Sitting of 4 November 1970

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS

  WEST END BAPTIST CHURCH, HAMMERSMITH BILL
  As amended, considered.
  Bill to be read the Third time.

  MINISTRY OF HOUSING AND LOCAL GOVERNMENT PROVISIONAL ORDERS (MELTON MOWBRAY AND SHEFFIELD)
  Mr. Secretary Walker presented a Bill to confirm Provisional Orders relating to the urban district of Melton Mowbray and the city of Sheffield: And the same was read the First time; and referred to the Examiners of Petitions for Private Bills; to be printed. [Bill 26.]
ORAL ANSWERS TO QUESTIONS
  ENVIRONMENT

    Turnhouse Airport (Rail Link)
    Mr. Eadieasked the Secretary of State for the Environment if he will make a statement on the future prospects of a rail link to Turnhouse Airport.
    The Under-Secretary of State for the Environment (Mr. Eldon Griffiths): We have received no proposal for such a link from the British Railways Board.
    Mr. Eadie: Will the hon. Gentleman accept that most of Scotland's authoritative bodies have said time and again that the problem is one of communications? Is he aware that a railway line runs past Turnhouse Airport? Is it not foolish, therefore, that people who want
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    to go to the airport have to get involved in the struggle along the road network? Will he give further consideration to the problem?
    Mr. Griffiths: I am aware of the facts. New investment for such links is a matter for the British Railways Board and discussions are under way between British Rail and the British Airports Authority. I hope that the hon. Gentleman will make his representations to them.
    Sir J. Gilmour: While my hon. Friend may not have received representations from the airport side, does not he agree that what is necessary is to cater for the travelling public? Is there some better facility which he could give to the travelling public whereby they could make their views known to him? Finally, would it not be better if he transferred his responsibilities in this respect to the Secretary of State for Scotland?
    Mr. Griffiths: It is for British Rail in the first instance to make a decision on whether there is business here for which it wishes to cater. The discussions between the B.A.A. and British Rail are under way, and I am sure they will take note of my hon. Friend's supplementary question.

    Humber Bridge
    Mr. James Johnsonasked the Secretary of State for the Environment if he will make a statement about the building of the Humber Bridge; and when he last met the Humber Bridge Board upon this matter.
    Mr. Wallasked the Secretary of State for the Environment if he will now make a statement on the Humber Bridge.
    The Under-Secretary of State for the Environment (Mr. Michael Heseltine): My right hon. Friend is at present investigating the proposals for financing the Humber Bridge: this will involve further discussions with the Board. Officials last met representatives of the Board a few weeks ago. He has now received an interim report from the consultant on the South Humberside network and has decided that a high standard dual carriageway East-West route is justified. This will run primarily on a new alignment from the M18 at Thorne, by-passing Scunthorpe to the South and incorporating a by-pass of Brigg.
    Mr. Johnson: Now that the Humber Bridge has left the twilight of electoral pledges, I thank the hon. Gentleman for his statement. Will he accept the thanks of Humberside? We hope that the Government will go ahead wholeheartedly in our support in order to help keep to our timetable of building the bridge between 1972 and 1976. I understand that we shall get, in our Parliamentary Bill, some Government lending. Without committing himself, will the hon. Gentleman keep his mind and pocket open about the future grants for the bridge?
    Mr. Heseltine: The hon. Gentleman may have slightly misunderstood what I said. I was not announcing that the bridge itself was going on. We are still having discussions with the Board, and we intend to have further meetings in the next few weeks. What I was announcing is an interim grant, for the by-pass to the South, which will enable part of the network to be advanced. We are still awaiting the final report of the consultants. I will bear in mind the point put by the hon. Gentleman about Government finance but that depends on how the financing of the bridge will be undertaken.
    Mr. Wall: As the future of the bridge is not yet firm, can my hon. Friend tell us when he can make a firm statement and what will be the approximate cost of the bridge?
    Mr. Heseltine: The decision on whether to go ahead with the bridge is still being discussed with the various local authorities and boards involved. There is a large number of complicated factors. The cost is still under discussion because we are looking at alternatives to the various networks involved. I would not want to give the impression, however, that the bridge is not going ahead. We are still examining the subject.
    Mr. Crosland: While remaining wholly loyal to the decision of the last Government to go ahead with the Humber Bridge, may I press an even higher priority—the improvement of the East-West roads, particularly on South Humberside?
    Mr. Heseltine: I am aware of the position of the last Government on this matter. They promised a bridge on the eve of the by-election of 1966. They won
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    the by-election but they did not build the bridge. I hope the right hon. Gentleman appreciates that the decision which I have announced will help South Humberside.

    Public Service Vehicle Licences (Barrow-in-Furness)
    Mr. Boothasked the Secretary of State for the Environment how frequently examiners will visit Barrow-in-Furness for the purpose of testing applicants for public service vehicle licences.
    The Minister for Transport Industries (Mr. John Peyton): As often as is necessary.
    Mr. Booth: While thanking the right hon. Gentleman for that assurance, may I ask him to say whether local authorities in the vicinity of heavy goods vehicle testing centres will be required to send trainee drivers to those centres for P.S.V. licence testing purposes and, if so, how far a local authority must be from a centre before an examiner will be sent to the local authority?
    Mr. Peyton: If the hon. Gentleman has any particular anxieties about this, I hope he will let me know and I will certainly look at them. As far as Barrow is concerned, I have already given him the assurance for which I think he asked.

    Port of Liverpool
    Mr. Hefferasked the Secretary of State for the Environment what steps he intends to take to assist the development of the Port of Liverpool.
    Mr. Peyton: The Board has now received the accountants' interim report and has sent me its initial reactions. It is now developing its proposals for dealing with its financial situation and for ensuring the future of the port.
    Mr. Heffer: Having now seen the report, may I ask the right hon. Gentleman whether he agrees that it is essential for the Government to give financial assistance during this interim period, until the Board is reorganised? Is he aware that it is absolutely essential that Government assistance is given because it is on the future of the Port of Liverpool that the whole of the Merseyside economy is dependent?
    Mr. Peyton: I understand the importance of this matter to Merseyside. I also understand the hon. Gentleman's anxieties. However, as I explained to him the other day, it is a bit early for me to say anything about the intentions of the Government on this issue. The accountants' interim report has just been received and the Board has given me its initial reactions, but it is too early to say what the Government will do.
    Mr. Tilney: While I absolutely understand and appreciate the view which my right hon. Friend has just expressed, may I ask him to agree, as I am sure he does, that the Port of Liverpool is of the utmost importance to the whole of Merseyside?
    Mr. Peyton indicated assent.
    Mr. Crawshaw: While thanking the right hon. Gentleman for the interest and concern which he has shown in this matter, may I ask him to agree that the only source of short-term financial assistance to keep this port solvent must be the Government and that any delay could have only a long-term detrimental effect on the port?
    Mr. Peyton: There has not been much delay and I will do my best to minimise it. I hope that the hon. Gentleman will be patient and I shall, as soon as possible, be meeting the Board to discuss its proposals.
    Mr. Selwyn Lloyd: I, too, am grateful for the interest which my right hon. Friend has taken personally in this matter. Is he aware that what worries a great many of us is the short time that is available in which action, if it is to be taken, must be taken? I am sure that he has borne this in mind. Will he continue to do so?
    Mr. Peyton: I am obliged to my right hon. and learned Friend. I am only too well aware of the importance of the time element and the fact that there is not much of it available.

    Hull (Capital Developments)
    Mr. James Johnsonasked the Secretary of State for the Environment what proposals for future capital developments in Hull he has received from National Freightliners Limited.
    Mr. Peyton: None, Sir.
    Mr. Johnson: Is the right hon. Gentleman aware that anxiety has been expressed about the long-term future of the terminal in West Hull? Since the major part of our deep-water dock is on the east side of Hull, will he consider the possibility of establishing a mini-terminal to provide additional facilities on the east side of the city?
    Mr. Peyton: This is a matter for the National Freight Corporation and not for me. I have no doubt that the Chairman of that Corporation will have taken note of the hon. Gentleman's remarks.

    Traffic Signals, London, S.W.15
    Mr. Hugh Jenkinsasked the Secretary of State for the Environment whether, having regard to the danger of the junction of Stag Lane and Roehampton Vale, S.W.15, and to the accidents and deaths that have occurred and to the unanimous request of those living in the area, he will give approval for the installation of traffic signals at this junction.
    Mr. Michael Heseltine: Proposals for signals at this junction are the responsibility of the Greater London Council.
    Mr. Jenkins: As this is well known to be one of the most dangerous exits on to a main road in London, which at present is entirely unprotected, may I ask the hon. Gentleman, in referring the matter to the G.L.C., to ask the Council to give serious attention to the unanimous demand of the people living at this point that it is high time that action was taken to reduce the number of deaths and accidents at this exit?
    Mr. Heseltine: I am sure that the G.L.C. is aware of the local anxiety that exists about this matter. I understand that the right turn from Stag Lane into Roehampton Vale is to be prohibited and that, in the longer term, the improvements at Robin Hill Gate will benefit this junction.

    A11, Norfolk
    Dr. Stuttafordasked the Secretary of State for the Environment if he will make a statement on future plans for the construction of dual carriageways on the A11 road in Norfolk.
    Mr. Michael Heseltine: With permission, I will circulate a list in the OFFICIAL REPORT.
    Mr. Stuttaford: Is my hon. Friend aware that although Norfolk is the fourth largest county in the country, it has less dual carriageway than any other county and that this is probably a contributory cause to its having the lowest wage structure in the country?
    Mr. Heseltine: My hon. Friend may consider that the list of schemes which I have announced give an indication of what we have in mind, though I assure him, on the wider aspects which he mentioned, that they are very much in our minds.
    Mr. Lane: Will the Minister bear in mind the fact that there is strong feeling in East Anglia generally that during the 1970s this part of England is due a higher priority and a greater share of the total national road programme?
    Mr. Heseltine: I will certainly bear that in mind, but there is no part of England which does not feel exactly the same.
    Following is the information:

    Cringleford Bypass;

    Newmarket Road, Norwich;

    Wymondham Bypass to Hethersett Bypass;

    Peddars Way to Turnpike Cottages;

    Thetford Bypass;

    Attleborough Bypass.

    Non-returnable Containers
    Mr. John Hallasked the Secretary of State for the Environment if he will undertake studies of the long-term problems arising in the disposal of non-returnable containers; and if he will make a statement.
    The Secretary of State for the Environment (Mr. Peter Walker): I am very conscious of the increasing intensity of this problem, which is one of the questions which has been considered by a technical working party on refuse disposal. I await its report, which I expect to receive this month, in the hope that some action to solve the problem will be shown to be practicable.
    Mr. Hall: Is my right hon. Friend aware that this problem has become so intense in the United States that a number of States have had to introduce legislation prohibiting the use of non-returnable containers? Would it not be better for us to consider this problem now and thus obviate the necessity of introducing restrictive legislation of that kind?
    Mr. Walker: I agree that this is a fast-increasing problem. A technical working party will be reporting on this subject this month and we are examining evidence from the United States and other countries about the ways in which they have had to deal with this problem.
    Mr. Ronald Bell: Will my right hon. Friend also examine the question of fiscal disincentives to the use of non-returnable containers?
    Mr. Walker: We shall consider all the recommendations that are made in the report.

    New Houses (Prices)
    Mr. Tebbitasked the Secretary of State for the Environment what was the average price of a new house in October, 1964, and June, 1970, respectively.
    The Under-Secretary of State for the Environment (Mr. Paul Channon): The average price of new houses mortgaged with building societies was £3,520 in the fourth quarter of 1964, and £5,080 in the second quarter of 1970.
    Mr. Tebbit: Does my hon. Friend consider it curious that the whole might of the Prices and Incomes Board was unable to arrest this progress? Does he envisage being able to take further steps—that is, beyond those already announced, such as the abolition of betterment levy and the Land Commission—to ensure that this rate of rise does not continue, and restore us to the happy state of six years ago?
    Mr. Channon: As my hon. Friend pointed out, we have already taken a number of steps to that end. [Laughter.] I am surprised that hon. Gentlemen opposite, who are responsible for the enormous rise that has occurred in house prices, find this a laughing matter.
    Mr. Crosland: Since Ministers have had 24 hours in which to reflect on the statement made yesterday by the Secretary of State, may I ask the hon. Gentleman to tell us what estimate he would give of the average rise in rents as a result of that statement?
    Mr. Channon: I am not at all surprised that the right hon. Gentleman is not anxious to concentrate on the rise in house prices, which is what the Question is about.

    New Towns (Sale of Houses)
    Mr. Tebbitasked the Secretary of State for the Environment how many houses were sold to tenants in the new towns in the year ended 30th June, 1970; and if he will take steps to increase this figure for the year ending 30th June. 1971.
    The Minister for Housing and Construction (Mr. Julian Amery): Development corporations and the Commission for the New Towns sold 208 houses to their own tenants in the year ending 30th June, 1970. My right hon. Friend has now invited corporations and the Commission to make available for sale to sitting tenants all their rented dwellings, except possibly old peoples' dwellings and flats. The basis of sale will be current market value with vacant possession, less 20 per cent.
    Mr. Tebbit: I was so grateful to my right hon. Friend for his statement last week that I almost withdrew this Question. However, I thought that this was the right time to impress on him the need to achieve this increase. Does he intend to announce further schemes to help prospective purchasers with the initial deposit on these houses, remembering that these are in many cases people who in the past have been denied the opportunity of buying and are unfamiliar with the advantages of house purchase?
    Mr. Amery: Arrangements have been made for building societies to give mortgages of up to 70 per cent. of the selling price to people who wish to buy and the Development Corporation is giving second mortgages to cover the remaining 30 per cent. If, in a particular case, a building society is not prepared to advance the required amount, the Corporation can give a 100 per cent. mortgage.
    Mr. Denis Howell: Is the right hon. Gentleman aware that the New Towns Commission has been conducting an intensive campaign to attract tenants to buy their houses but that there has been no take-up? Can the right hon. Gentleman say how many tenants have expressed a wish to buy their houses, which the New Towns Commission is trying to sell?
    Mr. Amery: The hon. Gentleman win be aware that there was no 20 per cent discount when his party was in office. We have provided an important additional incentive. It is too early to judge how effective this will prove, but I am sure that it will prove a great deal more effective than the measures which were in force when the hon. Gentleman and his hon. Friends were in power.
    Mr. Molloy: Would not the right hon. Gentleman agree that the real contribution that he could make to assisting the housing problem would be to use his influence with many Tory-controlled councils to drop their black records and increase council building? So that everyone can be assisted, including those who wish to buy a house, will the right hon. Gentleman do what he can to reduce the high mortgage rates and thus make a real contribution to the housing problem, which up to now the Government have failed to do?
    Mr. Amery: I think the hon. Gentleman will recognise, with his usual generosity, that the discount measures which we have taken, and the encouragement to take out mortgages which I have just expressed, will help a great deal in the direction that he wants to go.

    Local Amenity and Preservation Societies
    Dr. Stuttafordasked the Secretary of State for the Environment what action he intends to take to encourage and foster the growth of local amenity and preservation societies.
    The Minister for Local Government and Development (Mr. Graham Page): Her Majesty's Government very much welcome the growth of effective and responsible amenity and preservation societies all over the country. Their greatest value and virtue is their independence of Government. For that reason I am reluctant to interfere in their development.
    Dr. Stuttaford: I thank my hon. Friend for his encouraging reply. May I ask whether he is aware that the taking over of small provincincial firms by large national organisations has made it difficult to raise the larger subscriptions necessary to carry on this type of work?
    Mr. Page: The number of these amenity societies has grown, and they do not need interference from the Government. The figures are that when the Civic Trust was founded in 1957 there were 213 registered societies, and there are now 763 of them.

    Land (Price)
    Mr. Skeetasked the Secretary of State for the Environment what estimate he has made of the increase in the price of land between April, 1967 and June, 1970.
    Mr. Graham Page: Comprehensive information is not available about prices of land for all purposes, but so far as housing land in England and Wales is concerned, we estimate the price has risen by about half in the three years up to mid-1970.
    Mr. Skeet: I am obliged to the Minister for that Answer. Does he recollect that it was the purpose of the Land Commission to reduce the price of land, and is not a justification for the abolition of the Commission the fact that it has failed in its task?
    Mr. Page: That is one good reason for abolishing the Land Commission. Exactly how much of the increase of 50 per cent. over three years is attributable to the activities of the Land Commission and how much is due to other factors is difficult to say, but it is certain that after the introduction of the Land Commission prices rose at a very much faster rate, particularly in 1968 and 1969.
    Mr. Fernyhough: As the Government are depending on competition to bring down prices, and as it is competition which pushes up the price of land, can the Minister tell us what he will do to keep down the price of land?
    Mr. Page: We are taking active steps to make more land available for production. Active steps will be taken in many cases, particularly in the Home Counties where land for house building is very much required.

    Office Development
    Mr. Skeetasked the Secretary of State for the Environment what are his plans for altering the present control of office development.
    Mr. Huntasked the Secretary of State for the Environment what relaxations he proposes to make in the existing controls on office development in the Greater London area.
    Mr. Tugendhatasked the Secretary of State for the Environment if he will now make a statement on the Government's policy on the future of office development permits.
    Mr. Peter Walker: My review of the operation of the control is not yet completed.
    Mr. Skeet: I hope that my right hon. Friend will bear in mind that places such as Bedford depend upon O.D.P.s. I hope that he will consider any applications which come forward from Bedford and Kempston. It would be most useful if he would take these seriously.
    Mr. Walker: There is nothing to stop applications coming forward now.
    Mr. Tugendhat: I thank the Minister for his reply. May I ask whether he is aware that within the City of London, 25 years after the end of the war, there are still 100 derelict bomb sites, while at the same time the rents of certain prime sites have risen to nearly £25 a square foot? Has not the time come for an urgent review of the matter if the City of London is to be restored to its proper place?
    Mr. Walker: This matter is being reviewed, and I hope that in the near future I shall be able to make a statement on this topic. Over the last 18 months there has been quite a substantial increase in the number of permits given to the City of London.
    Mr. Lipton: Is there any sense in considering the decontrol asked for by the right hon. Gentlemen's hon. Friends when there are thousands of square feet of office space empty in London?
    Mr. Walker: One reason why office space has remained empty in London is the inflationary effect of the present controls.
    Sir R. Thompson: Does my right hon. Friend realise that the present legislation runs out in perhaps a year or 18 months, and that, contrary to expectations, its effect has been to drive up office rents in London to impossible levels on account

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    of the restriction? Is not that an argument for abolishing it and letting competition get to work?
    Mr. Walker: We are reviewing the effects of control over the years that it has been in operation, and we shall make a statement on the basis of our review of what has happened over the last few years.

    Planning Procedures
    Mr. Sorefasked the Secretary of State for the Environment what proposals he has for expediting, simplifying and decentralising planning procedures.
    Mr. Graham Page: I am sure there is scope for improvement in which both local authorities and the Department will have a part to play. We have recently made Regulations, coming into operation this week, which will have the effect of increasing to 60 per cent. the proportion of appeals decided by Inspectors. My right hon. Friend proposes to issue guidance on some other matters on which early action could be taken. He is also making a wider appraisal of the system.

    Reservoirs (Recreational Uses)
    Mr. Rostasked the Secretary of State for the Environment whether he is satisfied as to the consideration given to recreational uses when planning permission is given for the construction of new reservoirs; and if he will make a statement.
    Mr. Peter Walker: It would not be legal for a planning authority to impose a condition about recreational use in giving planning permission for a reservoir; but I understand that this aspect is taken into account in the preliminary consultations between the promoters of reservoir schemes and local planning authorities.
    Water undertakings and river authorities are well aware that it is my policy to encourage the greatest practicable use of reservoirs for recreation. We are about to write to water undertakings reinforcing this point.
    Mr. Rost: My right hon. Friend's reply will be welcomed by hon. Members on both sides of the House who are anxious to promote greater leisure facilities and the fuller development of the environment. Is he aware that the progress
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    made in this direction in South-East Derbyshire provides an example at which many local authorities might care to look?
    Mr. Walker: I am aware of the progress made in South-East Derbyshire, and I shall do all that I can to encourage local authorities interested in this subject to see that example.
    Mr. Denis Dowell: I appreciate the Minister's continuance of our policy, but may I ask whether, when he is sending out his circular, he will take steps to make increased capital allocations available for the building of the necessary facilities so that water resources can be used for recreational purposes?
    Mr. Walker: I am aware of the difficulties about the amount of capital made available by local authorities during the tenure of office of the hon. Gentleman and his hon. Friends. We shall look into the capital needs of this project.
    Mr. Blenkinsop: Does the right hon. Gentleman agree that in some cases the best way of encouraging recreational development is not to build the reservoirs at all?
    Mr. Walker: I am aware of the hon. Gentleman's views on this subject.

    Older Houses (Improvement)
    Mr. Geoffrey Finsbergasked the Secretary of State for the Environment what action the Government are taking to encourage the improvement of older houses.
    Mr. Amery: The Government are sponsoring a national publicity drive to convince owners of the benefits of improving older houses with the aid of grants. This is being supplemented by local house improvement months in selected cities and towns throughout the country.
    Mr. Finsberg: I thank my right hon. Friend for that Answer, but will he consider sending a circular to local authorities asking them to point out the benefits that can accrue from a policy of rehabilitation as opposed to a policy of complete redevelopment and destruction of existing communities?
    Mr. Amery: I am in full sympathy with my hon. Friend. Circulars have

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    been sent out, and a campaign is being conducted throughout the country. Only the day before yesterday I was at Salford and Keighley taking a hand in it myself.
    Mr. Freeson: Will the right hon. Gentleman say when it is proposed to publish and circulate the extensive manual on this subject which was in preparation under the previous Administration?
    Mr. Amery: As I have not had notice of that question, I had better look into the matter and write to the hon. Gentleman.

    Rent Rebate Schemes
    Mr. Selwyn Gummerasked the Secretary of State for the Environment what model rules his Department has provided for the guidance of local authorities in drawing up rent rebate schemes; and what the rules recommend with regard to war disablement pensions.
    Mr. Channon: Local authorities at the moment have complete discretion on rent rebates. Circular 46 of June, 1967 contained a scheme illustrating the principles on which rebate schemes might be based. This illustrative scheme suggested that the first £2 of disability pensions should be disregarded in assessing incomes.
    Mr. Selwyn Gummer: Would not the hon. Gentleman agree that war disablement pensions are normally treated in every way as different from other kinds of pension? Would it, therefore, not be more sensible in such model rules, because they are treated as model rules, to discount the whole of any war disablement pension?
    Mr. Channon: The present position follows the practice of the Supplementary Benefits Commission. The local authorities are free to adopt a different basis and disregard war pensions should they so choose.
    Mr. Blenkinsop: Are not the hon. Gentleman's own proposals denying local authorities the right to make their own choice in determining their rent rebates?
    Mr. Channon: There will be no removal of the local authorities' discretion to make this sort of extra payment.

    Birmingham (Development)
    Mr. Danceasked the Secretary of State for the Environment when he will announce his decision on Birmingham's applications for development on the city boundary.
    Mr. Graham Page: My right hon. Friend is studying this very carefully. He hopes to be able to announce his decision this month.
    Mr. Dance: Is my hon. Friend aware how grateful many people will be that we are at least getting a decision? Is he aware that there is great anxiety in the minds of many people in the West Midlands about their future?
    Mr. Page: Yes, indeed. I am sorry that this has been such a long inquiry. The report was received late in June. The issues are difficult and challenging, and I must be sure that the decision in so important a matter is right. But I am in no way complacent about the time taken to announce this decision.

    Cricklade Road Relief Scheme, Swindon
    Mr. David Stoddartasked the Secretary of State for the Environment if he has considered the effect on the environment in the Gorse Hill district of Swindon of the proposed route of the Cricklade Road relief scheme.
    Mr. Michael Heseltine: No application for planning permission for the construction of this road has yet been made. If and when one is made, I expect that it would be referred to my right hon. Friend as a departure from the development plan. The effect on the environment would be an important factor in his consideration of the matter.
    Mr. Stoddart: While thanking the Minister for his reply, may I ask him if, should he set up an inquiry, he will bear in mind that there will be 200 houses destroyed and a lot of old people displaced by this road scheme, which is highly expensive?
    Mr. Heseltine: I can assure the hon. Gentleman that a great deal of attention is paid to these problems by public inquiries, when they are held.

    British Railways (Catering Services)
    Mr. Blakerasked the Secretary of State for the Environment whether he will give a general direction to British Railways to improve their catering services.
    Mr. Eldon Griffiths: No, Sir.
    Mr. Blaker: Is my hon. Friend aware that the standards of this service, whether in the station or on the train, leave a lot to be desired and that an improvement would be welcome not only to British travellers but also to visitors whom we wish to attract from overseas?
    Mr. Griffiths: Like most hon. Members, I use British Rail catering services; and their quality, if I may say so, varies. The Board tells me that it keeps under continuous review any complaints that may arise, and I am satisfied that this is certainly not a field in which my right hon. Friend would feel it right to give a general direction.
    Mr. Kaufman: In view of the Prime Minister's personal commitment to cut into the wage-price spiral in the public sector at a stroke, will the hon. Gentleman approach British Rail and ask it to reduce the price of less than half a pint of milk in a beaker in British Rail snack bars to below the outrageous price of 1s. 1d.?
    Mr. Griffiths: I thought the hon. Gentleman was the great exponent of the virtues of nationalised transport. I am sure that the Board of British Rail will take into account his own and his former right hon. colleague's complaint.

    Preston Bypass
    Mr Blakerasked the Secretary of State for the Environment, whether he will make a statement about the progress made with planning for the Preston northerly bypass.
    Mr. Graham Page: The recommendations of the feasibility study of this scheme have been accepted and the scheme is included in the Trunk Road Preparation Pool. Route surveys are now in progress and I hope that they will be completed by the end of the year, with a view to publication next spring.
    Mr. Blaker: Is it not a fact that this proposed road would give a better return economically and by the saving of accidents than almost any other comparable road of similar cost?
    Mr. Page: Yes, Sir.

    Heavy Lorries
    Mr. Michael McNair-Wilsonasked the Secretary of State for the Environment (1) if he will introduce lower noise levels for heavy lorries than those set out in the Motor Vehicles (Construction and Use) Regulations 1969;
    (2) what steps he proposes to take to reduce exhaust emissions from heavy lorries.
    Mr. Peyton: I shall be publishing draft regulations on both these subjects shortly.
    Mr. Michael McNair-Wilson: Since my right hon. Friend has elected to take my two Questions together, will he forgive me if my supplementary question is slightly longer.
    Mr. Speaker: Order. That does not follow.
    Mr. McNair-Wilson: I bow to your view, Mr. Speaker.
    Since the present noise levels of heavy lorries are above those set by the Wilson Report in 1963, does my right hon. Friend believe that the lorry industry is doing as much as it can to get noise levels down? Does he not agree that these levels are pretty unbearable in urban areas?
    Mr. Peyton: I fully recognise and acknowledge the importance of the point made by my hon. Friend and that progress has been rather disappointing. I am engaged in talks with the industry at the moment and I hope for a satisfactory outcome.
    Mr. Mulley: Will the right hon. Gentleman assure the House that he will continue on the lines that we established in the previous Government, and say that at least in this field the Government accept that if they wish to achieve their targets they will have to interfere in private industry because, as he said earlier, it is the fault of the manufacturers that these standards have not been achieved?
    Mr. Peyton: I would not want to go too far in following the previous Administration. But in this matter I will do my best, and indeed the mere establishment of a Department of the Environment should be indicative of the Government's concern with these problems.

    Channel Tunnel
    Mr. Warrenasked the Secretary of State for the Environment, if he will make a further statement on the progress of negotiations for the Channel Tunnel.
    Mr. Sheldonasked the Secretary of State for the Environment if he will now make a statement on the Channel Tunnel.
    Mr. Peyton: I hope to be able to make a statement shortly.
    Mr. Warren: Is my right hon. Friend aware that whereas I have every hope that this venture will go ahead, I hope that during the very protracted negotiations the Minister and his colleagues will in no way interfere with the current communication links with the anticipated terminal area in this country? I have in mind particularly the south coast rail link via Hastings to Aldershot.
    Mr. Peyton: I have no desire to interfere with existing communication links.
    Mr. Sheldon: Since the design of this tunnel is now at least eight years out of date, because that is the period which has elapsed since its inauguration, will the right hon. Gentleman look at this again and see whether he can come up with a more modern design? Secondly, will he publish to the House the latest traffic estimates which I believe have been undertaken by his Department and which have not so far been published?
    Mr. Peyton: As to the latter part of the question, I will certainly consider the need to produce a document for the convenience of the House. As to the original design, there will, of course, be a period of more intensive and detailed examination of the project preceding construction. This awaits the decision of the two Governments at the moment.
    Mr. Crouch: Will the Minister bear in mind that there are many, including myself, who think that this Victorian idea of a Channel Tunnel should be forgotten
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    as soon as possible and the book closed? Is he aware that while it still remains open, the priority for road development in Kent is absolutely lamentable?
    Mr. Peyton: I think the project has been examined once or twice since Victorian times. In saying that, I would not wish prematurely to commit the Government to any decision.
    Mr. Deedes: Will my right hon. Friend bear in mind that he could make an invaluable contribution to the policy of retrenchment upon which the Chancellor of the Exchequer is now engaged by deciding not to have this tunnel at all?
    Mr. Peyton: I duly note my right hon. Friend's observations.

    Road Construction (Administrative Procedures)
    Mr. J. H. Osbornasked the Secretary of State for the Environment what plans he has for streamlining the administrative procedures involved in the process of road construction; and if he will make a statement.
    Mr. Graham Page: I am completing a review of these procedures and intend to make proposals shortly.
    Mr. Osborn: To what extent will the reorganisation which has taken place within the Ministry meet the Booz Allen recommendations based on the British Road Federation Report which, no doubt, my hon. Friend has read?
    Mr. Page: Certain steps are being taken at present to reduce delays, such as the progressive introduction of up-to-date management techniques, critical path analysis, and announcement of schemes well in advance to give plenty of time for preparation. We hope to introduce legislation on this subject shortly.

    Rural Bus Services
    Mr. J. H. Osbornasked the Secretary of State for the Environment what plans he has for improving rural bus services; and if he will make a statement.
    Mr. Michael Heseltine: We are taking a fresh and urgent look at the problem through pilot studies which have just begun in Devon and West Suffolk. We shall put forward proposals in the light of our findings.
    Mr. Osborn: The problem is severe and is of concern to many operators of rural bus services. Will the study include the possibility of a post bus and other means of providing adequate rural transport at reasonable prices for those living in the country?
    Mr. Heseltine: We are looking at the possible extension of postal services and combined transport services, as my hon. Friend suggests. We are looking also at a range of other possibilities with a similar purpose.
    Mr. Scott-Hopkins: Great hardship is being caused to people using rural bus services now that prices are increasing. Does my hon. Friend realise that it is possible that there will be few rural bus services left in the next year or two if the present closure rate continues owing to higher prices and higher operating costs? Will he do something about it?
    Mr. Heseltine: I am aware that the wage award in the National Bus Company at the beginning of this year was catastrophic to the level of rural bus services and that certain alterations in drivers' hours have greatly aggravated the position. We are reviewing the latter. It is difficult to do anything about the matter raised in the first part of my hon. Friend's supplementary question.
    Mr. David Clark: Will the Minister bear in mind that there are many parts of the country which are not traditionally accepted as rural but which have a great problem in their bus services, too?
    Mr. Heseltine: Yes, Sir, we recognise that there are these intermediate or twilight areas, and we are looking at them at the same time.

    Housing Associations
    Mr. Clinton Davisasked the Secretary of State for the Environment why he dissolved the Cohen Sub-Committee on Housing Associations.
    Mr. Ian Lloydasked the Secretary of State for the Environment if he will take steps to encourage the growth of voluntary housing associations.
    Mr. Peter Walker: I believe that voluntary housing can make a worthwhile contribution to the housing programme and offer a choice in rented accommodation.
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    A report is, therefore, being prepared by my Department based on the evidence assembled by the Cohen Committee.
    Mr. Clinton Davis: Why has the right hon. Gentleman dissolved the Cohen Committee, if his answer is true? Is not the truth of the matter that the Committee was to report that a considerable concentration of the whole housing association movement was needed, that a number of housing associations were not capable of properly administering their properties, and that the contribution which the housing associations are now making to this country's housing situation is only marginal? Is it not a reflection—
    Mr. Speaker: Order. Supplementary questions must be brief.
    Mr. Clinton Davis: Is it not a reflection on the Government's integrity that they decide to suppress a Sub-Committee when they do not like its views?
    Mr. Walker: The hon. Gentleman is completely wrong in saying that the Sub-Committee was suppressed. The reason why I decided to complete the report within the Department was that the Sub-Committee was having administrative difficulties in completing its report, and I was advised that the report would be made available far more quickly if it were done within the Department. I received no protest from members of the Committee when I decided to take this action.
    Mr. Crosland: With respect, that is not a satisfactory answer. Was this not a most distinguished Sub-Committee, presided over by Sir Karl Cohen from Leeds, with among its membership the housing manager of Sheffield and Mr. Peter Cadbury among the independents? Does not the right hon. Gentleman realise that the House should know what the views of the independents were, not what the views of the Ministry were, and will he assure the House that, when he comes to produce his purely official report, we shall have some knowledge of what the views of the independent persons were?
    Mr. Walker: Yes, Sir; I am anxious that all the information should be available so that a rational decision can be made on the future of housing associations. I shall publish the report, and, if any member of the Committee would like

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    to have evidence which he took, or his own views, published, he will be free to do so. I have no wish to conceal anything; I am only too happy that everything that has been put forward should come out.
    Mr. Selwyn Gummer: Does my right hon. Friend agree that at this time, when he is doing his negotiation with various local authorities, he could push home the importance of such housing associations, which has been proved already, for example, in Lewisham?
    Mr. Walker: There are problems in the housing associations. I am anxious to proceed as quickly as possible so that the important evidence given by a diversity of people to this Committee should be available for consideration.
    Mr. Crosland: I am partially reassured by what the right hon. Gentleman said, but, when the report is published, will it be a report of the views of officials of the Ministry or will it be a report expressing the views of the members of the Cohen Committee?
    Mr. Walker: It will be a report based upon all the evidence given to the Committee. Copies of the report will be made available to the members of the Committee. If the Committee, either individually or collectively, wishes to provide an opinion on that report, I shall be very pleased to receive it.
    The whole objective was to speed up the report on a very important matter. If I may say so, the right hon. Gentleman, with his experience in office, should know of the incredible delays which went on in the Committee.
    Mr. Crosland: This is not satisfactory. I understand the position—unless the right hon. Gentleman corrects me—to be this. As the Cohen Committee has been dissolved, will not the report be an officials' report from the Ministry, and the only way of discovering the views of the Cohen Committee will be if the members of the Committee individually comment on the report? Is this not a wholly unsatisfactory state of affairs?
    Mr. Walker: If the members of the Committee would like to gather together after the report has been published—[HON. MEMBERS: "Oh."]—they will be
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    perfectly free to do so. If I may say so, this criticism comes ill from a member of the former Government who, for months, allowed this Committee not to sit at all because they did not provide it with the proper staffing.
    Sir Harmar Nicholls: To avoid this report being denigrated out of existence before it is made, will my right hon. Friend repeat that the distinguished gentlemen who sat on the original Committee will have not only a right but a duty to comment upon it if it is different from the evidence which they collected while in office?
    Mr. Walker: A number of these distinguished gentlemen very much liked the fact that the report was to be speeded up in this way.

    Housing Subsidies
    Mr. William Hamiltonasked the Secretary of State for the Environment (1) by what amount he intends to reduce the global amount of housing subsidies;
    (2) whether, in order to allow rents to fall, he will expedite the return to free competition in the provision of housing.
    Mr. Frank Allaunasked the Secretary of State for the Environment if he will maintain existing housing subsidies; and if he will now make a statement.
    Mr. Amery: In my right hon. Friend's statement on 3rd November, he outlined plans for the reform of housing finance. The effect of these plans on subsidies will be among the subjects which I shall discuss with the local authority associations.
    Mr. Hamilton: As the Chancellor of the Exchequer suggested a floor of £100 million and a ceiling of £200 million, presumably there is a floor and a ceiling for the Scottish figures. May we have those figures? The Secretary of State rejected the suggestion from one of my hon. Friends that what the Government are doing would mean rents of up to 30 per cent. of income. Will the right hon. Gentleman say what figure he has in mind as a proportion of income which should be charged in rent? Further—[HON. MEMBERS: "Too long."] My second Question is very different from the first. Since the Government's whole

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    policy On prices—[HON. MEMBERS: "Too long."]—is to depend on competition to bring prices down, is it not the inference that there must be competition entirely in housing to bring rents down, and does not this show what nonsense the policy is?
    Mr. Amery: I had some difficulty in catching all that the hon. Gentleman said, but I should hesitate to ask him to trespass on the time of the House by repeating it. On matters relating to Scotland, perhaps he will put a Question to my right hon. Friend the Secretary of State for Scotland. The question of detailed figures is a matter for negotiation with the local authorities, and I should not like to anticipate the result of these discussions. What was the hon. Gentleman's other point?
    Mr. Hamilton: I wanted the Scottish figures, and we should like them from the Secretary of State for Scotland.
    Mr. Amery: Perhaps the hon. Gentleman has forgotten his third point.
    Mr. Hamilton: No, Sir, I shall tell the right hon. Gentleman. What percentage of income payable in rent does he think is fair?
    Mr. Amery: I have said that this must be a matter for discussion with the local authorities. I have no set views in my mind until I have been able to discuss it with them. I come now to the hon. Gentleman's third point, which he had forgotten. He asked what was fair and what was not fair. This is something which we shall discover by discussion—[Laughter.]—with the local authorities, with the people most directly concerned, within the margins which we have set out.
    Mr. Allaun: Yesterday the Secretary of State for the Environment told us that the subsidies totalled £190 million a year, and I think that included Scotland. We were also told that they would be reduced by approximately £150 million a year. Surely the Minister agrees that one need not be a mathematical genius to realise that this will reduce subsidies to £40 million a year plus any increase for houses built, if they are built, between now and 1975. Does not this mean a drastic acceleration of the decline in council house building which has already taken place?
    Mr. Amery: I think that the hon. Gentleman has got his figures wrong.
    Mr. Allaun: Not at all.
    Mr. Amery: We are not making savings on present housing subsidies. We are making savings on the subsidies that would have been payable in 1974–75, which would have risen to £310 million. At the moment they are £166 million. There will, therefore, be a saving of between £100 million and £200 million on £310 million. We are not going to a system of total free competition. This would be quite wrong in view of the housing shortage in a number of the most important conurbations.
    Sir G. Nabarro: Is it not a fact that, whereas housing subsidies may decline substantially, rent subsidies will increase substantially? At this juncture is not any estimate carried out statistically pure conjecture as it is impossible to ascertain exactly what will be the precise circumstance of every family in the land two, three or four years from now, the overwhelming majority of whom will be vastly better off under this Government?
    Mr. Amery: On this matter, as so often on others, I find myself in total agreement with my hon. Friend.
    Mr. Freeson: Will the Minister confirm that the biggest single contribution to the stabilisation of council house rents arises not so much from subsidies as from historic cost-rent pooling, a system which will be abolished according to the statement made yesterday by his right hon. Friend?
    Mr. Amery: This will help those who are most in need.
    Mr. Lawson: Are we to understand from the Minister's remarks that subsidies being paid in respect of houses already built, or in process of building, will be respected and that there will be no renegotiation downwards of those subsidies?
    Mr. Amery: The hon. Gentleman will realise that most of the subsidies are no longer being applied to the dwellings for which they are payable, because local authorities pool rents and subsidies.
    Mr. Heffer: Will the right hon. Gentleman cut through all this flapdoodle and tell us in precise terms what percentage

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    of council house tenants will now get an increase in their rents and by how much, and what percentage of those already being assisted by the policy of the Labour Government will get some assistance?
    Mr. Amery: The Government believe in consulting the local authorities. If the hon. Gentleman cares to put down a Question—
    Mr. Heffer: Give us some figures.
    Mr. Amery: The Government believe in consulting the local authorities. If the hon. Gentleman would care to put down a Question when those consultations are completed, I shall be glad to give him an answer.
    Mr. Hamilton: On a point of order. In view of the extremely unsatisfactory nature of that reply, I beg to give notice that I will raise the matter on the Adjournment, and that it will be addressed to the Secretary of State for Scotland, if only to find out whether he can still speak.
    Mr. Speaker: Order. Even the hon. Gentleman's Adjournment notice is too long.

    Francis Committee
    Mr. Barnesasked the Secretary of State for the Environment when he now expects to receive the Report of the Francis Committee.
    Mr. Amery: The Chairman hopes the Committee will be able to report by about the end of the year.
    Mr. Barnes: Is the right hon. Gentleman aware that for many families in London a furnished flat is their permanent home and that they, therefore, await this Report eagerly?
    Is the Minister further aware that in 1969 the average weekly expenditure on housing for tenants of furnished flats in London was £5 18s. against £4 2s. for average households in London? Surely the Minister intends to include furnished tenancies in his rent rebate scheme announced yesterday.
    Mr. Amery: The hon. Gentleman's Question relates to the Francis Committee, and it would be wrong of me to try
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    to anticipate its conclusions. If he would put down a separate Question on the particular point that he raised, I will do my best to answer it.

    Rating System
    Mr. Peter Archerasked the Secretary of State for the Environment whether he intends to publish a Green Paper on Local Government finance.
    Mr. Peter Walker: I would refer the hon. Member to the reply given to the Question by my hon. Friend the Member for Cannock (Mr. Cormack) on 27th October.
    Mr. Archer: The Secretary of State insists on replying to Questions by reference. Will the right hon. Gentleman tell the House whether, in view of his newfound attachment to the principle of imposing burdens according to ability to pay, we shall be given an opportunity of discussing the future of the rating system, which imposes the heaviest burdens on the largest families?
    Mr. Walker: I apologise for replying by reference in that way. I agree that normally it should be avoided. However, it was common practice previously.
    I am hoping to publish a Green Paper early next year, and there will be an opportunity to discuss the whole of the rating system.

    Disposal of Solid Toxic Wastes
    Mr. Peter Archerasked the Secretary of State for the Environment whether he intends to implement the recommendations of the Report on the Disposal of Solid Toxic Wastes.
    Mr. Peter Walker: The need to control the disposal of solid and semi-solid toxic wastes has been accepted in principle. The analysis of the problem and the recommendations in the Report on the Disposal of Solid Toxic Wastes will form the basis of our consideration of how best that need can be met.
    Mr. Archer: Since this Report took six years to complete, may I ask how many further inquiries we are to have about the inquiry? Is it not time that industry shouldered its own burden?
    Mr. Walker: In principle, I agree that industry should shoulder the burden of

    1083
    the pollution that it causes. Local authorities are concerned in this matter. I agree that it is urgent, and we are urgently pursuing it.
    Mr. David Mitchell: Does my right hon. Friend consider that county councils should notify rural district councils before they dump toxic material within their localities?
    Mr. Walker: This is a separate question. I know the instance in which my hon. Friend is interested. I suggest that he makes contact with his county council to discuss this topic.

    Housing (Ealing)
    Mr. Molloyasked the Secretary of State for the Environment what consultations he has had with the London Borough of Ealing regarding their building programme, in view of that Council having over 5,000 families on its register needing re-housing.
    Mr. Channon: I have had correspondence with the Council and hope that they will be proceeding energetically with a programme of improvement of properties which can be improved, and at the same time a substantial programme of new building, both by themselves and through charitable housing associations which they are assisting so as to enable the houses to be let to those in the greatest need. My right hon. Friend is writing to all London boroughs about their building programmes.
    Mr. Molloy: I am grateful that the Minister has been in touch with the borough council. However, he must be joking to give the House that kind of answer from the Ealing Borough Council. I would point out that this council received a black mention from the Estimates Committee because of its appalling housing record. Therefore, will the Minister, if he wishes to make a reality of some of the things that his right hon. Friend has been saying about solving the housing problem in London, visit the London Borough of Ealing and take on the herculean task of trying to instil some sense of urgency and compassion into that council regarding its housing problem?
    Mr. Channon: I certainly do not accept what the hon. Gentleman said. The difficulties faced by many councils under
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    the previous Administration are well known. They are being faced by councils of all political persuasions. As I pointed out, my right hon. Friend is in touch with all the London boroughs about their building programmes.

    Hull-Beverley Road
    Mr. Wallasked the Secretary of State for the Environment if he will now make a statement on the programme for the new Hull-Beverley trunk road and South-West Beverley bypass.
    Mr. Michael Heseltine: A single carriageway design is being prepared to the stage where a firm date for start of work can be decided, provided the scheme justifies a place in the firm programme.
    Mr. Wall: Will my hon. Friend bear in mind that this road has been planned since 1927? It is now very urgent. Will he give it priority in his programme?
    Mr. Heseltine: I realise the concern of my hon. Friend for this road and the work that he has done on it. But it has had to be redesigned, and we are waiting for further essential information.
    Mr. McNamara: Is the hon. Gentleman aware of the increasing pressures which are now put upon that new road, particularly because of new private and council housing development on large estates on either side? There is considerable concern about the way in which the dual carriageway peters out into a single lane. With the heavy increase in private traffic, it is becoming a danger to all users.
    Mr. Heseltine: I am sure that the hon. Gentleman knows that the single carriageway proposals being considered are acceptable to the county council.

    Road Improvements (Ealing)
    Mr. Molloyasked the Secretary of State for the Environment when he will authorise the necessary sanction for the Ealing Borough Council to proceed with the Perivale Lane/Argyl Road/Ruislip Road improvement project.
    Mr. Michael Heseltine: With regard to the project for improvement of the three roads, I hope that the Council will be able to raise the loan in 1971–72.
    Decisions as to the priority of the Perivale Flyover will be taken after receipt

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    of the report of the feasibility study of the improvements required to be made to Western Avenue in view of the projected M40 motorway.
    Mr. Molloy: I thank the hon. Gentleman for that reply. Will he be good enough to see that progress on this important project is in no way hindered by the statement on the roads programme made by his right hon. Friend the Chancellor of the Exchequer?
    Mr. Heseltine: The hon. Gentleman will remember that my right hon. Friend said that this road would not be affected by his statement on the roads programme.

  BILL PRESENTED
    FIRE PRECAUTIONS
    Mr. Secretary Maudling, supported by Mr. Secretary Campbell, Mr. Secretary Walker, Mr. Richard Sharples, Mr. Patrick Jenkin and Mr. van Straubenzee, presented a Bill to make further provision for the protection of persons from fire risks; and for purposes connected therewith: And the same was read the First time; and ordered to be read a Second time Tomorrow and to be printed. [Bill 27.]

PUBLIC EXPENDITURE AND TAXATION
Mr. Speaker: Before we come to the opening of the two-day debate, may I inform the House that I have so far over 90 names of hon. and right hon. Gentlemen who wish to take part, including those of 21 hon. Members who wish to make their maiden speeches. I am sure that all hon. Members who have been through the experience before appreciate the keenness of those who come to the House and are anxious to make their maiden speeches, but it will be clearly impossible for me to call 21 maiden speakers in the debate ahead.
There is one other point of procedure. We are now beginning a two-day debate. I have selected for debate the official Amendment which stands in the name of the Leader of the Opposition and some of his right hon. Friends.
Mr. George Lawson: On a point of order. Mr. Speaker. Is it not regrettable that the practice should appear to be encouraged of stimulating hon. Members who wish to be called to put down their names? Should we not follow the old practice that hon. Members stayed in the House and took their chance, instead of there now being submitted a long list of names which excludes anyone who does not put down his or her name?
Mr. Speaker: That point would have validity if the mere putting down of a name to an Amendment on the Order Paper secured, as of right, that an hon. Member would be called. It does not. Hon. Members have the right to put down Motions or Amendments expressing a point of view. It is not for the Chair to examine their motives.
Mr. Lawson: But I am asking you, Mr. Speaker, whether it does not seem to you that hon. Members who do not have their names down and who approach you are politely told that their prospects of being called are virtually nil because of all the names that have been put down. Might I suggest that this might be considered a bad practice to encourage in the House?
Mr. Speaker: It would be a very bad practice. I have tried, perhaps inadequately, to assure the hon. Gentleman

1087
that the mere putting-down of a name does not mean that an hon. Member gets a chance to speak.
Mr. William Small: Further to that point of order, Mr. Speaker. I understand that my hon. Friend's point of order related to writing to the Speaker for preference.
Mr. Speaker: I am sorry—I did not understand that. If that is so, obviously it helps Mr. Speaker if hon. Members who wish to take part in a debate do intimate to him in advance, but the fact that they do not intimate does not prevent Mr. Speaker from calling hon. Members who have not intimated. I hope that is clear.
3.34 p.m.
The Chancellor of the Exchequer (Mr. Anthony Barber): I beg to move,
That this House approves Mr. Chancellor of the Exchequer's Statement of 27th October on Public Expenditure and Taxation and the White Papers, New Policies for Public Spending (Command Paper No. 4515) and Investment Incentives (Command Paper No. 4516).
On Tuesday of last week I informed the House, by way of statement, of certain proposals for public expenditure and taxation. From my point of view, it would have been simpler to have made the announcement in an opening speech of a debate. In the first place, it would have avoided the somewhat prolonged period of questioning which ranged across the whole field of government. Secondly, by tradition parliamentary statements are confined in the main to the bare essentials. In the event of an ordinary opening speech I would have had more opportunity to elaborate and expand some of my proposals. But, having said this, I hope that the House will agree that it was right to proceed as I did so that hon. and right hon. Gentlemen on both sides would have adequate time before the debate to consider those proposals.
I start by paying tribute to the work of my hon. Friend the Chief Secretary to the Treasury, because whatever may be the views of individual Members about particular proposals, this very thorough and fundamental review of public expenditure could not have been carried through effectively, certainly not in so short a time, but for his resolution, determination and patience.
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I should like, first, to give the House a brief resumé of the general economic situation. It is well known that Britain's rate of economic growth in recent years has been depressingly slow. Indeed, in the past six years our rate of growth has been little more than half what it was in the previous six years, and I will return later to our proposals for improving the long-term rate of growth.
Looking to the immediate past, output fell slightly in the first quarter of the year but rose again in the second quarter. Over the whole six months from January to June output was only slightly up on the previous half-year, and the main stimulus for that increase came from consumer spending. The volume of exports did not change very much during that period—that is, from January to June—whereas imports rose, partly due to special factors such as the end of the Canadian dock strike. No complete figures for the third quarter are yet available, but a preliminary estimate of consumer expenditure suggests that it may rise further by about half of 1 per cent. between the second and third quarters to a level of 3 per cent. above that in the same period last year. This confirms earlier indications, which I mentioned once or twice during the recess, which were based on figures of retail sales, hire purchase transactions and new car registrations.
Future indications are that consumer expenditure will continue to rise. Exports are also expected to rise strongly with some modest rate of increase in public consumption and fixed investment. I have stated before in this House that I believe that one should be wary of short-term forecasts, but I think it right that I should tell the House that on all the information available it seems that over the coming six months or so the upward trend in the output of the economy as a whole will be broadly in line with the estimated rise in productive potential.
During the period since I became Chancellor of the Exchequer I have naturally considered whether to take steps to reflate the economy. Most of those people who were urging me to deflate the economy based their views on the fact that output had been stagnant, and on the assumption that it would continue to do so without some further action by the Government. There were fears,

1089
very genuine fears, that unemployment would rise to a much higher level during the winter. It is true that output was pretty stagnant in the early part of the year, partly, no doubt, due to strikes, but now there is evidence of a significant rise in consumer spending and of rising activity generally.
If one takes into account the continuation of the rapid rise in costs and prices which we have experienced over the past year or so, it follows that it would be wrong to take any steps likely to increase further pressure of demand. The first essential, and I believe that the whole House will be with me when I say this, is to bring the rate of increase in money earnings more nearly in line with the increase in productivity. I shall have something more to say about this later.
In recent years we have had the highest figure and the most prolonged period of unemployment since the 1930s. When I met the Economic Committee of the T.U.C., I agreed with its members that the level of unemployment was higher than any of us would like to see. But the fact is that the fears of a further alarming rise this autumn, which some people were suggesting, have so far proved to be wrong. Indeed, there was even a slight fall in the last two months. The level of vacancies has also been fairly stable in recent months. So the pressure of demand seems to be fairly constant, and this suggests that the economy is somewhat more buoyant than some commentators have been claiming.
It was in the light of the assessment which I have just given to the House and because I wanted to preserve my freedom of action next April that I was prepared to bring in legislation now to reduce direct taxation to an extent which, taken together with the reduction in public expenditure, would be broadly neutral in demand terms in the next financial year. I should like to clear up two points in connection with this.
The first concerns the cut in corporation tax. Although this will increase the amount of profit after tax, after considering all the advice that I have had, my judgment is that, after allowing both for the time that normally elapses before investment decisions can be translated into production and for the effects of corporate borrowing, the demand effect of the proposal concerning corporation tax
1090
during the financial year will be small, both absolutely and in relation to the effect of the reduction in income tax.
Secondly, there is the reality of the expenditure cuts, about which one or two questions were put to me at the end of my statement the other day and about which there has been some comment in the Press. It is true that in arriving at the figure of £329 million, which is shown in the White Paper as the net savings in 1971–72, we took account of some £125 million attributed to a further short fall in expenditure now expected for the year for public authorities and nationalised industries.
Hon. Members: Hear, hear.
Mr. Barber: I am grateful to have the approval of right hon. Gentlemen opposite.
Mr. James Callaghan: Agreement.
Mr. Barber: Agreement. I hope that they will also agree with this, because it is important to recognise that as well as this downward revision of the estimates caused by a shortfall there had already been a number of upward revisions in the estimates of costs and these amount to £88 million for 1971–72. Taking all these adjustments together, they account for £37 million out of the total net reductions of £329 million. In other words, the new policies which I announced on Tuesday of last week account for the remaining £292 million, that is, for nine-tenths of the total net reductions in public expenditure for 1971–72.
What I set out to do, and I think that this has been achieved, was, broadly speaking, to preserve the balance of aggregate supply and demand in 1971–72 which was in prospect when we took office in the summer. That does not mean to say, of course, that when next April comes I shall necessarily be satisfied with what then turns out to be the prospect for the balance of supply and demand in 1971–72. I think that the two right hon. Gentlemen opposite will agree that he would be a very imprudent Chancellor who would express a view on that at this stage, because that is the judgment which one can sensibly make only very much nearer the time which is appropriate for such a judgment, namely, in the Budget. What action

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may be called for then in five months is something neither I nor anyone else can say at this stage.
The figures for the balance of payments for the third quarter will not be complete until next month. As everyone knows, they have been very much distorted by the dock strike. But for the year as a whole, as I told the House yesterday in answer to Questions, there should be a good surplus on the current account, and I would expect a substantial surplus for 1971. But this means keeping our goods competitive. I remember the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) saying in his Budget in 1969:
"There is no magic about a particular figure for a surplus. But that it needs to be substantial and continuing is beyond doubt."—[OFFICIAL REPORT, 15th April, 1969; Vol. 781, c. 1001.]
We need to earn such a surplus on current account and go on earning it, not necessarily in every quarter, but as a sustained average over reasonable periods. We need to build this substantial surplus on current account to build up our reserves and to maintain an appropriate rate of repayment of the very large medium and short-term debts which we inherited from the previous Administration and which totalled £1,461 million at the end of June. [Laughter.] I assure the right hon. Member for Stechford that this is no laughing matter. This is a burden to be borne by the British people, because this is money which will have to be repaid over the years. These debts did not exist when the right hon. Gentleman and his colleagues took over.
Mr. Roy Jenkins: Of course the debts are no laughing matter, but, as the right hon. Gentleman knows, they have gone down to less than 50 per cent. of what they were. A smile crossed my face not at the debts but at the whistles of surprise from some of the right hon. Gentleman's hon. Friends when he announced a figure which had been published at least five or six months previously.
Mr. Barber: The point I was making and which it is fair to make is that this gives some idea of the task which as a nation we have before us. It is all very well for the right hon. Gentleman to talk
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about halving the debts and leaving them at a figure of "only" £1,500 million. Does he not know that when he and his colleagues took over in 1964 the figure was not £1,500 million but about £70 million? That is what has happened.
I was saying that we need this substantial surplus on current account not only to build up our reserves and enable us to replay this considerable debt, but to finance the net outflow which results from capital movements of many kinds, inwards and outwards, including, of course, overseas investments, and this includes export credit. I hope that the House will note the figure that exports credit is now increasing by around £350 million a year.
My statement last week was concerned almost entirely with public expenditure and taxation. I mentioned that I would say something this afternoon about monetary policy. When I spoke of the need for a firm grip on the growth of credit and of our resolve to take the necessary measures, I had mainly in mind the restricted lending of the clearing banks. I did not think it right to go further last Tuesday, because the figures for October were not then known. In the event, the figures showed a slight fall. But over the six banking months ending mid-October restricted lending rose by 4 per cent., or an annual rate of 8 per cent. This is too steep a rise for the year as a whole.
In particular, there has been too large an increase in personal lending for consumption and I have therefore approved the call for additional deposits, made by the Bank of England on 29th October. Our objective in monetary policy in present circumstances is to prevent too rapid an expansion of domestic credit. We are not proposing Draconian policies to deflate real activity by monetary measures.
What we intend is to ensure that the development of bank lending does not give the force of demand an unwanted boost which is out of tune with our measures on public expenditure and taxation. To this end we shall continue in the light of events to use calls for special deposits, and, in appropriate circumstances, repayments, as a means of influencing the movement of bank lending, using them flexibly and undramatically as the situation requires.

