords, the whole question is being examined. May I say to my noble friend that it is obvious that when severe measures of this kind are introduced at fairly short notice there will be adjustments that will have to be made subsequently. We will have to see how this runs and make sensible adjustments as required. The same applies to the question of the rotating three-day-week. I am afraid I cannot tell my noble friend anything about that at the present time, but it is also very much under consideration.
The noble Earl, Lord Dudley, also raised the question of unemployment benefit payments. It is hoped that wherever possible employers will pay unemployment benefit payments with wages to their workers who are on short time. Where this is not possible, arrangements are being made to pay short-time workers through the unemployment benefits service given by the local office of the

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Department of Employment. As now, the unemployment benefit service will deal with claims from workers whose employment has finally terminated. The normal rules for unemployment benefit will apply. People entitled to payment under a guaranteed week agreement are not also entitled to unemployment benefit. The first three days of a claim to unemployment or sickness benefit within a period of 13 weeks are treated as waiting days and not payable. Days of customary holiday, for example Christmas Day and New Year's Day, are also not payable to workers on short time. The earnings related supplement paid from the 13th day of unemployment will not be paid to short-time workers, as it is only paid after a continuous spell of unemployment. I hope that gives my noble friend the information he wanted.
The noble Lord, Lord Rochester, in a most interesting speech, raised the question of the Industrial Relations Act. This was fully debated in another place two weeks ago. On that occasion my right honourable friend the Secretary of State for Employment dealt in detail with some of the criticisms of the Act. In particular, my right honourable and learned friend the Attorney General dealt with the action of the Industrial Court in the ConMech dispute.
On the question of amending the Act, my right honourable friend the Secretary of State for Employment made it clear that he was perfectly willing to examine carefully any constructive suggestions for amendment put forward by interested organisations. It is surely not unreasonable to ask those who are dissatisfied with a particular piece of legislation to come forward and suggest the amendments which they think desirable. We have so far seen no detailed proposals from the Opposition or from the Trades Union Congress. It is not constructive simply to demand non-operation of the Act, or the sterilisation of an unspecified number of sections, and it is difficult for discussion to proceed on this basis. What we need—and what I very much hope we shall receive—from the unions is constructive and sensible suggestions for amendment. If the unions would put these forward, my right honourable friend would be very willing to look at them carefully and constructively, and I
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hope that we shall be able to get talks going on this basis.
LORD BESWICK: My Lords, has it occurred to the Government, or the Minister, that now the responsibility and onus for negotiating on these matters lies with them, and that it is for them to put forward suggestions themselves?
LORD DRUMALBYN: My Lords. I think that the onus is on those who want to change the Act to put forward their suggestions in the first place. It would make a start, and it is just a question of finding a means of sitting down together to consider this matter.
LORD DIAMOND: My Loris, the noble Lord has made the most important suggestion. He mentioned the Opposition and the unions, and then went on to talk about discussions with the unions. Are the Government saying that they are inviting suggestions from the Opposition as to the ways in which this Act should be amended? Will they give time far such discussions to take place in this House?
LORD DRUMALBYN: My Lords, that is a different question. What I am asking at the present time is that there should be discussions with my right honourable friend the Secretary of State for Employment. This is the way in which these things should be handled. I am not limiting it to the Opposition or to the Trades Union Congress. Anybody who has constructive proposals for the changing of the Act may put them forward.
LORD BESWICK: My Lords, the noble Lord said that it is only a question of sitting down together. Has there been an invitation sent to the T.U.C., for example, to sit down to discuss amendments?
LORD DRUMALBYN: My Lords, I have told the House what my right honourable friend said in the other place a day or two ago. It is on that basis that I am saying what I am now saying.
The noble Baroness, Lady Seear, suggested that output of opencast coal could be doubled. I can assure the House that the Government are well aware of the contribution that opencast coal is making, and can make in future, to our energy supplies. Such a sharp expansion, however, would be impracticable both because the procedures for approving sites

