INDUSTRIAL AND ECONOMIC SITUATION

HL Deb 06 February 1974 vol 349 cc776-896

2.45 p.m.

LORD BESWICK rose to call attention to the industrial and economic situation; and to move for Papers. The noble Lord said: My Lords, I beg to move the Motion standing in the name of my noble friend Lord Shackleton; and I rise to move it knowing that today our country needs all the courage, all the wisdom and all the patience that it can muster. It has been apparent to nearly all of us that the fabric of our society can be torn, probably irreparably, if we citizens of the same country continue to pull in opposite directions. Because this is so, and because we have had a glimpse of the economic and social consequences of conflict, many in the past few days, and especially Members of your Lordships' House, have sought to build bridges, to seek common ground and to counsel compromise.

There was, for example, the letter which was featured prominently in The Times last Friday which was signed by a noble Lord from each of the three main Parties in this House, and by the noble Lord, Lord Fulton, from the Cross-Benches. That letter asked for a new initiative and the signatories ended by saying that while they normally might approach these matters from a different viewpoint, they consider it essential in the current circumstances to find common ground. As I see it, that letter is as true, or more true, today than last Friday. But I have a special reason for knowing that it is not easy to agree an area which one can call common. Moreover common ground must also be firm ground and to establish the fact that it is firm ground we should welcome the most searching inquiry and the exchange of opinions in this debate.

My Lords, the crisis which has been developing inexorably, frighteningly, over the last two or three years now finds its sharpest and most immediate expression in the threatened stoppage in the mining industry. Without compromise, effective compromise, we face consequences spelled out by the Sunday Times in its leader last Sunday in which it said: A strike would be intolerable …. Once begun it would not speedily be ended. Several pits could suffer such damage by neglect that they would not reopen. The worsening shortage of electric power would extend the effects into the lives of working people all over Britain. A great many factories would close for good. The electrical transmission system could decline into disorder which would take months to repair.

My Lords, those words almost certainly underestimate the physical damage which would be done to our industrial and commercial structure by a prolonged strike in the mining industry. For example nothing is said in that estimate about the coking ovens in the steel industry. There is no word about social bitterness and its consequences, but the editorial went on to say—and I doubt whether any here will deny it: A prolonged miners' strike would do incalculable harm to the life of this country as a manufacturing and trading nation. It is this harm—this unnecessary harm—which, even now, must be avoided.

Mr. Macmillan, in his latest memoirs, At the End of the Day, wrote this: Mr. Baldwin is said to have made the reflection at the end of his long political career that there were three forces, in conflict with which it was very unwise for a British politician to engage. They were: the Vatican, the Treasury and the National Union of Mineworkers. Mr. Macmillan and Mr. Baldwin were as wise as any contemporary Conservative Minister, if not wiser; but despite that, if it were shown to be essential in the clear interests of the nation to engage in such a conflict, then I would range myself alongside those who say "Fight". But it has not been proven essential. On the contrary. No one has proven that our present economic plight is due to inflationary wage settlements.

After all, Phases 1 and 2 of the Pay Code have been observed, according to the Government, and they tell us repeatedly that 5 million workers have already accepted Phase 3. It cannot be proven, either, that paying more than Phase 3 ostensibly provides, will be a mortal economic blow. Indeed, the Government's plea to the miners is that, provided they do not strike, they can expect more at an earlier date, though under another heading. "Another heading"— that really is what this issue is all about. Would such an extra payment be considered unfair by other unions? The other unions themselves say not; and at least one of them—the E.T.U.—has settled under Phase 3 as a declared gesture of support for the miners' claim. Tom Jackson, of the Post Office Workers, a brave and eloquent advocate of an incomes policy, has said publicly that he thinks the miners deserve more than Phase 3. So the unfairness argument just will not stick.

What of the "floodgates" argument—that it will let loose all others if we give now to the miners what is promised later? We have had the T.U.C. undertaking, and we have had the confirmation by constituent delegates of the T.U.C. of that undertaking. But even if it is still argued that the T.U.C. initiative is not enough, does anyone in this House really believe that a union which intends to press a claim will not press it, if the miners are forced back? If the miners go back voluntarily with an honourable settlement and with the T.U.C. assurance as part of that settlement, and then if some other union presses a claim which might be considered excessive—is there any doubt then where public opinion would be? Would not resistance to an unreasonable claim be strengthened rather than weakened if the miners have been treated separately and fairly?

The detailed statistics and merits of this claim have been dealt with elsewhere and in this House—notably on January 9, by my noble friends Lord Taylor of Mansfield and Lord Jacques, and on other occasions by my noble friend Lord Blyton. But I wonder whether the Government realise that their own case has not attracted support by the less than frank reiteration that the miners have been offered a 16½ per cent. increase. I should like to ask two questions on this, and to make two further points. The weekly pay of a coal-face worker is now £36.79: he is being offered £39.36. I ask noble Lords opposite whether it is correct that, taking into account tax and insurance deductions, which will of course be taken off both the present and the offered pay, as the result of the 10 per cent. increase in the cost of living, the coal-face worker under the present offer would in fact be nearly £2 a week worse off as compared with his last settlement. If this is true—and I challenge the Government to say that it is not true—does this not emphasise, in their own interests, that a delayed settlement must be an increased settlement because of the increasing inflationary tide?

LORD DAVIES OF LEEK

My Lords, they are the worst paid in Europe.

LORD BESWICK

My second question relates to the so-called "exceptional generosity" of this pay offer of 16½ per cent. to the miners. Is it so exceptional, if we compare that figure with what was so quietly given to some civil servants recently? According to the Economist on January 19, the cash increase to officers in the Executive Grade of the Civil Service was 14.8 per cent. on the salary bill. At the Principal grade, the cash increase was £517 a year, despite the fact that we were told there was to be a rigid £350 limit per year for those earning over £5,000 a year. Are those figures correct and, if so, what were the special circumstances or the anomalies that could not be applied also in the case of the miners?

I quoted just now the present and offered basic rates. Usually those who tend to support the Government, as against those who speak for the miners, talk of "earnings" and not of the basic rate. If we are seeking common ground, ought we not to express an opinion on this? Ought the miners to have to rely on overtime? Might we not even raise coal more economically if we geared production to a properly paid, no-overtime day? My noble friend Lord Taylor of Mansfield very movingly told us on January 9 how, after the Sankey Commission, there was legislation to reduce the miners' working day from eight hours, which it had been since 1908, to seven hours; with a promise of a further reduction, in view of the special circumstances, to six hours per day. That was in 1919; and to-day the basic rate is for 7½ hours. There are those in Parliament, and in at least one national newspaper outside, who say: "Of course, pay should take into account earnings." If we are to discuss any figures I hope they will be figures of basic pay and not of earnings.

My final point on the miners' dispute—it is in some ways the core and it relates to the wider issues—concerns this so-called "league table of incomes". In one compilation we were told that the miners were eighth in the league in April, 1972, and now we are solemnly told they are 16th, but that they could go back to their previous position if they accepted the N.C.B. offer. That means they could climb over the rubber workers, the aircraft workers, the brewery workers, the iron and steel workers and so on. But those who talk in these terms of a carefully calculated league table of wages are talking in terms of a world which does not exist. The real world includes other people besidse those organised workers. There are 11 million affiliated to the T.U.C. but there are 23 million or more gainfully employed. Put the miners into that larger league table, and see how they stand then.

Of course there are cases within the 11 million group which stick out like sore thumbs. I understand, for example, that there is currently a loss of production in Fleet Street because some printers reject the idea that, because of lack of newsprint, they should fall back upon their minimum or basic rate. I wonder what would have happened if the miners had stood out, for example, for the same basic rate of £79 a week. But these isolated cases of abuse of union power should not distract from the deeper, wider issue. The Times in its fascinating collection of letters had several which touched upon this point. For example, there was one writer who said: No pay offer currently under consideration for the miners would place them, as you put it, at 'the head of the earnings league'. Reference to your advertisement columns for office vacancies will show the absurdity of such a claim". There was another writer who said: I am in the process of engaging a new secretary and am currently interviewing applicants. I have seen a number of young women aged around 20 to 25, who have said they would require salaries of £2,000 to £2,500 p.a. In addition, they would have three weeks' holiday a year, luncheon vouchers, and would work in a pleasant office, in a most agreeable part of London". That same writer goes on to say—and I ask noble Lords opposite to listen to this— Mr. Heath commands a great deal of respect as a man of integrity and determination, but I think he has completely misjudged the mood of the nation who, on the whole, feel that not only are the miners a special case, but a very special case, as distinct from every other class of employees". But of course it is not only the jobs advertised in The Times: there are a whole range of spivs and speculators who have been doing so well in our modern society. The truth of the matter is that in recent years it has been the least essential whose incomes have gone up most. Our contemporary society undervalues those who drive our trains and ambulances, who teach our children, who tend our sick or who mine our coal. It is this instinctive feeling among the politically sensitive miners that these things are wrong which gives a political tinge to what some say should be just an industrial dispute. The truth is that here we are dealing with a political issue as well as an industrial dispute, and unless we have the imagination to recognise this we shall not get anything like a lasting settlement.

It is possible that this Relativities Board could, over the years, help to sort out this unfairness, the anomalies of the contemporary scene. But to help solve the immediate crisis we need a recommendation quickly. To set up a Relativities Board which is going to work we need time—time for discussion and consultation. I have paid tribute before, and I am glad to pay it again, to the pioneering work of my noble friend Lord George-Brown in this field of an incomes policy. Looking back at what he did, from a time some distance ahead, we shall see that work was an important point in the development of what one day must come. But the Prime Minister is absolutely right in his letter when he confirms the Pay Board view that this new machinery should be generally acceptable. To think otherwise would be to repeat the grave mistakes which led to the imposition of the Industrial Relations Act and, indeed the present Pay Board apparatus. Looking back, how much better we should have been had the Government not scrapped, impetuously, with Selsdon prejudice, the old prices and incomes machinery! How much better had they allowed it to grow, to adapt and improve with experience!

The Relativities Report has great potential but it must grow naturally and unforced. Can we not agree that such an important potential development should be established with the fullest, most mature consideration. That means that some offer to the miners, on account, must be made without prejudicing later consideration. The noble Lord, Lord Carrington, is said to have great influence in the Government, and I can understand that that is so. I hope to see from him this afternoon some sign that there may yet be discussion about money.

One unhappy feature of this recent controversy has been the readiness of some to say that all could be solved if it was not for a few "Reds" who are leading the rest astray. Nothing, no single argument or action, has done more to anger the moderates than that they are dupes of the militants. The miner is a self-respecting man. He is far too sturdy and stolid in his judgments to be deceived by insincerity. I say that with feeling because I grew up among them.

Historically it is not unusual for those whose case is unconvincing, or who move away from, or never know, the shop floor, to describe their opponents as "Red" or, before that term was invented, something similarly emotive. Once before in my county of Nottinghamshire, the workers were compelled to protest against their intolerable conditions and the Establishment of the day derided them as a mob which should be put down by military force, as was said in your Lordships' House But it was Lord Byron who declared in his maiden speech to this House: It is the mob that labour in your fields and serve in your houses, that man your Navy recruit your Army. Had he been speaking seventy years later when the collieries were developed around his Newstead Abbey, he undoubtedly would have added, "and mine your coal." But he did go on to say that it was this mob, these 19th century "Reds", that have enabled you to defy all the world and can also defy you, when neglect and calamity have driven them to despair. There is another feature of that period on which we should do well to ponder. The serious industrial unrest of that day was caused not by the mob, not by any "Reds" of the time, but by rising prices and inflation, exacerbated, writes A. L. Morton in his People's History of England, by the Government's reckless borrowing and their readiness to print paper money. Let us not forget, when we seek agreement to-day, that the basic cause of our present plight is the devaluation of our currency. Let us not forget, when Mr. Barber says that more than £40 million in wages for the miners would be inflationary, that it was he who distributed £300 million in tax cuts to the higher income bracket. Let us not forget, if we are complaining about the stubbornness of Mr. Gormley, that it is Mr. Barber who insists that if you borrow enough, for speculation or otherwise, the interest on that personal loan can be set off against tax liability.

We cannot forget either that at the beginning of the year when Peers on all sides of this House said that increased taxation would be an acceptable way of curbing inflationary demand, Mr. Barber said he preferred to cut back public expenditure, by which he meant cutting back, among other things, on hospital and educational facilities. I do not press these charges to-day, though the material to do so is at my hand. All I wish now to show is that it does not befit the Government to adopt an unrelenting, uncompromising posture as the champions of good against evil. In this matter we have possibly all made mistakes and in this matter may be we all must do a little more to get agreement.

It would not worsen the record of the Government, and it could well enhance it, if in the remaining days of this week they got around the table again to talk, not of the need for the miners to give way, but of a sum of money which would enable the miners' leaders to recommend their members to keep at work. That I believe is what the majority of industry really want: both sides of industry, management and men, who in recent weeks have done so much together to get over the short-time working. That is what they want. That. I believe, is what the majority of this country wants, and that I hope is what the noble Lord will tell us is what the Government propose to do. I beg to move for Papers.

3.11 p.m.

BARONESS SEEAR

My Lords, I should like if I may to begin with two general points about the attitude of the Liberal Party towards the present situation. No one I think can accuse us of a record of "union bashing". We are proud to have supported the unions and the development of unionism throughout this century.

But the issue before us to-day is not to be for or against the unions. We accept that there are interest groups whose interests clash. We accept the inevitability of some degree of conflict. But we also say—and we believe that in this matter not only the members of our Party but the great majority of the people in this country would agree with us—that for any civilised society to exist there must be a set of rules which people can rely upon and know will be lived by. For that civilisation to be a democratic civilisation, those rules have to be promulgated and supported by the Government and the elected Parliament of the country. When it is the decision of a Government and of Parliament to take a certain line of action, that action cannot be challenged and overthrown by any power group in the country, however much one admires and respects in other ways that particular group.

SEVERAL NOBLE LORDS

Hear, hear!

BARONESS SEEAR

The second point I should like to make is that we know that the greatest problem facing this country remains the problem of inflation. We know too that if there were to be a change of Government, and any other Party came to power they would have the conquest of inflation as the first item on their agenda. If it should be that the noble Lords now sitting on the Opposition Benches found themselves charged with the job of ruling this country, they would be the first to say that public enemy No. 1 remains the battle against inflation; and we will say it too, my Lords.

We have said all along that we support a statutory incomes policy. Would that all Parties in this country had said the same. We have been critics of Phase 3, both here and in another place, from the time that it was introduced; critics of the details of Phase 3 as a document that is too inflexible and indeed too inflationary, though the criticism of its inflationary element has increased greatly since it was introduced as a result of the changes brought about by the oil situation. We have criticised it, but we have supported the need to stand by it while advocating its change by agreement. May I say, because there have been reports of a contrary nature, notably in to-day's Press, that this has been consistently the attitude of the Liberal Party both here and in another place? It is quite incorrect to say that we have been prepared to go against the application of that agreed incomes policy, although we are working all the time for adaptation of the policy.

Having said that, my Lords, nobody can be anything but profoundly anxious as to how, at one and the same time, we are to maintain those two cardinal principles—the need for the rule of law and the need to maintain the fight against inflation. How can we maintain those principles and deal with the situation in which we find ourselves at the present time? With the threat of a disastrous strike liable to start at the end of this week, we believe that there are three things which the Government should do straight away. We know that the Government themselves, or members of the Government at any rate, agree that in the Relativities Report—whatever one may think about it as a document to guide us in the long run, and I for my part do not think very much of it for that purpose—none the less I believe that in paragraph 61 of that Report suggesting the setting up of a Relativities Board, there is a possible way out. If that Board could be set up at once—and we appeal to the Government: can it not be set up quickly? Is there really any need for delay?—it would not take more than five minutes for the Secretary of State to decide, as paragraph 1 requires him to do, that the miners' case is one that needs to be referred to such a body. The body could be set up, if the will were there, straight away. Even if the miners themselves are not prepared at this stage to co-operate, the Board could still go on with its inquiry. The data, the information, is there. The Board is open to receive evidence from all quarters and it could go ahead. We ask, indeed we demand, that that Board should be set up without delay.

Secondly we say, echoing indeed what Mr. Ezra has been saying, both last night on the B.B.C. and again this morning, let us start straight away with this inquiry into the long-term affairs of the coal industry and the conditions which it is necessary to have over a wide front; not merely the questions of pay immediately to be settled, but also the total conditions to be offered in the new situation in which the coal industry finds itself at the present time. Cannot that inquiry be got under way straight away?

We on these Benches would also say: having by the development of the Relativities Board done something to modify the inflexibility of Phase 3, let us recognise too that it is in fact far too inflationary in itself for the conditions of the present time. We shall have to move quickly to a new kind of policy. Is it too soon for all interested parties to get together to discuss what that is going to be, knowing full well, as everybody in this House knows, that the policy which follows Phase 3 will, for a period of time at any rate, have to be a great deal tougher and a great deal more unpleasant for all of us than Phase 3 has been. Of course, the longer the present crisis goes on, the longer the strike—if strike there has to be—continues, then the worse that following phase will be.

Although we stand by Phase 3 while it remains the Government's policy, it has become a symbol of dissension, and the mere starting of discussions which must take place on what comes after Phase 3 would be a third move in the right direction. In our view all these things would help, but time is not on our side. Time between now and the end of the week gives us not many hours, indeed not many minutes, in order to stave off this disastrous downward trend in our affairs.

I have said that we stand by the idea of an incomes policy. The purpose of that policy is to fight inflation. It is of the essence of a fight against inflation that we do not pay out more money unless more goods are produced to justify that money. But, my Lords, is it not possible that the miners—the mining industry as a whole, the N.U.M. and the Coal Board to decide on the distribution—could be offered a production bonus on all the coal produced above the total level, (which I gather from the latest estimate is about 122 million tons, allowing for present losses) at the price which that coal will now fetch in the market? I know that the mining industry and the N.U.M., for very good reasons, dislike productivity agreements where the opportunity for one coalfield to earn is so much greater than another coalfield. That is not what we are suggesting. We are suggesting that, on the measure of the total official coal produced, the additional money be made available for distribution across the hoard, if that be the wish of the N.U.M. and the Coal Board, to all the miners. This is additional money, but it is not an inflationary addition, because it is given only when the extra coal has been produced.

Your Lordships will be aware that this idea has been put forward in a number of quarters and it is being viewed with some interest by many interested parties. It is a way, within the objective of Phase 3, of containing inflation, of seeing that more money is available. I would go further than that. I would say, as is not infrequently the case with production bonuses, that because of the need to have the extra money available, it would be possible to say to the N.U.M.: "It will be guaranteed that a payment will be made against that increased production, a guaranteed minimum of that bonus, whether the production is immediately forthcoming or not, and for anything which is produced above that level there will be extra payment"—a guaranteed production fallback, as it were.

The advantage of this is that that payment would be paid straight away once the miners started full working again and the coal started coming up. I do not believe that this offer should be made without any conditions. It should be made only if, on the one hand, the strike were called off, and on the other hand, if it is fully understood, taking up the spirit of the T.U.C. offer of the week before last, that no other unions will expect additional pay outside the terms of Phase 3. There would be a guaranteed fallback of production bonus, and payment over and above that as the extra coal comes out, to be paid on a monthly basis. There would then be extra money available, but it would not be inflationary. Surely that is fully within the spirit of Phase 3.

My Lords, a great many noble Lords wish to speak this afternoon. We on these Benches, as everywhere else, I am sure wish most urgently, most sincerely, that some way may be found to get out of the present problem. However, it must not be at the price of making the future still more difficult. The rule of law and the control of inflation are even more important than the solution of this immediate problem, vital though that is.

3.25 p.m.

LORD CARRINGTON

My Lords, we are confronted to-day by one of the most serious crises in peace time that any of us can recall. The issues at stake are as important as any that could face us. It is therefore all too easy for those of us with different political philosophies and different views on the best way forward to sound extreme and partisan. I hope we shall try to avoid that to-day. All of us are in public life, I imagine, above all to serve the public interest. That should govern what all of us say, both in this debate and in the weeks ahead.

My Lords, I want to begin by reviewing the background to the crisis, and the way it has developed. During the life of this Government I believe that we have had to tackle two great problems. First, we wanted to increase the growth rate of our economy, and hence raise the standard of living of the British people with higher investment, productivity and exports. Second, we have sought ways of containing inflation at a time when world prices have risen at a totally unprecedented rate.

Our drive for growth has been criticised by many as too ambitious. I wonder whether that is fair. I never really understood why a Chancellor of the Exchequer is thought to be brave and sensible if he drives with his foot permanently on the brake. It was surely right that we should have given this country, through a more flexible exchange rate policy, tax cuts and so on, the chance to expand and prosper at the same rate as that achieved by many of our friends abroad, in Europe and elsewhere, since the war. Whatever the views of your Lordships on the rights or the wrongs of the Government's growth strategy, what no-one can deny is that that strategy was urged upon us by representatives of unions and management, in the T.U.C. and the C.B.I.

At the same time as we were attempting to improve the country's economic performance we were also trying, like every other Government in the Western World, to contain inflation at tolerable levels without resorting to the kinds of methods employed in the 1930s, unacceptable. I should have thought, to the vast majority of all of us. I agree very much with what the noble Baroness Lady Seear, had to say about inflation. A Government can succeed in that objective only if it can encourage or impose a degree of restraint on those who sell goods and on those who sell their labour, increasingly nowadays from a position of monopoly strength. We attempted, in the wake of the last miners' strike when wage inflation was threatening to run away with the economy, to reach a voluntary agreement with the T.U.C. and the C.B.I. on a fair and effective way of restraining prices and incomes. After hours, and indeed weeks, of talks we failed. We were driven by events, and by our responsibilities as a Government, to introduce statutory controls—controls which we had made clear, again and again, ran counter to our philosophy as Conservatives. These controls in Phase 1 and Phase 2 had more success than many people are prepared to admit. We were remarkably successful at restraining the domestic causes of inflation which actually lie within our control. But we still had to pay more for the goods we had to buy from abroad. So prices continued to rise last year, and in particular food prices, which really hit the family budget—though I believe that without Phase 1 and Phase 2 we should have been swept into a hyper-inflationary spiral that would have done permanent and serious damage to our economic and social life.

And so we came to last autumn. The Middle East war and its results totally changed the picture. As the noble Lord, Lord Chalfont, said in the economic debate before Christmas, our world has been irreversibly altered. First, there was the interruption of oil supplies and the deflationary effects on the economics of the developed countries, and indeed on other countries, too, which that must cause. But even with any return to something like the previous flow of oil, the massive increase in price will have long-term effects and implications for us all, which totally change the context in which we as a country earn our living in the world. The price of oil has quadrupled in three months.

LORD BROWN

My Lords, would the noble Lord permit me to interrupt to ask him to agree that about half of the increase in the price of food and normal commodities is due to the Government's own loss of control over sterling, and that part of the increase of the price of oil would also be due to those same causes? Would he, in mentioning these facts in future, draw attention to the Government's own part in those increases in import prices?

LORD CARRINGTON

My Lords, I did not interrupt the noble Lord, Lord Beswick; nor did I interrupt the noble Baroness. I am trying to make a closely argued speech. I hope your Lordships will do the courtesy of listening to it. If the noble Lord has a point he wishes to make in the course of the debate, he is very welcome; but I hope he will see, when I have finished, that I am arguing the whole case for the Government.

LORD BESWICK

My Lords, will the noble Lord bear in mind that this same point was made by the noble Lord, Lord Windlesham? We did, I think, argue it out. We showed that it was not altogether a good case, and it is a pity therefore that it has been brought out again.

LORD CARRINGTON

My Lords, I really do want to continue with my argument, if the noble Lord will forgive me, because I think that when I have finished my speech he will see that I have covered the situation.

What made our position more difficult is that we had recognised that part of the short-term price of trying to lift the country's growth rate was a substantial strain on our balance of payments—a strain made more troublesome by the increase in world commodity prices. The rise in oil prices therefore hit us at a time when the balance of payments was in substantial deficit. But I believe that we could have coped with the impact of the oil crisis on our economy without too much dislocation and hardship. Of course we should have had to tighten our belts; we should have had to settle for a much lower rise in our standard of living over the next year or so: no one denies that. But we should have been able to cope with some confidence because, thanks to our national resources, we are better placed in the medium term than any other Western European country to deal with our energy problems ourselves. We have more nuclear know-how than any other country of our size. We are literally surrounded by oil and natural gas fields. Our problem is how to tap those resources as soon as we can. Finally, there are immense coal resources, both in existing fields and in the new Selby field, and in others too, I believe.

