HL Deb 27 July 1976 vol 373 cc1182-259

3.8 p.m.


My Lords, I beg to move that this Bill be now read a second time. The practice of the House in relation to the Finance Bill varies from year to year. More often, we take it formally and we have a Motion on the Order Paper which gives rise to a wide-ranging debate on economic affairs. On this occasion, we have had general debates on economic affairs in June and again in July, and no such Motion appears on the Order Paper. Another practice of the House is to deal with the Second Reading in the usual way rather than in the formal way, when there has been a fundamental change in taxation. For example, last year when the capital transfer tax was substituted for death duties there was a full-scale debate on that aspect of the Bill. On this occasion, I would say that the fundamental change in taxation is the development land tax. That is the subject of a separate Bill and it has already been debated by the House. Therefore, left with the assumption that the House, having heard the Statement of my right honourable friend last Thursday, wants an opportunity of discussing that Statement, and that tacking will be discussed incidentally, I shall try to lead the debate along those lines.

My right honourable friend the Chancellor of the Exchequer concluded that sufficient progress had been made with the annual survey of public expenditure to enable some conclusions to be reached, and having reached those conclusions he felt that it would be to the advantage of all concerned if an announcement were made before the Recess. The studies that have taken place since the Budget have shown that recovery, both worldwide and in the United Kingdom, is moving at a rather faster rate than was contemplated at the time of the Budget. For example, during the next 18 months it is anticipated that the gross domestic product of the United Kingdom will increase at something like 5 per cent. per annum; that exports will increase at 11 per cent. per annum; and that manufacturing production will increase at 9 per cent. per annum. All these figures are somewhat higher than those that were contemplated at the time of the Budget.

On the employment front, the number of vacancies continues to increase, although there have been fluctuations. Short time working is declining; overtime is increasing; and by reason of the facts that I have given we expect the unemployment figure to fall before the end of the year. The growth of the money supply has been kept under control, and during the year to mid-June M3s rose by only 9 per cent. The money supply continues to exert a downward pressure on prices. During the last year the rate of inflation has been reduced to one-half, thanks mainly to the pay agreement in the first year and the £6 limit. The restraint in the second year of an average pay agreement of 4½ per cent. is more severe and we expect an even greater effect.

In the meantime, however, the depreciation of sterling by 12 per cent. since March and a slight movement in the terms of trade against manufacturing countries are beginning to affect our retail price index. It is anticipated that instead of having a single figure rate of inflation by the end of the year, the rate is likely to be in the neighbourhood of 12 per cent. In 1975 the external current account deficit was halved, but it was still £1.7 billion. In the short term, the depreciation of sterling tends to increase our deficit; but in the long term, with the growth of exports and the substitution of our own goods for imports, it should greatly reduce our deficit. This, I believe, is the nub of the question. We must plan now in order drastically to reduce our external current account deficit next year.

By deficit budgeting and special grants we have saved 250,000 jobs or training places during the depression, but as recovery proceeds it is vital that we should gradually reduce our deficit on public expenditure. This must be reduced so that private savings are made increasingly available for stock building and investment by the private sector, otherwise we risk an excessive growth in the money supply. This we ought to avoid at all costs. An excessive growth in the money supply next year in order to finance private investment, even manufacturing investment, would refuel inflation and almost certainly lead to a sucking in of imports. Then we should be back to the well known pattern of "stop-go".

We have taken firm action in the current year to prevent public spending from exceeding the planned limits. At the time of the Budget it was expected that the amount of the deficit for the current year, 1976–77, would be £12 billion. We can now say that it will be somewhat less; namely, £11.5 billion. Recovery alone will reduce this deficit to £10.5 billion next year, but we consider that that is not enough. Accordingly, my right honourable friend in the other place made recommendations to Parliament in order to reduce the deficit to £9 billion.

If we make a study of the Statement I think we can come to the following conclusions so far as the cuts are concerned. First, we have preferred selectivity rather than an automatic cut across the board. We believe that there must be a certain amount of flexibility in a manoeuvre of this kind. Secondly, in accordance with our often declared policy of giving the maximum protection to the least well off in the community, the main social benefits—for example, pensions—will remain untouched. In particular, the up-rating in November will take place. Thirdly, in keeping with the part we have taken in the Councils of Europe and in the Councils of the United Nations we shall not cut the aid to underdeveloped countries. Fourthly, the cuts are devised to have the minimum effect upon employment and prices. Fifthly, the cuts are so devised that our programmes, particularly the programmes in education, in the National Health Service and in defence are not seriously impaired. Finally, the cuts are designed to have the greatest effect upon those industries which are likely to benefit from investment by the private sector.

There are a number of points which are of special interest. I think that all Members of the House will be pleased to see that, despite the stringency, we plan to give further aid for the employment of young people and that an announcement will be made on this matter before the Recess. Secondly, the lady Members of the House will be glad to see that the regional employment premium rate is to be the same for both men and women. Thirdly, I am very pleased to see, and I am sure that the noble Baroness, Lady Seear, will also be pleased to see, that we have provided for a contribution to any scheme for the collective funding of apprenticeships. The noble Baroness may tell me that it is too little and too late; but I would point out that we have spent vast sums of money upon protecting apprenticeships during the depression, that we have more than doubled our provision for training in real terms, and that we have made increased contributions to the scheme which aids the mobility of labour. Therefore I suggest that it is not too little and that it is not too late; it is additional.

Fourthly, there will be a restriction of unemployment benefit for those who are in receipt of substantial occupational pensions. I am sure that noble Lords on this side of the House, and I hope noble Lords in other parts of the House, will be pleased to note that this change is being made. Unemployment benefit is to help temporarily those who are seeking work. Many of those who have retired early and who are in receipt of substantial occupational pensions are not seeking work and should not, in any fair system, have unemployment benefit. I am very glad that action has been taken to make it more difficult for them to get the benefit.


My Lords, if I may intervene I should like to ask the noble Lord whether it is not a condition of receiving unemployment benefit that they should be seeking work, and does this not mean that the rules are not being strictly applied?


My Lords, it is sometimes easy to have rules and more difficult to apply them. This is one of those cases. I can pinpoint many cases where there was no excuse whatever for unemployment benefit being paid. I can even quote the case of a town clerk who retired early.


My Lords, if my noble friend will allow me, may I ask this question. For the same contributions, does not the person in receipt of an occupational pension have the same contractual right to unemployment benefit as anybody else?


My Lords, unemployment benefit is intended for those who are genuinely seeking work. Many of these people are not genuinely seeking work and I am pleased that the contract is being changed so that they will not receive the benefit. This is the one thing I am prepared to defend with my life. I retired at 60 and between the ages of 60 and 65 I happily paid the contribution rather than claim any benefit because I would not genuinely have been seeking work, and what I can do other people can likewise do. Many of them are better off than I have ever been. The total saving as a result of these cuts is £1,012 million and this will reduce the public sector borrowing requirement by £800 million.

I come now to the second important factor in the package which was put forward by my right honourable friend and that is the increase of two percentage points in the employers' contribution to National Insurance. I think all experience has shown that when there is a general charge for the whole of industry it does not take long for that charge to be reflected in market prices. That is certainly my experience in managing a business. Therefore, I would expect that before long it would be the consumer who pays, and consequently we have said that we would expect this to affect the retail price index by something like 1 per cent. Secondly, I would point out that the 12 per cent. depreciation of sterling since March will give adequate protection against competition from imports and it will also protect our export competitiveness.

Next I would point out that this change will bring us more into line with the other Member States of the EEC. Almost without exception the other Member States have higher contributions and taxes on employers in proportion to their total taxation. This is another step to bring us into line with them. The total of this saving will be £910 million and will reduce the PSBR by £700 million, and the £700 million plus the £800 million which I have just mentioned gives the one and a half billion pounds required. The PSBR as a percentage of the gross domestic product was 10 per cent. in 1975–76. In the present year it is 9 per cent. As a result of this package, next year it will be 6 per cent., and if we exclude the on-lending to public corporations and to the private sector for their capital programmes then the percentage of the PSBR to the gross domestic product is only 6 per cent. in the current year and as a result of this package it will be reduced to 3 per cent. next year.

I wish also to point to some of the changes which are being made in the Price Code since we last considered it only a few weeks ago. The proposed allowance for investment, which was being raised from 20 per cent. to 35 per cent., is now going to be raised to 50 per cent. So that step by step this Government have increased the allowance for investment from nothing to 50 per cent. in the Price Code. There is a similar allowance in respect of depreciation. Your Lordships will remember that when we considered the White Paper, The Attack on Inflation earlier this month it was stated that, for the purposes of the Price Code, if a company had revalued its assets in its balance sheet then depreciation would be based upon the revaluation. If it had not so revalued and was taking depreciation at the historic cost it would, for the purposes of the Price Code, be increased by 30 per cent. It is now announced that it will be increased by 40 per cent.

I should like to say a word to those who feel that no action should be taken other than import control. First, I would point to the fact that the reduction in the PSBR from recovery alone would not be enough. We must have further saving than that if we are to be sure that private savings are going to be available for the financing of stockbuilding and for reinvestment, bearing in mind that it is the Government's intention under all circumstances to keep the growth of the money supply under control, because otherwise we believe it would refuel inflation and suck in imports.

Secondly, I would point out that when the exchange rate of the pound sterling was fixed there was a case for having some general control of imports in a time of depression. Now we have the floating pound which automatically gives some protection. There is therefore much less case for having general import control in a time of depression. Furthermore, it would invite retaliation in the way it has never done before if we were to have such control in addition to the automatic protection which the floating pound gives. With the floating pound any protection of imports must be on a selective basis and in this connection the present Government have a very good record. We have negotiated agreements which give selective protection against imports in textiles, in footwear, in wood and paper products, in printing machinery, clocks, pottery, portable radios, electrical components and so on. In all those cases we have negotiated agreements which will protect our industry. In addition, in his Statement my right honourable friend specifically said this: We are anxious to discuss with both sides of industry the need for any further action there may be. Finally, I should like to say a word to those who believe that we should have taken much stronger action. I believe such people undervalue the Social Contract; I believe they undervalue the significance of the pay agreements which have flowed from the Social Contract. I believe also that they undervalue the better industrial relations which have accompanied the Social Contract. Without those this country would have been in a much more serious economic position than it is today. Do not let us sacrifice them. I beg to move that this Bill be now read a second time.

Moved, That the Bill be now read 2ª—(Lord Jacques.)

3.29 p.m.


My Lords, this debate is of course formally on the question of granting a Second Reading to the Finance Bill, but even before knowing about the Chancellor's measures we had indicated that we would like this debate to go somewhat wider. Of course, we think it even more important now, and so I strongly welcome and agree with the noble Lord's own speech in which he devoted himself almost entirely to these economic measures. I intend to do the same, but I want to say a few words first about the Finance Bill.

After 26 years in another place it seems strange to have a Finance Bill in front of me and not be able to get at it and seek to amend it. I do not know why we loved doing that because it was a painful and tedious process, but it was some sort of compulsive reaction that Members of Parliament have. On the other hand, when I cannot do that I realise that I am compelled to look at the Bill more as a whole. I am sorry to be rude about it, but when I look at the Bill as a whole the outstanding impression I get is one of sheer incompetence; in the way the Bill was prepared and put together and in the technical failure, "incompetence" is the only word for these initial proposals.

The original proposals outlined in the Finance Bill as introduced by the right honourable gentleman the Chancellor of the Exchequer now look as though they have been hit by a bomb. True, the TUC clauses, which were originally contingent on a pay-deal agreement, have been passed in their original form. Personally, I welcome that, as I think does the great majority of people. Also, the capital transfer tax changes have gone through more or less in their original form. But I must remind the House that those capital transfer tax clauses were themselves evidence of the incompetence of last year's Finance Bill, because they are almost all implementing the changes which the Opposition pressed in last year's Finance Bill, which they were then told by the Chancellor of the Exchequer and his colleagues were either impossible or undesirable, or both.

The two principal appalling sections in which the Government deliberately set out to turn the screws of the tax system on the business sector and on the self-employed—namely, the fringe benefits and the investigation powers—have emerged as barely recognisable as a result of all the Parliamentary blasting they have received in another place. The changes in the fringe benefit proposals have been really beneficial. All I will say in passing is that it is both interesting and healthy that opposition to the original proposals came just as strongly from the trade unions as from the Institute of Directors.

The changes in the snooping powers have also been substantial but not, in our opinion, nearly substantial enough. We still object to them strongly, and I sympathise very much with the feelings of my noble friend Lord Harmar-Nicholls about them. I must not encroach on what will be a separate debate on the Motion of my noble friend Lord Harmar-Nicholls, but may I briefly say now that while I feel that, since the Speaker has given his ruling about the Bill I doubt that it would be wise to proceed against it in this Bill. So far as I understand the matter, I think my noble friend may possibly share that view with me. Nevertheless, I feel strongly, and want to say that I feel strongly, that this House should find an effective way, outside this Bill, of looking into the increase of arbitrary powers of inquiry into the private affairs of citizens in ways which are highly objectionable and dangerous, not just to privacy, but to personal liberty itself. I am not referring just to this Bill nor, let me assure the House, merely to clauses included in Bills introduced by Labour Governments. Both Governments have been slipping down the dangerous path here, and it is time that Parliament—and I hope this House will play a big part in this—brought an end to the process and reviewed how much we should take a step backwards before too much damage is done.

I now wish to leave the Finance Bill, and to turn to the economy in general. Before coming to what I wish to say principally, may I comment briefly on two points raised by the noble Lord, Lord Jacques. There is one point about which 1 think I must fire a strong warning shot across his bows. When he started talking about the comparability of the general Government deficit, to use the Chancellor's new phrase, with that in other countries, he said it was now comparable if you exclude our funding to nationalised industries and to private industry. But what an exclusion. To look at the financial arrangements of this country and the appropriate size of the public sector borrowing requirement and to think you can compare Britain with other countries when you have excluded that element—all I can say is, Heaven help us in the running of our economy in future if such an exclusion is to be made.


My Lords, I was really suggesting that it should be excluded when compared with other countries where it is excluded.


My Lords, what is the scale in other countries compared with the scale here? It is probably excluded in most other countries almost on de minimis grounds compared to here, and if the Chancellor is going to try to make this phoney comparison in future he will not be allowed to get away with it without a lot of comment.

The other thing I want to say, which is important, but which is less fundamental to our whole economy, is with regard to what the noble Lord said about the proposals to deal with people over 60 in receipt of substantial occupational pension schemes. We looked at this when in Government, and I have considerable sympathy with the general approach of the noble Lord, but he surprised me in one thing. I wonder whether he realised what a severe attack he made on the way in which this scheme is administered, because he said in effect that the officials administering this scheme were failing, hopelessly failing, to apply the rule that, in order to qualify for benefit, you should be genuinely seeking work. This is what this country wants to see. The country wants to see that rule applied. We want to see it applied, of course, to people over 60, and to everybody, because while this country wants to be generous in helping those who wish to seek work and cannot get it—and I should like to be more generous rather than less generous to those people—we increasingly suspect that we are spending a lot of money subsidising people who are not genuinely seeking work. This applies throughout the age scale, not simply to people over 60 who happen to have occupational pension schemes.