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are necessarily complex to enable the environmental interests to be considered and because the National Coal Board, and their contractors, have to develop sites for production once authorisations are granted. The Government are, however, giving very full consideration to the future of opencast production as an integral part of their considerations of the future of the coal industry.
The Government, under their new powers in the Fuel and Electricity Control Act—I think I should take the opportunity to inform the House of this—have made an Order to protect the consumer against the risk of being charged excessive prices for pertol at the pump. Since last Saturday, December 15, it has been unlawful for any petrol retailer to charge more than the maximum retail prices specified in the Order. These vary for different grades and different parts of the country. For example, in the London area, or other parts of the inner zone, the maximum price for four-star petrol is 42p per gallon. The new fixed maximum prices should ensure that the general effect of the price increases resulting from the large increase in crude oil prices charged by the OPEC countries since October 16, is restricted to about 3p per gallon at the pump. We do not expect that there will be any infringement of the Maximum Prices Order, but if there are, any complaints on this score should be sent to the nearest Department of Trade and Industry Regional Office.
My Lords, I now come to the Chancellor's speech yesterday, and as I said, several noble Lords, including the noble Lord, Lord Diamond—in what I know the whole House thought was a most notable speech—thought that it did not go far enough. As the Chancellor made plain yesterday, there was first of all the question of uncertainty. We do not know how long the present short-term situation will last; we do not know what the oil prices will be, or what oil supplies there will be. The objectives are to reduce pressure in the economy with the minimum effect on prices and to command the maximum support, and as the noble Baroness, Lady Seear, emphasised, they should not result in deflation. My Lords, I think one has to bear in mind all the time that these oil prices are affecting all overseas
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countries, and some of the prices are very high indeed, especially those bid for in the open market, so that we shall be under no particular disadvantage in competition with other countries.
As the noble Lord, Lord Roberthall, made clear, the real trouble comes through the balance of payments. This is the longer term problem. I entirely agree with my noble friend Lord Amory on the problem of maintaining exports This is something that will be in the forefront of the Government's mind. My Lords, as I said, the House has generally commended the measures that have been taken—the hire purchase requirements, the surtax surcharge, land speculation and credit control—but several comments have been made on particular aspects.
The noble Lord, Lord Diamond, thought that the public expenditure cuts would be slow in operation. My Lords, the various departments are being asked to prepare their plans in detail and, as I think has been made plain, the cuts will be on figures published today for the Estimates. The cuts will be achieved by further deferment of work services other than for married quarters in the defence sector which worried the noble Lord, Lord Chalfont, and by slowing down the procurement of defence equipment, stores and supplies with some postponement of new orders and, inevitably, cancellation of some contracts. For obvious reasons I cannot give any examples there, and I can assure the noble Lord that the forces that we are contributing to NATO will not be reduced except that some improvements in equipment may have to be delayed. I entirely agree with him on the essential nature of maintaining our defences in the present circumstances of the world.
My Lords, the question of income tax was raised. A change in income tax is not something which would have immediate effect, and this too is something which can be considered in the light of what happens in the next month or two. The noble Baroness, Lady Seear, spoke about family allowances. Here again changes are not easy, and it is better to rely on the existing supplementary benefit provisions and the like for the time being. Several noble Lords, including the noble Lord, Lord Gore-Booth, and the noble Lord, Lord Roberthall, suggested taxes