Shortly before we were hit by the oil crisis, the Government had finalised the proposals for Phase 3 of our statutory policy. Many people say that that crisis has made those proposals too generous. But what is certain is that among those quite properly treated most generously under Phase 3 were the miners. I do not think it is a secret that when we drew up the Pay Code we were well aware of their special position and importance. The National Coal Board therefore made the miners what amounts to the largest offer ever put forward in the industry's wage negotiations, at a time when the coal industry's future looked brighter than it had for a very great many years.

It must be common ground to us all that during the 1960s, under Governments of both Parties, the coalmining industry had run down. For example, during the period of office of the Labour Government 249 pits were closed, and the number of miners was cut by over 200,000. Over the same period there was a decline in the miners' position, compared with that of other workers. In October, 1960, miners' average earnings were 7½ per cent. above the average earnings in manufacturing. By October 8, 1970, they had fallen to 3 per cent. below. The 1972 settlement restored the miners, in April, 1972, to 7 per cent. above the manufacturing average. However, as a result of leapfrogging by other industries, by October, 1973, they were only 4¾ per cent. above. The Coal Board's present offer would leave them nearly 8 per cent. above manufacturing earnings, even at the end of Stage 3.

My Lords, acceptance of the present offer would mean that miners' wages had increased under the present Government twice as fast as prices. They have been better treated in real terms, in absolute terms and in relative terms. What is more, we introduced the Coal Industry Act providing a massive new capital investment programme for the industry, and wages and job prospects are better than they have been for years. I do not think it can be said by anyone that the Government have treated the coalmining industry shabbily. On every count—wages, investment, miners' pensions, health provision, and so on—the record of this Government is, in general and in detail, substantially better than that of any previous Government. And it is nothing less than a tragedy that, at this very moment of promise, the National Union of Mineworkers decided to take industrial action in protest against the Coal Board's offer.

The National Union of Mineworkers decided to take industrial action at the beginning of the winter, some months before their present pay agreement expires at the end of February. At the same time we were confronted by the oil crisis and by the industrial action taken by ASLEF. In order to avoid running out of coal and power, and jeopardising basic and vital community services, we introduced our prudent fuel-saving measures, and in particular the three-day week. These measures were bound to be damaging to the economy, but I find few people to-day who question their necessity, given the Government's determination to operate a fair incomes policy. I cannot help feeling, my Lords, that anyone who really did believe that the N.U.M.'s action was not responsible for the three-day week must have lost confidence in that view when Mr. Gormley made clear that, because of our collective success in saving fuel, his union would have to contemplate more drastic action.

As soon as we received the information that coal stocks at the power stations were holding up better than we had expected, because of the weather and because of help from industry and the public, we considered whether it would be possible to move to a four-day week, or better, if possible. We were surely right to do so. For a Government to take the earliest opportunity to save men's jobs and to return to higher industrial production must be their first priority. The immediate reaction of the National Union of Mineworkers—and this, unfortunately, is not a matter of argument but a matter of record—was to announce a strike ballot. For some weeks, as we introduced the three-day week, the N.U.M. did not feel able to ballot their members on the Coal Board's offer. When it became clear that the coal stocks were holding up better than expected, and that the Government would not meet all their demands, the Executive of the N.U.M. called for a ballot—not on the offer, but on whether or not the Executive should be able to call a strike.

My Lords, we are now faced by the prospect of a strike next week. The industrial action taken in the last three months or so has been bad enough. It has been, as has been said often enough, a self-inflicted wound at a time when world problems are crowding in on us. From the outset of this dispute, and indeed before it began, the Government have tried every reasonable way of avoiding this situation. We have not sought confrontation—far from it! We have searched for a solution which recognises both the national interest of a fair and effective containment of inflation and the need to give the miners a square deal to-day and in the future. Within these reasonable parameters we have shown at every stage the will to settle on terms which can be regarded as fair and reasonable.

We did so first by treating the miners under Phase 3 as a special case. Then we offered, in addition to that settlement, a long-term look at the future of the industry, at the future wage and job prospects. We offered to look at pensions; we offered to look at health hazards. Then with the publication of the Pay Board's Relativities Report we offered as an alternative that if the T.U.C. and the C.B.I. would accept the Report in principle the Board set up to examine wage relationships could look straight away at the miners' case, and in turn at other cases. We thought—and there seems to be substantial support for this view—that an examination of the miners' claim on top of the existing offer, and in the context of the claims of other groups with weaker bargaining powers, could provide a fair and reasonable way out for everybody. There was a time when in taking that view we appeared to have the support and encouragement of the Leader of the Opposition, but now that we have acted it seems that the Opposition view has changed. I am not sure—and I put it no higher than that—that many moderate Leaders of the Opposition will look back at that episode with much pride. The Prime Minister and the Secretary of State for Employment have appealed to the miners.

LORD SHACKLETON

My Lords, may I interrupt the noble Lord? He has asked not to be interrupted, but if he makes many more provocative remarks of that kind he will be.

LORD CARRINGTON

My Lords, I do not really think that when I said that the Leader of the Opposition in the Commons had changed his mind that there can be very much dispute about that. If the noble Lord will look at the Notices and Questions on the Order Paper in another place on February 5 he will see the Motion moved by Mr. Wilson, and will see what Mr. Wilson had to say on that occasion about the use of the Pay Relativities Report. I will not read it out but I would ask the noble Lord to look at it.

My Lords, the Prime Minister and the Secretary of State for Employment have appealed to the miners week after week to reach a fair accommodation in the national interest. I fear that these proposals have fallen on stony ground. Now the N.U.M. refuse even to talk to us. My Lords, the Government have continued to seek a settlement ever since this dispute started and the National Union of Mineworkers has not budged from the declaration that it made last July.

LORD BESWICK

If the noble Lord is going to pursue this line, that they are so right and others so wrong, the only implication of which is that they are going for a General Election this week, would the noble Lord be good enough to say what they are going to do after that Election which they now refuse to do before?

LORD CARRINGTON

Perhaps the noble Lord will allow me to get on with my speech.

The response to our efforts has been the Trades Union Congress offer, an offer made in very good faith (I have said this on more than one occasion): that if the miners were immediately given a settlement outside Phase 3 such an award would not be used as an argument in other wage bargaining. A great deal has been said about that offer. I will only add this: the offer did not commit any other union to bargain within Phase 3, and it did not offer an effective way of restraining wage bargaining within the limits which we can afford.

My Lords, on the Relativities Report which could still, even at this late stage, provide us with the basis for a solution, the Trades Union Congress have not yet been able to offer an agreement in principle to the Pay Board's central argument that there should be a fair way, whether under a statutory or a voluntary policy, of deciding between the claims of different groups in the community for special treatment and so pave the way for a settlement of this dispute. At present, as the Prime Minister has said, wage relationships and the value placed on different jobs and professions by the community are too often decided by jostling in the queue. Under that system it is the weak and the vulnerable—the teachers and nurses, and the agricultural workers—who get the smallest rewards. There must surely be a better way of running our affairs. It is no part of Conservative philosophy that the law of supply and demand should be allowed to degenerate into the law of the jungle, and I am quite certain that it is not the philosophy of noble Lords opposite.

Despite all our efforts we are faced within a few days with a strike by the miners—a strike which, if carried through, would do untold damage to this country. What else could the Government have done to avoid this? What can we do to-day? There are those who tell us that there is an immediate answer to hand. They say that we should abandon our attempt made in the interests of everyone in this country to contain inflation, and that would be a smaller price to bear than the widespread disruption caused by the miners' action. The line of least resistance has always had its advocates. For years people have en-encouraged us to take it. In the short term, perhaps they are sometimes right; but in the longer term the results have been bad in the past and would, I think, be disastrous in the future. I will try to set out for your Lordships as simply as I can why I do not think the Government should take that road.

First, I believe that to abandon our policy would be unfair to those who have settled under Phase 3 provisions. The miners, of course, are important to our economy—very important to our economy. But, as I have said before to your Lordships, so too are many others. It would not be right for this Government, or for any Government, after the restraint shown by those who have accepted, to accede to the principle that, at the end of the day, those who can cause, or who choose to cause, the greatest damage should be able to get more or less what they ask for.

My second reason is this. There comes a point at which any Government which seeks to contain inflation has to draw the line. The Leader of the Opposition in the Commons himself has conceded this in arguing that the miners should get more than they have been offered but less than they are demanding. He has not been specific; he has given no figure: but he has supported the principle. My Lords, what safeguards are there in circumstances such as this? I do not believe that there are any except the will and common sense of the Government and the people. If Phase 3 is shattered everyone will suffer—pensioners, wage-earners and the miners themselves, just as they suffered from the leapfrogging which followed their big pay award in 1972 and led directly to the introduction of a statutory policy.

My Lords, the third reason for not allowing Phase 3 to be torn apart is that to do so would, I believe, encourage extremism and discourage moderation and ensure a bitter future in industrial relations. As The Times said near the beginning of this dispute: If one believes that moderate trade unionism is the only hope for the industrial future of Britain it is essential that extremists should not be able to demonstrate a crucial breakthrough". In the debate on the economy held before Christmas, the noble Lords, Lord Chalfont and Lord Shawcross, argued that there are some people who are seeking precisely that, and a darker political purpose as well. Well, my Lords, we have all read some speeches in this context, and I am pleased that very many members of the Labour Party have condemned those inflammatory remarks. But I have sought this afternoon to show that the Government have not been obdurate. We have sought a reasonable settlement, fair to everyone and certainly not a confrontation. I imagine that all of us hope that somehow reason will prevail. Some time it will prevail: it must prevail. There is no other way that this country, with its traditions and institutions, can survive. I hope that there will be no strike. I hope that before long we can be working with the miners, to build together the sound and prosperous future which could be theirs. I hope that we shall seek and build on a fair way of containing inflation and of weighing the claims of one group against another. I believe that all these aspirations are shared by most people in this country. With their support I believe that even now, at this late hour, we may be able to turn those aspirations into reality.

3.52 p.m.

LORD ROBBINS

My Lords, this afternoon we are debating a subject on which, as the very distinguished speeches which have already been made by representatives of the three Parties demonstrate, there is considerable conflict of view. But surely we all share one common anxiety: the fact that we are confronted now with what unquestionably is the gravest economic and political crisis in the lifetime of most of us now living. As I see the situation, most of us feel that the crude outline of the position presents itself, so to speak, in the shape of two alternatives: either there is a strike, with colossal losses on the part of industry, with considerable privations on the part of all sorts of people not immediately concerned with the dispute in question, and I mention last, but not least, overwhelming damage to our credibility abroad, just at the time when it stares one in the face that we need help from abroad as at no other time in the history of this century, save perhaps at the termination of World War II and the cancellation of lend-lease.

I am an humble Cross-Bencher and my thoughts on this subject do not run completely on the lines which have been adopted either by the distinguished speaker for the Government or the distinguished speaker for the Opposition. Perhaps I may be permitted in all candour to discuss the position as it presents itself to an isolated individual with no Party affiliation, but one who has spent a considerable part of his life considering these questions of the overall equilibrium or disequilibrium of the economy.

First, let me make a few very banal remarks about inflation in general. In confronting this problem in general, and in drawing morals for what is to happen here and now in the crisis with which we are confronted, we have to bear in mind a fundamental proposition—an arithmetical banality, if you like—with regard to the relationship of spending and production. It is this: if the volume of spending on a national scale does not exceed the value of current domestic production for home consumption, plus the value of imports, then all will be well as regards the value of money and as regards the dangers of inflation. But, if the volume of expenditure exceeds that amount then, other things being equal, prices will rise and in all sorts of ways inflation will permeate the system.

One must always be cautious in using effectively turned words. I should not like to suggest to your Lordships that all inflation is intolerable. I think history shows that industrial countries can survive, although with a certain amount of friction, a rate of inflation of, let us say, 1½ per cent. per annum, 2 per cent. per annum and, for short periods at any rate a little more than that. But equally I think that rates of inflation such as have occurred in the last four years are not in the long run tolerable to societies such as ours. It may be that in Latin America, at the cost of a vast inroad into social relations and public morality, rates of inflation higher than the rates I have mentioned may be tolerated, year in, year out. But, frankly, I do not believe—and I imagine that this thought is shared by most of your Lordships—that that sort of thing can go on year in, year out, without destroying this society.

If we are agreed on that, then there are two main ways of dealing with the problem. The first way, and the way which has been adopted in the last two or three years, is a control of prices and incomes. I mention prices and incomes together, but in the last analysis (I hope this will not be thought to be the hard sell) with the exception of outrageous examples and monopolistic prices, it is the volume of income which determines whether one is in an inflationary situation or not. If under such a system the total of incomes is reduced to the value of domestic production plus imports, then sooner or later inflation stops. I do not say for a moment this can be done overnight, but certainly some progress can be made if the object of the policy is, so to speak, a convergent series, the volume of income increasing more slowly and the volume of production eventually catching up with it.

My Lords, the second method of dealing with a situation of this sort is direct operation on the sources of expenditure, the imposition of taxes, the proceeds of which are not spent; or a more fundamental control of the basis of all expenditure, namely, the volume of money and credit, a diminution of the volume of borrowing, both public and private. If the money is not available, then in the end the excess demand for goods and services will cease. There one has, so to speak, the tedious arithmetic, the banalities of the subjects, and I apologise for reiterating them. Let me now come a little closer to reality.

My Lords, I personally doubt the long term viability of statutory control of prices and incomes. I respect the views of those who think that it can succeed in the long run. That view has been argued adequately again and again in this House by noble Lords of more than one Party, and I have made enough mistakes in my life to know that in differing from them I may be wrong. But my own belief is that while statutory control of prices and incomes may be effective for a time, in the end it puts strains on administration, on social relations and on the efficiency of industry, both private and public. Therefore, in the long run I believe that the solution to this problem is much more to be found in financial and monetary policy than in the adoption of these centralised and detailed controls, of the hundreds of thousands of bargains made in regard to goods and services every month of the year. Nevertheless, as I have ventured to say to your Lordships' House on earlier occasions, I am certainly prepared to accept the statutory control of prices and incomes as a temporary measure.

The alternative which I prefer as a long-term policy, the control of the source of expenditure and borrowing money, may be a very harsh medicine if the inflation has already become very brisk, as it has here, and if expectations of business are already geared to a continuation of inflation. In such circumstances, the adoption of a policy of this sort as a temporary measure seems to me to be not only admissible but wise. After all, past experience shows that prices and incomes controls do not break down immediately.

But there is one fundamental condition of success for policies of this sort; namely, that financial and monetary policy should be in harmony with such a policy. There should be no further feeding of excess expenditure from these sources. By this, I do not mean a sudden application of the fiscal and monetary brake which would clearly be folly; but I do mean a gradual reduction of deficit financing, a gradual reduction of the rate of increase of the money supply.

My Lords, this is not what has happened in the last few years. The cost inflation has been financed by the extension of the credit base. Let us face the fact that on the demand side there has been a policy, no doubt engendered by good will (I do not in the least disagree with the noble Lord. Lord Carrington, on that), of deficit financing which I think has no precedent in the financial history of this country, save in war time. At the same time, the main indices of credit expansion have been expanding at a rate at which I defy anyone to believe that production can increase in this country or, indeed, in most other countries of the world. The result has been what would be expected, I would have said, on grounds of pure principle: a continuing inflation, not only as regards the cost of living but—and this is more irritating to a great many people—as regards property and so on.

What is more, and this has a two-edged moral (although what I am about to say will not be agreeable to the Government Front Bench) it has meant an aggravation of our balance of payments difficulties. If the inflation had been less here, if there had been less pressure of demand on production resources to satisfy demand at home, then the troubles caused by the increase of prices abroad (I am not thinking about oil for the moment, but of what the noble Lord, Lord Carrington, was referring to), then more production resources might have been turned by the ordinary pressures of the ordinary operation of the market to production for export, and so diminish our difficulties in that respect. Do not let us underestimate those difficulties. This Government inherited from their predecessors a balance of payments surplus of something of the order of £1,000 million. Before the oil trouble began, the deficit on current balance of payments account was approaching the order of £2,000 million, a switchover which surely is a matter of very great anxiety indeed.

What I have just been saying is pretty severe criticism of some, not all but some, of the policies which have been adopted by Her Majesty's Government. But what about the attitudes elsewhere? I welcomed, I must say, the candid and forthright declaration of the noble Baroness, Lady Seear, with regard to the attitude of her Party to continuing inflation. But I must confess I am in some doubt as regards the attitude of the Labour Opposition, and my perplexity resides in this quarter. I do not know whether, shall I say the Labour movement, in order to make my generalisation all-embracing, do or do not want a statutory incomes policy. Certainly, as I have said, I have heard most eloquent pleas for such a policy from Labour Benches in this House, and, as I say, I have treated them with respect.

But I cannot refrain from noticing that the idea of a statutory prices and incomes policy, or incomes policy at least, is definitely repudiated by many of the leaders of the trade unions; if I am not mistaken it is repudiated by the Trades Union Congress itself. Those who make this repudiation seem to favour rather a free-for-all in the matters of the labour market. Well, I can conceive of an argument being put up in favour of that point of view, even in regard to the present crisis, although this is not my view. But, I ask, do those members of the Labour movement who repudiate a statutory incomes policy accept the corollary of a sufficient restriction of aggregate demand to prevent the free-for-all degenerating into an inflationary scramble? If they do accept it, then they must accept too, especially at the present time, a very considerable increase in taxation, not merely taxation of the very rich—that is not wholly, but very largely, a mirage; it means the taxation of most of us here; it means the taxation of people enjoying even smaller incomes, and it means, too, the most rigid control of the rate of increase of the credit base, which in the short run, at any rate, might lead to even higher rates of interest than prevail at present. If they do accept these things, I appeal to them to say so. If not, then do let us be clear that at the present time, in the present circumstances of this country, the free-for-all in the labour market means hyper-inflation.

LORD BESWICK

My Lords, may I intervene? As the noble Lord says that he has never heard anyone on the Labour Benches face up to this need for higher taxation, may I tell him that at last year's Labour Party Conference the largest cheer for the Shadow Chancellor was when he said that very thing.

LORD ROBBINS

My Lords, I am never so much in disharmony with the noble Lord, Lord Beswick, as he sometimes appears to think. I was asking whether those who advocate a free-for-all also accept this strong medicine; because if they do not accept it, do not let us deceive ourselves, the outcome must be hyper-inflation on the Continental scale, and eventually—because these things all come to an end; the trees do not grow up to the sky forever—a new money to replace sterling. That is not a joke.

May I say just a word or two about something nearer home, the present crisis. First of all, may I say a word about the effect on the Western world as a whole of the quadrupling of oil prices. I do not think there can be any doubt at all that this carries with it a danger of some deflationary influences in the world at large. I do not know how much; quantitative prediction in this respect would be a fool's game. After all, one does not know what the sheikhs are going to do. But I do know that unless their increased receipts are put into active investment in some part of the world or other, then there will be deflationary influences abroad off-setting the inflationary influences of the last few years. To that extent I have some sympathy with those financial commentators who have argued that in the world at large, neutral rather than astringent fiscal and monetary policies would be in order. They are quite right in saying that we should not always be fighting the battles of the last war. But I am afraid there is very little comfort for us in this reflection.

Our position is much worse than the position of many other leading countries. As I have said already, our balance of payments was sufficiently alarming before the oil crisis developed. It may be quite permissible to advocate financial neutrality as regards, let us say, Germany or the United States, but our position is much more delicate. We certainly shall need to borrow extensively if we are not to go back to wartime austerity. How shall we persuade people to lend more to us if internal chaos continues?

May I conclude (I have already spoken too long) by offering three reflections on the industrial dispute under consideration. The first point I want to make—and I hope it will not be thought I am a wicked man—is that in my judgment what has been revealed so far has meant an offer to the miners which is not by current standards ungenerous. I accept the view, which I think was implicit in what the noble Lord, Lord Beswick, said, and doubtless will be said by other noble Lords in the course of the debate, that you can argue until the cows come home about the exact percentage significance; but compared with settlements that have already been made under Stage 3, this is not an ungenerous offer. And, after all, Stage 3 is out of date; the oil producers have made it out of date. Stage 4, if it ever comes in, will have to be more rather than less severe. I ask the question, with all respect to those who ask us to extend understanding and compassion to the position of the miners: have they had a much better offer in the past, and how does the position compare with the position of those who have settled already under Stage 3?

BARONESS GAITSKELL

My Lords, may I interrupt the noble Lord? They are bottom of the league in the European Economic Community with regard to wages.

LORD ROBBINS

My Lords, I believe the noble Baroness, Lady Gaitskell, is right, as she usually is. But I humbly submit that comparisons with other countries in Europe are irrelevant in this context because in general we are rather near the bottom of the European league. We are the poor members of the European Community. We have been overtaken by France, Germany and others. It is humiliating to read about our position in the table with regard to national income per head in relation to the position of other countries.

My second reflection is that this is a dispute in a nationalised industry. It is not a question of a dispute over the disposal of excess profits made by private enterprise. The employer in this case, in the last analysis, is the nation. When I was young and in my salad days, I was a rather rabid young Socialist, and in those days we used to say that if the means of production, distribution and exchange were nationalised the problem of industrial relations would evaporate. Well, we know better now. The last thing that I wish to do is to bring an indictment against the miners as a body, but unless the history of the negotiations revealed so far in the Press, through the media, and by the noble Lord, Lord Carrington, is utterly false, some of the leaders of the miners—I am not calling them "Reds"; I am perfectly aware of the danger of exaggeration, particularly at this stage in this respect—have shown themselves absolutely unyielding. All expedients have been rejected.

LORD BLYTON

My Lords, would the noble Lord give way? Is he not aware that at all the meetings that the Mineworkers' Union have had with the Government, suggestion after suggestion has been put forward to solve this problem, and they have always been turned down by the Government That is why the miners have said that they do not want any more abortive meetings.

LORD ROBBINS

My Lords, I will not argue with the noble Lord on the detail of this case; I am simply giving the impression, which I think is widespread among men of good will, that there has never been any disposition to settle within the framework of Stage 3.

My third reflection is that we would do well to remember the terrible troubles which are ahead if the strike goes on. The dislocation of industry which has followed the three-day week is absolutely nothing to what must be expected if the strike actually breaks out. There will be internal privations on a large scale, and external discredit. Great companies will go bankrupt or will have to be helped out by injections of bank credit, which will not make the control of inflation any easier. As I have said before, we shall be back in something like the position in which we found ourselves after the cancellation of Lend-Lease—more or less bankrupt without external assistance. But, alas! there is the additional complication that at the moment, with all the good will which is incipient in the atmosphere of this House, we are, let us face it, a divided nation. The temptation to settle, therefore, and to risk the consequences is very great.

That is all I have to say. I would only add that I agree with those who say that we must watch anxiously for any opportunity to break the hitherto unyielding attitude of those concerned. But—and this is the last thing I have to say—there are moments in the life of an individual, or in the life of nations, when we have to make fateful decisions. I think that I have made it clear that I do not completely admire the policy which has been pursued as regards public finance by the present Government in the last two years, and even more recently, but I am clear in this—the Queen's Government must be carried on.

4.26 p.m.

LORD GEORGE-BROWN

My Lords, I suspect that what I have to say is going to please my friends in some parts and infuriate them in others, and maybe thereby do the opposite service for the other side of the House. So anybody who feels inclined to cheer or hiss in the early stages had better wait for what is coming later. May I make two comments on the two speeches immediately preceding mine. If he will allow me to say so, I found the approach of the noble Lord, Lord Carrington, depressingly dreary. He began with the only statement in his entire speech with which I could agree: that we faced possibly the gravest problem any of us have known in peace time. Then he delivered every bromide that I have ever heard in nearly forty years in politics, and he read into the Record something which is no doubt already being mailed to every Conservative office in the country. If we are facing the gravest problem we have ever faced in peace time, I suggest that we ought to approach it a little more seriously than he did.

To the noble Lord who has preceded me, may I say to him, with all the greatest respect in the world, that we are not, for the same reason, at a moment where we really need Reith Lectures. We are not in an extension of the academic year of the School of Economics. We are facing the realities of the human and political world, in which we are geting very near to a breakdown of peoples' trust, belief and understanding, and many of the interesting theories with which the noble Lord entertained us have jolly little relevance to a world outside this Chamber that is almost about to break down. The problem is not only as grave as the noble Lord, Lord Carrington, said; the problem is much more deeply seated than the Government even now realise. Income levels, income relativities, cannot be dealt with in isolation from the general economic and social policies which the State, through the Government, is pursuing at this time.