To come to the main issue of the proposals of the Chancellor of the Exchequer, when they were repeated to this House last Thursday I immediately welcomed them on behalf of the Opposition as a step in the right direction. I want to repeat that welcome today. It was becoming unbearable to watch this country's economic strength being allowed to bleed away while the Government stood by, refusing to apply the tourniquet whose use was so obviously necessary to everybody else but them. That is why the country's blood pressure, that is to say, the international value of the pound, has fallen to this terrible, dangerous and unnecessarily low level. Any action to stem the flow was to be welcomed; we do welcome it, and repeat our welcome. But after a few days in which to consider the measures in detail, it is right and necessary that we should judge them more critically. The more one looks at them, the more inadequate and inept they seem to be in the economic terms of both what is necessary to put our economy to rights and what is necessary to restore confidence abroad and for our capacity to do so. I do not want to be a Jeremiah but I am convinced that further action will be necessary; and this action which we have now, having been left to this late hour, is now on its own too late to be anything like sufficient. Moreover, the action is wrong-headed and perverse in several important respects.

In order to form a proper judgment necessary to establish the yardsticks by which to measure what is needed I want to speak simply about one or two certain basic principles. The economic problems facing Britain are, in many respects, very difficult and complex. I assure the House that I will not try to read an economic lecture; I was almost going to say that, thank goodness, I am incapable of doing so. But underlying the complexity there is a basic simplicity, which is that as a country we are living far beyond our means. The extent to which we are doing this is horrifying. I had thought that we were borrowing £1out of every £5 we were spending, and I found that terrifying enough. But last week the right honourable gentleman the Prime Minister said that in fact we were borrowing £1 out of every £4 that we were spending. This cannot go on. Every sensible person of whatever political Party in this county knows it cannot go on. To borrow for productive and essential public capital investment is one thing. But we are borrowing on this scale, to a large extent, simply to pay for our current level of consumption and to maintain normal public services at their present level, and this must stop, however painful it is in the short run.

So, my Lords, what do we have to do? Two things, I believe. First, urgently, in the short run we must cut our coat according to our cloth; that is, we must cut down our standard of living to what we can afford. That is the negative and harsh part of it. Secondly, for the longer term, we must take strong and urgent measures to increase our means for the future, so that we can afford to live within our means in the future at the standard we all desire. Action under both headings is necessary, and the Chancellor's measures need to satisfy both those tests. My submission is that they fail to do so.

If we are to meet the second test—that is, if we are to increase our means for the future and create the extra national wealth by which alone we can maintain, let alone improve in the future, our present standard of living—then we must devote more of our resources to exports and investment. It follows that in the short term we must make ends meet by cutting back on our consumption; that is on our everday standard of living. This can obviously be done in two ways, and it is very simple, but I believe we have to talk to the people of this country in rather simple terms if we are to get their backing and understanding. It can be done in two ways: first of all, by restraint on our demands for personal income spending; secondly, by cutting back on the services and benefits provided for us by the State; that is, cutting back what the Government like to call the social wage.

Of course, our individual personal consumption must make its contribution. Hence the vital importance of restraint in pay increases and therefore of an incomes policy. I criticised severely the Government's irresponsibility in letting pay increases run wild—there was no other description—for their first 18 months in power. That is a direct cause of the present high levels of both unemployment and prices. But for the last 12 months the Government have been dealing with this matter in a serious way which deserves support, and I take this opportunity of reaffirming my strong support in principle for the present incomes policy. It is essential and will remain essential in some form indefinitely.

But restraint in personal consumption cannot bear the whole burden. It would neither be right to make it do so nor would it be practicable to try to make it do so. If we are to make ends meet and at the same time put more of our resources into productive investment and exports, a large part of the cutback must come from the public sector; that is, from what is called the social wage. This is a hard reality, but there is no easy way out, and I am afraid I feel the Chancellor is still trying to dodge it. The Chancellor proposes to reduce expenditure in 1977–78 by £952 million and to increase revenue by £910 million, thus making a crude cash saving on the borrowing requirement of £1,862 million. But out of this crude saving only about £550 million—that is, only about one-third—is in resources of manpower, goods or services absorbed by the Government, and the remaining £1,300 million, or roughly two-thirds, falls exclusively on the private sector, on its profits, incomes, spending, production and employment.

Look at the Chancellor's cuts another way and judge them by the Chancellor's own yardstick. In his Budget speech on 6th April this year the Chancellor said that we can achieve full employment together with external balance: …only if we produce a major shift in the use of our resources away from private and public consumption towards exports and investment". —[Official Report, Commons, 6/4/76; Col. 239.] But the Chancellor's proposals cut over £400 million off public investment while cutting current public consumption by the much smaller figure of £136 million; in other words, the Chancellor in his make-up of this package stands utterly condemned by the very yardstick which he himself established only three months ago in his Budget speech.

I would ask you to look at the Chancellor's cuts in another way again; namely, in their effect on employment. The Chancellor estimates that the effect of his measures will add 60,000 to the number of people unemployed by early 1978. Some people say that it will be much more, but let me take the Chancellor's figure of 60,000. I want to ask the Government— and I hope the noble Lord the Leader of the House will deal with this in his reply—where will this unemployment fall, where will this extra 60,000 unemployed fall? I am going to suggest where I believe it will fall, but I specifically ask the Government to break this figure down sector by sector, particularly if they wish to disagree with the version I am going to give.

I do not want to make anyone unemployed in any sector if it can possibly be avoided, but if it is really unavoidable, surely we would all agree that this temporary, desperately sick-making and unpleasant hardship must have a constructive purpose behind it. That purpose must surely be a reduction of employment in the non-productive public sector and lead to an increase in jobs in productive work. That is not to say that work in the public sector is bad in itself; of course it is not. What I am saying is that we are doing more in that sector than we can afford at the moment, and we must get that transfer of resources. In fact, however, the Chancellor's expenditure cuts, so far as I can see, will leave the Civil Service and local government employment virtually untouched, while throwing far the greater part of this extra unemployment on the building and construction industries, which are already severely depressed, at least in terms of future orders.

I say to your Lordships that this is crazy in economic terms as well as being grossly unfair in social terms. Moreover, the other half of the Chancellor's proposals—that is the increase of £1,000 million a year in the taxes on industry—will also cause unemployment, mainly in the private productive sector. It is impossible to quantify, but it is bound to cause some unemployment, mainly in the private productive sector. Again I suggest that this is both socially unjust and economically crazy. This part of the Chancellor's proposals is, in our opinion, due to be severely condemned.

As I said earlier, we must now learn to live within our means and cut our coat according to our cloth. We must make the cuts which are necessary in the short term in a way which will encourage the creation of more national wealth in the longer term. To slap an extra £1,000 million a year in taxes on business costs at the present time will have an exactly opposite effect. It is bound to make industry's immediate investment lower than it would otherwise have been, because some of the extra cost is bound to come out of industry's profitability. It is bound to cause some loss of jobs in the productive sector. If we in Britain are to have full employment in the future and to enjoy a standard of living comparable to that in other industrial countries, we really must now make the creation of new national wealth our priority and drop our obsession with redistributing wealth which we have not got. The Chancellor, in my submission, is still failing to do this.

Before leaving the substance of the cuts, may I say in passing that I welcome the fact that there is to be no reduction in the overseas development budget. Although we are faced here at home with having to take cuts in our own standards of living, our own standards of living will still be unimaginably high by comparison with those in the poorest of the Third World countries. I believe on grounds of Christian morality, or any basic morality, but also in the long run on the grounds of our own self-interest as a country, that we must be prepared to make some sacrifice year by year in our own standard of living to try to help, however inadequately, the raising of standards in the Third World.

Finally, moving from the strictly economic impact of the measures, I want to say something about the almost equally important psychological impact on public opinion at home and on confidence abroad. First, on public opinion at home, I am convinced that the majority of people now realise that we cannot go on living beyond our means, that hard measures are necessary, and they will accept and support them provided that the Government speak, with complete honesty, and that, however hard the climb back for us may be, they believe that the sacrifice is being demanded and designed for a constructive, hopeful purpose in the long run.

I am afraid that I do not feel, nor do I believe that the country feels, that the Government have hitherto been speaking with complete honesty. It was not honest, for example, for the Chancellor to say so strongly earlier in the year, and in his Budget, that such further expenditure cuts as we are considering now were unnecessary for the next year, when he must have known that they were, or, if he did not actually know that they were, he must have known that the probability for their necessity was pretty high. But to have obtained the agreement of the TUC to Stage 2 of the pay policy on those terms, and then, within a week or two, to start preparing cuts of this size does not, I believe, appear to be talking to the country with true honesty. If some of those people feel instead that they have been the subject of a "con" trick, they are not, I think, altogether to be blamed.

Nor do I believe that large numbers of people will readily accept some of the cuts which will hurt them personally, when they see the Government still increasing expenditure in other ways which they do not want, which they know will not help them as individuals, and they do not believe will help the prosperity of the country as a whole. Take this vexed question of nationalisation. I disbelieve in it; I accept that noble Lords opposite believe in it. But whether you believe in it or not, is this the moment? The Community Land Act is expected to cost £350 million in a full year; the nationalisation of the shipbuilding and aerospace industries, £550 million, making a total of £900 million— almost the total cuts for which the Chancellor is now asking.

Move to smaller areas. In health and social services £20 million is now being cut from the capital spending of the NHS. But £40 million is being added to the cost of the NHS by the abolition of pay beds. Even those who want to get rid of pay beds might prefer to wait a little rather than suffer the capital cuts at the same time.


My Lords, may I interrupt the noble Lord? Surely he knows the difference between current and capital expenditure? To go on confusing the country by treating them both in the same voice is really as dishonest as he is suggesting the Chancellor is.


My Lords, I do; it is the Chancellor who does not know the difference. The whole burden of my complaint is that the Chancellor is muddling up the two. The Chancellor is making £400 million of his cuts in capital expenditure and mixing those up with current expenditure, and it is therefore perfectly valid for me to mix the two up together, because if the Chancellor separates them 1 will separate them. I will put to the noble Lord, is it fair or is it not fair to regard as a capital item the cost of nationalisation?


Yes, it is.


Will the noble Lord then admit that some people would rather make some saving on the capital side on nationalisation in order not to have to make some capital sacrifice on the National Health Service, on schools and the like? If we are comparing capital expenditure with capital expenditure, I am quite sure that the great majority of people in this country would rather have more capital expenditure on hospitals and schools, and facilities of that kind, which really matter in their lives, and less capital expenditure on nationalisation.


My Lords, if I may intervene, would the noble Lord agree that we ought to square the box? If the noble Lord is right, and to some extent he is right about current and capital expenditure, would he not agree that if shipbuilding companies need to be bailed out by very many hundreds of millions of pounds in order that they be saved, then that would become current expenditure?


My Lords, I will go so far with the noble Lord as to give him a preview of the speech I may have to make in September, to say that of course I accept that some of that £950 million will have to be spent in any case. But my case is that nothing like as much will have to be spent in order to achieve the necessary results if we did not embark on the full-scale nationalisation not just of the shipbuilding industry, which does need help with this money, but also the aircraft industry, which, in my view, does not.

Secondly, may I turn to the question of confidence abroad. The main cause of the collapse this year in the exchange value of the pound has been a chronic lack of confidence by those who have to hold and trade in sterling. I ask myself whether these measures will restore that confidence, and I am afraid I doubt it—at least not for long. I am afraid the early signs in the foreign exchange markets have not been all that encouraging. Why do I doubt it? Partly because of the critical analysis of the economic merits of the Chancellor's measures, which I have just given, and partly because confidence is an intangible asset which is affected greatly by attitudes and impressions as well as by individual acts of policy.

What our overseas creditors and all traders in sterling want is not so much dramatic measures; they do not demand sacrificial offerings from us for the sake of sacrifice. What they look for is evidence of a British Government whose deeds match their words, who know where they are going, and show the determination, willpower and stability of policy and purpose to get there. This is not the impression which has been created by this Government, nor is it being created now. The stubborn pretence for the first half of this year that these spending cuts were not needed, and would not be made, created the contrary impression. The emphasis on these cuts, now we have got them— on cuts in capital expenditure rather than public consumption—create the contrary impression. So does the imposition of a huge extra tax burden on industry. So does the Chancellor's failure to commit himself to a firm, longer-term programme for further reductions in the borrowing requirement beyond the next financial year.

Far from being steady and constant and firm in his policies and objectives, Mr. Healey, as Chancellor, has been a zig-zag Chancellor to exceed all other zig-zag Chancellors that there might have been in the past. Look at some of the examples of his zig-zagging. Take the jigging up and down of the VAT rates, with no stable or sustained industrial or economic purpose behind the changes. Take the severe strain on industry's financial resources which Mr. Healey imposed in March 1974, and then reversed eight months later after terrible damage had been done to industry's power to invest. Take the fact that in September 1974 Mr. Healey announced that the rate of inflation had already been cut to 8.4 per cent, and would certainly be within 10 per cent, at the end of 1975, when every informed observer abroad as well at home knew that this was nonsense.

Take, above all, the wild inconsistency of Mr. Healey's attitude towards the importance of the public sector borrowing requirement, which is the central subject of his latest measures. Two years ago he made a major plank of his first Budget his intention to make a major reduction in the previous year's borrowing requirement, which he criticised severely for being too large. But in practice, instead of nearly halving it, as he said he was going to do, he nearly doubled it to £7.6 billion. The following year he increased it again to almost £11 billion. This year he started the year by budgeting for it to be even larger at £12 billion. Now he comes along to reduce it with plans to cut it to a maximum of £9 billion. Of course he is now right, just as he was right in March 1974, but he has been terribly wrong in the interim.

How can people, particularly foreign holders of sterling, large traders of sterling, have confidence, in view of this past record, that this new policy is now to be firmly adhered to and followed through not only in 1977–78 but in subsequent years as well? Death-bed repentances seldom carry much conviction in this world however much they may command in the next, and if the Government really are to carry conviction at home and confidence abroad that they have changed their policy, that they really now are determined that Britain must live within its means, then I believe that the Chancellor—I do not by any means wish to belittle all that he has done or the courage he has shown on some occasions—should look deeply at the example set by his right honourable friend the Prime Minister in November 1967.

Then, too, a Chancellor had struggled hard but had to admit that there had to be a sea-change in economic policy, and he thought it right to resign the Chancellorship not only, or perhaps even mainly, as a matter of personal honour (because there was nothing to be ashamed of in what he had been trying to do) but, above all, in order to create confidence at home and abroad that the new policy was the real policy, and in the belief that one could not carry conviction by a new policy unless one also had new management. I say with regret, and not with any animosity, that I believe the Prime Minister and the Chancellor should consider that situation very carefully.

To sum up, my Lords, it seems to me that the cuts in public spending are to be welcomed as a step in the necessary direction but that they are insufficient in size and seriously wrong in their composition. Secondly, it seems to me that the imposition of an extra £1,000 million in tax on industrial and business costs is wrong and very damaging to investment confidence and to productive employment. Thirdly, it seems to me—and this answers the noble Lord's point about the severity— that while the reduction of £1½ billion in the public sector borrowing requirement is probably about as much as could be achieved, or ought to be achieved, in the next single financial year, this should all have been achieved by cuts in spending, without half of it coming from taxes, and also that the Chancellor should have committed himself irrevocably to further programmed reductions in the borrowing requirement in the years succeeding 1977–78.

For all these reasons I feel that the Chancellor's current package is unlikely to be sufficient on its own to re-create foreign confidence on a lasting basis. What we need is not necessarily a more savage cut in total in a single year, but the commitment to a firm programme which promises to reduce our borrowing requirement step by step over the next few years and to bring this about not by increases in taxation, not by cuts in investment, but by cuts in public consumption and by the transfer of manpower and other resources from the non-productive to the productive sector of our economy, accompanied by measures openly and deliberately designed to stimulate the creation of new wealth for the nation, including in particular cuts in our present punitive levels of personal taxation which now affect not just the people at the top of the salary scale but right through the salary scale in all forms and levels of employment.