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I hope that the whole House will agree that the most pressing and serious problem with which the country is faced today is cost inflation.
Mr. Joel Barnett: Would the right hon. Gentleman confirm what the Prime Minister told me last Thursday—that this additional monetary squeeze will not have any effect on companies? Would it not be fair to sum up what the right hon. Gentleman has been saying by saying that in fact he is continuing and accepting the Budget judgment of April.
Mr. Barber: Not necessarily. [Interruption.] On the second point, however, I entirely agree with what my right hon. Friend the Prime Minister said on the occasion to which the hon. Gentleman referred, though not exactly as the hon. Gentleman put it.
I was saying, and I am sure that the whole House will agree, that the most pressing problem is that of cost inflation. The main responsibility in this area must rest with those involved directly in negotiations about incomes and decisions about prices. I believe that the greatest contribution which the Government can make to stable prices is to provide the background of a consistent and responsible fiscal and monetary policy, and I have repeatedly made the position of Her Majesty's Government clear.
In the private sector, the actual negotiations about wage settlements are the responsibility of management and unions, but under no circumstances will the Government encourage or connive at inflationary settlements for the sake of short-term peace and quiet. [Interruption.] In the public sector, the Government have a special responsibility and we shall use all our influence against settlements which we believe to be against the national interest. [HON. MEMBERS: "Oh."]
It has been suggested that the increases in social service charges will add to inflationary pressures. The fact is that quite apart from the Measures which I announced last week—which will, on balance, benefit the lowest paid workers. [Laughter.] This is true, and if hon. Gentlemen opposite will wait a moment I will give some instances of this. [Interruption.] If they wish to hear the
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facts I will give them. If they simply wish to shout the country will draw its own conclusion.
I do not believe that, in practice, the measures which I announced last week, as far as charges are concerned, when one takes into account the other side of the coin, too—[Interruption.] I will give the details in a moment—will make any difference to the level of settlements which are reached.
The House will recall that I said last Tuesday that none of the new or increased charges would come into effect before April of next year. Consider the position between now and not next April but April, 1972. Between now and then the effect of the new or increased social service charges and levy schemes for agriculture will be to increase the cost of living by less than 1 per cent. [Interruption.]
I ask hon. Gentlemen opposite to hear me out and to compare that with the last 12 months of the previous Administration, when the cost of living rose, in their last year alone, by 6 per cent., the biggest rise since 1951.
There is another comparison on which the right hon. Member for Stechford should comment. Compare the increase of less than 1 per cent. to which I referred with the massive increases in indirect taxation piled on the consumer by the Labour Government—and piled on repeatedly—increases in, for example, corporation tax, petrol tax, taxes on beer, spirits and tobacco; all deliberately increased by the Labour Government time and again. Then, on top of that, there was the imposition of selective employment tax.
Mr. Harold Wilson: This might be a good opportunity to ask the right hon. Gentleman to reply to a question which I put to him last week after his statement but which, I am sure through inadvertence, he failed to answer. I asked him, having told us what his budget was for in relation to direct taxation next April, if he would give an assurance that no part of it would be financed out of increased indirect taxation. Perhaps, after what he has now said, he will give us that assurance.
Mr. Barber: Really!
Mr. Wilson: Answer.
Mr. Barber: It is no good the right hon. Gentleman shouting "Answer" as I am about to give him one. If he will consult his two right hon. Friends who were at the Treasury, the right hon. Member for Stechford and the right hon. Member for Cardiff, South-East (Mr. Callaghan), they will advise him that it would be utterly ridiculous for any Chancellor to give such an assurance at this stage. [Interruption.] The Leader of the Opposition is laughing. That is because in his heart he is ashamed of the excess of taxation which was piled on the consumer—nearly £3,000 million of increased taxes—under his Administration. That was the achievement of Labour. [Interruption.] I hope that the Leader of the Opposition will listen to me and not get back to his old habit of muttering when a nasty thing is said. It is calculated that under the previous Government, when the right hon. Gentleman was Prime Minister, the cost of living went up not by less than 1 per cent. but by 7 per cent., and it went up as a result of those measures.
The present level of wage claims and settlements is running far above the rise in production. Nobody will deny that. It is far above the rise in the cost of living and far above the rise in costs which could be attributed to the measures which I announced last week. Those are the facts, whatever individual hon. Members may think about particular measures, and no objective observer can deny them.
Consider the two disputes which are now in the news. Take, first, the miners' dispute. The miners were offered an increase of just under 10 per cent., the largest increase ever offered to miners by the National Coal Board. The executive of the National Union of Mineworkers rejected it and called for a strike. The matter went to the ballot, but the executive of the N.U.M. did not get the necessary two-thirds majority.
An Hon. Member: It got 55 per cent.
Mr. Barber: That was not a two-thirds majority.
Then the N.C.B., in a further negotiation, decided to offer an additional 2 per cent. I will only say that in my view the original offer was generous. I hope that hon. Gentlemen opposite who come from mining constituencies recognise that the original offer was three and half times
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greater than the current rate of increase in productivity in the industry.
Mr. Michael Foot Mr. Michael Foot (Ebbw Vale) rose—
Mr. Barber: I have a great deal to say and I do not want to give way too much.
Hon. Members: Give way.
Mr. Foot: Would the right hon. Gentleman tell the House and the country what will be the effect of the measures he announced last Tuesday on miners who are demanding a wage of £20 a week?
Mr. Barber: I will give some facts shortly about the effect on people in that position—[Interruption.]—of people who are earning £20 a week.
In its wisdom, the N.C.B. decided, after the union had failed to get the necessary support for an official strike, to jack up the offer by 2 per cent. Thus now, as we know, the coal burnt by industry and the coal which produces electricity is to be increased in price by 16 per cent., and this must inevitably lead to higher electricity prices.
Consider, next, the dispute concerning local government workers. Here the local authorities are the employers. Nevertheless, we have made it clear that in the view of the Government the offer is generous. If the offer to local authority employees were to be based on the increase in prices over the past year, plus the effect of the social service charges and the agricultural levy—and in any event the charges do not start until April of next year—then that offer would be halved.
I did not think the right hon. Member for Stechford did himself justice when on television the other evening he implicitly but clearly encouraged the dustmen and other local government employees to remain on strike against an offer which is twice as high as the increase in the cost of living and more than three times as high as the norm which was proposed by him when he was Chancellor of the Exchequer. Right hon. Members opposite lit the fires of inflation and are now pouring oil on them.
Let no one say that I did not warn the House that this was just what would

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happen. Last April, in a speech which I made in the Budget debate, I said:
"It is accepted that wage settlements are now running at about 10 per cent. on average, and are expected to remain at this level for most of 1970. This is the conclusion of the Bank of England, and presumably the right hon. Gentleman agrees with it. If one takes into account wage drift, earnings per hour for a week of given measure will be increasing by about 12½ per cent. … What makes this all the more serious is that these increases follow a period of severe wage inflation".
I concluded:
"… these are the hard facts which the Chancellor of the Exchequer cannot lightly cast aside. They are facts which must cause grave concern for any Government, Labour or Conservative, after the next General Election."—[OFFICIAL REPORT, 20th April, 1970; Vol. 799, c. 68.]
I think the whole House will agree that what I said was true.
In my statement last week I gave details of the abolition of investments grants, the reduction of corporation tax and the new system of accelerated depreciation. The reasons for these changes are these. First, there is no evidence that investment grants have worked in dealing with the central problem of raising the level of productivity investment as a whole. Indeed, the facts show that the rate of increase in manufacturing investment in real terms was lower in the four years after the grants came in than in the previous four years.
Secondly, we are concerned not just with the quantity of investment but with the quality of investment. After all, there is nothing inherently virtuous or economically valuable about investment as such. Building factories and buying machines which cannot pay their way is just as much a misuse of scarce resources as any other form of waste. In my view, much the most serious criticism of the grant system was that it was completely unrelated to the performance of the firm and to the likely return on investment. Money spent by an inefficient company on plant to produce unwanted goods attracted exactly the same subsidy as any other company.
What we want to do—and I hope that on reflection the whole House will agree—is to give the maximum encouragement to worthwhile and profitable investment by well run and profitable companies, and I believe that this is best achieved
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by a system of tax allowances to be set against profits.
A third reason, which should not be lightly brushed aside, is that the system of investment grants is administratively complicated. The change which I announced, once the transition is completed, will release about 1,000 civil servants.
The fourth reason is that we are concerned to reduce the extent of Government interference in decisions which we believe should properly be left to business judgment and customer choice, and that is why the new national allowances are being made available throughout industry rather than confining them, like the previous grants, to manufacturing industry alone. Higher efficiency is just as important in the service industries as it is in manufacturing.
So much for the reasons for abolishing the investment grants. In devising the new system of allowances, our aim has been to permit the rapid write-off of investment in plant and machinery, concentrating as much as possible on providing the benefit of the allowances at an early stage. This is one of the reasons why we prefer a form of accelerated depreciation to investment allowances. Although the two systems of tax relief can be made to have the same Exchequer cost over a period of years, investment allowances provide less benefit for companies in the earlier years but more in the later years and they do not, therefore, give the early boost to investment which we all want to secure. Therefore, we decided in favour of accelerated depreciation.
I realise that industry would have liked free depreciation for the whole country, but obviously, as those hon. and right hon. Gentlemen opposite who have been at the Treasury will know, one must consider the cost in these matters. However, we think that we have gone a long way towards free depreciation. After all, nearly 80 per cent. of expenditure on plant and machinery can in future be written off within three years.
Sir Gerald Nabarro: Would my right hon. Friend permit a question from this side of the House? Does that very handsome gesture to the overall opinion of private industry mean that the Government's long-term policy will be to make further

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progress towards free depreciation on the model introduced in 1960 by the Prime Minister when he was President of the Board of Trade, in giving 100 per cent. free depreciation for development areas only?
Mr. Barber: I could not commit myself to what I might do in future concerning progress in this sense. I can see the force of the arguments which have been put by the C.B.I. and repeatedly by my hon. Friend for an extension of the area which qualifies for free depreciation. I will bear in mind what my hon. Friend says.
I want to say something about the development areas. The present regional imbalance is not only socially unacceptable to all of us but a chronic waste of resources. As we said in our manifesto, we regard an effective regional development policy as a vital element in our economic and social strategy, but we do not believe that the interests of the regions were truly served by the previous Administration's policies, and I will explain why.
Too often those policies tended to subsidise inefficiency, to prop up lame ducks and to pay out large sums with little regard for the additional benefits which they would bring. Although it is true that huge sums were spent on regional incentives, there is, when one looks at the matter, very little evidence that they were cost-effective, while for those areas with a preponderance of service industries they were of no use at all.
Under the system which we propose, services and commerce in development areas will receive the new depreciation allowances, and free depreciation on fixed plant and machinery will provide additional incentive to encourage the location and expansion of manufacturing industry in those areas.
The regional differential will be reinforced by the indefinite continuation of a 40 per cent. initial allowance for new industrial building and, as I mentioned last Tuesday, extended assistance under the Local Employment Acts. What we are aiming to do above all is to create a secure long term base for regional prosperity, to increase the attraction of the less prosperous areas, to create new jobs which will last and to bring in new firms which will make profits and will grow.
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We are providing £25 million more for new measures of assistance under the Local Employment Acts.
These, then, are our immediate measures for the regions. As the House knows, we are now reviewing the whole of regional policy, but there is one very important factor which I ask the House to bear in mind. The total value to the development areas of the new differential arrangements—that is, free depreciation plus the extra assistance under the Local Employment Acts—should certainly be no less than the value to them of the differential element in the grant system. But what is important, I believe, and my right hon. Friends believe, that the changes which we have made will ensure that the new arrangements will be far more effective.
Mr. Dan Jones: Do those self-same proposals apply equally to the intermediate areas?
Mr. Barber: I dealt with the intermediate areas in my statement last week. I do not wish to go beyond what I said. The changes which we are proposing will be embodied in legislation. I was elaborating on those proposals.
I turn to my proposals for health and welfare because I realise that they are controversial. I can understand, and I respect, those hon. Members opposite who sincerely believe that all health and welfare should be 100 per cent. free. As for those, including the whole of the Opposition Front Bench—all of them—who are not opposed to charges in principle, I ask them to bear these facts in mind.
First, all the existing arrangements for total exemption from the charges will remain, except for a change in the age limit for dental treatment which I have announced. For example, for prescription charges, children, expectant mothers, nursing mothers, old people over the age of 65 and war pensioners are all exempt. Forty per cent. of the population are already exempt from prescription charges.
Secondly, there are the categories of people who, although not exempt from charges, are entitled to refunds of the payments. Here the steps which my right hon. Friend the Secretary of State for Social Services has decided upon will enlarge the categories, and my right hon.

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Friend is taking additional action to ensure that people are aware of their new entitlement.
Let me give the House some instances. As a result of the changes which I have announced, nearly one-quarter of a million more children will, in future, get free school meals, at an additional cost of £4 million a year. Almost 200,000 more mothers and children will, in future, get free welfare milk, at an additional cost of £3 million a year.
The result of the new system of exemptions, remissions and refunds—I come to the sort of case raised by the hon. Member for Ebbw Vale (Mr. Michael Foot)—is that a typical family with two children, with an income of right up to £1,000 a year—the hon. Member mentioned £1,000 a year—will not have to pay any of the increased charges for school meals, prescriptions charges or health charges which I announced last week. [Interruption.] It is important that right hon. and hon. Members, on both sides—[Interruption.] It is no good the hon. Member for Ebbw Vale shaking his head and saying that this is not true. These are the facts. The truth is that the hon. Member does not want to believe them. He wants to go back to Ebbw Vale and to tell his people that it is all terrible for everybody with an income of under £1,000 a year, but that is not true.
Mr. Michael Foot: Is the Chancellor saying that no one receiving less than £20 a week—and the miners have not got that yet; that is what many of them in South Wales are frightened about—will have to pay anything more for school meals, health charges, prescription charges, council house rents or any of the other items which he mentioned in his Tuesday package?
Mr. Barber: I made the position clear, and I will repeat it if the hon. Member did not hear it. Obviously, somebody with two children and an income of £1,000 a year and a large amount of capital—
Hon. Members: Ah!
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: Order. As the right hon. Gentleman does not give way, hon. Members must resume their seats.
Mr. Barber: My right hon. Friend the Secretary of State for Social Services has corrected me by saying that capital does not come into it. I said that the result of the new system—
Mr. John Mendelson Mr. John Mendelson (Penistone) rose—
Mr. Speaker: Order. The right hon. Gentleman is obviously not giving way.
Mr. Mendelson: On a point of order. The right hon. Gentleman has referred especially to the mining areas. He is under an obligation to give way to hon. Members representing those areas to challenge him. [Interruption.] It is no good hon. Members opposite who do not know the traditions of the House shouting. The Chancellor has referred to mining areas and said that we on this side want to take back a false tale to our constituencies. He is under a moral and traditional obligation to give way to two or three of us, and he should do so now.
Mr. Speaker: Order. I cannot rule on morals or moral obligations. The right hon. Gentleman himself decides whether to give way. That is the rule of the House. Mr. Barber.
Mr. Mendelson Mr. Mendelson rose—
Mr. Barber: No, I am not giving way. I have given way on a number of occasions. I answered many questions the other day for an hour and a quarter following my statement. In deference to the right hon. Gentleman who is to follow me, I should get on. I have made the position clear. [HON. MEMBERS: "No."] I hope that the hon. Member for Ebbw Vale will note the words I used, whether he likes them or not. If he wishes to have any further details, I shall be pleased to provide them.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: Order. Mere persistence does not make any right hon. Gentleman give way.
Mr. Eric S. Heffer: On a point of order. I wonder, Mr. Speaker, whether for a few moments the House could temporarily go into recess so that the right hon. Gentleman and my hon. Friend can settle between them precisely what is being said.
Mr. Speaker: That is n ot a point of order.
Mr. Thomas Swain: I rise on a point of order, Mr. Speaker, as a genuine miner who does not come from the silly, intellectual atmosphere in which some hon. Members opposite were brought up. There are 27 of us who represent mining constituencies. The right hon. Gentleman has referred specifically to miners but refuses to give way to anyone representing a mining constituency. [An HON. MEMBER: "He has done so."] I wish you would shut your big gob. May I ask, through you, Mr. Speaker, whether the Minister, however ignorant he might be when standing at the Dispatch Box, will give way to a Member from a mining constituency?
Sir G. Nabarro: Certainly not.
Mr. Speaker: I do not question the hon. Member's genuineness as a miner, but that does not affect the point of order. I have dealt with it already. It is the Minister who decides whether he gives way.
Mr. Barber: As the hon. Member is, as he rightly says—I know, because I come from the same part of the world—a genuine miner, I gladly give way to him.
Mr. Swain: The only thing I can say, Mr. Speaker, is that when the Demon Barber has had as many blisters on his hands as I have had on my backside he will be able to talk with the same authority as I do. I am grateful to the right hon. Gentleman for giving way. Is he aware that if the miners' wages had risen over the past 10 years strictly in accordance with the rise in productivity, they would now be getting a £23 10s. a week minimum wage in every section of the mining industry?
Mr. Barber: I was dealing with social service exemptions, remissions and refunds. I had passed the point where I was dealing with the claim of the National Union of Mineworkers but, no doubt, the point made by the hon. Member will be noted.
Thirdly, the effect of the family income supplement will be that where the breadwinner is working poor families will be better off. There are more than half a million children in those poor families
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who will be helped by the family income supplement. It has been asked why we would not increase family allowances with a matching clawback. I will tell the House. I was asked a number of questions about this the other day, and of course, in answer to questions one could not elaborate very easily. I will tell the House, because naturally the proposal to increase family allowances and to match them with clawback was the first thing we looked at when we took office—[HON. MEMBERS: "Then why the promise?"] but what we found was that because of inflation many poor families are now close to the tax threshhold and as a result the abolition of the reduced rate in the Budget of last year they would derive little or no benefit from an increase in family allowances with clawback. We also found—and references were made the other day to the cost of the family income supplement scheme—we also found—and I must admit that this was a surprise to me, and I believe it would be a surprise to most hon. Members in the House—that the net cost of a 10s. increase in family allowances with clawback would be less than the cost of the scheme proposed by my right hon. Friend; it would in fact be about £6 million and not £30 million which some of us understood that it would be.
Mrs. Shirley Williams: The right hon. Gentleman said just now that anybody who was earning £20 a week or less would not pay increased charges for school dinners—
Hon. Members: He did not.
Mrs. Williams: Yes, he did.
Hon. Members: He did.
Mrs. Williams: —and would be exempt from charges—if with two children, I think I am right in saying. Is he aware that his right hon. Friend's Order which has been alluded to indicates that anybody earning more than 13 guineas a week with two children will pay increased charges, and he himself has indicated an increase of only 30s.?
Mr. Barber: If the hon. Lady will do my right hon. Friend the justice of going carefully into the details of his proposal she will find that what I have said is accurate—and my right hon. Friend has just confirmed it; and obviously any

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Chancellor speaking at this Box on a matter of this kind would take the advice of the Department primarily responsible. The fact is in the list and it is true. So the hon. Lady can rest assured on that particular point.
What I was saying was that because of the difficulty—
Mr. William Hamilton: On a point of order. I think, Mr. Speaker, that there was confusion in the minds of hon. Members of the House as to what the right hon. Gentleman said in the first instance and there appeared to be an attempted correction after an intervention by the Secretary of State for Social Services. Would you take steps, Mr. Speaker, to ensure that HANSARD is not altered in any way on this point?
Mr. Speaker: Order. The hon. Member is right to wage political battle, but I hope that he will not bring HANSARD—[HON. MEMBERS: "Hear, hear."] I hope he will not seek to bring HANSARD, which serves us faithfully, into the political battle.
Mr. William Hamilton: I want to make it quite clear that I am making no reflection whatever on the integrity of the HANSARD people. I am making a reflection on the right hon. Gentlemen on the opposite Front Bench.
Mr. Speaker: That is not a point of order for me.
Hon. Members: The hon. Member should withdraw.
Mr. Peter Tapsell: On a point of order. The hon. Gentleman has confirmed the fact that he is making a reflection on my right hon. Friends. Is not the observation he has just made a most improper one which he should withdraw?
Mr. Speaker: Observations which are not in order about individuals are in order about groups of individuals.
Mr. John Mendelson: On a point of order. Would not the commonsense way of clearing up this difficult situation be for the right hon. Gentleman the Chancellor of the Exchequer to repeat his original statement and to allow himself to be briefly questioned on that statement and clear the matter up?
Hon. Members: Oh.
Mr. Barber: I am certain it is crystal clear in HANSARD without any need to check it. I would willingly repeat it, but it is absolutely clear. I explained it. I am not going to be diverted from what I was saying about claw-back, because what I am saying to the House is that after considering the possibility of family allowances and claw-back we came to the conclusion that family income supplement would be a better method of getting more money to the families in need, and this will be shown to be so when the scheme is fully understood by hon. and right hon. Gentlemen. What is more—
Mr. Dick Douglas: On a point of order.
Mr. Speaker: I remind the House that many hon. Members wish to speak in this debate, and I hope that we are not going to have too many points of order.
Mr. Douglas: Mr. Speaker, I am seeking your guidance. We have been speaking about reflections on the integrity and otherwise of persons inside and outside this House. The statement seems to me to place great reflection on the professional competence of Professor Wheat-croft, who was Conservative Central Office taxation adviser. Was not the information which the Chancellor has now given us available at the Conservative Central Office when right hon. Gentlemen were in opposition?
Mr. Speaker: That is not a point of order at all.
Mr. Barber: What is more—I hope that hon. and right hon. Gentlemen opposite will note this point and will applaud it—under this scheme which has been devised by my right hon. Friend families with only one child are benefiting for the first time, and one-parent families are being specially helped. I think the whole House will applaud this very much.
Mr. Jeremy Thorpe Mr. Jeremy Thorpe (Devon, North) rose—
Mr. Barber: I have a lot more to say to the House, and there is the right hon. Gentleman opposite who is to follow me.
Mr. Thorpe: I wonder if the Chancellor could help the House in a genuine difficulty? There is some misunderstanding as to what he was saying, and I

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am sure the Chancellor wants the whole House to be fully and accurately informed as to what he was saying. Can he confirm that, discounting persons with large capital assets—discounting them—a man earning £1,000 a year with two children will not be affected by any of the charges which he announced last week?
Mr. Barber: I did say in answer to an intervention, and apologised to the House that I made a mistake—[HON. MEMBERS: "Oh."]—that capital does not come into it at all. This is to the advantage of the people concerned. I will repeat once again what I said, because the right hon. Gentleman, I know, genuinely wants to hear what I said, but if there are any points of detail about any of these matters, as I have more to say in this speech, my right hon. Friend the Secretary of State for Social Services, who will be winding up the debate, can answer them and my right hon. Friend the Secretary of State for Trade and Industry will be speaking this evening. What I said was this, and the right hon. Gentleman would like to hear: the result of the new system of exemptions, remissions and refunds is that a typical family with two children with an income of less than £1,000 a year will not have to pay any of the increased charges for school meals, prescription charges or health charges which I announced last week. I hope I have made the point clear.
Mr. Harold Wilson Mr. Harold Wilson rose—
Mr. Barber: I do not propose to go into any further details. I can tell the Prime Minister who is getting up [Laughter.]—that I have the full details here of what is meant by a typical family, and if he would like to have them I will send them to him. Honestly, I have a great deal more to say.
Mr. Harold Wilson: I am most grateful to the right hon. Gentleman. I will try to help him here, too—[HON. MEMBERS: "Oh."]—because we are anxious to hear the rest of his speech, which can only improve on what we have heard so far. Would the right hon. Gentleman, in order to shorten these interruptions, which we all regret—Mr. Speaker, I
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wonder if I may pass this paper across the Table of the House to him, with your permission—will read out this Order? It is the regulations amending the provisions for the calculation of parent's income in respect of school dinners. It gives a nice table, the size of families, 1, 2, 3, 4, with net weekly income in shillings, and it seems to be centred around a figure of £13. Is this a question of adding in family allowances in order to get the figures the right hon. Gentleman has given us, or is there any other reason which he could simply explain to the House? Then we could get on and hear the rest of his speech.
Mr. Barber: Even for the right hon. Gentleman I do not intend to get involved in the details of the scheme, but I will say to him that the statement which I have made is true, it is accurate and this is what will happen. I regret that this considerable step forward for these families is not recognised as such by the right hon. Gentleman and that he does not do us the credit of saying that it is a step forward and will help these families.
The present figure of claw-back is £42. In theory, that figure should be increased to match the reduction in the standard rate but, for the benefit of the people concerned, I propose to leave it as it is for 1971–72.
Underlying all the changes in the social service field is the inescapable need for a choice between priorities. The whole House will agree that there are limitless directions where it can be argued that more needs to be done and that more burdens should be placed upon the taxpayer. What we have done is to give greater priority to those who are least able to fend for themselves and to devote more resources to the basic fabric of the social services. When the right hon. Gentleman follows, whatever his judgment on our overall proposals, I hope that he will at least give the Government credit for increasing the provision for health and welfare over the next four years by £110 million more than was provided by the plans of his Government for better services, including the hospital service, particularly for the elderly and the mentally handicapped. I hope that he will also express positive approval of our proposals for the net addition of £21½ millions starts to the

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education building programme for 1972–73—the first year in which we are able now to step up the number of starts.
The right hon. Gentleman may be opposed to the cut in income tax which I announced, although I believe in his heart he warmly approves of it, but at least let him approve the additional resources which we are devoting to the health and welfare and education services.
The Opposition have put down an Amendment in the name of the right hon. Gentleman the Leader of the Opposition and some of his hon. Friends, and I must do them the courtesy of referring to it. The Amendment describes the Government's proposals as "mean and unfair". We are entitled to ask who are these people whose record entitles them to make that particular criticism? Has the right hon. Gentleman the Leader of the Opposition forgotten that it was the Labour Government which increased the charges for spectacles by 25 per cent.? Was that "mean and unfair", or was there a different standard for the right hon. Gentleman when he was Prime Minister? I hope that he will tell us tomorrow. Has he forgotten that it was the Labour Government when he was Prime Minister which increased the charge for dental treatment by 50 per cent.? Was that "mean and unfair"? We on this side of the House are entitled to know.
Have the Parliamentary Labour Party, many of whom are sitting on the benches opposite, forgotten that the right hon. Gentleman when he was Prime Minister put up the charge for school meals by 75 per cent. during his period of office? I do not recall a single right hon. Gentleman in the then Government telling the House that that was "mean and unfair". We did not get that from the right hon. Gentlemen then. The right hon. Gentleman put forward his proposals and dragooned his supporters into the Lobbies in support of increases totalling 75 per cent.
On the contrary, what the right hon. Gentleman the then Secretary of State for Education and Science told the House was this:
"… the subsidy is now approaching the £100 million mark, and we must be prepared to weigh one priority in the education service against another."—[OFFICIAL REPORT, 17th November, 1969; Vol. 791, c. 863.]
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Is that still the policy of the Labour Party on charges for school meals? Right hon. Gentlemen were telling a very different tale when they were in office, and they were pursuing a very different policy from the one which they now purport to advocate. One would hardly think, looking at the Amendment, that it was right hon. Gentlemen opposite who abolished free milk in secondary schools.
I hardly think that I need to remind the Leader of the Opposition of the pledge which he gave to the country when he was Prime Minister about prescription charges, but it is worthwhile recalling the reason given by the Leader of the Opposition for the reintroduction of a prescription charge of 2s. 6d. He said:
"What we decided—and this was our choice of priorities—was that it was still more important to maintain the essential fabric of the National Health Service, and particularly the hospital building programme."—[OFFICIAL REPORT, 18th January, 1968; Vol. 756, c. 1977.]
Having been Minister of Health myself, I agree with him; I think he was absolutely right; but it is somewhat synthetic for the right hon. Gentleman who tops the list of names of his right hon. Friends to say that the proposals which we have put forward are mean and unfair.
I was amused to hear the right hon. Gentleman the Leader of the Opposition answering questions on the radio on Sunday. He was talking about the increase in social service charges under the Labour Government, and he said:
"I found it desperately hard to agree."
The simple fact is that he did agree, not once but again and again. He agreed in 1967; he agreed in 1968; he agreed in 1969. He said something to the effect that it was difficult—I have the report here:
"… because of the financial situation of the country."
If the financial situation of the country caused him to put up the social service charges in 1967, 1968 and 1969, why did he say six months before the 1966 Election:
"The economy is strong, sterling is strong, employment is strong."
If he is saying that it had to be done in these three years because of the financial difficulties which his Government found themselves in—and it will be noted that it was in those three years; not in

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the two election years of 1966 and 1970, but in the intervening years—I hope that he will tell us tomorrow if that was his real reason, that he took over an economy which he described in 1966 as being strong in these three respects and that it was due to the incompetence of his own Administration that he was faced with the difficulty he was talking about.
All my effort and all my thoughts are directed to the future, but on this occasion—the first time I have opened a debate at the Dispatch Box as Chancellor of the Exchequer—I am entitled to place firmly on the record the legacy of the previous Government. It calls for no comment and I make none, and I confine myself to published facts which are available to all the world. This is what the Labour Government left us in June 1970. The fastest rise of prices since 1951. The worst summer unemployment since 1940. The worst record of strikes and days lost since 1926. Industrial production actually lower than a year before. Tax rates up by almost £3,000 million. A short and medium term overseas debt of nearly £1,500 million.
The objective of the proposals which I announced last week can be shortly stated. We aim at a more limited rôle for government and, as a result, greater freedom, greater responsibility and greater self-reliance for the individual. We are doing more to help those in need. We are making greater provision for the basic fabric of the social services, but we are cutting back on the universal benefits distributed to rich and poor alike.
Mr. Dennis Skinner: On a point of order. Several minutes ago there was some consternation in this Chamber relating to the accuracy of what the Chancellor of the Exchequer had said and the integrity of either HANSARD or the Chancellor of the Exchequer was at stake. I have been up to HANSARD and while there I would like to inform the House that representations were being made by the Government side to the Deputy Editor of HANSARD with respect to this question. Irrelevent though it might be, I would point out that the Deputy Editor of HANSARD has refused me permission to see the statement made at that particular time.
Mr. Speaker: Order. These are serious charges. I must look into them.
Sir Harmar Nicholls: On a point of order. At the earliest possible moment, ought it not to be on record that nobody in the past has ever been allowed to have the transcript of other people's speeches, only an hon. Member's own speech?
Mr. Speaker: That is the usual custom.
Mr. William Hamilton: Further to that point of order. [Interruption.]
Mr. Speaker: Whatever differences we have, shouting does no good at all, either to the hon. Member concerned or to the cause he seeks to advance.
Mr. Hamilton: May I request you, Mr. Speaker, to make some inquiries into this matter. Could you further give the Government spokesman now the opportunity either to deny or confirm whether some spokesman from the Government, either official or unofficial, has been up to the HANSARD room to report what the Chancellor has just said.
Mr. Speaker: Order. As the hon. Gentleman knows, every hon. and right hon. Member is entitled to correct the script of his speech provided he makes no material alterations.
Mr. E. Fernyhough: Further to that point of order. I readily accept that it is customary for a Member to go to the HANSARD room to read his speech half an hour or three quarters of an hour after delivery of the speech. I readily accept that private secretaries of Ministers always go up to the HANSARD room on the completion of a Minister's speech. I have never known anybody from the Box, or anybody else, go up halfway through the speech to find out whether what has been said is right with a view to a correction being made if it is wrong.
Mr. Speaker: In a long speech it would be quite natural to making running corrections. Mr. Barber.
Mr. Barber: The ultimate aim of our policy is to achieve a faster rate of economic growth, a faster rise in the living standards of the British people and the ability of our nation to afford greater expenditure. [HON. MEMBERS: "Answer."] If hon. Gentlemen opposite

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want me to answer, I have made inquiries and I am told that no official of mine has been up to HANSARD.
Hon. Members: No.
Mr. Speaker: Order. In this place one hon. Gentleman takes another hon. Gentleman's word.
Mr. Barber: I have certainly given no instructions to anybody.
Mr. Harold Wilson: Further to the points of order. [Interruption.]
Mr. Speaker: Order. Noise does not help at all.
Mr. Wilson: The Chancellor of the Exchequer has just stated the facts as he understands them at this moment. Would it not be right for the House to accept them? If the right hon. Gentleman wants to make further inquiries about anything that has been said he will do so and I am certain he will tell the House if there is anything untoward to report. But at this stage we must accept what he has said. Surely it is a matter of policy because we want to hear the remainder of the right hon. Gentleman's speech. [Interruption.] I am being quite serious. If there are allegations there is adequate machinery in this House for you, Mr. Speaker, since you are charged by the House with supervision of debates, to see whether any documents are ever interfered with. Meanwhile, we must accept the right hon. Gentleman's statement and allow him to get on with his speech.
An Hon. Member: He was doing so well.
Mr. Barber: I can well understand that when I am giving the facts of a situation like this that somebody comes into the Chamber, no doubt I assume honourably believing it, but with what has turned out to be a completely trumped up charge. I was saying that the ultimate aim of our policy, like that of the previous Government, is to achieve a faster rate of economic growth, a faster rise in the living standards of the British people, and the ability of our nation to afford greater expenditure in those areas of public provision which both sides of the House agree should be provided by the public services.
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By economic growth, I do not mean the short term rate of increase in output which is temporarily obtainable by increasing the pressure of demand. I mean the real sustainable long term growth of our national productive potential. The thing about the British economy that stands out a mile is our failure over the years to achieve a long term rate of growth commensurate either with our needs or comparable with that of almost every other advanced country in the world.
Our rate of economic growth was fairly poor in the early 60s and hon. Gentlemen, and particularly the right hon. Gentleman the Leader of the Opposition, lambasted us with league tables. In the international league tables over the last 10 years we came bottom—twenty-second out of twenty-two. But the situation has become far worse in the second part of the decade. Between 1964 and 1968, during the period in which the Labour Party won two elections on the promise of faster growth, output in Britain rose by under 10 per cent., compared with over 20 per cent. in the O.E.C.D. countries as a whole. If Britain had achieved the same rate of growth as the other countries of Europe and North America, our national income today would be some £4,000 million a year higher than it is.
While Britain is bottom of the league for economic growth, we are top of the League for taxation. [An HON. MEMBER: "Untrue."] It is absolutely true. [Interruption.]
Perhaps, Mr. Speaker, this would be an appropriate moment to inform you that I have just been told that no member of my staff has been in touch with HANSARD, as was suggested.
Hon. Members: Withdraw.
Mr. Skinner: On a point of order. I refuse to withdraw. I went to HANSARD to test the validity of what actually had been said in this House, and while I was present the telephone rang and the Deputy Editor of HANSARD was listening to representations that were being made by someone from the Government side.
Mr. Speaker: Order. The right hon. Gentleman has given in the House a categorical assurance which the House has just heard. This is a place in which hon. Members accept each other's word.
Mr. Michael Jopling: On a point of order. It may have escaped attention that a few seconds before the hon. Gentleman raised his point of order a number of us on this side of the House distinctly saw the hon. Member for Fife, West (Mr. William Hamilton) and the hon. Member for Mansfield (Mr. Concannon), who I believe is an Opposition Whip, prompting the hon. Member for Bolsover (Mr. Skinner) to get up and raise his point of order.
Mr. Speaker: The debate is degenerating if we are reaching that stage.
Mr. Barber: I have had a message that no member of my staff has telephoned HANSARD. I hope that the hon. Gentleman will now withdraw his remarks.
Hon. Members: Withdraw.
Mr. Speaker: It is the custom of the House for one hon. Member to accept the word of another. Nothing that the hon. Member for Bolsover (Mr. Skinner) said in his previous remarks is in conflict with what the right hon. Gentleman has said. However, the right hon. Gentleman speaks, as every hon. Member speaks, on his honour. I hope that the hon. Gentleman will now withdraw.
Mr. Skinner: What I said to the House on a point of order was the absolute truth and I therefore have nothing to withdraw.
Hon. Members: Name him.
Mr. Michael English: On a point of order. Following your Ruling, Mr. Speaker, as to the customs of the House; it is my recollection of my hon. Friend's remarks that they were not in fact in contradiction with those of the right hon. Gentleman. My hon. Friend originally said that someone connected with the Government side of the House, not a member of the Treasury staff—those words were not used to my recollection by him—had been in touch with HANSARD. The right hon. Gentleman the Chancellor of the Exchequer has, I am sure correctly, denied that any member of his staff has done this. That does not say that they cannot both be right.
Mr. Speaker: I have suggested something like that in my approach to the hon. Member for Bolsover. The House must accept the word of the right hon. Gentleman.
Mr. Barber: On a point of order. To make absolutely sure, I have just asked my hon. Friend the Financial Secretary to go up to the Deputy Editor of HANSARD, who was referred to, and inquire whether any representations had been made on my behalf, either in person or by telephone. I am told that inquiries were made round the office and my information, which has just been brought to me by my hon. Friend the Financial Secretary, is that there is no truth whatever in the allegation.
Hon. Members: Withdraw.
Mr. Speaker: I must ask the hon. Member for Bolsover to accept the word of the right hon. Gentleman, which he has made clear. This can easily be done by the hon. Member. The right hon. Gentleman has made a categoric statement in the House which the hon. Gentleman must accept. The least he can do is that. Mr. Skinner.
Hon. Members: Withdraw. Make him withdraw.
Mr. Michael Foot: On a point of order. Would it not resolve the situation, Mr. Speaker, for my hon. Friend the Member for Bolsover (Mr. Skinner) if he fully accepted the word of the Chancellor of the Exchequer that no representations had been made and the Chancellor of the Exchequer acknowledged that he was sure that my hon. Friend reported in absolutely good faith what he had heard in the HANSARD office? Would not the matter thereby be resolved? It is perfectly possible that the conversations which may have taken place in the HANSARD office were misunderstood. I suggest that what I have proposed would be the best way for the matter to be resolved. I am sure that the Chancellor has spoken to the House in good faith, but equally sure that my hon. Friend has spoken to the House in good faith.
Mr. Speaker: I am grateful to the hon. Member for Ebbw Vale (Mr. Michael Foot). There has been no thought in my mind, nor, I think, in the mind of any hon. Member, that either the hon. Member for Bolsover or the right hon. Gentleman has spoken in bad faith. It is in these circumstances that I ask the hon. Gentleman to accept the word of the right hon. Gentleman.
Mr. Skinner: Yes, I will accept the word of the Chancellor, provided that he accepts that what I said was said in good faith.
Mr. Barber: I certainly do so in order that we may get on and give the right hon. Member for Stechford a chance to make his speech. I would not impugn the good faith of the hon. Member. The simple facts—and I should like them to be crystal clear—are that my hon. Friend the Financial Secretary to the Treasury has spoken to the Deputy Editor of HANSARD, who inquired round the office and who was informed that no representations had been made, either in person or by telephone, on my behalf. I hope that the House will accept that and that we may get on.
I repeat what I was saying immediately before this fracas arose—that while Britain is bottom of the league for economic growth, we are top of the league for taxation. I now give some examples. Except for Sweden and Denmark, taxation represents a higher proportion of the gross national product in Britain than in any other advanced country. Taxation in Britain—[Interruption.] I propose to finish my speech. A long time was taken up in the middle of what I was saying by a suggestion which was proved to bewholly unfounded.
Mr. Harold Wilson: We are listening.
Mr. Barber: As long as the right hon. Gentleman and his colleagues are listening, I shall proceed. I was saying that taxation in Britain is higher than in the United States, or in France, or in Germany, or any of the other Common Market countries.
Except for the Scandinavian countries, Britain is top of the league in the level of personal taxation. On an income of £2,500 a year, the rate of tax on earnings in Britain is nearly twice as high as in Germany, nearly three times as high as in the United States and four times as high as in France. Even after the reduction of 6d. in the standard rate, our highest rate of tax is nearly 90 per cent., compared with 70 per cent. in the United States, 55 per cent. in Germany and under 50 per cent. in France.
Do Labour Members believe that it is just a coincidence that Britain has vir-
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tually the highest taxation in the Western world and also the slowest rate of growth? The true saga of the past few years is that with a depressingly slow rate of economic growth, the Labour Government nevertheless continued to increase public expenditure and, as a result, they had to put up taxation. So we got a vicious circle—and the right hon. Gentleman will agree with this—of higher expenditure and higher taxation. Higher taxation meant less incentive and less growth, and slower growth eroded the incentive to invest and depressed the level of personal savings, and that again meant still higher taxation.
If anyone doubts my word, let me remind the House of two striking facts. First, under the previous Government, the proportion of the gross domestic product represented by public expenditure rose from 44 per cent. in 1964 to 50 per cent. in 1969. Secondly, the right hon. Member for Stechford told the people of Chicago earlier this year that the taxation of the British people had been increased under the Labour Government
"by an amount which has no parallel in Britain's peacetime history."
Never was a truer word spoken in Chicago, and you can bet your bottom dollar, Mr. Speaker, that the right hon. Gentleman will not repeat that phrase today. But it is the truth and I am entitled to remind the House, in the light of what I announced last Tuesday, of what I said in the Budget debate less than two months before polling day. I said:
"The over-riding reason for the mammoth increase in taxation has been the rise in public expenditure as a proportion of the national output "
I went on:
"I fully appreciate and respect the sincerity of those right hon. and hon. Gentlemen opposite who are not alarmed that the State should take more than 51 per cent."—
I should have said 50 per cent.
"of the national output. Indeed, to be fair, they are the true and consistent Socialists"
I then said:
"But, equally, they must accept that the concommitant is very heavy taxation indeed … this is the fundamental choice which people will have to make at the election. We, on these benches, believe that not only must the rate of direct personal taxation be cut, as we cut them before, but also that the proportion of the national output taken in taxation

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must be reduced."—[OFFICIAL REPORT, 20th April, 1970; Vol. 800, c. 63–5.]
That is precisely what I announced last week.
5.1 p.m.
Mr. Roy Jenkins: I am bound to say that the right hon. Gentleman spoke with greater conviction as Chairman of the Conservative Party than he does as Chancellor of the Exchequer, even though he speaks at greater length as the latter than he did as the former.
One of the byways down which the right hon. Gentleman was led for some time concerned his statement, and I say at once that I accept what he said about that without question. If anything is to be looked at, you will do that, Mr. Speaker. That was not his fault, but another of the byways down which he was drawn for getting on for quarter of an hour was directly due to the fact that it was quite clear that he did not understand his own measures. [Interruption.]
It is not good enough for a Chancellor, when asked to make a reconciliation between what he had said and an Order just laid—a directly financial Instrument—by one of his right hon. Friends, in this case the Secretary of State for Education and Science, to be quite incapable of attempting a reconciliation and merely able to repeat to the House, in effect, "I can assure you that this is my brief. I have complete faith in my brief, but I am afraid that I cannot tell you how to reconcile that which has just been laid before the House by my right hon. Friend". We shall expect, and we shall no doubt have, a clear and lucid statement from the right hon. Gentleman the Secretary of State for Social Services, but when an issue arises in the Chancellor's speech it should be the Chancellor who is able to explain what is happening in such a matter.
The Chancellor directed some stern words of admonition to the miners, the council workers and, indeed, to myself, about what, in his view, I said on television last week. That would have come a great deal more convincingly from him if he had not taken the lead himself in the last election campaign in denouncing the then Government's refusal to pay the doctors immediately a further 15 per cent. as something which was utterly unjustifiable. I do not recall the right hon.
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Gentleman then making comparisons between the 30 per cent. he was advocating for the doctors and any increases in productivity which they had recently achieved.
What is the core of the case which, in my view, should be deployed against the Government today? First, the Government's measures have been confusingly presented and incompetently carried out, and I shall give a few illustrations of this shortly.
Secondly, they are unfair and socially divisive because they are calculatedly redistributive in the wrong direction, and I shall come to this again shortly.
Thirdly, they are based on a deliberate programme of increasing prices which amounts to one of the most blatant and rapid betrayals of election promises and attitudes that we have ever seen in the political history of this country.
Fourthly, they fail to deal with—indeed, they exacerbate—the real economic problems facing the country today. These are the four main charges—I have no doubt that my hon. Friends will find others—on which I shall concentrate this afternoon, or this evening as it is now rapidly becoming.
The statement last week was in many ways confusing, perhaps even deliberately so. In spite of the new information which the right hon. Gentleman gave us today, about the balance between the £125 million of shortfall and the £88 million of increased charges, which in no way made the whole issue entirely clear, there is considerable difficulty in appreciating from his statement the fact that the demand effects are broadly neutral because a sizable part of the cuts—the abandonment of, for example, I.R.C. and of our programme for ports nationalisation and modernisation—undoubtedly has a very small demand effect indeed, whereas without question the demand effect of the income tax change will be very substantial.
It may or may not be a good thing to insert some reflation into the economy in April, but I doubt whether the cuts amount to a demand reduction of more than £150 million in total—and whether or not it is a good thing, it is certainly not a good thing to pretend to be doing one thing when one is really doing something else.

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If the right hon. Gentleman does not accept this, then I ask him to put before the House—because there is considerable confusion about this; more confusion than I recollect after any mini or maxibudget—as to the demand effects. I therefore ask the right hon. Gentleman to lay before the House an analysis of the demand effects on both sides of the account resulting from what he has done.
The medium-term measures have been presented in a very doubtful way. On defence, there was total confusion between the long-term costings and target figures, with the statement switching from one to the other for different years in a way which made it completely impossible to reconcile them in a fair or objective way.
There is also a great deal of vagueness about the time when the savings will accrue and the policies in regard to them. I did not think the right hon. Gentleman the Secretary of State for the Environment added a great deal of clarity or detailed information—about what sums were to be saved and how—when he made his statement yesterday to the House.
The timetable is also extremely vague in the case of the movement from farm price support to import levies.
Mr. Barber: It might be convenient if I intervened at this point on the question of defence. The position is that by 1974–75 there will be a saving in real terms—[HON. MEMBERS: "No."]—comparing the long-term costings of his right hon. Friend's programme and of my noble Friend's programme of £150 million.
Mr. Jenkins: The right hon. Gentleman does not understand this. There is a complete difference between long-term costings and target figures. We did not publish, because the time had not arrived to publish them according to the rolling conventions of the White Paper on Public Expenditure, the costings for 1974–75. It is, therefore, a bogus comparison and the right hon. Gentleman's interruption makes that clearer than ever.
Mr. Barber: I shall make it clearer than that if the right hon. Gentleman wants me to. The figures that were published to 1973–74 by the right hon. Gentleman's
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right hon. Friend bore very little relationship to long-term costs, as we found when we got to the Treasury.
Mr. Jenkins: The right hon. Gentleman is now doubly contradicting himself, because he cannot have it both ways. He cannot say, in the first place, that we were wrong to publish target figures which were lower than the long-term costs for the years before 1974–75, and then say, "Look how clever I have been because I am publishing long-term costs, and the target figures are lower than the long-term costs for 1974–75", which is what the right hon. Gentleman is doing.
Mr. Barber: The position is clear. I do not question the good faith of them, but the only figures which were published in the White Paper about defence expenditure were what the right hon. Gentleman calls target figures. That was all that we knew at the time of the election. The right hon. Gentleman who was Secretary of State for Defence in the previous Government repeatedly referred to the long-term costs of the previous Conservative Administration and to what their defence proposals would have cost at a certain period of time. We did the same. I am not impugning the right hon. Gentleman's good faith, but the point I am making is that the long-term cost of my noble Friend's programme compared with the long-term cost of the right hon. Gentleman's programme involves a saving of £130 million.
Mr. Jenkins: I do not think that that in any way contradicts what I am saying, and it in no way contradicts the fact that the right hon. Gentleman has running through his mind a continuing confusion between long-term cost and target figures.
Next, there is the really considerable mess which the right hon. Gentleman made of his monetary policy announcement. I thought that we would have a new passage on monetary policy this afternoon. We were prepared for it last Tuesday, but clearly something intervened on the way. I suspect that the right hon. Gentleman is now putting too much strain on monetary policy. It is essential to have it working in the right direction, and buttressing fiscal and other measures, but to give it almost the whole task to do is very doubtful wisdom.

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But that apart, the right hon. Gentleman's handling of the matter last week was really extraordinarily inept. On Tuesday he announced that he was going to make a statement today on money and credit policy. He gave eight days' notice that at some time some form of tightening up was in view. Not unnaturally, the market reacted, and reacted pretty violently, but, even after allowing rates to go up quite considerably, the Bank had to buy in a good deal of gilt-edged stock at the end of last week, from the moment of his statement onwards. I do not know how much it was. Sometimes these statements are exaggerated, sometimes they are not put as high as they are but the Financial Times estimated the figure at £200 million. Does the right hon. Gentleman deny that? I shall not press him on it. He should not shake his head without being prepared to rise to his feet. I think that he is wiser—
Mr. Barber: I was only going to say that the right hon. Gentleman should not believe everything that he reads in the newspapers.
Mr. Jenkins: I have never been as devoted a reader of Mr. Chapman Pincher, in particular, as the right hon. Gentleman the Chancellor of the Exchequer.
However much stock had to be bought in, it quite clearly considerably exacerbated the problem against which the right hon. Gentleman was warning, that of growth in the money supply, and by Thursday he had to bring forward—it was clearly not his intention to do so—his special deposits announcement; and even when the right hon. Gentleman made his announcement it had to be accompanied by another statement saying that nothing else was coming later, thereby betraying a certain lack of confidence in whether people would feel that that measure was in itself adequate. It was not, to say the least, a convincing way in which to proceed.
I now come to perhaps the more fundamental points of principle. First, there is the unfairness and redistributive effects of the package. This is a package, and, most unusual in this respect, with no avowed demand management effect. The right hon. Gentleman is not seeking
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to put the economy on to a new course. He claims, I think rather doubtfully, that it is neutral from a demand point of view, and therefore there is no avowed demand management effect.
As that is the case, it falls to be judged clearly and primarily by where the burdens fall and where the benefits fall. They fall in a most remarkable way. For a minority of the very poor there will, I agree, be some alleviation, though I thought that what the right hon. Gentleman had to say this afternoon about the family income supplement and the reasons why they abandoned the family clawback scheme which was put forward by his predecessor, and reiterated by his predecessor and by the Prime Minister in a statement to the Child Poverty Action Group during the election, was really most extraordinary.
After all, we were told repeatedly that the Government had come to power having done their tax sums with the help of a computer in a way that they had never been done before. In view of what the right hon. Gentleman said this afternoon I can believe that was, indeed, the case. They were incapable, whether owing to some fault of the computer or some more human intervention I do not know, of estimating the cost of the scheme which they advocated in April, and the advocacy of which they repeated with the stamp of the authority of the present Prime Minister in June, within an accuracy of 400 per cent. I beg the right hon. Gentleman's pardon. I have made a mistake. It is 500 per cent. The difference was between £6 million and £30 million. I think that this is a most extraordinary state of affairs, and what the right hon. Gentleman has brought forward here is, in the view of those most concerned with the problems, and those to whom he gave his promises, a cheap, inadequate, undesirable substitute for the brave words that were spoken before the election.
For the rest, it is a clear case of redistribution, not only against those who do not pay income tax, but against many who do; not only against some, I think a large number, in spite of the exchanges this afternoon, on below average wage earnings, but against those around and even some way above average wages, and against a lot of salary earners, too. I am not sure whether the right hon. Gentleman looks sceptical, but let there be no

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doubt about this. Let us consider a man with average earnings of nearly £27 a week, and with two children. His tax benefit will be £11 18s. a year. If both children are at school, the school meals cost will be £13 a year. I am doing it in yearly sums, rather than weekly, to make full allowance of the fact that schools are not in session all the year. The cost of the first instalment will be £13 a year, and another £9 a year when the 1973 instalment comes into operation, although if that involves the economic cost of the meal it will be more than £9 extra by then. The loss of milk for two children is about £6. One must make an arbitrary estimate for dental, ophthalmic and prescription charges for the parents, but I do not think that £8 would be an excessive sum to put in there, which gives one a total of £27 with only the first instalment of school meals charges included. It is £27 if it is done in that way, and substantially more if it is done otherwise.
That makes no allowance at all for the increased food prices which will come when there is a change in farm price support. It makes no allowance for any loss of subsidy in council house rents if the people concerned live in council houses. It makes no allowance for any increase in rates, which is an issue which has not been mentioned but to which I shall come later. It makes no allowance for any increase in railway fares, and if people live in the South-East the increase will be extremely heavy indeed.
Even if one moves to £40 a week, where the taxation benefit rises to £22 a year, one sees that there will still not be nearly enough to cover the increases, including the second instalment on the school meals, let alone the less quantifiable items such as those I mentioned a little earlier. Indeed, last week, as the right hon. Gentleman will, no doubt, have seen, the Sunday Times calculated that its average reading family, on about £3,000 a year, would be likely to come out neutral or rather worse.
Who does benefit? Single people benefit, against the married and those with children—I think that is regressively redistributive—and, of course, families with very big incomes benefit. The single man on £3,000 a year will get £44 6s. income tax remission with very limited offsets. A family on £20,000 a year will get £445 a year, and with two children their offsets would amount to only about £25,
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even assuming that they were previously taking up all these benefits, which is rather unlikely.
How can the Government argue that these groups—the £27 a week man and the £40 a week man even, but in particular the £27 a week man, as well as a little above that and a little below it—benefit from these changes? They only begin to do so if they accept the doctrine that the Inland Revenue is the only tax collector which matters. This is, of course, something which they half believe. They regard money collected through the Inland Revenue as potentially destructive of our national moral fibre, but they regard money collected, however compulsorily, by the schoolteacher, the chemist and the rent collector as a sign of our will to stand upon our own feet. This paradox, which is totally confusing at first sight, is, however, explicable, and it is explicable simply by the fact that the one method of tax collection is progressive and the other is regressive. The one tends to make living standards more equal and the other makes them less equal.
The switch from one form of tax collection to another—for that is what it is—does practically nothing to affect the share of real resources pre-empted by the Government, nothing to increase real spending power after tax. This point has been made forcibly in a number of articles in the Financial Times, notably by Mr. Samuel Brittan and Mr. Wynne Godley yesterday. Mr. Godley, now Director of the Cambridge Institute of Applied Economics, was in the Treasury for many years under successive Governments and did a great deal of work to help to make clearer and more rational the presentation of public expenditure which we achieved in last year's White Paper. He is, if I may say so, a man of scrupulous detachment as well as great intellectual power. He is clearly shocked by the deliberate retreat from clear straightforward presentation, by the obfuscating tactics with which the Chancellor is dealing.
This has also been true in some of the Chancellor's simpler and apparently more straightforward presentations. I was struck by his misleading international comparisons when he made them at Blackpool in the first week of October. I was even more struck by them when

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he repeated them this afternoon. He clearly rather liked them. He made great play of the point that our tax rates as percentages of the G.N.P. were much higher than those of other countries. He quoted France, Germany, Italy, Belgium, Holland and the United States, and showed them all well under 30 per cent. and Britain at 34 per cent. So, he announced this afternoon, we were top of the league for taxation. But he got this result by leaving out social security contributions. He got this result from a table published in his own Treasury Economic Trends in August. But that was the second table. The objective document—rather more objective than the Chancellor—which published the true position was the first table, the table which the Chancellor chose completely to ignore.
With social security contributions the comparison is as follows: United Kingdom 40 per cent., Germany 40 per cent., France 42 per cent., Belgium 37 per cent., Holland 42 per cent., Italy 34 per cent., United States 33 per cent. We are not top of the league at all, but just about the middle of the league. On what possible grounds can the right hon. Gentleman argue that the comparison is more valid without social security contributions than with them? The Chancellor really must be very careful not to become a purveyor of misleading statistics.
Mr. Barber: The statistics which I gave were accurate. Let me ask the right hon. Gentleman this question. Does he, after the massive increases in taxation over these years, think that we are too highly taxed or not?
Mr. Jenkins: The right hon. Gentleman, if he wishes to be respected in this House as Chancellor, must not wriggle. When he has been shown to have quoted misleading statistics, he should not try to get off the hook by asking a question which has nothing to do with the point at issue. I am perfectly willing to give my views on policies, and I will endeavour to do so, and in a more constructive way than was done by the Opposition during the last Parliament, who consistently avoided giving clear economic judgments and facing real choices, but always pretended that everything was easy, which is part of their difficulty at the present time.
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The right hon. Gentleman's purpose in such purveyance of misleading statistics is only too clear. It is to pretend that he is giving people greater freedom to spend their money. But it is really a smokescreen for giving some people more money, and a lot more money, and giving other people—a lot of people—a good deal less. May I ask him: what will the full picture in 1971–72 look like? The Chancellor has already told us six months in advance so much of his Budget that there really cannot be much objection to telling us the rest at the present time. Are the tax remissions for the biggest incomes already announced the end of the story or not? Is there, for instance, to be another big surtax reduction on top of the £400 a year which those with £20,000 a year will already gain? He did not answer my right hon. Friend's question on Tuesday or today. But will he at least give an assurance that there will be no increase in indirect taxation to pay for surtax concessions above what has already been announced to the better off?
Sir Harmar Nicholls: Would the right hon. Gentleman have done any such thing when he was Chancellor?
Mr. Jenkins: I would certainly not have behaved as the right hon. Gentleman has done. I would, as a matter of fact, not have thought it wise or right to disclose the major part of my Budget on both sides of the account six months in advance. I would not have thought it necessary to do that in order to show signs of activity after four months of hibernation.
Mr. Tapsell: Is it not a fact that within a few weeks of taking power the right hon. Gentleman's Government introduced a major Budget anticipating what they were going to do the following April?
Mr. Jenkins: My right hon. Friend had to take measures to deal with a £800 million deficit, which was a great deal different from the present position, in which the Chancellor, as he has told us this afternoon, has inherited what he now regards as a very favourable balance of payments account for 1970 and a very good prospect for 1971.
I turn now to the effect of the right hon. Gentleman's package on prices. There is not a single measure here, either direct or indirect, which will have the

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effect of restraining prices. On the contrary, the overwhelming majority of the big measures in the package are calculated to push up the cost of living still further, and to do it not only next year but for as long ahead as this Parliament can be made to last. Most of the ways in which this will come are familiar—the health charges, the shift to import levies and its effect on food prices in the shops, council house rents, commuter fares—but there is another aspect, a vague but menacing aspect, of the Chancellor's statement about which there has not yet been much comment. I refer to the rate support grant.
When we negotiated the last settlement, an increase in real terms of, I think, 4 per cent. for 1969–70 over the previous year and 5 per cent. for 1970–71 over the year before that, the Opposition screamed at our lack of generosity. What does the Chancellor now say to the local authorities?—
"… in the negotiations for rate support grant we shall assume that they will improve their efficiency"—[OFFICIAL REPORT, 27th October, 1970; Vol. 805, c. 38.]
No doubt, the right hon. Gentleman knows his Tory councillors and their past inefficiency. I doubt that they will change their spots much at this stage. I think that what we shall have will be not so much an increase in efficiency as an increase in rates. We have heard talk already from some of his friends in the G.L.C. areas about an increase of 2s. 6d. in the £. That was before his statement. The increase after his statement may, indeed, be massive, straight on the cost of living and straight off the limited tax benefits going to the great majority.
We have, therefore, a complete reversal of the policy put forward by the Prime Minister on 16th June. I first quoted that document on 7th July. I hoped not to quote it again today because I thought that it had now been quoted so much that all right hon. and hon. Members knew the salient phrases almost by heart. However, the Prime Minister obviously does not, since he assured us at Question Time that he had not used the phrase "at a stroke". HANSARD makes clear that he did. The Prime Minister then wrote the most unconvincing letter I have ever read and sent it to my right hon. Friend the Leader of the Opposition. He sent it also to the Daily Telegraph. Whether he sent
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it to other newspapers as well which did not think it worth while publishing, or whether he specially chose the Daily Telegraph, I am not sure.
What is clear is that the Prime Minister knows perfectly well that he did use that phrase, that he used it on 16th June. and anyone less self-righteous than himself would already have sought to withdraw his clear misstatement.
What is more important in the document of 16th June is the argument which the Chancellor sought to put forward last Tuesday, for without question—I have read it carefully in HANSARD—there is no question that the Chancellor accepted that the Prime Minister had turned tail and sought to excuse it on the ground that they had thought the economy was stronger that it was. This really will not do. The document of 16th June was based upon a scaremongering approach. It opened by quoting, among other sources, that great independent expert Lord Cromer, saying how grave everything was and going on to threaten in the same document another devaluation. It then proposed a remedy, to act directly on prices, to act directly to reduce prices.
On 2nd July, in his first speech as Prime Minister in the House, the Prime Minister said that everything was as he expected to find it, as the economic indicators had shown it to be. Now, the Chancellor says that the remedy could not be applied because the problem was worse than they had thought. The remedy, apparently, would work only if there was not much of a problem to deal with.
What a remedy, what chicanery and wriggling on the part of the Prime Minister, the Chancellor of the Exchequer and the Government. Their policy now for as far ahead as the eye can see is the direct opposite of that which the Prime Minister, with his full authority, put forward two days before the election. That is what I meant, when some hon. Members opposite jeered earlier, by saying that this was a direct and immediate betrayal of election promises such as had hardly ever been seen before.
Some of the Prime Minister's statements are very odd indeed. He gave an exclusive interview to The Times, published on the morning of his right hon. Friend's mini-budget. With an

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extraordinary sense of timing, he informed us in that interview that one cannot have compassion on the cheap. So, presumably, he decided not to have it at all. He went on to talk about hearts and heads and of there being no necessary conflict between the two. What emerges increasingly clearly when one looks at last Tuesday's measures, at the document of 16th June, and at the Prime Minister's handling of the South African arms issue, is that he has the worst combination of the lot, a cold heart and a hot head. [HON. MEMBERS: "Where is he?"] I think that he got a little bored with his right hon. Friend's speech, and I do not totally blame him for that.
On the prices issue, however, there is more at stake than the Prime Minister's action in trying to mislead the voters before the election, significant though that is for his own reputation and for the future. There is menace in the present rate of price increases, menace for the future of the balance of payments, menace for the groups who cannot keep up, menace for society as a whole. That is why it is dangerous doctrinaire nonsense for the Government to be willing to push up almost any price in sight in a relentless search for elbow room for direct taxation cuts handled in such a way as to give more help to those already much better off.
This is typical of the Government's whole approach in this package, a package directed to the exacerbation, not the solution, of nearly every problem we face We need to improve the industrial climate, and to get the council workers' strike and the coalfield strike settled, to take only two examples. [An HON. MEMBER: "Settled at any cost?"] Settled on reasonable terms. But does the Chancellor for a moment believe that his package—[HON. MEMBERS: "What percentage does the right hon. Gentleman suggest?"] Why on earth should hon. Gentlemen expect me to give a percentage when the Government say that they will never give a figure themselves? The irresponsibility of the Government and their supporters goes beyond bounds when they think that such percentages should come from the Opposition benches, while there is complete silence on their own. Does the Chancellor for a moment believe that his package, de-
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liberately making worse off nearly all those affected, will help in either of those directions?
I come now to investment, vital to future growth and employment prospects. Clearly, we need to improve the level of industrial investment, which is now tailing off pretty seriously after a modest post-devaluation spurt. [Laughter.] Certainly, there was a spurt, and that spurt is now falling off. I do not for a moment imagine that the Chancellor's proposals will do that. The net outlay on investment inventives will be over 30 per cent. smaller, £470 million against £725 million. In their new form, they are of value only against tax and, therefore, will be much less favourable to new firms or to firms expanding so fast that they cannot absorb full allowances out of profits. In the short term, there is the cut in the corporation tax to be set against the tight credit position, and no investment allowance from here forward. Many small and medium firms in particular, about which the party opposite used to talk so much, will plainly be worse off as a result of these changes.
We need to stimulate employment, particularly in areas like Scotland where the numbers out of work have been rising ominously. So far from doing this, the changes accompanied by the end of R.E.P. will, in my view, undoubtedly amount to a less powerful inducement to firms to go to, or to expand in, development areas. There is already evidence that some are changing their minds in the wrong way.
These are some of the main problems facing the country, and they are all made worse by the Government's measures.
What economic benefits are we offered as an offset? An increase in some people's incentive. "Incentive"—a lot of crimes can be committed in thy name! Is it seriously contended that the effect of a 6d. cut in the standard rate upon those limited number of people who, as the cut is now to be paid for, will really benefit will make them work so much harder as to outbalance an additional tax liability on the majority, a new jerk to prices, an exacerbation of industrial relations, a reduction in investment incentives and a worse balance between the regions? If hon. Members opposite believe that, they will believe anything.