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on luxuries. I do not know whether tobacco and alcohol are luxuries, but this was suggested by the noble Lord, Lord Roberthall.
One difficulty about taxing luxuries is that V.A.T., which for reasons that are well known is considered to be a better form of taxation, is levied at a single rate. To alter that in a meaningful way would take time; and, what is more, it would raise the cost of living. So, again, this is one of the reasons why it has been decided that we should not attempt to deal with indirect taxation in these measures. The noble Lord, Lord Robert-hall, made some other interesting suggestions, such as that concerning motor car licences, but when the motorist is, as some think, being "clobbered" already to a very considerable extent, perhaps it might be thought unreasonable to do this at the present time. It would again increase the cost of living.
My Lords, the noble Lord, Lord Roberthall, and the noble Earl, Lord Onslow, both referred to arrangements with Arab oil-producers for investment. I referred to this in the last speech I made on this subject, and it is a matter of the utmost importance. The noble Lord, Lord Kahn, also referred to it. The idea that what we pay for oil should be used for investment in our industries here is an important one, but at the same time, of course, a great part of the purchase price will go for the development of the countries in question, and they will no doubt be using these funds to purchase from the West. It is hoped that these are just the kind of arrangements it will be possible to make with the Arab countries through the medium of the E.E.C.
My Lords, I have spoken a little longer than I had intended. I should just like to refer to the excellent speech that was made by the noble Lord, Lord Taylor of Gryfe. I am sorry I did not hear it myself, but I have received an account of it. The essential task, and the earliest task we have, is to end the coalminers' strike, and I should like to take this opportunity—I beg your Lordships' pardon; the coalminers' industrial action.
LORD DAVIES OF LEEK: It is not a strike.
LORD DRUMALBYN: I meant industrial action. I am much obliged to the
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noble Lord for being out of order. He has now put himself in order. We all have a great respect for the miners, especially those of us who have had miners in our constituencies in former activities, even though we could not all normally claim them as supporters. But I think one should not under-estimate the great change which has been taking place recently; because if it ever was the case that the miners were disregarded, that the coal industry was thought to be a declining industry, and so forth, that certainly is no longer so. The earnest of this lies in the Coal Industry Act, which was passed last year and which gave very considerable assistance in checking the rundown in the industry: £275 million for capital reconstruction, £175 million for the write-off of the National Coal Board's deficit, and £695 million in further grants over the next five years. At the same time the National Coal Board's exploration programme is to be stepped up; and I should add here that the cuts will not in any way affect the development of energy industries. So that here, my Lords, is a token of the regard in which miners are held at the present time. And part of that respect derives, as my noble friend Lord Gridley said so elegantly, from the knowledge of the part that the miners have always taken in any emergency that we have had to lace. I am sure that when they realise how much they can do for the nation by reaching an agreement soon, and when they realise the respect in which they are now held, they will start to think of means of ending the present difficulties.
It is not only that they have received a very good offer from the National Coal Board, as good a one as was thought possible at the time when Stage 3 was entered into, although of course it might be possible to step it up in minor ways or renegotiate parts of it; it is also because of the great importance of miners to this country and—as is always claimed by the noble Lord, Lord Blyton; and we agree—their general patriotism. I believe that we can get over the first hurdle and end our short-term difficulties if only the miners as a whole will come to see the immense contribution they could make to solving our present difficulties if they were now to end their industrial action. As many noble Lords have said, communications play a great part. We must step up our communications and do everything

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possible to renew the links between the Government and this very valuable industry, links that are so important for us and also for the miners.
LORD BESWICK: My Lords. I beg to move that this debate be now adjourned.
Moved, That the debate be now adjourned.—(Lord Beswick.)
On Question, Motion agreed to.

BIOLOGICAL WEAPONS BILL
*Brought from the Commons; read 1a, and to be printed.

LAND TENURE REFORM (SCOTLAND) BILL
*Brought from the Commons; read 1a, and to be printed.
*[See statement in col. 335 of the OFFICIAL REPORT for December 18.]

EMERGENCY POWERS ACT 1920
9.47 p.m.
LORD WINDLESHAM: My Lords, I beg to move, That an Humble Address be presented to Her Majesty thanking Her for Her Most Gracious Message communicating to this House Her Declaration that a State of Emergency exists within the meaning of the Emergency Powers Act 1920.
Moved, That an Humble Address be presented to Her Majesty thanking Her for Her Most Gracious Message communicating to this House Her Declaration that a State of Emergency exists within the meaning of the Emergency Powers Act 1920.—(Lord Windlesham.)
On Question, Motion agreed to: the said Address to be presented to Her Majesty by the Lords with White Staves.

EMERGENCY POWERS ACT 1920
LORD WINDLESHAM: My Lords, I beg to move the second Motion in my name on the Order Paper.
Moved, That the Emergency (No. 2) Regulations 1973, dated the 12th December 1973, made by Her Majesty in Council under the Emergency Powers
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Act 1920, shall continue in force subject to the provisions of Section 2(4) of the said Act.—(Lord Windlesham.)
On Question, Motion agreed to.

NORTH WALES HYDRO ELECTRIC POWER BILL
Returned from the Commons, with the Amendments agreed to.