Before I come to my main points, which may annoy some people, may I just say this—and this will not please some people, either. The last time I intervened in this House on this subject was in an interjection at Question Time. I accepted then that the leaders of the National Union of Mineworkers could have, and should have, accepted with profit to their members, with honour to themselves, and with advantage to the country, the offer that was put before them. I said that then and I do not go back on it now. Equally, I accept a point which the noble Lord, Lord Carrington, did not forget to make, that there are—if I may upstage his words—villains all over the place. Indeed, I would go so far as to say that possibly the only bonus that has come out of this confrontation is that the degree of penetration of these people inside the Labour Movement can no longer, and Will no longer, be regarded as the obsession of a few of us who have been saying this for some time. It is now obvious, it is now open, as is the degree of penetration. I warned the noble Lord, Lord Carrington, not to start cheering too soon.

LORD CARRINGTON

I wondered why.

LORD GEORGE-BROWN

They were taking my advice. He should, too. But that is now open and obvious, just as is the extent of what I regard as the supine acceptance by many of the so-called moderate leaders of the infiltration of the Labour Movement. It has become true—I have said it before and I do not go back on it now, and I get rid of it at the beginning—that there is a degree of inhibition amounting almost to virtual control over the action that the Labour leadership is currently able to take. So I say it. It is not a concession and I believe it. I repeat that the one bonus that has come out of this confrontation is that the position is now clear.

But having said that, however disagreeable it is to my friends, however much it may give cause for a temporary moment of partisan smiling or giggling on the part of the noble Lord, there is one greater thing that needs to be said. Any Government's business, in any set of circumstances, is so to make policies and so to direct the nation's affairs that the nation prospers, that it develops, that people's actual real standards improve. The test of that is always that the people feel it to be so, not that the noble Lord, Lord Carrington, can read a beautifully drafted piece, impeccably enunciated, to show to his satisfaction that it is so. It is that the people feel it to be so. The truth that the Government have to face is that they have demonstrably failed to do this. They can blame anybody else they like. They can blame the things I have just mentioned. But the fact of the matter is that, at the end of the day, they were elected to do it and if people do not feel it is so, then they have failed.

Let us just recall a little recent history before I come to what I would do in the present situation. The Government, stupidly in my view, destroyed all the mechanisms for economic and industrial management that we left behind us, before they found out what parts of their Selsdon thinking, what parts of their Manifesto, were inept, and therefore before they knew what mechanisms they needed to keep in order to achieve what they wanted. They were forced to recant bit by bit, step by step, and they have done so meanly and uneasily and expensively all the time. They reversed the lame ducks' proposal over Rolls-Royce and other things. They did the national image enormous harm when they destroyed the name, the standing, of Rolls-Royce. They then, having clumsily recanted, paid out far more money, far more effort than was needed to retain Rolls-Royce had they kept the Industrial Reorganisation Corporation.

Similarly with their conversion to an incomes policy which they still do not understand. They go for a Price Commission separate from an Incomes Board, each operating on different bases with faceless anonymous civil servants, with drug chemists in charge, and now they produce a Relativities Commission, none of it set in any identifiable context. Partly because of their hatred of Mr. Aubrey Jones, who was never forgiven by them for being what they like to call a Quisling, they destroyed the Prices and Incomes Board which we left behind, before they found out whether they would need it. When they did so find out, in order to save face they had to make it different from what we had left behind. So it became much less effective—there can be no dispute about this—much less convincing, much less pointed, and it is totally unrelated to any national overall plan for the use of our resources and for their development.

The point about an incomes policy is that it cannot be in isolation. The point about a prices policy is that it cannot be in isolation. The point is that they have to be arrived at from the forecast of resources that you will have, of how you want to use them and of what can be available for this, that and the other. There has not been any general concept within which you can sell an incomes policy to people—workers, managers, industrialists. The same goes for the Government's social and taxation actions. I shall not go into all of these, and will try to keep my speech as short as I can. But there has been nothing in what they have done in the social policy field, or in what they have done in the taxation field, which would make intelligible or acceptable what they were asking people to accept in the incomes field. In consequence, we have seen the general reaction of people—and I repeat that at the end of the day in a democracy, it is the people in the country, not the bureaucrats and not the Ministers, who know best.

The Government have had some bad luck—there is no doubt about that—but I have never yet seen a Government that did not; and all Governments have to come to expect this. When I looked at the weather at about five o'clock this morning I said, "Good Heavens! Old Joe Gormley will be ever so pleased; he has now got the Clerk of the Weather on his side as well as all the others". All Governments get bad luck; but the point about the present Administration is that they have compounded their bad luck with appallingly bad management, and it is for that that they must answer.

Now, my Lords, as Lord Robbins said (he said it after 38 minutes; I have got there after 14), let me come to the immediate situation, and what to do now. I accept that it is no comfort and no particular use to say that had we been handling affairs we would not have got into this position. Had I been going to Edinburgh I do not think I would have started from Waterloo Station. It is no use, no comfort, saying that. But it is absolutely true: we would not have got here. But we are starting from here, so what do we do now? I start with one proposition. When all the moral protestations have been made and all the heroics have been gone through, I say this: no Government have the right to shut the nation down, whoever they think they are in conflict with. Whatever their feeling of what they regard as justified anger, Governments come and Governments go—and I am a living memorial to that. Ministers are expendable and are replaceable—and I am an even greater living memorial to that. Policies can be picked up again and tried again at a better time; but the nation cannot be. The nation is not expendable or replaceable. The nation cannot be picked up again and dusted off once it has been shut down. I watched Michael Clapham last night on the television; I hope that Ministers watched him. That man wished to give the Government every comfort and support he could. His face was that of a tortured man who knows that if you shut the British nation down industrially you finish it. Lord Carrington, particularly, had better understand this.

Any policy you like, however good you think it is, however much you attach to it, involves the balance of advantages and disadvantages; and in a democracy, which is what we are trying to run, all policies have limitations. They are the limitations imposed by the frailties, if you like, of human beings. No rationally minded Government would lose sight of this, and no rationally minded Government would drive any policy to the point where it is made too obvious that in a democracy you cannot carry it through. When you find this out you back off. You back off at the best moment and in the best way. You never make it clear that you are being defeated; but in a democracy you can be. But I repeat: no rationally minded Government would do that, which leads to only one conclusion. The Government we have at the moment lack rationality. The first requirement any Government in Britain have to accept is that their business is the British nation's prosperity; living within our limitations, within our existence. We are not a Continental Power, although we are, I hope, still going to continue being a part of a Continental organisation, whatever the difficulties there are.

We in Britain do not have every kind of indigenous raw material, although shortly, I hope, we shall have rather more than we have had in the past. For us to be prosperous—and that is what the Government are there for: to direct our affairs and our policies to achieve prosperity—we must make things, we must sell things, largely overseas, because we must be able to import things. I do not, I am sure, have to spell it out to the Government. If you shut industry down you cannot make; and if you cannot make you cannot sell, and if you cannot sell you cannot import. Surely Ministers can get this into their heads. Would it not have been better if Lord Carrington had explained to us this afternoon how their policy will achieve this, instead of reading out all those bromides addressed to the Keighley Conservative Association or those in any other marginal constituency they are greatly bothered about?

If we are to make and if we are to sell, then businesses need a cash flow. All right—so I am a Socialist; so I am a trade unionist. I have many friends in the West Midlands. They have their bills and their wages to pay. People are not paying them. The banks are charging them 20 per cent.—41,000 on £5,000—and are beginning to call in. How do the Government think that industry, even on three days a week, can do this for long? It is losing money; and once the banks say so, it stops. Raw materials, partly converted materials, have to be available for conversion. Credit has to be available on other than ruinous terms—selectively, I accept.

The Government's present position, however righteously Lord Carrington may feel it, however morally right in their hearts they think they are, is disastrous for an industrial and trading nation like ours. The so-called three-day week has got by so far to-day, I can tell Lord Carrington, in case he never meets industrialists, because it is a farce; because they are fiddling about with their entitlements and their rights, and are moving it from here to there. Even then they are only just getting by. If the noble Lord really thinks, or if any industrialists on the opposite Benches were to tell him, that it is possible to go to a two-day week, I am bound to tell your Lordships that they are not just irrational—they are daft. It is impossible. You cannot run the boilers if all you are operating is a two-day week. The mechanics do not work; the overheads are too great. You effectively shut it down, whether or not the steel stops—and of course the steel will stop. Some kilns and some ovens will go cold; and when they go cold they crack, they break. So a two-day week is not a starter.

Again, on this, let me say to the Government that they will pay out more in grants, in subsidies and in aids to keep industries and factories nominally going. They will pay out more in dole, in benefit to people laid off, than any settlement—however wrong they might think it to be—they might have made with the miners would have cost. You may say that the miners are rapacious. You may say, as I said in your Lordships' House once before, that they push their luck too hard. But I repeat, the Government will pay out more to make it look as though we are keeping going than they would have paid out on a settlement. And do remember, and let many of the industrialists on the Government Benches please tell their colleagues, and the Government, that many a medium-sized and small business in the Midlands will go out of business in a few weeks' time. Do let us understand the cost of what these righteous Ministers are doing.

I have recently come back from a visit to the States and, since then, from a visit to the Continent. I beg the Ministers, for heaven's sake! to bear in mind the lasting impression of ourselves that we are giving to people overseas who want to place contracts with us and whom we want to place contracts with us, and people with whom we want to invest. I will not develop that point in detail because of the time, but these people believe that we are going to go down with our own death wish. They are saying so, and they are cancelling. I can send letters to the Ministers if they want them, but they must know, or they can find out from their own friends. These people are cancelling contracts, cancelling orders which will not easily come back. Lastly, on this part of what I have to say, for heaven's sake! again let us understand that once the colliers are out and others have been drawn into the dispute, and the bitterness and the frustration has escalated, as it will, a settlement will still have to be made by somebody; and it will be a lot more costly, and the knowledge that the Government and the State have been defeated will be much more evident and obvious.

So, my Lords, what is to be done? It goes in quite a large way against the grain for me to say this; but I say to the Government: Settle now as best you may. You have hung around too long; you have handled it badly; there have been too many meetings that got nowhere and frustration has grown and grown. As I wrote in a paper the other day, you have managed to create a situation where there are no moderates now. I think of the constituency which obligingly kicked me out a couple of years ago. The idea that the colliers of South Derbyshire—good gracious me!—would not vote in this number is ludicrous. You cannot blame it on an artfully worded ballot paper. You cannot blame it—at least not there—on Left-Wing "Reds under the bed".

I would say to the Ministers: Something has happened and you have done it. You have created a spirit, an atmosphere of frustration, disbelief and distrust. You have done too much damage already. Go on holding out and you can only do more damage to Britain. Do not go on digging in. And I repeat, you have no right. Ministers are quite temporary, whether they win the next Election (and I will come to the Election in a minute) or whether they do not. Ministers and Governments are always temporary. You have no right to add to Britain's already troublesome trade and economic position. The fact that the figures have become astronomical does not mean that they are less serious. The noble Lord, Lord Robbins, referred to this point. A little while ago £1,000 million, one way or the other, was fantastic. We now have sums like £6,000 million and £10,000 million in the red. We can hardly visualise it. But that fact does not make the figures any less serious. This is where Ministers are getting us. We shall be "Weimarish" very soon. So I say: Settle; get that done, and then the longer-term policies in which I am more interested can be reexamined, re-stated and re-formed. The economic plan for productivity—

VISCOUNT ECCLES

My Lords, may I interrupt the noble Lord? I have listened to him with interest and I should like to ask him one question. Is he really saying that whenever an industry which is, let us say, of great importance to the economy as a whole puts in a claim, if the employers do not want to grant it someone should come along and give it to those in the industry just because of its importance?

LORD WIGG

George, isn't it terrible!

LORD GEORGE-BROWN

My Lords, what I am saying is that in this case, of course, the employers do want to pay it. In this case, all other employers want it to be paid. In this case, the C.B.I. and the T.U.C.—everybody—wants it to be paid. But I will also answer the kernel of the noble Viscount's question. If it is of such a degree of importance then do not land yourself with an unwinnable fight. The noble Lord, Lord Crathorne, and I both had our periods at the Ministry of Agriculture, and there were times when he and I both knew that the farming community was able to twist—I almost lapsed into the vernacular, but the noble Lord will know what I mean. We sometimes knew that we had to give way although the papers told us that we should not. Of course there are moments when you do not push the matter too far, even though there may be reasons for doing so; and the noble Viscount does this in his own affairs.

For heaven's sake! let us get back to the longer-term policies, the economic plan for productivity. You may evolve a better plan than I tried my hand at in 1965, but get back to something of the sort. Get back to the control of prices. Every night, if I go home early, I sit with my wife and I watch on the television the "Nationwide" programme and something called a Consumer Unit. They instance Tesco, David Greig or Sainsbury's and, taking a tin the top label of which says 27½p, they peel it off; the one underneath says 21p, and they peel that off; the one underneath that says 18½p, and they peel that off. Finally, we get down to what the tin was originally intended to be sold at—which is 11p or 13p. It is no use asking or telling working people that you have got to control their incomes—even though, as I know, you have got to have an incomes policy—unless you are pretty evidently controlling prices; and of course you can do so.

Then there is the social policy. Of course you should not go on arbitrarily pushing up the rents and housing costs. You can do it some time later—it may or it may not be right—but not now. Of course you must do something about pensions, now, in this situation. Of course you must get a taxation policy. All these things I should like to discuss. But, first of all, let us stop this frozen, mock-heroic drift into defeat and disaster. There are Ministers in this Government who served in a distinguished way, and nobly, in the forces. If Auchinleck and Wavell had not been willing to retreat, and had not known when to retreat, Montgomery and Alexander could not have been victorious. Each one of the four played his part—the fellow who knew when to come back, as well as the fellow who knew when to go forward from the safer ground the other chap had found. Of course it was less glamorous to retreat: it led to the "chop". But it also led to the victory.

Finally, regarding an Election—and this is where I am afraid I may be about to say something that some of my friends will not like—really, I care little for the idea. If the Prime Minister and the other hard-liners of whom we read cannot be otherwise replaced and if the more rational members of the Government cannot have their way, so be it. But I say to my friends on this side of the House that if the replacement for this Government is to be a Labour Government, then our Party has to face, and very quickly resolve, our own tensions, our own stated commitments and our own involvements. The rag-bag of propositions which we issued under the ironic title of a manifesto a few weeks ago had better be handed back to Mr. Ron Hayward, the General Secretary of the Party, for re-interment in his Labour Party resolution folder; and this Party had better replace it quickly with a relevant and short-term commitment to re-establish this nation's base.

It is all very well for Mr. Crosland and Mr. Healey to refer to it in speeches, but we must have a stated position. Whether this can be done in the present Party and trade union situation is, to say the least, questionable. So, if we have an Election the result might be that no one Party could, by itself, govern. I swallow hard over this next sentence as I say it. Perhaps in the present situation that might be no very bad thing. It is quite conceivable that the hard decisions this country has to take could not and would not be taken by any one-Party Government, and perhaps the only way we can be brought to face the situation is after such an Election result. I warn my own Party—and, indeed, I warn the Government though I am not so concerned about them—that I think there is good reason for believing that a large section of the electorate see the matter in this way, too.

5.3 p.m.

VISCOUNT AMORY

My Lords, in 25 years I cannot recall having had the experience of immediately following the noble Lord, Lord George-Brown. If I had the choice of speaking immediately after him or before him, I believe I should be content with my present position. If he will forgive my saying so—and I do not say this disrespectfully—I find the speech he has just made to be "all over the shop". But when a whirlwind has passed it takes a little while for things to settle again, so I am going to take the noble Lord's advice and neither hiss nor praise at this time. I can well understand that after the whirlwind many of your Lordships will want to withdraw and perhaps take a cup of tea.

It is a tragedy that at this moment when as a nation we should be rallying to the urgent task of saving ourselves, there is a danger of tearing ourselves to pieces. We are behaving as though the divisions among us are deep, bitter and unbridgeable. Yet I suppose that never in our history has there been a time when our everyday lives have more in common than is the case to-day. I, for one, refuse to believe that widespread bitterness is a dominating feature of our national life to-day. Our real trouble is not yet bitterness, although bitterness may grow: it is a curious kind of inability to appreciate the consequences of what is happening around us. Our situation cries out for moderation, statesmanship and understanding to an exceptional degree; but those attributes must be a two-way process, people to Government as well as Government to people. If moderation and understanding are expected (as they are) of Government, then the same qualities must be demonstrated by other sections of the community.

Sometimes we may feel that the influence of this House is inconsiderable and that the ripples of our debates do not spread outwards very widely, but I believe that the collective example of this House may not be insignificant or without effect in a situation like this. In our debate last December, the noble Lord, Lord Diamond, made an appeal for inter-Party co-operation, the spirit of which was echoed by, I believe, more than twenty speakers from every part of this House with approval. On his side, the noble Lord was supported by various other speakers, including the noble Baroness, Lady Burton. As I understand it, the appeal then was not that we should paper over our Party differences or pretend that they do not exist, but that we should recognise there are some situations which are so serious for the nation that we should temporarily subordinate our Party views to common action to safeguard the nation's life. There is a deep instinct which tells all of us that that is right; and the present is surely such a situation. I shall hope to say a little more about that before I finish my speech.

I have noted with pleasure since becoming a Member of your Lordships' House that we are generally disinclined to spend too much time quarrelling about the past. The noble Lord, Lord Beswick—and no one in this House would regard him as anything but a deep lover of his country—in his hard-hitting speech, animadverted to the past and in doing so acknowledged that all of us have made mistakes. I hasten to say that if sackcloth and ashes had been handy, I should certainly have donned an appropriate share for myself.

One trouble about concentrating too much on the past is that most of us, when we do so, build up over-rigid positions and become prisoners to them. We must remember that in this business we are all the time exploring new ground, because the ground has shifted, and is shifting, under our feet. The main shift in the past twelve months has concerned the terms of trade, which have turned against us more violently than during any comparable period and will shortly add several thousand million pounds a year to our national import bill. This means such a radical deterioration in the economic situation that nothing less than complete mobilisation of our maximum strength will see us through. That strength cannot be deployed until the present deadlock has been resolved.

In our understandable pre-occupation in recent weeks with our two major industrial disputes, one has noticed a tendency—not evident, I am glad to say, in to-day's debate—to place them foremost and forget the terrible enemy which is still gnawing of our vitals; namely, inflation. That is still our common national enemy. As evidence that it has been going strong, there was a figure in the paper this morning showing that the importation of cars for last year went up by 36 per cent. That is just one item, but it indicates the scale of the matter. I was glad that the noble Baroness, Lady Seear, dealt extremely well with the disease of inflation. It was with the aim of getting the better of this disease that the Government tried first to reach agreement on the voluntary incomes policy and, when those efforts failed, turned to a statutory policy with Stages 1, 2 and 3.

It is too early yet to attempt to quantify what additional economic burdens will arise from the current short-term working, but they are bound to be enormous even with a three-day week. Few of us would be bold enough to forecast what Stage 4 should be, except a certainty, as has been said already, that in the aggregate we shall have to pay ourselves less in real terms perhaps for several years ahead. In some quarters the Government are accused of being too obstinate about Stage 3. We can all agree that Stage 3 is not an end in itself, but it is the present incomes policy in operation and 6 million people have settled under its terms. If it collapsed now there would be no incomes policy in existence. The only practical alternative—and this would apply whatever Government were in power—would be massive deflation, and it would have to be massive indeed. No one can surely deny that since these industrial disputes have broken out the Government have made exemplary efforts to keep discussions open. The Prime Minister's recent letter to Mr. Wilson seemed a model of moderation and restraint. Speaking personally, the speech made this afternoon by my noble friend the Leader of the House justified the same terms—

LORD SHACKLETON

Lord Carrington.

VISCOUNT AMORY

I apologise, my Lords. I have made that mistake before; if I make it another time my noble friend will be justified in sending me home! As my noble friend the Leader of the House is not in his place, I have no opportunity of apologising personally to him.

The mining dispute has reached a point of seriousness which simply cannot be exaggerated. The miners seem completely obdurate. A strike with or without an Election will be catastrophic for the economy; industry cannot live without steel. I do not propose to develop that any further. The best immediate action at this stage would be to seek again to get agreement with the T.U.C. and the C.B.I. to set up a Relativities Board forthwith on the lines of the Prime Minister's suggestion in his letter to Mr. Wilson without, I fear, at this stage the support of the National Union of Mineworkers. The Pay Board Report, prepared very quickly, may or may not have devised the perfect machinery. In this field, an immensely complicated one and a novel one, too, a new instrument is only likely to be perfected in the light of experience. But if, as I expect, some kind of national incomes policy is going to be with us for the foreseeable future, bearing in mind that relativities and differentials are always the crux of wages and salaries settlements, a start must be made at once on job evaluation on a national scale, and here is an opportunity to start. Sooner or later a settlement with the miners will have to take place, and when that opportunity occurs a Report from a Relativities Board may be invaluable in helping to quantify the basis of settlement. Is there any other action that can be suggested at this very late hour to break the deadlock?

Returning again to the spirit of Lord Diamond's appeal, to which there was an active response in our December debate, would it not be wise if the Prime Minister were to invite the leaders of the other two Parties, each accompanied perhaps by one or two senior colleagues, to meet him and share with him the fullest information available to the Government and let them together make one final effort to find a way out of the present deadlock?—a way out which must be consistent with the full maintenance of the nation's fight against inflation. I agree with the noble Baroness, Lady Seear, that that ought to be a prerequisite of every effort, or we shall be defeated in the long run in all our national aims. The only essential condition I can think of is that it should be consistent with the fight against inflation. Any conclusions that might be reached jointly would carry unrivalled weight with the nation. Such a meeting would be in no sense derogatory of Parliamentary responsibility, and could I believe do much to reassure the people that all Parties were united in a determination to defeat inflation and safeguard the nation's life. Parliamentary democracy is indeed in danger, and such consultation at this late hour would surely be in accord with our highest traditions. The final words of my noble friend Lord Carrington's speech to-day epitomised the situation; let us pray there may still be time.

5.18 p.m.

LORD RHODES

My Lords, when I was a young Member of Parliament I used to travel with a colleague to Manchester on a Friday. On one occasion we went into a first-class compartment where a little boy was sitting. As the time approached for the train to move out of the station we began to wonder why he was there. My friend, who was of a curious and inquiring disposition, kept asking the boy questions. He said, "Where is your mother, lad?" The little boy replied, "She died last week". My friend said, "Where are you going?" The little boy replied, "I am going to Manchester, sir". My friend said, "Are you nervous, going to Manchester all on your own?" The lad replied, "No, my father is driving the train". That showed more confidence than this country has in the people who are driving the national train at the moment.

My Lords, this is not 1926. Cynicism, disbelief, disillusionment, is everywhere. Everything to-day is being called into question: education, drugs, violence—even our own Parliamentary system and the Party system in which we have been privileged to serve for so many years is under fire. Discontent is worldwide. A search for a more equitable form of society is taking place on a scale that we have never seen before. It is taking place in every industrialised country, and the realisation that equality may not be practicable does not prevent tremendous pressure being put on Governments to work towards it.

Only out of such a background can there be confidence in a Government, only from a Government seen to be working towards equality can come agreed solutions to pressing problems of the day, such as the problem of the differential wage. That is what we have been mentioning in this House for a long time. The record of the Government is not good enough, in my opinion, to give confidence enough to workers. Four years ago they said that they could deal with prices "at a stroke". We have heard about lame ducks like Rolls-Royce, and we will not labour that point. The Government took fright at the small increase in unemployment and went berserk. They handed out money right, left and centre on an enormous scale, believing that if they pressed on with this "sustained growth", as they called it, somehow or other things would come right.

The Government spokesman said that external prices have been responsible for our inflation. But this Government have gambled that world prices would come down, and they are responsible for a good deal of home-made inflation. One aspect is the jacking up of interest rates. They hoped that we could live off "hot" money until our economic miracle could be worked out, breaking the pattern of nearly 100 years, and emerging with a high growth rate. Look where this has led us! If I had £10,000 to hand over to a bank today they would pay me 15½ peg cent. interest on it. Now if in line with what I have done all my life up until comparatively recently—that is to manufacture articles for sale as honestly as I have known how—I invested the same amount of money in a concern to make cloths, I could look for an average return on my money of only 9½ per cent. Ask yourselves the question: how far down have we brought ourselves in this country to the situation where you can jolly well make more money by loaning it out than you can by manufacturing? What are we at? Are we a manufacturing country, or what? Or are we becoming a country of "spivs"? I lunched with the directors of a bank a fortnight ago, and the man who was sitting on my right could talk of nothing else all lunch-time than what a wicked thing it was that business concerns were borrowing money from his bank to lend to somebody else at a higher rate of interest. That was only a fortnight ago.