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But there are not only economic consequences to the policies that we are debating today; there are social consequences as well. A new philosophy of deliberate social division has been proclaimed, which will be applied in such a way that the members of every family will be made as aware as possible from as early an age as possible whether their family is on the successful side of the line or not.
On the evening when he became Prime Minister, the right hon. Gentleman stood on the steps of 10 Downing Street and rather sententiously announced:
"Our purpose is not to divide but to unite, and where there are differences to bring reconciliation."
The words of June have quickly changed into the action of October. There is no national unity to be found in the Government's proposals because there is no fairness, and there is no reconciliation because, so far from there being a concern for all the community, there is the narrowest partisan approach which we have seen for a generation or more.
5.45 p.m.
Mr. David Knox: I ask the indulgence of the House on the occasion of my maiden speech.
It is a particular pleasure for me to follow the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) against whom I contested two elections. The House will not be surprised to know that the right hon. Gentleman increased his majority on both occasions, though I must point out that since I left Stechford he has not done quite so well. He has, of course, been Chancellor of the Exchequer since then.
As the Member of Parliament for Leek I follow a Member, Mr. Harold Davies, who sat in this House for 25 years and enjoyed a great deal of respect from both sides of the House. He held office in the Labour Government as Parliamentary Secretary to the now defunct Ministry of Pensions and, more recently, as Parliamentary Private Secretary to the former Prime Minister.
Mr. Davies was not only respected in this House, but also in his constituency. He looked after the interests of supporters and opponents alike with diligence. I think that both in this House and in Leek his elevation to another place has been warmly welcomed.
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Leek is one of the most beautiful constituencies in England. Perhaps I should emphasise the words "in England", because the name of the constituency and that of the former Member may suggest that it is Welsh. Now it has a Scottish Member to add to the confusion.
Apart from its great beauty, Leek contains a cross-section of England. It has a large agricultural area, it has quarrying and mining, it has textiles and the computer industry, and there is a variety of very small to very large firms. In addition, just to keep up to date, there is a large commuting population to Stoke and to the towns of South Cheshire.
I intervene in the debate because my constituents are naturally concerned with economic prosperity. They believe that economic prosperity is indivisible. They want national prosperity because they know that that will mean prosperity for them as well.
I will concentrate my remarks on two particular aspects of the Chancellor's statement last week.
First, the proposal next April to reduce the standard rate of income tax by 6d. in the pound. I raise this point because it seems that a great deal of nonsense has been talked about it. It really is absurb to start making arithmetical calculations which, it is true, show little change for most people, and to conclude that this reduction in taxation will have no incentive effect. This argument fails to understand what the reduction is trying to do. The real point about any reduction in income tax is that people think that they pay much more in the pound in income tax than they in fact do and, because they think this, they behave as though they do. So long as they think this, so long will the current rates of income tax will have a strong disincentive effect.
I am sure that hon. Members on both sides, in discussions with people about overtime, will have heard the remark, "This man or that man does not work overtime because he thinks that he pays 15s. in the pound in income tax." We know that this is not true. At least, it is true only of those in the surtax class. But because people think that at current rates they are paying this large amount in income tax, the current rates act as a real disincentive.

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I believe that by cutting income tax in the way that my right hon. Friend has proposed, he has made a real contribution to persuading people that income tax in future will not be the burden that they think it has been. In this way this measure will have a real incentive effect in future.
Secondly, I should like to express regret that my right hon. Friend the Chancellor said last week, and reiterated today, that the reductions in income tax and in public expenditure taken together will, therefore, be broadly neutral in their effect on demand in 1971–72. Of course, as my right hon. Friend conceded earlier today, there will be an opportunity in next year's Budget to alter this. I welcome the assurance that the Chancellor gave on this score this afternoon. At the same time, I urge my right hon. Friend to think seriously about the early expansion of the economy. If we go through next year without any general reflation not only will the present unemployment situation continue for at least two years, but a large number of married women and elderly people will also remain out of work even though they would be willing to work. There is also the general under-utilisation both of labour and of capital in industry which is more prevalent than some Treasury Ministers not only in this Government, but also in the last Labour Government, seem to suggest. We also need this reflation to get general growth. We can achieve our full industrial potential only by an expansion of demand.
I understand, I hope, the argument put forward by my right hon. Friend that consumer demand is already rising. It would be very surprising if it were not rising at present, but how permanent is this rise in demand? At present, incomes are going up rapidly. Prices are going up quickly, but not quite so quickly. But price increases, which are consequent upon income increases, always lag rather behind income increases. So, obviously, there is an upsurge in real terms in consumer demand at present, but I confess to some doubt about how permanent this is. I think that it will tend to flatten out in due course.
If I am right, we are left with the problem of the economy operating for some time substantially below capacity. I know that some people produce clever
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and ingenious arguments to deny this, but an unemployment rate of 600,000 is sure evidence that the economy is at present working below capacity.
Again, some will argue that in current conditions of income inflation we dare not reflate because of the effect on income increases, but this is hardly a very strong argument because since 1968 we have had excessively high wage increases in conditions of remarkably high unemployment. For a long time in the 'fifties and early 'sixties we had the Paishite argument that if we only had a little more unemployment it would cure cost inflation. Well, we have had a lot more unemployment and cost inflation has got a great deal worse.
I conclude by summing up the advantages there seem to me to be in a general reflation of the economy. First, it would use up resources in labour and capital which I believe are now under-utilised. Second, the increase in demand would encourage investment—and it has always seemed to me rather foolish to expect investment to increase unless industrialists feel that they are likely to get some return in the form of increased sales.
Third, if one can promote extra demand in the private sector this can help to redress the balance between the public and private expenditure which the Chancellor of the Exchequer, and we on this side, wish. Fourth, I believe that an expansion in the economy can be particularly important in relation to the crucial capital intensive industries because of a consequent reduction that would come about in unit costs, and so the possibility of reduced prices.
Finally, and I suggest most important of all as a reason for reflation, is the fact that it would lead to repromoting confidence in manufacturing industry. It is all very well to promote financial measures—that may well restore confidence in the City—and no one would underestimate their importance, but financial measures on their own do not restore confidence in manufacturing industry. Confidence in manufacturing industry will come about only if there is a steady increase in industrial activity and a rise in orders. No one should underestimate the importance of confidence in manufacturing industry as a contribution to Britain's future economic prosperity.

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The House has listened to my slightly controversial views with patience and tolerance, and I am most grateful to all hon. and right hon. Members for their kindness on this occasion which, to me, has been something of an ordeal.
5.54 p.m.
Mr. Jeremy Thorpe: It is my very pleasant task to congratulate the hon. Member for Leek (Mr. Knox) on his delightful speech. I accept that he found it something of an ordeal, as we all do, but, if I may say so, I have to take his word for it, because he showed no signs of its being so.
I am also delighted to know that the constituency of Leek can still have its views expressed in a Gaelic or Celtic burr or dialect, though of a somewhat different kind from that spoken by the hon. Gentleman's predecessor. When I first got to the House in 1959 I remember hearing from time to time what sounded like a cry of anguish from an hon. Member in distress, but then I found that that was the way in which the hon. Gentleman's predecessor was accustomed to say "Hear, hear"—which would drown any other noise that might be heard in the Chamber.
The hon. Gentleman is an economic consultant and we look forward to hearing his views on economic matters in the future. I also understand that in a Young Conservative and literary capacity—if the two are not a contradiction—he has written a learned work on "Law, Liberty and Licence". We look forward to hearing him on all those subjects as well.
I suggest that the Chancellor of the Exchequer might reasonably be judged in the coming months by three assertions which he himself has made. I think that they are assertions by which his own right hon. and hon. Friends might judge him and the success of his policy. One of his assertions, quite plainly made—and he was courteous to give way to me so that it could be confirmed for the benefit of the House—was that no married man with children who is earning under £1,000 a year would feel the burden of any of the charges announced last Tuesday. I hope that is right—I am delighted to hear it. That will be a prophesy which will be very hard for this Government to fulfil, but the right hon. Gentleman has made it and we will judge him by it.
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His second assertion is that the increase in cost of living will be of the order of only 1 per cent. I speak as one who is in favour of going over to the levy system for agricultural support, although I would phase it more gradually. I can assure the right hon. Gentleman that when we of the Liberal Party were advocating this system as a way in which we should give support to agriculture, and the Tory Party at the time, as on so many issues, had not yet realised the possibilities of this advance, we were told that the increase in the cost of living would be almost prohibitive. Now that it has become official Conservative policy it is to be only a very small increase, because the total increase for all the measures contained in the package is apparently to be only 1 per cent.
The third point on which the Chancellor of the Exchequer is to be judged is his suggestion that the philosophy behind his mini-budget is dictated by the fact that this is the highest taxed of almost any advanced industrial country. Of course, as the right hon. Gentleman the Member for Stechford (Mr. Roy Jenkins) pointed out, the Chancellor of the Exchequer, not for the first time in his career, made a highly selective use of statistics and, in doing so, even ignored the statistics put out by the Treasury itself.
We shall judge him on those three issues.
The reduction of 6d. in income tax has obtained the instant euphoria one would expect. If I may say so, I think that the Government started with this as a conclusion and thereafter shaped their statement to achieve this; indeed, what other explanation could there be for announcing a 6d. cut in Income Tax six months before without giving the normal Treasury forecasts and assessments? But I believe that the real tests of these proposals and, I should have thought, the tests that would be accepted as fair by hon. and right hon. Gentlemen opposite are, first: will they bring down prices and prevent wage inflation? Will they bring about economic growth? Have the Government got the right social priorities? It seems to me that those are three not unreasonable tests for any hon. Member to apply. To cut taxes is superficially attractive, but unless it achieves those three objectives I believe it to be a very hollow achievement.

1139
What I have found an extraordinary thing about this Government is that whenever they produce measures which many of us think are contrary to the social priorities we hold, or that we think are of questionable economic or political advantage, we are always told that this is part of the Conservative philosophy. We heard it on overseas development; we heard it on the abolition of the National Board for Prices and Incomes; we heard it on the issue of health charges. It is most extraordinary to elevate bad government into a misapplied science, because that is what this great philosophical approach to politics achieves.
Let us consider first whether these proposals will bring down prices. I do not want to embarrass the other side of the House, but I think the Prime Minister put the subject of how to tackle prices so shortly and so succinctly on 16th June that it would not be a bad thing to refresh our memories. He said:
"There is a very real alternative … That alternative is to break into the price-wage spiral by acting directly to reduce prices. This can be done by reducing those taxes which bear directly on prices and costs, such as the selective employment tax, and by taking a firm grip on public sector prices and charges such as coal, steel, gas, electricity, transport charges and postal charges.
This would, at a stroke, reduce the rise in prices, increase production and reduce unemployment. It would have an immediate effect of moderating the wage-price spiral which would far outweigh any effects of a higher pressure of demand for labour."
Nothing has been done about selective employment tax. It may be done later, but certainly it was not regarded after the election as occupying the priority in the Prime Minister's mind which it clearly had on 16th June.
Many of us have long advocated that what we need is to abolish selective employment tax and put in its place a regionally varied payroll tax. But nothing has been done in that regard and yet it was to be one of the conditions precedent to bringing down prices.
There has not been much evidence of the firm grip in the public sector, except that the Government have contributed to raising the fares of commuters on British Railways by the action they have taken in this regard. In fact, the only firm grip they have taken has been in rummaging round in the dustbins of the country and doing what they have always done and
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what they did under the Macmillan Government—and this is one of the reasons why they were ultimately defeated in 1964. They had no policy at all for wages, except to wait until there were servants in the public sector, usually underpaid, usually with a good case, and usually with an emotional backing, such as the nurses, and then take them on. This is what they are doing at the moment.
There is no great effort, taking the Prime Minister's test as the right one, to grapple with the problem of the nationalised industries. One would have hoped that in the first package we would have seen something along the lines which the Secretary of State for Trade and Industry mentioned in a very interesting speech about enabling the nationalised industries to go to the markets to raise at least a proportion of their capital requirements. This would have an immediate effect of reducing public expenditure.
Nor can they give very much confidence in their determination to bring down prices when one of their first actions is to kill the child which they established in 1963 with such a fanfare of publicity, the Consumer Council, in order to save £240,000 a year. That was not the view of the election. Claiming some of the benefits of Conservative Government, the campaign guide said:
"In 1963 the Conservative Government set up the Consumer Council, which has since proved to be a powerful and influential spokesman in the interests of the consumer."
Alas! It is no longer to be.
Nor can there be very much confidence in the determination of the Government to attack prices, for the National Board for Prices and Incomes has been abolished and for bodies which are to take its place having had no right and no responsibility to deal with any question relating to prices. The answer was not to say that the board was perfect in its mechanism for dealing with prices, but to strengthen it. The experience of many advcanced industrial nations points to the need for a review body such as this.
The Secretary of State for Employment suggested the day before yesterday that all these questions could be dealt with by strengthening the Monopolies Commission and dealing with restrictive practices, and he said that a statement would be made in that regard. One cannot

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have much confidence if the record of the Government in ignoring the reports and recommendations of the Monopolies Commission is to follow the pattern which we had under the previous Conservative Administration, when 95 per cent. of the recommendations were totally ignored.
I shall refer in a moment to wage inflation, but I do not see, whatever else may be said about the package, that it will have the slightest effect on prices, save to put them up and to put them up to those people whose only and immediate reaction will be to put in a wage demand.
Will we get economic growth? One of the frightening things about the Chancellor is his view—and he repeated it this afternoon and made the point on television on 27th October—that the only reason, or the main reason, why Britain had been overtaken in growth by almost every other country is that we are about the most highly taxed nation in the world. It is simply not true. Of course we want to reduce taxes, but it is simply not true to say that we are the most highly taxed nation. If this is to be in his mind, if he thinks that he will solve the problem of economic growth simply by saying that we are to cut taxes whatever the social or other costs, he will have a very barren policy.
Economic Trends for August, 1970—and, unlike the Chancellor of the Exchequer, I take all the tables—and the O.E.C.D. reports of July, 1970—I do not want to weary the House with tax figures—show broadly the percentage of the gross national product devoted by this country to personal taxation is lower than that in Denmark, Norway and Sweden, and roughly the same as in the United States and Holland. Taken to include corporation tax, it is lower than in America, Denmark, Norway and Sweden and roughly the same as in Austria, Canada, West Germany and Holland. Including employees' contributions to social security, it is lower than almost the whole of Western Europe with the exception of Italy and the United States.
If the Tory thesis is right and the Government have only to reduce taxation to get the growth rate going up, if there is a correlation between lowering taxes and increasing growth, how is it that, notwithstanding five successive reductions in
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taxation under previous Conservative Administrations, we failed to get the growth rate and remained virtually at the bottom of the league?
The reasons for our sluggish economy and low rate of growth are complex and many. Any man who says that it is merely because we are too highly taxed is deluding himself. One reason is that we are excluded from the European Economic Community, and therefore cannot enjoy the economies of size. The Government and the Opposition have now made up for that, but that fault must lie largely at the door of a previous Conservative Administration. However, that is history. We could have been in as founder members and the effect of that on our growth would have been tremendous.
The next reason is that we do not have a proper incomes policy. It is vital to deal with the problem of minimum earnings. There are many people who have very low minimum earnings. I should like to see guaranteed minimum earnings, more plant bargaining and wages tied to productivity. That is the way in which to get economic growth, not trying to do what the right hon. Lady the Member for Blackburn (Mrs. Castle) did in the last Parliament and what the present Government show every indication, in a different form, of doing in this.
If the Chancellor thinks that 6d. off income tax will get economic growth he is due for a few shocks. I do not believe that by abolishing the investment grant system and substituting an accelerated system of depreciation allowances, we will get the growth we require either from the capital-intensive or the non-intensive industries. It will reduce the cash flow, and if the question is whether a person buys a new machine or cuts overheads it will be easier not to buy the new machine. As to the family incomes supplement scheme, the position has been briefly summarised by Samuel Brittan in the Financial Times when he said that the new cash benefits for poor families should cushion to the tune of £8 million the very poorest but beyond this level there would be redistribution to the somewhat better-off including the better-off wage earner, from the somewhat worse-off.
The worst hit will be those just above the official poverty line with several children and an above-average rate of illness.

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I do not accept the Chancellor's figures, and there have been times when the party opposite has not accepted a Chancellor's figures either—we remember a very embarrassing occasion a little time ago. My information is that a married man with two children under 11 on £900 a year will be £20 worse off as a result of this package. A man with two children under 11 with an income of £2,000 will stand to gain in a year no less than 6s. 3d. and a man on £3,000 a year will stand to gain something of the order of £20 5s. 2d.
I appreciate the Government's problem, that because of the last Budget a man comes out of the position of paying no tax and goes straight on to the standard rate. My colleague, Richard Wainwright, who was the Member for Colne Valley, said that we thought that this was one of the most regressive innovations in our tax system, because hitherto we had had a progressive taxation system which went up in carefully graded steps.
The position is that a man who suddenly comes out of the lower-paid bracket finds himself paying health charges, full charges for school meals, and could find if he earns an extra £1 that as much as 10s. of it will go at once on those increased charges. This is why it is regressive and this is why I believe that it will kill incentive. This is another reason why many of us have advocated the necessity for a negative income tax. The Prime Minister said yesterday that the Government were looking at this, and I hope that we will move in this direction.
The Government have got their social priorities wrong on these charges. I am in a position to make no apologies. I voted against every imposition of health charges by the Labour Government. I believe that the health service should be free at the time that it is used and there were many hon. Gentlemen in the official Opposition who took that view. We believe that when a man or a child is sick, that is the last time they should have to pay. That is why the principle of the "claw back" until we get a better and more refined system of graduated social security tax, a negative income tax, is to be preferred.
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I will make a prophecy. There is one proposal which, apart from being regressive, will be so complicated that it will break down within nine months—perhaps I should amend that and say about 12 months—because I do not think that the Government will realise that it has broken down until about then. It is one thing to have a prescription charge but, if the Government really think that on each occasion that a prescription is made out the pharmacist or doctor will relate the charge to the value of the drug or drugs which are prescribed at that moment, they have another thought coming. It will break down; it will also encourage blunderbuss prescribing which is not in the interests of the health service or the people in the country.
Surely the answer—and let us take the lower-paid worker such as those who work for the local councils—is that if a man who empties dustbins needs cortisone, it is just as important that he gets it, even though it is a very expensive drug, as it is important that anyone else should get it. That has been the principle of the health service. The principle of Beveridge, with family allowances, was that free milk and free school dinners were part of the benefits of family allowances in kind. This was the great thing; they could not be abused because they went to the children. That is why this is regressive.
I want to put again to the Government a question which I put to the Chancellor last Tuesday. Before they introduced charges for school milk for children in primary schools, did they take the advice of their Advisory Committee on medical aspects of food and, if so, what advice were they given? Have they seen the report of Dr. Lynch of Queen Elizabeth College in The Times today who showed in the results of an extensive survey that only half the schoolchildren at State schools had a wholly satisfactory diet and 11 per cent. had a very poor diet, indeed. The evidence of Plowden was that it was in the poorer areas that fewer school dinners were served. That is why, when we consider that school meals represent roughly one-third of a child's nutritional needs, this is a thoroughly retrogressive innovation. I saw in the dictionary definition that a barber is one who shaves and trims and one who lets blood with leeches.

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I believe that this is a series of proposals which start from the premise that an election pledge has to be honoured and, therefore, 6d. has to come off income tax and everything else must take its place to achieve that political end. Let us make no mistake about it, this is a political not an economic exercise. It does nothing to cure inflation, it will push up wage inflation. The reason why we will not get economic growth is not only because of the measures but because of the fundamental wrong-thinking of the Chancellor. He seems to think that there is some mystery in cutting taxation that will bring about production. Let him look at countries which have had economic growth and at their labour relations, at productivity deals, the way in which they operate plant bargaining and conduct works councils with consultation between management and labour. That is the way we will get growth. I do not think we will get a sense of national unity unless people feel that there is fairness in the running of the economy.
Mr. David Crouch: The right hon. Gentleman owes it to the House to say why he is so against tax reduction. He is giving the impression, which I hope he will correct, that he is also against cuts in Government expenditure.
Mr. Thorpe: I have never said anything of the sort. If the hon. Gentleman had the misfortune to see me on television the other night he would have seen precisely what I said in that respect. I will be happy to send him a transcript Of course, everyone wants to see a cut in taxation but not just to say that it has been done, not if the cost is attacking the Welfare State, the principle of a free health service which, at one stage, was supported by all hon. and right hon. Gentlemen—
Mr. Fernyhough: They voted against it.
Mr. Thorpe: I want to get economic growth. As the Tory social security document published this year said, the reason why a larger percentage of the gross national product is being devoted to the social services every year is because we have not had the economic growth and if we had got economic growth, we would not need these cuts. It does not seem
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that they have very much confidence in getting economic growth if they think that the first priority is to make cuts.
Of course, I would make cuts. I would not have this ridiculous business of going back east of Suez. I have already said that we could have substantial cuts through the nationalised industries raising part of their requirements on the open market. If we had not been ruled for many years by a bunch of ostriches with their heads in the sand, exposing their thinking parts, we would have been a founder-member of the European Economic Community and just think of the economic growth there. Instead of the Labour Government introducing selective employment tax and two years later appointing a professor to see how it was working out, we would have had a regionally varied pay roll tax and a negative income tax.
I am always prepared to put forward alternatives. The position in which I find myself as a Liberal is always a three-stage one. We are told first we have no policy; then that it is severely impracticable; and eventually, at the last minute, our opponents adopt it—alas, usually too late in the day. That is why, if the Government think that this set of proposals will produce economic growth, will bring down prices, and get the social priorities right, they will have a lot of convincing to do in the country.
6.20 p.m.
Mr. Julian Ridsdale: I am honoured to be the first on this side of the House to congratulate my hon. Friend the Member for Leek (Mr. Knox) on his excellent maiden speech. It is good to hear from the Midlands the voice of manufacturing industry, especially, on this side of the House, rather than that of the City, of which I am used to of late. We know from the pointers that he gave why he was able to defeat such a respected former Member of the House, Mr. Harold Davies, because obviously he thinks there should be more incentive and we should try to get more investment in manufacturing industry.
Mr. Scholefield Allen: Is the hon. Gentleman aware that the reason that the hon. Member for Leek (Mr. Knox) won the seat was that the wakes were on in Leek and most of the people were away on holiday?
Mr. Ridsdale: We always have excuses for the defeated, but one must pay tribute to the eloquence of my hon. Friend.
Much has happened in the last few months, and as I listened to the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) I could not help but feel how much happier he was in opposition than he was only a few months ago in government. It is far easier to be critical than correct, and one can see that so well from the way the Leader of the Liberal Party, the right hon. Member for Devon, North (Mr. Thorpe), addresses the House, so often without the prospect of responsibility. Nevertheless, when the right hon. Gentleman says that the test of this mini-budget is whether it will bring down prices, surely this is a question for which we must await the answer, because really the test of this budget, as he rightly said, is whether it will achieve growth.
I can understand why the right hon. Member for Huyton (Mr. Harold Wilson) went to the country in May rather than October. It was not because of the opinion polls but because he knew the kind of wage inflation and cost of living increases that were in the pipeline as a result of the Labour Government's policies and the dire consequences that they would have, particularly on the lower wage earners and pensioners.
I hope that the Secretary of State for Social Services will be frank with the country and say how much it will cost to keep the pensioner and the public service pensioner, and others, in the position that they were even in November, 1969. I estimate—and this is a conservative estimate—that even to keep the pensioners and public service pensioners in that position will cost £200 million. It is wrong for the right hon. Member for Stechford to moralise, as he did to us on this side of the House, and say, "It is all your responsibility; it is not ours at all". In fairness to the common sense of the people, it is only right that both sides of the House should apply their minds to the present serious situation without the recrimination that goes backwards and forwards across the Floor of the House.
The present situation is the consequence of allowing wages to leap ahead of productivity or increases in the gross national product. The right hon. Member for
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Huyton and the right hon. Lady the Member for Blackburn (Mrs. Castle), if they were not in such a guilty mood, would, I am sure, agree—or do they admit no responsibility for today's position? The position of some of the union leaders which is being adopted, particularly by the leader of the Transport and General Workers' Union, in reply to a letter which which I wrote to the Daily Telegraph, is morally hardly any better. Having all but caused the position, some of the unions, like the Transport and General Workers' Union, are pressing in a pamphlet for better pensions this winter. As the pensioner is now 5s. 6d. a week worse off and the married pensioner is 8s. 10d. worse off than they were in November, 1969, this appeal will not go unnoticed by the pensioner. I am sure that the pensioners will recognise the hypocrisy of such a campaign being pressed by people who have been one of the causes of the wage inflation and the steep rise in the cost of living.
Since the letter of the secretary of the Transport and General Workers' Union to the Daily Telegraph on Monday, I have been telephoned by pensioners of the Transport and General Workers' Union who were pensioned before 1955 telling me that their treatment from the union is not all that generous. I am using moderate language.
I hope that the Chancellor of the Exchequer will soon make a statement about public service and Service pensioners and disablement pensioners. Much as I welcome what has been done for pensioners, and particularly for people over 80 years of age, how long will it be before the Government can bring pensions back to the position that they were in November, 1969, which was hardly any better than it was in 1965?
Mr. Stanley Orme: If the hon. Gentleman is so concerned about the pensioners—and I recognise his sincerity—why does he not urge the Chancellor of the Exchequer to pay to the pensioners the 6d. which he proposes to take off the standard rate of income tax? Then he would achieve the correct balance.
Mr. Ridsdale: That is a very tempting course to adopt, but I believe that the only real help which can be given to pensioners is to try to bring about

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stability in prices. The only way in which we can do that is by encouraging investment in manufacturing industry. The tax reduction is a pointer in this direction. I would advocate doing away with the reduction of 6d. in income tax if the present wage demands were brought into line with productivity increases or increases in the gross national product. But I see no sign of that.
Mr. James Hamilton Mr. James Hamilton (Bothwell) rose—
Mr. Ridsdale: If I give way, it will only make my speech longer. I do not wish to be continually diverted from my theme.
I should like to hear from the Treasury how much the Government's agricultural policy will affect the pensioners and what sum is being put aside in addition to the £200 million which I estimate is needed to restore the purchasing power of the pension to what it was in November, 1969, to compensate pensioners for the increases in prices due to the new agricultural policy.
I stress these questions because elderly people want to know the answers to them as soon as possible. Pensioners were in despair in June. They have faith in the new Government, but we must give them hope that we shall deal with their problems soon. I am sure that they recognise our difficulties. For all the appeals from the Opposition and the moralising that we hear, they know that the sounds are false when we are being pressed to do in four months what the Labour Government failed to do in six years.
One sure way of helping the pensioner and the country is, first, to restrain wage demands and bring them into line with productivity increases. Why cannot the trade union leaders be more reasonable? What prevents hon. Members opposite from supporting my right hon. Friend's policy when so many of them, only a few months ago, were speaking the same words as I am saying from this side of the House now?
Of course, I want to see higher wages being paid, but as a result of an increase in productivity, as in Germany and Japan. Between 1958 and 1968, real wages in Germany went up by 54 per cent. but in the United Kingdom by only 19 per cent.
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During those 10 years, income per head in Germany rose by 104 per cent. In the United Kingdom the rise was 49 per cent. With Japan, a country I know well, the comparisons are even more invidious. I agree, however, with the Leader of the Liberal Party that one of the successes in Japan is plant bargaining. Nevertheless, one also knows that saving in Japan is at a much greater rate than it is here. I must say, too, that the rate of unemployment in Japan—again, hidden employment—is much higher than in any of the Western countries. The pressure of unemployment on productivity in that country is great.
During the last 10 years, I have attacked various Governments, including my own, for their failure to see that sufficient investment went into manufacturing industry. That is why I welcome the cut in corporation tax, although I should have liked it to be 5 per cent. and not 2½ per cent. I should also have liked help to be given, if possible, to the smaller industries in the context of trying to get more investment going into manufacturing industry, because unless we get more investment going into manufacturing industry, we will not get growth and as a consequence higher wages and we will not be able to pay higher pensions.
It appears from recent figures that our investment position is far worse than many of us feared or had been led to believe. A year ago, I had a Private Member's Motion on investment, and certainly the figures which I was given by the Government then in power were very different from some of the figures now being given by my right hon. Friends from the Dispatch Box. Especially am I concerned when we know how appalling is our record in investment compared with Germany and Japan, when they have been increasing their national cake considerably and ours has hardly increased at all.
What is far worse is that because of the wage inflation and bad labour relations, foreign capital is being frightened away. During the recent docks dispute in Harwich, the Transport and General Workers' Union tore up an agreement which it had made with the Harwich Dock Company. Much of the investment in that company comes from abroad. The nervousness which was caused among foreign stockholders as a result of that

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action by the union was very considerable.
I do not want to introduce personalities—I am dealing with policies—but when the General Secretary of the Transport and General Workers' Union expresses a wish to see a wealth tax, does he realise how such words discourage capital from coming to this country? To realise the importance of trying to get foreign capital to come here, one need only consult some of the foreign brokers who have to go overseas and ask whether foreign investors will invest here in view of the wage inflation. One gets a dreary answer.
Is it really impossible to get agreement and understanding over the present chaotic wage situation that faces us? The Leader of the Liberal Party is quite right in saying that this is the crux of the situation. How long must we go along the path of creating a bitter divide in this country? I still believe that there is a middle way in which understanding can be reached. I have no wish to see bitter deflation and large-scale unemployment. I want to see better investment in manufacturing industry and, as a consequence, higher wages and pensions. If the present situation goes on, the divide will continue, because my right hon. Friend the Chancellor will be forced, much against his will, to adopt a tough money policy—deflation—and the consequences will be unemployment, which nobody wants.
A deflationary policy is not in the long-term interest of the country. It is certainly not in the long-term interest of pensioners or of union members who want higher wages. That is why I hope that people will understand, and that we shall be able to get agreement upon, the fundamental problem which faces the country—that is, wage inflation, which is causing so much of our financial and industrial difficulties, and give such distress to pensioners and the lower wage earners.
6.36 p.m.
Mr. John Horam: I am the second in the course of this debate to go through the hoop of making a maiden speech. Like the hon. Member for Leek (Mr. Knox), I, too, am an economic consultant—which just shows how economists can differ but also, perhaps,
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how they can have politically different beliefs and a different understanding of the condition of the people, some right and some wrong.
I might also add for the benefit of the hon. Member for Harwich (Mr. Ridsdale) that I am a member of the Transport and General Workers' Union. I am sure that Mr. Jack Jones, to whom the hon. Member referred at considerable length, is quite capable of defending himself. I would simply remark that if the hon. Member was doing as much for old-age pensioners as Mr. Jack Jones is doing for them, they might be a lot better off than they are today.
I should like to begin, as I have observed is the custom, by referring to my predecessor and to my constituency. My predecessor was Harry Randall, who began his working life as a postman. This, together with a warm and kindly heart, gave him a fine understanding of working-class people. I can tell the House that he is much loved in the constituency and since I have come to this House, I have found him to be much respected here.
The constituency which he represented, and which I now represent, is Gateshead, West, in County Durham. Gateshead was described in the nineteenth century as the dirty back lane which led to Newcastle. It can no longer be so described, because as a result of a sustained effort, led by an ambitious—and Labour—council, it has wrought a transformation which is quite remarkable to see, particularly during the last five or six years. Now, as a result of a naturally superb setting on the banks of the Tyne and the homogenous and excellent community spirit among its people, the possibilities for pleasant urban living are extremely exciting.
I believe that the measures which the Chancellor of the Exchequer has proposed will bear particularly hard on people living in towns like Gateshead in development areas. To begin with, however, I want to go a little behind the detail and talk about the philosophy behind what the Chancellor said.
It appears that the Conservatives believe that they have a philosophy, or, at least, a fig leaf of a philosophy, even if we on this side believe them to be totally naked. They seem to be saying, "All right. There may be some inegalitarian

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aspects in what we are saying"—despite the double talk here, some of their supporters outside scarcely trouble to deny this—"However, we will enhance personal freedom and choice and, secondly, by reducing personal taxation, increase incentives and, therefore, increase also the rate of growth." I believe that in all these respects they are making large claims, and utterly mistaken ones.
First of all, let us take the case of personal freedom. Of course, there is an economic aspect of personal freedom just as there is a political and an industrial aspect of personal freedom. The greater the resources an individual possesses, the freer he is, but how does it enhance personal freedom to allow a person to retain after tax more of the money he earns if we cancel out entirely the amount he thereby saves by charging him more for the things he must spend on, things he cannot do without? Yet this is the net effect of the Government's measures.
There has been some statement by the Chancellor today about exactly where the line may fall. He has said that a man earning £20 a week, and with a wife and two children, will be no worse off. I am surprised if he can maintain that, without including elements such as family allowance in the total £20 of income which the person is receiving. I would be very surprised indeed if they were straight earnings. Quite apart from that, it does not touch the case of the average industrial workers who are earning rather more than that—not very much in my part of the world, but more than that. They will be worse off under the measures which the Government are taking.
This is the nub of the matter. To attack equality in the circumstances of Britain today is also to attack freedom. Indeed, since we know that a £ is worth more to a man with £20 a week than it is to a man with £4,000 a year to take from the one and to give to the other is to diminish the total welfare accruing from our resources to the whole community.
But, the Government will say, this is too static we are to get economic growth for all the incentives we are giving. One would think from that, since it is so much the keystone of their argument, that there was some definite, proven, perhaps
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even quantifiable, link between changes in marginal rates of personal tax and increases in productivity. But there is no evidence of any kind to support such a contention.
Some hon. Members may have seen a fascinating television debate two or three weeks ago between my hon. and learned Friend the Member for Lincoln (Mr. Taverne) and the right hon. Member for Taunton (Mr. du Cann). I think my hon. and learned Friend the Member for Lincoln won hands down, but the right hon. Member for Taunton was faced with the same problem as the Chancellor was faced with today: how to produce some evidence that there is a link between small marginal tax changes and incentives to productivity. He could produce no evidence. All he could do was to trundle out Sir Paul Chambers, who, to his consternation, said he did his job for fun. My hon. and learned Friend the Member for Lincoln was able to produce good sociological evidence that there is no link between small changes in taxation and incentives. Indeed, I believe that if he would look further he would find other evidence from sociological studies and human behaviour of this kind which would indicate the same thing.
If there is any connection at all, it is the other way about. By reducing taxation we can have a disincentive effect; a man may work less hard if his tax is reduced. Now, as we know, the average man's conditions are changed so that he is worse off as the result of the Government's tax and other measures. So if they hope by these means to get increased productivity they should at least be honest enough to admit that this is not a carrot which they are using but a whip.
Quite apart from sociological studies of human behaviour, there is not even general statistical evidence to suggest either that Britain has a uniquely high level of personal taxation or that taxation in toto, or that high or low taxation, is linked in the same way with slow or fast growth.
The Chancellor said in his speech that the public sector accounted for 50 per cent. of the gross domestic product of this country. I think that is a questionable statistic to use in the context of this debate or in the context of his statement. I say it is questionable not because I think it is inaccurate in itself, for the

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Chancellor was accurate as to that, but because we are talking about Government expenditure and taxation, and taxation as a proportion of gross domestic product is, as my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkin) pointed out, 20 per cent. to 25 per cent., depending on how one looks at it, below 50 per cent. This defines taxation as including social security contributions as well as rates and all types of taxation. By this measure we find that Britain is indeed not at the top of any international league table. As my right hon. Friend said, it is somewhere in the middle. The Scandinavian countries, as the Chancellor instanced, are higher than we are; so also is France; West Germany and the Netherlands are roughly at the same level as we are. Japan is the only major industrial nation, with the United States, which is significantly lower. The same is true if we limit the comparison to personal direct taxation. The only area where we are unique is in the slowness of our growth.
So it is obvious that there is no connection between high taxation and slow growth. Indeed, if we are perfectly honest economists we must say that we do not always know what economic growth is caused by when it appears. But it certainly has to do more with other matters such as those mentioned by the Leader of the Liberal Party; more to do with changing the exchange rate at appropriate intervals, trying to match an increase in money rates with an increase in productivity, having a proper plan for the allocation of resources. All these factors have far more to do with achieving fast growth than taxation. Indeed, when the history of this period comes to be written we shall find that the theory that high taxation and slow growth are inevitably linked will be regarded in much the same way as the old idea which was once popular that trade cycles are caused by the incidence of sun spots. But, then, Tory economists are always centuries behind the times.
In short, there is no substance to the Conservative contention that they have a positive side to their philosophy. It is no more than a blind assertion, and the trouble with this ideological approach to things, which equates national spending with original sin, is that it does untold
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damage. It does damage in that there are many areas where services are best provided collectively. Not only that, but there are an increasing number of these fields—I am thinking of development planning—where we are best to adopt a collective approach. This is the positive case for increased public spending, and rational and commonsensical decisions are made far more difficult by the smear attacks of the Government on public expenditure. Not only that, but that attack by the Government does direct social damage and increases inequality.
I said at the start of my speech that it is towns like Gateshead which bear the brunt of this kind of proposal. This is indeed the case. It is towns like Gateshead which have few of their population in the more affluent bracket and more in the average or worse than average bracket. It is towns like Gateshead, in development areas, which rely more on social services than the towns in more affluent parts of the country, and it is these services which are being made more costly. It is towns like Gateshead which, precisely because they are not affluent, attract less private investment, and, therefore, rely more on public investment and regional policies, which the Government are paring down.
Capitalism is centripetal; that is to say, the rich get richer faster than the poor get less poor. This applies to people, corporations, regions and countries. As a result of this philosophy, the development regions lose people, they have fragile economic structures, immense social harm is caused, and generally the material quality of life is less good. In addition to that—and this is the irony of it—the rich regions also suffer, because they have to receive fresh waves of people from the North, East or West who are seeking greater opportunity in more affluent regions. The people who come have to be transported, fed and housed, and they want to join in the entertainment and fun like everybody else. So problems are created of pollution, isolation, high house prices, loneliness and all the other difficulties associated with metropolitan big city living. Ghettoes tend to be created inside big cities because the rich can buy themselves out of these problems and the poor cannot. They may buy themselves

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out by buying a small house in a relatively poor part of London for a fancy price, thereby actually worsening the lot of the poor people. There is, therefore, a threefold effect, and all these problems can be helped by a proper, rational and forceful regional policy.
The last Government had a regional policy. It was not perfect but it is incontestable that it improved the development of intermediate regions. It is equally incontestable that it did not do enough. If there is something to be said about regional policy, it is that it should be strengthened and improved.
What the Government have said so far about regional policy is ominous. First, they say that they have maintained the status quo on investment incentives, but we have yet to see whether they have. Because of the new methods adopted by the Government the calculations cannot be done in advance. We cannot see precisely whether the total amount of money they are pumping into the regions is less than it was. But they have only maintained the status quo; they have not improved the situation.
Equally, during the period of the election the Conservatives told us that they wanted to switch spending from investment incentives of one kind to infrastructure grants. So far there has been no attempt to do that. We have heard no word of any attempt, and all we know is that total spending will diminish. Therefore, I say that what they have said so far about regional policy is deeply disturbing.
Finally, I offer an interesting reflection on the politics of this country. Gateshead is in County Durham. If everyone in the last election had voted as Durham voted there would not be a single Conservative Member of the House of Commons. I add, in fairness, that if everyone had voted as Surrey voted there would be no Labour Members in the House of Commons. If the net effect of the Chancellor of the Exchequer's statement last Tuesday and the policies which the Government intend to pursue will not be to make Surrey more Conservative, it will certainly be to make Durham more Labour. Therefore, any talk from the Government benches about building one nation is absolute cant.
6.54 p.m.
Mr. Peter Rees: Since this is my first intervention in a debate I must ask for the indulgence of the House. If in a slightly highly charged debate my remarks assume a rather partisan tinge I hope it will be attributed to inexperience and not to malice.
Perhaps unusually, it falls to me to congratulate the hon. Member for Gateshead, West (Mr. Horam) on his maiden speech. He set a high standard which I shall find it hard to emulate. He obviously has a unique combination of qualifications, and I have no doubt that the House will listen to his subsequent speeches with great interest.
May I also take time to pay tribute to my predecessors, who have represented Dover, Mr. David Ennals and Sir John Arbuthnott. I cannot speak at first hand of their contributions in this House, although I understand them to have been distinguished if perhaps slightly different in character. I can, however, speak at first hand of what they did in my constituency, and I think I speak for myself and the electors when I say that they served Dover well. They were assiduous in their constituency duties, and I shall try hard to match their assiduity.
I suppose that every hon. Member considers that his own constituency is unique, and I claim boldly for Dover that no constituency has been so involved in the history of this country, particularly with its martial history, starting from the day when Julius Caesar set foot on British soil at Walmer. We are proud to boast that we have two cinque ports, Dover and Sandwich, and a third town, Deal, which has a long connection with the Royal Navy and the Royal Marines. I very much hope that this Administration will find it possible to preserve the connection with the Royal Marines.
Dover also has a wide range of activities, from apple growing in the north to digging coal. I was not so bold as to align myself with the hon. Member for Ebbw Vale (Mr. Michael Foot) when he asked the Chancellor of the Exchequer to give way to him as a representative of a coal mining constituency, but I can claim without undue immodesty to represent a coal mining constituency, although Dover has other interests too.

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This leads me to the first part of my right hon. Friend's statement, in particular to the part relating to public expenditure. One cannot help observing that the demands of the nationalised industries for capital will persist, demands of well over £1,000 million. Contrary to popular mythology, there can be no hon. Members on either side of the House who wish to see the nationalised industries founder. Certainly I do not wish to see the three pits in East Kent go under. But I feel that my right hon. Friend might give consideration to whether the nationalised industries could not raise more of their capital requirements from the market and less from the Exchequer.
One of the most notable changes in budgeting since the war is the claim of the nationalised industries on the public exchequer; the other is that before the war our defence east of Suez was largely carried on the Indian Vote.
The task of the Chancellor of the Exchequer would be eased if the nationalised industries could be induced to go to the market. It would probably be visionary to imagine that they could sell to the market equity capital, but it would at least be possible for them to issue debenture or loan stock. This must ease the Chancellor's task and also submit the nationalised industries to a form of commercial discipline.
I pass to the second part of the statement, in particular to taxation. The right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins), in his speech on Tuesday last week and in his questions to my right hon. Friend the Chancellor of the Exchequer, seemed to be trying to assimilate taxation to the charges imposed on us for welfare services. This is to reduce the debate to a semantic exercise. I am directing myself only to direct taxation as it is generally understood, certainly by the electors in my constituency.
In any discussion of taxation one is asked to consider how the fiscal system advances social justice. I hope that on both sides of the House we are ultimately concerned with social justice, although possibly we may define our objectives in slightly different terms.
I ask: what kind of social justice is there in the present fiscal system? I will give one example in the hope that the
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Chancellor of the Exchequer will be able to take it up more fully in his next Budget. The other day I was approached in my constituency by an unmarried lady—[Laughter.]—purely on a financial basis, I assure the House—whose total gross income for tax purposes was not more than £565 in the last year. She is paying in 1969–1970 £50 by way of income tax. I was so staggered that I referred the matter to her inspector and he confirmed it.
The reason is twofold. First of all, she was ill-judged enough unfortunately to buy a small annuity, which counts as unearned income. This points the moral that the distinction between earned and unearned income is quite meaningless. Secondly, she was a victim of the alteration in reduced rate reliefs introduced in the 1969 Finance Bill. Therefore, she moved quickly on to the standard rate. I am happy to say that she will be relieved of at least part of her burden by the cuts it direct taxation proposed by the Chancellor. However, I still find it staggering that she should be paying anything like as much as £50 per year. I hope very much that my right hon. Friend will be able to take further account of her case and of similar cases.
The second test which must be applied to any fiscal system is, assuming it advances social justice, at what cost to the community is this achieved? Here I must declare a personal interest, as I gather is the custom in this House. I practise at the Revenue Bar, although the views which I advance politically are not likely to advance my professional practice because if the present Administration cuts direct taxation on the scale which I hope it will, then the demand for my services will then probably be considerably reduced.
Hon. Members opposite have advanced the sophistical arguments that there is no evidence that high rates of taxation affect the economy and have any disincentive effect. I can speak from direct experience of contact with clients who have come to consult me. The first consequence of present high rates is that it is practically impossible to take any major business decision without considering the fiscal consequences. Time and again directors have come to consult me on what basically is a commercial operation. They are bound to consider

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what fiscal effects this will have and whether any profit that might be made will be entirely absorbed by direct taxation. Their time in consulting me is entirely unproductive; it adds nothing to the gross national product of this country.
Beyond that there is the whole area of tax evasion shading off into tax avoidance. I know that some hon. Members would consider that this activity is entirely monopolised by the richer sections of the community. This is certainly not my experience. Many of us are dependent on the good offices of a charlady to keep our houses clean. Some of us have had our houses decorated by people in their spare time. I am certain that a great percentage of these people do not declare those earnings and, frankly, with present rates of taxation, I do not blame them.
There are those people who pass up opportunities for working overtime to undertake jobs in which they will not become subject to Schedule E and will not be under the direct control of their inspector. Then there are those people who can afford advice and, therefore, who fall into the area of avoidance. Two consequences strike me as particularly harmful. First, vast sums of money have passed to places like the Bahamas, Bermuda—and even the Cayman Islands, which nobody had even heard of five years ago. The reason is that it is cheaper to control capital there and that the impact of taxation is almost nonexistent. It must be of advantage to this country to coax that capital back. We shall do that only if we reduce the impact of direct taxation. I refer not to small cuts but to the bigger cuts which I am sure my right hon. Friend envisages in the long term. I welcome his immediate cuts, which I am sure are an earnest of what he intends to do over the life of this Administration.
Leaving aside the question of capital, there are a number of people who have gone abroad to live in those countries, and perhaps to the Channel Islands, too. They are not, contrary to popular mythology, entirely rentiers. They are often people who have built up successful businesses and who, when the shadow of estate duty starts to fall across their path, ask themselves, "Is it worth spending the last 15 years of my life in this
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country and leave my executors to pay over 80 per cent. on the estate I have so carefully built up to the Exchequer?" Who can blame them if they decide to leave Britain? They have something still to contribute to this country. I hope that we shall be able to coax them back so that they can make a further contribution to the economy of this country.
I am conscious that I have taken up a good deal of the time of the House with my personal experience and that this may sound a little egotistical. However, I conclude by saying that I welcome the cuts that the Chancellor has been able to forecast and I hope that they are merely a pledge of more to come. I hope that it will not sound churlish or presumptuous of me if I ask my right hon. Friend to set as his objective the turning of this country into a tax haven. I am certain that we should be surprised if he did by the reserves of initiative, thrift and resources which he would uncover and which then would be available to set this country on its feet.
7.8 p.m.
Mr. Frank Allaun: We have had this afternoon three maiden speeches, two from the Conservative benches and one from the Opposition side of the House. I warmly congratulate all three. Quite clearly they will make great contributions to the discussions on this and other subjects in the House of Commons. I hope that they will excuse me for not following them, because I wish to deal with another cut which has not been mentioned so far in this debate, although it is mentioned in the Amendment.
This week the Secretary of State for the Environment announced what he no doubt would want to be regarded as a great new era for housing. But the reality of the situation was revealed last week by the Chancellor of the Exchequer when he said that there would be a cut of £100 million to £200 million a year in housing subsidies by 1975–76. I intend to show that four results will ensue. First, that this will be the worst blow to housing for 13 years since the Conservative Rent Act was introduced. Second, that the housing programme will drop from its present inadequate level to under 200,000 new dwellings a year.