With such a firm programme for the next few years, Britain, I am convinced, would climb back steadily, even though slowly, to economic strength and prosperity, including full employment. But, I without it, I fear we shall continue to I slither from one crisis to the next, with high unemployment, a high rate of I inflation, and a standard of living for everyone steadily declining compared with that enjoyed in other major industrial countries. I beg the Government to follow up this first step, which we welcome with the kind of firm programme—an announced firm programme—for the next few years which I believe is essential.

4.4 p.m.

Baroness SEEAR

My Lords, the House will perhaps be relieved that in view of the fact that we have had a number of economic debates in recent weeks I do not intend to give an overall Liberal view of the economic scene, but rather to pick on certain specific points which have not been so greatly emphasised by either of the two noble Lords who have spoken this afternoon, and to ask the Government one or I two, I hope, pertinent questions. Before doing so, I should like to say that the suggestion which is coming perhaps as a Motion later from the noble Lord, Lord Harmar-Nicholls, raises an issue in which we on these Benches are also greatly interested. While we would not go along with the idea of sending this matter to the Committee of Privileges, we believe that it needs investigation, and as the noble Lord, Lord Carr of Hadley, has just said, we are not at all satisfied with the way in which matters of this kind have been developing over previous years.

Before raising the particular issues that I want to talk about this afternoon, I should like to say to the noble Lord, Lord Jacques, how relieved I was to hear today—as last week, when the question of cuts was first raised—that the Government are resisting the advice they have had from some more esoteric quarters of their advisers to bring in import controls. However, I was a little anxious when the noble Lord went on to justify what the Government had already done in the way of import controls as a reason for doing no more. That section of his speech seemed to me much to weaken his protestations that he disapproved of that line of advance. When he says that further matters in this area would be discussed with the TUC and with the CBI, I hope the noble Lord will remember that on this matter of import controls it is by no means only the producer interests in this country, be they employer producer interests or employee producer interests, that are concerned with matters of imports; it is also very much consumer interests which are concerned with matters of imports. Are there not a number of occasions, of which this is just an example, on which the consultations they have had with the producer interest should also have been extended to include what consumers wish to have done in this matter as well?

In looking at the Finance Bill in general and the economic issues which lie behind it, it is important to be certain that we are getting the right fundamental analysis as to what our problem really is. The temptation in these situations, all too easily fallen into, is to deal with symptoms of what is wrong with us without getting at the real causes. It seems to me that there are two matters with which we must deal. One of them has already been dealt with at some length by both speakers today— although I have a little I want to say on this matter—but the other has not so far been presented in the form in which I wish to present it.

The first matter is the obvious fact that expenditure in this country is gravely out of control and that action has to be taken to see that it comes within control. This is a situation in which we are not unique. The expenditure of other countries, including, for example, the United States of America, has become grossly out of control, and it is very easy in any democratic country for this to happen. The temptation to bribe the consumers, the voters, the big special interest groups with promises which require financial backing which is not in fact available, is a temptation to which all political Parties fall. So the need to bring public expenditure under control is of course the first and the obvious issue with which we are confronted. A very great deal has been said already by the noble Lords, Lord Jacques and Lord Carr of Hadley, in this regard.

I want to make one or two points only, not because I do not think there are a great many other things to be said, but because we do not want the debate to go on too long and many of the points have been raised by previous speakers and many will be said by more than one of the speakers who are to follow me. In passing, I should like to say that it seems to me a pity that when the Government embark on a plan of economy they have to indulge in petty little meannesses which really make no difference worth speaking about to the sum total. I know that this in itself is a small matter, but why on earth, when the Government were going through the list of economies which they could make, did they see fit to delay for another 12 months the invalid housewives' allowance which they had promised to give? To have done this for a paltry saving seems to me quite extraordinary. One is tempted, perhaps unworthily, to believe that it is because there is no powerful, organised interest group to speak for that particular small group of persons whose savings will be lost in the general expending of money which goes on regardless. But that is in passing.

The major point I want to make reinforces and to some extent extends what has already been said about the need to look again, and to look far more fiercely, at both Whitehall and town hall. I do not believe that there is not still much room for further saving in both those directions. The percentage increase in white collar employees by Government since 1962 is 25, which is surely far too high. It is too high both in terms of the number of persons employed and the levels of pay. I know that this is a fiercely contended point, but I find my students going out to earn salaries which to me seem excessive; I am told by industrialists, who do not pay money away because they enjoy paying it away, that they are the kind of salaries that they have to pay to compete with what Whitehall is paying.

I cannot believe that this state of affairs is satisfactory. Nor do I disbelieve the industrialists. Why should I, when they tell me that Whitehall is pricing them out of the market? Why should I disbelieve them when, for example, I was told the other day on very good authority, who shall be nameless, that she had been present at a committee meeting—not a Whitehall meeting but a town hall one—at which a young woman of 25 was paid over £5,000 a year to be in charge of a department of needlework? I am not decrying needlework—I have no claim either to decry or praise it—but it seems to me that we are getting wildly out of proportion when salaries of that kind are flung about, and it is surely something that must be looked into. Noble Lords in all parts of the House appreciate what I am saying.

When it comes to town hall, I think we could adopt an approach that might in the end be very profitable, not only in economic but in political terms. I believe, with both noble Lords who have spoken, that at last the public as a whole realises that the big enemy is inflation. Indeed I believe that the general public, perhaps to a greater extent than the leaders, are aware of the threat with which they are faced; aware of the importance of solving this problem of overspending. For this reason, I say that if one talks to the ordinary ratepayers in the country one discovers that they know that there are all manner of excessive expenditures going on.

I believe, therefore, that if, at town hall level, a very tough limit was imposed—I applaud the fact that the Government are trying to be tough in this matter, and in my view the ratepayer is their ally against the official—and town hall was told to find ways in which economies could be made, and made in close consultation with ordinary ratepayers everywhere, economies would be made. After all, there are ward organisations of all the political Parties. If they were asked to come up with recommendations of how in their areas economies could be made, I believe that town hall would be weighed down with recommendations—some of them very foolish, no doubt—based on local knowledge.

We talk about participation. Let us get ratepayers in the wards, in the country, coming forward with their suggestions as to what economies could be made, for I am convinced that there is a very great deal of room for this. After all, the connection between expenditure in town hall and rates, even if it is not as close as some of us might like, is still very close indeed. And who knows better whether the services being rendered are really worth the money that is being paid for them than the, people in-those areas? I suggest that there is room here for a real participative exercise, which would have the benefit of being participative in itself and which could lead to some very substantial economies.

In discussing the question of Whitehall and town hall, I have not so far made any suggestions about the Whitehall end, and in this connection I wish to deal with one area. I have yet to meet anybody who disagrees with those who say that there is a layer too much in the Health Service. Some people say that we do not need the region, others that we do not need the area and some that we do not need either, but I have never met anybody who says that we need all the layers we have. I have not costed it, but there must be a considerable amount of waste money going into supporting an area in the Health Service which has no defenders. I do not know how it ever got in, but certainly nobody believes that it should stay in. I recognise that with all the disturbances there have been in the Health Service it would be a little much to disturb matters yet again, but when we are looking for economies we must not be too nervous about the way in which we stir up what might look to be hornets' nests but which may prove to contain hornets with very little sting when we come to ask the people in the country, who are benefiting but who are also paying for these services, what sort of economies they would like to see take place.

The task of finding ways to make both ends meet, of cutting excess spending, is an apparent and well accepted need, but the question that does not seem to me to be asked or answered sufficiently—the issue that does not seem to be met sufficiently—is the fact that when we in this country compare ourselves with what happens in other countries, it is not so much that our deficit is so appalling, it is not so much that we are over-spending or even that we are overtaxed. I think the way in which the incidence of taxation falls is open to criticism, but the total volume of tax collected in this country is not strikingly different from the total volume collected in other countries; obviously it varies from one country to another. Our real problem, it seems to me, is that we get such a poor return for our money, be it the money we have invested in industry or the money used by Government. Not only do we get a poor return but also—and of course this is linked to the question of a poor return—we get a poor return for our use of resources, including our human resources, both in Government and in the private sector.

It is to this question that we should primarily be directing our attention if we are to pull the country out of its terrible malaise. How can we get a better return on the resources we have? It is no good redeploying those resources, although I want to see them redeployed, if we continue to get such a poor return on them. As I say, it is to this question that we should be paying major attention. Of course, F agree that we need to have a greater wealth-producing sector and a smaller wealth-spending sector; I am putting it in that slightly pompous way because we must underline that wealth producing is not all done in the private sector. There is wealth producing in the public sector, too. Equally, we must remember that wealth producing does not apply only to manufacturing industry; there can be wealth producing in services as well. So that neat, over-simplified idea, that all wealth production is in manufacturing industry is too simple and should not pass without comment. But we need this shift out of wealth spending into wealth producing and I echo the comment made by a colleague of mine who said, "I am constantly meeting young people who want to devote their lives to the redistribution of wealth, but I hardly ever meet one who wants to produce the wealth in order to redistribute it."

Here, we have a basic problem of attitude, and unless it is checked we shall not achieve better use of our resources. In this connection, I feel that the Party opposite—understandably if one looks back 50 years—still has a considerable amount to answer for and, therefore, a very considerable job to do in bringing about this change of attitude towards the social importance of wealth producing. The idea that there is something rather indecent about being a wealth producer and something noble about being a wealth distributor, combined with the belief which is all too commonly held and fostered in some quarters which have given great support to the Government that it is quite easy to get available resources for the good schemes they want to support, must be dispelled. It is perhaps unfair of me to say it but I have, after all, spent a good deal of my working life in an atmosphere in which, for some sections at any rate, the idea that better social services can be had simply by passing an Act of Parliament is held with all too little regard for the source of the funds which are to pay for those better services. I have seen several generations of students sent out with that belief firmly implanted in their minds.

So this is a long-term problem and it will not be overcome just by another Budget or mini-Budget. However, unless we make a start on it, we shall not get the better return on the resources that we use and without which a mere redeployment will not help anybody much. Of course redeployment means a number of things. It means being selective with the use of the resources, and selection implies rejection. Selection means that there are some directions in which the Government are prepared to give support, to give money and to give encouragement, and that there are some directions in which they have to say, "No". I wonder whether the Government still have the toughness to say, No where people are asking for support because they are in a situation which confronts them with acute and serious difficulty and which will not be solved simply by bolstering them up.

Better use of resources brings us again to this question of the use we are making of manpower and the preparations we are making for its better use. The question came up earlier when we were talking about genuinely seeking employment. I should like to add here, picking up the point made by the noble Lord, Lord Houghton, that of course—and I know I made this point last week—we have not raised the question of people with occupational pensions because we think that they should not be allowed to draw unemployment benefit because they have an occupational benefit, but because they are not genuinely seeking employment. May I ask again, as I asked last week and the week before, that the interpretation throughout the whole spectrum of people drawing unemployment benefit and the interpretation of the phrase "genuinely seeking employment" and what is regarded as suitable employment should be reviewed, particularly for people under 45?

It was last December that the Manpower Services Commission produced a list of jobs for which it could not find people. I have repeatedly mentioned in your Lordships' House that we not only have inflation and full employment—which, 10 years ago, was considered to be an impossible combination—but we have unemployment, inflation and shortage of labour in some sections of industry. This is a ridiculous hat trick. The list of jobs for which it is difficult to find people came from the Manpower Services Commission seven months ago. I asked in a debate early in the year what steps were being taken to see that those shortages were filled. The list is there. I have never had an answer as to how far we have got in training people to fill those shortages.

There is another and equally pressing question: we are told, and there are signs that it is so, that the economic recovery is on its way. Every single time there has been economic recovery in this country we have run into acute shortages of labour. It will he inexcusable if this occurs once again because then we shall get this appalling misuse of resources. What is the good of putting money into new equipment if there are bottlenecks in the operating of the plant so that the equipment cannot be properly used? What next? Now, with well over I million unemployed, we are not getting people trained to fill the shortages which already exist and which will exist in much greater numbers as soon as recovery takes place. Can we have information from the Government as to what has been done in relation to the shortages which were identified last September and what has been done to identify what will be the shortages with recovery and what in numbers—and I should like this quantified—is being done to see that those shortages do not arise? This will mean once again that we put our capital into areas of growth and recovery and then we are held up with these absurd, wasteful bottlenecks because we had not the foresight to see that we were there. Foresight combined with some degree of toughness about genuinely seeking employment is what is needed.

If we really want to encourage the recovery of industry and to increase growth in the manufacturing sector and make good use of resources, we must look again at the kind of rewards which go to the wealth producers, particularly the middle managers. We all know that we are losing these people. People of the age of most of us in your Lordships' House would probably not he offered jobs overseas, but the young people under 35, as we must all know, are looking around, comparing their return with that for the same kind of job in other countries. The noble Lord, Lord Jacques, pointed out that the additional tax on employers—which I deplore—brought us more into line with European practice. Of course that is true but has the noble Lord looked at other aspects of European practice, particularly in relation to the kind of rewards which are given to the wealth producers? It is no good ducking the importance of the economic contribution that managers make.

After all, management is often criticised for having failed to make industry sufficiently effective. If it has been bad management which means that industry loses out, good management is of the greatest possible importance economically and it should be rewarded accordingly. We must look again at the tax levels as they hit those people. The Chancellor of the Exchequer spoke as if he understood that, but one has to look at the small print and I do not feel that the reflection of those remarks in the figures in the Finance Bill shows that he has adequately taken this point on board.

That brings me to the final point I want to make. If this recovery is to be sustained—and it has not yet got off the ground—what happens when the pay pause comes to an end next year will be of the greatest possible importance. It is very difficult because, on the one hand, we must encourage the people who need to be encouraged by the additional payments (which, after all, they earn if they are really delivering the goods) and, on the other hand, we must make certain, or else everything falls to the ground, that there is some overall control over pay.

My Lords, I know I said this last week, but I intend to continue saying it again and again; that is, that we should work out the institutional procedures for deciding how these decisions are to be made and, in doing this, we should look further than just the TUC and the CBI. These bodies are not representative, by far, of all employed people or of all the interests involved in the settling of pay. Can there not be a wider extension of consultation, of involvement, in what comes after August 1977? Because if we do not win that battle, then everything that we have been talking about today will be so much waste of time.

4.31 p.m.


My Lords, it was to be expected, and is quite understandable, that this debate should become a discourse on the general economic problems of the nation, with more emphasis on last Thursday's announcement by the Chancellor than on the Finance Bill itself and the Budget that it is implementing. Indeed, the noble Lord, Lord Jacques, said that he wanted that to happen, and that was right. I was pleased to note that my noble friend Lord Carr and the noble Baroness, Lady Seear, recognised in passing that there was something other than the sheer econmic argument, which they have added to today. We are dealing with the Finance Bill, and I believe that there are good House of Lords reasons for remembering that today, quite apart from the important economic figures that have been bandied about by the speakers so far. We should be considering whether or not we ought to be giving it a Second Reading. We ought to take into account that there are things as important, and perhaps more important, as the economic strength of the country. There are things known as the freedom of the individual, and as being able to go on living in a free society—and marginally this Finance Bill embraces that thinking, too.

We all know that under the terms of the Parliament Act the House of Lords has no say at all in the levying or collection of taxes. That is the prerogative of the elected Parliament, and that is right. But we have our responsibilities in other spheres, and we must see that we do not ignore those responsibilities or run away from them. It is on the grounds of whether or not this Finance Bill is being inadvertently used in a way which may be weakening the future powers of your Lordships' House that we ought to examine it in some detail and consider whether or not we ought to reject it. The last time this power to reject was used by the House of Lords was in 1909, and that led to the constitutional crisis of 1911. The volcanic eruptions which came from that crisis mutilated many of the powers which the House of Lords had in those days, and so since then the House of Lords has been very cautious in the way it handles finance matters.