Recent events have been so sudden, dramatic and explosive that they have tended to obscure the fundamental changes which are taking place in every industrial society in the world. All the comments that have been made this afternoon about the importance of inflation are paramount. But during the last two months we have heard precious little about what steps they are going to take to deal with this problem. We have had our noses put to the grind-stone over the confrontation between Government and miners only. Do the Government not realise that we are faced with the situation of a "no growth" rate? Does there enter into their thinking the implication that if in the future you have no growth rate, there is going to be more trouble than ever? You are going to have campaign after campaign to divide up what there is.

Raw material costs have been mentioned. The advance prices that we are required to pay for raw material will make it impossible for us to be able to balance our payments deficits for a long time. Here I agree with the noble Lord, Lord Beswick, that the No. 1 consideration of any Government of any Party should be to see that their currency value is kept. The noble Viscount, Lord Amory, was talking about calling in the heads of the other Parties and perhaps their lieutenants. I believe, too, that it should be possible to agree on two or three basic elementary principles which any Government should pursue in running a country, and the principle of keeping the value of our currency is No. 1.

Much has been said to-day about the expediency of making an approach to the miners. I think that the Prime Minister should have taken the offer of the T.U.C. with both hands. Although the Labour Government were bitterly disappointed with the behaviour of the T.U.C. after they had promised the Prime Minister of the day that they would voluntarily take care of the wage applications and increases—which they did not do—I am certain that it is a different T.U.C. to-day and the Prime Minister would have got a better response from the T.U.C. than the Labour Government got in the last week of July, 1969. The offer should have been accepted and the responsibility for carrying out their pledge put firmly on their shoulders. It has been said so often this afternoon that we cannot afford a stoppage. Neither can we, and whether or not the outcome of this will be that one side will say, "Yes we have won", nobody will win in the long run.

VISCOUNT AMORY

My Lords, I tried to catch the eye of the noble Lord earlier. I listen to every word the noble Lord utters. He said that the Prime Minister should have put the responsibility fairly and squarely on the shoulders of the T.U.C. But from everything I have read, I have gathered that the T.U.C. were not willing to have the responsibility to which the noble Lord referred put fairly and squarely on their shoulders because they felt they had not the power to deliver the goods.

LORD RHODES

No, my Lords; but they went considerably further than any organised body of labour has ever gone before and they ought to have been taken up on it. There are honourable men in the T.U.C. who are willing to have a go in order to make a success of an incomes policy, and I think that the Government made a big mistake in not taking them up on it. If we drift to an Election or a strike it will be a disaster that will ruin the country. The speech of the noble Lord, Lord Carrington, was in my opinion nothing more than an electioneering one. I think that some time he may regret that he has made it. But if this were to go to a trial of strength, not only would I support the noble Lord, Lord George-Brown, in what he was saying about a compromise, but I would advise the Government to look at the fourteenth Chapter of St. Luke and see what it says about the king who sees an enemy approaching which outnumbers him by many, and about the expediency of sending out an embassage before being defeated by superior numbers. Perhaps it it not too late to ask the T.U.C. to come to see the Prime Minister again. I notice the Bishop sitting there. Perhaps he will find the Prime Minister a Church of England Prayer Book and ask him to read the General Confession. If he were then to send for the T.U.C. to come to Downing Street it would please many more people than there are in this House: it would please the country.

5.32 p.m.

LORD BALFOUR OF INCHRYE

My Lords, since the end of July we have had a series of economic debates, and I have not dared to open my mouth. But I think the time has now come when everybody who has anxiety and sadness in his heart should say what he thinks without thought of approval or disapproval from any quarter. At risk of a rebuke from the noble Viscount, Lord Amory, I want to deal somewhat with the past. The first thing I want to say is that this situation should never have arisen. It is not for me to evaluate or apportion the responsibility, but I repeat, with all sincerity, that I believe the situation should never have arisen.

We have been saying all afternoon that in our individual lives not one of us could look round without wishing, in certain circumstances, that we had made different decisions in situations from those we made. If individually we must all admit errors in the past, it is surely logical that collections of men, forming either the Government or the Opposition, should also be vulnerable and realise that there may be situations in which they wish they had acted differently. In order to see whether we can learn something which can help the present situation, I should like to look for a few moments where I, as a Conservative individual, think we may have been in partial error as a Government and as a Party, and then I would look, if I may, at where the Labour Party and the trade unions seem to me equally to have gone wrong.

My Lords, I speak as a supporter of the Prime Minister in his absolute determination to maintain unbreached the bulwark of Stage 3 against the dangers of a flood of uncontrollable inflation which would swamp the economic and social life of our country. I question whether we have brought home that great truth sufficiently to the public. The Prime Minister, in speech, in writing and on television, has covered the issues before us. Still the man in the street does not appreciate why Stage 3 is absolutely vital to our national safety, and why, to use the words of the noble Lord, Lord Carrington, "We must not see Stage 3 torn apart." The Prime Minister has spoken about the 5 million men—and the number is now, I am glad to say, 6 million—who have accepted Stage 3 who are quoted as examples to the miners. What is not stressed is why the leaders have accepted. It is not because they think there is no more money to be squeezed from the Government; it is because they see and understand, in the national interest, the vital importance of maintaining Stage 3. I believe that the whole weight of the Government machine in Press, television, radio, by poster and publication, should drive home the single point far more widely and forceably—the dangers before us if Stage 3 were abandoned. If there were a General Election, that would all be changed, but I am assuming for the moment that the Election is not decided.

My Lords, the next question I ask myself is whether, in the minds of the public, the Government are considered fair? If I had been asked that question six months ago, I should have said, "Yes". If you ask me now, I have doubts. As a Party, it seems to me that we do the right thing—but often rather too late. The Government record on pensions, on allowances and social services is something we can all be proud of. But to-day the rising cost of food and the general costs of living are bearing too hard on pensioners and the lower paid. I question whether these can or should wait for the next Budget. Ten pounds at Christmas really is not enough. We should have acted before now.

Next I should like to take the general national resentment which has been expressed at land and property speculation, and exorbitant profits. The Government have now acted firmly, fairly and wisely; but why wait so long as to make it appear that Government action is in response to a national outcry, rather than a forward-looking Government who have seen the dawn of an unacceptable position? We are now warned that a tough Budget is coming for us all. Should we not consider putting into suspense some of the justified, overdue and encouraging tax reliefs which were given to the better-off, which are appropriate to a booming economy?

I must confess that I find it hard, even as a Government supporter, to justify the offsetting of tax on large sums of borrowed money. But if these are matters some of us now regret, to the Party opposite there are graver matters of indictment. My main charge is that, in hopes of gaining electoral support (and I can think of no other reason), their Leader has constantly refused answer to two questions to which the country is entitled to a reply. The first question is: Does Mr. Wilson support the firm maintenance of Phase 3 as a bulwark against inflation? There is no answer. My second question is: Does Mr. Wilson support the miners' strike, or does he advise acceptance of the 16½ per cent. offer combined with the review of the future of the industry? Failure to give clear answers to those questions is, I believe, reflected in the disillusionment of the public with the Party opposite, and can only be described as inverted political courage.

My second indictment of the Party opposite is a criticism of some miners' leaders. They seem to be ruled from below instead of leading from above. These men appear to be just delegates who have to be ruled from below, often by militants in control below, who call the tune to which these leaders have to dance. If any National Union of Mineworkers' leader, seeing the national picture, wished to counsel moderation publicly, he would under present practice and organisation find it almost impossible; and he has to toe the line.

My Lords, I shall be concluding in a moment, but to come to the present and the future, cannot we all learn lessons from the past? It is the very sadness of the situation that hits me—seeing fine men in positions where they have to choose between loyalty to their union and loyalty to their country's interests. I believe that a new spirit must sweep through our land if we are to recover social and economic balance. I pray that it is not too much to hope that, even at this eleventh hour, the Government can bridge that divide between the miners and their trade union supporters and the rest of the community, and rebuild communication with the public. Again I say that if an Election comes, all I say goes away. But I would urge the Government to consider not waiting some weeks for the tough Budget, but to ease now the pressures bearing on the poorer sections of the community while standing absolutely firm on Stage 3.

If the Government did this, might not the climate of accepting Stage 3 be altered and the present exhibition of the exercise of naked industrial power by powerful minorities become repellent to a nation more united than at present? The miners have the power. The miners know they have the power. The miners are the jewel in the national crown. The miners are fine men, badly treated in the past. But surely, if the Government play their part in checking national disaster by standing by Stage 3, at the same time appreciating the difficulties which the present circumstances have put upon the lower-paid members of the community, the ordinary people might play their part and we might see a country more united than at present.

My Lords, I conclude with these words. Always at my age there is a prospect of any speech being the last—probably to the relief of some of your Lordships—though I hope not. But whether this be true or not, I want to finish on a note of complete confidence in the soundness and goodness of our people. We have had past troubles in war and peace. I would remind your Lordships what William Pitt said: There is scarcely anything around us but ruin and despair". I should like to remind your Lordships that Wilberforce, in the early 1800s, said that he dared not marry, the future was so dark and unsettled. I should like to remind your Lordships that the Duke of Wellington in 1851, on the eve of his death, thanked God he would be spared from seeing the consummation of ruin that is gathering about us". My Lords, each time the prophets of doom have been confounded, and years of industrial prosperity have dawned; and that, I feel certain, will be the case once again in this country.

5.46 p.m.

LORD SHINWELL

My Lords, I have no wish to follow the general trend of the speech to which we have just listened, but perhaps I might make one comment. It is with regard to the questions which the noble Lord, Lord Balfour of Inchrye, believes should be addressed to the right honourable gentleman the Leader of the Labour Opposition. It is not customary to ask questions of the Leader of the Opposition, or of the Opposition in general. Questions are usually addressed to the Government of the day, except in a General Election. When a General Election comes along in due course, no doubt the electors will have the opportunity of asking the Leader of the Opposition the questions to which the noble Lord has just referred. I can answer his questions, not that I can compare with the Leader of the Opposition in intellectual or even political stature. My answer to the first question—would I be in favour of Phase 3?—is that I am in a similar position to many prominent industrialists, and even the noble Lord, Lord Robbins, an eminent economist, who cast some doubts about the desirability of having stages or phases of any kind associated with an incomes policy.

As regards the second question which the noble Lord, Lord Balfour, thought should be addressed to the right honourable gentleman the Leader of the Opposition—is he in favour of the miners' strike?—it is not for anybody but the miners to decide what is the proper answer to that question. We have to concern ourselves with only one question, despite all the irrelevancies that some Members of your Lordships' House have indulged in their speeches this afternoon—inflation, the mistakes of various Governments, of course including the last Labour Government. Some Members of your Lordships' House, out of their vast knowledge, could turn themselves blue in the face asking all kinds of questions, pertinent and impertinent. They are all irrelevant to the vital and fundamental issue which should be the only subject of this debate: what are we going to do about this impending strike? That is the position.

If I may venture to say so, not a single speech, however eloquent—except in some respects the speech of my noble friend Lord Beswick who opened the debate and made some reference to it—would persuade the present Government to change course. This is the reality of the situation which confronts us and which we must not dismiss. Nor should we brush that aside or shrug our shoulders. That is the question we have to consider. If the speech of the noble Lord, Lord Carrington, who no doubt is engaged elsewhere on Government business—though I would not expect him to be present to listen to me, that would be asking too much—is any indication at all then instead of spending a lot of time he might have repeated what he said a few weeks ago. "No surrender". That is what he said. I remarked at the time that this was a surprising statement for a Minister to make when there were doubts whether a strike would develop at all and when the Government and others were engaged in delicate negotiations. The noble Lord, Lord Carrington said, "No surrender".

LORD MOYNE

My Lords, the noble Lord, Lord Carrington, is not here, but I did ask him whether he ever used those words and he said that never in his life had he used the words, "No surrender". It was the newspapers put them into his mouth.

LORD SHINWELL

All I can say to the noble Lord who seeks to disturb the thread of my discourse is that the noble Lord, Lord Carrington, when I ventured to make the remark in his presence, never challenged it. However, his speech was a clear indication. No surrender. That is the attitude of the Government. That is what we have to face this afternoon. All the fine highfalutin phrases about how to deal with inflation—we can all say a great deal about that subject. If I may say so with the utmost respect and good will, in the most inoffensive fashion, the last people this country should depend upon if it seeks a viable future are the economists. They are almost as bad as the Press.

This brings me to a very interesting leading article in the grandmother of national newspapers, The Times. I must be careful not to blot my copybook. I may not be asked to write an article. They have asked me before but I refused; I may not be asked again. Indeed I may not receive even a paragraph in the newspaper itself. They published a leading article this morning. The strike has not yet occurred, but they have it already—a General Election and all the questions that are going to be asked of the electors. In the leading article are a surprising number of these questions. One that interests me is where the electors ask the contending leaders, "Should we have gone into the EEC?" I could give an answer to that at once. We have enough disasters on our plate. I recall that the editor sought to win the Chester-le-Street division in Durham. He lost his deposit, so he became the editor of The Times. I am sorry to say that The Times appears to be in a state of decomposition. I say deliberately and emphatically, so far as political influence is concerned, influence on the electors, much less on the miners, it is dead but it cannot lie down. They can put that in their pipes and smoke it.

There is another newspaper, the Daily Telegraph. The only reason I read it every day—I have done so for years—is that because when I am dissatisfied about my own Party I turn to the Daily Telegraph and am immediately consoled. From the beginning of this conflict they have been venomous, vicious, splenetic, spiteful, as nasty as could be, condemning the miners outright; not a good word to say for them and sometimes not even a good word to say for the Government.

What are we going to do? What is the alternative to a strike? I should like an answer from the noble Lord who is going to wind up. What do the Government suggest? The answer is in The Times newspaper and in other newspapers; in the minds of many Conservative Members of Parliament, and no doubt in the minds of many Members of your Lordships' House—a General Election. "We will teach the miners! We will show them what we mean! We will stand no dam' nonsense from them! We have had enough of the militants and the moderates!"—sometimes they mix up the militants with the moderates; it suits their purpose—"No, we will teach them a lesson; we will have an Election." And then what happens? Will it produce any more coal? Will the situation improve?

That brings me back to a comment made by the noble Viscount, Lord Amory. It seemed to be an afterthought with him, something not contained in his notes. He suggested that even now, at this late stage, the Prime Minister might ask Mr. Wilson and the leaders of the political Parties, with perhaps some prominent people, to come and talk the matter over. Does he recall that in our December debate after my noble friend Lord Diamond had made an allusion to this subject I ventured to suggest that the Prime Minister should consult Mr. Wilson, Mr. Thorpe, the C.B.I., the T.U.C., some prominent Members of your Lordships' House who are engaged in industry, commerce and finance who have expertise at their disposal, and diagnose the complaint—not merely the question of the miners' impending strike but the economic financial complaint and then seek a solution, though I did not believe it was possible to get a complete solution. This idea is nothing new; but it is too late now, and I deplore it.

One other reference to that December debate: I said that in my experience, perhaps a longer experience of politics than any Member of your Lordships' House, seventy-odd years—though perhaps other members of your Lordships' House may subscribe to it—I have never experienced a crisis like this with all the potential dangers. I can remember crises before the First World War—vast industrial disputes. If it had not been for the outbreak of the 1914 war the country would have been engaged in a calamity of colossal magnitude. I remember, as many Members of your Lordships' House can recall, the crisis of 1931; but it was fundamentally a financial crisis. This is different.

I venture this opinion; and I hate to say it: I deplore the consequences of what I am about to say. If this strike takes place, if we cannot find some alternative before next week, I doubt whether for many years to come we can look forward to a viable economic future for this country. Already the prestige of this country has been weakened. We all know that and we deplore it. It has been weakened not merely because of this crisis but because of a succession of events for which various Governments have been responsible; and now we are faced with this situation. This would be a disaster which would be almost irreparable—irrevocable—no means of escape.

What are we to do about it? Have a General Election? One of the troubles is that there are too many Members of Parliament and too many members of the Press and too many leading articles which indicate preparedness—that is the term used in military circles—preparedness for events: obtaining the aid of volunteers, preparing the mechanism—lorries and all the rest. For what purpose? Is it civil war that we contemplate? How can we escape from this morass, this chasm?

I listened to the speech made by my noble friend Lord George-Brown. I noted that he was not too happy about the miners' demanding more in the way of wages, but I dismiss that. He made an eloquent appeal that the Government, even at this late stage, should do something about it. I understand the position of the Government; I have been in Government myself. It is a question of loss of face, but it would be far better for the Government to lose face than that we as a country should lose everything in the next few years. After all, it would not necessarily mean—and what I am going to say I mean earnestly and sincerely—that Mr. Heath would have to resign; it would not mean that we impugn his motives; it would not mean that he would appear to have less integrity and honesty than he possessed before. Not at all. It might well be that it would enhance his prestige if he were to say: "Well, I do not like this at all. I wish the miners had agreed with me and would have accepted Stage 3. I wish they would have helped me to counter inflation in the interests of our country. But in the circumstances I have to face facts. Let us be realistic and admit that we may have to give something away."

My revered noble colleague, Lord Butler of Saffron Walden—Rab Butler as I used to know him—spoke of politics being the art of the possible. It is sometimes essential for those in authority to compromise, to be resilient, to give way a little. I can assure noble Lords that if, even now, the Prime Minister were to declare that in the circumstances and for the salvation of our country, looking ahead at all the dire consequences that confront us, he would ask the miners to come along and negotiate again, something could be achieved. But what is the Prime Minister saying? He is complaining that the miners would not negotiate with him. But how was it possible for the miners to negotiate when he said, "I stand by Stage 3"—finish—the last word—point of no return. One cannot negotiate with a brick wall; with such an obstacle. Even now he should be resilient and give way a bit. I believe there are elements in the Cabinet who would be inclined to subscribe to that. It is a question of losing face. Some of the county members of the Conservative Party—the remnants of the old aristocracy—would say, "We can't have the Conservative Party and the Conservative Government giving way to the miners". No, they would rather have civil war.

A NOBLE LORD

Rubbish!

LORD SHINWELL

My Lords, I am not making an appeal to the Government because, after all, I do not count for much. I am just a Member of your Lordships' House; but I want this country to prosper just as much as any other Member of this House. I believe it can, although in the state we are now in it will take time and we may have to suffer. There has been some talk to-day about taxation. I was surprised when I heard the noble Lord, Lord Robbins, who ought to know better, say that the question of taxation had never been discussed by the Labour Party. Mr. Healey got into a great deal of trouble in the Labour Party for actually declaring that when we form a Government we should have to tax heavily. What a row he got into from the Press for saying that! Of course we may have to tax; we may have to do a lot of things we dislike doing. But rather do that, and do it as early as possible, than have to suffer this strike and all its consequences. But if we have to do it, let us do it quickly. Do not let us delay. I am not making an appeal; I am presenting the facts realistically. A General Election—and what? The end of the strike, and some hope.

6.7 p.m.

LORD GORE-BOOTH

My Lords; it is a great privilege to speak in this debate immediately after the noble Lord, Lord Shinwell, whom I regard in mining terms and from very much below, as a neighbour of mine, since my associations are with Yorkshire. I felt that at the climactic moment of his speech he was thinking along lines upon which many of us have thought, although I feel that the conclusion he arrived at is still a little difficult, for reasons to which I shall shortly return. Perhaps I might begin by saying that I find myself a little more in the mood of the noble Viscount, Lord Amory. Coming after the noble Lord, Lord George-Brown, I thought the noble Viscount was going scriptual and would say "After the earthquake, a still small voice". If I may say so, it was a most effective small voice, in the spirit in which a number of people have approached this debate, with the best intentions, even if those intentions have not quite lasted the quarter of an hour which the rest of the speech occupied.

In each of these debates we have to bring ourselves up to date in our thinking on the present emergency. I believe it is our duty—and here I find myself very much in agreement with the noble Lord, Lord Shinwell—not to shirk what we ought to try to do in the next day or two, because that is really what we are talking about. But we cannot quite reach the next day or two without putting a finger on a few events that have happened in the past two months, so with your Lordships' permission I will start with them and then I promise to arrive at this week.

First, may I be the exception to the rule and at least mention, in the prevailing gloom, a few of the positive things that have come out of the pressure of this emergency, and they are by no means small. For instance, the pressure of events since October has compelled the Government to accelerate the formation of a team to conduct a dynamic national energy policy. I think I am right in guessing that this might not have come so quickly had the crisis not come upon us first. Again, another most important acceleration which may yet have a bearing on our present troubles has been the publication of the Report on Relativities and on job evaluation. Again, a valuable point gained from this crisis.

Thirdly—and I was going to say it would be controversial, but I now need not say so because the noble Lord, Lord George-Brown, laid it on the line, as they say—and thanks to a number of speakers from this House, notably the noble Lord, Lord Chalfont, the question of the influence of people with extreme and dogmatic views on institutions in this country is now a matter of national debate. It has hitherto been too much suppressed by public apathy and the timidity of the media. Now it has come out; and one cannot ask for more than that, because public debate means awareness. When one is aware, one reads what some of these people say, and then, although I say it with slight regret, one cannot be quite so naive about it as my good friend, the noble Lord, Lord Beswick, was in his speech.

Those are some of the things we have gained; but there are very sad sides to this situation. One very sad side, to my mind, was this. In a previous speech I ventured to allude to psychological moments when trade union leadership has to decide: "Yes, some time, but not now". This moment was missed in October when the overtime ban was decided on. I fear very much that the decision to go ahead with industrial action came at the worst possible moment in the history of the mining industry. It came at a moment when Arab action over oil gave the coalmining industry a sudden great prospect, not simply of modernisation but even of expansion. If the National Union of Mineworkers could have refrained from action at that time I have a feeling that planning would have gone ahead very much in that direction. Now, any expert and any investor must hesitate about that in a way he would not have done a few months before. I am afraid that is the development brought about by the decision of the miners' leadership.

My Lords, perhaps I should say that, if I am going to criticise the National Union of Mineworkers, I am also, in my Cross-Bench capacity, going to criticise the other side. I say that simply to anticipate any fear that I may be wholly partial in this matter. The other and, I fear, rather important mistake that I must impute to the miners' leadership is this. The noble Lord, Lord Shinwell, said the Government had nothing to offer; but I think one has to ask, in reference to that, whether, if a trade union say it simply will not go to Downing Street unless it is offered some money, this is not somewhat confusing the roles of the trade unions and the Head of Government. I would have thought—but perhaps I am old-fashioned or radical—that if one is invited to No. 10, one goes to No. 10, even if for only 10 minutes. I also think that what was being demanded is something more than just a little money. What was in fact being demanded was that the Government should go back on a law which it had initiated, and which Parliament has passed, and should pay the National Union of Mineworkers something additional in advance. I cannot see that that is in the right proportions in the relations between any institution and national Government. So I fear some serious mistakes have been made there, and I can only express the hope that even in these remaining few days some of this could be re-thought. I shall come back to that in a moment.

My Lords, I have spoken of tensions that have arisen from that side and, chosing my words as carefully as I can, I must now express my agreement with a line taken very forcefully by the noble Lord, Lord Balfour of Inchrye, and I will trace it to a particular moment, though the individual Member of the Government I mention I am not in any way seeking to attack as a person. But there must have been a great many people all over this country who were shocked when, after the first T.U.C. meeting with the Prime Minister and his colleagues at No. 10, the Chancellor of the Exchequer, with a brevity that seemed to me, over the television, to amount to asperity, simply told us the T.U.C. initiative was no good. It seemed to me that in taking this initiative the T.U.C. were taking a considerable risk in respect of principles they had upheld in opposition to Stage 3, in opposition to the Industrial Relations Bill, and many other things, by making this offer. It must have been quite an effort for them to do that. No doubt the offer as made on that particular afternoon was insufficient, but surely, with a proper feeling of proportion, the Government should at least have publicly paid respects and compliments to the T.U.C. for taking that very important initiative.

I feel that in too many cases the Government have missed opportunities of that kind. The Romans had a word for it. I apologise once again for quoting Latin in your Lordships' House, but the Romans had an eloquent kind of shorthand for these occasions; and for this occasion they said, "suaviter in modo, fortiter in re," which means "Let your manner be gentle, but be strong in purpose." By all means be strong in purpose, and the Government have had to be, but for goodness sake cannot one be a little more suave and more gentle in manner?—because this affects not simply people like the T.U.C. to whom you are speaking, but it rebounds throughout the country.

My Lords, what should we do now? There are a number of suggestions that have appeared in the Press. For instance, there is Dr. Kaldor's suggestion that perhaps industry might be able to make a once-for-all contribution to the situation. There has been the suggestion by Mr. Maudling that it might be possible to arrive at a situation in which the vast majority of trade unions had accepted not as doctrine, but in fact, settlements under Stage 3; and the Government need have no fear then of treating the miners as a real and financial exception. And then there are all the ideas that have been expressed, first by the noble Lord, Lord Diamond, that at least the public would be reassured if political leaders could meet, not to reach an agreement, not even perhaps to issue a communique, but at least to re-establish the rules of the game so that some of the tactics to which many people have objected during the last months could be ruled either legitimate or out of court.