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Third, that millions of families both in council houses and private landlords' houses will suffer savage rent increases. Fourth, that subsidies for private landlords' tenants will become subsidies for private landlords. In other words, the "Cathys" of Britain will have even less chance of coming home.
There are some on the benches opposite and some academics and some newspaper leader writers who believe that the answer to the housing problem can be summed up in two words: higher rents. I do not share that view. Strange as it may seem, the answer to the housing problem is to build more houses. I was delighted when, in 1968, an all-time record of 413,000 houses was reached. Since then it has fallen seriously to 367,000 last year and, if I am not mistaken, to 330,000 this year. I expressed my disappointment with this falling-off under the Labour Government and I express it now.
This decline is now to be seriously and deliberately accelerated. I cannot claim to be a great Biblical scholar, but I remember that the Book of Kings says,
"… my father bath chastised you with whips, but I will chastise you with scorpions."
That is what we are going to see happening to the ill-housed. This run down of housing will not be achieved by Government edict. It will be achieved in council housing by cutting the subsidies and in private housing by continuing the credit squeeze on private building firms.
The promises of the Secretary of State are false because, if the Government kept all the promises he has made about subsidising poorer tenants in both council houses and in privately owned houses, increasing slum clearance subsidies and making other grants, the cost, as more houses were built each year, would be about £500 million by 1975–76, which no one in this House believes could happen in his wildest dreams. The Secretary of State for the Environment himself said that the council house subsidies totalled £190 million this year, and I gather, since my own figure is £164 million, that his total includes the Scottish subsidies. He also said that there would be a reduction by 1975–76 of about £150 million a year. This means a reduction to £40 million a year, plus, it is fair to say, the subsidy for new houses as and if new houses are built.
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The decline in the private sector will go on unless the Chancellor of the Exchequer, via the Bank of England, permits the banks to put loans to the small and medium house building firms into their priority lending list. I asked the Chancellor a Question urging this course last July and was told that the matter was under discussion. That was four months ago. As we have still had no announcement, we must presume that the credit squeeze goes on, and goes on in the housing sector, and this despite the huge number of unemployed building trade workers. More house building firms, unable to get loans even at 9 or 10 per cent., will go into liquidation and so there will be fewer houses for sale.
In the public sector, the causes of the decline are different. I have here a list of the number of starts up to date for the last four years. I have extrapolated this year's figures for Great Britain and seasonally adjusted them to the end of December next. These figures relate to council house starts. In 1967, there were 213,000 council house starts; in 1968—note the decline—there were 194,000; in 1969 there were 176,000 and this year there were 153,000. This serious fall will now be tragically accelerated, and mainly because of ideological reasons.
Since May, 1967, nine out of 10 town halls in Britain have been controlled by Conserative councillors. Most of them, with some honourable exceptions, have no great enthusiasm for council houses. I know that in some areas Labour councils have cut back too, and I deplore it, but these are mainly in mining areas where the population has fallen. The main reason for the decline elsewhere is a mean and snobbish attitude towards council tenants and their homes and I want to quote the Secretary of State, speaking at a conference in Manchester, my home town, a year ago, when he said:
"I hope that Conservative councils will take great care to resist the temptation to go on building council houses for all sorts of seemingly good purposes."
When I tackled him about that in the House at Question Time, he denied it, but I must tell the House that I have checked very carefully and those were his exact words. I see the hon. Member for Oswestry (Mr. Biffen) nodding his head. I am quoting those words verbatim.
Mr. John Biffen: I should make it clear that my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) was giving me a preview of some of his own views of the Governor of the Bank of England. I would not wish to convey to the hon. Member for Salford, East or to the House any thought that I was endorsing what the hon. Gentleman was saying.
Mr. Allaun: I hope that subsequent interruptions will be on a slightly higher level than that.
I also hope that Ministers and others, inside this House or outside, will not accept the stories with which we are so often regaled of three Jaguars parked outside every council house. To disprove this I want to quote the figures from the report of the Prices and Incomes Board on 20 typical local authorities in October 1968. This report showed that only 1·3 per cent. of husbands' and wives' combined incomes were over £40 a week and that 50 per cent. of them were less than £20 a week. What is more, this excluded tenants on pensions or social security. This means that the figure for combined incomes of under £20 a week was far higher than 50 per cent. I urge owner-occupiers not to allow the Government to drive a wedge between them and council house tenants, particularly since both of them are suffering from the same burden, which is the extremely high rates of interest.
Whether the Minister admits it or not, the great majority of working-class families—and we know it in our hearts to be true—are dependent on council housing since they cannot afford to buy their own houses even with mortgages. There are indications from last May's municipal election results and from local elections since then that Labour will win back next May half of the seats it has lost and that in the following May it will regain control of the remaining councils. Unfortunately, if the present proposals go through, Labour-controlled councils, however much they may wish it, will be prevented from restoring the programmes because the subsidy will have been removed. Each additional house they build will add to the deficit on their housing account. If they do proceed it will mean raising rents astronomically—so high in fact that only the rich will be
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able to afford them, and rich people do not like council houses.
I turn finally to the proposal to provide subsidies for tenants of private landlords. I repeat that these subsidies will go eventually not to the tenant but to the landlords, and I will explain why. The Government are going to take all rents out of their present control and put them instead into the so-called fair rent fixing machinery.
According to Ministry of Housing and Local Government figures which I secured from the then Minister a year ago, these have resulted in rents which are 2·6 times the previous controlled rents, a drastic increase. Even if they receive subsidy—and hundreds of thousands of families will not—the subsidy will only go to pay, or part pay, these big increases in rents.
Nor am I convinced that the so called fair rents are fair. In some areas, notably London, Birmingham and Southampton, they are not.
Mr. Timothy Raison: Would the hon. Gentleman at least accept that even if part of the subsidy finds its way into the pockets of the landlords, it will have the effect of adding to the housing stock, partly by encouraging people to build to let and partly by encouraging those with older properties to let them when at present it is not worth their while to do so?
Mr. Allaun: Unfortunately there is no likelihood of new houses being built to let, certainly not at the present time. We have a rapidly shrinking stock of property to let because housing is preferred either for owner-occupation or council tenancy. This, in my view, is the right solution because housing, like education, is not a suitable sphere for private profit making.
I was saying that often in areas like London, Birmingham and Southampton they are not fair rents. For a damp, terraced house in Tottenham, without a bath in operation, a rent of £4 12s. 6d. a week plus rates has been fixed by the rent assessment committee. A similar house in Manchester has had its rent fixed by the committee at £1 10s. plus rates. Clearly, the high rent is due to the intense housing shortage in some areas which these assessment committees are supposed

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to ignore and are enjoined by the Act to ignore but are not doing so.
The truth is that housing desperately needs more, not less, money. We are devoting only 3·7 per cent. of our gross national product to housing, compared with 5·5 per cent. on average in the remainder of Western Europe. We now have the lowest percentage of the G.N.P. going on housing, with the exception of Portugal.
I hope there will be a great nationwide movement to resist these cuts. The local Labour Parties, trade unions, tenants' associations, Shelter supporters, and all people who feel sympathy for the victims of the housing tragedy—should combine to prevent these blows.
7.23 p.m.
Mr. Peter Hordern: It is my privilege to congratulate the hon. Member for Gateshead, West (Mr. Horam) and my hon. and learned Friend the Member for Dover (Mr. Peter Rees) on their maiden speeches. Both spoke happily about their predecessors and constituencies, and I am sure that hon. Members on both sides of the House look forward to their further contributions.
The hon. Member for Gateshead, West rather reminded me of the adage that when two economists are gathered together one gets 50 different economic opinions. I am certain that that will be the case in future economic debates. His contribution, like that of my hon. and learned Friend's, followed a strong speech, if such I may describe it, from the right hon. Member for Stechford (Mr. Roy Jenkins).
The right hon. Gentleman said that a new philosophy of social division had been proclaimed and that the measures were calculatedly redistributive in the wrong direction. That sounded strange coming from a right hon. Gentleman who was Chancellor of the Exchequer when, in June, 1968, a half-crown per head prescription charge was imposed. It came strangely from the right hon. Gentleman when he was responsible for putting the standard charge for school meals up by 6d. to 1s. 6d. in April of that year. It was strange to hear the right hon. Gentleman talk today that Conservatives thought that high taxation was destructive of our national moral fibre—he said that that
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was what the Conservatives thought—when he himself said 18 months ago that he felt like mitigating slightly the rates of tax on high earned income.
I thought the right hon. Gentleman was carrying his accusations too far when he said that the measures were calculated to push up the cost of living still further. What was the supposed effect of the charges which he imposed and of the additional £3,000 million of taxation added by Labour during their six years in office?
On what did the right hon. Gentleman himself rely to control inflation? He certainly did not rely on a very strict monetary policy. Instead, he relied on an incomes policy. At that time he said that there had been far too many unnecessary and damaging disputes "of which we have seen all too much recently, which are totally incompatible with our economic objectives". But we are told by another Mr. Jenkins, this one from The Guardian, that the right hon. Gentleman had stuck to this belief for some time and had even supported the then Prime Minister in the Cabinet—until a crisis arose, when he slid inelegantly off the fence with a squelch of surrender.
The announcement of my right hon. Friend represents a major policy statement setting out a new strategy. It is an able attempt to break out of the slough which has existed in the economy for the last ten years. It recognises that the rate of growth has been too low and that industrial invesment has been stagnant. It recognises that taxation on both companies and individuals is far too high. In particular, it recognises that with public expenditure running far ahead of output, the size of growth of the private sector was diminishing while the public sector was growing. And as the public sector grew, it required yet higher taxation to finance its progress, so that the private sector diminished accordingly.
My right hon. Friend's statement that the growth of public expenditure is to be confined to a rate of 2·8 per cent. rather than 3·4 per cent. is particularly welcome since that, at least, should be covered by the growth in output. So also to be welcomed are the means by which this is to be accomplished. Investment in manufacturing industry has risen by only 8 per cent. in the last four years, which is stagnation in every sense.

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The total value of investment during the last few years has been about two and a half times the value of the cash grant and I do not believe that any more wasteful system could have been established than the system of industrial cash grants.
Also welcome in these measures is the announcement of the abolition of the Industrial Reorganisation Corporation. I do not say this particularly because of the savings that will he made in future years, but simply because, as a result of the existence of the I.R.C.—coupled with the present high rate of taxation—there was an instrument devised by the Labour Government to allow companies, which were heavily hit by taxation, to go to a Government agency and be bailed by the taxpayer on an entirely subjective basis.
I believe that the depreciation allowances are far preferable to the system of investment cash grants, because they mean that the profit of the company has to be earned, and demonstrably has to be earned, before there is any question of getting relief for an investment grant. In that sense the liquidity of companies has been severely strained, because the growth of company profits has risen by only 5 per cent. during the last five years, and the announced cut in corporation tax will be very helpful to companies.
I think that there has been a good deal of synthetic indignation about these charges, and the question which hon. Gentlemen opposite have to answer is how otherwise are we to increase the expenditure on primary schools, on mental health and on hospitals, which has already been announced as part of the measures to be taken? We have had no constructive proposals from the other side of the House in this regard.
This is a long-term strategy, and not a budget, but the question is what sort of background is there to its introduction? It is just as much an economic judgment to do nothing as to do something. I think the evidence is that this is the most inflationary of any period since 1950. The Chancellor announced today that earnings were rising by about 12 per cent. to 15 per cent. In the consumer sector it is my knowledge that some of the largest store groups are paying in- creased wages of up to 331 per cent. The result of these high increases in earnings and wages can be clearly seen in the figures for consumption.
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What one must conclude is that those figures bear no relation whatsoever to productivity. Hon. Members on both sides of the House know that this situation cannot go on like this, and it is therefore right to consider how it has arisen and what can be done to stop it. The Government have rightly, in my view, forsworn a statutory incomes policy. Such a policy was proved by the previous Government to be totally ineffective, and I do not think that there is any evidence of an incomes policy working in any country where it has been introduced. If that is the case, all the greater emphasis must be laid upon the importance of a strict monetary policy.
The old monetary policy introduced by the right hon. Member for Stechford in his Budget, that is to say, an increase in the money supply of about 5 per cent., would have done very well. It was appropriate, but we have already seen this kind of increase in the first three months after the Budget. In his Budget speech on the 14th April the right hon. Gentleman said:
"So far as the gilt-edged market is concerned, too, official strategy will be based on the general policy requirement."—[OFFICIAL REPORT, 14th April, 1970; Vol. 799, c. 1235.]
The general policy requirement was itself concerned with the restriction of the money supply and the restriction of credit.
But what happened? How can it be explained that within the three months from April to June the money supply increased by £700 million? It was the largest increase in any quarter since 1963 and, I suspect, the largest increase ever in any quarter. Those figures included a net purchase by the Government of £280 million of gilt-edged stock alone. What one has to ask the right hon. Gentleman—and I am sorry that he is not in the Chamber at the moment—is when he knew of this increase? Why was he not informed at any time between March and June, at the time of the election, of the increase in the money supply which had been caused directly by the operations of the Bank of England, for which he was responsible? Are we to believe that the right hon. Gentleman was never told during the whole of these three months about the increase in the money supply? It is very difficult to believe that that was the case. Suppose, however, that it was. On whose responsibility was

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the right hon. Gentleman's general instruction given during the Budget ignored? I believe that the House is entitled to know the answers to these questions.
The Governor of the Bank of England refuses to accept responsibility for the increase in the money supply. During his speech at the Mansion House recently he said:
"I do not accept, either, that the monetary authorities can exercise a precise control over the rate of increases in the supply of money from month to month or that in regulating the course of the economy overwhelming priority should be given to influence movements in this particular magnitude".
The Governor of the Bank of England refuses to accept responsibility for the operations of the Government Broker in the gilt-edged market.
I think that that is a very dangerous situation. The Governor of the Bank of England knows very well that a statutory incomes policy is not acceptable to this Government, yet it was he who in his speech at the Mansion House was advocating such a policy. He should know that an incomes policy has never worked in any country in which it has been tried.
What is perhaps more disturbing than anything else is the sight of the old Lady of Threadneedle Street bleating about inflation while at the same time flooding the market place with money she has printed herself at an unprecedented rate.
I have never been on the side of those hon. Gentlemen opposite who have taken the Governor of the Bank of England to task on previous occasions, but it really is a most alarming sight to see the keeper of the currency apparently so ignorant of the damage that he personally is inflicting on what he is supposed to protect. The Bank of England is supposed to support the Government in controlling inflation, and yet it is feeding it as fast as it can. This situation simply cannot continue. Battles, it has been said, are too important to leave to generals. Inflation is much too important to leave to such a Governor.
It is well known that there is a lag of at least six months in the effect of a movement of money supply. It would have been bad enough if the increase in the money supply had been halted in June, but there is, unfortunately, very
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good reason to believe that the third quarter's figures were just as inflationary. It appears that even last week the Government Broker pushed about £100 million more into the system than the clearing banks were asked to deposit with the Bank of England. One does not need to be an addict of the Chicago school to know that one cannot forswear both an incomes policy and a monetary policy. There is only one thing for it. The Governor must be given firm instructions that the money supply must not rise at all for another year.
What concerns me in addition is the fact that this House is badly served by the official statistics.
Mr. Barnett: I am fascinated by what the hon. Gentleman is saying. He should have sat when our old friend Jimmy Dickens used to sit and give us his views on the Governor of the Bank of England. Should not the hon. Gentleman's strictures be applied to the Chancellor of the Exchequer, who will not even tell us what instructions he has given the Governor of the Bank of England about the level of money supply, and what it should be?
Mr. Hordern: I hope that my right hon. Friend is engaged in conversation with the Governor, and far be it for me to get involved in this discussion in any way. I very much hope that he is so engaged, and that perhaps he will be courteous enough to take note of what I am saying.
The House is very badly served by these statistics on the money supply. We get them greatly in arrears, and only quarterly at that. At the very least we should get them monthly, and this should be arranged.
I fear that my right hon. Friend has been put into the position of a man running up an escalator which is going down fast. I do not think that his measures, courageous and proper as they are, will be able to function as they should unless that escalator is brought to a halt, and I hope to goodness that it will be brought to a halt in good time.
7.40 p.m.
Mr. Thomas Torney: I should first like to thank you, Mr. Speaker, for allowing me to make my maiden speech on such an important

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subject. I was just about to say that I was pleased that the Chancellor of the Exchequer was here, but I see that he has left the Chamber. I was hoping that he would have remained behind, because I would very much have liked him to hear at first hand of the effect of his cuts in the welfare services upon ordinary working folk, such as those who live in my constituency.
I pay a tribute to my predecessor who sat for Bradford, South, George Craddock. I am sure that many hon. Members on both sides of the House knew him well and are aware of the excellent service that he gave to this House as well as to his constituents.
I have listened with a great deal of attention to the speeches that have been made today, and I was struck by a couple of speeches which were made by hon. Members opposite who have now left the Chamber. The inference to be drawn from those speeches seems to be that the baling out of firms and industries was necessary because of high taxation or because of the activities of a very large trade union. I should like to make it clear that there are many reasons why firms and industries have had to be baled out over the years. Frequently it has been because of bad and inefficient management and the fact that not enough of the profits have been ploughed back into the industries to buy more machinery and bring them up to date. That is by the way, but I felt that it ought to be said.
The people of Bradford are hard working. For many years they have given good and loyal service to the woollen textile industry, which is the main industry of Bradford and the surrounding area of the West Riding. My constituents have contributed towards the fine records of exports in the woollen textile industry. These are vital exports, and this has been done despite the intense competition from abroad and despite the fact that Japan and Italy, by devious means, manage to subsidise their exports of woollen textiles.
The labour relations in the woollen textile industry in Bradford are excellent. Disputes and strikes are unknown—and they are well organised in their trade unions. Yet, despite the loyalty of these people, it is a low-paid industry. In fact, Bradford is entirely a low-wage area. It is because my constituents are mainly in the
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low income brackets that the cuts announced by the Chancellor will fall so heavily upon them. It is, indeed, ironic that these people, who have been so loyal and who have worked so hard, should have to suffer so much. The people of Bradford today are very worried because of the contractions in woollen textiles and because of the mergers in engineering, bringing in their wake redundancy with consequent unemployment and a complete lack of alternative work. New industry is urgently required if we are to save this area from becoming an area of depression, so common in the past under the Tory rule of the 1930s and before.
The policy outlined by the Chancellor is, to put it mildly, an aggravation of our problem, and little hope can be derived from Government spokesmen who have repeatedly declared their intention to help only where profit is assured. I appreciate that right hon. and hon. Members opposite find it impossible to understand the human suffering of the housewife trying to succour her family when he man is unemployed. Hon. Members opposite have never experienced it. They cannot understand the loss of human dignity of a man who must go to the labour exchange for his money each week, a man who has been denied the right to work. Hon. Members opposite who have never struggled in this way cannot understand the effect on such people of the abolition of free school milk and the vast increase in prices of school meals.
Tory philosophy changes but little—perhaps only in its method of presentation. It tends to kid a bit more. Still it transfers the cost from those with ability to pay to those who simply cannot afford to pay. For a married man with two children earning £20 a week—I wrote this before the "argie-bargie" that we had earlier today—6d. off income tax gives a gain of about 1s. a week. I see no reason to change that belief as a result of the Chancellor's statement. The Chancellor said that there would be some kind of aid to persons with earnings of less than £1,000 a year. A man with two children earning £20 a week receives slightly over £1,000 a year. This income tax reduction means nothing to him. It will be more than absorbed by the extra cost of school meals for one of his children. Someone must go short in a

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workingclass family if children are to have proper sustenance; alternatively, the children must do without proper nourishment and make do perhaps with sandwiches or chips, or something like that.
Hon. Members opposite cannot understand this. This is the price that low wage groups, like so many thousands in my constituency, will have to pay for the Tory policies of taking from the poorest to give to the richest. Milk is a vital food—so vital to the nation's children that the abolition of free school milk is criminal, particularly for people in areas like Bradford. This will not be made up by the additional private purchase of milk. The children just will not get the milk. Masses of my constituents cannot afford to buy it. To get one's tax concessions one must rob the children of their milk. This is no laughing matter—certainly not to one like myself who has in his constituency so many people in the condition that I have described.
The General Election campaign is still very fresh in my mind, if it is not fresh in the minds of hon. Members opposite. I still remember the statements which were made by hon. Members opposite, in particular the statement by the Prime Minister that prices must be reduced, not "some time, never", but immediately. These words are fresh in my mind. I wish that they were as fresh in the mind of the electorate.
If we on this side had made such statements to the electorate, telling them that we should reduce prices immediately, and prices had gone on rising for us as they have for the Government since 18th June, the Press would not have allowed the electorate to forget it. The newspapers would not have played it down for us as they have played it down for the party opposite. The Press is Tory-owned and Tory-controlled, but no amount of silent Press and Government gimmicks will cover up the fact that more and more is being paid by the housewife. The immediate cuts are not in prices but in social welfare and social services.
The housewives of Britain are in for an even tougher time when the new system of agricultural support outlined by the Chancellor comes into effect, because more and more will have to be paid for essential foods. So much for the election stunt of immediate lower prices.
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All this hardship and the struggle for existence will hit hardest the low-paid of Bradford and of Britain. For many years, I have battled for the low-paid, for until entering this place I was an officer of a trade union catering for some of the lowest-paid workers in this country. I am honoured to continue to do battle now for low-paid people everywhere, and for those in my constituency in particular. I hope that the day is not far distant when, despite the power of the Tory-inspired monopolistic mass media, the electors will see through the false promises of the party opposite, sweep this Government of monopoly big business from power, and return once again a Government pledged to reverse the policies which they have pursued.
7.52 p.m.
Mrs. Sally Oppenheim: In making my maiden speech, I must first congratulate the hon. Gentleman the Member for Bradford, South (Mr. Torney) on a most articulate and sincere speech. I did not agree with it, but I hold him in none the less esteem for that.
Having experienced in the past few months the trauma of a General Election campaign, the alarms of a gas attack in this Chamber, and the horror of a fire at sea, I can only assure the House that those hazards were but pale precursors of the terror and trepidation currently being experienced by this maiden speaker.
I am anxious to observe the traditions normally followed in a maiden speech. The first, that of non-controversiality, I shall do my best to observe, but if by any chance I should happen to stray, purely from force of habit, into the realms of controversy, I earnestly crave the indulgence of hon. Members opposite.
The second convention, that of paying tribute to my predecessor, I comply with most willingly. Lôrd Diamond was for many years a most illustrious and much appreciated Member of the House. He is now a Member of the other House, where, I am sure, he will acquit himself with equal distinction and will be just as much appreciated.
It is, however, the third convention, that of referring to my constituency, which gives me the greatest pleasure of all. Gloucester is a historic city, boasting one of the most superb cathedrals in

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Britain, and set amid what is surely the most beautiful gently undulating countryside in England. The people of Gloucester are themselves gentle, kind, warm and tolerant. They are people whom I am extremely honoured to represent and proud to serve, and of whom I shall always strive to be worthy.
In a city so rich in historical tradition and citizenry, it is difficult to single out events or persons for special mention. Indeed, if the Thames had not lost its way, this Parliament might have been sitting in Gloucester today, for it was in Gloucester in the year 896 that the assembly first took place from which we can trace the earliest beginnings of our Parliament. It was in Gloucester that William began the Domesday Book, and in Gloucester that another historic precedent occurred, perhaps more appropriate for this debate. In the year 1207, in what must surely be the earliest recorded attempt to control inflation and help the housewife, a Royal decree ordained that lampreys, a local delicacy, must not be sold there for more than 2s. each.
I single out for special mention, however, an 18th century dean of Gloucester Cathedral, Josiah Tucker, who, as well as being a divine and a great humanitarian, was a prominent economist and political writer. Some of his pronouncements are almost uncanny in their aptness today, for in 1766, in a tract on political and commercial matters, he spoke of the need
"to excite the activity and ingenuity of England's people, by giving them free scope, without exclusion, confinement or monopoly".
So, perhaps, it is only fair to say that in Josiah Tucker of Gloucester we had a pretty accurate prophet of modern Conservative economic philosophy.
Gloucester, as well as being a great city of yesterday, is very much a city of today, with a multifarious industry ranging from light and heavy engineering to the largest ice cream factory in the world. It boasts a skilled and diverse labour force, and its position and surrounding infrastructure make it an ideal city for further industrial expansion.
Unhappily, unemployment has mounted in Gloucester over the past few years, as a result of restriction and stagnation. It is fervently to be hoped that the easing
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of company liquidity and other Government measures in the near future will allow Gloucester to return to its former prosperity.
I am especially glad to have caught the eye of the Chair today because economic affairs are fundamental to the well being of our people and my overriding concern and, indeed, the concern of every right hon. and lion. Member, will always be the effect of any economic situation on the lives and living standards of the people we represent. While it is true that we on this side of the House do not believe in instant government, there can be no doubt now that the pot is really "perking" and the brew promises to be strong and flavourful.
Although there have been some divisions of opinion among political journalists, rather like those among their calleagues the fashion writers, as to whether my right hon. Friend's statement last week was a mini or a maxi-budget, I am sure that it was much more than either of those names might imply. It was, in fact, the first step in the implementation of measures which keep faith with a deeply-held Conservative conviction that the Welfare State as it exists today is inadequate where it is most needed, wasteful in its provision of indiscriminate subsidies, and harmful to the country's economy and to the well being of those people who are not receiving as much help as they should. I meet such people all the time in my constituency. They are the forgotten people of a Welfare State which attempts to be too all-embracing.
In welcoming my right hon. Friend's decision to allocate extra resources for the elderly and the mentally handicapped and for the hospital services, I urge him to consider the further improvements of State assistance to the elderly as soon as it is possible for him to do so.
On the subject of benefits, I am delighted to see that the hon. Member for Hitchin (Mrs. Shirley Williams) is still with us, because earlier in the debate she thrust a piece of paper upon the Chancellor of the Exchequer which purported to challenge his figures about family entitlement. I have administered free school meals. I am sure that the hon. Lady knows that it is not only the income of the family, nor the number of children,

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but many other factors which decide the entitlement to free school meals and many other areas of the social services.
Clearly a reappraisal of the relationship of the tax system structure to the Social Security system and of the whole structure of the finance of social security, together with a reassessment of the priorities in Government spending, is essential to curbing inflation and curing our economic maladies. I firmly believe that my right hon. Friend's statement last week, together with Government proposals in the sphere of industrial relations, will go down in history as the most significant first steps to restore long-term economic health and growth and with it better conditions for everyone.
A recurring theme in the debate, especially from hon. Members opposite, has been that of inflation. Of course inflation is the villain of the piece in causing most of our social and economic problems today. Inflation was not invented on 19th June. We have been suffering from mounting inflation over the past five years, and equally it will not be cured overnight.
Of course it matters economically if our goods are priced out of world markets. It matters that inflation greatly increases the cost on Government spending and the extra need for Government spending. But it matters even more in human terms to those already suffering hardship, to those living on pensions, on savings, and on fixed incomes. Not least, it matters to the housewife. So naturally we are all concerned with our obligation to these people to bring inflation under control. I believe that my right hon. Friend's proposals will in the long term enable us to do just that.
Inflation is a problem faced by many other countries. But when we look at the formulae of those countries which have been more successful than ourselves in overcoming this problem, we must inevitably ask: what is the magic ingredient in their recipe which is missing from ours? There are three such ingredients and they are elementary: a more equitable productivity to wage ratio, lower personal taxation, and a lower percentage of total social security finance from the State than we have here.
A move towards adding the first of these ingredients to our economic recipe
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will be made when the Government introduce proposals for the reform of industrial relations.
The second and third elements in the formulae of those countries which have achieved more expansion, less inflation and a faster rise in their living standards, are that in several countries less is paid in personal taxation than here, though more may be paid by both individuals and companies in contributions to social security, health and pensions, often through privately-run schemes. That means that such countries do not have to rely to the same extent as we do here on taxation to finance their social services.
Indeed, if I had to single out one basic criticism of Socialist economic philosophy, it would surely be their obsession with financing out of taxation the maximum rather than the minimum, which has always meant that succeeding Socialist Governments have had to raise more rather than less tax revenue, and, of course, taxation has always caused more inflation than it has cured, quite apart from the damaging effect that it has had on what Josiah Tucker would call "exciting the activity and ingenuity of our people".
Although high interest rates, increased indirect taxation and company taxation have all played their part in contributing to the inflation from which we are suffering today, the rate of personal taxation at almost every wage level must also be a significant contributing factor. I do not propose to argue the disincentive effect of high personal taxation although it would be quite easy to do so. The point that I am anxious to make is that it is inflationary as much in its effect upon the average wage as on the salary of the chairman of a nationalised industry. It is surely elementary that the proportion of any income taken in direct taxation reduces the value of that income and its saving potential accordingly. In Britain that proportion is higher than most other countries. Therefore, the Chancellor's proud announcement of the first cuts in income tax to be made in 11 years was a very welcome step which I hope will be followed by further sweeping cuts in personal taxation over a reasonable period.
With respect to the Treasury, it has become rather old-fashioned to look upon

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tax cuts as inflationary. At the moment we are suffering from a cost, not a demand, inflation—much the most uncomfortable and socially unacceptable version of the disease. So all the old economic clichés have become irrelevant in the context of the problem. But whatever forecasts we care to make about economic causes or cures, one forecast can be made with absolute certainty. If a Labour Government had been returned to power at the last election taxes would have continued to rise and our economic situation would have become progressively worse. Under this Government taxes have already been cut and our economic situation will become progressively better, so it is only the rate of progress, not its direction, with which we are concerned in this debate.
To sum up, if a more equitable productivity to wage ratio is one key to a healthier economy and to controlling inflation, the Government's proposal to rationalise industrial relations is a vital and urgent step. But recent tax cuts, followed, we hope, by the abolition of S.E.T., and a reassessment of priorities in Government expenditure also by further substantial cuts in the rate of income tax, as soon as this is possible, are also essential. These three elements are interdependent and fundamental factors in moderating inflation and creating the prosperity that we all want. And if Mr. Deputy Speaker will forgive a domestic simile from one of the comparatively small number of housewives and mothers in this House, these are the missing ingredients that will allow us to bake a bigger cake from which everyone can have a larger slice.
8.8 p.m.
Mr. Joel Barnett: I am delighted to have the opportunity of congratulating the hon. Member for Gloucester (Mrs. Sally Oppenheim) on an excellently delivered maiden speech, which certainly showed no trace of nervousness. The hon. Lady will not be surprised that I disagreed with almost every word in her speech. It is rather interesting that her predecessor's speeches had much the same effect on me. I disagreed with many of his speeches in the last Parliament. Although I may disagree with everything that the hon. Lady may say during this Parliament, I think that all hon. Members on
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this side might agree that she does at least make the benches opposite rather more attractive than when they are occupied by hon. Gentlemen.
The hon. Lady will not be surprised that I found the maiden speech of my hon. Friend the Member for Bradford, South (Mr. Torney) more to my liking. I thought that he made an absolutely first-class speech which showed an enormous degree of knowledge of the workers in his constituency and a feeling for the people hurt by this particular package. My hon. Friend made an excellent maiden speech. I hope that we shall hear more speeches from him and from the hon. Member for Gloucester although I am sure that we shall nevertheless disagree with almost everything she may say.
I found this particular package, and, indeed, most of the measures that we have had and have been promised in future, both unfair and irrelevant. The unfairness was amply demonstrated earlier by my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) when he totally demolished the Chancellor. It was not too difficult. If the Chancellor's speech this afternoon satisfied the hon. Member for Gloucester that he will do great things in future—she was not looking around at her colleagues on the benches opposite—I believe that she is easily satisfied. My right hon. Friend made the absolutely clear-cut and unanswerable case, on the score of fairness, that those up to a wage level of perhaps £3,000 a year would have a break-even point in respect of all the measures proposed. I believe that the break-even point will very likely be higher, because people on an income level of about £4,000 generally have reliefs in respect of mortgages, insurances and other items. That means that for someone on even as much as £4,000 a year the benefits derived from the package deal are probably nil.
I do not think that any fair-minded person would claim that to be just, but the important thing is the irrelevance, because if the economic situation is serious, and the late Iain Macleod in a debate on 7th July, while denying that he had ever said there was a crisis, said there was a serious economic problem, and if all these measures are relevant to that situation, why must we wait until

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1st April before most of them are implemented? What we have here is not action, but promise of action next April.
But even if all these measures were to be effective as from today, I say that they are totally irrelevant to the serious problems to which the late Iain Macleod and many other people have referred because they do not in any way deal with the serious problem of the very low level of growth we have had over many years—not only in the last six years, although they were particularly bad during that period. They do nothing to the good for the fall in investment. They do nothing, except for the worst, for inflation.
First, let me deal with the investment situation. It is quite true that during the period when we have had cash investment grants the level of investment has been poor, but it would be a very foolish person who tried to argue that that necessarily proved that an investment grant was a bad form of incentive. It may be so, but that does not prove it to be, because one must first look at the economic situation that existed at the time of the cash investment grant. During that period we were consistently running a deflationary policy, so to try to prove that because during that period we did not get the sort of investment growth we needed that form of incentive is bad is a very foolish argument.
The real question is: are the tax allowances likely to be any more effective? What have the Government done in this respect? Indirectly, in respect of company liquidity it cannot be denied that in the longer term this change will reduce funds in companies' hands. That is undisputed—the facts are in the White Paper. The Chancellor of the Exchequer accepts that over the longer period the tax allowance will reduce company liquidity.
Mr. J. Bruce-Gardyne: The hon. Gentleman says that the proposals will have the effect in the long term of reducing the funds in company hands. He will probably agree that while it may reduce liquidity, any reduction of funds will dsepend on whether or not countervailing reductions in corporate taxation takes place.
Mr. Barnett: If the hon. Gentleman is talking of reducing corporation tax to
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20 or 30 per cent. or from some other hand-outs to companies, I would agree, but we can only consider it in the context of the measures we now have. The statements that have been made are so confusing that it may well be that next week or next month we shall have a further cut. But we can only work on assumptions based on the figures now given, and on those figures I do not think that the hon. Member for South Angus (Mr. Bruce-Gardyne) will seek to deny that liquidity in company hands will be reduced.
In the short term, up to 18 months, there is a small increase, £60 million in the first period, and that, coming as it does as a sort of hand-out they did not expect, companies may well use for investment to some small extent. Because they had made their reserves for dividends, and so on, they may be inclined to use that hand-out for investment—except for the fact that at the same time we have an increased money squeeze and, if the hon. Gentleman had his way, it would be an even harsher squeeze if he managed to dispose of the Governor of the Bank of England. In practice, therefore, side by side with the money squeeze, even in the short term, we have the liquidity effect on companies, so that investment, to say the least, is not likely to be good.
We then have the question of the tax allowance as against the grant as a direct incentive, and here we have the situation that the Government have removed a clear grant that companies understood. Companies knew that they would get 20 per cent. of cost in the first 15 months of buying, but now they are to get a tax allowance which it has always been known is not very clear except to those companies using the discounted cash flow system. Not many companies use that system as yet, though the number has grown recently. So although there may be a case for reducing cash grants, no case has been made out for it by the Government.
When, yesterday, I asked the straight question: "Has there been any research on this?" the answer was a little difficult to apprehend, but it is clear that there has been no real research into whether tax allowances are better than investment grants. The only work on this that one can find indicates that for most companies tax allowances are not at all clear. So,

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at a time when everyone accepts, and when every speech by the right hon. Gentleman in the last Parliament made the point quite rightly, that investment is far too low, the Government take the opportunity not only to reduce company liquidity but to remove a form of direct incentive and replace it with something else without any kind of research into whether it is the best method. That is dogmatism gone mad. It is absurd that at a time when we desperately need increased investment the Government proceed, without any research or thought, to take action in this direction.
But, as I say, the other real problems that face the nation have not only not been dealt with in this package, but in a number of cases have been dealt with in the reverse way. In the same speech to which I have referred, the late fain Macleod said that inflation was the most serious problem facing the nation. The Government's income policy, if one can call it that, is to ask employers to resist all wage claims and to point out to the workers the folly of putting in wage claims which are not matched by productivity, and so on. I believe that at some time over a long period we should try to work towards a voluntary incomes policy, but that the only hope for it must be by the educative process and by co-operation with both sides of industry. How on earth can we hope to get that kind of co-operation when, on the one hand, the Government clobber the workers, as this package does. Right at the outset of a Parliament, the Government are telling workers that this is the way in which they propose to carry on while at the same time the Government want them to accept the need for some kind of incomes restraint.
I was very sorry when in the last Government we tried to achieve a short-term economic effect by a statutory incomes policy, which failed, but which had the effect of delaying any chance of getting a voluntary incomes policy. But what the Government have now done is to kill any chance which they may ever have had of getting any kind of voluntary incomes policy.
But the real answer to all these problems lies not in the restraint of incomes, but in going positively for economic growth as the first priority. In such a situation inflation would be more bear-
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able and one could deal directly with the serious problem of unemployment. Having listened throughout the whole of the last Parliament to speech after speech from Conservative Members deploring the level of unemployment, and similar speeches were made by some of us, one is now listening to a deafening silence from the Government on how to deal with the level of unemployment. No action to deal with it appears in this package. The Government will have to forgive us if we regard that as proof, if it were ever needed, of blatant hypocrisy and insincerity.
I come to the so-called Tory philosophy—and I apologise for the use of the word. The philosophy on which the Chancellor based himself today was exposed by my right hon. Friend so clearly to have been based on bogus figures any way. The philosophy is that our major problems of recent years have been high public expenditure and high taxation, that high public expenditure has prevented growth. What evidence has the right hon. Gentleman for believing that? He quoted some figures and I will quote a few.
There is one country of which it may be said that the level of public expenditure as a percentage of gross national product is low against an enormous level of growth, proving that what is needed is a low level of public expenditure. I refer to Japan. In 1968, its level of public expenditure was 14·4 per cent. of the gross national product. During the ten years 1960–70, O.E.C.D. estimated its growth as likely to be 11·3 per cent. Our public expenditure is 33·3 per cent. against an expected growth of 2·7 per cent. It might be said from such figures that if we could reduce our public expenditure, we could attain the sort of level of economic growth which Japan has had.
But other international comparisons show that this argument does not hold any water. The level of public expenditure in Germany is 32·6 per cent., not very different from our own, and the growth rate is 4·7 per cent., whereas in France public expenditure is 34·5 per cent. of gross national product against a growth rate of 5·6 per cent.
I entirely accept that international statistics and comparisons can be very difficult and that there are all sorts of ways in which to measure gross national

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product and public expenditure. I give the figures only to indicate that high public expenditure cannot be proved to be the reason why we have not achieved the levels of growth seen in other countries in the last ten years. I hope that hon. Members opposite will not therefore argue when they want to cut public expenditure that the reason is in order to attain higher levels of economic growth such as may be found in other countries, because that simply will not wash. In any case, they are not really cutting public expenditure. What they are doing is transferring payment for it from one group to another, to a group less able to pay.
The other argument is that it is high taxation which is the real burden. It is said that high taxation has prevented growth. Again the Chancellor got himself somewhat confused in his attempt to confuse us. He began by saying that our total taxation as a percentage of gross national product was the highest, and then he went on to say that he was referring to direct taxation. He is wrong either way. He is wrong on total taxation, as my right hon. Fiend the Member for Stechford pointed out with statistics which I will not repeat. I do not dispute that we have a high level of taxation, but the figures from O.E.C.D. and other sources clearly show that there are countries with higher levels of total or direct taxation which are achieving levels of growth greater than we have been able to manage in the last ten or twenty years.
I entirely accept that at a certain level of direct taxation we are much more progressive. At an income of £5,000 a year, we are much more progressive, as we are at the very highest rate where on the margin it is 18s. 3d. in the pound. But these levels apply to only one person in 2,000. We know that people of that sort work very hard, but they would have to work very hard indeed for the increased amount being given in this package, to make up for the lack of growth which we have had in recent years.
As I say, I willingly concede that we have a high, progressive rate above £5,000 a year, but such research as there has been—and it has not been very conclusive, but one of the best pieces was that by Brown and Dawson in a P.E.P. pamphlet published in January, 1969, which picked up other research—has
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certainly not proven that even a substantial reduction in direct taxation would do much to increase the level of growth.
International statistics are frequently inconclusive and difficult to compare because of the different ways in which things are measured, but I hope I have shown that no one should make international comparisons and deduce that high public expenditure and high taxation are the major reasons why we have not had a better level of growth. The reason why we have not given ourselves a chance to get a higher level of growth is that we have had the wrong priorities. We have put a shackle on the working community by having as first priority a particular level of parity of the pound in particular years and particular days, as though somehow that was the biggest and most important problem facing us, when the first and foremost priority should have been economic growth.
In the circumstances, it is not surprising with shackles of that sort and with deflationary policies such as we have had year after year that we have not achieved better levels of economic growth.
This package does nothing to help that. With a policy as grotesquely unfair as this package which helps, according to the Inland Revenue report, perhaps 367,000 people who earn £3,000 a year and over and takes from the rest of the 55 million people in the country, the only justification for it could be if it could be clearly shown that the economic well-being of the nation was being so improved that eventually those 55 million people would be helped too. There has been nothing to show that this will happen and there is nothing in the package which helps in the vital areas of growth, investment and inflation. This Government are condemned by their words, before the election, during the election and now. The House should condemn them tomorrow night.
8.30 p.m.
Mr. J. Bruce-Gardyne: The hon. Member for Heywood and Royton (Mr. Barnett), whom I frequently have the privilege of following in these debates, is, if he will forgive me for saying so, a growthman'. I have been a 'growthman' before and hope to be again but for reasons which I shall develop I do not feel able to be a growth-man at present. I would first like to

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join with the hon. Member in expressing my congratulations to the hon. Member for Bradford, South (Mr. Torney) and my hon. Friend the Member for Gloucester (Mrs. Sally Oppenheim). I am sure that we would all agree with that part of the hon. Member's speech when he praised their speeches.
I find the Chancellor's package and the philosophy behind it wholly admirable. I would have liked to develop at some length my reasons for this, but I want to go on to some related aspects of policy. These so-called cuts in public expenditure are, in fact, reductions in the planned rate of growth of public expenditure. Unless the total resources of the nation grow substantially faster than they have in recent years the State's share of those resources will continue to grow. It is hard to believe that that is the position from some of the speeches we have heard.
The right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins), roundly cheered by his hon. Friends, carefully managed to avoid saying one word about the problem of wage inflation. The right hon. Member for Devon, North (Mr. Thorpe) said that he would say something about wage inflation but carefully avoided it too. I do not see how one can possibly say that it is not the rate of increases in wages, far outstripping any comparable increases in productivity, which lies at the root of the grave inflationary problem facing us. Yet we have only to think back to the staggering spectacle last week of my right hon. Friend the Secretary for Employment having the serried ranks opposite yelling at him for three quarters of an hour because he refused to intervene in the council dispute and secure a wage increase of more than 15 per cent. If anyone had talked about such an increase two or three years ago I suspect it would have been thought that they should have their heads examined. Today this is becoming almost a routine situation.
We have to take this seriously and consider the reasons for it. There is no doubt that to some extent it is the aftermath of the attempt of the previous Government to impose a statutory wage freeze, followed up by their decision to use their enormous intervention
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machinery to stoke up the fires of inflation for electioneering reasons in their concluding months of office. All that was left was the then Chancellor's plans for control of money supply and investment credit.
At one stage tonight I felt rather like an author who was planning to publish a book, who had had an excellent "puff" for it and then found that someone else had produced an even better book on the same subject in advance of his own. My hon. Friend the Member for Oswestry (Mr. Biffen) suggested that I would have something caustic to say about the Governor of the Bank of England. Then my hon. Friend the Member for Horsham (Mr. Hordern) said it all to very great effect. Nevertheless it is important to stress what has been happening with the monetary situation.
In a leader in the Financial Times on 24th April it was said, a week after the Budget speech of the right hon. Member for Birmingham, Stechford, describing his strategy:
"If wages continue to rise at their present pace and if the Chancellor maintains a strict control over money supply, as he has suggested, the growth of the economy and the level of employment are both likely to suffer."
This is indisputable. But it has not happened because, as my hon. Friend the Member for Horsham pointed out, money supply control has not been maintained. In fact, during the second and third quarters of the calendar year, there has probably been an increase in the money supply just about double what the former Chancellor of the Exchequer had forecast for the financial year as a whole in his Budget statement.
My hon. Friend the Member for Horsham referred to the rather remarkable speech of the Governor of the Bank of England at the Lord Mayor's dinner for the bankers a fortnight ago. I should like to allude to it because the Governor tried to give some explanations for what had been happening. He said, among other things:
"Conditions in the capital market during the summer have probably added to the pressure of demand for bank advances, and there was a large redemption to cope with in the gilt-edged market."
Surely these factors must have been known to the then Chancellor of the Exchequer when he was laying down his

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targets for the growth of the money supply and d.c.e. in his Budget statement. Furthermore I cannot see any reason for expecting any great change in circumstances concerning conditions in the capital market between now and the end of the financial year.
I agree entirely with my hon. Friend the Member for Horsham. The Governor has, over the summer months, flagrantly disregarded the instruction he was given and now he has the nerve to tell us to organise an incomes policy. It is rather like a car accident, in which the people involved say that it was the other chap's fault. Central bankers are in favour of an incomes policy nowadays because it is nothing to do with them.
Mr. Robert Sheldon: The Governor of the Bank of England is under attack from the Conservative Party, and it is not my intention to defend him, but there is an alternative explanation, and that is that the Chancellor of the Exchequer has not given directions to the Governor and the possibility might be that, whereas in 1968 the Treasury was strongly against the idea of the money supply, it swung behind it with all the fervour of a convert in 1969. It may be that in 1970 it is in doubt.
Mr. Bruce-Gardyne: The hon. Gentleman has made it necessary for me slightly to prolong my remarks, but the point is this. The Chancellor of the Exchequer laid down his targets in the Budget speech. They were reaffirmed for the year as a whole by the Financial Secretary before we rose for the Summer Recess. I would prefer to come in a moment to the position today.
Mr. Callaghan: It is a bit too much that the Governor should have to bear the responsibility for this. He and the Chancellor of the Exchequer are not at arm's length. They have a telephone, and they meet every week. If the Chancellor of the Exchequer really thought that the Governor was not carrying out the directions, why did not the right hon. Gentleman take up the matter with him and make sure that they were carried out?
Mr. Bruce-Gardyne: The right hon. Gentleman should address his remarks to his right hon. Friend the Member for
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Stechford. What was he doing in the first quarter of the financial year when we had, as we now know for certain, a 16 per cent. increase in the money supply?
A line being taken at the moment—and the right hon. Member for Stechford seemed to be joining the Editor of The Times in taking it—is to say that we cannot leave everything to monetary control. I agree. But who says that we are? We still have a budgetary surplus of almost unprecedented size for recent years. In addition, the present Government, unlike the previous Government, have been trying hard to moderate the rate of wage and salary increases. It is not true to say that money supply, and that alone, is being left to hold the dyke. On the contrary, it is at this point that the dyke has been breached. I do not believe that the Bank of England can be exonerated from responsibility.
There is a more sophisticated alibi which has been advanced in some quarters, that one cannot run an effective monetary policy without a floating rate, because attempts to curb the growth of the money supply by allowing interest rates to rise simply draw in funds from overseas. Thus, liquidity is pumped in from outside and the policy becomes self-defeating. That alibi, however, certainly does not apply to the summer months of this year, because robody can dispute that if there has be any net inflow of funds during the period since the Budget it must have been small.
One recognises that effective control of the money supply creates special problems for the Bank of England—
Mr. Sheldon: For the Chancellor.
Mr. Bruce-Gardyne: —because it has to manage the National Debt, and if it has to operate on the gilt-edged market in such a manner that that market deflates, this increases the problem for the Bank of England.
Mr. Callaghan: The hon. Member knows full well that the Chancellor is just as responsible for the operation of the money market as are the technicians who do the job. He may want to attack his own Chancellor, but he should not go for the Governor when the Chancellor is responsible for the policy and seeing that it is carried out.
Mr. Bruce-Gardyne: If the right hon. Member thinks that he is making a stricture on my right hon. Friend, he is making an equally severe stricture on his right hon. Friend the Member for Stechford. The day-to-day operation of money supply control is bound to be in the hands of the Bank of England, and it can fairly be said to have been falling down on that aspect of the job.
The important question to my mind is what action we ought to take today. The hon. Member for Heywood and Royton—as, it is fair to say, he has done consistently in the past—has urged us to take a great leap forward out of the inflationary pressures and to go for growth and believe that thereby we will cure the inflationary problem. The rate of inflation is far too acute for that today. The underlying rate of inflation is, I suppose, about 11 per cent. per annum, and it is continuing to accelerate. [HON. MEMBERS: "Nonsense."] It may be a little less than that, but not much. I do not see how, in those circumstances, one can go for growth.
One has to look at where the dyke has been breached and one has to fill the breach. In other words, we have to get the growth of the money supply back on the course which the right hon. Member for Stechford outlined in his Budget speech. I should like to know from my right hon. Friend the Minister, when he replies, whether we could not have from the Chancellor a clear reiteration—because it is urgent—that the targets for growth of the money supply and d.c.e. which the right hon. Member for Stechford laid down in April, and which my hon. Friend the Financial Secretary reaffirmed as our targets in July, are still the targets by which we stand.
I accept fully the implication that if we are to reach those targets, we must have substantial net sales of gilts to the non-bank public between now and April, running into, perhaps, £600 million or £700 million worth. I accept that this means higher interest rates. It might even involve the necessity of contemplating floating for a period to ensure that the attempt to get the money supply under further control was not vitiated by an inflow of funds from overseas. The only thing that one can say at present is that, at least for once, anybody who questions the parity could be said to be arguing in
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a patriotic sense, because uncertainties on that score would facilitate the control of the growth of the money supply.
Of course, I accept that what I have been suggesting could be described as harsh medicine. I do not dispute that, but I believe that, because of the rate of inflation we have today, and the way in which it is still accelerating, unless we are prepared to accept that sort of harsh medicine today, we shall find ourselves, in the not too distant future, facing the sort of situation which Germany faced in 1923.
8.45 p.m.
Mrs. Doris Fisher: Thank you, Mr. Deputy Speaker, for calling me. I will adhere to what you ask me and restrict my remarks, because there are a number of Members on both sides to speak, ar so that they may have their opportunity, and so that we can properly answer one another.
In making my maiden speech, I am glad to be able to make it in this debate, because, like the hon. Member for Bradford, South (Mr. Torney), I represent an area which is a typical working class area. My constituents are what one may call average working families. Apart from a very small number of houses which are owner-occupied in the slum clearance areas the people of my constituency live in properties owned by Birmingham City Council, and live, the majority of them, in multi-storey blocks of flats and maisonettes. While the city council, under Tory control, has endeavoured to sell as many council properties as it can it has not been successful in the Ladywood constituency in selling one property up to the present. One ward in the constituency, which comprises approximately 60 per cent. of the electorate, has the highest child population of any ward in Birmingham and the least amount of public open space.
Figures which are given by the city statistician in Birmingham show that on average the people in Ladywood are average-wage earners, people earning approximately £25 per week gross, with take-home pay of roughly £22 a week. When we are talking about average pay it is important for us to remember that the average weekly wage of many wage earners does not take into consideration the many anti-social hours which they are

1195
asked to work to receive that remuneration. Many of my constituents have to work on night shifts and also around the clock shifts, from 6 a.m. to 2 p.m., from 2 p.m. to 10 p.m., from 10 p.m. to 6 a.m., to keep factory wheels turning—very anti-social hours for what is an average weekly wage.
I would not insult the housewives of Ladywood by telling them to shop around to get competitive prices. They do not need a Prime Minister or any member of the Government to tell them how to make their weekly budgets go further. The housewives in Ladywood—I think the housewives in the majority of areas of this country—use not only their mental resources but also their physical skill to shop around, and naturally, so that the families' resources are spent to the very best advantage. It was only last week, in the constituency, that one of the male electors told me, "It is a great problem, Mrs. Fisher, earning the weekly wage, but the greatest credit, the biggest credit, should go to my wife, who has the job of making it go round each week".
The constituency itself surrounds the centre of the city of Birmingham and includes the city centre. It includes small and medium-sized factories; there are the skills of the gun makers, the crafts of the jewellery quarter, the printing industry, heavy industries, including also electrical accessories manufacture: in short, multifarious types of jobs.
We have no rolling downs or visions from the clifftop. Our greatest attribute is the gasworks, which takes up a large area of the constituency; we have no other claim to fame.
For 25 years the constituency was represented by the late Victor Yates. He made speeches in the House for 25 years, and the House thought of him as a typical constituency Member of Parliament. He knew his constituents and represented them well. Hon. Members will be aware that Ladywood is the smallest constituency in the country and my days might be numbered if there were to be a General Election in the near future but, while I am here, I hope that I shall be able to follow in the worthy footsteps of Mr. Victor Yates.
The Tories believe that a subsidy should not be paid to people who can
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afford to pay the full economic price. I am concerned how to define the people who can pay the full economic price. The people who are being asked to pay the full economic price in the Chancellor of the Exchequer's proposals are wage earners with an average weekly wage of between £25 and £30 and who are paying £6 or £6 10s. rent for a council property or an equivalent amount if they are repaying a mortgage. They pay £1 10s. to £2 a week for gas and electricity and £1 to £2 a week on bus fares to get to and from work. Are these the people who can afford to pay the full economic price?
It was stated in the Press last week that this mini-budget would make the rich richer and give the factory worker a battering. My constituents in the main are factory workers, family men with children. They have read the Press with keen interest and have worked out how much they will lose by these measures. Although I could not follow very clearly the Chancellor of the Exchequer this afternoon I have been able to understand that my constituents will be much worse off.
I am concerned about the tremendous number of children who will suffer from the loss of free school milk. In Birmingham 16,000 children daily receive free school meals. An assessment has been made of the income of their families and these children are entitled to receive free school meals. If they are in that category, it could legitimately be argued that they should also receive free milk. If free milk is denied to these children they will suffer a severe loss which in the years to come will have repercussions on the health services. There are practically no problems for the wealthy in obtaining maximum benefits in the way of tax concessions. Because they can afford to do so they are able to consult accountants who are skilled in the art and who are able to see any financial gain that is possible for that person. But what about the average working man? How does he wade through complicated details in working out the different forms of benefit?
I run a weekly advice bureau in my constituency and I am constantly being asked to find out for people whether it will pay them to have a rent rebate, an educational maintenance allowance, or

1197
whether it will pay them to send their wives out to work. All these are complicated matters for working people to ponder over in deciding what benefits they should go for.
Only a fortnight ago I took up a case of one of my constituents, a widow, who was receiving a rent rebate from the Birmingham City Council. She asked me what she should be doing about her children who were still at school. I took up the case successfully with the Birmingham Education Authority and very quickly they gave a maintenance allowance for her two children who are both over 14. Unfortunately, because she was awarded that allowance she lost all her rent rebate and at the end found herself two shillings a week worse off.
How is the average weekly wage earner to be able to work these matters out? Once a particular subsidy is requested and goes forward, it can easily cancel out anything that may be obtainable from any other source. Authority does not like to be messed around too much by people going along to the education department and saying, "You can keep your maintenance allowances. I will have my rent rebate back." These are the problems and difficulties that the average working man and woman has to face.
As a result of the provisions of the new Bill dealing with supplementary family income even the working wife who takes a little part-time job in an effort to supplement the family income may have to stop working. These are complicated calculations for people to have to work out and they ought not to be called upon to exercise all their skills to sort them all out. If the Government are as interested in the lower paid worker as they claim to be, why have they not tried to persuade employers to improve minimum earnings so that relief under the new supplementary family incomes Bill would become completely unnecessary?
We should ask ourselves not whether people benefit under these schemes, but whether the whole approach on tax cuts and increased payments for social services will help to solve our economic problems. Are the steps which have already been taken—and we know that there are more to come which may lead to increased council house rents, and there are even whispers of payment for
1198
hospital beds—likely to lead to the sort of society in which we want to live?
The budget this week was not about inflation or the balance of payments. It was about the redistribution of national wealth in favour of those who earn most. We hear arguments from the Tories that the price of goods in the shops will be kept down by the forces of competition. They argue that the cutting of taxes is necessary and also put up a case for wage restraint. But is it social justice when the people who are now called upon to pay the extra costs for worsening social services are the same people who are also asked to accept a limit on wages to benefit the big income tax payer? Does this help to achieve the aim of one nation upon which we are all asked to support the Prime Minister? What is so significant is the principle now approved by the Government: that instead of increasing these charges to raise money for essential services it should be done mainly for the purpose of trimming taxation. Our clothes might provide a useful fashionable cliché. I see this as a "see-through" budget with a deep cleavage style which divides the "haves" from the "have nots".
9.0 p.m.
Mr. Kenneth Baker: I congratulate the hon. Lady the Member for Birmingham, Ladywood (Mrs. Doris Fisher) upon her maiden speech. It seemed to me to be an authentic voice from the grass roots of the Labour movement and when her constituency disappears I hope that she will not disappear with it.
As the last time I spoke in the House was in an economics debate in the early summer, and as I then represented Acton, perhaps I should begin by saying, "As I was saying before I was so rudely interrupted …" I would like to thank, first, the new hon. Member for Acton (Mr. Spearing) for the kind words he used about me in his maiden speech.
I follow Quintin Hogg at St. Marylebone and I think it is fair to say that on both sides of the House he was liked and respected. Hon. Members who were here will recall that fine speech of his on race relations about two years ago. Everyone will carry their own vivid recollections of his ebullient personality. One of the most amusing incidents occurred

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in a debate when he was Shadow Home Secretary. The House was discussing the proposal to put party labels on the ballot paper. Mr. Hogg, as he was then, recalled that in 1966 he was opposed by an "anti-Hogg candidate"—that was the man's entire manifesto—and he wanted to know how that man would have been described on the ballot paper. The right hon. Member for Cardiff, South-East (Mr. Callaghan), then Home Secretary, said the answer was simple—the man would have been called an "independent". "Independent?", said Quintin. "The man could not even have existed without me."
It is a great pleasure to be speaking, although briefly, in an economics debate again. I am no maiden and do not expect to be treated as one by hon. Members opposite, as I intend to be contentious. It is sad that Lain Macleod is not taking part. Those of us who served with him on the last three Finance Acts will carry a certain splendid memory for ever. People have said that he would not have presented the sort of package which the Chancellor presented last week. I do not agree. One of the things Iain was determined to do was reduce the standard rate of income tax at the first possible opportunity, and the first possible opportunity is 5th April, 1971.
I welcome this measure. It is some lifting of the clouds. Hon. Members opposite have accused us of the dreadful crime of wanting to cut income tax. They have spoken of the proposal with contempt and when they speak with contempt of reducing taxation it is a contempt which has not been bred by familiarity, because the Labour Government in six years proved to be the greatest taxing Government in our history, and it was only two months before the election that any taxation was reduced.
I had hoped that the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) would give us some inkling of the economic policy of the Labour Party because, in his Budget Statement last April, he set a clear target for the growth of domestic credit this year. He set 5 per cent., taking the year as a whole. As he was saying that, the money supply was expanding by between 12 and 16 per cent. Did he know about that? Did anyone tell him? If they did, what did he do about it?
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One of the main reasons why the inflationary forces are so strong today is the tremendous growth in money supply in the early part of this year, and we heard nothing of that from the right hon. Gentleman today. What is the economic policy of the Labour Party? No hon. Member opposite who has spoken today has put forward an economic policy. They have had a field day criticising the Government's package. Since 18th June, former Ministers have encouraged every high wage demand and, in some cases implicitly and in others explicitly, have encouraged industrial action to further those wage demands. There we have it, mismanagement in government, irresponsibility in opposition. That is the epitaph of the party opposite.
There are three brief points I want to raise. First the rise in local government expenditure. This is a difficult area, but it is a fact, perhaps not fully appreciated, that local government expenditure is rising at a much faster rate than national government expenditure. Taking the period 1965–69 and disregarding the fact that they were either Conservative or Socialist councils, local government expenditure, capital and current account together rose by over one-half whereas national government expenditure rose by only a third. We will have to develop, and it may take some time, a more sophisticated method of control over local government expenditure. Unless we can do this many of the efforts of my right hon. Friend the Chancellor will be thwarted and nullified.
Secondly, I hope that the Government will explore methods of finding alternative finance for capital expenditure of nationalised industries. The capital expenditure of these industries this year will be £1,500 million. It is significant that in the cuts announced last Tuesday the largest single item was provided by the nationalised industries. I am not in favour of cutting their capital expenditure, but when it is as high as £1,500 million, of which somewhere between 40 per cent. and 60 per cent. has to be financed by Treasury borrowing, it is imperative we find methods of attracting private capital to provide some of that capital expenditure.
My last point concerns the programme for investment incentives and it is something of a technical one. I welcome the