I want to suggest to your Lordships today that perhaps over recent years it has been too cautious; that it has been too cautious to the neglect of its own vital function of acting as a watchdog to safeguard the constitutional freedoms of the individual in this free society. On balance, I would say that that is a more important power to be used than merely having the monopoly to control the levying of taxes, and we should be very reluctant indeed to see this power, which we still have, whittled away. I would say to your Lordships that I do not think we ought to give a Second Reading to the Finance Bill today unless, at least, it has a warning notice attached to it. If it is to be allowed to go out as it now is, without such a warning notice attached to it, then I believe that we shall be being neglectfully cautious, and possibly infringing our own Standing Orders.

When the financial monopoly was given to the House of Commons they, in return, undertook to confine any Finance Bill purely to financial and tax matters. That was the agreement; that was what they understood and what they undertook to do; and they specifically agreed never to abuse their special financial prerogative by what is known as "tacking" on to a Finance Bill any matter that was not a tax matter or which in any way was likely to infringe the constitutional rights of the British citizen. That was the arrangement, that was the bargain—written, implied and well understood on all sides—and according to our own Standing Orders any such matter that is not to do with tax should not be easily passed through this House. The accepted procedure for things which are not tax matters is that they should be passed through both Houses, both having the power either to amend (which we have not got on a Finance Bill) or to reject—and if we reject this we can reject it for only one month, after which it automatically passes whatever we do.

That is in our Standing Orders, and I think it is right to have on the Record, as this is a continuation of an argument I have been putting to your Lordships individually for the last fortnight, the authority for saying that with such force. It is Erskine May, page 783. I quote: In former times, the Commons abused their right to grant supplies without interference from the Lords, by tacking to supply bills provisions which, in a bill that the Lords had no right to amend, must either have been accepted by them unconsidered, or have caused the rejection of a measure necessary for the public service. This practice infringed the privileges of the Lords, no less than their interference in matters of supply infringes the privileges of the Commons; and has been met by the Lords by standing orders … That is the authoritative confirmation of the point that I made about this bargain: that we, the nation, allowed them to have the full authority on tax matters, but in return for that they promised not to abuse a Finance Bill, which applies taxes, by bringing in something which was different from taxes and which may well be constitutional in its effect.

The Standing Order, which is on our procedural Table today, is Standing Order 49, which says this: The annexing of any clause or clauses to a Bill of Aid or Supply, the matter of which is foreign to and different from the matter of the said Bill of Aid or Supply, is un-parliamentary and tends to the destruction of constitutional Government". My Lords, 1702 was the year in which that preventive provision was inserted into the procedures of both Houses. I want to suggest that the Finance Bill that we are dealing with today can be read so as to show that Schedule 6 to it is an infringement of the authorities that I have just quoted. Schedule 6, as it now stands, allows Inland Revenue investigators, after application to a court, to break in and enter private premises and to take away private papers which can be used to the detriment, tax-wise, of a private citizen. That, in my book, is clearly a constitutional change in the laws of trespass and of individual freedom. This is a section of law making which, in my view, is well outside the scope of a privileged Finance Bill. It is a law, this Schedule 6 provision, which should be enacted if at all, only after it has passed the full and separate examination of both Houses each of which has the power to reject or amend.

It was on these grounds that initially I was inclined to ask your Lordships to reject this Bill. It was on these grounds and it was certainly not with the idea of delaying the implementation of the Budget proposals as agreed by the other place. They have to be in operation before August 5th in order for the administration of the country to continue; it was not with the idea of delaying that. Originally I had the idea of asking your Lordships to consider rejecting it merely so that it could be returned to another place for them to correct; because if we rejected it and it was returned to another place then, within hours, perhaps within minutes, the offending Schedule 6 could have been removed, making this Finance Bill a clean Bill. Then, if they so wished, the terms of Schedule 6 could have been properly re-presented as a separate Bill which could go through the proper channels and, if found acceptable in both Houses, could have been made the law without infringing Erskine May ruling or Standing Order No. 49.

To have done that would have obstructed no one. There is no special date or special urgency behind Schedule 6 such as there is behind the Budget proposals which must be there by 5th August in order to grant the money to pay for the administration of the country. At least, I hope that there is no special urgency about Schedule 6. I hope there are not people lined up ready to have this freedom taken away from them and that there is no special urgency to get on with that job. I am presuming there is no urgency. We would not have delayed the real meaning of the Budget and we would have avoided what is a constitutional infringement of the freedom of the individual in a way that Parliament is there to see properly protected. That was initially what I intended to propose to your Lordships today.

But within the last week Mr. Speaker has taken certain action which I believe would cause the rejection to be misunderstood. I still think it would be right to do it; but since Mr. Speaker has taken the action that I shall now describe, I believe that there would be a real risk—and this I accept—of the action that your Lordships would be taking in rejecting it being misunderstood and of bringing in its train other things perhaps more harmful than letting it go through. In the last week, Mr. Speaker has officially certified this Finance Bill as a Money Bill. When he designates a Bill a Money Bill that, at first sight, conclusively implies that it is free from "tacking". I see that the noble Lord the Leader of the House nods his head. That may be a point that he will make if he feels that the points I am making are worth answering at all.

I am reluctant, and your Lordships will be equally reluctant, to appear to be in any way in conflict with Mr. Speaker because we know that his ruling, apart from being weighty, is unquestionably an objective one. It is for that reason I would not now propose to suggest that your Lordships vote against the acceptance of the Finance Bill. But I would say this: if new evidence could be produced, it would not be a slur on the dignity of Mr. Speaker or upon the supreme confidence that we have in his impartiality and his objectivity to ask him to take such evidence into account. It is within the recollection of all here that precisely this has been done within the last month; so that there is a precedent, and a very respectable one, which can show that even Mr. Speaker's ruling does not stand firm for all time if new evidence can show that an Amendment ought to be made.

On the question of whether or not a Bill was a hybrid Bill a week or two ago in another place, Mr. Speaker Thomas reversed a ruling given by his predecessor earlier in the same Session on the grounds that he had new evidence. He was right and it was applauded throughout the country. So it is because one does not want to give the impression of being in conflict, and in order to maintain the good and proper relations between the two Houses, that I would suggest that we ought not to reject it. I maintain that the precedent I have given of only a few weeks ago would show that if there was new evidence it could be taken into account.

I think it right that I ought to tell your Lordships what I think the new evidence is. I believe that the ruling was given to make this Bill a clean Money Bill on the proper grounds that it could be said that the elected Chamber has the sole power to levy taxes and it is right that they should have the power to see that those taxes are collected. That I would accept. But I wonder whether the noble Lord the Leader of the House could at some time get one of the Law Officers to confirm whether or not this power is just for the collection of taxes as agreed. This power that is taken in Schedule 6, after an application to a court, enables an individual house to be broken into and papers taken in order to arrive at the assessment of what he may have to pay. That, I would submit, is not in accordance with the collection as well as the levying of taxes. I believe that those new grounds may not have been put to Mr. Speaker when he gave the ruling on the Money Bill.

However, the grounds for giving clearance are, at best, hazy enough to suggest that this House should at least make some official move to remove any doubts as regards future Finance Bills. That is as far as I want to go today. To this end, your Lordships will see that I have put on the Order Paper today a Motion to the effect that the operation of Standing Order No. 49 he sent to the Committee for Privileges for them to examine and to strengthen for future years. If the noble Lord the Leader of the House when he speaks could give me some indication, I would prefer to do it this way in order to make it perfectly certain that there is no question of our wanting to be in conflict with the powers of another place. My noble friend Lord Carr and the noble Baroness, Lady Seear, seem to have indicated that they have some sort of sympathy with the Motion which I have just described and which I have on the Order Paper. If the noble Lord the Leader of the House could, with his even greater responsibilities and influence, show that he feels that, too, then, when we get to my Motion after this debate, I would beg leave to withdraw it with the idea of re-presenting it on the Order Paper in September so that we have given a gap which can remove any possible thinking of our wanting to be in conflict with another place.

The Privileges Committee may find it desirable, if they are allowed to examine it, to find some way of underlining the message contained in Standing Order No. 49 and so prevent the ancient powers and privileges of this House from falling into disuse—because that is what we have been allowing to happen over recent years. Half of the Finance Bills that have come before this House since 1911 have not even been designated as Money Bills. I believe that we must be on the alert. I hope that your Lordships in all parts of the House will find it prudent, at any rate, to be so.

Having made that technical point, perhaps I may be allowed for a minute or so to make a point on the Bill itself. As regards the other parts of the Finance Bill and the economies announced last Thursday, I should like to say—merely as an extension of what I have already said to the noble Lord the Leader of the House at Question Times in the past—that if the measures that were accepted on all sides when announced last Thursday with the idea of wanting to re-establish world confidence had been taken two years ago, they would have re-established world confidence on the question of our solvency and our general economic health. If they had been taken 12 months ago they might have rescued the pound sterling from the disastrous slide in its value; but I believe that this type of medicine, even at double strength, will not alone do the trick today. The lack of world confidence now encompasses much more than mere over-spending or over-borrowing or fiscal ineptitude. That is the view I have formed from speaking to industrialists, diplomats and men of commerce in four continents over the past 12 months, a view that I pass on to your Lordships in all seriousness.

The world now questions our will to do these things and our ability to see them through. This questioning of whether we have the will and ability to see it through comes from our friends as well as those who are not so friendly with this nation. The doubts they want allaying today are summed up in the headline which appeared in an American newspaper 18 months ago when it asked the question, "Is Britain governable?". Our friends say today that we are at the stage where it can be said, "Yes, Britain is governable and capable of rescuing itself, but not under a Party Government". They have seen a Socialist Government unseated because they contemplated an Industrial Relations Bill entitled, In Place of Strife. They have seen a Conservative Government unseated because they introduced a similar Bill. They have seen a second Socialist Government only able to appease the extremists in the unions temporarily by agreeing to measures which can only cripple the private wealth-producing part of our economy.

The first essential in my view towards regaining world confidence is a political one. For a period, whether we like it or not, we must have a Coalition or National Government. We must have a sign as clear and as traumatic as that if we are going to tell the world that we recognise the magnitude of the task before us, a sign that a worthwhile proportion of the leaders of all political Parties are prepared to suspend sectional and doctrinaire aims, as they did in the war, long enough for us to win this war against the threats of economic collapse. If we do that, we shall win through and win through quickly. Without it, even the right and the normally adequate economic measures will be like pouring good medicine down the drain. I see no sign of this action, which I believe essential, being taken. It apparently is not on; but it is so essential and I still live in hope.

4.57 p.m.


My Lords, the noble Lord who has just spoken said in the first part of his speech all that I wanted to say and intended to say. He said it with much greater ability and considerably more clarity than I could have hoped to obtain. I support that part of what he said, but with one or two differences. He started by drawing the attention of your Lordships to the fact that this House should act as a watchdog. The trouble is not that it has failed as a watchdog; what it has become over the years is a lapdog. It has become a lapdog of the Tory Party carrying out the will—often the transient will—of Conservative Governments when they are in power, and embarrassing a Labour Government when, in the fullness of time, the Conservative Party find themselves on the Opposition Benches.

I will probably bore your Lordships in saying that for me the one act of your Lordships that forfeited my general support of this House as it is now constituted, was when, in pursuance of political needs of the Conservative Party, it failed to hold up our entry into the Common Market, and did not give the people of this country an opportunity to understand in detail and to hammer out in broad principle what was involved. It was very much more than passing a Bill which had been forced through the House of Commons without a single comma being altered; it was finding and telling the British people, "All you have to do to get everything under the sun is to go into Europe". I retain all the documents and speeches, including some of the speeches of the noble Lord the Leader of the House. It is very interesting reading, provided you have a strong stomach. If your stomach is at all weak, then you have a violent desire to go out and be sick. We were being promised by all sides of the House that the Common Market was going to deliver the goods. It has not, and it could not, deliver the goods. The only place from where Britain should be governed is London, not Brussels.

The only people who can save the British people are the British people. If we cannot find within our hearts and muscles the worth and strength to tackle our problems, inevitably we are going to fail, and we deserve to fail. The extent to which we have been mesmerised by easy solutions is also the extent to which we have failed to recognise the problem. I entirely agree with the noble Lord, Lord Harmar-Nicholls, in his protests about Clause 57 and Schedule 6 of the Finance Bill. It is a measure of fundamental importance which I support. It has been tacked on to a Finance Bill because the Government would find themselves in some difficulty if it was treated as it ought to be awed, on its merits, and brought to this House. The Conservative Opposition would unquestionably throw it out and that would be an embarrassment. The provisions in Schedule 6 are necessary. I have already said that.

I am a Socialist without prefix or suffix. My political faith today is that which I have held all my life. That means in political terms that I believe in planning. Planning in the modern world is necessary. You may not call it that. I also believe, because my belief in democracy is as strong as my conviction in the principle of Socialism, that there must be a check and a check again of powers exercised by the Executive in order to secure freedom, not as an academic exercise but because I believe the genius of the British people comes about through the exercise of the voluntary principle. When this nation, down the centuries, has recognised a problem, at that point we are one stage off finding its solution. Until the problems which face our country are recognised in depth, no solution will be found.

I believe we even underestimate our strength. Listening to the speeches today, one would think there has been calamity; everything is wrong. If we do not do this and that, then calamity is going to result. Not one single speaker—not even the speaker from the Government Dispatch Box—found much to cheer about. I do not share that view. I think the cause of our troubles is because we have not come to recognise our position in the world. For me Suez was a turning point. At that point "Great Britain" became "Little Britain". We no longer had effective power to influence events. We could—it was within our grasp if we wished—exercise great influence. But power in the sense that we exercised it in our heyday, or as we thought we could exercise it at Suez, was not a starter.

Shall I bore your Lordships once again by reminding you of this? When we talk about a saving of £400 million, £800 million, £2,000 million, I ask your Lordships to stop and think what has been spent on defence—£57,000 million. For what? What action could we possibly, in any circumstances whatever, undertake against anyone? There is no place for us in the world through the exercise of our defences. Our place is among the nonaligned countries. We are not in the first division any longer. What we should do is strive to be at the top of the second division. We should be alongside Yugoslavia and Algeria, exercising our influence through the 77 countries which comprise the non-aligned group in the world. They matter. Nobody takes any notice, in Washington, Moscow or even London, of a Commonwealth Conference. That is just a joke. But what happens when the non-aligned conference takes place very shortly is a matter of world importance, not in terms of the exercise of military strength, but of what will happen to commodity prices and of what those countries will ask of us, and if we do not give we shall find ourselves in a very weak position indeed.

Of course, the Budget and the statements that have been made are unacceptable. I suppose that if a man has been poisoned you have to do something about it. If you fetch in the doctor and he recognises a sign, he will prescribe the right remedy. At the moment—I think, through mistaken policies—the Government and the country find themselves in a very difficult position. So the Government have to come forward with proposals which I do not believe are likely to be very effective, and I do not think they are very acceptable, yet I support them. The mere fact that the country is faced with its present situation means that there has to be something of this kind, because our physical needs require it.

I am a little upset at the muddle-headedness of what is called the Tribune group, and of those whose views, in general, I share, because they are making the mistake of refusing to face up to their political responsibilities. If the patient has taken poison, you may have to give him an emetic. The emetic may not be very pleasant, but if you want to save his life it is essential. If somebody stands up and argues that the measures which have now to be taken do not measure up to the need, I should not like to be in the Chancellor's position. He has a very awkward furrow to hoe. This is indeed a problem. However, let me say—and let us cheer about this—that this Government have succeeded where the previous Government failed lamentably, because at the moment they have an incomes policy in very difficult circumstances indeed. I pay my tribute to Jack Jones and those of his colleagues who have carried it through in the first year, and again in the second year, because without it this country's position would indeed be difficult. But, very largely because of the carping attitude of the Party opposite, and the very subservient media that we have, which means the Press and the BBC, the position and strength of this country are written down all the time.