My Lords, if I may also turn to the matter of method—perhaps your Lordships may find this a little too reminscent of my profession—there is a great deal to discuss. Could not some way be arranged in order that some of these matters could be discussed by people who are directly interested, but in something of an atmosphere of quiet diplomacy? I cannot believe the principals give themselves a chance if they meet for a long, long time, and we do not know what happens. We assume they discuss things seriously, and then they come out of No. 10 and fall, hook, line and sinker, straight into the trap of the television camera, and have to make on the spot the kind of commitment from which they cannot subsequently escape.

All these things, I entirely agree, are a little fragmentary; they do not decide anything, but I hope I have at least suggested that there are things that are worth discussing. Where I do not quite agree with the noble Lord, Lord Shinwell, is in saying flatly, "The Government must give way". In all these things there has to be a little give on both sides, because both sides have face to win, and face to lose. Whether we are still in the position in which that can still be done I do not know, but at least I have the temerity to suggest it is still possible.

My Lords, I have two more points. In this situation I should like to make this something of an appeal. We need more help from the media. Yesterday I happened to see the 5.45 B.B.C. Television News. In fairness, I will say that Mr. Ezra and members of the Government have been spoken to since. The B.B.C. advanced on Mr. Gormley and asked the wrong question. They asked who was going to be hit first and how quickly these people would be hit. Surely the one question which the whole country was wanting Mr. Gormley to be asked was, "Given all the damage and the suffering that this is going to cause to industry, to other groups of people, to the community as a whole, including miners' wives, are you sure you have to do this?" Mr. Gormley knows the answer, but surely that should have been the question. I think that in these ways our media have to consider very carefully exactly how they express themselves. We want to be told the whole truth, but we do not want to be gloated over.

Finally, my other motive for intervening in this debate is simply that I think one consideration has been left out in all the talk we have had about mining as a profession. The noble Lord, Lord Blyton, and the noble Lord, Lord Taylor of Mansfield, have spoken about the dirt, dust and danger in the mines, all of which is true. But I do not think anybody has mentioned, and I have some pride and pleasure in mentioning it, that one of the great characteristics of that profession is its dignity. The dignity of labour among mining people is something very exceptional, and something of which they are rightly proud. I think the reason why all of us hate the present situation is that we feel that that dignity has not been upheld, and we should like to see it restored. But we would like to see all this happen before not only the miners' lamps but also all the other lamps go out.

6.22 p.m.

LORD CHALFONT

My Lords, may I begin by apologising, and especially to my noble friend the Leader of the Opposition and to the noble Earl, Lord Gowrie, if I have to be absent for some of the later stages of this debate. It is for a very cogent reason. I have not done this before in your Lordships' House and I hope I shall not do it again. But I felt that this debate was so important that I hoped your Lordships would understand if I took part in the debate even though I cannot be present for the whole of it.

This, as many other noble Lords have said, is no time for polemics or abrasive criticism. I have made no secret of my belief that in this crisis the very processes of democratic government are in peril. I had not intended to dwell on this factor in this particular debate, but my noble friend Lord Beswick, in his opening speech to-day, has referred with some asperity to those who have been concerned with pointing out the dangers of extremism, and particularly Left Wing extremism in this country. As I am one of those who, as the noble Lord, Lord Gore-Booth, has said in his characteristically thoughtful speech, has been associated with pointing out this danger, perhaps I may say that I do not believe that the moderates in the trade unions, and particularly in the National Union of Mineworkers, are the dupes of these extremists. I believe they are people of too much common sense and too much intelligence for any of us to be as simplistic as that. What I do say is that these extremists exist and that their aims are clear. It may suit some people and amuse others to talk of "reds under the bed".

The noble Lord, Lord Beswick, has said that this alleged campaign has done more to alienate moderate opinion than anything else. I take leave to doubt that statement. But I would make another and it is this, that those who pretend that this threat does not exist do a great disservice not only to the moderates but to this nation as a whole. If we have a miners' strike, if in the long run there turns out to be no way of avoiding it, I can assure your Lordships that there will be not much doubt left in the minds of many after a short while that militants and extremists do exist in our society, and they will use every means, not short of violence, to exploit the industrial unrest for their own political ends.

But to-day I want to make a few brief comments of what I hope will be regarded as a more constructive kind. The noble Lord, Lord Shinwell, in his typically robust and fighting speech, said that what we must all be concerned with now is what we do about the current problem. Of course he is right. I should like to make three points. First, I would endorse the proposal which has been made by Lord Shinwell, by the noble Viscount, Lord Amory, by the noble Lord, Lord Diamond, in a previous speech in this House, by the noble Lord, Lord Gore-Booth, and many others, even at this late hour, that the political Parties might get together to diagnose the problem and see whether they cannot reach some joint solution to it.

There is talk now, with what authority I know not, that we are about to enter a General Election campaign, with all that that means in the way of political bitterness, divisive attitudes and the slanging matches of a characteristic General Election campaign. And this at a time when we should be uniting in our attitudes and our approach to this problem, and not creating more and bitter and perhaps lasting divisions in our society. There are ideas, like, for example, the Relativities Report, which offer some hopes of order and sanity in our pay structure and industrial affairs in the long term. A General Election is not going to solve any of these basic problems. Whoever is returned as a result of that General Election is going to be faced with the same problems and will have the same appalling difficulty in solving them. It seems to me that we should be talking now not of General Elections and of getting at each other's throats, but of getting together to see whether together we can find a way out of what threatens to be a terrible and perhaps irretrievable disaster for this country.

Secondly, I should like to endorse something the noble Lord, Lord Gore-Booth, has referred to, the need for a better system, a better way, a better manner of explaining policies and problems to the people of this country. They are intelligent people, the most politically intelligent people in the world, and they deserve to have policies and problems explained to them calmly, courteously and lucidly. Ignorance is the ally of confusion and it is the breeding ground of oppression. I believe that whichever Party is in power in this country in the immediate future it will need to look closely at the machinery which it uses to acquaint the people of the country with its decisions and the reasons for them. I believe that if one criticism more than any other can be levelled at the present Government it is that they have failed almost totally to explain to the people of the country what this crisis is about and how they are proposing to deal with it.

For my third point I want to suggest that in the solution of this immediate crisis there might be a larger role for organised industry, for that side of industry which is commonly referred to as the C.B.I. It is a pity, I think, that for many people in this country the endorsement of an idea by Professor Kaldor is regarded as the kiss of death. I think this is a shame, because I believe that in his recent letter to The Times there was the germ of an idea which might yet be important in the immediate solution of this problem. In my view, inflexible negotiating techniques on both sides of this dispute have led to this implacable confrontation. The noble Lord, Lord Gore-Booth, referred to the practices and uses of diplomacy. He will know, and many of your Lordships will know, that one of the first rules of negotiation is always to leave the person with whom you are negotiating room for manoeuvre; do not pen him or yourself into a corner. This is, of course, what has been done.

I do not wish at this stage to go into any details of how organised industry might find a way of helping the Government and the trade unions out of the impasse in which they find themselves. I would simply point out that I think that we are talking in terms of a gap over a period of a year—the gap between what the miners are prepared to accept, and what the Government are prepared to offer under Phase 3—of something of the order of between £50 million and £100 million. The net before tax profits of the thousand largest firms in this country is of the order of £7,000 million a year. Suppose that we agree that the immediate problem is to tide us over the next three months until long-term policies can come into effect; we are talking about one-quarter of 1 per cent. of net before tax profits of the thousand greatest companies in this country.

It is for that sum that it seems to be proposed that the country should be plunged into a strike, and possibly into a General Election, and into the kind of division in our society which may do lasting damage to the whole democratic system to which we all subscribe and of which we are all, so rightly, proud. I will say no more about that, except to express the hope that if the C.B.I. should make some proposition to the Government, I hope that the Government and the miners will examine it with care and with sympathy. There has been too much inflexibility and too much intransigence. I believe that there is still time to put that right. I believe that the good sense and the moderation of the great bulk of the people of this country will, in the end, prevail. Whether it will prevail before too much damage is done is another question.

I should like to end, as the noble Lord, Lord Gore-Booth, ended, on a note which is more directly relevant to the actual business, profession, occupation of mining coal. The noble Lord, Lord Beswick, spoke of growing up in a mining community. I too grew up in a mining community in a mining valley in South Wales. Whatever strictures may be directed at anyone, I have not forgotten the roots from which I came. I have not forgotten some of the bitterest experiences of my childhood. I have not forgotten walking through an almost silent village in a South Wales mining valley and seeing knots of silent, hopeless and desperate men on the street corners. I know what a coal miners' strike is like from the inside, and I know what a general strike is like from the inside. I was very young at the time, but these are memories that never fade.

Perhaps if my eloquence is not enough to paint the picture of what a general strike means to the ordinary people of this country, noble Lords might wish to be reminded of an essay which George Orwell wrote many years ago in The Road to Wigan Pier. It is called "Down the Mine", and it is one of the most moving and vivid descriptions of the occupation of mining coal that I have ever read, and that anyone else could ever read. With your Lordships' permission, I should like to quote simply from the few words at the end of the essay called "Down the Mine". Orwell says: In a way it is even humiliating to watch coal-miners working. It raises in you a momentary doubt about your own status as an intellectual ' and a superior person generally. For it is brought home to you, at least while you are watching, that it is only because miners sweat their guts out that superior persons can remain superior. You and I and the editor of the Times Lit. Supp., and the poets and the Archbishop of Canterbury and Comrade X, author of Marxism for Infants—all of us really owe the comparative decency of our lives to poor drudges underground, blackened to the eyes, with their throats full of coal dust, driving their shovels forward with arms and belly muscles of steel. That is as true and as apposite now as it was when Orwell wrote it in 1937. The miners are an integral, essential and vital part of the economy of this country, but if we cannot solve their real problems—and these are not imagined problems—the whole of this country is going to suffer, and suffer bitterly, and with the rest of this country the miners will suffer too, because they cannot be separated from the rest of the community.

I hope that, in spite of what has been said by some noble Lords, it is not too late; that it is not too late for all Parties, and both sides of industry, to get together and, as the noble Lord, Lord Shinwell, has said, to examine the problem, diagnose it, and together attempt to solve it. This is no time to concern ourselves with prestige—Party prestige, personal prestige, with face or self-esteem. I believe that if we do not get together we shall be embarking next week on a path that will lead to disaster. But I believe that there is still time in the few days that remain to us. A noble colleague has said to me tonight that we are not at the eleventh hour, we are at the eleventh hour and fifty-ninth minute, but it may be that in the short time that is left there will be enough men of vision in all three Parties, and in both sides of industry, to take the one single step that might, in the end, avert disaster for us all.

6.36 p.m.

LORD COLERAINE

My Lords, there is very little in the speech of the noble Lord, Lord Chalfont, with which I would disagree. Like others of your Lordships I was very much moved by his childhood recollections in the Welsh mining valley. Indeed, people like myself, who sat for industrial constituencies throughout the 1930s, have the same bitter memories of the hopeless young and middle-aged men standing at street corners, leaning against walls, looking into space. I am sure that all of us on this side of the House value the work the miners do. The noble Lord read out the passage from George Orwell, and I would not dissent from it. But I would say that the same could be said about other classes of the community—trawlermen, for example, whom I represented, to the best of my ability, in another place—upon whom "superior persons" like the noble Lord and myself equally depend.

As the noble Lord, Lord George-Brown, was speaking. I reflected, not for the first time, that the House of Lords is like unto the Kingdom of Heaven by comparison with another place. Like the Kingdom of Heaven, it contains many mansions. There is room in it for the Hyde Park Corner speaker, as the noble Lord, Lord George-Brown, was at moments, and there is room in it for the professor of economics, delivering with the most timely and phenomenal clarity an exposition of a most complicated theme. Why the noble Lord, Lord George-Brown, should have thought that it was inappropriate to discuss economic theory in a debate which hinges largely on inflation, I cannot understand. Perhaps one day he will explain it to me.

Every speaker in this debate has realised the seriousness of the times. Most have said that never in peace time have we been in such a critical situation. For my own part, I believe that we have never been in such a critical situation, because in war time, whatever the dangers may have been, we were one people; and the real danger facing us to-day is that we are no longer one people. Some six or seven months ago, a very distinguished and intelligent European observer, Mr. Arthur Koestler (I am not sure whether or not he is now British) addressed the British Academy. He said: At the end of the war, Britain was at a height of influence in Europe which had never been surpassed. Within 20 years that influence had been all but whittled away. He went on to say: Seen through continental eyes, the Englishman's proverbial castle is crumbling with dry rot. That was said last June. I do not know what Mr. Koestler would have to say to-day.

Why has all this happened? There was a time when we could say that we were exhausted by our war effort, but surely we have recovered from that by now. There was a time when we felt, rather stupidly, that we had done so much for the world that the world owed us a living. We must by now be disillusioned of that. It is true that we are lazy. It is true that we have had trade disputes. But we have always been lazy and we have always had trade disputes. The real cause of this dry rot, this fungus, is a disease, insidious, progressive and, if it is allowed to take its course, invariably fatal; and that disease is called "inflation". I do not think that there is a Party in this House which is entitled to throw stones at the other on that score.

As the noble Lord, Lord Robbins, reminded us, there was a time when we accepted, quite happily, inflation of 1½, 2 or 2½ per cent. It was rather agreeable. It lubricated the wheels of industry on its onward path. But to-day we have inflation on a scale which ten years ago none of us would have even dreamed of, and if we had dreamed of it we would have taken very good care to wake up a great deal sooner than we did. I do not blame our present difficulties upon the present Government. By the time they came into office, inflation had gathered such momentum that it was very difficult to resist. It seemed to be like a vast Boeing aeroplane driving down the runway at increasing speed until it reached the point at which we are now, where it either came to the end of the runway or became airborne.

I do not blame the Government for what has happened, but I do blame them for what I believe to be their lack of understanding of the inflationary process and for their faulty diagnosis. Like others of your Lordships, I have listened to and read pronouncement after pronouncement by Ministers on the fight against inflation: what a stern battle it was; how important it was to win it! But all these clarion calls, all these calls to arms, inevitably boil down to this one proposition; that inflation is caused by rising prices, and rising prices are caused by excessive wage demands and the wickedness and selfishness of profiteers and speculators. That, my Lords, is simply not true. No one knows better than the noble Lord, Lord Robbins, that I am no economist, but I think he will probably bear me out. It is inflation that produces these things. It produces the rising prices; it produces the excessive wage demands, and it produces all the evils with which, unhappily, we have been living for the past few years. I do not believe that the Government under-stand that, even to-day.

My noble friend Lord Carrington indicated that the Government had been faced with a choice between, on the one hand, the policies of deflation which produced the 'thirties, and, on the other the policies of growth which they have pursued and which have so greatly contributed to inflation to-day. But I do not believe that the choice was anything like so stark as that. The Prime Minister, speaking in Birmingham last week, said that some advisers had recommended that massive unemployment would be a check upon the intransigence of the trade unions. I think he was understood to have been referring to Mr. Enoch Powell; but Mr. Powell has never, so far as I know, advanced any such proposition. What Mr. Powell has argued is that there is no painless escape from inflation; and anyone who has thought seriously about the subject must agree. The real charge that can be levied against successive Governments is that they have pretended to themselves, pretended to the public and pretended to the voter that there is some painless escape. I do not believe that such an escape exists, and I think we are all beginning to understand that fact.

In the early part of his speech, the noble Lord, Lord Chalfont, said that he feared greatly for the Parliamentary process, or the democratic process. I fear greatly, too, and for this reason. Parliament traditionally exists on Party conflict, upon the one side persuading the voter that its policy is better than the policy of the other side. In ordinary things that system is well and good, and it has worked very well. But when it is a question of dealing with the problem of inflation the situation takes on a very different complexion, because you have one Party trying to persuade the voter that it has a painless solution while the other Party has not, and vice versa. I do not know how you are going to get over that dilemma, I do not see how Parliamentary government can deal with that kind of situation, unless, it may be, by some kind of Coalition or some kind of suspension of normal Party activity.

I remember, 34 years ago almost to the day, rising from my obscure seat in another place, facing the Prime Minister of the day and saying, in the House and to his face, that I did not believe that unity could be achieved under his leadership. As noble Lords may realise, I was not a very popular figure To-day, 34 years later, I ask myself the same question: can the necessary unity be achieved under the leadership of the present Prime Minister? It is not that he is not a man of integrity: he is a man of great integrity. It is not that he is not a man of courage: he is a man of great courage. He has pertinacity. If there is any quality he lacks, I think it is antennae. But he is a good man; and he is doing, and has done, his best. But because of the history of the past four years I have the feeling that he represents in his own person an obstacle to the unity which we must have.

My Lords, what is it that has made us a great people? It is, I think, on the whole, that the rich man in his castle and the poor man at his gate—every section of the community, of the people—have realised that they are members of one another. That is the feeling which, somehow, we seem to have lost; and that is the feeling which, if we are to be saved, we have got to recover.

6.54 p.m.

LORD KAHN

My Lords, I. too, have to apologise, especially to the noble Earl, Lord Gowrie, and to the noble Lord, Lord Shackleton, because I shall probably have to leave the Chamber before the end of the debate. Tomorrow's locomotive drivers' strike in the Eastern Region and an important college meeting early tomorrow morning make it imperative for me to catch an early train back to Cambridge.

I find it very difficult to believe that the Government are really admitting that the situation is completely out of control. How it would help to submit the situation to the electorate I, as the noble Lord, Lord Shinwell, and the noble Lord, Lord Chalfont, fail to see. Even if the Government did get back, what additional powers would they have gained? Meanwhile, valuable time would have been lost, with the economic position deteriorating at a disastrous rate. There is no need for me to devote time to emphasising the catastrophic damage to the country's economy that would result from a protracted miners' strike.

My Lords, I am one of those Members of your Lordships' House who has consistently praised the Government for their courage in carrying out a real counter-inflation policy based on Statute, and in doing so renouncing their deeply held beliefs. I entirely agree that it would be disastrous if the counter-inflation policy were undermined. If better relations with the leaders of the T.U.C. and the N.U.M. could be restored, it should be possible to demonstrate that the miners, more, perhaps, than any other sector of society in this country, are going to benefit enormously from the preservation of the fabric of the counter-inflation policy. In saying that, I am well aware that the Government have tried very hard to deploy that argument.

Before I come to my constructive proposal, I wish to say a few words on this question of relations with the leaders of the T.U.C. and the N.U.M. I am fully conscious that the leaders of the Government have, on the whole, exercised considerable patience and devoted much thought and time to cultivating good relations with the trade unions, though I agree with the criticism made by the noble Lord, Lord Gore-Booth. The leaders of the Government complain that the miners' leaders are refusing to enter into discussions, but it must be recalled that there has not been very much to discuss with them. It was unfortunate that the opening offer of the National Coal Board was the maximum that could be offered within the bounds of Stage 3. It left nothing to negotiate about. An unfortunate diversion was caused by the suggestion that something might be done about part of the time spent by underground workers at the pithead. The final rejection of that idea must have caused bitterness.

It is very unfortunate that the Pay Board's Report on Relativities became available so late. It had been expected by the end of 1973, but it was not signed until January 19. While it need not take much time to establish the machinery proposed in the Report, the body to which the responsibility is given, whether it is the Pay Board or some other body, will need time to establish general principles—which were not arrived at in the Report of the Pay Board—before it can get down to the particular problem of miners' pay.

The upshot of last Monday's meeting between leaders of the Government and leaders of the T.U.C. is a bitter disappointment. The serious issues of to-day are too pressing for a post-mortem to be useful at the moment, but there is one particular phase in the negotiations to which I draw the Government's attention, because I feel that if the leaders of the Government were to reflect on it they might find that it helped to explain the bad relations which have developed with the leaders of the T.U.C. In my pocket diary there is an entry, made at that time, for Monday, January 14. It reads, written in red ink: "Government rot sets in'. The Pay Board's Report on Relativities had not yet been signed. As I have said, it was signed on January 19. Had the activities of the week beginning January 14 been postponed by one or, perhaps better still, by two weeks, the position to-day might have been entirely different.

In the week beginning January 14 there were two long meetings between the leaders of the Government and the members of the T.U.C.; one lasting I think for five and a half hours and one for three hours. Between those meetings, the leaders of the T.U.C. held a meeting with the leaders of most of the trade unions. On paper, and no doubt orally too, the trade union leaders were not prepared to concede more than that if an exceptional increase outside the bounds of Stage 3 were granted to the miners, they would not quote it in evidence in pressing any claim that they were putting forward. It is difficult to see how the trade union movement could have gone further than that. While no doubt continuing formally to oppose an incomes policy in general and Stage 3 in particular, their offer makes sense only within the context of a statutory incomes policy and of Stage 3, and it implied that it was in the general interest to maintain the fabric of a statutory incomes policy and Stage 3 notwithstanding a further concession to the miners.

The Government asked for a guarantee that was variously described either as "cast iron" or "copper bottomed", that no leader of the trade unions would put in a claim outside the bounds of Stage 3. Well, my Lords, one very important claim had already been put in. It is well outside the bounds of Stage 3. But it is fairly clear that the leaders of the union concerned will feel that they have done very well if they secure a settlement within, but close to, the bounds of Stage 3. Union leaders recognise the financial difficulties of many employers at the present time and this knowledge is curbing their negotiating enthusiasm. I suggest that in asking for a guarantee that was cast iron or copper bottomed the Government must have known that the T.U.C. Executive exercises no legal authority over its members and is not in a position to give such a guarantee. Nevertheless, I think it can be inferred from the proceedings of the fateful week to which I am referring that the trade union movement, in effect, regard the miners as constituting quite an exceptional case. It is on that basis, my Lords, that I put forward my proposal.

My suggestion is that under Section 2(1) of the Counter-Inflation Act 1973, an Order be made amending the Counter-Inflation (Prices and Pay Code (No. 2) Order 1973 in such a way as to make it possible for the Pay Board to approve for the coal mining industry, and only for that industry, an increase of the average pay bill by a certain percentage, which I will refer to as X, in addition to the maximum increase which can be granted under the main Order in its present form. Such an amending Order would be subject to Affirmative Resolution. It could not be made until after consultation with representatives of the consumers, persons experienced in the supply of goods or services, employers and employees; and, no doubt, the leaders of the C.B.I. and the T.U.C. and other persons, and also the Pay Board and the Price Commission. It sounds a rather formidable list, but I do not see why such consultation need take up more than a few days.

The magnitude of X might be negotiated between the Government, the T.U.C., the C.B.I., the N.U.M. and the National Coal Board. Once the Government accepted the principle of such an amendment to the Order it could be reasonably said that there was cash on the table, and this would constitute a perfectly good reason for the leaders of the National Union of Miners to enter into discussions. Alternatively, the Government might think it preferable, without consultation, to name a figure which they would be prepared to stick to. I do not feel competent to judge between these two alternatives. I have a figure in mind, my Lords, but I feel that it would be wiser not to mention it. I want to say that I believe the figure should concede for the miners rather less than they are claiming. In addition, after this procedure has been concluded there might, or might not, be a further increase in miners' pay as the outcome of the operations of the relativities machinery. I humbly, but very earnestly, commend my proposal to the immediate attention of Her Majesty's Government.

7.7 p.m.

LORD ROCHESTER

My Lords, I have little to say and I shall be brief. It is when our country is in danger that we most feel the need to draw together. I am sure it is the instinctive recognition of that need which has caused so many of your Lordships, first in the debate in this House on economic policy before Christmas, in the interval between then and now, and again in the debate to-day, to try to devise a common ground on which we could build together in seeking a solution to our present terrible problem. I continue to believe that the current dispute should be settled within the limits of the incomes policy approved by Parliament. This is not to deny the miners their due reward. It is because, in my view, at the present stage of our development—and I listened carefully to what was said by the noble Lord, Lord Robbins, who is a much greater economist than ever I shall be—that policy is all that stands between us and either uncontrolled inflation or deflation and intolerable unemployment.

If now the miners are given more money than is permitted under Stage 3, without at the same time ensuring that such an award is related in a rational way, and under a procedure which is applicable right across the board, to the pay of other powerful groups of workers, I fear that it will be seen as a surrender to industrial force and a defeat for Parliamentary authority. The correct conclusions will be drawn by the miners themselves when their next pay claim is submitted in a few months' time, and by other strong unions when opportunities arise.