1201
abandonment of investment grants and the movement to taxation incentives, but I would have thought that we could have devised a slightly simpler system. If we had had an initial allowance of 60 per cent. and the balance of 40 per cent. allowed, not on a reducing balance basis, but on a straight-line basis it would have made the task of many accountants in industry much easier.
I hope the Government have not abandoned their intention to simplify our taxation system. It is like some byzantine building, the sort of thing one sees in Venice. Each Chancellor comes along, no one more so than the right hon. Member for Cardiff, South-East (Mr. Callaghan), whom I see in his place, and looks upon his task as embellishment adding a pillar here, a little doorway there, a dome or a doorway. Then he moves on and slowly the facade is becoming more important than the building. The facade is getting to the stage where it can bring the building down. One of the tasks of this Government is to try and create a more simplified tax system, understandable to the tax payer. A system which is not understandable would fall into disrepute and taxes will not be be paid.
9.8 p.m.
Mrs. Shirley Williams: May I first say that we have had some extremely good maiden speeches, and I would like particularly to congratulate the hon. Members who made them. I say to the hon. Member for Leek (Mr. Knox), the hon. and learned Member for Dover (Mr. Peter Rees) and particularly the hon. Lady for Gloucester (Mrs. Sally Oppenheim) that if they do as well as those whom they have succeeded, then we shall very much admire them. We admired their predecessors, and they can set themselves no higher standard.
To my hon. Friends the Members for Birmingham, Ladywood (Mrs. Doris Fisher) and Bradford, South (Mr. Torney) I would say that both of them contributed excellently to the debate. In particular my hon. Friend the Member for Birmingham, Ladywood revealed the extent to which a means-tested society is a society that confuses a very large number of its citizens.
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I begin by saying a word about what I can only describe as an "Alice in Wonderland" statement. It was the hon. Member for Horsham (Mr. Hordern) who said that he regarded the Chancellor as being in the position of someone running up a down-going escalator. I prefer that verse from "Alice in Wonderland" which reads:
"How cheerfully he seems to grin,
How neatly spreads his claws,
And welcomes little fishes in
With gentle smiling jaws!"
I do not believe that anybody who looks closely at this budget—and I shall call it a budget because that is what it is—will be persuaded that it in any way meets the economic, social or any of the other problems of this country. It was the Chancellor himself who, in his statement, said that the main economic problems facing the country were those of inflation, unemployment and inadequate growth, and yet my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) and my hon. Friend the Member for Heywood and Royton (Mr. Barnet) have shown that the statement has nothing to do with any of those problems.
Perhaps I might give the House one example. With regard to regional employment, the statement both phases out R.E.P. after several years and also clearly reduces the incentives to people to invest in the regions. I have here—and it is worth quoting—a letter from a managing director of one of the larger firms in Scotland. He writes:
"… I believe it is true to say that investment incentives in plant and equipment have completely disappeared … I am afraid that those of us who are engaged in trying to attract industries to development areas will have a much more difficult job now since there are no incentives left other than differential building grants."
It goes even deeper than that. The hon. Members for South Angus (Mr. Bruce-Gardyne) and Horsham attacked the Governor of the Bank of England. They did so, I think, perhaps in an effort to try to avoid attacking their colleague the Chancellor himself. But it is not only the Governor of the Bank of England who has been critical of economic policies as set out in the statement. It was the Daily Telegraph which, on 2nd

1203
November in its financial columns, indicated that the effect of the statement would be a marginal shift from investment to consumption, and it was The Times that said on 30th October:
"What is clear is that monetary policy alone cannot stand as a surrogate for proper policy in this respect. With no incomes policy and an expansionist fiscal policy, the Government has created a situation in which the natural consequence of wage inflation is a reduction in our already inadequate finance for investment. To put it bluntly, that policy does not make sense."
I believe, too, that the policy being followed by the Conservative Government does very little in a situation in which they themselves admit that inflation is extremely disturbing because, as several of my right hon. and hon. Friends have said during the debate, the present position is one in which the Government are not merely allowing prices to go to the levels to which pressures take them, but are deliberately encouraging them to go beyond that.
But even more strange is the fact that this statement, which is not an economic statement, nor a social statement, but is, above all, a political statement, has three major consequences; first, to shift the burden of the financial expenditure of this country from the rich to those who are less well off; second, to shift it from single people and people without children to families; third, to shift it from unearned to earned income. To my mind the oddest feature of all, coming as it does from a party which constantly declares its belief in incentives, is that if one takes the traditional incentives of the stick and the carrot, it is the stick alone that is applied to the great majority of people, and the carrot which is reserved for those who are rich. This statement might be described not as a dustman's tanner but as a director's tanner.
I now turn to say something about the cuts which have been made, and I begin by taking up what was said by the hon. Member for Horsham. He said that it was hypocritical of hon. Members on my side of the House to attack the cuts which had been made. These cuts are not being made in a situation in which taxation is being increased across the board because of an economic crisis. They are being made in a situation in which the Chancellor himself admits that
1204
the balance of payments position is sound, and that there is money to return for the purposes of consumption.
Mr. Hordern: I am sure that the hon. Lady would not wish to misquote me. I asked the Opposition to say how they would finance the building of further primary schools and hospitals and encouraging the provision of more mental health facilities. I asked what proposals they had for the money which my right lion. Friends are to spend.
Mrs. Williams: I will come to that later. I do not think that is quite the whole of what the hon. Gentleman said. As I recall it, he said that it was hypocritical of the Opposition to attack the cuts which were being made in the Social Services. May I take the first of these cuts, the cuts concerned with primary welfare milk and school dinners. May I underline a question which was asked in the debate, a question of extreme importance: did the Government, when they reached this decision, consult either the B.M.A. or their own medical advisers? As recently as a year and a half ago when the British Medical Association, on a split decision, agreed by a narrow majority that secondary school milk was no longer necessary, they also agreed that primary school milk should continue. I wonder whether they have also changed their minds in the course of only 18 months. I wonder also why the Federal Republic of Germany is now considering introducing free milk into the schools, at a time when our Government have decided to withdraw it.
In respect of prescription charges, may I ask whether the Government have really worked out the effects of a proportional payment? May I give two examples. At the present time, treatment for the chronic condition of arthritis costs approximately £3 10s. a month. Treatment for Parkinson's disease costs £15 12s. a month. In other words, these diseases are exempted diseases for prescription charge purposes. The object and purpose of the Government's attempt to introduce proportional charges will be directly to say that the more ill a person is, the more that person should pay. This is in direct contradiction to the National Health Service—
The Secretary of State for Social Services (Sir Keith Joseph): It may help if

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I remind the hon. Lady that there will be a ceiling and there will be even a better bargain season ticket than now.
Mrs. Williams: I am delighted to hear that, but I must say that it is very typical of the Government that one always hears the details of what they are going to do after they have made a statement about it. There was nothing in the White Paper about the fact that there would he a better bargain season ticket. If the Government believe that this is any part of the answer, the whole argument for proportional charges necessarily and rapidly falls to the ground.
May I say a word about dental and spectacle charges. As the Government well know, what they have done is to introduce a charge which again is proportional and which has been described by the British Dental Association as taking dental treatment in this country back by 20 or 30 years. In addition, the Government have reduced the age of those who are no longer exempt from 21 to 18—the very age at which people are most liable to susceptibility to dental illness and disease. They must introduce a fixed maximum figure if they are going to do this at all. But they have given no indication of that. Unless they do something of that kind, it will wreck the dental service in this country. Once again they have been as unclear and obscure as they can possibly be.
May I next ask a question about the three-day waiting period. As the Government know, the proposal which was made before and which they have attacked was to shift the burden of this on to employers. In the case of this Government, they simply intended not to shift the burden anywhere but to allow those least able to bear this to meet the three day waiting period themselves.
Again the Government have said nothing about linkage, about what happens if somebody is ill for up to 12 days within a 13-week period. A great many people are liable to recurrent diseases like asthma, bronchitis and the rest, and they should not be penalised in this way. The Government also may not know—at least they have said nothing about it—that there are many trades like merchant seamen, fishermen and others who must be allowed linkage because their jobs are such that they get three days' unemployment
1206
in a 13-week period on a recurrent basis. The Government have said nothing at all about that. They have said that the family income scheme—and they repeat this over and over again—will meet the needs of those who are least well off in our society. Yet they themselves know that the family income supplement scheme will help less than two in 100 families in this country. They know that their means test will set a new level of poverty which will be below even the level of poverty set in the supplementary benefit scheme. Above all, they must realise that, unless they introduce measures the exact contrary of the kind they are now supporting to uphold minimum wage and low wage occupations, they will be introducing not a genuine income supplement but a Speenhamland system by another name.
I return to what must be, I take it, part of Conservative doctrine, the argument that people ought to have incentives if they are to work harder. The Government recognises—and I know that they recognise—that one of the great difficulties about the scheme which they have adopted, directly contrary to the one promised by the Prime Minister and the last Chancellor of the Exchequer, is that it will create a disincentive of no less than 54 per cent. for those low-paid workers who might earn another £1 or £2 out of overtime or from getting a better job. This is a massive disincentive, greater than anybody faces through the standard rate of income tax and for that matter, a greater disincentive than we have seen elsewhere.
In regard to the whole range of means-tested benefits proposed, I draw attention to what was said by my hon. Friend the Member for Ladywood. The right hon. Gentleman the Secretary of State for Social Services knows better than I do the level of uptake of means-tested benefits. It is shockingly low. He knows, in particular, in respect of such matters as rate rebate, rent rebate, welfare milk and so on, that in many cases not even half those entitled actually draw the means-tested benefit. The reason is the total confusion and utter difficulty of explaining or even understanding these things. In heaven's name, if Members of Parliament cannot understand the system, with a 60-hour week in which to grasp it, how can we expect the great bulk of people, troubled as they are by hardship, by poverty, by trying to make

1207
ends meet, to grasp these infinitely complicated schemes now put before them?
In my closing few minutes, I shall raise three points of great importance with the Government. First, I refer to the effect which prices are already having on those who draw supplementary benefit and on old-age pensioners. I shall not reiterate what has been said at length in the debate about the impact of the Chancellor's measures on the prices of food and fuel, on fares, and, for that matter on the social services. Suffice it to say that there is little reason to believe that price rises will slow down over the next few months. When the Chancellor says, as he did, that the effect of these measures will be less than 1 per cent. on the cost of living, I am bound to reply that already the cost of living has increased by more than that in the past three months.
What will be the effect on those who are dependent on supplementary benefits and on pensions? First, supplementary benefits. We know that the November up-rating is already just about matched, give or take a few pence, by the increase in the cost of living. What do the Government propose to do about that? If they plead administrative difficulties, I quote to them a statement made when they were in opposition. On 16th November, 1964, in a similar situation when the cost of living had risen rapidly over the previous few months, the right hon. Gentleman who is now Secretary of State for Social Services said:
"If, as I am sure is the case, the Minister wants to help the most needy as quickly as possible, she should consider laying regulations raising the assistance scales in a matter of weeks."—[OFFICIAL REPORT, 16th November, 1964; Vol. 702, c. 19.]
I ask the right hon. Gentleman to do exactly what he asked his predecessor in office in our Government to do, and what she, in fact, did, for, as most hon. Members remember, she brought in a special fuel benefit for all old people that Christmas.
What does the right hon. Gentleman intend to do about pensions? The hon. Gentleman the Member for Harwich (Mr. Ridsdale) made a moving appeal on behalf of pensioners. But he did more than that; he accused us when in Government of having been unhelpful and ungenerous towards old-age pensioners. But the hon. Gentleman does not realise
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how the record that was played when they were in opposition looks today. I quote from a letter sent by the Prime Minister's secretary to an old-age pensioner:
"As you know, the rates of retirement pensions were increased by 10s. a week for a single person and 16s. for a married couple only last November and, although price levels have certainly risen since then, the buying power of the pension is still higher than before the last increase."
That is what the Prime Minister says about the policies of the Labour Government. We ask the Government what they will do between now and November, 1971, when the consequencies of their policies will be to undermine the position of the old-age pensioner.
Lastly, I wish to raise a question which follows from the obscurities, the confusions, and the strangenesses of the Chancellor's statement. During the discussion about the statement I asked the Chancellor whether he would indeed commit himself to the £28 million of increased school building which we are told is one of the two major increases that this statement is about. I asked whether this was additional to school building programmes. The right hon. Gentleman replied:
"These are additional starts which are over and above the proposals put forward by the previous Government. This is additional school building."—[OFFICIAL REPORT, 27th October, 1970; Vol. 805, c. 75.]
The 1971–72 Labour school building programme was worth £186 million. The 1972–73 Conservative school building programme is worth exactly the same amount. The difference is as follows. Certainly the Secretary of State for Education and Science is increasing expenditure on improvements by £21 million, but what has not been made clear to the House is that the right hon. Lady is reducing expenditure on basic needs by £30½ million. So much for additional expenditure.
Hon. Members: Disgraceful!
The Secretary of State for Education and Science (Mrs. Margaret Thatcher)The Secretary of State for Education and Science (Mrs. Margaret Thatcher) rose—
Mrs. Williams: I will give way to the right hon. Lady in a minute.
In fairness to the right hon. Lady, I must quote the other statement that she

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made about the following year's school building programme. She told the local authorities at the Association of Education Committees last week:
"It follows that the programme for 1973–74"—
she had referred to the end of the raising of the school-leaving age programme—
"will be smaller than in 1972–73."
So much for the additional expenditure of £28 million about which we have been told by the Government. If the right hon. Lady wishes, I will give way now.
Mrs. Thatcher: The difference lies between what the shadow Minister of Education and Science left and what I have provided for the year 1972–73. If the hon. Lady cares to examine the figures, she will find a considerable increase. Also, I hope that she will not blame on me the fact that the birth rate was down for the relevant year.
Mrs. Williams: Of course I do not blame the right hon. Lady. The decision she made may well have been right. I am saying that no one who listened to the Chancellor's statement would have come to any conclusion other than that there was £28 million extra for school building. This follows from an extraordinary constant reiteration of the deep concern of the Government for primary schools. I must remind them, because we cannot divorce the basic needs from the improvement programme, that in the five years 1959–64 they built 1,453 primary schools, whereas in the five years 1964–69 we built 2,818—very nearly twice as many.
We are aware that the problems facing this country that must be solved by whichever party is in office are, above all, the question of industrial peace, the control of inflation, and how we can achieve social justice.
Some of us believed that when the Prime Minister made the statement which my right hon. Friend has aleady quoted about one nation he was going to prove to be the leader of at least a moderately progressive Conservative Government. We now see that even the memory of the depression that to some extent moderated and qualified the approach of previous Conservative Governments has been overthrown by this Government. Indeed, the
1210
consequences of that statement will be not one nation but two nations in the classroom, two nations in the doctor's surgery and two nations on the shop floor. It is a tragedy that those divisions should be deepened in consequence.
9.30 p.m.
The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. John Davies): My pleasant task is to say something about today's maiden speakers. Hon. Members on both sides will realise that I have a closer fellow feeling for them than practically anyone who has spoken from this position today. Their very number forbids me adequately to deal with the excellence of their speeches. However, it would be a pity if I did not say how much I enjoyed the speech of my hon. Friend the Member for Leek (Mr. Knox), with its succinct and sophisticated economic argument. He produced a reflationary argument which would have done justice to Vic Feather.
We have had other excellent contributions. I was, unfortunately, not able to be present for one or two of them, but I understood that my hon. and learned Friend the Member for Dover (Mr. Peter Rees) made a speech in which argument was admirably reinforced with humour, and in which he took up an argument which is close to my interests—the financing of the nationalised industries. The hon. Member for Gateshead, West (Mr. Horam) made an admirable and interesting speech on the subject of regional policies. The hon. Member for Bradford, South (Mr. Torney) who, I understand, was not entirely uncontroversial, obviously had a deep and sympathetic knowledge of the woven textile industry.
My hon. Friend the Member for Gloucester (Mrs. Sally Oppenheim) gave us an entrancing, interesting speech and one which was most sympathetic to the problems in which she is clearly interested. I listened with great interest to the hon. Lady the Member for Birmingham, Ladywood (Mrs. Doris Fisher). Again, that speech was not entirely uncontroversial, but it certainly showed the deep knowledge she had of her constituents, and I admire her for that. There was a kind of half-maiden speech in the person of my hon. Friend the Member for St. Marylebone (Mr. Kenneth Baker), which I was delighted to hear. I am told that some time ago he put down a Motion to

1211
reduce the rate of income tax by 1s.; he may feel that we have gone half way to meet him.
Liddell Hart, in an excellent book entitled "Why Don't We Learn from History?" recounted the true story of a general in the First World War who, in the great retreat, held a Press conference. He illustrated what he had to say by reference to a large strategic map behind him, on which he showed at what precise point it was his intention to stop and hold the forces of the enemy from that night on. One of the reporters said to him: "But, General, we lost that line at least three days ago". The General replied: "I know that very well, young man: what I said was for history".
There has been a great deal said in this debate for history—history at times modestly corrected—but I do not pretend or wish to contribute to its historical side. I do not believe that I derive any benefit in seeking once again to work over the tangled skein of these past years and try to derive from it the truth which must somewhere be there. I prefer to look squarely to the future, where the great problems and opportunities lie and where, despite our differences, our concerted efforts are so greatly needed to try to bring about a happy and more fruitful situation for our country.
The measures announced by my right hon. Friend have provoked the most intense discussion. They have been analysed in detail and in specifics, and each has fallen foul of one comment and received another's blessing. But what I find on the whole surprising is that the total strategy of his measures has escaped any serious comment—[Laughter.] I emphasise the words "serious comment", because these measures undeniably constitute a first step—
Mr. William Hamilton: Backwards.
Mr. Davies: No. They constitute a first step towards a new condition in the development of this country's life, and one in which this party believes profoundly. We believe that the essential need of the country is to gear its policies to the great majority of people, who are not lame ducks, who do not need a hand, who are quite capable of looking after their own interests and only demand to be allowed to do so. [Interruption.]
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: Order. The House ought to listen to both sides equally fairly.
Mr. William Hamilton: Let him get on with his reading.
Mr. Davies: We believe quite firmly that the need to encourage the individual to have a greater and not a lesser say in the conduct of his life is now an essential. National decadence is the consequence of treating us all, the whole country, as though we were lame ducks.
Dr. Shirley Summerskill: Would not the right hon. Gentleman agree that the majority of people at one time in their lives are under-five-year-olds, then primary school children needing milk and school meals, and that eventually everybody becomes sick at some time or another and is therefore a lame duck?
Mr. Davies: To devise a strategy by which the affairs of the country are conducted by reference simply to periods of weakness is unwisdom in an extreme degree. The vast majority is not so. The vast majority lives and thrives in a bracing climate and not in a soft, sodden morass of subsidised incompetence.
Miss Bernadette Devlin: When talking about lame ducks and subsidised minorities, would not the right lion. Gentleman accept that we stand here tonight facing the lame ducks and the subsidised minority—the faces of directors and chairmen? You are the subsidised minority and we are the workers.
Mr. Speaker: I am not a subsidised minority.
Mr. Davies: There has been intense discussion about tax rates and statistics have been exchanged across the Floor.
Mr. Michael Foot Mr. Michael Foot rose—
Mr. Speaker: Order. If the right hon. Gentleman does not give way the hon. Member for Ebbw Vale (Mr. Michael Foot) must resume his seat.
Hon. Members: Give way.
Mr. Davies: There has been intense discussion—[Interruption.]
Mr. Speaker: Order. We have listened to one side reasonably quietly. The other side must be equally fair.
Mr. Davies: For the third and, I hope, the final time, there has been intense discussion about tax rates and statistics have been exchanged across the Floor of the House. One element of our tax system which will be without argument is that at the higher rates the graduation of tax is more sharp than it is in any comparable country in the world. This is true and it is perhaps not altogether insignificant that the measures announced by my right hon. Friend went in a small way towards starting to redress that balance.
Mr. Michael Foot Mr. Michael Foot rose—
Mr. Speaker: Order. The hon. Member for Ebbw Vale knows that if the Minister does not give way, he does not give way.
Mr. Davies: I have given way on several occasions. What is true of people is true no less of businesses.
An Hon. Member: They are decadent, too.
Mr. Davies: There is in this no callousness or indifference.
Mr. Foot: On a point of order. It is a rule under the proceedings of this House that Members should not read from speeches. [Interruption.] It is extremely rare that this rule is invoked, but since the right hon. Gentleman has come to the House of Commons tonight without any apparent intention whatever—
Sir John Rodgers: That is not a point of order.
Mr. Foot: It is exactly a point of order. Since—[Interruption.]—the right hon. Gentleman—
Mr. Speaker: Order. Noise on either side does no good at all to either side.
Mr. Foot: Since the right hon. Gentleman has come to the House without any apparent intention to answer the speech of my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) or my hon. Friend the Member for Hitchin (Mrs. Shirley Williams), may I ask whether there is to be any attempt to prevent the right hon. Gentleman from reading a speech instead of conforming to the conventions of this House—which he had better start to learn?
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: Order. I am prepared to deal with the point of order without any assistance. It is not in order for hon. Members to read speeches. The hon. Member who raised the point of order very rarely reads anything in the House. However, hon. Members may refresh themselves with copious notes.
Mr. Davies: Returning to my copious but not complete notes—
Mr. Foot: Why not pay some courtesy to the House?
Mr. Davies: —I maintain that what I have been referring to is no strategy of callousness or indifference.
Mr. Fernyhough: You have read that before.
Mr. Davies: One side of our policy is matched by the other, which is to make sure that those who really cannot fend for themselves get real help, tailored to their needs. The right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) recognised this. He mentioned that the poorest among us were effectively helped by the Chancellor's measures. But he brushed by it without great attention. I suppose that we were treated to one of his rolling conventions.
Mr. Orme: How did he deal with Frank Cousins?
Mr. Davies: Industry, to which I am addressing myself, is not entitled—
Mr. Sheldon: On a point of order. As you know, Mr. Speaker, I hesitate to raise points of order in speeches, but it is a most important and essential convention of the House that Front Bench speakers give way to Front Bench speakers. This convention is being abused.
Mr. Speaker: I know that the hon. Gentleman rarely raises points of order. Whether the Minister gives way is in his discretion.
Mr. Davies: My purpose is to look more at the business side of our problems. The Chancellor's measures sought to gain for us room to manoeuvre. Nothing is harder than to fight back against the inexorable advance of public expenditure. In the course of this deep and difficult study, we have each of us sacrificed pet hopes and schemes, but

1215
the greater priority was to force back the ever-contracting boundaries of business decision and personal initiative. The decisive need was to turn towards a new course. The impact of this new course will steadily grow as further measures are taken.
Hon. Members opposite have always been inclined to counsel hasty action and unthinking development.
Mr. Laurie Pavitt Mr. Laurie Pavitt (Willesden, West) rose—
Mr. Davies: The effect of such hasty action will be damaging to us all, but my right hon. Friends' measures have great effects for both the wealth creators and the wealth consumers. I know, as we all know, that there is no sharp division between the two. Wealth creators and wealth consumers very largely overlap. At one stage we are the one; at another stage the other. I should like to concentrate on the wealth creators. I make no apology for doing so because the concern, well-being and prosperity of the wealth creators is as much the concern of everyone here as it is for me, it being the main purpose of my Department.
Undoubtedly business welfare operates best in a climate of stability and steady progress, not in a climate of feverish peaks and troughs. We must therefore ensure that undue and hasty action does not induce the same deep cycles which we have experienced for so long.
I should like to speak of the general climate in which the world of industry finds itself at the moment. I have no intention of indulging in any catechism of self-abasement. My right hon. Friend the Chancellor has spoken of the inroads of inflation and a great deal has been said today on this terrible and vexatious problem. Meanwhile, while the inflation rages, the business world undoubtedly waits and watches. It does not, as so many of us would have wished, take its courage in its hands and go forward into further investment and development.
Mrs. Shirley Williams: I am well aware that the Minister is new to the House and that he was not able to hear much of the debate, but, as he is the only Minister responsible, we would like him kindly to address himself to some of the questions which have been raised during the debate.
Mr. DaviesI will, of course, do so, but I have made it clear that my purpose today was to answer those parts of the debate which were concerned with the issues of wealth creation. There will be ample occasion for the other parts of the debate dealing with wealth consumption to be handled otherwise.
I have spoken of inflation, undoubtedly, the impact of headlong inflation which was stoked up by the Oppositon in the death throes of their own Government, has been a menace to us all. Inflation is a universal disease. I am astonished to see the degree to which such ready support to the fires of inflation is still being given by the party opposite. There is no salvation for anybody in so doing. It is curious, too, to hear prices blamed for being the propellent. Latest figures show that earnings are still rising at twice the rate of prices and nearly five times that of industrial growth.
Much mention was made, particularly by the right hon. Member for Stechford, about the level of investment. The right hon. Gentleman gave us the impression that the last few years have seen a steady rise and that this was now tapering off into a steady deterioration. That is not at all a correct presentation of the facts. The facts are that investment through the whole of the 1960s was virtually stagnant. There has been no tendency for it to take off. There have, of course, been minor rises, but they have not been of a profound kind. The object of my right hon. Friend's measures in this respect was to remedy something which, we believe firmly, was a great discouragement to a major part of our industrial world, the service industries. His package contained a readjustment of the balance which, we believe, was damaging to them.
I should like to say a word about our competitive climate. The present Government believe deeply in the benefits of competition.
Mr. Nigel Spearing Mr. Nigel Spearing (Acton) rose—
Mr. Speaker: Ferocious gestures do not make a Minister give way.
Mr. Spearing Mr. Spearing rose—
Mr. Speaker: The Minister has not given way. Mr. Davies.
Mr. Davies: I repeat that the Government believe profoundly in the benefits of competition—
Mr. James Hamilton Mr. James Hamilton rose—
Mr. Davies: I must go on.
Mr. Hamilton Mr. Hamilton rose—
Mr. Davies: I have not time.
Those who have practical experience of working in a competitive environment know, as apparently hon. Members opposite do not, that it has profound effects not just in the field of prices but on a much wider range—on products and the whole question of quality and design. I repeat that these benefits stem from competition, and that this is too often ignored.
Mr. Spearing Mr. Spearing rose—
Mr. Speaker: Order. The House of Commons is a fair place. It has listened to one winding-up speech from one side fairly quietly and it must do the same for the other side.
Mr. Davies: I believe firmly that we shall improve materially the force of competition in this country. We shall improve it not only by opening our country to the wider field of international competition through abatement of tariffs, through membership of the Community, and through like measures, but we shall take positive measures domestically, too, to try to ensure that competition is a more effective and determined force than it is now.
Several Hon. Members Several Hon. Members rose—
Mr. Davies: No. I must go on. It is too late for me to give way.
We will also look at the whole field of company law, believing that there are within it the seeds of improved competition, by working steadily towards improved levels of disclosure and an improved situation for both shareholders and consumers.
There has been much discussion of our regional problems. There has been a great concentration of view from the benches opposite that the package which has been offered by my right hon. Friend the Chancellor shows a marked deterioration as compared with that which existed before. Of course it does—in this sense, that that which existed before was an
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excessive means of attaining an entirely inadequate objective. It reminds me of trying to put the cream in your coffee by spraying a jugful of cream around the room in the dark.
The hon. Lady the Member for Hitchin was very anxious that I should reply to some of the points raised during the course of the debate. [HON. MEMBERS: "Hear, hear."] Unfortunately, the nature of the debate itself was not of a kind to permit that to be done in any effective way, but there is one thing I must do before I finish. I recall the remarks of the hon. Member for Ebbw Vale last week when we were debating coal, when he accused this party of being motivated by antagonism to the public sector and of having spite against the publicly-owned industries. I entirely disagree. On the contrary, we have taken closely to heart the need to try to assist those great industries to develop and survive. We found them, too, in a situation which was little inclined to achieve that particular result.
In the degree to which it has been possible for me, I have replied to this debate. I am wholly convinced of the wisdom of the measures we have taken, and I hope that they will be commended.
Debate adjourned—[Mr. Fortescue.]
Debate to be resumed Tomorrow.

SOUTH-WEST SCOTLAND
Motion, made, and Question proposed, That this House do now adjourn—[Mr. Fortescue.]
Mr. James Sillars Mr. James Sillars (South Ayrshire) rose—
It being Ten o'clock, the Motion for the adjournment of the House lapsed, without Question put.
Motion made, and Question proposed, That this House do now adjourn—[Mr, Fortescue.]
Mr. Sillars: Perhaps on my first Adjournment debate I should start on a personal note. I am addressing the Minister at the Box who is my own Member of Parliament. He represents the constituency of Ayr and I live in that town. He and I have had debates with each other over many years. He

1219
has normally used a proxy in the Ayrshire Post, but I have been inclined to write my own letters. The last debate we had by proxy was on comprehensive education in the town of Ayr and, needless to say, I won on that occasion.
I am delighted that the hon. Member is to reply for the Government. Ayr and the surrounding district of Ayr do not exactly lie in the South-West economic planning area, but they are nevertheless recognised as part of the South-West of Scotland and, I think he would agree, a very important part of it. Although my main remarks will be in relation to the document "Strategy for the South-West of Scotland", I intend to refer to Ayr and certain services related thereto which are pertinent to the economic situation in the South-West.
The South-West of Scotland, as defined in Scottish Economic Planning Council terms, covers 3 per cent. of the Scottish population, which is a fairly small percentage. But we are all concerned with people. Irrespective of whether they happen to live in an area consisting of 3 per cent. or 30 per cent. of the population, people everywhere are entitled to a fair degree of consideration.
The South-West deserves our attention because it suffers from acute problems, not the least of which is that the vast bulk of the local authority representatives are Conservative councillors of the most reactionary kind.
There has been a general belief in Scotland that the region of the Highlands and Islands poses the most acute difficulties in the country. Indeed, the Highlands have a remarkable power to attract Scottish attention, I think for historical reasons. But the South-West of Scotland in some important respects represents a more acute problem than the Highlands and Islands. The nature of the area's economic ailments is brought out in a document published earlier this year by the Scottish Development Department entitled "Strategy for the South-West of Scotland". I illustrate the claim I am making to parity of concern with the Highlands by quoting the net migration figures given in this publication. Between 1951 and 1961, whereas the Highlands, with a population of about 120,000 more than the South-West, lost 16,300 net, equal to a 5·6 percent.
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drop in population, the South-West lost 10,400, equal to a 6·7 per cent. drop in population. Between 1961 and 1968 the Highlands lost 9,600 people, 3·4 per cent., and the South-West lost 7,700, which is 5 per cent.
Another illustration of similarity was given to me by an old friend who has worked in the South-West for most of his adult life and who is now an elderly man. He told me of a tale, and a true one, that the reason the Harland and Wolff shipyards are in Belfast is that the then Earl of Stair prohibited its location in Stranraer.
Mr. John Brewis: Rubbish!
Mr. Sillars: The hon. Gentleman says "rubbish", but my informant is a man with tremendous knowledge of the South-West who is not given to telling tales out of school. I do not expect the hon. Gentleman to say anything else than "rubbish" because he relies on the support of certain landowners in the South-West for his re-election time after time.
The baleful influence of the landowners in the South-West comes out clearly in the document "Strategy for the South-West of Scotland". It identified the basic weakness of the South-West's economic structure as its abnormal reliance on the primary industries of coal mining and agriculture, both of which have shed labour to an enormous extent over recent years and its inability to provide the necessary number of alternative jobs for men in the manufacturing industries.
The size of the problem can be seen from the information given on the first page of that document, which shows the need to create 250 new jobs in manufacturing per year as opposed to the present rate of only 100, and suggests that this should be done in the short period between 1970 and 1976. The document then goes on to warn that the 100 jobs a year have been hard won and that there should be some recognition of the urgency of the problem. I did not catch any urgency in the remarks the Minister made at the meeting he and I attended at Whit-horn during the Parliamentary Recess.
After analysing the problems, the authors of the strategy document made certain recommendations. The chief of them was that strenuous efforts should be

1221
made to increase the rate of job creation in terms of male jobs. They also pointed to the need to set about attracting new industry by establishing an organisation for regional planning and industrial protection, and also to give a high priority to industrial training, with a recommendation that local authorities should co-operate in promoting and developing industrial estates.
It is only fair that I include a few remarks about the principal burgh in my constituency located inside the South-West Planning Region, the town of Girvan, which comes out of this particular study with an enhanced reputation. The majority of the town council of Girvan do not share my political persuasion, but it is only fair to pay due regard to them for an excellent job well done. I would add a further commendation to the present provost of the town, who has made enormous efforts during his period of office, not only on behalf of Girvan but also the surrounding landward area of South Ayrshire.
I should like to refer to certain points in the document. I do not believe we are likely to get the necessary degree of co-operation from the local authorities in the South-West, with certain honourable exceptions. I do not think we are likely to see any strenuous efforts made by these authorities. To use the current political dirty word, we need Government intervention in the South-West to reverse the present decline that is so evident in that area of Scotland. Time is indeed short on that matter.
The document says that it cannot project beyond 1976 and that we must have this rate of 250 additional male manufacturing jobs per year in the period 1970 to 1976.
I hope the Minister will not advise me that the Wheatley recommendations will be in within the next year or two, that we shall then see a new form of regional local government in the area and that we can then look forward to economic expansion from that point, because the problem will not wait for legislation along those lines. In any event, the Wheatley reorganisation will not transform the political character of the South-West of Scotland, which, regrettably, is likely to remain Conservative-dominated for a number of years.
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I believe that the Government must intervene. It is a sad thing to say that they must intervene above the heads of the local authorities but I do not think that those local authorities can complain, because the information produced by the Study Group in the South-West clearly illustrates that, by and large, the local authorities have been inadequate in relation to the needs of the area for economic and social development. I have very little hope and expectation of self-help being generated by the local representatives, and I believe it essential that the Government intervene.
The next point is industrial retraining, and this is of particular significance to me, representing South Ayrshire as I do. The Study Group forecast that the three pits in the village of Dailly in my constituency are likely to close some time in the 1970s. I have been to the pits and have talked to the managers and the men on the spot. I believe that, given the necessary support to the mining industry in the Coal Bill which we are anxiously awaiting, that forecast of probable pit closures would be unjustified. This matter is very important because the jobs of about 245 men are at stake, and, in an area as small as Girvan and the surrounding district, the loss of these jobs would be a catastrophe. It would most certainly be a catastrophe for Dailly.
I say to the Under-Secretary of State that, even if there is a grain of truth in this suggestion, if people are giving some consideration to the closure of the pits at Dailly, it is essential that the Government start planning now to provide retraining opportunities for these men and also to provide replacement jobs at fairly adequate incomes. I may add that the men do not get fairly adequate incomes now but one certainly does not look for replacement jobs with incomes anything less than they are earning at the moment.
Even at this limited extent of our knowledge of the question of industrial retraining—we are still groping forward to some extent and I am aware that technical problems are involved—it is surely not beyond the wit of the Government, given the existence of the intelligence information which is to hand, to forecast reasonably well the possible closure of a colliery and to bring in, before that happens, one-the-spot retraining for the

1223
men, perhaps on day-release or block-release, and at the same time vigorously to canvass around industrial areas in Britain where firms are looking to expand elsewhere, thereby bringing in replacement work. I am bound to make that point to the Minister, coming, as I do, from a constituency with that problem.
Finally, there is the need to draw attention to the rôle of transport infrastructure, which is recognised as of crucial importance to the promotion of economic wellbeing and development. I am sure the hon. Gentleman will forgive me if I concentrate on the north-west sector of the South-West, since it concerns my constituency. I see him looking up for inspiration and I will tell him that this involves the Girvan employment exchange area. It is necessary to improve the A77 from Girvan to Stranraer, but more especially from Girvan to Ayr. I see my right hon. Friend the Member for Kilmarnock (Mr. Ross) on the Opposition Front Bench, and it is only right that I should tell him that everybody in South Ayrshire recognises the massive road improvements made between Girvan and Ayr in the last five years.
However, we now look to the Under-Secretary of State, the hon. Member for Ayr (Mr. Younger), for even further improvements, particularly as I read in the Press the other day that the hon. Gentleman flew over the Firth of Clyde with a group of German industrialists. One cannot say whether or not the Press correctly reported the circumstances of the tour, but we are informed that his flight was designed to show them the magnificent deep water berth facilities at Hunterston, which is in the South-West of Scotland. One wonders whether this is an indication of a decision already made and soon to be announced about Hunterston, and the Under-Secretary is well aware of my views on that matter. I hope that it is a portent of good news to come in the very near future.
Air transport will be extremely important in inducing industrialists to come to the South-West, and I remind the hon. Gentleman of his gallant fight over the years for the retention of Prestwick Airport and for it to have a viable future. We in South Ayrshire are well aware of the importance of the public inquiry into the extension of the runway at Abbots-
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inch and the implications that that might have for Prestwick Airport, which I know is dear to the heart of the Under-Secretary.
Then there is the railway, which is extremely important. I recall that during the South Ayrshire by-election, after the Labour Government had restricted the grant aid to the Euston-Stranraer boat train for only six months until a further review took place, that action was denounced by the then Tory candidate as the action of a feckless Government. The Under-Secretary took part in that by-election campaign and I do not recall him ever contradicting his Tory colleague.
At a time when the present Government have under review the whole question of support for transport of the nature I am discussing, I take it that we can rely on the Under-Secretary to do his utmost to ensure the retention of the Euston-Stranraer boat train, a link which is regarded by everyone in the South-West as essential.
Another important rail passenger link which could have a definite effect on the South-West, and especially on Girvan, is the link between Ayr and Kilmarnock. It would, if reinstated, provide the South-West with a direct rail-passenger link right up to Kilmarnock, which my right hon. Friend who represents that constituency will agree is the booming and expanding industrial capital of the County of Ayrshire. New markets could be obtained there for the emergent industries of the north-west sector of the South-West planning region.
I know that this latter point is also dear to the heart of the Under-Secretary because he and I shared evidence at the time of the investigation into whether or not the Ayr-Kilmarnock line should close for passenger transport. I intend to send Mr. Robert Smillie, Secretary of the N.U.R. branch in part of my area and in the constituency of the Under-Secretary, a copy of the OFFICIAL REPORT of this debate, and I am sure that he will read it carefully to see whether the Under-Secretary answers or dodges the question.
I hope that the Minister can tell us how the Government intend to remedy the one defect of the strategy document for the South-West. I am referring to the self-confessed defect within the pages of the document namely, that it is not

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a plan. I suggest to the Minister that what the area needs above all is a plan and the swift execution of such a plan.
10.20 p.m.
Mr. John Brewis: I congratulate the hon. Member for South Ayrshire (Mr. Sillars) on his good fortune in being allotted this debate. I wish that the rules of the House allowed it to be for longer than half an hour so that both myself and my hon. Friend the Member for Dumfries (Mr. Monro) could make proper contributions to the debate.
In the few minutes available to me I should like to comment on the hon. Gentleman's speech. He was right to mention the Stranraer-Euston train. It was a written condition of the approval granted to the closure of the Dumfries line that this train should continue to be run. Can my hon. Friend give us an assurance that British Railways will not be allowed to escape from what is a firm commitment to people in South-West Scotland and also to those in Northern Ireland?
The plan for South-West Scotland is an excellent document, but paper plans are not enough. It is like a new car. It needs petrol and a driver. When the Wheatley Report on regional government is implemented there will be a regional development officer. Until then the Under-Secretary of State should encourage the local planning authorities to get together, to pool their resources and form a development association. Would a grant be available for that purpose?
Petrol for the new plan must come from the Department for Trade and Industry in the form of investment incentives and a greater interest in the area by my hon. Friend's Department. I welcome the return of investment incentives for those service industries unjustly excluded by the Labour Government.
I think that I speak for my colleagues in the South-West when I say that we are glad that the Under-Secretary of State made a special visit to the planning group meeting at Whithorn and how impressed we were by his obvious interest in the area.
10.22 p.m.
The Under-Secretary of State for Development, Scottish Office (Mr. George Younger): I am grateful to the hon. Member for South Ayrshire (Mr. Sillars),
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my constituent, for raising this matter this evening, and I am grateful, too, to my other constituent, the right hon. Member for Kilmarnock (Mr. Ross), for being present. One of the greatest things about the secret ballot is that one can never absolutely convince oneself that one's constituents have voted for one. I thank the hon. Member for South Ayrshire for raising this subject. I cannot possibly answer all the points that he raised in the few minutes now left to me, but I undertake to write to him on all the matters with which I cannot deal in the time available this evening.
I am glad that the hon. Gentleman has raised the question of unemployment in South-West Scotland, because this is a serious problem, at least in particular parts of the South-West. The provisional rate in October for the South-West planning region was 5·4 per cent.—6·4 per cent. for males—but this is not a new problem. In the mid-'fifties unemployment was well below the Scottish average, but the region's basic industries of coal-mining and agriculture have given employment to fewer and fewer men. By 1967 the rate had risen to 5·9 per cent., compared with 3·4 per cent. in 1961, and there was a debate in the House in March, 1967, which was initiated by my hon. Friend the Member for Dumfries (Mr. Monro), whom I am glad to see in his place, when several hon. Members expressed concern about the same matter as the hon. Gentleman has raised.
Since then the rate has risen even further, and although in the last year there has been a certain amount of improvement it is still higher than the Scottish average. I do not seek to make any political point. I am simply saying that this is a long-standing problem and not susceptible of simple and quick solutions.
The picture is not, however, entirely a gloomy one and if, in the short time at my disposal, I can cite one instance of what can be done in an area like this with great problems, I must refer to the truly excellent and successful efforts in the Burgh of Sanquhar to put right its problems and to deal with one of the highest rates of unemployment in Scotland. I have in mind the establishment of the Century Aluminium plant at Sanquhar which is now prepared to increase its production and expand. It has been a tremendous encouragement to the area. The arrival of that plant and the success

1227
of it owes not a little to the unremitting efforts of my hon. Friend the Member for Dumfries over the years to produce it and to help it in every way.
Mr. William Ross: Will the hon. Gentleman pay tribute to the fact that, when in government, we made this a special development area and that the incentives have worked dramatically quickly?
Mr. Younger: Yes. This is a prime example of local initiative which, combined with central government initiative, has helped to put something right in what was a general problem.
The hon. Gentleman mentioned that I visited the South-West in September and had discussions with local authorities and with the South-West Consultative Group. I am, therefore, fully aware of the economic problems there. Indeed, no one who has had a meeting with Stranraer Town Council can avoid being made aware of this, as my hon. Friend the Member for Galloway (Mr. Brewis) will know.
I discussed in particular the Report "A Strategy for South-West Scotland", and I have commended its study to the planning authorities involved. While the Government are not committed in detail to all the recommendations at present, I hope that the local authorities will agree that the general strategy proposed in the plan provides a suitable basis upon which their development plans might be updated after the usual consultations with the burghs and others concerned.
In particular, I would point out that the study shows that relatively few burghs in the area are actually ready as of now to offer a suitable site to an incoming industrialist. This must be rectified. I hope that all the authorities in the South-West will now, as a matter of urgency, review the provision made for industry in their development plans and, if it is insufficient, proceed to zone, acquire and, indeed, service sites on a suitable scale. There is no point in saying to the Department of Trade and Industry "Get us new industries" if there is not an industrial site readily available, adequately serviced and supported by houses readily on offer for those who may wish to work in the industries. This is really important, and it often takes far
1228
longer to zone and acquire a site than to build anything upon it.
But this is not just a matter for the individual authorities. The economic forces which shape the future of an area bear little relation to individual administrative boundaries. So it is essential for all the industries in the study area to come together to agree on a strategy which they can pursue in co-operation. I understand that the planning authorities already have an informal working arrangement to consult with one another on matters of common interest. I hope that they will make use of and strengthen this machinery now in the light of the published report.
I have also suggested to the authorities in the area that an industrial development agency might be set up. Mobile industry is in short supply and its attraction is a competitive business which has got to be tackled professionally. I am therefore glad to learn that the Consultative Group has endorsed this idea and has invited the planning authorities to send representatives to the next meeting of the group, and this is to take place on 11th November for the purpose of discussing this idea.
The group believe, and I believe too, that a regional agency would be more powerful, more professional and more effective than could the efforts of individual authorities working on their own. While, therefore, the South-West can certainly count on the continued support of the Government, I am sure that this House will agree that self-help is the best help and that Government efforts to attract industry to the area would be greatly reinforced if there were a strong promotional agency backed by the local authorities to sell the undoubted attractions of the South-West, which incidentally is one of the nicest areas of Scotland in which to live and work. If anyone doubts the value of self-help, let him look at the example of Sanquhar and at what has happened there.
I am glad that this debate has come at this particular time so that a twofold message can go from this House to the authorities in the South-West for them to consider before the meeting on 11th November—first, to the individual authorities, that they should make sure that they are absolutely ready to offer a choice of prepared industrial sites and of houses; and secondly, to all authorities

1229
that they should join their forces in planning and in industrial promotion, and the whole combined effort will be greater than the sum of the parts.
I am glad that the Consultative Group has convened the meeting on 11th November. I am grateful to its chairman, Mr. George Dunlop, for taking this initiative and suggesting this. I am grateful also to Provost Robertson of Dumfries who convened earlier meetings to explore the possibility of forming a
1230
development agency and who now, as vice-chairman of the group, is lending his full support to the current effort.
Mr. Ross Mr. Ross rose—
The Question having been proposed at Ten o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at half-past Ten o'clock.

ENVIRONMENT
  Road Accidents
  Road Accidents
  Council Houses (Sale)
  Council Houses (Sale)
  Country Parks and Picnic Sites
  Country Parks and Picnic Sites
  Caravan Sites (Gypsies)
  Caravan Sites (Gypsies)
  Thames Flood Barrier
  Thames Flood Barrier
  Betterment Levy
  Betterment Levy
  Land (Mineral Operations)
  Land (Mineral Operations)
  Houses
  Houses
  Chester, Bath, Chichester and York (Conservation Studies)
  Chester, Bath, Chichester and York (Conservation Studies)
  Motorways (Crash Barriers)
  Motorways (Crash Barriers)
  Brewery, Samlesbury
  Brewery, Samlesbury
  Builders (Registration)
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  Housing, Stockport
  Housing, Stockport
  Smoke Control Orders, London
  Smoke Control Orders, London
  Building Industry (Sub-Contractors)
  Building Industry (Sub-Contractors)
  Solid Toxic Wastes (Disposal)
  Solid Toxic Wastes (Disposal)
  Great Cambridge Road
  Great Cambridge Road
  House Rents
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  Motor Goods Vehicles
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  London Borough of Brent (Housing)
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  British Standard Time (Construction Industry)
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  Refuse Collection (Rate Charge)
  Refuse Collection (Rate Charge)
  Building and Ancillary Trades (Employment)
  Building and Ancillary Trades (Employment)
  Leeds/Bradford Airport
  Leeds/Bradford Airport
  The Wash
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  River Thames (Driftwood)
  River Thames (Driftwood)
  Building Industry (Consultative Committees)
  Building Industry (Consultative Committees)
  Building Programmes
  Building Programmes
  House-Building Programmes
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  Postal Minibus Services
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  British Transport Docks Board
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  Unremunerative Rail Services
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  Hoddesdon/Ware Bypass Order
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  House Improvement Month
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  Labour-only Subcontracting
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  Pedestrians
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  Docks Road and Bridge, Hull
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  Smokeless Fuel Supplies
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  Inner Ring Road, Blackpool
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  High Street, Putney (Heavy Vehicles)
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  Heathrow Airport
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SCOTLAND
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  National Farmers' Union (Discussions)
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  St. Andrew's House (Civil Servants)
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  Loch Fitty, Fife (Fish Poisoning)
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  Holiday Resorts (Motoring Tolls)
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  Teachers (Married Women)
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  Housing Subsidies and Rents
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  Advisory Planning Machinery
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  Museums and Art Galleries (Admission Charges)
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  Free School Milk
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EMPLOYMENT
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  Confidential and Personal Files
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TRADE AND INDUSTRY
  Smokeless Fuel Supplies
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  Scotland (Industry)
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  Industrial Estate, Cumnock (Advance Factory)
  Industrial Estate, Cumnock (Advance Factory)
  Trade with U.S.S.R.
  Trade with U.S.S.R.
  Investment Grants
  Investment Grants
  Aircraft Accident, Manchester (Report)
  Aircraft Accident, Manchester (Report)
  Scottish Gas Board, Edinburgh (Accounts Section)
  Scottish Gas Board, Edinburgh (Accounts Section)
  Scotland (New Jobs)
  Scotland (New Jobs)
HOME DEPARTMENT
  Road Safety Act
  Road Safety Act
  Refuse (5th November)
  Refuse (5th November)
  Public Buildings (Emergency Exits)
  Public Buildings (Emergency Exits)
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  Defendants
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  Local Government Grants (Social Need) Act, 1969
  Local Government Grants (Social Need) Act, 1969
EDUCATION AND SCIENCE
  Agricultural Colleges
  Agricultural Colleges
  University Building Programmes
  University Building Programmes
  Student Accommodation
  Student Accommodation
  Fireworks
  Fireworks
  Museums and Galleries (Admission Charges)
  Museums and Galleries (Admission Charges)
AGRICULTURE, FISHERIES AND FOOD
  Milk (Production Cost)
  Milk (Production Cost)
NATIONAL FINANCE
  Special Deposits (Government Stocks)
  Special Deposits (Government Stocks)
  Tax Arrears
  Tax Arrears
  Capital Gains Tax
  Capital Gains Tax
  Northern Ireland (Development Programme)
  Northern Ireland (Development Programme)
  Educational and Instructional Records (Purchase Tax)
  Educational and Instructional Records (Purchase Tax)
  Investment Incentives
  Investment Incentives
FOREIGN AND COMMONWEALTH AFFAIRS
  Rockall Bank
  Rockall Bank
  Waste Products (Disposal at Sea)
  Waste Products (Disposal at Sea)
  Fishing Rights
  Fishing Rights
  Continental Shelf
  Continental Shelf
  European Economic Community
  European Economic Community
  Passports
  Passports
  Jordan
  Jordan
DEFENCE
  South-East Asia (Land Forces)
  South-East Asia (Land Forces)
SOCIAL SERVICES
  Medicinal Tablets (Children)
  Medicinal Tablets (Children)
  Confidential and Personal Files
  Confidential and Personal Files
  Supplementary Pensions and Allowances
  Supplementary Pensions and Allowances
  Hospital Beds
  Hospital Beds
  Retirement Pension
  Retirement Pension
  Prescription Charges
  Prescription Charges
  Hospital Building
  Hospital Building
  Hospital Equipment (Purchases)
  Hospital Equipment (Purchases)
  Welfare Milk
  Welfare Milk
  Doctors (Group Practice)
  Doctors (Group Practice)
WALES
  Water Resources
  Water Resources
  River Authorities
  River Authorities
  Reservoirs
  Reservoirs
  Angling Clubs
  Angling Clubs
  Caravan Sites
  Caravan Sites
  Milk (Production Cost)
  Milk (Production Cost)
  Farm Costs
  Farm Costs

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

LORD WHEATLEY
The Right Honourable John Wheatley (commonly called Lord Wheatley), a Senator of the College of Justice in Scotland, having been created Lord Wheatley, of Shettleston in the County of the City of Glasgow, for life—Was, in his robes, introduced between the Lord Reid and the Lord Guest.

LORD ROSENHEIM
Sir Max Leonard Rosenheim, K.B.E., having been created Baron Rosenheim, of the London Borough of Camden, for life—Was, in his robes, introduced between the Lord Amulree and the Lord Platt.
The Viscount Thurso—Sat first in Parliament after the death of his father.
Several Lords—Took the Oath.

SEABED RESOURCES: PROPOSED CONVENTION
2.29 p.m.
LORD BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they support the treaty tabled by the United States of America in the United Nations Seabed Committee for the recognition of all resources beyond 200-metre depth from the coastline as an "international seabed area".]
THE LORD PRIVY SEAL (EARL JELLICOE): My Lords, at the August session of the United Nations' Seabed Committee the United Kingdom delegation welcomed the United States' draft
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convention as a valuable contribution to international discussion of the seabed issue. It was tabled as a working paper and will need much study and further discussion before we can adopt any definitive view on its provisions. Meanwhile, we are giving careful consideration to its contents, including the proposal for a shallow limit to national jurisdiction and a trusteeship zone beyond it.
LORD BROCKWAY: My Lords, while thanking the Minister, may I ask him two questions separately, of which I have given him notice? First, while I welcome the principle of the common heritage of mankind in Article I, may I ask whether Her Majesty's Government will seek deletion of the provision in chapter 3 for zones which are believed to be the richest in fish and minerals to be retained by the coastal States?
EARL JELLICOE: My Lords, like the noble Lord, Lord Brockway, I wish to make it clear that Her Majesty's Government support the principle that the seabed beyond the limits of national jurisdiction should be subject to an international régime and regarded as part of the common heritage of mankind. That is our fundamental principle on this question. But, as I indicated in my reply to the noble Lord's substantive Question, we wish to examine carefully the implications behind the very detailed draft convention which the United States' delegation have submitted, and at this stage I should not wish to be drawn into comments on particular aspects of it.
LORD BROCKWAY: My Lords, again thanking the Minister, and recognising that there will be an opportunity for a further discussion in a debate which is to be raised from the Prelates' Benches, may I ask him this further question? Is it the case, as reported, that Her Majesty's Government have proposed that the oceans be divided into national squares under the control of separate Governments; and, if so, would not this be a denial of the principle of corporate sovereignty?
EARL JELLICOE: My Lords, this is certainly not my understanding of the position taken by Her Majesty's Government. So far as I know, there are no proposals to carve up the ocean floors into separate parcels of national sovereignty, but there are all sorts of proposals, which

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various delegations have submitted, for some measure of national control nearer shore. There is great complexity in the proposals before the Seabed Committee.

POSTAL RATES ON CHRISTMAS CARDS
LORD FRASER OF LONSDALE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they will recommend to the Post Office that a reduced rate of postage should be allowed on Christmas cards, destined for the United Kingdom and overseas, bearing in mind the importance of this trade to the economy of this country through the production of cards and in terms of exports, and the goodwill associated with the sending of Christmas greetings.]
LORD DENHAM: No, my Lords, but I understand that the Post Office is studying a similar suggestion from the Post Office Users' National Council in connection with the inland post. However, the operational and financial problems to be overcome will rule out any possible concession this year. I understand that International Postal Regulations govern the overseas mail and that they make no provision for such a concession.
LORD FRASER OF LONSDALE: My Lords, while regretting that Answer, bearing in mind that in February rates generally are to go up very considerably, and possibly even aggravated by decimalisation, will the noble Lord undertake to ask the Post Office to consider keeping this rate as low as possible at Christmas, 1971? Otherwise it looks as if Christmas cards will be knocked for six.
LORD DENHAM: My Lords, I understand that any discussions that take place as regards the Post Office Users' Council's suggestion will refer to December, 1971.
BARONESS STOCKS: My Lords, would Her Majesty's Government agree that the
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massive proliferation of Christmas cards during the past few years has added to the manpower difficulties of the Post Office and to the amount of paper that subsequently has to be disposed of by someone?
LORD DENHAM: My Lords, that is no doubt one of the considerations the Post Office will bear in mind.
LORD GARNSWORTHY: My Lords, will Her Majesty's Government draw the attention of the appropriate authority to the very serious effect on the finances of quite a number of charities in this country unless some concession is granted? Further, is it not a fact that of late years, when increases in postal rates have been imposed, there has been a very substantial reduction in the number of Christmas cards sent, with a consequent reduction of income so far as the Post Office is concerned?
LORD DENHAM: My Lords, I think that questions of this kind come within the scope of the day-to-day running of the Post Office and therefore I do not think it would be proper for Her Majesty's Government to draw the attention of the Post Office to them. But no doubt the noble Lord's supplementary question will draw its attention to this matter.
VISCOUNT TENBY: My Lords, may one remind the Post Office that this is the season of good will?
LORD DENHAM: My Lords, I think the Post Office are aware that this is the season of good will. It is also the busiest time of the year so far as the Post Office is concerned.