It is made to appear that the nostrums which have been prescribed, and which the Chancellor and the Government have decided are necessary, are not enough and have been forced down the Government's throat. I do not believe that. The trade union leaders here are in touch with opinion. They know what is. practical, and they also know that they are playing for very high stakes indeed. I believe that incomes policies are born to die, but in its present situation this country needs an incomes policy for this year and next year, and in order to have that it must stay on course so far as its social and economic policies are concerned. The Chancellor does what he does, because in his judgment the economic and political necessities require it.

In general—if I may say this without any damaging effect—I have a high regard for the noble Lord, Lord Carr. But in the concluding words of his speech he suggested to Mr. Healey that he should follow the example of the Prime Minister in November 1967. I have been in politics a fair time, and I also have a fair memory. I wonder what the noble Lord, Lord Carr, said to the then Mr. Barber in the heyday of the most disastrous economic policy that any Government has ever wished on a poor unsuspecting country. Did he go to him and say "Mr. Barber, go out and cut your political throat"? Of course he did not. He toed the line like the rest of the Tory Party. They toed the line and had the responsibility for the raging inflation which we inherited. We inherited it in 1964—do I not know it?—and we inherited it again after the departure of the last Conservative Government. The policies then were built for us. Addled eggs were hatched out for us by Conservative Administrations who hate the idea of planning. Of course, they hate planning partly because they want to preserve the quality of looking after a section of the community who think that their interests are best served without planning. Planning is a dirty word for them. But, obviously, in the kind of world that we have somebody has to take decisions.

I am one of those Socialists who believe in a mixed economy, and who also believe that Socialism requires the effective use of the pricing system. I realise only too well that either you will have hosts of civil servants taking detailed decisions about manpower supplies, raw material supplies, training and the like, or you will let the pricing system do it for you. I believe in overall planning. I am less enthusiastic than I was about nationalisation in the old sense. What matters in the modern world is less the ownership, and much more the purpose for which resources are used. This seems to me to be more effective. But the idea that at the present state of our society you can leave the shipbuilding industry, the aircraft industry, the mining industry or the steel industry to the higgling of private enterprise is absolute nonsense, and among the chief protagonists of the view that there ought to be over-planning are the great industrialists themselves.

The question in the modern world is not whether you plan or do not plan. The question is in whose interests the plan should be made, and how it should be administered, and for me this is the core of my Socialist belief. In the ultimate, I believe that private good must prevail. I also believe in the maximum amount of individual freedom and for that to happen, then, if there is to be a second Chamber it must see that it retains and uses effectively whatever powers it is given.

I should have thought that one of the lessons in this bicentennial year is to be learned from the Americans, who plan. They plan through the giant corporation, but they also see that it conforms to the rule that the freedom of the individual there is placed second to the public good. There are plenty of exceptions, but the result is overall planning allied to gigantic resources and the freedom of the individual. The result is an economic giant which produces the strongest economic power on earth at present.

While there is no place for us in that league, we have plenty to give and plenty to learn; but we have nothing to give and nothing to learn unless first we understand the problems which beset us. Very largely they are problems of our own making but they are not insurmountable. They can be tackled, but they will not be tackled and we shall not be saved by Common Markets or any other nostrum. We have to tackle our problems by an effective diagnosis and understanding of what we face. Then we have to plan; and when we have planned we have to carry out that plan effectively inside the framework of democracy.

I congratulate the noble Lord, Lord Harmar-Nicholls. It was his speech which provoked me to speak. I do not want to dot the i's and cross the t's, but simply to give my general support and at the same time to draw a lesson or two not only from the Budget but from the experience I have gained in your Lordships' House.


My Lords, before the noble Lord sits down may I ask him a question. I have been reading Schedule 6 while the noble Lord has been speaking. Why is the noble Lord so sure that if the Government introduced a Bill that incorporated all the sections in Schedule 6 the Conservative Opposition in this House would throw it out? I do not think that they would. An officer of the Board of Inland Revenue has to go before a circuit judge in England and Wales and the judge takes his evidence on oath. If the judge considers that there has been fraud he grants an order and the Inland Revenue is allowed to enter the premises where the fraud may have been perpetrated. I do not think that the Conservative Party holds any brief for fraud. I thought that my noble friend who is sitting behind me was objecting to the tacking on to the Finance Bill of a measure like Schedule 6, and I wholeheartedly agree with him. But for the noble Lord, Lord Wigg, to say that if the Government introduced a separate Bill incorporating Schedule 6 the Conservative Opposition in this House would throw it out, is surely nonsense.


My Lords, how can I be sure? But judging by the noises which have been made both in another place and in the Press, I should have thought that there would be considerable opposition to such a Bill. All I am arguing is that for some reason the Schedule was tacked on. I do not agree with the noble Lord, Lord Harmar-Nicholls, that it was tacked on inadvertently; Governments and their advisers do not do that. The Schedule was tacked on because it was much more convenient to do so; it had a much better chance of getting through if it were tacked on rather than if it went through under its own steam. If I am wrong—well, all right.

5.14 p.m.


My Lords, I hope that the House will forgive me if I do not follow the path which was trod by the noble Lord, Lord Jacques, when he opened the debate. Still less do I intend to follow the byway trodden by the noble Lord, Lord Wigg, although, as always, I was fascinated by his contribution to the debate. My intention is to confine myself to the Motion which is before the House and to a rather small and technical part of the Finance Bill which is now before us. If I have to make excuses for so doing, they are two-fold: first, because I regard it as being an extremely important matter which should be ventilated in your Lordships' House and, secondly, because, owing to the haste with which the other place has to consider in particular the later stages of this Bill, ventilation of it is in my judgment desirable and, indeed, necessary.

I intend to confine myself to that part of the Bill which deals with the national heritage. Although in a geographical sense I am speaking from my normal position, I should make it plain that I am speaking personally and not necessarily as representing the Opposition opinion. Nevertheless, one is happy to say that to a very large degree the major Parties at least are in agreement that the financial problems which beset the national heritage deserve and should obtain special consideration and treatment.

When last year your Lordships debated the Finance Act, as it now is, during its Second Reading, I led for the Opposition and was immediately taken to task by the noble Earl, Lord Longford, for the language which I chose to employ on that occasion. I admit that on rereading what I then said I took, if I may use the expression, a good swipe at the Government for what I regarded and still regard as the malicious and thoroughly partisan manner in which at that stage they approached their task of raising revenue. It would be wrong of me not equally this afternoon to give a measure of congratulation to the Government who in this sense have come round, as I perceive, to recognising the problem, although again one has to say that this recognition is by no means disinterested.

Each year the tourist trade is worth several billion pounds in foreign exchange to Britain. The British Tourist Authority has estimated that 80 per cent. of all foreign visitors visit an historic building of one kind or another. It is the attraction of our heritage which to a very large degree draws tourists to our island in the first place. It is the appearance of our countryside and the buildings within both our countryside and our towns, and not least the treasures within those buildings, which are the envy of every other country with pretensions to civilisation.

Not the least part of the attraction is that so many of our historic homes or buildings are inhabited and are going concerns, in the sense that they are still fulfilling a need as a dwelling-house or habitation, for which reason they were first put up. It seems to be generally agreed that heritage properties, particularly historic homes, may best be maintained and looked after by their owners for the time being, because those owners generally regard themselves as mere trustees for their lifetime of the property which they happen to inherit. If it is necessary, I shall declare my interest, although it will be well known to some noble Lords at least.

The Government have recognised and have said through their spokesman on a number of occasions that it is not feasible for either a Government or a similar agency to run historic homes. The cost to the taxpayer, even if such a procedure were feasible, would be so enormous as to render it out of the question. Therefore the Government are to be congratulated on showing a degree of courage, particularly in view of the fact that some of their more extreme supporters remain convinced that any remedial steps which are taken to enable historic houses and their contents to be maintained in private hands will, in some measure or in some degree, confer large and unjustifiable fiscal privileges, I suppose one might call them, upon the owners.

With that measure of congratulation to the Government there go also many congratulations to my noble friend Lord Montagu of Beaulieu and his colleagues, both in the other place and in your Lordships' House, who have made such determined and sustained efforts to bring to the notice of both the Government and the civil servants who advise the Government the difficulties which these buildings are presently experiencing and to suggest measures which, when reviewed calmly and without rancour, may act to the benefit of the buildings, and indeed the nation as a whole.

The Bill which is presently before your Lordships contains a number of provisions relating to this subject, in Clauses 76 to 85. Indeed, in Clause 77 your Lordships will see the designation of the types of property which qualify for relief under this Bill, and to anybody who follows the subject the degree of property which can be the subject of relief has been to a welcome degree enlarged.

Apart from that clause, it is Clause 84 upon which I particularly want to comment, for the reasons which I have stated, and also because I want to ask the Government a question which I hope will be answered later, if not today, and also to point out the fallacy of certain arguments which flow from Clause 84. The clause reflects an attractive idea that by the setting aside of money a degree of relief from capital transfer tax may be obtained, and that money can be devoted to the maintenance of historic buildings, always provided that the public enjoys a certain measure of access to them. Indeed, at first blush it is an attractive idea which has much to commend it and I, for one, would be in sympathy with it if it could he made much more effective.

The difficulty is that there are a number of drawbacks to the scheme which, if not unattractive at the end, at least greatly detract from its attraction. First, the funds which are put into the fund are irrevocable. It is the same as an irrevocable trust, and if that were the only drawback I should have no complaint. The irrevocability, combined with some of the other drawbacks, in fact makes it unlikely that many owners of historic houses will transfer their funds into such a fund.

Secondly, the funds which are so transferred into this kind of trust are going to be taxed at the settlor's own rate so far as income tax is concerned, so that if the settler—who presumably is a person with some considerable funds or he would not be making the settlement in the first place—has a high rate of tax on the margin therefore the amount of money left to be devoted to the historic house at the end of the tax year will be minimal. Therefore, that again is a drawback and is something which I think may detract from the attraction to those who may wish to set up this kind of fund.

Thirdly, this provision separates the ownership of the building from the ownership of the money, or whatever the funds are, within the fund; and by providing no income tax relief for moneys within the fund which are spent on the building the relief which is now available for building supported, for instance, by agricultural estates under the Schedule A estate election, as I think it is called, will be lost on the settlor's death, so that the situation will be worse even than it is already. I draw that distinction because I think it is worth recording it.

Fourthly, and I am afraid even more technically, the fund which is settled, in England at any rate, will be subject to what is called the perpetuity rule which, in effect, means that after 80 years this irrevocable fund will pass away from the historic home in whose favour it has been settled and will have to go to a designated charity or some other similar fund.

I think the perpetuity rule is a drawback in two ways. First, the people who wish to provide for the continuance of their historic home are not likely to do so unless they have a very large amount of free capital which they are content should be dissipated over the next 80 years. Secondly, it will, above all, make it most unlikely that those who perhaps own agricultural land round the historic home will put that land into a fund, because at the end of the 80 years perhaps the income-producing farms, or whatever it happens to be, which will have provided the income for the historic home will inevitably pass into other ownership. So that the old concept of the historic home being the centre of an estate can no longer obtain with the perpetuity rule.

I wish to ask the noble Lord this question. In the way that I read this Bill I cannot see that any particular provision is made in respect of Scotland, where we do not have the perpetuity rule anyway; in which case as I read the Bill—and I may be talking nonsense but perhaps the noble Lord or someone could write to me in the future—it seems to me that a fund set up in Scotland would not be subject to the perpetuity rule but could go merrily on, which would indeed be a good thing. It arouses a happy idea that perhaps people in England might set up a fund in Scotland to finance for all time their English historic home. I merely throw that suggestion in.

Those then are a number of drawbacks. Another one—and I put this in fifthly and lastly—which is capable of being resolved by the Government in the next Finance Bill is that the funds which have been made the subject of a settlement can be devoted to the upkeep of the building but not to the contents within it. So we get the bizarre situation where the trustees can draw on the funds to mend the roof but not to mend the picture or whatever it happens to be within the building. That cannot really be the intent of the Government and I should have thought this is something which could be reconciled between now and when the Chancellor next comes to consider his Budget. It also appertains to gardens or any other amenity land round the historic home, unless that land is itself designated under the section which I have previously adumbrated. So, as I have said, one can use these funds to repair the house but not the contents and not to mow the grass round it. That surely is not very sensible.

Shortly after this Government came into power I made a speech in your Lordships' House to the effect that even at the then existing level of taxation the future of historic houses was bleak. The rates of income tax and the capital gains tax made it a fact that even if—as people then could—they took advantage to make over their historic home in good time so that no estate duty was paid, it was impossible either to save or to earn the sums of money which have to be provided from time to time for the expensive repairs which these old buildings need. I am afraid inflation has only magnified the problem and the introduction of the capital transfer tax has aggravated it still further. I draw the Government's attention to these drawbacks to their scheme only because the position is really not one that can be just left. To do them justice, I do not think that members of the Government believe that this is the end of the story. From reading Hansard as this Bill went through its tortuous course in the other place, I do not think that is so, but it is not right that anybody should think that this Bill will do anything much for the preservation of our historic houses in the future.

It remains a fact that if owners of these places are faced with bills for tax on what are unproductive assets, or bills for their repair which they cannot meet, they will sell those assets if they are saleable and leave them to deteriorate if they are not. The number of works of art leaving the country grows, apparently, every month. The noble Earl, Lord Perth, was in his place some time ago, and he has a number of agonising decisions to make in the course of the year. The number of historic houses which have tumbled down, literally, since the end of the Second World War now runs into hundreds. I do not think we want that situation to continue. I repeat what I said earlier on, that a number of us are grateful to the Government because we now consider that they realise the difficulties and are genuinely concerned to ameliorate the position. But the position will not wait for very long. I very much hope that the noble Lord, the Lord Privy Seal, when he comes to reply, will at least make encouraging noises to indicate that the position will be kept under continuous review.

5.31 p.m.

The Earl of LONGFORD

My Lords, I am in no way qualified to deal with the very interesting and knowledgeable remarks that fell from the lips of the noble Earl, Lord Mansfield. I might or might not be able to deal with the remarks of the noble Earl, Lord Gowrie, though I cannot hear them at the moment. The noble Earl, Lord Mansfield, at one moment announced that he might be talking nonsense. If so, that possibility had not occurred to me, but I must leave the Minister to reply to him when he winds up. The noble Earl made one generous reference to what the Government had sought to achieve, and at the earliest moment one should express thanks from this side of the House.

My Lords, the last time we debated economics I spoke for far too long, a fault from which one or two of the speakers today have not altogether been free. But I shall not myself, I hope, incur that blame today. That will prevent me from attempting to reply to most of the vigorous speeches to which we have listened. The noble Lord, Lord Wigg, dealt with some of the Conservative contentions in effective style, and has saved me from that responsibility. I should like to deal with an aspect of all this which so far has been ignored. I speak, as I suppose one could say, as a middle-of-the-road Socialist and from that point of view, of course, speaking from the middle of the Labour Party, one is bound to discuss the question of whether the Chancellor's cuts were necessary at all. Of course, the Conservatives say the cuts were quite inadequate, but in the Labour Party the argument is of a different character. I propose to spend my fairly short time dealing with that side of it.