Having said that, I nevertheless believe that a great responsibility rests now on the Government, on the C.B.I., on the T.U.C. in general and on the National Union of Mineworkers in particular, to see even now whether a strike may be averted and, de facto at least, an incomes policy preserved—for, as has been said, we all have to go on living together and sooner or later a settlement will have to be reached in this dispute. The question therefore which we should continue to ask ourselves right up to Saturday night (and, if necessary, afterwards) is not, "What are our differences?"—but, "How can we help each other and what is the common ground on which we can try to build together?" It is with that in mind that I should like to support the suggestion put forward by the noble Viscount, Lord Amory, and other speakers to-day, that the three Party leaders should meet together on an informal and privileged basis to share information which they may now be withholding from one another, and in this way to see whether even at this last hour some means can be found of reconciling the need of the miners to see more money on the table, as they put it, and the need of the community for an incomes policy to be preserved.

I should also like to support the suggestion made by my noble friend Lady Seear and taken up, again, by the noble Viscount, Lord Amory, that the Secretary of State, under paragraph 61 of the Pay Board's Relativities Report—which we must remember is concerned with the treatment of relativities within Stage 3; and it is those three words which I think need to be emphasised—should himself take action in selecting the miners' case as the first to be examined for special treatment. The Pay Board in their Report, understandably, say that it would be advantageous if the C.B.I. and the T.U.C. were associated with the selection process; but they also say that the Secretary of State should be free to select cases for consideration on the grounds of national interest. The body making the examination should presumably be the Pay Board, because it already exists, and, as the Report says, this would ensure consistency and coherence in the operation of the wages policy. I believe it should now be appointed by the Secretary of State as the examining authority and should then simply go ahead and examine the miners' case in depth and in public, as the Report itself recommends. This should be done with the greatest urgency, so that the Board may report its findings to the Secretary of State and the Secretary of State should then make his decision. The Pay Code could be amended and the Secretary of State should issue a specific directive providing for an increase beyond the pay limit.

All these measures are in conformity with the Report of the Pay Board. It is true that this would not immediately put more money on the table, but that could be soon done. All would be done within Stage 3, and account would be taken of the position of miners relative to other groups. Even if the miners go on strike this week-end, there is no reason why they should not give evidence to the examining body, particularly if that body took the form initially of a Royal Commission. If they refuse to do so, that would be disadvantageous, but no more. Evidence could still be given by the Coal Board, and other unions would have the incentive to give evidence on their own behalf if they felt that their interests might be adversely affected by the outcome of the examination of the miners' case. I hope, my Lords, that the Government will give consideration to this suggestion and that it may yet prove to be, in the words of the Book of Common Prayer, a way of finding "a happy issue out of all our afflictions".

7.16 p.m.

LORD BROWN

My Lords, I must apologise for absenting myself from the middle section of this debate, but I had a public engagement which I could not "duck out" of. I begin by declaring my position by making the statement that I believe the Prime Minister's refusal to the T.U.C. offer was the biggest political "clanger" of the century. I have listened on two occasions to Party spokesmen from the Liberal Benches saying, "We must support the law"—and then proceeding to appeal to the Government to change the law. I can see very little psychological difference between accepting the T.U.C. assurance and giving the miners an exception to Phase 3 as it stands, and, on the other hand, seeking to give the miners what would settle the issue by going into details to change the law. Psychologically, there is no difference between the two things at all. Both represent a loss of face for the Prime Minister which, in his maturity, he really ought to be able to face in the interests of the nation as a whole.

However, I should like to move on to longer-term issues. I believe that, unrealised by most of the people in this country, we are facing a constitutional crisis. Phase 3 can go on for some months more, followed by Phase 4; but this is a way of dealing with wage differentials which cannot endure for the rest of time. We are faced with the existence of power groups in society; and if we have power groups in society which have no constitutional means of making their power felt so as to achieve better conditions, or whatever it may be, then they will use disruption. This has been the lesson of history.

Let me go back into history for a moment. After the Napoleonic Wars, there were newly emerging power groups in society which were not represented in our legislature. The cities of Birmingham and Manchester, for example, had no representatives at all in the House of Commons. The Whigs at that time proposed reform, and it is one of the disgraces of this House that the Conservatives, led by the Duke of Wellington, held up that Reform Bill for two years. But eventually it was passed, to the distress of the Conservative Party, who believed they were handing over the British Empire to the grocers of England, or something of the kind. But the disruption and bloodshed which preceded that Act faded out; and if you look at the 19th century you will find it a story of English-I speak as a Scotsman—genius for arranging evolution as against revolution. It was a series of Reform Acts which extended the franchise of the emerging power groups in society—and indeed this has gone on into the present century, because women gained the vote by proving that they too could make infernal nuisances of themselves. Indeed, I believe that the Labour Government, when they gave the vote to 18-year-olds five years ago, were influenced, perhaps unconsciously, by a similar appreciation of the growing power of the teenager.

To-day, one cannot so easily enfranchise the existing power groups, the trade unions: there is no question of extending a vote to them. These are citizens in their occupational roles and we have no such thing as occupational constituencies in the formal sense. I believe it is absolutely essential that we should go in for constitutional change. I am not alone in this: no less a man than Winston Churchill, in his Romane lectures in the 1930s, proposed that there should be a third House of Parliament, a House of Industry. I did not agree, and I do not agree now, with the proposals, because they involve employers and trade union representatives who were to be appointed and not elected. Nevertheless, the germ was there and L. S. Amery was writing on the same theme in those days.

We seem to have forgotten the thoughts that were occurring then. I believe that we have to bring these power groups within the Constitution, because they will not just go away. They are there; and they are going to use disruptive power to get increases of wages when they feel like it. If we set the scene where this is to happen, the underlying determinant of behaviour in the employment zone of industry is that in every type of occupation in industry, however small or powerless, the imperative is for them to form a trade union, to become as powerful as possible and engage in the fight to preserve the standard of living of that particular occupation. That is what faces us in the future; and, incidentally, it faces every industrialised country. They will come to this malady very rapidly. We happen to be in an advanced stage of it.

So I propose a great social bargain. I propose that some Government—probably not the present one—should set out the terms of the bargain on their side. I will not go into details because they have already been discussed in society a great deal. It would involve a much fairer deal for the lower income groups of this country; it would involve a better deal for the pensioners, putting the land speculators and those who speculate in commodities in their place. It would involve putting individual people who exercise great economic power in their place. There is no place today in our society for people who can buy up twenty companies a year and close half of them down without thought for those whom they are displacing. It would involve taxation of inter vivos gifts to distribute wealth better. I am not going through the whole catalogue, but I believe that our society generally—I am not talking only about lower income groups; and this is especially true of the middle classes—is realising that unless we create a fairer society we are in for the gravest possible trouble in the future.

What is the other side of the bargain on the side of the T.U.C.? The T.U.C. should accept the establishment of an entirely new institution. I call it the National Council for the Regulation of Differential Wages. On it should sit representatives of every trade union in the country. Parliament each year should decide by what amount the national wage bill is to be increased—maybe it will be 5 per cent. or 6 per cent. A great political debate should take place at the time of the national Budget but it is the missing factor from every Chancellor's national Budget. He bases predictions on an assumption about the rate of rise of wages, but he does not disclose it. The 6 per cent., or whatever it might be, would be put at the disposal of the new National Council for the Regulation of Differential Wages.

I have been lecturing all over the country on this Council—I call it the N.C.R.D. They should be empowered to decide how much of that wage cake should go to the different employment groups in the country. And by "employment groups" I mean the Civil Service, the Health Service, the engineering industry, chemical industry, docks and railways, and so on. The N.C.R.D. should award differential percentages to those groups in the light of their intuitive assessment of what was a fair distribution, and they should do it by unanimous vote. If they could not agree in the one year allotted to them in which they had to agree this tortuous subject, wages should be frozen until they did agree. Their agreement should be a recommendation to Parliament which Parliament could either accept or reject. If Parliament accepted the recommendation, it would make it law. It would then become obligatory upon every employer to pay the given percentage to every one of his employees on top of their existing wages or salaries.

If people struck against these N.C.R.D. differential awards there would be sanctions. The sanctions would be deprivation of strike pay—it would be illegal for a trade union to pay strike pay or for an employer to pay income tax refunds or back pay until the employees had returned to work. These strikes would not be against the employer because the employer would be completely absent from the body that I am proposing. Employers have never had an insight into or interest in national differential pay.

LORD BESWICK

My Lords, I am very interested in and sympathetic to what my noble friend is saying; but could he answer a question which is put to me by miners? "All right, you say you are going to have sanctions against withdrawal of labour. But what are you going to do if the men simply refuse to work in that industry and move over to another?"

LORD BROWN

My Lords, I do not want to spend too long answering questions. If you create an institution which will put the whole question of differentials into the hands of a national body, and indicate clearly to the country the way in which a particular occupation can protect its place in the pecking order of differentials, then you change the psychological climate of industry. Maybe the miners would all go out on strike—I do not know. No great innovation is ever safe from the possibility that it will not work. But I think that this proposal will work and something like it will have to be done.

I should deal with the question of internal differentials within employment institutions by leaving an employer with the power to increase wages above the national awards to a section of his employees only so long as that increase was agreed by the other sections of his employees. Here I draw attention to a principle which is the theme of what I am saying. Differential wages are based on what the sociologists call field theory; if you alter one part of the field that alteration interacts over the rest of the field. This is so with differentials. If you increase the wages of one occupation or one department of a factory and that changes in degree all the others, you have set in motion a procedure whereby all the others will attempt to re-establish the status quo. Every industrial man and trade union man knows this. The Pay Board did not realise it, and that is why theirs was an extremely bad Report. It would be left to the employers and representatives of employees to change differentials within the firm above N.C.R.D. differential awards, so long as they could get agreement on the part of all that, relative to the rest, some sections of the employees were underpaid.

This is a brief account of something on which I could expand at much greater length, but I want to go back to the principles involved. In society you cannot have loose power groups that are not within the Constitution. If you do, they will disrupt the Constitution to make their presence felt. If you bring them within the Constitution something happens. It happened all through the nineteenth century. In contrast, if you look at what was happening in France, Italy and other European countries, you had revolution instead. We must face in the long term that a Constitutional change is necessary to-day. We can go "dickering" about with Phases 1, 2, 3 and 4; we can go "dickering" about with the improbable solutions which have been proposed by the Pay Board, where all you do is to elevate the bargain to a continuous argument between the C.B.I. and the T.U.C. at national level. But you will not solve it that way. You will only solve the problem of power groups by giving them Constitutional responsibility, and our eyes have to be turned towards changes of that sort.

7.30 p.m.

BARONESS GAITSKELL

My Lords, I think that my noble friend Lord Brown is a man to whom one should listen on the subject of industrial relations and particularly on the subject of differentials and relativities, because he is an expert on them. I wish I could understand everything he says, but even if I cannot I am always interested in what he says.

We have come to what looks like a point of no return in the negotiations between the Government and the miners. I personally long for a miracle solution, but without much hope, because at this late hour pride and prestige, two of the most dangerous attributes of government, have invaded the arguments, leaving very little room for sanity. I wish I were convinced that the Government were all along determined on a solution in the miners' case. I am afraid that I am not yet convinced. The danger signal appeared when I realised that the Prime Minister regarded his conflict with the miners as a crisis of authority. Of course, the Prime Minister thoroughout has claimed and proclaimed that the will to compromise and conciliate has always been there. I find little proof of this will, even though it is repeated by Ministers and in the media ad nauseam.

In his interview in the Daily Mirror the Prime Minister pointed to his forty hours of talks with the T.U.C. and the millers' leaders. It sounded to me, however, like forty hours of repetition of the words, "Phase 3". There seemed to me to be no hint of conciliation or compromise which emerged. Every suggestion, big or small, was brushed aside with one excuse or another; no opportunity was grasped by the Government. And the most serious missed opportunity was the rejection of the important, farseeing and constructive suggestion by the T.U.C. General Secretary, Mr. Len Murray, in seeking special treatment for the miners and saying that other unions would not press for special treatment for themselves. When the Government demanded a guarantee from the T.U.C., I knew that this was a transparent evasion of their good intentions to conciliate.

The Government were even lukewarm and dilatory about their last-minute presentation of the Relativities Report, which offered a ray of hope—though it is a document for long-term study by men like the noble Lord, Lord Brown, and not tailored for an emergency operation. Personally, I cannot understand why the Government led the miners to the brink of a ballot. What did they expect from the result? Did they expect a low poll?

Then, some of the Government's propaganda has been very misleading. For instance, the so-called 16½ per cent. rise in wages offer to the miners has been repeated so often that, as with goods described in an advertisement, the public has bought the product. The 16½ per cent, is a complicated package, and in fact only about a quarter of the miners qualify for it; the rest get much less. Even last night on the radio, in "The World Tonight", Mr. Ezra, the Coal Board Chairman, was asked: "Is the strike really about money?" And another rather shocking question: "Why are the miners so bloody-minded?" I was disappointed that Mr. Ezra did not kick this ball back into the Government's court. He is usually very good when he speaks on radio. Whatever one may think about Phase 3, no one can honestly say that the miners are overpaid. As for the Communists in the N.U.M., are they not behaving like "hard-line" capitalists in a mixed economy, bargaining hard because their value to our economy has been pushed up by the oil embargo? What do we expect?

There is much talk to-day of an Election. But what will an Election solve for the Labour or the Conservative Party? If the Labour Party wins it will have the unenviable task of dealing with the greatest balance-of-payments deficit in the history of this country. If the Conservative Party wins it will have to deal with the most divided society of the century, with bitterness between the Government and the trade unions—bitterness which can only provoke the hostility of the whole trade union movement for years to come. These are desperate days we are passing through, and industrial disruption can only worsen inflation. There was one particular comment that my noble friend Lord George-Brown made, and it seemed to me that he put his finger right on the real point. He accused the Government of shutting down shop in industry.

It is very difficult to make sense out of the Government's stand against the miners since the miners introduced their overtime ban. When we consider the Government's collision course towards the catastrophe of a miners' strike, and the possibility of a General Strike, I am reminded of the mysterious behaviour of the lemmings, those small Scandinavian rodents, which, at intervals over the years, have marched in great numbers down the mountains to the plains, slowly and steadily, and always in the same direction, regardless of obstacles, down to the sea, committing voluntary suicide by perishing in the waves. This behaviour seems to me to bear a distinct resemblance to the course the Government have taken so far. But to be serious, my Lords, we should have liked to hear from the noble Lord, Lord Carrington, to-day where the Government are going to lead us if there is a strike. I hope and pray that there will not be a strike, and that the Government will not worry about losing face but will come forward with suggestions for a compromise.

7.37 p.m.

LORD O'HAGAN

My Lords, I, in common with the rest of your Lordships, always admire the sincerity and moderation of expression of the noble Baroness, Lady Gaitskell, but I shall not be tempted to follow her detailed arguments, mainly because I am incapable of doing so. I am rather surprised to find myself intervening in a debate on the industrial and economic situation. I do so for one reason and one reason alone, and hope that it will not seem impertinent to your Lordships.

I cannot possibly offer any constructive criticisms or put forward solutions as to how we should deal with the details of this situation, but I should like to offer your Lordships some deep worries about the effects of the industrial and economic situation on Parliamentary democracy in this country. I do so as someone who through experience in your Lordships' House has begun to appreciate that there is no real alternative, for the individual and for this country as a whole, to our present democratic system. I do so as one who, in my short time in your Lordships' House, has learned a great deal from what I have seen of the potential of this system, and I do so from the experience of seeing in the European Economic Community something which is profoundly undemocratic at the moment, which has the elements of democracy in it, but which will never work satisfactorily, I am convinced, until it becomes democratic. From going to the rest of the Continent, often two or three times a month, and seeing Members of other Parliaments and appreciating the differences between their systems of Parliamentary Government and ours, I make this small intervention tonight in a mood not of despair but of deep disquiet.

From the noble Lord, Lord Robbins, and other economists in your Lordships' House, we have heard of the kind of economic plight that this country was in before the miners' strike. I cannot add to their words but I feel that in this situation, now that the possibility of a miners' strike has come upon us, we should assess what effect this continuing economic crisis is having and could have on our democratic system.

I am sure the noble Earl, Lord Gowrie, will remember the words of Wordsworth written in 1802 on the extinction of the Venetian Republic. I am not saying that we as a country are about to become extinct, nor am I going to indulge regularly in reading poetry to your Lordships. It is something that I find an instructive habit when spending a long time on the Continent. This poem, written in 1802, describes the end of what had been a system of government, and of a country that had commanded considerable admiration: Once did She hold the gorgeous east in fee; And was the safeguard of the west. Then later on Venice is described as, "the eldest Child of Liberty" and finally, And what if she had seen those glories fade, Those titles vanish, and that strength decay; Yet shall some tribute of regret be paid When her long life bath reached its final day: Men are we, and must grieve when even the Shade Of that which once was great is passed away. I am not inviting your Lordships to join in a communal funeral oration for British Parliamentary democracy, but the tone of that poem is the tone of many inquiries that I have received from my colleagues on the Continent. The types of comment that I have to try to answer—this was something that the noble Lord, Lord George-Brown, said—are in the tone of condolences to a patient on his death bed. In the debate we are having to-day, we should examine exactly what further pressures we, as a country, are subjecting our democratic system to.

I am not going to deal with the question of Communists because I have neither the knowledge of what they are doing, nor the wit to suggest how they should be dealt with. I feel that this is a problem that is exaggerated, and one which should, perhaps, receive slightly less attention than it does. What I would ask your Lordships to do is to examine some of the emotional "gut" reactions that we have had, not only from the Government but from other informed commentators who, over the past months, have tried to indicate to the country the seriousness of our economic situation. The noble Lord, Lord Rothschild, reminded us that Queen Victoria was dead, and that we as a nation should not seek to play a role that is no longer in our grasp. One felt that strong-armed men might be about to descend on him at any minute. When the Governor of the Bank of England recently broke silence and gave us a factual account of the position of the economy so far as he saw it, some politicians criticised him as a traitor.

My Lords, nationalism is fine, but it must be kept under control. If we allow this moment of crisis to give rein to those who are going to beat outdated drums, and drum up all kinds of activistic feelings, then we will pass from one economic crisis into another. It is no use thinking that our economy is independent in this era of interdependent economies, when every worker and every manufacturer is more and more in the pocket of the other, and when the world of economy is becoming more and more interlinked. It is no use thinking of isolationistic solutions to economic problems, such as futile notions of negotiating withdrawal from the E.E.C. Equally, my Lords, it is no use saying that Parliament can play a great role in dealing with this situation if we are to shackle Parliament from re-equipping itself to deal with modern conditions, and if we are to go back to a vision of Parliament as it might have pleased Bagehot, but that hides away from the television viewer and makes Parliament more and more remote.

This may seem unconnected with the acute dilemma that the Government are now in. I do not want to pour acid into any wounds—the wounds are wide open enough—but as an interested but ignorant observer, I think it must surely be true that nobody can mine coal except miners. You cannot mine coal with bayonets. Even if Community solidarity were at its best, we could not ring up Mr. Brandt and say "Can we borrow some of your 25,000 Turkish miners from the Ruhr to come and mine our coal while we are having a little trouble with our own miners?". This is not the world we live in.

I should like to tie together some of the threads in this rather rambling contribution. I said that I spoke mainly from a concern for Parliamentary democracy. Maybe that is a strange thing for a young hereditary Peer to do—maybe it has something to do with heredity. All four of my great-grandfathers were Members of your Lordships' House, and all four were Members of another place before they came here. Whatever be the reason for my concern, I think that we must realise that the strains to which we are subjecting our democratic system are really getting to the pitch of being intolerable and that Parliament, and government in general, are criticised if not discredited. Yet all the solutions to our present troubles seem to have been conducted outside Westminster—sometimes almost without a bow to Westminster. That is why I, in common with so many others in your Lordships' House, have welcomed the spirit if not the letter, of the suggestion made by the noble Lord, Lord Diamond. I would respond to the invitation of the noble Lord, Lord Chalfont, that the C.B.I. might volunteer a contribution to the solution of this difficult problem. However, I hope that such a solution would be sanctioned by Parliament. I would hope that we would not use such an extraordinary solution without making sure that it was subject to Parliamentary approval and control; and by "control" I mean discussions in an all-Party forum.

My Lords, many of your Lordships have more experience than I of elections and the consequences of elections. The noble Lord, Lord Coleraine, looked back to an early stage in his career when there had been a moment of division, of national disunity and crisis. I feel impotent in making positive suggestions as to how we should resolve this particular testing time. I feel that if we allow the "juggernaut process" that we now seem to be embarked on to continue at the destructive rate at which it seems to be proceeding, then we are beginning to put an end to the democratic process as we have known it here for a long time; not because of "Reds under the beds", not because of "Reds" on the television screen, but because the underlying consent of the people to the democratic system will surely be put under very great strain. We cannot continue our democratic process unless we have the consent of the people of this country that it should be continued.

My Lords, I am sure that my contribution will have added little to the particular outcome of this particular struggle, but I feel that at this moment of crisis we should not ignore the longer-term threats that we may be imposing upon our democratic system, because I believe we should always look upon this as one of the finest examples that Britain has had to offer. If I may quote from the Encyclopædia Britannica, describing Venice at the moment of its decay: Venetian life had crystallized into a system from which escape was not possible. My Lords, escape is possible. There is great resiliance and toleration in the British people, and I am sure that the Leaders of all Parties could still tap that to make a way forward possible, even now.

7.51 p.m.

BARONESS BURTON OF COVENTRY

My Lords, I do not think that the noble Lord, Lord O'Hagan, need feel that his contribution was a little one to our debate today, and I, for one, am very glad to follow him in what he said about our Parliamentary democracy. It seems to me that we are coming towards the end now, except for the final speakers, of what has been an excellent debate, and I think the House can be very relieved that I intend to be brief. There is very little I wish to say, but I wanted to make one small contribution. It seemed to me over the last few weeks, and particularly the last few days, that really and truly most of us must have been in despair—the public, the N.U.M., the T.U.C., the C.B.I. and the Government It seems as though everyone has felt helpless in this slide towards disaster. For none of us here, I think—and this has been very evident today—is in any doubt that it is disaster that we face.

Those of us not privileged (if "privileged" be the right word) to attend discussions in "No. 10" between the conflicting parties can deal only with appearances, with what it looks like from the outside. Starting with the general public, quite honestly I do not think that they know where they stand. What do they see from the outside looking in? They see two contestants, two antagonists, entrenched in opposite corners. They see short-time working; they experience inflation, and they hear of ruination for industry. Concerning inflation, I do not believe that the general public has any conception of the type of inflation that will follow a breach of the system under which some 6 million workers have settled. I think I am right in saying that this 6 million includes every large group of workers except three: the three exceptions being the miners, the railwaymen and the engineers.

I believe the electorate (and I use the term advisedly at the present moment for all of us, though less for us in this House than in another place) varies from day to day as to whether the Government are firm or obstinate; as to whether the miners should settle now with a firm, definite and publicly stated money guarantee on a date to be agreed. In short, my Lords, I think that neither political Party can be sure of victory. Everyone wants a settlement, and very few, I hope, want a bitter General Election.

How does it look to the miners? They believe that they are underpaid, unappreciated and that if they do not take a stand now, and a firm stand, they will get only promises and no extra cash. They have had a ballot, unfairly worded and at a time when bitterness had increased sufficiently, which has given their executive a mandate of 81 per cent. for whatever action that executive shall consider necessary. Now, the Government: how does it look to them? Obviously, it is not for me to say what the Government see, but outsiders think that the Government feel that an offer has been made to the miners which is as much as can be offered at the moment; that Ministers Feel that they have stated publicly that the miners are a special and unique case, and that therefore more money must come their way; that they cannot go any further after that guarantee, and that if they do go further then the floodgates of inflation will open.

Of course, what we outsiders do not know is the detailed nature of any such guarantee, and whether the N.U.M. believe it to be worth so little that they have no option but to bring catastrophe on their own industry and the country. I hope that the N.U.M. realise that public opinion believes that miners are underpaid and is quite definite that this must be remedied. Disaster will not bring the miners more money than that good will from the public. A delay of their strike action for consideration could bring untold benefit to the miners as well as to the country.

My Lords, I started with the people and I want to end with the people. I think the public is coming to realise that if we have these continual confrontations we are going to bring ruin on the country. I believe that people have become cynical as to the efficacy of Parliament. They think it is a talking shop, and not a very good one at that. They are tired of abuse and obstinacy. I believe that the only way to victory in all this is by co-operation. In that way, by co-operation, the price that we pay can buy peace. Any other way will buy only time—time to the next confrontation. I have said before on more than one occasion, in November last and January last, that I think this co-operation has to start in Parliament. I just do not believe, if the will is there, that the Leaders of our Parties cannot find an acceptable solution. Equally, if discussions such as these were to take place, privately, with the T.U.C. and the C.B.I., I believe that an acceptable solution could be offered to the N.U.M.