AIR POLLUTION CONTROL
2.37 p.m.
LORD PARGITER: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether the new forms of air pollution listed by the last Government in Command Paper 4373 of May, 1970, as about to be brought under the control are now to be brought under control.
THE PARLIAMENTARY UNDER-SECRETARY OF STATE, DEPARTMENT OF THE ENVIRONMENT (LORD SANDFORD): My Lords, what the previous Government said in Command 4373 they were about to do could not in fact have been done just like that. A public inquiry had first to be held; local authorities and others had to be consulted. The inquiry has now been held and the consultations have taken place. The report of the inspector is now awaited.
LORD PARGITER: My Lords, may I ask the noble Lord when the Government propose to let the House know what they intend to do in the matter?
LORD SANDFORD: My Lords, when the inspector's report has been received the Minister will decide, in the light of that, whether he should proceed to make the Order and lay it before Parliament, and, if he decides to do so, whether he should first modify its present form or context in any respect.
LORD PARGITER: My Lords, could the Minister indicate when the report is expected?
LORD SANDFORD: No, my Lords, not precisely.
THE EARL OF GOWRIE: My Lords, in respect of air pollution, may I ask my noble friend whether he will examine the case for siphoning off residual fuel aboard jet aircraft on the ground rather than, as at present, jettisoning it in the form of spray after take-off?
LORD SANDFORD: My Lords, that is quite another question.

INDUSTRIAL FURNACES: CONTROL OF DIRT EMISSION
LORD PARGITER: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether the new low tolerances for emission of grit and dirt from industrial furnaces announced by the last Government in Command Paper 4373 are now to be introduced.]
LORD SANDFORD: Yes, my Lords. Regulations are expected to be made shortly.
LORD PARGITER: My Lords, may I ask whether the Government are satisfied, having regard to the difficulties in detecting emissions of grit and dirt, as distinct from smoke, that the local authorities have adequate staffs for these increased and much more onerous duties, and whether or not the alkali inspectorate of the Government Department is sufficiently staffed to be able to give effect properly to the regulations?
LORD SANDFORD: My Lords, as regards the Question now before the House this is a matter for the local authorities; but we shall have to see how we go. My advice at the moment is that the slaffs will be adequate. The question about the alkali inspectorate has more bearing on the first Question I answered. If the Order is made in the form originally intended it is quite likely that the alkali inspectorate may have to be increased.
BARONESS SUMMERSKILL: My Lords, may I ask the noble Lord whether he will re-read the debate in this House last week on industrial injuries, in order that the Government shall be seized with the urgency of this matter.
LORD SANDFORD: My Lords, I am not sure of the connection at the moment, but I will certainly look at the debate.
BARONESS SUMMERSKILL: My Lords, perhaps the noble Lord is not sure because I referred to "industrial injuries": I should have said "industrial injuries and diseases". It is the diseases that I want to emphasise. May I also ask him why he feels certain that he has enough inspectors, because what emerged from last week's debate was that there was a serious shortage of inspectors.
LORD SANDFORD: My Lords, I thought I said (but perhaps I did not make it clear) that we expect that if, as a result of the inquiry, the Minister makes the first Order to which I was referring in answer to the noble Lord's first Question, it is more than likely that the alkali inspectorate will have to be increased.

FUTURE ARRANGEMENTS: DEFENCE DEBATE
VISCOUNT GOSCHEN: My Lords, I should like to inform your Lordships that in view of the large number of

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noble Lords who have put their names down for the debate tomorrow, dinner will be available on that evening from 7 until 8.30.

PORT OF TYNE BILL
Read 3a, with an Amendment, and passed, and returned to the Commons.

SHOPS (SUNDAY TRADING) BILL [H.L.]
LORD DERWENT: My Lords, I beg leave to introduce a Bill to amend the Shops Acts 1950 to 1965 in relation to Sunday trading and Sunday employment in shops, and for connected purposes, and to move that the Bil be now read a first time.
Moved, That the Bill be now read 1a.—(Lord Derwent.)
On Question, Bill read 1a, and to be printed.

PEERS' TRAVELLING EXPENSES
EARL JELLICOE: My Lords, in rising to move the Motion standing in my name on the Order Paper, I should first like to apologise to your Lordships for the shortness of notice given. However, I do not imagine that on this occasion your Lordships will take me too severely to task. If the Motion is accepted by the House to-day, as a somewhat similar Motion was accepted in another place yesterday, it means that the increase in the car mileage allowance will apply from the same date in both Houses. My Lords, I beg to move.
Moved, That this House approves, with effect from the date of this Resolution, the proposal to replace the existing limit upon car mileage allowance available to members of this House under the Resolution of 18th December, 1969, by a limit of 1s. per mile.—(Earl Jellicoe.)
On Question, Motion agreed to.

INDUSTRIAL RELATIONS
2.43 p.m.
LORD BYERS LORD BYERS rose to call attention to the Government's proposals on industrial relations; and to move for Papers. The
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noble Earl said: My Lords, we on these Benches have put down this Motion to-day to call attention to Her Majesty's Government's proposals on industrial relations, for two reasons: first, to afford the House an early opportunity of discussing the Consultative Document before the Industrial Relations Bill is finalised; and secondly, to enable us from these Benches to plead that the Government's proposals should not be regarded by the unions as a cause for an all-out battle which will merely conceal the very real problems which bedevil British industrial relations.
We are honoured that the Lord Chancellor is to sum up on behalf of the Government. I do not know whether this signifies that the Government are frightened of the outcome of this debate, that we might on a vote actually call for Papers, or whether industrial relations really are going to be taken over by the legal profession, a matter on which some people have expressed concern. However, we are most honoured that the Lord Chancellor should be summing up for us.
These proposals are a long way from the "union bashing" which many of the electorate thought they were supporting by voting Conservative on June 18. Some of these proposals do not commend themselves to Liberals or to Radicals, but I think that probably the time has come when some type of legal framework is needed in which industrial relations can develop. In our view, some parts of the proposed legislation are quite clearly unworkable. Certainly any idea of sending thousands of workers through the courts and levying fines on them is quite ludicrous. I do not believe that it could ever come to that. Any widespread litigation against unions or workers will result only in embitterment of relations and a field day for the lawyers.
On the other hand, the proposals dealing with the rights of individual workers are surely welcome and worth while. We on these Benches have for many years been concerned that employees should be allowed to refuse to join a trade union on grounds of conscience. Mr. Emlyn Hooson, Member of Parliament, argued this case during the passage of the Trade Disputes Bill 1965, when a Liberal Amendment designed to exclude strikes over the enforcement of the closed shop was lost by 14 votes; and I initiated a

345
debate on this particular matter in the 1945–50 Parliament under the Labour Government. Similarly, the proposal to reduce from 26 to 13 weeks the period of employment after which a week's notice is required follows precisely the terms of Mr. Richard Wainwright's Private Member's Bill which he introduced in the last Parliament.
We are also very much in favour of companies disclosing much more information to their employees. This surely must be right, although presumably it will have to be dealt with in relation to the rights of shareholders to have similar information. On the other hand, I am surprised that the Government have not taken the opportunity to insert a provision that employees should be able to contract in, rather than having to contract out of paying the political levy.
Whether or not the proposals for dealing with unofficial strikes, the cooling-off period and the enforcement of collective agreements, will be effective, time alone will tell. On this I certainly have some reservations. But I do not think that we can take what I understand to be the Labour Party view, that nothing at all needs to be done from a legislative point of view about creating a framework in which industrial relations ought to be developed. I believe that the time has come when trade unions should be accountable to some institution or organisation. I believe that some means must be found to bring home to the union officials the responsibility that they have, not just to their members but for their members. Similarly, I think that members of trade unions ought to take a new look at their responsibility for union officials, and to see that their pay and conditions of service are of a much higher standard than has prevailed hitherto.
I do not believe that industry can continue efficiently unless both sides can ensure that agreements entered into are effectively honoured. Therefore, the registration of unions and the scrutiny of union rules is something which ought to be supported. The proposal to try to build up the case law of what constitutes unfair or fair industrial action is something which might well improve general practice in the long run. The right of appeal by a member against union decisions must surely be right and proper.
But it is in the field of the legal enforcement of collective agreements that I have grave doubts about the possibility of this working out, and I am glad that the noble Lord, Lord Stokes, is going to speak to-day in this debate, when I hope that we shall hear something about the attitude of the motor industry to this aspect of the proposals. The fact that such agreements are not at the moment legally binding contracts is, I understand, simply because neither side wishes them to be so. The Trade Union Act of 1871, which the Government propose to change, does not in fact prevent the employer or a union from giving an agreement die full effect of a legal contract. It is in this area that I think the Government are going to run into real trouble.
I do not feel, as some members of the Conservative Party apparently do, that this proposed measure will transform industrial relations overnight. I think it may make some contribution over a very long period. It may help in some way to provide clearer guidelines on procedures, responsibility and behaviour, rather as the Race Relations Act is doing at the present time. But in our view, industrial relations can never really be made harmonious until we get at the root causes of frustration and dissatisfaction at work. My fear is that people may think that by passing a measure such as this they have only to sit back and await results. That is far from the truth.
If we are to tackle industrial relations at their roots we have to do a great deal more than introduce this sort of proposed legislation. There are, in our view, a number of measures which ought to be taken. First among these is to get rid of national wage agreements in favour of bargains struck at plant level. We keep on emphasising, from all sides of the House, the need for increased productivity and greater efficiency, but we continue to bargain at centres which are totally remote from where the action actually is and where you can actually measure merit and achievement. I cannot believe that the sewage workers of Lambeth, Hereford or Swansea deserve precisely the same wage, because the conditions must surely vary in some degree from place to place.
Secondly, we still have poor communications in industry as a whole. Some parts of industry are much better than

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others, but this lack of communications leads to misunderstanding and to frustration. I believe the time has come when we should set up, by Statute, works councils for companies of any size on which all sections of the firm or undertaking are represented so that they can know what is going on. I am very sorry that much of Donovan's good sense has been ignored in the Consultative Document. I believe that that Report hit on a fundamental reason for our poor industrial relations. It drew attention to the totally unsatisfactory position of the shop steward, and proposed that there should be constitutionally recognised committees to perform many of the functions now carried out by unofficial shop stewards' "combine committees".
It said that the process of union govvernment should be altered to accommodate shop stewards and work groups more adequately than they are at the present time. It emphasised, too, that union branch organisation ought to be based on factories and branch meetings ought to be held at places of work. This followed quite naturally the Commission's plea for fewer unions, more mergers, and agreements on rights of representation. They stressed the need for factory bargaining and the revision of rules concerning shop stewards in such matters as elections, term of office, jurisdiction, relation to other union officials, and place in the union organisation. This is far more important, in our view, than anything in the Consultative Document.
Donovan also pointed out the need for more full-time union officials of higher calibre. How often do disputes drag on because you cannot get hold of the local official at the time that he is really wanted! It is the structure and organisation of wage bargaining which needs to be put right, not merely the fringe problems associated with it. Why should there not be, for instance, some experiments within the nationalised industries to see whether we cannot get better communications going and establish works councils which will improve the relations within the industries themselves? I do not believe that nearly enough thought has been given to the part that profit-sharing schemes can play in bringing about industrial harmony. Where employees have a share in the profits, they
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have a disincentive to strike. They also have an incentive to get rid of the small dissident groups who are trigger-happy in starting work stoppages which reduce profits.
I have been very impressed with the different attitude to work in the installations I have visited in France, compared with the attitude in similar installations in this country. France has profit-sharing by Statute. I do not suggest at all that we should follow their scheme, or anybody's scheme, slavishly, but there is a strong case—and I have made this point before—for setting a team to work to examine the practice of other countries and the schemes operating there, so that we could extend this principle either by Statute or by incentive. Many things are happening in the Continent of Europe from which I believe we can draw very important lessons. To those who raise the old bogey of what happens if there are no profits, I merely say that with profit-sharing the rule rather than the exception, the best workers gravitate to the more profitable businesses, and I believe that in the long run this is a good thing.
Similarly, I believe we should try to produce—and this is much more difficult—an efficiency or cost-saving related scheme for workers in the Civil Service and the nationalised industries. This would require a great deal of deep thought, but I do not see why, in the long term, we should not come up with something that will work. It will not be easy, but if we could get some incentive scheme in that way, I believe it might have an electric effect on efficiency within the Civil Service and the nationalised industries. The truth is that we are doing too much to try to contain the problems, without getting down to the things which really cause bad industrial relations. This is a field in which I believe there must be a great deal more thinking in depth than there has been up to now.
On the Consultative Document itself, I only want to ask the following points, and mostly for clarification. I hope that the noble and learned Lord the Lord Chancellor may be able to answer the first two. Can the Government tell us how the present unofficial strike in the coalfields would be handled under the terms of the Consultative Document? What new procedures would be involved?

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What could we hope to expect from the Consultative Document procedure that we are not getting at the present moment? Could the noble and learned Lord say what difference would be made, under the proposed rules, from the present situation, so far as the National Union of Municipal Workers is concerned, in their strike which is going on at the present time? If we could get an authoritative opinion on this matter, I believe it would be much easier to understand what we might expect to get from the proposals which the Government have put before us in the form of the Consultative Document.
Can the Government tell us more about the proposed code of industrial relations practice? If it is merely an extension of the intentions set out in the Document, it could turn out to be just a series of platitudes, and that would be a very great pity; but it could be something much more powerful if it took the form and style of a works constitution law, similar to the sort of thing they have in Germany. If it were like the German one, would there not be a case for making the code directly enforceable? That would make sense if it were accompanied, as I have suggested, by constitutional bargaining procedures in the factory and the establishment, by Statute, of a works council for firms of any reasonable size. We believe that this would alter the unofficial dispute situation quite dramatically and make a positive contribution to good industrial relations. Apart from anything else, people would really know where they stood on the major matters.
Finally, my Lords, one has to recognise that strikes, and particularly unofficial strikes, arise largely out of the inflationary situation that has developed in this country. This is not peculiar to the United Kingdom—far from it—but it is the old vicious circle of higher prices, higher wages, higher prices; or, higher wages, higher prices, higher wages, whichever you like. That is why we view with regret the announcement yesterday of the abolition of the Prices and Incomes Board which, even if it did not control prices and wages, was able to expose unfair increases in prices and to produce important studies in comparability, so that one knew where the fairness and the equity lay between dif-
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ferent professions and different jobs. The fact is that the Consultative Document deals with only a small aspect of this vast field of industrial relations: pay, prices and inflation are part of the story, too, and I believe that we ought to see this Document in that perspective. I hope it will not become a battle-ground which will sour and embitter industrial relations. We in Parliament, in both Houses, have a long way to go before we solve this very important problem, and we cannot afford to waste time in useless wrangles and arguments. My Lords, I beg to move for Papers.
2.59 p.m.
LORD BROWN: My Lords, I have been an active researcher into employment problems for thirty years and I have formed personal views on their solution. Thus it is that though I speak to-day from the Opposition Front Bench, by courtesy of my colleagues, the views I express are my own. I agree with the noble Lord, Lord Byers, that the Government's proposals are not "union bashing"; in fact, I respect the Minister of Employment, and I accept that his proposals are a sincere attempt at solutions, but I think he ought to be warned that he will not continue to receive that respect, unless he can somehow contrive to inhibit his Prime Minister from statements like the following. He has made the same statement on two occasions and said:
"Wildly excessive wage demands were deliberately encouraged by the last Administration for its own political purposes."
That seems to me to be the height of irresponsibility, and an exceedingly dangerous comment to make in the present problematic situation.
Some of the proposals in the Consultative Document are sound in themselves, but seem to me to be very puny weapons with which to attack problems of the order which we are facing to-day. Other proposals are bound, as the noble Lord, Lord Byers, has said, to create more divisions in our society and to increase hostility and strife, and this form of cure may well be worse than the disease itself. But I shall not go into detailed criticism of the proposals in the Consultative Document, for I contend that this Government, and their predecessors since the war, have made faulty analyses of the total situation; and the action, or indeed the lack

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of action, which was based on those misleading analyses has led us into some very grave problems indeed to-day. My speech, therefore, outlines a fresh analysis and attempts some concrete proposals for change based on that analysis.
In the Sunday Times for July 12 there was reported a comparative study carried out by the Readers' Digest in the United Kingdom and in the Common Market countries. This showed that in Britain to-day less than 5 per cent. of the working population are employers, and less than 5 per cent. are truly self-employed; in other words, they indicate that over 90 per cent. of our working population to-day are employees. The expanding organisations which now employ the bulk of our population comprise, in effect, an intermediate zone in our society lying between our citizens as citizens and Government itself.
The nature of these employment organisations has received what is, in my submission, a quite inadequate degree of study, with the result that there is a uniform failure, not only in Britain but in all industrial nations, to arrange for their healthy management. We are, in effect, pressing most of the population into ill-comprehended institutions, thus creating an intermediate zone in society, full of the tensions of millions of people all struggling for their rightful place in the economic scheme of things. Unless ignorance about employment organisations is surmounted, then I submit that in due course—and maybe sooner than we expect—this intermediate employment zone will tear itself apart. Already the social and psychological tensions bred in employment are bleeding over into our social life and are beginning to destroy values which we have collectively built up over the centuries.
To suggest that there is uniform failure to manage employment organisations in a healthy and efficient manner is, I agree, a bold criticism. But I submit that any series of institutions which produce in-increasing human unreason and un-happiness on the scale which we observe to-day cannot readily escape that criticism. People in general are reasonable, but employment so often calls forth unreason; people have concern for each other, but employment tends to call forth meanness; people are fair, but employment
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produces greed; people are lawful, but employment stimulates the use of power; people need work which equates with their personal capacity and want to carry it out effectively, but employment so often calls forth boredom and lead-swinging. The sad fact is that we are all becoming so familiar with the chronic symptoms in the form of wage inflation, strikes, inefficiency and unhappiness, that we regard it as the inevitable norm of employment and seem to have lost hope of putting matters right.
The approach of every Government to these matters, for as far back as I can remember, has been a series of failures. We have been trying a range of recipes for our employment ills, each of which has been concerned with different percentages of the same ingredients. We have tried to curb wages or to free them; to increase taxation or not to do so; to allow credit to ride or to freeze it; to reduce consumption or to allow it to rise; to increase or decrease the supply of money, and so on. Decisions have to be made about these macro-economic matters, but to assume that manipulation of these factors will bring solutions to the problems of wage inflation, strikes, inefficiency and dissatisfaction at work is to abdicate from tackling the real problems. Labour is not a commodity. Its price no longer responds to shortage or surplus, like goods or services. The proof lies before us to-day, for in many industries, such as the docks, where there is a surplus of labour, wages are rising as fast as in any other industry. Power has become the determining factor.
When Government moves closer to the problem, its actions are, I submit, equally unrealistic, because it has never firmly grasped the fact that wage inflation and the use of power bargaining derive from feelings of unfairness about pay in one occupation as compared with another. It is these feelings that are the root of the matter. Thus, to solve the problems of wage inflation we must tackle the problems of unjust wage differentials, as well as the size of the national wage bill. They are separate problems.
The efforts of science have to date largely been concerned with the task of describing—and I emphasise the word "describing"—our physical environment. They have succeeded by the construction of agreed concepts, means of

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measurement and hypotheses. By this approach science has rid us of many false perceptions which used to clutter our minds about nature, and provided us with accurate mental models of the physical environment within which we exist so that we can discuss such matters within a setting of reason. This is precisely what we have as yet not done to our sociological environment and to the many types of institution used in the intermediate employment zone of society. We are beset by false thinking which is breeding the troubles to which I have referred. I will give some examples of this.
In the past, Governments have backed piecework payment schemes—and as I understand the noble Lord, Lord Byers, he is now suggesting one for the Civil Service—failing to take account of the many disciplined researches which have shown that among any group of skilled ratefixers the minimum variation in the evaluation of the same work will be of the order of plus or minus 40 per cent. Such schemes have worsened the inequity in wage differentials and have led to widespread minor corruption on the factory floor. Governments have supported the notion of collective power bargaining over wages because of their acceptance of the idea that labour is a commodity: the two are closely linked together. We are now reaping the fruits of that piece of false thinking.
Tacit support has been given to the use of a technique known as job evaluation; the Fulton Report backed its use in the Civil Service. I shall not describe it, but I can assure your Lordships that it is simply arbitrary judgment masquerading as measurement because it happens to be statable in arithmetical form. Its use will achieve nothing.
Productivity bargaining has been the latest approach to the establishment of wage levels. It has failed because there is no current method of measuring a mixed output; and, even if there were, there is no method of measuring the contribution made by labour, as opposed to the contribution from capital investment and change of technique. So there is no means of knowing whether or not the deal that has been made has been honoured. It has become a means of swapping restrictive practices for more pay. There was never within this process
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of productivity bargaining any hope that it would bring about more equitable differential payments.
In a company employing 1,000 people there are 999 manager/subordinate relationships. Everybody in employment wants to know with clarity and certainty who is his manager and what is the extent of his authority, but there is no currently accepted definition of the term "manager". I will not burden your Lordships with such a definition but one is available which nobody could seriously question. The fact is, however, that there are nearly three quarters of a million people occupying first-rank supervisory roles in Britain who ought to be endowed with both managerial authority and accountability but who, to varying extents, lack both. That is part of our trouble on the shop floor.
The acceptance of a single definition of the term "manager" would expose the need for organisations to state in writing their policy about conditions of work, so that they might train their managers how to interpret those policies reasonably. It would have the effect of causing organisations to select their managers much more carefully and to give them appropriate authority. We should thus begin to get first-line management on to an objective basis, and I can assure your Lordships, from personal experience, that the result, in terms of efficiency, of peace at work and contentment, would be profound.
My next example concerns participation in policy-making. Employment hierarchies are always accompanied by three power groups: first, the ownership system and its representatives, the board of directors. Management cannot introduce change unless that group tolerates the change. Secondly, there is the amorphous customer system. Management will not introduce change unless they are reasonably sure that it will be tolerated by their customers. Thirdly, there is the employee representative group. Management cannot introduce change unless that group finds it tolerable. Thus managers' authority to introduce change is based on the sanction of all of those three power groups. Employment organisations need, but lack, explicitly defined institutions under the terms of which no change which is felt to be important is employment by management without the

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unanimous vote of representatives of all grades of employees within an organisation and of the chief executives. I know of such an institution which has been in successful operation for 25 years in a large and successful industrial company. In that company strikes take place across the council table instead of by stoppage of work. Unwelcome change can be prevented or modified by force of argument or by a single representative or the chief executive simply withholding his approving vote. Strikes are thus rendered unnecessary.
The need for unanimous vote to sanction change may at first sight seem impracticable, but it is simply an explicit recognition of the real situation which exists in every employing organisation. Changes which are not felt to be tolerable result in strikes, and strikes are not settled until each and every strata of employee concerned with the change, and management, are agreed on some modification of the original proposal. Such an organisation can agree the policies governing conditions of employment which it is the duty of managers to implement. Thus employees' representatives can really participate in policy formation through such an institution, and the authority of managers can be greatly enhanced because they are implementing agreed, instead of arbitrary, policies.
But that is not enough. Managerial judgment on how to implement agreed policies will not be sanctioned by employees unless there is a clear and explicit right of appeal by successive stages up to the chief executive whenever an individual feels that there is injustice in the implementing of agreed policies. People as citizens treasure the right to contest the decisions of the Executive. This House is a constant and vigorous defender of that right. Yet in industry it largely does not exist. The result is that felt personal grievances which, in relation to the sum total of the affairs of the organisation are trivial, receive, almost willy-nilly, massive support from the representatives of the employees. The result is a strike over incidents which could easily have been settled in the formal setting of an internal appeal-hearing within the company.
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It is the duty of every employee to do his work as effectively as he can. I maintain that he wants to do so. Everybody wants to do so. Everybody wants everyone else to do so. It is impossible to proceed on any other assumption unless one postulates a very sick society, and that I do not accept. But for people to follow their natural inclinations their duties must be balanced by five inalienable rights. These, I submit, are as follows: the right to a job which reasonably employs one's faculties; the right of access to a full-scale manager; the right of appeal against that manager's decision; the right via one's elected representative, to take a full part in the making of policy; and the right to differentially equitable payment. The last of these rights is much the most difficult to arrange, as we know to-day.
I end my contribution to this debate by putting before your Lordships a proposal for change without which I do not believe we can solve the problem of unfair wage differentials and all the conflict and economic hazards which flow from their continued existence. Our Legislature to-day is based entirely on geographical constituencies. There are within it no direct representatives of occupational groups, and yet those groups increasingly possess the power to disrupt our society. The employment zone of our society has no representatives in Parliament. The major source of conflict in that zone is wage differentials. Governments have the constitutional authority to intervene in the battle with legislation; but they have not the power to uphold that legislation. I had no confidence in the intentions or ability of the last Government to tackle the problem of wage differentials; nor have I any more confidence in the present Government to do so. Neither seem to regard the problem of wage differentials as worthy of priority attention; yet it is in fact the nub of the troubles in which we at present find ourselves.
I propose that Parliament should agree to the establishment of a Council for the Regulation of Differential Entitlements of all Employed Persons. When I use the word "entitlements", I refer to wages, salaries, hours of work, pensions and other things of value like that. I summarise its composition as follows. Every occupational professional group

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would form an occupational constituency and elect representatives to that council—and I stress "every" type of occupation. Its prime function would be to make recommendations to the House of Commons concerning the adjustment of differential entitlement of specific occupations. These recommendations would be arrived at by only a 95 per cent. majority vote of the Council—virtually a unanimous vote.
It was Lord Keynes who pointed out that when one group receives increased wages all others who do not have relatively suffered a decrease. Thus, in present circumstances, if a wage award seeks to adjust a differential wage pattern so that pay is more consistent with the level of work, then it immediately sets off power bargaining by other occupations; and when this succeeds the effect of the original wage adjustment is negatived and the status quo is restored. Thus is wage strife perpetuated. But unanimous recommendations for adjustment of differential entitlement mean that those who do not get an increase agree that others should. There is no other way of changing the differential wage pattern. Either all occupations must agree changes in the pattern, or power will force reversion to the differential status quo. That is the process which now threatens us. I must add, in parenthesis, that a means of measuring different levels of work now exists.
The Council's recommendations would not be to the Government for possible amendment, but to the House of Commons for acceptance or rejection. This, I believe, would be essential in order that the Council should be seen by all to be the adjudicating forum on differential wages. With such a Council attending to the differential pattern of wages, Government itself would, I believe, be able for the first time to exercise control over the total national wage bill in accordance with total economic criteria. Successive Governments have not been able to do this because of the absence of separate mechanisms for dealing with differential wages. The use of the near-unanimous voting procedure by the Council will inhibit large occupations with many representatives ganging up to deprive smaller occupations of equitable differential adjustments to their pay. Your Lordships will not believe at first sight
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that unanimous voting will work, but I have had 25 years' experience of it in industry. What it achieves is the equation of power, because every representative and the chief executive has the right of veto; and when power is made equal it is neutralised, and those deprived of its use are driven to the use of reason.
I close my contribution with answers to some possible objections to my proposal for a Council for regulating wage differentials. To those in this House whose career is or has been associated with trade unions, I put the question: Do you object in principle to the idea of employees' representatives collectively recommending the differential pay of one occupation as against another? To those whose career has been or is in the role of employer, I address the question: Do you object in principle to the idea of giving up your ever more ephemeral authority to resist wage demands from ever more powerful bodies of representatives and allowing them to work out these problems in the way I have suggested? To those who believe that the Council's recommendations, when accepted by Parliament, would be unenforceable, I say this: British citizens have a deep respect for the law only if they are directly represented on the body which formulates it. The employment zone is not so represented at present.
Given that the pattern of differential pay of all occupational groups were regulated by this new Council and accepted by Parliament, then a new atmosphere could be created. In this new atmosphere, I believe that our society would accept the morality of bringing sanctions against minority groups who attempted illegally to use their power to override the decisions of Parliament. It is not moral to use such sanctions without all the changes which I propose. It is not moral to do so to-day, at least, in the eyes of society. That is why successive Governments have been unable to cope with the problem in the past.
My Lords, let me be clear. I am not advocating regulation of the pay of individuals. That would be intolerable. I am advocating a new institution, based on democratic election, which would be accountable to Government for recommending changes to the differential wage pattern of the employment zone. Unless far-reaching change is introduced

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soon, then every single occupation will be forced to resort to power bargaining to protect its position. Such bargaining is the destroyer of fair differential pay. We must have some institution which can effectively deal with pay differentials. We need it now. My Lords, every developed country increasingly faces these problems. Why should we not exhibit our own political maturity by giving a lead to others, as we have done in the past?
3.24 p.m.
THE MINISTER WITHOUT PORTFOLIO (LORD DRUMALBYN): My Lords, I should like first of all to thank the noble Lord, Lord Byers, for having given your Lordships the opportunity to discuss this very important subject, and for having given the Government the opportunity to explain, in some measure at any rate, the inevitably complicated proposals in the document which we call the Consultative Document. The noble Lord was good enough to give me notice of what he was going to say, and I should like to tell him that we very greatly welcome the appeal that he made at the start of his speech not to treat the document as "a cause of strife"; and he finished up his speech in the same vein. This is an appeal that I should like to make to noble Lords in all parts of the House.
The noble Lord expressed support for the proposals in the Document (and if I may, I shall refer to it throughout as "the Document") dealing first with the rights of the individual; secondly, with more information for employees; thirdly, with the registration of unions and the scrutiny of their rules; and, fourthly, with the right of appeal of individual members against breach of those rules. Then, fifthly, he placed great emphasis on agreements at plant level, as of course did the Donovan Commission. I am sure that this is right, and I am sure that this is the intention of the Document, also.
Perhaps here I might just say to the noble Lord that there is no question of passing a Bill and sitting back, thinking that nothing more needs to be done. If there is one thing that is absolutely clear, it is that the Bill, when it goes through, will be a beginning. It will be a beginning of the improvement of communica-
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tions and the improvement of industrial relations. It will give the pointers in that direction. It really is not true, if I may say so, that the good sense expressed in the Donovan Commission's Report has been ignored. I know that the noble Lord, Lord Donovan, personally did not accept the idea that collective agreements should be made legally binding, and he said so in the debate that we had on the Labour Parly's White Paper, In Place of Strife. But most of the remedies that he suggested are matters for the code and not for the Bill, although a great deal of what he suggested will also be in the Bill.
My Lords, the noble Lord, Lord Brown, has come like a whirlwind into your Lordships' House to-day. I think he has blown a very fresh wind, if I may say so, through this Chamber; and I hope it is a wind that will continue to circulate here. I hope that his ideas will be most carefully considered, for we all know the very great experience that he has in these matters and the lead that he has given to experiments in these fields, which he has recorded in books as well as speaking about them in this House. But perhaps I may be excused from following him in any detail because, as he said, he was not really dealing with the subject of this debate. He was putting forward completely alternative solutions, so to speak, whereas the purpose of the debate is to call attention to the Government's proposals.
The noble Lord said that some of these proposals are bound to create dissension. With respect, I do not think that we ought to assume that in advance. This Consultative Document has been put forward for examination by all concerned. We have the opportunity to-day of examining it; and that examination will continue up and down the country. But I hope that when I sit down—and my task is the modest one of having to set out the proposals in some perspective; obviously I cannot go into great detail on them—your Lordships in all parts of the House will at least agree that Her Majesty's Government have attempted to be fair.
My Lords, there are two aspects of industrial relations. First, there are the day-to-day relations at work, whether on the shop floor or elsewhere; and,

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secondly, there are the more formal proceedings at various levels. These interact. Getting the first right where they are wrong stems largely from the second. I think it was Burke who said:
"Good order is the foundation of all good things."
Industrial relations must depend on good will, mutual respect, mutual trust, compromise and mutual consideration. But differences are bound to arise at all levels, and so there must be recognised procedures for settling them. That trust depends not only on mutual personal respect; not only on confidence and the willingness of those who negotiate on behalf of their colleagues, whether on the management or the employee side, to keep their word: it depends also on their ability to do so. That means rules clearly defining responsibilities.
Such rules must have two main purposes. First, they govern substantive negotiations. If the accepted rules enable each side to enter into these with greater confidence about the durability of the resulting agreement, the result is more constructive and fruitful negotiations; more discussion of the problems that are really worrying the ordinary employees, and an agreement which is less of a defensive truce and more of a considered attempt to solve these problems. To achieve this will require changes of attitude on the part of employers, as well as on the part of unions. We cannot expect unions to accept greater obligations in entering into agreements—and in particular obligations which may define circumstances in which the whole agreement may be reopened—unless the employers, in their turn, are prepared to plan ahead; to keep the unions they recognise fully informed about developments; to give greater security of employment and to enter into discussions with the unions well before major changes. The Government's proposals are designed to encourage developments in these directions.
The second main purpose of the rules is to guarantee to both sides a prompt and fair settlement of grievances when they occur. A good grievance procedure, and one that everyone knows will be observed, can do a great deal to avoid wildcat strikes. We all know that no amount of rules can prevent men from stopping work in a fit of momentary exasperation. What is needed is fire-fighting machinery for
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immediate dowsing of tempers; and the resumption of good sense and calm consideration of the issues, in the knowledge that there are fair and adequate means of settling them. If all the calm consideration under the procedures fails to remove the differences, then the right to strike must remain. A person's right of free association—which means the right to choose whether or not to associate—and the right to withdraw his labour are fundamental. Yet the right to withdraw one's labour in combination can have such serious results for others, and for the nation, that it should be exercised only as a last resort.
My Lords, the record of strikes in recent months in this country, to put it mildly, gives cause for concern. The number of days lost through strikes in the first nine months of this year—7,401,000—was higher than in any full year since 1957, and the number of strikes beginning in the period—3,196—was higher in nine months than in any full year, including 1957. Until the last few months we were wont to take some comfort from a comparison of days lost in strikes in other countries. In any case, such comfort as could be derived from the comparison was at best tepid, because it is not the number of days lost that matters nearly so much as the disruption and the demoralisation caused by the constant threat of sudden strike action. The major reason, in the Government's view, is that, unlike other countries, we lack a code of industrial behaviour. We have no clear definition of rights and obligations, and our institutions are inadequate to give the necessary assurance that in the end the grievances will be remedied, rights will be vindicated and obligations respected without resort to what the Germans call "industrial warfare."
It is astonishing that the country which was the home of the first Industrial Revolution still has no comprehensive law on industrial relations. The Conservative Party has made clear for the past five years its firm intention to put this right, and now that the Party is in power it has put forward, in the Consultative Document which we are to-day discussing, its proposals for so doing. The Government are sincere in their willingness to listen. The proposals, as your Lordships know, are based on the document, Fair Deal at Work, modified to take

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account of the recommendations of the Donovan Commision, and also the last Government's White Paper, In Place of Strife, and of all the thought and discussion that have been devoted to the subject since the General Election. The original proposals have been modified, and can be modified still further if the Government are convinced that they should be, provided always that what the Secretary of State has called "the eight pillars" are not undermined. Their purpose is to set the tone for a real change of attitude, and a real improvement in the conduct of industrial relations. Neither of these changes can be brought about quickly; but at least a start can be made. I shall not read the eight pillars because I shall be dealing with all of them in my speech.
The general philosophy is that industrial relations are primarily a matter for the parties involved, but that Government and Parliament have an essential role to play because industrial relations affect the whole nation. It is not intended, to quote the words so often used, to "bring the law into industrial relations", in the sense that the law will invariably, or even frequently, be invoked by one side or the other. The Government believe that their role should essentially remain one of advice and conciliation, but that where the national interest is involved they have a duty, and should have the power, to initiate action to safeguard that interest. They also believe that Parliament should provide a framework within which individuals and associations alike should have the maximum freedom within the law to order their own affairs. In the long run, industrial relations must, in the main, be regulated either by voluntary action or by compulsory.
As I went into the Department of Employment the other day a pamphlet was thrust into my hands, it was entitled, "Hands Off the Trade Unions". The demonstrators, very few in number, apparently belonged to the Communist Party. I could not help wondering what freedom the trade unions would have if we had a Communist Government in this country. In contrast, we believe in the Tightness and efficacy of voluntary action, and I am sure that that belief is shared in all parts of your Lordships' House.
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My Lords, we want trade unions to be free and strong, stronger than they are now. We shall preserve the essential immunities necessary for them to do their jobs. These immunities confer great power, and within a free community it is only right that the power of associations should be accompanied by obligations, not merely to their members but to the nation also.
It follows that only those associations, whether of employers or employees, which conform to certain conditions should enjoy those immunities. Surely, it will be generally agreed and accepted that voluntary action in a civilised community should conform to certain rules. Behaviour should be regulated by a recognised code of conduct. Accordingly, it is the intention of the Government to establish a code of industrial relations practice, in consultation with both sides of industry, as a guide to all concerned. The code will not be enforceable at law, but no doubt when matters do come before the courts the courts will take into account, as they always do, the behaviour of the parties in the action; and the question whether that behaviour was in accordance or in conflict with the code will be considered relevant. And, of course, the code will incorporate what is regarded as responsible and reasonable practice on both sides of industry.
Where the law is invoked there is no intention that there should be criminal proceedings. There will be no fines, no imprisonment, except, as under any litigation, for wilful defiance of the authority of the courts, or where someone wilfully and maliciously breaks a contract of service, knowing that by so doing he will be endangering human life, causing serious bodily injury or exposing valuable property to destruction or serious injury. The legislation will establish and define rights and obligations of individuals and associations which can be asserted by civil action if need be.
My Lords, I turn now to a brief summary of the proposals in the Consultative Document, which are necessarily complex. It will be for those who follow me in the debate to analyse them and to consider how they are likely to work out in particular situations. Let me deal first with the rights, immunities and liabilities of employees and trade unions.

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First, a worker will have an unqualified right to join, or not to join, a trade union. There will be a right of action against both employers and unions who seek to discriminate against an individual who exercises this right. Secondly, there will be statutory safeguards against unfair dismissals. Dismissals are a major cause of strikes and the new procedure should go a long way towards removing the causes of these strikes. Next, long-term employees will be entitled to longer periods of notice. Complaints of infringement of these individual rights will be referred initially to a conciliation service of the Department of Employment which will seek a voluntary settlement. Should conciliation fail, the complainant will have his legal remedy.
Trade unions will continue to enjoy immunity from actions for inducing breach of contracts of employment in industrial disputes, provided that they are registered with the Registrar of Trade Unions and Employers' Associations, who will take over the existing function of the Registrar of Friendly Societies in relation to unions and employers' associations. As recommended by the Donovan Commission, employers' associations will be separately registered and will cease to be covered by the definition of "trade unions". There will be automatic transfer of registered trade unions when the Act comes into force—that is, those who are entitled to recognition as trade unions under the new legislation. The rules of a registered trade union and employers' associations will have to be consistent with basic principles concerning the rights of members, which will be set down in the Bill, and a reasonable period to bring them into line will be allowed.
The matters which the rules of the trade unions, or of employers' associations, will have to cover are outlined in the Annex to the Consultative Document. For example, they will have to provide acceptable procedures for dealing with disciplinary matters, for the equal rights of members to hold office, for election procedure and ballots, for admission to membership, and for clear identification of the authority with power to instruct members to take industrial action. This last is particularly important, since a person who induces or threatens to induce strike action without authority will not be covered by trade union immunity.
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Federations or other joint organisations of trade unions or employers' associations can also register, provided all the component unions or associations are registered. There will be a right of appeal against decisions of the Registrar as to registration, rules or cancellation of registration.
Registered trade unions and employers' associations will retain their immunity from actions in tort arising out of acts done in contemplation or furtherance of an industrial dispute, but not in respect of other acts. The Consultative Document creates a new class of actions to which immunity does not extend. These are described as "unfair industrial actions". I have a list of 16 actions on the part of employers and 13 actions on the part of trade unions to individuals which are actions which would be unfair. Perhaps I may mention three. First, there is the organising of or a threat to organise a strike to induce an employer to discriminate against an individual who is employed or is seeking employment, on the ground that he is, or is not, a member of a registered trade union; secondly, inducing an employer to dismiss someone unfairly; and thirdly, inducing industrial action to persuade anyone not to enter into or perform a commercial contract, unless that person is himself interested in the original industrial dispute. Then there is the general picking up item which is any other threat of industrial action, if the industrial action would itself be unfair.
There would be no limit on the amount of compensation that could be awarded against an employer, an employer's association or an unregistered trade union, but there would be a limit in the case of a registered trade union. It will be the responsibility of the Registrar to ensure not only that trade union rules conform to the standards laid down in legislation, but also that the trade unions observe their rules and administer their affairs properly. He will be enabled to promote a settlement in cases of alleged breaches of trade union rules made by members of the union and to investigate irregularities on his own initiative. If his efforts to promote a settlement fail, then he or the complainant may refer the case to the National Industrial Relations Commission or to an Industrial Tribunal for adjudication.

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That brings me to adjudication. Adjudication in general will be entrusted to the National Industrial Relations Commission and the Industrial Tribunals. The Industrial Tribunals will in general deal with issues involving individuals, while the Commission (perhaps I should call it the N.I.R.C.) will deal with collective issues. In all cases the N.I.R.C. will allow both parties an opportunity to be heard before reaching a decision. There will thus be no ex parte injunctions. I know that this has been a sensitive point and that criticisms have been made on it.
THE LORD CHANCELLOR (LORD HAILSHAM OF ST. MARYLEBONE): I am reluctant to interrupt my noble friend, but he inadvertently called it a "Commission". The N.I.R.C. is a court. It is important to have it right.
LORD DRUMALBYN: I am obliged. There will be a right of appeal to the Court of Appeal, or in Scotland the Court of Session, on points of law. The jurisdiction of the courts is set out in paragraph 21 of the Consultative Document. Both courts will be specialised bodies, sitting under a legally qualified chairman. Their other members will be experienced in the industrial relations field. Their procedure will be informal, and access to them easy. The Government do not expect them to be used as a simple way out of industrial relations difficulties; they are intended as a means of last recourse after negotiation and conciliation have failed. Both courts will be able to refer cases back to conciliation agencies. This illustrates the Government's intention that as many cases as possible should be settled by conciliation.
I turn now to the Commission on Industrial Relations. This will become a statutory body. Its primary responsibility will continue to be to assist employers and unions voluntarily to improve their institutions and procedures in the industrial relations field as at present. But it will be given new responsibilities in regard to bargaining arrangements, the selective improvement of procedure agreements and the conduct of ballots for an agency shop. It will have power to hold inquiries, examine witnesses on oath, and require the attendance of witnesses and the production of
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information and documents. Without proper procedure agreements, collective bargaining risks frustration. The last Government arranged that companies employing more than 5,000 workers, together with nationalised industries and 46 of the largest local authorities, should be invited to submit their procedure agreements and arrangements to what was then the Department of Employment and Productivity. The response has been very satisfactory. Before the adequacy and effectiveness of such agreements can be assessed in some cases undertakings may have to be visited. Progress is therefore steady but not swift. The Document envisages that, should the voluntary arrangements prove inadequate, the Secretary of State may make regulations requiring employers of specified classes to inform the Department of Employment of their own procedure agreements and arrangements at plant and company level, and of any national or industry-wide procedure agreements or arrangements that they observe.
In addition, either an employer or a registered trade union will be entitled to apply to the N.I.R.C. for a review of their procedures or for the establishment of procedures, if none exists, with a view to improving industrial relations where they are unsatisfactory. The N.I.R.C. will refer the application to the C.I.R. if it is satisfied that there is a case. If the C.I.R. thought that action was needed, it would try to persuade the parties to adopt suitable remedies voluntarily, and, failing this, would itself recommend suitable procedures. On the request of either union or employers, these recommendations could be made legally enforceable by the N.I.R.C. after a hearing.
These arrangements illustrate three points: first, the fact that the new courts will not be asked to do things they are not equipped to do. It will be the C.I.R. that conducts the inquiry, advises the parties and, if necessary, recommends the procedures and any other remedies; secondly, the need for procedure agreements to be clear and unambiguous, and thirdly, the desirability of their being legally binding. And it is not only procedure agreements to which this applies. In the Government's view, all collective agreements should be presumed to be legally binding, like any other contract made in the course of trade and business,

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unless it is expressly stated in the agreement that they are not intended to be.
It is commonly said that collective agreements have not usually been made in a form that lends itself to enforcement, that they often cover obligations which are not of a nature to be legally enforced and that in any event the employer would not want to refer a breach to the courts. All that may well be true at present. But there is no question of existing agreements being automatically made legally binding on the passing of the Bill or the making of an order under it, when it becomes law. It is only collective agreements made thereafter that will be legally binding, unless the contrary is expressed. It would be a matter for negotiation between the two sides whether or not an agreement should be legally binding, taking into account the subject matter and nature of the agreement. The change should mean that agreements will be more carefully and clearly expressed, so that misunderstandings will be less likely to arise than at present. It will certainly remove many causes of suspicion and uncertainty. Undoubtedly there are many agreements which are strictly observed by both sides already and where it will not make any difference if future agreements are legally binding. But there are other agreements on which the two sides put different interpretations. If such agreements made in the future are legally binding, there will be a way of settling them by reference to the N.I.R.C. if discussion and conciliation have failed to resolve the differences. The mere fact that nobody likes to go to court, even an industrial relations court, should make the differences that much easier to resolve without litigation or strikes.
Two of the most fertile breeding-grounds for trouble are inter-union rivalry, on the one hand, and on the other the reluctance of some employers to accord trade unions recognition and bargaining rights. A stable bargaining structure ranks in importance with procedure agreements.
Sometimes the parties need help in deciding who should represent the workers in bargaining. It should be open to any of the parties—the employer, any registered trade union or a substantial proportion of the workers—to apply to the N.I.R.C. to refer the bargaining structure or a claim for recognition to the
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C.I.R. for examination. Again there is reference to the C.I.R. Indeed, the Secretary of State should also be able to apply.
The C.I.R. would be required to define the "bargaining unit" in terms of the employers to be covered, and recommend to the N.I.R.C. a registered union or joint negotiating panel of registered unions as the sole "bargaining agent". Either the recommended "bargaining agent" or the employer could then apply to the N.I.R.C. to have the C.I.R.'s recommendations made enforceable. The N.I.R.C. would order a secret ballot of the employees concerned, and if a majority were in favour would make them enforceable. Thereafter the employer would be legally bound to negotiate with the bargaining agent.
Finally, the Government wish to take wider powers to deal with national emergencies. At present, the public interest may be protected only by the proclamation of a State of Emergency and, ultimately, by the use of troops. But that course is not open where the economy alone is seriously endangered. Under the proposed legislation the Secretary of State will be able to apply to the N.I.R.C. for two kinds of order—he will not make the order himself. The first, where industrial action which would deprive the community of the essentials of life or seriously endanger the national health, security or economy is threatened, is an order against specific organisations or individuals restraining them from calling industrial action for a period of up to 60 days. The second, where there is reason to believe that the industrial action proposed does not have the support of the majority of workers concerned, is an order for a secret ballot. Anyone who led a strike or threatened one in the intervening period in breach of either sort of order would be guilty of contempt of court. The noble Lord, Lord Byers, raised a question on the present strikes in the coalfields, which he said he would ask my noble and learned friend the Lord Chancellor to answer at the end of the debate, and I shall leave that question to my noble and learned friend.
Your Lordships would probably like me to give you some impression of how these proposals will affect the position of individual workers in regard to strikes. The general principle is that workers should be free to withdraw their labour,

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subject only to the requirements of their individual contracts of employment. As at present, an employee who goes on strike in breach of his contract of employment can be sued by the employer for breach of contract, but very seldom is. Employees who go on strike in breach of their contracts, however, and their leaders, will continue to be protected from criminal or civil actions for conspiracy; the possibility that an agreement between employees to do so might be actionable as a tort will be removed, as recommended by the Donovan Commission. The Government also propose to keep the existing protection, in industrial disputes, against actions for interfering with the trade, business or employment of some other person, or with some other person's right to dispose of his capital or his labour.
At present, the law also provides protection, in an industrial dispute, against actions for inducing employees to break their contracts of employment, or threatening to do so. The Government propose to limit this protection to registered trade unions and to officials acting on their behalf. This means, first, that an unofficial strike leader will be liable to be sued in the N.I.R.C. if he calls employees out on strike in breach of their contracts, but not if he calls them out on strike without any breach of their contracts. Secondly, it means that a shop steward will be liable to be sued in the same way as an unofficial strike leader if he calls employees out on strike in breach of their contracts without getting the union's authority, but not if he first gets that authority. Thirdly, it means that the ordinary employee who strikes in breach of contract but takes no responsibility for leading the strike will not be liable to be sued for inducement: the employer will not be able to apply to the N.I.R.C. for a restraining order against the ordinary employee, but he can against the strike leader. I hope that that answers the point which the noble Lord, Lord Byers raised.
LORD BYERS: My Lords, it still means that the criminal element is imported through the contempt of court procedure. Presumably, if the C.I.R., which is a court, makes an order and is not obeyed, then contempt of court comes in.
LORD DRUMALBYN: My Lords, I am not a lawyer, and I do not know whether or not that is true. I should prefer to leave that point also to my noble and learned friend.
Where strike action for some types of reason—for example, to procure a dismissal, or to put pressure on an employer to discriminate against an employee because of his membership or non-membership of a trade union—would involve an unfair industrial action, it is not intended that workers should be liable to pay compensation merely for going on strike for that reason. Only those who organised or led the strike would be liable. The N.I.R.C. will be able to make an order prohibiting the calling or inducing of a strike for up to 60 days, under the proposal on national emergencies; and while a ballot was held, under the proposal on Strike Ballots. Breach of the order would be contempt of court. Again, the order would apply to the strike leader, but not to the person who merely went on strike. I felt it right to make this clear because it very substantially answers what the noble Lord said.
Finally, the question remains: will the Government's proposed legislation, taken as a whole, work, and how long will it take to work? My Lords, the Government are not prescribing an instant cure for the country's industrial relations problems. Our aim is long-term, fundamental reform, through the creation of modern institutions and services for industrial relations. Their use should ensure that the strike becomes a weapon of last resort rather than, as too often it is to-day, a first resort. Nor is it intended to encourage litigation as anything but a last resort—to do so would serve only to divert energy from the much more important tasks of increasing the national wealth and well-being. Legislation is both a complement to long-term improvement in human relationships, and a framework for it. Moreover, the Government are convinced that without these essential measures the voluntary system of industrial relations, which they value as highly as do both sides of industry, cannot survive. Neither the law nor the code by itself can provide all the answers: they cannot of themselves change attitudes. But they can, in the long run, exercise a profound influence

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on behaviour. Above all, they can encourage greater trust between management and unions, and greater confidence in their common endeavour, to the benefit of themselves and of our long-suffering nation.
4.2 p.m.
LORD STOKES: My Lords, when the Government's proposals for reforming industrial relations were published it seemed to me that many managers, particularly those who had been pressing most strongly for legislation, retired into their shells and left it to such bodies as the C.B.I. to give public expression to the employers' viewpoint. That is why I welcome so much this debate this afternoon. I ask your Lordships' indulgence to speak on this matter in which I have a personal interest as a chief executive of one of our largest companies, and one, incidentally, which has inherited a substantial number of industrial relations problems. When I explain to your Lordships that our own group of companies alone have some 70 factories, all with different wage structures, different customs and practices, many of which go back over fifty years, you will see the magnitude of the problem that one company alone in this country faces, quite apart from the whole of our industry.
First of all, I think we have to be very careful not to lay all the blame on the trade unions for the situation that we are in to-day, as in my view this would be grossly unfair. We are all in some measure to blame. Successive Governments are at fault for having too long taken the view that industrial relations problems could, in keeping with the tradition, be left to the good sense of both sides, particularly in recent years when good sense has become noticeably rather scarce. Employers in many instances are equally to blame for having accorded industrial relations far too low a priority in their order of business, this being reflected by the absence in many instances of adequate overall personnel and industrial relations policies and a tendency to leave too much to employers' associations. The employers' associations themselves, possibly due to the inertia of their members, have clung too much to the maintenance of the institutional status quo and were not ready to see soon enough the need for change which has been accelerating rapidly in recent years. The trade
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unions equally have failed to accommodate themselves to change, with the result that unofficial elements, operating all too frequently outside disputes procedures and union rules, have filled the vacuum. In many instances these unofficial elements have been motivated by ideological issues rather than by economic motivations for the benefit of their colleagues.
These deficiencies and others were fully demonstrated in the report of Lord Donovan and his colleagues on the Royal Commission which investigated the trade unions and employers' associations. Your Lordships will recall that this Commission, with some reservations, advocated the voluntary approach to the reform of industrial relations, and I am quite certain that most employers, in common with trade union leaders, would infinitely prefer that approach if there were enough time at our disposal. Unfortunately we are not in that position. However much some people may try to qualify or excuse the man-hours we are losing through strikes, and however much some people may try to justify the present scramble for higher wages, there is little doubt that from an industrial point of view this country is rapidly bleeding to death from self-inflicted wounds, and will continue to do so unless we act with a greater sense of urgency than we have heretofore. I am not without sympathy, nor, I am sure, is anyone in this House, for the lower-paid sections of the community, but there is little doubt that unless there is some wage stability and uninterrupted continuity of production in those industries which account for our exports and balance of payments, we shall lose our markets overseas for our vital industrial exports, and we shall lose them for good.
In no area in this country to-day is speed more essential than in the reforming of our industrial relations system, and it is my hope and belief that the introduction of further laws of the kind under discussion may accelerate that process. I do not propose to comment on those of the Government's proposals which seek to regulate relationships between the trade unions and their members. In judging the likely impact of the proposals on joint relationships between employers and trade unions we must, I feel, ask ourselves a number of questions. First, will the proposals lead to a greater degree of clarity

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in the status, responsibilities and obligations of the negotiating parties? Second, will the proposals lead to a quicker reform of our collective bargaining processes, to a greater sense of responsibility in negotiation and to a greater adherence to agreements once they have been negotiated? Third, will the proposals persuade those who now act outside agreed procedures and constitutional authority to conform in future? Fourth, will the proposals lead to an elimination of inter-union organisational disputes which sometimes affect employers seriously but in which they are all too often powerless to intervene? Fifth, will the proposals lead to a new style of management, to a new philosophy or to a new professionalism in the general handling of industrial relations, including job evaluation and other techniques referred to by the noble Lord, Lord Brown? Sixth, can the law, of itself, do anything to assist in the restructuring of wage payment systems or the renegotiation of other outdated workshop arrangements?
In my view, the first four of my six questions can be answered by, "Yes, not immediately, but perhaps eventually, the Government's proposals will help". What the proposals will not of themselves do is to bring about those changes in management attitude that may be necessary and without which workshop attitudes themselves cannot be altered. As to changes in such matters as payment systems, disputes procedures and all the other day-to-day issues of industrial relations, I see these continuing to be handled and eventually settled, as in the past, on an exclusively voluntary basis.
The unions too must change their attitudes. It is right that men should argue with passion on matters about which they feel passionately, but it really is not good enough in the context of these proposals to invoke the ghost of the Tolpuddle Martyrs or Taff Vale. It seems to me that any union which pursues a claim through the agreed disputes procedure and then strictly applies its rules in order to press the claim further by means of strike action has little to fear—and in other respects much to gain—from the proposals. Nobody in his right mind should object to procedural processes being strictly followed by all parties concerned, and surely no one can tolerate our means of national wealth
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being dissipated owing to factories, and even whole industries, being shut down due to the precipitate action of a small minority who either have not complied, or else refuse to comply, with the directives from their responsible union officials. It is an impossible situation to-day in industry in which every minor dispute becomes negotiated under the threat of, or indeed in many instances after, a walk out of the employees concerned, and in many instances before the issue has even been registered at the lowest level.
Speed is essential in dealing with any industrial relations issue, but instant decision is no more a panacea to our shop floor problems than is instant Government to the country, and discipline must be introduced to allow quick, but sensible, consideration of the issues as and when they arise. I have said before in your Lordships' House that very much remains to be done in the field of communications, and big improvements are being made in this direction. It is, however, very hard work indeed, and it must also be remembered that communications themselves can be really effective only where there is a formalised framework of orderly negotiations to which they can refer.
I should like to conclude, if I may, with just a few words about the implications of employers suing unions for compensation or seeking the other forms of relief that are now contemplated. I am quite certain that most employers will find it wholly offensive if they ever have to have recourse to the law in the forms that are envisaged; and I am equally certain that, except perhaps for a lunatic fringe, employers, if they ever do invoke the law, will do so only with the utmost discrimination. If we are to have a legislative framework for our industrial relations system it is my sincere hope that, as members of a reasonably law-abiding community, employers and trade unions will quickly adjust themselves to a new situation in such a way that neither party feels it necessary to have recourse at law against the other. One thing is certain: if legal action becomes commonplace both the employer concerned and his workpeople will have failed in their joint responsibility of providing the right environment and atmosphere in which good industrial relations can flourish.
4.12 p.m.
LORD BALOGH: My Lords, it is a very daunting task to speak after the noble Lord, Lord Stokes, on industrial relations. I find myself greatly in agreement with him on many points, as well as with the noble Lord, Lord Byers, and my noble friend Lord Brown. I shall not follow them however, because I firmly believe that the basic problem really transcends the document we are meant to discuss. I would say to my noble friend Lord Brown that I do not believe that industrial difficulties can be solved within the firm. Nor do I believe that the problem of wage differentials can be solved objectively. A wage differential is fair when it is felt to be fair, and not otherwise. It is a general psychological problem within society, and the problem of prices and social policies in general cannot be separated from it. It is therefore, I fear, no good for the Government to make a plea against strife when they are provoking it. It is only when the wider context is examined that we can come to any conclusion about the proposals, and not on the basis of their strict interpretation into which the noble Lord, Lord Drumalbyn, was forced—difficulties which I understand well.
What is this wider framework in which we have to discuss this problem? The Prime Minister not only twice accused Labour, as Lord Brown mentioned, of having fomented inflation for Party political purposes, but also twice said that he would be willing to brave a general strike, thus implying that the unions contemplated such an action. This is surely not a very fair way of presenting the issue. He knows that both accusations are, to say the least, lacking in foundation—in the United States a different word has been used.
We were promised during the Election that a new style of Government was about to be inaugurated. Now we know what that new style of Government is: make a statement first, think afterwards, seek the facts still later, and put off implementation indefinitely. What we are witnessing here is not a return to Tory politics, and not even a return to Adam Smith. They were eclectic, pragmatic and sensible. What we are witnessing is a revival of Whigism and Herbert Spencer. We have not had so
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dogmatically enrapt a Prime Minister since Asquith.
During the Election we were promised direct action to lower prices, stabilisation of the public sector prices directly, and also of wages, and a breakout from constriction in the jolly way of Maudung. What we have got is a renewed inflation, the worst we have had since the war, with the Government accepting double-figure wage settlements and advancing the increase in top Civil Service salaries, which also go far into double figures, by six months. We have a "Budget" which is definitely inflationary in a treble sense: it releases purchasing power in the wrong places; it gives largesse to the better-off. and it directly raises prices. It is in this context that we have to discuss this new Consultative Document.
I note that the noble Lord, Lord Byers (who I fear is not here at the moment; I am sorry), contented himself with calling attention to the Government's proposals. I think that even in the refined and myotic parlance of your Lordships' House more emphatic words are necessary. But then, of course, the Liberal Party's proposals of collective bargaining are, if possible, even worse than those of the Tories, for by encouraging wage settlements on the shop floor they encourage leap-frogging in a redoubled way. I seem to discover in the formulation of the noble Lord's Motion a well-deserved reticence.
The overwhelming problem before us in this field is the problem of inflation. I do not wish to minimise the problem of individual and collective rights and duties which is also involved. They are important—and the hardships which sometimes arise have been very grievous, and possibly some of these measures are quite necessary. But surely these facts really wither away into insignificance when we discuss this problem in view of the inflationary situation which has overtaken us. The Government's policy is absolutely inexplicable except on the hypothesis that free competition, or some semblance of it, will provide a balancing force in the economic system, provided that a sound fiscal and monetary policy is presumed. They have tried to provide a framework in which these forces of competition can work. This is a complete parallel to their treatment of prices, where they hope to do exactly the same

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through the Monopolies Commission and, of course, by abolishing the Prices and Incomes Board—in both fields.
The American example for over seventy years shows a total ignorance of economic principles and economic facts on the basis of which these proposals have been framed. In the United States of America precisely this legislative framework has been provided—both on prices and on wages. And what happened? Strikes have been greater than ever. They are having the biggest strike in world history now in General Motors affecting something like one-fifth of American production and causing what they call a recession and what we would call a catastrophe —5½ per cent. unemployment. We shall have an opportunity, I think, within the next fortnight to debate this question in the wider context it really merits. Therefore, I do not wish to prolong this intervention. But I should like to put down a marker. It is not in this way, not by legal regulation, not by accusing each other of bad faith, that we shall retain our international competitiveness. It is by a new social contract animated by a social spirit, and not the sort of spirit which came out so loudly from Mr. Barber's statement in another place, that we can cure our malaise and put Britain back on to the way to prosperity.
4.20 p.m.
VISCOUNT BLAKENHAM: My Lords, I hope the noble Lord will forgive me if I do not follow him very closely. I should not like to engage in a discussion on the dangers of inflation, about which I agree with him and on which I think he knows more than I do, but I would join all the previous speakers in this debate in thanking the noble Lord, Lord Byers, for allowing us to have this early opportunity of discussing the proposals in the document before us. I was also glad to hear the noble Lord, Lord Byers, agree that something must be done to bring industrial relations up to date. I was interested in some of the theories that he put forward about how this was to be done, but they do not seem to me to produce the very large-scale solution that I think he had in mind.
The noble Lord, Lord Brown, made a most interesting speech and I hope that the Government will listen to his sugges-
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tion of a council for regulating wage differentials. In the old days, in the Ministry of Labour we had something similar in the wages councils, and I am sure there is something in the idea he has put forward this afternoon.
I hope your Lordships will forgive me if I look back for a moment to some of the causes of the troubles in which we find ourselves. If I may, I should like to take your Lordships back to the years 1960 to 1963, when I was at the Ministry of Labour. When I first went there industrial relations were not happy, but I found that among both employers and trade unions there was a growing recognition that there were faults on both sides and that something must be done to rectify a situation which, in the opinion of both sides of industry, was doing great damage to the nation. I agree with the noble Lord, Lord Stokes, because I have always felt that in these matters it was for the employers to take the lead. This has always been right. One only has to look at individual firms, such as I.C.I. or Unilever (one could name many more), or industries like oil refining, boot and shoe manufacture, or even, in those days, the great steel industry where, thanks to the fact that enlightened management was working closely with the trade unions, strikes had been unheard of for years.
In those early days I had a number of discussions with the leaders of both sides of industry, and I was satisfied that, so far as the unions were concerned, the T.U.C. was prepared to play its part in taking a look at its new role in the 1960s. This was confirmed by a resolution passed by the T.U.C. at their Congress in October. 1962, calling on its General Council to examine and report on—and I quote:
"the possibility of reorganising the structure of both the T.U.C. and the British trade union movement with a view to making it better fitted to meet modem industrial conditions."
Mr. George Woodcock, who was then the General Secretary of the T.U.C., speaking of the resolution, said:
"It is at least time that we examined British trade unionism to see how far we are failing to bring ourselves into conformity with the times."
And he went on:
"There could be one of two things done with a motion of this kind. It could be smothered, or it could be the beginning of a tremendous undertaking. I believe it will be the beginning of a tremendous undertaking".