I was so happy last week to feel that in these latter days I was not a member of the Cabinet. About now, I should probably have been talking of resignation, to the great irritation of my colleagues. I would have been in great doubt a week or so ago, if I had been in that exalted position, that I could have continued there. In this House a month or so ago I took the line that it would be quite wrong that the level of our social services should be determined by the state of foreign confidence, often a very irrational factor. About a week ago, or before that, we were told that owing to the state of foreign confidence, and owing to the need to reassure the foreigner, large cuts would be necessary. Large cuts have duly occurred, plus the taxation, which I have no time to deal with now. I have every bias in favour not only with the present Government, but with Mr. Healey in particular. He has many virtues not often found together. He is very tough, not that I think that toughness is necessarily a virtue in itself; it could be a curse rather than a blessing to mankind, but in this case it is coupled with a strong intellect, and I hope he will be Chancellor of the Exchequer for a long time to come, despite all the rumours one has heard.

For the reason I mentioned, in view of what I said only a month ago in this House, I awaited with intense anxiety the announcement of the Chancellor of the Exchequer, as did many other members of the Labour Party, including, I am sure, many who sit with me on these Benches. My anxiety was not diminished by a brilliant article in the Evening Standard of 20th July (before the cuts) by Professor Maurice Peston, who is an old pupil of Professor Robbins, although I am not holding either responsible for the other. The article was entitled, "Denis in a Dark World", and this sentence occurred: We might be obliged to act daft because we live in a daft world", or, as the Professor says elsewhere, making the same point, The Chancellor may be forced to do something which is economic nonsense because the key variable, foreign opinion, is not under his control. That is what I was discussing when I spoke last in this House, the question of whether we have to obey the dictates of foreign opinion, however misconceived.

Then came the statement by the Chancellor last Thursday. Like other noble Lords, I have gone through it with a fine comb, reading between the lines as best I could. Admittedly, there is a reference in passing to the need, and I am now quoting from the words of the Chancellor of the Exchequer: to maintain the confidence of those from whom we may have to borrow to finance our external deficit".—[Official Report, Commons, 22/7/76; Col. 2011.] Apart from that passing reference, the topic is passed over in virtual silence. The whole emphasis is on the need to cut back public spending to make room for prior claims on resources, particularly for exports and private sector investment. I am not saying that is in conflict with the desire to restore foreign confidence, but you can read the Chancellor of the Exchequer whichever way you like, this way up or that way up, and you will not find the factor of foreign confidence is stressed in any way.

If this is the true reason—and I believe the words of the Minister—for our policy, it is a much more telling one than the argument about the need to impress international financiers. But it opens up a very technical discussion and takes us into an area where a Back Bench Peer, even with some ministerial and banking experience, is very unwise to speak with dogmatism and even some Front Bench Peers might hesitate to rush in. But to quote Professor Peston again: Although one may disagree with the Chancellor, he is the man in charge. Having had a chance to argue a case, if one has failed to convince him, I feel obliged to defer to his and the Treasury's judgment". The noble Lord, Lord Boothby, is not present, but we do not need him to tell us that the Treasury has often been wrong, so far as we can judge. Some of us are not as humble as Professor Peston when we think of all the Chancellors and their Treasury advisers who have proved so fallible in recent years, which is not to say that anyone here has any claim that he has done better.

I could not help noticing, for example, that a well-known and much admired economist, Michael Stewart—not the former Foreign Secretary—in a powerful letter to The Times on 6th July argued the opposite case most effectively. He argued that there was no reason for cuts in order to liberate resources. So it is a matter of argument and very acute disagreement among those most qualified to judge on technical grounds.

Professor Robert Neild of Cambridge University, and Mr. Terry Ward, examined the whole question of the Budget deficit in The Times of 12th July. Their conclusion was a highly academic one, but I think one gets the general drift. They say: a general bias neither in favour of cuts in public expenditure, nor against increases in taxation, can be justified by a reference to levels in other Western European countries. The general impression left on one after reading this article by Professor Neild and Mr. Ward is that large cuts would not be justified. Various expert assessments have reached me, which came to the same conclusion, the opposite conclusion to that of the Chancellor. For example, this is a very high-level Labour Party source: Constraints of plant capacity are no more a serious justification for public spending cuts than are future shortages of labour". That may be right or wrong, but at any rate it is a view held by those who are well equipped with expertise. I try to give the Chancellor the benefit of the doubt, taking him on his own argument, not about the international financiers but about the resources, and I am left with a very large doubt indeed.

I hasten to say, however, that if he had to make cuts of this magnitude, in my eyes he set about it in the right way and reduced to the minimum the human distress resulting. Of course, I think the noble Lord, Lord Carr, would say that even if he was going to make those cuts he did not make them in the best way or did not level the wisest kind of cuts. The noble Lord, Lord Carr, did say one thing at least with which I agreed strongly: that he was delighted that overseas aid had not been cut. I think we can all take pleasure in that. However, for my own part, I would submit that if cuts of this size had to be made the Chancellor has made them in the least brutal manner available. I say that though I have not yet studied the implications of the cuts for some of the social services, and already before these cuts many of the social services were in very great difficulties. Therefore, on balance my vote, for what it is worth—I take it I will not be required to cast it—goes to the Chancellor, though only by a hair's breadth. I hope that is a clear if not very enthusiastic verdict.

In my speech of 9th June I pressed as strongly as I could the case for selective import controls. I did so in regard to the immediate future and because it seemed, and still seems, to me extraordinarily difficult without import controls to envisage a return at any point to genuine full employment without the trade balance going to pot straight away. I said that a month ago and I would say it again, but I will not develop that argument further this afternoon. The noble Lord who opened the debate had something to say about it, and we may hear more about it from the noble Lord the Leader of the House when he replies.

Tucked away in the Chancellor's speech there is this promise: …the Government will also watch vigilantly the need for any extension of their existing selective import restraints to provide temporary protection to viable industries faced with unfair foreign competition. The noble Lord quoted the next sentence: We have already taken action and we are anxious to discuss with both sides of industry the need for further action of this kind."—[Official Report, 22/7/76, col. 962.] So I think one can fairly say that the door is left open and import controls have not been rejected for good. Here I am not as pessimistic as the noble Lord, Lord Carr, or as optimistic as the noble Lord, Lord Jacques, but, regretfully, I believe the Chancellor will sooner or later find himself driven more and more in this direction. If and when it happens, it will not be a matter for national congratulation but of economic survival. Equally, if the policy of import controls comes to be adopted I would not call it a policy of national selfishness. If only we could make ourselves more economically successful we could do far more for the rest of the world, and particularly the poorer countries, than at any previous time. That is, I am sure, the long-term objective of all of us. Meanwhile I am sure that the Government are utterly sincere in what they are doing and dedicated to the task in hand, and in that respect at least they have my unqualified approval.

5.44 p.m.


My Lords, I hope the House will forgive me if I say a few words on the same subject as my noble friend Lord Mansfield; namely, the clauses affecting the national heritage, Clauses 76 to 85. I should, first of all, say that I speak as President of the Historic Houses Association, and I should like to pay my tribute to the Government for the great help they have given the heritage both in the 1975 Act and also in the 1976 Bill which is before the House this afternoon. Indeed, it has been perhaps the biggest leap forward since the war, perhaps since the Labour Chancellor, Sir Stafford Cripps, accepted the Gowers Report in 1948. That certainly was the Bible so far as the heritage was concerned. But all these problems came up again at the time of the Select Committee on the wealth tax. In fact, this was a very good report so far as the heritage was concerned, because, for the first time I think, all three political Parties agreed what their attitude should be towards the heritage. It is indeed comforting that we have taken this out of the political arena as far as possible. What is now, I think, generally recognised is that conservation certainly does cost money, and that the Government know only too well, as they have several houses in their care which they have to look after.

Great and small historic houses are not refuges for the rich. They are now much more liabilities than assets. I think it may be interesting for us in this House to note this afternoon that only 60 out of the 400 houses open to the public are owned by Members of your Lordships' House. It has been through the efforts of the owners and their personal sacrifices that we are the envy of the whole world today, in a world where big houses have been allowed to fall down and decay. Therefore, I should particularly like to express the Historic Houses Association's welcome for the capital transfer tax exemptions, for the house and the contents and the gardens, subject to public access, and also for other land of scenic and scientific interest. This year this has been extended to lifetime gifts, which also is very welcome.

As Lord Mansfield said, the Bill contains one important new clause, Clause 84, about maintenance funds. I do not wish to go into this, as it has been done so ably by Lord Mansfield, but I would say that there is certainly a welcome on our part for the political will that persuaded the Treasury and the Inland Revenue to accept this new principle of exemption of maintenance funds. However, as the clause is at present drawn it is more than a disappointment; indeed, it is virtually useless as it stands. I am sure it would not be impossible to put that right perhaps in future years. I am sure the public at large would like to see owners encouraged to set up maintenance funds for their houses. These trust funds have to be administered by independent trustees, and I am sure we could trust them to spend the income free of tax on the house. The clause is not going to fulfil its purpose. It will only help perhaps one or two large houses, when it is today the smaller houses that desperately need that help.

All these concessions are tied to public access, and the Historic Houses Association certainly encourage their members to open as much as possible. Last year we had over 7 million visitors to our private houses and thus made a great contribution to tourism. There is no guaranteed profitability from access. Indeed even when one does open it is very difficult to make a profit, and even on the money spent on repairs VAT is charged. In view of these new exemptions, I am sure it will be realised that many new houses are going to be open to the public. Therefore, it is very important for guidelines or rules to be drawn up so that owners will know exactly where they stand. Also, do these exemptions apply to historic houses which are used as hotels or schools or community centres? The Historic Houses Association is at the moment in consultation with the Historic Buildings Council and we certainly welcome these consultations. It is most important that these rules should be flexible, because one cannot possibly lay down rules which will cover a large house near London and a small remote house in the depths of Wales or the North of Scotland. Therefore, the geography of the house, the ease of access to it, and other local conditions must be taken into considertaion. I should like to say that the Historic Houses Association certainly wishes to continue to fulfil its part in making the national heritage work.

Finally, my Lords, I would make one comment on a completely different subject, Clause 12, which is the clause which enables the Government to charge a great deal more for the transfer of number plates from one car to another. This, I hope noble Lords will agree, is a popular and harmless hobby, perhaps a bit snobbish. Nevertheless, many embassies and other people do have these number plates. Many of them have been handed down as heirlooms from one generation to another. I was speaking to a senior police officer recently and he said he welcomed these number plates. Not only did it make it easy to recognise who was driving, but it made people drive very much better, too. I think that those of us who like to have special number plates recognise that the £5 charge is not enough, and certainly something could be done there. However, I hope it will be possible for the Government to say that it is not their intention to make the transfer of such number plates impossible. We have too much conformity nowadays. Perhaps if people want to have one or two number plates, they should be allowed to have them.

5.51 p.m.


My Lords, I am very glad to hear from the last two speeches made from the Benches opposite some approval of what the Government are doing to preserve the heritage of our country and something of its historic buildings. I do not think that the approval should come solely from the Benches opposite, where it might be thought that vested interests exist. I have no vested interest, but I have always been very keen indeed on conservation, and the preservation of the beauty and the history of our country, because if we once lose it it will never be recovered. I think that the creation of wealth is for more than the expansion of consumer goods and the provision of greater entertainment of the people. Governments have a responsibility to keep a balance in public expenditure between what people are demanding and what history will approve of and future generations will endorse, and today we can all see the failure of our ancestors to discharge that responsibility as fully as we would have wished. Therefore, I am glad to give my small voice of approval to that aspect.

I am not very much in favour of power without responsibility, and I am not much in favour of responsibility without power. That is why I do not think I shall enter into the general debate on the expenditure cuts or of the general economic situation this afternoon. The elected Members of another place have still to debate these cuts, and I think perhaps they should have precedence in leading the public debate upon them. My noble friend Lord Longford, as he spoke, brought back to me reminiscences of our joint experience in the Labour Government of 1964 to 1967. We then saw cherished schemes of social welfare go out of the window much more brusquely, with far less consultation, than the present Chancellor has recently extended to various interests inside and outside Parliament. I remember the minimum income guarantee which was established as a pledge beyond economic reach; that went in 1966 because we were anxious to restore world confidence in British capacity for economic recovery. In fact, let us beware; perhaps there are no obeisances that we can think of that may not yet be made in order to maintain world confidence in Britain's capacity for recovery.

I do my best to be enthusiastic about membership of your Lordships' House, but I notice that not much public attention is given to what we say unless it is in a field in which we have some power, which is mostly in matters of legislation. Then of course there is an interest in whether we, in your Lordships' House, are going to pass, amend, or reject what comes to us for consideration. I acknowledge that there are occasions when our debates do excite a considerable amount of public interest, especially on the moral issues of the nation, when we become a kind of secular synod of the Church of England and dwell upon the moral decay of the country, and forget perhaps the strides that we have made in the lifetime of most of us in raising the standards of the people and uplifting a sense of moral obligation to the poor and the needy, the disabled and the old. However, that is for another day. We shall perhaps continue that some other time.

Of course, if the captains of industry were here to give their counsel to the nation, to point the way to this recovery which we are now hearing about, and here to tell us how we can forge ahead and turn the Chancellor's cuts in public expenditure into economic progress, then no doubt the people would listen. But they are not here. Those who command the heights of the private economy are not here; still less those who command the heights of the nationalised industries. So we have to manage without them. The truth of the matter is that nothing that the noble Lord, Lord Carr, or I, may say this afternoon is going to make anything like the impact upon public opinion that would come from some who are absent from our debate today.

However, I want to refer to a matter on which I interrupted my noble friend Lord Jacques, which was on one of the Chancellor's proposals; namely, to restrict the title to unemployment benefit of certain people who are enjoying substantial occupational pensions. He responded to my interjection with a warmth of feeling which moved us all. It enabled him to admit his virtue in not claiming for himself unemployment benefit when he was probably entitled to it. But let me remind my noble friend that this is old hat; it has been tried before. My noble friend Lord Collison, who I do not see on the Benches today, was surely a member of the National Insurance Advisory Committee which went into this matter years ago, and when proposals were made to curtail the right to unemployment benefit of the people we are talking about. But nothing came of it. Why? One reason was that the Trades Union Congress did not like it; another was that the Civil Service did not like it, another was that the Government could not find an acceptable way of carrying out the general principle. I should be very interested to see what comes of the Chancellor's reference to this matter again. We are, after all, dealing with men who are compulsorily retired before the age of 65.


My Lords, would my noble friend give way? Not necessarily. In many cases they retire voluntarily.


My Lords, it is sometimes an open question as to whether you retire voluntarily or whether you go out with your honour and dignity. One can think of all sorts of people who are going "voluntarily", but their going is not so voluntary as it looks. However, I shall not dwell on that. I shall deal for a moment with those who are compulsorily retired before the age of 65 and who—and this is the rub—are required to pay quite substantial national insurance contributions in order to ensure their State pension. I can tell your Lordships that many of these people are much more concerned about getting their insurance contributions franked than they are in getting unemployment benefit. However it is something which I am sure we shall have to deal with later, because it will involve legislation and noble Lords will then have the opportunity of dealing with it.

I want to come now to the point which is of especial interest to this House, and which was raised by the noble Lord, Lord Harmar-Nicholls. I hope that it is no secret that he and I have had lengthy conversations about this matter. I am not dissuaded in my support of Lord Harmar-Nicholls because we are both supported by the noble Lord, Lord Wigg; there are some things even in this House that one has to put up with, and one of them is the support of Lord Wigg.

If we had a Privacy Act or a Bill of Rights I should hope that all the rights of the citizen would be embodied in a comprehensive protection clause of the rights of the citizen to be free of unnecessary intrusion or the breach of the threshold of his home. But as it is, we have these rights of coercion and of entry spread around the whole field of legislation, and sometimes I think that the citizen does not realise what nibbles have been made in one Act of Parliament after another at his inalienable rights to enjoy life free from the intrusion of police or bureaucracy. This proposal in Schedule 6 owes its existence as much as anything to the fact that similar rights, but in entirely different circumstances, were conceded at the time of the introduction of VAT, because I have heard Revenue people say, "We are asking for ourselves only what has already been conceded to the Customs and Excise in VAT" That shows the danger of legislation by the thin end of the wedge, and one has to be on guard against one thing being conceded because it will be taken as a precedent for another.