Utopia? Well, my Lords, it is Utopia or disaster. We have that choice. And although he is not here, I was very pleased to hear my noble friend Lord Shinwell say that he had said, I think in December, that he would favour any such coming together as this but that he thought it was now too late. I have never known my noble friend Lord Shinwell give up hope; and I would hope, if he were here now at this moment, that he might feel it was not too late. My Lords, it is not too late until midnight on Saturday in so far as this particular matter is concerned, and I believe that the public has a right to expect that the political Leaders shall co-operate on this issue. I think to do so would mean responsibility and not coalition. I am sure that it is only by the strengthening of Parliament that we shall really move forward; and this, I think, is what the noble Lord, Lord O'Hagan, really was getting at. I think that each one of us here to-day, wherever we may sit in this House, and whatever views we hold, must realise in our heart of hearts that government cannot be broken by industrial action, however justified one may feel the cause to be. Where would such action end? It would end in disaster and in the collapse of democratic government.

My Lords, I have been so cheered in this House to-day. I came feeling very despondent, as I am sure we all did, and I have been cheered by the number of people who, in varied words, have spoken of the possibility of co-operation between the parties. I could be wrong, but I have not known so many speak of this before in one debate and I feel that if only that message and that desire could go out from this House it might even reach another place. Let us in this House to-day ask our leaders to come to the rescue of the country. Nothing less will do.

8.1 p.m.

THE EARL OF LYTTON

My Lords, it it a great honour for me to follow the noble Baroness, Lady Burton of Coventry. She is one of a substantial group of brilliant Parliamentary women who day after day show how worthwhile were the sufferings of my suffragette aunt, Lady Constance Lytton. I would like further to record my humble enthusiam for what the noble Baroness, Lady Burton, has just been saying, and her substantial courage in saying it. We are at war with inflation, an enemy whose sinister victories nobody has outlined more cogently than the noble Lord, Lord Robbins, from these Benches. I was sorry to-day that his speech was denounced as a Reith Lecture. There was an element of truth in it; but equally one could have denounced the speech of the noble Lord, Lord George-Brown, as "Hyde Park oratory". Yet there were very good bits in it—more than there were in" the curate's egg".

The points raised by the noble Lord, Lord Robbins, today, were of value to us all. If our domestic inflation surpasses the international rate, all that we stand for as a stable nation is at risk; and at this moment it is at grave risk. Moreover, as a great trading nation we are exposed more than any others to international inflation over which we have no control. Therefore it follows that an attempt to control inflation by attacking the incomes end is the one that seems the most probable, and at the prices end the most difficult and unlikely to succeed. And in this matter both Party Leaders in turn have pointed to the same cause of inflation as a major one: "One man's wage rise is another man's price rise "Mr. Wilson. "One man's pay rise is another man's redundancy "—Mr. Heath. This is the simple language of wage-push inflation and whether the economists believe it or not, whether politicians believe it or not, that is what the two Party Leaders in turn have said is one of the major troubles. One way to attack inflation is to control incomes, as the noble Lord, Lord Robbins, said. But there is another way—the way that he preferred. That is control by finance and the restriction of credit; and the noble Lord enlarged on the dangers that have been caused by the disregard of this method by the Government in power.

It seems to me that one can easily find an excuse for a failure after the failure has become clear, but all Governments have before them the nightmare which persisted under the Prime Ministership of Baldwin—and I was surpised and a little shocked to be asked by the noble Lord, Lord Beswick, to accept Baldwin as a model Prime Minister or Leader of the Conservative Party in any matter, for the tolerated mass unemployment as one of those things which are inevitable, however horrible.

Also, as I knew when, before the war, I was Secretary of Committees for Mobilisation, Air Defence and Defence of Ports abroad, he landed us in a brooding storm which was unmistakable, without sufficient arms to cope with it—I refer to Hitler's war. Therefore I do not like to be asked to follow in the footsteps of Baldwin.

I rather think that those who have spent money have tried to do it because restriction of credit in the past has produced this mass unemployment; and if they have failed it has been in the interest of keeping the working man at work, even if he did not get the maximum "jam to-day", I think that even this ingenious three-day week is a resourceful device which is better than the unpredicted cutting off all over the place that occurred previously. Its purpose is to keep men employed. There is nothing quite so horrible as mass eunemployment for years and years. We knew of men who grew to the age of 30 and who had never had a job. That is the nightmare the Government have been trying to avoid, and if they have failed there is something to be said for them, because it is a very difficult problem.

It seems to me that the trade union movement refused to accept a voluntary limit on wages. Mr. Wilson's Administration capitulated but, in the words used by Mrs. Castle, I do not reproach them; I do not think they could have avoided it. There are circumstances which I will not enlarge upon now.

Mr. Heath's Government, on the other hand, have determined to control it by means of legislation. That is an unpleasant thing for a Conservative Party to have to do—it is contrary to all their principles. But for myself I thought it was the proper thing to do; and they have very nearly succeeded. A large number of people have accepted a legal limit to their wage rises, and that gives rise to the extreme difficulty at the eleventh hour of giving way to people who put a pistol at your head and demand that their terms must be met when others have not used the pistol and have capitulated, have conceded the point for the time being.

In this connection, I enjoyed the reference made by the noble Lord, Lord Beswick, to my ancestor, Lord Byron, in his maiden speech. It was the only part of his speech in which he drew attention to the labourers in the fields—in other words—the people who produce food. Very few other Peers (the noble Lord, Lord George-Brown, was an exception) have referred to-day to the producers of food. I am a producer of food. What would your Lordships say if I came along with a pistol, and said: "Jam to-day, or you won't get food to-morrow."? One of these days we may be able to say that if we organise ourselves sufficiently. How great will be our power! I do not think that the workers on the land want that power, and they are at the bottom of the wage league. They produce what is more necessary three times a day than anything else. You can live a little time, for eight weeks wittout coal, but you have difficulty living for seven days without food.

Therefore, my Lords, I support the Government stand, but I have felt for a long time that the method of handling their affairs has been wanting. And my only real contribution to the solution of this problem is to say, first, that the Government must not give way. Secondly, they have been defeated, just as Mr. Wilson was defeated. They have resisted and come into a head-on collision. Mr. Wilson disappeared, but was none the less equally defeated. My suggestion follows that made by many another in this House to-day, ending, more eloquently than all the rest, with the noble Baroness, Lady Burton of Coventry—namely, that both sides should get together. As to Leaders, I give the illustration of commanders in the field: however good they are—Lord Wavell is an example—when defeated in battle they are replaced. With that, I think I have said enough.

8.11 p.m.

LORD DAVIES OF LEEK

My Lords, it is a pleasure to follow the noble Earl. His last phrase was rather enigmatic; I was not quite sure who he wanted to remove, but I am glad he told your Lordships that we were at war with inflation. Most of the speeches I have heard from the other side of the House have implied that we were at war with the miners, and it is about time we realised that the 64,000 dollar problem is inflation. I agree with the speech made by the noble Baroness. She always makes an eloquent and thoughtful speech, whether or not I agree with it. I agreed with her when she referred to some of the television personalities. The superciliousness and the dandy intellectualism of some of the raconteurs and, I would say, people who were illiterate so far as the mining areas are concerned, who have appeared on television, on all sides, in the main has been a disgrace to a country trying to understand in depth the problem confronting us. I have said before that Parliament has to watch the trivialisation of problems on television, which is a much greater danger than Reds under the bed" in Britain.

Let us get rid of that bunkum. Here are the details of the Communist Party's fights since 1918. I am not going to bore your Lordships with the figures, but you will see the utter rubbish that has been spoken; and the same people who ululate about the Communists in Britain are quite willing to go into the Common Market where they do not have "Reds in the bed" or under the bed in Cabinet chairs. In France and in Italy millions of votes are cast for the Communists. Have these people in Britain not travelled? Do they not know the politics of the Common Market?

Now let us see about little old Britain, with its own inimitable, difficult, democratic system. The first Communists stood for Parliament in 1922 and they got 33,600 votes out of a 3.6 million electorate. The last stood in 1970 and they got 37,970 votes representing 0.1 per cent. of the electorate of 29 million. Are people arguing that the Communist Party is stronger than the 37,000 people who voted Communist at the last Election? Of course there is silence in your Lordships' House, because that is the truth. Their influence in this country is as nothing compared with their influence in the Common Market, to which masses of the people want to fly.

As I have said before, I would assure the noble Earl, Lord Lytton, who has just spoken with such sincerity and common sense, that our going into the Common Market is partly responsible for the inflation we are now in. Last month we reduced the tariffs another 20 per cent.; prices are due to be increased on March 1, and the miners' wives have to meet this increase. I do not think there are twenty people in this Chamber who could tell me what a collier's wages are.

Now we come to the leadership of the miners and the Communist influence there. In Britain, we have 335 trade union leaders of all types of unions—that includes Britain's 12 largest unions—and among the entire leadership there are 41 Communists. Some of them have been very wise, particularly Arthur Horner in September, 1949 (I knew Arthur very well), when he wrote: As the oil supplying countries raise their living standards they will demand a higher price for their oil. Any Government would be advised to give priority to the only indigenous fuel we have got. Lawrence Daly in 1970, before this trouble, spoke of the danger to the supplies of oil and of the Middle East probably cashing in on their monopoly. But what did we do? We closed the pits, one after the other. I used to subscribe to the Hobart Institute Economic Papers. They were loaded with intellectual dandyism and economics, urging that we should switch to oil as quickly as possible. We had local councils building council houses, refusing to put in coal-burning boilers for the central heating but even in mining areas insisting on putting in oil-burning boilers. How stupid can a nation become! They did that because they thought coal was finished. Even the bonanza of 1980, which is in the dim and distant future, when we get the oil from the North Sea, the Government are not sure how we shall stand with the Common Market about oil. Even so, we shall need all the coal that we can get.

What are the miners asking for? The National Union of Mineworkers are asking for £35 a week for a surface worker, £40 for an underground worker and £45 for a man at the coal face. Has any Member of your Lordships' House been right up to the coal face, stark naked, cutting coal? That is how many of them work. Or has any Member sunk a pit, like my brother, working up to his shoulders in water? I have seen this in my student days. We did not have grants when I was a student; we went to work side by side with uncles or somebody we knew, underground, to make money to keep us at our colleges and universities. And let the women who talk so much about this matter not forget that their own kith and kin in the last century worked down those pits and were treated like animals. We had to fight hard to get women and children out of these ghastly places. Anybody who says that we must be so adamant about Phase 3 that we cannot give a collier £36 a week and we cannot give a man on the surface £35 a week, or £40 for underground work and £45 for shovelling on to the conveyor at the coal face, when he is prepared to defend a wage of £2,000 for a girl who did six months at a commercial college, needs his head examined.

With regard to the farmers, I come from farmers and I know their value to society; and, God help us! if the farmers were to cut all the coal and the colliers were to dig all the ground we would freeze to death and starve to death. The farmers are a strong body. I knew their influence on the Cabinet; I knew their influence when I was a Minister in the Social Security Department, when we spoke about reducing school milk. They have a strong Lobby. The noble Lord, Lord Brown, had an interesting thesis, and he knows a lot about it, but we are moving too gradually, as he knows. Just after the war, Arthur Deakin and Ernie Bevin said that constitutionally more and more were the T.U.C. and the C.B.I. (as they now call it) part of the nation. The noble Lady's husband knew this as well when he was a leader of our Party. I have seen them come to No. 10 when the trade unionists and the C.B.I. have had discussions; and we are moving to that.

There may be quite a sound and constructive approach in the points the noble Lord was making, but, as is usual, in the old-fashioned British way we are working this policy out empirically. It is a pragmatic thing. It will come, and there is a place for it. This was the trouble. Some of us have spoken before about the impossibility of applying law when men think their wages are wrong. I give as an example par excellence Betteshangar Colliery during the war, when the nation was at war and the miners were treated unfairly. The miners were adamant about getting the right wages, and when they went to gaol the Government had to negotiate with the miners' leaders in gaol and get them out. From that day to this they have never been fined.

During World War I we had to bring back the colliers from the valleys of Scotland, Durham and Wales. They were leaving the pits because they were patriotic, and we had to say to them, "It is more important to get coal than to use you in the trenches", even though they were the finest sappers you could find. I can think of the feeling in Senghenydd where there is a memorial to the 416 men who died in the explosion on October 13. I lived on the farm at the top of the hill, 200 yards from the shaft. There is also a memorial to the men we had to call back, who were patriotic. Thus they lived. Now they are being called unpatriotic. When it comes to patriotism, after the last Tory candidate had fought me and lost the fight, he skivelled off to Malta so that he could not be taxed.

My Lords, what could be more authoritative than the Banker, produced by the dignity of the Financial Times? In the Banker there is an article on the great art of these patriots of overcoming tax. I will read something from the issue of the Banker of May, 1973: The Cayman Islands has reached the front rank of offshore tax havens. There are 95 active banks and trust companies … 5,000 companies have been established in the Islands and probably another 500 trusts. The Banker concluded: The future of offshore financial centres looks very bright indeed. Do not talk to me about patriotism! No wonder one of my local friends who has been a woollen manufacturer has said to me, "I can put money into my factory and only get about 5 per cent. or 8 per cent." Who was the Minister who sold 154 acres of land for £10 million? He would have to pay a lot of tax on that. That £10 million could have gone into our factories and industries. Or the land need not have been sold. Is not that speculation? The noble Lord who opened the debate to-day, speaking as the Minister for Energy, is a gentleman of culture, a gentleman who is able, quiet and sophisticated. But do not let him ever dare tell me about the miners not having thought for this country in their hearts. Let us get rid of this sophisticated, absolute insincerity.

My Lords, the basic thing we are fighting to-day is inflation. It is no good playing the game of the Cayman Islands, the Isle of Man, the Bahamas, Hong Kong, Panama, Liberia, New Hebrides, Nassau. Noble Lords who know the history of Nassau will know about the phosphate that comes from there. We shall have no trouble there. In 1973 the Daily Mail said that it is no good anybody earning less than £25,000 trying to find these tax havens. As the noble Lord said in opening the debate—and he is Chairman of the Conservative Party—we have struggled for growth. It was the apotheosis of growth at the expense of the quality of life, the materialistic approach completely. We encouraged investment; we encouraged productivity; we encouraged exports to contain inflation. But the Government do not understand what inflation is.

We ask the question: why has British investment lagged behind everyone else? What is inflation? At what point do price changes, which are always going on in a market economy, cease to be price changes and become inflationary? When do wage increases cease to be healthy improvements in people's living standards? Is the miners' increase a healthy increase in their standard of living, or is it inflationary? When does a piece of land sold for £10 million become a healthy economic action, and when does it become inflation? Inflation is a complex phenomenon. Its essence is a system of real activities to produce goods and services, and a stream of money claims. We have economic and monetary systems.

What does the Governor of the Bank of England say about that? When he was speaking at the Lord Mayor's dinner on October 18, 1973, he spoke in a steady, calm, constructive Bank of England Governor's way, but let us read between the lines. Said he at the end of his sumptuous feast and didactic speech: But despite all the doubts and uncertainties that abound, one has to make a judgment about the pace of monetary expansion, and looking at all the monetary statistics, and perhaps in particular at the pace and direction of the bank lending to the private sector, it appears to have been over-rapid. There is the expansion of the M3 motorway which I asked questions about and the Minister, or some official or other, gave tinpot silly answers. That was an understatement, but the truth is there. There are men who know.

The Governor of the Bank of England then said: The Government said that relations between industry and the City could be improved. This is the point. The Government have put their money first on the City. The result is that investment at home has lagged, and despite the availability of finance and the money that was printed, the appetite of British capitalism for foreign investment became gargantuan. In March, 1973, the Bank of England bulletin gave remarkable figures that proved that in 1972 overseas investment was double that of 1971 and nearly as large as the total in England. At the same time, half of these funds were borrowed from foreigners. That is why I said in my supplementary question, after reading the Bank of England bulletin and the Digest of Statistics, that the tables contain the classic problems of the 1931 crisis, funds borrowed short, lending long; that was the core of the 1931 crisis.

So may I now say, before I sit down, why do we shut down industry and do nothing about the City? We are pushing the industrialist and the farmer on to the three-day and other weeks—yes; of course it affects the farmers in my own area—but the City can go on with its speculation, with its intellectual dandyism in leading articles in the financial papers about the markets and sending money overseas. When, therefore, we ask the people to be patriotic, why do the present Government not take some real powers in the crisis? When we are asked for an incomes policy, why is it that we have not a prices policy? Why is it that whatever mistakes were made, the British farmer had subsidies? In fact it was not he who had the subsidies but the public for whom he produced the food. Because they could not pay the prices there was the cushion for the mass of the ordinary people. Had there been some cushion on food prices, wage demands would not have been as they were.

This has not been a policy; it has been a ramshackle rag-bag of semi-economic policies, followed blindly by the gentleman who, when he got into power, said quite frankly: To govern is to serve. This Government will be at the service of all the people the whole of the time. Our purpose is not to divide but to unite, and where there are differences to bring reconciliation and to create one nation". That is sad. That statement was made on the eve of the General Election of 1970. It was the appeal of the Prime Minister to vote, and the women of England rushed, thousands of them, to vote on that belief.

Now the Prime Minister has the opportunity this week to try not to divide. Many constructive ideas have been given, and I think the best from both sides of the House could be followed. I sincerely hope that this Government will try to get some answer, and some cash on the table for the miners, because it is not only the miners who have voted 90 per cent. That vote has nothing to do with Communism; it is the miners' wives who are finding difficulty in living on the money their men bring home, after stoppages and insurance. Always remember, my Lords, that 69,000 was roughly last year's figure of miners who had accidents which kept them out of work three days or more; and when they have those accidents their money drops. So never count just the blatant weekly pay of the miner; remember also the disease and the injury that he faces.

8.34 p.m.

THE EARL OF GOWRIE

My Lords, although I have stomach for the fight, and I am, of course, referring to nothing more sinister than the conventions of debate, I am a little short of voice to-day as a result of a cold and I must ask your Lordships' indulgence towards some rather cracked sounds which will be forthcoming from this Box, though of course I promise to try to see that the sentiments will be rather more firmly based. This is, at least, an added incentive for me to be brief, for the hour is late, and your Lordships will be anxious, having heard the crystally clear opening speech from these Benches of my noble friend the Secretary of State for Energy, to hear the response of the noble Lord the Leader of the Opposition.

But before I deal with as many as time allows of the points put to the Government in this debate, may I make a very brief point of my own. In our present crisis, in the days ahead, one thing seems to me to be certain. The voice and the claims and the determination of moderate men, men of reason and goodwill and courage, will more than ever be sought in the land, and I believe that we have heard this voice in this House this afternoon. May I give quickly just four examples of what I mean. The noble Lord, Lord George-Brown, said the Government's business is the nation's prosperity. The noble Baroness, Lady Burton of Coventry, said the general public has no conception of the kind of inflation which could follow a breach of a formula under which nearly 6 million people have settled. The noble Baroness, Lady Seear, said the rule of law and the control of inflation are even more important than the immediate crisis. And my noble friend Lord Amory said relativities and differentials are always at the crux of wage disputes. Those are the sort of instances I mean of moderation, determination, goodwill and courage, and I would say that in a debate where we can hear them we are not at the end of the road: we are simply making a beginning. The Government will study your Lordships' contributions with particular care, and this is not, in a crisis of these dimensions, by any manner of means a form of words.

To come now to the debate, the noble Lord, Lord Beswick, Who has been a consistent, very coherent and clear critic of the Government, asked me two specific questions. He seemed to be suggesting that under the Stage 3 settlement the miners would in fact be worse off. I would suggest to the noble Lord and to the House that his figures are based only on the 7 per cent. increase in basic rate. The offer to the miners is an average of 13 per cent., with an offer to conclude a productivity agreement worth a further 3½ per cent. It is, I think, misleading—and I cite the noble Lord, Lord Robbins in this context—to use figures selectively without taking into account all other components of the wage offer. It is in fact, as most noble Lords opposite would agree, the best offer made under Stage 3, and 6 million people have already accepted settlements under Stage 3.

LORD BESWICK

My Lords, if the noble Earl has finished with that point, will he now answer the question I put: namely, are they or are they not worse off if they accept the offer as applied to the coalface worker working during the day, the 7 per cent, increase within the offer?

THE EARL OF GOWRIE

No, my Lords, they are not worse off, because it would be impossible for the offer to the miners to be the best under Stage 3. The logical conclusion of the noble Lord's statement is that all other workers have settled for a negative offer. I simply cannot accept that.

LORD BESWICK

My Lords, the noble Earl really must look again at what I said. Those men who work on the day shift and get only the 7 per cent., and not the 6 per cent. anti-social hours, will in fact at the end of the week be worse off if they accept the offer, with the 10 per cent. increase in the cost of living which has taken place since the last pay settlement.

THE EARL OF GOWRIE

My Lords, I am sorry, but, as I have said, I do not accept that; and I also fear that the noble Lord is leaving out many other aspects of the offer, the benefits and so forth which have been made on the social side and which also must be quantified in this respect. I acknowledge disagreement between us here.

I come now to the next specified question that the noble Lord put to me, the question of Civil Service pay. The Pay Code accepts that the miners are a special case, and the offer to the miners is greater than that available to other groups. But it was, I think, always accepted that the standstill of Stage 1 and the Stage 2 pay limit would cause anomalies which would have to be rectified, and the rectification of anomalies was in fact a precondition of the statutory policy. The important point about the incomes paid to civil servants is that, like the offer to the miners, it is within Stage 3, and Stage 3 was specifically designed to correct anomalies. Some civil servants indeed who, but for the counter-inflation policy, would have received increases on January 1 last year, will in fact have to wait for their full increase until November of the present year.

But whether or not we have arguments about the details of these figures—and I respect the noble Lord's motives—I am not going to stand at this box and say that I think that the miners are presently working for sufficient wages. They are not, and that is why it is, as my noble friend Lord Carrington said, an open secret that Stage 3 was drawn up with the miners, and their conditions of work, very much in mind. Nor am I going to stand here at this Box and say that Stage 3 is simply the end of the story, the end of the road so far as the miners are concerned. It is not, and it never has been. Stage 3 is time-bound; it is the product of certain circumstances, of things that have happened in this country and in the world.

A Stage 3 settlement is about basic wage rates, about the possibility of a productivity deal, about substantial side benefits—which I do not think have been made very much of by noble Lords opposite this evening. I emphasise that on top of a Stage 3 settlement there has been the offer of getting a cash-assessing relativities board under way at once, or the immediate launching of talks about the future needs of the industry and its revised position as a result of what has happened over oil, or both. In fact all these are concerned with cash. All the Government are asking, all that we are working for so hard, is that the miners will settle now for a generous offer—an offer relatively generous, as many noble Lords have said, compared with offers accepted, or about to be accepted, by nigh on 6 million of their fellow workers. Their fellow workers are also of course their fellow sufferers from inflation.

The miners' circumstances are special. The miners' position has changed. This has been acknowledged in cash terms, and in my judgment it will have to continue to be acknowledged in cash terms. But the circumstances of a Governmental, Parliamentary and a national war, not against the miners but against inflation, also has to be taken into account. These circumstances have not changed. We are asking the miners to hold the line against this enemy. We acknowledge that their place in the line is a crucial one, and we have backed this acknowledgement by seeing that it is possible for the miners to be specially treated. We are anxious to break out of the circle, and to this end we ask the miners and the nation to help.

I come now to the formidable analysis made, as we would expect of him, by the noble Lord, Lord Robbins. As is perhaps proper for an eminent Cross-Bencher, he gave both sides of your Lord-ships' House something of a wigging. Under my estimate the Government got gamma mark plus, but the Opposition gamma minus. They might decide that the figures were reversed. The noble Lord said that we had inherited £1,000 million surplus on the balance of payments, but I would also say to him that we inherited rising unemployment, a press of wage claims, and a 1½ per cent. growth rate—the same rate which had put paid to so many of the admirable social hopes of the last Government. That is the sort of situation we also had to try to change. He acknowledged on our side that the current offer was not, by current standards, ungenerous. He made the point that one could argue indefinitely about details, but it would be better to get on with the job and to settle.