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Tragically, my Lords, the report was smothered. Nothing emerged, and the reforms which Mr. Woodcock (for whom I have the highest personal regard) and many other enlightened trade union leaders of the time would have liked to pursue in fact never saw the light of day.
The then Government have since been subjected to a considerable amount of criticism for having failed to insist on bringing in measures to modernise the trade union movement. At the time I was firmly convinced that, so long as the trade unions were voluntarily prepared to do this on their own, it was much better that they should do so. I still believe that this would have been right although unfortunately, as I have said, nothing came of this voluntary undertaking. In fact I made clear my own position, and that of Her Majesty's Government, when discussing the problem of unofficial strikes in the House of Commons on February 14, 1963. I then said—if I may quote a short passage:
"The most satisfactory way of dealing with all this"—
unofficial strikes—
"is for the unions to put their house in order. By an assertion of responsibility and leadership, the unions should see that agreements which they conclude are honoured. As the House knows, the T.U.C. decided last autumn to review the structure and purpose of the trade union movement. In my submission, that review must be carried out quickly and must lead to reforms. If it fails, then the situation will be serious and we must ask ourselves whether we can afford to let things go on as at present. My view is that we cannot."—[OFFICIAL REPORT, Commons, 14/2/63, col. 1509.]
My Lords, that was in February, 1963, and I agree that unfortunately there is no time to allow for these great problems in industrial relations to be solved on a purely voluntary basis.
So far as the employers were concerned, the picture was a somewhat brighter one. The Confederation of British Industry was formed in 1965 and was an amalgamation of the Federation of British Industries, the British Employers' Confederation and the National Association of British Manufacturers. So that after many years of sometimes rather divided counsels the majority of the employers in this country were able to speak with one voice. In addition, I think the noble Lord, Lord Stokes, would agree about the importance of the
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two official management training colleges which were set up at the Universities of London and Manchester and have done a great deal to improve the quality of middle management.
During those years from 1961 to 1963 it was interesting to see that, perhaps as a result of efforts in bringing together the chief trouble-making industries, largely the motor car industry, the shipbuilding and the building industry, and getting them round the table, industrial trouble, in terms of days lost, which my noble friend Lord Drumalbyn quoted earlier, in 1963 reached a figure of 1¾ million, which was the lowest figure since 1951. Unfortunately, as again my noble friend Lord Drumalbyn has said, this figure of 1¾ million days lost through industrial strikes has since then risen very considerably. Last year we lost 6¾ million days; and, as the noble Lord has said, in the first nine months of this year we have lost 7¼ million days, so that, obviously and unfortunately, the figure is bound to reach well over 8 million days lost by the end of the year. I think I am right in saying that these are the worst figures since the war.
My Lords, no Government could sit idle and watch this grave erosion of the productive capacity of the nation. Mr. Wilson's Administration endeavoured to face up to the situation, thanks largely, I think, to the courage and clear-minded-ness of the former Minister of Labour, Mrs. Barbara Castle, but the Cabinet and the Parliamentary Labour Party were divided. They could not swallow two of the main proposals put forward by their own Minister responsible for labour relations. The first was that unions involved in a recognition strike could, if the Minister judged it necessary, be brought before a newly formed industrial board empowered to levy fines on those brought before it. And the second major proposal that I think caused the withdrawal of the Government programme was that the Minister should be given the power to impose a 28-day pause on both sides in any industrial dispute which the Minister deemed to be damaging to the national interest.
Mr. Wilson, despite many brave words, capitulated at the very last minute. The proposals were abandoned, and instead the T.U.C., under the so-called "Croydon rules", formulated at their special

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Congress in June, 1969, were given the responsibility of intervening in unofficial strikes. Unfortunately, despite the gallant efforts of Mr. Victor Feather, the strike figures, as we have seen, have risen alarmingly in the last twelve months. It could not be otherwise. We have to-day to face up to the blunt truth that the General Council of the T.U.C., and indeed, unfortunately, the leaders of many of our unions, have lost control of the shop floor.
So to-day the new Government, empowered by the mandate which the electorate gave them last June, have produced their new proposals to modernise the industrial relations field. I should like your Lordships to be quite clear that, so far as I am concerned, I would not for one moment support these proposals if I thought them to be unjust or against the true interests of the trade union movement. I was very glad that the noble Lord, Lord Brown, when opening for the Opposition, made it quite clear that in his opinion these proposals were not, as has been suggested outside, "union bashing". They certainly are not. I believe that these proposals will strengthen the trade unions and not weaken them. I would ask your Lordships; why should the trade union movement, which to-day is one of the great estates of the realm, seek to be above the law in the contracts made by its members? I see no reason for this. We are living in 1970, not 1870; and surely power without responsibility is anathema in a modern democracy.
My right honourable friend the present Secretary of State for Employment has outlined in the Document, I think with admirable clarity, his main objects in dealing with our industrial relations problems. The Bill, as the noble Lord, Lord Drumalbyn has said, will establish what in the public interest are the basic rights and, at the same time, the matching obligations of employers and trade unions. It will lay down rules about what are fair and what are unfair practices in the conduct of industrial relations. It will provide a new structure and new institutions for encouraging stable and effective collective bargaining, and for resolving industrial conflict without—and this is very important—Government interference. At the same time, it will pro-
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vide (and this has been gravely lacking) new machinery for protecting the public interest in circumstances which threaten the nation. Throughout the whole document, I think, runs the constant theme of trying to obtain what is fair and trying to condemn what is unfair, so far as employers, trade unions, individual workers and the public as a whole are concerned. My right honourable friend the Secretary of State, whom I warmly congratulate on the presentation of these proposals, believes them to be fair and reasonable. I also believe them to be so, and I therefore commend them to your Lordships' generous consideration and approval.
4.35 p.m.
LORD STRANGE: My Lords, your Lordships will appreciate that I speak as a Cross-Bencher, as a member of the jury and not as an expert. Listening to this entrancing debate this afternoon, I have been struck by the fact that at the moment it seems to be all against the employees and not against the employers, except for a few remarks made by my noble friend Lord Stokes. We have to consider quite a lot against the employers as well in this matter. There is an operation called a takeover bid. I am speaking as an outsider. I had a very long friendship with a family who ran a large store in the City of London; they ran it for generations, and I knew three generations of them very well. We both engaged in the same sort of sport, and we met often. A gentleman who was an expert on takeover bids discovered something that the other people did not know: he found that they were very good employers; they knew all their employees. When it came to the terrible depression which we had at the beginning of the 'thirties they had to reduce their staff, people who had been with them for years, and they felt very sorry about it indeed.
They had another store in London, and in this other store, when the troubles came over them, they salted away money every year. Thus they accumulated a large sum in this other store in the same company, so that if there should be another depression they could pay their old employees and look after them while the money lasted. This astute gentleman,

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from wherever he came, discovered it through his spies. He was able to outbid anybody else and took the firm over, because he knew he could get the money out of the reserves. He had taken over many firms. Only one concern managed to fight against him and win. Some of the firms he took over were obviously obsolete, and by taking them over he improved them and made them more efficient, but the store I am mentioning has deteriorated considerably, to my personal knowledge, because it has lost the old drive, the old employer-employee relationship. It has gone down very badly. That is a pity for Britain, because it is quite an important store. I could mention other takeover bids, but I do not intend to.
May I tell your Lordships of a great friend of mine, engaged in the manufacturing industry, who travels about a good deal. He is a member of a businessmen's club in a town which as this business is going on now I will not mention, but it is a town like Sheffield or Manchester. He takes a great interest in manufacturing. Manufacturers are inclined to have a drink or two at the bar when they meet together, and in the course of a conversation he said "I have never seen a handkerchief factory"—I am using the word "handkerchief" as a disguise. His own product is of a different type. One man said, "We took one over in the last takeover bid. I will send you down to see it. I do not know where it is, but my secretary knows and she will get you a car. Run down and have a look at it." He went and saw this handkerchief factory. The tooling in the factory was extremely good; the material came in at one end and went out of the other as the finished product. There was nothing to do; even the packaging was automatic. But the place was in a deplorable state. The floor was dirty; there was obviously no management at all in the place. The staff looked disheartened; they just did their "press button" jobs. They seemed to have no interest, no enthusiasm. When my friend went out into the yard it was full of junk and rubbish which had not been cleared away. This small firm had previously been a most efficient family firm, with strong relationships between the staff and the owners. Those are just two examples I wish to give of a takeover bid.
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When it comes to the question of strikes, about which everybody has been talking all the afternoon, if your Lordships will excuse my saying so, I am reminded a little of the Psalms—one says something quite brilliantly in one line, and says the same thing quite brilliantly in the next line. I should like to talk, again as the man in the litter-filled streets of to-day, about the General Strike of 1926, because I took part in it—no, I was not on strike; I drove cars. On the first day of the strike I went down to the Horse Guards Parade and volunteered to drive cars for any purpose that was needed. A number of my friends did the same. The whole thing was disorganised. As you can imagine, this is Britain I am talking about. Some civil servants were lurking about. I met a friend who had been to school with me. He was higher up on the list of volunteers, and he was asked to take the British Gazette, of which there were some rather smudged and dirty copies, down to the East End. When it came to my turn, I was given a list. It was generally scored out. I had the job of taking some civil servants back to their homes. One lived, we will say, at Putney, one at Hampstead, and generally there was to be a great deal of driving. There was no system.
I went down to the Horse Guards Parade to wait, meeting many friends there. This chap who had gone down to Whitechapel returned. He said: "It is terrible down there; they are all killing each other". He said, "They surrounded the car; they have nearly pushed it over. I thought I was going to be killed, and I have come back". I said: "You did not deliver the papers", and he said, "No, I would have been killed". I said, "You take my assignment and I will deliver the papers". So I took the papers out of his car. A chap came up to me—he was a volunteer, an ex-naval officer who had come down to do anything useful—and said, "Can I come with you?" I said, "Yes, of course you can". He said, "Wait till I get my hat". As he was wearing a hat I could not think why he said that. Anyway, he went into the Whitehall Palace, came out with a leg of a chair and joined me. I made no comment why he had got a leg of a chair.
We drove down the Mile End Road, and were at once surrounded by people

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before we could get to the newsagents. These people wanted to buy the British Gazette and sell it at a profit. As we had no price restrictions then or instructions on what to do if anybody wanted to buy it, I auctioned the paper in quires and the crowd rushed off with them because they were selling them at a huge profit. That was all the trouble there was. That night somebody got some sense and decided that the faster cars were to go the longer distances and that the slower cars were to do the shorter journeys. So I drove down to Bristol that night. I even went up as far as Newcastle. I also went to Liverpool. My shortest trip, which I made towards the end of the strike, was to Dover.
I got a very good picture of the Strike. I talked to lots of people. I saw no trouble anywhere. It struck me for the first time what a wonderful people the British people are. This idea returned to me quite vividly in the bombing of London. They can take it. The conditions the people were put to were terrible in that Strike. They had no transport; there was nothing. In that way it was much worse then than it would be to-day; but it is much worse to-day, as we know, in other ways. The Strike came to an end, and that was that; but I have never forgotten it. I have never forgotten the depression that followed it. I have never forgotten seeing those plumeless chimneys, those streets in all the mining towns throughout the country with men sitting down on their heels. At that time I staged a revue. I played in most of these places, and everywhere I went there were men sitting on their heels without any hope of getting employment.
As we know, the picture changed. I have to put this rather carefully because I am speaking to all sorts of different people in your Lordships' House and I am just thinking how I should put it. The official unions have advanced in thought a great deal since those days. They have learned a lot. I think I should put it in this way, in a story which may not even be true, of the small boy who went to a public school. On about his third day there the master found that the boy had written a word in what I think is now called his dictionary, although it used not to be so called. The master sent the boy up to the headmaster, who said to
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I him, "Why did you write this word in your dictionary?" The boy said, "I am trying to learn a new word. It is one I have never heard before." The head- master asked, "Do you not know what it means?", and the boy said, "No, I do not know". So the boy was sent off. When it came to the time for him to receive his leaving book on leaving his public school, the headmaster, whom the I boy had never seen again until that time, said, "Oh yes, do you know what that word means now—that four-letter word you wrote in the book at the lower end of the alphabet?" "Yes", the boy said. The headmaster replied "Thank heaven we have managed to teach you something."
That is the attitude of the trade unions during the years which followed the General Strike. They have learned a great deal. They are responsible people; they know what they are doing. We all know what the trouble is—that is, the unofficial strike. We all know that the trade unions cannot control the unofficial strike, and I think we all know that about 0·2 per cent. of the population of this country—and this applies to most other countries—are causing a great deal of unnecessary trouble. We know that. As a democracy I am not sure that it is right that 0·2 per cent. of our enormous population should inconvenience people, for no particular reason, in the way that they do.
If I remember correctly, the end of the General Strike in 1926 came about because one member of, I think, a Conservative Government at that time had the good sense to ask the law what was the legal position in regard to the General Strike. I rather think that it was Sir John Simon. He said quite clearly, "It is illegal to strike against the State, to bring a disturbance against the State." That was clear. We are shortly to have a long and involved debate about the measures to be taken, and I would suggest to your Lordships—though not for a moment do I think that my advice will be followed—that the legal profession should be asked, first, if all this is necessary and whether the unions could not be left just as they are. We should ask somebody—the judges know; they maintain the law—whether the unofficial strike is legal or not. If it is not legal, that is the end of the problem.
4.50 p.m.
LORD TAYLOR OF MANSFIELD: My Lords, I should like to join in the sentiments of appreciation to the noble Lord, Lord Byers, for initiating this debate to-day. He has not lost much time in taking the initiative. It is only a month since the Consultative Document was issued, the House sat only last week, and here we are, in such a short time, discussing this important matter of industrial relations. I have no doubt that your Lordships will welcome this debate to-day for an obvious and special reason, namely, that it provides an opportunity for ventilating opinion—and we have had that up to now, and I believe it will continue—on a very important matter: the Government's proposed legislation on the question of industrial relations.
While the noble Lord, Lord Byers, was speaking, he took my mind back, because in some respects he was critical of all Parties but his own. He took me back to the heyday of Liberalism, when Campbell Bannerman won a resounding victory at the polls in 1906. Two years afterwards I commenced work. My wages were 1¾d. per hour for a 9-hour day and a journey of eight miles. That does not matter so much; but what I should like to point out is that in that heyday of Liberalism the only industrial relations there were were bad ones. This question is really of recent birth, and among all sections in the community, the trade union world and the employers, it has assumed a very important aspect indeed. Personally, I welcome that. The great need to-day is not to do anything precipitate that will sour industrial relations, but to do all that we can to sweeten them.
Most of the speeches from your Lordships to-day have been on the proposals. I intend to say very little about them, because I have had the Document for only about a fortnight, and I have it in mind that to-day's debate is merely a curtain raiser. It is a preliminary, though a very important preliminary, to the longer and more detailed discussions that will take place when the Government's Bill comes before Parliament. I am sure that none of your Lordships would doubt the controversial nature of these proposals, and the deep, emotive feelings that will be aroused if the Government persist in their proposals in the Bill as they
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are set out in the Consultative Document itself.
My Lords, do not forget that what we are dealing with in this particular sphere is not numbers on a card but men (and now women as well, because there are so many in the industrial field) who have feelings and who have rights. For what it is worth, I should like to state my reactions to the proposals as laid out in the Document, which may, or may not, be different when the Bill comes before us. I have had a fairly long experience in the industrial world, dealing with problems at branch and at pit level, trying to understand the feelings and the emotions of people in industry; and, rightly or wrongly, I have come to the conclusion that I do not believe that the proposals in the Document, if implemented, will improve industrial relations. On the contrary, a deterioration is likely to take place. I feel that co-operation between organised labour and the employers for improving the quality of industrial relations, which is so necessary, is likely to decrease. If the Government persist in going forward, it is only the future that will test the soundness of my own reactions and the opinion that I have on these proposals.
What is outlined here as in the mind of the Government in their approach to industrial relations? This is called a "Consultative Document", but I hope to show, before I sit down, that it is not. It is a document, yes; but by no stretch of the imagination, on the evidence that I have been able to accumulate, can I regard it as a consultative document. May I read paragraph 2 of the Document?:
"This Document sets out the principles on which the Government proposes that the Bill should be based, and the main provisions which it proposes to include. It is intended"—
and, as I take it, this is the only purpose of this Document—
"to serve as a basis for consultations with the Trades Union Congress and the Confederation of British Industry;".
It is on this aspect that I wish to make comments, and I hope to show that it is not what it states it is; that is, a Consultative Document.
What is the evidence for an assertion of that kind? The Minister responsible

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for its publication, Mr. Carr, is reported to have said:
"However good a case may be made against the main principles, there is no departure. Take it or leave it. I don't want to listen to any case that can be put up against the proposals in the Document."
I suggest if that is a fair and reasonable statement to make on what the Minister has said—
LORD BYERS: My Lords, would the noble Lord give the source of that statement, because it is very important?
LORD TAYLOR OF MANSFIELD: My Lords, it is in a report that has been published by the Trades Union Congress, and I will let the noble Lord look at it if he wishes. On the basis of that statement by the Minister I should like to say, first of all, that it is a pretty high-handed attitude to adopt. I should be the last person in the world, I hope, to be guilty of extravagant language, or in any way to misrepresent the Minister, Mr. Carr.
I now want to quote what the Minister has said, both in public and in private to the T.U.C., about these proposals. On October 7, two days after the Document was issued, he said at Blackpool:
"The main principles of the projected Industrial Relations Bill outlined in the Document are firm. There is no going back on the central principles. We still want and we welcome constructive comments about details, whatever they are."
One week later, when the Finance and General Purposes Committee of the Trades Union Congress met the Minister, there had been a slight change: there was a little chink in the armour—not in attitude; only in phraseology. When the Minister met the T.U.C., the "main principles" had become "pillars". He told them that the shape might be changed, but that the principles would stand whatever anybody thought of them, and they were not negotiable. I call them the eight commandments which are non-negotiable.
In the light of those ministerial statements, why call it a Consultative Document? In my submission, there is a misplaced adjective, and it is merely a document. It is not even a White Paper. I remember going to the Printed Paper Office last week, and asking for the White Paper on Industrial Relations. The people in the Office said, "We do not
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have a White Paper, but we have a Consultative Document". I said, "I am sure that must be it. That is what I want." Whatever the intention claimed in paragraph 2, I cannot see how this can by any stretch of the imagination be called a Consultative Document. Mr. Victor Feather, the General Secretary of the Trades Union Congress, is reported as saying, "It is called a Consultative Document, but it is not". The Government, in my view, have adopted a very pontifical attitude, and the Trades Union Congress, who are the victims of this snub, are of the same opinion. The T.U.C. have told the Government that these proposals will not help to improve the voluntary system of industrial relations and will impede the progress already being made by the unions, the employers and the Trades Union Congress. That is the assessment by the Trades Union Congress of the effects of these proposals. The T.U.C. have not used extravagant language; they have only expressed their view of the future. And remember, my Lords, that they, as well as the employers and the Government, are involved in this subject.
Let us remember also that the T.U.C. have long and wide experience in this field. The child which we call industrial relations is only in its infancy. I see the noble Lord, Lord McCorquodale of Newton, sitting opposite and he, along with the late Ernest Bevin and the late George Tomlinson when they were at the Ministry of Labour during the war, did much to deliver this industrial relations child, in co-operation with the T.U.C. and the employers. I do not know what the late Ernest Bevin would think of the proposals in this document to-day.
We cannot "shove off" the T.U.C. as an unimportant body. They represent 10 million organised workers, not only manual workers but many in the professions, and the lives and work of those people will be affected by the proposals in the document that we are discussing. To ignore and dismiss so arrogantly, as the Government have done, the advice which the T.U.C. could offer is foolish, and possibly dangerous. What the T.U.C. have done is to utter a warning about what the future may be in this delicate field of industrial relations, in the unhappy event that these proposals are

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implemented and become the law of the land. I do not think anyone would expect the T.U.C. to make that kind of prediction for fun, or because they have been treated shabbily in recent weeks, or even because we have a Tory Government. The T.U.C. would take a much wider, more objective and more dispassionate view than that, because they are a responsible body of people who are anxious to help in the progressive improvement of industrial relations.
I think that the attitude of the Government in recent weeks, in denying consultation with the T.U.C. or the employers, is a mistake of the first order. The Government's attitude strikes me in this way. The Government must think that these non-negotiable proposals, these eight commandments, have emanated from an omniscient mind and, because of that, are immutable and cannot be changed. During the last 30 or 40 years, Governments, of whatever Party, of whatever colour (and the noble Viscount, Lord Blakenham, paid this tribute as well) have sought the T.U.C.'s advice on industrial matters, and have been given it. Of course that advice has not always been accepted, but that is understandable. But what one cannot understand is a refusal to listen; the T.U.C.'s being told, "Irrespective of the case you may have, it is no use". My Lords, I regard this as a serious body blow, and one which could be damaging so far as co-operation between the Government and the T.U.C. is concerned.
I should like to take the opportunity of saying this to Mr. Carr, the Minister, and to the Government: "Your refusal to listen to the case against the proposals in the document, whether the case be accepted or not, is a matter for your judgment; but to close the door, and publicly pronounce and privately intimate to the T.U.C. that the main principles in the document are not negotiable is an attitude which in the future you may have cause to regret." I am told—in fact, I have heard trade union leaders say this—that Mr. Carr is a mild-mannered man, amenable to suggestions, and that he is not unwilling to discuss problems. All I can say is that if that is a correct description—and I accept it immediately—then one of two things has happened. Either he has taken leave of his senses or the pressures have been too
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strong for him to resist—and I suspect that the latter is the case.
My Lords, the case against the proposals will not go by default. There are two avenues open, and they will be used to the full. First, there is Parliament. Here, the proposals will, I am sure, be vigorously contested. Secondly, there is still a platform outside, and the T.U.C. will take full advantage of presenting the case against the proposals in the document—a privilege which they have been denied by the Minister.
One could go on for quite a time, but I feel that perhaps I have trespassed too long on your Lordships' time. The case that I have been trying to make is that the initial mistake which the Government have made in this field is to slam the door, so far as consultation on the proposals is concerned, in the face of the Trades Union Congress. The T.U.C. want to be helpful; they want to give their advice. They are as anxious as anybody that industrial relations should become better and sweeter; and they have a contribution to make. I hope—and this is my earnest plea—that even at this late hour, when we are perhaps on the eve of receiving the Bill into Parliament, the Minister and the Government will change their minds on this question of consultation and will say to the Trades Union Congress and to the employers, "Let us hear the case, if any"—and they have one—" which you have to make against the proposals in the document". I think that that would be a much better start to the long-drawn-out discussions which will take place in this House and outside; and I am also sure that such advice as they would receive would be of value.
LORD MCCORQUODALE OF NEWTON: My Lords, the noble Lord, Lord Taylor of Mansfield, was good enough to refer to me, and to talk about my old chief, Ernest Bevin, and he asked what Mr. Bevin would have thought of these proposals. All I would say is that throughout his career Mr. Bevin never ceased emphasising the supreme importance of the fact that agreements entered into between employers and representatives of the employees should be scrupulously honoured at all times.
LORD TAYLOR OF MANSFIELD: My Lords, I think that is perfectly true, and I subscribe to what the noble Lord

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has just said. What I meant when I asked, "What would the late Mr. Bevin have thought?" was in regard to these proposals, not in regard to agreements made between employers and employees. I subscribe entirely to what the noble Lord has said regarding Mr. Bevin.
5.17 p.m.
VISCOUNT ROCHDALE: My Lords, I have listened with very great care to what the noble Lord, Lord Taylor of Mansfield, has said. I think he will find that I have quite a degree of sympathy with what he said on the question of consultation, but I shall come to that a little later on.
In considering what contribution I might make to this debate, there came to me four basic thoughts which I recognised I must keep very much in front of me all the time if I were not to say something that would be dangerous. The first point was that industrial relations presents a problem which is second to none in importance among the many problems with which this country has to deal to-day. I do not think that that can be possibly overstated. The second was that it is a problem not of machines nor of economics, but of human beings. It is a problem of men and women, and of how, with all their widely differing attitudes, outlooks and ambitions, they may best pull together. The third point was that to-day, regrettably—and I am offering no criticism, because I think this is very much a case of, "Judge not, that ye be not judged"—the subject has become charged with a degree of emotion, in many ways understandable but which does not make an objective approach any the easier. The fourth was that nothing I say must be allowed to stoke up the fires of emotion. It is therefore, I hope, with a proper sense of responsibility that I try to add something to this debate.
Before coming to anything specific in the Document—and I want to refer to certain specific aspects of the Document later on—I should like to make a few general but I think relevant points. Industrial relations, my Lords, is not just a matter of trade unions or of employers' associations. It concerns management at all levels; it concerns the employees of a plant at all levels, and their families;
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it concerns, though perhaps less directly, Government. The Document we are debating is of course primarily directed to trade unions and employers' associations, and, though most important, has therefore limited objectives. The Document does not, as I see it, deal with issues: it deals rather with safeguards and procedures to be adopted when issues arise. It does not (nor does it attempt to) discuss or tackle the wider and more fundamental circumstances or troubles which underlie the unrest which can ultimately result in strike action.
These other circumstances—and other noble Lords have referred to some of them; and one much referred to is the effect of inflation—go far beyond the scope of this Document and indeed beyond the responsibilities of any one Secretary of State or any one Department. To say that is in no way to condemn the Document. Indeed, there may well be some who feel that for a single Document this goes too far and tries to do too much. All I want to do is to try to place this Document in its proper place and importance.
I have had some experience of employer organisations and have seen how important is a liberal outlook to new circumstances and new requirements. Yet how difficult it can be to bring about essential change!—whether the difficulties are due to personality clashes, personal ambition, fear of losing control or the question of finance. Reference has already been made to the formation a few years ago of the Confederation of British Industry, the result of a merger by three other bodies. This did not happen overnight; the concept had been in existence for years and years, but because of the various difficulties that I have mentioned it took a very long time to bring about. If my remarks seem unduly directed to trade unions—and many noble Lords have a lifelong first-hand experience of them, which I clearly do not have—I readily accept that what I say in connection with trade unions has a very direct counter application to employers' associations. I readily accept in either case that what is sauce for the goose is sauce for the gander.
My Lords, we in this country were the pioneers of trade unionism. Other countries have benefited from our experience and have even sought our advice; and

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while we have undoubtedly continued to advance (and are still advancing, thanks to the personal efforts of such men as Mr. Feather) it is never so easy for an old-established institution to wipe the slate sufficiently clean to take the fullest advantage of the best in present experience. I say that not to be critical in any way. I believe that this applies throughout life. I believe that we owe a great debt of gratitude to many of the trade unions and their leaders for their efforts in peace and in war. I would also say that although on paper our present-day arrangements may sometimes seem to have lost the lead compared with the arrangements in other countries, I am not at all sure that in the realities of practice we may not still be ahead.
Unfortunately, we have a curious national characteristic, very much played upon by the Press, of blazing abroad our shortcomings and concealing our good points. In the context of industrial relations, the Press, radio and television certainly seem to highlight the strikes with seldom a word for the far greater volume of harmonious fruitful discussion, agreement and mutual co-operation which goes on all the time between the trade unions and the employers. This national shortcoming puts the matter into a totally wrong perspective and the effect on our customers and competitors, particularly those overseas, must be most damaging to our prosperity—and quite needlessly so.
That does not mean to say that we can afford to be complacent. There is certainly no room for complacency because the fact remains that there is a significant upward trend in the frequency of strikes (and particularly unofficial strikes) and in this rapidly changing world surely something more is called for and is expected by the country whether or not it can strictly be said that the Government have a so-called mandate. Reference has been made this afternoon to the Labour Government's bold attempt with an important measure. They were defeated not by the Opposition but, as it were, from within; and it is far from clear what progress has been achieved within the T.U.C. despite what I know to be the very hard work of Mr. Victor Feather himself.
It is against this general background that I look at the Document. Let me
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say at once that I welcome it as a real and promising start. It is a start; but, as I have already said, it deals with only part of the whole problem and I shall have certain reservations to make. I should like here to refer to the question of consultation about which the noble Lord, Lord Taylor of Mansfield, spoke at such length. It seems to me to be regrettable that in a matter of such complexity and such national importance, a matter which in some respects should be entirely above Party considerations, there should be so little opportunity for preliminary objective discussion. The Document as it now stands has yet to be translated into a Bill. There may well be room for different interpretations of certain clauses where the intention and likely consequences may not be entirely clear. Prior discussion on these points could only be helpful in allaying fear and suspicion and could well make improvements and so produce the very best possible results.
Your Lordships will probably have seen a most interesting article that appeared in The Times on Monday of this week. An eminent American there compared this Document with the American practice. I must say that I have some sympathy with him when he said in conclusion:
"The document will surely fail if its many important provisions are debated in generalities".
—implying that there is a very great need for detailed consultation and discussion.
The introduction to the Document I regard as in some ways most impressive, including as it does a number of very important paragraphs leading up to the need for collective effort on the part of Government, management, trade unions and workers. May I read from paragraph 3 a few lines which to my mind are of tremendous importance?
"Poor industrial relations … restrict people's opportunities of finding satisfaction in their work, and create avoidable conflicts and hostilities in the workplace and in society as a whole. They dissipate the energies of management and unions alike, which are needed for more constructive purposes."
Turning to paragraph 4, I am very glad indeed to see that the primary responsibility for remedies for poor industrial relations is placed fairly and squarely where I (and, I believe, Lord Stokes also)

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think it should be placed—on management. Perhaps we sometimes forget this. I think it would be unfair for me to suggest that management has tried to evade it, but unless this responsibility is constantly in mind, and constantly in the mind of very top management, there is a danger of distorting the whole balance. Of course, the trade unions also have a great responsibility; the Government have a responsibility, and it is on the Government's responsibility that I should like to say a word. There may be different views as to the extent to which it is right for the Government to withdraw somewhat from this field, as they clearly intend to do. As I see it, the Government's role, as in other economic spheres, should be to create the right climate within which the normal process of industrial negotiation can operate; or, if I may take another analogy, to build the right kind of infrastructure upon which the normal process of industrial negotiation can operate.
My Lords, I have been very glad to hear throughout the debate that there seems to be general agreement on both sides of the House that this document is not an instrument for trade union "bashing". If I thought that was really the intention, or indeed likely to be the consequence, I should regard it with the utmost suspicion. It would be entirely wrong; it would be utter folly. Trade unions are an indispensible part of the industrial world. That may sound like a platitude, but as an employer I wish to repeat it and to emphasis it. I have many friends and acquaintances in the trade unions—indeed, I am glad to see some of my friends sitting opposite to me now; friends with whom I have worked for a great number of years on different aspects and for whom I have acquired a real degree of friendship. Therefore, my Lords, I try to put myself in their shoes and to ask myself what is it that they particularly fear, setting aside the question of consultation about which I have already had a word.
As I see it, the key to the Government's proposals seems to lie with the Registrar. Is it that the trade unions do not like their internal organisation arrangements pried upon or interfered with from outside, as they might be, by the Registrar? Is it that they do not believe that the proposals will work? Or perhaps it is a bit
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of both. My Lords, I must admit to having some sympathy on both these counts. None of us running his own business likes to be interfered with by an outsider, particularly if we naturally feel that we know better than the outsider. But in respect of most old-established institutions (and I imagine that trade unions are no exception to this) it is often easier for an outsider, bringing a fresh and, I hope, completely impartial viewpoint to bear, to see the wood for the trees; and, given some authority, to lend a hand.
I am sure that noble Lords on both sides of the House will appreciate the point I am trying to make. Many noble Lords must have sat on courts of inquiry dealing with matters other than those of their own professions, and they will have found that it was possible sometimes for them to bring to bear on another profession or industry a point of view which those constantly immersed in it from day to day had not entirely seen, or had not seen in the same way. It is in that light that I see the role of the Registrar, acting, of course, along with the courts and with the Commission.
That brings me to the second question: how practical are the proposals? It may look logical and natural to expect an agreement, which has been carefully argued and solemnly undertaken, to be legally binding; but if it is, how successful is enforcement going to be? How many agreements will in fact include—and I am now quoting a few words from paragraph 114:
"… express written provision to the contrary …"?
I suspect, my Lords, that quite a few agreements will include those words. It is here that I feel there is a gap in the proposed arrangements. It seems to me that too much emphasis is being placed on the legal aspect too early. In the last resort, as an utter long-stop, particularly in difficult cases, availability of legal enforcement may be right, but I should hope that resort to it would seldom, if ever, be needed; and it is at that early stage that I think something more is necessary.
The suggestion I should like to make deals with Clause 119. It is that not only should an employer or a recognised registered trade union have the right to make a reference to the Commission through

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the court for a revision of existing procedures, but also the Registrar himself. It may be asked why I make that suggestion, and again I would quote from paragraph 119, where it says:
"If the N.I.R.C. were satisfied, on the evidence brought before it and in accordance with specified criteria, that the development or maintenance of orderly industrial relations in the undertaking concerned had been seriously impeded by recourse to industrial action in breach of the procedure agreement, or in the absence of any effective agreement, it would refer the matter for investigation by the C.I.R."
My Lords, it seems to me that that procedure would take a very long time indeed, and by the time it had all been gone through it would be too late. On the other hand, if the Registrar could apply, if he were given authority to make a reference under this paragraph, then he would be given the right or status, as an independent, impartial and increasingly experienced person, to use all his powers of persuasion to help and to strengthen the hands of the trade unions; particularly in those cases where the review and improving of procedures was proving particularly difficult and frustrating. I believe a very great deal could be achieved in that way, particularly in the context of trying to prevent unofficial action. I find it difficult to see how unofficial action can be approached except through or by the unions themselves and they must be as much concerned about it as anyone else, if not more. Therefore anything that the Registrar could do, given the additional status which I suggest, would help and support the unions to that end; and that, surely, must be all to the good. This may seem quite a small amendment, but I believe that it could have very important results.
I turn now for a moment to the Code of Industrial Relations Practice. This seems to me extremely timely in offering great possibilities, but I regret that it will not be ready for inclusion in the Bill. Clearly, it will need to be most carefully drawn up and I suppose that it why its preparation will have to follow the Bill. I hope, however, that there may be incorporated in the Bill some guidelines, perhaps going a little further than the guidelines already indicated in paragraph 13. Above all, when the Code has been approved by Parliament it will need to be given the maximum publicity, because I hope that it would first be accepted and then be-
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come an accepted code or philosophy on this subject throughout the country.
I should also like to say a brief word about the closed shop. The whole philosophy underlying the Document is the freedom of the individual, though I am sure that we should all agree that the corollary of greater individual freedom is that it should be matched with greater individual responsibility. However, be that as it may, the concept of freedom of the individual makes, at any rate in theory, the closed shop appear rather an anachronism. But is its abolition practical? Here I refer to the Donovan Report. Your Lordships will remember that in that Report we were given a great deal of valuable and informative material on the whole closed shop system. We learned that it already exists to a greater extent than many may have realised before. But, in the event, Donovan came down against abolition of the closed shop, though clearly favouring a review and probably a tightening up of some of the procedures.
As I read the present Document, it does not propose to abolish the "post-entry" closed shop, but it does seem to be definitely against the so-called "pre-entry" closed shop, which of course is much the smaller aspect of closed shop as it exists to-day. Whether even this abolition of the "pre-entry" closed shop would be completely practical is obviously a matter of opinion, but I am clear myself on one point—that is, provided a man has the right skills and the right experience or is prepared to acquire them (and here I have in mind also applicants for apprenticeships), and provided an employer has the wish to employ him, individual membership of the appropriate union should be open to him without obstacle. And an employer must surely have some say in the control of recruitment and be free to say whom he does or does not wish to employ. This point is also discussed at considerable length in the Donovan Report.
There are one or two other points I should like to mention briefly. There is the availability of essential company information to trade unions. As an employer, I readily accept that this is highly essential if discussions are to be really on all fours. There is the revision of trade union procedures and accounts. I hope that this will include some

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standardisation of the way in which their accounts are presented annually. And, of course, there is the fact that everything in the Document must apply as appropriate equally to employers' association as to trade unions.
I would end by asking the general question as to whether I am right in thinking that the rights of the individual worker are in no way diminished, rather, indeed, in some respects extended, always provided he does not promote or lead an unofficial strike on behalf of an unrecognised body, and, secondly, that the rights of the unions are not diminished, provided they are accepted by the Registrar for registration, with or without some amendments to their procedures. Again, in some respects I believe the rights of the unions to be strengthened. If this is broadly the position, if the answers to these two questions are "Yes", how fundamental are the grounds for the resentment and fear of which one gets the impression? Where is the need for the critical nationwide publicity we have been promised?
This brings me back to the hope that some way may be found, without materially delaying the passage of the Bill, for much more preliminary discussions, really useful discussions, between the main parties concerned, in an objective and unemotional atmosphere of goodwill, so that in this vital matter we may get the best answer for the wellbeing of all engaged in industry and so of the country itself. Finally, I would say that Mr. Carr has taken upon or has had thrust upon his shoulders a task of immense burden and difficulty. He deserves our support.
5.46 p.m.
LORD HANKEY: My Lords, I should like to give a warm welcome to the Government's proposals on industrial relations. I think that the Consultative Document gets the balance just about right. It is a most welcome and necessary first step in the right direction. Obviously, we cannot prevent strikes, any more than we can prevent personal quarrels, by legislation, but the use of the strike weapon really must be canalised and we must prevent troublemakers from exploiting it unreasonably. I hope that just as we no longer fight duels with our
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rivals, so the institution of the National Industrial Relations Court and the Industrial Tribunals, and particularly the concept that some types of industrial action should be regarded as unfair and treated accordingly, will in the course of time produce a much more orderly atmosphere. Goodness knows! we need it.
The appointment of a separate Registrar for trade unions is much overdue and the new protection proposed for workers' rights in Section V of the Document is also most welcome. I think it is only reasonable that the immunities granted to trade unions under our very generous legislation should only apply to registered organisations. In this connection, I think that the definition of immunities of other combinations of workers in paragraphs 107 to 111, Section VIf, is to a layman rather obscure and I would recommend the Government to make the position much clearer when the Bill is drafted. I think that it might be better now to be a little more severe, if necessary, rather than allow further ambiguity which would give rise to more disputes.
I also want to welcome the proposals in Section VII on collective bargaining, particularly the point made by the noble Lords, Lord Byers and Lord Drumalbyn, about the importance of collective agreements at plant level. I believe that that is very important. I would also urge the importance of one other point. I think that industrial agreements ought to be valid for a particular period. At present, strikes often occur within a few weeks of an agreement having been concluded, not because it has already been broken but because some group or other want to change it. If an agreement has a stated period of validity, such as one year, as is the case in some countries overseas, then I think it would have better chances of sticking throughout the period of its validity. The constant renegotiations now involved are exasperating to everyone on both sides of industry and undermine our industrial efficiency.
The recommendations in Section VIIg about bargaining units are an ingenious way of making the best of a bad job. Let us face it. What we ought to aim at over the years is to have one union or very few unions for each industry,

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which is more or less the situation in Sweden and Germany. An employer cannot have relations of really close understanding with twenty or thirty unions. It is physically impossible. Nor can a coterie of small unions easily tackle large problems. This question bites both ways. The branch secretaries represent too few people; they cannot be adequately paid, and so the work of the unions, which is most important, also suffers. Like the noble Lord, Lord Byers, I should also like to see works councils as they exist, for instance, in Germany. However, I recognise that we must leave these problems, and of course many others, for future treatment. They obviously cannot all be dealt with at once. Nevertheless, my Lords, I think that these proposals in the Consultative Document, taken as a whole, will greatly reduce our present industrial chaos, and will strengthen the bargaining organisations on both sides of industry. This new reason for hope we must unreservedly welcome.
I am greatly disappointed that the Labour Party and the T.U.C. have not hitherto given this Consultative Document more favourable consideration. I entirely share the hope of the noble Viscount, Lord Rochdale, that they will think further about this in the weeks ahead, because I do not believe that this question ought to be treated as a Party matter.] honestly believe that there is a great deal of good in this Document from which the trade unions will benefit. I could understand their attitude, as I understand it to-day, if they seemed to have anything else worthwhile to offer. But, so far as I can see, that is not the case. Speaking strictly from these Cross-Benches and entirely without Party bias, I have been dreadfully shocked and disappointed that the Labour Party were not able to deal effectively with these issues of industrial relations while they were in office. I think that Mr. Wilson, as Prime Minister, did the best that he could in the circumstances.
LORD BROWN: My Lords, will the noble Lord allow me to interrupt? If he is dealing out strictures, will he comment on the words used twice by the Prime Minister which I have quoted, to the effect that wildly excessive wage demands were deliberately encouraged by the last Administration for their own
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political advantage? Does he expect the Labour Administration to approach even in a reasonable frame of mind a document produced by a Party led by a Prime Minister who repeats such remarks?
LORD HANKEY: I want everybody to be reasonable in this matter, and I am really appealing to both sides. I feel that if this question could receive completely impartial consideration on both sides, there is here a kernel of proposals which could usefully lead us forward. I am full of admiration for the courage and imagination of Mrs. Castle. I believe that her White Paper In Place of Strife would have given a useful impulse at that time and set our country on a better course. It has certainly influenced the Consultative Document. I think it was difficult for the Labour Party to deal with this question in the 12 months before an Election. The long delay in getting a Report from the Donovan Commission (the Commission did a great deal of work, but they met only 128 times over three years) involved this question coming up to the Cabinet at a time when an Election was getting rather near. I think that made it extremely hard.
The fact that this was going to happen was pretty obvious for ages before. I took this matter up with a member of the Government in the summer of 1967, and his attitude was, in effect—I do not quote him—"Do not touch the question, my dear fellow." I realised how delicate it was, but it could not be left to itself. Only four months later we had those disastrous strikes in the docks, and the pound slipped. Of course, the fact that the pound slipped was not solely due to the strikes; but the strikes, closing two of our main ports for, I think, five and nearly eight weeks were a material occasion for making the pound slip, because foreigners thought that we must be crazy: and foreigners will again think that we are crazy. I can understand that the T.U.C. believe in the voluntary system and when the White Paper In Place of Strife was more or less dropped, they promised to do their best. But just look at the mess in the docks, in spite of some local improvements, in coal mining, in the motor vehicle industry, in shipbuilding; and look at the mess in our streets.
The country, as a whole, is really fed up. Management is fed up because they

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are frustrated at every turn and cannot manage. The trade unions are fed up because any dissident group of workers can with complete impunity tear up the agreements that they have made for them. The branch secretaries, who have my full sympathy, faced by innumerable recalcitrant and often irresponsible groups, are in an impossible position; and so are the general secretaries—though I respect the fact that they still want to be allowed time to do better. I entirely agree with the noble Lord, Lord Taylor of Mansfield, that all of them want to see better times. The ordinary workers are fed up, too. Cost inflation is pushing up prices because of constant strikes and wage increases; and the Government's own attempts to control demand by fiscal and other measures have pushed up prices, and have in effect stoked the cost inflation. Agreements take ages to make and are constantly torpedoed. So what can the workers do except strike? And, of course, they make matters worse if productivity is not regarded. I do not think that they like it, and their wives certainly do not.
The great British public is fed up. Clambering over piles of rotting, rat-infested rubbish would be a scandal in Central Africa. And we know quite well that our public authorities are paying out huge sums in returned income tax and supplementary benefit to help finance this colossal waste of resources, to say nothing of mounting unemployment, which is a disaster.
We are in a spiral which we can break only by rapidly improving our system of industrial efficiency and by taking suitable financial and monetary measures. I agree entirely with the noble Lord, Lord Stokes, that the present situation cannot go on without this country falling very much further behind our competitors. Already we have fallen into thirteenth place in the O.E.C.D. in gross national product per head. Why should Norway, Denmark, Germany, France or the Netherlands all have a higher gross national product per head than we have? The answer is quite clear. They work, whereas our permissive society allows any disgruntled group of men to break their contracts and put a whole integrated industry like shipbuilding or motor vehicles into chaos. So we lose our markets and our share of world trade.
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Make no mistake about it, my Lords, we are going down. Our workers and the rest of us are going to suffer much more. This cannot go on. If our political position allows our relative position to slip much further, we may well reach a position of no return where we cannot easily modernise ourselves. I think that our political system itself might then be at risk.
To sum up, I welcome these proposals, because I am convinced that they will over the years restore order in industrial relations. I believe that within a year after the legislation becomes effective the trade unions will be immeasurably strengthened and made more responsible, and they will be able to make collective bargains that will be adhered to, provided of course that the Government control inflation. Eventually, management will be more able to manage. I hope that the trade unions will then be able to cooperate in getting up-to-date machines and processes adopted and bringing our productivity up to that of other nations. There is no other way in which we can expect our standard of living to keep pace with that of other countries. I foresee that when we have joined Europe the trade unions will be much more conscious of this than they are now.
I agree that no-one should think that the present state of industrial relations can be rectified just by amending the law. A real improvement depends on decisions to be taken by millions of our countrymen. But it is high time to realise that no improvement can come about unless we do amend the law in some such way as is now proposed. We have a long, hard road ahead, but I believe that this Consultative Document sets us off in the right direction, and we must in no circumstances lose more time.
My Lords, this country has no resources that some other countries have not got in greater measure. What we have got is a large measure of practical genius and a remarkable capacity for co-operation. Neither can be effective in industry in present conditions. But unless we allow our countrymen's genius and our capacity for co-operation to operate, and unless we prevent them from being foiled and baffled by small groups of disgruntled men, then I believe there is almost no limit to the humiliation and poverty that may be in store for us. We

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have all the genius necessary for success. We must now allow it to become effective. I hope the Government will lose no time in drafting the necessary legislation and bringing it into force.
6.2 p.m.
LORD TAYLOR OF GRYFE: My Lords. I welcome the debate this afternoon if for no other purpose than it has established a right temper for discussing this particular problem. If there is one thing that causes great concern it is the fact that on one side the troubles of our country are attributed to a small group of disgruntled men, and on the other side to the employers waging class war. I believe that both assessments are wide of the mark. I welcomed Lord Byers's concern that some of the problems of the place of the individual in society and the dehumanising aspects of a modern mass-production society require further examination. It is interesting to see in our own country in these past few years a number of notable experiments in this field. I reject the suggestion of the noble Lord, Lord Byers, that the day of national agreements is past and that power belongs on the shop floor. We are in grave danger of weakening the trade union movement by accepting that kind of philosophy and encouraging a kind of anarchy.
I have had some experience in recent years in one of the great nationalised industries: I refer to British Railways—a very vulnerable industry in which the workers can exert just as much power as dockers in terms of crippling the economy. In British Railways in the past eight to ten years the number of employees has been reduced from 500,000 to to-day's figure of 262,000, without any major industrial disputes. This is a tribute to the good sense of the men concerned, the good personnel relations department of British Railways, and the sense of responsibility of the trade union leaders concerned in that particular industry. What have we established there? We have established guidelines for industrial relations. There is an acceptance of national agreements, there is an acceptance of procedures, and there is an acceptance on the part of the trade union leaders that if they reach an agreement by voluntary negotiation they have a responsibility for its implementation. I should like to pay tribute to this
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particular industry with which I am personally familiar.
I am sure many noble Lords will have read the very interesting book by the noble Lord, Lord Robens, called Human Engineering which tells a similar story of improved relations in the coal industry. If I may say so on the subject of nationalised industries, there has been no reluctance to apply enlightened personnel policies in these industries. The steel industry is conducting the interesting experiment of worker-directors, so we should, when we are looking at this problem of industrial relations, pay tribute to these great sectors of the national economy where these successful experiments have been carried out.
Like my noble friend, Lord Hankey, we are all a little fed up, and as a consequence we are inclined to claim for this Document more than should be claimed for it. It will not solve the problem of strikes of municipal workers and the piled up rubbish; it will not solve some of the industrial disputes from which we have suffered in the past few years. All it claims to do is to establish some kind of climate, or to change the climate of industrial relations; to lay down certain guidelines which should be followed in order that industrial relations may be improved. I ask myself, as one who has been head of a large commercial organisation as well as a lifelong trade unionist, whether these proposals are acceptable or not.
I deplored the desertion of In Place of Strife, and consequently, to be honest, I find that I must support this Document, though perhaps not in its entirety. At least I feel encouraged by some attempt to lay down guidelines for conducting our industrial relations. It is an interesting paradox that it is the present Government who do not believe in State intervention, and it is the trade unionists and the Labour Party, on the whole, who clamour for a greater participation by the State in our national affairs. In this particular area it would appear that it is the trade unions who want disengagement by the State in industrial relations, and the Government who in turn wish Government intervention in this field. I am not concerned about Party loyalties in this regard. To me, as the noble Lord, Lord Robens, would say if he were in this House, it is a problem of human

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engineering, a problem of getting people to work together for agreed ends. To that extent I feel that if we do not get trade union co-operation and if we do not get the necessary good will, this Document, when translated into a Bill and subsequently into an Act, could be a dead letter. So it is important at this stage that we should reassure the people who are vitally affected as to what exactly is at stake in these proposals.
As a democrat, I think it is right that in a democratic society we must regulate the use of power by sectional interests and at the same time safeguard certain basic freedoms. To that extent I welcome the repeated statements of the Prime Minister concerning control of monopolies and the prevention of the abuse of their power. It is right that in a democratic society we should be concerned about the use of power by sectional interests, be they trade unions, be they I.C.I. or be they great industrial monopolies.
As a trade unionist I can understand the concern and worry felt by the trade unions. They are living in a situation of increasing inflationary pressures. There is the danger, too, following recent statements that rents may go up. A trade unionist considers: How can I protect myself in this situation? There is the abolition of the Consumer Council, the abolition of the Prices and Incomes Board. He may have regarded them as protective instruments in their various ways. But he holds on to the rights of trade unions to withdraw labour as being the essential protective instrument which he has used for over a hundred years in order to improve his conditions. Consequently, the trade unionist questions whether any of his fundamental rights are to be impaired by the passing of this legislation. To that extent the Government, and all concerned with national survival, have a job to do, to educate and explain; and assurances must be clearly spelled out that the right of workers to strike is not impinged by this legislation.
Looking at the Document quite objectively I can see many reasons in it for trade union backing. I believe that the trade unions have an important place in our society and must be elevated to an even more important place in industrial relations. I believe that the trade unions themselves have to be worthy of these
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responsibilities, and they in turn must rationalise their organisation. They must give their trade union officials better conditions and safeguard their position in such a way that they are free men and not captives.
Only recently I was speaking to a trade union official; he is a man who refuses to appear on television whenever there is an industrial dispute. He has many colleagues who are not so modest. It is no accident that this man was recently standing for a senior position in one of our largest trade unions and was not successful. In a sense he has paid the price for his responsibility. It is extremely difficult for trade union officials who have only a short tenure of office and who come up for re-election every three or five years. They have children to educate and domestic responsibilities, but they have a noisy, militant Left Wing behind them. Very often they feel they have not the freedom to speak objectively because of the pressures of the militant noises in their respective unions. These are human problems. I believe that the new type of trade union official should be a man who is trained in our business schools; who is able to analyse balance sheets; who is able to take advantage of the information that will be made available to him following these proposals, and who will be able to challenge management and ensure that inefficient management is not being propped up by workers being paid low wages. So I must insist that the problem is not one of small, dissident minorities. It is a problem in which management and unions have a heavy responsibility.
There is a changed situation in industrial relations. Ten years ago we had national agreements freely entered into in which the central executive of the trade unions and the employers accepted their responsibilities for implementing their agreements. This is no longer so. The old employer/employee relationship has gone, as businesses have become national and international. The decision-making seems to be remote from the workers. The workers themselves feel increasingly that they are cogs in some great machine and that decisions regarding their future, if they are in the motorcar industry, may be made in Detroit which may affect their daily bread in Linwood. So it is natural that there

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should be frustrations on the part of workers who feel impotent in this situation. So we have to look at this problem of communications in industry and try to make the worker feel involved in the success of his particular enterprise.
A great deal has been written on the Fairfield experiment. I am not going to assess the economics of that experiment, but what a refreshing sight it was to see Ian Stewart going down to the Lyceum Cinema at Govan Cross and addressing 3,500 workers and telling them about the fate of the company! What a refreshing thing it was to see that when new orders were received, or changes in the fortunes of the company took place, the men did not read about it in the evening newspapers when they went home! It was conveyed to them first, because they were regarded as important in the industry. Therefore I feel there is a great deal of responsibility for management. I hope that training in the factory, training of junior employees, will not be concerned simply with the handling of tools. It should be trying to show young people in the factory and in the workshop that they are an important part of a large organisation. Balance sheets should be explained and company objectives should be explained.
So, my Lords, I feel that this could be a turning point. It could be a turning point if employers recognised the role of the workers in the new situation. Recently I was reading a book by a man whose bicentenary we celebrate next year. I refer to Robert Owen. Almost 200 years ago Robert Owen addressed his fellow employers and said, "If this due care as to the state of your inanimate machines can produce such beneficial results, what may not be expected if you devote equal attention to your vital machines—to men, who are far more wonderfully constructed?" I believe there is some wisdom in Robert Owen's approach of 200 years ago.
Having said this, I would say to my trade union friends that it would be a great and grievous mistake if, in the excitement of this great debate on this new proposal, the trade unions were to resurrect outworn class-war slogans, or even if they were to be urged to challenge the power of the State. There is a grave danger of this happening urged by irresponsible elements in the trade union
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movement. I hope that, with understanding on both sides, we shall be able to reach some kind of system, some kind of code, that will enable us as human beings to work together for agreed objectives, accepting fairness and justice on both sides.
There are at least things in this paper which improve the status of the trade unions and of workers. There are proposals which bring pressure on inefficient management. The C.I.R. may intervene to avoid the dragging out of negotiations. The workers may demand a ballot to decide whether a factory should have 100 per cent. trade union membership. Ballots can be arranged to decide the bargaining agent—and how important that is in industries where there is a multiplicity of trade unions! The worker is protected against unfair dismissal. He has the right to more information. I hope that trade unionists will look at this matter again, and I hope, too, that the Government will make it easy for trade unionists to look at it again, by not being hidebound in their decisions, but opening up the possibilities of negotiation so that a new chapter in industrial relations may be entered into which will bring national wellbeing.
6.20 p.m.
THE EARL OF DUDLEY: My Lords, with such experienced and talented speakers—11 of them before me—I feel like the 12th man in the sporting sense. After the wide-ranging speeches from noble Lords on the subject of this Motion I hope I may be forgiven if I still go in to bat. I must especially congratulate the noble Lord, Lord Taylor of Gryfe, on his remarkable, informative and objective speech. He spoke from a great depth of experience as a humanist, and it is a pleasure to follow him.
As many noble Lords know, the annual conference of the Institute of Directors will be held to-morrow and will be addressed by (among others) His Royal Highness the Prince of Wales, the Prime Minister and Mr. Victor Feather. Noble Lords may look upon this as a happy augury for the future of industrial relations in this country, if not for the future of the Government's impending Bill. The occasion will no doubt be memorable, but above all it will be salutary if the outcome of the conference is to persuade

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boards of directors to pay more and closer attention to industrial relations. The Donovan Report criticised managements for their past handling of this subject. I believe it was fair criticism, that too many boards of directors still delegate the technical aspects of industrial relations to personnel officers, and that every board employing labour in any numbers should include at least one director with comprehensive knowledge and experience of the subject.
It should be self-evident that good industrial relations are essential to the success of any undertaking. Nor is there any other country whose prosperity depends so much on the effective use of manpower as our own. I entirely agree with the noble Viscount, Lord Rochdale, on this point and also with the noble Lord, Lord Balogh, when he demonstrates, as he has in his recent pamphlet, Labour and Inflation, that industrial relations and the wage bargain lie at the heart of our economic difficulties since the war. They are made responsible for the tendency for costs to rise further in the United Kingdom than elsewhere. With a subject of such national importance and urgency, the Government must be right in their choice of legislative priorities, and should introduce their impending Industrial Relations Bill to Parliament as early as possible.
The noble Lord, Lord Byers, in his Motion draws attention to the Government's proposals and to the Consultative Document, and your Lordships' debate has, I believe, reviewed the proposals and the Document against the background of industry's requirements, and examined their relevance to industry's current problems. Industry's greatest need, of course, is for a settled climate and a fair wind in industrial relations. At the moment we in this country are pitching and tossing in the teeth of a gale (noble Lords opposite will perhaps bear with the nautical simile, which is fashionable on these Benches), and hoping anxiously for better weather; though I doubt whether there is any noble Lord in this House who seriously believes that it will not be a long time before there is a marked improvement in industrial relations, or that it will not be a long haul to achieve that improvement.
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I remember, when I was at Oxford in 1939, hearing a lecture by the then Warden of All Souls in which he made the point that it had taken years of teaching and propaganda, by Walter Bagehot and other socio-political and economic thinkers in the early part of the 19th century, to instil habits of industrial discipline in people's minds. In the early days of the Industrial Revolution working men and women turned up at, and left, their place of employment when they so had a mind. This seemed to them natural, and it took years to reshape their thinking.
Since those days industrial behaviour has been gradually moulded into the familiar pattern that we see to-day. But while the modern industrial system has evolved, there have been severe and deep conflicts, particularly in the field of industrial relations. There have been stresses, there have been hardships and people have suffered. All of this is familiar to your Lordships, and because of it there are deep-rooted prejudices and antipathies in industrial relations, which it will take a good many years to eradicate.
At the same time, during the period in which our modern industrial society was fashioned, there developed the trade unions. These great institutions, formed by workers in their own interests and to protect them from exploitation, were granted, by Gladstone, by Disraeli, by Campbell-Bannerman, and by Asquith, privileges, and immunities from the law, denied to your Lordships or to any other body of citizens, to any other group, association of individuals, or individual since Magna Carta. No, my Lords, they cannot, in the words of the noble Lord, Lord Taylor of Mansfield, in any way be "shoved off" as unimportant bodies. This unique degree of protection may well have been necessary to the healthy growth of the unions at a time when they faced a great deal of hostility and opposition—at least so it seemed to the Government of the day; and having heard the remarks of the noble Lord, Lord Taylor of Mansfield, I think they were clearly right. With the complete protection given to them by Statute, the unions flourished and prospered, to the point Where now, after the Monarchy, Parliament and Church, they are the greatest institution in the land, the new Second Estate.