I pointed out in a letter to The Times on 21st May that VAT and income tax are two entirely different things. The truth of that is that Parliament decided to conscript large numbers of traders into the field of tax gatherers; they have become enforced tax gatherers for VAT. They receive money from those with whom they do business and it is their responsibility to hand that over to the State. They are unpaid, involuntary and in many cases are perhaps not as efficient or as willing as they should be. Thus, when the Revenue, the Customs and Excise, claim the right of enforced entry to look after VAT, in many cases they are looking for the money. They claim that somebody is sitting on money which has been deducted or received from other people which belongs to the Revenue and has not been handed over. But Schedule 6 is an entirely different thing, so we must look at the two issues separately. We should try to safeguard the erosion of our responsibilities in this House on matters of this kind.

Schedule 6 to the Finance Bill seeks to amend not the Income Tax Acts, not previous Finance Bills, but the Taxes Management Act 1970. Lord Harmar-Nicholls will recall that year after year in Finance Bill debates in another place I asked for administration to be brought into a separate Statute so that our debates on the Finance Bill were not crowded out with details of administration when we wished to debate at greater length matters of taxation.


My Lords, until 1911 that is in fact what happened.


Lord Harmar-Nicholls took the words out of my mouth, my Lords. That is indeed what happened, and we now have the Taxes Management Act. The administration provisions are there and Schedule 6 is proposing to amend that Act, which is where the mischief comes. As we know, the proposal first of all was that, on the certificate of a justice of the peace, a right of enforced entry warrant could be given to an inspector of taxes who had declared on oath that he had reasonable grounds for suspecting that a fraud had been committed. I think that rights of enforced entry into people's premises, and especially into their homes, are bureaucracy, not police, and should be very cautiously granted because in many cases those concerned are not equipped for it and they are probably inexperienced in this manner of entry into other people's property.

The main question that Lord Harmar-Nicholls was discussing was whether, by this device of a Schedule to the Finance Bill to amend the Taxes Management Act 1970, matters of importance to us should be put beyond our reach. If we are not the guardians of the basic rights of the citizen, what purpose have we? Surely that is what must be conceded to this House, to both Houses jointly, when it comes to a matter of the invasion of the privacy of the citizen. It can be argued that, like the barmaid's child, it is only a little one; that it will be used only in a few cases and that they will be dreadful ones—that any person with any moral feeling about him will concede that we have the right not only to enter the man's home but to cast him into goal without very much ceremony. That argument has always been used far eroding the rights of the citizen—"We will do it only in the extremity". I believe there are some cases—I am not saying that this is one, although perhaps it is—where the cure is worse than the disease, and that it is far better to retain one's rights than to give them away because one is persuaded that there is a small number of cases which require that sort of treatment.

Before I resume my seat I wish to refer to a further possibility in this direction. Just recently we had the Report of a Royal Commission on standards of conduct in public life presided over by the noble and learned Lord, Lord Salmon. I was a member of that Commission, which has made some recommendations in the Majority Report and some in the Minority Report which impinge on the rights fo the citizen and which would propose to give new powers to the Inland Revenue; the power, in the case of the Minority Report, to take the initiative in transferring to the Director of Public Prosecutions genuine suspicions of corruption—nothing to do with taxation but with other walks of life.

Would that be tacked on to a Finance Bill? Would that be regarded as the powers or the duties of the Tax Inspectorate, and also as a suitable item for inclusion in a Finance Bill? If so, would it, again, be put outside the power of this House to have something to say about it? Or would it be included in another Bill on which we should be free to express our point of view? I say no more about that, except that it shows the danger unless we take note of any tendency in this direction.

My Lords, while I am not in favour, nor is Lord Harmar-Nicholls, of impeding the progress of the Finance Bill on this occasion, it is as well that we have had our say. We hope that what we have said will be read in another place and that in future we shall have proper respect given to this aspect of our work. In the meantine, I hope that this matter can go for examination to the Committee for Privileges and that in due course we will have a report on this most important subject.

6.10 p.m.

The Earl of GOWRIE

My Lords, we have just listened to a remarkable speech, from a very informed source, about the defence of liberty, and I shall refer to one or two points that the noble Lord made later in my speech. I should like to start by apologising in a most heartfelt way to the noble Lord, Lord Jacques, for missing his opening speech. This was unpardonable in somebody who was due to wind up, but I had an engagement that I could not break unless those who do not wish to cut public expenditure choose to subsidise Opposition spokesmen rather than leave them to their own resources. As I am not one of those, I had, unfortunately, to be absent for a few minutes this afternoon.

There should, I feel, be a festive, end of term feeling in your Lordships' House at this time of year, but I cannot honestly say that I detect it. For the second year running, the Government's handling of its Parliamentary programme means that our plans for our holidays and—perhaps more important—our plans for getting on with our own work and earning our own living have been disrupted. If the House of Commons wants a full time professional House of Lords or Senate, it has only to say so. It has the power, subject to your Lordships' consent to create one and, knowing the effect which constant legislative changes have on the productive capacity of the country, perhaps the Government could get the International Monetary Fund to lend them the money to create one.

We in this country are really confusing policy with legislation. We are trying to do too much lawmaking in too little time and with far too little professionalism I feel that we should compare the European and American Parliamentary systems with our own in this regard. I know that we have a civil service to be proud of but, at a time in history when the involvement of Government authority in individual lives and livelihoods is greater than at any peacetime period in our history, we need a much more modern, up-to-date and efficient Parliamentary system than we have at present. It is strange that the persistent increase of public service manning at local and national levels has been accompanied in recent years by a persistent decrease in the effects of Parliamentary advice or scrutiny. Perhaps it is not so strange because the imbalance suits the Executive, whether it is struggling to put into effect a frequently irrelevant or outdated Manifesto or whether it is in hock to one pressure group or another.

When we were in Government, I thought that we were on occasion cavalier towards Parliament. But compare the parliamentary "going-over", if I may put it that way, which the Industrial Relations Bill received with the far more skimpy and desultory treatment that Bills of greater economic and structural import are receiving under the present Government. Consider the Dock Labour scheme alone in this regard. Of course, in some ways I welcome the scheme. It is furiously resented by other groups of workers and it will do wonders for the Tory vote among workers without which no Conservative Administration can or, in my view, should take office.

The progress of the Finance Bill in another place makes a fascinating case for Parliamentary reform and for the need for much wider consultations before a Bill is drawn up, as against the frantic scramblings and unscramblings while it is being pushed through. In this House, where Finance Bills are concerned, we have, as many speakers have said, a rather different role. I shall come to the very interesting points and proposals of my noble friend Lord Harmar-Nicholls at the end of my own brief contribution if I may. Conventionally, though not, I believe, constitutionally, we do not refuse Finance Bills a Second Reading, and we cannot amend Money Bills, dearly as we might like to. Instead, we use Second Reading as a general economic debate.

Your Lordships have heard a notable speech from my noble friend Lord Carr this afternoon and the House heard a notable speech on the general economy and the state of the nation from my noble friend Lord Carrington two weeks ago. In my role as a second violinist—I do not feel that one should talk about "second fiddle" where a Finance Bill is concerned—I have contributed, I believe, to all but two of the economic debates in your Lordships' House since February 1974.

So I do not want to make my old speech again, except to say that I believe that its general theme remains quite relevant. It is, in brief, that the economic problems and the economic opportunities of Britain are compounded and thwarted by British political life and by our political institutions, long and honourable though their history may be. The Conservatives learned—and learned the hard way—that their political aims in the industrial relations field—aims which I, for one, still find entirely reasonable, unrepressive and in line with the sensible practices of our competitors—were a stumbling block to their also reasonable desire to go for growth in the economy.

I contend that the Labour Government and, above all, the Labour Party have not learned and are not learning the same lesson. They believe that prosecuting in Parliament a series of political measures—whether dock labour, pay beds, community land, the nationalisation measures or the taxation clauses of the present Bill—will command such a measure of political assent from the unionised work force in the country that our poor industrial relations performance will improve, our productivity will increase, wage claims will proceed on an orderly basis and our national competitive position will get better. I do not see a whit of evidence that this is the case. When will we in Parliament learn that people are not idiots? As the noble Baroness, Lady Seear, said in her speech, the general public are aware of the effects of excessive expenditure. They do not need politicians to tell them that.

It is, it seems to me, part of the conventional wisdom of the Government that the present wage restraint policy or restrained prosecution of wage claims is engendered by the kind of legislative trafficking which I have mentioned. Surely it is not. When the Wilson Government abandoned the Heath Government's pay policy though not, of course, the threshold agreements nor the mechanism for price restrictions, wage inflation rose sharply because anyone with any sense—and that included the vast majority of working people in the country—knew perfectly well that a wage restraint policy was needed and would sooner or later be reimposed. Therefore, a scramble to re-establish differentials resulted and that at a time when we were still reeling under the effects of the oil crisis. That, too, at a time when the Government had committed themselves, in order to keep the Labour Party in good fettle for the October election, to a very expensive and damaging legislative programme.

If your Lordships think that I am being too partial, let me give another instance from our own side. Your Lordships will remember all the political fuss and brouhaha about property speculation. My noble friend Lord Barber brought in draconian measures to deal with property speculation late in 1973. The Wilson Government then added to them after March 1974. But property, in one form or another, is the underpinning of credit in Western economies. If you go and ask your bank manager for money to expand your productivity, nine times out of 10 he will take a lien on your factory, your office or your home. So the political attack on property speculation which was for the most part contained by the physical area of the City of London, I suggest, helped to undermine the entire credit stability of enterprises all over the country at a time when interest rates were rising very steeply because of the oil crisis. This did us incomparable damage at home and abroad. If, in the Federal Republic of Germany, say, you do not like a set of political attitudes or a group of people or certain practices in the economy, you say so; you draw upon public opinion to support you and you bring public pressure to bear. But you do not set fire to the stables by legislation after the horse has bolted. In any case, it is in the nature of speculators to be very fleet-footed indeed.

We must not think that our creditors overseas understand our Parliamentary and political ways quite as well as we do. We know perfectly well that, when the trade union leaders pledge implacable opposition to cuts in the social wage and threaten a free for all on the wages front if public expenditure is reduced, they do not really mean it. But foreigners do not know this. They see a Government legislating to please a small handful of union leaders, and so the normal cut and thrust of union politics makes them edgy about the pound. They see a Government laboriously leaking and educating its Party in proposed future cuts in its own expenditure.

Then the proposals are announced, no one resigns except two Scottish Members of Parliament (who do not really resign anyway) and the Government do not fall. Surely, the pound should then zoom upwards, in Mr. Jack Jones' excited phrase, but it does not because foreigners, in my contention, are no more idiots than the people of the country. They examine the cuts and see that they are simply a rerun of what we might call "1966 and all that"—better than nothing, but nothing very much. They do not see what they are looking for; not cuts for the sake of cuts, as my noble friend Lord Carr of Hadley said in his speech, but a restructuring of central and local expenditure so that it bears a less inflationary relation to national productivity and consumption. In better English this simply means paying your way and living within your means, including, for of course we do need credit, living within our overdraft facility.

My Lords, 1984, you will remember, was not only the year of Big Brother. It was also the year of double-think. Thank goodness the Chancellor is not yet Big Brother, but he is certainly a master of double-think! About half of his package of cuts turn out on inspection to be increases in company taxation. With 1½ million people unemployed he takes another whack at the employers—nearly £1,000 million in extra taxation on the corporate sector through National Insurance contributions. Yet the whole point of reducing public expenditure is simply to enable you not to increase taxation further with the damaging effects that that implies.

What effects do noble Lords opposite think that will have on our employment opportunities or on companies who might take on school-leavers, for instance? What effects will that have on investment and on those overseas who effectively promote investment by holding on to our currency? How do we think the double act of the Chancellor and the Prime Minister will go down?—I guess like the pound, unless we are lucky. The Prime Minister, with the economists Messrs. Bacon and Eltis at his elbow, talks of the need, and says that the unions echo the need, to shift resources into the producing sector. The Chancellor, to protect the consuming and service sectors, slaps £1,000 million on to the producers. If I were my noble friend Lord Watkinson I would go slow, or sit-in, or walk out. I think that this will have incredibly damaging effects on the investment agreements reached with the CBI.

Do we really think that our creditors do not notice the shambles of a policy which seeks to cut public spending, on the one hand, while not allowing people to contribute towards public services, as in the pay beds dispute, on the other? It is back, I agree, to my old theme, the old irreconcilable of politics. We are politicing rather than housekeeping. To control wages we have to control prices. The control of prices hits profits, hits investments, and therefore hits jobs. I just do not believe that working people on both sides of industry do not appreciate this. We must learn to trust them which is only to say that we must learn to regain the confidence to trust ourselves.

I want to make a final point about the notable speech by my noble friend Lord Harmar-Nicholls. I had the great interest and privilege some years ago to attend the Ditchley Conference run by the late Sir Kenneth Younger (to whom I pay every tribute in this regard) on the question of privacy in this part of our century and in our national life. I acknowledge that there is a very strong vein of feeling among noble Lords opposite that privacy and individual liberty must not be jeopardised. This was a vein which we heard in the speech of the noble Lord, Lord Houghton of Sowerby. I wish I could say that I felt that this feeling were echoed by some of their colleagues in another place.

I acknowledge the difficulties which we all, on both sides, have on the question of entering to pursue possible tax evasions. I do not shun the fact that it was a Conservative Government which introduced VAT entering on this level. I should say that there has been considerable pressure from the Opposition in another place to amend this into a half-way acceptable form, and my noble friend Lord Massereene and Ferrard spoke of this in his intervention. But I should also say that we must he extremely careful on all sides how far down the road of increasing powers of entry we should go. It seems to me that our police force is still the best force for being issued with powers of this kind.

We must also be watchful about evidence we have of the increasing "politicisation" of the Revenue service. But surely the most important thing to avoid these problems is to get our taxation back on to reasonable levels. My right honourable friend—I speak in a personal sense—Mr. Grimond made a remarkable speech on this subject on the Third Reading of the Finance Bill in another place when he attacked the way we were becoming a perk-led or fringe benefit economy.

I agree that it should be right that the House of Lords should be a watchdog in this regard. But it is also right, as my noble friend Lord Harmar-Nicholls acknowledged, that the position of the Speaker of the House of Commons, not just towards the House of Commons but towards the whole Parliamentary system, should be honoured and acknowledged. Certainly my noble friend Lord Harmar-Nicholls is not a lap-dog of the Tory Party or of Parliament, but a watchdog—to adapt the phrase of the noble Lord, Lord Wigg. However, I am glad that he has decided not to bite this afternoon, even if he has given us a good taste of his teeth, and I acknowledge his right to do so.

6.27 p.m.


My Lords, today's debate has fallen into four parts: the Finance Bill; the cuts—whether they were right, whether they were needed, whether they have gone far enough; semi-philosophical discussion about the future of the country; and then the interesting point, raised by the noble Lord, Lord Harmar-Nicholls, on the question of "tacking", in relation to which I saw very strange support from my noble friend Lord Houghton of Sowerby and the noble Lord, Lord Wigg. This is a notable experience and raises severe qualms about what I should say at the end of the debate to the noble Lord, Lord Harmar-Nicholls.