We heard a formidable speech from the noble Lord, Lord George-Brown, who told me that he would have to be absent from the House in order to visit someone in hospital, but would try to get back. Therefore I shall do my best to answer some of his points. He started with a fairly startling statement. He said that the Government destroyed the name and the national image of Rolls-Royce. I was nothing to do with the Government at the time, but it seemed to me from a humble onlooking position that the Government were trying to rescue and restore the national image of Rolls-Royce, and that they did so very effectively under the aegis of my noble friend. Although it might be said that the noble Lord made many telling points against the Government, I think that he was very unfair in his criticism of the Government in the social field. Perhaps it is the Government's own fault for not blowing their own trumpet clearly enough here. I just point on a quick à la carte basis to the annual uprating of pensions; the attendance allowance for the disabled; invalidity allowances for the handicapped; family incomes supplement; increased resources for the National Health Service, and the services with which, until recently, my noble friend Lord Aberdare was connected; getting the tax credit system (so dear to the heart of the noble Baroness, Lady Seear), under way; greatly increased resources for local authority health and social services, housing improvement policies, nursery schools, new pensions schemes for 1975, and the like. I do not think that this is a tariff to be ashamed of. This is not the kind of legislation that comes out of a Government bent on confrontation.

The "still small voice", as he described it (but we know that that still small voice has an excellent precedent), came after the noble Lord, Lord George-Brown, from my noble friend Lord Amory. He said uncompromisingly, however modestly he decided to phrase his speech, that if Stage 3 collapsed now no incomes policy could be brought easily into existence, and the alternative would be massive deflation. I think that that point too must be made to my noble friend Lord Coleraine.

The noble Lord, Lord Rhodes, remarked that cynicism prevailed. Certainly I agree with him that public cynicism is a consequence of inflation, and we have heard some of the justifiable cynicism about inflationary property values, or whatever. Nevertheless, I would say to the noble Lord, and I hope that he reads this, that the defeat of the democratic process by industrial power would surely generate a far greater dose of cynicism than anything we have had to encounter so far.

My noble friend Lord Balfour of Inchrye pointed out that he was effectively making a maiden speech so far as the economy was concerned. Therefore I should like to use this opportunity to congratulate him. He said, rather gloomily, that the speech might be his last. I am sure that that is not true, and I certainly hope that my noble friend will make many other contributions. He too pointed out that nearly 6 million people had settled under Stage 3, and I would echo him and say that these people see that inflation does not affect simply the Government; it is not simply about the Government. As the noble Lord, Lord George-Brown, said, Governments come and go, but inflation affects the people themselves.

My noble friend raised the point that in view of rising costs of food and world commodity prices, and the like, we should be extra attentive to the problems and needs of the lower paid. My à la carte on the social front may go some way to reassure him, but I should like briefly to go a little further. Stage 3 allows larger relative pay increases to the lower paid by allowing distribution of an increase to the lower paid of £2.25 where this is more advantageous than 7 per cent.; by allowing the gap between men's and women's rates of pay to be closed by up to one-half; by allowing the reduction in working hours to 40, and an increase in annual holidays up to three weeks, as well as seven public holidays; and by allowing threshold agreements, which would allow an increase of 40p per week for any 1 per cent. by which the cost of living index rises above 7 per cent. That provision is very relevant to the miners.

I come now to a swingeing speech—I think that is the word—by the noble Lord. Lord Shinwell. He asked a direct question, though I thought it was a rhetorical one, which he wanted me to answer specifically, and I shall try so to do. He asked what do the Government suggest as an alternative? It is in no sense my business, or I think the business of the House, to talk about political options; but I would say, echoing my noble friend Lord Carrington's remarks in his opening speech, that the Relativities Report can still, at this late stage, provide us with a solution.

We had another notable speech from the noble Lord, Lord Chalfont. He told me that he could not be here at this stage, but I should like to deal with a couple of points he made. I think that his error was in mistaking the amount of money due to the miners (which I agree, in relative terms, is not very considerable), for the unleashing of the floodgates of inflation through other wage claims in the future. Even though the noble Lord, Lord Chalfont, has not been able to stay for my remarks, I hope he will read the report of the remarks of his noble friend Lady Burton of Coventry in this context. He quoted George Orwell and I, too, have read with great admiration The Road to Wigan Pier. I know perfectly well that, at the relative comfort of this Dispatch Box, I am kept comfortable by the work of miners, but I think my noble friend Lord Coleraine answered the point by saying that I am kept comfortable by the work of other groups in the community as well.

The noble Lord, Lord Kahn, made an interesting suggestion and cited the Counter-Inflation Act provisions, particularly the passage which states: The Treasury shall from time to time make such changes in the code as appear to them to be required. I totally agree with the noble Lord. The means to make an immediate concession are not lacking; but those who advocate the use of this provision, those who advocate immediate concessions to the threat of the use of industrial power, must ask themselves where this process will stop. I do not say that they need reject such a provision, but they must ask themselves where this process will stop. A solution must surely be found by a process of reason and conciliation. This the Government have repeatedly tried to do, and will continue to do.

The noble Lord, Lord Brown, talked of the importance of changing the psychological climate of industry, and I do not think any of us would quarrel with him on that. I particularly agreed with one of his remarks. He put his finger on the fact that this is not simply a problem of a conflict between Government and organised labour. The differentials and relativities between one occupation and another are, as my noble friend Lord Amory said, really at the heart of the matter. The noble Lord made a proposal for a national council for the regulation of differential wages. Far be it from me to suggest that the noble Lord's proposals do not represent an imaginative approach to the relativities problem, but I do not think—and I do not think he thinks—that they would provide an immediate solution.

I come at something of a gallop to the speech of the noble Baroness, Lady Gaitskell. She talked about how bitterly divided society is. I must ask her how our society is so bitterly divided when nearly 6 million workers have accepted settlements, or are due to accept settlements, under Stage 3? She said that the Government are lemmings. I can see no resemblance between my right honourable and honourable friends and those furry rodents. I assure her that we will do everything in our power to prevent a strike, but if there is a strike we will do everything in our power to settle so long as we can contain the fight not against the miners, but against inflation.

I come to the speech of the noble Lord, Lord O'Hagan, who quoted Wordsworth against me—rather unfairly, I thought, because I did not have time to get to the Library in order to quote Wordsworth back at him. I do not want to be too "bullish" at this point, but I agree with my noble friend Lord Balfour of Inchrye that we will recover in this country if we have the will. I would say to the noble Lord, Lord O'Hagan, that in energy terms this country is in an admirable position to recover from what are, in part—and I stress "in part"—self-inflicted wounds. Finally, I would say to him that no one is suggesting that coal could be mined by anyone other than miners, who are of course very important persons and are, and will be, treated accordingly.

I have already mentioned the noble Baroness, Lady Burton. I thought her speech an admirable enunciation of the practical politics of hope. My noble friend Lord Lytton pointed to the demands which agricultural workers, also, could reasonably throw at us at this time. I would just say to the noble Lord, Lord Davies of Leek, who took up the "Reds under the bed" theme, that very wise words were said in this context by my noble and learned friend the Lord Chancellor, wearing his Mr. Quintin Hogg hat in another place on another occasion. He said, when the right honourable gentleman the present Leader of the Opposition named the Communists during the seamen's strike: In every muddy pool of industrial dispute to-day, the Communists and Trotskyists will be sitting on the bank with their rod and line fishing in the dirty water. But that does not mean that they have created the pool or put the fish in it or that there are no other fishermen. I do not think the Communist theme could be better dealt with than by those words.

I must now make an end. All of your Lordships are, I believe, agreed that the events which brought our debate about have the makings of a tragedy. The events are well-known and they have been very clearly outlined by my noble friend so are the personalities involved. The Coal Board, the Government, the T.U.C., Members of Her Majesty's Opposition, many public figures, many of your Lordships wherever you sit in this House, the information media, ordinary men and women, through the lines of communication open to them, have made repeated, and determined and ingenious attempts to find a way out of this dispute, but a way out which does not destroy the counter-inflation policy approved by this Parliament as necessary both to the survival and to the development of our national life.

There has been no lack of sympathy on all sides for the miners, for their special position and for their special claims. Equally, there has been no lack of awareness on all sides of the need to maintain the framework of incomes and prices restraint in the interests of fighting our old and common enemy—inflation. Here, indeed, lies the dilemma which the Government and the nation must solve. It is the classic democratic dilemma; how to find a way to reconcile our legitimate interests with the defence of the interests of the community in general. We have reached a stage in history when this problem has donned economic robes: how to reconcile our individual, or individual group, aspirations to a higher standard of life with the whole community's interest in high rates of employment, controlled inflation and economic growth.

As a Government, we have laboured long and hard to establish the means for achieving this reconciliation. Many people, inside and outside your Lordships' House and another place, have laboured with us in the task. No one can pretend that a means lies ready to hand. No one can pretend that the way forward is not difficult and dark. But, equally, we on this side of the House are convinced that we are on the only viable road with our present counter-inflation policy, that we are on the right lines in seeking to build a basis for voluntary agreement on the statutory restraint of inflationary price and wage increases. I said that we have the makings of a tragedy. With the help of everyone we will do everything in our power to see that there may also be a reconciliation scene.

LORD BALFOUR OF INCHRYE

My Lords, before my noble friend sits down, may I, through the courtesy of the noble Lord, Lord Shackleton, put the Record straight about something which my noble friend said? I did not want to interfere with his flow, but he said that it was my maiden speech on economics. I said that I have kept my trap shut since July last; but it is not my first speech in 30 years in this House. Secondly, I did not say that it was my last speech: I said that at my advanced age one never knows when one's last speech will come. I hope that it was not my last speech, but if it was I wish to finish on a note of complete belief in the future of this country.

8.58 p.m.

LORD SHACKLETON

My Lords, in the light of the vigour of the intervention which we have just heard, may I say that I think the noble Lord, Lord Balfour of Inchrye, will go on correcting the Government for many years to come. I have never heard so many quick corrections delivered by a noble Lord. I can only say that it is characteristic that he should have said what he did, in view of the many other errors that have been committed by the Government.

I am bound to say, first of all, that in this case the "ranks of Tuscany" cannot refrain from cheering the noble Earl's speech. I know that that is not a direct quotation, but it was a most able speech, and moderately delivered. The fact that I shall have occasion to disagree both with him and with his noble friend Lord Carrington does not diminish my admiration of his skill. I have always said that the noble Earl is a strength of the Opposition Front Bench—

SEVERAL NOBLE LORDS

Government Front Bench.

LORD SHACKLETON

I should have said, "Government Front Bench". But he will be a strength of the Opposition Front Bench. I can foresee the noble Earl usefully replacing some members of the present Cabinet.

We have not chosen to divide the House on this Motion. I am quite sure that your Lordships produce a debate of reason, in accordance with our Writ of Summons, on the principle that we are called upon to give our counsel. I think that this has been done to-day, with a great deal of ability, by a number of noble Lords. In view of the late hour, I shall certainly not go over all the ground again, nor recapitulate the extraordinary series of blunders perpetrated by the present Government. However, I must refer to some of the remarks which have been made by Members of the Government Front Bench. The noble Earl who has just spoken referred to certain speeches made by noble Lords which he thought were typical of the moderation, determination and good courage that they and the Government have shown. It is notable that the test of moderation, determination and good courage is that one should agree with the Government. I am bound to say to the noble Earl that his simple astonishment with regard to Rolls-Royce took away the breath of all of us. It was, as my noble friend made clear, part of that unfortunate "lame duck" episode. The noble Lord, Lord Carrington, had to rush in and nationalise Rolls-Royce on the spot, without compensation to shareholders. Just think what would have happened if a Labour Government had done that! It really was one of the most unfortunate stages of the early phase of this Government.

But, my Lords, there were other things that worried me in the remarks of noble Lords—and I want to get back to the central point. The noble Lord, Lord Carrington, we all acknowledge, is at the moment carrying a very heavy strain, and we know that he feels his responsibilities very strongly and very seriously; but I am bound to say that I think it really was disingenuous of him, in the face of the remarks of my noble friend Lord Beswick, first of all to call for moderation, my noble friend Lord Beswick having made a brilliant and notably moderate speech which, I may say, the noble Lord, Lord Carrington, entirely ignored. The noble Lord no doubt wished to be very careful not to say anything that his officials or the Conservative Central Office had not approved. But when he talked in terms of the effect of the enormous increase in oil prices which is threatening not only us but the whole world—and the real tragedy of the increase in oil prices will be in the undeveloped world—and used that as an explanation of the really desperate balance of payments situation, not to refer to the other factors (and the noble Lord, Lord Robbins, set the record very straight) was, I can only say, disingenuous; and when my noble friend Lord Beswick sought to correct him I think the noble Lord, Lord Carrington, might have acknowledged that there is justice in giving a fair representation of the situation.

If I may say so to the noble Lord, Lord Robbins, I am always fascinated by his speeches. I think, as my noble friend Lord George-Brown indicated, that his admirable and clear lecture, which so impressed the noble Lord, Lord Coleraine, was in fact aimed at the sixth form. There are some noble Lords who do understand some economics. We shall read his speech with interest. I suggest that he has it reprinted and offered to the Open University for those students who have not yet been selected to make the grade. The noble Lord always contributes distinction to our debate, but I must say that the position of the terms of trade and the effect on inflation in this country is something that we have reiterated. In the last debate I myself drew attention, as my noble friend Lord Beswick has on a number of occasions, simply to the effect of the change in parities on metal prices, which was quite staggering, which meant that some countries in Europe are paying less for their imports than they were a couple of years ago, whereas we are paying anything up to 50 per cent. more. I will not go through the whole range, but if the noble Lord. Lord Carrington, wishes to look at those figures—no doubt he is being instructed by his noble friend Lord Windlesham about this—he can always consult my speech on the last occasion. I doubt whether he will do so, but I then made the point that my noble friend Lord Beswick made to-day.

My Lords, I think this is about the fourth debate on this subject that we have had in a month, and on each occasion the prospects have got worse and the future more bleak. After the first shock of the introduction of the three-day week, the country settled down to live, and indeed to make the most of it. But when the noble Earl, Lord Lytton, praises the three-day week, I can only say that, whatever may be happening on the farm to which he referred, to much of industry it is a disaster. Even now a number of small businesses are in dead trouble. Incidentally, representations have been made to the Government asking them, where the Government owe money to small businesses, to pay their bills more quickly. No reply has been given, which suggests to me that the Government are out of touch with the situation as it affects so much of industry.

My Lords, mysteriously the fuel situation and the coal situation proved to be much better than the Government had anticipated. On the last two occasions we debated this subject it had become pretty questionable whether a three-day week was necessary at all. It would appear that the only justification for the foresight which the Government claimed to be exercising was their anticipation that they were not going to agree to a settlement, that they would confront the miners in a national strike and that they were in fact playing for time. Now, I have not got to believe that the Governments are always as Machiavellian as they are accused of being: I happen to think that in this area the present Government are singularly incompetent. But this seems to me the only explanation, unless they were in fact anticipating a strike.

My Lords, once again we are back—I must say that I find the Members of the Government Front Bench frightfully noisy to-night. They may not wish to listen to me, and I must apologise, also, that we on the Opposition Front Bench sometimes talk; but it is distracting. My Lords, once again we have had to discuss the real meaning of the miners' pay claim. As a leading industrialist—not a supporter of my Party—said to me to-day (I hesitate to use those words): "They have been dishonest in their presentation of the effects of the miners' pay claim". My Lords, the Government keep on talking about 16½ per cent. They know that 3½ per cent. of that relates to a productivity deal threatened or proposed at the time of Wilberforce, of which there is not a sign; and we know that the majority of miners, or at least a large number of them, are going to get only 6 per cent. or 7 per cent. There are a number of workers who have got a great deal more than this under Stage 3. I have to administer Stage 3 in industry, and in fact there are all sorts of provisions which enable one to pay more. This applies particularly in the staff field, if, for instance, annual increments are provided. This is the position in the Civil Service. I happen to think that it was right to pay the civil servants a particular figure, but in fact there is a wide degree of injustice; or, at any rate, inevitably the justice is so rough that certain people are suffering a disadvantage.

The Government have argued—I do not know whether we shall ever settle this point—that their offer would restore the miners to the post-Wilberforce position; whereas in fact in April, 1972 (these figures are from the Government's own new earnings survey), mineworkers paid hourly (we can all pick our different examples, but the hourly pay rate is the key to all the other pay rates) were eighth in the table, and by 1973 they had dropped to sixteenth. They were worse off than before the 1972 settlement. In order to restore their position they would need to have almost the whole of their full pay claim. But the miners have made clear that all they want to do is to negotiate on this. They are not demanding the full amount; they are willing to negotiate. If the strike starts, I do not know on what basis a settlement—

LORD ROBBINS

My Lords, I am sorry to interrupt the noble Lord, but do I understand him correctly? Is he arguing that a higher offer could be made to the miners under Stage 3?

LORD SHACKLETON

My Lords, if, like the noble Lord, Lord Carrington, I may be allowed to develop my remarks, I will deal with that very point. What I am dealing with at the moment is the simple proposition that comes time and again from the Government: that what is proposed is more generous than has been given to other workers—which is not true in certain respects—and that it is adequate to restore the position of the miners. We could argue for a long time about this, but I have gone into these figures very carefully and I assure noble Lords opposite that this is a view taken by many people who are not necessarily supporters of the Government or the Opposition—people who are independent. Somehow there is an impression that the miners have been offered some quite outstanding sum which, in their selfishness or greed, or at the behest of extremists, they are turning down. I am grateful to the noble Earl, Lord Gowrie for keeping off the "Reds under the bed" argument—he is too intelligent to go far on that.

My Lords, we have constantly emphasised—indeed, it has been the recurring theme in debates that we have initiated from this side of the House—that there is not that basic national sense of unity which could be achieved only in a society which sought more firmly for social justice for all its citizens, and which dealt with some of the disgusting extremes of self-interest practised in our community. I do not think that many noble Lords will disagree about this. It is against this background that the remarks of the noble Lord, Lord Coleraine, were interesting. We realise that he chose his words with moderation when he said—and he stood up and said it bravely—that it was difficult to achieve national unity under the present Prime Minister, though the noble Lord properly paid tribute to his great qualities.

We are continually being told about the need for national unity. We are continually confronted by this simpliste argument about who governs the country. My noble friend Lord George-Brown dealt with this very effectively in a remarkable speech. None of us wishes—and I am sure all my noble friends will agree with me in saying this—to see a British Government humiliated. It is not good for our democracy. But the present Government have followed the path of confrontation with certain sections of the community—although we see signs of repentance now and again—for too long. They have created weapons, they have fabricated weapons, like the Industrial Relations Act, only to find that they have broken in their hands and have had to be discarded.

I cannot claim, as can my noble friends Lord Beswick, Lord Davies of Leek and Lord Chalfont, and others, to speak with first-hand knowledge of the characteristics and psychology of the miners. But I think we should all recognise—and I hope that noble Lords on the other side will accept this, because we have had some very eloquent and sincere expressions of opinion during our debate about it—that in a hard world the strength of purpose of the miners, their mutual loyalty and unity as a community, have upheld them under great hardships for many generations. We should not dismiss this pride and loyalty, as there is sometimes a tendency to do in some quarters, when there are still deep divisions in our society. It should not be treated as of no account in comparison to appeals to national unity when that underlying unity is not present. It has not been said tonight but it has been said in the past. One can cite certain offensive leaders in newspapers—the Daily Telegraph has been referred to, for example—and one can see what an offence this is if we are to achieve national unity.

LORD COLERAINE

My Lords, I am grateful to the noble Lord, Lord Shackleton, for giving way. I expressed doubts, as he said, about the possibility of achieving national unity under the Prime Minister's leadership; but let me assure him that this was not on the grounds of social injustice. In fact I think one of the criticisms that might be made of Her Majesty's Government is that they have leaned over backwards in many respects to achieve social justice. My noble friend, in winding up for the Government, cited a long list of advances in welfare services, and so on. I myself feel that those advances in welfare services are not altogether compatible with the counter-inflation policy. I was not suggesting that the Prime Minister was unmindful of social justice, because I believe he is. The doubts in my mind occur because of his U-turns—his firmness and then his retreats, with Wilberforce 1 and Wilberforce 2 and so on—but that has nothing whatever to do with social injustice.

LORD SHACKLETON

My Lords. I naturally accept this further interesting explanation, which seems to me to be equally damaging to the Prime Minister. I do not wish to start discussing that hastily compiled list of credits produced by the noble Earl, Lord Gowrie. Nor do I propose to waste much time pointing out the Government's appalling blunders, such as housing finance, and so on—and incidentally, the noble Earl ought to be careful of talking about the tax credits scheme, because we do not yet know how that will be financed.

I should now like to come back to the application of a counter-inflation policy. The Government are standing firm on a simple proposition. I must say that I find the position of the Liberals in this matter rather equivocal: they want Stage 3, but apparently they also want the Government to give in. I really do not know what they want—

BARONESS SEEAR

My Lords, if I may intervene for a moment, I thought that we had made our position abundantly clear.

LORD SHACKLETON

My Lords, if the Conservatives think that the Liberals have made themselves clear, then all I can say is that their respect for the Liberals has increased beyond what it has customarily been in the past. I am sorry: I do not wish to be offensive to those who sit on those Benches.

It must be emphasised that it is wholly within the power of the Government to settle outside Stage 3. I believe the noble Earl referred to "Treasury powers". As I understand the powers, they are contained in Section 8 of the Counter-Inflation Act, to the effect that the Minister may by order direct changes to be made in the pay arrangements. They have kept this power and this initiative; and it is wholly misleading in this respect to say that the demands that are being pressed are somehow an attempt to override Parliament; in fact it is an attempt to persuade the Government to use the powers that they have taken in the Act of Parliament. We are almost in a kind of medieval argument about this: we are arguing about procedures. We know that the Government are dangling things for the future. They say, "If we get together on the relativities, we shall be able to do something for them"—the miners. They have even hinted that they can back-date it to March 1. The future of this country is hanging on a dispute over procedures, and this is causing great anxiety, not just to the trade unions and working classes of this country but also to industrialists. I see leading industrialists every day, and the language they use about the Government is much stronger than anything I would use in your Lordships' House.

The Government have been given a lifeline through the initiative of the T.U.C. As other noble Lords have done, I should like to pay tribute to Mr. Len Murray, who is potentially a very great General Secretary, on the model of Citrine. As my noble friend Lord Brown said, the Government's rejection of the T.U.C. offer, and the decision not to use the opportunity granted to them by the trade unions' promise not to use the miners' settlement as an argument, was, as I think he called it, the political "clanger" of the century. I am astonished at the lack of political skill that one finds in a Government to deal with situations of this kind.

It has been obvious—and my noble friend Lord Brown made this very clear—that the fundamental problem in relation to incomes and wages was that of relativities. We now have a Paper on relativities which took six months to produce. I would go so far as to say that a Select Committee of your Lordships' House could have produced this in a week. The Paper is long and rather argumentative. I took exception to what the noble Lord, Lord Carrington, said (unfortunately I cannot recollect his exact words) when talking about this. I think he said something about a sense of shame in regard to the Leader of the Opposition's attitude. It is a fact—and again I accuse the Government of being disingenuous—that they have tried to get the Opposition hooked on this. Mr. Heath wrote to Mr. Wilson to ask him, in effect, to commit himself to the principles of this. This is not right; the Government carry the responsibility. But we suggested that there was a way out. I suggest that here is another temporary bridge that could be used.

At this late hour, I would only say that, like other noble Lords, I am filled with a greater sense of despair than I have felt for many years about the future of this country. As noble Lords have pointed out, the prospects for this country are very good—indeed, sterling could get stronger. The views in the Continent of Europe are still that this is a stable country; and let us not think that other European countries are all that stable. They are astounded that a responsible Government could have got themselves into the present position. It may well be that it may bring good; it may force us, as my noble friend Lord Brown said, to look at our institutions. On past occasions we have always managed just in time to develop our institutions to take care of new situations. I suspect that all Governments have failed to face up to the real changes that we need to make in our society, and that Governments, because they are obsessed with practicalities—not that this is a very practical Government —have shrunk away from the more imaginative and idealistic approaches to the problems of running this country.

If this strike goes ahead, and if there is an Election, like my noble friend Lord George-Brown, and others, I have the deepest anxieties as to what will confront a future Government. I beg the Government to consider again. I repeat, we do not wish to see them humiliated. We would like them to find a solution to a problem which, if it is allowed to continue, will create a degree of disaster which on the last occasion I said was like a doctor who boasted of a successful operation but admitted, when asked how the patient was, that he was dead. My Lords, we are getting nearer and nearer to that situation. If we are to maintain our standards—and I believe that we have a great contribution to make in the world—of Western civilisation and democracy, then I beg the Government to avoid tearing ourselves apart at this moment. An Election will not solve the problem, and all noble Lords know this. It is possible to find a solution, and, I believe, a solution with honour. I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.