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Also, since 1906 there have been social changes which have transformed the relative strengths of the two sides of industry. The increasing integration of industry has placed employers more at the mercy of groups of militant employees. Since the last war Governments have adopted with success the policy of full employment. This has removed the main cause of hardship, but has also improved the bargaining position of labour vis-à-vis the employer. As with all great concentrations of power and privilege, there have been abuses and excesses, and it is natural that at some point in time, at some stage in the history of the unions, people and Government should think in terms of placing checks upon the power of the unions, particularly if it is felt that this can be done in such a way as not to detract from their usefulness and dignity.
Against this background, the Minister's proposals seem to me to be both relevant and sensible. In considering the legal framework, I see the central feature as being the informal and relaxed atmosphere of the courts, which will set the new standards of industrial behaviour and ensure that they are adhered to. As the noble Lord, Lord Drumalbyn, said, no one before the courts can be branded as a criminal, and I cannot see that attendance upon them need in any circumstances detract from the authority or standing of the officials who may be called upon to account for their actions. Nor are the standards anything but minimal and reasonable, and, above all, impartial.
My Lords, I agree with some noble Lords who have taken the view that the whole Document—with one exception, to which I shall refer later—is impartial. It will also, to my mind, reduce the causes of conflict in industrial relations. What is asked of the unions by the Government is that their rules should conform to certain principles, to which most union leaders could hardly object. Provided that the unions are registered, their immunities will be no less than they were. Here I agree with the noble Viscount, Lord Blakenham, that there is a strengthening of their position. But the real strengthening of the unions' position derives from the provisions for recognition and for the agency shop, which will give the unions something they
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have never had before—the legally enforceable right to represent 100 per cent. of employees and to bargain on their behalf. In many situations where the unions are developing their membership, these provisions must help them to increase their recruitment and their resources. There are other benefits for the unions and for their members. The unfair dismissal clauses and provisions for longer notice are major contributions by way of improved rights to employees.
Such weaknesses and inconsistencies as there are in the Document mainly concern the employer. As Ministers know about them from representations already made, I shall refer to them only briefly. I would agree with the noble Viscount, Lord Rochdale, about legal enforcement. There are weaknesses in the provisions for making collective agreements legally enforceable, provisions which make sense only if the unions are not going to press for an exclusion clause. Yet will they share the view that the present state of affairs is unsatisfactory? There are also technical difficulties about making industry procedures legally enforceable, as proposed in paragraph 144. Yet the great body of smaller companies in this country depend for their collective bargaining upon industry procedures. There are inconsistencies over the Secretary of State's powers to intervene. He can intervene in company agreements but has no right to do so in industry agreements, nor to initiate a reference in the case of unfair industrial action. Finally there is anxiety in industry about the provisions for disclosure of information by employers to trade unions, not in principle but as proposed in the document, which could lead to misunderstandings and to an undue weakening of the bargaining position of the employer vis-à-vis the union. These various matters are, I understand, being discussed by industry and by the Minister, who, I hope, will feel that he can deal with some of the more obvious weaknesses and inconsistencies.
Why cannot voices be heard from both sides of industry? Why will not the T.U.C. discuss the Document with the Government? If it is on the ground that the Government have not given them time, this must be nonsense. They have the whole background of the subject at their fingertips and must know exactly

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their position on each paragraph of the document. If I thought that in considering the proposals we were faced with a situation whereby the rights of the individual were being threatened or infringed upon by Government action, I should be the first to support the unions in their stand against the Government's proposed legislation, but the reverse is true. And the stand of the T.U.C. in their entrenched positions can only be because they are determined to resist any attempt to limit their powers or to curtail their privileges. I pray that this may not be so, and that their leaders will feel that there are some concessions that their members can and should in justice make. It seems to me that it would be so much more sensible and statesmanlike, and so much more in their members' better interests, for the T.U.C. to co-operate and consult now, rather than leaving all the work of preparation to the D.E.A. and the C.B.I.
I believe that it is in the T.U.C.'s interests to go to the conference table, and I believe that they could be brought to the conference table. With this in mind, I must voice my one major criticism of the Government's proposals, which is the same as that voiced by the noble Viscount, Lord Rochdale. Let me make my position clear. In most respects I support the Document. I congratulate the Minister on what I see as a constructive and statesmanlike approach to the problem of industrial relations, but in one respect he, and the Party which he represents in Government and which I support, have not, in my opinion, been sufficiently objective. I think we are allowing our judgment to be clouded by our passionate and fervent care for the rights of the individual when threatened by large and powerful institutions, whether it be the State or the trade unions. I refer, as did Lord Rochdale, to the closed shop. The democratic system in which we believe depends upon the expression of the will of the majority, not upon the impossible conception of 100 per cent. agreement. And if, in the sort of society in which we live—objective, we hope; unprejudiced, we hope; tolerant, we like to think—the majority of employees working together decide that they wish to be represented only by one union in collective bargaining, then, my Lords, please tell me what is wrong with that, and who should deny them?
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I do not know what motivates us when we feel so strongly about the closed shop. Whatever the reason, I agree with the noble Viscount, Lord Rochdale, that we are wrong. I believe that noble Lords on this side of the House should think again on this issue, and the Minister also. I like the agency shop proposal, and see no reason why the agency shop and the closed shop should not co-exist; agency shop if the votes are not enough, closed shop if they are; and, of course, the secret ballot. It seems to me that on the basis of acceptance by the Government of the closed shop, the agency shop becomes negotiable. Indeed, I should think that the Document and the legislation would become negotiable, with what great consequential benefits for the nation and for the economy!
Whatever view the Minister may take of my suggestion, I earnestly hope that he will not lose patience with the T.U.C. and will work towards joint consultation and negotiation. I would add that I foresee difficulties also if negotiations cannot take place in the climate of an expanding economy. It is my view that the country generally welcomed the cut in income tax last week, which was in line with Conservative pledges before the Election. The fiscal changes may lead to some deceleration of the wages band-waggon, and will certainly impress people with the present leadership's determination to reduce the level of Government expenditure. But, combined with continued monetary restraint, these measures will do little or nothing to stimulate investment and to reduce the level of unemployment. I assume that the restraints are maintained to combat inflation and to protect the balance of payments, but I am convinced that politically the proposed industrial relations legislation should be introduced against a background of expansion and declining unemployment. Economic policy should be directed from now on towards these ends and some risks taken with the total level of demand. So please, Prime Minister, set the spinnaker rather than trim the sails.
I believe that public opinion is at present behind the Government on these great and important issues, but conflicting pressures and persuasions are likely to be brought to bear upon the public in coming months. There are the militant branch officials of the unions, the

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convenors and shop stewards, and the militant rank and file, who will certainly fight the Government's proposals on their own, with their own methods and without regard for any guidelines laid down by the General Council. They will cause protracted and widespread disruption to industrial production, especially in the automobile and automobile components industries.
As hardships are felt as a result of strikes, the public could lose faith in the Government and in the proposed legislation. To prevent that from happening, we on this side of the House, who sincerely believe that the legislation will in the long run work in the national interest, are entitled to ask Ministers to use all the media of mass communication and information at the Government's disposal to rally public opinion behind the Government. It would be naïve to think that Ministerial television broadcasts or other media for making the Government's views known to the people will influence the militants, but they may help to steady the ranks under fire. Moreover, it would be the height of arrogance and folly not to take every possible step to explain such important legislation fully and in the simplest possible terms to the people, who are entitled to know what the Government propose and what Parliament disposes.
I fully expect the Opposition to oppose the legislation, and] accept their right to do so, even though I would privately hold the forlorn hope that they would not see it as their obligation. But I also know that in this House your Lordships' main concern is, must be, and will always be, the welfare of the people. It may well be that to some of your Lordships the selflessness of others is suspect, a political smokescreen for selfishness. Be that as it may, the consensus of this House must emerge as the betterment of the lives of our people, and we will surely in the last resort gauge our actions by that standard.
It is to my mind a tragedy that there should be confrontation in industrial relations. The State suffers by it, the nation suffers by it, and the living standards of the people are held back by it. This frontier of our own making, across which labour and management confront each other, cuts like the East-West Wall across the whole field of industrial relations. This wall may be in men's minds, but it is as barbed and explosive as the Iron
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Curtain. It seems to me, from the feel of this debate, that on this issue of industrial relations your Lordships will act senatorially. We should make it our task to destroy the barriers to concerted effort, and by so doing effectively to fulfil the purposes for which this House is by tradition suited.
6.40 p.m.
LORD BIRKETT: My Lords, if the noble Earl who preceded me was nervous about speaking twelfth, how would he feel had he been asked to speak thirteenth? I shall not therefore keep your Lordships long. But I should like to join with previous speakers in thanking the noble Lord, Lord Byers, for introducing this debate. I am very glad that the Motion came from the Liberal Benches, because it underlines almost the first thing he said, which was the need to avoid even the possibility of warfare in this matter, when so much has been published and so much said on television and in the Press advising us that warfare is about to start.
I confess to being, in a sense, slightly disappointed that the course of this debate has provided so little evidence either of warfare or of warmth. I started off by being a little sad that what the noble Viscount, Lord Rochdale, described as second to none in importance among the matters confronting this nation should be dealt with so coolly; and I thought that perhaps, even with your Lordships' reputation for what the Americans so graphically call "preserving your cool", just the tiniest spark might have lit the Chamber this afternoon. Then I reflected that I could find only two little sparks in the whole debate, and that they could scarcely be described as more than a scold.
The noble Lord, Lord Balogh, for instance, I noticed, took to task two of the Parties for their proposals on industrial reform. He took the Conservative Party to task, saying that it was in fact a Party which had proposed Whig proposals, and that it was more in league with Herbert Spencer than it might be with any of his other, more favoured economists. That is a judgment I am prepared to agree with, if it will please him. He then expressed his discontent with the Liberal proposals, and even accused poor Lord Byers of what I think he described as "well deserved reticence"

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on the subject. I think that, had the noble Lord, Lord Balogh, been fair, he should perhaps have added the fact that the Labour Party failed to stand by their entirely sensible proposals. That would, I think, have rounded off rather better his summary of the attitudes of the Parties.
Then in the speech of the noble Lord, Lord Taylor of Mansfield, I noticed some suggestions that the Government, having published a Document which they called "Consultative", had hinted privately—and indeed had said publicly—that they did not propose to hold any consultations and were not interested in anybody's comments. I can scarcely believe that any Government could publish a Consultative Document and then refuse to consult anybody. These were the only two moments, I thought, where anybody even looked like being cross. Yet I reflect that perhaps this is for the best, because essentially this is the time when our sense of fairness and our sense of common sense will be most needed.
I agreed with the noble Lord, Lord Byers, in that there were two things I should have liked to see emphasised, or even mentioned, in this Document because they both seem to have much to do with common sense and much to do with fairness. The first is the question of profit-sharing, of shareholding by all those concerned in an enterprise. I work in an industry, or at least in an entertainment world, where the law of supply and demand applies not only in an extreme sense but in a perfectly outrageous sense, so that in some cases the only way of satisfying the demands of some elements of our profession is to give them a share in what might ultimately result in terms of profit. That is the only rational way of approaching the sort of demands which, unfortunately, they can make and get away with in terms of salary.
I have tried to apply that principle from time to time right through a working unit of people, and I have always found that it has provided enormous satisfaction. I suspect that the interest in the profit participation scheme is not that it will make everybody rich, or even that it will ensure that nobody is richer than anybody else; it is, quite simply, that it will ensure that nobody is rich at the expense of anybody else. That satisfaction,
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even if it comes to not so much as a penny piece, is still a satisfaction and a guarantee to those working within a group.
The other point which the noble Lord, Lord Byers, mentioned, and of which I should like to see more mention in the Consultative Document, is the question of the contracting in or the contracting out of a political affiliation. In my view, the less political affiliation there is between the trade unions and any Party, and between employers' organisations and any Party, the better protected the interests of the country will be. The tendency in the country is always to divide everything down the middle with a line, and to place it to the right or to the left of that line. The fewer artificial distinctions and divisions of that sort there are, the better off I believe we shall be.
So, with the exception of agreeing with the noble Lord, Lord Byers, that these two things might have been mentioned, and perhaps encouraged in this Document, I should like to agree with the noble Lord, Lord Brown, when he said, if I took him aright, that employment often spoils the natural good will and the natural good reason of people who are working. I find this to be so—not, I think, on principle, but because six people can somehow work together easily but 6,000 people can work together only with the greatest difficulty. The 6,000 people are no less individual human beings than the six; but within the 6,000 there arises the question of communications, the question of persuasion; even the question that haunts us all, of the hidden persuasion.
That is why I welcome so much all the references made to information provided from management to workers about the nature of the company, about the state of the company, about proposals for the future. That is why I welcome so much the remarks that I heard from numerous quarters about the satisfaction in companies where consultation did exist, and where those at every level were informed and asked to contribute to the plans and the future of the company. Indeed, I think that this element of trying to make massive industrial relations as simple as ordinary human relationships is really at the centre of what this proposal is about.
For that reason, I agree with the noble Lord, Lord Drumalbyn, that a code of

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industrial practice is essential. I hope that nobody will think that in saying that I am betraying my background, and I hope that the noble and learned Lord the Lord Chancellor will forgive me if I say that if a code is essential the law will be useful. I make that distinction because I take clearly the point made by the noble Lord, Lord Stokes; namely, that if the law is invoked too often the common sense and the fairness which he believes to be inherent in the industrial situation wall have failed. It is not that the law is not needed, nor that it is not to be regarded as the highest arbiter in the land: it is simply to be hoped that it will be very rarely invoked. With those comments, my Lords, I welcome the Consultative Document and express the hope that I may equally be able to welcome the Bill.
6.50 p.m.
LORD DELACOURT-SMITH: My Lords, the House is indebted to the noble Lord, Lord Byers, for initiating this debate. In the course of it we have had from my noble friend Lord Brown, and from others, highly individual contributions to the examination of this Document. It is a long Document and a complex one. I frankly confess that I found the former Government's White Paper, In Place of Strife, far easier to comprehend and to grasp than I have found the present Document. Much of it seems to be couched in language which is intended for the layman, but then we find ourselves up against a passage which is rather mysterious to the layman, and which we can only assume has some particular legal significance. But I think it would be difficult, from the tone of the speeches of some noble Lords who have contributed to the debate, to appreciate that there are some in this House, and very many outside it, who see this Consultative Document as in danger of leading us down quite the wrong road, of diverting our attention from some of the most urgent aspects of industrial relations, and of landing us in a situation which in the end, on balance, worsens industrial relations rather than improves them.
It is common ground, of course, that industrial relations in this country are unsatisfactory, and we are agreed that it is important to improve them and to bring our arrangements in many respects
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up to date, not only for economic reasons but for social reasons as well. The Consultative Document says:
"Poor industrial relations are not to be equated simply with strikes."
I welcome that statement most cordially, but I must confess that it seems to me belated recognition, from the Party opposite, who have, I think it is fair to say, at any rate publicly concentrated most of their attention in the past two or three years upon strikes and strike statistics.
I would suggest that better industrial relations, being much more fundamental than a reduction in the number of strikes, depend upon possibly four elements: one, better procedures; two, a better understanding of industrial problems by employers and employers' associations, for although there are some employers who set a very high standard in this respect, unhappily there are many employers in this country whose attitude and record in industrial relations is one of deplorable lack of understanding; three, better organised and better serviced trade unions; and four, and perhaps embracing the three preceding elements, the use of machinery in which everybody can have confidence to produce improvements. This question of machinery involves the Commission for Industrial Relations, the T.U.C., the progressive employers and employers' associations, and the various agencies of Government itself. I am bound to say that, in my view, to proceed along the lines set out in this Document is likely, so far from improving industrial relations, to prejudice the improvement of industrial relations and to prejudice the most effective operation of the agencies to which I have referred.
We have spoken much this afternoon of the law, and the new place which it is to have in industrial relations as a result of these proposals. There are some points in the Document which are not very clear. One point which is not very clear, at any rate to me, is that of the sanctions which are in fact to be at the disposal of the law. If I am wrong, I trust that the noble Lord, Lord Drumalbyn, or the noble and learned Lord the Lord Chancellor will correct me. Am I right in thinking that, among other things, these proposals would mean that in a certain set of circumstances, an

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individual who induced industrial action—and, by the way, we have not had a definition of what industrial action is—and who, for example, induced his fellow workers in a particular set of circumstances to withdraw their labour, might find that, as a result, the N.I.R.C. imposed upon him, or awarded against him, financial penalties? And am I right in thinking that if he did not, or would not, accept those financial penalties, or if he persisted in a course of action, in inducing a course of action, or seeking to induce it, which the N.I.R.C. have condemned, he might find himself liable to be sent to prison for contempt of court?
THE LORD CHANCELLOR: My Lords, the noble Lord has asked me a question, and I will proceed to answer it. If the noble Lord will read the Report of the Payne Committee he will find the answer is, "No", you cannot go to prison for not paying a judgment debt.
LORD DELACOURT-SMITH: My Lords, if an individual persisted in a course of action which had been condemned by the N.I.R.C, would there be no issue of contempt of court?
THE LORD CHANCELLOR: My Lords, clearly if a person who is served with an injunction wilfully disobeys the injunction, there is a question of contempt of court.
LORD DELACOURT-SMITH: My Lords, will the noble and learned Lord take it from me that it is of the greatest importance that these matters should be clarified?—because they are very far from clear in the Consultative Document. They are certainly a substantial element in the thinking of people upon this matter, because for the invocation of the law to take place in this way—and there can be no doubt about it—is changing the atmosphere, and tradition, of industrial relations in this country. It is playing with words (if it is seriously meant that the law is to be brought in to ensure the performance of contracts of employment) to suggest that this can be a form of strengthening the voluntary system. I think it is of great importance that this matter should be looked at.
LORD DRUMALBYN: My Lords, may I ask the noble Lord a question?
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Is he not confusing the treatment of contracts, on the one hand, with the intervention of the Secretary of State in matters of national emergency, or strike ballots, on the other?
LORD DELACOURT-SMITH: No, my Lords, I am not in any way confusing the two things. I am seeking to get a clarification of what the situation is if, in fact, somebody performs an act which is condemned by the N.I.R.C., or persists in a course of action which is condemned by the N.I.R.C. I think it would be very helpful all round if this could be clarified and the position set out to us in more detail.
I think I am right in saying that in his closing remarks the noble Lord, Lord Drumalbyn, talked of the breakdown of the voluntary system, or the voluntary system being faced with breakdown. I think that that is putting it a little strongly. If I am misrepresenting the noble Lord, I shall be happy to give way.
LORD DRUMALBYN: My Lords, I do not think I said that. I said that there was a danger that it could break down altogether, and one had to choose between a voluntary system and a compulsory system in the long run.
LORD DELACOURT-SMITH: My Lords, I am bound to say that it seems to me, on the basis of the evidence so far offered to us, that we are a very long way from the breakdown of the voluntary system. We have had quoted to us—and they were referred to this evening by the noble Lord, Lord Hankey—the usual industries which are always quoted: the docks; the coal-mining industry; the ship-building industry; the motor car industry. These are the industries which are always quoted as those in which there have been unconstitutional disputes. It would perhaps be better if attention could be concentrated more closely on the special circumstances which exist in those industries, rather than on drawing from them generalisations about the voluntary system—which, after all, covers a very wide range of industry—being in possible danger of breaking down.
I think, too, that the Document before us ignores the fact that the control of an individual's relationship in industry is

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an important part of his freedom. We should, I believe, be seeking to aim at greater participation by the individual, and better understanding on his part of the problems of the industry in which he works and of its industrial relations. A system which is based on legal regulation, or which brings the law in as an ultimate sanction, is bound to militate against this, to introduce an element of inflexibility into negotiation and to put greater responsibility in the hands of the full-time official and the legal expert compared with the lay member of the union.
At the heart of the proposals is of course the N.I.R.C. As we know, it will not be an industrial court of the kind with which we have been familiar in the past. As I understand the Document, the N.I.R.C. will be headed by judges; it will be concerned with enforcing legal rights and obligations; and it will, I presume, create case law. It seems to me likely to create a paradise for lawyers. It will open the way to penalties, which, perhaps the noble and learned Lord, the Lord Chancellor, will explain rather more fully than does the Consultative Document itself.
In such an atmosphere the influences which make for an improvement of industrial relations are likely to be weakened. For example, although there is intended to be scope for conciliation, it is hard to believe that officials of the D.E.P. will put themselves in the position of impeding persons from seeking legal remedies for unfair industrial actions. Emphasis, too, has been put by the Government and by the Minister at the D.E.P. upon the diminished need for Government interference. I should like to know—not necessarily on this occasion—how far it is the intention of the present Government to seek to develop the steps which were being taken in the Ministry of Technology, in particular, in the last year or so of the previous Administration, to develop much closer relationships with the trade unions and to seek to ensure that there was, on the part of permanent officials dealing with industrial matters in the sphere of the Ministry of Technology, an understanding of trade union attitudes and problems as complete as their understanding of employers' attitudes and problems.
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There is little in this Document about the need for employers and employers' associations to secure a better understanding of industrial relations. Indeed, my fear is that the forthcoming Bill will tend to strengthen the position of the more backward employers, who will be tempted to take the course of doing what they conceive the law compels them to do, rather than seeking, as has hitherto been the case, to promote proposals which commend themselves to the common sense and the sense of justice of their employees. This infusion of a greater legal element into our industrial relations system will, I believe, vitiate to a considerable degree the work of the Commission on Industrial Relations; and already there has been some suggestion, at any rate, of this in some of the reports in the Press. It is hard to see—and this is a point which I believe has not been mentioned by any noble Lord—how these proposals can fail to weaken the influence of the T.U.C. itself. They seem to me to ignore the work of very considerable value which the T.U.C. has been doing since the Donovan Commission, and particularly in the last twelve months, in seeking to improve the relationships of unions with one another, to bring together more effectively unions within particular industries, and to improve the procedures by which those unions operate.
It would be valuable if we could have indicated to us where, in the system envisaged by the Consultative Document, there is room for the mediating influence of the T.U.C. It has been a valuable influence, and one which, I think, under the impetus which was given to it by the discussions with the former Government, held out possibilities of being more fruitful in the future. I think that the present Administration have consistently underestimated (and this came out in the debate this afternoon) the value of the undertakings given by the T.U.C. following their discussions on the White Paper with the previous Government. I believe it would be of great value if, instead of proceeding on the lines they now propose, the present Government were rather to seek to follow the lines which were begun at that time.
This leads naturally to the point which was particularly emphasised by my noble

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friend Lord Taylor of Mansfield, who pointed out how the Government had made it clear that they were not prepared to listen to argument, except upon details of the proposals. I think few noble Lords have endorsed that attitude. It seems to me that in a matter as delicate as this, it was most unwise for a declaration of that sort to have been made. Considering the complexity and importance of this issue, it was hardly likely that the T.U.C. would easily be able to enter into negotiations and discussions when it was told that the minds of the Government and the Minister were closed upon the major provisions in the proposals now before us.
There are many items of detail in the Document to which I am tempted to refer. However, it seems likely that we shall have many opportunities of returning to this matter and dealing in considerable detail with some of the proposals contained in the Document, when and if they come before us in legislative form. There are many matters which are puzzling, there are many which have an effect, when one examines them in the light of detailed knowledge, which is quite different from the effect they appear to have on first reading. For example, there are the proposals about trade union membership, with the juxtaposed right of an individual to belong to an independent registered trade union, and the right of an individual to choose not to belong to a trade union.
It is hard to see how, on the basis of those two points, the proposals set out in the Document can really be reconciled with the arrangements which the T.U.C. have under the Bridlington rules, which are arrangements of great value in introducing order into trade union membership and trade union demarcation. There is much, too, that could be said on the issue of the closed shop. There are areas of employment where maintenance of a very close control over entry to them—and I have in mind some fields of the entertainment industry, as one example—is closely related to the maintenance of standards of employment, standards of wages and conditions. There are many points which need to be examined much more closely and which deserve much more criticism than they have so far received from your Lordships.
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Then, my Lords, let us take the issue of unfair dismissal. There are many weaknesses in the proposals on unfair dismissal. If I understand the Document aright, the one which seems particularly unsatisfactory is the proposal that an employer has a right, if he wishes, to reject a recommendation of an Industrial Tribunal that a dismissed worker should be reinstated. It is very hard to believe that this does not mean, in fact, that if these proposals are carried, then in future an employer, provided he is prepared to pay the cost (which may not in all circumstances be very great), will be able effectively to dismiss individuals who have been in his employment and who have proved themselves obnoxious to him because of their trade union activities which, while perfectly proper and perfectly legal, may have been too energetic for his liking. As to registration and legal status, one can contrast these with what the Donovan Commission said about the relative lack of serious criticism which could be made of internal trade union arrangements and trade union democracy.
So, my Lords, one could go in very great detail—and it may well be that in due course we shall have to—through this Document; but before I conclude I must make a reference to the background of these proposals. This was touched upon by my noble friend Lord Balogh, and I want to make only a brief reference to it because, as he said, there will no doubt be an opportunity before very long to discuss these aspects of the background in greater detail. However, these proposals are inevitably seen by many trade unionists outside this House as a part of and as related to other proposals which are now before your Lordships. The announcement of the Chancellor of the Exchequer on the question of income tax and social charges seems to many of us to be deliberately setting the Government upon the path of accentuating social inequality. Increased social service charges and increased food prices are set against the expectation of a cut of sixpence in income tax. There seems to be a general consensus, even among some Conservative newspapers, that the "break-even" point for a family with two children is about £60 a week, and that the higher one's income is above that figure the better one does from the package, the lower one's income is below that figure, until

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one gets to the family income supplement point, the more adversely one is affected.
A second major factor in the background is the evident desire of the Government to withdraw so far as they can from any attempt to interfere in the use that industry makes of its economic power. The I.R.C. is to go; the Prices and Incomes Board is to go; any attempt to place any limit on price rises or to investigate price rises is, so far as I can make out, to go; and even the Consumer Council is to go. The Government are in fact merely to "hold the ring", except that they seem disposed to depart from this neutral position, as has been made clear in the case of the strike of public employees, when they find that the use of their normal conciliation machinery might lead employers voluntarily to propose figures for wage increases higher than the Government regard as appropriate. Against such a background as this, it is not surprising that workers look to their trade unions to take action to protect living standards, and are very acutely conscious of the relationship between trade union rights and the standard of living which trade union members and their families enjoy.
My Lords, the present Document, I fear, is not likely to improve industrial relations, but to worsen them. I believe that the course of wisdom would be for the Government to think again. They have been prepared to think again on a number of issues. They recognise that from the Treasury Bench some issues look different from the way they looked from the Opposition Benches. I believe it would be the course of wisdom for the Government to think again about these industrial relations proposals, to withdraw their Document and to sit down with both sides of industry to address themselves to the practical problems of improving industrial relations.
7.15 p.m.
THE LORD CHANCELLOR: My Lords, the noble Lord, Lord Byers, in the interesting speech with which he introduced his Motion, speculated with some doubt as to why the Lord Chancellor should have been asked to reply. May I suggest one or two possible reasons? I pass by, of course, the suggestion that Lord Chancellors are habitually used by their colleagues as a kind of housemaid at the end of a debate to sweep up the
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dust. Perish the thought, my Lords, that this should have been the case in this instance!
Could it be that the Lord Chancellor himself was interested in the subject of the debate, and thought that perhaps he might make a contribution to it, especially as the Document to which the Motion relates introduces a number of new legal conceptions and a series of new legal institutions? Could it be that the Government themselves attach great importance to these proposals, and wanted one of their few senior members in this House to reply to the debate? Could it be that the Government were anticipating something of an onslaught from the Benches opposite, and wanted a Minister with a certain amount of debating experience to defend their ranks? If the latter is the explanation, I can only say that we have been grotesquely disappointed.
Yet we had every reason for the apprehension. In the debate on the Queen's Speech the noble Lord, Lord Shackleton, said:
"… the Opposition will carry on with great vigour."—[OFFICIAL REPORT, 2/7/70, col. 24.]
and his peroration in his speech in the main debate was:
"I can also promise"—
the Government—
"a determined Opposition such as has not been encountered before in your Lordships' House."—[OFFICIAL REPORT, 7/7/70, col. 52.]
Well, well, my Lords! They gave the first bisk to the noble Lord, Lord Brown. We enjoyed that, if he will allow me to say so. But the noble Lord made it very clear that the astonishing proposal which formed the central part of his speech was entirely his own view; and from the small knowledge I have of the Labour Party and of the trade union movement, from the outside of both, I should say that the chances of their adopting it are about those of an icicle in hell. Indeed, it seemed to me as he proceeded to his third Chamber of Parliament, as I thought it to be, the functionally-elected Chamber which was to recommend wage differentials, that I had heard nothing like it—
LORD BROWN: My Lords, it was not a third Chamber of Parliament—I should like to be accurate. The noble Lord was not listening as closely as he might have been. It was a Council.
THE LORD CHANCELLOR: I see; it was not a third Chamber of Parliament, it was a Council; but it was to be elected functionally. I thought, whether it was a Council or a third Chamber of Parliament, that I had heard nothing like it since Mussolini's corporate State. As it was to be 95 per cent. united before it did anything, I thought I had heard nothing like it—
LORD BROWN: My Lords, has the noble and learned Lord not seen fit to read the Romaine Lecture by Sir Winston Churchill?
THE LORD CHANCELLOR: I said only that I had known nothing like it in practice since the Polish monarchy—or perhaps the Security Council, which is not notorious for coming to many decisions. The principle of a unilateral veto may be extremely attractive to the noble Lord, but I do not believe there is much political experience which gives support for thinking that it gets things done. And when I ask myself whether his proposals would do any good in demarcation disputes, for instance, or unofficial strikes when the 95 per cent. majority was not obtained but only an 85 per cent. majority, or unfair dismissal or recognition disputes (to mention only some of the frequent causes of strikes), or even a plain strike about wages when they do not have all they want, I can only say that I possess—and I expect the Labour Party will possess, because I saw no trace of this in In Place of Strife—a certain degree of scepticism about the noble Lord's proposals.
LORD BROWN: My Lords, did the noble and learned Lord not hear me dwell at some length on an appeal system for industry when he referred to the fact that I said nothing about unfair dismissals? I fear that the noble and learned Lord is having a jolly, theatrical, almost pantomime, time. But he might have listened to what was said before he began to pull to pieces proposals made in a very serious vein. I personally find his comments most objectionable.
THE LORD CHANCELLOR: I regret that the noble Lord should find them objectionable; but he must expect, when
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he puts forward what appears to be a revolutionary set of proposals, that they will be examined in a critical spirit. He cannot find personally objectionable a certain degree of scepticism when one hears from the front Opposition Benches, albeit in a purely individual sense, proposals of this kind. Personally I remain unconvinced by them and I suspect that his colleagues do, too.
On the other hand, we were given a very eirenic speech, hardly coming up to Lord Shackleton's promises of determined and skilful Opposition, from the noble Lord, Lord Delacourt-Smith. I will come to him in a moment; but I would say this, in passing: if he finds so much difficulty in understanding the Consultative Document, and discovers so many points of interest which ought to be explained further and spelt out in detail, I would recommend him to get his trade union friends to consult with the Government instead of refusing to talk to them—because that is exactly what we want. If he will do that, all his difficulties will be smoothed away. But, my Lords, you see that I accept the challenge with which he ended in discussing the background of these proposals.
The noble Lord, Lord Taylor of Mansfield, to whom I also listened with a great deal of interest, and who supplied the wants of a great number of speakers on the Opposition Benches, said that we were to do nothing precipitate. Nothing precipitate! My Lords, has anything been less precipitate than the handling of this subject by Parliament? Thirteen years ago, when I was Chairman of the Conservative Party, after years of Conservative Government the principal complaint that was being made against us in this field was that we had not dealt with it. We did not deal with it. And I, as a senior Minister at that time, was as responsible as anybody for our omission. We did not deal with it precisely because we hoped that the trade unions would deal with it themselves and that the voluntary system would work. That is why we underwent the agony of that criticism.
But things did not stop there. We had a Labour Government for six years—not doing anything precipitate. They appointed a Royal Commission; and I remember the sneers in another place with which the Leader of that Party, then

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the Prime Minister, attacked the Conservative Benches in that place and said, "You never did anything about it. We have appointed a Royal Commission." That was not very precipitate. The Royal Commission reported and issued a series of Reports under the chairmanship of the noble and learned Lord, Lord Donovan, and recommended that there should be legislation; and the Government of the day produced a White Paper, In Place of Strife; and then there was so much strife inside the Government of the day that they withdrew In Place of Strife and secured as an excuse for their doing so a solemn and binding undertaking from the T.U.C. General Council.
Then there was another General Election. And this was one of the major subordinate issues in that Election; because we had placed our policy, in all its essentials the same as the Consultative Document, into our Election programme. It was discussed very fully before the electorate. I am in no doubt that one, at any rate, of the subordinate reasons why we won the Election was that we had a constructive policy to propose and that the Government of which the noble Lord, Lord Delacourt-Smith, was an ornament, had no constructive proposals at all. But when I heard the noble Lord say that one does not improve industrial relations by introducing law into that field—what an extraordinary thing for a member of that Government to say! Because the whole sanction behind In Place of Strife was a criminal sanction. There was no question of asking questions as to whether, in the face of a deliberate contempt of court, there might be a chance of committal; they had a direct criminal sanction. And instead of the cooling-off period being something which could only be achieved after a ritual of extreme precision before a court of law, it was the Secretary of State who straight away had to make an order for such a cooling-off period. Really, the noble Lord deceives himself if he thinks that our memories are quite as short as he supposes. I suppose that that was really why we had such a lack of determined and vigorous opposition on this occasion: they knew they were on very weak ground.
The really pathetic fact about this matter is the extraordinary schizophrenia inside the Party in opposition. Is it not rather odd that the law reformers oppo-
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site have been so notably silent this afternoon—including the noble and learned Lord who preceded me on the Woolsack? They want law reform in every sphere except one. In this field alone law reform is not to be permitted to exercise its beneficial influence. They want law in all fields except industrial relations and at every moment of time except the present. Nor have we heard very much about the need for planning this afternoon from the Party in Opposition. We have not heard very much of the Tory "free-for-all" because although the Tory "free-for-all" is condemned in the market place, it is not merely tolerated but lauded as indispensable on the shop floor. And although planning is all right for the board room it becomes an intolerable tyranny if it is applied to trade unions. There is the schizophrenia.
Nor do we hear very much about compassion or the Tory philosophy of greed—except in a few concluding remarks from the noble Lord, Lord Delacourt-Smith. These tear-jerking exercises will be kept for our proposals to reduce taxation. For it is apparent—is it not?—that the whole implication underlying the resistance to what we now propose is that we are to stay where we are in all spheres except this. The law of the jungle is to be condemned, but in this sphere alone, greed, the philosophy of, "I'm all right Jack", is the one which is to be permitted to continue to prevail.
Yes, my Lords, let us talk about the background to these proposals. The noble Lord, Lord Hankey, in what I thought was a remarkably constructive speech, spoke of the gradual decline in our position among the advanced nations of the world, whether one regards productivity or whether one regards income per head as the criterion—the low, gradual sinking below Germany, France, perhaps Italy, Norway, Sweden, Denmark and the great countries of the Commonwealth. No one spoke from the Opposition Benches about the inflation to which we are being subjected at the present time. Nobody ventured a speculation as to the wage claims—except the noble Lord, Lord Brown, who ventured to attack the Leader of my Party for criticising the attitude of the previous Government in this respect. Yet what have we seen?
LORD BROWN:My Lords, IS the noble and learned Lord prepared to stand up and defend the statement made by the Prime Minister? If he would do so, it would give me an opportunity to quote the Lord Chancellor, as well as the Prime Minister, in a deplorably irresponsible comment.
THE LORD CHANCELLOR: My Lords, the noble Lord is really getting very upset unduly. I was about to say what I was going to say about the Prime Minister. It has only been delayed a couple of minutes—and I was standing up. So what is the noble Lord complaining about? If the noble Lord had really reflected on what has happened, he would recall that the previous Administration said that, on the whole, wage settlements which exceeded 3 per cent. to 4 per cent.—I think that was the figure—were, in fact, inflationary. They have been running at about 10 per cent. or higher. This was not the first time it happened. It was no coincidence that it happened towards the end of 1964, just before and during the period of the run-up to the 1966 Election; and it started happening again, after the Government had been leaning against these settlements, in the run-up to the 1970 Election—so carefully planned and timed, as the Leader of the Labour Party was good enough to explain during the course of his Election broadcasts. How can the noble Lord, Lord Brown, complain of the remarks of the Leader of my Party in the face of such a recent experience as this?
LORD BROWN: My Lords, is the noble and learned Lord supporting the Prime Minister in the statement that the last Government deliberately encouraged these wage demands? I just ask a simple question on that.
THE LORD CHANCELLOR: My Lords, I complained that they had deliberately let the reins down on the horse and let the thing rip, because they knew very well that the policy which they had pursued up to that time, and which was a more responsible policy, was one which would lose them votes.
LORD BROWN: My Lords, the noble and learned Lord is a distinguished lawyer and he is evading the question. He has answered my question, whether he was supporting the Prime Minister's state-
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ment that the previous Government have deliberately encouraged these wage demands, by saying that the Government had "let the reins down" or something like that. He has not answered my question, he is evading it. His slapstick is wearing thin.
THE LORD CHANCELLOR: I do not know how slapstick can wear thin. The noble Lord must not mix his metaphors if he does not wish to be ridiculous. Now, my Lords, we are—and this is the point I had reached—discussing this particular Motion and not the Prime Minister's remarks. I think I have given the noble Lord very fair and very full treatment on his attack upon my right honourable friend. But the truth of the matter is that we have before us a set of proposals which in our view merit consideration.
The noble Lord, Lord Taylor of Mansfield, claimed that this was not a Consultative Document, and in that he received, perhaps not wholehearted but at any rate modest support from his Leader, the noble Lord, Lord Delacourt-Smith. I wonder why the noble Lord said that. He did not think to mention that it is the Labour Party, or rather the trade unions, who are refusing to talk and not the Government. His complaint appeared to be that the Government proposed to stick by the essentials of their policy. He referred to the "eight commandments" as he called them. They were not commandments; they were pillars, as my right honourable friend said. Let us look at some of the things by which the Government wish to stick.
The right to belong or not to belong to a trade union: that was the first of the pillars. Is the noble Lord, Lord Taylor of Mansfield (who did not see fit to tell us which he objected to), objecting to our sticking to that principle? Is he refusing to discuss, or justifying the refusal to discuss, the validity of that principle? If he is, he is going against the great mass of responsible opinion in this country, because that is a principle, I should have thought, which had overwhelming support from public opinion.
The unions' right to recognition: that was the second of the pillars. Does the noble Lord, Lord Taylor of Mansfield, complain that the Government, in this Consultative Document, are giving to the trade unions greater right of recognition

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than they have ever given before? Is that the reason why he justifies the refusal to discuss? I suppose not. At any rate, we have offered much more than has ever been given before. The third pillar was the registration of trade unions and employers' associations. Is this the reason for refusing to discuss with the Government? But most of them are registered already; and all we are suggesting is that registration should carry with it a certain particularity about rules which is open to discussion; and that the Registrar should have separate files for employers' associations and for trade unions. Is that what they are refusing to discuss?
Number 4 pillar is the presumption that collective agreements are legally binding unless they say otherwise. Well, my Lords, is that a reason for refusing to discuss? I know that the Trades Union Congress do not want a presumption in favour of legal enforceability, but they know as well as I do that it is open to trade unions now to enter into legally enforceable bargains; and they know that under the proposals in the Consultative Document they could contract out if they pleased. I can see, of course, that my noble friend Lord Rochdale had something in his criticism that more will do so, probably, than we should wish. But what is there to justify the refusal to discuss about that when you can contract out of it if you please?
What is there, in any of the principles I have given so far, to justify Lord Taylor of Mansfield's reference to our slamming the door? Why do they refuse to discuss the fifth pillar, the procedure for the selective improvement of procedure agreements leading to legal enforceability if necessary? What is there about it which is so abominable? It may well be, of course, that trade unions would wish to enforce their agreements against the employers who broke them. Why should they not be the gainers from it? We cannot know unless they tell us, but these omnibus condemnations savour badly of a guilty conscience. If they have a good case against it, let them come forward with it. The noble Lord asked why we were not willing to listen to the case. I have been waiting the whole; afternoon to listen to this case. We are asked for clarification; we are told that we slammed the door when the door is wide open. We hear general condemna-
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tions from the noble Lord, Lord Balogh, about the philosophy. But detailed criticism, constructive criticism—we have heard none. If they have a case let us hear what it is—even if the slapstick is wearing a little thin!
The sixth pillar is the provision for the reform of the bargaining structure. Well, Donovan was in favour of that; In Place of Strife was in favour of that. Why are we supposed to be imposing a diktat because we say that this is something which lies at the root of our proposals? Limitation of existing immunities—the majority of Donovan proposed it. Is the noble Lord really afraid of discussing the proposals of a Royal Commission, set up by a Labour Government, under a distinguished and impartial Judge who, in a former existence, was a member of the Labour Party in the House of Commons? Is this where he has taken himself to, and his trade union friends? Ultimate safeguards for the community—and now, my Lords, I have read them all—the eight pillars, the eight commandments, which the noble Lord found so objectionable that he said the T.U.C. were entitled to refuse to discuss them round the table with us.
LORD TAYLOR OF MANSFIELD: My Lords, I think the noble and learned Lord is mistaken. What I said was that it is the Government who are refusing to consult with the T.U.C. on these eight principles.
THE LORD CHANCELLOR: My Lords, the noble Lord is wholly misinformed. This is what we say is our policy. I agree that we are not going back on trade union recognition. Does he want us to? I agree that we insist that there should be some ultimate safeguards for the interests of the community. Does he complain of that? The House might have been led to believe, since he did not reveal one of the eight principles which Mr. Carr referred to in detail, that the things we are insisting on were utterly controversial or unreasonable. But the noble Lord has not yet answered which of these he finds unreasonable and why the T.U.C. should have refused to discuss them with us.
LORD TAYLOR OF MANSFIELD: But the T.U.C. have not refused. It is the Government who have refused to listen to the T.U.C.
THE LORD CHANCELLOR: My Lords, I am delighted to hear it, and I hereby revoke any measure of refusal that there might have been and only hope that they will be round to-morrow morning to discuss it.
I turn back to the question of the philosophy underlying this Document, since that was the only other general measure of attack. I must for this purpose refer to something that I said in the debate on the gracious Speech. About 150 years ago two great types of economic organisation were left unrecognised by the Common Law of England. One was the joint stock company and the other was the trade union. The joint stock company was outside the Common Law because the Common Law did not recognise the right to limit liability. If you traded, so said the judges of the time, you had to pay to the utmost of your ability. Limited liability was not to be permitted. The trade union was outside the Common Law basically because it was a conspiracy in restraint of trade.
Owing to the particular political philosophy of the time, successive Parliaments of the 19th and early 20th centuries smiled on the joint stock company, and by 1862 the forerunner of the present Companies Act was passed. It brought law into that field. It recognised the right of limited liability, a privilege and an immunity not enjoyed by other associations. It gave a corporate personality. It insisted on registration, provided that in order to secure the privilege of registration and immunity a minimum set of rules was adhered to. It even provided a model set, called Table A. It defined the rights of directors, shareholders, creditors and members of the public. It limited the sphere within which a given company could operate, defined by the Memorandum of Association. And the result was, as always happens when you bring in law where chaos was, that the joint stock company, the limited liability company, became a great instrument in the dynamic economic expansion for which it has become famous.
But what a different kind of treatment was meted out to the trade unions by the 19th and 20th century Parliaments! There is no Trade Union Act, like the Companies Act. If one looks at the leading work on trade union law, written by a very close relation of the
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noble Lord, Lord Citrine, one sees that it is a jungle of anomalies. The noble Lord, Lord Delacourt-Smith, complained of certain points of obscurity in the Consultative Document. If he wants obscurities, he should go to this leading technical authority on trade union law and see what we are trying to clear up. That is the chaos which the noble Lord is asking us to maintain.
The truth is, my Lords, that successive Parliaments in successive Acts (and here I speak of the whole succession of Trade Union Acts from the Act of 1871 up to and including the last Statute of 1965 brought in by the last Government: an Act which we are going to repeal) did nothing more than reverse ad hoc previous decisions of the courts. Thus Parliament rendered obscurity more obscure and did nothing to introduce a clearly stated system of rights and obligations.
I agree with the noble Lord, Lord Byers, that this is only a part of what has to be done. We cannot handle the climate of industry solely by introducing legislation, or handle any contemporary disputes. May I say to the noble Lord, in passing, that I am not going to yield to the invitation which he held out and which was handed on, tied up with red tape, by my noble friend on the Front Bench, that I should tell him exactly how the Bill would have dealt with the miners' unofficial strikes or with the strikes of local authority workers? It would be only too easy to do so—but fatally foolish. One reason why I should not do so is that there is now no industrial code and no enforceable procedure agreement, so that the situation now is one which could not be translated into a set of circumstances in which these strikes took place under the new code.
We might have to ask whether some of these disputes include unfair industrial actions, in which case the Consultative Document will give the noble Lord the answer. We might have to ask whether some of them might not involve a national emergency at some stage, in which case the Consultative Document will again give him the answer. But wild horses will not drag from me a syllable further—even at the invitation of the noble Lord, Lord Byers, which I find so difficult to resist.
But, my Lords, this is only a part—indeed, a small part of the whole—of

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what my noble friend Lord Dudley called the long haul which we have in front of us. But I do not think that we can do without it, because I do not believe in the law of the jungle either in the market place or on the shop floor. I believe in law. And what do I mean by law? The last Government, I am sorry to say, seem to have assumed that the only law with which they were familiar was the law of crime which ends in imprisonment or fine. That is not our view in the Government. The greater part of English law has nothing whatever to do with crime and does not end in prison. The law of husband and wife is not part of criminal law; nor is the law of landlord and tenant, of vendor and purchaser, of master and servant, of partnership, divorce, company law, income tax, contract and tort—none of these is a part of the criminal law. Though cases can occur when a deliberate attempt to flout the law may end in prison under the rules affecting contempt of court, this happens remarkably seldom.
I must tell the noble Lord who raised this question that even in this country we have some small experience of the truth of this. Judgments were given in the ordinary courts against the trade unions or against individuals in Rookes v. Barnard; they were given by way of injunction in Stratford v. Lindley; they were given in the Torquay Hotel case against the Transport and General Workers' Union, including Mr. Cousins. Did they go to prison? They did not. They obeyed the law. I rather suspect that if a reasonable and just law is passed in the field of civil obligation, not of crime, the responsible leaders of the trade union movement will abide by that just as they have in the past and, as I say, just as the vast majority of trade union leaders in other countries have done when similar laws have been passed. Because there is nothing in this Consultative Document which does not exist in other advanced countries and which has not worked with a considerable measure of success there, a circumstance which I commend to the Party in Opposition and the trade unions to reflect upon deeply.
LORD BYERS: My Lords, while not wishing to dispute that, may I ask something by way of clarification? It says in the Document that the N.I.R.C. would have power to enforce any of these orders.
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How is it proposed that they should enforce them?
THE LORD CHANCELLOR: There are three types of order. One is an order for compensation, when in one way or another they would be enforced through fieri facias; there is a declaration which would not require direct enforcement; and there is an injunction which would be enforceable in the first place simply by service of the order on the two or three people to whom it was directed, but certainly not to masses of trade unionists as the noble Lord, Lord Byers, suggested in his speech. I think that if the noble Lord reads the Consultative Document with care he will find that this is made abundantly plain. If it has not been made abundantly plain in the Consultative Document, I hope I have made it abundantly clear now—though I stand subject to correction.
The law is therefore not something to be feared—this is a point that I would particularly emphasise in this context—it is, in fact, the very framework on which society is founded. Its most effective sanctions are very often its mildest sanctions. I agree with those noble Lords—I think the noble Earl, Lord Dudley, and my noble friend Lord Rochdale—who said that law is most valuable when it comes least before the courts. But its absence—and we are dealing with a situation in which it is absent in the field we are now discussing—always means chaos, disorder and even violence; and this is, if not the only cause, one of the contributory causes of the contemporary chaos in industrial relations.
As I have said, we do not put forward the introduction of our proposals as an instant cure to inflationary wage demands or strikes in support of them. I do not suppose that those will stop until it really comes home to people that if all the wage claims were met, that would be a recipe for national bankruptcy, and that strikes therefore not only do not pay in the long run, but cannot. But we do claim that our proposals will help to put an end to industrial anarchy; we believe that they will help to put an end to non-recognition disputes: we hope that they will help to put an end to demarcation disputes, to disputes over unjust dismissals, to wildcat and unconstitutional

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strikes, to secondary strikes, to the Rookes v. Barnard situation, to strikes in support of a closed shop. We claim that our proposals may marginally assist in dealing with national emergencies and will protect the worker from unjust dismissal by his employer or unjust expulsion from his union by a caucus. In other words, we claim that our case has not been answered in the debate to-day. We have put forward these proposals as part of a scheme to handle what is undoubtedly an urgent situation with which the future economic life of the country is bound up.
I would beg noble Lords who have great influence in their own Party to take another look at the Consultative Document—and they have asked us to take another look. Let them take it back to their union friends, with whom again they have often exercised greater influence than I can hope to do. Let them ask their union friends to think again before refusing consultation with us. Let them point out some of the advantages in it, and let them say quite plainly that it is always better to talk before you attack in general terms policies which are designed by an effective Government, forming part of their Election programme, for the good of the country which we were elected to represent.
7.55 p.m.
LORD BYERS: My Lords, IT only remains for me to thank noble Lords who have participated in what I think has been an extremely useful debate. It has given the noble and learned Lord the Lord Chancellor an opportunity to enjoy himself. I must say that I thoroughly appreciated his tour de force: I would calculate it at about Force Eight; it is nice to see him in full sail. I quite appreciate that he is too old a hand and much too skilful to be drawn on the question that I put to him as to how these proposals would refer to the two current strikes. I was not very convinced by his answer, except from the debating point of view; and I of course would have given exactly the same answer had I been asked the question. But I think it would be helpful to the House if, before we come to legislation, we could have some practical example as to how these proposals might work.
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I want to say only one more thing. I believe that the Lord Chancellor has made an important statement to-night in making it clear that the Government are willing to talk to the T.U.C. or to anybody else in this process of consultation. I hope that we shall have the opportunity of seeing as much discussion as possible.
To me the Consultative Document is merely a starting point. Without a starting point, my Lords, you do not make progress. I ask leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

LINDSEY COUNTY COUNCIL BILL [H.L.]
Returned from the Commons, agreed to with an Amendment; the said Amendment considered and agreed to.

NORTHAMPTON CORPORATION BILL [H.L.]
PEMBROKESHIRE WATER BOARD BILL [H.L.]
Returned from the Commons, agreed to with Amendments; the said Amendments considered and agreed to.

  EGYPT: COMPENSATION FOR BRITISH ASSETS
  EGYPT: COMPENSATION FOR BRITISH ASSETS