So far as the Finance Bill is concerned the noble Lord, Lord Carr of Hadley, said (with some justification, I suppose) that the Bill, when initially introduced, was ill-formed. He used the word "incompetence", which I would not accept, but I would accept the term, "ill-formed". Whenever there is any major change in the finance field it takes many years of refinement to get it right, and I should have thought that it is no criticism of another place, or of the Government, that as a consequence of good, hard debate, not only in Parliament but outside, that one had succeeded in making a major improvement. I suspect that in relation to some of these taxes it will be a case of a number of years of continued refinement.

I can only say to the noble Lord, Lord Carr, that the Act which will be associated with him might in this way have avoided very many of the difficulties that it faced. At the end of the day I would accept that 80 to 90 per cent. of that Act was a good Act. It was that small 10 or 15 per cent. which damned it. If the House of Commons and the Government of the day had listened with a little more care to some who had vast experience in the trade union field, speaking in this House, not in a political sense, and if consideration had been given to what they said, I think we might have had a completely different reaction to that legislation. I take the view that this is what Parliament is about. It is debate, it is the improvement of legislation, and above all else it is the willingness of Government to listen and also for Parliament to recognise from time to time that there is an area beyond which the Government, for obvious, practical, political reasons, cannot go.

My Lords, I think the noble Lord, Lord Carr, did not have any deep criticism of the Finance Bill, except of Schedule 6, which he referred to as containing "snooping powers", and that I shall deal with later. The noble Earl, Lord Mansfield, and the noble Lord, Lord Montagu of Beaulieu, spoke about the national heritage and the improvements that the Government have provided in the Finance Bill. The noble Earl, Lord Mansfield, asked whether we would continue to keep this under review. The noble Earl should see what my right honourable friend Mr. Robert Sheldon said, as Financial Secretary at the Treasury, I think on 15th July, when he gave a very firm assurance that this would be kept under continual review. As regards perpetuities, I am advised that it does apply to Scotland. Certainly it does to England. I will check and write the noble Earl, but I am assured that it does apply to Scotland.

In regard to the cuts, my noble friend Lord Longford raised a question about whether the cuts were necessary. The noble Lord, Lord Carr, felt they were necessary, that they were a first step, though perhaps inadequate. I think the House ought to be reminded of the position of my right honourable friend the Chancellor of the Exchequer throughout his period of office in regard to public expenditure. There has been a continuing campaign by noble Lords opposite and by their Party for major cuts in public expenditure. We have taken the view that, in a period of deep recession such as that through which we have gone, it would be quite wrong to cut public expenditure, with all the traumatic consequences which would follow in the field of employment. We announced last year a cut in public expenditure of some £3 billion for the purpose of making resources available as industrial progress was made, but we took the view then that, so far as 1977 and 1978 were concerned, there was not a case on grounds of the movement of resources for a cut in public expenditure, My view is that that is still true. I do not myself believe that there is any pressure upon resources in this country at the moment; nor do I anticipate a strain on resources of such a character, at least, that there needs to be a shift from the public sector into private industry.

However, there is another factor which has borne very heavily upon us in recent months. The economy in the country has developed a good deal faster than we had anticipated earlier in the year. This therefore means that industry will be requiring further sums for investment. To achieve that, we have got to restrain the public area in order that the sums that are saved can be made available for private industry. So there is, I believe, an undoubted case for the cuts that were announced by the Chancellor last week. There is also another reason, and the noble Lord, Lord Carr, touched upon it himself. The public sector borrowing requirement is very high. In my view, it is unacceptably high. It has been left at that figure because we have sought to avoid all the consequences of recession. But I believe, and the Government believe, that steps should be taken to reduce the public sector borrowing requirement. We believe that we can see a reduction, through an upturn in the economy, of the order of some £1 billion, but the rest has to be found by restraint or by imposition through taxation.

I take the view—and I think most noble Lords would agree—that it would be quite wrong to look for such a change in the field of taxation. In fact, I do not believe that the taxation system would bear it. Certainly it would be counterproductive in the field of pay policy. I have also to say to the House, having gone through the exercise of finding this £950 million plus other savings, that it is one thing to talk about cutting public expenditure; it is another thing to do it, unless, of course—and I think the noble Lord, Lord Carr, was very close to it—you cut benefits. Then you can save money, you can save it dramatically and you can save it quickly, as the noble Lord, Lord Thorneycroft, I am sure, would agree. You can cut pensions, unemployment benefits and all that goes with it; but when you start to cut into the normal machinery of government, whether it is of central Government or of local government, then it is a very difficult task.

The noble Lord, Lord Carr, was quite right in saying that we anticipate that some 60,000 jobs will be lost through the cuts themselves. In the main, they will be in the construction and service industries; and there will be, I suspect, something of the order of 12,000 lost as a consequence of the 2 per cent. on National Insurance contribution. I shall come back to that in a moment. My Lords, in our view we went as far as we were justified in going. We sought to protect housing, we sought to protect the essential road building programme, and we deferred where we could; hut, my Lords, we took the view that a £9 billion public sector borrowing requirement was an essential target, and therefore we had to look in the field of taxation.

As I said on the Statement announcing the cuts, we looked closely into this. We had to have in our minds the effect on the RPI. If we had done it through VAT it would have made a considerable impact on prices. If we had done it on cigarettes or drink—for which there is a very strong case—that, too, would have made a major impact on prices. We took the view at the end that this was the best way of doing it. It would have a marginal and early effect on industry but taking into account the buoyancy of industry and commerce and what was being done in the Price Code field, the increase could be borne by industry without any serious consequences. I must say—and I hope that noble Lords opposite will convey it to the noble Viscount, Lord Watkinson—that I can understand his initial reaction and that of his colleagues at the CBI; but all sides in the country are being asked to bear a special burden here. The CBI and industry have not been isolated from the impact and the cuts that are going to affect them.

I hope very much that the spirit that existed—and which, I believe, still exists—between industry, Government and the trade union movement will be very quickly restored and that the plea for investment that the noble Viscount, Lord Watkinson, had in mind to make to industry will be made. I hope it will be responded to; because investment is the kernel of the economic development of this country.

My Lords, all sides are being asked to pay a heavy price. I agree with the noble Baroness very much when she referred in the course of the debate—as did the noble Lord, Lord Carr—to the need to maintain the degree of co-operation and confidence between the Government and the trade union movement. The noble Lord, Lord Carr, recognised the tremendous opportunities that have now been provided because of the new climate through pay restraint. I agree with the noble Baroness that the re-entry is going to be more difficult. We must certainly devise ways and means by which there are incentives and differentials and certainly, if it can be done, to meet the undoubted case so far as middle management is concerned.

However, we have got to maintain this climate of co-operation. This has been very much in the mind of Government throughout. We have need to maintain not only the spirit of co-operation of (shall we say?) management and the investor but also of the work force and their representatives. It is not always easy but I believe that we should carry on; although there has been criticism of the extent to which the Chancellor has gone out of his way to consult the various bodies before a decision was taken. But I believe that this is the only way—certainly at this time—in which this country can be governed. It creates difficulties for Parliament for it appears as though decisions are being taken and matters are being negotiated elsewhere which normally are done on the Floor of the House, but I believe that it is essential to bring the three pillars of the Estate together and in continuous consultation.


My Lords, the noble Lord mentioned the care with which the Chancellor of the Exchequer consulted. Could he say whether the CBI were among those consulted since such a vast amount of the package fell on their members?


My Lords, I understand the Chancellor did see the senior executive—I believe it is the Director General—of the CBI certainly before decisions were taken by Cabinet. That is my understanding.

My Lords, I do not think there is need to say a great deal more. We are going to return to this matter, no doubt, in the Recess and also to some of the alternatives which the noble Lord, Lord Carr, deployed about the use of public funds and the shipbuilding and aircraft industry. The noble Lord, Lord Carr, was free to acknowledge that whether we nationalised the shipbuilding industry or not, very large sums of money would have had to be found for that industry. I do not know whether noble Lords would dissent from it; but I, personally, when it comes to very large sums of money, would prefer to buy the equity and have some say in management rather than merely to provide large sums of money to the shareholders of companies who may fail to exercise their responsibilities in the conduct of those companies.

I now come to the noble Lord, Lord Harmar-Nicholls. If I may say so, this is one of the more interesting points on procedure raised during my period as Leader of your Lordships' House. The noble Lord has acknowledged that this Bill is now a Money Bill under the Parliament Act 1911. I think I ought to say a few words about what this means to this House. First, it means that the Bill can be given the Royal Assent at the end of one month, whether or not this House passes it. Secondly—and I hope the noble Lord, Lord Harmar-Nicholls, will agree with me—Mr. Speaker has, in effect, given his Certificate that there are no tacking provisions in this Bill. I would quote Section 1(2) of the Parliament Act at length because it lays down the conditions which must apply before the Speaker can give his Certificate: A Money Bill means a Public Bill which in the opinion of the Speaker of the House of Commons contains only provisions dealing with all or any of the following subjects, namely, the imposition, repeal, remission, alteration, or regulation of taxation; the imposition for the payment of debt or other financial purposes of charges on the Consolidated Fund, or on money provided by Parliament, or the variation or repeal of any such charges; supply; the appropriation, receipt, custody, issue or audit of accounts of public money; the raising or guarantee of any loan or the repayment thereof; or subordinate matters incidental to those subjects or any of them. Section 3 of the Act says: Any certificate of the Speaker of the House of Commons given under this Act shall be conclusive for all purposes, and shall not be questioned in any court of law. Mr. Speaker has certified that this Bill deals only with the items that I have mentioned; namely, taxation, supply, and subordinate matters incidental to those subjects. I am not suggesting it—I could not do so—but the way in which the noble Lord mentioned it in his earlier Motion could have been construed as a challenge to Mr. Speaker. What we are now dealing with is a Money Bill, whereas it could have come to us as a Supply Bill alone which would have produced a slightly different situation.

The real question is whether Schedule 6, that is, the investigatory powers of tax inspectors, is foreign to and different from the matter of the Bill. That is the kernel of it. First of all, it is within the Long Title of the Bill. The noble Lord will agree to that. It has been accepted by the authorities in the Commons to be within the scope of a Finance Bill. My Lords, if it had not been, and you wanted to put some foreign matter into the Bill, it could be done in the House of Commons quite responsibly and respectably. There is a procedure for including in Finance Bills provisions which are normally outside their scope. This is done by means of a procedural resolution; but in the case of Schedule 6 no such procedural resolution was considered necessary because what was in Schedule 6 was not thought to be outside the scope of the Bill.

Regarding the scope of a Finance Bill, Erskine May (page 791) says that it: is not limited to the imposition and alteration of taxes for the purpose of adjusting the revenue of the year. It … normally includes many provisions of a permanent character for the regulation of fiscal machinery and other purposes. I think the noble Lord, Lord Harmar-Nicholls, agreed that the House of Commons has been scrupulous in avoiding tacking. There has been no successful accusation of tacking since 1807, and the Commons attitude is summarised in Erskine May (page 802) as follows: As for the modern equivalents of Bills of aids and supplies, namely, Consolidated Fund and Finance Bills, the rules of order of the House of Commons exclude the possibility of foreign matter being tacked to such Bills by way of amendment; and respect for constitutional practice prevents the inclusion of such matters among their original provisions. The Schedule is well precedented by, for instance, Clause 37 of the Finance Act 1972 relating to the entry and search of the premises or persons in connection with VAT. There are other powers of entry in the Betting and Gaming Duties Act 1972 (consolidating earlier Finance Acts), and the Finance Act of 1967 on SET.

I cannot help but feel that the distinction of the noble Lord, Lord Harmar-Nicholls, between assessment of taxes and the collection of taxes is, if I may say so, meaningless. The important point is that they are both concerned directly with taxes and are therefore not foreign to the matter of the Finance Bill. I could not do better—and it is a strange afternoon—than to refer to a rather unlikely authority, that of an Archbishop of York, who spoke on the notorious Finance Bill of 1909, when accusations of tacking were made. He said: I find it difficult to believe that the procedure for the assessing of a tax is foreign to that tax itself". It seems to me that the noble Lord is trying to create a new definition of what tacking is. The rule originated from the procedure of putting together in the same Bill clauses that have no relation to each other and the subjects of which are entirely different. The kind of situation which the Standing Order was designed to meet was, for example, that of 1704 when the Tories—then rather different from the Tories of today, but Tories none the less—tried to tack clauses about Dissenters to a Land Tax Bill. The last occasion when tacking was successfully invoked, in 1807, involved a Malt Duty Bill to which a clause legalising Exchequer Bills charged on pension duties was added, and an Irish Customs Bill to which a clause on foreign compensation was added.

What we are proposing in this Bill has no real relationship to what Standing Order No. 49 was designed to prevent. I agree with my noble friend Lord Houghton and, in a lesser degree, with my noble friend Lord Wigg, that Parliament always ought to be watchful about the way the Executive may encroach upon individual freedom. It could be done accidentally and without intention. I am a little nervous about Standing Order No. 49 and what we should do about it in relationship to another place. I have no doubt at all that the question of tax, how taxes are raised, regulated and assessed, is a matter for the House of Commons. I would not wish this House to be put in a position of challenging that right. There is a risk therefore in going into Standing Order No. 49 that, by some strange quirk, we may well create a problem between the two Houses.

When I discussed this matter informally with the noble Lord, Lord Harmar-Nicholls, I had at the back of my mind the idea of sending this to the Committee for Privileges because this is a matter of privilege. The more I thought about it the more I could see it impinging upon another place, and I came to the view that that would not be the correct Committee because it would be a Committee sitting (shall I say?) as the House of Lords in isolation.

If it is the wish of the House that Standing Order No. 49 and matters relating to it should be considered by a Committee, the new Committee which has been set up on Parliamentary Procedure would be the right one. I will tell the noble Lord, Lord Harmar-Nicholls, why: the House of Commons are setting up an identical Committee and both Committees have power to meet together, so this is a matter which can best be considered by the two Houses in that Committee. It does not restrict our later attitude to it.

I do not think a resolution is necessary. This matter can be referred immediately to the Chairman of our own Committee, so that it can be considered and proceeded with between the two Houses. In saying that, I want to make it absolutely clear that I do not believe there is any question whatsoever of tacking in this piece of legislation. I would not wish it to be thought that, by expressing a willingness for it to be considered, I am in any way accepting some of the things which have been said or written by certain noble Lords in this respect. I believe the position of Mr. Speaker needs to be protected, though in fact he is already protected because I believe he has acted on the best advice.

6.58 p.m.


My Lords, the noble Lord has been generous and responsible. The suggestion that he has made is one we ought to consider and perhaps follow. From my point of view I should like to think about it; on the face of it it looks right. The only reason I rise again is because I still believe that both Houses have inadvertently run against their procedures. If the noble Lord looks at the matter again in detail he will find there is a difference between assessment and collection of taxes. None of the examples he gave as to the way it has been dealt with in the past referred to people's own money; it was only when they have been holding other people's money. I thank the noble Lord for the thought that he has given to this matter; the suggestion he has made certainly enables me not to move the Motion standing in my name on the Order Paper, and I should like to feel the outcome will be as he has suggested it might after consideration by the new Committee. my only concern is that our rights are properly preserved.


My Lords, I thank the noble Lord. I am glad that I have met the concern of the noble Lord, but I hope that the conditions under which I have done so are clear. We have a lot more business yet to do, and I apologise for having spoken a great deal longer than I intended. I hope that the House will now give this Bill a Second Reading and allow all its remaining stages to be proceeded with.

On Question, Bill read 2ª: Committee negatived.

Then, Standing Order No. 43 having been suspended, pursuant to the Resolution, Bill read 3ª, and passed.


My Lords, I do not intend to move the Motion standing in my name on the Order Paper; viz: To move, That the operation of Standing Order No. 49 (No Clause to be annexed to a Bill of Aid or Supply foreign to the matter) be referred to the Committee for Privileges.